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HomeMy WebLinkAboutRM 04-25-80April 25, 19f 10:00 A.M. Presiding Off I. ROLL CALI Members F Members A Legal Cou Redevelop SOUTH BEND REDEVELOR4ENT COMMISSION REGULAR MEETING 1200 County -City Building 227 W. Jefferson Blvd. Mr. F. Jay Nimtz, South Bend, Indiana 46601 President it: Mr. F. Jay Nimtz, President Mr. A. Peter Donaldson, Secretary Mr. Robert J. Cira, Assistant Secretary Ms. Paula N. Auburn, Member ent: Mr. Lloyd E. Robinson, Sr., Vice President el:- Mr. Charles Sweeney nt Staff: Mr. Carl Ellison, Executive Director Mrs. Ann Kolata, Deputy Director Mr. Kevin Horton, Real Estate Officer Ms. Ann Bathon, Acquisition Specialist Mr. Bill Fox, Relocation Specialist Mr. Paul Falduto, FiTloyment Targeting Assistant Mrs. Jane Zimmerman, Executive Secretary Mrs. Hedy Robinson, Secretary Community Development Staf News Guests: 2. APPROVAL On motion Ms. Auburn Minutes of April 11, Mrs. Kathryn Baumgartner, Director, Bureau of Housing Mr. Herman Lee Ms. Deborah Domine, Reporter, WSBT Mr. Steve Neher, Photographer, WSBT Mr. J. Scott Brink, Photographer, WNDU Mr. John Strauss, Reporter, *DU Ms. Jeanne Derbeck, Reporter, South Bend Tribune Mr. Larry Ford, Reporter, WSJV W. Joe R. Winey, Photographer, WSJV Honorable Mayor Roger 0. Parent Mr. John Kagel, Downtown Council Ms. Shelly Heger, Downtown Council Mr. T. Brooks Brademas, Architect Ms. Glenda Rae Hernandez, President, S.F. PAC F MINUTES )y Mr. Cira, seconded by MINUTES OF THE and unanimously carried, the REGULAR MEETING OF the Regular Meeting of Friday, APRIL 11, 1980 WERE 1980 were approved. APPROVED South Bend Reldevelopment Commission Regular Meet* g - April 25, 1980 3. APPROVAL DF CLAIMS On motion by Mr. Donaldson, seconded by Mr. Cira, and unanimously carried, the claims to ailing $35,184.32 were allowed and order pd to be paid. The authorized claims ar : REDEVELOPMENT REVOLVING FUND Payroll: 3 -22 -80 to 4 -04 -80 $ 5,628.15 Bureau of National Affairs, Inc. 394.00 Indiana Bell Telephone Company 529.18 Seminars Workshops, I.U.S.B. 20.00 Seminars & Workshops, I.U.S.B. 60.00 Schilling ' Sales Co., Inc. 8.00 Smith Petroleum, Inc. 65.23 TOTAL $ 6,705.36 REDEVELO ENT DISTRICT CAPITAL $ 50.00 Sharon Jones Patrick Shelton 170.00 TOTAL P.E.A. WP ROE - SAMPLE AREA - R -77 Richard E. Nichols Associates, Inc. TOTAL P.E.A. INID. R -66 Allied Construction Company Seifer Safe F Lock Service St. Josepl County Treasurer S. M. Dix Associates, Inc. Ray Brede Margaret Gibson Emmons, George C. Gibson, Mary K. Gibson, James E. Gibson, and Milton A. J hnson TOTAL -2- $ 220.00 $ 1,250.00 $ 1,250.00 $ 134.88 40.98 5,409.64 112.50 124.00 4,090.36 $ 9,912.36 CLAIMS APPROVED South BOd Redevelopment Commission Regular ]fleeting - April 25, 1980 3. APPROVAL OF CLAIMS (continued) 312 LOANS Kiss ell Company $ 8,800.00 Art eil 238.25 Dan Horine 45.96 Frari<lin Pest Control & Frank Dixon 45.00 Amer'can Insulation & Dennis & Catherine Noland 670.00 Denn s & Catherine Noland 66.39 Camp ell Electric Co. & Jeff Gibney 675.00 Barn s Electric, Inc. & Janice Surratt 539.00 Erne t Garza & Jurtin's Construction 58.00 Jurt'n's Construction Co. & Helen Ballard 4,119.00 Jurt n's Construction Co. & Helen Ballard 11,840.00 TOTAL $17,096.60 GRAND TOTAL $35,184.32 4. CO"VNICATIONS a. etter from Mayor Roger 0. Parent P¢ardinu Odd Fellows Building Proposal. letter read as follows: ApA - 24, 1980 t. F. Jay Nimtz, Ptaident edeve.topment Commisz i.on 200 County-City Bu tding outh Bend, Indiana 46601 Mn. N.i.mtz: DISCUSSIONS HELD ON LETTER RECEIVED FROM MAYOR ROGER 0. PARENT REG/WING ODD FELLOWS BUILDING PROPOSAL In a Zetten I wrote you on Match 20, 1980, I alsked that the Redevelopment ^ommczzion putus ue 4utrtheA a pro posat by South 3end Buif-ding Co&po&ation 4otL uhabit tati,on )�j the Odd FeUows Building. At that time, the 2ammi6sion agreed with my kequat and entered into a thiAty day pe iod o4 exc eu/s.ive negoti.- iti on with pAincipatz o4 the Conpona t%on. Fhat this ty- day peA i.od has now posed. -3- South Bed Redevelopment Commission Regular Meeting - April 25, 1980 4. CO"OICATIONS (continued) a. fetter from Mayor Roger 0. Parent..... I am pteased to Aepottt to you that oti.ati,ows have been 4&u t4ut. The nci.pa z in the co&poAation, AA. Sam man, AA. pave NeZs o n and Air.. BiU NeZ6 o n, e Aecon4iAmed the it commitment to abit%tate the Odd Fe Uows Buitding and e ag&eed to the genetat plan standatd,6 t weAe provided by BoAgeAlJone�s and oci.atu at the Aequest .o4 the Redevetop- t Commission. At xh,%.s point in the negotiations, Ae6pect4uutty Aeque6t that the Commission nee to convey the Odd Fettom Bwif -ding the South Bend Buitding CoApoAation th an addit onat th Aty -day pe iod which to jinaeize the tegat documents ceslsatcy 4oA a zucce/ss 4u2 "ctosing„ ans action. It us my 4i&m b e.P,i e �j that a ucces/s 4uUy Aenovated Odd. Fe tows u i t d tng w,i et be a v eAy impan Cant a 6z et o the community. I took 4oAwaAd to youte avoAabte acceptance o4 my tequest and hank you 4oA the eoopetation you have hewn in thi.6 matteA. SineeAe2.y, S/ Ro g eA O. Patent Chair welcomed the Honorable Roger 0. nt, Mayor, City of South Bend, to the ing. r Parent: Mr. Ellison, would you er to begin with the documents that Commission asked for? Ellison: Yes. At the last meeting the Commission (at the staff's request) .e staff requested authorization to ecute an agreement with Borger /Jones & sociates to provide us with some idance on the rehab of the Odd Fellows ilding. -4- South Bond Redevelopment Commission Regular Meeting - April 25, 1980 4. COVA"ICATIONS (continued) a. IMr. Ellison continues... his was designed to determine minimum tandards which the Commission could :hen dictate to a developer. We found hat necessary because we have not .ad a consistent design proposal from .11 those parties we have dealt with on .he building. As a result, it was .ecessary for us to have some basis for stablishing what our minimums are. Borger/ 'ones proceeded on our instructions to do ome work, which we received last Yiday, and the result of the work ssentially is to allow for the building o be renovated in such a fashion that he exterior would be cleaned and epaired (both the terra cotta, and the rick) with the replacement of the indows etc. They essentially suggested hat this is a minimum that a prospective weer can go above, but this is the ottom line. (Mr. Ellison pointed to some ayouts of the floor plans)... he floor plans call for the removal of a ne story wall with roof that was added a the east side of the building and onstruction of a new wall further out rom the east wall. This would permit n atrium that could extend the full height f the building or only two stories. This xtension on the east side would also allow n entrance both from Washington Street and rom Century. This is not inconsistent ith some of the previous proposals that e have had on the structure. They also how the first floor as retail space. ith respect to the office floors, it is heir recommendation that we require that there a men's and women's facility on each loor. Presently there is only one facility er floor in the building. In addition to !iese recommendations a second stairwall s necessary for the building to meet )de, and will be placed on the inside of Ze building. Some of the previous roposals called for the second stairway to on the outside of the building. The plan ;ain also shows typical office layout. -5- South BE Regular Redevelopment Commission ting - April 25, 1980 4. COMMUNICATIONS a. Mr. Ellison continues... One of the options left open by the Borger/ Jones plan is related to the atrium. Some of the previous proposals have talked about light courts and /or an atrium. Borger /Jones seems to feel that some sort of atrium is desirable but they leave it open to the developer as to whether that should be some kind of enclosed structure extending two stories or ten. Phis information was detailed to the 'omission the other day in an Executive Session. The work by Borger /Jones Logically dovetails with the exclusive negotiations that have been going on in the past thirty days with the South Bend Building Corporation who we nave talked to with respect to rehabil- itating the building. We have a letter from Nhyor Roger 0. Parent regarding hyor Roger 0. Parent: About thirty ays ago I asked the Commission to enter nto a thirty day period of exclusive egotiation with the principals of outh Bend Building Corporation, which ou have done. The drawings that you ee here were duplicated and shown to he principals of South Bend Building orporation here in South Bend and they ere mailed to the principals who live n San Francisco. They have indicated hat they are in agreeement with the general uidelines that were prepared by Borger/ ones, and on the basis of that agreement, long with their preliminary offer, I am ere to ask the Redevelopment Commissioners o agree to convey the building to the outh Bend Building Corporation. I am lso requesting another three or four eeks to complete the documents necessary or closing the sale. As I have said at ther meetings, I feel that the Odd Fellows uilding in its present state constitutes an sset to the community and, at this point in time, s the strongest thing we have in the Century all Block area. M South B Regular Redevelopment Commission ting - April 25, 1980 4. CONYUNICATIONS a. Mayor Roger 0. Parent continues... is renovation would be an asset to this o munity. The architects estimate the cost o renovate the building at around $36.00 er square foot, while duplicating that pace in a new structure would probably equire about $65.00 per square foot. enovation of the building seems to make ense economically. I respectfully ask he Commission to agree to convey the uilding to the South Bend Building orporation. We will then, if you agree, otify them today of this decision and hey are prepared to meet with us. r. Ellison: I might add that we have weed the building now for slightly more than ne year, and clearly there is a need to eep some progress going with respect to is rehabilitation. I think the staff ants to encourage the Commission to do wo things; 1) to express that this type of roposal is acceptable from the standpoint f their standards of the building; and ) approve the Mayor's request to allow us o go the next step to get us to the point f final commitment. r. Nimtz: I might say to the Commission hat Mr. Butler and I have met with the yor, Mr. Ellison, and the staff, and lthough we keep talking about a perfor- ate bond, it is our understanding that f this is completed, the bond will be ritten so that if the project fails, we will btain the $200,000 and we can then use the 2001000 to tear the building down if we so esire. Although we talk about, performance ond, technically it is not that unless one ays since he has not performed we get the 200,000. Normally when you talk about a erformance bond, and I think W. Sweeney ill agree with me, you talk about the uilding being completed. Of course, if the uilding fails you certainly couldn't omplete the building for $200,000. It s our understanding, through the I yor and he counsel for Mr. Sam Kalman, that the -7- South Be *d Redevelopment Commission Regular leeting - April 25, 1980 4. COMYIi►JNICATIONS a. Mr. Nimtz continues... fond would be so written that we could obtain the $200,000 if the project loes not meet fruition and completion. t would be the Chair's recommendation that re proceed with the Mayor's request and ;ay that we intend to convey to the South 'end Building Corporation the Odd Fellows wilding if the legalistics can be : ompleted and the bond be arranged to our ;atisfaction within a period of another shirty days. I will leave it up to fr. Sweeney and Mr. Butler to prepare the exact motion. You understand what my _ntention is Mr. Sweeney? 7r. Sweeney: Most assuredly. 4r. Nimtz: If the Commission proceeds Tith the Mayor's request, the Commission iembers may have some questions they may Jish to ask the Mayor. 1s. Auburn: I am sorry that I missed the 3xecutive Session on Wednesday, but I did feet with the Mayor this morning to talk i little bit more about the proposal. I ;till have some very deep reservations about the ability to finance and to bring ;he building on the market, however, I ilso agree with the Mayor that if the > uilding can be salvaged and renovated, that Lt could be the boost that we need to the iowntown area and generate some activity. am concerned, perhaps, that the legal iocunents be drafted in such a way to rive full protection to the Redevelop- ment Commission and to the City of >outh Bend so that we can recapture that )roperty and that building should it not )e completed. I also have a question on -he Borger /Jones renderings. What have -hey recommended to the backside of the ) uilding? South Bead Redevelopment Commission Regular Weting - April 255, 1980 4. COnMICATIONS a. (continued... [r. Ellison: Essentially the same kind f treatment. That is, the brick would e cleaned, repaired, and tuck pointed. n the first level on the back of the uilding on the inside of the ''V' there is one story roof which will be removed. he back wall would be moved out a distance o allow primary egress and ingress from hat side. It could be enclosed at either he second level or extend the height of the ntire building, so that it has an atrium ype of appearance. The building would ssentially remain as it is except that t would appear more like the rendering here with the brick cleaned, repaired, nd new windows installed. s. Auburn: Then other specifications would e written into the legal documents that are n agreement with Mr. Kalman, I assume? 1. Ellison: That is correct. This reement would be no different than any her. That is, that if within the next .irty days we are at the point of .ecution of a redeveloper's agreement, and at agreement requires all the various .ings we are talking about save for the ditional security we are seeking in this stance which is not only $200,000, but the pacity to obtain $200,000 if the project ils and use it as we please. Plans d specifications are required as a part the execution of that agreement. If uth Bend Building Corporation might sh to make adjustments in the plan, they uld be subject to Commission approval. think our routine documents cause us execute the deals in which there ists irrevocable commitments. I don't ink in this situation we will be protected. M South Be *d Redevelopment Commission Regular eting - April 25, 1980 4. COMMUNICATIONS a. continued.... Auburn: Mr. Kalman has indicated .t he is going to finance the ovation of that building solely out his own finds. Do we stand a risk his coming back and asking for nomic development finds or any kind local bonding? r. Ellison: I talked to Mr. Kalman ersonally and he has indicated to e that he does not care to pay prevailing nterest rates on either an interim or ermanent basis, and he has indicated heir intent to finance out of pocket nitially. That is, in effect, to do his onstruction loan out of his own cash. f at a later time he did want to use onds or some other method to achieve ermanent financing, I would not think hat it would in any way effect the deal. . Auburn: I guess my concern is that if e gets halfway into the project and then ,cLll of a sudden he decides he doesn't want to continue on his own financing but can't find other financing either. If that were to happen, then realistically you are t lking about tearing down a building, but it is difficult to move in and tear down building when someone has put some mprovement into it. It is going to be even more of a difficult decision at that point in time than it would be now, with no rovements in the building. . Ellison: That is true. Of course the roblem with the economic development usiness is that we will never have all he information we need before we have to ke a judgement. So what we will have to o is go with our best determination of proba- ility and in this instance we do have a eveloper who appears to be of substantial substance. -10- South Be�eting Redevelopment Commission Regular - April 25, 1980 4. CO""ICATIONS a. Mr. Ellison continues... e have some minimum standards and e do have a recapture method echanism so that at least we do have he capacity to demolish the building n the event the project does fail. don't think we are going to be able o tie down all the other possible uestions to the building no matter ow long we pursue the question. r. Cira: How do you determine when hat bond is a forfeiture? t. Ellison: All of our standard edeveloper's agreements require a start f construction and a projected completion ate. We have talked about a project ompletion time of twelve to eighteen onths. That is one of those details hat will obviously have to be nailed own. Mr. Butler will be concerned bout tying that language, with respect o starting and completion to the eparate documents related to the ecurity. If, for instance, the ecurity is a demand note or if it s $200,000 in an escrow account, I ould imagine that you would wind up with contract that gives us rights to that oney if certain things are not met. r. Nimtz: Generally, Mr. Sweeney, correct e here, it involves a question of notice. f we feel the project is bogged down and of going forward a certain number of ays to reply and to proceed. If not, hen a notice of forfeiture is issued. s that correct, Mr. Sweeney? r. Sweeney: I would say so. r. Nimtz: Are there any questions by he Commission? If not, are there any aestions from the public? Chair recognized W. T. Brooks Bradema.s: -11- South B r� Regular Redevelopment Commission ting - April 25, 1980 4. COMMUNICATIONS a. continued... vr. Brademas: Mr. Mayor, President, and aembers of the Commission. This is, of - ourse, the first time I have had a chance -o see these renderings, and I am assuming if course, that our proposal was given to the 3orger /Jones group because it is very close -o what we had proposed. My architect was :he professor who taught several of the 3orger /Jones people and I can understand low there would be some similarity. In terms of the inside stairway of course, we lad that enclosed on the outside of the > uilding. In terms of the treatment ;o open up to the mall itself, and the )ossibility of an atrium, that was in )ur proposal also. In terms of renovating and keeping the character of the building :hat is exactly what we have proposed. will go right to the heart of it if I :an. Over a year ago, in March, '[ayor Nemeth stated to the City Council, & which Mayor Parent was the President, :hat the determination to demolish the )dd Fellows Building would await the souse Report. When that report came it gas a very positive report. I believe iany of you have read it (I hope you all Lave), it said among other things, that he Odd Fellows Building could serve the ommunity well. On October 10, 1979 I ubmitted a proposal and along with that submitted evidence of the market, and he economic and financial feasibility. in November 26, 1979, I received a letter rom the Redevelopment Commission which tated among other things, that the Commission as instructed the staff of the Redevelopment epartment to begin negotiations with 1 evelopers who had submitted proposals. t read ... "please be advised we will contact ou shortly to begin a negotiation process." ow, I am not all that far away, I wasn't ven out in San Francisco at that period f time. -12- South Be #d Redevelopment Commission Regular Ieeting - April 25, 1980 4. COMJNICATIONS a. Mr. Brademas continues... host of the time I was right here n the community, available. That was 'ive months ago, and I am still waiting ;o hear from the Redevelopment Commission :o start the negotiation process with me. )bviously, I had no word from the Commission, and the only word I had was what I had -ead in the newspaper or what I saw on '.V., and during that time the prime .nterest rate went from 12% to 20 %. 'he newspaper said that you have a substantial San Francisco party, now I m not sure what substantial means. I talked with Air. Ellison and tried to 'ind out what this party had in fact lone and I was told in rather vague terms... "that he had done some buildings gut in California and I believe in exas ". But other than that, nothing gas -publicly revealed. I have not seen . redeveloper's statement or a public lisclosure statement, as I have sub - dtted to the Commission. The ommission is aware that my net worth s in excess of $S million so I would hink that would make me substantial. believe I discussed that with the 'resident and he agreed that he thought t would be a very good definition. At ny event, I would like to observe that his is my community; I employ in excess of 50 people in various jobs in this community. fy people and I pay a substantial amount of axes in this community, and we contribute • United Fund. We are in this community • stay and we have been here for quite ome time. We have heard about the good rack record in restoring buildings in alifornia and Kansas, but we haven't een anything other than the newspaper hich says he has a good track record. think you can look at my track record nd see that I have been doing other things esides restoring old buildings. -13- South Bed Redevelopment Commission Regular Meeting - April 25, 1980 4. COMMUNICATIONS a. Mr. Brademas continues... 'his San Francisco party says they .re going to put up $200,000 to guarantee :ompletion of the mechanical and electrical ystem for four floors. I had proposed to iut up 2-1, million dollars to guarantee ompletion of the entire building. This :oncept that you are looking for an investor it developer to invest his own money, with .11 due respect to Ms. Auburn, I know in her ,wn field she is an authority, but I think Shen you dabble in the field of development hen you have to have a little bit more nderstanding about it. I can tell you 'rom some long experience that the eveloper who puts in his own money is of very bright, and the developer who puts n his own money is the one who cannot et the financing. Now, we never put n our own money, that would be absolutely .sinine on our part. That is why we go nd use other financing mechanisms, and e are able to do that for two reasons; ) our track record and; 2) our financial tability. So at a time when the prime s at 200, any developer who is going o put in his own money is obviously ncertain about the territory. We have eveloped and presented to the Commission .definitive proposal, pretty much what ou see here today, except we did propose o set our flacade on the first floor ack a little bit to give some covered edestrian walkway, but other than that, t is almost the same as what we had resented five months ago. We have given vidence of our financial ability to inance, not the exterior renovation nd mechanical and electrical, but the ntire project. The entire project! e have given evidence of the market for he space, as a matter of fact, we are till receiving calls asking when can we et started? -14- South B nd nedevelgpment Commission Regular Meeting April 25, 1980 4. COMMUNICATIONS a. Mr. Brademas continues,.. re have a commitment on the basement, re have a commitment on the first 7oor, we have a commitment on the ninth .nd tenth floors, and we have evidence if strong interest on all remaining floors pith the exception of two. Obviously in he meantime we could market those. We lave given evidence to this Commission of ur professional training and experience o carry out the work and it appears .tear to us that with the pending potion in front of the Commission, that he Commission in one way or another s not interested in us. We are not ure why, we don't know if it is the �ay we comb our hair, the way we spell ur name, or what. At the same time, s I have told the Mayor before, we do of want to stand in the way of a uccessful renovation of the Odd Fellows uilding. We think it is essential hat this building be preserved and aintained, so I am here today to wish he Commission good, and to tell you hat under the circumstances that we re withdrawing, because we object trenuously to the procedures. Where e, and three other proposed redevelopers pent a lot of time and effort on the asis that the Commission would give s a fair shake. We submitted that roposal, we were advised by the Commission hat we would be contacted to sit down nd negotiate. No such contract was ver made, no evidence was ever given o us that you had any intention to egotiate with us, and while individually like all members of the Commission, nd of course, Mr. Nimtz and I are long ime friends, and I hold him in high steem, I want to suggest to the Dmmission that I am very upset, and I eel you have acted and are acting in n unreasonable and arbitrary manner and -15- South Bed Redevelopment Commission Regular Ieeting - April 25, 1980 4. COMMUNICATIONS a. Mr. Brademas continues... believe that you are setting a stage here to tell local developers at you don't want them involved in the owntown program, or for that matter, any rograms in which this Redevelopment oommision is going to be involved. I am ere to tell you that I resent it and I kink that in the final analysis that this s going to come back and haunt you. . Nimtz: Thank you, Mr. Brademas. ything further from the press or public? v1s. Derbeck: How much are they paying for he building? Mr. Ellison: Their bid is for $100. . Brademas: You might note that ours is ten times that. Ellison: For clarity purposes, our offering for price for the value of the wilding is $295.000. No proposal came in o acquire the building at that amount. The I roposals ranged from $1.00 to $10,000 hich was high. In order to convey the building or less than $295.000 the Commission elected o reject all the bids some time ago and to go nto a 90 -day period of negotiation. Some ime after the 90 -day period ended the South end Building Corporation came to us and about month ago the Commission elected to go into thirty day negotiation period and today's "eeting is the result of that period. 'Ir. Brademas: I might be out of line Mr. Ellison, but can you tell me during that ninety day period who or which of the four initial redevelopers who submitted proposals did you negotiate with? . Ellison: By that, do you mean...did we have contact with redevelopers? t oit. Brademas: Well obviously you are going have contact if you are going to negotiate h them. -16- South Bed Redevelopment Commission Regular Meeting - April 25, 1980. 4. COMMUNICATIONS a. Lontinued... 4r. Ellison: During that period I am sure had contact with you. I also had contact with the other redevelopers. 4r. Brademas: Obviously, there were no attempts to sit down and negotiate. I am not talking semantics, I am talking bout negotiating. I think that is a straight forward question. Did you, in act, during that ninety day period, ontact any of the developers, as you indicated to us in a letter and say ou would arrange a time to sit down d negotiate? 4r. Ellison: No. Mr. Brademas: I think it would be true o say that we were used because the law says that you cannot sell the property at less than the asking price unless ou receive bids and those bids are then ejected. Then you may start to egotiate at a lesser price. r. Ellison: No, we have to wait inety days. r. Brademas: I understand about the inety days obviously; but you were going o negotiate with us during that ninety ys, and there was never any attempt made n the part of the Commission with me at east. Mr. Ellison: Are you representing that e had no communication during that ninety y period? Mr. Brademas: I am representing that no attempt was made on the part of the Redevelop- ment Commission, either by the Commission embers or the staff, to do any type of negotiation with me or any of my people whatsoever in conjunction with the Odd ellows Building. That is exactly what � am representing, because that is xactly the case. -17- South Bed Redevelopment Commission Regular eeting - April 25, 1980 4. COM40NICATIONS a. continued... . Nimtz: The Mayor desires to be zomized. ayor Parent: I think it should be obvious o the Commissioners and the public who have ollowed this that although there have been ommLmications with the other developers, hat in fact the redevelopment staff and considered the South Bend Building orporation's proposal the strongest one hat was submitted. That is not to ay that the others were not strong. he key difference in this proposal, nd the reason the decision was made to nter into exclusive negotiations for hirty days with them was the proposal o submit to us at time of closing a erformance bond. Now all the other evelopers and public had known that hat was submitted. I am not saying hat they might not have done the ame. On February 12 for example, we eceived a letter that basically outlines 11 the elements of Mr. Kalman and [r. Nelson's proposal to the Commission. think it was obvious at that point hat it made it the most attractive roposal. That is not to say that he others might not have been able o put up that type of performance bond, he fact is, they didn't. You have to lake a decision at some point as to hom you are going to negotiate with. ou can't be forever negotiating with 'our or five different people. At some ,oint you make a decision that that is .he person or company you are going to negotiate further with. That is !ssentially what was done, and it is not n unusual procedure at all. Don't you 'eel that is a correct assessment, Mr. Ellison? Mr. Ellison: It is probably correct Mr. Brademas that classical negotiations which might ordinarily occur if we were talking about vacant land did not occur in this negotiation; so I resent any notion M. South Be *d Redevelopment Commission Regular eeting April 25, 1980 4. COM4 NICATIONS a. i4r. Ellison continues... >f conveying to the public the fact that :he staff did not communicate with each if the developers in the process. I will invite the press to contact the other ievelopers to find out some information is to whether we had talked to them. Crue, we have not sat down around a Zegotiation table and in effect said... 'okay Mr. Brademas, you can do this... this ... and this, and in effect we will like it." Part of the reason for that is because the Odd Fellows Building obviously is a unique property for the Commission to handle. The Odd Fellows Building, during this past year has not been assumed to be a property that would remain standing, and obviously, in the mind of... Mr. Brademas: Certainly not in the mind of the Mayor because, in his public statements, he felt that the building should be renovated. Mr. Ellison: That is correct, but bear in mind that we acquired the building last April before the election. During the course of the process of handling the building we simply tried to indicate that it was a somewhat unique situation for the Commission and for the staff, so if we are to be kicked for not handling this as we would ordinarily handle a vacant piece of land, then fine, but I do think we have in fact communicated; we have not negotiated in a way in which you would consider to be formal or normal, but I do think that anybody who would contact the other developers would discover that we have in fact communicated with them all along. I also want to point out Mr. Brademas that after the start of the ninety day period of exclusive negotiation you reacted in just the way the other developers did. That is, you supplied us with additional infor- mation. You provided us with information and marketing, and you talked about financing a time or two with me, so that we have indeed obtained additional information, informal, but additional information during the whole process. -19- South Bed Redevelopment Commission Regular Ieeting - April 25, 1980 4. COMMUNICATIONS a. continued... :r. Brademas: You would not certainly haracterize that as negotiation. I have een in negotiations quite a number of imes and negotiation requires a communi- ation back and forth. I offer this, etc. ack and forth. The Mayor has said that he reason for the selecting of this articular group was their ability or illingness to put up a $200,000 perfor- ance bond. We would have been willing, f necessary, to put up a 22 million dollar erformance bond just as we did. when we uilt the high rise project. We put up 00% performance bond for every project hat we go on. I sign on them personally, nd when you borrow on an EDC program, as e obviously proposed to do, you sign on hat personally; so you are personally ound for the 2z million dollars on top of he fact that you give a performance bond or it. I reject completely, and I on't want the general public to get the dea, that there was ever any negotiation ver made on behalf of the Redevelopment omission towards me. Now what they did or the others I do not know, but I want D go on record to make sure that if you ad come to me and said, "Tom here is what e have to have ... we have to have at least quarter of a million dollars performance ond, I would have gotten back to you in riting promptly with evidence that we ould provide that. For the whole building, of for four floors! r. Nimtz: Mr. Ellison, it is my understanding hat all bids and proposals have been rejected. s that correct? Mr. Sweeney is that correct? r. Sweeney: Yes. r. Nimtz: Any further comments or discussion? s. Derbeck: Is it your understanding that 11 of the original four bids were rejected? -20- South B nd Redevelopment Commission Regular Meeting - April 25, 1980 4. COMUNICATIONS a. (continued.... Mr. Nimtz: Yes, there was a motion at one time where all the bids were rejected. Mr. Ellison: There was. The bids were rejected in November 1979. The Commission then negotiated. with any and /or all parties. I believe our minutes will reflect that. Mr. Cira made a motion that it be the Department Df_ Redevelopment's intent to convey the Odd Fellows Building to the South Bend Building Corporation provided that the necessary bond, in the amount of $200,000, can be provided and that the legalistics and other arrange- ments be completed to the satisfaction of the Redevelopment Commission, within thirty (30) days, seconded by Mr. Donaldson, s. Auburn: I have a question before the vote. 11 of my questions on this proposal have of been answered. All of my concerns ave not been answered. I do not see the omission as a "rubber stamp" Commission, owever, I do believe that with the change f administration and with the new Mayor oming into office, that we owe respect to hat office and the leadership at a point n time where we support the Mayor in any hange of directions. I take Mr. Brademas' :)mments in all due respect, and in many ases, I do agree with some of his comments. will not, however, stand in the way of he Mayor's wish to go into negotiations ith Mr. Sam Kalman on the Odd Fellows wilding. I do not wish to obstruct any ovement that we can made on the Odd allows Building. . Nimtz: I might say that I have reser- tions. I think many of the Commissioners ve some reservations as to whether this n be done. I spoke with Ms. Derbeck at e last meeting about whether this can done for the amount of projected cost d whether it can be rented for the oiected rental. -21- South Be *d Redevelopment Commission Regular Meeting - April 25, 1980 4. COMMdTNICATIONS a. Mr. Nimtz continues... e architects have raised some .estions concerning that, however, the other side, Mr. Cira and I scussed the other day that anybody th inventory these days, has a growing set, even if he just sits there with e inventory. Anybody with material ings these days has a growing asset matter what they have done with it. concur with your remarks and for at reason I have suggested a motion re which is contingent upon our ing satisfied that it can be done. questions on the passage of the lution? There being none... Cira made a motion that it be the artment of Redevelopment's intent convey the Odd Fellows Building to South Bend Building Corporation vided that the necessary bond, in the unt of $200,000, can be provided and t the legalistics and other arrange - ts be completed to the satisfaction the Redevelopment Commission within rty (30) days, seconded by Donaldson, and the motion was nimously carried. Nimtz: Mayor, we welcome you and nk you for your cooperation. -or Parent: Thank you very much. I ,reciate the cooperation and vote. We e about thirty (30) days to get all the k done and that will be necessary prior a successful closing. 5. Derbeck: I would like to ask a question efore the Mayor leaves because he might be he only one with the answer. There is ome feelings in some people's minds that e don't know much about the developer, W. alman, or the South Bend Building Corporation. s it possible to define for us how much of he interest in the South Bend Cor_oration does �r. Kalman have? -22- MOTION PASSED INDICATING THE DEPT. OF REDEVELOPMENT'S INTENT TO CONVEY THE ODD FELLOWS BUILDING TO THE SOUTH BEND BUILDING CORP. South Bed Redevelopment Commission Regular Meeting - April 25, 1980 4. CO UNICATIONS a. ontinued... .1r. Nimtz: It is a corporation to be formed, t has not been formed yet. s. Derbeck: How much of the interest is ith this South Bend group; about which I ave heard some remarks which lead me to elieve that it is not all that smart. 1r. Ellison: Ms. Derbeck, in answer to our question, the proposed ownership in he South Bend Building Corporation would e 50o to Mr. Sam Kalman and the other Oo would be to Michiana Regional Warehouse. 1s. Derbeck: Is that how they are putting tm the money? . Ellison: I don't know how they intend o put up the money. . Derbeck: I think that is the real question. vTayor Parent: We did not initiate contact ith Mr. Kalman or with Mr. Nelson; they alled us and they basically said they were 'nterested in the building, and they have een doing that ever since. Why should they implicate interest, there is absolutely o reason for them to indicate interest if they are not serious about successfully completing the renovation of the building. In addition to that, both Mr. Ellison and have talked to W. Kalman and W. Nelson. We have visited buildings that he has renovated which were much larger than this ne. One of them is a 250,000 sq. ft. uilding in San Francisco. On the day e were there he acquired another similar uilding which he was going to renovate. talked to his insurance broker personally nd he said that if Mr. Kalman needed to ave $200,000 performance bond, he could have at any day of the week with no questions F tiked. We have not made any inquiries, least, I have not, with his work in tchita, Kansas, but in fact, he has -23- South B Redevelopment Commission Regular Meeting - April 25, 1980 4. COMMUNICATIONS a. Mayor Parent continues... one very substantial work there that as been publicly recognized. He has een written up in the newspapers there. r. Kalman is personally a member of the alifornia Economic Development Commis - ion. We are dealing with someone who s highly respected in his home town, so e have no reason to believe that someone f his stature and financial strength ould have any reasons to come over to outh Bend and say.. "I want to rehabili- ate the Odd Fellows Building" in the ack of his mind thing "I am not really aterested, I am just playing a game." Ls. Derbeck: After the meeting where t was announced that Mr. Kalman was the erson interested, I attempted to find ut something about the Miichiana Warehouse. he Chamber of Commerce couldn't tell me nything and even the Better Business ureau couldn't help me. In fact, the eople in the office, when I called their umber were very cagey. After the story as in the paper I had a phone call from company that said "what in the heck is oing on, this company has owed me money or a long time and they won't pay." I now this sometimes happens. That doesn't ule them out, but I have not heard any - hing that reassures me about Michiana arehouse. ayor Parent: Without addressing all of hose concerns, let me put it this way. took office on January 1, 1980, and I ade a commitment to attempt to get the uilding rehabilitated. It is a long time ommitment on my part. We worked with t. Kalman and Mr. Nelson and the choice hat we face is that we either go ahead nd attempt to rehabilitate the building f if they don't do the work the Commission ants them to do, what they committed them - elves to do, and we get the $200,000, we hen tear it down in eighteen months or so. t does not stand in the way of Century -24- South Bead Redevelopment Commission Regular eting - April 25, 1980 4. COMMUNICATIONS a. IUyor Parent continues... , it will hurt nothing trying to work th them. If you were a gambler attempting get this building rehabilitated, there certainly only one way to go, because have nothing to lose, and everything gain. It is not as if we have many oices before us. What we have to gain a rehabilitated building which,as the chitects told us at this point, is even re of an asset than it used to be. What have to lose is possibly an inconvenience eighteen months I, mainly, and the nmissioners to a lesser degree, will have face the public and say "my golly it dn't work and we are recommending that tear it down ". That is a possibility t we are going to tie it down to where e risks are minimal. . Derbeck: Can you tell me why they en't interested in the news media? yor Parent: You have to understand that velopers aren't interested in dealing th the news people. We are, but they are t, and that is their perrogative. They 11 have provided all their information the time the final decision is made by is Commission, but they have not d any great incentives to deal with 1 kinds of people, but that is their siness. I am not going to tell them w to operate. Derbeck: Well, they don't have to tell did they tell you who their bankers were? Ellison: Ms. Derbeck, they did, but bear .mind that when we are negotiating, particu- rly with a relatively new firm that has me on the market or has come to our tention, in a relatively short space of time are more concerned about knowing what eir plan is and knowing they have the pacity to handle the project. We will t normally push the deal to the point ere we get all those details until we get oser to closing. That will happen in the xt thirty days. -25- South B�nd Redevelopment Commission Regular Meeting - April 25, 1980 im a. continued... Ms. Derbeck: I was wondering if .ichiana Warehouse was just a local front so that it would not be necessary for them to incorporate in Indiana? Ellison: No. We met all the principals in Michiana Warehouse, and they are real people just as Mr. Kalman is. I am convinced that South Bend Corporation and all its principals are indeed alive and ell. I do think that from our stand- point, as we pursue targets of opportunity, e have to decide along the way how much ressing to do at a point in time. Obviously, there has been a clous hanging over the building with respect to whether or not a real effort would be made to rehabilitate it. Clearly Mayor Parent, since the beginning of the year, has stated his desire to see the building rehabilitated. Today we have actually taken a significant step because the Commission and the Mayor are in concurrence n trying to take the next step. The next step is to execute the standard finding commitments that the Commission would always execute in any real estate transaction. 1r. Nimtz: Mr. Ellison, the Mayor is late for an appointment so I want to hank you again Mayor. r. Ellison: Excuse me. . Derbeck: Could you come back in thirty days and say that this couldn't e done? 4r. Nimtz: That is correct. . Ellison: At the end of thirty days, theoretically we could try somebody lse or else we could say maybe we can ut public money into it and try to rehabilitate it or try to tear it down. -26- South Bed Redevelopment Commission Regular Meeting - April 25, 1980 4. COMINI CATIONS a. Mx. Nimtz continues... t is the staff's feeling, s. Derbeck, and I have talked to you about his before, that we really want to have he question of the building settled, nd this is clearly a good positive step n that direction. . Nimtz: Thank you, Ms. Derbeck. 5. OLD BUSINESS was no old business to present to the NO OLD BUSINESS ssion. PRESENTED 6. NEW a. commission approval requested for Order # #13 with Plaia Construction • an increase in contract price of $43. • an amended contract total of 27,565. of 1110 Geor Lana, as s. Kat rvn Baumgartner °eau of Housing. qrs. Baumgartner: Change Order #13 is for an increase of forty -three ($43.00) dollars to Contract Northeast #06 with general con- tractor, Plaia Construction. The increase involves the installation of an aluminum ombination storm door instead of replacing e door lockset. Also being deleted from this contract are four (4) window stoops at the home of Alvine Thomas, 110 Georgiana Street. The cost of the storm door was not included in the riginal contract dated June 1, 1979, and is necessary in order to bring the home to standard. Redevelopment Commission pproval is requested for the change order. imarily what we are doing is deleting 85.00 worth of items. The door was reviously to be repaired. We did not epair it, but had it replaced, therefore, Ze eting do not need the lockset and we are four window stoops. -27- South B, Regular Redevelopment Commission ting - April 25, 1980 6. NEW BUSINESS a. Mrs. Baumgartner continues... ere is no such thing as a window oop. Why it appeared on our specs d why the contractor bid on it, is yond our comprehension, so it is being leted from the contract. We did speak th the contractor and he thought ybe it meant the sill, but it was bid nonetheless. . Cira: How could the contractor bid it if he didn't know what it was? . Baumgartner: We assumed he knew t he was talking about. . Ellison: Mrs. Baumgartner, I think at this is a very positive sign that we e identifying these little problems and e correcting them. The staff certainly uld think the Commission should approve r. Cira made a motion to approve Change rder #13 for an increase of $43.00 to ontract Northeast #06 with Plaia Construction ompany to install an aluminum combination torm door and delete four window stoops, econded by Mr. Donaldson, and the motion as unanimously carried. . Ellison: Mrs. Baumgartner, are we ing to see increased business from you the near future? . Baumgartner: Yes and no. Our con - ctors meeting is tentatively scheduled May 7 and we should then be ready to business going. We are going to be king on all our procedures and forms having an orientation, so hopefully by t month we should have something. -28- CHANGE ORDER #13 APPROVED FOR AN INCREASE OF $43.00 WITH PLAIA CON- STRUCTION COMPANY South Bond Redevelopment Commission a Me Regul r eting - April 25, 1980 6. NEW BUSINESS (continued) b. ICommission proval reguested for 11 authorizing the RedeV612�ment Agreement sition of land and the quit =claim deed(s for of title thereto in th land to be disposed alle Park Proiect. Ind. 1 # Name Amount 18 -14 Lula McNeal $129.60 s. Auburn made a motion to approve esolution #611 authorizing the execution f Redevelopment Agreement for the isposition of land and the execution of uit -claim deed(s) for the transfer of itle thereto in connection with land to e disposed of in the LaSalle Park roj ect, Ind. R-57, (Parcel 2 18 -14 D Lula McNeal, in the amount of $129.60), econded by W. Cira, and the motion as unanimously carried. 7. PROGRESS REPORTS a. lax Abatement Ors. Kolata: The Commission will remember in December they passed a resolution ;tating their intent to not consider any lore tax abatement requests pending _mplementation of local standards and >rocedures. Since that time, Mr. Horton ind I have worked with Mr. Richard Hill, :i.ty Attorney, and Kathy Cekanski- Farrand, :ouncil Attorney, and have helped write n ordinance which was passed by the ;ommon Council at their April 14, 1980 ession. The ordinance which has been sassed establishes the procedures for 'iling for tax abatement. Just ,riefly, as the state law is written, he procedure must follow the declaratory - esolution process that the Redevelopment ommission follows. -29- RESOLUTION #611 APPROVED FOR THE SALE OF PARCEL #z 18 -14 TO LULA MCNEAL IN THE M4OUNT OF $129.60 IN LASALLE PARK (IND . R-57) DISCUSSION CONCERNING TAX ABATEMENT PROCEDURES South Be *d Redevelopment Commission Regular eeting - April 25, 1980 7. PRO SS REPORTS a. 14rs. Kolata continues... e way it will work is that the petitioner will go to the City Jerk's office, fill out a petition equesting tax abatement, it will hen be referred to redevelopment For investigation and report to the City Council, who will then have a declaratory resolution. They will ass a resolution, refer it on to the ea Plan Commission and it will then ome back to the City Council for public hearing and final passage. e staff is still working on procedures or handling these requests as they come in to the department. The ordinance as passed, but it is still in the rocess of having the legal notice of its adoption published, so therefore, he petitions will not be available til May S. . Nimtz: It would come directly from he City Clerk's office to us, then it would go to City Council? qrs. Kolata: We would then make a report to the City Council. . Nimtz: Then they refer it to the Area Jan Commission? Mrs. Kolata: That is correct and then it comes back to the Council for a public hearing and for final adoption of the resolution. We are still working on the procedures, and we expect that probably next week we are going to try to do a couple of dry runs in terms of what types of information we need. Mr. Nimtz: Do you know Mrs. Kolata if it provides for a public hearing in front of the Area Plan? Mrs. Kolata: No, there is no hearing at Area Plan. Mr. Ellison: It for the most part follows our state statute so that the presumption is for the Area Plan Commission to say that the plan or the abatement in question is consistent with the local plan. -30- South end Redevelopment Commission Regula Meeting - April 25, 1980 7. PROGRESS REPORTS a. tinued... Mrs. Kolata: The only public hearing actually called for in the ordinance is at the City Council. There will be legal notices of the hearing and it would be at the time -of the recon- firming resolution. The whole process would probably take 6 to 8 weeks for each decision, by the time it makes the rounds. I believe we have 30 days to investigate and report, and I believe Area Plan also has 30 days to see if each abatement request is in conformity with the master plan. Mr. Kagel: I have a question. If rejected by the Area Plan Commission, is there redress or recourse? Mr. Ellison: Well that is not spelled out in detail but the local ordinance models the state redevelopment statute in terms of procedures that we go through for declaratory process. If the Commission passed a declaratory resolution and the Area Plan Commission had objections, the Commission would take those into account as the resolution came back for the confirming declaratory process. Presumably the Commission, or the Council in this instance, would make some judgement. I really suspect from a practical matter that the Area Plan's concurrence would likely be fairly standard. If there are problems, they would likely occur on the front end where the Redevelopment Commission is asked to do a study and to provide evidence to show that the statutory tests are met. If, for instance, we receive a request or petition for property that clearly does not meet any of those tests, that is that the public action is not necessary to cause some development to happen if the area is not right, etc. We would presumably put that in the report, and recommend that an abatement not be be granted. -31- South E Regular 7. PRC a. Mr. b. end Redevelopment Commission Meeting - April 25, 1980 GRESS REPORTS continued... Kagel: Thank you. LaSalle Park Disposition Plan Mr. Ellison: We have indicated at previous Commission meetings that we have been working on a LaSalle Park disposition plan. We are about at the stage where we can come to the Commission with that plan. We met both last Saturday and this past Wednesday night with the LaSalle District Council to try to gain some neighborhood imput into the plan to dispose of the lots. At this juncture we are encouraged from what we are hearing from them. Generally, they appear to be buying into the plan concept which would call for us to identify parcels that are available and then offer those to adjoining owners for $1.00 in a first phase period. If inventory would remain we would then have a second phase where we offer those for $1.00 to the people who live in LaSalle Park. If after that process any land remains we then make it available to any- one in the City for $1.00. We have indicated to them our desire to move forward with some speed and that it be our hope that the Commission might approve of a plan which would allow us to dispose of the lots at the end of summer time, probably during the month of September. The reason for that is a number of people have gardened on lots over the years and we don't want to be in a position of conveying land after someone has gone to all the trouble of putting in a garden. Again, the LaSalle Park residents we have_ met with, and that has been a fairly sizable number, appear to be in concurrence with the plan. We expect to be in a position to bring the written plan to the Commission for its approval sometime in the near future. Mr. Nimtz: Thank you. 32 PROGRESS REPORTS ON LASALLE PARK DISPOSI- TION PLAN South 7. C. ,nd Redevelopment Commission Meetin - April 25, 1980 REPORTS (continued) Update on Rental of Property Within the Centu ry Mall Project Area. Mrs. Kolata: We have approved another lease by telephone that is similar to the previous leases in the Century Mall area. I think we should have a recon- firmation of that lease. We have rented the Gallenkamp property to a firm known as Allen Shoes. It is on a month -to- month lease. They have provided us proof of insurance, naming us as co- insured, in the amount we have requested, and it is a $1.00 lease the same as we have done with Robertson and PDH Office Equipment. Ms. Paula Auburn made a motion to ratify and confirm the lease between the Department of Redevelopment and Allen Shoes in the Century Mall Project Area (IND. R -66) seconded by W. Cira, and the motion was unanimously carried. Mr. Ellison: As an addition to the update of rental property within the Century Mall Project Area, I would like to report on the request we had from the Brademas organization to lease some space. I believe the staff indicated at the last meeting that we had contact with HUD with respect to the leasing of space to a political organization. The staff wants to report that we have had further conver- sations with HUD and they agreed that there is no legal prohibition against the leasing of a facility that we have acquired in part or whole with federal funds to a political entity on an interm basis. HUD did suggest, however, that we follow very closely the requirements of the Federal Management Circulars if we intend to lease such property. That is, that there be a process which would allow for competition from any interested party to lease the space. Secondarily, HUD has suggested that we require any political entity to pay fair market rent for the space. Based on that -33 - DISCUSSIONS ON RENTAL OF PROPERTY WITHIN CENTURY MALL PROJECT AREA South B�nd Redevelopment Commission Regular Meeting April 25, 1980 7. PROGRESS REPORTS (continued) c. IMr. Ellison continues... information the staff has had economic rental appraisals made on three properties, The House of Fabrics, Lerners, and Lane Bryant. The reason the staff sought economic rent appraisals on these three properties and have called them to the Commission's attention, is that we have not yet had any indication of interest from retailers for any of these three properties. We have simply seen no interest in them at all despite the public acknowledgement of the possibility of $1.00 leases. The fair market rent for The House of Fabrics would be $430.00 per month, for Lerner's it would be $398.00 per month and Lane Bryant would be $540.00 per month. What the staff would like the Commission to do to move this matter along further, is to go through a solicitation process to try to determine whether there is interest from other political parties in leasing all these properties in which we indicate that the minimum offer is the amount of the fair market value. I don't know exactly off hand what the figures come out to per square foot but the figures are simply a calculation of the appraised cost per square foot times the amount of first floor space available in the facility. We would like Commission author- ization to go through a solicitation process so that we might determine whether there are additional offers to be made on these properties so that we can settle the Brademas matter. I checked the previous minutes, there was some indication of a desire to serve parties on a first come, first served basis. We have had the letter from Brademas' organization for some time and I think the staff's interest is merely to try to settle it in one way or another. Having settled the potential problems with HUD from the standpoint of its legality and the process to be followed, we would like Commission authorization to go through a solicitation process and would like the Commission to see if we can determine, by our next meeting, whether we can receive -34- South Bond Redevelopment Commission Regular Meeting- April 25, 1980 7. PRO SS REPORTS c. Mr. Ellison continues... offers from other parties. Mr. Cira: I haven't seen anything in the papers that this vacant building has been advertised. Maybe a lot of these retail merchants that could be interested would like to rent for the Christmas holidays. This is only the fifth month of the year. They could be interested in a $1.00 per month lease. Mr. Ellison: We have had a number of people look at these and other properties, but these properties do require a substantial amount of work. Some need more work than others. Mr. Cira: But, have they been advertised? Mr. Ellison: We have not advertised them formally, however, after the initial news story, we have had quite a number of phone calls. Mr. Kagel: I guess I am assuming something here. I understand the term of parties in this case refers to political parties. In other words, it is quite feasible or possible that there could be one party in one building, and then next door someone of the opposite political persuasion, in the way that you have pointed out here. Mr. Ellison: Yes. HUD's concern is that if we lease to a political entity, that there be an open competition process and that the rental not be less than the economic rent as shown by appraisers. Mr. Kagel: In other words, I guess what I am trying to say is that you have already had an initial request from a political entity and if they accept what your proposition is here, your proposal, that thay can then have it under the conditions that you have placed. -35- South Bond Redevelopment Commission Regular Meeting April 25, 1980 7. PROGRESS REPORTS c. IMr. Kagel continues... If they wanted two buildings, for instance, but yet there is another political entity that would like to have the other building, what happens in that case? W. Ellison: Mr. Kagel, any open process presumes that there might be more than one party which might make an offer on the same building. All we are saying is an offer cannot be lower than the economic rental value. If we get more than one offer then the Commission would make a judgement. Ms. Derbeck: Is this only for political people that the offer can't be less than the fair market rental? Mr. Ellison: The Commission, if it wanted to, could lease to retailers at economic rental value. However, the previous indication from the Commission was that our objective was to try to reduce our burdens for operating vacant property. It was to reduce public risk and also to try to generate traffic. "As a result of that, we then executed some leases for $1.00 to retailers. The reason we are talking about economic rents now Ms. Derbeck is simply related to the process of talking to HUD pursuant to the Brademas. letter, regarding leasing of space. Ms. Derbeck: What if nobody is interested in a fair market price, would you rent at the normal asking price? Mr. Ellison: To a political entity, absolutely not. Ms. Derbeck: To a merchant, yes? W. Kagel: You are really wanting someone in those building for safety's sake? -36- South end Redevelopment Commission Regula Meeting - April 25, 1980 7. PROGRESS REPORTS c.l continued.... Mr. Ellison: That is correct. Ms. Derbeck: I understand, I just wanted it to make sense. You told me that fair market rent is only required for political entities. Mr. Niintz: That is correct. Wouldn't you say that great and sufficient contact has been made with possible renters through the Downtown Council, Mr. Kagel? Mr. Kagel: Yes. Mr. Nimtz: We have tried everything to get people interested in downtown. Ms. Auburn made a motion that the Director of the Department of Redevelopment be given authorization to proclaim fair market rentals based on the prior appraisals and review to be $430.00 for the House of Fabrics, $398.00 for Lerners, and $540.00 for Lane Bryant, also to authorize the Redevelop- ment staff to solicit proposals from any interested parties enabling the Department of Redevelopment to receive offers of not less than fair market rentals, seconded by Mr. Cira, and the motion was unanimously carried. Mr. Cira: Are these rents based on per square foot rates? Mr. Ellison: Yes, but the charge per square foot is not the same for each store. Ms. Horton: I believe it is $1.05 for Lane Bryant, $1.25 for House of Fabrics, and $1.15 for Lerners. Mr. Ellison: The appraisers looked at each building independently, obviously they used some of the same computations but they described an economic rent for each structure. -37- COPnMISSION APPROVAL GIVEN TO DIRECTOR OF REDEVELOPMENT TO PRO- CLAIM FAIR MARKET RENTALS ON PROPERTY IN CENTURY MALL PROJECT AREA (IND. R -66) South B�nd Redevelopment Commission Regular Meeting - April 25, 1980 7. PROGRESS REPORTS L-01 C. Mr. Ellison continues... So in establishing economic rent we need to average the two appraisals and then use whatever that figure is. In this instance it is not the same for all three structures. Ms. Auburn: I would hope that some consideration would be given on a first come, first served basis, if it comes down to looking at two or three different entities who want to rent. I don't think you can jeopardize people who come in and request usage of the space. Mr. Nimtz: I didn't want to create any problems with the Brademas organization Ms. Auburn. This may sound political, but I just didn't want any problems among other political entities, and I just wanted to give everyone a fair shake. Mme. Auburn: Now they are going to know. Mr. Sweeney: There are three places, so we even have room for an independent organization downtown. r COMMISSION MEETING The next regularly scheduled South Bend Re velopment Commission Meeting will be hel on May 2, 1980, at 10:00 A.M. Ms. Derbeck: You have been silent on a certain matter for awhile. It has been quite some time since a special counsel was appointed to investigate the Butler matter, and we haven't heard anything about what is going on. It seems like a long time has elapsed. NEXT COMMISSION 14FETING South Bend Redevelopment Commission RegulaT Meeting - April 25, 1980 Mr. Nimtz: I might say that I met with Judge Rakestraw last Friday, and he has reviewed the material which was sent to him. It is my understanding from the Judge that he has contacted certain other parties as to whether they would like to be interviewed by him, or would like to discuss matters with him. He is proceeding with his investigation; I presume, and I believe he should have a report for us within the next thirty days. I an not at liberty to say what he is going to do. He has suggested to me certain procedures he is going to follow and I think it is up to him to make any statement he wants to make. Ms. Derbeck: Well alright, I just wanted to know. This is an important matter and, although Mr. Butler has not appeared at recent Commission meetings, I feel it is important. Mr. Nimtz: Mr. Sweeney is only filling in for him temporarily. Mr. Butler was here at the last meeting. He has been engaged in other business. Mr. Ellison: The judge had to obviously review a great number of documents. In fact, we have put together a rather substantial packet and he has had to take some time to get all the details together. Ms. Derbeck: Is he being paid for by the Department? Mr. Ellison: Yes, this is at the Commission's expense. He is, in effect, special counsel. There being no further business to come before the Commission, Mr. Donaldson made a motion that the meeting be adjourned, seconded by Mr. Cira, and the motion was unanimously carried. The meeting was adjourned at 11: 5 A. M. -39- DISCUSSIONS CONCERNING MR. BUTLER'S POSSIBLE CONFLICT OF INTEREST ADJOURM4ENT South end Redevelopment Conmlission Regular Meeting - April 25, 1980 -40- Carl Ellison, Executive Director