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Agenda Item Review Form Muskegon City Commission Commission Meeting Date: June 11, 2024 Title: Request for an Industrial Facilities Exemption Certificate - Forming Technologies, LLC - 2675 Olthoff Drive Submitted by: Jocelyn Hines, Development Department: Economic Development Analyst Brief Summary: Forming Technologies, LLC has requested an Industrial Facilities Tax Exemption Certificate. The company will be making an investment of $16,000,000 in real property improvements and plans on creating up to 72 jobs over four years as part of the overall project, qualifying them for a 12-year abatement. Detailed Summary & Background: Forming Technologies, LLC (Form Tech} is a manufacturing facility, founded in November 2004, providing customized pallets, lids, and shipping products using a thermoforming process. In partnership with Bluewater Industrial Development, LLC, Form Tech will begin construction of a new facility starting September 2024. The new 195,000 sq. ft building will house the plastic extrusion and thermoforming business and its associated offices. The total real property investment is $16,000,000. This project will create 72 more jobs over the next four years. Staff Comments: There is an established Industrial Development District on this site since July 26, 1983, that encompasses the Port City Industrial Park and is included in the agenda packet. The IFT committee reviewed the applicant's project on May 29, 2024, and based on their findings and calculations, the committee suggests approval of the attached resolution for a term of 12 years for real property. The company has turned in all the necessary documents. Goal/Focus Area/Action Item Addressed: Key Focus Areas: Diversity reflected in businesses and business owners Progress toward completion of ongoing economic development projects Goal/Action Item: 2027 Goal 2: Economic Development Housing and Business - Progress toward new and ongoing economic development projects Amount Requested: Budgeted Item: $2,116,659 in Abated taxes over 12 years Yes No N/A X Fund(s) or Accouni(s): Budget Amendment Needed: N/A Yes No N/A x Recommended Motion: | move to close the public hearing and approve the attached resolution granting an Industrial Facilities Exemption Certificate for a term of 12 years for real property to Forming Technologies, LLC and to authorize the Mayor and Clerk to sign. Approvals: Guest(s) Invited / Presenting: Immediate Division Head Yes Information Technology Other Division Heads Communication Legal Review CITY OF MUSKEGON CONTRACT FOR TAX ABATEMENT Act 198 Public Acts of 1974 AGREEMENT between CITY OF MUSKEGON, a municipal corporation of 933 Terrace Street, Muskegon, Michigan 49440, (“City”) and Forming Technologies, LLC ("Company’). Recitals: A. |The Company has applied to City for the establishment of an industrial development district or industrial rehabilitation district pursuant to the provisions of Act198 of the Public Acts of 1974, as amended, which act requires a contract between the City and the Company to be agreed and submitted with the Company’s subsequent anticipated application for an industrial facilities exemption certificate. B. That in addition to the statutory requirement, the City has determined that it is in the best interests of the taxpayers, property owners and residents of the City that this Agreement be approved and executed prior to the establishment of the requested district, and the City deems this Contract, together with the conditions set forth in the said Act to constitute a necessary element in the City’s determination whether or not to create the district. C, The Company intends to install the project set forth in its application (“project”) which it believes qualifies for the process of establishing the district and the application for industrial facilities exemption certificate. D. The City, provided this Agreement is executed, will determine whether to create the district based upon the potential for the production of permanent jobs, the continuation, stabilization or increase of economic activity, planning and zoning considerations and the City’s general plan and intentions regarding economic development. In addition to the City policy considerations and predictions that the Company’s proposed district and certificate benefit the community in those ways, the City has further determined that the contractual commitments made by the Company to thereby assist the community shall be binding on the Company and necessary to continue the tax exemption made possible by the certificate. E. This contract shall become effective upon the issuance of an Industrial Facilities Tax Exemption Certificate. NOW THEREFORE THE PARTIES AGREE: 1, COMPANY AGREEMENT. The Company irrevocably commits to the investment, job retention and job creation promises made in its application, a copy of which is attached hereto and incorporated herein. In particular the Company agrees: 1.1 That 100% of the jobs shall be filled and in existence with full-time employees by a date no later than two (2) years from the date of the granting of the certificate by the State Tax Commission, subject to the provisions of section 3.4 of this agreement. 1.2 That the amount of jobs listed on the application, whether new or retained, will be maintained through the life of the abatement, subject to the provisions of section 3.4 of this agreement. 1.3 The Company shall meet the affirmative action goal included in the application or in any documents supplied by the City and utilized by the Company, including any additional representations made to the City Commission on or before the date two (2) years after the granting of the certificate by the State Tax Commission. It shall maintain the said levels of employment diversity during the period of the certificate, subject to the provisions of section 3.4 of this agreement. 1.4 The Company, by the end of two (2) years from the date of the grant of the certificate by the State Tax Commission shall have completed the investment of $16MM in improvements as shown in the application, subject to the provisions of section 3.4 of this agreement. 1.5 That the improvements and equipment to receive the tax abatement treatment shall be completed on or before the date two (2) years from the date of granting of the certificate by the State Tax Commission, 1.6 The Company shall pay its specific taxes required by the act in a timely manner, and shall not delay payments so as to incur any penalties or interest. 1.7 The Company shall fully cooperate with the City representatives in supplying all requested and required documentation regarding jobs, investment, the meeting of all goals and the timely installation and utilization of equipment and improvements. The City shall be entitled to inspect at reasonable hours the Company’s premises where the said improvements and equipment have been installed and where the said jobs are performed. 1.8 The Company shall maintain, during the entire period for which the tax abatement is granted, the level of jobs, affirmative action goals, production and utilization of the improvements and equipment at the site where the district has been created and for which the tax exemption has been granted. 1.9 The Company shall not cause or fail to cure the release of any hazardous substance, or the violation of any environmental law on its premises in the City. It shall report any releases to the appropriate governmental authority in a timely and complete manner, and provide copies of said report documentation to the City. It shall comply with all orders and actions of any governmental agency having authority. 1.10 The Company shall maintain the equipment and improvements so as to minimize physical or functional obsolescence. 141 The Company shall continue to operate its business location in the City, containing the same number of and type of jobs, for the term of the certificate. 2. AGREEMENT BY THE CITY. Provided this contract has been executed and further provided all applications to create the district and achieve the industrial facility exemption certificate have been properly filed, the City shall, in a timely manner, determine in a public meeting to whether to create the district and whether to receive, process, and approve thereafter the Company’s application for an industrial facilities exemption certificate. The City may consider this contract in a meeting separate from and prior to the meeting in which the City considers the creation of the district and/or approval of the application for certificate. Further, the City shall require the submission of this contract signed by the Company together with its applications, before creating the district. 3. EVENTS OF DEFAULT. The following actions or failures to comply shall be considered events of default by the Company: 3.1 Failure to meet any of the commitments set forth above. 3.2 The closing of the Company’s facilities in the City. Closing shall mean for purpose of this Agreement, the removal, without transfer to another site within the City of substantially all of the production facilities, and the elimination of substantially all the jobs created or retained thereby, which are set forth in the Company’s application. 3.3 Failure to afford to the City the documentation and reporting required. 3.4 The failure to create or retain jobs, meet affirmative action goals or expend the funds on equipment and improvements as represented in the application within the times required hereby, unless the company can show that there has been a loss of revenue and employment due to circumstances beyond the control of the company. In order to make that showing the company shall have the burden of supplying, to the City's satisfaction, complete and convincing documentation supporting and justifying reductions in investment, failures to attain affirmative action goals or job losses, such as, without limitation, written evidence of lost contracts, accounting information showing reduced revenues due to the loss of business, (not due to diversion of production to affiliate companies or divisions of the company), production records showing reduced quantities over significant periods of time, and such other information required by the City to support the Company's claim that the failure to invest, failure to achieve affirmative action goals, or loss of jobs should not form the basis for a finding of default. 3.5 The bankruptcy or insolvency of the Company. 3.6 The failure to pay any and all taxes and assessments levied on the Company’s property or any other taxes, local, state or federal, including but not limited to City income taxes and the withholding of said City income taxes from employees as required by the City Income Tax Ordinance. 3.7 The performance or omission of any act which would lead to revocation under MCLA 207.565, being §15 of the Act. 3.8 The violation of any provisions, promises, commitments, considerations or covenants of this Agreement. 4, REMEDIES ON DEFAULT. In the event of any of the above defaults the City shall have the following remedies which it may invoke without notice, except as may be reasonably required by the Company’s rights to due process: 4,1 In the event of closing as determined after investigation of the facts and a public hearing, the Company shall be immediately liable for penalties to be paid forthwith to the city as determined as follows: 4.1.1 The Company shall pay to the City for prorata distribution to the taxing units experiencing the abatement, an amount equal to the difference between the industrial facilities tax which it has paid, and the total property taxes to the relevant taxing units which it would have paid, given its installations of improvements and equipment, during the years for which the certificate was in effect. 41.2 Immediate Revocation. The Company hereby consents to revocation to the IFT certificate before the State Tax Commission, without hearing, and the City shall submit a copy of this Agreement to the State Tax Commission in connection with its revocation procedure, giving notice that the default has occurred and immediate revocation should occur. 4,2 In the event the improvements and equipment have not been installed before the two (2) year period, in addition to the revocation procedures before the State Tax Commission, the abatement should immediately be reduced by the City propottionately, and any installations which have not been finished at the end of said two (2) year period shall not be eligible for the abatement thereafter and shall be placed on the regular tax roll. 4,3 Failure to Expend the Funds Represented. In the event, (whether or not the installations have been completed), the Company has not expended the funds it has represented on its application that it would invest for the installation of equipment, the abatement shall be reduced prorata, and any remaining value of equipment shall be placed on the regular tax roll, unless the company can show, through receipts, etc. that the cost of the equipment was actually less than the amount estimated by the company (i.e., the same equipment was purchased as listed in the IFT application, but the bids came in less then expected). 4.4 Job Creation and Retention. In the event the promised number of jobs have not been created or retained at the end of the two (2) years after the grant of the certificate by the State Tax Commission, the abatement shall be proportionately reduced, unless the company can show that the loss of jobs, or inability to hire as many people as expected, is due to circumstances beyond the control of the company (such as an economic downturn). 4,5 Affirmative Action Goals. In the event, after one (1) year from the grant of the certificate by the State Tax Commission, the affirmative action goals of the City for additional jobs have not been met on a prorata basis, the abatement shall be revoked. 4,6 For other violations of this Agreement or for actions or omissions by the Company amounting to grounds for revocation by statue, the City shall recommend to the State Tax Commission immediate revocation of the certificate. 4,7 Special Assessment. For any amount due to be paid to the City, under this Section 4, the Company consents that the City shall have a personal action against the Company for the said amount, and in addition, cumulatively, and not by election, the City shall have a special assessment lien on all the property of the Company personal and real, located in the City, for the collection of the amounts due as and in the manner of property taxes and in such case the collection of the said special assessment shall be accomplished by addition by the City to the Company’s property tax statement regularly rendered. 5. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Michigan applicable to contracts made and to be performed within the State of Michigan. 6. Counterparts. This Agreement may be executed in one or more counterparts. Notwithstanding such execution all such counterparts shall constitute one and the same Agreement. 7. Benefit. This Agreement shall be binding upon and inure to the benefit of the respective parties, their successors and personal representatives. 8. Effective Date. This Agreement shall be effective on the date the State of Michigan Tax Commission grants the company at Industrial Facilities Exemption Certificate. CITY OF MUSKEGON Ken J ohngon, Mayor and ~ Jf Lund TM Ann Meisch, Clerk by By RAL Shawn McNeil, CFO
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