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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. Brownfield Redevelopment Authority January 27, 2016 Page 4 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 Brownfield Redevelopment Authority 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 Brownfield Redevelopment Authority 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 Brownfield Redevelopment Authority 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. Brownfield Redevelopment Authority 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 Brownfield Redevelopment Authority 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 Brownfield Redevelopment Authority 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 Brownfield Redevelopment Authority 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