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HomeMy WebLinkAbout04-23-18 Community Investment �SpUTH B��O 'U d "t( a x is65_ OFFICE OF THE 'CITY CLERK KAREEMAH N. FOWLER, CITY CLERK COMMUNITY INVESTMENT APRIL 23, 2018 4:02 P.M. Committee Members Present: Gavin Ferlic, Regina Williams-Preston, Oliver Davis, Sharon L. McBride 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: Kareemah Fowler, Bianca Tirado, Graham Sparks, Bob Palmer Presenters: Pam Meyer, Dan Buckenmeyer, Ann Hayes, Mo Miller, Frank Perri, Tom Panzica, James Mueller Agenda: Bill No. 18-16- Executing Documents to Renew Interlocal Agreement between Cities of South Bend, Mishawaka, and St. Joseph County Bill No. 18-18-Designating Property Tax Abatement Petition: Franklin Street Technology Park, LLC Bill No. 18-19- Designating Property Tax Abatement Petition: Wharf Partners, LLC Committee Chair Gavin Ferlic called to order the Community Investment Committee meeting at 4:02 p.m. He introduced members of the Committee and proceeded to give the floor to the presenters. Bill No. 18-16-Executing Documents to Renew Interlocal Agreement between Cities of South Bend, Mishawaka, and St. Joseph County Pam Meyer, Director of Neighborhood Development with offices on the 14th floor of the County- City Building, stated, The resolution before you will authorize the Mayor to sign an Interlocal Agreement between St. Joseph County, the City of Mishawaka and the City of South Bend. This follows a historical agreement started in 1991.It allows home funding,which is a Federal Program for housing low and moderate income individuals, to come into the community at a larger dollar amount. The agreement is for three (3) years and they always have been. We received INTEGRITY1 SERVICE1 ACCESSIBILITY JENNIFER M.COFFMAN BIANCA L.TnLADo JOSEPH R MOLNAR CHIEF DEPUTy/DIREcTOR OF OPERATIONS DEPUTY/DIREcToR OF POLICY ORDINANCE VIOLATION CLERK EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 1 227 W.Jefferson Blvd.I South Bend,Indiana 466011 p 574.235.92211 f 574.235.9173 1 www.southbendin.gov CITY OF SOUTH BEND I OFFICE OF THE CLERK approximately $750,000 to $800,000 per year. There are projects in South Bend, Mishawaka and the County. It is an application process that follows the same type of process Community Development Block Grants and other federal funds follow. We are renewing it for another three (3) years and it expires at the end of this ye . We are required by HUD regulations to submit everything before June 1St, 2018. Committee Chair Ferlic opened the floor to questions from Committee and Council Members. Councilmember John Voorde asked, Is this one (1) of those programs that, at one (1) time, had a larger allotment? Ms. Meyer replied, Yes, nationally it had a larger allotment. The program, nationally, ran into some issues of mismanagement and there were definite repercussions to that,nationally. However it is my understanding that in the 2018 budget that was recently passed, there was an uptick for home funding so we anticipate getting a little bit more but we don't know how much that would be yet. Committeemember Oliver Davis asked, How much more do we receive for South Bend particularly with us being in this agreement versus if we stood alone? Ms. Meyer replied, I honestly don't know the answer to that question. I could find it out. I don't know if there has ever been a calculation done by HUD for that. The issue would be that we would be the only entity receiving the home funds and Mishawaka and the County would not. I think that is based on the population size formula. Committeemember Davis followed up,Because what you just shared there, it makes me feel,with all due respect to our neighbors in Mishawaka and the County, that they are taking South Bend's money. Ms. Meyer replied, No, I think you get additional resources because you have two (2) other jurisdictions. I don't know you would get less because of having this consortium. Committeemember Davis interjected,That's why it goes back to my original question. Is there any kind of way that it could be found out? Ms.Meyer replied, I can ask that question, sure. We've never asked it because we have never been in that situation but I can ask that question. Committteemember Davis stated, It would just be interesting for me to know. I'm at peace. Committeemember Regina Williams-Preston asked, Is this saying that the monies we get from CDBG,just as example, can actually be used in Mishawaka? Ms. Meyer replied,No. This is only for a program called Home Investment Partnership. Committee Chair Ferlic then opened the floor to members of the public wishing to speak in favor of or in opposition to this legislation. There were none. He then turned the floor back to the Committee for further comment or main motion. EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 227W.Jefferson BvldI South Bend,Indiana 466011p574.235.9221If574.235.91731 TTD574.235.5567Iwww.southbendin.gov 2 ®CITY OF SOUTH BEND I OFFICE OF THE CLERK Committeemember Davis made a motion to send Bill No. 18-16 to the full Council with a favorable recommendation, with the understanding he would receive his information. Committeemember Sharon L. McBride seconded the motion which carried by a voice vote of four(4) ayes. Committeemember Davis then made a motion to hear Bill Nos. 18-18 and 18-19 together for purposes of public hearing. Committeemember Williams-Preston seconded the motion which carried by a voice vote of four(4) ayes. Bill No. 18-18-Designating Property Tax Abatement Petition: Franklin Street Technology Park,LLC Bill No. 18-19-Designating Property Tax Abatement Petition: Wharf Partners, LLC Dan Buckenmeyer, Director of Business Development for the Department of Community Investment with offices located on the 14th floor of the County-City Building, stated, These two (2) projects, in total, bring in over $22 million of private investment to the community. Through the abatement period, even though some taxes will be abated, we estimate over $1.6 million will be paid in that period. We are looking for less than $900,000 to be abated in total. Both are spec in nature. Mr. Buckenmeyer continued, This first rendering (referencing a slide in the presentation available in the City Clerk's Office) is an early concept but it is what is proposed on the corner of Sample and Franklin. It used to be known as the Hamilton Towing Block. This will eventually become, after three (3) phases, three (3) buildings divided up for Light Industrial or Tech utilization. The first phase is about 30,000 square feet. It will be divided into 5,000 to 15,000 square foot sections depending on how the rent prospects are looking as it is built. It will be a total of$3 million in private investment over about four (4) years on land that was purchased from the City's Redevelopment Commission at $84,000. That price was reached by our normal procedure. While there won't be direct jobs,this is a spec building so it will be built for future tenants. We anticipate that at least sixty (60), if not more,jobs will be created or retained in the South Bend area as a result of building this. DCI is recommending an eight (8) year phase-in tax abatement. So the abatement amount will lessen over those eight(8)years and will result in$439,000 of abated taxes with an estimated $138,000 taxes paid in that same period. Ann Hayes, Franklin Street Technology Park with offices located at 814 Marietta Street, South Bend, stated, I think Dan gave a great overview of this project. We started working with Dan and other members of the City several months ago as this project developed. We really worked together in the Ignition Park PUD to compliment the currently existing buildings that are there. The first phase will encompass a 30,000 square foot building and we plan to start construction on that soon after closing on the property this summer. Committee Chair Ferlic opened the floor to questions on Bill No. 18-18 from Committee and Council Members. Councilmember Dr. David Varner asked, If this building is loaded up with all sorts of communications and utilities, what other taxes to you anticipate as personal property tax? At one (1) point in time there was an exemption for tech equipment. I don't recall where that is. When EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 1227 W.Jefferson Bvld 1 South Bend,Indiana 46601 p 574.235.92211 f574.235.91731TTD574.235.55671www.southbendin.gov 3 CITY OF SOUTH BEND I OFFICE OF THE CLERK Ignition Park came into being, there was a State deal that almost allowed a total exemption. Does that still exist? Ms. Hayes replied, This building targets a variety of different companies so we could have some tech companies, light manufacturing and start-ups. So there is a nice array of possibilities and we are not expecting additional abatement. Mo Miller, Franklin Street Technology Park with offices located at 814 Marietta Street, South Bend, stated, We expect no additional abatements. There would be personal property which is the possession of each of the companies we lease to. I don't think it really matters if it is five (5) companies with 5,000 square feet. We anticipate building this space as a fill and specify the needs of the tenants that come in. Committeemember Davis asked, For the PUD over there, is there a committee that advises that? There was conversation about that because it is in the sixth district.Are you aware of a committee? Mr. Buckenmeyer replied,Yes we are aware. The committee was not utilized over the past several years. We are in the process of pulling that committee back together for Ignition Park. Committeemember Davis interjected,Personally,I would like to get back on that because it is right in the district I serve. I would prefer to know more about those things prior to them being put in our packet. Thank you. I'm at peace. Committee Chair Ferlic then opened the floor to members of the public wishing to speak in favor of or in opposition to Bill No. 18-18. There were none. He then turned the floor back to the Committee for further comment or main motion on Bill No. 18-18 Committeemember Davis made a motion to send Bill No. 18-18 to the full Council with a favorable recommendation. Committeemember McBride seconded the motion which carried by a voice vote of four ayes. Mr.Buckenmeyer continued,This next is,obviously, Wharf Partners. The project is known as 320 at the Cascasde. This rendering(referencing a slide in the presentation available in the City Clerk's Office) shows specifically the phase one (1) of the multi-phase project. This phase will be about 77,000 square feet of Mixed-Use. It will be commercial on the lower floor and residential on the upper floors. It is a private investment of over $20 million that is going into the building of this structure. We have a very low estimate as they are indirect jobs for the spec project but we think there will be twenty (20). But we figure with the floor plate they have, there could be easily more than that. We are recommending a six (6)year tax abatement and, it is important to note, it will be on the commercial elements only. There will no abatement to the residential portion. During the time of abatement, it is an estimated $432,000 to be abated however there will still be over $1.5 million in taxes paid. Frank Perri, Wharf Partners with offices located at 3617 McKinley Avenue, stated, We are very excited. Wharf Partners is the presenter of the project over the next four (4) years total. It will be some $40 million in investment. We are excited because it is the last remaining piece on the riverfront that hasn't had much activity. We've hit pay dirt and are really proud to bring it to you today. We hope you see it favorably on the abatement. We were very conservative on the job estimate and I think it will generate life on that portion of the river which is right downtown. It is EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 227W.Jefferson BvldJ South Bend,Indiana 466011p574.235.9221 f574.235.9173 TM574.235.55671www.southbendin.gov 4 CITY OF SOUTH BEND I OFFICE OF THE CLERK risky in a lot of ways but not so risky when you stop to think about what is happening right now in South Bend. We are hoping to be a part of that. Committee Chair Ferlic then opened the floor to questions on Bill No. 18-19 from Committee and Council Members. Councilmember Tim Scott asked, How many commercial or retail spots are on the bottom? Mr. Perri replied, It can be broken up into three (3) or it could be one(1)really big one. Obviously we want that place to be alive and that is what it will come down to. Tom Panzica,Panzica Building Corp.with offices located at 416 E.Monroe Street, stated,I would like to note that when people look at these renderings,they always focus on the height of the tower. You really need to look at the detail down at the river front. We don't know what the final river walk design will be. This is a very early concept that was shown to us. But if you look at what goes on between the river walk and the towers, we see restaurants and people. Committeemember Davis stated, I hope it can be like that. I like the steps. That is really creative. It brings a nice freshness to downtown. Mr. Perri replied, Well,that is mandate for the City to build it then, huh? Councilmember Dr. Varner asked, How different is this than the proposal from five (5) to six (6) years ago? I know there have been a lot of changes but what specifically? Mr. Panzica replied,Five(5) or six (6)years ago,the ground floor was proposed to be all parking. On this project, after working with the City for a number of years, we decided to opt with the expense of going underground and free up the first floor to commercial use. The commercial carries a risk of spec space. That is what the tax abatement will assist with is that holding period trying to get someone in there to create all of this. Mr. Perri stated, And just to give you a dollar idea of the difference, we are talking $18 million versus $40 million. Because it was also going to be a lower and shorter building. It is quite a bit different in scale. Committee Chair Ferlic asked, Is there any indication as to when you might break ground? Mr. Perri replied, If you can get us this abatement we are going to break ground really soon thereafter. We will invite the press. Committeemember Davis asked, With the last water situation we just had with the flooding, how did that affect you and this project? Mr. Perri replied, If you had a canoe out there, you would have been stranded because the water never hit the site. We know where the high water mark is and it was probably still eight (8) feet below our first floor. We would have taken a risk on our garage flooding some but the cars won't float down there. EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 1227W Jefferson Bvld I South Bend,Indiana 466011 p 574.235.9221 If 574.235.9173 IM574.235.5567 www.southbendin.gov 5 CITY OF SOUTH BEND I OFFICE OF THE CLERK Committeemember Davis stated, Alright, I'm at peace. Committee Chair Ferlic then opened the floor to members of the public wishing to speak in favor of or in opposition to Bill No. 18-19. Sue Kesim, 4022 Kennedy Drive, stated, My issue is with abatements in general. As you know, I've looked at the budget. When you give the developer TIF money, that is taxpayer money and we expect to get that back in terms of taxes to refill the coffers. When I looked at the figures and you give TIF and then an abatement,things like the Health Department we just had here are getting underfunded. We can't have it both ways. When I looked at the figures on page two hundred and forty-four (244), the past ten (10) years the City of South Bend has given $868 million in abatements and we wonder why the budget is coming up short. I really implore both the City and County Councils to get out their calculators and really look at abatements. What you are saying is the tax payers don't have to be repaid and, as a taxpayer,that comes out of something somewhere. It comes out of the small persons home or business. So in general, I have to agree with Jamie O'Brien of the County Council that too much has been given away. You guys have to look at the total because it is staggering. It is not free money. It is money that comes out of paying for things that we need. You need to look at the totals. I sit in these meetings and boy, abatements, abatements, TIFs, TIFs, and then I hear we don't have enough money. Well, that is just my perspective of having gone through the budget last year and I want all of you to look at those figures. Will Smith, 728 Whitehall Drive, stated, I would like to speak in favor of this. Mr. Perri has been a part of the planning process for a very long time and seeing this project come to fruition is rather wonderful to see. I would echo Sue's comments that the process is confusing and I think the City could enhance that process. Thank you. James Mueller, Executive Director of Community Investment with offices on the 14th floor of the County-City Building, stated, We get into this discussion every time we bring an abatement. The abatements are on the incremental value that is being added. Many of these projects, given our market and other variables wouldn't be viable without these incentives. We are not talking about abated taxes on what we get because otherwise we would get nothing.Here,for six(6)years alone, we are getting roughly $1.5 million and after that the abatement is done and we get full taxes on the commercial portion too. This is new assessed value coming online that wouldn't be available otherwise.Particularly with the commercial element,if you left it to them and we weren't involved, they would probably have the parking on the ground floor and condos above. Here we are getting a real benefit for the City. Mr. Panzica stated, I would just like to add that when we bought this property it was with the intention that this building and property would be a pivotal site in the downtown. It had been dormant for twenty (20) years or more. What we do to this site will affect generations and will be around long after we are gone. The goal is to have a quality and level of development that will benefit the City and the future generations of the City. Could we have bought the site and made money building a three (3) story wood frame townhome? Yes and that would have been a gross underutilization of such a pristine parcel of land. So with the assistance of the City TIF and tax abatement, we are able to elevate the project to something that will help move the City and downtown forward. Long after Frank and I are gone, this building will be paying taxes into South Bend. This building will stand for hundreds of years and will pay property taxes down the road. EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 227W Jefferson Bvld I South Bend,Indiana 46601 p 574.235.92211 f574.235.9173I TTD574.235.55671www.southbendin.gov 6 CITY OF SOUTH BEND ' OFFICE OF THE CLERK Committeemember Williams-Preston asked, How much did we commit in TIF? Mr. Mueller replied, On phase one (1), $200,000. Councilmember Dr. Varner asked, So just for clarification, the parking garage would have belonged to the development? Mr. Perri replied, Yes. Councilmember Dr. Varner followed up, Dan, when you presented these in the past you used to put in the payback period for the TIF funds and the tax abatements. I think that would be helpful. Committeemember Davis made a motion to send Bill No. 18-19 to the full Council with a favorable recommendation. Committeemember Williams-Preston seconded the motion which carried by a voice vote of four(4) ayes. With no further business, Committee Chair Ferlic adjourned the Community Investment Committee meeting at 4:29 p.m. Respectfully Submitted, Gavin Ferlic, Chairperson EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building j 227W Jefferson Bvld I South Bend,Indiana 46601 I p 574.235.9221 If 574.235.9173 1TFD 574.235.5567 www.southbendin.gov 7