HomeMy WebLinkAboutConfirming Tax Abatement - McCormick & Co. Inc. 3425 W Lathrop Dr. (5 Yr. Personal Property)Attes
RESOLUTION
4076 -14
Passed by the Common Council of the City of South Bend, Indiana
January 24, 11
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Presented by me to the Mayor of the City of South Bend, Indiana
January 25,
zo 11
City Clerk
dent of Common Council
Approved and signed by me January 26 201L.
City Clerk
RESOLUTION NO. ~~~< <°J~~
A RESOLUTION CONFIRMING THE ADOPTION OF A
DECLARATORY RESOLUTION DESIGNATING CERTAIN AREAS
WITHIN THE CITY OF SOUTH BEND, INDIANA, COMMONLY
KNOWN AS
3425 WEST LATHROP DRIVE
TO BE AN ECONOMIC REVITALIZATION AREA FOR PURPOSES OF
A FIVE (5) YEAR PERSONAL PROPERTY TAX ABATEMENT FOR
MC CORMICK & COMPANY, INC.
WHEREAS, the Common Council of the City of South Bend, Indiana, has
adopted a Declaratory Resolution designating certain areas within the City as Economic
Revitalization Areas for the purpose of tax abatement consideration; and
WHEREAS, a Declaratory Resolution designated the area commonly known as
3425 West Lathrop Dr., South Bend, Indiana, and which is more particularly described as
follows:
8.44 AC Tract; Mid PT S Side SE '/4 Beg 990' W & 40' N of SE Cor
SE SEC 28-38-2E.
and which has Key Number 025-1010-0403.01, as an Economic Revitalization Area; and
WHEREAS, notice of the adoption of a Declaratory Resolution and the public
hearing before the Council has been published pursuant to Indiana Code 6-1.1-12.1-2.5;
and
WHEREAS, the Council held a public hearing for the purposes of hearing alI
remonstrances and objections from interested persons; and
WHEREAS, the Council has determined that the qualifications for an economic
revitalization area have been met.
NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of
South Bend, Indiana, as follows:
SECTION I. The Common Council hereby confirms its Declaratory Resolution
designating the area described herein as an Economic Revitalization Area for the
purposes of tax abatement. Such designation is for Personal property tax abatement only
and is limited to two (2) calendar years from the date of adoption of the Declaratory
Resolution by the Common Council.
SECTION II. The Common Council hereby determines that the property owner is
qualified for and is granted Personal property tax deduction for a period of five (5) years,
and further determines that the petition complies with Chapter 2, Article 6, of the
Municipal Code of the City of South Bend and Indiana Code 6-1.1-12 et sue.
SECTION III. This Resolution shall be in full force and effect from and after its
adoption by the Common Council and approved by the Mayor.
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M tuber of the Common Council
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1200 COUNTY-CITY BUILDING
227 W. JEFFERSON BOULEVARD
SOUTH BEND, INDIANA 46601-1830
PHONE 574/235-9371
FAx 574/235-9021
CITY OF SOUTH BEND STEPHEN J. LUECKE, MAYOR
COMMUNITY ~ ECONOMIC DEVELOPMENT
JEFFREY V. GIBNEY
January 10, 201 1 EXECUTIVE DIRECTOR
Council Member Timothy A. Rouse, Chairperson
Community & Economic Development Committee
South Bend Common Council
4th Floor, County City Building
South Bend, IN 46601
RE: Real and Personal Property Tax Abatement Petitions for:
MC CORMICK AND COMPANY, INCORPORATED
Dear Council Member Rouse:
On July 26, 2010, the Common Council approved Designating Resolutions for real and personal
property tax abatements for the subject firm. The property will be located at 3425 West Lathrop Drive.
At the time the Designating Resolutions were considered the firm had not completed the list of
construction contractors and suppliers for its proposed project as called for in the real property petition
forms. In approving the Designating Resolution for real property it was noted that the firm could
qualify for up to anine-year abatement term. The firm agreed to provide the required information prior
to the Council considering its real property Confirming Resolution. Consideration of the Confirming
Resolutions for both tax abatements was held in abeyance pending receipt of the required information.
McCormick has now completed the list of contractors and suppliers for construction of the addition and
submitted it tome. I have reviewed the information and found that the firm qualifies for aneight-year
real property tax abatement term. Ilowever, due to an increase in customer demand McCormick had to
enlarge the project. A summary tax abatement report on the revised project follows:
Project Description: The project originally entailed the construction and equipping of a 50,000 square
foot addition to their manufacturing facility. The cost of construction was estimated at $5,010,913 and
equipment procurement was estimated at $875,173 for a total project cost of $5,886,086. The
equipment includes fork lifts, coolers, racking, computers and furniture and fixtures. The addition is
intended to house a distribution operation for the products McCormick makes. The products include
condiments (ketchup, mustard, salad dressing, etc.) for major restaurant chains. During initial
discussions the company was also considering alternate sites in Michigan, Illinois and other states to
locate the distribution operation. After the Designating Resolutions were approved the company
selected South Bend. Since then an increase in business volume from their main customer has
caused the company to increase the size of the project by adding 25,000 more square feet to the addition
at a cost of $884,071 and providing more equipment at a cost of $487,000. The revised cost of
construction is now estimated at $5,894,984 and the equipment procurement is estimated at $1,362,173
for a new total project cost of $7,257,157. However, the goals and objectives of the project remain the
same as those originally presented for the Designating Resolutions.
COMMUNITY DEVELOPMENT ECONOMIC DEVELOPMENT FINANCIAL RC PROGRAM
PAMELA C• MEYER DONALD E. INKS MANAGEMENT
574/235-9660 574/235-9371 ELIZABETH LEONARD
PAX: 574/235-9469 ~ 574/235-9371
South Bend Common Council
RE: Tax Abatement for McCormick and Company
January 10, 2011
Page 2
Based on an eight-year term the total estimated real property taxes to be abated on the revised project
are $784,181. Total additional real property taxes to be paid as a result of the revised project during the
eight-year abatement period are estimated at $868,820. For the equipment, the total estimated personal
property taxes to be abated on the revised project during the personal properly five-year abatement term
are $10,073. Total additional personal property taxes to be paid as a result of the revised project during
that same term are estimated at $103,084.
Employment Impact: It is estimated that the total project will create five (5) new, permanent, full-time
jobs within the first year of the project representing a new annual payroll of approximately $177,247.
The project will retain one hundred twenty-three (123) existing permanent, full-time jobs (ofwhich 30
are minority employees) with an annual payroll of $6,288,998.
Abatement Qualification: A review of the Tax Abatement Ordinance No. 9394-03 finds that the
Petitioner meets the qualifications fora (5) five-year personal property tax abatement under section 2-
84.2, Tangible Personal Property Tax Abatement. In addition, a review of that ordinance finds the
Petitioner meets the qualifications for aneight-year (8) real property tax abatement under Section 2-82,
Industrial Development, City-wide General Standards.
Revised Statement of Benefit (SB-1) forms together with a letter of explanation from McCormick are
attached. In addition, copies of the Public Benefit Points Summary used to calculate the real property
abatement term and the estimated Real Property Tax Abatement Schedule and Personal Property Tax
Abatement Schedule are attached. A representative of the firm will be available to meet with the
Council's Community and Economic Development Committee at its afternoon meeting on Monday,
January 24, 2011, and with the full council at its public meeting on that same date.
Copies of the original staff reports and tax abatement petitions are available upon request.
Should you or any of the other Council members have any questions concerning the report, or need
additional information, please call me at 235-5835.
Sincerely,
,,~~ f
`~n ~1NO~~~I~t~{v
Bob Mathia
Assistant Director,
Economic Development
Attachments
cc: South Bend Common Council Members
Mayor Stephen Luecke
Jeff Gibney
Don Inks
m~
McCORMICK& COMPANY INC. 18 LOVETON CIRCLE, SPARKS, MD 21152-sD00 USA /TEL (410) 771-7301 FAX (410) 77t-7462
January 4, 2011
To Whom It May Concern:
McCormick and Company will be increasing the size of the distribution center expansion
located at 3425 West Lathrop Drive; South Bend, Indiana 46628 from 50,000 square foot
to 75,000 square foot.
The increase in the distribution center size is due to an increase in business volume from
our main customer. The extra space is needed for the increased inventory that is required
to support our customers.
The cost for the added squaze footage is approximately $1.4 million. This includes an
increase of $487,000 in personal property (racking system) as well as an increase of
$884,071 in real property construction. This increases the total construction project cost
to $7.2 million. We expect to begin using the distribution center on June 1, 2011.
Thank in advance for your support on this project. If you have questions, please feel free
to contact me at 410-771-7381.
Sincerely,
Deidre Cassidy
Director of State and Local Tax
11-Jan-11
McCormick and Company, Inc.
Public Benefit Points Summary
Qualify Earned Available
Public Benefit Item: Y or N Points Points
Proiect Related:
1. A. Redevelop a Site that has Special Needs N 0 49
B. Develop Based on Local University Research N 0 35
C. Achieve a Physical Element of a Plan N 0 36
Sub-total Project Related: 0 120
2. Super Size Proiects (point values are cumulative):
A. 100% to 199% Y 25 25
B. 200% to 299% Y 68 68
C. 300% to 399% Y 65 65
D. 400% and Over Y 52 52
Subtotal Super Size Projects: 210 210
3. Construction Related:
A. Employ Local Companies N 0 20
B. Purchase Materials from Local Companies Y 20 20
C. Require Employees vs. Independent Contracts Y 19 19
D. Require Target Wage Levels Y 22 22
E. Require Health Benefits Y 22 22
F. Require Pension Benefits Y 18 18
G. Maintain Affirmative Action Plan Y 20 20
Sub-total Construction Related: 121 141
4. Waae & Benefit Related:
A. Pay Target Wage Levels Y 33 33
B. Provide Health Benefits Y 34 34
C. Provide Pension Benefits Y 29 29
D. Provide Training Y 28 28
E. Provide Child Care N 0 15
F. Provide Transportation Assistance N 0 14
G. Provide Employer Assisted Housing program N 0 9
Sub-total Wage 8 Benefit Related: 124 162
5. Workforce Related:
A. Create New Jobs Y 42 42
B. Retain Existing Jobs Y 41 41
C. Maintain Affirmative Action Plan Y 35 35
D. Provide Targeted Hiring Preference N 0 34
Sub-total Workforce Related: 118 152
6. Pav for Municipal Infrastructure: (point values are cumulative):
A. Pay for Oversizing or Upgrading N ~ 0 14
B. Pay for 26-50% of Extension Cost N 0 26
C. Pay for 51-75% of Extension Cost N 0 39
D. Pay for 76-100% of Extension Cost N 0 52
Sub-total Infrastructure Related: 0 131
7. Support a Municipal Facility: '
A. Support a Municipal Facility N 0 84
Total Public Benefit Points: 573 1000
* Qualification for each Public Benefit Item based on best available information at time of application or
good faith determination if no information available.
McCormick and Company, Inc.
Additional Years of Abatement
Multi-family Development Proiects:
From To Additional Years
0 141 0
142 183 1
184 225 2
226 267 3
268 309 4
310 351 5
352 393 6
394 & over 7
Other Development Proiects:
From To Additional Years
0 300 0
301 357 1
358 414 2
415 471 3
472 528 4
529 585 5
586 642 6
643 1000 7
Subtotal from Points Summary: 573
Base Years of Abatement 3
Additional Years of Abatement: 5
Total Years of Abatement: 8
22. In the following chart please indicate companies that were used for purchasing materials used in the construction or rehabilitation
associated with the project. ~ Include the location of the company, description of the materials, and cost of the materials. Local
companies include those located in St. Joseph County. Additional information may be requested for verification of this
information. (If more space is needed, please photoc opy this page)
of
Name and Address of Company Description of Materials Cost of Materials Grand Total
Local Companies (see above):
1. Midland Engineering Co., Inc. Roofing Materials purchased from
52369 SR 933 North, SB, IN 46637 North Coast Commercial Roofing Mishawaka $156,000 .085
2. S hambaugh & Sons, L.P.
56575 Twin Branch Dr, Mishawaka, IN 46545 Plumbing, HVAC, refrigeration & electrical $758,000 .413
3. C&E Excavating
1702 Bendix Dr, SB, IN 46514 Sand Stone and crushed concrete $ 58,630 .032
4. Lit hko Contracting, Inc.
7706 Moller Rd, Indianapolis, IN 46268 Ready Mix Concrete from Transit Mix $ 185,000 .101
5. Ho me Depot, SB, IN Form Materials $ 5,000 .003
Total Local 1.162.630 63.4%
Non-Local Companies:
1. C&E Excavating
57367 CR 9, Elkhart, IN 46514 Pipe, manholes and fabric $ 32,356 .018
2. K erksta Precast, Inc
3373 Busch Drive, Grandville, MI 49418 Precast concrete materials $ 264,677 .144
3. Co oper Steel
1919 Hayes Street, Nashville, TN 37203 Structural Steel $ 240,000 .130
4. E nvirotech Construction
10309 Industrial Park Drive, Brazil, IN 47834 Insulated Metal Panels $ 135,166 .074
5.
Total Non-Local 672 199 36.6%
GRAND TOTAL $ 1.834,829 100%
10 Quality Street, Lexington, KY
Total Non-Local
GRAND TOTAL
Total Project Cost from Petition
Difference (Please explain):
$3,957.969
$5.894,984
$5,010,913
$ 884,071
Additional 20,000 sf expansion
23. In the following chart please list the companies that will be used for the construction associated with the project. Indicate the name
and address of each company; list the dollar amount of the work to be provided by each company; indicate whether or not 100% of
the workers are employees of that company and not independent contractors; indicate whether or not the company pays workers
wages that meet the wage rates for each classification of laborers and mechanics published by the U.S. Department of Labor; indicate
whether or not the company contributes to a health plan for its employees; indicate whether or not the company contributes to a
pension plan for its employees; and indicate whether or not the company maintains an affirmative action plan or other similar plan to
achieve racial diversity. Local companies include those located in St. Joseph County. Additional information may be requested
for verification of this information. (If additional space is needed, please photocopy this page).
100% Workers Pay
Maintain
are Employees U.S. Dept. Contribute Contribute
Affirmative
Name and Address of Contract (Not Independent Labor Wage to a Health to a Pension Action
Construction Company Amount Contractors) Rate (Y/N) Plan IYIN1 Plan (Y/N1 Plan
L2
Local Companies (see above):
1. Midland Engineering Co., Inc. $ 331,010 Y Y Y Y Y
52369 SR 933 North, SB, IN
2. Shambaugh & Sons, LP $1,589,505 Y Y Y Y Y
56575 Twin Branch Dr, Mishawaka, I N
3. Wightman & Petrie, Inc $ 5,000 Y Y Y Y Y
412 Lafayette Blvd., SB, IN 46601
4. Alt & Witzig Construction Services $ 10,000 Y Y Y Y Y
3725 Foundation Ct., Suite A, SB, I N
5. Indiana Michigan Power $ 1,500 Y Y Y Y Y
2929 Lathrop St., SB, IN
Total Local $1.937.015
Non-Local Companies:
1. C&E Excavating $ 367,632 Y Y Y Y Y
57367 cr 9, Elkhart, IN
2. Lithko Contracting, Inc. $ 430,000 Y Y Y Y Y
7706 Moller Rd, Indianapolis, IN
3. Kerksta Precast, Inc. $ 681,347 Y Y Y Y Y
3373 Busch Drive, Grandville, MI
4. Cooper Steel $ 480,000 Y Y Y Y Y
1919 Hayes St., Nashville, TN
5. Envirotech Construction $ 208,151 Y Y Y Y Y
10309 Industrial Park Drive, Brazil, IN
:~6.. .Gray.Construction $ 5,894,984 (total contract including all above)
8 YEAR
Tax Key Number
Current Assessed Value:
Estimated Project Cost:
10-Jan-11
McCormick 8~ Company, Inc.
South Bend German Township
Real Property Tax Abatement Schedule*
25-1010-040301
1,423,500
5,894,984 10.00%
Current Without 100% 68% 75% 63% 50% 38% 25% 13%
Assessed Value: AV 8, Tax Abatement Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
Current Assessed Value 100% 1,423,500 1,423,500 1,423,500 1,423,500 1,423,500 1,423,500 1,423,500 1,423,500 1,423,500 1,423,500
Base Assessed Value 100% 5,894,984 5,010,736 5,010,736 S,Ot0,736 5,010,736 5,010,736 5,010,736 5,010,736 5,010,736
Less Abatement Deduction 0 (5,010,736) (4,409,448) (3,758,052) (3,156,764) (2,505,368) (1,904,080} (1,252,684) (651,396)
Net Assessed Value 1,423,500 7,318,484 1,423,500 2,024,788 2,676,184 3,277,472 3,928,868 4,530,157 5,181,552 5,782,841
ProoeM Taxes:
Assume constant tax rate of 4.4232% 4.4232% 4.4232% 4.4232% 4.4232% 4.4232% 4.4232% 4.4232% 4.4232°/ 4.4232%
Gross Tax (tax rate x net assessed value)
Less Circuit Breaker Credit
Net Tax
Circuit Breaker Cap
Circuit Breaker
Debt Service
Circuit Braker Cap
62,964 323,711 62,964 89,560 118,373 144,969 173,782 200,378 229,190 255,787
(13 069) (67,191) 0 0 0 0 0 0 0 (7,023)
49,895 256,520 62,964 89,560 118,373 144,969 173,782 200,378 229,190 248,764
3.0000% 42,705 219,555 219,555 219,555 219,555 219,555 219,555 219,555 219,555 219,555
0.5051% 7,190 36,966 7,190 10,227 13,517 16,555 19,845 22,882 26,172 29,209
49,895 256,520 226,745 229,782 233,072 236,109 239,399 242,436 245,727 248,764
New Combined Net
Existing Project Existing 8 New Tax Tax
Year Taxes Taxes Taxes Abated Paid
1 49,895 206,625 256,520 193,556 62,964
2 49,895 206,625 256,520 166,960 89,560
3 49,895 206,625 256,520 138,147 118,373
4 49,895 206,625 256,520 111,551 144,969
5 49,895 206,625 256,520 82,738 173,782
6 49,895 206,625 256,520 56,142 200,378
7 49,895 206,625 256,520 27,330 229,190
8 49,895 206,625 256,520 7,757 248,764
Totals 399,161 1,653,001 2,052,161 784,181 1,267,980
'This schedule is for estimation purposes only and assumes constant tax rates. The true tax values
will ultimately be determined by the actual assessed valuation and the then current tax rates.
5 YEAR
McCormick & Company, Inc.
South Bend German Township
Personal Property Tax Abatement Schedule*
Tax Key Number 025-421-3817
Current Assessed Value: 7,668,104
Estimated Project Cost: 1,362,173
11-Jan-11
40% 60% 55% 45% 37%
100% 80% 60% 40% 20%
Year 1 Year 2 Year 3 Year 4 Year 5
Current
Assessed Value: AV & Tax Pav 2011 Pav 2012 Pav 2013 Pay 2014 Pav 2015
Current Assessed Value 100% 7,668,104 7,668,104 7,668,104 7,668,104 7,668,104 7,668,104
Base Assessed Value 544,869 817,304 749,195 612,978 504,004
Less Abatement Deduction (544,869) (653,843) (449,517) (245,191) (100,801)
Net Assessed Value 7,668,104 7,668,104 7,831,565 7,967,782 8,035,891 8,071,307
Prooerty Taxes:
Assume constant tax rate of 4.4232% 4.4232% 4.4232% 4.4232% 4.4232% 4.4232%
Gross Tax (tax rate x net assessed value)
Less Circuit Breaker Credit
Net Tax
Circuit Breaker Cap
Circuit Breaker
Debt Service
Circuit Braker Cap
339,176 339,176 346,406 352,431 355,444 357,010
(70,402) (54,056) (52,287) (59,667) (66,423) (71,079)
268,774 285,120 294,119 292,763 289,021 285,931
3.0000% 230,043 246,389 254,562 252,519 248,432 245,163
0.5051% 38,731 38,731 39,556 40,244 40,588 40,767
268,774 285,120 294,119 292,763 289,021 285,931
New Combined Net
Existing Project Existing & New Tax Tax
Year Taxes Taxes Taxes Abated Paid
Pay 2011 268,774 19,098 287,872 2,752 285,120
Pay 2012 268,774 28,647 297,421 3,302 294,119
Pay 2013 268,774 26,260 295,034 2,270 292,763
Pay 2014 268,774 21,485 290,259 1,238 289,021
Pay 2015 268,774 17,666 286,440 509 285,931
Totals 1,343,870 113,157 1,457,026 10,073 1,446,954
*This schedule is for estimation purposes only and assumes constant tax rates. The true tax values
will ultimately be determined by the actual assessed valuation and the then current tax rates.