HomeMy WebLinkAboutPUBLIC HEARING - 2018-04-30 - IFEC - MENARDS
CITY OF LIVONIA
PUBLIC HEARING
Minutes of Meeting Held on Monday, April 30, 2018
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A Public Hearing of the Council of the City of Livonia was held at the City Hall
Auditorium on Monday, March 30, 2018.
MEMBERS PRESENT: Laura Toy, President
Jim Jolly, Vice President
Scott Bahr
Brandon Kritzman
Kathleen McIntyre
Brian Meakin
Cathy K. White
MEMBERS ABSENT: None
OTHERS PRESENT: Mark Taormina, Director of Economic Development
Paul Bernier, 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 regarding the subject of Menards. The City has received an
application requesting approval of an Industrial Facilities Tax Exemption Certificate from
Nick Brenner, Real Estate Representative for Menard, Inc., for the rehabilitation of the
building and related property to operate as a truss manufacturing plant as well as a rail
siding constructed to operate a lumber transload operation at their facility located at
12701 Middlebelt Road, Livonia, MI 48150, located in Industrial Development Overlay
District #108.
The public hearing is now open for comments. There was one person in the audience.
Please state clearly your name and address before making your comments.
Toy: We will now turn this over to Director of Planning and Economic
Development, Mr. Mark Taormina.
Taormina: Thank you. This tax abatement request, submitted on behalf of Menards,
is for a new manufacturing operation that would be located adjacent to the
Company’s home improvement store on Middlebelt Road. The site is part
of the former Advantage Logistics facility and contains an existing 116,000
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square foot industrial warehouse building that is located behind the
Menard’s store along he CSX Railroad.
The existing building was originally a part of a vast complex of buildings
and structures that served as a regional warehouse, distribution, food
processing and packaging center for the Kroger Company.
In 2012, Menards acquired approximately 46 acres of the original 86 8acre
Advantage Logistics complex. The acquisition included the main
warehouse and distribution building that at the time totaled over 775,000
square feet.
To make room for the new home improvement store, garden center,
lumber warehouse and outside storage yard, all of which are now part of
Menards’ retail operations, roughly 660,000 square feet of the aging
warehouse and distribution center was demolished, and the easterly half
of the property, where the store and lumber yard is now located, was
rezoned to C-2 (General Commercial).
What remains of the original warehouse, about 116,000 square feet, is
located on the westerly half of the site and is still zoned Industrial, (M-1).
Since the store opened about 5 years ago, Menards has been using this
building for storage of merchandise.
The company now intends to convert this building and the surplus land
around it into a truss manufacturing plant. The new Midwest
manufacturing facility would produce wooden trusses for distribution
throughout the region primarily for the home construction industry.
The capital investment that Menards plans to make in establishing the
new production operation totals approximately $10.1 Million, including
$3.4 Million in Real Property improvements, plus an estimated $6.7 Million
in Personal Property.
Included in the investment is a new rail siding, or spur, that Menards will
use as part of its lumber transload operations. Additional real property
improvements include remodeling the interior of the building as well as
other site improvements, such as paving and lighting.
In 2007, Livonia City Council established Industrial Development Overlay
District #108, which covers all the industrial properties in Section 26,
including the subject parcel. Menards is eligible for a tax abatement under
PA 198 as a qualified “industrial property.”
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As an industrial processor, Menards will not be liable for any personal
property taxes, and instead will pay an Essential Services Assessment
(ESA) on the Eligible Manufacturing Personal Property (EMPP).
When finished and operational, the new facility will employ an estimated
17 full-time employees.
Based on the projected real property investment and jobs, Menards
qualifies for a full 12-year tax abatement pursuant to the City’s PA 198 Tax
Exemption Duration Chart for Industrial Facilities.
The True Cash Value (TCV) of the existing 116,000 square foot
warehouse building is approximately $1.31 Million which translates to just
over $11.00/square foot and generates about $38,750 in tax revenue.
With the scheduled improvements, the Assessor estimates that the True
Cash Value of the building will increase to about $43.00 a square foot, or
roughly $5 Million dollars in total.
Should the Industrial Facilities Exemption Certificate be approved, and
based on the higher valuation, the taxes on the Real Property (not
including land) will more than double to about $81,200.
Additionally, the Michigan Economic Development Corporation (MEDC) is
offering Menards a 6-mill State Education Tax abatement worth an
estimated $15,000/yr., or about $180,000 over twelve years.
Now, with both the IFEC and the SET abatements, Real Property Taxes
would total $66,255, resulting in an annual tax savings of about $81,000.
Real Property Taxes on the industrial building currently paid to the City
total about $9,100. Factoring in the abatement, the additional property
investment will generate about $17,000 in annual tax revenues to the City
which is an increase of about 90%.
With that, Madam President, I’d be happy to answer any questions. You
have my notes on tonight’s presentation as well as some key factors and
assumptions that provides some of the basics for some of the numbers I
presented here tonight.
Toy: Thank you, Mark. Questions for Mr. Taormina? Seeing none, can you
come up to the podium and begin with your name and address.
Brenner: Nick Brenner, 5101 Menard Drive, Eau Claire, Wisconsin 54703. Good
evening, I just want to give you guys a brief summary of what Menards is
all about. Menards has two components, one is the retail aspect you guys
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are familiar with, the retail store. The less obvious is the manufacturing
component of it. A lot of the material that you see in the stores is actually
manufactured by Menards. We have concrete block plants, so all of the
concrete block products that you see, the pavers, the edgers, the retaining
walls, those are all manufactured by Menards. Pre-hung doors,
countertops, cabinets, steel siding, steel roofing, those are all
manufactured by Menards as well, that includes trusses as well.
I don’t know if you asked the question, if you guys are wondering it, why
are we thinking a truss plant here in Livonia. We do have a distribution
manufacturing facility in Ohio just west of Toledo, but with the growing
network of stores in this area, especially we have three new stores in the
Detroit area that are going up right now, we are kind of reaching our
capacity in that Ohio location. So there’s really two options that we have,
one is to expand the existing facility to accommodate the new stores built,
and the other option is to build a new facility and that’s what I’m here
today for. We are trying to go with option number two, build a new facility
here closer to a major metropolitan area where we can serve more of our
stores a little bit more efficiently. And when we do that the transportation
costs and the economy goes down, that passes down to the customers
and makes our products more attractive.
So I’m here today asking for the tax abatement. This is a huge program
for us, it allows us to improve some of the costs that we spend on the
project and that goes a long way and it’s always great when communities
do that for us.
A second part of the abatement that may go a little under the coverage
here is how much this shows that the community wants Menards here, a
lot of times we do take that into consideration, whether someone wants us
here or not, we want it to be a good relationship with the City. This tax
abatement again, will show the City’s willingness to want us here and our
communications, beginning working with Mark, working with the
Engineering Department, the City has been fantastic to work with, this
whole process has been working since September or October and if you
guys are willing to grant this abatement for us it will only just capitalize and
show my words, what I’ve been communicating to my superiors.
One other thing I wanted to mention, too, that is a very positive thing,
Menards always, always is willing to expand its facilities. Not just retail
stores, but industrial facilities as well. What this means is right now today
it’s a truss plant and a railroad facility. A couple years down the road my
managers may come to me and say, hey, Nick, I want to have a cabinet
manufacturing plant in Michigan. Well, it makes sense as far as facilities,
to have them close to each other. So Livonia goes to the top of my list in
my eyes in trying to find a location for a future manufacturing plant. So
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that is just something to look at as well as a future opportunity that
Menards can offer you. If you look at any of our existing facilities, you can
see that we’ve expanded multiple times on multiple facilities. So that’s just
something else that I wanted to point out that’s very promising for the
future. We like our stuff together, we have the employees, we know the
area, it’s always a great opportunity.
So with that, if you have any questions, want to know more about the
project, ask away.
Toy: Thank you. Any questions from Council?
Meakin: Madam Chair.
Toy: Councilman Meakin.
Meakin: Can you explain how the rail line will help your decision to choose this
location?
Brenner: Yes. So, when we do an operation like this, we need rails. The reason
why is because we ship our lumber products, whether it’s plywood,
southern yellow pine, from all parts of the nation. CSX owns a lot of those
down south, that’s where a lot of yellow pine. The Canadian National
brings in other materials from Canada. So what we end up doing is the
rail brings it on the site and it’s a little bit more convenient, you can bring
bigger loads and we end up taking them off the cars on the train and
putting them on the trucks to go to the different stores. So the rail is a
must, we need it as part of the operation, some will go to the truss plant as
well. Is that exactly what you’re asking for?
Meakin: Do you see a greater need for rail lines in the future?
Brenner: It’s possible. Depending on the – I mean obviously as far as stores go,
keep being built, continuing to be successful, there’s more probability.
With that being said, also what I just mentioned, if there’s ever an
opportunity to bring in another manufacturing plant, cabinets, steel,
whatever it may be in the future, again, we do bring that stuff in on rail as
well, so yes, does increase the capacity of the rail and that makes this a
very attractive site and it makes it easier to sell the company to go to that
site because you have the infrastructure already established. You
obviously have a long term relationship with CSX, this is the first time
we’ve worked with then, but they’ve been very good to work with so far.
Meakin: This is very exciting because in my twenty years this is the first group
that’s ever said they needed the use of the rail line, no one has used it in
twenty years.
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Brenner: Yes, I can see that, it’s hit and miss, I suppose but every one of our sites
has added it, whether it’s the CSX or Polk Southern, Short Line, we’re
willing to work with them.
Meakin: It’s pretty exciting to me so I’ll offer the approving resolution.
White: Madam Chair.
Toy: Councilwoman White.
White: I have a question for Mr. Brenner, have you used up most of the available
land, do you still have room to expand?
Brenner: No, we don’t. The site is very packed, this is going to use up most of the
remaining property. So, again, when I said if we have opportunity to bring
more stuff in here, we would have to get some more property to do that.
Theoretically, could we always shift something, yes, but I’ll most likely
have to acquire something else in order to do that. But I don’t even know
if there’s a square foot available, we really pushed it as much as we can to
revamp everything, redevelop everything and use everything out there.
White: Thank you.
Bahr: Madam Chair.
Toy: Councilman Bahr.
Bahr: Is it typical to do this next to an existing store or is this just a convenient
option for you because of this situation?
Brenner: I’m going to say it’s rare and the only reason I paused there is I was trying
to think if I could find, figure out another store and I don’t think there is.
We like putting them in closer but we’ve never had one directly next to a
store. And the reason why this one worked out so well is when we tore
down that building, we tried to figure out if we should demo the whole
building or if we should keep a portion of it. And we ended up deciding to
keep a portion of it because why not. And then we listed it for sale and
then if we don’t want to sell it maybe we could find an alternate use for it
and a couple years later we finally find a use for it. So it just happened
and there happened to be a rail line next to the store, that’s not too often,
we might have a handful of those, too. So, everything kind of came
together in an odd way for this and it’s unique.
Bahr: I was on the Planning Commission when the Menards project came and I
was a skeptic and I wondered why we were protecting the four out lots in
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front of the store and I was obviously very wrong about that. I think they
saw something I didn’t see.
I have a question for Mark, if I can.
Toy: Sure.
Bahr: This Industrial Development Overlay District, is that a Livonia program or a
state program or what?
Taormina: Well, it’s something that the City undertook as a kind of proactive measure
to help facilitate these requests for IFECs because as you know the
statute requires first that the Industrial Development or Plant Rehabilitation
District be established before engaging in the Facility Exemption
Certificate. So in order to expedite the approval process, the City
proactively established these districts throughout all six miles of industrial
property in the City. So it’s really saved a lot of time, it’s boosted our
ability to attract business.
Bahr: And then another question for you, Mark, the property tax abatement that
we’re offering here, how long does that last?
Taormina: Well, that’s a decision that the Council makes and we have been relying
on a tax duration chart, it’s a matrix that establishes the number of years
based on the capital investment and the number of jobs created and it’s a
sliding scale obviously with the greater investment and number of jobs we
reached that twelve year threshold more quickly, in this case they do meet
the minimum requirement for a 12-year abatement based on the number
of jobs created and the total investment.
Bahr: Okay, thank you.
Kritzman: Madam Chair.
Toy: Yes, go ahead, Councilman.
Kritzman: Thank you, Madam Chair. Since Menards been introduced to Council, I
think it’s been a very positive influence and as Councilman Bahr
mentioned, this company came along at a time where it provided a nice
shot in the arm from the economic development standpoint and was the
first initial development in that area. And I wanted to check with you to
see your thoughts and obviously you’re making an investment in the City
and in turn you’re asking us to make an investment in you and one of the
spots that bother me about the Menards complex is that detention basin
area up front. It looks completely out of character with the rest of the
development, and frankly it looks very unappealing. And I don’t think that
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that is consistent with the friendliness and the approach that Menards
takes on the rest of your projects. Has there ever been any thought given
to landscaping around that detention basin?
Brenner: Yes. I mean, we have talked internally about it. I went out today and it
was just too cold.
Kritzman: Nobody is faulting you for that, it’s just a big massive open area that
collects geese and trash and not something that is very pleasant from an
esthetics standpoint and really not consistent with the rest of your stuff.
Brenner: Understood. And Menards tries to keep it in repair, you know, it’s a retail
store, we want the property to look attractive. I’m not too familiar with the
state of that, with that being said I’m more than willing to bring up the
subject again, maybe once we get some warmer weather, I know it’s
coming tomorrow finally, maybe if we can get some pictures and I can
take a more in depth look at it and try to figure out what’s going on there
and see what we can do to accommodate and make it look a little more
appealing.
Kritzman: And I know initially and I was trying to recall this conversation with Mr.
Bahr or someone else on Council may remember, initially in one of the
concepts and I haven’t seen them for a while but the concept of
underground storage and even having additional pad sites back there but I
don’t know if that’s anything that is even still in the works. Probably that
ship has sailed by this point but I think that was part of the reason there
was not a whole lot of attention paid to it because it was initially going to
be a temporary situation. And I think it’s gone beyond being temporary at
this point and I really would appreciate it, I know myself, if those got
addressed to the point where they were in kind with the rest of your
property there.
Brenner: Yes, I can definitely look into that. I’m not too in depth on the history of
the planning of the development, especially on the out lots, but I know
people that are obviously, so I can definitely bring that up and ask
questions and get you an answer.
Kritzman: And Mark, I don’t know if that’s anything we can certainly tie to this?
Taormina: I don’t think the resolutions that are acted on typically provide conditions
that kind of fall outside of the issue at hand.
Kritzman: What’s the process for approving the project tonight and then it goes on to
a Regular meeting?
Taormina: It will go on to a Regular with a resolution.
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Kritzman: A Study?
Taormina: No, just to a Regular meeting. You could potentially have a companion
resolution that would refer the issue of the landscaping of the detention
system to the Administration or something to that effect, we would go to
the Law Department for the language on the second resolution.
Kritzman: Madam Chair, I’ll offer that resolution. I think it’s a great project moving
forward and I can see Councilman Meakin moving forward an approving
resolution but I would also like to offer that companion resolution.
Toy: You’ve got that, Bonnie?
Murphy: Yes.
Kritzman: And you’ll look into that and get back to us?
Brenner: I absolutely will.
Toy: Thank you. Congratulations on the Michigan Economic Development
Corporation support, there are good people over there, it’s quite a feat in
itself. I commend you on that as well. How is that store doing, by the
way? Are the biggest in the country by any chance or the state?
Brenner: I don’t know the updated facts on everything but this store does very well
and the whole Detroit area actually does very well. We’re excited to be
here in the area, we’re excited to be in Livonia, we’re excited to bring the
truss plant here to Livonia and I just hope it’s a kick start to a great
relationship moving forward.
Toy: Well, I just wondered because you’ve got Home Depot over there and I
was just wondering. Thank you again.
Brenner: We’ve been very happy with the success of the Livonia store.
Taormina: Madam President.
Toy: Yes, Mr. Taormina.
Taormina: If you could remind the Petitioner on the date of the Regular Meeting.
Toy: I’m sorry, it’s not in my packet.
Murphy: It would be the 5-21 meeting.
Toy: 5-21.
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st
Taormina: May 21 and that will be a voting meeting at 7:00 p.m. here in this
Auditorium and you should be here or somebody should be here as a
representative.
Toy: With that, the Public Hearing is adjourned.
As there were no further questions or comments, the Public Hearing was declared
closed at 7:21 p.m.
SUSAN M. NASH, CITY CLERK