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HomeMy WebLinkAboutPUBLIC HEARING - PH 2016-10-10 - IFEC - MASCO CITY OF LIVONIA PUBLIC HEARING Minutes of Meeting Held on Monday, October 10, 2016 ______________________________________________________________________ A Public Hearing of the Council of the City of Livonia was held at the City Hall Auditorium on Monday, October 10, 2016. MEMBERS PRESENT: Kathleen E. McIntyre, President Brandon M. Kritzman, Vice President. Jim Jolly Brian Meakin Cathy K. White MEMBERS ABSENT: Scott Bahr Maureen Miller Brosnan OTHERS PRESENT: Mayor Dennis Wright Todd Zilincik,City Engineer Mark Taormina, City Planner Don Knapp, City Attorney Helen Mininni, Public Hearing Recorder This is a Public Hearing regarding the subject of an Application for an Industrial Facilities Exemption Certificate submitted by Lawrence Leaman, MASCO Corporatoin, for land and building improvements, machinery, equipment, furniture, and fixtures at their facility located at 17450 College Parkway, located within the City of Livonia Industrial Development District No. 117. The City Clerk has mailed a notice to the Petitioner and to all parties having interest in such Application for Industrial Facilities Exemption Certificate, including all taxing authorities for property within City of Livonia Industrial Development District No. 117. There was 1 person present in the audience. The Public Hearing was called to order at 7:35 p.m. with President Kathleen E. McIntyre presiding. The Public Hearing is now open for comments. Please state clearly your name and address before making your comments. 2 McIntyre: We will now move to our second public hearing for the evening. Mr. Taormina, before we go to the petitioner is there anything you would like to add? Taormina: Yes. And Madam President, if you would like to the previous petitioners or interested parties indicate when that first item is going to be back? I’m not sure if it was mentioned or not? McIntyre: Oh, I’m sorry. Thank you. We will confirm and if, Mr. Guzberg, if you will leave a card. Todd, I assume you have Mr. Guzberg’s contact information. Zilincik: Yes. McIntyre: We will have the City Council, I believe, and I am sorry I should have it in th my notes but I don’t. I believe it’s the 17. We will confirm that with your business tomorrow if that’s okay from the City Council office. Guzberg: Thanks again for your listening to us. McIntyre: Thank you. Taormina: All set? McIntyre: Yes, thank you very much. Thanks for calling that to my attention. Taormina: Thank you. And tonight’s public hearing is a PA 198 tax abatement on behalf of MASCO Corporation. As everyone knows MASCO is in the process of building its new headquarters building here in Livonia. The location is an approximate 12-acre site that is on the west of I-275 between Six and Seven Mile Roads. The underlying owner of the property is Schoolcraft College and the construction contractor is George W. Ault Company. The building contains three levels a total of about 9,000 sq. ft. The target move in date is in March next year at which time over 200 employees will relocate to the new facility. MASCO is seeking approval of the IFEC or Industrial Facilities Exemption Certificate, a capital investment of totaling more than 29 million dollars. In June of last year Council established an IDD or Industrial Development District #117 on the subject property and that was originally described as unit number 14 of College Park site condominium. Although it was not known at the time that the IDD was created that MASCO would be a tenant. Approval of the IDD was done ahead and in anticipation of a significant – project. The landlord in this case is an entity that is referred to as Simon Delta, LLC. Sworn to a joint venture between the college and its building authority and the Shostak Brothers & Company. With over 7 and a half billion dollars in sales in 2016 and approximately 25,000 employees world-wide MASCO 3 ranks over 345 in the list of Fortune 500 companies and is number one 12,311 in the list of the world’s biggest public companies. MASCO also ranks as one of America’s best employers. MASCO is known as one of the world’s leading manufacturers of home improvement products. The company manufactures, distributes and installs home improvement building products including faucets, cabinets, architectual codings and windows and some of the well-known brands under the MASCO umbrella of companies include Behr paints, Delta faucets, Kraftmaid cabinets, and Milgard windows and doors. The company was established in Detroit in 1929 with MASCO screw products by its founder, Alex Manoogian. This represents MASCO’s first request for an IFEC in Livonia. MASCO is relying on its eligibility as an industrial property as the term is defined in the statute which includes facilities related to the manufacturing, operation under the same ownership including, but not limited to offices, engineering, and research and development. Probably the most similar example of a facility of this nature which received approval of a tax abatement in Livonia is Infineon. Infineon a manufacturer of semi- conductor chips built its North America automotive headquarters on Victor Parkway about four years ago and was granted a 10-year abatement on an investment totaling approximately 11 million dollars. The values associated with this request includes 21.4 million dollars in real property costs plus an estimated 7.8 million dollars in personal property costs. The total of 21.4 million dollars is the estimated cost of land and building improvements for which the tenant of the building, MASCO, is responsible for paying taxes. The 7.8 million dollars relates to all the personal property, which includes furniture and fixtures, data processing and telecommunications equipment as well as power generators and other improvements. The company expects to transfer over 200 employees from its current location in Taylor and to add jobs in the next two years. The petitioner is requesting a full 12-year abatement. With a projected full investment first year taxes on the real property component not including land with the IFEC will be about $257,000.00 and $90,000.00 on the personal property side. With its investment in Livonia, MASCO will rank in the top 20 largest businesses measured by taxable value and in the top 25 in terms of the largest taxpayers even with the abatement. Until this past year the property was vacant and treated as tax exempt. It was only added to the tax rolls in 2016. The anticipated revenue to the city is projected to be about $83,000.00 with the tax abatement. So with that, Madam Chair and Council members, I would be happy to answer any questions you might have regarding this. McIntyre: Councilwoman White. White: Mark, how many new jobs are estimated to be created with this project? 4 Taormina: Well, Jeff Horka the CFO from MASCO is here to answer the question. He and I have had this discussion. I think it is better that you hear it from Mr. Horka. Horka: Good evening, appreciate your time tonight and just to let you know MASCO is extremely excited about the opportunity to come to the city of Livonia. McIntyre: I’m sorry, Mr. Horka, as a formality could you please give us your name and address? Horka: Yes, Jeff Horka, 21001 Van Born Road, Taylor in Michigan. I do appreciate your time tonight. As I mentioned, MASCO is very excited about the opportunity to come to the city of Livonia. The employees are anticipating our move in of what we approximate to be March of 2017. Mother Nature has been on our side with regard to weather, so we are pretty fortunate in that aspect. We have a fantastic crew working over there with Ault Construction and partnered up Schoolcraft College. We are looking forward to sharing in the amenities at Schoolcraft College and the amenities that the city of Livonia offers us. As indicated, we are bringing aboard about 215 jobs, full-time employees, professional level, accounting, finance, legal, administrative from HR. And approximately 50 contract employees, our tax consultants and also the IRS employees that we have working in our building. So, in total around 270 employees will be working out of that facility. I put together a presentation to pass out to the Council, or Mark did that. I appreciate that. There is some history in here of MASCO that I can share if you like. If not, you could read it at your leisure. MASCO is well known in Detroit by Detroiters and investors, but by the layman not really. You know our products as indicated and Mark has done a fine job outlining MASCO and what we are all about. I gave a little bit of early history for you if you’d like to take a look at that at your leisure. We are probably most well known for the single handled Delta faucets which given a little history on that and in any even we have been associated by the Manoogian family. We are very proud of our heritage and again extremely excited to be part the city of Livonia here in the near future. We did an extensive real estate market analysis when we made the decision to move. We had looked east towards Detroit and went north to the Farmington area and Troy. And we looked northwest of M-5 and we did look south towards Michigan Avenue and then obviously west. When all was said and done with what the city had to offerus with the ingress/egress access to 275 and 96 and M-14 we chose Livonia. In any event, I have shown in my presentation here outlining our company so I would like to draw your attention to the philantrophy program, if I may. And just part of what MASCO is all about and what we expect to do in the city of Livonia is straightforward. The relationship we have had with the city of Taylor, which has been fantastic for 50 years so, it’s been a very 5 difficult choice for us to move out of the community. We offer an immense amount of support to the community and we have been a great corporate citizen to the city of Taylor and we hope for that behavior with the city of Livonia. So, I have outlined for you some of the practices of MASCO Corporation. MASCO embraces its responsibility to the communities where we live, work and do business. And we are confident that our actions are making a difference. I have indicated on page nine some of the programs that we have in place. The MASCO Corporate Foundation, the MASCO Gift and Volunteer Grant Program, The In-Kind Product Donations, and Business Unit Philanthrophy. MASCO’s Philanthrophy Program has many different facts. The MASCO Corporation was founded in 1952 and provides support locally and nationally. It’s best known for its arts legacy and affordable housing charities. MASCO matches employee donations up to $5,000 made to eligible non-profit 501 C-3’s charitable organizations. The program is designed to motivate our employees to engage with the support of its communities through personal gifts. In recognition of the importance of corporate citizenship and employee volunteerism, MASCO encourages community service and to acknowledge and support employees in their volunteer work by offering grants and qualified chartable non-profit organizations at the request of its employees. Our Employee Grant Program encourages individuals to engage in volunteer service, to acknowledge their services. The company provides employees with the opportunity to apply for grants paid direct to an organization of their choosing in return for 25 hours of unpaid volunteer service. In our business units, we also actively support charitable organizations through cash and private donations in addition to our employee volunteer. In addition, our employees volunteer thousands of hours each year. Taylor Community is supported by – may I quickly just outline a few of our programs there. As indicated, Conservatory and Pavilion at the Heritage Park. We have sponsored the city fireworks, numerous Little League teams, Taylor Today publication, Safety town, Senior Citizen picnics, Holiday Santa’s Magic Forest, Reindeer Days. We have provided funding for new score boards for the parks, donation of statute to honor fallen Taylor Police, lead sponsor for development of community homeless shelter and cash donations to local food pantry. Over the years we have been proud to support the city of Taylor and the community and as indicated the list is just some of our contributions to the city of Taylor. Moving forward to the city of Livonia, the organization within our company MASCO Rocks. MASCO Rocks is an innovative and fun way for MASCO Corporate office employees to make a difference in the community. Funded exclusively by employee donations. We pool our individual potential and connect our employees with programs that address local needs. Our employees have donated countless hours to the community including Heritage Park –this is still referring to what we have done in Taylor. I apologize. Donating annually 250 backpacks filled with supplies to Taylor Schools, landscaping elementary schools, 6 renovating classrooms and donating 100 Thanksgiving meals and 3,000 cans of soup to local foods. Now, moving on to Livonia. We are already a member of the Livonia Chamber of Commerce, donation in 2016 to the Livonia Public Schools Education Foundation, placing an ad in the Livonia Chamber of Commerce Community Profile and Membership Directory. We have met with representatives from the city of Livonia Community Foundation and we have met with representatives from Livonia Today publication to discuss possible sponsorship. So, the point of all that is just to share with the Council Masco’s history and the stewardship that we intend to carry forward in the city of Livonia and look forward to the move in again in March. Included in your presentation packet here as well are renditions that I put together and added in here showing construction and also renditions of the finished product of the building. Mark did a great job detailing the attributes of the building. On page 15 of the outline as Mark has indicated, building costs of approximately $21.45 million. Our M&E or personal property costs will be approximately $7.85 million with a total estimated project cost of $29.3 million and again we will be bringing approximately 215 employees and 50 contractor jobs to the city of Livonia. McIntyre: All right. Thank you, Mr. Horka. Mr. Meakin. Meakin: Thank you, Madam President. Well, Mr. Horka, welcome to the city of Livonia. Horka: Thank you. Meakin: I think you made an excellent selection by choosing the city of Livonia. We worked very hard to get your project approved and it was one of the quickest developments I’ve ever seen in municipal government from beginning to end. I’m very well aware of all the work that you guys have done for the city of Livonia already. I’m a representative from the Livonia Committee Foundation and met with (inaudible) earlier in the year and we are looking forward to great things that you are going to be able to provide for our charities in the city of Livonia. We are very excited about that. To me this is a no brainer for many, many years this property was listed as public land when it was under Schoolcraft College and even with the abatement they will still be one of the largest taxpayers in the city of Livonia for those main reasons I will happy to offer an approving resolution for this. McIntyre: Thank you. Councilmember Jolly. Jolly: Thank you. Mr. Taormina, you indicated how much the total tax revenue would be with the tax abatement. Could you tell us what it would be without just so we can have a full picture. 7 Taormina: In terms of the – well, looking at the real property and this includes all taxing jurisdictions it is estimated at by about $466,000,00. That’s not city revenue that’s all taxing jurisdictions, on the real side about $180,000.00 on the personal side. Jolly: Annually? Taormina: That is certain assumptions. That’s based on the full investment as it has been outlined evaluation that is set by the assessor making certain assumptions that obviously – they haven’t done a full evaluation of the building, but these are some best guessimates let’s just say with the information that we have at this time. As the year is carried forward though, those evaluations change. Bear that in mind on the personal side of course depreciation kicks in rather quickly so those numbers start to slide down fairly quickly and if you look at just the city revenue it’s roughly – it’s $83,000.00 with the abatement and the applied millage would give abatement of precisely half of what it would otherwise be so under the - scenario you’re looking at double that so about $160,000 – that accounts again for personal property components. So, those numbers are adjusted over time. Kritzman: Is there a certain page that that’s on, Mark? Taormina: No, these are our notes that we have filed just based on discussions with the assessors as recently as yesterday. Kritzman: Thank you. McIntyre: Mark, MASCO would be eligible for the personal property tax elimination beginning when? Maybe Mr. Horka knows? Taormina: And I’ll let Jeff add to this, but I do not – if you’re talking about the exemption of personal property – McIntyre: Right. Taormina: -- as a qualified manufacturer they would be, I don’t know what the laws would say relative to the support operations of the office whether or not they would be fully eligible for that exemption or not. McIntyre: All right. Taormina: The information I am providing is that it won’t be. The application that will be submitted to the tax commission assumes otherwise. It includes the personal property component with the abatement. 8 McIntyre: So, everything assumed right now that MASCO will not be eligible, not a qualified participant for the State elimination of personal property tax; is that what you just said? Taormina: That is correct. McIntyre: Okay. Did you want to comment Mr. Horka? Horka: I’ve really been leaning on Mark and his research and what we have done and our tax consultants as well with regard to eligibility. McIntyre: Okay. Taormina: This is kind of a question back to Mr. Horka and that is they have similar facilities, for example, they have offices in the Ann Arbor area that has similar functions for their reigning companies -- Horka: Right. Taormina: And I know that they receive tax abatements on not in a very similar office situation. I’m not sure if the personal property has been exempt that particular case or not, but if it hasn’t I’d suspect that it would be the same here. McIntyre: My question though is not just a curiosity question. My question goes to the fact that the State agrees right to reimburse us for most of what we lose and so I was concerned if the 198 would in any way affect that. I think the short answer is no because this facility is not eligible to qualify for the manufacture for the exemption. Okay. Anyone else, anyone in the audience? Okay. With that, this public hearing is closed. As there were no further questions or comments, the Public Hearing was declared closed at 7:57 p.m. SUSAN M. NASH, CITY CLERK