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HomeMy WebLinkAbout6C (1)6C- (1) Staff Report to Redevelopment Commission South Bend Career Academy — TIF Pledge Resolution Prepared 9/8/11 The pledge resolution is for a total of $1.5 million to be paid over 3 years at 4% interest. The total cost to acquire, renovate, equip and provide for first semester operating cash is $13.9 million. Construction financing has been provided by the Garatoni Family Foundation. End financing is expected to come from various bonds ($9.5 million, including the TIF Pledge), Federal Funding of $150,000, seller financing of $750,000 and private contributions totaling $3.5 million (including $1.0 million from the Garatoni Family Foundation). South Bend Career Academy is a public, vocationally oriented charter school located in the Blackthorn Office Park. It opened in August for grades 7 thru 9 with a target enrollment of 125 students in each grade. Grades 10 thru 12 will be addedsuccessively over the next 3 years. As a public school it will be open without charge to any Indiana resident. Its operations will be funded by state tuition payments beginning in January of 2012. In addition to offering Indiana's "Core 40" academic program, the Career Academy will emphasize project based learning for all grades and will emphasize vocational education for higher grades. The school will share equipment and instructors now used for the adult education programs of the Apprentice Academy. Courses will include precision metalworking, welding, plumbing, auto mechanics, appliance repair, heating and ventilating, advanced manufacturing, entrepreneurship, information technology, retail/business management, business ethics, nursing and phlebotomy. This school is housed in a formerly vacant 100,000 square foot facility and will provide another choice for quality education in South Bend. RESOLUTION NO. 9 A RESOLUTION OF THE SOUTH BEND REDEVELOPMENT COMMISSION PLEDGING CERTAIN TAX INCREMENT REVENUES ON A SUBORDINATE BASIS TO THE PAYMENT OF CERTAIN CITY OF SOUTH BEND, INDIANA, ECONOMIC DEVELOPMENT REVENUE BONDS EXPECTED TO BE ISSUED FOR THE SOUTH BEND CAREER ACADEMY PROJECT WHEREAS, the South Bend Redevelopment Commission (the "Commission "), the governing body of the City of South Bend, Indiana, Redevelopment District (the "District ") and the City of South Bend, Indiana, Department of Redevelopment, exists and operates under the provisions of Ind. Code § 36 -7 -14, as amended from time to time (the "Act "); and WHEREAS, the Commission has previously (i) designated and declared an area in the City of South Bend, Indiana (the "City "), known as the Airport Economic Development Area (the "Area ") to be an economic development area and an allocation area for purposes of tax increment financing and established an allocation fund for said Area (the "Allocation Fund "); and WHEREAS, the Commission has previously authorized pursuant to various resolutions (the "Prior Bond Resolutions ") the issuance of the Commission's (i) City of South Bend, Indiana, Redevelopment District Revenue Bond, Series 2001A (Robert Bosch Corporation Project) (ii) City of South Bend, Indiana, Redevelopment District Special Taxing District Bonds of 2002; and (iii) City of South Bend, Indiana, Redevelopment District Tax Increment Revenue Bonds, Series 2003 (collectively, the "Prior Bonds ") payable from the tax increment revenues allocated to the Commission and resulting from the increase in the assessed value of real property and improvements thereon located in the Area (the "Tax Increment Revenues "); and WHEREAS, the Commission has previously adopted a resolution (the "Prior Lease Resolution" and collectively with the Prior Bond Resolutions, the "Prior Resolutions ") authorizing the execution of a lease with the South Bend Redevelopment Authority (the "Authority ") pursuant to which the Commission makes lease rental payments from the Tax Increment Revenues to the Authority which the Authority uses to pay the principal of and interest its Lease Rental Revenue Refunding Bonds of 1998 (Blackthorn Golf Course Project) (the "Prior Lease" and with the Prior Bonds, the "Prior Obligations "); and WHEREAS, the City is considering the issuance of its economic development revenue bonds pursuant to Ind. Code § 36 -7 -11.9 and 12 for the South Bend Career Academy Project (the "EDC Bonds "), the proceeds of which are to be used to finance a portion of the costs of the acquisition, renovation, construction, installation and equipping of an approximately 106,000 square foot charter school located at 3801 Nimtz Drive in the City which is located in the Area (collectively, the "Project "); and BDDB01 6825523v] WHEREAS, the Commission has been asked to pledge Tax Increment Revenues which may be available following payment of the Prior Obligations and Future Obligations (as defined herein) (such remaining amount of Tax Increment Revenues being referred to herein as "Pledged Tax Increment "); and WHEREAS, the Commission anticipates that sufficient Pledged Tax Increment will be available to the Commission to pay the principal of and interest on the EDC Bonds when due and desires to pledge the Pledged Tax Increment to the payment of principal of and interest on the EDC Bonds as set forth herein; and WHEREAS, the pledge of the Pledged Tax Increment shall be junior and subordinate to the Prior Obligations and also junior and subordinate to all other obligations or indebtedness incurred by the Commission pursuant to Sections 25.1 and 25.2 of the Act, if any, which by their terms are secured by or paid from Tax Increment Revenues ( "Future Obligations ") and WHEREAS, neither the City nor the Commission shall have any obligation with respect to the payment of principal of or interest on the EDC Bonds other than from the Pledged Tax Increment if and when available; NOW, THEREFORE, BE IT RESOLVED, by the City of South Bend, Indiana, Redevelopment Commission as follows: 1. The Commission hereby pledges the Pledged Tax Increment to the payment of the principal of and interest on the EDC Bonds for a period up to but not exceeding three (3) years from the date of the issuance of the EDC Bonds. Such pledge shall terminate at the earliest of the final payment on the EDC Bonds or the conclusion of said three (3) year period and shall be junior and subordinate to the Prior Obligations and to Future Obligations, if any. 2. The principal and interest account of the Allocation Fund, previously established and continued by the Prior Resolutions, is hereby continued with respect to the Pledged Tax Increment. 3. Tax Increment Revenues received by the Commission shall be deposited into the Principal and Interest Account, as set forth in the Prior Resolutions, for the payment of the Prior Obligations and Future Obligations, if any, and any remaining amounts (which shall constitute Pledged Tax Increment as defined herein), after setting aside Tax Increment Revenues for the payment of amounts owed on the Prior Obligations and the Future Obligations, if any, shall be appropriated for the payment of the principal of and interest on the EDC Bonds. The pledge of the Pledged Tax Increment shall be junior and subordinate to the Prior Obligations and the Future Obligations, if any. Tax Increment Revenues received in any year in excess of the amount necessary to pay the amounts due that year on the Prior Obligations, the Future Obligations, if any, and the EDC Bonds do not remain pledged and may be used by the Commission, in accordance with the Prior Resolutions, for any purpose set forth in Ind. Code § 36-7-14-39, -2- BDDB01 6825523v] 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 Pledged Tax Increment contained herein. -3- BDDBOI 6825523v1 ADOPTED at a meeting of the South Bend Redevelopment Commission held on August 23, 2011, in Room 1308, County -City Building, 227 West Jefferson Boulevard, South Bend, Indiana 46601. SOUTH BEND REDEVELOPMENT COMMISSION Marcia Jones, President ATTEST: Nancy King, Secretary -4- BDDB01 6825523v 1