Tax-Exempt Review Committee - September 22, 2020 Minutes
TAX EXEMPT REVIEW COMMITTEE
Fargo, North Dakota
Regular Meeting Tuesday, September 22, 2020
The September meeting of the Tax Exempt Review Committee of the City of Fargo, North Dakota was held in the City Commission Room at City Hall at 1:00 p.m., Tuesday, September 22, 2020.
The committee members present or absent are:
Present: Dave Piepkorn, Bruce Grubb, Jim Gilmour, James Haley (representing Mike Splonskowski), Jim Buus
Absent: Mayor Tim Mahoney, Kent Costin, Jessica Ebeling, John Cosgriff, Jackie Gapp, Levi Bachmeier, Erik Johnson, Joe Raso
Commissioner Piepkorn called the meeting to order at 1:02 p.m.
A quorum was not present at the meeting. It was decided that the presentations would be presented and another meeting would be held for voting purposes. Date to be determined.
Application for PILOT for Aldevron, LLC
Jim Gilmour explained this is an application for Aldevron that would be located on the corner of 30th Ave South and University. This is an expansion that will create additional jobs. Aldevron has received two PILOT’s in the past for expansions and they have exceeded expectations both times. In 2016 they projected to add 85 employees in the next five years and actually added 192 jobs in three years. In 2019 they expected to add 105 jobs in five years and actually added 117 jobs in one year. For this application they expect to add 51 employees over the next five years. There would be no property taxes for years 1-5 except for the land, years 6-10 they would pay half of what they would normally pay with a 2% escalator on that.
Troy Brendemuhl the Controller from Aldevron described Aldevron as a Bio-manufacturing Company that was founded about 22 years ago in Fargo. They manufacture DNA, MRNA and proteins at different quality levels. This project will be a research grade, R & D facility. It is an existing facility that will be fit up to manufacture the research grade. They project going live in the facility in the second quarter of next year. The jobs added will be scientists, operators in the labs, quality control individuals and some management level positions. The research grade is the lowest level. Some companies (as customers) start with research level and then move up to other levels.
Application for TIF for River Lofts
Austin Morris, Managing Partner of Enclave, said that this is a very special site that has been worked on for a number of years with many challenges. It would be a mixed residential site that will include 117 apartment units on floors one through three, 14 top floor condominiums, 220 on-site parking spaces including 145 underground to fully accommodate all residents, clubroom, fitness center, roof top patio, bike storage and pet spa. The neighborhood requested the condo’s because they felt it would promote homeowner attentiveness. The project is located in the Oak Grove neighborhood at 505 Oak Street North. The site has challenging soil that will need remediation before the project can begin. A dike has also been included in the plan. All the units have either a riverfront view or a view of Wildflower Park.
Matt Schnackenberg of PFM Financial Advisors, LLC, stated they are looking at $4.4 million in costs for this project. Policy #8 limits the TIF assistance to 15% of the hard constructions costs. Based on the developers pro forma that was $21.6 million which results in $3.2 million as the max TIF amount that could be received. Policy #8 also states that the developer must provide at least 10% of total capital costs which has been exceeded. Because of the condo units this one is a little bit different. They will be financing $19.5 million, however after a couple of years the plan is to take much of the sales revenue from the condos and reduce the principle on the loan amount to reduce the annual principle and interest payments. An estimated $4.9 million would be paid to the principle, reducing their principle and interest payments quite a bit and help with the cash flow of this project. Matt does see some risk involved especially with the condos. However he thinks it should have a reasonable rate of return of 13-20% so they are on the lower end of risk. PFM concluded that without public assistance this project would not be feasible.
Jesse Craig owner of Craig Properties, stated that KLJ has been the agency that constructed plans for the levee to make sure it meets all the requirements. The levee is a requirement of the city, without the levee there could not be any new construction on the site. There is also 14-16 feet of rubble that has been dumped there over decades that has to be removed. Currently, about $22,000 a year in taxes is collected on the entire block.
Dave Piepkorn adjourned the meeting at 1:43 pm.