BAKER,DONELSON. September 9, Impact Innovations, Inc., ("Impact") PILOT Application. Dear Reid:

Transcription

1 BAKER,DONELSON BEARMAN, CALDWELL 8c, BERKOWITZ, PC 2000 FIRST TENNESSEE BUILDING 165 MADISON AVENUE MEMPHIS, TENNESSEE PHONE: FAX: I LODIE V. BIGGS Direct Dial: Direct Fax: Address: Ibiggs@bakerdonelson.com September 9, 2016 VIA HAND DELIVERY & (WITH ATTACHMENTS) Mr. Reid Dulberger Economic Development Growth Engine Industrial Development Board of the City of Memphis and County of Shelby, Tennessee 100 Peabody Place, Suite 1100 Memphis, Tennessee Re: Impact Innovations, Inc., ("Impact") PILOT Application Dear Reid: Enclosed please an original Impact PILOT Application to the Economic Development Growth Engine Industrial Development Board of the City of Memphis and County of Shelby, Tennessee ("EDGE") and a check in the amount of $3,000 for the PILOT Application fee. Impact is requesting that this PILOT Application be heard at the EDGE's September 21st meeting. Impact previously provided the majority of the Application information to your office last month, and we are available at any time to answer your questions and/or discuss. Thank you for your cooperation on this project. Sincerely Lodie V. Biggs Enclosures A LABAMA FLORIDA GEORGIA LOUISIANA MISSISSIPPI TENNESSEE TEXAS WASHINGTON, D.C.

2 Joss PILOT PAYMENT-IN-LIEU-OF-TAX APPLICATION ECONOMIC DEVELOPMENT GROWTH ENGINE FOR MEMPHIS & SHELBY COUNTY 100 Peabody Place, Suite 1100 Memphis, TN (901) Please submit your application online at

3 APPLICATION FOR JOBS PILOT ECONOMIC DEVELOPMENT GROWTH ENGINE INDUSTRIAL DEVELOPMENT BOARD OF CITY OF MEMPHIS AND SHELBY COUNTY, TENNESSEE ("EDGE") Applicant Company Name: Company Contact: Mailing Address: Impact Innovations, Inc. ("Impact" or "Applicant") Ron Noyes, CFO 223 SE 1st Ave City: Clara City State: MN Zip: Telephone: (320) ext 303 Fax: (320) Federal Employer Identification Number: Applicant's Legal Structure: Corporation If any outside consultants will be representing the applicant (accounting firm, law firm or site consultant) in applying for this PILOT, please provide the following: Company Name Contact Name: Baker Donelson, Bearman, Caldwell & Berkowitz, P.C. Lodie V. Biggs and Chad Wilgenbusch Mailing Address: 165 Madison Avenue, Suite 2000 City: Memphis State: TN Zip: Telephone: Fax: Project Location 6269 E. Shelby Dr., Memphis, TN ("6269 E. Shelby") and 4800 A. Address: Southridge Blvd., Memphis, TN ("4800 Southridge") B. Tax Parcel Numbers: 6269 = C and 4800 = C. City of Memphis: l2f Yes No D. New Market Tax Credit Eligible Site: 0Yes No See Exhibit A attached hereto for further detail as to the ownership of the Real Property, NMTC eligibility, and assessment details. Project Description Briefly describe the applicant's principal business activities to be conducted at the Project Site: See the attached detailed PILOT request and Project information narrative on Exhibit B attached hereto. Project - Real Property Investment Building a new Purchasing an existing facility, and sq. ft. facility OLeasing 350,000 sq. ft. of an existing facility and Making renovations or additions Making renovations or additions As to 6269 E. Shelby, Impact would lease 275,000 sq. ft. (100% of the building) and as to 4800 Southridge, Impact would lease 75,000 sq. ft Category Capital Investment Purchase Price of Land $-0- Purchase Price of Building $-0- New Construction/Site Improvements $-0- Renovation of Existing Structure $85,000 Soft Costs $-0- TOTAL $85,000

4 Project - Personal Property Investment Group New Relocated Furniture, Fixtures, General Equipment & All Other Property Not Listed in Another Group $50,000 $ -0-2 Computers, Copiers, Fax Machines, Peripherals & Tools $ $ Molds, Dies & Jigs $ $ -0-4 Aircraft, Towers & Boats' $ $ -0-5 Manufacturing Machinery $950, $ -0-6 Billboards, Tanks & Pipelines $ $ -0-7 Scrap Property' $ $ -0-8 Raw Material & Supplies' $ $ -0-9 Vehicles' $ $ -0- TOTAL $1,000,000 $ -0- 'Vehicles, towers, scrap and inventory are not eligible for a PILOT agreement, but the value of these items may be included in the determination of the PILOT benefit. 2Depreciated value. Items to be submitted with this application To be submitted- Tax Compliance Provide documentation demonstrating payment of all municipal, county, state, and federal taxes due for all properties owned by the Applicant located within Shelby County. X Application Fee ($3,000.00) Other Applicant Financial Information Staff will need to review audited financial statements for the most recent three fiscal years. [Separate Signature Page Attached] * Impact Innovations, Inc., will work with Staff to review its Financial Information.

5 This Application is made in order to induce EDGE to grant financial incentives to Applicant. Applicant represents and warrants that the statements contained herein or attached hereto are true and correct to the best of their knowledge and include all information materially significant to EDGE in its consideration of this Application. Applicant has read and agrees to comply with all requirements of the EDGE Jobs PILOT Program Policies and Procedures. Applicant specifically agrees to pay all reasonable costs, fees, and expenses incurred by EDGE in connection with this Application, whether or not the financial incentives are granted or the Project is consummated. Signature Page to Impact Innovations, Inc., Jobs PILOT Application

6 PROJECT EMPLOYMENT Position # of Fulltime Jobs' Average Annual Base Pay2 Annual Overtime/ Incentive Pay3 Annual Benefits4 Annual Total Compensation Each Total Each Total Each Total Each Total Maintenance 2 $45,000 $90,000 $8,830 $17,661 $53,830 $107,660 Office 11 $63,273 $696,003 $12,415 $136,575 $75,688 $832,568 Production 7 $36,720 $257,040 $7,205 $50,438 $43,925 $307,475 Total 20 $1,043,040 $204,674 $1,247,714 Average $52,152 $10,233 $62,385 Definitions: 'Permanent jobs or combination of permanent positions that provide employment of 1,600 hours or more within a year that is employed directly by the Applicant or employed by a contract employer on behalf of the Applicant. 2 Annual base wage must exceed $12 per hour to be included, please show payments as annual average wages. 3lnclude paid overtime, paid holidays and vacation pay. Do not include discretionary bonus or stock options. 4lnclude health insurance, dental insurance, 401K plans, paid sick leave, bonus compensation, etc. Signature Page to Impact Innovations, Inc., Jobs PILOT Application

7 Exhibit A Real Property Information 6269 E. Shelby - Owned by Industrial Development Board of the City of Memphis and County Shelby, Tennessee ("IDB") pursuant to transfer from Belz Investco GP ("Belz") to ldb as evidenced in the April 1, 2012 Special Warranty Deed, recorded in the Shelby County Register's Office ("Register's Office") as Instrument No E. Shelby is Leased to MDH Memphis Portfolio LLC ("MDH") pursuant to a Real Property Lease Agreement dated April 1, 2012 by and between the IDB and Belz and recorded as Instrument No in the Register's Office, as amended by that certain Amendment to Real Property Lease Agreement dated April 1, 2012 and recorded as Instrument No and as assigned form Belz to MDH pursuant to an Assignment of PILOT Lease dated June 16, 2015 and recorded as Instrument No in the Register's Office Southridge - Owned by MDH pursuant to transfer from Belz to MDH as evidenced in the June 16, 2015 Special Warranty Deed, recorded as Instrument No in the Register's Office. El Lake tz,s5 al 4800 Sou brine Memphis, TN Irlarlirnftirril'arlare COHNI A)REZNICK NMTC interactive Map Unqualified Census Tract QUALIFIED Census Tract Status: Ous614d DOtrosse..1 -Poverty NOW No-28.7% 13istnesod - Median Foray Income, No -73.7% [unused -Unemployment RAN: No -11.4% Non- afro: No Stem Tennessee 6269 E. Shelby Drive Qualified ct Census Severely Distressed Qualified Census Tract II You may still qualify Even if your project does not quality. a Muni, distressed census tract on this map, your praiser may still be highly distressed. find out how 4800 So 0th ridge CONTACT US I Signature Page to Impact Innovations, Inc., Jobs PILOT Application

8 8/3/2016 Welcome to the Shelby County Assessor of Property CHEYENNE JOHNSON Assessor of Property Property Location and Owner Information Parcel ID: C Property Address: 6269 E SHELBY DR Municipal MEMPHIS jurisdiction: Neighborhood 00914A57 Number: Tax Map Page: 209K Land Square Footage: Lot Dimensions: Subdivision Name: Subdivision Lot N umber: Plat Book and Page: Acres: Number of 2 I mprovements: Owner Name: INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF MEMPHIS AND COUNTY OF SHELBY TN THE In Care Of: Owner Address: 100 PEABODY PL STE 1100 Owner City/State/Zip: MEMPHIS, TN Appraisal and Assessment Information Class: EXEMPT Land Appraisal: $ 503,700 Building Appraisal: $ 5,328,000 Total Appraisal: $ 5,831,700 Total Assessment: $ 0 Greenbelt Land: $ 0 Homesite Land: $ 0 Homesite Building: $ 0 Greenbelt Appraisal: $ 0 Greenbelt Assessment: $ 0 Click Here for 2015 Values View: Assessor's GIS Map View: GIS Parcel Map Land Use: Total Living Units: Structure Type: Year Built: Investment Grade: Building Square Footage: Commercial Structure information - WHS STORAGE WAREHOUSE A Other Buildings on Site for this Property See Permits Filed for this Property See Sales Data for this Property Disc aimer: T e in ormation presente on t is we site is ase on t e inventory o rea property oun wit in t e juris iction o t e county o Shelby in the State of Tennessee. Shelby County assumes no legal responsibility for the information contained within this web site. This is not a bill and does not serve as a notice or invoice for payment of taxes nor does it replace scheduled notices mailed to property owners

9 8/3/ E Shelby Dr - Google Maps Google Maps 6269 E Shelby Dr I "....,ririricike. Country Opp Membership Nficie "' I TENNESSEE ' l'et"'f^e.111ssissippi AfISSISSIPPI Imagery 2016 Google, Map data 2016 Google 2000 ft by+ D r,+m emphis,+tn+38141/@ , ,10493m/data=l3m111e314m513m411s0x887f8fe0db834857:0xe66b4b82963d3f1918m2!3d l4d /2

10 8/3/2016 Welcome to the Shelby County Assessor of Property 1-YENNE JOHNSON Assessor of Property Property Location and Owner Information Parcel ID: Property Address: 4800 SOUTHRIDGE BLVD M unicipal Jurisdiction: MEMPHIS Neighborhood Number: 00914A57 Tax Map Page: 209K Land Square Footage: Acres: Lot Dimensions: X IRR Subdivision Name: Subdivision Lot Number: Plat Book and Page: N umber of Improvements: 1 Owner Name: MDH MEMPHIS PORTFOLIO LLC I n Care Of: BUILDING 400 Owner Address: 3715 NORTHSIDE PKWY NW STE 240 Owner City/State/Zip: ATLANTA, GA Appraisal and Assessment Information Class: INDUSTRIAL Land Appraisal: $ 666,300 Building Appraisal: $ 3,517,000 Total Appraisal: $ 4,183,300 Total Assessment: $ 1,673,320 Greenbelt Land: $ 0 Homesite Land: $ 0 Homesite Building: $ 0 Greenbelt Appraisal: $ 0 Greenbelt Assessment: $ 0 Click Here for 2015 Values View: Assessor's GIS Map View: GIS Parcel Map Stories: Exterior Walls: Land Use: - VACANT LAND Year Built: Total Rooms: Bedrooms: Bathrooms: Half Baths: Basement Type: Dwelling Construction Information Heat: Fuel: Heating System: Fireplace Masonry: Fireplace Pre-Fab: Ground Floor Area: Total Living Area: Car Parking: Other Buildings on Site for this Property See Permits Filed for this Property See Sales Data for this Property [ Disclaimer: The information presented on this web site isbased on the inventory of real property found within the jurisdiction of the county of Shelby in the State of Tennessee. Shelby County assumes no legal responsibility for the information contained within this web site. This is not a bill and does not serve as a notice or invoice for payment of taxes nor does it replace scheduled notices mailed to property owners. 1/1

11 8/3/ Southridge Blvd - Google Maps Goo &'& Maps 4800 Southridge Blvd TENNESSEE. MISSISSIPPI MISSISSIPPI. Imagery 2016 Google, Map data 2016 Google 2000 ft phis,+tn+38141/@ , ,8588m/data=l3m1!1e3l4m5l3m4l1s0x887f8fe027fc3aa1:0x8d41e0abc4bb4d8d8m2!3d !4d /3

12 Exhibit B Impact Innovations Jobs PILOT Request History Impact has been in business since 1968 and is incorporated in Minnesota. The company's first products included printed, vacuum fomied and die-cut point of purchase displays and other instore products for the food industry. One of its products was a static cling window decoration that could be placed on freezer windows to advertise their customer's products. This product led to a similar static cling window decoration which was sold to the mass channel in the United States and Canada. Other categories of products sold to the mass channel include seasonal and all-occasion window/wall decorations, lit and unlit window decorations, lit and unlit outdoor decorations, bows, ribbon, tree skirts, ornaments and other decorations. In addition, gift paper products including gift wrap, gift bags and other related products are part of the family of products for Impact. Impact's first year selling gift wrap was Impact acquired a small start-up gift wrap wholesaler that year and grew the business over the next several years. In 2008, Impact acquired a gift wrap company based in North Carolina and consolidated that business into its existing gift wrap business. In late 2011, Impact acquired the Christmas gift wrap portion of Cleo, Inc.'s business. Cleo was located in Memphis, TN and was part of CSS Industries, a public company based in Philadelphia, PA. CSS had publicly announced in April 2011 that it was closing its Memphis facility by December 31, Memphis Expansion As part of the Cleo acquisition, Impact acquired converting equipment from Cleo by which it converted jumbo gift wrap rolls to consumer-sized rolls. Impact decided to lease a facility in Memphis to continue to domestically convert a portion of its gift wrap business. However, the printing presses owned by Cleo were deemed too old to continue to print gift wrap efficiently. Impact worked extensively with both the IDB and EDGE to obtain a 6-year PILOT award on the 275,000 square foot Memphis facility on Shelby Drive. As a part of that award, Impact committed to retain 6 and hire 19 full-time employees and invest $950,000 in real and personal property in Memphis Additional Memphis Expansion In 2014, Impact approached a large customer to discuss Impact's interest in producing gift wrap (both printing and converting) in the United States. Prior to this time, 100% of Impact's gift wrap was printed at factories in Asia. That successful endeavor entailed relocating manufacturing from China to the United States. B-1

13 One key barrier to setting up gift wrap printing in the United States was the high initial capital investment needed to purchase and install the printing equipment. Discussions with Impact's customer centered on its willingness to enter into a multiple year commitment to purchase defined levels of gift wrap from Impact. In exchange, Impact would install the equipment and agree to specific levels of domestically produced gift wrap to be sold to the customer. In 2014, this agreement between Impact and this customer was signed with the plan for Impact to begin printing gift wrap during the summer of In 2015, as part of the manufacturing on-shoring effort and expansion, Impact again partnered with EDGE when the company committed to invest $7M in new gift wrap printing equipment and add 18 new full-time petinanent jobs in Memphis. As part of that expansion, EDGE awarded a new 3-year PILOT covering only the new printing equipment. As part of its two PILOT awards, Impact committed to retain/hire a combined 43 permanent fulltime employees. As of July 2016, Impact employs 56 permanent full-time employees in Memphis with an average annual wage that exceeds the Shelby County Average Annual Wage. In addition, Impact currently has over 100 seasonal and contract employees. All seasonal employees expected to work at least 6 months are offered health insurance benefits which are at least 50% paid by Impact. Planned Expansion and Growth Needs Impact's strong growth in Memphis and continued plans to grow its business in the Memphis area have led to a space challenge for the company. Impact is currently operating out of several facilities in Memphis as detailed below (additionally, see attached map): 6269 E Shelby Drive, Memphis TN = 275,000 square feet (Primary Production Facility and currently under a PILOT that is set to expire in March 2018) 6005 Shelby Drive, Memphis TN = 41,000 square feet (Temporary Warehouse) 4105 South Mendenhall, Memphis TN = 40,000 square feet (Temporary Warehouse) 4800 Southridge, Memphis TN = 36,250 square feet (Temporary Warehouse) In the near future, Impact expects to need at least 350,000 square feet of long-term space versus its current long-term footprint of 275,000 square feet. With 350,000 square feet of long-tetm space, Impact may still need seasonal temporary space, but those needs are addressed on a yearly-basis. In order to maintain the flexibility to grow under one roof, Impact negotiated an early termination option with its Landlord at 6269 E. Shelby Drive which may be used to fully terminate its current lease in March Impact has been taking a temporary approach with one-off leases in anticipation of creating one business location in Shelby County or Mississippi. However, with the termination option quickly approaching and its plan for continued growth, B-2

14 Impact has to make a long-term decision as to its facility location and has been exploring its options. Impact would prefer to partner with the City of Memphis and Shelby County, Tennessee to assist with this business expansion. Ideally, the 350,000 to 400,000 square feet needed by Impact would all be under one roof, but that request is proving difficult to fulfill within the City of Memphis. Impact is actively weighing its options and working with its real estate broker to identify the correct space, including multiple spaces in Memphis and single roof options in Mississippi. Unfortunately, if the ultimate space is a site outside of Memphis and Shelby County, all of Impact's current and anticipated full-time and seasonal jobs would be located elsewhere. Due to the additional costs and logistical issues associated with being in multiple spaces, Impact desires to work with EDGE to obtain a PILOT incentive that can continue to make Memphis an attractive option for expansion, which is Impact's preference. Based upon the representations made in the PILOT Application, Impact requests that EDGE grant it a new 7-year PILOT on (i) all of its real property at 6269 E. Shelby, (ii) up to 75,000 square feet of real property at 4800 Southridge, and (iii) any personal property added during a 2- year ramp-up period. If awarded PILOT benefits, Impact plans to sign long-teiiii leases for both 4800 Southridge and 6269 E. Shelby and will continue to ingrain its presence in Memphis and Shelby County. Impact plans to continue to grow its operations (both jobs and capital expenditure) in Memphis and to consider further expanding its product lines being manufactured and distributed from Memphis. Given the cyclical nature of its business, Impact may continue to lease short-term flex-space as warehousing needs arise, but its current long-term space needs would be met by 4800 Southridge and 6269 E. Shelby Drive. Impact continues to value its relationship with Memphis and Shelby County and will only continue to grow that relationship if it is able to expand its long-term footprint within those borders. Additionally, as Impact grows its presence in Memphis in both 4800 Southridge Blvd. and 6269 E. Shelby, the representations made in this Application will be treated as campus-wide investments by Impact in both locations. B-3

15 Z1Z4 C./S1.1U JIAKA 1./J/Z4/ZU15 Z1:i2f IMPACT INNOVATIONS, INC. SUPPLIER: IDB TN 08/08/2016 REFERENCE INVOICE DATE GROSS AMOUNT DISCOUNT NET AMOUNT APP FEE PI08/08/ PRODUCT SSLB500 PAY TO THE ORDER OF IMPACT INNOVATIONS IMPACT INNOVATIONS, INC. P.O. BOX SE 1ST AVENUE CLARA CITY, MN (320) THREE THOUSAND DOLLARS AND 00 CENTS ECONOMIC DEVELOPMENT GROWTH ENGINE CITY OF MEMPHIS / COUNTY OF SHELBY TN MEMPHIS TN CITIZENS ALLIANCE BANK DATE CHECK NO. AMOUNT tiligtnorm= 08/08/ $ ** RIZED SIGNATURE Details on back. 8 Hi0366 Lau' i: :