Title
A resolution approving an economic development agreement between the City of Colorado Springs and Jaxon Engineering Maintenance LLC
Presenter:
Bob Cope, Economic Development Officer
Chelsea Gaylord, Senior Economic Development Specialist
Body
Summary:
Jaxon Engineering designs, constructs, tests, and maintains military grade Electromagnetic Pulse (EMP) hardening and survivability structures for government and commercial clients. The company offers a full range of services from engineering design, development and maintenance of EMP structures. Jaxon Engineering is moving and expanding its location in Colorado Springs from 21,000 square feet to 56,000 square feet at 5825 Mark Dabling Boulevard. The company currently has 65 employees, and over the next four years plans to hire an additional 35 employees. With the creation of these new full-time jobs, Jaxon Engineering desires to invest in business personal property and construction materials for its facilities expansion. The Executive Branch is recommending that the City provide certain performance-based incentives for the company investment and job growth.
Background:
Jaxon Engineering has investment plans for business personal property, construction materials, and job creation for its Colorado Springs facilities. The company estimates that it will invest $1.785 million in purchases of construction materials, equipment, and furniture and fixtures. The company expects to hire 35 new full-time employees over the next 4 years at an average wage of $75,000.
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).
The Executive Branch is recommending a four (4) year agreement based on the level of projected investment and new job creation.
Previous Council Action:
Presentation to City Council during Work Session on June 8, 2020.
Financial Implications:
City staff has conducted an Economic Impact Analysis (EIA) to quantify the estimated economic benefit to the City that is expected to be derived by the expansion of Jaxon Engineering in Colorado Springs. The following is a summary of the results:
COMMUNITY BENEFITS (ECONOMIC IMPACTS)
4 Year Jobs Impact: 190
The EIA indicates a jobs impact from Jaxon Engineering operations over a 4 year period as follows: 61 jobs from expansion, 129 jobs from retention, and a combined jobs impact of 190.
4 Year Projected Impact to Local GMP: $51 Million
The EIA indicates growth in Gross Metropolitan Product (GMP) over a 4 year period as follows: $10 million from expansion, $41 million from retention, and a combined GMP growth of $51 million.
10 Year Jobs Impact: 218
The EIA indicates a jobs impact from Jaxon Engineering operations over a 10 year period as follows: 89 jobs from expansion, 129 jobs from retention, and a combined jobs impact of 218.
10 Year Projected Impact to Local GMP: $181 Million
The EIA indicates growth in Gross Metropolitan Product (GMP) over a 10 year period as follows: $62 million from expansion, $119 million from retention, and a combined GMP growth of $181 million.
CITY REVENUE (FISCAL IMPACTS)
4 Year City Incentives: $14,875
City incentives for Jaxon Engineering are estimated to be $14,875 over 4 years.
4 Year Net City Revenue: $7.38 Million
The EIA indicates net city revenue from the Jaxon Engineering facilities in Colorado Springs over a 4 year period as follows: $3.58 million from expansion, $3.8 million from retention, and combined net city revenue of $7.38 million*. (*Net city revenues include items scheduled to sunset.)
10 Year Net City Revenue: $8.38 Million
The EIA indicates net city revenue from the Jaxon Engineering facilities in Colorado Springs over a 10 year period as follows: $3.98 million from expansion, $4.4 million from retention, and combined net city revenue of $8.38 million*. (*Net city revenues include items scheduled to sunset.)
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 a resolution approving an economic development agreement between the City of Colorado Springs and Jaxon Engineering Maintenance LLC
Summary of Ordinance Language
N/A