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HomeMy WebLinkAboutItem 10 - GamestopITEM MEMO TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL �L FROM: BRUNO RUMBELOW, CITY MANAGER 0 MEETING DATE: NOVEMBER 15, 2011 SUBJECT: CONSIDERATION OF A RESOLUTION TO THE CITY'S ENTERPRISE ZONE PROGRAM CONCERNING THE NOMINATION OF GAMESTOP, INC. TO THE OFFICE OF THE GOVERNOR, ECONOMIC DEVELOPMENT AND TOURISM, AS A DOUBLE JUMBO TEXAS ENTERPRISE PROJECT RECOMMENDATION: Staff recommends that the City Council approve the attached resolution to nominate GameStop, Inc. to the Office of the Governor, Economic Development and Tourism as a Double Jumbo Texas Enterprise Project. FUNDING SOURCE: Economic development incentives in form of sales and use tax rebates are derived from the state's portion of state sales and use taxes. None of the funding source will involve the local portion of state sales tax. BACKGROUND INFORMATION: In 2010 GameStop purchased a new facility in Grapevine to accommodate the rapid growth that they were experiencing. GameStop moved their entire refurbishing operations to the new facility, located at 2200 William D. Tate Avenue. As a result of their investment in this new facility, and their commitment to retain and create jobs in Grapevine, the City nominated GameStop as a Texas Enterprise Project so that GameStop could apply for state sales and use tax incentives within the State Enterprise Zone Program. The Enterprise Zone Program allows for the designation of Enterprise Project Status to companies for five years through a competitive selection process by the state following a nomination by the host city. The state subsequently approved their status as an enterprise project. GameStop now has plans for additional investment projects totaling $150 million. These improvements include remodeling with upgrades in machinery and equipment for their new refurbishing center at 220 William D. Tate Avenue. In addition, the headquarters and warehouse building at 625 Westport Parkway will undergo a renovation and remodel as well as a large information technology upgrade. As a result of this planned investment, and their commitment to retain jobs in Grapevine, GameStop would like to apply to the state for a "concurrent Double Jumbo Enterprise Project" designation under the state's Enterprise Zone Program. This additional designation to the GameStop Enterprise Project created in 2010 will require the approval of the attached resolution to nominate incentives for an additional 500 jobs. The Enterprise Zone Program is a state incentive program designed to promote job retention and/or creation and capital investment. GameStop currently has a total of approximately 1,900 employees combined at its headquarters, refurbishing center and warehouse in Grapevine. The original designation allowed for GameStop to claim 500 employees for a state sales tax rebate of $2,500 per job per year. The total incentive amount was capped at $1,250,000 for the five year period. At the level of investment proposed by GameStop for the currently proposed incentive, $150 million, the state will provide a "Double Jumbo" incentive of $5,000 per job per year for a total incentive of $2,500,000 in state sales tax rebates for the five year period. If approved by the state, the double jumbo incentive will run concurrently with the incentive approved in 2010. In order to qualify for the proposed rebate, a minimum of 35% of GameStop's new hires must be either residents of a state enterprise zone or economically disadvantaged as defined by the State Government Code. GameStop must prove to the State Comptrollers Office that they are meeting the retention and hiring criteria required by state law, prior to rebates. The deadline for submission of the application to the State is December 1, 2011 and the selection process will take approximately 90 days. Cl SENT VIA ELECTRONIC MAIL November 8, 2011 Mr. Dan Truex Economic Development Manager City of Grapevine 200 South Main Street P.O. Box 95104 Grapevine, Texas 76099 Re: Request for Double Jumbo Enterprise Project Nomination for GameStop, Inc. Dear Mr. Truex: 100 Congress Avenue Suite 1900 Austin. TX 78701 Tel. 512.476.0022 Fax 512.476.0033 www.ryan.com As we have discussed, GameStop, Inc. has plans to invest over $150 million in capital in their Grapevine facilities over the next five years. These investment projects include new machinery and equipment for their newly -built refurbishing center, remodeling and renovations to the old refurbishing space in their headquarters offices, remodeling and renovations to their existing warehouse, and the purchase of new IT hardware and software to implement internet -based programs and strategies that they are developing. This level of proposed investment presents GameStop with the unique opportunity to seek designation from the State of Texas as a "Double Jumbo" Enterprise Project under the State's Enterprise Zone Program. The Enterprise Zone Program is a state incentive program that allows qualifying business locations to receive state sales and use tax refunds on taxable items purchased for use at the designated location. In order to qualify for refunds, the business must be investing capital and creating or retaining full -time jobs at the location, and must commit to hire a certain percentage of enterprise zone residents or economically disadvantaged individuals to fill new or vacated positions at the designated facility. On behalf of GameStop, Inc., I am hereby requesting that the City of Grapevine nominate GameStop, Inc. to the Office of the Governor, Economic Development and Tourism as a Double Jumbo Enterprise Project at the City Council meeting on November 15, 2011. Doing so will allow GameStop to apply to the Office of the Governor, Economic Development and Tourism as a Double Jumbo Enterprise Project. If awarded such a designation by the State, GameStop could receive as much as $2,500,000 in state sales and use tax refunds over the course of their five -year designation period ($5,000 /full -time job, 500 jab maximum). Since this is a state incentive program involving state sales tax refunds only, the city's sales tax will not be directly affected as a result of a Double Jumbo Enterprise Project designation. Mr. Dan Truex City of Grapevine November 8, 2011 Page 2 Thank you for your consideration of this request. Please do not hesitate to contact me at 512.476.0022 (office) or 817.235.4324 (mobile) with any questions. Regards, Adam H. Glatz Taxpayer's Representative RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GRAPEVINE, TEXAS, NOMINATING GAMESTOP, INC. TO THE OFFICE OF THE GOVERNOR, ECONOMIC DEVELOPMENT AND TOURISM THROUGH THE ECONOMIC DEVELOPMENT BANK FOR DESIGNATION AS A DOUBLE JUMBO ENTERPRISE PROJECT ( "PROJECT ") UNDER THE TEXAS ENTERPRISE ZONE PROGRAM UNDER THE TEXAS ENTERPRISE ZONE ACT, CHAPTER 2303, TEXAS GOVERNMENT CODE ( "ACT ") AND PROVIDING AN EFFECTIVE DATE WHEREAS, on August 3, 2010, the City of Grapevine, Texas (the "City ") previously passed Ordinance No. 2010 -38 electing to participate in the Texas Enterprise Zone Program, and the local incentives available under this resolution are the same on this date as were outlined in Ordinance No. 2010 -38; and WHEREAS, the Office of the Governor Economic Development and Tourism ( "OOGEDT ") through the Economic Development Bank ( "Bank ") will consider GameStop, Inc. (the "Company ") as a double jumbo enterprise project pursuant to a nomination and an application made by the City; and WHEREAS, the City Council of the City of Grapevine, Texas, desires to pursue the creation of the proper economic and social environment in order to induce the investment of private resources in productive business enterprises located in the City and to provide employment to residents of enterprise zones and to other economically disadvantaged individuals; and WHEREAS, pursuant to Chapter 2303, Subchapter F of the Texas Enterprise Zone Act, Texas Government Code (the "Act "), GameStop, Inc. has applied to the City for designation as a double jumbo enterprise project; and WHEREAS, the City finds that GameStop, Inc. meets the criteria for designation as a double jumbo enterprise project under Chapter 2303, Subchapter F of the Act on the following grounds: 1. GameStop, Inc. is a "qualified business" under Section 2303.402 of the Act since it will be engaged in the active conduct of a trade or business at a qualified business site within the governing body's jurisdiction located outside of an enterprise zone and at least thirty -five percent (35.0 %) of the business's new employees will be residents of an enterprise zone or economically disadvantaged individuals. 2. There has been and will continue to be a high level of cooperation between public, private, and neighborhood entities within the area. 3. The designation of GameStop, Inc. as a double jumbo enterprise project will contribute significantly to the achievement of the plans of the City for development and revitalization of the area. WHEREAS, the City finds that GameStop, Inc. meets the criteria for tax relief and other incentives adopted by the City and nominates GameStop, Inc. for double jumbo enterprise project status on the grounds that it will be located at the qualified business site, will create a higher level of employment, economic activity and stability; and WHEREAS, the City finds that it is in the best interest of the City to nominate GameStop, Inc. as a double jumbo enterprise project pursuant to the Act. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF GRAPEVINE, TEXAS: Section 1. That the findings of the City and its actions approving this resolution taken at the council meeting are hereby approved and adopted. Section 2. That the City finds that GameStop, Inc. is a "qualified business ", as defined in Section 2303.402 of the Act, and meets the criteria for designation as a double jumbo enterprise project, as set forth in Section 2303, Subchapter F of the Act. Section 3. That the City nominates GameStop, Inc. to the State of Texas for Double Jumbo Enterprise Project status. Section 4. That the enterprise project shall take effect on the date of designation of the enterprise project by OOGEDT and terminate 5 years after the date of designation. Section 5. That this resolution shall take effect from and after the date of its passage. PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF GRAPEVINE, TEXAS on this the 15th day of November, 2011. APPROVED: RES. NO. 2 ATTEST: APPROVED AS TO FORM: RES. NO.