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HomeMy WebLinkAbout08-22-16 Community InvestmentOFFICE OF THE CITY CLERK KAREEMAH FOWLER, CITY CLERK COMMUNITY INVESTMENT AUGUST 22, 2016 4:25 P.M. Committee Members Present: Gavin Ferlic, Regina Williams- Preston, Oliver Davis, Randy Kelly, Will Smith (Citizen Member), Paul Tipps (Citizen Member) Other Council Present: Jo M. Broden, Karen White, Dr. David Varner, Tim Scott, John Voorde Others Present: Kareemah Fowler, Joseph Molnar, Kathleen Cekanski- Farrand, Adriana Rodriguez Agenda: Bill No. 16 -65 — Designating Personal Property Tax Abatement for 3B Tech, Inc. TIF Briefing, Brian Pawlowski — Director Dept. of Community Investment Committee Chair Gavin Ferlic called the Community Investment Committee to order with two (2) items on the agenda. Bill No. 16 -65 — Designating Personal Property Tax Abatement for 3B Tech, Inc. Sarah Heintzelman, Community Investment with offices on the 14u' Floor of the County -City Building, served as the presenter of this bill. This is a personal property tax abatement for 3B Tech Inc. They are looking to invest $640,000 in new equipment which will generate $54,904 in new taxes of which $25,200 will be abated. This project looks to create one - hundred (100) new jobs within the five (5) year abatement process with an estimated annual payroll of over $3.5 million. Mike Johnson, Director of Operations 3B Tech 3431 William Richardson Dr., served as the petitioner of this bill. We are a distribution office for a variety of computer and computer related parts. We also provide repair services, purchasing services, and other tech support. We have been rapidly expanding and simply ran out of space in our existing building so we are starting to look at other opportunities to expand in South Bend. We found a building in the west side of South Bend that is a great location for us and a good opportunity to support our growth. That building is the vacant Amicare building. The project is going to support putting in ramping to increase 455 County-City Building • 227 W. Jefferson Boulevard • South Bend, Indiana 46601 Phone 574- 235 -9221 • Fax 574 - 235 -9173 • TDD 574- 235 -5567 • www.SouthBendIN.gov JENNIFER M. COFFMAN ALKEYNA M. ALDRIDGE EMILY SEXTON CHIEF DEPUTY/ CHIEF OF STAFF DEPUTY/ DIRECTOR OF POLICY ORDINANCE VIOLATION CLERK output for the company. At the same time, by moving to the new location and maintaining our existing location we will be able to start looking at some other growth applications for future customer care support. Paul Tipps asked what the time frame was for the one - hundred (100) jobs being created. Mr. Johnson responded over the next five (5) years. During the first year of the project there will probably be an increase of twenty (20) to thirty (3 0) jobs. Will Smith stated he loves 3B Tech and stated he also had a concern about the number of employees the abatement states it will generate. He asked Mr. Johnson how many employees they currently have. Mr. Johnson responded they have just over forty (40) employees right now on their payroll. They are moving to a warehouse with just 30,000 square feet to the new location that has 80,000 square feet. Since we will continue occupying the old warehouse as well that gives us a total of 110,000 square feet. That gives us the opportunity to grow as our presence increases. We will need more employees from customer service representatives to answer questions from customers as well as more technicians for our repair services. We have already expanded our accounting support as well. Mr. Smith stated he appreciates Mr. Johnson's passion and commitment to South Bend. Councilmember Dr. David Varner stated over the years similar questions have been raised about the amount of jobs the abatements will generate and does it meet the number given by Community Investment. He stated he has always believed that when a company is willing to invest so much money, like the $3 million 3B Tech has committed to investing, he is much more comfortable giving the City's support. There was one (1) incident about ten (10) years ago where a company bought a million dollars' worth of machinery in anticipation of a product they eventually didn't get and that happens occasionally where even the best plans don't work out. Typically though a company's financial commitment is evident of their belief in their product. Committeemember Regina Williams- Preston stated South Bend has committed itself to this new diversity and inclusion plan, she asked Mr. Johnson how they look at match where we are going as a community and developing an inclusive workforce. Mr. Johnson responded they definitely value diversity in the workplace and aim to support a diverse workplace inside 3B Tech. They look for candidates from many different backgrounds and continue to strive for ways to match the City's effort to increase inclusion. People from different backgrounds bring new perspectives and ideas to the company. Committeemember Williams- Preston asked if he had any numbers currently about the diversity of their staff or could he get some for tonight. Ms. Heintzelman stated the numbers should be in the abatement on the third page. N No one from the public spoke either in favor of or in opposition to the bill. Committeemember Will Smith made a motion to send Bill 16 -65 to the full Council with a favorable recommendation. Committeemember Randy Kelly seconded the motion which carried by a voice vote of six (6) ayes. TIF Briefing, Brian Pawlowski — Acting Director Dept. of Community Investment Mr. Pawlowski stated we can look fairly close to home for other examples of Cities utilizing their different TIF Districts. Mishawaka tends to be rigid in its use of TIF for infrastructure and other types of uses but occasionally spends on other things for substantial public good which can be seen in some of their park developments. We have looked at that as well which is evident in the Parks Master Plan with the example of the Howard Park Ice Rink. We have also seen communities especially those circling Indianapolis that have utilized TIF very aggressively for recruitment, expansion, retention, and basically a large and diverse variety of uses. South Bend, especially since Mayor Pete became Mayor, has gone in many of those different directions simultaneously. We have recognized some of those bigger fish in terms of large companies and job creation that we have gone after pretty aggressively with whatever we had at our disposal. Mr. Pawlowski stated he believes the City has done a good job seeing the pulse of projects in the area and how sustainable they are going to be. If you look at the average amount of investment from a City perspective, which is a combination of abatements and TIF, the City has really hued close to a twenty percent (20 %) or less investment in the project. To the extent that we are higher in some instances they are probably very unique projects for whatever reasons. Looking at TIF going forward in light of the economic momentum we currently have discussed ways to utilize TIF in a more narrow fashion such as infrastructure approach with keeping open the possibility of exceptions when those important opportunities arise. It is really all about the individual project because no two (2) projects are the same and no two (2) projects have the same needs. Currently, we are looking to be more in the ten percent (10 %) to fifteen percent (15 %) average of investment in a project. If we can start looking at projects with our given momentum we may be able to push that number lower. During the Department of Community Investment budget presentation on August 29th, Mr. Pawlowski stated they will have some final decisions to give to the Council for their feedback. The City, as almost all other municipalities in Indiana, is facing a strain on the General Fund and to the extent we have public use opportunities TIF could fill we are looking into that to ease the burden on the General Fund. We have a capacity within certain TIFs to take some public use on from the General Fund while still having the ability to fund certain projects in the future. Councilmember Karen White asked Mr. Pawlowski as we move towards 2019 and 2020 where the revenue streams will be very limited, how can we utilize TIF differently than what we currently do which is focused on projects and infrastructure such as maybe even supporting public safety like some communities have done. 3 Mr. Pawlowski stated taking on the debt service is certainly one (1) aspect of the equation as is equipment purchasing as well. Going back to public use, one (1) of the things we are looking at presenting during the budget meeting is the ability to take some of the pressure off of other departments such as Public Works and others who have a long list of projects that need to get done but have limited budgets. That is something that we are going to look at as well as projects like the Blue Way which just received Regional Cities funding. Committeemember Oliver Davis asked if there were any legal problems for the cities that did these more broad funding plans with their TIF money when they were audited. Committee Chair Ferlic stated he doesn't think anyone has challenged legally the use of TIF in these more broad plans. Mr. Pawlowski stated things come into question when it is really seen if it is for public use or not. Councilmember Karen White stated it is her opinion that the Council and Administration have had a very conservative and narrow viewpoint on how TIF can be used. Mr. Pawlowski asked Ms. White if she would like to see a more expansionary interpretation of TIF dollars. Councilmember White responded as a City knowing what we are facing coming in 2019 we need to be flexible to address those challenges while still staying within the intent of the statute. Committeemember Tipps asked if the Administration has any idea of the minimum amount of money they want to keep in the TIF fund for rainy day type projects. Mr. Pawlowski stated that mentality is exactly what we are looking at now. We definitely want a certainly amount of money available to respond to any unforeseen opportunities the City doesn't know about. At the same time, any money above that minimum we want to use in terms of helping other departments such as Public Works. Committeemember Davis asked when they would see some final numbers. Mr. Pawlowski stated during the budget presentation they would have those numbers and a range to keep that floor at for the various TIFs. Committeemember Davis stated getting close to that floor is something we have never really done but I think we are interested in doing. With no further business before the Committee, Committee Chair Gavin Ferlic adjourned the meeting at 4:45 p.m. Respectfully Submitted, Gavin Ferlic, Chairperson 11