HomeMy WebLinkAboutSM 07-10-75July 1(
10:30 )
Presid-
SOUTH BEND REDEVELOPMENT COMMISSION
SPECIAL MEETING
), 1975
1. M.
ing Officer: Mr. F. Jay Nimtz,
President
1200 County -City Building
217 West Jefferson Blvd.
South Bend, Indiana 46601
The South Bend Redevelopment Commission, Governing Body of the City
of South Bend, Department of Redevelopment, met in a Special Meeting,
in Room 1200, County -City Building, 227 West Jefferson Boulevard,
in the City of South Bend, at 10:30 A.M., E.S.T., on the 10th day of
Ju y, 1975 - -the place, hour, and date, duly established for the hold -
in of such meeting.
Thi
pry
President called the meeting to order and all Commissioners were
ent for the roll call - -a full complement of Commissioners:
Ledal Counsel:
Nevis Media:
Others Present:
Mr. F. Jay Nimtz, President
Mr. John E. Chenney, Vice President
Mr. Donald A. Wiggins, Secretary
Mr. A. Peter Donaldson, Member
Mr. Robert J. Cira, Member
Mr. Kevin J. Butler
Ms. Jeanne Derbeck, South Bend Tribune Reporter
Mr. Dave Anderson, WNDU -TV Reporter
Mr. Lou Tutino, WNDU -TV Reporter
Mr. James L. Marchelewicz, WNDU -TV Photographer
Mr. Dan Caesar, WSBT -TV Reporter
Mr. Steve Neher, WSBT -TV Photographer
Mr. Larry Ford, WSJV -TV Reporter
Mr. Les Howard, WSJV -TV Photographer
Mr. Roland A. Kelly, Secretary, Board of Trustees
Mrs. Janet S. Allen, Interested Citizen
Mr. Allan C. Bloomquist, First Bank & Trust Co.
Mr. Hubert Getzinger, Chairman, Downtown South Bend
Council
Mr. Gordon E. Medlock, International Constructors Co.
Mr. Steve Parker, Dept. of Administration & Finance
Mr. Allen E. Schrager, Interested Citizen
Mr. Lloyd S. Taylor, St. Joseph River Bend Develop-
ment Corporation
LPq Staff: Mr. C. Wayne Brownell
Ms. Helen S. King
SOUTH END REDEVELOPMENT COMMISSION
SPECIA MEETING: Julv 10, 1975
2. Th
Nol
Cor
No-
Pape 2.
s Special Meeting was convened pursuant to a duly dated and signed
ice of Special Meeting which was mailed and telephoned to each
missioner in due time, form, and manner as required by law. Said
ice read as follows:
NOTICE OF SPECIAL MEETING TO THE COMMISSIONERS
OF THE SOUTH BEND REDEVELOPMENT COMMISSION,
GOVERNING BODY OF THE CITY OF SOUTH BEND,
DEPARTMENT OF REDEVELOPMENT
Notice is hereby given that a Special Meeting of the South
Bend Redevelopment Commission, Governing Body of the City of South
Bend, Department of Redevelopment, will be held in Room 1200,
County -City Building, 227 West Jefferson, in the City of South
Bend, in the regular meeting place thereof, on the 10th day of
July, 1975, at 10:30 A.M., E.S.T., for the purpose of:
a. Consideration of bid received from the St.
Joseph River Bend Development Corporation
on Disposition Parcel No. 6 -1, Project
Indiana R -66.
b. Any other business that may properly come
before the meeting.
Dated this 8th day of July, 1975.
/s/ F. Jay Nimtz
F. Jay Nimtz, President
(SEAL) Redevelopment Commission
CERTIFICATE OF SERVICE
I, Donald A. Wiggins, Secretary of the City of South Bend
Redevelopment Commission, Governing Body of the City of South
Bend, Department of Redevelopment, hereby certify that on the
8th day of July, 1975, I served a true copy of the foregoing
Notice of Special Meeting on Thursday, July 10, 1975, at
10:30 A.M., E.S.T., on each and every Commissioner of the
South Bend Redevelopment Commission, Governing Body of the
City of South Bend, Department of Redevelopment, in the follow-
ing manner: by telephone and by mail.
Witness my hand this 8th day of July, 1975.
(SEAL)
/s/ Donald A. Wiggins
Donald A. Wiggins, Secretary
Redevelopment Commission
SOUTH END REDEVELOPMENT COMMISSION
SPECIA MEETING: July 10, 1975 Page 3.
3. New Business
a.
Consideration of bid received from the St. Joseph River Bend
Development Corporation on Disposition Parcel No. 6 -°1, Project
Indiana R -66: President F. Jay Nimtz advised that Messrs.
Brownell and Butler have been meeting and negotiating with
the bidder in accordance with the instructions from the Re-
development Commission, and, at this point, called on Mr.
Kevin J. Butler, Legal Counsel, for his report.
Mr. Butler advised:
Members of the Commission:
We were directed, at your meeting last Thursday to
discuss the technical matters concerning the redevelop-
er's bid, the redeveloper being the St. Joseph River
Bend Development Corporation. Mr. Brownell and I have
met with the representatives of the redeveloper, and are
in basic accord with respect to the issues that were
raised last week.
1) There are additional matters that have to be dis-
cussed and worked through; e.g., we were going to
acquire a 40 -foot right -of -way from Columbia Street
over to the Pedestrian Parkway. We want to negotiate
with the redeveloper, whatever redeveloper we will be
working with to determine the location of that 40 -foot
right -of -way., to be appropriate both for public purposes
and for their uses. We feel that is the better approach
than simply designating the location of the right -of-
way and then having the developer work around that.
2) You will recall, towards the end of last year, Block 6
was in Fire District No. 1, and we were authorized by
the Commission to get a change on that. We went to
the Common Council and the Council did eliminate that
particular parcel in Fire District No. 1. However, the
Fire Chief, Chief Bland, in approving that and going
along with that proposal asked us,and we are committed,
that before any development is put on Block 6, that the
actual physical plans would be presented to the Fire
Department for their review to make sure that the con-
struction is fire -safe for people.
3) A third matter that is going to be discussed and will
have to be resolved is relative to the old gasoline
station that is over there on that site.
Now, I think that Mr. Brownell and I can both assure the
members of the Commission and the public that the principals
of this Coproration are all local businessmen and professional
SOUTH END REDEVELOPMENT COMMISSION
SPECIA MEETING: July 10, 1975 Page 4.
people, and each of them does have a reputation both with
respect to integrity, and business and professional ac-
complishment. Basically, these are substantial people in
the community, and we are dealing, we think, with a real
bid.
HUD Form 6004, which is the HUD public disclosure form,
has been sent to the Indianapolis Office of HUD for their
review and we would anticipate a response within three
weeks to that.
Mr. Brownell and I propose that the Redevelopment Commis-
sion authorize us to continue our discussions with the St.
Joseph River Bend Development Corporation to try to work
towards an acceptable redevelopment contract to be pre-
sented to the Redevelopment Commission, and also we will
be talking with International Constructors Company to
pursue their development plans, and also with our con-
sultants, Real Estate Research Corporation, in order to
determine the various alternatives that we do have with
respect to Block 6, so we can make appropriate recommenda-
tion.
We asked for this meeting so that we could report to the
Commissioners as to the occurrences of the past week,
and also so that the Commissioners would have the oppor-
tunity to ask specific questions of the redeveloper and
of Mr. Brownell and myself, before we get into any further
discussions and negotiations.
The Chair thanked Mr. Butler, greeted Mr. Taylor, spokesman for the
St. Joseph River Bend Development Corporation, who arrived at this
point, and called on Mr. C. Wayne Brownell, Executive Director of
the Department of Redevelopment, if he had anything further to
say in regard to the housing situation, how that is involved in
this.
Mr. Brownell added:
Several groups of people have bid, we understand, under
Section 8, to HUD. Several groups are trying to get
the site in Block 6- -about two acres - -and also some
groups are bidding on other locations in the downtown
area. No one, of course, knows what HUD's decision will
be on those bids.
Mr. Taylor is here for the purpose of representing the
bidder and answer any questions you might have. The one
group that is working with them is the Oxford Development
Group on the Section 8 housing. I understand they made a
bid on Section 8. Supposedly, several other bids are being
made on Section 8, but we have no information as to how
many people bid or whom HUD will accept.
SOUTH END REDEVELOPMENT COMMISSION
SPECIA MEETING: Julv 10.1975
e 5.
President Nimtz addressed Mr. Taylor, "Prior to your coming
in, Mr. Butler had reported to us that there had been discus-
sions with your group relative to the right -of -way from Columbia
Street, the question of the fire district and the construction
thereon and that there have been discussions and negotiations
with your group, and assuring the Commission that all these
people are local people and of quality and good reputation,
and successful entrepreneurs. Do you want to say anything
further that you can discuss at this time or not? You may
have the floor."
Mr. Lloyd S. Taylor, spokesman for the St. Joseph River Bend
Development Corporation, said he would like to add a few other
things:
The problem with the right -of =way: I don't foresee that
that's really any problem at all. We have always antici-
pated that whoever was responsible for the maintenance of
the area along the river would need a right -of -way to get
to it. We think that, in fact, an access over there had
been shown on our drawing.
The other things - -you know, problems that we have - -are
just a matter of working out language and things like
that of agreement.
I would want to assure the Department of Redevelopment,
the Commissioners, that our group is sincerely interested
in developing this parcel. We have talked to a good many
people in the community, and we think- -they have indicated
to us - -that our plan looks good and they are interested
in being a part of it.
I think, as probably was indicated by Mr. Brownell, that
we would certainly like to have the housing; although, if
we don't get it this year, there- will be another time, I
am sure, when we can anticipate a developer taking care
of that.
We actually have options with three different developers,
and our option simply says that if we are successful in
gaining control of this land through our bid and they are
successful with HUD in getting the 200 units of housing,
that then we have an agreement, so there is no misunder-
standing. I don't know if I have the names with me, but
the Oxford Development Group out of Indianapolis is one
of those affirmed- -the name is Crenshaw, Gresham & Smith
out of Atlanta, Georgia; Nashville, Tennessee is another;
and a third one is Mr. Medlock's group, International
Constructors Company, who, I understand, is bidding on
that. We have an option with them should we be successful.
SOUTH END REDEVELOPMENT COMMISSION
SPECIA MEETING: July 10, 1975 Page 6.
President Nimtz asked if the Commissioners have any questions
to raise with Mr. Butler, Mr. Brownell,or Mr. Taylor- -the
recommendation being that Messrs. Brownell and Butler be
authorized to continue negotiations and discussions with the
St. Joseph River Bend Development Group, with International
Constructors Company to:pursue their development plans, and
with our consultants, Real Estate Research Corporation?
Commissioner Wiggins asked if there is a feeling that there
should be a time involvement in these discussions, and Mr.
Butler advised, "I think our basic feeling is that on the one
hand we want to, and we have, to this point, proceeded expedi-
tiously, but, at the same time, we don't want to be too pre-
cipitous. We want to make the right decision. We want to be
able to present to the Commissioners all of the facts that are
available, so that you can make the best decision - -if there is
any right decision in this."
Mr. Wiggins made the motion Mr. Brownell and Mr. Butler be
authorized to continue the negotiations and discussions
with the St. Joseph River Bend Development Group, International
Constructors Company, and Real Estate Research Corporation,
and come up with a further report, at our next Regular Commis-
sion Meeting -- Friday, July 18th. Motion seconded by Mr. Chenney,
and the Chair called on Mr. Gordon E. Medlock, Sr., with Inter-
national Constructors Company, for any statement.
Mr. Medlock stated:
There is one item in regard to the housing. I have met with
HUD and Real Estate Research on some aspects of our recommenda-
tions, and I think if you will indicate the willingness to co-
operate with the housing section of HUD that the time taken to
make the decision, would not prejudice the possibility of having
the high -rise elderly on Block 6. Their communication and co-
operation seems to be such that they are very much in tune at
HUD, in Indianapolis, with the problems and concerns, and inter-
est of South Bend, and I think that that is probably the most
immediate problem, and if that can be resolved within the time -
frame-- whichever direction you go and it involves a complete
change of land use and it can be done in sufficient time for
them to make their decision, and so as not to delay the earliest
date on which that construction might be done.
President Nimtz said that we have been in contact with HUD, almost
daily; in fact, sometimes more than twice daily on this whole matter.
Mr. Brownell advised he has met with the Project Manager from HUD at
6:03 p.m., last evening, in our office, and that we have sent a letter
to UD advising about the Commission meeting today and that we are
con idering the land which is involved in the Section 8 bid, to give
the the input that is being suggested now.
SOUTH END REDEVELOPMENT COMMISSION
SPECIA MEETING: July 10, 1975
MR
Page 7.
With no further discussion or comment from the members of the
Commission, the motion was unanimously carried by all Commissioners.
Letter from International Constructors Compa
1975: Mr. Brownell advised we received this
national Constructors Company, and is in the
packet. Asked if it is Mr. Medlock's desire
read, Mr. Medlock said he had no objections.
read in its entirety and is on file.
1y, dated July 7,
letter from Inter -
Commissioners
the letter be
The letter was
President Nimtz asked Mr. Medlock if wants to comment further
regarding the letter and the attachments. Mr. Medlock advised,
"Only to say that we are sincerely interested in seeing this
developed and in seeing this developed in the best way possible,
and we feel that we have made every effort to make our plans public
knowledge, and, in fact, to communicate to the other bidder, that
we would be willing for them to join our group and that we would
be glad to meet with them to negotiate the development of the
office portion as a part of a'single bid, if that can be done
without collusion or any of the things that would throw out a
future bid, but we are, as we have gotten further into this,
more and more convinced that the best development of Block 6 is
going to be something that will involve some land use change,
and we might as well make the necessary land use changes to do
what is best for the community."
President Nimtz requested an explanation be given on the land
use, and Mr. Butler, Commission Legal Counsel, advised, "Basically,
the land use is a requirement of HUD regulations. They require
that the Local Public Agency declare land -use conditions/restric-
tions in any urban renewal area, and those be the land use de-
signated at the time the property is put up for bid. If, from
that point on, a contract is successful, or an acceptable contract
is openly signed, then the land use for that particular property
which is subject of bid is locked in for a period of at least
30 years from December of 1969 until December, 1999. It can be
extended. We are talking about a 30 -year period." In re- affirming
the statement, President Nimtz stated, "So once a decision is
made on a particular land use, that is it for 30 years." Mr.
Butler stated that is correct.
The Chair requested response from the Commissioners:
Mr. Wiggins said, "I think that, without question, we have had
to rely upon the specialists in the field, because this is what
HUD requires largely. I think to a degree, in all fairness to
the Commission, since we are not all experts in all of these
things, we have to rely to some degree upon their judgment. I
don't know if anybody's got a crystal ball that is clear and
really forecasts the future, so there is an element of possibly
being wrong, or wrong in varing degrees, or right in varying
SOUTH LEND REDEVELOPMENT COMMISSION
SPECIA MEETING: July 10, 1975
Page 8.
degrees in any of these judgments. Our basic concern - -as a
Commission - -I feel is to try to project South Bend's future
and to provide the best ways that this future can develop to
maximize the land and the use of the land, and the develop-
ment of the South Bend area. We are as a Commission - -to the
process that we have to employ here - -to a degree handicapped,
in that we can create the area, but we do not have direct
control of the development, since we are not developers
nor can we be developers, and that one of the ways we have
to operate is to try to provide the guidelines and incentives
to have happen the things that we feel are are told that need
to happen for orderly development.
Commissioner Chenney raised questions on International Con -
structors, that they didn't submit a bid to which the Chair
answered International submitted a proposal and plans to
the Commission. Mr. Brownell advised Mr. Chenney that he
had been absent at the last Commission meeting, at which it
was suggested each Commissioner come in at any time at their
convenience, and to go through the confidential papers submitted
by International, as Mr. Chenney commented he hadn't seen the
confidential plans to know what they want to build.
Mr. Taylor requested permission from the Chair to comment on
that, which was granted. "As you know, Mr. Nimtz, I am not
a lawyer, but that gives me a little bit of a problem though.
It seems to me in reviewing our bid, which was a legitimate bid
for this property, then the review of documents - -if those con-
fidential documents are used to influence the decision of your
group in any way, then it seems to me that it should be made
public. Now- -like I say - -I am not an attorney, so I could be
totally wrong."
Mr. Brownell replied, "I think, Mr. Taylor, that I would have
to say this, that part of your bid is confidential. Mr. Taylor
said that is the part only that is designated by HUD to be con -
fidential. Mr. Brownell replied, "That's right, and that will
not be disclosed by us to the public and likewise in connection
with the proposal that was made by Medlock's group, part of it
is public, and part of it is confidential. We would not disclose
the confidential part on either bid. Now, I have no quarrel or
comment on what should be made public or not; we will not disclose
anything given to us as confidential material."
Mr. Medlock stated their intention in asking some of this be kept
confidential is to prevent this from being used to their disadvan-
tage if they were given an opportunity to put in an acceptable bid.
"If it becomes a question of propriety, or if in your judgment you
would like to make a portion of that public - -as the portion that
would be made public if it were a fully responsive bid - -I am sure
I can obtain approval of our company for that portion to be made
public.` We have, in fact, made public a portion of the plans
SOUTH TEND REDEVELOPMENT COMMISSION
SPECIA MEETING: July 10, 1975
Paqe 9.
that relate to the Midway Motor Lodge and the Hoffman House
Restaurant- -the details of the timing and the amount of invest-
ment. We would also, if it is your judgment and it is desirable
to indicate the joint- venture partners that we have already
negotiated with -- preliminary negotiations - -for the office and
the luxury apartments, be glad to make that public if it is
going to prejudice your ability to make a decision." President
Nimtz said he didn't think so at this time.
Mr. Medlock added, "I would like to say just one other thing in
regard to our proposal of land use, and that is that there is
a lot of land in South Bend that needs to be developed- -that
is already zoned for offices - -that would not be suitable for a
motor lodge or restaurant. We have explored this with our
people and they indicate that this is an idea'l'site and that
the other alternatives in South Bend are marginal, and that
they would not be 'interested. Considering the amount of time
the Chamber of Commerce spends -in trying to get a business that
would run a couple of million dollars a year in gross, I feel
that their request for being invited and permitted to build in
South Bend is one that should be considered very seriously, and
I appreciate the approach and the time and effort that this
Commission has taken."
Commissioner Donaldson said as he understands it, "Mr. Medlock
hasn't actually made an official bid, and cannot Unless there
is a land -use change; then, they can submit.a bid. As it stands
now, they have only made a proposal." The Chair answered that
is correct.
Commissioner Chenney said Mr. Taylor's outfit needs a land -use
change too, and President Nimtz said this is what they are work-
ing on now -- whether there are some minor land -use changes that
would have to be made to do the development that is under the
technical HUD regulations. If some of the things they propose
to do meet HUD requirements and regulations, or if we have to
get some minor land -use changes to do the particular things.
A lengthy discussion followed on minor and major land -use changes.
Mr. Brownell advised this Commission has the power to make minor
land -use changes - -if HUD concurs it is a minor land -use change.
The change can then be made by Proclaimer through this Commission.
A major land -use change- -which a motel would be a major land -use
change according to HUD - -would require HUD approval, City Council,
Area Plan and MACOG's approval through Public Hearings.
Ms. Jeanne Derbeck, Reporter for The South Bend Tribune, said
she thinks there is a conflict here in the philosophy towards
developing downtown that she would like the Commissioners to
comment on. "When the plans were announced for the so- called
Super Block, many people thought and it was suggested it should
be developed as an office area, and I have it in writing, in
SOUTH END REDEVELOPMENT COMMISSION
SPECIA MEETING: July 10. 1975
Paae 10.
fact, from the developers that they had done research and decided
that South Bend was over- officed' and that it would be silly to
build more offices when we already have more new office buildings
and more remodeled offices than the City seems to be able to fill.
Now, here we are - -that was the excuse, you know, one of the reasons
why we were going to go to the merchandising -type. Now, here we
are with Block 6, considering a plan that has the emphasis on
office buildings, and I don't understand this conflict. So, if
there are too many offices when you were talking about Super Block
but we seem to need more offices when we are talking about it now."
Mr. Brownell advised the last Study that we had made here as a
Commission was made by Real Estate Research Corporation. They
updated the LUM Study and found there was a need for more new
office space. As a result of that Study, we changed the land
use on Block 6 from predominently housing to office use, to this
secondary service /commercials Since that Study was made, there
have been two buildings built with office space- =they are both
six -story buildings--and they are either on the south side or the
west side of the St. Joseph Bank Building. Now how much those
two new buildings have effected the situation in regard to new
office space, of course, we don't know. We know it affected it
some. But the last official Study we had made indicated the
need for more office space. Now whether that is soaked up, we
don't know. To the answer, Ms. Derbeck replied, "So obviously
the situation has changed, so how can you go by that old Study?
And the First Bank developing group, who are local, aught to
be capable of a little local research around here. The Chair
requested if Mr. Allan Bloomquist, with the First Bank & Trust
Company, if he would address himself to that.
Mr. Bloomquist said he believed those to be two different ques-
tions:
1. You have the very near term vs. a 'little bit longer
range, and based on the data that we have, on the very
near term, there is not a strong office demand for down-
town high -rise type office buildings because of the new
buildings that have gone up in the past five years. Of
course, for longer term purposes, we are optimistic that
the downtown South Bend will develop very vigorously.
Relative, however, to Block 6, based upon - -I don't re-
member the specific figures, but as I recall, having
gone through some analysis, I think the market segment
that you would be going after for developments in Block
6, and secondly and more important, the economics of
development in Block 6, such as Lloyd Taylor's group
has suggested, is in my opinion, significantly, reason-
ably attractive, and has probability for success over a
three -year horizon, economically, at least, based upon
13� �+f�
l s
SOUTH END REDEVELOPMENT COMMISSION
SPECIA MEETING: July 10, 1975
Page_ 11.
the numbers our architects have gone through, and certainly
Lloyd is extremely capable in this category, and I imagine
you would agree. Of course, on a cost per foot basis, you
would come out better in Block 6: 1) The cost of the land
is less; 2) You have certain construction economies.
The other facet is, I think - -I am speculating - -but I would
imagine Lloyd Taylor and his group would be going after a
distinctly different segment of clients. In other words,
they apply the probability of getting clients of free stand-
ing, one or two story buildings out along Ireland Road, or
perhaps on U.S.:31, which they want: 1) For their own
identity; 2) The convenience aspect of parking right at
the door - -is important.
So, I think we are talking about a couple different segments,
and, personally, I haven't seen any detail on it, but just
taking an overall guess, I think the economics of the single
office building, free- standing, with its own identity, has a
reasonably, good probability for success.
Ms. Derbeck said, "It appears then that you- -the Commission itself
is basing this decision on an out -of -date research study and has
done no further study for information itself on office buildings
when the decisions' are being made on Super Block and Block 6. You
are using an out -of -date Study."
Mr. Lloyd Taylor requested to respond to the above: "I think over
a number of years, I, as well as some others in this room, have been
involved in market research in the downtown area. Of course, we are
directly involved because we have just constructed 75,000 square
feet of downtown mid -rise, let's say, office buildings. The people
that we lose- -let's put it that way- -that come to us and are inter-
ested in office space, but ultimately we lose them. We lose them
because of just exactly what Allan said: They want a building with
their own identity; they want a building with the convenience of
parking - -but they did want a building downtown- -and so they say,
'Where can I have all these things ?' Well, I guess you drive out
Colfax Avenue and LaSalle Avenue, and you can see -- especially, and
in some degree to the North- -these small individual, independent,
single- occupancy buildings with their parking mushrooming up out
there. Those people would rather be downtown and they certainly
would do a great deal to improve the overall economics of the
downtown area, if we had them here, but we lose them, because
we don't - -at the present time - -have a site for them. Now, I think
you have to understand that in putting financial backers together,
that we had to have some pretty good data to give people...."
Interrupted by Ms. Derbeck, "But that is your data." Mr. Taylor.
continuing, "Excuse me, Jeanne, but my data is much more important
than Real Estate Research's data, because I've got to rent it;
Real Estate Research doesn't have to rent it, and you know I have
a great deal of confidence in Real Estate Research. I think it is
a good organization, but more important than that, I think that I
SOUTH END REDEVELOPMENT COMMISSION
SPECIA MEETING: July 10, 1975
Page 12.
and...frankly, a lot of people in this room ... Allen Schrager
and Allan Bloomquist...have probably a lot better input into
what is needed than some people in Chicago, or the fact that
whether or not we can rent it- -and that's the important thing- -
or lease, or sell or whatever; that's the important thing, and
we obviously feel there is a market over there for this type of
office space or we wouldn't have gotten involved, and I know
that Allen Schrager can support what I say, that we lose a
lot of people to downtown because of those ingredients of
single occupancy and parking.
The Chair called on Mr. Allen Schrager, who responded, "Well,
it's not along these lines. I wanted to ask two questions:
It is my understanding that the HUD regulations do not permit a
drive -in bank. Now, if that is correct, and the bid that the
St. Joseph River Bend Development Group submitted was not a
responsive bid, and if the land use was changed, it would have
to be rebid, or a negotiated bid, am I correct or wrong? Mr.
Butler, Commission Legal Counsel, responded, "No, it is not the
same thing. We are discussing a specific question Allen with
Mr. Jannotta [Real Estate Research Corporation] when he comes
down next week, as to whether a drive -in bank or branch bank
is restricted- -not by HUD now -- but by our land -use conditions
for that particular property, which states, or provides an
exception for strictly auto - oriented facilities. President
Nimtz added, "What is an auto - oriented use? Is a restaurant an
auto - oriented use? One we have been using here is a cemetery- -
an auto - oriented use - -and that is a one -way trip!"
Mr. Schrager further asked, "My other question was: Kevin, you
stated that the people - -the principals involved - -were highly
respectable people, and I am sure they are. Now, is that con-
fidential, or is that open to the public ?" Mr. Butler said,
"So far as we are concerned, we cannot disclose that. HUD does
not require that the principals be revealed. Any principal who
owns more than 10% of a particular business entity must be dis-
closed." Mr. Schrager asked, "The three people that were dis-
closed are the only ones that own 10% or more." Mr. Butler
answered that he didn't know what percentage they own but that
his understanding is that no one owns 10 %. There were three
individuals disclosed but the source was not from us.
Mr. James L. Marchelewicz, WNDU -TV Reporter, asked the following
question of Mr. Taylor: "You mentioned you do have options with
International. Is there a real possibility that the two of you
can get together, and you could see a restaurant and a motel,
and your development? You have a restaurant in yours." Mr.
Taylor responded, "Let me answer that in this way. Certainly we
are willing to work with International Constructors, in both the
area of the restaurant and the area of the housing. The problem
we have, we can't work with them in the area of the motel, because
that land use is specifically prohibited. Mr. Marchelewicz said,
"Yes, but if you could agree and ask for a land use change."
SOUTH END REDEVELOPMENT COMMISSION
SPECIA MEETING: July 10, 1975
Paae 13.
Commissioner Chenney said they don't want another motel stuck
in there.
Mr. Medlock stated, "Just a couple of items: 1) We were advised
if we bid on a land use that was not authorized that we could not
then negotiate, and it was on that basis that we did not build
the extra 10% effort that was necessary to put together a fully -
responsive bid because of the predetermined fact that we would not
have a designated land use. So, what is fair for one, should be
fair for another."
Mr. Butler said, "We do intend to sit down with you next week.
You can negotiate now, even though you didn't submit a bid.
We can negotiate. We can get into discussion with you; however,
we are still limited to our land use the same as with the developers.
If we have a specific problem with the development, or a particular
segment of the development, as proposed with a bidder, requiring
absolutely a rejection - -an outright rejection of the bid - -then we
cannot negotiate with that bidder, unless we accept parts of the
bid. At this point, in time, as I said, we will be meeting with
Real Estate Research next week to make a conclusive determination
concerning the one element of the bid."
Mr. Medlock said, "I am glad to know that and appreciate that. The
other area that I wanted to comment on is that there is no question
on the minds of anyone that I talked to, but that Block 6 is a good
investment for anyone who owns it and will hold it to develop it
for future office space. The question in my mind is that it should
not be resolved on that basis because we have included in our bid
some office space. However, in terms in what is best for downtown
South Bend, and over the next 30 years if you're locked into the
existing land use and cannot permit, authorize or negotiate to the
development that would involve some auto - oriented use that might
be desirable or other variations that are specifically prohibited,
I think you lock yourself into a land use that may not be in the
best interest of South Bend. With regard to the value of this
property to the community, I think a restaurant that might bring
several people per day down to that area will contribute a lot
more to the economy of downtown South Bend, than garden -type
offices or small offices that would bring relatively a small number
of people into the downtown area."
Mr. Steve Parker, with the Department of Administration and Finance,
asked the following: "There has only been one bid received. Are
you saying that you are going to open up to the public future bids,
so that International Constructors, in addition to anyone else, can
submit a bid?. In order for International Constructors to make a
bid after any kind of negotiations are going on, are you saying
then that you are opening it up to the public? Mr. Butler advised,
"I am saying, that assuming a determination is made , that we have
a specific problem with a single bid, or a single bid is received.
I will run through the procedure: We call for bids- -the department
calls for bids--if no bid is received, then the department is in a
SOUTH BEND REDEVELOPMENT COMMISSION
SPECI L MEETING° July 10, 1975 Page 14.
situation where they can negotiate for the sale and development
of the particular piece of property. If more bids are received,
and the Commission for whatever reason determines the bids are
not acceptable, then we are at the same point as if no bids had
been received. I am saying that the department can discuss with
anybody who has any interest in that property. Right now, we
are conducting, beginning probably early next week, very serious
negotiations with the group who has actually submitted a bid under
the current land use. Also, we will be negotiating and talking
with International Constructor, and Mr. Jannotta with Real Estate
Research who will be coming down early in the week. In talking with
any other prospective developers, however, Steve, we would be dis-
cussing with the developers the development of the land in accordance
with the current land use plan, at least we are discussing it in
terms of negotiation towards a contract."
Mr.Parker said he was wondering about their bid- -does it have to
be opened up to the public -- anyone who submitted a bid? Mr.
Butler advised in order to award to International Constructors,
that under their current proposal, we could not award the bid
under the current land use. We would have to have the land use
changed, and then we could call for bids again.
Mrs. Janet S. Allen said on all this discussion in changing the
land use and trying to negotiate all these things, instead why don't
we go ahead and apply for a land use change. If it was changed,
they wouldn't have to go to a motel even if it says you could; you
could build whatever you wanted on this. In the meantime, "you
are wasting so much time in negotiating - -maybe this; maybe that
happening- -and you still have to change it for the drive -in bank.
Why don't you go ahead and get this land use changed, and then put
everything in, and then decide it. It would seem that would be a
logical approach." Mr. Brownell said the "difficulty with that
course is this. If this Commission decided to change the land use
now and make a major change permitting the motel, permitting addi-
tional housing, permitting whatever else they decide to include,
then it would have to be re- appraised for reuse and a new price
established by the appraisers, which we would then proclaim, and
that would probably increase the price for this land substantially
and we may end up with no bid from anybody, so we have to be practi-
cal in that if we are going to put a land use on this land that isn't
going to be used and thereby increase the price so that other bidders
who don't want to use that land -use would be precluded from bidding."
Mrs. Allen said, she understood "the reason that land was priced
so low along the river - -which is the prime spot of this whole urban
redevelopment - -it was priced low so that you could have multi- occupancy,
you could have apartments, the high rise, etc. That's why the price
was low. It.was not and never set low so that you could build offices,
like one or two story offices - -a 14 -story building that was mentioned
originally, but certainly not one and two story buildings. It seems
to me the reason this while plan started was to open up the river
SOUTHIBEND REDEVELOPMENT COMMISSION
SPECIAL MEETING: July 10, 1975
Paae 15.
to the people, and if you put offices there that close at night,
you're not; but if you can have something else along with it,
then it's a good land use, and I still think it makes sense to
change the plan and have an open-ended land use on it and throw
out the things you don't want and include the things you do."
Mr. Allen Schrager said, "The only thing I'would like to say is
that Lloyd Taylor and his group should be congratulated for sub-
mitting a bid. It is easy to sit back and take pot shots and
say, well we should do this and well we should do that, but over
the last couple of years, no one has come forth with a bid, except
a lot of promises that never materialized. Now, granted, this
may not be the ideal plan, but an old cliche, 'a bird in the
hand is worth two in the bush!' Now, the only thing that bothers
me, Lloyd, is this. I think one of the main problems downtown
in office space is the parking, because people don't like to pay
$20 a crack, or $15, or $10, or what have you, when you can go
out to surrounding office buildings. I know you people just lost
Xerox to Industrial Park, where they want 20 to 30 parking spaces.
Unfortunately, in your plan, you are going to have these one and
two story office buildings with parking included, and this is
going to make it more difficult to develop new office buildings
downtown, because if people have a choice of getting their own
buildings with free parking or, coming downtown in a high -rise
and having to pay for their parking, they will take the free
parking, but as I said, you can't have your cake and eat it too,
so half a loaf is better than none."
Mr. Taylor said he thought the obvious thing here is, "Allen, you
are right in what you say, except you know and I know that we have
been losing a lot of offices to the downtown area because of that,
as you well know. It's not a question of a choice between forcing
them to go into a high -rise office building because they don't
have any other choice; the other choice is to go out to Industrial
Park or to Colfax Avenue, so what we are doing is trying to retain
some of these major complexes here in the downtown area. Also, I
think you lose sight of the fact that the only - -I would say- -the
only difference between the proposal of International Constructors
and our proposal is in the hotel, that's all - -or, they call it
the motor lodge. That is the only difference! We propose a luxury
restaurant with all of the facilities that they proposed. It's
possible, if Hoffman is interested without the motel, it could be
a Hoffman, I don't know. There area lot of nice restaurants in
the country. I think that's really the only 'basic difference. You
have the hotels in the downtown area that are not doing too well in
their occupancy. Now, regardless of what the name is on that hotel- -
whether it is Royal Inns, Pick, or Sheraton, or what - -I don't know
one of them - -even out on North Michigan the motels are not doing
well in occupancy. Plow, whether or not a market study- -which would be
an absolute requirement in land'use change to permit a hotel- -would
be a market study which would say whether one is feasible- -not one
which would be feasible five years from now; but one that is feasible
today."
SOUTH $END REDEVELOPMENT COMMISSION
SPECIAL MEETING: July 10, 1975
Paqe 16.
Mr. Schrager said, "The important part that I want to make is that
I think you people have done great, but let's not fool around and
lose all the bids; let's get something and grab that football and
move forward even though it is not perfect. It would be wonderful
if we could see some construction start NOW, not a year from now- -
or two years from now. If you wait until everything is perfect,
maybe we'll all be gone::. So, let's get rolling, as was pointed
out by Wayne, you may change the land use, and double or triple
the price and the end will be...you will end up with NOTHING!"
Maybe this isn't perfect, but I you people aught to give
serious consideration... sell that land... get the money in... reduce
your notes... cut down your interests.., let those people start build-
ing and start paying some taxes."
President Nimtz stated, "Allen, I agree with you entirely. I can
assure you we have been spending many, many hours per day, including
myself, on this matter."
Mr. Medlock stated, "I want to correct Allan's impression that no
one came forward on this, because last April--after waiting for I
don't know for how many years and no interest being expressed- -
International Constructors did come forward and request the land use
change and later asked they be put up for bids. Maybe that's why
he got the wrong impression; he talks and then doesn't listen. We
requested the change be made and put up for bid. It was not put up
for bid. We did go to all the people who had previously expressed
an interest in Block 6 - -we went to Associates; we went to the St.
Joseph Bank and asked them if they had an interest and indicated to
them in advance what we were going to do. In both cases, we were
advised they did not - -as of that time- -have any interest in becoming
a part of our bid, or in competing for the land. So, we proceeded
naively feeling that we were the only ones, and aggressively re-
quested the land use change back in April. So, at this point, I
think what you are looking at is a bid that was a result of our having
asked it be put up for bid, and the decision for the Commission to put
it up for bid, prior to the re- zoning is their own, and I presume for
good reasons. In terms of prejudicing the future bids on this, I
can't imagine a re- appraisal of this to accommodate our proposal that
will price it out of realistic terms for the development that we are
asking for. One other thing, in all of this discussion, no one has
commented on the utilization of the Century Center. It's as though
it didn't exist. And we are going to spend $12 -1/2 Million, and
then we are going to ask people from all over the country to come, and
they won't come to South Bend if they 'won't have a motel or a restaurant,
or some place to go in connection with the Century Center activities."
Mr. Schrager directed his question to Mr. Medlock: "Now with the
Travel Lodge having 60% occupancy - -the Travel Lodge across from the
hotel; the Royal Inn 35 %; the Sheratin less than 40%; and the Albert
Pick less than 50%- -you tell me, how are you going to fill this one up ?"
Mr. Medlock said the same way as they are in twelve other communities
where they have the same kind of occupancies -- Ramada's, Royal Inn's,
Holiday Inn's, Pick's, etc. Their statistics of the Midway Motor
SOUTH END REDEVELOPMENT COMMISSION
SPECIA MEETING: July 10, 1975
Page 17.
are open to the Commission and to interested investors, that show
an average occupancy in excess of 85% in communities the size of
or smaller than South Bend. So, in terms of this, it is a desirable
investment in point of view of Midway - -it definitely is. In terms
of the Hoffman House Restaurant, Mr. Hoffman advised this group,
he wouldn't be interested in coming to South Bend if he wasn't con-
fident he could do over a $1 =1/2 Million the first year.
Mr. Schrager added, "The question involved though is what is best
for downtown South Bend. Do we need another motel here? It is
not whether or not you people can have 85% and we can have three or
four more empty motels. We have a downtown that has continually
gone down hill. The Redevelopment has come in and has purchased
properties and torn them drown. I don't know - -T am not an expert
about motels - -but we certainly want something that is going to come
in and add to the downtown. Not if you people are 85% filled and
we have two or three other motels that are going to be closed. That's
not going to aid us any. We want something that is going to help
fill this place up. Not fill up your place and empty two or three
others.
Ms. Derbeck said she hope's she is not out of line, but "I think
it should be brought out. Does either Mr. Rosenthal or the St.
Joseph Bank have some interest in the Royal Inn ?" Mr. Taylor
advised, "The exact interest of the St. Joseph Bank, first of
all - -I think there should be some understanding that we, as a
management group to St. Joseph River Bend Development Corporation,
have no identity with the St. Joseph Bank, except that the St. Joseph
Bank is a management consultant to that group - -No. 1. No. 2,
the St. Jospeh Bank's interest in the relevance of South Bend is
that Royal Inns of South Bend was constructed by $2 -1/2 Million
Economic Development Bond Issue, of which the St. Joseph Bank bought
$1 Million to that Bond Issue and the U.S. National Bank in San
Diego bought $1-1/2 Million of that Issue. We are the Trustees
for the Issue. I think - -yes, we have some interest in that, although
our $1 Million is well secured. I think the City of South Bend, the
Economic Development since they are economic development bonds- -
certainly has some interest; as does the U.S. National."
Ms. Derbeck stated, "Here we have the St. Joseph Bank having some
interest in seeing that the Royal Inn goes; Mr. Rosenthal, head
of the St. Joseph Bank, is also a principal in the St. Joseph River
Bend Development, and I wonder if you wouldn't have a certain interest
in not wanting another motel, etc? Mr. Butler advised, "Jeanne,
in response to that - -I know the question is not being asked of me --
but Wayne and I have spent some time over the past week. I personally
am convinced that the interest of the St. Joseph River Bend Development
Group is not based upon any interest of the Royal Inn. As a group
of investors they are interested, and I would imagine, as all good
businessmen, they are interested primarily in the investment advantages
of Block 6 -1. Secondly, I think they, as most of us in the community,
including Mr. Medlock and his group, are interested in the development
of the downtown area.A�t this point in time, the development of Block 6
is the issue."
SOUTH END REDEVELOPMENT COMMISSION
SPECIA MEETING: July 10, 1975
Page 18.
Mr. Dan Caesar, Reporter for WSBT -TV, asked, "If you take both
proposals side -by -side, which has the greatest economic impact
on the community? Mr. Butler advised as he is not an economist,
that is an impossible question to answer. Mr. Caesar then asked,
"Which one has more to offer in investment? That you can answer,
as you can look at both parts. Does anyone on the Commission
know that answer ? " Mr. Butler replied, "I think, frankly, we
are very fortunate to have two excellent development groups inter-
ested in developing Block 6. Mr. Caesar said that didn't answer
his question. Mr. Brownell said he doesn't have an answer to
his question, but the development that we are considering from
Mr. Taylor's group estimates $14 Million in development on Block 6.
Mr. Medlock's group is suggesting a motor lodge and restaurant and
their motor lodge and restaurant in Grand Rapids cost $3 Million,
and the rest of the development he has no figures on yet. Mr.
Medlock said in his letter (that 'is before the Commission) indi-
cates $16 to $18 Million.
Commissioner Wiggins said, "You have to bear in mind that we are
dealing with estimates in both of these instances, because the total
development is not, in either case, all completely firmed up and
ready to go. This is over a period of time that the development
will happen, so that to some degree these are fair offsetting kind
of thing."
Mr. Steve Parker added, "I would like to say, in kind of a defense
to Mr. Rosenthal. Basically, I think what the Redevelopment was
trying to do was to tear down businesses that weren't doing well
to make downtown look nicer and to bring in new businesses. Here
I see the differences in the two proposals. One is local business-
men involved in their community to try to make available land for
other local businessmen to develop.- I am interested in building a
business in this town. I have looked all over and that is probably
the best piece of property in town. If International Constructors
bid is accepted, no local businessmen other than only the wealthy
can invest capital and can be involved. If Lloyd Taylor's group is
accepted, many local businessmen, insurance companies, small individuals
can become a part of downtown and have a nice location and can become
a part of their community that is prospering, and I think the purpose
of the Redevelopment Commission is just that - -to make the community
as members of its community, to be a part of that prosperity, and I
think that is an ingredient that should be considered. Mr. Medlock
said he is sorry that he is not considered a local businessman, parti-
cularly since their very first announcement they went to the Press to
indicate that they are interested and were encouraging and including any
local businessmen in community for the need of office space in Block 6:'
In response to Mrs. Allen's question involving Notre Dame's convention
facilities, Commissioner Wiggins replied, "Notre Dame's convention
facilities are great and they can handle some very large scale things
that the Century Center can in no way compete with. Notre Dame on the
other hand, by virtue of the size that ACC has, has little trouble with
flexibility with smaller groups. Now, there have been a number of con-
SOUTH END REDEVELOPMENT COMMISSION
SPECIA MEETING: Jul
_v 10, 1975
Page 19.
ventions that have been proposed here, or were asked here, or were
concerned about meeting here, that did not desire Notre Dame's
facilities. So that these were lost to the community altogether.
So it isn't exactly an either /or proposition. I think that one
can supplement the other and what would happen downtown here would
not be a threat to Notre Dame's business necessarily."'
Mrs. Allen said she meant the people who would come to the convention
downtown, would have to seek space farther out, because the local down-
town -- when you go to a convention, you normally stay close to the
convention. So, as soon as they are filled up, they have to run North
and that is her point. That if you build more space for them downtown
to accommodate the smaller conventions that we hope to get, then those
people will stay downtown.
Commissioner Wiggins said this is a part of the kind of responsible
studies that are required, and it is difficult to know exactly what
will happen in terms of conventions, what is expected, and what kind
of space the Century Center will have could generate. You have to
figure out the maximum that it could generate and then work out some
percentage kind of thing that seems reasonable and project that along
with the amount of space you have and the amount of space you will
need and these things, I think, have or can be made and it should be a
part of that, and I would think that anybody who was interested in
investing that kind of money, would have already made such studies.
4. NEXT COMMISSION MEETING
Th next Regular Meeting of the Redevelopment Commission will be at 10:00
A. ., Friday, July 18, 1975, in the Office of the Department of Redevelop -
me t.
5. ADOOURNMENT
Th re being no further business to discuss relating to the Special Meeting,
mo ion was duly made for adjournment by Mr. Chenney, seconded by Mr.
Do aldson, at 11:42 A.M.
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