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HomeMy WebLinkAbout04-18-88 Human Resources & Economic Development Qtan ni1ttn It nrt r , * • go tic Qlommon Cotuwtt of tip QCttg of ►outiv lit nil: HUMAN RESOURCES AND ECONOMIC DEVELOPMENT COMMITTEE The April 18, 1988 meeting of the Human Resources and Economic Development Committee was called to order by its Chairman Councilman Steve Luecke at 4:00 p.m. in the Council informal meeting room. Persons in attendance included Councilmen: Zakrzewski, Luecke, Duda, Voorde, Slavinskas, Niezgodski, Puzzello, and Coleman, Ann Kolata, Jim Wensits, Carl Ellison, John Pfair, Dave Behr, Hedy Robinson, Jim Kronk, Pam Meyer, and Kathleen Cekanski-Farrand. Councilman Luecke noted that the committee meeting was being re-convened from the committee meeting of last Monday, April 11, 1988. He also noted for the record that members of the committee currently present included Councilmen: Slavinskas, Duda, and himself with Councilman Coleman expected to arrive later in the meeting. Councilman Luecke stated that the first item to be reviewed by the committee was to continue the discussion regarding possible tax abatement consideration for the Hollady Corporation. Utilizing the "tax abatement impact area map dated January, 1986" Councilman Luecke explained that basically the committee had two choices for further consideration. The first included the expansion of the geographic boundaries or the possible consideration of the project as an exception which may qualify due to extraordinary costs. Councilman Luecke further noted that the expansion of the boundaries may permit a three year tax abatement consideration and that the exception possibility would have the same three year consideration. He noted that only if the central business district geographic boundaries would be expanded would the petitioner have the possibility of a six or ten year tax abatement consideration. Mr. John Pfair noted that his company had filed the application with the City Clerk's office. Mrs. Kolata also passed out preliminary calculations of the "Memorial Skyway Plaza" (copy attached) which addressed the possible tax abatement consideration for a three, six, or ten year duration. Councilman Voorde questioned the procedure that would be followed in order to expand the central business district boundaries. Mrs. Kolata explained that an amendment would be required of the Common Council by Ordinance. She also noted that the current boundaries of the central business district incorporate the densest part of the downtown where the densest development is projected to take place. Councilman Slavinskas stated that if the central business district boundaries would be enlarged that tax abatement would be easier and that in effect tax abatement would not be an incentive. He further stated that he would prefer a smaller geographic area so that people would relocate or locate to the area determined to be blighted or older in many instances. Mrs. Kolata stated that she would prefer that the Council consider the possibility of a special exception and would be opposed to the expansion of the boundaries. Councilman Luecke then asked for motions of two separate occasions with regard to the expansion of the geographic boundaries. No motions were made. Councilman Luecke then stated for the record that from the committee's perspective expansion of the geographic boundaries would be a moot issue. Councilman Slavinskas stated that after considering all of the costs of the proposed projects and the safety issue, he believed that the proposed skywalk would be a benefit to the City. In light of this he would consider favorable support of the project as an exception which may qualify it for a three year real property tax abatement. Councilmen Voorde, Duda, and Luecke voiced similar support of utilizing the exception possiblity for a three year real property tax abatement consideration. Councilman Luecke stated that the Can American Development on the East Bank would be heard at the April 25th meeting of the Council which is to begin at 3:30 p.m. He stated that a committee meeting would be held at 3:15 p.m. that afternoon for further information on that project. Pam Meyer then reviewed the Urban Enterprise Zone. She reviewed the map outlining the zone which was dated November 1987. She handed out individual packets of information for each of the committee members present (copy attached) and then reviewed in summary much of the information contained within the packet. The initial item reviewed was the governing State law. She stated that the State program began in 1982 with the City of South Bend having an Urban Enterprise Zone in 1984. This was one of 10 Urban Enterprise Zones throughout the State of Indiana. Currently 32 other states have a similar program 2 in effect. She explained that registration of businesses within the zone began in 1987. She stated that the Urban Enterprise Association locally has recommended a 15% contribution of each business tax savings attributable to the zone program. She further noted that other communities require 25%. Prior to the 15% contribution rate being established the average locally contributed was approximately 10%. She further noted that the Urban Enterprise Association is made up of eleven members which report quarterly to the State board. Members are appointed by the governor, the Mayor, and the Common Council. She also noted that South Bend has had two relocations into the Urban Enterprise Zone namely Lehmann Gas & Oil, Inc. located at 2205 West Sample and The Tire Rack located at 3300 West Sample. She then briefly highlighted some of the possible incentives for businesses to locate within the Urban Enterprise Zone. Such incentives include: inventory tax credits, adjusted gross income tax credits up to $7,500, employee credits, and deductions for Urban Enterprise Zone residents working at the facility. Legislation provides for industrial recovery site tax credit commonly known as "Dinosaur legislation" as well as investment cost credit. She then briefly reviewed the procedure which must be followed for boundary changes and a detailed hand-out outlined the exact procedure. Currently three square miles are allowed by State law and the City of South Bend has approximately 2 .95 square miles designated which makes it the largest Urban Enterprise Zone in the State of Indiana. Regarding contributions, approximately $200,000.00 has been pledged and the Urban Enterprise Association is hoping for approximately $250, 000. 00 to be pledged. Typically the disqualification procedures are utilized for businesses who do not respond to requests made by the U.E.A. She further noted that the State Board is not eager to disqualify, however, the first four disqualifications took place last month in the City of Evansville. Three businesses in South Bend have been pending for approximately two years on the disqualification list. These disqualifications would be pursued by the U.E.A. It was also noted that the larger businesses are also the biggest contributors within the zone. To date 125 of 240 businesses have responded. Councilman Slavinskas noted that in some circumstances businesses are not making a profit and may not be responding at all. He noted that his business is located within the Urban Enterprise Zone and that the most positive incentive is the inventory tax credit. With this, expansion has been possible. 3 It was noted that through the various types of incentives that businesses were able to invest or reinvest in buildings, expansion of their buildings, expansion of employee benefits and/or increased employment. Pam Meyer noted that the association has also started a commercial loan program with approximately $150, 000. 00. She noted that currently a no-interest loan is being considered for the Housing Development Corporation for a project with the homeless. She also stated that "Peoples, Inc. " is an innovative project where individuals are providing lawn care and snow removal and related activities. The project received a $2, 000. 00 loan which is to be paid back over a two-year period without interest. The project is also sponsored by the National Association's of Neighborhoods. The program is also utilizing an in-kind contribution procedure for various lawn equipment. Councilman Luecke questioned whether the ten year period could be expanded. Pam Meyer explained that the law does permit an expansion, however, does not set forth the exact procedure to be followed. She also noted that Purdue University is presently doing a study on Urban Enterprise Zones and their initial review concludes that the program is "worth it" . There is also consideration for Federal legislation. Discussion then took place with regard to the Studebaker Corridor and which buildings may or may not be purchased by Redevelopment and the procedure which may be used. Mrs. Kolata noted that whether to invest or not invest by current owners does present a dilema, however, direct contact with the Redevelopment Office would prove both informative and beneficial to such specific land-owners. The Committee then heard a presentation by Ann Kolata on the Redevelopment Authority. She noted that the Redevelopment Authority is primarily a financing mechanism. The Authority has the ability to sell Revenue Bonds only. Through a lease payment arrangement with the Redevelopment Commission Revenue Bonds can be financied with payments being made from tax increment financing or several other sources. Basically by utilizing the Redevelopment Authority a not-for-profit corporation can be involved whereas by utilizing the Redevelopment Commission only a for profit corporation could be involved. Typcially the Commission goes to the State Tax Board for backing of the pay back procedure of the bond. Permission must be received to go over the levy and each decision is determined on a case-by-case basis. The ability to levy taxes on a year-to-year basis, if needed, may be pursued but the end result is that only Revenue Bonds and not General Obligation Bonds are involved. 4 Mrs. Kolata further noted that the lease between the authority and the Commission must be approved by both the Common Council and the State Tax Board. The lease would include the maximum payment per year and the State Tax Board has the final authority and may reduce the maximum amount. Mrs. Kolata stated that the procedure incorporated multiple avenues to allow public input at the Redevelopment stage, the Common Council stage and at the State Tax Board level. She stated that the public hearing on the stadium and the garage Revenue Bonds will be held at the Redevelopment Commission's meeting on April 29th at 10:00 a.m. It was further noted that basically the remonstrance period begins after Common Council action with a Petition process which is to be filed in the Auditor's Office. It is not like a General Obligation Bond where a majority of the remonstrators could negate a G.O. Bond. The procedure is specifically outlined in the State law. Councilman Slavinskas noted concern with regard to where the authority goes after the parking garage and the stadium. No exact projects were recommended at this time. It was projected that the stadium Revenue Bond would be heard by the Common Council in early May and that the garage Revenue Bond would be heard by the Common Council at the end of May. The garage was being delayed so that bids would be in hand at the time of the hearing. Discussion then took place of the various consequences of the 1986 tax reform Federal law and how that impacts whether the bonds would be taxable or tax exempt. Once a 10% amount was reached which would be on a cumulative basis of private involvement, the bond could be considered taxable. Councilman Luecke also noted that the annual Tax Abatement Report had been received and that any questions should be directed to Hedy Robinson. Discussions then took place with regard to keeping the City of South Bend competative with regard to competing for new and enlarging businesses within the community. Following further discussion Councilman Coleman seconded by Councilman Duda that the meeting be adjourned. The meeting was adjourned at 5:40 p.m. Respectfully submitted, Councilman Steve Luecke, Chairman Human Resources and Economic Development KCF:srk Attachment 5