03-13-14 Redevelopment Commission Minutes

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South Bend Redevelopment Commission Regular Meeting—March 13, 2014 6. NEW BUSINESS (CONT.) B. Airport Economic Development Area (1) continued... staff has negotiated a public investment of$250,000 to be used for the purchase of equipment to be leased back to Lippert for a period of ten years. Lippert submitted the petition through 2024 pledging to create 380 new jobs with hourly wages ranging upward from$12.50 with 180 of those jobs to be filled in 2014. In addition, Lippert commits to investing$2.8M in the space for building upgrades and additional equipment. Staff is requesting permission to move forward with preparation of a development agreement committing$250,000 of AEDA TIF funds to purchase the equipment to be leased to Lippert for a nominal fee after disposition procedures are completed. The Redevelopment Commission will retain ownership of the equipment through the period of commitment (2024)and upon proof of satisfying total investment and total job creation,the equipment will then be sold to Lippert for the sum of$1.00. It is anticipated that the standard clawback provisions will be included in the development agreement and that the Redevelopment Commission will retain ownership of the equipment through the commitment period. Staff will prepare a development agreement to be brought back to the Commission in April. Mr. Varner commented on the Commission's trend toward purchasing equipment as an incentive and leasing the equipment to the company. He wondered if that made the equipment non-taxable,in which case state legislatures should be notified of that trend. Mr. Fielding agreed that the purchase of equipment is change in policy. Rather than investing in a privately owned building, investing in equipment and machinery provides some collateral for the Commission. Should the business either not come through on what it has promised, or actually close, that asset will be owned by Redevelopment and the public investment can be recouped. The leased equipment is taxable, so there is no revenue lost to the state. Ms. Schey asked for an explanation of"clawback." Mr. Fielding responded that though the clawbacks have not been negotiated,typically the city receives 1.5 times its investment if the jobs or investment targets are not met. C. West Washington-Chapin Development Area There was no business in the West Washington-Chapin Development Area. D. South Side Development Area (1) Resolution No.3209 approving and authorizing execution of an Addendum to the Master Agency Agreement(Fellows St. Supplement#8) 4