Pflugerville Council, PCDC approve settlement agreement with Cortec
Thursday, June 29, 2017
The Pflugerville City Council and the city’s economic development corporation approved a settlement agreement with Cortec Precision Manufacturing after the company failed to meet some terms in a March 2014 performance agreement.
The California-based sheet metal manufacturer has agreed to refund proceeds from a discounted land sale after failing to meet terms of the agreement by employing undocumented workers at its Round Rock facility, said Amy Madison, executive director of the Pflugerville Community Development Corporation.
A new settlement agreement includes the corporation signing a five-year lease at Cortec’s new facility in the 130 Commerce Center, according to a media release. The agreement also gives the development corporation the option to renew the lease for another five years.
The corporation will be reimbursed $217,101 by Cortec during their five-year lease of 3,775 square feet in the form of rent savings, tenant finish-out allowance and other benefits, according to the release.
The PCDC’s move into the new facility will allow the corporation more space for growth and a possible conference facility that will be large enough to host public meetings, Madison said.
Cortec, which will be relocating to Pflugerville, invested $20 million in a 130,000-square-foot manufacturing facility on an 8-acre tract of land the company bought from the city corporation in 2014.
The Pflugerville City Council originally approved the incentives agreement and property purchase with Cortec in March 2014. It approved the new settlement agreement on Tuesday.
Following initial approval by the council, Cortec President Richard Corrales and three Cortec employees were arrested in September 2014 after a grand jury indicted them on charges of illegally employing immigrants.
In December 2015, Corrales and three Cortec employees pleaded guilty to one count of unlawful employment of aliens, Daryl Fields of the U.S. attorney general’s office said.
Investigators with the Department of Homeland Security said the business had employed at least 16 immigrants illegally since September 2013.
Madison said all performance agreements include clauses prohibiting employment of undocumented workers under state statutes for 4B funds, which is money generated from a half-cent of the city’s sales tax revenue for economic development purposes.
Despite the violation occurring in Round Rock, she said, the company violated the terms of agreement since they had already signed the contract when the violation occurred.
Cortec plans to relocate 125 employees and expand in Pflugerville. The new facility is currently being readied for tenants to move in, according to the release.
According to a 2014 study funded by the PCDC, Cortec’s move will generate 200 permanent direct and indirect jobs in the next 15 years. The result will be an estimated $19 million in taxable sales and purchases within the city and $20 million in additional city tax revenue.
If Cortec decides to expand their facility in the future, they may ask the PCDC for additional assistance or incentives, Madison said.
$50K relocation grant approved for Flooring Services
The Pflugerville City Council unanimously approved a $50,000 one-time relocation grant Tuesday to help Flooring Services Southwest move its operations from Austin to its soon-to-be built Pflugerville facility.
The flooring company, which is relocating from its Central Texas headquarters in Austin, broke ground on their Pflugerville facility at the 130 Commerce Center in early June.
The company bought the 30-acre property in November from the Pflugerville Community Development Corporation, an economic arm of the city that receives funding through a portion of city sales tax revenue.
The relocation grant, not to exceed $50,000, will not be paid to the flooring company before Dec. 31, 2018, said city corporation Executive Director Amy Madison.
The Pflugerville City Council approved the relocation grant agreement after speaking with the city corporation during an executive session after Tuesday night’s regular council meeting.
The city corporation board unanimously approved the agreement prior to the council meeting, Madison said.
The project’s first phase entails a 187,000-square-foot facility with office space and a large warehouse. A second phase includes a 73,000-square-foot facility for stone countertop fabrication.
Madison said the city corporation did not want to execute the relocation grant agreement before the company broke ground on its new facility.
Per the agreement, Flooring Services must bring 107 full-time equivalent jobs to the city with a minimum average salary of $43,000 plus medical benefits, and maintain operations in Pflugerville until July 31, 2022.
“We know that we’re going to have a long and lasting relationship with this company as a result of the land sale and small assistance to get them relocated to Pflugerville,” she said.
Flooring Services, a subsidiary of FS Builder Resources, provides a variety of interior home supplies like flooring, lighting, blinds and stone to commercial homebuilders. FS Builder Resources has facilities in Dallas, Houston, San Antonio and Baton Rouge.
Nicole Barrios, Austin Statesman, statesman.com, 6/29/17