Title
A Resolution Approving an Economic Development Agreement Between the City of Colorado Springs and Project Fusion.
Presenter:
Bob Cope, Economic Development Officer
Chelsea Gaylord, Economic Development Project Manager
Body
Summary:
Project Fusion is an advanced engineering and Original Equipment Manufacturer (OEM) that provides specialized hardware and software solutions to the Department of Defense and commercial customers associated with advanced satellite communications and assured position, navigation and timing. The company’s core competencies span several mission areas including space situational awareness, electronic warfare, antennas, custom trailers, technical support services, and other synergistic products and services. Project Fusion is relocating its corporate headquarters to Colorado Springs for the community’s economic environment and growth of the region’s space operations industry. The company currently employs 73 people in Colorado Springs and 128 company-wide. The company is currently located in several facilities across Colorado Springs and desires to expand its number of full-time employees and invest in manufacturing equipment and construction materials for its facilities. The Executive Branch is recommending that the City provide certain performance-based incentives for company investment and job growth.
Previous Council Action:
N/A
Background:
Project Fusion has investment plans for business personal property, construction materials, and job creation for the following Colorado Springs locations: 2050 Cygnet Heights; 1525, 1535, and 1537 Vapor Trail; and 2506 Zeppelin Road. The company estimates that it will invest $13.5 million in purchases of construction materials, manufacturing equipment, and furniture and fixtures. The company expects to hire 59 new full-time employees over the next 4 years at an average wage of $98,554.
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 (100% of the City’s 2% General Fund Rate, or a 2% Total Rebate on first $5 million in investments).
Sales and Use Tax Rebate on Purchases of Construction Materials (50% of the City’s 2% General Fund Rate, or a 1% Total Rebate of remaining investments).
The Executive Branch is recommending a four (4) year agreement based on the level of projected investment and new job creation.
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 Project Fusion in Colorado Springs. The following is a summary of the results:
COMMUNITY BENEFITS (ECONOMIC IMPACTS)
4 Year Jobs Impact: 391
The EIA indicates a jobs impact from Project Fusion operations over a 4 year period as follows: 173 jobs from expansion, 218 jobs from retention, and a combined jobs impact of 391.
4 Year Projected Impact to Local GMP: $135.2 Million
The EIA indicates growth in Gross Metropolitan Product (GMP) over a 4 year period as follows: $59.6 million from expansion, $75.6 million from retention, and a combined GMP growth of $135.2 million.
10 Year Jobs Impact: 489
The EIA indicates a jobs impact from Project Fusion operations over a 10 year period as follows: 271 jobs from expansion, 218 jobs from retention, and a combined jobs impact of 489.
10 Year Projected Impact to Local GMP: $456.7 Million
The EIA indicates growth in Gross Metropolitan Product (GMP) over a 10 year period as follows: $230 million from expansion, $226.7 million from retention, and a combined GMP growth of $456.7 million.
CITY REVENUE (FISCAL IMPACTS)
4 Year City Incentives: $94,300
City incentives for Project Fusion are estimated to be $94,300 over 4 years.
4 Year Net City Revenue: $925,700
The EIA indicates net city revenue from the Project Fusion facilities in Colorado Springs over a 4 year period as follows: $502,700 from expansion, $426,000 from retention, and combined net city revenue of $925,700*. (*Figures do not total due to rounding of estimates, and net city revenues include items scheduled to sunset.)
10 Year Net City Revenue: $2.79 Million
The EIA indicates net city revenue from the Project Fusion facilities in Colorado Springs over a 10 year period as follows: $1.57 million from expansion, $1.23 million from retention, and combined net city revenue of $2.79 million*. (*Figures do not total due to rounding of estimates, and 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.
Board/Commission 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 Fusion.
Summary of Ordinance Language
N/A