IDB Case #20110101 IDB PAYMENT-IN-LIEU-OF-TAX (PILOT) PROJECT SUMMARY ELECTROLUX HOME PRODUCTS, INC -- JANUARY 12, 2011 A. PILOT RECOMMENDATION: Fifteen-year PILOT agreement on Real and Tangible Personal Property involved in the project. B. PROJECT DESCRIPTION: Electrolux Home Products is a Delaware Corporation, which is registered to do business in the State of Tennessee. They are internationally recognized leaders in the manufacture, distribution and sale . of household and professional appliances. The project is intended for the manufacture of "high-end" consumer appliances, and will serve to consolidate within Tennessee certain existing North American manufacturing facilities. This project is also anticipated to include a future distribution center. In addition to the 1,240 jobs, the applicant intends to directly create at its manufacturing facility, it is also anticipated that their vendors will locate facilities in immediate proximity in order to serve Electrolux's on-going needs for ancillary goods and sen/ices. -- C. PILOT EVALUATION: 1. JOB CREATION POINTS AWARDED: 129 New Job Creation 1,240 Existing Employment Base (Not considered for points) 0 Total 1,240 2. WAGES POINTS AWARDED: 13 E|ectrolux's annual average wage for this project is $30,472, which is 83% of Shelby County's current targeted wage of $36,815. 3. CAPITAL INVESTMENT POINTS AWARDED: 195 $69,000,000 Improvements Personal Property $126,000,000 Total Capital Investment $195'000'000 IDB Case #20110101 IDB PAYMENT IN LIEU OF TAX (PILOT) PROJECT SUMMARY ELECTROLUX HOME PRODUCTS, INC JANUARY 12, 2011 PAGE 2 4. LOCATION POINTS AWARDED: 10 Electrolux Home Products, Inc., plans to locate at Paul Lowery Road in the Pidgeon Industrial Park in the City of Memphis. TOTAL POINTS AWARDED FROM BASIC MATRIX: 347 . SPECIAL CONSIDERATION POINTS: 20 (Targeted Industry: Manufacturing; Headquarters, Fortune 500 Major Employer) TOTAL POINTS AWARDED FOR THE PROJECT: D. ECONOMIC IMPACT OF OPERATIONS: Annual Impact of Operations New Employment i Employment, Direct (New fu|I--time equivalentjobs) 1,240 Wages Benefits, Direct 47,609,453 Employment Multiplier 1 2.3196 Total Employment 2,876 Employment, Indirect 1,636 Shelby County Annual Average Wage 2 49,087 Wages, Indirect 80,321,254 Total Wages 127,930,707 Sales Tax Revenue 3 1,442,099 Other Tax Revenue 4 416,767 Residential/Commercial Property Tax Revenue 2,245,305 Total Tax Revenue 4,104,171 IDB Case #20110101 IDB PAYMENT IN LIEU OF TAX (PILOT) PROJECT SUMMARY ELECTROLUX HOME PRODUCTS, INC JANUARY 12, 2011 PAGE 3 E. ECONOMIC IMPACT OF NEW CAPITAL INVESTMENT: One Time Expansion Impact Total Capital Investment Considered for One--Time Impact 200,000,000 Building Site- Real Property (Includes $5 million infrastructure) 74,000,000 Economic Impact Multiplier 6 1.9126 i Economic Impact Equipment Purchase/Set-up - Personal Property 126,000,000 . Economic Impact Multiplier 7 1.7410 -- Economic Impact 219,366,000 Total Economic Impact Sales Tax Revenue 3 1,813,727 Other Tax Revenue 524,167 Total Tax Revenue 2,337,894 F. PILOT TAXES ABATED Property Tax Memphis Shelby County Total Abated 90?/o 75?/c Real Property $13,287,721 $13,929,300 $27,217,021 Personal Property $5,642,449 $5,914,887 $11,557,336 Total $18,930,170 $19,844,187 $38,774,357 IDB Case #201 l010l IDB PAYMENT IN LIEU OF TAX (PILOT) PROJECT SUMMARY ELECTROLUX HOME PRODUCTS, INC JANUARY 12, 2011 PAGE 4 0 G. COST RATIO LOCAL AGREEMENT TAXES ABATED TAX REVENUE COST HARD COSTS From Operations RATIO CONTRIBUTED and Construction (Memphis Shelby Coun 15 Years: I 25% Shelby County Taxes 10% City of Memphis Taxes $8 million land value -- $40 general $100,5%,923 $106,979302 1.06.1 obligation bonds from City of Memphis Shelby Coun at 3% for 20 rs H. BOARD FEES: Application Fee (Graduated Scale) 4,000 Closing Fees of Total Taxes Forgone) 296 Maximum of 300 Less A iication Fee City of Memphis Personal Property Fees for PILOT 50 5% of Taxes Abated Maximum 50 000 Shelby County Personal Property Fees for PILOT 50 i 5% of Taxes Abated Maximum 50 000 Total Fees 400,000 Notes for Electrolux Project: 1. U.S. Bureau of Economic Analysis, RIMS II, aggregate direct effect employment multiplier for Shelby County, Tennessee: number of indirectjobs created per directjob multiplier- electrical equipment and appliance manufacturing. 2. Projection based upon data from Tennessee Department of Labor; Annual Average Wage/Salary in Shelby County, 2009 based upon an assumption of3.5% average wage increase for 2010. 3. U.S. Department of Labor, "Consumer Expenditure Survey, Southern 2009; factor applied to determine the rate of indirect or expenditures on sales and taxable goods and services at the local option tax rate of .0225. It is assumed all purchases associated with construction and equipment will be sales tax exempt. 4. Based upon July 2009 - June 2010 collections of Business, Alcohol, Motor Vehicle and other taxes compared to sales tax. 5. Property taxes on new property value created within Shelby County per each new job created in the local workforce based upon historical trend. The new property value may be new single family -- homes, new rental property, expansions or improvements to existing residential or commercial property. Although commercial property value is included, the residential rate of assessment is used as a conservative measure. The assessment rate of 25% and a combined City of Memphis ($3.1957) and Shelby County tax rate of $7.2157 per $100 of assessed value is used. 6. U.S. Bureau of Economic Analysis, RIMS II final demand aggregate multiplier for new construction for Shelby County, Tennessee. I 7. U.S. Bureau of Economic Analysis, RIMS II final demand aggregate multiplier for wholesale trade for . Shelby County, Tennessee. *All calculations are in constant 2010 dollars. No tax rate increases are assumed. Company/Applicant: Electrolux Project Description; Electrolux Operation Only Heavy appliance manufacturer locating in Shelby County -1,240 jobs -$195 million total capital investment ($126 million personal property, $69 million building) million land value million in genral obligation bonds from city/county at 3% for 20 years Capital Investment: 195,000 000 Jobs: 1,240 Annual Average Wage: 5 30,472 Recommended PILOT Length: 15 Years Tax Incentive: 5 38,774,357 Local Tax Benefit: 105,319,523 Benefit] Cost Ratio: 1.05 Younger Associates 1 1-10-2011 1 Electrolux Tax Incentive Eligibility Analysis Category Project Data Points Job Creation 1240 129 Wages $30,472 10 Capital Investment $195,000,000 195 Lotion 10 ecial Circumstances Not to exceed 25% of Total Points (86 pts) 2 Length of tax incentive: 15+ *Wages Calculation Target Wages: 2010 (75% of$ 49,807 Annual Average Wage) 36,815 Project Wages 30,472 Project wages as a of Target Wages 83 Meets Target Wages 10 E>>10-2011 Lg gg; . .-4 ebu?rQ? S1 4 33 -*mh'! . nv (D: (ng: mE` -- 1*1 ng EXO rr?-4 QOGOGOGGCOCGGOGNQUWKALUWQX (D -- yy VI (D cv 7* Ei pp .4.4 . gg gmgo on(.0 ?-:7rv? ?'City of Memphis, Shelby County, Tennessee Electrolux Economic Impact and Benefit] Cost Analysis Payback Summary 15-Year PILOT Term, 20 Year Project Lite Total Taxes Forgone 38,774,357 Hard Cost (Land Value) 8,000,000 Hard Costs (Building Interest) 53,772,566 1 Total Taxes Forgone and Hard Costs 100546,923 Tax Revenues From Set--Up 678,316 Tax Revenues From Operations During PILOT Period 82,083,414 Payments Received in Lieu of Tax 22,557,794 Total Tax Revenues Received During PILOT Period Benefit/Cost Ratio 1.05 Annual Tax Revenue from Operations 4,104,171 7 Benefit/Cost Ratio: The sum of tax revenues from construction, operations and property during the PILOT period divided by the total taxes forgone and hard costs, Younger Associates 7 1-10-2011