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2012-075 RES APPROVING AND AUTHORIZING TAX ABATEMENT AGREEMENT WITH CAMPBELL SOUPRESOLUTION N0. 2012-075 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS; APPROVING AND AUTHORIZING A TAX ABATEMENT AGREEMENT WITH CAMPBELL SOUP SUPPLY COMPANY LLC; MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND DECLARING 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, Texas and Campbell Soup Supply Company, LLC, providing for a commercial and industrial tax abatement for certain improvements, a copy of which is attached hereto as Exhibit "A", and incorporated herein by reference hereinafter called "Agreement"; and, WHEREAS, a public hearing was held before the City Council on August 27, 2012, to allow interested persons to speak about the proposed Tax Abatement Agreement; and, WHEREAS, upon 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 meet the Guidelines and Criteria for Tax Abatement and should be approved, and that the Mayor should be authorized to execute it on behalf of the City of Paris, Texas. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS, THAT: Section 1. The findings set out in the preamble to this resolution are hereby in all things approved. Section 2. That the terms of the Tax Abatement Agreement attached hereto as Exhibit "A" and the property the subject thereof ineet the City's Guidelines and Criteria for Tax Abatement adopted by the City of Paris by Resolution No. 2012-072 passed on August 13, 2012. Section 3. That the terms and conditions of the Tax Abatement Agreement between the City and Campbell Soup Supply Company, LLC 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 4. 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 attached hereto as Exhibit "A". Section 5. That the planned use of the property the subject of the tax abatement will not constitute a hazard to public safety, health, or morals. Section 6. That this approval and execution of the Agreement on behalf of the City is not conditioned upon approval and execution of any other tax abatement agreement by any other taxing entity. DULY PASSED AND APPROVED this 27th day of August, 2012. ATTEST: �-�� ��` �_-, � , , � J nice Ellis, City Clerk APPROVED AS TO FORM: <� � C/� W. Kent Mc lyar, ' Attorney 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 CAMPBELL SOUP SUPPLY COMPANY LLC, acting by and through its authorized officer whose signature appears below (hereinafter referred to as "OWNER"). WITNESSETH: WHEREAS, the City Council of the City of Paris did heretofore, on the 13th day of August, 2012, in Resolution No. 2012-07, 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, under the Texas Enterprise Zone Act (Government Code Chapter 2303), the designation of an area as an Enterprise Zone also constitutes designation of the area as a reinvestment zone; and pursuant to the 2010 United States Government Census, the PROPERTY of the OWNER within City of Paris, Texas, is included within an ENTERPRISE ZONE, as is shown in the print-out of such ENTERPRISE ZONE from the Office of the Governor of the State of Texas on its website, as shown in Exhibit A, attached hereto and made a part hereof for all purposes; and WHEREAS, the contemplated use of the IMPROVEMENTS, as hereinafter defined, in the amount as set forth in this AGREEMENT upon and within the PROPERTY (herein called the PROJECT), 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; and WHEREAS, the City Council of the City of Paris did heretofore, on the 13t� day of August, 2012 in Resolution No. 2012-072, pass and adopt 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; NOW, THEREFORE, The Parties hereto do mutually contract and agree as follows: I. Term 1� (11 EXHIBIT �� 1.1 The effective date of this AGREEMENT is the 27t�' day of August, 2012, with tax abatement beginning with the tax year commencing January 1, 2014, and expiring on December 31, 2020. II. Area to be Improved 2.1 The PROJECT consists of new building modifications to the real property of the OWNER, and the addition and installation of equipment and personal property described in Article III, below, all to be performed by OWNER within an existing building of the OWNER at the OWNER'S plant in Paris, Lamar County, Texas. Collectively, all such improvements which are the subject hereof shall be called the "IMPROVEMENTS". The IMPROVEMENTS shall be located upon and within the OWNER'S current facilities consisting of the OWNER'S land also described in Exhibit A, attached hereto and made a part hereof for all purposes (as are all Exhibits which are mentioned herein), and within the building at the location shown within the drawings attached hereto as Exhibit B. The land and building are herein called the "PROPERTY". III. Improvements 3.1 The installation of the IMPROVEMENTS will require engineering and design work, procurement of equipment, infrastructure and utilities modifications and electrical and mechanical installation at the PROPERTY. The IMPROVEMENTS are being made to enable the OWNER to manufacture fresh refrigerated soups in pouch and cup formats. The IMPROVEMENTS are described as follows: A. To the real property of OWNER, building modifications to segregate "Ready To Eat" ("RTE") production from remaining manufacturing spaces to provide a sanitary environment for RTE products, and to support specific pieces of manufacturing equipment. This includes floor, wall, and ceiling finishes, as well as some structural changes to the building. Modifications will occur in 5 major areas of the RTE space: preparation, blending, filling/chilling, packaging, and finished goods warehouse. B. Refrigeration equipment and infrastructure to support the required product chiller, conditioned manufacturing spaces, product/ingredient storage spaces, and refrigerated dock. C. Ingredient preparation equipment, including Hand Scaling equipment; an extractor for bulk frozen ingredients; 4 frozen ingredient and 2 dry ingredient batching stations; and fresh cream/milk handling system. D. Premix systems, including emulsion and thickener systems will be relocated into the new space. E. A blending cell will be created, including 4 blending kettles complete with ingredient delivery and blending control systems. F. A filling area including the following equipment: One cup filler; one bulk pouch filler; and one single serve pouch filler. G. A product chiller complete with infeed mechanism for pouches and cups. H. A packaging area, including the following equipment: Carton erector for pouches; manual casepacking station for pouches; checkweighing for pouch cases; case sealer for pouch cases; 2 product accumulators for cups; overcapper for cups; labeler for cups; sleever for cups; casepacker for cups; and palletizer for pouch and cup products. I. All-interconnecting conveyance. J. A refrigerated finished goods warehouse complete with gravity flow racking. K. A refrigerated dock complete with dock doors and exterior paving. All such IMPROVEMENTS will be particularly described in the CITY'S Certificate of Completion prepared after the completion and installation of the above described building modifications and improvements, personal property, machinery and equipment. The description 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 C. The IMPROVEMENTS will be at a cost equal to or in excess of $45,400,000.00 for the cost and installation of the building modifications, machinery and equipment, and shall be substantially completed during the month of July, 2013; 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 installation of the IMPROVEMENTS. For this purpose, "force majeure" shall mean any contingency or cause beyond the reasonable control of OWNER 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, floods, and labor disputes or strikes. The date of completion of the IMPROVEMENTS shall be reflected in the Certificate of Completion issued by the City of Paris, Texas, referred to above. 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 for 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 Completion is issued, or that the IMPROVEMENTS are completed as agreed, until the expiration of this AGREEMENT, continuously operate and maintain the PROPERTY, including the specific units of new machinery and equipment as identified herein, as a food production plant. V. Consideration (Jobs) 5.1 The City has provided in its Guidelines and Criteria for Tax Abatements, for tax abatement for the benefit of its existing employers, such as the OWNER herein, to improve their respective businesses and industries, as well as their profitability, even though no new jobs are created as a result thereof. The Guidelines and Criteria provide substantially as follows in this regard: If an existing Employer owns or leases an Authorized Facility (such as the PROPERTY of the OWNER herein), and it has plans to improve such property by constructing new improvements on its real property or to add new personal property (which includes equipment, such as that to be constructed by OWNER herein within the PROPERTY), such existing employer may be eligible for tax abatement with respect to such improvements to its real property or its new personal property even though no new jobs or newly created minimum annual payroll are created. In such cases, however, the Owner is encouraged to retain as many jobs and as much existing annual payroll as is economically feasible for the existing employer to do and remain competitive in its industry. 5.2 The Owner agrees to retain sufficient employment levels to efficiently operate and support its plant operations during the term of this Tax Abatement Agreement. 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) 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 (c) 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) or (c) 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 (a)(4) 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 of Texas, 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. Personal Property 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 the ad valorem property taxes assessed upon the IMPROVEMENTS and otherwise owed to the CITY shall be abated as is provided for in the Property Tax Abatement Schedule attached hereto as Exhibit D. Said abatement shall be an amount equal to one hundred percent (100%) of the taxes assessed upon the completed value of the IMPROVEMENTS on January 1, 2014, with this tax abatement continuing at such rate of one hundred percent (100%) for each year during the seven (7) year term of this AGREEMENT, through and including December 31, 2020. This tax abatement shall be in accordance with 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 of the OWNER that is not subject to tax abatement AND WHICH DOES NOT INCLUDE THE IMPROVEMENTS (as defined herein) shall be deemed to be the values as shown on the tax rolls of the Lamar County Appraisal District as of January 1, 2013, which values are not known as of the date of this AGREEMENT, but the values as of 7anuary 1, 2012, are stipulated to be $15,051,220.00 far Land and Buildings, and $115,912,802 for tangible Personal Property. This current abatement, which is the subject of this AGREEMENT, shall extend for a period of seven (7) years beginning January 1, 2014. 7.2 The abatement granted herein shall be subject to and governed by the POLICY STATEMENT CRITERIA AND GUIDELINES for TAX ABATEMENT, a copy of which is attached hereto as Exhibit E. OWNER shall comply with the requirements of Exhibit E in the performance of this AGREEMENT, save and except that, in the event of a conflict between the requirements of Exhibit E and this AGREEMENT, this AGREEMENT shall control. VIII. No Conflict of Interest 8.1 The OWNER represents and warrants that neither the PROPERTY nor the IMPROVEMENTS include any real or personal 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 December 31, 2014. 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 of the 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 OWNER'S letterhead and signed by a designated representative of OWNER, which contains the following information: (a) Copy of the printout from the Lamar County Appraisal District showing the market value of the PROPERTY prior to the construction of the IMPROVEMENTS; (b) Detailed description of the IMPROVEMENTS; (c) Detailed description of any miscellaneous items of office equipment and the actual cost of such added office equipment; (d) Copy of or improvements and certification team; identification of plans and specifications of constructed the location of the same for inspection by CITY's (e) Detailed list of and actual cost of added machinery and equipment; ( fl Actual cost of capital IMPROVEMENTS; and, (g) 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 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. 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 27th day of August, 2012, authorizing the Mayor to execute the AGREEMENT on behalf of the CITY. 122 This AGREEMENT was entered into by CAMPBELL SOUP SUPPLY COMPANY LLC (PARIS PLANT) 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: CAMPBELL SOUP SUPPLY COMPANY LLC Attn: Richard J. Landers, V. P.-Taxes 590 NW Loop 286 Paris, TX 75461-9016 With a copv to• Michael Caruso, Esq. Campbell Place Camden, NJ 08101 CITY: City of Paris, Texas Attn: City Manager P. O. Box 9037 Paris, TX 75461-9037 With a copv to• City Clerk, City of Paris, Texas (address same as above) 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 saidd 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 construct�on or interpretafion 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 CITI', OWNER, and their respective successors, and permitted assigas, 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 Eastem District of Texas for any federal court acfion. WITNESS our hands this 27�' day of August, 2412. �� ATTEST; . � "�, a ice �,11is, City C]erk t APPROVED AS TO FORM: c� � - - ---� W. Kent McIlyar, y Attorney ATTEST: Secretary CITY OF PARIS, PARIS, TEXAS CAMPBELL SOUP SUPPLY COMPANY LLC By � . Richard J. Landers, ice President - Tax & Real Estate LIST OF EXHIBITS TO THIS AGREEMENT: A= 2010 Designation of Enterprise Zone which includes OWNER'S PROPERTY, and Land of OWNER in Paris, Texas B= Drawings showing the building and the location of the IMPROVEMENTS within the building. C= CITY'S Certificate of Completion D= Property Tax Abatement Schedule E= CITY'S Guidelines and Criteria for Tax Abatements EXHIBIT A TO TAX ASATEMENT AGREEMENT (Follows this Page)