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SCC Item 4. Request for Financial IncentivesPage 1 of 6 ATTACHMENT A: FORM REQUEST FOR FINANCIAL ASSISTANCE FORM CITY OF OTSEGO AND OTSEGO ECONOMIC DEVELOPMENT AUTHORITY REQUEST FOR FINANCIAL ASSISTANCE TAX INCREMENT FINANCING (TIF) OR TAX ABATEMENT FORM FOR R.L.R. Investments, L.L.C. (RLR) (as lead company for the Roberts Family of Companies (RFC) -See Exhibit A NAME OF APPLICANT SCC Item 4. CITY OF OTSEGO REQUEST FOR FINANCIAL ASSISTANCE FORM REQUIRED INFORMATION 1. Provide a brief project description -RLR proposes to build a 100 door cross dock transportation facility that would be expandable to 150 doors. This will include a 5,000 square feet (SF) office, a 6 bay maintenance shop, a 3 lane fuel island (UST) with a large paved lot for truck, trailer and employee parking. The total SF of the building would be between 75,800 SF and 105,800 SF (expanded to 150 doors) 2. Provide business information Business Name: R.L.R. Investments, L.L.C. Address: 600 Gillam Rd. Wilmington, OH 45177 Telephone: 239-275-2314 Contact Name: Jeff Haungs 3. Provide brief description of the business -RLR is a Real Estate holding company that is a sister company to a transportation company (see attached Exhibit A for further details) 4. Provide information on the present ownership of the site Name: R.L.R. Investments, L.L.C. Address: 600 Gillam Road Wilmington, OH 45177 Phone Number: 239-275-2314 Contact Name: Jeff Haungs 5. Provide information on the proposed project Building square footage: initially 75,800 SF Size of property: 36.7367 acres 6. Description of building: Cross-dock transportation facility Materials and other additional relevant building information: Tilt-wall construction with concrete, steel and general mechanicals Provide total estimated project costs Land Acquisition $ 4,800,753.00 Site Development $ 4,500,000.00 Building Cost (including Mechanicals) $ 17,150,000.00 Equipment $ 500,000.00 Architectural & Engineering Fees $ 350,000.00 Legal Fees $0 Financing Costs $ 2,500,000.00 Broker Costs $0 Contingencies $0 Other (please specify) $0 Total $ 29,800,753.00 Page 2 of 6 7. Project Costs: List and describe in detail by item the amount and purpose for which financing (either tax increment financing or tax abatement financing) is being requested•We are requesting $1,230,000 in tax abatements over a series of years by sharing in the incremental real estate tax and related assessment increases directly related to the property. This amount would assist in the infrastructure needed at the site, which could also be used for other users and to allow us to spend necessary dollars on hiring 8. State specific reasons why the use of tax increment financing or tax abatement assistance is necessary for the project (the "but for" test) -RFC operates a nation Less-than-truckload (LTL) transportation company that has facilities across the county. We have been operating in Minnesota for several years, using facilities we own and operate in the state as well as though facilities in other states and other partners within or outside the state. Our assessments come down to four real options, one is to push freight to other facilities we own, another is to allow our freight to be run on our partners' trucks, another would be to expand operations at an existing location and the last would be to build a new facility. The last is by far the most expensive and has proven to be the most difficult in recent years. In light of this, we do a great deal of due diligence before we make our final decision and in fact typically go through all of the approvals including, in some cases, getting a building permit before we make a final decision. The initial costs are still far cheaper than pre-purchasing building materials and the like in anticipation of getting a permit that may not ever come. We have looked in the Minneapolis/St. Paul area for options and have included both Minnesota and Wisconsin in our search. The tax abatement assistance will help defray the infrastructure and initial due-diligence that ultimately add no real operational value and likely adds a great deal of value for the community infrastructure and our potential presence will add to the draw for the community as well. 9. Provide market value information Current market value (from Wright County Assessor): Proposed market value at completion: 10. Provide real estate property tax information $ 1,533,200.00 $ 25,000.000.00 Existing real estate taxes of property: $ 12,730.00 Estimated real estate taxes of property upon completion: $ 240,000.00 11. Provide source of financing information Equity $ 4,800,753.00 Bank Loan $ 20,070,000.00 Tax increment assistance (TIF or Abatement) $ 1,230,000.00 Revenue Bonds $ O Other (other Incentive assistance) $ 1,200,000.00 Total $ 27,300,753.00 12. Provide name and address of architect, engineer, and general contractor for the project•Architect -ArcWest•Engineer -Manhard Consulting•There is no GC just yet Page 3 of 6 13. Provide project construction schedule Estimated construction start date: 08/15/2023 Estimated construction completion date: If phased project: 2023 Year 30 0/o Complete 2024 Year 70 0/o Complete 14. Describe how the project will meet one or more of the following City of Otsego or Otsego Economic Development Authority goals (in addition to increasing tax base). Please provide measurable, specific, and tangible goals. Goals may include the following: increased wages; creation of jobs that pay wages adequate to support households; and/or job retention where job loss is specific and demonstrable; and/or development or redevelopment projects that are consistent with the City of Otsego's goals and objectives. -this project will initially create approximately 75 new jobs, including 10 part-time and 65 full-time positions. The total annual payroll would be over $4.5 million. The full-time wages will average above $35 an hour, with part-time office closer to $20 an hour. The building project would bring a significant boost to the local economy through use of local building trades and labor, use of local facilities, etc. Both the proposed project and proposed location (industrial zone) fit perfectly within the City's Comprehensive Plan. 15. Provide a reference from another municipality (if applicable) •Shani Bradshaw, Director of Economic Development -Sanger, TX -940- 458-9096 •John Isom -Director, City of Waller TX Economic Development Corp. -936- 931-5151 16. Provides names of any other municipalities wherein the applicant, or other corporations the applicant has been involved with, has completed developments within the last five years •Boise, ID •Ocala, FL •Temple, TX •Sanger, TX •Waller, TX •Edinburgh, IN •Huntsville, AL •Omaha, NE 17. Provide the following required supplemental information: Page 4 of 6 Project Pro Form as ( one showing with assistance and one without assistance) Being a privately held company, we typically do not share financial information, but understand your request. We measure our results based on Operating Ratios (OR) which is Operating Expenses (OE) (costs BEFORE cost of debt) divided by Sales. OE includes fuel costs, labor, benefits, operational taxes and insurance, claims, maintenance, etc. Our target pro-forma for each facility would range between an 80% and 85% OR. Based on our initial pro-forma our OR would be very close to 90% and with the above requested incentives our OR would be close to the 87% mark. We will need to continue to tweak our operations until we reach our 85% or lower mark. Our current high-level ESTIMATED Pro Forma for this location is as follows: •SALES -$24 MM •OE -$21.5 MM ($20.85 MM WITH INCENTIVES)•OR -$2.5 MM ($3.15 MM WITH INCENTIVES) Legal description of the property -16658 70 th Street NE, Otsego, MN -Application fee of $5,000 payable to the City of Otsego -Included Site plan and building rendering -concept drawing attached SUBJECTIVE ANALYSIS In addition to the required information from above (items 1-17), the following information is requested and will be considered as part of the application approval process: 18.Provide number of years in business -RLR started in 1996 (27 years) as a spin-off of the transportation company, the operator, that started in 1965 (58 years) 19.Provide number of years located in the City of Otsego (if applicable) -N/ A this would be a new facility for us 20.Describe potential for business growth or future development -This is a growth area for us to help serve a growing area for us in Minnesota and western Wisconsin, as well as take the pressure off our current facility in Farmington, MN. As noted above, we would be initially building to allow for the expansion of additional door space in the future. We projected to grow at a rate of 8% a year. 21.Explain whether the building will be owner-occupied (Yes/No) -The building would be Owner occupied. 22. If rental space, provide the targeted retail rates -N/ A 23. If building is non-owner occupied, explain whether the lessee will be required to capitalize this lease -N/ A 24. Provide land costs per acre or square foot -$130,680 an acre 25.Describe the location of proposed facility within Otsego -in the industrial zoned area just off SR 101 on 70 th Street NE 26. Describe the general quality of the development 27.Provide the size of parcel being developed -36.736 Acres 28.Provide the projected building cost per square foot -All in costs per SF, excluding land is estimated to be $297 a SF 29. Additional comments -This would be a strategic location that we fell we can grow. Incentives will be important to help defray the significant upfront costs that would allow us to invest right people to accomplish that growth. Page 5 of 6 As a part of this request we are requesting for the following to be considered: •Allow for Bonds to be used instead of Letters of Credit (LOC} within the Development Contract -We have used bonds across the country for similar projects with no issue. I realize this has been a staple in contracts with the city and the city attorney has suggested he would recommend the use of the LOC's if asked, but your assistance in allowing for the use of Bonds would be very helpful•Assistance with the infrastructure requirements that would ultimately become city/county property•Assistance with water/wastewater capital charges and available use charges•Assistance with the construction administration fees for city to monitor our project. The fees are based on a percentage of the project costs which appear high. Page 6 of 6 Exhibit A Roberts Family Group of Companies (to include all wholly owned subsidiaries) •R.L.R. Investments, L.L.C. (As Lead Company and Landholder) •R&L Carriers, Inc. (Holding Company) o Greenwood Motor Lines, Inc., dba R+L Carriers {Operations) o Gator Freightways, Inc. o R&L Transfer, Inc. (owner of revenue equipment leased to operator) o RAMAR Land Corporation •R&L Carriers Shared Services, L.L.C. (Employee Provider) o R&L Carriers Payroll, L.L.C. (Employee Provider) •Paramount Transportation Logistics Services, L.L.C. •AFC Worldwide Express, Inc. •AFC Worldwide Holdings, Inc. •R+L Paramount Transportation Systems, Inc. •R+L Truckload Services, L.L.C. Adopted: DRAFT OF UPDATES FROM 2-26-2018 City of Otsego Economic Development Strategies and Priorities Policy This Economic Development Strategies and Priorities Policy (Policy) is in place to ensure that the City’s limited economic development resources are used to achieve the City’s highest priority economic development goals. The Council must consider each request for assistance in the context of this Policy. The Policy may be amended by the Council at any time and should be reviewed periodically to realign the Policy with changes in City development, priorities, economic and financial conditions, and applicable laws. The City Council has complete discretion to determine if a project will receive City assistance, the type of assistance and the amount of assistance. The City Council may deviate from this Policy in the event that a unique development opportunity is presented that does not fall into the established criteria; but that the City Council determines will provide benefit to the City and its residents. City Identified Priority Projects: After thorough review of current conditions and development of the City, and after examining long term City goals, the City Council identified high priority projects and initiatives that: Enhance the City as a whole Provide jobs to residents Create tax base to sustain a reasonable tax rate that will support the ongoing, necessary core services along with the amenities the residents desire. High Priority Projects and Initiatives may be considered for City assistance or incentives, if eligible and available, and if the Council believes the project would not occur without such assistance. The City Council, in its sole discretion, will determine if a project will receive City assistance and the amount of such assistance. Medium Priority Projects and Initiatives are important to the development of the City and to enhancing the community but are typically not eligible for City assistance. In rare cases the Council may determine that a project warrants assistance because of an unusual circumstance that exists which prohibits the development from occurring and the project has benefit to the City. Low Priority Projects and Initiatives are projects or initiatives that the Council has determined are of such nature, that other assistance is readily available in the community and the project or initiative does not provide benefits justifying City assistance. The City Council has identified the following as development priorities and initiatives: Adopted: DRAFT OF UPDATES FROM 2-26-2018 1.High Priority Projects and Initiatives a.Projects that bring jobs with substantial pay to employ residents b.Projects that increase the City tax base c.Creating and assisting with the creation of shovel ready sites for targeted future development d.Manufacturing development e.Office and professional development f.Retail development 2.Medium Priority Projects and Initiatives a.Warehouse development b.Senior housing development with amenities typical of senior housing 3.Low Priority Projects and Initiatives a.Low to Moderate Income Housing b.Multifamily Housing c.Redevelopment City Assistance: State laws and City Policy allow for several forms of City assistance to projects that meet certain eligibility criteria. Incentives to attract certain types of projects, jobs, or development include: 1.Tax Abatement 2.Tax Increment Financing (TIF) 3.Economic Development Loan 4.Assessment of SAC/WAC fees 5.Support of grant and loan fund applications to other government entities or non-profit organizations All assistance must comply with the provisions of the City’s Business Subsidy Policy. All TIF shall be pay as you go only with the exception of City infrastructure that may be funded through bonds. The City will consider the merits of each project before determining if it meets the City’s long-term objectives and is eligible for and worthy of assistance. Generally, Tax Abatement and TIF assistance are reserved for High Priority Projects and Initiatives. Both High Priority Projects and Initiatives and Medium Priority Projects and Initiatives are eligible for Economic Development Loan, assessment, and grant support assistance. Additional criteria may apply to projects requesting City assistance including but not limited to the following: 1.Assistance to manufacturing projects is dependent upon the new jobs meeting wage criteria as determined by the Council Adopted: DRAFT OF UPDATES FROM 2-26-2018 2.Redevelopment of blighted low-income housing may qualify for assistance as determined by the City Council 3.Land write down will be considered only for properties in the flood plain where fill is required to make the site buildable 4.The City may impose additional development requirements including but not limited to higher building design standards 5.The City may require a minimum value assessment agreement Assistance for public infrastructure to serve the development will be considered under the following circumstances: 1.The project is a High Priority Project and Initiative 2.The street is identified as a Collector street; local streets are not eligible 3.It is needed to create shovel ready development sites City assistance to a project will be determined based on at least one or more of the following factors: 1.A maximum percent of the project cost 2.A maximum number of years of TIF or Tax Abatement assistance 3.A maximum per type of project 4.By the location of the project 5.By the number and wages of jobs created 6.By the market value created 7.If it is a High Priority Project and Initiative The above Policy shall serve as a general guide for administering financial assistance to economic development projects. The City Council shall interpret the policy and determine its applicability to each individual project. The Policy may be amended or changed from time to time by majority vote of a quorum of the City Council. The Policy is a general guide for evaluating proposals and not a rule or ordinance and is subject to change. Parties seeking assistance should understand that it is only a general guide for evaluation and does not provide applicant with any assurance that the City can or will provide requested assistance, even if the proposal appears to meet the criteria established within the Policy. Applicants present requests to the City at their own risk and expense, and the City accepts no liability of any nature by receiving and evaluating the proposal.