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Home My WebLink About6B (2)Community & Economic 68(2-) UTg ,\11"111 ;! i O Development • 1. {S 1200 County -City Building, 227 West Jefferson, South Bend, Indiana 46601 -1830 Phone 574/235 -9371 Fax 574/235 -9021 To: South Bend Redevelopment Commission From: Don Inks f✓ Subject: Reimbursement Resolution with City for Costs Related to Chase Tower Date: December 9, 2011 Negotiations are continuing with a potential developer of the Chase Tower Building. Should the City reach an agreement to financially participate in the renovation of Chase Tower it would be necessary to close the transaction quickly. To keep open the possibility of a quick closing the City has scheduled a special meeting of the Common Council for 12/19/11 to consider an appropriation of up to $5.7 million. A part of the presentation to the Common Council would be this proposed Reimbursement Resolution. The Resolution itself would pledge new tax increment revenue from the Chase Tower Building to reimburse the City for its expenditures related to acquiring a real estate interest in the Chase Tower parking garage. Existing increment currently being collected from the Chase Tower would remain with the downtown TIF, while any new increment generated by the improvements to the property would be pledged to reimburse the City. Chase Tower Reimbursement Agreement 12.9. l l .doc What We Do Today Makes A DM%nemm I SpLJ T 8 04 - x•16 Ui C w 'ACF y - 1865 CITY OF SOUTH BEND STEPHEN J. LUECKE, MAYOR DEPARTMENT OF ADMINISTRATION & FINANCE GREGG D. ZIENTARA CONTROLLER December 7, 2011 Mr. Derek Dieter President, South Bend Common Council 41h Floor, County -City Building South Bend, IN 46601 re: Ordinance of the Common Council Appropriating Monies to Assist in the Chase Tower Building Rehabilitation Project Dear President Dieter: The Chase Tower building ( "Chase Tower ") is located in the heart of downtown South Bend across from the County -City Building at 211 -213 West Washington Street. It is the tallest building in South Bend and contains a bank, business offices, a hotel, restaurants and a parking garage. Presently, Chase Tower is in foreclosure proceedings, and is in urgent need of repair and rehabilitation. An entity known as Care Hotels Indiana, LLC, an Indiana limited liability company ( "Care Hotels ") and affiliate of Care Hotels plans to purchase the Chase Tower at sheriff foreclosure sale, thereby satisfying the judgment of foreclosure acquired by the lender Huntington National Bank. However, once released from foreclosure, Chase Tower requires substantial Capital improvements to retain and attract tenants, attract guests to the hotel portion of the building, and otherwise become a viable commercial enterprise. The total cost to make these repairs is not financially feasible for a developer. In order to rehabilitate Chase Tower and assure it will increase in assessed value subject to payment of property tax, that it will retain and create new jobs in downtown South Bend, and that it will remain a vital commercial enterprise in the heart of South Bend, it is necessary for the City of South Bend to assist in the Chase Tower rehabilitation by appropriating funds for this purpose. The City will thereby acquire a long term interest in the garage portion of Chase Tower which will assist in the general rehabilitation of Chase Tower. City Administration requests Council approval to invest up to $5.7 million for the purpose of acquiring a long term interest in the parking garage thereby providing financial assistance to the developer, to affect the repairs, maintenance rehabilitation necessary in the structure. The Raining Day Fund # 102 will provide the cash funds for this appropriation. The monies appropriated under this Ordinance shall be reimbursed to the Rainy Day Fund ( #102) in annual payments from Tax Increment Finance -South Bend Central Development Area Fund (TIF- SBCDA) No. 420 out of the incremental increase in tax revenues resulting from the differential in assessed valuation of Chase Tower at this time and after rehabilitation is undertaken under this development plan. County -City Building 227 West Jefferson Boulevard South Bend. Indiana 46601 -1830 Phone: 574/235-9216 Fax: 574/235 -9928 TDD:574!235 -5567 These annual reimbursement payments from Fund No. 420 to Rainy Day Fund #102 shall be made until the original appropriation of $5,700,000.00 is repaid and satisfied in full. City Administration submits this appropriation spending request for 1st reading at the December 12, 2011 Council Meeting, 2nd read, public hearing, 3`d read and Council vote at the December 19, 2011, special Council meeting. Mayor Luecke will present this bill to Council at the appropriate committee meeting and at the Council session. cc: Stephen J. Luecke, Mayor of the City of South Bend RESOLUTION NO. 2988 A RESOLUTION OF THE SOUTH BEND REDEVELOPMENT COMMISSION PLEDGING CERTAIN TAX INCREMENT REVENUES TO THE REIMBURSEMENT OF COSTS INCURRED BY THE CITY OF SOUTH BEND (CHASE TOWER PARKING GARAGE) 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 South Bend Central Development Area (the "Area ") to be a redevelopment area within the meaning of Ind. Code §36 -7 -14; (ii) established the Area as the South Bend Central Development Area Allocation Area (the "Allocation Area ") to be an allocation area for the purpose of separately accounting for the tax increment revenues derived from the Area; and (iii) created an allocation fund for the Area (the "Allocation Fund ") for purpose of tax increment financing; and WHEREAS, the Chase Tower is located at 211 -213 West Washington Street, South Bend, Indiana (the "Chase Tower ") in the heart of downtown South Bend, located within the Area and is the tallest building in South Bend; and WHEREAS, Chase Tower is a landmark South Bend building including offices, a bank, hotel, restaurants and a parking garage; and WHEREAS, it is in the best interests of the citizens of the City to prevent the further deterioration of the Chase Tower, maintain the presence of the tenants in the Chase Tower, establish or maintain a reputable branded hotel in the Chase Tower, encourage the undertaking of improvements, as such improvements will provide for additional economic development of the downtown area of the City, including increasing the assessed value of the Chase Tower; and WHEREAS, the City intends to acquire a real estate interest in the parking garage located in the Chase Tower (the "Garage "), for an amount not exceeding $5,700,000.00 (the "Garage Acquisition Costs "); and WHEREAS, the City will appropriate the Garage Acquisition Costs from the South Bend Rainy Day Fund (Fund # 102); and WHEREAS, the Garage Acquisition Costs will be used to finance the acquisition of a real estate interest in the Garage which will facilitate the development and rehabilitation of the Chase Tower in downtown South Bend; and WHEREAS, the Commission desires to pledge tax increment revenues allocated to the Commission and resulting solely from the new increase in the assessed value of the Chase Tower generated by the improvements to be accomplished subsequent to the City's acquisition of the Garage (the "Chase Tower Improvements "), located in the Area, and deposited into the Allocation Fund, as required by Ind. Code §36- 7 -14 -26 (the "Chase Tower Improvements Tax Increment Revenues ") to the City for reimbursement of the Garage Acquisition Costs; and WHEREAS, the Commission shall not have any obligation with respect to the reimbursement of the Garage Acquisition Costs other than the use of the Chase Tower Improvements Tax Increment Revenues toward the payment or reimbursement thereof, NOW THEREFORE, BE IT RESOLVED, by the City of South Bend, Indiana, Redevelopment Commission as follows: 1. The Commission hereby pledges the Chase Tower Improvements Tax Increment Revenues to the reimbursement of Garage Acquisition Costs in an amount not to exceed $5,700,000.00 (collectively, the "Pledge Payments "). Such pledge shall remain in effect until the Garage Acquisition Costs have been reimbursed to the City. 2. Chase Tower Improvements Tax Increment Revenues, received by the Commission, shall be appropriated for the Pledge Payments. Chase Tower Improvements Tax Increment Revenues received in excess of the Garage Acquisition Costs do not remain pledged and may be used by the Commission for any purpose set forth in Section 39 of the Act (IC 36 -7- 14-39); provided however, that the Commission may only use such excess Chase Tower Improvements Tax Increment Revenues to the extent that the Chase Tower Improvements Tax Increment Revenues exceed the amount necessary to reimburse all Garage Acquisition Costs. 3. This Resolution shall be subject to the City acquiring a real estate interest in the Garage and incurring the Garage Acquisition Costs. 4. This Resolution shall be in full force and effect after its adoption by the Commission, shall be subject to completion of all actions necessary to create the obligations referred to herein and shall not be repealed or amended in any manner which would serve to adversely affect the pledge of the Chase Tower Improvements Tax Increment Revenues contained herein. 2 ADOPTED at a meeting of the South Bend Redevelopment Commission held on December 13, 2011, at 4:00 p.m., in Room 1308, County -City Building, 227 West Jefferson Boulevard, South Bend, Indiana 46601. CITY OF SOUTH BEND, DEPARTMENT OF REDEVELOPMENT Signature Printed Name a Title South Bend Redevelopment Commission ATTEST: Printed Name and Title South Bend Redevelopment Commission