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To authorize the Chief Administrative Officer, for and on behalf of the City of Richmond, to accept funds in the amount of $265,275.00 from the Commonwealth’s Development Opportunity Fund, to amend the Fiscal Year 2023-2024 Special Fund Budget by creating a new special fund for the Department of Economic Development called the Alacer Corp. Special Fund, and to appropriate the increase to the Fiscal Year 2023-2024 Special Fund Budget by increasing estimated revenues and the amount appropriated to the Department of Economic Development’s Alacer Corp. Special Fund by $265,275.00, for the purpose of providing Alacer Corp. with incentives to improve, equip, and operate its facility at 1211 Sherwood Avenue in the city of Richmond. (3rd District)
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THE CITY OF RICHMOND HEREBY ORDAINS:
` § 1. That the Chief Administrative Officer, for and on behalf of the City of Richmond, is authorized to accept funds in the amount of $265,275.00 from the Commonwealth’s Development Opportunity Fund for the purpose of providing Alacer Corp. with incentives to improve, equip, and operate its facility at 1211 Sherwood Avenue in the city of Richmond.
§ 2. That Article 1, Section 2 of Ordinance No. 2023-071, adopted May 8, 2023, which adopted a Special Fund Budget for the fiscal year commencing July 1, 2023, and ending June 30, 2024, and made appropriations pursuant thereto, be and is hereby amended by creating a new special fund for the Department of Economic Development called the Alacer Corp. Special Fund for the purpose of providing Alacer Corp. with incentives to improve, equip, and operate its facility at 1211 Sherwood Avenue in the city of Richmond.
§ 3. That the funds received from the Commonwealth’s Development Opportunity Fund are hereby appropriated to the Special Fund Budget for the fiscal year commencing July 1, 2023, and ending June 30, 2024, by increasing estimated revenues by $265,275.00, increasing the amount appropriated for expenditures by $265,275.00, and allotting to the Department of Economic Development’s Alacer Corp. Special Fund the sum of $265,275.00, for the purpose of providing Alacer Corp. with incentives to improve, equip, and operate its facility at 1211 Sherwood Avenue in the city of Richmond.
§ 4. This ordinance shall be in force and effect upon adoption.
DATE: September 13, 2023 EDITION: 1
TO: The Honorable Members of City Council
THROUGH: The Honorable Levar M. Stoney, Mayor
THROUGH: J.E. Lincoln Saunders, Chief Administrative Officer
THROUGH: Sabrina Joy-Hogg, DCAO Finance and Administration
THROUGH: Sheila White, Director of Finance
THROUGH: Jason May, Director of Budget and Strategic Planning
THROUGH: Sharon Ebert, DCAO Planning Community & Economic Development
FROM: Leonard L. Sledge, Director of Department of Economic Development
RE: Budget Amendment to the FY 2024 Special Fund Budget to accept a Commonwealth’s Development Opportunity Fund grant for Alacer Corp., a member of the Haleon group of companies.
ORD. OR RES. No.
PURPOSE: To accept a $265,275 grant from the Commonwealth’s Development Opportunity Fund (COF); to amend the current FY 2024 Special Fund Budget by creating a new special fund for the Department of Economic Development called “Alacer Corp.;” and to appropriate the grant funds to the Economic Development Authority of the City of Richmond (EDA) so that they may disburse these funds to Alacer Corp. (the Company), a member of the Haleon group of companies.
REASON: The City of Richmond was awarded a COF grant of $265,275 from the Commonwealth of Virginia to induce the growth of the Company’s research and development facility located at 1211 Sherwood Ave. City Council approval is required to create a special fund for this money so that it may be disbursed to the EDA and then to the Company
RECOMMENDATION: The City Administration recommends the adoption of this ordinance.
BACKGROUND: In October 2019, the Company’s corporate predecessor, GlaxoSmithKline, announced an expansion of its research and development operation in the city of Richmond. The Commonwealth awarded a performance-based grant of up to $675,000 from the COF to induce the Company’s decision to make a capital investment of approximately $16,730,000 and create 158 new jobs with an average annual wage of $110,000.
As of the December 31, 2022, performance date, the Company made a capital investment of $11,590,510 and created 57 net new jobs over the baseline of 215 jobs. Per the terms of the COF performance agreement between the Company, VEDP, the City, and the EDA (Ordinance 2022-117), Haleon’s performance entitles it to a $265,275 COF grant, which was sent from the Commonwealth to the City in the summer of 2023. The Company cites its corporate restructuring, in which GlaxoSmithKline spun off its consumer healthcare assets, including its facility at 1211 Sherwood Ave, into the new Haleon group of companies, and a slowdown during the COVID-19 pandemic as reasons for the partial achievement of targets.
The City is required to make a 1:1 match to the COF Grant by leveraging an existing local performance-based grant with Pfizer (Pfizer and GlaxoSmithKline formed a joint venture named GSK Consumer Healthcare in 2019), in-kind recruitment services, and a local performance-based grant. City funds have previously been appropriated to fulfill the City’s remaining obligation, and no additional City funds are needed.--
The Company’s continued expansion and investment in the city is an economic development success for Richmond’s growing biotech cluster. In addition to the new capital investment and high-paying jobs that resulted from this project, the Sherwood Avenue facility continues to be the flagship research and development facility center for Haleon’s impressive catalog of well-known brands, including Centrum vitamins, Advil, Tums, and Flonase.
FISCAL IMPACT / COST: None
FISCAL IMPLICATIONS: None
BUDGET AMENDMENT NECESSARY: A budget amendment to accept and appropriate the COF of $265,275 is required for the current FY 2024 Special Fund Budget.
REVENUE TO CITY: None
DESIRED EFFECTIVE DATE: Upon adoption
REQUESTED INTRODUCTION DATE: December 11, 2023
CITY COUNCIL PUBLIC HEARING DATE: January 8, 2023
REQUESTED AGENDA: Consent
RECOMMENDED COUNCIL COMMITTEE: Finance and Economic Development
CONSIDERATION BY OTHER GOVERNMENTAL ENTITIES: The Economic Development Authority of the City of Richmond
AFFECTED AGENCIES: Department of Budget and Strategic Planning, the Department of Finance, and the Department of Economic Development
RELATIONSHIP TO EXISTING ORD. OR RES.: Ordinance 2022-117
REQUIRED CHANGES TO WORK PROGRAM(S): None
ATTACHMENTS: Ordinance 2022-117 with attached Commonwealth’s Development Opportunity Fund Performance Agreement; Commonwealth Opportunity Fund transfer letter from Virginia Economic Development Partnership
STAFF: Leonard L. Sledge, Director, Department of Economic Development - (804) 646-7576
Katie McConnell, Deputy Director, Department of Economic Development - (804) 646-3171
Sam Earl, Senior Management Analyst, Department of Economic Development - (804) 646-4248