Battle Creek Tax Increment Finance Authority

BATTLE CREEK TAX INCREMENT FINANCE AUTHORITY Tuesday, January 15, 2013 At the regular meeting of the Battle Creek Tax Increment Finance Authority held on Tuesday, January 15, 2013 at 3:00 p.m. at the Frederick R. Brydges Customs Cargo Center, the following were in attendance: Messrs. Bobrofsky, Christensen, Czerney, Karre, Noble, Scott, Stewart, Tsuchiyama and Ms. Tuggle. Absent was: Messrs. Bowman, Cutshall, Frantz and Rae. Also in attendance were: Messrs. Dehn, Mumford, Voshell and Mmes. Albrant, Frantz, Morrison and Young. Mr. Bobrofsky called the meeting to order at 3:00 p.m. APPROVAL OF MINUTES MOTION: Ms. Tuggle moved that the Battle Creek Tax Increment Finance Authority Board of Directors approve the minutes of the October 16, 2012 meeting as amended. Mr. Czerney supported the motion and it was unanimously approved. APPROVAL OF AUDIT ENDING JUNE 30, 2012 Mr. Mark Kettner stated that the Audit ending June 30, 2012 was submitted for board review. The audit includes a clean and unqualified opinion letter on the financial statements. The Audit ending June 30, 2012 for the Battle Creek Brownfield Redevelopment Authority Board will be sent to the board members separately. Mr. Scott noted that the figures on page 5, under management’s discussion analysis indicate that revenues are down one third and expenses are down one half. Mr. Voshell stated that this reduction is reflected by the reduction in the capture of the school taxes under the Public Act 29. This is a continual reduction and there are two more years to go. Also the drop in the economy starting in 2008, BCTIFA slowed down and began to be conservative for existing resources, and lastly, a $1.6 million grant for energy conversion devices. MOTION: Mr. Karre moved that the Battle Creek Tax Increment Finance Authority Board approve the Audit for fiscal year ending June 30, 2012 as presented and respectfully submits it for City Commission approval. Mr. Stewart supported the motion and it was unanimously approved. APPROVAL OF ANNUAL REPORT 2011-12 Ms. Linda Morrison stated that the Annual Report is a two page summary that provides the activity from the prior fiscal year. The Annual Report requires approval from both the BCTIFA Board and the City Commission. BCTIFA Board Page 2 – Minutes January 15, 2013 MOTION: Mr. Karre moved that the Battle Creek Tax Increment Finance Authority Board approve the Annual Report 2011-2012 as presented and respectfully submits it for City Commission approval. Mr. Scott supported the motion and it was unanimously approved. ELECTRONIC PARTICIPATION Mr. Voshell stated that Mr. Rae at a previous meeting asked staff to look into the availability of electronic participation. Staff asked Mr. Mumford to review the request. A memorandum from Mr. Mumford was provided in the board package. Mr. Mumford noted that to the extent there remains an issue as to whether our by-laws restrict telephonic participation, he suggested that the BCTIFA Board consider the pros/cons to the amendments to the by-laws and provided three alternatives. Mr. Tsuchiyama commented that electronic participation has created problems on other boards he sits on. If a Power Point presentation was being made the individual would not have the information. He stated that if the BCTIFA was having a problem with getting quorums to attend the meeting, it might be worth us looking into alternatives. He stated that there is value with the board meeting personally. Mr. Voshell shared additional reasons to not have electronic participation. If the caller starts to speak and a member is speaking, they may not get heard and background noise is disruptive. The BCTIFA Board meetings are subject to the open meetings act. Mr. Karre suggested that the board revisit this agenda item and address it at the next meeting and perhaps Mike Rae would be present for further discussion. LAND STATUS Mr. Voshell reported on the following: West Columbia Avenue – The board requested staff to hire an attorney (Mr. Ortega). Mr. Ortega was asked to employ an appraiser (Mr. Ortzel) to give the board a consensus of what the damages are from the contamination by Walters-Dimmick. Mr. Voshell stated that the BCTIFA purchased the 4 acres for approximately $100,000. In a recent meeting with Messrs. Ortega and Ortzel, Mr. Voshell was under the opinion by Mr. Ortzel that there was not a lot of damage to be won in a court action on this matter. Mr. Ortega had asked for additional work to be done by Soil and Material Engineers, Inc. (SME) on behalf of the BCTIFA. SME was asked to estimate a soil and gas survey; contact MEDQ regarding the FOIA; estimate the additional costs associated with the process wells; prepare cost estimate for remedial action; estimate the cost of bringing municipal water and sewer over to the site; estimate the cost to fill and level the site for development. BCTIFA Board Page 3 – Minutes January 15, 2013 Mr. Voshell stated that SME has estimated the additional costs to be approximately $10,000. Mr. Voshell asked the board what their desire would be. Mr. Bobrofsky asked if a prospect was interested in purchasing this site today, could the BCTIFA sell the property in the condition it is? Mr. Voshell stated that knowing the property is contaminated the property could be sold by doing a couple of things: deed restriction required by State of Michigan; the cost associated with installation of water and sewer. Mr. Karre asked what the value of the property is in the present condition, compared with the value of the property when it was not contaminated, irrespective of what we paid for it. It was worth something prior to the contamination and its worth something different now. Can Mr. Ortzel provide us with that number without any more work. Mr. Mumford stated that we are trying to get Mr. Ortzel’s preliminary opinion of what has occurred to the value of our property. We have not known what has happened to our property all along. The BCTIFA has paid for outside counsel, up to $6,000 for the appraiser, up to $10,000 for proposed additional studies from SME. Mr. Mumford previously met with SME and Walters-Dimmick Environmental expert noted that the water and material is deep enough, there is no such issue and they were not going to pay the BCTIFA for it. SME would have to convince otherwise. Mr. Noble asked if anyone else’s property was affected by the contamination other than the government. The topography is that it is going downhill toward the government. What is the State doing about it? Mr. Voshell stated that the government is making Walters-Dimmick address the contamination issues but no time frame. Walters-Dimmick plans to install sparging wells to suck the contamination back. Mr. Mumford received Mr. Ortzel’s preliminary opinion and it states that there is not much damage here on the four acres. Mr. Dehn asked if the BCTIFA would have a better case if we develop the site and document that we received lost of interest or that the site requires a brownfield site and that it required $400,000 remediation. Mr. Mumford stated that it would be possible to have the prospect be witness for the BCTIFA. It was the consensus of the BCTIFA Board not to pursue any further expenses on this parcel of property. BCTIFA Board Page 4 – Minutes January 15, 2013 PROSPECT/PROJECT UPDATE Mr. Voshell reported on the following: Janesville Acoustics has begun moving at a rapid pace. The company is planning to hire 170 people by summer’s end. An additional 100 people will be hired after 2013. The company’s machinery and equipment is currently being installed. The company is planning its Grand Opening Celebration for July 16. This is the fiber acoustics material manufacturer for the auto industry. Project Heavy Metal is a German prospect that plans to locate in Battle Creek. The company is currently working on a name change and plans to hire 60 people. This company is close to an announcement. Project Neon is a prospect currently looking at the Battle Creek area. Mr. Voshell presented the large binder and commented that this is what staff provides to some of the responses to Request for Information (RFIs) in the initial venture. This company is close to an announcement. Denso Manufacturing Michigan, Inc. announced at the Detroit auto show their plans to expand in North America including opportunities in Battle Creek. There is a potential for 266 additional jobs in 3-4 years. Mr. Tsuchiyama noted that staff is not intending to be coy about the information they provide on the prospects they report on. The confidentiality is extremely important at the beginning of these projects. There are reasons why they are careful with the information. Timing is everything. Ms. Frantz reported on the following: Ms. Frantz thanked the BCTIFA Board for their letter of support in regards to keeping a flying mission at the Battle Creek Air National Guard Base (BCANGB). Ms. Frantz provided copies of the letter and a database of businesses who have supplied support letters. While we are pleased that the Air Force intends to add an MQ-9 unmanned aerial vehicle “Remote Split Operations” unit at the BCANGB, we believe the base is also well postured to host a portion of the additional C-130 aircraft authorized by FY 2013. There are eight other states competing for the 32 aircraft. Ms. Frantz stated that we have been told that when Secretary, United States Air Force Michael Donley makes his recommendation, having these several letters of support will make a difference and are very influential. Ms. Frantz stated that if Battle Creek does not get the flying mission, there will be the following negatives: no longer keep pilots in Battle Creek; no load masters, no maintenance personnel, no first responder fire fighters at the W.K. Kellogg Airport, several job losses and loss in service providers. BCTIFA Board Page 5 – Minutes January 15, 2013 Mr. Christenson commented that if the flying mission goes away from Battle Creek, the fire and rescue will also disappear and this will be a huge expense the City of Battle Creek will undertake. He asked if the City has developed a contingency plan. Mr. Tsuchiyama stated that they are working on a plan. Mr. Karre stated that Cheryl Beard mentioned to him a project going on at the Robbins Building and thought that the board would need to take action. Mr. Voshell stated that Project Neon has approximately 40 people in Battle Creek as they begin their start up process. Battle Creek Unlimited offers companies startup space usually in this building, but it is not possible to accommodate that may people. The Robbins Building has an office space that is in need of some repairs including a new water heater and floor tile and cleaning. Mr. Voshell stated that he estimates the cost to be approximately $3,000 to get this office space in usable condition. The money would come from the Fort Custer Maintenance Projects. MOTION: Mr. Christenson moved that the Battle Creek Tax Increment Finance Authority authorize spending up to $3,000 for cleaning and repairs to the Robbins Building office space as presented. Mr. Stewart supported the motion and it was unanimously approved. Mr. Dehn provided the board with a brief update on the personal property tax elimination. The legislation that passed did not address the tax increment finance districts. What took place was a rush to get something done. The leadership wanted to make a statement to the business community that they got it done. He and city leadership continue to meet with Jase Bolger, Mike Nofs and Lieutenant Governor’s office to continue to emphasize the importance of protecting the tax increment financing, not only for our debt obligations, but for ongoing operations. The proposal that was announced included 80% reimbursement. Mr. Dehn believes that legislation is targeting spring to revisit this. He commented that instead of a special election and costing municipality million of dollars around the state, they will proceed with a school and various elections in August 2014. PUBLIC COMMENTS No public comments. ADJOURN There being no further business, the meeting was adjourned at 4:15 p.m.