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HomeMy WebLinkAbout25-19 Confirming Resolution - Real Property Tax Abatement for 425 South Michigan Street Filed in Clerk's Office J It OFSOUTH CITY BEND MAR a 5 2025 p COMMUNITY INVESTMENT Brirado City Clerk, South Bend, IN /865 March 5, 2025 Council Member Troy Warner Chairperson, Community Investment Committee South Bend Common Council County-City Building, 4th Floor South Bend, Indiana 46601 RE: Confirming Resolution (2): Vacant Building Tax Abatement and Mixed-use Development Real Property Tax Abatement for Penny Hill Homes LLC Dear Council Member Warner, Please find the enclosed Confirming Resolutions and Memorandum of Agreement for a vacant building tax abatement and a mixed-use development real property tax abatement for Penny Hill Homes, LLC, an Indiana Limited Liability Company. Penny Hill Homes intends to rehabilitate the building located at 425 S. Michigan Street, known as the Inwoods Building. The building has been vacant since 1999, and Penny Hill Homes will renovate and reactivate the space with the intent of proving a mixture of commercial spaces and an "art market"for artists and small businesses. The total investment for this project is $1.44 million. The project meets the qualifications for two abatements: a two-year (2) vacant building tax abatement and a ten-year (10) mixed-use development real property tax abatement. A representative from Penny Hill Homes, LLC, will be available to meet with the Committee on Monday, March 10, 2025. Should you or other Council members have questions about the report or need additional information, please feel free to call me at (574) 235-5838. Sincerely, • Erik Glavich Director, Growth and Opportunity EXCELLENCE ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT 1400S County-City Building 227 W.Jefferson Blvd. South Bend.Indiana 46601 p 574.235.9371 www.southbendin.gov Filed in Clerk's Office ivA 0 5 20L1 BILL NO. 25-19 Bianca Tirado RESOLUTION NO. City Clerk, South Bend, IN A RESOLUTION CONFIRMING THE ADOPTION OF A DECLARATORY RESOLUTION DESIGNATING CERTAIN AREAS WITHIN THE CITY OF SOUTH BEND, INDIANA, COMMONLY KNOWN AS 425 S. Michigan Street, South Bend, Indiana 46601 AN ECONOMIC REVITALIZATION AREA FOR PURPOSES OF AN TEN-YEAR (10) REAL PROPERTY TAX ABATEMENT FOR Penny Hill Homes LLC WHEREAS, the Common Council of the City of South Bend, Indiana, has adopted a Declaratory Resolution designating certain areas within the City as an Economic Revitalization Area for the purpose of tax abatement consideration; and WHEREAS, a Declaratory Resolution designated the area described as: Key Number: 71-08-12-303-020.000-026 Local Parcel Number: 018-3016-060001 Commonly Known As: 425 S. Michigan Street Legal Description: Lot 2 Martin's Addn-Penny Hill Minor Sub25/26 NP #964 5/24/2024 be designated as an Economic Revitalization Area under the provisions of Indiana Code 6-1.1- 12.1 et seq., and South Bend Municipal Code Sections 2-76 et seq.; and WHEREAS, notice of the adoption of a Declaratory Resolution and the public hearing before the Council has been published pursuant to Indiana Code 6-1.1-12.1-2.5; and WHEREAS, the Council held a public hearing for the purposes of hearing all remonstrances and objections from interested persons; and WHEREAS, the Council has determined that the qualifications for an economic revitalization area have been met; and WHEREAS, the Council adopted Declaratory Resolution No. 5121-25on February 24, 2025. NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of South Bend, Indiana, as follows: SECTION I. The Common Council hereby confirms its Declaratory Resolution designating the area described herein as an Economic Revitalization Area for the purposes of tax abatement. Such designation is for mixed use development real property tax abatement only and shall expire on December 31, 2027. SECTION II. The Common Council hereby determines that the property owner is qualified for and is granted real property tax deduction for up to a period of ten (10) years as shown by the schedule outlined below as well as the attachment pursuant to Indiana Code 6-1.1-12.1-17 and further determines that the petition, the Memorandum of Agreement between the Petitioner and the City of South Bend, and the Statement of Benefits comply with Chapter 2, Article 6, of the Municipal Code of the City of South Bend and Indiana Code 6-1.1-12 et seq. Year 1 - 100% Year 2 - 100% Year 3 - 100% Year 4 - 100% Year 5 - 100% Year 6 - 100% Year 7 - 100% Year 8 - 100% Year 9 - 100% Year 10 - 100% SECTION III. This Resolution shall be in full force and effect from and after its adoption by the Common Council and approved by the Mayor. Canneth Lee, Council President South Bend Common Council Attest: Bianca Tirado, City Clerk Office of the City Clerk Presented by me, the undersigned Clerk of the City of South Bend, to the Mayor of the City of South Bend, Indiana, on the day of , 2025, at o'clock .m. Bianca Tirado, City Clerk Office of the City Clerk Approved and signed by me on the day of ,2025,at o'clock .m. James Mueller, Mayor City of South Bend Filed in Clerk's Office ",R 0 5 2025 MEMORANDUM OF AGREEMENT Bianca Tirado City Clerk, South Bend, IN (REAL PROPERTY TAX ABATEMENT) This Memorandum of Agreement (Agreement) dated as of February 25, 2025, serves as confirmation of a commitment by Penny Hill Homes LLC (the "Applicant"), pending a March 10, 2025, public hearing, to comply with the project description, job creation and retention (and associated wage rates and salaries) figures contained in its petition, Statement of Benefits, and attachments and this Agreement. 1. Property Associated with the Abatement and Responsibilities of the Applicant. At the time of this Agreement, the property is located at 425 S. Michigan Street, South Bend, IN 46601, and has Key Number 71-08-12-303-020.000-026. Throughout the duration of the abatement, the Applicant shall promptly report any changes in the address or Key Number of the property receiving the abatement to the Department of Community Investment and to the Office of the City Clerk. Moreover, the Applicant also shall report any material changes or improvements made to the property subject to the abatement including changes as the result of subdividing, replatting, or otherwise. The Applicant agrees that failure to promptly report changes can result in a finding of noncompliance on behalf of the Applicant under the commitments of this Agreement. 2. Commitments of City and Applicant. Subject to the adoption of a Declaratory Resolution and a Confirmatory Resolution by the South Bend Common Council (the "SBCC"), the City of South Bend, Indiana, (the "City") commits to provide a ten-year (10) real property tax abatement for the Applicant, based on the Applicant's commitment set forth in its Application. The Applicant commits to the following(the"Commitments"): (a) making total combined real property expenditures of no less than One Million Four Hundred Forty Thousand dollars ($1,440,000.00) for the redevelopment of the structure totaling approximately Fifty Thousand (50,000) square feet at property identified in Section 1 of this Agreement; (b) creating at least eight (8) permanent full-time jobs with a total estimated annual payroll of at least Three Hundred Sixty Thousand dollars($360,000.00); and (c) acting in good faith to complete the project as described in its Application. 3. Applicant's Compliance with City and State Laws. During the term of the abatement, the Applicant shall comply with Chapter 2,Article 6,of the South Bend Municipal Code, entitled "Tax Abatement Procedures," and all governing provisions of the Indiana Code. During the term of this abatement, the City may annually request information from the Applicant concerning the nature of the Project, the approved capital expenditure of the Project, the number of full-time permanent positions newly created by the Project, and the average wage rates and salaries (excluding benefits & overtime) associated with the positions, and the Applicant shall provide the City with adequate written evidence thereof within fifteen (15) days of such request (the "Annual Survey"). The City shall utilize this information and the information required to be filed by the Applicant in the CF-1 Compliance with the Statement of Benefits form to verify that the Applicant has at all times complied with the Commitments after the Commitment Date and during the duration of the abatement and for no other 1 purpose. The Applicant further agrees to provide the City with such additional information as requested by the City to determine Applicant's compliance with the Commitments and with local and state requirements within twenty (20) days following any such request. Notwithstanding anything herein to the contrary, the Applicant acknowledges that the City may be required to disclose certain documents provided by the Applicant as required by a court order or applicable law. 4. Substantial Compliance and Rights of Termination. The City, by and through the SBCC, reserves the right to terminate the Economic Revitalization Area designation and associated property tax abatement deductions if it reasonably determines that the Applicant has not made reasonable efforts to substantially comply with all the Commitments, as defined in Section 2 of this Agreement, and the Applicant's failure to substantially comply with the Commitments was not due to factors beyond its reasonable control, as described in Section 5 below. 5. Factors Beyond Control. As used in this Agreement, factors beyond the control of the Applicant shall only include factors not reasonably foreseeable at the time of designation application and submission of Statement of Benefits which are not caused by any act or omission of the Applicant, and which materially and adversely affect the ability of the Applicant to substantially comply with this Agreement. Applicant has the burden to communicate to the City any such factors in which it believes is beyond its control and impacting its ability to fulfill the terms of this Agreement or any tax abatement benefit provided to the City. The City reserves the right to investigate the factors cited by Applicant under this Section 5 to the fullest extent possible and may deny Applicant's request upon the completion of the City's investigation. 6. Repayment of Tax Abatement Savings. If at any time during the term of this Agreement the Applicant shall: (a) be delinquent or in default with respect to any tax payment in St. Joseph County, Indiana; or (b) cease operations at the facility for which the tax abatement was granted; or (c) announce the cessation of operations at such facility, then the City may immediately terminate the Economic Revitalization Area designation and associated tax abatement deductions, and upon such termination, require Applicant to repay all of the tax abatement savings received through the date of such termination. 7. Notice/Hearing of Termination. In the event that the City determines that the Economic Revitalization Area designation and associated tax abatement deductions should be terminated or that all or a portion of the tax abatement savings should be repaid, it will give the Applicant notice of such determination, including a written statement calculating the amount due from the Applicant, and will provide the Applicant with an opportunity to meet with the City's designated representatives to show cause why the abatement should not be terminated and/or the tax savings repaid. Such notice shall state the names of the person with whom the Applicant may meet and will provide that the Applicant shall have thirty (30) days from the date of such notice to arrange such meeting and to provide its evidence concerning why the abatement termination and/or tax savings repayment should not occur. If, after giving such notice and receiving such evidence, if any,the City determines that the abatement termination and/or the tax repayment action is proper, the Applicant shall be provided with written notice and a hearing before the SBCC before any final action shall be taken terminating the abatement and/or requiring repayment of tax benefits. The Applicant shall be entitled to appeal that determination to a St. Joseph County Superior or Circuit Court. 2 8. Repayment. In the event the City requires repayment of the tax abatement savings as provided hereunder, it shall provide Applicant with a written statement calculating the amount due (the "Statement"), and Applicant shall make such repayment to the City within one hundred twenty (120) days of the date of the Statement. If the Applicant does not make timely repayment, the City shall be entitled to all reasonable costs and attorneys' fees incurred in the enforcement of this Agreement and the collection of the tax abatement savings required to be repaid hereunder. 9. Modification/Entire Agreement. This Agreement and the schedules attached hereto as Exhibit A contain the entire understanding between the City and the Applicant with respect to the subject matter hereof, and supersede all prior and contemporaneous agreements and understandings, inducements, and conditions, expressed or implied,oral, or written, except as herein contained. This Agreement may not be modified or amended other than by an agreement in writing signed by the City and the Applicant. The Applicant understands that any and all filings required to be made or actions required to be taken to initiate or maintain the abatement are solely the responsibility of the Applicant. 10. Waivers. Neither the failure nor any delay on the part of the City to exercise any right, remedy, power, or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power, or privilege preclude any other or further exercise of the same or of any other right, remedy, power, or privilege with respect to any occurrence or be construed as a waiver of such right, remedy, power, or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver. 11. Notices. All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been received when delivered by hand or by facsimile(with confirmation by registered or certified mail)or on the third business day following the mailing, by registered or certified mail, postage prepaid, return receipt requested,thereof, addressed as set forth below: If to Applicant: Penny Hill Homes LLC 1512 E.Wayne Street, South Bend, Indiana 46615 Attn: Sarah Hill If to the City: City of South Bend, Indiana 227 W. Jefferson Boulevard, Suite 1400S South Bend, Indiana 46601 Attn: Executive Director of Community Investment 3 12. Governing Laws of Indiana. This Agreement and all questions relating to its validity, interpretation, performance, and enforcement shall be governed by the laws and decisions of the courts of the State of Indiana. 13. Applicant's Consent to Jurisdiction. The Applicant hereby irrevocably consents to the jurisdiction of the Courts of the State of Indiana and of the St. Joseph County Circuit or Superior Court in connection with any action or proceeding arising out of or relating to this Agreement or any documents or instrument delivered with respect to any of the obligations hereunder, and any action related to this Agreement shall be brought in such County and in such Court. 14. Assignment and Transfer Prohibited. This Agreement shall be binding upon and inure to the benefit of the City and the Applicant and their successors and assigns,except(a)that no party may assign or transfer its rights or obligations under this Agreement without the prior written consent of the other party hereto, in which consent shall not be unreasonably withheld, and (b)Applicant may assign and transfer its rights under this Agreement to the Permitted Assign without prior written consent. "Permitted Assign" means the affiliated single purpose entity created for purposes of designing, constructing, owning, operating, and maintaining the project which is the subject of this Agreement. 15. Valid and Binding Agreement. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. By executing this Agreement, each person so executing affirms that he has been duly authorized to execute this Agreement on behalf of such party and that this Agreement constitutes a valid and binding obligation of the party. 16. Severability. The provisions of this Agreement and of each section or other subdivision herein are independent of and separable from each other,and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part unless this Agreement is rendered totally unenforceable thereby. 17. No Personal Liability. No official, director, officer, employee, or agent of the City shall be charged personally by the Applicant, its employees, or its agents with any liabilities or expenses of defense or be held personally liable to the Applicant under any term or provision of this Agreement or because of the execution by such party of this Agreement or because of any default by such party hereunder. Remainder of page intentionally blank.] 4 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. "Applicant" "City" Penny Hill Homes LLC City of South Bend, Indiana By: 'ALA 10, By: Sarah Hill Canneth Lee Owner President, South Bend Common Council Approved as to Legal Adequacy and Form this By: day of , 2025. Troy Warner Chairperson,Community Investment Counsel, South Bend Common Council Committee By: Erik Glavich Counsel for Applicant Department of Community Investment By: James Mueller Mayor 5 EXHIBIT A Abatement Schedule Subject to the adoption by the SBCC of a resolution confirming the adoption of Declaratory Resolution No. 5121-25, the property owner is qualified for and is granted real property tax abatement for a period of ten(10)years as shown by the schedule outlined below. Year 1 - 100% Year 2 - 100% Year 3 - 100% Year 4- 100% Year 5 - 100% Year 6- 100% Year 7- 100% Year 8 - 100% Year9 - 100% Year 10 - 100% 6