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Dept. ID ED 14-12 Page 1 of 3
Meeting Date:4/21/2014
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CITY OF HUNTINGTON BEACH
REQUEST FOR. CITY COUNCIL ACTION
MEETING DATE: 4/21/2014
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Fred A. Wilson, City Manager
PREPARED BY: Ken Domer, Assistant City Manager
Kellee Fritzal, Deputy Director, Business Development
SUBJECT: Approval of an Operating Covenant Agreement Between the City of Huntington
Beach and Pinnacle Petroleum, Inc., at 7911 Professional Circle, Huntington
Beach and Request to increase the Business Development budget by $330,000
Statement of Issue:
The City Council is asked to approve an Agreement with Pinnacle Petroleum, a California
Corporation (Pinnacle), for sales tax sharing. The City and Pinnacle currently have a sales tax
sharing agreement approved in July 2007 that provides a 70/30 split (70% to City, 30% to
Pinnacle). The new sales tax sharing agreement will be 35% to City and 65% to Pinnacle. Due to
competition among cities in attracting petroleum broker industry firms, a new Agreement is
recommended to retain this business. With the new sales tax sharing agreement, Pinnacle has
stated that their revenue will increase, as they will be able to be more competitive in the petroleum
market place.
Financial Impact:
Currently, Pinnacle Petroleum brings in approximately $700,000 in revenue to the City, after the
current sales tax sharing agreement is applied (70/30 split). With the proposed sales tax sharing
agreement, the City will receive approximately $350,000 a year (35% City/65% Pinnacle). This is a
revenue loss mitigation agreement. In order to provide for this greater sales tax sharing increase to
Pinnacle, a budget increase, based upon current sales tax figures, will be required in the Business
Development Sales Tax Sharing account (10080101.79350) of $330,000. The City will retain an
estimated $356,000 as a portion of the General Fund revenues. Pinnacle anticipates increases in
revenue as a result of this agreement, therefore, the City will benefit from the increased revenue.
Recommended Action:
A) Approve the Operating Covenant Agreement Between the City of Huntington Beach and
Pinnacle Petroleum, Inc., and authorize the Mayor and City Clerk to sign; and
B) Approve an increase of$330,000 to Business Development account 10080101.79350.
Alternative Action(s):
Do not approve the Operating Covenant Agreement and direct staff as necessary.
Analysis:
The City has utilized the concept of sales tax sharing agreements in the past and the City Council
previously approved four sales tax sharing agreements. One of which, Pinnacle Petroleum,
Item 9. - I HB -226-
Dept. ID ED 14-12 Page 2 of 3
Meeting Date:4/21/2014
recently approached the City regarding a new sales tax sharing agreement. Pinnacle Petroleum is
a provider of gas and oil products for government and corporate fleets. This industry has seen a
consolidation of firms and has become more competitive for fuel contracts. Information shared by
Pinnacle confirms the increase in competitiveness within the industry and the potential for
increased sales to Pinnacle with the proposed agreement.
Pinnacle established their business in Huntington Beach in 1995, and moved to Seal Beach in
1998. At that time, Seal Beach offered a sales tax sharing agreement to Pinnacle with more
incentives. However, due to the ownership being local Huntington Beach residents, Pinnacle
relocated back to the City in 2007, when the City matched the sales tax sharing agreement. The
sales tax sharing agreement was 70% to the City and 30% to Pinnacle. Pinnacle purchased a
building located on Professional Circle and, over the last six years, has seen the business grow.
However, over the last six months, Pinnacle has outgrown the building in which they are located
and explored various opportunities to relocate the business. As part of the relocation, in addition to
a general push by other cities to seek such sales tax generating businesses, Pinnacle was
approached by and has approached other cities regarding a new sales tax sharing agreement
formula. Based upon review of other city's sales tax sharing agreements, the current City
agreement is not competitive. The cities of Long Beach, Seal Beach, Buena Park, Garden Grove,
Orange, and La Palma are offering better incentives to attract Pinnacle and other petroleum
providers. City staff confirmed the other cities' interest and willingness to provide the sales tax
sharing agreement to attract Pinnacle.
In general, the sharing of sales tax revenue is considered an economic development tool for cities
and counties in. order to either attract or retain businesses. The encouragement of Pinnacle by
other cities is not unexpected given the minimal impact of the business to a city (minimal office
space requirement, non-industrial setting and remote dispatching of fleet vehicles) and the potential
for high sales tax increase to a new city even at a 35% share to the local government. However, in
the case of Huntington Beach (or any city potentially losing such a business) the impact can be
immense to General Fund revenues. As such, the new agreement is considered a revenue loss
mitigation agreement as it minimizes the potential loss of all sales tax generated by Pinnacle to the
City. The agreement and concept was discussed with the City's Economic Development
Committee and the consensus was to advance it to the City Council with the recommendation for
approval.
New with this agreement is the requirement for a Public Hearing and Economic Development
Impact Report. The loss of redevelopment left cities with a loss of local resources to encourage
economic development. The State made the decision to terminate redevelopment and removed the
single largest economic tool available to local agencies. Based upon the decision to terminate
redevelopment Statewide, the Governor and Legislature recognized the necessity of cities, counties
and State to encourage employment and retain jobs and companies. Consequently, the State
approved Assembly Bill 562 (AB 562), which went into effect on January 1, 2014, as an economic
tool to provide a process to allow all local agencies and cities to create and retain jobs as well as
industries in the local communities and State through sales tax sharing or other financial
assistance.
The attached report provides the information required by AB 562 and the fiscal analysis necessary
to determine the projected revenue generated by Pinnacle to the City for business retention through
an Operating Covenant Agreement. The retention of sales tax revenue to the City, of which a
portion of the revenue collected will be shared with Pinnacle, will help to mitigate significant fiscal
impacts to City revenues and city services. The term of the agreement is ten years, with a five-year
option for renewal. This agreement also provides for liquidated damages should Pinnacle decide
to leave within the ten-year timeframe.
HB -227- Item 9. - 2
Dept. ID ED 14-12 Page 3 of 3
Meeting Date:4/21/2014
Environmental Status:
Not applicable
Strategic Plan Goal:
Improve long-term financial sustainability
Attachment(s):
1. Operating Covenant Agreement Between the City of Huntington Beach and Pinnacle
Petroleum, Inc.
2. AB 562 Economic Development Impact Report
Item 9. - 3 HB -228-
OPERATING COVENANT AGREEMENT BETWEEN
THE CITY OF HUNTINGTON BEACH
AND PINNACLE PETROLEUM, INC.
THIS OPERATING COVENANT AGREEMENT ("Agreement") dated as of
, 2014 ("Effective Date") is entered into by and between the CITY OF
HUNT GTON BEACH, a municipal corporation of the State of California ("City"), and
PINNACLE PETROLEUM, INC., a California corporation ("Business Owner"). City and
Business Owner enter into this Agreement with reference to the following recited facts (together
the "Recitals"):
RECITALS
A. Business Owner is in the business of selling refined petroleum products. Business
Owner currently owns, and has as its current point of sale for purposes of the Uniform Local
Sales and Use Tax Law, property located at 7911 Professional Circle, Huntington Beach,
California 92648 ("Site"). During the Operating Period hereunder (including any extended
Operating Period), Business Owner may buy alternate property within the City of Huntington
Beach to be its point of sale for purposes of the Uniform Local Sales and Use Tax Law for
Business Owner's business of selling refined petroleum products. In such event, the "Site"
hereunder shall mean and refer to such alternate property upon the satisfaction of both of the
following conditions precedent: (1) commencement of fee title ownership of such alternate
property within the City of Huntington Beach by Business Owner; and (2) commencement of the
designation of the property as the point of sale for purposes of the Uniform Local Sales and Use
Tax Law for Business Owner's business of selling refined petroleum products.
B. City and Business Owner are parties to that certain Sales Tax Agreement between
the City of Huntington Beach and Pinnacle Petroleum, Inc. dated as of July 16, 2007 ("Existing
Agreement") whereby Business Owner has agreed to use the Site as its primary business location
during the operating period described in the Existing Agreement. City recognizes that retention
of Business Owner in Huntington Beach will continue to contribute to the economic vitality of
the City, continue to provide additional jobs in the City, continue to expand the City's tax base
and otherwise improve economic and physical conditions in the City.
C. In order to induce the Business Owner to retain its business in Huntington Beach,
the City is willing to provide financial assistance to the Business Owner as described in this
Agreement subject to the terms and conditions of this Agreement.
D. By its approval of this Agreement, the City Council of the City of Huntington
Beach finds and determines that this Agreement serves as a valid public purpose through
continuing to expand economic opportunities for businesses in the City, continuing to expand the
City's employment base, and continuing to generate hereinafter defined Sales Tax that City can
utilize to fund general governmental services such as police, fire, street maintenance, and parks
and recreation programs. City and Business Owner have agreed that the respective
considerations are a fair exchange.
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NOW, THEREFORE, based upon the foregoing Recitals and in consideration of the
mutual covenants and conditions hereinafter set forth, Business Owner and City agree as follows:
1. DEFINITIONS
The capitalized terms and words used in this Agreement shall have the following
meanings unless expressly provided to the contrary.
1.1 "Base Amount" means the amount of Twenty-Five Thousand Dollars ($25,000) in
Sales Tax Increment received by the City for any quarter.
1.2 "Fiscal Year" means the City's fiscal year of October 1 through September 30.
1.3 "Laws" means all statutes, laws, ordinances, regulations, orders, writs,judgments,
injunctions, decrees or awards of the United States or any state, county, municipality or other
governmental agency.
1.4 "Liquidated Damages" means an amount equal to twenty five thousand dollars
($25,000) per quarter after the date of the Business Owner Default relating to Section 3.1, 3.2
and/or 3.3 hereunder through the then remainder of the Operating Period (including any extended
Operating Period) (notwithstanding any termination of this Agreement as may be permitted
under this Agreement).
1.5 "Operating Period" means the period beginning with the Effective Date and
expiring ten (10) years later. Upon mutual written agreement of the Parties at least 180 days
prior to the end of the then current Operating Period (or such later date as may be mutually
agreeable to the Parties), this Agreement may be extended for up to two additional five (5) year
operating periods upon the same terms and conditions herein for a cumulative total of a twenty
(20) year Operating Period. Upon any such extension, "Operating Period" as used herein shall
mean and include such extended operating period.
1.6 "Party" means any party to this Agreement. The "Parties" shall be both parties to
this Agreement.
1.7 "Penalty Assessments" means penalties, assessments, collection costs and other
costs, fees or charges resulting from late or delinquent payment of Sales Tax and which are
levied, assessed, or otherwise collected from the business on the Site owning or obligated to pay
Sales Tax.
1.8 "Person" means any person or entity, whether an individual, trustee, corporation,
partnership, trust, unincorporated organization, governmental agency or otherwise.
1.9 "Sales Tax Increment" means that portion of taxes derived and received from the
California State Board of Equalization pursuant to the application of the Uniform Local Sales
and Use Tax Law by the City of Huntington Beach attributable to Business Owner's business
conducted on the Site. Sales Tax Increment shall not include (a) Penalty Assessments; (b) any
Sales Taxes levied by, collected for or allocated to the State of California, the County of Orange,
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a district or any other entity, notwithstanding that such funds received by City are derived or
measured by such other entity based upon Sales Taxes; (c) any administrative fee charged by the
California State Board of Equalization; or (d) any Sales Tax attributable to any transaction not
consummated within the Operating Period (including any extended Operating Period). The Sales
Tax Increment shall not exceed one percent (1%) upon taxable sales and uses on the Site.
1.10 "Sales Tax" means the tax derived from the Business Owner's business conducted
on the Site and a portion of which is allocated to and received by the City of Huntington Beach
pursuant to the Uniform Local Sales and Use Tax Law.
1.11 "Uniform Local Sales and Use Tax Law" means and refers to: (a) California
Revenue and Taxation Code Section 7200 et seq., as may be amended from time to time, and any
successor law thereto; and (b) regulations of the California State Board of Equalization and other
binding rulings and interpretations relating to subsection(a) of this Section.
2. THE PARTIES
2.1 Business Owner. Business Owner is Pinnacle Petroleum, Inc., a California
corporation. Wherever the term "Business Owner" is used in this Agreement, the term shall be
deemed to refer to Pinnacle Petroleum, Inc.
Business Owner may not assign the rights and/or obligations of this Agreement to
any other Person without the prior written consent of the City, which consent shall not be
unreasonably withheld. Prior to any assignment by Business Owner, Business Owner shall
present such information to the City as may reasonably be requested by the City Manager or
designee in connection with such assignment. Upon receipt of the requested information, City
shall have ten (10) days to respond and approve or disapprove the proposed assignment. In the
event market conditions materially change and this Agreement places Business Owner in a non-
competitive position, the City agrees to meet and confer to discuss mutually acceptable
modifications to this Agreement By executing this Agreement, Business Owner
warrants and represents to City that it has the full power and authority to enter into this
Agreement and that all authorizations and approvals required to make this Agreement binding
upon Business Owner have been duly obtained.
2.2 The City. The City is a municipal corporation, duly organized and
existing pursuant to its Charter.
3. OBLIGATIONS OF BUSINESS OWNER
3.1 Operating Covenant. Business Owner covenants and agrees that, during the
Operating Period (including any extended Operating Period), Business Owner shall retain and
operate on the Site Business Owner's business of selling refined petroleum products and use the
Site as Business Owner's primary business location for selling such refined petroleum products,
consistent with all applicable provisions of any Laws. Business Owner shall operate its business
in a commercially reasonable and prudent manner, with the objective of generating the greatest
feasible amount of Sales Tax Increment. Business Owner's obligations pursuant to the
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immediately preceding sentence include, without limitation, the obligation to obtain or cause to
be obtained all federal, state and local licenses and permits required for the operation of its
business.
3.2 Covenant to Designate City as Point of Sale. Business Owner covenants and
agrees that, during the Operating Period (including any extended Operating Period), Business
Owner shall, consistent with the requirements of law, designate the Site as the point of sale in all
sales of its refined petroleum products and identify the City as such in all reports to the
California State Board of Equalization in accordance with the Uniform Local Sales and Use Tax
Law. Business Owner shall be solely responsible for ensuring that all taxable sales transactions
for business activities are consummated at the Site, consistent with all applicable statutory and
California State Board of Equalization regulatory requirements applicable to the business
activities and the designation of the City as the "point of sale" for all taxable sales occurring as a
result of the business activities on or off the Site.
In the event market conditions materially change and this Agreement places Business
Owner in a non-competitive position, the City agrees to meet and confer to discuss mutually
acceptable modifications to this Agreement.
3.3 Covenant Against Solicitation and Acceptance of Economic Incentives During the
Term of the OperatingP . Business Owner covenants and agrees that, during the Operating
Period (including any extended Operating Period), Business Owner shall not directly or
indirectly solicit or accept any "Financial Assistance" from any other public or private Person, if
such Financial Assistance is given for the purpose of causing or would result in Business
Owner's breach of any of the covenants or terms and conditions of this Agreement. For
purposes of this Section, the term "Financial Assistance" means any direct or indirect payment,
subsidy, rebate, or other similar or dissimilar monetary or non-monetary benefit, including,
without limitation, payment of land subsidies, relocation expenses, public financings, property or
sales tax relief, rebates, and/or exemptions or credits.
3.4 Indemnification. From the Effective Date of this Agreement through the
termination date of this Agreement, Business Owner shall indemnify, defend, and hold harmless
City and its officers, employees and agents, from and against all liabilities, obligations, claims,
damages, penalties, causes of action, judgments, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) (collectively "Claims") imposed upon or
incurred by or asserted against City arising out of any act or omission of Business Owner and/or
its business(es); provided, however, that the aforesaid obligations of Business Owner shall not
apply to the extent any Claim results from the active negligence or intentional misconduct of
City or any of City's officers, employees, agents, or contractors. In the event that any action, suit
or proceeding is brought against City by reason of any such occurrence, Business Owner, upon
City's request, will, at Business Owner's expense, defend such action, suit or proceeding at
Business Owner's sole cost.
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3.5 Insurance.
3.5.1 Workers' Compensation Insurance.
Pursuant to California Labor Code section 1861, Business Owner acknowledges
awareness of section 3700 et seq. of said Code, which requires every employer to be insured
against liability for workers' compensation. Business Owner covenants that it will comply with
such provisions from the Effective Date of this Agreement through the termination date of this
Agreement.
Business Owner shall maintain workers' compensation insurance in an amount of not less
than One Hundred Thousand Dollars ($100,000) bodily injury by accident, each occurrence, One
Hundred Thousand Dollars ($100,000) bodily injury by disease, each employee, Two Hundred
Fifty Thousand Dollars ($250,000) bodily injury by disease, policy limit.
Business Owner shall require all subcontractors to provide such workers' compensation
insurance for all of the subcontractors' employees. Business Owner shall furnish to City a
certificate of waiver of subrogation under the terms of the workers' compensation insurance and
Business Owner shall similarly require all subcontractors to waive subrogation.
3.5.2 Insurance.
In addition to the workers' compensation insurance and Business Owner's covenant to
indemnify City, Business Owner shall obtain and furnish to City, a policy of general public
liability insurance, including motor vehicle coverage, covering the Site and Business Owner's
business operations thereon. Said policy shall indemnify Business Owner, its officers, agents
and employees, while acting within the scope of their duties, against any and all claims of arising
out of or in connection with the Site or Business Owner's business operations thereon, and shall
provide coverage in not less than the following amount: combined single limit bodily injury and
property damage, including products/completed operations liability and blanket contractual
liability, of$1,000,000 per occurrence. If coverage is provided under a form which includes a
designated general aggregate limit, the aggregate limit must be no less than $1,000,000. Said
policy shall name City, its officers, and employees as Additional Insureds, and shall specifically
provide that any other insurance coverage which may be applicable to the Site or Business
Owner's business operations thereon shall be deemed excess coverage and that Business
Owner's insurance shall be primary.
Under no circumstances shall said above-mentioned insurance contain a self-insured
retention, or any other similar form of limitation on the required coverage.
3.5.3 Certificates of Insurance; Additional Insured Endorsements.
Prior to commencement of the Operating Period hereunder, Business Owner shall furnish
to City certificates of insurance subject to approval of the City Attorney evidencing the foregoing
insurance coverages as required by this Agreement; said certificates shall:
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a. provide the name and policy number of each carrier and policy;
b. shall state that the policy is currently in force;
C. shall promise to provide that such policies will not be canceled or
modified without thirty (30) days' prior written notice of City; and
d. shall state as follows: "The above-detailed coverage is not subject to any
self-insured retention, or any other form of similar-type limitation."
Business Owner shall maintain the foregoing insurance coverages in force from the
Effective Date of this Agreement through the termination date of this Agreement.
The requirement for carrying the foregoing insurance coverages shall not derogate from
the provisions for indemnification of City by Business Owner under this Agreement. City or its
representative shall at all times have the right to demand the original or a copy of all said policies
of insurance. Business Owners shall pay, in a prompt and timely manner, the premiums on all
insurance hereinabove required.
A separate copy of the additional insured endorsement to each of Business Owner's
insurance policies, naming the City, its officers and employees as Additional Insureds shall be
provided to the City Attorney for approval prior to any payment hereunder.
3.5.4 Non-Assi ng ability. Business Owner shall not sell, assign, transfer,
convey or encumber this Agreement, or any part hereof, or any right or duty created herein,
without the prior written consent of City and the surety, which consent shall not be unreasonably
withheld by the City. Prior to any assignment by Business Owner, Business Owner shall present
such information to the City as may reasonably be requested by the City Manager or designee in
connection with such assignment. Upon receipt of the requested information, City shall have ten
(10) days to respond and approve or disapprove the proposed assignment In the event market
conditions materially change and this Agreement places Business Owner in a non-competitive
position, the City agrees to meet and confer to discuss mutually acceptable modifications to this
Agreement
3.6 Anti-discrimination. Business Owner shall not discriminate against any employee
or applicant for employment because of age, sex, marital status, race, handicap, color, religion,
reed, ancestry, or national origin.
3.7 Business Owner's Representations and Warranties. Business Owner makes the
following representations and warranties as of the date of this Agreement and agrees that such
representations and warranties shall survive and continue thereafter but shall not be remade after
the date of this Agreement.
3.7.1 No Litigation. There is no litigation, action, suit, or other proceeding
pending or threatened against the Business Owner or the Site that may adversely affect the
validity or enforceability of this Agreement or sale of the refined petroleum product at the Site.
To the best of Business Owner's knowledge, Business Owner is not in violation of any statute,
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law, regulation or ordinance, or of any order of any court or governmental entity the effect of
which would prohibit the Business Owner from performing its obligations hereunder.
3.7.2 Authority. Business Owner has complied with all governmental
requirements concerning its organization, existence and transactions of refined petroleum
products. Business Owner has the right and power to own and operate its business as
contemplated in this Agreement.
3.7.3 No Breach. To Business Owner's knowledge, none of the undertakings
contained in this Agreement violate any applicable governmental requirements, or conflicts with,
or constitutes a breach or default under, any agreement by which the Business Owner is bound or
regulated.
3.7.4 Warranty Against Payment of Consideration for Agreement. Business
Owner warrants that it has not paid or given, and will not pay or give, to any third person, any
money or other consideration for obtaining this Agreement, other than normal costs of
conducting business and costs of professional services such as accountants and attorneys.
3.8 Release of City Officials. No member, official, agent, employee, or
attorney of the City shall be personally liable to Business Owner, or any successor in
interest of the Business Owner, in the event of any default or breach by the City or for any
amount which may become due to the Business Owner or its successors, or on any obligations
under the terms of this Agreement. The Business Owner hereby waives and releases any claim it
may have personally against the members, officials, agents, employees, consultants, or attorneys
of the City with respect to any default or breach by the City or for any amount that may become
due to the Business Owner or its successors, or on any obligations under the terms of this
Agreement.
3.9 Reports. Within ten (10) days of filing each report with the California State Board
of Equalization, Business Owner shall provide to the City true and correct copies of all reports
filed by Business Owner with the California State Board of Equalization in order to allow the
City to preliminarily determine the amount of Sales Tax paid by Business Owner on account of
sales from the Site; provided, however, that the City shall not be deemed to have received any
Sales Tax until the City actual receipt thereof.
3.10 Participation in Fuel Procurement Activities. Business Owner retains all right to
participate in the City's petroleum product and fuel procurement activities.
4. OBLIGATIONS OF CITY OF HUNTINGTON BEACH
4.1 Financial Assistance Pam. As consideration for Business Owner's
performance of its obligations set forth in this Agreement and subject to the terms and conditions
of this Agreement, within thirty (30) days after the City confirms its receipt of Sales Tax paid by
Business Owner attributable to sales from the Site for each quarter during the Operating Period
(including any extended Operating Period), the City shall pay to Business Owner on a quarterly
basis in arrears financial assistance in an amount equal to one of the following:
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a. If the Sales Tax Increment generated by the Business Owner and actually received
by the City for any given quarter is the Base Amount or lower, the amount of thirty percent
(30%) of Sales Tax Increment generated by the Business Owner and actually received by the
City for such quarter; or
b. If the Sales Tax Increment generated by the Business Owner and actually received
by the City for any given quarter is higher than the Base Amount, the amount of sixty-five
percent (65%) of Sales Tax Increment generated by the Business Owner and actually received by
the City for such quarter.
At the end of the Operating Period (including any extended Operating Period) or earlier
termination of this Agreement as expressly permitted herein, the City's obligations under this
Section 4.1 shall automatically terminate without cost, expense, or liability to City. Financial
assistance payments shall be payable from any source of funds legally available to City. In this
regard, it is understood and agreed that the Sales Tax Increment from the Site is being used
merely as a measure of the amount of financial assistance payments that are periodically owing
by City to Business Owner, and that City does not pledge any portion of the Sales Tax Increment
from the Site.
4.2 City's Obligation to Provide Conditional Assistance. The City's obligations to
provide Business Owner with financial assistance pursuant to Section 4.1 are contingent on a
quarter to quarter basis in each Fiscal Year and, for each quarter within the Operating Period
(including any extended Operating Period), the City's obligations to make any payments to
Business Owner under this Agreement are expressly contingent upon Business Owner, for the
entirety of such quarter, completely fulfilling its obligations under this Agreement and producing
Sales Tax Increment each quarter. In the event Business Owner does not produce Sales Tax
Increment in any quarter, then the tax rebate obligations herein shall be zero dollars ($0). If for
any reason Business Owner fails to authorize the release or use of all or any part of sales tax
information regarding its business in a manner satisfactory to the California State Board of
Equalization or provide any information reasonably required by the City to perform the City's
obligations under this Agreement, or if all or any part of the sales tax information of Business
Owner is unavailable to the City or the City is not legally authorized to use such information for
the purposes of performing its obligations under this Agreement, the financial assistance
payment shall be based solely upon the information so received, if any.
4.3 Annual Adjustment. Promptly after each Fiscal Year of the City which
includes a portion of the Operating Period (including any extended Operating Period), the City
shall determine with respect to that Fiscal Year the aggregate amount of Sales Tax Increment
received by the City and the aggregate amount of financial assistance payments made to
Business Owner pursuant to Section 4.1. If for any reason (including, but not limited to,
reporting errors or other adjustments) the aggregate amount of payments by the City with respect
to that Fiscal Year is less than the aggregate amount payable with respect to that Fiscal Year, the
City shall pay to Business Owner an adjustment payment equal to the amount of deficiency; if
for any reason (including, but not limited to, reporting errors or other adjustments) the aggregate
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amount of payments by the City with respect to that Fiscal Year is more than the aggregate
amount payable with respect to that Fiscal Year, then the amount of the excess shall be applied
against the next payments due under Section 4.1, except that if any unapplied excess remains
after the Operating Period (including any extended Operating Period), Business Owner shall pay
the amount of the unapplied excess to the City immediately upon written demand therefor.
4.4 California State Board of Equalization Determination of Improperly Allocated
Local Sales Tax Increment. If, at any time during or after the Operating Period (including any
extended Operating Period), the California State Board of Equalization determines that all or any
portion of the Sales Tax Increment received by the City was improperly allocated and/or paid to
the City, and if the California State Board of Equalization requires repayment of, offsets against
future sales tax payments, or otherwise recaptures from the City any of the improperly allocated
and/or paid Sales Tax Increment, then Business Owner shall, within ten (10) calendar days after
written demand from the City, repay all financial assistance payments (or applicable portions
thereof) theretofore paid to Business Owner which are attributable to such repaid, offset or
recaptured Sales Tax Increment. If Business Owner fails to make such repayment within ten (10)
calendar days after the City's written demand, then Business Owner shall be in breach of this
Agreement and such obligation shall accrue interest from the date of the City's original written
demand at the then-maximum legal rate imposed by the California Code of Civil Procedure on
prejudgment monetary obligations, compounded monthly, until paid. Additionally, the City may
deduct any amount required to be repaid by Business Owner under Section 4.1 from any future
financial assistance payments otherwise payable to Business Owner under this Agreement. This
Section shall survive the expiration or termination of this Agreement.
4.5 Legal Challenge. Should any third party successfully challenge the validity of this
Agreement through a taxpayer suit or otherwise, either Party may terminate this Agreement upon
thirty (30) days written notice.
4.6 Contingent Liability and Limitations. The financial assistance payment
obligations of the City of Huntington Beach shall be subject to the provisions of City Charter
Section 605, regarding annual budget appropriations, and shall not be payable for a period in
excess of the Operating Period (including any extended Operating Period).
5. DEFAULTS AND REMEDIES
5.1 Business Owner Default. City shall provide Business Owner with written notice
of Business Owner's failure ("Business Owner Default") to strictly abide by any material
provision of this Agreement, including, without limitation, the obligations in Section 3 of this
Agreement. Business Owner shall have fifteen (15) days from the date of such notice either to
cure such Business Owner Default, or, if such Business Owner Default cannot be reasonably
cured during such fifteen (15) day period, promptly (in any event, within 5 days after receipt of
such notice) commences cure, and thereafter diligently (in any event within a reasonable time
after receipt of such notice) prosecutes such cure to completion.
5.2 City Default. Business Owner shall provide City with written notice of City's
failure ("City Default") to strictly abide by any material provision of this Agreement. City shall
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have fifteen (15) days from the date of such notice either to cure such Business Owner Default,
or, if such Business Owner Default cannot be reasonably cured during such fifteen (15) day
period, promptly (in any event, within 5 days after receipt of such notice) commences cure, and
thereafter diligently (in any event within a reasonable time after receipt of such notice)
prosecutes such cure to completion.
5.3 General Remedies for Default. Except as provided in Section 5.4, upon either a
City Default or a Business Owner Default uncured within the applicable cure period, Business
Owner or City (as applicable) shall have the right to seek all available legal and equitable
remedies, including, without implied limitation, general and consequential damages, unless
otherwise expressly provided to the contrary herein. Unless prohibited by law or otherwise
provided by a specific term of this Agreement, the rights and remedies of the City and the
Business Owner under this Agreement are nonexclusive and all remedies hereunder may be
exercised individually or cumulatively, and the City may simultaneously pursue inconsistent
and/or alternative remedies. Notwithstanding the foregoing or anything to the contrary in this
Agreement, in the event of a City Default, Business Owner shall only be permitted to pursue
collection of the financial assistance payments on an quarter-to-quarter basis as such payments
may become due hereunder. Business Owner hereby expressly waives any right Business Owner
may have to seek, demand or collect, on an accelerated basis, any financial assistance payments
that may be due after the date of any City Default.
5.4 Liquidated Damages.
5.4.1 Business Owner Default With Respect to Obligations Under Sections 3.1, 3.2
and/or 3.3. The Parties acknowledge that the consideration to the City for its entry into this
Agreement and the performance of its obligations hereunder include the City's receipt of Sales
Tax Increment and other direct and indirect financial and non-financial benefits arising from the
operation of the Business Owner's business at the Site. Business Owner agrees that the City will
suffer damages if Business Owner commits any Business Owner Default with respect to any of
its obligations arising under Sections 3.1, 3.2, and/or 3.3 that is uncured within the applicable
cure period. The Parties agree that the exact determination of such damages would be
impracticable and extremely difficult to quantify. Accordingly, the Parties have determined that
Liquidated Damages represents a reasonable estimate of the damages which would be suffered
by the City if Business Owner commits any Business Owner Default with respect to any of its
obligations set forth in Sections 3.1, 3.2, and/or 3.3 that is uncured within the applicable cure
period. Accordingly, as its sole and exclusive remedies for a Business Owner Default with
respect to any of its covenants and obligations set forth in Sections 3.1, 3.2, and/or 3.3 that is
uncured within the applicable cure period, the City shall be entitled to: (1) terminate this
Agreement and the entirety of its obligations hereunder, including any accrued and unpaid
financial assistance payments, and (2) receive from Business Owner the applicable amount of
Liquidated Damages.
5.4.2 ACKNOWLEDGEMENT OF REASONABLENESS OF LIQUIDATED
DAMAGES. UPON A BUSINESS OWNER DEFAULT WITH RESPECT TO ANY OF ITS
OBLIGATIONS SET FORTH IN SECTIONS 3.1, 3.2, AND/OR 3.3, FOLLOWING NOTICE
AND OPPORTUNITY TO CURE PURSUANT TO SECTION 5.1, THE CITY AND
v2 3-24-14
10
BUSINESS OWNER ACKNOWLEDGE AND AGREE THAT IT WOULD BE EXTREMELY
DIFFICULT AND IMPRACTICAL TO ASCERTAIN THE AMOUNT OF DAMAGES THAT
WOULD BE SUFFERED BY THE CITY WITH RESPECT TO SUCH DEFAULT. HAVING
MADE REASONABLE, DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN
THE ACTUAL DAMAGES THE CITY WOULD SUFFER AS FAIR COMPENSATION FOR
THE LOSS SUSTAINED BY THE CITY IN THE EVENT OF SUCH A BREACH, THE
PARTIES AGREE THAT THE LIQUIDATED DAMAGES AMOUNT REPRESENTS A
REASONABLE ESTIMATION OF THOSE DAMAGES UNDER THE CIRCUMSTANCES
EXISTING AT THE TIME THIS AGREEMENT WAS MADE AND NOT A FORFEITURE
OR PENALTY. THEREFORE, UPON A BUSINESS OWNER DEFAULT WITH RESPECT
TO ANY OF ITS OBLIGATIONS SET FORTH IN SECTIONS 3.1, 3.2, AND/OR 3.3, AS ITS
SOLE AND EXCLUSIVE REMEDIES FOR SUCH DEFAULT, THE CITY SHALL BE
ENTITLED TO (1) RECEIPT OF THE LIQUIDATED DAMAGES, WHICH BUSINESS
OWNER SHALL PAY WITHIN TEN (10) DAYS FOLLOWING WRITTEN DEMAND
FROM THE CITY, AND (2) TERMINATE THIS AGREEMENT AND THE ENTIRETY OF
ITS OBLIGATIONS HEREUNDER, INCLUDING ANY ACCRUED BUT YET UNPAID
FINANCIAL ASSISTANCE PAYMENTS.
Initials of Authorized Initials o Au on
City Representative Business er Representative
5.4.3. Exceptions. Damages defined in this section 5.4 shall not be applicable to or
payable by Business Owner in any amount in the event Business Owner ceases operations of
company, sells business or relocates business to location outside the State of CA..
6. EXISTING AGREEMENT
Except as set forth in the following sentence, this Agreement is intended to replace and
supersede in its entirety the Existing Agreement and, upon the Effective Date, the Existing
Agreement shall be terminated in its entirety, and City and Business Owner shall have no further
rights or obligations under the Existing Agreement except as may be expressly provided therein.
Notwithstanding the foregoing sentence or anything else contained in this Agreement to the
contrary, City shall continue to be obligated under the Existing Agreement to pay Business
Owner any financial assistance payments due and payable under the Existing Agreement as of
the Effective Date of this Agreement and Section 4.3 of the Existing Agreement relating to the
annual adjustment shall continue to be in full force and effect until the completion of the annual
adjustment for the current Fiscal Year. It is the Parties intent that financial assistance payments
under the Existing Agreement shall dovetail into financial assistance payments under this
Agreement.
v2 3-24-14
11
7. GENERAL PROVISIONS
7.1 Time of the Essence. Time is of the essence of this Agreement and each Party's
obligations hereunder.
7.2 Venue. In the event of any litigation hereunder, all such actions shall be instituted
in the Superior Court of Orange, State of California, or in an appropriate municipal court in the
County of Orange, State of California or an appropriate Federal District Court in the Southern
District of California.
7.3 Applicable Law. The laws of the State of California shall govern the
interpretation and enforcement of this Agreement.
7.4 Execution in Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which shall constitute one and the
same instrument.
7.5 Copies. Any executed copy of this Agreement shall be deemed an original for all
purposes.
7.6 Severability. If any one or more of the provisions contained herein shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability, unless it affects the substantial rights of a party or defeats the purpose of this
Agreement, shall not affect any other provision of this Agreement, but this Agreement shall be
construed as if such invalid, illegal or unenforceable provision has not been contained herein.
7.7 Interpretation. The language in all parts of this Agreement shall in all cases be
construed as a whole according to its fair meaning, and not strictly for or against any Party.
When the context of this Agreement requires, the neuter gender includes the masculine, the
feminine, a partnership or corporation of joint venture or other entity, and the singular includes
the plural.
The Parties acknowledge that this Agreement is the product of mutual arms-length
negotiations and that each Party has been, or has had the opportunity to have been, represented
by legal counsel in the negotiation and drafting of this Agreement. Accordingly, the rule of
judicial construction which provides that ambiguities in a document are to be construed against
the drafter of that document shall have no application to the interpretation or enforcement of this
Agreement. In any action or proceeding to interpret and/or enforce this Agreement, the trier of
fact may refer to extrinsic evidence not in conflict with any specific provision of this Agreement
to ascertain and give effect to the intent of the Parties hereto.
7.8 No Partnership or Joint Venture. The Parties hereto agree that nothing contained
in this Agreement shall be deemed or construed as creating a partnership, joint venture, or
association between City and Business Owner; or cause City or Business Owner to be
responsible in any way for the debts or obligations of the other, and no other provision contained
in this Agreement nor any acts the parties hereto shall be deemed to create any relationship
v2 3-24-14
12
between City and Business Owner other than that of contracting parties. Further, nothing herein
shall give or is intended to give any rights of any kind to any person not an express party hereto.
7.9 Inte ration. This Agreement is the entire Agreement between and final expression
of the Parties, and there are no agreements or representations between the Parties except as
expressed herein and the Existing Agreement as set forth in Section 6, above. All prior
negotiations and agreements between City and Business Owner with respect to the subject matter
hereof are superseded by this Agreement except as set forth in the Existing Agreement as set
forth in Section 6, above. Except as otherwise provided herein, no subsequent change or addition
to this Agreement shall be binding unless in writing and signed by the Parties hereto.
7.10 Nonwaiver. None of the provisions of this Agreement shall be considered waived
by any Party except when such waiver is given in writing. The failure of any Party to insist in
any one or more instances upon strict performance of any of its rights hereunder shall not be
construed as a waiver of any such provisions or the relinquishment of any such rights for the
future, but the same shall continue and remain in full force and effect.
7.11 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective heirs, executors, administrators, legal representatives,
permitted successors and assigns.
7.12 State of California Legislation Impact on Financial Assistance Payments.
Business Owner acknowledges that the California legislature has in the past adopted certain
legislation which diverted to the State of California a portion of the Sales Tax Increment which
was otherwise payable to the City. Business Owner acknowledges that it is possible that the
legislature may enact similar legislation in the future which would cause a corresponding
reduction of and/or delay in the payment of the Sales Tax Increment and that such reduction will
cause Business Owner a corresponding reduction and/or delay in the payment of the financial
assistance payments due to Business Owner during such time as such legislation is in effect.
Furthermore, Business Owner acknowledges that it is possible that the legislation described
above, or some variant thereof, may be enacted and effective during one or more subsequent
times during the Operating Period (including any extended Operating Period) and may materially
and negatively impact the amount of Sales Tax Increment and, accordingly, financial assistance
payments. The City does not make any representation, warranty or commitment concerning the
future actions of the California legislature with respect to the allocation of Sales Tax Increment
to the City. Business Owner agrees that it is undertaking its obligations under this Agreement
after having considered, and is expressly assuming the risk of, the possibility of the enactment of
such legislation.
The foregoing paragraph notwithstanding, City acknowledges that the California
legislature may provide for the payment to City of other revenues for the purpose of offsetting
any losses in Sales Tax Increment resulting from the enactment of legislation of the type
described in the immediately preceding paragraph. City agrees that, should the California
legislature provide for such offsetting revenues, then for purposes of this Agreement and the
computation of any financial assistance payments which may become due to Business Owner
hereunder, City will consider, on a quarter- quarter basis, any such offsetting revenues which are
v2 3-24-14
13
(i) indexed to Sales Tax and offset the loss of Sales Tax Increment to the City on a dollar for
dollar basis, (ii) actually received by the City, and (iii) not subject to any restrictions on use
beyond those which are otherwise generally applicable to sales tax revenues received by
California municipalities, to be Sales Tax Increment within the meaning of this Agreement.
Notwithstanding anything herein to the contrary, to the extent the City's receipt of Sales Tax
Increment is impaired or restricted in any way or otherwise eliminated for any reason, the City
shall not be obligated to make any financial assistance payments during the period within which
the City's receipt of Sales Tax Increment is so restricted, impaired or eliminated.
7.13 Attorneys' Fees. In the event suit is brought by either Party to enforce the terms
and provisions of this Agreement or to secure the performance hereof, each Party shall bear its
own attorneys' fees.
7.14 Notices. All notices or other communications required or permitted between the
City and Business Owner under this Agreement shall be in writing,, and may be (i) personally
delivered, (ii) sent by United States registered or certified mail, postage prepaid, return receipt
requested, (iii) sent by telecopier, or (iv) sent by nationally recognized overnight courier service
(e.g., Federal Express), addressed to the Party at the address provided below. Any notice so
given by registered or certified United States mail shall be deemed to have been given on the
second business day after the same is deposited in the United States mail. Any notice not so
given by registered or certified mail, such as notices delivered by telecopier or courier service
(e.g., Federal Express), shall be deemed given upon receipt of the same by the party to whom the
notice is given. Any notice shall be addressed as set forth below:
If to City: If to Business Owner:
City of Huntington Beach Pinnacle Petroleum, Inc.
Attn: City Manager Attn: Liz McKinley, President
2000 Main Street 7911 Professional Circle, Huntington
Huntington Beach, CA 92648 Beach, California 92648
With a copy to:
City Attorney
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Either City of Business Owner may change its respective address by giving written notice
to the others in accordance with the provisions of this Section.
(remainder of page left intentionally blank)
(signatures on following pages)
v2 3-24-14
14
04/14/2014 1 :49PM FAX 17148417766 PINNACLE PETROLEUM IR0001/0001
IN WITNESS WHEREOF,the Parties hereto have caused this Agreement to be executed
on the dates hereinafter respectively set forth.
BUSINESS OWNER: CITY OF HUNTINGTON BEACH,
PINNACLE PETROLEUM, INC. A municipal corporation of the State of
California
I matthew M: Harper, Mayor
�. 1. L -
APPROVED AS TO FORM:
ITS: (CIRCLE ONE)Chair.. �zs' !!,enftice President
AND
f4p 7jC y Attorney
BY:
INITIATEll AND APPROVED:
ITS: (CIRCLE ONE)Secretary/Chief Financial
OEZ:ica/ASSt.Secretary-Treusum //lon
A(
s.is t City .anager
i Cler
v2 3-24-14
15
'4 04/16/2014
CERTIFICATE OF LIABILITY INSURANCE DATE(M
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS
CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS
CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR
PRODUCER,AND THE CERTIFICATE HOLDER.
IMPORTANT: If the certificate holder is an ADDITIONAL INSURED,the policy(les)must be endorsed. If SUBROGATION IS WAIVED,subject to the terms
and conditions of the policy,certain policies may require an endorsement.A statement on this certificate does not confer rights to the certificate holder
In lieu of such endorsements.
-PRODUCER CONTACT
FEDERATED MUTUAL INSURANCE COMPANY NAME: CLIENT CONTACT CENTER
IFAX
HOME OFFICE: P.O.BOX 328 A CONE No,
Ext:888-333-4949 (,C No);507-446-4664
OWATONNA, MN 55060 ADDRESS:CLIENTCONTACTCENTER FEDINS.COM
INSURER(S)AFFORDING COVERAGE NAIC#
INSURER A:FEDERATED MUTUAL INSURANCE COMPANY 13935
INSURED 310-059-1 INSURER B:
PINNACLE PETROLEUM INC INSURERC:
7911 PROFESSIONAL CIRCLE
HUNTINGTON BEACH,CA 92648-1901 INSURER D:
INSURER E:
INSURER F:
COVERAGES CERTIFICATE NUMBER:47 REVISION NUMBER:1
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD
INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS
CERTIFICATE MAY BE ISSUED OR MAY PERTAIN,THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS
AND CONDITIONS OF SUCH POLICIES.LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
INSR TYPE OF INSURANCE DL SUBR POLICY NUMBER POLICY EFF POLICY EXP LIMITS
S WVD I D/YYYY f DIY
GENERAL LIABILITY EACH OCCURRENCE $1,000,000
RENTD
X COMMERCIAL GENERAL LIABILITY PREMISES O a ocwErrence $100,000
CLAIMS-MADE ❑X OCCUR
MED EXP(Any one person) EXCLUDED
A Y N 9068974 06/14/2013 06/14/2014 PERSONAL&ADV INJURY $1,000,000
GENERAL AGGREGATE $2,000,000
GEN'L AGGREGATE LIMIT APPLIES PER: PRODUCTS-COMPIOP AGO $2,000,000
X POLICY JECo- F LOC
AUTOMOBILE LIABILITY COMBINED SINGLE LIMIT Ea acciden $1,000,000
ANY AUTO BODILY INJURY(Per person)
ALL OWNED SCHEDULED
A AUTOS AUTOS N N 9068974 06/14/2013 06/14/2014 BODILY INJURY(Per accidenQ
X HIRED AUTOS X NON-OWNED PROPERTY DAMAGE
AUTOS - Per acciden
X UMBRELLA LIAB X OCCUR EACH OCCURRENCE $4,000,000
A ri EXCESS LIAB CLAIMS-MADE N N 9068829 06/14/2013 06/14/2014 AGGREGATE $4,000,000
DED I I RETENTION
WORKERS COMPENSATION WC STATU- OTH-
AND EMPLOYERS'LIABILITY Y f N TORY LIMITS ER
ANY PROPRIETORIPARTNERIEXECUTIVE ❑ E.L.EACH ACCIDENT
OFFICERIMEMBER EXCLUDED? N f A {
(Mandatory in NH)
E.L.DISEASE-EA EMPLOYEE
11 yes,describe under G' r E.L DISEASE-POLICY LIMIT
DESCRIPTION OF OPERATIONS below Aa
DESCRIPTION OF OPERATIONS f LOCATIONS I VEHICLES(Attach ACORD 101,Additional Remarks Schedule,i1 more space is required)
CITY OF HUNTINGTON BEACH, ITS OFFICERS AND EMPLOYEES, ARE LISTED AS ADDITIONAL INSURED FOR GENERAL LIABILITY.
COVERAGE IS NOT SUBJECT TO ANY SELF - INSURED RETENTION, OR ANY OTHER FORM OF SIMILAR - TYPE LIMITATION.
CERTIFICATE HOLDER CANCELLATION
310-059-1 47 1
CITY OF HUNTINGTON BEACH SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE
2000 MAIN ST THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN
HUNTINGTON BEACH,CA 92648-2702 ACCORDANCE WITH THE POLICY PROVISIONS.
AUTHORIZED REPRESENTATIVE
O 1988-2010 ACORD CORPORATION.All rights reserved.
ACORD 25(2010105) The ACORD name and logo are registered marks of ACORD
CERTHOLDER COPY
SG
• TE
COMPrNSATION P.O. BOX 8192, PLEASANTON, CA 94588
FUND
CERTIFICATE OF WORKERS' COMPENSATION INSURANCE
ISSUE DATE: 04-15-2014 GROUP:
POLICY NUMBER: 1490815-2013
CERTIFICATE ID: 189
CERTIFICATE EXPIRES: 10-01-2014
10-01-2013/10-01-2014
THIS CERTIFICATE SUPERSEDES AND CORRECTS
CERTIFICATE # 188 DATED 04-15-2014
CITY OF HUNTINGTON BEACH SG
2000 MAIN ST
HUNTINGTON BEACH CA 92648-2702
This is to certify that we have issued a valid Workers' Compensation insurance policy in a form approved by the
California Insurance Commissioner to the employer named below for the policy period indicated.
This policy is not subject to cancellation by the Fund except upon 10 days advance written notice to the employer.
We will also give you 10 days advance notice should this policy be cancelled prior to its normal expiration.
This certificate of insurance is not an insurance policy and does not amend, extend or alter the coverage afforded
by the policy listed herein. Notwithstanding any requirement, term or condition of any contract or other document
with respect to which this certificate of insurance may be issued or to which it may pertain, the insurance
afforded by the policy described herein is subject to all the terms, exclusions, and conditions, of such policy.
Authorized Representative President and CEO
EMPLOYER'S LIABILITY LIMIT INCLUDING DEFENSE COSTS: $1,000,000 PER OCCURRENCE.
ENDORSEMENT #1600 - LIZ MCKINLEY P, S, T - EXCLUDED.
ENDORSEMENT #2570 ENTITLED WAIVER OF SUBROGATION EFFECTIVE 2014-04-15 IS
ATTACHED TO AND FORMS A PART OF THIS POLICY. THIRD PARTY NAME:
CITY OF HUNTINGTON BEACH
EMPLOYER
PINNACLE PETROLEUM INC SG
7911 PROFESSIONAL CIR
HUNTINGTON BEACH CA 92648
[TMJ,CS]
(REV.1-2012) PRINTED : 04-15-2014
POLICYHOLDER COPY
SG
STATE
C:fDMRF:N5AT10NP.O. BOX 8192, PLEASANTON, CA 94588
INSURANCr
FUND
CERTIFICATE OF WORKERS' COMPENSATION INSURANCE
ISSUE DATE: 04-15-2014 GROUP:
POLICY NUMBER: 1490815-2013
CERTIFICATE ID: 169
CERTIFICATE EXPIRES: 10-01-2014
10-01-2013/10-01-2014
THIS CERTIFICATE SUPERSEDES AND CORRECTS
CERTIFICATE # 168 DATED 04-15-2014
CITY OF HUNTINGTON BEACH SG
2000 MAIN ST
HUNTINGTON BEACH CA 92648-2702
This is to certify that we have issued a valid Workers' Compensation insurance policy in a form approved by the
California Insurance Commissioner to the employer named below for the policy period indicated.
This policy is not subject to cancellation by the Fund except upon 10 days advance written notice to the employer.
We will also give you 10 days advance notice should this policy be cancelled prior to its normal expiration.
This certificate of insurance is not an insurance policy and does not amend, extend or alter the coverage afforded
by the policy listed herein. Notwithstanding any requirement, term or condition of any contract or other document
with respect to which this certificate of insurance may be issued or to which it may pertain, the insurance
afforded by the policy described herein is subject to all the terms, exclusions, and conditions, of such policy.
Authorized Representative President and CEO
EMPLOYER'S LIABILITY LIMIT INCLUDING DEFENSE COSTS: $1,000,000 PER OCCURRENCE.
ENDORSEMENT #1600 - LIZ MCKINLEY P, S, T - EXCLUDED.
ENDORSEMENT #2570 ENTITLED WAIVER OF SUBROGATION EFFECTIVE 2014-04-15 IS
ATTACHED TO AND FORMS A PART OF THIS POLICY. THIRD PARTY NAME:
CITY OF HUNTINGTON BEACH
EMPLOYER
PINNACLE PETROLEUM INC SG
7911 PROFESSIONAL CIR
HUNTINGTON BEACH CA 92648
[TMJ,CS]
(REV.t-2012) PRINTED : 04-15-2014
WAIVER OF SUBROGATION NOTICE
Enclosed is your copy of a certificate of insurance on which the certificate holder
required a waiver of subrogation:
1. Please be advised that a waiver of subrogation requires that a 3% surcharge
will be applied by State Fund ONLY to the premium assessed on the payroll
of your employees earned while engaged in work for that certificate holder
who requested the waiver. (Note: if you have no employee payroll on that job,
then there is no charge.)
2. To apply the 3% surcharge, you must also agree to maintain accurately
segregated payroll records for employees engaged in work on job/s for the
certificate holder who has the waiver. The payroll records are subject to
verification by an auditor.
Example:
Payroll for job: $5, 000 . 00
Sample Rate : 13 . 30%
Regular Premium equals : $ 665 . 00
Surcharge : 3 . 00o
Additional waiver charge : $ 19 . 95
Total premium equals $ 684 . 95 (665 . 00 + 19 . 95)
ATTACHMENT #2
TIERRAWEST
A D V I S 0 R
a
3
J
r rr
PINNACLE PETROLEUM, INC.
AB 562 - ECONOMIC DEVELOPMENT STRATEGY
JOB RETENTION
THE CITY OF HUNTINGTON BEACH
Item 9. - 23 HB -248-
T u,mU °" S°pry
t j ISO R S
April 14,2014
Ms. Kellee Fritzal
Deputy Director Business Development
CITY OF HUNTINGTON BEACH
2000 Main Street
Huntington Beach,CA 92648
RE: Pinnacle Petroleum, Inc.
AB 562 -Economic Development Strategy
Job Retention
Dear Ms. Fritzal:
The City of Huntington Beach (City) has commissioned Tierra West Advisors, Inc. (Tierra West) to
review, analyze and prepare a report pertaining to a Operating Covenant Agreement (Agreement),
between the City and Pinnacle Petroleum, Inc. (Pinnacle) based upon the economic development
strategy and to comply with the newly enacted public reporting requirements of Assembly Bill 562
(AB 562).
The State Legislature and Governor Brown, due to the elimination of Redevelopment addressed
the loud outcry by cities, counties and communities for the need to legislatively assist local
agencies, as well as the State, to encourage employment, retain jobs and companies in local
communities. The loss of redevelopment has left the City of Huntington Beach with a loss of
local resources to encourage economic development. In response to this loss, the City of
Huntington Beach is developing an economic development strategy and is also considering an
economic development subsidy that will comply with the continued public reporting provisions
mandated by AB 562.
Pinnacle, located in Huntington Beach, is proposing to maintain its headquarters within the City
for the next 15 years. In order to remain competitive and promote expansion, Pinnacle and the
City are proposing to enter into the Agreement and revenue sharing arrangement as part of the
City's Economic Development Program. The Agreement is intended to provide Pinnacle and the
City the ability to address among others:
• Decline in competitiveness due to industry consolidation
• Update existing Tax Sharing Agreement terms
• Extend Pinnacle's operations in the City
• Retain City General Fund revenues to provide needed services for residents
• Retain and capture future growth in Pinnacle product sales(leveraging on estimated
future revenue and industry price increases)
E.r Angeles WVmla00D33
T-Q312C,x44W
€"Ini 61 861f,
V,'4ieeeawest^at�srx.tam
CrCCet.ESTATE h DEVELORAENT
51TiATEGISTS
HB -249- Item 9. - 24
• Increase the economic competitiveness of Huntington Beach
• Increase the City's wealth and prosperity
• Diversify the City's economic base and wage levels
• Outreach and support to existing businesses
• Maintain and enhancing a consistent, business-friendly environment
• Expand public-private partnership opportunities
Tierra West recognizes that the provisions of the Operating Covenant Agreement and retention of
Pinnacle would not only assist Pinnacle but also provide a strong public purpose through the
City's continued expansion of economic development opportunities for businesses within the City
and continued growth of the City's General Fund revenue and tax base, as well as improve
economic and physical conditions and services in the City.
Sincerely,
TIERRA WEST ADVISORS,INC.
ihn N. Yoplai
V
Item 9. - 25 HB -250-
City of Huntington Beach
Economic Development (AB562)
Operating Covenant Agreement
between
City of Huntington Beach
and
Pinnacle Petroleum, Inc.
The City of Huntington Beach (City) in order to maintain sustainable economic development,
community vitality and recovery from the annual loss of over$21 million previously received by
the City's Redevelopment Agency, is implementing economic development strategies that
include the application of Assembly Bill (AB) 562. The City and Pinnacle Petroleum, Inc.
(Pinnacle) propose to enter into an Operating Covenant Agreement (Agreement). The
Agreement requires Pinnacle to remain in operation in the City and the City will continue to
provide revenue sharing with Pinnacle.
The loss of redevelopment has left the City of Huntington Beach as well as all cities Statewide
with a loss of local resources to encourage economic development and maintain local services.
The California Legislature and Governor Brown made the decision to terminate redevelopment
and removed the single largest economic tool available to local agencies. Based upon the
decision to terminate redevelopment Statewide, the Governor and Legislature recognized the
necessity of cities, counties and the State, to encourage employment and retain jobs and
companies by giving economic subsidies to businesses and the importance of providing public
input by requiring:
1. A public hearing prior to the granting of the subsidy
2. A report regarding the subsidy within the term
3. Where a subsidy has a term of more than 10 years, an additional public hearing at the
conclusion of the subsidy.
The State approved AB 562, which went into effect on January 1, 2014, codifying a continued
public reporting requirement for economic development subsidies.
This report includes the information required by AB 562 and the fiscal analysis necessary to
determine the projected revenue generated by Pinnacle to the City as part of the economic
development strategy for business retention through an Operating Covenant Agreement. The
City-provided information which was utilized to establish an estimated "Revenue Tax Base" of
sales tax collected by the City from Pinnacle. After the Revenue Tax Base was determined,
projections of additional revenue generation from sales tax collections directly attributable to the
business were developed. The projected revenue tax increases from Pinnacle represents new
resources as well as the retention of a portion of existing general fund revenues to the City of
which a percentage of the revenue collected will be shared with Pinnacle. This will avoid
significant fiscal Impacts to City revenues and community services.
10 a
HB -251- A D V' I 5 0 Item 9. - 26
The economic development strategies seek demonstration that the proposed business retention
will result in community-wide benefits, which is evidenced by the retention of revenues that will
be used to provide municipal services. The City Council may choose to approve the Agreement
in order to retain and expand jobs, maintain a local business, assist Pinnacle to gain
competitiveness within the fuel provision industry and incentivize the business owner to
consider and complete upgrades and improvements. This report identifies the financial data
necessary to allow the City Council to determine the value of entering into the proposed
Agreement.
AB 562 Reporting Requirements
On and after January 1, 2014, each local agency shall, before approving any economic
development subsidy within its jurisdiction, provide all of the following information in written
form available to the public, and through its Internet Web site, if applicable:
1. The name and address of all corporations or any other business entities, except for sole
proprietorships,that are the beneficiary of the economic development subsidy, if applicable.
Pinnacle Petroleum,Inc.,7911 Professional Circle,Huntington Beach,CA 92648
Founded in 1995, Pinnacle Petroleum, Inc. (Pinnacle) is a national provider of
competitively priced energy products and services. Pinnacle services include the
distribution of refined petroleum products and lubricants, environmental services,
cardlock fueling, and remote tank monitoring with a fully integrated fuel management
system. Pinnacle is a 100% woman owned California Corporation. Certifications
include WBENC #240301 with WMBE Clearinghouse#95IS0030.
Refined Petroleum Industry
The refined petroleum products market in the US grew 22 percent between 2006-2012
despite a sharp decline in consumption and price during the economic downturn. The
local refined petroleum products industry followed similar trends, growing by an average
of 6 percent per year during the 2006-2012 review period. The US refined petroleum
products industry became more export oriented with the share of exports increasing from
6 percent in 2006 to 16 percent in 2012. Strong growth is forecast for the industry as
high prices and recovering volume demand will propel revenues.
2. The start and end dates and schedule, if applicable, for the economic development subsidy.
Operating Covenant Agreement, if approved is anticipated to commence on July 1, 2014
and continue for ten (10) years with one (1) five (5) year option term by mutual
agreement.
Sales Tax Generation
The Bradley Burns Uniform Local Sales and Use Tax ("Bradley Burns") applies to the
sales of tangible personal property in which a percentage of California's sales and use tax
rate is distributed back to the jurisdiction where sales were generated to support local
general funds. For many jurisdictions, including the City, this amount is one percent
(1%). Sales tax is payable to the City from the State Board of Equalization. The
calculations in this report indicate only the estimated amount of sales tax to be received
20�- , ,
R �� �E 1
Item 9. - 27 HB -252- A D V- 1 � 0 R S
by the City through the distribution formula used by the State Board of Equalization.
Pinnacle proposes to maintain and enhance existing business operations in the City. The
City and Pinnacle mutually agreed that a Sales Tax Base would be set at $25,000 per
quarter to offset and minimize any potential decline in current general fund revenue.
Therefore, the City would receive the first $25,000 each quarter and revenue sharing
would commence on any sales tax generated by Pinnacle above this amount.
Sales projections were developed based upon review of retail sales data between the
years of 2008 through 2013. According to the historical sales data, Pinnacle generated on
average approximately $243,000 in revenue per quarter or approximately $972,000
annually. 2012 and 2013 data indicated steady growth in revenue with an average of
$254,000 in sales per quarter or$1.016 million per year.
The City and Pinnacle are presently under contract with a Sales Tax Agreement entered
in July 2007 and includes the following terms: The City provides Pinnacle with 30 % of
the sales tax revenue generated by Pinnacle and received by the City with the remaining
balance of 70% retained by the City. The duration of the current agreement is for 10
years commencing in July of 2007 and slated for termination in June 2017, unless the
parties enter into the new Agreement. To date, the City has received approximately $4.0
million in sales tax revenue as a result of Pinnacle's operation and revenue generated.
3. A description of the economic development subsidy, including the estimated total amount of
the expenditure of public funds by, or of revenue lost to, the local agency as a result of the
economic development subsidy.
Economic Development Strategy Implementation and Business Retention
In furtherance of the City's economic development strategies, a revenue sharing
Agreement in the form of the Operational Covenant Agreement is being proposed.
Pursuant to AB562 the revenue sharing Agreement is defined as an Economic
Development Subsidy that is an expenditure of public funds or loss of revenue to a local
agency in the amount of one hundred thousand dollars ($100,000) or more, for the
purpose of stimulating economic development within the jurisdiction of a local agency,
including, but not limited to, bonds, grants, loans, loan guarantees, enterprise zone or
empowerment zone incentives, fee waivers, land price subsidies, matching funds, tax
abatements, tax exemptions, and tax credits. Economic Development Subsidy shall not
include expenditures of public funds by, or loss of revenue to, the local agency for the
purpose of providing housing affordable to persons and families of low or moderate
income, as defined in Section 50093 of the Health and Safety Code. The City and
Pinnacle are currently in a revenue sharing agreement which the parties propose to amend
and extend. The current agreement began in July of 2007 and is set to expire with the
proposed new Agreement. To date, the City has received approximately $4.0 million in
sales tax revenue as a result of Pinnacle's operations.
The City is being reactive in retaining Pinnacle as one of the major contributors to the
City's general fund. The City economic development strategies recognize the vulnerable
economic recovery the Nation and City are experiencing. The potential relocation of
Pinnacle and total loss of revenue would be much more detrimental and undermine the
30Tii--, RRAWEST
NB -25 3- A V ' s 0 Item 9. - 28
City's delicate economic recovery and cause significant impact to services. The City is
making a significant commitment to maintain the economic momentum it has gained over
the past 12 months.
The City and Pinnacle propose to enter into a new Agreement that would extend the
commitment by Pinnacle to remain in the City for up to fifteen(15)additional years. The
Agreement provides for a sales tax sharing structure that would provide Pinnacle with up
to 65 percent of the sales tax revenue generated by Pinnacle and the City 35 percent. It is
estimated that the Agreement will provide Pinnacle with approximately $7.4 million and
the City $5 million over a ten (10) year period. Should the parties agree to extend the
Agreement for the five (5)year option term, Pinnacle will receive a cumulative amount in
revenue sharing of approximately $12.0 million and the City $8 million over fifteen (15)
years of the extended Operating Period.
4. A statement of the public purposes for the economic development subsidy.
Public Purpose
Review of the Agreement and proposed revenue sharing between Pinnacle and the City is
consistent with the City's economic goals and strategies and is in the best interest of the
general public.
Economic goals and strategies include the following:
• Increase the economic competitiveness of Huntington Beach
• Increase the City's wealth and prosperity
• Maximize public revenues and economic development financing options
• Diversify the City's economic base and wage levels
• Outreach and support to existing businesses
• Maintain and enhancing a consistent, business-friendly environment
• Expand public-private partnership opportunities
• Maintain current and provide future City public Services, capital projects and
maintenance
The loss of redevelopment has had significant fiscal impact on City revenues and
eliminated the primary local economic tool. Retaining Pinnacle's business operations in
the City would address the need and desire to maintain revenue streams such as property
and sales tax to the City. Additionally, Pinnacle's continued presence in the City would
assist in maintaining relative balance in the local economy through indirect retail sales
and employment from other local businesses that are supported by Pinnacle's location in
the City. Retention of Pinnacle will also result in maintaining occupied property square
footage thus minimizing the risk of blight and dilapidation.
4 OTIERRAWEST
Item 9. - 29 HB -254- ;, V ' S 0 R S
The operating covenant and revenue sharing Agreement assists Pinnacle in the following
areas:
• Decline in competitiveness due to industry consolidation
• Update current Tax Sharing Agreement Terms to allow Pinnacle to remain
competitive
• Early capture of future growth in product sales (leveraging on estimated future
revenue or industry price increases)
Pinnacle has identified multiple instances where larger competitors, created by significant
consolidation of operators in the industry,have prevailed over Pinnacle by providing prices at
significantly lower then Pinnacle's product costs. In recent months there have been a number
of smaller operations that have been purchased by larger companies. These acquisitions have
made it difficult for many of the remaining smaller operations to submit competitive price
quotes for new business contracts. Larger companies are positioned to offer lower bid prices,
thus creating a challenging environment for operations similar to Pinnacle to remain viable.
Pinnacle and the City concur that the current Tax Sharing Agreement between the City and
Pinnacle is not reflective of the current industry standards or requirements for
competiveness. Tierra West has reviewed comparable agreements between companies
and communities and noted substantial support for revenue sharing agreements of 65
percent. Pinnacle, as well as, overall industry forecasts project significant growth in sales
revenue over the next five(5) and ten (10)years. City staff and Pinnacle agree that early
capture or the ability of Pinnacle to accelerate increases in revenue through the proposed
Agreement will allow it to be more competitive with contract pricing and operations.
5. Projected tax revenue to the local agency as a result of the economic development subsidy.
Based on the current City and Pinnacle Sales Tax Sharing Agreement, the City has
received approximately $4.0 million in sales tax revenue as a result of Pinnacle's
operations in Huntington Beach. Based upon the proposed Operating Covenant Agreement, it
is estimated that the City will receive an additional $5 million during the first ten (10)years
of the new Agreement. Should the parties agree to extend the Agreement for the
additional five (5) year term; the City will receive $8 million over fifteen (15) years of the
extended Operating Period.
6. Estimated number of jobs created by the economic development subsidy, broken down by
full-time, part-time, and temporary positions.
Pinnacle Petroleum, Inc. was founded in Huntington Beach in 1995 and moved to Seal
Beach in 1998 and remained there for 10 years. Seal Beach provided a revenue sharing
agreement to entice Pinnacle to move from Huntington Beach to Seal Beach. Pinnacle
and Huntington Beach entered into a Sales Tax Agreement in July 2007 and Pinnacle
agreed to relocate its headquarters back to Huntington Beach along with its 10 full time
employees. Pinnacle has increased its employee base in the City by 300% and now has
30 full time employees. Based upon projected Pinnacle sales growth, over the term of the
Agreement it is estimated that Pinnacle will increase employment in the City by
approximately 8% per year. Over the initial 10 year term Pinnacle is anticipated to
increase from 30 to 62 employees. Assuming Pinnacle and the City extend the Operating
5
HB -255- A D " l > 0 Item 9. - 30
Covenant Agreement for the five (5) year option; Pinnacle's employee base could
potentially reach 91 at year 15.
Summary
Pinnacle Petroleum, Inc. (Pinnacle) and the City have agreed that Pinnacle remaining in
Huntington Beach is beneficial for both parties. The City has proposed that Pinnacle agree to an
Operating Covenant Agreement (Agreement) to remain in Huntington Beach for the next fifteen
(15) years. Pinnacle and the City have mutually agreed to a revenue sharing structure in
exchange for the Operating Covenant that also provides Pinnacle a more competitive advantage
in an industry that is consolidating. The revenue sharing Agreement is the economic
development subsidy that is consistent with the City's economic development implementation
strategy and as prescribed in AB 562. Assistance is provided in the form of a revenue sharing
agreement between Pinnacle and the City. The Agreement provides for Pinnacle receiving 65%
of the sales tax revenue generated by Pinnacle's operation with the balance of 35% going to the
City. The proposed Agreement will be for ten (10) years and could be extended for an additional
five (5)year operating period upon the same terms and conditions for a total of a fifteen (15)year
Operating Covenant. The estimated amount of the total subsidy or expenditure of public funds
would be $7.4 million over a ten (10) year period. Should Pinnacle and the City extend the
Agreement for the five (5) year term, Pinnacle could receive a cumulative amount in revenue
sharing of approximately $12.0 million through year fifteen (15) of the extended Operating
Covenant period.
Based upon review of the Agreement, the structure is consistent with the City's economic goals
and implementation strategy is in the best interest of the general public. The Agreement and
projections indicate the City will receive approximately $5.0 million in sales tax revenue during
the first of ten (10) years of the Agreement; including the five (5) year extension under the
Agreement, the City will receive approximately $8 million in total through the extended
Operating Covenant period.
The Agreement serves a valid public purpose through the expansion of economic development
opportunities for businesses in the City, continuing to expand the City's employment base, and
continuing to generate sales tax revenue that the City utilizes to fund general governmental
services for businesses and residents.
Recommendation
Retention of Pinnacle in the City will continue to contribute to the economic vitality of the City,
continue to provide additional jobs within the City, continue to expand the City's tax base and
improve economic and physical conditions in the City. Loss or relocation of Pinnacle out of the
City will impact a vulnerable economic recovery and momentum that the City is achieving and
reduce City services. As such it is recommended that the Operating Covenant Agreement be
approved.
By its approval of the Agreement, the City Council of the City of Huntington Beach finds and
determines that the Agreement serves as a valid public purpose through continuing to expand
economic opportunities for businesses in the City, continuing to expand the City's employment
base, and continuing to generate Sales Tax that the City will utilize to fund general governmental
services such as police, fire, street maintenance, and parks and recreation programs.
6 OTIERRAWEST
Item 9. - 31 HB -256-
NOTICE OF PUBLIC HEARING
Pursuant to Section 53083(a)(6)(b) of the California Government Code (AB 562), the City of Huntington
Beach shall provide public notice and a hearing prior to granting of proposed economic development
subsidy.
NOTICE IS HEREBY GIVEN that the City of Huntington Beach will hold a public hearing in the Council
Chambers of the Huntington Beach Civic Center, 2000 Main Street on Monday April 21, 2014 at 6:00
p.m., unless otherwise changed by the City Manager, to consider the following item:
Applicant: Pinnacle Petroleum, Inc.: Liz McKinley, President
Project Location: 7911 Professional Circle, Huntington Beach, California 92648
Agreement:
The City of Huntington Beach desires to create and retain jobs and employment within the City. The City
has the ability to implement the provisions of AB 562, a Statewide economic development tool passed by
Governor Brown in late 2013 for the purpose of allowing local jurisdictions to induce economic
development for the creation and maintenance of jobs. The City of Huntington Beach and Pinnacle
Petroleum, Inc. are proposing to enter into an agreement that encourages Pinnacle Petroleum, Inc. to
retain its headquarters and business within Huntington Beach. The City is proposing to provide financial
assistance in the form of an economic development subsidy to Pinnacle Petroleum as described in the
Operating Covenant Agreement. Pursuant to Section 53083 of the California Government Code (AB 562)
the following information will be posted on the City's Web Site.
1) The name and address of all corporations, or any other business entities, except for sole
proprietorships, that are the beneficiary of the economic development subsidy, if applicable.
PINNACLE PETROLEUM, INC., a California corporation, 7911 Professional Circle, Huntington
Beach, CA 92648
2) The start and end dates and schedule, if applicable, for the economic development subsidy.
Commencing approximately July 1, 2014.
3)A description of the economic development subsidy, including the estimated total amount of
expenditure of public funds, or of revenue lost to, the local agency, as a result of the economic
development subsidy.
The proposed Operating Covenant Agreement provides for participation of revenues generated
from Pinnacle Petroleum's operations within the City with the City of Huntington Beach. The
Agreement provides that Pinnacle will retain 65% of revenues generated by Pinnacle to the City
over$25,000; payment will be made on a quarterly basis. It is estimated, based on current sales,
that Pinnacle will generate approximately $1.02 million per year to the City in revenue. Based
upon this estimate, Pinnacle is projected to receive approximately $660,000 per annum and the
City approximately $356,000 per annum.
4)A statement of the public purposes for the economic development subsidy.
To continue to expand and enhance economic opportunities for businesses in the City, continue
to expand the City's employment base, and continue to generate hereinafter defined Sales Tax
that the City can utilize to fund general governmental services such as police, fire, street
maintenance, and parks and recreation programs.
5) Projected tax revenue to the local agency as a result of the economic development subsidy.
The City of Huntington Beach will receive approximately $356,000 per year in sales tax revenue.
6) Estimated number of jobs created by the economic development subsidy, broken down by full-time,
part-time and temporary positions.
The City and Pinnacle have estimated that the Agreement preserves 27 full time jobs in the City
and over the term of the Agreement, Pinnacle will generate an additional 20 to 25 full time jobs in
the City.
All interested persons are invited to attend this hearing and express opinions upon the items listed above.
The Operating Covenant Agreement is available for review at Huntington Beach City Hall from April 10,
2014 through April 21, 2014.
Any written materials to be submitted to the City Clerk at least twenty-four (24) hours prior to the hearing
City of Huntington Beach, 2000 Main Street, Huntington Beach, CA 92648.
Further information on these items may be obtained at the City of Huntington Beach, Attn: Kellee Fritzal,
Deputy Director Business Development, 2000 Main Street, Huntington Beach, CA 92648 or by telephone:
(714) 374-1519.
PUBLISHED: Huntington Beach Independent April 17, 2014
POSTED AT CITY HALL AND ON CITY WEB SITE: April 7, 2014
CLASS IFIEDr-)' r!'(-, ,`(- ; r
ADVERpr
TISING r,1-.!`� ir .
Printed by:0596 Vacant Apr 7,2014,3:50 pm
0a Augeler,a1Mp_J3 Salesperson: IIOJy Angeles (�lmeJy
Phone: Ad#35788191
cenmm wmemmom Account Inform tlon e rrn�i Ad ....ion
�� -- _ ,Information �
._
(714)536 5511 Start date 04-10-14 „ Siz e. 2 x 102.430Phone#
Name: City of Huntington Beach w Stop date q 04-10-14 Billed`size' 10.00 TCN Inch
Address: c/o Patricia Esparza Insertions 1 Keyword
f 2000 Main St Rate code &Legal Huntington Beach Ad type, Liner
Huntington Beac,CA 92648 ! j- Taken by 6716 Brittany Jackson
Acct#:, C000310791 Class:, 13000-Legal Notices Gross price:: -- —$160.00
-- Pubs:. TCN HBI Net price $160.00
Client:.
Placed by: Patty Esparza Amt Due: $160.00:
i Fax#:. Note: Amount,:Due .is subject to
change. due.to-discounts, miscella-
neous fees;or other charges:
Ad Copy:
NOTICE Of PUBLIC HEARING
Pursuant to Section 53083(a)(6)(b) of the
California Government Code (AB 562), the City of
Huntington Beach shall provide public notice and
a hearing prior to granting of proposed economic
development subsidy.
NOTICE IS HEREBY GIVEN that the City of
Huntington Beach will hold a public hearing in the
Council Chambers of the Huntington Beach Civic
Center, 2000 Main Street on Monday April 21,
2014 at 6:00 p.m., unless otherwise changed by
the City Manager, to consider the following item:
Applicant:Pinnacle Petroleum, Inc.: Liz McKinley,
re` en
Project Location:7911 Professional Circle,
uA nfing-lon e6 acF,-Talifornia 92648
Agreement:
Tfie—C of Huntington Beach desires to create
and retain jobs and employment within the City.
The City has the ability to implement the provisions
of AB 562,a Statewide economic development tool
passed by Governor Brown in late 2013 for the
purpose of allowing local jurisdictions to induce
economic development for the creation and
maintenance of jobs.The City of Huntington Beach
and Pinnacle Petroleum,Inc.are proposing to enter
into an agreement that encourages Pinnacle
Petroleum, Inc. to retain its headquarters and
business within Huntington Beach. The City is
proposing to provide financial assistance in the
form of an economic development subsidy to
Pinnacle Petroleum as described in the Operating
Covenant Agreement. Pursuant to Section 53083
of the California Government Code (AB 562) the
following information will be posted on the City®s
Web Site.
1) The name and address of all corporations, or
any other business entities, except for sole
proprietorships, that are the beneficiary of the
economic development subsidy,if applicable.
PINNACLE PETROLEUM, INC., a California
corporation, 7911 Professional Circle, Huntington
Beach,CA 92648
2) The start and end dates and schedule, if
applicable,for the economic development subsidy.
Commencing approximately July 1,2014.
3) A description of the economic development
subsidy, including the estimated total amount of
expenditure of public funds, or of revenue lost
to, the local agency, as a result of the economic
development subsidy.
The proposed Operating Covenant Agreement
provides for participation of revenues generated
from Pinnacle Petroleums operations within the
City with the City of Huntington Beach. The
Agreement provides that Pinnacle will retain 65%
of revenues generated by Pinnacle to the City over
$25,000; payment will be made on a quarterly
basis. It is estimated,based on current sales,that
Pinnacle will generate approximately$1.02 million
--- ad proof pg.1 ---
NOTICE OF PUBLIC HEARING
Pursuant to Section 53083(a)(6)(b) of the
California Government Code(AB 562),the City of
Huntington Beach shall provide public notice and
b tw f a hearing prior to granting of proposed.economic
PRfir+ development subsidy.
ZOy ■ NOTICE IS HEREBY,'GIVEN that the City of
P U B L ON Center,Huntington Beach will hold a public hearing in the
Council Chambers of the Huntington Beach Civic.
Center, 2000 Main Street on Monday April 21,
2014 at 6:00 p.m., unless otherwise changed by
; the City Manager,'to consider the following item:
CIT11 Ap iiica�nt:Pinnacle Petroleum, Inc.: Liz McKinley,
Pro ect Location:7911 Professional Circle, Hun-
STATE OF CALIFORNIA) in' c aifornia92648 j
Agreement:
Trhe_City of Huntington Beach desires to create l,
and retain jobs and,employment within the City.
SS. The City has the ability to implement the
COUNTY O F ORANGE ) Provisions 5 a Statewide economic
developmentt toolof passed
d by Governor Brown in
late 2013 for the purpose of allowing local
.jurisdictions to induce economic development for
the creation and maintenance of jobs.The City ofi
Huntington Beach and Pinnacle Petroleum, Inc.
am a citizen of the United States and a are proposing.to enter into an agreement thati
encourages Pinnacle Petroleum, Inc. to retain its,1
resident of the Count of Los An eles I I headquarters and business within Huntington
y g Beach.•The City is proposing to provide financial
am over the age of eighteen years and assistance in the form of economic develop-
� ment subsidy to Pinnacle Petroleum as described
not a art to or interested in the notice in the Operating Covenant Agreement..Pursuant
p y to Section 53083 of the California Government
published. I am a principal clerk of the Code (AB the
the following information will be
posted on the City s Web Site. i
HUNTINGTON BEACH 1) The name and address of all corporations, or
any other business entities, except for sole
INDEPENDENT, which was adjudged a proprietorships; that are the beneficiary of the
economic development subsidy,if applicable.
newspaper of general circulation on PINNACLE PETROLEUM,INC., a California corpo-
ration, 7911 Professional Circle, Huntington
September 29, 1961, case A6214, and Beach,CA 92648
June 11 1963 case A24831 for the I2) The start and end dates and le, if
applicable, for the economic development
ment subsi-
d .
City of Huntington Beach, County of �Commencingapproximately July 1,2014.
3) A description of the economic development
Orange, and the State of California. subsidy, including the estimated total amount of
i expenditure of public funds,or of revenue lost to,
Attached to this Affidavit is a true and the local agency, as a result of, the economic
development subsidy.
complete copy as was printed and The proposed Operating Covenant.Agreement
provides for participation of revenues generated
published on the following dates): from Pinnacle Petroleum s operations within t
City with the City of Huntington Beach. The
Agreement provides that Pinnacle will retain 65%
Thursday; April 10, 2014
of revenues generated by Pinnacle to the City
lover $25,000; payment will be made on a
quarterly basis. It is estimated, based on current
:sales, that Pinnacle will generate approximately
$1.02 million per year to the City in revenue.
certify (or declare) under penalty Based upon this estimate,Pinnacle'is projected to
of perjury that the foregoing is true receive approximately $ 000 per annum and
the City approximately$35656,000 per annum.
4) A statement of the public purposes'for the
and correct. economic development subsidy.
To continue to expand and enhance economic
opportunities for businesses in the City, continue
to expand the City s employment base, a
continue to generate hereinafter defined Sales
Tax that the City can utilize to fund general.
governmental services such as police,fire, street
Executed on A ril 10th 2014 maintenance,and parks and recreation programs.
p 5)Projected tax revenue to the local agency as a
-result of the economic development subsidy.
at Los Angeles, California The City of Huntington Beach will receive
approximately $356,000 per year in sales tax
revenue.
6) Estimated number of jobs created by the
economic development subsidy, broken down by
full-time,part-time and temporary positions. .
The City and Pinnacle have estimated that the
Agreement preserves 27 full time jobs in the City
and over the term of the Agreement,Pinnacle will
generate an additional 20 to 25 full time jobs in
the City.
S' nature All interested persons are invited to attend this
hearing and express opinions upon the items
listed above. The Operating Covenant Agreement
is available for review at Huntington Beach City
Hall from April 10,2014 through April 21,2014:
Any written materials to be submitted to the City
Clerk at least twenty-four (24)hours prior to the
hearing City of Huntington Beach, 2000 Main
Street,Huntington Beach,CA 92648.
Further information on these items may ,be
obtained at the City of Huntington Beach, Attn:
Kellee Fritzal, Deputy Director Business Develop-
ment, 2000 Main Street, Huntington Beach, CA
92648 or by telephone:(714)374-1519.
4/10
City of Huntington Beach
2000 Main Street ♦ Huntington Beach CA 92648
(714) 536-5227 ♦ www.huntingtonbeachca.gov
Office of the City Clerk
Joan L. Flynn, City Clerk
April 29, 2014
Pinnacle Petroleum, Inc.
ATTN: Liz McKinley, President
7911 Professional Circle
Huntington Beach, CA 92648
Dear Ms. McKinley:
Enclosed for your records is a copy of"Operating Covenant Agreement Between The City of
Huntington Beach and Pinnacle Petroleum, Inc.."
Sincerely,
Joan L. Flynn, CMC
City Clerk
JF:pe
Enclosure
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