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HomeMy WebLinkAboutOctober 28, 2020 - 21st MeetingUNAPPROVED MINUTES OF THE 21st MEETING OF THE CITY OF LIVONIA BROWNFIELD REDEVELOPMENT AUTHORITY The 21st Meeting of the Brownfield Redevelopment Authority of Livonia was called to order at 5:07 p.m. on Wednesday, October 28, 2020, via the Zoom Platform due to the COVID-19 pandemic by Chairman Engebretson. MEMBERS PRESENT: Jack Engebretson, Chairman Lynda Scheel, Vice Chairman Ken Harb, Secretary Bill Fried, Treasurer Andrew Lendrum Steven Vandette Dillon Breen Nicholas Lomako Melissa Karolak MEMBERS ABSENT: None OTHERS PRESENT: Mark Taormina, Planning Director Mike Slater, Director of Finance Stephanie Reece, Program Supervisor Bruce Rasher, RACER Trust Grant Trigger, RACER Trust Mark Quimby, SME Susan Harvey, Ashley Corporation Kyle Morton, Ashley Corporation ROLL WAS CALLED. A quorum was present. INTRODUCTION OF NEW MEMBER Mr. Engebretson: Melissa Karolak who is exceptionally well qualified to participate in our activities. She earned a Bachelor of Science in Accounting in 2001. She has been working in the accounting and finance world ever since then. Along the way she got an MBA at Madonna University in 2008. She has gone through a lot of very interesting job assignments and she is presently has risen to the position of Vice President of Finance at St. Mary Mercy Hospital. She has a very impressive resume. We look forward to having her as part of our team. Welcome Melissa. Ms. Karolak: Thank you. Thanks for having me. APPROVAL OF MINUTES Livonia Brownfield Redevelopment Authority October 28, 2020 Page 2 On a motion by Scheel, seconded by Lomako, and adopted, it was: #07-2020 RESOLVED, that the Minutes of the 20th Meeting of the City of Livonia Brownfield Redevelopment Authority and held May 13, 2020, are hereby approved as amended. A roll call vote on the foregoing resolution resulted in the following: AYES: Breen, Lendrum (partial), Lomako, Harb, Vandette, Scheel, Fried, Engebretson NAYS: None ABSENT: None ABSTAIN: Karolak Mr. Engebretson, Chairman, declared the motion is carried and the foregoing resolution adopted. REVIEW OF LBRA TAX CAPTURE FOR LIVONIA MARKETPLACE AND CONSIDERATION OF TAX INCREMENT FINANCE (TIF) REIMBURSEMENT PAYMENT #13 (S-2020) FOR AUTHORIZED ELIGIBLE EXPENSES Mr. Taormina: Thank you. Mr. Chairman, please let the record reflect that Andrew Lendrum joined the meeting at 5:10 p.m. This item is consideration of payment #13 to the developer of Livonia Marketplace. This coincides with the collection of 2020 summer taxes. In fact, four of the items on tonight’s agenda involve the disbursement associated with the collection of Summer 2020 taxes. For Livonia Marketplace, the total taxable value of all real and personal property is $11,900,034.00. When we remove the base value from that calculation, it leaves an amount of $6,300,874.00 for the incremental value for capture. Breaking that down, when we apply the taxes to that, the captured amount totals roughly $222,585.00. Breaking that down even further, the amount that gets distributed to the LSRRF equals $19,497.93 and to the developer equals $203,087.49. We have prepared a staff recommendation that reflects those dollar amounts. Thank you. Mr. Engebretson: Are they any questions for the Planning Director or Finance Director? If not, a motion would be in order. On a motion by Vandette, seconded by Fried, and adopted, it was: Livonia Brownfield Redevelopment Authority October 28, 2020 Page 3 #08-2020 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 #13 (S-2020) to the “Owner” of the Livonia Marketplace, Livonia Phoenix, LLC, in the amount of $203,087.49 for the reimbursement of eligible expenses related to the redevelopment of the Former Livonia Mall Site; and 2) A deposit of $19,497.93 into the Livonia Brownfield Redevelopment Authority’s Local Site Remediation Revolving Fund (LSRRF). A roll call vote on the foregoing resolution resulted in the following: AYES: Scheel, Lomako, Lendrum, Harb, Vandette, Breen, Fried, Karolak, Engebretson NAYES: None ABSENT: None ABSTAIN: None Mr. Engebretson, Chairman, declared the motion is carried and the foregoing resolution adopted. REVIEW OF LBRA TAX CAPTURE FOR LIVONIA COMMONS AND CONSIDERATION OF TAX INCREMENT FINANCE (TIF) REIMBURSEMENT PAYMENT #11 (S-2020) FOR AUTHORIZED ELIGIBLE EXPENSES. Mr. Taormina: The taxable value of this property is $3,224,372.00. Subtracting out the base value, $1.74 million, leaves an incremental value for capture totaling $1, 483,572.00. Applying the tax rate for capture, which in this case is 29.1793 mills, generates a capture of $43,289.59. The resulting distribution is $4,450.72 to the Michigan State Brownfield Redevelopment Fund and $38.838.88 to the developer for reimbursement of eligible Brownfield expenses. Thank you. Mr. Engebretson: Any questions for the Planning Director or Finance Director? If not, a motion would be in order. On a motion by Lomako, seconded by Harb, and adopted, it was: Livonia Brownfield Redevelopment Authority October 28, 2020 Page 4 #09-2020 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 #11 (S-2020) to the “Owner” of Livonia Commons, TMA-LIVCOM, LLC, in the amount of $38,838.88 for the reimbursement of eligible expenses. 2) Payment of $4,450.72 to the Michigan Department of Treasury and the State Brownfield Redevelopment Fund A roll call vote on the foregoing resolution resulted in the following: AYES: Lomako, Fried, Lendrum, Harb, Breen, Vandette, Scheel, Karolak, Engebretson NAYES: None ABSENT: None ABSTAIN: None Mr. Engebretson, Chairman, declared the motion is carried and the foregoing resolution adopted. REVIEW OF LBRA TAX CAPTURE FOR LIVONIA MARKET II AND CONSIDERATION OF TAX INCREMENT FINANCE (TIF) REIMBURSEMENT PAYMENT #3 (S-2020) FOR AUTHORIZED ELIGIBLE EXPENSES. Mr. Taormina: The current taxable value of Livonia Marketplace II property is $3,982,300.00 with an incremental value for capture totaling $2,676,463.00. This results in a capture of $37,950.37. Of this, 25%, or $9,487.59, goes to the LSRRF and the balance of $28,462.78 goes to the developer for eligible expenses. Mr. Engebretson: Thank you, Mr. Taormina. Any questions or comments? Mr. Breen: There was a question posed in the chat. I am not sure if you are able to see it, Mr. Chairman. Mara Braciszewski…was that question answered already? Mr. Taormina: I am answering it right now. Mr. Engebretson: Okay, looking for a motion. On a motion by Vandette, seconded by Fried, and adopted, it was: Livonia Brownfield Redevelopment Authority October 28, 2020 Page 5 #10-2020 RESOLVED, that the City of Livonia Brownfield Redevelopment Authority does hereby approve the distribution of Captured Taxes from the Livonia Marketplace II Project as follows: 1) Payment #3 (S-2020) to Livonia Market II, LLC in the amount of $28,462.78 for the reimbursement of eligible expenses as approved in the Brownfield Plan; and 2) A deposit of $9,487.59 into the Livonia Brownfield Redevelopment Authority’s Local Site Remediation Revolving Fund (LSRRF). A roll call vote on the foregoing resolution resulted in the following: AYES: Lomako, Fried, Lendrum, Harb, Breen, Vandette, Scheel, Karolak, Engebretson NAYES: None ABSENT: None ABSTAIN: None Mr. Engebretson, Chairman, declared the motion is carried and the foregoing resolution adopted. REVIEW OF LBRA TAX CAPTURE FOR HAGGERTY CENTER AND CONSIDERATION OF TAX INCREMENT FINANCE (TIF) REIMBURSEMENT PAYMENT #3 (S-2020) FOR AUTHORIZED ELIGIBLE EXPENSES. Mr. Taormina: This is regarding payment #3 in connection to the Brownfield Plan for the Haggerty Center or Haggerty Square. This project is not yet complete; however, the taxable value is substantially more for 2020 than it was for 2019. The current taxable value is $2,267,700.00, which is still well below what the projected total will be upon completion. For those of you that have not visited the site lately, construction of the apartment complex is well under way. Occupancy should begin in the first quarter of next year. Looking at the base value at $844,500.00 and subtracting that out from the current taxable value, the incremental value for capture equals $1,423,200.00. The resulting tax capture totals $20,179.98 of which $4,036.00 goes to the LSRRF and $16,143.98 to the developer. Please note that for each active brownfield project, staff provides a running total of the annual disbursements which includes what goes to the developer and what is distributed to the Livonia Brownfield Redevelopment Authority October 28, 2020 Page 6 LSRRF. Hopefully, everyone can see that. It is a good way of tracking the total payments. Thank you. Mr. Engebretson: Appreciate your comment, Mark. Is there any discussion or questions for the Planning Director or Finance Director? Mr. Harb: Mark, I would like to ask you a couple questions about the progress of the Haggerty Center. Shall I ask now, or should I wait until the end of the meeting? It does not necessarily need to be on the record. Mr. Taormina: Mr. Chairman, I think it would appropriate to ask that question now. Mr. Engebretson: Okay. Mr. Harb: I was curious to know the progress…when it is going to be completed and can you talk a little bit about the road? Is it going to go by the Beaumont Hospital site and go all the way down to Seven Mile? Mr. Taormina: As I indicated, the project is…the retail phase of the development is complete and occupied. I think many of you have seen what that looks like. What is less apparent is the status of the project on the back half of the property. That is where the two apartment buildings are located. Those I would put at about 80% complete. Occupancy should start sometime in the Winter or maybe early Spring. We will see the completion of that project early next year. The road you are referring to is actually a connection between this property on the east side to a road that will be built that will run north and south and will tie into the Costco property to the north adjacent to the gas station. To the south, it will connect to Fox Drive, which is the road that wraps around the AMC theater complex and the former A123 property, which is now the Beaumont OPCC site. It will effectively allow for circulation between all the properties along that side of Haggerty Road extending from Seven Mile Road almost up to Eight Mile Road. At least up to the point where the Target store is without even going on to Haggerty Road. It is going to be somewhat circuitous, but there will be a way to navigate from the AMC theater complex all the way up to Costco behind these developments. That road is not yet complete, Mr. Harb, but I would expect that it would occur sometime after the beginning of the occupancy of the apartments. Mr. Harb: So, the road by AMC is behind AMC or to the west of AMC? Livonia Brownfield Redevelopment Authority October 28, 2020 Page 7 Mr. Taormina: Both. At that point you can connect to the front part of the AMC development as well as behind the AMC development, which is through the Beaumont property. It is a little difficult to describe. You would have to look on the map. There are connections all the way through the AMC development and the Beaumont site. Mr. Harb: That is going to be one busy road. Mr. Vandette: Mark, are these going to be public roads or private roads that connect the sites? Mr. Taormina: These will be private roads. Mr. Vandette: Any agreement between the property owners to keep these open? Mr. Taormina: I believe there are agreements between the various properties involved. That is correct. Mr. Engebretson: Mark, did you say that that had happened? That they have come to the agreement? Mr. Taormina: I can’t answer the status of all of the legal agreements between all of the parties involved. I know that there are certain rights between the properties that preexisted this. I believe that some of the easement rights were preexisting. Others may still have to drawn up. I don’t know what the status is, Mayor. Mr. Engebretson: I believe that a motion would be in order. On a motion by Scheel, seconded by Lendrum, and adopted, it was: #11-2020 RESOLVED, that the City of Livonia Brownfield Redevelopment Authority does hereby approve the distribution of Captured Taxes from the Livonia Haggerty Center Project as follows: 1) Payment #3 (S-2020) to Haggerty Square, LLC in the amount of $16,143.98 for the reimbursement of eligible expenses; and 2) A deposit of $4,036.00 into the Livonia Brownfield Redevelopment Authority’s Local Site Remediation Revolving Fund (LSRRF). A roll call vote on the foregoing resolution resulted in the following: Livonia Brownfield Redevelopment Authority October 28, 2020 Page 8 AYES: Breen, Lomako, Fried, Lendrum, Harb, Vandette, Scheel, Karolak, Engebretson NAYES: None ABSENT: None ABSTAIN: None Mr. Engebretson, Chairman, declared the motion is carried and the foregoing resolution adopted. CONSIDERATION OF A REQUEST BY SME ON BEHALF OF ASHLEY CAPITAL AND LIVONIA WEST COMMERCE CENTER 2 FOR APPROVAL OF A BROWNFILED PLAN AT 12950 AND 13100 ECKLES ROAD Mr. Taormina: Hopefully, everyone can see the graphic on the screen. This request involves the redevelopment of property located at the northeast corner of Amrhein and Eckles Roads. The site is along the westerly boundary of the city. The main parcel consists of the remaining 19 acres of what was previously the site of a GM Delco manufacturing plant. Built in 1953 and demolished in the early 2000’s, the original GM plant was located on roughly 128 acres. Following GM’s bankruptcy, the site became part of a portfolio of troubled real estate assets that were transferred to RACER Trust, which was charged with managing the environmental remediation and repurposing and disposing of the sites. In 2015 Ashley Capital, your petitioner this evening, purchased 101 acres from RACER Trust and two years later developed the Amazon fulfillment center on roughly 48 acres. Just so you can get your bearings straight, this is the Amazon site. It is about a million square foot distribution facility. Around the same time, Ashley sold 33 acres to Republic National Distributing Company (RNDC) which developed a 517,000 square foot wine and spirits warehouse and distribution facility. The RNDC site is located here. Ashley still owns around 20 acres of vacant property that is directly north of Amazon. This triangular shaped parcel here, which is also part of today’s discussion and plan, is owned by Ashley Capital. The corner 19 acres that would be developed is owned by RACER Trust. Contamination of the 19-acre parcel was caused by plating operations that were used in the production of the coils, springs, and bumpers. RACER Trust is now able to sell the property to Ashley Capital, who has the first right of offer to purchase and redevelop the property. However, to make the project financially viable, Ashley is seeking assistance to overcome the constraints Livonia Brownfield Redevelopment Authority October 28, 2020 Page 9 created by the brownfield conditions. The assistance would be in the form of a Brownfield Plan that proposes tax increment financing to reimburse the developer for costs associated with redeveloping the site. As indicated, the plan involves two parcels, 12950 Eckles Road which is 18.77 acres on the corner and 13100 Eckles Road, which is 19.74 acres and is northeast of Amazon. The proposed development of the corner parcel would include a 370,000 square foot industrial building to be used for light manufacturing, warehousing, and/or distribution. The other parcel to the north would be used primarily for remote trailer staging in connection with the user on the corner property. The projected total investment would be roughly $32 million resulting in approximately 185 full and part-time jobs created. An end-user has not yet been determined at this time; thus, Ashley Capital is basing these employment numbers on similar size projects the Company has been involved with. In the plan, Tables 1A, 1B, and 1C provide the breakdown of all that eligible activity costs. The most significant costs include: demolishing and removing the former plant slabs, foundations, buildings, trenches, and other utilities - $1.9 million, the need to import fill to raise the site grade and create a structural bridge that would cap the site and prevent groundwater contamination from infiltration - $2. 6 million, site grading and earthwork - $2.3 million, underground storm water retention - $505,000, and transporting and disposing of contaminated soils - $500,000. Altogether, the projected total of all eligible expenses is $11.97 million. Tax increment revenue captured on the increased value of the real property above the established base value would be used to reimburse the developer for these costs. For the subject two parcels, the base value is $294,245.00. As the site is developed and the value increases, taxes paid on the incremental value above this base value will be used to reimburse the developer. This will be done, as you know, on a bi-annual basis that coincides with the collection of Summer and Winter taxes, the same arrangement that we have for four active brownfield redevelopment projects. By statute, a portion of tax increment revenue collected will go to the State Brownfield Revolving Fund. In addition, the plan proposes 10% being allocated to administrative costs and for deposits for the Local Site Remediation Revolving Fund, or LSRRF. The plan assumes that the project will be completed by December 2023, which would be the first year of capture, and would achieve a total taxable value of roughly $6.7 million the year after. Another assumption built into the plan is a 1% annual growth in the taxable value. Like our other plans, there are non-capturable millages including the Zoo Livonia Brownfield Redevelopment Authority October 28, 2020 Page 10 Authority, the Art Institute, and School Debt. In addition, the Plymouth Road Development Authority (PRDA), another tax increment finance authority, levies 2 mills on all properties within the district. These two properties are both within the PRDA district, which would continue to receive tax revenue from the development. The plans duration would be 30 years—the maximum allowed under the Brownfield Act. Year 2052 would be the final year with the developer receiving projected reimbursements totaling $10,570,677.00 which is roughly 11-12% less than the projected total costs of all eligible activities. Included with documentation is a best-case scenario in which the eligible costs would be reduced by about 38%, or $7,403,000, resulting in a reduction in the number of years of reimbursement to about 22. Included with the application is a Development and Reimbursement Agreement. As with all Brownfield TIF proposals, this agreement would spell out the various obligations of both the Brownfield Authority and the Developer. It specifies the amount and the timing of the distribution payments to the developer, as well as the LSRRF. It also mandates the submission of evidence in connection with the payment of all eligible activity costs, including contractor and sub-contractor manifests and paid invoices. One thing we look for with all these projects is verification that payment has been made on all of the eligible costs that are identified in the plan. The City Law Department has reviewed the proposed Development and Reimbursement Agreement. Lastly, because of the properties involved in this request are within the PRDA district, for the Brownfield Authority to capture tax increment revenue from the project, there needs to be an agreement between the two tax increment finance authorities. Despite the need for an interlocal capture agreement, we do not see there being any reduction to the PRDA’s revenues as a result. The reasons for this are two-fold. First, the Brownfield Authority’s collection of taxes does not include the 2 mills that are currently levied by the PRDA. And second, because the aggregate taxable value of all the properties within the PRDA district is well below the base value that was established in 1998, no incremental taxes are available for capture. This has been the case for the last 10 years and—unfortunately—will continue into the foreseeable future. However, the agreement is required by the State. Again, we do not see any adverse impact to the finances to the PRDA because of the agreement. They are not currently capturing any tax increment revenue. Only money from the millage and that would not be impacted or collected by the PRDA. That is a summation of the project. If you have any questions, I would be happy to answer Livonia Brownfield Redevelopment Authority October 28, 2020 Page 11 them. I am going to get out of this screen and hopefully you can see our petitioners. We have Bruce Rasher and Grant Trigger from RACER Trust, Kyle Morton and Susan Harvey from Ashley Capital/Livonia West Commerce Center 2, and Mark Quimby from SME, the Petitioner’s environmental consultant. Mr. Engebretson: Are they there with you at City Hall? Mr. Taormina: No. They are participating via Zoom. I can see them as attendees. As they elect to speak, I will help you move them over as panelists. In fact, I will do that right now, so they are all available to speak. Mr. Engebretson; That would be good. I guess with Mark’s opening it is appropriate to go this time to any and all of those folks representing the petitioner. Who would like to begin? Mr. Morton? Kyle Morton: Mr. Taormina did a great job summarizing a lot of the stuff that I thought I would be introducing. So, rather than repeating a lot of that I think just giving a little context to why now and why the TIF is important to us would be helpful for this discussion, I think. As Mark mentioned we have been working on this project with RACER since 2013-2014 timeframe. This property was held back from our original acquisition mainly due to the environmental contamination that is on the 19-acre corner parcel and the ongoing activities environmental that RACER was coordinating with both the State and Federal agencies. We are not at the point we have reached a plan to move forward with the state and the EPA to build the building on site. In order to move forward the importance of the TIF is that we have a roughly 20% - 25% cost increase to build this project relative to if this was just a vacant dirt lot. We have a spend a significant amount of money, as Mr. Taormina mentioned, in terms of the demolition of the existing facility, the slab, the basement, and the foundations. Largely related to the slabs and the basement but also, we needed to bring in a substantial amount of fill which will amount to approximately 120,000 cubic yards. Both sites are to be razed out of the contamination and also provide the cap that was previously mentioned. The TIF really allows us to recapture that additional 20% of cost that we face, which makes this project financially not viable without the ability to capture that. As we previously mentioned it is a 370,000 square foot warehouse. We are targeting approximately 200 jobs. That is our baseline. A number that we estimated. We don’t have a tenant currently. Upon completion the estimated stabilized taxable Livonia Brownfield Redevelopment Authority October 28, 2020 Page 12 value is $6.7 million. We are roughly looking at $350,000 in annual captures. I am not sure if it make sense to walk through the base case, kind of against the best case at the moment or open it up to questions and then come back to that rather than get into the nitty gritty details. Mr. Engebretson: Thank you, Mr. Morton. Is there anyone else? Susan, it is nice to see you again. Grant Trigger joined us as well. Who would like to have the floor next? Susan Harvey: I have the pleasure of doing a lot of projects in Livonia and we have never, for all the development done there, had to come to Livonia for a TIF. I also want to speak to the fact that, yes, we don’t have a tenant currently and in our business that means we are building on spec. Meaning speculatively. We have a really strong track record of doing that. Most everything we have ever built anywhere, but our biggest footprint is in Michigan in Livonia. We have successfully leased it up and provided long-term investments from tenants and long-term jobs in the community. This is a great location in Livonia. We are very optimistic that we are going to attract strong interest from good users that will bring a lot of jobs to the community. As Kyle was going through and Mark did a great job of explaining the particulars of the contamination history of the site just make the characteristics of this site just not like anything else we have done in Livonia. Mr. Engebretson: I want to second you comment on the great record you have in our region and in our city in particular. Mr. Trigger, you look as though you are ready to go. Grant Trigger: Mr. Chairman, I am wearing one of my father’s ties. I know of your past friendship with my father, so it seemed appropriate. Mr. Engebretson; Thank you. Mr. Trigger: Thank you for this opportunity. We have been working closely with Kyle and Susan, obviously, for a number of years in the initial development of this site and we have devoted a fair amount of time and effort over the last six to eight years really addressing the number of issues on this partial that positions it so it can be developed. There are things that we still have to do. In fact, in one of our other meetings Mike raised a question about whether this development somehow replaces work that the Trust has to perform. It doesn’t replace work that the Trust has to perform, but Livonia Brownfield Redevelopment Authority October 28, 2020 Page 13 it does provide us an opportunity to fulfill our dual mission. For those in the Authority that haven’t had an opportunity to hear some of the history of the Trust…when the Trust was formed it was assigned the responsibility of addressing former GM properties that they abandoned in the bankruptcy. To give you an idea of the footprint in Michigan, 36 of the 59 sites that we have across 14 states with remediation budgets, 36 of those 59 are in Michigan. We have a strong devoted effort here. Again, for those who don’t know me, I serve as the Michigan clean up manager. Our mission is a dual mission. To clean up and redevelop. We are very pleased to have Ashley as a partner here because they understand the dynamics and they are a good user. That is very important to us because we want to have users that have a good reputation in the community and will be responsive to community interests. As of yesterday, and today, I have had direct conversations with Waste Management with respect to their landfill at Woodland Meadows just south of Van Born Road. They have extra clay there. It is good quality clay because it is from a landfill operation. We are working on an arrangement with them where we would relocate approximately 35,000 yards of clay from the landfill. Excess clay that they don’t need. That clay is what we need to enhance the cover that the developer will create on site. So, you take Ashley’s development plus the clay that we will bring to this site as part of our remedial activities and put those two things together, we have an opportunity to provide a long-term cap for the corner of this property and secure a better remedy for the long-term. That is the basic overall view of where we are at if that is helpful in your consideration, and we can answer any questions you might have. That is our key contribution in what we want to pull together to make this happen. Mr. Engebretson: Mr. Quimby, you look as though you are looking for the floor? Mark Quimby: No, I am just here in support of Ashley Capital and I am happy to answer any more detailed or technical questions. I think all the high-level presentation…I don’t have anything to add to that. Mr Engebretson: Do any members of Board have any questions? Mr. Fried: I have a question concerning…you talk about bringing clay in, but is that supposed to offset or what are you doing with the contaminated property that is already on the site? Or is the idea removing contaminated property and replace it with the clay coming in and therefore…this is a brownfield… Livonia Brownfield Redevelopment Authority October 28, 2020 Page 14 Mr. Harb: We lost Bill. Mr. Engebretson: Bill, I think we lost you. Well we will give him an opportunity… Mr. Fried: …to do whatever you want or…(inaudible) Mr. Engebretson: Bill, will you ask the question again? We lost you for 30 seconds…will you restate the question? Mr. Fried: The question is, it’s a Brownfield condition. That is to clear up the contaminated property, why are we paying for….unless I guess you can make the argument that you have to have clean material to build on and this is how we got rid of it. We remove the contaminated property and put clean clay on the property. Mr. Engebretson: Bill, hold on for a minute. I am going to try to answer that and then Grant Trigger can come on if I miss anything. Mr. Fried: Okay. Mr. Engebretson: We heard Mr. Morton say on previous occasions that they are going to bring in 150,000 cubic yards of clean fill to not only fill in basement areas and other polluted areas like a cap on top of all that is there now once they remove the concrete slab. There will be bad stuff taken away and good clean fill brought in, not only filled in where the bad was taken from but to build a cap up. Trigger, did I get that right? Mr. Trigger: Yeah, I think that is a good summary. The clay that we are bringing in will be put around the perimeter of the building so that we can prevent infiltration into the area after the building is constructed. The environmental contamination has been addressed by treatment methods that we have worked on over the last six or seven years. What we have now is a site that is generally cleaned up and environmentally, but now it has to be built upon and when it is built, we also need to cap the old area to prevent infiltration into the area that we did the treatment in. The new construction and the clay cap the site. Mr. Fried: Okay. Mr. Engebretson: Anyone else? Livonia Brownfield Redevelopment Authority October 28, 2020 Page 15 Mr. Quimby: What I can add is…you know in the context of redevelopment, one thing that is important to understand is that it is fairly common that contamination is not actually cleaned up as part of the actual redevelopment, but it is controlled. So, what is really happening here is the majority of the contamination is in the groundwater underneath the site. RACER has already spent significant amounts of money building a slurry wall that basically surrounds the site like a fence to stop any contaminated ground water from site itself from the box they created. What we are really talking about now is the development creating a top on top of the box in order so that water doesn’t keep filling the box and needs to be pumped out. That is a real simplistic perspective, but it is essentially what is happening. The contamination will definitely be controlled as part of this work, but it isn’t going to be like cleaned up per se.in the notion that it is going to be removed from the site and gone for all time. This is fairly common for these sites. Mr. Engebretson: If I understand you correctly, Mr. Quimby, is that the capping process along with the slurry wall and all of these other considerations make it a clean site. Is that a correct statement? Mr. Quimby: Yes. It makes it a safe site to use where any of the users wouldn’t be affected by the contamination because it is adequately controlled and mitigated. Mr. Engebretson: Okay. Mr. Morton: Mr. Chairman, the one analogy that we have used in the past is that we basically have a bathtub that is out there. We have got four walls that contain the water that are on site and keep it on site. We are trying to put a lid on that site from getting any new water in there. We kind of encapsulated and controlled the site, to Mark’s point. Grant and RACER team have actively remediated some of the nickel and chromium problems in the past to bring the contamination levels down, but the goal is really to put a cap on this site by using the building and parking lots and the clay that Grant previously mentioned to make a lot of impervious surfaces. Mr. Engebretson: Mr. Morton, does that slurry wall go deep deep into the ground? Mr. Morton: Grant would be able to better answer that, but I believe it is 20 feet? Livonia Brownfield Redevelopment Authority October 28, 2020 Page 16 Mr. Trigger: Actually, it is a little deeper than that. The slurry wall goes from about three feet from the surface all the way down and is tied into a clay base underneath it. Kyle is correct. We really the essence of a bathtub. The development and the clay put a lid on top of it. Mr. Fried: It makes the existing site competitive with clean sites and other sites so this is a way to make it competitive to sites that (inaudible) because you are controlling it. Mr. Quimby: Yes. This is Mark again. What you said is correct. Essentially the purpose of these TIF’s is to offset the cost and negative equity that is created by the previous Brownfield conditions. In this case, it is the combination of the previous building features and also the contamination in the ground. Mr. Engebretson: Bill, did you have anything else? Mr. Fried: No. It makes sense. The idea is that we have vacant property that people can’t use it and it costs the City in the long run. It is such that the property can be used but it is more than the site, with the cap and everything, is not effective for people to build on it presently. Mr. Harb: I have two questions. Mr. Engebretson: Go ahead, Ken. Mr. Harb: I was really expecting the Amazon site, or that site to come before the Brownfield Authority. I guess this is for Mr. Trigger. Did RACER take care of everything that was needed for the Amazon site and the wine and spirits site? Mr. Trigger: Let me step back and explain one of the aspects of a RACER project. As I mentioned before, we are assigned a dual mission of clean up and redevelopment. If every site we had you couldn’t redevelop until it was completely clean, there would be years of delays. The way the Trust was structured was that we retain the responsibility to complete closure obligations on the site after we sell it. Even though Amazon and RNDC have been built on the remaining portions of the property, we still have some residual closure obligations on that portion of the property. When we have these obligations, we try to find opportunities. As I mentioned, Ashley is a great partner because they understand these dynamics. They aren’t shy to take on a property like this, Livonia Brownfield Redevelopment Authority October 28, 2020 Page 17 particularly when they know we are going to take on the clean up part. We have advanced the clean up on the southwest parcel so far now that we can accommodate the development on it. It is going to take a fair amount of coordination. That is the fun part, frankly. I have done it a number of times. The Trust has. That is why we can go ahead with the development. Mr. Harb: I was really surprised that whole site didn’t come before us. (inaudible) 2052, as far as the payback, that seems a little longer than we normally do. Is that right? It seems we go 12 or 13 years. We are going 30 plus years on this. Mr. Engebretson: Ken, let me let you know that there has been another proposal called the best case proposal created that goes for less money based on the fact, as both Mr. Morton and Mr. Trigger mentioned, that getting this free clean fill reduces their expenses substantially. As matter of fact, it reduces it by about $7 million. So, I think Mr. Trigger during our rapid response team meeting mentioned having contact with MDOT and other major construction businesses and Waste Management as well, and that you didn’t have any more space on that site until you started getting rid of the slabs. I walked that site twice. I see your problem. I see that you really can’t do anything more until you get rid of that concrete and start bringing in that fill dirt. The best case, which for the people on the board, is the last three pages of your packet. It is very appealing to me, because while I trust all the people that are involved in this process here, I have an obligation to the city to do the right thing. I think that Mr. Trigger has even encouraged me even more today by saying that these conversations with Waste Management about the clay is ongoing, and I get the impression likely to happen. That makes the best case scenario more likely. Mr. Morton mentioned previously that they really need to have this TIF in order to get going and we understand that. On the other hand, until you know for sure what is going on with the ability to obtain the fill that they need hauled away and you need for free, it kind of puts us in a box. If we approve, and we all realize the City Council has the final decision on this, we are only a recommending body where digging out facts and doing our homework, and I want you to know that I have read every word of this packet. I have been to this site twice. I have great admiration and respect for Ashley Capital. I don’t have any axe to grind with anyone, but I do feel a compelling need to work to the best of my ability, not only in cooperation with the petitioners, but on behalf of doing the best that I can for the City. I am leaning toward favorable action being Livonia Brownfield Redevelopment Authority October 28, 2020 Page 18 taken on the best case scenario by reducing the cost substantially and if we were to take the best case scenario and reduce the number of years from 22 to 20, we would still be beyond anything we have ever done in the past. That doesn’t make it bad itself, but if you have been with us since the beginning of the meeting tonight, you heard the distribution of TIF reimbursements to various developers around town that were in the category of 20% and 25% splits vs. 10%. I think that it would be appropriate to consider the best case scenario for $7.5 million vs. the $11.9 million, to reduce the number of years to 20, and it would still be our largest and number of years we have ever done, and I realize one event a precedent it does not set. You lawyers have taught me that over the years. The adjustment of the split to 80/20 is appropriate because there is an awful lot of work that goes on to manage this from the city’s point of view. So, it is my hope that we approve this tonight and move it on to the City Council and between now and then all of the participants will have an opportunity to have discussions and tweak this. I am not saying that this is how it has to be, but I think it is a good place for the City to start. So, without repeating all of the details, just $7.5 million, 20 years, 80/20 split and to get this handled as quickly as we can so that you can get this and go. Mr. Harb: I did not walk the site, but it seems to me that we should give some leeway…we should do the 80/20 but the maximum of the $11.9 rather than the $7.5 and hope for the best. Mr. Engebretson: Bill, excuse me for interrupting you, but these aren’t my numbers, these are numbers that SME has prepared and it removes the cost of hauling away the debris and bringing in the fill all of which they believe they can get accomplished at no cost. So, they have backed those costs out to get to the $7.9 million. Ms. Harvey: Mr. Chairman, can I…and I am sure that Mr. Morton can speak to this better, but I think that how we presented that may have been confusing. We are still asking for the larger amount and the full number of years. We are certainly hopeful and optimistic that we are going to come in at closer to the best case scenario. We cannot move forward without the approval of, I will say the worst case scenario because we just don’t have any assurances of that. I think the thing to keep in mind is that there is nobody more motivated than Ashley Capital to keep these costs as low as possible because spending more money than we have to only to wait to be reimbursed until the year 2025 or something is not in our Livonia Brownfield Redevelopment Authority October 28, 2020 Page 19 best interests. So, our motivation to hit our best case scenario number is as strong as it possibly can be, but to take the TIF and limit it to the best case scenario, that is just that. A best case number. I think it will, and Kyle and speak to this more, put this project…the financing, the economic outlook, back into the category we can’t make it work. Kyle, I think you can add to that. Mr. Morton: I think there were a few variables that start to get a bit messy there in terms of the best case scenario really backed out the idea of paying for the fill to be brought on to the site and it also reduced our contingency. It was meant to be an example that if we were to get the free material and we didn’t have any other large issues, this contingency, this buffer of safety, wouldn’t be drawn on and again we don’t get the benefit of the TIF reimbursement unless we actually spend the cost. If you approve the $11.9 and we end up spending $7 million, it isn’t like we are eligible for the other unless we actually spent it. To Susan’s point, the trade off from Ashley Capital’s perspective is that we are spending $1 today to get that dollar back in 29 or 30 years. There is no interest provision in this. We get that same dollar back. That is a bad financial proposition for us and we are highly motivated to not spend that money. I think to Mr. Harb’s point, and I don’t know Mark Taormina if you are able to open up the slide deck again to number 11. I think that the thing to focus on is that we are…this is a highly highly unusual situation. Given the size of the site…I think it is page 11. One back, thank you. What largely led the Amazon project and the RNDC project to not necessarily need the Brownfield to this extent is both of those buildings, if Mark toggles forward, are really outside the footprint of what the original plant was. As you can see there, the level of what we have a structural concerns from the concrete, the basement, that is one issue. We have the slabs and the basements to deal with from the former structure and then double on top of that, this is the one very contaminated section of the site that RACER had to keep and they are working with the State and Federal agencies and had to build this slurry wall. We are dealing with the worst structural portion of the site and we are dealing with the worst environmental portion of the site. The rest of the 102 acres, when we closed on the site in 2014, we benefited from all of the free material from the work on I-96 when that work was being done. That is our anticipation of doing this now. When I-96 was being completely renovated and redone, they took a ton of…Grant may know the number…they took several hundred thousand yards of dirt were brought to this site and that was all free. In this instance, we are hoping to do that again from I-275 Livonia Brownfield Redevelopment Authority October 28, 2020 Page 20 but we can’t actually tell I-275 we want the dirt unless we spend the several million dollars to remove the concrete. It is really a safety net for us that we don’t spend several million dollars and then are stuck because we have no way of getting the dirt to build the project to point where we want it. I think that kind of answers the Amazon component of it and why that project didn’t need it. In terms of going forward and just approving a best case scenario, I think there are a few variables. In terms of dollar amounts, that is a very aggressive assumption for us to be able to hit that number. We are optimistic that we can do it if we can get the free fill. Secondly, if you go to an 80/20 split, it dilutes us even further in the capture. In 24 years which was the $7.4 million and the best case was 24 years, to get through that $7.4 if you go to 80/20 to goes back to almost 30 years. We do not get 10% of the money every year. So, the project ends up being three or four years longer. They end up being kind of circular on each other. If we are diluted in term and dollar amount and capture, it makes this project almost unviable anymore. Mr. Engebretson: I understand. Mr. Quimby: One thing that I want to add is I understand from Livonia’s perspective that this is an incredible amount of money. So does Ashley Capital. It is important to understand that not all sites are created equal. Brownfield sites, in general for TIF’s, is a function of two main things. How much eligible activities are necessary to offset the Brownfield costs and the second piece is how much taxes can be generated from the property in comparison to the base. We were asked and did provide to the Board, several examples of other projects in the metro Detroit area that went the full terms of 30 years. It is important to remember that the costs…this project would cost Ashley Capital the same to build if the building was half as bad or half as large. Let’s say the eligible costs were half, we will be building the same building and so it is important to remember it in context that although there may be other projects that the Board has approved and may there hasn’t been a TIF that has been greater than a certain amount of years, I would wager that there is not a project that had anything close to the amount of problems that this one has from Brownfield conditions. It is just important to think of apples and apples. I understand the fiduciary responsibility to the City and I totally respect it, I just ask that people understand the context of the one thing is one thing and something else is something else. Livonia Brownfield Redevelopment Authority October 28, 2020 Page 21 Mr. Engebretson: Your points are well-made and well-taken. Whereas, the problem you are dealing with is made more difficult because GM dumped this toxic site on the city. It isn’t the city’s fault either. The city to be bailing out General Motors or the former General Motors, just doesn’t seem to be right. Mark Taormina, what is the total cost to the City of participating in this, assuming as Ms. Harvey mentioned, the full 30 years and the 90/10 and so on? What is the real cost to the city? Mr. Taormina: To answer that question, I am going to refer to Table 2 under the local capture and the projection after 30 years. The city’s contribution would be about $2.9 million. Which is about 24% of the overall capture. Mr. Quimby: Of that amount, 10% would be basically captured and given to the City for the Brownfield Authority. Mr. Engebretson: Say that again please. Would you please repeat that Mr. Quimby? Mr. Quimby: It is roughly $3 million that the city mills add up to over the 30 years. I was just saying that he $3 million doesn’t completely go into the project because 10% of that is being captured by the Brownfield Authority for their local Brownfield fund. The cost to the City is roughly $2.7 million. Mr. Engebretson: You’re right. You’re absolutely right. Mr. Taormina, do you have anything to add to that? No? Well I apologize for taking so much of your time. Mr. Trigger. Mr. Trigger: A couple of points circling back to our earlier conversations and the relative contributions in support of the project. The clay I mentioned from Waste Management, the trust will be paying the cost to haul it and place it on site. We have to place it as engineered fill and that will be the trust’s expense. That will be reducing any contribution that would come out of this development project that would be capping this site because of the environmental issues on site. The building construction itself provides a further cap, but that building construction needs to be done regardless. That is how you build the building. The remaining fill, which is really the challenge that Kyle is referring to, is really the cart before the horse. We can’t put the fill in place until the concrete slabs and foundations have been removed, which is not an environmental contamination issue, it is a structural issue Livonia Brownfield Redevelopment Authority October 28, 2020 Page 22 associated with the past buildings on the site. That puts them in the position of if we start that but we don’t have the ability to finance the fill can we start the project. That is really the dilemma that is being faced here. I want to return to your point about working with the State. I am literally, while we were in the discussion, I got a call from the State from Eagle, on the sampling we need to do on the soil coming from Waste Management. That is how closely we are working with Eagle. We have had conversations with MDOT and Eagle about other road projects, including I-275. You know how these projects go. Annual funding and things like that. Will that soil be ready and available in March or April or May or June of next year when it is necessary to bring it to the site? That is the contingency that we cannot control. I want to be careful how I say this. Given the amount of effort that I have given personally and the Trust has devoted to working on these redevelopment issues with a State that is also motivated to see these developments successfully implemented is extraordinary. If anybody can pull off getting dirt from a road project to support this project, it will be Ashley Capital and RACER Trust and our cooperation with the State. It is not a guarantee. That is really going back to Kyle’s and Susan’s struggle here is how do we start the project and not have adequate financing in place? That is the challenge we have to deal with here. With that, I will defer back to them with how the numbers were (inaudible). That really is the challenge we have. If we knew I275 was being built and knew that the contracts were going to be (inaudible), that would change the risk dynamics substantially. It is supposed to be scheduled for next year. Mr. Engebretson: Mr. Trigger, I am not trying to launch a debate with you here, but with regard to the comments we heard in the last few minutes, what if you can’t get that contaminated material all the way and fill dirt brought in for free, which goes back to the best case scenario, what do you do then? Do you buy the stuff? Mr. Trigger: We need to clarify something. What is being hauled away, what is being removed is not contaminated material. We have addressed the contamination from the nickel and chromium operation with a major effort about two years ago. There is some residual contamination that will be contained within the slurry wall and capped. What is being taken out is the old foundations. It is the old slabs. Those are materials that were structural in nature. That is not contaminated. If that doesn’t come out I don’t know what else will be built on the site because the structural and Livonia Brownfield Redevelopment Authority October 28, 2020 Page 23 geotechnical engineers will tell you, you have to properly prepare the site and that requires removing those old structures. Mr. Engebretson: Got it. Thank you. Anyone else? Mr. Lomako: I have a series of questions if I may ask. First of all, when I open the plan I too was concerned about the number of years, but when I started to read the plan and the list of eligible expenses that they wanted reimbursement for on Table 1A and 1B, those costs seemed reasonable so the tenure or duration of the plan seemed reasonable to me. I just wanted to let you know my opinion on that. I do have some specific questions. In terms of looking at 1A and 1B, in the work plan, you list reimbursement for the study. For the plan preparation in both tables. The original cost of the work plan, the Brownfield Plan, of $60,000, are you just dividing the cost between the two listings or are we double counting the cost in the overall cost? Mr. Quimby: That is good question. It is broken out between two different elements. The plan preparation, which involves the local process but also the work plan that has to be submitted to both agencies, which is MEDC for the non-environmental TIF and EGLE for the environmental TIF and the cost is estimated at $30,000. That is basically the statutory allowed amount for the expenditures. If it costs a little bit less, then it costs a little bit less. Those are evenly split between the non-environmental and environmental at $15,000 apiece. Then there is a second line item for implementation. That has to do with all of the cost tracking that is necessary after the project is built out. That also has a cap of $30,000 per the statute and that is also evenly split between those two categories, both environmental and non-environmental. Mr. Lomako: Then it didn’t really matter that it showed in both tables then, did it? Mr. Quimby: It does in the sense that state agencies prefer you to take the costs when you have a plan that has both environmental and non- environmental, they prefer you take the costs and split them between the two. That is all that is. Mr. Lomako: I just wanted to make sure we weren’t double counting. The second question I have is about the property identified as 13100 Eckles Road. That 19.4 acre site, the northern most piece. You have a concept site plan there indicating that 11.3 acres will be used for the parking or trailer staging or whatever that is. What Livonia Brownfield Redevelopment Authority October 28, 2020 Page 24 happens to the rest, or is that 11.3-acre number on the concept plan wrong? Mr. Morton: I can answer that. I think that the difference is largely what we call gross and net acreage. The gross acreage number is the 19-acre number which includes the detention pond and some of the unbuildable areas on the east side along the railroad tracks. There are some areas where you can actually build parking on. Some have to do with storm water retention and detention. The 11.3 is our rough guess of effective amount of parking. The reason that the parking is there is largely to service this building. If you were look at the Amazon or the RNDC buildings, they both have parking for trailers across from the docks at the building. Where this site is so small and based on the requirements of RACER, which was also the requirements of the State and the EPA, but to cover as much of the site as we could with the building we decided to make a larger building on the southwest corner and make the parking that services the building on the northeast corner. Mr. Lomako: The functionality isn’t a problem from a marketing and spec building? Mr. Morton: No, we don’t believe so. That center drive aisle we have access to and we can also create a fenced trailer lot. So if an attendant is worried about security, the proximity is very close. Only a few hundred feet. You don’t actually have to go out on to a public street. Mr. Lomako: Okay. So, for the 185 projected employees including handicap people, that isn’t a problem? Mr. Morton: From a trailer staging perspective? No… Mr. Lomako: Where will the employees park? Mr. Morton: The employee parking is on the east and west side of the building. It is only for trailer staging and remote trailer staging for tractor trailer trucks is on that remote lot. To the east and west sides of the building we have ample car parking and we are well in excess of 200 spaces. Mr. Lomako: So, that 19.4-acre site will be used for trailer parking only and left over space of 40% for open space and storm water management? Livonia Brownfield Redevelopment Authority October 28, 2020 Page 25 Mr. Morton: Correct. What we actually retained is part of the storm water system that Amazon uses. Technically, we own it and they have an easement to it. That will service the trailer staging as well. I think the car parking that I found is almost 300 car parking spaces. Mr. Lomako: In the report you made a comment that the employment is expected to be about 185. That is 1 employee for every 2,000 square feet I think. You indicated that it is based upon other projects. Mark, have they provided a listing of similar projects showing that it is an appropriate number to use? Are you comfortable with this? Mr. Taormina: Again, this is all contingent on the user. It could be three times that number if it is a certain type of manufacturing operation. On the other end of the scale, it could be a big open warehouse with only 30 or 40 people working in the building, so we won’t know until a user is identified for the property. Mr. Lomako: That is all an issue for the Planning Commission and Council anyway, right? Mr. Taormina: Planning Commission will not review this site. It is not something that requires site plan review. City Council only reviews the Brownfield plan. The project’s potential employment contribution is something Council will take into consideration relative to the cost- benefit analysis. However, this is not something that will be considered as part of a site plan review process, if that is what you are asking. Mr. Lomako: Okay. You also indicate in a footnote that 75% of the project will be completed by December 31, 2022 with 100% being completed by December 31, 2023. Did I get that right? Mr. Morton: That is correct. That was to show a phasing of the projected taxable value as the building is being completed. Our hope is that if we were to get going, it could beat the timeframe by a year or 18 months. It is really based on a function of this fill conversation and how quickly we can get construction going. Mr. Lomako: Okay, I thought that was quite an ambitious schedule the way it was. I was just wondering if there was a project phasing plan? That might be a nice addition to the plan, just because I saw a footnote buried I thought it something very important I think in terms of completion. Just a suggestion I guess. Livonia Brownfield Redevelopment Authority October 28, 2020 Page 26 Mr. Morton: Thank you. We will take a look at that. Mr. Lomako: Last question, I promise. Looking at Table 3 I got a little confused. I will show you one point of my confusion, for example. If I am looking at Table 3, Year 1, the total annual developer reimbursement is listed as $226,957 thereabouts, right? Mr. Morton: Correct. Mr. Lomako: Okay, when I go back a Table to Table 2, and I look at the total taxable incremental revenue available for capture, the number is $399,805. Am I reading that correctly? Mr. Morton: I believe you are looking at Year 16. You would need to go back one more page. Mr. Lomako: You’re right. $255,314. Mr. Morton: The difference between these is related to two items. If you were to go back to Table 3 and looked at Plan Year 1, we are essentially capturing…it is a little less than 90%. If you were to look towards the top of the page the red line that says Redline State Revolving Fund, the state takes $14,000 for their revolving fund and then we are able to capture the rest. If you were to look to the bottom of the page you can see the local capture. There is a $14,000 capture that goes to the Livonia Brownfield Fund. It is almost…the state takes their 50% off the top and we get the rest and on the local capture we get 90% and the LBRA gets the other 10%. If you were to add those together, I believe they add back up. Mr. Quimby: Kyle is correct. They should add back up. Essentially, it is like rounding. What is happening is the State has in its statute when they allow school taxes to be captured, they keep 3 mills of the SET. On this plan it functionally works out to be about 10%. Essentially 10% of the capture is going to the State, 10% of the capture is going to local Brownfield Authority, and the remaining 80% would go to the developer of the available capture. Mr. Lomako: You mean 90? Mr. Quimby: The way it is structured now is like there is no say over the State. They get their money no matter what. The city can negotiate with the developer in terms of the percentage on the local Brownfield Livonia Brownfield Redevelopment Authority October 28, 2020 Page 27 capture. So, it is a 90/10 split in the sense that of the available capture the developer is getting 90% and the city is keeping 10%. Before that amount was even touched, the State already took their part on top of that. I apologize if I confused anyone. I was just trying to indicate, of the total available capture, if you went back to Table 2 what is functionally happening is the city is keeping 10%, the state is taking 10% of the amount and the developer is getting a little less than 80%. Mr. Lomako: So, if I took $255,314 and took 20% away right and then that remainder, use 80% that is what we should see in terms of what the developer reimbursement will be? Mr. Quimby: Yeah, that is about right. It is not exact, because like…the city piece is exactly 10%, the State piece is 3 mills of the State SET. The ratios work out about the same, but it isn’t exact. What you said is functionally correct. Mr. Lomako: Okay, alright. What I would like you to do outside this meeting is just double check your math. That’s all. I came out with a slightly different number. Not far from the number you had in Table 3. That’s all. Those are my questions Mr. Chairman. Mr. Engebretson: Thank you. Mr. Slater will sometime in the next couple minutes have all of that reviewed and recapped and reported back to you. Just wanted to make sure you are awake there Mike. Okay. Steven, did you have a question or comment? Mr. Vandette: Yes I did. Mr. Engebretson: Sir. Mr. Vandette: Okay, this question I think is for Mark. And it has to do with the Plymouth Road Development, the documentation is noted that this project would have no effect on the capture for the Plymouth Road Development Authority because the baseline value is so low, I am sorry. The current taxable value is much lower than the baseline. Correct, Mark? Mr. Taormina: That is correct. Mr. Vandette: So, what happens if that changes? What happens if the taxable value goes above the baseline in 30 years? It might. What would Livonia Brownfield Redevelopment Authority October 28, 2020 Page 28 happen and what would be the implication of that on the Plymouth Road Authority and on this proposed Brownfield project? Mr. Taormina: It would probably amount to something very insignificant in terms of the impact to the PRDA because it would only involve the subject two (2) parcels. More importantly, if the PRDA was ever in the next 30 years able to approach…if the taxable value were able to approach the established base value, there would be a lot of happy people here in the City. I am going to punt and give this to Mike Slater. I think he can describe this a lot better than I can. But you are correct: the agreement would allow the LBRA to capture any dollars in the event that does happen. That is the purpose of the agreement. However, the chance of that happening is extremely slim. Mike can answer this better than I can. Mr. Slater: The only way that, even in the next 30 years, the value in the PRDA gets above the base value is if there are changes in the tax laws. When they changed the laws for depreciation for auto manufacturers in 2010 and since then a change in the personal property taxes for eligible manufacturing property, we are about $200 million below the base value in terms of current value…it is all personal property. In absence of the law changing, it is never going to happen. Mr. Vandette: Is this property in the…obviously it is in the district for the PRDA, right? Mr. Slater: It is. Mr. Vandette: Okay, why is it there to begin with. To me, it is like a boat anchor that weighs down the entire district. To me it seems what could happen with this parcel and maybe other parcels, is that at some point the Development Authority decides we are going to cast off certain properties that are weighing down the value and come up with a new district with a new Downtown Development district. It is possible to do. It is very difficult, but if you did cast off these properties that were valuable in 1998 but are extremely low now, that may not have the potential to increase in the future, if those are cast off and the district is redrawn then they might, the district might back up to…and I am not familiar with all of the details, but… Mr. Slater: You would have to look at the numbers for the district. Even if you redrew the district, it is not going to fix it. Livonia Brownfield Redevelopment Authority October 28, 2020 Page 29 Mr. Vandette: Not going to fix it. Mr. Slater: That is a discussion for another time. Mr. Vandette: It is, yeah. I think it is important to know that theoretically, and maybe I am wrong, but theoretically the district could be redrawn, such that it would get back to its base line value and then if that were to happen and there are increment tax revenue captured, who would capture that then? Would it be the Plymouth Road or would it be this Brownfield project? Mr. Slater: It would be the Brownfield, but again I just don’t see it happening. Mr. Vandette: Okay, I see. Thank you. Mr. Engebretson: Thank you, sir. Anyone else? Mr. Taormina: I would like to just point out that under that scenario, Mr. Vandette, if that property in question is removed from the PRDA, it would really make the interlocal agreement a moot point. Mr. Engebretson: Anyone else? We will give the petitioner the final word if you wish. Anyone of you? Ms. Harvey: I would just like to say again that we are really excited about this project. Without this Brownfield TIF, we would not be able to develop this piece. The costs we could never recapture in rents to justify these costs just due to the previous history of the site and again we are more motivated to keep these costs down as low as we possibly can. The Brownfield does reimburse us for a single penny that we don’t spend upfront many years in advance. I guess that this is very important to reiterate. It is important to us. We wouldn’t even be considering developing this corner. To remind everybody there are other sites in the past that we could have come into the city and tried to get Brownfield help, but we were able to make it work and didn’t do that, so in this case we absolutely cannot make it work without the Brownfield TIF. Mr. Engebretson: I think that point has been well made by everyone in your group. Ms. Harvey: Thank you for indulging me. Ms. Scheel: Mr. Chairman? Livonia Brownfield Redevelopment Authority October 28, 2020 Page 30 Mr. Engebretson: I would be glad to indulge you anytime. You can join our meetings anytime. Did someone else want the floor? Ms. Scheel: I was part of the meeting that was held prior to go over some things and most of my questions or concerns were answered there and I did also talk to Mike Slater about a few other things. With all of the discussion that we have had tonight and the concerns that have been raised on both sides, I would like to put a motion on the floor for the Brownfield Committee to discuss numbers and where we end up. Are you amicable to a motion being put out right now? Mr. Engebretson: I think if the petitioner, if none of them have any additional comments, I think a motion would be in order. We will give then a final opportunity. Mr. Morton: I think I am going to abstain. I believe Susan hammered it. Mr. Engebretson: With that understanding, a motion would be in order Ms. Scheel: This is going to be just a general motion with numbers and terms. I would like to put out a motion for 25 years for a dollar amount of $11,971,777 with payback terms of 85/15. Mr. Engebretson: So I will repeat that. It is a proposal that has been put before us by the petitioner but the terms you are reducing the number of years and you are leaving the value at $11.9 million and the split of the capture to 85/15. Ms. Scheel: My reason for that is that if gives them the opportunity to collect the most but it does up the split a little bit to 85/15. The terms that instead of what was talked about of 20 years would give them 25 years to do that. Understanding that we are just a recommending body and Council can always change this when it gets to Council. Mr. Engebretson: Right. We should have support before we have discussion. Mr. Lomako: I will support for discussion. I guess I like the way the framing was, but I guess the split I still have concerns. A 90/10 split would be better to me. Mr. Harb: Mr. Chairman, I would be more inclined to go with what was actually written. The 90/10 and I don’t know if it was 22 years or Livonia Brownfield Redevelopment Authority October 28, 2020 Page 31 30 years that was in here. I believe it was 30 years, just as it was written. Mr. Engebretson: So, is that a substitute motion? Mr. Lendrum: I have a question. Mr. Engebretson: Andy? Mr. Lendrum: Who came up with the 30 years? Who suggested it? Mr. Engebretson: They did. Mr. Quimby: 30 years is the statutory maximum. We can’t…one point I would like to add to this discussion that hasn’t been brought up is that the 30-year timeframe does not pay back the entire plan. Under the current projections the eligible activities or the $11.9 million, 30 years of capture is only $10.5 million. The difference between the two is lost and cannot be captured. The statute is written that you can’t capture for more than 30 years. If the taxable value came back a little bit higher and they could get the full $11.9 in the 30 years or 29 or 28 they would, but right now based on current conditions the developer is not even made whole. So, to Kyles point, the dollar that is spent now they don’t get every dollar back they only get most of the dollars back. That is where the 30 years come from. Mr. Lendrum: Mark, does it matter to the City whether it is 20 years or 25? Mr. Taormina: That is ultimately a decision that rests with City Council. Does it have an impact on money in both directions? Yes. The real question is: what will it take to make the project viable? Mr. Lendrum: To make it viable, they need 30 years. Mr. Taormina: They want the 30. That is what they are seeking. The motion on the floor tries to reach some compromise but still giving them the opportunity to achieve full reimbursement. Under the current plan and tax projections, this would not be achievable. In fact, you can see how much gets reimbursed after 25 years and how much gets left on the table should they exceed those costs. Mr. Quimby: One thing I would like to add for the Board’s consideration is that when you change the ratio from 10 to 15 or 90 to 85, in effect that Livonia Brownfield Redevelopment Authority October 28, 2020 Page 32 is just taking more money out of a project. Instead of being $1.4 million short at a 30-year capture, you are $1.1 or so. That extra 5% is $300,000 or so. Every bit…whether you reduce the term or you reduce the percentage, both of which essentially make the project less whole which it is already not whole based on the current projections. Mr. Engebretson: That’s all true, but the City starts out not whole either and the City becomes less whole as you start moving…unfortunately what works for one side works against the other. That is too bad because in many aspects we are in a partnership here. I think you have to recognize that. Okay, well you know we recognize that this isn’t the United Nations as far as protocol is concerned straying from Robert’s Rules here. We have a motion on the floor here by Lynda Scheel and it was supported by Nick Lomako for 25 years, $11.9 million, and 85/15. Ken Harb in the discussion discussed the proposal being approved as presented with a 90/10 split, full number of years, 30 years, and the full amount as well. Mr. Lomako: My proposal is to keep the with the 25 years and the split 90/10. Mr. Engebretson: We are going to have to resolve this folks and come up with one new resolution. The only resolution on the floor realistically is Lynda’s resolution. If we want to offer a substitute we can. Again, keep in mind folks that we are building a public record here and I think that the petitioner understands what our concerns are. That is one of the values of having a meeting like this, because if you think that we are prickly people wait until they get to the City Council. That is not meant to be disrespectful of them, but we answer to the Mayor and they answer to the whole electorate. They are going to feel a lot of pressure on this because again the Brownfield Redevelopment process generally has worked to the benefit of the petitioners and the City. This one seems to tip toward the developer, and I don’t say that with any disrespect or hostility, but what I think what Ms. Scheel is trying to do is bring it more in the middle. Most people would call that a negotiation. Anyway, her resolution is on the floor and if anyone wants to offer a substitute resolution you can do that. The procedure would be to ask to make a substitute resolution and we would vote whether or not to do that and then at that time discussion on both resolutions would be in order. Mr. Harb: I would like to offer a substitute resolution of 30 years, $11.9 million, and 90/10 split. Livonia Brownfield Redevelopment Authority October 28, 2020 Page 33 Mr. Breen: I will second that. Mr. Engebretson: We actually have two motions and we need to iron this out, and we have to settle on which of the two motions we will take a vote on and send on to City Council for final resolution. Mr. Taormina: While I am not a Parliamentarian, I think procedurally you would first vote on whether to offer the substitute, and if that passes, then the substitute motion is presented and if that is supported, you then vote on it. Thus, you will have to take two votes. The first is whether there is support for a substitute resolution, and then present the substitution for consideration. Mr. Engebretson: I thought we had done that, but apparently not. I am sitting here in a real mess with stacks of paper all around me. So, the vote that we took was whether or not to substitute. We didn’t take the vote. It was offered and seconded. On a motion by Harb to substitute, seconded by Lomako, a roll call vote resulted in the following: (Ms. Karolak left the meeting before the vote was called.) AYES: Breen, Lomako, Fried, Lendrum, Harb NAYES: Scheel, Vandette, Engebretson ABSENT: Karolak ABSTAIN: None Mr. Engebretson, Chairman, declared the motion to substitute carried. On a motion by Harb, seconded by Lomako, and adopted, it was: #12-2020 RESOLVED, that the Brownfield Plan for Livonia West Commerce Center 2 Redevelopment, 12950 and 13100 Eckles Road, dated September 30, 2020 (Version 1.5) as prepared by SME, is hereby approved, subject to final approval by the Livonia City Council. A roll call vote on the foregoing resolution resulted in the following: AYES: Breen, Lomako, Fried, Lendrum, Harb, Engebretson NAYES: Scheel, Vandette ABSENT: Karolak ABSTAIN: None Livonia Brownfield Redevelopment Authority October 28, 2020 Page 34 Mr. Engebretson, Chairman, declared the motion carried and the foregoing resolution adopted. Dillon Breen excused himself from the meeting at 7:05 p.m. On a motion by Lomako, seconded by Fried, and adopted, it was: #13-2020 RESOLVED, that the Development and Reimbursement Agreement as presented to the Livonia Brownfield Redevelopment Authority (LBRA) at its meeting of October 28, 2020, allowing for the capture of Tax Increment Revenues (TIR) from the subject Property for the reimbursement of eligible activity costs up to $11,971,777 beginning with the Summer 2023 tax bill and terminating upon payment of all outstanding reimbursement requests, but in no event later than the TIR collected through the Winter 2052 (30 years total), with ninety percent (90%) paid to the Developer and ten percent (10%) retained by the LBRA for administrative fees and deposits to the Local Site Remediation Revolving Fund (LSRRF), is hereby approved subject to final approval by the Livonia City Council. A roll call vote on the foregoing resolution resulted in the following: AYES: Lomako, Fried, Lendrum, Harb, Scheel, Engebretson NAYES: Vandette ABSENT: Karolak, Breen ABSTAIN: None Mr. Engebretson, Chairman, declared the motion carried and the foregoing resolution adopted. On a motion by Harb, seconded by Lomako, and adopted, it was: #14-2020 RESOLVED, that the Interlocal Agreement to Use Local Tax Increment Revenues for the Livonia West Commerce Center 2 Brownfield Redevelopment Project between the Plymouth Road Development Authority (PRDA) and the Livonia Brownfield Redevelopment Authority (LBRA), as presented to the LBRA at its meeting of October 28, 2020, is hereby be approved. A roll call vote on the foregoing resolution resulted in the following: AYES: Lomako, Fried, Lendrum, Harb, Scheel, Engebretson NAYES: Vandette ABSENT: Karolak, Breen Livonia Brownfield Redevelopment Authority October 28, 2020 Page 35 ABSTAIN: None Mr. Engebretson, Chairman, declared the motion carried and the foregoing resolution adopted. Mr. Engebretson: To the Ashley team, we do wish you the best of luck. We do hold you in very high regard and wish you the very best on this project. Please don’t leave tonight thinking that there was anything personal in any of the comments I made or anyone else for that matter. Ms. Harvey: Thank you very much. We certainly do not. This is a good robust discussion. We appreciate the concerns and thank you very much. Mr. Engebretson: You are all set for Council. We have a couple items left. The Ashley people can check out or they stick around for the exciting next item. Mark, I meant to discuss this with you earlier when we were getting set up. I was curious about the agenda item regarding the election of officers. Since we just did that last May, is this something left over from picking off a template? Something that was done previously? Or is there something else we need to know about? Mr. Taormina: While we are still in the first year, we can skip this step until the next meeting of the Brownfield Authority. It may have been a carryover from the previous meeting. I apologize. Mr. Engebretson: Is there any other items to come before the Board? Mr. Fried: A basic observation and I didn’t want to raise it earlier because it is within our area or the bonding area. Mr. Engebretson: There is no bonding. Mr. Fried: The fact that part of the agreement is…there was a provision that if they petition for a reduction in assessment and we have collected our share of the money because property tax issues may take a while to settle, then we would have to pay back what the City collected earlier on their share of the considered property tax because they got a reduction in the property tax overall. Mr. Engebretson: So, what is your point? Mr. Fried: My point is that there could be several years difference when we get the city share because of Brownfield contamination. They can Livonia Brownfield Redevelopment Authority October 28, 2020 Page 36 object to the overall assessment. The tax would go down and then that share that was allocated for Brownfield would then have to be reversed to the taxpayer. Mr. Taormina: I think I can answer that. If there is an appeal that lowers the taxable value of the property, it only serves to hurt the developer as far as getting reimbursed for the eligible costs. While it is not out of the realm of possibilities, I don’t know why they would choose to do that. It would really work against them in terms of their reimbursement. Is that correct Mike? Mr. Slater: That is true, Bill. Mr. Taormina: I know what Bill was driving at. They are not prevented from appealing the taxes. There is somewhat of a claw back provision, but they are not prevented from doing that. There is language in the agreement that requires the City be reimbursed by the Developer for any taxes that must be paid back to any of the taxing authorities because of an appeal. Mr. Fried: (Inaudible) reimburse the City for the share that went to the Brownfield Fund. I just feel that somehow there can be a separation of years there and we would then, a certain amount of tax would come in for Brownfield to cover expenses and everything, the Brownfield share and now we turn around and then the city will then have to make whole whatever the taxes they collected in total. Because is not the amount that goes through the Brownfield simply an accounting thing within the City? A certain amount ends up in the Brownfield Fund vs. being available for other uses which is not all bad. Don’t get me wrong. I just could see over 30 years or over any period that it ends up being…other ones we were talking in shorter periods rather than in the type this would end up being. A possible fact on a rental property and actually I am not sure if (inaudible) this thing to Amazon. That is generally based on the rent. There is one way to value property for property tax purposes even though the tax end for accounting purposes you go to cost, but for property taxes you start with cost and hopefully they will increase or decrease depending on economic activity. Thirty years is a long time. Mr. Engebretson: Bill, you and I will check them out in 30 years from now. Mr. Fried: Huh?