HomeMy WebLinkAbout11-30-81 Human Resources & Economic Development A
HUMAN RESOURCES & ECONOMIC DEVELOPMENT COMMITTEE
EXECUTIVE SESSION HELD IN COMMON COUNCIL CAUCUS ROOM
NOVEMBER 30, 1981 - 4 :00 p.m.
ATTENDANCE
COUNCIL MEMBERS
JOHN VOORDE, CHAIRMAN
JOSEPH SERGE
WALTER SZYMKOWIAK
BEVERLIE BECK
LEWIS MCGANN
ROBERT TAYLOR
RAYMOND ZIELINSKI
BEVERLY CRONE
REDEVELOPMENT COMMISSIONERS
F. JAY NIMTZ, PRESIDENT
LLOYD E. ROBINSON, VICE PRESIDENT
PAULA AUBURN, MEMBER
REDEVELOPMENT STAFF
PATRICK MCMAHON, EXECUTIVE DIRECTOR
ANN KOLATA, DEPUTY DIRECTOR
KEVIN HORTON
KEVIN J. BUTLER, ATTORNEY
Meeting was called to order by Mr. John Voorde Chairman. The
following are excerpts from the meeting:
Mr. Butler : You must realize, of course, that we may not say
anything about the developers unless we have received a "waiver"
from them indicating that they have waived all rights; allowing
us to discuss any matters pertaining to their proposals.
Mr. McMahon: I will begin discussions and if anything appears
which I should not be touching base, please indicate this to me,
Mr. Butler.
Mr. Nimtz: Please understand that we are not trying to be difficult
here. We (the Commissioners and the staff) do not have anything
to hide. We are here to try to clear the air , but I just don' t
want to be sued.
Mr. McGann: I understand. The reason Mr. Voorde called this
meeting was to clear up some allegations the Council received at
its last meeting under "Privilege of the Floor" concerning the
Odd Fellows Building. I suggested to Mr. Voorde that a letter be
written to Mr. Nimtz and a meeting be called. It was decided
that these issues should be brought out in the open.
Mr. Voorde: Mr. Nimtz, and Mr. Butler , I would like to say that
I have talked on the telephone several times to Mr. T. Brooks
Brademas, and he verbally said at that point that he would waiver
all his rights, and that he (Mr. Brademas) would contact Mr.
Raker and ask him to supply us with a waiver also. I have not
received a written waiver at this point.
Mr. McMahon: I don' t know what your inquiry is specifically
because I wasn't at the Council meeting, but I have heard Mr.
Brademas probably half as many times as the Council has heard him
on other issues claim that he had been fouled or that he should
have had an attempt to go with homes (Harbor Homes, or whatever
that might be) . Assuming that an allegation was made at your
council meeting you are probably going to ask two questions:
(1)what was the process that we went through; (2) were the people
that we dealt with mishandled, or handled in any appropriate
manner as we went through that process? I have put together some
information if you wish to address those two questions.
Mr. McGann: It came down to two things. Mr. Raker expressed
unhappiness in the way the process was handled and felt that
there may have been attempts by the Redevelopment staff to undermine
his efforts to develop the building. I did receive a letter from
Bruce Bancroft addressed to me saying that he had a developer who
had made several attempts and was given several assurances by
Kevin that if things fell through with Mr. Raker that he would be
given an opportunity, but I will address that later.
Mr. McMahon: Back in 1979, the City originally was addressed as
to whether to take the building down or not, and at that time
they received bids two different ways. They received demolition
bids to take the building down, and they also received bids to
keep the structure. The Commissioners, and Mayor Nemeth at that
time said "we will look at both and made a decision based on what
comes in. " At that time they received four bids to save the
building. The action taken on those four bids was this; one bid
had a residential use proposed for the building and that was
rejected out of hand by the City because they did not want a
residential use in the structure;and this happened in November
1979. There were three office space bids received and they were
referred by the Commission to an outfit called Jannotta & Associates
out of New York with Nick Jannotta being the principal person to
contact. It is one of the largest real estate companies in the
country and we have used them all through our project Ind. R-66,
and commented on the feasibility of the three proposals that
were office proposals . The response came back from Jannotta at
that time that all three office proposals should be rejected
because they just didn't make sense financially, and they were
not economically feasible. As a result, the Commission rejected
those proposals. Then, prior to the demolition of the building
Mayor elect, and Council president, intervened and requested that
the Commission hold the demolition on the Odd Fellows Building
because the Commission should take a year or so to try to put a
package together if it could succeed. There was a considerable
effort on the part of the administration to try to save the building
so, therefore, they asked the Redevelopment Commission to do
that. The Commission had no responsibility to do that but, toward
the end, concurred with the Mayor that they would withhold action
on the Odd Fellows Building to try to give people an opportunity
to present additional proposals to the City of South Bend. Once
a 90-day period passes, after bids are received, the Commission
is then available to negotiate with anyone that may present themselves
and may be able to solicit their efforts with respect to the
redevelopment of that space. The next proposal that came in
through reading the newspaper was addressed from Mr .Sam Kalman to
do an office rennovation in the Odd Fellows Building. Mr. Kalman
had a substantial track record in renovations and contrary to
statements made by Mr. Brademas had completed renovations in
other parts of the country. Mr. Kalman, who is from California,
came in and looked at the building with Redevelopment and Mr.
position taken by every individual we have negotiated with. Those
types of agreements were made with Mr. Kalman stating that if we
would agree to convey the building, providing that he could meet
certain statutory agreements such as those we had laid out by
Housing & Urban Development for the Redevelopment Commission.
There was a four or five month span and then Mr. Kalman came in
May of that year and withdrew his proposal. I am uncertain as to
what those reasons were, whether they were financial , etc. This
occurred in May of 1980. We then recontacted people who submitted
proposals and asked them if they were interested in negotiating
with us further and how could we improve some of the things that
you have been struggling with? There was a problem with the
natural treatment of the building that a number of them addressed.
Some of them said that they didn't want to destroy the terra
cotta, and some of them said that they wanted to put a new face
on the building. Everyone stated, including Mr. Brademas, that
if the building were declared historical , prior to the renovation
taking place, that the exterior of the building could not be
saved because of the high cost of fixing terra cotta, and that
you can't go in and fix the joints because of treating the joints
under this historical preservation idea.
He confirmed that the terra cotta had to be done with the original
stuff and it would be very expensive, and that those numbers did
not mean anything if that be the case. Number two, if the building
was not acted on this fall, we were probably going to see at
least somewhere in the neighborhood of $100 ,000. 00 to $160 ,000. 00
to fix the terra cotta next year because they expected that much
damage to occur due to freeze and thaw conditions during the
weeks we have bad weather here. We told them that we had some
people who were interested and were talking with us right now so
could you share this information with us and share this information
with Mr. Robert Raker? They agreed to this. We also sat down
with the Mayor and told him that the Odd Fellows Building is at
this point, andthat it was deteriorating very rapidly, and if we
were going to do anything at this point in saving the building,
we are going to have to do it this fall. Are we in a point to
spend $180,000. 00 not knowing if it can be renovated? The response
internally between the Mayor and the staff with our recommendation
to the Commission is that "no" we are not going to put any money
into the building unless we know someone who is going to go ahead
with it. Mr. Raker came back to us shortly after he received the
information, and at that point he said he had run into problems.
He was not certain on how to put his package together but he does
have management who would help him with their expertise and would
manage the building. ESCI was identified as the partner (leading)
in his group. He stated that because of the terra cotta situation
he would like to have the building before he could start going
ahead with the project. I told him it was a problem. He stated
that TRISCO would take a lien on the building, and we told him
"no" we were not going to get into a situation whereby someone
was going to have a lien on the building. It would cost us another
$80 ,000.00 to demolish the building with the lien. We attempted
to resolve the lien situation with him on repairing the terra
cotta, and found out that in reviewing his proposal that what
they intended to do was repair more than the terra cotta. It was
the first of the year before they could even tell us if they
would be able to repair the whole building. The most optiman
pursuit in this proposal would not be known until January 1 , and
he would have financial costs in the building with a lien against
it. This was not what he told us before. We really questioned
him on this and told him that if he could meet the equity requirements
that he had in the proposal, that we wouldn' t even question the
timetable, interest rates, etc. that he had in his proposal. Mr.
Raker felt that he could do this in hours and wondered whether
to give us an answer. He did not come in with the equity that we
had asked for , and his partner (managing) stated that they had
relooked at the information and found out that our department was
correct in some of the questions raised, and that after they had
studied this, discovered that it was not economically feasible,
could not be pursued, and that they were terminating at that
point.
Mr. McGann: At what point in time was that?
Mr. McMahon: That would have been October 21.
Mayor Parent: I sat in with the meetings that redevelopment had
with all the developers about a year or two ago, and I think the
allegations that were present with all the work that redevelopment
staff and commissioners had is unfounded. I think those people
who come forward complaining about the problems and making allegations
are completely unfounded, because if that would be the case, the
Marriott would be built when I took office and the commissioners
would not have gone along with me at that time. I think that the
feeling among many council members were that the building should
have been down anyway. Any person who feels that the building
could be helped like the Marriott simply doesn't understand the
arguments that I gave two years ago when I asked for an extension
of time.
Mr. McMahon: Please let me finish one more portion. Shortly,
thereafter we received word either through Mr. Raker or his attorney
that he was now trying to do it in another mechanism by utilizing
an outfit from Chicago Bank. We called in his attorney and told
him that we had a discussion with the managing partner and was
told that the deal was closed and, quite frankly, we don' t want
it reopened at this point because this would be game #3 with
respect to this proposal. Mr. Raker had only one other experience
in developing a building and that proved unsuccessful this summer.
If someone comes in here and wants to try it another way, we have
to have some good reason to accept . We discussed this with his
attorney and stated that he had no equity to base his proposal
on, and that any suggestion that his partners were going to take
or own the building in a year or whatever, was false, and I have
that in writing from them. I got back with his attorney and
informed him that this was the case and he was glad because he
wasn't certain that it would work anyway. I also asked him whether
we should contact Mr. Raker or deal with him, at which he stated
that we could deal with him and there was no need to contact Mr.
Raker directly.
Mayor Parent: If we are going to take another two months to
negotiate with someone else we have to put $80 ,000.00 into the
building and from my perspective I would certainly entertain
anything. I am not sure that the Commission would budge no matter
what. I am not sure that there are five or six council members
who would want to say yes okay, take more time and spend $80 ,000.00.
Mr. Voorde: I am not sure either , but that is not the purpose of
this meeting. The purpose of this meeting is a committee of
inquiry. The allegations that were made, I want to confirm were
not made by anyone on the council members, to my knowledge, or
certainly as a group haven't said that there has been any collusion,
stone-walling or anything, but those claims were made through
correspondence through the Council. In that the nature of the
Redevelopment Commission is going to change, and that we do sit
Mr. McMahon: When someone comes in and makes a statement like
that to the Common Council and you are an elected official it
puts you on the spot and I certainly recognize that. Certainly,
you did not investigate the Library Board and you did't investigate
the School Corporation just as the commissioners don't investigate
the county council and vice versa, etc. My only concern is with
the next meeting we have scheduled here for 5 o'clock . . .I have
seen T. Brooks Brademas do it over Harbor Homes and over a number
of other issues, and quite frankly, he is very good, he deals in
inuendos better than anyone I have ever met and I personally
don't care for that portion of it. I spoke with Mr. Brademas
when he came in several weeks ago to talk with us, (I had someone
with me) and he said, "I want you to tell me why my project was' t
economically feasible, and I said "Mr. Brademas, you take a look
at where you have been in the process. What I have told you and
what the Commission has told you is that all along the way we
would accept proposals from you and we have encouraged you to
submit proposals. "
I told Mr. Brademas that he should take a look at the process.
What I told him and the Commission told him was that all along
the way we would accept proposals from him and encouraged him to
submit proposals. I told him his proposal did not rank high for
a number of very good reasons and we never got to that point with
you, and we have gotten to that point with other people. Mr.
Brademas has never been at the top of the list and I told him
last week we didn' t know what would turn it around at this point,
but if we were to turn it around I wouldn't recommend that we be
dealing with you on this. We had a 3%, 200 ,000.00 and we were
never going to be paid back and it was not known until we questioned
you on this thing and you smiled and said well I guess. . . .
Mr. Butler : You have said too much.
Mayor Parent: I receive many letters alledging all kinds of
matters and it is a very serious matter for the City Council to
have a meeting of inquiry with the commissioners. I am not saying
it is not warded, but I think you better make darn sure that
before you have these things,it doesn' t put whoever it is on the
spot. You have very serious reservations in order to call this
meeting and I hope it is not for information, because you could
have all this information without calling this kind of a meeting.
I think obviously you are putting the staff and tahe commissioners
on the spot because you are saying that somehow Tom Brademas and
Bob Raker have credibility with you and also Pat McMahon, me and
a lot of other people. That basically is what you are saying.
Mr. Voorde: I was hoping that the calling of this meeting or a
committee of inquiry lends substance to the redevelopment commission
and the redevelopment staff for their efforts. I go into this
thing confident that you are going to be vindicated, and you are.
This is the sort of thing that a lot of people will question and
if you will lay the facts on the table maybe you can sweep all
the basis for all that inuendo and really that is the purpose of
having this meeting.
Mr. McGann: I think, John, that on the Raker proposal,you have
gone as far as you can go, but maybe I can relate from here and
give you some relief. I received something in writing here which
I will read. Going back to the September 24th meeting he said
that Pat McMahon, Kevin Horton, Norm Beardsley, Ed Bradley, Dave
Vance, and Bob Raker were present and at that time McMahon stated
that at that time we did not have construction experience, must
project. City wanted time for legal staff review. October 5,
the meeting was attended by Chuck Lahey, Dave Vance, Bob Raker,
Pat McMahon, Rich Hill, Kevin Horton, for the City to scrap the
$50 ,000.00 offer and does not like the legal mechanism. McMahon
says we must get this project dissolved, also no legally binding
contracts have been signed, so we have failed to comply with the
original agreement. McMahon again informed that we could not
sign legally binding sales agreements for the building which we
did not have. Legals must be drawn up for size of condo required.
October 8, Vance meets with Horton and McMahon for additional
time and $100 ,000.00. October 21, Vance meets with McMahon, and
McMahon says that two other developers are waiting to negotiate
the building. October 27 Lahey meets with Horton and Horton
informs them of funding and asks them for funding and asks for
more time to finance long term funds. Okay given by McMahon.
Warner Mortgage had received project and they had come back to us
with a proposal on payment schedules, and were very interested in
the project. They had come back to us with a proposal on rate,
payment schedule and they were very interested in the project.
October 29, Bob Lackey from TRISCO Systems Inc. , Lima, Ohio called
Kevin Horton and Kevin Horton tells Lackey that financing failed
and that all negotiations are terminated. Apparently somewhere
here he said he had a contract signed with TRISCO signed to begin
the exterior work. October 30, Lahey and Raker meet in Niles,
Michigan with Pacesetter Bank to set them up with Baird & Warner
out of Chicago. The same day, Channel 28 held a Press Release
and stated that all developers on Odd Fellows Building have failed
and the building will probably be torn down. The president of
TRISCO was in town and heard that release. November 2, Horton
tells Lahey that no call has been made yet and has no knowledge
of press release. Bob Plackey informs me (Raker) of a conversation
with Kevin Horton on the 29th. Apparently at that time Plackey
was told that the project had failed and the building was down
and that was his first impression that the building had fallen
through. Raker calles Mike Lynch at Baird & Warner mortgage in
Chicago and said that we have a political football here and his
company did not want to be involved until it was straightened
out. Plackey informs me of a conversation that Kevin Horton and
also somewhere between July and August numerous meetings were
held by Redevelopment. Redevelopment tells us $200,000.00 was
not available to them. This was made in athe presence of Mr.
Raker 's attorneys. I was somewhat informed of Mr. Raker 's troubles
this summer so some of this can be taken with a grain of salt.
We are not involved with administrative guidelines but the only
thing that aroused my curiosity was the fact that the $200,000.00
from the Community Development program with a low interest loan
was not available to them. They referred to it as a federal
grant and that it had expired.
Mr. McMahon: The $200,000 was presented to them the same as it
was to everyone else. Some chose to utilize it and some chose
not to utilize it, and we informed them that the use of the $200,000
(through a meeting with Mr. Horton and Mr. Lahey) and Mr. Raker
stated that the use of the $200,000 to the extent that you wanted
to utilize that fund and the manner that you wanted to repay it
was one of the factors we used to weight the proposals that were
evaluated. Quite frankly, some of the proposals that we saw
chose not to utilize the $200,000 because they didn't care for
the connection with the City that goes along with it and the
possible tie with Historical Preservation or any type of historical
intervention. We indicated to them that it was something that
would be one of the points that would need review.
Mr. Horton: The point that was made was that they really didn' t
need the $200,000 anyway. If you look at the pro forma they
Mr. McMahon: The fact that it was available on that basis it
should have been very aware to Mr. Lahey who sat on the historic
restorations board and southhold.
Mr. Nimtz: He sat on the Southhold Restorations and on the Southhold
Heritage board up until sometime last year when he resigned.
Mr. McMahon; The manner in which it would be loaned out and the
manner in which it would be paid off was what the boards were
considering and this is before he was involved with Mr. Raker.
At first, Mr. Raker had suggested that they didn't even know
about the $200,000. and when we pointed out that they knew about
the money, recently, it is a little different now. I think if we
sat down and recollected conversations held with Mr. Lahey that
it might refresh his memory.
Mr. McGann: Going to my letter that I wrote to Mr. Nimtz, based
on what Mr. Raker had said to members of the Council and Mr.
Brademas publically and what we have been informed of all along
with the Executive Session on the 2nd of November, the money in
having no one use it, etc. Basically, we are obtaining information
that is 180 degrees apart and I think it is important with these
things being said while the building is still standing, that now
is the time to get these things straigntened out so that at six
months or twelve months or whatever down the road that we are not
all going to be out on a limb on this.
Mr. Voorde: Mrs. Crone has a question.
Mrs. Crone: I just wanted to clarify with Pat to make sure that
I am understanding the sequence on all of this. During this
period of time during the two years, Redevelopment has never ever
sat down and considered Brademas' proposal as is, or the proposal
or had been given thirty days for other developers?
Mr. McMahon: The first time it was rejected was in the fall of
1978 with the other proposals. Some of those people came back
and said they were going to change the building, it makes more
sense, and generates more money. He came back in with another
office proposal similar to his first and he did that in I believe
March or February of this year and we reviewed that proposal and
rejected it. We informed him in writing and sent him a letter
saying that maybe some point in time that we would talk with him.
There are a number of factors why the Commission chose to bring
this to a conclusion at the end of October or November. The
biggest one was the deterioration of the building in respect to
the terra cotata and most of the people looking at it now are
trying to save the terra cotta. It merits a substantial investment
this fall.
Mrs. Crone. During that two year period of time the only ones
that you were having serious discussion with was Kalman from
California, the people with the hotel , and Mr. Raker?
Mr. McMahon: That is correct, and all three of those people have
said to put them in a position for sole negotiation, as did Tom.
Mrs. Crone: Those are the only three that you ever did sole
negotiation with?
Mr. McMahon: That is correct and each one of them took between
three and six months to run that gambit.
Mrs. Crone: You are saying that at that period of time that you
yield, as an example, one fellow might come in and say. . . I think
that the building needs two and a half million dollars to fix it
up, another individual might say that we need three and a half to
fix it up. Now the fellow who says that he needed two and a
half, that is fine if he underestimated it, assuming that we had
Brademas ' proposal for an example. Assuming he had 30% lower in
rennovation costs than the other proposals, and we looked at it
from the standpoint and said fine, if we can do it, but if there
is an overrun, where is this contingency going to come from?
Where is the profit margin that he projects and if those types of
things were evaluated from proposal to proposal . Because of the
fact that Raker was proposing a concept to handle the building
that was not leased he was not going to lease office space. He
was being approached on a condominium basis where he was going to
sell individual spaces in the building. It created an investment
situation and a return on the dollars and a lack of a need for
someone to finance a substantial portion of the building through
a bank or traditional channels. He could be way off with his
numbers but still have enough margin to make it up. He had the
biggest margin that we looked at and the biggest equity when you
added all those things up. When you added it all up at what the
equity would be in fair market return and property versus what
the costs would be and when you put those different things together
his proposal at the time that we decided to go with him, was
stonger by Brademas ' by a couple, and stronger than the previous
than the #2 guy when we went to the hotel guy. Mr. Raker had
promished that his proposal would be better than anyone we had
previously seen. With the exception of the hotel, and I would say
that the hotel was by far the best.
Mr. Voorde: Okay we are running short of time, but there is one
other thing or facet while we are in the executive session to
bring up, and that is, the location of the TRANSPO terminal . The
newspaper article of November 3rd, quotes Ann Kolata as saying
that this is prior to a closed door meeting between Roger , members
of the Transpo board, and the commissioners, that the terminal
will probably be located on Jefferson. At the meeting it was
determined that the lot would be on Washington Street, and in my
own mind , are the commissioners pushing Transpo to Washington
Street or are you specifically requesting the Washington Street
frontage? I ask this, because I had many people inquire about
this.
Mrs. Kolata: I believe that the context of that article was
written by Ms. Derbeck and she asked me what we were going to be
talking about to determine if Transpo was going to have a terminal
downtown. I said yes, that we would make certain that Transpo
would have a facility in that block . We would determine the
size, location of the block that we were going to designate before
we talked in abstract terms in an executive session. I don't
know the reference to Jefferson Street but I may have commented
on the different proposals that may have been made over the previous
years.
Mr. McMahon: The only thing I can think of is that it had reference
to the proposal that was in the Gruen and Rand Jefferson study.
Mr. Voorde: Does the Redevelopment Commission now feel that
Washington Street frontage is the best use of that particualr
block for the facility?
Mr. Nimtz: There is no secret, I explained to them what Transpo
did in their request which came as a surprise to us.
Mr. McMahon: Transpo has felt for a number of years and dates
has felt for some time that we want to get downtown and get downtown
now and get our hands on some real estate. The sequence was
this. . .when Rouse did the original report on Century Mall , Rouse
had them on Washington Street. It was also behind the Odd Fellows
Building. At the time that the Rouse Report was done, Transpo
was grumbling about that location because it didn't have any
exposure to Main Street and it hid them from view. Mayor Nemeth
decided that he didn' t like some things about the Rouse plan in
that we commissioned Gruen to tell us how that block would go and
Gruen did the model that we now have in the Redevelopment Department.
Gruen came up with the concept that had them running right across
the middle of the block the full length of Main Street right in
front of the retail and the big park area that opened up. Transpo
liked the idea because of the exposure and quite a few accesses
from the streets. We thought that the bus terminal would be
right alright in that location if the GSA building was built
there. We had a need for a parking structure as we were going to
put it underground and put it under the Transpo facility and they
were even going to pay for the top slab, and as a result provide
an area for Transpo which gave them access to the visibility, and
number two help with the cost of the garage and do some landscaping.
Mr. McMahon: When we lost the GSA building that changed the
whole concept.
Everyone stated, including Mr. Brademas, that if the building
was historically declared prior to the rennovation that we are
talking about another set of figures.
Mrs. Crone: Pat, when you said that you recontacated people how
many proposals did you have on file?
Mr. McMahon: We had the three remaining office people but others
would surface from time to time, but I will listen up.
Mrs. Crone: In 1979 , the three that you received on office space
had been told that their proposals had not been accepted?
Mr. McMahon: That is correct, and those same three people came
back again.
Mrs. Crone: Was Mr. Brademas one of those?
Mrs. McMahon: Mr. Brademas was one of those. There were two
others who stayed with us pretty much all the way through. Some
of them said they had problems with posting a security bond or
any kind of performance bond on the building. Some of them said
they couldn't meet the requirements of fire safety etc. We had
some material laid out to negotiate and we were also talking at
this point because of the financial aspect of it perhaps some
type of subsidiary such as a low interest loan and those initial
negotiations sprang up. That was pursued to a certain point and
in the spring of 1980 or in the very early part of 1981 we handed
out some documents to all those people who were still interested
and stated that we would like for them to requote us; because we
had a low interest loan in place to facilitate this somewhat, and
we think we have come to some agreement pertaining to the exterior
of the building. We received proposals from four different entities
(a new one came up) . We received one from National Mobile Concrete
a Michigan Corporation, one from American Development Corporation
from Chicago (who do a number of restorations and have a good
track record in that regard) , one from T. Brooks Brademas, and we
received one from an outfit called United Energy who does some
projects around the country and were interested in doing some
rennovation and had contacted some South Bend businessmen to
discuss that. The top two proposals put in a 100% more equity
than the other proposals. For example, the third proposal only
had half the amount of equity as the other proposals did. Some
of them had debt service reserves to address unforeseen lease up
times, or other things along that line, and others did not. It
was very easy to put together five different parimeters whereby
we rated the different proposals on their strength. Mr. Brademas 's
proposal did not come out on the top of that listing, in fact, he
did not come out second on that listing. We informed Mr. Brademas
and all of the individuals who were not number 1 that we had a
stronger proposal and that we reserved the right to talk to them
again and hope that we would discuss it through again and that we
were not going to take any further action on their proposal.
Mr. McGann: Where are you time wise now?
Mr. McMahon: This was in about April or perhaps February of
1981.
Mayor Parent: It was probably earlier than that.
Mr. McMahon: No, it would have been around that time. Now, with
the top individual, we turned and said what do you need to fix
the building further? That firm was one who had proposed office
space in light of the fact that office space was only allocated
to only 65% of South Bend right now and they couldn' t stand that
kind of occupancy and keep the building out of debt. They
proposed an alternative use to us which made a lot of sense. It
was a hotel use which would house 132 rooms, and they had significance
correspondence with a hotel chain previously located in South
Bend and wanted to open because of the downtown location. They
told us that they wanted a sole position with us as others did
previously. We gave them sixty to ninety days in order that they
may confirm to us that they did indeed have investors lined up
and that they felt things were squared up. They came to us in
July of this last year and told us that the deal had fallen through
because they had some problems (which I cannot relate to you but
they did withdraw their offer) , at which time we said we were
sorry we could not go through with it but that we going to move
on with the next guy on the list or were going to reevaluate.
When we sat down to review the proposals we have received previously,
in the meantime we had received a proposal from Mr . Robert Raker.
We at that time told him that we were currently negotiating with
someone else on the Odd Fellows Building, and we are not solicitating
any new proposals at this time, and cannot discuss the building
with you or anyone else at this time until we find out if another
proposal goes through. He went ahead and felt strong enought
about it and went ahead and submitted it. At that time, when the
hotel fell through, we sat down with Mr. Raker to review his
proposal (in the meantime, Mobile Concrete had dropped out and
also received an inquiry from Bob McGinny who felt that he did
not want to pursue anything further either) . At any rate, of any
proposals we had received prior, Mr. Raker 's seemed to be the
strongest proposal, not because of his expertise in doing it but
because he was somewhat of a novice in this regard, but because
he was proposing a concept used which was an ownership. He proposed
a neat method of packaging the building, and based on the information
furnished us by the attorneys working with looked very good and
it was stronger than the Number Two proposal we had received
earlier, and way ahead of the Brademas proposal. We talked to
Mr. Brademas proposal, so we turned to Mr. Raker and asked him
what it would take for him to put a package together. He said he
wanted a letter from the Redevelopment Department stating that he
was the only person we were gong to negotiate with, so we gave
he had to accomplish a few things before we could him the building.
We told him that he had to have certain things accomplished in
ninety days and certain things accomplished in ninety days.
Mr. McGann: When did he come on the scene?
Mr. McMahon: He came to us in July of 1981. Mr. Raker submitted
to us in May of 1981 on a speculative basis. On August 4, 1981
(I believe) we put him on a sole basis . On the thirty day clock
he came in with some information that somewhat exceeded the requirement
that we had for thirty days, not substantial things. When it
came close to the sixty day clock , when we needed some substantial
information from him, the documentation was not forthcoming and
he couldn't get passed it. He was not going to be able to resolve
particular criteria problems. At that point we had a second
evaluation come into the building in the area of saving the terra
cotta. I then contacted a firm to look at the Terra Cotta and
would be willing to pay for their services if they would be willing
to come in and take a look, and give us an estimate in what it
would cost to fix the building. The firm then inspected the
terra cotta problems on the building and said that the cost of it
would exceed $80,000.00, a little more than twice what we had
estimated on the building when taking bids because of the rapid
deterioration of the building which had taken place.
.tom ` fl
by Mr. Walter Szymkowia1Ato adjourn,
seconded by Mrs . Beverly Crone, and the meeting was adjourned.
Meet ing--was--ad j-o-urne-d at