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HomeMy WebLinkAbout2003-03-19 Transcription#2 Page 1 ITEM NO. 2 CONSIDER A RESOLUTION APPROVING AND AUTHORIZING AN AGREEMENT FOR PRIVATE REDEVELOPMENT BY AND BETWEEN THE CITY OF IOWA CITY AND ALPLA OF IOWA, INC. (Bad tape) Nasby/ ... Bottle sitting by Connie, and I have one interested in seeing that. Last year the company had about a billion dollars in sales so they are a very large and growing company. In the proposal they are proposing to add an additional 86,000 square feet of manufacturing/industrial space. That would include some warehousing and distribution. They currently have 56,000 square feet in their facility. They would be expanding on site so it's about a 150% increase in the amount of space that they would have. The building improvements are estimated to be about $3.1 million and that's the number of improvements that's in the development agreement. They will also have approximately $9 million in machinery and equipment. They will create initially at least 10 new positions. We did amend the development agreement to say that those initial positions have to up and going by Mamh 1, 2004, so they will be coming fairly quickly on the heels of the expansion. Lehman/ $3.1 million that's the improvements to the real estate? Nasby/ That would be the improvement to the real estate, correct. Lehman/ That does not include equipment? Nasby/ That does not machinery and equipment. Vanderhoef/ No, $9 million in equipment and machinery. Nasby/ Yea. Vanderhoef/ That's a BIG investment. Nasby/ Yes, it is. And then also in the development agreement you'll probably notice that it calls for five years of 100% o£tax rebates on the expansion portion of the building and then also a $35,000 up front payment which the business has requested to use for infrastructure improvements. They need to make some electrical upgrades, transformer, and some other installation of that equipment on their site. So that is something that we putting up front and then certifying with our TIF debt that we then would be collecting that back through the TIF process. There's also a memo in your information today that walks you through that process. This represents only a reasonably accurate transcription of the Iowa City City Council meeting of March 19, 2003 #2 Page 2 Vanderhoef/ Nasby/ Vanderhoef/ Atkins/ Vanderhoef/ Atkins/ Nasby/ Vanderhoef/ Nasby/ Vanderhoef/ Nasby/ Pfab/ Nasby/ Pfab/ Okay, on the $35,000 1 had a conversation today with Steve because I wondered about the installation of this electrical transformer and where our public utility was in helping with that. And my understanding was from what Steve said was that State law does not allow the public utility come on site to build this for us (can't hear) Yea. So, it's not something that we can ask for elsewhere and I am presuming Steve that this will come out of the City economic development fund and Planned on. So it will be repaid in that sixth year but it will be part of that fund that we have set aside Is that correct, sixth year? Yea, the tax rebate is for five years so essentially we would be looking at in year six. Or after...or until we reach the $475,000? Or we reach the maximum amount, correct. Okay, that's fine so it might be in the fifth year if we get a good appraisal. Question for you. So in other words ifI understand this correctly it's a interest free loan for six years and then or until the maximum is paid or we pay out the maximum as agreed too? And then we get it paid back? We're going to pay out the $35,000 up front and we would certify that as debt in the TIF district and we certify that to the County, City Assessor and that is held in that T1F account until the future tax payments come back. And then as the tax payments come in that amount can be repaid with interest. So we would get it at a future point in time when the taxes are returned. So it is like an interest only loan (can't hear) because you say it's going to earn interest. This represents only a reasonably accurate transcription of the Iowa City City Council meeting of March 19, 2003 #2 Nasby/ Lehman/ Nasby/ Lehman/ Nasby/ Lehman/ Nasby/ Lehman/ Nasby/ Vanderhoef/ O'Donnell/ Vanderhoef/ Nasby/ Vanderhoef/ Audience/ Lehman/ Nasby/ Audience/ Nasby/ Vanderhoef/ Page 3 We will earn interest and that will be payable through the TIF proceeds as well. However the interest on that is irrelevant. That's correct. Because it comes out of tax It's going to come out of tax revenue Whatever isn't paid in interest we keep in taxes That's correct. so that parts not relevant. Yep. They would like to get under construction this construction season and I believe they have a target date for completion of August. Terrific. Good job. And the jobs are in the $9 to $16 range? In our discussion with the company they've indicated that the starting wages would be in between that range for the 10 new employees that initially would be coming on by the first of March, 2004. Okay, are these ali hourly workers or are there some salary workers in there that average into that? (Can't hear) You need to speak into the microphone if you answer. Tell me. (can't hear) Initially they would be hourly employees. All 10 or 117 Whichever? This represents only a reasonably accurate transcription of the Iowa City City Council meeting of March 19, 2003 #2 Audience/ Nasby/ Pfab/ Nasby/ Wilburn/ Lehman/ O'Donnell/ Lehman/ Wilburn/ Audience/ Wilburn/ Pfab/ Nasby/ Vanderhoef/ Nasby/ Pfab/ (laughter) Nasby/ Lehman/ Page 4 (Can't hear) The 10 is an initial number that they could have up and coming by March 1, 2004. There will likely be additional employment beyond that but that's not something that we can foresee at this point in time to include into the development agreement so Are you saying that they are ascertaining that they will have that many annual employees by March? By March 1, 2004, that's correct. And that's something that was added to the development agreement that you have that was firmed up this morning. So that yea. That's pretty amazing to increase the size by one and half times in less than a year after it's completed. Incredible. Okay, any other questions for Steve? I don't know if we ever had a chance but welcome to Iowa City. Thank you. Thank you for your investment or reinvestment. It's a great operation. Irvin was out and had a tour of the plant yesterday. And I'm jealous. I want to come too. We'll work it out with Ken. But first of all you have to be sure you're not part of the competition. Thank you. Thank you Steve. Council discussion? This represents only a reasonably accurate transcription of the Iowa City City Council meeting of March 19, 2003 #2 Page 5 Vanderhoef/ O'Donnell/ Wilbung Lehman/ Vanderhoef/ Pfab/ Nasby/ Pfab/ Nasby/ Lehman/ O'Donnell/ Lehman/ Vanderhoef/ Lehman/ Well this meets the criteria of our TIF district. They are good jobs with benefits and still gives us more opportunity for growth. I think we should go ahead with this. Good opportunity for the City. Nice to have growth on top growth that we already brought. The other thing that we probably don't think about cause 1 think we have fairly judicious in the TIF's that we've given but this certainly is in keeping with the whole idea of TIF. There is a limitation of time on it, it's project specific. I think it's an example of what TIF's are really intended to do and if all TIF's were mn this way the State wouldn't be talking about limiting them. Ah, huh. I think we might be well for the Council to remember that when they first canoe to Iowa City and asked for TIF but we couldn't act fast enough so they just said we'll just build it anyway. No, they didn't ask for it. I mean they discussed it and said we can't make it work so go on. Yea, it was something they came and we didn't have anything in place to even talk about it so they didn't request it but... So this time we're prepared. Other discussion. Roll Call. (All ayes) Motion carried 6/0. I would entertain a motion to adjourn. Move to adjourn. Moved by O'Donnell. Second. Seconded by Vanderhoefto adjourn. All those in favor. All ayes. Thank you very much. This represents only a reasonably accurate transcription of the Iowa City City Council meeting of March 19, 2003