Economic Vitality Committee Agenda and Packet 2021 08 20

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SUBJECT: BAP ANNUAL ANALYSIS DATE: AUGUST 20, 2021 PAGE 3 OF 5 relatively consistent with most prior years, the agreement with Medtronic Inc. was valued at $1.45M, which is an outlier from most other packages. There have also been a number of other primary employer/industrial projects valued at more than $100,000. As of the end of July, the City has 15 active agreements —meaning the project has not reached the termination date in its agreement or payments are still being made on a past agreement. 56 BAPs have been completed. 22 agreements are void, which mostly occurs because a company did not advance a project to relocate or locate to the community. It is not unusual that a number of offers do not come to fruition, especially because businesses "shop" for incentives as they evaluate various spaces and because the City's program requires agreements to be approved prior to lease execution. Of the incentives paid to -date, the majority have been for office users, though retail users are a close second. Based on the more recent agreements, staff expects the rebates paid to industrial users could surpass office and retail in the next few years. A total of $4,022,256 in rebates has been paid by the City to applicants since 2007, which accounts for 44.2% of rebates offered. The active agreements can be split into two sub -categories, including remaining payments and outstanding offers. Remaining payments are for those users where the City has made partial payments of incentives offered, such as applicants who have rebates obligated for a period of years. Outstanding offers are to applicants who have agreements in place but have not completed their project in order to become eligible for rebates. A number of the BAP criteria focus on job retention and job creation. None of the incentives, however, are actually tied to these desired outcomes. The Business Assistance Program functions as both a retention and attraction tool, so the data presented evaluates jobs that have likely been retained and created, at least in part due to incentives. A total of 2,925 jobs have either been retained or created in line with the BAP, which is approximately 21 % of the total employment in Louisville. These figures and those that follow here account for 2007 through 2020. The total annual wages for these jobs in 2020 was $72,656,816; this is a slight decline from the total annual wages in 2019 ($74,914,199), which is likely attributable to furloughs and layoffs from the COVID-19 pandemic. The total number of jobs also decreased between 2019 and 2020, from 23% to 21 %. Staff would expect these numbers to rebound within a year or two given the amount of new business activity. The City has almost an even number split between jobs retained and jobs created: 1,481 vs. 1,444. Staff reviewed the revenues the City has received as a likely result of incentives provided. These calculations are only made on completed BAP projects. The Sales and Consumer Use Tax generated by companies having received BAPs (2007 through 2021) in 2020 is $1,414,673. The other two revenue figures capture cumulative data from 2007 through 2021. This includes the permit fees paid by companies receiving business assistance in construction of their new building or tenant finishes of $4,631,923 as well as the construction valuation of the company's projects of $96,960,846. The City's incentive program is structured around rebates, which helps ensure there is a true financial benefit Agenda Packet P. 9