Res 33-17
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MEMORANDUM
TO: Mayor and City Commissioners
FROM:
Joan K. Goodrich, Economic Development Director
THROUGH: Neal de Jesus, Interim City Manager
DATE: April 5, 2017
CC: Caryn Gardner-Young, Assistant City Manager
SUBJECT: AGENDA ITEM 17-381 - Regular Commission Meeting of April 18, 2017
Qualified Target Industry Tax Refund Local Match – “Project Butler”
ITEM BEFORE COMMISSION
Approval of Qualified Target Industry Tax Refund (QTI) Local Match for “Project Butler” in an
amount not to exceed $58,800 (paid out in six annual installments and only remitted if the jobs are
created as verified by the State of Florida) for a Palm Beach County early stage technology company
seeking to grow their corporate administration of their national customer base and offshore
activities. Project Butler is entitled to be made confidential pursuant to section 288.075 Florida
Statutes. The Local Match contribution is a requirement by the State of Florida for the company to
be eligible for the QTI incentive program.
PROJECT BUTLER OVERVIEW
Project Butler is an existing early stage technology company developing software and hardware
solutions for integrated building management systems and automation for residential and
commercial applications including highly secured internet protocols. The company’s business
activities also include the corporate administration of a national customer base and offshore
activities.
Project Butler is ready to launch their software and hardware solutions to the national and
international markets. The company has been located in West Palm Beach as a start-up company
employing 10, operating out of small temporary space while developing their products and
services. The company is now in need of more space to establish their headquarters, manufacturing,
and support.
They have identified 9,000 square feet of office space on Congress Avenue in Delray Beach along
with other sites in Dallas, TX, San Francisco, CA, Atlanta, GA, Boston, MA or New York, NY.
If Project Butler chooses to expand in Delray Beach and Palm Beach County, it would:
Create 42 new jobs with an average wage of $101,316 (at least 200% of the Palm Beach
County average wage - $50,658)
Relocate 10 existing jobs
Make a total capital investment of $2,325,000 in capital investment over 5 years
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Generate a positive economic impact of more than $17 million as projected by the
Business Development Board of Palm Beach County.
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INCENTIVE REQUESTED
The company is seeking the following incentives from the State of Florida and the City of Delray
Beach:
Total Incentive Estimate: $294,000
Sub-Total State Portion (80%) - $235,200
Sub-Total Local-Delray Beach Match (20%) – $58,800
The QTI incentive is calculated is as follows:
$3,000 base per job + $2,000 200% average wage bonus + $2,000 High Impact Sector bonus
x 42 new jobs = $294,000
It is noted that Project Butler is being deemed a qualified target industry business and one that is
also within a designated high impact sector as defined by the State of Florida’s QTI program
because of the NAICS code affirmed by the company on it’s application. Additionally, Project Butler
is eligible for the QTI Local Match by the City of Delray Beach because they are:
Submitting an application before making a decision to expand
Creating at least 10 net new full-time jobs (per their application)
Paying an average annual wage of at least 115% of Palm Beach County avg. wage -
$50,658. Project Butler is actually estimating to pay at least 200% of the county avg.
wage.
The QTI application process requires the City of Delray Beach to adopt a resolution recommending
that the project be approved as a qualified target industry business within a designated high impact
sector and specifying that the commitment of local financial support necessary for the target
industry business exists.
BENEFITS AND RETURN ON INVESTMENT
The additional anticipated benefits of Project Butler on the City of Delray Beach includes: 1)
diversification of the tax base; 2) diversification of the economic base; 3) attraction of a
headquarters operation to an emerging economic development corridor; and 4) contribution to the
City’s growing reputation as an entrepreneurial community.
Return on investment (ROI) for Project Butler, if calculated on capital investment only
(conservative), is $39.45 for every $1 invested by the City of Delray Beach. If calculated on Direct
Total Economic Impact (county-wide impact), the City’s ROI would be $290.76 for every $1
invested.
LOCAL INCENTIVE AUTHORITY
On April 3, 2012, the City Commission approved Resolution No. 21-12, creating the Delray Beach
Economic Development Fund. The purpose of the ‘fund’ was to support citywide economic
opportunities (i.e., financial incentives) to attract and/or retain jobs as well as to increase the City’s
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As estimated by the Business Development Board of Palm Beach County Economic Impact Projections for Project
Butler – see attached.
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tax base. The ‘fund’ is implemented through annual budget allocations for economic development
projects the City Commission approves by resolution.
In addition, the City Commission took action on December 11, 2012 approving Resolution No. 62-
12 approving Delray Beach’s Incentive Policy and Programs including the Job Creation Incentive
(JCI) Program which allows for the City’s participation for up to the 20% local match in the State of
Florida’s QTI program (see attached program guidelines).
JCI GRANT AWARD LIMIT RECOMMENDATION
In Delray Beach’s Job Creation Incentive (JCI) Program Guidelines, base awards per job ranges from
$250 to $1,000 per job created with a minimum and maximum amount award of $10,000 - $50,000
per applicant. Incentive guidelines provide for a higher level of investment on the recommendation
of the City Manager and the Economic Development Director. Based on the benefits and return on
investment stated earlier, it is recommended that the JCI Grant Award Limit be waived for Project
Butler to allow for the full 20% Local Match requirement of the QTI incentive in the amount not to
exceed $58,800.
FISCAL- BUDGET NOTES
If approved, the City’s total incentive obligation in the amount not to exceed $58,800 will be paid
out in six annual installments from General Funds (see below QTI payout and City budget allocation
schedule) and only after the State of Florida certifies and notifies the City that Project Butler has
met the job creation criteria as a part of the Qualified Target Industry Tax Refund Agreement
Project Butler will execute with the State of Florida Department of Economic Opportunity. It is
furthered noted that the City’s payments will be made directly to the State of Florida - and not to
the company - because it is the State of Florida who has the lead oversight and payment
responsibility for this particular State incentive tool.
Anticipated City of Delray Beach Budget Allocation Schedule
FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Total
$5,600 $10,150 $14,700 $14,700 $9,100 $4,550 $58,800
RECOMMENDATION
Approve Resolution No. 33-17 to encourage the relocation of 10 high-wage jobs and the creation of
42 new high-wage jobs by Project Butler, an early stage technology company seeking to relocate
their corporate administration (headquarters) of a national customer base and offshore activities to
Delray Beach.
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