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HomeMy WebLinkAbout2021-12-06 - IFEC - International Extrusions, Inc. CITY OF LIVONIA PUBLIC HEARING Minutes of Meeting Held on Monday, December 6, 2021 ___________________________________________________________________ A Public Hearing of the Council of the City of Livonia was held at the Livonia City Hall Auditorium on Monday, December 6, 2021. MEMBERS PRESENT: Kathleen E. McIntyre, President Scott Bahr, Vice President Jim Jolly Rob Donovic MEMBERS ABSENT: Laura M. Toy Brandon McCullough Cathy K. White OTHERS PRESENT: Paul Bernier, City Attorney Mark Taormina, Planning and Economic Dev. Director Jacob Uhazie, Planning and Economic Dev. Coordinator Sara Kasprowicz, Recording Secretary The Public Hearing was called to order at 7:02 p.m. with President Kathleen McIntyre presiding. This item is regarding a request for approval of an Industrial Facilities Exemption Certificate to accommodate an advanced extrusion line which will add qualified new jobs for fifty (50) individuals, located at 39001 Schoolcraft Road, Livonia, MI 48150. (Industrial Development Overlay District #112). This item will move to the Regular Meeting of December 13, 2021. The Public Hearing is now open. There were 2 people in the audience. McIntyre: Good evening, Mr. Taormina, are you going to… Taormina: Yes, madam President, I’d be happy to. This is a public hearing item that involves a tax abatement request by International Extrusions. They are located on the south side of Schoolcraft Road, just east of Eckles. International Extrusions are Intex, owns a 105,000 square foot industrial building, where the company manufactures a variety of high-quality products through a process called aluminum extrusion machining. Originally built in the 1940’s for a company called Century Spray Corporation. The building was later occupied by Ingersoll-Rand and then by Cinetic Fives Corporation. It was in August of 2019 that 39001 LLC, a holding company for Intex acquired this property. They are seeking approval of a facilities exemption certificate on a capital investment, totaling approximately 12.5 million dollars. Of this amount, nearly 5 million dollars is in the form of real property improvements for the construction of a 32,000 square foot addition on the west side of the building, for an additional extrusion manufacturing line. Over the next three years, the investment will result in sixty-three (63) new jobs, supplement with the 2 requested tax abatement, the MEDC is awarding a Michigan Business Development grant to the program in the amount $189,000. With a full capital investment, real property improvements and assuming a commensurate increase in the taxable value of the 2.42 million dollars, the first-year taxes with the abatement in place, would be about $78,000. This is versus about $142,000 without an abatement. This represents an annual savings of roughly $65,000 for the company. After twelve (12) years, the life of the abatement would represent a total savings of approximately $768,000. That’s measured in today’s dollars and valuations. With the IFEC, the City’s portion is roughly $16,170. As an eligible manufacturer, International Extrusions is exempt from paying personal property taxes and instead, pays an essential service assessment, a small portion of which is paid back to the city each year. Approval of the tax abatement will not impact any existing tax assessments. Submitted with the application is a signed letter of agreement. The company is applying for a twelve (12) year incentive as recommended by Livonia Tax Incentive duration guidelines. This evening, we have George Gazepis, he works for the company. I met George back in the late Spring of 2019 we were introduced by another company here in Livonia, prior to when Intex acquired the property. Since then, we’ve been working with this company towards improvement and we are happy now to present this project, which is a substantial investment in the City of Livonia, thank you. Jolly: I’ll offer an approving. McIntyre: Yes, Mr. Bahr, did you have something? Bahr: Mark, you said $768,000 over twelve (12) years of savings and said $16,000 for the City. Is that $16,000 total over the twelve (12) years? Taormina: I probably should have explained that better, no, $16,000 dollars, that’s what will net the city each year in tax revenue. That’s versus about $32,000. Bahr: So, sixteen (16) for the City would have been thirty-two (32), so sixteen (16) per year? Taormina: That is correct. Bahr: Ok, it was probably rolled into what you said, sorry I ask this, because I’ve been on Council awhile, but we don’t deal with this every day, can you just give me the quick synopsis again on how this works? How this one is structured? In general. Taormina: The investment. What they will do, is they’ll receive, instead of paying ad valorem taxes on the increased value, they’ll receive a certificate in lieu of that being on their taxes. They’ll pay their taxes based on that certificate, which is a reduced amount. Of course, these are all rough estimates. These are estimates based on the information that we received from the company and also using information from the Assessment office. 3 Bahr: So, we are more or less holding the value for twelve (12) years? Taormina: The value will be allowed, yes, it will apply the taxes to the certificate. There will still be an increase in the valuation of the property and then once the abatement has expired, then it goes back up to the original taxable value. Bahr: Got it, thank you. I know I’ve dealt with a number of these. Taormina: These are actually our first two abatements of the year, I believe. McIntyre: It has been a while. Councilmember Donovic. Donovic: Thank you, madam President. Through the Chair to Mr. Taormina. At the end of that twelve (12) years or whatever the year City Council approves, it could be ten (10) years, right, it is up to City Council to decide the timewise. At the end of that timeline, the City taxes will jump back up to the current day and they’ll receive a big increase at that time, right? Taormina: Yeah, the abatement will cease, and they’ll pay taxes on the full valuation. Donovic: There isn’t a phased approach, its just the following tax year, they’ll pay the new amount. How many of these do we have here throughout the city? Taormina: That’s a good question, I’d have to go back, because the ones that were granted, expire. Every year, we might have one or two. I will tell you that in your assessment that you receive every year, the numbers are in there. The companies that are still working under a tax abatement. Donovic: Thank you Mr. Taormina, I appreciate it. McIntyre: All right, we have an approving offered by Councilmember Jolly, if no one else has any questions we can move on to the second item. Taormina: Thank you. Thanks, Mr. Gazepis, I guess you don’t have to speak. McIntyre: This will go on the voting meeting, our Regular meeting next Monday, a week from today, and that’s a 7:00p meeting. Gazepis: Should we be represented at that meeting? McIntyre: It’s a good idea since we don’t have all members of Council here this evening. Gazepis: Will we get notice? McIntyre: If you send Mark your email address, we’ll make sure Sara sends you a copy of the agenda. Thank you very much for being here. 4 Gazepis: I could tell you guys a little history of the company. I worked for various parts of the company since 1963. McIntyre: That’s the same age I am. Gazepis: No, I was working in 1963. The company started back in the 1950’s. Do you have a little time? McIntyre: Please do, we’re always interested in learning about the interesting history of the Livonia businesses, so we would be interested in hearing. Gazepis: The company started in the 1940s after World War II in Detroit, Michigan. We had a large presence in the northeast part of Detroit, near Hamtramck. We had three (3) buildings. We actually started manufacturing aluminum storm windows and aluminum storm doors, aluminum siding and aluminum awning components. Those were the businesses we were in. Nick’s father, I worked for those year, I had a great idea, at that time, we were making storm windows indoors, but he kind of set up a dealer network, where they were buying their aluminum, including parts, corners, everything but the glass, vinyl, weather stripping for the storm windows and storm doors, he developed a dealer network all over the U.S. and there was a little problem. We were buying the aluminum extrusions using them ourselves, obviously, and the dealers were making pretty-much our windows and our doors, but we had trouble supplying things. We were having to buy our aluminum from rentals or Keiser, one of those large companies and then a big light came up that said hey, we need to start making our own aluminum. In 1965, we bought our first aluminum extrusion press. I had just started with the company, and I had just went with Marshall, we had bought an existing aluminum, at Mount Elliot and Jefferson, a press in an old building, and we kept it there. Marshall bought a bunch of land in Garden City, which became Garden City Industrial Park. We own four (4) buildings in Garden City Industrial Park. We have four (4) extrusion presses there. There was no room for expansion, and we needed to expand. That’s how we got in Livonia. We bought the Fives building, set up an LLC and bought an extra extrusion press, manufactured in Italy, set that up. We had to do some modifications to the building to accommodate it. At that time, we did not apply for a tax abatement. Business got good. Everyone in our industry is very, very busy worldwide. Logistics problems, supplies. McIntyre: How is your raw material coming along? Gazepis: Terrible. We had our major supplier in Shelbyville, Kentucky, buy 3.2 million pounds of aluminum a month from those fellas. We have three other vendors and the are all behind. Our major vendor, who is domestic. He is our only domestic. We have him, we have our Canadian vendor, we have a Russian vendor and we have an Indian vendor. All of those guys are behind and some of them are over a month behind, so we continue with trying to keep production as good as we can. From what I understand, the new press is coming, its scheduled to deliver some time in January. The construction for the 32,000 5 square foot addition is ongoing right now and we plan on getting that thing up and going really, really soon. We’re hoping to be in production in a good way by Q2 of 2022. McIntyre: Mark, did we say there was a two-year construction period included? Taormina: No, just twelve (12) years. McIntyre: Ok, we didn’t need that. Well, that’s excellent. Gazepis: That’s just a little, I mean, I can go on and on, but I’m not going to do that. I’m glad you guys let me talk, are there any questions specific that I can answer? Jolly: You mentioned that the last extruder was manufactured in Italy. First question, where is the new one manufactured? Gazepis: Italy. Jolly: They have the market, I guess. Gazepis: There is not a machinery company in the United States that manufactures aluminum extrusion presses. We bought a new one from a company in 1973 called Sutton and I don’t know if they are still in business. There are no manufactures, that’s why we went to Italy. I first thought, the Germans were known for equipment manufacturing, but obviously, the Italians are too, because that press in Livonia is really… Jolly: My second question is, what percentage of your operations are in Livonia versus Garden City at this point? Gazepis: Right now, we’re about, the machine we have here is so automated. It produces pounds that you wouldn’t believe. We’re probably 75/25, but with the new machines, we’ll be over 50/50. That’s with two machines versus four machines in Garden City. Our equipment in Garden City is old with the exception of one, fairly new press. Jolly: Thank you, sir. McIntyre: Mr. Donovic. Donovic: Thank you madam President. Just a quick note, this is funny to say, when I was eighteen (18) years old, my father said I had to get a factory job and learn what it was like to work in a factory, so I actually worked at International Extrusions in Garden City for about three months. It was one of the most miserable jobs I ever had, it was hard work. I loved the staff, they were great, very nice people, but boy oh boy, was it hard work. The saws, it was hot in there and it was pretty busy, right off of Ford Road right there and Henry Ruff, I believe. 6 Gazepis: We’re at Ford Road and Venoy. Donovic: It was a tough job, long manual days and it set me up for the rest of my life, so I appreciate the experience. Gazepis: Wonderful, that’s great to know. Donovic: I was going to ask for a tour, but I still have nightmares. Gazepis: It is very hot in the summer and very cold in the winter. Donovic: It was very nice there, it was a great place to work, with the comradery there, very cool being here today, looking at this agenda item. Thank you, sir. McIntyre: Thank you and I’ll just say, there is a great appreciation in our community for people that make things. We’re proud of our industrial district that was a great foresight on the part of the city and think it’s always given this city a true appreciation for people that make things. Gazepis: We’re very, very happy to be in Livonia. Everyone has been cordial; Mark has done great. McIntyre: Mark is the best. Gazepis: Mark is a good guy; he knows what he’s doing. I have done maybe three or four of these in Garden City, but it has been a long time since we did a 198. McIntyre: Thank you. Gazepis: Our Controller put this package together, she’s just a wonderful, wonderful person. McIntyre: Give our best to your entire team. Gazepis: Thank you very much for having me. McIntyre: Thank you so much for the history of the company and the education, I’ve learned a little bit about extruding. Gazepis: That’s just a little bit, but that’s ok. I’m glad you worked at International Extrusions. As there were no further questions or comments, the Public Hearing was declared closed at 7:21 p.m.