UPDATE: Hirschfeld and City reach agreement in lawsuit

City of San Angelo

The City of San Angelo, the City of San Angelo Development Corp. and Martifer-Hirschfeld Energy Systems have reached an agreement to resolve their legal dispute that will result in the company maintaining its current workforce and earning a tax rebate if it creates more jobs and invests $1 million in its steel bridge fabrication plant in San Angelo. 

Martifer-Hirschfeld also agreed to repay the City and COSADC $1.4 million in economic incentives previously advanced to the company. Those incentives were paid as part of a contractual commitment to invest in and create jobs at a renewable energy plant in San Angelo. The City and the COSADC sought to recoup the incentives after Martifer Energia, the Portuguese energy company, suffered financial setbacks and Hirschfeld Industries converted the plant to production of steel bridge members.

The San Angelo City Council and the COSADC board said in a joint statement:

“This is a fair resolution for all involved, including San Angelo’s taxpayers. The City is recovering a substantial sum that was funded through the half-cent sales tax for economic development. More importantly, this agreement ensures Hirschfeld’s continued presence, stability and growth in our community for years to come. The true winners of this agreement are the citizens who will benefit from the plant expansion and job creation at one of Hirschfeld’s three local facilities. Together, those plants provide jobs to approximately 370 San Angelo residents.”

Martifer-Hirschfeld Energy Systems was also pleased with the agreement.

In a release from the city Dennis Herschfeld, CEO of Hirschfeld Industries added, “We think this is a fair agreement for all involved. We appreciate the City and COSADC working with us. This agreement recognizes Hirschfeld’s economic impact locally, and further demonstrates Hirschfeld’s commitment to the San Angelo area.”

The terms of the agreement were discussed by city council and COSADC board in executive session in Tuesday’s city council meeting and approved by each body in an open meeting.

The terms of the agreement are as follows:

  •  Martifer-Hirschfeld will pay the City and COSADC $1.4 million upon execution of the agreement.
  •  Hirschfeld will maintain current employment of 47 employees at existing payroll levels at its San Angelo steel bridge fabrication plant for five years. If Hirschfeld fails to maintain 47 employees at existing payroll level in any year during the five-year term, Hirschfeld will repay $6,000 per position lost.
  •  Hirschfeld may increase its workforce to 75 employees during the five-year period. If it does so, the company will earn property tax rebates for that given year of 75 percent in years one through three and 50 percent in years four and five. The rebate will be lost for any year during which 75 employees are not maintained.
  •  The company will also make commercially reasonable efforts to build a railroad spur to its plant within 12 months, at an estimated cost of about $1 million. If Hirschfeld does not complete the rail spur within 24 months, it loses all rights to property tax rebates.
  • These terms will be included in a new contract between the COSADC, which administers the City’s half-cent sales tax for economic development, the City and Hirschfeld. The new agreement will terminate and supersede all prior contracts between the company and the City and COSADC.

ORIGINAL STORY: The City of San Angelo and the City of San Angelo Development Corp., which administers the half-cent sales tax for economic development, have brought suit against Martifer-Hirschfeld Energy Systems to recover more than $2.6 million in funds entrusted by taxpayers.

According to a statement from the City of San Angelo, Martifer-Hirschfeld received the public funds and confessed in court documents that it failed to live up to its contractual obligations with the City. The attorney representing the City filed a motion for summary judgement.

Judge Ben Woodward, 119th District Judge, did not rule on the case in March. Woodward will rule prior to May 6, which is when jury selection for a trial is scheduled to begin, according to City Public information Officer, Anthony Wilson.

The money was advanced to the company as part of two economic development agreements executed between Martifer-Hirschfeld, the COSADC and the City in 2009 and 2010. In those contracts, Martifer-Hirschfeld committed itself to investing $40 million into its wind energy plant in San Angelo, creating 225 full-time jobs for local and area residents and operating the plant continuously for 10 years. According to a release from the City’s public information office, by its own admission in court filings, the company failed to meet its contractual obligations.

Officials with the City and COSADC claim they tried to work out an agreement with Martifer-Hirschfeld before filing suit. Martifer-Hirschfeld expanded operations in Abilene rather than in San Angelo.