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HomeMy WebLinkAboutAgenda - 09-17-2024; 5-a - Public Hearing Regarding a Proposed Economic Development Recruitment Incentive and Performance Agreement Between Orange County and Morinaga America Foods, Inc. 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: September 17, 2024 Action Agenda Item No. 5-a SUBJECT: Public Hearing Regarding a Proposed Economic Development Recruitment Incentive and Performance Agreement Between Orange County and Morinaga America Foods, Inc. DEPARTMENT: County Manager, County Attorney, Economic Development ATTACHMENT(S): INFORMATION CONTACT: 1. Proposed Performance Agreement Travis Myren, County Manager, (919) 2. PowerPoint Brief Summary 245-2308 3. Public Hearing Notice John Roberts, County Attorney, (919) 4. Orange County News Release 245-2318 Steve Brantley, Economic Development Director, (919) 245-2326 PURPOSE: To receive information and hold a public hearing on the County's issuance of a proposed seven-year performance-based incentive agreement, with claw-back provisions, to induce the manufacturing expansion of Morinaga America Foods, Inc. in Orange County, NC. BACKGROUND: Local and state governments in North Carolina have the goal to promote economic development by encouraging the location of new businesses and the expansion of existing businesses. This activity serves to diversify the local tax base, increase employment opportunities, and introduce desired job skills and related benefits to a community, and for the benefit of its residents. The Local Government Act, North Carolina General Statute (NCGS) 158- 7.1, outlines the requirements of public hearings, and NCGS 158-7.1(a) specifically addresses the requirement that economic development appropriations "must be determined by the governing body of the city or county to increase the population, taxable property, agriculture industries, employment, industrial output, or business prospects of the city or county". This public hearing has been scheduled in compliance. Company Background: Morinaga America Foods' current operation is based in a 101,495 square foot manufacturing facility located along Wilson Road in the County's western Buckhorn Economic Development District. This operation makes "HI-CHEW" candy, employs approximately 204 full-time associates, and has a current County property tax valuation of$31.6 million. The facility is located within the County's designated "Buckhorn Economic Development District" and Mebane's city limits. 2 On September 3, 2013, Morinaga announced its decision to make its first major manufacturing investment in the United States, and in Orange County, as follows: • Capital Investment: $48 million • Employment: 90 jobs • Average Salary: $37,969 • Annual Payroll, with benefits: $3.4 million • Facility Size & Type: Approximately 110,000 square feet • Type of Operation: Production of the fruit flavored candy snack "HI-CHEW" Description of Proposed Manufacturing Expansion Project: • A doubling of the current manufacturing operations at the existing Orange County site to increase production capacity for "HI-CHEW" candy. • $136 million total new capital investment, with $127,077,000 million in new capital investment forecast to occur over the five-year investment period (2024-2028), as outlined in the Performance Agreement, and the remaining $9.9 million investment to occur on or after 2029. • 204 additional new jobs will be created between 2026—2030 with an average annual wage of $48,912 (or approximately $23.52 per hour). These jobs are full-time and include healthcare and related employment benefits. • New construction of an additional 132,600 square feet of production space. • Competing sites were considered in Taiwan and China (where Morinaga operates existing Hi-Chew manufacturing plants), or in a new facility to be constructed in Vietnam. • Orange County's site is the Company's existing 21-acre factory property located at 4391 Wilson Road, Mebane, NC. The site is outlined on the following location map. army ell f e - A � ' 1� r 3 The proposed incentive will be performance-based with respect to the County's annual verification of Morinaga' s targeted increases in (1) employment, wages & benefits, and (2) new taxable real & personal property value over the next five years, as the Company expands. Incentives would only be paid following confirmation of the Company's required annual growth measures. Basis to Calculate the Value of Orange County's Performance-Based Incentives 1) INVESTMENT — Morinaga will increase property valuation by at least $32,806,000 in real property and at least $94,271 ,000 in personal property, to total $127,077,000 over five (5) years as detailed in the table below. If these real and personal property valuation targets are not achieved, the proposed annual incentive payment will be reduced proportionally. Property'Real $4,877,000 $25,778,000 $2,134,000 $17,000 $0 $32,806,000 Personal $23,856,000 $45,919,000 $20,671,000 $675,000 $3,150,000 $94,271,000 . . - • $28,733,000 $71,697,000 $22,805,000 $692,000 $3,150,000 $127,077,000 2) EMPLOYMENT – Morinaga will add net new employment consistent with the job growth chart below. If annual job targets are not achieved, the annual incentive payment will be reduced by $500 per full-time equivalent employee not hired. By the year 2030, the Company will create 204 new positions with an average salary of $48,912 per year (or approximately $23.52 per hour). NEEL AL New Full- 57 51 48 36 12 204 Time Jobs The proposed inducement payment will be in the form of a performance-based grant payable in up to seven installments over a seven-year period, at an amount equal to 75% of Morinaga's projected net increase in real & personal property tax valuation over the five-year investment period as outlined in the chart above for 2024 – 2028. Since the company's employment creation schedule (2026-2030) runs beyond the investment period, the County will withhold $500 per job that has not yet been created by December 31, 2030. The final payment will be made upon verification of job creation, with the final installment anticipated to occur in January 2031. This will ensure that annual tax revenues from this project's additional investment, net of annual incentive payments, remain positive in all years of the incentive agreement. 4 New Property Tax il $247,937 $846,025 $984,659 $920,458 $882,118 $3,881,197 Revenue , Incentive -$185,953 -$634,519 -$738,494 -$690,344 -$661,589 -$2,910,898 Payment Annual Net $61,984 $211,506 $246,165 $230,115 $220,530 $970,300 OrangeRevenue New Property Tax Revenu $7,417,526 Incentive Payment -$2,910,898 Total $4,506,628 State of North Carolina — Incentives Approved on July 15, 2024 The State of North Carolina's "Economic Investment Committee" approved the State incentives for Morinaga America Foods, Inc. (see table below) during the North Carolina Department of Commerce's July 15, 2024 meeting. Immediately following this approval of State incentives, a public announcement was held on July 16, 2024 which was led by North Carolina Department of Commerce Secretary Machelle Baker Sanders, and attended by representatives from Morinaga, Orange County, and the City of Mebane. The public announcement addressed Morinaga's decision to expand the Company's existing facility located in Orange County, instead of the competing locations (Taiwan, China, Vietnam), subject to approval of local government incentives. State Tax Exemption on machinery & equipment purchases $5,936,558 One North Carolina Fund (discretionary grant) $100,000 N.C. Community College System's "Customized Training Value" $306,000 On-the-Job Training $50,000 Work Opportunity Tax Credit (WOTC) $146,400 Federal Bonding Program $255,000 City of Mebane — Incentives Approved on August 5, 2024 Morinaga's proposed expansion site is located adjacent to the existing facility and is currently located within the City of Mebane's city limits. Mebane's City Council approved up to $1,076,999 in performance-based grant funds and waived fees for the project at its August 5, 2024 meeting. Performance Based Incentive $576,999 Waiver of Development Start-Up Fees $500,000 5 Benefits of Morinaga America Foods Expanding in Orange County • Add another 204 full-time manufacturing jobs by 2030, paying approximately $23.52 per hour average wage. • The proposed recruitment incentive is revenue positive for each year of the incentive period, netting 25% per year of the actual new property tax valuation in the first five years. A ten-year revenue forecast (shown as Exhibit F in the Performance Agreement) indicates Morinaga will generate approximately $7,417,526 in additional gross property tax revenue for the County, receive up to a maximum of$2,910,898 in incentive grants, and the County will receive $4,506,628 in net property tax revenue. • Morinaga's Orange County property tax value for 2023 is listed at $31,602,085. With the projected $136 million in additional investment, the firm would likely become Orange County's 2nd largest manufacturing related corporate taxpayer (behind #1 Thermo Fisher Scientific, and with Medline Industries at #3). • Establishes another successful public/private partnership between Orange County and the City of Mebane to grow the industrial tax base and employment in a designated Rural Census Tract area. • Further illustrates the County's success applying Article 46 sales tax proceeds to fund water & sewer infrastructure in the Buckhorn Economic Development District for the goal of attracting significant non-residential tax base and employment growth. • Strengthen the County's partnership with the State of North Carolina's business and expansion efforts, as Governor Roy Cooper and N.C. Department of Commerce Secretary Machelle Sanders visited parent company Morinaga & Co., Ltd in Tokyo, Japan in October 2023 and met with President Eijiro Ota. State of North Carolina, Local Governments, &Workforce Development Partners Assisting Orange County in the Recruitment Effort • The North Carolina Community Colleges System & the Hillsborough campus of Durham Technical Community College will fund a "Customized Training Program" technical training assistance for the employees. This support will further elevate the skill level of Orange County residents who begin employment with Morinaga. • The NC Department of Commerce has now approved state incentives and will serve as a liaison for State-assisted workforce development & pre-screening of applicants by NC Works, and community college support. • The City of Mebane has recently approved its own performance grant and will waive development start-up construction fees. • The Capital Area Workforce Development Board (CAWD), which Orange County is affiliated with as a member, is expected to provide funding for employment recruiting and screening services, on-the-job training, and incumbent worker training assistance. 6 • Governor Roy Cooper and Morinaga & Co., Ltd.'s President Ota recently met in Raleigh on July 10, 2024, when the State of North Carolina continued its active recruitment for the expansion. ias f- • Governor Roy Cooper and NC Department of Commerce Secretary Machelle Sanders visited Tokyo, Japan in October 2023 to meet with parent company Morinaga & Co., Ltd.'s President Ota, and encourage the firm to expand its Orange County factory. JA i • Governor Roy Cooper and the North Carolina Department of Commerce featured Morinaga's locally made "Hi-Chew" candy in a large State reception in Tokyo that included representatives from all Japanese industries currently based in North Carolina, and the State's industrial prospects. 7 • During Governor Cooper's business recruitment trip to Japan in October 2023, Don Hobart (Vice Chancellor for Research at UNC Chapel Hill) spoke at the Southeast U.S./Japan annual conference that featured NC and six other southeastern states, plus several hundred delegates. Mr. Hobart's presentation focused on Orange County's Morinaga HI- CHEW factory as a successful example of a Japanese industry operating successfully in North Carolina. i A 1 � Morinaga's International Business Profile • Morinaga & Co., which was founded in 1899 in Tokyo, Japan, is a major international confectionary & candy maker. Global sales revenue was comprised 53% in chocolates, caramel & biscuits, 19% in ice cream &frozen foodstuffs, 16% in health products, and 12% in cocoa/cake mix foodstuffs. The firm is Asia's equivalent to a Hershey's, Mars or Nestle. It is Japan's oldest and largest confectionary maker. • In Japan, which is the world's #2 overall largest candy and confectionary market (behind the USA), the Company has over 40 different product lines, where it holds the #1 Japanese 8 domestic market-share for candy. Morinaga ranks similar to Kellogg Company, Mars and Nestle in terms of worldwide retail sales. • Among Japan's top 3 competing confectionary makers, Morinaga ranks #1 for candy and caramel products, #2 for biscuits, and #3 for chocolate products. The chewy fruit flavored snack "HI-CHEW" holds the #1 spot within Japan and is the company's current product made here in Orange County. • Morinaga is aggressively marketing HI-CHEW across the United States and has successful store displays at Target, COSTCO, 7-Eleven, and Kroger, and is found locally at the Streets at Southpoint Mall ("It's Sugar", "World Market"). Sales in the U.S. have been increasing 20%-25% annually. • Additional product lines include frozen desserts (19%), foodstuffs (10%), and the internationally renowned Weider-brand health care products such as energy drinks, nutritional vitamin/mineral supplements & protein bars, & collagen-based beauty products (16% of sales). • Morinaga America, Inc. was established in Los Angeles in 2008 for the purpose of introducing the company's various product lines throughout the USA, starting with HI- CHEW. The "Hi-Chew" logo is advertised at all Duke University sporting events and can be seen nationally on all televised Duke NCAA basketball and football games. • Overseas partners include serving as the trademark distributor, licensee, or supplier for world-class confectionary companies such as Disney Japan, SUNKIST Growers, PEZ, Perfetti van Melle (Italy), Storck (Germany), Dare Foods (Canada) and Barry Callebaut AG (Switzerland). • Management's corporate philanthropy strives to be a "company that improves the lives of children worldwide". The firm partners with international non-governmental organizations (NGOs) in developing nations, and places a special emphasis promoting healthy nutrition, and funding for school facilities and educational supplies, especially among West African countries. • Morinaga was the first Japanese corporation to be affiliated with the World Cocoa Foundation (WCF), which was established with the objective to foster a sustainable cocoa industry and prevent the use of child labor in developing nations. This is achieved through the environmental protection of regions where major global chocolate corporations cultivate cocoa, and through economic and social development. Technical guidance and training support is provided to cocoa farmers through various programs that protect the natural and social environment. • Sustainability, Diversity & Inclusion corporate principles: The Morinaga Group's Sustainability of Morinaga I morinaga & co., ltd. Additional Company Information • Morinaga America Foods About Us: https://morinaga-america.com/story/ • January 10, 2024, Launch of Direct-To-Consumer E-Commerce Platform for Hi-Chew: https://morinaga-america.com/hi-chew-launches-direct-to-consumer-e-commerce- platform/ 9 • Morinaga Celebrates Hi-Chew Factory Opening: • https://chapelboro.com/news/business/morinaga-celebrates-hi-chew-factory-opening • Japanese Candy Maker Finds Sweet Spot in North Carolina: https://edpnc.com/success- stories/iapanese-candy-maker-finds-sweet-spot-north-carolina/ FINANCIAL IMPACT: Performance Agreement: Based on the Company's proposed operation and net new capital investment forecast of $127,077,000 for a new building, machinery and equipment over the next five years, the attached Performance Agreement contract between Orange County and Morinaga America Foods, Inc. outlines a maximum total financial impact of $2,910,898). The Company will create at least 204 new production jobs with an average annual salary of $48,912 annually ($23.52 hourly). Other economic benefit multipliers to the County include enhanced job skills for those employees through advanced technical training to be provided by the Orange County campus of Durham Technical Community College in Hillsborough. Also, construction employment for the new 132,600 square foot facility will create many additional skilled trade jobs. ALIGNMENT WITH STRATEGIC PLAN: This item supports: • GOAL 6: DIVERSE AND VIBRANT ECONOMY OBJECTIVE 6. Provide workforce and business development resources to enhance the skills of residents of the County. RECOMMENDATION(S): The Manager recommends that the Board: (1) Receive the proposal to consider entering into a Performance Agreement for the purpose of incentivizing Morinaga America Foods, Inc. investment in Orange County's Buckhorn Economic Development District; (2) Conduct the Public Hearing and receive public comments; (3) Close the Public Hearing; and (4) Approve the performance-based incentive agreement between Orange County and Morinaga America Foods, Inc., subject to final review by the County Attorney, and authorize the Chair to sign the Performance Agreement on behalf of the County. 10 Attachment 1 STATE OF NORTH CAROLINA ORANGE COUNTY PERFORMANCE AGREEMENT BETWEEN ORANGE COUNTY,NORTH CAROLINA, AND MORINAGA AMERICA FOODS,INC. INCORPORATED This Performance Agreement("Agreement")made and entered into this the day of 92024 (the"Effective Date")by and between Orange County, a body politic existing under the laws of the State of North Carolina("County") and Morinaga America Foods, Inc., a subsidiary of Morinaga&Co. Ltd., a multinational corporation,with facilities to be located in Mebane, Orange County,North Carolina("Company"), for the purpose of incentivizing Company's investment in Orange County. The County and Company may be referred to as Party or Parties. Company's ultimate parent is a multinational corporation situated and doing business in Tokyo, Japan. The Company intends to expand the Company's existing confectionary food manufacturing facility in Orange County. Company represents it is duly authorized to conduct business in North Carolina. It is understood that the levels of performance required by this Agreement are to be met by Company as a whole at its Facility(as hereinafter defined) in Orange County. Accordingly,the term"Company" as used in this Agreement refers to the Company and any of its Affiliates conducting business at the Facility. WITNESSETH THAT WHEREAS,the County has offered to the Company an inducement package as hereinafter set forth; and WHEREAS,the State of North Carolina and the Cityof Mebane,North Carolina have offered separate inducement packages to the Company; and WHEREAS, Pursuant to G.S. Section 153A-449, 158-7.1, and 158-7.2, as construed by the North Carolina Supreme Court in its opinion in Maready v. The City of Winston-Salem, et al, 342 N.C. 708 (1996), and other judicial authority,the County may enter into an agreement with the Company in connection therewith; and WHEREAS,the County finds that awarding the Company a grant based on its Total Taxable Investment will increase the taxable property base for the County and help create new jobs in the County at the agreed average annual salary, all of which will result in an added and valued benefit to the taxpayers of the County; and WHEREAS,the Company has agreed to meet and continue meeting the minimum investment and employment requirements as hereinafter set forth; and WHEREAS,but for the offer of an inducement package the Company would not be locating its manufacturing facility within Orange County. NOW, THEREFORE,the Parties hereto in consideration of these mutual covenants and agreements passing from each to the other do hereby agree as follows: 4863-5202-3475.v5 11 1. DEFINITIONS. As used in this Agreement the terms below will have the following meanings: A. "Affiliate." A company that the Company controls, controls the Company, or is under common control with the Company. B. "Baseline Employment." The number of employees, 204, employed by Company as of the date of execution of this Agreement. C. "Baseline Valuation." Current assessed valuation of the Subject Property as assessed by the Orange County Tax Administrator prior to the investment contemplated in this Agreement. Upon revaluation by the County prior to the Commencement Date the Baseline Valuation shall be adjusted as determined by the Orange County Tax Administrator. D. "Commencement Date." The date in which the Company begins actual production operations at the Subject Property, after having obtained applicable governmental approvals, certificates of zoning compliance, and certificates of occupancy. Unless delayed by causes beyond the control of the Company, the Commencement Date is anticipated to be no later than December 31, 2026. E. "Company." Morinaga America Foods, Inc., its Affiliates, successors, and assigns. F. "Eligible Property." Includes (a)the Subject Property,together with other real property in the County owned by Company("Additional Property"), and all improvements the Company or an Affiliate of the Company constructs or installs, or causes to be constructed or installed, at the Subject Property or any Additional Property, including all buildings,building systems, and building improvements,the estimated value of which is described in Exhibit C, and(b) all Personal Property the Company or an Affiliate of the Company purchases or leases and installs at, or relocates to,the Subject Property or any Additional Property, the estimated value of which is described in Exhibit C. Does not include property valued for the Baseline Valuation as noted in Exhibit D,Description of Existing Real Property and Exhibit E,Description of Existing Personal Property. G. "Inducement Grant." An economic development grant provided to Company for the purpose of securing the Company's commitment to expand its manufacturing facility in Orange County,North Carolina. H. "Minimum Taxable Investment." The aggregate Qualifying Expenditures made by the Company that Company anticipates will be made annually as reflected in Exhibit C and verified by the Orange County Tax Assessor and which will be used for calculating the annual Inducement Grant payment. I. "Orange County Facility"or"Facility." The Subject Property and the improvements now or hereafter located on the Subject Property or any Additional Property, including, without limitation, the Company-constructed or owned primary and secondary structures,utilities, and operations and service areas located in Mebane, Orange County, North Carolina in and on which Company conducts its business or operations. Revised 2023 Page 2 of 18 4863-5202-3475.v5 12 J. "Person." Any individual,partnership,trust, estate, association, limited liability company, corporation, custodian, nominee, governmental instrumentality or agency, body politic or any other entity in its own or any representative capacity. K. "Personal Property." All business personal property, other than real property,the Company or an Affiliate owns or leases located at the Facility, including all (a) machinery and equipment, (b) furniture, furnishings, and fixtures, (c)property that is capitalized for federal or state income tax purposes, and(d) any and all additions or replacements of any of the foregoing in excess of$100,000. L. "Qualifying Expenditure." All expenditures the Company, an Affiliate, or lessor to the Company or an Affiliate makes for Eligible Property which is subject to Tax in the County, and which is not otherwise subject to an exemption or exclusion from Tax, that the Company uses. M. "State." The State of North Carolina. N. "Subject Property." The property on which the Company currently operates the Orange County Facility having Parcel Identifier Number 9824564353. O. "Tax"or"Taxes." Ad valorem property tax levied on real and Personal Property located in the County pursuant to Article 25, Chapter 105 of the North Carolina General Statutes or any successor statute relating to ad valorem property tax the County levies on property. P. "Term" or"Full Term." The duration of this Agreement commencing as of the Effective Date and through and including January 31, 2031. Q. "Total Taxable Investment." The taxable value of all Qualifying Expenditures made by Company in and to its Orange County Facility as of December 31, 2028. 2. INDUSTRIAL INVESTMENT AND EMPLOYMENT AGREEMENT A. INVESTMENT 1. The Company anticipates it shall, during the Term of this Agreement, directly invest a Minimum Taxable Investment annually in accordance with the investment plan attached as Exhibit C in addition to the amount of the 2024 assessments in real and taxable Personal Property attributable to the existing Facility as described in Exhibit D and Exhibit E. If the Company does not make the Total Taxable Investment on or before December 31, 2028 (and as may be extended below),the total amount of the Inducement Grants will be adjusted as provided in Subsection 2.A.3. 2. The Company shall achieve the Total Taxable Investment by December 31, 2028. 3. If the total increase of taxable investment falls below the Minimum Taxable Investment levels, due to failure to meet the investment goals set forth in Exhibit C or removal of equipment, as assessed by the Orange County Tax Assessor,the amount of the following annual Inducement Grant installment payment will be reduced by a pro-rata percentage Revised 2023 Page 3 of 18 4863-5202-3475.v5 13 of the shortfall;provided, however, the foregoing shall not be deemed to limit the total amount of the Inducement Grant available to the Company and so long as as any shortfall in Minimum Taxable Investment in any given year is invested in a subsequent year, Company shall be entitled to recoup any prior reductions in the payment of the Incentive Grant so long as the Total Taxable Investment occurs on or before December 31, 2028. The baseline for measuring whether the investment goals have been met(i.e. the 2024 tax assessments) shall be adjusted prior to the Commencement Date (1) upward, if there is an increase in the assessment of the Company's real property and(2) downward,to reflect the natural decline in the value of the Company's personal property (existing in 2024 and acquired thereafter in the course of the new investment) as measured by the depreciation of such property in accordance with generally accepted accounting principles. B. EMPLOYMENT 1. On or before December 31, 2030 at least 204 net new positions filled with full-time equivalent employees will be created at the Facility as reflected in Exhibit B. The number of full-time positions shall be evidenced by one or more Quarterly Tax and Wage Reports (Form NCUI 10 1) filed with the N.C. Employment Security Commission. Net new positions means positions added above and beyond Baseline Employment. If 90%of the net new positions are not achieved on or before December 31, 2030 (or as extended as provided below), the amount of the Grants will be adjusted as provided in Section 2.D. and Section 6. 2. During the first year of operation following the year in which the Commencement Date occurs, Company and County agree Company shall hire 57 new full time employees at the Facility. During the second year of operation the Company shall hire an additional 51 new full time employees at the Facility for a total of 108 new full time employees at the Facility. During the third year of operation the Company shall hire at a minimum an additional 48 new full time employees for a total of 156 new full time employees at the Facility. During the fourth year of operation the Company shall hire an additional 36 new full time employees for a total of 192 new full time employees at the Facility. During the fifth year an additional 12 new full time employees shall be hired for a final and ongoing 204 full time employees at the facility. At the expiration of this Agreement, the Company shall employ, at the Facility in Orange County, at least the equivalent of 204 new full time employees in accordance with Exhibit B. 3. Employees counted toward this total shall include only new employees of the Company in the State of North Carolina employed and located at Company's Facility in Orange County above and beyond Baseline Employment,provided such employees are employed in Orange County on a full time basis. Employees of the Company will be eligible to participate in Company sponsored health insurance and retirement programs. For purposes of this section"new full time employees" shall be defined as actively employed individuals and shall not include employees or positions counted for Baseline Employment or vacant positions for which the Company is actively or otherwise recruiting It is understood that vacancies occur and that when such occur the Company will immediately, or as soon as is reasonably possible thereafter, fill said vacancies. The average wage of the 204 new full time employees shall be, as of the last day of this Agreement, at the annual rate of$48,912. Revised 2023 Page 4 of 18 4863-5202-3475.v5 14 C. DEVELOPMENT GRANT PARTICIPATION: Where applicable, the Company agrees to partner,through the commitment to create new jobs,with Orange County and other applicable agencies to apply for development grants that will improve or add water, sewer,road or other necessary infrastructure in order to facilitate the successful completion of this project. The Company agrees to meet with program representatives, and to participate in the grant request process as necessary to secure the required funding. D. GUARANTEED MINIMUM LEVEL OF PERFORMANCE: The Company agrees that its minimum level of performance pursuant to this Agreement shall be as set out in this Section 2. Furthermore,Company agrees that failure to meet the minimum level of new employment as reflected in Section 2.13. shall entitle the County to make reductions in inducement installments paid to the Company in an amount of Five Hundred dollars ($500.00)per employee not hired as reflected in Exhibit B. Company further agrees that failure to meet the minimum level of direct investment as reflected in Section 2.A. shall entitle County to make pro rata reductions in inducement installments paid to the Company as set out in Section 3. It is agreed and understood by the Parties hereto that the failure of the Company to meet the level of performance with respect to minimum level of investment or minimum level of new employment as specified herein shall not be considered a breach of this Agreement. E. STATUTORY COMPLIANCE: The Company understands that the County's participation is contingent upon authority found in North Carolina General Statute 158-7.1 and other relevant North Carolina General Statutes and that should such statutory authority be withdrawn by the North Carolina General Assembly County may terminate this Agreement without penalty to County and without County's further compliance with this Agreement. If a court having lawful jurisdiction determines the inducement grant itself is illegal, invalid, or unenforceable this Agreement shall immediately terminate without further obligation to the Parties except that the amount of any portion of the inducement grant already paid by the County shall be reimbursed to the County by the Company. 3. INDUCEMENT PACKAGE A. COUNTY INDUCEMENT GRANT: The County,upon execution of this Agreement, shall provide to the Company an Inducement Grant to offset facility development, expansion, and acquisition costs in an amount up to and not to exceed Two Million Nine Hundred Ten Thousand Eight Hundred Ninety-Eight Dollars ($2,910,898.00). This Inducement Grant shall be payable in up to seven installments over a seven year period(the "Inducement Grant Period"). The Inducement Grant is equal to seventy-five percent(75.0%) of the actual property tax for real and Personal Property taxes attributable to the amount of the Total Taxable Investment due and paid in each year of the Inducement Grant Period,up to the maximum not to exceed amount. The estimated annual amount of each year's grant payment is shown in Exhibit F for years two (2025)through six(2029). Subject to Section 6.B.,below, or delays caused by an event of Force Majeure,the first and second installments of the Incentive Grant shall occur no later than June 30 of the 2025 and 2026 calendar years respectively,upon receipt of proof reasonably satisfactory to the County, as described in Section 5 of this Agreement,that the investment numbers referenced in Section 2 of this Agreement have been met and that all local property taxes on the real and Personal Property owned by the Company and located within Orange County have been fully paid. Subsequent annual installments are anticipated to occur during the month of January for the term of this Agreement upon receipt of proof reasonably Revised 2023 Page 5 of 18 4863-5202-3475.v5 15 satisfactory to the County that the minimum employment and investment numbers have been met and that all local property taxes on the real and Personal Property owned by the Company and located within Orange County have been paid in full. Should the company meet the investment goals before all job creation has been completed, the County will withhold$500.00 per job that may remain to be created by December 31,2030 and will pay out the final amount upon proof satisfactory to the County of the job creation according to the job schedule outlined in Exhibit B.,with the final installment occurring in January 2031. No installment shall be required to be paid until such time as the County receives proof of the payment of all property taxes and verification of employment and investment levels has been submitted to the County. B. TOTAL COUNTY COMMITMENT: The total County commitment for the Inducement Grant outlined in Section 3.A. shall not exceed Two Million Nine Hundred Ten Thousand Eight Hundred Ninety-Eight Dollars ($2,910,898.00). 4. EXPANSION OPPORTUNITY Participation in this Agreement shall not exclude the Company from consideration for additional inducements from the County either during or upon completion of this Agreement. Future projects shall be considered on a case-by-case basis and induced at the discretion of the County based on new taxable investment and job creation in excess of the minimum levels outlined in Section 2 above. Any such agreement shall require a separate"Performance Agreement"which shall conform to all relevant North Carolina Statutes and Orange County Ordinances,Policies or Resolutions, shall be in writing, and shall be mutually agreed upon by the Parties. 5. PROOF AND CERTIFICATION The officials of the Company shall furnish the necessary reports and certificates to verify that the goals set out in this Agreement are met. Once the Company maintains its investment and employment goals for one year following the conclusion of the term of this Agreement it will no longer need to furnish these reports to the County. Acceptable forms of proof for taxable investment shall be the records of the County Tax Administrator. Acceptable forms of proof of payment of taxes shall be in the form of cancelled checks and receipts of payment from the County Tax Administrator or Finance Officer. Acceptable forms of proof for employment numbers shall be in the form of a notarized statement from a North Carolina licensed Certified Public Accountant and shall be verified by the North Carolina Employment Security Commission. Until that date which is one (1)year following the date of the final Incentive Grant payment,the Company shall allow representatives of the County to enter the Facility during normal business hours upon forty-eight(48)hours prior notice for the purpose of confirming that the claimed investment and employment goals have been met and maintained. 6. REMEDY A. INDUCEMENT PACKAGE: If the County does not meet and maintain the terms set forth in the inducement package,the Company has the option to the rights set forth in Section 1 LA. of this Agreement upon thirty(30) days written notice to the County. Revised 2023 Page 6 of 18 4863-5202-3475.v5 16 B. DELAY OF INDUCEMENT PACKAGE INITIATION: If the Company believes that it will not meet employment and investment goals that are to be met pursuant to this Agreement by December 31, 2026, the onset of the Inducement Grant Period may be delayed up to one(1) additional year, at the option of the Company. Written notification of the exercise of this option to delay onset must be received by the County no later than December 31, 2026. In that event this Agreement shall initiate no later than December 31, 2027 and shall expire no later than January 31,2032. Notwithstanding anything else herein the Commencement Date shall not be beyond December 31, 2027. If Company cannot meet these requirements this Agreement shall terminate automatically without fault or further obligation to County. Company shall remain free to negotiate a new incentive agreement with County based on new terms and timelines. C. INVESTMENT AND EMPLOYMENT PACKAGE: If the Company does not meet and maintain either the investment or employment goals within the annual timetable set forth in this Agreement, and does not opt to delay the onset of this Agreement as described above,then the County will reduce the annual installment payment as set forth in Section 2.1). of this Agreement until such time as the Company once again meets both the investment and employment goals. Reduction shall be computed, exclusively by the County,based on the percentage of the goal not met. In order to qualify for the full reimbursement, including recovery of any prior reductions, both investment and employment must meet or exceed the minimum standards outlined above prior to the natural termination of this Agreement. 7. SEVERABILITY If a court having lawful jurisdiction determines any term or provision of this Agreement is illegal, invalid, or unenforceable,the legality,validity, or enforceability of the remaining terms, or provisions of this Agreement shall not be affected thereby; and in lieu of such illegal, invalid or unenforceable term or provision,there shall be added by mutually agreed upon written amendment to this Agreement, a legal,valid, or enforceable term or provision, as similar as possible to the term or provision declared illegal, invalid, or unenforceable. 8. COMPLIANCE WITH THE LOCAL GOVERNMENT BUDGET AND FISCAL CONTROL ACT OF NORTH CAROLINA GENERAL STATUTES All appropriations and expenditures pursuant to this Agreement shall be subject to the provisions of the Local Government Budget and Fiscal Control Act of the North Carolina General Statutes for cities and counties and shall be listed in the annual report submitted to the Local Government Commission by the County. 9. GOVERNING LAWS,DISPUTE RESOLUTION, & FORUM This Agreement shall be governed and construed by the Laws of the State of North Carolina. Any action brought to enforce or contest any term or provision of this Agreement shall be brought in the North Carolina General Court of Justice sitting in Orange County,North Carolina. The Parties hereto stipulate to the jurisdiction of said court. It is agreed by the Parties that no other court shall have jurisdiction or venue with respect to any claims, complaints, suits, or actions brought pursuant to this Agreement. Binding arbitration may not be initiated by either Revised 2023 Page 7 of 18 4863-5202-3475.v5 17 Party,however,the Parties may agree to nonbinding mediation of any dispute prior to the bringing of a claim, complaint, suit, or action. 10. INDEMNIFICATION The Company hereby agrees to indemnify,protect and save the County and its officers, directors, and employees harmless from all liability, obligations, losses, claims, damages, actions, suits,proceedings, costs and expenses, including reasonable attorneys' fees, arising out of, connected with, or resulting directly or indirectly from (a) the Company's gross negligence or intentional misconduct with regard to the business, construction, maintenance, or operations of the Company or the Facility, or(b)the transactions contemplated by or relating to this Agreement, insofar as such matters relate to events subject to the control of the Company and not the County. The indemnification arising under this Section shall survive the Agreement's termination. 11. TERMINATION A. COMPANY: Upon Company's meeting its Employment and Investment obligations asset out in Section 2 above and upon Company's certification to such and certification of the payment of all real and Personal Property taxes, as set out in Section 5 above, then upon the occurrence of any of the following events, the Company shall have the option of terminating this Agreement: Failure of the County, to provide the initial inducement installment as provided in Section 3 of this Agreement; or, under the same circumstances, failure of the County to make future inducement installments, as provided for in Section 3 of this Agreement. Subject to Section 2.E., should the Company exercise its option to terminate this Agreement,pursuant for failure by the County to provide inducement installments, the Company shall be entitled to retain all funds paid to or for the benefit of the Company pursuant to this Agreement. Should the Company terminate this Agreement for any reason other than the default by the County to provide for any inducement installment to the Company, the Company shall repay to the County all funds paid to or for the benefit of the Company pursuant to this Agreement. Thereafter,the County shall have no further obligation to make inducement installments annually or otherwise. Any such termination of this Agreement by the Company shall be in writing and shall meet notice requirements as set out herein. B. COUNTY: The County shall have the option of terminating this Agreement upon any Abandonment of Operations by the Company,without penalty or further obligation to the County, which option shall be executed by giving written notice to the Company. Abandonment of Operations shall be defined as a period in excess of ninety(90) days during which the Company's level of Full Time Equivalent Employees or Direct Investment goes below thirty percent(30%) of the guaranteed minimum levels of performance commitments for either Full Time Equivalent Employees or Direct Investment as reflected in Section 2 above. Notwithstanding the foregoing, if the aforesaid decline in the number of full time equivalent employees or the Company's failure to make the required direct investments is attributable to an overall national economic decline(as such may be recognized by the United States Bureau of Labor Statistics),this shall not be deemed an abandonment of operations entitling the County to terminate this Agreement, and the Company shall not be deemed in default. In such event,the Revised 2023 Page 8 of 18 4863-5202-3475.v5 18 Company's and the County's obligations shall be suspended for one year and resume thereafter. If after one year the aforesaid decline continues the County may declare an Abandonment of Operations and proceed as set forth herein. C. NATURAL: In any event, the above terms notwithstanding, this Agreement shall terminate upon the 31St day of January of the year in which the final financial inducement installment is made. 12. LIMITATION OF COUNTY'S OBLIGATION No provision of this Agreement shall be construed or interpreted as creating a pledge of the faith and credit of the county within the meaning of any constitutional debt limitation. No provision of this Agreement shall be construed or interpreted as delegating governmental powers nor as a donation or a lending of the credit of the county within the meaning of the North Carolina Constitution. This Agreement shall not directly or indirectly or contingently obligate the county to make any payments beyond those appropriated in the county's sole discretion for any fiscal year in which this Agreement shall be in effect. No provision of this Agreement shall be construed to pledge or to create a lien on any class or source of the county's moneys, nor shall any provision of the Agreement restrict any action or right of action on the part of any future county governing body. To the extent there is a conflict between this Section and any other provision of this Agreement,this Section shall have priority. 13. LIABILITY OF PUBLIC OFFICERS No officer, agent or employee of the County or the Company shall be subject to any personal liability or accountability by reason of the execution of this Agreement or any other documents related to the transactions contemplated hereby. Such officers, agents, or employees shall be deemed to execute such documents in their official capacities only, and not in their individual capacities. This Section shall not relieve any such officer, agent or employee from the performance of any official duty provided by law. 14. MISCELLANEOUS A. ENTIRE AGREEMENT: This Agreement, including all exhibits attached, constitutes the entire contract between the Parties, and this Agreement shall not be amended except in writing signed by the Parties. B. BINDING EFFECT: Subject to the specific provisions of this Agreement, this Agreement shall be binding upon and inure to the benefit of and be enforceable by the Parties and their respective successors and assigns.Neither Party may assign their rights, responsibilities, or interest in this Agreement without the prior written consent of the other Party. Revised 2023 Page 9 of 18 4863-5202-3475.v5 19 C. TIME: Time is of the essence in this Agreement and each and all of its provisions. D. CONSTRUCTION: Nothing in this Agreement shall be construed to the effect that the County has any right to influence the Company's business decisions or to receive business information from the Company(except as expressly provided in Section 2.A., 2.B., and Section 5 hereof). E. SIGNATURES: This Agreement together with any amendments or modifications may be executed electronically. All electronic signatures affixed hereto evidence the intent of the Parties to comply with Article 11 A and Article 40 of North Carolina General Statute Chapter 66. F. AUTHORITY: The Parties and each person executing this Agreement on behalf thereof represent and warrant that they have the full right and authority to enter into this Agreement, which is binding, and to sign on behalf of the Party indicated, and are acting on behalf of themselves, the constituent members and the successors and assigns of each of them. The Parties shall reasonably assist one another and cooperate in the defense(should any defense ever be necessary) of this Agreement and the incentives granted hereunder, so as to support and in no way undercut the same. G. FORCE MAJEURE: Subject to the provisions of Section 6 neither Party shall be liable towards the other Party for non-compliance with its contractual obligations hereunder, if and to the extent such non-compliance is directly attributable to events of force majeure. Events of force majeure are events or causes which are not under a Party's reasonable control and render the execution of a Party's obligations impossible. Each Party shall forthwith inform the other Parties of the occurrence of a force majeure event preventing such Party from complying with its contractual obligations. Force Majeure does not include failure of the Company to secure permitting necessary for the project to commence, continue, or proceed. 15. COMPLIANCE WITH LAW A. NON-DISCRIMINATION: Company shall at all times remain in compliance with all applicable local, state, and federal laws,rules, and regulations including but not limited to all state and federal anti-discrimination laws,policies,rules, and regulations and the Orange County Non-Discrimination Policy. Company shall not discriminate against any person based on age (as defined in the Orange County Civil Rights Ordinance),race, ethnicity, color,national origin, religion, creed, sex, gender, gender identity, gender expression,marital status, familial status, source of income, disability,political affiliation, veteran status, disabled veteran status. Any violation of this requirement is a breach of this Agreement and County may immediately terminate this Agreement without further obligation on the part of the County. This Section is not intended to limit and does not limit the definition of breach to discrimination. B. E-VERIFY, ISRAEL BOYCOTT,AND IRAN DIVESTMENT: By executing this Agreement Company affirms that Company, and any North Carolina Affiliates of Company, is and shall remain in compliance with Article 2 of Chapter 64 of the North Carolina General Statutes. By executing this Agreement Company certifies that Company, and any North Carolina Affiliates of Company,have not been identified, and have not utilized the services of any agent or subcontractor, on the list created by the North Carolina State Treasurer pursuant to Articles 6E and 6G of Chapter 147 of the North Carolina General Statutes. Revised 2023 Page 10 of 18 4863-5202-3475.v5 20 16.NOTICES Any notices pursuant to or required by this Agreement shall be in writing and shall be delivered via United States Mail, certified,return receipt requested: If to Orange County; If to Morinaga America Foods, Inc.; County Manager 200 S. Cameron Street Hillsborough,NC 27278 Any addressee may designate additional or different addresses for communications by notice given under this Section to the other Party. Revised 2023 Page 11 of 18 4863-5202-3475.v5 21 AGREEMENT REVIEWED AND ACCEPTED BY: President Attest: Morinaga America Foods, Inc. Chair Attest: Laura Jensen Orange County Board of Commissioners Clerk to the Board Orange County Commissioners This instrument has been pre-audited in the manner required by the Local Government Budget and Fiscal Control Act. Chief Financial Officer Revised 2023 Page 12 of 18 4863-5202-3475.v5 22 EXHIBIT A - PROJECT OVERVIEW Average wages Awg New JO&I By Year 3-�'+ar 5 Yrr kly ap's1f,rLLL rd"1nk-num mNtw Avg Annual W—n 2m xL,5 20 TDTAL TatAL kts vbpoljobT. 57 51 40 36 12 1561 m $.11$,912 $4B 912 New lywesIrnent By'car 3-'Yov 5-Yea' 2024 2A 2m 2T127 2029 TOTAL TOTAL Real Propaitk 5 4;ffn.D00 M7TdOW $ZI341,000 5t7.mo 30 W.T1G4.81>0 M A46,400 Tengitle Per30M611 t"erly 523 91'0000 SW A 049 W75.000 $3.150.004 m$4(w sm,27i'm Total lnvesUmFd IMMAN VMAffim SM." MGkwo Sim $12T M7?bbd Source:North Carolina Department of Commerce Project Summary Form Submitted by Compano Consideration of State Discretionary Incentives 4863-5202-3475.v5 23 EXHIBIT B — EMPLOYMENT GOALS December 31 Baseline New Employees to 90% of New Total Cumulative Employees be Added Employee Target Employees (Current Added by Year Employment) (the "90% Target") 2026 204 57 51 261 2027 204 51 46 312 2028 204 48 43 360 2029 204 36 32 396 2030 204 12 11 408 Total at Natural 204 204 184 408 Termination of Agreement 1/31/31 4863-5202-3475.v5 24 EXHIBIT C - INVESTMENT GOALS Year End Dec. 31 2024 2025 2026 2027 2028 Real Property $4,877,000 $25,778,000 $2,134,000 $17,000 $0 Personal Property $23,856,000 $45,919,000 $20,671,000 $675,000 $3,150,000 Total Annual $28,733,000 $71,697,000 $22,805,000 $692,000 $3,150,000 Investment TOTAL INVESTMENT: $127,077,000 4863-5202-3475.v5 25 EXHIBIT D - DESCRIPTION OF EXISTING REAL PROPERTY Parcel Identification Number 9824564353 -Physical Address 4391 Wilson Rd., Mebane,NC 27302 Acreage 21.00 -Existing Building Size 101,495 2024 Orange County Real Property Value $12,648,800 4863-5202-3475.v5 26 EXHIBIT E — DESCRIPTION OF EXISTING PERSONAL PROPERTY Parcel Identification Number 9824564353 -Physical Address 4391 Wilson Rd., Mebane,NC 27302 2024 Orange County Personal Property Value $16,555,477 4863-5202-3475.v5 27 EXHIBIT F - PROPOSED ORANGE COUNTY INCENTIVE Project"Sunny"Morinaga Orange County NC Proposed Incentive Proles["Sunny'•MorinaEa 5127.077;004 $0-8629 JOBS 244 INCENTIVE 75% of new property tax for 5 years AVERAGE WAGE §48.912 DEPRECIATION 10% • •� i r r r n n r r r r r (2034) Initial New Real $4,877,000 $30,655,000 $32,789,000 532,806,000 $32,806,000 $32;806,000 $32,306,003 $32,W6,CCO $32,806,000 $32,&76,000 $32,806,000 $32,806,003 Pers Prop Yr 1 523,856,030 $21,470,400 519,323,360 $17,391,024 515,651,922 $14,086,729 $12,678,056 $11,410,251 $10,269,226 59,242,303 $8,318,073 $23,856,000 Pers Prop Yr2 $0 $45,919,000 $41,327,100 $37,194,390 $33,474,951 $30,127456 $27,114,710 $24,403.259 521,962,915 519,765,524 517,789,961 545,914,OD3 Pers Prop Yr 3 S0 W $20,671,000 $18,603,900 $15,535,800 $14,469,700 $12,402,500 $10,335,500 $8,268,400 56,201,300 $4,134,200 520,671,003 Pers Prop Yr 4 50 50 50 5675,,000 5637,500 $540,000 5472,500 5405,000 5337,500 5270,000 5202,500 5675,033 Pers Prop Yr 5 SO 50 $0 SC 53,150,000 52,835,000 $2,520,003 S2,205.000 S1,890,000 $1,575,000 51,263,000 53;150,030 Pers Prop Yr 6 $a $0 w $0 $0 $0 50 A $0 $0 $0 $0 Pers Prop Yr 7 Sd 50 53 SO 50 50 $0 $0. S0 50 $0 $0 Tax Value $28,733,000, $98,044,400 5114,110,450 $106,670,314 $102,227,173 $94,864,885 $87,993,867 $81,564,990 $75,534,041 $59,861,227 $64,510,734 $127,077,000 I • r r (ZD3C) r r r r (2034) Property Tax $0' $247,937' $846,025 $984,659 $-20,45°. 5862,118 $818,589 $759,299 $703,824 $651,783 5632,833 $7,417,526 Inrenttves $0 -5185,953 -5634,519 -S738,494 -5690.344 -S661.589 Sa S0 SO so 50 -S2.914,89B Annual Net 50 $51,984 $211,506 $246,165 $230,115 $220,530 5818,589 $759,299 $703,824 $651,783 $502;833 $4,506,628 Cash Flow $0 561,984 5273,491 $519,655 $749,770 5970,299 $1,788,889 52,548,188 $3,252,012 53,9113,795 $4,506,628 5s,000.00o 54,500.000 - 54,m0,003 5a,500;000 53,000,003 52,500.000 $z,m0.m0 $1,500.000 51,000.000 X00,so - ■ ■ ■ ■ ■ rr1[zoz4} rrz(wzs) rr3(zoz6) rr4(2427) In 512028) rr6{0029} rr7(ao3o) rra(z031) ,,9(00329 ,,10(2013) nu[2034} -MralNet -Cuh Flaw 0 57 51 4s 351 121 0.: 6 4 4 204: I f II i 4863-5202-3475.v5 28 OR- -A-NGE COUNTY NORTH CAROLINA Proposal for Orange County's Financial Incentives to Morinaga America Foods , Inc . Am MORINAGA Public Hearing by Orange County Board of Commissioners Whitted Building - Hillsborough, NC September 17, 2024 1 Location of Morinaga America Foods, Inc. 29 4391 Wilson Road , Mebane, Orange County wN` arma ell I sib ,Y5 r• '� J - I Y . ,�- h Z: R L 4 ORANGE COUNTY NORTH CAROLINA 2 30 Current Operations • 204 full-time jobs • $31 .6 million property tax valuation . 101 ,495 sq. ft. building • 21 -acre site • Makes 7 million pieces of HI-CHEW candy Y ever 24 hours � • In operation since 2014 • Located at 4391 Wilson Road, Mebane, Orange County ORANGE COUNTY NORTH CAROLINA 31 Proposed Expansion • 204 additional full-time jobs during the 2026-2030 incentive period • $136 million in new investment ($127 million during the incentive s period of 2024-2028) • 132,600 sq. ft. building addition at the current factory location • $48,912 average annual wage (approximately $23.52 per hour) • HI-CHEW candy manufacturing • Competing sites were Taiwan and China (where Morinaga operates existing HI-CHEW manufacturing plants), and Vietnam. ORANGE COUNTY NORTH CAROLINA 32 Outline of State & Local Incentives ----7"Sales ow I IN" Tax Exemption on Machinery & Equipment Purchases $5,936,558 One North Carolina Fund (discretionary performance grant) $100,000 N.C. Community College System's "Customized Training" $306,000 On-the-Job Training $50,000 Work Opportunity Tax Credit $146,400 Federal Bonding Program $255,000 Orange • Performance Based Incentive (as proposed) $2,910,898 Performance Based Incentive $5761999 Waiver of Development Fees $5007000 ORANGE COUNTY NORTH CAROLINA 5 33 Forecast of Morinaga America Foods' Capital Investment Schedule New Taxable Investment 1W F- - --r- -q Iq Investment 2024 2026 qnq 2028 Real � $4,877,000 $255778,000 $2,134,000 $17,000 $0 $325806,000 Personal $23,856,000 $45,919,000 $20,671 ,000 $675,000 $3,150,000 $94,271 ,000 Property • $2837335000 $7136975000 $2258055000 $6929000 $3,1505000 $127,0775000 ORANGE COUNTY NORTH CAROLINA 6 34 Forecast of Morinaga America Foods' New Job Creation Hiring schedule for 204 new full-time jobs, with health care, retirement and related employee benefits ($48,912 annual salary, or, $23.52 per hour) r 2028 2029 J, — . . Full-Time 57 51 48 36 12 204 Jobs ORANGE COUNTY NORTH CAROLINA 35 Orange County's Performance-Based Incentive • Performance-based incentive on 204 new jobs and $127,077,000 in capital investment. • Up to $2,910,898 in total potential County incentive to be paid upon verification of actual jobs and investment that is added per year. (Net revenue positive in all years). • Incentive value calculated at 75% of actual new property tax valuation in the first 5 years. (Same incentive formula as previously approved by the BOCC for ABB, Medline Industries, and the first Morinaga incentive in 2013). ORANGE COUNTY NORTH CAROLINA 8 Orange County Revenue Projections (first 5 years) 2026 2027 2028 36 Orange CountV's Performance-Based Incentive Revenue Projections: New Property Tax $247,937 $846,025 $984,659 $920,458 $882,118 : : • Revenues Incentive ', . • 4•4 • • 1 � � ' • 1 ' • ' 1-$185,953 ', ' • • Annual Net Revenue $61 ,984 , • 709300 Orange County Revenue Projections (first 10 years) New Property Tax Revenues Incentive Payments -$2,9109898 Total Net Revenues $47506,628 ORANGE • NORTHCAROLINA 37 Benefits of Morinaga Expanding in Orange County • Proposed recruitment incentive is revenue positive for all years, netting 25% per year during the first 5 years of the forecasted net new property tax valuation. Once the final incentive payment ends after year #5, annual net new property tax revenues for the County will rise to approximately $839,499 in the seventh year. A 10-year revenue forecast indicates Morinaga will generate approximately $7,147,526 to the County in additional gross property tax revenue, the County will pay Morinaga a maximum of $2,910,898 in incentive grants, and the County will net $4,506,628 in revenue. • Morinaga's tax value for 2023 was listed at $31 ,602,085. With the projected $136 million in additional investment, the firm will become Orange County's 2nd largest manufacturing related corporate taxpayer (behind #1 Thermo Fisher Scientific, and Medline Industries as #3). • Establishes another successful public/private partnership between Orange County & the City of Mebane to grow the industrial tax base and jobs in a designated Rural Census Tract area. • Demonstrates the County's success to apply Article 46 to fund water & sewer infrastructure in the Buckhorn Economic Development District, and attract significant growth in the non-residential tax base and employment. • Reinforces the County's partnership with the State of North Carolina's business and expansion efforts, as Governor Roy Cooper and N.C. Department of Commerce Secretary Machelle Sanders visited the company in Tokyo, Japan in October 2023 and met with parent company Morinaga & Co., Ltd. and President Ota. ORANGE COUNTY NORTH CAROLINA 38 Proposal for Orange County's Financial Incentives for Morinaga America Foods, Inc. Questions & Discussion ORANGE COUNTY NORTH CAROLINA 39 Attachment 3 PUBLICATION INSTRUCTION: Please publish the following notice in the Special Notice Section of the Classified Advertisements as early as Monday, September 2, 2024 and by no later than Wednesday, September 4, 2024. The County Seal should be placed above the announcement. 179 52 PUBLIC HEARING Tuesday, September 17, 2024—7:00 PM Southern Human Services Center 2501 Homestead Rd. Chapel Hill,NC 27516 NOTICE OF PUBLIC HEARING REGARDING PROPOSED ECONOMIC DEVELOPMENT INCENTIVE AGREEMENT FOR MORINAGA AMERICA FOODS, INC. Notice is hereby given that in accordance with North Carolina General Statute 158-7.1, the Board of Commissioners of Orange County (the "Board") will hold a public hearing on Tuesday, September 17, 2024 at 7:00 PM at the Southern Human Services Center, 2501 Homestead Rd., Chapel Hill,NC 27516. This public hearing concerns Orange County entering into an Economic Development Incentive Agreement with Morinaga America Foods, Inc. to encourage the business to expand in Orange County for a new light industrial operation. The Board will consider the appropriation of County funds for the purpose of entering into an Economic Development Incentive Performance Agreement with the Company in an amount not to exceed Two Million Nine Hundred Ten Thousand Eight Hundred Ninety-Eight Dollars ($2,910,898.00), payable in up to seven (7) annual installments over a seven (7) year period. These funds will be used to encourage the Company to select Orange County for the proposed manufacturing expansion, and, assist the Company with expenses, to include site development and facility construction costs, associated with Morinaga America Foods, Inc. Recruitment of the Morinaga America Foods, Inc. facility expansion in Orange County will create immediate and long-term public benefits for the County, to include the creation of 204 new full time equivalent jobs, with health care and related employment benefits, and new capital investment of$127 million, in the first five (5) years of operation. Anyone interested in the Economic Development Incentive Performance Agreement or the nature of the Morinaga America Foods, Inc. project may appear and be heard at the public hearing. Anyone 40 who wishes to make comments in writing prior to the public hearing may do so by submitting such comments to the Board of Commissioners of Orange County, c/o Clerk to the Board of Commissioners, P.O. BOX 8181, Hillsborough,North Carolina 27278, or by emailing OCBOCC@orangecountync.gov 41 The Beattfort Gazette Dtuham I The Herald-Stm The Modesto Bee The Belleville NewsDemocratFort Worth Star-Telegram The Sun News-Mvrtle Beach Bellingham Herald The Fresno Bee Raleigh News&Observer McClatch Cent e Dail`Times The Island Packet Rock Hill The Herald sas Stm Herald The KanCiry Star The Sacramento Bee Idaho Statesman Lexington Herald-Leader San Luis Obispo Tribune Bradenton Herald The Telegraph-\Macon Tacoma I The News Ttibtme The Charlotte Observer Merced S—Star Tri-City Herald The State Miami Herald The Wichita Eagle Ledger-Enquirer El Nuevo Herald The Olvtnpian AFFIDAVIT OF PUBLICATION Account# Order Number Identification Order PO Amount Cols Depth 94057 588157 Print Legal Ad-IPL01918370-IPLO191837 08282024 $873.12 1 91 L Attention: Steve Brantley STATE OF NORTH CAROLINA Orange County Economic Development COUNTY OF WAKE,COUNTY OF DURHAM 131 W.Margaret Lane,Suite 205 Before the undersigned,a Notary Public of Dallas Hillsborough,NC 27278 County,Texas,duly commissioned and authorized to administer oaths,affirmations,etc.,personally Ihirni@orangecountync.gov appeared Tara Pennington,who being duly sworn or affirmed,according to law,doth depose and say that he --------------------------------------------------------------------------- or she is Accounts Receivable Specialist of the News& Observer Publishing Company,a corporation organized and doing business under the Laws of the State of North + Carolina,and publishing a newspaper known as The 17 52 News&Observer,Wake and State aforesaid,the said newspaper in which such notice,paper,document,or Q legal advertisement was published was,at the time of each and every such publication,a newspaper meeting PUBLIC HEARING all of the requirements and qualifications of Section 1- Tuesday,September 17,2024 -7:00 PM 597 of the General Statutes of North Carolina and was a Southern Human Services qualified newspaper within the meaning of Section 1-597 Center 2501 Homestead Rd. of the General Statutes of North Carolina,and that as Chapel Hill,NC 27516 NOTICE OF PUBLIC HEAR- such he or she makes this affidavit;and is familiar with ING REGARDING PROPOSED the books,files and business of said corporation and b ECONOMIC DEVELOPMENT p y INCENTIVE AGREEMENT FOR MORINAGA AMERICA FOODS, reference to the files of said publication the attached INC' Notice is hereby given that in accor- advertisement for Orange County Economic dance with North Carolina General Development was inserted in the aforesaid newspaper Statute 158-7.1,the Board of Com- missioners of Orange County (the on dates as follows: "Board")will hold a public hearing on Tuesday,September 17,2024 at 7:00 PM at the Southern Human Services Center,2501 Homestead Rd.,Chapel 1 insertion(s)published on: Hill,NC 27516. This public hearing concerns Orange County entering into 09/02/24an Economic Development Incentive Agreement with Mormaga America. Foods,Inc.to encourage the business to expand in Orange County for a new light industrial operation. The Board will consider the appropri- ation of County funds for the purpose of entering into an Economic Devel- opment Incentive Performance Agree- ment with the Company in an amount not to exceed Two Million Nine Hun- dred Ten Thousand Eight Hundred Ninety)Eight Dollars seven (7)annual y� payable in up to seven (7)annual 5k installments over a seven (7) year period. These funds will be used to encourage the Company to select Orange County for the proposed man- I certify or declare)under penalty of perjury that the ufacturing expansion,and,assist the Company with expenses,to include foregoing is true and correct. site development and facility con- struction costs,associated with Mori- naga America Foods,Inc.Recruitment of the Morinaga America Foods, Inc. facility expansion in Orange County, will create immediate and long-term public benefits for the County,to in- clude the creation of 204 new full time equivalent jobs,with health care and relatedemployment benefits,and new capital investment of$127 million,in Notary Public in and fort the state of Texas,residing in the first five(5)years of operation. Anyone interested in the Economic Dallas County Development Incentive Performance _ Agreement or the nature of the Mori- naga America Foods,Inc.project may ,•,, {+ t3.Ll h y,I[C HATCH CG appear and be heard at the public = ,- _ J r HA w tC f A 1 CH C11 hearing.Anyone who wishes to make /,y yr}�r�y i/1,� comments in writing prior to the public. x; •_ ursf I�+th i x7.77.FF"ltly hearing may do so by submitting such _ ,�y; ! 7 `O comments to the Board of Commis- �y �7,+1+y,p stoners of Orange County,Go Clerk 'T}f'„';f tt��� r� y 14,2029 to the Board of Commissioners,P.O. BOX 8181,Hillsborough,North Caro- — - - Met 27278,or by mailing OCBCCC @ orangecountync.gov Extra charge for lost or duplicate affidavits. s P z 10247 Legal document please do not destroy! 42 ORANGE COUNTY NORTH CAROLINA Morinaga Announces Major Expansion at Orange County Site p�iHF,W/ FCHfW/ Officials from Morinaga America Foods, Inc., today NFCNEW/ announced a significant expansion of its site in Orange NIXH, M{HEWJ TA NAIME/ County that will double current manufacturing production capacity for "HI-CHEW" candy and create more than 200 well-paying jobs. -NE; J The company announced $136 million in new capital in- vestment for the creation of an additional 100,000 square N�fHE"J feet of production space at its facility along Wilson Road in J�JEW/ N/[N Mebane. Construction is expected to be finished by 2027. 0V NP�.LNE J When complete, the project will create 204 additional new jobs between 2026 and 2030 with an average annual wage of $48,912 (or approximately $23.452 per hour). These jobs are full-time and include healthcare and related employment benefits. "I would like to express my gratitude to the government officials who supported the investment," said Masaki Matsumoto, Morinaga Senior Executive Officer & General Manager, Overseas Business. "We aim to become a company that continues to grow here in North Carolina." "Orange County is excited for this additional investment by Morinaga," said Orange County Chair Jamezetta Bedford. "They took a chance on Orange County and North Carolina many years ago, helping to diversify our tax base and bring strong top-quality jobs to our residents. We value their initiative and look forward to many more decades of partnership. And their candy is really delicious, too. Local supermarkets have it. My husband and I like to share the smaller bag." Morinaga America Foods agreed in 2013 to locate in Orange County and built a 100,000 square foot manufacturing plant. The company employs approximately 204 associates and has a current county property tax valuation of $31 .6 million. Morinaga & Co., Ltd., was founded in 1899 in Tokyo, Japan, and is a major international confection- ary and candy maker. The firm is Asia's equivalent to a Hershey's, Mars or Nestle. Morinaga is ag- gressively marketing HI-CHEW across the United States and has successful store displays at Target, Costco, 7-Eleven and major grocery store chains. Orange County Economic Development Director Steve Brantley said the company considered loca- tions in Taiwan and China, where the company has existing HI-CHEW factories, and had also re- searched building a new facility in Vietnam, before choosing to expand in Orange County. The Board of Commissioners will consider a county incentive when the Board reconvenes in the Fall. Cutline for photograph: Masaki Matsumoto, Morinaga Senior Executive Officer& General Manag- er, Overseas Business receives a gift from Machelle Baker Sanders, Secretary of the North Carolina Dept. of Commerce.