Title
Resolution to Approve a Commonwealth's Development Opportunity Fund Performance Agreement among the City of Hampton, Virginia, the City of Newport News, Virginia, the Economic Development Authority of the City of Newport News, Virginia, the Economic Development Authority of the City of Hampton, Virginia, the Virginia Economic Development Partnership, and Liebherr-America, Inc. and Related Documents and to Amend the City Council Approved Fiscal Year 2025 Budget to Appropriate the Local Matching Funds Required under that Agreement
Purpose
PURPOSE/BACKGROUND:
Liebherr-America, Inc. ("Liebherr"), an international leader in the manufacturing of commercial mining equipment, operates a facility (the "Facility") in the Copeland Industrial Park that spans the border between the City of Hampton ("Hampton") and the City of Newport News ( "Newport News"). Newport News, with Hampton's support, was awarded a grant in the amount of $1,500,000 (the “COF Grant”) from the Commonwealth’s Development Opportunity Fund (the “Fund”) to ultimately be disbursed to Liebherr for the purpose of inducing Liebherr to add a significant number of new jobs and to acquire, construct, expand, equip, and improve the operation of (collectively the "Improvements") the Facility. This latest expansion of the Facility will encompass areas in both Newport News and Hampton. The Governor of Virginia announced this award in a Press Release issued June 25, 2024.
Discussion:
The purpose of this resolution is for Council to consider and authorize Hampton's participation in the COF Grant Fund award and that certain COF Performance Agreement to be executed by and between Hampton, Newport News, the Economic Development Authority of the City of Newport News, Virginia ("NN EDA"), the Economic Development Authority of the City of Hampton, Virginia ("Hampton EDA"), the Virginia Economic Development Partnership ("VEDP"), and Liebherr. Per the COF Grant Agreement, the full amount of the COF Grant will be paid to Newport News, and then transferred to the NN EDA to pay to Liebherr. And that agreement further provides that both Hampton and Newport News agree to each pay a portion of the required local matching funds in the total amount of $1,734,500. A component of the COF Performance Agreement is a Memorandum of Understanding between Hampton, Newport News, the NN EDA, and the Hampton EDA (the "MOU") that delineates the specific funding responsibilities of each of the localities.
Liebherr's investment in the Facility Improvements is estimated to be approximately $72,329,755, of which approximately $17,183,201 will be invested in machinery and tools and approximately $55,146,554 will be invested in real property improvements. One hundred seventy- five (175) new jobs must also be created and maintained. It is anticipated that not less than $24,463,850 of the Facility Improvements, to include approximately $23,024,800 in real property improvements and $1,439,050 in machinery and tools, will be invested in Hampton. All of the new jobs are expected to be reported through Newport News. Accordingly, Hampton and the Hampton EDA are obligated to fund $257,000 of the required local match, and Newport News and the Newport News EDA are obligated to fund the balance in the total amount of $1,477,500.
Impact:
The action requested of Council will lead to the creation of new tax revenue and economic activity generated by Liebherr's investment. The estimated net new tax revenue for the City during the first five-years of the project is $1,166,000.
Recommendation:
Rec
Approve the Resolution.
Body
WHEREAS, Liebherr-America, Inc., an international leader in the manufacturing of commercial mining equipment, operates a facility (the "Facility") in the Copeland Industrial Park area of the City of Hampton ("Hampton") that spans the border between Hampton and the City of Newport News ( "Newport News") and has announced that it intends to add a significant number of new jobs and to acquire, construct, expand, equip, and improve the operation of (collectively the "Improvements") the Facility;
WHEREAS, Liebherr's investment in the Facility Improvements is estimated to be approximately $72,329,755, of which approximately $17,183,201 will be invested in machinery and tools and approximately $55,146,554 will be invested in real property improvements and 175 new jobs are to be created and maintained, and of which it is anticipated that not less than $24,463,850 of the Facility Improvements will be invested in Hampton, with the remainder and all of the jobs expected to be within Newport News;
WHEREAS, the Governor of Virginia announced on June 25, 2024 that Newport News, with the support of Hampton, has been awarded a Commonwealth’s Development Opportunity Grant by the Virginia Economic Development Partnership Authority (“VEDP”), is expected to be received by Newport News in the amount of $1,500,000 (“COF Grant”) for the purpose of inducing Liebherr to invest in the Facility Improvements, and to memorialize that relationship through a Commonwealth’s Development Opportunity Fund Performance Agreement ("COF Grant Agreement") between Hampton, the Economic Development Authority of the City of Hampton, Virginia ("Hampton EDA"), Newport News, and the Economic Development Authority of the City of Newport News, Virginia (“NN EDA”);
WHEREAS, pursuant to the COF Grant Agreement, Newport News will serve as the fiscal agent for all of the Grant Funds, and Hampton and Newport News (through their respective EDAs) are obligated to provide a combined cash grant match for the COF Grant of up to $1,734,500, of which Newport News expects to provide up to $1,477,500 and Hampton expects to provide up to $257,000, the obligation for which Hampton, the Hampton EDA, Newport News, and the Newport News EDA will enter into a memorandum of understanding ("Hampton-Newport News MOU") to set forth the individual obligations of each of those parties with respect the local match requirement;
WHEREAS, as of September 30, 2024, Liebherr has already invested over $23,165,474.84 in Hampton and $45,713,539.16 in Newport News in the Facility Improvements; and
WHEREAS, the stimulation of the new tax revenue and economic activity to be generated by the Liebherr’s investment constitutes a valid public purpose for the expenditure of public funds.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Hampton, Virginia that it:
1. Supports the City of Hampton's participation in the COF Grant and the Hampton-Newport News MOU to further the support and induce Liebherr's investment in the City of Hampton;
2. Amends the City Council Approved Fiscal Year 2025 Budget to appropriate $257,000 from the Economic Development Fund Fund Balance to the Hampton EDA, subject to the Hampton EDA returning to the City any amount of those funds equivalent to the amount of any previously appropriated used by the Hampton EDA to satisfy its local match obligation under the COF Grant Agreement and the Hampton-Newport News MOU; and
3. Authorizes the City Manager, or her designee to execute, on behalf of the City of Hampton the COF Grant Agreement, the Hampton-Newport News MOU, and any other documents necessary in the furtherance of the purposes of this resolution.