The URL can be used to link to this page

Home My WebLink About12-13-06 Community & Economic DevelopmentSouth Bend City Council Community & Economic Development Committee CF-1 Compliance Hearings Wednesday, December 13, 2006 Councilmember's attending: Roland Kelly, Chairperson, Community & Economic Development Committee Ann Puzzello, Vice-Chairperson Buddy Kirsits, Member Ervin Kuspa, Member David Varner, Soh District Councilamember Derek Dieter, 6`h District Cauncilmember Tim Rouse, Council President Others Present: John Voorde, City Clerk Martin Wolfson, Citizen Member, Community & Economic Development Committee As required by state statute the City Council gave proper notice and held hearing to determine whether the recipient of tax abatement benefits previously granted has "made reasonable efforts to substantially comply with the statement of benefits and whether any failure to comply was caused by factors beyond the control of the property owner." In all twelve companies were notified that the City's Community & Economic Development Department had determined they were not in substantial compliance with the CF-1, statement of benefits, form they are required to file annually. Eleven of the twelve companies notified attended the compliance hearing to explain and defend their efforts to comply. One company unable to attend sent a letter defending their efforts. These minutes are a brief summary of each company's presentation. In addition a f le in the Clerk's office contains a record of notice, reasons for non-compliance, a copy of the CF-1 form the company filed, and any written rationale the company may have provided the Community & Economic Development Committee to ponder. It should be noted the Community and Economic Development Committee made no "final determination" recommendations to full Council. This was to be offered at a later meeting of the Community & Economic Development Committee after subsequent review. In order of appearance the following companies appeared for their "day in court." 1. Curtis Products - Represented by Jeff McGowan CPA of Kruggel & Lawton, it was explained, the primary reason Curtis Products failed to meet salary and employment projections was the loss of a major customer. John Deere, a $6 million annual customer, took its business overseas. Curtis efforts to find new business have resulted in recent employment and payroll gains, boding well far the future. McGowan promised a revised CF-1 reflecting these gains. 2. Bomar Plastics - Bomar maintained that given the loss of jobs in the manufacturing sector in the region, especially Indiana, their efforts to "weather the economic storm" should more than constitute reasonable effort to substantially comply. In fact, machinery acquired as a result of abatement has allowed Bomar to capture new customers. Bamar's supporting data paints and optimistic future. General Sheet Metal - General Sheet Metal supplied testimony and supporting material that allowed showed that they were only marginally out of compliance with payroll and number of employee projections. In fact, all 113 local employees were retained and recent new hires exceeded expectations. 4. Schaefer Gear - Schaefer has endured and their efforts to prevail and grow. Significant setbacks were the loss of Dana and Cummins as major customers who took their business off- shore. In spite of the depressed, economy and the diff culty in hiring qualified machinists, Schaefer has made efforts to manage overtime and seek out niche markets. They feel they are doing all they can to comply. 5. Bowne - Bowne defended a lack of compliance for both personal and real property tax abatement. Bowne was represented by Jim Hahn, Vice-President of operations, Christine Urbanski, Human Resources, and Rich Deahl, Attorney. Bowne originally projected retaining 119 employees and hiring 19 more. Actually 81 were retained and 5 were hired. Bowne supplied a 10 point defense of their efforts arguing any short falls were due to external factors beyond their control. They also noted their efforts to remain a positive force in the overall community. 6. AJW (A.J. Wright} A. J. Wright was represented by Bab Arnold, V.P. Operations and Phil Faccenda, Jr., Attorney 2 A. J. Wright originally planned to build a 500,000 sq. ft. warehouse. They built 543,000 sq. ft. The projected cost of $26,500,000 was actually $14,000,000. The projected S74 jobs with salary of $37.5 million was actually 433 new jobs with $7.1 million in salaries. A three page press release details the reasons for the shortfall. Despite efforts locally, corporate decisions in Massachusetts were blamed for the outcome. Marty Wolfson asked why employee projections were near SO%, salaries were only 20%. Actual wages average $7.00 hr. Starting wages are $6.25 hr. rising to $8.00 hr. after 3 years. The press release did not offer reason for optimism in the short term. 7. Value Production Inc. - Value Production said their abatement would result in an investment of $250,000. It was actually $425,085. They had hoped to retain 20 employees and hire 4 new. They actually employ 18. Current machinists are typically working 48 hrs. a week. Difficulty in finding CNC qualified machinists was the reason offered far this. 8. Federal Mogul Ed Fain the Plant Manager represented Federal Mogul. The company has received one real property and four personal property abatements. In each case Federal Mogul was in compliance as far as meeting total dollar investment; but fell short of projectians for employment. While 548 jobs were hoped far, 514 are actually employed. Mr. Fain through testimony and handouts succinctly described the highly competitive, ever changing automotive component business. He remains optimistic. 9. Lock Joint Tube (LJT) - LJT was represented by Bob Strzelecki, Controller and Tim Hernly, Attorney. LJT -has three abatements under review, 2 real property and one personal property. In each case Community and Economic Developrent reports lack of compliance for not meeting investment and employment forecasts. In their defense Community and Economic Development as well as LJT representatives cited the disruption of business not only due to external economic factors; but also changes in location of production facilities. They admitted to overly optimistic forecasts. 10. Total Enterprises LTD. Lance Long, Vice-President and Tom Walz, Attorney represented the fact that Total Enterprises was actually in compliance or very near to projections made for their S year personal property abatement. In fact while projecting an investment of approximately a half million the actual was nearly 3/4 million. Furthermore, current employment is claimed to be 58 or 20 more than projected. 3 11. Steel Warehouse Ted Lerman, owner and CFO represented the company. Under review by the Council are 3 separate 5-year personal property abatements. In each case the dollar value of the investment was in compliance. At issue are employment levels. For one abatement the projected new hires was projected to be 10; but is actually 3. In another the projected 7; but turned out to be 11. Overall, employment appears to be about 450. 12. Cequent Consumer Products - Cequent was unable to attend a review session, but at the request of Roland Kelly a written explanation was sent and is on file. The letter was sent by Ron Dill, Distribution Center Manager. Under review is asix-year real property abatement granted in April of'04 for the rehab of a distribution facility. Community & Economic Development claimed non-compliance because the estimated investment was projected to be $860,000 and turned out to be $520,000. Employment was supposed to be 83 but is actually 55. In response, Cequent claims over a million dollar investment since '04. Regarding employment, Cequent re-structuring transferred 25 positions to Goshen, but added 15 positions from a Pennsylvania facility. Counting temporary employees total payroll exceeded expectations by over half a million dollars. There being no further business to come before the Committee, Council Member Kelly adjourned the meeting. Respectfully submitted, ~~ _r ~ QzP Councilmember Roland Kelly, Chairperson Community and Economic Development Committee JV:mbw 4