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HomeMy WebLinkAbout10-28-19 Community Investment souTI1 U _.: = rd �\ PEACE\ S f 1865 OFFICE OF THE CITY CLERK KAREEMAH FOWLER, CITY CLERK COMMUNITY INVESTMENT OCTOBER 28, 2019 4:00 P.M. Committee Members Present: Gavin Ferlic, Sharon McBride, Dr. Oliver Davis Committee Members Absent: Regina Williams-Preston Other Council Present: Tim Scott,Jo M. Broden, John Voorde, Karen White Jake Teshka Other Council Absent: None Others Present: Lisa Horton, Dawn Jones, Bob Palmer Presenters: Jitin Kain Agenda: Bill No. 19-67-Approving a Lease Between the South Bend Redevelopment Authority and the South Bend Redevelopment Commission Relating to the Double Tracking Commuter Rail Bill No. 19-67- Approving a Lease Between the South Bend Redevelopment Authority and the South Bend Redevelopment Commission Relating to the Double Tracking Commuter Rail Jitin Kain, Interim Director of the Department of Community Investment with offices on the 14th floor of this building stated, I have a brief presentation. As Council is aware, the double tracking project is adding about sixteen-point nine(16.9)miles of second(2nd)track in portions of the route between South Bend and Chicago, and the project is expected to have enormous impact on the region including, improved reliability, faster travel times, increased service, increased safety and enhanced economic benefits. The City Council passed a resolution in 2016 in support of this project. Subsequently, the Redevelopment Commission and the Saint Joseph County Commissioner signed an agreement in May of 2017,which stipulated that the County would cover the cost of the double tracking project, which is estimated at $18 million dollars. The City would cover the cost of relocating the station, which was expected to be $25 million dollars at the time. These two (2) projects collectively would shave off a big chunk of the travel time between South Bend and Chicago, bringing the travel time closer to ninety (90) minutes. More recently, the County has approached the City and asked to redo this original MOU in 2017 and asked the City to split the cost of double tracking and by doing this, the City not have the obligation of the $25 million-dollar relocation expense of moving the station.The overall project for the County remains at$18.25 million. They've asked the City tot split this to $9.125 million in bonds that we are here today asking for your approval. These are TIF bonds and I will be inviting a couple of other INTEGRITY' SERVICE'ACCESSIBILITY JENNIFER M.COFFMAN BIANCA L.TIRADO JOSEPH R.MOLNAR CHIEF DEPUTY/DIRECTOR OF OPERATIONS DEPUTY/DIRECTOR OF POLICY ORDINANCE VIOLATION CLERK EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 1227 W.Jefferson Blvd.I South Bend,Indiana 46601 I p 574.235.9221 I f 574.235.9173 I www.southbendin.gov 1 1 ®CITY OF SOUTH BEND ' OFFICE OF THE CLERK individuals to share some more details on this. The County would then contribute this amount that we're contributing towards double tracking towards the cost of a new station which would be within the corporate limits of South Bend. The Redevelopment Commission has also in recent weeks,signed an agreement with NICTD to maintain a station in South Bend for a period of twenty (20)years.The bond issuance schedule is roughly as follows.We began with an update to Council on the 23rd. The Redevelopment Commission adopted resolutions and set public hearings on the 26th. We've had MOU's signed on the 10th. And today we're here for the bond lease resolution, as read by the Clerk. I'm going to invite Mike Nolan from NICTD to share a few words about the project followed by Mark Pascarella from IFA. And then finally, Phil Faccenda to share a few details about the bond. Thank you. Mike Nolan, 33 East US Highway 12, Chesterton, IN, served as a presenter for this bill. Mr. Nolan stated,Thank you. I appreciate being before the Council again tonight.We were here before earlier, so I'll try to make it brief. We've talked about this double track program for a while. This is a seminal moment, we are just about to get all of our funding together. We're right before the FTA right now seeking an all-important entry into their engineering phase to get the project advanced towards a full funding grant agreement. Jitin did a great job of assessing the benefits. We're going to triple ridership out of South Bend. South Bend is where we started to look at this double track. Ninety (90) minutes, ninety (90) miles downtown South Bend or South Bend to Chicago. I mentioned the downtown stop in South Bend, and we are certainly studying the station location. But that is not part of what we're talking about today. In order to determine where we're going to ultimately be in South Bend, we first (1St) need to clear the way further to the west and make the travel times quicker. That's what this project does. We advanced this project in June of this year to the FTA with the State funding approval by the State budget committee. I just heard from the head of the FTA a few weeks ago when we got our West Lake project into engineering,that double track and her mind is right on the heels. So, this is a very important element of the project. In addition to this, we also made a commitment to not only Michigan City but to South Bend, that we will maintain service for a minimum of two (2) decades from the last point in time that money is spent from South Bend on the improvements for the railroad. That is not any way shape or form a suggestion that we're looking at not running a service at any particular point in time. But it does give you some assurance that the monies you're going to put into this railroad will be here for a minimum of several decades to come, if not much longer than that. Thank you. Mark Pascarella, Indiana Finance Authority, 1 North Capital, Indianapolis, IN, served as a presenter for this bill. Mr. Pascarella stated, I'm going to go through three (3) very quick points with you. Point number one (1) is to talk about the original financing plan. When this was originally constructed,it was supposed to be fifty percent(50%)federal grants. Fifty percent(50%) is what the federal agencies would consider is local funds. Of that fifty percent,(50%) fifty percent (50%)was going to be from the State.The other half was going to come from the four(4)counties: Lake, Porter, St. Joseph and LaPorte Counties. And those were going to come in at eighteen and a quarter percent (18.25%) each. Subsequently, as we moved forward, we really started to dig deep into this project and a couple things happened. Number one (1) is we really started getting estimates of how much it was going to cost and it was a little bit more than that 50/50 split I discussed on the local share. Also, the Federal Government at that point decided that rather than doing a 50/50 split, they're going to do a 62/38 split. And, of course, for Federal Government reasons,they want the thirty-eight percent(38%)and they want to put the sixty-two percent(62%) on the locals in the State as well. When that happened obviously that shifts cost dramatically on to the State and local areas. So, at that point during the last session, the IFA, Northwest Regional EXCELLENCE ACCOUNTABILITY INNOVATION 1 INCLUSION EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend.Indiana 46601 p 574.235.9221 f574.235.9173 TTD574.235.5567 www.southbendin.gov 2 CITY OFSOUTH BEND OFFICE OF THE CLERK Development Authority and NICTD went to our legislators and also discussed with our governor. At that point it was decided to provide$205 million in extra funding for the West Lake project and the double track project. The point in doing that was to not have to come back and ask the local participants for any more than what they originally agreed to fund. Mr. Pascarella continued, So, the State contribution got upped in a major way. In fact, we're now the largest contributor to these projects. However, I think what should be noted is that the legislators and the governor really support this project. And they did that because it wasn't just local politicians agreeing to that, it was the whole State who had to vote for that, and they voted overwhelmingly to fund the project. So therefore, I think you can see the commitment from the State and from Governor Holcomb that we are ready for a seed with funding this project. Which brings us to why we're here today. So, in order to get the funds from the Federal Government, we had to apply as Mike was talking for entry into engineering. And the Federal Government wants to make sure that when we do apply that we have a fully committed financial plan. They don't want to have empty promises and end up approving something only to find it fall through because the local or the State could not come up with financing. In doing so we put together a financial plan that had to be backed and voted on by the IFA board, the Northwest Regional Development Authority, and NICTD. Upon approval from those three (3) boards, then it went in front of the State budget committee in July, late June. We were able to get approval for that and we move forward, we submitted to the FTA, the FTA is looking at this project and as they're looking at the financing plan, they are watching to make sure that all the partners who agreed to fund, step up and make the proper approvals so they can fund and there's no additional unnecessary actions needed to be taken by the authorities. I can tell you that the State has already cleared its way and it has no further action needed. LaPorte County in a deal also with Michigan City has done the same, they fully funded their portion. And so has St. Joseph County. So, this is the last remaining piece that we have. And you know, we're very excited to be here tonight, because again, it is the last piece and against what we're asking your approval for tonight. The last piece is anytime you see a lot of funds being sent into a project fund. I want everybody to know here that also once those funds do come in, if the approval happens,they will be locked up. So, they can only be used for the double track project. So, your money will be protected. We want to make sure that that's obviously very important. I'd be happy to take any questions that you may have. Phil Faccenda, Barnes and Thornburg with offices located at 100 North Michigan Street, South Bend, IN, stated, I just want to briefly explain to you the bond financing and the resolution that's in front of you. It is a Redevelopment Authority bond issue that the Redevelopment Commission will lease property from the Redevelopment Authority. The reason for this structure is to maintain the Redevelopment Commission's two percent(2%) debt limit or the redevelopment district's two percent (2%) debt limit so it's a lease financing structure. There will be a portion of Cleveland Road that will be leased. It will then be transferred from the City to the Redevelopment Authority and leased because an asset needs to be leased as part of the lease. That asset will approximate the value of the bonds that are being issued. The bonds that will be issued are as reflected in your resolution, not to exceed $11 million. It is anticipated that the actual bond issuance at the time of pricing which will probably be in December. If the Council approves, and we make it through the rest of that bond schedule you see in front of you, the financing will probably be for less, and maybe as much as $1.5 million less than that. But it was seen as a not to exceed number, and necessary that in the event that the Redevelopment Commission should choose to use a debt service reserve fund, that was necessary for the dollar size of the bonding. It is not to exceed eleven (11) years in terms of the term of the bonds, and the interest rate, as reflected in your resolution will EXCELLENCE I ACCOUNTABILITY INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 TTD 574.235.5567 www.southbendin.gov 3 ®CITY OF SOUTH BEND I OFFICE OF THE CLERK not exceed five percent (5%) on the bonds. Again, given current market conditions we would expect to do quite a bit better than that when the bonds are issued. Councilmember Jake Teshka asked, The $205 million, right?That's the State contribution? Is that on top of another, I guess, what's the scope of this entire project? The City and the County are throwing in$18.2,you know, LaPorte County is throwing in x,the Northwest Regional is throwing in x and then the state FDA, what's this overall? What does this double tracking cost? Mr. Nolan replied, Sure. We're going to be slightly above $400 million in total project cost. And so, the quick numbers I have right here between the two (2) counties, which is St. Joseph and LaPorte, you're $18.25 million each. And then you're going to have Northwest Regional Development Authority, which is Lake and Porter County. They're going to be in for $18.25 million as well. So, it's roughly between $73 million between the four (4) counties. I have the Federal Government coming in for grants should we be approved that somewhere around $160 million, and then the State contribution that $205 for both West Lake and double track. So, a portion will be used for double track. But that will also be an increase from what the State had already been putting in. So, the State's going to be roughly around $180 to $185 million dollars into the project. So, you can see that State is the largest contributor. Councilmember Jake Teshka followed up, So, our approval is the last piece of this puzzle, and then it goes to the timeline, the Redevelopment Commission, and then the RDA. When does track actually start getting laid on this, if all goes well? Mr. Nolan stated, I'll add one (1) piece on that $400 million price tag, the FTA requires us to put a thirty percent (30%) plus contingency on so we're looking to bring this project in substantially lower than that, but that's part of the process that the FTA looks for. It's that you have not only your base cost, but you have a sizable contingency on that process as well. If we maintain our current schedule, we hope to be getting a construction contract in summer of 2021 and finish up in summer of 2023. We also are required to put on schedule contingencies so you may see us talk about April of 2024 in certain documents,that's because like price contingency,the FTA also asks us to put schedule contingency on, but we drive to our base budget we drive to our base schedule. Councilmember Tim Scott stated,this is in light of Karen White and Oliver Davis. Two(2)things. This is for the public more than anything,this is setting the bond,this the financial side to it. It has nothing to do with the location of a station whether downtown or anywhere else in the City, correct? Mr. Nolan replied, That's correct. Councilmember Tim Scott Stated, Okay, and then this does not have anything to do with routing of that double track through any neighborhoods or any other land through this,right?This has only to do with the financials. Right? Mr. Nolan replied, This has to do with the double track project, no taking of any land in South Bend, no change of location from the east end of the airport or routing. Councilmember Tim Scott stated, Thank you. I just want to make sure that was that was for the public more than me. I just want to make sure that was out there. EXCELLENCE ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 TTD574.235.5567 www.southbendin.gov 4 ()CITY OF SOUTH BEND I OFFICE OF THE CLERK Councilmember Jo M. Broden stated, I want to thank Mr. Kain for sharing the MOU. I believe it is referenced in one(1) of these documents. Between St. Joseph County Board of Commissioners, South Bend Redevelopment Commission, and NICTE, so thank you very much. Has that agreement been signed yet? Mr. Nolan replied, Yes. Councilmember Jo M. Broden followed up, By all parties? Mr. Nolan replied, Yes. Councilmember Jo M. Broden followed up, In terms of that broader discussion with regard to station location,could you define the public input process and the transparency going forward with regard to that decision in very specific terms? What will that look like and at what touch points will the public be involved in that? Mr. Kain replied, Sure. We are still waiting on the study to be completed. Our consultant, ACON is working on two (2) components of the study. One (1) looks at the preliminary engineering analysis for a station in the downtown and what that means is it looks at the route to downtown, looks at the structures in downtown, and then helps us confirm the capital costs. So that process is wrapping up. The second (2nd) part of that study is to look at the economic impact of the cargo master plan that the County and airport are currently working on. That portion is also wrapping up. We expect to have a presentation to Council, perhaps by mid to late November. As that information comes to us,we will bring it to the Council immediately.That will be really the launch of at least some public participation and what that result is and following that,the Mayor will have to be a part of the conversation on what the next steps are on the station. Councilmember Jo M. Broden then asked, And as a follow up in terms of final approval, will that be a Council decision or whose authority will that fall under and will it be a public process? Mr. Kain replied,We certainly expect to be very transparent about that decision,the decision really would be between the City of South Bend,the County,Airport and NICTD,these are all the parties that have been part of the conversation. And as the MOU states, we expect the process to be a collaborative process. So, when we pick the location, we want all the parties that have been engaged in the process for a few years now to also be part of the decision making. Councilmember Jo M. Broden stated, Okay, so public meetings then going just as far as a takeaway, public meetings going forward relative to this question, will be collaborative in terms of the, presentation. And so, the work itself and the decision making will be public and collaborative. And then the decision itself will be public and collaborative. Mr. Kain replied, The decision will be public, we expect to, like I said earlier, come to Council with some results of the study by mid to late November, at that point, I can't tell you exactly what meetings will occur post that point, but we will do our best to be as transparent as possible. Councilmember John Voorde stated, I'd just like to thank all the parties involved. The City of South Bend. I know, Jitin, you've done a lot of work on this, thank the County Council. I mean, the Commissioners, President Kostielney is here, this takes a lot of coordination and a lot of work EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION EMPOWERMENT 455 County-City Building 1227 W.Jefferson Bvld I South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 TTD 574.235.5567 vwvw.southbendin.gov 5 CITY OF SOUTH BEND OFFICE OF THE CLERK on everybody's part. And the magnitude of the benefits are yet to be measured, but the magnitude of the work is daunting,and I appreciate you and the State,Governor Holcomb,and the Legislature for not passing along the costs from the feds. So, thanks very much. I appreciate it. Councilmember Jo M. Broden asked, Would it be possible also to fill out tonight's record and similar to how you provided the three (3) party MOU, to actually provide the two (2) party MOU between the County and the City, please? Mr. Kain replied, Yes. Councilmember Tim Scott stated, I want to thank the State, the City, the County and everybody involved. I also want to thank you guys for being patient and letting us work our schedule on getting our budget out of the way. I don't think you guys wanted to be here until 12:30 a.m. doing this. So, I appreciate that. I know we're the last piece, but I appreciate the patience on that. Committee Chair Gavin Ferlic opened the floor to the public for anyone wishing to speak in favor of Bill No. 19-67. Andy Kostielney, President of the Saint Joseph County Board of Commissioners with offices on the 7th floor of the County City Building stated,I want to add a couple of points. One(1),regarding the memorandum between the County and the City. Any monies that are spent first (Pt) would come from the County. So, the City would only be on the hook for any money that's spent in the event that the project did not move forward, which we discussed a little bit earlier today. In all likelihood,if we clear the first(1st)hurdle in the next few months,that would be a strong indication that the project is going to move forward. In the event the project did not move forward,the County money would be spent first(1St). Only after the first(1st) $9 million is spent would the City money be taken into account. The second (2nd) thing is I want to help you answer a question that I had to answer when we voted on this. How are we spending tax dollars in St. Joseph County or the City of South Bend for a project that does not take place within the County or City limits? The answer is pretty simple. Much like the US 31 project down south, a lot of the work wasn't done in St. Joseph County or the City of South Bend, but we've certainly reaped the benefits of that. This is another indication here, I probably shouldn't say this in public, but from a St. Joseph County standpoint,the double track project, we get the lion's share of the benefit.Next to LaPorte County, St. Joseph County gets the biggest impact on their ridership and potential economic development because Lake and Porter County are spending the same amount of money as St. Joseph County is, and their benefit is much less than ours. So, I think it's just a great project. I appreciate your work and the work of South Bend's Administration as well. So, thank you and I hope you support the project. Committee Chair Gavin Ferlic opened the floor to the public for anyone wishing to speak against Bill No. 19-67. Seeing none, the meeting was turned back to the Committee for a vote. Committee Chair Gavin Ferlic made a motion to send Bill No. 19-67 to the full Council with a favorable recommendation.The motion was seconded by Committeemember Dr.Oliver Davis and carried with a voice vote of three(3) ayes. EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f574.235.9173 TTD574.235.5567 www.southbendin.gov 6 •CITY OF SOUTH BEND OFFICE OF THE CLERK Respectfully Submitted, Gavin Ferlic, Committee Chair EXCELLENCE ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 227W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f574.235.9173 TTD 574.235.5567 www.southbendin.gov 7