fca project overview - detroit · 2019. 5. 9. · fca development agreement workforce initial...
TRANSCRIPT
FCA Project OverviewMayor’s Office and DEGC Presentation to Detroit City Council
May 9, 2019
FCA Project Overview – Agenda
City of Detroit Mayor’s Office May 9, 2019
• Project Scope
• Real Estate Acquisitions
• Financing
• Detroit Brownfield Redevelopment Authority
• Incentives
• Development Agreement
1
City of Detroit Mayor’s Office May 9, 20192
4,950 New jobs
$35 Million In community benefits
Exclusive Hiring WindowFor Detroit residents
This project will result in…
FCA Development Agreement
Workforce
Initial Application Process: DESC will provide recruiting, pre-screening and vetting, and work-readiness training related to production jobs.
FCA will open windows exclusively for Detroit residents (anticipated to be 1 - 2 weeks each) to apply for production jobs, subject to priority being given to the UAW candidates.• first, to Detroit residents who reside in the
most impacted geographic areas (48213, 48214, 48215)
• second, to all other Detroit residents, including individuals who have successfully completed the DESC readiness program as a result of a criminal conviction, or who are military veterans.
Hiring After Initial Application Process: FCA will provide the application priorities for DESC candidates if FCA and DESC mutually agree in writing on the terms, including DESC continuing to provide in-kind support services.
City of Detroit Mayor’s Office May 9, 20193
FCA IN DETROITJefferson North Assembly Plant
Mack Avenue Engine Complex
FCA Transport
Great Lakes Business Center (Chrysler House)
EMPLOYEES
WORK IN DETROIT
6,275 4,873 $19.7MILLION
6,307
EMPLOYEES
LIVE IN DETROIT
RETIREES
LIVE IN DETROIT
IN TAXES PAID TO
CITY OF DETROIT IN 2018
MACK AVENUE ENGINE COMPLEX
Imagery ©2019 Google, Map data ©2019 Google
JEFFERSON NORTH ASSEMBLY PLANTWhen complete,
Mack would join
Jefferson North as
THE ONLY AUTOMOTIVE
ASSEMBLY PLANTS TO
BE LOCATED COMPLETELY
WITHIN THE CITY LIMITS OF DETROIT.
Convert Mack Avenue Engine Complex into vehicle assembly site
PRODUCTS• Next-generation Jeep Grand Cherokee
• All-new three-row full-size Jeep SUV
• New plug-in hybrid (PHEV)
$1.6 BILLION
3,850 NEW JOBS
MACK AVENUE
JEFFERSON NORTH
Retool and modernize plant for continued production of Dodge Durango
PRODUCTS• Dodge Durango
• Next-generation Jeep Grand Cherokee
• New plug-in hybrid (PHEV)
$900 MILLION
1,100 NEW JOBS
Every vehicle manufacturer job creates almost 7 OTHER JOBS in industries across the economy. When considering only assembly line employment, the jobs multiplier is 11.57.1
Hill, Kim, et al. Contribution of the Automotive Industry to the Economies of All Fifty States and the United States. Center
for Automotive Research, Jan. 2015, www.cargroup.org/wp-content/uploads/2017/02/Contribution-of-the-
Automotive-Industry-to-the-Economies-of-All-Fifty-States-and-the-United-States2015.pdf.
HOURLY HIRING NEEDS FOR FULL PRODUCTION
Approximately 10,000 Jobs in Detroit at Full Production
Today New Full-Time Jobs At Full Production
Jefferson North Assembly 5,000 + 1,100 = 6,100
Future Mack Assembly * 3,850 4,280
Total 4,950 10,380
* There are currently 600 employees at the Mack Engine Complex
4,950 New Jobs to Detroit
FCA Project Overview – Agenda
City of Detroit Mayor’s Office May 9, 2019
• Project Scope
• Real Estate Acquisitions
• Financing
• Detroit Brownfield Redevelopment Authority
• Incentives
• Development Agreement
10
FCA Real Estate Acquisition Overview
Parcel Acreage
City of Detroit Mayor’s Office May 9, 2019
Crown Enterprises
Hantz
Soave
Yahiayan
DTE
GLWA
Conrail
Kelly
City parcels
DPS
82.2
3.9
0.1
5.3
8.1
41.4
10.8
6.9
0.3
55.6
11
Map Number
#10
#8A, #8B
#8B
#4
#6
#12
#12
#12
#1
#1, #8, #7A, #7C2
Description
82-acre parcel adjacent to JNAP currently being leased by FCA
4 acres adjacent to South Berm that will be used for a retention pond and additional parking
Parcel located adjacent to South Berm that is part of #8B assemblage
Two parcels adjacent to east side of Mack Engine
One parcel adjacent to east side of Mack Engine
Former Conners Creek powerplant site that will be combined into single 60-acre DTE/GLWA/Conrail site
Vacant portion of GLWA Freud site that will be combined into single 60-acre DTE/GLWA/Conrail site
Two Conrail parcels that run in between GLWA and DTE sites that will be combined single 60-acre DTE/GLWA/Conrail site
Three parcels located in North Berm
North Berm, South Berm, St. Jean, Federal Mogul Site, #7C2 site
Totals 214.6
FCA Real Estate Acquisition – Overview Map
City of Detroit Mayor’s Office May 9, 201912
FCA Real Estate Acquisition – Crown Enterprises (Parcel #10)
Property Owner
Crown Enterprises
Parcel Size
82.2 acres
Description
The city is acquiring from Crown Enterprises the former Budd Plant site, an 82 acre parcel adjacent to Jefferson North Assembly Plant that Crown currently leases to FCA as a site to store finished vehicles.
Acquisition Type
Cash + land swap
Acquisition Value
$54MM total:– $43.5 MM cash– $10.5 MM land
City of Detroit Receives
• Budd Plant Site (conveyed directly to FCA)
Crown Enterprises Receives
• $43.5 million in cash• 116.6 acres of city-owned land
– Option to purchase property in the UTS McNichols area
– Must bring half of non-compliant parcels into compliance within 6 months and all parcels into compliance within 1 year
– Receive Springwells parcels in 2025 when lease expires with Bridge
– $21 million in additional cash if certain conditions are not met (a portion may be paid by city)
Intended FCA Use
FCA will use this parcel for finished vehicle parking. They intend to build additional rail infrastructure on this site to provide rail served access to finished vehicles.
City of Detroit Mayor’s Office May 9, 201913
FCA Real Estate Acquisition – Crown Enterprises (Parcel #10)
City of Detroit Mayor’s Office May 9, 201914
Crown Enterprises Land Swap Overview
City of Detroit Mayor’s Office May 9, 2019
Property General Address Acres Value ($)
Bridge area 1.9 148,521
I-94 Industrial Park 24.3 1,265,8549240 Mt . Elliott
Jefferson / Conner / Freud
5.3 500,000696 Hart
Trombley Triangle 4.0 325,0007529 St. Aubin
West Grand Blvd / Toledo
3.1 564,0333600 Toledo
SpringwellsIndustrial Park
28.5 2,600,0001420 Springwells Ct
UTS McNichols 1.7 233,48217140 Mitchell
Airport Area 45.6 3,970,93011111 French Road
JNAP area 1.4 117,61212121 Mack
Totals 116.6 10,483,980
15
Crown Enterprises Land Swap – Bridge Area (1.9 acres)
City of Detroit Mayor’s Office May 9, 201916
City of Detroit Mayor’s Office May 9, 2019
Crown Enterprises Land Swap – I-94 Industrial Park (24.3 acres)
17
City of Detroit Mayor’s Office May 9, 2019
Crown Enterprises Land Swap – Jefferson/Conner/Freud (5.3 acres)
18
Crown Enterprises Land Swap – Trombley Triangle (4.0 acres)
City of Detroit Mayor’s Office May 9, 201919
Crown Enterprises Land Swap – West Grand Blvd / Toledo (3.1 acres)
City of Detroit Mayor’s Office May 9, 201920
Crown Enterprises Land Swap – Springwells Industrial Park (28.5 acres)
City of Detroit Mayor’s Office May 9, 201921
Crown Enterprises Land Swap – UTS McNichols (2.7 acres)
City of Detroit Mayor’s Office May 9, 201922
Crown Enterprises Land Swap – Airport Area (45.6 acres)
City of Detroit Mayor’s Office May 9, 201923
Crown Enterprises Land Swap – 12121 Mack (1.4 acres)
City of Detroit Mayor’s Office May 9, 201924
FCA Real Estate Acquisition – Hantz (Parcels #8A and #8B)
Property Owner
Hantz
Parcel Size
3.7 acres
Description
Hantz will transfer 3.7 acres of land adjacent to the South Berm on Beniteau Street to DBRA. In exchange, Hantz will receive approximately 1.7 acres of land in an area west of the FCA JNAP plant bounded by Mack, Kercheval, Van Dyke, and Maxwell.
As part of this deal, the city is also selling 40-45 acres of land to Hantz to eliminate its obligation negotiated by the previous administration to provide Hantz with an option to buy 180 additional acres in the area outside of the original Hantz Farms footprint. The 40-45 acres are located inside the original Hantz footprint bounded by Mack, Jefferson, St. Jean, and Fischer.
Acquisition Type
Land swap
Acquisition Value
$14,000
City of Detroit Receives
3.7 acres + $160k
Hantz Receives
• 366 vacant lots• Up to 80 structures that must be renovated
within a 2-year time period• Hantz must comply with maintenance
standards from original agreement (100 trees per acre, maintain the landscape, remove trash and debris)Intended FCA Use
FCA will use this land for a stormwaterretention pond and additional parking.
City of Detroit Mayor’s Office May 9, 201925
FCA Real Estate Acquisition – Hantz (Parcel #8B)
City of Detroit Mayor’s Office May 9, 201926
FCA Real Estate Acquisition – Hantz (Parcel #8A)
City of Detroit Mayor’s Office May 9, 201927
FCA Real Estate Acquisition – Soave Enterprises
Deal #1 – Van Dyke / Lynch
DescriptionSoave will transfer two parcels adjacent to the Mack Engine Plant in exchange for 9.5 acres at Van Dyke/Lynch roads. These two parcels will be used as part of a broader assembly for FCA employee parking.
City of Detroit Receives• 2 Republic Services
parcels (5.3 acres) needed for FCA assembly
• $280,000 in cash
Soave Receives• Lynch / Van Dyke parcels
(9.5 acres)
Deal #2 – Huber Yard
DescriptionSoave will transfer 3.2 acres so the city can square off the DWSD Huber Yard in exchange for 12.8 EDC-controlled acres adjacent to Soave property in the I-94 Industrial Park.
City of Detroit Receives• 3.2 acres adjacent to Huber
Yard• $768,000 in cash
Soave Receives• 12.8 acres in Area 6
Deal #3 – Gratiot / Conner
DescriptionSoave will receive a 2-year option on 9 acres of city-owned parcels at 10600 and 10644 Gratiot to help complete land assembly for a potential industrial development site.
City of Detroit Receives• Completion of deals #1
and #2• $642,000 in cash
Soave Receives• 2-year option on 10600
Gratiot (4 acres) and 10644 Gratiot (5 acres)
• 10780 Gratiot (State of MI parcel) (1.7 acres)
City of Detroit Mayor’s Office May 9, 201928
Cash proceeds from all three deals will be placed into an escrow which can be used by Soave for site prep
FCA Real Estate Acquisition – Soave Enterprises (Deal #1 – Van Dyke / Lynch)
City of Detroit Mayor’s Office May 9, 2019
Soave parcels received by city City parcels received by Soave
29
FCA Real Estate Acquisition – Soave Enterprises (Deal #2 – Huber Yard)
City of Detroit Mayor’s Office May 9, 201930
FCA Real Estate Acquisition – Soave Enterprises (Deal #3 – Gratiot / Conner)
City of Detroit Mayor’s Office May 9, 201931
FCA Real Estate Acquisition – Yahiayan
Property Owner
Margarit Yahiayan
Parcel Size
8.1
Description
The city is acquiring a 8 acre parcel of land immediately east of Mack Engine plant. This parcel is currently used for parking for the adjacent retail center and had easements that needed to be acquired as well.
FCA will combine this parcel with the two Republic Services parcels acquired from Soave Enterprises to form a single 13 acre parcel.
Acquisition Type
Cash
Acquisition Value
$3.0M
City of Detroit Receives
Yahiayan property
Yahiayan Receives
$3.0MIntended FCA Use
FCA intends to use this parcel for employee parking.
City of Detroit Mayor’s Office May 9, 201932
FCA Real Estate Acquisition – Yahiayan (Parcel #6)
City of Detroit Mayor’s Office May 9, 201933
FCA Real Estate Acquisition – DTE Connors Creek Site (Parcel #12)
Property Owner
DTE Electric
Parcel Size
41.4 acres
Description
DTE will demolish the remaining power plant facility at the Connors Creek site and transfer 41 acres to the city which will be combined with the adjacent Conrail and GLWA parcels to create a single 60 acre site.
In exchange, DTE will receive 25.1 acres from the City of Detroit and DLBA for potential future substations and pullout yards.
Acquisition Type
Land swap
Acquisition Value
$3.6M
City of Detroit Receives
Connors Creek site (40 acres) + 11860 Freud (1.2 acres)
DTE Receives
25.1 acres total acres including:
• 1340 Third Street (PLD Building) (0.9 acres)• 9733 Grinnell (13.1 acres)• 14584 Livernois (5.7 acres)• Winslow / Lawton parcels (1.8 acres)• 11900 Freud (2.6 acres)• 2 Canal (1.0 acres)
Intended FCA Use
FCA intends to use the 60-acre combined DTE/GLWA/Conrail site as a finished vehicle parking lot. The city is responsible for assembling the site as well as constructing the parking lot before it is conveyed to FCA.
City of Detroit Mayor’s Office May 9, 201934
FCA Real Estate Acquisition – DTE Connors Creek Site (Parcel #12)
City of Detroit Mayor’s Office May 9, 201935
FCA Real Estate Acquisition – GLWA (Parcel #12)
Property Owner
GLWA/DWSD
Parcel Size
10.8 acres
Description
The city has acquired the 11 vacant acres of the GLWA parcel at Freud Street, which will be combined with the adjacent Conrail and DTE parcels to form a single 60-acre site for FCA.
Acquisition Type
Cash
Acquisition Value
$1,000,000
City of Detroit Receives
• GLWA site• 1-2 acres of river-adjacent portion to be
conveyed to DTE
GLWA Receives
• $1,000,000
Intended FCA Use
FCA intends to use the 60-acre combined DTE/GLWA/Conrail site as a finished vehicle parking lot. The city is responsible for assembling the site as well as constructing the parking lot before it is conveyed to FCA.
City of Detroit Mayor’s Office May 9, 201936
FCA Real Estate Acquisition – GLWA
City of Detroit Mayor’s Office May 9, 201937
FCA Real Estate Acquisition – Conrail
Property Owner
Conrail
Parcel Size
6.9
Acquisition Type
Cash
Acquisition Value
$484,000
City of Detroit Receives
• Two parcels from Conrail totaling 6.9 acres• 1-2 acres of river-adjacent portion to be
conveyed to DTE
Conrail Receives
• $484,000
Description
The city is acquiring two parcels from Conrail that sit in between the DTE and GLWA sites in order to create a single 60-acre parcel as well as two parcels adjacent to the DTE site and Freud Street.
Intended FCA Use
FCA intends to use the 60-acre combined DTE/GLWA/Conrail site as a finished vehicle parking lot. The city is responsible for assembling the site as well as constructing the parking lot before it is conveyed to FCA.
City of Detroit Mayor’s Office May 9, 201938
FCA Real Estate Acquisition – Conrail (Parcel #12)
City of Detroit Mayor’s Office May 9, 201939
FCA Real Estate Acquisition – Kelly
Property Owner
Michael Kelly
Parcel Size
0.3
Acquisition Type
Land swap
Acquisition Value
TBD
City of Detroit Receives
• Three parcels in North Berm• One (1) parcel in I-94 Industrial Park -Area 2• One (1) parcel in Lawton/Winslow area
Kelly Receives
• 14 parcels on Ashland Avenue in Jefferson-Chalmers
• 1 parcel on Dexter Avenue in Russell Woods• Release of pending law suits for 2012 unpaid
property taxes• Release of claims for unpaid property tax for
2015 and prior
Description
The city is clearing title issues with three parcels in the North Berm by acquiring those parcels from Michael Kelly. The city is also acquiring one parcel adjacent to the Winslow / Lawton parcels being transferred to DTE as part of the DTE land swap as well as one parcel adjacent to the I-94 Area 2 land swap with Crown Enterprises.
Intended FCA Use
The parcels are part of the broader expansion of the Mack Engine Plant west to include the North Berm and St. Jean as part of the new assembly plant.
City of Detroit Mayor’s Office May 9, 201940
FCA Real Estate Acquisition – Kelly (0.3 acres)
City of Detroit Mayor’s Office May 9, 201941
FCA Real Estate Acquisition – City of Detroit Land Contribution
Site Description Acreage Value ($) Intended FCA Use
City of Detroit Mayor’s Office May 9, 2019
Federal Mogul (#7C)
#7A2
North Berm, South Berm, (#1, #8), #8A
St. Jean Street
Former Federal Mogul facility across from DDOT Shoemaker facility
14.4 521,805 Truck staging
City-owned parcel off St. Jean that connects to FCA parking lot north of Mack Engine
1.2 51,444 Access to FCA parking
Existing berms on west side of St. Jean and city-owned land in #8A
24.9 383,992 Expand Mack Engine Plant west for additional parking
St Jean between Warren-Mack and Mack-Kercheval
12.6 115,508 Expand Mack Engine Plant west for additional parking
Totals 55.6 1,072,749
42
FCA Real Estate Acquisition – Site #7C and #7A2
City of Detroit Mayor’s Office May 9, 201943
FCA Real Estate Acquisition – North Berm / St. Jean
City of Detroit Mayor’s Office May 9, 201944
FCA Real Estate Acquisition – South Berm / St. Jean
City of Detroit Mayor’s Office May 9, 201945
FCA Project Overview – Agenda
City of Detroit Mayor’s Office May 9, 2019
• Project Scope
• Real Estate Acquisitions
• Financing
• Detroit Brownfield Redevelopment Authority
• Incentives
• Development Agreement
46
FCA Real Estate Acquisition – Summary
Parcel AcreageAcquisition Type Cash ($MM) Swap Value ($MM) Council Action Needed
Acquisition Cost
City of Detroit Mayor’s Office May 9, 2019
Crown Enterprises
Hantz
Soave
Yahiayan
DTE
GLWA
Conrail
Kelly
City parcels
DPS
Totals
82.2 Cash + Land Swap
43.5 10.5 Yes
3.9 Land Swap -- 0.01 No (already approved)
0.1 Cash 0.01 -- No (DBRA approval)
5.3 Land Swap 0.3 Yes--
8.1 Cash -- No (DBRA approval)3.0
41.4 Land Swap 3.6 No (already approved)--
10.8 Cash -- No (DBRA approval)1.0
6.9 Cash -- No (DBRA approval)0.5
0.3 Land Swap 0.02 Yes--
53.2 N/A 1.1 Yes--
214.6 48.1 15.5
47
Site Prep and Other Project Costs 59.5
Total Cash 107.6
FCA Funding - Sources
City of Detroit Mayor’s Office May 9, 2019
Land Swap Contingency
The parties who are receiving the 155 acres of city-owned land in swaps have a due diligence period in
order to determine whether the land has environmental, title, or other problems that would cause
them not to accept the land in swap. The City has agreed to up to $20 million in contingency fund
obligations in the event the due diligence review results in land swap parcels not being accepted.
Detroit Uncommitted Bond Funds $36.0
Detroit Loan to Detroit Brownfield Development Authority $7.5
Detroit Millennium Garage Proceeds $7.1
City of Detroit Subtotal $50.6
Grants & Loans Requested from the State of Michigan for Site Improvement $57.0
Total Project Fund $107.6
Sources for $108 million Project
48
FCA Funding – Millennium Garage Sale
Overview
After a competitive RFP process, a prospective buyer has offered $18.7 million for the City of Detroit’s Millennium Parking Garage and reports that ownership of the garage will facilitate the move of 500 permanent office jobs to Detroit.
City of Detroit Mayor’s Office May 9, 2019
Prospective Buyer
Sterling Group
Parcel Size
595 parking spaces
Appraised Value
$13.5 million
Purchase Agreement
$18.7 million
Fiscal Impact Overview
• The garage has $2.8 million in deferred capital needs.
• The City would receive $16.6 million in net proceeds.
• 20% of net proceeds will be contributed to affordable housing
• The buyer will use the garage to bring at least 500 permanent office jobs to Detroit. This would yield a potential increase in income tax revenues of over $500,000 annually.
49
FCA Funding – Millennium Garage Sale Fiscal Impact Analysis
City of Detroit Mayor’s Office May 9, 2019
$ in thousands Fiscal Year Total2020 2021 2022 2023 2020-2023
Current projection1
Revenue 938 938 938 938 3,752
Direct costs (350) (357) (364) (371) (1,443)
Overhead costs (563) (574) (586) (597) (2,320)Net Operating Income 25 7 (12) (31) (10)
Proposed sale
Millennium sale net proceeds2 16,598 0 0 0 18,650
Impact on Four-Year Financial Plan 16,573 (7) 0 0 16,599
Cost avoidance:
Millennium capital needs3 2,800 0 0 0 2,800
Potential income tax revenue:
Millennium sale4 - 525 532 538 1,595
Notes:
1. Reflects Millennium Garage operations only. Four-Year Financial Plan does not assume reactivation of JLA Garage.
2. Assumes sales close in FY 2020. JLA Garage sale requires completion of budgeted capital improvements.
3. Millennium capital not currently budgeted and would otherwise be a draw upon fund balance.
4. Millennium buyer reports ownership of the garage will facilitate the move of 500 office jobs to Detroit. Assumes $65,000 average salary, 25% resident, 75% non-resident, and start date in FY 2021. Does not include indirect economic stimulus.
50
FCA Funding – Millennium Garage Sale
City of Detroit Mayor’s Office May 9, 201951
FCA Project Overview – Agenda
City of Detroit Mayor’s Office May 9, 2019
• Project Scope
• Real Estate Acquisitions
• Financing
• Detroit Brownfield Redevelopment Authority
• Incentives
• Development Agreement
52
BROWNFIELD REDEVELOPMENT AUTHORITYBrownfield Redevelopment Financing Act – P.A. 381 of 1996
City of Detroit Mayor’s Office May 9, 2019
Description
Detroit Brownfield Redevelopment Authority, as an Instrumentality of the City, is authorized to facilitate the implementation of brownfield plans; to create brownfield redevelopment zones; to promote the revitalization, redevelopment, and reuse of certain property, including, but not limited to, tax reverted, blighted, or functionally obsolete property; to prescribe the powers and duties of brownfield redevelopment authorities; to permit the issuance of bonds and other evidences of indebtedness by an authority.
Funding Agreement – DBRA Specific Activities to Support FCA Project
Make and enter into contracts necessary to the project, including, land swaps, purchase agreements, sales agreements, etc.
Incur and expend funds for eligible site preparation and environmental remediation activities on approx. 215 acres of land
Request money from the STATE and the CITY for eligible activities to be reimbursed through the collection of tax increment revenues (TIR)
Convey to FCA, land and other real property, or rights or interests in the property, and or options with respect to the property
53
FCA Project Overview – Agenda
City of Detroit Mayor’s Office May 9, 2019
• Project Scope
• Real Estate Acquisitions
• Financing
• Detroit Brownfield Redevelopment Authority
• Incentives
• Development Agreement
54
Proposed City of Detroit Tax AbatementIndustrial Facilities Exemption - P.A. 198 of 1974, as amended Act
City of Detroit Mayor’s Office May 9, 2019
Description
Industrial Development Districts Act, (known as the Industrial Facilities Exemption) PA 198 of 1974, as amended, provides a 50% tax incentive to manufacturers to enable renovation and expansion of aging facilities, assist in the building of new facilities, and to promote the establishment of high tech facilities.
Term: up to 12 years
Sites under Consideration
1. Mack Engine Facility2. Jefferson North Assembly Plant -JNAP
55
PROGRAM BENEFIT AGREEMENTS
Industrial Property Tax Abatement (P.A. 198)
12 yr; 50% reduction of real property taxes on the new investment to a facility
Estimated Value: $12.1millionSET Value: $1.8 (must be approved by State)
• City may terminate Agreement if facility is not built|rehab or
• May recover a pro rate share of the abated taxes for jobs shortfall.
Good Jobs for Michigan Program Up to 10 yr; 100% capture and reimbursement of state withholding taxes
• Agreement is a reimbursement based on job creation
Michigan Business Development Program (MBDP)
Performance-based grant for job creation and training
• Agreement is a reimbursement based on job creation and achieving certain milestones
Workforce Development In-kind services to support training and hiring • In-kind services
State Essential Services Assessment Exemption (SESA)
Up to 15 yr 100% exemption of personal property tax
• State may terminate Agreement if eligible investment not met or
• 25% or more of the eligible property is relocated during the Agreement Term
1
2
3
4
5
FCA: City of Detroit and Applied for* State of Michigan Incentives
up to $160 million City and State Tax IncentivesExcludes Land Contribution
*Company has made an application for State Incentives, but have not been awarded
May 9, 2019City of Detroit Mayor’s Office 56
Estimated Gross Property TaxesRevenues direct to the City of Detroit pre-incentives
$28.5 million
Direct Income Taxes 4,950 Direct Jobs
$160.6 million
Utility Users’ Taxes5% Utility users tax
$20.2 million
Indirect Revenues Income Taxes, fees
$133.3 million
$342 Million Gross Benefit to City of Detroit
Over 30 yearsg
FISCAL IMPACTS
City of Detroit Mayor’s Office May 9, 201957
FCA Project Overview – Agenda
City of Detroit Mayor’s Office May 9, 2019
• Project Scope
• Real Estate Acquisitions
• Financing
• Detroit Brownfield Redevelopment Authority
• Incentives
• Development Agreement
58
FCA Development Agreement
Overview
The City of Detroit reached a Development Agreement with FCA. The project is intended to create approximately 3,850 net new full-time employees in the operation of the Mack Plant, plus another projected 1,100 jobs as part of the planned JNAP retooling project. FCA will commence operations of the Mack Plant by no later than December 1, 2022 (the deadline may be extended to 2023).
City of Detroit Mayor’s Office May 9, 2019
Site Preparation
Land Assembly
DBRA is delivering parcels in three categories: 1. delivering City-owned parcels to FCA; 2. purchasing parcels from third parties, then
conveying those parcels to FCA; 3. facilitating the transfer of parcels directly
from third party owners to FCA, without entering the chain of title.
• The City/DBRA will facilitate rezoning (as necessary), conduct Phase I environmental studies and conduct additional environmental testing as directed by FCA.
• DBRA will conduct certain environmental remediation and site preparation activities.
• DBRA is also taking down the berm west of the Mack Plant property, and will construct a sound barrier in its place.
• The City will vacate portions of St. Jean Street Avenue, as well as partial sections of the East Vernor Highway, Charlevoix Street, Goethe Street, Conner Lane and East Canfield Street rights of way so that those vacated rights of way can be incorporated into the project’s footprint.
59
FCA Development Agreement
Workforce
Initial Application Process: DESC will provide recruiting, pre-screening and vetting, and work-readiness training related to production jobs.
FCA will open windows exclusively for Detroit residents (anticipated to be 1 - 2 weeks each) to apply for production jobs, subject to priority being given to the UAW candidates.• first, to Detroit residents who reside in the
most impacted geographic areas (48213, 48214, 48215)
• second, to all other Detroit residents, including individuals who have successfully completed the DESC readiness program as a result of a criminal conviction, or who are military veterans.
Hiring After Initial Application Process: FCA will provide the application priorities for DESC candidates if FCA and DESC mutually agree in writing on the terms, including DESC continuing to provide in-kind support services.
City of Detroit Mayor’s Office May 9, 201960
FCA Development Agreement
Investment Monitoring
To show the City’s return on investment, FCA will report the revenues produced by the project• income tax from new jobs (including FCA
and 50% credit for suppliers)• property tax increases (net of abatements
and TIF capture), and • growth in corporate City income tax as a
result of expanded operationsIf the City does not recoup its approximately $57.4 million direct investment ($43.09 million in cash granted, $14.35 million in land) within thirty years, FCA will pay the City the shortfall.
City of Detroit Mayor’s Office May 9, 2019
If FCA does not commence operations of the Mack Plant by December 1, 2023, title to the contributed property may re-vest in the DBRA through a right of reverter.
If FCA (prior to the City’s recoupment of its investment or within 15 years, whichever is later) ceases operations of the plant for a period of sixty (60) consecutive months, the DBRA has the opportunity to re-purchase a 58-acre assembling including the former ConnersCreek Power Plant property for fair market value.
If (prior to the City’s recoupment of its investment) FCA seeks to re-sell any parcels prior to the recoupment of the City’s investment, it must notify the DBRA if the sale will result in similar use of the property, or receive City approval. In either case, the DBRA receives 75% of the sale proceeds.
Remedies
61
Resolutions For City Council Approval
City of Detroit Mayor’s Office May 9, 2019
Resolution Description
Development Agreement – City & Hantz
Property Sale / Land Exchange – DTE
Modifications to existing agreements with Hantz that exchange 366 vacant city & DLBA lots & up to 80 structures for 3.7 acres for future retention pond & $160K cash
Land Exchange / Property Sale – Kelly
Exchange of 25.1 ac from City & DLBA for 41 acres of demolished Conners Creek Power Plant
Land Transfer – DLBA to DBRA
Clearance of title issues on 5 required parcels in exchange for 15 parcels & released property tax claims
City – FCA Resolution (CBO)Community Benefits provision, FCA and the City’s commitments to address community impacts
Street Vacation Request Vacation of St. Jean Street
Conveyance of about 208 City parcels of land to DBRA in exchange for $965,093
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Development Agreement – DLBA & Hantz
Amended
Amended
Agreement with FCA & DBRA – DA
Funding Agreement & Loan to DBRA
Land Transfer Agreement with DBRA
Amendments to transference of parcels from the DLBA to DBRA for $1.00
Development Agreement for Mack Plant and JNAP retooling project in exchange for land & site preparations
City’s transfer of $33.09M and issuance of a $7.5M, 30-year loan to DBRA for assembly and site preparations
Resolutions For City Council Approval
City of Detroit Mayor’s Office May 9, 2019
Resolution Description
Property Sale / Land Exchange – FodaleGroup & Associates (Soave)
Property Sale / Land Exchange – Crown Enterprises, Inc
Exchange of 2-year option on city parcels at Gratiot and Conner (9 acres), & one State of MI parcel (1.7 acres) for $642K cash & other exchanges
Transfer / Surplus – 450 W Congress
Exchange of city’s Lynch / Van Dyke parcels (9.5 ac) for 2 Republic Services parcels (5.3 ac) & $280K cash
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Property Sale / Land Exchange – Lynch Road Land LLC (Soave)
Property Sale of 450 W Congress
Finance Dept. Transfer of jurisdiction from Municipal Parking Dept. to P&DD and surplus of real property
PA 198 District & Certificate
Exchange of 116.6 acres & $43.5M cash for Crown’s 82 acre Budd Plant site
Sale of Millennium Parking Garage to Sterling Group for $18.7M, will facilitate move of 500 permanent jobs
Rezoning of North and South Berm to M-2
Industrial Facilities Exemption, a 50% tax incentive for 12 years for Mack Plant and JNAP
Rezoning
City of Detroit Mayor’s Office May 9, 201964
4,950 New jobs
$35 Million In community benefits
Exclusive Hiring WindowFor Detroit residents
This project will result in…