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Home My WebLink AboutPR 22806: AMENDMENT TO THE IDA WITH THE CITY OF PORT, PORT ARTHUR LNG, LLC AND PALNG. P. R. No. 22806 09/30/22 ht RESOLUTION NO. A RESOLUTION AUTHORIZING THE EXECUTION OF THE FIRST AMENDMENT TO THE INDUSTRIAL DISTRICT AGREEMENT BETWEEN THE CITY OF PORT ARTHUR, PORT ARTHUR LNG, LLC AND ITS SUBSIDIARY, PALNG COMMON FACILITIES COMPANY, LLC WHEREAS, on June 4, 2022, the City Council adopted Resolution No. 19-245 authorizing an Industrial District Agreement (IDA) with Port Arthur LNG, LLC and its subsidiary, PALNG Common Facilities Company, LLC (herein referred to collectively as "PALNG"), which will commence on Tax Year 2023 (January 1, 2023); and WHEREAS, on September 16, 2022, PALNG submitted a formal request, attached hereto as Exhibit "A", to respectfully extend the commence period from Tax Year 2023 to Tax Year 2026 (January 1, 2026), due to the onset the COVID-19 pandemic which constituted a "Force Majeure Event" as provided in Section 20 of the IDA; and WHEREAS, the City Council of the City of Port Arthur finds it in the best interests of the citizens of Port Arthur to execute the First Amendment to the Industrial District Agreement with PALNG pursuant to Sections 42.044 and 212.172 of the Texas Local Government Code, and Article 1, Sections 5 and 6, of the City's Charter. 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 are true and correct. Section 2. That the City Council hereby authorizes the City Manager to execute the First Amendment to the Industrial District Agreement with Port Arthur LNG, LLC and its subsidiary, PALNG Common Facilities Company, LLC (also referred to as "PALNG"), in substantially the same form as attached hereto as Exhibit"B". 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, this day of , 2022 AD, at a Regular 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 AS TO FORM: Valecia R. i o i Attorney APPROVED FOR ADMINISTRATION: Ronald Burton, City Manager Exhibit "A" SE M P RA James R.Asay Director—Corporate Tax Sempra Energy 488 8'h Avenue,HQ08N1 San Diego,CA 92101 Tel:619-696-4836 Mob:619-207-8329 jasay@sempra.com September 16, 2022 City Council City of Port Arthur 444 4th Street Port Arthur, TX 77640 RE: Request to amend Industrial District Agreement Dear City Councilors, Reference is made to that certain Industrial District Agreement by and among the City of Port Arthur, Port Arthur LNG, LLC and PALNG Common Facilities Company, LLC entered into and effective June 4, 2019. (Hereinafter, the Industrial District Agreement will be referred to as the "IDA", City of Port Arthur will be referred to as the "City" and Port Arthur LNG, LLC and PALNG Common Facilities Company, LLC will be referred to collectively as "PALNG".) Section 3 of the IDA sets forth "In Lieu of Payment[s]" to be made by PALNG to the City. Section 3(a) provides, in pertinent part: The "Payment Period" of this Agreement shall be fifteen (15) years which shall commence with the Tax Year 2023 (January 1, 2023). Such commencement shall be extended only by an action of the City Council upon receipt of a written request from [PALNG] stating that the commencement of construction is delayed beyond the calendar year 2023 due to Force Majeure events. The City will not unduly withhold the extension. A definition of"Force Majeure Event" is set forth in Section 20 of the IDA: "Force Majeure Event" means any event, condition, or circumstances beyond the reasonable control of [PALNG], including but not limited to the following: (a) acts of God, earthquakes, tidal waves, lightning, floods, and storms; (b) explosions and fires; (c) strikes and lockouts; (d) wars, riots, acts of the public enemy, civil disturbances, hostilities, sabotage, blockades, insurrections, terrorism, and epidemics; and (e) acts of expropriation, confiscation, nationalization, sempra.com Port Arthur City Council Page 2 September 16,2022 requisitioning, or other taking; provided, however, that"Force Majeure Event"does not include the inability to make payment except in cases where banking systems or required methods for transmission of payment have also been delayed by Force Majeure. (Emphasis added) The COVID-19 pandemic constitutes a "Force Majeure Event" which has resulted in a delay (or delays) in the commencement of construction of PALNG's project. PALNG hereby requests that the City Council take appropriate action, as soon as reasonably possible, to extend commencement of the"Payment Period"from Tax Year 2023 to Tax Year 2026 (January 1, 2026) by approving an amendment to the IDA to that effect. A copy of such a proposed amendment, which has previously been provided to and reviewed by City Manager Ron Burton and City Attorney Val Tizeno, is attached hereto. If you have any questions please don't hesitate to contact me at either of the telephone numbers or the email address found above. Thank you in advance for your consideration of this request. Rioe„yespectfully, 0 James R. Asay Director— Corporate Taxes, Sempra Energy Vice President- Tax Port Arthur LNG, LLC and PALNG Common Facilities Company, LLC. cc: Ron Burton, City Manager Val Tizeno, City Attorney Huy Tran, Legal Secretary Exhibit "B" STATE OF TEXAS § § COUNTY OF JEFFERSON § FIRST AMENDMENT TO INDUSTRIAL DISTRICT AGREEMENT This FIRST AMENDMENT TO INDUSTRIAL DISTRICT AGREEMENT (this "Amendment" ) is executed on the date set forth on the signature pages attached hereto (the "Effective Date" ) , by and among the City of Port Arthur (hereinafter referred to as the "City" ) , a home rule municipality governed under the laws of the State of Texas, on the one hand, and Port Arthur LNG, LLC, a Delaware limited liability company (hereinafter referred to as the "Project Company" ) and its subsidiary, PALNG Common Facilities Company, LLC, a Delaware limited liability company (hereinafter referred to as "PALNG" ) , on the other hand. Project Company and PALNG are referred to collectively in this Amendment as "Property Owners" . WHEREAS, City and Property Owners are parties to that certain Industrial District Agreement dated to be effective June 4 , 2019 (the "Agreement" ) ; WHEREAS, City and Property Owners desire to amend certain provisions of the Agreement as more particularly set forth in this Amendment; WHEREAS, this Amendment shall be effective and binding on the parties hereto upon the Effective Date; and Port Arthur LNG,LLC Industrial District Agreement 1 AMENDMENT 1 WHEREAS, the Parties acknowledge that circumstances beyond the control of Property Owners, specifically difficulties occasioned by the COVID-19 pandemic, which City and Property Owners agree constitutes a Force Majeure Event, and other unanticipated exigencies, have delayed the commencement of construction of the Facility and City and Property Owners would each suffer the loss of the intended benefits of the original Agreement if this Amendment were not entered into; NOW, THEREFORE, in consideration of the premises and the mutual agreements of the parties contained herein, City and Property Owners agree with each other as follows as it pertains to the Agreement : 1. Capitalized terms used in this Amendment have the same meanings given to them in the Agreement unless otherwise defined herein. 2 . City and Property Owners hereby agree that the Agreement is amended as follows : a. The twelfth recital of the Agreement is deleted in its entirety and replaced with the following: "WHEREAS, the Property Owners plan to make an estimated capital investment of approximately $8 billion in the Affected Area; and" 1 Port Arthur LNG,LLC Industrial District Agreement 2 AMENDMENT I b. The third sentence of the third paragraph of Section 3 (a) is revised so that "Tax Year 2023 (January 1, 2023" is deleted and replaced with "Tax Year 2026 (January 1, 2026) " . c. The Discounted Rate Table in Section 3 (b) is deleted in its entirety and replaced with the following table : Tax Payment Year Tax Year (beginning Discount Period No. January 1st) Rate Year 1 2026 Construction Period 25% Year 1 2 2027 Construction Period 20% Year 2 3 2028 Construction Period 15% Year 3 4 2029 Post Construction 10% Year 4 5 2030 Post Construction 10% Year 5 6 2031 Post Construction 10% Year 6 7 2032 Post Construction 20% Year 7 8 2033 Post Construction 30% Year 8 9 2034 Post Construction 30% Year 9 10 2035 Post Construction 40% Year 10 11 2036 Post Construction 45% Year 11 12 2037 Post Construction 50% Year 12 13 2038 Post Construction 55% Year 13 14 2039 Post Construction 60% Year 14 15 2040 Post Construction 65% Year 15 d. The Property Owners notice addresses in Section 27 of the Agreement are deleted in their entirety and replaced with the following: Port Arthur LNG,LLC Industrial District Agreement 3 AMENDMENT 1 TO the Property Owners : Port Arthur LNG, LLC PALNG Common Facilities Company, LLC 488 8th Avenue, HQ08N1 San Diego, CA 921101 Attn: James R. Asay, Vice President - Tax WITH A COPY TO: Port Arthur LNG, LLC PALNG Common Facilities Company, LLC 1500 Post Oak Blvd, Suite 100 Houston, TX 77056 Attn: Asset Management Email : PALNGAssetManagement@SempraGlobal . com and Sempra Infrastructure Partners, LP 1500 Post Oak Blvd, Suite 100 Houston, TX 77056 Attn: Chief Legal Officer Email : SlGeneralCounsell@SempraGlobal . com 3 . All of the information recited in this Amendment is true and correct in all respects . 4 . Except as set forth in this Amendment, all of the terms, covenants, and conditions of the Agreement, and all the rights and obligations of City and Property Owners thereunder, shall remain in full force and effect and are not otherwise altered, amended, revised, or changed. 5 . This Amendment may be executed in counterparts, each of which shall be deemed an original, and all of which taken together, shall constitute but one and the same instrument . Port Arthur LNG,LLC Industrial District Agreement 4 AMENDMENT SIGNED AND AGREED to on the day of 20 . PALNG COMMON FACILITIES COMPANY, LLC BY: NAME: James R. Asay TITLE: Vice President - Tax PORT ARTHUR LNG, LLC BY: NAME: James R. Asay TITLE: Vice President - Tax ACKNOWLEDGMENT STATE OF TEXAS § COUNTY OF JEFFERSON § BEFORE ME, the undersigned Notary Public, on this day personally appeared , known to me to be the person whose name is ascribed to the foregoing instrument, and acknowledged to me that he executed the same as the act and deed of PALNG Common Facilities Company, LLC for the purposes and considerations therein expressed, and the capacities therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE, THIS THE day of , A.D. , 20 . NOTARY PUBLIC, STATE OF TEXAS Port Arthur LNG,LLC Industrial District Agreement 5 AMENDMENT SIGNED AND AGREED to on the day of , 20 CITY OF PORT ARTHUR, TEXAS BY: Ronald Burton City Manager ACKNOWLEDGMENT STATE OF TEXAS § COUNTY OF JEFFERSON § BEFORE ME, the undersigned Notary Public, on this day personally appeared , known to me to be the person whose name is ascribed to the foregoing instrument, and acknowledged to me that he executed the same as the act and deed of Port Arthur LNG, LLC for the purposes and considerations therein expressed, and the capacities therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE, THIS THE day of , A.D. , 20 . NOTARY PUBLIC, STATE OF TEXAS Approved as to form and substance : Valecia R. Tizeno, City Attorney RETURN TO: Valecia R. Tizeno City Of Port Arthur P.O. Box 1089 Port Arthur, TX 77641-1089 Port Arthur LNG,LLC Industrial District Agreement 6 AMENDMENT