15 - PEDC Amendment & Termination of Campbell Soup's Single Serve Beverage Line Incentive Agreement

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Item No. 15 A TO: City Council John Godwin, City Manager FROM: Stephanie 11. Harris, City Attorney SUBJECT- Approval of PEDC Board of Directors action amending and terminating Economic Incentive Agreement dated January 3,0, 2014 with Campbell Soup Supply Company LLC. DATE: November 7, 2.017 BACKGROUND: Recently, Council approved documents to terrninate the February 25, 2013 Tax Abatement Agreement with Campbell Soup related to their Single Serve Beverage Line ("SSB Line") and to enter a anew Tax Abatement Agreement with the company related to its, new Plum Organics Manufacturing Line ("Plum Line)." As you will recall, Campbell Soup is ceasing operations of the SSB Line due to prevailing conditions in the industry, but is replacing that line with the new Plum Line which will manufacture organic baby and toddler food and the like in soft pouches. There will be a small net gain in jobs over those currently associated with the SSB line as a result of the changeover. In conjunction with the 2013 tax abatement agreement, Council approved an Economic Incentive Agreement between PEDC and Campbell Soup regarding the SSB Line in the amount of $500,000.00 in January of 2014. For the same reasons the company requested the amendment and termination of the 2013 tax abatement agreenicilt, it requested that PEDC amend and terminate: the 2014 Economic Incentive Agreement and also to enter into a new performance agreement related to the Plum Line to assist it in transitioning fi-orn the SSB Line to the Plum Line. On October 20, 2017, the PEDC Board of Directors voted to amend and terminate the 2014 incentive agreement, and subject to Council approval, will execute the documents attached hereto (and addendum agreement and a tennination agreement) or documents in substantial conformance thereto. At the same meeting, PEDC approved a perforrnance incentive relating to tile Plum Lille which consists of a forgivable loan of $400,000.00, under the terms of which, at the second, third, fourth and fifth anniversaries, payments due and owing will be forgiven by PEDC if Campbell Soup has met employment levels akin to those in the tax abatement agreement recently approved by Council. STATUS OF ISSUE, As noted, the 2.014 incentive was for $500,000.00, Under PEDC bylaws as, they existed in 2014 and now, any project over $400,00�0.0�0 requires Council approval, and Council provided this approval on January 27, 2014 in Resolution 2014-006, As Council approved the incentive by resolution, Council will need to approve a second resolution to amend and terminate the 2014 agreement in order for PEDC to be able to execute the addendum and tem-tination agreements. The new PEDC Plum Line incentive does not exceed $400�,00�0,00 and thus does not require Council approval.