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Home My WebLink About141-17 RESOLUTION113 West Mountain Street Fayetteville, AR 72701 (479) 575-8323 Resolution: 141-17 File Number: 2017-0355 KIMBEL MECHANICAL SYSTEMS, INC.: A RESOLUTION TO APPROVE AND CERTIFY THE PARTICIPATION OF KIMBEL MECHANICAL SYSTEMS, INC. IN THE ARKANSAS TAX BACK PROGRAM AND TO AGREE TO AUTHORIZE THE ARKANSAS DEPARTMENT OF FINANCE AND ADMINISTRATION TO REFUND CITY SALES TAX BACK TO KIMBEL MECHANICAL SYSTEMS, INC. FOR QUALIFIED PURCHASES WHEREAS, Kimbel Mechanical Systems, Inc., a construction mechanical contractor that designs and constructs plumbing, electrical, and HVAC work for the residential and commercial housing sectors, has moved its national headquarters to Fayetteville and has planned a total investment of $580,000.00 in improvements to an existing building; and WHEREAS, Kimbel Mechanical Systems, Inc. is committed to creating 55 new jobs paying an average hourly wage of $27.37 for a total annual payroll of approximately $3,100,000.00 and the company trains its entry level employees for licensing in plumbing and electrical work, contributing to the development of a skilled workforce in the City of Fayetteville; and WHEREAS, in order to certify Kimbel Mechanical Systems, Inc. to participate in the sales and use tax refund program, either Washington County or the City of Fayetteville, or both, must "(s)pecify that the Department of Finance and Administration is authorized to refund local sales taxes to the qualified business." {A.C.A. §15-4-2706 (d)(B)(ii)); and WHEREAS, the City of Fayetteville or Washington County must also endorse Kimbel Mechanical Systems, Inc.'s participation in this state and local sales and use tax refund program; and WHEREAS, bond indentures prevent diversion of sales tax proceeds from the city's bonded penny sales and use tax. NOW, THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Page 1 Printed on 7/19/17 Resolution: 141-17 File Number: 2017-0355 Section 1: That the City Council of the City of Fayetteville, Arkansas hereby endorses Kimbel Mechanical Systems, Inc.'s participation in the sales and use tax refund program authorized by A.C.A. § 15- 4-2706(d) in relation to its renovations, equipping and hiring at its new facility in Fayetteville, Arkansas. Section 2: That the City Council of the City of Fayetteville, Arkansas hereby specifies that the Department of Finance and Administration is authorized to refund the non -bonded penny city sales tax to Kimbel Mechanical Systems, Inc. for qualified construction and equipment purchased for its facility in Fayetteville, Arkansas. PASSED and APPROVED on 7/18/2017 Approved: Attest: Jordan, ?V y_ or Sondra E. Smith, City Clerk Treasurer Iy/1 ``iR�t rpt+ 1 TR •r��i� 9 +. �; FAYETTEVII_L.E;�u4 .r ,y i0��ty`` Page 2 Printed on 7/19/17 City of Fayetteville, Arkansas Text File File Number: 2017-0355 Agenda Date: 7/18/2017 Version: 1 In Control: City Council Meeting Agenda Number: A. 5 KIMBEL MECHANICAL SYSTEMS, INC.: 113 West Mountain Street Fayetteville, AR 72701 (479) 575-8323 Status: Passed File Type: Resolution A RESOLUTION TO APPROVE AND CERTIFY THE PARTICIPATION OF KIMBEL MECHANICAL SYSTEMS, INC. IN THE ARKANSAS TAX BACK PROGRAM AND TO AGREE TO AUTHORIZE THE ARKANSAS DEPARTMENT OF FINANCE AND ADMINISTRATION TO REFUND CITY SALES TAX BACK TO KIMBEL MECHANICAL SYSTEMS, INC. FOR QUALIFIED PURCHASES WHEREAS, Kimbel Mechanical Systems, Inc., a construction mechanical contractor that designs and constructs plumbing, electrical, and HVAC work for the residential and commercial housing sectors, has moved its national headquarters to Fayetteville and has planned a total investment of $580,000.00 in improvements to an existing building; and WHEREAS, Kimbel Mechanical Systems, Inc. is committed to creating 55 new jobs paying an average hourly wage of $27.37 for a total annual payroll of approximately $3,100,000.00 and the company trains its entry level employees for licensing in plumbing and electrical work, contributing to the development of a skilled workforce in the City of Fayetteville; and WHEREAS, in order to certify Kimbel Mechanical Systems, Inc. to participate in the sales and use tax refund program, either Washington County or the City of Fayetteville, or both, must "(s)pecify that the Department of Finance and Administration is authorized to refund local sales taxes to the qualified business." {A.C.A. §15-4-2706 (d)(B)(ii)}; and WHEREAS, the City of Fayetteville or Washington County must also endorse Kimbel Mechanical Systems, Inc.'s participation in this state and local sales and use tax refund program; and WHEREAS, bond indentures prevent diversion of sales tax proceeds from the city's bonded penny sales and use tax. NOW, THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1: That the City Council of the City of Fayetteville, Arkansas hereby endorses Kimbel Mechanical Systems, Inc.'s participation in the sales and use tax refund program authorized by A.C.A. City of Fayetteville, Arkansas Page 1 Printed on 711912017 File Number: 2017-0355 §15-4-2706(d) in relation to its renovations, equipping and hiring at its new facility in Fayetteville, Arkansas. Section 2: That the City Council of the City of Fayetteville, Arkansas hereby specifies that the Department of Finance and Administration is authorized to refund the non -bonded penny city sales tax to Kimbel Mechanical Systems, Inc. for qualified construction and equipment purchased for its facility in Fayetteville, Arkansas. City of Fayetteville, Arkansas Page 2 Printed on 7/1912017 Devin Howland City of Fayetteville Staff Review Form 2017-0355 Legistar File ID 7/18/2017 City Council Meeting Date - Agenda Item Only N/A for Non -Agenda Item 6/26/2017 Submitted By Submitted Date Action Recommendation: ECONOMIC DEVELOPMENT (050) Division / Department Resolution of the City of Fayetteville certifying local government endorsement of Kimbel Mechanical Systems, Inc. to participate in the State of Arkansas Tax Back Program (as authorized by Section 15-4 2706(d) of the Consolidated Incentive Act of 2003) and authorizing the Department of Finance and Administration to refund local sales and use taxes to Kimbel Mechanical Systems, Inc. Budget Impact: Account Number Fund Project Number Project Title Budgeted Item? No Current Budget $ - Funds Obligated $ - Current Balance $ Does item have a cost? No Item Cost Budget Adjustment Attached? NA Budget Adjustment Remaining Budget $ V20140710 Previous Ordinance or Resolution # Original Contract Number: Comments: Approval Date: CITY OF FAYETTEVILLE ARKANSAS TO: Mayor; Fayetteville City Council THRU: Don Marr, Chief of Staff FROM: Devin Howland, Director of Economic Vitality DATE: June 26, 2017 SUBJECT: Kimbel Mechanical Systems, Inc. Tax Back Program STAFF MEMO RECOMMENDATION: The City Staff and Administration recommend on behalf of the Mayor's office that the City Council of the City of Fayetteville pass a resolution in support of Kimbel Mechanical Systems, Inc. to participate in the State of Arkansas Tax Back Program. The Arkansas Economic Development Commission seeks local support for the Tax Back Program, and the City Council's action to support this application will result in their approval. BACKGROUND: The City of Fayetteville was contacted by Steve Clark, President and CEO of the Fayetteville Chamber of Commerce and Chung Tan, Director of Economic Development with the Fayetteville Chamber of Commerce, seeking endorsement of Kimbel Mechanical Systems Inc. to participate in the State of Arkansas Tax Back Program of the Consolidated Incentive Act of 2003. Kimbel Mechanical Systems, Inc. is a US company which was previously headquartered in Springdale. Kimbel Mechanical Systems (KMS) has moved its national headquarters to 1936 N Shiloh Drive. KMS is a construction mechanical contractor where they design and construct plumbing, electrical, and HVAC for the residential housing sector and commercial sector. During an expansion phase, KMS considered several sites and chose to locate its new facility in Fayetteville on North Shiloh Drive. With this proposal, KMS is committed to creating 55 new jobs which pay an average hourly wage of $27.37 for a total annual payroll of $3,131,128. In addition, they will be investing $580,000 on renovating and updating the existing building. Furthermore, KMS trains their entry level employees for licensing in plumbing and electrical, contributing to the development of a skilled workforce in the City of Fayetteville. DISCUSSION: Kimbel Mechanical Systems, Inc. meets the Fayetteville First Plan's goals of attracting corporate services and developing a skilled workforce. Mailing Address: 113 W. Mountain Street www.fayetteville-ar.gov Fayetteville, AR 72701 BUDGET/STAFF IMPACT: We believe the budget impact will be neutral. The job growth will spur new sales tax growth from the new employees but most importantly may lead to further expansion in this area supporting KMS's needs. Attachments: Exhibit A: Chamber of Commerce Support Letter Exhibit B: Consolidated Incentive Act of 2003 Incentive Application tFayetteville � Chamber of Commerce mom■ a June 13, 2017 Mayor Lioneld Jordan Fayetteville City Council 113 West Mountain Fayetteville, AR 72701 Dear Mayor Jordan and Council Aldermen: I am pleased to inform you that Kimbel Mechanical Systems, Inc. (KMS), a company previously headquartered in Springdale, has moved its -national headquarters to Fayetteville at 1936 N M Shiloh Drive. KS is a new construction mechanical contractor- where they design and/or execute plumbing, HVAC and electrical work for the residential and commercial housing sector. This expansion project includes the purchase of property in Fayetteville, $580,000 in improvements and new construction to the existing building as well as creating 55 new jobs in the process- Average hourly wage of the new employees will be $27.37 resulting in a new payroll of $3.1 million annually. KMS has applied for the Arkansas Tax Back program and the Fayetteville Chamber is very much in favor of supporting its application. I strongly recommend that the City leaders approve a resolution to refund sales and use taxes to KMS for qualified purchases under this program. Such action allows KMS to reinvest the funds in its expansion program and spur economic development in Fayetteville. KMS meets Fayetteville First's goals of attracting corporate services to Fayetteville and providing workforce training. KMS trains its entry level employees for licensing in plumbing and electrical thus contributes towards building a trained workforce in Fayetteville. KMS has the capabilities and expertise to successfully operate and manage the company as evidenced by this expansion exercise. I anticipate KMS to grow and expand even more in the future. Last but not least, KMS is a valuable asset that we can leverage when we attract new and complementary businesses to the city. Steve Clark, l I M President/CEO ?' iblount;iin. Ste 100 ` 11.0. Bo 1-116 11C, AR 7.70"2-4-)16 I_:l 1'). �?I i %I!) FAX -17() 51I.171)I `` �� .latettc,illear.com I Consolidated Incentive Act of 2003 Incentive Application Incentive Applicant OFFICE USE ONLY Project N Project Manager Date Received Please select which of the following program(s) are applicable to this application: Job Creation: I rJ Advantage ArkansaS (Income Tax Credit program) Investment: (construction, expansion, modernization) Applicants may only select one of the following proarams: [Tax Back (Sales and Use Tax Refund program) For new or expanding buisnesses with a $100,000 minimum investment OR 7 InveStArk (Sales and Use Tax Credit program) For existing businesses only, with two (2) or more years of operating in Arkansas, investing a minimum of $5,000,000 and obtaining a direct -pay sales/use tax permit. ��fi Local Operating Name of Company 1 G /V ,sGr.+t;,L .4 1K : V Yom✓! , rl�� r � 4� Mailing Address City/State Zip S9 ►vti G Physical Location of Project qq C i ty/S tate/Zip County Name and+ Title of Local Company Contact ..Phon+e Fax j Grl G . b a r rt e,C we �i � �,�c tet �t � . Pu+�w. f�. '�#tc& Company Contact a -ma address Company Web. to Complete Company Name, if company is filing for tax credit under a different name Consolidated Incentive Act of 2003 Application §15-4-2705, §15-4-2706(c), §15-4-2706(d) (Revised 7/09) Page 1 of 6 0 Project Cost Land Estimate Building (a) New construction ..................$ (b) Existing building ..................$ 5 -FO, 006 Equipment...... ............................................ $ Employments TOTAL ......... $F'o, 600 Present employment: / is Number of new employees resulting from this project: 5-5— Average SSAverage Hourly wage of new employees hired for this project: S 27 37 Total annual payroll of new employees hired for this project: $ 3 /3/28 NOTE: To qualify for the income tax credits provided by the Advantage Arkansas program, the company must be an eligible business and meet the minimum payroll requirements for the Tier (county) in which the project is located. The Tier Map is available on line at www.ArkansasEDC.com. -NAICS Classification Code Dtes�`�� tion of pr'i�cipa9 b�uts'�iness a tivity,}p`rotivcts manyfacttured etc: 1 / rTV �LHc��IP.GITYCGL�6Uo>'y a%t YG��,tG77w�a1>d laktlt��Gtt�f �I��SI �_ What percentage of the applicant's gross sales are retail sales to the public? (An eligible company must not derive more than 10% of its revenue from sales to the general public) If the applicant is a computer-related company, a distribution center, office sector business, motion picture company or a scientific and technical services business, 75% of the applicant's sales revenue must be derived from out of state. What percentage of the applicant's sales is derived from out of state? SO NOTE: Information contained in this application is subject to audit by the Arkansas Department of Finance and Administration. If any of the above information is found to be inaccurate and does not qualify, the business will be decertified and shall not receive any benefits and may be required to repay any benefits received, plus penalty. Consolidated Incentive Act of 2003 Application §15-4-2705, §15-4-2706(c), §15-4-2706(d) (Revised 7/09) Page 2 of 6 _ a When does your tax year end? 1.7- IL Month Date Consultant Information ! _ r (If Applicable) _-_- Name of Consultant filing this application Phone Fax I ] Consultant Firm Name Mailing Address Consultant E-mail address City/ State/ Zip Consolidated Incentive Act of 2003 Application §15-4-2705, §15-4-2706(c), §15-4-2706(d) (Revised 7/09) Page 3 of 6 I.D. Numbers Employer's Federal I.D. Number Arkansas Sales or Consumer Use Tax Number Information Ownership of Company (Please check the appropriate box.) for Income Tax E] Individual ❑ Partnership ❑ LLC Credit ❑Taxable Corporation Small Business Corporation (C Corporation) (Sub 5 Corporation) If ownership of company is Individual, Partnership, LLC or Small Business Corporation, please provide the following information (a separate attachment may be submitted if necessary): Name(s) Social Security Number or of Owner(s) Federal Tax I.D. Number _ a When does your tax year end? 1.7- IL Month Date Consultant Information ! _ r (If Applicable) _-_- Name of Consultant filing this application Phone Fax I ] Consultant Firm Name Mailing Address Consultant E-mail address City/ State/ Zip Consolidated Incentive Act of 2003 Application §15-4-2705, §15-4-2706(c), §15-4-2706(d) (Revised 7/09) Page 3 of 6 Project Plan Please indicate the activity planned by the company associated with this application. (Check all that apply) FNew Construction Expansion of existing business Idmodernization Estimated Start Date of Project: Estimated Completion Date of Project: _ Proje t Description: 6U,,, �� e&Y?o� elft jp�n'Sa yy+ �! a -/p QY 1 ¢ r �L414nE Kq f -/r2U*��c5 Project Cost Estimates: Description: Land: I Building: Land Total; I $ New construction: Expansion or /Purchase -of existing facility. Sae �76GtGlGt.�t S i4`e, 1 Description: Machinery and Equipment: $ s8o, Oro Building Total:_ $ sop pap T` Machinery & Equipment Total: $ Total Estimated Project Cost: $ Consolidated Incentive Act of 2003 Application §15-4-2705, §15-4-2706(c), §15-4-2706(d) (Revised 7/09) Page 4 of 6 Certification The undersigned authority, .I'1 -_ acknowledges that he/she is Company Official (Printed Name) the owner or authorized official of the applicant company that has the authority to act on behalf of the applicant. This affidavit is made for the specific purpose of verifying that the information contained in this application is true and correct. The applicant acknowledges that only those eligible project costs incurred and/or employees hired after the date this application is received by the Commission will be considered for refund or credit. The Advantage Arkansas program requires a separate financial incentive agreement, signed by the applicant company and the Commission, before hiring any new, full-time, permanent employees. The applicant company does hereby agree to report new job creation and investment figures annually to the Arkansas Department of Finance and Administration for the term of the incentive agreement and to the Arkansas Economic Development Commission upon request. - ^Signature of Company Official Title C7Mc Contract Disclosure Any individual contracting with the State of Arkansas must make full disclosure if he or she is a current or former: member of the General Assembly, Constitutional Officer, Board or Commission member, State employee, or the spouse or immediate family member of any of the persons described herein; or if such persons having any position of control or any ownership interest of ten percent (10%) or greater in the entity currently applying to contract with the State. Please indicate if this disclosure is required for this application. Failure to disclose such information is a criminal offense and shall render any contract with the State of Arkansas null and void. Disclosure Required?: Ayes or ZNo Press Release Disclosure I [:]do gdo not authorize the Arkansas Economic Development Commission to release to the press the ew job creation and investment figures. (Signing this authorization to release job creation and investment numbers is not mandatory. However, information about benefits received is public information and may be obtained through a Freedom of Information request filed with the Arkansas Department of Finance and Administration.) Signature of Company Official Title Date Consolidated Incentive Act of 2003 Application §15-4-2705, §15-4-2706(c), §15-4-2706(d) (Revised 7/09) Page 5 of 6 If you have questions about the incentive programs included in this application, please call the Arkansas Economic Development Commission at 501-682-7675 or visit the Commission's website at www.ArkansasEDC.com. Submit this application to: Business Development Division Arkansas Economic Development Commission 900 West Capitol, Suite 400 Little Rock, AR 72201 AEDC APPROVAL The Commission's approval of this application is based upon its content. The eligibility provisions of the individual incentive programs will be administered by the Arkansas Department of Finance and Administration upon audit at a later date. Signature of AEDC Incentives Manager Consolidated Incentive Act of 2003 Application §15-4-2705, §15-4-2706(c), §15-4-2706(d) (Revised 7/09) Page 6 of 6 Kimbel Mechanical Systems, Inc. Advantage Arkansas Program Tax Back Program Project Description Expansion of offices in Northwest Arkansas to allow for further growth of the Company's corporate and operations management personnel, and to provide for meeting, training and classroom facilities. Project Cost Estimate Land Building: (a) New construction* (b) Existing building* Equipment Total 580,000 $ 580,000 * Project Cost.Estimates 1. 'Refurbishment A. New HVAC units B. Remodel / paint / repairs C. Repave parking lot D. Furniture / fixtures - relocate E. Roof repair F. Electrical repair - G. Fire safety H. Clean-up 2. Improvements / new construction A. New meeting room and classroom B. Office and file room wall partitioning C. Flooring D. Signage E. Electrical upgrade F. Low voltage cabling G. Network engineering H. Security I. Audio / visual for meeting room and classroom J. Kitchen / break room upgrade Total Project Cost Estimate 50,000 50,000 10,000 10,000 15,000 37,500 25,000 3.000 77,000 10,000 75,000 10,000 37,500 7,000 18,000 2S,000 100,000 20,000 200,500 379,500 $ 580,000 1 Kimbel Mechanical Systems, Inc. Advantage Arkansas Program Tax Back Program Employment Present employment in Arkansas 195 Number of new Arkansas employees over the next 5 years*" 55 Average hourly wage of new employees $ 27.37 Total annual payroll of new employees $ 3,131,128 ** Estimated New Jobs Year Cumulative Jobs Average Hourly Wage Payroll Estimates Tax Credit Estimates 1 12 $ 27.37 $ 683,155.20 $ 6,831.55 2 28 $ 27.37 $ 1,594,028.80 $ 15,940.29 3 38 $ 27.37 $ 2,163,324.80 $ 21,633.25 4 47 $ 27.37 $ 2,675,691.20 $ 26,756.91 5 55 $ 27.37 $ 3,131,128.00 $ 31,311.28 Totals $ 10,247,328.00 $ 102,473.28