Battle Creek Tax Increment Finance Authority

BATTLE CREEK TAX INCREMENT FINANCE AUTHORITY Tuesday, April 23, 2013 At the regular meeting of the Battle Creek Tax Increment Finance Authority held on Tuesday, April 23, 2013 at 3:00 p.m. at the Frederick R. Brydges Customs Cargo Center, the following were in attendance: Messrs. Bobrofsky, Bowman, Christensen, Frantz, Karre, Noble, Rae, Scott, Stewart, Tsuchiyama and Ms. Tuggle. Absent was: Messrs. Cutshall, Czerney. 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. Noble moved that the Battle Creek Tax Increment Finance Authority Board of Directors approve the minutes of the January 15, 2013 meeting as amended. Mr. Rae supported the motion and it was unanimously approved. 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: Mike Bowman, Robert Cutshall, and Richard Frantz. MOTION: Mr. Karre moved that the Battle Creek Tax Increment Finance Authority Board approves the Nominating Committee recommendation to re-appoint Mike Bowman, Robert Cutshall and Richard Frantz and recommends that the City Commission approve re-appointment of these candidates. Mr. Rae 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. Noble supported the motion and it was unanimously approved. BCTIFA NEW POLICY CONSIDERATION Mr. Voshell stated that there was discussion at the BCTIFA Finance Committee to make a new policy consideration and adopt by Resolution: As part of each fiscal years end of year audit adjustments a transfer shall be made of all undesignated General Fund balance, according to audited financial information, in excess of fifteen (15%) percent of that year's total BCTIFA revenue to the BCTIFA Capital Projects Fund to be held for future capital outlays. BCTIFA Board Page 2 – Minutes April 23, 2013 This automatic transfer is to occur annually unless this process is hereafter terminated or modified by BCTIFA Board resolution. Mr. Ritsema stated that the City of Battle Creek has a policy of what we want the target to be and then anything in excess of that balance would automatically be transferred over. This would keep a cap on the General Fund balance and allows the transfer to take place instead of holding a special meeting to adjust the budget. Mr. Dehn stated that it has been the BCTIFA’s philosophy that it is okay to build reserves because economic development projects do not happen on an annual basis. Having the capability to act when we have a larger infrastructure project is good financial practice. The BCTIFA can use the Capital Projects Reserve as a place to put that. MOTION: Mr. Rae moved that the Battle Creek Tax Increment Finance Authority Board of Directors approves the new policy and amended Resolution as presented. Mr. Noble supported the motion and it was unanimously approved. AMEND FY 2012-13 OPERATING & CAPITAL BUDGET Mr. Voshell stated that the budget has been reviewed by the BCTIFA Finance Committee and makes the recommendation to amend the budget as presented. The budget is being amended to support the Battle Creek Air Traffic Control Tower, as well as the transfer of all undesignated General Fund balance. Mr. Voshell referred to the budget beginning on page 8 of the board package. He highlighted the following items: BCTIFA General Operations Budget Revenue BCTIFA Revenue, $7,393,925.00 Fort Custer BCTIFA Projects, $205,499.00 Total Revenue: $7,599,424.00 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 $10,332,412.00 Total Expenses: $12,136,941.00 Net Grand Total, ($4,537,517.00) BCTIFA Capital Project Budget Revenue BCTIFA Capital Projects Revenue, $9,219,500.00 Rents and Leases, $9,000.00 Total Revenue: $9,228,500.00 BCTIFA Board Page 3 – Minutes April 23, 2013 Expenses Capital Projects Reserve, $1,206,331.00 Robbins Building, $525,000.00 Park Development, $887,287.00 Airport Snow Removal Equipment, $240,382.00 Land Acquisition for Noise (Match), $45,000 Battle Creek Air Traffic Control Tower, $49,500.00 Total Expenses: $2,953,500.00 Net Grand Total, $6,275,000.00 MOTION: Mr. Noble moved that the Battle Creek Tax Increment Finance Authority Board approve the amended FY 2012-13 Operating & Capital Budget as recommended by the BCTIFA Finance Committee as presented. Mr. Karre supported the motion and it was unanimously approved. BCTIFA FY 2013-14 OPERATING & CAPITAL BUDGET Mr. Voshell presented the proposed BCTIFA FY 2013-2014 budgets. The BCTIFA Finance Committee did review and recommends approval. BCTIFA General Operations Budget Revenue BCTIFA Revenue, $5,571,779.00 Fort Custer BCTIFA Projects, $205,499.00 Total Revenue: $5,777,278.00 Expenses Fort Custer Debt Service (Bonds), $1,572,004.00 Fort Custer BCTIFA Projects Contractual and Other, $5,671,858.00 Total Expenses: $7,243,862.00 Net Grand Total: ($1,466,584.00) BCTIFA Capital Project Budget Revenue BCTIFA Revenue, $1,451,525.00 Robbins Building leases, $9,000.00 Total Revenue: $1,460,525.00 Expenses Robbins Building, $625,000.00 Park Development, $325,000.00 Airport Snow Removal Equipment, $194,992.00 Air Traffic Control Tower, $148,500.00 Rehabilitate Taxiways, C/B/G, $86,000.00 Design Resurface Runway 5L-23R (Match), $15,000.00 Total Expenses: $1,394,492.00 Net Grand Total: $66,033.00 BCTIFA Board Page 4 – Minutes April 23, 2013 MOTION: Mr. Noble moved that the Battle Creek Tax Increment Finance Authority Board approve the proposed FY 2013-14 Operating & Capital Budget as presented. Ms. Tuggle supported the motion and it was unanimously approved. Mr. Rae suggested that with the decrease in the budget, a plan needs to be in place for the personal property tax. He is concerned that nothing is being done. Mr. Dehn stated that the decrease in revenue that the BCTIFA is experiencing has nothing to do with the elimination of the personal property tax as it has not gone into effect. The majority of the decrease is in the state capture which is having offsetting expenses going away that are eligible expenses. Our efforts have been to push legislation to reimburse TIFs for lost revenue. The legislature approved the Bills in December and recognized fixes that would come at a later point of time. Mr. Dehn stated that there have been at least four visits to legislators. TIFs have issues that need to be addressed so we are currently proceeding strategically. Mr. Dehn stated that he is very concerned but does not want to jeopardize our strategy. CREATION OF BCTIFA COMMITTEE TO ACCESS ROBBINS BUILDING OPTIONS Mr. Voshell stated that staff has given Cosma Castings, the newest company in the Fort Custer Industrial Park, some office space located in the Robbins Building. The office space consists of approximately 2,000 sq. ft. The company is in need of additional space until their building is up and operational. Mr. Voshell suggested that the restaurant portion (5,000 sq. ft.) be white boxed and prepared to accommodate Cosma Castings and for the future sale of the condo. Cosma Casting has approved to pay for some of the cleanup. The company will be shown other temporary office sites in Fort Custer Industrial Park and in the downtown area for a six month time frame. Mr. Voshell stated that he is working with Schweitzer Construction on a construction bid. Mr. Voshell stated that he believes that it may cost up to $25,000 to clean up and white box. Staff is seeking a committee to access the construction project and return to the BCTIFA Board with a recommendation for the future. Mr. Bobrofsky recommended the BCTIFA Finance Committee. Mr. Voshell stated that the Robbins Building is located in a prime location. The problem with razing the building is there are two tenants that own their units and the BCTIFA owns three units. The BCTIFA would have to buy out the two owners. MOTION: Mr. Karre moved that the Battle Creek Tax Increment Finance Authority Board of Directors authorize staff to spend up to $50,000 to prepare the space for Cosma Castings, and that the BCTIFA Committee assess long-term basis of the Robbins Building beyond this project. Ms. Tuggle supported the motion and it was unanimously approved. BCTIFA Board Page 5 – Minutes April 23, 2013 WALTERS-DIMMICK UPDATE Mr. Mumford stated that Mr. Ortega has asked that he advise the BCTIFA Board of the statute of limitations against taking any action against Walters-Dimmick on the BCTIFA owned property. Mr. Ortega is asking for permission to file suit right away so that we do not run into statute of limitation problems. Mr. Mumford stated that for approximately three years, we did not know how much we had been damaged. The BCTIFA Board hired an expert appraiser to appraise the property at $75,000 in value, in addition $20,000 to run water/sewer under Dr. Martin Luther King Memorial Highway. Mr. Ortega has drafted a suit complaint for $95,000 and has invited Walters-Dimmick to talk about a settlement. MOTION: Mr. Rae moved that the Battle Creek Tax Increment Finance Authority Board of Directors approve filing the lawsuit against Walters-Dimmick as presented. Mr. Scott supported the motion and it was unanimously approved. CONTINUATION OF TELECONFERENCE DISCUSSION Mr. Voshell stated that Mr. Karre requested this issue be brought back for additional discussion at this meeting at the request from Mr. Rae as to the opportunity or not to arrange for teleconferencing for board members. Mr. Rae stated that he would like to have the opportunity to call in while he was out of town. The BCTIFA has never had a problem with getting a quorum to hold the meeting. Mr. Tsuchiyama stated that his concern is with another board he sits on and having the ability to call in has actually made it more challenging to get a quorum. He stated that it dilutes things to the point where we have as many people conferencing in as we have at the table, the value of communication is lost. PROSPECT/PROJECT DEVELOPMENT UPDATE Mr. Voshell reported on the following: It has been a very busy six months, over 1,000 jobs have been committed to Fort Custer Industrial Park over the next two years. Janesville Acoustics has opened, Cosma Castings has purchased the former United Solar Ovonics building, BleiStahl North America, a German company announced its plans to move to Battle Creek, plus two additional projects that will be announced in the next couple of months. It has become more challenging to make sure Battle Creek has the trained workforce available. Staff has been working closely with the Michigan Works! Agency and the Regional Manufacturing Technology Center to market and train right in the Fort Custer Industrial Park. BCTIFA Board Page 6 – Minutes April 23, 2013 Mr. Dehn stated that Cosma Castings has requested that the City Commission remove the Renaissance Zone that was previously in place for the United Solar Ovonics. The building will be placed back on the tax roles for real and personal property. The company will apply for a P.A. 328 Tax Abatement for personal property. Mr. Karre asked for an update on Toda America, is the company developing like they hoped for? Mr. Voshell stated that the electric vehicle industry seems to be growing slower than anticipated. Toda has diversified and they are not growing as fast as they thought, holding their own, consolidation with their Sarnia, Canada operations. Battle Creek will continue to be the location they will grow at their next phase. The company has a new president, Mr. Abe. Mr. Frantz followed up with concern with the elimination of personal property tax. He stated that there have been a lot of conversations with Karl Dehn, the City of Battle Creek and legislators, possibly losing an amount of funding in three years. It was never thought out what the consequences would be for an organization like ours. The BCU staff and City worked on this and it was ignored by our elected officials. Mr. Dehn stated that the BCU Board gets monthly reports. The BCTIFA Board would receive quarterly reports. If anything should begin to happen before the next meeting, the board would receive communication from staff should this head south. If the BCTIFA Board receives an email that states “Urgent Personal Property Tax” staff will be asking for help to weigh in as business representatives and what it can do to the Fort Custer Industrial Park and community. Mr. Ritsema stated that an equally ominous threat to the BCTIFA Board is the tax appeals. Very recently there have been some large settlements. The firm has notified every company and there are several under appeal. This is a result from settlements or verdict from the tax commission tribunal. The Board will also receive an update on this matter. PUBLIC COMMENTS No public comments. ADJOURN There being no further business, the meeting was adjourned at 4:15 p.m.