DEPARTMENT: Economic Development Department
DEPARTMENT HEAD: Rene Dominguez
COUNCIL DISTRICTS IMPACTED: 1
SUBJECT:
Chapter 380 Economic Development Grant Agreement with Oracle America, Inc.
SUMMARY:
Staff is recommending City Council approve an Ordinance authorizing the City to enter into a Chapter 380 Economic Development Grant Agreement (Economic Development Agreement) with Oracle America, Inc. (Oracle). The Economic Development Agreement will provide financial incentives to Oracle in an amount not to exceed $1,000,000 over three (3) years, based on Oracle's commitment to create 200 new information technology services and business process support jobs, with a minimum salary of $70,000 at the project located at 613 NW Loop 410 in San Antonio (District 1).
BACKGROUND INFORMATION:
Founded in 1977 and headquartered in Redwood City, CA, Oracle is a global provider of enterprise software and computer hardware products and services with over $37 billion in revenue in 2013. A Fortune 500 company, it employs over 120,000 people worldwide, including an estimated 35,000 developers and engineers, 18,000 support personnel, and 18,000 consulting experts.
In response to continued growth due to the acquisition of new customers and the expansion of existing client relationships, Oracle evaluated a number of sites throughout the Southwest United States for the expansion of its information technology services and business process support operations. Based on a number of factors, the company assessed costs associated with the addition of 200 jobs and leasing a 30,000 square foot facility in a number of markets. On April 30, Oracle chose the facility located at 613 NW Loop 410 in City Council District 1 for the expansion.
This Chapter 380 grant requires Oracle to create 200 new full-time jobs in San Antonio over a three (3) year period. The new full-time positions must pay a minimum salary of $70,000 and be in the areas of information technology services and business process support. The 200 positions must be maintained in San Antonio for 10 years or the City will recapture the grant funds in accordance with the terms of the grant agreement.
ISSUE:
Chapter 380 of the Local Government Code authorizes the City to provide incentives for the purpose of promoting economic development provided the City has established a program for such purposes. City Council approved a program promoting economic development in April 2005.
The recommended incentive represents an exception to EDIF Guidelines by increasing the per job grant maximum to $5,000 for a project locating within San Antonio, but outside the Inner City Reinvestment Infill Policy (ICRIP) Area. Staff recommends an exception to the EDIF Guidelines based on: (1) the addition of 200 new jobs in the SA2020 Targeted Industry of Information Technology; and (2) the minimum salaries associated with these positions far exceed both the San Antonio Median Income ($30,035) and the annualized Bexar County Average Weekly Wage ($44,239).
ALTERNATIVES:
Oracle has decided to proceed with locating its project in San Antonio and creating 200 new full-time jobs based on the competitive financial incentives offered by City staff to secure the project. Should City Council choose not to approve the Ordinance authorizing the City to enter into the Economic Development Agreement, Oracle could elect to locate its project elsewhere.
FISCAL IMPACT:
Funding is available in the Economic Development Incentive Fund from current and prior year appropriations to support the grant to Oracle. The grant will be paid over 3 years for a total amount of no more than $1,000,000.
RECOMMENDATION:
Staff recommends approval of the Ordinance authorizing the City to enter into a Chapter 380 Economic Development Grant Agreement with Oracle, which will provide a grant in an amount of $1,000,000, provided that Oracle create and retain a minimum of 200 new high skill jobs paying an annual salary of $70,000 plus benefits.