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Date
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October 23, 2006
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Agenda
Item No. 55 Roll
Call No. 06- Communication No. 06-663 Submitted by: Richard A. Clark, City Manager |
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AGENDA HEADING:
Selection of Lincolnway Energy, LLC as the Preferred
Redeveloper and Vision Fuels Des Moines, LLC as the Alternate Redeveloper for
Disposition Parcel No. 1 in the Des Moines Agrimergent Technology Park in the
SE Agribusiness Urban Renewal Area
SYNOPSIS:
Council is requested to select Lincolnway
Energy, LLC (Richard Brehm, CEO/President, 59511 West Lincoln Highway, Nevada,
IA 50201) as the preferred redeveloper
of Disposition Parcel No. 1 in the Des Moines Agrimergent Technology Park and
to authorize the City Manager to enter into contract negotiations with the
company. The 166-acre site is located
south of Vandalia Road and west of SE 43rd Street. Lincolnway Energy, LLC has proposed to
construct a 100-million gallon, dry mill fuel ethanol production facility on
104 acres to be completed in Stage I within 16 months and to purchase an
additional 8.2 acres for potential co-product development to be completed in
Stage II by July 1, 2012. The City
would retain approximately 43.6 acres of prime land for future development at
the SE 43rd Street and Vandalia Road intersection and 10 acres for a
regional storm water detention basin.
The company has pledged to create 56 full-time, permanent jobs within
three months after a Certificate of Occupancy has been issued and an additional
nine (9) jobs within 21 months thereafter.
The annual payroll, including bonuses, would be $2.8 million.
If
the City Manager is unable to finalize an agreement with Lincolnway Energy,
LLC, Council is requested to authorize the City Manager to negotiate with
Vision Fuels Des Moines, LLC (David W. Walters, President, 2641 86th
Street, Urbandale, IA 50322) as the
alternate redeveloper. Vision Fuels Des
Moines, LLC has proposed to construct a 110-million gallon, dry mill fuel
ethanol production facility on 118 acres to be completed in Stage I within 14
months and to purchase an additional 38 acres for Stage II development, which
could include a bio-diesel facility.
The company has pledged to create at least 45 full-time, permanent jobs
within three months after a Certificate of Occupancy has been issued and up to
an additional 35 jobs within 21 months thereafter. The minimum projected annual payroll would be $2.2 million.
FISCAL IMPACT:
Complete fiscal impact information will
be provided after the contract has been negotiated. Lincolway
Energy, LLC will be held to the following, as specified in its competitive
proposal.
Amount:
N/A
Funding
Source:
1. The City will not provide tax abatement for the Stage I development. The minimum taxable value on 104 acres is estimated at $33.8 million, which would yield approximately $1.6 million in tax revenue annually to local taxing jurisdictions. Local taxpayers will save nearly $4.8 million by not providing tax abatement based on the three-year 100% schedule, even though the project is located in an urban revitalization area.
2. If the Stage II development does not achieve at least $10.75/square foot in taxable value, the City will not provide tax abatement for it. The redeveloper shall contractually agree to a minimum taxable value on 8.2 acres that is projected at $2.9 million. This would generate about $131,300 in annual tax revenue to local taxing jurisdictions. Local taxpayers could save nearly $400,000 by not providing tax abatement based on the three-year 100% schedule.
3. Lincolnway Energy, LLC will pay the City the established Fair Market Value land price of $14,000/acre, which equates to nearly $1.6 million. The City will remit $527,333 (one-third of the funds) to the Des Moines Water Works because it contributed this proportionate share to acquiring the land in May 2000.
4. The City will retain 43.6 acres of prime land
located at the entrance to the Park at SE 43rd Street and Vandalia
Road. When this acreage is developed,
it is projected to command at least $15.2 million in taxable value or yield
about $697,900 in taxes annually.
5. Lincolnway Energy, LLC will contractually
agree to contribute $2 million to the Land Assemblage and Infrastructure
Fund. The City will use these funds for
acquisition, relocation activities and demolition of blighted properties and/or
investment in regional storm water management and other infrastructure in the
Park.
ADDITIONAL INFORMATION:
Council established October 6, 2006 by 1 p.m. as the date for the Office of Economic Development to receive proposals for the purchase and redevelopment of all or part of Disposition Parcel No. 1 in the Des Moines Agrimergent Technology Park. Des Moines Ethanol, LLC (Broin Companies, Larry Ward, Chairman, 2209 E. 57th Street North, Sioux Falls, SD 57104), Lincolnway Energy, LLC (Richard Brehm, CEO/President, 59511 West Lincoln Highway, Nevada, IA 50201), and Vision Fuels Des Moines, LLC (David W. Walters, President, 2641 86th Street, Urbandale, IA 50322) have submitted competitive proposals. Des Moines Ethanol, Lincolnway Energy and Vision Fuels Des Moines have proposed to construct 60-million gallon, 100-million gallon and 110-million gallon, dry mill fuel ethanol production facilities respectively on all or part of Disposition Parcel No. 1.
On October 11, 2006, the Good Neighbor Task Force evaluated each proposal. The seven-member Task Force is comprised of representatives from the Laurel Hill, Fairground Neighbors, Capitol East, Indianola Hills and Pioneer/Columbus neighborhoods as well as a business from the SE Agribusiness Enterprise Zone Association and the City of Pleasant Hill. Council tasked the Good Neighbor Task Force with submitting its recommendation and rank order of proposals to the Urban Design Review Board and to itself as part of the review process. The Task Force awarded 10 points (highest score and maximum number of points) to Lincolnway Energy, LLC; 5 points to Des Moines Ethanol, LLC; and 2 points to Vision Fuels Des Moines, LLC.
The Good Neighbor Task Force selected Lincolnway Energy, LLC as the top competitor because (1) they have the most experienced project team, (2) ethanol production is their core competency, and they have a firsthand understanding of the issues involved in building and operating a facility, (3) they have a well-balanced, locally-owned investor base whereby many shareholders make decisions rather than a few large investors, (4) their building and site plans are the most attractive, (5) they have a very efficient site layout and use less acres than the other projects, which allows the City to seek higher density development on the prime remaining 40+ acres, and (6) they are interested in being in the ethanol business for the long term and in keeping Iowa at the forefront of ethanol-based fuel technologies.
On October 12, 2006, the Technical Review Committee evaluated each proposal. The Committee is comprised of City staff from the Office of Economic Development, Community Development Department and Engineering Department. Staff also recommended that Lincolnway Energy, LLC be selected as the preferred redeveloper for many of the above-referenced reasons. In addition, the company has the financial capacity to raise the debt and equity capital for its nearly $200 million facility. It is positioned to attain potentially a Gold or Platinum Leadership in Energy and Environmental Design (LEED) rating from the U.S. Green Building Council. This will be the first industrial LEED-certified project in Des Moines. Furthermore, Lincolnway Energy, LLC will contribute $2 million to the Land Assemblage and Infrastructure Fund to reinvest in the Park.
On October 19, 2006, the Urban Design Review Board unanimously recommended that Council select Lincolnway Energy, LLC as the preferred redeveloper and Vision Fuels Des Moines, LLC as the alternate. Board members stated that Lincolnway Energy, LLC had the best site design, which would allow for future denser development of the remaining 40+ acres, and respected the original Des Moines Agrimergent Technology Park plan that Council adopted in December 2001. The team was also well experienced in constructing, owning and operating an ethanol production facility. The Urban Design Review Board commented favorably on Vision Fuels Des Moines, LLC’s and Des Moines Ethanol, LLC’s proposals. They appreciated the time, effort and resources each development team invested.
The remaining aspects of the competitive process are as follows:
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Date/Time |
Action |
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In late October/ Early November 2006 |
City staff negotiates the contract with the redeveloper. |
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November 20, 2006 5:00 p.m. Local Time |
City Council declares its intent to execute the contract and solicit competing proposals. |
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November 21, 2006 |
City publishes notice and mails request for competing proposals. |
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December 15, 2006 |
All competing proposals are due to the Office of Economic Development. |
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December 18, 2006 |
City Council approves the contract if there are no competing proposals. |
Lincolnway Energy, LLC’s project will be a hallmark and a long-term community asset for the Des Moines Agrimergent Technology Park. It most vividly depicts the vision the City Council established for the area and will act as a catalyst to attract future high quality development.
PREVIOUS COUNCIL ACTION(S):
Date: 8/21/06
Roll Call Number: 06-1713
Action: Resolution
for Competitive Process and Minimum Development Requirements and Competitive
Criteria for the redevelopment of Disposition Parcel No. 1 in the Des Moines
Agrimergent Technology Park in the SE Agribusiness Urban Renewal Area. (Council
Communication No. 06-529) Moved by Kiernan to approve.
Motion Carried 5-1.
Date: 7/10/06
Roll Call Number: 06-1368
Action: From
Vision Fuels, LLC regarding proposed ethanol facility in the Des Moines
Agrimergent Technology Park. (Council
Communication No. 06-401) Moved by Brooks to receive and file
letter and refer to the City Manager for further action. Motion Carried
5-2. Absent: Kiernan and Vlassis.
Date: 4/24/06
Roll Call Number: 06-799
Action: From
Lincolnway Energy, LLC regarding a proposed ethanol facility in the Des Moines
Agrimergent Technology Park. (Council
Communication No. 06-214) Moved by Brooks to receive and file
letter and refer to the City Manager for further action. Motion Carried
7-0.
Date: 12/3/01
Roll Call Number: 01-3577
Action: On proposed Des Moines Agrimergent
Technology Park Plan, generally between SE 30th and SE 43rd Streets in vicinity
of Vandalia Road. (Council
Communication No. 01-599) Moved by
Brooks to adopt. Motion Carried 6-1. Absent: McPherson.
Date: 12/6/99
Roll Call Number: 99-3720
Action: Approving Offer to Purchase approximately
166 acres owned by Archer Daniels Midland, (Council
Communication No. 99-512) Moved
by Brooks to adopt. Motion Carried 5-2. Absent: Daniels and McPherson.
BOARD/COMMISSION ACTION(S):
Date: 10/19/06
Roll Call Number: N/A
Action: Urban Design Review Board recommended
selection of Lincolnway Energy, LLC as the preferred redeveloper and Vision
Fuels Des Moines, LLC as the alternate redeveloper of Parcel No. 1 in the Des
Moines Agrimergent Technology Park.
Date: 8/15/06
Roll Call Number: N/A
Action: Urban Design Review Board recommended
approval of the Minimum Development Requirements and Competitive Criteria for
Disposition Parcel No. 1 in the Des Moines Agrimergent Technology Park.
ANTICIPATED ACTIONS AND FUTURE COMMITMENTS:
On December 18,
2006, the City anticipates entering into the urban renewal contract.