Loading...
HomeMy WebLinkAbout09-24-18 Community Investment r �O4SpOTH \PEACE a X x 1865 OFFICE OF THE CITY CLERK KAREEMAH FoNVLER, CITY CLERK COMMUNITY INVESTMENT SEPTEMBER 24, 2018 3:30 P.M. Committee Members Present: Gavin Ferlic, Regina Williams-Preston, Sharon L. McBride Committee Members Absent: Oliver Davis Other Council Present: Tim Scott, Jo M. Broden, John Voorde, Jake Teshka, Karen White Other Council Absent: None Others Present: Bianca Tirado, Graham Sparks, Bob Palmer, Gabriel Murei Presenters: Dan Buckenmeyer, Troy Adams Agenda: Bill No. 18-53-National Distribution Centers, LLC Designating Tax Abatement Committee Chair Gavin Ferlic called to order the Community Investment Committee meeting at 3:30 p.m. He introduced members of the Committee and proceeded to give the floor to the presenters. Bill No. 18-53-National Distribution Centers,LLC Designating Tax Abatement Dan Buckenmeyer, Director of Business Development for the Department of Community Investment with offices on the 14th floor of the County-City Building, stated, Today we are here to talk about a tax phase in for a local company that is doing some new construction and expansion. I always like to zero us in on where we are talking about, for starters, so, we are up in Portage Prairie here (referencing a slide in a presentation which is available in the City Clerk's Office). We are specifically north of Cleveland and Brick here on Dylan Drive. It is a twenty (20) acre parcel.This is a great opportunity.I always say that,but it is.We have,here,a retention opportunity to keep a company in town that, on paper, shouldn't be here. They are here, presently, but their own internal research shows they would be better off in Fort Wayne. They have one hundred and eight (108) current employees that they want to hold on to so, for those reasons, they are looking to reinvest in South Bend. We are thrilled to hear that. He continued, I would like to make a few quick points. The parcel was assessed at $23,500 this year and they are looking at buying it for nearly $1 million. They are looking at a private investment of real property of about $14 million and then we do expect another $4.1 million in personal property, machinery and equipment. Once that gets tied down, we will come back and talk about a personal property tax abatement. But again,we are talking about a north of$18 million investment in town. Presently,the property out there is generating seven hundred and five dollars INTEGRITY1 SERVICE1 ACCESSIBILITY JENNIFER M.COFFMAN' BLANCA L.Twxo JOSEPH R MOLNAR CHIEF DEPUTy/DIREGTOR OF OPERATIONS DEPT y/Dnu=oR OF Poucy ORDINANCE VIOLATION CLERK EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 1 227 W.Jefferson Blvd.I South Bend,Indiana 466011 p 574.235.92211 f 574.235.9173 1 www.southbendin.gov ®CITY OF SOUTH BEND I OFFICE OF THE CLERK ($705) a year in tax revenue. Post investment, and again these are just estimates, but we anticipate it will generate an anticipated $312,000 in tax revenue. Digging into that a little bit more for you, this is a nine(9)year phase in. Year one (1)is one hundred percent(100%) and then every two (2) years it goes to ninety percent(90%), eighty percent (80%), seventy percent (70%) and then sixty percent(60%)abated.It is a phased in property tax abatement.If this project didn't exist,we would be looking, at the end of that nine (9)years, of having collected only $6,345 in tax revenue on this parcel. With this project, we will see over$1 million in tax revenue collected in the nine (9)years of abatement. Then, again, we anticipate around$312,000 in tax revenue a year beyond that. He went on,The only great piece of news on that is that it is $14 million of private investment and there are no TIF dollars going toward this project. We will be revenue positive in year two (2). This is a really great opportunity to save one hundred and eight (108) jobs and keep a great company in town. We will come back to talk about a personal property tax abatement at some point but right now the real property tax abatement will generate about $1.5 million in taxes over the nine (9) years and will have abated about $1.7 million. Troy Adams,Director of Real Estate for NFI with offices located at 1515 Burnt Mill Road, Cherry Hill,New Jersey, stated, On behalf of NFI, we appreciate the opportunity to come and present to everyone here. We are excited. We've been in the City of South Bend for about four (4) years. After a long exhaustive search we ended up in a building off of Sample Street that was not the ideal situation for us. We distribute food out of this building. We share a wall with a company that builds RVs. Food and RV parts don't really go well together. The reason we are standing here today is that, what was a painful process for the first (1St) two (2) years, has now turned out to be extraordinarily well. That is all based on the labor that we have. About a year ago when we started to look at our needs in the upper Midwest, our transportation group did some analysis. Really, when it comes to transportation costs, the I-69 corridor south put us in a more central part of the State and allowed us to get north, south, east and west better than South Bend did. Despite the transportation costs being significantly less to do that, when we looked at the one hundred (100) plus people we currently employ here, about half of those are warehouse personnel and the other half are truck drivers. In an economy that is less than three percent (3%) unemployment, we thought it would be crazy to pick up and move. To make that math work, we need to build a good building that is cost effective and that is why we are here today. He went on, With that little intro, let me give you a quick summary of NFI the company. It is privately held and has been owned by the same family since it started in 1932. It is a great story. It started out with one (1) truck in Vineland,New Jersey. Most people may know Vineland, New Jersey to be home to Progresso Soup and a lot of other foods. We have always been in the food business. It started out with one (1) truck and the current generation of ownership, it was their grandfather's truck. He started the business. The company now does global logistics and they employ over 10,000 people across the US and Canada.We occupied and operate about 47.5 million square feet of space with 4,000 trucks and 9,000 trailers. To zero in on our South Bend operation, in the lower left hand corner (referencing a slide in a presentation which is available in the City Clerk's Office) is where our building currently is on the corner of Sample and Olive Street. We are at about 156,000 square feet there. Mr. Buckenmeyer interjected, They are co-located with Lippert,just so we are all aware. EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 1 227 W.Jefferson Bvld I South Bend,Indiana 466011 p 574.235.9221 If 574.235.91731 TM 574.235.5567 I www.southbendin.gov 2 T t*CITY OF SOUTH BEND I OFFICE OF THE CLERK Mr. Adams continued, We are proposing to move, I think it is about seven(7)miles or so,just due north. We are going through a lot of analysis and engineering work as we speak so this hearing is timely for us. We are really looking to start checking off some of these boxes about the site before the winter sets in. It is a very aggressive construction schedule. We don't want shovels trying to break through frozen ground in the middle of winter. We are looking to work with the City and move into the new building in about twelve (12) months. This (referencing a slide of the presentation) is a concept elevation we had drawn. Of that 47.5 million square feet, we own about 10 million square feet across the country. We have project managers that we will hire locally. We are interviewing three (3)different local general contractors. We will manage the project but all of the construction work and the construction employment will be generated by the general contractor and by their subs. Here (referencing a slide of the presentation) is our site plan. This is a much more effective and efficient building compared to what we currently operate out of. There is a cross-dock and there will be enough parking to park the trucks and park all of our employee's cars. All one hundred and eight(10 8)jobs will be situated at this facility. He went on,The parcel we've targeted on Dylan Drive is about twenty(20)acres.We're proposing to build 232,000 square feet in twelve (12) months of construction as I indicated earlier. We will look to start in November 2018 and be done by October 2019. We expect construction costs at$14 million with machinery and equipment being just over$4 million for a total capital investment of $18 million. We are excited about the project. This is a huge opportunity for us. It satisfies a need to continue doing good things. We run this operation in several other cities across the US. To the labor side of this, this is one (1) of our better functioning operations. That is directly contributed to either the folks behind the wheel of the trucks or in the warehouse. We are very pleased and that is the sole reason we are looking to stay here in South Bend. I appreciate everyone's time and I'm here to answer any questions. Committeemember Regina Williams-Preston asked,If you were to not get this tax abatement,how would that impact you? Would you still consider staying here in South Bend? Mr. Adams replied, We need this tax abatement to make this project work. We would strongly reconsider and have to go back to step one (1) and start the search again. Committeemember Williams-Preston followed up, So this is about helping to retain the good jobs we have with this excellent work force? Mr. Adams replied, Absolutely. Committeemember Williams-Preston stated, Great. I do have another question for clarity. Do you have any connection or affiliation with Lippert? Are you a part of that company? Mr. Adams replied, We are not. We have no affiliation with Lippert at all. It is a business relationship where we lease space from them. Committee Chair Ferlic then opened the floor to members of the public wishing to speak in favor of or in opposition to this legislation. Sue Kesim, 4022 Kennedy Drive, stated, This is a suggestion. I would like you to think about the future generations of our community. You are covering a lot of arable land. We have innovative solar here, right here in South Bend. They specialize in putting solar on warehouses so I would EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 1 227 W.Jefferson Bvld I South Bend,Indiana 466011 p 574.235.9221 If 574.235.9173 1 TTD 574.235.5567 I www.southbendin.gov 3 ®CITY OF SOUTH BEND I OFFICE OF THE CLERK like you to consider solar.Also,I would like you to consider cisterns using grey water.Also,native plants around it. A warehouse isn't always eco-friendly and I would encourage you to think about future generations and the environment. Committee Chair Ferlic then gave the floor back to the petitioner for rebuttal. Mr. Adams stated, Sustainability is critical to us when we have that much square feet of space. We are hiring a local civil engineer who will help us with native plantings so it fits with what you would see here in west Indiana. We have done solar installations on other buildings. We have about six (6) megawatts installed across the US. That is something we are familiar with and our team has constructed those. We would have to evaluate it here and I can't make any commitments but that is certainly something we will look at. Councilmember Tim Scott stated, Thank you for your investment in the City and specifically the first (1'� District. I'm glad to hear the workforce is what is keeping you here. I will make a recommendation that we suspend the rules tonight to move this resolution, because there is only one (1), to the front of the meeting to respect his time. Committeemember Williams-Preston made a motion to send Bill No. 18-53 to the full Council with a favorable recommendation. Committeemember Sharon L. McBride seconded this motion which carried by a voice vote of three (3) ayes. With no further business, Committee Chair Ferlic adjourned the Community Investment Committee meeting at 3:46 p.m. Respectfully Submitted, Gavin Ferlic, Committee Chair EXCELLENCE I ACCOUNTABILITY INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 1 227 W.Jefferson Bvld I South Bend,Indiana 466011 p 574.235.9221 If 574.235.9173 I TTD 574.235.55671 www.southbendin.gov 4