HomeMy WebLinkAbout1988-04-14 MinutesI
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Mrs. Kolata noted that the preliminary cost estimate for the construction of
the garage is approximately $3,000,000. Costs in addition to the actual
construction of the garage raise the total project cost to approximately
$4,150,000. The purpose for approving the proposed lease using these
approximate figures is so that the financing process can be started. As the
process progresses and the figures become firm, they are expected to
.decrease. The cost cannot be increased once the financing process is begun,
so the costs have been conservatively estimated based on worst case
projections. By the time the lease goes before the South Bend Common Council
for approval, bids will have been received on the construction of the
garage. By the time the lease goes before the Local Property Tax Control
Board, who must approve the lease in its final form, the bid will be awarded
SOUTH BEND REDEVELOPMENT AUTHORITY
SPECIAL MEETING
April 14, 1988
1:00 p.m.
1. ROLL CALL
Members Present:
Legal Counsel:
Redevelopment Staff:
News Media:
2. APPROVAL OF MINUTES
1200 County-City Building
227 W. Jefferson Boulevard
South Bend, Indiana 46601
Mr. Thomas J. Varga
Mr. Chris Davey
Mr. Joseph Wroblewski
Mr. Thomas Bodnar
Mrs. Ann Kolata, Acting Executive Director
Mrs. Cheryl Phipps, Office Manager
Ms. Jeanne Derbeck, South Bend Tribune
Ms. Linda Kauffman, WSJV-TV
Upon a motion by Mr. Davey, seconded by Mr. Wroblewski and unanimously
carried, the Authority approved the Minutes of the Organizational Meeting of
March 10, 1988.
3. Adoption of Resolution No. 2, a Resolution of the South Bend Redeve
Mrs. Kolata explained that Resolution No. 2 accomplishes three things: (1)
it approves the Lease between the Authority and the Redevelopment
Commission; (2) it approves the preliminary cost estimates for the
construction of the parking facility; and (3) it directs the Secretary to
file a copy of the proposed Lease, as approved, with the Commission.
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South Bend Redevelopment Authority
Special Meeting - April 14, 1988
3. Continued...
and costs will be finalized. The proposed form of lease sets an annual
lease payment of $520,000. This, again, is based on conservative, worst
case figures and is expected to decrease as financing costs are finalized.
Mrs. Kolata noted that the timetable we are on would have the approvals
through the state process by about July 1. The notice of the bond sale, the
bidding on the bond and the .bond closing would take most of the month of
July. We expect to be able to issue a notice to the contractor to begin
construction about August 1.
Mrs. Kolata also noted that the decision to make the bonds taxable or tax
exempt has not .been made. There are restrictions if the bonds are tax
exempt. The question is whether the lower interest rate on tax exempt bonds
is worth the rental restrictions incurred by the tax exempt status.
Mr. Varga asked what the Local Property Tax Control Board and the State Tax
Board have to do. Mrs. Kolata responded that they have to approve the lease
and the lease payment amount.
Mr. Varga asked if the City would operate the garage. Mrs. Kolata responded
that the Authority would not be operating the garage. The lease allows the
Redeveloment Commission to enter into an agreement with the Parking Bureau
to operate it.
Mr. Varga asked what criteria the State Tax Board uses. Mrs. Kolata
responded that they evaluate the security of the financing and whether
revenue will be sufficient to pay off the bond. Springsted Inc., the
Commission's financial advisor, has made certain that there would be enough
revenue to pay for the bonds without levying taxes, even if the yearly
payment is $520,000. Garage revenues, the One Michiana Square UDAG
repayment and tax incremental financing revenues would be used to make the
lease payment. There will be a general obligation backup so that, if those
sources would not be enough to make the payment, taxes could be levied to
make up the difference. But that general obligation backup is security to
make the bonds more marketable and not expected to be used.
Mrs. Kolata noted that in approving Resolution No. 2, the Authority would be
approving the proposed form of lease and approving the preliminary cost
estimates in the proposed form of lease.
Mr. Varga asked about the bidding process. Mrs. .Kolata explained that the
schedule calls for construction bids to be taken during the month of May.
The Board of Public Works will take the bids and be responsible for
construction management.
Upon a motion by Mr. Davey, seconded by Mr. Wroblewski and unanimously
carried, the Authority adopted Resolution No. 2.
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South Bend Redevelopment Authority
Special Meeting - April 14, 1988
4.
Adoption of Resolution No. 3 accepting assignment of an Option to Purchase
the Stanlev Coveleski Regional Stadium and approving a proposed lease for
Commission.
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Mrs. Kolata noted that the Authority is being asked to approve a proposed
lease with the Redevelopment Commission similar to the proposed lease for
the parking facility. However, since the stadium has been built, the total
cost is known. The Park Board has an Option to Purchase the stadium from
Security Pacific. The Park Board has passed a resolution assigning that
Option to the Redevelopment Authority, The Authority would then lease the
stadium to the Redevelopment Commission. Resolution No. 3 accepts the
assignment of the Option to Purchase and allows the Authority to begin the
financing process.. A maximum lease payment of $1,000,000 per year has been
used in the proposed lease. That figure was derived by determining the
highest yearly payment which would justify the cost of refinancing. The
actual yearly payment is expected to be less, depending on whether the bonds
can be tax exempt and the interest rate at which the bonds are sold. The
final numbers will be known by the time the lease goes before the Local
Property Tax Control Board for approval. Resolution No. 3 also directs the
Secretary to file a copy of the proposed Lease, as approved, with the
Commission.
Mrs. Kolata noted that the existing agreements between the White Sox team,
the Park Department and the Board of Public Works, etc. will remain in
place. The existing revenue stream will be used to pay the lease payment.
Mr. Wroblewski asked what the current lease payment is. Mrs. Kolata
responded that it is a semi-annual payment of $515,594. Mrs. Kolata noted
that projections are that the City would save between $200,000 and $900,000
over the life of the financing.
Mrs. Kolata noted that operational revenues from the stadium will be used
for the lease payment. There is provision for general obligation taxes to
be levied to make up any shortfall in revenues. It is expected that taxes
will be levied, but that they will be lower than they would be without
refinancing. That is the purpose of the refinancing, to lower the amount of
taxes levied.
Mrs. Kolata noted that the schedule of this refinancing will be about a
.month ahead of the garage financing. We expect to take the lease to the
Common Council for approval the beginning of May, the State Tax Board
hearing the end of May, and the bond sale about July.
Mr. Varga asked if there was any provision for prepayment. Mrs. Kolata
responded that she was not certain, but Springsted had structured the Tax
increment financing. bonds so that there was no prepayment penalty and
thought this might be handled the same way.
Upon a motion by Mr. Wroblewski, seconded by Mr. Davey and unanimously
carried, the Authority adopted Resolution No. 3.
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South Bend Redevelopment Authority
Special Meeting - April 14, 1988
4. Continued...
Mr. Davey asked who the Authority's legal advisors are. Mrs. Kolata
responded that the Authority is represented by the City Attorney's Office.
Baker and Daniels is bond counsel.
5. ADJOURNMENT'
There being no further business to come before the Authority, Mr. Davey made
a motion that the meeting be adjourned. Mr. Wroblewski seconded the motion
and the meeting was adjourned at 1:45 p.m.
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Thomas Va gamresident Ann E. Kolata, Acting Executive Director
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