12-13-10 Common Council Meeting Minutes

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REGULAR MEETING DECEMBER 13, 2010 Richard Nussbaum, Attorney at Law, 210 S. Michigan Street, South Bend, Indiana, stated that he would like to address some of the questions that were raised at the committee meeting this afternoon. First, despite the fact that there were many different parties, many different agendas in terms of what individual parties wanted to see come out of this. He stated that all the parties in the beginning wanted to accomplish one thing and st that was to prevent a termination of 1 Sources lease at the downtown site. He stated that he thinks despite the fact that they are coming up on a deadline, it should be very clear st that the attorney’s for 1 Source Phil Faccenda from Barnes & Thornburg as well as the attorney’s for Host, Rich Hill from Baker & Daniels and behalf of himself for the Commission that was their primary goal. He stated that he believes that all parties worked very hard in order to do that. In conjunction with that overriding goal there is this goal of maintaining an upscale hotel at the site. For over the past 30 years there has been a Marriott Hotel that has been classified as an upper upscale hotel and it is everyone’s desire to maintain that status that brand on site. It is coincidence that the branding that Marriott has with Host and that their agreement is also coming up for renewal as well around this time and he believes that theirs carries over into 2011 and it is their hope by virtue that the proceeds of this garage sale are going into the improvements of the hotel that it will continue to be a Marriott. In the event that it is not a Marriott and there is no indication at this point that it is not a Marriott that there might be some other hotel at that site they have to plan for these kinds of events with Host and st with 1 Source and the City that they arranged for a list of hotels that would be satisfactory to all the parties that would satisfy this arrangement. Those listing of hotels are found in Exhibit “D” which is the up scale hotels and there is also a website that is referred to in the agreement that lists the upper up scale hotels and Marriott is one of those on that list. They would be thrilled if Marriott doesn’t move but if one of those other hotels such as a Hyatt or Hilton or any of the other hotels that are listed there would come on board. They hope that by making these improvements that would happen. In st the event that wouldn’t happen 1 Source is comfortable with that list that you see on Exhibit “D.” There was also some question about Exhibit “E” and some copies that the Council received did not have an Exhibit “E” attached and there was some questioning about that. Mr. Nussbaum stated that Exhibit “E” is a copy from the Uniform System of Accounts from the lodging industry; it’s a publication that is used within the business to calculate annual net operating income. There is some language in the agreement that indicates that if the annual net operating income goes below a certain level that provides an out for the hotel. Mr. Nussbaum stated that the out doesn’t occur until all of the improvements are done. He stated that every word of this agreement is geared toward making sure that those improvements are done and reiterated that there is no mystery to Exhibit “E”, it was a widely discussed and agreed upon part of this agreement that was st agreed upon by 1 Source, the City and by Host. He stated that the Mayor has gone into great detail why and how the proceeds are going to occur between the COIT and UDAG funds so he won’t go into that. He stated that he would like to address the question of why would the city do this and how can it be explained to the constituents of the Council why this is going to occur. First of all it’s an historic business to Downtown South Bend, st 1 Source Bank has been in downtown South Bend since 1863. Mr. Nussbaum reflected st back on the site where the Marriott Hotel and 1 Source Bank now sit, it was called the hole. Approximately 40 years ago it was a place to dump all the excess snow during the winter months. He stated that he got to know a great man by the name of Mike Carmichael who had a different vision for that hole. He stated that he worked very hard in his life to make that vision come true. Although it wasn’t his vision to have the building that is there now, the vision of Mike Carmichael was carried on by Chris Murphy. He nailed down thirty years ago that building and he maintains his position with the bank now and it has been his goal to try to get this deal done so that things would continue. That building which is 30 years old and needs a lot of work, that the work would be done and that we could continue on for many, many more years to come at that site. They would also like to accomplish by keeping an upper upscale hotel next to the Century Center which provides a wonderful marketing opportunity to attract conventions and events at the convention center by having that hotel right next to it. It st would also provide a high class and an appropriate neighbor to the 1 Source Office st Facility including 1 Source Bank and Barnes & Thornburg who is a major tenant there as well as for Merrill Lynch and some of the other tenants there as well. There would be st 700 direct jobs retained in downtown South Bend as a result of this. 600 from 1 Source 12