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HomeMy WebLinkAboutApproval of the Issuance of Bonds Providing Certain Economic Development Facilities - Kite Capital, LLC Erskine Village ProjectAttes RESOLUTION Passed by the Common Council of the City of South Bend, Indiana July 28, 20 03 Presented by me to the Mayor of the City of South Bend, Indiana July 29, 20 03 City Clerk dent of Common Council Approved and signed by me July 30 20 03 . City Clerk M-. RESOLUTION NO. J Z 17— 6-3 A RESOLUTION OF THE CITY OF SOUTH BEND, INDIANA, COMMON COUNCIL PROVIDING PRELIMINARY APPROVAL OF THE ISSUANCE OF BONDS FOR THE PURPOSE OF PROVIDING CERTAIN ECONOMIC DEVELOPMENT FACILITIES (Kite Capital, LLC Erskine Village Project) WHEREAS, the City of South Bend, Indiana (the "City "), is authorized by I.C. 36 -7 -11.9 and 12, as supplemented and amended (the "Act "), to issue revenue bonds for the financing of economic development facilities, the funds for said financing to be used for the development, construction, installation and equipping of said facilities; and WHEREAS, the City, the South Bend Redevelopment Commission (the "Redevelopment Commission ") and Kite Capital, LLC (the "Company "), have entered into a Development Agreement (the "Agreement') pursuant to which the Company has agreed to undertake the demolition of the former Montgomery Ward store and automotive service center and the construction of a discount department store consisting of approximately 123,680 square feet (the "Project'), which Project is the initial phase of the construction by Company of a 450,000 - 500,000 square foot retail power center having a village concept to be known as 'Erskine Village" on the site of the current Scottsdale Mall in the City (the "Site "); and WHEREAS, pursuant to the Agreement, the City and the Redevelopment Commission have agreed to assist the Company with the provision of certain economic incentives to the Company; and WHEREAS, the Company has advised the South Bend Economic Development Commission (the "Commission ") and the City that they propose that the City issue economic development revenue bonds for the purpose of providing financing for certain economic development facilities consisting of the development and construction of the Project; and WHEREAS, the Company has proposed that the City issue its revenue bonds under the Act to finance the development and construction of the Project under a financing agreement whereby the proceeds of such bonds would be utilized to develop and construct the Project and the principal of, premium, if any, and interest on said bonds shall be payable solely from tax increment revenues to be pledged by the Redevelopment Commission and resulting from the increase in the assessed value of real property which comprises the Site and improvements thereon (the "Tax Increment'), with the aggregate principal amount of such bonds not to exceed Six Million Dollars ($6,000,000); and the Company has further advised the City that the determination by the City to proceed with the issuance of such bonds constitutes a substantial inducement to the Company to proceed with the Project; and WHEREAS, the Company has submitted evidence regarding the adverse competitive effect of the Project on similar facilities already constructed or operating in the City; and WHEREAS, it is estimated that the Project will result in the creation or retention of approximately one hundred and fifty (150) permanent jobs with an estimated total annual payroll of $2,500,000; and WHEREAS, the Commission has rendered a report concerning the proposed financing of economic development facilities for the Company which report incorporates findings of fact by the Commission regarding the competitive effect of the Project on similar facilities already constructed or operating in the City; and WHEREAS, the Commission has given its approval to such financing of the Project; and WHEREAS, the issuance and sale of said revenue bonds will not reduce the legal bonding capacity of the City; and WHEREAS, the expenses incurred by the City in connection with the issuance and sale of said revenue bonds shall be paid from proceeds of the bonds; and WHEREAS, the principal of and interest on said bonds are payable solely from the Tax Increment and the failure of the City to pay such principal and interest due to the insufficiency of the Tax Increment will not constitute an act of default by the City with respect to the bonds; and WHEREAS, the issuance of said bonds shall not obligate the full faith and credit for the taxing power of the City; WHEREAS, subject to required approvals, it appears that the financing of the Project would be a public benefit to the health, prosperity, economic stability and general welfare of the City and its inhabitants; NOW, THEREFORE, BE IT RESOLVED, by the Common Council of the City of South Bend, Indiana, as follows: I. The Common Council finds, determines, ratifies and confirms that the creation and retention of opportunities for gainful employment and the creation of business opportunities to be achieved by the Project in the City will be of benefit to the health and general welfare of the citizens of the City; and that it is in the public interest that this Common Council take such action as it lawfully may to encourage diversification of industry and promotion of job opportunities in and near said City. II. The Common Council further finds, determines, ratifies and confirms that the issuance and sale of economic development revenue bonds of the City under the Act in an approximate amount of $6,000,000 for the Project and the loan of the proceeds of the revenue bonds to the Company will serve the public purposes referred to above, in accordance with the Act. III. In order to induce the Company to proceed with the Project and subject to all approvals required pursuant to Act, the Common Council hereby finds, determines, ratifies and confirms that: -2- SBIMANI 156691A i) It will take or cause to be taken such actions pursuant to the Act as may be reasonably required to implement the aforesaid financing, or as it may deem reasonably appropriate in pursuance thereof; provided that all of the foregoing shall be mutually acceptable to the City and the Company; and ii) It will adopt such ordinances and resolution and authorize the execution and delivery of such instruments and the taking of such action as may be reasonably necessary and advisable for the authorization, issuance and sale of said economic development bonds. IV. All costs of the Project incurred for planning, engineering, interest paid during construction, underwritten expenses, attorney and bond counsel fees, acquisition, construction and equipping of the Project, including reimbursement or repayment to the Company of moneys expended prior to the adoption by the City of this resolution would be permitted to be included as part of the Project costs to be financed out of the loan of the proceeds from the sale of the bonds to the extent permitted by the Act. V. All action taken and approvals given by the City with regard to the Company, are based upon the evidence submitted and representations made by the Company, its agents or counsel, to the Commission and the City. No independent examination, appraisal or inspection of the Project was made, requested, or is contemplated by the City. VI. The City does not, by this or any other approval or funding, guarantee, warrant or even suggest that the bonds, coupons or series thereof will be a reasonable investment for any person, firm or corporation. VII. The City shall not be obligated, directly or indirectly, to see to the application or use of the proceeds from the sale of the bonds or to see that the contemplated improvements, if any, are constructed. VIII. The City does not warrant, guarantee or even suggest that interest to be paid to or income to be received by the holders of any bond, coupon, or series thereof is exempt from taxation by any local, state or federal government. IX. The Council anticipates that, pursuant to the Agreement, the bonds, together with the interest thereon, shall be payable solely from the Tax Increment and that the Redevelopment Commission shall take such actions as may be necessary to pledge the Tax Increment for such purpose; neither the City nor the Commission shall have any obligation with respect to the payment of principal of or interest on said bonds other than the payment of the Tax Increment as such may be pledged by the Redevelopment Commission. The principal amount of said bonds shall not be greater than the amount, along with interest thereon, which may be payable from the Tax Increment, and, as a result, the principal amount of said bonds referred to herein may be adjusted accordingly. -3- SBQdANI 156691A X. The failure of the City to pay the principal of and interest on the bonds due to the insufficiency of the Tax Increment shall not constitute a default by the City with respect to the Bonds. XI. This resolution does not constitute a binding obligation of the Commission or the City to issue the bonds, but instead, is a commitment by the City to proceed with negotiations for the financing described herein with the Company and is subject to the adoption of a bond ordinance by the City in accordance with the provision of the Act. XII. This Resolution shall be in full force and effect from and after its passage by the Common Council and approval by the Mayor. PRESENTED —7 —21'^03 NOT APPROVED TDOPTE0" %- 24'—Q3 SBIMANI 156691vl COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA By: Member of the Common Co ncil Filed in Jerk's 0111CO JUL 23 B93 LcLETrdSO. SEND, 1W -4- cITYCLEdaK, _ TO THE COMMON COUNCIL OF THE CITY OF SOUTH BEND: Your Committee of the Whole, to whom was referred: BILL NO. 03 -78 A RESOLUTION OF THE CITY OF SOUTH BEND, INDIANA, COMMON COUNCIL PROVIDING PRELIMINARY APPROVAL OF THE ISSUANCE OF BONDS FOR THE PURPOSE OF PROVIDING CERTAIN ECONOMIC DEVELOPMENT FACILITIES, KITE CAPITAL, LLC ERSKINE VILLAGE PROJECT Respectfully report that they have examined the matter and that in their opinion, this bill is being recommended to the full Council with a favorable recommendation. Karl King Chairman Addendum to Lease Between City of South Bend Building Corporation, as Lessor, and City of South Bend, Indiana, as Lessee (Fire Station Project and Police Station Project) THIS ADDENDUM, made and entered into this 151 day of July, 2003 (the "Addendum "), between City of South Bend Building Corporation, an Indiana non - profit corporation (the 'Building Corporation "), and City of South Bend, Indiana the "Lessee "), WITNESSETH: WHEREAS, the Building Corporation and Lessee have entered into a lease dated as of April 1, 2003 (the "Lease "), which was recorded in the office of the Recorder of St. Joseph County, Indiana, as Document Number ; and WHEREAS, Section 2 of the Lease provides that the reduced annual rental payable by the Lessee shall be endorsed on the Lease and recorded as an addendum to the Lease; NOW, THEREFORE, IT IS HEREBY AGREED, CERTIFIED, AND STIPULATED by the undersigned that: 1. Fire Station Rental. The first semiannual rental installment in the amount of Three Hundred Seventy -eight Thousand Eight Hundred Forty and 00 /100 Dollars ($378,840) shall be due on the later of (i) the day that the Fire Station Project to be erected on the premises is completed and ready for occupancy, or (ii) January 15, 2005. If completion of the Fire Station Project is later than January 15, 2005, the first installment shall be in an amount which provides for rental at the rate specified for the Fire Station Project in Exhibit A attached hereto and made a part hereof for the semiannual period in which the Fire Station Project is completed and ready for occupancy, prorated from the date of such completion .until the first July 15 or January 15 following such date of completion. Thereafter, such rental shall be payable in advance in semiannual installments on July 15 or January 15 of each year as provided for in the attached lease payment schedule at Exhibit A. The last semiannual rental payment due with respect to the Fire Station Project before the expiration of this Lease shall be adjusted to provide for rental at the yearly rate specified for the Fire Station Project in Exhibit A prorated from the date such installment is due to the date of the expiration of this Lease. 2. Police Station Rental. The first semiannual rental installment in the amount of Two Hundred Twenty Thousand and 00 /100 Dollars ($220,000) shall be due on January 15, 2004. Thereafter, such rental for the Police Station Project shall increase until completion of the Police Station Project and be payable in advance in semiannual installments in the amounts and on the dates set forth at Exhibit A. Upon the later of (i) the day that the Police Station Project is completed and ready for occupancy, or (b) July 15, 2005, the semiannual rental installment due shall be Four Hundred Eighty -two Thousand Seven Hundred Twenty and 00 /100 Dollars ($482,720.00). If completion of the Police Station Project is later than July 15, 2005, the first installment shall be in an amount which provides for rental at the rate specified for the Police Station Project in Exhibit A attached hereto and made a part hereof for the semiannual period in which the Police Station Project is completed and ready for occupancy, prorated from the date of such completion until the first July 15 or January 15 following such date of completion. SBIMAN 1155447v I Thereafter, such rental shall be payable in advance in semiannual installments on July 15 or January 15 of each year as provided for in the attached lease payment schedule at Exhibit A. The last semiannual rental payment due with respect to the Police Station Project before the expiration of this Lease shall be adjusted to provide for rental at the yearly rate specified for the Police Station Project in Exhibit A prorated from the date such installment is due to the date of the expiration of this Lease. 3. The amendments to the Lease as set forth in this Addendum to Lease shall be effective as of the date of this Addendum to Lease and all remaining terms, covenants, and conditions set forth in the Lease shall remain in full force and effect. 2- SBIAIANI 155447v1 IN WITNESS WHEREOF, the undersigned have caused this Addendum to be executed for and on their behalf on the day and year first hereinabove written. ATTEST: Secretary (SEAL) a YIV Y�.`T_W Loretta J. Duda, Clerk -3- SBIMAN 1155447vl LESSOR CITY OF SOUTH BEND BUILDING CORPORATION President LESSEE CITY OF SOUTH BEND, INDIANA By: Stephen J. Luecke, Mayor STATE OF INDIANA SS: COUNTY OF ST. JOSEPH Before me, the undersigned, a Notary Public in and for the State of Indiana, personally appeared and , personally known to me as the President and respectively, of the City of South Bend Building Corporation, and acknowledged the execution of the foregoing Lease for and on behalf of said Corporation. Witness my hand and notarial seal this _ day of My Commission Expires: County Resident SBN4AN 1 155447v] M 2003. Notary Public Printed STATE OF INDIANA SS: COUNTY OF ST. JOSEPH Before me, the undersigned, a Notary Public in and for the State of Indiana, personally appeared Stephen J. Luecke and Loretta J. Duda, personally known to me as the Mayor and Clerk, respectively, of the City of South Bend, Indiana, and acknowledged the execution of the foregoing Lease for and on behalf of said City. Witness my hand and notarial seal this _ day of My Commission Expires: County Resident 2003. Notary Public Printed This instrument was prepared by Randolph R. Rompola, Baker & Daniels, 205 West Jefferson Boulevard, Suite 250, South Bend, Indiana 46601. -5- Sswanrn 155447A Piled In Clerk's 0 ffiCs Ejf 2 2003 a� LO CITY CLERK, Date 1/15/2004 7/15/2004 1/15/2005 7/15/2005 1/15/2006 7/15/2006 1/15/2007 7/15/2007 1/15/2008 7/15/2008 1/15/2009 7/15/2009 1/15/2010 7/15/2010 1/15/2011 7/15/2011 1/15/2012 7/15/2012 1/15/2013 7/15/2013 1/15/2014 7/15/2014 1/15/2015 7/15/2015 1/15/2016 7/15/2016 1/15/2017 7/15/2017 1/15/2018 Exhibit "A" ADDENDUM LEASE PAYMENT SCHEDULE CITY OF SOUTH BEND BUILDING CORPORATION FIRST MORTGAGE BONDS, SERIES 2003 Lease Payment Schedule Semi - Annual Lease Payment 220,000 315,000 861,000 862,000 862,000 862,500 862,500 861,000 861,000 861,500 861,500 860,000 860,000 861,000 861,000 863,000 863,000 862,000 862,000 860,000 860,000 863,000 863,000 862,000 862,000 862,500 862,500 862,500 862,500 Annual Lease Payment 1,724,000 1,725,000 1,722,000 1,723,000 1,720,000 1,722,000 1,726,000 1,724,000 1,720,000 1,726,000 1,724,000 1,725,000 Police Station 220,000 315,000 482,160 482,720 482,720 483,000 483,000 482,160 482,160 482,440 482,440 481,600 481,600 482,160 482,160 483,280 483,280 482,720 482,720 481,600 481,600 483,280 483,280 482,720 482,720 483,000 483,000 Fire Station 378,840 379,280 379,280 379,500 379,500 378,840 378,840 379,060 379,060 378,400 378,400 378,840 378,840 379,720 379,720 379,280 379,280 378,400 378,400 379,720 379,720 379,280 379,280 379,500 379,500 1,725,000 483,001 FI1 4WC1.3rka'S OffCC e :JUL 2 3 2003 LORETTA J. DUDA CITY CLEM SO. BEND, IN, 7/15/2018 859,500 481,320 378,180 1/15/2019 859,500 1,719,000 481,320 378,180 7/15/2019 860,500 481,880 378,620 1/15/2020 860,500 1,721,000 481,880 378,620 7/15/2020 861,500 482,440 379,060 1/15/2021 861,500 1,723,000 482,440 379,060 7/15/2021 861,000 482,160 378,840 1/15/2022 861,000 1,722,000 482,160 378,840 7/15/2022 861,500 482,440 379,060 1/15/2023 861,500 1,723,000 482,440 379,060 SBMIANI 155447v1 1200 COUNTY -CITY BUILDING SOUTH BEND, INDIANA 46601 -1830 July 23, 2003 PHONE 574/ 235 -9371 FAX 5741235-9021 TDD 574/ 235 -5567 CITY OF SOUTH BEND STEPHEN J. LUECKE, MAYOR COMMUNITY & ECONOMIC DEVELOPMENT South Bend Common Council Fourth Floor Council Chambers 400 County-City Building South Bend, IN 46601 Dear Council Member: The attached resolution will approve the issuance of up to $6.0 million in Economic Development Revenue Bonds for the Erskine Village Project. Proceeds of this bond will be used to commence Phase I of this project, including demolition of the former Montgomery Ward building, along with utility relocation and other site improvements. Repayment of this bond will be from Tax Increment Financing funds generated by the project. It is anticipated that Phases II, III and IV will be funded through a later Redevelopment Revenue Bond. When completed this project will encompass 510,000 square feet of retail and restaurant development. I will make the presentation to the Council at your July 28 meeting. If you have any questions, please call me at 235 -9339. Sincerely, H: \WPDATA\Don\comc0 cove2.wpd Filed to Clerks Office LORHTTAJ�.•� O,1Pe. CttY CLER!<, COMMUNITY DEVELOPMENT ECONOMIC DEVELOPMENT FINANCIAL & PROGRAM PAMELA C. Mevea DONALD E. INrc MANAGEMENT 5741235 -9660 5741235 -9371 ELIzseerx LE.NAaD FAx: 574/235 -9697 574/235 -9371 V 11. Donald E. Inks Director, Economic Development H: \WPDATA\Don\comc0 cove2.wpd Filed to Clerks Office LORHTTAJ�.•� O,1Pe. CttY CLER!<, COMMUNITY DEVELOPMENT ECONOMIC DEVELOPMENT FINANCIAL & PROGRAM PAMELA C. Mevea DONALD E. INrc MANAGEMENT 5741235 -9660 5741235 -9371 ELIzseerx LE.NAaD FAx: 574/235 -9697 574/235 -9371 V 11.