HomeMy WebLinkAboutPUBLIC HEARING - 2018-03-28 - IFEC RNDC
CITY OF LIVONIA
PUBLIC HEARING
Minutes of Meeting Held on Wednesday, March 28, 2018
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A Public Hearing of the Council of the City of Livonia was held at the City Hall
Auditorium on Wednesday, March 28, 2018.
MEMBERS PRESENT: Laura Toy, President
Jim Jolly, Vice President
Scott Bahr
Brandon Kritzman
Kathleen McIntyre
Brian Meakin
MEMBERS ABSENT: Cathy White
OTHERS PRESENT: Mark Taormina, Director of Economic Development
Don Knapp, City Attorney
Eric Goldstein, Assistant City Attorney
Bonnie J. Murphy, CER-2300, Certified Electronic Recorder
The Public Hearing was called to order at 7:00 p.m. with President Laura Toy presiding.
This is a Public Hearing relative to an Application for Industrial Facilities Exemption
Certificate submitted by Tom Cole, RNDC-NWS, LLC, to construct an office and
warehouse operations at their facility located at 13000 Eckles Road, Livonia, Michigan
48150. This is in the Industrial Overlay District #112.
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 Overlay District No.
112.
The Public Hearing is now open for comments. Please state clearly your name and
address before making your comments. There were 45 people in the audience.
Toy: Mr. Taormina?
Taormina: Thank you. Tonight’s Public Hearing involves a request on behalf of the
joint venture between Republic National Distributing Company or RNDC,
and National Wine and Spirits. This is for a tax abatement in connection
with the construction of a new state of the art wine and spirits warehouse
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distribution center and regional headquarters building that is near the
corner of Eckles and Amrhein Roads. This is the site of the former GM
Spring and Bumper Plant that was decommissioned and demolished
approximately eighteen years ago. Construction of the 515,000 square
foot building began late last year. RNDC is seeking approval of a PA 198
tax abatement on a capital investment totaling approximately 67.5 million
dollars.
In 2008, the City Council established IDD Overlay #112, which covers all
of the industrial property in Section 30, including the subject parcel. The
original 120 acres that made up the former GM plant has since been split
into four parts including the RNDC site, which is about 33 acres; Amazon’s
property which is about 48 acres; approximately 20 acres located north of
Amazon and just east of this site which has been retained by Ashley
Capital for future development; and then about 19 acres which is right at
the northwest corner of Amrhein and Eckles Road and that’s still owned by
RACER Trust for ongoing groundwater remediation.
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The origins of RNDC began in the late 19 Century after a multitude of
mergers and acquisitions of various beer, wine and spirit wholesalers and
distributors, mostly throughout the south and midwestern United States.
RNDC was formed in 2007 and today the company is the second largest
wine and spirits wholesaler with over 9,500 employees at 45 locations in
22 states as well as the District of Columbia.
The Livonia operation will be a consolidation of three other facilities across
the State of Michigan. RNDC is eligible for a tax abatement under PA 198
as a qualified commercial activity.
Overall capital investment in the Livonia facility includes roughly 34.5
million dollars in real property, plus an additional 33 million dollars in
personal property. The 34.5 million is the estimated cost of the land and
other building improvements of which the applicant, RNDC, is responsible
for paying taxes on.
The 33 million dollars relates to all of the personal property, which are the
furniture, fixtures, data processing, telecommunications, equipment
storage racking, shipping and other leasehold improvements.
The new facility will house an estimated 525 full-time employees with an
average salary of $60,000 a year. Positions within the company include
sales, HR, finance, management, warehouse, delivery and truck
operations, as well as support personnel.
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Based on these projected investments and the jobs, RNDC qualifies for a
full twelve-year tax abatement. Should the IFEC be approved, and based
on a true cash value of roughly $50 a square foot, the taxes on the real
property, not including the land, will be about $426,000. Additionally, with
the full investment of roughly 33 million dollars in personal property, the
first year taxes will be just under $400,000.
So the estimated value of the abatement, the tax savings to RNDC, would
be roughly $335,000 in real property tax reductions and $380,000 in
personal property tax reductions. But even with the abatement, RNDC will
rank in the top ten of Livonia’s largest taxpayers. For the 2017 tax year,
the taxable value of the property is about 1.6 million dollars, with an
estimated $98,000 total tax of which $22,000 went to the City. Once the
project is complete, the estimated revenue to the City will exceed
$200,000 a year with the tax abatement. And with that, Madam President,
I will be happy to answer any questions you may have. I have provided a
summary of my comments to each of the Council members, provided an
outline of the numbers, some key factors and assumptions and if you look
at the back, it also provides a layout of the facility on the property. You’ll
note with that plan that they do show a future addition of roughly 265,000
square feet. So that is something that the company expects that they will
do as the need arises.
Toy: Thank you. Great job, Mark.
Meakin: Madam Chair.
Toy: Yes, Councilmember Meakin.
Meakin: I have a couple questions. Mark, can you go back a couple years before
Amazon, before this company came to us, when it was just vacant land,
how much was the City receiving in taxes at that time?
Taormina: You know, I’d have to go back and take a look, it was a mere fraction of
what we expect to collect once both of these facilities are complete. I’d be
happy to provide those numbers to you.
Meakin: Tens of thousands of dollars as compared to hundreds of thousands of
dollars, would it be somewhere close to that?
Taormina: If it was over $100,000 I’d be surprised.
Meakin: There will be a significant tax revenue even if we give this abatement?
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Taormina: This is a win/win scenario no matter how you look at it relative to the City’s
collection of increased tax revenues on it and the incentive that is offered
to the company with the tax abatement, so yes.
Meakin: In addition to 500 new high paying jobs in the City of Livonia?
Taormina: That is correct. And I’ve indicated this is right on par with the investment
that was made by Amazon.
Meakin: Thank you.
Toy: Thank you, Councilman Meakin. Does anyone wish to comment at this
time before we go to the Petitioner? Seeing and hearing none, with the
Petitioner come to the podium.
Clark: Good evening. My name is Michael Clark, I’m the director of operations
for RNDC in Michigan. The property is located at 13000 Eckles Road
here in Livonia. We’re very excited to be a part of the City of Livonia,
thank you for your consideration. We’re moving two facilities into this new
facility, bringing, like Mark said, over 500 jobs to the City. We do expect
some of those people to come with us but as we grow and the state of the
art nature of this facility, it’s nothing like RNDC has built before, it’s the
largest facility we’ve ever built, it’s the most advanced facility that we’ve
ever built. The automation is a version of robotic that will make us far
more efficient and help us in the business that we do and help us to grow
our business throughout the state. We’re very excited, it will be a flagship
facility for the company. Construction is well on its way, we are probably a
third of the way through the project, walls are up, roof is on, we’re actually
in the process of thawing the ground, what we have to do here in
Michigan, pouring the slab and get some assembly automation started
installing in June. So we’re very excited about the automation and the
state of the art nature of the conveyors and robotics that we’re bringing to
this building. Like I said, it’s nothing that we have ever done in the
company before so it’s very exciting.
As we grow our business through the state, obviously we look to expand
and pick up more suppliers on our end to further grow our business and
bring even more jobs to the company and with the expansion that could
bring even more.
Toy: Absolutely. Questions? Mr. Clark, you have two companies you’re
combining, where are those coming from?
Clark: We have five facilities across the state right now, our main facility that
Livonia will take the place of is Brownstown down south, so if nothing else
but from a location standpoint, being here in Livonia, the highways and
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everything, it’s going to be far more advantageous to us, so that’s key win
for us. We also have a facility in Byron Center just south of Grand Rapids.
We have a facility in Traverse City. We have a facility in Saginaw. We
have a facility up in Escanaba.
Toy: And you sell a lot of wine.
Clark: A lot of wine.
Toy: Okay. And if I may ask, when you’re talking about hiring people from our
area, how many people would you approximate will come with you from
those other areas? Let’s look at Brownstown, since that’s one of the
closest.
Clark: So we feel like probably about two/thirds of the people that are down there
right now will probably come initially, we’re not sure once they enjoy the
luxury of the commute how many will stay with us. We feel like a lot of
people will try in the beginning and them as we add positions, we feel like
it could be upwards of 100 positions I would say.
Toy: I appreciate that, thank you. Any questions?
Kritzman: Madam Chair.
Toy: Yes, please, go ahead.
Kritzman: I just have one point of clarification. I think I have the information in hand
to the question that Mr. Meakin asked. It was noted in Mr. Taormina’s
presentation as to the taxes for the property that RNDC sits on, is just
under $22,225 that were contributed while it was vacant. And Mr.
Meakin’s question was how about the whole property and what was that
providing and assuming that that same dollar value was spread out overall
120 acres, the answer to the question is about $80,800, so this is a
significant improvement in the taxable value for that particular area.
Toy: And that doesn’t include the personal property.
Meakin: Madam President.
Toy: Yes.
Meakin: I’ll offer the approving resolution.
Toy: Councilmember Meakin has offered the approving resolution, were there
any others? And this will be on the next regular meeting which is Monday,
rd
April the 23 is when this will be heard.
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Anyone else offering anything else? We have an approving right now on
the Regular Agenda.
Clark: Thank you so much.
Toy: Okay. And what was your name just for the record?
Bialek: Tammy Bialek.
Toy: And you’re with the company as well?
Bialek: I’m with the Office Group.
Toy: All right. Thank you very much. Is there anyone from the audience who
wishes to comment on item one? Hearing and seeing no one, we are
adjourned.
As there were no further questions or comments, the Public Hearing was declared
closed at 7:12 p.m.
SUSAN M. NASH, CITY CLERK