Economic Development Funding Agreement
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City of Salina
Economic Development Grant Offer and Agreement
Offer
This agreement entered into on the 17'h day of September, 2007 is made by and between
the City of Salina, Kansas, 300 West Ash Street, Salina, KS, herein called the "City", and
Hawker Beechcraft Corporation, whose address is 2656 Scanlan, herein called the
"Grantee."
WHERAS, the Grantee has submitted to the City an application for grant of City
economic development sales tax funds for facility improvements and major equipment
purchases for the addition of primary industrial jobs; and
WHERAS, the City's Salina Economic Development Incentives Council (SEDlC)
Reviewed Grantee's application and recommended to the Salina City Commission the
granting of $52,520 in City economic development sale tax funds for Grantee's project;
and
WHERAS, on September 17, 2007, the Salina City Commission approved the
expenditure of $52,520 as an economic development grant for Grantee's project
consisting of the following:
Construction of an aircraft fuselage loading dock at Building No. 626. I
The project is described in more detail in t1e attached application letter submitted by !
Grantee, Excerpt of Minutes and copy of Resolution Number 05-6220.
NOWTHEREFORE, pursuant to City of Salina appropriations authority and Resolution
Number 05-6220 and in consideration of the Grantee's acceptance of this offer, and the
bcnefits to accrue to the City of Salina and the public from the accomplishment of the
project and compliance with the assurances and conditions as herein provided, the City of
Salina hereby offers and agrees to pay $52,520 as the City's share of allowablc costs
incurred in accomplishing the project.
This offer is made on and subject to the following terms and conditions:
Conditions
I. The maximum obligation of the City of Salina under this Offer shall be $52,520.
2. Payment of the City's share of .the allowable project costs as detailed in the
Grantee's attached application will be made pursuant to paid invoices submitted
to the City by Grantee. Grantee may request multiple drawdowns of grant funds.
Grantee shall request Salina Airport Authority certification as to the completion
or percentage of completion of the Building No. 626 loading dock. The Grantee
will also request Salina Airport Authority certification that eligible project has
been completed at Grantee's leasehold premises.
3. Grantee agrees that the loading dock shall become a part of the Building No. 626
leasehold premises.
4. The project shall be complete within twelve (12) calendar months from the
execution date of the agreement.
5. Grantee shall use every reasonable effort to meet the job creation estimate of 33
new jobs provided to the SEDlC on September 12, 2007.
6. Grantee agrees to maintain all insurance coverages as required in its March 1,
1987 Lease Agreement, including all amendments with the Salina Airport
Authority and continue to name the Salina Airport Authority and City of Salina as
named co-insurers.
7. The official contact for the City is:
Lieu Ann Elsey
City Clerk
300 West Ash, P.O. Box 736
Salina, KS 67401
785-309-5735 (0)
785-309-5738 (F)
I ieuann.elsev@salina.org
8. The official contact for the Grantee is:
Mike Hammond
Director Hawker Beechcraft, Salina Division
Hawker Beechcraft Corporation
Plant #1
9709 East Central, P.O. Box 85
Wichita, KS 67201-0085
(316) 676-2373
mike hammond@hawkerbeechcraft.com
The Grantee's acceptance of this offer, ratification and adoption of the project application
incorporated herein shall be evidenced by execution of this agreement by the Grantee,
and thc offer and agreement shall comprise a Grant Agreement. Such Grant Agreement
shall become effective upon the Grantee's acceptance of the offer.
City of Salina
Attest:
L~
hson Gage
City Manager
~~
City Clerk
Acceptance
The Grantee does hereby ratify and adopt all assurances, statements, representations,
warranties, covenants and agreements contained in the project application letter and
incorporated materials referred to in the foregoing offer and does hereby accept the offer,
by such acceptance, agrees to comply with all of the terms and conditions in the Offer
and in the project applications letter.
Hawker
B~hc
day of Cclobti ,2001-
Evidenced this
B
ee s Designa fficial Representative
-:::Jf5:IV\-6S \(,&~j)oy
Title ~~) zt-\,P"D
Attest:
Title:
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION
DATE
09/17/2007
TIME
4:00 P.M.
AGENDA SECTION
NO:
8
ORIGINATING DEPARTMENT: APPROVED FOR
AGENDA:
CITY MANAGER'S OFFICE
ITEM
NO.
Page 1
4
BY: Jason A. Gage, City Manager
BY:
ITEM:
Consider an incentive request from the Hawker Beechcraft Corporation to fund 50% of an aircraft
fuselage loading dock at Airport Authority Building Number 626 for the addition of up to 33 new
primary industrial jobs.
BACKGROUND:
Hawker Beechraft Corporation (previously known as Raytheon Aircraft Company) has submitted a
request in an amount not to exceed $52,520 (50% of total project) to construct a fuselage loading
dock on an existing Airport Authority building. Up to 33 additional primary industrial jobs are expected
to be added as a result of this initiative. The local investment is estimated to be just under $1,600 per
job.
Please see the September 10, 2007 SEDIC memorandum from Salina Airport Authority Executive
Director Tim Rogers as it does a very good job of providing the related detail to this request. In
addition, we have included recommended contract language and a benefit/cost analysis provided by
Wichita State University's (WSU) Center for Economic Development and Business Research. The
benefit/cost analysis provided by" WSU illustrates individual taxing entity benefit/cost ratios well in
excess of 1.0. Any ratio in excess of 1.0 illustrates a total benefit which exceeds the cost to the
affected taxing entities.
This incentive request was recently reviewed by the Salina Economic Development Incentives
Council (SEDIC). Their role is to make a recommendation regarding the approval or denial of such
requests to the City Commission. While an executive session discussion for this item is not
anticipated, the City Commission may still choose to go into executive session if a need exists to
discuss certain confidential data related to the financial affairs or trade secrets of the corporation prior
to making a decision.
FISCAL NOTE:
If authorized, this request will be funded from the 12.5% economic development allocation of the
City's Special Y. Cent Sales Tax, which is accounted for in the City's Sales Tax Economic
Development Fund.
ALTERNATIVES AND RECOMMENDED ACTION:
Alternative #1: Approval of the request to provide capital investment funding to Hawker Beechcraft
Corporation for a fuselage loading dock in an amount not to exceed $52,520.
Alternative #2: Denial of the request to provide capital investment funding to Hawker Beechcraft
Corporation for a fuselage loading dock in an amount not to exceed $52,520.
This item was recommended for approval with a 5-0 vote by the SEDIC at their September 12, 2007
meeting. Staff believes this request clearly meets the intent of Resolution #05-0220, which provides
for the fundin of ca ital ex enditures in ro ert, lant and e ui ment to stimulate' ob rowth for
"
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION
DATE
09/17/2007
TIME
4:00 P.M.
AGENDA SECTION
NO:
8
ORIGINATING DEPARTMENT: APPROVED FOR
AGENDA:
CITY MANAGER'S OFFICE
ITEM
NO. 4 BY:
Page 2 BY: Jason A. Gage, City Manager
primary businesses. As a result, Staff also recommends Alternative #1.
Attachment: Company request letter dated August 15, 2007
Tim Rogers memorandum dated September 10, 2007
Letter to Mayor Jilka dated September 10, 2007
Loading dock construction estimate from Lancaster Construction
Recommended grant agreement
WSU BenefiUCost Analysis
Special % Cent Sales Tax Cash Flow Report
Draft minutes from the September 12, 2007 SEDIC meeting
Resolution No. 05-6220
EXECUTIVE DIRECTOR
3237 Arnold Ave.
Salina. Kansas 67401
Telepnooc(78S) 827.)914. FAX (785) 821.2221 . E-Maillrogers@sahair,org
DATE:
September 10, 2007
FROM:
Salina Economic Development Incentives Council
Tim Rogers 7:.--
Hawker Beechcmft Corpomtion Omnt Application
TO:
SUBJECT:
Enclosed is a letter from Hawker Beechcmft Corpomtion (HBC) requesting SEDIC considemtion of a $52,520
gmnt from the City of Salina special sales lax fund for economic development. The gmnt funds would be used 10
fund 50% of the cosl ofa new loading dock at HBC's Building No. 626.
In addition to the HBC application letter you will find a copy of a bid for the conslruction of the loading dock
and a dmft City of Salina Economic Development Omnt Offer and Agreement.
One of the first SEDIC gmnts was awarded to Raytheon Aircmft Company (now Hawker Beechcmft
Corpomtion) in August 2006. The 2006 gmnt award of $130,000 resulted in 31 new jobs at the HBC Salina
Division. The 2006 commitment was for 20 new jobs. Total employment althe division is now 385.
The avemge wage for the Salina Division work force is $21.60 per hour. Total 2007 payroll for the division
now exceeds $17,297,280 as compared to $15.9 million in July 2006.
The continual growth of the HBC Salina Division is consistent with the SLN Aviation Service Center
Marketing and Recruiting Plan adopted by the SAA Board of Directors in 2006. The plan is now a part of the
2007 Saline and Salina County Economic Development Stmtegic Plan. Both plans identify HBC as an exisling
employer with significant job growth potential.
The HBC growth at Salina has lead to meetings with other aviation support businesses that are considering a
SLN Aviation Service Cenler location in order to support HBC's growth in manufacturing aircmft structures.
You will note that the proposed HBC gmnt offer and agreement does not contain a c1awback provision. The
gmnt funds will be used to construct a capital improvement that will become a part of Building No. 626. The
loading dock will benefit the community over a long time period since the physical asset will remain a part of
Building No. 626.
It is also important to note that HBC has demonstmted its ability to meet and exceed job growth projections as
evidenced by the corpomtion' s 2006 - 2007 performance.
At the SEDIC meeting you will receive a copy of the WSU economic impact analysis for the project.
Recommendation Approval of a $52,520 SEDIC application submitted by Hawker Beechcmft Corpomtion to
be used to fund the continuation of a $105,040 aircmft fuselage loading dock at Building No. 626.
~;mvkeI- <1?eechcraft
---
Hawker Beechcraft Corporation
2656 Scanlan Avenue
Salina,Kansas
67401 USA
September 10, 2007
The Honorable Alan Jilka
Mayor
City of Salina
300 West Ash Street
Salina, KS 67401
RE: Salina Economic Development Incentives
Council Economic Development & Grant Application
Dear Mayor Jilka:
Hawker Beechcraft Corporation (formerly Raytheon Aircraft Company) requests SEDIC
consideration of a $52,520 grant from the City of Salina special sales tax fund for
economic development. The grant would assist Hawker Beechcraft with the process of
bringing additional aircraft structures manufacturing to its Salina Division and create
additional new jobs benefiting Salina and Saline County.
In August 2006 the SEDlC and Salina City Commissioners approved a $130.000 SEDlC
grant for modifications to Building No. 626 and the purchase of tools and equipment.
The 2006 grant enabled Hawker Beechcraft to bring additional structures work to the
Salina Division, and as a result 31 new jobs were added to the Salina Division workforce.
(Note: July 2006 employment was 354 workers. August 13. 2007 employment was 385
employees) The corporation's 2006 SEDlC grant application projected that a total of20
new jobs would be created at the Salina Division.
The next opportunity for the Salina Division is to become the site for building the
Hawker 400A fuselage. The Salina Division already builds the nose, cockpit, wings,
empennage and engine nacelles for the Hawker 400A. The Hawker 400A fuselage would
require an additional 33 Salina Division employees based upon current production rates
for the aircraft.
The Hawker 400A fuselage would be built in Bldg. No. 626. The one limitation is the
lack of loading dock that will accommodate the fuselage structures. The fuselage
structure will need to be properly loaded for transport to its final assembly destination.
The cost estimate of constructing a loading dock is $105,040 (tax not inc1.uded). Hawker
Beechcraft will contribute $52,520 (a 50% match) to the cost of loading dock
construction. The loading dock will improve the utility of Building No. 626 and the
improvements will become a part of the building.
"
Page No.2
Mayor Alan Jilka
September 10,2007
Hawker Beechcraft appreciates its long-term partnership with the Salina community,
Your favorable consideration of the grant request will enable Hawker Beechcraft to
provide further economic benefits to the Salina and Saline County area.
Sincerely,
Hawker Beechcraft Corporation
~/~
Mike Hammond
Director, Plant 1 & Salina
C:\DOCumenfs and Seuingivs7/424\Local SetlingnTemporary In/erne' Files\OLKJ lAVlammond ,rsnmrl grant rqsl 08-17.07 (Z).doc
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227 N. Santa Fe, 5ulte 307 Salina, KS 67401 785-823-8859/785-823-8863 Fax blllld@yahoo.com
September 10. 2007
Raytheon Aircraft
2656 Scanlan Ave.
Salina, KS 67401
Attn: Darwin Dykes
Project: Loading Dock / South Wall EnClosure at Building 626
Thank you for taking the time to review the enclosed. quote for the loading dock /
wall enclosure located at Building 626 in Salina, Ks.
Lancaster Construction, Inc. has been in business for over 25 years; and we have a
proven track record of completing jobs on time, with superior craftsmanship and
quality products. Local, regional and national companies have used Lancaster
Construction, Inc. for its concrete, commercial, industrial and residential
construction and remodeling needs.
Lancaster Construction, Inc. is committed to satisfying its customer needs by
giving the most competitive prices available. Please contact us to go over the quote
and answer any questions you might have.
Thank you for considering Lancaster Construction, Inc for your building and
concrete needs.
We look forward to hearing from you in the future.
Thank you,
Bill Pratt
Lancaster Construction, Inc.
Attached: Quote for loadl"!!: dock I wall enclosure located at Huildin!!: 626
Labor and materials to complete loading dock / south wall enclosure for Raytheon
Aircraft located at Building 626 in Salina,Ks. Loading dock to be similar to dock at
Building 959 and as per conversation with Darwin.
Price to include the following:
- Site preparation
- Loading Dock Pit outside 60' x 14' x 4'
- Handrails 2 - 60' x 42"
- Loading Dock inside 15' x 15' x 8"
- Dock Leveler - 6' x 8' - ElectrkJhydraulic
- Remove sliding doors / walls at south end of Building 626
- Install permanent wall at south end of Building 626
- 2 - 36" x 80" insulated walk thru doors
- 2 - 10' x 10' insulated overhead doors
Total price: $ 105.040.00 Tax not included
Thank you for considering Lancaster Construction, Inc for your building needs.
Please feel free to call if you have any questions.
Bill Pratt
Lancaster Construction, Inc.
RESOLUTION NUMBER 05-6220
A RESOLUTION ESTABLISffiNG THE SALINA ECONOMIC DEVELOPMENT
INCENTIVES COUNCIL.
WHEREAS, that in 2004, Salina voters approved a special one-quarter cent (1/4 cent) sales
tax and 12.5% of the revenues from the special sales tax were restricted to the establishment of an
economic development fund managed by the City of Salina; and
I
WHEREAS, that in October 2004, the City Commission unanimously approved an
initiative proposed by the Salina Airport Authority and the Salioa Area Chamber of Commerce to
provide incentives to new and existing manufacturing and primary businesses; and
WHEREAS, that the City Commission fonned an ad hoc committee led by the Mayor and
Vice Mayor to further explore the protocol for expending the economic development funds, which
then resulted in the establishment of a six member Salina Economic Development Incentives
Council. SO NOW THEREFORE,
BE IT RESOLVED by tbe governing body of the City of Salina. Kansas:
Sectiun 1. Establishment. That the Salina Economic Development Incentives Council
(S.E.D.I.C.) is hereby established.
Section 2. Responsibilities. The responsibilities of the S.E.D.I.C. arc to:
(a) Develop and recommend guidelines, policies and processes to the City
Commission for grants from the allocated special sales tax funds for incentives to
new and existing manufacturers and primary businesses for the purpose of
enticing them to relocate or expand capital andlor human investment in
Salina/Saline County in order to provide a stimulus to the local economy;
I
(b) Review applications and make specific recommendations to the City
Corrunission regarding grants from the sales tax;
(c) Make recommendations to the City Commission, County Commission andlor
local government bodies regarding othcr public economic devclopment
incentives; and
(d) Provide regular reports to the City Commission, County Commission, Salina
Airport Authority Board of Directors and the Chamber of Commerce Board of
Directors regarding economic development projects receiving incentives.
Section 3. Membership, The S.E,D.I.C, will be made up of the following persons:
(a) Mayor;
(b) Saline County Commission Chair;
(c) Salina Airport Authority Board Chair;
(d) Salina Chamber of Commerce Board Chair;
I
(e) Two citizens appointed by the Mayor and the City Commission; and
(f) Citizen appointed by the Saline County Commission
The citizens appointed by the City and County shall serve for terms of two years and shall be
eligible for reappointment in accordance with Resolution No. 90-4242. Initial city citizen
appointments shall be staggered to expire February 2007 and February 2008.
Section 4. Organization, The S.E,D,I.C. chair shall be the Mayor and vice-chair shall be the
Saline County Commission Chair,
Section 5. Administration. Administration of the S.E.D.LC. shall be as follows:
(a) Meetings are to be held at least quarterly, and otherwise as needed for related
projects, projects, programs and funding applications;
(b) Professional staffing for the S.E.D.I.C. to be provided by the City Manager,
Airport Authority Executive Director and Chamber of Commerce President;
I
(c) Administrative/clerical support shall be provided by the Chamber of Commerce;
(d) All meetings/records are covered under the Kansas Open Meetings Act and Open
Records Act as specified by State law; and
(c) The use of Local organizations and other resources is highly encouraged.
Section 6. Miscellaneous. Miscellaneous considerations regarding this council are as
follows:
(a) For purposes of the S.E.D.l.C. "primary business" includes manufacturing,
processing, interstate uistribution, research, or service sector businesses which
derive a minimum of90% o[revenue from sources out<;ide Saline County;
(b) Sales tax grants are to focus primarily on human capital investment in training
and capital investment in plant, property and equipment, with priority briven to
human capital investment in training. Also, it is important to ensure that existing
primary businesses remain eligible for grant funding; and
I
(c) A program performance review is recommended in the fourth quarter of 2006.
1bis will allow for a full year of operation and provide an opportunity to make
any adjustments deemed necessary for the remaining term of the special sales tax
funding.
Section 7. Effective Date. This resolution shall take effect from and after its adoption.
2005.
Adopted by the Board of Commissioners and Sign~:EY of October,
Deborah Divine, Mayor
[SEAL]
ArrEST:
~~Clerk
I
,CoJIl[t1ission
Action #
CITY OF SALINA, KANSAS
REGULAR MEETING OF THE BOARD OF COMMISSIONERS
September 17,2007 Minutes Excerpt
4:00 p.m.
The City Commission convened at 2:30 p.m. in a Study Session on the Wastewater Treatment Facility.
The Regular Meeting of the Board of Commissioners was called to order at 4:00 p.m. in Room 107,
City-County Building. A roll call was taken followed by the Pledge of Allegiance and a moment of
silence.
There were present: Mayor Alan E. Jilka, Chairman presiding; Commissioner Luci Larson;
Commissioner Aaron Peck; Commissioner R. Abner Perney; Commissioner John K. Vanier II
Absent: None
ADMINISTRATION
(8.4) Approval of a request to provide capital investment funding to Hawker Beechcraft
Corporation.
Jason Gage, City Manager, explained the request and the Salina Economic Development
Incentives Council's recommendation.
Tim Rogers, Salina Airport Authority Executive Director, and Mr. Gage responded to
Commissioner Larson's question regarding the inclusion of sales tax.
07-7246 Moved by Commissioner Vanier, seconded by Commissioner Larson, to approve .the
request to provide capital investment funding to Hawker Beechcraft Corporation for a fuselage loading
dock in the amount not to exceed $52,520. Aye: (5). Nay: (0). Motion carried.
07 -724 7 Moved by Commissioner Vanier, seconded by Commissioner Peck, to recess into executive
session for 20 minutes to discuss with the City Attorney matters subject to the attorney-client privilege
for the reason that public discussion of the matters would waive that privilege and adversely affect the
City's interests in the matters; and reconvene at 4:45 p.m. Aye: (5). Nay: (0). Motion carried.
ADJOURNMENT
07-7248 Moved by Commissioner Vanier, seconded by Commissioner Larson, that the Regular
Meeting of the Board of Commissioners be adjourned. Aye: (5). Nay: (0). Motion carried. The
meeting adjourned at 5:35 p;m.
/s/ Alan E. Jilka
Alan E. Jilka, Mayor
[SEAL]
ATTEST:
/s/ Lieu Ann Elsev
Lieu Ann Elsey, CMC, City Clerk
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