Battle Creek Tax Increment Finance Authority

BATTLE CREEK TAX INCREMENT FINANCE AUTHORITY Tuesday, October 16, 2012 At the regular meeting of the Battle Creek Tax Increment Finance Authority held on Tuesday, October 16, 2012 at 3:00 p.m. at the Frederick R. Brydges Customs Cargo Center, the following were in attendance: Messrs. Bobrofsky, Bowman, Christensen, Cutshall, Czerney, Frantz, Karre, Noble, Rae, Stewart, Tsuchiyama and Ms. Tuggle. Absent was: Mr. Scott. Also in attendance were: Messrs. Dehn, Mumford, Ritsema, Voshell and Mmes. Albrant and Young. Mr. Bobrofsky called the meeting to order at 3:00 p.m. APPROVAL OF MINUTES MOTION: Mr. Rae moved that the Battle Creek Tax Increment Finance Authority Board of Directors approve the minutes of the August 28, 2012 meeting as presented. Mr. Christensen supported the motion and it was unanimously approved. DENSO PERSONAL PROPERTY APPEAL Mr. Voshell stated that an accounting firm began discussions regarding the Original Equipment Manufacturing (OEM), car makers have a new depreciation schedule and they felt it should be applied to Denso. Both the City of Battle Creek and the BCTIFA objected to the appeal and negotiated a settlement at 25% for a total of $1.6 million. Mr. Karre stated that we don’t have a say in this fight. The decision rests with the City of Battle Creek. The City Assessor does not make the numbers up. This was a better outcome than the risk of the fight which might result in a greater reduction plus refunding taxes already paid plus interest. Mr. Karre has confidence that the City Assessor has evaluated this correctly based on more facts than what we have. Mr. Rae stated that the job of the BCTIFA Board is to raise questions, he was not comfortable with this deal, as he is just seeing the information that was presented today for the first time. Mr. Mumford asked Mr. Voshell if the purpose of placing this on the agenda was to advise the board and not ask the board to take action. Mr. Voshell stated that was correct. Mr. Mumford stated that staff is advising the board that this deal has been done, they’re advising the board that there might be more deals like this necessary. Mr. Voshell stated that Denso has just informed staff that the company is planning a $92 million investment, with a P.A. 198 tax abatement in 12 years of $5.8 million in taxes paid. BCTIFA Board Page 2 – Minutes October 16, 2012 Mr. Czerney stated that the property is assigned to a class, depending on the nature of the property, there is a predetermined depreciating schedule. In year two maybe 90% is taxed, year three 80%. The equipment is depreciating at a rate much faster. High technology equipment drops in value much quicker because in five years it’s worthless. Mr. Rae asked what is the statute of limitations as far as raising this issue. The appeal was on taxes filed in 2009. Mr. Karre stated that the property owner must file an appeal by June 1 of the calendar year for that year. Mr. Ritsema stated that there has been a huge back log with the tax tribunal. He stated that it is not unusual to see multiple tax years. Mr. Voshell stated that the City of Battle Creek has won some appeals and has not had to reduce the property values. Mr. Voshell stated that in his opinion, this has started up because of the new tax laws, the car manufacturers were going to accelerate their depreciation schedule. The parts manufacturers and suppliers to the automobile manufacturers feel it should be their right as well. Mr. Mumford asked Mr. Ritsema if the BCTIFA Board goes forward with the budget for next year, do we need to know how many appeals are pending. Mr. Ritsema stated that the auditors are looking at that and they will share a list with values in question. Mr. Karre asked is there anything the BCTIFA Board can do to help the City Assessor going forward. Mr. Ritsema stated that there are three resources that would be needed if the City is going to fight the appeals. The City would hire an appraiser to do an independent appraisal, this may cost in the $50,000 range; an audit would need to be done, the City relies on the listing of equipment the company provides, $100,000 for a large claim. Mr. Frantz asked what year did they implement the new tax laws. The accelerated depreciation was given to just the manufacturer and not the suppliers. However, the suppliers argued that they have the same equipment and they should have the same accelerated depreciation schedule. BCTIFA Board Page 3 – Minutes October 16, 2012 CONTRACT AGREEMENT WITH TERRELL R. OETZEL Mr. Voshell stated that the BCTIFA Board is moving forward with the contaminated property. Staff recommends contracting with Terrell R. Oetzel who has been recommended by Mr. Ortega. Mr. Mumford stated that Mr. Ortega has done his research of seeking available appraisers and has recommended Mr. Oetzel with a rate of $250 per hour not to exceed $6,000. The next step is to contract with this appraiser. MOTION: Mr. Rae moved that the Battle Creek Tax Increment Finance Authority Board of Directors authorize contracting with Terrell R. Oetzel as presented. Mr. Christenson supported the motion and it was unanimously approved. FINALIZATION OF LAND CONTRACT SALE Mr. Voshell stated that the 20-year land contract between the City of Battle Creek and the BCTIFA has been completed. The City executed a Warranty Deed and a copy was included in the board package. PROSPECT/PROJECT UPDATE Mr. Voshell reported on the following: Janesville Acoustics has decided to locate in Battle Creek and will acquire the existing building located at 2500 Logistics Drive, the former AMT facility. The company is working on renovations at the existing building and will use office space at the Customs Cargo Center until the building is available. Bleistahl is the German automotive company that is looking at the Battle Creek area. The company plans to hire 60 employees. The building located at 10 N. Clark Road continues to be shown to several prospects. Two very large prospects continue looking at the space. Training support continues to be more important with the prospects that staff is working with. Companies are seeking skilled employees and it has become more of an issue and are seeking support from BCU. The current workforce in the pipeline or available, is not meeting the requirements of the employers. Ms. Laura McGuire, Kellogg Community College/Regional Manufacturing Technology Center is heading up a manufacturing consortium in the area to identify ways to put the pipeline in place for people looking to hire. The consortium is made up of manufacturers, educators, and suppliers. BCTIFA Board Page 4 – Minutes October 16, 2012 PUBLIC COMMENTS Mr. Rae asked that the By-Laws be modified to include remote board participation. Staff would look into this matter and provide information at the next meeting. CLOSED SESSION MOTION: Mr. Rae moved that the Battle Creek Tax Increment Finance Authority Board of Directors go into closed session at 3:55 p.m. Ms. Tuggle supported the motion and it was unanimously approved. MOTION: Mr. Rae moved that the Battle Creek Tax Increment Finance Authority Board of Directors come out of closed session at 4:18 p.m. Mr. Noble supported the motion and it was unanimously approved. ADJOURN There being no further business, the meeting was adjourned at 4:18 p.m.