From
Letecia McClendon
Title
Resolution granting 380 Incentive Agreement with CardinalHealth; granting a partial rebate on sales tax revenues
Presenter
Marty Wieder, Economic Development Director
Recommended Action
Approve
Analysis
On March 21, 2017, City Council voted to grant a 380 Incentive Agreement to CardinalHealth, a long-time Grand Prairie employer which has been considering relocation and expansion within North Texas as well as outside the State, with a combination of sales and ad valorem tax rebates. CardinalHealth however leases the 361,690 square feet at 3080 West IH-20 - and therefore cannot quality for rebate of ad valorem taxes. So as an incentive for CardinalHealth to remain in Grand Prairie and eventually expand operations, staff is again recommending a five-year sharing of 50% of CardinalHealth’s qualifying $.01 General Fund sales tax revenues, as allowed through Chapter 380 of the Texas Local Government Code.
Moreover, the company continues to pursue new contracts and weigh the use of a second-story mezzanine at 3080 West IH-20 for uses which may also qualify as sales taxable. CardinalHealth officials have requested consideration of an additional percentage share of qualifying revenues to come as a result of their lease extension, space repurposing and possible future expansion.
Therefore, staff is recommending an additional five-year sharing of 25% of CardinalHealth’s $.01 General Fund sales above $62 million. If approved by City Council, all incentive rebates will apply to sales tax revenues reported and paid by CardinalHealth on or after January 1, 2018.
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 (over 5 years)
Body
A RESOLUTION OF THE CITY OF GRAND PRAIRIE, TEXAS, TO ENTER INTO A CHAPTER 380 PROGRAM AGREEMENT WITH CARDINALHEALTH GRANTING A 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 qualifying $.01 General Fund sales tax revenues will induce CardinalHealth to remain and eventually expand its operations in Grand Prairie; and
Whereas, an additional five-year, 25% rebate of all of CardinalHealth’s $.01 General Fund sales tax revenues above $62 million will encourage CardinalHealth to continue pursuing additional contracts and maximize the use of future, expanded 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 as outlined above is approved and the City Manager is hereby 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 18th DAY OF APRIL, 2017.