HomeMy WebLinkAboutPUBLIC HEARING - 2017-06-28
CITY OF LIVONIA
PUBLIC HEARING
Minutes of Meeting Held on Wednesday, June 28, 2017
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A Public Hearing of the Council of the City of Livonia was held at the City Hall
Auditorium on Wednesday, June 28, 2017.
MEMBERS PRESENT: Kathleen E. McIntyre, President
Maureen Miller Brosnan
Jim Jolly
Brian Meakin
Cathy K. White
MEMBERS ABSENT: Brandon M. Kritzman, Vice President
Scott Bahr
OTHERS PRESENT: Mark Taormina, Director of Planning
Paul Bernier, Assistant City Attorney
Bonnie J. Murphy, CER-2300, Certified Electronic Recorder
The Public Hearing was called to order at 7:00 p.m. with President Kathleen McIntyre
presiding. The Public Hearing is relative to an application for an Industrial Facilities
Exemption Certificate submitted by Ryan Wilson, Amazon.com, to develop, construct
and equip a regional sortation center at their facility located at 39000 Amrhein Road,
located within the City of Livonia Industrial Development Overlay District No. 112.
The City Clerk has mailed a notice to the Petitioner and to all parties having interest in
such Application for Industrial Facilities Exemption Certificate, including all taxing
authorities for property within City of Livonia Industrial Development Overlay District No.
112. There were three people in the audience.
McIntyre: The public hearing is now open for comments. Please state your name
and address before making your comments. I would also like to state that
the subject of tonight’s public hearing will be heard on the Monday, July
10, 2017 Regular Meeting of Council.
Mr. Taormina, would you like to start with an introduction.
Taormina: Thank you, Madam President. Tonight’s public hearing is a PA 198 tax
abatement request on behalf of Amazon.com As we all know, Ashley
Capital, now a preferred developer for Amazon, is currently building a one
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million square foot fulfillment center for the online retailer on Amrhein
Road, just east of Eckles Road.
The site of the new distribution facility is the former General Motors Spring
and Bumper manufacturing plant that was decommissioned and
demolished approximately 17 years ago. Construction of the new facility
commenced late last year. Occupancy is scheduled for October 2017, just
in time for the upcoming holiday season.
Amazon is seeking approval of an IFEC on a capital investment totaling
more than $73,000,000.
In 2008, City Council established Industrial Development District (I.D.D.)
Overlay #112, which covers all the industrial properties in Section 30,
including the subject Amazon parcel.
The original 120 acres that made up the former GM plant has since been
split into four parts, including:
1. The Amazon site, which totals approximately 48 acres;
2. An approximate 33-acre site on Eckles Road that will serve as the
future site of wine and spirits distributor Republic National Distributing
Company (RNDC);
3. Twenty acres located north of the Amazon site that is being retained by
Ashley Capital for future industrial development;
4. Approximately nineteen acres at the northwest corner of Amrhein and
Eckles Roads still owned by and maintained by RACER Trust and
used for conducting ongoing groundwater remediation.
Amazon is based in Seattle, Washington and amazon.com was founded in
1994 by Jeff Bezos. Early in its history, the company sold books and
other forms of media online. Today, Amazon is the world’s largest online
retailer employing nearly 270,000 people worldwide.
Through the company’s site selector Amazon first approached the City
late last summer under the code name “Project Hamilton.” Working
closely with a team consisting of representatives from the Michigan
Economic Development Corporation, Wayne County, DTE Energy and the
City, an incentive package was prepared and submitted, which the
Company accepted and thereafter signed a lease with Ashley Capital,
committing to locating its first fulfillment center in Michigan and in Livonia.
Amazon has over ten different types of fulfillment centers. The Livonia
site is classified as a non-sort facility, and will handle primarily medium-
sized items with a distribution radius of approximately 350 miles.
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The company expects to hire over 1,000 warehouse associates.
Associates are responsible for packaging and quality control of all items
shipped from the fulfillment center.
Employee benefits include both maternity and paternity leave, stock
options, bonuses, and the Company’s Career Choice Program, which
provides up to 95% pre-paid community college tuition for associates that
have been with the company more than 12 months. The Company is
partnering with Schoolcraft College on its Career Choice Program.
The economic development package of state and local incentives totals
over 23 million dollars and includes the following major components:
$7.5 million in funding from the Michigan Business Development
Program (MBDP)
$4.4 million in Workforce Development
$1.6 million from Wayne County in the form of road improvements
Approximately $10 million in tax abatements
The $7.5 million dollars from the MBDP will be in the form of a
performance-based grant that will be disbursed as the Company achieves
a series of predefined hiring goals within 3 years.
The Workforce Development piece includes a full range of services and
resources, including grants and incentives aimed at assisting the
Company in the hiring and training of employees. Agencies include
Michigan Works! (SEMCA), Community Ventures, and Michigan New Jobs
Training Program administered through the Business Development Center
at Schoolcraft College.
The Livonia facility is considered a qualified commercial activity as the
term is defined in PA 198 of 74 and as such it qualifies for a tax abatement
under the statute. According to the statute, Amazon as the lessee of the
property must have direct Ad Valorem, real and/or personal property tax
liability in order to qualify for the IFEC abatement on the leased property.
Overall the capital investment in the Livonia facility includes approximately
$52 million dollars in real property plus an estimated $20.8 million dollars
in personal property and the $52 million dollars is the estimated cost of the
land and other building improvements for which the tenant of the building,
Amazon, is responsible for paying taxes on, and the $20.8 million dollars
relates to all the new personal property – furniture and fixtures, data
processing and telecommunications equipment, backup power generators,
and other leasehold improvements.
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Within the first year, Amazon expects to hire over 1,000 employees and
would rank in the top ten of leading employers in the City of Livonia.
Based on the projected investment and job creation, Amazon easily
qualifies for a full 12-year tax abatement.
Should the IFEC be approved, and based on a projected true cash value
of approximately $46.00 per square foot, the first year taxes on the Real
Property, not including land, will be approximately $780,000 and without
the abatement the taxes on real property would be $1,375,000.
Additionally, with a full investment of $20.8 million in personal property,
the first year taxes on this part will be approximately $255,000 versus
$491,000 without the abatement.
This will amount to a first year savings to the company of approximately
$595,000 in real property tax reductions plus an estimated $235,000 in
personal property tax reductions for a total of approximately $830,000.
It should be noted that even with the abatement, Amazon will rank in the
top ten of Livonia’s largest taxpayers.
For the 2016 tax year, the property was treated as vacant and just under
$14,000 was collected in City tax revenue.
Once the project is complete, the estimated revenue to the City, with the
tax abatement, will exceed $234,000 per year. Upon expiration of the tax
abatement in twelve years, the full City millage rate will apply and the
amount of tax revenue to the City will effectively double from the
preceding year.
So, with that, Madam Chair, I will answer any questions you might have. I
provided a summary of this report earlier today, I apologize for the
lateness of it, and I did include a copy of the MEDC package that spells
out much of the other components. Thank you.
McIntyre: Thank you, Mr. Taormina. If the Petitioner would come to the podium.
Good evening.
Wilson: Good evening. Thank you for having me. Seattle is a long way away but
this is an important location for Amazon not only across the country but
also across the globe and this will make a difference in how quickly we
can move, how effectively we can invest in this site in order to make a
long term commitment.
McIntyre: Thank you. If you could give us your name.
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Wilson: Absolutely. My name is Ryan Wilson, I’m with Amazon.com and my
location just changed so I’ll have to look at my business card. My address
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is 2121 7 Avenue, Seattle, Washington, and my title is Manager of
Economic Development, my coverage area for projects with Amazon is for
the Midwest and Canada.
McIntyre: Well, we certainly do appreciate you making a very long flight all that way
to come to Detroit to be here this evening.
Meakin: I think it was worth it for $500,000.
McIntyre: It’s just appreciated that you came here yourself. I don’t know if there are
other things you wanted to talk about.
Wilson: No. We’re excited to be here, excited to be a part of the community,
excited for the partnership that we’ve seen so far. I’m happy to answer
any questions for Council.
White: Madam Chair.
McIntyre: Councilmember White.
White: I was wondering if these are full-time jobs or part-time jobs or a blend of
both? Can you describe what we can expect in terms of jobs.
Wilson: Sure. Every single one of those 1,000 jobs is a full-time job. We will have
additional jobs on site that will be part-time above and beyond that 1,000
but the 1,000 full-time jobs will be associates working 40 hours a week,
and as Mark said will have access to benefits, retirement, the same
benefits that I have as a corporate employee they will have.
White: Excellent. Thank you.
McIntyre: Councilmember Brosnan.
Brosnan: You talk about jobs, and we’ve been talking about them a lot in Livonia
and the opportunities that are going to be there, when will you be looking
to fill those positions?
Wilson: Typically it’s about fifty days out from a national facility launch. What we
found is if we start too early people drop out and if we start too late we
can’t reach 1,000 by our peak season. So we’ll actually have a dedicated
workforce launch team on site, we’ll come back here in a couple of months
and actually meet with our economic development partners, workforce
partners, community colleges and really start to put together a launch plan
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for this site, how are we going to get the word out, how are we going to
find people to hire using event space, so a gymnasium, community
college, actually have hiring fairs and we’ll be partnering with anyone who
will partner with us to help get this off the ground.
Brosnan: I think you’ll find some very willing partners here and obviously you had a
commitment prior to making the site selection that you did, so we’re
looking forward to seeing all of that executed because there’s going to be
an awful lot of energy created in and around the community as a result of
that. Can you tell us a little bit about the additional information that we’re
getting even now about additional facilities being targeted in Michigan,
Romulus is one that we’ve heard recently and then Grand Rapids is
another that we’ve heard you’re looking at, and how do they all work
together is the question?
Wilson: Sure. Yes, so on Tuesday we did receive approval for a State grant to
help support our growth in the City of Romulus. That location would be
what we call an AR sortable, a robotics sortable building. So actually it’s a
smaller footprint than this one is, about 855,000 square feet. That one will
eventually employ about 1600 full-time jobs. And the difference between
Livonia and Romulus if that lease is executed, it hasn’t been executed yet,
but if all goes well the difference will be that Livonia will be for some of our
bigger items so if you want to order a kayak off of Amazon you can do
that. But that doesn’t really fit well with a lot of our building models and
smaller products and big products don’t always fit well with our conveyors
and systems and processes and so we actually try to split out big items,
bulky items, awkward items from the smaller every day items that people
may be purchasing, and so we split those out but we’ll have both kind of
those facilities located here in Michigan. I can’t really speak on any future
speculative projects that we might be working on, but certainly we’re
always finding ways to deliver products to our customers faster and more
cost effectively so if there are other opportunities in other parts of the state
to accomplish our goals then we’ll be looking into that.
Brosnan: It’s important I think as a community for us to hear that there may be
overlaps and may be some compatibility between the two facilities, but
that one is not mirroring the other one, that as a community there is a
need for both, that is important information and we appreciate it. Thank
you.
Meakin: Madam Chair, I will get to the point and offer the approving resolution.
Brosnan: Madam Chair, if I may, because we might not see you back here again,
really we do appreciate the fact that you’ve taken such a strong interest in
Livonia, it will be a good partnership for as much as you have to offer
Livonia, we have an equal wealth of resources to offer you as well so
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we’re really looking forward to having you come on as one of our
community partners.
McIntyre: So Mr. Meakin has offered an approving resolution for the Regular
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Meeting of Monday, July 10. Thank you. We are adjourned.
As there were no further questions or comments, the Public Hearing was declared
closed at 7:15 p.m.
SUSAN M. NASH, CITY CLERK