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HomeMy WebLinkAboutC2005-203 - 4/12/2005 - ApprovedSETTLEMENT AGREEMENT THIS SETTLEMENT AGREEMENT (this "Agreement") is made by and between the City of Corpus Christi, a Texas home-role city, ("City") and Flint Hills Resources, LP ("Company"). Recitals Company owns or operates pipelines that have occupied property subject to public rights- of-way within City's boundaries for many years. On November 16, 2004, City adopted Ordinance No. 026023 (the "Ordinance"), which provided an annual charge for pipelines located in such rights-of-way. City and Company disagree as to City's attthority to impose charges as provided in the Ordinance. On November 17, 2004, City filed a declm-atory judgment action in the District Court in Nueces County, Texas, styled CiO, qf Corpus Christi v. Air Liquide, et al., Cause No. 04-06556- A (the "l~wsuit"). City and Company have had a mutually-beneficial relationship for many years and want resolve certain issues between them without the time and expense of litigation. Agreement In consideration for the mutual obligations herein provided, City and Company agree as follows: 1. Term. This Agreement extends for a term commencing January 1, 2005, and expiring at midnight on December 31, 2014, unless sooner terminated in accordance with its terms. 2. Payments. (a) Amounts. Company shall pay the sum of $68,000 to City annually on or before each March 31, beginning in 2006 and ending in 2014, or 30 days after invoice by City, whichever is later, in addition to license fees payable under the license referred to in paragraph (b)(iii) of this Section. (b) Conditions. The obligation of Company to make the armual payments described in this Section 4 shall be subject to the conditions precedent that: (i) Dismissal: City shall have dismissed the Lawsuit against all defendants named therein; Flint Hills Resources 2005-203 04/12/05 Ord026217 (ii) Ordinance: City Council shall have adopted an ordinance in the form and to the effect appended hereto as Exhibit A, amending and restating the provisions of the Code of Ordinances of City enacted or amended by the Ordinance; and (iii) License: City shall have issued a license to Company in accordance with the ordinance to be enacted pursuant to paragraph (b)(ii) of this Section, if Company shall have applied for such license in accordance with such ordinance by July 1, 2005. In addition, the obligation of Company to make such annual payments shall terminate, unless otherwise agreed by Company in writing, if: (iv) Ordinance Amendment: City amends the ordinance described in paragrttph (b)(ii) o[' this Section without the written consent of Company; or (v) License Termination: City terminates the license described in paragraph (b)(iii) of this Section without the written consent of Company. If legislation is enacted (or an unappealable appellate decision is rendered) that either (A) resolves the parties' dispute as to whether City has the legal right to raise net revenues via a pipeline ordinance or (B) resolves the parties' dispute as to the nature or scope of what is the lawful charge that home role cities may impose for the use of city streets by pipelines, or (C) otherwise limits the annual charges that may be assessed for the license described in this Section to an amount that is less than the annual amount payable under such license plus the annual amount payable under this Agreement, then the annual payments described in this Section, together with the payments payable under the license described in this Section, shall be renegotiated in good faith by City and Compm~y to be fully consistent with any such new legislation or binding decision and, absent agreement, Company's obligation to make armual payments hereunder shall terminate on the second anniversary of the enactment of such legislation or rendering of such decision, as applicable; provtded, however, that unless City and Company otherwise agree. Company shall in any event make all annual payments due under this Sectitm 2 on or before March 31, 2009, unless any condition described in paragraphs b(i). (b)(ii), or (b)(iii) of this Section has not been satisfied or Company's obligation to make such payments has been terminated pursuant to paragraph (b)(iv) or (b)(v) of this Section. (c) Use. City shall expend such annual payments by Company only for economic development programs currently funded by City, other economic development programs, and emergency planning and response activities, including, but not limited to, training, equipment, record collection, and coordination of responding entities; provided, however, if revenue attributable to a particular City-owned property, such as airport property, is legally limited to certain uses, use of that revenue shall be so limited. The City Manager of City shall, 30 days prior to submission of his annual budget recommendation to City Council, advise Company in writing of his recommended use of the annual payment, and he shall, at Company's request, meet with Company and consider any alternative proposal for use of such annual payment it might make. (d) Late Payments. Late payments will accrue interest from the due date to the date payment is received by City at the rate of three percent (3%) over the per annum rate of 2 FlintHillsSetAgr doc interest announced as the "Prime Rate" for commercial loans as published in the Wall Street Journal or equivalent, as selected by City's Director, Engineering Services, or his designee (or other City officer designated by City's City Manager), as of January 1 of each year, or the ~naximum lawful rate permitted by applicable law, whichever is less. (e) Economic Development. City recognizes Company's contribution to the economic health of the Corpus Christi area In entering this Agreement, the City Council finds that Company makes significant contributions to employment and business activity in the Corpus Christi area, mid that this Agreement will promote local economic development, and declares that this Agreement and the license referred to in Section 2(b)(iii) hereof are part of City's program of economic development pursuant to Section 380.001 of the Texas Local Government Code. 3. Release o1' Claims. City hereby releases any claims it may have against Company for payments related to past occupancy of public rights-of-way within City boundaries or City-owned property by Company's pipelines; provided, however, this release shall become null and void if Company fails to make in lull any of the annual payments due and payable pursuant to Section 2 hereof prior to termination of the Company's obligation to make such payments, and in such event all of City's valid claims, if any, shall be automatically reinstated, and Company's amlual payments hereunder shall be applied to satisfy any such claims pro tanto. 4. Dismissal of Lawsuit. Promptly after final approval and execution of this Agreement by both parties, City will cause the Lawsuit against Company to be dismissed as moot. Promptly after final approval and execution by Air Liquide Large Industries U.S. LP, Citgo Refining & Chemical Company, Enterprise GTM Holdings, L.P., Equistar Chemicals, LP, and Valero Refining - Texas, L.P., of substantially similar agreements (except that annual payments by GulfTerra Energy Partners, L.P. shall be in the suni of $110,000), City shall cause the Lawsuit to be dismissed against all defendants named in the Lawsuit. 5. Legislation. City shall not oppose, directly or indirectly, enactment of the Senate Natural Resources Conunittee substitute for Senate Bill 480, introduced by Senator Hinojosa in the pending regular session or- the Texas Legislature, or any companion bill introduced in the House of Representatives of the Texas Legislature. and shall take all action reasonably requested by Company to support passage of such legislation. 6. Assignment. This Agreement shall be personal to Company. However, Company may assign this Agreement to other entities, provided that, prior to the assignment, it firs! obtains the City Council's written consent to the assignment. City may not unreasonably withhold consent to Company's request to assign this Agreement. In the event of any assignment of this Agreement to a third party, all of the benefits and obligations created by this Agreement will inure to the benefit of and become binding upon the assignee, mid Company shall be released from any Inrther obligation hereunder. Notwithstanding any of the foregoing, Company may assign its interest in this Agreement to any affiliate of Company without the prior written consent of City, but such assigument may not relieve Company of any of its obligations or liabilities nnder this Agreement, whether accrued or unaccrued. 3 FlintHillsSetAgr.doc 7. Notices. All notices required or permitted by the terms of this Agreement are deemed sufficient if given by personal delivery, or facsimile, or by prepaid, certified mail and addressed to each party as follows: Notice to City: City Manager City of Corpus Christi P.O. Box 9277 Corpus Christi, Texas 78469-9277 Telephone: (361) 880-3220 Facsimile: (361) 880-3839 For overnight delivery: 1201 Leopard Street Corpus Christi, Texas 78401 or to any other address designated in writing by City to Company. Notice to Company: Flint Hills Resources, LP Attention: Exec. Vice President-Operations 4111 East 37th Street Wichita, Kansas 67220 Telephone: (316) 828-4008 Facsimile: (316) 828-8748 For overnight delivery: Flint Hills Resources, LP Attention: Exec. Vice President-Operations 4111 East 37th Street Wichita, Kansas 67220 or to any other address desigliated in writing by Company to City. 8. Applicable Law. This Agreement must be construed under and in accordance with the laws of the State of Texas, and all obligations of the parties created under this Agreement are performable within the incorporated limits of City of Corpus Christi, Texas. 9. Venue. Venue for any cause of action brought under this Agreement shall be the federal or State courts of competent jurisdiction in Nueces County, Texas, unless Texas law requires a matter to be submitted to a particular regulatory body or court outside Nueces County. 10. Attorney Fees. h~ the event either party brings any action under this Agreement alleging that the other party to this Agreement has defaulted on or breached obhgations created by this Agreement, the party who prevails is entitled to recover its reasonable attorneys' fees from the losing party. 4 11. Waiver. Failure of either party to require the performance of any term in this Agreement or the waiver by either party of any breach of this Agreement does not prevent subsequent enforcement of such term and is not deemed a waiver of any subsequent breach. The recitation of specific remedies in this Agreement does not waive the right of either party to other remedies available at law or equity to enforce this Agreement. 12. Relationship of Parties. This Agreement may not be construed to create between City and Company a relationship of partnership, joint venture, principal and agent, or any similar relationship, nor may it be construed to be for the benefit of any third party other than City and Company. 13. Captions. The captions contained in this Agreement are for convenience only and in no way limit or enlarge the terms and conditions of the Agreement. 14. Severability. If for any reason any section, subdivision, clause, phrase, word or provision of this Agreement shall be held invalid or unconstitutional by final judgment of a court uf competent jurisdiction after all appeals, if any, it shall not affect any other section, subdivision, clause, phrase, word or provision of this Agreelnent, for it is the definite intent of the parties that every section, subdivision, clause, phrase or word or provision hereof be given full. force and effect for its purpose. 15. Entire Agreement. This Agreement constitutes the entire Agreement between City and Company as to the issues between City and Company raised in the Lawsuit and any prior use of public rights-of-way within the City and City-owned property by Company for its pipelines. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly authorized, executed, and delivered as of the last date of execution specified below. CITY OF CORPUS CHRISTI, TEXAS By: C~ FLINT HILL RESOURCES, LP By: FHR/GP, LLC its general partner By: ,/W-~4'V 4 //~-/~ b 5 FlintHillsSctAgr doc A'FI-EST: Arma~/ City Secretary APPROVED AS TO FORM: Lisa Aguilar (~ Assistant City Attorney For City Attorney