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HomeMy WebLinkAbout1994-06-28 94-314 ORDERCOUNCIL ACTION Date: Sone 38 1994 Item No. 94-314 Item/Subject: PUBLIC REARING - COUNCIL ORDER DESIGNATING B.I.A. NNNICIPAL DEVELOPMENT DISTRICT, TM INCREMENT FINANCING DISTRICT AND STATE TAX INCREMENT FINANCING DISTRICT Responsible Department: Community and Economic Development A public hearing regarding the creation of a Municipal Development District is required prior to consideration of the Order. See attached Memo for additional information. Associated Information Legal Approval: City Manager Finance Director City Solicitor Introduced For Passage _ First Reading Pageof Referral ca -form �tmen Manager's Comments: Associated Information Legal Approval: City Manager Finance Director City Solicitor Introduced For Passage _ First Reading Pageof Referral ca -form c.o. 94-314 Asuped to Coumcdor as pMTT80 CITY OF BANGOR Designating B.I.A. Municipal Development District (TITLE.)Til¢Tt.............._ a Add Tax -Increment 73nstcing.. District and State Tax Increment Financing District and Adopting a Development Program for the District By the City C Usmt m{the City OfBmmpmr. ORDERED, THAT WHEREAS the City of Bangor is authorized pursuant to Chapter 207 of Title 30-A of the Maine Revised Statutes, a amended, to designate specified areas within the City as s Municipal Development District and Tax Increment Financing District and a State Tax Increment Financing District and to adopt a Development Program for such District; and. WHEREAS, there is a need for industrial development in the City of Bangor; and WHEREAS, the General Electric Company intends to expand its existing manufacturing operations within the proposed Municipal Development District and Increment Financing District and State Tax Increment Financing District (individually and collectively the ^District'); and - WHEREAS, there is need to provide n and continuing employment opportunities for the citizens ofBangor and the surrounding region; to improve and broaden the tax base of the City of Bangor;and to improve the general economy of the City of Bangor, the surrounding region and the State of Maine; and WHEREAS, the expansion will provide employment opportunities to the citizens of Bangor and the surrounding region; improve and broaden the tax base in the City of Bangor and improve the economy of the City of Bangor and the State of Maine; and WHEREAS, there is need to encourage the expansion, improvement and continuation ofmanufacturing operations through theestablishment of Municipal Development Districts and Tax Increment Financing Districts and State Tax Increment Financing Districts in accordance with the provisions of Chapter 207 of Title 30-A; and WHEREAS, the City has contemporaneously herewith held a public hearing on the question of establishing the District in accordance with the requirements of 30-A M.R.S.A. 55253, upon at least ten (10) days prior notice published in a newspaper of general circulation within the City; and WHEREAS, the City desires to designate the B.I.A. Municipal Development District No. 1, a Tax Increment Financing District and State Tax Increment Financing District and adopt a Development Program for such District; and wHFREAs, it is expected that approval will be sought and obtained from the Maine Department of Economic and Community Development, approving the designation of the District and the adoption of the Development Program for the District; NOW, THEREFORE, BE IT HEREBY ORDERED BY THE BANGOR CITY COUNCIL THAT: Section 1. The City hereby finds and determines that: (a) At least 25%, by area, of the real property within the District, as hereinafter designated, i suitable for industrial sites as defined in 30-A M.R.E.A. §5253; is (b) The total area of the District does not exceed 2k of the total acreage of the City and the total area of all development districts within the City (including the District) does not exceed sk of the total acreage of the City; and (C) The aggregate value of equalized taxable property of the District as of April 1, 1994 does not exceed 5k of the total value of equalized taxable property within the City as of April 1, 1994; and (d) The aggregate value of indebtedness financed by the proceeds from tax increment financing districts within Penobscot County, including the proposed District, does not exceed $50 million; and (e) The City expecte that the Development Program will be completed within five years of the designation of the District by the Department of Economic and Community Development; and (f) The designation of the District and pursuit of the Development Program will generate substantial economic benefits for the City, Stateand its residents, including employment opportunities, broadened and improved tax base andcanomic stimulus, and therefore constitutes a good and valid public purpose. Section 2. Pursuant to Chapter 207 of Title 30-A of the Maine Revised Statutes, as amended, the City hereby designates the H.I.A. Municipal Development District No. 1, Tax Increment Financing District and State Tax Increment Financing District designated and described as more particularly set forth in the "CITY OF BANGOR, MAINE, B.I.A. MUNICIPAL DEVELOPMENT DISTRICT NO. 1, TAX INCREMENT FINANCING DISTRICT AND STATE TAX INCREMENT FINANCING DISTRICT AND ADOPTION OF THE DEVELOPMENT PROGRAM" presented to the City Council in the form attached hereto and such Development Program is hereby incorporated by reference into this Order as the Development Program for the District. Section 3. Pursuant to the provisions of 30-A M.R.S.A. 55254, the City hereby adopts the following statement of the percentage of Assessed Value to be retained by the City for purposes of said Section 5254: Fiscal Year Percentage Retained Percentage Retained Ended June 30 Real Estate Personal Property 1994 100% Sot 1995 100% 5ok 1996 100% Sok 1997 look sot 1998 loot 50k 1999 look 50k 2000 100% sot 2001 loot Sok 2002 loot Sot 2003 look 50t 2004 loot Sok 2005 loot 5ok 2006 loot Sot 2007 100% 504 2008 look sot 2009 loot 50k 2010 l00% 50k 2011 100% sot 2012 100% sot 2013 look Sot 2014 loot Sot If at any time during. the term of the District the captured assessed value increases by reason of revaluation, the maximum amount of retained captured assessed valueshall increase n proportion to the increase in assessed value attributable to such revaluation, it being the intent of the City that the retained tax increment from the captured assessed value shall remain at a level at least equivalent to the dollar values specified in the Development Program over the life of the District. 2. 3. 5. • City interest rate 2 points below bank rate, but not less than 6.58 (estimated to be between 6.58-]8) • Fixed rate for initial 5 years. Bate is adjuatable for 5 year terms for the remainder of terns. City rate will be adjusted to reflect 2 point spread with back financing • City will undertake construction of Polk Street extension to Maine Avenue (see attached map) - the coat of the project will be charged to the GE project (paid for by GE) III. GENERAL LB&SE TEAMS Lease Term - 20 years. GE. releases Building 466 to City and takes over Building 487 (when City secures control from Guard). GE continues "base lease' -payment for Buildings 487/488/489. This amount is $9,566.33 per month, which includes amount to amortize City investment in Building 466, which was made i 1987-88. The base lease will be adjusted upwards by 58 in 1999, 2004, 2009, and 2014. - GE has right to pay down some or all of the principal an Target and City financing. This would reduce rental payments accordingly. GE has purchase option for Buildings. If this option is exercised, the following guidelineswouldbe used to determine value: (a) Land will be leased at market rate (108 of value annually). (b) Buildings would be purchased at market value. Buildings would be valued based on original condition (GE's. leasehold improvements and improvementsfinancedby higher rent payments would not be used in determining value). I - (c) Ge would reimburse City -Target for all outstanding principal for improvements made since 1969. GE will have first right Of refusal on land lying between expansion area and Maine Avenue. For the time frame between 1/1/93 to 12/31/94, the following terms shall apply: (a) If Building 482 is occupied by GE, rent will be $1,000 per month. W (b) If City occupies Building 466, GE shall be given rental credit of $1,000 per month. 0. City will make funds available to GE immediately after the lease is negotiated. Interest will be charged at 6.56 and accrue until January 1994 when the project will be completed. emw\vmeux.e t✓v✓m� - 3 (1) Financing for the $7.5 Million expansion of Building #273, a City -owned building, will be provided by Bangor Target area Development Corporation through a loan from Fleet Back of Maine. Theloan will be repaid by G.B. through lease payments over a 20 .year lease period. (2) G.E. will fund the projected $20 Million investment in machinery and equipment. (3). The City will enter into a Credit Enhancement Agreement with Target which will provide that, for a 20 year period, the City will make available one hundred percent of the incremental value of real property in the District, and fifty percent of the incremental value of personal property in the District. The City will also provide twenty-five percent of the state tax increment for a period of ten years. These funds will be used by Target to pay debt service on monies borrowed from Fleet Bank. As a result, G.E. lease payments will be reduced. If approved, the proposed project will provide the means by which G.E. can expand its manufacturing capabilities and make additional investment in Bangor. .The. TIF/STIP package will also provide attractive financing which will assist G.S. in remaining competitive and in retaining and expanding its Bangor operations. it should be noted that following municipal approval, the TIF/STIF Development program will be forwarded to the State Department of Economic and Community Development for approval. During the next month, the City will also be working with G.E. on amending the existing building leases in order to incorporate the proposed expansion. The City of Bangor, the Greater Bangor region, and the entire State will benefit from increased property tax revenues (projected W be over $4 Million during the next 20 years), a projected 100 good paying, high quality job opportunities, and an additional payroll of over $3 Million per year which will create significant Income and sales tax revenues for the State of Maine. we believe that this project represents an excellent opportunity for General Electric, the City of Bangor, and the State of Maine to continue the partnership which has encouraged the continued expansion of G.E.Is manufacturing operations in Bangor. ARG/jp emu\�a.a< ls,xa,so 94-314 Asamedto Counolm Sullivan]une 28,1994 ,4 CITY OF BANGOR (TITLE.) (jorber. -lo ignaana Tax -.A Municipal Development District ------Increment Financing Dist'ct"-and State Tax Increment Financing District and Adopting a Development Program for the District BY the GV Coamit Of MW aty ofDn . ORDER®, TUT WHEREAS, the City of Bangor is authorized pursuant to Chapter 209 of Title 30-A of the Maine Revised Statutes, as ended, to designate specified areas within the City as a Municipal Development District and Tax Increment Financing District and a State Tax Increment Financing District and to adopt a Development Program for such District; and WHEREAS, there is a need for industrial development in the City of Bangor; and WHEREAS, the General Electric Company intends to expand its existing manufacturing operations within the proposed Municipal Development District and Increment Financing District and State Tax Increment Financing District (individually and collectively the ^District')) and WHEREAS, there is a need to provide new and continuing employment opportunities for the citizens ofBangor and the surrounding region; to improve and broaden the tax base of the City of Bangor; and to improve the general economy of the City of Bangor, the surrounding region and the State of Maine; and WHEREAS, the expansion will provide employment opportunities to the citizens of Bangor and the surrounding region; improve and broaden the tax base in the city of Bangor and improve the economy of the City of Bangor and the State of Maine; and WHEREAS, there is a need to encourage the expansion, improvement and continuation of manufacturing operations through the establishment of Municipal Development Districts and Tax Increment Financing Districts and State Tax Increment Financing Districts in accordance with the provisions of Chapter 207 of Title 30-A; and In CITY COUNCIL .lune 38. 1994 Passed as Amended by Substitution by Unanimous Vote CIT lr�- 94-314 ORDER Title, Designating B.I.A. Municipal Devel District NO. t and Tax Increment Financing and State I. Increment Financing District srid'tlie'SCaCe Test 1H Fdevrc TiH Reek U grog ................................. A Feed to SULLIVAN ....................................... Councilman taV_, 94-314 WHEREAS, the City has contemporaneously herewith held a public hearing on the question of establishing the District in accordance with the requirements of 30-A M.R.S.A. 55253, upon at least ten (10) days prior notice published in a newspaper of general circulation within the City; and WHEREAS, the City desires to designate the H.I.A. Municipal Development District No. 1, a Tax Increment Financing District and State Tax Increment Financing District and adopt a Development Program for such District; and wNEREAs, it is expected that approval will be sought and obtained from the Maine Department of Economic and Community Development, approving the designation of the District and the adoption of the Development Program for the District; NOW, THEREFORE, BE IT HEREBY ORDERED BY THE BANGOR CITY COUNCIL THAT: Section 1 The City hereby finds and determines that: (a) At least 25%, by area, of the real property within the District, as hereinafter designated, is suitable for industrial sites as defined in 30-A M.R.S.A. 55253; and (b) The total area of the District does not exceed 2% of the total acreage of the City and the total area of all development districts within the City (including the District) does not exceed 5£ of the total acreage of the City; and (c) The aggregate value of equalized taxable property of the District as of April 1, 1994 does not exceed 5t of the total value of equalized taxable property within the City as Of April 1, 1994; and (d) The aggregate value of indebtedness financed by the proceeds from tax increment financing districts within Penobscot County,ncluding the proposed District, does not exceed $50 million; and (e) The City expects that the Development Program will be completed within five years of the designation of the District by the Department of Economic and Community Development; and (f) The designation of the District and pursuit of the Development Program will generate substantial economic benefits for the City, State and its residents, including employment opportunities, broadened and improved tax base and economic stimulus, and therefore constitutes a good and valid public purpose. 94-314 Section 2 Pursuant to Chapter 207 0£ Title 30-A of the Maine Revised Statutes, as amended, the City hereby designates the B.L.A. Municipal Development District No. 1, Tax Increment Financing District and State Tax Increment Financing District designated and described a e particularly set forth in the "CITY OF BANGOR, MAINE, B.I.A. MUNICIPAL DEVELOPMENT DISTRICT NO. 1, TAX INCREMENT FINANCING DISTRICT AND STATE TAX INCREMENT FINANCING DISTRICT AND ADOPTION OF THE DEVEWPMENT PROGRAM" presented to the City Council in the form attached hereto and such Development Program is hereby ieorporated by reference into this Order as the Development Program for the District. Section 3. Pursuant to the provisions of 30-A M.R.S.A. 55254, the City hereby adopts the following statement of the percentage of Assessed Value to be retained by the City for purposes of said Section 5254: Fiscal Year Percentage Retained Percentage Retained Ended June 30 Real estate Personal Pronerty 1994 look 50% 1995 look 50% 1996 lout 50% 1997 look 50% 1998 look 50k 1999 look 50% 2000 l00% 50k 2881 look 50% 2002 look sot 2003 look 50k 2004 look 50k 2005 loot 50k 2006 1001 50k 2009 look sok 2008 look 50% 2089 look Sok 2010 100% 59k 2011 1004 sot 2012 100% 50k 2013 100% sok 2014 loot sot If at any time during the term of the District the captured assessed value increases by reason of revaluation, the maximum amount of retained captured assessed valueshall increase n proportion to the increase in assessed value attributable to such revaluation, it being the intent of the City that the retained tax inent from the captured assessed value shall remain at a level ate least equivalent to the dollar values specified in the Development Program over the life of the District. Section 4. Pursuant to the provisions of 30-A M.R.S.A. 55254-A(2)(B), the City desires to retain twenty-five percent (25&) of the state tax increment generated by G.E. within the District. Section S. The City Manager be, and hereby is, authorized, empowered and directed to submit the proposed designation of the District and the proposed Development Program for the District to the State of Maine Department of Economic and Community Development ("OECD") for review and approval pursuant to the requirements of 30-A M.R.S.A. §45253 (1)(F) and 5254-A (1-A)(D); provided, however, that the City Manager is authorized, at his discretion, to submit the designation of the District on a bifurcated basis as separate applications for a municipal cipal tax increment financing district only and for a state taxincrement financing district only. The separate applications may be submitted by the City Manager simultaneously or at different times, as he may deem appropriate. The application may also be bifurcated following submission on a consolidated basis. Section 6. The foregoing designation of the District and the adoption of the Development Program for the District shall automatically become final and shall take full force and effect upon receipt by the City of approval of the designation of the District in adoption of the Development Program by the Department of Economic and Community Development, without requirement of further action by the City of Bangor. Section ]. The City Manager be and hereby is authorized and directed to enter into the Credit Enhancement Agreement contemplated by the Development Program, in the name of and o behalf of the City, such agreement to be r such form and to contain such terms and provisions, not inconsistent with the Development Program, as the said City Manager may approve, his approval to be conclusively evidenced by hie execution thereof. DATED: June 28, 1994 Section 4. Pursuant to the provisions of 30-A M.R.S.A. 55254 -A (2) (B) , the City desires to retain twenty-five percent (25k) of the state tax increment generated by G.E. within the District. Section 5 The City Manager be, and hereby authorized, empowered and directed to submit the proposed designation of theDistrict and the proposed Development Program for the District to the State of Maine Department of Economic and Community Development ('DECD") for review and approval pursuant to the requirementsof 30-A M.R.S.A. §§5253 (1)(P) and 5254-A (1-A)(D); provided, however, that the City Manager is authorized, at his discretion, to submit the designation of the District on a bifurcated basis as separate applications for a municipal tax increment financing district only and for a state tax increment financing district only. The separate applications may be submitted by the City Manager simultaneously or at different times, s he may deem appropriate. The application may also be bifurcated following submission on a consolidated basis. Section 6. The foregoing designation of the District and the adoption of the Development Program for the District shall automatically become final and shall take full force and effect upon receipt by the City of approval of the designation of the District in adoption of the Development Program by the Department of Economic and Community Development, without requirement of further action by the City of Bangor. Section v. The City Manager be and hereby is authorized and directed to enter into the Credit Enhancement Agreement contemplated by the Development Program, in the name of and on behalf of the City, such agreement to be in such form and to contain such terms and provisions, not inconsistent with the Development Program, as the said City Manager may approve, his approval to be conclusively evidenced by his execution thereof. Section a The City Manager be and hereby is authorized and empowered, at his discretion, from time to time, to make such revisions to the Development Program for the District as the City Managerdeems reasonably necessary or convenient in order to facilitate the process for review and approval of the District by the Department of Economic and Community Development, or for any other reason, so long as such revisions are not inconsistent with these resolutions the basic Structure and intent of the Development Program.r DATED: June 28, 1994 '' 94-314 MEMDRANDUM To: Bangor City Councilors Edward A. Barrett, City Manager From: Kenneth R. Gibb, Director, Dept. of Community d Economic Development Date: June 24, 1994 Re: Proposed BIA Municipal Development District E1 At Tuesday evening's City Council meeting there are two items scheduled that relate to the creation of a Municipal Development District at Bangor International Airport. These items aret (1) A Public Hearing on the proposed formation of the BIA Municipal Development District #I. (2) A Council Order which creates the Development District and adopts a Tax Increment Financing and State Tax Increment Financing Development Program for the District. As you know, G.E. Bangor has been considering another expansion of its Bangor facilities'. The latest proposed project would result in G.E. manufacturing another steam turbine component, diaphragms, at the Bangor plant. The following briefly describes the proposed project: (1) A 62,000 square foot building expansion of Building $273 which is located on Florida Avenue (near Maine Avenue). (2) An investment of approximately $20 Billion by G.B. in machinery and equipment over the next two years. (3) Creation of approximately 100 additional jobs over the next two years. In order to ensure that G.B. Bangor is in a competitive position to be awarded the additional turbine manufacturing work and in recognition that G.E. is involved in an extremely competitive world market, the City has been working with the State Department of Economic and Co®unity Development t0 develop incentives which will attract additional G.E. investment to Bangor. An Important part of this package is the creation of a Tax Increment Financing (TIP) District and a State Tax Increment Financing .(STIP) District. The following describes major components of the TIP/STIF package: 11 and S ... he,* Ruerrr LA OHDEH, Halep}}egieg ENe Batryer Z...asba' - A4sp$et Vccipal Development District No.1 j Tax Increment Financing kevm; o nt ceugeew and State - Tan Increment Financing Sao ai-V, At B anprbm and Adapting a Development F1 TTe[egare. - THE CITYvC0 TUNE 24, 1994 TO THE IQ w OF 9le CITY COUNCIL, Notice is hereby Elven that especial mating of rho City Council will be TQC in the Council Area, City Hall. Bangor._ TUESDAY, .NNE 28, 1994 at 7:00 T 'clock P.M. Far SPECIAL KRETING - COUNCIL ORDER 94-314 OHDEH, Halep}}egieg ENe Batryer Z...asba' - A4sp$et Vccipal Development District No.1 j Tax Increment Financing kevm; o nt ceugeew and State - Tan Increment Financing Sao ai-V, At B anprbm and Adapting a Development F1 TTe[egare. - THE CITYvC0 PW, dW Onto R. MJJ1.JULI 9199 Mend W. Auto Gaseous" enw DEDEPARTMENT Cwnmvikwffner a MJY.. 8." US6 ECONOMIC AND COMMUNIST DEVELOPMENT - Wail 193 see Steel slate Nom station 59 AuguW, Same sar July 11, 1994 Mr. Edward A. Barrett, City Manager City of Bangor 73 Harlow Harlow Street Banger, Maine 04401 Dear Mr. ett: (/ I The Maine Department of Economic and Community Development has reviewed and accepted the City of Bangor's application to create the B.I.A. Municipal Development District No. 1 Tax Increment Financing Development Program, effective today. The City of Bangor is authorized to capture increased assessed value at the rate of up to 100 percent per year on real estate property and up to 50 percent per year on personal Property, with the tax increments arising therefrom to be used expressly for the activities defined in the Development Program section of the application submitted on June 30, 1994. Me actual amount to be captured annually shall be limitedasset forth in the Financial Plan of the application. , This approval is contingent upon our understanding that the tax increment will be held in the farm of a Development Sinking Fund Account which will be used expressly for the repayment of the principal and interest on any notes, bonds, or other forms of indebtedness issued to fund the activities described in the Development Program section of the application. it is understand that any changes in the Development Program, as defined in the application, will require an amendment to the application. It is further understood that the City of Bangor desires to have the retained tax increment from the captured assessed value, supplemented by lease payments from General Electric, be sufficient to pay 100% of the principal and interest on any notes, bonds or other forms of indebtedness issued by the Bangor Target Area Corporation to pay for the Development - Program, as provided in the City's application to this Department. Further, a revaluation within the City could adversely affect the amount of tax increment available for this purpose. Borism Dessopmenl 181 Stele Slnel Haw House SmNon 59 Angola , Maine 04333 ATM -3153 FAX An IH -2861 Constantly Ovelopmenl T nnsm 219 Counts SIItt1 189 SYIe Stat Mae Mom Stalin 130 Stale Nouse Season $9 Atlanta, Maine east Assets, Maim Stale 2%-6146800 VD -281 510 FAX 2016H 810 FAX 041-10 KH Edward A. Barrett July 11, 1994 Page Two Therefore, the Department agrees that if at any time during the approved life of the District the assessed value of the new investment within the District increases by reason of a revaluation, the maximum amount of captured assessed value designated in this letter shall, subject to review and notification by the Department as provided below, be recalculated to increase in proportion to the increase in assessed value attributable to such revaluation as provided in the City Council's resolutions approving the District. The city of Bangor shall notify the Department of Economic and Community Development in writing of any such increase due to a revaluation and shall provide the Department with sufficient information supporting its calculation of the increase within 30 days of such revaluation. The Department shall review the City of Bangor's calculation and to the extent that it finds on the basis Of such review that the increase in such assessed value is due to a revaluation, it will notify the City and the State Tax Assessor of the increase in maximum designated captured assessed value for the District. The project must be completed within five years. As this threshold is met, please inform me of your compliance. This authorisation remains in effect until the notes, bonds, or other forms of indebtedness are retired. If for any reason the City of Bangor decides to forfeit this designation, the City must notify the Department of Economic and Community Development. This approval is limited to the designation of the B.I.A. Municipal Development District No. 1, Tax Increment Financing District, and does not include State Tax Increment Financing District designation. Following the successful resolution of certain questions pertaining to the specifics of the State Tax Increment Financing program contained within the application, approval will be provided separately. incerelly,,, ,,, yn W � Michael W. Aube Commissioner cc: Senator John Baldacci Representative Mary Sullivan Representative Julie Winn Representative Jane Sari Representative Sean Faircloth Representative Hugh Morrison John LaFaver, State Tax "Sesser Christopher Howard, Esq.