HomeMy WebLinkAboutPR 20671: AMENDMENT NO. 1 ECONOMIC INCENTIVE CONTRACT AND LOAN AGREEMENT WITH EDC, AND KLV VENTRURES, INC. interoffice
MEMORANDUM
To: Mayor, City Council, and Interim City Manager
From: Valecia R. Tizeno, City Attorney V.A ,r'i( _� hD
Date: February 5, 2019 W�
Subject: P.R. No. 20671 - Amendment No. 1 to the Economic
Incentive Contract & Loan Agreement between PAEDC and
KLV Ventures, Inc .
Resolution No. 17-234 is the original incentive agreement
between the PAEDC and KLV. PAEDC agreed to provide a conditional
grant to KLV in the amount of $326 , 000 . The agreement contained
various milestones which are attached hereto.
The milestones required that the company achieve the
employment of 7 full-time permanent employees that are Port
Arthur residents with an average annualized payroll of $385 , 000
and completion of construction of a permanent facility at the
Highway 73 Business Park. Therefore, pursuant to Resolution No.
18-398 , the City Council approved a purchase agreement between
the PAEDC and KLV for the purchase of land in the Hwy 73 Business
Park in the amount of $175, 000 .
In this resolution, PAEDC board is requesting that the City
of Port Arthur authorize an amendment to the milestones . The
PAEDC board has requested that the provision related to the
purchase of land be removed from the milestones .
The legal department recommends that the City Council
carefully review the attached milestones and determine whether
the deletion of the land purchase is an appropriate change to the
incentive agreement. The resolution requires the City Council to
determine whether the amended milestone schedule meets the
requirements for a conditional grant or loan. At a later date,
the PAEDC will request that you consider rescinding its purchase
agreement with KLV. All of the above referenced factors need to
be taken into consideration prior to acting on this request .
PERFORMANCE MILESTONE SCHEDULE
KLV VENTURES
MILESTONE SCHEDULE
Deadline Milestone
(a) Status Report for September 1, 2017 to December 31,2017
December 31, 2017
(b) March 31, 2018 Status Report—Business Operations from January 1,2018 to March
31, 2018
(c) March 31, 2018 Operational Status Report—On Construction of permanent Facility at
Hwy 73 Business Park
(d) August 31,2018 Operational Report-Achieve employment of 7 full-time permanent
employees that are Port Arthur residents with an average annualized
payroll of
$385,000.
(e) March 31, 2019 Payroll Report - Submit W-2's for Port Arthur residents from
January 1, 2018 to December 31,2018
(f) March 31, 2019 Operational Status Report—On Construction of permanent Facility at
Hwy 73 Business Park
(g) July 31, 2019 Status Report—Complete Construction of permanent Facility at Hwy
73 Business Park
(h) August 31, 2019 Operational Report -Achieve employment of 7 additional full-time
permanent employees that are Port Arthur residents with an average
annualized payroll of$385,000; Total Port Arthur resident's payroll
for year 1 and 2 averaging$770,000 annualized.
(i) Payroll Report - Submit W-2's for Port Arthur residents from
March 31, 2020 January 1, 2019 to December 31, 2019
(0) August 31, 2020 Operational Report—KLV to maintain annualized payroll of
$770,000 for year ending December 31,2020
(k) March 31, 2021 Payroll Report—Submit W-2's for Port Arthur Residents from
January 1, 2020 to December 31, 2020
(i) August 31,2021 Operational Report—KLV to maintain annualized payroll of
$770,000 for year ending December 31,2021
(m) March 31, 2022 Payroll Report—Submit W-2's for Port Arthur Residents from
January 1, 2021 to December 31, 2021
(n) April 2022 Operational and Close Out Report
Interoffice
MEMORANDUM
To: Mayor, City Council, City ager
From: Floyd Batiste, CEO
Date: January 29, 2019
Subject: P.R.No. 20671; Council Meeting of February 5,2019
ATTACHED IS PROPOSED RESOLUTION NO. 20671
APPROVING AMENDMENT NO. 1 TO THE ECONOMIC
INCENTIVE CONTRACT & LOAN AGREEMENT BETWEEN
THE CITY OF PORT ARTHUR SECTION 4A ECONOMIC
DEVELOPMENT CORPORATION AND KLV VENTURES,INC.
P. R. No. 20671
1/25/2019 KVM
RESOLUTION NO.
A RESOLUTION APPROVING AMENDMENT NO. 1 TO THE
ECONOMIC INCENTIVE CONTRACT & LOAN AGREEMENT
BETWEEN THE CITY OF PORT ARTHUR SECTION 4A
ECONOMIC DEVELOPMENT CORPORATION AND KLV
VENTURES, INC.
WHEREAS, per Resolution 17-234 dated September 26, 2017, 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 KLV Ventures, Inc. ("KLV") in an amount of$326,000.00 to reimburse KLV
for equipment purchased for the expansion of their operations into the Highway 73 Business
Park in the City of Port Arthur; and
WHEREAS, KLV contracted to purchase approximately 2.9 acres of vacant land in the
Highway 73 Business Park for the purpose of the development of an office and parking facilities
for their transportation and logistics operations; and
WHEREAS, KLV has determined that due to un-anticipated infrastructure costs at the
Highway 73 Business Park, they will not move forward with the purchase of the property at the
Highway 73 Business Park and have leased property elsewhere in Port Arthur and are currently
operating out of that property; and
WHEREAS, the PAEDC Board of Directors at their regular Board meeting of February
4, 2019, will consider amending the performance milestone schedule in the Agreement with
KLV to reflect the change of location of KLV's Port Arthur facility from the Highway 73
Business Park to another location in the City of Port Arthur.
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. 1 to
the Economic Incentive Contract&Loan Agreement between PAEDC and KLV Ventures, Inc. as
denoted in the Amendment attached hereto as Exhibit "A".
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., 2019,
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
ATTEST:
Sherri Bellard, City Secretary
::161-;()0
APPROVED:
Floyd Batiste, AEDC 0
APPROVED AS TO FIRM:
Guy N. Goodson, PAEDC Attorney
APPROVED AS TO FORM:
Valecia R. Tizeno, City Attorney
vyev i C-)
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EXHIBIT "A"
FIRST AMENDMENT TO THE
ECONOMIC DEVELOPMENT CONDITIONAL GRANT AGREEMENT
BETWEEN
THE CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT
CORPORATION
AND
KLV VENTURES, INC.
WHEREAS, KLV Ventures, Inc. ("KLV") and the City of Port Arthur Section 4A
Economic Development Corporation ("PAEDC") entered into an Economic Development
Contract and Loan Agreement (the "Agreement") on pursuant to
Resolution No. 17-234;
WHEREAS, the Agreement provided that KLV would purchase approximately 2.9 acres
of vacant land in the Highway 73 Business Park for the development of an office and parking
facilities for their transportation and logistics operations;
WHEREAS, KLV has determined that due to un-anticipated infrastructure costs at the
Highway 73 Business Park, they will not move forward with the purchase of the property at the
Highway 73 Business Park and have leased property elsewhere in Port Arthur, specifically
and are currently operating out of that property;
WHEREAS,PAEDC Board of Directors considered amending the Performance Milestone
Schedule to reflect the new location of KLV's business operation; and
WHEREAS, the PAEDC Board of Directors agreed to amend the Agreement and
performance milestones at its February 4, 2019 regular meeting.
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 Economic Development Contract and Loan Agreement between
PAEDC and KLV Ventures, Inc. was approved by the PAEDC Board of Directors on February 4,
2018.
2. This Amendment to the Agreement shall be effective upon approval by the City of Port
Arthur, Texas.
3. The Introduction is amended as follows:
The Incentive Recipient is a Texas for profit corporation in Port Arthur, Texas. The
Incentive Recipient shall expand their operations at a new facility located at
, Port Arthur, Texas 77642 (the "Property"). The City of Port
Arthur Section 4A Economic Development Corporation ("PAEDC") will assist Incentive
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Recipient in this expansion by providing the hereinafter described conditional grant or
other incentives in exchange for the promise by Incentive Recipient of creation of
permanent jobs.
4. The Performance Milestone Schedule is amended as follows:
KLV VENTURES
MILESTONE SCHEDULE
Deadline Milestone
(a) Status Report for September 1, 2017 to December 31, 2017
December 31,2017
(b) March 31, 2018 Status Report—Business Operations from January 1, 2018 to March
31, 2018
(c) August 31, 2018 Operational Report-Achieve employment of 7 full-time permanent
employees that are Port Arthur residents with an average annualized
payroll of
$385,000.
(d) March 31, 2019 Payroll Report - Submit W-2's for Port Arthur residents from
January 1, 2018 to December 31, 2018
(e) August 31, 2019 Operational Report-Achieve employment of 7 additional full-time
permanent employees that are Port Arthur residents with an average
annualized payroll of$385,000; Total Port Arthur resident's payroll
for year 1 and 2 averaging$77Q,000 annualized.
(f) Payroll Report - Submit W-2's for Port Arthur residents from
March 31, 2020 January 1, 2019 to December 31, 2019
(g) August 31, 2020 Operational Report—KLV to maintain annualized payroll of
$770,000 for year ending December 31, 2020
(b) March 31, 2021 Payroll Report—Submit W-2's for Port Arthur Residents from
January 1,2020 to December 31, 2020
(1) August 31, 2021 Operational Report—KLV to maintain annualized payroll of
$770,000 for year ending December 31, 2021
(i) March 31, 2022 Payroll Report—Submit W-2's for Port Arthur Residents from
January 1,2021 to December 31,2021
(k) April 2022 Operational and Close Out Report
5. The recitals to this Amendment are incorporated and fully referenced in this
Amendment.
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6. Other than the amendment set forth herein, KLV Ventures, Inc. and PAEDC ratify and
affirm all terms and conditions of the Agreement dated
SIGNED AND AGREED to on this day of , 2019.
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 , 2019, by
as President and as Secretary on
behalf of City of Port Arthur Section 4A Economic Development Corporation.
Notary Public, State of Texas
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KLV Ventures,Inc.
By:
Its:
THE STATE OF TEXAS §
§
COUNTY OF JEFFERSON §
This instrument was acknowledged before me on the day of , 2019,by
behalf of KLV Ventures, Inc.
Notary Public, State of Texas
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