Town Council Regular Session

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  Item # 4.       
Meeting Date: 07/15/2020  
Requested by: J.J. Johnston
Submitted By: J.J. Johnston, Community and Economic Development
Department: Community and Economic Development  

Staff respectfully requests that the Council adopt the attached program as presented. This program has been modified to include the Town Council's input from July 1, 2020, and can be further modified in the future as it is applied and used for primary employers.
This item is for discussion and possible action during the July 15, 2020 Council meeting. Based on Town Council input directed during the Study Session held on July 1, 2020, staff has updated the proposed program to include more clarity and flexibility to the Menu of Incentive credits, thus making the program more customizable to both the Town and to the prospective primary employer. Also added were additional clarification points and greater flexibility on how primary employers are defined and qualified for the program. Council also directed staff to reference other potential incentive enhancements that may be offered at the regional, state and federal level, such as leveraging federally-funded job training programs. These updates and others are added to the attached revised Primary Employer Incentive Program.

The purpose of the Primary Employer Incentive Program is to help enable long-term financial sustainability in Oro Valley through the creation of new primary job opportunities and the generation of new capital investments in the Town. In accordance with the economic development goals embodied in the voter-approved General Plan, the Town Council's Strategic Leadership Plan and the Council approved Comprehensive Economic Development Strategy, this program is proposed to assist Oro Valley in its efforts to attract high quality primary job opportunities and new capital investment to the community. If approved by Council, the Town of Oro Valley may offer different incentives such as fee reductions or reimbursement of eligible expenses, depending on the nature of the project. Reimbursement amounts will be restricted to the amount of construction sales taxes collected by the Town in association with the project.

These incentive reimbursements will help offset qualifying expenditures by the primary employer such as required new public infrastructure improvements, offsetting impact fees, employee relocation and qualified job training programs, exterior building aesthetics and renovation expenses. The program aims to encourage the retention and expansion of existing primary employers. Additionally, the program will help attract new primary employers to the Town.
Oro Valley is without a primary employer incentive program which puts the Town's economic development efforts at a significant competitive disadvantage in the region. The Town's economic development team has generated dozens of new primary employer projects; however, winning new primary employer projects is extremely competitive. Oro Valley is in the 'final four' phase of the site selection process with several high quality prospects and all prospective employers are requesting incentives. Companies and their consultants frequently engage in a compare and contrast financial analysis of Oro Valley in comparison with competing communities. The proposed primary employer incentive program will enable Oro Valley to 'catch-up' with the surrounding communities who are already providing these incentives.

The Oro Valley Primary Employer Incentive program goals, its administration, employer and project qualifications, proposed incentives, and other considerations are detailed in the attached program document. The Council-approved Comprehensive Economic Development Strategy (CEDS) for 2019-2024 further details what is needed to protect and expand primary employers in the community. The Council incorporated several of the CEDS recommendations into their Strategic Leadership Plan. If approved, the Oro Valley Town Council, Town Manager and ED staff will implement the program in accordance with SLP Goal 1A: Expand Economic Vitality. 
Fiscal impacts will be determined after negotiations are finalized by the Town Manager, on a project case-by-case basis. In every Town Manager-approved project, a Council-approved contract is required. It should be noted that the primary employer will earn the incentive (via its capital investment, job creation, etc.) before the incentive reimbursements are realized back to that employer. Even with maximum allowable incentive applications, the primary employer will still generate direct, indirect and induced net new revenue in the community. The economic and fiscal impacts will be prepared by an independent third party service provider and will be part of the final documentation prior to Council-approved contract execution.
I MOVE to (approve or deny) the proposed Oro Valley Primary Employer Incentive Program.
Primary Employer Incentive Program
Primary Employer Incentive Program Presentation


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