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Home My WebLink About61-18 RESOLUTION113 West Mountain Street Fayetteville, AR 72701 (479) 575-8323 Resolution: 61-18 File Number: 2018-0089 OURPHARMA, LLC TAX BACK PROGRAM: A RESOLUTION TO APPROVE AND CERTIFY THE PARTICIPATION OF OURPHARMA, LLC 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 OURPHARMA, LLC FOR QUALIFIED PURCHASES WHEREAS, OurPharma, LLC, a pharmaceutical manufacturing and compounding company headquartered in Fayetteville has purchased property at 2512 South City Lake Road in the Fayetteville Commerce District and plans a total investment of more than $36 million, including $31.3 million to construct 55,720 square feet of building space and more than $5 million for machinery and equipment; and WHEREAS, OurPharma, LLC is committed to creating 41 new full time jobs within the first two years paying an average hourly wage of $34.42 an hour for a total payroll of approximately $2.9 million, with plans to expand to more than 100 employees in the future; and WHEREAS, OurPharma, LLC meets the Fayetteville First Plan's strategic focus of developing manufacturers and specialized technology companies; and WHEREAS, in order to certify OurPharma, LLC 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 OurPharma, LLC'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. Page 1 Printed on 2121118 Resolution: 61-18 File Number: 2018-0089 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 OurPharma, LLC's participation in the sales and use tax refund program authorized by A.C.A. §15-4-2706(d) in relation to its construction, 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 OurPharma, LLC for qualified construction and equipment purchased for its facility in Fayetteville, Arkansas. PASSED and APPROVED on 2/20/2018 Attest: Lwe,l, 6. Z.,& Sondra E. Smith, City Clerk Treasurer, �,��ta�trrrr 4 Page 2 Printed on 2121118 - City of Fayetteville, Arkansas 113 West Mountain Street Fayetteville, AR 72701 (479) 575-8323 Text File File Number: 2018-0089 Agenda Date: 2/20/2018 Version: 1 Status: Passed In Control: City Council Meeting File Type: Resolution Agenda Number: A. 9 OURPHARMA, LLC TAX BACK PROGRAM: A RESOLUTION TO APPROVE AND CERTIFY THE PARTICIPATION OF OURPHARMA, LLC 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 OURPHARMA, LLC FOR QUALIFIED PURCHASES WHEREAS, OurPharma, LLC, a pharmaceutical manufacturing and compounding company headquartered in Fayetteville has purchased property at 2512 South City Lake Road in the Fayetteville Commerce District and plans a total investment of more than $36 million, including $31.3 million to construct 55,720 square feet of building space and more than $5 million for machinery and equipment; and WHEREAS, OurPharma, LLC is committed to creating 41 new full time jobs within the first two years paying an average hourly wage of $34.42 an hour for a total payroll of approximately $2.9 million, with plans to expand to more than 100 employees in the future; and WHEREAS, OurPharma, LLC meets the Fayetteville First Plan's strategic focus of developing manufacturers and specialized technology companies; and WHEREAS, in order to certify OurPharma, LLC 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 OurPharma, LLC'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 OurPharma, LLC's City of Fayetteville, Arkansas Page 1 Printed on 212112018 File Number: 2018-0089 participation in the sales and use tax refund program authorized by A.C.A. §15-4-2706(d) in relation to its construction, 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 OurPharma, LLC for qualified construction and equipment purchased for its facility in Fayetteville, Arkansas. City of Fayetteville, Arkansas Page 2 Printed on 212112018 City of Fayetteville Staff Review Form 2018-0089 Legistar File ID 2/20/2018 City Council Meeting Date - Agenda Item Only N/A for Non -Agenda Item Devin Howland 1/25/2018 ECONOMIC DEVELOPMENT (050) Submitted By Submitted Date Division / Department Action Recommendation: OURPHARIVIA, LLC: A RESOLUTION TO APPROVE AND CERTIFY THE PARTICIPATION OF OURPHARIVIA, LLC IN THE ARKANSAS TAX BACK PROGRAM AND TO AGREE TO AUTHORIZE THE DEPARTMENT OF FINANCE AND ADMINISTRATION TO REFUND CITY SALES TAX BACK TO OURPHARMA, LLC FOR QUALIFIED PURCHASES Account Number Project Number Budgeted Item? No Does item have a cost? No Budget Adjustment Attached? NA Previous Ordinance or Resolution d Original Contract Number: Comments: Budget Impact: Current Budget Funds Obligated Current Balance Item Cost Budget Adjustment Remaining Budget Fund Project Title L.. Approval Date: V20140710 CITY OF FAYETTEVILLE ARKANSAS MEETING OF FEBRUARY 20, 2018 TO: Mayor and City Council THRU: Don Marr, Chief of Staff FROM: Devin Howland, Director of Economic Vitality DATE: January 25, 2018 SUBJECT:' OurPharma, LLC Tax Back Program CITY COUNCIL 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 OurPharma, LLC 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 and Chung Tan, Chief Economic Development Officer of the Fayetteville Chamber of Commerce, seeking endorsement of OurPharma, LLC to participate in the State of Arkansas Tax Back Program of the Consolidated Incentive Act of 2003. OurPharma is a Fayetteville grown new business that will manufacture and compound pharmaceutical medications. Currently, they are building a new campus at 2512 S City Lake Road in the Fayetteville Commerce District. OurPharma, LLC is making an estimated $31.2 million investment in the facility, which will consist of 55,720 SF across multiple buildings. Machinery and equipment cost are estimated to be over $5 million. Initially, OurPharma will create 41 new jobs within the first 2 years, expanding to over 100 new jobs in the future. Average pay is more than $30 an hour, over two times MIT's estimated living wage for the City of Fayetteville. DISCUSSION: OurPharma, LLC meets the Fayetteville First Plan's strategic focus of developing manufacturers and specialized technology companies. BUDGET/STAFF IMPACT: We believe the budget impact will be neutral. The job growth and quality wages will spur new sales tax growth from the new employees, but most importantly the development may lead to further expansion in the area supporting OurPharma's needs. Mailing Address: 113 W. Mountain Street Fayetteville, AR 72701 www.fayetteville-ar.gov Attachments: Exhibit A: Fayetteville Chamber of Commerce Support Letter Exhibit B: Consolidated Incentive Act of 2003 Incentive Application Fayetteville Chamber of Commerce To: Mayor Lioneld Jordan City of Fayetteville CC: Don Marr, Chief of Staff Devin Howland, Director of Economic Vitality From: Steve Clark, President & CEO Date: January 24, 2018 Subject: Recommendation to pass a City Resolution to support Tax Back Sales/Use Tax Refund for OurPharma, LLC OurPharma, LLC has made an application with the Arkansas Economic Development Commission (AEDC) to participate in the state's Tax Back (Sales and Use Tax Refund) program. This program allows Arkansas businesses (new or expanding) with a minimum of $100,000 in new investments to receive a tax back from sales and use tax paid on qualified expenses related to the new development or expansion. OurPharma, LLC is a home grown new business that will manufacture and/or compound pharmaceutical medications. OurPharma is now working on building a new campus at 2512 S City Lake Road in the Fayetteville Commerce District. This new development project will have: a) Two phases, Phase I and II. The investments are estimated at $31.3M. b) New construction of a 22,460 SF compounding facility, a 22,460 SF manufacturing facility, and a 10,800 SF administration building on a green site. c) An initial creation of 41 new jobs within the first 2 years and eventually expanding to over a hundred jobs. d) Average rate of pay of more than $30/hr. e) Machinery and equipment costs estimated to be over $5 M ,� j - 21 bV. hr€Du"tail?, Ste. Y"O,C, 15-0, 4210", Pcl,/Pl[i20114' i. 7t77v[. Te 1: !4;":j 2i 71 ,); Fax (479) 521-1791; 'wWw.fayetteviIIear.coln Ouftarma/Page 2 OurPharma meets the criteria for the type of businesses we want in Fayetteville and it is in our targeted sectors recommended in the Fayetteville First Economic Development Strategic Plan. As a locally owned business, OurPharma offers excellent paying jobs while striving to be an innovative manufacturer in the healthcare sector. We expect this company to make a difference in the pharmaceutical arena and to provide affordable solutions to diabetic patients nationally and globally. We definitely would like to show support for companies such as OurPharma and to encourage future companies to set up their business in Fayetteville that I respectfully request that the City passes a Resolution to support the Tax Back Sales/Use Tax Refund for OurPharma. Thank you for your kind consideration in this matter. Yours truly, //J�o (Wk Steve Clark, IOM President and CEO OFFICE USE ONLY Consolidated Incentive Act of 2003 Project# -- - Incentive Application -- - Incentive Program Project Manager Date Received Please select which of the following program(s) are applicable to this application: Job Creation- ❑ Advantage Arkansas (Income Tax Credit program) IrtYeStMent: (construction, expansion, modernization) ARplFcant-s_m ing pr0Lranrs: ® Tax Back (Sales and Use Tax Refund program) For new or expanding buisnesses with a $100,000 minimum investment OR ❑ 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. Consolidated Incentive Act of 2003 Discretionary Incentive Application 415-4-2706(b) and §15-4-2707 (Revised 6/09) Page 1 of 7 Consolidated Incentive Act of 2003 Discretionary Incentive Application The incentive programs included in this application are discretionary and may only be offered upon approval by the Director of the Arkansas Economic Development Commission. This application should not be completed unless the incentive has been offered.by the director. Incentive Program OFFICE USE ONLY Project H -- -- � — Project Manager Date Received Pease select which of the following program(s) are applicable to this application: Job Creation: ® Create Rebate (Payroll rebate program) Requires $2,000,000 minimum payroll for new full-time permanent employees Investment: (construction, expansion, modernization) ❑ A1rkPIUS (Income Tax Credit program) Requires investment and Job creation threshold according to the tier in which the project is located OurPharma, LLC Local Operating Name of Company 3657 E Leawood Way c/o Peter Kohler Payeltevllle, AR 727 Mailing Address 03 City/State Zip 2512 S City Lake Road Fayetteville, AR 72701 _ Physical Location of Project City/State/Zip County Peter O. Kohler (479) 871-7341 479) 347-2857 Name and Title of Local Company Contact Phone Fax akohler our)harma,net w4vw ourpharma,net Company Contact e-mail address Company Website complete Company Name, if company is filing for benefits under a different name Consolidated Incentive Act of 2003 Discretionary Incentive Application §15-4-2706(b) and §15-4-2707 (Revised 6/09) Page 2 of 7 Project Cost Estimate Employment Land ......,.$ 223,500 Building (a) New construction .................. $ 25,740,000 (b) Existing building .................... $ Equipment ................................................ $ 5,350,000 TOTAL ...............$ 31,313,500 Present employment: 2 Number of new employees resulting from this project: 41 Average Hourly wage of new employees hired for this project: $ 34.42 Total annual payroll of new employees hired for this project: $ 2,920,781 NOTE: 'To qualify for tate benefits of the ArkPlus or Create Rebate programs, the approved 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 ww—,k-ArkansasEDC.com. NAICS Classification 3z5a10 Code Pharmaceutical Preparation & Manufacturing Description of principal business activity, products manufactured, etc. What percentage of the applicant's gross sales are retail sales to the public? 0 (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? 0 % NOTE: Information contained In this attplicatlon 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 ponalty. Consolidated Incentive Act of 2003 Discretionary Incentive Application §15-4-2706(b) and §15.4-2707 (Revised 6/09) Page 3 of 7 I.D. Numbers Employer's Federal I.D. Number 81-3883932 Arkansas Sales or Consumer Use Tax Number Will Apply For information Ownership of Company (Please check the appropriate box.) for Income Tax ❑ Credit Individual ❑Partnership ❑LLC ❑Taxable Corporation ❑ Small Business Corporation (C Corporation) (Sub S 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) Percent Social Security Number or of Owner(s) Ownership Federal Tax I.D. Number Peter O. Kohler 1 100.00 229416-2660 Consultant Information (If Applicable) When does your tax year end? 12 31 Month Date Name of Consultant filing this application Phone Consultant Firm Name Mailing Address City/'State,/ Zip Consultant E-mail address Fax Consolidated Incentive Act of 2003 Discretionary Incentive Application §15-4-2706(b) and §15-4-2707 (Revised 6/09) Page 4 of 7 Project Plan Please indicate the activity planned by the company associated with this application. (Check all that apply} x❑ New Construction ❑ Expansion of existing business ❑ Modernization Estimated Start Date of Project: 12117 Estimated Completion Date of Project: 9118 Project Description: aurPharma, LLC intends to build a new facility in the Fayetteville Commerce Park located at 2512 S City Lake Road to provide space necessary to allow for the manufacturing and compounding of pharmaceutical medications. The initial capital cost of Phases I and II is expected to be 31.3M and will allow for the hiring of approximately 41 new employees within 2 years at an average rate of pay estimated to be $34.421hour. Project Cost Estimates: Land: Building: Description: 2512 S City Lake Road in the Fayetteville Commerce Park was recently purchased for the development of the prolecl, It is approximately 14.9 acres, and will allow for the planned Uwe expansion. Land Total: 1 $ New construction: Phase 1- 22,460 sq ft building for compounding & a 1,243 sq ft waste building Phase II - 22,460 sq It manufacturing building & a 10,800 sq ft administration building Expansion or Purchase of existing facility: 27,3,500 7,500,000 18,240,000 $ 25,740,000 _ Building Total: $ 2 740,000 Description: Machinery and Equipment: Phase I - the prolect will require 8 clean rooms, sterile hoods 2,850,000 for ventilation, monitoring equipment, extensive security system, and refrigerated and secure storage .-- -- Phase II - will require 5 lines for manufacturing. We will 2,500,000 start with 3 and add 2 more In approximately 6 month. �� $ 5.350,000 _ Machinery & Equipment Total; $ 5,350,000 _ Total Estimated project Cost; $ 31 313500 Consolldated Incentive Act of 2003 Discretionary Incentive Application §15.4-2706(b) and §15-4-2707 (Revised 6/09) Page 5 of 7 Certification The undersigned authority, _ Peter, O. Kohler, M.D. acknowledges that he/she is CompanvOlficial (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 ArkPlus and Create Rebate programs require 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. y CEO_ __ 11/21/1.7 Signature of company ofiirlal Title Date - — - 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 appfication. Failure to disclose such information is a criminal offense and shall render any contract with the State of Arkansas null and void, Disclosure Required?: ❑X Yes or ❑ No Press Release Disclosure I x❑ do ❑ do not authorize the Arkansas Economic Development Commission to release to the press the new 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.) fir. Sgnatnr FfiCEO 11Dat/17 Company0iclal Title Date Consolidated Incentive Act of 2003 Discretionary Incentive Application §15-4-2706(b) and §SS -4-2707 (Revised 6/09) Page 6 of 7 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. AEDC Executive Director Consolidated Incentive Act of 2003 Discretionary Incentive Application §15-4-2706(b) and §SS -4-2707 (Revised 6/09) Page 7 of 7