Okaloosa County BOCC — February 17, 2015 — FINAL Project Proud Memo to Hofstad - Feb 17 BCC Meeting — reading text

MEMO Date: February 11, 2015 To: John Hofstad, Okaloosa County Administrator From: Nathan Sparks, EDC Executive Director Subject: Request consent agenda placement for the February 17, 2015 BCC meeting for consideration of an Economic Ad Valorem Tax Exemption for Project Proud. Request for public hearing at March 3, 2015 BCC meeting. Project Proud The Economic Development Council of Okaloosa County requests the Board of County Commissioner’s consideration in providing an Economic Development Ad Valorem Tax Exemption for Project Proud. Project Proud is a business located in Crestview, FL. The project and all corresponding documents are being coded to protect confidentiality pursuant to Florida Statute 288.075. Project Specs þ Current jobs: 101 þ End employment (dependent on approval of this incentive): 141 o Retention: 101 o New jobs: 40 þ The company is seeking incentives from the state for 40 new jobs to be created should the company choose to remain in Florida and expand þ Average wage of the 40 new employees will be $36,152 þ Capital Investment: $16,850,000 within 5 years þ Retention and Expansion of a company that has been in the county for 11 years þ Industry Diversification - Manufacturing Enterprise Florida, through the State of Florida, is willing to consider providing $256,000 as their 80% match in Qualified Target Industry (QTI) Tax Refund Incentives for the creation of 40 new jobs at an average wage of $36,152. Per Florida Statute, all QTI Incentives require a Local Financial Support (LFS) match of 20%, which in this project is $64,000. Together, the total incentive package, if the county chooses to provide $64,000 (20% LFS) through EDATE, will be $320,000. Acceptable forms of Local Financial Support for this program can be in the form of cash or through the county’s approved Economic Development Ad Valorem Tax Exemption (EDATE) Program. Historically, Okaloosa County provides their match through the EDATE program and that is the route that the Economic Development Council recommends. If the BCC approves to move forward in considering providing an ED Ad Valorem Tax Exemption for Project Proud, the EDC requests that the BCC schedule and advertise a public hearing for the next north county meeting on March 3, 2015 due to time sensitivity. It is important to note that the company’s anticipated average wage of $36,152 for 40 employees was 100% of the average wage in Okaloosa at the time of their state application. We are seeking a wage waiver for this project as the wage falls below the self-prescribed 110% average wage requirement that the county set when drafting criteria for the EDATE application P.O. Box 4097, Fort Walton Beach, FL 32549 - (850)362-6467 Page 1 of 3 process in 2010. The Board of County Commissioners is asked to consider the fact that Florida Statute 288.106 (4)(b)1.b (full excerpt below) allows local governing bodies, in the case of QTI Incentives, to waive the average wage requirement for projects that are located in an Enterprise Zone and/or manufacturing projects, both applicable to this project. We ask that a similar provision be considered when the county considers EDATE for Project Proud. If a public hearing were to occur on March 3, 2015, the EDC proposes the attached resolution (Exhibit A) reflecting the Ad Valorem Tax Exemption year-to-year values based on assessments conducted by the Okaloosa County Property Appraiser’s office (Exhibit B). Per county policy, an ordinance should also be drafted. After the public hearing and, if adopted, the EDC requests that the Chairman of the Board approve and sign the appropriate resolution in conjunction with the ordinance. County Incentive Requested: Ad Valorem Tax Exemption Program State Incentive: Qualified Targeted Industry Tax Refund Program 80% $256,000 Local Incentive: Ad Valorem Tax Exemption 20% $64,000 (over 7 years) 100% $320,000 Local Exemption Schedule (Assuming millage at 3.4308): Tangible Personal Property Tax $45,548 Real Property Tax $18,452 Tangible Personal Real Year-to-Year Property Tax Property Tax Total Year 1 $4,649 $2,636 $7,285 Year 2 $9,058 $2,636 $11,694 Year 3 $8,352 $2,636 $10,988 Year 4 $7,563 $2,636 $10,199 Year 5 $6,788 $2,636 $9,424 Year 6 $5,916 $2,636 $8,552 Year 7 $3,222 $2,636 $5,858 _______________ Total $45,548 $18,452 $64,000 Comments o The EDC is asking the BCC to consider supporting an Ad Valorem Tax Exemption for the Tangible Personal Property (TPP) taxes and Real Property taxes not currently on the tax roll (future value) for this project. o The formula for the incentive amount of $8,000 per new job created is based on the state’s calculations for the Qualified Target Industry Tax Refund with High-Impact Sector Bonus for a company located in an Enterprise Zone. The breakdown is as follows: $3,000 base award + $3,000 for companies located in an Enterprise Zone + $2,000 High-Impact Sector Bonus = $8,000. At $8,000 per new job times 40 new jobs, it equals $320,000. o Of the $320,000 that “Project Proud” is eligible for, the state will provide 80% or $256,000 if the county provides 20% or $64,000 as its match over the a time period recommended by the PA. P.O. Box 4097, Fort Walton Beach, FL 32549 - (850)362-6467 Page 2 of 3 Florida Statute Excerpts 288.106 – Tax refund program for qualified target industry businesses Florida Statute 288.106 (4)(b)1.b The department may waive the average wage requirement at the request of the local governing body recommending the project and Enterprise Florida, Inc. The department may waive the wage requirement for a project located in a brownfield area designated under s. 376.80, in a rural city, in a rural community, in an enterprise zone, or for a manufacturing project at any location in the state if the jobs proposed to be created pay an estimated annual average wage equaling at least 100 percent of the average private sector wage in the area where the business is to be located, only if the merits of the individual project or the specific circumstances in the community in relationship to the project warrant such action. If the local governing body and Enterprise Florida, Inc., make such a recommendation, it must be transmitted in writing, and the specific justification for the waiver recommendation must be explained. If the department elects to waive the wage requirement, the waiver must be stated in writing, and the reasons for granting the waiver must be explained. 196.1995 Economic development ad valorem tax exemption.— Florida Statute 196.1995 In considering any application for an exemption under this section, the board of county commissioners or the governing authority of the municipality must take into account the following: a) The total number of net new jobs to be created by the applicant; b) The average wage of the new jobs; c) The capital investment to be made by the applicant; d) The type of business or operation and whether it qualifies as a targeted industry as may be identified from time to time by the board of county commissioners or the governing authority of the municipality; e) The environmental impact of the proposed business or operation; f) The extent to which the applicant intends to source its supplies and materials within the applicable jurisdiction; and; g) Any other economic-related characteristics or criteria deemed necessary by the board of county commissioners or the governing authority of the municipality. Thank you for your consideration to this request and future development! P.O. Box 4097, Fort Walton Beach, FL 32549 - (850)362-6467 Page 3 of 3