HomeMy WebLinkAbout12-03-10 Redevelopment Commission Minutes
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
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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
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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
3. APPROVAL OF CLAIMS continued…
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.
N
No bids were received.
O BIDS WERE RECEIVED
3
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
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.
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South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
B. Tax Abatements
(1) continued…
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
5
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
B. Tax Abatements
(1) continued…
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.
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
6
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
. South Bend Central Development Area
C
(2) continued…
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.
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
7
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
. South Bend Central Development Area
C
(2) continued…
$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.
CLI
Upon a motion by Mr. Downes, seconded by
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
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
8
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
. South Bend Central Development Area
C
(4) continued…
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
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
9
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
. South Bend Central Development Area
C
(4) continued…
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-
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
10
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
. South Bend Central Development Area
C
(4) continued…
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
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agreement from 1 Source that it will renew
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its lease for ten years; 1 Source will make
st
improvements to not only the 1 Source
Center downtown and to other areas where
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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
has for the last thirty years.
11
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
. South Bend Central Development Area
C
(4) continued…
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
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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
12
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
. South Bend Central Development Area
C
(4) continued…
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
$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
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1 Source with the kind of protection we
think we should have in order to make sure
13
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
. South Bend Central Development Area
C
(4) continued…
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
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
14
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
. South Bend Central Development Area
C
(4) continued…
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.
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
15
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
. South Bend Central Development Area
C
(4) continued…
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
$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
16
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
. South Bend Central Development Area
C
(4) continued…
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
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.
17
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
. South Bend Central Development Area
C
(4) continued…
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.)
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South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
. South Bend Central Development Area
C
(6) continued…
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.)
19
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
(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.
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
20
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
. South Bend Central Development Area
C
(5) continued…
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.
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
21
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
. South Bend Central Development Area
C
(5) continued…
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.
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,
22
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
D. Airport Economic Development Area
(1) continued…
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
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
23
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
D. Airport Economic Development Area
(1) continued…
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
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
24
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
D. Airport Economic Development Area
(1) continued…
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
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
25
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
D. Airport Economic Development Area
(1) continued…
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,
26
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
D. Airport Economic Development Area
(1) continued…
rather than plan for a certain circumstance
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
27
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
F. SouthSide Development Area
(1) continued…
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
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.
28
South Bend Redevelopment Commission
Regular Meeting –December 3, 2010
6. NEW BUSINESS (CONT.)
F. South Side Development Area
(1) continued…
CRN.2813
OMMISSION APPROVED ESOLUTION O
Upon a motion by Ms. King, seconded by
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
P)
of the presently outstanding taxable
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.
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.
29
South Bend Redevelopment Commission
Regular Meeting –December 3, 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
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.
30