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HomeMy WebLinkAbout11-26-18 Community Investment PEACE 1863 OFFICE OF THE CITY CLERK KAREEMAH FOWLER, CITY CLERK COMMUNITY INVESTMENT NOVEMBER 26, 2018 4:00 P.M. Committee Members Present: Gavin Ferlic, Oliver Davis, Sharon L. McBride(late) Committee Members Absent: Regina Williams-Preston Other Council Present: Tim Scott,Jo M. Broden, John Voorde, Karen White Other Council Absent: Jake Teshka Others Present: Bianca Tirado, Graham Sparks, Bob Palmer, Gabriel Murei Presenters: James Mueller, Phil Faccenda, Deborah Futa, Pam Meyer Agenda: Bill No. 60-18- Bond Financing for the Community Center Project Bill No. 18-70- Renewing and Extending the Term of the South Bend Urban Enterprise Zone Bill No. 18-71- MOU with St. Joseph County Public Library and Community Foundation regarding Community Education Center Project Committee Chair Gavin Ferlic called to order the Community Investment Committee meeting at 4:00 p.m. He introduced members of the Committee and announced the lack of a quorum, rendering the Committee incapable of taking official action on legislation. He then gave the floor to the presenters. Bill No. 60-18- Bond Financing for the Community Center Project Bill No. 18-71- MOU with St. Joseph County Public Library and Community Foundation regarding Community Education Center Project James Mueller, Executive Director for Community Investment with offices located on the 14th floor of the County-City Building, stated, Good afternoon Council Members. Before we begin with the presentation, we have heard there have been concerns about process and we want to clear that up, first (1St), before we move on to the presentation in an effort to be efficient with time if there if there is a desire to continue this. We filed the bond ordinance for first(Pt) reading on the first (1St) meeting of the month and set it for second (2D1) and third (31-`1) reading today. We filed the resolution related to the Memorandum of Understanding by the special Tuesday deadline for the holiday. By 12:00 p.m. noon I got the cover letter in. The exhibit of the MOU itself did not get in until Wednesday, the following day, and it is the same MOU that the Council has had since the INTEGRITYI SERVICE1 ACCESSIBILITY JENNIFER M.COFFMAN BIANCA L.'DRAM) JOSEPH it MOLNAR CHIEF DEPUTY/DIRECTOR OF OPERATIONS DEPUTY/DIRECTOR OF POLICY ORDINANCE VIOLATION CLERK EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 1227 W.Jefferson Blvd.I South Bend,Indiana 46601 I p 574.235.9221 I f 574.235.9173 I www.southbendin.gov •CITY OF SOUTH BEND I OFFICE OF THE CLERK first (1St) week of November that we flagged for the Redevelopment Commission. I believe that your Council representative on the Redevelopment Commission also flagged for Council Members that existed so, we didn't think this was a fatal flaw since the MOU had been in your hands all month. Nothing in the MOU is too complicated or different from all the conversations we have had over the past several weeks. Phil Faccenda, Barnes & Thornburg with offices located at 100 N. Michigan Street, stated, The reason it is important to have a vote on the MOU, in particular, is that the Library is issuing $5 million of bonds to finance the Community Education Center, if you recall our previous conversations. It's hoped that they would then follow up with $15 million of bonds in 2019. They need to actually issue those bonds this year in order to preserve the levy structure of their two (2) part bond financing. That is tied to the calendar which is a bond sale that would be coming up next week. In order to sell those bonds, they need to have the commitment of the Community Foundation and the City to fund the Community Education Center with dollars other than their bond dollars. So if you were to continue this, they would not be able to move forward with their bond sale. I did not realize there was a process concern until about twenty (20) minutes ago and I'm sorry that there has been. But, as James said, the document has been completed since late October and was approved by the Redevelopment Commission. The Library Board approved it today, as well, at 12:00 p.m. noon and the Community Foundation approved it last week. If there are any questions about that document, at all, I'd be happy to answer them. I think the prior two (2) presentations that have been made to the Council on the project have covered the most important points. Committeemember Oliver Davis asked, Which bill are we on? Committee Chair Ferlic replied, We are on both 60-18 and 18-71. Councilmember Karen White asked,Could you maybe just highlight some of the key points of the MOU? Dr. Mueller replied, Yes and it is in the presentation. We are excited to bring this to you (referencing a presentation which is available in the City Clerk's Office). We've had a lot of conversations about programming and the space itself as well as the possibilities of partnership with the Library and the Community Foundation. Tonight we are ready to get into the financial details and the structure of the bond financing as well as the provisions within the Memorandum of Understanding. So,we will do a quick project overview of what we talked about previously, go over the key commitments outlined in the MOU, look at the financial position of where these dollars are proposed to come from and look at some of the community impacts. The Library will then talk more about what they anticipate for programming. He continued, So we are looking at a $36 million to $38 million overhaul of the Main Library Branch downtown which will include a renovation of the existing building and the construction of a new building on the north east corner of that block, of which would be three (3) stories, would connect to the existing building and have a courtyard in the middle. This is in collaboration with the Public Library and the Community Foundation as well as the Redevelopment Commission of the Common Council and the Civil City of South Bend. The City's participation that we will get to in the commitments is on this new component which is called the Community Education Center. It will be about 38,000 square feet which will include an auditorium, meeting, office and EXCELLENCE ACCOUNTABILITY INNOVATION i INCLUSION EMPOWERMENT 455 County-City Building 227W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f574.235.9173 111)574.235.5567 www.southbendin.gov 2 •CITY OF SOUTH BEND I OFFICE OF THE CLERK programming space. That component of the project will cost, roughly, $18 million to $19 million. In the Memorandum of Understanding, the City would obligate $4 million of net proceeds from the River West TIF Fund for that component of the project. It is also looking for approval from all the bodies by December 2018.The bonds wouldn't be issued for roughly three(3)years.We expect to do it sometime in 2021 but the MOU states that they must be issued by quarter one(1) of 2022. So in roughly three (3) years from now we would be looking to issue the bonds. From the Public Library's view, they are obligating $20 million of bond proceeds. So, as Phil had just mentioned, $5 million now and another $15 million early next year. Then they would also look at $2 million of furnishings for the Main Library from other funds. There is an agreement that there will be a consultation on the design and plans for the new construction and renovation, and there is an explicit commitment to maintaining an entrance on Main Street. One (1) of the earlier proposals for the renovation had the door to our new investment in Smart Streets going away and so that is explicitly captured in this MOU. He went on,The other piece of the commitments is they have consented to developing the parking lot just south of the Library. There are certain criteria on that and those criteria include that parking is satisfied. The same number of parking must be met within that block as long as it doesn't contradict the mission of the Library or have adverse effects on the Library. Finally, the Community Foundation's obligations are $10 million for the Community Education Center and then they would also cover up to $4 million of financing for the City's contribution until the City issues the bonds in about three (3) years. This (referencing a slide in the presentation)just shows historic previous terms.As you can see,this was given in a presentation in September and it shows that the debt issuance by this Council is well in line with previous Councils. This is not even adjusted for inflation. If you did real dollars, it would be adjusted even more favorably. Here is a list of the River West obligations that are ending by 2025. These are most of the obligations in the River West TIF. The two (2) notable ones that are not on here that end later would be the Parks TIF Bond that was approved last year and that ends in 2032 and then the Smart Streets Bond which was used to extend the life of the TIF to 2037. Committeemember Sharon L. McBride arrived at the meeting at 4:10 p.m. Committee Chair Ferlic recognized a quorum. Dr. Mueller continued, So all of these other obligations will end by 2025 and many of them end in the next two (2) to three (3) years. As you can see, we can go through the specific obligations if you would like but if you see on the next slide, this opens up a lot of annual debt service capacity to be able to support what is proposed here from the Library proposal. So these(referencing a slide in the presentation) are numbers from Umbaugh, our financial advisor on this project. If this is assuming a fifteen (15) year bond, when we get to issuing the bonds in three (3) years, it may be shorter term. But this is a reasonable assumption of a fifteen (15) year bond with the interest rate a point above what it is today as we don't know what the interest rate will be exactly in three (3) years. These are all reasonable assumptions. If you shorten the time or interest rates change, we will still be well within the debt service capacity. This will also not preclude other priorities that we may need over the next three(3)years for other debt. He went on,With regards to community impacts,the South Bend Regional Chamber of Commerce has done the input into their model and found the construction phase would lead to sixty-five(65) direct jobs and support one hundred and fifty(150) indirect and induced jobs. The total economic output from the construction phase will be $64 million. The operations phase, which is what the EXCELLENCE j ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 227W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f574.235.9173 TTD574.235.5567,www.southbendin.gov 3 CITY OF SOUTH BEND OFFICE OF THE CLERK Public Library is projecting, there will be about five(5) to ten(10)jobs, increased foot traffic and in the south east portion of downtown where we have seen a lot of progress in adjacent quadrants. This has lagged behind in some ways so this will be an important anchor in that piece and will draw more people there. Finally, there will be a ton of new impacts from additional programming capacity with the new space. Councilmember John Voorde asked, How do you define induced economic impact? Dr. Mueller replied,There are three(3)types of economic output models. There is one(1)that the US Department of Commerce uses and they put out multipliers by region for different industries. This is construction, so, for each million dollars spent, often times they think of a seven (7) multiplier for jobs on direct impacts. And then somewhere between fifteen (15) and twenty (20) multiplier effect on indirect and induced. So that's on jobs and then there is a similar correlation on output. Those multipliers are determined using a more complicated system and I don't know the ins and outs of those economic models. Any time we see economic input numbers, they are either using those US Government multipliers, the in-plan model and then there is another model. There are basically three(3)main approaches but they aren't too far off from each other. Committeemember Davis asked, Regarding the construction, do you know already who is going to be doing the construction?Will that be local jobs and local suppliers and all those kind of issues of non-union kind of stuff? Dr. Mueller replied, This would be a St. Joseph County Library led project. Mr. Faccenda stated, It will be publicly bid. The project will be controlled by the Public Library and bid out as any other publicly bid project. It will follow the Indiana Public Bidding Statutes. Councilmember Tim Scott stated,The City has a fair bidder ordinance and so does the County, so, it also has to fall under the fair bidder ordinance. Committeemember Davis followed up, Does the Library have to follow it? Councilmember Scott replied, Yes, they are part of the County. Committeemember Davis then asked, And we have the same thing? Councilmember Scott replied, The County wrote theirs before us. Mr. Faccenda stated, If you follow the schedule of issuing bonds in 2021 or 2022, the project will have already been bid out and money would have already been spent. Committeemember Davis interjected, But we wouldn't have had in terms of the whole project and so that is why I wanted to make sure. Mr. Faccenda replied, The prevailing statutes will control the bidding. EXCELLENCE ! ACCOUNTABILITY I INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 227W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 TTD574.235.5567 www.southbendin.gov 4 •CITY OF SOUTH BEND OFFICE OF THE CLERK Deborah Futa, Director of the St. Joseph County Public Library with offices located at 304 South Main Street, stated, I would be happy to talk more about the project but would also be happy to answer questions because I know you've heard this before. Committeemember Davis interjected, Thank you for your email you sent. I appreciated that. Ms. Futa replied, You're welcome. Committee Chair Ferlic opened the floor to questions from Committee and Council Members. Councilmember White stated, The last time you presented to Council, there was some discussion about the size of the auditorium and whether or not you could look at that particular prospectus. Are you still looking at that? Ms. Futa replied, We are still looking at about two hundred and fifty(250) which is sizably more than what we have now. Part of the reason is because that auditorium is going to come out on the property far enough that I don't know if we could get a whole lot more out of that space. It would encroach on other space. Committeemember Davis asked, What about the plaza courtyard area? What will be the kind of uses that would be done out there? Ms.Futa replied,We would love to be able to do outside programing.This year for summer reading we had eight hundred(800)people outside in our parking lot for the summer reading kick off. Last year we did a program for the eclipse and we had five hundred (500)people out there waiting and doing all kinds of things with us. My children's staff have long wanted to have space for children's programming outside but we don't feel safe doing it where we are because it is all parking lot. It is really hard to control traffic and I don't think parents feel it is safe. We could also do events, so, there is a large public meeting room that backs up to that courtyard. We would be able to do conferences. We already host the Unity Gardens: Guide to Growing Conference. Every year we do the Genealogy Conference and those conferences could spill out into that courtyard. Committeemember Davis interrupted, So from the auditorium, you could use the auditorium and have a back door to go into the courtyard? Ms. Futa replied, Yes, it will have access from all four (4) sides and we want to make it as accessible as possible. So even if you work downtown, you could come eat your lunch in the downtown as well. Councilmember Jo M.Broden asked, Is there an anticipated completion date if all goes as planned? Ms. Futa replied, They are saying about one (1) year for construction and about eighteen (18) months for the Community Learning Center. So,that puts us out to about 2021 if all goes according to plan. Councilmember Broden followed up, And in terms of readiness to fundraise on this, tomorrow is Giving Tuesday. EXCELLENCE ACCOUNTABILITY INNOVATION I INCLUSION EMPOWERMENT 455 County-City Building 227W Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f574.235.9173 TTD574.235.5567 www.southbendin.gov 5 eCITY OF SOUTH BEND I OFFICE OF THE CLERK Ms. Futa replied, Yes and we are participating. We have all of our materials out there. We have a little video that went with our email requests and it looks good. I like it. Councilmember White stated, I was at the LaSalle Branch on Tuesday and I was just amazed at the number of kids. It is fabulous and I can't describe it. They were using the terminals and I was made aware that, and you had made mentioned, a number of the libraries are actually providing food. Ms. Futa replied, We have received thank you letters from those kids. We were made aware that a lot of those kids don't eat until they get home a lot of those kids stay until closing. Councilmember Broden asked, What does this action bind on future Councils? What is the precedence of that and is there any need to go back at this prior to 2022. Mr. Faccenda replied, If you take this action tonight, there are no additional public steps that need to occur. So there is a contract saying the City will do x,y and z, and that is the MOU. If you approve the bond issue, there are no additional steps that need to be done to issue the bonds. If somebody doesn't want to sign bond documents in three(3)years it would be hard for us to enforce that but all the actions are in place and there is an agreement that says you are going to do it. Committeemember Davis interjected, What would be the reverse? Mr. Faccenda replied, I hope I understand your question. You're asking if they would be required, would the City be required to move ahead with the issuance of the bonds? Committeemember Davis replied, That is correct. Another Council cannot overturn this action. Given the fact that there is going to be a three (3) year lag, could somebody else come along and change that? Mr. Faccenda replied, If the question becomes amending a bond ordinance, yes,they could. Could a future Council amend a bond ordinance? They could. You still have a contract in the MOU and the MOU says you will provide x number of dollars to the project. So whether you decide to fund it with these exact TIF funds or if a future Council decides to do it some other way, they still have to come up with the $4 million. Committeemember Davis stated, Cool. Committee Chair Ferlic then opened the floor to members of the public wishing to speak in favor of or in opposition to the legislation. There were none. He then turned the floor back to the Committee for further comment or main motion. Committeemember Davis made a motion to accept the Substitute version of Bill No. 60-18. Committeemember Sharon L. McBride seconded this motion which carried by a voice vote of three(3) ayes. Committeemember Davis then made a motion to send Substitute Bill No. 60-18 to the full Council with a favorable recommendation. Committeemember Sharon L. McBride seconded this motion which carried by a voice vote of three (3) ayes. EXCELLENCE ACCOUNTABILITY INNOVATION j INCLUSION EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 110574.235.5567 www.southbendin.gov 6 CITY OF SOUTH BEND j OFFICE OF THE CLERK Committeemember Davis then made a motion to send Bill No. 18-71 to the full Council with a favorable recommendation. Committeemember Sharon L. McBride seconded this motion which carried by a voice vote of three (3) ayes. Councilmember Scott stated, I will be entertaining a motion to suspend the rules and move the Resolutions portion of the agenda to the top tonight. Bill No. 18-70-Renewing and Extending the Term of the South Bend Urban Enterprise Zone Pam Meyer, Director of Neighborhood Development for the Department of Community Investment with offices located on the l4t'floor of the County-City Building, stated, I'm also here wearing the hat of the Director of the Urban Enterprise Association. You have a resolution before you which is based on new legislation that was effective earlier this year. It allows the fiscal body of a municipality in which an enterprise is located to extend and renew that enterprise zone for one (1) final five(5) year period of time. The South Bend Enterprise Association, the zones governing the body, supports this resolution and asks for your approval. The current enterprise zone is in its fifteenth(15th) year and is set to expire on December 31, 2018. This would allow it to continue to December 31, 2023. Committeemember Davis interrupted, It's set to expire when? Ms. Meyer replied, It is set to expire at the end of this year but if you extend it five(5)years it will expire December 31, 2023. Committeemember Davis followed up, And that would be the last of that? Ms. Meyer replied, Yes. Committeemember Davis then asked, Then what happens? Ms. Meyer replied, Then the program ends. The Enterprise Zone Program, for those that may not be familiar, was a program that started in the 1980s. South Bend was one (1) of the first (1St) communities in the State of Indiana to do it. We had one(1)Enterprise Zone for a twenty(20)year period of time. That program ended. We then applied for a second (2nd) zone because we were allowed to do so and the community wanted to do that. We shifted the geography a bit at that time because of the AJ Wright facility that was coming into play. At that point we received the designation for ten (10) years. We were then allowed to come back for a five (5) year period and then this will be the final five(5)year period. An Enterprise Zone is never longer than twenty(20) years. Committeemember Davis interjected, So at the end of that five(5), could we apply for another one (1)possibly? Ms. Meyer replied, Possibly but I believe the legislation negates Enterprise Zones after that period of time. EXCELLENCE ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 227W Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 TTD 574.235.5567 www.southbendin.gov 7 CITY OF SOUTH BEND OFFICE OF THE CLERK Committeemember Davis followed up, Oh, for real? Ms. Meyer replied, Yes. There are probably about nineteen(19) of them left in the State and there used to be close to thirty (30). Many of the benefits have changed over time given that most of their benefits were related to Indiana's tax structure and some of that has changed. So the benefits are smaller and less in number that businesses can apply for and they have to qualify based on certain things. So the State of Indiana, this year, with this legislation also eliminated their responsibility to administer the program and provided a gift to local communities and told the local communities that they can administer that until the end of the five(5) year period. Committeemember Davis asked, What was that gift? Ms. Meyer replied, Well it's basically that businesses would register on an annual basis with the State of Indiana, advising them which benefits they took advantage of. We would then get that information locally and because when you take advantage of a tax benefit through this program, you are required to pay a fee to the local association. In this case,with the change in administrative responsibility, that registration would come directly to the local association and the State does not participate in it at all. Councilmember Broden stated,Thank you,Pam. I have a couple of questions. I don't have enough background on this so I'm going to just be really quick in asking these. It looks like there was a remediation plan put into place at some point relative to the property and we are in the midst of that right now. Ms. Meyer stated, Yes, the Enterprise Association owns the Sample Street Business Complex on Sample Street. When we took that over as a donation, we took responsibility for it and there was a large remediation project. We never, at that point in time, entered into the volunteer remediation program that the State offers.We did that,probably now,five(5)years ago and we are just towards the end of that. We anticipate we will be getting the end product of that which is a Covenant Not to Sue from the Governor's Office sometime in the first (1st)half of 2019. Councilmember Broden followed up, And then that status, would that set it up favorably in terms of selling it? Ms. Meyer replied,Yes, it should. Councilmember Broden then asked, Was there a responsibility or burden, if you would, on Torrington Inc.? Ms.Meyer replied, It doesn't exist any longer.They did a groundwater treatment remediation plan. Councilmember Broden followed up, Then relative to the vacancies that currently exist in the Urban Enterprise Association,if we are to approve this tonight,what are the plans to get that whole in terms of oversight? Ms. Meyer replied, The challenge is the resident positions by State law. One(1)resident has to be Republican and one(1)has to be Democrat. There have been residents over time but anybody who has some history in understanding what the Council has gone through to try and find someone who EXCELLENCE ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 227W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 I I D574.235.5567 vvww.southbendin.gov 8 CITY OF SOUTH BEND OFFICE OF THE CLERK would be interested in serving has been a little bit of a challenge. We welcome that because we do have only six (6) or seven (7) members, so, having a quorum sometimes is a challenge. That has been a process that the Council has asked for applications for on an annual basis. Councilmember Broden then asked, And then the Sample Street Complex, Bradley Company, I am assuming,has the leasing responsibility? Ms. Meyer replied, The Enterprise Association has a contract with Bradley Company. They manage the property for us. Councilmember Broden followed up, The documentation here in terms of the business complex and its tenant status, was that created by Bradley Company? Ms. Meyer replied, Yes. Councilmember Broden stated, I guess I don't really have a sense of the effectiveness and how full or not full it is based on the overall space, so, if there is some greater context outside of this I would appreciate it. I tallied up seventy five (75) but I know it's a huge building. My father used to work in it but I don't know if this is relative to what this represents. Councilmember White stated, We do get the report that tells us the capacity. If you could make a copy of that and get that to Councilmember Broden, that would be great. Ms. Meyer confirmed she would forward that information to Councilmember Broden. Councilmember Broden asked, The $300,000 in contributions to the City for Vacant and Abandoned and then the West Side Main Streets Planning process, can you give me a sense of how this is a vehicle for that and what was that process? And then my last question is what does BEP stand for? Ms. Meyer replied, BEP stands for the Blight Elimination Program. It was a grant that the City applied for to help demolish certain vacant properties. They needed program partners,non-profits, who would hold the property as the City demolished them. BEP was one (1) of the program partners for that. The UEA is a non-profit that has helped the City, over its thirty five (35) years of existence, doing a variety of things. So they are the fiscal agent for things like the South Bend Home Repair Program, the Lincolnway West, Western, Mishawaka and Miami Façade Matching Grant Programs. So I think those are some of the numbers you are talking about there. So we serve as the fiscal agent and we sign grant agreements and we pay out the grants as approved by City staff. Councilmember Broden stated, Thank you, I appreciate that background. Committee Chair Ferlic then opened the floor to members of the public wishing to speak in favor of or in opposition to the legislation. There were none. He then turned the floor back to the Committee for further comment or main motion. EXCELLENCE ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT 455 County-City Building!227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f574.235.9173 TTD 574.235.5567 www.southbendin.gov 9 410 CITY OF SOUTH BEND OFFICE OF THE CLERK Committeemember Davis made a motion to send Bill No. 18-70 to the full Council with a favorable recommendation. Committeemember Sharon L. McBride seconded this motion which carried by a voice vote of three(3) ayes. With no further business, Committee Chair Ferlic adjourned the Community Investment Committee meeting at 4:33 p.m. Respectfully Submitted, / Gavin Ferlic, Committee Chair EXCELLENCE ACCOUNTABILITY ! INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 TTD574.235.5567 www.southbendin.gov 10