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South Bend Redevelopment Authority <br />Regular Meeting -June 7, 1994 <br />3. NEW BUSINESS (Cont.) <br />a. continued... <br />When we sized the lease rental amount, we put in a higher lease rental amount <br />so that we could withstand increases in the rate, the idea being that once the <br />bonds were priced we would reduce the lease rental to re~ect the actual <br />interest rate. We are here today with that resolution and the lease rental can <br />be reduced. The semi-annual lease rental listed in the lease was $300,000. <br />The Lease Addendum attached to the Resolution reduces the lease rental <br />amount to $297,000.00 semi-annually, fora $3,000.00 reduction. We would <br />have anticipated an even greater reduction, but given the fact that rates have <br />increased in the last 4-5 months, that is not possible. <br />The Lease Addendum also changes some of the terms relating to the lease. <br />Basically, the idea was that when the lease was originally done, there was to <br />be one bond issue: a combined Century Center and Hall of Fame Bond. As <br />we proceeded along that plan, it became clear that there were some savings to <br />the City by splitting it up and having a separate Century Center Bond at a <br />• fixed rate and then a Hall of Fame financing at a variable rate. We are <br />proceeding on that basis, and to do that we need to break out some of the <br />terms in the lease to recognize that there will be two separate bond issues and <br />the lease rentals will be pledged separately to each bond issue. The <br />Redevelopment Commission has already adopted a pledge resolution with <br />respect to the Century Center portion, and once we finalize the structure of the <br />Hall of Fame portion, the Commission will then adopt a pledge resolution <br />relating to that lease rental. <br />Mr. Gammage asked whether there was one lease or two leases in the previous <br />resolution, and whether they were listed as both fixed rates at that time. Mr. <br />Rompola answered that in the original lease it identified the project as having <br />two components, one being a Century Center portion and the other being a <br />Hall of Fame portion, and had identified separate lease rentals being applied <br />for each portion, so there are distinct lease rental payments being applied, but <br />what we didn't have at that time was an option to purchase just the Century <br />Center bonds or just the Hall of Fame bonds. This is on page 7 of the <br />Addendum to Lease. It is still one lease, but two bond issues will be <br />supported by the same lease. When the maximum lease rentals were <br />established, we were looking at fixed rates. Even though we are making this <br />change, we are still held to the maximum payment. <br />-2- <br />