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Agenda 06/11/2013 Item #16F46/11/2013 16. F.4. EXECUTIVE SUMMARY Recommendation to direct the County Manager, or his designee, and the County Attorney to prepare the required program Agreements with Haynes Corporation and JL South Properties, LLC for the Fee Payment Assistance Program, Job Creation Investment Program and the Job Retention Investment Program, consistent with the company's approved incentive application, for consideration by the Board of County Commissioners at a future meeting. OBJECTIVE: That the Board of County Commissioners (Board) directs the County Manager, or his designee, and the County Attorney to prepare a Job Creation Investment Agreement, a Job Retention Investment Agreement and a Fee Payment Assistance Agreement with Haynes Corporation and JL South Properties, LLC (Fee Payment Assistance - land owner) consistent with the company's incentive application, which was approved July 27, 2010, for future consideration by the Board. CONSIDERATIONS: The current Economic Incentive Programs, established by Collier County in 2003, are intended to: (1) Provide performance -based programs offering financial relief for eligible targeted industry development or expansion projects in Collier County to mitigate the effects of rising development costs; (2) Provide for the economic well being of Collier County residents by providing high - wage employment opportunities in Collier County; (3) Lessen the seasonal cycle of Collier County's economy; and (4) Encourage investment opportunities for new or existing companies thus increasing and diversifying the county's tax base. Collier County, currently offers six local incentive programs. These Programs are Fee Payment Assistance, Property Tax Stimulus, Job Creation Investment, Advanced Broadband Infrastructure Investment, Job Retention Investment and the Fast Track Regulatory Process Program. The individual Programs have been adopted by the Board of County Commissioners (Board) and are codified in Chapter 49 of the Collier County Code of Laws and Ordinances (Code). The current Fast Track Regulatory Process Program was adopted by the Board on January 24, 2006, via Resolution No. 2006- 12. Typically, in order to qualify to participate in the Programs a new or expanding business must meet specified criteria related to the type of industry proposed, number of jobs created and the average wage of the new jobs. On June 28, 2010 an incentive application was submitted to the County by the Economic Development Council (EDC), on behalf of Haynes Corp. to participate in incentive programs. Haynes Corporation is a manufacturer of diesel fuel injection systems and precision component parts that has been in operation in Collier County since 1989. As part of an inducement effort to retain the company in Collier County, the following needs were identified as a basis for their decision. Without quick action to address these concerns, this national company indicated a relocation of the operation to their Norwalk, California location or to Jackson, Michigan would be considered 1) Ability to quickly permit and build an additional facility, adjacent to their current facility (3581 Mercantile Avenue) on land they currently own under the name of JL South Properties, LLC; Packet Page -1637- 6/11/2013 16.F.4. 2) financial incentives to defray the cost of relocation, hiring; and 3) Access to a skilled workforce or training programs for potential employees. Because this company required a number of waivers from program requirements in order to participate, staff from the County, the Economic Development Council and company representatives developed the following additional criteria designed to provide assurances that the assistance provided to the company will provide direct benefits to Collier County. a. The 20 proposed new jobs will be offered with preference to Collier County residents or employees willing to relocate to Collier County; b. 93% of the 45 existing employees being retained by the company currently reside in Collier County (42 employees). Therefore, Job retention funds will be provided at $1,000 per job for those 42 jobs. The incentive will be paid over three years and the residency will be verified each year; c. The company also proposed to create 20 new jobs. Job creation funds in the amount of $2,000 will be provided for each new job created and filled by a Collier County resident or an employee relocating to Collier County. The incentive will be paid over three years and the residency will be verified each year; and d. Fee Payment Assistance will be based on the creation of the 20 jobs, without residency requirements, as this incentive is used to pay impact fees on behalf of the company. On July 27, 2010, the Board approved the application by Haynes Corporation to participate in the Fee Payment Assistance, Job Creation Investment, Job Retention Investment and Fast Track Regulatory Process Programs. At the time of approval of their application (and currently) Haynes Corporation did not meet all of the Program criteria in order to be eligible to participate in the incentive programs, however, the Board recognized Haynes Corporation as a long established, respected Collier County business and approved their participation in the incentive programs based on the overall economic benefits of the project and the company's commitment to retain and employ Collier County residents. After approval of the incentive application on July 27, 2010, Haynes Corporation moved forward on consolidating their operations into one location, in Collier County, which serves as the corporate headquarters. The company also began the construction portion of the project consisting of the construction of a 30,000 square -foot building on property owned by the company, adjacent to the existing manufacturing facility. The capital investment related to this expansion totals $1,850,000, including the purchase of new manufacturing equipment. Due to timing constraints, the company elected to pay the impact fees associated with the construction and upon approval of their Fee Payment Assistance Agreement, request a refund of the previously paid fees. In December of 2011 the County staff and a member of the Clerk of Courts Internal Audit Department completed the first year of verification. As of September 30, 2011 Haynes Corp. has retained 37 Collier County residents and created 17 new jobs with 12 of those jobs being filled by Collier County residents, which have been audited and verified as having met the requirements to participate in the programs based on Board approval of their original application. The Second year verification is well underway and indications are that Haynes will easily meet their Year 2 goals. Haynes Corporation has requested that employee records be retained on site for review during monitoring and incentive verifications, due to the competitive nature of their industry and the difficulty in keeping skilled Packet Page -1638- 6/11/2013 161.4. employees. All necessary records and verification documentation will be made available to the County for compliance review. During the discussion related to the Haynes Corp. approval, the Board directed that the County Manager, or his designee, and the County Attorney, in coordination with the EDC, to develop options for changes to the Economic Incentive Programs, in order to provide an incentive package that will better serve the needs of businesses, particularly through this period of instability in the economy, for future consideration by the Board. Further, as part of the approval of the item, as discussed in the legal considerations, the Board directed the County Attorney to bring back a minor ordinance amendment that would in effect state "The Board may, upon the showing of good cause, modify or waive any of the requirements for participation in these economic incentive programs." However, due to various issues that have arisen since Haynes' initial approval, including the indefinite continuance of the item providing changes to the Economic Development Incentive Ordinances, dissolution of the EDC and the lengthy process to review the Economic Development strategies and programs in other counties, the formation of the new Office of Business and Economic Development (including hiring of the director), program modifications have not been implemented, and Program Agreements have not been executed, and Haynes has not received any incentive payments. The current Incentive Programs are scheduled to sunset on October, 1, 2013; however, on May 28, 2013 the Board heard a presentation (Item 11D) proposing a revision of the County's incentives, subject to public vetting and Board adoption,. Included in the proposal is a program designed to provide inducements for "basic industry" companies, comparable to the Haynes Corp., validating the consistency of this action with the proposed policy intent going forward. Therefore, it is staff s recommendation that the Board honor the approval of Haynes' incentive application, as the company has moved forward in good faith with the expansion of their business, and directs the County Manager, or his designee, and the County Attorney to draft the required Program Agreements for future consideration of the Board. Upon approval of such Agreements, the payment of eligible incentive awards may be processed retroactively and going forward as performance is certified. FISCAL IMPACT: Haynes Corporation is eligible to receive the first payment of Job Creation funds ($8,000 — Phase 1), the first payment of Job Retention funds ($12,333) and Fee Payment Assistance funds ($79,550). Upon finalizing the Year 2 verification, Haynes will be eligible to receive the second payment of Job Creation funds ($8,000 - Phase 1) and Job Retention Funds ($12,333) and the first payment of Job Creation funds for the Phase II jobs ($2,000). The total of these payments equals $122,216, for which adequate funding exists within the approved budget for the local Economic Incentive Programs (Fund 001) for Fiscal year 2013. GROWTH MANAGEMENT IMPACT: This request is consistent with Objective 3 of the Economic Element of the Collier County Growth Management Plan which states: "Collier County will support programs which are designed to promote and encourage the recruitment of new industry as well as the expansion and retention of existing industries in order to diversify the County's economic base." LEGAL CONSIDERATIONS: This item has been reviewed by the County Attorney, raises no legal issues at this time, and requires majority vote of the Board for direction. -JAK RECOMMENDATION: That the Board of County Commissioners directs the County Manager, or his designee, and the County Attorney to prepare a Job Creation Investment Agreement, a Job Retention Investment Agreement and a Fee Payment Assistance Agreement with Haynes Corporation Packet Page -1639- 6/11/2013 16. A and JL South Properties, LLC (Fee Payment Assistance - land owner) consistent with the company's incentive application, which was approved July 27, 2010, for future consideration by the Board. Prepared by: Bruce Register, Director, Business and Economic Development Amy Patterson, Impact Fee Manager Office of Management and Budget Packet Page -1640- 6/11/2013 165.4. COLLIER COUNTY Board of County Commissioners Item Number: 16.16.F.16.F.4. Item Summary: Recommendation to direct the County Manager, or his designee, and the County Attorney to prepare the required program Agreements with Haynes Corporation and JL South Properties, LLC for the Fee Payment Assistance Program, Job Creation Investment Program and the Job Retention Investment Program, consistent with the company's approved incentive application, for consideration by the Board of County Commissioners at a future meeting. Meeting Date: 6/11/2013 Prepared By Name: BrockMaryJo Title: Executive Secretary to County Manager, CMO 6/4/2013 11:39:02 AM Submitted by Title: Executive Secretary to County Manager, CMO Name: BrockMaryJo 6/4/2013 11:39:04 AM Approved By Name: OchsLeo Title: County Manager Date: 6/4/2013 11:53:00 AM Packet Page -1641-