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HomeMy WebLinkAboutLBRA MINUTES 2009-10-19MINUTES OF THE THIRD MEETING OF THE CITY OF LIVONIA BROWNFIELD REDEVELOPMENT AUTHORITY The third meeting of the Brownfield Redevelopment Authority of Livonia was called to order at 5:00 p.m. on Monday, October 19, 2009, by Chairman Jack Engebretson. MEMBERS PRESENT: Paul Condon Jack Engebretson Bill Fried (arrived 5:10 p.m.) Lynda Scheel Enrico Soave (arrived 5:08 p.m.) Joe Taylor Ashley Vartoogian MEMBERS ABSENT: Jim Cambridge Ken Harb DEVELOPMENT Andrea E. Montbriand, Fausone Bohn, L.L.P. TEAM MEMBERS: Tony Werschky, Delta Research OTHERS PRESENT: Mayor Jack E. Kirksey Michael Slater, Director of Finance Mark Taormina, Director of Planning Scott Miller, Planning Department Margie Watson, Program Supervisor, Planning ROLL WAS CALLED. A quorum was present. REQUEST TO APPROVE A BROWNFIELD PLAN FOR DELTA RESEARCH. Engebretson: Mayor, do you want to launch us with any kind of opening remarks as to any particular points you'd like to make because I understood you just said you wouldn't be staying with us for the duration of the meeting? Kirksey: I appreciate that. I'm personally very excited about this project. I think it holds a tremendous amount of promise and it takes a property, although it's been used for other purposes, once this vision has reached fruition, I think it's just going to end up being a very positive statement about our community and the ability to stay and to bring us further investments. It's a very solid project and well worthy of any support that we have to offer. Thank you. Engebretson: Thank you for your comments, Mayor. Those of us who had the opportunity to join you on the walk-through I think would all share your enthusiasm for the potential that this project has to take a tired Brownfield Redevelopment Authority October 19, 2009 Page 2 building that once held icon status in our community, and now we see another icon emerging, someone that's been with us and has been a great corporate citizen and has been very enthusiastic about the investment that they're planning for this site. I'm very excited about it as well. Mr. Taormina, are you going to get us launched here with the official proceedings? Taormina: First of all, thank you for meeting on short notice. As the Mayor indicated, this is a very exciting project because it takes what is clearly a Brownfield site here in Livonia and rehabilitates it into what is planned to be an outstanding research and production facility. Delta Research has been in the community a number of years. They currently have operations on Capital Street, one building there, and TIFCO, a company that was acquired five years ago, is located on Industrial. I think you all have copies of the video. I'm hoping that some of you had the chance to view that. It gives you an idea of what the company does. Engebretson: I couldn't get it to work, but Tony told us we can go on YouTube and see the same thing. So we will do that. I don't think that we will lose anything in terms of our meeting here tonight by not having seen it, but it will be interesting to point to as we move forward. Taormina: Basically, Delta Research is looking to acquire the former Observer Newspaper building at the southeast corner of Schoolcraft and Levan Roads and completely renovate the structure. A copy of the Brownfield Plan is included in your packet. The total investment, which is in excess of $15 million, will completely renovate the structure and pay for the necessary equipment in order for the company to do a number of things. The representative from the company, Tony Werschky, can provide you with the details of their operations. This evening's review and approval of the Brownfield Plan is necessary in order for the company to proceed with their MEGA approval for Michigan Business Tax credits. State law requires that the eligible property be part of a locally approved Brownfield Plan. The City's approval of the Brownfield Plan will enable the company to proceed with their application to the State of Michigan and the Michigan Economic Growth Authority for approval of what would be classified as a "large credit" because the investment is over $10 million. This would entitle them to a 12.5% tax credit on the eligible costs. Unlike the Livonia Marketplace, this project does not involve any form of tax increment financing. However, the State does require local participation, and it has been determined that the City's role in this process would be in the form Brownfield Redevelopment Authority October 19, 2009 Page 3 of issuing tax abatements under Act 198. Sometime in the first quarter of next year, it is anticipated that the company will submit an Industrial Facility Exemption Certificate application to the City. Andrea Montbriand is here with Fausone Bohn, the attorneys that have handled all of this. Taylor: There was a tax increment there on a piece of machinery, a printing press. Has that run out? We gave them a 198. Taormina: We will have to go back and look at that. Engebretson: I think the machine disappeared, but the tax abatement was still mid-term somewhere. Taylor: I just wondered if that would fog it up at all. Taormina: No, I don't believe so, although there may be some follow-up paperwork that will be necessary. We will check up on that. Taylor: Thank you. Engebretson: Mark, before we yield to our guests, would you just review briefly the process involved here. The last time we dealt with a very complex issue with a lot of grinding of numbers and dates and things like that. This appears to be far less complex. I also get the impression that they can move forward to the MEDC on the strength of the recommendation that this body will present. Taormina: It still requires the approval of the Brownfield Plan in the same manner that we undertook for the Livonia Marketplace. It's going to require a public hearing by the City Council and approval by them. Engebretson: But they can move forward now before all those things happen, correct? Taormina: We're looking to have the resolution by the City Council included as part of their Part 2 application that goes to the MEDC. We went through the timeline and it works out fairly well. By the time we can get this approved by the Council, that resolution will be forwarded to the MEGA board for a meeting in early December. Engebretson: Okay. Well then, will we have a resolution to act upon this evening? Brownfield Redevelopment Authority October 19, 2009 Page 4 Taormina: We do not have a prepared resolution. It will just be a resolution to approve the Brownfield Plan. Engebretson: Okay. Well, Andrea and Tony, we will yield to you. Andrea Montbriand, LEED AP, Fausone Bohn, LLP. I don't have much more to say on the plan. Mark summarized it real well. The previous certificate that was issued for the Observer and Eccentric will not have any effect on Delta's ability to apply for the certificate. The Industrial Development District is overlaid on the property and any property owner going into that District will apply for their own certificate. As far as the MBT credit goes, it will proceed simultaneously with the Brownfield Plan. We're moving in tandem with them to get their support too. The great thing about that process is that they do have a 90 -day reach back on any activity. We're starting early, but we're shooting for their December meeting. If we don't make it, we'll be on the January meeting, which won't be a problem with the 90 -day reach back. We could start investment as soon as we have the resolution in front of us. As far as the actual project goes, the building qualifies as a Brownfield because it is functionally obsolete. It's functionally obsolete for two reasons, the foremost is that it was built for publication, and newsprint is slowly but surely going out of style. There's a practical matter as well, just functionability. You can't put a heavy piece of machinery on the existing floor. There's a crawl space so it's an elevated floor. It just won't accommodate our type of manufacturing. Basically, the floor has to be ripped out and lowered down to grade. That is how it's been characterized and that is what qualifies it for a Brownfield. As for details on the company and what they expect from this project, I'll let Tony talk. Tony Werschky, Delta Research. Thanks, Andrea. I'm the son-in-law of Bob Sakuto, the owner. I actually own part of both companies. Bob was unable to make it today. He's in Colorado at a machinery company's facility learning some new leading edge technology on their machines. He apologizes for not being here today. I get to talk about the fun stuff and what's going to be happening with Delta Research and Delta Gear and TIFCO. I'll share a little bit about the history of these companies and then talk to you about where we're going and the planning that has led up to the opportunity that we're seeing here in the new facility. Delta Research has been around since 1952. They have been in Livonia most of that time, at least the last 30 or 40 years that I know. We started out as a precision prototype automotive supplier of transmission and engine components. We started out working with General Motors, and Brownfield Redevelopment Authority October 19, 2009 Page 5 expanded to Ford and Chrysler, Borg Warner, and all different kinds of companies, and still work with them today making transmission components and prototypes. These days, prototypes aren't your traditional types of components. It's more hybrid based, electric vehicles, hydrogen vehicles. We're making most of the prototype hydrogen fuel cell and electric car transmissions that are going into future vehicles. Bob purchased our sister company, TIFCO, about five years ago to get a competitive advantage. Our Delta facility is primarily machining based. The white brochure is the Delta facility and the black brochure is the TIFCO facility. Delta basically makes the housing for the gears and TIFCO makes the gears that go in the housing. Together they make us very competitive from an overall standpoint because we not only can do the machining but we can also make the gears that go inside of it. Not a lot of companies can do that. Even fewer can do it to the precision that we can. A number of years ago, Bob had started focusing on the aerospace industry for a number of reasons. We have continued to focus on that and have basically made part of our strategy into developing more relationships with the aerospace industry. Last year, we became AS 9100 certified which is basically like ISO 9000 for aerospace. We got that at TIFCO, and then actually Delta will be going through our AS 9100 audit next week. What that has allowed us to do is get our foot in the door to a lot of these aerospace companies. A lot of the large ones make that a requirement when you're building supplier relationships. The kind of precision that we do at TIFCO is second to none. A lot of the companies that we compete against send some of their gears to us just because we have a capability that really nobody else can do. You can see some of the pictures on the front where the gears are really shiny. You'd think that's because they're dipped in chrome but that's actually a machining finish that we do. It's a super finishing process that's required on jet engine pump gears. A lot of these pump gears that you see in the front go into jet engines. They are very difficult parts to make and we are very good at making them. What we have the opportunity to do now is to take our Delta facility, which does defense and automotive and aerospace components, and our TIFCO facility, which also does automotive and aerospace components, and work in tandem to make ourselves very, very competitive in the aerospace industry. It's just starting to catch on. We've had some great results in the last number of months from some of the larger aerospace companies. We've been developing purchase agreements with them. We have some long-term contracts that are coming, and it's going to increase our company's sales dramatically. And that's why Brownfield Redevelopment Authority October 19, 2009 Page 6 it's perfect timing for us to get into this new building and expand. We are going to be hiring lots of employees that are not going to be your minimum wage people. These are going to be high paid technicians and engineers, the kind of people that you want in the City of Livonia. We're very excited about it. It's great that we have the opportunity to come here and talk to you today because we see this as being a win-win situation for all of us. Engebretson: Thank you, Tony. I think that we would agree that this is a win-win. Not only does the community win, you win, the neighborhood wins, the school district wins. It's all good, and I think it's also interesting that in the manufacturing arena, that we will have somebody in our community that has the credentials that set you apart in the way your credentials do set you apart. You are certainly going to be a player in helping Livonia continue to thrive and prosper and keep our star high in the sky. Enrico, did you have something to add? Soave: How many new hire employees would be coming to this old Observer & Eccentric building? Werschky: Right now, TIFCO has approximately 36 or 38 employees. TIFCO is going to be split into two companies. Delta Gear will be the aerospace gear facility and TIFCO Gauge and Gear will be the gauge and master gear company. Delta Gear will have the majority of the growth. We anticipate the company at least doubling in size, if not doing more than that. So we anticipate 30 to 40 new employees in this next wave of growth. Engebretson: This new facility will enable you to go well beyond that if I understand correctly. Werschky: Oh, yes. A lot of these companies that we're talking with now, they want us to do more than what we're doing right now because they want us to do in-house heat treating. They want us to do more inspection -types of processing. We normally send that out to somebody in the Detroit area. That's another reason why we're going to be seeing this expansion. Vartoogian: What are your hours of operation? Werschky: Right now at our TIFCO facility, we run two shifts that are 10 hour shifts. We'll basically run from 5:00 a.m. to 3:30 p.m. and then one that runs to 2:00 a.m. or something like that. There's a chance that we will go to a third shift, because the machines that are in the Brownfield Redevelopment Authority October 19, 2009 Page 7 facilities are very expensive and we want to keep those things running as much as possible. So there's a chance we could go around the clock. Right now, it's about 5:00 a.m. to 2:00 a.m. Vartoogian: I also have questions about the plan. It talks about demolition of the building or a portion of the building. How is that going to take place as far as dust control? Condon: Which part of the building is going to come down? Werschky: We're not touching the front facade. Bob fell in love with the face of the building. He really likes that genre or era of buildings. So the front face won't look any different other than some minor changes. Montbriand: They will reconstruct the western portion of the building where the presses were, and they will follow all ordinances and protocol. There are very little hazardous materials but they will be removed. Vartoogian: Will any of the debris be recycled? Montbriand: We haven't discussed that yet. I'm sure where they can recycle the steel, they will. Werschky: It is our intention to save the fire suppression system, save the air conditioners. Any place where we can recycle, we will do that. Vartoogian: Are funds available for sustainable energy? Montbriand: Bob has hired his niece and they are doing some cost/benefit analysis, and we are looking at Energy Star. Werschky: It's still up in the air, but we're basically researching every avenue from having grass on the roof to geothermal heating. We haven't decided yet what is going to happening. It's still in the very early planning stage. Taormina: In terms of site improvements, what we're likely to see is that a large section of the parking lot on the Schoolcraft side will be removed and replaced with landscaping. Also, there may be a water feature incorporated as part of their stormwater management system. However, the fence will remain. Based on my last discussion with Mr. Sakuto, it will be fixed up, painted and replaced as necessary. But for security reasons, the company will need to keep the fence in tact. A portion of the building will be removed Brownfield Redevelopment Authority October 19, 2009 Page 8 and additions will also be constructed along the rear or south portions. Mr. Sakuto is very conscious of the trees that are on the site, so he doesn't want to encroach into that area any more than he has to in order to make it work. Engebretson: I got the impression he wants to build on that to take advantage of the natural growth back there because it really is quite nice. Taormina: It's very nice. And as was mentioned, the transformation of the interior is going to be dramatic. A large portion of the building contains a crawl space, which will be removed, dropping the floor down about six feet. One of the reasons is to eliminate vibration due to the sensitivity of the machinery they operate. The offices will not be modified too much. Werschky: No, they will still be on the same slab. If you can picture it, all the office space will be glassed on the side from the offices and the engineering area out to the floor. So you'll be able to see a large portion, if not all, the shop floor. It's going to be really cool. Engebretson: As to Ashley's point relative to demolition, I think the majority of (W demolition occurs inside the walls, with the exception of the press areas. The amount of money allocated for demolition really is not terribly substantial so obviously the building is going to stay pretty well in tact. Werschky: One thing I've heard as we've gone along is that the building has good bones, but it needs a facelift. Scheel: Mark, you said they are thinking about taking away some of the parking lot. Are they thinking of doing the landscaping closer to the road or closer to the building? Taormina: I think closer to the road. Scheel: I just had a couple other questions. It shows two different addresses where Delta is right now. Are you leaving those buildings and going into one? Werschky: We will be moving just the TIFCO facility to the new building. That building is currently being leased. We own the Delta Research building so we will be staying there. There is no plan to move Delta Research to the new building. Brownfield Redevelopment Authority October 19, 2009 Page 9 Taylor: How long will it be before it's completed? Werschky: It should be completed and machinery moved in next November, a little over a year, if everything goes as planned. Taylor: I'm a little disappointed that we're not doing something with the fence. I was hoping the fence would come down. It is pretty well dilapidated. It's in bad shape. I don't know whether painting is going to help it or not. But if you're going to put in new landscaping and everything, you kind of lose it with the idea of having that big fence around it. I don't quite understand that thinking, but obviously you know your business better than I do. Werschky: We have to keep a certain amount of security around the facility. Some of the defense work that we do requires that type of security. I know there will be a fence no matter what. Taylor: I guess if you put in enough landscaping and trees it can help. Werschky: What we're picturing doing is a lot of grass types of growth in certain areas where there will be islands of different tall grasses and then trees behind that. Taylor: In your communication, it says you're going have 25 to 35 more employees. Bringing on new jobs is more important with the 198. That's something that everybody looks at because if you're going to bring more jobs on, that's a good indication of why you should get a 198. Werschky: Right. Engebretson: As you undoubtedly know, the City of Livonia has a matrix of jobs and investment that are used to determine the qualifications for 198 support, and it is my impression that you're going to qualify with either the jobs or the investment. I just want to give you a little comfort here, Joe, that in the demolition plan, they show $20,000 to $40,000 for estimated project costs for fencing. So they're going to do more than put some paint on it. We need a resolution offered to support the proposed Brownfield Redevelopment Plan as discussed and as presented in the documents that have been presented to us. Brownfield Redevelopment Authority October 19, 2009 Page 10 On a motion by Scheel, seconded by Fried, and unanimously adopted, it was: #01-09 WHEREAS, on November 19, 2008, the Livonia City Council approved resolution #520-08 creating a Livonia Brownfield Redevelopment Authority (the "LBRA") in accordance with the provisions of Brownfield Redevelopment Financing Act, Act 381 of the Public Acts of the State of Michigan of 1996, as amended (the "Act"); and WHEREAS, the LBRA was created to facilitate the implementation of plans relating to the identification and treatment of brownfields in the City of Livonia; and WHEREAS, the property located at 36251 Schoolcraft (the "Property") in the City of Livonia has been identified as a "functionally obsolete" brownfield site as defined by the Act; and WHEREAS, a Brownfield Plan for the Property, known as the Delta/TIFCO Redevelopment Project, 36251 Schoolcraft, Livonia, Michigan (the "Plan"), dated October 7, 2009, has been prepared in accordance with the provisions of the Act to restore the economic viability of the Property; and WHEREAS, the LBRA has reviewed the Plan and has determined that it meets the requirements of Section 13(1) of the Act; and WHEREAS, the LBRA has determined that the proposed Plan constitutes a public purpose under the Act and recommends that Livonia City Council concur in this determination; NOW, THEREFORE, BE IT RESOLVED that the proposed Plan for the property located at 32651 Schoolcraft is approved and recommended to Livonia City Council for adoption. Chairman Engebretson declared the resolution adopted. Taormina: The City Council Public Hearing will be held on Wednesday, November 4, 2009, at 7:00 p.m. Brownfield Redevelopment Authority October 19, 2009 Page 11 REVIEW OF PROPOSED FEE SCHEDULE On a motion by Taylor, seconded by Fried, and unanimously adopted, it was: #02-09 RESOLVED, that the Brownfield Development Authority does hereby approve of the Proposed Fee Schedule in connection with the Brownfield Redevelopment Plan for the former Observer & Eccentric building. Chairman Engebretson declared the resolution adopted. APPROVAL OF MINUTES On a motion by Condon, seconded by Soave, and unanimously adopted, it was: #03-09 RESOLVED, that the Minutes of the Second Meeting of the City of Livonia Brownfield Redevelopment Authority held December 3, 2008, are hereby approved as submitted. Chairman Engebretson declared the resolution adopted. On a motion by Taylor, seconded by Soave, and unanimously adopted, the Third Meeting held by the City of Livonia Brownfield Redevelopment Authority on October 19, 2009, was adjourned at 5:41 p.m. Aske artoogian, Secretary