HomeMy WebLinkAboutNo. 2047 ratifying/confirming/approving certain actions related to the erskine commons retail project (SSDA)A
RESOLUTION NO. 2047
A RESOLUTION OF THE SOUTH BEND REDEVELOPMENT COMMISSION
RATIFYING, CONFIRMING AND APPROVING CERTAIN ACTIONS
RELATED TO THE ERSKINE COMMONS RETAIL PROJECT
(SOUTH SIDE DEVELOPMENT AREA)
WHEREAS, Anchor Associates ( "Developer ") intends to develop a retail center known
as "Erskine Commons" to be located on Ireland Road within the City of South Bend, St. Joseph
County, Indiana; and
WHEREAS, the Erskine Commons Project shall consist of two (2) anchor tenants having
an approximate square footage of 210,000± and 116,000± square feet respectively with
additional development of approximately 30,000 square feet to occur on certain outlots located
on the Project Site; and
WHEREAS, Developer also intends to develop that portion of the Project Site known as
Parcel "C" with two (2) or more retail tenants, but such development shall not include a single
retail tenant having more than 75,000 square feet; and
WHEREAS, the South Bend Redevelopment Commission ( "Commission "), to facilitate
the Erskine Commons Project within the South Side Development Area ( "SSDA "); and
WHEREAS, on March 12, 2004, Developer and the City of South Bend entered into a
non - binding Memorandum of Understanding ( "MOU ") that expresses the intent of each of the
Parties at the time the MOU was executed concerning the Erskine Commons Project and have
agreed to work toward the execution of a formal Development Agreement on or before April 15,
2004; and
WHEREAS, pursuant to Indiana Code § 36- 4 -5 -3, the Mayor for the City of South Bend
is empowered to sign contracts of the City; and
WHEREAS, in order to expeditiously facilitate the Erskine Commons Project, the Mayor
has heretofore executed the MOU on behalf of the City pursuant to Indiana Code § 36- 4 -5 -3; and
WHEREAS, the Commission desires to ratify the MOU dated March 12, 2004; and
WHEREAS, the Commission believes that the Erskine Commons Project as described in
the MOU is in the best interests of the health, safety and the social and economic welfare of the
City and its residents and that the Erskine Commons Project complies with federal, state and
local laws under with the Project has been undertaken and is being assisted.
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NOW, THEREFORE, BE IT RESOLVED by the South Bend Redevelopment
Commission as follows:
1. The actions taken by the Mayor of the City of South Bend relating to the Erskine
Commons Project, including the execution of the Memorandum of Understanding dated
March 12, 2004 on behalf of the City are hereby in all respects ratified, confirmed and
approved.
2. This Resolution shall be in full force and effect after its adoption by the South
Bend Redevelopment Commission.
ADOPTED at a meeting of the South Bend Redevelopment Commission held on March
19, 2004 at 1300 County -City Building, 227 West Jefferson Boulevard, South Bend, Indiana
46601.
CITY OF SOUTH BEND,
DEPARTMENT OF REDEVELOPMENT
Marcia I. Jones, Vice Pres' nt
South Bend Redevelopment Commission
ATTEST:
By: `
Its: P esident
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1400 COUNTY -CrrY BUILDING
SOUTH BEND, INDIANA 46601 -1830
CHARLES S. LEONE
CITYATTORNEY
C(OPOVN741235-9241
/235 -9892
TDD 574/ 235 -5567
CITY OF SOUTH BEND STEPHEN J. LUECKE, MAYOR
DEPARTMENT OF I.AW
March 12, 2004
Michael D. Hardy, Esq.
BARNES & THORNBURG
600 1 st Source Bank Center
100 North Michigan Street
South Bend, Indiana 46601
ALADEAN M. DERoSE
CHIEF ASSISTANT CITYATTORNEY
RE: Memorandum of Understanding
Anchor Properties Development Project; Erskine Commons
South Side Development Area
Dear Mike:
Enclosed are four (4) originals of the above - referenced document signed by the Mayor.
Please have your client sign where indicated. You should then return two (2) fully executed
documents to me. If you have any questions, please call myparalegal, Pam Paluszewski at 235 -5865.
Sincerely,
Chery A. Greene
Assistant City Attorney
CAG /pap
Enclosures
cc: Mayor Stephen Luecke
Donald E. Inks
Bill Schalliol
THOMAS L. BODNAR CHERYL A. GREENE ANN -CAROL NASH
JEFFREY M. JANKOWSKI JOHN R. LIVINGSTON ROBERT C. ROSENFELD JOHN E. BRODEN
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MEMORANDUM OF UNDERSTANDING
by and between
The City of South Bend, Indiana
and
Anchor Acquisitions, Ltd.
ERSKINE COMMONS PROJECT
March 12, 2004
THIS MEMORANDUM OF UNDERSTANDING, dated the 12th day of March, 2004,
its made and entered into by and between the City of South Bend, Indiana and Anchor
Acquisitions, Inc.
RECITALS
WHEREAS, Anchor Acquisitions, Inc. ( "Developer ") intends to develop a retail center
known as "Erskine Commons" to be located on Ireland Road within the City of South Bend, St.
Joseph County, Indiana; and
WHEREAS, the Erskine Commons Project shall consist of two (2) anchor with
additional development to occur on certain outlots located on the Project Site; and
WHEREAS, Developer also intends to develop that portion of the Project Site known as
Parcel "C" with two (2) or more retail tenants, but such development shall not include a single
retail tenant having more than 75,000 square feet; and
WHEREAS, City and Developer hereby agree that the Project, as proposed in this
Memorandum of Understanding is in the Parties' mutual best interests and that the best interests
of the citizens of the City of South Bend will be served by the Project.
NOW, THEREFORE, the Parties hereby agree and represent as follows:
1) PURPOSE. The purpose of this Memorandum of Understanding ( "MOU ") is to summarize
the list of commitments that the negotiating teams for Anchor Acquisitions, Ltd.
( "Developer ") and the City of South Bend ( "City ") have made to one another to date
regarding the approximate 50 acre retail project located at the corner of Michigan Street and
Ireland Road within the City of South Bend (the "Project "). As soon as reasonably possible
prior to April 2, 2004, the negotiating teams agree to work together to reduce the MOU to a
more formal development agreement (the "Development Agreement "). Finally, this signed
MOU will allow both parties to initiate the next series of actions required to move the Project
forward with a better understanding of the type and degree of risk involved at this stage of
the Project.
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2) TRANSFER & ASSIGNMENT OF RIGHTS. Upon written consent of the City, which
ILconsent shall not be unreasonably withheld, Developer may transfer any portion of the
Project, as shown on the general site plan attached hereto as Attachment 1 and assign its
corresponding rights under this MOU and /or the Development Agreement that follows to
another party. It is the intention of Developer to develop the Project as a retail shopping area
and to add more high- quality retail stores for the citizens of South Bend, Indiana.
Notwithstanding any such assignment or transfer, Developer shall remain legally responsible
for all of the performance goals and failure to perform penalties outlined in this MOU and, in
more detail, in the Development Agreement. Additionally, the assignee would have the same
corresponding contractual rights and development obligations as Developer has under this
MOU and /or Development Agreement.
3) SITE ASSEMBLAGE. City agrees to facilitate the Project by assisting Developer, if
reasonably necessary, in assembling the parcel(s) described at Attachment 2, attached hereto
and incorporated herein, ( "Acquired Parcels ") in order to accomplish the Project. Site
assemblage as set forth herein, may be accomplished by the City through the South Bend
Redevelopment Commission ( "Commission "), g overning body of the City of South B end,
Department of Redevelopment. In such case, the parties understand and agree that the
Commission shall follow the procedures set forth at Ind. Code § 36- 7 -14 -1, et seq., by which
the Commission is bound, including, if necessary, the use of eminent domain in accordance
with Ind. Code § 32- 11 -1 -1, et seq and as authorized by Ind. Code §36-7-14-20.
"Reasonably necessary" means that the property sought to be acquired by such means is
necessary and integral to the Project as described herein, the property will be utilized for a
public use and public purpose, the use of the property is consistent with the SSDA Plan and
all other reasonable means to purchase the property by the Developer have failed.
a) Indemnification. Upon acquisition by the City, Developer, or its designated agent, shall
make an offer to purchase the Acquired Parcel, either as separate parcels or as an
assembled site, in an amount equal to or greater than the Minimum Acceptable Bid and
shall meet or exceed all bid specifications as set by the City in accordance with Ind. Code
§ 36- 7- 14- 22(c). The "Minimum Acceptable Bid" for purposes of this section shall be the
greater of the average of two independent appraisals in accordance with Ind. Code § 36-
7- 14 -22(b) or the City's total cost of purchasing the Acquired Parcels including
appraisals, title, survey and any other costs incidental to the City's acquisition. If
Developer, for whatever reason, does not submit a bid to purchase the Acquired Parcel,
Developer shall pay the City the sum of One Hundred Thousand and 00 /100 Dollars
($100,000.00) ( "Penalty ") within ten (10) days of the bid closing date. If City proceeds
with acquisition of the Acquired Parcel and, for whatsoever reason, Developer does not
purchase the Acquired Parcel from City, Developer shall reimburse the City in an amount
which is the difference between the selling price of the Acquired Parcels received by the
City and the total cost of acquisition, including appraisals, title, survey, and closing costs.
At the Commission's sole discretion, the Penalty may be waived if the Developer later
purchases the Acquired Parcel through a negotiated purchase or shall either be (i)
credited to Developer at closing of Developer's purchase of the Acquired Parcels from
City or (ii) retained by City as provided herein. Should Developer desire to terminate its
obligations to purchase the Acquired Parcels prior to acquisition by the City, Developer
shall only be obligated to reimburse the City for its third party out -of pocket expenses,
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including without limitation appraisal, title, and survey expenses, if applicable. Neither
the City nor Developer will be required to reimburse the other party for predevelopment
costs incurred prior to the execution of the MOU.
4) FIRE STATION. City hereby acknowledges that the Project will involve construction by
Developer on the property currently being utilized as a fire station on Ireland Road (the "Fire
Station Property "). Having completed all necessary appraisals, City agrees to sell the Fire
Station Property to Developer for $123,500 as permitted by Ind. Code § 36- 7- 14 -22(h) and to
relocate the fire station by July 1, 2005.
5) STREET VACATION. Consistent with City policy, City agrees to endorse and support
Developer's efforts to vacate portions of South Main, Lafayette, South Hoover and Auten so
that Developer can be assured that a unified, contiguous development parcel is available for
private development.
6) PROJECT STORES. Developer and the City will jointly prepare and agree on a list of the
type of retail stores to be recruited for the development in order to meet the public
expectation of South Bend citizens and customers and to justify the public assistance
requested. Developer agrees to prepare, fund and implement a retail development strategy
with the following objectives in terms of the square footage, type, mix and general quality of
retails stores:
a) Parcel A -Home Improvement Store of approximately 116,000± square feet;
b) Parcel B - Discount Department Stores (with or without groceries) of approximately
210,000± square feet;
c) Parcel C - No single user building greater than 75,000 square feet; and
d) Outlots - Restaurants Specialty Retailers (books, sporting goods, home accessories, etc.)
and Financial Institutions.
7) FINANCING OF OFFSITE INFRASTRUCTURE IMPROVEMENTS. City has agreed to
provide certain offsite infrastructure improvements to the Project (the " Offsite Infrastructure
Improvements "). The Offsite Infrastructure Improvement shall include, without limitation,
acquisition of required Michigan Street and Ireland Road right of way not owned or under
contract by the Developer as part of the Project and the road improvement outlined by
American Consulting, Inc. which include five (5) lane expansion of Ireland Road adjacent to
the Project, signalization and double left turn lane from Michigan Street onto Ireland Road.
The Parties agree that $1.97 Million of the Offsite Infrastructure Improvements shall be paid
for through Tax Incremental Financing ( "TIF "). In December, 2002, the City created a Tax
Increment Financing Allocation Area ( "TIF Area ") for the Project area. The parties intend
that a TIF bond (the "TIF Bond ") in an amount of $1.97 Million plus the City's actual
reasonable c osts i nvolved i n i ssuing t he b and s hall b e u tilized t o p ay for t hat p ortion t he
Offsite Infrastructure Improvements that consists of the Ireland Road improvements and the
Ireland Road right of way acquisitions. Developer shall commit to purchase the TIF Bond
and /or be responsible to sell it to a third party. Developer understands and agrees that it shall
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be solely at risk for any short fall between the actual service payment revenues allocated for
the debt service of the TIF Bond and the amount necessary to support the annual debt service
on the TIF Bond under its terms.
8) PROJECT SCHEDULE. Developer and City shall work together to prepare a schedule
detailing the timing of the Offsite Infrastructure Improvements, but the City acknowledges
that the Offsite Infrastructure Improvements shall be completed on or before the end of the
2005 construction season so they are completed by the Project tenant's proposed opening in
March, 2006.
9) FINANCING OF ONSITE EXTRAORDINARY EXPENSES. The parties hereby
acknowledge that, for the Project to occur, the Developer must incur substantial and
extraordinary expense not normally required in a project of this kind (the " Onsite
Extraordinary Expenses "). These Onsite Extraordinary Expenses include relocation of power
lines and gas lines, demolition and environmental remediation through dynamic compaction
of the former landfill site contained on the Project. The Onsite Extraordinary Expenses will
be financed, in part, with an Economic Development Commission Bond (the "EDC Bond ")
in an aggregate principal amount of not more than $1.73 Million plus the City's actual costs
involved in issuing the bond to pay for the Onsite Extraordinary Expenses. Developer
hereby agrees to purchase the EDC Bond or, in the alternative, Developer shall cause the
EDC Bond to be purchased by third party(ies). The repayment source for the EDC Bond
shall be the TIF generated by the Project, however Developer understands and agrees that it
shall be solely at risk for any short fall between the actual TIF revenues generated and the
Icamount necessary to support the annual debt service on the EDC Bond under its terms.
10) FINANCING GAP, BUDGET CAP AND TIF REVENUE CAP. The parties hereby
acknowledge that, at the time this MOU is entered into, it is projected that the Project will
generate approximately $3.7 Million in available TIF revenue proceeds ( "Estimated
Proceeds ") and that the costs budgeted to Offsite Infrastructure Improvements is estimated at
$1.97 Million and the costs budgeted to Onsite Extraordinary Expenses is estimated at
$2.432 Million for a combined estimated budget total of $4.402 Million ( "Budget Cap ").
The parties hereby acknowledge that, unless Project costs are reduced or the Actual Proceeds
generated are greater than the $3.7 Million Estimated Proceeds, there will be a shortfall
between the TIF revenue proceeds generated and the $4.402 Million that has been budgeted
to Offsite and Onsite improvements. Developer understands and acknowledges that it shall
be solely at risk for said shortfall (i.e. the difference between the $4.402 Million and $3.7
Million). It is understood and agreed that Actual Proceeds generated shall be allocated: First
for payment of the $1.97 Million budgeted to Offsite Infrastructure Improvements, and
Second for payment of the $2.432 Million budgeted Onsite Extraordinary Expenses. In the
event that Actual Proceeds generated is greater than the Estimated Proceeds of $3.7 Million,
such excess shall be allocated: First to payment of Onsite Extraordinary Expenses up to the
$2.432 Million budgeted ( "TIF Revenue Cap ") and Second to the City for its sole use and
benefit.
11) PRIVATE INVESTMENT. Developer agrees to the following investment goals for the
project:
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a) Level of Private Investment: A minimum of Twenty -five Million Dollars ($25,000,000)
will be invested in the development of the Project, whether through equity, debt, and
third -party investment, with the final amount to depend on its ultimate square footage.
b) Type of Private Investment: The type of private investment includes, but is not limited to,
acquisition, construction, tenant improvements, soft costs, and closing expenses.
12) FAILURE TO PERFORM. Both parties recognize that the Project requires a strong
- private - public partnership in order that all Project goals can be achieved. The City has
committed to a series of large -scale public investments in land acquisition and public
improvements. Should Developer fall short on the investment targets, the City will require
that Developer reimburse the City on a basis to be agreed upon in the Development
Agreement.
13) AGREEMENT TO DATE. This non - binding MOU represents the basic agreement to date.
Both the City and Developer agree that the above items that have been identified as "agreed
to" by one or both parties will serve as the basis for the Development Agreement, which both
parties agree to diligently work towards being executed by the 2nd day of April, 2004.
[SIGNATURE PAGE ATTACHED]
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CITY OF SOUTH BEND
G-
Stephen J. L ecka e, Mayor
ATTEST:
By: C
Its it Clerk
ANCHOR ACQUISITIONS, LTD.
Douglas S. Hynden, Authorized Member
Date: March 12 , 2004 Date:
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2004