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HomeMy WebLinkAbout11-30-81 Committee of the Whole PUBLIC HEARING 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 OTHERS PRESENT T. BROOKS BRADEMAS, DEVELOPER MR. ROBERT RAKER, DEVELOPER Meeting was called to order by Mr. John Voorde, Chairman. The following are excerpts from the meeting: Mr. Voorde: The Council decided on having an Executive Session prior to the Public Hearing on this issue to hopefully accomplish a couple of things. First, what was the process involved in the Redevelopment Commisssion' s efforts to save or rehabilitate the Odd Fellows Building, (acting as a Committee of Inquiry in response to the allegations that were made in writing to the President of our Council and publically at the last council meeting under Privilege of the Floor. ) Evidently, developers feel that they were obstructed somewhere along the line and the Redevelopment Commission wasn' t playing fair . It is my hope as Chairman we can remove any cloud of suspician that anything like that was going on, and that the decision to take down the Odd Fellows Building is one that can be substantiated and the Redevelopment Commission and staff which has worked long and hard is in fact vindicated. That is not to say that they are on trial here this evening, it is just that the Council wanted to get at the facts. I personally, and I don' t think the Council takes any position either pro or con to save or take down the Odd Fellows Building at this point, but in response to allegations that were made that someone did not get their day in court and that they weren' t treated fairly, we have simply called this meeting to lay the facts on the table situation. Mr . Brademas and Mr. Raker have verbally agreed to waiver any rights to confidentiality which developers normally Mr . McGann: I would maybe preface this by referrng to the letter I sent to Mr. Nimtz last Monday, asking that this meeting be held as to what we have received in progress reports concerning the Odd Fellows Building, and were now receiving conflicting information that there were people who were willing to finance the building and did have financial resources, etc. , and that I thought before any final word was made on the building, or that the building was finally demolished, leave room for Monday morning criticism that we should meet formally to clear the air tocome to some sort of resolution maybe in a difference of opinion on what took place. I would like to mention in addition to to Mr. Brademas and Mr. Raker I did receive a letter last Friday from Mr. Bruce Bancroft and since he is representing another potential developer , Marvin J. Reed, still expressing some interest in developing the Odd Fellows Building. Mr. Voorde: If there were any viable rehab proposals that were rejected, I guess we would ask the indulgence of Mr. McMahon and Mr. Nimtz to explain why perhaps or how did we get to where we are and basically to clear the air. Mr. Butler suggested that the developers state verbally that they waiver their rights. At this time, Mr. Brademas made a statement and Mr. Raker followed. Mr . Voorde: I think it might be appropriate to ask Mr. Brademas first to tell us why he had prompted the meeting. Mr. Brademas: Mr. Chairman, and members of the Council , I have just been handed by a friend of mine a letter dated November 20 , 1981 by I assume Mr. Kevin Horton, indicating an evaluation criteria for the Odd Fellows proposal. In terms of proposed reuse we think we have a feeling of what the uses of market are. I hold a Masters Degree in City planning, have done city planning for quite a number of years, and quite successfully. As a result, when I come into a community, especially my own home community I think I have a good feel for it. My assessment of the market potential and uses for that building were fully supported by the American Cities Corporation (Rouse Report) . In terms of the reuse we proposed essentially that the bottom of the basement of the building would be used by the Hacienda restaurant and at one time there was a restaurant there by Hacienda. They gave us a commitment to build a restaurant in the building. The Rouse report suggested the need for that kind of use in the downtown area. We had the Bookworld as some tenants in which they wanted half of the building and the Hacienda would have the other half. The ninth and tenth floors (the Hacienda) agreed to take it over and make it into a fine restaurant type lounge. Restoration is our business, and we know what it takes in the way of equipment and in fixturiz-ing it, etc. We went out and did our own survey and got very scientific results. What we did was to send letters to the types of peole who we felt would have an affinity for the location and I asked them about office building , and went on to indicate to them what we proposed to do and for them to indicate their interest. We got an indication written, and when people write back to you that usually indicates that they are more than casually interested. Is there any question in the minds of the council and the committee that we did not do our homework in terms of proposed reuse and have a viable plan for the plans in terms of reuse for the building, and if there is I would like for you to tell me. Mr. McGann: The uses you have mentioned, now what percentage of the commitments and total square footage do you have? Our intent was to keep the building essentially the character it has. Obviously, we are aware that the west flacade does not look good. Mr. Szymkowiak: When you mentioned San Francisco, they have different climate conditions than South Bend. Mr. Brademas: I am aware of that, but I will speak more directly about it in just a minute. We have done some extensive work in terms of the design of the building. In terms of the proposed rennovation we went through a series of subcontractors, the new standards, etc. The building has to meet all codes in all aspects. Fire protection, we met with the building commissioner , etc. The Trisco system is what I was referring to when I was discussing west side of the flacade of the building. The proposed material would provide a stucco like appearance. These people are experts in this type of work. At any rate, we have done our homework and we know what it is going to cost us, etc. Are there any questions on the proposed rennovation? Mr. Voorde: You have obviously done a great deal of homework on this project and have gone to great length to substantiate us that you have a viable proposal. It is not our proposal to sit in judgement and determine whether it is lacking in some areas or whether it is a good one. Have you made the same presentations to the Redevelopment Commission? Mr. Brademas: We have done everything with the Redevelopment Commssion that we were required to and we have answered any questions that they might have had. Mr . Brademas: We received a letter from Stevens, Inc. which reads: Dear Mr . Brademas, we have reviewed your proposal for the acquisition and rennovation of the Odd Fellows Building located in downtown South Bend, Indiana and feel it is a sound and well thought of program. We wish to advise you of our interest in purchasing tax free revenue bonds issued by the South Bend Economic Development Commission in the amount of two million five hundred dollars, to provide you with the necessary dollars to rennovate the Odd Fellows Building subject to the following agreements. Obviously, you have to have a bond purchase agreement, and the attorneys have to agree to it and the financing will be negotiated at a later date. We were unable to tell them at that time when the Redevelopment Commission would give us a decision. I believe Mr . Chairman, ladies and gentleman that is why we are here today. I have said publically before and I will say it again, I have nothing but the highest regard for Mr. Nimtz, and the members of the Redevelopment Commission and the staff, and we don' t want to get into any acromonious debate with them. My concern is that as an interested developer I believe I presented to the Redevelopment Commission a plan that was fully supported and fully feasible and the Redevelopment Commission nor their staff has been unable or unwilling to this date to give me any factual reason as to why they rejected my plan, other than to say that they didn' t believe it was feasible. I have spoken to Mr . McMahon and Mr . Horton that while I know they are both young and able men that I asked them right out have you ever acquired an old building such as this, and have you ever worked out the engineering and architectural aspects of it? Have you ever set up the financing, have you ever rehabilitated it and ever then managed it? Mr. McMahon: I don' t ever want to break up your train of thought. Mayor Parent: Are we here to test the integrity of Mr. McMahon and Mr. Horton. He should keep his line of questioning on his proposal . Mr. Voorde: I concur. What I would like to do is that if in fact you have made this presentation to the Redevelopment Commission. . . Mr. Brademas: They may not have felt that I have. Mr. Voorde: What are you requesting at this point, in light of the fact that the Commission is going to be accepting bids this coming Friday? Mr . Brademas: I am requesting from the Redevelopment Commission that they give me some rational reason as to why they rejected my proposal , supported by something other than. .well , we don' t feel it had merit. Especially in light of one thing, with all due respect to Ann Kolata, and I noted in the paper that Mr . McMahon took issue with me and said that he was physically upset with me when he said I had repeatedly said that the reason the Redevelopment Commisison wanted to tear the Odd Fellows Building down was to do a favor to the First Source people so that there would not be any competition. I have never said that. I said that a senior member of the Redevelopment Staff said that, and I took issue with that. As a matter of fact, when that was said, I immediately called the Director of the Redevelopment Commission, Carl Ellison, and asked him what was going on and said it was not a function of the Redevelopment Commission. He said, oh, Ann did not mean to say that. Mrs. Kolata also said that the staff felt the building, if rehabilitated, would be competing with other office building if rehabilitated today, such as the GSA building to be constructed nearby, the new First Bank building to be constructed in the Redevelopment Commisison can give me any factual reason for turning down my proposal. Mr . Voorde: Mr . McMahon, do you care to respond to Mr. Brademas? Mr. McMahon: The information that Mr. Brademas has brought in represents a great deal of work on his part. He is a professional in the community, and as a professional in the community, versed in specific areas he does put together various packages that represent the various things that have to be reconsidered when looking at a building. I certainly wouldn' t challenge that in any way. I could, however, say that we have had a number of people come in to us with proposals on the Odd Fellows Building, and Mr . Brademas' work in this regard is not different in this respect. Many of them had come in with volumes of information to support why their proposal was best. Mr. Brademas comes in with certain things that perhaps are more easily generated in his particular office, and others who are versed in other areas have come in with different aspects which were stronger in other areas. The type of information which has been presented here, and while Mr. Brademas made a presentation did not offer us some of the information he offered here today, some of it has been generated. He obviously was not talking about this previously, that being aside from the point, we have received a number of proposals from other individuals whose proposals were cancelled, and once we have discussed their proposals with them as we discussed his proposal with him, brought in an enormous amount of information to back up their proposals. As I explained to Mr . Brademas before he apparently did not understand the process of the Redevelopment Commission. Not unlike any other developer , Mr . Brademas came to us and said I have generated this additional information and if I am to go any further on this, and extend further funds I want to know that the City is solely talking to me. I want to know that if you feel my proposal is good, and I spend further monies to pursue this project I would like to know that if I can get to where I said I can get, I want to know that I am the only one you are talking to and the project is going to go ahead. Mr . Voorde: Is that a legitimate request? Mr. McMahon: It certainly is. We have no problem with this with other developers, and his is no different. The Commission has evaluated all the proposals based on their strength. (the equity in the building, the rennovation concept, the amount of monies spent on the building, the strength of the rental or lease of the building from the standpoint of revenues generated from the building and their ability to meet the costs associated with the rennovation. These are what the Redevelopment Commission evaluates. His proposal was rejected, along with other proposals based on the advice from professional consultants, not from members of our staff and consultants we have used over a numbear of years. They were rejected on the basis that they were not economically feasible, and this is back in 1979 when the bids were made. We accepted proposals for a second time to change their proposals and offer some alternate proposals. We have also had some new people who have come in and given us their suggestions for the building, some office and some not office. They presented new proposals and we looked at them. We chose out the strongest and the weakest. Mr . Brademas ' did not rate on top nor did it rate number two. His was rejected because it was not as strong as other proposals and we felt we had an obligation to go with the strongest proposal. That is the basis of the rejection of his proposal; it was not as strong as other proposals presented (from the equity standpoint, from the aspects of the financing, the rental structure, and the manner in which he would pay any monies in which he had invested in it. He also pointed out that the city would not be paid back the money. His proposal which had 95% occupancy would not have paid back that loan, only perhaps about twenty years from now and he did not point that out to the commission. He smiled at us and said that well , I had some intentions of discussing a grant. Because of that and a number of other aspects of the packet, it was not as sound as other packets presented to the Commission. Mr. Voorde: First of all are you saying that if we would delay this further , the City would incur substantial costs at this point in keeping the building safe and keeping it potentially ready for rennovation with no guarantee that it would ever be done by Mr. Brademas or anyone else? Mr. McMahon: We felt that we had reached that point this fall' . The cost of repairing the terra cotta would cost about $80 ,000. 00 . That cost may double more than once because of the rate at which the terra cotta is deteriorating. Mr . Voorde: So we are at that point in time where if we delay the rennovation this spring, the City may incur as much as $150 ,000. 00 in work on the terra cotta? Mr. McMahon: Mr. Voorde, I am not versed in terra cotta, but I relied on TRISCO in this regard. Mr. Brademas: We had budgeted $140 ,000.00 for the building because we were aware that through the negligence of the Redevelopment Department and commission in not doing the basic things that should have kept that building in a reasonable shape that there has been a substantial deterioration of it. No developer in his right mind puts his own money into a development for any extended period of time. This constant harping by Ms. Auburn and others on the commission I tried to be charitable because they are not aware of the development business. On November 26 , 1979 I received a letter from the redevelopment department which said that "please be advised that we will contact you shortly to begin a negotiation process". Thereafter the newspapers reported that the redevelopment people had gone out to San Francisco, California to talk with Mr. Sam Kalman. There was someone who thought four proposals were no good, and I am trying to find out who made that decision. Who is it who says that these proposals are not feasible? I went back and took a look at Mr . Kalman' s proposal to see just why the Mayor and others went to San Francisco to check out this man' s proposal, evidently, it must have been a substantial proposal. From that point, I went to Redevelopment and talked to Mrs. Kolata and asked her if I could review Mr. Kalman' s proposal , at which time she stated that they did not have a proposal. I told her that under the law they had to have submitted a packet. I will make a statement that the Redevelopment Commission entered into an agreement to convey the Odd Fellows Building to an out of town developer who did not meet any requirements fo the law. Mr. Butler : Mr. Brademas, Redevelopment did not enter into an agreement with an out of town developer to convey the building. Mr. Brademas: Mrs. Kolata acknowledged that you did have that information. Mrs. Kolata: I am not sure that I did acknowledge that . Mr. Brademas: I am telling you that it is in the newspaper and it says that Mrs. Kolata acknowledged that you did not have that information but that you would soon secure it. Apparently, you never did secure it because about five or six months later I told him that I certainly could but to give me a couple of days. Several days later I called back and said "yes, I think we can forward" . At that point in time, I did receive a letter from the Redevelopment Commission telling me that they were ready to go forward now and would accept new proposals. Mr. McMahon did not sit down with me and explain my proposal . He said I showed no evidence of paying the so called $200 ,000.00 that the City was going to provide. Let me say that the $200 ,000. 00 was offered by the City; we did not demand that in any shape or form. The Redevelopment Commission wrote to me saying that loan between $200 ,000 and $300,000 would be made and we acknowledged that and said fine that that is what we would go on. The concept was that the City would give to Southhold $200 ,000 and Southhold would give another $200,000 and that money would be loaned to the developer and then it would be paid back to Southhold and they would receive the benefit of that money (Southhold) . It had always been indicated to us that the return of the $200 ,000 the City would provide would be provided not to the City but to Shouthhold, and if we did not show any payment in terms of the repayment of $200 ,000 to the City it was because we had been told that the money would not be paid to the City. Mr . McMahon: We asked you for a complete financial statement that listed all the revenue from the building, all of your miscellaneous expenses, and it listed that there was no money left when you subtracted it to repay that loan and the condition on your IRB note stated that it would not be repaid in all likelihood until the IRB was retired twenty years out. Mr. Brademas: We were told that it would be a stand by loan that would be repaid when the building was refinanced or sold. Mr. McMahon: Not so sir, and you have that documentation in writing. Mr. Brademas: Again if you were talking about a two and a half million dollar project payment of $200,000 it seems to me that you could come in and say how are you going to solve this? We did have a commitment of two and a half million dollars to do the project at that time. Mrs. Crone: In your earlier presentation you mentioned that you had sole negotiations with three different developers, during this period of the two years time, how many actual different developers have you received proposals from, including Mr . Brademas where they have come to you with complete proposals? Someone that you would consider as a legitimate developer with a proposal? Mr. McMahon: Six, including Mr. Brademas. Mrs. Crone: During that period of time, you only considered three of them? Mr . McMahon: Yes, they had strong proposals. Mrs. Crone: During that period of time when you are setting up a program of negotiation you have talked to Mr . Raker about giving him another 60 to 90 days. Mr. McMahon: The timetable may differ from each individual from time to time based on what it was they were attempting to get accomplished. Mrs. Crone: When you have a 24-month period of time and only six developers it seems to me there would have been a possibility of not contingent to the $200,000 and that he doesn' t want to use the money. Mr. McMahon: His proposal listed the money going in but did not show it going out. Mr. Brademas: For all who wish to see it, I give you a current financial statement. I am well trained, and have a great deal of experience in this field. This is my home community and I would not begin to take on a project that I could not be completely successful with. I respresent to this council this evening that I submitted to the Redevelopment Commission based upon some substantial experience, a completely viable plan supported by financial commitments with all the necessary details for the commission to embrace my plan and go forward. I have worked in many communities and have seen the elected leadership in those other communities coming forward and embracing proposals that were much less difinitive. I can even a community of South Bend embracing a proposal for a so called "hole project" or Associates and telling me that I could not go forward on the Wyman's building because we were waiting for Associates. i do not believe a good faith effort was made to properly evaluate our proposal , and it is my considered opinion that the demolition of the Odd Fellows Building will be a sad day for the City of South Bend. Mr. Voorde: A few questions Mr. Brademas: You did not need the $200,000 for the proposal? Mr. Brademas: That is correct. Mr. Voorde: Number 2 is that you mentioned tax credit. . . is your proposal contingent upon getting the Odd Fellows Building declared an Historical landmark? Mr. Brademas: That would certainly enhance it and as the owners of that building we would certainly request it. Mr. Voorde: Is there anyone here from the Historical Preservation who would like to speak to the designation of that building as an historically significant structure? Mr. Wasielewski : We asked about two years ago to have the building declared a historical landmark. We waited to see what the developers would do with their proposals. Yes, there is no doubt that it would qualify for historical significance and it probably would qualify for the National Register at this point. They are only accepting public buildings and it is a public building. There has been a lot of controversy for a number of years on that particular building. We have had nothing but demolition from our redevelopment departments not only with the commissioners now but also in the past. It takes too long for another project to develop once demolition is done. I would like to see the City Council direct all the citizens in some manner on this issue. Mr. McGann: I think to expedite this meeting I would like to say that Mr. Brademas is telling us that he has the experience, desire, the financial resources in which to apply and develop the building. at your own risk. Mr. Brademas: Let me clarify in saying that in view of the history of this it would be necessary to have some reasonable time to put the financial pieces together because of the fluctuation of money prices. I believe I have a good chance to do that, and what I would like the Redevaelopment Commission to do is give tahe building a "Stay of Execution" of at least 90 days to give us an opportunity to do that, because TRANSPO is a long way away from doing their plans for the Transpo building. Mr . McGann: Setting aside the securing of the finances, as far as other aspects of the project, are you 100% certain that it is a financially viable project and that you would be willing to undertake? Mr. Brademas: I can tell you that in view of the history of this, that nothing motivates me more than someone to tell me that I can' t do it, and I am very motivated by what has been said about this building. Therefore, I will pledge to the Council , to the Redevelopment Commission, the staff and particularly the Mayor, that I would give my entire efforts (110%) in this 90 day reprieve to try to develop and refine a plan (particularly the Mr. Brademas: I think the new tax law would certainly give us an upward boost. I do think it will be tough but I do believe we have a good opportunity to overcome that and in 18 months from now can have a building that everyone can be proud of, and particularly Roger Parent. Mr. Voorde: Mr. Radecki , you have been asking to speak. Mr. Radecki : The record states that on July 31 , Jon Hunt came to our board meeting and asked that a committee be set by Mr. Oxian, Gaylen Allsop, the Mayor, etc. Their initial proposal was that we would match their $200 ,000 with the original amount. Their was some concern about guaranteeing our portion ($100,000) in a two and a half million dollar project. We waited for negotiations to take place and on December 18 of the same year Mr. Alisop indicated that communications had broken down with the city. We do follow standards historically. Mr. Voorde: The chair recognizes Mr. Raker. Mr. Raker : It was brought to everyone 's attention that I have some liens against the building which involved a project that I did myself. I realized that I could not do a project by myself because of the high interest rates. I made my presentation to the Redevelopment Commission and I expressed that I was going to have a team of people who could do this project for me so that I could not get into another situation as I had done previously, and all these people were local people. I had the idea of office condominiums. They would buy their offices and then own them. The office condominium idea is new in the United States. My complaint is that the City had said that we could prove to them that we could sell them this idea and come back with 40% of the funds in a 60 to 90 day deal , then we could sell the project. Since no advertising is allowed, I went door to door to visit executives in this area and a lot of offices I was unable to be received, but I brought back letters for funding of 60% of the building, which proved that 60% of the people had intent on purchasing a portion of the building space. It was because of this interest that I felt I could go forward on this project. At one time earlier in a meeting held by the Redevelopment Commission that $200,000 was not available for use, and I assumed that it was federal money. I felt that I could go ahead without that money because I had $150 ,000 but was told that it was not enough. Rehabing a 50 year old building, the new tax laws that take effect the first year, the 15 year accellerated depreciation, and your 20% dollar for dollar in tax credit return for the first year is really something that people really look at; it makes it really lucrative. Mr. Voorde: Mr. Raker I hate to interrupt but you are in areas that we are unfamiliar with, but Mr. McMahon has already explained to us, and that your proposal was the most intriguing in concept and had the sole negotiating posture with the redevelopment commission, but at some point in time, for your failure to do things in a timely manner, your proposal was ultimately washed out. Conceptually it may have been good but you must realize this. Mr. Raker : I think that when you are puttting these kind of packages together you don' t use your own money, and you can' t put together a two and a half million dollar project in two weeks. I know I had ample time from my original conception up to when I was supposed to come up with money. Through some friends I found out that the proposals had been denied for rehabbing the Odd Fellows Building, and that it would be demolished (would be acceptina