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HomeMy WebLinkAbout04-22-02 Community & Economic Development tommitt a *port tontuntilitg an etottomtt ikkioinittnt tommitta The April 22, 2002 meeting of the Community and Economic Development Committee was called to order by its Chairperson, Council Member Karl King at 4:13 p.m. in the Council Informal Meeting Room. Persons in attendance included Council Members Varner, Kirsits, White, Ujdak, Coleman, Aranowski, King, and Pfeifer; Beth Leonard, Michael Beitzinger, Water Utilities Director John Stancati, Director of Economic Development Jon Hunt, Beth Leonard, Michael Beitzinger, Christopher Kirby, Tim Hernly, Thomas J. Hall, Don Inks, Patrick McMahon of Project Future, Vice-President of Communication Services for TJX Louis Julian, Manager of Home Office Construction Ken Downey, Bob Hunt, Sean E. Kenyon, Joseph Grabill, Terry Bland of the 'OtttJ 3.13enti tribune and Kathleen Cekanski-Farrand, Council Attorney. Council Member King called for a presentation on Substitute Bill No. 02-35 which would waive conditions precedent to the adoption of a Declaratory Resolution for rthe property located at 212 East LaSalle for the project commonly known as SBL Building Co., LLC. Mr. Timothy D. Hemly of Barnes &Thornburg made the presentation. He noted that the various legal issues involved were "hashed out" at the last Committee meeting. He then provided to the Committee copies of a letter dated April 19,2002 from Sean E. Kenyon(copy attached) and copies of a letter dated April 19, 2002 from Thomas J. Hall, a partner of Tuesley & Hall, LLP and Manager of SBL Building Co.,LLC(copy attached). Ms. Kenyon noted that a two(2) month period was involved prior to the expiration of their current lease which is expected to expire on April 30th. She further noted that over 500 hours have been devoted to keeping the project on schedule for the five(5) attorneys involved. Mr. Hall appreciated the bi-furcated situation, noting that most of the problems resulting from miscommunication. 18 months have been involved in working with the subject property;however there now is a rush to close and they need the space. He noted believes that with the approval of the Council the project will be feasible and affordable. Mr. Beitzinger confirmed his discussions with Mr. Hall. He noted that they discussed the issue of whether there would be increased value to the property based on its improvements and therefore increased assessed valuation. He directed Mr. Hall to contact Mr. Voorde, the Portage Township Assessor. Dr. Varner noted that the timelines are important and based on all of the information made available by the Petitioners he does not believe that there was any intent to circumvent the City's procedures. Dr. Varner stated that he would like to see the building located at 212 Fast LaSalle re-occupied and used. Following discussion, Dr. Varner made a motion, seconded by Council Member Kirsits that Substitute Bill No. 02-35 be recommended favorably to Council. The motion passed. The Committee then reviewed Bill No. 02-19 which is a real property tax abatement request for the property located at 212 Fast LaSalle for SBL Building Co.,LLC. Mr. Michael Beitzinger,Community&Economic Development Assistant Director then . 1 . Community and Economic Development Committee April 22, 2002 Page 2 summarized his report dated February 13, 2002 (copy attached), noting that a summary was also provided at the March 25,2002 Community and Economic Development Committee meeting. The petitioner is SBL Building Co., LLC which is a recently formed Indiana limited liability company composed of two (2) member limited liability companies, namely DS Building Co., LLC which has two (2) shareholders Konopa; Reagan & Kenyon, PC and TH Building Co., LLC, the equity owners of which are the partners of Tuesley & Hall, LLP. The petitioners plan to rehabilitate and convert the former South bend Orthopedics Professional Office Building. It will be converted from a single medical user and medical rehabilitation tenant into a multi-user professional office building which will house two (2) law firms. There will also be 1,750 square feet available for a third party. The cost of renovation is estimated to be $685,000. Mr. Beitzinger then reviewed in detail the information set forth under"Abatement Qualification"on pages 2-3 of his report. Mr. Timothy D. Hernly of Barnes & Thornburg made the presentation. He noted that the tax abatement would be addressing a formerly vacant building which will have over a $750,000 investment by the petitioners. Mr. Hall noted that the total investment will be over $ 2 million when the purchase price is included. Following discussion, Dr. Varner made a motion, seconded by Council Member Ujdak that Bill No. 02-19 be recommended favorably to Council. The motion passed. The Committee then reviewed Bill No. 02-36 which is a ten(10) year real property tax abatement request for the property located at 1902 West Sample Street requested by the South Bend Redevelopment Commission for the benefit of AJW South Bend Realty Corporation. Mr. Beitzinger reviewed his report dated April 12, 2002 (copy attached). He noted that AJW South Bend Realty Corporation is a real estate holding company for AJ Wright, a division of the TJX Companies, Inc. They proposed to build an 800,000 square foot warehouse/distribution center at the southeast corner of Sample and Olive Streets. AJ Wright sells off-price apparel at forth-six (46) retail locations throughout America, and the South Bend location will service the company's Midwest stores. There will be two(2) phases to the project with Phase I consisting of developing 500,000 square feet with a ground-breaking proposed for July 2002. Phase II will consist of 300,000 square feet with the proposed ground-breaking set for July of 2005. The project will be built on seventy(70)acres in the Sample-Ewing Development Area. Building costs are estimated to be $24 million and land costs are estimated to be $2.5 million. Equipment at the facility will cost $20 million for a total project cost at approximately $47 million. He directed the Committee to the special language included in Section V of the proposed Resolution. Council Member King noted that the language in Section V has been used in prior resolutions addressing special situations. Patrick McMahon of Project Future, Louis Julian, and Ken Downey then spoke in favor of the proposed abatement. Dr. Varner noted that with the abatement fifty percent of the $5.7 million tax obligation would be abated. He stated that this is a good project which utilizes a lot of vacant land. Council Member Ujdak noted that Schedule B shows that the current revenue stream being r Community and Economic Development Committee April 22, 2002 Page 3 generated is $110,000. He concluded his remarks by stating that the project is good for the City. Mr. McMahon noted that the petitioner would also be paying personal property taxes on top of the real estate taxes and that the personal property taxes will not be abated. Following discussion, Dr. Varner made a motion, seconded by Council Member Ujdak that Bill No. 02-36 be recommended favorably to Council. The motion passed. Council Member King then called for a presentation on Bill No. 02-37 which is a ten(10) year real property tax abatement request for the property located at 237 North Michigan Street for LaSalle Property Management Co., LLC. Mr. Beitzinger then reviewed his report dated April 15, 2002 (copy attached). He noted that the LaSalle Property Management Company is a recently formed Indiana limited liability company which has been formed to acquire and renovate the former LaSalle Hotel located on the southwest corner of Michigan and LaSalle Streets. It has entered into a contract to purchase the 105,000 square foot building from Charismatic Renewal Services. The costs of renovation will be $2,050,000 for a new roof, a fire suppression system, renovation of the elevators, and asbestos removal. In the next three (3) years an additional$3.2 million will be needed for the project. The first two floors will be converted into a restaurant with banquet and conference facilities, with the remainder of the building converted into residential units. The report concluded that the petitioner meets the qualifications for a ten (10) year real property tax abatement under § 2-80 of the South Bend Municipal Code addressing"Mixed Use Developments in the Central Business District". Mr. Joseph Grabill a member of the LaSalle Property Management Co., LLC then made the presentation. He stated that the project will incorporate the best of the"white table cloth restaurants form New York City"which focus on excellence. In response to a question from Dr. Varner, Mr. Grabill noted that a Long Island architect is involved and that restoration will begin before the end of this year. In response to a question from Council Member King, Mr. Grabill stated that the apartments would range between 1,500 to 2,000 square feet, with the rent beginning at$1,000 per month. There are currently sixty(60) parking spaces available. Following discussion, Council Member Kirsits made a motion, seconded by Dr. Varner that bill No. 02-37 be recommended favorably to Council. The motion passed. The Committee then reviewed Bill No. 02-39 which would authorize the Mayor to submit an application for Section 108 Loan Funds. Elizabeth Leonard, Director of the Financial and Program Management, made the presentation. She noted that the HUD funds would be used to finance the Studebaker-Oliver Redevelopment project. The proposed funding of$3,405,000 was appropriated from 2001 funds. Following discussion, Dr. Varner made a motion, seconded by Council Member Ujdak that Bill No. 02-39 be recommended favorably to Council. The motion passed. Council Member King noted that the last item on the agenda was to hear a presentation by Mike • F . Community and Economic Development Committee April 22, 2002 Page 4 Beitzinger on the Annual Tax Abatement Report (copy attached). Mr. Beitzinger noted that the 2001 Tax Abatement Annual Report is divided into five(5)parts: Part 1 Tax Revenue Impact Part 4 Tax Delinquencies Part 2 General Information Part 5 Approved Abatements During 2001 Part 3 Employment Impact He noted that he has met with the three (3) delinquent tax abatement owners. He noted that there has been a decline in abatement applications since 9/11. Council Member King inquired whether there is information sharing with other cities. Mr. Beitzinger stated that information sharing should be pursued since there is a wealth of information involved. Dr. Varner noted that there is much valuable information contained in the report, especially when you review the net amount of dollars added because of the developments receiving abatement. Council Member Pfeifer suggested that all petitioners should receive letters since they are"sharing in the success" of development utilizing tax abatement. She suggested that a letter of congratulations be sent. Council Member White noted that the general public still does not understand the development process and how tax abatement is used as a tool for such development. Council Member King noted that future committee meetings will address the new tax abatement ordinance. There is a lot of misunderstanding which is counter productive to economic development. The right forums to discuss tax abatement and development must be pursued. He noted that the level of understanding is going down and that the City needs to be more proactive. Council Member King concluded his remarks by noting that tax abatement can be a powerful development tool. Council Member Kirsits stated that other incentives may be better than tax abatement. He then asked for an update on Accuride. Mr. Beitzinger stated that they should be closed by July and that in February the Council acted on the rescinding resolution. He added that La-Z-Boy would not have renovated its building in the downtown without tax abatement, and that they did not have much control over there move from the area.. Council Member King thanked Mr. Beitzinger for his report. He then adjourned the Committee meeting at 5:12 p.m. Respectfully submitted, Council Member Karl King, Chairperson Community and Economic Development Committee KCF:kmf Attachments