03-28-13 Redevelopment Commission Minutes

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South Bend Redevelopment Commission Regular Meeting —March 28, 2013 6. NEW BUSINESS C. Airport Economic Development Area (4) continued... certain Repayment Amounts and Lease Termination Penalties. In addition, Bosch, upon leaving the site was also required to enter into an Environmental Indemnity Agreement with the City of South Bend. Bosch exited the site and terminated its lease on December 31, 2012. Lease Termination Agreement In accordance with the lease, Bosch is agreeing to the following: 1. A lease termination penalty of $1,327,083.33. 2. A repayment amount of $746,071.71, which will allow the City of South Bend to repay funds borrowed from local and State sources to complete the original project. 3. Payment over time of an Indiana Development Finance Authority loan with a current balance of $538,508.13. This loan will be repaid in accordance with the original repayment schedule. Environmental Indemnity Agreement 1. Bosch is agreeing to indemnify the City for any environmental issues arising from its occupancy of the site between 4/1/96 and 12/31/12. 2. The City of South Bend is agreeing to indemnify Bosch for any environmental issues arising after 12/31/12 not due to Bosch's occupancy. Ms. Schey asked if Bosch had been leasing the property from the Redevelopment Commission. Mr. Inks responded that the lease agreement was with the City of South Bend. Ms. Schey asked if the lease payments, then, went into the general fund. Mr. Inks responded that there were no lease payments under that lease. The lease had a 20 year term where there were no payments to the city. If the lease was renewed beyond that point, then it went to a market rate and there would have been payments. Ms. Schey asked how the City of South Bend become the owner of the property. Mr. Inks responded that it was an Economic Development Project to retain 500 engineering jobs in the community. As a part of that effort the City of South Bend acquired the property for $1.5 million in August 2000, and leased it to Bosch. Ms. Schey asked if the terms of the lease were that if Bosch left early, they would have to pay $1,327,083.33. Mr. Inks responded that this particular term had a proration clause, so they would pay so much per day for every day they left before the end of the lease.