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CITY OF SOUTH BEND REDEVELOPMENT COMMISSION REGULAR MEETING – April 10, 2025 <br /> <br />3 <br /> <br />Commissioner Gooden-Rodgers inquired about the project timeline <br />and housing income levels. Mr. Molnar responded that the bond is <br />expected to close this summer, with site preparation and construction <br />beginning in the spring of 2026. The Area Median Income (AMI) for the <br />housing will be set at 80%. <br /> <br />Vice President Relos questioned the choice of financing method. Mr. <br />Randy Rompola, with Barnes & Thornburg LLP, explained that this <br />approach avoids the need to sell bonds on the open market, <br />simplifying the process. Additionally, the interest rate is lower than it <br />would be through a regular bonding process. The current rate is <br />3.15%, reset quarterly, and was 3.11% prior to April. They anticipate <br />closing before the rate resets in July. This method also eliminates the <br />need for a rating process, disclosure documents, and underwriting, <br />thereby reducing issuance costs. Secretary Wax asked why we don’t <br />use the cash on hand to fund the project instead of taking out a loan <br />that we would have to pay back over 20 years with interest and Caleb <br />Bauer, Executive Director of Community Investment, stated that this <br />decision involves strategic considerations about when to use our cash <br />reserves versus financing options. We chose this tool because the <br />interest rate is significantly lower than if we issued bonds through the <br />Redevelopment Commission's typical lease rental revenue process. <br />This makes it an attractive option, allowing us to advance this project <br />while preserving cash for other ongoing projects. As of March 31st, the <br />River West account balance is $27.5 million in cash, with $6.7 million <br />in debt service obligations for the year. By financing this project, we <br />avoid using cash reserves, which would necessitate issuing higher-rate <br />bonds for future projects. Currently, there's uncertainty regarding future <br />property tax revenues due to potential legislative changes, such as the <br />amendment to Senate Bill 1, which could impact our economic <br />development areas. Given this uncertainty, it makes sense to pursue <br />favorable financing options. This specific program offers a very <br />favorable rate, making it a prudent choice over using cash. If the <br />revolving infrastructure fund is renewed by legislature, it could be a <br />valuable tool for future projects. <br /> <br />Commissioner Shaw inquired whether the bond could be paid off <br />earlier than the 20-year term. Mr. Rompola responded that he didn't <br />see why the Indiana Finance Authority (IFA) wouldn't want the funds <br />returned sooner to reissue loans. <br /> <br />Caleb Bauer, Executive Director of Community Investment, wanted to <br />clarify an important point regarding this agenda item. Although we <br />previously mentioned affordability and an 80% AMI, the IFA program <br />does not have an affordability requirement. Our intention is to develop <br />a mixed-income community, with future residential units at various