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HomeMy WebLinkAboutResolution - 2023-R0249 - Economic Development Incentive to CoNetrix, LLCResolution No. 2023-RO249 Item No. 5.10 May 23, 2023 RESOLUTION WHEREAS, pursuant to Section 501.073 of the Texas Local Government Code the of Lubbock, as the corporation's authorizing unit, has the authority to approve all programs 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, the amount set forth in Exhibit "A" attached hereto and incorporated herein by reference, to provided to CoNetrix is hereby approved pursuant to Section 501.073 of the Texas Lo Government Code. Passed by the City Council on A EST: Courtney Paz, City cretary May 23, 2023 AP OVED AS TO ENT: Brianna Brown, Director of Business Development APPROVED AS TO FORM: Ili Leisure, Senior Assistant City Attorney ccdocslRES.LEDA Expenditure-CoNetrix 5.9.23 Resolution No. 2023-RO249 RE 23-20 RESOLUTION APPROVING CONETRIX, LLC 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 Tuesday, April 25, 2023, 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 CoNetrix, LLC, a for -profit corporation (hereafter referred to as "Recipient"). LEDA hereby grants to CoNetrix, LLC a potential incentive of $150,000, with payments to be expressly made under the following terms and conditions. A. LEDA shall pay Recipient the sum of $150,000 payable in one (1) installment, becoming due on Recipient's written confirmation and proof that the capital investment portion of the Project is completed and upon Recipient delivering to LEDA a copy of the Certificate of Occupancy for the Project issued by the City of Lubbock. B. Recipient agrees that should the estimated capital investment expenditures fall more than twenty (20%) below in the amount identified in Section 2b of the Performance Agreement, that the capital investment from LEDA would be reduced $10,000 for every $500,000 below $12,240.000. Upon Motion by Director, Dr. John Opperman, and Seconded by director, Mr. B1akeWomble, 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 Co-Netrix. 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 SBORNE. PRESIDENT & CEO 4.1, &k�2 LIN1YA DAVIS. SECRETARY LEDA Project Trumpet CoNetrix, LLC Presented to City Council CoNetrix was founded in March of 1977 here in Lubbock, Texas. With its headquarters still located in Lubbock, CoNetrix has grown to be a leader in information technology consulting, software development, and cybersecurity testing services across the US. Over the past 10 years, CoNetrix has seen an average of just over 8% employee growth year over year. With the increased need for high-tech cybersecurity services, CoNetrix is positioned well for increased growth over the next few years. To support this growth, they need to build a corporate building. The building would provide office space for high-tech employees as well as a multi -purpose room to be used for technology and leadership training as well as other community events. CoNetrix will spend $15.3 million building their new headquarters facility and create 15 new jobs with an average salary of $65,000 annually. According to Impact Data Source's projections, "the Project's operations will support employment and other economic impacts in the community. The 15 workers directly employed by the Project will earn approximately $71,000 per year on average over the next 10 years. This direct Activity will support 20.2 indirect and induced workers in the community earning $28,000 on average over the next 10 years. The total additional payroll or workers' earnings associated with the Project is estimated to be approximately $13.2 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 $26.8 million in taxable sales over the next 10 years." *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 ImpactTM, 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.