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HomeMy WebLinkAboutResolution - 2002-R0564 - Agreement With Frito Lay And Market Lubbock, Inc. For Wastewater System - 12_19_2002Resolution No. 2002-R0564 December 19, 2002 Item No. 41 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock an Agreement with Frito Lay and Market Lubbock, Inc. for the installation of a wastewater primary clarifier system, and all related documents. Said Agreement is attached hereto and incorporated in this Resolution as if fully set forth herein and shall be included in the minutes of the Council. Passed by the City Council this 19th day of December C McBm0lUIGAL."MAYOR ATTEST: Reb cca Garza, City Secretary APPROVED AS TO CONTENT: � J Richard Burdine, Assistant City Manager APPROVED AS TO FORM: Linda L. Chamales, Supervising Attorney Office Practice Section Resolution No. 2002-RO564 December 19, 2002 Item No. 41 Agreement Between Frito-Lay, Market Lubbock Inc., and the City of Lubbock THIS AGREEMENT (hereinafter referred to as "Agreement") is made effective as of the 19th day of December, 2002 by and between FRITO-LAY, INC., a Delaware corporation (hereinafter referred to as "Frito-Lay"), having an office and principal place of business at 7701 Legacy Drive, Plano, Texas 75024, its parent, divisions, subsidiaries and affiliates, the City of Lubbock (hereinafter referred to as "City of Lubbock") having an office and principal place of business at 1625 13th Street, Lubbock, Texas 79457 and Market Lubbock, Inc., a 501(c)4 corporation (hereinafter referred to as "Market Lubbock"), having an office and principal place of business at 1301 Broadway, Suite 200, Lubbock, Texas 79401, its parent, divisions, subsidiaries and affiliates. In consideration of the mutual promises of performance by Frito-Lay and payment by the City of Lubbock and Market Lubbock to Frito-Lay for the installation of a wastewater primary clarifier system and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Frito-Lay, the City of Lubbock and Market Lubbock agree to the following terms and conditions: Recitals: WHEREAS, Frito-Lay has conducted business in the Lubbock, Lubbock County area for over 40 years and employs an effective workforce with an approximate annual Payroll of $9,500,000.00 million per year; and Rphargr/agremnts/Lubbock City of Page 1 of 8 WHEREAS, The Lubbock Frito-Lay plant currently operates on a lowest landed cost and volume leveraging basis but is in need of capital facility upgrades and plant expansion; and WHEREAS, Frito-Lay is currently on the City of Lubbock wastewater treatment system but in an effort to reduce production costs has agreed with the City of Lubbock to install a new primary clarification system; and WHEREAS, Frito-Lay estimates the cost of installing such a wastewater pretreatment system at approximately $2,500,000 plus annual operation and maintenance; and WHEREAS, Frito-Lay wishes to maintain a long term presence in the City of Lubbock provided it remains a competitive operator within the Frito-Lay system by upgrading its Lubbock facility and establishing effective wastewater treatment capacity at an established and reasonable rate; and WHEREAS, the City of Lubbock and Market Lubbock is desirous of securing Frito-Lay's long term commitment to maintain its manufacturing/processing operation and workforce in Lubbock and to ensure that it remains a customer on the City of Lubbock's wastewater system at certain established rates; and WHEREAS, the combined economic effect of Frito-Lay's continued employment and economic activity in the community, the direct and indirect tax revenue those activities generate and the reduced BOD and TSS capacity loading on the city wastewater treatment facility provide a substantial benefit to the City; and WHEREAS, the financially projected benefit in combination with the tax abatements, wastewater billing credits and Market Lubbock incentives result in an overall net economic benefit to the City of Lubbock; and Mphargr/agremnts/Lubbock City of Page 2 of 8 NOW, THEREFORE, in consideration of the mutual understanding, undertaking and promises contained herein inclusive of the recitals above and the benefits to be realized by each party and in consideration of the benefit to the public by ensuring the long term presence of the Lubbock Frito-Lay Plant within the City of Lubbock it is agreed by and between the parties as follows: 1. FRITO LAY TERMS AND CONDITIONS. Frito-Lay agrees to the following terms and conditions: 1.1 That, if the City of Lubbock provides the wastewater credits and tax abatement as set forth in Article 2 of this Agreement and Frito- Lay secures the needed funding approvals, Frito-Lay will, invest no less than a total of $6,000,000 dollars which includes the $2,500,000 in paragraph 1.2 in additional facilities upgrades in 2002 through 2004. 1.2 That in consideration of the City of Lubbock fulfilling its obligations in Article 2, Frito-Lay shall be responsible for the initial funding for the installation of a wastewater primary clarifier system as described in Exhibit A, attached hereto and incorporated herein, which is expected to take 12 months, with the cost not to exceed $2,500,000. 1.3 That Frito-Lay shall maintain an annual payroll of $9,500,000 at the Lubbock operations from January 1, 2003 to January 1, 2010 (seven (7) years). Frito-Lay's Annual Payroll shall be defined for the purposes of this agreement as the total of: direct and overtime pay for all work, vacation pay, holiday pay, and sick pay for manufacturing, traffic and warehouse operation in Lubbock, TX as accounted for in Frito-Lay's performance report 061 documenting actual charges for Lubbock operations in a given year. The referenced 061 report documenting these charges will be available for city viewing, with the understanding that all business information Rphargr/agremnts/Lubbock City of Page 3 of 8 viewed will be managed as confidential and not shared publicly or with any other business 2. CITY of LUBBOCK TERMS AND CONDITIONS. City of Lubbock agrees to the following terms and conditions: 2.1. That in consideration for the financial and capital payments and commitments made by Frito-Lay as set forth herein, City through its Water -Sewer Utility will provide to Frito-Lay credit for wastewater surcharges in the amount of $144,000 in 2002, $576,000 in year 1 (2003) and $156,000 in year 2 (2004) of the project. to be applied against Frito-Lay's annual total bill for wastewater discharge. 2.2 That the City of Lubbock and Lubbock County have agreed to provide property tax abatement for 10 years, starting at 100% in year 2 (2004) and declining 10% each year thereafter for all new capital investments begun after August 30,2002. 2.3 That Market Lubbock will contribute cash grants of $300,000 in year 1 (2003), $200,000 in year 2 (2004) and $100,000 in year 3 (2005) as a job retention incentive. 3. AMENDMENTS. This Agreement contains the entire agreement between the Parties hereto and shall not be amended or modified in any manner whatsoever except by an instrument in writing signed by both Parties. 4. RECITALS. The introductory recitals and paragraphs are incorporated herein by reference and made a part of this Agreement as though set forth in the body of the Agreement. 5. NOTICES. Any notice, demand, request or other communication required or permitted to be given in this Agreement shall be in writing and Rphargr/agremnts/Lubbock City of Page 4 of 8 delivered personally or sent by certified mail, the parties at their respective addresses below: City: City Manager City of Lubbock P.O. Box 2000 Lubbock, Texas 79457 With a copy to: City Attorney City of Lubbock P.O. Box 2000 Lubbock, Texas 79457 Frito-Lay: Frito-Lay Technical Manager 3203 Avenue B Lubbock, Texas 79404 return receipt requested to With a copy to : Frito-Lay Legal General Counsel 7701 Legacy Drive Plano, Texas 75024 6. SPECIFIC REMEDIES. The following specific remedies will apply to situations of potential non-compliance by: 6.1 If Frito-Lay fails to install the primary clarification system as set forth in section 1, then either party has the right to terminate the contract with neither party obligated in any way. Rphargr/agremnts/Lubbock City of Page 5 of 8 6.2If Frito-Lay spends less than the estimated $2,500,000 to construct and start-up the primary clarification system, the difference in what is actually spent and $2,500,000 will be deducted from the wastewater surcharge credit for year 2 (2004) as defined in section 2. 6.3If Frito-Lay installs a start-up operation of the primary clarification system but fails to make the total capital investment of $6,000,000 as defined in section 1, then Frito-Lay will forfeit a pro rated share of the Economic Development Grant as defined in grant contract between Frito-Lay and Market Lubbock. 6.4 If Frito-Lay makes all of the required capital investments but fails to maintain the annual payroll as defined in section 1, then Frito-Lay will forfeit a pro rated share of the Economic Development Grant as defined in grant contract between Frito- Lay and Market Lubbock, Inc. In addition, until January 1, 2010, each year Frito-Lay shall pay to the City of Lubbock $13.18 for every $1000.00 or portion thereof that the annual payroll is less than $9,500,000. 7. FILING. A copy of this Agreement shall be filed with the City Secretary of Lubbock. 8. WAIVER. The waiver by one Party of the performance of any covenant, condition, or promise shall not invalidate this Agreement nor shall it be considered a waiver by such Party of any other covenant, condition, or promise hereunder. The waiver by either or both Parties of the time for performing any act shall not constitute a waiver of the time for performing any other act or an identical act required to be performed at a later time. Mphargr/agremnts/Lubbock City of Page 6 of 8 9. VENUE. The venue for any dispute related to this Agreement shall be Lubbock County, Texas. 10. GENERAL PROVISIONS. This Agreement contains all of the agreements of the Parties with respect to any matter covered or mentioned in this Agreement, and no prior agreement oral or written shall be effective for any purpose. No provision of this Agreement may be amended or modified except by written agreement signed by the Parties. 12. SEVERABILITY. If any term or provision of this Agreement or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Agreement or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby and shall continue in full force and effect. 13. ASSIGNMENT. Neither the City of Lubbock, Market Lubbock or Frito- Lay shall assign this Agreement without the express written consent of the others. This Agreement shall inure to the benefit of and be binding on the City of Lubbock, Market Lubbock and Frito-Lay and their successors and any permitted assigns. 14. FORCE MAJEURE. If any default or performance of any other covenant or term of this Agreement is delayed by reason of war, civil commotion, act of God, governmental restrictions, regulations, or interference, fire or other casualty, labor disputes beyond the control of Frito-Lay, or any other circumstances beyond a signatory party's control, then the duty to do or perform the term or covenant, regardless of whether the circumstance is similar to any of those enumerated or not, is excused during the delay period. IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year first written above. Rphargr/agremnts/Lubbock City of Page 7 of 8 CITY OF LUBBOCK Attest: Approved as to content: chard Burdine, Assistant City Manager Approved as to form: Linda Chamales, Supervising Attorney MARKET LUBBOCK By::ax", :5�,, , Title: . HAthg\agr\Frito1ay061402.doc FRITO LAY INC. By: Its: 5 Y.• V Rphargr/agremnts/Lubbock City of Page 8 of 8 Resolution No. 2002-RO564 =VAMII=]kr,1 Improvements to be undertaken will include the modernization and expansion of the Frito-Lay manufacturing facility located at 3203 Avenue B, Lubbock, TX 79404. The facility includes several parcels of land that have been added over the years, and the operation includes manufacturing, warehousing, and transportation. The various projects will also include the purchase of new manufacturing machinery and equipment to be used in the facility. Listed in Attachment 2 (B) are the currently proposed capital projects for 2003 and 2004. Specific capital projects are subject to change and additional projects may be added in 2004, but Frito Lay is committing to invest a total of $6.5 million beginning in September of 2002. 2003-2004 Capital Projects Outlay Temp # Priorit Dept. Description Start YR. Capital Project Expense LB03025 1 Facility Wast Water Clarifier 2003 $ 2,500,000 $ 50,000 LB03026 1 Multi Rail Corn/Oil Un-Load 2003 $ 1,500,000 $ 30,000 1 FCC Packaging Upgrades 2003 $ 398,000 LB03001 1 Facility Roof Upgrades 2003 $ 80,000 $ 2,000 LB03002 3 Facility Employee Welfare Upgrades 2003 $ 60,000 $ 1,500 LB03003 2 Facility Building Upgrades 2003 $ 60,000 $ 1,400 LB03004 1 FCC FCC #1 Fryer Pan Upgrade 2003 $ 60,000 $ 1,400 LB03005 1 FCC FCC #2 Fryer Pan Upgrade 2003 $ 60,000 $ 1,400 LB03006 1 FCC FCC 1 &2) Seasoning Dust Cover 2003 $ 30,000 $ 600 LB03007 1 FCC Additional Seasoner 2004 $ 100,000 $ 2,000 LB03008 2 FCC Oil Transfer 2003 $ 60,000 $ 1,500 LB03009 2 FCC Allen Level Control 2003 $ 65,000 $ 1,500 LB03010 2 Mulit Upgrade Flooring Phase 2 2003 $ 80,000 $ 2,000 LB03011 2 NE 12 Slam Autoloader 2004 $ 100,000 $ 2,000 LB03012 1 NE TC Seasoning Dust Cover 2003 $ 15,000 $ 300 LB03013 1 NE RSTC Seasoning Dust Cover 2003 $ 15,000 $ 300 LB03014 2 NE New Wall Event Room 2003 $ 50,000 $ 1,400 LB03015 2 NE SS Ceilinq above Corn Washers 2003 $ 50,000 $ 1,400 LB03016 2 NE Automatic Allen Gates 2003 $ 60,000 $ 1,200 LB03017 1 NE Dual Seasoning line (DTC) 2003 $ 120,000 $ 2,800 LB03018 1 PC O tsort Upgrade 2004 $ 145,000 $ 2,900 LB03019 2 PC PC Slicer Head Station Upgrade 2003 $ 70,000 $ 1,600 LB03020 1 PC PC Fryer Pan Upgrade 2003 $ 80,000 $ 2,000 LB03021 1 PC PC Seasoning Dust Cover 2003 $ 15,000 $ 300 LB03022 3 PC Fines System Upgrade 2003 $ 10,000 $ 200 LB03023 3 PC Potato Impact Reduction Upgrade 2003 $ 15,000 $ 300 LB03024 3 VP VP 8 Pack Tray Maker 2003 $ 40,000 $ 1,000 3 PC PKG Automation 2003 $ 200,000 $ 16,502 3 TC Low Water Corn Process 2003 $ 140,000 $ 7,388 1 WH Warehouse Projects 2003 $ 500,000 total $ 6,678,000 $ 136,890