Cuyahoga County s Clean Ohio Revitalization Fund Round 5 Application Great Lakes Shipyard Expansion Project Attachment A1 Application Summary Document A1-1
ATTACHMENT A1 Great Lakes Shipyard Expansion Project Application Summary Document Goal of the Brownfield Project Cuyahoga County is requesting $2,148,450.00 from the Clean Ohio Revitalization Fund (CORF) to address environmental impacts on property along the old Cuyahoga River channel to prepare the property and adjacent parcel for a $23 million ship building and repair expansion project that will result in the creation of 15 new highly skilled shipbuilding jobs in downtown Cleveland. This builds upon Current Great Lakes Shipyard employees Future site of Great Lakes Shipyard Expansion Project recent investment of $4 million for the current facility upgrade. The Great Lakes Towing Company is expanding its operation on the 2.1897-acre CORF project area, which was recently acquired from the City of Cleveland, and on a 5-acre adjacent property. Cuyahoga County has already committed over $530,000 in support to see this project realized. The City of Cleveland has committed to provide future financial support for expansion of the shipyard. A CORF grant will help address the environmental issues on this prime seaport property that has been vacant for over 20 years. Originally part of the shipyard for the American Shipbuilding Company, this property has hosted shipbuilding and other industrial activities over the last century. The Phase II environmental assessment found lead and total petroleum hydrocarbons in soil that exceed the residual concentration standards and concentrations of selenium and anthracene in groundwater that exceed Great Lakes basin surface water quality standards. To appropriately address these impacts, contaminated soil will be removed and a bulkhead will be installed to serve as an engineering control to prevent contaminated groundwater migration to the Cuyahoga River channel. This grant will help convert this brownfield into a higher and better manufacturing end use by a very successful Ohio-based shipbuilder. The Great Lakes Towing Company was established in Cleveland in 1899. They own and operate the largest fleet of U.S.-flag tugboats on the Great Lakes-St. Lawrence Seaway. The Great Lakes Towing Company is considered a small business by the U.S. Small Business Administration. This CORF grant will allow The Great Lakes Towing Company to implement its 2003 strategic plan to diversify and expand its ship repair business and to construct new tugboats and barges. The Great Lakes Towing Company successfully completed its $4 million Phase I Expansion that included a new 15,000 square foot corporate headquarters and fabrication facility. The Great Lakes Towing Company intends to further expand its stateof-the-art shipbuilding and repair facility on the CORF property, thereby creating new career job opportunities in Northeast Ohio. Proposed Fabrication and Commercial Building A1-2
Economic Benefit: This CORF project will result in a total investment of $23 million in property improvements and equipment on and adjacent to the CORF project area and 15 new highly skilled shipbuilding jobs. A $2,148,450 CORF grant will be matched with at least $723,898 toward additional remediation/bulkhead installation activities and new infrastructure. Based upon preliminary estimates, the tax benefits of the Great Lakes Shipyard Expansion Project will include a one-time sales tax benefit of $330,000 and annual income and property tax benefits of $134,000. The revival of production shipbuilding in Cleveland and Northeast Ohio brings employment opportunities that include highly skilled positions employing the latest shipbuilding technologies in tug and barge construction in an expanded state-of-the art facility. The Great Lakes Towing Company currently has 61 employees and has committed to creating an additional 15 full-time jobs for this Great Lakes Shipyard Expansion Project as tug, barge and vessel construction ramps up. As new vessel production increases, they will seek Ice-breaking hull construction at Great Lakes Towing additional certified marine welders, pipe fitters, diesel mechanics, information technology specialists, naval engineers, purchasing managers, steel construction foremen, heavy equipment operators, and quality assurance personnel. Starting earnings for new unskilled employees meet or exceed the City of Cleveland s living wage of $10.00 per hour. Starting shipyard salaries for skilled employees range from $12.00 - $18.00 per hour with full medical, dental, vision, life and disability insurance in addition to generous retirement benefits. The Great Lakes Towing Company invested $4 million in November 2006 for Phase 1 of the shipyard expansion project. Additionally, Tugz International LLC, an affiliate of The Great Lakes Towing Company, purchased two new state-of-the-art, environmentally compliant tugboats and a pair of sectional barges at a total cost of approximately $10 million to jump start tugboat and barge construction. This investment demonstrates the company s commitment to implement the remaining expansion project activities to capitalize on marketplace opportunities. Community Benefit: Located near downtown Cleveland, this CORF project will provide significant benefits to the State of Ohio, Cuyahoga County, Cleveland, and, most importantly, the nearby community. The new shipyard is in a federally recognized Historically Underutilized Business Zone ( HUB Zone ). This redevelopment increases surrounding property values that lead to higher tax revenues and also acts as a catalyst for economic growth. Increased employment and earnings will generate long-term cash flows to the federal, state and local governments from payroll and income taxes; and increased area real estate values will create new property tax income for the local government and city school system. Among the key benefits of the expansion will be increased employment opportunities; primarily adding new highly skilled and well-paid shipyard jobs with an emphasis on A1-3
providing maritime training and employment opportunities for the region s underemployed (including job opportunities for those living in the large nearby low-income housing complex) as well as providing opportunities for inner-city high school graduates. The Great Lakes Towing Company partners with the Cleveland Municipal School District s vocational trade schools. It maintains a close working relationship with Max S. Hayes High School, a Cleveland Municipal School District school, specializing in vocational programs. Under an agreement with the school district, The Great Lakes Towing Company offers vocational students in-school, after-school and summer employment opportunities at the shipyard to gain valuable, practical hands-on work experience that complements the welding and engine repair curriculum offered by the school. Qualified students are offered full-time employment with benefits upon graduation. The Great Lakes Towing Company anticipates expanding this partnership to Cuyahoga Community College with the expansion of its shipbuilding capabilities. The Great Lakes Shipyard Expansion Project is part of the City of Cleveland s Waterfront District Plan and the City of Cleveland s 2020 City-wide Plan. The shipyard expansion complements existing Old River Bed Channel businesses that include industrial businesses and recreational marinas, and will add to the demographic diversity and round-the-clock activity that enhances the area s aesthetics and economics of the region that has been a draw to the Industrial Flats area of the City of Cleveland. This project also helps maximize many recent investments in the area, including the flats redevelopment, Battery Park, and Wendy Park, and Cargill salt dome replacement and docking slip area replacement. Other Funding Sources: The total match value for this CORF project is $723,898. This match is committed by Cuyahoga County and Great Lakes Towing to fund a portion of the remediation and infrastructure costs. The match also includes $88,955 from previous expenses encumbered by The Great Lakes Towing Company and Cuyahoga County for assessment, survey, and engineering design costs, and in-kind services from Ohio EPA Targeted Brownfield and Technical Assistance activities. Towboat construction assembly line which is similar to that proposed at the Great Lakes Towing Expansion Project. (photograph of Damen Shipyards Group facility). The overall investment for the entire Great Lakes Shipyard Expansion Project is estimated to be $23 million. This includes remediation and bulkhead installation activities outlined in the CORF; the acquisition of a specialized marine crane capable of lifting up to 700 tons; design, engineering and construction of necessary infrastructure; design, engineering and construction of a 45,000 square foot building to house an industrial fabrication shop and 3,000 square feet of commercial office space; and the acquisition of shipyard tooling and equipment. The Great Lakes Towing Company has committed $14 million in private capital and dollars provided through conventional financing sources toward property improvements and equipment. They were also recently awarded a $546,000 Small A1-4
Shipyards Assistance grant from the Maritime Administration to assist with their expansion efforts. History of the Project Property The 2.1897-acre CORF property is part of an original 15-acre site that was the former American Shipbuilding Corporation shipyard that began operations in the early 1900s and operated until the 1950s. From the 1950s until the early 1980s, the property was leased by numerous industrial tenants whose known activities included manufacturing, machine repair, and metal fabrication. Several rail spurs were located along the northern area, used in conjunction with on-site industrial operations. The Cleveland-Cuyahoga County Port Authority acquired the 15-acre property in 1998 and leased a 5-acre portion to the The Great Lakes Towing Company. The Port sold the remaining 10 acres to the City of Cleveland in 2005. The Great Lakes The CORF Project Area is on the far left. The pinkshaded land contains the current headquarters. Towing Company purchased the 2.1897-acre CORF property from the City of Cleveland in August 2008 and also intends to purchase the Port s five acres. Environmental Improvements and Benefits The property contains up to 10 to 12 feet of fill material, initially used to bring the property to grade in the late 1800s. Nearly a century of industrial activities and the fill material itself are potential sources of contamination on the property. The environmental remedies on this project include removal of 170 cubic yards of impacted soils and installation of a 560-foot bulkhead along the shoreline of the property to prevent contaminated groundwater migration from continuing to impact the Cuyahoga River and Lake Erie. The Great Lakes Shipyard Expansion Project will incorporate many green building and sustainable design elements and construction practices. Planned activities include using building materials that contain high recycling content materials (crushed concrete, structural steel, ceiling tile, and carpet), recycling or reusing materials generated from site construction, implementing an indoor air quality management plan throughout the construction of the building (using low-voc materials wherever possible), using photointegrated light sensors to conserve energy, and installing roof panels on the fabrication building that are highly reflective. Project s Readiness to Proceed if Funded Assuming award of the CORF grant in December 2008, extension of the bulkhead from the adjacent property, which was completed in 2007, onto the CORF property, could begin in summer 2009. Discussions with the U.S. Army Corps of Engineers indicate that the bulkhead project would proceed under a Nationwide Permit for dredging and bulkhead maintenance and replacement activities for the Cuyahoga River shipping channel. We expect CORF grant and match-related activities to be complete by 2010. We expect the building to be constructed and the expansion plans to be complete by 2013. A1-5