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HomeMy WebLinkAbout11-27-17 Community Investment O�$01U T11 4 F U d W MC-F ale 1865 OFFICE OF THE CITY CLERK KAREEMAH FOWLER,CITY CLERK COMMUNITY INVESTMENT NOVEMBER 27, 2017 4:15 P.M. Committee Members Present: Gavin Ferlic, Oliver Davis, Randy Kelly, Regina Williams- Preston, Paul Tipps (citizen member), Will Smith (citizen member) Committee Members Absent: None Other Council Present: Tim Scott,Jo M. Broden. John Voorde, Dr. David Varner, Karen White Other Council Absent: None Others Present: Bianca Tirado, Graham Sparks, Bob Palmer Presenters: James Mueller, Dan Buckenmeyer, Jeff Smoke Agenda: Bill No. 80-17- Transitioning HPC to the Department of Community Investment Bill No. 17-76-Designating Tax Abatement Petition to River Park Leasing Corporation Committee Chair Gavin Ferlic called to order the Community Investment Committee meeting at 4:15 p.m. He introduced members of the Committee and proceeded to give the floor to the presenters. Bill No. 80-17- Transitionim HPC to the Department of Community Investment James Mueller, Executive Director of Community Investment with offices on the 14th floor of the County-City Building, stated, The ordinance before you does two (2)main things. The first being the placement of responsibilities of Historic Preservation in the Department of Community Investment, as contemplated in the 2018 Budget. Secondly, it ratifies an Interlocal Agreement between the County and the City. There was some lengthy discussion during the budget process. If we were able to find the original Interlocal Agreement,the primary changes we would be seeking to amend would be purely on the staffing component. So the changes we are looking at are only on the staffing component.However,we were unable to find the preexisting Interlocal Agreement. For peace of mind, this new Interlocal Agreement ensures that if someone does find the original Interlocal Agreement, this new agreement would supersede the old agreement. With that, the Historic Preservation Commission was never really contemplated to have any structural or procedural changes at this time. The things contemplated were purely budgetary and the oversight 455 County-City Building-227 W.Jefferson Boulevard-South Bend,Indiana 46601 Phone 574-235-9221 -Fax 574-235-9173-TDD 574-235-5567-www.SouthBendIN.gov JENNIFER M.COFFMAN BIANCA TIRADO JOSEPH MOLNAR CHIEF DEPUTY/DIRECTOR OF DEPUTY/DIRECTOR OF POLICY ORDINANCE VIOLATION CLERK OPERATIONS of the staff. There will be second legislative action needed by the Council to amend the Historic Preservation parts of the Municipal Code. That is set to go before the Area Plan Commission meeting in December 2017, and will come to this Council sometime in Januar2018. We have heard, from community as well as Councilmembers, that the Historic Preservation Commission needs to be more customer-service minded. We will work tirelessly to make sure that happens. Committeemember Oliver Davis asked, So the composition is two (2) from the Commissioners, two (2) from the Mayor, two (2) from our Council and two (2) from the County Council. Is there any reason we need to have the County involved in its composition seeing that it is coming under City control? Mr. Mueller replied, When the arrangement was flipped, the City had four (4) representatives on the Commission. We want to have continuity with the Commission so it can be grandfathered in as smoothly as possible. The ninth member is elected from within the Commission as their architect. We still have four (4) and the County will still have (4). In the Interlocal Agreement there is a piece that implores each appointed member to act in the best interest of the appointing body. Committeemember Paul Tipps asked, The jurisdiction is still the entire County, correct? Mr. Mueller replied, Yes, it will remain the way it currently is. Committeemember Will Smith asked, What brought about this budget change in the first place? Mr. Mueller replied, This had been under discussion for a number of years. The proportion of the work that was being done in the City as opposed to the County was unbalanced. When we got into that conversation, it became clear the vast majority of the resources were being spent in the City. Committeemember Tipps stated, I think this is a great move toward efficiency. Councilmember Dr. David Varner stated, If there is anything we've learned over the years it is finding the balance of City folks voting on County things and County folks voting on City things. That has always been a hang up. This Interlocal Agreement is great. If it is possible and the rules allowed it, I would suggest future recusal of voting for certain issues. Committeemember Oliver Davis stated,The concern I have is having an elected body vote on itself rather than having the body vote on their own members. I understand why we should have the County,but I think it should be coming from the County and the City and not have someone voted in by their own members. I think that should be different. I don't know if other boards or commissions do that. When it comes to City things, that shouldn't be the case because to my knowledge I can't think of any other City structure that does that and if you could enlighten me on that, I would appreciate it. So if we have enlightenment in that area, I'll back off. But if we don't have enlightenment in that area, I think there should be consistency with that. Mr. Mueller stated, Like I said,the preference to this transition was to keep as much continuity of the services,but we are happy to look into what it would mean to change things down the road. 2 Committeemember Tipps stated, Presumably, the person the HPC elects has some expertise in Historic Preservation. They may want somebody with expertise. Committeemember Davis stated, I would agree but that's the elected body doing that in the City structure. That's why I'm saying the same requirements should be across the board. Councilmember Jo M. Broden stated, Having looked at both the Interlocal Agreement and the enabling legislation, and having gone line by line on this, I think there are a lot of questions on this. It's not just answering Jo Broden's questions but I think it is important for the Council to understand this is the undertaking of an entirely new department. We need to take the time to get it right. Specifically with regards to serving an entire County and the crafting of the Interlocal Agreement, it is actually a tool that gets us good participation from small areas of the County. While I'm not a member of this Committee, I think we do have the time to hold up on this to get questions answered. She then passed out a document with her questions (available in the City Clerk's Office). She continued, There are a lot of minor changes but they could have big implications in the future. One (1) of the biggest difficulties I have on voting on this tonight is we have no idea of the transition plan and the benchmarks to make this move. Another big concern I have are the financial pieces to it as well as some of the triggers if this breaks apart and what happens after that. We can't, in my opinion,make this decision until those questions are answered. I'm not sure, within this agreement, we have looked at all those contingencies long or adequately enough. I would like for us to postpone this legislation until our next meeting. What is the actual plan and what are the benchmarks? This is a big change taking on a long-standing organization. We need to make sure we have the protections in place to have the best service possible. Without the original Interlocal Agreement and an actual transition plan, I don't feel comfortable voting on this. Councilmember Tim Scott stated, The County decided not to fund this. If we don't fund this, it will not exist, correct? Mr. Mueller replied, If we don't have all four (4) entities pass this, it would default to the State, that is correct. Councilmember Scott followed up,And how long has Historical Preservation been operating like this? Mr. Mueller replied, Since 1973. Councilmember Scott stated, The way I look at it is this is a brand new department, yes, but they have been running with experience for quite a long time. I agree with concerns raised about the structure of the commission, but this is just an operational transition. Is it worth passing now, but coming back to this and amending it? Mr. Mueller replied, We are open to more shifts and changes over time. The concern with this is there isn't, practically, enough time before the end of the year to get the same document passed through all four(4) bodies, if we postpone it right now. 3 Councilmember Davis stated,I appreciate we have to get this done by the end of the year. But this came in the 91h inning of the game during the budget process. We were promised we had time for this and I was not aware that we had all this discussed and explained. I would at least appreciate deliberating this in a separate meeting. I think these are legitimate questions. It is not just budget but it is ownership. We are the ones that have to go before the people, not you, except the Mayor, with all due respect to your service. We asked this question during budget time. Mr. Mueller replied,With all due respect,this was on first reading last meeting and it is only today that these questions are coming. Councilmember Davis interrupted, That's because that's how the process works. This is not late at all, we don't have any questions during first reading. This is the first time we have dealt with this bill. Councilmember Broden stated, I have been fair in addressing any questions in advance in most issues. Councilmember Davis interjected, I was fair. Councilmember Broden stated, I think if we have the time, we need to punch the clock with the other bodies. We need a separate meeting with the other bodies on this. Committee Chair Ferlic then opened the floor to members of the public wishing to speak in favor of or in opposition to the legislation. Joseph Molnar, 1430 Longfellow Avenue, stated, I am speaking as one (1) of the Historic Preservation Commissioners. I think the quality of service that the staff will be able to provide to residents both in the County and the City will be greatly increased with this move. I don't think the County had the finances or desire to support the Commission to the extent of what it could have been. There are a lot of initiatives that have not been financially feasible being part of the County that will now be made possible being in the Department of Community Investment. Jim Bognar, 807 W.Washington Street,stated,This started as an issue of finances with the County. For close to forty (40) years the County has carried the City. Over ninety percent (90%) of the work was getting done on City properties. It is actually just Historic Preservation you are undertaking whereas the Commission will still be there. When it was originally formulated and set up,the reason why it was set up the way it was is for the unincorporated parts of St.Joseph County and South Bend. The person usually elected is an architect that came in to make comments on what was happening. This whole thing was going to be eliminated by the County because they did not have the funding. There is a tremendous upswing towards taking this on. While there have been some points made, this agreement transfers it over as is and amending it as you go along. That may not be palatable to all of you,but there are also State legal concerns for all of this. Right now there is a tax bill in our State House of Representatives that actually eliminates Historic Preservation credits completely. The Senate has it but is changing the way the credits are. Coming into the Department of Community Investment enables the Historic Preservation to immediately 4 be able to go out and find money in other areas. This should not be postponed, especially if you don't want to lose the status we have had over forty (40) years. It should be approved tonight but amended as you move forward. I give credit to the Department of Community Investment for saving this because this would have been eliminated from the County and the City would have lost a lot of valuable assets. Committee Chair Ferlic turned the floor back to the Committee for further comment or main motions. Committeemember Smith made a motion to continue Bill No. 80-17 to the December I Vh,2017 Common Council meeting. Committeemember Davis seconded this motion which failed to reach a majority. Committeemember Randy Kelly then made a motion to send Bill No. 80-17 to the full Council with no recommendation. Committeemember Williams-Preston seconded this motion which carried unanimously by a voice vote of six (6) ayes. Bill N& 17-76-Designating Tax Abatement Petition to River Park Leasing Corporation Dan Buckenmeyer, Director of Business Development for the Department of Community Investment, with offices on the 14'h floor of the County-City Building stated, We are here to launch the revitalization of the block immediately south of this building. What used to be a fully developed downtown block is now a sea of parking, and we are looking to change that. The northeast corner of the block was home to the Hotel Jefferson for most of the 1900s. In 1979, that four(4) story structure was demolished to make way for a Hardy's, only to be demolished itself in 2000. Since then and for almost the past two (2) decades, that corner of the block has sat vacant. It is owned by the City but is generating no revenues or benefits for our citizens. We are thrilled to present an opportunity to avoid this situation happening for another decade or two (2). The Department of Community Investment is recommending the approval of a resolution to designate that corner as an economic revitalization area to aid in the revitalization of that block, and provide an assessed value deduction or tax abatement to the property in order to incent and enable this exciting and important property in question. The property in question will actually sit on the parcel that includes only the easternmost half of the lot and will maintain ownership of the western half of the lot in anticipation of incenting and activating future development. This will be the first new downtown South Bend office building or development in about twenty (20) years. It also sits on a meaningful artery between downtown and the ballpark. The proposed building includes high-end retail with four(4) floors of Class-A office space above. It would be five (5) stories and 3,800 square feet in total. He continued, When we evaluate opportunities to support economic development in the City of South Bend,the top two (2) of the many factors we look at are the levels of private investment and job creation. This building's expected $9 million price tag represents significant private investment whilst also representing significant risk. It is important to note that this is a new SPEC Building. The retail space is not contracted at this point. We are in an era of high construction costs which also increases the risk. Known and committed job creation will stem from this project. The owner has committed to creating fifteen(15)new jobs with a payroll of $750,000 per year. In addition to those jobs, we anticipate there will be significant indirect job creation resulting from the activation of ground floor retail and the other offices. We, the City, are selling the parcel to the developer for$50,000. We are thrilled to present this opportunity to the Council and hope you are equally as excited. This property has sat idle and made no 5 contributions to the tax rolls for decades. The Department of Community Investment staff recommends to the Council the approval of this resolution for a real property tax abatement at one hundred percent(100%) for six (6) years. When the abatement does finish,the property is expected to generate up to about $250,000 in tax revenues. Jeff Smoke, Great Lakes Capital, 112 W. Jefferson Boulevard stated, We are pretty excited about this project. It is the first office building built in downtown South Bend in a number of years. Councilmember Davis asked, Who is the developer? Mr. Smoke replied, Great Lakes Capital is the developer and the owner is an entrepreneur from Elkhart that is from South Bend originally. Councilmember Dr. Varner stated, We've been doing abatements on graduated scales. In this case with the one hundred percent (100%) abatement, I'm becoming uncomfortable with how much it is getting out of hand. We've spent so much time tilling the public what abatements are and, now, with these requests, it means no taxes. I'm afraid this will become the standard request and I will have a difficult time allowing all the tax revenue to walk away. Mr. Buckenmeyer replied, We do intend to do a deeper investigation on abatements. However over the years and through the changes, it is the same amount of money abated, it is just a different duration and different formula. Mr. Mueller stated, And that shift has come with putting less or even no TIF funds to projects anymore. Councilmember Broden asked, Could you please update that employment data? Also, what is the owner's business plan for the attraction and retention for the retail and office space? Mr. Smoke replied, The owner is from South Bend originally and he was excited when he saw the revitalization of South Bend's downtown. He is an entrepreneur launching the business on the top floor. We will be talking to tenants for the office space. Councilmember Scott stated, It is all about return on investment. We've put off having a conversation about abatements just because of timing on agendas, but that will come up. I'm not a fan of one hundred percent(100%)tiers, but I am a fan of getting this parcel on the tax rolls. I don't think this will set precedent. Committee Chair Ferlic then opened the floor to members of the public wishing to speak in favor of or in opposition to the legislation. There were none. He then turned the floor back to the Committee for further comment or main motions. Committeemember Randy Kelly made a motion to send Bill No. 17-76 to the full Council with no recommendation. Committeemember Smith seconded this motion which carried unanimously by a voice vote of six (6) ayes. 6 With no further business, Committee Chair Ferlic adjourned the Community Investment Committee meeting at 5:13 p.m. Respectfully Submitted, Gavin Ferlic, Chairperson 7