5.A.(1) Lease Termination Agreement (SASCO)

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Redevelopment Commission Staff Report Lease Termination and Settlement Agreement with TCU (410 W. Sample Street) 9/29/09 Since the last meeting several things have occurred. 1. Commissioners may have misunderstood my response to a question about when we last received payment from SASCO. I responded to what I thought was a question about the Redevelopment Loan payments and said not since 2001. I heard some thought my response was concerning the Lease. Accordingly, we have supplied a listing of payments and dates to our Legal Dept. showing all payments due have been received. There is no payment default on the Lease. 2. TCU has submitted a letter exercising the first 5 year renewal option. 3. TCU has informed us they have a signed agreement for the sale of the Studebaker Parts Inventory and related assets. 4. Our Agreement with TCU has been modified to more clearly explain the transaction as a Lease Termination and Settlement Agreement. We could try to deny TCU the renewal option, but it is not clear whether we would prevail. Our Legal Department believes a settlement is appropriate. 5. The Agreement now includes the amount to be paid of $686,000. The Lease Termination and Settlement Agreement allow the Redevelopment Commission to achieve a number of goals. 1. The property at 410 W. Sample St. will be vacated by 2/15/10, allowing demolition to proceed on schedule and combined with Underground Pipe & Valve to achieve cost efficiencies. 2. This will keep Ignition Park on track to be available for new development in 2011. 3. The Studebaker Parts Inventory will be preserved and continue to be available for owners of Studebaker cars. 4. The Parts business will remain in South Bend, the home of Studebaker. The cost of this Settlement Agreement is $686,000. As noted above we could contend TCU’s right to renew the Lease, but the outcome is uncertain. If we did not prevail our conservative estimate of the Economic Value of the Current Lease is $965,680. In