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South Bend Redevelopment Commission <br />Regular Meeting - February 19, 1999 <br />6. NEW BUSINESS (CONT.) <br />m. continued.... <br />Randy Rompola, Baker & Daniels, stated <br />that the Lease is between the South Bend <br />Redevelopment Authority and the South <br />Bend Redevelopment Commission. The <br />Lease would provide security to satisfy the <br />Department of Housing and Urban <br />Development. The Section 108 Loan is a <br />note which is issued by the borrower —the <br />City —with a guarantee by HUD. HUD <br />provides the credit and is looking to the <br />City for a source of revenue to repay the <br />note. The expectation of the City is to use <br />both Tax Increment Financing and <br />Economic Development Income Tax <br />revenues to repay the note. It is necessary <br />to structure the repayment mechanism as a <br />Lease, since EDIT revenues are involved, <br />to avoid a constitutional -debt limitation, <br />which relates to the Economic <br />Development Income Tax and not to Tax <br />Increment Financing. The payment stream <br />would be from the Redevelopment <br />Commission to the Redevelopment <br />Authority, which would then repay the <br />note. The Lease provides for a term of 13 <br />years. It is structured so that the Lease, as <br />it relates to the Studebaker Lot, would be <br />for the full 13 years. There is a four -year <br />period of interest -only payments on the <br />Section 108 Loan. The Lease has been <br />structured so that the Lease payments <br />match the debt service. During the first <br />four years, only the Studebaker Lot will be <br />leased, which has already been acquired <br />and is able to be leased. At the end of the <br />four -year period- 2003 — presumably all <br />HAWPDATATOMMSM021999AIN -22- <br />