01-28-19 Community Investment - Laserfiche WebLink

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CITY OF SOUTH BEND OFFICE OF THE CLERK So,this is three(3)tax abatements. We have done stacks, if you will,of tax abatements in the past. Liberty Tower is an example. The reasons we did this was, one (1), we really want them to come into town and invest in the neighborhood. We also wanted to make this worthwhile. When we stack all these up, it will be just over $213,000 of phased-in benefit for them. They are making some really significant investments in a building that is otherwise crumbling infrastructure within the community. We want to assist that however we can. So, we are stacking a vacant building tax phase-in, a real property phase-in and the personal property tax phase-in. The subject property is right here(referencing a presentation which is available in the City Clerk's Office)where the curb starts. There are actually two (2) parcels there. One (1) is with the building that is about 73,000 square feet. Another small parcel totals to about eight and a half(8.5) acres. It has been vacant for quite a few years now. The purchase price is $765,000. They are going to put in at least$500,000 for renovating the building itself There are renderings that were shared with me today. Their business has to do with adding value to rolled steel and reselling that. You can see with the condition of the building, there is a lot of roofing and tuck-pointing work that needs to be done. The vegetation is out of control. You can see (referencing the presentation) the result of leaks and the need for restoration. Councilmember Jake Teshka arrived at the meeting at 4:03 p.m. Mr. Buckenmeyer continued, On the personal property side, this (referencing a slide in the presentation)just gives you a quick picture of some of the tools they will be utilizing. They will be processing and adding value to rolled or sheet steel by sheering it into different sizes or doing laser cutting. That is about $700,000 worth of personal property and capital equipment that we also want to support bringing in. The real meat of it is, right now, the current state of the property as an assessed value is about $550,000. The annual tax bill has been about $20,000 a year. With their total private investment of over $2 million and a commitment to sixteen (16) new full-time jobs with good salaries and hourly rates, over the next four(4) years, as well as retaining four(4) existing jobs, we are recommending the levels of support noted here (referencing a slide in the presentation). The phase-ins on the vacant building would be just about $105,000, on the real property they would be about $68,000 and the equipment would have about $40,000 in abated value. They will still be paying about$55,000 over that time.And,when we look at a ten(10) year window and we talk about the payback or a break even, within that ten (10) years, with a tax abatement, we will still see a larger return in terms of the tax revenue from this building than if there was no action. And keep in mind, at no action, that number is still ambitious because if there is no action on the tax abatement,there is no action on the building. That taxable value is not likely to stay in a straight line as the building will continue to develop leaks and other issues. That would lower its value. This is a win-win financially. It is a win-win for the neighborhood and we think it is great to get this building back into use. This will encourage additional development with the neighbors and, again, these renderings are some examples of what it may look like. There are a couple different concepts but they are really looking to clean up the outside as well as the inside. It will be the headquarters for their company. Councilmember John Voorde asked, Do you know if the Assessor's Office has functional obsolescence applied to the discount in assessed value due to its vacancy? And if so, when you calculate these numbers, I wonder if you're using the current one (1) which would reflect obsolescence, and it would come off EXCELLENCE j ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 TTD 574.235.5567 www.southbendin.gov 2