HomeMy WebLinkAbout07-28-03 Committee of the Whole COMMITTEE OF THE WHOLE Monday,July 28,2003
Subject: Compliance with Statement of Benefits Form CF-1
Schafer Gear Works,Inc.
Honeywell International
Members in Attendance:
Karl King-Chairperson James Aranowski Charlotte Pfeifer
Roland Kelly David Varner Ervin Kuspa
Karen White Al Kirsits
Kathleen Cekanski-Farrand-Council Attorney
Others in Attendance:
Terry Bland-South Bend Tribune
Michael Beitzinger-Economic Development
Representatives- Schafer Gear Works,Inc.
Representatives-Honeywell International
Committee of the Whole Chairperson,Karl King welcomed all in attendance and called the
meeting to order at 3:30 p.m.. Council Member King stated the purpose of the meeting by saying
that the meeting is an"informal information gathering session," to review the progress of the two
companies in comparison to the CF-1 Tax Abatement Forms information that existed at the time of
the awarded abatements, and the status of those statements today, and to determine what level of
non-compliance they are experiencing according to the guidelines set forth by the State of Indiana,
and the review and determination of the Common Council. "The Council will not take any action
today."
Opening statements by Michael Beitzinger,Economic Development,reported that according
to state guidelines and CF-1 statements,it appears that both Schafer Gear Works and Honeywell
International are not presently in compliance.
Schafer Gear Works,Inc. representative Stan Blenke, stated that their base business has
not been what had been anticipated,customers have been seeking products produced out of country,
and the events nationally and globally has had an effect on businesses everywhere. The 3 million
plus invested in equipment was made to upgrade and ready the plant for business promised. That
has not yet materialized, therefore the equipment is now idle, but ready. Schafer Gear Works
anticipate that the project will still happen, but the events that have happened was beyond their
control.
Stan Blenke further stated that they closed the Elkhart facility and moved it to South Bend.
They also closed their facility in Chicago and like wise moved it to South Bend. Employees were
offered employment here but declined. Some hiring was done locally. Their staffing is up,but not
as projected. •
Council President Karen White asked Mike Beitzinger about the"reporting status"under
state regulations,and if it was possible to get information sooner on abatement recipients that appear
to experience problems in meeting projections as stated on the CF-1 forms. Also,Council Member
White asked Stan Blenke what their employment status is at this point, and he stated that in 2002
they were at 80,now 87 people are employed with Schafer Gear Works.
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Council Member Karl King asked if the buy-out of the Chicago plant and relocation to
South Bend had utilized those employees here, and again it was stated that those employees had
been offered positions at the South Bend facility, but did not accept,therefore, new people were
hired to fill the vacant positions.
Council Member Charlotte Pfeifer asked why Schafer Gear Works had made the 2002
projections if their customer base decline began in 2000. Stan Blenke replied that the customer base
was slow,however,they were confident it would recover,and they were not alone in experiencing
a slow down. Schafer Gear Works was forced to offer customers increased capacity to enable the
customers to use their plant for"different ventures."
Council Member Pfeifer also asked Blenke if he could tell Council Members how many of
his employees reside in St. Joseph County. Stan's reply was that he felt that the majority of
Schafer's employees do reside in St.Joseph County. Pfeifer would like to have a list of where their
employees live.
Honeywell International representative,Roberta Baxter, presented Honeywells reasons
for not attaining their projections as stated on their CF-1 form. They are basically airline industry
providers. The September 11,2001 attack on the U.S., devastating the airline industries,the war
in Iraq,SAARs outbreak globally,and a very slow economy,has hit many industries as well as their
own, and a time frame for"recovery"is still uncertain. Honeywell has been hit hard.
Council Member David Vamer asked if the investments they requested tax abatement on is
now in place. Ms. Baxter stated that they are; $8 million plus in 2001, $20 million plus in 2002,
and another$21 million plus yet in 2003.
Council Member Karl King asked if Honeywell's "research and technology" was moving
ahead,and Ms. Baxter stated that it was.
Council Member Charlotte Pfeifer asked where Honeywell's employees live, and if they
reside in St. Joseph County. Ms. Baxter said that they will get back to the Council with that
information.
Council Member Karl King thanked both companies and their representatives for informing
the Council, and that the Council will.get back to them soon.
Discussion by Council Members ensued: Council Member White stated that the Council
will need a report from Mike Beitzinger stating that recipients of tax abatement are either"in or
out"of compliance,and why. Council Member King said that the Council must be kept informed.
A review of each abatement will need to be based on State law, making judgements on
circumstances for non attainment. The Council has"discretionary privilege"to decide whether to
accept or reject reasons for non attainment. Council Member Varner stated that unfortunately,
Schafer Gear Works buy-out, and closing of the Chicago Company,helped keep Schafer going.
Council Member Pfeifer asked, "how do we know that the companies are living up to their
projections or not?" Mike Beitzinger replied that his department"keeps tabs"on the companies,
but stated that "how do we know what they say is fact? We have the right to inspect records if
misrepresentation is apparent,and we can make them accountable."
Chairman King thanked everyone and adjourned the Committee of the Whole at 4:00 p.m.
Respectfully submitted,
Loretta J.Duda,City Clerk