TOWN OF BROOKHAVEN INDUSTRIAL DEVELOPMENT AGENCY MEETING MINUTES FEBRUARY 15, 2012

Transcription

1 TOWN OF BROOKHAVEN INDUSTRIAL DEVELOPMENT AGENCY MEETING MINUTES FEBRUARY 15, 2012 MEMBERS PRESENT: EXCUSED MEMBER: ALSO PRESENT: INVITED GUESTS: MEMBERS OF THE PUBLIC: Frederick C. Braun, III, Chairman Joseph R. Kessel, Jr. Ronald J. LaVita Peter G. Moloney John Rose Ann-Marie Scheidt Gasper C. Celauro Lisa M. G. Mulligan, Chief Executive Officer James Ryan, Chief Financial Officer Yves R. Michel, Deputy Executive Director James M. Tullo, Deputy Executive Director Annette Eaderesto, IDA Counsel William Weir, Nixon Peabody (via conference call) Jocelyn Brinka, Administrative Assistant Ross Ain, Caithness Long Island Mitch Garber, Caithness Long Island Tom Geiger, Counsel for Caithness Long Island Heather Martorello Virginia Daly Chairman Braun called the meeting to order at 7:52 A.M. on Wednesday, February 15, 2012, in the Work Session Room on the Third Floor at Brookhaven Town Hall, One Independence Hill, Farmingville, New York. MEETING MINUTES OF JANUARY 11, 2012 The Minutes of January 11, 2012 had previously been sent to the Members for review. The motion to approve these Minutes as presented was made by Ms. Scheidt, seconded by Mr. Rose and unanimously approved. Mr. Moloney inquired if Drive Train ever paid the second-half of their PILOT for Ms. Mulligan responded that we have received a partial payment and we are working with the company. CAITHNESS PRESENTATION 1

2 Mr. Braun invited Mr. Ain from Caithness Long Island to make his presentation to the Board. Caithness has responded to a Request for Proposals (RFP) from the Long Island Power Authority (LIPA) to construct a second power plant. Mr. Ain introduced his colleagues Mitch Garber and Tom Geiger. Caithness Long Island s existing plant is a 350 megawatt combined cycle power plant that supplies roughly 10% of the electricity for Long Island. This plant has been up and running since August of 2009 when it went commercial and is fueled by natural gas with oil as a back-up. Mr. Ain noted that the project has not been on oil for a single day since the project went commercial due to the high price of oil versus the price of natural gas. This is a very efficient plant in many ways, one of which is their water usage in the steam cycle. When Caithness initially approached the Town they estimated that they would use 35 gallons of water per minute to supply 10% of Long Island s electricity; they only use 22 gallons per minute. In terms of emissions they have very strict limits and operate 50% below the limit for NOX and over 90% below the limit for carbon monoxide and volatile organic compounds. The reason for this is that the plant is not cycling. They are operating 24 hours a day seven days a week since they are the most cost-effective option in LIPA s system. Mr. Ain informed the Board that the cost to produce electricity at this plant is at a variable cost of below $0.02 per kilowatt hour. Caithness was originally induced by the IDA in 2007 and entered into a 20-year PILOT Agreement with the Agency. The PILOT amount for the current tax year is roughly $6 million dollars. Caithness also receives Empire Zone benefits. Mr. Ain explained that LIPA pays the PILOT to Caithness who then makes the PILOT payment to the IDA, and then they get a check back from New York State which is then returned to LIPA. This is the only power plant on Long Island that the ratepayers are not paying any real property taxes net out of pocket for the first ten years resulting in a savings of $80 million dollars. Mr. Ain detailed the existing lot arrangement at the Caithness site; they own about 106 acres in the Sills Road Industrial Park. He noted the new railway center is located north of their property. The existing hatched area (a map was part of their presentation) is under the IDA. This area was meant to be larger than Caithness required rather than re-arranging the tax lots. LIPA has put out a 2,500 megawatt Request for Proposals and there have been 16 responders with 49 separate proposals. LIPA must make a decision in 2013 as to renewing their option to use National Grid plants on Long Island. They have already announced that Glenwood Landing and Far Rockaway will be retired. 2

3 Mr. Ain hopes to hear a decision on the RFP soon. LIPA had wanted the project to be online in May of In order to meet that deadline site clearing and construction would need to begin by the second quarter of Financing would need to be in place by the third quarter of 2013 and the environmental review process needs to start now. Even though Caithness has not yet been chosen to construct the second plant they need to proceed in order to meet LIPA s schedule if they are chosen. They expect to file a special use permit this March and a full site plan application in the summer or fall. They have proposed 4 different configurations to LIPA. Their current plant is a one on one which means one gas turbine with one steam turbine generator. Mr. Ain explained that there is also a two on one plan which is two gas turbines with one larger steam generator, as well as other options. LIPA will determine which type of plant is most suitable to their needs but in the meantime Caithness must file special use permits for all four proposals submitted. Some of the land that is under the original IDA lease is more than is needed for the current plant but would be necessary for the second plant. The Town of Brookhaven requires a 100 foot setback and 30% of the land must remain natural and undisturbed. There is a large LIPA substation on the property that they would connect the new plant to. They are requesting the release of some of this land from the lease so that it can be united with the rest of the land for Unit 2. Mr. Geiger added that the release of this land would not reduce the current PILOT amount; it would in fact generate more tax revenue as the land would return to the tax rolls. Mr. Weir explained that this resolution contemplates releasing the portions of the land not needed for the existing plant from the lease with the IDA and out of the PILOT Agreement. Excess land had been included in the original deal to accommodate for a potential future plant. Mr. Ain added that they had used the land for the current plant during construction for parking and administration offices. The land has now been revegetated and is no longer need for Unit 1. Mr. LaVita questioned if anything needs to be done like a lot reduction with the Certificate of Occupancy with the Town. Mr. Ain responded that they are well over the minimum 20 acres that is required for a power plant so a lot reduction would not be necessary. Caithness has begun the process with the Assessor s Office to change the tax lot lines. Mr. Braun inquired about the size of the proposed new plant versus the current one. Mr. Ain replied that it will be equal or up to double the size, or, 350 megawatts to 750 megawatts. Mr. Braun inquired about the gas supply, Mr. Ain said there were 2 options presented to LIPA and LIPA is actively investigating this. Gas supply arrangements in the US have dramatically changed in the last five years. A lot of gas is coming in from Pennsylvania with not much coming from Canada or the Gulf Coast. In fact, American natural gas may be exported to Europe and other parts of the 3

4 world. There are new pipelines coming from Pennsylvania hooking up to facilities around New York City. One proposal presented to LIPA is to expand the National Grid distribution lines to the plant through looping and enhancement of those lines using the same routes and sites. The second proposal is a pipeline from Connecticut that would run under Long Island Sound, into Shoreham, down William Floyd Parkway and over to the plant. Mr. Ain added that there had been a controversial plan around six or seven years ago involving a pipeline from Commack. An IDA application will be submitted once LIPA has made their decision, for now a resolution would be required to release the land so that these plans can proceed. Mr. Ain replied to a question from the public about emissions from the Caithness plant. He explained the bidding process for LIPA and that they know what power needs they are expected to fulfill the day before. At 8:19 A.M. the representatives from Caithness were thanked for their presentation and excused from the meeting. CFO S REPORT Mr. Ryan presented the Operating Statement for January. He detailed the deposits and expenditures for the month and noted one correction for the Certificate of Deposit from Astoria Federal Savings Bank; the CD matures on January 12, This was rolled over from the prior year. Mr. Ryan informed the Board that PILOT disbursements have begun and that the files necessary for the Annual Report have been delivered to Ms. Mulligan and our auditors, Albanese, Sini & Reeves. Mr. Braun reminded the members that PILOT payments need to be disbursed to the taxing jurisdictions within thirty days of receipt which the Agency abides by. Mr. Braun added that the Caithness PILOT Agreement was structured as a 20-year PILOT so they have a specific payment every year. After discussions with Counsel and Agency staff, the Agency will probably move to PILOT payments having specific start and end dates, as well as set amounts with an inflation rate included. Ms. Mulligan added that this would be beneficial to the projects as well. Mr. Braun brought up an issue involving Motorola where due to an oversight; they failed to pay their sewer taxes. The County has now taken title to the property. Mr. Ryan assembled all of the necessary documents, along with the sewer tax payment from Motorola and delivered it to the Legislature to have the deed transferred back. For some reason this was held up in the Legislature. As a result, Motorola will have to pay a substantial amount of school taxes since the property will not be in the IDA s name as of March 1 st. Since it appears this was simply an oversight on Motorola s part, Mr. Braun proposes that the Agency extend the PILOT for Motorola for one year. Mr. Weir will prepare a resolution for this matter to be presented at the next meeting. 4

5 The motion to accept the Operating Statement for January was made by Mr. Moloney and seconded by Mr. LaVita. All were in favor. CAITHNESS REVISITED Mr. Weir explained that the resolution for Caithness allows the IDA to release the unnecessary parcels of land from the lease. This land will go back on the tax rolls and will be ready to be reassembled into a new tax lot if they receive the contract from LIPA. The motion to approve this resolution was made by Mr. Moloney, seconded by Mr. Rose and unanimously approved. Mr. Weir added that if Caithness does get the contract for the second plant it may be even bigger than the first plant. Mr. Braun questioned if the potential PILOT would be structured similarly, Mr. Weir responded that the first PILOT was really driven by LIPA and the contract. Mr. Ryan noted that escalations in the tax rates need to be considered as well as making sure that if the plant size doubles, the PILOT Agreement should increase too. Mr. Weir inquired how the 2% tax cap will impact this. Mr. Ryan said that is a risk that Caithness will have to take. The levy, not the tax rates, is capped at 2%. It was discussed that this new plant would most likely be in the Longwood School District, not South Country. Mr. Ryan also feels that the PILOT should be put in place in 2014 to approximate the same situation that occurred in the first plant so that PILOT payments begin during construction. Mr. Weir inquired if a host benefit community agreement would be contemplated again as it was for the first plant. Ms. Eaderesto does not think a host benefit agreement will be requested this time. BLUE DIAMOND Mr. Braun explained that this resolution is to put a second mortgage on Blue Diamond s property. Due to delays in getting their Certificate of Occupancy from the Town their commitment on a 504 SBA loan expired. The bank that holds the first mortgage is backing it up with a second mortgage to cover the construction loan that Blue Diamond had expected to be taken out by the 504 loan. Mr. Weir added that this also waives the technical default. When the Board passed a resolution for Blue Diamond in October, the plan was that one of the members of the company was going to sell their interest to another member. That has now changed; this individual is now selling his interest in the company to his daughter and he will be released from the Guaranty. 5

6 The motion to approve this resolution was made by Ms. Scheidt and seconded by Mr. LaVita. All were in favor. PRESENTATION BY YVES R. MICHEL & JAMES M. TULLO Mr. Braun invited our two new Deputy Directors, Yves R. Michel and James M. Tullo to make their presentation to the Board. Mr. Tullo and Mr. Michel have both previously worked with the Town of Brookhaven and returned on February 1 st. They both stated how pleased they are to be back with the IDA. Mr. Michel said their primary focus is to cultivate, qualify and submit potential IDA projects to the Board for approval. Mr. Tullo added that between the two of them they have 20 years of experience with the Town. They have hit the ground running and in the last two weeks have already attended meetings of the Long Island Mid-Suffolk Business Association (LIMBA), where Supervisor Lesko spoke about how important it is to have more people working to bring business into Brookhaven in this economy, and the Long Island Business Development Corporation (LIBDC) where they reconnected with many of their past business associates. They are also meeting with businesses inside and outside of Brookhaven on a weekly basis and will utilize attorneys, accountants, bankers and real estate organizations to help promote the Town of Brookhaven as the place to do business. They also have a database to reach out to existing IDA deals to make sure our projects know we are here to help. Two great assets that we have are our sewers which not every municipality has to offer, as well as the websites that have been developed. There is also much commercial and industrial land available. They met with John O Hara of Corporate Realty Services last week and he estimated that there is 500,000 square feet of industrial and commercial land that is available which is key to attracting companies that may want to come in to ready to suit opportunities. There is also available land that is zoned for development for companies that want to build from scratch. Mr. Tullo added that in his years in the private sector doing commercial and industrial development he can understand the frustration level in doing business with the Town. They have already met with the Planning and Building departments about a streamlined review process for companies that come to the IDA. Mr. Tullo also said they plan to work with the High Tech Incubator at Stony Brook University to keep companies from leaving Brookhaven. Mr. Michel noted that they have strong relationships with different agencies outside of Brookhaven that will help facilitate projects. Mr. Braun informed the Board that when they met with the Commissioner of Planning he outlined 6

7 Planning s Top 25 Projects. Any projects that have been designated as being part of Blight to Light will be brought before the IDA. There was a brief discussion about the transfer of development rights for the Carmans River project. Mr. Rose inquired how far outside of the Town are Mr. Tullo and Mr. Michel looking for potential projects. Mr. Michel responded that he has sent roughly 3,500 s to individuals and companies in the tri-state area letting people know that he has returned to Brookhaven. Mr. Tullo added that they will go anywhere to attract businesses and will be attending networking events both before and after work hours. Mr. Moloney inquired if they had a set number of opportunities that they would bring to the Board in the next year. Mr. Tullo noted that they have already met with three businesses in the last two weeks and plan to ramp that up. Mr. Michel said that Uncle Wally s has already contacted them about an issue they needed assistance with regarding the Town. Ms. Scheidt mentioned that her Economic Development team at Stony Brook University recently gave a presentation to the Stony Brook Council. Without exception every member did not know of all of the programs that are available for businesses. Ms. Scheidt invited the whole Brookhaven team to meet with the Economic Development Council to help educate them on the diversity of programs available. Mr. Braun has met with Framerica again; they have still not made a decision about remaining on Long Island. They are waiting on reduced LIPA rates which LIPA says may still be two and a half to three months away. Mr. Braun inquired of Mr. Weir if since the IDA technically owns the Caithness plant, is there any way to carve out a number of kilowatt hours at a reduced rate and parcel them out to existing or future IDA projects. Mr. Weir replied that this could probably not be done because it would really depend on the contract between LIPA and Caithness and LIPA will probably be taking all of their power. Mr. Weir doesn t think Caithness could sell electricity directly to any of the projects since Caithness is a producer, not a supplier. This would need to be done through LIPA which is a possibility. Mr. Weir will speak with his energy partners about how this could be accomplished. Mr. Braun noted that the unaudited financial statement for 2011 shows the Agency turned a profit of roughly $128,000, a significant improvement over prior years. CEO S REPORT 7

8 Ms. Mulligan mentioned that the potential changes in PILOT Agreements already discussed would only apply to new projects moving forward. MCRS Springhill Suites Mr. Braun reminded the Board that about one and a half to two years ago Briad sold their Marriott Springhill Suites Hotel on Sawgrass Drive to a group called MCRS who own seventeen hotels in nine different states. Mr. Braun has been speaking with a representative from MCRS over the past few weeks. There is currently no debt on the building but Mr. Braun is meeting with the CEO of MCRS tomorrow about potentially putting some debt on the building of roughly 50% of its appraised value. MCRS has expressed some concerns if IDA benefits would transfer if they sold the hotel. His concern is from an appraisal standpoint of whether an appraiser would consider that in the value of the building. Mr. Braun has spoken with others about this and while an appraiser may add an abatement as a footnote, most do not consider them while appraising a building. It s been a bit of a struggle for MCRS to fill the hotel, nearby Baseball Heaven helps in the summer and they get some business from Brookhaven Lab. Mr. Braun will inform the Board when there has been some movement on debt for this project. Authority Budget Office (ABO) and Long Island Angel Network (LIAN) Mr. Braun updated the members on the status of the Authority Budget Office s (ABO) decision that donations to the Long Island Angel Network (LIAN), DARE and Miller Business Resource Center (MBRC) are considered to be outside of the IDA s mission. A contract will be prepared so that sponsorships can continue for MBRC. Mr. Braun spoke with a representative from the ABO to explain what the IDA wishes to do. Their response was that it is not within the purview of the IDA. DARE matches venture capitalists with entrepreneurs which mean that hopefully new businesses will be formed in the Town. LIAN may or may not respond to a RFP from NYS that could give them $15 to $25 million dollars in economic development funds. Ms. Scheidt added that LIAN will be responding to the Innovate New York Seed Fund Request for Proposals to seek $4 to $6 million dollars for a sidecar fund that would invest alongside the individual investors. New Open Meeting Regulations Mr. Braun noted there are new regulations for open meetings. Draft minutes, complete applications, agendas and all resolutions are now supposed to be posted on our website prior to the meeting. Mr. Weir added that to the extent practical, if a lease or PILOT Agreement is to be discussed, a current draft should be posted. Not all websites have the capacity to handle hundreds 8

9 of pages in PDF documents. Discussion followed on the requirement to post draft minutes that have not been accepted by the Board. At 9:02 A.M. Mr. LaVita left the meeting. Mr. Weir suggested the IDA post the agenda, the resolutions, draft minutes and operating statements while making sure that if something is not disclosable under the Freedom of Information Law, it is not posted. This will also incur greater web maintenance fees for the Agency. Mr. Kessel inquired if these documents can instead be available at the Agency office rather than on-line. Mr. Weir responded that it needs to be on the website. LDC Mr. Weir said a letter came out of the Comptroller s Office a year ago stating that IDAs cannot lend their employees to LDCs to operate the LDC. In Brookhaven s case, employees are Town employees that also receive compensation from the IDA. Also, the Brookhaven LDC has not been active. Mr. Weir gave some examples of how other IDAs and LDCs handle staffing issues such as the Hempstead IDA who has started the policy that IDA employees satisfy their IDA work hours first and then perform LDC work. The employees submit time sheets to the LDC who then pays the employee for their extra time and issues a 1099 form for any additional compensation they have received. No retirement or health benefits were granted under the LDC. Mr. Weir said that the Comptroller ruled this year that if you do one hour of LDC work on IDA time then you lose the entire year s worth of qualifications in the pension system. As long as the IDA gets the number of hours they are supposed to receive, IDA employees can do LDC work on their own time as volunteers. Ms. Mulligan, Mr. Michel and Mr. Tullo are all required to provide a set number of hours to the IDA, any work they perform for the LDC will be done on their own time. Personnel When the Board passed the resolution to hire our new Deputy Directors it was for forty hours per week. An additional resolution was made to decrease that amount to thirty-five hours to provide Mr. Michel and Mr. Tullo the opportunity to perform the five hours per week required by the Town. The motion to approve this resolution was made by Mr. Moloney, seconded by Ms. Scheidt and unanimously approved. 9

10 Mr. Kessel asked Mr. Tullo and Mr. Michel to reach out to our current IDA projects in addition to seeking out new business. Retention will be a major focus for both of them; this will also alert the Agency to any compliance issues. Ms. Mulligan added that it is now required that the Annual Financial Reports the projects fill out be notarized. Mr. Braun added that each company should have a Relationship Manager. Mr. Braun has reviewed the board assessments. He noted that there seems to be some questions regarding meeting our community responsibilities. This will be discussed further at the next meeting. The motion to adjourn the meeting at 9:18 A.M. was made by Ms. Scheidt and seconded by Mr. Rose. All were in favor. The next meeting of the IDA is scheduled for March 21,