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WEIRTON CITY COUNCIL COUNCIL MEETING - SPECIAL SESSION April 20, 2004 9:00 A. M. A special meeting of the Common Council of the City of Weirton, Hancock and Brooke Counties, was held on April 20, 2004 at 9:00 A.M. in Council Chambers of the Municipal Building. Mayor Miller called the meeting to order. Councilmembers in Attendance: Henry DeMasis Councilmember Ward 4 Harold Miller Councilmember Ward 2 Dale Moore Councilmember Ward 3 Steve Dorich Councilmember Ward 1 Dave Dalrymple Councilmember Ward 6 Frank Veltri Councilmember Ward 7 George Kondik Councilmember Ward 5 City Officials in Attendance: Gary DuFour City Manager Thomas J. Maher, Jr. City Clerk Valerie Means Finance Director Rick Rekowski Mary H. Weir Public Library Director Robert Riccelli Economic Development Director Rod Rosnick Building Inspector John Yeager City Attorney Mayor Miller led the Pledge of Allegiance. NEW BUSINESS Resolution: No.: TO ADOPT LEVY RATES FOR 2004-2005 FISCAL YEAR. Motion was made by Councilmember Kondik, second by Councilmember DeMasis to accept the resolution. Motion carried by majority, 7/0. Resolution: No.: TO AUTHORIZE REQUEST OF SALES TAX INFORMATION FROM THE WEST VIRGINIA STATE TAX COMMISSION. Motion was made by Councilmember DeMasis, second by Councilmember Dalrymple to accept the resolution. Councilmember Kondik commented, "Is this not public information John." Mayor Miller commented, "No." Councilmember Kondik commented, "It's not?" Mayor Miller commented, "No sir. They said that in order for the city to obtain it, either, item one, the Mayor, or the Mayor and Council must go back and request the information through the State Tax Department. So, in conjunction with that, my understanding, I wanted to make sure that Council was on board with this along with the Mayor before we requested it. Now. I don't know John. Do you have anything further on that?" City Attorney Yeager commented, "No. You know more about that than I do Mayor. I had heard what I heard about it from you and Gary. It's the sort of thing that seems like it should be public knowledge or maybe available through the Freedom of Information Act. But, certainly, if we can get it more quickly this way, more efficiently, then this is how we ought to do it." Mayor Miller commented, "It's like everything else in the world, Councilman. It's free, but you have to have a request in writing to entertain it." Councilmember Kondik commented, "But we need a whole body of Council to do that?" Mayor Miller commented, "Not necessarily. I said I wanted to share it with Council. I, as Mayor, can go back and authorize that information through the State Tax Department, but I thought collectively, we all should share in the information. So. I wanted to make sure that Council is passed on." Councilmember Kondik thanked Mayor Miller for his comments. Councilmember Moore commented, "I would like to note that this information is needed to help the Finance Department and this Council make a decision on whether the potential of the new Senate Bill 701 that has been passed is an opportunity for us in the city to look at another funding mechanism. However, we would have to drop the B&O we presently have on banks and utilities to put this in place. To make that decision, we need to know what the potential revenue from this would be to make a judgment on whether it's an opportunity or not. So, that's why it's important, this resolution, because it's information we need to make a decision on whether we are able to utilize this new funding mechanism that's been presented to the city." Councilmember Kondik commented, "Did we ever receive the mechanics of 701 yet?" Councilmember Moore commented, "Yes. I believe we have. I have a copy of the bill itself, and it was in the Municipal League Lites magazine in our last packet." Motion carried by majority, 7/0. Discussion: CONCERNING CREATION OF TAX INCREMENT FINANCING DISTRICT Mayor Miller commented that the information had been sent out in the packet, and Mr. Bob Riccelli was here for discussion on the subject and input. Mr. Riccelli commented, "Mayor. Honorable Councilmen. Good morning. I'm proposing that the City of Weirton create a Tax Increment Finance District since legislation was passed recently to change the constitution to enable this. The idea of the TIF, Tax Increment Financing, was to become a development tool. The city has no cash to offer as incentives to a potential development or a developer. In looking at what the tax increment financing can do, we now have in our midst what I think is probably a once in a lifetime opportunity to capture some money without hurting the tax agencies, or the tax receiving entities in this county. My proposal, without being defined, is generally to take the acreage that is along Three Springs Drive, the General Offices of Weirton Steel or whoever is going to own that, probably someone private very shortly, three hundred and some acres contiguous to that, maybe over to Potomac, where there is a lot of discussion as to where this might be. But, along Three Springs, this whole corridor is probably poised for more development in the next couple years than we have seen in the last 30. Why do I say that? We know that the state has authorized a project to widen the Three Springs Bridge over 22. HDR is currently working on that design. That's going to happen within the next 2 years. That in it will add to the attractiveness to that corridor. The location by itself in proximity to the Pittsburgh market and the Pittsburgh Airport is certainly advantageous to the City of Weirton. We've talked about it for a number of years. We've done a little bit of marketing. Currently, the Business Development Corporation has a marketing firm on retainer marketing the Three Springs acreage itself. So. With the auction of Weirton Steel, there's certainly been a lot of attention to these areas. Furthermore, when you read the tax increment financing documents. The basis for this is, you take an area, you define it, and the assessor in that county determines the tax basis as of July 1 of a particular year. In our case, July 1 of 03, just the Three Springs Business Park acreage, had zero taxes, because it's owned by the State of West Virginia. I think it's the West Virginia Development Authority. So, there are no taxes on that property. Come July 1 of this year, we will have the Dee Jays Restaurant and the hotel that go on the tax logs. Just doing some rough figures, an assessed value of that could be about 3.5 Million dollars. If that were the assessed value at the end of the day, based on the levy rates for Brooke County, because that's a Brooke County property, just those two properties would generate $119,400.00 in taxes. Of that, $18,000 would be the City of Weirton's. If we create a district, and we include, obviously, that land, and the adjacent land around it, the acreage, and it's about 450 acres of what the considerations have been and I've had some of the discussion with Gary. What I see is we have this development fund now, and we started off in the first year with a minimum of a hundred thousand or more dollars. The intent of the tax increment financing tool is not to create development money to have fun. It is to do projects, infrastructure. Let me offer some more interesting facts that I see. When this auction happened last week with Weirton Steel, there were two parcels of property that are contiguous to the park around the GO. One is approximately a two-acre site, and the other one is approximately a 10-acre site. Their total value in this auction was as much as what the whole 177-acre GO, R&D property land value on the books. The 177 acres. Consider Weirton Steel's property, prior to the auction, in the last assessment, that 177 acres had a land value of $995,000. Those 12 acres sold for approximately that much. There is a potential buyer for the GO, we keep hearing. If that happens, the likelihood is that the value of the GO office, whatever it is as of last July 1, will probably increase going forward. The land values themselves have to go up by virtue of what's just occurred in that auction. So, that means that there is more increment that could be captured in the first year or two. What would we do with that? We have a lot of options. The idea is to have a project, not to collect money, but to have a project. We are considering with discussions with the state and others the property, the new property owners that have projects that they want to bring. They may need some assistance, either in infrastructure. We certainly know that we have infrastructure needs in that area. We have a limited water capacity. We certainly have issues on the width of Three Springs being a two-lane road. We know the bridge is going to get widened. You know. Can we put a third lane in that three lane on Three Springs Drive? If so, where would that money come from? We can't look to the state, not likely, although that's a state road. Creating the district creates some opportunities. What we do with it, it's dependant on a lot of factors. Let's talk about the process of creating it, the cost, and the potential downside. As a Class II city, we are not required to get permission from anybody, not that that's the way I would suggest we proceed. If the Council, after we have our discussion, is comfortable, I'd certainly like to proceed. I'd like to go to the (unintelligible) of incubation, and explain to them our interest and why. I would also like permission to go to the Brooke County School Board and explain to them why. For two reasons. One is courtesy, that we should always do things in a very collaborative manner. And, two, we want everybody on board with why we're doing this. We're not doing this to freeze the tax basis that takes away from anybody. This money that I'm talking about, this increment has never been paid to anybody. Remember, the idea of tax increment financing is that you freeze a tax base at a certain point in time, so the taxing entities continue to get what they got at that time. But, they don't get any future increases, with the exception of excess levies and any outstanding bond issues. Those would be paid (unintelligible). Having said that the communicating with the partners like the Brooke County Commission and the School Board enables them to understand that what we are looking for is an opportunity to create future opportunities for this whole area, ideally future investment which brings at some point in time in the future it brings either land value increases which the ad valorum goes up. There's more tax coming in to all the taxing entities at some point in the future. And, ideally it brings jobs. There are no guarantees to do this. Let me go back to creative financing. I have been talking with Jackson & Kelley Law Firm who's been intimately involved in a number of transactions, and with their advise, they suggest that the cost of doing a tax increment district is approximately $10,000. Typically, when you do a TIF, that $10,000 is paid for, either in a bond issue if there's a large enough project that comes, or it's paid out of the increment. Worst-case scenario. None of that happens. We create the district. Nothing happens. We get the increment, and we de-designate a year later, or two years later. There's no impact on the property. We can make an agreement with the school board in terms of an MOU to say that if we don't get a project in a year or two years or some defined time that the amount of the increment would be distributed at some agreed terms, whether it's all or 50%, it would be solely up to the Council's discretion. We can certainly look at those things in what other communities have done as templates for this. One of the limiting things about creating a district. The most limiting thing is that typically you have a 30-year window to amortize or pay down the debt. You don't get more than 30 years. That's 30 years. So, once you create a district, the clock starts ticking. So, if we had no project in 2 years, and in the third year we got a project, we would only have 28 years to pay down that indebtedness. Now, I've thrown an awful lot of information out, hypothesis based on examples that have been shared with some other communities and particularly other states, because West Virginia. This is new to them. I guess at this point, I think I've clarified the issues why I am proposing that we do this, and I would certainly entertain any amount of discussion from Council as to." Mayor Miller commented, "Bob, one question. In taking a look at this. The City Clerk had picked up some information on the tax situation like this similar in Homestead. The way you read the information in the paper, as far as I'm concerned, it's kind of like a win win situation, where everybody, if it's handled properly. And, the information, I'll give back to the City Clerk, and he can pass it out to the individual Council people. I think it's imperative for the growth of the community to have this particular type of program available so that we can move forward not only with jobs but with the basic increase in our infrastructure. I would like to say to you thank you for your assistance and your help in this. You've been up to your eyeballs in a lot things, and you certainly have come forward with a lot of data and information, and I believe that Council should review it, take a look at it, and I think we should jump on board with you and the City Manager for your prediction for the future for this community." Councilmember Miller commented, "It's my understanding that you can have multiple TIFs, districts in a community." Mr. Riccelli commented, "Yes." Councilmember Miller commented, "So, you're not just talking about one TIF. Also, would you explain how you selected the TIF area, and what are the dimensions of that area or locations?" Mr. Riccelli commented, "Again, there's some conjecture based upon potential development, and if you think about some of the issues that I spoke about in turn. If you take the Three Springs Park. Basically, that's I think 132 acres. Take the 308-acre parcel that's contiguous that a gentleman from the Burgettstown area bought. Mr. Frank Brownly may have some ideas about doing something. We don't know that. I think he's meeting with you this week." Unknown commented, "This morning. We just met with him an hour ago." Mr. Riccelli commented, "So there's 308 acres, all of the GO, the R&D, going down Three Springs, potentially picking up the Kmart on both sides of the road at Potomac. Rod and I have discussed some potential as to where we would actually define that. One of the questions that came up. If we stretched it further down Three Springs, we'd actually be going across into Hancock County. Does that present problems? I actually had a call in this morning for the attorney to answer that, and I can't tell you. I don't know that it would present a problem. It just presents the fact that we would be doing a TIF district that was across two counties. Whether we would have to do two districts, I don't know that. But, the intent, to get back to the essence of your question, is to capture a designated area that has what we would think the most potential for growth. Immediate growth, ideally, but growth over time where, as growth occurs within that district, we have money to assist either the developer or we have the wherewithal to do infrastructure that we currently don't have. So, the lines are not defined at this point. It's conceptual, and certainly we would consider input from anybody that has something to offer regarding why you would think we would need to more. And, we have talked; the City Manager and I have talked extensively about doing multiple TIFs. And, as much as I'm encouraged to do that, just trying to get a handle on doing one district certainly is consuming. And, obviously, if you do multiple TIF districts there are that many times $10,000.00. And, again, that's an approximate number. It could be more if there were specific issues. It could be less if things went well. Just like a two county TIF. That may be something that, obviously, the attorney's going to spend more time researching, so that would probably be added cost. But, at the end of the day, if all of this fell on its face, and nothing worked. At the end of the day we had a district. We had some development funds, and for whatever reason they were very little. And, I can't imagine, just based on what I've shared with you this morning. We have a fund here, that's a development fund. It's about $72,000 in it, and it comes from the PA Fashions cash stream. I'd call it an in lieu of, but it's not a true in lieu of. That fund was set up to do economic development. If, at the end of the day, we had to pay attorney's fees, we'd have the money there to pay it. Do I want to do that? No. But, I can't ask the Council to support me going forward, and then let me continue with this and engage Jackson & Kelly to take us down this road unless there's a plausible way to say yes. We do have the money set aside. It's in the general fund, and it's a, I don't know, a special revenue fund?" Ms. Means commented, "A special fund." Mr. Riccelli commented, "Yes." Mayor Miller commented, "What's your recommendation?" Mr. Riccelli commented, "Well. What I'm asking is that I can pursue this, engage Jackson & Kelley officially. I have a letter of engagement that I would ask the City Attorney to look at. And, in the meanwhile, I want to contact the County Commission and the School Board. Obviously, the newspaper is here. They are going to put this in the paper, probably this morning. I would like to immediately have some discussion with both of those entities that this is what we are looking at. Without saying that the Council. It comes to the designation by this Council by ordinance at some point in time." City Manager DuFour commented, "As Bob indicated, we've been talking as well. I think for my own part in this, I would like to just add my two cents in the sense that I would like to ask Council to authorize Mr. Riccelli to proceed with the understanding that based on the information he brings back from the discussions he holds that we hopefully in one of our future regular meetings can step forward and do the actual legislation and all is right to authorize a TIF district. I think we have an unparalleled opportunity, even in the adversity that we've seen in the past year, or so. I don't believe we get these opportunities very often. I think we would be remiss if we did not perhaps at least authorize proceeding forward to gather the information to hold those discussions, and hopefully if all is positive, to proceed with the TIF district. It will also give us the green light, I hope, to look at infrastructure, water, streets, so on. We're talking to developers in our different offices already, so the pressure is there. The desire is there. And, I'd like to ask Council to authorize Mr. Riccelli to proceed." Councilmember Kondik commented, "Bob, does in kind service have anything to do with the dollars and cents, as far as trading dollars and cents with in kind services?" Mr. Riccelli commented, "In respect to…" Councilmember Kondik commented, "Dollars and cents that we're going to be looking for as far as what we need to put out for this if the developer's coming in." Mr. Riccelli commented, "No. We could actually. It is very typical to have the cost of this designation put on the developer and it becomes part of…" Councilmember Kondik commented, "Oh, really?" Mr. Riccelli commented, "Yea." Councilmember Kondik commented, "That's a factor?" Mr. Riccelli commented, "Yea. If you do a bond issue, it's included in the bond issue." Councilmember Kondik commented, "Oh. OK." Mayor Miller commented, "Gentlemen, its kind of a win win situation for the city and surrounding area. It's going to create jobs if it's successful." Councilmember Moore commented, "One other, a couple comments. One, this may be new to West Virginia, but when Amendment 1 passed West Virginia, we were the 47th state in the union to pass it, so we were late getting on this train. The second thing, developers are, regardless how good your location and regardless how much they want to build there, they are coming, and they are looking for something. What deal do you have for me, because that is the mechanism of the game today? Everybody's got something to offer them. If you look across the river at Steubenville, they passed and ordinance by Council last year that said they could take from general funds up to 4% of the value of the project to pay for infrastructure and improvements to allow for that development. That's our competition. That's our direct competition. That's our local competition. That doesn't include Star Pointe. That doesn't include national competition. So, we need the availability to take advantage of this legislation to allow us to again, when that developer comes and says, 'you know, we really like it. It's a great location. What can you do for us?' I mean. 'We know this needs upgraded. The street needs widened. What can you do for us?' We could not come from our general fund now and say that we could do anything for them. This allows us an opportunity to develop a fund to have funds available that we can then make the arrangements to enhance the attractiveness of these locations to bring in these developers to build these expansion projects that will hopefully incur the jobs that will come with them. So, I am fully in support of these projects and the development of this district." Councilmember DeMasis commented, "Bob. I'll tell you what. This is great. That's about the finest thing I've heard in years. I think we should grasp it. We should grasp it now. I really do believe that was a fine job." Mr. Riccelli commented, "Well. The opportunity. What happens is, if we don't do the designation now and we let it go. And, the new tax basis occurs July 1. So, when the current private development properties and the impact of whatever's happened with Weirton Steel and the GO, the auction properties and the GO. The new tax basis is going to reflect that, so they will be higher. Now. You can create a district next year, but you will start with whatever it was on July 1 of 04. So. The timeline is we have until December 31 of this year. This process at a minimum is probably 90 days if we start it immediately." Councilmember DeMasis made a motion to authorize Mr. Riccelli to proceed. Councilmember Veltri made a second to the motion. The motion carried by majority 7/0. Mr. Riccelli commented, "Thank you gentleman. I will have the draft that Jackson Kelley sent me as a letter of engagement. I would like for you to review that for comment as quickly as you can, and I will continue my dialog with the School Board and the County Commission." Mayor Miller commented, "I would suggest sending an Email, Bob, if you can't reach anybody, because the paper will come out tomorrow. I think we have to have an open door policy, and we want to try to share everything with everybody. What is good for Weirton is also good for the counties. Whether it be Hancock or Brooke is inconsequential, but to move forward with open arms." ADJOURNMENT With no further business before this April 20, 2004 special session of the Weirton City Council the meeting was adjourned after the closing prayer.
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