HomeMy WebLinkAboutConfirming Tax Abatement - 4747 W. Cleveland Road - PEI-Gensis, Inc.RESOLUTION
3611-06
Passed by the Common Council of the City of South Bend, Indiana
Juiy 10, os
20
Attest:
City Clerk
President of Common Council
Presented by me to the Mayor of the City of South Bend, Indiana
July 11, 20 6
Approved and signed by me , i ~ ~ ~ ~~ i ~ y 20~.E;i_ .
~~
c`~~• <~_
City Clerk
~Y~
RESOLUTION NO. 3 ~~ L ~~~
A RESOLUTION CONFIRMING THE ADOPTION OF A
DECLARATORY RESOLUTION DESIGNATING CERTAIN AREAS
WITHIN THE CITY OF SOUTH BEND, INDIANA, COMMONLY
KNOWN AS
4747 WEST CLEVELAND ROAD
TO BE AN ECONOMIC REVITALIZATION AREA FOR PURPOSES OF
A FIVE (5) YEAR PERSONAL PROPERTY TAX ABATEMENT FOR
PEI-GENESIS, 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
4747 West Cleveland Road, South Bend, Indiana, and which is more particularly
described as follows:
Commencing from the East Quarter of said Section 20, said point being
approximately 68.62 feet South of the South right-of--way of Indiana
East/West Toll Road (300' total R/VV) thence North O 1 °04' 10" West along
the East line of the Northeast Quarter of Section 20, 704.03 feet to the
point of beginning of this description; (note: The bearing for this
description was derived from the recorded documents from the Right-of-
Way undertaking); thence North 77°34'00" West, along the North right-
of-way of Cleveland Road 1346.24 feet; thence North 00°38'36" West,
629.12 feet to the South line of the Plat of Clarence A. Gregory's High
Meadows Estates Subdivision; thence North 89°37' 14" East along the
South line of the Plat of Clarence A. Gregory's High Meadows Estates
Subdivision and Hartman DeMaegt Subdivision, as recorded under Book
21, page H4 and Book 27, page H respectively; 1304.45 feet to the East
line of the Northeast Quarter of said Section 20; thence continuing along
the South boundary of Hartmen DeMaegt Subdivision on a bearing of
North 89°37' 14" East, 80.5 feet to a point on a line West 80.5 feet of the
West Half of the Northwest Quarter of said Section 21; thence South
O l °04' 10" East, 946.09 feet to a point on the North line of Cleveland
Road; thence continuing along the said North line of Cleveland Road on a
bearing of North 77°34'00" West, 82.79 feet to the point of beginning.
and which has Key Number 25-1012-0199.37, 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 all
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 sew.
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.
/~~u
Member of the on Council
~ ~ to-~~°
PRESENTED
NOT APPROVED r _
ADOPTED ~ _-~, O "d~
Filed In ~tcr'~c'~ ®ioice
,SUN 2 1 2006
JOl1F! VOOfi~@
CfTY C~rfiX, 50. BcNO, IN.
1200 COUNTY-CITY BUILDING
227 W.JEFFERSON BOULEVARD
SOUTH BEND, INDIANA 46601-1830
PHONE 574/235-9371
FAx 574/235-9021
TDD 574/ 235-5567
CITY OF SOUTH BEND STEPHEN J. LUECKE, MAYOR
June 19, 2006 COMMUNITY S~ ECONOMIC DEVELOPMENT
SHARON T. KENDALL
EXECUTIVE DIRECTOR
Council Member Roland Kelly, Chairperson
Community & Economic Development Committee
South Bend Common Council
4th Floor, County City Building
South Bend, IN 46601
RE: Personal Property Tax Abatement Petition for:
PEI-GENESIS, INC.
Dear Council Member Kelly:
Please find attached the Department of Community & Economic Development's report on a personal
property tax abatement petition for the above referenced petitioner. Also attached is a copy of the petition,
Statement of Benefits form, and supporting information. The project calls for the acquisition and
installation of new equipment as part of the company's planned increase in productive capacity in its facility
located at 4747 West Cleveland Road.
The report contains the Department's findings relative to the above petition. PEI-Genesis, Inc. will be
purchasing and installing new equipment. The total project cost for the equipment is estimated at
$3,500,000. 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) for $2.3 million of manufacturing equipment, but does not meet the ordinance
requirements for the $1.2 million of logistical distribution and information technology equipment. Tax
abatement is being sought on the $1.2 million of equipment as a Special Exception. State law was changed
this year to provide for Tax Abatement on both logistical distribution and information technology equipment
A representative from PEI-Genesis, Inc., will be available to meet with the Committee on Monday, June 26,
2006.
Should you or any of the other Council members have any questions concerning the report, or need
additional information, please feel free to call me at 235-5825.
Sincerely,
Sharon Terrell
Economic Development
Attachments
cc: South Bend Common Council Members
Mayor Stephen Luecke
Sharon Kendall
Filed nrt 6el'~'~ ~f-1~~
~uN 2 a 2006
JOHN VSO RBE D, IN.
CITY CLERK,
Don In~MMUNITY DEVELOPMENT ECONOMIC DEVELOPMENT
PAMELA C. MEVER DONALD E. INKS
574/235-9660 574/235-9371
FAX: 574/235-9697
FINANCIAL & PROGRAM
MANAGEMENT
ELIZABETH LEONARD
5741235-9371
1200 COUNTY-CI77 BUILDING
227 W. JEFFERSON BOULEVARD
SOUTH BEND,IND[ANA 46601-1830
PHONE 574/235-9371
FAx 574/235-9021
TDD 574/ 235-5567
CITY OF SOUTH BEND STEPHEN J. LUECKE, MAYOR
COMMUNITY HL ECONOMIC DEVELOPMENT
SHARON T. KENDALL
EXECUTIVE DIRECTOR
TAX ABATEMENT REPORT
TO: SOUTH BEND COMMON COUNCIL
FROM: SHARON TERRELL~
SUBJECT: PERSONAL PROPERTY TAX ABATEMENT PETITION FOR:
PEI-GENESIS, INC., 4747 WEST CLEVELAND RD, SOUTH BEND
DATE: June 19, 2006
On June 8, 2006, a petition for personal property tax abatement consideration for property located at 4747
West Cleveland Road, South Bend, was filed with the City Clerk PEI-Genesis, Inc. Pursuant to Chapter 2,
Article 6, Section 2-77 of the Municipal Code of the City of South Bend, this petition was referred to the
Department of Community and Economic Development for purposes of investigation and preparation of a
report determining whether the area qualifies as an Economic Revitalization Area pursuant to
I.C.6-1.1-12.1 and whether all zoning requirements have been met.
The Department of Community and Economic Development has reviewed the petition (a copy of which is
attached), investigated the area, and makes the following report.
PROJECT SUMMARY
Tuliptree Associates, LLC is in the process of acquiring 20 acres of land in South Bend to build a new
manufacturing facility. The initial facility will be approximately 142,400 square feet; however, the site
will support a facility in excess of 350,000 square feet and the building is being designed to accommodate
phased expansion. The facility will be leased to PEI-Genesis. As the new facility will be twice the size of
PEI's existing facility, new equipment will need to be purchasing including: conveyors, glue machines,
insertion machines, rackers, loaders, ovens, test equipment, automatic baggers, mold machines and tools,
numerous other tools and equipment, as well as logistical distribution equipment and information
technology equipment.
COMMUNITY DEVELOPMENT ECONOMIC DEVELOPMENT FINANCIAL HC PROGRAM
PAMELA C. MEYER DONALD E. INKS MANAGEMENT
574/235-9660 574/235-9371 ELIZABETH LEONARD
Fax: 574/235-9697 574!235-9371
South Bend Common Council
RE: Tax Abatement for PEI-Genesis
June 19, 2006
Page 2
EMPLOYMENT IMPACT
Per the petition, it is estimated that the total project will generate (12) twelve new, permanent, full-time
jobs representing a new annual payroll of $340,000. The project will also maintain 140 existing,
permanent, full-time jobs and (4) four existing, part-time jobs representing an annual payroll of
$3,700,000.
ABATEMENT QUALIFICATION
A review of the tax abatements previously granted finds that the petitioner has been granted a
previous tax abatement.
Term/Tune Resolution No. Date
6-year real property 3083-02 4/22/02
2. The building commissioner has reviewed the petition and finds the property to be properly zoned
for the proposed project.
3. A review of the South Bend Redevelopment designation areas finds that the property is located in
the Airport Economic Development Area, which is a Tax Incremental Allocation Area, therefore,
the petition for personal property must first be approved by the South Bend Redevelopment
Commission.
4. 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) for $2.3 million of manufacturing equipment, but does not meet
the ordinance requirements for the $1.2 million of logistical distribution and information
technology equipment. Tax abatement is being sought on the $1.2 million of equipment as a
Special Exception. State law was changed this year to provide for Tax Abatement on both logistical
distribution and information technology equipment.
~1iE'd ~tl~ ~~~E~~
aura 2 0 2005
10t1N VCOR~E
CITY CLEnK, CO. BE;d'3, IN.
Tax Abatement Schedule prepared for:
PEI-GENESIS, INC.
South Bend German 5 Year Personal Property Abatement Schedule"
Total estimated Equipment Cost: $3,500,000
Assume constant tax rate of: 4.874
Assume constant SRTC rate of: 7.9223
TTV Assessed Gross Less Net Percent Tax
Year TTV% (Year 1-5) Value Tax SRTC Tax Abated Abated
1 40% 1,400,000 1,400,000 $68,236 5,406 $62,830 100% $62,830
2 56% 1,960,000 1,960,000 $95,530 7,568 $87,962 80% $70,369
3 42% 1,470,000 1,470,000 $71,648 5,676 $65,972 60% $39,583
4 32% 1,120,000 1,120,000 $54,589 4,325 $50,264 40% $20,106
5 24% 840,000 840,000 $40,942 3,244 $37,698 20% $7,540
$330,945 26,218 $304,727 $200,428
Total Taxes Due During Abatement: $304,727
Total Taxes Abated During Abatement: $200,428
Total Taxes Paid During Abatement: $104,298
' -This schedule is for estimation purposes only and assumes constant tax rates.
The true tax values will ulimately be determined by the actual
assessed valuation and the then current tax rates.
6/16/2006
Tax
Paid
$0
$17,592
$26,389
$30,159
$30,159
$104,298
~i ^t ~~ ~~ t ro
~~~€~.;.
.~.-----
~ur~ 2 0 2006
G.' _.,
CITY OF SOUTH BEND PETITION FOR
TANGIBLE PERSONAL PROPERTY TAX ABATEMENT CONSIDERATION
The undersigned owner(s) of new manufacturing equipment, personal property,
located within the City of South Bend, hereby petitions the Common Council of the
City of South Bend for personal property (new manufacturing equipment) tax
abatement consideration and pursuant to I.C., 6-1.1-12.1, et seq•, and South Bend
Municipal Code Section 2-84.2, et seg•, for this petition states the following:
1. Describe the proposed project, including information about the new
manufacturing equipment personal property (equipment) to be installed, the
amount of land to be used, if any, the proposed use of the equipment, and a
general statement as to the value of the project to your business.
Tuliptree Associates, LLC ("Tuliptree" is in the process of acquiring 20 acres of
undeveloped land in South Bend to build a new manufacturin fgL acility. The initial facility
will be approximately 142,400 sf; however; the site will support a facility in excess of
350,000 sf and the buildin i~ designed to accommodate phased expansion. The
facility will be leased to PEI/Genesis, Inc. ("PEI"). (PEI currently leases a 65,000 sf facility
located in South Bend from A,~pletree Associates., Tuliptree, Appletree Associates and
PEI all have common ownership.
PEI will use the facility as its main world-wide production facility. PEI will consolidate its
North American manufacturing operations in this facility retaining 140 full time jobs (total
annual payroll of $3.7 million) in South Bend and generating 12 new jobs in the first year
of production. PEI`s core business is the manufacture, assembly and distribution of
electronic components, primarily electronic connectors. The Company also desi ng sand
manufactures electronic systems, cable assemblies and specialized connectors and
components. All phases of the production process are housed in the facility including_
receiving, inspection, inventory managLement, warehousing=qualit,~production, testing_and
shipping_
PEI currently produces and ships over 5 million connectors a year from its existin facility.
Over_80% of PEI's revenue will be generated from this facility and the facility will employ
more than 40% of PEI's total employees. Products will be made and shipped to a1150
states and over 50 countries. The success of this project is critical to PEI's future r~
and prosperity.
As the new facility will be twice the size of PEI's existin fg acility, new equipment will
need to be purchased including: Conve~s_~lue machines, insertion machines, rackers,
loaders, ovens, test equ~ment, automatic baggers, mold machines and tools, numerous
other tools and equipment, as well as logistical distribution equipment Man pieces of
1
equipment are computer driven.
2. The project will create 12 new, permanent jobs within the first year,
representing a new annual payroll of $340,000 and will maintain 140 existing
permanent full-time and 4 existing part-time jobs representing an annual
payroll of $ 3,700,000. The projected annual salaries for each new position
created are estimated to be as follows:
8 x Production Worker $20,100
2 x Engineer $57,500
2 x Supervisor $32,500
3. Estimate the total cost of the Equipment: $ 3,500,000 over the first four _years of
the project.
4. (a) The Equipment is owned or to be owned by the following individuals or
corporations (if the business organization is publicly-held, indicate also the
name of the corporate parent, if any, and the name under which the
corporation has filed with the Securities and Exchange Commission):
NAME ADDRESS INTEREST
PEI/Genesis, Inc. 2180 Hornig Road 100%
Philadelphia, PA 19116
(b) The following other persons lease, intend to lease, or have an option to buy
this Equipment (include corporate information as required in (4)(a) above, if
applicable):
NAME ADDRESS INTEREST
N/A
5. Give a brief description of the overall nature of the business and of the
operations occurring at the location for which tax abatement is requested:
PEI will use the facility as its main world-wide production facility. PEI `s core business is
the manufacture, assembly and distribution of electronic components, primarily electronic
connectors. The Company also designs and manufactures electronic systems, cable
assemblies and specialized connectors and components. All phases of the production
process are housed in the facility including: receiving, inspection, inventory mana eg ment
warehousing=quality, production, testingLand shipping_
2
6. The commonly known address of the property where the Equipment is to be
located is: 4747 West Cleveland Road, South Bend
7. The Key Number of said property is: 25-1012-01993
8. Attach the legal description of the property where the equipment is to be
located, marked Exhibit A, and is hereby incorporated herein.
9. Attach a map and/or plat describing the property where the equipment is to be
located, marked Exhibit B, and is hereby incorporated herein.
10. Attach photographs of the property, taken within 30 days of filing of this
petition, marked Exhibit C, and hereby incorporated herein.
11. The current assessed valuation of the tangible personal property to be replaced
by the new manufacturing equipment is $ N/A
(This information maybe obtained from the St. Joseph County Assessors office 235-9523)
12. The current use of the real property where the Equipment is to be installed is
undeveloped land and the current zoning is light industrial (use) and
N/A (height and area).
(This information may be obtained from the Building Department 235-9553)
13. List the real and personal property taxes paid at the location during the
previous five years, whether paid by the current owner or a previous owner:
YEAR REAL PROPERTY TAXES PERSONAL PROPERTY TAXES
2005 $519.34 $0
2004 $519.69 $0
2003 $485.74 $0
2002 $341.66 $0
2001 $339.44 $0
(This information may be obtained from the St. Joseph County Treasurers office 235-9531)
14. Describe the commitment made within the past five years by your firm to hiring
minority individuals, including number of minorities employed during each of
the past five years, specifying whether full time or part-time and whether
permanent or temporary employees. The Petitioner shall also list the current
number of total employees (full and part-time) and the current number of
(Revised 8/2/02) 3
minority individuals (full and part-time).
PEI has an affirmative action plan. The specific goals are as follows:
1. Achievement of genuine equal employment
2. To employ and retain a diverse workforce of the best-qualified individuals.
3. Provide equal access to all available jobs, training, and promotional opportunities
4. Provide similar benefits and services to everyone
5. Apply all policies and practices consistently to applicants and staff
6. Do not differentiate among applicants or employees on the basis of race, color, national
origin, religion, sex, physical or mental disability, medical condition, ancestry, marital status,
or age.
PEI currently employs 140 full-time emplo ey es (40 minority and 4 part-time emplo e~ 1
minority). In 2005 PEI had 38 minority employees, in 2004 PEI had 31 minority employ ees,
in 2003 PEI had 26 minority employees, and in 2002 PEI had 22 minority employees.
15. Describe on-site child care or day care facilities, services or benefits currently
offered or proposed to be offered by the Petitioner for children of employees.
PEI pays up to 80% of monthly health insurance premiums for employees and their spouse
and children.
16. What is your best estimate of the market value of the new Equipment after
installation? $3,500,000.
17. What is your best estimate of the amount of taxes to be abated during each of
the five years after installation? $ Year 1: $63,700 Year 2: $71,400 Year 3:
$40,100 Year 4: $20,394 Year 5: $7,646
18. What is the commitment your firm will make to minority employment during
the five years of tax abatement?
PEI will continue to follow its Affirmative Action Plan and strive to meet the Plan's stated
goals.
19. The Equipment has not been installed as of the date of filing of this petition.
(The signature at the end of this Petition is verification of this statement)
20. The standard Industrial Classification Manual major group within which the
proposed project would be classified, by number and description:
334417 Electronic Connector Manufacturer
21. The Internal Revenue Service Code of Principal Business Activity by which the
(Revised 8/2/02) 4
proposed project would be classified, by number and description:
334000 Computer and Electronic Product Manufacturer
22. The real property where the Equipment will be installed is located in the
following Allocation Area, if any, declared and confirmed by the South Bend
Redevelopment Commission:
Airport Economic Development Area
23. Other anticipated public financing for the project including, if any, industrial
revenue-bonding to be sought or already authorized, assistance through the
United States Department of Housing and Urban Development funds from the
City of South Bend, Small Business Association Sections 503 and 504 financing
through the Business Development Corporation of South Bend, Mishawaka,
and St. Joseph County, Indiana; or other public financial assistance, including
but not limited to public works improvements.
Based on recent tax law changes, it is likely that Tuliptree and PEI will be seekin~to
finance a portion of the project using Industrial Development Bonds. The City of South
Bend and the Indiana Economic Development Corporation will be providing- up blic
infrastructure including_public road infrastructure and the extension of steel conduit from
the current St. Joseph Valley Metronet location to the new facility.
24. Describe how and why the manufacturing equipment to be replaced or the
facility in which Equipment will be added is currently technologically,
economically or energy obsolete and how and why that obsolescence may lead to
a decline in employment and tax revenues:
No equipment is being replaced; rather, the significant expansion of manufacturing~
capacity requires PEI to add new equipment. The new building should be "state-of--the-art"
in terms of technology and energy delivery.
25. The new manufacturing equipment will be used in the direct production,
manufacture, fabrication, assembly, extraction, mining, processing, refining, or
finishing of other tangible personal property and that the equipment was never
before used by its owner for any purpose in Indiana. The signature at the end
of this Petition is verification of this statement.
Consistent with conversations held with members of the City of South Bend Community &
Economic Development Department, certain items of equipment are new to istical
distribution equipment (approximately $1,000,000.00) and information technology
equipment (approximately $200,000.00) and are being_applied for as a special exception.
(Revised 8/2/02) 5
The balance of the amount indicated in response to Question 3. ($2,300,000.00 is
manufacturing equipment. All of the equipment (manufacturing, information technology
and distribution) will never have been used before by PEI for anYpurpose in Indiana.
26. The following person(s) should be contacted as Petitioner's agent regarding
additional information and public hearing notifications:
Name: Jeff Johnson
Address: May Oberfell Lorber 4100 Edison Lakes Parkway, Suite 100
City, State, Zip Code: Mishawaka, IN 46545
Telephone: 5~~~$-'~:291~ z,~(3 ~ ~ ~ ou
(Revised 8/2/02)
Find in C!~Yk'~ Office
JUN - 8 200
6 ~~EF;KVSO.BEND, IPA.
cis
WHEREFORE, Petitioner requests that the Common Council of the City of South
Bend, Indiana, adopt a declaratory resolution designating the area described herein
to be an economic revitalization area for purposes of tangible personal property tax
abatement consideration, and after publication of notice and public hearing,
determine qualifications for an economic revitalization area have been met, and
confirm such resolution. Petitioner herein hereby verifies that the required $250.00
filing fee to cover processing and administrative costs pursuant to Section 2-84.7 of
the Municipal Code of the City of South Bend has been paid in full.
Name of Property Owner(s):
~ ET ~e,~ es ~ s ~~ ~ ,
By:
(Si ed
G ~~~ c ~v
(Typed or print name and capacity of signor if signed
by an agent or representative of the owner)
(Revised 8/2/02)
Filed In Gle~l~'~ ~~;i~
JuPI - g ~o~~
Jo~;t, vDO~D~
'] CITY_ CL;t'~'C, SJ. Fs~?dD,~± i'L
E7illiBIT "A"
A tract of land situated in the Bast half of the Northeapt Quarter of
:action 20, and a part of the West Haif of the Northwest Quarter of Section
21, both its Township 38 North, Range 2 Sast of the second Principal
Meridian, bern+an, Township, St. Joseph County, indiana, explicitly defined
as follows:
Commending from the east Quarter of said Section 20, said paint being
• approximately 68,62 feet south of the South right-of-way of Indiana
Bast/meet Toll Road {300' Cotal R/W) thence North 01°04'10" West alo:tg the
Sa-at line of the Northeast Quarter of Section 20, 704.03 feet to the point
• of beginning of this description; {Note: The bearing for this description
was derived from the recorded documents from the Right-of-Way undertaking);
• thence North 77°34'00" Kest, $long the North right-of-way of Cleveland Raod
1346.24 feetp thence ltorth 00 38'36" west, 629.12 feet to the south line of
~ the Blat of Clarence A. C3regery'g High Meadows Estates Subdivision; thence
. North 89°37'14^ East slang the South line of the Piat of Clarence A.
Gregory's Nigh Meadows Estates Subdivision and ltartman ikMaegt Subdivision,
as recorded under Book 21, page H4 acid Book 27, page H respectively,
1304.45 feet to the East line of the Northeast Quarter of said Section 20;
thence continuing along ~he South boundary of xartman DeMaegt Subdivision
on a bearing of North 89 37'14" Sa9t, 80.5 feet to a paont on a line West
80.5 feet of the West Half of tha northwest Quarter of said section 21;
thence South 01 04'10" Last, 946.49 feet to a point on the North line of
Cleveland Road; thence continuing along the said North tine of Cleveland
Road on a bearing of North 77°34'00" Kest, 82.79 feet to the point of
. begiru~ing .
DULY CNTER;.n Fns T4XkT)'.',~;
J~~Sr:r~~~ f. f..~~Y
to Ctc;~i,~N ~3iiC{'
Fi1~d
JU~1 - 8 2~`'~'
~o~Pa vovaDe