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HomeMy WebLinkAboutPublic Hearing 11-23-2020 - Brownfield - SME CITY OF LIVONIA PUBLIC HEARING Minutes of Meeting Held on Monday, November 23, 2020 ____________________________________________________________________ A Public Hearing of the Council of the City of Livonia was held virtually via ZOOM on Monday November 23, 2020. MEMBERS PRESENT: Kathleen McIntyre, President Vice President Scott Bahr Jim Jolly Brandon McCullough Cathy K. White MEMBERS ABSENT: Rob Donovic Laura M. Toy OTHERS PRESENT: Mark Taormina, Director of Economic Development Paul Bernier, City Attorney Sara Kasprowicz, Recording Secretary The Public Hearing was called to order at 7:01 p.m. with President Kathleen McIntyre presiding. This item is regarding the adoption of a resolution approving a Brownfield Plan and Development and Reimbursement Agreement of the City of Livonia Brownfield Redevelopment Authority and interlocal agreement with the Plymouth Road Development Authority (PRDA) for the development of a new industrial building located on the east side of Eckles Road between Amrhein Road and the CSX Railroad (12950 and 13100 Eckles Road) in the northwest ¼ of section 30, as requested by SME on behalf of Ashley Capital and Livonia West Commerce Center 2, pursuant to and in accordance with Act No. 381 of Public Acts of 1996, as amended. This item will move to the Regular Meeting of December 14, 2020. The Public Hearing is now open. There were 8 people in the audience. McIntyre: Good evening, Mr. Taormina, would you like to speak, are you going to kick this off for us? Taormina: Yeah, I can provide some opening comments if that’s ok. McIntyre: Thank you very much. 2 Taormina: I'm going to show a one graphic as I provide the information. So, this is a request involving the redevelopment of. McIntyre: Mark, I'm sorry. I don't know who's on the on the phone in the audience, but I just wanted to introduce you since usually in public, we have our name plates up there. Mr. Taormina is the City's Director of Planning and Economic development. Thanks Mark. Taormina: Thank you. Again, this is a request involving the redevelopment of property, which is at the Northeast corner of MRI and Eckles road. It includes the remaining 19 acres of what was previously the site of a GM Delco manufacturing plant. The site qualifies as a Brownfield based on its designation as a facility under part 201 of the Natural Resources and Environmental Protection Act. A soil and groundwater contamination at the site is caused mostly by plating operations that were used in the production of coil springs and bumpers. Ashley Capital is positioned to acquire the site from Racer Trust for redevelopment, but to make the project feasible, Ashley is seeking assistance in the form of a Brownfield Plan and tax increment financing to reimbursed for the costs of certain eligible activities that are needed. In order to overcome the constraints caused by the Brownfield conditions. There are two parcels involved in the plan. The first is 12950 Eckles Road, which is 18.77 acres and is located at the corner and that is identified as site A on the aerial photograph. Then the second parcel 13100 Eckles is about 19.7 acres in size and is located North of the Amazon site. And this site is currently owned by Ashley capital. The proposed development of the corner parcel includes a new 370,000 square foot industrial building that would be used for light manufacturing to warehousing and or distribution. The other parcel, site B, would be used primarily for remote trailer staging in connection with the principal use of the corner property. The projected total investment would be about $32 million with approximately 185 full and part time jobs created. In the plan, tables 1A, 1B and 1C provide a breakdown of the eligible activity costs. Note that these figures are based on new data, which was submitted by the applicant last week in each of the Council members should have that new data, a letter dated November 19th. So, the costs include, the primary cost, that is, one demolition was totals, approximately $2.15 million. Site preparation, including importing Phil Earthwork site grading and underground stormwater detention at $5.07 million and environmental due care response activities, which total about $1.1 million. So, when you include the soft cost and a 15% contingency, the projected total of all eligible expenses is $9,724,945. As with all of the City’s active Brownfield projects, tax increment revenues captured on the increased value of the property would be used to reimburse a developer for these eligible costs. The base or the initial taxable value totals, $294,245. As the site is developed and the values increase, the tax is paid on the value above the base are captured and used to reimburse the developer. This was done twice per year coinciding 3 with the collection of summer and winter taxes. A requirement of the Brownfield statute, is that a portion of the captured taxes goes directly to the state Brownfield revolving fund. Additionally, the Livonia Brownfield Redevelopment Authority is recommending that 10% of the collected taxes be allocated for administrative costs for deposits to the local site remediation revolving fund, or the LSRRF. The revised tables project that the developer would be fully reimbursed after 28 years or by the year 2050. The projections are based on the completed development, having a taxable value of approximately $6.7 million and that would increase at a rate of 1% annually. Non-capturable millages include the Zoo Authority, Art Institute School debt and the PRDA, which love is two mills on all th properties within the PRDA district. On October 28, the Brownfield Authority approved the Brownfield Plan and Development and Reimbursement Agreement, as originally submitted, which requested reimbursement of eligible activity costs, totaling $11.97 million over a 30- year period. So that, Madam President, I'll answer any questions, I'll note that we have a representation from the Petitioner, including Kyle Morton and Susan Harvey of Ashley Capital. We have Mark Quimby, with the SME, their environmental consultant and Bruce Rasher and Grant Trigger, both from Racer Trust, thank you. McIntyre: Thank you very much, Mr. Taormina, and I should also know that a Council Member, Donovic and Council Member Toy are not able to be with us this evening. Council, questions? Council Member White. White: Thank you. Madam chair, question through the chair to Mark. Mark, Amazon and RDNC, am I saying that right? Or is it RMDC? Are those two Brownfields as well? I mean, did they go through the same process? Taormina: No, but they did receive tax incentives through the PA198 Program. So, tax abatements were issued for both properties. White: Okay, thank you. McIntyre: Anyone else from Council have any questions for Mr. Taormina before we go to the Petitioner to address the Public Hearing? Seeing none. Would any of the Petitioners like to address the Council? Alright, does Council have any questions for the Petitioners? I see that I think Ms. Harvey, Mr. Jolly, is that okay? I think Ms. Harvey would like to address this or Mr. Morton. Good evening, Ms. Harvey. Harvey: Good evening. Thank you all for doing this tonight. Mark, I thought we were going to run through this PowerPoint slides. Yeah, we will. try to be brief about this, but we did put together a presentation that we hope answers a lot of questions including the one that was just asked, which is, how does the Brownfield status of this undeveloped parcel compared to the other parcels that were developed and why are we asking for a 4 Brownfield here when none was requested earlier. That is part of this PowerPoint deck, but if we can, I'd like to go through these slides because I think it will answer a fair amount of questions and we're going to pause after each one and give the opportunity to ask questions. So, again, this is the same site slide that was up before. Are there any questions about this, the location or the two parcels that we're talking about? McIntyre: Any, any questions from Council before we go through them. Vice President Bahr? Bahr: So, as we looked at this and I'll probably have more questions as we go through, but I appreciate you doing this slide by slide because this is pretty complex and it'll help break it down for us. When I, when I look at this, the old GM plant footprint certainly wasn't just on Site A, was the RNDC building also on the GM plant footprint? The same question for Amazon? Harvey: Somewhat, I'm going to let Grant from the Racer Trust answer that question. Can we get grant? McIntyre: Yeah, I, I think, Susan did you say Grant? Harvey: Yeah, Grant Trigger. Trigger: Thank you, Madam President. Yeah, this is a great shot to answer that question, it goes back to show what the site looked like in 2005. The Trust acquired the property in 2011. So, the principal buildings had been demolished before we acquired the property, so you can see that a portion of the Amazon development and a portion of the RNDC had portions of the old building footprint on it. The main reason that we're dealing with this residual partial of 18.77 acres is that was the principle operation of a chrome plating operation. There's approximately 10 acres that are underneath a building slab and you see this sort of a dark area on the Eastern end of the parcel. There, who is operating the pointer, if that's you, Mark can go up a little bit to the left, come back down to the corner parcel, there's a little bit, the one that goes North/South. No, I'm sorry, to the East, no, that’s North. We've been doing the Zoom for awhile, we all get used to this. There's a dark area in the slab that is still owned by the Trust. You're on Amazon. Just straight up, right there. That is the basement of the old plating area. There's an area here of about 670,000 square feet that's contained within a slurry wall. That is the concentrated area of contamination that we've been managing very aggressively since 2011, and there's old basements there with footings and foundations. This portion of the site is the most challenged and we retained ownership of that when we sold the remaining parcels that became Amazon in about 2014. Let me mention one other thing, and I'll pause and come back to the Councilman's questions. The Trust remains responsible for the 5 environmental conditions on the site. Legacy problems. For example, on the Amazon parcel, we still have monitoring wells there that we're responsible for. One of the things that we're working very closely with Ashley now, this also shows that area where the old basement. So, there is some foundations, not foundations, old slabs, under the other buildings, but this had the plating area in it. That’s why this is uniquely different. Bahr: Thank you. Harvey: Okay, are we moving on? McIntyre: Any questions, Council? I don't see any questions, Susan, from the Council. So, yes. Can you please? Harvey: Yeah, can you hear me? McIntyre: We can, yes. Harvey: Okay, I’m not sure if I’m on or not. So, there are some references, that have already been made to this history of the site. I'm not sure how much more needs to be said. It was a former chassis, a spring and bumper plant, then when General Motors, and we get to this in the next few slides, but when General Motors went bankrupt, it was April, through bankruptcy protections to onload, get rid of, move forward with a new entity and not be burdened by all this property that it no longer had a need for. In most cases, was contaminated on some level. This whole site represents one of those properties. We did buy most of the sites in 2014, the 18.77 acres that we're talking about today, we did not purchase at the time, because the level of environmental cleanup that remained to be done at the time was just too much for us to rationalize taking ownership of that piece. We currently, as a reminder, still don't own that corner piece. We have an option to purchase it, but of course we only are going to go through and do that if we can develop it in a way that makes sense for the community and make sense for Ashley Capital. So, that's what we're, talking about now. We did build the Amazon building in 2017 and we did sell the 32 acres to RNDC who built their own building. The tax abatements that were referenced earlier, those tax abatements go directly to the benefit of the users of those buildings and Ashley capital did not apply for tax abatements and does not in any way and did not in any way benefit from any prior tax abatements that were granted to these other users. If there's no questions on that background, we'll go to the next slide. Okay. So, Racer Trust was actually created by the bankruptcy court in New York in 2011. There is a lot of confusion for some people, because Racer Trust is still connected in people's minds with GM, old GM, and maybe even current, old General Motors, Corp, and current GM, but Racer Trust is independent of either the old GM or the current GM and racer trust has 6 offered to doing this ongoing, clean up on many sites across the country. This is just one of that. GM has no responsibility for this site. They’re under, both Eagle, the State Regulatory Agency and the Federal Agency, which is the EPA. So, their work is under supervision and they need permissions from those groups. Their mission has been prescribed by law. What kinds of things they can spend money on has to be approved and already there's some boundaries there when they were established. They do retain the responsibility for environmental cleanup and that is ongoing until, at one day in the distant future, it is completely released. We don't know when that will be, but the site is in a condition now that it can very safely be redeveloped and be occupied. Since Racer was established in 2011, it has spent $4,500,000 on this site for cleanup activities. McIntyre: Excuse me one moment, Susan. Council, would we want to ask your questions now or did you want to, raise your hand up if you'd like to ask your question now. If not, I’ll go to Jim, Brandon and Scott. Jim, you didn't have a question now? All right, I'll go to Brandon, Council Member McCullough. McCullough: Thanks, Madam President. I guess through the Chair, it might be better for Grant. Kind of new to the Council's scene. When it does say that Racer will have legacy involvement after the site's redevelopment. I know you touched base on it. Is there a set in stone time period. I mean, are we looking at another 5, 10, 15 years or until site is, I guess non contaminated. Is there an end to it? I guess just trying to educate myself a little bit more on that. Trigger: I'll be happy to respond to that question. When we took over the site in 2011, we had a budget that was laid out and scheduled for 30 years. At the time, we had a pump and treat system, we pumped contamination out from inside the slurry wall, treated and discharged into the sanitary sewer. That was about $350,000 a year. There was no end in sight, it could be 30 years from now and we'd be still operating that system. So, we approached the EPA and said, let's try this differently. Let's go in and directly aggressively treat the nickel and chromium contamination from the chromium plating operation. We did that about two years ago, injected thousands of pounds of chemicals into the ground inside the slurry wall and we removed almost all the chromium and nickel. In 2017, however, we encountered PFAS and if you’d been following that, I don't want to sidetrack this into a technical discussion of another contaminant, but that changed our remediation approach. So, we've developed an alternative approach, worked through with the city of Detroit with their treatment system. Great Lakes Water Authority and EPA in which we would, in conjunction with the development by Ashley capital, supplement with what Ashley does with additional liners, clay or otherwise, to prevent further ground water or rainwater getting into the slurry wall area. That would give us based on our analysis, a remedy that won't require any further direct 7 activity. We anticipate some ongoing monitoring. Over the years they had, as I mentioned, we have a budget for 30 years. So, the bulk of the contamination has been dealt with and the remediation strategy that we've developed in place that we would integrate with Ashley's development gives us the opportunity to more aggressively bring the site to nearly a closed condition with some limited long-term monitoring. McCullough: Thank you for that. Trigger: Let me add one supplemental point as well. We also enter into what we call an Environmental Easement Agreement. Where we retain a right of access and we have that current right of access to both the RNDC and the Amazon property and we retain the right of access to this property proposed to be developed by Ashley, even after we sell it. So, anything that we have to do to keep an eye on the remedies that we put in a place and so forth, we'll continue to write access to do that. As I mentioned, an obligation to do that, for the next 30 years, the next 25 years now, it's 30 years total. So, thank you. McIntyre: All right, Council Member Jolly. Jolly: Thank you. Madam President. We deal with these things occasionally, and this is probably the most clear-cut in regards to really qualifying to be a Brownfield, as far as I'm concerned. At this time, I'll offer an approving resolution of what is requested. I think it is appropriate, but I'll also offer, a denying and A Committee of the Whole as well, just for sake of discussion, if we need to go there. I'll just note too, this is the site that my father worked at when I was a child. So, it's particularly interesting to me to hear about this, but also be involved on some level and it's clean up. I think it's good for our community as well. Thank you. McIntyre: Thank you. Anyone else? Okay. I don't see any hands up. Sorry, I'm having a hard time with mine this evening, so I apologize for that for some reason it’s hard for me to see the slides and see everyone. All right, I'm calling for final opportunity for comments from Council? Bahr: Madam President? McIntyre: Yes. I'm sorry if you had your hand up. Bahr: No, I didn't because I was going to say, when you said final there, it made me nervous. Are you planning on closing the public hearing? I'd like to go through the remainder of the presentation. McIntyre: Okay. Fine. No, I met before we continued on. 8 Bahr: I do have more questions, but I decided to save them just in case they get answered. McIntyre: All right. No, let's continue. I shouldn't have said final. All right. Harvey: Can we move the slides forward? So, I thought it might be worth a quick review of who is Ashley capital. We were founded 1984. We have over 20 million square feet of warehouse distribution type properties in the Michigan area. Overwhelmingly most of that is in the Detroit area. Livonia is one of our biggest communities and favorite communities to work in. The list of properties, they're below what we have currently in Livonia. The big former plant on Plymouth road that we call Plymouth Road Technical Center, 1.1 million. Mastronardi Produce, the old Farmer Jack building, they're expanding currently. Livonia Corporate Center, four buildings were on the old Ladbroke racetrack site, 2 million square feet. LDC, that's another former GM plant that had previously been under the control of The Racer Trust. We purchased that. Livonia West, as the Amazon building, we already referenced, and we recently purchased a small building on Plymouth road. So, this would be in our next investment in Livonia, and we're excited about doing it. The big point here on this slide is that in all of these situations, we have not requested Brownfield funding before. We could have. PRTC was a Brownfield. Mastronardi, probably the second was a Brownfield. Livonia Distribution Center qualifies as a Brownfield. So, we haven't been coming before the City to get every bit of incentive that might have been possible and we wouldn't be here today if we didn't think this was essential for us to move forward with this project. Bahr; Madam president? McIntyre: Vice President Bahr? Bahr: I will ask a question just on that specific comment. Susan, I appreciate you pointing that out. I assume, let's say Plymouth Road Technical Center, for example, do you have some kind of other tax abatement on that or no? Harvey: No, we have not gotten any incentives on any of this, these properties. We have had tenants that lease in these properties that have, and I'm trying to think, Mark, you probably have a better memory on this, that might have applied for tax abatement. I know Mastronardi is applying for one right now for their expansion, which is considered pretty small. Years ago, when Technicolor was a tenant at Livonia Corporate Center, they applied, but again, Ashley capital has never applied for any kind of tax incentive, abatement, nothing like that. Bahr: So, so just curious. Some of those sites, as you point out Livonia Distribution Centers on a former GM site. Many of them are similar types 9 of industrial sites. I'm just curious from a business perspective, why you wouldn't have applied on those, and yet this one. Although, I'm remembering now, you said maybe it just comes back to the plating operation. Maybe I just answered the question for you. Harvey: Yeah, it really is the magnitude of the of the things that have to be done to the site so that we can develop it. We did have costs on other sites, but they just didn't rise to the level of pushing us to come forward to the City and ask for help. This site here, doesn't in any way, compared to those sites, as far as the magnitude of cost and complexity of the redevelopment. Bahr: Okay, thank you. Taormina: Could I, just one point of clarification on that, there's not a direct tax incentive, but in the case of Plymouth Road Technical Center, there was assistance provided by the Plymouth Road Development Authority for the installation of a traffic signal to assist the traffic routing at that particular site. So, again, it wasn't a tax incentive, but it was assistance provided by an entity here within the City and the PRDA. Thank you. McIntyre: Thank you. Alright, go ahead please, Susan. Harvey: Okay. Again, we're, trying to anticipate questions with these slides. So, this is just a review of, so why do we need to plan now, and these are the reasons: The existing conditions includes removal of 13 acres of slabs and basements. The removal of all the underground utilities for the old plant. The PFAS, the heavy metals, the environmental contamination. So, once you dig out all these basements and slabs, you have to fill in those voids with new dirt and there's a cost doing that, a big cost to doing that. We are trying to, keep the elevation of the building at a certain height to keep the foundations out of the water table and there's a cost with that. Without the Brownfield Plan, the market rents just wouldn't justify the construction costs. We wouldn't be able to rent it for enough money to make the investment make any sense. McIntyre: All right, thank you. Harvey: I'm going to let Kyle Morton speak to this slide. Morton: Sure, hopefully everybody can hear me. So, this was a question that we originally had gotten when we started this, but why specifically, do we need a brownfield plan here opposed to why we didn't have one for Amazon and RNDC. So, I think on the original aerial that Mark had pulled up, you can see that the large part of the facility, including the slabs and the basements sit on this subject site, roughly 19 acres in the Southwest 10 corner. Mr. Trigger had mentioned, this is the most contaminated site, from both the heavy metal perspective, which lead to Federal and State oversight. There's also the slurry wall, which has led to just more complications with construction and that makes it harder to build on this site. As Susan just mentioned, the design of this building; we're attempting to keep the building out of the water table to prevent having to treat and pump contaminated water. So that's a unique situation here. I think one of the big, big takeaways as well, is that second to last bullet point regarding the free dirt and one of the big changes between the original Brownfield plan that we submitted with the tax tables and then the revised tables that we submitted last week is the cost of this, this free dirt. When we were working on purchasing this overall 120-acre site from Racer, it coincided perfectly with the renovation and complete reconstruction of I-96. Working with M-Dot and Racer, we were able to get, what we think, ended up being almost 400,000 cubic yards of free dirt. So, when the road was being replaced, that material was dropped on site, at no cost to Ashley Capital or to Racer. So, those are the opportunities that we're going to pursue, hopefully to bring these costs down further. I guess I'll open it up to questions. McIntyre: Council? All right, next slide, we're on to the next side. Harvey: Yeah, Kyle? Morton: Sure, so, the summary of this request coincides with, again, the cover letter and those, adjusted tables. So, as Mr. Taormina mentioned, we're down from the 11.97 million to our current request is 9.7 million. Our request is for 28 years of capture, with a 90% capture, meaning Ashley Capital as the development entity, would capture 90% of the marginal increase, 10% would go to the LBRA. I don't think I need to walk through the tax tables as you have those in front of you and Mr. Taormina mentioned them earlier. McIntyre: All right. Harvey: Grant? Trigger: Yes. I guess my final observation would be that we have funds in our budget, annual budget, this year, to continue our work on this site. Our goal is to continue to work with a great partner, which is Ashley Capital and frankly, the City of Livonia. We're proud of the opportunities we've had to support redevelopment in the community, which is part of our dual mission to both clean up and support redevelopment. So, this is a unique opportunity for us because we integrate to construction activities that Ashley's planning with the closure of our environmental obligations. We've got budget approved for that work in 2020 and 2021. So, we look forward 11 to that. If you have other questions that you have about how this will all come together, I’d be happy to answer those. McIntyre: Thank you. Harvey: This is just a little more historical information that's what the site looked like way back in 1999 with all the structures and facilities. So, it's come a long way. The next slide? Again, we saw this earlier. Just shows you the condition of it with all the concrete slabs and basements, and so on that were left after the demolition of the buildings. Next, there's a, better picture that shows a bit of the Amazon building, the RNDC building, all the concrete that we're talking about that has to be dealt with and the parking parcel, which is up in the upper right hand corner, which will be essential to support whatever businesses go in the distribution building that's eventually going to be built. This is it, so, just sort of summarizing some of the high points. One of the things that's really important when considering a Brownfield Plan, and we know this is, a lot of money and a lot of years, is that Ashley Capital is motivated to get our costs down as much as we can. There's nothing in granting a Brownfield plan that would motivate us to spend money unless it absolutely had to be spent because any dollar we spend now is going to take many, many, many years to get back. Approving the plan at the amounts requested, does not in any way, incentivize us to, I'll say spend money needlessly, foolishly, because that will only hurt us. We still are hoping to get the cost down by getting some free dirt but we cannot get the free dirt and there's some sources that we think might be out there. Even if we secure a large free fill, we can't use it until we have a place to put it and we won't have a place to put it until we can get the basements and the slabs removed. Then we can move dirt on the property, but we can't do that until the Brownfield Plan is approved. With that, I'll turn everything over for questions, but that is the essence of, the situation and our request. So, please ask questions. McIntyre: All right, Council Member White. White: Thank you Madam President. Susan, I guess I had questions about your timeline. It looks like this assuming this Brownfield Plan is put in place, you're going to undertake the removal activities. When do you anticipate the construction would begin on the building? Harvey: Certainly, but I'm going to let Kyle, who's been laboring over that schedule with more detail than me. So, it's a great question for you, Kyle. Morton: Thanks, Susan. I think the main intention here is if we get the Brownfield Plan in place, that, during the winter it's called the first quarter, we're able to, get a demolition crew onsite and that crew is able to get the slab out of the way, deal with the basements, and then get us in a position when these road projects start in the Spring, so, April/May, that we're able to 12 accept this free fill. I think our actual, construction start date will be flexible based upon when we're actually able to get that material. If we, demolish st the, slab in someone shows up April 1 and it says here's all the dirt you need and you can, move forward, then that saves us potentially a million plus dollars from having to buy that there. So, long way of saying we're hoping by the late second quarter, early third quarter, that we're able to move, move forward in earnest. McIntyre: All right. Council Member McCullough McCullough Thank you, Madam president. Kind of going through the packet and I read the Brownfield Authority notes and, I know you guys haven't really went on record to say that the original amount that you were looking at was 11 million over 30 years, so having this new information and seeing you did your due diligence and got it down to the $9.7 and to 28. To touch base a little bit on the incentive that you would like to potentially see, you know, there's no silver lining to spend it all and hopefully we can see it drop a little bit. I, I definitely do think that, if this does go through, you do have an opportunity to save. I don't have it in front of me, but that fill dirt of a project coming up in the spring. The one question I did have on my notes, and this is probably for, through the chair to Susan is, I did notice that we' re estimating 185 new jobs potentially. I'm just trying to, I guess, get my arms around a little bit further, since Site B is going to be more trailer parking, I would assume most of these jobs would come from Site A. Am I correct in that assumption? Harvey: You are, and that's a reasonable guess based on 20 million square feet of distribution type buildings in Michigan. So, we honestly did some simple math and just took how many employees are in our buildings over the portfolio and said that's a pretty, conservative estimate. We certainly don't want to over-promise and we don't have a tenant identified, but based on our history. That's a reasonable estimate. McCullough: Thank you. I guess just time to kind of point out, I know that the city usually likes to have an 80/20, this is obviously a 90/10, but as, some of my colleagues brought up this is a very true Brownfield. It's something that has been impacting the city negativity from an environmental perspective for many years. After seeing that, having the potential to, I guess not fully abate it. but get our arms around it and then move forward and put some nice, exciting development. Seems to be good. Obviously hoping that that number drops, to more close to the 7.4, but obviously time will tell and depending on when it kicks off. So, I appreciate everything and the hard work and all the slides and information and thank you for your time. Harvey: Thank you. Vice President Bahr. 13 Bahr: Thank you. Madam President. One question for the Petitioner and then I think the remainder of my questions probably are more for Mark. There was the comment earlier about Racer can only do environmental costs as part of the agreement. Are all the costs that we're talking about reimbursing here, are these all Ashley capital costs or are some of those Racer costs? Harvey: These are all Ashley capital costs. Bahr: Okay, thank you. Like I said, I think the rest of my questions are for Mark. Mark, I'm sorry to ask these earlier, I just wanted to give time for the whole thing to develop. We’ve cut down on some of my questions. As we compare this to our other three, or do we have three or four other Brownfields in the city? Three? Right. Four. Okay. Taormina: Four active Brownfield Projects. Bahr: Do you know, off the top of your head, roughly what length of time and amounts were for each of those? Taormina: Yeah, the cost varied anywhere from, $1.2 million to, I believe, six and a half million dollars in the case of Livonia Marketplace. The lengths of time generally are, and Mike Slater can help me out on this. He probably has the spreadsheet in front of him, but 10 to 14 years, I think was the timeframe for those four other projects. Bahr: The Marketplace, are we referring to the one where LA Fitness is now, is that the one? Taormina: That's Livonia market two. Bahr: Two. Okay. So, we're talking about the original one. Okay. That was the six and a half million. He thought. I don't know, maybe Mike’s there, do you know those numbers off the top of your head, is that right? Slater: Yes, the number was 6.6 billion, that's the cap full of Livonia marketplace, but most of these cases the actual amount that's going to go to the Developers less than the cap because the years were limited. It’s not projected they're going to give back, in terms of reimbursement, all their eligible costs. Bahr: Okay, I'll just stick with you, Mike, for this one. No, It will be easy for you and I've had this question answered before. Just, I always have to refresh my mind and some of the details of these Brownfields. So, when we have an amount of years in an amount of money, if we reached the amount of years, and because delay of construction or whatever, they haven't been 14 able to recover all their costs. It's done. Right? It's whichever comes first to the years of the money? Slater: That's exactly right. Whatever comes first. Bahr: Okay. And I can go back to Mark. If Mike prefers. This, whatever we agree to here, does it commence with the start of construction or does it commence with the Council approval? Slater: It commences with the date in the reimbursement agreement. Bahr: Okay. Slater: I believe this one is 2023, Mark, or 2022. I think it's a couple of years down the road. Taormina: The first year of capture is on the table, and that is year number one is 2023. Bahr: So, obviously, even at the 28, is twice as long as anything we've ever done as a City. If, we were to, if Council were to choose to cut that down and I I'm not telegraphing anything, I'm just going to pick a round number, if we were to cut it down to 20. Does that necessitate, cutting down the amount as well. I see Mike shaking his head. Slater: No. They're independent of each other. Bahr: I know they're independent, but if it takes, the 28’s based on how long they, correct me if I'm wrong, and I clearly am from your answer, but I'm just going to ask the question anyway. The 28 is based on how many years it takes to capture the money to be reimbursed back to them. Right. Slater; That's their projection, but, Council's not under an obligation to reimburse 100% of what the requesting. So, if you did 20 years and they only got back, I'm picking a number out of the air $6 million, even though all the agreements, as the eligible costs are 9.4 million, if we get to the 20 years and they've only got $6 million back, that's all they get. Bahr: I guess what I'm getting at is, there's not a way, if we were to say 20 years, there's not a way for them to recover the 9.6 million in the 20 years, based on the tables that we have now. Slater: The only way that could happen is if the projections were drastically different than what actually happened, so if the value of the property, somehow skyrockets way above what the estimates are or the tax rates become much higher so the capture amount is much higher, but that can 15 happen to a small degree, I don't see that happening under our current tax laws to being off 20, 30, 40% now. Bahr: Okay, thank you. That takes of two of my questions. When we talk about the 90/10 split and the 10% to go back into the acronym that I can never remember, but the city, the Administrative portion of this. Do we have a sense as to what the City’s actual costs, not necessarily in terms of numbers, but what are the activities that make up the cost for the City that, it reimburses? Slater: Well, part of it's for administrative costs, which is relatively small. The rest of it is held in reserve for future Economic development purposes, which is fairly wide-ranging, but it'd be for future projects to assist with those. With those dollars that are saved. Bahr: Okay, thank you. If 28 years, long time, if Ashley were to sell this property, what happens financially, with the tax reimbursements to this, does that transfer to a new owner? Slater: Not without an amendment to the agreement. So, under the current agreement, the dollars would go to Ashley. If they had some side deal, we didn't know about, I guess that could, indirectly go to somebody else, but I believe the only other way to have the money to go to somebody other than Ashley would be to amend the agreement. Bahr: So, if Ashley sold it to someone else, they no longer own the property, therefore they're no longer paying the taxes, then, if they were to sell it prior to this deal being done, they just forego the rest of the potential reimbursement. Slater: No, they would still receive the reimbursement. They're the ones that are in the agreement is the beneficiary of this, it doesn't matter who's paying the taxes, it just matters what the difference between the base value is and the current taxable value and that money would go to Ashley again. Unless there's an amendment to this agreement that says it should go to somebody else. Taormina: Yeah, and I'll point out, that situation exists right now with the Livonia Marketplace or the majority of those assets have been sold by the original owners. So, they're still receiving the, reimbursement payments. Bahr: Okay. Got it. I believe that's the extent of my questions. I just, I struggle. I appreciate the presentation. Obviously appreciate what Ashley does in this community and they've done a good job of, of making their case and I appreciate that. I struggle with 28 years. That's a really, really long time, obviously, twice of anything that we've done. So, I’ve got some more 16 thinking to do on this, but I think that's all my questions at this point. Thanks. McIntyre: I think that Mr. Quimby would like to address, Mr. Quimby? Quimby: Hello, well, thank you. Mr. Bahr, I did want to make one point because you brought it up that it's important to remember that the reimbursement is to offset the negative equity of the development costs that are invested in the property. So, it's not uncommon for properties when they're sold for the developers, to still recoup those taxes, because ultimately that is kind of tie barred to the original investment that made the property developable in the first place. So, the economics of that, including the sale and all that is all baked into that. So, that does happen. That doesn't necessarily mean that someone's taking various advantage. It's just the economics of the project. Bahr: I understand. Thank you though. Thank you. McIntyre: Anyone else from the Council? Anyone else from the attending side? Ms. Harvey? Harvey: I just want to, the issue of the length of the plan. I certainly understand, 28 years is a long time. If you just compare the four other plans that the city has done, it really seems long. I would just ask, I guess to keep a couple things in mind. One is that this is an extraordinary redevelopment site. Unlike the prior sites that you have approved plans for and I think it's important to, to keep that in mind and also, um, you know, we are doing everything we can to get costs down. When cost goes down, those years go down as well. So, if we are able to get those costs down, it won't be 28 years, It will be something less than that. We also, again, wouldn't be here unless it was essential that we get this plan to move forward. So, you know, if the Council were to say, well, we'll approve it, but we only want 20 years just to choose that number. At that number, we’ll probably just move forward to move forward unless we got just extraordinary, lucky on finding savings, but we've really scoured this budget looking for savings and finding free fill is the one big thing out there that still could make a meaningful difference. Again, we're not here asking for one penny more than we think you might need, we're not asking for one day longer than we think we might need, we want to be paid back sooner rather than later and we certainly want to spend as little money in this plan as we can. McIntyre: Thank you, Mr. Morton. Morton: Dovetailing on that really quickly, I think it's also just kind of not just an Ashley Capital, dollars in dollars out related issue. We would also need a construction loan on this project. Likely go out to a lender who we've used 17 on other projects in the area. They typically provide, construction debt up to 60% of the project, something in that area. From their perspective, the cost from this project are so extraordinary that they look to, they value that TIF payment in a way to help them rationalize the cost as well. So, it's really not just, it's something we're struggling with, in the capital markets realm as well, not just internally, trying to explain to someone why this project costs, all things considered about $10 million more than it would be if we were just down the road. That's it. McIntyre: Thank you. I just like to comment that Ashley is an outstanding company with a history of outstanding projects. Ashley has a long track record about standing projects in Livonia, this is a unique site. It's unfortunate that the way the, none of us can change in 2011, the bankruptcy structures, a new GM to skate out of really horrible environmental situations. Left communities holding the bag, if you will, and I appreciate everyone's efforts. Companies like Ashley Capital, who are looking to remediate those sites. All of that said, it's still, on unprecedented length of time. I'm sensitive to the economics, but I'm sensitive to the fact it puts, generations of taxpayers in Livonia, signs them up to something that, you would be committing to now. So, thanks. Anyone else? All right. And I should have mentioned that this evening's subject matter for this public hearing will be on the Regular agenda of our December 14th, 2020 meeting. So, if no one has anything else, we will adjourn the public hearing at 7:55. Thank you everyone. Thank you to everyone from Ashley capital and Racer Trust and thank you Council. Everyone else have a good and safe and healthy Thanksgiving. Good night. As there were no further questions or comments, the Public Hearing was declared closed at 7:55 p.m.