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HomeMy WebLinkAbout19-34 Economic Development Revenue Bonds 2018 (Cedar Glen) �4so13T11.a� I Filed in Clerk's Office W, z MAY 06 2019 PEACE x x KAREEMAH FOVWLER 1865 CITY CLERK,SOUTH REND,IN CITY OF SOUTH BEND COMVUNITY INVESTMENT May 6, 2019 Mr.Tim Scott, President South Bend Common Council 4th Floor County City Building South Bend, IN 46601 RE: Economic Development Revenue Bonds 2018 (Cedar Glen) Dear President Scott: Attached for the Council's consideration is a resolution supporting the issuance of bonds to fund improvements at Cedar Glen Apartments located at 425 25th Street in South Bend, to be developed by Merchants Affordable Housing Corp. and owned by MAH Cedar Glen LLC. The issuance of these bonds will fund the rehabilitation of 179 units as well as other exterior improvements to the building and property. These improvements will provide much needed upgrades to the 179 unit apartment community for low and moderate income persons. Additionally, there has been a commitment of a minimum of 5 units as permanent supportive housing. The Economic Development Commission met on April 16th and approved the Preliminary Resolution and Report and Finding of Facts attached with the Council resolution. In addition to Lory Timmer of Neighborhood Development/DCI, representatives of Merchants Affordable Housing Corporation will be presenting at the May 13, 2019 Council meeting. Thank,y,r your con ideration, amela C. Mey- Director DANIEL" BC CKE.S\IEYER AI.KE\-\.\ALI)RIN,I'. P\\II.I.\\IEYLR TIM CORCORA\ BUSINESS DEVELOPMENT ENGAGEMENT&ECONOMIC:E\IPO\A ERNIE\h NEIGHBORHOOD DEVELOPMENT PLANNING&COMMUNITY RESOURCES EXCELLENCE ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT 1400S County-City Building 227 W.Jefferson Blvd. South Bend.Indiana 46601 p 574.235.9371 www.southbendin.gov Filed in Clerk's Office BILL NO. 19-34 MAY 0 6 2019 RESOLUTION NO. KAREEMAH FOWLER CITY CLERK,SOUTH BEND,IN A RESOLUTION OF THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, APPROVING AND AUTHORIZING CERTAIN ACTIONS AND PROCEEDINGS WITH RESPECT TO CERTAIN PROPOSED ECONOMIC DEVELOPMENT REVENUE BONDS AND RELATED MATTERS WHEREAS, Indiana Code Title 36, Article 7, Chapters 11.9 and 12 (collectively, the "Act") declares that the financing and refinancing of economic development facilities constitutes a public purpose; and WHEREAS, pursuant to the Act, the City South Bend, Indiana (the "City"), is authorized to issue economic development revenue bonds for the purpose of financing, reimbursing or refinancing the costs of acquisition, construction, renovation, installation and equipping of economic development facilities in order to foster diversification of economic development, creation or retention of opportunities for gainful employment and affordable housing in or near the City; and WHEREAS, Merchants Affordable Housing, Inc., and MAH Cedar Glen, LLC, one or more subsidiaries or affiliates thereof, and/or one or more entities in which any of the foregoing entities is a member, whether such entity is currently in existence or is to be created following the date hereof(collectively, the "Company"), in cooperation with the City, desires to finance a project within the City, including all or any portion of the acquisition, design, construction and equipping of a 179-unit affordable multi-family housing facility, together with functionally related and subordinate facilities, located at 425 South 25th Street in the City (the "Project"); and WHEREAS, the Company has advised the South Bend Economic Development Commission (the "Commission") and the City concerning the Project, and has requested that the City issue, pursuant to the Act, one or more series of its taxable or tax-exempt City of South Bend, Indiana, economic development revenue bonds (with such further or different series designation as may be necessary, desirable or appropriate, including such series designation to indicate the year in which the bonds are issued) (the "Bonds") in the approximate aggregate principal amount of Seven Million Three Hundred Thousand Dollars ($7,300,000), for the purpose of providing funds for paying all or part of the costs of the Project by making a portion of the proceeds of such Bonds available to the Company and paying all incidental expenses in connection with and on account of the issuance of the Bonds; and WHEREAS, the Commission has studied the Project and the proposed financing of the Project and its effects on the health and general welfare of the City and its citizens; and , WHEREAS, the completion of the Project will result in the diversification of industry, the creation and retention of jobs, the creation and retention of business opportunities in the City, the creation and retention of affordable housing in the City, and will be of public benefit to the health, safety and general welfare of the City and its citizens; and WHEREAS, pursuant to and in accordance with the Act, the City desires to provide funds necessary to finance all or a portion of the Project by issuing the Bonds; and WHEREAS, the diversification of industry and creation of job opportunities to be achieved by the acquisition, design, construction and equipping of the Project will be of public benefit to the health, safety and general welfare of the City and its citizens; and WHEREAS, it is tentatively found that the acquisition, design, construction and equipping of the Project will not have an adverse competitive effect on any similar facility already constructed or operating near or in the City; and WHEREAS, the Commission approved a report (the "EDC Report") and adopted an inducement resolution (the "EDC Inducement Resolution") which EDC Report and EDC Inducement Resolution have been forwarded by the Commission to this Common Council making findings that the financing of the Project complies with the purposes and provisions of the Act and that such financing will be of benefit to the health and welfare of the City, and that the Project will not have an adverse competitive effect or impact on any similar facility already constructed or operating in the same market area or in or about St. Joseph County, Indiana; and WHEREAS, based upon the EDC Report and the EDC Inducement Resolution, this Common Council hereby finds and determines that the funding preliminarily approved by the Economic Development Commission for all or a portion of the Project will be of benefit to the health and general welfare of the citizens of the City, complies with the provisions of the Act and the amount necessary to finance all or a portion of the costs of the Project, together with incidental expenses incurred in connection therewith, will require the issuance, sale and delivery of one or more series of economic development revenue bonds in an approximate aggregate combined principal amount of Seven Million Three Hundred Thousand Dollars ($7,300,000); and WHEREAS, this Common Council desires to declare its intent to reimburse the costs of the Project pursuant to Treas. Reg. §1.150-2 and Indiana Code §5-1-14-6(c); NOW, THEREFORE, BE IT RESOLVED BY THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, AS FOLLOWS: Section 1. After considering the evidence presented and findings of fact set forth in the EDC Report, this Common Council hereby finds, determines, ratifies and confirms that the financing of the economic development facilities consisting of the Project, the issuance and sale of the Bonds, and the use of the net proceeds thereof by the City and/or the Company to finance all or a portion of the Project will: (i) result in the diversification of industry, the creation or - 2 - retention of business opportunities, the creation or retention of opportunities for gainful employment and the creation of affordable housing within the jurisdiction of the City; (ii) serve a public purpose, and will be of benefit to the health and general welfare of the City; (iii) comply with the purposes and provisions of the Act and it is in the public interest that the City take such lawful action as determined to be necessary or desirable to encourage the diversification of industry, the creation or retention of business opportunities, the creation or retention of opportunities for gainful employment and the creation of affordable housing within the jurisdiction of the City; and (iv) not have a material adverse competitive effect on any similar facilities already constructed or operating in or near the City. The findings of fact set forth in the EDC Report and this paragraph are based upon evidence and testimony presented to the Commission at its meeting on April 16, 2019 that the proceeds of the Bonds will be used for the acquisition, design, construction and equipping of the Project, capitalized interest on the Bonds during construction and costs of issuance for the Bonds. Section 2. This Common Council hereby finds and determines that the issuance and sale of economic development revenue bonds in an approximate principal of$7,300,000 of the City under the Act for the lending of the proceeds of the revenue bonds to the Company for the purpose of financing a portion of the cost of the acquisition, construction and equipping of the Project will serve the public purposes referred to above, in accordance with the Act. Section 3. In order to induce the Company to proceed with the acquisition, construction and equipping of the Project, this Common Council hereby finds and determines that (i) it will take or cause to be taken such actions pursuant to the Act as may be required to implement the aforesaid financing, or as it may deem appropriate in pursuance thereof; provided that all of the foregoing shall be mutually acceptable to the City and the Company; (ii) it will adopt such resolutions and authorize the execution and delivery of such instruments and the taking of such action as may be necessary and advisable for the authorization, issuance and sale of said economic development revenue bonds; and (iii) it will use its best efforts to assist the Company in procuring the issuance of additional economic development revenue bonds, if such additional bonds become necessary for refunding or refinancing the outstanding principal amount of the economic development revenue bonds, for completion of the Project and for additions to the Project, including the costs of issuing additional bonds (provided that the financing of such addition or additions to the Project is found to have a public purpose (as defined in the Act) at the time of the authorization of such additional bonds), and that the aforementioned purposes comply with the provisions of the Act. Section 4. All costs of the Project incurred after the date permitted by applicable federal tax and state laws, including reimbursement or repayment to the Company of moneys expended by the Company for application fees, planning, engineering, a portion of the interest paid during acquisition, construction and equipping of the Project, underwriting expenses, attorney and bond counsel fees, and acquisition, design, construction and equipping of the Project will be permitted to be included as part of the bond issue to finance the Project, and the City will lend the proceeds from the sale of the bonds to the Company for the same purposes. Also, certain indirect expenses, including but not limited to, planning, architectural work and engineering incurred - 3 - prior to this inducement resolution will be permitted to be included as part of the bond issue to finance the Project. This resolution shall constitute "official action" for purposes of compliance pursuant to Treas. Reg. §1.150-2 and IC 5-1-14-6(c) requiring governmental action as authorization for future reimbursement from the proceeds of bonds. Section 5. The City does not, by this or any other approval or funding, guarantee, warrant or even suggest that the Bonds will be a reasonable investment for any person, firm or corporation. Section 6. The City shall not be obligated, directly or indirectly, to see to the application or use of the proceeds from the sale of the Bonds or to see that the contemplated improvements, if any, are constructed. The City is in no way responsible to the holders of any Bonds for any payment obligation created by the Bonds. Section 7. The Bonds shall be limited, special obligations of the City payable solely from the funds provided therefor as described in the indenture authorizing the Bonds, and shall not constitute an indebtedness of the Commission or the City or a loan of the credit thereof within the meaning of any constitutional or statutory provisions. Section 8. This resolution does not constitute a binding obligation of the Commission or the City to issue the Bonds, but instead, is a commitment by the City to proceed with negotiations for the financing described herein with the Company and is subject to the adoption of a bond ordinance by this Common Council in accordance with the provisions of the Act. Section 9. This resolution shall be in full force and effect upon adoption and compliance with IC 36-4-6. Tim Scott, Council President South Bend Common Council - 4 - US.122725183.03 Filed in Clerk's Office AY 06 2019 KAREEMAH FOWLER RESOLUTION EDC #2019-1 CITY CLERK,SOUTH BEND,IN A RESOLUTION OF THE CITY OF SOUTH BEND, INDIANA, ECONOMIC DEVELOPMENT COMMISSION PROVIDING PRELIMINARY APPROVAL OF THE ISSUANCE OF BONDS FOR THE PURPOSE OF FINANCING CERTAIN ECONOMIC DEVELOPMENT FACILITIES FOR MAH CEDAR GLEN,LLC WHEREAS, Indiana Code Title 36, Article 7, Chapters 11.9 and 12 (collectively, the "Act") declares that the financing and refinancing of economic development facilities constitutes a public purpose; and WHEREAS, pursuant to the Act, the City of South Bend, Indiana (the "City"), is authorized to issue revenue bonds for the purpose of financing, reimbursing or refinancing the costs of acquisition, construction, renovation, installation and equipping of economic development facilities in order to foster diversification of economic development, creation or retention of opportunities for gainful employment and affordable housing in or near the City; and WHEREAS, Merchants Affordable Housing Corp. and MAH Cedar Glen, LLC, one or more subsidiaries or affiliates thereof, and/or one or more entities in which any of the foregoing entities is a member, whether such entity is currently in existence or is to be created following the date hereof(collectively, the "Company"), in cooperation with the City, desires to finance a project within the City, including all or any portion of the acquisition, construction, renovation, installation and equipping of a 179-unit apartment community, together with functionally related and subordinate facilities for low and moderate income persons, located 425 25th Street, South Bend, Indiana(the "Project"); and WHEREAS, the Company has advised the South Bend Economic Development Commission (the "Commission") and the City concerning the Project, and has requested that the City issue, pursuant to the Act, one or more series of its taxable or tax-exempt City of South Bend, Indiana, economic development revenue bonds (with such further or different series designation as may be necessary, desirable or appropriate, including such series designation to indicate the year in which the bonds are issued) (the "Bonds") in the approximate aggregate principal amount of Seven Million Three Hundred Thousand Dollars ($7,300,000), for the purpose of providing funds for paying all or part of the costs of the Project by making a portion of the proceeds of such Bonds available to the Company and paying all incidental expenses in connection with and on account of the issuance of the Bonds; and WHEREAS, the Company has further advised that the issuance and sale of said Bonds will not reduce the legal bonding capacity of the City, and the City shall bear no expense in connection with the issuance and sale of said Bonds with all expenses in connection therewith which are incurred by the City to be reimbursed to the City by the Company; and US.122705944.03 WHEREAS, the Company has further advised that the principal of and interest payable on said Bonds shall not be payable from any revenues of the City and shall not obligate the full faith and credit of the City but shall be payable solely from funds of the Company; and WHEREAS, the Company has further advised the Commission that the determination by the City to agree preliminarily, on a non-binding basis, to accept such a request for financing the Project will constitute an inducement to the Company to proceed with the negotiations for the financing of the Project, it being the intent of the Commission and the City to defer any final approval of the Project and the financing thereof until a subsequent meeting held in accordance with Section 25 of the Act following a public hearing in accordance with Section 24 of the Act; and WHEREAS, the Commission has studied the Project and the proposed financing of the Project and its effects on the health and general welfare of the City and its citizens; and WHEREAS, the Company has further advised that the completion of the Project will result in the diversification of industry, the creation and retention of jobs, the creation and retention of business opportunities in the City, the creation and retention of affordable housing in the City, and will be of public benefit to the health, safety and general welfare of the City and its citizens; and WHEREAS, pursuant to and in accordance with the Act, the Company is requesting that the City provide funds necessary to finance all or a portion of the Project by issuing the Bonds, which financing shall be without recourse to the City and its citizens; and WHEREAS, the Company has further advised that the diversification of industry and creation of job opportunities to be achieved by the acquisition, design, construction and equipping of the Project will be of public benefit to the health, safety and general welfare of the City and its citizens;and WHEREAS, the Commission has been asked to find that that the acquisition, design, construction and equipping of the Project will not have an adverse competitive effect on any similar facility already constructed or operating near or in South Bend, Indiana; and WHEREAS, the Commission is considering a form of inducement resolution (the "Common Council Resolution") with respect to the Project to be adopted by the Common Counsel of the City (the "Common Council") and is considering recommending that the Common Council adopt such resolution in substantially such form; NOW,THEREFORE, BE IT RESOLVED BY THE COMMISSION AS FOLLOWS: Section 1. After considering the evidence presented and findings of fact set forth in the Report (as defined herein), the Commission hereby finds, determines, ratifies and confirms that the financing of the economic development facilities consisting of the Project, the issuance and sale of the Bonds, and the use of the net proceeds thereof by the City and/or the Company to -2 - US.122705944.03 finance all or a portion of the Project will: (i)result in the diversification of industry, the creation or retention of business opportunities, the creation or retention of opportunities for gainful employment and the creation of affordable housing within the jurisdiction of the City; (ii) serve a public purpose, and will be of benefit to the health and general welfare of the City; (iii)comply with the purposes and provisions of the Act and it is in the public interest that the City take such lawful action as determined to be necessary or desirable to encourage the diversification of industry, the creation or retention of business opportunities, the creation or retention of opportunities for gainful employment and the creation of affordable housing within the jurisdiction of the City; and (iv) not have a material adverse competitive effect on any similar facilities already constructed or operating in or near the City. The findings of fact set forth in the Report and this paragraph are based upon evidence and testimony presented to the Commission at its meeting on April 16, 2019 that the proceeds of the Bonds will be used for the acquisition, design, construction and equipping of the Project, capitalized interest on the Bonds during construction and costs of issuance for the Bonds. Section 2. The Commission hereby finds and determines that the issuance and sale of economic development revenue bonds in an approximate principal amount of$7,300,000 of the City under the Act for the lending of the proceeds of the revenue bonds to the Company for the purpose of financing a portion of the cost of the acquisition, design, construction and equipping of the Project will serve the public purposes referred to above, in accordance with the Act. Section 3. The Commission hereby approves the report with respect to the Project (the "Report") presented at this meeting, and hereby adopts the findings of fact set forth therein. The Secretary or Vice President of this Commission shall submit such report to the executive director or chairman of the Area Plan Commission serving the City. Section 4. In order to induce the Company to proceed with the acquisition, design, construction and equipping of the Project, the Commission hereby finds and determines that(i) it will take or cause to be taken such actions pursuant to the Act as may be required to implement the aforesaid financing, or as it may deem appropriate in pursuance thereof; provided that all of the foregoing shall be mutually acceptable to the City and the Company; (ii) it will adopt such resolutions and authorize the execution and delivery of such instruments and the taking of such action as may be necessary and advisable for the authorization, issuance and sale of said economic development revenue bonds; and (iii) it will use its best efforts to assist the Company in procuring the issuance of additional economic development revenue bonds, if such additional bonds become necessary for refunding or refinancing the outstanding principal amount of the economic development revenue bonds, for completion of the Project and for additions to the Project, including the costs of issuing additional bonds (provided that the financing of such addition or additions to the Project is found to have a public purpose (as defined in the Act) at the time of the authorization of such additional bonds), and that the aforementioned purposes comply with the provisions of the Act. Section 5. All costs of the Project incurred after the date permitted by applicable federal tax and state laws, including reimbursement or repayment to the Company of moneys expended - 3 - US.122705944.03 by the Company for application fees, planning, engineering, a portion of the interest paid during acquisition, design, construction and equipping of the Project, underwriting expenses, attorney and bond counsel fees, and acquisition, design, construction and equipping of the Project will be permitted to be included as part of the bond issue to finance the Project, and the City will lend the proceeds from the sale of the bonds to the Company for the same purposes. Also, certain indirect expenses, including but not limited to, planning, architectural work and engineering incurred prior to this inducement resolution will be permitted to be included as part of the bond issue to finance the Project. Section 6. All actions taken and approvals given by the Commission with regard to the Company are based upon the evidence submitted and representations made by the Company. No independent examination, appraisal or inspection of the Project was made, requested, or is contemplated by the Commission or the City. Section 7. The Commission does not, by this or any other approval or finding, guarantee, warrant or even suggest that the Bonds, coupons or series thereof will be a reasonable investment for any person, firm or corporation. Section 8. The Commission shall not be obligated, directly or indirectly, to see to the application or use of the proceeds from the sale of the Bonds or to see that the contemplated improvements, if any, are constructed. The Commission is in no way responsible to the holders of any Bonds for any payment obligation created by the Bonds. Section 9. The Bonds shall be special, limited obligations of the City payable solely from the funds provided therefor as described in the indenture authorizing the Bonds, and shall not constitute an indebtedness of the Commission or the City or a loan of the credit thereof within the meaning of any constitutional or statutory provisions. Section 10. The Commission hereby approves the form of the Common Council Resolution and recommends that it be adopted by the Common Council in substantially the same form as a resolution, and the Commission hereby directs that copies of this resolution, and the form of the Common Council Resolution be transmitted to the Clerk of the City for presentation to the Common Council with the recommendation that the Common Council Resolution be adopted as a resolution. Section 11. The Commission hereby authorizes the Secretary of the Commission to cause to be published a notice of public hearing in accordance with Indiana Code 36-7-12-24(a), Indiana Code 5-3-1 and Treas. Reg. §1.147(1) 1 at such time as it is determined to proceed with the financing of a portion of the Project as described herein. Section 12. This resolution shall be in full force and effect upon adoption. -4 - US.122705944.03 Adopted this 1 Lp day of p At:( i ,, 2019. SOUTH BEND ECONOMIC DEVELOP►4 - T C!►u MISSION Tim Scott, President ATTEST: entin Phil ips, Secretary - 5 - US.122705944.03 Filed in Clerk's Office REPORT AND FINDINGS OF FACT OF THE MAY 06 2019 1 SOUTH BEND ECONOMIC DEVELOPMENT COMMI IO r CONCERNING THE PROPOSED FINANCING O KAREEMAH FOWLER ECONOMIC DEVELOPMENT FACILITIES FOR CITY CLERK,SOUTH BEND. IN MAH CEDAR GLEN,LLC The South Bend Economic Development Commission (the "Commission") proposes to recommend to the Common Council (the "Council") of the City of South Bend, Indiana (the "City") that it finance the acquisition, construction, renovation, installation and equipping of certain economic development facilities to be developed by Merchants Affordable Housing Corp. (the "Developer") and owned by MAH Cedar Glen, LLC (the "Owner," and together with the Developer, the"Applicants"). The proposed economic development facilities to be undertaken by the Developer and owned by the Owner will consist of acquisition, construction, renovation, installation and equipping of a 179-unit affordable multi-family housing facility to be located within the City at 425 South 25th Street, South Bend, IN (the "Project"), having a total estimated project cost of $12,109,806. The public purpose for which the Bonds are being issued is to finance economic development facilities (being the Project) which will create or retain opportunities for gainful employment and business opportunities. The Developer, on behalf of the Owner, has requested that the City issue one or more series of the City of South Bend, Indiana, Economic Development Multifamily Housing Revenue Bonds, Series 2019 (MAH Cedar Glen, LLC Project) (with such further or different series designation as may be necessary, desirable or appropriate, including such series designation to indicate the year in which the bonds are issued) (the"Bonds") in the aggregate principal amount not to exceed Seven Million Three Hundred Thousand Dollars ($7,300,000), for the purpose of providing funds for paying all or a portion of the costs of the Project and paying all incidental expenses incurred on account of the issuance of the Bonds. The Commission estimates that no new material public works or services, including public ways, schools, water, sewer, street lights and fire protection, will be made necessary or desirable by the Project, because any such works or services already exist or will be provided by the respective Applicants or other parties. Based upon information submitted in the application of the Applicants and other information available to the Commission, the Commission hereby makes tentative findings of fact that (a)the proceeds of the Bonds will be used to finance all or a portion of the Project, (b)the use of the proceeds of the Bonds to finance the Project will not be used to subsidize rents to be paid by tenants or occupants of the Project, and (c)the tenants are expected to pay rent similar to similar facilities existing in the area. Therefore, based upon such findings of fact, the Commission tentatively determines that the acquisition, renovation, and equipping of the Project will not have an adverse competitive effect on any similar facilities already constructed or operating in or near the City. The Commission estimates that, upon completion and as a result of the Project, approximately 6 new full-time equivalent jobs will be created, with an estimated total annual payroll and benefits of approximately $225,625 and it is estimated that, upon completion and as a result of the Project, local construction participation is estimated at roughly$1,290,000, or 30% of the rehabilitation budget. Adopted this 16th day of April 2019. SOUTH : D 2 •MIC DEVE; OPMENT COMM ION • '.ter Tim Scott, President Consuella Hopkins, Vice President ATTEST: "selientin P • ips, Secretary 2 US.122724012 03