HomeMy WebLinkAboutLBRA MINUTES 2016-01-27 MINUTES OF THE 10th MEETING OF THE
CITY OF LIVONIA BROWNFIELD REDEVELOPMENT AUTHORITY
The 10th Meeting of the Brownfield Redevelopment Authority of Livonia was
called to order at 5:00 p.m. on Wednesday, January 27, 2016, by Chairman Jack
Engebretson.
MEMBERS PRESENT: Jack Engebretson, Chairman
Lynda Scheel, Vice Chairman
Joe Taylor, Treasurer
Ken Harb, Secretary
Paul Condon
Kathleen E. McIntyre
Bill Fried (arrived at 5:15)
MEMBERS ABSENT: None
OTHERS PRESENT: Mark Taormina, Planning & Economic
Development Director
Michael Slater, Director of Finance
Barbara Gamber, Economic Development Coordinator
Dennis Wright, Mayor
Karl Zarbo, Lormax Stern Development Company
Mark Jacobs, Dykema Gossett, PLLC
Trey Buffington, National Real Estate Management Corp.
Representatives from J. S. Vig and NTH Consultants
Margie Watson, Planning Department
ROLL WAS CALLED. A quorum was present.
APPROVAL OF MINUTES
On a motion by Scheel, seconded by McIntyre, and adopted, it was:
#01-2016 RESOLVED, that the Minutes of the Ninth Meeting of the City of
Livonia Brownfield Redevelopment Authority held May 27, 2015,
are hereby approved as submitted.
A roll call vote on the foregoing resolution resulted in the following:
AYES: Scheel, McIntyre, Condon, Taylor,
Harb, Engebretson
NAYES: None
ABSENT: Fried
ABSTAIN: None
Brownfield Redevelopment Authority
January 27, 2016
Page 2
Mr. Engebretson, Chairman, declared the motion is carried and the foregoing
resolution adopted.
REVIEW OF LBRATAX CAPTURE FOOF REIMBURSEMENT PAYMENLIVONIA MARKETPLACE
CONSIDERATION #3 (S-2015) FOR
AUTHORIZED ELIGIBLE EXPENSES.
Engebretson: Mr. Taormina, are you or Mr. Slater going to present this?
Taormina: I'll provide the initial background and then if Mike wants to add
some items, I'll hand it off to him. This marks Payment #3 to the
Developer of the Livonia Marketplace, Livonia Phoenix. It is the
first reimbursement payment that is not affected by TURBO.
What you're looking at today is substantially different than the
first two payments in terms of the amount and that is because
TURBO is no longer in the picture. TURBO was part of the
Wayne County's Land Bank Authority. It was a separate
incentive program that ran for five consecutive years. It
commenced in 2010 and then ended in 2014. That basically
reimbursed the Developer for half of the real property taxes.
Now that it is expired, 100 percent of the real property taxes are
included in the computation of the incremental capture. So what
we have today is a valuation, both real and personal, at the
Livonia Marketplace totaling $12,457,300. This is actually a
decrease from the previous year's valuation of $13,425,660.
Several factors contributed to this decrease. There was a tax
tribunal case involving Walmart which lowered the store's
taxable value over $570,000, followed by depreciating personal
property values for several of the larger businesses, including
Bank of America, Walmart and Kohl's, and the elimination of
personal property tax for all of the small businesses with
personal property valuations of $80,000 or less. That is what
caused a slight devaluation overall. We have collected almost
100 percent of the taxes. Just a very meager amount was not
collected but that does not really affect the reimbursement
payment. In total, we captured $242,034.60. Of this, $48,406.92
(20%) will go to the Revolving Fund and $193,627.68 (80%) to
the Developer. With that I will answer any questions you might
have. Mike has the Tax Capture Table which was attached to
the staff analysis. He can provide details on that and any other
information.
Engebretson: Mr. Slater, would you like to comment?
Brownfield Redevelopment Authority
January 27, 2016
Page 3
Slater: We worked with the Treasurer's Office to make sure the values
and the taxes paid included in this worksheet are correct. I'd be
happy to answer any questions, but you've seen this display
before. And as Mark said, the only difference here being that
TURBO is no longer a factor.
Engebretson: You're right. We are very familiar with it having gone through
this several times now, in addition to our original launch of this
whole process. We have learned that it's an extremely
complicated and very detailed process and one that this Board, I
know, has total trust in the Staff and the Finance Department
and the Planning Department. I would like to let the record show
that we're very grateful and appreciative of the work that both of
those departments do. I know that I don't have the facilities to
go through and really totally understand all of the detail in the
spreadsheets, but I know I don't have to. If the staff says they're
right, they're right. I know that if Mr. Zarbo and his cohorts had
any issue with it, we would certainly hear from him. We're going
to give him the floor, but first I want to welcome Mayor Wright to
our meeting.
Wright: Thank you.
Engebretson: Traditionally, we offer the Mayor an opportunity to add any
comments of interest.
Wright: Just keep collecting the money like you do and we'll be just fine.
My sincere thanks.
Engebretson: We're glad you're with us and congratulations on your election.
It's my first opportunity to congratulate you in person. I hope I'll
have an opportunity to see you again soon.
Wright: I'm sure you will.
Engebretson: Mr. Zarbo.
Karl Zarbo, Director of Operations, Lormax Stern Development Company. We're
the owner/operator/manager of the shopping center. Again,
thanks to the Staff. It's been seven or eight years working on
these numbers and I always appreciate Mike's help. We attempt
to budget for this each year for our team of investors and we are
right about at the $200,000.00 mark, and it's without knowing
what happens totally with value. So we do crank through these.
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January 27, 2016
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We do look at Mike's outstanding work and we're very, very
happy always with the support from the team. We're happy to
keep this alive.
Engebretson: We are too, Karl. Any questions or comments for staff from
members of the board?
Taylor: Karl, is there anything new and exciting happening over there?
Zarbo: A couple things happened in late 2015. We opened a new
Dollar Tree just under 10,000 square feet. Their numbers were
a phenomenon when they were in the mall. Their numbers
stayed very, very good in the several months that they've been
open. We've opened Hibachi Grill that's in the building with the
Coney Island. It's about 2,500 square feet. They opened late
last year. The owner, Judy, has a lot of energy and is doing a
great job in a very short period of time. We had a conversation
with her yesterday and she's very, very happy with the business
in that new operation. We also opened 1,000 Degree Pizza and
we're doing quite a few of them. I don't know if you've been in
there but it's pretty interesting. You've got to go in if, nothing
else, just to see a pizza made in six minutes and the type of
oven they use for pizza now. It's pretty good food and it's an
interesting concept if you've never seen it before. They opened
late last year also. I don't have a feel for the numbers yet
although we're five or six units with them now. Across the board
what we're hearing is, again, all very good things. We've worked
on the out parcel where Baker's Square used to be. We're very
close to finishing up a deal on that 1.4 acres. It would be a food
operator. We didn't close with them yet, but we actually signed
an option the week after the Planning Commission approved the
site plan and that's moving along quite nicely. We have our
hands full across the street with the former Farmer Jack. We've
been working a little bit with Mark and will continue to work
through Mark to see whatever influence anyone in the world can
attempt to put on Wayne County. The issue there is we cannot
find a dance partner that's willing to either pay for the correction
of what Wayne County wants today with stormwater
management or share it with us. Of the players that are out
there in today's retail market, we just can't make the numbers
work when we see what kind of rents we would get from tenant
a, b, or c as opposed to what it would take to bring that site into
their non-realistic compliance. It's been there for a million years.
It feeds into a 10 foot drain but it is what it is. We've got two
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January 27, 2016
Page 5
more units left. One is very, very weak. One is on life support.
We hope we can pull one of those out, but we're not going
anywhere. We'll keep slugging away until we fill it. Everything
we're looking at is to knock it down and start all over again.
Taylor: You do own it, don't you, Karl?
Zarbo: Yes, we own it. Correct. It's a little different partnership, but it's
all the same people. That's kind of where we're at.
Engebretson: Let the record show that Mr. Fried joined us at 5:13. Thank you
for coming Bill. Anything else from the Board? If not, a motion
would be in order.
On a motion by Scheel, seconded by Taylor, and unanimously adopted, it was:
#02-2016 RESOLVED, that the City of Livonia Brownfield Redevelopment
Authority does hereby approve the distribution of Captured
Taxes from the Livonia Marketplace Project as follows:
1. Payment #3 (S-2015) to the owner of the Livonia
Marketplace, Livonia Phoenix, L.L.C., in the amount of
$193,627.68 for the reimbursement of eligible expenses
related to the redevelopment of the Former Livonia Mall
Site; and
2. A deposit of $48,406.92 into the Livonia Brownfield
Redevelopment Authority's Local Site Remediation
Revolving Fund.
Mr. Engebretson, Chairman, declared the motion is carried and the foregoing
resolution adopted. Any further discussion?
McIntyre: I have a question. What we're looking at for the Baker's Square
out parcel, will that be included in the TIF?
Slater: Yes. That's part of the district.
Engbretson: Thank you, Karl.
Zarbo: Thank you all very much.
Brownfield Redevelopment Authority
January 27, 2016
Page 6
REVIEW OF LBRA TAX CAPTURE FOR LIVONIA COMMONS AND
CONSIDERATION OF REIMBURSEMENT PAYMENT #1 (S-2015) FOR
AUTHORIZED ELIGIBLE EXPENSES.
Mr. Taormina: This item represents the first brownfield TIF reimbursement
payment to the developers of the Livonia Commons shopping
center located at the southwest corner of Middlebelt and
Schoolcraft Roads. This is for the Summer 2015 tax collection
period. LBRA approved this project back in January, 2014.
Official final approval was granted by the Livonia City Council on
February 19, 2014. The project in general involved a complete
renovation of an aging and blighted commercial shopping
center, and the construction of new retail space, which included
an addition to the north end of the existing building as well as
two outparcels. The project now has major tenants including
Dick's Sporting Goods, Jo-Ann Fabrics, and Party City, which
recently moved in the southerly portion of the building, and Rally
House which is at the north end next to Dick's Sporting Goods.
In the outparcel building we have Aspen Dental, Jimmy John's,
T-Mobile, and a soon-to-built Panda Express which is a full
service standalone restaurant. The predevelopment brownfield
conditions at the site included both MDEQ environmental
response activities in the form of some underground
contamination as well as Michigan Strategic Fund (MSF) non-
environmental activities which were associated mostly with the
demolition and the site preparation activities. The Developer has
supplied a cost breakdown of all of the activities totaling about
$2,190,176. To date, they have expended roughly $2,108,335
that either has been paid or incurred as of December 31, 2014.
The only remaining work that we noticed is identified as a vapor
barrier. This is something that will be done in connection with
the Panda Express restaurant which has yet to be built but is
anticipated to be constructed sometime this year. The largest
single expense appears to be soil remediation at $992,217.96.
Unlike the Livonia Marketplace Brownfield Plan, which
authorized both the capture of both real and personal property
taxes, the Livonia Commons Brownfield Plan captures only the
incremental taxes on the real property. The established base
value is $1,704,800. The amount of funds available for
reimbursement to the Developer is the captured taxes, both
summer and winter, on the value of the real property above the
base value, less various other costs, including payment into the
Revolving Fund, administrative costs, and then three mills that
will be directed to the State of Michigan as part of the school tax
a
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January 27, 2016
Page 7
capture. As of December 31, 2014, the taxable value of all the
real property at Livonia Commons totaled $2,731,090. The total
amount billed and collected for the Summer 2015 tax period
equals $81,237.33. When we take the real property value, less
the base value, and then apply the summer tax rate for capture,
approximately 26.6 mills, it results in a total tax capture of
$26,212.28. So that's the total amount of capture. We now
subdivide that into the various categories including 20% to the
revolving fund, 80% goes back to the Developer, and then, as I
indicated, three mills back to the Michigan Department of
Treasury for state education tax capture. So roughly $4,650 will
go to the Revolving Fund, $18,593 to the Developer, and $2,970
to the State of Michigan. Thank you.
Engebretson: I'd like to invite the Developer's representative to join us at the
table. Mr. Slater, do you have anything to add to the comments
before we go the Developer?
Slater: This brownfield is obviously simpler that the Livonia Marketplace
from the standpoint of there is no TURBO, there's one parcel
versus the 20 that we have at the Marketplace, and this is only
real property versus real and personal. So this is a little bit
easier. The one thing that is different than Livonia Marketplace
is the 3 mills that get captured and remitted back to the State.
That's a new requirement from the State.
Condon: Mike, will that 3 mills continue each time we have a
disbursement?
Slater: Yes.
Condon: And it will never apply to Livonia Marketplace.
Slater: No.
Condon: Okay.
Engebretson: Please share your name and address with us for the record.
Mark Jacobs, Dykema Gossett, 400 Renaissance Center, Detroit, MI 48243. I'm
the environmental attorney representing the Developer. With me
here tonight is Trey Buffington, who works for National Real
Estate and he's here to speak on behalf of the property
manager. Also with me tonight are representatives from NTH
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January 27, 2016
Page 8
Consultants, the environmental engineers that worked on the
cleanup of the site, and they're here to answer questions if you
have any in that area. Also with me here tonight is folks from J.
S. Vig, the builder.
Engebretson: So you brought the army with you.
Jacobs: I thought you might have questions of the owner and about what
went on out there while this project was proceeding. I'm not
going to presume that I'd be the best person to answer those
questions, so I just wanted to make sure that on the first
meeting with this Board that everybody who could possibly have
information that you may need is here.
Engebretson: We appreciate, sir, the courtesy that you've shown by making
the effort to have all the various interests represented. Let me
just say that the concept which emerged a number of years ago
has proven to be extremely beneficial to the City and to several
developers. We got pretty worn down by learning the process,
but going through it has been a lot less difficult because of good
people on the development side and good people on the City's
side on our staff here. You heard the Planning Director remark
on the details of this first disbursement. Do you care to
comment on that or make any further comments?
Jacobs: Of course we ran the numbers as well, and as usual, these guys
have done an excellent job. Our numbers came out the same as
theirs. There's one issue that I don't think we need to deal with
tonight. There's a question of at what point funds gets placed in
the Local Site Remediation Revolving Fund, the LSRRF.
There's a question of what the development agreement
provides, whether it starts today or whether it starts down the
road. Mark, Mike and I will deal with that following this meeting.
Engebretson: So we don't have to deal with it.
Jacobs: Not tonight. It's not going to require an amendment or change.
It's just an interpretation.
Engebretson: Any further comments?
Jacobs: No, I'd just like to throw it open to the Board and make sure you
guys are comfortable with what we've done and understand
where we're going with this.
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January 27, 2016
Page 9
Harb: I'd like to make a comment. I believe that corner is a beautiful
corner. You guys did a great job on that whole area. It's so
exciting to drive down and see all the development. Thanks to
this program and the developers, I think Livonia has definitely
benefited greatly from it.
Ms. McIntyre: Pursuant to what Mr. Harb said, an interesting thing is, this
summer when I was campaigning for City Council, one of the
complaints that I heard from some people was the traffic
congestion. You're certainly empathetic right to people who
were used to just rolling through that intersection with no traffic.
But it was almost kind of a nice compliment to the development,
that that now is an issue because for many, many years that
was not an issue.
Condon: I've been through there at various times of the day and whoever
laid out the traffic patterns, the lights, the driveways, things like
that, it seems to flow very, very well. I've not noticed any real
issues.
Ms. McIntyre: It does intra-center very much. The issue is when you're going
westbound on 96.
Condon: I've never had a problem.
Ms. McIntyre: Well, I notice a lot of nights when I'm coming home, that there's
a backup on that ramp at rush hour.
Jacobs: Cars west on 96 onto Middlebelt? There was a lot of traffic there
tonight.
Ms. McIntyre: It was interesting. Right after those of us who have been here
for a long time and saw that lane with absolutely no activity and
very little traffic, that it's now at a point where that's the concern.
Condon: Is the property fully developed now?
Buffington: Not quite. We have about 30,000 feet in the main building, next
to Party City. Party City opened January 2 and we have a lease
out to a national retailer for that remaining 30,000 feet. Then it
was mentioned earlier, Panda Express will taking the out lot
pad. We're in final lease negotiations with them as well. That
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January 27, 2016
Page 10
leaves us 1,800 square feet in the outlot building as our only
vacancy.
Mr. Taormina: I have a couple of comments and then a question to the
Developers, if I may through the Chair. First, I'd like to just thank
your team for the documentation you provided relative to the
spreadsheets and everything else. At this point, there doesn't
seem to be any issues. We had a real challenge this year
getting Industrial Road paved and installing a new traffic signal
at that intersection which includes part of this property, and the
Developer was very good to work with in that particular case.
NTH and the team has provided us with a lot of details and
summary sheets and also an explanation of the work that was
done including the cleanup of both the former dry cleaning
operation as well as the gasoline station. Hopefully you've had a
chance to take a look that. It summarizes the work that was
done in order to clean up the site, but my one question is, the
entity that will receive the reimbursement, if you can provide us
with that name. We have identified the partnership, which is
Tobeck Corp., Maxlune Realty Corp. and Antonoff Family Trust.
Our Treasurer Department will have to know precisely to whom
the check is going to be remitted.
Buffington: As I understand it, there are three entities that have common
ownership and interest in the property. Those owners are the
ones who get the reimbursement, whether it's through National
Real Estate or not, we'll have to let you know.
Engebretson: Any further discussion? I'd like to take a moment to commend
the Developer and the team that works with the Developer.
Having been involved in various capacities in the City dealing
with land use matters for the last 30 years, this has been a
troubled piece of property forever. What you've done is to take a
nightmare and turn it into a premier development that brings a
lot of excitement to the City. If the brownfield development
process helped make that happen, then I'm really happy. Even if
it didn't, we're glad that you're participating in it. You've just
done an outstanding job. To whoever works with you, in taking
an eyesore nightmare sight and turning it into a gem that you've
created there, please let them know how much we appreciate
everything that's been done.
Jacobs: I can tell you that this program played a significant role in the
redevelopment of the site. Forest City left the city and my client
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January 27, 2016
Page 11
with a terrible mess. They had a gas station out there that was
poorly tended and leaked all over the place. We just found
during the last cleanup the final vestiges of the mess they left
behind that they were supposed to have dealt with but didn't. It
was a complete surprise to us. They also had a dry cleaner out
there. I have not seen many dry cleaner sites that were as badly
contaminated at this one. You see the numbers. It was a
tremendous financial obstacle for redevelopment, and through
the support of the City we were able to overcome it. This is
exactly the kind of project that this program is intended to apply
to.
Engebretson: I appreciate your comments, sir. We've been aware for a long
time that there was a lot of bad stuff put in the ground out there
that you're referring to. The efforts made by the City to
encourage redevelopment of that property went unnoticed for a
long time. We're just really glad that you're there now and really
appreciate what you've done.
Jacobs: Thank you. This is our team with V. S. Jig and NTH. I really
appreciate them coming today. I'd like to acknowledge them as
well.
Engebretson: To whatever extent you had any role to play at that
development, you can be very proud of the end product.
Taylor: I just want to say that I echo what Jack has said. It's a great
project and I know you don't own the corner where the oil
change is, but it's just too bad that you can't get rid of that
because it kind of destroys the whole look. It's too bad. Just a
comment. Thank you.
Jacobs: They did try to acquire that more than one time. Those guys
know they're sitting on a piece of property that the City wants
them to get rid of. They're asking too much money.
Engebretson: Sometimes that works and sometimes it doesn't work. We've
seen it bite people that have gotten into that mode. It's not
always productive.
Mclntrye: I just want to say commenting on what's over there and the
great flow of traffic. The other great thing is that it brought us
Livonia's first standalone Starbuck's location. It kind of put
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January 27, 2016
Page 12
Livonia on the Starbuck's map. Originally, it was hard to
envision how that traffic flow would work, but it's pretty amazing.
Engebretson: We're ready for a motion.
On a motion by Fried, seconded by McIntyre, and unanimously adopted, it was:
#03-2016 RESOLVED, that the City of Livonia Brownfield Redevelopment
Authority does hereby approve the distribution of Captured
Taxes from the Livonia Commons Project as follows:
1. Payment #1 (S-2015) to the owner of the Livonia
Commons, National Real Estate Management Corp., on
behalf of Tobeck Corp., Maxlune Realty Corp., and the
Antonoff Family Trust Partnership, L.L.P., in the amount of
$18,593.13 for the reimbursement of eligible expenses
related to the redevelopment of the Livonia Commons;
2. A deposit of $4,648.28 into the Livonia Brownfield
Redevelopment Authority's Local Site Remediation
Revolving Fund; and
3. A total of $2,970.87 (3 mils of state education tax capture)
to the Michigan Department of Treasury.
Mr. Engebretson, Chairman, declared the motion is carried and the foregoing
resolution adopted. Best wishes for continued success. Is there
any other business to come before the Board?
Ms. McIntyre: I submitted my letter of resignation because of the time
commitment primarily relative to the day job I have. I don't know
how active this Board will be.
Engebretson: We meet about twice a year.
Taormina: We meet twice a year unless we have additional projects come
before us, which is not out of the question, but those don't
typical require more than an additional meeting, and if we could,
we would bring it with the other regular disbursements. We have
to meet at least twice a year for the purpose of disbursements.
Beyond that, it really depends on how many projects come
before us.
Brownfield Redevelopment Authority
January 27, 2016
Page 13
Ms. McIntyre: I'm happy to stay involved if you think it is going to be limited to
two meetings a year. I'm leery about committing to Boards that I
can't actively participate in.
Engebretson: Kathleen, based on the recent past several years, it's twice a
year for an hour or so.
McIntyre: Then I think I could withdraw my letter of resignation.
Engebretson: I'm glad you're willing to give it a chance.
On a motion by Condon, seconded by Fried, and unanimously adopted, the 10th
Meeting held by the City of Livonia Brownfield Redevelopment Authority on
January 27, 2016, was adjourned at 6:00 p.m.
041 / /441- --'
Ken Harb, Secretary