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HomeMy WebLinkAboutResolution - 2013-R0325 - Approve LEDA Program/Expenditure - Shearers Foods - 09/26/2013resolution No. 2013-RO325 eptember 26, 2013 tem N0. 5.26 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 Shearers Foods is hereby approved pursuant to Section 501.073 of the Texas Local Government Code. Passed by the City Council on September 26, 2013 GLE C. ROBE ON, MAYOR ATTEST: RebTa Garza, City Secre ry APPROVED AS TO CONTENT: uincy White ssistant City Manager AP E AS TO FORM: Chad Weaver, Assistant City Attorney vw:ccdocs RES.LEDA Expenditure -Shearers Foods August 27, 2013 LEDA and MLI Projects Presented to City Council August 2013 Shearers Foods, a snack food manufacturer headquartered in Brewster, Ohio, first opened a Lubbock plant in 2005, and immediately helped the City fill a void when they moved into an empty facility. Since then, Shearers has invested over $40 million in new capital investment and hired over 200 employees. In that same time period, Shearers has grown nationwide from 2 plants to 6 plants. The Lubbock plant, over the last 2 years, has won `Plant of the Year' and also chosen as `Co -Packer of the Year'. All expansions are a competition with all 6 plants. The Lubbock plant will add new equipment for two new lines of chips. They will be investing over $2.6 million in new capital and adding 14 new employees with $447,614 in annual salaries. At the August meeting, the Lubbock Economic Development Alliance Board of Directors voted to incent Shearers Foods $41,500 for the 14 jobs, to be paid out over a 5 -year period as the jobs are created. In addition to the direct impact, this expansion creates an additional 19 indirect (suppliers/support operations) and induced jobs (retail/entertainment/hospitality) for a total of 33 new jobs. • The annual economic impacts of the business once fully operational on the Lubbock County include a total earnings impact* of $1 million and a total value added impact (change in Lubbock County's Gross Regional Product) of $3 million. • The present value of net benefits** to the City of Lubbock over 10 years (fiscal) is $897,055. • The present value of net benefits to all taxing districts over 10 years (fiscal) is $1,229,725. *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 ImpactT"', 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.