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Home My Public Portal AboutA1990-06-08LRAE LYNWOOD REDEVELOPMENT AGENCY 11330 BULLIS ROAD LYNWOOD, CALIFORNIA 90262 (213) 603 -0220 Robed Henning CHAIRMAN n Paul Richards, VICE CHAIRMAN Louis J. Heine, MEMBER Armando Rea MEMBER n Wells, MEMBER � V Evel Y CITY OF LYi T/4'Of;p CITY CLLL'',CJ UFi IC: JUN J" 1990 AM P64 AGENDA X1819110111112111213141516 LYNWOOD REDEVELOPMENT AGENCY June 8, 1990 SPECIAL MEETING 5:30 P.M. LYNWOOD CITY HALL, 11330 BULLIS ROAD ROBERT HENNING CHAIRMAN PAUL H. RICHARDS II VICE CHAIRMAN ARMANDO REA MEMBER EXECUTIVE DIRECTOR CHARLES G. GOMEZ OPENING CEREMONIES: LOUIS J. HEINE MEMBER EVELYN WELLS MEMBER AGENCY COUNSEL HENRY S. BARBOSA A. Call Meeting to Order. B. Roll Call. ( HENNING- RICHARDS -HEINE -REA- WELLS) C. Certification of Agenda Posting by Secretary. r t PUBLIC ORAL COMMUNICATIONS (Regarding Agenda Items Only) ITEMS FOR CONSIDERATION• 1 MINUTES OF PREVIOUS MEETING None 1 PUBLIC HEARING ITEMS None REGULAR ITEMS 2. ECONOMIC DEVELOPMENT GRANT TO RELOCATE BUZZ SPORTSWEAR TO THE CITY OF LYNWOOD Comments: To have the Agency to consider the request of Buzz Sportswear International for an adaptive rehabilitation grant for leasehold improvements to a building in the Alameda Industrial Redevelopment Project Area. Recommendation: Staff respectfully requests that the Agency hear the presentation from Buzz Sportswear International and provide staff with appropriate direction. DISCUSSION ITEMS 3. DEVELOPMENTS PERTAINING TO THE LYNWOOD MARKETPLACE Comments: Agency staff will brief the Agency regarding changes in the plans submitted by M + D Management for the improvement of the Montgomery Ward building CLOSED SESSION ITEMS None A GENCY ORAL AND WRITTEN COMMUNICATION PUBLIC ORAL COMMUNICATION ADJOURNMENT: Motion to adjourn to a Regular Meeting of the Lynwood Redevelopment Agency to be held June 19, 1990 at 7:30 p.m. in the Council Chambers of City Hall, 11330 Bullis Road, Lynwood, California. i usibm \speccvr\sf PA 0 0 DATE: JUNE 8, 1990 TO: HONORABLE CHAIRMAN AND MEMBERS OF THE AGENCY FROM: Kenrick R. Karefa- Johnson Interim Director of Community Development SUBJECT: ECONOMIC DEVELOPMENT GRANT TO RELOCATE BUZZ SPORTSWEAR TO THE CITY OF LYNWOOD Purpose: To have the Agency consider the request of Buzz Sportswear, International for an adaptive rehabilitation grant for leasehold improvements to a building located in the Alameda Industrial Redevelopment Project Area. Facts: 1. Buzz Sportswear International, a contract sportswear manufacturer, plans to expand its manufacturing capabilities in order to service increasing sales orders from two major manufacturers, Esprit de Corp and Guess? Jeans. 2. Buzz Sportswear currently employs 94 workers in a 9,000 square foot facility at 136 East 32nd Street in Los Angeles. The firm plans to expand its work force to 200 to fulfill the company's increasing sales orders and therefore requires a larger manufacturing facility. The firm is considering moving to Lynwood. 3. Most of the firm's new employees will be sewing machine operators, a skilled and semi - skilled position that pays between $300 and $500 per week. In order to ensure a constant supply of trained operators, the company plans to cooperate with JTPA to establish a training center in Lynwood that would be similar to an incubator project. 4. To accommodate their increased manufacturing operations, the company has located a 25,000 square foot building in the ERC Business Park, which would be suitable for the company's needs if specific improvements were made. These needed improvements are: power to support 300 machines, an electrical feed rail system, heating and air conditioning for all work areas, security gates and demolition. These improvements are estimated to cost $150,000. >. Buzz Sportswear is requesting a + q g $150,000 { adaptive rehabilitation grant from the Agency to finance these improvements. Per Agency counsel, Redevelopment Law permits the use of Agency funds for such adaptive rehabilitation purposes. AGENDA ITEM Analysis: Buzz Sportswear's proposal, which is attached as Exhibit A, indicates that they expect their move to Lynwood to result in economic benefits for the City; specifically: - 100 new jobs within a 5 -month period, increasing to a total of 200 in the near future. - A job training center, similar to an incubator project, which will train skilled and semi - skilled workers for the jobs that will be created. In addition, the firms proposal could result in the elimination of certain causes of blight in the Alameda Industrial Redevelopment Project Area and increased property tax revenues due to increased value of the leasehold. As Redevelopment Law allows for the use of Agency funds for an adaptive rehabilitation grant, the firms proposal may allow the Agency to promote the creation of new jobs for Lynwood residents. Buzz Sportswear and ERC Business Park have entered into a lease agreement, contingent upon the Agency's approval of the proposed adaptive rehabilitation grant. The adaptive rehabilitation grant could be conditioned by an agreement that would stipulate the permitted uses of the funds, the contribution of the firm and other conditions of acceptance of the funds. The agreement could include certain guarantees to insure the accountability of the firm to the City, such as 1) a lien, in the amount of the proposed grant, placed on the firm's equipment to secure the City's interest in case of bankruptcy; 2) a guarantee that a specific number of new jobs would be filled by Lynwood residents. A representative of Buzz Sportswear is present this evening to make a presentation to the Agency on the firm's proposal. Recommendation: Staff respectfully requests that the Agency hear the presentation from Buzz Sportswear International and provide staff with appropriate direction. f buzz \060190 \elinor 8.UZZ SPORTSVWAR INT'L., INC. • � DBA SPORTSWEAR SPECIALISTS OBA L.A. GARMENT FINISHING }S' 136 E. 32nd STREET • LOS ANGELES, CALIFORNIA 90011 • TELEPHONE: (213) 231.1129 . FAX: (213) 2310403 May 25, 1990 Mr. Charles Gomez City Manager 11330 Bullis Road Lynwood, CA 90262 RE: Request for Leashold Improvement Assistance Dear Mr. Gomez: •- Thank you for your assistance in finding a facility for our young and growing company. The City of Lynwood would be an excellent place to relocate our plant if we can work out a suitable arrange - ment, We have the business and financial resources to expand our Production capacity threefold. All we need is the "right building in the right location to handle this growth. The City of Lynwood provides us with many benefits including a large labor pool, transportation, parking and a safe environment. However, the building we are interested in is not prepared for a manufacturing tenant. Since our own funds will be used for new equipment and working capital, we must rely on the City of Lynwood or the landlord to provide the necessary funds to make the builing suitable to our manufacturing needs. Specifically, we are requesting that the City of Lynwood provide the necessary funds estimated at $150,000.00 to prepare the new facility for our business, requirements. The details of this request along with some background information on our .company is provided in the document which follows: The format of the document is as follows: Company History and Structure Product and Market Current Labor Force and Facilities Expansion Plans and Financial requirements The Lynwood Facility Benefits to the City of Lynwood If you have any questions, please feel free to call on us. very truly yours, BUZZ �RT OE R INT'L INC. President t ,t 0 BACKGROUND INFORMATIONO COMPANY HISTORY AND STRUCTURE: In January, 1990 BUZZ SPORTSWEAR INT'L., INC. purchased the assets of a sole proprietorship owned by Buzz Fukutomi, doing business as LA Finishing which had operated as a garment fi- nishing plant for approximately one year prior to the purchase. In addition to the finishing operation which it still conti- nue to operate, BUZZ SPORTSWEAR INT'L., INC under the dba of SPORTSWEAR SPECIALISTS established a small sample making ope- ration for Esprit de Corp and Cherokee Marketing Corp. with the plan of expanding to a full jeans and jackets factory. Today, SPORTSWEAR SPECIALISTS and LA GARMENT FINISHING employ on a combined basis approximately 90 people and together will ship $200,000.00 of jeans and jackets for the month of June. Grace Fukutomi is the sole stockholder and her son, Buzz, is president and chief operating officer. PRODUCT AND MARKET: BUZZ SPORTSWEAR INT'L., INC. is a contract manufacturer of sports related apparel providing the following contract ser- vices to its customers: dba SPORTSWEAR SPECIALISTS Fabric warehousing Cutting Service Sewing Service Sample making Service dba LA GARMENT FINISHING Pressing Service Trimming Service Quality Inspection Service DEPARTMENT Sample Making Sewing Finishing 8 of Sales 88 608 328 1008 At present the company specializes in the contract manufact ring of jackets and jeans pri1narily in u- denim fabrications. How- ever, its employees and equipment are suitable for manufacturing a wide variety of sports related .,apparel. Current sales can be broken down as follows: t t r . ,' • - 2 - 9 The sewing, department is expected to account for over 75% of sales withiutwelve months. The company by choice has limited its customer base to two major companies: Esprit de Corp, San Francisco, CA Guess? Jeans, Los Angeles, CA It is common industry practice to limit the number of customers and products in a sewing factory to maximize efficiency and profitability. Both customers are presently negotiating with the company on major ongoing production programs. Due to the company's reputation for quality and service (see exhibit C) the company would have no problem in replacing or augmenting its two major customers if circumstances warrants it. In recent years, there has been a trend to return overseas production in better goods to domestic manufacturers due to the "quick response" requirements of the retailer. In addition, there has been a government "crackdown" on illegal sewing ope- rations and State's pressure to make the manufacturer respon- sible for the illegal acts of its contract manufacturers. There- fore large manufacturers such as Esprit de Corp and Guess? want to deal with larger and more reputable contractors such as BUZZ SPORTSWEAR INT'L., INC. to reduce their risk. Consequent- ly, we see a growing demand for our services over the next five years. CURRENT LABOR FORCE AND FACILITIES: The company employs 94 workers in a 9,000 square feet facility located at 136 E,32nd Street in Los Angeles. The facility was originally acquired for finishing and sample making and has now outgrown its purpose. Due to space limitations, product movement has become very inefficient due to the cramped quar- ters, and as a result the company was forced to subcontract its cutting operation, and also stored its fabric inventory in another warehouse. The company's facility contains cutting tables and 120 units of equipments for sewing and pressing operations, Current employment consists of the following: PERSONNEL Office personnel Sewing Operators Trimmers Pressers Cutter Spreader Sample':Makers Utility workers Plant Manager and Supervisors 2 42 20 15 1 94 t !` • - 3 - EXPANSION PLANS AND FINANCIAL REQUIREMENTS As the company has geared up its production, sales have increased as follows: . MONTH (7990) January February k ' March { April May *June *July *August * September * October November December PROJECTION FOR 1990 Monthly Sales $60,000.00 65,000.00 84,000.00 125,000.00 135,000.00 200,000.00 250,000,00 300,000.00 ' 300,000.00 300,000.00 300,000.00 150,000.00 $ (projected) The company is currently developing the following programs with Esprit de Corp and Guess ?: Customer Name Esprit Guess? Product Produced Samples Jeans Jackets Jeans * *TOTAL WEEKLY SALES * *TOTAL ANNUAL SALES Weekly Average Value Production Price 230 70000 $75.00 $ 17,250.00 3000 5.25 14.25 52,500,00 42,750.00 5000 51!30 26,500.00 18230 947960 139,000.00 $ 7,228,000.00 *In order to meet demand the company will have to expand its work force to approximately 200 semi - skilled and skilled emplo- yees inside the next five months, and another 100 before the end of June 1991, and will require a 25,000 square feet faci- lity to accomodate the additional workers and equipments. * * 5 -year projection from 1991 thru 1996. The company plans to procure an additional 200 machines at an estimated costs of $ The facility and down time resulting from cost of moving to the new the move (due to loss Of a good portion of the present employees, hiring and training of new employees) is estimated at $ The company has the financial resources to acquire the equipment and finance -the move. However, it will be necessary to move into a faci- lity which has already been prepared for such a manufacturing operation. t i - 4 - • I THE LYNWOOD FACILITY OWNED & OPERATED BY ERC: Company has identified a 25,000 square feet facility at 2555 Industry Way in the City of Lynwood which would be suitable to the company's needs if the following improvements were made: IMPROVEMENTS REQUIRED Estimated Costs Power to support 300 machines $40,000.00 Electrical Feed Rail system 25,000.00 Heating and A/C for entire work area 60,000.00 Security gates (6) 15,000.00 Wall demolition 10,000.00 TOTAL ESTIMATED COSTS 150,000.00 These improvements would be necessary conditions for any buil- ding the company would move into. The Lynwood facility was not initially designed f,or a manufacturing plant and therefore will need these improvements. The Lynwood facility is attractive for the following reasons: (1) Ample parking and the security of an industrial park; (2) Long term lease; (3) Large Labor Pool; (4) Ease of access to public transportation; (5) The ren cost is competitive with the surrounding communiies. However, the company will welcome any other similar facility offered by the City of Lynwood. If there is another facility that will fit the company's operations and requirements (see exhibit B) other than the one located at 2555 Industry Way, it will seriously consider it as well. BENEFITS TO THE CITY OF LYNWOOD: Although most of the 94 employees will remain employed (through extra incentives like financial assistance should employee de- sire to move to Lynwood, increase the minimum wage guarantee from $4.25 an hour to $4.50 an. hour, shuttle bus, etc.), an additional 100 employees will be required at the new facility within a 5 -month period. Within the past three months alone, the company has hired 60 new employees. Employment growth will be primarily in the sewing operator category which is a semi - skilled to skilled position paying $300.00 to $500.00.00 per week depending upon productivity Skilled) Due to the limited lled)in the Lynwoodarea, the pcompanysintendsptoaestablish a training center in a joint venture with The Hub Cities Con- sortium to provide a constant supply of trained operators. r t u Ll EXHIBIT A (EXISTING) fir' I iC -PROPOSED STORAGE .FOR FABRIC rp q. GATE I BLE •t�l,,. �---- .�.�_BUN DLI B WC wc h. mecli'l w 1: w . I GATE 2 sto- z H rage ; U GATE 3 Wc 0 WC ''GATE 4 "i j GATE' 6'. 0 GATE 5 z 'INSPECTION SHIP PING z If 3'14 — F4 V) 0 a4 0 x P4 H H CQ 0 )v rr .PROPOSED STORAGE -FOR FABRIC °-- -- --ATE 1 BLE .' �.: I • 1• f fTTTTNC' S BUN,__ D -2h B v WClll WC ,.. 1 r5 . • f ' tom; q' i0, � . e. f „� � ) ,o � • o Yi • i inech.A o 9 v . p G ,GATE 2 - - . F r v.0 rage . It i �. • , Yi• 0 0- �� 0 0 GATE 3 •.♦ 0 G -O v �•'� 'p 'm (:. t We � r: ''• �' '' 'ne•.aFa � 44444 p � �rrri, -a : U ' 7 "�'�' ' P 0 b y •� �j .wf • �. 7 P .0 O O � ) f• ' . a • O a 'GATE 4 ` t . i • ,GATE' 6:..: o o. o• . m P c N 11 •i 4 m" + v G TE { 5 ' LA )A , � _ • � ' Vr.y 1. ;- 4 ��. _ INSPECTION & SHIPPING e ER Ci Lam' • v, •'• cc .,••. ;•;;• % ':f ...: � 3 "Ga� �1lJy Y" ':` «;,v a„i�l' .�11� ^�l +.y'n « •:;vim:. � l Sportswear Specialists Div. of Buzz Sportswear 136 East 32nd Street Los Angeles, CA. 90011 NU Dear Joseph, Buzz, and Employees: I wish to thank you all for the excellent job you did Producing the Fall and Winter sample lines for Esprit. In spite of the complexity of,,many of the jackets, you were able to deliver' the jackets on time and with excellent quality. Our designer, Alan Goldin; was extremely pleased with the job you did and was very complimentary about the appearance of the line. I hope this is just the beginning of a long relationship between Esprit and - Sportswear Specialists. , we find a contractor with your high level of quality and flxibility, we want to be certain the relationship continues. Once again, thanks for all your efforts. Best Regards, Cliff Thompson V.P. Domestic Manufacturing EXHIBIT C I s 3 R t,