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HomeMy WebLinkAboutPR 11943:PRAXAIR INC. AGREEMENTinteroffice MEMORANDUM To: From: subj ect: Date= Mayor, City Council, City Manager Mark T. Sokolow City Attorney /~ ~ P. R. NO. 11943; Council Meeting October 15, 2002 October 7, 2002 Attached is P. R. No. 11943 authorizing the City Manager to execute an Industrial District Agreement with Praxair, Inc. The "in lieu of tax" payments will be. S200,000 per year from 2006 to 2008 for an $80,000,000 hydrogen facility to be built on Motiva property. MTS/ts Attachment CC: VIA FACSIMILE (203) 837-2545 PRAXAIR, INC. Attn: Peter Bedanes 39 Old Ridgebury Road Danbury, CT 06810 VIA FACSIMILE (713) 241-3095 PRAXIAR, INC. Attn: Gary Erickson 222 Pennbright, Suite 300 Houston, TX 77090 VIA FACSIMILE (7130 241-3095 MOTIVA ENTEPRISES, LLC c/o Danny Harris Senior Property Tax Representative P. O. Box 4369 Houston, TX 77210 z .pr11943 .memo P. R. No. 11943 10/04/02 - ts RESOLUTION NO. A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE AN INDUSTRIAL DISTRICT AGREEMENT WITH PRAXAIR, INC. WHEREAS, the City Council of the City of Port Arthur hereby deems it to be in the best interests of the citizens of the City of Port Arthur for the City Manager to execute an Industrial District Agreement between the City of Port Arthur and Praxair, Inc., a copy of which is attached as Exhibit ~A". NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF TEE CITY OF PORT ARTHUR: Section 1. That the facts and opinions in the preamble are true and correct. Section 2. That the City Manager is authorized to execute an Industrial District Agreement between the City of Port Arthur and Praxair, Inc., denoted in Exhibit "A". the ist day of January, in substantially the same form as The effective date of the agreement is 2003. Section 3. be spread upon the Minutes of the City Council. READ, ADOPTED AND APPROVED on this __ day of , A.D., 2002, at a Regular Meeting of the City Council of the City of Port Arthur, Texas, Mayor That a copy of the caption of this Resolution by the following vote: AYES: , City Council NOES: ATTEST: OSCAR ORTIZ, MAYOR EVANGELINE GREEN, CITY SECRETARY APPROVED AS TO FORM: MARK T. SOKOLOW, CITY ATTORNEY APPROVED FOR ADMINISTRATION: STEVE FITZGIBBONS, CITY MANAGER Z .pr119¢3 : PRAXAIR Making Our Planet More Productivt, Gary Erickson 222 Pennbright Drive, Ste 300 Houston. TX 77090 281-872-2148 Fax 281-872-2220 October 4, 2002 Mr. Mark T. Sokolow City Attomey City of Port Arthur City Hall 444 4th Street Port Arthur, Texas 77641 Subject: Industrial District Agreement Dear Mr. Sokolow: Please find attached five (5) executed copies of the Industrial District Agreement which outline Praxair's agreed to "in lieu of tax" payments to the City of Port Arthur from 2003 through 2008, assuming Praxair proceeds with the construction of the Hydrogen Facility at Motiva Enterprises LLC property. The Hydrogen Facility currently has an engineered estimated capital cost of eighty million dollars ($80,000,000) and an anticipated electrical usage of eight (8) to twelve (12) megawatts of electrical power (8,000 - 12,000 kilowatts). Praxair looks forward to becoming a long term partner with the City of Port Arthur. Sincejoly. ~T ~/~ / ~rY,[~/Ericks°n (.j,/Execfitive Account Manager Praxair, Inc. CCi Danny Harris, Equiva Services LLC Dave Grant, Praxair STATE OF TEXAS § g0UNTY OF JEFFERSON § INDUSTRIAL DISTRICT AGREEMENT WITH pRAXAIR, INC. LLC, March 1, WHEREAS, WHEREAS, the City of Port Arthur and Motiva Enterprises, entered into an Industrial District Agreement, effective on 2002 and LLC to that was approved by Resolution No. 02-28; this Agreement requires Motiva Enterprises, pay the City the following: YEARS: AMOUNT OWED: DUE DATE: 000 October 000 October 000 October 000 October 000 October 000 October 000 October 2002 $3,450 2003 $3,450 2004 $3,700 2005 $3,700 2006 $3,700 2007 $3,700 2008 $3,700 15, 2002 15 2003 15 2004 15 2005 15 2006 15 2007 15 2008 WHEREAS, this Industrial District Agreement will expire on December 31, 2008 unless extended by the City of Port Arthur; and WHEREAS, Praxair, Inc., hereinafter denoted as the "Company" plans to build a Hydrogen Facility on a portion of the Motiva Enterprises, LLC property more particularly described in Exhibit "A"; and WHEREAS, the Company plans to make a capital expansion or improvement in the timetables and values as described in Exhibit ~B"; and W~EREAS, the address the following: described in Exhibit ~A" City of Port Arthur and the Company wish to (1) health and safety issues on the land and at any existing plant or at any plant that may be built thereon and procedures for the City's review thereof, (2) needs of the City to have a stable revenue source that is not materially affected by appraisal litigation, minorities, and companies; and W~EREAS, the City of Port Arthur desire to enter an Industrial District property described on Exhibit ~A" that (3) the need to define backup services provided by the City, (4) employment opportunities for Port Arthur residents, and (5) the terms of an Agreement; ("City") and the Company agreement with respect to is within the extraterritorial jurisdiction of the City; and W~ER~AS, the City of Port Arthur and the Company agree that there has been full and adequate consideration for the Industrial District Agreement with the Company; and W~ER~AS, this Agreement is authorized under Section 42.044 Local Government Code, Vernon's Texas Code Annotated, and that the parties agree that the following terms are reasonable, and not unduly restrictive of business activities; appropriate, and Agreement W~EREAS, Motiva Enterprises, LLC agrees to the terms of this and agrees that if Praxair, Inc. fails to make payments hereunder, the City can annex the necessary strip of property of Motiva Enterprises, LLC, of at least 1000 feet in width as to comply with Section 43.054 Local Government Code, Vernon's Texas Code Annotated, up to and including the property listed in Exhibit "A"; and WHEREAS, all parties find that this Agreement as delineated herein is beneficial to each party. NOW, THEREFORE, in consideration of the promises and the mutual agreements of the parties contained herein, the City of Port Arthur and the Company agree with each other as follows: Section 1. Payments by the Company (a) For the years 2003, 2004, 2005, 2006, 2007 and 2008, Praxair, Inc., the company, shall only pay to the City of Port Arthur the amounts delineated in Section l(b) so long as this Industrial District Agreement is in full force and effect and all of the property described in Exhibit "A" is not annexed by the City of Port Arthur. These amounts are in addition to the amounts to be paid by Motiva Enterprises, LLC to the City of Port Arthur as per their March 1, 2002 Agreement. (b) The "in lieu of tax" payments by Praxair, Inc. shall be made as follows: YEARS: AMOUNT OWED: .DUE DATE: 2003 $0.00 October 15, 2003 2004 $0.00 October 15, 2004 2005 $0.00 October 15, 2005 2006 $200,000 October 15, 2006 2007 $200,000 October 15, 2007 z .~otiva 5agreement 3 2008 $200,000 October 15, 2008 (c) the City of Enterprises, The total Kin lieu of tax" payments to be received by Port Arthur from Praxair, Inc. and/or by Motiva LLC, shall therefore be the following: YEARS: AMOUNT OWED: 2002 $3 2003 $3 2004 $3 2005 $3 2006 $3 2007 $3 2008 $3 DUE DATE: (d) the' Company, Arthur. Section 2. 450,000 450,000 700,000 700,000 900,000 900,000 900,000 October 15 October 15 October 15 October 15 October 15 October 15 October 15 2002 2003 2004 2005 2006 2007 2008 The City shall not refund any monies previously paid by either directly or indirectly, to the City of Port If requested by the Company, the City of Port Arthur's Fire Department shall provide backup fire suppression support and the City of Port Arthur's Police Department shall assist in providing an evacuation route in the case of a fire or a chemical release at the Company plant located in the City's extraterritorial jurisdiction. Nevertheless, the Company shall be primarily liable for taking such precautions as is expected in the industry and as is required by federal, state and local law, including the standard codes as delineated and referenced in the Standard Fire Prevention Code as published each year by the Southern Building Code Congress International, Inc. to prevent fires, explosions and chemical releases and to provide an z .motiva 5agreement 4 evacuation. The Company shall employ or provide sufficient fire suppression personnel and equipment to provide an initial and primary fire suppression response, as well as to control and abate chemical releases. The Company shall provide the City's Fire Chief and Police Chief with Emergency Response Plans for any plants, refineries, chemical operations or other hazardous operations that take place on the land described in Exhibit "A". If there is a fire and the City is requested to provide initial and primary fire suppression services or if a clean-up is required under Section 2201.3.2.1 of the Standard Fire Prevention Code, the company will pay to the City the costs and expenses incurred by the City and any of its departments. Section 3. The Company shall promptly notify the central dispatch office which serves the City of Port Arthur's Fire Chief, Police Chief and the City of Port Arthur's Emergency Management Coordinator of all incidents involving fires, serious injuries, deaths, and chemical releases that create a health and safety hazard to the community. Section 4. It is specifically stipulated that nothing in this Agreement will in any manner limit or restrict the authority of the City to annex all or part of said lands and facilities during the period of this Agreement if the City should determine that such annexation is reasonably necessary to promote and protect the general health, safety and welfare of the persons z .motiva 5agreement 5 residing within or adjacent to the City; provided, however, that the City agrees that such annexation prior to October 1, 2008 will not be made for revenue purposes only. Notwithstanding, the parties agree and consent that the City can annex if a bill is adopted by the State legislature which limits or restricts the authority of the City to annex all or part of said land and facilities. In the event of such annexation, the company will not be required to make further payments under this Agreement for any calendar year commencing after such annexation with respect to property so annexed, but shall nevertheless be obligated to make full payments for the year during which such annexation becomes effective, if the annexation becomes effective after January 1st of said year. Praxair, Inc. shall not be required to pay ad valorem taxes to the City of Port Arthur for the same period of time that Praxair, Inc. has already paid an "in lieu of tax" payment, with respect to the property described in Exhibit "A" to this agreement. In case the property described in Exhibit ~A" is annexed prior to December 31, 2008, the City will remit to the Company any taxes paid to the City in excess of the "in lieu of tax" payments as described in Section 1 as an economic incentive program as allowed under Chapter 380 Local Government Code. This partial remission of taxes (Economic Incentive Program) will only be applicable until December 31, 2008. If the annexation laws are changed so that the City can no longer annex the property of the Company, the Company agrees that it will continue to annually pay to the City of Port Arthur the "in lieu of tax" payments delineated in Section 1 until December 31, 2008 and it will thereafter continue to pay the City an ~in lieu of tax" payment of 75% of the company's appraised value times the City's tax rate for so long as it or its assignees and successors owns the property as described in the attached Exhibit ~A". Payments will be due on October 15tn of each year. Pursuant to Section 42.044 Local Government Code, the company agrees and consents that the City has the option, in the City's sole discretion if the annexation laws are changed so that the City can no longer annex the property of the company, to extend this agreement and that the Company will continue to be obligated to pay the City "in lieu of tax" payments of 75% of the company's appraised value times the City's tax rate for successive periods not to exceed fifteen (15) years each. The appraised value of the Company is the value as denoted by the Jefferson County Appraisal District and includes all of the land, buildings, goods, equipment, inventory and other property that is or will be located in or on the property described in the attached Exhibit UA". This also includes the appraised value of any property that is located in a free trade zone or in any other type of federal, state or local zone. Section 5. The parties agree that the City has the sole discretion after October 1, 2008 to annex the property in Exhibit "A" or to enter into negotiations on the payment by the company of additional ~in lieu of tax" payments. Section 6. The present owners of the property described in Exhibit ~A" are listed in Exhibit "C". If the Company only owns or possesses a partial interest in any of the parcels or tracts described in Exhibit ~A" to this Agreement, the City of Port Arthur reserves the right to annex that tract or parcel if the other owners do not pay an "in lieu of tax" payment for their interest in the property. If the City annexes a tract or tracts, the total ~in lieu of tax" payment will be reduced by the same percentage as the appraised value of the tracts under the contract are reduced. Specifically, the City can annex the Motiva Enterprises, LLC property up to, and including, the Praxair, Inc. site, if (1) Motiva Enterprises, LLC does not pay its ~in lieu of tax" payments as denoted in their March 1, 2002 agreement; (2) Praxair, Inc. does not make the payments as stated herein; or (3) other owners do not pay their "in lieu of tax" payments. Any of the companies listed in Exhibit ~C" can, at their discretion, make the "in lieu of tax" payments of other companies as to avoid annexation and the companies that make the payments can seek reimbursement from the defaulting companies. Section 7. The City will not commence annexation proceedings prior to October 1, 2008 for the Company's property z .~tiva. 4 agreement ~ as delineated in Exhibit "A" to this Agreement under Chapter 43 of the Local Government Code or file litigation in District Court to abate or prevent a nuisance or seek a civil penalty under Sections 54.016, 54.017, and 217.042 Local Government Code for ~health, safety and welfare concerns" until written notice of the concerns have been delivered to the Company, and they have had an opportunity to respond and to address the City Council in open session. Section 8. If there is a dispute as to whether there is a health, safety and welfare concern for an event that occurred pri~r to October 1, 2008, the matter can, at the request of either party, be submitted to arbitration before an arbitrator selected from a panel supplied by the American Arbitration Association. The arbitration shall take place in Jefferson County or at such other locations as the parties agree to. The request for arbitration must be demanded in writing within ninety (90) days of the initial written complaint from either party to this agreement or rights to the arbitration shall be waived. The costs of the arbitration shall be shared equally between the two parties. The arbitration process shall be completed within ninety days from the date the arbitrator is selected, and if it is not so completed, either party may proceed with annexation or litigation as they so desire. Section 9. When hiring, the Company shall continue to seek z. ~ot ira. 4agreement 9 qualified applicants by advertising in the Port Arthur News as to give Port Arthur residents a fair opportunity to apply for employment with the Company for work on the plants that are located or to be located on the land described in Exhibit ~A". The Company shall also continue to give Port Arthur companies a fair opportunity to sell goods and services to the Company. For major new capital expansions, the Company shall also include advertising for construction and permanent jobs in the local market including radio stations in Port Arthur and shall also include recruitment through the Texas Work Force Commission in Port Arthur, Lamar State College in Port Arthur, PAISD, the Black Pastor's Association and the Ministerial Alliance, the Port Arthur NAACP and local labor unions. For major new capital expansions, the Company shall also meet every other month or at other intervals mutually agreed on with City officials to monitor progress on hiring and hiring efforts and to try to make adjustments in the recruitment process if needed. The Company will also have a local hiring facility in Port Arthur or in Port Arthur's Extraterritorial Jurisdiction for both the retention/selection of new employees and contractors. Section 10. This agreement or the rights and obligations thereunder can be assigned in whole or p~rt with the written consent of the City Council, by a duly adopted Resolution, which will not be unreasonably withheld. If the Company desires to make such an assignment, it shall make a written request to the City Council attaching (1) a description of the new Company (2) financial statement of the new Company (3) proposed contract between the companies and (4) the portion or portions of the plant or plants to be assigned. Section 11. The City encourages capital expansion on the land described in Exhibit ~A" and the City agrees to act in good faith to negotiate reasonable incentive programs with the Company as such new projects are contemplated. This includes major new capital expansions that are not delineated in Exhibit ~B" since all. parties agree that reasonable incentive programs should be offered and that the Company expects to pay and should pay reasonable "in lieu of tax" payments on new capital projects. Section 12. It is agreed by the parties to this agreement that the company and the City have the right to seek equitable relief, including specific performance of this'agreement. Section 13. The Company shall allow authorized employees and/or representatives of the City who have been designated and approved by the City Council, Mayor or the City Manager to have access to the Company's land and/or plants during the term of this AGREEMENT to inspect the plants and any improvements thereto to determine compliance with the terms and conditions of the AGREEMENT. Ail inspections will be made at mutually agreeable times and will only be conducted in such manner as to not unreasonably interfere with the construction and/or operation of the Company. All inspections will be made with one or more representatives of the Company and in accordance with the company safety standards. Section 14. The Company shall certify the commencement and completion date of the contemplated improvements described in Exhibit ~B" herein. Additionally, the Company shall furnish or make available for inspection the following information or written statements to the City at least every six months during the construction period of capital improvements: (1) Statement by Company describing the status of construction of the contemplated improvements, percentage of construction completed, construction schedule and Company's estimate of taxable value of constructed improvements on the date of the statement; and (2) Statement by Company of numbers of Port Arthur residents, minorities, and companies hired and amount of Port Arthur goods and services purchased; and (3) Any information, documents or records of any kind reasonably necessary for the city's evaluation of Company's compliance with the.terms and conditions of this agreement and the City's guidelines, provided that Company shall not be required to furnish any information, documents, or records which a reasonable prudent company under the same or similar circumstances would consider to be harmful to its business operations. Company's statement described above shall be verified by company's project manager or other appropriate representative. Section 15. Company agrees to annually furnish information necessary for the City to evaluate Company's compliance with the terms and conditions of this AGREEMENT. Company further agrees that on or before March 1st of each year of this AGREEMENT, Company shall provide the City an annual report/statement of compliance with this AGREEMENT. Section 16. By acceptance Of this AGREEMENT and/or benefits conferred hereunder, Company represents and warrants that its undersigned agent has complete and unrestricted authority to enter into this AGREEMENT and to obligate and bind Company to all of the terms, covenants and conditions contained herein. Section 17. Any notice provided for in this contract shall be given in writing to the parties hereto by certified mail, return receipt requested, TO CITY: City Manager CITY OF PORT ARTHUR 444 4tn Street Port Arthur, TX 77640 addressed as follows: TO THE COMPANY: PRAX/%IR, INC. C/O David K. Grant Economic Development Coordinator 175 East Park Drive P. O. Box 44 Tonawanda, NY 14151-0044 13 Section 18. This agreement is effective the 1st day of January/, 2003 and shall expire on the 31st day of December 2008 unless extended by the City of Port Arthur. SIGNED AND AGREED TO on the~h~ day of ~~ , 2002. PRAXAIR, INC. S~ED BY: SIGNED AND AGREED TO on the /day of 0~f~'w~' 2002. CITY OF PORT ARTHUR, TEXAS WITNESSED BY: BY: CITY SECRETARY SIGNED AND AGREED TO 2002. on the MOTIVA ENT~LC WITNESSED BY: Page 1 of 2 ~XHIBITA The Hydrogen Facility will lie on a portion of Motiva's property ,,within the pa, rcel bounded north ofW. 11th Street to the south, east of South "W Road to th~ west, west of South "T" Road to the east, and south of Townsend Road (also known as Chemical Plant Road) to the north. The dimensions of such parcel are approximately 400' (N-S) by 500' (E-W), together with part of the parcel bounded by W. 11th Street to the south, South "W" Road to the east, Townsend Road to the north, and the storm water drainage canal to the west. The approximate dimensions of such partial parcel are 400' (N-S) by 130' (E-W). A portion of the Hydrogen Facility will also lie on a portion of Motiva's property within the parcel bounded north of Townsend Road to the south, east of South "W" Road to the west, west of South "T" Road to the east, and south of the Railroad Tracks to the north. The dimensions of this parcel are approximately 200' (N-S) by 60' (E-W). The black highlighted portion of the drawing on the second page of this Exhibit depicts the portions of Motiva's property on which the Hydrogen Facility is expected to be located. '- SABINE G/~S STATION STAR LEASE SITE II II II II II II II II II II II HUNTSMAN CHEMICAL CO. 'L II 4' N2 I AU ~ FLARE LOU FLARE FLARE Page 2 of 2 C Hydrogen Facility -- O~ II RTU 1 HTU P HTU 4 LCDU TATION ( 11 £RU III Illl 1 Illl II III I II Ill I RESERVO: [en Facility , RESERVOIR 3 RESERVE II o JL___ ~NT[RPRISES EXHIBIT ~B" The Hydrogen Facility is intended to be constructed and operated on the property of Motiva Enterprises LLC as described in Exhibit A. The Hydrogen Facility, if constructed, will have a capital value of approximately $80 million dollars. The construction period of the Hydrogen Facility is anticipated to be 16-18 months. EXHIBIT "C" Huntsman Corporation and Ethyl Additives Corporation jointly owns a twenty-five (25%) described in the City's dated March 1, 2002. · Tract · Tract · Tract interest in the following tracts as agreement with Motiva Enterprises, LLC, · Tract IV out of Tract XIV, · Tract V out of Tract XIV, I out of Tract XIV, II out of Tract XIV, Parcel D III out of Tract XIV, Parcel E Parcel F Parcel G Parcel C (28.850 acres) (66.004 acres) (30.848 acres) (30.677 acres) (14.811 acres) Motiva Enterprises, LLC owns the remaining interests in these tracts as well as in the tracts described in the City's Agreement with Motiva Enterprises, LLC, dated March 1, 2002. Praxair, Inc. is leasing property as described in Exhibit "A" from Motiva Enterprises, LLC.