Presenter/Contact
Presenter
Jeff Jewell, Economic Development Manager
Contact Info
(830) 221-4621 - jjewell@nbtexas.org
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SUBJECT:
Title
Discuss and consider approval of a resolution authorizing an expenditure of up to $125,000 to Boon Chapman, Ltd. for a project to create and retain 80 jobs.
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BACKGROUND / RATIONALE:
Boon Chapman is a Third Party Administrator serving the needs of insurance companies and insurance related programs. The Company provides benefits administration and services for more than 100 self-funded employer sponsored health plans. They also provide benefit administration services to 1,200 employers for ongoing enrollment, billing and collections. They also provide services such as call center support, medical, dental and vision claims processing, employer billing/collections, financial reporting and enrollment services. In addition, they founded a software and technology advisory company that has since grown to 50 technology processionals. The Company has seen significant growth in recent years and operates small sales and service offices in the Houston and Dallas markets in addition to the corporate office in Austin. Recruitment and retention of employees in the operations division has been challenging in the north Austin market. In late 2016, the Company began looking for a new location to expand its operations center. The Company selected New Braunfels for an initial test of the labor market and to determine if it could recruit and retain the talent needed to continue meeting its growing workforce demands. The initial investment was in a 2,500 square foot facility and eight new employees. The Company has doubled its employee base in New Braunfels and is looking for a larger office space with a longer lease term.
The Company is proposing to occupy approximately 20,000 square feet at the Heritage Business Center main office building on or around December 1, 2017. By December 31, 2018, the Company is required to have at least 100 full-time employees. The Company will spend approximately $800,000 on business personal property and leasehold improvements.
Employment
The Company will add 80 new employees to the existing 16 by the second quarter of 2018 and expects to employ approximately 118 full-time employees by the end of 2018. As the operations division attritions in Austin, those additional employees will be hired in New Braunfels. Over the longer term, the company will scale core operations in two locations: New Braunfels and Oklahoma City. Overall, the company will grow by approximately 300 employees, of which 100 to 150 of those new employees will be hired in New Braunfels. That would place total employee count in New Braunfels at 200 to 250 by 2022.
ADDRESSES A NEED/ISSUE IN A CITY PLAN OR COUNCIL PRIORITY:
N/A
FISCAL IMPACT:
The company will generate $270,000 in net benefits to the City and NBIDC over a 10 year period. The $125,000 incentive provides a payback period of 5 years. The NBIDC has adequate funds for this project expenditure.
Recommendation
COMMITTEE RECOMMENDATION:
The NBIDC met at a special called meeting on June 30th and voted 5-0 to approve the project expenditure with the following terms:
• By December 31, 2018, the Company will employ a minimum of 100 employees.
• The NBIDC will deliver up to $125,000 to the Company on a reimbursement basis after the Company has created and retained 100 positions.
o As long as the minimum number of jobs are fulfilled (100), the NBIDC will reimburse the Company $1,562.50 per job created.
• In the event the NBIDC or City ascertain there are less than eighty (80) employees between January 1, 2019 and June 1, 2021 of the contract term, the Company will provide a one-time reimbursement payment to the NBIDC of $1,562.50 per job below the 100 employee threshold.
• If the NBIDC or City ascertain there are less than 80 employees between June 1, 2021 to December 1, 2022, Boon Chapman agrees to reimburse the NBIDC $500 for each position below the 100 employee threshold and will provide a $50,000 letter of credit beginning June 1, 2021 to secure the commitment.
STAFF RECOMMENDATION:
Staff recommends approval of the resolution.