Battle Creek Tax Increment Finance Authority

BATTLE CREEK TAX INCREMENT FINANCE AUTHORITY Tuesday, May 15, 2012 At the annual meeting of the Battle Creek Tax Increment Finance Authority held on Tuesday, May 15, 2012 at 3:00 p.m. at the Frederick R. Brydges Customs Cargo Center, the following were in attendance: Messrs. Bobrofsky, Cutshall, Czerney, Karre, Noble, Rae, Scott, Tsuchiyama and Ms. Tuggle. Absent was: Messrs. Bowman, Christensen, Frantz and Stewart. Also in attendance were: Messrs. Dehn, Kevin Linders (Consumers Energy), Mumford, Roy Powell (Sigma Technologies), Voshell and Mmes. Albrant and Young. Mr. Bobrofsky called the meeting to order at 3:00 p.m. Introductions Mr. Bobrofsky introduced two new members, Tim Czerney, Chief Financial Officer, EPI Marketing Services, has been with company 15 years. Richard “Rick” Scott, Chief Financial Officer, Kellogg Community College, has been with college for 9 years. Nominating Committee Recommendations Mr. Karre stated that the Nominating Committee consists of Robert Cutshall and Nelson Karre. The Nominating Committee recommends the renewal of three member’s terms expiring: Michael Rae, Jim Noble and Erick Stewart. MOTION: Mr. Karre moved that the Battle Creek Tax Increment Finance Authority Board approve the Nominating Committee recommendation to re-appoint Michael Rae, Jim Noble and Erick Stewart. Mr. Cutshall supported the motion and it was unanimously approved. Mr. Karre stated that the Nominating Committee recommends that the Slate of Officers are proposed as the following: Albert Bobrofsky, Chair; Michael Rae, Vice-Chair; and Karl Dehn, Secretary. MOTION: Mr. Karre moved that the Battle Creek Tax Increment Finance Authority Board approves the Nominating Committee recommendation for Officers as presented. Mr. Cutshall supported the motion and it was unanimously approved. Approval of Minutes MOTION: Mr. Rae moved that the Battle Creek Tax Increment Finance Authority Board of Directors approve the minutes from January 17, 2012 as amended. Ms. Tuggle supported the motion and it was unanimously approved. BCTIFA Board Page 2 – Minutes May 15, 2012 BCTIFA Fiscal Year 2012-13 Operating & Capital Budget Mr. Voshell presented the BCTIFA FY 2012-13 budgets. The BCTIFA Finance Committee did review and recommends approval. BCTIFA General Operations Budget Revenue Real Estate Taxes, $7,359,974.00 Fort Custer BCTIFA Projects, $205,499.00 Total Revenue: $7,565,473.00 Expenses Fort Custer Maintenance and Development, $120,000.00 Fort Custer Debt Service (Bonds), $1,684,529.00 Fort Custer BCTIFA Projects Contractual and Other $5,382,912.00 Total Expenses: $7,187,441.00 Net Grand Total, $378,032.00 BCTIFA Capital Project Budget Revenue Rents and Leases, $20,000.00 Operating Transfers, $2,125,000.00 Robbins Building leases, $9,000.00 Total Revenue: $2,154,000.00 Expenses Capital Projects Reserve, $1,206,331.00 Robbins Building, $125,000.00 Park Development, $537,287.00 Airport Snow Removal Equipment, $240,382.00 Land Acquisition for Noise (Match), $45,000 Total Expenses: $2,154,000.00 MOTION: Mr. Rae moved that the Battle Creek Tax Increment Finance Authority Board approve the Fiscal Year 2012-13 Operating & Capital Budget as presented. Mr. Cutshall supported the motion and it was unanimously approved. Mr. Voshell stated that in the near future he would like to meet with the officers to discuss the Robbins Building and the maintenance of the building. Mr. Ritsema stated that there was a significant decrease in revenue from last year. The BCTIFA is limited in how much school money that this captured for eligible obligations. Next year that amount will continue to decrease and the amount of $2.7 million returned to the state. BCTIFA Board Page 3 – Minutes May 15, 2012 BCTIFA – BCU Proposed Reaffirmation Agreement Mr. Voshell stated that this issue has to do with the continued reduction of state funding with the elimination of the personal property tax. Mr. Dehn provided history of the P.A. 29. The 1994 legislation basically eliminated the ability for TIF districts to capture the school portion of the mileage. Because a number of municipalities and TIF districts had bonds and other contractual obligations with long term contracts, a provision was added to capture for pre-existing obligations and defined as eligible obligations and could continue to capture school taxes as long as those obligations still exists. As the contracts go away, BCTIFA no longer has the payment, but the BCTIFA does not have the revenue either. The Battle Creek Unlimited – BCTIFA Management Contract is one of those eligible obligations. In 1994, the Treasury, challenged the BCTIFA as to whether the contract was long term in nature. As a compromise, the BCTIFA agreed to legislation that placed an end date of ten years that the BCTIFA could capture specific amounts. This will end in 2015. The revenue is currently in a phase down period. The legislation introduced a Bill to eliminate the property tax to the Senate. In 2016, there will be a 7-year phase down of all manufacturers’ personal property tax. The State of Michigan has proposed to replace a portion of the revenue by projecting the new revenues as MEGA tax credits and battery tax credits over the next 15-20 years. The reimbursement mechanism has a lot of uncertainty in it. Mr. Dehn stated that there is a lot of work to do. Between the BCTIFA and BCBRA, there are promissory notes for debt obligations for BCBRA and a management contract. BCU is focused on making sure the reimbursement mechanism is fair and equitable and does not put us out of business when it comes to having a strong economic development effort in the district and city- wide. Mr. Mumford stated that the Reaffirmation Agreement of previous contractual agreements and long term contract for future services is a resolution in place for a long term commitment between the BCTIFA and City of Battle Creek. MOTION: Mr. Rae moved that the Battle Creek Tax Increment Finance Authority Board approve the BCTIFA – BCU Proposed Reaffirmation Agreement as presented. Mr. Karre supported the motion and it was unanimously approved. Mr. Tsuchiyama commended Jim Ritsema and Karl Dehn for their work on this issue and stated that there is still a lot more work to do as it moves into the House. BCTIFA Board Page 4 – Minutes May 15, 2012 Update Land Contract Purchase Mr. Voshell stated that included in the board package was a copy of the legal description of property, including a map of the Fort Custer Industrial Park. Mr. Bob Carr with Carr & Associates provided a parcel drawing of the Fort Custer Industrial Park properties and that is located in the office. Mr. Mumford stated the land contract obligation between the BCTIFA and the City of Battle Creek is about to be complete. The BCTIFA entered into a contract, August 24, 1992 to buy Fort Custer Industrial Park from the City of Battle Creek. The BCTIFA will receive the Deed from the City of Battle Creek. Because the BCTIFA has been selling property for 20-years, the City has advanced property to the BCTIFA as needed to the prospect. The legal description has been updated. This gives staff the tool to know what land is still available to market. The payment of $951,959 was made every year for 20-years for a total payment of $8.7 million. This obligation is about to go away. Update Land Trade Mr. Voshell stated that the board received today, a copy of a letter sent to Mr. Jason Latham, Michigan Department of Transportation. This letter was in regards to the land swap proposal for the adjacent land near the Shell station on Martin Luther King, Jr. Memorial Highway. There have been three meetings with Walters Dimmick. Staff has been advised that the pollution has traveled across our property and is now going onto the Federal land. Mr. Latham is the Regional Manager for MDOT and has indeed agreed that the land swap is a “win-win-win” outcome for all involved. The land swap would allow the BCTIFA to gain additional frontage along Martin Luther King, Jr. Memorial Highway. The land swap continues to gain momentum as it has been provided to Lansing. Aerial maps were provided to the board. Mr. Voshell stated that the dotted red line is the property that is contaminated. The solid red line (2.03 acres) is the property that the BCTIFA owns and is interested in swapping for the dark blue highlighted property (4.6 acres). Prospect/Project Development Update Mr. Voshell reported on the economic gardening activities in the Fort Custer Industrial Park: TRMI is expanding and its investment is $7 million. Hi-Lex America is expanding 40,000 sq. ft. to existing building. Musashi Auto Parts is expanding on the front of its building. Geislinger Corporation is expanding 3,000 sq. ft. Prairie Farms is expanding its facility. BCTIFA Board Page 5 – Minutes May 15, 2012 Prairie Farms is located in the former Kellogg building. Staff is working with the City of Battle Creek on a request for removal of a property line for the company to expand. There are 75 new jobs proposed with all of the expansions. Mr. Voshell reported on the following new projects staff has been working on. 10 N. Clark Road, former USO building has been shown to two different prospects. One of the prospects is a large supplier in the auto industry. The second prospect is smaller and interested in the communications industry. Both have good track records. Project Duff & Phelps is interested in the 2500 Logistics Drive facility. The company has had representatives in to visit the building. This project looks encouraging. Project Heavy Metal, is a German auto supplier prospect. The company visited Battle Creek recently and toured the Regional Manufacturing Technology Center and they were very impressed with the training. Staff is working with a prospect looking at property at the W.K. Kellogg Airport. Consumers Energy Request for Easement Mr. Kevin Linders, Senior Corporate Account Manager, Consumers Energy. He has worked for Consumers Energy for 35 years, 25 years with accounts in Battle Creek. Mr. Linders presented the BCTIFA Board with the plans for Consumers Energy to construct overhead power lines along Martin Luther King, Jr. Memorial Highway. It would begin at the corner of Hill Brady and Martin Luther King, Jr. Memorial Highway. Currently the service to Binger Shipping Supplies, former AMT Freight building, and businesses locating on Buckner Drive are serviced through an underground power line. Consumers Energy is interested in investing $400,000 to upgrade and construct an overhead power line offering a two-way feed. The creation of this two-way feed will also benefit any business that may locate in the former AMT Freight site. The proposed new line would consist of 80 feet east of the MDOT right-of-way for MLK. Consumers Energy has identified the land owners they would have to request permission from for easements. Consumers Energy plans to have the line constructed by the end of this calendar year. If Consumers Energy does not receive easements from property owners, they have already been in discussions with MDOT. Consumers would like to be able to maintain the power lines and add to it. This new construction will tie into existing line and provide a two-way feed. All of Fort Custer Industrial Park has a looped system, with two-way feed capabilities, except for the power line which runs to the recreation area (campground). Most of this is underground. The overhead system is cheaper and easier to repair (10-14 hours to repair) and much more flexible. BCTIFA Board Page 6 – Minutes May 15, 2012 Mr. Voshell asked Mr. Linders if Consumers is granted an easement from a private party and the line has to be moved, at whose expense is that. Mr. Linders stated that it would be the requesting party. Consumers is looking to protect their investment. Mr. Linders stated that the MDOT right-of-way is 80 feet wide on each side of the road along Martin Luther King, Jr. Memorial Highway. Consumers would be installing the power line along the adjoining property line. The tie end would be made without interruption of service to the existing customers. Mr. Linders stated that his presence today was to inform the BCTIFA Board of the situation and he would return for approval. Consumers is currently working on the property descriptions and easements. Mr. Linders stated that there has been some tree trimming completed along the north of Hill Brady to Dickman Road. Additional tree trimming has been done in the wetland areas due to the unstable trees that could potentially fall onto power lines. Public Comments No comments were made. Adjourn There being no further business, the meeting was adjourned at 4:10 p.m.