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Res 133-2002 12/17/2002RESOLUTION NO. 1 -�l -Dr-C) RESOLUTION AUTHORIZING AN ECONOMIC DEVELOPMENT INCENTIVE AGREEMENT WITH WARNER ELECTRIC AND ITS PARENT COMPANY COLFAX CORPORATION AS RECOMMENDED BY THE WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION AND APPROVING AN AMENDMENT TO THE CORPORATION'S FY 2002 -2003 BUGET; FINDING AND DETERMINING THAT THE MEETING AT WHICH THIS RESOLUTION WAS PASSED WAS OPEN TO THE PUBLIC AS REQUIRED BY LAW WHEREAS, on December 9, 2002, the Wichita Falls Economic Development Corporation ( WFEDC) met to consider a Memorandum of Understanding with Warner Electric and its parent company Colfax Corporation; and WHEREAS, the WFEDC approved the attached Memorandum of Understanding that includes an incentive agreement for job retention, job creation, capital investment and relocation expense reimbursement; and WHEREAS, the WFEDC recommends approval of the Memorandum of Understanding that will encumber $937,000 for this project. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WICHITA FALLS, TEXAS, THAT: SECTION 1. A Memorandum of Understanding outlining an economic development incentive agreement with Warner Electric and its parent company Colfax Corporation, as approved by the Wichita Falls Economic Development Corporation, is attached and hereby approved. SECTION 2. The FY 2002 -2003 Budget of the WFEDC is hereby amended to provide for funding in the amount of $937,000. SECTION 3. It is hereby officially found and determined that the meeting at which this resolution was passed was open to the public as required by law. PASSED AND APPROVED this the 17th day of December, 2002. ATTEST: �j ) Ulu City Clerk Memorandum of Understanding December 9, 2002 This is a Memorandum of Understanding (MOU) between Warner Electric (WE) and its parent company Colfax Corporation (Colfax) and the Wichita Falls Economic Development Corporation ( WFEDC). 1. The WFEDC recommends that the City Council approve the use of Section 4(a) Sales Tax proceeds as described below. 2. Definitions New Capital Investment - is defined as property improvements including but not limited to repairs, new or relocated personal property and equipment, and new facility upgrades associated with the Phase I and Phase H expansions at WE's Wichita Clutch facility in Wichita Falls, Texas. New Job - is defined as full -time, paying a minimum of $13.00 per hour, benefit eligible, that has been created as a result of a consolidation and subsequent expansion at WE's Wichita Clutch facility in Wichita Falls, Texas, and that has been in place by WE for a minimum of 6 months. Phase I Retention and Expansion - is defined as a consolidation of Colfax operations and a subsequent expansion at WE's Wichita Clutch facility that results in the retention of jobs as of the date of this Understanding, the creation of a minimum of 90% of the projected 21 new jobs, and $200,000 in estimated new capital investment at the facility on or before October 1, 2003. Phase H Expansion - is defined as an expansion of operations at WE's Wichita Clutch facility in Wichita Falls, Texas resulting in new job creation above the estimated 81 retained and new jobs in Phase I and additional new capital investment of approximately $500,000 on or before December 31, 2005. Relocation Expenses - is defined as WE's costs associated with relocating personal property and equipment from other Colfax locations in conjunction with a consolidation and subsequent expansion at their Wichita Clutch facility in Wichita Falls, Texas. Retained Job - is defined as an existing full -time job that is benefit eligible and that is in place as of the date of this Understanding. 3. The use of Section 4(a) Sales Tax proceeds will be contingent on the following: Phase I and H Expansions A. WE's presentation to the WFEDC describing their intent to retain up to 60 existing full -time jobs at WE's Wichita Clutch facility in Wichita Falls, Texas. The presentation will also include the number of retained jobs that are paid in excess of $50,000 and not more than $100,000. Memorandum of Understanding between WE and WFEDC Page 2 of 2 B. WE's presentation to the WFEDC describing their intent to create new full -time jobs at WE's Wichita Clutch facility in Wichita Falls, Texas in addition to the number of full -time retained jobs. These new jobs are to be created no later than October 1, 2003. C. WE's presentation to the WFEDC describing their intent to add $200,000 in new capital investment in Phase I and another $500,000 in Phase H. D. The WFEDC's recommendation and City Council's approval of Section 4(a) sales tax proceeds being used to encourage WE's consolidation /expansion at their operations in Wichita Falls, Texas versus other locations. E. A presentation will be made by WE to the WFEDC evidencing the retained jobs, the completion of the Phase I capital investment, and the creation of a minimum of 90% of the 21 projected new jobs. Upon completion of the presentation, a payment will be made to WE in the amount of $4,000 per retained job, $5,000 per new job created with a premium of 10% of annual salary being paid for those jobs that pay in excess of $50,000 but not more than $100,000, and $75,000 for new capital investment related expenditures. F. Additionally, in an effort to facilitate WE's planned phase two expansion at the Wichita Falls, Texas facility, a subsequent presentation(s) evidencing new full -time job creation above the 81 full -time jobs as detailed herein may be made through 2005. Upon completion of this presentation(s), a payment will be made to WE in the amount of $5,000 per new job created and a premium of 10% of annual salary will be paid for those jobs in excess of $50,000 but not more than $100,000. The maximum number of new jobs eligible for payments through 2005 shall not exceed 25. Reimbursement of Relocation Expenses A. WE's presentation to the WFEDC describing their intent to relocate property and equipment in conjunction with a consolidation and a subsequent expansion at their Wichita Falls, Texas facility. B. The WFEDC's recommendation and City Council's approval of Section 4(a) sales tax proceeds being used to encourage WE's consolidation/expansion at their operations in Wichita Falls, Texas versus other locations through the reimbursement of expenses associated with the relocation of property and equipment from other Colfax facilities. C. At a date to be determined by WE, not to exceed 18 months from the date of this Understanding, a presentation will be made to the WFEDC evidencing relocation expenses up to $300,000 associated with the consolidation/expansion. Upon completion of this presentation, a payment will be made to WE in an amount up to $300,000 for said relocation expenses. Wichita Falls Economic Development Corporation B �J Gary 3wores Chairman Warner Electric : B gi_ - Y Mark J. Stuebe General Manager