Title
A Resolution approving an Economic Development Agreement between the City Of Colorado Springs and Project Diamond
Presenter:
Jessie Kimber, Economic Development Officer
Shawna Lippert, Economic Development Manager
Body
Summary:
Project Diamond is an international software and technology company. The company intends to establish a base in the U.S. and be in proximity to customers in the defense and aerospace industries. This is a competitive project as the company is considering four (4) U.S. locations for expansion. Project Diamond is a Primary Employer, as they generate more than 50% of their revenue from outside of El Paso County. Project Diamond plans to secure and remodel an existing Facility in Colorado Springs. Additionally, the company plans to hire 61 employees over the next five (5) years. With the creation of these new full-time jobs, Project Diamond 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 Diamond 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 $26.2 million in purchases of construction materials, furniture, fixtures, machinery, and equipment. The company expects to hire 36 new full-time employees over four (4) years (length of term), and a total of 61 new full-time employees over the next five (5) years, at an average wage of $80,130. 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 four (4) 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 Diamond in Colorado Springs. The following is a summary of the results:
COMMUNITY BENEFITS (ECONOMIC IMPACTS)
4 Year Jobs Impact - Expansion: 71
The analysis indicates a jobs impact from Project Diamond operations over a 4-year period, resulting in a total permanent jobs impact of 71 jobs from expansion.
4 Year Local GMP Impact - Expansion: $40.8 Million
The analysis indicates a growth in Gross Metropolitan Product (GMP) over a 4-year period, resulting in total GMP growth of $40,814,641 from expansion.
CITY REVENUE (FISCAL IMPACTS)
4 Year City Incentives: $198,225
City incentives for Project Diamond are estimated to be $198,225 over 4 years.
4 Year Net New City Revenue - Expansion: $669,695
The analysis indicates a total net new city revenue from the Project Diamond facilities in Colorado Springs over a 4-year period as follows: $867,920 gross new city revenue from expansion, less the city incentives of $198,225, for a total net new city revenue of $669,695.
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 Diamond.
Summary of Ordinance Language
N/A