City Council Meeting


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  H.1.       
Meeting Date: 10/19/2021  
Submitted For: Matt Carlson Contact: Melba Hill, Administrative Assistant

COUNCIL ACTION
Motion by Councilmember Marks with a second by Mayor Pro Tem Byrd to approve as presented. Motion passes 7-0.
AGENDA ITEM:
Consider authorizing the DeSoto Development Corporation to negotiate and execute a restated and amended Incentive Agreement between the DeSoto Development Corporation and Global Industrial Distribution Inc. as approved by the DeSoto Development Corporation Board on September 27, 2021
BACKGROUND:
In September 2019, the DeSoto Economic Development Corporation (DDC) and Global Industrial Distribution entered into a five-year, $500,000.00 incentive agreement. The agreement was predicated on three conditions: 1) The lease of approximately 490,000 square feet of warehouse space in the Eagle Industrial Park for a period of at least 10 years. 2) A minimum investment of $6.0 million in tangible personal property at the inception of the agreement, the value of which is to be maintained throughout the term of the agreement. 3) The creation of certain employment positions during the term of the agreement, including the following:

a. At project inception | 15 Exempt & 50 Non-Exempt
b. Year 1 | 17 Exempt & 55 Non-Exempt
c. Years 2-5 | 20 Exempt & 60 Non-Exempt

In May 2021, Global Industrial substantiated by letter (Exhibit A) that they had met, and in fact exceeded, the conditions set forth in the agreement with the exception of the total number of jobs created. In this letter, they also outlined the exigent circumstances COVId-19 had played in their hiring efforts and requested a waiver of this requirement. Attached documentation confirmed the company had hired 7 of 15 exempt positions and 47 of 50 non-exempt positions. Economic Development staff reviewed the incentive agreement and the documentation of capital investment and hiring provided by the company. A summary of this review is attached as Exhibit B. 
FINDINGS:
Based on this review of the documents and the company’s overall investment in the plant and facilities that more than doubled the original investment requirement, the DeSoto Economic Development Director recommended to the DDC Board of Directors at its July 26, 2021, meeting the following: 1) Amend and restate the original agreement to eliminate the “all or nothing” language in favor of language that created a partnership between the parties and provided for five 1-year grant opportunities for the company to meet its hiring obligations. In each year that the company meets those obligations, the company would receive the $100,000 incentive payment. 2) Deny the company’s request for a “waiver” of the employment requirements for year 1. An amended copy of the agreement was provided for the Board members review. The DDC Board of Directors unanimously approved these recommendations at the September 27, 2021 regular meeting and the amended incentive agreement is now forwarded to the City Council for consideration. 
FINANCIAL IMPACT:
Because the company has not met the initial impact requirements as specified in the agreement, the City's anticipated incentive obligation is reduced by $100,000 with $400,000 still available in incentives should the company meet or exceed the agreement terms.
RECOMMENDATION:
Staff recommends that the City Council authorize the DeSoto Development Corporation to negotiate and execute a restated and amended Incentive Agreement between the DeSoto Development Corporation and Global Industrial Distribution Inc. as approved by the DeSoto Development Corporation Board on September 27, 2021.
MANAGEMENT REVIEW
Attachments
Redline Amended Agreement
Exhibit A
Exhibit B
Tax Summary


    

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