Item Coversheet
Commission Agenda Item
 

MEETING DATE:  8/22/2016

SUBJECT:  Resolution 16-20; Brammer Bio, LLC Participation in Qualifed Target Industry Tax Refund

PREPARED BY:  Adam Boukari, Assistant City Manager

RECOMMENDED ACTION:

Approve Resolution 16-20

 

Summary

Brammer Bio, LLC is a private company focused on contract manufacturing.  The company is located in the City of Alachua and plans to expand its operations.  The expansion is projected to create 50 new jobs over two (2) years, beginning in 2016 with an average annual compensation of approximately $42,000.

In an effort to ensure Florida is an attractive business environment, The Florida Department of Economic Opportunity (DEO) offers several incentives to prospective and expanding businesses, such as Coqui.  The Qualified Target Industry (QTI) Tax Refund is such a program.  If approved for the program, a company may receive refunds on taxes it pays including corporate income tax, sales tax, ad valorem tax, etc. following job creation.

Companies apply to the DEO for consideration in the program.  To participate in the QTI program companies must:

(1) Be in a target industry
(2) Demonstrate the refund will make a material difference in locating/expanding in a community
(3) Create at least 10 new full time jobs; if expansion project must increase employment by 10 percent
(4) Pay average annual wage that is at least 115 percent of state, MSA or local average wages
(5) Demonstrate jobs make significant economic contribution to area economy
(6) Receive resolution from local government authorities committing to provide local 20 percent match

Once a company has applied to the DEO for the QTI program, the staff of Enterprise Florida (public-private partnership serving as Florida’s primary organization devoted to statewide economic development) reviews it and makes a recommendation to the Governor’s Director of Economic Opportunity (formerly Office of Tourism, Trade and Economic Development).

Brammer Bio is making application for participation in the QTI program totaling $250,000.  The total award amount is derived from a formula developed by the DEO that places valuation on each new job created.  Brammer Bio qualified for $5,000 per expected new job created ($5,000 x 50 jobs = $250,000).

The QTI program requires a 20 percent local government match.  The local government match totals $50,000 divided equally between Alachua County and the City of Alachua.

The Alachua County Board of County Commissioners will consider approval during its meeting on Aug. 23, 2016.  The City's Resolution 16-20 would provide $25,000 in local match, if approved by the City Commission.

The company may only receive refunds on taxes paid; the company must demonstrate job creation and will only receive a refund for actual jobs created.  Therefore, the company must have paid taxes to the City of Alachua totaling at least the City's refund amount to receive the refund.  The refund amount is based on the job formula developed by the DEO, not on projected taxes paid.  The expanded facility would likely generate an amount of ad valorem taxes to the City above the refund amount.  Furthermore, the City may capture additional utility revenue due to the expansiony.

The City would be required to remit its local government match annually to the Economic Development Trust Fund administered by the State.  The DEO would then issue the refund (including State funds and local government matching funds) directly to Brammer Bio annually.

The Council for Economic Outreach has been assisting Brammer Bio with its application to the DEO and may have representatives in attendance.

 
FINANCIAL IMPACT: Yes
BUDGETED: No
AMOUNT:  $25,000
FUNDING SOURCE:  General Fund
ADDITIONAL FINANCIAL INFORMATION:
Funding in the amount of $25,000 is payable over four (4) years following job creation from each prior year. In that Brammer Bio would be creating jobs over two (2) years (City's FY 2016-17 through FY 2017-18), the projected payout schedule for the City's local government match spans five (5) years (City's FY 2017-18 through FY 2021-22)

FY 2017/18: $1,875
FY 2018/19: $6,250
FY 2019/20: $6,250
FY 2020/21: $6,250
FY 2021/22: $4,375

 

The projected payout schedule is offset by one year from the year of job creation because refund payments are made from the State to the company after July 1 (beginning of State's fiscal year), the year following job creation.
 
ATTACHMENTS:
Description
Resolution 16-20 Brammer Bio, LLC QTI
Resolution 16-20 SIGNED