Minutes 06/08/1982 - Laserfiche WebLink

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.' ( i(~ "<.! t._: .J JUNE 8, 1982 TUESDAY In acknowledging receipt of the following (copy of) letter dated May 21, 1982, from Mr. John P. Doane, Treasurer of The Budd Company, to City Manager Edmonds, and upon City Manager Edmonds' recommendation, Council unanimously authorized the withdrawal of the City's ("UDAG") application, filing of which was authorized February 26, 1982, seeking a grant of $3,000,000 from the United States Department of Housing & Urban Development to help finance the then-proposed re-tooling and expansion of the local Budd plant to manufacture subway cars for the New York Metropolitan Transit Authority, contingent upon acceptance by said Authority of The Budd Company's bid, which bid reportedly has been rejected by said Authority: As you know, Budd has not been selected by the New York Metropolitan Transit Authority (MTA) to build 825 subway cars for the New York City Transit Authority. You and I have also discussed the circumstances which led us to consider the possibility of assembling these cars at a facility in Hornell, N. Y., rather than at our idle facility in Martinsville. This letter is intended to set forth the reasons why, we believe, Budd's pro- posal was rejected by MTZ as well as reasons why we considered and offered to MTZ the assembly of the cars at Hornell. You may distribute copies of this letter to anyone in Martinsville who may be interested in the subj ect. It seems clear to us that Budd lost the MTZ job because the Canadian Government offered a very large, subsidized, financing package to MTA. In brief, Canada offered to finance 85% of the total cost of the cars-- including the U. S. content--at an interest rate of 9.7%, with repayments to be made over 10~ years after May, 1987. Budd was in no position to offer a comparable financing package. Budd's price was lower--thanks in part to your efforts in our behalf--and our delivery schedule was faster. It seems clear to us that the Canadian financing will cost Budd this job. The possibility of assembling the cars in New York State was brought to our attention by the Hornell Industrial Development Agency approximately four weeks ago. Budd decided to follow up this lead, as it has followed up many, many others in the course of the last year that we have been working on the MTA project. After consideration of the Hornell site, it became evident that, while the MTA cars could be assembled at Hornell, there were several pluses and minuses to be evaluated vs. assembly at the idle facility in Martinsville. Among these were the following: (1) Because of lower conversion costs at Hornell, no UDAG would be required; (2) Access to railway was available at Hornell but would have to be acquired and constructed at Martinsville;