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HomeMy WebLinkAboutC2024-315 - 12/3/2024 - Approved 380 Agreement Between City of Corpus Christi and HEP Javelina SMR, LLC This Agreement ("Agreement") is made and entered into as of January 1, 2025 (date approved by city council), 2025 (the "Effective Date"), by and between the CITY OF CORPUS CHRISTI,TEXAS, a Texas home-rule municipal corporation of Nueces County,Texas, hereinafter called the"CITY," and HEP Javelina SMR, LLC, a Delaware limited liability company, hereinafter collectively called the"COMPANY" pursuant to Chapter 380 of the Texas Local Government Code. WHEREAS, the CITY has established a program in accordance with Article III, Section 52-a of the Texas Constitution and Chapter 380 of the Texas Local Government Code ("Chapter 380") under which the CITY has the authority to make loans or grants of public funds for the purposes of promoting local economic development and stimulating business and commercial activity within the CITY; and WHEREAS, the CITY has concluded and hereby finds that this Agreement promotes economic development in the CITY of Corpus Christi and, as such, meets the requirements under Chapter 380 and the CITY's established economic development program, and, further, is in the best interests of the CITY and COMPANY. Therefore, the City enters into this Chapter 380 Incentive Agreement with the owner, HEP Javelina SMR LLC,to provide a rebate of 25.5 %of the ad valorem taxes payable to the City on the Hydrogen Steam Methane Reformer Facility for a period of fourteen(14) years, terminating on December 31, 2029; and WHEREAS, the CITY recognizes the positive economic impact that the COMPANY's investment in COMPANY's industrial facility will bring to the CITY through development and diversification of the economy, reduction of unemployment and underemployment through the retention of existing jobs and the production of new jobs, and the attraction of new businesses; and WHEREAS, consistent with Article III, Section 52-a of the Texas Constitution, Chapter 380 and other law, CITY and the COMPANY as contemplated in this Agreement agree to work together to cause the public purposes of developing and diversifying the economy of the state, reducing unemployment or underemployment in the state, and developing or expanding transportation or commerce in the state;and WHEREAS, to ensure that the benefits the CITY provides under this Agreement are utilized in a manner consistent with Article III, Section 52-a of the Texas Constitution, Chapter 380 and other law, the COMPANY has agreed to comply with certain conditions for receiving those benefits, and WHEREAS, the CITY and the COMPANY desire to enter into this Agreement for their mutual benefit; NOW, THEREFORE, for and in consideration of the foregoing recitals and of the mutual promises, obligations, covenants and benefits herein contained, CITY and the COMPANY contract and agree as follows: SCANNED 1.General Terms Section 1.01 Definitions. The following terms have the following meanings: a. Affiliates. As used herein shall mean:(I)all companies with respect to which the COMPANY directly or indirectly,through one or more intermediaries at the time in question,owns or has the power to exercise control over 50%or more of the stock having the right to vote for the election of directors;or(2)all corporations(or other entities)controlled by or under common control with the Company as contemplated by Section 1239(c) of the Internal Revenue Code of 1986, as amended. a. Appeal Rebate Date. Ninety days after the termination of the COMPANY's rights to appeal the value of an appealed CAD Geographic ID via lawsuit, protest, appeal or other legal proceeding and the COMPANY's notification thereof to the CITY. b. CAD. The county appraisal district (either the Nueces County Appraisal District [NCAD] or the San Patricio County Appraisal District[SPCAD]) responsible for appraising the Land and Improvements located within the boundaries of such appraisal district.. c. Calendar Year. A period of time beginning January 1 and ending December 31 in a numbered year. d. Existing Improvements. All improvements existing on property. e. Improvements. As defined in Section 1.04(3) of the Texas Tax Code, and shall also include power generation facilities, petroleum and/or chemical refining, processing, extraction or storage facilities, structures, or equipment erected on or affixed to the land, regardless of the land ownership,and pipelines on, under,or across the land which are owned by COMPANY. f. Land."Land"shall mean that certain 1.61 acre tract of land land owned by the COMPANY or its Affiliate as described in Exhibit A, attached hereto an incorporated by reference. g. Market Value. As determined and defined by the applicable CAD. h. Non-Appeal Rebate Date. April I following the relevant tax year or 60 days following the COMPANY's payment of ad valorem taxes for an unappealed CAD Geographic ID, whichever is later. 2. Term Section 2.01 Term.This Agreement shall be effective as of January I,2025,and continue until December 31, 2039, unless terminated as herein provided or extended for additional period or periods of time upon mutual consent of the COMPANY and the CITY as provided by the Local Government Code. 3.Chapter 380 Rebates of City Ad Valorem Taxes Paid by Company Section 3.01 Rebate of Ad Valorem Taxes. Each year during the term hereof, the CITY shall rebate a portion of ad valorem taxes paid by COMPANY to the CITY that are attributable to the Improvements to the Land.The payment obligation is more specifically described as follows,but may be reduced as provided in this Agreement, notably Sections 3.04 and 3.05: a. The "Reimbursable Tax Amount" is the ad valorem taxes paid by the COMPANY to the account of the CITY in the following amounts: (1) 25.5% of the Reimbursable Tax Amount paid by COMPANY for the CITY ad valorem taxes finally received from COMPANY on Existing Improvements owned by COMPANY on the Land. With respect to each COMPANY CAD Geographic ID subject to rebate, such rebate shall be paid to COMPANYno later than June 151 annually. . If the COMPANY appeals the value of a CAD Geographic ID, then the reimbursable taxes for such CAD Geographic ID will be issued upon the final determination concerning the amount of ad valorem taxes that should be properly assessed to the Existing Improvements on the Land. b. The COMPANY shall provide evidence, satisfactory to the CITY, of payment of the ad valorem taxes on Existing Improvements located on the Land.The sole source of payments by the CITY pursuant to this Agreement is the taxes paid by the COMPANY that are rebate(s). c. The attached"Worked Examples of Article 3 Payments and Rebates" illustrates the Parties intentions as to how payments and rebates will function under this Article 3, see Exhibit B attached hereto. Section 3.02 Determination of Value. The COMPANY shall timely provide information and reports required under this Agreement and under Texas law, rules and regulations to the applicable CAD or its designee, so that the appraisal process can be completed in accordance with all applicable state laws. Section 3.03 Company Protest of Value or Billing. If the COMPANY elects to protest the valuation set on any of its properties by the applicable CAD for any year or years during the term hereof, it is agreed that nothing in this Agreement shall preclude the protest, and the COMPANY shall have the right to take all legal steps desired to reduce the same. A reduction of the taxable value will reduce the reimbursable amounts pursuant this agreement. The COMPANY must cooperate with the CITY in determining what taxes and accounts are subject to protests to ensure the CITY is accurately maintaining and disbursing funds.. Section 3.04 Calculation of Amount Due. Within 60 days after request by the COMPANY, following COMPANY's submission of taxes paid and lists of accounts determined reimbursable by this agreement, the CITY shall provide a report to the COMPANY specifying the accounts and amounts subject which sets forth the amount of the Reimbursable Tax Amount.. Section 3.05 Payment.The COMPANY agrees to pay its ad valorem taxes so as not to be delinquent under 3 the Texas Property Tax Code. The COMPANY further agrees to provide an accurate report of all amounts paid for ad valorem taxes on the Land,Existing Improvements thereon and properly pay CITY ad valorem taxes to on or before January 3 I st of each year. Penalties and/or interest that are paid by the COMPANY will not be subject to rebate to the COMPANY. Article 4.Default and Cessation of Operations Section 4.01 Default by CITY. If the CITY does not perform its obligations hereunder in substantial compliance with this Agreement and, if such default remains uncured for a period of 60 days after notice thereof shall have been given, in addition to the other rights under the law or given the COMPANY under this Agreement, the COMPANY may enforce specific performance of this Agreement and seek an injunction or writ of mandamus to perform obligations under this Agreement. Section 4.02 Default by COMPANY. If the COMPANY does not perform its obligations hereunder in substantial compliance with this Agreement, and, if such default remains uncured for a period of 60 days after notice thereof shall have been given or such longer period as is reasonably necessary to cure default if such default cannot be cured within 60 days not withstanding COMPANY's reasonable efforts to effectuate a cure, the CITY may terminate this Agreement and CITY's obligation to pay funds to COMPANY under this Agreement will terminate. Section 4.03 Notice of Default.Notwithstanding anything to the contrary contained herein, in the event of any breach by either party of any of the terms or conditions of this Agreement, the non-defaulting party shall give the other party written notice specifying the nature of the alleged default, and manner in which the alleged default may be satisfactorily cured. Thereafter, the allegedly defaulting party will be afforded 60 days within which to cure the alleged default. Section 4.04 Cumulative Remedies.The remedies provided herein are cumulative, none is in lieu of any other, and any one or more or combination of the same is available. Each party, in addition to remedies expressly provided herein is entitled to any and all other remedies available at law or in equity. Section 4.05 Limitation of Liability. In no event will either party be liable to the other party hereunder for punitive,exemplary,or indirect damages, lost profits or business interruptions damages. Article 5. Description of Applicable Property Section 5.01 Description of Property.The COMPANY agrees to provide the CITY with an updated listing of Geographic ID numbers, as available from the applicable CAD, for property located on the Land, to be attached hereto and incorporated into the description of the Land on Exhibit A of this Agreement. The COMPANY must include all accounts containing property for which COMPANY proposed to receive rebates of ad valorem taxes paid to the CITY. Article 6. Transfer of Land or Property to another Entity, Adding or Removing Affiliates, and Remitting Taxes Section 6.01 Sale or Lease. If the COMPANY sells or teases all or a portion of the Land or Improvements to any entity,the COMPANY shall within 90 days give notice to the CITY of said sale or lease. Section 6.02 Assignment.This Agreement may be assigned by the COMPANY to a new owner of Land only with the prior, written approval of the CITY. The CITY may choose to permit assignment and/or 4 require the COMPANY to execute a new 380 agreement with the CITY. If the COMPANY and proposed Assignee are in compliance with all obligations to the CITY,then the CITY will not unreasonably withhold permission for assignment or execution of a new 380 agreement. The mere right to payment pursuant to this Agreement may not be assigned. Section 6.03 No Third-Party Beneficiaries,Setoff.Except as specifically assigned with permission of the CITY, no entity other than CITY or COMPANY shall have any right in this agreement or funds due pursuant to this Agreement. Further,the purpose of this agreement is to incentivize the continued operation and expansion of COMPANY. In the event that COMPANY ceases to do business on the Land, fails to make ad valorem payments, becomes insolvent or otherwise ceases to pay creditors as its debts becomes due, then ad valorem rebate amounts will inure to the CITY and shall not be paid to the Owner for the fiscal year at issue. Article 7. Procurement Section 7.01 Buy Local. COMPANY shall use commercially reasonable efforts to acquire all of its procurements, including, but not limited to, supplies, materials,equipment, service contracts,construction contracts, and professional services contracts from businesses located within Nueces and San Patricio Counties, unless such procurements are not reasonably and competitively available within said area. COMPANY shall not be required to maintain records regarding this requirement other than those normally kept in its usual course of business. Article 8. Miscellaneous Provisions Section 8.01 Severability. In the event any word, phrase, clause, sentence, paragraph, section, article or other part of this Agreement or the application thereof to any person, firm, corporation or circumstances shall ever be held by any court of competent jurisdiction to be illegal, invalid or unconstitutional for any reason, then the application, invalidity or unconstitutionality of the word, phrase, clause, sentence, paragraph, section, article or other part of this Agreement shall be deemed to be independent of and separable from the remainder of this Agreement and the validity of the remaining parts of this Agreement shall not be affected thereby. Section 8.02 Entire Agreement. This Agreement constitutes the entire agreement of the parties and supersedes any and all prior understandings, or oral or written agreements, between the parties respecting such subject matter, except as otherwise provided in the instruments referenced herein. This Agreement may be amended only by written instrument signed by all of the parties hereto. Section 8.03 Notices. Any notice to the COMPANY or the CITY concerning the matters to which this Agreement relates may be given in writing by registered or certified mail addressed to the COMPANY or the CITY at the appropriate respective addresses set forth below, The COMPANY must notify the CITY of any change of address in writing. Notices by a party to the other party hereto,shall be mailed or delivered as follows: If to CITY: City Manager,City of Corpus Christi 1201 Leopard P.O. Box 9277 Corpus Christi,Texas 78469-9277 Phone:36 I-826-3220 Fax:361-826-3845 5 With copies to: City of Corpus Christi-City Attorney 1201 Leopard P.O. Box 9277 Corpus Christi,Texas 78469-9277 Phone: 361-826-3360 Fax: 361-826-3239 If to COMPANY: HEP Javelina SMR,LLC do Howard Midstream Energy Partners, LLC 16211 La Cantera Parkway,Suite 202 San Antonio,Texas 78256 Attention: Property Tax Department Phone: 210-634-1 325 And Registered Agent:CT Corporation System 1999 Bryan St.,Suite 900 Dallas,Texas 7520 1-3 1 36 Section 8.04 Governing Law and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, and the sole legal venue for construction of this agreement will be in a court in Nueces County,Texas. Section 8.05 Counterparts.This Agreement may be executed in multiple counterparts, each of which is deemed an original,and all of which taken together,shall constitute but one and the same instrument,which may be sufficiently evidenced by one counterpart. Section 8.06 Authority.By acceptance of this Agreement and/or benefits conferred hereunder,each party represents and warrants to the other that its undersigned agents have complete and unrestricted authority to enter into this Agreement and to obligate and bind such party to all of the terms,covenants and conditions contained herein. 6 IN WITNESS WHEREOF, the Parties hereto have caused this instrument to be duly executed as of the day of , 2025. CITY OF CORPU CHRISTI ATTEST: • rit1-44k., Art o Marquez, Economic Development Director C y Secretary LEGAL FORM APPROVED 01A10333 AUTHORIZED BY COUNCIL /a que n#i a S. Bazan r� �,� ( Assistant CityAttorneyfor CityAttorneySECRE�RY CITY OF CORPUS CHRISTI ACKNOWLEDGMENT THE STATE OF TEXAS § COUNTY OF NUECES § This instrument was acknowledged before me on I' \ 2025, by Arturo Marquez, Director of Economic Developm&ht for the City of Corpus Christi,a Texas home-rule municipal corporation, on behalf of said corporation. (seal) Notary Public 1 ,:tY e••. SARAH J BRUNKENHOEFER► 4 '•c'i ID# 12954066-5 ► ,� Notary Public / ,4 of i •` STATE OF TEXAS My Comm. Exp. 08-28-2025 ► 7 COMPANY: ATTEST: HEP Javelina SMR, LLC, a Delaware limited liability company By: Howard Midstream Energy Partners, LLC, a Delaware limited liability company, its sole m r Frank Quintana John Spinner, Vice President of Tax Sr. Manager, Property Tax COMPANY ACKNOWLEDGMENT THE STATE OF TEXAS § COUNTY OF BEXAR § This instrument was acknowledged before me on 21 day of Ill 0 , 2025, by Frank Quintana,the Vice President of Tax of Howard Midstream Energy Parr ters, LLC, a Delaware limited liability company,the sole member of HEP Javelina SMR, LLC, a Delaware limited liability company,on behalf of said companies. Given under my hand and seal of office this2k day of AA CI L3 ,A.D.,2025 • tr... r (seal) ootui,,,, LUCY RIDOUT Notary Publ ` a�~�i=Noury Publlo,Stag of Tam ?? Comm.Expires 0308.2029 °';,,,;;,. Notary ID 130088843 8 Exhibit A to 380 Agreement Map of Company Land Area with Metes and Bounds [attached] 9