HomeMy WebLinkAboutJD Food J and D Meat Codba Economic Incentive Agmt[ ¡/. ,t ¡; ti. i !., -
t"1trft5
ECONOMIC INCENTIVE AGREEMENT
J&D Meat Company, lnc.
THIS AGREEMENT is made and entered into thisl',/rh day of -1.r,,u., 2015
("Effective Date"), between the CITY OF FRESNO, a municipal corporatioÉr ("City"), and
J&D MEAT COMPANY, a California corporation doing business as JD FOOD, and
CERTIFIED MEAT PRODUCTS, lNC., a California corporation.
RECITALS
WHEREAS, J&D Meat Company, lnc., is a distributor of food related products to
restaurants, schools, caterers, hotels, and retail grocery stores throughout Northern
California, and Certified Meat Products, lnc., is a processor of meat products for
foodservice operators, retaíl stores, and wholesale manufacturers throughout the United
States; and
WHEREAS, J&D Meat Company is closely affiliated with Certified Meat Products
by common ownership, the two being collectively referred to herein as the "Companies,"
and the Companies currently share a location at 4586 E. Commerce, Fresno, California
("Current Location"); and
WHEREAS, the Companies propose to expand business operations (the
"Project") along Edgar Avenue between Maple and Dearing Avenues, APN 487-042-
135 (the "Project Site") as depicted on Exhibit "A"; and
WHEREAS, the Companies have considered locating in other jurisdictions and
expansion at the Project Site has been conditioned upon Companies receiving
economic development assistance from City; and
WHEREAS, City desires to increase employment opportunities and encourage
the establishment of new jobs within the City to improve the economic welfare of the
City and its citizens; and
WHEREAS, the Project will be of benefit to the citizens of the City in that the
Project is expected to directly employ and expand the labor base of the City by
approximately 144 new full time positions, and will expand the tax base of the City; and
WHEREAS, for the purpose of economic impact, performance requirements for
the Companies shall be combined so long as they remain connected by common
ownership, and the Companies shall be jointly and severally liable for the obligations
herein; and
WHEREAS, Companies will invest approximately $10,000,000 in capital
ímprovements to the Project Site during the term of this Agreement; and
ì r)( J .,:
,' L)t-D -Ll()r:. .l'Ll- --tl. o
()a
ì: )Li
( ) t)
()
1652082u1 / 1 9006.0001
WHEREAS, the City Council finds the creation of jobs, the expansion of the tax
base, and the infusion of money into the local economy are of public benefit for which
the incentives set forth herein are proper; and
WHEREAS, in recognition of job creation and capital investment, City commits to
provide the incentives set forth herein; and
WHEREAS, absent participation by the City pursuant to this Agreement, the
Companies'expansion would not be constructed within the City.
NOW THEREFORE, in consideration of the foregoing recitals, which are
contractual in nature, and the mutual promises and covenants hereinafter set forth, City
and Company agree as follows:
DEFINITIONS
"Agreement Year" means each calendar year after the Effective Date, beginning
January 1,2016.
"Economic Development Assistance" means the annual reimbursement payments made
to Companies by City as authorized by this Agreement.
"Full Time" employees are defined as salary or full{ime hourly employees with a
scheduled work week of 35 hours or more throughout the calendar year and whose
services are dedicated to Companies and receive their compensation from Companies.
"lnitial Qualified lnvestment" means the capital expenditure of $7,000,000 at the Project
Site by December 31,2016.
"Reimbursable Improvements" means the roadway, water, and sewer services more
fully set forth in Exhibit "8" hereto, prepared by Companies' civil engineer.
"Required Levels of Employment" means the amount of Full Time Employees necessary
to qualify for the full amount of Economic Development Assistance in a given
Agreement Year.
"Total Qualified lnvestment" means the capital investment of $10,000,000 (inclusive of
lnitial Qualified Investment) during the Term, broken down into annual totals as set forth
in Section 5.c. The Total Qualified lnvestment shall consist of buildings and other real
property improvements, as well as furniture, fixtures and equipment needed to run each
business.
AGREEMENT
1. Term. Unless sooner terminated, the Term of this Agreement shall commence
on the Effective Date and end on December 31,2025, subject to the City's obligation, if
21652082v1 i 19006.0001
any, to make Economic Development Assistance payments for the final Agreement
Year. This Agreement may sooner terminate upon occurrence of all of the following:
a. Companies achieve the Full Time employment goal of 288 employees;
and
b. Companies make the Total Qualified lnvestment of $10,000,000; and
c. City fully reimburses Companies for the cost of the Reimbursable
lmprovements.
2. Cíty's Economic Development Assistance
a. Off-Site lmprovements Reimbursement.
i. Companies agree to construct the Reimbursable lmprovements in
accordance with approved plans and City's standards and specifications on
behalf of City at Companies' sole cost and expense (including, but not limited to,
engineering, inspection and testing). ln completing the construction, Companies
shall comply with (a) the conditions and terms of the entitlements and site plan,
(b) all approved construction plans, (c) all applicable laws, ordinances, and
resolutions, and (d) the construction standards contained in the City's Standard
Specifications. Companies will complete all construction to the satisfaction of,
and use materials satisfactory to, the City Engineer.
City's final written acceptance of any public facilities will constitute a
finding that the public improvements comply with the plans and specifications,
but Companies shall be responsible to City for any defects in work, material or
design in the public improvements or facilities that occur or appear within one
year after the date of written acceptance. This one-year obligation is in addition
to, and does not limit, Companies' obligations under any express or implied
warranties. City shall give Companies written notice to repair or correct any
defect occurring or appearing within one year, and the Companies' cost to repair
or correct the defect will not be reimbursable by City. Failure to repair or correct
any defect may result in an offset to, or suspension of, the Economic
Development Assistance until the repair or correction is completed to the
satisfaction of the City. Companies shall include City as a named beneficiary to
any subcontract for or warranty of the public facilities.
The parties understand that some of the Reimbursable lmprovements are
being installed in front of undeveloped properties. lf those properties are
developed in the future and connected to the Reimbursable lmprovements, the
installer of the improvements may be entitled to reimbursement. Until the
Companies have been fully reimbursed for the Reimbursable lmprovements the
Companies shall receive all reimbursements paid by those who connect to the
Reimbursable lmprovements. Because City is reimbursing Companies for the
Reimbursable lmprovements pursuant to this Agreement, however, the City shall
receive a credit for reimbursements to the Companies for the Reimbursable
1652O82v1 / 19006.0001
lmprovements from adjacent property owners. After the Companies have been
reimbursed, from all sources, for the full amount of reimbursement owing to the
Companies as calculated pursuant to this Agreement, the Companies shall not
be eligible for any additional reimbursements or payments from City or adjacent
property owners for the Reimbursable lmprovements. Any additional
reimbursement for the Reimbursable lmprovements from adjacent property
owners shall be paid to and be the property of City.
i¡. After the Reimbursable lmprovements have been accepted
by City, City shall reimburse Companies for their actual out-of-pocket costs in
constructing the Reimbursable lmprovements, in an amount not to exceed
$360,467, according to the specified improvement reimbursement credit formulas
below. Companies shall provide invoices to City evidencing the actual cost of the
Reimbursable lmprovements. The reimbursement of Companies' improvement
costs using future City revenues generated directly by the Project will occur only
after the City's receipt thereof.
A. Real Property lmprovements Credit Formula. 1OO% of the
City's share of secured real property taxes paid annually in connection
with improvements and capital equipment purchases to the Project Site,
such taxes on improvements and capital equipment purchases to be
determined by subtracting the amount of the secured real property taxes
paid in the Iast full year prior to the commencement of Companies'
improvements to the Project Site from the amount of property taxes paid in
any subsequent year (the "Associated Funds"). The City will exercise all
reasonable efforts to acquire such distributions from the County in a timely
manner each Agreement Year for the preceding Agreement Year. The
City will confirm the Real Property lmprovement Credit to which
Companies are entitled within thirty days of receipt of the distribution of
funds from the County. Within thirty days of confirming the amount of the
Real Property lmprovement Credit, City will issue payment to Companies.
B. Wholesale Business Tax Credit Formula. The City will waive
the amount of Wholesale Business Tax attributable to the Companies
during the term of this Agreement, up to a maximum amount of
$31,1281year.
3. Deferred lmprovements. The following required improvements shall be deferred:
a. Construction of sidewalk along Edgar Avenue shall be deferred
indefinitely.
b. Undergrounding of power and telephone lines shall be deferred by
covenant. Companies shall execute an Underground Utility Covenant stating the
Project Site may be included in a future underground utility district that may be formed,
41652082v1 / 1 9006.0001
and Compan¡es understand they may have a future financial obligation to participate in
undergrounding these facilities.
4. Plan Review Assistance. City shall process Companies' site plan review
application on a priority basis. City shall make every effort to complete the review within
sixty days of receipt of a complete application. City shall assign a dedicated staff
member to serve as Companies' primary point of contact for permit processing.
5. Conditions on Economic Development Assistance. The City's obligations to
provide Economic Development Assistance to Company is conditioned upon the
following:
a. Companies are not in default of this Agreement.
b. Job Retention. During the Term, Companies shall retain at the Current
Location and Project Site the 144 Full Time employees employed by Companies as of
January 1,2015.
c. Job Creation. Commencing with Agreement Year 2017, Companies shall
add Full Time employees at the Current Location and Project Site to maintain the
following Required Level of Employment:
Year Required Level of
Employment - Total
Number of Full Time
Emplovees
Base Year - Effective Date 144
2016 144
2017 152
2018 162
2019 180
2020 196
2021 212
2022 228
2023 250
2024 270
2025 288
All determinations of the number of Full Time employees maintained by Companies
during any given Agreement Year shall be made based on the number of Full Time
employees employed by Companies as of December 31 of the Agreement Year for
which such determination is being made.
lf Companies fail to meet the Required Levels of Employment in a given
Agreement Year, the Economic Development Assistance payment for that year will be
retained by City. lf in the next Agreement Year Companies meet the goal for the then
51652082v1 / 19006.0001
current Agreement Year, Companies shall be entitled to the Economic Development
Assistance for that Agreement Year and the retained Economic Development
Assistance payment from the prior Agreement Year. lf Companies do not meet their
Required Levels of Employment for two consecutive years, then City's obligation to
Companies shall immediately terminate, and City shall have the right to terminate this
Agreement.
d. Qualified lnvestment. To receive the full Economic Development
Assistance in Agreement Year 2017, Companies shall have made at least $7,000,000
capital investment at the Project Site by December 31, 2016. By December 31 of each
Agreement Year thereafter, Companies shall make the following additional annual
capital investments, to reach the Total Qualified lnvestment.
Year Annual Qualified
lnvestment
Cumulative Total
Qualified Investment
2016 $7,000,000 $7,000,000
2017 $1,000,000 $8,000,000
2018 $500.000 $8.500.000
2019 $500,000 $9,000,000
2020 $100,000 $9,100,000
2021 $0 $9,100,000
2022 $0 $9,100,000
2023 $500,000 $9,600,000
2024 $200,000 $9,800,000
2025 $200,000 $10,000,000
lf Companies fail to meet (within 3%) their Annual Qualified lnvestment Total in a
given Agreement Year, the Economic Development Assistance payment for that year
will be retained by City. lf in the next Agreement Year Companies meet the goal for the
then current Agreement Year, Companies shall be entitled to the Economic
Development Assistance for that current Agreement Year and the retained Economic
Development Assistance payment from the prior Agreement Year. lf Companies do not
meet their Required Levels of lnvestment for two consecutive years, then City's
obligation to Companies shall immediately terminate, and City shall have the right to
terminate this Agreement.
6. Termination.
a. Either party may terminate this Agreement for cause upon giving thirty
days written notice to the other party should the other party materially fail to perform any
of the covenants contained in this Agreement in the time and/or manner specified, and
fails to cure the default within thirty days. lf the default cannot with due diligence be
cured in thirty days, the party shall have the additional time reasonably necessary to
accomplish the cure, provided that party has commenced curing within such thirty days
and thereafter diligently prosecutes the cure to completion. lf notice of termination for
61652082u1 / 1 9006.0001
cause is given and it is later determined the other party was not in default or the default
was excusable, then the notice of termination shall be deemed void.
b. City may suspend, amend, or terminate this Agreement immediately upon
giving written notice to Companies if due to a change in law or regulation the Economic
Development Assistance payments become illegal or othenruise impossible due to no
Associated Funds being paid to City from the County. Any suspension, amendment or
termination of thís Agreement pursuant to this Section shall preserve the rights of
Companies to the extent that Associated Funds are still available for payment of the
Economic Development Assistance payments. Nothing in this provision shall prevent
Companies from pursuing any remedies against the responsible government authority
othenruise available to it by law.
c. lf Companies fail to commence operations within twelve months of the
approval of building permits, or if Companies suspend or cease operations at the
Current Location or Project Site for twelve consecutive months, then City's obligation to
Companies shall immediately terminate, and City shall have the right to terminate this
Agreement.
d. lf either party hereto shall be delayed or prevented from the performance
of any act required hereunder by reason of acts of God, strikes, lockouts, labor troubles,
inability to procure materials, restrictive governmental laws or regulations or other cause
without fault and beyond the control of the party obliged, performance of such act shall
be excused for the period of the delay and the period for performance of any such act
shall be extended for a period equivalent to the period of such delay.
7. Indemnitv.
To the furthest extent allowed by law including California Civil Code section
2782, Companies shall indemnify, hold harmless and defend City and each of its
officers, officials, employees, agents and volunteers from any and all loss, liability, fines,
penalties, forfeitures, costs and damages (whether in contract, tort or strict liability,
including but not limited to personal injury, death at any time and property damage)
incurred by City, Companies, or any other person, and from any and all claims,
demands and actions in law or equity (including attorney's fees and litigation expenses),
arising or alleged to have arisen from acts or omissions of Companies directly or
indirectly involving and occurring during the construction by Companies of the
Reimbursable lmprovements, or directly or indirectly involving and occurring during the
relocation by Companies of utilities. Companies' obligations under the preceding
sentence shall apply regardless of whether City or any of its officers, officials,
employees, agents or volunteers are passively negligent, but shall not apply to any loss,
liability, fines, penalties, forfeitures, costs or damages caused by the active or sole
negligence, or the willful misconduct, of City or any of its officers, officials, employees,
agents or volunteers.
71652O82v1 / 19006.0001
lf Companies should subcontract all or any portion of the work to be performed
under this Contract, Companies shall require each subcontractor to indemnify, hold
harmless and defend City and each of its officers, officials, employees, agents and
volunteers in accordance with the terms of the preceding paragraph.
Companies' obligations under this indemnity shall survive termination of this
Agreement.
I. Audits and Records. The parties acknowledge and agree a strong City economy
is in the best interest of both the Companies and the citizens of City. The Companies
shall prepare and deliver to City such data and other information as and when City may
from time to time reasonably request concerning public benefits anticipated in
connection with City's provision of incentives to Companies.
At the end of each Agreement Year from December 31, 2016, until the
termination of this Agreement, Companies shall document for City for such Agreement
Year, (i) the number of Companies' Full Time employees at Current Location and
Project Site, and the aggregate average annual compensation by class of employee, (ii)
the amount of Wholesale Business Tax attributable to Companies based on gross
receipts for wholesale sales for the Agreement Year and (iii) the total capital investment
made during the prior calendar year as required by the foregoing investment schedule.
Companies shall provide copies (or printed reports, if such records are maintained
electronically) of such records to the City, with personal information redacted, on or
before March 1 following the end of each Agreement Year.
Upon City's request, City or its designee shall have the right to audit Companies'
documentation associated with the minimum capital investments and employment
obligations under this Agreement and shall at all times be maintained in reasonable
condition for audit and shall be subject to reasonable examination by the City or its
agents during reasonable hours upon reasonable notice solely for the purpose of
reviewing Companies' compliance with this Agreement. The books and accounts of the
operations under this Agreement shall be kept in accordance with generally accepted
accounting principles. City shall handle records provided pursuant to this provision as
confidential and proprietary business information to the extent allowed by State and
Federal laws. City shall not copy or remove from the Companies site any proprietary or
confidential information. City agrees that for the purposes of determining that the
Companies are in compliance with this Agreement only aggregated data concerning
investment and employment is required. Companies shall maintain such records for a
period of four years following the end of the respective Agreement Year to which such
records apply.
9. Confidentiality. City shall keep all proprietary and confidential information and
data provided by Companies under this Agreement strictly confidential to the fullest
extent permitted by law. City will use information provided by Company pursuant to this
Agreement only for purposes within the scope of this Agreement. lf there is a
demonstrated need for the City to review any confidential or proprietary data of the
I1652082u1 / I 9006.0001
Companies, then the Companies shall clearly mark or othen¡uise identify in writing all
information it considers to be proprietary or confidential at the time it is delivered to City.
lf the City obtains any material from the Companies that is marked proprietary or
confidential, then the City shall store that information in separately marked and locked
files. Those files shall not be copied or removed from the location where they are
stored and access shall be restricted to those only those employees or others who are
conducting an audit to ensure compliance with this Agreement. The City is not
authorized to utilize the information for any other purposes. The confidentiality obligation
under this section shall not apply to: (a) information which is already public information
or which is othen¡uise available to the general public; (b) information received by the City
from a third party without a similar confidentiality restriction who is lawfully in possession
of the information and who has the lawful right to disclose it; (c) information that is
already in the City's possession prior to receiving it from Companies; or (d) information
delivered by Companies to City and not marked or otherwise identified as proprietary
and confidential at the time it was delivered.
10. Termination if Subject to California Labor Code section 1720. Companies shall
be solely responsible for determining whether payment of prevailing wage is required.
Companies shall indemnify, hold harmless and defend (with counsel reasonably
acceptable to the City) the City against any claim for damages, compensation, fines,
penalties or other amounts arising out of the failure or alleged failure of any person or
entity (including Companies, its contractors and subcontractors) to pay prevailing wages
as required by law or to comply with the other applicable provisions of Labor Code
Sections 1720 et seq. and the implementing regulations of the Department of lndustrial
Relations. Other provisions of this Agreement and its Effective Date notwithstanding,
Companies may, at their sole discretion, terminate this Agreement by providing notice in
writing to City if any competent governmental authority makes a final determination that
this Agreement, or any agreement of its type, is subject to California Labor Code section
1720 or any regulations promulgated pursuant thereto. Companies' obligation to
indemnify City under the provisions of this paragraph shall survive termination of this
Agreement.
11. No Reliance. Companies represent and warrant they are not relying on any
representation by City as to the suffìciency of Companies' information and material
required to obtain permits, approvals, bonds, or other certifications authorizing
development, manufacturing or financing. Companies further represent and warrant
that they are not relying on any representation of City that any certain desired permit,
approval or other desired outcome is guaranteed as a result of assistance provided by
City under this Agreement. Companies acknowledge and agree City is not responsible
for any loss, whether claimed or suffered by Companies, in connection with the
assistance provided by City pursuant to this Agreement or in the event the desired
permits and/or approvals are not awarded to Companies.
12. Amendment and Waiver. Except as provided herein, no alteration, amendment,
variation, or waiver of the terms of this Agreement shall be valid unless made in writing
and signed by both parties. Waiver by either party of any default, breach or condition
I1652082v1 / 19006 0001
shall not be construed as a waiver of any other default, breach or condition, or any other
right hereunder. No alteration, amendment, variation or waiver of this Agreement shall
be binding upon City unless agreed to by the City Council.
13. Successors and Assigns. This Agreement shall be binding on the parties'
successors and assigns. Companies shall not assign this Agreement or any right or
obligation hereunder except that it may so assign to its immediate or ultimate parent, or
to a directly related corporate or business entity, by providing notice to City. There shall
be no third party beneficiaries or, nor any holders of any lien interests in, Companies'
rights under this Agreement, including, but not limited to, any person or entity holding
any easement rights or appurtenant interest in the land associated with the Project Site
or claiming superior title to the Project Site.
14. Governmental Aporovals. By entering into this Agreement, neither City nor its
City Council is obligating itself to any other governmental agent, board, commission, or
agency with regard to any discretionary action relating to Companies' activities.
Discretionary action includes but is not limited to rezones, variances, environmental
clearances, or any other governmental agency approvals which may be required for
Companies' activities.
15. Compliance with Laws. Venue. Attornev's Fees. Companies shall observe and
comply with all applicable Federal, State and local laws, regulations and ordinances.
This Agreement shall be governed by the laws of the State of California, and venue
shall be Fresno County. lf any party to this Agreement begins any action, proceeding,
or arbitration arising out of this Agreement, then as between Companies and City, the
prevailing party shall be entitled to receive from the other party, besides any other relief
that may be granted, its reasonable attorneys'fees, costs, and expenses incurred in the
action, proceeding, or arbitration.
16. Authority to Contract. Each individual executing this Agreement on behalf of
another person or legal entity represents and warrants he or she is authorized to
execute and deliver this Agreement on behalf of such person or entity in accordance
with duly adopted resolutions or other authorizing actions which are necessary and
proper and under such legal entity's articles, charter, bylaws, or other written rules of
conduct or governing agreement, and this Agreement is binding upon such person or
entity in accordance with its terms. Each person executing this Agreement on behalf of
another person or legal entity represents and warrants such entity is a valid, qualified
corporation, limited liability company, partnership, or other unincorporated association in
good standing in its home state and such entity is qualified to do business in California.
1652082v1 / 1 9006.0001 10
ln witness whereof, the parties have executed this Agreement as of the date first written
above.
By
CITY OF FRESNO, a municipal
corporation
ATTEST:
WONNE SPENCE, CMC
J&D MEAT COMPANY, a California
corporation
By
CERTIFIED MEAT PRODUCTS, INC., A
California corporation
By
oate trrl Uto f I 3
APPROVED AS TO FORM:
Date Date
.¡.,-l-lc// E / / :,t
KBD: ns [6787Sns/kbdl- 5l 121 1 5
iu Rudd, City Manager Mark Ford,
City Clerk
DOUGLAS T. SLOAN
1652082v1 / 1 9006.0001 11
EXHIBIT A
PROJECT SITE
I652O82vI / 19006.0001
EXHIBIT B
REIMBURSABLE IMPROVEMENTS _ ENGINEER'S ESTIMATE
1652082v1 / 19006.0001