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HomeMy WebLinkAboutConfirming Tax Abatement - Lock Joint Tube, LLC 1217 S. Walnut Street (5 Yr. Personal Property)RESOLUTION 4186 -12 Passed by the Common Council of the City of South Bend, Indiana May 29, 20 12 Attest: Presented by me to the Mayor of the City of South Bend, Indiana May 30, 20 12 City Clerk President of Common Council Approved and signed by me V `n, 20i�:f . City Clerk �JL�� RESOLUTION NO. A RESOLUTION CONFIRMING THE ADOPTION OF A DECLARATORY RESOLUTION DESIGNATING CERTAIN AREAS WITHIN THE CITY OF SOUTH BEND, INDIANA, COMMONLY KNOWN AS 1217 S. WALNUT STREET TO BE AN ECONOMIC REVITALIZATION AREA FOR PURPOSES OF A FIVE (5) YEAR PERSONAL PROPERTY TAX ABATEMENT FOR LOCK JOINT TUBE, LLC 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 1217 S. Walnut Street, South Bend, Indiana 46619, and which is more particularly described as follows: A tract of land in the City of South Bend, County of St. Joseph, and State of Indiana, situated in the Northwest Quarter of Section 14, and the Northeast Quarter of Section 15, Township 37 North, Range Two (2) East, bounded by the following described line: Beginning at a point in the West line of Walnut Street, 1239.70 feet South of the South line of Sample Street, which point is 587.95 feet South of the South line of the Sanders and Egbert Tract, as conveyed by deeds recorded in Deed Record 118, page 428, and Deed Record 121, page 320; thence on an assumed bearing of South 00 °00'49" East along said West line of Walnut Street 479.91 feet; thence South 89 °54'12" West, 725.03 feet; thence South 61 °54'12" West, 42.91 feet; thence South 89 °23'32" West, 437.13 feet; thence North 00 °00'49" West parallel with said West line of Walnut Street, 504.26 feet; thence North 89 °55'05" East, 1200 feet to the place of beginning. and which has Key Number 018 - 8021 - 084503 a/k/a 71- 08 -15- 276 - 003.000 -026, 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 seq.; provided however, the Petitioner may not receive an economic revitalization area deduction if it receives an enterprise zone investment deduction under I.C. 6- 1.1 -45 for the same property. 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. PW, APPROVE? AaOPTEP r—XA—kl- Member of the Common Council Riad i11y F APP ` 7U�2 CITY CLERK, GOd fd MAD, IN I200 COUNTY -CITY BUILDING 21.7 W. JEFFERSON BOUI.F.vARD SOUTH BFND, INDIANA 46601 -1830 March 29, 2012 PHONE 574/ 23 5-9371 FAX 574/235-9021 CITY OF SOUTH BEND PETE B=GIEG, MAYOR COMMUNITY & ECONOMIC DEVELOPMENT Council Member, Chairperson Henry Davis Community & Economic Development Committee South Bend Common Council 4th Floor, County -City Building South Bend, IN 46601 RE: Personal Property Tax Abatement Petition and Real Property Tax Abatement Petition for: Lock Joint Tube, LLC Dear Council Member: Please find attached the Department of Community & Economic Development's report on a personal property tax abatement petition and a real property tax abatement petition for the above - referenced petitioner. Also attached are copies of the petitions, Statement of Benefits forms, 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 1217 South Walnut Street. The company also plans to construct an addition and raise the existing roof on the present building. The report contains the Department's findings relative to the above petitions. Lock Joint Tube will be purchasing and installing new manufacturing equipment. The total project cost for the equipment is estimated between $8.0 and $9.0 million. The project meets the qualifications for a (5) five -year personal property tax abatement. With the real property improvements, the Company will qualify for a four or a five year real property tax abatement. A representative from Lock Joint Tube will be available to meet with the Committee on Monday, April 23, 2012. Additionally, Lock Joint Tube is located in the Urban Enterprise Zone and may qualify for the Enterprise Zone Investment deduction. This is a 10 -year deduction which covers 100% of assessed value from new investment, but requires the company to contribute 25% of savings to the Urban Enterprise Association. The department recommends that should the company receive the UEZ designation, the Tax Abatement designation shall become null and void. COMMUNITY DEVELOPMENT ECONOMIC DEVEI.OPMP.NT PAMELA C. MEYER DONALD E. INKS 574/235-966o 574/235-9371 FAX: 574/235-9469 South Bend Common Council RE: Tax Abatements for Lock Joint Tube, LLC March 29, 2012 Page 2 The Company may not receive an economic revitalization area deduction if it receives an enterprise zone investment deduction under I.C. 6- 1.1 -45 for the same property. 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 -9278. Sincerely, Kathy Hahn Economic Development Specialist Attachments cc: South Bend Common Council Members Mayor Pete Buttigieg Aladean DeRose Don Inks I200 COUNTY -CITY BUILDING 22.7 W. JEFFERSON BOULEVARD SOUTH BEND, INDIANA 466oi -1830 PHONE 574123 5 -9371 FAX 5741235 -9021 CITY OF SOUTH BEND PETE BUTTIGIEG, MAYOR COMMUNITY & ECONOMIC DEVELOPMENT TAX ABATEMENT REPORT TO: SOUTH BEND COMMON COUNCIL FROM: KATHY HAHN SUBJECT: PERSONAL PROPERTY TAX ABATEMENT PETITION AND REAL PROPERTY TAX ABATEMENT PETITION FOR: LOCK JOINT TUBE, LLC, 1215 SOUTH WALNUT STREET DATE: March 29, 2012 On March 29, 2012, petitions for personal property tax abatement and real property tax abatement consideration for property located at 1217 South Walnut Street were filed with the City Clerk by Attorney Richard Deahl, agent for Lock Joint Tube, LLC. Pursuant to Chapter 2, Article 6, Section 2 -77 of the Municipal Code of the City of South Bend, these petitions were 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 petitions (copies of which are attached), investigated the area, and makes the following combined report. PROJECT SUMMARY The company will invest between $8.0 and $9.0 million in the purchase and installation ofnew manufactu- ring, information technology, and logistical distribution equipment to expand its production capabilities at its Walnut Street facility. This equipment will increase the length, wall thickness, and width of steel tubing that can be manufactured as well as enhance the coating, weld capabilities, and overall quality control standards for production of finished goods. These increased capabilities will expand the types of products the Petitioner can manufacture and will expand its existing markets, plus open new markets such as automotive axles, roll -over production systems and other heavy structural applications. Total taxes abated during the five -year abatement period range from $353,006 to $397,132, depending upon the final amount the company will invest in the new equipment. Additionally, Lock Joint Tube is located in the Urban Enterprise Zone and may qualify for the Enterprise Zone Inv&fti #kdfteti,@mNThis is a 10 -year deduction which covers F09ftff 'VffjbNselE "V2ilue from new PAMELA C. MEYER DONALD E. INKS 574/235-966o 574/235-9371 FAX: 574/235-9469 South Bend Redevelopment Commission RE: Tax Abatements for Lock Joint Tube, LLC March 29, 2012 Page 2 investment, but requires the company to contribute 25% of savings to the Urban Enterprise Association. The department recommends that should the company receive the UEZ designation, the Tax Abatement designation shall become null and void. The real property tax abatement petition describes new investment in two primary building projects. First, there will be the removal and reconstruction of a new and raised roof structure (raised from 15 feet to. 40 feet) covering approximately 60,000 square feet of manufacturing space. Second, they will construct a new 30,000 square foot addition for additional manufacturing, storage, and shipping space. These real estate investments will cost between $1.0 million and $1.6 million. Please note that the contractor information (on the real estate petition) is largely unknown at this time although they do want to use MidStates Construction as the primary contractor, and they know that a prefabricated metal building (which is not available locally) will be a large purchase. Based on the preliminary information, they should qualify for a four or five year real property tax abatement. The term that they qualify for will be known by the date set for obtaining the confirming resolution. Based on a project cost of $1.0 million with a four or five year term, the taxes abated would range from $62,311 to $74,542 based on the approved term. Based on a project cost of $1.6 million with a four or five year term, the taxes abated would range from $99,698 to $119,267 based on the approved term. EMPLOYMENT IMPACT Per the petitions, it is estimated that the projects will create seven to eleven new, permanent, full -time jobs within the first year of production representing a payroll of $210,000 to $330,000; and, the projects will maintain (56) fifty six existing, permanent full -time and no existing, part-time jobs representing an annual payroll of $2,300,000. ABATEMENT OUALIFICATION 1. A review of the tax abatements previously granted finds that the petitioner has been granted or associated with (3) three previous tax abatements. Term /Type Resolution No. Date 5 -year personal property 3621 -06 08/14/06 5 -year personal property 3308 -04 03/08/04 10 -year real property 2952 -00 11/27/00 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 Sample -Ewing Development Area, which is a Tax Incremental Allocation Area; therefore, the petitions for personal property and real property must first be approved by the South Bend Redevelopment Commission. 4. A review of the South Bend Urban Enterprise Zone finds that the property is located in the Zone Area; therefore, it is recommended that should the company receive the UEZ designation, the Tax Abatement designation shall become null and void. The Company may not receive an economic revitalization area deduction if it receives an enterprise zone investment deduction under I.C. 6 -1.1 - 45 for the same property. 5. A review of the Tax Abatement Ordinance No. 9394 -03 finds that the petitioner meets the qualifications for a (5) five -year personal property tax abatement under section 2 -84.2, Tangible Personal Property Tax Abatement. The real property project will qualify for a four or five year property tax abatement pending further information on the contractors. 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C. 6- 1.1 -12. 1 -1 et seg., and South Bend Municipal Code Section 2 -84.2 et seq., for this petition states the following: 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. Lock Joint Tube, LLC (the "Petitioner ") manufacturers mechanical and structural arg de steel tubing in Indiana (and other states) for use in various industries, including _(among _others) automotive recreational vehicle office /furniture healthcare and construction. Petitioner is proposing to invest between $8,000,000 and $9,000,000 in new manufacturing, information technology and logistical distribution equipment to expand its production capabilities at its Walnut Street (South Bend) facility. This investment in new equipment will (a)i create the length, wall thickness and width of steel tubing that can be manufactured by Petitioner, as well as (b) enhance the coating, weld capabilities and overall quality control standards for production of finished goods. In turn, these increased capabilities will expand the types of products that Petitioner can manufacture and expand its existing markets and open new markets for the production and delivery of goods, including markets such as automotive axles, roll -over protection systems and other heave structural applications. 2. The project will create at least _7 -11 new, permanent, jobs within the first year, representing a new annual payroll of between $210,000 and $330,000. The Petitioner anticipates that the number of j obs (and associated payroll) will nearly double as production progresses through 2013 and 2014 if additional shifts are added. The jobs related to this proposed project are new jobs to the South Bend community. 3. Estimate the cost of the Equipment: The estimated cost of equipment which will be reported for Indiana personal property taxes is estimated to be between $8,000,000 and $9,000,000. 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 Lock Joint Tube 515 W. Ireland Road Owner (or subsidiary) South Bend, Indiana 46614 (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): fL /: "ul ADDRESS INTEREST N/A N/A N/A 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: The Petitioner's operations at its Walnut Street facility in South Bend involve the manufacture, milling and fabrication of steel tubing for various industries, including (among others), the automotive, recreational vehicle, office /furniture, healthcare and construction industries. 6. The commonly known address of the property where the Equipment is located is: The equipment is proposed to be located at 1217 S. Walnut Street, South Bend, Indiana 7. The Key Number of said property is: The k y number of the real estate where the equipment is proposed to be located is 018 - 8021 - 084503 (a/k/a 71- 08 -15- 276 - 003.000 -026) 8. Attach the legal description of the property where the equipment is to be located, marked "Exhibit A," and is hereby incorporated herein. Please see Exhibit A attached hereto. 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. Please see Exhibit B attached hereto. 10. Attach photographs of the property, taken within 30 days of filing of this petition, marked "Exhibit C," and hereby incorporated herein. Please see Exhibit C attached hereto. 11. The current assessed valuation of the tangible personal property to be replaced by the new manufacturing equipment $ None ($0.00) 12. The current use of the real property where the Equipment will be installed is industrial /manufacturing. The current zoning is "GI" General 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 2011 $36,358 $102,254 2010 $35,326 $100,183 2009 $39,636 $ 91,301 2008 $43,107 $ 81,291 2007 $ 28,597 (This information may be obtained from the St. Joseph County Treasurer's 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 of temporary employees. The Petitioner shall also list the current number of total employees (full and part-time) and the current number of minority individuals (full and part- time). *Year Total Minority Employees Total 2011 56 14 Minority Minority Full -Time Part -Time 14 2010 47 9 9 0 2009 45 8 8 0 2008 38 6 6 0 2007 45 5 5 0 *These numbers reflect employment at Petitioner's Walnut Street location. 15. Describe on -site child care of day care facilities, services or benefits currently offered or proposed to be offered by the Petitioner for children of employees. None. 16. What is your best estimate of the market value of the new Equipment after installation? The market value of Petitioner's equipment is estimated to be in excess of $8,000,000. 17. What is your best estimate of the amount of taxes to be abated during each of the five years after installation? The following estimates are based on equipment installations with a cost of $8,500,000 and a 3.5% tax rate (for purposes of the estimate of taxes to be abated) Year Estimated Dollar Amount 1 $119,000 2 $133,280 3 $74,970 4 $38,080 5 $17,850 18. What is the commitment your firm will make to minority employment during the five years of tax abatement? Petitioner is an equal opportunity employer with a focus on attracting hiring and retaining qualified employees. In addition, Petitioner is committed to following measures during the next five years to attract minority candidates to apply for positions at Lock Joint Tube. In addition to walk -in traffic and local advertisement, petitioner also uses local employment agencies to advertise positions for attracting candidates, including minority candidates. 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: Major Group 33 -- Primary Metals Industries 21. The Internal Revenue Service Code of Principal Business Activity by which the proposed project would be classified, by number and description: 331200 - Steel Product Manufacturing from Purchased Steel 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: Sample Ewing 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 the St. Joseph County, Indiana; or other public financial assistance, including but not limited to public works improvements. None. 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: Petitioner does not anticipate that its investment will "replace" existing equipment. Rather, the new investment will enhance its production capabilities and expand the types of products it can produce. This will lead to expansion of existing markets (and new markets) and additional product/customer diversification to support further growth. 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. 26. The following person(s) should be contacted as Petitioner's agent regarding additional information and public hearing notifications: Name: Address: City, State, Zip Code: Telephone: Timothy D. Hernly Richard J. Deahl Barnes & Thornburg LLP 100 North Michigan, Suite 600 South Bend, IN 46601 574 -233 -1 171 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 Owners(s): LOCK JOINT TUBE, LLC (Signed / (Typed or printed name and capacity of signor if signed by an agent or representative of the owner) Dated: March.-2-C, 2012 Rl Office MAR ?Q1Z CITY CLERK, SOUTH SEND ), IN I +EXHIBIT A LEGAL DESCRIPTION OF REAL PROPERTY A tract of land in the City of South Bend, County of St. Joseph, and State of Indiana, situated in the Northwest Quarter of Section 14, and the Northeast Quarter of Section 15, Township 37 North, Range Two (2) East, bounded by the following described line: Beginning at a point in the West line of Walnut Street, 1239.70 feet South of the South line of Sample Street, which point is 587.95 feet South of the South line of the Sanders and Egbert Tract, as conveyed by deeds recorded in Deed Record 118, page 428, and Deed Record 121, page 320; thence on an assumed bearing of South 00 °00'49" East along said West line of Walnut Street 479.91 feet; thence South 89'54'12" West, 725.03 feet; thence South 61'54'12" West, 42.91 feet; thence South 89 °23'32" West, 437.13 feet; thence North 00 °00'49" West parallel with said West line of Walnut Street, 504.26 feet; thence North 89 °55'05" East, 1200 feet to the place of beginning. Filed i MAR &Rs}iati4.A5 r E CITY CL ��g�u 'a e. $EN®, IN EXHIBIT B MAP OF PROPERTY (PLEASE SEE ATTACHED) Filed in CIO a . Y MAC JOHN yr i' C9TY CLERK, 60"J ArcIMS Viewer ! MEW Novi] MINE Legend S t. Joseph Parcels co Unly ❑ ElkharMficorpotated lilies ❑St. Jose p fig Incorporated 059S 2006 AerialPholography 1w Infonnation shown on this map is not warranted for accuracy or merchantability. Reproduction of this material is not possible ith out the written permission of the Michiana Area Council of Governments. I ElkharMCM Townships ❑ ElkharWiDounly Boundary ❑St. Josapb#County Boundanj 2006 AerialPholography 1w Infonnation shown on this map is not warranted for accuracy or merchantability. Reproduction of this material is not possible ith out the written permission of the Michiana Area Council of Governments. I