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HomeMy WebLinkAboutResolution - 2022-R0402 - Economic Development Program with Tropicale FoodsResolution No. 2022-RO402 Item No. 5.7 September 27, 2022 RESOLUTION WHEREAS, pursuant to Section 501.073 of the Texas Local Government Code the Ci , of Lubbock, as the corporation's authorizing unit, has the authority to approve all programs an 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 Exhibi "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, ij the amount set forth in Exhibit "A" attached hereto and incorporated herein by reference, to b, provided to Tropicale Foods is hereby approved pursuant to Section 501.073 of the Texas Loca Government Code. Passed by the City Council on ATTEST: 0 -o 6&,Its, A-", Rebtca Garza, City Secr t AS TO Brianna Gerardi, Director of TO FORM: City Attorney September 27, 2022 Development ccdocs/RES.LEDA Expenditure-Tropicale Foods 9.12.22 Resolution No. 2022-RO402 RE 21-31 RESOLUTION APPROVING TROPICALE FOODS 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, August 24, 2022, 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 Tropicale Foods. 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: LEDA hereby grants Tropicale Foods a potential Job Creation incentive of $2,500,000 at a rate of $5,000 for each Primary Full -Time Job created and maintained, to be paid out in equal amount of $1,000 per year over a five-year period. The incentive payments may be made during the term of the Agreement, if needed. LEDA agrees to pay Tropicale Foods up to $1,500,000 for a Capital Investment incentive for the purchase and installation of equipment inside the building and updating the building to meet city fire code. The Capital Investment is to be paid over 5 years in the following manner: 1. $450,000 the January following LEDA's receipt of the Recipient's certificate of occupancy for the project: 2. $450,000 one year following the first payment and upon written verification from the company of continued business operations with the City of Lubbock: 3. $200,000 one year following the second payment: 4. $200,000 one year following the third payment: 5. $200,000 one year following the fourth payment. WHEREAS, The Board of Directors of LEDA finds that an Economic Development Grant and Contract offering job creation incentive in the amount of 2,500,000 and a capital investment incentive of $1,500,000 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. Dr. John Opperman, and Seconded by director, Mr. James Conwright, and unanimously approved by all directors. IT WAS RESOLVED that LEDA offer and, if accepted by Recipient, enter into an Economic Grant and Contract with Tropicale Foods. 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. R I- Rxr,07_1 LEDA Project Bronco Tropicale Foods Presented to City Council Tropicale Foods is an Ontario, California -based manufacturer of frozen novelty products under the Helados Mexico brand. The Company produces an assortment of traditional Hispanic offerings, including paletas, bolis, and mangonada cups, which are sold in a variety of flavors and pack sizes. Tropicale's products are sold nationwide at multi -outlet retailers, convenience stores and traditional grocery outlets. Wind Point acquired the Company in December 2019. Their value creation plan focuses on growing the platform organically through existing markets, capturing new customers and channels, introducing new innovative products, and executing on strategic acquisitions. Tropicale Foods has purchased the Dynamic Foods building and will invest $66.8 Million in retrofitting the facility and equipment and will create 500 new jobs, with average salary of $51,000. The Project's operations will support employment and other economic impacts in the community. *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.