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South Bend Redevelopment Commission <br />Regular Meeting -January 20, 2006 <br />6. NEW BUSINESS (CONT.) <br />I. South Side Development Area <br />() continued... <br />Mr. Rompola explained that this resolution is <br />related to the financing for the Erskine <br />Commons project. Resolution No. 2074 <br />authorized the issuance of tax increment <br />revenue bonds that would be for the public <br />road improvements adjacent to the Erskine <br />Commons site. The Commission also <br />approved a pledge resolution that pledged <br />some of the TIF for the financing that will be <br />done for the improvements on the site. <br />Those proceeds were loaned to the developer <br />for their work. Given some of the delays, <br />that financing was closed in 2005. We're <br />now at the point where we're ready to <br />proceed with the road improvements. We <br />need to proceed with the tax increment <br />revenue financing. Resolution No. 2225 is <br />almost identical to Resolution No. 2074 <br />which allowed for a TIF bond up to $2.8M <br />with a maximum term of twenty years. That <br />had a maximum interest rate of 7%. The <br />bonds would be differently issued with <br />respect to other TIF revenue bonds. These <br />bonds would be issued on a variable rate <br />basis, meaning that the interest rate would <br />float each week. The benefit of that is that <br />during the time that the project is being <br />completed and there's no tax increment being <br />generated, it allows the interest rate on the <br />bonds to be much lower, probably in the <br />range of 2 to 31/2%. A letter of credit is <br />needed for this type of bond as a security <br />instrument. The developer has agreed to <br />provide the letter of credit. The bonds would <br />be issued pursuant to a trust indenture. <br />32 <br />