Approving an Amendment - South Bend Central Development Area Dev Plan

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MEMORANDUM OF UNDERSTANDING This Memorandum of Understanding (the "Agreement"), effective as of December 2, 2010, is made and entered into by and among the City of South Bend, Indiana, a political subdivision and municipal corporation of the State of Indiana, by and through its Board of Public Works (the "City"), the South Bend Redevelopment Commission (the "Commission"), 1st Source Corporation ("1st Source"), and Host Hotels & Resorts, L.P. ("Host") (each individually, a "Party" and, collectively, the "Parties"). RF.(''TTAT.Q WHEREAS, 1st Source is the master tenant of a bank office building located at 100 North Michigan Street in South Bend, Indiana (the "Office Building"), and Host is the owner of a building adjacent to the Office Building and housing a Marriott Hotel located at 123 N. St. Joseph Street in South Bend, Indiana (the "Hotel"); and WHEREAS, Host owns a seventy percent (70%) interest in an underground parking garage (the "Garage"), related street and site improvements and an atrium (the "Atrium") (collectively, the "Public Improvements") which are used as common property for the Hotel and the Office Building, and 1st Source owns the remaining thirty percent (30%) interest in the Public Improvements; and WHEREAS, pursuant to that certain Agreement for Conveyance of Public Improvements between the City and 1st Source (f/k/a FBT Bancorp, Inc.) dated October 22, 1979 (the "1st Source Conveyance Agreement"), and that certain Agreement for Conveyance of Public Improvements by and between the City and Host (as successor to Rahn Properties II), dated October 22, 1979 (the "Host Conveyance Agreement" together with the 1st Source Conveyance Agreement, collectively, the "Conveyance Agreements"), 1st Source and Host pay annual fees to the City in accordance with the schedules set forth in the Conveyance Agreements; and WHEREAS, 1st Source is currently occupying all of the first through fourth floors and a portion of the fifth floor of the Office Building, totaling 84,696 square feet (the "1st Source Space"), and has entered into a lease for a term of ten (10) years for the 1st Source Space (the "1st Source Lease"), the terms of which allow 1st Source to terminate the 1st Source Lease if certain actions contemplated herein are not completed by December 31, 2010; and WHEREAS, Host is contemplating certain capital improvements to the Hotel, which are more particularly described in Exhibit A (the "Hotel Improvements"); and WHEREAS, it is in the best interests of the citizens of the City to prevent the termination of the 1st Source Lease, to maintain the presence of 1st Source and the Hotel, as an "upper upscale" or "upscale" hotel, at their current locations and to encourage the undertaking of the Atrium Improvements (as defined herein), the 1st Source Improvements (as defined herein) and the Hotel Improvements, as such improvements will provide for additional economic development of the downtown area of the City, retain employment and provide for new employment opportunities within the City; and