8.2 Exide Technologies SEDIC Grant
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION DATE TIME
4/16/12 4:00 P.M.
AGENDA SECTION ORIGINATING DEPARTMENT: FISCAL APPROVAL:
8
NO:
BY:
CITY MANAGER’S OFFICE
FINAL APPROVAL:
ITEM
NO:2
BY: Jason A. Gage, City Manager BY:
Page 1
ITEM: Resolution Number 12-6897
Consider Resolution No. 12-6897, authorizing an economic development grant agreement with Exide
Technologies (“Exide”) which provides a financial incentive in an amount up to $390,000 to add
between one-hundred (100) and one-hundred thirty (130) new manufacturing positions and up to $10
million in related capital equipment at their Salina plant.
BACKGROUND:
Exide has been manufacturing automotive batteries in the Salina area since 1987. They have been a
very stable business with a current employment of over 600 employees and have contributed
significantly to Salina’s local economic base.
Exide is proposing to add between 100 and 130 new, primary manufacturing jobs over the next 30
months. In addition, they plan to add up to $10 million in new capital equipment. These additions will
help them take full advantage of t heir Salina plant’s production output potential. The total annual
estimated payroll for the new positions ranges from $3,913,700 to $5,087,810. This payroll averages
to be $39,137 per year ($18.82 per hour), not including bonus pay. The annual/hourly proposed
wage is significantly higher than the Saline County average (approximately $13.97) for general
manufacturing positions.
Exide is requesting a Salina Economic Development Incentives Council (SEDIC) incentive grant of
$3,000 per job, up to a maximum of $390,000 over a 30-month timefr ame. The incentive grant
disbursements are to be paid to Exide at intervals up to twice per year over the 30-month timeframe.
They are to be paid upon receivi ng a written request and certificat ion from Exide regarding the
project-related hiring of the positions. Those jobs hired at early stages of the project cycle must also
be retained in order for Exide to qualify for future grant disbursements.
The Wichita State University (WSU) Benefit-Cost Model analysis as prepared by the Salina Airport
Authority is included for your re view. It provides a benefit-cost ra tio of 2.05, which is extremely
strong. A minimum ratio of 1.0 is typically desirable.
A news conference publicly announcing Exide’s intention to add these jobs and capital equipment,
contingent upon a final grant agreement, was held a few weeks ago by the Salina Area Chamber of
Commerce.
FISCAL NOTE:
If authorized, this request will be funded from the economic development allocation of the City’s
Special Sales Tax over a 30-month period, which is accounted for in the City’s Sales Tax Economic
Development Fund. This funding source has a current balance of $379,639. Annual revenue equals
approximately $320,000 per year.
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION DATE TIME
4/16/12 4:00 P.M.
AGENDA SECTION ORIGINATING DEPARTMENT: FISCAL APPROVAL:
8
NO:
BY:
CITY MANAGER’S OFFICE
FINAL APPROVAL:
ITEM
NO:2
BY: Jason A. Gage, City Manager BY:
Page 2
CONFORMANCE WITH THE COMPREHENSIVE PLAN
GOAL #3:
Exide is a stable company with global sales impacts that has had a very successful track record in
Salina. Staff believes that the growth of healthy, local industries such as Exide will certainly foster
this goal.
RECOMMENDED ACTION:
Staff recommends consideration of the following alternatives:
Alternative #1: Approve Resolution No. 12-68 97, authorizing an economic development grant
agreement with Exide Technologies, which provides for a financial incentive in an
amount not to exceed $390,000 over a 30-month period to stimulate job growth and
fund capital equipment.
Alternative #2: Approve Resolution No. 12-6897 with proposed modifications.
Alternative #3: Do not approve Resolution No. 12-6897 at this time.
This item was recommended for approval by the SEDIC at their April 11, 2012 meeting. The staff
support group (City Manager, Saline County Administrator, Salina Airport Authority Executive Director
and Salina Area Chamber of Commerce President/C EO) believes this requ est clearly meets the
intent of Resolution No. 12-6897, which provides for the funding of capital expenditures in property,
plant and equipment to stimulate j ob growth for primary businesses. As a result, Staff also
recommends Alternative #1.
Attachment: Exide Technologies Letter of Request
Economic Development Grant Offer and Agreement
WSU Benefit-Cost Model Analysis
DRAFT SEDIC Minutes for April 11, 2012
Special Sales Tax Financial Report
Resolution No. 12-6897