BOARD OF DIRECTORS MEETING
County of Chautauqua Industrial Development Agency
CCIDA
214 Central Avenue, Dunkirk, NY
November 29, 2012
10:00 a.m.
Michael Metzger Chairman
Kim Peterson Secretary
Doreen Sixbey Member
Dennis Rak Member
David Bryant Member
Hans Auer Member
Also in attendance:
William Daly Administrative Director/CEO
Rich Dixon CCIDA Chief Financial Officer
Greg Peterson Counsel
Jonathan Taber Counsel
Carol Rasmussen CCIDA Staff
Lawrie Taylor CCIDA Staff
Susan Casel CCIDA Staff
Kristine Morabito CCIDA Staff
Shirley Pulawski Dunkirk Observer
Absent Board Member(s): Greg DeCinque and Fred Croscut
Michael Metzger
I will now call the County of Chautauqua Industrial Development Agency (CCIDA) Board of Director’s meeting to order. Today is November 29, 2012 (10:05 a.m.) This meeting is being held at SUNY Fredonia Incubator, 214 Central Avenue, Dunkirk, NY.
I will now have roll call.
Kim Peterson– Here, David Bryant – Here, Dennis Rak – Here, Doreen Sixbey – Here, Hans Auer – Here, and Mike Metzger – Here. We have a quorum and will begin the meeting.
We are now in regular session.
Hans Auer was recognized as our new board member.
Everyone has had a chance to review the minutes from October 30, 2012. Are there any questions; if not, may I have a motion to accept the minutes as presented?
David Bryant
I so move.
Dennis Rak
I second.
Jonathan Taber
I would like a revision noting in the minutes that a memo was handed out to the Board regarding our UTEP Policy – and attach to minutes.
Michael Metzger
Motion has been made to accept the minutes with revision. All in favor indicate by saying Aye.
Board Members
Aye
Michael Metzger
The minutes are passed.
We will now have our Deviation Hearing.
Carol Rasmussen
In regards to Covenant Manor LLC we are having a Deviation Hearing. We had the Public Hearing yesterday. Jon Taber attended, Rich, myself, and Bob Kenyon, from City of Jamestown. I emailed and put copies in front of you the minutes of the Public Hearing and the letters that we received from the City of Jamestown, the letter they read yesterday and also the one dated October 10, 2012, letter that they wanted attached to it.
Covenant Manor is applying for a tax lease PILOT. We’ve had the Public Hearing; we’ve had the Preliminary Resolution. Today the SEQR and Approving Resolutions are on the Agenda.
Jonathan Taber
We did receive a letter from the City of Jamestown; the letter was submitted to the Board members; I believe you all have a copy. It was included in the Public Hearing that we held yesterday. For this project, there are really two different meetings – and they have two different purposes. I just want to make sure that we’re not mixing those purposes.
One is a Public Hearing for the project itself which was an opportunity for the public to provide comments in connection with the project. That was yesterday’s meeting.
The Deviation Hearing, that we’re having right now, is a separate hearing that is intended to determine whether we should deviate from the IDA’s UTEP Policy in connection with the project. Negotiations were held between the IDA staff and the applicant – there is a negotiated schedule of PILOT payments that differs from the UTEP.
So for the purpose of the Deviation Hearing, we should focus on that. The letter that was submitted was not a letter that raised an issue with the deviation. It is a letter that expresses the City’s perspective on doing the project at all, which is a part of the Public Hearing. All of that stuff is important, but for the purpose of the Deviation Hearing we should focus on whether or not the negotiated deviation from the UTEP is appropriate in this circumstance. I only raise that because the requirements on the Agency are different when comments are received in a Deviation Hearing than they are in a Public Hearing. I want to make sure that we handle those comments appropriately.
Carol Rasmussen
Right, that was the history I was giving; then I was going to turn the Deviation Hearing over to you.
Jonathan Taber
Rich, would you explain how you arrived at those numbers.
Rich Dixon
The PILOT amount is a 10-year PILOT. The amounts were negotiated with the people who were buying Covenant Manor from Cleveland. They approached us and said they had been in discussion with the Assessor from the City of Jamestown. It was their understanding, that because of the value of this property and the rents, there would be a special provision in tax law to allow them to not pay full tax on this. When they approached the Assessor and did calculations, the Assessor said they did not qualify for it. That meant they were going to have to pay full tax. At that point, they came back to the IDA, and said if we don’t get this tax abatement, we will be unable to proceed with the purchase. This would have left the parcel off the tax roll – paying no tax. They also wanted to invest $3 million in the project. So, Bill and I had negotiated with them, and we arrived on some PILOT amounts. They’re basically 50% to start with. That amount increases 2% every year ending in year eleven when this property will be full taxed. We thought that was fair given the fact the – it was our understanding that the local not-for-profits had passed on purchasing this building. Even though they would pay no tax, they still didn’t feel that they could make a go at this. So, here we have property going back on the tax roll. A substantial investment coming in the next few years, once the rents are stabilized and the occupancy raises a little bit from downtown, we thought it fit in nicely with the down town development plan. So, that’s how we arrived at these numbers.
Michael Metzer
What is the percentage reduction in the first year?
Rich Dixon
50%
That is based on what the City had told them. The City was also talking to the developer about what the assessment would be. So they had been working with them; because, as I said, their understanding was their property taxes would be minimum on this project. That is not how it turned out.
So Jon, I think that, since there is no one here from the taxing jurisdictions, we can close the Deviation Hearing?
Jonathan Taber
I think that the Board should approve the Deviation if the Board is so inclined. Again, this doesn’t necessarily have to do with the project, it’s just approving the proposed change in the tax abatement over the 10-year period.
David Bryant
Rich, could you remind us how this is a deviation – a deviation from what?
Rich Dixon
Our UTEP Policy talks strictly about new projects, tourism projects, adaptive reuse projects; this project doesn’t’ really fit in to that. It’s a parcel that’s been off the tax roll – it’s not brand new, but it’s coming on the tax roll. We have a fixed dollar amount based on negotiations. So it isn’t really your standard uniform policy. So, there are just some slight deviations to it.
Michael Metzger
And we’ve had no other correspondence from the other taxing jurisdictions – just the City.
Bill Daly
No, and there are no representatives here from the jurisdictions.
Michael Metzger
Thank you – I would like to entertain a motion on the Deviation.
Dorren Sixbey
So moved.
Dennis Rak
Second
Michael Metzger
The motion has been made and seconded – any further discussion?
Hans Auer
I guess I wonder what the City’s big problem is then – if it’s coming from very low tax revenue. It sounded like in their letter that they felt like they had a deal with the developer, and we came in at the 11th hour and squashed the deal.
Bill Daly
No, that’s not true. That’s their perception of what happened. The developer actually came to our last Board meeting, and Jim Wells made a very thorough, precise presentation about the project. He explained all the reasons why they think they can make it viable. One of the key ingredients was that – they initially wanted to pay $20,000 in a PILOT. As you can see, we started at $37,800.00. So it was substantially more than they wanted to pay.
Their argument is that this is not fully leased. We know that other people who would not have paid taxes passed on it. Even the tax free entities, because they didn’t think the numbers would work. Millennia is a very large company that does this all over the United States – they feel they can get the occupancy up to 100%. Then down the road, they want to spend $3 million in rehabbing the building.
Hans Auer
Do they own it yet?
Rich Dixon
Covenant Manor owns it.
I think the City’s perception is that while Industrial Development Agencies around New York State, do much more than industrial projects, the City feels we should do only industrial projects; and all types of other projects should be precluded.
Hans Auer
The purpose of this Deviation Hearing is because it’s not in our bailiwick?
Rich Dixon
It is in our bailiwick. The IDAs in New York City do mostly housing projects – there’s not a lot of manufacturing in the City. So a lot of the City IDA’s do mainly housing projects, tourism projects, or other types of projects. Those are all allowed.
Jonathan Taber
Deviation really is all about changing the numbers. The agency has what we call the UTEP. It’s something the IDA has adopted. It sets standard tax abatements based on the type of project. So there is a general catch-all that says if you apply for financial benefits or if you receive financial benefits your tax abatement will be taxed on a sliding scale for a 10-year period. That is on the cost of the improvement. It applies in situations where a facility is either building new or adding on. Then you would apply that abatement. There are separate categories for tourism destination, adaptive reuse, and small wind.
This project, nothings being added, the building is already there, it’s not being added on to. So, the formula that is part of the standard policy, doesn’t work – it doesn’t fit, so it’s not entitled to benefits under that UTEP. The IDA has very broad statutory authority to provide benefits; but because it doesn’t fit within that number scheme; the deviation is saying “ok, this project is a project that we still want to consider, but it doesn’t fit within the standard number scheme for purposes of tax abatement. So, we’re going to negotiate something we need that’s very project specific.” Whenever you do that, the State Statute requires that we go through an additional process that’s called the Deviation process – that involves notifying all of the taxing jurisdictions which – in this case is the City, City School District, and the County, giving them the opportunity to show up at this show up at this meeting or to provide written objection to the negation.
The point I was making, was that even though we got a letter from the City, they’re not showing up at this hearing. They showed up at the Public Hearing on the project itself. Their letter refers to the project itself. It doesn’t say – we don’t like your proposed deviation – it says, we don’t like the project; we think IDAs should only do industrial. So, the deviation is all about the numbers. Their letter is really about the project in general. The State Statute for IDAs is very, very broad. The City’s view, political view I guess for a lack of a better word, is that IDAs ought to only do industrial projects.
Hans Auer
One more question. The bottom line is that it’s going to add to the tax revenue for the City?
Bill Daly
They haven’t received taxes on this building for years.
Jonathan Taber
It’s not as much as they wanted; and they feel we’re imposing on their territory.
Bill Daly
At the end of eleven years, they will be fully taxable for whatever the assessed value is that they negotiate with the City of Jamestown.
Rich Dixon
I’d like to add, Hans, there our four parcels involved in this project. Two parcels are located right where Covenant Manor is – there are two parcels in the parking lot down around the corner. Two of the current parcels are taxable – the retail space underneath Covenant Manor and the parking lot around the corner will continue to pay tax. They are not loosing anything, they are gaining. The City will get more than 50% of it.
Jonathan Taber
The Deviation notice that we sent out spells out precisely what those numbers are.
Bill Daly
Just so you understand – we never do anything with the base taxes – that always stays the same. Nobody looses taxes; they just get them scaled up. We only abate the expansion or improvements. In this case, there haven’t been taxes paid on this property in decades.
Jonathan Taber
That’s part of the agency’s UTEP Policy, the IDA’s involvement in any project does not result in a reduction in property taxes.
Michael Metzger
Very good discussion. If there is no further discussion – we’ll need a roll call vote.
Kim Peterson– Aye, David Bryant – Aye, Dennis Rak – Aye, Doreen Sixbey – Aye, Hans Auer – Aye, and Mike Metzger – Aye. Let the record show that there are six votes in the affirmative. The motion is carried.
I’d like a motion for the first Resolution – Dennis, the first Resolution please.
Dennis Rak
Resolution 11-29-12-01
Resolution of the County of Chautauqua Industrial Development Agency pursuant to the State Environmental Quality Review Act concerning the Negative Declaration of Environmental Significance for Covenant Manor Apartments, LLC.
Kim Peterson
Second.
Jonathan Taber
You’re going to see a lot of what we call SEQR Resolutions. That’s because it’s a peculiar law that NYS requires. SEQR stands for State Environmental Quality Review Act. It’s a State law that requires any governmental agency of authority in New York State, before passing any project or taking any action, to consider the environmental significance of the project. So anytime they’re engaged in any project, and in this case it’s the Covenant Manor, they’ve got to look at the project from a very broad view – and say ok, we’ll participate in this project allowing this project to move forward having negative impact on the environment. So when that happens, we ask the applicant to provide us an application and a document called the Environmental Assessment Form. Then we conduct a review of the materials and make a determination about whether or not the project will have a significant impact on the environment. The law gets a lot more complicated – in this case, it’s relatively straight forward because there are no external complications whatsoever to the building. The building will look exactly the same as it does from outside. It will not impact traffic pattern in any significant way. The Resolution takes you through that determination in several categories. It can get more complicated, sometimes we engage in projects where we have to do a much deeper analysis. But in this case, because of the nature of the project, it’s what we would call unlisted action – we’ve done our review and we are proposing a Negative Declaration, which is – by passing this Resolution, the Board is saying – we’ve reviewed the Environmental Assessment Form, and we are stating that the project will not have a significant impact on the environment. Once that SEQR compliance by passing the Resolution is completed, it then allows the Board to make a decision on the project.
Michael Metzger
If there is no further discussion, I will take a roll call vote.
Kim Peterson– Aye, David Bryant – Aye, Dennis Rak – Aye, Doreen Sixbey – Aye, Hans Auer – Aye, and Mike Metzger – Aye. Let the record show there were six votes in the affirmative.
The resolution is passed. David, the next Resolution.
David Bryant
Resolution 11-29-12-02
Resolution taking official action toward and approving the acquisition and straight leasing of a certain project for Covenant Manor Apartments, LLC, and other matters in connection therewith.
Kim Peterson
Second.
If there are no questions, I will take a roll call vote.
Kim Peterson– Aye, David Bryant – Aye, Dennis Rak – Aye, Doreen Sixbey – Aye, Hans Auer – Aye, and Mike Metzger – Aye. Let the record show there were six votes in the affirmative.
The resolution is passed. Rich, the Treasurer’s Report.
Rich Dixon
A thorough review, of the balance sheet and budget to date, was given.
Michael Metzger
If there are no questions, may I have a motion to accept the Treasurer’s Report?
Kim Peterson
I so move.
Doreen Sixbey
Second.
Michael Metzger
All in favor.
Ayes all around.
The Treasurer’s Report is accepted.
I would now like to move for a motion to conduct an executive session to discuss the financial and credit history of certain companies and the potential acquisition and lease of real property by the Agency. personnel matters.
Doreen Sixbey
I so move.
Dennis Rak
I second.
Michael Metzger
All those in favor.
Board
Ayes all around.
We are now in Executive Session.
Executive Session begins at 10:41a.m.
Executive Session ends at 10:58 a.m.
We are now back in Regular Session.
Michael Metzger
Is there any Old Business to come before the Board?
If there is nothing else, may I have a motion to adjourn?
Kim Peterson
So moved
Dennis Rak
Second
Michael Metzger
All in favor indicate by saying Aye.
Board Members
Aye
Michael Metzger
This meeting is adjourned. Meeting adjourned at 10:59 a.m.