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HomeMy WebLinkAboutPR 22867: IDA WITH LG CHEM, LTD P.R. No. 22867 02/06/2023 ht RESOLUTION NO. A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE AN INDUSTRIAL DISTRICT AGREEMENT(IDA)WITH LG CHEM, LTD WHEREAS, LG Chem, Ltd. is globally known for its production of high purity Iso- Propyl Alcohol (IPA), a critical material used for manufacturing semiconductors; and WHEREAS, LG Chem, Ltd has informed the City of Port Arthur of their plans to expand their operations to North America for the purpose of constructing a new Iso-Propyl Alcohol manufacturing facility to work in close proximity with chipmakers in the U.S., and therefore, requests to enter into an Industrial District Agreement (IDA) solely for this purpose; and WHEREAS, 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, the City Council deems it to be in the best interests of the citizens of Port Arthur to enter into an IDA with LG Chem, Ltd. 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 an IDA with LG Chem, Ltd. exclusively for the construction a new Iso-Propyl Alcohol manufacturing facility, in substantially the same form as, attached hereto as Exhibit "A". Section 3. That the execution of the IDA by the City of Port Artur will be contingent upon the submission of Exhibit"B"and Exhibit"C", in its entirety, by LG Chem, Ltd. Section 4. That a copy of the caption of this Resolution be spread upon the Minutes of the City Council. READ, ADOPTED AND APPROVED on this day of , A.D., 2023, at a Meeting of the City Council of the City of Port Arthur, by the following vote: AYES: Mayor: , Councilmembers: , , NOES: . Thurman Bill Bartle, Mayor ATTEST: Sherri Bellard, City Secretary APPROVED AS TO FORM: ae Valecia R. Tizen , City Attorney APPROVED FOR ADMINISTRATION: Ron Burton, City Manager EXHIBIT "A" STATE OF TEXAS § COUNTY OF JEFFERSON § INDUSTRIAL DISTRICT AGREEMENT This INDUSTRIAL DISTRICT AGREEMENT (this "Agreement") is made and entered into by and between the City of Port Arthur (hereinafter referred to as the "City") , a home rule municipality governed under the laws of the State of Texas and LG Chem, Ltd. (hereinafter referred to as the "Property Owner") . WHEREAS, the Property Owner wishes to lease and/or own real property that is located in the City' s extraterritorial jurisdiction/industrial district for the purpose of constructing a new manufacturing facility that will produce Isopropyl Alcohol (IPA) (hereinafter referred to as "The Project" and described in more detail in Exhibit "A") and would like to enter into an Industrial District Agreement solely for that purpose; and WHEREAS, pursuant to Section 42 . 001 of the Texas Local Government Code, the Legislature declares it the policy of the State of Texas to designate certain areas as the extraterritorial jurisdiction of municipalities to promote and protect the general health, safety, and welfare of persons residing in and adjacent to the municipalities; and WHEREAS, the extraterritorial jurisdiction/industrial district (hereinafter referred to as the "ETJ") of the City is the LG Chem,Ltd.Industrial District Agreement 2025-2030 1 unincorporated area that is contiguous to the corporate boundaries of the City and that is located within 3 miles of the boundaries of the City; and WHEREAS, pursuant to Section 42 . 044 of the Texas Local Government Code (the "TLGC) , the governing body of a municipality may designate any part of its ETJ as an industrial district and may treat the designated area in a manner considered by the governing body to be in the best interests of the municipality; and WHEREAS, the Property Owner owns and/or leases land that is located in the ETJ of the City which was previously designated as an industrial district . Exhibit "B" represents a true, correct and complete legal description and map depiction of said land owned in fee by and/or leased by the Property Owner (hereinafter referred to as the "Affected Area") ; and WHEREAS, pursuant to Section 42 . 044 of the Texas Local Government Code, the City may make written agreements with owners of land in an industrial district; and WHEREAS, this Agreement is authorized under Sections 43 . 0116 and 212 . 172 of the Texas Local Government Code, Vernon' s Texas Code Annotated and Article I, Sections 5 and 6 of the City' s Charter, and the parties agree that the terms of this Agreement are reasonable, appropriate, and not unduly restrictive of business activities; and LG Chem,Ltd.Industrial District Agreement 2025-2030 2 WHEREAS, this Agreement includes provisions concerning being tangible property, real, personal and mixed owned and/or leased by the Property Owner in the Affected Area; and WHEREAS, in previous Industrial District Agreements, the City has articulated its concern regarding the unemployment rate of Port Arthur residents in an effort to maximize job opportunities for Port Arthur residents and contracting opportunities for Port Arthur businesses and contractors; and WHEREAS, the City created the Port Arthur Business Enterprise (PABE) program, with a goal of improving opportunities for its residents and businesses; and WHEREAS, the City is interested in working with industry to obtain information on current hiring and procurement efforts, including results, and to increase employment opportunities for Port Arthur residents and procurement for Port Arthur businesses; and WHEREAS, the City wants to encourage additional new capital investments and job creation at the location as it pertains to the aforementioned Project; and WHEREAS, the Property Owner plan to make an estimated capital investment of approximately $240 million in the Affected Area; and WHEREAS, the City and the Property Owner desire to enter into an Industrial District Agreement with respect to the Affected Area in the City' s ETJ; and LG Chem,Ltd.Industrial District Agreement 2025;2030 3 WHEREAS, the Property Owner agree to provide written reports to the City regarding its hiring and procurement practices on a semi-annual basis as it pertains to the Project (as defined in Exhibit "A") ; and WHEREAS, the City desires to offer an incentive to the Property Owner as it pertains to the Project if it participates in an Employment and Training Roundtable Program and meets certain milestones based on increases in the hiring of Port Arthur residents and the contracting opportunities afforded Port Arthur businesses; and WHEREAS, this Agreement shall be effective and binding on the parties hereto upon execution hereof on behalf of all parties to this Agreement, effective January 1, 2025 and governs the City contractual relationship with the Property Owner; and WHEREAS, the City finds that the provisions set forth in this Agreement are in the best interests of the City and beneficial to the general health, safety, and welfare of its residents; and WHEREAS, the Property Owner find that this Agreement is beneficial to its business operations . NOW, THEREFORE, in consideration of the premises and the mutual agreements of the parties contained herein, the City and the Property Owner agree with each other as follows as it pertains to the Affected Area described in Exhibit "B" : LG Chem,Ltd.Industrial District Agreement 2025-2030 4 Section 1 : ETJ Status , City Services and Code Enforcement (a) Pursuant to Section 42 . 044 of the TLGC, and subject to the terms and provisions of this Agreement, the City agrees and guarantees that during the term of this Agreement, the Affected Area shall be immune from annexation and shall continue to retain its status as part of the City' s ETJ, except as otherwise expressly provided herein. (b) The Property Owner and the City agree that the City shall have no obligation to provide City services to the Property Owner in the Affected Area with respect to the project and that the City will not extend any services to Property Owner in the Affected Area with respect to the project (unless otherwise provided herein) . The City will not require the Property Owner to adhere to City codes such as the regulation of plats and subdivisions of land, the imposition of building, electrical, or plumbing inspections, and related code requirements . The Property Owner agrees not to imprudently discharge storm water from the project facilities located in the Affected Area or contribute to flooding on adjacent property from the project facilities located in the Affected Area. Section 2 . Description of Affected Area and Reports (a) The City hereby designates the portion of the City' s ETJ described and depicted on Exhibit "B", which contains all of the land owned and/or leased by the Property Owner in the City' s ETJ, LG Chem,Ltd.Industrial District Agreement 2025-2030 5 as an Industrial District . The Property Owner hereby certifies that Exhibit "B" represents a true, correct and complete legal description and map depiction of all of the land owned and/or leased by the Property Owner in the "Affected Area" . This agreement solely relates to the values assigned for the Project as delineated in Exhibit "A" and located within the ETJ/Industrial District in Exhibit "B"; and (b) On or before May 1 of each year during the term of this Agreement, the Property Owner shall furnish to the City a written report listing the names and addresses of all persons and entities who store any tangible personal property on the land in the Affected Area with the Property Owner with respect to the Project (hereinafter referred to as "products in storage") , and are in the possession or under the management of Property Owner on January 1 of such year, and further giving a description of such products in storage. The Property Owner shall file all reports required by the chief appraiser of the Jefferson Central Appraisal District ("JCAD") under Section 22 . 04 of the Texas Property Tax Code relating to (i) third parties' property that is in the Affected Area with respect to the Project and in the Property Owner' s possession or under the Property Owner' s management by bailment, lease, consignment, or other arrangement, and (ii) storage space leased or otherwise provided to third parties for LG Chem,Ltd.Industrial District Agreement 2025-2030 6 storage of personal property in the Affected Area with respect to the Project . Section 3 . Payments by the Property Owner (a) The City levies ad valorem taxes for general revenue purposes on the value of land, improvements, and certain personal property located within its corporate limits . If the Affected Area were located within the corporate limits of the City, it would be subject to such levy. As part of the consideration for the City' s agreements contained herein, the Property Owner agrees to make a payment to the City in lieu of taxes with respect to the Project (hereinafter referred to as "In Lieu of Payment") for each "Tax Year" (as hereinafter defined) during the term of this Agreement "Payment Period (as hereinafter defined) as provided herein. As used herein, the term "Tax Year" has the meaning assigned to that term in Section 1 . 04 of the Texas Property Tax Code (i . e . , the calendar year) . (b) On or before October 15th of each Tax Year during the term of this Agreement, and except as otherwise provided in Sections 6 and 19, the Property Owner will remit to the City an "In Lieu of Payment" equal to the applicable percentage for the tax year as delineated below of the "Taxable Value" (as hereinafter defined) multiplied by the City' s property tax rate for such Tax Year as it pertains to the Project . LG Chem,Ltd.Industrial District Agreement 2025-2030 7 For avoidance of any future doubt or confusion, whatever "In Lieu of Payment" Property Owner makes under this Agreement with respect to the Project supplants and is to the exclusion of any "In Lieu of Payment" which might otherwise be due under any existing Industrial District Agreement with respect to the Project . The Parties agree to the following Discounted Rate Table as it pertains to the Project : $240 million Tax Year (beginning January 15t) investment Discount Year 2025 Construction Period 25% Year 1 202E Post Construction 50% Year 2 2027 Post Construction 60% Year 3 2028 Post Construction 70% Year 4 2029 Post Construction 80% Year 5 2030 Post Construction 90% Year 6 The Property Owner will report and certify to the City the requisite investment of the Project within 120 days after the completion of the Project (or 120 days after the Effective Date, whichever is later) . In the event the investment of the Project does not exceed $240 million, the Parties agree to revisit the Discounted Rate Table and utilize the discounted rate applicable to the amount invested under the City' s IDA Policy. For illustration purposes only, the "In Lieu of Payment" for Tax Year 2025 would be calculated based upon a discounted value of LG Chem,Ltd.Industrial District Agreement 2025-2030 8 25% . The "In Lieu of Payment" is an amount equal to 25% of the Taxable Value multiplied by the City' s property Tax Rate for such Tax Year. (c) On or before October 1st of each Tax Year during the Payment Period, the City will submit to the Property Owner a statement setting forth the calculation of the In Lieu of Payment due from the Property Owner for such Tax Year. (d) For the purposes of this Agreement, "Applicable Percentage" means, for any Tax Year during the Payment Period, a percentage equal to amount specified in the table referenced in Section 3b. (e) For the purposes of this Agreement, "Construction Period" means the one-year period beginning on January 1, 2025 in which construction of the Project commences and ending on December 31, 2026. (f) For the purposes of this Agreement, "Post-Construction Period" means the five (5) year period beginning with and including the Tax Year immediately following the end of the Construction Period and ending with and including the sixth ( 6th) Tax Year following the conclusion of the Construction Period (December 31, 2025) . (g) For the purposes of this Agreement, "Payment Period" means the six (6) year period beginning with and including the LG Chem,Ltd.Industrial District Agreement 2025-2030 9 first (1st) Tax Year of the Construction Period and ending with and including the fifth (5th) Tax Year of the Post-Construction Period. (h) For the purposes of this Agreement, "Taxable Value" means, for any Tax Year, the appraised value of the Property Owner' s real property, tangible personal property or mixed that is included in the Project and situated on the Affected Area as determined for such Tax Year by the chief appraiser of JCAD for the property tax purposes of Jefferson County, Texas as of January 1st of such Tax Year, less the exempt value of pollution control property included in the Project and as so determined. The Appraised Value also includes the appraised value of any property included in the Project and that is located in a foreign trade zone or any other type of federal, state or local zone as it pertains to the Project. Additionally, the Property Owner' s Taxable Value for the purposes of this Agreement for any such Tax Year will include the Taxable Value of all tangible personal property located and stored on the Affected Area as it pertains to the Project that is owned by third parties and is in the possession or under the management of the Property Owner by bailment, lease, consignment, or any other arrangement with the Property Owner ("products in storage") on January 1 of such Tax Year. (e) For illustration purposes only, assume for Tax Year 2025 during the term of this Agreement that the Taxable Value is LG Chem,Ltd.Industrial District Agreement 2025-2030 10 $200, 000, 000 and that the City' s property tax rate for such Tax Year is $ .792 per $100 of Taxable Value. Subject to the provisions of Section 6, the In Lieu of Payment for such Tax Year under this Agreement would be $396, 000 calculated as follows : $200, 000, 000 X 25% X $ . 792/$100 = $396, 000. 00 Similarly, for illustration purposes only, assume for Tax Year 2029 during the term of this Agreement that the Taxable Value of the Project is $200, 000, 000 and that the City' s property tax rate for such Tax Year is $ . 792 per $100 of Taxable Value. Subject to provisions of Section 6, the In Lieu of Payment for such Tax Year would be $1, 267, 200 . 00 calculated as follows : $200, 000, 000 X 80% X $ . 792/100 = $1, 267, 200 . 00 Section 4 . Port Arthur Local Business Enterprise Program The City recognizes that proactive steps must be taken to help ensure that Port Arthur local business enterprises thrive and continue to benefit our community economically and socially. Therefore, the City created the Port Arthur Local Business Enterprise Program (the "PABE Program") which is designed to promote spending with qualified Port Arthur local business enterprises (each an "LBE" as such term is defined below) by companies that have industrial district agreements with the City, as well as to increase the diversity of Port Arthur businesses from which such companies procure goods and services so that the pool of such businesses is representative of the business community LG Chem,Ltd.Industrial District Agreement 2025-2030 11 at large . The Property Owner agrees to participate in the PAGE Program. As used herein, "LBE" means a Port Arthur business (including, but not limited to, a Port Arthur minority and/or women owned business enterprise ("MWBE") , a Port Arthur historically underutilized business ("HUB") , and a Port Arthur disadvantaged business enterprise ("DBE") ) that has been certified as a LBE under the procedures and criteria specified in the PAGE Program as determined by the City Council of the City, but such term shall not include any Port Arthur business that has ceased to be so certified. The City and the Property Owner agree, in conjunction with other companies that have entered into industrial district agreements with the City, to set up an advisory board to implement the goals and objectives for the PAGE program. The advisory board will meet as needed and will be facilitated by an outside source (Lamar State College of Port Arthur or other mutually agreeable party) (referred to herein as the "PABE Facilitator") . Notwithstanding anything contained in this Agreement to the contrary, the Property Owner shall in no event be obligated under any provision of this Agreement (i) to amend or otherwise change, or attempt to amend or otherwise change, any agreement to which the Property Owner is a party as of the date hereof, or (ii) to hire or retain any person, or to award any contract for materials, supplies, equipment or services to any vendor, supplier, LG Chem,Ltd.Industrial District Agreement 2025-2030 12 professional, contractor or subcontractor, unless, in the Property Owner' s sole discretion, (A) such person is qualified, is willing to perform the work, and satisfies all of the Property Owner' s normal standards for employment, and (B) such vendor, supplier, professional, contractor or subcontractor is qualified, financially sound, has an adequate safety record, is willing to perform the work, or provide the materials or services, in the time required and in a competitive manner, and is the lowest qualified responsive bidder who meets all the applicable bid specifications . The Property Owner agrees that it will participate in the PABE Program during the term of this Agreement and strongly consider the use of certified Port Arthur businesses to facilitate the goals of the PABE Program. The terms and conditions of the PABE Program are delineated on the City' s official website. The Property Owner, together with the City' s staff, will also participate in a Semi-Annual Employment Roundtable Program facilitated by the City. The goal of the Semi-Annual Employment Roundtable Program is to address employment and training issues that are essential to the hiring of Port Arthur residents as employees of the Property Owner and its Nested Contractors (as hereinafter defined) . The Semi-Annual Employment Roundtable Program will also address issues related to improving the workforce within the City to meet the needs of industry. LG Chem,Ltd.Industrial District Agreement 2025-2030 13 As used herein, the term "Nested Contractor" means an employer that regularly operates full time at the Affected Area providing personnel or services under contract with the Property Owner. Section 5 . Reporting Requirements (a) For each of the Tax Years 2025 through 2030, the Property Owner agrees to submit on a semi-annual basis a report, attached hereto as Exhibit "D" (each, a "Report") in accordance with the procedures, and providing the information specified, herein with respect to the hiring of qualified Port Arthur residents by the Property Owner and its Nested Contractors, and the retention of PABE' s by the Property Owner, as the same relate to the Affected Area. Each six-month period for which a Report is required herein is referred to herein as a "Reporting Period. " Section 6. Performance Based Incentives for Discounts as an Economic Incentive Program pursuant to Chapter 380 of the Texas Local Government Code In General (a) The calculation of the In Lieu of Payment under Section 3 is based in part upon the application of a percentage as delineated in Section 3 for the Corresponding Tax Year (the "Discounted Rate") . For any Tax Year during the term of this Agreement, the Discounted Rate may be reduced as provided in this Section 6 upon verification and approval by the governing body of the City that one or more of the performance-based milestones described in this LG Chem,Ltd.Industrial District Agreement 2025-2030 14 Section 6 were reached for the Report Period or Report Periods covered by the Report or Reports applicable for such Tax Year as designated below (such period or periods for any Tax Year being referred to herein as the "Milestone Period" as designated below) : Tax Year Report Period or Milestone Period Report Periods Ending on the following: 2025 (Year 1) June 30, 2025 January 1, 2025 to June 30, 2025 2026 (Year 2) December 31, 2025, July 1, 2025 to June 30, 2026 June 30, 2026 2027 (Year 3) December 31, 2026, July 1, 2026 to June 30, 2027 June 30, 2027 2028 (Year 4) December 31, 2027, July 1, 2027 to June 30, 2028 June 30, 2028 2029 (Year 5) December 31, 2028, July 1, 2028 to June 30, 2029 June 30, 2029 2030 (Year 6) December 31, 2029, July 1, 2029 to June 30, 2030 June 30, 2030 The information used to calculate the performance-based milestones described in this Section will be reported in the manner outlined in Section 5 of this Agreement. Hiring Milestones (b) For purposes of this Agreement, the term "Report Period Hiring Percentage" means, for any Report Period during the term of this Agreement, a percentage equal to the quotient determined by dividing (X) by (Y) where: (X) = an amount equal to the sum of: (i) the total number of expansion employees employed by the Property Owner at the Facility on the last day of such Report Period who were Port Arthur residents on such date; plus LG Chem,Ltd.Industrial District Agreement 2025:2030 15 [- (ii) the total number of expansion employees employed, by the Property Owner' s Nested Contractors for projects at the Facility on the last day such Report Period who were Port Arthur residents on such date; and (Y) = an amount equal to the sum of: (i) the total number of expansion employees employed by the Property Owner at the Facility on the last day of such Report Period; plus (ii) the total number of expansion employees employed by the Property Owner' s Nested Contractors for projects at the Facility on the last day of such Report Period. The Hiring Milestone calculation referenced in this section only applies to employees that are hired for the Project . Those employees that work at the existing plant are not included in this calculation. (c) For purposes of this Agreement, the term `Hiring Milestone" means : (i) for the Milestone Period applicable to the Tax Year 2025, the Report Period Hiring Percentage for the Report Period ending June 30, 2025; and (ii) for the Milestone Period applicable to any of the Tax Years 2025, 2026, 2027, 2028, 2029, and 2030 the sum of the Report Period Hiring Percentages for the Report Periods included in such Milestone Period divided by two (2) . (d) Upon verification and approval by the governing body of the City that one of the Hiring Milestones (as hereinafter defined) was reached for the Milestone Period applicable to a Tax Year, the Discounted Rate for such Tax Year shall be reduced by ten (10) LG Chem,Ltd.Industrial District Agreement 2025-2030 16 percentage points (10%) based upon the following schedule (the "Hiring Milestones") : Construction Period Percentage Point Reduction* Milestone Hiring Percentage for the Milestone Period applicable to such Tax Year 25% of those employed are 10% Port Arthur Residents Post-Construction Period Percentage Point Reduction* Milestone Hiring Percentage for the Milestone Period applicable to such Tax Year 25% of those employed are 10% Port Arthur residents and 10% of the new Hires are Port Arthur Residents This milestone includes those individuals working as Permanent employees of the Company and those employed by Nested Contractors that are specifically working for the Project. PABE Spend Milestones (e) Prior to the first day of each Report Period, the City shall cause the PABE Facilitator to provide the Property Owner with a list of certain PABE' s for such Report Period selected and compiled by the PAGE Facilitator in accordance with the next sentence (such PABE' s for any such Report Period being referred to herein as the "Designated PABE' s") . In preparing the list of the Designated PABE' s for any Report Period, the City shall cause the PABE Facilitator: (i) to categorize the PABE' s on such list as either commercial, industrial, or both commercial and industrial; LG Chem,Ltd.Industrial District Agreement 2025-2030 17 (ii) in the case of PABE' s categorized as commercial, to only include PABE' s that specialize in retail trade, service, professional, office or similar goods and/or services that can be utilized by the Property Owner at the Project; and (iii) in the case of PABE' s categorized as industrial, to only include PABE' s whose primary business activity is classified under the North American Industry Classification System (NAICS) to an industry that provides goods and/or services that can be utilized by the Property Owner at the Project. (f) For purposes of this Agreement, the term "PABE Spend Amount" means an amount equal to (i) the dollar amount of contracts awarded and/or purchases made by the Property Owner to Designated PABE' s for goods and/or services during the six (6) semi-annual Reporting Periods included in the Tax Years 2025 through 2030 and the semi-annual period January 1, 2025, through June 30, 2030 (collectively, the "Report Period") . (g) For purposes of this Agreement, the term "Report Period PABE Spend Percentage" means; for any Report Period during the term of this Agreement, a percentage equal to the quotient determined by dividing (X) by (Y) where: (X) = the dollar amount of contracts awarded and/or purchases made as it pertains to the Project, during such Report Period by the Property Owner or its affiliates with Designated PABE' s for goods and/or services; and (Y) = the total dollar amount of contracts awarded and/or purchases made as it pertains to the Project, during such Report Period by the Property Owner or its affiliates. LG Chem,Ltd.Industrial District Agreement 2025-2030 18 (h) For purposes of this Agreement, the term "Milestone PABE Spend Percentage" means for the Milestone Period applicable to each of the Tax Year 2025, 2026, 2027, 2028, 2029 and 2030 the sum of the Report Period PABE Spend Percentages for the Report Periods included in such Milestone Period. (i) Upon verification and approval by the governing body of the City that the PABE Spend Milestones (as hereinafter defined) was reached for the Milestone Period applicable to a Tax Year, the Discounted Rate for such Tax Year shall be reduced by ten (10) percentage points (10%) based upon the following table (the "PABE Spend Milestones") : Construction Period ' Percentage Point Reduction* PABE Milestone Percentage applicable to such Tax Year 4% of construction costs are 10% spent with PABE members Post-Construction Period Percentage Point Reduction* PABE Milestone Percentage applicable to such Tax Year 4% of purchases made after 10% construction are spent with PABE members Notifications (i) For each Tax Year during the term of this Agreement, the City will verify the Report or Reports (as applicable) submitted by the Property Owner for the Report Period or Report LG Chem,Ltd.Industrial District Agreement 2025-2030 19 Periods (as applicable) included in the Milestone Period applicable to such Tax Year. If for any such Tax Year the City determines that such Report or Reports fail to substantially comply with the reporting obligations under Section 5, then the City shall provide the Property Owner with a written notice of the facts which the City believes have caused such Report or Reports to fail to substantially comply with such reporting obligations, and the Property Owner shall have thirty (30) days to cure such failure . If the City does not provide any such written notice with respect to the Report or the Reports for the Report Period or Report Periods included in a Milestone Period within ninety (90) days after the last day of such Milestone Period, then for purposes of this Agreement (including Section 5) , such Report or Reports shall be deemed to be in substantial compliance with the reporting obligations under Section 5 . On or before October 1 of each such Tax Year, the City shall notify the Property Owner whether it met any of the Hiring Milestones and/or PABE Milestones . The information compiled by the City in connection with any such verification shall be made available to the Property Owner upon request . Section 7 . Back-up Fire and Police Assistance If requested orally or in writing by the Property Owner, the City' s Fire Department may provide back-up Fire Suppression Support as determined by the City' s Fire Chief, and the City' s LG Chem,Ltd.Industrial District Agreement 2025-2030 20 Police Department may assist in providing an evacuation route and traffic control, in the case of a fire or a chemical release at the Property Owner' s facilities located in the Affected Area, at no cost or expense to the Property Owner. Nevertheless, the Property Owner agrees to abide by and shall take such precautions as to prevent (1) fires, explosions and chemical releases and (2) the imprudent discharge of storm water that contributes to flooding on adjacent property. The Property Owner shall have in place an evacuation plan for the Property Owner' s facilities located in the Affected Area that is consistent with industry standards and/or is required by applicable federal and state laws, and the health and safety laws of the City of which the Companies have been notified by the City. The Property Owner shall employ or provide sufficient primary fire suppression response, as well as control and abate chemical releases . The Property Owner 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 in the Affected Area . If there is a fire and the City is requested to provide initial and primary (as opposed to back-up) fire suppression services or if a cleanup is required of the City, the Property Owner agrees to pay to the City the costs and expenses incurred by the City and any of its departments or of any of its affiliated providers, i .e. , ambulance companies that are called to the scene . LG Chem,Ltd.Industrial District Agreement 2025,-2030 21 The Property Owner shall immediately notify the central dispatch office which serves the City' s Fire Chief, Police Chief, and the City' s Emergency Management Coordinator of all incidents involving fires, serious injuries, deaths, chemical releases and flooding that create a health and safety hazard to the community or that exceed permissible exposure limits under applicable state or federal laws . Section 8 . Annexation for Health, Safety and Welfare Reasons 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 residing within or adjacent to the City, provided however, that the City agrees that any annexation of the land in the Affected Area will not be made for revenue purposes only. Section 9. Annexation Due to Legislative Action Notwithstanding any other provision in this Agreement, the parties agree and consent that the City may annex the Affected Area if a bill is enacted by the Texas Legislature which limits or restricts the authority of the City to annex all or part of the land and improvements in the Affected Area. In the event of annexation under this Section 9 or Section 8, (i) the Property Owner LG Chem,Ltd.Industrial District Agreement 2025-2030 22 will not be required to make further payments under this Agreement for any Tax Year commencing after annexation with respect to the property so annexed, but shall nevertheless be obligated to make full payments for the Tax Year during which such annexation becomes effective if the annexation becomes effective after January 1st of such Tax Year, and (ii) the Property Owner shall not be required to pay ad valorem taxes to the City for the same period of time they have already paid an In Lieu of Payment with respect to the Affected Area. If for any reason the City is prevented from annexing the Affected Area and if the parties cannot reach an agreement on a new payment schedule on a new "in lieu of tax" agreement, then unless the City has extended this Agreement under the circumstances described in the last sentence of this Section 9, the Property Owner agrees that it will continue to pay to the City the In Lieu of Payments delineated in Section 3 of this Agreement until December 31, 2026 and will, for each Tax Year thereafter, continue to annually pay the City an "in lieu of tax" payment equal to eighty percent (800) of the Taxable Value of the Property Owner' s real and tangible personal property located in the Affected Area as determined by JCAD for such Tax Year multiplied by the City' s property tax rate for such Tax Year for so long as the Property Owner or its assignees and successors or affiliates own such property. Payments will be due on October 15th of each year. In the event the City is prevented from annexing the Affected Area in LG Chem,Ltd.Industrial District Agreement 2025-2030 23 the legislative circumstances described in the first sentence of this Section 9, then pursuant to Sections 42 . 044 and 212 . 172 Local Government Code, the Property Owner agrees and consents that the City has the option, in the City' s sole discretion, to extend this Agreement and that the Property Owner will continue to annually pay the City "in lieu of tax" payments, as denoted above, for successive periods, for a total duration not to exceed 45 years, or the maximum period allowed by law, whichever is longer. Section 10 . Electrical Usage The Property Owner will provide the City with information as to the Property Owner' s electrical consumption at the Affected Area from Entergy or from any other electric utilities, transmission and distribution utility, municipally owned utility, electric cooperative, or from any other source, as well as all metering locations that service the Affected Area . The information provided by the Property Owner to the City regarding such electrical consumption and metering locations shall be held confidential by the City to the fullest extent permitted under applicable law. If the City receives a request for such information, the City will notify the Property Owner and the Property Owner will be afforded an opportunity to file a brief with the Texas Attorney General setting forth the reasons for exclusion of all or any portion of such information from the requirement to be released pursuant to the Texas Public Information LG Chem,Ltd.Industrial District Agreement 2025-2030 24 Act . Section 11 . Right to Annexation at the Expiration of this Agreement The parties agree that the City has the sole discretion, after October 1, 2030 to annex the property in the Affected Area or to enter into negotiations with the Property Owner regarding an industrial district agreement covering periods after the expiration of this Agreement . If for any reason any portion of the Affected Area is annexed prior to December 31, 2030, and as an economic incentive program as allowed under Chapter 380 of the Texas Local Government Code, the City will promptly remit to the Property Owner the portion of the property taxes paid to the City with respect to such annexed property that are in excess of the In Lieu of Payment that would have been paid to the City with respect to such annexed property if such annexation had not occurred. This partial remission of taxes (Chapter 380 Economic Incentive Program) will only be applicable until December 31 , ? 3C. Section 12 . Right to Annexation pursuant to Chapter 43 of the Texas Local Government Code The present owners and lessees of the land, improvements, units, equipment, inventory, and all other property located in the Affected Area and pertaining to the Facility are described in Exhibit "A", except for any owner or lessee of such property the aggregate Taxable Value of which is not reasonably expected as of LG Chem,Ltd.Industrial District Agreement 2025-2030 25 F the date of this Agreement to exceed $250, 000. 00 (the "Excluded Persons") . The City reserves the right to annex any tract or parcel with the minimum required adjacent area, as per Chapter 43 of the Texas Local Government Code, if any of such owners or lessees other than the Excluded Persons do not pay an In Lieu of Payment for its interest in such land, improvements, units, equipment, inventory, and all other property located in the Affected Area and pertaining to the Facility. Nothing contained herein shall be construed to prohibit or prevent the Property Owner from paying the other owners' or lessees' In Lieu of Payment required by this Agreement to prevent annexation by the City. If the City annexes a tract or tracts, such annexed tract or tracts shall be deleted from the description of the Affected Area set forth on Exhibit "A" for all purposes of this Agreement, and the total In Lieu of Payment will be reduced accordingly to accurately reflect such annexation. Section 13. Assignment If the Property Owner desires to assign all or a portion of this Agreement to any person,, the Property Owner shall provide written notice of such assignment to the City and shall receive the written consent of the City Council, by a duly adopted Resolution, which will not be unreasonably withheld, delayed or conditioned. The Property Owner shall provide a description of the assignee and such other information as is reasonably requested LG Chem,Ltd.Industrial District Agreement 2025-2030 26 by the City to indicate that the assignee will operate the Facility as a reasonably prudent operator, act as a good corporate citizen, and will fully abide by the terms of this Agreement . If the assignment is approved by the City Council, the Property Owner shall be relieved of its obligations under this Agreement to the extent that an assignee expressly assumes the Property Owner' s obligations hereunder. Subject to the preceding, this Agreement shall inure to the benefit of and be binding upon the parties hereto and its respective successors and assigns . Section 14. Other Relief Granted It is agreed by the parties to this Agreement that the Property Owner and the City have the right to seek equitable relief, including specific performance of this Agreement . Section 15. Inspections The Property Owner shall allow a reasonable number of authorized employees and/or representatives of the City who have been designated and approved by the governing body of the City to have access to the Affected Area during the term of this Agreement to inspect the property and any improvements thereon to determine compliance with the terms and conditions of this Agreement . All such inspections will be made at mutually agreeable times and will only be conducted in such manner as complies with the Property Owner' s safety and security standards and rules . All such inspections will be made with one or more representatives of the LG Chem,Ltd.Industrial District Agreement 2025-2030 27 Property Owner. The Property Owner may require any person conducting such an inspection to execute a confidentiality agreement before entering the Affected Area. The information provided by the Property Owner to the City or otherwise obtained by the City in connection with any such inspection shall be held confidential by the City to the fullest extent permitted under applicable law. If the City receives a request for such information, the City will notify the Property Owner and the Property Owner will be afforded an opportunity to file a brief with the Texas Attorney General setting forth the reasons for exclusion of all or any portion of such information from the requirement to be released pursuant to the Texas Public Information Act. Section 16. Port Arthur Industrial Group The Property Owner agrees that it will participate in the Port Arthur Industrial Group during the term of this Agreement and for so long as the Port Arthur Industrial Group is a viable organization in order to assist in the establishment of apprenticeship, internship, mentoring and/or educational programs and projects for the training of Port Arthur residents for permanent jobs in the Port Arthur area. The Property Owner further agrees to request and encourage its Nested Contractors to establish and fund their own apprenticeship, internship, mentorship and/or LG Chem,Ltd.Industrial District Agreement 2025-2030 28 education programs and projects for the training of Port Arthur residents for permanent jobs in the Port Arthur area. Section 17 . Inspection of Records The City reserves the right to review the Property Owner' s records to ascertain the accuracy of reports filed by the Property Owner in accordance with this Agreement . Section 18 . Undocumented Workers The Property Owner certifies that it has not, and will not, knowingly employ an "undocumented worker, " which means an individual who, at the time of employment, is not (i) lawfully admitted for permanent residence to the United States, (ii) a temporary resident lawfully permitted to be employed in the United States or (iii) or authorized under law to be employed in that manner in the United States. The Property Owner acknowledges that it has reviewed Chapter 2264, Texas Government Code, and hereby affirmatively agrees to repay the amount of any incentive with interest at the rate of ten percent (10%) per annum, not later than the 120th day after the date the City notifies the Property Owner of a violation. The Property Owner acknowledges the City may bring a civil action as to recover any amounts owed under this Chapter, and further acknowledges that the City may recover court costs and reasonable attorney' s fees incurred in bringing an action under Section 2264 . 101, Texas Government Code. The Property Owner will also promptly report to the City any "undocumented worker" LG Chem,Ltd.Industrial District Agreement 2025-2030 29 that is improperly retained by its contractors or subcontractors at the Project . Section 19. Property Tax Information, Credits and Refunds With respect to the land, improvements, units, equipment and all other property located in the Affected Area for each of the Tax Years 2025 through 2030, the Property Owner will, to the extent such property has not been annexed by the City, provide to the Director of Finance of the City, at the address specified in Section 27, no later than September 15th of such Tax Year, a copy of the non-privileged/non-confidential rendition which the Property Owner filed with the Jefferson Central Appraisal District . The Property Owner shall also provide the following to the Director of Finance of the City at such address with respect to such Tax Years: • each notice of appraised value received by the Property Owner from the Jefferson Central Appraisal District with respect to such property; • any notice of protest filed by the Property Owner with the Jefferson Central Appraisal Review Board ("ARB") with respect to such property within thirty (30) days after such filing; • any informal settlement or final ARB order determining protest with respect to such property; • any pleadings filed by the Property Owner as a petition for review of an order determining protest of the ARB with respect to such property; and • any settlement, final judgment or other final disposition on appeal or otherwise of any such lawsuit. LG Chem,Ltd.Industrial District Agreement 2025-2030 30 Pending final determination of any tax protest filed by the Property Owner with the ARB, or appeal thereof, with respect to any Tax Year during the term of this Agreement, the Property Owner shall pay to the City, on or before October 15th of such Tax Year, an amount equal to the In Lieu of Payment paid to the City for the immediately preceding Tax Year. Upon the final determination of such protest or appeal thereof, the Property Owner' s In Lieu of Payment liability hereunder for such Tax Year shall be calculated based on the Taxable Value for such Tax Year that reflects such final determination. If the In Lieu of Payment so calculated for such Tax Year exceeds the In Lieu of Payment previously paid by the Property Owner for such Tax Year, then the City shall submit to the Property Owner a statement setting forth the calculation of such excess, and the Property Owner shall pay the amount of such excess, without interest or penalty, to the City within thirty (30) days after the Property Owner' s receipt of such statement . If the In Lieu of Payment so calculated for such Tax Year is less than the In Lieu of Payment previously paid by the Property Owner for such Tax Year, then the City shall credit dollar-for-dollar toward future In Lieu of Payments the difference between the amount actually paid hereunder and the amount for which the Property Owner is determined to be liable, without interest, it being understood and agreed that to the extent there are insufficient future In Lieu of Payments under this Agreement against which to credit such LG Chem,Ltd.Industrial District Agreement 2025-2030 31 difference, the remaining balance of such difference shall be carried forward and credited dollar-for-dollar against any in lieu of tax payments and other amounts due to the City under any industrial district agreement between the Property Owner and the City covering a period or periods after the expiration of this Agreement until utilized in full . Section 20. Notice of Default Notwithstanding anything to the contrary contained in this Agreement, in the event of any breach by the Property Owner of any of the terms or conditions of this Agreement, the City shall give the Property Owner not less than five (5) business days' written notice, specifying the nature of the alleged default, and manner in which the alleged default may be satisfactorily cured. Thereafter, the Property Owner will be afforded a reasonable time (but in no event less than 60 days) within which to cure the alleged default . Nevertheless, time is of the essence on the payment schedule for the In Lieu of Payments on October 15th of each year. If the Property Owner does not pay the In Lieu of Payment on October 15th of each year, the City can immediately commence annexation proceedings and sue for all damages provided for herein. In the case of litigation for breach of this Agreement and to encourage timely payments, the City can seek 100% of all monies that the City would have received from the Property Owner if it been within the corporate limits, which include 100% of all LG Chem,Ltd.Industrial District Agreement 2025-2030 32 taxes, building permit fees, sales or use taxes, and all franchise fees on cable and electrical usage, interest and penalty thereon, attorney' s fees, and court costs . Section 21. Entire Agreement This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes any and all prior understandings or oral or written agreements between the parties respecting such subject matter, except as otherwise provided in the instruments referenced herein. This Agreement may be amended only by written instrument signed by all of the parties hereto. Section 22 . Severability If any term or provision in this Agreement, or the application thereof to any person or circumstance, shall to any extent be held to be invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect any other provision of this Agreement or the application thereof, which can be given effect without the invalid or unenforceable provision or application, and the parties agree that the provisions of this Agreement are and shall be severable; provided however, that for the avoidance of doubt, payment of the In Lieu of Payments, the provisions of Section 1 (a) of this Agreement, and the confidentiality provisions of this Agreement are essential parts of this Agreement . LG Chem,Ltd.Industrial District Agreement 2025-2030 33 Section 23. Remedies Cumulative Except as otherwise expressly provided herein, all rights, privileges, and remedies afforded the parties by this Agreement shall be deemed cumulative and not exclusive, and the exercise of any or more of such remedies shall not be deemed to be a waiver of any other right, remedy, or privilege provided for herein or available at law or in equity. Section 24. Governing Law This Agreement shall be governed by and construed in accordance with the laws of the State of Texas . This Agreement is to be performed in Jefferson County, Texas . Section 25. Counterparts This Agreement 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. Section 26. Authority By acceptance of this Agreement and/or benefits conferred hereunder, the Property Owner represents and warrants that its undersigned agent has complete and unrestricted authority to enter into this Agreement and to obligate and bind the Property Owner to all of the terms, covenants and conditions contained herein. LG Chem,Ltd.Industrial District Agreement 2025-2030 34 Section 27 . Notice Any notice provided in connection with this Agreement shall be given in writing to the parties hereto by certified mail, return receipt requested, addressed as follows : TO CITY: TO PROPERTY OWNER: Ronald Burton City Manager City of Port Arthur 444 4th Street Port Arthur, TX 77640 WITH A COPY TO: WITH A COPY TO: Valecia Tizeno City Attorney City of Port Arthur 444 4th Street Port Arthur, TX 77640 LG Chem,Ltd.Industrial District Agreement 2025-2030 35 Section 28 . Cancellation If the Property Owner permanently ceases operation of the Facility during the term of this Agreement, then the Property Owner shall have the right, at is sole option, to cancel this Agreement with ninety (90) days written notice in which case the Property Owner shall be relieved of all its obligations under this Agreement, except as to payment of the In Lieu of Payment for the year of such cancellation. Section 29. Term This Agreement is effective the 1st day of January, 2025, and shall expire on the 31st day of December 31, 2030. [SIGNATURE PAGES FOLLOW] SIGNED AND AGREED to on the day of 2023 . LG Chem, Ltd. BY: NAME: TITLE: LG Chem,Ltd.Industrial District Agreement 2025-2030 36 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 LG Chem, Ltd. 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. , 2023 . NOTARY PUBLIC, STATE OF TEXAS SIGNED AND AGREED to on the day of , 2023. CITY OF PORT ARTHUR, TEXAS BY: Ron Burton, City Manager LG Chem,Ltd.Industrial District Agreement 2025-2030 37 ACKNOWLEDGMENT STATE OF TEXAS § COUNTY OF JEFFERSON § BEFORE ME, the undersigned Notary Public, on this day personally appeared Ron Burton, City Manager of the City of Port Arthur, 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 the City of Port Arthur, 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. , 2023 . NOTARY PUBLIC, STATE OF TEXAS Approved as to form and substance : Valecia R. Tizeno, City Attorney LG Chem,Ltd.Industrial District Agreement 2025-2030 38 Exhibit "A" ® LG Chem Confidential LG Chem Project Description LG Chem,Ltd.is conducting a site selection analysis for a new manufacturing facility for Iso-Propyl Alcohol ("IPA"),a critical material used for manufacturing semiconductors. One major issue that has plagued the world following the COVID-19 pandemic and other conflicts is supply chain disruption,especially regarding materials for key products(like semiconductors)that have both advanced technology and national security implications.This also speaks to the passing of key legislations such as the CHIPS and Science Act of 2022,which calls for reshoring microprocessor manufacturing and securing its supply chain in the U.S. And to contribute to building a more resilient supply chain for semiconductors together with a key ally and partner nation,LG Chem is planning on building an Iso-Propyl Alcohol("IPA") manufacturing facility to work in close proximity with chipmakers in the U.S. IPA serves as a high-purity substance that dissolves major impurities without leaving any residue and is considered a key component for front-end processes of manufacturing semiconductors,such as photolithography,etching,ion implantation,and deposition. In these processes,IPA's degree of purity significantly affects semiconductors' quality and yield rate. With over thirty years of experience in the IPA space,LG Chem is capable of producing IPA with purity over 99.99%and is globally renowned for its operational excellence and quality control.Currently,LG Chem supplies its IPA to major semiconductor companies,including Samsung Electronics, SK Hynix,and TSMC. And some suppliers,including Samsung and SK Hynix, supply IPA exclusively from LG Chem because they simply cannot overlook the quality of IPA for the end product. The decision to bring LG Chem's semiconductor materials manufacturing capabilities to North America again stems from the importance of building a resilient supply chain.Because the very nature of IPA makes it susceptible to contamination over long-distance shipping,it is advantageous to source IPA from nearby locations. The proposed project will require the hiring of around 51 manufacturing employees and a total investment of about$240 million. The site selection for this project is at its fmal stages,and one of the main criteria that will be considered during these last steps will consist of state and local government support. Finally,as LG begins to expand its operations in the U.S.,the petrochemical division is planning to build out more facilities. A successful rollout of the project will lead to a potential petrochemical complex in the area for other LG Chem products. Thus,the project team appreciates all the guidance and support in advance and looks forward to fostering a productive and meaningful long-term partnership. Cc-)2023 LG Chem,Ltd.All rights reserved. 1 LG Chem,Ltd.Industrial District Agreement 2025-2030 39 Exhibit "B" Legal Description and Map Depiction of the Affected Area LG Chem,Ltd.Industrial District Agreement 2025-2030 40 Exhibit "C" List of Present Owners and Lessees of Property Located in the Affected Area and Pertaining to the Facility, Except for Excluded Persons • LG Chem,Ltd.Industrial District Agreement 2025-2030 41 Exhibit "D" Form of Industrial District Agreement Report Industrial District Agreement Report Property Owner's Name ----- Date of this Report _ Report Period (semi-annual period covered by this Report) From /_ /20_To /_/20_ Property Nested Owner Contractors (A) Total number of employees employed on the last day of the Report Period who were Port Arthur residents on the last day of the Report Period (B) Total number of all employees employed on the last day of the Report Period (C) Total number of new hires employed during the Report Period who were Port Arthur residents on their first day of employment (D)Total number of all new hires employed during the Report Period (E) Total number of applicants completing the interview process during the Report Period (A) Total number of Designated LBE's that: • were on the approved vendor list of the Property Owner at any time during the Report Period,and/or • were invited by the Property Owner during the Report Period to bid on contracts for goods and/or services (B) Total number and dollar amount of contracts awarded by the Property Owner during the Report Period for goods and/or services that the Property Owner determines could have potentially been obtained from Designated LBE's: Total Number of Contracts: Total Dollar Amount of Contacts: $ (C) Total number and dollar amount of contracts described immediately (above in II (B)that were awarded to Designated LBE's during the Reporting Period: Total Number of Contracts: Total Dollar Amount of Contacts: $ This Report contains confidential or privileged information. Unauthorized use of this communication is strictly prohibited. This Report is to be submitted to the Office of the City Manager and copied to the City Attorney during the months of January and July for the immediately preceding 6 months. The due date(January 31"or July 31')for submitting a Report may be extended for thirty(30)days upon the written request of the Property Owner. LG Chem,Ltd.Industrial District Agreement 2025-2030 42