02-22-16 Meeting of the La Porte Development Corporation Board of Directors

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Project Math This mathematical analysis is based upon the New Incentive Guidelines for New and Expanding Businesses, which the ED Board approved on 11 November, 2015. In short, the new guidelines applicable to this project state that: 1. Incentives for new or expanding businesses should be limited to the lesser of: (a) A maximum 10 year payback of the business's new/additional tax revenues to the City of LaPorte, or (b) Up to 25% of the business's total expenditures for "infrastructure", "site improvements", and "other related improvements"; 2. Businesses that create new "primary jobs" will receive additional value, which will be calculated as an "Adjusted Payback"; Known Facts: • Total capital expenditure, excluding inventory of approximately $600,000. • Sales tax revenues are expected to increase by 15-20%, per the Project Introduction. • Annual sales tax revenues for the last twelve months ending with the 2nd Quarter of 2015, as provided by the STARS report. (Note: In accordance with State Law, this information is confidential.) • Anticipated new employment of 4 full time managerial positions and 3 part time positions. (Note: For the purpose of this analysis, the full time, primary job positions were given a value of 0.1, while the part time, non -primary job positions were assigned a value of 0). Analysis: For this project, an incentive grant award may be limited to a maximum 10 year payback of the business's new/additional tax revenues to the City of La Porte, since this amount is less than 25% of the business's total expenditures. Therefore, assuming that (a) 100% of the value of the $600,000 capital expenditure will be added to the city's tax rolls, and (b) the retailer will increase its annual retail sales tax revenue by 20% each year, the 10 year payback is as: $120,000 = (($600,000/100) x (0.71) x (10 years)) + ((20% new sales tax revenue) x (10 years)) + a value for 4 full time, managerial/primary jobs