#07 TIF agreement with HSI Aviation Holding (File Res. #2009-591)Economic Development Memorandum
Date: March 30, 2009
TO: City Council
FROM: Doug Venable, Director of Economic Development
SUBJECT: Action on a Resolution Approving a TIF Development Agreement with HSI
Aviation Holding, LLC Helicopter Inspection and Customizing Facility Located in
TIF No. 34 (File Resolution 2009 – 591)
I. Summary
Earlier this year, the City Council approved creation of TIF District No. 34 to stimulate the
development of aviation related business at the Southern Wisconsin Regional Airport. HSI
Aviation Holding, LLC (“HIS”) is a real estate holding company owned by Jim Freeman that
leases a hangar building to Mr. Freeman’s company, Helicopter Specialties Inc. Helicopter
Specialties is a growing business at the Southern Wisconsin Regional Airport that customizes
helicopters for use in medical rescue flights, installs avionic equipment in helicopters, and that
inspects helicopters in accordance with FAA requirements.
The Administration has negotiated a TIF Development Agreement with HSI. Under the
terms of the Agreement, the City will reimburse HSI for $100,000 in costs associated with the
construction of a 20,000 SF hangar expansion. In return, HSI will construct the 20,000 SF
facility, increase employment from nineteen (19) full time workers to thirty-one (31) full time
workers by January, 2010, and guarantee to pay to the City a minimum annual property tax bill
of $13,840. The minimum annual property tax payment will allow the City to fully recover its TIF
investment within eight (8) years.
Recommendation --
The Economic Development Department recommends that the
Council adopt Resolution No. 2009 – 591 approving the TIF Development Agreement with HSI
for a 20,000 SF project in TIF No. 34.
II. TIF Development Agreement
HSI is a holding company that leases real estate to Helicopter Specialties, Inc.; both
companies are owned by Jim Freeman. Mr. Freeman previously worked for Omniflight
Helicopters which moved from the Rock County Airport to Dallas, Texas in 1993. Mr. Freeman
returned to Janesville in 2000, and created Helicopter Specialties. Company sales have
doubled annually since 2000.
Helicopter Specialties provides a full range of services on helicopters. As a certified FAR
145 repair station, the company can service over 21 makes and models of helicopters. The
company has service center contracts with 4 major helicopter manufacturers, one engine
manufacturer and 5 optional helicopter equipment manufacturers.
???
Economic Development Department Box 5005 Janesville, WI 53547-5005 755-3180
HSI TIF Agreement
March 30, 2009
Page 2
Helicopter Specialties can perform FAA required inspections of helicopters at certain flight
hour intervals. They can add new avionic equipment to helicopters like weather radar or ground
detection radar to improve flight safety. They also take newly purchased helicopters and
customize them for use in medical flights, etc. In 2008, the company added a large paint booth
so that they can paint helicopters in an environmentally safe manner.
The company is expanding and has outgrown its existing 12,000 SF hangar. HSI plans to
lease additional land from the Southern Wisconsin Regional Airport and construct a second
20,000 SF hangar. The hangar facility is estimated to have a value of $675,000 and will
generate $13,840 in new property taxes annually. New equipment and employee training will
add an additional $750,000 to the overall project cost.
Under the terms of the proposed TIF Agreement, HSI will complete the construction of the
new 20,000 SF hanger by December 31, 2009. The company will retain the existing nineteen
(19) employees and create an additional Twelve (12) jobs by January, 2012. The starting wage
for their technicians is $15/hr and for their inspectors is $20/hr. Beginning in 2010, HSI will
guarantee to annually pay not less than $13,840 in new property taxes to the City.
In return, the City will reimburse HSI for $100,000 in development costs associated with this
expansion project. The guaranteed annual property tax payment from HSI will allow the City to
fully recover its TIF investment within 8 years.
Recommendation
III.
The City’s economic development strategy seeks to diversify the local economy by
facilitating the growth of its existing industries. Helicopter Specialties is a growing company that
is somewhat insulated from the ups and downs of the national economy. They provide required
FAA inspections of existing helicopters and can customize helicopters to meet the specific
requirements of the firms that use them in their operations. The public has made a significant
investment in the Southern Wisconsin Regional Airport and this project will leverage that
investment.
The Staff recommends that the Council adopt Resolution No. 2009 – 591, approving the
TIF Development Agreement with HSI Aviation Holdings, LLC, for a 20,000 SF Facility in TIF
No. 34.
Douglas Venable
Cc: Eric Levitt, City Manager
Jay Winzenz, Dir. of Administrative Services
Attachments: Resolution 2009 – 591
Location Map
Summary of TIF Agreement
Resolution 2009 – 591
A Resolution Approving a TIF Development Agreement with HSI Aviation Holdings, LLC
for a 20,000 SF Hangar Facility in TIF No. 34
WHEREAS, Sections 66.1105 and 66.1101 of Wisconsin Statutes authorize cities to utilize tax
increment financing to promote industry and implement economic development projects; and
WHEREAS, the Common Council has authorized the use of Tax Increment Financing Districts
for industrial site development and TIF Development agreements when the Council adopted
amended Council Policy Statement No. 61 (Economic Development Policy) on the 14th day of
November, 2006; and,
WHEREAS, the Common Council of the City of Janesville created Tax Incremental Finance
District No. 34 to stimulate development projects at the Southern Wisconsin Regional Airport;
and
WHEREAS, HSI Aviation Holdings, LLC. (hereinafter “HSI” and the City have negotiated a TIF
Development Agreement which calls for the City to reimburse HSI for $100,000 of development
costs related to the construction of a 20,000 SF hangar facility at the Southern Wisconsin
Regional Airport in TIF No. 34, and the creation of twelve (12) new full time jobs by January,
2012; and
WHEREAS, the Common Council of the City of Janesville finds the approval of the TIF
Development Agreement and the reimbursement of HSI of $100,000 in development costs to be
in the best interest of and benefit to the City, its citizens, and the overall community;
NOW, THEREFORE, BE IT RESOLVED, by the Common Council of the City of Janesville that it
hereby approves the TIF Development Agreement with HSI and authorizes the reimbursement
of $100,000 in development costs according to the terms and conditions set forth in the TIF
Development Agreement, and
BE IT FURTHER RESOLVED, that the City Manager, on behalf of the City of Janesville, is
hereby authorized to negotiate, draft, modify, amend, review, and file all such other documents,
papers, and agreements, to take whatever other actions, and to make whatever changes and
amendments to the TIF Development Agreement, and such other documents and agreements
which the City Manager may, from time to time, deem necessary and/or desirable to effectuate
the intent of this Resolution.
Resolution 2009 – 591
Page 2
ADOPTED:
Motion by:
Second by:
APPROVED:
Councilmember Aye Nay Pass Absent
Brunner
Loasching
McDonald
Eric Levitt, City Manager
Rashkin
Steeber
ATTEST:
Truman
Voskuil
Jean Ann Wulf, City Clerk-Treasurer
APPROVED AS TO FORM:
City Attorney
Proposed by: City Manager
Prepared by: Economic Development Director
Summary of TIF Development Agreement Between
City of Janesville and HSI Aviation Holding, LLC
for a Development Project in TIF No. 34
I. Parties
A. City of Janesville
B. HSI Aviation Holdings, LLC (Developer)
C. Helicopter Specialties, Inc.
II. Description of the Property -- 20,000 Leased Premises – 4710 S. Columbia
Dr. in TIF No. 34
III. Purpose of the Agreement -- Facilitate the completion of a 20,000 SF
expansion and creation of 12 new jobs.
IV. Terms of the Agreement
A. The City shall:
1. Create TIF No. 34 at the Southern Wisconsin Regional Airport
2. Upon issuance of occupancy permit, reimburse HSI for $100,000
in site development and equipment costs.
B. HSI shall:
1. Submit financial documentation for City review
2. Lease site from Rock County
3. Get approval for site plans and building plans.
4. Lease the new building to Helicopter Specialties Inc. and use best
efforts to create twelve (25) new full-time jobs by January 2012.
5. Complete construction of 20,000 SF hangar facility by December
31, 2009.
6. Guarantee to annually pay not less than $13,840 in property
taxes.
C. For the entire term of the TIF Agreement, HSI must remain a taxable
corporate entity.
D. Developer contingencies to be met by June 1, 2009:
1. Environmental Assessment of the Project Site.
2. Receipt of approvals for site and building plans.
3. Receipt of project financing.
4. Receipt of a binding lease for the Project Site from Rock County.
5. Receipt of a binding lease from Helicopter Specialties.
E. City must receive waiver or satisfaction of contingencies before being
bound to Agreement.
F. HSI has the right to prepay TIF Development Loan