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Home My WebLink About2017-12-04 Board of Selectmen Executive Session Minutes BOARD OF SELECTMEN EXECUTIVE SESSION MINUTES December 4, 2017 EXECUTIVE SESSION: The Executive Session convened at 6:40 p.m. ATTENDANCE: The following were present: Chairman Phil DeCologero, Clerk Regina Kean, Rosemary Smedile, Richard Vaillancourt, Chris Nobile, Town Manager Andrew Maylor, Assistant Town Manager Ray Santilli, Town Counsel Suzanne Egan, Director of Community and Economic Development Eric Kfoury and Executive Assistant Laurie Burzlaff. M.G.L. Chapter 30A, §21(a)- reason#6 to conduct strategy session to consider the value of property- 1600 Osgood proposed marijuana siting agreement Town Manager, Andrew Maylor, provided a summary of the terms proposed by Mass Innovation Works for a commercial/medical marijuana facility at 1600 Osgood Street. The Board discussed waiting on any agreements as the letter of non-opposition requires selectmen to certify zoning is complete. The Board agreed that they can negotiate a Host Community Agreement prior to the Annual Town Meeting in May. The Board agreed that for transparency purposes, the terms of any agreements should be publically released before any Town Meeting (special or annual) where the zoning could be changed. ADJOURNMENT: Richard Vaillancourt made a MOTION, seconded by Chris Nobile, to move out of executive session and back into open session at 7:30 p.m. Roll call vote: Kean-yes, Nobile-yes, Smedile- yes, Vaillancourt-yes, DeCologero-yes. Laurie A. Burzlaff Executive Assistant Regina Kean, Clerk of the Board Documents used at meeting: Term sheet December 2, ZU17 Subject:Summary Response tn"Term Sheet Response 112117" Dear Mr. May|or, A critical objective of the Massachusetts Innovation Works(MIW) is to expeditiously obtain zoning rights,a Letter of Non-Opposition from the Board of Selectmen,and a structured Host Community Agreement that allows a fair and reasonable financial benefit to the community,as well as a practical operating environment for the business. The M|VVhas reviewed your comments dated November 21, ZO17and summarized apathway toproceed below. Please refer tothe term sheet that isattached. In summary, any agreement made between the MIW and the Town must comply with applicable laws, including the Act to Ensure Safe Access to Marijuana, signed into law July 1, 2017. This law places strict UmitsonaTown'sabiUtytocaptuve"upside" ofanon-vetai|marijuanae/tab|ishmenL Our legal counsel has advised of a high risk that key terms in the Town's Response would not comply with the law. We maintain that reasonable P|LOTs and the Commercial Marijuana Fee are a suitable framework for long-term scheduled payments. Further, K4|VVproposes two additional components asanalternative to the direct percentage ofrevenue approach suggested bythe Town: ° Innovation Center Reinvestment. Z%ofrevenues from Cultivation Center, upto$ZK4per year for 10 years (total investment over 10-year period shall be no less than $20M)to be directly reinvested in the Innovation Center facilities to build companies and create jobs in North Andover as well as increased personal and property taxes from the new businesses created in the Innovation Center. * Community Fund. 1%ofrevenues from Cultivation Center tobeplaced inamutually agreed fund to be distributed by an independent board for programs that benefit the community (capped at$1Mper year), including aninitial payment of$ZSU,OOOasdefined inthe term sheet. We invite the town to work with us to establish objectives and bylaws for the North Andover Community Fund. This combination of benefits is expected to deliver over$6.8M/yr annual community direct revenue and defined reinvestment, including an estimated$2.2M permitting fees and initial Community Fund contribution in 2018.An example breakdown of revenues is found in the attached term sheet. _ Timing and zoning are acritical aspect ofthis proposal. Asexplained )nnumerous public meetings,the M|VVmust befirst tomarket to capture key advantages. Assuch,this proposal iscontingent nn obtaining a Letter of Non-Opposition from the BoS in 2017 and zoning in January 2018 that allows for a full, uninterrupted fit-upofthe cultivation facility. |nsummary,critical timing and zoning constraints • Non-Opposition Letter.The MIWs DPH license now awaits town support to be ready for the April 151 CCC Priority List deadline. Without this, it is unclear when the RMD license would convert to Cultivation and Manufacturing Licenses,potentially causing months or over a year delay in growing the business and revenue to the Town. • Zoning. Zoning must be in place to prior to the DPH issuance of the Provisional Certificate of Registration (PCR) (starting point for local permitting).While the DPH process to PCR can proceed immediately with a Letter of Non-Opposition, it can only conclude with Zoning in place. • Growth Staging. Zoning and permitting that requires interrupted, limited buildouts of the facility are impractical from a project financing and constructive perspective since critical building systems for managing odor,security, and plant health, must be wholly implemented in order to house even a fraction of the cultivation space. Further, incremental permitting will cost the Town millions of dollars in lost revenue. The Town can manage odor,security and any other nuisance concerns with the conditions and administration of the Special Permitting process without any need to handicap the project or Town revenue. We look forward to discussing the details of the agreement and would be happy to answer any questions about the critical timing objectives at your earliest availability. Sincerely, Orit and Jeff Goldstein Attached:"TONA and MIW Term Sheet, Rev2" 2 Revision 2 Key Elements of the Massachusetts Innovation Works(MIW) and Town of North Andover Agreement Host 0 Party: [MIW and Affiliated Licensees] Community 0 BoS issues Letter of Non-Opposition to DPH with respect to the entire property Agreement running to Valley Green Grow, Inc. or its assigns in 2017 (HCA) 0 No MIW or Affiliate Retail License in North Andover 0 No Town Municipal Water for irrigating plants ..................................... _.................._........._a..._.___ Zoning • Zoning does not restrict staging of the project. It is the intent of the developer to apply for a single Special Permit for Cannabis cultivation and manufacturing and construct the full 1.11VISF cultivation space in 2018 • Zoning is favorably adopted in January 2018 that includes Cultivation, Manufacturing, Laboratory and R&D Allowed Marijuana Uses(AMUS) ........... .......................................... Commercial 0 Party: [MIW and its Affiliated Licensees] Marijuana Fee 0 Commercial Marijuana Fee of$395,000 per annum, paid quarterly at a rate of $98,750 for 40 consecutive quarters commencing on first day of first full calendar quarter subsequent to the issuance of the Certificate of Occupancy to first licensee on property holding special permit issued by Town under Article 8.14 of the North Andover Bylaws,subject to regulatory compliance 0 Based on the entire 169-acre parcel and the approximate pro rata share of commercially developed space for public safety and services budget 0 Future licensees or changes in licensees shall not incur additional fees 0 Payments shall toll if licensed operations are delayed or suspended in excess ........ of 90 days ___^..................................... ........ Property 0 Party: [MIW] Improvement 0 Covers all new and existing infrastructure, improvements,and ancillary PILOT property necessary for BLDG 30 repurposing to indoor agriculture 0 Assumes$100M CAPEX in new Furniture, Fixtures,and Equipment(FF&E)and $50M in repurposed FF&E.At current tax rate of$20.45, provides an effective yield of$2,79/sf for 1.11VISF over 10-years with no depreciation 0 Term is 10 years, paid in 40 consecutive quarters 0 Payments commencing on the first day of the first full calendar quarter subsequent to issuance of cannabis related Certificate of Occupancy from Town to first licensee on property holding special permit issued by Town under Article 8.14 of the North Andover Bylaws 9 PILOT covers Project CAPER improvements and FF&E, and does not disturb any other agreements in place with respect to taxation of other real and personal property on site. Enhanced value to BLDG 30 captured by PILOT is not subject to increased real estate tax assessment 0 Payments shall toll if licensed operations are delayed or suspended in excess of 90 days ......................... _.-m_. .........................__.............................................. . ................................... .................---- Combined ---Combined Heat • Party: [CHP Special Purpose Entity(SPE)Owner] and Power • Covers value of CHP Project (CHP) PILOT • Payment of$10,000 per MW per annum®of nameplate capacity of project ....................... December 1,2017 .............. .................. .......... • Term is 10 years, paid in 40 consecutive quarters,commencing on the first day of the first full calendar quarter subsequent to the issuance of the Certificate of Occupancy for the CHP project • PILOT covers CHP (including real and personal property and related infrastructure),and does not disturb any other agreements in place with respect to taxation of other real and personal property on site • Payments shall toll if licensed operations are delayed or suspended in excess of 90 days ........... ........................................ ................................ Property Tax 0 Party: 1600 Osgood Street, LLC Assessment 0 Property Tax Assessment excludes all PILOT Property(representative listing of excluded property shall be set out in Exhibit to Agreements) and associated rental income 0 All DPH/CCC licensed space in BLDG 30 shall be considered included in PILOT and shall not increase the underlying baseline property tax assessment, ............ ......... ................ 40R 0 Party: 1600 Osgood Street, LLC Indemnification 9 1600 Osgood Street, LLC indemnifies the Town of North Andover for any potential repayment of the Commonwealth of Massachusetts 40R Grant (Appx. $600,000) Innovation 9 2%of revenues from Cultivation Center will be directly reinvested in the Center Facilities Innovation Center as capital investment that will create employment Reinvestment opportunities in North Andover, up to$2M per year for 10 years.Total investment over 10-year period shall be no less than$20M. .............. Community 0 1%of revenues from Cultivation Center to be placed in a mutually agreed fund Fund to be distributed by an independent board,capped at$1M per year for 10 years, payable quarterly on the same schedule as the PILOTS * Distributions in the form of grants to community non-profits that serve a defined 501(c)3 purpose for benefiting the North Andover community. * $250,000 to be pre-funded the day after approval of the Commercial Marijuana Zoning Bylaw at a special town meeting in January 2018 Example: Full Item Estimated Estimated Annual Buildout Project Initial Revenue and 1,100,000 sf Fees and Reinvestment Cultivation and Contribution Manufacturing Property Tax $ 372,000* with37.5 MW .....---............. ............. ................ CHP Building Permit Fees (improvements, $ 1,300,000 based on actual costs __ _.................... . ... ....... ---—------ Building Permit Fees (CHP, based on $ 650,000 actual costs) .... . ...... Commercial Marijuana Fee 395,000 Property Improvement PILOT $3,067,500 ................. ...... ..................................................___............... CHP PILOT $ 375,000 ........... Community Fund $ 250,000 $ 1,000,000 ............................_......_..............I._........._ ........................ Total Initial Fees and Foundation $2,200,000 Contribution December 1,2017 Total Annual Direct Revenue to $4,837,500 Community Additional Reinvestment in Innovation $ 2,000,000 Center Facilities Total Annual Community Direct $6,837,500* Revenue and Defined ReinvestMent *Future This new growth isnot included\nthis table because itbunknown atthis time. December 1'u/zr