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HomeMy WebLinkAboutResolution - 5143 - Notice Of Intent - Frito-Lay Inc - Tax Abtement Agreement - 03/14/1996Resolution No. 5143 March 14, 1996 Item # 52 RESOLUTION WHEREAS, the City Council has determined to give notice of its intent to enter into a Tax Abatement Agreement with Frito-Lay, Inc., and WHEREAS, V.T.C.A., Tax Code, Section 312.2041 requires notice of the intent of City Council to be given to the presiding officer of the governing body of each taxing unit in which the property to be subject to the Tax Abatement Agreement is located; NOW THEREFORE: BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the City Secretary give notice as set forth in Exhibit "A' of the intention of City Council to enter into a Tax Abatement Agreement with Frito-Lay, Inc., said notice to be given to the presiding officers of each governing body of each taxing unit having jurisdiction in assessing taxes on property located in City of Lubbock, Lubbock County, Texas and further described as 3202 AVENUE B, TRACTS A, D, AND E, BURLINGTON INDUSTRIAL ADDITION CITY OF LUBBGeK` OCK COUNTY, TEXAS; Passed by the City Council this 14th da Mar VID R. LANGSTON, MA ATTEST: 6cl—, AJ (�� Betty Johns City Secretary APPROVED AS TO CONTENT: I el Beesinger, I terim rector of Business Development APPROVED AS TO FORM: Donald. G. Vandiver, First Assistant City Attorney DVG:vl ccdocs/Frito-Lay, Inc.res Febmary 2, 1996 Resolution No,5143 March 14, 1996 Item #52 NOTICE OF INTENT OF THE CITY COUNCIL OF THE CITY OF LUBBOCK TO ENTER INTO AN AGREEMENT TO ABATE TAXES ON REAL PROPERTY "ROVEMENTS AND TANGIBLE PROPERTY LOCATED 3242 AVENUE B, TRACTS A, D, AND E, BURLINGTON INDUSTRIAL ADDITION CITY OF LUBBOCK, LUBBOCK COUNTY, TEXAS; Notice is hereby given that the City Council of the City of Lubbock intends to enter into an agreement with Frito-Lay, Inc. to abate taxes on improvements to property and tangible property located within an enterprise zone created by Ordinance No. 9591 and covering all of the subject property. Notice is further given that the City Council of the City of Lubbock will consider authorizing the Mayor of the City to execute a contract between the City and Frito-Lay, Inc. for tax abatement, a copy of said Agreement is attached to this Notice as Exhibit "A" and made a part hereof for all purposes. Notice is further given that the City Council will consider this matter at its meeting held in the City Council Chamber, City Hall, 1625 13th Street, City of Lubbock, on the 14th,day of March , 199_6_, at 10: 00 o'clock a m. DGV:vl ccdocsTrito-Uy, Ino-noi.res February 2, 1996 EXHIBIT "A" AGREEMENT STATE OF TEXAS § COUNTY OF LUBBOCK § This Agreement made this day of , 1996, by and between the City of Lubbock, Texas, a home rule municipality of the State of Texas (hereinafter called "City") and Frito-Lay, Inc. (hereinafter called "Company"); WITNESSETH: WHEREAS, City did receive from Company on the 22nd day of December, 1995, an application for tax abatement for the modernization and expansion of the existing manufacturing facility located at 3203 Avenue B, which is further described as Tracts A, D, and E, Burlington industrial Addition to the City of Lubbock, Lubbock County, Texas; and WHEREAS, upon review of the above application it was determined that the facilities will be located in the South Enterprise Zone designated by the City in Ordinance No. 9591 covering the above described property; and WHEREAS, the Guidelines and Criteria Governing Tax Abatement for all Taxing Units Contained within Lubbock County was heretofore adopted by Resolution No. 4973 of the City Council of the City of Lubbock; and WHEREAS, the City did comply with all the requirements set forth in V.T.C.A., Tax Code, Section 312.201; and WHEREAS, the City did comply with all of the criteria and guidelines as set forth in the Guidelines and Criteria Governing Tax Abatement for all Taxing Units Contained within Lubbock County, said guidelines having been adopted by Resolution No. 4973 of the City on September 28, 1995, and WHEREAS, the City did thereafter pass Ordinance No. 9591 creating an enter- prise zone for commercial and industrial tax abatement, said zone including Tracts A, D, and E, Burlington Industrial Addition to the City of Lubbock, Lubbock County; and WHEREAS, V.A.T.C., Tax Code, Sec. 312.2011 provides that designation as an enterprise zone constitutes designation as a reinvestment zone without further action; and WHEREAS, the application received by City from Company is an application for the modernization and expansion of an existing facility; and WHEREAS, V.A.T.C., Tax Code, Sec. 312.002 specifically states that such a pur- pose is to be included in the guidelines for tax abatement and to be eligible for such treat- ment; and WHEREAS, Section IV of the Guidelines and Criteria Governing Tax Abatement for all Taxing Units Contained within Lubbock County adopted by the City Council by Resolution No. 4973 does recognize modernization and expansion of existing facilities as being eligible for tax abatement status; and WHEREAS, Section IV (9)(d) provides for variance of the Guidelines and Criteria Governing Tax Abatement for All Taxing Units Contained Within Lubbock County by the affirmative vote of three-fourths of the governing body of an affected jurisdiction; and WHEREAS, the Company does not meet the specific standards of Section IV (9)(c)(1) in that the Company began hiring new employees from the commencement of the project; and WHEREAS, the City Council does hereby find that all of the Guidelines and Criteria Governing Tax Abatement for all Taxing Units Contained within Lubbock County, as adopted by Resolution No. 4973, have otherwise been met by Company; and WHEREAS, the City Council finds that variance of the requirements of Section IV (9)(c)(1) and entering into this Agreement to abate taxes on the property described in Exhibit "A" will contribute to the retention of existing jobs and the creation of new jobs AGREEMENT FRITO LAY, INC. PAGE 2 within the affected jurisdiction, and enhance economic development within the designated Enterprise Zone; WHEREAS, variance of the requirement that eligible job creation be limited to the term established in the Tax Abatement Agreement to include new jobs created since the commencement of the project is hereby granted; NOW THEREFORE, for and in consideration of the premises and of the mutual terms, covenants and conditions herein contained the City and Company do hereby agree as follows: SECTION 1. Term. This Agreement shall remain in force and effect for a period of ten (10) years from the date of its execution and shall expire and be of no further force and effect after said date. SECTION 2. Base Year. The base year applicable to real property, which is the subject of this Agreement, shall be 1996, and the assessed value of the real property shall be the assessed value applicable to such property for said year. SECTION 3. Base Year Taxes. The taxes upon the real property shall be paid in accordance with the assessed value of such property for the base year. Base year taxes upon the real property are thus not abated. SECTION 4. Abatement of Increase in Base Year Tax. In accordance with V.A.T.C., Tax Code, Section 312.204 real property taxes applicable to the real property subject to this Agreement shall be abated only to the extent said value for any given year within the term of this Agreement exceeds the base year taxes hereinabove set forth. SECTION 5. Property Ineligible for Tax Abatement. The property described and set forth in Section IV(S) of the Guidelines and Criteria Governing Tax Abatement for all Taxing Units Contained within Lubbock County and heretofore adopted by the City Council by Resolution No. 4973 is incorporated by reference herein as if fully set out in this Agreement and fully describes the property ineligible for tax abatement. AGREEMENT — FRITO LAY, INC. PAGE 3 SECTION 6. Exemption from Tax. The City covenants and agrees to exempt from taxation, in accordance with Section 4 above, the following properties: (a) All proposed new improvements to be placed by Company upon Tracts A, D, and E, Burlington Industrial Addition to the City of Lubbock, Lubbock County, which proposed improvements are set forth in a plat of the above tract of land, attached hereto as Exhibit "A" and made a part hereof (b) All eligible new tangible personal property placed in or upon the property set forth in Exhibit "A". (c) It is further understood that all items affixed to the new improvements placed upon the real property identified in Exhibit "A" including machinery and equipment shall be considered part of the real property improvement and taxes thereon shall be abated in accordance with the provisions of subparagraph (a) above set forth. SECTION 7. Economic Ouaiification. It is hereby found by the City that Com- pany will expend funds in excess of the funds necessary to qualify for tax abatement by expanding an existing facility and further that the Company will create new jobs in excess of the percentage required for tax abatement, all as set forth in Section IV(9)(c) of the Guidelines and Criteria for Tax Abatement adopted by the City through Resolution No. 4973. SECTION 8. Value of Improvements. Company intends to expend approximately six hundred thousand ($600,000) dollars in building related structural improvements and two million six hundred thousand ($2,600,000) in equipment to be located within the enterprise zone created by Ordinance No. 9591, SECTION 9. Creation of New Jobs. Company agrees between the commencement of this project and within twelve (12) months from the date of execution of this Agreement that it will create ten (10) full-time equivalent new jobs within the Company plant located within Tract A, D, and E, Burlington Industrial Addition to the AGREEMENT — FRITO LAY, INC. PAGE 4 City of Lubbock, Lubbock County and use its best efforts to maintain a minimum of two hundred twenty-nine (229) jobs during the term of this Agreement. SECTION 10. City Access to Property. Company covenants and agrees that City shall have access to the property, which is the subject matter of this Agreement, during normal business hours and that municipal employees shall be able to inspect the property to insure that the improvements are being made in accordance with the terms and condi- tions of Company's application for tax abatement and this Agreement. SECTION 11. Portion of Tax Abated. City agrees, during the term of this Agreement, to abate 100 percent of taxes on eligible property. SECTION 12. Commencement Date. This Agreement shall commence upon the date of its execution, which date is hereinafter set forth, and shall expire ten (10) years after such date. SECTION 13. Type of Improvements. The Company proposes to modernize and expand an existing manufacturing facility as described in Exhibit "A". The Company further states that the proposed improvements to the property above mentioned shall commence on the 1 st day of January, 1996, and shall be completed within approximately six (6) months from said date. The Company may request an extension of the above date from City in the event circumstances beyond the control of Company necessitates additional time for completion of such improvements and such consent shall not unreasonably be withheld. SECTION 14. Drawings of Improvements. Company shall furnish City with one set of as built plans and drawings of the improvements to be made pursuant to the terms of this Agreement.. SECTION 15. Limitation on Use. Company agrees to limit the use of the prop- erty set forth in Exhibit "A" to commercial and/or industrial uses as those terms are defined in the zoning ordinances of the City of Lubbock and to limit the uses of the prop - AGREEMENT — FRITO LAY, INC. PAGE 5 erty to uses consistent with the general purpose of encouraging development of the enter- prise zone during the term of this agreement. SECTION 16, Recapture. The Company agrees to be bound by and comply with all the terms and provisions for recapture of abated taxes in the event of default by Com- pany as set forth in Guidelines and Criteria for Tax Abatement adopted by Resolution No. 4973 of the City Council of the City of Lubbock. SECTION 17. Certification. The Company agrees to certify annually to the governing body of each taxing unit that the owner is in compliance with the terms of the Agreement. SECTION 18. Compliance. The City may cancel or modify this Agreement if the Company fails to comply with the Agreement. SECTION 19. Notices. Notices required to be given by this Agreement shall be mailed, certified mail return receipt requested, to the following addresses: CITY OF LUBBOCK City Manager P.O. Box 2000 Lubbock, Texas 79457 FRITO-LAY, INC. 3203 Avenue B Lubbock, Texas 79404 AGREEMENT - FRITO LAY, INC. PAGE 6 SECTION 20. Effective Date. Notwithstanding anything contained herein to the contrary, this Agreement shall not be effective until such time as it has been finally passed and approved. EXECUTED this day of FRITO LAY, INC. Nice President of Operations ATTEST: Secretary 199 CITY OF LUBBOCK A Municipal Corporation DAVID R LANGSTON, MAYOR F. 6WV *1f Betty Johnson City Secretary PROVED AS TO CONT: t. ael Beesinger - f Interim Director of Business Development APPROVED AS TO FORM: Don Vandiver Assistant City Attorney AGREEN ENT — FRI TO LAY, INC. PAGE 7 EXHIBIT "A" W 1 . Frtto-Lay, Inc. Section III - Facility Description for Frito Lay, Inc. - Lubbock plant a) General description of improvements: arch Recovery Upgrade: Improvements include upgrading the current system to a new high efficiency starch recovery design and constructing a new building to fit it in. LBCSS 1 Texas Gritted Fritos: Improvements include new equipment and upgrading building structure for new Texas Grill line Frito #1 Fryer Replacement: Improvements include new equipment b) Descriptive list of improvements Starch Recovery Upgrade: ` Building a 2,500 sq ft metal building extension Installing a 200 gpm Starch Recovery Module ' Installing a 500 Ib/hr ring -type starch dryer LBCSS 1 Texas Grilled Fritos: Installing a new corn cooking system (2 kettles and 16 soaking tanks) • Upgrade floor, ceiling, roof, roof penetrations, walls, drains • Install new griller and new conveyors for new line New weigh belt and seasoning loop Frito #1 Fryer Replacement: ` Install new fryer to handle a larger capacity due to new line c) List of the kind, number, and location of all proposed improvements Starch Recovery Upgrade: Environmental 1 Upgrade with new equipment I Cost reduction, 1, see attached map LBCSS 1 Texas Grilled Fritos: New equipment! new tine I increased headcount by 10, 1, see attached map Frito #1 Fryer Replacement: New equipment, 1, see attached map Location of plant: 3203 Ave. B, Lubbock, TX 79404 Page 2 Facility Description d) Site reap Starch Recovery Upgrade, LBCSS / Texas Grilled Fritos, and Frito #1 Fryer Replacement: • See attached map e) List of all Tangible Personal Property presently existing on Real Property or located in an existing facility Personal Property value = $11,075,100 fj Proposed time schedule Starch Recovery Upgrade, LBCSS / Texas Grilled Fritos, and Fdto #1 Fryer Replacement: See attached time schedule 9) General description stating whether the proposed improvements are in connection with the modernization of a facility Starch Recovery Upgrade, LBCSS / Texas Grilled Fritos, and Frito #1 Fryer Replacement: ' All of these projects are involved with modernizing the plant. h) Statement of the additional value to the Real Property or Facility March Recovery Upgrade: Capital: $635,000 Expense: $5,000 Total: $640,000 ACSS /Texas Grilled Fritos: Capital: $2,595,000 Expense: $105,000 Total: $2,700,000 Frito #1 Fryer Replacement: Capital: $104,040 Expense: $30,400 Total: $134,000 1) Statement of the assessed value of the Real Property for the Base Year Starch Recovery Upgrade, LBCSS / Texas Grilled Fritos, and Frito #1 Fryer Replacement: ' Please see attached statement jj Information concerning the number of new jobs that with be created Starch Recovery Upgrade, LBCSS / Texas Grilled Fritos, and Frito #1 Fryer Replacement: 3 sanitors LBCSS 1 Texas Grilled Fritos and Frito #i Fryer Replacement: 3 fryer operators, 1 resource, 3 packers Total of 10 new jobs created reo 1 %vC., J' u n cn Lay v Jm uq 5, 1996 Grill Ind i►Rer s pip at Ordering Installation Commissioning Iwll Production Is= IvApm t Ordering Installation Cai■issiaiwq lull Producttom SI'AIM IBquipmat ardderim lrui1ling Installation Mpipaent Wtillatlal Pemwat of Old S" OCt NarlDISC .Imp IS1r �J, J9�6 '96 095 X95 196 ,9e ( rg6 r �*IpWnt OrdKl ................. i s [install] ; ......... •...... .......:....................... ......:..! °!P* , tOcdarint--�........,..,......:...................... ......... �? i .......................`.........+......................... X11 �tios�--� ........................................................................................... ..... .......................... ............. ,...,......... r..,................. ,. ..... ............... :....... :......... :....... ............. i • � r • FAD, Frito-Lay, Inc. Lubbock, TX STARCH RECOVERY UPGRADE Descriatifln: Potato starch is a by-product of potato chip manufacturing that can be sold when recovered from the slice washer process water. Frito-Lay starch recovery systems are currently operated at 21 of Frito-Lay's 22 potato chip production facilities including Lubbock which has one PC21 potato chip line. The existing starch recovery module was an asset transferred from another plant and is more than 14 years old. Due to its age and low efficiency, the starch recovery system needs to be upgraded to a new high efficiency starch recovery design. This project will significantly reduce wastewater discharge loads (37 percent for TSS and 12 percent for BOD) which will comply with recent requests from the City of Lubbock to make a good faith effort to reduce waste loads. Scope:- Local contractors to construct a 37' wide by 54' long metal building extension to house the new starch recovery system, provide for dry starch storage, and to provide space for wastewater pretreatment system components is required in the future. 10 Local contractors to install new starch recovery system Capital. $635,404 expense: $5,O00 Total: $640,1000 ..r..- I - -- -- - • I. Frito-Lay, Inc. Lubbock, TX TEXAS GRILLEQERITaS PRODUCT START UP Qgscriotlow, Texas Grilled is a new product which involves several process changes when compared to Crisp N' Thin the product currently run on that line. There will be several pieces of specialized equipment Installed. The current Crisp N' Thin is crewed with one (1) Fryer Opr.and one (i) Packer working about 15 to 20 hours weekly, producing .85 MM LBs. this year. Texas Grilled will put this line at max capacity 6.5 MM LBs, annually with three (3) Fryer Opr, and three (3) Packers all full time employees. Scaoe; • Local contractors will 03316t in the installation of the new speCialized processing equipment, plus relocate some existing assets, and make the required facility modifications. C3131tal• $910.000 Eggense: $55,000 ?gtal; $ 9 00 P.O. BOX 660634 • Dallas, Texas 75266-0634 • (214) 334-7440 V'TM1 Irl Frito-Lay, Inc. LUBBOCK, TX LgCSS CORD COOKING UPGRADE Desgridtion; Currently, the existing corn cooking system in the Fritos department does not have the required capacity to support the Texas Grilled project, planned In the first quarter of 1996. Also major upgrades are needed due to the age of the existing cook system. The LBCSS system planned for this department will be handle any growth for this product line for several years in the future. SconeLocal contractors will assist in the Installation of the specialized equipment, and make the required facility modifications. 41,150,000 Exnense, 550,000 T01314 51,200,000 P.O. BOX 660634 • Daly, Texas 75266-0534 ■ (2I4) 3347400 ' . 1 . Frito-Lay, Inc. Lubbock. Tx RlT # R P ACEMEN Oescrigtj2= The existing Fryer is In needed of replacement due it's age which is In excess of 10 years. As Improved Product Standards are introduced the condition of this asset Is also making it difficult to achieve our product quality requirements. SC206, A new fryer will be purchased and relocated as required when Installed with the Texas Grilled project. capital: $104,000 Expense-. nse. 430,000 ?gtal: $134,000 P.O. BOX 660634 - Dallas, Texas 75266-0634 - (214) 334-7000 ori u 1 / i 1596 12:34 GWM MC•EL1 11Y L ASSOC. i 518M7627727a9? 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