Title
Consider a memorandum/resolution approving a Chapter 380 Economic Development Incentive Agreement with Dongjin Semichem Texas, Inc. for reimbursement of a portion of personal property taxes for up to ten years in an amount not to exceed $435,999.
Summary
DATE: November 8, 2022
TO: Kent Cagle, City Manager
FROM: Holli C. Clements, City Attorney
SUBJECT: Chapter 380 Economic Development Incentive Agreement
BACKGROUND AND FINDINGS:
The City of Killeen has in place a Chapter 380 Economic Development Program designed to promote local economic development and to stimulate business and commercial activity in the City.
The Killeen Economic Development Corporation (KEDC) entered into discussions and executed a performance measures agreement with Dongjin Semichem Texas, Inc. (Dongjin) to construct improvements and establish business operations at the Killeen Business Park. Dongjin will blend chemical solutions for a well-known international technology corporation. The establishment of Dongjin’s business operations will advance the City’s interests by creating jobs and increasing tax revenues.
Dongjin agrees to the following requirements:
• To make a capital investment of at least $70 million at the Site within two years of Closing, with at least $1.5 million devoted to acquisition costs for the Site, $30 million devoted to construction of the Facilities, and $38.5 million devoted to acquisition and installation of furniture, fixtures, and equipment at the Site (to include external tanks and state-of-the-art processing equipment).
• To create at least 17 new Full-time Equivalent jobs at the Site by the first anniversary of Commencement of Operations, and to maintain those jobs until the 10th anniversary of Commencement of Operations. Any employee transferring from another business owned or operated by Company or an Affiliated Entity in the City may not be considered a new job.
• For at least 10 years following Commencement of Operations, to pay an annual average salary of at least $50,000 to the workers employed at the Facilities.
• By the first anniversary of Commencement of Operations to establish taxable inventories of at least $4 million at the Site as shown in the records of Bell County Tax Appraisal district, and to maintain at least such value until the 10th anniversary of Commencement of Operations.
Upon confirmation of compliance with the agreement, the City agrees to reimburse Dongjin an amount equal to 25 percent (25%) of personal property taxes paid in connection with the site for up to ten (10) years upon timely request each year, not to exceed $435,999 in total.
THE ALTERNATIVES CONSIDERED:
The alternatives are to:
1. Disapprove the Chapter 380 Economic Development Incentive Agreement; or
2. Approve the Chapter 380 Economic Development Incentive Agreement.
Which alternative is recommended? Why?
Staff recommends considering approval of the Chapter 380 Economic Development Incentive Agreement because the establishment of Dongjin’s business operations will advance the City’s interests by creating jobs and increasing tax revenues.
CONFORMITY TO CITY POLICY:
Yes
FINANCIAL IMPACT:
What is the amount of the expenditure in the current fiscal year? For future years?
No expenditure is anticipated in the current fiscal year. Expenditures in future years will be based on the approved budget for that year and the amount of personal property tax payments paid by Dongjin.
Is this a one-time or recurring expenditure?
Recurring
Is this expenditure budgeted?
This expenditure will be included in the Proposed Budget for future years and will be appropriated upon City Council’s approval of the budget for those years.
If not, where will the money come from?
N/A
Is there a sufficient amount in the budgeted line-item for this expenditure?
N/A
RECOMMENDATION:
City Council consider approval of the agreement with Dongjin Semichem Texas, Inc. and authorize the City Manager or designee to execute same as well as any and all amendments and actions allowed per federal, state, or local law.
DEPARTMENTAL CLEARANCES:
Legal
Finance
ATTACHED SUPPORTING DOCUMENTS:
Agreement