HomeMy WebLinkAboutA022 - Council Action Form dated October 23, 2018 A
ITEM # 9
DATE: 10-23-18
COUNCIL ACTION FORM
SUBJECT: RESOLUTION SETTING THE DATE OF PUBLIC HEARING FOR
NOVEMBER 13, 2018 ON A DEVELOPMENT AGREEMENT WITH
BARILLA AMERICA, INC WITH TAX INCREMENT REBATE
INCENTIVES IN AN AMOUNT NOT TO EXCEED $3,000,000 AND
PROJECT DEVELOPMENT REQUIREMENTS
BACKGROUND:
In February 2017, the City Council approved proceeding with economic development
assistance for the expansion of Barilla manufacturing facilities in Ames as a local match
for Iowa Economic Development Authority (IEDA) incentives. In July 2017, the City
Council approved the establishment of the Barilla Urban Renewal Area and Tax
Increment District to provide for the local match in the form of a rebate of incremental
taxes. A summary of the project is provided below.
The project includes: 1) a building expansion of 71,374 square feet to house two
additional processing lines and associated packaging/feeding equipment, 2) a rail yard
expansion to accommodate a larger number of train cars, and 3) six new silos to store
wheat. The total investment in this project is estimated to be approximately $62 million
including engineering/design work, construction, machinery, and equipment. When
completed, the assessed value of the expansion project is estimated to be $16,320,000.
In addition, 41 new jobs will be added at the Ames site.
The Iowa Economic Development incentive package totals $1,591,000. The package
consists of: 1) $375,000 in the form of a Forgivable Loan if the 41 jobs are created in a
timely manner, 2) $400,000 in Investment Tax Credits, and 3) $816,000 in State Sales
Tax Credits.
The City local match consists of a rebate of incremental property taxes generated by the
new valuation for the facility expansion for a period of 10 years or a total of $3,000,000,
whichever comes first. The company in return will agree to a minimum assessment of
$16,320,000 for the expanded facility and a requirement for job creation to continue to
receive the full rebate.
Next Steps
City staff, with the assistance of bond counsel, has negotiated a development
agreement with Barilla per the terms approved by City Council. There are some minor
issues that need to be resolved, but staff expects to have the agreement ready by the
November 13 meeting. The rebate of incremental taxes constitutes a debt for the City
and a public hearing is required for the City to enter into a debt agreement.
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With Council approval, a public hearing will be held at the November 13, 2018 City
Council meeting. After the hearing, the Council will be asked to approve the
development agreement as well as the associated debt in the form of rebate of property
taxes and minimum assessment agreement.
Please note that the rebate of property taxes is subject to the local government debt
limit. To avoid recording the entire rebate against the debt limit, City Council will be
required to approve an annual tax increment resolution. This is the same process for the
Kingland rebate and will be a Council action item each November until the terms of the
agreement have been fulfilled.
ALTERNATIVES:
1 . Adopt a resolution setting the date of public hearing for November 13, 2018 on a
Development Agreement with Barilla America, Inc., with tax increment rebate incentives
in an amount not to exceed $3,000,000 and project development requirements.
2. Do not adopt a resolution setting the public hearing.
MANAGER'S RECOMMENDED ACTION:
Barilla is an international company with a long-term presence in Ames and has
expanded the Ames facility multiple times. Barilla is again making a significant
investment of capital to expand employment. In keeping with the Council's goal to
promote economic development, this project will expand the number of quality jobs
within our city. A public hearing is required to proceed with the economic development
incentives for the Barilla expansion.
Therefore, it is the recommendation of the City Manager that the City Council adopt
Alternative #1 , adopting a resolution setting the date of public hearing for November 13,
2018 on a Development Agreement with Barilla America, Inc., with tax increment rebate
incentives in an amount not to exceed $3,000,000 and project development
requirements.
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