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HomeMy WebLinkAbout08-15-11 Community & Economic Development Committee � COMMUNITY AND ECONOMIC DEVELOPMENT Auqust 15, 2011 Community and Economic Development Committee Members Present: Chairperson Tim Rouse; Henry Davis; Karen White; Citizen Member Murray Miller Other Councilmember's Present: Oliver Davis; Derek Dieter; Tom LaFountain Other's Present: Don Inks; Marti Wolfson; Linda Wolfson; Kevin Allen (SBT); Glenda Rae Hernandez; Rita Kopala . Agenda: Update—A. J.Wright Councilmember Timothy Rouse, Chairperson, Community and Economic Development Committee opened the hearing promptly at 4:30 noting there was a quorum present. Having stated the purpose for the hearing, Chairperson Rouse called upon Don Inks, Director Economic Development, to provide an update regarding the post-closing status of A. J.Wright regarding financial benefits owed to and due from the company. Don recounted the terms of the abatement agreement entered into by A. J.Wright and the city in 2002. He noted that$16,545 were left to be claimed by the company had they stayed. Provisions in the agreement allowed the city a$2500 annual penalty for job targets missed as well as more significantly an assessment of$460 per job per year below the promised number of jobs. A.J. Wright has paid the city$410,000 so far for missed targefs. Over the next 9 years of the agreement full term A. J. Wright will owe the city$3.2 million. Given the money already paid, the$3.2 owed, and the $500,000 annual property taxes they will continue to pay, Don suggested not pursuing abatements already claimed by the company. Councilmember White asked how the job formula was created. Inks said 857 jobs were originally promised. A 10% default was allowed or approximately 86 jobs. The balance calculated at $460.00 per job as stated in the original agreement comes to$354,000 per year. Jobs were to be counted each November with the bill due each February. Tim Rouse asked where the money goes. Inks said while the company was operating the money went to the Airport TIF. Future payments may go anywhere, the decision to be made by the Redevelopment Commission. Councilmember Rouse asked if the Postal Service was a potential occupant of the empty building; but Inks could not confirm that. Councilmember Rouse asked Inks for a copy of the original agreement between the City and A.J. Wright. Inks noted the goal of economic development efforts is to create jobs and tax base, not collect penalties. He added that the$500,000 annual A.J.Wright tax bill goes to the Airport TIF. The company is current on all taxes and penalties. Councilmember Rouse then allowed Marti Wolfson to address the Council. Marti suggested that due to the contract being broken by the company they should forfeit abatement benefits. Three reasons for this are: 1. The$16K isn't much of a hire to attract new investors to whom the benefit would accrue. 2. The new abatement ordinance allows the forfeiture even though the original did not. 3. State law speaks to substantial compliance with the statement of benefits, thus allowing the Council to pursue forfeiture. Councilmember Rouse urged a look at the"bigger picture" noting the cooperative payments already paid or agreed to by A. J.Wright. Councilmember Oliver Davis said allowances for local consequences should not be made just because the decision was made by a remote"home office." Councilmember Rouse cautioned a perception South Bend be viewed as anti-business. Councilmember Henry Davis asked just what"business friendly" meant. Counciimember Rouse said that was a discussion for another time. There being no further business to come before the committee at this time, Chairperson Rouse adjourned the meeting at 5:00 p.m. Respectfully Submitted, � � �/ ,� % Timothy A. Rouse C airperson Community a nomic Development Committee