Finance Committee Meeting Minutes from January 3, 2017

 

FINANCE COMMITTEE MEETING

 

JANUARY 3, 2017

 

 

 

Committee Member Mr. Evers opened the meeting at approximately ­­­6:00 p.m. Members of the Committee in attendance were Mr. Evers, Mr. Hoefle and Mr. Zuren.  Present from Council were Mr. Meyers, Mr. Kasunick, Mr. Spotton and Council President Ms. DePledge.

 

In attendance from the Administration were Mayor Morley, Fire Chief Whittington, Police Chief Reik, CBO Menn, Service Director Rubertino and Finance Director Schindel and Law Director Klammer.

 

Also in attendance were Mr. Rayburn from Big Game Capital, Mr. Merletti (Ret.) from Secret Service and Mr. Vincente Attorney-at-Law.

 

Also in attendance were members of the public.   

 

Members of the audience that were recording the meeting:

 

PROPOSED:

 

The sale of the old JFK property

 

Mr. Evers: I would like to either have Mayor Morley or Finance Director Schindel give us a little bit of history on the building.  What is going on with it?  How long has it been for sale?  I will now turn the meeting over to Mayor Morley.

 

Mayor Morley: It hasn’t been for sale long.  We’ve had continuing issues and we went to the land bank to try and tear the building down so that it would be easier to sell.  I will introduce Mr. Rayburn to discuss a few items for his opportunity to purchase the property.  We have been talking back and forth with Mr. Rayburn for the last two to three months.  He will discuss what he wants to build there and I think that we will just go from there.  We are trying to look out to see if Council would think about doing something like this.  Obviously when we talk about it…it will be a hot button issue that is in the state right now and then we will go from there.  I have not had it appraised yet and we were going to get it appraised so we know what the cost would be to sell it.  We sat down with Mr. Klammer and the Chief and he is on board with this project.  Mr. Rayburn will make a presentation and introduce his team and we will go from there.

 

Mr. Evers: Sounds good.

 

Mr. Rayburn: The name of my company is Big Game Capital.  It is my private investment company.  You can see my business background on that website.  I thought that without taking too much of your time that we would introduce ourselves and give a brief background, also bring you up to date on the Ohio medical marijuana law stands, and what the time tables are.  We will also explain the idea that we have for the property and what we plan on doing there and then answer any questions that you may have.  My background is that I was born and raised in Northeast Ohio.  I am not a wild 24 year old and I have been doing business for a long time in Northeast Ohio.  I took over my first business in 1981 when I was 26 years old.  It was an industrial distribution company that was called Flexiloin.  We were in Cleveland and Indianapolis and we were doing about $8 Million in revenues.  With a great team and a lot of innovation by doing things first class and I am saying those things because these are all of the ways that will operate our business in your city.  We did things better than the market and we grew faster in 1999 the $8 Million company was a $235 Million a year revenue company and I sold it.  The reason why I lay those numbers out is to indicate that a successfully managed a number of growth thresholds in business and I expect this to be the same kind of situation.  When I sold in 1999 I worked for the corporation that bought me briefly and then I started Big Game Capital.  It is a private investment company that is re-investing…came about by the way to start with anything.  It was quit new to have liquid in 1999.  I started following the medical cannabis market, which is now legal in some form in thirty-two states.  It is only 60% plus of the United States population.  Maybe five years ago I became very, very interested in it and after that when a very close friend of mine had an experience with it that I will get back too.  Since last year I’ve been 100% focused on connecting nationally in this market.  Learning the market and learning what not to do, learning what to do and in the process I have met some really fantastic people.  I will introduce Mr. Vincente first; he is one of the new people that I have met through this effort.  I have built the core of a national class excellence team.  Mr. Vincente can tell you what he has been but he the principle of Vicente Sederberg law firm headquartered in Denver…specialized in this market.  He is leading our effort to get licensed to operate these facilities.   I have known Mr. Merletti for a long time and he is on the security side.  Did you guys want to introduce yourselves?

 

Mr. Vincente: Thank you so much for having us.  I was born in Columbus and grew up in Cincinnati and now I live in Denver.  I head up the law firm Vincente Sederberg and we have five offices around the country.  We are a unique animal in that all we do is marijuana law and policy.  I have actually been doing this for thirteen years at this point.  I started out defending medical marijuana patience’s.  People with AIDS and cancer that were in the court system and I try to fight for their rights.  I have been very involved in writing a lot of the state laws in Colorado, Alaska, Florida and Massachusetts to help change the medical marijuana laws or to establish them.  Ohio is at a critical juncture here it is now one of 28 states that have the medical marijuana laws and there are eight states that have legalized marijuana.  We are not here to talk about that we are here to talk about the medical side of it.  I consider it sort of a moderately conservative law but I think that there are a lot of opportunity to help people and a lot of opportunity to create jobs.  That is why he has assembled this team.  My roll in this is to make sure that these guys are compliant as possible and that they are following the laws to a tee.  And that they are working with the local community.  My firm has actually represented and it continues to represent a number of governments around the country.  And we advise government internationally on medical marijuana laws and balance things out so it works for the community and for patients.  What are the taxes rates and fees?  What does security look like so forth?  We have a lot of expertise in this area and I think that it just speaks to the fact that Mr. Rayburn is a local guy and he wants to do things right here.  I am happy to answer any questions, talk about the laws or the timeline. 

 

Mr. Merletti: I am a security consultant and I am currently working with Mr. Rayburn on this project.  I have known him for a long time.  Prior to this I was the head of security for the Cleveland Browns from 1999 until Mr. Haslam came in.  In that roll I designed all of the security for the stadium, the training facility, the players and the owners.  Right after 911 Commissioner Tagliabue reached out to me and asked me to go to New York and their I designed the security for all of the NFL stadiums throughout the country.  Prior to that I was the Director of the United States Secret Service and I ran worldwide operations for the Secret Service.  Before that I was the Assistant Director for Training for the Secret Service and prior to that I was on the Presidential Protective Division with President Regan for seven years, President Bush Sr. for four years and for President Clinton for six years.  While I was with President Clinton I was named the agent in charge so I was in charge of the President, First family, and security for the White House complex.  I have been in the security field for a long time and I have a good feel for it.  Prior to that I was based with the Secret Service in the New York field office, prior to that the Philadelphia field office and before that I graduated from Duncan University.  In 1967 to 1970 I was in the United States Army.  I started as a Paratrooper and I had the opportunity to volunteer for the Special Forces and I was accepted.  I was cross trained as a medic as a light weapons expert and a Vietnamese interpreter.  I was in Vietnam from 1969 to 1970.  Prior to all of that I was in high school and that is it.  Thank you for allowing us to be here and to talk to everyone.

 

Mr. Rayburn: I will give a time table on what is happening with the law right now if that would be helpful.  The law was signed in June by Governor Kasich…there is a ninety (90) day organizational period between June 8th and September 8th.  There are three (3) state bodies that are involved with writing regulations for the law.  The first one is the Department of Commerce…most relevant to what we are talking about tonight.  They started writing regulations for cultivation facilities, which is specifically what we are talking about.  September 8th they have about four (4) months to get that done.  They put out a draft in early December…they put out a draft a couple of weeks ago so two (2) drafts have come out.  The first draft called for twelve (12) level one facilities which is what we are talking about and six (6) small facilities.  In the first draft a level one facility was fifteen thousand feet (15,000) of cultivation area and in the second draft it has grown to twenty-five thousand feet (25,000) of cultivation area.  The second draft held that the number of licenses at twelve (12) for the larger facilities.  For the smaller facilities it was fifteen hundred feet (1,500) of growing area and it is at three thousand feet (3,000) and they have increased the number of licenses from six (6) to twelve (12).  It is a total of twenty-four (24) which is twelve (12) each.  We are talking about a tier one twenty-five (25,000) feet of cultivation facility.  It will also have a twenty-five (25,000) square foot hard building for processing and other functions of business.  We are going to build from the ground up.  We are going to be building national state of the art…in addition to these two guys that I have aligned with so far to bring serious national level of input to each of their areas.  We also have a lot of our remaining members of our team built out already as well.  That is the Department of Commerce for Cultivation.  The second body that will be important to this is the State Pharmacy Board and they just started writing their regulations for dispensaries.  They are on about a four month lag behind the Department of Commerce, so all of the license applications are staggered.  They put out their first draft a couple of weeks ago and it called for forty (40) dispensaries in the state and the number is likely to move up.  The third body is the State Medical Board and they will be writing regulations for doctors on how they become certified, how they can write recommendations for the medicine for their patience’s, and what future diseases may be added to the current list of twenty (20) diseases that fall under the law.  That is the time table.  If there are questions at any point please…the description of what we are talking about doing with the current city property is to build a fifty thousand foot (50,000) from the ground up.  We will be building our facility to the higher end of the market and we will be building a facility that you will be proud of in your city.  We will be operating at the highest level of responsibility and legality.  As I have put it a number of time I don’t think that I would do well in prison.  I am going to be very careful about not bringing that into the conversation.  I don’t think that anybody is going to have in the state of Ohio a better security plan, because that is also very important to me personally and obviously to the community.  Finally in the communities where I have been active in business I like to be more than just a business man paying some taxes or license fees in this case we like to support the local community from a philanthropic side and little things here and there.  Would you like to issue questions?

 

Mr. Evers: Mr. Hoefle?

 

Mr. Hoefle: How many employees are you looking to have?  What is the salary ranges as far as potential revenue for the city? 

 

Mr. Rayburn: Let me elaborate briefly on the time table that if we are successful in getting our license that would occur sometime around September of this year not next year anymore.  We would build from the ground up for roughly a ten month construction period.  During that period we are going to contract locally where ever possible.  When we are up and operating and our target would be the third quarter of 2018.  Now I am going to answer your question…when we are operating initially the first year we would anticipate roughly thirty (30) jobs and the payroll between a million and a half and $1,750,000.00.  These are not commitment numbers but I don’t expect that they are going to change a lot.  The types of jobs to answer your other question would range from $10.00 per hour.  Working with the plants, soil, trimming and basically processing the plant from the baby stage to adult and then through to harvest, drying, curing, trimming and packaging.  The other end of this would be the managers of cultivation area.  There is potential that we will be able to also do production.  Which is the production of chocolate bars and there would be a manager of that area.  Assuming that we get an extraction license, which is a process of taking the plant through an extraction process to oil.  There will be someone with some scientific credentials possibly a PhD. a specialist in that area of business.  There will be a small amount of front office staff meaning financial, information and technology.  That is pretty much that spectrum.

 

Mr. Merletti: There will also be security jobs.  I strongly believe in partnership.  The only way that it will work is if I have a close partnership with the Police Department here.  The Chief would come in and look at everything that I am doing and make suggestions, which we are very open to we wouldn’t have it any other way.  We would also be hiring security people to work there full-time and part-time.  We would actually hope that we could maybe even have some…we consider your police officers the most professional.  Maybe we could have someone working off duty there.

 

Mr. Evers: Mr. Zuren?

 

Mr. Zuren: In the legislation from the commerce department are they requiring any or all employees that would work in this type of facility to be licensed on an annual basis? 

 

Mr. Vicente: Yes they are.  The intensive background for anyone that would own one of these businesses or work in them even your front line…and upwards…that make hire wages it is criminal background checking and good moral character background checks as well.  Then those licenses would have to be renewed every year.

 

Mr. Evers: Mr. Spotton?

 

Mr. Spotton: Would this facility be the corporate headquarters for this?  I know that it is a city business not just a facility within a city.

 

Mr. Rayburn: It’s the corporate headquarters and it would be the only facility like it that we own.  It would be the facility.

 

Mr. Evers: Mr. Hoefle?

 

Mr. Hoefle: Will this be one shift or are we looking at three shifts seven days a week?

 

Mr. Rayburn: I also didn’t give you quit the full answer on the job side.  That is year one the thirty (30)…million and a half plus.  We would fully expect and there is in the law a consideration that some license holders at the end of 2018 will be able to double their cultivation facility.  So from twenty-five thousand (25,000) feet of cultivation to fifty thousand (50,000) and it wouldn’t go from thirty (30) to sixty (60) jobs it would approximately be another twenty (20) jobs on top of the starting point.  We fully expect this to a growth business.  The question that you just asked me…it is dark for twelve hours in adult green houses.  Your light for twelve hours we would roughly be light from 7:00 a.m. to 7:00 p.m. most likely.  It could change a little bit also. Very few people there from 7:00 p.m. to 7:00 a.m.

 

Mr. Evers: Mr. Zuren?

 

Mr. Zuren: I have a question regarding what type of revenue this is projected to generate based on year one? Would you own a dispensary or would the product actually be sold from the City of Eastlake within the boundaries to a separate entity that owned the dispensary? 

 

Mr. Rayburn: The product would be sold from this facility to dispensaries.  There will not be a dispensary in this facility.

 

Mr. Zuren: Would your company own the dispensary or would it be sold to a separate…

 

Mr. Rayburn: We are hoping to get several dispensary licenses.  It is a separate application process and a separate location process.  We would fully expect to work with Eastlake first for a location if works for your city.  Then find one or two in other city.  I think that if I understand your question if we have three dispensaries let’s say.  We would probably be consuming the great majority of what we are producing here.

 

Mr. Zuren: I was looking at the tax benefits of it.  That was my question.

 

Mr. Evers: Mr. Hoefle?

 

Mr. Hoefle: Mayor Morley are they seeking any kind of tax breaks from the city with this endeavor?

 

Mayor Morley: We haven’t talked about it and they haven’t asked.

 

Mr. Rayburn: No.

 

Mayor Morley: What we’ve talked about and again we are in the early stages.  We wanted to see when we came here.  We have been meeting two to three months and the Chief can expound on it if he chooses to.  The Chief has sat down with Mr. Merletti…we have had our group and the group that we had is both the Chief’s, Ms. Schindel, Mr. Menn and myself because we are looking at the zoning to make sure that it was okay and obviously the Law Director.  So before we came to you…actually Mr. Klammer had some other land purchased in Eastlake and unfortunately it was the Wetlands.  After that I said we have some property so let’s take a look at that and that is what we decided to do.  They all knew that I had to have the Chief on board and like I said that the Chief can talk for himself.  The Chief is on board with this and the Chief has also talked with Mr. Merletti a few times.  They have had other meetings besides the meetings that we’ve had for the security.  Because if there are any issues that people would believe that there would be a security issue and we want to make sure that is taken care of.  Did you bring what you looked at where they put a building?  They are putting a building away from the residents and they are going to put a buffer up off of East 337th Street. 

 

Mr. Rayburn: Lets show the property first and I am sure you all know…this is the school bus lot.  This is your piece of property right here and this is what we would propose to put on that property. This is the property and the entry would roughly be where the current entry is and parking…this is the building that is currently on the property and it is going to be demolished.  Our hard building would be here and we would have five (5) five thousand foot (5,000) green houses there.  That would be our initial.

 

Mr. Vicente: The only thing that I would add and it is a little tough to see…essentially there is a lose advice the plan was to build a five (5) foot berm around the exterior and then plant a bunch of trees there.  We can talk about security….

 

Mr. Rayburn: For security and visibility for the…

 

Mr. Hoefle: The property on the right-hand side is actually 337th and I believe that is the backyards of all of the properties on 337th.

 

Mr. Evers: The other one is 332nd.  The other one to the left is 332nd.

 

Mr. Hoefle: 332nd on the left there.

 

Mr. Rayburn: The berm and the white pine protection will be on this portion of the property.

 

Mr. Menn: You have Louis Street on the north side and 337th is on the east side.

 

Mr. Evers: Ms. DePledge?

 

Ms. DePledge: When you talk about a five (5) foot berm are you talking about a wall, a hill or what are you talking about?

 

Mr. Evers: A fence.

 

Ms. DePledge: A fence and dirty so we’re going to have drainage issues for those residents around there?  That is something that we are going to be looking into?

 

Mr. Rayburn: Yes we are going to address that.

 

Ms. DePledge: I did have more questions if I could keep the floor?

 

Mr. Evers: Go ahead.

 

Ms. DePledge: How many facilities like have you built already?

 

Mr. Rayburn: I haven’t built any this will be my first.

 

Ms. DePledge: This is your first.

 

Mr. Rayburn: Approximately thirty (30) nationally and I mentioned other advisors that we have on in addition to Mr. Vicente’s firm for the lead position.  We have a cultivator advisor who has built multiple green houses.  We have an extraction and production advisor who has one of the best known companies in the United States.  That is in the market for the next stage we have a very well know dispensary advisor.

 

Ms. DePledge: So you’re of an investor than the builder or operator?

 

Mr. Rayburn: I will be operating the business.  I am not a builder but I will be contracting locally to build it.

 

Ms. DePledge: If you know are there any fumes that escape from these plants that could be a nuisance to the neighbors?  Do you…manage those well?

 

Mr. Rayburn: If we were to not filter there would be fumes that the neighbors…our plant will have a 100% filtering system.  Not fumes escaping.

 

Ms. DePledge: What is particularly attractive about this piece of property in this community?  Just a referral or?

 

Mr. Rayburn: I was referred to in my initial conversations with the Mayor from my first meeting several months ago through a mutual friend.  Not every community is open to the discussion and Eastlake has been so far.  It is also relatively close to home so that I don’t have to drive two hours.  It’s a great location from a distribution stand point, because we can distribute easily for this location throughout northeast Ohio and the state.  The bulk of our business will be northeast Ohio. 

 

Ms. DePledge: Are there any noises associated with the production that we should be aware of?

 

Mr. Rayburn One of the plusses is that it is a very quiet business.  It’s not a manufacturing pounding business.  There is no heavy equipment and there are no tow motors that come from manufacturing and heavy equipment background.  Flexiloin that was a rather loud business and this business will virtually be silent twelve (12) hours a day.  The active twelve (12) hours a day…2/3 of our space our plants are growing.

 

Ms. DePledge: I was more worried about the manufacturing process or the drying…

 

Mr. Rayburn: The process is in the hard building it is a low volume no noise pollution coming out of here.  Very few heavy trucks for deliveries it is mostly a van transported industry.

 

Mr. Evers: Mr. Spotton?

 

Mr. Spotton: I just want to go back to talking about the cooperate headquarters.  You said that you don’t have another facility like this and it would be here.  If you get dispensaries in other cities it is still going to be corporate headquarters for tax reasons as a profit in Eastlake?  You’re not going to be moving?

 

Mr. Rayburn: The dispensaries would likely be separate for legal reasons, because of the industry.  Dispensaries outside of Eastlake I do not think would be part of the Eastlake.  Again our first choice would be to put one in Eastlake.

 

Mr. Spotton: If you’re selling the product from your facility to your own distributorship.  There is going to be no profit there for the Eastlake building correct?

 

Mr. Rayburn: I didn’t hear…

 

Mr. Spotton: There’s not going to be any profit to the Eastlake business or very little.

 

Mr. Rayburn: We expect it to be absolutely profitable.

 

Mr. Spotton: When you sell it to yourself?

 

Mr. Rayburn: Yeah but there is also a…

 

Mr. Vicente: There is a transfer tax and I’m not sure exactly sure if that is what you are asking.  The state does require a tax to be paid on a whole sale transfer.  I not sure if…I know that the state will be capturing some.

 

Mr. Spotton: That is what I’m saying in seeing what we are going to capture.

 

Mr. Vicente: I would say that there is…we have worked with a lot of different communities on trying to figure out how this benefits the community.   It’s great that people want to come here and bring jobs obviously that is a big piece and to help people in the community.  We expect to have state and local fees related to this…any sort of regulatory burden that fall on Eastlake we would hope that our annual fee or bi-annual fees the state level it is every other year…would cover any sort of issue with that.  Often there are state and local taxes for this whether it’s on the retail side or on the whole sale side.  I think that there are different ways to capture that money flow into Eastlake and have this be a robust…

 

Mr. Rayburn: Let me make it really clear that there is no intent to run this as a break even or a loss to move profits down the chain.  There will be market levels that by a market phenomenon dictate price that we are going to be selling it at.  We are not into playing transfer games or anything like that if that is part of what your question.

 

Mr. Spotton: I just don’t want to see the profit get moved to another city and that’s your corporation and that’s your taxes that you’re paying somewhere else, because that is dispensing somewhere else.

 

Mr. Rayburn: That is a good question and that’s not all…

 

Mr. Evers: Mayor Morley?

 

Mayor Morley: We have discussed and Mr. Rayburn has asked for his company to be exclusive in the city and we’ve not gone past that.  That should tell you right there that Mr. Rayburn wants to stay here in Eastlake as his corporate head quarters.  The dispensaries will be the dispensaries and we talked to the Law Director that the laws are going to dictate certain things.  With the million in three quarter for hopefully the first year for the revenue will be thirty some thousand dollars for the two percent (2%) tax and then property taxes.  We wanted to make sure before we approach Council that this is something that Council would want to look at.  I have not gotten that land appraised yet and I will get it appraised.  Mr. Rayburn said that he would tear down the building at his cost the old part of the building…that he would just…there is no cost to us.  We have been talking back and forth for three months.  It is something and obviously it will be a hot button topic in the city and in the state.  We just wanted to be up front in where we are trying to go.  The person that did send Mr. Rayburn to me is a very reputable person as well.  Every meeting that I had with Mr. Rayburn and his team just shows how professional it is going to be and it is going to be state of the art.  As I have said there will be fourteen (14) in the whole state and if Eastlake says “we don’t want it and wake up the next morning reading the paper that it will be in Mentor, Willoughby or somewhere else.”  We have to look at our city and what we need to do to get some revenue in the city.  No matter what your take is on the medical marijuana period I think that it’s just something that is going to be controlled.  I believe that the state will control it and we shouldn’t have any issues.

 

Mr. Evers: Mr. Zuren?

 

Mr. Zuren:  I have a question about the nuts and bolts of the operation and I don’t know if you can answer this but I know that in a nursery they topically don’t have a water filtration system.  Is there one that is required in this facility?  The three (3) that you have visited have any plants grown outside of the greenhouses?  Have there been any issues with that with the public or the neighbors?  If you could comment on that I would appreciate it.

 

Mr. Rayburn: No outdoor grow at all.  I have never seen that and it is not allowed.  It’s not going to be allowed in the State of Ohio.  For the water filtration the simple answer is yes.  We don’t know if we will use natural pesticides or not on our plants. If we do there will be a filtering system before the water reaches the sewer system.  We will be recycling a good amount of that as well.

 

Mr. Vicente: Our intention is to run a state of the art from an environmental impact.  Mr. Rayburn referenced that we are working with a Colorado cultivator who has been growing a regulated market.  Colorado has had medical marijuana since the year 2000, so he has quite a bite of experience working a regulated market.  His intention is to make this almost like a show piece for environmentalism, recycling water and things of that nature, which I think could attract some positive attention.

 

Mr. Evers: Ms. DePledge?

 

Ms. DePledge: To Mr. Merletti you are being brought on for security purposes and if you can what type of concerns are you watching for?  Use your discreasion in you answer.  

 

Mr. Merletti: Really if you look at any business let’s take a bank.  There is security because there are certain people that come in and rob the bank.  Well that is the same concern that we are going to have.  We are going to make sure that we are meeting all of the regulations that Ohio has put into effect.  The seeds from seedling to when it becomes an adult plant…this is all tracked.  That is part of securing it and making sure that none of it can walk out.  That is how we are going to secure it that way.  I think that just in general securing the way that you would any business, but we are going to make it state of the art.  There will be a fence out there, but the fence will also have a high tech technology on it to make sure that nobody can climb it and get over it.  There will quite a security system put into place.  There will be a human element of security and that will be supported strongly.  That is why I am here and I think that it will be…our goal is to mitigate risk completely to the public, even if it wasn’t a medical marijuana business.  My whole life has been dedicated to mitigating risk to the public safety in the law.  That is what I am hoping to do and I am hoping to make this a showcase.  I have had several meetings with the Chief and I know the professionalism that is here in Eastlake.  I know that we will be able to really have a partnership.

 

Ms. DePledge: Thank you.

 

Mr. Evers: I have a question for Chief Reik.  Chief do you have any input?

 

Chief Reik: I think that you guys see what I see.  From the first meeting Mr. Rayburn seems like a good business guy and the stuff that he doesn’t know he gets a marijuana law man from Colorado and a gentleman that has guarded the President.  How you go and get better people to take up the slack of the parts of the business that you don’t know…obviously Mr. Merletti brings a lot to the table.  He has been open for any concerns that we may have that comes from the grass roots up.  Then having other businesses and people to consult with I am sure that there will be questions that were brought in Colorado in 2000 will come up when we start something or if something started in this area.  Marijuana has pretty much been decriminalized for a number of years anyway to where it is almost non-existent.  Obviously the state has already made their decision and this is going to happen somewhere so I didn’t see any reason to not entertain it.  After meeting these guys it seems more studies than a bunch of twenty year olds who just showed up and they want to throw something together.

 

Mayor Morley: Do you want to talk about the time line and why we decided to come out now with the application process?

 

Mr. Rayburn: Sure.  The regulations that are being written by the Department of Commerce that are due in the next couple of months include the requirements for the application for a license.  Sometime this spring in April, May or so we should have all of that that should be published by the Department of Commerce.  We will have prepped a good deal of our license application before then, but what will be required of anybody applying will be an exact location, letters from the city supporting the effort from various constants of the city, detailed building plans, projected financial statements, and a lot of other stuff.  The main coin thing is that we have to have our exact location and the building that will be built on their planned in full detail as part of our application.

 

Mayor Morley: And the application is what $200,000.00.

 

Mr. Rayburn: The application fee is $20,000.00 with the application and if you win a license it is $180,000.00 so the total is $200,000.00 per year.

 

Mr. Evers: I have and it is for Law Director Klammer.  What do you see coming down the pipe that Council would have to take action on as far as ordinances?

 

Mr. Klammer: From my perspective it’s kind of twofold and we are going to do a set of regulations.  A large part will define what the licensing procedure will be.  That should be real easy and I have talked with Mr. Vicente a little bit from here going forward to see if Ohio…I suspect that Ohio intends to preempt a lot of that so I don’t know…the regulation control that we are going to have.  It doesn’t mean that we can’t do it and deal with it as preemption becomes an issue.  The Chief I think is right on the decriminalization part.  If I remember this is medical marijuana it’s not recreational marijuana.  Even on a decriminalization of recreational marijuana it is a $100.00 fine anyway, which is a part of this global growth and understanding of marijuana across the country…to take steps like that.  A regulatory structural…make sure that you guys a comfortable with how you want to see the licensenur and do you want a separate background search for the providers.  Secondly Mr. Menn and I have talked about it a few times as well as being in these meetings is the zoning related issue and particularly the sale of this property.  We did include that ordinance a few years back that references the ten (10) acres and I suspect that...I am trying to remember why we did but I suspect that it was of the Nike site.  I don’t remember what other parcel that we had at the time, but oddly enough depending on the numbers it is just under ten (10) acres or just over ten (10) acres.

 

Mr. Evers: It is just under.

 

Mr. Klammer: Our ordinance says ten (10) acres so depending on what the actual acreage and the parcel is we have to figure it one way or the other.  The blessing of course with the charter and the municipalities we have that authority to exempt our properties from any ordinances anyways.  If you were to exempt this property from that ten (10) acre restriction it is a pretty reasonable thing to do if it were ten point five (10.5) acres.  I don’t think that anybody…it is certainly consistent with the purposes of the ordinance.  That would give them one of things that they want is to see if we’re willing to let that property go, because they want to at least have that under contract for the purposes of their licensor.  So that would probably be your first thing and at the same time we could work on the licensor structure and he obviously is going to enter into that transaction with the risk that we haven’t decided on the licensing yet.  But the good part is that there has been such a good ongoing dialog and I don’t anticipate any surprises.  It’s been a nice experience thus far.  Like the Chief said if you’re going to do something like this obviously you have to come to it with that type of perspective to give everybody comfort and I know that they have done that with me.  I don’t think that these are regulatory issues that we can’t get over.  From a legislative stand point you guys kind of decide on what the business policies of the city are.

 

Mr. Evers: Last question will be for Mayor Morley or for Ms. Schindel.  There were some deed restrictions on this property from a few years back if I’m not mistaken.  Has all of that been cleared up?

 

Mayor Morley: Those were taken away in 2008.

 

Mr. Evers: In 2008.

 

Mr. Klammer: I need to figure out the…and again nobody knows the entire configuration of the property but I don’t know if there is direct access across this property.  I think that Willoughby-Eastlake Schools Board of Education owns part of that I think.  It is up to Mr. Rayburn and his team to figure out those configurations and what easements may exist on the property.  That is rather topical on any commercial…

 

Mr. Evers: That is just the access road correct?

 

Mr. Klammer: Yeah and that is pretty topical with any commercial transaction if you look at…which ones exist or which ones we use.  I just say that so that…I don’t think that parcel makes it all real…

 

Mayor Morley: I think it was in 2008 when the former Mayor we got the deed restriction I was on Council we got that.

 

Mr. Klammer: I think that the deed restriction was…and I will tell you… I have to go through and find those documents.  I am not sure that that particular…for some reason I believe that parcel is land locked and I’m not sure that it makes…different so we are going to need to figure out with Willoughby-Eastlake Schools.  How it got land locked I would assume it is related to specifically…then I can say otherwise…

 

Mr. Evers: The bus garage.

 

Mr. Klammer: The bus garage…we would allow them…

 

Mr. Evers: That is the actual Nike site and that is where the bus garage is.

 

Mr. Klammer: On the south property.  I know that I’ve been there with Mr. Menn and we talked about this joint or split zoning on that property…will seem to allow this use without any conditional uses as far as from my prospective.  Mr. Menn knows and the Mayor has said is the one concern is that there is residential on two sides of this at least.  The front end on Lakeland Blvd. is perfect and it is into the highway and gives distribution.  The big concern is making sure that the neighbors are happy too and they were already preparing for buffering and that type of stuff.  There has never been any push back…

 

Mr. Evers: Ms. DePledge?

 

Ms. DePledge: Just to recap for the record than anything else.  So the city is going to get whatever the sale price is determined to be.  We’ll have an employment tax based on the employees on an annual basis.  And then is there any type of licensing fee that the city can retain as far as…do we have any interest or any potential for some sort of interest like that?

 

Mayor Morley: We’ve talked about what the licensing fees in the other states are and again we are going to work through those and obviously we will have to go through Council for any new fees or licenses.  We came here because we weren’t going to…if Council says “this is a no go or whatever” we’re done.  We haven’t really gone into that and we will do that.  This is not going to happen in the next couple of months.  Just so you know the land will be contingent on them getting a license.  If they end up not getting a license then the sale would be done.  We will work through all of those details.  Mr. Klammer and Mr. Vicente have been working together to get the…he has been in Denver all of those years and he flew in today.  They have been working on those so when we present that on any fees that we are looking at that we are all on the same page with it.  This part of it is if Council is on board with us on selling the property to them.

 

Mr. Evers: Are there any other questions?  Mr. Kasunick?

 

Mr. Kasunick: Mayor Morley as far as public bidding is concerned…

 

Mayor Morley: The ordinance that Mr. Klammer is talking about we don’t have to go to a public bid.  What we are going to do is…we did research on that because of the acreage.  It also says in the ordinance that it has immediate impact economically to the city that we don’t have to bid it out.

 

Mr. Kasunick: Okay.

 

Mr. Klammer: You may not have on Council…we had this designed this back in 2015 and it was only for the Nike site that we did this.

 

Mr. Evers: I think that it was.

 

Mr. Klammer: I think that we designed this right for ten (10) acres for that site and I’m not sure why…ten acres (10) when it is ten point five (10.5) acres.  Such is the story and some things in small…so we exempt ourselves from that type of bidding under the state code.  This procedure is that we can exempt ourselves from that too as long as Council does it by legislation.

 

Mr. Evers: Are there any other questions?

 

PENDING:

 

There is nothing under Pending.

 

MAYOR’S COMMENTS:

 

Mayor Morley had nothing to report.

 

There were no further questions or comments.

 

FINANCE DEPARTMENT

 

Ms. Schindel had nothing to report.

 

There were no further questions or comments. 

 

LAW DEPARTMENT

 

Mr. Klammer was absent and excused.

 

There were no further questions or comments.

 

MISCELLANEOUS:

 

There was nothing under Miscellaneous.

 

REGOGNITION OF PUBLIC:

 

Ellen Dorney, 1710 East 337th St., Eastlake, OH

 

Ms. Dorney: What I’ve learned tonight is that this is a dangerous project.  We have a man of this caliber and thank you for serving your country with the security and that scares me right then and there.  You have children around marijuana and I understand the medical marijuana but I also know that there are synthetics that can be replaced by the medical marijuana.  I have friends that are on it with diabetes and for eye problems and things like that.  I think that it is the wrong location and I am very upset about the whole situation.  I know your goal is money of course.  I think that you really have to think of the homes around there.

 

Ms. DePledge: If you could direct your comments to the chair.

 

Ms. Dorney: We are not going to be able to sell our homes.  I certainly do not…I have experience with people on marijuana and I know that this is medical and I know that there are substitutes for that.  I just do not think that it is a good location.  Thank you.

 

There were no further questions or comments.

 

Mr. Evers: Mayor Morley?

 

Mayor Morley: I have equipment under miscellaneous.

 

Mr. Evers: Under Miscellaneous?

 

Mayor Morley: I have talked with Ms. Schindel and Mr. Klammer and we have to talk to Mr. Klammer about getting a move on to get this levy moving if we are going to have in on the ballot February 1.  If you can get the numbers moving we have to get moving on it.  I guess I will ask how does Council feel about this.

 

Mr. Evers: I was going to have them exit and then.  I appreciate the time. 

 

Mr. Hoefle: What Mr. Klammer is asking is if you guys have any kind of input in regards to a resident who had concerns about the property values with an establishment like this going in?  I think that you were going to address that.

 

Mr. Vicente: Absolutely sir and again I have been doing this for about thirteen years and honestly we need to be respectful and that is not an outrageous concern at all and it seems like she is coming from a good place.  What I can tell you is the statistic is showing a drop in property values related to residents being near marijuana facilities.  In particular medical marijuana cultivation facility which is essentially agriculture and our goal is basically…that no one will know that it is there.  It isn’t like we are going to have a flashing sign that says “We’re selling marijuana here” or things like that.  We will have no sign and no smell.  I really don’t think that statistics…I am happy to share some numbers on that and such.

 

Mr. Evers: Mr. Hoefle?

 

Mr. Hoefle: I know that you were talking about the buffer zone and talking about a fence…you talking an eight foot high fence with…I am just wondering for the ecstatic of a neighbor who backs up to that property.  Do they want to see a big fence with barbed wire at the top of it or are you going to plant some…that would make it look like a nice private area.  They would even know that you guys exist back there.

 

Mr. Rayburn: That is the goal.  You can comment on the fence if you wanted.  That is very clear…and I appreciate the comments.  Hopefully what we are doing is taking a pretty dormant piece of property and making look first class.  We are absolutely going to address all issues involved…the berm and the point of the berm is to envision this from the neighborhood.

 

Mr. Merletti: The fence line would inside that so that it is not going to be like what is this.  The burm is going to hide just about everything.

 

Mr. Hoefle: The fence and all?  I figured.

 

Mr. Klammer: The only thing that building is going to really be used for of significance was our Police Task Force there because it was isolated.  Nobody was going to go back there they could meet with…and do what they had to do back there without any details right Chief?

Chief Reik: It won’t be the first time that we drove back there.

 

Mr. Evers: Mr. Menn?

 

Mr. Menn: I will say that the houses on 337th…a lot of them are up towards the street and if you…I probably encourage everyone to drive back there to see that there is already a big buffer zone between the ends of their properties…where their houses are located.  Those yards are very deep back there.

 

Mr. Hoefle: They are very deep back there.

 

Mr. Menn: You may want to take a drive back there and look at it for yourselves to see the area if you haven’t already.

 

 Mr. Evers: Mr. Meyers what do you think?

 

Mr. Meyers: I’m all for anything with the jobs aspect and the revenue for the city it is all going to have a lot of the same concerns that everybody else with the marijuana things coming whether we want it to or not throughout the country.  I think that if we don’t get on board with this it’s going to be Wickliffe, Willoughby or Mentor.  Everything seems to end up in Mentor.

 

Mr. Evers: Mr. Kasunick?

 

Mr. Kasunick: I agree 100%.  It sounds like a good opportunity and we would be insane to pass it up.  Like they said it’s going to go somewhere else if it’s not here and we would be losing out on all of the revenue.  It’s an up and coming industry so it’s a good chance to get in on something on the ground level that is within the state.  I am for it.

 

Mr. Evers: Mr. Hoefle?

 

Mr. Hoefle: Based on all of the conversation and all of the input that we’ve had here I am in total agreement with it.

 

Mr. Spotton: I am in agreement with it even though I’m not a fan of another toxic in society but that state is making and it’s coming like Mr. Meyers said. 

 

Mr. Evers: Mr. Zuren?

 

Mr. Zuren: I am concerned and my wife is a drug and alcohol counselor and I see what it has done to society and I know that this is the lowest level of it, but the state has deemed it legal and I think that it is a big financial burden to the city.  I am definitely opened minded to it.

 

Mr. Evers: Ms. DePledge?

 

Ms. DePledge: I am on board with it.  It sounds like you guys really have done a lot of research and a lot of work.  There will still be a lot of questions that will come down the pipe but I think that the team that you have assembled is very good and that we will be able to work together and this will work out well for the city.

 

Mr. Evers:  I do have some concerns those will come along in time.  I think that if we don’t jump on this now somebody else will.  Chief Reik seems pretty comfortable with it and our Building Department seems to be okay with it.  The Law Director seems to feel comfortable with it and obviously our Service Department is also. 

 

Mayor Morley: Again I appreciate it and next I will get the appraisal done.  After we do that we will obviously get into a contract with Mr. Rayburn and get all of it together and bring it back to Council.

 

The meeting was adjourned at 7:02 p.m.

 

tms     


 

APPROVED: __________________________ 

 

 

 

DATE: ______________________________

 

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