04-23-12 Council Agenda & Packet

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South Bend Redevelopment Commission RE: Tax Abatements for Lock Joint Tube, LLC March 29, 2012 Page 2 Additionally,Lock Joint Tube is located in the Urban Enterprise Zone and may qualify for the Enterprise Zone Investment deduction.This is a 10-year deduction which covers 100% of assessed value from new investment,but requires the company to contribute 25% of savings to the Urban Enterprise Association. The department recommends that should the company receive the UEZ designation, the Tax Abatement designation shall become null and void. The real property tax abatement petition describes new investment in two primary building projects.First, there will be the removal and reconstruction of a new and raised roof structure(raised from 15 feet to 40 feet) covering approximately 60,000 square feet of manufacturing space. Second, they will construct a new 30,000 square foot addition for additional manufacturing, storage, and shipping space. These real estate investments will cost between $1.0 million and $1.6 million. Please note that the contractor information (on the real estate petition) is largely unknown at this time although they do want to use MidStates Construction as the primary contractor, and they know that a prefabricated metal building (which is not available locally) will be a large purchase. Based on the preliminary information, they should qualify for a four or five year real property tax abatement. The term that they qualify for will be known by the date set for obtaining the confirming resolution. Based on a project cost of$1.0 million with a four or five year year term, the taxes abated would range from $34,436 to $40,871 based on the approved term. The taxes paid will range fi-om $223,469 to $281,511. Based on a project cost of$1.6 million with a four or five year term,the taxes abated would range from$70,895 to$82,397 based on the approved term. The taxes paid would range from $258,514 to $329,364. EMPLOYMENT IMPACT Per the petitions,it is estimated that the projects will create seven to eleven new,permanent,full-time jobs within the first year of production representing a payroll of$210,000 to $330,000; and, the projects will maintain(56)fifty six existing,permanent full-time and no existing,part-time jobs representing an annual payroll of$2,300,000. ABATEMENT QUALIFICATION 1. A review of the tax abatements previously granted finds that the petitioner has been granted or associated with (3) three previous tax abatements. Term/Type Resolution No. Date 5-year personal property 3621-06 08/14/06 5-year personal property 3308-04 03/08/04 10-year real property 2952-00 11/27/00 2. The Building Commissioner has reviewed the petition and finds the property to be properly zoned for the proposed project.