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HomeMy WebLinkAbout01-28-19 Community Investment pUTH 1,,6— -.,, i‘,,t,',,,:.r'c.G — ��,0'h w a \ x1x < �^ 1865 4l' OFFICE OF THE CITY CLERK KAREEMAH FOWLER, CITY CLERK COMMUNITY INVESTMENT JANUARY 28, 2019 3:59 P.M. Committee Members Present: Gavin Ferlic, Regina Williams-Preston Committee Members Absent: Oliver Davis, Sharon L. McBride Other Council Present: Tim Scott,Jo M. Broden, John Voorde, Karen White, Jake Teshka(late) Other Council Absent: None Others Present: Kareemah Fowler, Graham Sparks, Bob Palmer Presenters: Dan Buckenmeyer, David Andre Agenda: Bill No. 19-07- SWGS Properties, LLC Designating Vacant Building Tax Abatement Bill No. 19-09- SWGS Properties, LLC Designating Real Property Tax Abatement Bill No. 19-11- SWGS Properties, LLC Designating Personal Property Tax Abatement Bill No. 19-03- Approving and Adopting the Southeast Neighborhood Master Plan Committee Chair Gavin Ferlic called to order the Community Investment Committee at 3:59 p.m. He introduced members of the Committee and announced the lack of a quorum, rendering the Committee incapable of taking official action on legislation. He then gave the floor to the presenters. Bill No. 19-07- SWGS Properties,LLC Designating Vacant Building Tax Abatement Bill No. 19-09- SWGS Properties, LLC Designating Real Property Tax Abatement Bill No. 19-11- SWGS Properties, LLC Designating Personal Property Tax Abatement Dan Buckenmeyer, Director of Business Development with offices located on the 14th floor of the County-City Building, stated, I will be referring to SWGS Properties, LLC as its company name, which is Grace Steel, throughout the presentation. Councilmember Davis had the opportunity to visit the site so if he shows up here or even tonight, I hope he will add some color to this as well. INTEGRITYI SERVICEI ACCESSIBILITY JENNIFER M.COFFMAN --- BIANCA L.TIRADO --. JOSEPH R.MOLNAR CHIEF DEPUTY/DIRECTOR OF OPERATIONS DEPUTY/DIRECTOR OF POLICY ORDINANCE VIOLATION CLERK EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 1227 W.Jefferson Blvd.I South Bend,Indiana 46601 I p 574.235.9221 I f 574.235.9173 I www.southbendin.gov CITY OF SOUTH BEND OFFICE OF THE CLERK So,this is three(3)tax abatements. We have done stacks, if you will,of tax abatements in the past. Liberty Tower is an example. The reasons we did this was, one (1), we really want them to come into town and invest in the neighborhood. We also wanted to make this worthwhile. When we stack all these up, it will be just over $213,000 of phased-in benefit for them. They are making some really significant investments in a building that is otherwise crumbling infrastructure within the community. We want to assist that however we can. So, we are stacking a vacant building tax phase-in, a real property phase-in and the personal property tax phase-in. The subject property is right here(referencing a presentation which is available in the City Clerk's Office)where the curb starts. There are actually two (2) parcels there. One (1) is with the building that is about 73,000 square feet. Another small parcel totals to about eight and a half(8.5) acres. It has been vacant for quite a few years now. The purchase price is $765,000. They are going to put in at least$500,000 for renovating the building itself There are renderings that were shared with me today. Their business has to do with adding value to rolled steel and reselling that. You can see with the condition of the building, there is a lot of roofing and tuck-pointing work that needs to be done. The vegetation is out of control. You can see (referencing the presentation) the result of leaks and the need for restoration. Councilmember Jake Teshka arrived at the meeting at 4:03 p.m. Mr. Buckenmeyer continued, On the personal property side, this (referencing a slide in the presentation)just gives you a quick picture of some of the tools they will be utilizing. They will be processing and adding value to rolled or sheet steel by sheering it into different sizes or doing laser cutting. That is about $700,000 worth of personal property and capital equipment that we also want to support bringing in. The real meat of it is, right now, the current state of the property as an assessed value is about $550,000. The annual tax bill has been about $20,000 a year. With their total private investment of over $2 million and a commitment to sixteen (16) new full-time jobs with good salaries and hourly rates, over the next four(4) years, as well as retaining four(4) existing jobs, we are recommending the levels of support noted here (referencing a slide in the presentation). The phase-ins on the vacant building would be just about $105,000, on the real property they would be about $68,000 and the equipment would have about $40,000 in abated value. They will still be paying about$55,000 over that time.And,when we look at a ten(10) year window and we talk about the payback or a break even, within that ten (10) years, with a tax abatement, we will still see a larger return in terms of the tax revenue from this building than if there was no action. And keep in mind, at no action, that number is still ambitious because if there is no action on the tax abatement,there is no action on the building. That taxable value is not likely to stay in a straight line as the building will continue to develop leaks and other issues. That would lower its value. This is a win-win financially. It is a win-win for the neighborhood and we think it is great to get this building back into use. This will encourage additional development with the neighbors and, again, these renderings are some examples of what it may look like. There are a couple different concepts but they are really looking to clean up the outside as well as the inside. It will be the headquarters for their company. Councilmember John Voorde asked, Do you know if the Assessor's Office has functional obsolescence applied to the discount in assessed value due to its vacancy? And if so, when you calculate these numbers, I wonder if you're using the current one (1) which would reflect obsolescence, and it would come off EXCELLENCE j ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 TTD 574.235.5567 www.southbendin.gov 2 •CITY OF SOUTH BEND ! OFFICE OF THE CLERK Mr. Buckenmeyer replied,That's a good question that we will look into and answer at the meeting later this evening. David Andre, 21601 Durham Way, Bristol, IN, stated, Pam started Grace Steel three(3) years ago as a steel brokerage operation and it has grown tremendously. That has created a need for additional space. We currently operate out of a 10,000 square foot facility in Mishawaka and we are looking for this additional space. That is our interest in this property. Grace Steel distributes steel sheets. Many of the sheets are supplied by Steel Warehouse which is conveniently located just across the railroad tracks. So that is a plus for this facility. There is a tremendous amount of work to be done. We have our hands full to do that, but we are also excited about the opportunity. We want to be a seed on Sample Street to hopefully spawn some additional growth.This particular property was built in 1955. It was a Sears Distribution Center. It then became a printing company and when they went out of business, it became a scrapyard. One(1) of the things we have to clean up is the remaining aluminum scrap in the eight and a half(8.5) acres of field. That is hard but nonetheless,we are excited to take on this project and really be a seed on Sample. Committee Chair Ferlic asked, Did you pursue any TIF money or is just a tax abatement? Mr. Buckenmeyer replied, Only a tax abatement. Councilmember Voorde asked, Who are some examples of your customers? Mr.Andre replied, We supply the RV industry and a lot of the trailer industry. We ship as far away as Alabama and Missouri. I would say the bulk of sales are in Northern Indiana and lower Michigan. Councilmember Jo M. Broden stated, Two (2) questions. If you're increasing your capacity, what is the benefit to Steel Warehouse? Will they be able to move more product or bring more individuals online? Are there additional or secondary benefits? Mr. Andre replied, They currently scrap some of the secondary material we process. So that is a secondary benefit to them. To have us conveniently located, that is a benefit for them as well. Councilmember Broden followed up,And then what about workforce?With the individuals you're bringing on,what is the ramp up time for those individuals, skill wise and training wise? Mr. Andre replied, It is about a six (6) month process to bring them in and get them up to full speed. With some of the new equipment that's coming on, we will be sending them to an outside training once its operational. Committee Chair Ferlic then opened the floor to members of the public wishing to speak in favor of or in opposition to the legislation. Jason Banicki, 3822 Ford Street,stated,Dan hit the nail on the head.That property has been vacant for many years. I've lived in that neighborhood pretty much my whole life. I'm excited for something like this because it's not a full ten(10)year abatement. I think that helps mitigate some of our risk. Also, we are talking about jobs that are averaging$39,000 or$40,000 a year and those are hard to come by. It is nice to see that come in that neighborhood. My other thing I would say is given that those railroad tracks aren't used very often, I wonder if there is a way we could build EXCELLENCE ; ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 TTD 574.235.5567 www.southbendin.gov 3 CITY OFSOUTH BEND OFFICE OF THE CLERK an access road in between Steel Warehouse and this property. That way we aren't wasting truck drivers' time by going up and around the roundabout. I think that is something to look at. Sue Kesim,4022 Kennedy Drive, stated, One(1)thing I always look at with these projects is what is being done to make it more sustainable. That is a big roof. Maybe solar panels? Maybe a green roof to reduce the carbon footprint and cool the building down? What are you doing for water drainage? I want to know you are becoming a sustainable member of our community. That does save you money on utilities, as well, but that is something I'm interested in knowing. I'm curious about the green features you are going to use. Mr. Andre replied, I appreciate the shortcut idea as that would save a tremendous amount of money. We would welcome anyone suggestions to make that possible. We look at this in phases. Phase One (1) is the mess we have to build out of. We added some green space already but there are eight(8) acres to clean up first(1St). The seller is required to remove the hot tub looking object as it was a containment bunker for diesel fuel tanks. It now contains water. They are also required to remove the underground storage tank. From that perspective, we are already helping the environment, but I appreciate your comments and we will look into adding other green features after Phase One(1). Mr. Buckenmeyer stated, Their business model is a really sustainable business model. They are taking what would otherwise be steel going to scrap, in some manner, and putting it to use. Due to the lack of a quorum to take any official action on Bill Nos. 19-07, 19-09, and 19-11, all three(3)bills were sent to the full Council with no recommendation. Bill No. 19-03-Approving and Adopting the Southeast Neighborhood Master Plan Per the request of the petitioner, Bill No. 19-03 was continued indefinitely. With no further business, Committee Chair Ferlic adjourned the Community Investment Committee meeting at 4:17 p.m. Respectfully Submitted, Gavin Ferlic, Committee Chair EXCELLENCE ACCOUNTABILITY INNOVATION INCLUSION I EMPOWERMENT 455 County-City Building 1227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 TTD574.235.5567 www.southbendin.gov 4