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08-B Turner Ind Tax Abatement .. DRAFT F:ATTORNEY\RESWORK\CURRENT\ Turner Industries Tax Abatement Res July 28, 2005 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS, APPROVING AND AUTHORIZING A TAX ABATEMENT AGREEMENT WITH TURNER INDUSTRIES GROUP, LLC; MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City Council of the City of Paris has been presented a proposed agreement by and between the City of Paris, Paris, Texas, and Turner Industries Group, LLC, providing for a commercial and industrial tax abatement for certain improvements, a copy of which is attached hereto and incorporated herein by reference hereinafter called "AGREEMENT"; and, WHEREAS, upon full review and consideration of the AGREEMENT, and all matters attendant and related thereto, the City Council is of the opinion that the terms and conditions thereof should be approved, and that the Mayor should be authorized to execute it on behalf of the City of Paris; NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, PARIS TEXAS: Section 1. That the findings set out in the preamble to this resolution are hereby in all things approved. Section 2. That the terms and conditions of the proposed AGREEMENT, having been reviewed by the City Council of the City of Paris and found to be acceptable and in the best interests of the City of Paris and its citizens, be, and the same are hereby, in all things, approved. Section 3. That the Mayor is hereby authorized to execute the AGREEMENT and all other documents in connection therewith on behalf of the City of Paris substantially according to the terms and conditions set forth in the AGREEMENT. Section 4. That the terms of the Tax Abatement Agreement and the property the subject thereof meet the Guidelines and Criteria heretofore adopted by the City of Paris. Section 5. That, by hereby granting the tax abatement, there will be no substantial adverse effect on the provision of City services or on its tax base. Section 6. That the planned use of the property the subject of the tax abatement will not constitute a hazard to public safety, health, or morals. I Section 7. That this approval and execution of the AGREEMENT on behalf of the City is not conditional upon approval and execution of any other tax abatement agreement by any other taxing entity. Section 8. That this resolution shall be effective from and after its date of passage. PASSED AND ADOPTED this the 8th day of August, 2005. Curtis Fendley, Mayor ATTEST: Janice Ellis, City Clerk APPROVED AS TO FORM: Larry W. Schenk, City Attorney I THE STATE OF TEXAS COUNTY OF LAMAR ) ) ) TAX ABATEMENT AGREEMENT This agreement is entered into by and between the CITY OF PARIS, PARIS, TEXAS, a municipal corporation, situated in Lamar County, Texas, acting by and through its authorized officer whose signature appears below, hereinafter called CITY, and Turner Industries Group, LLC, acting by and through its authorized officer whose signature appears below, hereinafter referred to as 0 WNER. WITNESSETH: WHEREAS, the City Council of the City of Paris did heretofore, on the 1 st day of August, 2005, in Resolution No. 2005-_, elect to be eligible to participate in tax abatement agreements in order to maintain and enhance the commercial and industrial economic and employment base of the Paris area for the long term interest and benefit of the City and its citizens; and, WHEREAS, the City Council of the City of Paris did heretofore, on the 1 st day of August, 2005, in Resolution No. 2005-_, pass and adopt a policy on tax abatement incentives; and, WHEREAS, the policy on tax abatement incentives constitutes appropriate guidelines and criteria governing tax abatement agreements to be entered into by the CITY as required by the Property Redevelopment and Tax Abatement Act, as amended; and, WHEREAS, the City Council of the City of Paris did heretofore, on the - day of , , pass Ordinance No. , establishing an Enterprise Zone in the City of Paris, hereinafter called CITY, for commercial and industrial tax abatement, hereinafter referred to as ORDINANCE, as authorized by the Property Redevelopment and Tax Abatement Act, as amended, being V.T.C.A. Tax Code, Chapter 312 at Section 312.2011; and, WHEREAS, the contemplated use of the PROPERTY, as hereinafter defined, the contemplated improvements to the PROPERTY in the amount as set forth in this AGREEMENT, and the other terms hereof are consistent with encouraging development of said Enterprise Zone in accordance with the purposes for which it was created and are in compliance with the CITY's policy on tax abatement incentives and the ordinance creating such Enterprise Zone adopted by the CITY and all applicable laws; NOW, THEREFORE, The Parties hereto do mutually contract and agree as follows: TAX ABATEMENT AGREEMENT - Page 1 EXHIBIT A 1 I I. Term 1.1 The term of this AGREEMENT shall begin on the 8th day of August, 2005, with, as hereinafter provided, tax abatement granted herein beginning with the tax year beginning January 1,2006, and expiring on December 31,2012. II. Area to be Improved 2.1 The PROPERTY to be the subject of this AGREEMENT shall be that PROPERTY described in Exhibit A, attached hereto, which is made a part hereof and shall be hereinafter referred to as PROPERTY. III. Improvements 3.1 The OWNER's current facilities consist of land, buildings, and other structural improvements, all as shown on Exhibit A, attached hereto. The OWNER shall make improvements to the PROPERTY as follows: Expansion in production capacity in the Paris plant consisting of additional production capability, to be included in a portion of an existing building structurally modified to accommodate new production equipment. Such improvements will be made upon the PROPERTY herein described and that portion of Bay 4 described in Exhibit A attached hereto, for the purposes of the production and configuration of heavy duty metal pipe, to include an addition to the foundation of and structural improvements to the building; the purchase and installation of one (1) PB 1400 Induction Bending Machine capable of bending up to 56 inch diameter joints of carbon and alloy heavy duty metal pipe, said specific piece of equipment to be later identified for future reference by manufacture's name and serial number; and the purchase and installation of one Wheelabrator Blast Cabinet capable of grit blasting joints of straight carbon and alloy pipe, to similarly be later identified for future reference by manufacture's serial number, all of which will be particularly described in CITY'S Certificate of Completion prepared after the completion and installation of the improvements and machinery herein described, which shall be furnished to and filed with the Chief Appraiser of the Lamar County Appraisal District. Said Certificate shall be duly executed by the Mayor of the City of Paris in the form attached hereto as Exhibit B. The improvements described in this paragraph shall be hereinafter referred to as IMPROVEMENTS. The IMPROVEMENTS will be at a cost equal to or in excess of $600,000.00 for improvements to the existing building, and $2,305,000.00 for purchase of machinery and equipment, for a total investment of $2,905,000.00, and shall be substantially completed on or about November 1,2005; provided, that OWNER shall have such additional time to complete the IMPROVEMENTS as may be required in the event of "force majeure" if OWNER is diligently and faithfully pursuing completion of the IMPROVEMENTS. For this purpose, "force maj eure" shall mean any contingency or cause beyond the reasonable control of 0 WNER including, without limitation, acts of God, or the public enemy, any natural disaster, war, riot, civil commotion, insurrection, governmental or de facto governmental action, unless caused by acts or omissions of OWNER, fires, explosions, accidents, TAX ABATEMENT AGREEMENT - Page 2 I floods, and labor disputes or strikes. The date of completion of the IMPROVEMENTS shall be defined as the date a Certificate of Occupancy is issued by the City of Paris, or as otherwise agreed in writing by the parties. IV. Consideration Improvements 4.1 The OWNER agrees and covenants that it will diligently and faithfully, in a good and workmanlike manner, pursue the completion of the IMPROVEMENTS. As a good and valuable consideration of this AGREEMENT, OWNER further covenants and agrees that all construction of the IMPROVEMENTS will be in accordance with all applicable state and local laws, codes and regulations or will procure a valid waiver thereof. In further consideration, OWNER shall thereafter, from the date a Certificate of Occupancy is issued or the IMPROVEMENTS are completed as agreed, until the expiration of this AGREEMENT, continuously operate and maintain the PROPERTY, including the specific units of new equipment as identified herein, as a production and manufacturing plant. V. Consideration Jobs 5.1 The OWNER currently has 485 employees at the existing site. Not later than December 1,2005, OWNER will create at least ten (10) new, permanent, full time jobs at the Paris Plant for work to be performed substantially either (a) at the site of the IMPROVEMENTS, or (b) in support of operations performed by others at the site of the IMPROVEMENTS. Suchjobs shall be filled with priority being given to promote and/or retain among equally qualified job applicants the hiring of employees first from within the Enterprise Zone, second from within the corporate limits of the City of Paris, and third from within the County of Lamar, State of Texas, subject to the laws and regulations of the United States of America and the State of Texas and subject to any labor contracts currently in effect and any successive contracts or past practices. The OWNER agrees that it will not fill the new, permanent, full time jobs with employees from among its current employees at the existing site without immediately filling the positions vacated by such employees. 5.2 OWNER agrees that, during that portion of the term of the AGREEMENT occurring subsequent to January 1,2006, it will not reduce below ten (10) the number of such new, permanent, full time jobs so created. VI. Default 6.1 In the event that (a) the IMPROVEMENTS for which an abatement has been granted are not completed in accordance with this AGREEMENT or the expenditure for the IMPROVEMENTS does not meet the amount required herein; or (b) the jobs required herein are not TAX ABATEMENT AGREEMENT - Page 3 I created and maintained in accordance with this AGREEMENT; or (c) OWNER allows its ad valorem taxes owed the CITY to become delinquent and fails to timely and properly follow the legal procedures for protest or contest of any such ad valorem taxes; or (d) OWNER materially breaches any of the other terms and conditions of this AGREEMENT, then this AGREEMENT shall be in default. In the event the OWNER defaults in its performance of either ( a), (b), (c), or (d) above, then the CITY shall give the OWNER written notice of such default and if the OWNER has not cured such default within sixty (60) days of said written notice, this AGREEMENT may be modified or terminated by the CITY. Notice shall be in accordance with paragraph 13.3. As liquidated damages in the event of default, and in accordance with the requirements of Section 312.205 (c) of the Property Tax Code of the State of Texas, all taxes which otherwise would have been paid to the CITY without the benefit of abatement, together with interest to be charged at the statutory rate for delinquent taxes as determined by Section 33.01 of the Property Tax Code of the State ofT exas, with all penalties permitted by the Property Redevelopment and Tax Abatement Act and the Property Tax Code of the State of Texas, shall be recaptured and will become a debt to the CITY and shall be due, owing, and paid to the CITY within sixty (60) days of the expiration of the above-mentioned applicable cure period as the sole remedy of the CITY, subject to any and all lawful offsets, settlements, deductions, or credits to which OWNER may be entitled. The parties acknowledge that actual damages in the event of default and termination would be speculative and difficult to determine. VII. Tax Abatement 7.1 Subject to the terms and conditions of this AGREEMENT, and subject to the rights and holders of any outstanding bonds of the CITY, a portion of ad valorem property taxes from the PROPERTY otherwise owed to the CITY shall be abated. Said abatement shall be an amount equal to one hundred percent (100%) of the taxes assessed upon the increased value of the IMPROVEMENTS (including real and personal property, but excluding inventory and supplies) over the value in the year in which this AGREEMENT is executed and in accordance with the terms of this AGREEMENT and all applicable state and local regulations or valid waiver thereof; provided that the OWNER shall have the right to protest or contest any assessment of the PROPERTY and said abatement shall be applied to the amount of taxes finally determined to be due as a result of any such protest or contest. For the purposes of this AGREEMENT, the initial value of the existing property (not subject to abatement) shall be deemed to be the value as shown on the tax rolls of the Lamar County Appraisal District as of January 1 of the year in which the AGREEMENT is executed, said amount being $9,555,260.00 (Base Year Value), the same consisting of$158,200.00 for Land, $3,219,720.00 for Buildings, $1,645,400.00 for Inventory, and $4,531.840.00 for Equipment, with $1,739,570.00 of the Equipment value already abated through 2006. Said abatement shall extend for a period of seven (7) years beginning January 1,2006. 7.2 The abatement granted herein shall be subject to and governed by the Guidelines and Criteria for Tax Abatements, a copy of which is attached hereto as Exhibit C, and OWNER shall comply with the requirements of Exhibit C in the performance of this AGREEMENT, save and except that, in the event of a conflict between the requirements of Exhibit C and this AGREEMENT, TAX ABATEMENT AGREEMENT - Page 4 T I this AGREEMENT shall control. VIII. No Conflict of Interest 8.1 The OWNER represents and warrants that the PROPERTY does not include any property that is owned or leased by a member of the Planning and Zoning Commission of the City of Paris, nor by a member of the City Council approving, or having responsibility for the approval of, this AGREEMENT. . IX. Conditions 9.1 The terms and conditions of the AGREEMENT are binding upon the successors and assigns of all parties hereto. 9.2 It is understood and agreed between the parties that the OWNER, in performing its obligations hereunder, is acting independently, and the CITY assumes no responsibility or liability in connection therewith to third parties and OWNER agrees to indemnify and hold harmless the CITY therefrom; it is further understood and agreed among the parties that the CITY, in performing its obligations hereunder, is acting independently, and the OWNER assumes no responsibility or liability in connection therewith to third parties and, to the extent permissible by law, the CITY agrees to indemnify and hold harmless the OWNER therefrom. x. Compliance Provisions 10.1 The OWNER agrees that the CITY, its agents and employees, shall have the reasonable right of access to records concerning the OWNER's investment in the IMPROVEMENTS for the purpose of conducting an audit of the project improvements and project costs. Any such audit shall be made only after giving the OWNER notice at least fourteen (14) days in advance and will be conducted in such a manner as to not unreasonably interfere with the operation of the facility. Upon request, the OWNER will provide the CITY with a detailed Asset Report with an itemized list of assets placed into service from the date of execution of this AGREEMENT to November 1, 2005. The Asset Report will provide the date on which the asset was capitalized, the acquisition amount, and the accumulated depreciation amount. At the CITY's request, the OWNER will provide actual invoices to support the amounts shown on the Asset Report. 10.2 The OWNER further agrees that the CITY, its agents and employees, shall have reasonable right of access to the PROPERTY to inspect the IMPROVEMENTS in order to insure that the construction of the IMPROVEMENTS are in accordance with this AGREEMENT and all applicable state and local laws and regulations or valid waiver thereof. After completion of the IMPROVEMENTS, the CITY shall have the continuing right to inspect the PROPERTY to insure that it is thereafter maintained and operated in accordance with this AGREEMENT during the term TAX ABATEMENT AGREEMENT - Page 5 T I of the AGREEMENT, and OWNER shall provide evidence as to the creation of the ten (10) new, permanent, full time jobs described in this AGREEMENT. All inspections will be made only after giving the OWNER notice at least seventy-two (72) hours in advance, and such inspections shall be conducted in such a manner so as not to interfere with the operation of the facility. Representatives of the CITY inspecting the PROPERTY and improvements shall be accompanied by one (1) or more representatives of the OWNER and shall sign an agreement promising to maintain the confidentiality of any information they obtain in connection therewith except for the purposes of assessing and collecting ad valorem taxes and verifying or enforcing compliance with this AGREEMENT. Said representative shall also be required to observe any facility rule and regulation applicable to the PROPERTY. Nothing herein shall be construed as limiting the CITY's ability to perform inspections or to enter the PROPERTY the subject of this AGREEMENT. XI. Initial and Annual Reporting 11.1 The OWNER further agrees that it will, within thirty (30) days of completion of the IMPROVEMENTS, provide CITY with a sworn report, written on company letterhead and signed by a designated representative of OWNER, which contains the following information: (a) (b) (c) (d) (e) (t) (g) Copy of the printout from the Lamar County Appraisal District showing the market value of the PROPERTY prior to the construction of the IMPROVEMENTS; Detailed description of IMPROVEMENTS; Detailed description of any miscellaneous items of office equipment and the actual cost of such added office equipment; Copy of or identification of plans and specifications of constructed improvements and the location of the same for inspection by CITY's certification team; Detailed list of and actual cost of added machinery and equipment; Actual cost of capital IMPROVEMENTS; and, Date of substantial completion of the IMPROVEMENTS as defined in paragraph 3.1 hereof. 11.2 The OWNER further agrees that it will provide CITY with an annual, sworn report which contains the following information: (a) the name of original hiree in the newly created job, date of hire, and place of residence of the hiree, and (b) statement as to whether or not the ten (10) new, permanent, full time jobs are still in existence and filled, and (c) the name of the current employee in the newly created job, date of hire, and place of residence of the hiree. Additionally, OWNER shall certify, in writing, that it is in compliance with each applicable term of this AGREEMENT. Such annual report shall be furnished on the forms provided by the City and TAX ABATEMENT AGREEMENT - Page 6 I attached hereto as Exhibit D. 11.3 In addition to the annual report required under Section 11.2 hereof, the OWNER further agrees that it will provide CITY a copy of its Texas Workforce Commission Employer's Quarterly Report within thirty (30) days of its filing of the same with the Texas Workforce Commission. XII. Authority to Contract 12.1. This AGREEMENT was authorized by resolution of the City Council at its regularly scheduled meeting on the 8th day of August, 2005, authorizing the Mayor to execute the AGREEMENT on behalf of the CITY. 12.2 This AGREEMENT was entered into by Turner Industries Group, LLC. pursuant to the authority granted to the authorized official whose signature appears below. 12.3. This AGREEMENT shall constitute a valid and binding AGREEMENT between the CITY and OWNER when executed in accordance herewith, regardless of whether any other taxing unit executes a similar agreement for tax abatement. XIII. Legal 13.1 No officer, official or agent of the CITY has the power to amend, modify or alter this AGREEMENT or waive any of its conditions or to bind the CITY by making any promise or representation not contained herein. 13.2 This AGREEMENT, except by operation of law, shall not be assigned or transferred by OWNER, without the prior written consent of CITY, which consent shall be at the sole discretion of the CITY. 13.3 Any written notice required or permitted under the terms of this AGREEMENT shall be given and be deemed to have been duly served if either (1) delivered in person, or (2) deposited certified mail, return receipt requested, postage prepaid in the United States mail, addressed to the designated representative of the respective parties which are designated as follows: OWNER Turner Industries Group, LLC. Attn: Thomas M. Glasscock, Vice President/General Manager 1200 19th St. S.W. Paris, TX 75460 CITY City Manager City of Paris P. O. Box 9037 Paris, Texas 75461-9037 TAX ABATEMENT AGREEMENT - Page 7 T I With a copy to: City Clerk City of Paris P. O. Box 9037 Paris, Texas 75461-9037 13.4 If any term or provision of this AGREEMENT shall be declared unconstitutional or void by any court of competent jurisdiction, the constitutionality and validity of the remainder of said AGREEMENT shall not be affected thereby, and to this end the terms and provisions of said AGREEMENT are declared to be severable. 13.5 This AGREEMENT sets forth the entire understanding between the parties, and any other understandings or agreements shall be canceled and superseded by this AGREEMENT upon the date of execution hereof. None of the terms of this AGREEMENT shall be waived, discharged, altered or modified in any respect, except by an Agreement in writing signed by both parties and specifically referring to this AGREEMENT. The captions in this AGREEMENT are included for convenience only and shall not be taken into consideration in any construction or interpretation of this AGREEMENT or any of its provisions. This AGREEMENT is performable in Lamar County, Texas, and shall be governed by, construed and enforced in accordance with the laws of the State of Texas. The provisions of this AGREEMENT shall apply to, bind and inure to the benefit of the CITY, OWNER, and their respective successors, and permitted assigns, if any. 13.6 Venue for any actions arising under this AGREEMENT shall lie exclusively in the courts of Lamar County, Texas, for any state court action, and in the U.S. District Court for the Eastern District of Texas for any Federal Court action. Witness our hands this 8th day of August, 2005. CITY OF PARIS, PARIS, TEXAS By: Curtis Fendley, Mayor ATTEST: Janice Ellis, City Clerk APPROVED AS TO FORM: Larry W. Schenk, City Attorney TAX ABATEMENT AGREEMENT - Page 8 T I ATTEST: By: Secretary I TURNER INDUSTRIES GROUP, LLC. Les Griffon, Vice President - Finance TAX ABATEMENT AGREEMENT - Page 9