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HomeMy WebLinkAboutNo. 1830 amending Res. No. 1823 entitled "Resolution of the SBRc of the COSB, pledging TIF revenues for pmt, if necessary, of the principal of/interest on a loan from the environmental remediation revolving loan fund administered by IDFARESOLUTION NO. A RESOLUTION OF THE REDEVELOPMENT COMMISSION OF THE CITY OF SOUTH BEND, INDIANA, AMENDING RESOLUTION 1823 ENTITLED "RESOLUTION OF THE REDEVELOPMENT COMMISSION OF THE CITY OF SOUTH BEND, INDIANA, PLEDGING TAX INCREMENT FINANCE REVENUES FOR THE PAYMENT, IF NECESSARY, OF THE PRINCIPAL OF AND INTEREST ON A LOAN FROM THE ENVIRONMENTAL REMEDIATION REVOLVING LOAN FUND ADMINISTERED BY THE INDIANA DEVELOPMENT FINANCE AUTHORITY" WHEREAS, the South Bend Redevelopment Commission (the "Commission ") has adopted various resolutions declaring a certain area located within the South Bend Redevelopment District (the "Redevelopment District ") and known as the "Airport Economic Development Area" as an economic development area and designated such area as an allocation area (the "Allocation Area ") within the meaning of Indiana Code 36 -7 -14, as amended (the "Act "), for purposes of tax increment finance which Area now includes certain property (the "Property ") occupied by Robert Bosch Corporation ( "Bosch ") and owned by the City of South Bend, Indiana (the "City ") pursuant to an Agreement for the Use and Rehabilitation of Real Property between Bosch and the City dated as of August 17, 2000 (the "Agreement "); and WHEREAS, the State of Indiana ( "State ") has established the Environmental Remediation Revolving Loan Program (the "Program ") pursuant to Indiana Code 13 -19 -5, as amended (the "Program Act "), for the purpose of providing funding from the Environmental Remediation Loan Fund (the "Fund ") administered by the Indiana Development Finance Authority ( "IDFA ") for the assessment and remediation of "brownfield sites" located throughout the State: and WHEREAS, the pursuant to Section 9 of the Agreement, (i) the City has represented that it is eligible to borrow up to $1,300,000 from IDFA (the "Loan ") through the Program and that r it will use its best efforts to borrow such amount and, in turn, loan it to Bosch for purposes of remediating environmental conditions at, on, under or emanating from the Property, including, but not limited to, demolition, asbestos and lead paint removal, and environmental testing and assessment of the Property (the "Program Improvements ") and (ii) Bosch has agreed to repay such loan in accordance with the repayment schedule set forth in the Agreement subject to certain forgiveness provisions set forth in the Agreement as permitted by the Program Act; and WHEREAS, the Common Council ofthe City (the "Common Council ") will consider an ordinance authorizing the issuance of revenue bonds of the City (the "Bonds ") in the form of the Loan; and :ODMAvPCDOCS \SBDOCS 1 \83274\ 1 LM WHEREAS, in addition to the promise of Bosch to repay the Loan, IDFA requires further assurance of the City to repay the Loan from Rinds available to the City in the unlikely event that Bosch does not make repayments as provided in the Agreement; and WHEREAS, the Improvements constitute "local public improvements" as such term is defined in the Act; and WHEREAS, the Commission has previously adopted Resolution No. 1823 at its meeting on January 5, 2000 (the "Pledge Resolution "), whereby the Commission pledged Available Tax Increment Revenues (as defined therein) to the repayment of the Loan as evidenced by the Bonds (the "Pledge "); and WHEREAS, in connection with the Pledge, IDFA has indicated it �� ill require a parity test with respect to any possible future issuance of Redevelopment District revenue bonds payable in whole or in part from tax increment revenues (the "Tax Increment ") generated in the Allocation Area; AVWA NOW, THEREFORE, BE IT RESOLVED by the Redevelopment Commission of the City of South Bend, Indiana, as follows: 1. The Commission hereby amends the Pledge Resolution to include the second paragraph hereof for purposes of creating a parity test with respect to the Tax Increment and its use for the payment of principal of and interest on any possible future revenue bonds. 2. (a) The Redevelopment District reserves the right to authorize and issue additional bonds ( "Parity Bonds "), payable out of the Tax Increment, ranking on a parity with the Pledge and payable ratably from the Tax Increment for the purpose of raising money for future property acquisition, redevelopment and economic development in or serving the Allocation Area. The authorization and issuance of Parity Bonds shall be subject to the following conditions precedent: (i) All interest and principal payments with respect to all obligations payable from the Tax Increment shall be current to date with no payment in arrears. h, (ii) The Commission shall have received a certificate prepared by an independent certified public accountant or an independent financial consultant ( "Certifier ") certifying that the Tax Increment estimated to be received in each succeeding year, adjusted as provided below, is estimated to be equal to at least 150% of the principal and interest requirements of all obligations of the Commission pad able from Tax Increment for each respective year during the term of the Pledge and the Parity Bonds. In estimating the Tax Increment to be received in any future year, the Certifier shall base his calculation on assessed ODMA PCDOCS.SBDOCS 1 83274 1 -2- A valuation actually assessed or to be assessed as of the assessment date immediately preceding the issuance of the Parity Bonds; provided, however. the Certifier shall adjust such assessed values for the current and future reductions of real property tax abatements granted to property owners in the Allocation Area. No increase in the Tax Increment to be received in any future year shall be assumed which results from projected inflation in property values. The Commission shall approve and confirm the findings and estimates set forth in the above - described certificate in any supplemental resolution authorizing the issuance of the Parity Bonds. (b) Except as otherwise provided in this Paragraph, so long as any of the Pledge remains effective, no additional bonds or other obligations pledging any portion of the Fax Increment shall be authorized, executed or issued by the City acting for and on behalf of the Redevelopment District except such as shall be made subordinate and junior in all respects to the Pledge and the Parity Bonds, unless the Pledge has been terminated by the Commission with the concurrence of IDFA and all of the Parity Bonds are redeemed and retired coincidentally with the delivery of such additional bonds or other obligations. 3. All remaining provisions set forth in the Pledge Resolution shall remain in full force and effect. 4. This Resolution shall be in full force and effect after its adoption by the Commission and shall not be repealed or amended in any manner which would serve to adversely affect the pledge of the available tax increment revenues contained herein with respect to the Loan. ODM 1 PCDOCS SBDOCS 1 83274 1 - - Adopted at a meeting of the South Bend Redevelopment Commission held on January 19,200 1, at Room 1308, County -City Building, 227 West Jefferson Boulevard, South Bend, Indiana, 46601. SOUTH BEND REDEVELOPMENT COMMISSION By: President ATTEST: I I wah wjlw�l I w I 501"na r g 0DMATCD0CS \SBD0CS1 83274',1 - 4 - c INTER - OFFICE MEMORANDUM DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT TO: Redevelopment Commission FROM: Robert D. Case SUBJECT: Amendment to Resolution DATE: March 7, 2001 Resolution 1823 approved on January 5, 2001 was initially setup as a requirement for the $1,300,000 IDFA loan application to Bosch Braking Corporation for environmental cleanup of the facility. Upon further review from IDFA it was determined that the initial resolution did not meet their guidelines for approving the loan.. Amendment to Resolution 1823 would set up a parity test with respect to any future TIF revenue bonds issued in connection with the Airport Economic Development Area (AEDA). The Indiana Development Finance Authority (IDFA) does not want to be in a position in the future where its loan is junior to a TIF revenue bond. The Staff recommends approval of the amendment to resolution 1823 no ME' CITY 1080 b BAKER & DANIELS EST. 1863 FIRST BANK BUILDING • 205 W. JEFFERSON BOULEVARD, SUITE 250 • SOUTH BEND, INDIANA 46601 • (219) 234 -4149 • FAX (219) 239 -1900 • www.bakerdaniels.com ANNE E.BRUNEEL DIRECT (219) 239 -1918 e -mail: aebrunee@bakerd.com INDIANAPOLIS FORT WAYNE SOUTH BEND ELKHART WASHINGTON, D.C. QINGDAO, P.R. CHINA MEMORANDUM TO: Bob Case Cheryl A. Greene, Esq. Jon Hunt Donald E. Inks FROM: BAKER & DANIELS -- Anne E. Bruneel, Esq. -- Randolph R. Rompola, Esq. DATE: January 17, 2001 C:00 Py Via Hand Delivery RE: Amending Resolution Relating to TIF Pledge in Support of IDFA Brownfield Loan The Redevelopment Commission had previously adopted a resolution in connection with the proposed Brownfield Loan for the Bosch Project pledging "available tax increment revenues" to the repayment of the IDFA loan and defining "available tax increment revenues" as those tax increment finance ( "TIF ") revenues generated in the Airport Economic Development Area (the "Area ") and remaining and available for use by the Commission on an annual basis after payment of lease rentals to the South Bend Redevelopment Authority. Such payment would be required only if Bosch failed to make the required payments. As you know, each respective issue of Authority lease rental revenue bonds outstanding with respect to the Area is secured by a lease between the Authority and the Commission. In connection with these leases, the Commission has pledged to levy a tax in order to made lease rental payments in the event that there is insufficient revenue otherwise available to the Commission. The Commission avoids that tax annually by applying TIF revenues to the lease payments. As a result of the resolution previously adopted, the pledge of available TIF revenues is junior to those lease payments. IDFA has no" determined that it wants the loan it is making to be on parity with any future TIF revenue bond financings. The Commission does not currently have outstanding TIF revenue bonds in the Airport Area. Although it is unlikely that a TIF revenue bond vv ould be issued by the City while the lease financings are outstanding (given that the TIF revenues which are currently used to pay the lease rentals would have to be pledged to such a bond), IDFA does not want to be in a position in the future where its loan is junior to a TIF revenue bond issue. To address IDFA's concern, we have prepared the enclosed amending resolution which establishes a parity test with respect to any future TIF revenue bonds issued in connection with the Area. The parity language provides that before any such TIF revenue bonds are issued in the future, the Commission would have to have an assurance that sufficient TIF revenues would be available to service the IDFA loan (if Bosch were to default) and the bond issue. The parity provision we have included in the resolution is a standard provision used in TIF revenue bond financings. Please feel free to call with any questions or comments. Enclosures cc: Charles S. Leone, Esq. Richard L. Hill, Esq. ODMA J'CDOCS SBDOCS I .82330,1 '7'