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HomeMy WebLinkAbout6C2� C (-2-) ,pb,ayi,� Community & Economic Development , Iu5 1200 County -City Building, 227 West Jefferson, South Bend. Indiana 46601 -1830 - Phone 574/235 -9371 - Fox 574/235 -9021 To: South Bend Redevelopment Commission From: Don Inks Subject: Curtis Products Letter of Intent — Bosch Site Date: November 26, 2012 Attached is a Letter of Intent (LOI) — Summary of Lease Terns for the lease of the Bosch site to Curtis Products. Curtis Products would have a 12 year lease with the first two years at no rent, and subsequent years at market or slightly above. Curtis Products would also have the option to buy the site for $1,350,000 at any time during the first two years. The LOI also provides for the Redevelopment Commission to provide $250,000 for improvements to the building to be determined in conjunction with Curtis Products. The Redevelopment Commission is being asked to approve the terms of this LOI and authorize proceeding to the preparation of a Lease for the site. Bosch will be returning possession of the site to Redevelopment at the end of this year. The target date for Curtis Products to take possession is May 1, 2013. There will be an interim period where Redevelopment will be responsible for the site, and at our next meeting a proposal for property management services will be brought before the Commission. Our annual holding costs for this site have been estimated at about $650,000, including security, maintenance, utilities and property taxes. While there is no rent in the first two years of the lease, these holding costs will be avoided, except during Redevelopment's interim holding period. These costs have been budgeted for in 2013. Average appraised values for the site were $1,967,000 to purchase and $1.63 per square foot to lease. The Option Purchase Price to Curtis Products of $1,350,000 represents a savings to Curtis of ~ Wb Do Today Makes A DhYerence t $617,000, or just under one year of holding costs for Redevelopment. Without Curtis' interest in the site, it is reasonable to believe it could take at least a year to find another business who may be able to make the building work for their purposes. While the site has been well maintained by Bosch, it is an older facility and its low ceiling heights make it less desirable for many businesses. Curtis Products is a local family owned business started in 1959 and operates out of 180,000 square feet in 4 buildings located just southeast of the downtown in the Monroe Park area. The two years of no rent provides Curtis Products an opportunity to market their property before having to pay rent at the Bosch site. Curtis Products currently has 324 employees. They recently filed a tax abatement petition indicating they will be investing $675,000 in new equipment and adding another 9 jobs. It seems highly fitting that a growing, locally owned company finds this former Bendix facility to meet their needs for continued growth. Staff requests approval of the Letter of Intent — summary of Lease Terms and authorization to proceed with preparation of a Lease with an option to purchase. F Cubed MOU 11 .6-12 What We Do Today Makes A Difference! SUMMARY OF LEASE TERMS 1. Lessee: Curtis Products, Inc. 228 E. Bronson St. South Bend, IN 46601 2. Lessor: City of South Bend Redevelopment Commission 1200 County City Building South Bend, IN 46601 3. Premises: 401 N. Bendix Dr., South Bend, IN 46628. The property will include land and the buildings as shown on Exhibit A commonly identified as Building 100 and Building 101 consisting of approximately 283,076 square feet of manufacturing, warehouse and office space, in Building 100 and approximately 77,230 square feet of lab, testing and office space in Building 101, existing building systems and other fixtures and equipment, and the other improvements at that site 4. Lease Term: 5. Base Rent 6. Operating Expenses: 7, Target Date for Possession and Commencement of Term: In addition, Lessee shall, by way of an easement, have the use of the property north of Bertrand St. and fronting on Goodland Ave. that currently houses the main electrical supply to the building Such property is shown on Exhibit B. Twelve (12) years Months 1 - 24: Years 2 - 7: Years 8 - 12: Abated $1.70 per square foot nnn $1.95 per square foot will Commencing upon possession of the Premises, Lessee shall be responsible for all operating expenses and maintenance associated with the buildings and grounds including but not limited to utilities, insurance, property taxes, maintenance of the grounds and parking lots, building systems such as plumbing, electrical and mechanical system and roof and structure. The sooner of IDEM granting the Comfort Letter referred to Mr. Timothy I. Mehall November 7, 2012 Page 12 in paragraph 10 or May 1, 2013. Provided that Lessee is diligently and in good faith pursuing the comfort letter but IDEM has not issued the comfort letter by May 1, then the Possession and Commencement Date shall be changed to the sooner of IDEM granting the comfort letter referred to in paragraph 10 or August 31, 2013. If the comfort letter has not been received by August 31, 2013, then Lessee shall have the option to accept the Premises at that time without the comfort letter or terminate the lease. 8. Condition of Premises: Lessee shall accept the Premises in its existing and "as is" condition with the exceptions that Lessor shall be responsible at its sole cost and expense to (i) ensure the electrical service to the Premises serves the Premises exclusively, (ii) obtain from IDEM, if Honeywell fails to do so, a No Further Action letter /Certificate of Completion/Covenant Not To Sue and (iii) indemnify Lessee from and against any responsibility for the existing condition of the Premises with respect to environmental matters for a period of thirty five (35) years from the date of Commencement of Term. Lessee shall indemnify Lessor from environmental conditions on the Premises first existing after lessee occupies the Premises that are caused by Lessee or Lessee's operations or business at the Premises. Lessee and Lessor each hereby acknowledge that (i) there is existing contamination on the Premises and (ii) the party performing remediation of such contamination will continue to have access to the Premises for such remediation, during the time period specified and to the extent set out on Schedule I to this letter of intent. 9. Incentive: Lessor shall provide, subject to requirements of Indiana law, Lessee an allowance of Two Hundred Fifty Thousand dollars ($250,000) to be used toward the cost of building improvements or renovations. Any qualifications for the allowance shall be disclosed by the City to Lessee prior to the Commencement. 10. Contingencies: Lessee shall have thirty (30) days from the date of execution of this letter to receive approval from its commercial lender. Any conditions by the City upon the Incentive provided for in paragraph 9 above will be satisfactory to Lessee. Lessor shall provide Lessee with a commitment for a policy of Leasehold Title Insurance from Meridian Title Insurance satisfactory to Lessee. Mr. Timothy J. Mehall November 7, 2012 Page 13 Subject to paragraph 7, Lessee will have obtained a satisfactory comfort letter from IDEM or the IFA ( "Comfort Letter ") with respect to the Premises (and Lessor will cooperate with Lessee's efforts in this regard, share information as to the environmental condition of the Premises and reimburse Lessee for the expenses of costs of the IDEM application, reasonable steps required by IDEM (or IFA) to obtain liability protections under the Comfort Letter and Lessee's all appropriate inquiry Phase 1 environmental report. In no event shall Lessor's liability for legal fees or consultant and other costs of Lessee associated with this subparagraph exceed $35,000. 11. Purchase Option: Lessee shall have the option to purchase the Premises at any time during the initial twenty -four (24) months of the term upon the following terms. Lessee may exercise this option at a price of $1,350,000, by providing Lessor not less than sixty (60) day advanced written notice of its intent to purchase. A fort of Purchase Agreement shall be negotiated and attached to the Lease (and an agreement satisfactory to each party will be a condition to commencement of the Lease) which shall govern the terms of the purchase in the event that Lessee exercises its option to purchase. The purchase agreement will provide for (i) Lessor to convert the leasehold title insurance policy into an owner's policy insuring Lessee's interest, (ii) Lessor to continue to indemnify Lessee against environmental matters existing on the Date of Commencement of the Lease as specified in paragraph 8 above, (iii) Lessee to continue to indemnify Lessor from environmental conditions on the Premises first existing after Lessee occupies the Premises that are caused by Lessee or Lessee's operations or business at the Premises as specified in paragraph 8 above, and (iv) such other terms and conditions as are mutually satisfactory to each of the parties. Mr. Timothy 1. Mehall November 7, 2012 Page 14 12. Additional Property To The West: Lessor does not own property to the west of the current property line and is therefore unable to grant the request for an additional loo feet of contiguous ground, but will cooperate with Lessee's efforts to obtain rights to that land 13. Contract: The parties will work diligently and in good faith to fully negotiate and execute a Lease within thirty (30) days of Lessee's acceptance of this letter. Accepted By Lessee By Its: PsoStde,4 Date I�oJ�ts�IOev 7 Accepted By Lessor By: Its: Date: