Title
Authorization to Enter into Development Agreement with PennyMac Loan Services (Ordinance S-46808)
Description
Request authorization for the City Manager, or his designee, to enter into a Development Agreement, and to execute any other instruments or documents necessary with Private National Mortgage Acceptance Company, LLC, a Delaware Limited Liability Company DBA PennyMac Loan Services. Further request the City Controller to disburse funds in an amount not to exceed $374,000 with this action. Funding is available in the Strategic Economic Development Fund.
Report
Summary
After a search involving multiple states and regions, PennyMac Loan Services (PennyMac) expressed its desire to expand its presence in Phoenix. PennyMac, is the third largest non-bank correspondent lender in the U.S., and acquires newly originated loans from small banks and independent originators as well as provides retail lending and loan servicing. Founded in 2008, PennyMac is headquartered in Thousand Oaks, California, and has more than 4,000 employees across the country. Capital investment from PennyMac's expansion into Phoenix will be nearly $10 million in an approximate 60,000 square foot facility, and will result in up to 374 new jobs to be phased in from 2021-2025 with an average annual salary of $104,000 including commissions and bonus.
The City recognizes the resulting substantial economic impacts to the City and region from PennyMac's expansion into Phoenix. Phoenix is one of the largest financial services job markets in the U.S. To remain competitive on a national level and ensure quality financial services positions are created in Phoenix, the terms of a Development Agreement (DA) are as follows:
- PennyMac agrees to expand its organization into the City of Phoenix.
- PennyMac intends to create up to 374 additional new jobs within five years of entering the DA. The City realizes 374 jobs is a program model estimate and this DA is not contingent upon the exact total job creation.
- The City will provide $1,000 to PennyMac for each net new employee earning an annual wage exceeding $50,000 including bonus and commission in their second year of employment. If the jobs are not created in the specified timeline, the City will not be obligated to pay.
- Entering into the DA and participation in the job creation fund does not preclude PennyMac from working with the City's Workforce Innovation Opportunity Act (WIOA) Program or any other local and/or State program.
- The DA may contain other terms and conditions deemed necessary by City staff.
Financial Impact
The total contract amount will not exceed $374,000 over a five-year period. Funding is available in the Strategic Economic Development Fund.
Location
PennyMac is conducting due diligence for a location within Phoenix and will be identified before entering into a Development Agreement.
Department
Responsible Department
This item is submitted by Assistant City Manager Deanna Jonovich and the Community and Economic Development Department.