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HomeMy WebLinkAboutSubstitute 17-69 Confirming GLC SBDC II tax abatement modification VTH g�� Fi9ed in Gs r<'a C.i ice d F0TC1 9 2017 w \PEACE x x KAREEri AH FOWLER 1865 CITY CLERK,SOUTH BEND,IN CITY OF SOUTH BEND COMMUNITY INVESTMENT October 19,2017 Mr.Tim Scott, President South Bend Common Council 41h Floor City-County Building South Bend, IN 46601 RE:Substitute resolution and Memorandum of Understanding regarding Tax Abatement for 23464 Adams Rd.(the"Property") Dear President Scott: On October 9, 2017,the Common Council adopted Resolution No.4678-17 directing the City Clerk to give notice of a public hearing on a proposed resolution(the"Proposed Resolution"),which would modify the Common Council's Resolution No.4607-17,dated January 9, 2017,declaring a 9-year tax abatement for the Property. The Proposed Resolution would replace the original 9-year tax abatement schedule with a more aggressive 6-year tax abatement schedule. Enclosed for the Council's consideration on October 23,2017,is a substitute version of the Proposed Resolution,along with an associated Memorandum of Agreement to be executed in the event the Common Council adopts the Proposed Resolution. This substitute version corrects errors in the property description and the corporate entity name of Great Lakes Capital company responsible for this project appearing in the originally filed version of the Proposed Resolution. Again,the Department of Community Investment appreciates the Council's support on this project which will bring a critically important piece of commercial real estate inventory to the City of South Bend—and subsequently bring a new business entrant and accompanying jobs,investment and eventual tax revenue. Both I and Jeff Smoke of Great Lakes Capital will attend the Community Investment Committee and Council meetings on October 23, 2017 to address any questions. Thank you, Sincerely, Daniel . Buckenmeyer Director of Business Development Department of Community Investment EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 1400S County-City Building 1 227 W.Jefferson Bvld.I South Bend,Indiana 466011 p 574.235.93711 www.southbendin.gov RESOLUTION NO. A RESOLUTION SUPERSEDING A CONFIRMATORY RESOLUTION AND MODIFYING AND CONFIRMING THE ADOPTION OF A DECLARATORY RESOLUTION DESIGNATING A CERTAIN AREA WITHIN THE CITY OF SOUTH BEND, INDIANA, COMMONLY KNOWN AS 23464 Adams Road, South Bend, IN 46628 AS AN ECONOMIC REVITALIZATION AREA FOR PURPOSES OF A REAL PROPERTY TAX ABATEMENT FOR GLC PORTAGE PRAIRIE II, LLC WHEREAS, on January 9, 2017, the Common Council (the "Common Council") of the City of South Bend, Indiana (the "City"), adopted Resolution No. 4607-17 (the "Declaratory Resolution") designating certain areas within the City as Economic Revitalization Areas for the purpose of tax abatement consideration; and WHEREAS, the Declaratory Resolution designated the area commonly known as 23464 Adams Road, South Bend, IN 46628 (the "Property") which is more particularly described as follows: Lot 1 of the recorded plat of Portage Prairie Minor #8, recorded on March 2, 2017, as Document No. 1704972 in the Office of the Recorder of St. Joseph County, Indiana. and which has Key Number 025-1009-014608, be designated as an Economic Revitalization Area; and WHEREAS, on February 13, 2017, the Common Council adopted Resolution No. 4610-17(the"Confirmatory Resolution")confirming the Declaratory Resolution following a public hearing advertised and conducted pursuant to Indiana Code 6-1.1-12.1-2.5; and WHEREAS, on October 23, 2017, the Common Council conducted a public hearing for the purpose of hearing all remonstrances and objections from interested persons concerning the proposed amendment of the tax abatement schedule that the Common Council approved on January 9, 2017,under the Declaratory Resolution and confirmed on February 13, 2017, under the Confirmatory Resolution; and 1 WHEREAS,the Council has determined to supersede the Confirmatory Resolution and to modify and confirm the Declaratory Resolution by adopting an amended tax abatement schedule with respect to the Property. NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of South Bend, Indiana, as follows: SECTION I. The Confirmatory Resolution is hereby superseded by this Resolution. SECTION II. The Common Council hereby modifies and confirms the Declaratory Resolution designating the Property as an Economic Revitalization Area for the purposes of tax abatement. Such designation is for real property tax abatement only and is limited to two (2) calendar years from the date of adoption of the Declaratory Resolution. SECTION III. The real property description and Key Number contained in the Declaratory Resolution are hereby deleted and replaced by the description of the Property and Key Number contained in this Resolution. No real property included in the real property description set forth in the Declaratory Resolution but excluded from the description of the Property stated in this Resolution will be designated as an Economic Revitalization Area or will be otherwise subject to the tax abatement confirmed by this Resolution. SECTION IV. Each reference to "GLC SBDC II, LLC" contained in the Declaratory Resolution is deleted and replaced by"GLC Portage Prairie, LLC." SECTION V. The Common Council hereby determines that the property owner is qualified for and is granted a real property tax deduction for the Property for a period of six (6)years, as shown by the amended tax abatement schedule attached hereto as Exhibit A,pursuant to Indiana Code 6-1.1-12.1-17 and further determines that the petition complies with Chapter 2, Article 6, of the Municipal Code of the City of South Bend and Indiana Code 6-1.1-12.1. SECTION VI. All of the Common Council's findings and determinations under the Declaratory Resolution remain in full force and effect unless expressly modified by this Resolution. SECTION VII. Upon the Common Council's adoption of this Resolution, the Common Council will execute a Memorandum of Agreement (the "Updated MOA") reflecting the amended tax abatement schedule, which Updated MOA will supersede and replace the Memorandum of Agreement dated February 13, 2017. SECTION VIII. This Resolution shall be in full force and effect from and after its adoption by the Common Council and approved by the Mayor. 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J t rn N y O 0U m J 'Q CD J U MEMORANDUM OF AGREEMENT This Memorandum of Agreement (this "Agreement") dated as of the 23rd day of October, 2017, serves as confirmation of a commitment by GLC Portage Prairie II, LLC (the "Applicant"), to comply with the project description, job creation and retention (and associated wage rates and salaries) figures contained in its petition, Statement of Benefits, and attachments and this Agreement(the "Commitments"). 1. Commitments of City and Applicant. Subject to the South Bend Common Council's (the "SBCC") adoption of a resolution modifying and confirming its Resolution No. 4607-17 dated January 9, 2017 (the "Declaratory Resolution"), the City of South Bend, Indiana (the "City") commits to providing a six (6) year real property tax abatement for the Applicant, based on the Applicant's commitment set forth in Commitments regarding the construction of a building located on property at 23464 Adams Rd., South Bend, IN 46628 approved as part of the Commitments. The Applicant commits to a capital expenditure (from all sources of funds) of $8,800,000 to construct a new approx. 210,000 sq. ft. spec commercial/bulk distribution facility. This project will create 10 permanent full-time jobs in the first three years, representing an annual payroll of$374,400. 2. Potential Impact of State of Indiana Circuit Breaker Law: The parties note that the calculations regarding the affect of the tax abatement in question are based on the State of Indiana's tax rates currently in effect at the time of entering into this Memorandum of Agreement. The complete impact of the State of Indiana's Circuit Breaker law on the City's property tax revenues is unknown at this time. To assure that the City receives the projected amount of property tax revenues, which amount was calculated at the time of granting the tax abatement for the Applicant, the parties to this Memorandum of Agreement agree to adjust the length of the abatement and/or the percentage of deduction if the tax revenues due under the Circuit Breaker Law are less than what was initially projected and represented to the Common Council, as evidenced by the supporting documentation submitted to the Council with the Applicant's tax abatement petition. However, in no case will the adjustments cause the property taxes to be paid to exceed the tax payments as initially projected and represented to the Common Council by the aforementioned supporting documentation. Memorandum of Agreement Page 2 of 6 3. Applicant's Compliance with City and State Laws. During the term of the abatement, the Applicant shall comply with Chapter 2, Article 6 of the South Bend Municipal Code entitled "Tax Abatement Procedures" and all governing provisions of the Indiana Code. During the term of this abatement, the City may annually request information from the Applicant concerning the nature of the Project, the approved capital expenditure of the Project, the number of full-time permanent positions newly created by the Project, and the average wage rates and salaries (excluding benefits & overtime) associated with the positions, and the Applicant shall provide the City with adequate written evidence thereof within 15 days of such request (the "Annual Survey"). The City shall utilize this information and the information required to be filed by the Applicant in the CF-1 Compliance with the Statement of Benefits form to verify that the Applicant has complied with the commitments contained in the Commitments at all times after the Commitment Date and during the duration of the abatement. The Applicant further agrees to provide the City with such additional information requested by the City related to the information provided in the Annual Survey and the CF-1 form within a reasonable time following any such additional request. 4. Substantial Compliance and Rights of Termination. The City, by and through the SBCC, reserves the right to terminate the Economic Revitalization Area designation and associated property tax abatement deductions if it determines that the Applicant has not made reasonable efforts to substantially comply with all the Commitments, and the Applicant's failure to substantially comply with the Commitments was not due to factors beyond its reasonable control. As used in this Agreement, "substantial compliance" shall mean the Applicant's compliance with the following: (a) a minimum investment amount of Eight Million Eight Hundred Thousand ($8,800,000) for new building construction. (b) this project will create 10 permanent full-time jobs in the first three years. 5. Factors Beyond Control. As used in this Agreement, factors beyond the control of the Applicant shall only include factors not reasonably foreseeable at the time of designation application and submission of Statement of Benefits which are not caused by any act or omission of the Applicant and which materially and adversely affect the ability of the Applicant to substantially comply with this Agreement. Memorandum of Agreement Page 3 of 6 6. Repayment of Tax Abatement Savings. If at any time during the term of this Agreement the Applicant shall: (i) be delinquent or in default with respect to any tax payment in St. Joseph County, Indiana; or (ii) cease operations at the facility for which the tax abatement was granted; or (iii) announce the cessation of operations at such facility, then the City may immediately terminate the Economic Revitalization Area designation and associated tax abatement deductions, and upon such termination, require Applicant to repay all of the tax abatement savings received through the date of such termination. 7. Notice/Hearing of Termination. In the event that the City determines that the Economic Revitalization Area designation and associated tax abatement deductions should be terminated or that all or a portion of the tax abatement savings should be repaid, it will give the Applicant notice of such determination, including a written statement calculating the amount due from the Applicant, and will provide the Applicant with an opportunity to meet with the City's designated representatives to show cause why the abatement should not be terminated and/or the tax savings repaid. Such notice shall state the names of the person with whom the Applicant may meet and will provide that the Applicant shall have thirty days from the date of such notice to arrange such meeting and to provide its evidence concerning why the abatement termination and/or tax savings repayment should not occur. If, after giving such notice and receiving such evidence, if any, the City determines that the abatement termination and/or the tax repayment action is proper, the Applicant shall be provided with written notice and a hearing before the SBCC before any final action shall be taken terminating the abatement and/or requiring repayment of tax benefits. The Applicant shall be entitled to appeal that determination to a St. Joseph County Superior or Circuit Court. 8. Repayment. In the event the City requires repayment of the tax abatement savings as provided hereunder, it shall provide Applicant with a written statement calculating the amount due (Statement), and Applicant shall make such repayment to the City within 30 days of the date of the Statement. If the Applicant does not make timely repayment, the City shall be entitled to all reasonable costs and attorneys' fees incurred in the enforcement and collection of the tax abatement savings required to be repaid hereunder. 9. Modification/Entire Agreement. This Agreement and the schedules attached hereto contain the entire understanding between the City and the Applicant with respect to the subject matter hereof, and supersede all prior and contemporaneous agreements and Memorandum of Agreement Page 4 of 6 understandings, inducements, and conditions, expressed or implied, oral or written, except as herein contained. This Agreement may not be modified or amended other than by an agreement in writing signed by the City and the Applicant. The Applicant understands that any and all filings required to be made or actions required to be taken to initiate or maintain the abatement are solely the responsibility of the Applicant. In accordance with the SBCC's Resolution No. , dated October 23, 2017, the City and the Applicant mutually acknowledge and agree that this Agreement supersedes and replaces the Memorandum of Agreement dated February 13, 2017, between the City and GLC SBDC II, LLC, which entity was erroneously identified as the applicant. 10. Waivers. Neither the failure nor any delay on the part of the City to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege with respect to any occurrence or be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver. 11. Governing Laws of Indiana. This Agreement and all questions relating to its validity, interpretation, performance, and enforcement shall be governed by the laws and decisions of the courts of the State of Indiana. 12. Applicant's Consent to Jurisdiction. The Applicant hereby irrevocably consents to the jurisdiction of the Courts of the State of Indiana and of the St. Joseph County Circuit or Superior Court in connection with any action or proceeding arising out of or relating to this Agreement or any documents or instrument delivered with respect to any of the obligations hereunder, and any action related to this Agreement shall be brought in such County and in such Court. 13. Notices. All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been received when delivered by hand or by facsimile (with confirmation by registered or certified mail) or on the third business day following the mailing, by registered or certified mail, postage prepaid, return receipt requested,thereof, addressed as set forth below: Memorandum of Agreement Page 5 of 6 If to Applicant: GLC Portage Prairie II, LLC 112 West Jefferson Blvd., Suite 200 South Bend, IN 46601 Attn: Jeff Smoke If to the City: City of South Bend, Indiana 227 West Jefferson Blvd. Suite 14005 South Bend, Indiana 46601 Attn: Daniel Buckenmeyer, Department of Community Investment 14. Assignment and Transfer Prohibited. This Agreement shall be binding upon and inure to the benefit of the City and the Applicant and their successors and assigns, except that no party may assign or transfer its rights or obligations under this Agreement without the prior written consent of the other party hereto, in which consent shall not be unreasonably withheld. 15. Valid and Binding_Ageement. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. By executing this Agreement, each person so executing affirms that he has been duly authorized to execute this Agreement on behalf of such party and that this Agreement constitutes a valid and binding obligation of the party. 16. Severability. The provisions of this Agreement and of each section or other subdivision herein are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part unless this Agreement is rendered totally unenforceable thereby. 17. No Personal Liability. No official, director, officer, employee or agent of the City shall be charged personally by the Applicant, its employees or agents with any liabilities or expenses of defense or be held personally liable to the Applicant under any term or provision of this Agreement or because of the execution by such party of this Agreement or because of any default by such party hereunder. [Remainder of page intentionally blank.]