02-24-14 Council Agenda & Packet

Home Browse Search

South Bend Common Council RE: Tax Abatement for Great Lakes Capital Development February 12, 2014 Page 2 There are three different schedules of taxes abated attached for your review. The first schedule shows the taxes abated for a 10 year abatement based on our normal everyday calculations. Under this scenario, taxes abated would be $1,086,677 and net tax paid would be $1,943,305. The petitioner has requested that we offer the business a more aggressive schedule of taxes abated. Much of the investment into the building will be "Costs to Cure" as the building has been vacant for approximately twenty years. The renovation costs are extensive and without a more aggressive schedule of taxes abated, the project does not cash flow in the first few years. The developer needs a more aggressive tax abatement than usual in order to complete this project. This scenario is shown on the attachment called "Petitioner's Requested Schedule. "Taxes abated would be $1,993,298 and net tax paid would be $1,036,684. The third schedule called "Best Estimate" shows the Department of Community Investment's best estimate of taxes abated for this project. Because so much of the rehabilitation costs will be "Costs to Cure ", the department estimates that the new assessed value of the building will only be $5,340,000 despite a $9.5 million investment. This schedule is based on the $5.3 million assessed value along with more aggressive rates for taxes abated and shows that taxes abated will be $1,241,636 and net tax paid will be $696,910. EMPLOYMENT IMPACT Per the petition, it is estimated that the project will create nine (9) new, permanent full -time positions and zero (0) part-time positions with an annual payroll of $315,000. The project will not maintain anyjobs. ABATEMENT QUALIFICATION 1. A review of the tax abatements previously granted finds that the Petitioner, Great Lakes Capital Development has not been granted any previous abatements. 2. The Building Commissioner has reviewed the petition and finds the property to be properly zoned for the proposed project. 3. The property is located in the Central Business District. 4. A review of the Tax Abatement_ Ordinance No. 9394 -03 finds that the petitioner meets the qualifications for a (10) ten -year real property tax abatement under section 2 -80 Mixed Use Developments in the Central Business District.