To: Honorable Mayor and Members of Town Council
From: Frank Gray, Executive Director, Castle Rock Economic Development Council
Title
Resolution Approving an Economic Assistance Agreement with Dorsey Pictures LLC
Body
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**Project Update following August 21st, 2018 5-0 vote**
Following the August 21st, 2018 Council meeting Dorsey Pictures received a tenant improvement bid that was several hundred thousand over the original estimate. In response to this discovery, Dorsey Pictures applied several strategies that included reducing the dedicated office space and replacing it with an open concept bullpen. They also reduced the amount of leasable space from 12,000 SF to approximately 7,000 SF and submitted the redesigned space to their Board of Directors for approval.
Unfortunately, the Board concluded that the changes were not acceptable, stating that by reducing the size of the project the relocation no longer met the original intent which was to support the future growth plans of Dorsey Pictures. Following the Board’s decision, Dorsey Pictures presented a new group of real estate options that included; staying in their current location, moving to 4700 Castleton Way in Castle Rock and looking into additional options in Centennial.
Dorsey’s Board provided direction to see if the Castle Rock Town Council would extend the economic development support as defined below in order for Dorsey Pictures to locate at 4700 Castleton. If support is given, Dorsey’s Board has authorized their local leadership team to sign a 5-year lease (with a 5-year option) for 11,266 SF at Castleton Way. If no support is provided the Board has indicated, they would prefer that Dorsey Pictures stay at their current location in Littleton.
The Castle Rock EDC is in support of this request. Dorsey Pictures, a 100 person employer, is a significant opportunity for Castle Rock. The Castle Rock Economic Assistance Policy outlines goals related to targeted businesses. The policy states that the Town can provide economic assistance to “businesses consistent with community goals that are underrepresented within the corporate limits of the Town and/or meet a strongly expressed community need or desire.” Examples include “primary, quality employment, defined as (a) businesses that sell goods and/or services outside of the Town of Castle Rock, thereby bringing new dollars into the Town, and (b) the creation or retention of jobs meeting and matching Town resident workforce.”
The positions Dorsey Pictures will relocate and propose to add are consistent with the Town’s primary employment attraction criteria and are eligible for economic assistance from the Town in accordance with this Agreement. The Primary Job Incentive is a deciding factor on whether Dorsey Pictures will relocate its production company to 4700 Castleton Way, Castle Rock, Colorado 80109.
Castle Rock Business and Development Incentive Program Overview
Economic vitality is a critical factor in ensuring Castle Rock’s long-term success in achieving its vision of being a self-sufficient community; a community in which residents can live, work, play and purchase the goods and services they need; and create a tax base adequate to support provision of core Town services.
With increasing regional competition, it is important to Castle Rock to create and maintain an exceptional Business Climate. The policy includes elements to support core Castle Rock Economic Development priorities including: attraction and expansion of primary employers, attraction and expansion of targeted retail and investments in projects of economic significance or serving as economic catalysts. The program is designed to create jobs, expand the tax base, encourage existing businesses to make capital investments, and spur new office, industrial, and retail expansion and development. It is critical that all incentive programs create a net positive job or economic impact on the community.
The parameters in this program are for guidance purposes and each case will be evaluated on a case-by-case basis.
Dorsey Pictures
Dorsey Pictures is an Emmy Award winning production company that is presently located in Littleton off West Centennial Road. They currently have 98 full-time and 18 contract employees with an average salary of $81,358. Dorsey Pictures produces a wide range of shows that can be seen on HGTV, DIY Network, National Geographic and Discovery Channel (to list a few). More information can be found on their website at <http://www.dorseypictures.tv/connect>.
Economic Development Request
Dorsey Pictures has formally requested support from the Town of Castle Rock’s Business and Development Incentive Program. Castle Rock is one of three locations evaluated by the Dorsey Pictures’ Board of Directors. While the Riverwalk project is their first choice, it does represent a 10% increase over comparable properties. The largest contributing factor is the tenant improvement costs needed to complete the 12,000 SF space which is estimated at $500,000. Dorsey Pictures has communicated that should they receive support from the Castle Rock Business and Development Incentive Program they are prepared to select Castle Rock as their new corporate headquarters and sign a five-year lease with two additional (5) year options.
Economic Impact
Castle Rock EDC enlisted the expertise of Gary Horvath, a well know Colorado Economist, to analyze the impact Dorsey Pictures could have on the Castle Rock economy. Using IMPLAN, an economic modeling software, it was reported that 100 jobs with an average salary of $80,000 would generate approximately $15,000,000 in direct effects (the additional spend a company has on its employees), approximately $4,000,000 in indirect effects (the spend a company has within its trade area) and approximately $2,000,000 in induced effects (the spend the employees of that company likely make within the community). IMPLAN also calculated that 100 employees in this industry segment is likely to create and/or support an additional 54 employees in the trade are.
Due Diligence
As part of the due diligence of this project, the EDC reached out to Donald Zuckerman, the Commissioner of Film, TV, & Media at the Colorado Office of Economic Development and International Trade (OEDIT). Donald validated Dorsey Pictures, qualifying them as “the real deal” and “one of the top three production companies in the State of Colorado”. Online research through IMDBPro confirms Dorsey Pictures’ relationship with the following distribution companies; Discovery Channel, National Geographic, HGTV, DIY Network, and Outdoor Channel. Donald also shared that the industry standard for calculating FTE in the film industry is (32 (hours)) X (47 (weeks)).
Recommended Incentive
The EDC support the use of incentives to ensure Dorsey Pictures chooses Castle Rock. High wage primary employment in the tech and media industry represents a “Targeted Industry” and a “Project of Economic Development Significance” as defined in the 2014 Castle Rock Business and Development Incentive Program. These are the type of jobs that we intended to attract when we established policy in 2012. The EDC is recommending a Job Creation Incentive that supports the relocation of the 98 employees and the 10-15 new positions that are anticipated as part of the expansion. The calculation of the incentive would follow our Job Creation Incentive policy (attached) and would include a not to exceed dollar amount of $330,000.
Additional In-Kind Considerations
Dorsey Pictures is committed to be a part of the Castle Rock community and is offering to produce two, 3-5-minute professional videos for the Town of Castle Rock. They also intended to activate their PR firm to announce the move to Castle Rock showcasing Castle Rock as a perfect location for media related businesses.
Recommended Motion:
“I move to approve the resolution as introduced by title.”
Attachments
Attachment A: Resolution
Attachment B: Incentive Agreement
Attachment C: Castle Rock Business and Development Incentive Program 2014