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HomeMy WebLinkAbout03122008~~ $E~E3AST~jy HOME OF PELICAN ISLAND SEBASTIAN CITY COUNCIL MINUTES REGULAR MEETING WEDNESDAY, MARCH 12, 2008 - 7:00 P.M. CITY COUNCIL CHAMBERS 1225 MAIN STREET, SEBASTIAN, FLORIDA Mayor Coy called the regular meeting to order at 7:20 p.m. 2. Vice Mayor Neglia led the Pledge of Allegiance. 3. A moment of silence was held. 4. Vice Mayor Neglia read the Civility Pledge. We will be respectful of one another even when we disagree. We will direct all comments to the issues. We will avoid personal attacks. 5. ROLL CALL City Council Present: Mayor Andrea Coy Vice-Mayor Sal Neglia Council Member AI Paternoster Council Member Dale Simchick Council Member Eugene Wolff Staff Present: City Manager, AI Minner City Attorney, Rich Stringer City Clerk, Sally Maio Deputy City Clerk, Jeanette Williams Airport Director, Joe Griffin Growth Management Director, Rebecca Grohall Police Chief, Jim Davis Police Lieutenant, Michelle Morris 6. AGENDA MODIFICATIONS None. 7. PROCLAMATIONS, AWARDS, BRIEF ANNOUNCEMENTS Presentations of proclamations, certificates and awards, and brief timely announcements by Council and Staff. No public input or action under this heading. Ms. Simchick announced the Chamber of Commerce/City sponsored Concert in Riverview Park this Friday at 5:30 p.m. Mr. Wolff noted the SRHS Jazz Ensemble will play. Mr. Neglia spoke on the Pelican Wildlife Festival stating it was a great time. Regular City Council Meeting March 12, 2008 Page Two 8. CONSENT AGENDA All items on the consent agenda are considered routine and will be enacted by one motion. There will be no separate discussion of consent agenda items unless a member of City Council so requests; in which event, the item will be removed and acted upon separately. If a member of the public wishes to provide input on a consent agenda item, he/she should request a Council Member to remove the item for discussion prior to start of the meeting or by raising his/her hand to be recognized. 1-2 A. Approval of Minutes -Special Meeting 2/27/08 3-14 B. Approval of Minutes -Regular Meeting 2/27/08 MOTION by Mr. Paternoster and SECOND by Mr. Neglia to approve the consent agenda passed on a voice vote 5-0. 9. COMMITTEE REPORTS & APPOINTMENTS None. 10. PUBLIC HEARINGS None. 11. UNFINISHED BUSINESS None. 12. PUBLIC INPUT Public Input for each individual is five minutes, however, it can be extended or terminated by a majority vote of Council members present. Damien Gilliams, Sebastian, said he wanted to speak on the Mayor not returning his phone calls, stated she said he is not allowed to wear a wig to meetings and said that wearing a wig and earrings is his option. He provided information about appraisals to the City Clerk in regard to the airport issue which included a rent study, and said he hoped the City Clerk would make copies for members of Council before we get to the airport item. Harvey Wheeler, 1464 Seahouse Street, requested a general briefing of how the tax reform will affect the City be given to the citizens every other meeting. The City Manager responded a written report would be coming to Council by the end of the month. Cindy Falco-DiCorrado, stated she was shocked that at the previous CRA meeting, the Facade & Landscape Grant committee was not notified of the grant award meeting. Joe Scozzari, asked if the Mayor was working with the Chamber to provide economic development as she had promised and wanted to know how far she had come with it. Mayor Coy told Mr. Scozzari to address the chair and speak to non-personal issues. She said it inappropriate that he singled her out but said she would answer his question. She said Council was working with the Chamber and Ms. Simchick noted the Council had passed a resolution supporting the Chamber's economic development efforts. 2 Regular City Council Meeting March 12, 2008 Page Three 13. NEW BUSINESS 08.031 A. LoPresti Aviation 15-41 (Airport Director Transmittal, Proposed Lease and Agreement) i. Lease ii. Economic Development Incentive Agreement The City Clerk showed the large packet of documents previously provided by Mr. Gilliams in reference to this item and asked for Council direction to make the copies for them in fairness to anyone else who might request copies, noting by policy people are asked to provide their own copies. She said she would have them copied at this time if requested by Council. In response, Ms. Simchick requested a copy of the current appraisal he had provided, however, no other member of the Council wanted any of the copies at this time and Mr. Paternoster said he would review them at a later time. The City Manager read a written statement into the record with additional details (see attached). The City Attorney reviewed some minor changes to the contract as follows: Circle page 20, paragraph four, strike the last sentence, "In no event, however, shall the rent decrease below the sum of $44,400 in Years 1 through 10, or below $48,000 for Years 11 through 15 and any extension thereafter." Circle page 21, after subparagraph three, add, "(c)(4) However failure by tenant to pay rent in a timely manner as required by the terms of this agreement as a result of conditions beyond its control such as, but not limited to: war, strikes, fires, floods, acts of God, governmental restrictions, power failures, or damage or destruction to any network facilities or servers shall not be deemed a breach of this agreement." . By request the City Attorney provided a copy of the amendments to Ms. Simchick and Ms. Simchick said she would have liked a copy for all members of Council to review. The Airport Director said he had received an appraisal from a local state certified appraiser showing $8 per square foot for the office space and $2 per square foot for the hangar and approval from FDOT relative to the lease. Ms. Simchick pointed out that neither the appraisal, nor the FDOT approval letter had been provided to the Council or the public. The Airport Director then had both documents copied and provided them to Council and to the Clerk for the record (see attached). Mayor Coy suggested Council hear from the public and then take a break and review the materials provided. Ms. Simchick again asked if the appraisals were dated February 15, why they were not provided in the packet. Regular City Council Meeting March 12, 2008 Page Four Mayor opened public input. Chuck Lever, Mulberry Street, Sebastian, urged approval for economic development and gave a brief background on LoPresti Aviation. Cindy Falco-DiCorrado, Sebastian, said this is a fabulous way to bring jobs. Richard Gillmor, Kroegel Avenue, Sebastian, said he applauds economic development but there should be time to take a look at the whole picture, and suggested .the hangar costs should be lower. The City Manager explained the $285,000 City match for FDOT grants in the amount of approximately $1.2 million total cost, but hopefully we'll come in under that amount, noting construction costs for the hangar to be roughly $100 per square foot so we think we can beat the $1.4 million. George Skilski said LoPresti runs a first rate operation and urged everyone to look at the lease on a positive basis. Jim Schaffer, Franciscan Avenue, Sebastian, salesman for LoPresti, spoke to LoPresti's high reputation, stating they will have a low environmental impact, their function at this facility will be mainly engineering and that fabrication and installation will be done elsewhere. Bill Bodon congratulated the City Manager and Airport Director for bringing this to the City and asked what we can do for other businesses so they don't fall by the wayside. Ed Herlihy, Seagrass, Sebastian, said this is a golden opportunity for the City to expand the tax base, and we need income for the building which was paid for in part by taxpayer money. He said as a pilot since 1964, he knows LoPresti is exceedingly well known in the aviation business and is the seed we need to start down the road to good economic development. Neil Lagin, Wentworth Street, Sebastian, said this will cost the City $285,000 and asked how much LoPresti was paying in Vero Beach. Debra Maerz, Sebastian Industrial Park, read from a prepared statement and urged tabling the matter for one or two week to request more information, look at every detail of the lease, noting it is hard to do business with the City, and urged asking is the City going to benefit, will it lower taxes, bring high paying employment to City, enhance quality of life to surrounding area, and will City be able to absorb any losses. Nate Episcopal, said we should welcome the company for more jobs in the City of Sebastian. Damien Gilliams, 1623 US 1, said he was disappointed with Council who normally ask for paperwork, thanked Ms. Simchick for requesting copies of the documents he provided to the Clerk, and then reviewed the documents citing the Vero Beach airport resolution which 4 Regular City Council Meeting March 12, 2008 Page Five requires an appraisal, said we have not done due diligence, that the appraiser we used was not MAI certified, discussed the Vero Beach lease, and requested the item be tabled. He asked if the City used the Economic Development Task Force, cited the Vero Beach appraisal dated August 2006 and a new updated appraisal. He suggested getting a percentage of the gross income. Curt LoPresti, owner of LoPresti Aviation, said his business was community based and family owned, gave a brief background on his family's involvement in aviation and talked about their efforts to encourage public participation and knowledge of their operations with Leroy's Cafe which is open Saturdays once per month, he said they were looking for a City large enough to have facilities they needed and looked at 73 different locales, and based 40% of their decision on a matrix of 31 items and 60% was based on their relationship with the City, citing the professionalism of the City Manager and Airport Director and noting his family is from a small fishing village in Italy and that he hopes they get a chance to become a part of this community. Mayor Coy called recess at 8:34 p.m. and reconvened the meeting at 8:54 p.m. All members were present. Ms. Simchick told Mr. LoPresti she looks forward to working with him but had questions and concerns, then asked who wrote the specs for the hangar and why it was not included in the packet. The City Manager said preliminary specs are based on requirements of LoPresti and the design for the building was not complete though there are concepts, noting design and construction would be the next step if the lease goes through. Ms. Simchick asked why the square footage was omitted from the contract and the City Manager advised her that Schedules A and B of the proposed lease contain square footage information and cited that Schedule A is the administrative building space and Schedule B is the hangar which will be 15,000 square feet. The City Clerk pointed out that Schedule B was on page 39 of the agenda packet. Ms. Simchick said she did not have page 39 and it was discovered that City Council packets were missing circle pages 36 through 40. The City Clerk had pages 37 (Schedule A) and 39 (Schedule B) copied for Council at this time for their review (see attached). She noted those pages do appear in the scanned version in Laserfiche so they were available to the public on the website. Mr. LoPresti responded to questions from Mr. Wolff relative to employment. Mr. Wolff said he was excited about the potential of the lease, had visited LoPresti in Vero Beach, was concerned packets were incomplete tonight, noted no one else is offering to come to the airport and we have to give benefit of doubt, noted there will be some extra planes but not a significant amount, and manufacturing won't be done in Sebastian. He said $285,000 is not a lot of money and would understand if Council cannot come to an agreement tonight because of the lack of information. Regular City Council Meeting March 12, 2008 Page Six Mayor Coy cited that previous Council almost rented out this property to someone else about two years ago for less than this and the LoPresti name was mentioned then, cited the need for economic development, noted the company has stated it pays $18.40 an hour which is a decent salary, said she visited the LoPresti operation in Vero Beach and talked to employees and they love working for this guy because he cares about his people. She said she too has many questions but is satisfied and is prepared to go forward and support the initiative this evening. In response to Mr. Neglia's questions about the grant money the City Manager said the grant money is a match and must be available to reimburse but that we should not get bogged down in finances because staff will come back to Council for that, that coming up with the $285,000 is a piece of cake and it will return to the City with the rent money and won't cost the general fund or citizens any money. In response to Mr. Neglia, Mr. LoPresti said currently he has three Sebastian residents out of 21 employees and he advertises for positions locally. The City Manager explained to Mr. Neglia that with Mr. LoPresti utilizing the hangar for which we received the grant, we are guaranteeing a source of payment. He then explained the rebate program whereby if they don't create jobs they don't get the rebate. In response to Mr. Neglia, the City Manager said LoPresti currently conducts afly-in and has an aviation open house program and they will continue that, they may use the City's fuel and bring in others who may use it as well, can't say there won't be more traffic because they are going to market the Fury in this location but we may be able to attract other small businesses who are coming to see the Fury and like what they see in Sebastian. Mr. Neglia said this is good for Sebastian but he has concerns. In response to Mr. Paternoster, the City Manager said there is zero revenue being generated now from the administration building, that there are expenses for maintenance and utilities in an approximate amount of $25,000 out there that could be covered by this, and that 60% of the revenues to the airport come from the Golf Course. Mr. Paternoster noted for the record that Mr. Gilliams stated on December 13, 2006 that $8 per square foot for this property is fair market value. He said he has spoken to Mr. LoPresti, Mr. Griffin and Mr. Minner and commended them for this agreement and was in a position to move forward this evening. Ms. Simchick said she was in agreement with this, but cannot commend staff, that this was the worst packet she had ever received in her years in government public records and it is her job to see that the citizens have full public view, noted we are missing four pages in our packets, the credit rating, the two loan options, the appraisal and FDOT information were not available until tonight nor was the modification by the City Attorney provided. She said she would like to see a packet next week with those documents. MOTION by Ms. Simchick and SECOND by Mr. Neglia to table to the next meeting where modifications can be applied to the lease and to our packet. 6 Regular City Council Meeting March 12, 2008 Page Seven Under discussion, Mr. Neglia said we need this but agreed with Ms. Simchick that we received papers at the last moment, however, 95% of this will be the same information at the next meeting and everything is good, i.e., the money, the prices, and he is inclined to approve tonight. The City Manager told Mr. Neglia if you approve and they execute they are obligated to make us whole and they can't back out. He then explained to Mr. Wolff that the lease is fifteen years by recommendation of FDOT though he had originally proposed ten years, and the economic development plan is ten years because once we have our match covered we stop incentives. He also explained Vero Beach has a higher fair market value because they are more attractive to businesses because of their amenities. The motion was discussed and it was advised that it should read "postpone" to the next meeting due to lack of information rather than table. Result of the roll call was as follows: Ayes: Simchick Nays: Coy, Neglia, Paternoster, Wolff Failed 1-4 MOTION by Mr. Paternoster and SECOND by Mr. Wolff to approve the economic development incentive agreement and lease agreement with LoPresti Aviation as modified by our City Attorney. Result of the roll call was as follows: Ayes: Coy, Neglia, Paternoster, Wolff Nays: Simchick Passed 4-1 14. CITY ATTORNEY MATTERS None. 15. CITY MANAGER MATTERS The City Manager reiterated that citizens must clean up after pets in parks. 16. CITY CLERK MATTERS The City Clerk apologized for the missing pages in the packet. 08.032 A. Citizen Budget Review Advisory Board 43-45 i. Direct City Clerk Re: Two At-Large and One Alternate Member Terms - Extend One Year Term Expirations from April 2008 to November 2008 or Re-Advertise for New Members for Review of 2008/2009 Budget (City Clerk Transmittal, Code Provisions) 7 Regular City Council Meeting March 12, 2008 Page Eight MOTION by Mr. Neglia and SECOND by Ms. Simchick to extend the two at-large positions through November on a voice vote of 5-0. Ms. Simchick appointed Charles Cardinale as her representative. 17. CITY COUNCIL MATTERS A. Ms. Simchick Ms. Simchick thanked everyone who participated and attended the Pelican Island Wildlife Festival. B. Mr. Wolff None. C. Mayor Coy 08.033 i. Potential City Hall Open House fno backup) Mayor Coy reported on her attendance at a board seminar with members of City boards and said in an effort to attract more people to come in and ask questions about boards, we could possibly arrange an open house on a Saturday and have the City Manager look into and also get input from the boards. Thanked everyone for the Pelican Island Wildlife Festival. To bring home how staff is aware of limited spending at this time, she reported when there was flooding under the childrens' activity tent, she sought help from public works staff member Bucky Gerber who told her he would help but could not spend any money, so she gave him $20 for bags of mulch. D. Mr. Neglia None. E. Mr. Paternoster Mr. Paternoster asked about the overgrown lot ordinance and the City Attorney said staff had met with USFW today and this issue was in the mix of discussions about scrub jays and they considered the proposed overgrown lot regulations a take. In response to Mr. Paternoster relative to constructing a sidewalk on Barber Street in the area of Park Place, the City Manager reported there is some money left from installing the sidewalk on Main Street and he planned to suggest spending gas tax revenues for operations and maintenance for the sidewalks, which will help free up the general fund for capital projects. He said this will also be in the written report he planned to provide by the end of next week. Mr. Paternoster reported on his public forum in Chambers on March 25, 2008 from 6 to 7 pm. Mayor Coy briefly updated Council on today's Land Acquisition Committee recommendation on the Corrigan land swap. 18. Being no further business, Mayor Coy adjourned the regular meeting at 10:22 p.m. Regular City Council Meeting March 12, 2008 Page Nine Approved at the March 26, 2008 Regular City Council Meeting. ~~ Andrea 8. Coy, Mayor ATTES Sally A. Maio, a1MC -City Clerk 9 TO: Members of Sebastian ouncil FROM: AI Minner, City Manag RE: LOPRESTI ECONO IC V OPMENT INCENTIVE PROPOSAL DATE: Wednesday, March , Tonight marks the culmination of negotiations that started well over two years ago with the LoPresti Corporation, when they originally sought Sebastian as a potential location for their enterprise. Much has transpired since that time and to avoid inundating you with paper and data before this evening; recently, Joe Griffin and I have done our very best to meet with each member of Council to bring you "up to speed" on the important decision which we are asking you to consider this evening. Over the last few days, however, the Office of the City Manager has received a few inquires of concern regarding the LoPresti Economic Development Incentive Proposal. These concerns are to be expected and have legitimacy if they are purely rooted in the vices of government economic incentives and the use of public dollars for public purpose. As an example, we recently experienced these arguments on a County level concerning Piper. Nevertheless, and in the sprit of full disclosure, I have prepared this statement to publicly review the history of the LoPresti transaction and address remaining public questions and concerns that have come to my attention. AIRPORT ADMINISTRATION FACILITIES HISTORY Upon my appointment as Sebastian City Manager, the City had already begun construction on the $2.2 million Airport Administrative Facility. With hindsight being 20/20, I was in a position to see the flaws in the Airport Administrative building concept. Having said that, I cannot say I would disagree in its vision catalyst; which was to spur development in the 512-Triangle. Instead, in September 2006, I petitioned City Council to consider using that facility as an economic development incubator. When Council supported this plan, the Engineering Department was moved to City Hall, opening one wing of the building. Efforts to market the wing began. Some negatively critiqued the actions that transpired. However, what I learned from the experience is that market value of the Airport Facility was not what I thought. Market value was lower. In the end, two formal RFPs were conducted to solicit rental of the facility. From the first RFP process, only one aviation and one non-aviation corporation submitted proposals. Those proposals offered, at or just under $8.00 per square foot. As efforts to market the wing transpired, so too did the City's negotiations with LoPresti. Negotiations continued to such an extent that more effort was placed into what my office determined a more attainable and win/win scenario. In other words, as time transpired, the LoPresti option presented itself to be the best alternative because if it came to fruition, the most goals would be obtained. Hence, my direction to staff was to work to secure a proposed lease with the LoPresti Corporation where the City could (1) boast job creation; (2) bring target industry to Sebastian; (3) solve the Airport Administration Facility riddle; (4) positively use FDOT grant money without increasing air traffic; and, (5) keep the City financially whole. On November 27, 2007, I submitted to this Council a Hanger Performa that outlined several ways to use FDOT grant money. The core message in that correspondence was to generate interest in the concept of using FDOT money to construction a speculative building. This idea would minimize the public investment needed to create economic development incentives for the City. Shortly thereafter, the spec-building concept was re-proposed to the LoPresti Corporation and their interest became increasingly strong, leading to the lease and rebate question before you tonight. PUBLIC QUESTIONS Succinctly and direct as possible, that history brings Council to the question at hand. In getting to this position, Joe Griffin and I have done everything we can to keep Council equally informed on this matter, both in writing and verbally. On Tuesday, I provided a written correspondence that summarized all one-on-one verbal communication with Council. Still on Tuesday, I was made aware of a number of questions and concerns coming from the public which merit additional clarification. In a question/answer format, I will respond to those concerns: IS THE LOPRESTI CORPORATION EXPANDING OR DOWNSIZING? The LoPresti Corporation is expanding. Currently, LoPresti employs 15 and operate in a combination hanger/administrative facility that shows the sign of age and wear/tear. They seek a location that will promote a new aviation image and Kurt LoPresti is here tonight to talk about their decision making matrix and why they picked Sebastian. So, as the LoPresti Corporation takes on more work -which is the fabrication of aircraft modifications such as cowlings, they plan to expand by hiring 30 people, bringing their total employment number to 45. Based on the proposed economic development rebate, their rent will receive an annual $8,400 reduction for up to ten years, if they employ 45 people within 9 months of the commencement of the proposed lease (lease start January 2009 -job creation deadline September 2009). These jobs are not intended and should not relate to "increasing" air traffic at the airport. Rather, these are aircraft fabrication jobs, which is a Florida target industry. THE ARTICLE IN THE PRESS JOURNAL REPORTED COMMITMENTS WITH VERO BEACH UNTIL 2021. WHO WILL HONOR THE TERMS OF THAT AGREEMENT AND WHO IS RESPONSIBLE FOR DEFAULT? DOES THEIR PAST CORPORATE RECORD REFLECT ON HOW THEY WILL PROCEED IN THE FUTURE? Obviously if the LoPresti Corporation felt staying in Vero Beach was in their best interest they would stay. This, in my opinion, does not reflect on LoPresti, nor does it reflect on the Airport and City of Vero Beach. LoPresti is familiar with their obligations in Vero Beach and are bound contractually to handle those responsibilities. They will also be bound to fulfill any obligations they agree to in Sebastian; making it is reasonable to assume, that if LoPresti signs another lease, they have their business risks covered. HOW CAN THE CITY COME UP WITH $1.4 MILLION TO BUILD A HANGER AND WHY WOULD THIS HANGER BE GIVEN TO LOPRESTI? This proposal finances the construction project with two FDOT grants. These grants are 80/20 in format. Meaning, that for every dollar received by the state, the city matches it with $0.20. To date, the City Council has two approved FDOT facility grant agreements in the amounts of $800,000 and $625,000. By combining these grants $1.425 million in funding is available, requiring a local match of $285,000. With the $1.425 million and assuming approval of the lease, staff will shortly be proposing the construction of a 15,000 square foot facility. Council action will be required on execution of design and construction agreements. However, before we get to that step, the lease should be approved so not to put the City in a poor financial position. At the end of construction, scheduled for January 2009, LoPresti will lease the facilities. LoPresti will not own the facilities. The facilities proposed are being rented. The price -the Airport Wing at $8.00 per square foot and the hanger at $2.00 per square foot, totaling a new revenue stream for the airport of $44,400. Based on incentive credits, the annual payment may be reduced to $36,000 per year. There is also a CPI inflator in the lease. As a side note, the LoPresti revenue may prove to be one of the largest contributors to the Airport Fund. Currently, the Airport Fund generates approximately $300,000 in rental revenues. Of these funds, nearly 60% comes from the golf course. Next the Philipson developments and Sheltair T-Hangers generate a large sum of revenue. At $36,000 annually, the LoPresti revenue is significant. However, because of the financial position of the airport, making the FDOT grant match is difficult. To address that, a plan has been presented to borrow the funds using the new LoPresti revenue as a cash vehicle. Also, as of late yesterday, a secondary plan was realized that may bring immediate cash to the Airport, if some financial priorities are changed. SUMMATION In closing, the Office of the City Manager continues to support the recommendation that Council approve the Economic Development Rebate and Lease with LoPresti. However, in answering additional direct questions, this proposal is rooted in two philosophical arguments. Should Council opt not to approve the lease, your decision can reasonably be rooted in the following: WHAT IS FAIR MARKET VALUE AND IS THE CITY GETTING A FAIR DEAL? It can be interpreted that LoPresti is getting a deal below market value. Fair market value analysis can be disputed. No matter the source, an appraisal on fair market value is an opinion on market conditions. Real "fair market value" is what an entity can actually realize. Market value was not easy to determine. For example, typical commercial or professional space may pay more than $8.00 per foot, but those locations are in primarily commercial corridors such as US 1 or Sebastian Boulevard. While the airport is attractive, experience has proven that non- aviation business interest has been limited. If this proposal is rejected based on failure to achieve a "perceived" market value, I would offer these counter arguments to concerns of "undercutting" the City: 1. Through the RFP process conducted, as recently as last year, target industry did not pursue leasing the Administrative Complex for an amount over $8.00 per Square Foot. 2. Common Area Maintenance (CAM) costs already exist and are paid by the City in terms of ground maintenance, building maintenance and utilities. This is a hidden cost that is already paid by the City. Why not include it as a portion of the incentive value? Further, the LoPresti lease does require apro-ration of utility expenses. Understand, that utilities and other maintenance costs will not dramatically increase when the building becomes filled. Having said that, this proposal starts to reduce our current CAM expenses. 3. In preparing the LoPresti agreement, the basic concept was to use the tools available to provide business incentive. Those tools were FDOT grant money and the Administrative Wing. Therefore, the guiding force to hold harmless the City was to: a. Keep the City financially whole; b. Keep the FDOT grant assurances safe; and, c. Structure an incentive package that would entice target industry. All of the premises in these points and sub-points have been met and fairly address concerns of underrating market value. In my opinion, the City is financially and operationally protected. Therefore, the suggestion is made that market concerns are fairly and reasonable addressed. SHOULD THE CITY "STEAL" BUSINESS FROM A NEIGHBORING COMMUNITY IN THE NAME OF ECONOMIC DEVELOPMENT? In closing, it is reasonable to question government's role in business development. If its not fair to steal industry from community to community, is it fair to "steal" it from state to state? Further, one could argue that anyway you split the hair; economic development is really spending public dollars for private purpose. In my experience, the economic development game is cut throat and pits community vs. community and state vs. state. However, the overriding universal belief is that the concept of economic development aims at targeting specific industry, providing incentive to encourage industrial expansion, retention or relocation; thereby, employing people, creating development; and, stimulating the local economy. On a local level, this process happens in selected incremental steps. Toward that endeavor, Section 166 of Florida Statutes, under home rule powers, provides economic development authority to municipal governing bodies. At the end of the day, these questions are before you this evening in the context of the LoPresti Lease. Page 1 of 2 Joseph Griffin From: Mainardi, Rebecca [Rebecca.Mainardi@dot.state.fl.us] Sent: Monday, March 03, 2008 4:15 PM To: Alfred Minner Cc: Notz, Nicole; Joseph Griffin; Merritt, Larry Subject: RE: Approval letter draft AI - We have reviewed your below request; however, do not feel that this language is necessary in the FDOT response for 2 reasons. 1. The City is providing these funds as part of an economic development program, they are NOT coming from airport funds. 2. This information does not have any bearing on our decision to allow the projects we are funding to move. forward. We acknowledge this information is part of your proposal and appreciate you making us aware of your intentions. Call me if we need to discuss further. Becky Mainardi Aviation & Rail Section Leader Office of Modal Development 3400 W. Commercial Blvd. Fort Lauderdale, FL 33309 (954) 777-4404 From: Notz, Nicole Sent: Monday, March 03, 2008 3:56 PM To: Mainardi, Rebecca Subject: FW: Approval letter draft Here it is. Nicole FDOT Aviation (954) 777-4497 (9541777-3497 From: Alfred Minner [mailto:aminner@CityOfSebastian.org] Sent: Monday, March 03, 2008 3:34 PM To: Notz, Nicole Subject: Approval letter draft Nicole: I have been in contact with Joe in reference to our ongoing use of FDOT grant funds for the construction of an "Economic Development" hanger. The FDOT letter is very important in terms of making sure all issues between the City and the State are clear and "fully disclosed." Therefore, I have asked and am requesting that the additional point be added to your letter with LoPresti Aviation qualifying for the City's separate economic development incentives. Below is some wording from Joe. This would work great for us. Thank you for your attention to this matter. Please contact me at your convenience if you have any questions on this request. I can be reached 772-388-8200 3/4/2008 Page 2 of 2 AI Minner City Manager City of Sebastian -----Original Message----- From: Joseph Griffin Sent: Monday, March 03, 2008 11:17 AM To: Alfred Minner Subject: FW: Approval letter draft New bullet point we want added would read: "It is understood that the City and LoPresti Aviation will enter into a seperate economic development agreement That agreement would provide fora $200 per year per employee payment to LoPresti from the city for job creation The maximum amount payable to LoPresti would be $8400 per year for_the first_10_years."... -----Original Message----- From: Notz, Nicole [mailto:Nicole.Notz@dot.state.fl.us] Sent: Friday, February 29, 2008 1:57 PM To: Joseph Griffin Subject: Approval letter draft Is there anything that needs to be added that your board will be looking for? Letter will go in the mail on Monday. I have to get it proofed. Nicole Notz Aviation Coordinator Florida Department of Transportation 3400 West Commercial Boulevard Ft. Lauderdale, FL. 33309 (954)777-4497 (954)777-3497 3/4/2008 March 5, 2008 Mr. Joe Griffin Airport Manager Sebastian Municipal Airport 1225 Main Street Sebastian, FL 32958 Dear Mr. Griffin: Subject: Letter of Approval Lopresti Development The Florida Department of Transportation has reviewed your proposal to attract Lopresti Speed Merchants to the Sebastian Municipal Airport. The FDOT approves this proposal and the following requested changes to FDOT funded projects: Airfield Access Road (407706-1-94-01) -This grant was used to design the access road on the westside of the airport. These plans will be shelved and the remaining $655,262.00 will be used to widen, strengthen and landscape the existing entrance road up to the infield area on the eastside of the airport. Also included is the extension of utilities to this area as discussed in the Technical Memorandum from LPA (2/26/2008). There is money allocated in the FDOT Work Program in 2011 to construct the west access road. 2. Construct Hangars (409863-1-94-01) and Construct T-Hanctars (418164-1- 94-01 - To be used to construct a large hangar for Lopresti Speed Merchants contingent upon their written agreement to pay fair market value as assessed by a certified appraisal for the space. We will require the signed lease agreement before we issue a notice to proceed for these grants. All terms, conditions and assurances of State funded agreements are in effect for 20 years. We suggest that this be the term of the lease. The grants will continue to be funded at the current 80% Department 20% Agency and we will forward a supplemental agreement to change the description of 418164- 1-94-01 to Construct Hangars. 3. Request for Proposals for the FBO and Fuel Farm have not produced any viable customers. The FDOT agrees with your request to lease a wing of the administration building to Lopresti as long as it is leased for fair market value. Mr. Griffin March 4, 2008 Page 2 All of these projects are depicted on the draft Airport Layout Plan (ALP) for Sebastian Municipal Airport. Our notice to proceed will be issued once the ALP is officially approved by FDOT Central Office. If any additional information is required, please contact me at (954) 777-4497 or e-mail at nicole.notz@dot.state.fl.us. Sincerely, Nicole Notz Aviation Coordinator Office of Modal Development NN/rm/nn Cc: Nancy Ziegler, District Modal Development Administrator Rebecca R. Mainardi, Aviation & Rail Section Leader File C:\Documents and Settings\bbrooke\Desktop\Lopresti approval.docx MARKET RENT ANALYSIS MARKET RENT ANALYSIS OF ADMINISTRATION BUILDING'S "PUBLIC WORKS WING" AND PROPOSED AIRPLANE HANGER LOCATED AT SEBASTIAN MUNICIPAL AIRPORT 202 AIRPORT DRIVE, EAST SEBASTIAN, FLORIDA 32958 PREPARED FOR MR. JOE GRIFFIN, AIRPORT DIRECTOR SEBASTIAN MUNICIPAL AIRPORT 202 AIRPORT DRIVE, EAST SEBASTIAN, FLORIDA 32958 DATE OF ANALYSIS FEBRUARY 15, 2008 PREPARED BY ADAM B. PREUSS CERTIFIED GENERAL APPRAISER RZi991 ADAM PREUSS APPRAISAL SERVICES, INC. 936 U.S. HIGHWAY 1, SUITE A SEBASTIAN, FLORIDA 32958 (772) 589-8915 /(772) 589-8916 fax www.PreussAupraisals.com Residential ^ Commercial ADAM PREUSS A/~PRA/SAL SERV/~ES_ /nc. State Certified Real Estate Appraisers 93G U.S. Highway 1, Suite A, Sebastian, Florida 32958 Phone: (772) 589-891 5 Fax: (772) 589-891 G Website: PreussAppraisals.com February 15, 2008 Attention: Joe Griffin, Airport Director Sebastian Municipal Airport 202 Airport Drive; East Sebastian, Florida 32958 Re: Market Rent Analysis Dear Mr. Griffin, Pursuant to your request, I have personally inspected and concluded an "as is" market rental rate for the "Public Works Wing" of the Sebastian Municipal Airport Administration Building as of February 15, 2008. In addition, I have concluded a "subject to" market rental rate for the Proposed Airplane Hanger which is to be constructed approximately 75 feet southwest of the above referenced "Public Works Wing" as of February 15, 2008. These two facilities are further described on the following page. As a result of my inspection of the "Public Works Wing" facility and the plans for the Proposed Airplane Hanger, investigation into those matters that influence market rent, and by virtue of my experience and training, I have formed the opinion that the respective "as is" and "subject to" market rental rates for the two above reference facilities, effective February 15, 2008 are: SEBASTIAN MUNICIPAL AIRPORT FACILITY ANNUAL RENTAL RATE "Public Works Wing" $8.00 Per Square Foot Proposed Airplane Hanger $2.00 Per Square Foot The market rental rate opinions expressed in this report are contingent upon the attached special assumptions, general assumptions and limiting conditions, as well as a typical marketing time of three to six months. It has been a pleasure assisting you. If I may be of further service to you in the future, please do not hesitate to contact me. Respectfully submitted, Adam Preuss Appraisal Services, Inc. Adam B. Preuss Certified General Appraiser RZ1991 PROPERTY DESCRIPTION "PUBLIC WORKS WING" The Sebastian Municipal Airport Administration Building has a central common area with four various sized, rectangular-shaped wings protruding off this central area. The southwestern wing, also known as the "Public Works Wing," consists of approximately 1,734 square feet. The market rental rate concluded for this facility also includes the shared use of the central common area. General exterior construction of this facility includes concrete block walls with stucco and hardiboard siding, fixed pane aluminum windows and a metal roof. The interior floor plan consists of a standard width hallway running the entire length of the wing with individual offices and a small two-fixture restroom situated along both sides of the hallway. Interior construction includes drywall, tongue and groove wood ceiling in the hallway and acoustical the drop ceiling with fluorescent lighting in the individual offices. Other features include commercial grade carpet and the flooring, solid wood interior office doors with anauto-locking security entrance door to each wing and individual central heating, ventilation and air-conditioning systems for each wing. PROPOSED AIRPLANE HANGER A separate market rental rate was also concluded for the Proposed Airplane Hanger, which is to be constructed approximately 75 feet southwest of the "Public Works Wing." Per Joe Griffin, the Airport Director, this facility is to be generally square-shaped, containing approximately 15,000 square feet. Construction is said to be steel frame with metal siding. SCOPE OF WORK The problem to be solved is the credible determination of market rental rates for the two facilities outlined herein and located at the Sebastian Municipal Airport for the client's use. Rental rates for both local commercial office space and airplane hangers were surveyed (see the following spreadsheet) and their relative differences with regards to location, visibility/exposure, size, quality and condition were analyzed. The surveyed data was gathered from the Realtors Association of Indian River County's Multiple Listing Service as well as interviews with various market participants. The results of this analysis were reconciled rental rates for the two facilities that are the subject of this report. Thus, the "as is" market rental rate for the "Public Works Wing" of the Sebastian Municipal Airport Administration Building was reconciled at $8.00 per square foot, while the "subject to" market rental rate for the Proposed Airplane Hanger was reconciled at $2.00 per square foot. a w ~ o O c o o F"~ ~ ~ M O O H aaW!! E/-3 F/-1 6i9 W `"' M O O O ~ W [~ N M O ~t ~ z V1 ( ] O ~n O o0 ~ c ~ ~ ~ ~ ~ ~ o 0 a 0 0 a a x H z ~ o ~ o o`Oo 0 iri H ~ ~ ~ 69 ~ 69 0 bg ~ ~ z O c, •~ `r' .~ ~ ~ ~ ~ ~ ~ ~ a a~ z o ~ ~, ~ ~ U ~ ~ ~ ~ ~ ~ ~ ~ b ~ ~ a ~ >, ~ ~ ~ 3 ~ i.~ O ~" .~ ~ '~' ~"' ~ ~ ~ ~ V ~ ~ ~ ~ ~ ~ ~ ~ .Q V~ ~" C/~ l\ a ~ ~ M ~ O ~ ° ~ W ~ ~ ~ ~ r-+ O 0 Q~ 0 ~ 00 N l~ z ~ 6 9 6~~9 6~9 b~r4 W ~ " O O ~ ~ O O O ~ ~ d' N ~O ~ W N ~ ~ ~ O r; O .-~ oo .-. N ,-~ ~ z rr^^ W ~ ~ ~ ~ ~ ~ c ~ ~ ~ ~ ~ ~ ~ o ~ ' ~' ~ H 0 ~ 0 ~ 0 ~ 0 ~ 0 ~ ~..~ a a z ~i oo l~ o~ v~ ' Z (~ ~-+ b4 Q1 69 M 64 lp 69 V ) 64 ~ z W ~' ~ o ~ ~ x ~ x ~ > .~ ~ o x ~ H ~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ 0 0 0 ~ ~ ~ ~ O a ~ ~ ~ d . ~ . ~ ~ ~ .Q. ~ .Q, ~ .¢, ~ .a it bA ~ ..U. ~i .U .~ Gr" .~ ~ ~ r /-, ~ r /~ x .~ ~ ~ ~ ~ ~ C~ U N U N U N U N p ' ~ L~ W G~1 0.'1 ~ ~ N N N N a > ~ > ~ ~ SUBJECT PHOTOS View of the Sebastian Municipal Airport Administration Building -Facing West View of the Central Common Area -Facing West SUBJECT PHOTOS View of the "Public Works Wing" -Facing Northwest View of the "Public Works Wing" -Facing East SUBJECT PHOTOS ~:~.~ View of the Hallway in the "Public Works Wing" ~;,;~_. View of a Typical Office in the "Public Works Wing" View of the Proposed Airplane Hanger Site -Facing Southwest AIRPORT LAYOUT PLAN Pt~~ ~~~~~ ~~rY 1 a~nz 1=1~je~ LOCATION /AERIAL MAP Sebastian, FL 32958 SPECIAL ASSUMPTION • The "subject to" market rental rate concluded herein for the Proposed Airplane Hanger is based on the hypothetical condition that the building has been constructed per plans and specifications in a professional manner as of the date of this report. GENERAL ASSUMPTIONS 1. No responsibility is assumed for the legal description provided or for matters pertaining to legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated. 2. The property is appraised free and clear of any or all liens or encumbrances unless otherwise stated. 3. Responsible ownership and competent property management are assumed. 4. The information furnished by others is believed to be reliable and a reasonable effort has been made to verify all such information; however, no warranty is given for its accuracy. 5. All engineering studies are assumed to be correct. The plot plans and illustrative material in this report are included only to help the reader visualize the property. 6. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or for obtaining the engineering studies that may be required to discover them. 7. It is assumed that the property is in full compliance with all applicable federal, state, and local environmental regulations and laws unless the lack of compliance is stated, described, and considered in the appraisal report. 8. It is assumed that the property conforms to all applicable zoning and use regulations and restrictions unless nonconformity has been identified, described and considered in the appraisal report. 9. It is assumed that all required licenses, certificates of occupancy, consents, and other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based. 10. It is assumed that the use of the land and improvements is confined within the boundaries or property lines of the property described and that there is no encroachment or trespass unless noted in the report. 11. Unless otherwise stated in this report, the appraiser did not observe the existence of hazardous materials, which may or may not be present on the property. The appraiser has no knowledge of the existence of such materials on or in the property. The appraiser, however, is not qualified to detect such substances. The presence of substances such as asbestos, urea-formaldehyde foam insulation and other potentially hazardous materials may affect the value of the property. The value estimated is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for such conditions or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired. GENERAL LIMITING CONDITIONS 1. Any allocation of the total value estimated in this report between the land and the improvements applies only under the stated program of utilization. The separate values allocated to the land and buildings must not be used in conjunction with any other appraisal and are invalid if so used. 2. Possession of this report, or a copy thereof, does not carry with it the right of publication. 3. The appraiser, by reason of this appraisal, is not required to give further consultation or testimony or to be in attendance in court with reference to the property in question unless arrangements have been previously made. 4. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser, or the firm with which the appraiser is connected) shall be disseminated to the public through advertising, public relations, news, sales, or other media without the prior written consent and approval of the appraiser. 5. Acceptance of and/or use of this report constitutes acceptance of the foregoing General Assumptions and Limiting Conditions. CERTIFICATION OF APPRAISER I, Adam B. Preuss, certify that, to the best of my knowledge and belief: • The statements of fact contained in this report are true and correct. • The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and is my personal, impartial, and unbiased professional analyses, opinions, and conclusions. • I have no present or prospective interest in the property that is the subject of this report, and no personal interest with respect to the parties involved. • I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. • My engagement in this assignment was not contingent upon developing or reporting predetermined results. • My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. • My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) adopted by the Appraisal Standards Board of the Appraisal Foundation. • I have made a personal inspection of the property that is the subject of this report and no one provided significant real property appraisal assistance to the person signing this report. • As of the date of this report, I have completed the requirements of the continuing education program of the State of Florida. ~~~~ Adam B. Preuss Certified General Appraiser RZ1991 Schedule "A" Lease Agreement between the City Of Sebastian and LoPresti Speed Merchants, Inc. 1. Leased premises shall include a `wing' at the Sebastian Municipal Airport Administration Building currently known as the "Public Works Wing." This space is approximately 1700 square feet, more or less. 2. A 10' X 10' office adjoining the lobby area of the administration building is included. Total leased space is I &00 square feet. 2. Premises are furnished, as is. Prior to occupancy, the Landlord and Tenant will exchange an inventory of the fitrnishings that will include the condition of said furnishings. 3. Utility charges shall be prorated according to square foot usage. 4. Common Area Maintenance (CAM) shall be at no charge to the Tenant. 5. Lobbylreception area shall be considered acommon/shared space with other building tenants. 6. Tenant shall have priority use of a locked Conference Room/Library adjacent to the lobby of the administration building with appropriate notice to the Landlord. C3J Schedule "B" Lease Agreement between the City Of Sebastian and LoPresti Speed Merchants, Inc. Concerning Hanger Operations The City Of Sebastian shall lease to LoPresti Speed Merchants, Inc. a 15,000 square foot hanger located at the Sebastian Municipal Airport, adjacent to the Airport Administration Building. It is understaod that the hanger facility shall be used in conjunction with the manufacturing operations of LoPresti Aviation interests. The City Of Sebastian retains ownership of the hanger facility throughout the term of the lease. 2, The lease rate shall be at a rate as describe in section 4 ofthe lease agreement. It is understood that LoPresti will provide adequate insurance on all aspects relating to its manufacturing hanger operations. In addition, LoPresti will provide adequate liability and property damage insurance coverage on the city- owned hanger facility. LoPresti Speed Merchants, Inc. will hold harmless the City Of Sebastian of any claim or liability relating to LoPresti's hanger operation. ~9)