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HomeMy WebLinkAbout2 Minutes12-03-10 Meeting SOUTH BEND REDEVELOPMENT COMMISSION REGULAR MEETING December 3, 2010 10:00 a.m. 227 West Jefferson Boulevard Presiding: Marcia I. Jones, President South Bend, Indiana 1. ROLL CALL Members Present: Ms. Marcia Jones, President Dr. David Varner, Vice President Ms. Nancy King, Secretary Mr. Greg Downes Mr. Donald Alford Members Absent: Ms. Stephanie Spivey Legal Counsel: Mr. Charles S. Leone, Esq. Mr. Lawrence Meteiver, Esq. Redevelopment Staff: Mr. Don Inks, Director Mrs. Cheryl Phipps, Recording Secretary Mr. Robert Mathia, Economic Development Specialist Mr. Matt Sikora, Economic Development Specialist Ms. Debrah Jennings, Property Manager Others Present: Mr. Tom Price, Mayor’s Office Mr. Jeff Gibney, Executive Director Ms. GlendaRae Hernandez Mr. Mark Seaman, Prism Science Mr. Richard Deahl, Barnes & Thornburg Mr. Russ McFee, G.H.S. Corporation Mr. Mark Peterson, WNDU Mr. Dan Schoenfeld, WNDU Mr. Richard A. Nussbaum II Ms. Geri Hathaway Mr. Jon Paul, WSBT-TV Photographer, WSBT-TV Mr. Jeff Parrott, South Bend Tribune st Mr. Doug Way, 1 Source Bank Mr. Rich Hill, Baker & Daniels Ms. RaeLee Rea, Baker & Daniels Mr. Phillip Faccenda, Barnes & Thornburg Ms. Tamara Nicholl-Smith Ms. Katrina Marquardt st Ms. Lori Jean, 1 Source Bank South Bend Redevelopment Commission Regular Meeting –December 3, 2010 2. APPROVAL OF MINUTES A. Approval of Minutes of the Regular Meeting of Friday, November 19, 2010. CM Upon a motion by Mr. Downes, seconded by Ms. OMMISSION APPROVED THE INUTES OF THE RMF, EGULAR EETING OF RIDAY King and unanimously carried, the Commission N 19,2010 OVEMBER approved the Minutes of the Regular Meeting of Friday, November 19, 2010. 3. APPROVAL OF CLAIMS Redevelopment Commission Claims submitted December 3, 2010 for approval. 305 FUND SBCDA BOND Paul Fujawa Engineers, Inc. 11,600.00 St. Joseph/Wayne Parking Garage Forms+Surfaces 8,180.20 Furniture for Island Park @ Century Center 324 AIRPORT AEDA Plews Shadley Racher & Braun LLP 4,262.93 Cost Recovery Studebaker/Olive Plow Tuck Langland 45,000.00 James Oliver & Oliver Plow Sculptures IDEM 733.00 Reimbursement Administrative Costs South Bend Parks & Recreation Dept 4,780.00 Lawn Maintenance DLZ 240.00 Professional Srvs on Site Engineering Representative for Studebaker Indiana Michigan Power 1313 Prairie Ave 64.22 Nipsco 1313 Prairie 6.49 Plews Shadley Racher & Braun LLP 3,049.10 601 W Indiana Ave George Frison 2,100.00 1518 S Catalpa St. Linda Frison 1518 S Catalpa St. 1,900.00 South Bend Tribune 621 Scott St. 93.44 Walsh & Kelly, Inc. 415,176.55 Memorial Hospital Streetscapes Olive Rd/U.S. 20 VOB Enterprises, an Indiana Partnership 6,712.00 Innovation Park Monthly Office Space Rental - Dec 2010 630.00 Tri County News 87.07 SBD Reprographics Demo Former Millennium Environmental 129.26 Hull & Associates, Inc Olive Industrial Pk Phase II 8,531.67 Hull & Associates, Inc Studebaker Area A 12,373.30 Meridian Title Corporation 755 S Michigan St 100.00 2 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 420 FUND TIF DISTRICT-SBCDA GENERAL Baker & Daniels Legal Services 164.00 Indiana Earth Inc. 79,312.65 Demolition Fred's Transmission & Clutch Ampco System Parking St Joseph St Surface / 225 Main St 1,205.26 422 FUND TIF DISTRICT WEST WASHINGTON South Bend Parks & Recreation Dept 150.00 Lawn Maintenance 426 FUND SOUTH BEND CENTRAL MEDICAL DISTRICT Carl Walker Memorial Hospital Bartlett St. Garage 3,408.93 429 FUND NORTHERN DEVELOPMENT TIF AREA Baker & Daniels Legal Services 205.00 430 FUND SOUTHSIDE DEVELOPMENT TIF AREA #A South Bend Parks & Recreation Dept 150.00 Lawn Maintenance $ 610,345.07 CC Upon a motion by Ms. King, seconded by Mr. Downes OMMISSION APPROVED THE LAIMS D3,2010, SUBMITTED ECEMBER AND ORDERED and unanimously carried, the Commission approved the THE CHECKS TO BE RELEASED Claims submitted December 3, 2010, and ordered checks to be released. 4. COMMUNICATIONS TC There were no Communications. HERE WERE NO OMMUNICATIONS 5. OLD BUSINESS TOB There was no Old Business. HERE WAS NO LD USINESS 6. NEW BUSINESS A. Receipt of Bids (1) Receipt of Bids for disposition of 410 South Main Street. No bids were received. 3 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 B. Tax Abatements (1) Resolution No. 2811 approving an application for personal property tax deduction for property located at 6879 Enterprise Drive in the Airport Economic Development Area. (G.H.S. Corporation d/b/a/ GHS Strings) Mr. Mathia noted that G.H.S. Corporation is one of the largest domestic manufacturers of strings for fretted instruments, including for example, strings of classic, acoustic and electric guitars, bass instruments, mandolins, banjos, fiddles and many other instruments. G.H.S. Corporation is proposing to relocate its primary string manufacturing operations to South Bend in a phased transition process to ramp up production and commence production during 2011. The project consists of the installation of string manufacturing equipment including, without limitation, automated ball-end machines, and computer monitored string tension and winding equipment. G. H. S. Corporation will be transferring or purchasing and installing new and used equipment. All of the used equipment will come from outside the State of Indiana. The estimated cost of the project is $600,000 to $1,000,000. At a cost amount of $600,000 total taxes to be abated during the five-year abatement period are estimated at $26,096. Total taxes to be paid during the five-year abatement period are estimated at $23,746. At a cost of $1,000,000 total taxes to be abated during the five-year abatement period are estimated at $43,494. Total taxes to be paid during the five-year abatement period are estimated at $39,577. 4 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 The project is estimated to create at least fifteen (15) new, permanent, full-time jobs in the first year of production representing a new annual payroll of at least $350,000. Because the project is new to South Bend there are no existing jobs. G.H.S. Corporation has notbeen granted any previous tax abatements. The property is properly zoned for the proposed project. The property is located in the Airport Economic Development Area, which is a Tax Increment Allocation Area; therefore, the petition for personal property tax deduction must first be approved by the South Bend Redevelopment Commission. The project qualifies for five years of personal property tax abatement under the Tax Abatement Ordinance. Mr. Deahl noted that G.H.S.’s initial estimate of fifteen jobs to be created is expected to double within the first year as production ramps up. Mr. Varner asked how many suppliers of instrument strings there are nationwide. Mr. McFee responded that there are eight to ten manufacturers. Three of those are the major worldwide suppliers, one on the east coast, one on the west, and G.H.S. in the Midwest. Mr. Downes asked what attracted G.H.S. to South Bend. Mr. McFee responded that the proximity to Battle Creek, Michigan where his other plant and his home are was important to him; South Bend also has a pretty strong workforce; and he was able to find a building in South Bend that suited him. Mr. Downes said how pleased the Commission is to have them here. 5 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 CRN.2811 Upon a motion by Ms. King, seconded by OMMISSION APPROVED ESOLUTION O APPROVING AN APPLICATION FOR PERSONAL Mr. Alford and unanimously carried, the PROPERTY TAX DEDUCTION FOR PROPERTY Commission approved Resolution No. 2811 6879ED LOCATED AT NTERPRISE RIVE IN THE approving an application for personal AEDA. IRPORT CONOMIC EVELOPMENT REA property tax deduction for property located at (G.H.S.C///GHSS) ORPORATION DBA TRINGS 6879 Enterprise Drive in the Airport Economic Development Area. (G.H.S. Corporation d/b/a/ GHS Strings) C. South Bend Central Development Area (1) Staff report on LaSalle Hotel. SLSH Ms. Jennings gave a report, noting that on TAFF REPORT ON AALLE OTEL ROOF REPAIR October 15, 2010 the Commission authorized repair of the Hotel LaSalle roof, instructing staff to seek additional quotes and proceed using the lowest quote not exceeding $6,000. The three quotes ranged from $9,900 to $2,170. Horns and Sons was the lowest quote. Staff was concerned about whether they would really be able to provide the scope of services required for that amount of money, but Horns and Sons assured staff that it could. The work is currently in process. (2) Letter of Intent for UAN Cultural & Creative, Ltd. to lease 123 S. Michigan St. (Michigan Street Shops) Ms. Jennings noted that UAN is an art gallery interested in leasing123 S. Michigan St. Staff has received a Letter of Intent to lease for one year beginning January 15, 2011 with a sixty-day rent abatement. The annual modified gross rent is to be $19,000 per year, including common area maintenance (CAM), real estate taxes and insurance. The tenant will be responsible for paying all utilities. The tenant will have the option of two one-year lease renewals, provided they are in good standing. 6 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 Ms. Jennings provided the following comparison of rent paid by other retail tenants of redevelopment leased space downtown. Bombay International, 119 S. Michigan, pays $11.50 per sft with CAM of $2.32 per sft. Its annual rent is $16,708. Spark Design, 121 S. Michigan, pays rent of $7.00 per sft with CAM of $5.26 per sft. Its gross rent is $17,445.98 per year. UAN Cultural & Creative will be paying rent of $7.50 per sft with CAM of $4.92 per sft. Its annual gross rent will be $19,000. LePeep, 127 S. Michigan, pays rent of $9.37 per sft and CAM of $4.58 per sft. Its annual gross rent is $44,681.85. Christian Science Reading Room, 129 S. Michigan, pays rent of $11.50 per sft with CAM of $5.47. Its gross annual rent is $17,920.32. Brunos Pizza, 131 S. Michigan, pays rent of $4.49 per sft with CAM of $4.92. Its gross annual rent will be $14,400. Mr. Inks asked for approval of the Letter of Intent from UAN Cultural & Creative, subject to receipt and review of a business plan from UAN and also some flexibility on which address to locate them in. He noted that staff has received word that Spark Design will be leaving its space shortly. Upon a motion by Mr. Downes, seconded by CLI OMMISSION APPROVED THE ETTER OF NTENT UANC&CL. FROM ULTURAL REATIVE TD TO Ms. King and unanimously carried the LEASE REDEVELOPMENT OWNED RETAIL SPACE Commission approved the Letter of Intent , IN THE DOWNTOWN SUBJECT TO RECEIPT AND 7 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 from UAN Cultural & Creative Ltd. to lease REVIEW OF A BUSINESS PLAN redevelopment owned retail space in the downtown, subject to receipt and review of a business plan. Mr. Inks asked that Item 6.C.(4) be considered before 6.C.(3). There was no objection and Item 6.C.(4) was moved up on the Agenda. (4) Staff report on acquisition of property in the South Bend Central Development Area. Mr. Inks noted that for several months staff has been working on a retention project in st the downtown involving 1 Source Bank and the Marriott Hotel, not only trying to make sure that those operations stay in the downtown, but that the jobs remain and the property is improved. Mr. Richard Nussbaum has been handling the negotiations as well as preparing the documents related to the project. Mr. Nussbaum noted that late in the evening of December 2 there was an attempt to provide Commissioners with a fifteen page document, the Memorandum of Understanding. The city’s e-mail program was not sending e-mail to the outside, so Commissioners did not receive the document for review. Mr. Nussbaum reviewed the essence of the document. Mr. Nussbaum noted that he remembers the st site where the 1 Source Bank and Marriott Hotel now sit while it was a vacant lot called “the hole.” There had been a very grandiose vision for that site by some leaders in the community, such as Mike Carmichael. Mr. Carmichael worked very hard until his death to implement the vision, but it did not work 8 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 out. “The hole” became a great place to dump snow. About ten years later a grand structure was built, somewhat controversial in terms of architectural style, but nonetheless a very interesting and beautiful building. The building was developed through a partnership of some of the same people present at the meeting today. It was a great vision and a “great day for South Bend” when that came to fruition. Mr. Nussbaum said that we are here today to continue that vision to make sure that it remains viable, and remains a foundation of downtown South Bend. The parties to the Memorandum of st Understanding are 1 Source Corporation, the principle tenant of the office building; Host Hotel and Resorts, a real estate investment trust. It is the owner of the hotel side of the building. The Marriott brand is the manager under an agreement with Host Hotel. Marriott is not a party to this agreement. The Board of Public Works is also a party to the agreement because some of the funding will be channeled through civil city funds. And, the South Bend Redevelopment Commission is the final party to the agreement, as owner of the ground on which the buildings sit. The purpose of the agreement is twofold. st First, the 1 Source lease is coming up for st renewal at the end of December 2010. 1 Source has to make a decision before then whether it is going to maintain its presence at the current location or look at other options. st We have been working with 1 Source over the course of the last year to make sure that they remain in downtown South Bend. This Memorandum of Understanding accom- 9 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 plishes that goal. Second, that Host maintains the status of the Marriott Hotel in an upscale or upper upscale fashion. Those are terms in the hotel business. This agreement accomplishes that as well. In order to move this project forward the city has pledged $6.5M toward the purchase of st the parking garage located at the 1 Source Center. The $6.5M proceeds will be allocated according to the current ownership of the garage. Seventy percent of the garage is owned by Host; thirty percent is owned by st 1 Source. The sources for the $6.5M are UDAG repayments and some COIT funds. The consideration for the parking garage will st go 70% to Host and 30% to 1 Source. In exchange for that, the city will receive an st agreement from 1 Source that it will renew st its lease for ten years; 1 Source will make st improvements to not only the 1 Source Center downtown and to other areas where st 1 Source has properties in South Bend, the most important of which is the First Bank Building at the northwest corner of Jefferson and Main. On the Host side, Host will continue to operate the hotel at an upper upscale or upscale hotel, making improvements to the hotel as well. Also important to this transaction is that both st Host and 1 Source, as they do today, will continue to assume and maintain the garage and make any capital improvements to it that are necessary. They will be entitled to receive the revenues from the garage and those revenues will be used to maintain the garage. The city will not assume any additional responsibilities or liabilities as it relates to the garage. The operation of the garage will not appear any different than it 10 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 has for the last thirty years. With regard to the improvements and how the proceeds will be allocated, it is important to note that the entire $6.5M put into the project by the city will go into these improvements. There will also be private money, both from the Host side and from the st 1 Source side. One of the first things that the public will see during the construction phase, which will occur over the next three years, is improvements to the atrium area of st the 1 Source Center. A minimum of st $1.25M will be allocated to the atrium. 1 Source and Host own the atrium in the same percentage that they own the garage. So, of that $1.25M, Host will be contributing 70% st and 1 Source will be contributing 30%. $7.35M will be allocated to hotel improvements by Host, half from the garage proceeds and half from private Host funds. The bank improvements, over and above the atrium, will amount to a minimum of $5.4M. Some of those improvements will be at the st 1 Source Center, others will be to properties st 1 Source owns in the City of South Bend. Some other items in the agreement are that the garage proceeds (the $6.5M) are going to st be escrowed. Neither Host nor 1 Source will have access to those funds until they have used their own funds to make their improvements. The city’s money will be “last in.” There are some special considerations in the agreement to encourage the parties to make improvements to the atrium first. This deal doesn’t do anything for anyone unless the improvements are made. As a result, there is a provision that if the improvements are not made as agreed, st both 1 Source and Host will be subject to liquidated damages in the amount of 11 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 $750,000. There’s a construction deadline of December 31, 2013. Mr. Nussbaum stated that the city does not anticipate having to worry about that at all. We have every confidence that these improvements will be made; however, it is prudent to include such a guarantee. In addition, if there are drawdowns of city funds, there are provisions that if certain operational standards are not met, the city can get refunds for what it has paid for the garage. The important part of the clawback portion of the agreement is that no credit is given until all the improvements are done. So, again, the goal is making sure that the money that is promised to be invested in the project will be invested in the project. As in any business transaction, there may be the situation where it is a losing proposition. So, there are certain considerations given to Host, assuming that there are certain threshold levels of performance that are not met. Mr. Nussbaum noted that this was the subject of a lot of negotiation. We believe from the city side that it would need to be a pretty catastrophic event for Host to not meet those thresholds. It has never gotten that low before in its history and we think the agreement provides Host the kind of protection they needed, while at the same time providing the city and st 1 Source with the kind of protection we think we should have in order to make sure that the operation continues as it should. st Additional consideration to 1 Source and Host will be that the ground lease interest will be conveyed to the building owner and to Host. There have been some modest conveyance payments in the underlying documents, about $33,000 per year, split between the two parties. Those will go away as the result of this agreement. Then, at 12 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 some point, no later than 2041, the garage st will go back to Host and 1 Source. Mr. Nussbaum stressed the economic development impact of this agreement. An important historic business is being st maintained at this site. 1 Source has been in downtown since 1863. It was very important to the city that it remain. Secondly, we wanted to maintain the presence of an upscale/upper upscale hotel downtown. That was important to the convention business we have at Century Center, but is also the sign of a city that has something to offer. This agreement also allows 700 jobs to be st maintained600 from the 1 Source side and C 100 from the Host side. Mr. Nussbaum also noted that there will be short term benefits of $14M of construction that will take place in downtown South Bend over the next three years. That will be a source of construction jobs, and also a sign that downtown is alive and well. Mr. Downes clarified that the 700 jobs do not include tenants in the office building other st than 1 Source. Mr. Nussbaum agreed. Barnes & Thornburg is the main other tenant. It would also maintain its presence downtown with its 200+ jobs. Mr. Downes pointed out that there are roughly, then, 1,000 jobs being maintained in the downtown as a result of this agreement. Mr. Downes asked how property taxes are paid on the property. Mr. Inks responded that the property taxes would continue as they have. There may be a small gain, given the improvements to the property, but typically renovation work does not generate significant assessed value. 13 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 Ms. King asked if the owner of the building is a party to the agreement. Mr. Nussbaum responded that it is not. She asked if that was an issue for any of the parties. Mr. Nussbaum responded that it is not. Mr. Varner pointed out that the owner of the building benefits from the agreement in that it gets another ten-year lease for its building. Mr. Varner stated that the $6.5M is a cash infusion, period. Mr. Nussbaum clarified that Commission approval of the Memorandum of Understanding is not the final approval of the deal. It is a step in the process. On December 7 the Area Plan Commission will consider a very narrow issue whether C amending the South Bend Central Development Area Development Plan to add the parking garage to the List of Properties to be Acquired conforms to the development plan. Then, the $6.5M will have to be appropriated. The South Bend Common Council will be addressing the appropriation on December 13. Then, the Commission will hold a special meeting on December 28 for a public hearing on amending the Development Plan. Today’s actions are very important steps in the process, but they are not the only public steps to the process. Mr. Varner wanted to clarify that the total of the cash contribution from the city is $6.5M. There will be nothing additional? Mr. Inks responded that of the $6.5M total, $5.3M will come from UDAG and $1.2M from COIT. The cash balance in the UDAG fund today is $2.6M. So, about $2.7M will be loaned from COIT. On day one COIT will be putting in 14 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 $3.9M and UDAG will put in $2.6. At the end of the process it will be $5.3M from UDAG and $2.7M from COIT. The UDAG fund has a major loan that is being repaid over the next seven or eight years. That loan would bring in an additional $3M to the UDAG fund. That will be the repayment source for COIT. Mr. Downes asked for clarification on what upscale hotel and upper upscale hotel means. Mr. Nussbaum explained that in the hotel industry the Marriott would be classified as an upper upscale hotel, based on amenities such as a restaurant, a certain level of room quality, a nice lobby, fitness center, etc. An upscale hotel is comparable to the Inn at Saint Mary’s or Hilton Garden Inn. Certain flagship brands qualify for that rating. Mr. Downes asked about the performance thresholds. Mr. Nussbaum responded that the upper upscale level is the performance threshold for Host. Mr. Alford asked if a Marriott representative could speak to the upscale/upper upscale definitions. Mr. Nussbaum responded that Marriott manages this hotel for Host under a management agreement, also up for renewal at the end of 2010. The city expects that because of these improvements the Marriott will want to remain as manager of the hotel. But it should not be a surprise if Hilton becomes the new manager. It would have to be a certain caliber of manager. Mr. Varner asked, again, if $6.5M is the city’s total liability for this project. Mr. Inks noted that there is another item on the agenda st related to the 1 Source project where we are buying some of their property. That is not a 15 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 part of this transaction, but is related. Mr. Varner asked what the property taxes are on the property currently. Mr. Inks thought taxes are between $600,000 and $700,000 total per year. CM Upon a motion by Mr. Downes, seconded by OMMISSION APPROVED THE EMORANDUM OF U1S ST NDERSTANDING WITH OURCE Mr. Varner and unanimously carried, the C,HHB ORPORATION OST OTELS AND THE OARD Commission approved the Memorandum of PW OF UBLIC ORKS st Understanding with 1 Source Corporation, Host Hotels and the Board of Public Works. (3) Resolution No. 2812 amending the Development Plan for the South Bend Central Development Area and adding an interest in one or more parcels to the List of Parcels to be Acquired. Mr. Inks noted that Resolution No. 2818 adds st the parking garage at the 1 Source Center to the South Bend Central Development Area Acquisition List. CRN.2812 Upon a motion by Mr. Downes, seconded by OMMISSION APPROVED ESOLUTION O DP AMENDING THE EVELOPMENT LAN FOR THE Mr. Varner and unanimously carried, the SBCDA OUTH END ENTRAL EVELOPMENT REA Commission approved Resolution No. 2812 AND ADDING AN INTEREST IN ONE OR MORE amending the Development Plan for the LP PARCELS TO THE IST OF ARCELS TO BE South Bend Central Development Area and A CQUIRED adding an interest in one or more parcels to the List of Parcels to be Acquired. Mr. Inks asked to consider Items 6.C.(6) and 6.C.(7) at this time because they are also st related to the 1 Source transaction. There was no objection and the items were moved up on the Agenda. (6) Resolution No. 2815 related to acquisition of property in the South Bend Central Development Area. (122 Niles Ave.) 16 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 Mr. Inks noted that Resolution No. 2815 sets an acquisition offering price for 122 S. Niles Ave., formerly known as the Troegger Sheet Metal site. It is composed of eight contiguous parcels, across Niles from the Emporium. It has been used as a parking lot. Two independent appraisals were performed. st The average of the two was $404,500. 1 Source has agreed to a purchase price of $400,000. The resolution sets the offering price at $400,000. The property has value to the Commission to facilitate its plans for the East Bank. CRN.2815 Upon a motion by Ms. King, seconded by OMMISSION APPROVED ESOLUTION O RELATED TO ACQUISITION OF PROPERTY IN THE Mr. Downes and unanimously carried, the SBCDA. OUTH END ENTRAL EVELOPMENT REA Commission approved Resolution No. 2815 (122NA.) ILES VE related to acquisition of property in the South Bend Central Development Area. (122 Niles Ave.) (7) Contract for Purchase and Sale of Property (122 Niles Ave.) Mr. Inks noted that the Contract for Purchase and Sale is contingent on the closing anticipated by the Memorandum of Understanding explained previously. CC Upon a motion by Ms. King, seconded by OMMISSION APPROVED THE ONTRACT FOR PSP(122N URCHASE AND ALE OF ROPERTY ILES Mr. Downes and unanimously carried, the A.) VE Commission approved the Contract for Purchase and Sale of Property (122 Niles Ave.) (5) Resolution No. 2814 determining to apply TIF revenues to the payment of the Redevelopment District Revenue Bonds in the event Professional Sports and Convention Development Area revenues are insufficient. 17 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 Mr. Inks noted that the Commission previously approved a revenue bond for the Coveleski project. The source of those payments for that bond was to be the Professional Sports and Convention Development Area revenues, with a backup on that bond of COIT. The intent was to never get to the point of using COIT, but it was a credit enhancement to get a better interest rate when we sold the bonds. We believe the Professional Sports Development Fund (PSD) revenues are sufficient. The Controllers Office has run a cash flow based on cash on hand and what is expected to be received over the remaining period. In the event that reality doesn’t follow projection, we ask that TIF be pledged as a source of repayment to provide an additional assurance that COIT would not be used. Mr. Varner noted that the PSD funds are pledged to the National Football Foundation (NFF) through a certain period of time. He asked if staff was suggesting that the city might have to pay the NFF for a longer time and the PSD funds wouldn’t be available to pay the Coveleski bond. Mr. Leone responded that we believe the commitment to the NFF will end after 2011. Mr. Varner responded that he thought the contract with the NFF was broken when the NFF gave notice that they were leaving. Mr. Inks agreed. Mr. Inks said that is the assumption used in the Controller’s cash flow projection, that there are no remaining obligations on that cash balance. 18 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 Mr. Varner said that there is another $1.6M or $1.8M that is due the NFF. Where will that come from? Mr. Leone responded that he believes that would be part of the negotiation with the NFF for an the extension to use the facility in 2011. Mr. Varner asked what are the city’s contingencies on that? He doesn’t want to see the NFF end up with a claim on part of the PSD fund and then the city has to use TIF revenues to pay for the Coveleski bond. Mr. Leone responded that the risk may be more of a statutory risk, that the legislature may decide that because the PSDF actually takes a portion of the state’s income in sales tax revenue, the legislature may decide the state needs the money more than localities do. That may be something that is changeable over timewe don’t know what’s C going to happen legislatively, so this offers us some protection. PSDF expires in 2018 unless the legislature takes action to extend it. Mr. Inks noted that the projections only go through 2018. The PSDF has a $1M cash balance, so there would be several years before any likely problem might occur. It is highly unlikely that this won’t work out as we anticipate. In that unlikely event, we’re asking for TIF to be a fallback. CRN.2814 Upon a motion by Mr. Downes, seconded by OMMISSION APPROVED ESOLUTION O TIF DETERMINING TO APPLY REVENUES TO THE Ms. King and unanimously carried, the RD PAYMENT OF THE EDEVELOPMENT ISTRICT Commission approved Resolution No. 2814 RBP EVENUE ONDS IN THE EVENT ROFESSIONAL determining to apply TIF revenues to the SCDA PORTS AND ONVENTION EVELOPMENT REA payment of the Redevelopment District REVENUES ARE INSUFFICIENT Revenue Bonds in the event Professional Sports and Convention Development Area revenues are insufficient. 19 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 D. Airport Economic Development Area (1) Proposal for professional services related to Ignition Park. Ms. Hathaway noted that staff requests Commission approval for a proposal from BSA Life Structures for a Land Planning, Master Planning, Site Budgeting and Architectural Concept Development for Ignition Park in the amount of $65,500. Ms. Hathaway noted that it is really timely that we look at how the park will be developed. Innovation Park has met its first year goals. Notre Dame, Project Future and private groups are working very hard at trying to understand and develop methods for advancing the commercialization of the research on the campus of Notre Dame. We have a business asset inventory that’s being developed for the regional businesses for two purposes: one, to understand who is here, and also to understand how those businesses here might help in that commercialization process. And then, hopefully, how the residual effect of that would be that they might actually increase their capacity for innovation and technological advances. Both of those things, the commercialization and the regional development, should result in some potential tenants for Ignition Park as they graduate from Innovation Park or as they grow from their existing locations in the region. Also, we are beginning to receive calls of interest about Ignition Park. It is important for us to understand the best way to develop the physical part of Ignition Park so that we do that in a way that is beneficial ecologically to the community, and so that it appeals to those developers and 20 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 tenants that are interested. It is a Certified Technology Park. The crucial word is technology. When we’ve developed buildings in the past there was an architectural firm, and they passed their designs to an engineering firm. The engineering firm did the work on top of the architectural work. As buildings require much greater advanced technological components, as we hope they will at Ignition Park, it is crucial that those two things, the engineering and the architecture merge and develop in a cohesive manner. That means we need a firm that has both architectural and engineering capacity. BSA Life Structures is such a firm. Based in Indianapolis, they were started in 1975 and have 197 people on staff. The Commissioners were provided bios of many of the staff there. BSA’s work is significant. They have done massive land planning, medical, university, and technology campus development, specifically, the Stinson Remick Hall at Notre Dame and the Indiana University Medical School building. In the case of the IU Med School building, Notre Dame required the use of its design materials, though IU has half the budget of Notre Dame. BSA accomplished that building within IU’s budget. The University of Notre Dame architectural staff couldn’t praise BSA enough. BSA has done very technical buildings for medical facilities, education, research and they’ve done incubator and accelerator buildings. At some point we may need to have that at Ignition Park. BSA has not only worked for the end user, they have done work for developers and for redevelopment commissions. Staff recommends Commission approval of the $65,500 proposal for BSA Life Structures for the land 21 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 and master planning as outlined. Ms. King asked about the wisdom of doing the master planning before the business plan is complete. Ms. Hathaway responded that we really have to understand what the land will accommodate before we can do a business plan. The land planning looks into zoning, traffic patterns, soil conditions and then how can we use this land effectively. Ms. Hathaway noted that BSA’s fee was lowered $11,000 from its first proposal because the city provided the Herceg EMI and Vibrations study. The master planning requires a feasibility study to consider how to make the land flexible enough to accom- modate the single user who wants a 250,000 sft building as well as the graduate of Innovation Park that needs to be a tenant in a multi-tenant building, as well as someone who wants to lease the land and build a building. We have to be ready for all those possibilities. Mr. Inks noted that staff has had a lot of conversations about which comes first, business plan, site plan, land use planning, etc. We feel that we need to move ahead on the land planning because of the calls we are getting. We also want to be moving the business plan ahead quickly because we see those things merging and feeding into each other. One of the initial concepts was that there would be no roads through the site, to minimize vibration and electromagnetic interference. If those businesses aren’t part of our business plan, we may look at an interior grid for vehicular access. Do we want centralized utilities, centralized parking? Those issues will also be addressed in the land planning and will assist in the business plan. The land planning and 22 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 business plan must ultimately be consistent with each other. Ms. Hathaway said she is less concerned about preserving a whole lot of land for what may or may not happen in the future. What Mr. Inks mentioned is very important. The feasibility study and business plan will allow us to be proactive rather than reactive. If we come to realize that we are not “this” or “this” in South Bend, but maybe we are “this.” If we are, then let’s target that type of business, figure out what we have to provide and then go after them. She believes that is the best scenario. That’s where she would like to be by the end of 2011. Ms. King is anxious to see a business plan. Ms. Hathaway said she wants to find an author for the business plan who is highly respected. She would like an author who would be very blunt. We don’t need a strategic plan that is a cheerleader. We don’t need to be told that we can build out eighty acres in three years. She wants a plan that admits this will be hard, but lays out ways to make it easier. Mr. Downes asked who is doing the business asset inventory and what is the timeline for that. Ms. Hathaway responded that George Spohrer and Karl King are doing the business asset inventory as volunteers and she expects that will be completed by the end of the first quarter 2011. Mr. Varner stated that he hopes we don’t turn away offers based on a plan that is too restrictive. South Bend needs productive land that is paying taxes. Let’s plan for accommodating people who have needs, rather than plan for a certain circumstance 23 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 that may change in a few years. Mr. Gibney responded that the new plans that have been developed under his oversight have great flexibility, however they are very helpful to speaking to prospective investors. But they do help us create a vision for future investors as to what the environment is in which they will be working. C Upon a motion by Mr. Downes, seconded by OMMISSION ACCEPTED THE PROPOSAL FROM BSALS IFE TRUCTURES FOR THE SCOPE OF Mr. Alford and unanimously carried, the SERVICES AND FEE PROPOSED Commission accepted the proposal from BSA Life Structures for the scope of services and fee proposed. E. West Washington-Chapin Development Area There was no business in the West Washington- Chapin Development Area. F. South Side Development Area (1) Resolution No. 2813 determining to proceed with the redemption of the presently outstanding taxable Economic Development Revenue Bonds, Series 2005 (Erskine Commons Project) Mr. Inks noted that earlier this year staff received Commission authorization to pay off the TIF revenue bond related to the Erskine Commons project. The intent at that time was to come back later to seek approval to pay off the Economic Development Commission Industrial Revenue Bonds on the project. We expect the payoff to occur in early February 2011. That TIF area would then be debt free. Mr. Varner asked what would be the future of that TIF area then. Mr. Inks responded that that is still up for discussion. There are 24 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 three options: (1) The TIF district could remain in place. When the Southside Development Area was created, the whole area was created as TIF Area No. 1. Later, the individual nodes at Erskine Commons and Erskine Village were declared separate TIF areas. They overlap the underlying TIF Area No. 1. If the Erskine Commons TIF Area would be dissolved, that TIF would automatically revert to the underlying TIF Area No. 1. (2) Since there is no debt related to the TIF Area No. 1, that area could be dissolved, releasing all the South Side Development Area TIF. (3) The South Side Development Area No. 1 could remain, but each year it could be determined whether that TIF was needed to support the activities of the TIF Area, or not needed and be released to the other jurisdictions. Mr. Downes asked who would decide between those options. Mr. Inks responded that the Redevelopment Commission has authority over those decisions. Staff is in the process of putting together a list of projects that would complete the South Side Development Area Development Plan and make a recommendation to the Commission regarding the continuance of the TIF area. CRN.2813 Upon a motion by Ms. King, seconded by OMMISSION APPROVED ESOLUTION O DETERMINING TO PROCEED WITH THE Mr. Downes and unanimously carried, the REDEMPTION OF THE PRESENTLY OUTSTANDING Commission approved Resolution No. 2813 EDR TAXABLE CONOMIC EVELOPMENT EVENUE determining to proceed with the redemption B,S2005(EC ONDS ERIES RSKINE OMMONS of the presently outstanding taxable P) ROJECT Economic Development Revenue Bonds, Series 2005 (Erskine Commons Project). G. Northeast Neighborhood Development Area There was no business in the Northeast Neighborhood Development Area. 25 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 H. Douglas Road Economic Development Area There was no business in the Douglas Road Economic Development Area. I. Ratification of Services Contracts Commission Role in Contract Staff Transaction Contractor Service Provided Amount Member 230 E. Sample St. Acquisition Meridian Title Corp. Title Work $100 Relos 755 S. Michigan St. Acquisition Meridian Title Corp. Title Work $100 Relos Ignition Park Area 1 Disposition David Waszak Appraisal $3,200 Kolata (87.15 acres) Appraisals, Inc. Ignition Park Area 1 Disposition R.E. Pitts & Assoc. Appraisal $3,400 Kolata (87.15 acres) CS Upon a motion by Downes, seconded by Mr. OMMISSION RATIFIED THE ERVICES CN19, ONTRACTS APPROVED SINCE OVEMBER Varner and unanimously carried, the Commission 2010 ratified the Services Contracts approved since November 19, 2010. 7. PROGRESS REPORTS PR There was no report. ROGRESS EPORTS 8. NEXT COMMISSION MEETING NCM The next meeting of the Redevelopment Commission is EXT OMMISSION EETINGS scheduled for Friday, December 17, 2010 at 10:00 a.m. A Special Meeting is anticipated December 28, 2010 at st 10:00 a.m. to hold a public hearing on adding the 1 Source parking garage to the acquisition list, set the offering price, entertain the counter offer, and other st actions related to finalizing the 1 Source project. 9. ADJOURNMENT A There being no further business to come before the DJOURNMENT 26 South Bend Redevelopment Commission Regular Meeting –December 3, 2010 Redevelopment Commission, Mr. Varner made a motion that the meeting be adjourned. Mr. Downes seconded the motion and the meeting was adjourned at 11:23 a.m. Donald E. Inks, Director 27