Title
A Resolution approving an Economic Development Agreement between the City Of Colorado Springs and Project Kokua
Presenter:
Jessie Kimber, Economic Development Officer
Shawna Lippert, Economic Development Manager
Body
Summary:
Project Kokua is a fabless semiconductor company focused on design and software solutions. The company is searching for a U.S. location to expand their capabilities. This is a competitive project as the company is considering other U.S. locations for expansion. Project Kokua is a Primary Employer, as they generate more than 50% of their revenue from outside of El Paso County. Project Kokua plans to secure and remodel an existing Facility in Colorado Springs. Additionally, the company plans to hire 53 employees over the next six (6) years. With the creation of these new full-time jobs, Project Kokua plans to invest in 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 Kokua has investment plans for purchases of furniture, fixtures, machinery, equipment, construction materials, and job creation for its potential Colorado Springs facilities. The company estimates that it will invest $9.7 million in purchases of construction materials, furniture, fixtures, machinery, and equipment. The company expects to hire 33 new full-time employees over four (4) years (length of term), and a total of 53 new full-time employees over the next six (6) years, at an average wage of $83,333. 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 furniture, fixtures, machinery, equipment, 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 Kokua in Colorado Springs. The following is a summary of the results:
COMMUNITY BENEFITS (ECONOMIC IMPACTS)
4 Year Jobs Impact - Expansion: 80
The analysis indicates a jobs impact from Project Kokua operations over a 4-year period, resulting in a total permanent jobs impact of 80 jobs from expansion.
4 Year Local GMP Impact - Expansion: $19.67 Million
The analysis indicates a growth in Gross Metropolitan Product (GMP) over a 4-year period, resulting in total GMP growth of $19,670,926 from expansion.
CITY REVENUE (FISCAL IMPACTS)
4 Year City Incentives: $66,500
City incentives for Project Kokua are estimated to be $66,500 over 4 years.
4 Year Net New City Revenue - Expansion: $277,661
The analysis indicates a total net new city revenue from the Project Kokua facilities in Colorado Springs over a 4-year period as follows: $344,161 gross new city revenue from expansion, less the city incentives of $66,500, for a total net new city revenue of $277,661.
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 Kokua.
Summary of Ordinance Language
N/A