Title
A Resolution approving an Economic Development Agreement between the City Of Colorado Springs and Project Phoenix
Presenter:
Jessie Kimber, Economic Development Officer
Shawna Lippert, Economic Development Manager
Body
Summary:
Project Phoenix is a renewable energy company and industrial manufacturer. The company has several locations in the U.S. This is a competitive project as the company is considering three (3) U.S. locations for expansion. Project Phoenix is a Primary Employer, as they generate more than 50% of their revenue from outside of El Paso County. Project Phoenix plans to secure and remodel an existing Facility in Colorado Springs. Additionally, the company plans to hire 378 employees over the next ten (10) years. With the creation of these new full-time jobs, Project Phoenix plans to invest in business personal property, including furniture, fixtures, machinery, equipment, and construction materials for its facilities development and expansion. The Executive Branch is recommending that the City provide certain performance-based incentives for the company investment and job growth.
Background:
Project Phoenix has investment plans for business personal property, construction materials, and job creation for its potential Colorado Springs facilities. The company estimates that it will invest $587.5 million in purchases of construction materials, furniture, fixtures, machinery, and equipment. The company expects to hire 378 new full-time employees over the next 10 years at an average wage of $105,509. The Executive Branch is recommending that the City enter into an Economic Development Agreement to provide certain performance-based incentives for the company to invest in business personal property, construction materials, and job creation. The proposed City incentives are:
Sales and Use Tax Rebate on Annual Purchases of Business Personal Property (50% of the City’s 2% General Fund Rate, or a 1% Total Rebate).
Sales and Use Tax Rebate on Purchases of Construction Materials (50% of the City’s 2% General Fund Rate, or a 1% Total Rebate).
Taking into account the nature of the expansion, the level of investment and the new job creation, the Executive Branch is recommending a ten (10) year agreement.
Previous Council Action:
N/A
Financial Implications:
City staff has conducted an Economic and Fiscal Impact Analysis (EFIA) to quantify the estimated economic benefit to the City that is expected to be derived by the expansion of Project Phoenix in Colorado Springs. The following is a summary of the results:
COMMUNITY BENEFITS (ECONOMIC IMPACTS)
10 Year Jobs Impact - Expansion: 1,178
The analysis indicates a jobs impact from Project Phoenix operations over a 10-year period, resulting in a total permanent jobs impact of 1,178 jobs from expansion.
10 Year Local GMP Impact - Expansion: $1.33 Billion
The analysis indicates a growth in Gross Metropolitan Product (GMP) over a 10-year period, resulting in total GMP growth of $1,326,902,471 from expansion.
CITY REVENUE (FISCAL IMPACTS)
10 Year City Incentives: $4,220,500
City incentives for Project Phoenix are estimated to be $4,220,500 over 10 years.
10 Year Net New City Revenue - Expansion: $20.2 Million
The analysis indicates a total net new city revenue from the Project Phoenix facilities in Colorado Springs over a 10-year period as follows: $24,441,756 gross new city revenue from expansion, less the city incentives of $4,220,500, for a total net new city revenue of $20,221,256.
The proposed incentive structure incurs no financial risk since it is strictly performance-based, and revenue is rebated to the company only after it has been collected.
City Council Appointed Board/Commission/Committee Recommendation:
N/A
Stakeholder Process:
N/A
Alternatives:
N/A
Recommended Action
Proposed Motion:
Approve the Resolution approving an Economic Development Agreement between the City of Colorado Springs and Project Phoenix.
Summary of Ordinance Language
N/A