Designating Tax Abatement - Vacant Land Adjacent to 3305 Lathrop Drive - Gateway Plaza Real Estate, LLC

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(10/22/2008) Janice Talboom - Re: Tax Abatement Petition From Gateway Plaza Real Estate, Inc. Page 5 »> Robert Mathia 10/14/08 2:00 PM »> Hello Derek & Rev. Rouse, I am requesting your permission to submit the subject tax abatement petition to the Common Council as a Special Exception. BACKGROUND: The petitioner is proposing to build a 31,819 Sq. ft. building that can be demised to 7 units of approximately 4,320 sq. ft. each. The project's estimated cost is $1,480,180. This will be the fourth building constructed as part of Gateway Plaza which is located on the northwest corner of Bendix and Lathrop and which is in the Airport Economic Development Area. The petitioner's description of the proposed building is confusing. In one section of the petition it is described as an "industrial flex building" In another section it is called a "multi-tenant building with up to 7 units." Finally, in a third section it is stated that the "Tenants in the building are likely to be primarily warehouse users, but with some need for front-space office or showroom (similar to existing Gateway tenants). All suites will have grade-level overhead door access, with at least 4 slated for dock access as well." I made a windshield inspection of the three current buildings in Gateway Plaza and found the following tenants there: Wood Temporary Staffing; Memorial Center for Occupational Health; Paul Davis Restoration; GCS EcoLab; Now Courier; Cardinal Health Nuclear Pharmacy Services; Harry Alter Carrier, HVAC Parts and Service; and Trane HVAC Parts & Service. In a meeting on September 9, 2008, the petitioner stated that Cardinal Health, Carrier HVAC and Trane HVAC were all engaged in the wholesale trade. Further, Wood Staffing, Memorial Occupational Health and Now Courier provide services to surrounding businesses. Based on the mix of tenants I found, and the petitioner's description of the businesses, I concluded that the proposed abatement would best fit under the warehouse classification for tax abatement. PROBLEM: The definition for warehouse development contained in the City's ordinance on tax abatement states that it includes economic activities in major groups 421, 422 and 493 of the North American Industry Classification System -United States 2002 (NAICS). When 1 consulted that reference I found that only group 493 was listed. The description for that group did not fit the type of economic activity proposed for the new building. It was limited to storage and warehousing of goods. I researched earlier versions of the NAICS and found all three groups listed in the 1997 version. The descriptions for groups 421 and 422 in that version cover wholesale trade activities for both durable and nondurable goods. They cover many of the kinds of activities occurring in the original three buildings at Gateway Plaza and what is planned for the new building. It appears that during a prior revision of the City's ordinance on tax abatement the reference to the NAICS year of publication was updated but the changes in the group numbering system were not made. The Council clearly intended to continue including the activities contained in groups 421 and 422 because the groups continue to be listed in the ordinance. In the 2002 version of the NAICS the activities included in group 421 were moved into groups 423 and 425 and the activities listed in group 422 were moved to groups 424 and 425. DISCUSSION: The proposed project would benefit the City. The three existing Gateway buildings are full. There is additional demand for the type of building proposed. The project as currently proposed would qualify for up to a five year abatement. If the property is left vacant over the five year term the City would collect a total of only $2,306 in property taxes. If the project is constructed, the City would collect an additional $108,213 in taxes over the five year tax abatement term for a total of $110,213. In addition, because the site is located in an area of the City that is already developed, it will not create a major additional burden on the police and fire departments. However, because of the confusion generated by the changes in the NAICS group numbering system I am suggesting that we consider the petition as a Special Exception. Please advise whether or not you are willing to consider the petition for a Special Exception. Thanks! Bob Mathia Assistant Director,