City Council

Minutes of Work Session of Redevelopment Agency of Ogden City, Utah, March 17, 2015 Page Minutes of the Work Session of the Ogden City Redevelopment Agency held on Tuesday, March 17, 2015 at 7:52 p.m., in the Council Chambers on the third floor of the Municipal Building, 2549 Washington Boulevard, Ogden City, Weber County, Utah. Present: Chair Richard A. Hyer Vice Chair Marcia L. White Board members Bart E. Blair Neil K. Garner Doug Stephens Amy L. Wicks Board Administrator Bill Cook Board Deputy Administrator Janene Eller-Smith Board Policy Analyst Glenn Symes Communications Manager Amy Sue Mabey Excused: Board member Caitlin K. Gochnour Also present: Chief Administrative Officer Mark Johnson Community and Economic Development Director Tom Christopulos Community and Economic Development Deputy Manager Brandon Cooper Planning Manager Greg Montgomery Chief Deputy Recorder Lee Ann Peterson The purpose of the work session was to discuss the participation agreement with Rock Exotica, LLC and Board business. Participation Agreement with Rock Exotica, LLC Board Deputy Administrator Eller-Smith explained the Board is being asked to consider approving the terms and conditions of a participation and incentive agreement with Rock Exotica, LLC to facilitate development of a portion of the Ogden Business Exchange property located within the Trackline Economic Development Project Area. Community and Economic Development Deputy Manager Cooper provided brief historical information about Rock Exotica, LLC, noting the business is growing and is looking to relocate from their existing facility that they lease in the Freeport Center to a building that they will own. Board member Wicks inquired as to the number of people employed by Rock Exotica, to which Mr. Cooper answered 40, but noted that the company has indicated their staffing levels will increase to more than 50 in the near future. Mr. Cooper then reviewed the conceptual master plan for the Trackline Project and identified the parcel that Rock Exotica is under contract to purchase. The closing date is set for April 24, 2015 and closing is contingent upon the business receiving approval of the inventive being requested of the Redevelopment Agency (RDA). Board member Wicks asked if the sale will fail if the incentive agreement is not approved. Mr. Cooper stated that is likely. He noted the justification for the incentive is the high costs to relocate machinery, racking systems, and other equipment from one location to another. He then reviewed the draft site plan for the 40,000 square foot building the business plans to build and said it will be linked to the trail system and fits very well into the theme of the overall project. He summarized the terms of the agreement, noting the request is for $75,000 to be broken up into $15,000 payments for a five year period. The amount of the incentive is tied to the tax increment the City stands to receive when the business is operational; the anticipated tax increment to be produced by the business is approximately $35,000 to $42,000 per year for the duration of the tax increment period, which extends to 2033. He noted there is another inventive option that is to provide $25,000 per year for the same five year period if Rock Exotica chooses to use the developer of the Trackline Project (OBE Vision, LLC) to construct their building. At this point in time Mr. Cooper is unsure if this option will be selected and for that reason he is recommending approval of the agreement that would offer $15,000 per year for a five year period. Vice Chair White asked if Rock Exotica has been forced from their current location at the Freeport Center, to which Mr. Cooper answered yes. Vice Chair White wondered if the incentive is appropriate given that the company is not choosing to move; rather, they were forced to move by their current landlord. Mr. Cooper stated that moving costs will be incurred no matter where Rock Exotica chooses to relocate, but it is correct that they have been forced from their current location. Vice Chair White wondered why the company would be eligible for a higher incentive if they use the project developer to construct their building, with Mr. Cooper responding that the City is paying that money regardless, but rather than paying it to the developer it would be paid to the business. Chair Hyer asked how long the City has been courting the business. Mr. Cooper answered that discussions have been underway since the summer of 2014.  Board member Stephens asked where the business will go if they chose not to locate at the Trackline project. Mr. Cooper remarked he is unsure if they have identified other viable locations, but there are definitely other options available to them outside of Ogden. He added that it is very important to get an established business at the project to be the catalyst for future growth. Chair Hyer inquired as to the timeline for the project if the sale is closed in mid-April 2015. Mr. Cooper stated the business has a very tight timeframe, with plans to occupy February of 2016. He concluded he feels the investment the company plans to make in the City is well worth the $75,000 incentive; the overall project cost is approximately $4 million. There was a brief discussion about the product manufactured by the company and the different vendors they work with. Vice Chair White asked how the incentive amount of $75,000 was determined as the appropriate amount. Mr. Cooper responded the business communicated what their funding gap was relative to the cost of moving and retrofitting or purchasing new equipment; that number was used as part of the calculation the City feels the company will produce based on their investment in the community. He reiterated they will generate more than double the incentive amount in tax increment. Board member Stephens inquired as to what will happen if the company defaults and does not meet their responsibilities defined in the incentive agreement. Mr. Cooper replied the company will not purchase the property until the incentive agreement is approved. If the company later fails to construct their building, they will no longer qualify for the incentive amount. He stated that it is important to note that the RDA has already committed 100% of the tax increment to be generated by the project back to the developer; this action will basically divert some of that money from the developer to another party. Vice Chair White asked if any of the employees of the company plan to relocate to Ogden. Mr. Cooper stated he has been told that the owner and executive team of the business have no plans to move to Ogden, but some of the new employees may come from Ogden. One requirement of locating in the Trackline project is that businesses must agree to provide annual job creation reports that show that they have recruited in low to moderate income neighborhoods throughout the City. Discussion then centered on the average salary for employment positions with the company. Ms. Eller-Smith reviewed the timeline for considering the agreement, concluding final action could be taken at the April 14, 2015 RDA meeting. The meeting adjourned at 8:10 p.m. ________________________________________ LEE ANN PETERSON, MMC CHIEF DEPUTY CITY RECORDER ________________________________________ RICHARD A. HYER, CHAIR APPROVED: April 28, 2015