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HomeMy WebLinkAboutMO # 1829MUNICIPAL ORDER NO. 1829 A MUNICIPAL ORDER REPEALING MUNICIPAL ORDER NOS. 1035 AND 1714 AND ESTABLISHING A NEW POLICY AND GUIDELINES FOR PROVIDING ECONOMIC INCENTIVES TO QUALIFIED PROJECTS LOCATING WITHIN THE BOUNDARIES OF THE CITY OF PADUCAH AND MCCRACKEN COUNTY 332 WHEREAS, Paducah, Kentucky is a wonderful place to live and do business with thousands of businesses employing 37,000 people. With its pro-business attitude, abundant productive workforce, optimal geographic location along Interstate 24, and its reputation as the hub of the inland waterway system makes Paducah and McCracken County an ideal place for business investment; and WHEREAS, with the McCracken County per capita income being 21% lower than the average for Kentucky and the median household income being 31% lower than the State, Paducah seeks to improve quality of life by increasing the income of its residents; and WHEREAS, with the rate of poverty in Paducah being 24.1%, which exceeds the state average by 2% and the national average by 34%, The City of Paducah seeks to reduce the rate of poverty through purposeful investment in job creation; and WHEREAS, Paducah experienced a 9% decrease in population in Paducah between 1980 and 2010 is deemed to be unacceptable; and WHEREAS, the vitality of the city and its ability to foster long term sustainability is dependent upon growth in industry and businesses through expansion, with the resulting increase in job opportunities and tax base for the funding of public services; and WHEREAS, Cities and counties across the Commonwealth and the United States actively create, operate, and fund organizations whose principal charge is to assist with growing local industry as well as to recruit new industries to their jurisdictions. The City of Paducah allocates significant resources to the work of Paducah Economic Development for that purpose; and WHEREAS, the intense competition amongst political jurisdictions to attract and retain business demands that the City of Paducah and its economic development partners strategically employ methods and resources to attain success in the aforementioned areas; and WHEREAS, Measures for determining the quality of a business prospect should minimally be job creation and retention, capital investment, economic outputs, and the increase of the tax base; and WHEREAS, financial incentives provided from public funds should move the community away from low skill, low paid jobs to higher skilled, better paid jobs. The City Commission desires to support strategies through its incentive policy that increase career opportunities by attracting high skilled, well- paid jobs in growing industries. NOW THEREFORE, BE IT ORDERED BY THE BOARD OF COMMISSIONERS OF THE CITY OF PADUCAH: I. PURPOSE The purpose of this document is to establish the official policy and procedures of the City for � the granting of economic development incentives and infrastructure assistance associated with projects within the city. The City of Paducah considers creation of adequately paid jobs for the citizens of Paducah and the expansion of the tax base to be a fundamental governmental interest. The City's objective is to enhance the quality of life for its citizens by seeking employers who will establish new, or expanded, qualified projects within the City of Paducah or McCracken County. The City finds that such economic incentives fulfill a valid public purpose. Page 1 1 ,'TT 1_.: , _ 1,111 i - , -I-_ 1[ =sLLL ni JzW ��.ili� L _ LE-- :— — _-L__ _ _ _. _.I V 1 I, IL I I ­:_,. I I I J_,. I i I 1:::.e. hlh. I::,I 333 II. POLICY To encourage economic development, business expansion, and job creation, the use of financial assistance will be used to further the city's goal of population growth, long-term economic growth and employment opportunities for its citizens. To achieve its objective, the City will, on a case by case basis, provide economic incentives as an inducement for qualified economic development. To achieve the City's goal of long-term economic growth, the selective use of incentives will be targeted toward businesses meeting the objectives defined below. It will be the policy of the City to reserve its highest incentives for projects that combine the best attributes of the expansion or creation of skilled jobs, pay and benefits, and capital investment. While the City recognizes the potential significance of including loans and grants in this Policy, it is recognized and understood that such will be available only upon determination that financial priorities and resources permit their use. III. OBJECTIVES The City's primary role in promoting the economic vitality of Paducah is to provide effective, efficient and economical core municipal services that benefit residents and businesses alike. The City's role in economic development programing is to provide an annual operating appropriation to assist Paducah Economic Development (PED) in staffing, marketing and general operations. The City of Paducah, through PED, seeks to selectively recruit business and industries that economically advances the interest of the entire community. The City will support strategies that: • Assist the expansion of existing businesses industries, • Assist new business start-ups, • Recruit targeted companies from out-of-state, • Recruit industries that employ high skill jobs, • Retains business and industries that pay well and employ skilled jobs, • Encourage and reward businesses seeking to locate or expand here to display good corporate citizenship by supporting the Chamber of Commerce, the PED, and local civic or philanthropic organizations. IV. CRITERIA FOR ECONOMIC INCENTIVES A proposal may be qualified and eligible for approval if the City Manager and the Board of Commissioners finds that the following criteria are substantially met: 1. The project is a basic industry which either retains, brings new, or expanded income into the City. The retail sector is not eligible. Types of acceptable industries are: • Heavy industrial, • Light manufacturing and distribution, • Information technology, • Value added agriculture, • River transportation and support businesses, • Or selected service industries. Page 12 2. Generally, for projects to be eligible for the city's financial incentives, it must meet the threshold and be qualified to receive incentives from the state. Exceptions may be considered for in-state projects. Benefits must be coordinated with the state's Cabinet for Economic Development. 3. The proposed project must either newly create 10 full-time jobs. The City will not provide incentives for part-time or temporary jobs. For the purpose of this policy, "part- time" meaning less than 35 hours per week. 4. At a minimum, the beginning salary should be not less than 100% of the per capita income (as calculated by the most current report of the United States Census Bureau http://www.census.gov/quickfacts/) of McCracken County. This does not include benefits. 5. The employer shall provide a premium contribution per employee of at least 50% of the lowest cost health plan premium (based on employee -only coverage) which is offered to employees considered full-time as defined by the Affordable Care Act or prevailing law. 6. At a minimum, makes a capital investment in land, buildings, leases and business equipment and machinery (except supplies or inventory) of at least $500,000 over two years, unless another date is mutually agreed. The economic incentives of the city, county, or state should not be computed in this calculation. 7. The project must meet all development policies of the city, including the application of building, electrical, and life safety codes and zoning. Furthermore, the project must be consistent with the City and County's adopted Comprehensive Plan. V. TYPES OF INCENTIVES The City of Paducah recognizes that the unique nature of each project requires flexibility in designing appropriate incentives. Therefore, the offering of an incentive, or combinations thereof, will be customized on a case by case basis. . The list below is a summary of the various local and State programs which may be available to qualified projects. The city intends to scale its incentives with the quantity and quality of projects that meet or exceed the city's desired objectives. 1. City Grants: Provide investment capital to existing and new businesses which furthers the economic development objectives of Paducah. Grants are only available to new or expanding businesses that pay hourly or salaried wages above 125% of the per capita income (PCI) of McCracken County; and are expanding or locating 35 new jobs to Paducah. 2. Infrastructure Improvements: The City may assist the project by designing, constructing and maintaining basic infrastructure for the project such as, public streets, sidewalks, public sanitary or storm sewers, or other public utilities as may be required. The City will not design, construct, or maintain private roadways, or connections to public utilities. Infrastructure improvements are only available to new or expanding businesses that pay wages above 125% of the per capita income (PCI) of McCracken County; and are expanding or locating 50 new jobs to Paducah. 3. Tax Credits: The City may grant tax credits to eligible applicants. Up to 25% of the prospects net new taxable investment can be recovered over a negotiated term, not to exceed 10 years, with payroll tax. Tax credits are only available for the creation of jobs. On an annual basis the City of Paducah will return to the company the occupational wage taxes withheld by the company and paid to the City and not otherwise obligated for a state wage assessment program. The negotiated credits will be divided equally into the term. a) Between PCI and 125% of PCI, $1,000 per job maybe granted for a 5 year term. Page 13 334 JT ,r, — 7 1 1 , 1 11 -, i 1n 1 , , F- __-7—r T w FUT - 335 b) Between 125% of PCI and 150%, up to $1,500 per job maybe granted for a 5 year term. c) Between 150% of PCI and MHI, up to $2,500 per job maybe granted for a 7 year term. d) Above Medium Household Income (MHI), up to $4,300 per job maybe granted for a 10 year term. 4. Real Property: When suitable, real property maybe available. The City may consider proposals to convey or lease the property to a qualified project. The terms of the transfer or lease negotiable in each transaction but, where the City finds a valid public purpose is served, it may consider proposals to acquire or lease the property for consideration below market value. 5. Property Tax Exemptions: The City may authorize the use of Industrial Revenue Bonds (IRB) (KRS 103.210). IRB's can be used to finance manufacturing projects and their warehousing areas, major transportation and communication facilities, and some health care facilities. 6. Tax Increment Financing (TIF): For eligible projects, a "local only" TIF development area may be established by the City on vacant land. The City may pledge up to 100 percent of incremental property taxes and occupational license taxes or fees for up to 20 years. 7. Fee Waiver: The City Manager may waive, building and electrical permit fees as well as zoning and subdivision fees. 8. Expedited Plan Review: The City Manager may grant priority status to key economic development projects. The city's staff will work with the developers design professionals to produce a schedule that moves their projects as expeditiously as possible. The granting of expedited plan review does not mean that building and electric codes, development ordinances, and polices will be exempted or varied. In no way will any life safety code be compromised. VI. APPLICATION FOR ASSISTANCE All requests for assistance shall originate with the City Manager. The preliminary request for assistance should be in writing from PED and minimally contain the following elements: 1. A project summary. 2. Location map conceptually demonstrating existing and proposed improvements. 3. A description of the type of industry or business, its proposed employment, the projected wage and benefit rates, as well as the capital investment being proposed. 4. Information demonstrating the professional and financial capability to complete the project. 5. The timeline for completion. 6. A summary of the assistance requested of the city and from other units of government. The City Manager will facilitate the review of all requests originating with PED before they are considered by the City Commission. In preparing the review, the City Manager may utilize city staff and other resources. The City Manager may elect to use other professional assistance as deemed appropriate. If the City Manager determines that the proposal substantially meets the objectives of the city, and resources are available, then the proposal shall be presented to the Commission. For Commission consideration and prior to formal approval, additional written information will be required, including: 1. Verification of eligibility for the incentive sought. 2. Phone calls to listed references for banking, financing, major vendors, and customers. Page 14 3. Verification of major indebtedness with mortgage holders. 336 4. Review of the company's financial statements, including balance sheet, profit and loss statements, independent audits, cash flow projections, etc. 5. Any significant negative aspect or information that may discredit the prospect. 6. Any other information that may be required in order to make a sound judgment about the use of economic incentives for a particular project. 7. A cost -benefit analysis prepared by PED and reviewed by city staff. It is the policy of the city to incentive returned within a reasonable amount of time. 8. In exceptional cases, where the upfront incentive costs being offered by the City to the project exceed $1 million, then a 3rd party feasibility study may be required. That report should examine the market feasibility of the proposal. 9. A proposed draft of a Development Agreement prepared by PED in consultation with the City Manager. For sensitive information, the City may use, at its selection and discretion, a third party to review the information and make a summary report. Emphasis will be concentrated on areas that judge the applicant's ability to complete the project and operate profitably. VII. THE DEVELOPMENT AGREEMENT. The relationship between the prospect, PED, the City and its incentives being offered will, for every approval, be reduced to writing and approved by the City Commission. Minimally, the Development Agreement will contain: 1. Capital commitments of the company, including but not limited to: proposed investments being made in land, building, machinery and equipment. 2. Employment commitments of company including the employees being retained and new hires along with the commitments to pay and benefits required by the policy. 3. Commitment to keep all licenses and pay taxes and fees not otherwise waived or negotiated by the City. 4. Timelines for commencement of project and completion. 5. Commit to progress reporting. Recipients of the City's incentives shall be required to report to the PED and City of Paducah on job creation, wages, benefits, capital improvements and other performance benchmarks at least annually and as requested during construction. Company shall agree to a verification process, such as auditing or cross checking against a separate reliable data source. 6. The economic inducement commitments along with the timeline for disbursements being made by PED and the City. 7. Statements regarding the recapture, reimbursement, or restructure mechanisms of the City's economic incentives if commitments of the proposing company are not met. 8. Any other requirements of a specific proposal. VII1. MICELLANEOUS 1. This Municipal Order repeals and replaces Municipal Order 1035 and 1714 which was adopted March 19, 2013. 2. Nothing herein is meant to prevent PED from periodically meeting with the Commission to inform them of the progress of specific proposals. Page 15 It���L 1-�. -J-i� I r _- - '.Li1I 337 3. Commission Approvals Required. All promises for local financial assistance, state wage assessment program participation, or grant applications shall be formally approved by the City Commission in an open meeting. 4. Variance. The policy statements contained herein are important for improving the quality of life of the citizens of Paducah and McCracken County. All efforts should be made to adhere to policies promulgated regarding the quantities and qualities of job creation. Proposals that substantially meet the objects of the city will be considered. Proposal that marginally fall short of hiring, pay and benefits, and capital investment guidelines may be considered when it is in the best interest of the city to do so. S. For the purpose of determining the precise economic impact of the proposal, wages should not be presented to the City as a blended rate. The proposal should be broken down into job classifications along with their respective wage rate. 6. If requested to do so, and mutually agreed, McCracken County may participate with the City and equally share the cost of the incentives sought. IX. EFFECTIVE DATE This Municipal Order shall be effective upon the date of its adoption AJTEST: .� J Tammara S. Sanderson, City Clerk Adopted by the Board of Commissioners March 31, 2015 Recorded by Tammara S. Sanderson, March 31, 2015 \mo\economic incentives policy & guidelines 2015 -14 L11J � A AYOR Page 16 L^` �N g = a o L CL Cy cnct o �si`��� o L Cg ii L S a t 0 V/ CL Q s cog d Q i = cc +c; 2 �� � 0 `�3 � O N CCA A t LO F C4 OS 5 (D 'CUT c �. N L o t5 o N cr o Q. CO) V co o c in C, NCY $ i c c p m& N x 75 76 c 5 m c of co 05-5Z Alpenio qor = A N T- U a 0 �=N 0E N �. O E a R F- t- 04 64 U O E L co SO L vo E } 0_Lr, naiiddw slinaae) xei Page 17 338 - - I 1 11,1 d , . i T I I , I , I I , i : iI r i ,