The URL can be used to link to this page

Home My WebLink AboutPR 19878: AMENDMENT NO. 3, EDC J.Z. RUSSELL INDUSTIRIES, INC. Interoffice MEMORANDUM To: Mayor, City Council, City Manager From: Floyd Batiste, CEO Date: August 15, 2017 Subject: P. R. No. 19878; Council Meeting of August 29, 2017 ATTACHED IS PROPOSED RESOLUTION NO. 19878 APPROVING AMENDMENT NO. 3 TO THE ECONOMIC INCENTIVE CONTRACT & LOAN AGREEMENT BETWEEN THE CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION AND JZ RUSSELL INDUSTRIES, INC. P. R. No. 19878 8/14/2017 KVM RESOLUTION NO. A RESOLUTION APPROVING AMENDMENT NO. 3 TO THE ECONOMIC INCENTIVE CONTRACT & LOAN AGREEMENT BETWEEN THE CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION AND J.Z. RUSSELL INDUSTRIES, INC. WHEREAS, per Resolution 12-047 dated February 28, 2012, the City Council of the City of Port Arthur approved an Economic Incentive Contract & Loan Agreement (the "Agreement") between the City of Port Arthur Section 4A Economic Development Corporation ("PAEDC") and J.Z. Russell Industries, Inc. ("J.Z. Russell") in an amount of $447,496.00 to reimburse J.Z. Russell for equipment purchased for the expansion of their operations into the Spur 93 Business Park; and WHEREAS,J.Z. Russell is able to receive credits toward their incentive amount through payroll to Port Arthur residents by receiving $1.00 in credit for every $5.10 in payroll to Port Arthur residents as shown in Exhibit "A"; and WHEREAS, in working closely with J.Z. Russell, it has been determined that J.Z. Russell is unable to meet their expected performance milestones, attached as Exhibit "B", due to a lack of expected job contracts and a high turnover of Port Arthur residents filling the available positions as shown in Exhibit "C"; and WHEREAS, it has been determined that J.Z. Russell has put forth their best effort in hiring Port Arthur residents by using the PAEDC's First Source Referral Program, recruiting students from the Lifeskills Program funded by PAEDC and participating in PAEDC's training programs; and WHEREAS, the PAEDC Board of Directors at their regular Board meeting of August 7, 2017, approved amending the Agreement with J.Z. Russell to allow J.Z. Russell to continue receiving credits toward their incentive amount through the term of their Agreement which is March 2020. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR, TEXAS: Section 1. That the facts and opinions in the preamble are true and correct. Section 2. That the City Council of the City of Port Arthur approves Amendment No. 3 to the Economic Incentive Contract & Loan Agreement between PAEDC and J.Z. Russell Industries, Inc. as denoted in the Amendment attached hereto as Exhibit "D". Section 3. That a copy of the caption of this Resolution shall be spread upon the Minutes of the City Council. READ, ADOPTED AND APPROVED on this day of A.D., 2017, at a Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES: Mayor Councilmembers • NOES: Derrick Freeman, Mayor #1419508 Page 2 ATTEST: Sherri Bellard, City Secretary APPROVED: '---/-4,Pe- l ,6L.T.,-- Floyd Batiste, PAED CE APPROV : A S TO F4 ' '• .4.01gr . 4 AgAti I --- Guy N. Goodson, PAED attorney APPROVED AS TO FORM: Cli- , . D Valecia R. Tize City Attorney #1419508 Page 3 EXHIBIT "A" JZ Russell — Port Arthur Payroll and Credit Earned Payroll by Year Credits earned 2012 - 2014 - $298,972.76 $54,395.90 2105 - $222,878.35 $43,701.64 2016 - $223,896.42 $43,901.26 2017 (thru July) - $83,563.28 $16,384.96 Totals: $829,311.06 $158,383.76 JZ Russell receives $1.00 credit toward their incentive amount for every $5.10 in payroll paid to Port Arthur residents. Contract amount is $447,496 EXHIBIT " B " PERFORMANCE MILESTONE SCHEDULE—MODIFIED JZ Russell Industries,Inc. 7-10-14 DATE MILESTONE Achieve employment of six (6) full-time permanent employees that (a) December 31, 2014 are Port Arthur Residents as Technicians and two (2) full-time, permanent employees that are PA Residents as office staff with an annualized payroll of$287,040 for Port Arthur Residents. (b) July 31, 2015 Issue a Business Operational Report to PAEDC for the period of January 1, 2015 to June 30, 2015. Achieve employment of six (6)additional full-time permanent employees that are Port Arthur Residents as Technicians and one (1) (c) December 31, 2015 full-time,permanent Port Arthur employee as office staff with an annualized payroll of$252,720. Total Port Arthur employees' payroll for year ending 2014 and 2015 not less than$826,800. (d) July 31, 2016 Issue a Business Operational Report to PAEDC, CEO for the period of January 1, 2016 to June 30, 2016. Achieve employment of twelve (12) additional, full-time permanent employees that are Port Arthur Residents as Technicians and one (1) (e) December 31, 2016 additional, full-time permanent Port Arthur employee as office staff with an annualized payroll of$471,120. Total Port Arthur employees' payroll for year ending 2014,2015 and 2016 not less than$1,550,640. (f) July 31, 2017 Issue a Business Operational Report to PAEDC, CEO for the period of January 1, 2017 to June 30, 2017. Achieve employment of six (6) additional full-time permanent employees that are Port Arthur Residents as Technicians and one (1) (g) December 31, 2017 additional, full-time permanent Port Arthur employee as office staff with an annualized payroll of$252,720. Total Port Arthur employees' payroll for year ending 2014, 2015, 2016 and 2017 not less than$2,274,480. (h) July 31, 2018 Issue a Business Operational Report to PAEDC, CEO for the period of January 1, 2018 to June 30, 2018 (i) December 31, 2018 JZ Russell Industries, Inc. maintain annualized payroll for year ending December 2018 of$315,900. (j) December 31, 2019 JZ Russell Industries, Inc. maintain annualized payroll for year ending December 2019 of$315,900. Issue a business operational report to PAEDC CEO report to include at least twelve (12) Port Arthur resident hired,trained and ready to (k) March 2020 be assessed for Technician's Certification and two (2) Port Arthur Residents hired, trained and ready to be assessed for Inspector's Certification. (1) March 2020 J Z Russell Industries, Inc meets all PAEDC contractual performance as verifies by the PAEDC CEO (m) March 2020 Prepare close out of contract for PAEDC Board and Council Approval. EXHIBIT " C " Reason for non hire No TWIC No TWIC Did not accept offer Not hiring at time of application Could not pass background Could not pass background Could not pass background or hair follicle test Not hiring at time of application No TWIC Did not accept offer Could not pass background Did not accept offer No TWIC Not hiring at time of application Did not accept offer Did not accept offer No TWIC Did not accept offer Not hiring at time of application Could not pass hair follicle test No TWIC Not able to work out of town job Reason for termination: Poor attendance&effort on job site. Poor performance of work Job Abandonment No Call No Show X 3 Left for out of town work with another employer(No notice) Bad attitude and could never get in touch with him Complacency on job, reduced hours first then laid off Incarcerated Quit for another job on a Friday, then tried to return on following Monday Bad Attitude and Performance on job Job Abandonment No Call No Show after every paycheck No transportation Layoff Quit for another employer(2 week notice) Scheduled 40 Hour Training& Decided he didn't want to work in this field Quit for another employer(2 day notice) No call no show 6 consecutive days Poor performance of work Afraid of working on elevated work surfaces even though stated otherwise Poor performance of work EXHIBIT " D " THIRD AMENDMENT TO THE ECONOMIC INCENTIVE CONTRACT & LOAN AGREEMENT BETWEEN THE CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION AND J.Z.RUSSELL INDUSTRIES, INC. WHEREAS, J.Z. Russell Industries, Inc. ("JZR") and the City of Port Arthur Section 4A Economic Development Corporation ("PAEDC") entered into an Incentive Contract & Loan Agreement(the"Agreement")on February 13,2012 pursuant to Resolution No. 12-047; WHEREAS, JZR has indicated that they cannot meet the Performance Milestone Schedule as set forth in the Agreement; and WHEREAS, the PAEDC Board of Directors met on August 7, 2017, and agreed to amend the Agreement as set forth below." NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION that: 1. This Amendment to the Incentive Contract & Loan Agreement between PAEDC and JZR was approved by the PAEDC Board of Directors on August 7, 2017. 2. The amendment as to Agreement shall be effective upon approval by the City of Port Arthur, Texas. 3. The recitals to this Amendment are incorporated and fully referenced in this Amendment. 4. Section 5(C)(1) shall be amended as follows: (1) Starting on the effective date of the Agreement until December 2019 Incentive Recipient puts forth in its best efforts to hire Port Arthur residents Incentive Recipient will receive $1.00 credit for each $5.10 of payroll paid to residents of Port Arthur. Payroll to non-residents cannot be credited. 5. Other than the amendment set forth herein, JZR and PAEDC ratify and affirm all terms and conditions of the Agreement dated February 13, 2012. SIGNED AND AGREED to on this day of , 2017. City of Port Arthur Section 4A Economic Development Corporation By: President ATTEST: Secretary THE STATE OF TEXAS § COUNTY OF JEFFERSON § This instrument was acknowledged before me on the day of , 2017, by as President and as Secretary on behalf of City of Port Arthur Section 4A Economic Development Corporation. Notary Public, State of Texas J.Z. Russell Industries,Inc. By: James W. Russell, Jr. THE STATE OF TEXAS § COUNTY OF JEFFERSON § This instrument was acknowledged before me on the day of , 2017,by behalf of J.Z. Russell Industries, Inc. Notary Public, State of Texas