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HomeMy WebLinkAboutResolution - 2024-R0008 - Expenditure Of LEDA, Provided To Hydroflo Pumps USA - 01/09/2024Resolution No. 2024-R0008 Item No. 6.7 January 9, 2024 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 th 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 amount set forth in Exhibit "A" attached hereto and incorporated herein by reference, to provided to Hydroflo Pumps USA is hereby approved pursuant to Section 501.073 of the Te Local Government Code. Passed by the City Council on January 9, 2024 AT EST: Courtney Paz, City Secreta:y TRAY PA =, MAYOR OVED AS TO C �NT: . � Brianna Brown, Director of Business Development A P OVED AS TO FORM: K lli Leisure, Senior Assisfant City Attorney ccdocslRES.LEDA Expenditure-Hydroflo 12.14.23 Resolution No. 2024-R0008 RE 23-52 RESOLUTION APPROVING HYDROFLO PUMPS USA, INCORPORATED 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, November 29, 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 Hydroflo Pumps USA, Incorporated, a for-profit corporation, hereafter referred to as "Recipient". A. Recipient is preparing a new "Project" which shall include the expansion and remodel of an existing facility located at 1802 E SOth St, Lubbock, TX 79404, (NAICS 333996). Its business project is anticipated to result in 38 new Primary Jobs created over five (5) years for the City of Lubbock with a Target Annual Compensation of $1,994,280, in the aggregate, over those five (5) years. Total capital investment is estimated to be $1,875,000. WHEREAS, LEDA agrees to pay up to a maximum of $190,000 for Job Creation incentives to Recipient at the rate of $5,000 for each Primary Full-Time Job created and maintained, to be paid out in equal amounts of $1,000 per year over a five-year period. The incentive payments may be made during the term of the Agreement, if needed. A. Recipient agrees to establish a Baseline Employment Level and Census and shall timely provide such information to LEDA's designated accounting representative when requested. Recipient agrees to maintain the Baseline Employment Level through the term of this Agreement and create and maintain the additional full-time Target Job Positions intended to qualify for the incentive, as offered by LEDA. B. Should Recipient fail to meet its Target Job Positions during any year or yeazs, but ultimately meet its overall Tazget Job Positions by the end of year five (5), LEDA, shall at its discretion have the right to allow recapture of forfeited incentives not to exceed the maximum amount approved by the Board. Should Recipient exceed its Target Job Positions during any year or years, LEDA, shall at its discretion have the right to allow accelerated job creation incentive payments, not to exceed the maximum amount approved by the Board. WHEREAS, Recipient acknowledges that LEDA and Recipient are required to remain in conformance with the statutory provisions of the Act. The parties hereto agree that in the event Recipient fails to comply with the provisions of this Agreement, including but not limited to Paragraphs 2.B, SE, 7B and 9 of the Performance Agreement, and after written notice and failure to cure the violation, then LEDA, in its sole discretion, may terminate this Agreement and permanently suspend all future payments to Recipient. IT WAS RESOLVED that LEDA offer and, if accepted by Recipient, enter into an Economic Grant and Contract with Hydroflo Pumps USA, Inc. 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. JOH SBORNE, PRESmENT 8c CEO LIN A DAVIS. SECRETARY LEDA Project Red Dirt Hydroflo Pumps USA Presented to City Council For over 25 years, Hydroflo Pumps USA has manufactured vertical and submersible turbine pumps for industries including agricultural, commercial, industrial, municipal and other specialized markets. Today, Hydroflo is the only manufacturer of pumps constructed with all lost-wax investment cast technology. Hydroflo was purchased by TACO, Inc., a leading supplier of advanced equipment and systems for HVAC applications, in 2012. TACO has been in business for nearly 100 years and employs over 600 individuals worldwide. Manufacturing a wide range of pumps and hydronic-based equipment, TACO operates factories worldwide. Due to Hydroflo's continued growth, the company announced its expansion to Lubbock into an existing facility at 1802 E SOth Street. As renovations to the building are underway, production is estimated to begin in early 2024. Hydroflo will spend $1,875,000 on building renovation and new equipment and create 38 jobs with an average annual salary of $52,483. According to Impact Data Source's projections, "The Project's operations will support employment and other economic impacts in the community. The 38 workers directly employed by the Project will earn approximately $57,000 per year on average over the next 10 years. This direct activity will support 49.6 indirect and induced workers in the community earning $42,000 on average over the next 10 years. The total additional payroll or workers' earnings associated with the Project is estimated to be approximately $33.8 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 $7.3 million in taxable sales over the next 10 years." *Earnings impact includes all salaries/wages, benefts, 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 ItnpactTM, 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.