From
Letecia McClendon
Title
Resolution granting 380 Incentive Agreement with CardinalHealth; granting a five-year 50% rebate on sales tax revenues
Presenter
Marty Wieder, Economic Development Director
Recommended Action
Approve
Analysis
CardinalHealth provides medical products to over 75 percent of hospitals in the United States. Based in Dublin, Ohio, CardinalHealth ranks among the Fortune 100 Top 25 (#21). The company is traded on the New York Stock Exchange as CAH.
CardinalHealth was originally known as Baxter Healthcare here in Grand Prairie before it acquired Baxter division Allegiance Healthcare; it has operated in 361,690 square feet at 3080 West IH-20 (the northeast corner of IH-20 and SH 360) since 1996--and presently employs 249 people.
The company has been considering relocation and expansion within North Texas, as well as to a location outside the State; CardinalHealth real estate representatives are seeking a lease extension from the owners of 3080 West IH-20, and they have an option to eventually expand the building footprint. The building owners will make more than $3 million in real estate improvements in conjunction with the lease renewal. Moreover, CardinalHealth officials are weighing the use of a second-story mezzanine at 3080 West IH-20 for other office uses--some of which may qualify as an in-bound or on-line sales call center (with the potential for revenues that may also qualify as sales taxable).
Therefore, as an incentive for CardinalHealth to remain in Grand Prairie and eventually expand operations staff is recommending a five-year sharing of 50% of CardinalHealth's $.01 General Fund on-line sales tax revenues, as allowed through Chapter 380 of the Texas Local Government Code.
Financial Consideration
Present Investment - Equipment, Machinery & Fixtures: $2,200,000
Present Inventory: $52,600,000
Added Investment - Real estate improvements: $3,000,000
Projected Future Investment - Added Real Property Market Value: $5,200,000
Projected - Sales Tax Amount Received; $6,834,200 (over 5 years)
Projected - Sales Tax Amount Rebated: $1,708,550
Body
A RESOLUTION OF THE CITY OF GRAND PRAIRIE, TEXAS, TO ENTER INTO A CHAPTER 380 PROGRAM AGREEMENT WITH CARDINALHEALTH GRANTING A 50% SALES TAX REBATE
Whereas, CardinalHealth is considering an extension of their lease of 361,690 square feet at 3080 West IH-20 in Grand Prairie; and
Whereas, with the lease extension building owners are committing to make $3,000,000 in real estate improvements to the leased space of CardinalHealth's Grand Prairie facilities, CardinalHealth will have an option to expand the building's footprint by an additional 93,580 square feet, and CardinalHealth is weighing occupation of the second-story mezzanine at 3080 West IH-20 with office uses that may qualify as sales taxable; and
Whereas, a five-year, 50% rebate of CardinalHealth's $.01 General Fund on-line sales tax revenues will induce CardinalHealth to remain and eventually expand its operations in Grand Prairie; and
Whereas, the City Council has determined that it is in the public interest to enter into a Chapter 380 Program Agreement for Economic Development Incentives and partially rebate certain sales tax revenues.
NOW THEREFORE, BE IT RESOLVED, by the City Council of the City of GRAND PRAIRIE, Texas that:
Section 1. THAT the granting of an incentive through a Chapter 380 incentive agreement is approved and the City Manager is herby authorized to execute contracts to effectuate this approval.
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF GRAND PRAIRIE, TEXAS, ON THIS THE 21ST DAY OF MARCH , 2017.