It is recommended that the City Council authorize the City Manager to execute a Tax Abatement Agreement with Smith & Nephew, Inc., or an affiliate thereof, for the expansion of an existing medical manufacturing facility at 4900 W. Vickery Boulevard.

Smith & Nephew, Inc. (Company), a global leader in the medical technology industry, with a presence in more than 90 countries around the world, is looking to expand operations in Fort Worth to increase manufacturing capabilities and assume full control of the filling and finishing processes for certain medical products at its existing facility at 4900 W. Vickery Blvd. The Company plans to invest at least $4.7 million in total construction costs (exclusive of land acquisition costs) and at least $21 million in new business personal property by December 31, 2018. Hard construction costs for the project are estimated at $3.5 million. Failure to meet the minimum total construction cost and business personal property investment is an event of default, which, subject to commercially reasonable notice and cure rights, will result in immediate termination of the Agreement. The Company will spend or cause to be expended the greater of 35 percent or $1,225,000.00 of all hard construction costs with Fort Worth contractors and the greater of 25 percent or $875,000.00 of all hard construction costs with contractors that are Fort Worth Certified Minority/Women Owned Business Enterprise companies.

As a result of the investment, the Company will create 30 new full time employees (FTEs) on the property by December 31, 2018, another 28 new FTEs (for a total of 58) by December 31, 2020 and an additional 42 new FTEs (for a total of 100) by December 31, 2022.  A minimum of 40 percent of the new full time jobs will be with Fort Worth residents and a minimum of 30 percent of the new full time jobs will be with Fort Worth Central City residents. The average salary of the new FTEs is projected to be over $46,000.00 annually. The Company will also spend the greater of 35 percent or $5,000,000.00 of annual discretionary service and supply expenditures with Fort Worth companies and a minimum of 25 percent or $3,575,000.00 of annual discretionary service and supply expenditures with contractors that are certified Fort Worth M/WBE contractors.

In return for these commitments, the City will grant a 55 percent tax abatement on the incremental increase in value of real and personal property improvements (above a base year value) for a period of five years. The Company must meet specific construction spending, annual employment and annual supply and service spending commitments in order to achieve the maximum amount of potential incentive for each abatement year. The weighted values for each of the commitments is as follows:

Company Commitment	Potential Abatement
$4.7 million in Real Property Investment and $21 million in Personal Property Investment (Base Commitment)	10 percent
35 percent Construction Spending with FW Companies	5 percent
25 percent Construction Spending with FW Certified M/WBE Companies	5 percent
Overall New Employment of 30/58/100 Full Time Employees	5 percent
40 percent New FTEs are Fort Worth Residents	10 percent
30 percent New FTEs are Fort Worth Central City Residents	10 percent
35 percent annual with FW Companies for Services and Supplies	5 percent
25 percent annual with FW Certified M/WBE Companies for Services and Supplies	5 percent
TOTAL	55 percent

Staff recommends entering into a Tax Abatement Agreement with the Company for the project.

This project is located in COUNCIL DISTRICT 3.