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Home My WebLink AboutPR 15400: EDC - BOWHEAD MANUFACTURING COMPANYinteroffice MEMORANDUM To: Mayor, City Council, City Manager From: Floyd Batiste, CEO Date: July 22, 2009 Subject: P. R. No. 15400; Council Meeting of July 28, 2009 Attached is P. R. No. 15400 as it is pertaining to approving closing the Economic Incentive Contract and Loan Agreement between Bowhead Manufacturing Company and the City of Port Arthur Section 4A Economic Development Corporation. PR15364.memo • 11- ~) ~ ~~~ I~AfIUFACTUAli1G (/,1 June 11, 2009 ~ .. 1C Port Arthur Economic Development Coproretion ~L~U~ IS ~ SSS////// ~~~"'""" Attn: Ms. Brenda Vaughn 4173 39°i St. PO Box 3934 Port Arthur, TX 77642 Re: Bovfiead Revised Milestone (T) Final Report Gear Ms. Vaughn, Bowhaad k hereby pleased fo submit our Milestone (T) Final Report In accordance to the- Economic Incentive Contract & Loan Agreement between the City of Port Arthur Section 4A Economic Development Corporation and Bowhead Manufacturing Company, LLC (Bowhead). j According to Page 2, (b) Performance by Bowhead, of the contract, Bowhead agreed to be In full complhance of the following promised performances: 1. Use Brent monies provided by the PAEDC exduslvely for (a) manufacturing equipmenk (b) ~~ Improvements to Its Port Arthur manufacturing facility, and (C) ofOce tacilittes and equipment In Port Arthur. 2 2006Isby emptoyinguatt eas 601~,foflfhe s~itaff with Port Arthurrres dents and re enuegto Port Argthur vendors. 3, Execute and comply with the stand-alone collateral agreements, to include the Commeroial Promlasary Note, Commerolal Security Agreement, and CerUflcation Regarding Lobbying. 4. Deliver to PAEDC any Landlord Lien Subordine9an Agreements. 5 contractuaAobga onsaf they fail to achievete perfotrmance miestone tatted w1011neffrer Mie t ne Schedule on Page 4 of the conftact. eowhead has performed and satisfied the requrlements of elf the above promised performances. Bowhead began and continues to manufacture, fabricate, and assemble pumps from the Port Arthur fecfliry, We continue to be in NII production producing 600GPM pumps for our US Government customers. Bowhead, has distributed a cumulative total of $2,689,600 from 2006 through 2008, exceeding the contract requirement of $1.5 million. We started with an onsite staff of 3 employees in 2006, end due to the Increase six (6)In 2008. Totaling the hiring of 38 emmployees frotm Part Arth0u0r a d Its ur~ourid ngicommu etresanother RewardM Labb tin on Au ust 11 i200b. We have since maintained wmpl eryrtcegwlth those agreements. on 9 9 Yi 9 9 Bowhead delivered an executed copy of the original Landlord Lien Subordination agreement (sublease) with Magnum Flre end Safety Systems In July of 2005. In October of 2007, we leased 26,000 square feet of warehouse apace from WUson Warehouse and provided She lease dooomentation to PAEDC. With reference to Item No. 5 above, In 2008, Bowhead experienced a standstill in productlon as testing for performance apeclllcation changes were being conducted on our pumps by our cuatomar. The testing process exceeded the estimated timeftame of six weeks to six months, thus generating decease in labor, AlaglgCarporalaHdgtr. CantwdaOfllee: Oper2lionsOflice HROfllrs: Flnance0lflw: 3201 C Street-Salle 801 19420 Golf Pala Plaza, Suite 310 408 Sandra DrNe 3315 Sob wallaceAve. 1011 SW KHddlal Wey, Suite 104 Anchore0e,AK99693 teeaburg,VA20175 TyleMVm,tdS39887 Hunlev0le,AL358!% Seaf0e,wA98134.1138 Phone 205.981.6280 I'hone6rl•~1.4022 Phone601~87fifi288 Phane258.392.3280 Phone 208.957,5260 .. . B. Vaughn /PAEDC 3ubJect: 8owhead Milestone (F) Final Report Detect: June 11, 2009 ~pge 2 oP 2 needs, and production for Bowhead. During that six month, we were unable to meet the scheduled milestone due to the delay and minor reporting errors. We provided documentation to PAEDC In January 2008 and March 2007, of Ifs situation and our Intentions and capabilities to fully meet the contractual obligagone. We provided PAEDC our resolution to meet and surpass the requirement of the contrail 6y purchasing more equipment, moving into a larger facility Tor manufacturing, hiring more employees, and acquiring another US dovernmeM contract. 8owhead la pleased to submit this Final Report to the PAEDC Board and Executive Director detailing our actual performance of the contract It Is Bowheads desire that the Board will deem the contract complete, thereby extinguishing the corollary agreements contained In Appendices B, C, D, and F. 3hauld you require additional informatbn, please do. not hesitate to contact our ConUacts Administrative Assis~nt, 7ewana Young, at (571) 291-4028, lawana vounaldtbowhead.com or the underefgned at (571) 291-4125, marv oachefdtbowhead.com. siROerely, .: ,!~G~~GZr cc~ Mary E. C3ache Director of Contracts ~. J i i I Paga~2 P. R. No. 15400 July 22, 2009 RESOLUTION NO. A RESOLUTION APPROVING CLOSING THE ECONOMIC INCENTIVE CONTRACT AND LOAN AGREEMENT BETWEEN BOWHEAD MANUFACTURING COMPANY AND THE CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION WHEREAS, on July 28, 2005, the City Council of the City of Port Arthur approved Resolution OS-203 authorizing an Economic Incentive Contract and Loan Agreement (the "Agreement") between Bowhead Manufacturing Company. L.L.C. ("Bowhead"} and the City of Port Arthur Section 4A Economic Development Corporation (the "PAEDC"); and WHEREAS, on August 16, 2005, the City Council of the City of Port Arthur approved Resolution OS-246, an Amendment to the Agreement between Bowhead and the PAEDC; and WHEREAS, on June 15, 2009, the Board of Directors of the PAEDC voted to approve this Agreement as complete, thereby, concluding the Agreement with Bowhead and directing the release of collateral securing the Agreement. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR: Section 1. That the facts and opinions in the preamble aze true and correct. Section 2. That the PAEDC is herein authorized to close the Agreement between Bowhead and the PAEDC and to release the collateral under the Agreement. Section 3. That a copy of the caption of the Resolution be spread upon the Minutes of the City Council. READ, ADOPTED AND APPROVED on this _ day of A.D., 2009, at a Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES: Mayor Councilmembers NOES: DELORIS "BOBBIE" PRINCE, MAYOR ATTEST: TERRI HANKS, CITY SECRETARY APPROVED: FLOYD BATISTE, PAEDC CEO APPROVED AS,TO FORM: ~' ,r lUttNr; ~~~ ` k707461 Page 2 ~~'~ BOWHEAD CLOSE-OUT REPORT Bowhead contract states that they shall distribute $1,292,500 for a combination of payroll & payments to Magnum over the 5 year term of the contract. They will distribute $129,250 in 2005, $258,500 per year for 2006- 2009 & $129,500 in the first half of 2010. Payroll & Payments # of Emnlovees # of PA Residents 2005 $ 180;277.06 3 2 2006 $ 242,013.93 ~7 4 2007 $1,119,931.68 30 14 2008 $1,047,622.35 27 9 Total $2,589,500.00 ~~ V