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Cognate BioServices, Inc.

Project Number: 20201101
Pilot Type: Jobs
Status: Approved
Parcel ID: 093301 A00005 and 09360000445 and 094200 00551
County Commission District: 11 | City Council District: 03, 08

Summary

Cognate BioServices, Inc. (“Applicant”) was approved for a 15-year Jobs PILOT to enable the company to create 561 Net New Jobs at an average wage of $63,749 and invest $212,859,608 to renovate three properties for cell-therapy operations, contract development and manufacturing for drug sponsors, and related logistics as Phase I (“Project”) of a possible two-phase plan.

This PILOT Term Sheet evaluates Phase I only and Cognate is only committing to Phase I at this time. Phase II, if presented to the EDGE Board, will be processed as provided below.

The total Project investment includes three existing spaces with a total tax appraisal of $15,859,608, construction costs of $126,000,000 and personal property of $71,000,000. Community Reinvestment Credit has been requested for all three properties.

• Parcel 093301 A00005 (4600 East Shelby Drive) is 7.38 acres and contains a 112,313 square foot warehouse. The Applicant currently occupies approximately 88,000 square feet and after relocating the warehouse and distribution operation to 5780 East Shelby Drive, will spend $30 million on interior construction and renovations and $17 million on new personal property. Real property improvements occupied by the Applicant (78.35%) will receive PILOT benefit on a proportional basis and new personal property will receive PILOT benefit. The redevelopment of this parcel will allow the removal of current distribution activities on the site to another parcel and the redevelopment of this parcel to create a manufacturing facility utilizing clean room operations at a significant expense.

• Parcel 09360000445 (5780 East Shelby Drive) is 5.88 acres and contains a 108,138 square foot warehouse. The Applicant will occupy approximately 50,000 square feet, spending $2 million on interior construction and renovations and $1 million on new personal property. Real property improvements occupied by the Applicant (46.24%) will receive PILOT benefit on a proportional basis and new personal property will receive PILOT benefit.


• Parcel 094200 00551 (6100 Global Drive) is 9.39 acres and contains a 122,580 square foot warehouse. The Applicant will occupy the entire building, spending $94 million on interior construction and renovations and $53 million on new personal property. Both real property improvements occupied by the Applicant and new personal property will receive PILOT benefit.

The applicant may receive benefit for up to 135% of stated construction and renovation investment, and 135% of new tangible personal property investment if commitments for Net New Jobs, associated wages, and capital investment are met. Otherwise real and personal property investments are capped at 110% of the amounts shown in the Budget Detail on page 4, per EDGE Jobs PILOT Policies and Procedures.

The project will have a Ramp-Up period of four years from approval of this Term Sheet by the EDGE Board of Directors.
This is a multi-site project and, as such, performance commitments related to jobs, wages, capital investment and Local Business Participation will be measured across all three properties as one project.

Cognate BioServices is a leading contract developer and manufacturer of advanced cell and gene therapies. Founded in 2002, the Baltimore-based company has grown tremendously, diversified its services from clinical into commercial applications and now has facilities in the United States, United Kingdom and Sweden. Recently, Cognate manufactured product for the world’s largest clinical trial for a treatment for glioblastoma multiforme, considered the most aggressive form of brain cancer. The company has 568 employees globally in six worldwide facilities and employs 287 people at its 4600 East Shelby Drive facility in Memphis today.

The contract development and manufacturing industry is growing as demand for regenerative medicine, cancer treatments and other live-cell biologics increases. Cognate recently secured investment from a focused healthcare investor to enable the company’s expansion. The company is now evaluating long-term strategic options for construction of innovation and testing laboratories, clean rooms, manufacturing, logistics, material storage and related facilities.

The company has its roots in Baltimore, Maryland and opportunities in other locations including Dallas, Texas. The availability of the PILOT makes Memphis, Tennessee more attractive in the site selection process.
The locations proposed for this project produce $523,671 today in City of Memphis and Shelby County property taxes annually. Estimated annual property taxes should be $1,178,454 during the PILOT term and $4,420,333 after. Staff projects $65,397,548 in local total tax revenues to be received during the PILOT term of this project and an estimated $52,008,223 benefit to the Applicant.

Depending on market conditions Cognate anticipates a Phase II project with similar activities constructed in the vicinity of the Phase I Global Drive location. The two phases are integrally linked. Therefore, should Cognate deliver to the EDGE Board a PILOT application for Phase II by December 1, 2024 that includes a new location in the City of Memphis with new capital investment of at least $147 million, the creation of at least 250 additional net new jobs averaging at least $50,000 per year, and an LBP spend pursuant to the application benefit, that PILOT shall be approved as a separate project under the EDGE Jobs PILOT Policies & Procedures Effective June 1, 2019. However, the Phase II project must be presented to the Board for the public record. Consistent with that Jobs PILOT Policies & Procedures, the Applicant will have two years from Board approval to close the PILOT with a standard two-year Ramp-Up period after closing to fulfill the obligations of Phase II.

PILOT Term:

15

Projected New Jobs:

561

Projected Retained Jobs:

Not applicable

Total Jobs:

561

Projected Average Payroll of New Jobs:

$63,749

Projected Average Payroll of Retained Jobs:

Not applicable

Annual New Direct Payroll:

$35,763,189

Annual Retained Direct Payroll:

Not applicable

Total Capital Investment:

$212,859,608
Real Property Investment:
$126,000,000

Personal Property Investment:
$71,000,000

Community Reinvestment Credit (CRC):
Not applicable

Capital Investment not in PILOT:
$561

Projected Tax Revenue:

$65,397,548

Projected Taxes Abated:

$52,008,223
City: $22,939,282
County: $29,068,941

Benefit/Cost Ratio:

1.26

Projected MWBE/LOSB Spending:

$39,301,234

Incentive Provided:

$52,008,223

Compliance Information

Not applicable

Approved

11/18/2020

Ramp up Period

4

Closing

Not applicable

Effective

Not applicable

Lease Begins

Not applicable

Lease Expires

Not applicable

Amended

Not applicable

Property Details

Lease Began

Not applicable

Lease Expires

Not applicable

Cognate BioServices, Inc.

4600 East Shelby Drive, 5780 East Shelby Drive and 6100 Global Drive Memphis, TN 38118