08-25-82 Council Special Meeting Minutes

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a 3 SPECIAL MEETING BILL NO. 86 -82 AUGUST 25, 1982 A BILL ENABLING THE CITY TO PROVIDE FINANCIAL AND STAFF SUPPORT TO A LOCAL DEVELOPMENT CORPORATION FOR PURPOSES OF ASSISTING THE ECONOMIC DEVELOPMENT OF THE CITY. Now is the time heretofore set for public hearing on the above bill, proponents and opponents were given an opportunity to be heard. Mayor Roger Parent: I want to thank you for continuing the public hearing of last Monday to this evening to consider an -issue which pertains to the eventual construction of a 186 million dollar ethanol plant in South Bend. My presentation will include five (5) other people. About a month ago, we decided and talked about the formation of a local development corporation in order that some group may come to us in anticipation of saving Robersons. We proceeded unaware of the timetable. I followed a procedure whereby I sent out a number of letters to people representing the financial community, business community, unions, neighborhood groups, and other people who might be considered at large. I asked them if they would come together and form a local development corporation. At some point in time, after about three meetings, a good number of the group whom I had invited, decided that they would form a local development coproration. Last Wednesday the papers of the corporation were filed with the Secretary of State in Indianapolis. It was Friday of the same week that we found out that the local developmen corporation would be required with the City to be able to fulfill commitments which were required as a result of better recent negotiations. The whole matter of the local development corporation came up rather unanticipated in relation to the Ethanol Plant, but was also something which was done very fast. I wish to thank all the people who helped form the Local Development Corporation. A Local Development Corporatio simply means for a community to be able to accept public funds and to make loans. Most part, city governments are not allowed to use their funds whether they be federal or othrwise. The powers we aksed be given us have been given to others throughtout the country. We have not devised something that has not been done anywhere else. There are many precedents for city councils and mayors to provide funds for corporations who then in turn make their own decisions to how they are going to use that money, without coming back to the council or mayor. We also have an industrial revolving fund_w,hich came about as a result of the city receiving 5 million dollars to keep South Bend Lathe in operation some years ago. Since that time South Bend Lathe has been paying back that loan to the corporation. At this point I would like to ask Mr. Barry Direnfield, President of New Energy Corporation to say a few words. Barry Direnfeld: I appreciate the time that each member of the Council gave to me this week and being able to take the time to discuss a compressed timetable that New Energy is operating under. In the last week events have happened with New Energy which permitted us to close our equity offering and to assure ourselves that the equity offering will be closed and have funds available to build the ethanol plant. In addition to that, we have our bank commitments in place and negotiations with the Department of Energy are going along at a very rapid and successful rate at this moment. The last major block of our financial plan is the issue that is before you tonight which is to permit an amendment to the City's application for a UDAG grant to incrase it by 5 million dollars and permit the local development corporation 'to be admitted as a special limited partner. The federal regulatory agencies have given approval to this plan. The timetable for us to implement it is extremely short. I think today we are on a schedule whereby we could have groundbreaking in October. I urge you to take whatever action you feel is appropriate, but in a manner that would assure that our project go forward. Thank you. Council Member Beck made a motion to accept the amended version of the bill, filed with the City Clerk, seconded by Council Member Zielinski. The motion carried. Carl Ellison, former Redevelopment Director: During my time at the Small Business Administration, Washington, D. C., I had an opportunity to observe a number of local devlopment corporations around the country. Generally, local development corporations have originated because of desires of entrepreneuers along the strip sometimes because of local government. Generally, local development corporations have enjoyed local government support, and are successful only if they enjoy bi- partisan support, broad community support, and high level of trust and confidence. Local devleopment corporation; have worked very well, they have not abused local public trust and have done an efficient job of orderly local development activities, securing orderly economic targets and opportunities available to the community. Anytime a third party receives community development money by statute and regulation, and by local practice, the City utilizes a third party contract which requires the recipient to comply with state, local and federal laws as well as with other local requirements. Based on the group of individuals who are involved in this corporation, it is my opinion that the public has little cause to worry about its integrity and the fact that it would operate fully within the spirit and practice of local economic decision making consistent with all the policies. I would highly recommend that the Council pass Bill No. 88- 82, as amended. Thank you. Patrick McMahon, Director of Project Future: This bill is very significant in that it will serve to bring South Bend - Mishawaka area out of the dark ages with rspect to economic development. Most areas around the country that have been extremely active in.:ec,onomic development and have been very successful in economic development, have a number of tools at their disposal in their community that allow their total community to bring their resources to bear. Government and financial institutions play a role. There is often a need for coordinated effort to be utilized and develop various programs such as we are trying to develop with the ethanol project; that require both the private financial community and various aspects of our community outside the government to get together with government and as a result, bring to the table certain aspects or proposals to companies that previously could not be considered.