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HomeMy WebLinkAbout6C7 Renaissance District PH II4,- C ( -7 ) Community & Economic Development 1200 County -City Building, 227 West Jefferson, South Bend, Indiana 46601 -1830 Phone 574/235 -9371 Fax 574/235 -9021 To: Redevelopment Commission From: Bill Schalliol, ADED Subject: Renaissance District, Phase II Project Overview Memo Date: April 5, 2012 The following is a staff memorandum on the Renaissance District Project, Phase 2. On March 13th, the Redevelopment Commission was presented with an overview presentation of the project being called "The Renaissance District." The project would be located at the southern end of downtown, bound by South Street, Lafayette Boulevard, Sample Street and Scott Street. The Renaissance District would allow Union Station Technology Center (USTC), which is now located in Union Station, to expand south of the rail tracks into the Ivy Tower building, with additional plans for a larger, dense, mixed use, community technology center. While Phase 1 of this project provided an updated power infrastructure, Phase 2 includes environmental remediation and rehabilitation of Ivy Tower. Plans for the rehabilitated space include data center environments, advanced manufacturing and rapid prototyping businesses, software development companies, and supercomputing capabilities, along with a centralized energy source to provide recycled energy for electric and thermal needs. USTC and The Renaissance District are founded on four core principles - - SPACE, POWER, CONNECTIVITY, INNOVATION. SPACE As the Union Station Technology Center grows to capacity, the next logistical step is to acquire more land and space adjacent to the rail corridor to grow the technology center. The Renaissance District project contemplates the acquisition and repurposing of the Ivy Tower complex and the former Millennium Environmental property, both located south of the tracks, for expanded technology center purposes. The total developable square footage between the Union Station facility, the Ivy Tower complex and additional new construction on the site would be over 1.3 million square feet of space. Additional land and buildings could be added to the district and there could even be a long -term push to expand connectivity of the RD into the Ignition Park campus. POWER An integral part of this project is to create an Integrated Central Power System (ICPS), which will be developed to provide conditioned and recycled energy to the various users on site. A large component of this project will be to expand the power capacity in this southern downtown area by directly connecting to the 138 KV transmission network and developing redundant substations and power conduit grids to maintain a high level of power to the site. The first energy component, which is presently in the planning stage, will be the construction of a 5 MW power connection into the RD facility with a direct conduit connection to the AEP substation on Lafayette. CONNECTIVITY The Renaissance District proposes a variety of connections in and around the district campus. First, with the vacation of United Drive, the Union Station will be connected at grade level to the Millennium site and the Ivy Tower site to allow for equipment and supplies to be safely and effectively transported between facilities. Second, the City will coordinate with the team the construction of a redundant power and conduit path around the district, which will distribute power What We Do Today Makes A Difference! and fiber optic capabilities throughout the site. Third, the Union Station building and the Ivy Tower building will be connected by way of the construction of a pedestrian tunnel between the facilities to physically connect the space. INNOVATION Already a patent holder for many of the new technologies proposed for implementation in this center, as well as the integration of a team of project partners and tenants that work and compete on the national and international stage, the hallmark of the Renaissance District will be innovation. By combining space to develop ideas, power to fuel the ideas and connectivity to integrate solutions across a variety of user and product platforms, innovation will be the driver of all that happens within the Renaissance District. On March 27th, the Redevelopment Commission approved Phase I of the Renaissance District project. Phase 1 contemplated the following five points which were the subject of a Memorandum of Understanding that was also approved at the March 27th Commission meeting. The five points included within the MOU were: > Phase 1 of the project includes a request to the Redevelopment Commission for the following: 1. Sell the former Millennium Environmental (ME) property to USTC for $43,500 (commission offering price) 2. Once site remediation is complete at the ME site, work with Indiana Department of Environmental Management to provide USTC with a comfort letter allowing USTC to purchase the Millennium Site without any environmental liability or claims of lien holders 3. Initiate and support the vacation of United Drive; work with adjacent property owners to maintain reasonable access 4. Construct the proposed communication and power duct bank from the Lafayette Blvd AEP substation north to a point of connection with the Ivy Tower or Union Station facility; extend south to Sample Street as part of the conduit construction project for Ignition Park 5. The construction of the power duct bank also includes the acquisition and installation of proposed components to support an upgrade of equipment capable of up to five Megawatts ( "5 MW ") as part of the IC Power System and it is contemplated that the cost of the proposed system will be $2.2 million dollars. > Phase I of the project requires the following from the USTC: 1. The $2.2 million would be repaid to the City over a 10 year period through a formula defined in the MOU which the City will measure the taxable investment and if there is a shortfall, the USTC will repay the difference in value. At the present time, City items 1 -5 are all in various levels of process and it is anticipated that they will be complete by early summer. With the completion of these elements, the private investment to begin developing the infrastructure grid for the project as well as construction and improvements at Union Station will begin to take shape. PHASE II — Renaissance District While Phase I of the project contemplated and worked to achieve two of the four core components of the project (Power, Connectivity), it is now time to present to the South Bend Redevelopment Commission with Phase II of the Renaissance District project . Phase II is about Space and Innovation. The key element of Phase II deals with the remediation, rehabilitation and repurposing of the Ivy Tower structure into the usable building inventory of South Bend. From a redevelopment perspective, there are two methods of facilitating redevelopment of a site -- (1) Raze and Wait or (2) Remediate, Rehabilitate and Repurpose. While the City has seen successes with the first type of redevelopment, several stellar projects in the City over the last several years were accomplished by the latter method, and Phase Il,of this project would fit in to that category. The challenge with brownfield or greyfield redevelopment is that there are many more impediments to site development than development on a greenfield site. By playing a role in obstacle removal and burden sharing, brownfield and greyfield redevelopment begins to balance with the costs delta of greenfield development. In Phase II of the Renaissance District project, the staff is requesting that the Redevelopment Commission perform the role of site preparation agent to help facilitate reuse of the Ivy Tower site. The proposal, and the subsequent Memorandum of Understanding for this Phase II project will contemplate the Commission doing the following two items: Obtain a Phase I & II Environmental Survey of the Ivy Tower Building, and enter into an Environmental Agreement regarding remediation of the Ivy Tower Building and property. The studies contemplate two main environmental issues on -site -- asbestos and lead based paint. Based on an estimate provided by the environmental consulting team, the projected cost of total building remediation is $2,611,189.00 with $655,754.00 for asbestos remediation and $1,955,435.00 for lead based paint abatement. As a component of the Environmental Remediation of the site, the City will enter into an Environmental Agreement ( "EA ") regarding the Ivy Tower Building. 2. Upon the closing of the Ivy Tower Building purchase by USTC, provide $3,500,000 of improvements to structurally stabilize and enhance the building to allow for its reuse. 3. Work with Union Station or its affiliate on planning the Ivy Tower Improvements in order to best adapt the Ivy Tower Building as a collaborative multi- tenant facility to revitalize the Renaissance District. The total Commission investment in to Phase II of the project is projected to be $6,150,000.00. In exchange for financial participation by the City and Redevelopment Commission in Phase II of the project, the Union Station Technology Center group or its affiliate will do the following: 1. Take all reasonable steps to close on the purchase of the Ivy Tower Building to facilitate the USTC, as well as to provide an opportunity for other businesses to expand and relocate within the Ivy Tower Building, including but not limited to, providing the Commission with a Business Plan which shows the cooperative reuse of multiple businesses within the Ivy Tower Building, as well as providing reasonable space within the Ivy Tower Building for use by the Commission and other public agencies. 2. Make no less than $1,000,000 in improvements each year in the Renaissance District for a ten (10) year period, and provide the Commission on an annual basis with proof of compliance with this Commitment. To secure a return to the Commission for its Commitment, in Section 1(a)(ii), Kevin M. Smith shall guarantee Union Station will make no less than Three Million Five Hundred Thousand and 00 /100 ($3,500,000.00) Dollars in improvements in the Renaissance District over a five (5) year period. In the event Union Station fails to make such improvements, the Commission without any prejudice to enforce the Agreement against Union Station, may only enforce this Agreement against Kevin M. Smith for any deficiency in the required amount of improvements over the five (5) year period. 4. Provide the Commission with an annual report concerning the progress of Union Station's Phase Commitments. To the extent possible, this report shall be at a regularly scheduled Commission meeting. Phase II of the Renaissance Center project is key to the success of the overall project. By having 800,000 square feet of adjacent space to the USTC which can be utilized in a multi- tenant format allowing a variety of uses, producers, and end users to meet and collaborate in one area, the opportunity for innovation, job creation and spin -off development is maximized. Furthermore, the opportunity to reutilize existing structures with targeted investment as opposed to acquiring, razing, and waiting for new development to occur, or allowing the new development to happen on our fringes in greenfiled areas, is a maximization of resources and opportunities for the City of South Bend. Staff requests Commission approval of Phase II of the Renaissance District project specific to participation in the redevelopment of the Ivy tower building and site. The terms listed in the staff report are contained within the Memorandum of Understanding and staff requests approval of the MOU for this phase of the project. z V s z a z 0 z D O z fT'I n z 0 0 n m m pA ' D 4-y- 2 V MEMORANDUM OF UNDERSTANDING PHASE II This Memorandum of Understanding Phase II (the "Agreement ") effective as of April 7, 2012 is made and entered into by and between the City of South Bend, Indiana, a political subdivision and municipal corporation of the State of Indiana, by and through its South Bend Redevelopment Commission (the "Commission "), and Union Station Properties, LP, an Indiana Limited Partnership ( "Union Station ") (each individually a "Party" and collectively the "Parties "). STATEMENT OF FACTS A. On March 27, 2012, a Memorandum of Understanding was executed between the Parties ( "Phase I MOU "). The Statement of Facts contained in the Phase I MOU, items A -P inclusive, including but not limited to, the defined terms contained therein shall become part of this Agreement as if fully set out herein. B. In MOU Phase I, the Parties contemplated one (1) or two (2) other separate Agreements described as Phases II and III will be necessary. This Agreement is the second Agreement of the Parties involving the USTC and describes the Parties' agreement relative to Phase II. C. Union Station reasonably believes Phase I1 will create at least three hundred (300) new jobs in the Renaissance District over time. NOW THEREFORE, the Parties hereby agree the foregoing Statement of Facts are accurate and incorporated into this Agreement for all purposes and further agree as follows: Section 1. Commission Agreements. The Commission agrees with Union Station as follows: (a.) Phase II Commitments. (i) Obtain a Phase I and Phase II Environmental Survey of the Ivy Tower Building depicted as Item 2 -A on Exhibit 1, and enter into an Environmental Agreement ("EA") regarding the Ivy Tower Building in a form substantially the same as Exhibit 2. 1 (ii) Upon the closing of the Ivy Tower Building Purchase by Union Station or its affiliate, provide three million five hundred thousand dollars ($3,500,000) of improvements to structurally stabilize the building to allow for its reuse ( "Ivy Tower Improvements "). (iii) Work with Union Station or its affiliate on planning the Ivy Tower Improvements in order to best adapt the Ivy Tower Building as a collaborative multi- tenant facility to revitalize the Renaissance District. Section 2. Union Station Commitments. The Union Station agrees with the Commission as follows: (a.) Phase II Commitments. (i) Take all reasonable steps to close on the purchase of the Ivy Tower Building to facilitate the USTC, as well as to provide an opportunity for other businesses to expand and relocate within the Ivy Tower Building, including but not limited to, providing the Commission with a Business Plan which shows the cooperative reuse of multiple businesses within the Ivy Tower Building, as well as providing reasonable space within the Ivy Tower Building for use by the Commission and other public agencies. (ii) Make no less than $1,000,000 in improvements each year in the Renaissance District for a ten (10) year period, and provide the Commission on an annual basis with proof of compliance with this Commitment. (iii) To secure a return to the Commission for its Commitment, in Section I (a)(ii), Kevin M. Smith shall guarantee Union Station will make no less than Three Million Five Hundred Thousand and 00/100 ($3,500,000.00) Dollars in improvements in the Renaissance District over a five (5) year period. In the event Union Station fails to make such improvements, the Commission without any prejudice to enforce the Agreement against Union Station, may only enforce this Agreement against Kevin M. Smith for any deficiency in the required amount of improvements over the five (5) year period. (iv) Provide the Commission with an annual report concerning the progress of Union Station's Phase II Commitments. To the extent possible, this report shall be at a regularly scheduled Commission meeting. Section 3. Notices. Any notices, requests, or other communications required or permitted to be given hereunder shall be in writing and shall be either (i) delivered by hand, (ii) mailed by United States registered mail, return receipt requested, postage prepaid, (iii) sent by a 2 reputable, national overnight delivery services (ie: Federal Express), or (iv) sent by facsimile (with the original being sent by one of the other permitted means or by regular United States mail) and addressed to each party at the applicable address set forth herein. Any such notice, request, or other communication shall be considered given or delivered, as the case may be, on the date of hand delivery (if delivered by hand), on the third (3`d) day following deposit in the United States mail (if sent by United States registered mail), on the next business day following deposit with an overnight delivery service with instructions to deliver on the next day or on the next business day (if sent by overnight delivery service), or on the day sent by facsimile (if sent by facsimile, provided the original is sent by one of the other permitted means as provided in this paragraph or by regular United States mail). Union Station: Union Station Properties, LLC Attn: Kevin M. Smith 6561 Lonewolf Drive, Suite 100 South Bend, Indiana 46628 Commission: South Bend Redevelopment Commission Attn: Don Inks 12th Floor, County -City Building South Bend, IN 46601 Section 4. Miscellaneous. The following general terms are made a part of this Agreement: (a.) The term of this Agreement shall be for a period of one (1) year ( "Initial Term "), and it shall automatically renew for an additional period of one (1) year ( "Renewal Term ") unless either Party provides written notice of its intention to terminate the Agreement at least one hundred twenty (120) days prior to the expiration of the Initial Term or any Renewal Term. 3 (b.) This Agreement shall bind, and inure to the benefit of, the Parties and their heirs, personal and legal representatives, and successors and assigns. (b) This Agreement shall be interpreted by the laws of the State of Indiana and any venue for any action related to this Agreement shall be in the St. Joseph County, Indiana Courts. (c.) In the event of any Parties' failure to perform or observe any of the covenants, terms or conditions in this Agreement, the defaulting Party shall pay the other Parties' attorney fees, costs and expenses, including expenses of preparing any notice of delinquency request for performance, whether or not any legal action is instituted, including by reason of enforcing the non - defaulting Parties' rights hereunder. (d.) Any Parties' failure to enforce any of its rights or remedies upon the other Parties' breach of any of the covenants, terms or conditions of this Agreement shall not be deemed a waiver of those rights or remedies, nor shall its failure bar or abridge any of its rights or remedies upon any subsequent default. (e.) If any covenant, term or condition of this Agreement is held invalid or unenforceable by a court, the remaining covenants, terms or conditions shall not be affected by such an occurrence. Each covenant, term and condition of this Agreement shall be given effect and enforced against the breaching Party to the fullest extent permitted by law. (f.) This Agreement constitutes the entire Agreement between the Parties and may not be modified except in writing, signed by both Parties. Any prior understanding or representation of any kind preceding the date of this Agreement shall not be binding on either Party except to the extent incorporated in this Agreement. (g.) The undersigned persons executing and delivering this Agreement on behalf of each Party represent and certify they are duly authorized with authority to execute this Agreement; they have the full legal right, power and authority to enter into this Agreement and to grant the rights and perform the obligations contained herein; to the extent any third party consent or approval is required to grant such rights or perform such obligations hereunder those third party consents or approvals will be obtained, but each Party may rely on this Agreement as a valid and binding obligation, enforceable in accordance with its terms. (h.) This Agreement may be executed in counterparts, each of which when taken together shall constitute one and the same instrument. [SIGNATURES CONTAINED ON FOLLOWING PAGE] 4 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by the duly authorized officers effective as of the date set forth above. SOUTH BEND REDEVELOPMENT COMMISSION Its President Attest: GlobalaccVNOU_PhaseI I_3 5 UNION STATION PROPERTIES, LP By: Kevin M. Smith Its Managing Partner Kevin M. Smith, Individually With regard to Section 3(a)(iii) EXHIBIT 1 EXHIBIT 2 ENVIRONMENTAL AGREEMENT REGARDING IVY TOWER BUILDING THIS ENVIRONMENTAL AGREEMENT REGARDING IVY TOWER BUILDING (the "Agreement ") is made and entered into by and between South Bend Redevelopment Commission (the "Commission ") and UNION STATION PROPERTIES, LP, a limited partnership, existing under the laws of the State of Indiana ( "Union Station ") (collectively "Parties "). WHEREAS, Union Station is a party to a certain Contract for Purchase and Sale (the "Purchase Agreement ") for the purchase by Union Station of certain property located at 600 United Drive and 635 South Lafayette Boulevard, in South Bend, Indiana, consisting of three (3) land parcels, two (2) of which have been developed with larger industrial facilities, and the third parcel encompassing a thin tract of land located between the existing buildings and the adjacent Penn Central Railroad property (collectively "Ivy Tower Building ", "Facility ", or "Property "); and WHEREAS, Union Station intends to adaptably reuse the Ivy Tower Building as part of the Union Station Technology Center; and WHEREAS, after the Purchase Agreement was executed, the Commission produced an environmental site assessment for the Property indicating certain contamination is possible at and/or under the Property in certain instances in excess of the Indiana Department of Environmental Management's ( "IDEM ") industrial clean -up criteria; and WHEREAS, Union Station will be taking steps to qualify as a Bona Fide Prospective Purchaser (`BFPP ") under CERCLA and analogous Indiana laws and intends to apply for a "comfort letter" from the Indiana Finance Authority's Brownfields Program (the " Brownfields Program ") that details Union Station's liability protection for pre- existing contamination at the Property and the "continuing obligations" Union Station must satisfy to maintain its BFPP liability protections under CERCLA and analogous Indiana Laws (the "Comfort Letter "); and NOW, THEREFORE, for and in good consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Existing Environmental Conditions. Union Station acknowledges that there are certain environmental defects on, at, or under the Property, which is in excess of the Indiana Department of Environmental Management's ( "IDEM ") clean -up criteria or screening levels ( "Existing Environmental Conditions "), as described in the Phase II Environmental Site Assessment dated March 23, 2012, Lead Based Paint Survey dated March 21, 2012, and Asbestos Inspection Report dated March 21, 2012, all prepared by Wightman Petrie, Inc., (collectively "WP Reports "), copies of which, together with all attachments and enclosures referenced in the WP Reports are found on a disk which is attached hereto. A copy of the disk containing the WP Reports has been provided to and reviewed by Union Station. The Parties agree the Commission will take reasonable steps to remediate the Existing Environmental Conditions including, but not limited to, Two Million Six Hundred Sixty Thousand Dollars ($2,660,000) which sum includes the costs of the Phase I and Phase II studies which have been completed ( "Existing Environmental Conditions Remediation Cost "). 2. Environmental Indemnification. The Commission agrees to release, indemnify and hold harmless Union Station against and in respect of any and all damages, claims, losses, liabilities and expenses, including without limitation legal fees and environmental consulting or sampling fees or expenses (the "Environmental Costs ") which may be imposed upon, incurred by or asserted against Union Station pursuant to the requirements of any governmental authority, including but not limited to the IDEM and the United States Environmental Protection Agency, or any unrelated third party, arising out of, in connection with or relating to the Existing Environmental Conditions described in paragraph 1 above, or any other environmental condition, known or unknown, existing at the Property on or before the date of Closing as defined in the Purchase Agreement, including without limitation, the Environmental Costs which may be imposed upon, incurred by or asserted against Union Station as a result of the Existing Environmental Conditions. As agreed to in paragraph 1 of this Agreement, the Commission will advance the Existing Environmental Conditions Remediation Cost. The Parties shall work together and take reasonable steps not to disrupt the businesses of the existing Tenants in the Ivy Tower Building during any environmental remediation. The Parties further understand the lead paint mitigation will necessarily occur over time, and any Existing Environmental Conditions Remediation Cost shall be paid as incurred. The Commission shall have the right to review and approve any and all activities or plans that may result in such Environmental Costs in order to minimize such Environmental Costs, provided that if the Commission objects to any such activities, plans or Costs, the Commission shall propose an alternative that is consistent with: a) applicable federal and Indiana laws, including without limitation, implementing regulations and guidance; and b) Union Station's redevelopment and use of the Property. The Commission's review of activities and plans that may result in Environmental Costs shall not exceed fifteen (15) business days and approval shall not be unreasonably withheld. 3. Environmental Indemnification to Run with the Property in Perpetuity. The indemnification in Paragraph 2, above, shall run with the Property in perpetuity and shall inure to the benefit of Union Station and all future owners of the Property or any interest therein and their respective successors, assigns, parents, affiliates, mortgagees, or lessees ( "Indemnitees "), except to the extent that any such Indemnitee causes or contributes to any environmental condition at or from the Property or exacerbates any Existing Environmental Condition, unless exacerbation of Existing Environmental Conditions results from the use of the Property by Union Station. 4. Waiver of Commission Defenses Based on Union Station Knowledge of Environmental Defects at the Propea. The Commission expressly waives any legal defenses, either in law or equity, based on Union Station's actual or constructive knowledge of the existence or potential existence of environmental defects on, at, or under the Property. 5. Commission Responsibility for the Incremental Cost of Handling Unsuitable Materials at the Property_ The Commission agrees to reimburse Union Station for the reasonable costs related to any construction activity by the Commission or Union Station in order to adaptably reuse the Property which are necessary to comply with applicable Environmental laws and regulations (the "Incremental Costs "), but only to the extent such Incremental Costs would not be incurred by Union Station for preconstruction or construction activities at another property which has not been used for industrial purposes or has no environmental defects. The Commission shall have the right to review and approve any and all activities or plans that may result in such Incremental Costs in order to minimize such Incremental Costs, provided that if the Commission objects to any such activities, plans or Incremental Costs, the Commission shall propose an alternative that is consistent with: a) all applicable federal and Indiana laws, including without limitation, implementing regulations and guidance; and b) Union Station's redevelopment and use of the Property. The Commission's review of activities and plans that may result in Incremental Costs shall not exceed fifteen (15) business days and approval shall not be unreasonably withheld. "Unsuitable materials" means any materials that would not be reasonably expected to be found during an excavation for preconstruction or construction activities at a Property that has not been used for industrial purposes or has no environmental defects, including without limitation, contaminated soil or groundwater. 6. Commission Responsibility for Additional Costs of Obtaining Comfort Letter. The Commission shall reimburse Union Station for any additional costs, including without limitation, environmental testing or other measures, deemed necessary by IDEM or the Indiana Finance Authority Brownfields Program, either on the Property or off -site, as a condition for granting the Comfort Letter to Union Station or as a necessary condition for Union Station to maintain liability protections provided in the Comfort Letter_ 7. Assignment of Agreement to Affiliate. Union Station has notified Commission it may assign this Agreement to an affiliate entity. The Commission, by executing this Agreement, hereby consents to the Assignment of this Agreement from Union Station to an affiliated entity. 8. Multiple Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be considered an original with counterparts signed by one party when combined with counterparts signed by other parties to this Agreement constituting an original contract. 9. Paragraph Headings. This Agreement shall be construed without reference to paragraph headings which are inserted only for convenience of reference. 10. Controlling Effect of This Agreement. To the extent that any provision in this Agreement conflicts with any provision of the Purchase Agreement, this Agreement shall control. IN WITNESS WHEREOF, the undersigned executed and delivered this Environmental Agreement Regarding Real Estate on the date set forth below the name of each. UNION STATION By: Its: Dated: "COMMISSION" CITY OF SOUTH BEND, by its Redevelopment Commission By:_ Its: Dated: ATTEST: By: Its: Dated: