HomeMy WebLinkAboutPR 15769 - SECOND AMENDMENT TO ECONOMIC INCENTIVE AGREEMENT WITH EDC AND TRIANGLE WASTEInteroffice
MEMORANDUM
To: Mayor, City Council, City Manage;r
From: Floyd Batiste, CEO
Date: March 2, 2010
Subject:. P. R. No. 15769; Council. Meeting of March 9, 2010
Attached is P. R. No. 15769 approving a second
amendment to the Economic Incentive Agreement between City of
Port Arthur Section 4A Economic Development Corporation and
Triangle Waste Properties, L.P.
P.R. No. 15769
3/2/2010
RESOLUTION NO.
A RESOLUTION APPROVING A SECOND AMENDMENT
TO THE ECONOMIC INCENTIVE AGREEMENT
BETWEEN CITY OF PORT ARTHUR SECTION 4A
ECONOMIC DEVELOPMENT CORPORATION AND
TRIANGLE WASTE PROPERTIES, L.P.
WHEREAS, Triangle Waste Properties, L.P. ("Triangle"), a Texas limited partnership,
has planned to construct a metal recycling facility, which includes metal collection, sorting,
cutting, packaging, and disposal within the Port Arthur Business Park on Spur 93 (the "]Project");
and
WHEREAS, the City of Port Arthur Section 4A Economic Development Corporation
("PAEDC") has sold a ten (10) acre parcel (the "Property") in the Port Arthur Business Park (the
"Park"), with an estimated fair market value of `.6310,000, to Triangle at a forty percent (40%)
discour.~ted value of $186,000. Additionally, the PAEDC Board granted Triangle a $250,000
incenti`~~e for construction costs of a building and improvement in the Park as approved by the
City Council of the City of Port Arthur pursuant to Resolution No. 07-344 on July 17, 2007; and
WHEREAS, Triangle agreed to hire fifteen (15) new employees, with an estimated
annual payroll of $436,800 by December 2008, as measured by IRS forms W-2 and W-3, and
maintain. annual payroll through June 30, 2010; and
WHEREAS, the Special Warranty Deed, dated August 1, 2007, and the Deed of Trust,
dated August 1, 2007, indicated that Triangle would perform the following:
a. Construction of a covered concrete pad of at least 100' X 100' for metal processing;
b. Crews on site will operate according to procedures, rules and regulations of the Texas
Commission on Environmental Quality (TCEQ);
c. The capture of rainwater and any process water used at the site will be disposed of in
accordance with all applicable rules and regulations of TCEQ;
~d. Design, build and operate so that scrap is not visible to any member of the public
standing at ground level on a public way;
~e. Screen property lines from view with an eight (8) foot concrete tiltvvall with
landscaping on the outside to provide extra protection and help contain dust, noise,
and odors;
£ Metal will be contained in proper storage containers when not being processc>d;
g. Metal containing radioactive sources will not be recycled or permitted on the Property
in the Park;
h. All roll off containers kept on the Property will be for non hazardous material and all
repairs to these containers will be done at a different location as to insure this area
does not become a repair area; and
i. Store all equipment, trucks, roll off containers, etc., either behind the buildings or
inside of the plant, so as not to be visible from South Business Park Drive.
and
WHEREAS, the PAEDC has not advanced the $250,000 incentive payment as n.o facility
on the Property has been constructed; and
WHEREAS, the City amended Article IV of Chapter 22 of the Code of Ordinances as it
pertains to metal recycling facilities, per Ordinance No. 07-81 on October 23, 2007, after
receiving comments and recommendations from Jack Fields, attorney for Triangle, and from the
City's environmental attorney, Robin Morse; and
WHEREAS, Ordinance No. 07-81 primarily pertained to a new permitting procedure for
Metal F;ecycling facilities; and
WHEREAS, by letter request, dated May 14, 2009 (see attached), Triangle requested a
delay in the startup of its metal recycling facillity scheduled for May 31, 2010, due to the
construction of a detention pond for later this year and due to the unfavorable business climate in
the metal recycling business; and
WHEREAS, the PAEDC has recently awarded a contract for the detention ;pond and
related i7n~provements; and
pr 15'769 Page 2
WHEREAS, PAEDC did not seek to amend the "Original Agreement" until the
detention contract was awarded; and
WHEREAS, Triangle has now requestec'l that the Original Agreement be amended to
provide a revised Performance Milestone Schedule now that there is a scheduled development of
the detention pond and related improvements; and
WHEREAS, Triangle has provided statics reports on its Project, as required by the
Original Agreement, as amended; and
WHEREAS, PAEDC proposes a revised Performance Milestone Schedule, which
includes the start of construction by July 31, 2011, and the completion of construction of the
Facility on or before May 31, 2012; and
WHEREAS, PAEDC may grant variances to the Covenants and Restrictions and such
variance has been requested by Triangle as to t:he period for construction of its building and
improvements in the Park; and
WHEREAS, Triangle has further consented to the execution of a Subordination and
Priority Agreement, as approved by Resolution l~fo. 07-444 on September 25, 2007, and ratified
in Resolution No. 08-455, which facilitated the financing by Wachovia Bank of $4,480,000 for
the building and improvements; and
WHEREAS, Triangle will be required to sign a Supplement indicating that i~t will not
hire undocumented workers, in substantially the same form as attached to Resolution No. 08-
256; and
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY ~DF PORT ARTHUR:
Section 1. That the facts and opinions in the preamble are true and correct.
pr 15769 Page 3
~5ection 2. That the PAEDC is herein authorized to enter into the Second Amendment
to Economic lncentive Agreement with Triangle Waste Properties, L.P., as to allow a revised
Performance Milestone Schedule, which includes the start of construction by July 31, 2.011, and
the completion of construction of the Facility on or before May 31, 2012.
Section 3. That a copy of this Resolution shall be spread upon. the Minutes of the
City Council.
:READ, ADOPTED AND APPROVED on this day of A.1D., 2010,
at a Meeting of the City Council of the City of Port Arthur, Texas, by the following vote:
AYES: Mayor
Council members
NOES:
DELORIS "BOBBIE" PRINCE, MAYOR
ATTEST:
TERRI HANKS, CITY SECRETARY
APPRCVED:
FLOYD BATISTE, PAEDC CEO
APPROVED AS TO FORM:
GL~Y N. GOODSON, PAEDC ATTORNEY
APPROVED A TO FORM:
~~n--
VALECIA . T ZE T~ATTORNEY
pr 15769 Page 4
EXHIBIT "A"
SECOND AMENDMENT
TO ECONOMIC INCENTIVE CONTRACT
BETWEEN
CIT'1' OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORP.
TRIANGLE WASTE PROPERTIES, LP
1'he Economic Incentive Contract between the City of Port Arthur Section 4A Economic
Development Corporation (the "PAEDC") and Triangle Waste Properties, LP ("Triangle")
approved. by Resolution No. 07-344 (the "Original Agreement") is hereby amended to revise the
promised. performance by Triangle and to revise tlhe Performance Milestone Schedule.
The Original Incentive Agreement was modified and amended by First Amendment to
Economic Incentive Contract (the "First Amendment"), and except as specified herein, all terms,
conditions, performance obligations, covenants and agreements of Triangle or the PAEDC as
specified in the Original Incentive Agreement and the First Amendment were ratified and
affirmed, and each party covenants and represents that there were no defaults in the Original
Agreement.
Triangle already entered into a Subordination Agreement as approved by Resolution No.
07-444 and will enter into a Supplement that it will not employ undocumented workers as
required by Resolution No. 08-256.
Triangle requested in May, 2009 to delay startup of its proposed metal recycling facility
(the "E acility") (i) due to the construction of a retention pond scheduled for proposed
construction by the PAEDC and (ii) due to changes in the metal recycling business which would
materially effect their projected revenues from this business. The retention pond has now been
approved and awarded for construction by the Board of Directors of the PAEDC.
The Executive Summarti is amended and restated to read as follows:
EXECUTIVE SUMMARY
~l'riangle Waste Properties, LP, a Texas limited partnership, ("Triangle") is engaged in
metal recycling, which includes metal collection, sorting, cutting, packaging and disposal.
Triangle intends to sell the recycled metal in Beaumont, Texas and Houston, Texas.
1 he City of Port Arthur Section 4A Economic Development Corporation (":PAEDC")
sold a ten. (10) acre parcel (the "Property") in the PAEDC Business Park- (the "Park"), with an
estimated fair market value of $310,000, to Triangle at a forty percent (40%) discounted value of
$186,000. Additionally, PAEDC granted Triangle $250,000 towards the construction of a
building and improvements in the Park {the "Facility";). Triangle's total grant value is $374,000,
which :includes the forty percent (40%) discounted land value and the cash grant of 250,000. In
exchange, Triangle agreed to hire 15 new employees, with an estimated annual payroll of
$436,800 by December 31, 2008, as measured by IRS forms W-2 and W-3, and to maintain said
new employees and annual payroll as required by the Original Agreement. Triangle promised to
userts best efforts to hire Port Arthur, Texas residents. Additionally, Triangle agreed to meet or
exceed the Park's original and amended Covenants and Restrictions; agreed to meet Triangle-
specifir, restrictions as specified in the Original Agreement; agreed to allow the PAEDC to pre-
approve the architectural drawings for the Facility; and agreed to serve as a model of cleanliness
and maintenance for other Park occupants.
[f breached, the PAEDC grant of $374,000, minus any credits earned, would
automatically convert to a loan (liquidated damages). The loan would have athree-year term,
starting, an the date of Triangle's breach, and an interest rate often percent (10%). To secure the
loan, (l) Joe Swinbank and Donald Poarch provided BBVA Compass Bank (formerly Texas
State Bank) a Certificate of Deposit in the amount of $374,000, according to a Commercial
Security Agreement executed by such parties, and perfected by filing a Financing Statement
(UCC-l Form) with the Secretary of State, and (2) Triangle granted PAEDC a subordinated
Deed of Trust, with PAEDC holding a second priority lien on the Property.
Triangle earns credits to reduce the duration of the Original Agreement or to reduce
liquidated damages in the event of a breach. When Triangle achieves a payroll level of $436,800
(annualized) and said payroll continues for as long as Triangle maintains at least that level of
employment, Triangle shall receive a $1.00 credit for each $6.00 of payroll paid to residents of
Port Arthur. Payroll to non-Port Arthur residents cannot be credited.
Triangle agreed to send PAEDC brief status reports, every three (3) months for the first
year and every six (6) months thereafter, until issuance of a close out report. Triangle v~ill forfeit
its credits if it fails to cure such default within five (5) days for any reporting period for which it
did not issue a report in a timely manner.
Triangle submits that its metal collection, sorting, cutting, packaging and disposal facility
(the "C&.D Recycle Center") is still underway, but there have been delays primarily due to its
focus on its existing Facility. Triangle indicates that engineering and planning for the Facility
has also been delayed due to changes in the original design layout and Texas Commission on
Environmental Quality (the "TCEQ") regulations. The new City regulations on recycling and
scrap facilities have also impacted the planning, design and engineering for the Facility.
Triangle believes it is near final acceptance of its, engineering plans and that construction of the
Facility will be offered to its current general contractor and plan to start after the plans have been
approved and a construction date can be set. Triangle acknowledges that final completion date is
simply an estimate at this time and may seek an additional amendment to the Performance
Milestone Schedule if the requested Performance Milestone Schedule amendment as set forth in
this Second Amendment cannot be achieved.
Z~riangle has indicated that due to the additional responsibilities to meet regulatory
compliance issues that the administrative staff' for the Facility should increase by 4 to 6
additional employees.
Triangle will agree to continue to provide the status reports as specified in its previous
Performance Milestone Schedule.
2. In order to provide the modified Performance Milestone Schedule, the following
schedule of the Original Incentive Agreement as amended by the First Amendment is amended
and res~rated again to read as follows:
a.. Section 5(b)(1): Incentive Recipient promises to employ fifteen (15) employees
at an annual total payroll of $436,800 as~~ measured by Internal Revenue Service (IRS)
rt7d22? + Page 2
forms W-2 and W-3 within six (6) month s from completion of its building (scheduled for
July 31, 2011).
b. Section 5(b)(3): Incentive Recipient will select an architect and general
contractor who will build facility that complies with the Park's covenants and restrictions,
original and amended, and have been pre-approved by the PAEDC-Board. The Park's
Covenants and Restrictions are contained in Exhibit "A" to the Original Incentive
Agreement and are incorporated by reference into the Original Incentive Agreement in
their entirety. The plans for the facility shall be submitted to the Board of the PAEDC
cater approval by the City. The PAEDC Board shall have a period of thirty (30) days
within which to approve such plans or advise Incentive Recipient of any reasonable
objections to such plans with specific recommendations for resolution, of such
objections. Incentive Recipient shall then have a period of fifteen (15) days within
which, to resubmit revised plans for approval of the PAEDC Board, which shall then
have a period of fifteen (15) days within which to approve the resubmitted. plans or
advise Incentive Recipient of any reasonable objections thereto. This process of approval
or rejection for resubmission shall continue with the same fifteen (15) day limitations for
each party as aforesaid until plans are ultimately approved in their entirety for the
Facility.
c.. Section 7: Triangle's amended Performance Milestone is contained in the table
below:
PF.RFnRMANCF. MiL1ESTONE SCHEDULE
A Sept. 1, 2007 Review architectural plans with the PAEDC Board for
approval
__
B Oct. 31, 2007 Issue a status report to PAEDC's Chief Executive Officer
("CEO") for the period from the effective date of this
Agreement to September 30, 2007
___
C February 1, 2008 Status report i=or the period from the effective date of this
Agreement to December 31, 2007
___
I) February 1, 2009 Status report i-or the period from the effective date of this
Agreement to ]December 31, 2008
__
E February 1, 2010 Status report for the period from the effective date of this
Agreement to ]December 31, 2009
I July 31, 2010 Status report i:or the period from the effective date of this
Agreement to .Tune 30, 2010
___
(J January 31, 2011 Status report i:or the period from the effective date of this
Agreement to ]December 31, 2010
__
H April 1, 2011 Present updated architectural plans to the PAEDC Board for
approval and provide status report on Project
___
I _
July 31, 2011 Start Construction of Facility
J October 31, 2011 Status report on Construction Progress from July 31, 2011 to
September 30, 2011
__
K January 31, 2012 Status report on Construction Progress from October 1, 2011
to December 31, 2011
_ _
I_, April 30, 2012 Status report on Construction Progress from Jan. 1„ 2012 to
March 31, 2012
ii71_? ' ~ Page 3
M July 31, 2012 Complete facility construction; Status Report
N Dec. 31, 2012 Achieve performance of 15 full-time, permanent employees;
__ _ _ Annualized payroll of $436,800;
O Feb. 1, 2013 Status report from January 1, 2012 to December 31, 2012
__ Employment and payroll sustained
P July 31, 2013 Status report from January 1, 2013 to June 30, 2013;
_ Employment and payroll sustained
~~ Feb. 1, 2014 Status report firom aanuary 1, 2013 to December 31, 2013;
_ Employment and payroll sustained
_
R July 31, 2014 Status report From January 1, 2014 to June 3(1, 201.4;
___ Employment and payroll sustained;
S Sept. 30, 2014 Close out report for presentation to the PAEDC Board at its
October 2014 meeting submitted.
3. Extension of Collateral. In consideration of the granting of this; Second
Amendment to Incentive Agreement, Joe Swinbank and Donald Poarch ratify and affirm the
pledge of a security interest in a $374,000 certificate of deposit at BBVA Compass Bank
(forn~erly Texas State Bank) (see Exhibit "C" and "E" to the Original Incentive Agreement)
and shall obtain acknowledgement from Compass Bank (formerly Texas State Bank) of the first
priority lien ofthe PAEDC against certificate of deposit #37773999 in the name of Joe Swinbank
and against certificate of deposit 3777408 in the name of Poarch Family Limited Partnership to
secure incentives for performance of the Original Incentive Agreement amended only by the
terms aJnci conditions set forth in the First Amendment.
4. Paragraph 43 of the Original Incentive Agreement is modified to :include a
reference to the EXECUTIVE SUMMARY as a part of the Original Incentive Agreement for all
purposes and constitutes promise performance by Triangle and/or PAEDC as the case may be in
accordance with the Original Incentive Agreement.
ATTO]ItNEY APPROVALS
APPRC)VED ,AS TO FORM:
Guy N. Goodson
General Counsel for PAEDC
VERIFIED AS CONSISTENT
WITH ~C 1TY COUNCIL RESOLUTION:
Resolution Number:
Valecia R. Tizeno, Acting City Attorney
#712?,; Page 4
SECOND AMENDMENT EXECUTION
CITY OF PORT ARTHUR SECTION 4A
ECONOMIC DEVELOPMENT CORPORATION
SIGNED AND AGREED TO on the day of , 2010.
President.
Witness
Secretary
Witness
TRIANGLE WASTE PROPERTIES, LP
SIGNED AND AGREED TO on the day of , 2010.
TRIANGLE WASTE PROPERTIES, LP
Signature
Print
Position
Witness
#k137? t Page 5
"fhe undersigned in accordance with paragraph 4 of the herein specified Second
Amendment hereby ratify and affirm the pledge of a security interest in that certain $374,000
Certificate of Deposits at Compass Bank (formerly Texas State Bank) as referenced in Exhibit
"C" and "F," to the Original Incentive Agreement and shall provide acknowledgment from
BBVA Compass Bank of the first priority lien of PAEDC against Certificates of Deposit
#37773999 and 3777408.
Joe Swinbank
Donald Poarch
Poarch Family Limited Partnership
~7~2?' ~ Page 6