HomeMy WebLinkAbout08-25-03 Committee of the Whole COMMITTEE OF THE WHOLE Monday,August 25,2003
Subject: Compliance with Statement of Benefits Form CF-1
3:30-3:45 p.m.-JTG Development,Inc.
3:45-4:00 p.m.-Lock Joint Tube,Inc.
Members in Attendance:
Karl King-Chairperson James Aranowski Charlotte Pfeifer
Roland Kelly David Varner Ervin Kuspa
Karen White Al Kirsits Sean Coleman
Kathleen Cekanski-Farrand-Council Attorney
Others in Attendance:
Terry Bland- South Bend Tribune
Michael Beitzinger-Economic Development
Representatives-Patti O'Brien,JTG Development,Inc.
Representatives-Tim Hernly and Mr. Strzelecki,Lock Joint Tube,Inc.
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 JTG Development, Inc and Lock
Joint Tube,Inc.are not presently in compliance.
JTG Development,Inc. representative Patti O'Brien, stated that, "the business has been
holding its own,the economy is much different today then it was in 1999 when they applied and
received tax abatement. Their employee status was 94 at that time,and is now at 51,and have hired
11 new employees. Ms. O'Brien stated that the company has actually gone over budget in building
its new building; $766,000 instead of$600,00 that they had planned. With the slow down in the
economy,JTG experienced a 50%drop in sales from 1999 thru 2002. 2003 has seen an incline in
sales, with projections looking much better. Labor and materials costs have risen as well. The
company had to make"survival decisions"in order to stay viable. Next year JTG will be on the tax
rolls in full, staff is at full time now. JTG appreciates the assistance that the abatement has given,
and feel that the slow economy was beyond their control. JTG is confident that the outlook is much
better not only for their company,but for those they do business with.
Council President, Karen White asked what % JTG projects for next year in sales and
staffing. Ms. O'Brien stated that they should see a 10%or better increase with staffing at 65 now,
and an additional 10 to 15 more to be hired before the end of the year;they are union employees.
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Council Member King stated,"The Council is obligated to review the CFI's as a requirement
of State law. The Council as a whole will evaluate the new information,and will let Ms. O'Brien
know what the next step will be in the process."
Lock Joint Tube,Inc.:Mike Beitzinger,CED,reported to the Council that there is actually
two separate facilities with improvements made on both,with 6 abatements currently between the
two facilities.
Representatives, Tim Hernly and Mr. Strzelecki, presentation stated that their company
makes tubes; standard and special request sizes and configurations. They gave the history of the
company,its successes,difficulties,expansion,and comeback success. Employment stands at 252,
with estimated employment on the CF1 at 246. The reason for the appearance of no-attainment
on their CF-1 form is due to a difference in style of reporting the numbers,and not understanding
the report,and went through the numbers to show that they had in fact substantially complied. They
did experience a slow down due to the economy,but prospects are looking better. The company is
gearing up for special requests from new industries,new markets are now opening up to them. The
company will be asking the Council to consider another abatement in 6 months. They feel that they
are now close to being in compliance with the Statement of Benefits.
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 King restated that a review
of each abatement will be based on State law, making judgements on circumstances for non
attainment. The Council has six companies to discuss, and to decide whether to accept or reject
reasons given for each non attainment. A meeting could be set up for September 22 for the Council
to further discuss the 6 companies as to whether they are or not in compliance. King asked each of
the Council Members to comment on how they feel about what they have heard and whether further
information is needed and/or another scheduled meeting would be required for discussion.
Council Member Kelly: "It was good that the companies expressed their problems with a
faltering economy,and it was good to hear that things are getting better."
Council Member Kuspa: "I am satisfied with the information I have heard."
Council Member White: "Perhaps it was a combination of a slow economy and not being
realistic with their projections at the time of their request for abatements,that caused the problem,
but this process sends a good message to those with abatements that accountability is expected."
Council Member King:"Even though Indianapolis annually reviews the reports,we need to
do so as well."
Council Member Kirsits: "Companies need to take this process seriously. It is a matter of
accountability."
Council Member Coleman: "I am satisfied with the statements we have heard."
Council Member Varner: "I am satisfied with what we have heard. These are growth
industries,and we need to encourage their growth. It is a two-way street."
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Council Member Aranowski: "I am satisfied. I appreciate this structured format for
gathering the information we needed; the world has changed, and these companies have invested
in South Bend,and the information was good."
Council Member Pfeifer: "It would be good in the future to have each companies report to
us in writing. What if we find that they are not in compliance,and what can we do about it?"
Council Member King asked for a motion on all six companies that appeared before this
body. Council Member Aranowski stated that all six companies, under situations beyond their
control, were found to be in reasonable, and acceptable compliance, and made a motion"to find
all six companies in compliance." Council Member Varner seconded the motion.
Council Member Pfeifer asked that all six companies be asked to send the Council their
statements made at these hearings, for our records.
Council Member King thanked each Council Member for their participation and comments.
Respectfully submitted,
Loretta J. Duda, City Clerk