02-13-14 Redevelopment Commission Minutes

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South Bend Redevelopment Commission Regular Meeting — February 13, 2014 6. NEW BUSINESS (CONT.) C. Airport Economic Development Area (6) continued... not upgraded significantly it was only worth its value in scrap and that the City would have to be a willing partner if was to return to production. The DCI staff has been included at every turn and has witnessed the projected capital expenditures costs rise from $12 million to now $28 million with work already well under way and a projected start-up date of June 1, 2014. Staff feels we have negotiated a responsible level of participation in the project. The final negotiated public investment figures we anticipate being included in a development agreement include up to $2,000,000 to purchase equipment through the BPW public bidding process that will be leased back to Noble America for 5 years at a base rate of $100,000 per year with potential escalations contingent upon jobs created and sustained over a five year period (please see attached petition).The equipment to be purchased is a corn oil extraction unit that will make the plant more sustainable and more resilient to the margins of the commodities market. In addition, in a worst case scenario the RDC has the ability to remove the unit from the plant and resell it to recoup TIF investment. Staff proposes that the Redevelopment Commission use TIF funding from the Airport Economic Development Area and the Redevelopment Authority would purchase the equipment for approximately $2,000,000 and as a base would lease that equipment back to Noble Americas for $100,000 per year over five years, with an additional fallback that the lease rate would rise should they fail to meet the job creation projections they've committed to. DCI staff is requesting that the RDC approve moving into negotiations of the terms of a development agreement to be brought back for approval at your next meeting. Mr. Varner asked whether the $40,000,000 of improvements would be taxable. Mr. Fielding responded that they would be. Estimated Acquisition cost Estimated Capital investmenttupgrades Real Property Tat revenue (2012) Personal Pro erty Tax Revenue (2012) Waste Water revenues Average hourl wa a $8,000,000 $28,000,000 $170,276 $398,064 $2,000,000+ $27.00 er hour DCI staff is requesting that the RDC approve moving into negotiations of the terms of a development agreement to be brought back for approval at your next meeting. Mr. Varner asked whether the $40,000,000 of improvements would be taxable. Mr. Fielding responded that they would be.