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Home My WebLink AboutPR 22238: EDC, APPROVING AMENDMENT NO. 1 TO THE ECONOMIC INCENTIVE AGREEMENT WITH CLIFFORD DISTILLING, LLC PORT*ARTHtJR ONOMIC DEVELOPMENT CORPORATIO% INTEROFFICE MEMORANDUM Date: November 9, 2021 To: The Honorable Mayor and City Council Through: Ronald Burton, City Manager From: George Davis, Interim PAEDC Chief Executive Officer RE: P.R. 22238—A Resolution approving Amendment No. 1 to the Economic Incentive Agreement between the City of Port Arthur Section 4A Economic Development Corporation and Clifford Distilling,LLC Introduction: The intent of this Agenda Item is to seek City Council's approval of an amendment to an Economic Incentive Agreement between the City of Port Arthur Section 4A Economic Development Corporation and Clifford Distilling, LLC. Background: On September 28, 2021, the City Council approved an Economic Incentive Contract and Loan Agreement between the City of Port Arthur Section 4A Economic Development Corporation and Clifford Distilling, LLC in an amount of$162,500.00 to assist Clifford Distilling in its startup business operating as a top shelf whiskey and rum distillery in downtown Port Arthur. In review of the contract, it was determined that the performance milestones and substitute credit amount were incorrect. The PAEDC Board of Directors approved amending the Agreement to correct the milestones and substitute credit amount. Budget Impact: None Recommendation: It is recommended that the City Council of the City of Port Arthur approve an amendment to the Economic Incentive Agreement between the City of Port Arthur Section 4A Economic Development Corporation and Clifford Distilling, LLC. P. R. No. 22238 11/5/2021 KVM RESOLUTION NO. A RESOLUTION APPROVING AMENDMENT NO. 1 TO THE ECONOMIC INCENTIVE CONTRACT AND LOAN AGREEMENT BETWEEN THE CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION AND CLIFFORD DISTILLING,LLC WHEREAS, per Resolution 21-411 dated September 28, 2021, the City Council of the City of Port Arthur approved an Economic Incentive Contract and Loan Agreement (the "Agreement") between the City of Port Arthur Section 4A Economic Development Corporation (the"PAEDC")and Clifford Distilling, LLC ("Clifford Distilling")in an amount of$162,500.00 to assist Clifford Distilling in its startup business operating as a top shelf whiskey and rum distillery in downtown Port Arthur;and WHEREAS,after review of the Agreement,it was discovered that performance credits to be provided to Clifford Distilling and the Performance Milestone Schedule were inaccurate and must be amended to reflect the approved credits and milestones including payroll per employee and total payroll; and WHEREAS, at their regular board meeting of November 1, 2021, the PAEDC Board of Directors approved amending the Agreement to reflect the corrected Performance Milestone Schedule as detailed in Amendment No. 1 to the Agreement,attached hereto as Exhibit"A". 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 and Loan Agreement between the Port Arthur Section 4A z, _.„ • Economic Development Corporation and Clifford Distilling, LLC 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., 2021, at a Meeting of the City Council of the City of Port Arthur, Texas,by the following vote: AYES: Mayor Councilmembers • NOES: Thurman Bartie,Mayor ATTEST: Sherri Bellard,City Secretary APPROVED: George avis, nterim PAEDC Chief Executive Officer #1170989 Page 2 APPROVED AS TO FORM: dir rank ►, ,, 'AEDC Attorney APPROVED AS TO FO : ilOPF Val!la • Tizeno, .4 o I y NI370989 Pape 3 Exhibit "A" ECONOMIC INCENTIVE CONTRACT & LOAN AMENDMENT NO. ONE TO AGREEMENT BETWEEN THE CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION CLIFFORD DISTILLING LLC This is an Amendment to an Economic Incentive Contract & Loan Agreement between THE CITY OF PORT ARTHUR ECONOMIC DEVELOPMENT CORPORATION (PAEDC) , and Clifford Distilling,LLC(Incentive Recipient). WHEREAS, the PAEDC and Clifford Distilling, LLC, entered into an Economic Incentive Contract & Loan Agreement (hereinafter referred to as the "Agreement"), effective , 2021; and WHEREAS, after review of the Agreement, it was discovered that Credits to be provided to Incentive Recipient and the Performance Milestone Schedule was inaccurate and must be amended to reflect the approved credits and milestones including payroll per employee and total payroll; and WHEREAS,the PAEDC Board approved amending the Agreement to reflect the corrected Performance Milestone Schedule; NOW, THEREFORE, for and in consideration of mutual covenants and agreements contained herein, and per Section 29 of the Agreement, the parties hereby agree to amend the Agreement as follows: Section 1. Credits identified in 5(c)(1)entitled Credits-Substitute Performance should be corrected to read as follows: (C) CREDITS—SUBSTITUTE PERFORMANCE Incentive Recipient may earn credits according to the following terms,to either reduce the duration of this Agreement or reduce the amount of liquidated damages in the event Incentive Recipient breaches the Agreement. (1) Starting on the effective date of the Agreement and for as long as Incentive Recipient performs as specified in Section 5(b)(1) of this Agreement, Incentive Recipient will receive a $1.00 credit for each $4.03 of payroll paid to residents of Port Arthur. PAYROLL TO NON-RESIDENTS CANNOT BE CREDITED. Section 2. The current Performance Milestone Schedule found in Paragraph 7 of the Agreement is to be replaced in its entirety with the following new schedule: CLIFFORD DISTILLING,LLC PERFORMANCE MILESTONE SCHEDULE (Amended November 2021) Deadline Milestone (a) DECEMBER 31, 2021 CLIFFORD DISTILLING, will issue a status report on their move into their new location in the 235 Procter Street and the retrofitting of the building and installation of equipment completion date to PAEDC (b) JUNE 30, 2022 Achieve full-time permanent employment of four(4) Port Arthur Residents with an average annualized payroll of$32,760.00 per employee (c) DECEMBER 31, 2022 CLIFFORD DISTILLING, average annualized payroll for the four permanent Port Arthur Residents is not less than$131,040 (d) MARCH 31, 2023 CLIFFORD DISTILLING, will provide PAEDC with W-2's for all permanent Port Arthur Residents Employed during 2022 (e) June 30,2023 CLIFFORD DISTILLING, will employ an additional four(4) permanent Port Arthur Residents with an average annualized payroll of$32,760.00 per employee (f) DECEMBER 31, 2023 CLIFFORD DISTILLING, total payroll for permanent Port Arthur Resident employees for years ending 2022 and 2023 should be not less than$393,120 (g) MARCH 31, 2024 CLIFFORD DISTILLING, will provide PAEDC with W-2's for permanent Port Arthur Resident employees Employed during 2023 (h) JUNE 30, 2024 CLIFFORD DISTILLING,will maintain the eight(8)Port Arthur residents employed at an average annual payroll of $32,760.00 (i) DECEMBER 31, 2024 CLIFFORD DISTILLING, total payroll for permanent Port Arthur Resident employees for years ending 2022, 2023, and 2024 should be not less than$655,000 (j) MARCH 30,2025 CLIFFORD DISTILLING, will provide PAEDC with W-2's for permanent Port Arthur Resident employees Employed during 2024 (k) JUNE 30, 2025 Once all contractual obligations are met, PAEDC closes file CLIFFORD DISTILLING file. Section 3. The Amendments outlined in Sections 1 and 2 are the only changes to the original Economic Incentive Contract & Loan Agreement and all other provisions of the original Agreement, any approved and Exhibits not in conflict with this Amendment shall remain in full force. Section 4. This Amendment shall be effective upon the execution of this Amendment by both parties. THE CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION By: Name: Darrell Anderson Title: President Date: A 1"1'hST: PAEDC Secretary CLIFFORD DISTILLING, LLCD/B/A CLIFFORD DISTILLING By: Name: . Title: Date: