06-22-09 Common Council Meeting Agenda & Packet

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South Bend Common Council RE: Tax Abatement for Ontario Partners June 5, 2009 Page 2 is critical to capturing potential tenants who have short timelines for occupancy. In addition, the petitioners are facing short deadlines in order to begin the project this construction season. Because of the speculative nature of the proposed project, it is difficult to precisely determine the project's impact in calculating Public Benefit Points and the term of the abatement. Therefore, projections have been used that are based on experience with the Huron Building. Although the Huron Building is slightly smaller at 147,000 square feet it is built to the same general specifications as the Ontario and, therefore, can serve as a good model for estimating the Ontario's impact. Information on the Hurori Building is included with the attached petition. Based on the projections and actual information provided about the Ontario Building; staff calculated that the term of the abatement should be six years using the Public Benefit Points system. However, the petitioners have verbally indicated they intend to request anine-year term which is the same term that was approved for the Huron Building. On July 21, 2006 the petitioner and the Redevelopment Commission signed a Project Agreement for a project titled "Portage Prairie Development Phase I". Both the Ontario and Huron Buildings are included in Phase I of that project. Section 5.7 (Tax Abatement) of the Project Agreement states in part: "Developer understands that it may petition for tax abatement for the project and acknowledges that the Commission, in accordance with this Agreement, will endorse and support a nine (9) year tax abatement for the Project within the current requirements and standards established by the South Bend Common Council pursuant to City ordinance. Developer understands and acknowledges that the granting and approval of tax abatement requests are under the exclusive authority of the South Bend Redevelopment Commission and the South Bend Common Council and require separate approval of each, with such action taken at public meetings in accordance with Indiana law..." At the time the Redevelopment Commission reviewed the petition for the Ontario Building insufficient information was available to determine the length of the abatement term using the Public Benefit Points system and a base amount of three years was estimated. Due to the lack of information the Commission approved the abatement petition for up to anine-year term by Resolution Number 2588 dated June 5, 2009 with the understanding that additional information would be made available to the Common Council to make a final determination. However, as noted previously using the information now available and applying it to the Public Benefit Points system approved by the Common Council, staff could only justify asix-year term for the abatement. Assuming anine-year abatement as requested by the petitioner the total taxes to be abated during that term are estimated to be $635,240. Total taxes to be paid during the nine-year term are estimated at $723,671. For comparison purposes total taxes to be abated during the six-year abatement term are estimated to be $457,383. Total taxes to be paid during the six-year term are estimated to be $448,558.