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HomeMy WebLinkAbout2 Minutes (Special Meeting)SOUTH BEND REDEVELOPMENT COMMISSION SPECIAL MEETING January 18, 2012 1:00 P.M. 227 West Jefferson Boulevard Presiding: Marcia I. Jones, President South Bend, Indiana 1. ROLL CALL Members Present: Ms. Marcia Jones, President Dr. David Varner, Vice President Ms. Nancy King, Secretary Mr. Greg Downes Members Absent: Mr. Donald Alford Ms. Stephanie Spivey Legal Counsel: Mr. Lawrence Meteiver, Esq. Redevelopment Staff: Mr. Don Inks, Director Mrs. Cheryl Phipps, Recording Secretary Mr. Bill Schalliol, Economic Development Specialist Mr. David Relos, Economic Development Specialist Mr. Jitin Kain, Senior CED Specialist Others Present: Mayor Pete Buttigieg Mr. Dan Jones Ms. Beth Leonard -Inks, Community Development Ms. Rita Kopala Ms. Madeleine Wright Mr. Ian Sindell Mr. John Earnest, ACS Mr. Rich Earnest, ACS Mr. Kevin Kelsheimer Mr. Mark Peterson, WNDU Mr. Eric Walon, WNDU 2. APPROVAL OF MINUTES A. Approval of Minutes of the Regular Meeting of Tuesday, December 13, 2011. Upon a motion by Mr. Downes, seconded by Ms. COMMISSION APPROVED THE MINUTES OF THE King and unanimously carried, the Commission REGULAR MEETING OF TUESDAY, DECEMBER approved the Minutes of the Regular Meeting of 13, 2011 Tuesday, December 13, 2011. South Bend Redevelopment Commission Special Meeting — January 18, 2012 2. APPROVAL OF MINUTES (CONT.) B. Approval of Minutes of the Annual Organizational Meeting of January 3, 2012. Upon a motion by Mr. Downes, seconded by Ms. King and unanimously carried, the Commission approved the Minutes of the Annual Organizational Meeting of January 3, 2012. C. Approval of Minutes of the Special Meeting of January 3, 2012. Upon a motion by Mr. Downes, seconded by Ms. King and unanimously carried, the Commission approved the Minutes of the Special Meeting of January 3, 2012. 3. APPROVAL OF CLAIMS There were no Claims for approval. 4. COMMUNICATIONS There were no Communications. 5. OLD BUSINESS There was no Old Business. 6. NEW BUSINESS A. South Bend Central Development Area (1) Staff report on Ambulatory Care Solutions proposal for location of the CBOC VA Clinic in the South Bend Central Development Area. Mr. Inks noted that there are several items and they are all connected and Mr. Schalliol will walk through the staff reports. 2 COMMISSION APPROVED THE MINUTES OF THE ANNUAL ORGANIZATIONAL MEETING OF JANUARY 3, 2012 COMMISSION APPROVED THE MINUTES OF THE SPECIAL MEETING OF JANUARY 3, 2012 THERE WERE NO CLAIMS FOR APPROVAL. THERE WERE NO COMMUNICATIONS THERE WAS NO OLD BUSINESS South Bend Redevelopment Commission Special Meeting — January 18, 2012 6. NEW BUSINESS (CONT.) A. South Bend Central Development Area (1) continued... Mr. Inks introduced Mayor Pete Buttigieg, for his comments concerning the project. Mayor Buttigieg noted that economic development of the downtown is a priority often spoke about, but rarely do we have such an immediate opportunity to act on it. We make decisions with the hope of attracting somebody who might be ready to make an investment that might eventually draw more people downtown. What the Commission is considering today is a very clear opportunity to dramatically increase the people traffic in an area between where we're now sitting and the entrance to Coveleski Stadium. The estimates that have been furnished to us are that a minimum of 50,000 to 75,000 patients a year will be served at this site, not including veteran's families or people who'd accompany them to the clinic. The staff has intended to acquire the Gates Toyota building eventually, but that is now on a fast track. We are working with a very swift timeline. The VA wants the doors to be open by the first week of March 2012. The Mayor believes that this would be a good deal for the city and a good opportunity for downtown. Mr. Schalliol noted that in 2010, the City of South Bend was approached by Ambulatory Care Solutions (ACS) concerning their need to expand and relocate their existing VA Community -Based Outpatient Clinic 3 South Bend Redevelopment Commission Special Meeting — January 18, 2012 6. NEW BUSINESS (CONT.) A. South Bend Central Development Area (1) continued... operations, located south of town on Ironwood Drive. The present facility offers primary care services for veterans in South Bend and surrounding areas. Also, the facility offers Mental Health services including medication management and individual and group counseling in Post Traumatic Stress Disorder (PTSD) and a Substance Abuse Treatment Program (SATP). ACS is a contract service provider to the VA and they operate on five -year contract cycles (of which they are presently in contract year eight at the existing facility). After doing site reconnaissance and looking at a variety of facilities, ACS and the city developed a concept plan for bringing the VA project into the Central Business District to reutilize the former Gates Toyota building located at 303 W. Western Avenue as the new home for the VA Clinic. Over the last two years, ACS and the city have worked on site planning and space design for the building as well as the adjacent parking lot. Mr. John Earnest noted that he and his son are the two partners of Ambulatory Care Solutions, which specifically contracts with the Veterans Administration to provide primary care services for veterans. Presently ACS has six facilities, four of which are located in Indiana. In October 2004, they were awarded their first contract (a five -year contract), Community Based Outpatient Clinic (CBOC). The award was for the present facility south on Ironwood Road, the 0 South Bend Redevelopment Commission Special Meeting — January 18, 2012 6. NEW BUSINESS (CONT.) A. South Bend Central Development Area (1) continued... South Bend VA Clinic. In rebidding for a new contract, ACS won a new five year contract. That was won December 4, 2011. That put into motion the moving of its facility to this downtown location. They are very excited about the downtown and believe the clinic will benefit the downtown with its 50,000 to 75,000 of foot traffic. In addition, there will be close to 100 employees, 45 of which will relocate from South Ironwood to the downtown area. Mr. Schalliol noted the proposal for the site would require ACS and the city to enter into a contract relationship to allow ACS to lease between 16,000 and 24,000 sq. ft. of the former Gates Toyota building (the building is estimated to be 72,000 sq. ft.). The lease would be for a term of five years (the length of a the VA contract with ACS). It would retain 50 jobs and allow for the creation of more jobs in the medical and medical service industry. Additionally, the clinic estimates that it would expand its current patient visit count from 50,000 to 75,000 patients (figure includes patient only and not drivers or family members, etc.). The excess space over what the clinic needs now could be used for future expansion of the clinic or for a proposed VA Hospital in 2013. The project requires the Redevelopment Commission to become a property owner of the site to aid in the cost financing for the project. And, based on negotiations with the Gates family for the purchase of their 5 South Bend Redevelopment Commission Special Meeting — January 18, 2012 6. NEW BUSINESS (CONT.) A. South Bend Central Development Area (1) continued... remaining downtown parcels, the land is being offered as a package deal allowing the city to purchase the remaining 16 parcels as a block. Of those parcels being acquired, five parcels would be used for this project, one parcel contains the Gates Service Center which would remain on site with an assumable lease to the city, four parcels adjacent to the former Schillings building would make the Schillings building better suited for redevelopment, two lots are located within the Coveleski Park parking area, one parcel is adjacent to a downtown business that wants to expand, so it could be sold, and the other three lots contain the Gates Used Car lot which would remain on site with an assumable lease to the city. The ACSNA project offers the following: • The move to the central business district will provide easier access to the clinic for both veterans and employees and will be a complement to other similar services presently located in the downtown area. • The proposed site will be on a public bus route and near the crossroads of many major roadways. Access will be an improvement over the present location. • The relocation of the clinic into the proposed facility in the central business district will aid in furthering economic development goals in the downtown and provide a strong 3 South Bend Redevelopment Commission Special Meeting — January 18, 2012 6. NEW BUSINESS (CONT.) A. South Bend Central Development Area (1) continued... • tenant for a vacant property located within one of the downtown development zones, the Coveleski Park planning area, a multimillion dollar economic development project intended to stimulate new investment in the downtown. • Moving from the current location to the downtown will provide more service space, parking and proximity to local businesses, restaurants and government offices. In conclusion, the opportunity to advance the ACSNA project in the downtown area is a win for the VA Clinic and its patients and staff, it is a win for the Coveleski Park Planning Area as its puts a vacant site into active reuse with a large number of employees and visitors and will create opportunities for shared parking and other development opportunities in the planning area, and is a win for the City of South Bend in its business attraction efforts. Upon a motion by Mr. Downes, seconded by Ms. King and unanimously carried, the Commission approved Staff report on Ambulatory Care Solutions proposal for location of the CBOC VA Clinic in the South Bend Central Development Area. (2) Resolution No. 3000 related to acquisition of property in the South Bend Central Development Area (Transaction 1). 7 COMMISSION APPROVED STAFF REPORT ON AMBULATORY CARE SOLUTIONS PROPOSAL FOR LOCATION OF THE CBOC VA CLINIC IN THE SOUTH BEND CENTRAL DEVELOPMENT AREA. South Bend Redevelopment Commission Special Meeting — January 18, 2012 6. NEW BUSINESS (CONT.) A. South Bend Central Development Area (2) continued... Mr. Schalliol noted that Resolution No. 3000 sets the acquisition offering price for 11 of the 16 properties proposed for acquisition at $895,125, the average of two MAI certified appraisals. The total amount of property being acquired includes a total of 4.43 acres, one occupied building which contains the Gates Service Center facility and one vacant sales trailer building located on the corner of Lafayette and Western. Four of the properties contained within this resolution are adjacent to the former Schillings property and will allow for a reuse plan for the site to be developed. Upon a motion by Mr. Downes, seconded by Ms. King and unanimously carried, the Commission approved Resolution No. 3000 related to acquisition of property in the South Bend Central Development Area (Transaction 1). (3) Resolution No. 3001 related to acquisition of property in the South Bend Central Development Area (Transaction 2). Mr. Schalliol noted that Resolution No. 3001 sets the acquisition offering price for the two of the remaining five parcels at $552,500, the average of two independent MAI appraisals. The total amount of land being acquired is 1.41 acres. They contain the two story former Gates Toyota sales and service building The three remaining parcels proposed to be included with this transaction have been appraised for purchase because COMMISSION APPROVED RESOLUTION NO. 3000 RELATED TO ACQUISITION OF PROPERTY IN THE SOUTH BEND CENTRAL DEVELOPMENT AREA (TRANSACTION 1). South Bend Redevelopment Commission Special Meeting — January 18, 2012 6. NEW BUSINESS (CONT.) A. South Bend Central Development Area (3) continued... they are not on the SBCDA acquisition list. They will be considered as part of the administrative settlement package. Upon a motion by Mr. Downes, seconded by Ms. King and unanimously carried, the Commission approved Resolution No. 3001 related to acquisition of property in the South Bend Central Development Area (Transaction 2). (4) Administrative Settlement — Transaction 1 Mr. Schalliol noted that Resolution No. 3000 set the offering price for 11 parcels owned by GMS Realty, Inc. and Gates & Gates Realty on the area described generally as the Gates Downtown Campus. The total appraised value for the 1 I parcels was $895,125. In anticipation of an acquisition, the property owners obtained a fair market appraisal of their own which indicated and a value of $1,765,000. In an effort to reach an administrative settlement with the property owner, an average value was examined for the purpose of trying to find a common ground. The proposal is to acquire the 11 properties at one closing for a total acquisition amount of $1.9 million dollars. The purchase would be structured over four years with the initial payment for the properties at $1,150,000. The remaining funds would be spread out over the next three years at a rate to be determined with the property owner. Any E COMMISSION APPROVED RESOLUTION NO. 3001 RELATED TO ACQUISITION OF PROPERTY IN THE SOUTH BEND CENTRAL DEVELOPMENT AREA (TRANSACTION 2). South Bend Redevelopment Commission Special Meeting — January 18, 2012 6. NEW BUSINESS (CONT.) A. South Bend Central Development Area (4) continued... existing leases on the property would be assumed by the Commission, and because the Commission would have clear title to the land, any of the land parcels could be disposed of to facilitate development in the Coveleski Park area. Mr. Meteiver added that we took the percentage values of each of the parcels based upon the average appraisal values, computed their percentage of each individual parcel (of the total $1.3 million) and then computed out the values based on the $1.9 million total purchase price. The computed purchase price had been adjusted to a purchase price that falls within the $1.9 million. The first settlement would take in all of the following properties: Gates and Gates, Lots No. 11 and 12, Tax ID's 0483 and 048201, city low appraisal $98,882.50, Gates high appraisal $245,OOO,average appraisal $171,941.25 with a computed purchase price of $200,000. GMS, Lots No. 14, 15, 16, Tax ID's 0265, 0266, and 0267, city low appraisal $115,000, Gates high appraisal $115,000, average appraisal $115,000 with a computed purchase price of $115,000. Parcels 14, 15 and 16 are figured into the acquisition value but will be accepted by 10 South Bend Redevelopment Commission Special Meeting — January 18, 2012 6. NEW BUSINESS (CONT.) A. South Bend Central Development Area (4) continued... donation by the Board of Public Works as they are not presently on the SBCDA acquisition list. This is property within the $1.9 million price. Upon a motion by Mr. Downes, seconded by Ms. King and unanimously carried, the Commission approved the Administrative Settlement — Transaction 1. (5) Administrative Settlement — Transaction 2 Mr. Schalliol noted that Resolution No. 3001 set the offering price for two parcels owned by GMS Realty, Inc. on the area described generally as the Gates Downtown Campus. The total appraised value for the two parcels was $552,500. In anticipation of an acquisition, the property owners obtained a fair market appraisal of their own which indicated a value of $700,000 for the same properties. In an effort to reach an administrative settlement with the property owner, an average value was examined for the purpose of trying to find a common ground. The proposal is to acquire these two properties at one closing for a total acquisition amount of $1 million dollars. The purchase would be structured over four years with the initial payment for the properties being $50,000. The remaining funds would be spread out over the next three years at a rate to be determined with the property owner. Any existing leases on the 11 COMMISSION APPROVED THE ADMINISTRATIVE SETTLEMENT -TRANSACTION 1. South Bend Redevelopment Commission Special Meeting — January 18, 2012 6. NEW BUSINESS (CONT.) A. South Bend Central Development Area (5) continued... property would be assumed by the Commission and because the Commission would have clear title to the land, any of the land parcels could be disposed of to facilitate development in the Coveleski Park area. The Commission today is being asked to set an acquisition value for 13 properties owned by GMS Realty, Inc. and Gates & Gates, Inc. The administrative settlement for the total acquisition package is $2.9 million dollars which includes the transfer of three additional properties the city via the Board of Public Works. After the acquisition of the parcels, the City of South Bend will own the entirety of the Gates downtown campus. The city will also inherit, by lease assignment, three tenants including the Gates Service Center, Gates Used Car Sales, and the ACSNA Clinic. The lease arrangements with the two Gates tenants is still being reviewed but the terms of the ACS agreement are as follows: • $3.00 /SF lease with ACS for five years with renewable terms • Loan repayment of $1 million dollars at 6% for five years With the infusion of the lease payment and the loan repayment, the total acquisition value of the Gates property is reduced from $2.9 million to $1.5 million. And with the ability to capture additional revenue from land sales, rent and other income 12 South Bend Redevelopment Commission Special Meeting — January 18, 2012 6. NEW BUSINESS (CONT.) A. South Bend Central Development Area (5) continued... opportunities, the project opens up great opportunities for development in the Coveleski Park area. Mr. Inks noted in summary that the total outlay is $2.9 million to acquire the property. Part of that acquisition is a lease that will be in place with ACS and that lease will have been funded with $1 million in improvements to the property. The city is buying properties that had an average appraisal, or some agreed -to price of $1.9 million, plus a lease in place and the improvements which total the $2.9 million for the acquisition for all the property. There is another $432,000 cost which will improve the site ($70,000 in exterior improvements, painting, windows, parking lot, landscaping, etc.). The total to be paid out over time by the city then is $3,332,000. $1.7 million of that is going to be paid over the next three years (through 2015). The balance, $1,632,000, will be paid in 2012. Mr. Schalliol used a net number and the way he got to that is $3,332,000 in costs to do the project. In addition, rents of almost $280,000 from ACS on an annual basis (including the repayment of $1 million of improvements) and additional rents of $60,000 per year from the Gates Service Center which totals $340,000 per year over the five year period totaling $1.7 million in revenues received deducting it from the $3,332,000 which is $1,632,000 net cost that's out at the end of five years. These 13 South Bend Redevelopment Commission Special Meeting — January 18, 2012 6. NEW BUSINESS (CONT.) A. South Bend Central Development Area (5) continued... numbers are conservative numbers, based on ACS taking 16,000 sft of the building. There is potential that additional rents could be had should there be need for additional space. Mayor Buttigieg restated the costs as he understands them. At the highest level the city is acquiring land that is appraised to be worth $1.9 million that in the long run the city will have paid $1.6 million for. And that the number is higher upfront for reasons having to do with timing and with the city's offer to finance some improvements that have to happen sooner or later. Mr. Inks said that the summary is correct. Mr. Downes asked how any need for additional improvements would be handled. Mr. Inks responded that the City has other rental property, primarily retail space in the downtown, and if a tenant desires improvement to the space, typically there is negotiation between the tenant and the landlord and effectively it gets picked up in the rent for the property. Mr. Rich Earnest noted that they came to the city asking for $1 million in improvements. The amount that it's going to take to improve that site is closer to $1.4 million. ACS will bring $400,000 of its own capital to the project. If for some reason VA asks for more, ACS sees that as VA responsibility. Mr. Varner asked if ACS is expected to require more than 16,000 sq. ft. Mr. Inks 14 South Bend Redevelopment Commission Special Meeting — January 18, 2012 6. NEW BUSINESS (CONT.) A. South Bend Central Development Area (5) continued... responded that the range has been presented as 16,000 to 24,000. Mr. John Earnest has not settled completely with the Veterans Administration on exactly how much square footage it will take. ACS will start out with perhaps 18,000 to 20,000 sq. ft. initially. The building, with the upstairs and downstairs is a total of about 64,000 sq. ft. so that as ACS'S services expand in the future, it will expand in that building for at least the next five -year period. Mr. Varner asked if the lease would reflect that the remainder of the 64,000 sft would be held for ACS, or could it be rented to another tenant. Mr. Inks responded that the unused space will be the city's to hold or lease out. Mr. Varner asked if the VA clinic will provide rehab work or primary care at this location. Mr. John Earnest responded this facility will provide primary care, lab, x -ray, psychiatric, and a pretty large cadre of services there. The intent is to bring to South Bend the services currently offered in Fort Wayne and Marian. ACS serves a 14 county area and has over 8,000 veterans enrolled in its clinic. It's one of the largest contracted clinics the VA has. Mr. Downes questioned if there was any data in about the economic impact of the current VA clinic on the restaurants and retail establishments around the clinic. Though there isn't any hard data, Mr. Rich Earnest offered anecdotal data from Goshen and 15 South Bend Redevelopment Commission Special Meeting — January 18, 2012 6. NEW BUSINESS (CONT.) A. South Bend Central Development Area (5) continued... Terre Haute, Indiana, where they've asked nearby businesses and have been told that clinic patients do shop there. Many people make their trip to the VA clinic a shopping trip to South Bend, as well, so there should be some positive impact on downtown business. Ms. King asked about the negotiation of the price with Gates and the difference between the high appraisal that Gates received and the city's appraisals. That just became part of the negotiations? Mr. Inks responded, yes. Mr. Varner asked if ACS operates as a "for - profit" corporation and therefore taxable. Mr. John Earnest responded that it does operate as a for - profit corporation and is taxable. Ms. King asked Mr. Schalliol to explain what buildings are on the property. Mr. Schalliol pointed out the buildings and lots on a map provided. Ms. King asked what will be occupied and what will be left alone at this time. Mr. Schalliol noted that the front half of the Gates Toyota Building will be occupied by the VA clinic. There is a second floor for possible expansion. The whole Western Avenue frontage will be used for parking. Mr. Downes asked whether the current parking at the site is adequate for the clinic. Mr. John Earnest replied that the 147 parking spaces will be more than enough. 16 South Bend Redevelopment Commission Special Meeting — January 18, 2012 6. NEW BUSINESS (CONT.) A. South Bend Central Development Area (5) continued... Mr. Downes asked if the clinic expands to 24,000 square feet, would there still be enough parking. The response was that there would be. Mr. Varner asked what the property taxes are on the building now, since it's unoccupied. Mr. Schalliol responded that the total 16 parcels currently pay about $51,000 annually. Upon a motion by Mr. Downes, seconded by Ms. King and unanimously carried, the Commission approved the Administrative Settlement — Transaction 2 in the amount of $2.9 million. 7. PROGRESS REPORTS There was no report. 8. NEXT COMMISSION MEETING The next Regular Meeting of the Redevelopment Commission is scheduled for Tuesday, January 24, 2012 at 4:00 p.m. 9. ADJOURNMENT There being no further business to come before the Redevelopment Commission the meeting was adjourned at 1:50 p.m. Donald E. Inks, Director 17 COMMISSION APPROVED THE ADMINISTRATIVE SETTLEMENT- TRANSACTION 2 IN THE AMOUNT OF $2.9 MILLION. PROGRESS REPORTS NEXT COMMISSION MEETING ADJOURNMENT