Policy 1-11 ECONOMIC DEVELOPMENT ASSISTANCE - INDUSTRIAL

DISTRIBUTION:    Mayor, City Council and All Departments

SUBJECT:    Economic Development Assistance Policy – Industrial

PURPOSE:    To develop and initiate an economic industrial development assistance policy to provide industrial development incentives.

BACKGROUND:    During the past year, it has become very apparent to the City of Lawton that increasing outside interest from commercial enterprises makes it necessary for the City to set in place an industrial development assistance policy.  A city Council policy covering the economic development incentives and guidelines for potential industrial projects seeking financial support is important given statutory limitations established by the State of Oklahoma.  In this regard, the attached Economic Development Assistance Program, Council Policy 1-11, adopted by the Lawton City Council on September 21, 2009, recognizes the City’s interest in assisting viable industrial development projects and the procedural guidelines for securing public investment through the City of Lawton.

This industrial development policy will be administered by the Lawton Industrial Development Authority (LIDA), acting as an advisory committee to the Lawton City Council.  All final decisions regarding the scope and size of any financial incentives offered to a proposed industrial development shall be at the sole discretion of the City Council.

REFERENCES:    None

EFFECTIVE DATE:    September 21, 2009



                            ____/s/ John P. Purcell, Jr.______________
                            JOHN P. PURCELL, JR., MAYOR











CITY OF LAWTON
ECONOMIC DEVELOPMENT ASSISTANCE – INDUSTRIAL
POLICY 1-11

Table of Contents

I.    PURPOSE STATEMENT----------------------------------------------------------    1

    A.    Principles-----------------------------------------------------------------------    1
    B.    Tax Increment Financing (TIF)---------------------------------------------    1-2

II    INDUSTRY/JOB DEVELOPMENT PROGRAM----------------------------    2

    A.    Guiding Principles-----------------------------------------------------------    2-3
    B.    Program Characteristics-----------------------------------------------------    3
    C.    Standard Program------------------------------------------------------------    3

I.    PURPOSE STATEMENT

    The City of Lawton is committed to the promotion of high quality industrial development in all part of the City and to ongoing improvement in the quality of life for its citizens.

    This policy is established in an effort to develop and expand the local economy by promoting and encouraging industrial development and redevelopment projects that enhance the City’s economic base through the expansion and diversification of job opportunities and new private investment.  For the purpose outlined in this City of Lawton Policy, industrial development will be defined by the State of Oklahoma and qualified through the State Quality Jobs Act through the expansion of existing facilities or the location of a new company within the City of Lawton.

    In furtherance of these goals, the City of Lawton will consider, on a case-by-case basis, requests for economic development assistance to private industrial business entities in order to make possible projects that would not otherwise occur.

    Nothing in this policy is intended to imply that the City is under any obligation to provide economic development assistant to any applicant.  All applicants shall be considered on a case-by-case basis.  The decision to provide economic development assistance shall be at the sole discretion of the City Council.  Any applicant granted economic development assistance must enter into an agreement with the City of Lawton, or a public trust who sole beneficiary is the City of Lawton, which contains all terms required by State statues, City Code, this Policy, and other applicable law, in order to protect the public interest in ensuring an adequate public benefit in exchange for the investment of public funds, assets or services in the economic development project.

A.    Principles:    In providing economic development assistance, the following principles shall be followed:

    1.    The City’s credit and financial interest shall never be placed at risk.
    2.    The project must promote the public health, safety, prosperity and general welfare of the community.
    3.    The City must have a legal interest in the land upon which any public infrastructure is constructed to include right-of-ways and easements.

B.    Tax Increment Financing (TIF):    Where appropriate, the City of Lawton may choose to provide economic development assistance under the Oklahoma Local Development Act, 62 O.S. §§ 850 et seq., including through the use of tax increment financing (TIF).  The City’s method of financing economic development assistance for a particular project is a legal and financial decision of the City, not the applicant.  It is the policy of Lawton (City) to receive adequate consideration and accountability from private developers or redevelopers when providing tax increment financing (TIF) to project, and to achieve specific public policy objectives.  Public policy objectives for TIF projects areas include but are not limited to eliminating blight, encouraging economic revitalization, and encouraging investment and development that otherwise would be difficult or impossible.  In addition, the following principals will guide the City’s use of TIF assistance to economic development projects:

    1.    To receive an allocation of TIF revenues, an investment must meet the public policy objectives set forth in the project plan for the particular TIF district where the project is located.

    2.    The TIF revenues may be used to pay project costs as defined by the Local Development Act (62 O.S. §853 (14)).  The City’s preferred method for providing TIF assistance to a project is for the TIF revenues to be paid over time as the developer or redeveloper performs on covenants meeting the pubic policy objectives, with the performance providing the public benefit to the City and the public.

II.    INDUSTRY/JOBS INVESTMENT PROGRAM

    Lawton pursues all opportunities to create qualify jobs.

A.    Guiding Principles:    This initiative is designed to meet public policy objectives and ensure accountability and transparency.  The City’s participation in a project will depend upon a commitment from the private sector company to invest in new facilities and/or pre-existing facilities to create new jobs.  The economic impact of the jobs and investment will be measured and will be a major factor used to determine the incentives a company may receive.

    It is preferable that all projects be first assisted by Comanche County, the State of Oklahoma, or Federal incentives.  Any city incentives will be supplemental, and therefore should not be considered an entitlement.

    If state laws change any of the state incentives programs, or if local conditions change, this program will need to be revisited, and potentially amended at that time with the assistance of the Lawton Economic Development Team.

    1.    Focus on economic development outcomes:  This program cannot serve all of the economic and community development needs in Lawton or it will be perceived as unfocused and not accountable to the needs of the marketplace.  In this respect it will focus on primary jobs (companies selling the majority of their product or services out of the Comanche County market and/or the State of Oklahoma) and companies creating jobs and capital investment within strategic industries and meeting threshold criteria.

    2.    Speed to market:  Local incentives must be responsive to the ultimate customer. The program will be set up for a formalized, quick approval process.  If a company meets the established criteria, the Lawton Industrial Development Authority (LIDA) will make decisions that meet the timeline of the customer and are approved by the Lawton City Council.

    3.    Accountability:  The program will be measured and formulated with criteria and economic analysis that is predetermined, but that also allows for some flexibility.  All City of Lawton incentives, as stated herein, will be reviewed and approved by LIDA, as appropriate, and the City Council.  The information provided to the City Council and the trust will outline how the company meets the program criteria, the incentive agreement and an economic analysis that shows the economic impact of the new job creation and capital investment.  The Regional Economic Modeling, Inc. (REMI) software will be used as the basis of the analysis both during the due diligence phase, and after the project has been funded, to allow measurement of the results the company has achieved.  The REMI analysis will be conducted by the Lawton Economic Development Team.

B.    Program Characteristics:    In general, the program will focus on number of jobs, wage level and employee benefits, new annual payroll and capital investment.

    Due to Federal Internal Revenue regulation interpretation, consideration of utility rates lower than the published rates of the City cannot be considered.  The overriding criteria are annual salary, number of jobs, and total investment subject to taxation on the local tax rolls.

    The City of Lawton Incentive applications will be submitted to LIDA by the Lawton Economic Development Team and the application process will be administered through a contract with LIDA.  If any issues arise during the application process, and they cannot be resolved by LIDA, then the General Manager of the Trust will be asked to review the project and make a decision as to whether the project meets the stated criteria.  All recommendations for this local incentive will be made by LIDA and presented to the City Council for final approval.

    All financial documents, project presentations, and negotiations may be conduced and reviewed in executive sessions, at the request of the company applicant.  All financial information and presentation materials shall remain the property of LIDA and returned at the conclusion of executive session. This holds true for privately held applicants and publicly traded applicants.  

C.    Standard Program:    Provisions/Thresholds:  Firm creates a minimum of 20 full-time new jobs with a minimum of $500,000 annually in new payroll (as of 2008, this will be adjusted annually).  The company wage must be 100% of the Lawton Metropolitan Statistical Area average wage and must provide healthcare benefits to all full-time employees as defined by the State of Oklahoma.  

    The City of Lawton, Comanche County, State of Oklahoma, and Federal incentive package will be introduced by the Lawton Economic Development Team and reviewed by LIDA as a total incentive package.  LIDA will make a recommendation to the City Council as to the return on the City’s investment for said project over a 5 year period.  Return on investment can be measured by one or all of the following:

    1.    A REMI analysis provided by the Lawton Economic Development Team which shows the quality of jobs to be created (Payroll, wage levels, and benefits).

    2.    Contributions (direct, indirect and induced) to local taxes (sales tax, with some consideration of property and income taxes).

    3.    Total capital investment.