The URL can be used to link to this page

Home My WebLink AboutPR 21284: EDC, AMENDMENT NO. 1, STANDARD ALLOYS INCORPORATED Interoffice MEMORANDUM To: Mayor, City Council, City Manager From: Floyd Batiste, CEO Date: February 11, 2020 Subject: P.R. No. 21284; Council Meeting of February 18, 2020 ATTACHED IS PROPOSED RESOLUTION NO. 21284 APPROVING AMENDMENT NO. 1 TO THE ECONOMIC INCENTIVE CONTRACT & LOAN AGREEMENT BETWEEN THE CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION AND STANDARD ALLOYS INCORPORATED; FUNDS AVAILABLE IN EDC ACCOUNT NO. 120-1429-582.59-01 P. R. No. 21284 2/10/2020 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 STANDARD ALLOYS INCORPORATED; FUNDS AVAILABLE IN EDC ACCOUNT NO. 120-1429-582.59-01 WHEREAS,per Resolution 18-507 dated December 4,2018,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 Standard Alloys Incorporated ("Standard Alloys") in an amount of $1,024,100.00 for the relocation of its business enterprises into the Spur 93 Business Park(the "Business Park"); and WHEREAS, the Agreement provided that Standard Alloys would develop a state-of-the- art office, machine shop and repair, testing facility and foundry; and WHEREAS, Standard Alloys cannot build the performance testing facility and foundry with the current available electrical voltage in the Business Park; and WHEREAS, the PAEDC Board of Directors at their special Board meeting of February 10, 2020, approved providing Standard Alloys an additional incentive in the amount equal to fifty percent(50%)of Entergy's cost to bring updated electrical voltage to 2200HP in the Business Park needed for the performance testing facility and foundry as shown in Exhibit "A"; and WHEREAS, the total estimated cost for the updated electrical voltage is approximately seven hundred twenty-five thousand dollars and no/100 ($725,000.00); and WHEREAS, PAEDC would agree to provide Standard Alloys approximately three hundred sixty-two thousand five hundred dollars and no/100 ($362,500.00); and WHEREAS, Standard Alloys has agreed that in addition to increasing the electrical voltage to 2200 HP, they will further increase the electrical power to 5000 HP within the thirty- six (36)months of the execution of this Agreement or March 30, 2024; and 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 Agreement between PAEDC and Standard Alloys to increase the power distribution from 2200 HP to 5000HP within thirty-six (36) months from the execution of this Agreement or March 30, 2024, whichever is later. 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., 2020, at a Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES: Mayor Councilmembers NOES: • Thurman Bartle, Mayor #1726451 Page 2 ATTEST: Sherri Bellard, City Secretary APPROVED: Floyd Batiste, PAEDC CEO APPRO# AS : FORM: Guy N. Goodson, PAEDC Attorney APPROVED AS TO FORM: (�e€ Nt. e ,i't Valecia R. Tizeno, City Attorney APPROVED AS TO AVAILABILITY OF FUNDS: YJ0L, 131 Kandy Daniel,Ynterim Finance Director #1726451 Page 3 EXHIBIT "A" FIRST AMENDMENT TO THE ECONOMIC DEVELOPMENT CONDITIONAL GRANT AGREEMENT BETWEEN THE CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION AND STANDARD ALLOYS INCORPORATED WHEREAS,Standard Alloys Incorporated("the Incentive Recipient")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. ; and WHEREAS, the Agreement provided that Incentive Recipient would purchase approximately 22 acres of property located on Spur 93 in Port, Arthur, Texas known as the PAEDC Business Park (the "Business Park"); and WHEREAS, the Agreement provided that Incentive Recipient would develop a state-of-the-art machine shop and repair facility with a performance test stand/foundry; and WHEREAS,Incentive Recipient cannot build the performance test stand/foundry with the current available electrical voltage in the Business Park; and WHEREAS,PAEDC will provide Incentive Recipient an additional incentive in the amount equal to fifty percent (50%) of Entergy's cost to bring updated electrical voltage in the amount of 2200HP to the Business Park needed for the performance test stand/foundry; and WHEREAS, the total estimated cost for updated electrical voltage om the amount of 2200HP is approximately seven hundred and twenty-five thousand dollars and no/100 ($725,000.00); and WHEREAS, PAEDC would agree to provide Incentive Recipient approximately three hundred and sixty-two thousand five hundred dollars and no/100 ($362,500.00); and WHEREAS, Incentive Recipient shall upgrade the electrical voltage to 5500HP within the later thirty-six(36)months of the execution of this Agreement or March 30, 2024 ; and WHEREAS, the performance test stand/foundry will be equal to an additional twelve million dollar capital investment in the Business Park by Incentive Recipient; and WHEREAS, the Incentive Recipient would increase the current Letter of Credit in the amount of one million twenty four thousand and one hundred dollars and no/100 ($1,024,100.00) by three hundred and sixty-two thousand five hundred dollars and no/100 ($362,500.00) to securitize the additional incentive amount; and #1725443 • WHEREAS, PAEDC Board of Directors considered amending the Performance Schedule to reflect the revised timeline for the construction and completion of the performance test stand/foundry; and WHEREAS, the PAEDC Board of Directors agreed to amend the Agreement and performance milestones at its February 10, 2020 special 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 Incentive Recipient was approved by the PAEDC Board of Directors on February 10, 2020. 2. This Amendment to the Agreement shall be effective upon approval by the City of Port Arthur, Texas. 3. Section 5(b) is amended as follows; (1) Incentive Recipient shall meet the conditions precedent contained in this Agreement and, subject to the terms and conditions of the Purchase Agreement, shall close on the purchase of the Property for the development of the Project no later than the deadline as shown in the Performance Milestone Schedule in this Agreement. (2) Incentive Recipient shall begin construction on the Project no later than the deadline as specified in the Performance Milestone Schedule in this Agreement. (3) Incentive Recipient shall have applied for its certificate of occupancy within eighteen (18) months from the close of the Purchase Agreement or at such other time thereafter as may be reasonably agreed upon between PAEDC and Incentive Recipient,and Incentive Recipient shall occupy its Project on the Property not later than six (6)months after receipt of its certificate of occupancy. (4) Incentive Recipient shall upgrade the electrical voltage to 5500HP within the later thirty-six (36)months of the execution of this Agreement or March 30, 2024; (5) Incentive Recipient shall continually conduct business operations during normal business hours for a period that is the lesser of(i)four(4)years from the date of its receipt of certificate of occupancy for the Project on the Property or (ii) the Termination Date. (6) Incentive Recipient shall generate a total of approximately $665,808.00 in annual wages, including any benefits by December 2021. #1725443 (7) Incentive Recipient shall provide PAEDC a Letter of Credit in the amount of the incentive. (8) Incentive Recipient will be required to meet the conditions and agreements set forth in the First Source Referral Agreement attached hereto as Exhibit"F" and made a part hereof for all purposes. (9) On demand by PAEDC and in response to Incentive Recipient's failure to achieve a performance milestone, Incentive Recipient shall provide PAEDC with reasonable assurances,proposed by Incentive Recipient and reasonably acceptable to PAEDC, that it has both the intention and the capabilities to perform fully its contractual obligations. 4. The Performance Milestone Schedule is amended as follows: STANDARD ALLOYS INCORPORATED Deadline Milestone (a) Standard Alloys Engineering close on the purchase of 22 acres OCTOBER 31, 2020 of land in the Spur 93 Business Park. (b) Standard Alloys Engineering issue a status report on building DECEMBER 31, 2020 construction and equipment installation estimated completion date to PAEDC CEO (c) DECEMBER 31, 2021 Achieve full-time permanent employment of four (4) Port Arthur residents with an annualized payroll of $221,936 (d) MARCH 30, 2021 Standard Alloys Engineering provides PAEDC with a copy of Property Tax Statement (e) Standard Alloys Engineering maintain employment of Port DECEMBER 31, 2021 Arthur residents with an annualized payroll of $221,936; total accumulated payroll ending December 31, 2021 over two year period of $443,872 MARCH 30, 2022 Standard Alloys Engineering provides PAEDC with a copy (f) of Property Tax Statement Standard Alloys Engineering maintain employment of Port DECEMBER 31, 2022 Arthur residents with an annualized payroll of $221,936; (g) total accumulated payroll ending December 31, 2022 of over three year period of $665,808 MARCH 30, 2023 Standard Alloys Engineering provides PAEDC with a copy (h) of Property Tax Statement #1725443 Standard Alloys Engineering issue a business operational (i) JULY 30, 2023 report to PAEDC CEO on company Phase II construction plans MARCH 30, 2024 Standard Alloys Engineering will have completed electrical (1) upgrade to the 5 500 HP. (k) MARCH 30, 2024 Standard Alloys Engineering provides PAEDC CEO a copy of Property Tax Statement (1) JULY 30, 2024 PAEDC close Standard Alloys Engineering file 5. Other than the amendment set forth herein, Incentive Recipient and PAEDC ratify and affirm all terms and conditions of the Agreement dated #1725443 [SIGNATURE PAGE TO FOLLOW] CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION SIGNED AND AGREED TO on the day of , 2020. By: By: President Secretary EDC Representative EDC Representative #1725443 STANDARD ALLOYS INCORPORATED SIGNED AND AGREED TO on the day of , 2020. By: Title Acknowledgment #1725443