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HomeMy WebLinkAboutResolution - 2002-R0200 - Defense Economic Adjustment Assistance Grant Application - 05/23/2002Resolution No. 2002-RO200 May 23, 2002 Item No. 32A 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 a Defense Economic Adjustment Assistance Grant Application and any associated documents from the Texas Department of Economic Development for funding of design, engineering, and construction of roads and the upgrade of a water line being the necessary infrastructure required to develop the Lubbock International Airport Interport Industrial Park and any associated documents, which Application shall be spread upon the minutes of the council and as spread upon the minutes of this Council shall constitute and be a part of this Resolution as if fully copied herein in detail. Passed by the City Council this 23rd day of May 2002. ATTEST: Reb cca Garza, City Secretary APPROVED AS TO CONTENT: c and igurdine, Assistant City Manager APPROVED AS TO FORM: s G.Nandiver, First Assistant City Attorney LIA DEAAG.res Resolution No. 2002-80200 Tyco Fire Protection Division is planning to consolidate their fire sprinkler manufacturing operations into a new manufacturing facility in Lubbock, Texas. This project involves building access roads and upgrading an 8" water line in the LIA Interport Industrial Park to accommodate a new facility that will be built for Tyco Fire Protection. Tyco has an existing facility in Lubbock, but plans to close a plant in another state and move all their fire sprinkler production to Lubbock to increase employment to 675. If we do not proceed with this project, we could lose the existing 325 jobs that Tyco has in the existing facility. Tyco will build anew 231,000 square foot facility in the LIA Interport Industrial Park at a cost of thirteen million dollars. They will also invest approximately nine million dollars in new machinery and equipment. Access roads to the site need.to be built and the water line presently in place is not sufficient for this project and needs to be upgraded. $946,030 1 3.9% 49.9% $11,129,460 1 46.2% Texas Department of Economic Development 5/16/02 Page 1 of 15 Defense Economic Adjustment Assistance Grant AProject Summary (Continued) Number of Direct Jobs Created: 350 Total Amount of Direct Wages Generated: $13 million Number of Indirect Jobs Created: 269 Proiected Dollar amount of direct impact on the local economy: $35,000,000 This project will create 350 new jobs in the region of influence as well as 269 secondary jobs in support industries. The project will also retain an additional 325 jobs already located at the existing Tyco facility in Lubbock. The total payroll for the new direct jobs is $6.5 million annually. The total payroll for the existing jobs is approximately $6 million annually. Financial Return and Public Benefit Direct Benefit Direct and Indirect Benefit • Investment in Project Construction Cost for Building: $13 million Construction Total Impact: $23.7 million Investment in New Equipment $9. million Investment in New Equipment: $9.0 million • Job Creation Total New Jobs Created by Tyco: 350 Direct and Secondary Jobs Created: 619 Total New Payroll: (2003-2004) $13 million Total Direct and Secondarylmpact of Payroll: $20.2 million Total Estimated Direct Impact of Project: $35.0 million Total Estimated Direct and Indirect Impact Of Project: $52.9 million • Incentives for the Project: Site, Platting, Fence Moving, Building Construction: $10,183,430 Road Construction: $1,157,059 Water Line upgrade: $735,000 $12,075,489 of Project: Cost to Community $12,075,489/$52,900,000 Benefit Sources: Construction (1.8211) and Manufacturing (1.7673 - Jobs, 1.5568 — Payroll) Multipliers — US Dept of Commerce, Bureau of Economic Analysis, RIMS II Regional Multipliers Expected Annual Salaries The average salary for Tyco will be approximately $18,462 (Total annual payroll divided by number of new jobs) Tyco will replace approximately 14.3% of the direct jobs lost to the community and 16.9% of direct and indirect jobs lost to the community through the closure of Reese. Federal and Other Assistance Leveraged Market Lubbock, Inc., the local economic development corporation, is providing other incentives to the project in the amount of: $10,183,430 for the land for the facility, platting costs, building construction and fence moving. The City of Lubbock and Market Lubbock, Inc. will be providing matching funds, in the amount of $946,030 for the construction of the roads and upgrade of the water line. Total Leverage: Non-DEAAG Contribution — $24.4/ $1 DEAAG Contribution Texas Department of Economic Development 5/16/02 Page 2 of 15 Application for Defense_ Economic Adjustment Assistance Grant Eligibility Certification W Loss of 2,500 or more defense worker jobs in an area of a municipality or county that is located in an urbanized area of a Metropolitan Statistical Area Loss of 1,000 or more defense worker jobs in any area of the municipality or county outside an urbanized area of a Metropolitan Statistical Area Loss of defense worker jobs representing one percent or more of the jobs in the municipality or county Reese Center was on the Base Realignment and Closure Commission 1995 closure list announced in February 1995. The President signed the acceptance of the list in July 1995, and Congress approved the bill in September 1995. Reese Center was officially closed on September 30, 1997. Reese was the only Texas base in the BRAC '95 that was immediately closed. One percent of total civilian jobs must be lost, in order to qualify to apply for these grant funds. According to the Department of the Air Force Socioeconomic Impact Analysis Study, April 1997 (page 3-7, last paragraph), there were 2,454 defense worker jobs lost representing 2.04% of the total number of jobs in Lubbock County (120,000) as of August, 1997. This is more than twice the percent required for eligibility to apply for grant funds (Source Documents provided to the Department with previous grant applications). Source: Department of the Air Force, Socioeconomic Impact Analysis Study, April 1997, Chapter 3 and ' Texas Workforce Commission, Civilian Labor Force Estimates, Lubbock County. Provided to the Department with previous grant applications. Texas Department of Economic Development 5/16/02 Page 3 of 15 1994 112,865 112,865 4.2 1995 115,534. 115,534 4.0 1996 116,348 116,348 3.9 1997 117,376 117,376 3.9 1998 118,568 118,568 3.4 1999 119,914 119,914 2.9 2000 120,598 120,598 2.6 2001 123,547 123,547 2.6 March 2002 125,208 125,208 3.0 Source: Texas Workforce Commission, Civilian Labor Force Estimates Backup material included in Tab 2 4.2 4.0 3.9 3.9 3.4 2.9 2.6 2.6 3.0 Reese Air Force Base employed 2,454 in both military and civilian jobs and also stimulated the creation of approximately 1,199 secondary jobs in the Region of Influence (ROI). Closure of the base caused a decline of 3,653 direct and secondary site -related jobs. If the base had not closed, the projected employment in the ROI would have been 168,897 at closure. With the closure, the baseline projection for total employment for closure date is 165,244. (Socioeconomic Impact Analysis Study (SIAS), April 1997, page 3-2, Table 3.2-5) Under the No -Action Alternative, or closure baseline, Reese AFB would not be reused and the activity at the site would produce only a minimal amount of economic stimulus to the ROI. Under this alternative, employment in the ROI is projected to increase from 165,244 at closure to 190,056 by 2017, which represents an annual average growth rate of 0.7 percent. The employment at the base would be 83, (50 direct jobs and 33 secondary jobs). (SIRS, page 4-3, paragraph 1) The project proposed in this application supports the redevelopment of the ROI, even though it is not located at the former Reese Air Force Base. This project alone will create 350 new full time equivalent positions at the Tyco Plant, and 269 secondary jobs by 2004 for a total of 619 new jobs that will assist in replacing the 3,653 direct and indirect jobs lost with the closure of Reese Air Force Base. Texas Department of Economic Development 5/16/02 Page 4 of 15 Defense Economic Adjustment Assistance Grant Impact Statement (Continued) 1998 $22,851 1999 $23,235 2000 $24,613 Lubbock County is the Lubbock MSA BEARFACTS included as Tab 3 Resource Cateeory Earnings Local Expenditures Population 1 Housing Public Service General Gov't, Police & Fire Education Health Care Public Finance (1994$) Lubbock County City of Lubbock Frenship ISD Lubbock ISD Utilities Source: SIRS, April 1997, page 3-2, Table 3.1-1 $22,851 $23,235 $24,613 Source: Bureau of Economic Analysis 1994 through Closure in the ROI Decline of $93,906,763 direct and secondary site -related earnings Decline of $50.5 million in local expenditures fro Construction, Services Education, Health, and other miscellaneous expenditures Decline of 4,613 residents including on -base and off -base residents and Additional off. -base residents (including military retirees) Decline in demand for 1,419 off -base units Decline of 2,902 off -base population served county -wide Decline in ROI public school enrolhnent of 754 students Reese AFB clinic closed Shortfalls of $254,046 per year Shortfalls of $357,772 per year Shortfalls of $387,737 per year Shortfalls of $187,021 per year Utility demand would decrease from preclosure levels Under the No -Action Alternative, or closure baseline, Reese AFB would not be reused and the activity at the site would produce only a minimal amount of economic stimulus to the ROI. Under this alternative, total earnings in the ROI is projected to be $1,925,851 annually from closure until 2017 for both direct and indirect jobs. The project referenced in this application supports the redevelopment of the community. The project will create $13 million in direct payroll from 2002 to 2004. The total impact of the payroll from 2002-2004 is $20.2 million. The total projected annual impact of the payroll for 2003 is approximately $10.1 million. This will assist in recouping some of the $93.9 million in lost payroll with the closure of Reese. kource: SIAS, April 1997, page 4-4, Table 4.2-1. Texas Department of Economic Development 5/16/02 Page 5 of 15 Defense Economic Adjustment Assistance Grant Impact Statement (Continued) Since the closure of Reese Air Force Base, in September 1995, the ROI has also felt other significant impacts. The Health Services Sector lost a significant number of jobs due to the way that health care services are delivered since the advent of managed care. Two things occurred in the Lubbock area: (1) Two of Lubbock's major hospitals merged and jobs were lost as duplicate services were cut., (2) South Park Hospital closed with a total job loss of 234. The ROI has also felt major impacts from the ups and downs of the mining sector due to the fluctuation in oil prices. Areas of the ROI are heavily dependent on oil for employment. Other impacts that have been felt by the ROI are that in the past several years, we have had very bad agriculture years. This area is heavily dependent on agriculture and with the low agriculture product prices and weather-related issues, the ROI has been negatively impacted. Another issue is the slow population growth in the ROI or in some cases declines in population. New industry, with the promise of jobs, could assist the area in recruiting new population. * Socioeconomic Impact Analysis Study provided to the Department with previous applications. w Texas Department of Economic Development 5/16/02 Page 6 of 15 Texas Department of Economic Development 5/16/02 Page 7 of 15 Defense Economic Adjustment Assistance Grant Project Description (Continued) New roads need to be built to give access to the property where the new Tyco facility will be built and the water line serving the property needs to be upgraded to meet the needs of the facility. Description of Road Improvements: Build approximately 2,550 linear feet of Westport Access Road, Phase II. Project will extend the access road from where it stops at the air freight complex to the proposed Tyco manufacturing facility at Keuka Street. EOPC based on 60 -foot right-of-way with a 43 foot pavement cross section. This also includes approximately 2,200 linear feet of internal roadway which is rail -served to accommodate the clients desire for rail service. Description of Water Line Upgrade: The purpose of the project is to provide sufficient water flow and pressure to the Lubbock International Interport Industrial area for fire protection. Currently, the distribution system is inadequate to meet the fire protection needs of the new Tyco plant planned for the area. The proposed ground storage tank and booster station will serve the Lubbock International Airport Interport Industrial area. Major components of the project include the following: 500,000 gallon ground storage tank Two pumps Electrical switch gear and controls Standby generator Pump building Pump controls f Disinfection systems Site improvements (paving, fencing, lighting,etc.) Texas Department of Economic Development 5/16/02 Page 8 of 15 Defense Economic Adjustment Assistance Grant Project Description (Continued) 171 Texas Department of Economic Development 5/16/02 Page 9 of 15 Application for Defense Economic Adjustment Assistance Grant Project Expenses Texas Department of Economic Development 5/16/02 Page 10 of 15 Application for Defense Economic Adjustment Assistance Grant Project Funding Sources Funding Typd Specific So�ce Name Amdunt of FundEng By Fiscal �C�r FY;Ob2F 2f103 F 20E4: Total. Federal Fund�rtg Assistance State Assrstance Texas 13efenSOI conomic Texas Qepartment of $946,030 $946,030 Adjustment Assistance ErAnom't0 C3evelopment Grant: Community Economic Market Lubbock, Inc. $10,183,430 $10,183,430 Development Corporation Community Economic Market.Lubbock, Inc. $810,000 $810,000 Development Corporation Water Fund City of Lubbock $68,015 $68,015 $136,030 Private Tyco Fire Protection $12,000,000 $12,000,000 1$24,007,4751 $68,015 $24,075,490 Texas Department of Economic Development 5/16/02 Page 11 of 15 Defense Economic Adjustment Assistance Grant Project Funding Sources (Continued) Lubbock International Airport submitted a grant application to EDA for funding for the roads in the Lubbock International Airport Interport Industrial Park. EDA declined to fund the project. We have secured funding for the rest of the project from local public and private sources. N/A Texas Department of Economic Development 5/16/02 Page 12 of 15 Application for Defense Economic Adjustment Assistance Grant General Community Efforts to Improve the Local Economy The City of Lubbock does not have the '/2 cent economic development sales tax to provide funding for economic development; however, in October 1996, the City of Lubbock formed a 501 (c)4 Economic Development Corporation called Market Lubbock, Inc. (MLI). The funding for this corporation comes from property tax revenues. Market Lubbock, Inc. receives approximately $1.9 million funding annually from the City of Lubbock. The corporation consists of a 7 -member board and a staff of 9 persons. The City of Lubbock has also provided other funding to Market Lubbock, Inc. for special projects such as the LISD/South Plains College Byron Martin Advanced Technology Center and an image campaign for Lubbock. MLI offers job creation incentives and relocation incentives to attract new business and assists in expansion of existing business. Also in the past, the City of Lubbock has accessed EDA grant funding as well as the Defense Economic Adjustment Assistance Grants for help in supporting economic development in the area. These efforts to use state, local, and federal resources have been "to compensate for the loss of civilian jobs from the closing of Reese Air Force Base." MLI has limited funding for economic development compared to other cities with the economic development sales tax; however, since its inception in 1995, MLI has assisted in the creation of 5,144 jobs and capital investment in the amount of $213.7 million through attraction and retention/expansion efforts. The City and County of Lubbock have been proactive in their efforts to support economic development efforts in the City and County of Lubbock. As discussed in the paragraphs above, the City of Lubbock created Market Lubbock, Inc. to attract new business and assist existing businesses with retention/expansion projects. Since the creation of Market Lubbock in 1995, they have assisted in the location of 11 new companies in Lubbock and the expansions of 37 existing companies. These projects created 5;144 jobs and had a capital investment of $213.7 million. Market Lubbock has provided almost $16 million in incentives to these projects. The City and County of Lubbock also have been willing to use tax abatement and other incentives to assist in economic development. The city created three enterprise zones, one of which is located at Lubbock International Airport Interport Industrial Park, in which several incentives are offered including tax abatement, local sales tax rebates and building permit fee rebates. With limited available funding for economic development, the city has been very liberal with tax abatement to encourage new development. Another effort by the City and County of Lubbock to promote development of the area was to exercise their option to exempt "freeport goods" from inventory taxation in December 1998. This allowed another incentive for companies to move to the area. Texas Department of Economic Development 5/16/02 Page 13 of 15 Application for Defense Economic Adjustment Assistance Grant 0 Project Milestones and Performance Measures 1. The completion of the 231,000 square foot buildingfor Tyco at Lubbock International Airport Interport Industrial Park and initiation of manufacturing operations. 2. Maintain 325 existing jobs at Tyco Fire Products new facility. 3. The creation of 350 new jobs at Tyco Fire Products new facility. Texas Department of Economic Development 5/16/02 Page 14 of 15 Significant milestones that musf;be completed -and thegropos�d. dates for completion Design/Engineering - Roads 7/1/02 Bids - Roads 8/1/02 Complete Design — Water Line 8/2/02 Open Bids — Water Line 8/20/02 Award Bids — Water Line 9/12/02 Begin Construction — Water Line 10/1/02 Begin Construction - Roads 11/1/02 Substantial Completion of Tyco Facility 12/20/02, Complete Construction - Roads 3/1/03 Complete Construction — Water Line 4/1/03 Begin System Operation - Water Line 4/15/03 1. The completion of the 231,000 square foot buildingfor Tyco at Lubbock International Airport Interport Industrial Park and initiation of manufacturing operations. 2. Maintain 325 existing jobs at Tyco Fire Products new facility. 3. The creation of 350 new jobs at Tyco Fire Products new facility. Texas Department of Economic Development 5/16/02 Page 14 of 15 Application for Defense Economic Adjustment Assistance Grant Certification To the best information and belief, the information contained in this Defense Economic Adjustment Assistance Grant Application is true and correct and the authorized representative, the applicant author or contact person and the project administrator or contact person have read Chapter 486 of the Texas Government Code and 10 TAC 174.1-174.11 and are familiar with the provis}ons contained therein as evidenced by the signatu es ' orated herein. McDougal armor, it- of Lubbock (Title) May 23, 2002 (Date) ATTEST: 4Reecica Garza, City Sec�reary OFFICIAL SEAL Kevin G. Walker Business Liaison Officer. City of Lubbock (Title) (Date) Mark Earle (Title) (Date) Texas Department of Economic Development 5/16/02 Page 15 of 15 Resolution No. 2002—RO200 TEXAS DEPARTMENT OF ECONOMIC DEVELOPMENT CONTRACT FOR DEFENSE ECONOMIC ADJUSTMENT ASSISTANCE GRANT # ODA -480-77-02-06 STATE OF TEXAS COUNTY OF TRAVIS § SECTION 1. PARTIES TO CONTRACT This contract (hereinafter referred to as "Contract") is made and entered into by and between the Texas Department of Economic Development, an agency of the State of Texas, hereinafter referred to as "Department", and the City of Lubbock (hereinafter referred to as "Contractor"). The parties hereto have severally and collectively agreed and by the execution hereof are bound to the mutual obligations and to the performance and accomplishment of the tasks described herein. SECTION 2. CONTRACT PURPOSE Contractor shall conduct, in a satisfactory manner as determined by Department, an economic development project to build access roads and upgrade an 8" waterline (hereinafter referred to as the "Project") to accommodate a new facility that will be built for Tyco Fire Protection at Lubbock International Airport Interport Industrial Park, in the city of Lubbock, Texas (hereinafter referred to as the "Facility"). The Department will support the Project through a Defense Economic Adjustment Assistance Grant (DEAAG), as created by the 75th Texas Legislature to provide state funding for the purpose of acquiring federal grant assistance or sharing the cost of redevelopment of communities that have been adversely affected by defense downsizing. Senate Bill 227 of the 75th Texas Legislature, which adds Chapter 486 to the Texas Government Code, authorizes the grant program. Section 174 of the Texas Administrative Code contains the rules under which the program is implemented. SECTION 3. PROJECT REQUIREMENTS A. Both Contractor and Department understand and agree that this Contract is to be executed pursuant to a letter of authorization, signed by Marc McDougal, Mayor of the City of Lubbock, dated May 16, 2002, and approval of the Lubbock City Council given on August M, 2002. B. The total number of new, direct, permanent, full-time jobs to be created as a result of the Project shall be no less than three hundred fifty (350). C. The total cost of the Project is $1,397,059.00, which is to be funded as follows: Funding Type Specific Source Name Amount of Funding Texas Defense Economic Texas Department of $75,000.00 Adjustment Assistance Economic Grant evelo ment Assistance Requested from $0 Federal Agencies Local Community Funding City of Lubbock $512,059.00 Market Lubbock, Inc. $810,000.00 Total Project Cost 1 1$1,397,059.00 D. If Contractor's proposal for funding from any of the other sources named in Section 3(C) is rejected, the commitment of funds under this Contract will be withdrawn and the funding amount reallocated to other applicants. Contractor shall have thirty (30) days to renegotiate financial arrangements prior to withdrawal of the commitment of funds under this Contract. SECTION 4. CONTRACT PERIOD This Contract shall commence upon execution of this Contract and shall terminate on or before June 30, 2004, upon completion of the Project, as defined by Section 17 of this Contract. SECTION 5. CONTRACTOR PERFORMANCE A. Contractor shall conduct and complete the Project in a satisfactory manner as determined by Department. B. Contractor shall comply with all applicable laws and regulations, and shall perform all activities in accordance with the terms of the Special Conditions specified in Section 17 of this Contract, and with all other terms, provisions, and requirements set forth herein. C. No more than ten percent (10%) of Contract funds disbursed pursuant to this Contract may be applied towards administrative costs. The acceptability of costs incurred for performances rendered hereunder shall be determined in accordance with Federal Office of Management and Budget Circular No. A-87 - Cost Principles for State, Local, and Indian Tribal Governments, and in accordance with this Contract. Both Contractor and Department understand and agree that by referring to said Circular, there is no intent to expand on the eligible use of grant funds other than as permitted under Chapter 486 of the Texas Government Code. SECTION 6. DEPARTMENT OBLIGATIONS A. In consideration of full and satisfactory performance of activities required by Section 3 of this Contract, Department will disburse DEAAG funds to Contractor in the amounts and at the times specified by the Special Conditions detailed in Section 17 of this Contract, and subject to the limitations set forth in this Section 6. Notwithstanding any other provision of this Contract, the total of all payments and other obligations incurred by Department under this Contract will not exceed the sum of Seventy -Five Thousand and No/ 100 Dollars ($75,000.00). Department will not be liable to Contractor for any costs incurred by Contractor or for any performances rendered by Contractor which are not strictly in accordance with the terms of this Contract. Department will not be liable for costs incurred or performances rendered by Contractor before commencement of this Contract or after termination of this Contract, except as may be specifically set forth in Section 16(C). B. Contractor shall refund to Department any sum of money paid to Contractor by Department, which Department determines is an overpayment to Contractor, or in the event Department determines funds spent by Contractor were not an allowable cost of this Project. Allowable costs will be determined in accordance with Federal Office of Management and Budget Circular No. A-87, Cost Principles for State, Local, and Indian Tribal Governments, and in accordance with this Contract. No refund payment(s) may be made from local, state, or federal grant funds unless statute or regulation specifically permits repayment with grant funds. Such refund shall be made by Contractor to Department within ninety (90) calendar days after such refund is requested in writing by Department, or within thirty (30) calendar days of a notice from Department indicating the request is the result of a final determination that the refund is owed. SECTION 7. RETENTION AND ACCESSIBILITY OF RECORDS A. Contractor shall maintain fiscal records and supporting documentation for all expenditures of funds made under this Contract in a manner that conforms to this Contract. Such records shall include data on the racial, ethnic, and gender characteristics of persons who are applicants for, participants in, or beneficiaries of the funds provided under this Contract. Contractor shall retain such records, and any supporting documentation, for the greater of four (4) years from the end of the contract period, or the period required by other applicable laws and regulations. B. Contractor shall give the Department, its designee, or any of their duly authorized representatives, access to and the right to examine all books, accounts, records, audit reports, reports, files, documents, written or photographic material, videotape and other papers, things, or property belonging to or in use by Contractor pertaining to this Contract, including records concerning the past use of DEAAG funds. Such rights to access shall continue as long as the records are retained by Contractor. Failure to provide reasonable access to authorized Department representatives shall give the Department the right to suspend or terminate the Contract as provided for in Section 15 and 16, or any portion thereof, for reason of default. All records and other information shall be retained by Contractor for a period of four (4) years after all performance requirements are achieved for audit purposes until such audits or other administrative, civil or criminal matters, including but not limited to investigations, lawsuits, administrative inquires and open record requests, are completed. Contractor agrees to maintain such records in an accessible location and to provide citizens reasonable access to such records consistent with the Texas Public Information Act. C. Contractor shall include the substance of this Section 7 in all subgrant agreements. SECTION 8. MONITORING A. Department reserves the right to perform periodic on-site monitoring of Contractor's compliance with the terms and conditions of this Contract and of the adequacy and timeliness of Contractor's performance. After each monitoring visit, Department will provide Contractor with a written report of the monitor's findings. If the monitoring report notes deficiencies in Contractor's performances under the terms of this Contract, the monitoring report shall include requirements for the timely correction of such deficiencies by Contractor. Failure by Contractor to take action specified in the monitoring report may be cause for suspension or termination of this Contract, in accordance with Sections 15 and 16 herein. B. During the course of the Project, Contractor shall provide on a semi-annual basis, a certified engineering or architectural assessment of the Project. C. During the course of the Project, Contractor shall provide on a semi-annual basis, information evidencing the number of jobs generated during the construction phase of the Project. SECTION 9. INDEPENDENT CONTRACTOR It is expressly understood and agreed by the parties hereto that Department is contracting with Contractor as an Independent Contractor, and that Contractor, its employees and subcontractors are not employees of the Department. SECTION 10. CONFLICT OF INTEREST A. Contractor shall ensure that no employee, officer, or agent of Contractor shall participate in the selection, award or administration of a subcontract supported by funds provided hereunder if a conflict of interest, real or apparent, would be involved. Such conflict of interest would arise when: (1) the employee, officer, or agent; (2) any member of his or her immediate family; (3) his or her partner; or, (4) any organization which employs, or is about to employ any of the above, has a financial or other interest in the firm or person selected to perform the subcontract. Contractor shall comply with Chapter 171, Texas Local Government Code. B. Except for eligible administrative or personnel costs, no employee, agent, consultant, officer, or elected or appointed official, of either Contractor or of a subcontractor, who exercises or has exercised any functions or responsibilities or is in a position to participate in decision-making or gain inside information in regard to the activities involved in the Project, shall be permitted to have or obtain a financial interest in or benefit from the Project or any contract, subcontract or agreement with respect thereto, or the proceeds thereunder, either for themselves or those with whom they have family or business ties. This prohibition shall remain in effect for the duration of the prohibited relationship plus one calendar year thereafter. C. Contractor shall include the substance of this Section 10 in all subgrant agreements. SECTION 11. NONDISCRIMINATION AND SECTARIAN ACTIVITY A. Contractor shall ensure that no person shall, on the ground of race, color, national origin, religion, sex, age, or handicap, be excluded from participation in, be denied the benefits of, be subjected to discrimination under or be denied access to any program or activity funded in whole or in part with funds made available under this Contract. B. None of the performances rendered by Contractor under this Contract shall involve, and no portion of the funds received by Contractor under this Contract, shall be used in support of any sectarian or religious activity, nor shall any facilities used in the performance of this Contract be used for sectarian instruction or as a place of religious worship. C. Contractor shall include the substance of this Section 11 in all subgrant agreements. 4 SECTION 12. LEGAL AUTHORITY A. Contractor assures and guarantees that Contractor possesses the legal authority to enter into this Contract, receive funds authorized by this Contract, and to perform the services Contractor has obligated itself to perform hereunder. B. The person or persons signing and executing this Contract on behalf of Contractor, or representing themselves as signing and executing this Contract on behalf of Contractor, do hereby guarantee that he, she or they have been duly authorized by Contractor to execute this Contract on behalf of Contractor and to validly and legally bind Contractor to all terms, performances, and provisions herein set forth. C. Department will have the right to suspend or terminate this Contract in accordance with Section 15 and 16 herein, if there is a dispute as to the legal authority of either Contractor or the person signing this Contract to enter into this Contract, any amendments hereto or failure to render performances hereunder. Contractor is liable to Department for any money it has received from Department for performance of the provisions of this Contract, if Department has suspended or terminated this Contract for reasons enumerated in this Section 12. SECTION 13. LITIGATION AND CLAIMS A. Contractor shall give Department immediate notice in writing of any action, including any proceeding before an administrative agency, filed against Contractor arising out the performance of any subcontract hereunder. Except as otherwise directed by Department, Contractor shall furnish immediately to Department copies of all pertinent papers received by Contractor with respect to such action or claim. Contractor shall notify the Department immediately of any legal action filed against the Contractor or any subcontractor, or of any proceeding filed under the federal bankruptcy code. Contractor shall submit a copy of such notice to Department within 30 calendar days after receipt. No funds provided under this Contract may be used in the payment of any costs incurred from violations or settlements of or failure to comply with federal and state regulations. B. Department and Contractor acknowledge that they are political subdivisions of the State of Texas and are subject to, and comply with the applicable provisions of the Texas Tort Claims Act, as set out in the Civil Practice and Remedies Code, Section 101.001 et. seq., and the remedies authorized therein regarding claims and causes of action that may be asserted by third parties for accident, injury or death. C. This Contract shall be interpreted according to the Constitution and the laws of the State of Texas. Venue of any court action brought directly or indirectly by reason of this Contract shall be in Travis County, Texas. SECTION 14. CHANGES AND AMENDMENTS A. Except as specifically provided in Section 14(C) of this Contract, any alterations, additions, or deletions to the terms of this Contract shall be by amendment hereto in writing and executed by both parties to this Contract upon Department approval and authorization of Contractor's governing body. B. It is understood and agreed by the parties hereto that performances under this Contract shall be rendered in accordance with the laws and rules governing Defense Economic Adjustment Assistance Grants, and the terms and conditions of this Contract. Department may, during the contract period, issue policy directives which serve to establish, interpret, or clarify performance requirements under this Contract. Such policy directives will be promulgated by Department, shall have the effect of qualifying the terms of this Contract and shall be binding upon Contractor, as if written herein, provided however that said policy directives and any amendments shall not alter the terms of this Contract so as to release Department from any obligation specified in Section 6 of this Contract to reimburse costs incurred by Contractor prior to the effective date of said amendments or policy directives. C. Any alterations, additions, or deletions to the terms of this Contract required by changes in state law or regulations are automatically incorporated into this Contract without written amendment hereto, and shall become effective on the date designated by such law or regulation. SECTION 15. SUSPENSION A. Notwithstanding the provisions of Chapter 2251 of the Texas Government Code, in the event Contractor fails to comply with the terms of this Contract, Department shall provide Contractor with written notification as to the nature of the non-compliance. Department shall grant Contractor a sixty (60) day period from the date of the Department's written notification to cure any issue of non-compliance under this Contract. Should Contractor fail to cure any default within this period of time, the Department may, upon written Notice of Suspension to Contractor, suspend this Contract in whole or in part and withhold further payments to Contractor, and prohibit Contractor from incurring additional obligations of funds under this Contract. Such Notice of Suspension shall include: (1) the reasons for such suspension; (2) the effective date of such suspension; and, (3) in the case of partial suspension, the portion of the Contract to be suspended. B. In the case of default for causes beyond Contractor's reasonable control, which cannot with due diligence be cured within such sixty (60) day period, the Department may, in its sole discretion, extend the cure period provided that Contractor shall (1) immediately upon receipt of Notice of Suspension advise Department of Contractor's intention to institute all steps necessary to cure such default and the associated time frame; and (2) institute and thereafter prosecute to completion with reasonable dispatch all steps necessary to cure same. C. A suspension under this Section 15 may be lifted only at the sole discretion of the Department upon a showing of compliance with or written waiver by Department of the term(s) in question. D. With the exception of payment for work in progress or materials ordered prior to receiving a Notice of Suspension, Department will not be liable to Contractor or to Contractor's creditors for costs incurred during any term of suspension of this Contract. SECTION 16. TERMINATION A. Department shall have the right to terminate this Contract for non-compliance, in whole or in part, at any time before the date of completion specified in Section 4 of this Contract whenever Department determines that Contractor has failed to comply with any term of this Contract. Department will provide Contractor with written notification as to the nature of the non- compliance, and grant Contractor a sixty (60) day period from the date of the Department's written notification to cure any issue of non-compliance under this Contract. Should Contractor fail to cure any default within this period of time, the Department may, upon issuance to Contractor of a written Notice of Termination, terminate this Contract in whole or in part and withhold further payments to Contractor, and prohibit Contractor from incurring additional obligations of funds under this Contract. Such notification shall include: (1) the reasons for such termination; (2) the effective date of such termination; and, (3) in the case of partial termination, the portion of the Contract to be terminated. M B. In the case of default for causes beyond Contractor's reasonable control, which cannot with due diligence be cured within such sixty (60) day period, the Department may, in its sole discretion, extend the cure period provided that Contractor shall (1) immediately upon receipt of Notice of Termination advise Department of Contractor's intention to institute all steps necessary to cure such default and the associated timeframe; and (2) institute and thereafter prosecute to completion with reasonable dispatch all steps necessary to cure same. C. Except as provided in Section 16(A), awards may be terminated in whole or in part only as follows: By the Department (with the consent of the Contractor) in which case the two parties shall agree upon the termination conditions, including the effective date and in the case of partial termination, the portion to be terminated; or 2. By the Contractor upon written notification to the Department, setting forth the reasons of such termination, the effective date, and in the case of partial termination, the portion to be terminated. However, if, in the case of partial termination, the Department determines in its sole discretion that the remaining portion of the award will not accomplish the purpose for which the award was made, the Department may terminate the award in its entirety under Section 16(A). D. Upon receipt of Notice of Termination for non-compliance under Section 16(A), Contractor shall, to the extent possible under its other contractual obligations, cancel, withdraw, or otherwise terminate any outstanding orders or subcontracts related to the performance of this Contract or the part of this Contract to be terminated and shall cease to incur costs thereunder. Any other work or materials under or part of this Contract shall be terminated and Department will not be liable to Contractor or to Contractor's creditors for any costs incurred subsequent to receipt of a Notice to Terminate. E. Notwithstanding any exercise by Department of its right of suspension under Section 15 of this Contract, or of early termination pursuant to this Section 16, Contractor shall not be relieved of any liability to Department for damages due to Department by virtue of any breach of this Contract by Contractor. Department may withhold payments to Contractor until such time as the exact amount of damages due to Department from Contractor is agreed upon or is otherwise determined. SECTION 17. SPECIAL CONDITIONS A. Department will release the initial disbursement of contract funds, which shall equal Thirty - Seven Thousand Five Hundred Dollars ($37,500.00), or fifty percent (50%) of the total amount of funds provided by Department under this Contract (hereinafter "Contract Funds"), upon submission by Contractor of the following within (nine) 9 months of the execution of this Contract: Specific plans and specifications for the construction of the Project, as set out in Section 2, are on file with the Contractor; 2. A copy of the administration contract (if applicable); A letter identifying individuals authorized to request and receive funds from the Department on the Contractor's behalf, 4. Proof of local funding supporting the Project in the amount of $1,322,059.00; Documentation indicating that the plans and specifications for the construction and renovation of the Project, to the extent required by law or regulation, have been reviewed and when applicable, approved by the Texas Natural Resource Conservation Commission (TNRCC) prior to construction. Where TNRCC approval is required, necessary applications and materials shall be sent by Contractor to the Texas Natural Resource Conservation Commission, P. O. Box 12100, Park 35 Circle, Austin, Texas 78783, and shall be identified as activities being financed through the Department; and 6. Documentation indicating that the plans and specifications for the construction and renovation of the Project have been reviewed and approved by the Texas Department of Licensing and Regulation (hereafter referred to as "TDLR") with regard to the elimination of architectural barriers encountered by persons with disabilities as specified in TEX. REV. CIV. STAT. ANN. art. 9102. and the rules promulgated thereunder. In the event TDLR has not issued approval within thirty (30) days of its receipt of the plans and specifications, the operation of this condition may be temporarily suspended pending such approval by submitting proof of mailing and a legible photocopy of both sides of a canceled check. The plans and specifications shall be sent to the Texas Department of Licensing and Regulation, Architectural Barriers Division, P.O. Box 12157, Austin, Texas 78711, and shall be identified as a Project being financed through the Department. B. Department will release the second disbursement of Contract Funds, which shall equal Thirty Thousand Dollars ($30,000.00), or forty percent (40%) of the Contract Funds, contingent upon satisfying the forgoing Special Conditions in Section 17(A) and providing a copy of an invoice showing fifty per cent (50%) completion of the Project, with an "Architect's Certificate for Payment" stamped and signed by the Architect. C. Department will release the final disbursement of Contract Funds, which shall equal Seven Thousand Five Hundred Dollars ($7,500.00), or ten percent (10%) of the Contract Funds, upon Project completion as demonstrated by the following: 1. Completion of the construction of the Facility as described in the plans and specifications referred to in Section 17 (A)(1); and Submission by Contractor of a Certificate of Completion to Department no later than sixty (60) calendar days after completion of the Project. The Certificate of Completion shall include a final Project Completion Report of all activities performed under this Contract; D. The Contractor shall provide the following milestones and updates, including photographs where appropriate, after completion of the Project (as marked by the release of the final ten percent (10%) installment of Contract Funds by the Department): Base line and semi-annual data on the impact of the Project on the local economy over a four (4) year period beginning with the completion of the Project; 2. Base -line and semi-annual data on any jobs generated by the Project and data on the employment of dislocated defense and economically disadvantaged workers beginning with completion of the Project for a period of four (4) years; 3. Upon completion of the Project, Contractor shall provide documentation evidencing the number of jobs created over the course of the construction phase of the Project. E. In addition to the limitations on liability otherwise specified in this Contract, it is expressly understood and agreed by the parties hereto that if Contractor fails to submit to Department in a timely and satisfactory manner any report required by this Contract, Department may, at its sole option and in its sole discretion, withhold any or all payments otherwise due or requested by Contractor hereunder. If Department withholds such payments, it will notify Contractor in writing of its decision and the reasons therefor. Payments withheld pursuant to this paragraph may be held by Department until such time as the delinquent obligations for which funds are withheld are fulfilled by Contractor. F. In the event Contractor fails to complete the Project or comply with any provision as specified in this Contract, the Contractor may be liable for damages under this Contract and barred from applying for or receiving additional funding under the DEAAG program until repayment is made and any other compliance or audit findings are resolved and/or any issue of non-compliance is cured to the satisfaction of Department pursuant to Sections 15 and 16 of this Contract. G. The total number of new, direct, permanent, full-time jobs to be created as a result of this Project shall be no less than three hundred fifty (350). These jobs must be created within two (2) years of the completion date of the Project. The Director of the Economic Development Department of the Contractor may request and Department staff may consider, subject to approval of Department's Governing Board, an extension beyond these two (2) years upon demonstration of reasonable grounds for Contractor's failure to meet the job requirements. In the event the Contractor fails to ensure the creation and retention of new jobs as required by this Section 17(G), Department shall receive a recoupment of funds from Contractor equal to the lesser of : (a) A prorated share of the total Contract Fund amount of seventy-five thousand dollars ($75,000.00) for each of the minimum number of new, direct, permanent full-time jobs required in this Contract (350) not created and in existence on the second anniversary of the completion of the Project; or (b) Fifty percent (50%) of the total Contract Fund in the amount of Thirty -Seven Thousand Five Hundred Dollars ($37,500.00). 2. For purposes of this Contract, job creation and retention rates must be evidenced by satisfactory documentation, such as copies of payroll documents, as required by the Department. H. Contractor shall provide Department with copies of all reports required by the federal agencies pursuant to the terms of individual federal grants received, within 30 days of their submission to the granting agencies. W SECTION 18. SUBCONTRACTS A. Contractor shall ensure that the performance rendered under all subcontracts complies with all terms and provisions of this Contract as if such performance were rendered by Contractor. Contractor shall bear full responsibility for performance by all subcontractors. B. Contractor, in subcontracting any of the performances hereunder, expressly understands that in entering into such subcontracts, Department is in no way liable to Contractor's subcontractor(s). C. Contractor assures and shall obtain assurances from all of its subcontractors where applicable, that no person shall, on the grounds of race, creed, color, disability, national origin, sex or religion, be excluded from, be denied the benefit of, or be subjected to discrimination under any program or activity funded in whole or in part under this Contract. D. As subcontracts and supplier contracts become necessary to carry out the requirements of this Contract, Contractor covenants to make a good faith effort to contract with historically underutilized (disadvantaged) businesses so certified by the State of Texas, as that term is identified by Section 2161.001, Texas Government Code. Contractor shall make a good faith effort to let at least thirty percent (30%) of the total value of all subcontracts and supplier contracts for the performance of this Contract to historically underutilized (disadvantaged) businesses. SECTION. 19. DEBARMENT By signing this Contract, Contractor certifies that it will not award any funds provided under this Contract to any party which is debarred, suspended or otherwise excluded from or ineligible for participation in assistance programs. Contractor further certifies that it is not ineligible under Section 231.006 of the Texas Family Code to receive the specified grant, loan, or payment and acknowledges that this Contract may be terminated and payment may be withheld if this certification is inaccurate. SECTION 20. RIGHTS UPON DEFAULT It is expressly understood and agreed by the parties hereto that any right or remedy provided for in this Contract shall not preclude the exercise of any other right or remedy under this Contract or under any provision of law, nor shall any action taken in the exercise of any right or remedy be deemed a waiver of any other rights or remedies. Failure to exercise any right or remedy hereunder shall not constitute a waiver of the right to exercise that or any other right or remedy at any time. SECTION 21. NON -ASSIGNMENT This Contract is not assignable. Notwithstanding any attempt to assign the Contract, Contractor shall remain fully liable on this Contract and shall not be released from performing any of the terms, covenants, and conditions herein. Contractor shall be held responsible for all funds received under this Contract. SECTION 22. ORAL AND WRITTEN AGREEMENTS All oral and written agreements between the parties to this Contract relating to the subject matter of this Contract that were made prior to the execution of this Contract have been reduced to writing and are contained in this Contract. 10 SECTION 23. AUTHORIZED RELIEF FROM PERFORMANCE (Force majeure) Department may grant relief from performance of the Contract if the Contractor is prevented from compliance and performance by an act of war, order of legal authority, act of God, or other unavoidable cause not attributed to the fault or negligence of the Contractor. The burden of proof for the need for such relief shall rest upon the Contractor. To obtain release based upon force majeure, the Contractor must file a written request with the Department. SECTION 24. SURVIVAL OF CERTAIN CONTRACT PROVISIONS The following provisions of the Contract, concerning Contractor's obligations, shall survive the termination of the Contract after completion of the Project: A. Section 3B (Job Creation) B. Section 7 (Records Retention and Accessibility of Records) C. Section 17D (Reports Concerning the Project After Completion). WITNESS OUR HANDS, EFFECTIVE as of August 30,2002: Accepted and executed on behalf of the City of Lubbock pursuant to a letter of authorization, signed by Marc McDougal, Mayor, dated May 16, 2002, and the Texas Department of Economic Development py�suant toresolution of its Governing Board, passed and approved on August 2, 2002. , '/ Mayor City of L ATTEST: Rebecca Garza City Secretary APPROVED AS TO CONTENT: Richard Burdine Assistant City Manager APPROVED AS TO FORM: William de Haas Competition and Contracts Manager/Attorney Live Director Department of Economic This Contract is not effective unless signed by the Executive Director of the Texas Department of Economic Development or by his or her authorized designee. 11