HomeMy WebLinkAbout2014-06-8154833
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ORDINANCE NO. 2014 -06-8154
AN ORDINANCE OF THE CITY OF PADUCAH, KENTUCKY, APPROVING
A MEMORANDUM OF UNDERSTANDING AMONG G.P.E.D.C., INC.,
DOING BUSINESS UNDER THE ASSUMED NAME OF THE GREATER
PADUCAH ECONOMIC DEVELOPMENT COUNCIL, INC., AND GENOVA
PRODUCTIONS, INC., WITH RESPECT TO A PUBLIC PROJECT;
AUTHORIZING THE EXECUTION OF THE MEMORANDUM OF
UNDERSTANDING AND OTHER DOCUMENTS RELATED THERETO
WHEREAS, the City of Paducah, Kentucky (the "City") has previously determined, and
hereby further determines, that it is a public purpose to reduce unemployment in the City, to .
increase the City's tax base, to foster economic development within the City and to promote the
development of a skilled workforce, all to the benefit of the citizens and residents of the City;
and
WHEREAS, The City and the County of McCracken, Kentucky (the "County") have
further determined that it is necessary and desirable to accomplish such public purposes that the
City and the County must proceed at this time to provide certain economic incentives to Genova
Products, Inc., a Michigan corporation, ("Corporation") in order to induce Corporation to
develop and locate an vinyl building products facility (the "Project") to a certain building located
at 5400 Commerce Drive, Paducah, Kentucky (the "Property") within the boundaries of the
Paducah, McCracken County, Kentucky; and
WHEREAS, the City, the County, and G.P.E.D.C., Inc., doing business under the
assumed name of the Greater Paducah Economic Development Council ("GPEDC"), find it
necessary and advisable to set forth in summary form the intention of the Project and the
economic incentives to be provided to partially defray the costs of the Project; and
WHEREAS, in order to further the above described public purposes, it is necessary and
desirable that the City now authorize the Memorandum of Understanding among GPEDC, and
Corporation with respect to the Project and the economic incentives to be provided; and
NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE
CITY OF PADUCAH, KENTUCKY, AS FOLLOWS:
Section 1. Recitals and Authorization. The City hereby approves the Memorandum of
Understanding among GPEDC, and Corporation (the "MOU") in substantially the form attached
hereto as Exhibit A and made a part hereof. It is further determined that it is necessary and
desirable and in the best interest of the City to enter into the MOU for the purposes therein
specified, and the execution and delivery of the MOU is hereby authorized and approved. The
Mayor of the City is hereby authorized to execute the MOU, together with such other
agreements, instruments or certifications which may be necessary to accomplish the transaction
contemplated by the MOU with such changes in the MOU not inconsistent with this Ordinance
and not substantially adverse to the City as may be approved by the official executing the same
on behalf of the City or the City Manager. The approval of such changes by said official, and
that such are not substantially adverse to the City, shall be conclusively evidenced by the
execution of such MOU by such official.
Section 2. Severability. If any section, paragraph or provision of this Ordinance shall be
held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such
section, paragraph or provision shall not affect any of the remaining provisions of this
Ordinance.
Section 3. Compliance With Open Meetings Laws. The City Commission hereby finds
and determines that all formal actions relative to the adoption of this Ordinance were taken in an
open meeting of this City Commission, and that all deliberations of this City Commission and of
its committees, if any, which resulted in formal action, were in meetings open to the public, in
full compliance with applicable legal requirements.
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Section 4. Conflicts. All ordinances, resolutions, orders or parts thereof in conflict with
the provisions of this Ordinance are, to the extent of such conflict, hereby repealed and the
provisions of this Ordinance shall prevail and be given effect.
Section 5. Effective Date. This Ordinance shall be read on two separate days and will
become effective upon summary publican ---
ATTEST:
IA J.��
Tammara S. Sanderson, City Clerk
Introduced by the Board of Commissioners, June 3, 2014
Adopted by the Board of Commissioners, June 10, 2014
Recorded by Tammara S. Sanderson, City Clerk, June 10, 2014
Published by The Paducah Sun, June 17, 2014
EXHIBIT A
17436k[ean
June 9, 2014,1:30gm
MEMORANDUM OF UNDERSTANDING
This is a MEMORANDUM'OF UNDERSTANDING CMOU'5 between GENOVA
PRODUCTS, !NC., ("Company" or "Genova" ), with a principal mailing address of Post Office
Box 309, Davison, Michigan 48423, and G.P.R.D.C„ INC., d/b/a the .Greater Paducah $conolnie
Development Council, Inc., a Kentucky not-for=profit-corporation C'GPEDC'5, with a principal
mailing address of Post Office Box 1155, Paducah, Kentucky 42002-1155. Company and
OPEDC may be referred to herein individually as a'Party", and collectively as the 'Parties".
Recitals:
WHERE" the City of Paducah, Kentucky ("City', and County of .McCracken
("County's hold fee s'"Up le title to a certain industrial building and related improvenienis (the
'Building's situated upon a certain tract of real property at 5400 Commerce Drive in Paducah,
McCrackefi County, Kentucky (the 'Property'), for industrial development;
WH R)VAS, Company proposes to locate, equip, and operate a manufacturing and
distribution facility of vinyl building products (the 'Project's within the Building and on the
Property;
WHEREAS, the Project would have a positive itnpact on the entire community by
stimulating the local economy, expanding the tax base, and reducing unemployment within the
boundaries of Paducah, McCracken County, Kentucky;
Vi HEUiEAS, OP13DC leadership strongly support the location of the Project in
Paducah, McCracken County,KgriOcky;
WME! RE, AS, in order to induce the location, equipping, and operation of the Project
by Company on the Property , GPBDC or its assigns has agreed to provide certain
economic incentives to Company as provided in this MOU for piirposes of de$aying the costs
of locating and equipping the Project on the Property;
WHEREAS : Company is very interested in pursuing the Project and the Parties wish
to enter into #his MOU to clearly set forth the framework of a subsequent agreement regarding
the location and equipping of the Project and the economic incentives to be provided to partially
defray the costs thereof; and
WHEREAS , the Parties intend to work cooperatively to move forward with the
Project as set forth in this MOU.
Now, THEREFORE, Company and GPEDC agree to the following:
A. C ammftments from. Paducah.
1. GPEAC or its assigns agrees to extend a revolving loan to Company for the sole
purpose of purchasing trade fixtures, equipment, and fixtures for the Project that enhances its
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operations on the Property and creates additional and new job opportunities to Kentucky
residents up to the aggregate amount of $1.1 million, which loan shall be repaid with
Interest at the rate of 4.5% per annum amortized over a ten (10) year period. Advances up
to and not to exceed $900,000.00 from the revolving loan shall be expressly conditioned
upon Company having hired and retained a minimum of 18 new full-time employees
("FTEs') at the Premises/Project. Site and upon providing current ffnanclal statements.
Additional advances from the revolving loan after the aforesaid Initial advance of the first
$900,000.00 are expressly conditioned upon Company having hired and retained a
minimum of 50 new FTEs and upon providing current financial statements, FTEs are
defined as new full-time employed workers with an average hourly compensation of
$13:11 per hour, plus health Insurance benefits with a rnInimum of 50% Lessee
contribution, which employed workers are subject to the City of Paducah "s license fees as
defined under Article IV of the Paducah Code of Ordinance, Sections 106.-1.83 and 106-184,
and who satisfy the Kentucky residency criteria under the provisions of the Kentucky
Economic Development Finance Authority ("KEDW) Diredt Loan Programs. Said loan to be
evidenced by a Revolving Loan Credit Agreement and secured by a security agreement
wherein GPEDC or Its assigns are accorded a first -and superior security Interest in the trate
fixtures, equipment, and fixtures acquired for and used in the operation of the Project.
Such documents are to contain such terms and conditions as are acceptable to GPEDC or
its assigns.
2. apEDC agrees to pay directly to City and County (a) the base rental payments
commencing with the Lease Commencement Date (duly 1, 2014) (defined below) and
terminating on the Base Rent Commenceirrent Date (September 1, 20 15) (defined
below), and .(b) the equipment loan lustalhnent payments during the first year of the loan:
3. Additional Incentives: GMDC will in good faith petition the State of
Xentuc) y and other partners for the following s
(i) A KEDjFA 3% payroll rebate for 10 years;
(ii) K.BI tax credit (Offsets state corporate income taxes by 50% of
lease payments pO year for 10 years:);
(iii) KBIA (sales & use tax refmd for building/construction materials &
income tax abatement); and
(iv) Kentucky Training Incentives
4. At its sole cost, GPEDC agrees to cotaplete a Phase I environmental assessment
of the Property prior to June. 30, 2014, and if indicated, a Phase Il erxvhbrlm atal assessment,
and agrees to indemnify Company ftom any environmental damage's that were caused prior to
the Lease Commencement Date (defined below).
5. As an incentive -and an inducement to Company to locate, equip acid olierate,
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the Project on the Property, GPEDC agrees not to offer cash incentives to attract the
companies expressly listed below within the boundaries of McCracken County,, Kentucky for
a five (5) year period from the Effective Date of this MOU, provided, however, such
covenant shall not apply in the event: (i) any of the listed companies agree to pay an
average salary of $20/hour or more, (ii) a building owned by GPEDC, City, or County
loses a tenant (such as Whitehall or Macco); or (iii) Company is in default of any of its
obligations under this MOU, the lease, or the loan documents. The listed companies
GPEDC is restricted from providing cash incentives are as follows: Charlotte, Nibco,
Lasco, Mueller, Tigre, Spears, Amerimax, YP Building Products, Trex, Timbertech,
Azek, Fiberon, Gossen, Kleer Decking, Tamko, and Universal Forest Products. This
does not prohibit the City, County, or State from granting statutory incentives as
permissible by law.
B. Commitments of Company. in consideration of the public incentives to be
provided, .Company agrees as follows:
1. Company reasonably projects and in good faith anticipates hiring and
maintaining 125 new FTEs at the Property within ten (10) years of the Effective Date of
this MOU with health insurance benefits. Further) Company shall provide to GPEDC, at
its sole cost and expense, the following:
(i) Written reports of the Company's progress in satisfying the foresaid
employment commitments. Such progress reports shall be provided bi-
annually commencing upon commencement of the lease agreement and
shall be certified as. aecurate by Company. Upon a reasonable request by
City and/or County, Company shall provide support documentation
verifying the aforesaid progress reports.
(ii) A year-end fmancial statement and balance sheet, in reasonable detail and
with all supporting schedules and comments, duly certified by Company's
dertified public accountant by April 30th following each fiscal year-end of
the Company.
2. To obtain and maintain all licensing, permitting and certification
requirements for the lawful construction, installation, and equipping of the Project
and the operation of the Project including but not limited to, all city development,
zoning, building code ordinances and policies, and all other federal, state and local
applicable laws and regulations (collectively, "Governmental Permits'). GPEDC
will work closely with tate Company to ensure these Governmental Permits are
provided in a timely and expedited manner.
3. To acknowledge that the financial and other assistance it would receive,
as described herein would be made possible, in part, by reason of local businesses,
governmental entities, and citizens contributing to support the economic development
efforts of GPEDC. Company agrees to be a good corporate citizen and become a
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838
GPEDC investor at a level of$7,500/year, the first annual contribution to be paid upon
the execution of the definitive lease agreeinent for the Building and the Property.
C. Addonal Commitments of the Parties,
1. GPEDC, as agent for City and County, and Company agree to negotiate in
good faith the terms of a lease agreement for the Building and the Property on or before
June 30, 2014. Failure to enter into the lease agreement within this time frame shall result
in the termination of this MOU and neither Party shall have any further liabilities or
obligations to the other hereunder. Company shall lease the Building and the Property for an
initial term of ten (10) years with an option to renew for one (1) additional term of ten (10)
years. The Iease shall commence on July 1, 2014 (the "Lease Commencement Date"), with base
rentals payments being paid by GPEDC from the Lease Commencement Date and terminating
on the Base Rent Commencement Date (September 1, 2015). Company shall commence base
rental payments on September 1, 2015 (the "Base Rent Commencement Date"). The base rental
rate shall be $289,000 per year, Base rentals shall be paid in advance in equal monthly
installments commencing on the Lease Commencement Date: Also commencing on the Lease
Commencement Date and continuing during the term of the lease, Company shall timely pay, at
its sole cost and expense, as additional rentals, any and all other customary costs arising out of
the use and occupancy of the Building and the Property, including without limitation
maintenance, repair, insurance, utilities, and taxes. Any failure by GPEDC to pay the base
rental payments described above shall not constitute a default by Company under the lease.
D. Conditions.. to. Closine. The Parties acknowledge that Genova's execution of this
MOU is contingent upon the approval by the Commonwealth of Kentucky approving the
KEDFA incentives described above, the Parties acknowledge and,agree that any obligations
of the Parties to consummate the transactions contemplated wider the terms of this MOU
are expressly conditioned upon of the following:
1. Execution of a Binding definitive lease agreement of the Building and the
Property among City, County, and Company on or before June 30,.2014;
2. Execution and delivery by Company of all loan documents required in this MOU
for the Revolving Loan Credit Agreement onor before June 30, 2014;
3. Approval of the KEDFA incentives described above by the State of -Kentucky; and
4. Approval by the governing legislative bodies of -G -'EDC, City, and County of
the terms of this MQU and the consummation of the transaction's contemplated under
this MOU.
In the event .the condition is not satisfied or waived by the Parties hereto on or
before June 30, 2014, this MOU shall terminate and thereafter neither Party shall have any
further liabilities or obligations to the other hereunder.
DetNil 3T0019j
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E menses. Except as otherwise provided herein and the definitive documentation
to be entered among the Parties, City and County, each Party shall be responsible for its
own attorneys' fees and other costs and expenses, anticipated or otherwise.
P. Assignability. GPEDC may assign any or all of its rights and obligations
hereunder to the City of Paducah, McCracken County; and/or the Paducah McCracken
County Industrial Development Authority.
G. Governing Law: Count"arts- Miseellarieous. This MOU shall be governed by
and construed in accordance with the laws of the ' State of Kentucky, without regard to any
conflict of laws principles. Venue shall be in the McCracken Circuit Court. This Agreement
may be executed in counterparts (including counterparts executed and transmitted via fax or
e-mail), each of which shall be deemed an original but all of which together shall constitute
one and the same instrument. This MOU shall continue in force and effect for the same term
as the lease agreement for the use and occupancy of the Property to be entered pursuant to
this MOU. Yfany provision of this MOU shall be held irivalid under any applicable laws,
such invalidity shall not affect any other provision of this MOU than can be given affect
without the invalid provision, and, to this end, the provisions hereof are severable.
H, Effective Date. This MOU shall not become effective and binding until fully
approved, executed, and delivered by all Parties hereto and City and County.
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IN WITNESS WHEREOF, the parties hereto have set their hands.
(5ENOVA PRODUCT'S, INC.
fklrojt 3706419 I
G.P.E.D.C., INC.
By:
Title:—�js4'J ea (C�Q
Date:
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841
842
HAVE SEEN AND AGREED TO:
CITY OF PADUCAH, KENTUCKY MCCRACKEN COUNTY, KENTUCKY
By:
Title:
Date:
By:
Title:
Date:
Dclrolt 310, 419_I