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HomeMy WebLinkAbout08-28-17 Community Investment �pUT11 W PEACE 1865 OFFICE OF THE CITY CLERK KAREEMAH FOWLER,CITY CLERK COMMUNITY INVESTMENT AUGUST 28, 2017 4:45 P.M. Committee Members Present: Regina Williams-Preston, Oliver Davis, Randy Kelly, Paul Tipps (citizen member) Committee Members Absent: Gavin Ferlic Other Council Present: Tim Scott,Jo M. Broden, John Voorde, Dr. David Varner, Karen White Other Council Absent: None Others Present: Kareemah Fowler, Graham Sparks, Bob Palmer Presenters: James Mueller, Dan Buckenmeyer, Tom Walz, Dane Vida, Mike Lehman, Kareemah Fowler, Regina Williams- Preston, Angelina Billo Agenda: Bill No. 17-44-Non-Compliance Waiver for CBK Land Developments Bill No. 17-45-Non-Compliance Waiver for Vida Realty Bill No. 17-46-Non-Compliance Waiver for Chase Plastics Bill No. 17-47-Non-Compliance Waiver for Manufacturing Technology, Inc. Bill No. 48-17- Tax Abatement Amendment Committee Vice Chair Regina Williams-Preston called to order the Community Investment Committee meeting at 4:45 p.m. She introduced members of the Committee. For purposes of public hearing, Committeemember Randy Kelly made a motion to have Bill No. 17-44, 17-45, 17-46, and 17-47 discussed jointly. Committeemember Oliver Davis seconded this motion which carried unanimously by a voice vote of four(4) ayes. Committee Chair White then proceeded to give the floor to the presenters. Bill No. 17-44-Non-Compliance Waiver for CBK Land Developments Bill No. 17-45-Non-Compliance Waiver for Vida Realty Bill No. 17-46-Non-Compliance Waiver for Chase Plastics Bill No. 17-47-Non-Compliance Waiver for Manufacturing Technology, Inc. 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 JOSEPH MOLNAR CHIEF DEPUTY/DIRECTOR OF DEPUTY/DIRECTOR OF POLICY ORDINANCE VIOLATION CLERK OPERATIONS James Mueller, Executive Director of Community Investment with offices on the 14th floor of the County-City Building, stated, As you all may recall, about a month ago the Council considered and approved a Non-Compliance Waiver for the Hoffinan Hotel. They recognized their error and got ahead of us. In fact, we were hoping to group them all together and do them all at one (1) time. These are the remaining Non-Compliance Waivers for this year. What that means is they are fully on track to meet what was stated in their tax abatement application with respect to jobs and investment, but what they didn't do was file their Form 322/RE. The important things for the Community are happening, it is just the lack of the form that makes them out of compliance. I know it is the obligation of the recipient of the abatement to stay in compliance but the Department of Community Investment also bears some responsibility in sending reminders and following up with the recipients. Dan Buckenmeyer, Director of Business Development with offices on the 14th floor of the County-City Building, stated, There are representatives from each organization to answer any specific questions you may have. CBK Land Development Company has a real property tax abatement on the land and the land now has a 125,000 square foot distribution facility for Chase Plastics. Chase Plastics has already surpassed their job and investment goals for both the abatements. Manufacturing Technology Inc. is a high-friction welding technology company. They work with SpaceX,NASA and other big companies. Vida Realty is also growing and investing in South Bend, specifically the Western Avenue Corridor. All of these have just a single form they missed. Councilmember Tim Scott stated, My company I work for does buy products from Chase Plastics but,per consulting with our Attorney, there is no conflict of interest in me taking action on this matter. I wanted to make that clear. But in my time on the Council,Non-Compliance waviers have become a trend. Is there something missing in the process? Mr. Buckenmeyer replied, In our Department,there has been a tremendous amount of turnover. We recognize this is not something to make habit of. Committeemember Paul Tipps stated, I can't support any of these four(4) waivers. They need to be good stewards of taxpayer money. I think awarding these abatements comes with responsibility. We are seeing too much negligence and the rules are clearly enumerated. Councilmember John Voorde asked for representatives from the respective companies to give their explanation as to why this happened. Tom Walz, 509 W. Washington Street, stated, I represent Vida Realty. They made recent investments into a new business at a new location. Their business is located on the corner of Olive Street and Western Avenue. I agree that by getting taxpayer money there is a prudence in making sure the dollars are being invested in the right place. This is a new business attempting to grow a food distribution facility. They have put a lot of time and investment into this location which is a blighted area. Although I certainly recognize the responsibility to file these forms on a timely basis, I believe there are cases where it is justified to have exceptions. I would like to thank the Department of Community Investment in helping us through this process. This clerical error got lost in the process of trying to make our business grow. 2 Dane Vida, 2115 W. Western Avenue, stated, We thought we had done what we needed to do back in March of 2014. Those forms were filed and we thought we were good. We did not know we had extra paperwork to fill out. It became more and more complicated and we would have filled out the forms if we knew we had to do that. With what we've gone through the past three (3)years, I wish we never would have filed for an abatement. The cost has been ridiculous. Mike Lehman, representing MTI located at 1702 W. Washington Street, stated, We did file,but I filed to the email on the form but that email wasn't right. A year later is when we started the conversation with Community Investment. Councilmember Karen White stated, We appreciate the development and investment in South Bend and we also know there has been a lot of turnover in Community Investment. I would like Community Investment to come back at a later date and outline that process for us. Committeemember Kelly stated, They are meeting the most crucial goals with jobs and investment, and that is important. Committee Vice Chair Williams-Preston asked, What does the follow-up process look like? Mr. Mueller replied, We submit the annual tax abatement report in June. As part of preparing that report, we recognize there were companies that thought they filed. We are tracking all companies and following up with them. Councilmember Dr. David Varner stated, Over the years we have found some administrative issues. With these investments, if there are small administrative errors, we need to be willing to work with them. Councilmember Jo M. Broden asked, Do we know where the error lies? Whether it is in the business or in the Department, the primary burden lies with the business. What would we lose if we tabled these in order to find the process and support going forward? I don't want a business to be in this position again going forward. The ball is getting fumbled somewhere, somehow. I would like these individuals that have been involved in the process to help inform and maybe come back before the Council to give specifics. Some of these are multiple years of Non- Compliance so there has to be some sort of noticing process. Kareemah Fowler, City Clerk with offices on the 4th floor of the County-City Building, stated, These come through the Clerk's Office as well. We met with Councilmember Ferlic and Angelina to go through the list of abatements. We found that at one (1)time, notices were contracted out to a company to do it and it was then brought back in-house. We thought that was a bit of the problem, but since bringing it back in-house,Alkeyna has met with the Auditor's office and Angelina. I don't know where we are at now but this is a result of our meetings. Right now we are on the right track and it is straightened out. If you look at these numbers you will notice they are consecutive. Before Scott Ford left, it was contracted out to a company to handle it. They were sending the forms directly to the Auditor's Office and completely bypassing the Clerk's Office so we didn't have the same information.Now we are back on track and we all 3 have the same exact information. Going forward, Community Investment is going to send out two (2) separate notices to two (2) individuals about the company's filings to let them know when those filings are statutorily due. There was some miscommunication in the past but we are on the right track. Mr. Buckenmeyer stated, The impact of tabling this would be seen on the cash-flows and the tax bills of these growing companies. Mr. Mueller stated, We want these individuals growing their businesses and we don't want them worrying about technicalities. Committeemember Oliver Davis stated, I think there are two (2) issues here. Each company has presented a reason for their mistake and I feel comfortable moving forward today. However, I would like on our next agenda a summary and a detailed process. We need more outreach from the developers to the neighbors. Councilmember Tim Scott stated, Let's not interrupt someone paying their bills. They came before us with their corrections and let's move on. Councilmember Voorde asked, How long would it take to put your process on paper? Mr. Mueller stated, By the next Council meeting, we should have that ready. Committee Vice Chair Williams-Preston opened the floor to members of the public wishing to speak in favor of or in opposition to the legislation. There were none. She then turned the floor back to the Committee for further comment or main motion. Committeemember Kelly made a motion to send Bill No. 17-44, 17-45, 17-46, and 17-47 to the full Council with favorable recommendations. This motion was seconded by Committeemember Davis which carried by a voice vote of three (3) ayes and one (1)nay (Committeemember Tipps). Bill No. 48-17- Tax Abatement Amendment Regina Williams-Preston, 838 N. Elmer Street, stated, This proposed change to the Ordinance asks to add a requirement for applicants to pay all company employees a minimum wage at least as high as the minimum wage offered by the City of South Bend. As Councilmembers, it is our duty to make sure people have the benefit of a good wage. Typically we see an average wage on the information of the tax abatement application. This makes it explicit. The Department of Community Investment has put things into place to review abatements to make sure employers will comply with this. We know most businesses that come before us for tax abatements already do pay their employees at least at the City minimum wage, but this lays the groundwork for the future. This will only take effect moving forward and we will not retroactively require businesses that have already been granted an abatement to do this. This also looks at employers funded by TIF dollars. 4 Committeemember Tipps asked, Who is going to administer and monitor compliance and how will they do that? Who will audit their annual pay roll? Mr. Mueller replied, We have been thinking a lot about the operations and compliance and we have a draft amendment that we would like Council to consider. The amendment includes pieces that Councilmember Williams-Preston talked about with regard to TIF workers. We were asking a later effective start date. We also aren't aware of anyone under the $10.10 mark. We will be making it a part of the contractual agreement between the applicant and the Common Council. The amendment will also clarify where this will be reported. Councilmember Scott stated, If this goes through the ultimate impact is on the decision of the company. There is a lot to this. What are we doing on audits currently? Angelina Billo, Business Development Manager for the Department of Community Investment with offices on the 14th floor of the County-City Building, stated, We usually require CF-1 Forms on an annual basis. These forms provide us information on the actual achievements. When companies come to us for a tax abatement,they give us estimates. CF-1 Forms give us the actual information. Councilmember Dr. Varner asked, Was the amendment offered today to be acted upon? Mr. Mueller replied, With the passing of this, we were hoping to add some of these things. Councilmember Dr. Varner followed up, If that is the case, this should be continued to a later date. If there is a large amendment and we haven't seen it yet, we can continue the discussion. Councilmember Broden stated, I am in support of continuing this. Committeemember Davis made a motion to continue Bill No. 48-17. Committeemember Kelly seconded this motion which carried unanimously by a voice vote of four(4) ayes. With no other business, Committee Vice Chair Williams-Preston adjourned the Community Investment Committee meeting at 5:34 p.m. Respectfully Submitted, Regina liams-Preston, Vice Chairperson 5