Loading...
HomeMy WebLinkAboutResolution - 2017-R0412 - LEDA Expenditure To Hoverstate - 11_02_2017Resolution No. 2017-RO412 Item No. 6.13 November 2, 2017 RESOLUTION WHEREAS, pursuant to Section 501.073 of the Texas Local Government Code the City of Lubbock, as the corporation's authorizing unit, has the authority to approve all programs and expenditures of the Lubbock Economic Development Alliance (LEDA); and WHEREAS, the City Council finds that it is in the best interest of the public to approve the program or expenditure, as proposed to the City Council by LEDA, as set forth in Exhibit "A" attached hereto and incorporated herein by reference; NOW THEREFORE: BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the program or expenditure of the Lubbock Economic Development Alliance, in the amount set forth in Exhibit "A" attached hereto and incorporated herein by reference, to be provided to Hoverstate, Inc., is hereby approved pursuant to Section 501.073 of the Texas Local Government Code. Passed by the City Council on November 2, 2017 DANIEL M. POPE, MAYOR ATTEST: %1 Reb ca Garza, City Secrcta L) APPROVED AS TO CONTENT: W. JarAt Atkinson, City Manager APPROVED AS TO FORM: Justin ruitt, Assistant City Attorney ccdocs/RES. LEDA Expenditure — Hoverstate, Inc. October 16, 2017 RE 17-22 RESOLUTION APPROVING HOVERSTATE PROJECT THE STATE OF TEXAS COUNTY OF LUBBOCK At a regular meeting of the Board of Directors of LUBBOCK ECONOMIC DEVELOPMENT ALLIANCE, INC., a Texas nonprofit corporation (LEDA), on Wednesday, September 27, 2017, held in conformity with the bylaws, after due notice as therein provided, a quorum being present and acting, the following resolution was unanimously adopted: WHEREAS, LEDA presented to members of the Board the proposal of a possible Economic Development Grant and Contract to Hoverstate. The terms and conditions of such Economic Development Grant and Contract, other than the normal terms and conditions applicable to all such Economic Development Grant and Contracts by the Corporation, are described generally as follows, to wit: Grant Hoverstate a Downtown Real Estate Grant of $105,000, a workforce recruitment grant of $80,000, and job creation incentives of $2,500 up to 50 jobs payable over a five-year period as the jobs are created with average salaries of $60,000 with a capital investment of $20,000. LEDA will provide an Employee Training Grant of $5,000 per employee once the company has presented to LEDA a Certificate of Completion of the designated training curriculum Recipient selects, up to a maximum of $150,000. WHEREAS, The Board of Directors of LEDA finds that an Economic Development Grant and Contract offering the incentives for job creation described above meet and comply with the qualifications and purposes of the Corporation for the granting of such Economic Development Grants and Contracts. Upon Motion by Director, Mr. Barry Orr, and Seconded by director, Ms. SuzAnn Kirby, it was approved, IT WAS RESOLVED that LEDA offer and, if accepted by Recipient, enter into an Economic Grant and Contract with Hoverstate. This Economic Development Grant and Contract will be on the normal terms and conditions of such Economic Development Grant and Contract offered by LEDA to existing businesses and business prospects and authorize the CEO to enter into and negotiate Performance Agreement. JOHN OSBORNE, PRESIDENT & CEO A DAVIS, SECRETARY LEDA Project Presented to City Council November 2, 2017 Project Bliss Project Bliss, Hoverstate, is a software development and delivery firm with offices in Los Angeles and Italy. They have selected Lubbock as their third location. They have decided to locate in the former Federal Building, downtown Lubbock and finalizing their lease agreement and construction on their space is undergoing. They plan to be in the office and operational by early November. Hoverstate anticipates hiring 10 initial employees and will increase to 50 new full-time with average salaries of $60,000 annually and will be making a capital investment of $20,000. Lubbock Economic Development Alliance Board of Directors has voted to incent Hoverstate a three-year Downtown Real Estate Grant of $105,000, a workforce recruitment grant of $80,000 and job creation incentives of $2,500 up to 50 jobs, payable over a five-year period as the jobs are created. LEDA will provide an Employee Training Grant of $S,000 per employee once the company has presented to LEDA a Certificate of Completion of the designated training curriculum Recipient selects, up to a maximum of $150,000. The Project's operations will support employment and other economic impacts in the community. The 50.0 workers directly employed by the Project will earn approximately $66,000 per year on average over the next 10 years. This direct activity will support 59.5 indirect and induced workers in the community earning $27,000 on average over the next 10 years. The total additional payroll or workers' earnings associated with the Project is estimated to be approximately $43.6 million over the next 10 years. Accounting for various taxable sales and purchases, including activity associated with the Project, worker spending, and visitors' spending in the community, the Project is estimated to support approximately $8.9 million in taxable sales over the next 10 years.* This employment creates an additional 59.5 indirect (suppliers/support operations) and induced jobs (retail/entertainment/hospitality) for a total of approximately 110 jobs. • The present value of net benefits** to the City of Lubbock over 10 years (fiscal) is $87,345. • The present value of net benefits to all taxing districts over 10 years (fiscal) is $136,033. *Earnings impact includes all salaries/wages, benefits, and other compensation to employees. Value added impact (change in Lubbock County's Gross Regional Product) includes earnings, taxes, and profits that the company has added to its inputs and is equivalent to revenue less outside purchases (of materials and services). This represents the wealth created and is also called value-added output, or productivity. **The Present Value of Net Benefits is a way of expressing in today's dollars, dollars to be paid or received in the future. Today's dollar and a dollar to be received or paid at differing times in the future are not comparable because of the time value of money. The time value of money is the interest rate or each taxing entity's discount rate. This analysis was conducted using Total Impact", a model by Impact Data Source. The analysis was performed using company data, rates and information provided to Lubbock Economic Development Alliance. In addition, the model uses certain estimates and assumptions common for this type of analysis and based on data collected for Lubbock County. Using this data, the impact from the facility and the costs and benefits for relevant taxing districts were calculated using multipliers provided by Economic Modeling Specialists Inc.