Would you shell out $94,300 to get almost 10 times that amount back?
That's the deal the city might make with Project Fusion, an engineering and equipment manufacturer, who's moving its entire company here and promises to add 59 new full-time employees over the next four years at an average wage of $98,554 a year, according to city records.
City Council is set to receive a briefing on the deal at its meeting Tuesday, May 28, which gets underway at 9 a.m. at City Hall, 107 N. Nevada Ave.
Specifically, an economic analysis conducted by city staff shows the return for the city of $925,700 over four years, in exchange for giving tax breaks on the city's sales tax collections.
Here's a description of the company from the meeting's backup materials:
Project Fusion is an advanced engineering and Original Equipment Manufacturer (OEM) that provides specialized hardware and software solutions to the Department of Defense and commercial customers associated with advanced satellite communications and assured position, navigation and timing. The company’s core competencies span several mission areas, including space situational awareness, electronic warfare, antennas, custom trailers, technical support services, and other synergistic products and services.
Project Fusion is relocating its corporate headquarters to Colorado Springs for the community’s economic environment and growth of the region’s space operations industry. The company currently employs 73 people in Colorado Springs and 128 company-wide. The company is currently located in several facilities across Colorado Springs, and desires to expand its number of full-time employees and invest in manufacturing equipment and construction materials for its facilities. The Executive Branch is recommending that the City provide certain performance-based incentives for company investment and job growth.
City staff say Project Fusion will invest $13.5 million by buying construction materials, manufacturing equipment, and furniture and fixtures.
Here's the recommended incentive:
• Sales and use tax rebate on purchase of business personal property — 50% of the City’s 2% General Fund rate, or a 1% rebate.
• Sales and use tax rebate on purchase of construction materials — 100% of the City’s 2% General Fund rate, or a 2% Total Rebate on first $5 million in investments.
• Sales and use tax rebate on purchases of construction materials — 50% of the City’s 2% General Fund rate, or a 1% total rebate of remaining investments.
That will add up, staffers predict, to a payback to the local economic development picture over four years of 391 jobs, including jobs from expansion and retention, and $135.2 million to the Gross Metropolitan Product.
The numbers for 10 years are even more generous.
Incentives for businesses are fairly rare. The most recent, for more than $16 million, came earlier this year for Scheels All Sports
City Council gave a different type of incentive of $40 million in this case