Minutes, Regular Meeting / January 9, 2017

January 2017 | Minutes

Monday – January 9, 2017 at 5:30 PM
Present

  • Stephen Rainaldi, Second Vice-Chairman
  • Michael Hayes, CEO and Member

Absent

  • F. Edward Devitt, Chairman
  • Edwin Williams, First Vice-Chairman
  • Donna Jennings, Treasurer and Member

Also Asbent

  • Christopher Martell, IDA Attorney, Hodgson Russ LLP

Also Present

  • Suzanne Hadden, Recording Clerk

Mike Hayes said this is the IDA meeting of January 09, 2017 and because of the schedule there are only two board members present and we are going to have a presentation by Polich Art Foundry on NYS Route 747 looking to move to the former Big Apple Circus building in the Village of Walden. We had a meeting with the applicants last week and this evening Adam is going to give a presentation with the potential of the IDA being able to help them with this purchase and the upgrades of the facility.

Adam Demchak, PE, Executive VP & General Manager for Polich Tallix Fine Art Foundry handed out a brochure and said that it gives a glimpse of the things that they do. He said to sum it up they are an art foundry; they cast and fabricate sculpture for artists. They don’t create the artwork; they are hired by the artist to make their work in metal. They have metal melting and casting equipment and they do a lot of traditional metal fab work, welding, cutting, grinding and assembling large castings. He brought some pictures for examples and said here is Arnold Palmer, 10 foot in his alma mater in Wake Forest, the Civil Rights Memorial in Baltimore, Pope Francis, two dogs that went to a veterinary school at Ohio State and a woman reading to some kids that went to a public library in Massachusetts. Mr. Demchak said these examples are not all that they do, they do a lot of abstract work.

Member Hayes asked about the Pope figure and who did that?


Polich Tallix – Presentation

  • Mr. Demchak said that is Carolyn (inaudible) who is local and also did the replacement of Lucille Ball that went in after nobody liked the first one. He handed the members an Oscar statue to pass around and said this is their second year; they are in the midst of making the Oscars.
  • Member Hayes told the members that the Richie Reynold’s Memorial; this company also did that.
  • Mr. Demchak said they also did on Broadway in Newburgh, Safe Harbors is a charity that provides a place to stay for women and children that are homeless and there is a sculpture hanging on their new building wall that they donated to them because their president owner’s wife sits on the board. They try to get involved with the community. They have been in business for 47 years and in their current location at 17K and 747 for a little over 20 years. They have been leasing that space for 20 years. Dick Polich, their founder, president and owner is 84 years old. Mr. Demchak said that he has been with the company for 3 years and he is the executive vice president and is the succession plan. If anything happens to Dick, he becomes president and he works for the board of directors that represents Dick’s Estate. Shortly after he came on, three years ago, part of his job was general manager and now as vice president he looks where their money is going and what their long term plans are. They have been leasing the space for a long time and spending a lot of money and progressively taking more and more of that building. They have about 3⁄4 of the building right now and about 3 years ago they took another large bay in the building, so they have been increasing the space they are taking and paying more and more rent because of it. Meanwhile he is looking now towards the next 20 or 30 years in the company’s future and understands that he doesn’t want to pay lease and rent for another 20 or 30 years, especially with the interest rates that are available right now. So they started looking and thinking what their options were, should they buy property and build a building or find a building. There are not a lot of buildings in the immediate area that are a good fit for them. They are 80 fulltime employees right now at their facility. They have 100,000 SF and they don’t need that much for production space. They do a lot of storage in a third of that space. The Big Apple Circus property that they found in Walden is about 60,000 SF and that covers their production needs. They leased a separate warehouse space in Walden where they are in the process of moving their storage things over to.
  • Member Rainaldi asked if they were moving the large items outside also?
  • Mr. Demchak said most of the things you see outside are not theirs; they rent 3⁄4 of that building and the other fourth of the building is rented by an artist called Frank Stella and he has the big sculptures across the street and most of the things in their yard are Frank Stella’s things. They don’t keep a lot of sculptures around although they do have some things out by their front door on display. There are things that Dick has picked up around over the years, but most of the stuff on the property is either Franks or the landlords.
  • Member Hayes asked if they would be building their own warehouse on the property at the Big Apple Circus, since there is a fair amount of property there?
  • Mr. Demchak said eventually they would like to do that. Right now they are focusing on the important thing; which is the production space. They are taking the opportunity to downsize the amount that they were storing. They were storing 30,000 square feet of molds for sculptures. So they were storing molds for artists who they agreed to store things for and some they hadn’t agreed to. The artists knew they had a lot of space and they never came and got it. It was okay, they were a client and they’d hang on to it. However, now they are downsizing that storage space and they’re in the process of reaching out to a lot of clients to say you have to come and get your stuff. So eventually yes definitely, if it works out on that property. It is unheated, it is simple warehouse space that they need and if they can do that on that property great, if not it doesn’t hurt them to have it off site. What they are thinking about is this Big Apple Circus property and they are under contract for the property and the reason they want to move is so they can grow. They don’t want to put any more money into the building that they are in because Dick has been doing that for 20 years with the understanding that when he was ready to buy the owner would sell him the building and he has come to find out that that is not the case there. They want to expand and he doesn’t mean by footprint, they want to bring in processes that they have paid other people to do historically; which means new equipment, new infrastructure, electrical, air, gas and new hires to run those machines and run those processes. The idea is they can do that, they can get into that building and they can eventually get to the point where they are ready to expand and hire and buy equipment and bring things in, with some help they can do this all at one time and that is why they are coming to the IDA. They are talking to the State of New York, the ESD (Empire State Development), with that same message. With some help from local and state government they can do these things all at the same time. They have the bandwidth to do it; they don’t have the cash to do it. Moving for the first time in twenty years is a project.
  • Member Rainaldi asked if they would be taking a lot of the equipment with them?
  • Mr. Demchak said absolutely, everything goes with them. They have big equipment; especially the foundry equipment and that would be brake processers, rollers and sheers for metal fab. He is giving it a 6 month time span where they transition from one location to the other, so they can save money while they do it. They have to keep producing while they move, so they will move one department at a time slowly, while they build up a lead above the next department, then they can take a week and jump over so they can hold their promises to their clients to keep things moving and keep some cash flow coming in. Specifically what they are looking for from the IDA is help on sales tax for materials they are going to purchase to renovate the building, mortgage recording tax and a PILOT program where the Big Apple Circus has been in this property for about 20 years. The Circus purchased it in ’96 and it is at an assessed level and they are purchasing it for more than the assessed level and will be doing some renovations to spruce up the place. Their thinking with the PILOT program is that they go in on year one, paying property taxes based on the assessment that it was when Big Apple Circus owned it and they would ask for 10 or 15 years, depending on what’s allowable to ramp up to the current or market rate that they would pay for the property and out of those three that is the biggest help to them; that is the most cash saving for them in the next immediate future over the next few years.
  • Member Hayes asked if he remembered what the assessment was on the building?
  • Mr. Demchak said the assessment on the building now is about, 1.2 million, land and building and that is based on the Orange County Tax card that he looked up on line and he is not sure if he is capturing everything by looking at that one tax card, as far as they show school taxes, village taxes; he said he did not bring a copy of that with him.
  • Member Hayes asked if that was where they want to start and then the PILOT would be for what the improvements are?
  • Mr. Demchak said right, right up to what the new assessed value is after the sale, however that pans out; break that up into 10% increments over 10 years or 15 years. He wasn’t sure whether it was 10 or 15, or if there were options for both; either one would be great.
  • Member Hayes said you are going to bring all of your equipment and asked what new equipment they would be purchasing to get the building up to where they could use it?
  • Mr. Demchak asked in terms of getting the building up for use, or adding the processes that he talked about that they wanted to add or a little bit of both?
  • Member Hayes asked what are the new things that you are going to purchase to bring the building up to where you want it, for when you want to get started?
  • Mr. Demchak said the big thing that they are going to add in that building, just to get it up to where they are now are cranes. Big cranes, overhead bridge cranes throughout the entire building. The building they are in right now is a heavier construction, whereas the circus building is more of a pre-engineered metal construction. So they are going to do a lot of structural work to accept those cranes and then purchase the cranes themselves. The big bridge cranes they have now stay with the building, they don’t go with them and they are massive. The cranes and building envelope renovations would get them up to where they are now in the new building. The new things they would be adding are a paint booth for the painting process and a C & C milling machine. The examples he showed are all bronze sculpture that get a patina, so that is a chemical process. However they do a lot of sculptures that are painted and when he talks about a painted sculpture, he is talking 20 to 100 thousand dollars, just in the paint portion of the project. They fly a painter in from California to do the work, because he is the only guy in the country that can do the type of work that they do. So it is not an auto body shop where we are priming cars, it is high end paint. The paint booth that they would be adding is a high end paint booth to allow them to do the work in house, rather than ship things back and forth. They need that on site to be able to do that and to be competitive. The C&C milling they outsource to a company in New Jersey and that is becoming more of a utilized process in the digital side of things. If they have an Oscar, that size, they can cast directly to size with bronze and they started with a sculptured Oscar. A lot of times what a sculptor does is they will bring him something that big and they want it at 8 feet tall. So he would digitally scan the Oscar and on the computer they would scale it up to 8 feet and then they use the C&C mill with high density foam to mill out that 8 foot tall Oscar and that is where they start their process, by making molds and casting that way. Before laser scanners and C&C equipment you would have guys doing that all by hand, now other foundries and other art fabricators are doing the C&C milling in house and they have been outsourcing for 15 years; it is time to bring it in. He has hired people on staff already, that have experience with it, but they don’t have anyone to run the machine. They have people to set it up. They have the manager, they don’t have the operator.
  • Mr. Demchak continued and said that would be one of the hires that would come in with that equipment. The paint booth comes with the paint prep and eventually a painter who is hired on site too.
  • Member Hayes asked if he had a rough idea of the improvements, between the cranes, the structure, the milling machine and paint booth; how much money are you talking in improvements?
  • Mr. Demchak said they are talking probably about 650,000. Right now he is not sure because he is defining the layout of the new facility, so where the departments will be drives how big the cranes are, where the cranes are and what the cranes costs are. So it is between 300 and 350 in cranes and from there he has 120,000 dollars in the milling machine, 75,000 dollars to 100 to the paint booth depending on bells and whistles and the rest is 200 to 250 in general renovations to the building and building envelope. The building was built in ’81 and still has the original HVAC system in it and they are working with NYSEG and NYSERDA figuring out better ways to heat the building. They have a local company out of New Windsor doing a lighting review and proposal to put all new LED lighting in. Lighting is important to them because they deal with artists. It’s a money savings too, but it’s also the quality of light and that will be about 100,000 dollars. Add that all up and that is probably 650 or 750, somewhere in there depending on where a few of those key items fall.
  • Member Hayes said he received the application on Saturday and he will talk to the IDA Attorney and will look to schedule the public hearing for January 30th, as the tentative date.