8.8 Matrix Electronic SEDIC Funding RequestCITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION DATE TIME
3/23/2009 4:00 P.M.
AGENDA SECTION ORIGINATING DEPARTMENT: APPROVED FOR
NO: 8 AGENDA:
CITY MANAGER’S OFFICE
ITEM
NO. 9
BY:
BY: Jason A. Gage, City Manager
Page 1
ITEM:
Consider a grant request from Matrix Electronic M easuring, Inc. to assist with ongoing product
development, foreign patent protection, and creation of eight (8) additional jobs for Salina.
BACKGROUND:
Matrix is not unlike other established Salina manufacturers such as Salina Vortex, Geoprobe Systems,
Tony’s Pizza, Great Plain’s Manufacturing, KASA Industrial Controls, and Blue Beacon International.
These established manufacturers were started in Salina at the hands of entrepreneurs with innovative
ideas. Matrix is lead by local entrepreneurs that are growing Salina’s next successful and innovative
manufacturing operation.
As noted in the company’s application letter, Matrix is requesting a $100,000 economic development
grant to assist with ongoing pr oduct development of a stereoscopi c, 3-D computerized measuring
system with related software, and foreign patent protection. The wand is a hand-held, wireless, stand-
alone tool that is used to provide precise, triangulated measurements with a minimum accuracy of two
millimeters. The wand and related software are currently being targeted to the $38 billion automotive
collision repair industry. This industry is in need of a product that can produce exact measurements
that can be archived, retrieved, re-examined and accessed. Today, there is no such product available
on the market. It is very probable that this pr oduce will eventually find the same type of niche for
many other industries, ranging from those that require field investigations to the medical industry.
To date, over $2.2 million has been raised from Salina area investors. A $100,000 SEDIC grant will
enable the company to achieve its next development goals for the wand and add eight (8) additional
employees for Salina. The eight new employees would be hired at an av erage wage of $52,050
($25.00/hr). The average salary of all employee classifications is above the respective County
averages, which is required by t he “Salina Economic Development Strategic Plan”. These are
primarily administrative, technical and product marketing personnel.
The SEDIC is given the responsibility to develop recommendations for grants from the allocated
special sales tax funds for incentives to new and existing manufacturers for the purpose of enticing
them to relocate or expand in Salina/Saline County in order to pr ovide a stimulus to the local
economy. This grant applic ation is an opportunity to entice Matrix to c ontinue its growth and
development in Salina/Saline County. The immediate benefit will be eight (8) new jobs. The future
opportunity will be the selection of Salina/Saline County as the manufacturing and assembly site for
the Matrix wand (software, camera, and wand) if the product demand me ets or exceeds the
company’s expectations. The product is anticipat ed to be ready for full marketing and production
sometime this year.
The Wichita State University (WSU) Benefit-Cost A nalysis is included, and provides a benefit-cost
ratio in excess of 1.0 for all impacted governmental units.
It is anticipated that the City Commission may request to ask questions of Matrix representatives that
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION DATE TIME
3/23/2009 4:00 P.M.
AGENDA SECTION ORIGINATING DEPARTMENT: APPROVED FOR
NO: 8 AGENDA:
CITY MANAGER’S OFFICE
ITEM
NO. 9
BY:
BY: Jason A. Gage, City Manager
Page 2
deal with trade secrets or financial affairs of the company. These are considered to be of a private
nature and can be discussed in an executive session setting. As a result, Staff has included agenda
language regarding an executive session in anticipation of this.
FISCAL NOTE:
If authorized, this request will be funded from the 12.5% economic development allocation of the
City’s Special ¼ Cent Sales Tax, which is a ccounted for in the City’s Sales Tax Economic
Development Fund (see attached Special ½ Cent Sales Tax Cash Flow Report)
CONFORMANCE WITH STRATEGIC PLAN
GOAL #3:
Staff believes that local development of entrepreneurial businesses with strong growth potential such
as Matrix will foster this goal.
ALTERNATIVES AND RECOMMENDED ACTION:
Alternative #1: Approve the gr ant request to fund ongoing product development and foreign patent
protection to Matrix Electronic Measuring, Inc. in an amount not to exceed $100,000
and authorize Staff to enter into a grant offer agreement (see attached).
Alternative #2: Deny the request to fund ongoing product development and foreign patent protection
to Matrix Electronic Measuring, Inc. at this time.
This item was recommended for approval by the SED IC at their March 16, 2009 meeting. Staff
believes this request fully meets the intent of Resolution #05-6220, which provides for the funding of
research and related product development to stimulat e job growth for primary businesses. As a
result, Staff recommends Alternative #1.
Attachment: Matrix Electronic Measuring, Inc. letter of request
WSU Benefit-Cost Analysis
DRAFT Grant Offer Agreement
Resolution No.05-6220
Special ½ Cent Sales Tax Cash Flow Report
Center for Economic Development and Business Research
Wichita State University
1845 Fairmount St.
Wichita, Kansas 67260-0121
(316)978-3225
OF
311812009
OF
OF
Draft
0
Taxabatement 0
Sales tax exemption 0
Forgivable loans 0
Training dollars 0
Infrastructure 0
Cash value all other incentives
0
0
Taxabatement 0
Sales tax exemption 0
Forgivableloans 0
Training dollars 0
Infrastructure 0
Cash value all other incentives
0
305
0
Tax abatement 0
Sales tax exemption 0
Forgivableloans 0
Training dollars 0
Infrastructure 0
Cashvalue all other incentives 0
1
Pageof4
Center for Economic Development and BusinessResearch
Wichita State University
Fairmount St.
1845
Wichita, Kansas
67260-0121
(316) 978-3225
311812009
AM
Draft
Direct jobs
Directpayroll earnings
$0
Total jobs
Totalpayrollearnings
$0
Payroll earnings for 10yearperiod
Direct
$4,884,952
Total
$7,318,635
Page of
Center for Economic Development and Business Research
Wichita State University
1845 Fairmount St.
Wichita, Kansas
(316) 978 3225
812009
DATE OF ANALYSIS
AM
OF ANALYSIS
Draft
VERSIONOF ANALYSIS
. .
Discounted
City Fiscal Impacts. Salina
$1,094
Present value of net benefits
of
$1,094
public benefits 10-year period
Public costs 10-year period $105,629
ROI 1
Public benefits 10-year period $106,724
$105,629
Public costs 1 0-year period
Benefit-Cost Ratio 1.01
Discounted
County Fiscal Impacts. Saline
$22,630
Present value of net benefits
$22,630
Net public benefits 10-year period
$10,003
Public costs 1 0-year period
ROI 226.2%
Public benefits 1 0-year period$32,634
Public costs 1 0-year period $10,003
Benefit-Cost Ratio 3.26
State Fiscal Impacts Discounted
$397,974
Present value of net benefits
Net public benefits 1 0-year period$397,974
Public costs 10-year period $31,460
ROI
1265.0%
Public benefits 10-year period $429,434
Public costs 10-year period$31,460
Benefit Cost Ratio 13.65
School District Fiscal Impacts. 305 Salina
Discounted
Present value of net benefits
$41,538
of
Net public benefits 10-year period
$41,538
Public costs 10-year period $132,773
ROI 31.3%
Public benefits 10year period $174,310
Public costs 10year period
$1 32,773
Benefit-Cost Ratio 1.31
Page 3 of 4
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of
City of Salina
Economic Development Grant Offer and Agreement
Offer
This agreement entered into on the day of March, 2009 is made by and between the
City of Salina, Kansas, 300 West Ash Street, Salina, KS,herein called the City,and
Matrix Electronic Measuring, Inc., whose address is 1725 Vortex Avenue. Salina,
Kansas, herein called the Grantee.
WHEREAS, 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
WHEREAS,the City's Salina Economic Development Incentives Council (SEDIC)
reviewed Grantee's application and recommended to the Salina City Commission the
granting of $100,000 in City economic development sales tax funds for Grantee's project;
and
WHEREAS,on March 2009, the Salina City Commission approved the expenditure
of $100,000 as an economic development grant for project consisting of the
following:
Product development and completion of foreign patent protection.
The project is described in more detail in the 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
05-6220 and in consideration of the Grantee's acceptance of this offer, and the benefits 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 $100,000 as the City's share of allowable costs incurred
in accomplishing the project.
This offer is made on and subject to the following terms and conditions:
Conditions
The maximum obligation of the City of Salina under this Offer shall be$100,000.
2.Payment of the City's share of the allowable project equipment 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 of product development and foreign patent protection tasks.
3.Grantee agrees not to resell or dispose of project equipment without the written
permission of the City.
4. The project shall be complete within eighteen (18)calendar months from the
execution date of the Agreement.
5.Grantee shall use every reasonable effort to meet the job creation estimate of eight
(8)newjobs provided to the SEDIC on March 16,2009.
6.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
7.The official contact for the Grantee is:
Jan Srack
President and CEO
Matrix Electronic Measuring, Inc.
P.Box 1246
1725 Vortex Avenue
Salina, KS 67401
(785) 823-8800
j
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 the 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:
Ann
JasonGage Lieu Elsey
CityManager City Clerk
Acceptance
The Grantee does hereby ratify and adopt all assurances, statements, representations,
warranties, covenants and agreements contained in theproject application letter and
incorporated materials referred to in the foregoing offer and does hereby accept the offer,
such acceptance, agreestocomply with all of the terms and conditions in the Offer
andin the project applicationletter.
Evidenced this dayof
Matrix Electronic Measuring, Inc.
Grantee's Designated Official Representative
Title
Attest:
Title:
RESOLUTIONNUMBER
A RESOLUTION ESTABLISHING THESALINA ECONOMIC DEVELOPMENT
INCENTIVES COUNCIL.
WHEREAS,
that in 2004,voters approved a special one-quarter cent 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
WHEREAS,
that in October 2004,the City Commission unanimously approved an
initiative proposed by the Salina Airport Authority and the Salina Area Chamber of Commerce to
provide incentives to new and existing manufacturing and primary businesses; and
WHEREAS,
that the City Commission formedan ad committeeled by the Mayor and
Vice Mayor to explore the protocol for expending the economic development funds, which
then resulted in the establishment of a six member Salina Economic Development Incentives
SONOW THEREFORE,
Council.
BE IT RESOLVED
by the governing bodyof the City of Salina, Kansas:
Section
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.are to:
(a) Develop and recommend guidelines, policies and processes to the City
Commission for grants from the allocated special sales funds for incentives to
tax
new and existing manufacturers and primary businesses for the purpose of
enticing them to relocate or expand capital human investment in
Countyin order to provide a stimulus to the local economy;
(b) Review applications and make specific recommendations to the City
Commission regarding grants from the sales tax;
(c) Make recommendations to the City Commission, County Commission and/or
local government bodies regarding other public economic development
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.
Section3.
Membership. The S.E.D.I.C. will be madeup of the following persons:
Mayor;
(b) Saline County Commission Chair;
(c) Salina Airport Authority BoardChair;
(d) Salina Chamber of Commerce BoardChair;
(e)Twocitizens appointed by the Mayor and the City Commission; and
Citizen appointed by the Saline CountyCommission
The citizens appointed by the City and County shall serve for terms of two years and shall be
-4242. Initial city citizen
eligible for reappointment in accordance with Resolution No. 90
be
appointments shall staggered to expire February2007and February 2008.
Section
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.I.C.shall be as follows:
be
Meetings are to held at least quarterly,and otherwise as needed for related
projects, projects, programs and applications;
Professional staffing for the S.E.D.I.C. to be provided by the City Manager,
Airport Authority Executive Director and Chamberof Commerce President;
(c)support shall be provided by the Chamber of Commerce;
(d) All are covered under the Kansas Open Meetings Act and Open
RecordsAct specified by State law; and
(e) The use of local organizations and other resources is highly encouraged.
6.
Section
Miscellaneous. Miscellaneous considerations regarding this council are as
follows:
(a) For purposes of the S.E.D.I.C.primary business includes manufacturing,
processing, interstate distribution, research, or service sector businesses which
90%
derive a minimum of of revenuefromsources outside Saline County;
grants are to focus primarily on human capital investment in training
(b) Sales
and capital investment in plant, property and equipment, with priority given to
is important to ensure that existing
human capital investment in training. Also,
primary businesses remain eligible for grant funding; and
(c) A program performance review is recommended in the fourth quarter of 2006.
This
will allow for a full year of operationand provide an opportunity to make
any adjustments deemed necessaryfor the remaining term of the special sales tax
funding.
Section 7.
Effective Date. This resolution shall takeeffect from and after its adoption.
Adopted by the Board of Commissionersand sign r this day of October,
Deborah Divine, Mayor
[SEAL]
Lieu CMC,Clerk
OF
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Sales Tax Distribution
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Sales Tax Distribution
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Kansas Army National Guard
Sales Tax Distributlon
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SalesTax Distribution
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SalesTax Distribution
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Development Project
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City of Salina Cent Sales Tax Cash Flow Detail
OF
Salina Downtown FagadeProgram
590,101.36 InterestAllocation
616,052.75 Sales Tax Distribution
Premier Pneumatics
592,052.75 North Central RPC year program
3
Sales Tax Distribution
618,481.58 lnterest Allocation
Kansas Army National Guard
673,321.51 lnterest Allocat~on
Hawker Beechcraft
lnterestAllocation
Sales Tax
Sales Tax
680,93109 lnterestAllocat~on
Sales Tax
706,933 04 lnterest Allocation
732,94625 SalesTax
737.68720 lnterest Allocation
Salina Downtown FagadeProgram
642.687 20 Entreprenuership Program
645,224 23 lnterest Allocation
Sales Tax Distribution
CAVAerospace
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lnterest Allocation
SalesTax Distribution
686,105.00 lnterest Allocation
586,105.00 K State Salina
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609,54561 lnterest Allocation
588,545 61 Thunderstruck.
589,17473 lnterestAllocat~on
589,17473 SalinaDowntown FagadeProgram
590,03194 lnterest
617,798 49 Sales Tax
642,77952 Sales Tax
lnterestAllocation
Sales Tax Distribution
Sales Tax Distribution
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Hawker Beechcraft
SalesTax Distribution
lnterest Allocation
K State Salina
lnterest Allocation
SalesTax Distribution
758,337.00 Premier Pneumatics
lnterest Allocation
Sales Tax Distribution
813.761 35 Sales Tax
813.761 35 K State Salina
Sales Tax
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Sales Tax
871,80252 lnterestAllocat~on
TotalsTo date
$
Revenues
SalesTax Distribution
$
lnterestAllocation
$
Expenses and Commitments
87,000 00 Salina Downtown FagadeProgram
North Central RPC year program
130,000.00 DevelopmentProject
HawkerBeechcraft
Thunderstruck,
Premier Pneumatics
Entreprenuershlp Program
49,200.00 CAVAerospace
K State Salina
Kansas Army National Guard
Total
City of Salina Special Cent Sales Tax Cash Detail