038-04
BOARD OF SUPERVISORS
Resolution
HP Hood
WHEREAS, HP Hood has made known its intent to expand its manufacturing operation
by making new taxable real estate and machinery and tools investments and new jobs; and
WHEREAS, the company meets the policy guidelines of the Frederick County
Economic Development Incentives Fund as established by the Winchester-Frederick County
Economic Development Commission in 1995;
BE IT RESOLVED, that the Board of Supervisors for the County of Frederick, Virginia
does hereby approve and appropriate the payment of $450,000.00 to the Industrial
Development Authority of Frederick County, Virginia from the Frederick County Economic
Development Incentive Fund to expand its manufacturing operation for HP Hood in Frederick
County, Virginia.
BE IT RESOLVED, that said funds are subject to an executed Memorandum of
Understanding outlining the required performance criteria.
BE IT FURTHER RESOLVED, that the Board of Supervisors for the County of
Frederick, Virginia, does authorize the County Administrator to execute the Memorandum of
Understanding on its behalf.
Upon motion duly made byW._Rarrington Smitltseconded by Barbara E. Van Osten
and on the votes hereafter recorded,
ADOPTED, this~th day Janua.!"L-, 2004.
Lynda Tyler
Aye
Gary Dove Aye
Barbara Van Osten Aye
Richard C. Shickle
Aye
W. Harrington Smith, Jr.
-~~
Bill Ewing ~
Gina Forrester
_1:::z~
A COPY TESTE:
f1/:&
Clerk, Board of Supervisors
Resolution No.: 038-04
MEMORANDUM OF UNDERSTANDING
THIS MEMORANDUM OF UNDERSTANDING, (the "Memorandum") made and dated this 28111 day
of January, 2004, evidences the agreement among the COUNTY OF FREDERICK, VIRGINIA, a
political subdivision of the Commonwealth of Virginia (the "County"), the INDUSTRIAL
DEVELOPMENT AUTHORITY OF THE COUNTY OF FREDERICK, VIRGINIA, a political subdivision
ofthe Commonwealth of Virginia (the "IDA"), the WINCHESTER-FREDERICK COUNTY ECONOMIC
DEVELOPMENT COMMISSION, a joint commission ofthe City of Winchester and Frederick County,
Virginia (the "Commission"), and HP HOOD ("HOOD"), a Massachusetts corporation, regarding a
building and an equipment expansion in their Frederick County facility.
RECITALS
A. HOOD intends to invest Eleven Million Nine Hundred Thousand Dollars ($11,900,000.00)
in new taxable real estate and taxable improvements, to invest Thirty Million Nine
Hundred Thousand Dollars ($30,900,000.00) in new taxable machinery and tools, and to
create Sixty-Five (65) new jobs (collectively the "Project") at its manufacturing facility is
located on Valley Pike (U.S. Route 11) in Frederick County, Virginia (the Facility).
B. The County agrees to make a cash grants to the IDA in the sum of Four Hundred and
Fifty Thousand Dollars ($450,000.00), and the IDA agrees, upon receipt of such funds, to
make cash grants to HOOD in an identical amount (the "IDA Grant") to be applied by
HOOD in order to complete the Project, as more fully set forth hereinafter. Such funds
will be used as partial reimbursement for equipment purchase costs and subsequent site
development expenditures, as more fully set forth hereinafter.
NOW THEREFORE WITNESSETH: That for and in consideration in the sum ofTen Dollars ($10.00),
cash in hand paid by each of the parties hereto unto the other, the receipt and sufficiency of which is
hereby acknowledged, and other consideration deemed adequate at law, including, but not limited to,
the covenants and conditions set forth in this Memorandum, the parties do hereby agree as follows:
MOU: HP HOOD - January 2004
Frederick County, Virginia
page 1 of 5
1. Recitals: The Recitals are made a material part hereof and incorporated herein by
reference as if set out in full.
2. Terms and Conditions of Disbursement:
a. The obligations of the IDA to make disbursement of the IDA Grant to HOOD is
expressly contingent upon receipt of such funds by the IDA from the County.
b. Provided that the IDA receives the IDA Grant in a timely fashion, the IDA shall
disburse such funds to HOOD per the following schedule;
(1) IDA shall disburse a sum of Two Hundred Thousand Dollars
($200,000.00) to HOOD after March 1, 2004, but no later than June 30,
2004.
(2) IDA shall disburse the additional sum of Two Hundred and Fifty Thousand
Dollars ($250,000.00) to HOOD after July 1, 2004, but no later than
October 30,2004.
3 Reimbursement/Default: HOOD agrees to make reimbursement to the IDA ofthe IDA
Grant, as described in Section 4, below, in the event that HOOD fails to satisfy all the
following terms and conditions (the "Conditions"), as reasonably determined by the IDA:
a. HOOD acquires and has fully operational new taxable real estate in an amount of
not less than $8,500,000.00, new taxable machinery and tools in an amount of
not less than $26,600,000.00 and create 50 net new jobs at the Facility located in
Frederick County, Virginia by December 31,2004;
b. In addition to the new taxable real estate, new taxable machinery and tools, and
net new jobs set forth in subsection (a), above, HOOD acquires and has fully
operational new taxable real estate in an amount of not less than $3,400,000.00,
new taxable machinery and tools in an amount of not less than $4,300,000.00
and create 15 net new jobs at the Facility located in Frederick County, Virginia by
December 31,2005;
c. HOOD employees created by the Project will average an annual salary of not less
MOU: HP HOOD - January 2004
Frederick County, Virginia
page 2 of 5
than $34,320, excluding benefits by December 31,2005;
d. HOOD maintains the level of taxable investment, new jobs and wage levels as
part of the Project until December 31, 2007; and
e. HOOD continues to operate in Frederick County, Virginia for a four (4) year period
commencing on December 31,2007.
4. Refund:
a. In the event that HOOD fails to meet all of the foregoing Conditions
set forth in Section 3, above, then and in that event HOOD shall refund to the
IDA such portion of the IDA Grant as is proportionate to HOOD's shortfall in
satisfying the Conditions (the "HOOD Refund"). Upon receipt of the HOOD
Refund from HOOD, the IDA shall return the same, or such proportionate share
thereof as called for herein, to the County, respectively.
b. Notwithstanding the foregoing, however, if HOOD has met ninety percent (90%)
of the investment and employment goals set forth in this Memorandum by
December 31,2005, maintains that ninety percent (90%) level of investment and
jobs created through the Project for a period of two (2) years beginning on
December 31, 2005, and thereafter remains operational in Frederick County,
Virginia for a period of four (4) years until December 31,2011, then and in that
event, HOOD shall be deemed to have substantially complied with the terms of
this Memorandum and shall not be obligated to repay the HOOD Refund or any
portion thereof unto the IDA.
5. CooDeration: The County agrees to use its best efforts to "fast track" any
building permits required for the construction and installation of the Facility by HOOD
so that the appropriate building permits, if otherwise prepared and submitted in
proper form, can be issued in a timely manner in order to meet the deadlines set forth
above. The County and the Commission agree to reasonably cooperate with HOOD,
its equipment suppliers and its equipment contractors, in order to assist HOOD in
MOU: HP HOOD - January 2004
Frederick County, Virginia
page 3 of 5
meeting its operational deadlines so that the Facility is fully equipped by not later than
the schedule outlined in 3a and 3b above. Nothing contained in this Section 5 shall
be interpreted to in any way require the County to issue any building permits unless
and until all applicable terms and conditions as required by law for such building
permits have been met and satisfied by HOOD.
6. Time: Time is of the essence as to all matters set forth in this Memorandum.
7. Binding Effect: This Memorandum shall be binding upon and inure to the
benefit of the parties hereto and their respective permitted successors and assigns.
8. Construction: This Memorandum and the terms thereof shall be interpreted
and construed in accordance with the laws of the Commonwealth of Virginia.
9. Assianment: Except as set forth hereinafter, this Memorandum may not be
assigned by any party hereto; not withstanding the foregoing, this Memorandum may
be assigned by HOOD (whether by operation, of law or otherwise) to any successor
to all or substantially all of the business of HOOD, (whether by merger,
consolidation, sales of asset or otherwise), provided, that such successor agrees in
writing to assume and comply with all obligations of the HOOD hereunder.
10. Ratification and ImDlementation: This Memorandum must be fully ratified by
all parties hereto not later than 5:00 p.m. on March 1, 2004, and the implementation
by HOOD of the terms of this Memorandum must have commenced by December 31,
2004; otherwise, this Memorandum and the terms hereof shall be deemed withdrawn
and of no further force and effect, and any funds disbursed by the IDA to HOOD shall
immediately refunded by HOOD to the IDA.
MOU: HP HOOD - January 2004
Frederick County, Virginia
page 4 of 5
COUNTY OF FREDERICK, VIRGINIA
By:___________________(SEAL)
John R. Riley, Jr., County Administrator
INDUSTRIAL DEVELOPMENT AUTHORITY OF THE
COUNTY OF FREDERICK, VIRGINIA
By:____________________(SEAL)
WINCHESTER-FREDERICK COUNTY ECONOMIC
DEVELOPMENT COMMISSION
By:___________________(SEAL)
HP HOOD
By:____________________(SEAL)
MOU: HP HOOD - January 2004
Frederick County, Virginia
page 5 of 5
FINAL 12.03.03
APPENDIX A
NET FISCAL IMPACT
PROPOSAL: HP Hood Expanison 3
2004 2005 2006 2007 2008
NET DIRECT FISCAL IMPACT
Annual Return $387,055 $410,899 $349,099 $287,299 $278,699
Cumulative Return $387,055 $797,954 $1,147,053 $1,434,351 $1,713,050
NET INDIRECT RESIDENTIAL FISCAL IMPACT
Annual Return ($10,389) ($10,677) ($10,677) ($10,677) ($10,677)
Cumulative Return ($10,389) ($21,066) ($31,743) ($42,420) ($53,097)
NET IMPACT
Annual Return $376,666 $400,222 $338,422 $276,622 $268,022
Cumulative Return $376,666 $776,888 $1,115,309 $1,391,931 $1,659,953
$1,115,3091
$1,659,953 l
. Three (3) Year Return
IFive (5) Year Return
ASSUMPTIONS
Demoaraohics
Persons per Residential Unit
School Children per Residential Unit
2.60
0.70
Investment and Emolovee Plan
(totals - 5 Year)
Real Estate
Machinery & Tools
Personal Property
Business License
$42,800,000
$11,900,000
$30,900,000
$0
$0
Employees
Averaae Hourlv Waae Emclovee
65
$16.50
ArPENDIX B
FINAL 12.03.03
ASSUMPTIONS
PROPOSAL: HP Hood Expanison 3
SUMPTIONS
Source
us Census 2000
Value
2.60
0.70
0.39
0.14
0.17
NOTE: ALL VALUES ARE FY ANNUAL TOTALS
Residential
Per Residential Unit Real Estate Tax Revenue
Per Residential Unit Other General Fund Revenue
Per Residential Unn General Fund Service
Per Residential Unit General Fund Service (no educ)
$1,220
$1,665
$3,124
$830
Per Capita Fiscal Impact Analysis Model, Frederick County 2002
Per Capita Fiscal Impact Analysis Model, Frederick County 2002
Per Capita Fiscal Impact Analysis Model. Frederick County 2002
Per Capita Fiscal Impact Analysis Model, Frederick County 2002
Capnal Facilities Cost per Pupil (Elementary)
Capnal Facilnies Cost per Pupil (Middle)
Capital Facilnies Cost per Pupil (High)
Capital Facilnies Costs: Fire & Rescue - Per Residential Unit
Capital Facilities Costs: Public Safety - Per Residential Unit
oilal Facilities Costs: Parkland - Per Residential Unit
$2,333
$3,837
$4,591
$55
$9
$263
Per Capita Fiscal Impact Analysis Model, Frederick County 2002
Per Capita Fiscal Impact Analysis Model, Frederick County 2002
Per Capita Fiscal Impact Analysis Model, Frederick County 2002
Per Capita Fiscal Impact Analysis Model. Frederick County 2002
Per Capita Fiscal Impact Analysis Model, Frederick County 2002
Per Capita Fiscal 1m act Anal sls Model, Frederick Coun 2002
Non-Residential
See Investment and Employment Plan Sheet
See Investment and Employment Plan Sheet
$175 Per Capita Fiscal Impact Analysis Model, Frederick County 2002
Real Estate Tax Retum
M&T, BPOL, BE, PP'Tax
Per Employee Other General Fund Revenue
Per Employee General Fund Service
Capital Facilities Costs: Public Safety - Per Employee
$132
$2
Per Capita Fiscal Impact Analysis Model, Frederick County 2002
Per Capita Fiscal Impact Analysis Model, Frederick County 2002
Average Hourly Wage Employee
Residential-Nan-Residential Linka e
Taxes
Real Estate
Machinery and Tools
Year 1 (60%)
Year 2 (50%)
Year 3 (40%)
Year 4 (30%)
Personal Properly
property taxed at 30% of original value
Sales Tax
ome S nt on Taxable Products
$0.73
$2.00
$1.20
$1.00
$0.80
$0.60
$4.20
$1.26
60%
50%
40%
30%
Weldon Cooper Center, University of Virginle
Weldon Cooper Center, University of Virginie
Weldon Cooper Center, University of Virginia
Weldon Cooper Center, University of Virginia
Weldon Cooper Center, University of Virglnie
Weldon Cooper Center, University of Virginia
Weldon Cooper Center, University of Virginia
Weldon Cooper Center, University of Virginia
Weldon Cooper Center, University of Virginle
American Chamber of Commerce and Research Association
Other Assumotions
Revenue and Expenditure (Operating & Capital) Levels will remain at 1999 - 2000 levels
No changes In any tax rates
No slack capacity In any general fund revenues and operaUng expenditures
APPENDIX C
FINAL 12.03.03
INVESTMENT AND EMPLOYMENT PLAN
PROPOSAL: HP Hood Expanison 3
:ojected Plans
2004
2005
2006
2007
2008
Value of New Construction
Phase 1
Phase 2
Phase 3
Phase 4
Phase 5
8,500,000
3,400,000
Annual Value
8,500,000
3.400,000
Value of Machinery & Tools
Phase 1
Phase 2
Phase 3
Phase 4
Phase 5
26,600,000
15,960,000
4,300,000
13,300,000
2,580,000
10,640,000
2,150,000
7,980,000
1,720,000
7,980,000
1,290,000
Annual Valua
15,960,000
15,880,000
12,790,000
9,700,000
9,270,000
Value of taxable personal property
Phase 1
Phase 2
Phase 3
Phase 4
Phese 5
Annual Value
Sales TIIX Return from Employees
Phase 1
Phase 2
Phase 3
Phase 4
Phase 5
3,727
3,727
3,727
3,727
3,727
Annual Value
3,727
3,727
3,727
3,727
3,727
Projected Employment
Phase 1
Phase 2
Phase 3
Phase 4
Phase 5
1 ST YEAR
50
2NO YEAR
3RD YEAR
4TH YEAR
5TH YEAR
15
Annual Value
50
15
.;.j;'\f~
65
Projected Wages
Phase 1
Phase 2
Phase 3
Phase 4
Phase 5
1ST YEAR
1,716,000
2ND YEAR
1,716,000
514,800
3RD YEAR
1,716,000
514,800
4TH YEAR
1,716,000
514,800
5TH YEAR
1,716,000
514,800
Annual Value 1,716,000 2,230,800 2,230,800 2,230,800 2,230,800
Cumu/etlve Value 1,716,000 3,946,800 6,177,800 8,408,400 10,639,200
~.diIt\_"'li;'!Il._~iII!I!i~Ii\I!~![~1!l~__'El
FINAL 12.03.03
APPENDIX D
DIRECT FISCAL IMPACT
PROPOSAL: HP Hood Expanison 3
DIRECT REVENUES
Real Estate Tax Return 2004 2005 2006 2007 2008
Annual Revenues $62,050 $86,870 $86,870 $86,870 $86,870
Cumulative Revenues $62,050 $148,920 $235,790 $322,660 $409,530
M&T,BPOL,BE,PP"Tax 2004 2005 2006 2007 2008
Annual Revenues $319,200 $317,600 $255,800 $194,000 $185,400
Cumulative Revenues $319,200 $636,800 $892,600 $1,086,600 $1,272,000
Sales Tax 2004 2005 2006 2007 2008
Annual Revenues $3,727
Cumulative Revenues $3,727
Local sales tax receipts reflect portion of purchases by new workers
(Based on 54.5% of annual payroll spent on taxable purchases - US Chamber 2oo0) (New taxable sales based on proportion of total taxable
sales between Winchester and Frederick County for 2001- Virginia Department of Taxation)
$3.727
$7.455
$3,727
$11,182
$3,727
$14,910
$3,727
$18,637
Other General Fund Revenue
Annual Revenues
Cumulative Revenues
2004
$8,752
$8,752
2005
$11,377
$20,129
2006
$11,377
$31 ,506
2007
$11,377
$42,883
2008
$11,377
$54 ,260
DIRECT REVENUES 2004 2005 2006 2007 2008
Annual Revenues $393,729 $419,575 $357,775 $295,975 $287,375
Cumulative Revenues $393,729 $813,304 $1,171,078 $1 ,467,053 $1,754.427
':1i'.,Ni'('9"~~!'Jiil;''""'K~dff:'''~'iS'"'!f~~W!,:<1~#1"jt)}'i!!iJ;fJi&:,~'1!!f1il\:r_~:"~r"'~'ii;:,aM~i'~'I;}$,l)~k&'O:Mtl\~l'~i~i;;;r"':l;'lcJ~Jf"'1J~1":J',ZfNjlf);.'I?("~'~~'\KtJf~:~8'!1%7i~1i:J
Jl'R.'''i~'''''":1;tA1ii~!;tf<:'f:~''li1;'''r;1~'ff,""'fA'ir>;;;-&X'flif;J$};1.-"'iJiS!i"!fIJBt"'~i">>:~~'"\~~~"";0W,;y..""~':<iW'".
DIRECT EXPENDITURES
General Fund: Operating Costs 2004 2005 2006 2007 2008
Annual Costs $8,583 $8,558 $8,558 $8,558 $8,558
Cumulative Costs $6,583 $15,141 $23,700 $32,258 $40,816
Capital Facilities Costs 2004 2005 2006 2007 2008
Annual Costs $90 $118 $118 $118 $118
Cumulative Costs $90 $208 $326 $443 $561
DIRECT EXPENDITURES 2004 2005
NET
Annual Return
$387,055
$410,899
$349,099
$287,299
$278,899
FINAL 12.03.03
APPENDIX E
INDIRECT RESIDENTIAL FISCAL IMPACT
PROPOSAL: HP Hood Expanison 3
INDIRECT REVENUES
Potential New Residential Units 2004 2005 2006 2007 2008
Annual Units 5 1
Cumulative Unfts 5 6 6 6 6
Real Estate Tax Return 2004 2005 2006 2007 2008
Annual Revenues $6,100 $6,804 $6,804 $6,804 $6,804
Cumulative Revenues $6,100 $12,904 $19,708 $26,512 $33,315
General Fund Revenue (Other) 2004 2005 2006 2007 2008
Annual Revenues $8,325 $9,286 $9,286 $9,286 $9,286
Cumulative Revenues $8,325 $17,612 $26,898 $36,184 $45,470
INDIRECT REVENUES 2004 2005 2006 2007 2008
Annual Revenues $14,425 $16,090 $16,090 $16,090 $16,090
INDIRECT EXPENDITURES
General Fund: Operating Costs 2004 2005 2006 2007 2008
Annual Costs $7,273 $7,752 $7,752 $7,752 $7,752
Cumulative Costs $7,273 $15,025 $22,777 $30,529 $38,281
Capital Facilities Costs 2004 2005 2006 2007 2008
Annual Costs $17,542 $19,015 $19,015 $19,015 $19,015
Cumulative Costs $17,542 $36,557 $55,572 $74,587 $93,602
INDIRECT EXPENDITURES 2004 2005 2006 2007 2008
Annual Costs $24,815 $26,767 $26,767 $26,767 $26,767
NET INDIRECT RESIDENTIAL FISCAL
FINAL 12.03.03
APPFNDIX F
INDIRECT RESIDENTIAL CAPITAL FACILITIES COSTS
PROPOSAL: HP Hood Expanison 3
POTENTIAL NEW STUDENTS
Elementary 2004 2005 2006 2007 2008
Annual New Public School Students 3 0
Cumulative New Public School Student 3 3 3 3 3
Middle 2004 2005 2006 2007 2008
Annual New Public School Students 0
Cumulative New Public School Student 1
High 2004 2005 2006 2007 2008
Annual New Public School Students 0
Cumulative New Public School Student 1
POTENTIAL CAPITAL FACILITIES COSTS
Elementary 2004 2005 2006 2007 2008
Annual Capital F acilitias Costs 6,500 7,025 7,025 7,025 7,025
Cumulative Capital Facilities Costs 6,500 13,524 20,549 27,573 34,598
Middle 2004 2005 2006 2007 2006
Annual Capital Facilities Costs 3,837 4,147 4,147 4,147 4,147
Cumulativa Capital Facilities Costs 3,837 7,984 12,132 16,279 20,426
High 2004 2005 2006 2007 2008
Annual Capital Facilities Costs 5,575 6,025 6,025 6,025 6,025
Cumulative Capital Facilities Costs 5,575 11,600 17,626 23,651 29,676
POTENTIAL OTHER CAPITAL FACILITIES COSTS
2004 2005 2006 2007 2008
Annual Capital Facilities Costs 1,630 1,818 1,818 1,818 1,818
Cumulative Capital Facilities Costs 1,630 3,448 5,266 7,083 8,901
TOTAL RESIDENTIAL CAPITAL FACILITIES COSTS
2004 2005 2006 2007 2008
Annual Capital Facilities Costs 17,542 19,015 19,015 19,015 19,015
Cumulative Capital Facilities Costs 17,542 36,557 55,572 74,587 93,602
~~
~~ WINCHESTER I FREDERICK COUNTY
~~ Economic Development Commission
DATE:
January 28, 2004
TO:
Frederick County Board of Supervisors
FROM:
Patrick Barker, Executive Director
CC:
John R. Riley, Jr., County Administrator
RE:
Local Government Agreements for HP Hood
Attached for your review and comments are the Memorandum of Understanding (MOU)
and BOS resolution for HP Hood. As you recall, BOS seemed favorable in providing
$450,000.00 from Frederick County's Economic Development Incentive Fund to secure
this expansion.
HP Hood has qualified for a $500,000 performance-based grant from the Virginia
Investment Partnership (VIP) program to assist in Frederick County securing the location
of this project. The VIP program offers financial assistance to existing Virginia
companies proposing significant expansion projects.
I would like to request that the MOU and BOS resolution for this project be placed on the
BOS's January 28th agenda. As you are aware, the Governor had already formally
announced the State's financial assistance.
Thanks for your help. I am available if you have any questions or comments on these
materials on this project.
45 E. Boscawen Street _ Winchester, VA 22601
phone: 540-665-0973 _ fax 540-722-0604 - a-mail info@wininva.com
web: http://www.wininva.com