13.21 Exhibit 3
Annual Employment Survey
16.)
17.)
18.)
19.)
20.)
21.)
Signature: Date
Enter the cumulative amount of Employment Incentives that have been paid, but not offset or reimbursed under Section 8 of the Agreement.
*For all employees included as Net New Employees for #12, the business must be prepared to provide documentation of date of hire for Net New Jobs included in the Employment Incentives. The business is not required to claim the Employment Incentive in the year of increase and may claim the Net New Employee(s) in a subsequent agreement year, provided the increase in employment is maintained at the time the incentive is claimed.
I, __________________________________________, the authorized representative for Joby Aero, Inc. certify and declare to the City of Santa Cruz under penalty of perjury, under the laws of the State of California, that the information reported in this document is complete and accurate.
Enter the number of Net New Employees, in Line 15, determined on an Annual Full-Time Equivalent basis that were paid at least 120% of the Annual Wage Standard during the Calendar Year.
Enter the percentage of Net New Employees in Line 15, determined on an Annual Full-Time Equivalent basis that were paid at least 120% of the Annual Wage Standard this Agreement Year. (Line 16 divided by Line 15) Enter the number of Net New Employees for which an Employment Incentive may be offset or reimbursed (under Section 8 of the agreement) since the prior Annual Employment Survey, if any, through the end of the Calendar Year.
Enter the Baseline for the next Calendar Year. (Add Lines 10 and 15, then Subtract Line 18 . Enter result on Line 10 of the Annual Employment Survey of the Agreement Year following this Agreement Year).
Enter the Economic Incentives payment claim amount for the above-named Agreement Year. (Line 13 multiplied by $2,000)
13.22 82811.00019\42039630.1
EXHIBIT 4
(Promissory Note)
PROMISSORY NOTE
(Joby Aero, Inc.)
Principal Sum Not to Exceed ____________, 2024
$500,000.00 Santa Cruz, California
FOR VALUE RECEIVED, Joby Aero, Inc., a Delaware corporation (the “Maker” or “Borrower”), having an address at 333 Encinal Street, Santa Cruz, California 95060, promises to pay THE CITY OF SANTA CRUZ, a municipal corporation (“Payee” or “City”), the principal sum not to exceed FIVE-HUNDRED THOUSAND DOLLARS ($500,000.00) (“Principal”), or so much of such Principal as may be advanced, with interest at the rate of three percent (3%) per annum. Interest shall be simple interest only.
1. Purpose. This Note is made and delivered pursuant to and in implementation of that certain Employment Incentive Agreement entered into between City and Borrower, dated _______________, 2024 (the “Incentive Agreement”), which provides for a loan from the City for the purpose of incentivizing job growth and may be used solely to purchase (i) testing, manufacturing, and safety equipment and (ii) communications, security, and other facility-related equipment.
2. Disbursement.
(a) The Principal shall be disbursed to Maker as Annual Incentive Payments, in accordance with the Incentive Agreement. Interest shall accrue against all Principal amounts disbursed as of the date of each disbursement.
(b) All disbursements shall be made by wire transfer initiated by the City to a financial institution designated by Borrower in writing.
3. Repayment and Forgiveness. Notwithstanding any other provisions of this Note, Principal, accrued interest, and other applicable fees, costs and charges (“Costs”), if any, owing on this Note shall be payable or forgiven as follows:
(a) Repayment of Principal and Interest. Principal and accrued interest thereon shall be payable in full on or before January 31, 2038 (“Maturity Date”). (b) Forgiveness. Subject to the requirements of the Incentive Agreement and the default provisions of Section 4 of this Note, if Borrower receives an Annual Incentive Payment in accordance with the Incentive Agreement prior to the Maturity Date, and provides City with the written documentation required by Section 8 of the Incentive Agreement, then City shall forgive on the same date of the Annual Incentive Payment, an amount equal to the Annual Incentive Payment, and thereby reduce the balance of the City Loan, together with all associated accrued interest, including the principal, accrued interest, and all Costs, if any owing by Borrower under
13.23 82811.00019\42039630.1
this Promissory Note. If Borrower receives Annual Incentive Payments equal to the Principal and any Costs incurred on or before the Maturity Date, and Borrower is not in default of the Incentive Agreement, then any remaining Principal, accrued interest, or Costs from the loan shall be forgiven in its entirety.
(c) Prepayment. Borrower shall have the right to prepay the Principal outstanding in whole or in part without penalty. Any partial prepayment shall be applied against the Principal outstanding.
(d) Application of Payments or Forgiveness Amounts. Unless otherwise agreed to in writing in advance by City, each payment or forgiveness with respect to this Promissory Note shall be credited as follows: first, against Costs, if any; second, against accrued and unpaid interest then due and owing; and third, against the Principal outstanding.
4. Payment Location. Payment shall be made in lawful money of the United States to the City of Santa Cruz, 337 Locust Street, Santa Cruz, CA 95060. The place of payment may be changed from time to time as the Payee may from time to time designate in writing.
5. Default. The occurrence of any of the following shall constitute an event of default under this Note:
(a) Maker fails to pay any amount due under this Note or Section 7 or 8 of the Incentive Agreement within thirty (30) days of its due date;
(b) Failure to use the loan funds made hereunder for the allowed uses set forth in Section 4 of the Incentive Agreement; or
(c) Any default by Maker under this Note or the Incentives Agreement after the expiration of all applicable cure periods.
Upon the occurrence of any uncured event of default, or at any time thereafter, at the option of the Payee hereof, the entire unpaid principal and interest owing on this Note shall become immediately due and payable. This option may be exercised at any time following any such event of default, and the acceptance of one or more installments thereafter shall not constitute a waiver of Payee’s option. Payee’s failure to exercise such option shall not constitute a waiver of such option with respect to any subsequent event. Payee’s failure in the exercise of any other right or remedy hereunder or under any agreement which secures the indebtedness or is related thereto shall not affect any right or remedy and no single or partial exercise of any such right or remedy shall preclude any further exercise thereof.
In addition to the remedies stated above, upon the occurrence of any uncured event of default, or at any time thereafter, Maker agrees that City shall have the right to record the Security Agreement attached as Exhibit 5 to the Incentive Agreement, or file a UCC financing statement or fixture filing, against the properties identified as the Employment Center pursuant to the Incentive Agreement.
6. Default Interest Rate. At all times when Maker is in default hereunder by reason of Maker’s failure to pay principal due under this Note within applicable cure periods, the interest rate on the sums as to which Maker is in default (including principal, if Payee has elected to declare it
13.24 82811.00019\42039630.1
immediately due and payable), shall be the highest rate then allowed by law as of the date of the default or 10% whichever is lower.
7. Continuing Liability. Borrower’s liability under this Promissory Note shall not be affected by the City’s pursuit or non-pursuit of any one or more its rights, powers or remedies (including, without limitation, its option to accelerate the payment of this Promissory Note), regardless of the order in which or the extent to which the City may pursue any of such rights, powers or remedies, it being understood that the liability of Borrower shall cease only upon satisfaction in full of all of Borrower’s obligations arising under this Promissory Note.
8. No Waiver. No failure on the part of the City to exercise any right or remedy under this Promissory Note, whether before or after a default, shall constitute a waiver of such right or remedy, and no waiver of any past default shall constitute waiver of any future default. No acceptance of a past due installment or other indulgence granted from time to time shall constitute a waiver of the right to insist upon prompt payment, be deemed to be a novation of this Promissory Note or as a reinstatement of the debt evidenced by this Promissory Note, or be construed to preclude the exercise of any right which the City may have under law, by agreement or otherwise.
Borrower expressly waives the benefit of any statute or rule of law or equity which would produce a result contrary to or in conflict with the foregoing. Borrower expressly waives the four (4) year statutory period for civil actions upon written contracts set forth in California Code of Civil Procedure Section 337, and agrees that the statutory period for any actions upon this Promissory Note shall run for eight (8) years as permitted by California Code of Civil Procedure Section 360.5.
9. Waivers. Maker and any endorsers hereof and all others who may become liable for all or any part of this obligation, severally waive presentment for payment, demand and protest and notice of protest, and of dishonor and nonpayment of this Note, and expressly consent to any extension of the time of payment hereof or of any installment hereof, to the release of any party liable for this obligation, and any such extension or release may be made without notice to any of said parties and without any way affecting or discharging this liability.
10. Costs. Maker agrees to pay immediately upon demand all reasonable and documented costs and expenses of Payee including reasonable attorneys’ fees:
(a) If after an event of default and the expiration of all notice and cure periods this Note is placed in the hands of an attorney or attorneys for collection, (b) If after an event of default hereunder or under the Incentive Agreement and after the expiration of all notice and cure periods Payee finds it necessary or desirable to secure the services or advice of one or more attorneys with regard to collection of this Note against Maker, any guarantor or any other party liable therefor or to the protection of its rights under this Note or the Incentive Agreement, or
(c) If Payee shall be made a party to or shall reasonably intervene in any action or proceeding, whether in court or before any governmental entity, affecting the Borrower, including, without limitation, any form of bankruptcy proceeding, condemnation or eminent domain proceeding, Payee shall be reimbursed by Maker immediately upon demand for all costs, charges and reasonable attorneys’ fees incurred by Payee in any such case.
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11. Notices. Any notices provided for in this Note shall be given by mailing such notice by certified mail, return receipt requested at the address stated in this Note or at such address as either party may designate by written notice.
12. Amendments. This Promissory Note may be modified or amended only by mutual written agreement of the Parties. Any such modification or amendment must be in writing, dated, signed by the Parties and attached to this Promissory Note.
13. Assignment. Borrower shall not assign, sell, transfer or delegate any of Borrower’s rights or duties under this Promissory Note without the prior written consent of the City. The City may assign its rights and delegate its duties under this Promissory Note upon written notice to Borrower.
14. Successors. This Note shall be binding upon Maker, its successors and assigns.
15. California Law. This Note shall be construed in accordance with and be governed by the laws of the State of California.
16. Interest Limitations. Notwithstanding anything to the contrary contained in this Promissory Note, the total liability for payments in the nature of interest shall not exceed the limits imposed by applicable interest rate laws. If any payments in the nature of interest are held to be in excess of the limits imposed by applicable interest rate laws, any such amount held to be in excess shall be considered payment of Principal and the Principal outstanding shall be reduced accordingly.
17. Severability. If any provision, in whole or in part, or the application of any provision, in whole or in part, of this Promissory Note is determined to be illegal, invalid or unenforceable by a court of competent jurisdiction, such provision or part of such provision shall be severed from this Promissory Note, and such severance shall have no effect upon the enforceability, performance or obligations of the remainder of this Promissory Note, including the remainder of such provision not determined to be illegal, invalid or unenforceable.
18. Time of the Essence. Time is of the essence in the performance of Borrower’s obligations under this Promissory Note.
19. Subordination. Payor may request subordination of this Promissory Note. The City Manager of the City of Santa Cruz may agree to a subordination request if (1) Payor is not in default of any obligation relating to this Note or the Incentive Agreement, and (2) the subordination would further the interest of the City of Santa Cruz entering into the Note and the Incentive Agreement.
City of Santa Cruz
By: ________________________________
NAME: Matt Huffaker
Joby Aero, Inc.
By: ________________________________
NAME
13.26 82811.00019\42039630.1
TITLE: City Manager
Date: _____________, 2024
TITLE
Date: _____________, 2024
Approved as to Form
BEST, BEST & KRIEGER
By: ______________________________
NAME:
TITLE: Special Counsel to the City
Attest:
By: _______________________________
Assistant City Clerk
13.27 82811.00019\42039630.1
EXHIBIT 5
(Security Instrument)
SECURITY AGREEMENT
This Security Agreement (this “Agreement”) is made and entered into as of the ____________________________, 2024, by and between JOBY AERO, INC., a Delaware corporation (“Debtor”), and City of Santa Cruz, a charter city and municipal corporation of the State of California (“Secured Party”).
For value received, the Debtor grants to the Secured Party a security interest in (i) the personal property and interests in personal property described on Exhibit A attached hereto and incorporated herein by reference, and (ii) all proceeds thereof (such personal property and proceeds are referred to herein collectively as the “Collateral”), for the purpose of securing: (1) all advances and future advances by the Secured Party to the Debtor pursuant to the terms and provisions of the Employment Incentive Agreement dated as of the date hereof (as amended, supplemented, restated and otherwise modified and in effect from time to time, the “Incentive Agreement”) and that certain Promissory Note dated as of the date hereof in the principal amount of $500,000 executed in connection therewith by Debtor (the “Note”); and (2) all expenditures by the Secured Party for the protection of the Collateral and incurred by the Secured Party in the collection and enforcement of the Note and otherwise required to be reimbursed by Debtor pursuant to the terms of the Incentive Agreement. The Incentive Agreement and the Note are collectively referred to herein as the “Loan Documents.” The Debtor warrants, covenants, and agrees as follows:
1. Title. Except for the security interest granted by this Agreement, the Debtor has, or on acquisition will have, good title to the Collateral free from any lien or security interest (except for those security interests relating to indebtedness of the Maker for borrowed money owed to financial institutions (“Permitted Liens”) and those that otherwise may be approved by Secured Party in its sole discretion), and the Debtor will, at the Debtor's reasonable cost and expense, defend any action that may reasonably be likely to affect the Secured Party's security interest in, or the Debtor's title to, the Collateral.
2. Financing Statement. No financing statement covering the Collateral or any part of it or any proceeds of it is on file in any public office (except for those relating to Permitted Liens and those that otherwise may be approved by Secured Party in its sole discretion). Secured Party shall be entitled to file a financing statement covering the Collateral. At the Secured Party's reasonable request, the Debtor will pay the filing fees required for all necessary financing statements in forms satisfactory to the Secured Party and will further execute all other necessary instruments deemed reasonably necessary by the Secured Party.
3. Sale, Lease, or Disposition of Collateral. Except in the ordinary course of business or as specifically allowed under the Incentive Agreement, the Debtor will not, without the written consent of the Secured Party, sell, contract to sell lease, encumber, or dispose of the Collateral or any interest in it until this Security Agreement has terminated. Debtor may request consent with thirty (30) days written notice and, subject to standards of commercial reasonableness, Secured
13.28 82811.00019\42039630.1
Party shall approve or disapprove a first-lien security interest in the Collateral in connection with a third-party financing.
4. Protection of Collateral. The Debtor will not use the Collateral in violation of the terms of the Incentive Agreement.
5. Taxes and Assessments. The Debtor will pay promptly when due all material taxes, assessments and fees on the Collateral, or any part of the Collateral, except as may be contested in good faith by appropriate proceedings.
6. Reimbursement of Expenses. At the option of the Secured Party, which option may only be exercised after the occurrence and during the continuation of an Event of Default, the Secured Party may (i) discharge taxes, liens, interest, or perform or cause to be performed for and on behalf of the Debtor any actions and conditions, obligations, or covenants that the Debtor has failed or refused to perform, if such failure or refusal shall have resulted in an Event of Default that shall then be in existence, and (ii) pay for any actions reasonably taken to preserve the aggregate value of the Collateral, and is authorized by Debtor (subject to any contractual restrictions to which Debtor may be subject) enter the Employment Center during the existence of an Event of Default (and only upon reasonable prior written notice to the Debtor, during normal business hours (but not during any games or practices) and without disruption of any other team related activities) and cause to be performed as agent and on the account of the Debtor any acts that the Secured Party may reasonably deem necessary for the proper preservation of the aggregate value of the Collateral.
7. Payment & Termination. The Debtor will pay the obligations secured by this Security Agreement in accordance with the terms and provisions of the Loan Documents. This Security Agreement and the liens evidenced hereby will terminate upon the following: (1) payment or forgiveness in full of all monetary obligations of Debtor to Secured Party under the Loan Documents, and (2) the Debtor is no longer subject to reimbursement of any amounts forgiven as required by Section 8 of the Loan Agreement; provided, however, that the foregoing does not apply to contingent indemnification or reimbursement obligations for which no claim for payment has been asserted. The termination shall be effective upon City’s written consent. Upon termination of this Security Agreement and the liens evidenced hereby, all rights to the Collateral shall revert to the Debtor and the Debtor is hereby authorized to file Uniform Commercial Code amendments at such time evidencing the termination of the Liens so released. At the request of the Debtor following any such termination, the Secured Party shall deliver to the Debtor any Collateral held by the Secured Party hereunder and execute and deliver to the Debtor such documents as the Debtor shall reasonably request to evidence such termination.
8. Change of Place of Business. The Debtor will promptly notify the Secured Party of any change of the Debtor's principal place of business, or permanent change of the place where material records concerning the Collateral are kept.
9. Attorney-in-Fact. Solely during the occurrence and continuance of an Event of Default, the Debtor appoints the Secured Party as the Debtor's attorney-in-fact to do each and every act that the Debtor is obligated by this Security Agreement to do, and to make collections and to execute any and all papers and instruments and to do all other things reasonably necessary to preserve and
13.29 82811.00019\42039630.1
protect the aggregate value of the Collateral and to protect the Secured Party's security interest in the Collateral; provided, that the Secured Party shall have given the Debtor reasonable prior written notice of such action.
10. Limitation of Liability. Notwithstanding anything to the contrary contained in this Agreement, the total liability of the Debtor hereunder shall in no event exceed the amount then owed by the Debtor under the Incentive Agreement.
11. Event of Default. An Event of Default under the Note or Incentive Agreement shall be deemed an Event of Default hereunder.
12. Remedies. Upon the occurrence and during the continuation of any Event of Default, the Secured Party may declare all obligations secured due and payable immediately, and may proceed to enforce payment and exercise any and all of the rights and remedies provided by the California Commercial Code as well as other rights and remedies either at law or in equity possessed by the Secured Party.
The Secured Party may require the Debtor to assemble the Collateral, or the books, records and contracts relating to the Collateral and make it or them available to the Secured Party at any place to be designated by the Secured Party that is reasonably convenient to both parties. Unless the Collateral threatens to decline rapidly in value, the Secured Party will give the Debtor reasonable notice of the time and place of any public sale or of the time after which any private sale or any other intended disposition of the Collateral is to be made. The requirements of reasonable notice shall be met if the notice is mailed, postage prepaid, to the address of the Debtor shown at the beginning of this Security Agreement at least ten days before the time of the sale or disposition.
Expenses of retaking, holding, preparing for sale, selling, or the like shall include the Secured Party's reasonable and documented attorneys' fees and legal expenses.
13. Miscellaneous Provisions.
(a) Governing Law; Venue. This Security Agreement shall be construed under and in accordance with the California Commercial Code and other applicable laws of the State of California. Venue shall be in the state and federal courts located in Santa Cruz County, California.
(b) Parties Bound. This Security Agreement shall be binding on and inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, successors, and assigns as permitted by this Security Agreement. (c) Attorneys' Fees. Should any litigation be commenced between the parties to this Security Agreement concerning the Collateral, this Security Agreement, or the rights and duties of either party in relation to them, the prevailing party shall be entitled to recover reasonable and documented attorneys' fees and legal expenses.
(d) Severability. In case any one or more of the provisions contained in this Security Agreement shall for any reason be held invalid, illegal, or unenforceable in any respect, the invalidity, illegality, or unenforceability of that provision shall not affect any other provision of
13.30 82811.00019\42039630.1
this Security Agreement, and this Security Agreement shall be construed as if the invalid, illegal, or unenforceable provision had never been contained in it. (e) Entire Agreement. Except as may be specifically provided in the Incentive Agreement or Note, this Security Agreement constitutes the only agreement of the parties and supersedes any prior understandings or written or oral agreements between the parties respecting the subject matter of this Security Agreement.
(f) Definitions. All terms used in this Security Agreement that are defined in the California Commercial Code shall have the same meaning in this Security Agreement as in the Code.
[SIGNATURES FOLLOW THIS PAGE]
13.31 82811.00019\42039630.1
The parties have signed this Security Agreement as of the day and year first above written. “DEBTOR” JOBY AERO, INC., a Delaware corporation
By: ___________________________
Name: ___________________________
Title: ___________________________
“SECURED PARTY” CITY OF SANTA CRUZ, a charter city and
municipal corporation of the State of California
By ___________________________
Name: Matt Huffaker
Title: City Manager
13.32 82811.00019\42039630.1
EXHIBIT A
Description of Personal Property Collateral
(a) All Collateral, consisting of (i) testing, manufacturing, and safety equipment and (ii) communications, security, and other facility-related equipment; provided that Company identified personal property specified in (i) or (ii) as eligible Equipment purchases for purposes of loan forgiveness under Section 4(d) of the Incentive Agreement dated as of [______] between the City of Santa Cruz, as lender, and Joby Aero, Inc., as borrower, located at 324 and 333 Encinal, Santa Cruz, California (APN: _____________), including but not limited to all personal property, goods, supplies, and equipment (inclusive of manufacturing, testing, and safety equipment), in which Debtor now or hereafter acquires an interest or right, together with any interest of Debtor in and to personal property, including all furnishings, fixtures, and equipment, which is leased or subject to any superior security interest, and all books, records, leases and other related agreements, documents, and instruments of whatever kind or character; (b) Debtor’s rights under all insurance policies covering any of the aforesaid collateral and all proceeds, loss payments, and premium refunds payable regarding the same; (c) All causes of action, claims, compensation, and recoveries for any damage to, destruction of, or condemnation or taking of any of the aforesaid collateral; and (d) All proceeds, increases, substitutions, replacements, additions, and accessions of the aforesaid collateral.
13.33 Economic Development Subsidy Report
Pursuant to Government Code Section 53083
For an Employment Incentive Loan Agreement
Between the City of Santa Cruz and Joby Aero,
Inc.
Pursuant to Government Code Section 53083, the City Council of the City of Santa Cruz must hold a noticed public hearing and, prior to the public hearing, provide all of the following information in written form and available to the public through the City’s website regarding a proposed economic development subsidy provided by the City pursuant to an Employment Incentive Loan Agreement between the City of Santa Cruz and Joby Aero, Inc (Joby). Joby il located at 333 Encinal Street, Santa Cruz, CA 95060. Notice was published on the City’s website for a public hearing to be held on February 27, 2024.
The purpose of this report is to provide the information required pursuant to Government Code Section 53083 in regard to the Agreement. This report shall remain available to the public and posted on the City’s website until the end date of the economic development subsidy, as further described in number 2 below.
(1) The name and address of all corporations or any other business entities, except for sole proprietorships, that are the beneficiary of the economic development subsidy, if applicable.
The proposed Employment Incentive Loan Agreement (Agreement) is with Joby Aero, Inc.
Joby Aero, Inc.
333 Encinal Street
Santa Cruz, CA 95060
(2) The start and end dates and schedule, if applicable, for the economic development subsidy.
Following City Council approval of the proposed Agreement, the Agreement is estimated to commence on March 1, 2024, and end on March 31, 2038. (3) A description of the economic development subsidy, including the estimated total amount of the expenditure of public funds by, or of revenue lost to, the local agency as a result of the economic development subsidy.
The economic development subsidy is in the form of a loan to Joby in an amount not to exceed $500,000. The loan would be disbursed over a period of not more than five years with installment payments based upon an annual employment survey.
Under the proposed agreement, Joby would submit the annual employment survey to demonstrate the total number of new full-time employees in an agreement year. The employment growth would be determined on a net basis to ensure that Joby is contributing to employment growth in the City. The survey would require Joby to report the total number of employees at its Santa Cruz employment center, the total number of full-time employees (both on an hourly and salary basis), and information about prior year employment to determine the total number of net new full-time employees.
For each new full-time employee, the City would disburse $2,000. Joby cannot claim more than 100 net new employees in a year, which means that the City’s maximum 13.34 payment for a given year is $200,000. The City would have the opportunity to review and approve the requested annual incentive payment. The loan amount would be forgiven within 90 days of submittal by Joby of the annual employment survey if Joby can demonstrate that it has eligible expenses, which include (1) testing, manufacturing, and safety equipment, and (2) communications, security, and other facility-related equipment. The agreement would require reimbursement of specified amounts to the City if: (1) there is a reduction in employment over the course of 5 years, or (2) the company relocates its Santa Cruz headquarters prior to 2038. (4) A statement of the public purposes for the economic development subsidy.
Providing Joby with incentives to establish and expand their employment center in the City would help diversify the City’s economy, create jobs for residents, and stimulate additional tax revenues to the City. The City desires to incentivize high-growth industries to establish and grow major employment centers in areas of the City most appropriate for job creation and to create and retain jobs in the City. The proposed Employment Incentive Loan Agreement is consistent with the City’s Economic Development Strategy goals of supporting growth in technology companies focused on innovations. The public purpose of this economic development incentive is to promote the general welfare of the City and its residents by creating new full-time jobs, expanding the range of employment opportunities and generating other City revenues, thereby enriching quality of life within the City of Santa Cruz. (5) Projected tax revenue to the local agency as a result of the economic development subsidy.
Property tax revenue to the City is anticipated to be in excess of $200,000 per year based on assessed valuation of property and this number will increase as Joby invests in capital improvements and anticipated expansion to their facility on Encinal Street. While no direct sales tax revenue would be generated as a result of the economic development subsidy, the City will benefit indirectly from consumer spending from the Joby employees who work and reside in Santa Cruz. The average sales tax revenue generated locally per capita in Santa Cruz is over $4,000 annually. Conservatively, the City should realize sales tax revenue increases resulting from net job growth in the community of over $100,000/per year once Joby has fully realized their projected employment numbers in Santa Cruz. (6) Estimated number of jobs created by the economic development subsidy, broken down by full-time, part-time, and temporary positions.
Under the proposed Agreement, Joby is incentivized to add up to 250 full-time positions within the next five years in Santa Cruz.
13.35 From: Chris Zegers
To: Sandy Brown; City Council
Subject: $500,000. Loan to Joby!?
Date: Saturday, February 24, 2024 7:59:49 AM
Good morning council members,
I have a question I hope you can answer. Why is the city asking for a tax increase from the public (measure K & L) when you are making a "loan" to Joby aviation fo$500,000.00 to a company that has a $ 163 million contract with the Air Force and got $400 million from an investment from Toyota. Something does not add up? Can you explain this to the people of Santa Cruz?
Respectfully,
Chris
13.36 From: Ed Jameyson
To: City Council
Subject: Re: Feb 27, 2024 Meeting / Agenda Item 13
Date: Saturday, February 24, 2024 10:20:01 AM
Dear Council --- I am writing to express my disapproval of Agenda Item # 13 on the Feb 27, 2024 Agenda; specifically it seems wrong to give away 1/2 of a million dollars when the City budget is so short that a sales tax increase is needed and is on the ballot in the upcoming election.
Are all the monies generated by this tax increase going to fund Joby, a company that if I read the newspapers right, is going places --- both literally and figuratively and will most likely leave Santa Cruz for more appropriate manufacturing shores, like a location with an airport, ect.
I ask that you not support item #13.
Sincerely, Ed Jameyson
13.37 From: Garrett
To: City Council
Subject: 2.27.24 Agenda Item #13 Joby giveaway
Date: Monday, February 26, 2024 10:42:09 AM
2.27.24 Agenda Item #13 Joby giveaway
Dear Council,
Giving away possibly $500,000 to Joby doesn't seem like an effective use of taxpayer funds.
Joby has already committed to being in Santa Cruz, for instance paying over 25 million for the property.
Joby will hire people anyway as a growth company if successful. Setting the time line for counting "new hires" retroactively seems like we are paying "hiring incentive" for some people already hired as well as for people they would hire anyway.
If you think giving $2000 per hire is going to cause a company to hire anyone you seem naïve.
Employees are very expensive and nobody is hiring anyone who isn't worth it, very worth it and more.
If you think Joby is going to pay more for employees than they normally would in exchange for $2000 again I think you are either a) naïve , b) hell bent to flush the peoples money. $71,000/yr average is nothing for high tech manufacturing/design workers. They would pay that anyway.
A $500,000 stack of dollar bills is 179 feet high.
If you think giving Joby $2000/per employee hired starting at some baseline time in the past is incentive to stay in Santa Cruz until 2038 I would suggest the decision to leave would have nothing to do with that, would be a trivial consideration, and THEY LOSE NOTHING, they just give the money back, or if they don't, you get collateral of equipment with little or no value at some future time.
This isn't one of those "spend the money" end of year budget considerations where some department needs to spend all the money so they won't get their budget cut next year is it?
My memory goes back to the late 60’s early 70’s where SFO Helicopter went bankrupt starting a commute service to cross the Bay sending the common shares to zero value, including mine. They will
13.38 either be a big success, or they won't, $500,000 give away or not.
Poly went bye-bye because they got bought by HP for 3 BILLION. If Joby gets bought like that, I doubt your $500,000 (max, might be less) will be any consideration to not sell or insist on staying here as a condition of sale.
If memory serves me right, the economic development dept raided the Public Trust Fund as a loan used for residential development at the old Outdoor World site. While that was an awful abuse of funds of questionable legality considering the source of protected funds, AT LEAST THAT was an actual LOAN that presumably gets paid back.
There is nothing about this that makes it a "loan" in any sense except the laughable kind.
Loans get paid back and carry interest, and then the money can be used over again.
This seems like a back room give away using false justifications of dubious reality.
Joby can hire in other nearly locations, but the public can commute to a new job there also.
(No) Thanks for providing another reason to vote NO on Measure L.
Garrett Philipp - Westside
13.39 From: Ron Pomerantz
To: City Council
Subject: Wasting $500,000 as a gift to Joby
Date: Monday, February 26, 2024 3:57:07 PM
The City presents itself as impoverished and hawking desperately for Measure L, the 1/2 cent sales increase. Now according to this agenda item you’ve found $500,000 to give away to Joby, a financially well off company to pay them to hire employees. Hypocrisy is running deep. There are a lot of deserving local companies who could use this kind of assistance to support childcare, afterschool programs, bike and pedestrian safety, and the like. Who’s next for your handouts? Swenson development? Santa Cruz Warriors? If the 1/2 million dollars found its way into the Economic Development kitty it can find its way out for the benefit of homeless or public safety or parks or all the important and necessary needs in our community. The very needs you claim the 1/2 cent sales tax is essential for.
Unfortunately sales tax money goes into the General Fund and can be used for anything an untrustworthy Staff and Council wants. Trust is essential. You’ve lost trust going forward with $$500,000 to Joby.
Thank you for your time and thoughtful consideration.
Ron Pomerantz
13.40 Joby Employment Incentive Loan Agreement(ED)
February 27, 2024
13.41 Joby Employment
Incentive Loan Agreement
• Joby is an aeronautical technology
company developing an all-electric
aircraft with zero emissions intended
for commercial operations.
• Joby’s aircraft will transport a pilot and
four passengers at speeds of up to
200 mph, while also having the ability
to take off and land vertically.
• Compared to traditional, ground-based
infrastructure such as road and rail,
aerial ridesharing networks can be set
up rapidly and at significantly lower
cost, enabling Joby to provide a
sustainable solution to today’s dual
challenges of congestion and climate
change.
13.42 Joby Employment Incentive
Loan Agreement
• Joby purchased the former Poly facility in
Harvey West in November 2022 consisting
of approximately 162,000 square feet and
relocated its corporate headquarters in
2023.
• Joby currently employs over 250 individuals
who reside in the City of Santa Cruz.
• Joby has requested the City’s financial
assistance to establish an employment
center by providing a loan up to the amount
of five-hundred thousand dollars
($500,000) for the purchase and
acquisition of certain equipment, which will
be paid or forgiven over time if certain
conditions are met relating to job creation
and retention.
13.43 Joby Employment Incentive Loan Agreement
• One of the main goals of the proposed
Joby Employment Incentive Loan Agreement is
consistent with our education and workforce
goals in our ED Strategy: to connect local
residents with high quality jobs that offer
economic opportunities within our community.
• Providing Joby with incentives to establish
and expand their employment center in the
City would help diversify the City’s economy,
create jobs for residents, and stimulate
additional tax revenues to the City.
• https://www.jobyaviation.com/careers/
13.44 • In order to successfully bring clean, quiet aerial transportation to market, Joby will need to attract and retain employees with a diverse set of skills and perspectives in order to scale their manufacturing capabilities and expand their current operations.
• In addition to providing competitive cash and equity compensation, Joby offers employees a compelling vision and an opportunity to positively impact their communities as a key part of their workforce growth strategy. • Joby has a strong commitment to investing in the communities where they operate, with programs enabling accessibility, education and training.
• Joby employs full-time technicians, machinists, construction workers, QA inspectors, engineers, managers and support personnel.
Joby Job attraction and retention strategy
13.45 Economic Development Strategy (EDS) and public purpose of economic incentives • The EDS serves as a roadmap for business support and longer-term efforts to diversify and expand the City’s economy.
• Snapshot of the Santa Cruz workforce and commuting:
– 33% of Santa Cruz working residents are employed in the City, 58% in the County
– 67% of Santa Cruz working residents work outside the City • The strategies and implementation actions in the EDS support sustaining Santa Cruz’s economic strengths, retaining and expanding existing businesses, and pursuing new opportunities to attract industries with a high potential for growth based on our competitive advantages.
• Technology and Innovation is a recognized industry sector in Santa Cruz with one of the greatest potentials for sustained job growth. • The public purpose of this economic development incentive is to promote the general welfare of the City and its residents by creating new full-time jobs, expanding the range of employment opportunities and generating other City revenues, thereby enriching quality of life within the City of Santa Cruz.
13.46 Joby Employment
Incentive Loan Agreement
Proposed Terms
• City would make a forgivable loan to Joby in an
amount not to exceed $500,000.
• The loan would be disbursed over a period of not
more than five years with installment payments
based upon an annual employment survey.
• The annual employment survey would demonstrate
the total number of new full-time employees in an
agreement year. The employment growth would be
determined on a net basis to ensure that Joby is
contributing to employment growth in the City.
13.47 Joby Employment
Incentive Loan Agreement
Proposed Terms
• For each new full-time employee, the City would
disburse $2,000. Joby cannot claim more than 100
net new employees in a year, which means that the
City’s maximum payment for a given year is
$200,000.
• The loan proceeds may be used for eligible
expenses only which include (1) testing,
manufacturing, and safety equipment, and (2)
communications, security, and other facility-related
equipment.
• The agreement would require reimbursement of
specified amounts to the City if: (1) there is a
reduction in employment over the course of 5 years,
or (2) the company relocates its Santa Cruz
headquarters prior to 2038. 13.48
• The proposed agreement and promissory note
includes a security interest in certain personal
property to secure the amounts loaned and
Joby’s performance under the agreement.
• In total, the agreement provides incentives for
up to 250 new full-time employees that would
be employed at the Joby facility in the City of
Santa Cruz
Joby Employment
Incentive Loan Agreement
Proposed Terms
13.49 Joby Employment Incentive
Loan Agreement
Proposed Terms
Forgiveness of the loan is
contingent upon Joby’s meeting
specific performance benchmarks
including its continued presence in
the City of Santa Cruz during the
life of the loan and a ten-year
period afterwards, as well as
increased employment retention
during the specified period in the
loan agreement.
13.50 Fiscal Impact
• The proposed Employment Incentive Loan
Agreement results in a commitment of up to
$500,000 from the City’s Economic
Development Trust Fund.
• Based on current projections, it is anticipated
that the funding will be disbursed over a 3-4
year period.
• If Joby moves or relocates its employment
center and headquarters prior to 2038, Joby will
be obligated to reimburse the City for a
percentage of loan funding, on a prorated basis.
• Funding for the agreement has been included
in the FY 2024 approved Economic
Development Budget.
13.51 Recommendation
Staff recommends that the City Council
authorize the City Manager to execute an
Employment Incentive Loan Agreement, in a
form approved by the City Attorney, and other
related documents including a promissory
note, with Joby in order to provide assistance
in the form of a loan in an amount up to
$500,000 based on employee job generation
and retention.
13.52 Questions?
THANK YOU
13.53