NOTICE AND AGENDA

CITY OF BLOOMINGTON ECONOMIC DEVELOPMENT COMMISSION

January 23, 2015 12:00 pm – Hooker Conference Room

City Hall, 401 N. Morton Street Bloomington, Indiana

1. Call to Order 2. Roll Call

3. Approval of Minutes

November 21, 2014 4. Staff Report

BIIF Financial Report

5. New Business Election of Officers Res. 15-01 and 15-02: Real Property Tax Abatement Application –

Big O Properties, 338 S. Walnut St. Res. 15-03: Personal Property Tax Abatement Application – Cook

Pharmica, 1501 S. Strong Dr.

6. Other Business Xfinigen BIIF Loan

7. For the Good of the Order

8. Adjournment

Posted 1/20/2015

Economic Development Commission Minutes

November 21. 2014

Call to Order Meeting was called to order at noon on November 21, 2014

Roll Call Members: Kurt Zone, Vanessa McClary, Darryl Neher, Malcolm Webb, Geoff McKim Staff: Danise Alano-Martin, Jason Carnes, Laurel Waters, Thomas Cameron, Dan Sherman Guests: Mary Freidman Approval of Minutes

June 27, 2014 - Vanessa McClary made a motion to approve the minutes from June 27, 2014. Darryl Neher seconded the motion. The motion passed.

Staff Report

BIIF Financial Report - Jason reported all payments are coming in except for Xfinigen. The Legal Department is still reviewing this along with the Office of the Mayor to determine the best course of action.

McKim had questions about Xfinigen and ProWinds. Alano-Martin explained Xfinigen was a startup business proposing to become a green battery maker. They did have an arrangement with Battery Express at that time to use some extra space in their building to start the business. The EDC provided a loan from the Bloomington Investment Incentive Fund and they made their payments for a good year or two, but had no traction in getting the business started. The loan payments became sporadic, and then non-existent. The Legal Department is working on getting some closure to the matter. Alano-Martin explained there was a loan to ProWinds which was a musical instrument company, in business for 25+ years in Bloomington. The loan was provided for inventory and some improvements to their storefront and retail improvements. The company then went out of business. Alano-Martin explained in terms of paying off creditors, the BIIF was very far down the line, so there was nothing left. Susan Failey, Assistant City Attorney at the time, did go to all the bankruptcy proceedings, and followed the issue closely to determine what recourse if any the City could pursue. New Business

Tax Abatement Application - Big O Properties, LLC

11/21/2014 Minutes 1

Jason explained Big O Properties, LLC are interested in a tax abatement for a project they have at 338 South Walnut Street. Big O is a local property management and development company founded in 1985. They have properties around campus and also in the City that they have developed and manage. They developed the property just south of this location on S. Walnut Street that has two stories of residential with commercial downstairs. There is a mortgage company and a cafe will be going in there as well. Jason stated they have demolished the one story building that was formerly on this site. They will put another building in its place that will have four (4) two bedroom units, ten (10) one bedroom units, eighteen (18) bedrooms total. Residential will be in the upper two floors, and ground floor will be commercial space. The total project cost is approximately two million ($2,000,000). The current tax liability for the property as it is right now is under $4,000 annually. Based on the project estimates, the tax liability, without the tax abatement would be approximately $40,470 a year. This building will add value to the property. The City's Tax Abatement General Standards has additional criteria that is evaluated, such as if the project will make a significant positive contribution to the overall economic vitality of the City. There are four categories that spell out what those are, and the Petitioner has provided evidence on how their project addresses those criteria. The project's application addresses Quality of Life: making sure the project supports sustainable development, sustainable living, by addressing residential density in the core rather than the periphery, allowing residents a daily lifestyle they use such as transportation infrastructure and energy resources. For Community Character, this has been the only company developing new mixed use properties in this section of South Walnut. They have torn down a small nondescript building that was on the site for years. They plan to build a modern, mixed use building with the hopes of contributing to the community character. Mary Friedman indicated they are working with architects and the City to keep the construction costs down so they can be competitive on the residential and commercial units. It is hoped this project will be a catalyst for even more development in the area. Alano-Martin explained about the Economic Revitalization Area. The State Statute states the Economic Revitalization Area be designated in order for properties to be eligible for tax abatement. The City's process has been to establish at ERA at the same time as the tax abatement approval. These are typically constrained to the property receiving a tax abatement, although, previously the City has done the West Kirkwood ERA in hopes that would attract additional investment to the area. The City Council has to make some specific findings related to the ERA so the EDC makes a recommendation that the City Council designate the district. An Economic Development Target area is something else required by statute in the cases of market rate housing or if there is a retail component. Because of the housing and retail components, this additional designation is also required for tax abatement for this property to be eligible for tax abatement.

11/21/2014 Minutes 2

Jason stated the staffs' recommendation after considering all these factors is to propose a three (3) year property tax abatement to be phased in at 100% the first year, 66% the second year, and then 33% for the third year. The estimated value of the overall abatement (using 2014 tax rates and the project's capital investment figure) is $80,536. The rationale for support of the abatement is that S. Walnut Street has been slow to redevelop. Big O has another project on the south side of that site that they have been successful with, and the Council approved an Enterprise Zone Investment Deduction (EZID) for the project in recognition of the obstacles to redevelopment along S. Walnut. At this time there seems to be no environmental concerns at the site that staff is aware of. Staff also feels the project will enhance the attractiveness and future private sector investment in the area, possibly adding to efforts to attract a hotel nearby and convention center. The three (3) year term is based upon the fact the project is market rate housing and speculative retail rather than, for example, affordable housing or commercial component with a specific job creation projection. Zorn asked for an explanation between real estate and business property tax abatement. What types of clawbacks will there be if there are no jobs created. Alano-Martin stated there will still be "substantial compliance" requirements in the Memorandum of Agreement, including the amount of investment that will take place. The development would have to comply with applicable laws, such as zoning, site planning, etc. Time limits are also something discussed so that if the project doesn't happen in a certain amount of time it could be clawed back or rescinded. The project will not be able to be tied to jobs as none are proposed as benefits for this project (speculative commercial), so the focus for compliance will be on the capital investment and that the project is completed as proposed. Zorn asked what would happen if it is built and remains vacant. Alano-Martin responded that the investment will have been made so compliance in that respect will have been attained. In the current economic climate it has taken time to fill up retail space. This is a three (3) year term, and it is conceivable that it might take 12 to 24 months to fill up the commercial space. Neher asked when the neighboring property was built. Mary Friedman stated it was built about a year and a half ago. Neher asked about the percentage of occupancy for residential and the demographics. Friedman stated residential occupancy is 100 percent occupied and the demographic is mixed, professional and grad students. The commercial is fully occupied as well. McKim asked if the City has done any other abatements like this, of residential and mixed use. Alano-Martin explained there have been a few, B&L Rentals, Cornerstone and others; some have fallen off the books as terms have expired. McKim asked if Friedman had received any other tax abatements. She stated she has, and is in full compliance with the terms.

11/21/2014 Minutes 3

McKim asked how the project would change if they were not to receive a tax abatement, or if it weren't approved at the full amount. Freidman stated it seems they are the only ones doing anything to improve the area, and can't say they would not do the project, because they probably will, but they might not do anymore in the area. Freidman stated her current commercial tenants are a mortgage company, there is an alteration shop, and also will be opening a cafe. Neher asked about the orientation to a neighboring building as there were set back errors made to the existing building. Freidman stated that Planning wants the buildings to align the property. Neher asked about the parking capacity and how many beds there will be. Freidman stated there will be 18 beds and four spaces will be provided, and it is being considered to give those to the commercial tenants, but no definite decision has been made. There was discussion about occupancy rates in the downtown, and how the north is doing better than the south. Also discussed was the build out once the Switchyard Park comes online, and if this was factored into the tax abatement. Staff felt that in regards to this area the Switchyard Park is fairly far removed, and it may not be enough by itself to overcome some of the obstacles in the area. Also discussed was the time line for Switchyard Park, which there is none, as it is waiting on identification of funding. Currently the property at 338 S. Walnut generates a low property tax rate. The process after leaving the EDC is that the request will go before the City Council for consideration. Alano-Martin stated if the EDC does not make a recommendation, Mary can go to City Council directly, although the City Council does asks for the EDC to make a recommendation. McKim stated he is a little uncomfortable doing a tax abatement for a residential property, but other factors out weigh that discomfort. This does accelerate the redevelopment of an area that is blighted. Alano-Martin added that the City has also done pure housing tax abatements, and not all of them have been affordable housing. The Madison Park Condos received a tax abatement. One of the mixed use projects was for Omega Properties (also owned by Mary Friedman's company) at 7th & Walnut. That abatement finished its term a couple of years ago. Priorities for tax abatements are based upon the City's development and economic development goals, and goals for specific areas at that time. Kurt Zorn stated there are two Resolutions 14-03 which designates the Economic Development Target Area and then Resolution 14-04. McKim made a motion to approve Resolution 14-03 to designate a Economic Development Target Area. Vanessa McClary seconded the motion. The floor was open for discussion.

11/21/2014 Minutes 4

Neher stated he was hesitant and will likely vote no, with the understanding that with more detail if it comes before full Council, then he will reserve the right to reconsider that position. Neher sated he would like percentage breakdown mix of occupancy in the South project, a sense of who might be interested in coming into this, the possibility of attaching, if Council were to attach, other conditions to the abatement concerning wage related issues. A verbal vote was called with the outcome as follows: Vanessa McClary - Yes Darryl Neher - No Geoff McKim - Yes Kurt Zone - Yes Motion passed 3-1 Geoff McKim made a motion to approve Resolution 14-04. Vanessa McClary seconded the motion. The floor was open to discussion. Alano-Martin stated Resolution 14-04 recommends setting the ERA designation and the tax abatement schedule. A verbal vote was called with the outcome as follows: Darryl Neher - No Vanessa McClary - Yes Geoff McKim - Yes Kurt Zone - Yes Motion passed 3-1. Old Business There was no old business. Discussion Alano-Martin stated staff is in discussion with another commercial property tax abatement that may potentially come forward at the December 19th meeting. If that is ready to come forward staff will be in touch to make sure there is a quorum for that date. Adjournment Meeting adjourned at 12:39 p.m. Minutes submitted by Laurel Waters

11/21/2014 Minutes 5

Loan Date Borrower Loan

Amount

Term Current on

Payments

Fixed Rate Monthly

Payment

# of

Completed

Payments

Current

Balance

1/15/2012 Kicks Unlimited $10,000 3-Year Yes 1.00% $282.08 33 of 36 $844.85

1/1/2012 E2Taxi $73,500 5-Year Yes 0.30% $1,234.36 34 of 60 $31,985.53

5/4/2011 Xfinigen $74,000 5-Year No 0.30% $1,175.58 28 of 60 $37,464.07

5/18/2010 Feast Bakery and

Café

$25,000 5-Year Yes 1.25% $430.04 56 of 60 $1,715.67

4/12/2007 Bloomington

Co-op Services

$100,000 15-Year Yes 5.42% 812.84 93 of 180 $58,370.59

Total

Oustanding

Balance

$130,380.71

Paid/Written Off Loans

1/27/2012 LED Source $64,197 10-year

w/balloon

after year 5

Yes - Paid

remaining

balance on

9-18-13

0.30% $543.11 17 of 61 $0.00

11/1/2011 ProWinds $75,000 5-Year No – Out of

Business as

of 3/12/12

0.30% $1,259.55 1 of 60 $73,740.45

7/28/2000 Cha Cha $35,000 42 Months No - Out of

Business

2.00% $590.00 17 of 44 $11,506.98

Last Update: January 16, 2015

RESOLUTION 15-01 OF THE

ECONOMIC DEVELOPMENT COMMISSION OF THE

CITY OF BLOOMINGTON, INDIANA

TO DESIGNATE AN ECONOMIC DEVELOPMENT TARGET AREA

WHEREAS, Indiana Code § 6-1.1-12.1-7 specifies that the Common Council may designate an economic development target area after a favorable recommendation by the Economic Development Commission; and WHEREAS, Big O Properties, LLC, has submitted an application in which it seeks to have an area located at 338 S. Walnut Street, and including the following Monroe County Parcel Numbers, designated as an economic development target area

53-08-04-200-013.000-009 (Alt Parcel Num: 015-47810-00)

WHEREAS, the Economic Development Commission of the City of Bloomington, Indiana held a meeting on January 23, 2015 to consider Big O Properties, LLC’s application; and

WHEREAS, the Economic Development Commission of the City of Bloomington, Indiana has determined that the application falls within the statutory qualifications in Indiana Code §6.1.1-12.1-7 and has voted to approve the designation;

NOW, THEREFORE, BE IT RESOLVED BY THE ECONOMIC DEVELOPMENT COMMISSION OF THE CITY OF BLOOMINGTON THAT:

The Economic Development Commission of the City of Bloomington, Indiana recommends to the

Common Council of the City of Bloomington that the above-referenced location be designated as an economic development target area. APPROVED this day of , 2015.

__________________________________________ President Bloomington Economic Development Commission __________________________________________ Secretary Bloomington Economic Development Commission

RESOLUTION 15-02 OF THE ECONOMIC DEVELOPMENT COMMISSION OF THE CITY OF BLOOMINGTON, INDIANA

WHEREAS, the Economic Development Commission of the City of Bloomington, Indiana, recognizes the need to stimulate growth and to maintain a sound economy within the corporate limits of the City of Bloomington, Indiana; and

WHEREAS, Indiana Code § 6-1.1-12.1-1 et seq. provides for the designation of “Economic Revitalization Areas” (“ERA”) within which property taxes may be abated on improvements to real estate and within which property taxes may be abated on personal property; and

WHEREAS, in addition to ERA designation, an applicant for tax abatement must receive the Common Council’s approval of the Statement of Benefits regarding the proposed project; and

WHEREAS, the Common Council of the City of Bloomington—in Ordinance 97-06—gave the Economic Development Commission the responsibility for making recommendations to the Council regarding requests for tax abatement; and

WHEREAS, the Common Council of the City of Bloomington—in Resolution 11-01—adopted Tax Abatement General Standards that established the standards to be used in finding an area to be an ERA; and

WHEREAS, Big O Properties, LLC, (“Petitioner”) proposes a project on one parcel addressed as

338 S. Walnut St., located within the Downtown Tax Increment Financing District (“Project”); and WHEREAS, Petitioner has applied for a tax abatement on the real estate improvements

associated with the Project; and WHEREAS, Petitioner’s application includes a Statement of Benefits; and

WHEREAS, the Economic Development Commission of the City of Bloomington, Indiana, has

met and considered Petitioner’s application and Statement of Benefits, and recommends a phased-in three-year tax abatement on the proposed real estate improvements;

NOW, THEREFORE, BE IT RESOLVED BY THE ECONOMIC DEVELOPMENT

COMMISSION OF THE CITY OF BLOOMINGTON THAT:

The following recommendations are made to the Common Council of the City of Bloomington, Indiana:

1. One parcel—identified by Monroe County as the following Parcel Number—be designated an Economic Revitalization Area:

53-08-04-200-013.000-009 (Alt Parcel Num: 015-47810-00)

2. Petitioner’s Statement of Benefits regarding the Project at 338 S. Walnut St. be approved,

including a three-year tax abatement with the following deduction schedule: Year 1 100% Year 2 66% Year 3 33%.

APPROVED this day of ,2015.

__________________________________________ President Bloomington Economic Development Commission

__________________________________________ Secretary Bloomington Economic Development Commission

MEMORANDUM

To: Economic Development Commission Members

CC: City Legal Department

From: Danise Alano-Martin, Jason Carnes

Date: January 20, 2014

RE: EDC Resolutions 15-01 and 15-02 Real Property Tax Abatement Application Big O Properties, 338 S. Walnut Street.

On November 21, 2014, the Economic Development Commission voted to recommend a tax abatement for Big O Properties mixed-use development at 338 S. Walnut Street. Since that meeting, Big O has altered the square footage for the retail space from 2,500 sf to 1,663 sf to make more room for bicycle storage. The bedroom to bike storage ratio is now 1:1. Because of this change, staff and the City Legal Dept recommend taking Big O’s request back to the EDC for recommendation before going before City Council. This is to prevent any possible confusion between what the EDC approved and what City Council is to consider. Other than the commercial square footage change, no other Project benefits have changed. A new Statement of Benefits and City of Bloomington Tax Abatement Application were submitted on January 16, 2015. For the reasons stated in Staff’s previous memo (attached here for review purposes) for the November 21, 2014 meeting, and in discussions during the meeting, the Administration remains supportive of a 3-year phase-in of taxes on the capital improvements to real property.

---

Attached: Petitioner’s 1/16/2015 City of Bloomington Tax Abatement Application Petitioner’s 1/16/2015 Statement of Benefits Form, Real Estate Improvements (SB-1) Original Staff Memo dated 11/13/2014

1 of1 1/20/2015

STATEMENT OF BENEFITS REAL ESTATE IMPROVEMENTS State Form 51767 (R6 I 10-14)

Prescribed by the Department of Local Government Finance

This statement is being completed for real property that qualifies under the following Indiana Code (check one box): D Redevelopment or rehabilitation of real estate improvements (IC 6-1.1-12.1-4) D Residentially distressed area (IC 6-1.1-12.1-4.1)

INSTRUCTIONS:

20 __ PAY20 __

FORM SB-1 /Real Property

PRIVACY NOTICE Any information concerning the cost of the property and specific salaries paid to individual employees by the property owner is confidential per IC 6-1.1-12.1-5.1.

1. This statement must be submitted to the body designating the Economic Revitalization Area prior to the public hearing if the designating body requires information from the applicant in making its decision about whether to designate an Economic Revitalization Area. Otherwise, this statement must be submitted to the designating body BEFORE the redevelopment or rehabilitation of real property for which the person wishes to claim a deduction.

2. The statement of benefits fonn must be submitted to the designating body and the area designated an economic revitalization area before the initiation of the redevelopment or rehabilitation for which the person desires to claim a deduction.

3. To obtain a deduction, a Form 322/RE must be filed with the County Auditor before May 10 in the year in which the addition to assessed valuation is made or not later than thirty (30) days after the assessment notice is mailed to the property owner if it was mailed after April 10. A properly owner who failed to file a deduction application within the prescribed deadline may file an application between March 1 and May 10 of a subsequent year.

4. A property owner who files for the deduction must provide the County Auditor and designating body with a Fann CF-1/Real Property. The Form CF-1/Real Properly should be attached to the Form 322/RE when the deduction is first claimed and then updated annually for each year the deduction is applicable. IC 6-1.1-12.1-5.1(b)

5. For a Form SB-1/Rea/ Property that is approved after June 30, 2013, the designating body is required to establish an abatement schedule for each deduction allowed. For a Form SB-1/Real Property that is approved prior to July 1, 2013, the abatement schedule approved by the designating body remains in effect IC 6-1.1-12.1-17

SECTION 1 TAXPAYER INFORMATION

Name of designating body Resolution number

Location of property

338 Soo#l Wttl nu.f County

Y\Dl'I roe, DLGF taxlng district number

Description of real property improvements, redevelopment, or rehabilitation (use additional sheets if necessary) Estimated start date (month, day, year)

See ~--h~ 3h,ed rch I 2.016

ASSESSED VALUE

Current values

Plus estimated values of proposed project

Estimated solid waste converted (pounds) Estimated hazardous waste converted (pounds) JJOOC Other benefits

I hereby certify that the representations in this statement are true.

Title

Page 1 of2

We find that the applicant meets the general standards in the resolution adopted or to be adopted by this body. Said resolution, passed or to be passed under IC 6-1.1-12.1, provides for the following !imitations:

A. The designated area has been limited to a period of time not to exceed ______ calendar years* (see below). The date this designation expires is ______________ .

8. The type of deduction that is allowed in the designated area is limited to: 1. Redevelopment or rehabilitation of real estate improvements D Yes 2. Residentially distressed areas D Yes

C. The amount of the deduction applicable is limited to$ ________ .

DNo DNo

D. Other !imitations or conditions (specify) _________________________________ _

E. Number of years allowed: D Year 1 D Year6

D Year2 D Year?

D Year3 D YearB

D Year4 D Year9

O Year 5 (*see below) D Year10

F. For a statement of benefits approved after June 30, 2013, did this designating body adopt an abatement schedule per IC 6-1.1-12.1-17? D Yes D No If yes, attach a copy of the abatement schedule to this form. If no, the designating body is required to establish an abatement schedule before the deduction can be determined.

We have also reviewed the information contained in the statement of benefits and find that the estimates and expectations are reasonable and have determined that the totality of benefits is sufficient to justify the deduction described above.

Approved (signature and title of authorized member of designating body) Telephone number Date signed (month, day, year)

Printed name of authorized member of designating body Name of designating body

Attested by (signature and title of attester) Printed name of attester

* If the designating body limits the time period during which an area is an economic revitalization area, that limitation does not limit the length of time a taxpayer is entitled to receive a deduction to a number of years that is less than the number of years designated under IC 6-1.1-12.1-17.

A. For resldentially distressed areas where the Form SB-1/Real Property was approved prior to July 1, 2013, the deductions established in IC 6-1.1-12.1-4.1 remain in effect. The deduction period may not exceed five (5) years. For a Form SB-1/Real Property that is approved after June 30, 2013, the designating body is required to establish an abatement schedule for each deduction allowed. The deduction period may not exceed ten (10) years. (See IC 6-1.1-12.1-17 below.)

B. For the redevelopment or rehabilitation of real property where the Form SB-1/Real Property was approved prior to July 1, 2013, the abatement schedule approved by the designating body remains in effect. For a Form SB-1/Rea! Property that is approved after June 30, 2013, the designating body is required to establish an abatement schedule for each deduction allowed. (See IC 6-1.1-12.1-17 below.)

IC 6-1.1-12.1-17 Abatement schedules Sec. 17. (a) A designating body may provide to a business that is established in or relocated to a revitalization area and that receives a deduction under section 4 or 4.5 of this chapter an abatement schedule based on the following factors:

(1) The total amount of the taxpayer's investment in real and personal property. (2) The number of new full-time equivalent jobs created. (3) The average wage of the new employees compared to the state minimum wage. (4) The infrastructure requirements for the taxpayer's investment.

{b) This subsection applies to a statement of benefits approved after June 30, 2013. A designating body shall establish an abatement schedule for each deduction allowed under this chapter. An abatement schedule must specify the percentage amount of the deduction for each year of the deduction. An abatement schedule may not exceed ten {10) years.

(c) An abatement schedule approved for a particular taxpayer before July 1, 2013, remains in effect until the abatement schedule expires under the terms of the resolution approving the taxpayer's statement of benefits.

Page 2 of2

Section 2:

The development at 338 South Walnut will be a mixed use building, residential and commercial,

with a total of 14,400 square feet. It replaces a small temporary office structure of approximately 2,400

square feet. The development will include some on street landscaping, giving a more welcome feel to

the area. Currently there is a vacant lot. The building that will replace it will continue to enhance the

look and vibrancy of the downtown South Walnut Street area.

Other Benefits:

The largest benefit of this project to the area is this new mixed use building itself. It is located in

the BEAD district and it's in an area that we feel the city would like to see infill and growth. This is our

second building in this part of the South Walnut Street area and we hope that there will be other

developments to follow.

Application for Designation as an Economic: Revitalization Area (ERA):

C~TY BLOOllNG10N

Real and/or Personal Property Tax Abatement . City of Bloomington, Indiana

,;;-.;:;,~MtAJ & $0!l~!·.$~!"1~Kfil1'1J;;i~li)f1~V.i; Department of Economic and Sustainable Development 401 N. Morton St., PO Box 1110, Bloomington, Indiana 47402-0100 812.349.3418

INSTRUCTIONS 1. State law and City of Bloomington policy require that the designation application and statement of benefits form

(SB-1) be submitted prior to the initiation of the project (i.e., prior to filing for building permits required to initiate construction). If the project requires a rezoning, variance, or approval petition of any kind the petitioner must file prior to submission of the tax abatement application, and must be approved prior to a final hearing on the tax abatement request.

2. All questions must be answered as completely as possible and must be verified with a signature on the completed Statement of Benefits Form (SB·l) and last page of this application. Incomplete or unsigned applications will not be accepted as official filings. If attaching additional pages, please label responses with corresponding Section numbers.

3. Return completed Application and $100.00 non-refundable Application Fee (payable to the City of Bloomington) to City of Bloomington Department of Economic & Sustainable Development, PO Box 100, 401 N Morton Street, Suite 130, Bloomington, IN 47402-0100 (economlcyjtallty@bloomjngton.in.qov).

Name of Company for which ERA Designation is being requested

Primary Contact Information (for questions concerning this application and the Project)

Name MtU\,f Fri ed.l'Yl.a.Y1 Job Title o~ Phone ($17;) UtJ&~xt. .... ···.· Email mfrial;J25J25@9mit.\.CM1 Address 1.12.. 9 W OOtt CV-€ gf- DIL . (street and/or PO, city, ZIP)

~\oomt "\or> IN 4-"T~I Compliance Contact Information (person responsible for completion and timely submittal of mandatory annual compliance forms if designation is granted) Name I '$('...be.I So...rr\.U- C 'PP. Job Title CPA Phone SIZ) 5~S::ifl'l0ext. Email

Address IU.OI'.> w. Bl~€!~. \ S.o.xt~CX-@b\Lcl. .COt'V)

(street and/or PO, city, ZIP) 'P.o;~ 3/)40

'3lct.M\ "\C() IN 47401..-304-0

Street Address ·'?'.;~ 'S. WO<.lll\l.Aft Current Zonin (!; lid.I Current Use(s) of Property

Property or Building(s) Listed as Historic on the City [J Outstanding Age of Building(s), if of Bloomington Historical Surve ? [J Notable applicable

D Yes o If es check one: El Contributin Describe any other natio al or local historical significance or designation, if applicable

Please list all owners of the property.

Attach additional sheets as necessary to include all relevant property records. The City of Bloomington of the ro e deed.

ESD Form Revised 20130206

Describe how the project property and surrounding area have become undesirable for nnrm"I

development and occupancy.

S e.e a. +heh~

C11rre11t/Rel:ilined Job!i and Wages (include only current permanent jobs, and elude benefits and overtime from wage values)

Number of part-time employees Number of full-time employees TOTAL current employees (permanent jobs)

What is the lowest hourly wage in the company? (inc. FT, other)

Median part-time hourly wage Average part-time hourly wage

Median full-time hourly wage Average full-time hourly wage

What is the median hourly wage in TOTAL Annual Payroll the company (inc. PT, FT, other) (current/retairi_ed=-------------<

New lobs and Wages As Result of the Proposed l"mjed: (include only new permanent jobs, and exclude benefits and overtime from wage values)

Number of part-time employees Lowest starting part-time wage Number of full-time employees lowest starting full-time wage TOTAL NEW employees TOTAL NEW Annual Payroll new ermanent ·obs new ·obs 0111

Describe your company's benefit programs and include the approximate value of benefits for existing and new employees on a per hour basis (e.g., benefits are valued at an additional $3.00 per hour, etc.)

Market for Goods and Servii:es; Loail So11n:i11g To the extent possible, please estimate the relative percentages of your company's reach (via your products or services) into following markets:

Inside Monroe County, Indiana Outside Monroe County, but inside Indiana Outside of Indiana

__ Outside of the United States 100% If applicable, list the name and location (City, State) of your five largest vendors or suppliers. 1. 2. 3. 4. 5.

ESD Form Revised 20130206 2

which tax abatement on the property is being sought.

Estimated Total Project Cost Has Bloomington Ca ital rm rovements onl Planning approval 1~~~~~~~~~~~~~~~~~~-1

Estimated Construction Start Date been obtained for month- ear the Project? !-'-~--~~~~~~~~~~~~~~~-;

Estimated Completion Date month- ear

Will the Project require any City expenditures (for public infrastructure, etc.)? If yes, please describe

Yes 0No

If yes, Case Number:

Yes ~No

Proposed Use(s) of the property after Project completion. Describe uses entire Project space, including any uses not of the applicant company (e.g., if portions of space are intended ro be leased to other entities, provide details). <ge,e., aJ:iz:A.eh ed. Describe the impact on your business if the proposed Project is not undertaken (e.g. loss of jobs, contract cancellations, loss of production, change in location, etc.).

Jans drawin s etc., of the Pro ect.

Personal Property Abatement is a property tax deduction from the assessed valuation granted by a designating body for the installation of qualifying abatable equipment in an ERA.

Are you also applying for Personal Property Tax Abatement? D Yes ~No

If No, proceed to Section 6.

What type of new equipment will be installed? 0 Manufacturing 0 Research and Development 0 logistical Distribution 0 Information Technology

Describe the new equipment to be installed

Estimated capital investment for new equipment only

Size of the facility in which equipment will be installed (square feet)

Size of the site in which equipment will be installed (acres)

Estimated installation start date (month-year)

Estimated installation completion date (month-year)

Please list all potential owners of the equipment to be installed.

Attach additional sheets as necessa

ESD Form Revised 20130200 3

Describe how the Project will make a significant positive contribution to the community's overall economic vitality in at least one of the following areas which apply. Feel free to add details to any and other categories which appl . See "General Standards" for ex lanations and exam les.

0 Quality of Life, Environmental Stewardship, and/or Sustainability

0 Affordable Housing

0 Community Service

0 Community Character

If applicable, describe any further (not yet described above) beneficial and detrimental impact to the community's economic, social or environmental wellbeing, resulting from the Project.

Attach any additional information or documentation you feel to be pertinent to the City's decision to authorize this tax abatement.

[The remainder of this page left intentionally blank. Application continues next page.]

ESD Form Revised 20130200 4

Section 7 - Certification: The undersigned hereby certify the following:

• The statements in the foregoing application for tax abatement are true and complete.

. {' (t • The person(s) executing this application for tax abatement have been duly authorized by the business entity for which this application is being filed to execute and file this application, and all required approvals by the appropriate board or governing body of the business entity have been received.

• The indiVidual(s) or business entity that is applying for Economic Revitalization Area (ERA) or Economic Development Target Area (EDTA) designation or approval of a Statement of Benefits is not in arrears on any payments, fees, charges, fines or penalties owed to the Oty of Bloomington, Indiana, including but not limited to, City of Bloomington Utilities, Bloomington Transit, and any other Qty

,J / '('_ "'A departments, boards, commissions or agencies.

/ti,11iI_t • I/we understand that if the above improvements are not commenced (defined as obtaining a building permit and actual start of construction) within 12 months of the date of the designation of the above area as an ERA, EDTA or of approval of a Statement of Benefits for the above area, whichever occurs later, the

,A ) ,.;,.... t"vi Bloomington Common Council shall have the right to void such designation.

~ • I/we understand that all companies requesting ERA and/or EDTA designation will be required to execute a Memorandum of Agreement (MOA) with the Qty. The MOA shall contain the capital investment levels, job creation and/or retention levels and hourly wage rates and other benefits that the applicant has committed to the City in order to receive consideration for the designation. The MOA shall also contain information relative to what the City and applicant have agreed upon as "substantial compliance" levels for capital investment, job creation and/or retention and wage rates and/or salaries associated with the project.

Additionally, the MOA shall indicate that the City, by and through the Economic Development Commission and the City of Bloomington Common Council, reserves the right to terminate a designation and the associated tax abatement deductions if it determines that the applicant has not made reasonable efforts to substantially comply with all of the commitments, and the applicant's failure to substantially comply with the commitments was not due to factors beyond its control.

If the Oty terminates the designation and associated tax abatement deductions, it may require the applicant to repay the Qty all or a portion of the tax abatement savings received through the date of such termination. Additional details relative to the repayment of tax abatement savings shall be contained in the Memorandum of Agreement.

• I/we understand that if this request for property tax abatement is granted that I/we will be required to submit mandatory annual compliance forms as prescribed by State law and local policy. I/we also acknowledge that failure to do so or failure to achieve investment, job creation, retention and salary levels contained in the final resolution and MOA may result in a loss of tax abatement deductions and the repayment of tax abatement savings received.

1 • I/we understand that beneficiaries of a city tax abatement are subject to the City of Bloomington's Living Wage Ordinance (BMC 2.28), and therefore I/we must certify the entity's Living Wage compliance annually during the tax abatement term, if this abatement request is approved.

OWNER(S) OR AUTHORIZED REPRESENTATIVE(S)

mLE DATE

1/;6)~1£ Owneri.. ! //b/Q0/6

I I

ESD Form Revised 20130206 5

Section 3:

Tax Abatement Application

338 South Walnut St.

Bloomington IN 47401

Describe how the project property and surrounding area have become undesirable for normal

development and occupancy.

It is not that it is undesirable, it is more challenging. The first property built on South Walnut, at 340

South Walnut, as well as this property, at 338 South Walnut, are a test market for us. The reaction we

have had from residents about locating to this area is that they are a little hesitant. We are hopeful that

our projects will create interest in the South Walnut area. As I stated before, it is somewhat of a

challenge due to several factors. It is a property that will need to be monitored vigilantly which can drive

up costs.

Section 4:

Company History

Omega Properties is a property management and development company. It was founded in 1985 in

Bloomington, Indiana. We have residences around the Indiana University campus as well as new

residential and commercial developments in the downtown area. We have also had experience working

with Nancy Hiestand to preserve and re-store historic properties. Our goal has always been to work

closely with the city and to bring development to the underdeveloped and underutilized areas.

Section 4:

Largest Suppliers

Bender Lumber - Bloomington, Indiana

Carpets Plus and Tile - Bloomington, Indiana

B-Tech Fire and Security- Bloomington, Indiana

Blacks Lumber- Bloomington, Indiana

Enviroclean - Bloomington, Indiana

Bloomington Paint and Wallpaper- Bloomington, Indiana

Section SA:

Describe all real estate improvements for the properties which tax abatement is being sought

New construction of a three story 14,400 square foot building of brick, glass, limestone, and cement

board consisting of 14 units with four 2 bedroom units and ten 1 bedroom units plus a 1,663 square foot

commercial space.

Section SA:

Purposed uses of property after project completion

This will be a three story mixed use property. There will be 14 units with four 2 bedroom units and ten 1

bedroom units. The building will also include 1,663 square feet of commercial space.

Section SA:

Describe the impact on your business if proposed project is not taken

If this project was not to be built, the predominant impact would be to our contractors, builders, and

vendors. Not only would it be taking away business from local vendors we use but also the contribution

of character and vibrancy would be lost.

Section 6:

Omega Properties, so far, is the only company developing mixed use properties in the South Walnut

Street area of downtown. We have torn down a small, non-descript building that sat at that location for

years. We intend to construct a very attractive mixed use building with the hopes of contributing to the

community character. We are working diligently with the city and our architects to keep all costs down

so that we can be very competitive on our pricing for all of our residential units as well as our

commercial units. We feel that there is still work to be done in the downtown South Walnut Street area.

We hope that other projects of this kind will follow to help create vitality to South Walnut.

DULY ENTERED FORT AXATION

MAR o ,~ 2014 ~ ~ f:J,-;,,< f1~c1',

Auditor Monroe County, Indiana_

2014002342 CORP WRR $20. 0~ 03/04/2014 12:05:15P 3 PG~ Jim Fielder Monroe Counly Recorder IN Recorded as Presented

CORPORATE JJIARRANTY DEED

File Number: 37571

BLOOMINGTON REAL ESTATE COMP ANY INC., an Indiana corporation ("Granter"), whose principal office is at Bloomington, Indiana, CONVEYS AND WARRANTS to BIGO PROPERTIES, LLC, an Indiana lin1ited liability company C1Grantee 11

) whose principal office is at Bloon1ington, Indiana, for and in consideration of the sum of Ten Dollars ($10.00) and other valuable consideration, the receipt which is acknowledged, the following described real estate in MONROE County, State oflndiana:

Part of Seminary Lot Number Twenty-three (23) in the City of Bloomington, Indiana, bounded as follows, to-wit: Commencing at the Southeast comer of said Seminary Lot Twenty-three (23), running thence North with Walnut Street F orly-eight ( 48) feet; thence West One Hundred Thirty-eight (13 8) feet, thence South Forty-eight ( 48) feet, thence East One Hundred Thirty-eight (138) feet to the place of beginning.

Tax Parcel No. 53-08-04-200-013.000-009 Auditor's Parcel No. 015-47810-00

SUBJECT TO THE FOLLOWING:

1. Real estate taxes and assessments for the year 2013, due and payable in 2014, and all subsequent taxes and assessments.

2. Any and all conditions, agreements, limitations, restrictions, covenants, encu1nbrances, easen1ents, and mineral and oil and gas interests, if any, which are either observable or of record.

3. All covenants, conditions, restrictions, easen1ents, and encumbrances as shov.rn by the recorded plat of Seminary Lots, recorded in Plat Cabinet C, Envelope 220, in the office of the Recorder of Monroe County, Indiana. NOTE: This exception omits any covenant, condition, or restriction based on race, color, religion sex, handicap, familial status or national origin as provided in 42 U.S.C.§3604, unless and only to the extent that the covenant (a) is not in violation of state or federal law, (b) is exempt under 42 U.S.C. §3607, or (c) relates to a handicap, but does not discriminate against handicapped people.

4. Resolution 89-25 Board of Public Works regarding encroachment recorded in Miscellaneous Book 192, page 145, in the office of the Recorder of Monroe County, Indiana.

The undersigned, Audrey Marker, executing this deed on behalf of the Grantor represents that she is the duly elected President, and the undersigned, Lois Tilford, executing this deed on behalf of the Grantor represents that she is the duly elected Secretary/Treasurer of the Grantor; both have been fully empowered by proper resolution

of the Board of Directors of the Grantor to execute and deliver this deed; Grantor has full capacity to convey the real estate described in this deed; and all necessary action for 1naking this conveyance has been taken and done.

NOTE: Balance of page left blank intentionally. Signatures and acknowledgements appear on following pagc(s).

.F Grantor has executed this CORPORATE WARRANTY DEED, this tJ g day of dn~uu1j ,2011_.

BLOOMINGTON REAL ESTATE COMP ANY, INC., by:

STATE OF INDIANA ) ) SS:

COUNTY OF MONROE )

~ Before me,~ \,\_::d:J..N\ W. C,;lfl'.Jv\ , a Notary Public in and for said County and State, this \-e,\o\[u..lw" ci't , 20\ ',personally appeared Audrey Marker, President, and Lois Tilford, S~cretary/Treasuter, of BLOOMINGTON REAL ESTATE COMPANY INC., an Indiana corporation, who ackno1.vledged the execution of the an11exed instrun1enL

Mailing addresses:

Per IC 32-21-2-3(b): Mailing address to which statements should be mailed under IC 6-Ll-22-8. 1:

\\S J- \Q~ ~- B\130..--,..,.;"''z:k~~ ,J:r\l 41'-1:0/c

Per IC 32-21-2-3(b): Street address or rural route address of Grantee if above mailing address is NOT a street address or rural route address:

This Instrument Prepared By MORRISH. ERICKSON, Attorney at Law

Bloomington, Indiana

"I affirm, under the penalties of perjury, that I have taken reasonable care to redact each Social Security number in this docu111ent, unless required by law."

Manis H. Erickson

CC: (30 ac.~

7 g- V.Y11 ' fS

By: greulice

2 Jul 13 50 0

133.221

50 100

For reference only; mop information NOT wcrranted.

150

City of Bloomington

Planning

~~~

f ~t Scale: 1 " = 50'

1 of4 11/14/2014

MEMORANDUM

To: Economic Development Commission Members

CC: City Legal Department

From: Danise Alano-Martin, Jason Carnes

Date: November 13, 2014

RE: EDC Resolutions 14-03 and 14-04

Real Property Tax Abatement Application Big O Properties, 338 S. Walnut Street.;

Big O Properties, LLC is a Bloomington-based property management and development company founded in 1985. They have residences around the Indiana University campus as well as new residential and commercial developments in the downtown area. They are seeking to redevelop property they own at 338 S. Walnut Street into a 3-story, mixed use building. The property is owned by Big O Properties, LLC. The principal is Mary Friedman. Big O Properties proposes to demolish the current building and construct approximately 2,500 square feet of non-residential space on the first floor and 14 residential units (four 2-BR units, ten 1-BR = 18-BRs total) on the upper two floors. The Administration supports the property owner’s application for tax abatement, specifically a 3-year phased-in of taxes on the capital improvements to real property.

Criteria: City of Bloomington Tax Abatement General Standards Capital Investment as an enhancement to the tax base Total project costs will be approximately $2 million. Current tax liability for the subject properties is just under $4,000 annually. Based on project estimates, the new tax liability (without an abatement) would be $40,470 annually, over a 10-fold increase. The subject property is located within the City’s Downtown Tax Increment Financing (TIF) District which is an area targeted by the City for redevelopment. The project is aligned with development objectives of Economic Development Area Plan (or “Downtown TIF Plan”) adopted in 1985 and amended in 2010, such as:

• "strengthen and intensify existing land uses within the area, with a particular focus on ensuring a diverse retail mix,"

• "increased upper-story residential uses" Evaluative Criteria The City’s Tax Abatement General Standards describe additional criteria to evaluate whether a project will make “a significant positive contribution to overall economic vitality” of the city. Four categories are outlined as examples, and the petitioner may provide supportive evidence for how their project addresses any or all of the evaluative criteria, and may also offer a description of the project’s contributions outside of these four categories as the petitioner deems appropriate. A summary of the

Original 11/13/2014 Staff Memo to EDC - Page1

2 of4 11/14/2014

application’s listed categories and Staff assessments are below. Please also refer to the petitioner’s application. � Quality of Life/Environmental Sustainability: The mixed use project supports sustainable

development and sustainable living in the most primary of ways by adding residential density in the core rather than periphery, allowing residents a daily lifestyle that uses less transportation, infrastructure and energy resources.

� Community Character: Big O Properties, LLC, so far, is the only company developing mixed

use properties in the South Walnut Street area of downtown. They have torn down a small, non-descript building that stayed at that location for years. They intend to construct a very attractive mixed use building with the hopes of contributing to the community character. They are working diligently with the City and their architects to keep all costs down so that they can be very competitive on the pricing for all their residential units as well as their commercial units. They feel that there is still work to be done in the downtown South Walnut Street area. Their hope is that other projects of this kind will follow to help create vitality to South Walnut.

Criteria: Indiana Code Establishing an Economic Revitalization Area and a Term of Abatement Upon the EDC’s favorable recommendation, the City Council will take the necessary legislative steps to approve or deny the abatement. In order for a property to be eligible for tax abatement, it must be designated an Economic Revitalization Area, or must be within an already designated ERA by the Common Council. An ERA is an area which has obstacles to “normal development and occupancy because of a lack of development, cessation of growth, deterioration of improvements or character of occupancy, age, obsolescence, substandard buildings, or other factors.” (I.C. 6-1.1-12.1-1) In order to establish an Economic Revitalization Area and authorize a tax abatement term, the Council must find that:

� The estimate of the value of the redevelopment or rehabilitation is reasonable for the projects of that nature.

� The estimate of the number of individuals who will be employed or whose employment will be retained can be reasonably expected to result from the proposed described redevelopment or rehabilitation.

� The estimate of the annual salaries of these individuals who will be employed or whose employment will be retained can be reasonably expected to result from the proposed described redevelopment or rehabilitation.

� Any other benefits about which information was requested are benefits that can be reasonably expected to result from the proposed described redevelopment or rehabilitation.

� The totality of the benefits is sufficient to justify the deduction. City staff finds the estimates and benefits described in the Application and on the Statement of Benefits form are reasonable and that the benefits, as outlined in the application packet and this memo, are sufficient to justify a tax abatement of the recommended term and schedule. Note that as the project has speculative commercial space, there are no specified jobs or wages proposed as benefits of this project. However, the retail space will create opportunities for additional employment in the area once leased. ERA in an Allocation Area (TIF district)

Original 11/13/2014 Staff Memo to EDC - Page2

3 of4 11/14/2014

Additionally, Indiana Code requires that the City Council must approve by resolution any ERA in an allocation area such as a Tax Increment Financing district. The EDC does not have to make specific recommendations regarding this issue, but we offer this for your information. The subject location is located within Downtown Tax Increment Financing (TIF) District. Rather than a longer term abatement with greater impact to the potential for new Downtown TIF revenue, staff recommends a three-year abatement term for this project. More details are described below on this term recommendation. Economic Development Target Area In general, in order for most types of residential projects to be eligible for abatement, Indiana Code requires Economic Development Target Area designation (I.C. 6-1.1-12.1-3), and requires a favorable recommendation from the EDC before the Council can designate an EDTA (IC 6-1.1-12.1-7). An EDTA is property that “has become undesirable or impossible for normal development and occupancy because of a lack of development, cessation of growth, deterioration of improvements or character of occupancy, age, obsolescence, substandard buildings, or other factors that have impaired values or prevent a normal development of property or use of property.” This project’s market-rate housing component necessitates an EDTA designation. Staff views the cessation of growth of this property, and the slow redevelopment rate of S. Walnut street, as factors impairing values and preventing normal development and use of the property.

Recommendation & Rationale With the consideration of all factors outlined above and additional rationale below, staff recommends the following term of abatement, with the support of the Administration:

� Three-year Real Estate (RE) Property Tax Abatement, phased-in at 100% in Year 1, 66% in Year 2, and 33% in Year 3. Estimated value based on 2014 tax rates and capital investment estimates: $80,536.

Arguably, S. Walnut Street has been slower to redevelop than other areas of downtown. In staff's view, that is due to older, obsolete buildings, and aging infrastructure. BigO's previous project just south of this site (a project which received approval from City Council for an Enterprise Zone Investment Deduction) is an early frontrunner along with this project in activating the area. And, although the commercial space is speculative and job creation benefits are undefined, the retail space when occupied will also activate S. Walnut. The petitioner has indicated to Staff that a current tenant of BigO Properties is likely to expand their business into some of the retail space upon construction.

Staff also believes that continued investment (private and public) in this area will enhance attractiveness to future private sector investment (such as, for example, potential hotel investment nearby the Convention Center). Staff's recommendation not to exceed a 3-year term is based upon the project being market-rate housing and speculative retail, rather than (for example) affordable housing or a commercial component with specific job creation projections.

Original 11/13/2014 Staff Memo to EDC - Page3

4 of4 11/14/2014

We greatly look forward to discussing this project with the EDC, and hope you will consider recommending the above tax abatements for the Common Council’s consideration. If recommended, the petition will likely be scheduled for January hearings at the Council.

Should the EDC recommend abatement and the Council approve, the City will negotiate and execute the required Memorandum of Agreement with Big O Properties, LLC. This agreement will include clawback provisions (remedies and consequences for noncompliance) related to the benefits stated in the Application and Statement of Benefits (SB-1) forms, and will define other substantial compliance terms though the duration of the tax abatement periods.

---

Attached: • Petitioner’s City of Bloomington Tax Abatement Application • Petitioner’s Statement of Benefits Form, Real Estate Improvements (SB-1) • Estimated Property Tax Abatement Calculations, Real Estate Property

Original 11/13/2014 Staff Memo to EDC - Page4

RESOLUTION 15-03

OF THE

ECONOMIC DEVELOPMENT COMMISSION

OF THE

CITY OF BLOOMINGTON, INDIANA

WHEREAS, the Economic Development Commission of the City of Bloomington, Indiana, recognizes the need to stimulate growth and to maintain a sound economy within the corporate limits of the City of Bloomington, Indiana; and

WHEREAS, Indiana Code § 6-1.1-12.1 et seq. provides for the designation of “Economic Revitalization Areas” (“ERA”) within which property taxes may be abated on improvements to real estate and within which property taxes may be abated on personal property; and

WHEREAS, in addition to ERA designation, an applicant for tax abatement must receive the Common Council’s approval of the Statement of Benefits regarding the proposed project; and

WHEREAS, the Common Council of the City of Bloomington—in Ordinance 97-06—gave the Economic Development Commission the responsibility for making recommendations to the Council regarding requests for tax abatement; and

WHEREAS, the Common Council of the City of Bloomington—in Resolution 11-01—adopted Tax Abatement General Standards that established the standards to be used in finding an area to be an ERA; and

WHEREAS, Cook Pharmica LLC, (“Petitioner”) proposes to invest $25 million in new manufacturing equipment, associated utilities and ancillary equipment within its property on one parcel addressed as 1501 S. Strong Drive. located within the Thomson Tax Increment Financing District (“Project”); and

WHEREAS, Petitioner has applied for a tax abatement on these personal property improvements; and

WHEREAS, Petitioner’s application includes a Statement of Benefits; and

WHEREAS, the Economic Development Commission of the City of Bloomington, Indiana, has met and considered Petitioner’s application and Statement of Benefits, and recommends a 10-year tax abatement on the proposed personal property improvements;

NOW, THEREFORE, BE IT RESOLVED BY THE ECONOMIC DEVELOPMENT

COMMISSION OF THE CITY OF BLOOMINGTON THAT:

The following recommendations are made to the Common Council of the City of Bloomington, Indiana:

1. One parcel—identified by Monroe County as the following Parcel Number—be designated an Economic Revitalization Area with an expiration of not earlier than December 31, 2028:

53-08-05-400-032.000-009 (Alt Parcel Num: 015-43770-00)

2. Petitioner’s Statement of Benefits regarding the Project at 1501 S. Strong Drive be approved,

including a 10-year tax abatement with the following deduction schedule:

Each Year 70%

APPROVED this day of ,2015.

__________________________________________ President Bloomington Economic Development Commission

__________________________________________ Secretary Bloomington Economic Development Commission

MEMORANDUM

To: City of Bloomington Economic Development Commission From: Danise Alano-Martin, Director

Jason Carnes, Assistant Director Date: January 20, 2015 RE: Resolution 15-03: To Recommend an Economic Revitalization Area and a Term of Abatement for

Personal Property (Cook Pharmica LLC)

This memo recommends a 10-year personal property tax abatement for new manufacturing equipment, to be installed by Cook Pharmica LLC, with a deduction schedule of 70% annually. BACKGROUND

In 1997, Thomson Consumer Electronics announced it would close its facility and lay off 1,200 employees. In addition to the income loss associated with the 1,200 jobs, the City experienced a decline of over $1 million in property tax revenues and $350,000 in County Option Income Tax (COIT) revenues. A coordinated community effort was initiated to redevelop the site and several economic tools, including a Tax Increment Finance District and the state’s first Community Revitalization Enhancement District, were put into place to encourage new investment. Tools from the Bloomington Urban Enterprise Zone were also leveraged. A neighborhood strategies plan and a PUD were completed. Since then, significant public and private investments have been made to revitalize the area and recuperate from the loss. Cook Pharmica LLC has been a key contributor to new job creation and economic revitalization at the former Thomson site. PROJECT In 2004, Cook Pharmica LLC, a start-up contract pharmaceutical manufacturing company owned by Cook Group, agreed to open its facility at the former Thomson site at 1300 S. Patterson St. (now addressed as 1501 S. Strong Dr.). In 2008, the company surpassed its goal to create 200 jobs, and further invested in expansion that year. By May 2014, Cook Pharmica employed 496 people, comprising $34.2 million in salaries. The company has invested nearly $38 million in new manufacturing and R&D equipment, and more than $112 million in real property improvements. Today, 550 employees work at the location. The $84 million expansion in 2008 involved a new and distinct business line – formulate, fill and finish (package) vials and syringes – rather than an expansion of existing operations. Today, an additional expansion is proposed of the vial and syringe filling business. From now through April 2017, Cook Pharmica proposes to make improvements to its building and purchase and install new manufacturing equipment. The company seeks a personal property tax abatement to support the $25 million equipment investment. The company estimates it will invest millions more in rehabilitation costs in the building, but does not seek real property tax abatement. The expansion will create 70 new jobs and $3.2 million in new salaries. The equipment investment includes a barrier-isolated Flexi-Filler and all process-related utilities and ancillary equipment. Although the site improvements are in process, it is only when the equipment is placed “in service” will it become taxable and therefore eligible for the abatement.

1/20/2015 Memorandum Page 2 of2

It will take more than a year for the equipment to be fully installed, tested and ready to be placed in service (estimated completion date of April 2017).

RECOMMENDATION The Economic & Sustainable Development Staff, with the support of the Administration, recommend that the EDC adopt the following recommendation to the Common Council:

� Designate 1501 S. Strong Dr., Bloomington, as an Economic Revitalization Area, with an expiration date of December 31, 2028

� Authorize personal property tax abatement for the described new manufacturing equipment, with a term of 10 years and a deduction schedule of 70% annually

URBAN ENTERPRISE ZONE CONSIDERATION Within the Zone, another type of property tax abatement – the Enterprise Zone Investment Deduction (EZID) – is alternately available. The EZID offers an automatic 100% abatement for 10 years. When also in a TIF, the EZID must be approved by the Common Council. Participation fees totaling 30% of the realized tax savings are paid by the taxpayer annually to the Bloomington Urban Enterprise Association (20%), the City’s Redevelopment Commission (9%) and the Indiana Economic Development Corporation (1%), which results essentially in 70% net savings to the company. In lieu of the EZID, the Administration proposed 70% annual abatement through its City Tax Abatement program. TIF IMPACT Currently, personal property taxes are not included in the calculation of the City’s annual Tax Increment Finance revenue calculations. Therefore, this tax abatement will not impact the City’s TIF increment. PROPERTY TAX IMPACT The new equipment will generate an estimated $544,793 in new property taxes over the term of the abatement. The value of the abatement (savings to Cook Pharmica) is an estimated $1.27 million over the term of the abatement. (See attached deduction schedule.) MEMORANDUM OF AGREEMENT (MOA) Purusant to the City’s Tax Abatement General Standards, an MOA will be executed between the City and Cook Pharmica. It will detail the terms of substantial compliance, and the remedies and consequences (including clawbacks) of noncompliance. As with all tax abatements, compliance with the City’s Living Wage Ordinance will apply, and the MOA will reference this requirement. Bloomington’s hourly Living Wage is $12.31, of which up to 15% (or $1.84) may be comprised of available benefits compensation. The new positions will be high wage jobs, with an average hourly wage higher than $21. The project’s lowest hourly wage will be $10.50. The company’s benefit compensation is valued at a $6.23/hour, which puts benefits-eligible positions already well above the Living Wage. All positions associated with the project must comply with the Living Wage.

SUMMARY The City seeks the support of the EDC for this personal property tax abatement, to ensure the creation of these high wage jobs, and to continue the community’s recovery at the Thomson site.

STATEMENT OF BENEFITS PERSONAL PROPERTY State Form 51764(R3/12-13)

Prescribed by the Department of Local Government Finance

INSTRUCTIONS

FORM SB-1 I PP

PRIVACY NOTICE

Any information concerning the cost of the property and specific salaries paid to individual employees by the property owner is confidential per IC 6-1 .1-12.1-5.1.

1. This statement must be submitted to the body designating the Economic Revitalization Area prior to the public hearing if the designating body requires information from the applicant in making its decision about whether to designate an Economic Revitalization Area. Otherwise this statement must be submitted to the designating body BEFORE a person installs the new manufacturing equipment and/or research and development equipment, and/or logistical distribution equipment and/or information technology equipment for which the person wishes to claim a deduction.

2. The statement of benefits form must be submitted to the designating body and the area designated an economic revitalization area before the installation of qualifying abatable equipment for which the person desires to claim a deduction.

3. To obtain a deduction, a person must file a certified deduction schedule with the person's personal property return on a certified deduction schedule (Form 103-ERA) with the township assessor of the township where the property is situated or with the county assessor if there is no township assessor for the township. The 103-ERA must be filed between March 1 and May 15 of the assessment year in which new manufacturing equipment and/or research and development equipment and/or logistical distribution equipment and/or information technology equipment is installed and fully functional, unless a filing extension has been obtained. A person who obtains a filing extension must file the form between March 1 and the extended due date of that year.

4. Property owners whose Statement of Benefits was approved, must submit Form CF-1/PP annually to show compliance with the Statement of Benefits. (IC 6-1.1-12.1-5.6)

5. For a Form SB-1/PP that is approved after June 30, 2013, the designating body is required to establish an abatement schedule for each deduction allowed. For a Form SB-1/PP that is approved prior to July 1, 2013, the abatement schedule approved by the designating body remains in effect. (IC 6-1.1-12.1-17)

Name of designating body

Bloomington Common Council

Location of property

1501 S. Strong Drive, Bloomington, IN 47403 County

Description of manufacturing equipment and/or research and development equipment and/or logistical distribution equipment and/or information technology equipment. (Use additional sheets if necessary.)

Equipment necessary to expand Cook Pharmica's vial and syringe filling capacity. This includes a barrier isolated Flexi-Filler and all the process related utilites and ancillary equipment.

Monroe

Manufacturing Equipment

R & D Equipment

Logist Dist Equipment

IT Equipment

Resolution number (s)

DLGF taxing district number

009-Perry City

ESTIMATED

START DATE COMPLETION DATE

10/01/2015 04/30/2017

NOTE: Pursuant to IC 6-1 .1-12.1-5.1 (d) (2) the

COST of the property is confidential.

MANUFACTURING EQUIPMENT

R & D EQUIPMENT LOGISTDIST EQUIPMENT

IT EQUIPMENT

Current values

Plus estimated values of proposed project

Less values of any property being replaced

COST ASSESSED VALUE

135,162,857 40,683,010

25,000,000 10,000,000

160,162,857 50,683,010

COST ASSESSED VALUE COST ASSESSED

VALUE COST ASSESSED VALUE

Estimated solid waste converted (pounds) __________ _ Estimated hazardous waste converted (pounds) __________ _

Other benefits:

Employees also receive the following benefits: Health insurance, dental insurance, vision insurance, life insurance, disability insurance, profit sharing plan, 401 (k) plan with employer match, and an educational assistance program.

SECTION 6 TAXPAYER CERTIFICATION I hereby certify that the representations in this statement are true.

Signature of authorized representative I Date signed (month, day, year)

Printed name of authorized representative I Title

Page 1of2

FOR USE OF THE DESIGNATING BODY

We have reviewed our prior actions relating to the designation of this economic revitalization area and find that the applicant meets the general standards adopted in the resolution previously approved by this body. Said resolution, passed under IC 6-1.1-12.1-2.5, provides for the following limitations as authorized under IC 6-1.1-12.1-2.

A. The designated area has been limited to a period of time not to exceed _____ calendar years * (see below). The date this designation expires is ____________ _

B. The type of deduction that is allowed in the designated area is limited to: 1 . Installation of new manufacturing equipment;

2 . Installation of new research and development equipment;

3 . Installation of new logistical distribution equipment. 4 . Installation of new infonnation technology equipment;

0 Yes 0 No

0 Yes 0 No

0 Yes 0 No

0 Yes 0 No

C. The amount of deduction applicable to new manufacturing equipment is limited to $ _______ cost with an assessed value of $ ________ _

D. The amount of deduction applicable to new research and development equipment is limited to $ _______ cost with an assessed value of $ _______ _

E. The amount of deduction applicable to new logistical distribution equipment is limited to $ _______ cost with an assessed value of $ _______ _

F. The amount of deduction applicable to new infonnation technology equipment is limited to $-------cost with an assessed value of $ ________ _

G. Other limitations or conditions (specify) ______________________________ _

H. The deduction for new manufacturing equipment and/or new research and development equipment and/or new logistical distribution equipment and/or

new infonnation technology equipment installed and first claimed eligible for deduction is allowed for:

D Year1

D Year6

D Year2

D Year7

D Year3

D Years

D Year4

D Year9

D Year5

D Year10

(see below •)

I. For a Statement of Benefits approved after June 30, 2013, did this designating body adopt an abatement schedule per IC 6-1.1-12.1-17? 0 Yes 0 No If yes, attach a copy of the abatement schedule to this form. If no, the designating body is required to establish an abatement schedule before the deduction can be determined.

Also we have reviewed the infonnation contained in the statement of benefits and find that the estimates and expectations are reasonable and have determined that the totality of benefits is sufficient to justify the deduction described above.

Approved by: (signature and title of authorized member of designating body) Telephone number

( ) I Date signed (month, day; year)

Printed name of authorized member of designating body Name of designating body

Attested by: (signature and title of attesterj Printed name of attester

• If the designating body limits the time period during which an area is an economic revitalization area, that limitation does not limit the length of time a taxpayer is entitled to receive a deduction to a number of years that is less than the number of years designated under IC 6-1 .1-12.1-17.

IC 6-1.1-12.1-17 Abatement schedules Sec. 17. (a) A designating body may provide to a business that is established in or relocated to a revitalization area and that receives a deduction under section 4 or 4.5 of this chapter an abatement schedule based on the following factors: (1) The total amount of the taxpayer's investment in real and personal property. {2) The number of new full-time equivalent jobs created. {3) The average wage of the new employees compared to the state minimum wage. {4) The infrastructure requirements for the taxpayer's investment. {b) This subsection applies to a statement of benefits approved after June 30, 2013. A designating body shall establish an abatement schedule for each deduction allowed under this chapter. /vi abatement schedule must specify the percentage amount of the deduction for each year of the deduction. /vi abatement schedule may not exceed ten {10) years. {c) An abatement schedule approved for a particular taxpayer before July 1, 2013, remains in effect until the abatement schedule expires under the tenns of the resolution approving the taxpayer's statement of benefits.

Page2 of2

Application for Designation as an Economic Revitalization Area (ERA): Real and/ or Personal Property Tax Abatement City of Bloomington, Indiana Department of Economic and Sustainable Development CITY OF BLOOMINGTON

economic & sustainable development 401 N. Morton St., PO Box 100, Bloomington, Indiana 47402-0100 812.349.3418

INSTRUCTIONS 1. State law and City of Bloomington policy require that the designation application and statement of benefits form

(SB-1) be submitted prior to the initiation of the project (i.e., prior to filing for building permits required to initiate construction). If the project requires a rezoning, variance, or approval petition of any kind the petitioner must file prior to submission of the tax abatement application, and must be approved prior to a final hearing on the tax abatement request.

2. All questions must be answered as completely as possible and must be verified with a signature on the completed Statement of Benefits Form (SB-1) and last page of this application. Incomplete or unsigned applications will not be accepted as official filings. If attaching additional pages, please label responses with corresponding Section numbers.

3. Return completed Application and $100.00 non-refundable Application Fee (payable to the City of Bloomington) to City of Bloomington Department of Economic & Sustainable Development, PO Box 100, 401 N Morton Street, Suite 130, Bloomington, IN 47402-0100 (economicvitalitv@bloomington.in.gov).

Section 1 - Applicant Information Name of Company for which ERA Designation is being requested Cook Pharmica LLC

Primary Contact Information (for questions concerning this application and the Project)

Name Jason Rager Phone (812) 331-3352 ext.

Address (street and/or PO, city, ZIP)

P .0. Box 1608

Bloomington IN 47402

Job Title Tax Director

Email jason.rager@cookgroup.com

Compliance Contact Information (person responsible for completion and timely submittal of mandatory annual compliance forms if designation is granted) Name Jason Rager Job Title Tax Director Phone {812) 331-3352 ext. Email jason.rager@cookgroup.com Address P .0. Box 1608 (street and/or PO, city, ZIP) Bloomington

IN 47402

Township Perry City

Street Address 1501 S Strong Dr, Bloomington, IN ZIP 47403-

Current Zonin PUD Current Use(s) of Property Manufacturing and Estimated Market Value of Property $44 million Office

er real estate assessment Property or Building(s) Listed as Historic on the City D Outstanding of Bloomington Historical Survey? D Notable

D Yes C8J No If es check one: D Contributin

Age of Building(s), if applicable

58 Describe any other national or local historical significance or designation, if applicable

Please list all owners of the property. Cook Pharmica LLC

Attach additional sheets as necessary to include all relevant property records. The City of Bloomington of the ro e deed.

ESD Form Revised 20130206

Section 3 - Criteria for Economic Revitalization Area ("ERA") or Economic Development Target Area ("EDTA") Designation Describe how the project property and surrounding area have become undesirable for normal development and occupancy. The project property and surrounding properties have been designated as a TIF District, Enterprise Zone, and a Community Revitalization Enhancement District due to barriers to redevelopment such as lack of economic activity and low income levels. Additionally, the property is located in a qualified census tract for federal New Market Tax Credit purposes.

Section 4 - Company Profile Does your company currently operate at this location? ~ Yes 0 No If yes, how lonq has your company been at this location? 10 years Will this property be your company's headquarters location? ~ Yes LJ No If no, where is/will be your company's HQ? Company is a: ~LLC OLLP OLP Ocorporation Os. Corporation 0Nonprofit Corporation 0Mutual Benefit Corooration 00ther-Please describe: Provide a brief description of your company history, products and services. Cook Pharmica is a privately held contract development and manufacturing organization (COMO) that provides biopharmaceutical companies with a unique one-source, one-location model for development, clinical or commercial cell culture manufacturing, formulation, parenteral product manufacturing and secondary packaging.

Please list all persons and/or entities with ownership interests in the company. Cook Group Incorporated owns Cook Pharmica LLC. Cook Group is controlled bv the Cook family. Current/Retained Jobs and Wages (include only current permanent jobs, and exclude benefits and overtime from wage values)

Number of part-time employees 20 Median part-time hourly wage $15.00

Number of full-time employees 550 Average part-time hourly wage $15.52 TOTAL current employees 570 (permanent jobs) Median full-time hourly wage $23.00

Average full-time hourly wage $27.14 What is the lowest hourly wage in $9.70 the company? (inc. PT, FT, other) What is the median hourly wage in $22.22 TOTAL Annual Payroll

~31,174,966.00 the comoanv (inc. PT. FT. other) (current/retained)

New Jobs and Wages As Result of the Proposed Project (include only new permanent jobs, and exclude benefits and overtime from wage values)

Number of part-time employees Q Lowest starting part-time wage $0.00

Number of full-time employees 70 Lowest starting full-time wage $10.50

TOTAL NEW employees 70 TOTAL NEW Annual Payroll

~3,200,000.00 (new oermanent iobsl (new iobs onlvl

Describe your company's benefit programs and include the approximate value of benefits for existing and new employees on a per hour basis (e.g., benefits are valued at an additional $3.00 per hour, etc.) Benefits are valued at an additional $6.23 per hour. Benefits include: Health insurance, dental insurance, visi(ln insurance, life insurance, disability insurance, profit sharing plan, 401(k) plan with employer match, and an educational assistance program. Hiring of the new employees will occur from 2015 through 2020. Market for Goods and Services; Local Sourcing To the extent possible, please estimate the relative percentages of your company's reach (via your products or services) into following markets:

3.3Inside Monroe County, Indiana 9.40utside Monroe County, but inside Indiana 80.50utside of Indiana 6.80utside of the United States

ESD Form Revised 20130206 2

100%

If applicable, list the name and location (City, State) of your five largest vendors or suppliers. 1. VWR International, Inc. - Pittsburgh, PA 2. West Pharmaceutical - Pittsburgh, PA 3. Optima Machinery Corp. - Green Bay, WI 4. GE Healthcare BioSciences Corp - Pittsburgh, PA 5. Optima Group Pharma GMBH - Germanv

ESD Form Revised 20130206 3

Section 5A - Proposed Improvements (the "Project") Describe all real estate improvements for which tax abatement on the property is being sought.

An abatement is only being sought on machinery and equipment. It is not anticipated that real property improvements will be material as the currently proposed expansion space already exists.

Estimated Total Project Cost Has Bloomington 0Yes (Capital Improvements onlvl Planning approval ~No Estimated Construction Start Date

March 2015 been obtained for

(month-year) the Project? If yes, Case Number: Estimated Completion Date April 2017 (month-year) Will the Project require any City expenditures (for public infrastructure, 0Yes etc.)? ~No If yes, please describe

Proposed Use(s) of the property after Project completion. Describe uses for entire Project space, including any uses not of the applicant company (e.g., if portions of space are intended to be leased to other entities, provide details). Cook Pharmica will increase its dru!I product vial and syringe filling capacity. Describe the impact on your business if the proposed Project is not undertaken (e.g. loss of jobs, contract cancellations, loss of production, change in location, etc.). This project will allow Cook Pharmica to retain and grow its global biopharmaceutical customer base, supporting life-saving and life-enhancing biopharmaceutical drug development and manufaturing in Bloomington, IN.

Attach renderinas, site olans, drawinas etc., of the Proiect.

Section 5B - Personal Property Description Personal Property Abatement is a property tax deduction from the assessed valuation granted by a designating body for the installation of qualifying abatable equipment in an ERA.

Are you also applying for Personal Property Tax Abatement? ~Yes D No

If No, proceed to Section 6.

What type of new equipment will be installed? ~ Manufacturing D Research and Development D Logistical Distribution D Information Technology

Describe the new equipment to be installed Equipment to expand Cook Pharmica's vial and syringe filling capacity. This would include a barrier isolated Flexi-Filler and all the process related utilites and ancillary equipment.

Estimated capital investment for new equipment only $25 million

Size of the facility in which equipment will be installed (square feet) 1,000 to 1,500 square feet for the Flexi-Filler itself. The process related utilities would consume additonal space.

Size of the site in which equipment will be installed (acres) 37 acres

Estimated installation start date (month-year) October, 2015

ESD Form Revised 20130206 4

Estimated installation completion date (month-year) April, 2017

Please list all potential owners of the equipment to be installed. Cook Pharmica LLC

Attach additional sheets as necessarv.

Section 6 - City of Bloomington Evaluative Criteria Describe how the Project will make a significant positive contribution to the community's overall economic vitality in at least one of the following areas which apply. Feel free to add details to any and all other cateaories which aooly. See "General Standards" for explanations and examples.

t2:J Quality of Life, Environmental The jobs created by this project will increase the tax base Stewardship, and/or Sustainability (property taxes and county option income taxes).

Additionally, the employees will spend money in the community creating a multiplier effect.

D Affordable Housing N/A

[2:1 Community Service Cook Pharmica and its employees are proud supporters of the community through donating both time and money to charitable causes.

D Community Character

If applicable, describe any further (not yet described above) beneficial and detrimental impact to the community's economic, social or environmental wellbeing, resulting from the Project.

Attach any additional information or documentation you feel to be pertinent to the City's decision to authorize this tax abatement.

[The remainder of this page left intentionally blank. Application continues next page.]

ESD Form Revised 20130206 5

Section 7 - Certification: The undersigned hereby certify the following :

[Initials] j \( • The statements in the foregoing application for tax abatement are true and complete.

• The person(s) executing this application for tax abatement have been duly authorized by the business entity for which this application is being filed to execute and file this application, and all required approvals by the appropriate board or governing body of the business entity have been received.

• The individual(s) or business entity that is applying for Economic Revitalization Area (ERA) or Economic Development Target Area (EDTA) designation or approval of a Statement of Benefits is not in arrears on any payments, fees, charges, fines or penalties owed to the City of Bloomington, Indiana, including but not limited to, City of Bloomington Utilities, Bloomington Transit, and any other City departments, boards, commissions or agencies.

• I/we understand that if the above improvements are not commenced (defined as obtaining a building permit and actual start of construction) within 12 months of the date of the designation of the above area as an ERA, EDTA or of approval of a Statement of Benefits for the above area, whichever occurs later, the Bloomington Common Council shall have the right to void such designation.

• I/we understand that all companies requesting ERA and/or EDTA designation will be required to execute a Memorandum of Agreement (MOA) with the City. The MOA shall contain the capital investment levels, job creation and/or retention levels and hourly wage rates and other benefits that the applicant has committed to the City in order to receive consideration for the designation. The MOA shall also contain information relative to what the City and applicant have agreed upon as "substantial compliance" levels for capital investment, job creation and/or retention and wage rates and/or salaries associated with the project.

Additionally, the MOA shall indicate that the City, by and through the Economic Development Commission and the City of Bloomington Common Council, reserves the right to terminate a designation and the associated tax abatement deductions if it determines that the applicant has not made reasonable efforts to substantially comply with all of the commitments, and the applicant's failure to substantially comply with the commitments was not due to factors beyond its control.

If the City terminates the designation and associated tax abatement deductions, it may require the applicant to repay the City all or a portion of the tax abatement savings received through the date of such termination. Additional deta ils relative to the repayment of tax abatement savings shall be contained in the Memorandum of Agreement.

• I/we understand that if this request for property tax abatement is granted that I/we will be required to submit mandatory annual compliance forms as prescribed by State law and local policy. I/we also acknowledge that failure to do so or failure to achieve investment, job creation, retention and salary levels contained in the final resolut ion and MOA may result in a loss of tax abatement deductions and the repayment of tax abatement savings received.

• I/we understand that beneficiaries of a city tax abatement are subject to the City of Bloomington's Living Wage Ordinance ( BMC 2.28), and therefore I/we must certify the entity's Living Wage compliance annually during the tax abatement term, if this abatement request is approved .

OWNER(S) OR AUTHORIZED REPRESENTATIVE(S)

TITLE

.AV? t QFo

Printed Name

ESD Form Revised 20130206 6

Tax Rate (2014): $2.0754 per $100

PERSONAL PROPERTY ABATEMENT ESTIMATE

Cost of Personal Property: $25,000,000

True Tax

Value*

Taxes Payable

Without

Abatement

Recommended

Abatement

Schedule (%) Amount Abated

Net Taxes

Payable

With

Abatement

Year 1 40% 207,540$ 70% 145,278$ 62,262$

Year 2 56% 290,556 70% 203,389 87,167

Year 3 42% 217,917 70% 152,542 65,375

Year 4 32% 166,032 70% 116,222 49,810

Year 5 30% 155,655 70% 108,959 46,697

Year 6 30% 155,655 70% 108,959 46,697

Year 7 30% 155,655 70% 108,959 46,697

Year 8 30% 155,655 70% 108,959 46,697

Year 9 30% 155,655 70% 108,959 46,697

Year 10 30% 155,655 70% 108,959 46,697

PP Totals 1,815,975$ 1,271,183$ 544,793$

*Per Indiana Code

Estimated Tax Abatement CalculationsCook Pharmica LLC, 1501 S. Strong Dr.

Township: Bloomington City-Perry Township

Department of Economic Sustainable Development January 20, 2015

CITY OF BLOOMINGTON

LEGAL DEPARTMENT

MEMORANDUM

TO: Bloomington Economic Development Commission

FROM: Thomas D. Cameron, Assistant City Attorney

RE: XfiniGen, Inc.’s Bloomington Investment Incentive Fund (“BIIF”) Loan

Default

DATE: January 21, 2014

Summary: XfiniGen has not made payments on its BIIF Loan pursuant to the terms of

its Promissory Note. This memorandum recommends that the EDC write off

XfiniGen’s BIIF Loan as a bad debt.

A Brief History of the Bloomington Investment Incentive Fund

Between 1986 and 2012, the City issued loans and grants from the Bloomington Investment Incentive Fund (“BIIF”). During that time, the City loaned $2,287,400 to businesses through the BIIF program. To this point, two loans have been written off—totaling $85,247.43 or 3.73% of all loans made—as uncollectible: (1) $11,506.98 from a 2000 loan to Cha Cha for $35,000, and (2) $73,740.45 from a 2011 loan to ProWinds for $75,000. Although new BIIF loans are no longer being made, there are still five outstanding BIIF loans, with a total outstanding principal balance as of October 17, 2014 of $137,815.59. Four of the outstanding BIIF loans are current on their obligations. The fifth outstanding BIIF loan, which was made to XfiniGen, Inc. (“XfiniGen”) is currently in default.

2

The BIIF Loan to XfiniGen XfiniGen’s BIIF loan was awarded by the EDC to XfiniGen in May 2011. XfiniGen proposed building “next generation lithium batteries for large scale energy storage applications” and planned to bring 107 jobs to Bloomington by 2014. Under the terms of this loan, XfiniGen was to make monthly payments of $1,175.58 for 60 months to repay the low interest loan of $70,000. The loan was secured by XfiniGen’s inventory and equipment. Between July 2011 and November 2013, XfiniGen made 28 payments of $1,175.58 toward its liability. All 28 payments were late, and XfiniGen was one month behind in its payments after it made its payment in November 2013. In total, XfiniGen paid $32,916.24 in principal and interest toward its BIIF loan, leaving $37,464.07 of principal outstanding. Since the loan was awarded, City Staff sought updates on the project. This has included: (1) email exchanges, (2) unscheduled visits to the Batteries Xpress building, (3) letters, and (4) phone calls and voicemails. In May 2013, the Legal Department sent a Demand Letter to XfiniGen, demanding payment in full of the remaining balance. In June 2013, City Staff met with Ryan Stout, and was promised information about how the loan funds were used. Despite multiple follow up attempts, XfiniGen has not provided the requested information.

Recommendation: EDC Should Write Off the Loan to XfiniGen as a Bad Debt

By declaring the loan to XfiniGen a bad debt, the City can write the loan off its books as uncollectible, as was done previously with the Cha Cha and ProWinds BIIF loans. This Memo recommends writing the loan to XfiniGen off as a bad debt, for two reasons. First, because XfiniGen is no longer in business (it has been administratively dissolved by the Secretary of State’s Office), has not responded to the City’s attempts at communication, and has not submitted a payment toward its debt since November 2013, it is unlikely that the City will be able to collect a monetary judgment against XfiniGen. Second, to pierce the corporate veil and attempt to collect against XfiniGen’s ownership personally will be a difficult and time consuming process, which—because of the high standard to overcome and the fact sensitive nature of the analysis—has a high likelihood of failure.