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Home My WebLink About07-17-2006 Special JEFFERSONVILLE CITY COUNCIL SPECIAL SESSION Meeting Memorandum - July 17, 2006- Mayor's Conference Room 5:30 p.m. Council President Barbara Wilson called. the meeting to order. The meeting was called to order at 5:30 p.m. and on call ofthe roll those members present were: Councilpersons Wilson, Perkins, Fetz, Grooms, Zastawny, McCauley and Sellers. Also present were Clerk Treasurer Peggy Wilder, City Attorney Merkley, and Chief Deputy Clerk Suz~ Bass. Councilperson Fetz asked to remove #5 - Edit, and #6 - Municipal Campaign Finance, from the agenda. The motion was made by Councilperson Fetz to approve the agenda with these changes and to add Kent Arnold to the agenda, second by Councilperson Perkins and passed on a vote of7-0. Barry Cahill appeared before the Council about Tax Abatement Fees. He asked the Council to approve the attached CF -1 Report. The City Council must approve these each year. He feels the properties are in substantial compliance with the terms ofthe abatement. The motion was made by Councilperson Grooms to approve the CF-l reports, seconded by Councilperson Zastawny, passing on a vote of7-0. Barry Cahill informed the Council that two, possibly three Little League Teams will be playing in the State Tournament. He asked the Council to donate money to help offset the cost of lodging for the teams. The motion was made by Councilperson Fetz to approve $500.00 per team, not to exceed $1500.00 for traveling expenses, seconded by Councilperson Grooms, passing on a vote of7-0. Barry Cahill presented an Abatement Fee Schedule for future abatements for the Council's approval (attached). The motion was made by Councilperson Perkins to approve Attorney Merkley to draw up a resolution for the Council's approval adopting the attached schedule, seconded by Councilperson Grooms, passing on a vote of7-0. The motion was made by Councilperson Perkins to override the veto of2006-0R-37, An Ordinance Amending 98-0R-40 Establishing an Independent Municipal Purchasing Agency, seconded by Councilperson Sellers. The vote was taken and passed on a vote of 6-1, with Councilperson Grooms voting no. Councilperson McCauley would like to make the override of the veto effective with the establishment of a Purchasing Order Agent. The motion was made by Councilperson Perkins to override the veto of 2006-0R-38, An Ordinance Establishing The Jeffersonville City Hall Building Authority, seconded by Councilperson Zastawny. Councilperson Grooms asked if the property was still in the hands of Redevelopment. Councilperson Perkins said that it was and Grooms asked what the urgency was for a Building Authority. Councilperson Perkins said that everyone needs to know who owns the building and who is going to manage and take care of the building. The vote was taken and passed on a vote of7-0. Kent Arnold appeared before the Council with an updated timetable of the Economic Development Commission Bonds. (attached) He is meeting with his bond people on 7- 18-06 and will keep the Council updated on what is going on at the Jeff Town Center. The motion was made by Councilperson Perkins to adjourn at 7:40 P.M., seconded by Councilperson Fetz, passing on a vote of5-0. ~fd~ Council President Wilson Attest: ~~\0Ad~ Clerk Tre Peggy WIlder June 22, 2006 To: Common Council From: Barry Cahill Re: Abatement Fee as a percent of Benefit to Company You have received a similar memo dated June 12, 2006. Mr. McCauley and I have exchanged Em ails and I have made the bold changes. There is no way of having a minimum fee. It must be a percentage and cannot be a dollar amount. The maximum percentage is 15%. I have changed the original memo so as to never charge the maximum percentage. At the low end where the percent is higher lowering the rate does little to the amount you receive. We might soon have abatement requests, some of which might well be high profile, come before the Common Council. Previous to any new abatement requests, I hope that we can have a policy in place, perhaps by resolution, as to the fee the Jeffersonville Common Council charges for the administration of our abatement processes. It would be much better to quote from an established policy rather than it being more personal with each company as they come before you. As you may recall on SDI, Inc.'s abatement request, I asked and you agreed to charge a percentage of SDI' s tax savings as permitted by recent Indiana legislation. SDI and I negotiated a fee of7.5 percent. This was the first time SDI had paid a fee in Indiana and they were at first not predisposed to pay any fee. After discussion they agreed to accept the 7.5 % fee. In this case their proposed improvements were to be $5,500,000 in real and $33,000,000 in personal property. Their savings over ten years is expected to be $2,354,000 and our fee is expected to be $177,000. Recognizing their savings they got OK with our fee. At the low end I think we should receive at least a $150.00 yearly. As an example abatement of$100,000 for ten years would have a value of$II,OOO to a company and if we charged a 15% fee we would get $1,650 over the ten years or an average of$165.00 per year. Ifwe charge 12% our fee becomes $1,320 over the ten years or $132.00 per year on average. This affects our cash very little but softens the max percentage perception. On $1,000,000 of investment the numbers would be $110,000 savings to the company and at 15% rate $16,500 to the Councilor $1,650 on average over ten years. With the 12% fee this becomes $13,200 over ten years or $1,320.00 per year on average. Review the examples above and consider my recommendation that you charge a fee of 12% if the total investment abated is $500,000 or less; 12% if the investment is $500,000 to $1,000,000; 12 % on anything up to $1,000,000. 10% on investments of$I,OOO,OOO to $5,000,000; 7.5% on investments of $5,000,000 to $50,000,000 and 5% on any above that amount. $1,000,000 investment or less $1,000,000 to $5,000,000 $5,000,000 to $50,000,000 above $50,000,000 12% fee 10%fee 7.5% fee 5% fee $13,200feefor $1,000,000 $24,484 fee for $2,500,000 SDI pd $177,000 on their $38,500,000 $244,000 on $50,000,000 Don't expect the above to work exactly if you do the calculations. When computing for personal property the value is decreasing each year but not on a straight line method. The above should be used only as an indication of results. State law lists 15% as an acceptable maximum rate. You can read the actual code at Ie 6-1.1-12.1-14 Version b. With an actual rate of 15% established by the state it would seem that any rate chosen less then that rate would be somewhat defensible. I would appreciate comments from each of you. We could then move forward with a resolution or other means to establish a written policy. I hope you can address this at your July 3, 2006 work session. ,,; '" ..... ~ I ..... o I CO o o N C o (/) (/) CO c.. o -- (.) C ::J o (,) ~ (,) I.. .E 1:: o c. Q) 0::: ~ I LL (,) "0 iU III Q) ... .1Il_ .acE ~~~ 0. .E "giU.E 1::~..... 0.... I g. ~ ~ 0::: s:: o "0 Q) iU .!!! '0 E I- 0 ... 0. .s "0 III s:: C 0'(3 ........1Il III Q) ~ 0::: "0 Q) Q) > 1;; .; c g 0::: ~~u;>(O~~30C?cg~~(O (,,)N(o (o(")CON LON (0'<1' NO 0>..-(") (,,)O>N LON..-I"-..-'<I' N ON..-O"-(OS:e 1.0 1.0 N..-O'<l' (")N'<I'(,,)LO'<I'I"-N"-:;:N(0 ..- III "0 ~ N o '<I' "-(0(0 No>O ~LON(")~'<I'r:::LOLO:::..-(O'<I' ..- 1:: III .... C/) Ol"-I"-~OOO~OONOO (0(0(0(0(0(0(0(0(0 ~~~~~~~~~ '<1'(")..-..-(")..-'<1'1.0'<1' ~~~~~~~~~ CO'<l''<I''<I'(o '<I' '<I' COCO 000000000 (0(0(0(0 ~~~~ (")0>(")1"- ~~N'T""'" -- -- -- -- '<1''<1'(0'<1' 0000 (0(0(0(0(0(0(0(0 00000000 00000000 ~~~~~~~~ Ol"-I"-I"-LOI"-CO..- :!:~M?5~M~~ I"-N 1.0 NI"- (0 (0 00 00 ~~ 01"- N -- -- I"-N (0 (0 (0 000 000 ~~~ LOLOC"J c;,~c;:; 1.0 w :!: <C z III ECIlCll"O Q) "E "E Q) (;) .~ .~ t;::: Q) >- - 'in c €CI)m(OmU Co c "0 "0 .~ ~ ICCCO-- >-EC1:l00....~ C_EE~8 .;:: ro .~ .~ 0 C CCOOOOW u c 0) c 'in C1:l Q) -l .- .~ .,.', '/.. '",,, r' ;,' June 22,2006 To: Common Council From: Barry Cahill Re: Abatement Fee as a percent of Benefit to Company You have received a similar memo dated June 12,2006. Mr. McCauley and I have exchanged Emails and I have made the bold changes. There is no way of having a minimum fee. It must be a percentage and cannot be a dollar amount. The maximum percentage is 15%. I have changed the original memo so as to never charge the maximum percentage. At the low end where the percent is higher lowering the rate does liUle to the amount you receive. We might soon have abatement requests, some of which might well be high profile, come before the Common Council. Previous to any new abatement requests, I hope that we can have a policy in place, perhaps by resolution, as to the fee the Jeffersonville Common Council charges for the administration of our abatement processes. It would be much better to quote from an established policy rather than it being more personal with each company as they come before you. As you may recall on SDI, Inc.' s abatement request, I asked and you agreed to charge a percentage ofSDI's tax savings as permitted by recent Indiana legislation. SDI and I negotiated a fee of7.5 percent. This was the first time SDI had paid a fee in Indiana and they were at first not predisposed to pay any fee. After discussion they agreed to accept the 7.5 % fee. In this case their proposed improvements were to be $5,500,000 in real and $33,000,000 in personal property. Their savings over ten years is expected to be $2,354,000 and our fee is expected to be $177,000. Recognizing their savings they got OK with our fee. At the low end I think we should receive at least a $150.00 yearly. As an example abatement of $1 00,000 for ten years would have a value of $11 ,000 to a company and if we charged a 15% fee we would get $1,650 over the ten years or an average of$165.00 per year. Ifwe charge 12% our fee becomes $1,320 over the ten years or $132.00 per year on average. This affects our cash very liule but softens the max percentage perception. On $1,000,000 of investment the numbers would be $110,000 savings to the company and at 15% rate $16,500 to the Councilor $1,650 on average over ten years. With the 12%fee this becomes $13,200 over ten years or $1,320.00 per year on average. Review the examples above and consider my recommendation that you charge a fee of 12% if the total investment abated is $500,000 or less; 12% ifthe investment is $500,000 to $1,000,000; 12 % on anything up to $1,000,000. 10% on investments of$I,OOO,OOO Viii . ~ to $5,000,000; 7.5% on investments of $5,000,000 to $50,000,000 and 5% on any above that amount. $1,000,000 investment or less $1,000,000 to $5,000,000 $5,000,000 to $50,000,000 above $50,000,000 12 % fee 10%fee 7.5% fee 5% fee $13,200 fee for $1,000,000 $24,484 fee for $2,500,000 SDlpd $177,000 on their $38,500,000 $244,000 on $50,000,000 Don't expect the above to work exactly if you do the calculations. When computing for personal property the value is decreasing each year but not on a straight line method. The above should be used only as an indication of results. State law lists 15% as an acceptable maximum rate. You can read the actual code at Ie 6-1.1-12.1-14 Version b. With an actual rate of 15% established by the state it would seem that any rate chosen less then that rate would be somewhat defensible. I would appreciate comments from each of you. We could then move forward with a resolution or other means to establish a written policy. I hope you can address this at your July 3, 2006 work session. I -'~ 't:: ,I Date January 25,2006 February 7,2006 February 10,2006 February 15,2006 March 28, 2006 March 31,2006 July 12, 2006 July 19, 2006 August 7,2006 August 7, 2006 August 7, 2006 August 7,2006 August 7,2006 August 7, 2006 August 11, 2006 [/1554414.1 ICE MILLER LLP - DRAFT FOR DISCUSSION PURPOSES ONLY July 14, 2006 CITY OF JEFFERSONVILLE ECONOMIC DEVELOPMENT COMMISSION BONDS (KENT ARNOLD PROJECT) TIMETABLE Activity Workshop to explain transaction to Council and Redevelopment Commission Bond counsel receives bond terms and commitment to purchase bonds Documents distributed to working group Comments on documents due Revised numbers distributed to financial adviser Second draft of documents distributed to working group Third draft of documents to working group Comments on documents and all missing bond terms due Notice of public hearing on amendment to plan delivered to The Evening News (Jeffersonville) Notice of public hearing on bonds delivered to The Evening News Substantially final forms documents delivered to City EDC preliminarily approves financing Council \Vorkshop (tentative) Common Council meeting held to introduce bond ordinance Notice of public hearing on bonds published in The Evening News y .. ..-, Date Activity August 11, 2006 Notice of public hearing on amendment to plan published one time in The Evening News (Jeffersonville) (at least 10 days prior to hearing) August 21, 2006 EDC holds public hearing and approves project report; adopts final action resolution which approves the substantially final form of documents and recommends that Common Council pass the bond ordinance August 21, 2006 Common Council meeting to adopt bond ordinance and approve substantially final forms of trust indenture, loan agreement and any other required documents (e.g. continuing disclosure agreement, purchase contract, etc.) and amendment to plan August 22, 2006 Secretary 0 r EDC delivers project report to Director of Plan Commission and, if required, to School Superintendent (if creating > 100 jobs) August 28,2006 Redevelopmellt Commission (1) holds public hearing on amendment to plan that carves out Arnold project area; (2) adopts amending resolution; (3) adopts resolution pledging TIF and (4) notifies StaL; of amendment to existing TIF area August 29,2006 Bond Pricing; Purchase Contract signed September 12, 2006 Pre-closing September 13, 2006 Closi ng Assumptions: All bodies comply with Indiana Open Door Law Bonds payable from TIF and 108n repayments from the Company Bonds are taxable Sale of bonds negotiated The Evening News (Jeffersonville) is published daily (Tues.-Sun.) Common Council mcets 1 st 8nd :; ,cl Monday of each month Economic Development Commission meets as needed Redevelopment Commission meets last Monday - 2 - 1/1554414.1