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HomeMy WebLinkAboutPR 11638 SABINA/BASF/ATOFINAR. MEMO OFFICE ' To: Mayor, City Council & City Manager .From: Mark T. Sokolow, City Attorney /~ ~ Subiect: P. 1~. No. 11638 Council Meeting - l~nuary 22, 2002 ~ ~ Date: . Iam,=ry 17, 2002 ~ 11638 authorizing the City Manager to Attached is Proposed ll. esoludon No. execute an IndUstrial District Agreement with SABINE petrochemicals, Inc., BASF Corporation, Inc. and ATOI=INA Petrochemicals, Inc. lVITS/ts Attachment z. pr116$8.mcmo OSCAR G. ORTIZ, MAYOR FELIX A. SARI(ER, MAYOR PRO-T~M COUNCIL MEMBERS: CRAIG HANNAH THOMAS & HENDERSON TOM GJLLAM, III REV. RONNIE LINDEN . SOB BOWERS ,* ROSE MITCHELL CHAISSON . ROBERT E. ALLEN yanuary ! 7, 2002 STEPHEN RT'Z(~tB~ CAROLYN O~XO~ CffY SEO~ETAR¥ MARK T.S~KOLOW ..VIA FAC, SIM'II.l=. (903) 498-¢260 FINA OIL AND CHEMICAL COMPANY ATTN: Mr. Marvin Roe 1004 CR 412S ': Scurry, Texas 75158 :' ILE: ' Butadiene Con~act Dear Mr. Roe: It was a pleasure meeting you on January 15th. Attached is another draft of the butadiene contract. It will need to be approved by the City Council by a new Resolution. We still need an Exhibit "E" to show the location of the butadiene extractibn unit, olefin conversion unit,'and alkylate unit as well as the address for the Joint Ventures to be put in Section 18. We are placing this matter on the $anuary 22, 2002 Council agenda Sincerely, Mark T. Sokolow City Attorney MT.g/ts Attachment: P.R. No. 11638 Proposed Butadiene Contract cc: City Manager zfina4_l.ltr2 RO. BOX 1089 · PORT ARTHUR. TEXAS 77641-1089 · 409/983-8115 · FAX 409/983-8291 P.R. No. 11638 01/16/02 jb RESOLUTION NO. A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE AN INDUSTRIAL DISTRICT AGREEMENT WITH SABINA PETROCHEMICALS, INC., BASF CORPORATION, INC., AND ATOFINA PETROCHEMICALS, INC. WHEREAS, the City Council of thc City of Port Arthur hereby deems it to be in thc best interests of the citizens of thc City of Port Arthur for thc City Manager to execute an Industrial District Agreement between thc City of Port Arthur and BASF Corporation, Sabina Petrochemicals, Inc., and Atofina Petrochemicals, Inc., a copy of which is attached as Exhibit "A". NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR: Section 1. That thc facts and opinions in thc preamble arc true and correct. Section 2. That thc City Manager is authorized to execute an Industrial District Agreement between thc City of Port Arthur and BASF Corporation, Sabina Petrochemicals, Inc., and Atofina Petrochemicals, Inc., in substantially thc same form as denoted in Exhibit "A". Section 3. That this Resolution superccdes Resolution No. 01-312. Section 4. That a copy of the caption of this Resolution be spread upon thc z.prl1638 Minutes of the City Council. READ, ADOPTED AND APPROVED on this day of , A.D., 2002, at a Regular Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES: Mayor , City Council NOES: ATTEST: OSCAR ORTIZ, MAYOR CAROLYN DIXON, CITY SECRETARY APPROVED AS TO FORM: MAKK T. SOKOLOW, CITY ATTORNEY APPROVED FOR ADMINISTRATION: STEVE FiTZGIBBONS, CITY MANAGER z.prl1638 EXHIBIT "A" STATE OF TEXAS COUNTY OF JEFFERSON INDUSTRIAL DISTRICT AGREEMENT WITH BASF CORPORATION, SABINA PETROCHEMICALS, LLC AND ATOFINA PETROCHEMICALS, INC. WHEREAS, the companies, BASF Corporation, SAFINA Petrochemicals, and ATOFINA Petrochemicals, Inc., plan to build a butadiene extraction uniL olefins conversion unit and an alkylate unit on a portion o£the tracts that are owned by ATOFINA Petrochemicals, Inc.; and WHEREAS, BASF Corporation, ATOFINA Petrochemicals, Inc., and SABINA Petrochemicals, LLC, a Tri-Venture among Shell Chemical Company, ATOFINA Petrochemicals, Inc., and BASF Corporation, hereinafter denoted as the Joint Venturers desire to enter into an "in lieu of tax" (industrial district agreement) with the City o£ Port Arthur, hereinafter denoted as the City, with regards to this new ptant; and WHEREAS, the Joint Venturers are businesses that presently plan to produce the products described in Exhibit "A" on the tracts; and WHEREAS, the Joint Venturers presently have the equipment and units z.ida.atofina_basf_shell.2 described in Exhibit "B" with the values described in Exhibit "C", and WHEREAS, the Joint Venturers plan to make a capital expenditure in the timetables and values as described in Exhibit "D", and WHEREAS, the City and the Joint Venturers wish to address the following: (1) health and safety issues on the land described in Exhibit"E." and at any existing plant or at any plant that may be built thereon and procedures for the City's review thereof, (2) needs of the City to have a stable revenue source that is not materially affected by appraisal litigation, (3) the need to define backup services provided by the City, (4) employment opportunities for Port Arthur residents, minorities, and companies, and (5) the temis of a new Agreement; and WHEREAS, the City and the Joint Venturers desire to enter a new Industrial District Agreement with respect to property described on Exhibit "E" that is within the extraterritorial jurisdiction of the City; and WHEREAS, the City and the Joint Venturers agree that there has been full and adequate consideration for the new Industrial District Agreement with the Joint Venturers; and z.ida.atofina_basf_shell.2 2 WHEREAS, this new Agreement is authorized under Section 42.044 Local Government Code, Vernon's Texas Code Annotated, and that the parties agree that the following terms are reasonable, appropriate, and not unduly restrictive of business activities; and WHEREAS, all parties find that this new Agreement as deli,n, eated herein is beneficial to each party. NOW, THEREFORE, in consideration of the promises and the mutual agreements of the parties contained herein, City and the Joint Venturers agree with each other as follows: Section 1. Payments by The Joint Venturers (a) For the years 2003 through 2012, the Joint Venturers shall pay to the City the amounts delineated in this Section so long as this Industrial District Agreement is in full force and effect and all of the property described in Exhibit "E" is not annexed by the City. z. ida.atofina_basf_shell.2 3 b) The "in lieu of tax" payments shall be made as follows: Years Amount Owed Due Date 2003 $0 September 2004 $0 September 2005 $ 252,000 September 2006 $ 252,000 September 2007 $ 252,000 September 2008 $ 252,000 September 2009 $ 315,000 September 2010 $ 315,000 September 2011 $ 315,000 September 2012 $ 315,000 September 1 2003 1 2004 1 2005 1 2006 1 2007 1 2008 1 2009 1 2010 1 2011 1 2012 c) If these payments are received later than September 1st of each year, the Joint Venturers will also pay the City a late fee of 12% perannum. d) The City shall not refund any monies previously paid by the Joint Venturers, either directly or indirectly to the City. Section 2. If requested by the Joint Venturers, the City of Port Arthur's Fire Department shall provide backup fire suppression support and the City of Port Arthur's Police Department shall assist in providing an evacuation route in the case of a fire or a chemical release at the Joint Venturers plant located or to be located in the City's extraterritorial jurisdiction. Nevertheless, the Joint z.ida.atofina_basf_shell.2 4 Venturers shall be primarily liable for taking such precautions as is expected in the industry and as is required by federal, state and local law including the standard codes as delineated and referenced in the Standard Fire Prevention Code as published each year by the Southern Building Code Congress International, Inc. to prevent fires, explosions and chemical releases a, nd to provide an evacuation. The Joint Venturers shall employ or provide sufficient fire suppression personnel and equipment to provide an initial and primary fire suppression response as well as to control and abate chemical releases. The Joint Venturers 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 on the land described in Exhibit"E". If there is a fire and the City is requested to provide initial and primary fire suppression services or ifa cleanup is required under Section 2201.3.2.1 of the Standard Fire Prevention Code, the Joint Venturers will pay to the City the costs and expenses incurred by the City and any of its departments. Section 3. The Joint Venturers shall immediately notify the central dispatch office of the City of Port Arthur's fire chief, police chief and the City's Emergency Management Coordinator of all incidents involving fires, serious z.ida.atofina basf shell.2 5 injuries;deaths, and chemical releases that create a health and safety hazard to the community. Section 4. 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 the Agreement if the City s?ould 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 such annexation prior to October 1, 2012 will not be made for revenue purposes only. Notwithstanding, the parties agree and consent that the City can annex ifa bill is adopted by the State legislature which amends the current annexation laws. In the event of such annexation, the Joint Venturers will not be required to make further payments under this Agreement for any calendar year commencing after such annexation with respect to property so annexed, but shall nevertheless be obligated to make full payments for the year during which such annexation becomes effective if the annexation becomes effective after January 1st of said year. The Joint Venturers shall not be required to pay ad valorem taxes to the City for the same period of time that they have already z.ida.atofina_basf_shell.2 6 paid an "in lieu of tax" payment, with respect to the property described in Exhibit "E" to this Agreement. In case the property described in Exhibit "E" is annexed prior to December 31, 2012, the City will remit to the Joint Venturers any taxes paid to the City in excess of the "in lieu of tax" Payments as described in Section 1 as an economic incentive program as allowed under Chapter 380 Local Govemment Code. This partial remission of taxes (Economic Incentive Program) will only be applicable until December 31, 2012. If the annexation law.s are changed so that the City can no longer annex the property of the company, the Joint Venturers agree that it will continue to pay to the City the "in lieu of tax" payments delineated in Section 1 until December 31, 2012 and it will thereafter continue to annually pay the City an "in lieu of tax" payment of 70% of its appraised value times the City's tax rate for so long as it or its assignees and successors owns the property as described in Exhibit "E". Pursuant to Section 42.044 Local Government Code, the Joint Venturers agree and consent that the City has the option in the City's sole discretion to extend this contract and that the Joint Venturers will continue to be obligated to pay the City "in lieu of tax" payments for successive periods not to exceed 15 years each. The taxable value of the Joint Venture includes z. ida.atofina_basf_shell. 2 7 all of the land, buildings, goods, equipment, inventory and other property that is or will be located in or on the property described in the attached Exhibit"E". This also includes the value of any property that is located in a free trade zone or in any other type of federal, state or local zone. Section 5. The parties agree that the City has the sole discretion after October 1, 2012 to annex the property described in Exhibit "E" or to enter into negotiations on the payment by the company of additional "in lieu of tax" payments. Section 6. The present owners of the tract are described in Exhibit "F". If the Joint Venturers only owns or leases a partial interest in any of the parcels or tracts described in Exhibit "E" to this Agreement, the City of Port Arthur reserves the right to annex that tract or parcel if the other owners or lessors do not pay an "in lieu of tax" payment for their interest in the property. If the City annexes a tract or tracts, the total "in lieu of tax" payment will be reduced by the same percentage as the appraised value of the tracts under the contract are reduced. Section 7. The City will not commence annexation proceedings prior to October 1, 2012 for the Joint Venturer's property as delineated in Exhibit "E" z.ida.atofina basf shell.2 8 to this Agreement under Chapter 43 of the Local Government Code or file litigation in District Court to abate or prevent a nuisance or seek a civil penalty under Sections 54.016, 54.017, and 217.042 Local Government Code for "health, safety and welfare concerns" until written notice of the concerns have been delivered to the Joint Venturers, and they have had an opportun,,ity to respond and to address the City Council in open session. Section 8. If there is a dispute as to whether there is a health, safety and welfare concern for an event.that occurred prior to October 1, 2012, the matter can, at the request of either party, be submitted to arbitration before an arbitrator selected from a panel supplied by the American Arbitration Association. The arbitration shall take place in Jefferson County or at such other locations as the parties agree to. The request for arbitration must be demanded in writing within ninety (90) days of the initial written complaint from either party to this Agreement or the arbitration shall be waived. The costs of the arbitration shall be shared equally between the parties. The arbitration process shall be completed within ninety (90) days from the date the arbitrator is selected, and if it is not so completed, any party may proceed with annexation or litigation as they so desire. z.ida.atofi ha_basf_shell.2 9 Section 9. During construction, prior to commencing operations, the Joint Venturers shall continue to seek qualified applicants by advertising in the Port Arthur News as to give Port Arthur residents a fair opportunity to apply for employment with the Joint Venturers for work on the plants that are located or will be located on the land described in Exhibit "E". The Joint Venturers shall use its best efforts to hire Port Arthur residents for both the construction work and the permanent jobs. Best efforts shall also include advertising for construction and permanent jobs in the local market including KALO radio stations in Port Arthur and shall also include recruitment with the assistance of the Texas Work Force Commission in Port Arthur, Lamar University in Port Arthur, PAISD, the Black Pastor' s Association and the Ministerial Alliance, the Port Arthur NAACP and local labor unions. During construction, the Joint Venturers shall also meet every other month or at other intervals mutually agreed on with City officials to review progress towards hiring a qualified, and to the extent available, a diverse and local workforce and to suggest or propose adjustments in the recruitment process if needed. The Joint Venturers will also have a local hiring facility in Port Arthur or in Port Arthur's extraterritorial jurisdiction for both the retention/selection of new employees and contractors. z.ida.atofina_basf_shell.2 10 The Joint Venturers will insert into their new construction contracts that the contractors will utilize their best efforts to hire construction workers and subcontractors from Port Arthur, if there are sufficient and qualified construction workers and subcontractors available. Section 10. This agreement can be assigned in whole or part with the written consent of the City Council, by a duly adopted Resolution, which will not be unreasonably withheld. If the Joint Venturers desire to make such an assignment, it shall make a written request to the City Council attaching (1) a description of the new company, (2) financial statement of the new company (3) proposed contract between the companies, and (4) the portion or portions of the plant or plants to be assigned. Section 11. The City encourages capital expansion on the land described in Exhibit "E" and the City and the Joint Venturers agrees to act in good faith to negotiate reasonable incentive programs with the Joint Venturers as such new projects are contemplated. This includes major new capital expansions that are not presently delineated in Exhibit "D" since all parties agree that reasonable incentive programs should be offered and that the Joint Venturers expect to pay reasonable "in lieu of tax" payments on new capital projects. z. ida.atofina basf shell.2 11 Section 12. In the event the capital expansion project contemplated in Exhibit "D" is not fully and finally completed for any reason, then the Joint Venturers shall nevertheless be obligated to pay seventy-percent (70%) of the butadiene extraction unit, olefins conversion unit and alkylate unit' project's then existing appraised value times the City's tax rate, or the payment amounts delineated in Section 1 herein, whichever is less, for the remaining term of this Agreement. Section 13. It is agreed by the parties to this agreement that the Joint Venturers and the City have the right to seek equitable relief, including specific performance of this agreement. Section 14. The Joint Venturers shall allow authorized employees and/or representatives of the City who have been designated and approved by the City Council, Mayor or the City Manager to have access to the Joint Venturer's land and/or plants during the term of this AGREEMENT to inspect the plants and any improvements thereto to determine compliance with the terms and conditions of the AGREEMENT. All inspections will be made at a mutually agreeable times after the giving of forty-eight (48) hours prior notice and will only be conducted in such manner as to not unreasonably interfere with the z.ida.atofina_basf_shell.2 12 construction and/or operation of the Joint Venturers. All inspections will be made with one or more representatives of the Joint Venturers and in accordance with the safety standards of the Joint Venturers. Section 15. The Joint Venturers shall certify the commencement and completion date of the contemplated improvements described in Exhib!t "D" herein. Additionally, the Joint Venturers shall furnish or make available for inspection the following information or written statements to the City at least every six months during the, construction period of capital improvements: (1) Statement by Joint Venturers describing the status of construction of the contemplated improvements, percentage of construction completed, construction schedule and company's estimate of taxable value of constructed improvements on the date of the statement; and (2) Statement by Joint Venturers of numbers of Port Arthur residents, minorities, and companies hired and amount of Port Arthur goods and services purchased. (3) Any information, documents or records of any kind reasonably necessary for the City's evaluation of the Joint Venturer's z.ida.atofina_basf_shell.2 13 compliance with the terms and conditions of this agreement and the City's guidelines, provided that Joint Venturers shall not be required to furnish any information, documents, or records which a reasonable prudent company under the same or similar circumstances would consider to be harmful to its business operations. Joint Venturer's statements described above shall be verified by Joint Venturer's project manager.or other appropriate representative. Section 16. Joint Venturers agree to annually furnish information reasonably necessary for the City to evaluate Joint Venturers' compliance with the tem-~s and conditions of this AGREEMENT. Joint Venturers further agree that on or before March 1 ~t of each year of this AGREEMENT, Joint Venturers shall provide the City an annual report/statement of compliance with this AGREEMENT. Section 17. By acceptance of this AGREEMENT and/or benefits conferred hereunder, the Joint Venturers represent and warrant that its undersigned agents have complete and unrestricted authority to enter into this AGREEMENT and to obligate and bind the Joint Venturers to all of the tet ms, z.ida.atofina_basf_shell.2 14 covenants and conditions contained herein. Section 18. Any notice provided for in this contract shall be given in writing to the parties hereto by certified mail, return receipt requested, addressed as follows: TO CITY: TO THE JOINT VENTURERS: City Manager City of Port Arthur 444 - 4th Street Port Arthur, TX 77640 BASF Corporation, SABINA Petrochemicals, LLC and ATOFINA Petrochemicals, Inc. Section 19. This agreement is effective the 1 st day of January, 2003, and shall expire on the 31 st day of December 2012, unless extended by the City. z.ida.atofina_basf_shell.2 15 day of , SIGNED AND AGREED to on the 2002. WITNESSED BY: BASF CORPORATION BY: SIGNED AND AGREED to on the __ 2002. day of WITNESSED BY: ATOFINA PETROCHEMICALS, INC. BY: SIGNED AND AGREED to on the 2002. WITNESSED BY: day of SABINA PETROCHEMICALS, LLC BY: SIGNED AND AGREED to on the __ 2002. day of WITNESSED BY: CITY OF PORT ARTHUR, TEXAS BY: City Secretary z.ida.atofi na_basf_shell.2 16 EXHIBIT "A" BASF Corporation, SABINA Petrochemicals, LLC, and ATOFINA Petrochemicals, Inc. plan to produce butadiene and alkylate products in the new butadiene extraction unit, olefins conversion unit and alkylate unit. EXHIBIT "B" The land is presently substantially vacant and does not have any major equipment therein. EXHIBIT "C" There is no major equipment on the property. The valuation of the land and existing improvements is approximately $126,000 as appraised by the'Jefferson County Appraisal District. EXHIBIT "D" The Joint Venturers plan to make a capital expenditure of approximately 280 million dollars to build a new butadiene extraction unit, olefins conversion unit, and alkylate unit within the next two years. EXHIBIT "E" A map of the area for the butadiene unit, olefins conversion unit and alkylate unit will be in the City Secretary's Office. EXHIBIT "F" The land described in Exhibit"E" is owned by ATOFINA Petrochemicals, Inc.. Except for the payments described in Section 1 of the contract from ATOFINA Petrochemicals, Inc., SABINA Petrochemicals, LLC and BASF Corporation, the City does not expect additional payments from ATOFINA Petrochemicals, Inc. for the capital expenditure on the butadiene extraction unit, olefins conversion unit, and alkylate unit described in this contract. The parties do expect "in lieu of tax" payments as follows: 1) ATOF1NA "in lieu of tax" payments of $2,250,000 per year pursuant to a new "in lieu of Tax Agreement for their refinery, as described in Resolution 01-301 (January 1, 2002 to December 31, 2008). * 2) Fina (a/k/a ATOFINA) and BASF "in lieu of tax" payments for the olefins complex as described in Resolution No. 98-291 (January 1, 1999 to December 31, 2008). * 3) ATOF1NA, BASF, and SABINA will pay "in lieu of tax" payments as delineated in this agreement for the butadiene extraction unit, olefins conversion unit, and alkylate unit (January 1, 2003 to December 31, 2012). Unless a new "in lieu of tax" agreement is negotiated for the period after December 31,2008, these areas (refinery and olefins complex) will be annexed, effective December 31, 2008, at the discretion of the City of Port Arthur.