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HomeMy WebLinkAboutRedevelopment Commission Minutes 03.27.25 - Signed CITY OF SOUTH BEND REDEVELOPMENT COMMISSION SOUTH BEND REDEVELOPMENT COMMISSION MINUTES March 27, 2025, at 9:30 a.m. BPW Conference Room, 13th Floor, County-City Building https://tinyurl.com/RDC-2025-4T The South Bend Redevelopment Commission was called to order at 9:30 a.m. Vice President David Relos presiding. 1. ROLL CALL Members Present: David Relos, Vice President Eli Wax, Secretary Gillian Shaw, Commissioner Ophelia Gooden-Rodgers, Commissioner Marcus Ellison, Member At-Large Members Virtually: Troy Warner, leaving at 10:18 a.m. Legal Staff: Sandra Kennedy, Corporation Council -Virtual Danielle Campbell Weiss, Senior Asst. City Attorney Redevelopment Staff: Caleb Bauer, Exec. Director, DCI - Virtual Sarah Schaefer, Deputy Director, DCI Erik Glavich, Director of Growth and Opportunity, DCI Rosa Tomas, Director of Finance, DCI Joseph Molnar, Asst. Dir. of Growth and Opp., DCI Erin Michaels, Property Development Manager, DCI Allison Doctor, Project Manager, DCI Laura Hensley, Board Secretary, DCI Others Present: Greg Swiercz, SB Tribune Matt Barrett, 110 S. Niles Ave. Tina Patton, 707 Sherman Ave. Murray Miller, 23698 Western Ave. CITY OF SOUTH BEND REDEVELOPMENT COMMISSION REGULAR MEETING – March 27, 2025 2 Charity Stowe, Empowerher Development LLC Sarah Hill, Penny Hill Homes LLC Rachel Tomas Morgan, Councilwoman 2. Approval of Minutes A. Approval of Minutes of the Regular Meeting of Thursday, March 13, 2025 Upon a motion by Eli Wax for approval, second by Gillian Shaw, the motion carried unanimously; the Commission approved the minutes of the regular meeting of March 13, 2025. 3. Approval of Claims A. Claims Allowances March 4, 2025 Upon a motion by Eli Wax for approval second by Ophelia Gooden- Rodgers, the motion carried unanimously; the Commission approved the claims allowances of March 27, 2025. B. Claims Allowances March 18, 2025 Upon a motion by Eli Wax for approval second by Ophelia Gooden- Rodgers, the motion carried unanimously; the Commission approved the claims allowances of March 27, 2025. 4. Old Business A. Purchase Agreement Terminated (Lafayette Building) Joseph Molnar, Assistant Director of Growth and Opportunity, reported that in Fall 2023, the RDC approved a purchase agreement for the Lafayette Building. However, the agreement was extended several times due to due diligence and communication with the developer. Unfortunately, the project did not achieve the desired outcome. Following a thorough architectural and engineering analysis, the developer concluded they lacked the financial capability to proceed with the project as initially planned. Mr. Molnar noted that the developer chose not to close on the building, which was not the intended result as outlined in the purchase agreement. Mr. Molnar stated the importance of the framework of the agreement and staff will now engage interested developers. He is also encouraged that there will be renewed interest due to the church North of the building is now for sale. Vice President Relos inquired about the situation, to which Mr. Molnar explained that the building has structural and engineering issues CITY OF SOUTH BEND REDEVELOPMENT COMMISSION REGULAR MEETING – March 27, 2025 3 stemming from a fire in the 1930s, and the subsequent repairs do not meet current standards. He also mentioned that the atrium space poses a challenge as it is not rentable and negatively impacts the pro forma numbers. Secretary Wax asked if there were any other developers or ideas for the building that would preserve the skylight. Mr. Molnar responded that there is no set plan at this time but emphasized the building's historic value due to its civil rights heritage. Commissioner Gooden-Rodgers inquired about the age of the building and suggested that demolition might be a better path forward. Mr. Molnar explained that the first two floors were constructed in 1898, with the top three floors added in 1901. He noted that the building might be better suited for offices due to their lighter structural weight. However, he emphasized that demolition is not preferred because of the building's historic value. He also mentioned that the building is currently not deteriorating since the RDC replaced the roof, fixed the skylight, and drainage system when we purchased it. Mr. Molnar also assured the Commission that people are not accessing the building due to securing entrance points and vandalism is not an issue. Commissioner Ellison inquired whether a project could now include both the Lafayette building and the church to the north. Mr. Molnar responded that this could be a possibility since the purchase agreement has been terminated. Councilwoman Rachel Tomas Morgan asked about the City's investment in the building. Mr. Molnar stated that the City invested $750,000 from a tax sale by the County in 2018 and has also removed interior asbestos contamination along with other improvements. Councilwoman Morgan expressed her support for preserving the building. 5. New Business A. River West Development Area 1. 7th Amendment to Purchase Agreement (Real America Development, LLC) Joseph Molnar, Assistant Director of Growth and Opportunity, presented the 7th. Amendment for the extension of the closing date for market rate parcels until July 31st, 2025. Mr. Molnar recapped and gave some insights into what's transpired over the past nine months. The Redevelopment Commission entered into a purchase agreement with Real America Development, LLC back in 2021 for a combined low-income housing tax credit and market rate apartments project. This project was planned to include a total of 150 units, with 60 being affordable income-restricted and 90 being market rate. The agreement, initiated in 2021, allowed them two years to apply for credits with the CITY OF SOUTH BEND REDEVELOPMENT COMMISSION REGULAR MEETING – March 27, 2025 4 state. In November 2022, they were awarded low-income housing tax credits. In February 2024, the purchase agreement was amended to separate the closing dates for the low-income housing tax credit project and the market rate parcels, providing some context for our current situation. Mr. Molnar explained that in 2024, the Redevelopment Commission transferred the LIHTC parcel, and construction began in the fall of that year. The estimated completion is by the end of 2025, and the project is progressing well. He shared some photos, showing that the market rate portion was delayed due to the findings from the phase one and phase two environmental assessments. Environmental cleanup was necessary for that part of the parcel, which is why we originally decided to split the project. Mr. Molnar explained that the Indiana Brownfields program, a state initiative, funded and carried out the work, making it a beneficial partnership with the state. In total, 189 tons of hazardous lead- contaminated soil and over 1,300 tons of non-hazardous lead- contaminated soil, which still exceeded residential limits, were excavated. Approximately 1,500 tons of soil were removed from the site, requiring over 68 truckloads. The total cost of the cleanup reached about $250,000, which was covered by Indiana Brownfields, benefiting both the developer and the Redevelopment Commission (RDC). Although the cleanup is officially complete, we are awaiting the final release of the site in the form of a comfort letter from Indiana Brownfields. They have communicated via email to both Real America and the city that the approval is forthcoming. The final steps are expected to be completed by April 2025. Indiana Brownfields has indicated that since the RDC was the initial owner, they prefer the RDC to maintain ownership until the comfort letter is issued. Secretary Wax asked if this is the last step before closing and Mr. Molnar stated yes, and they have full-build plans as well. Vice President Relos asked if the hole would need to be filled and Allison Doctor, Project Manager confirmed that it has already been backfilled. Upon a motion by Eli Wax for approval, seconded by Gillian Shaw, the motion carried unanimously; the Commission approved the Purchase Agreement as presented on March 27, 2025. 2. Development Agreement (Milkweed Gardens Inc.) Joseph Molnar, Assistant Director of Growth and Opportunity, presented this agreement with EmpowerHer Development LLC, Milkweed Gardens Inc. and Herstoric Properties LLC for the Restoration of 512, 516, 520, and 530 S. Michigan St. The proposed development agreement with the above developers will help lead to the renovation of two buildings located at 530 S. Michigan and 516 S. CITY OF SOUTH BEND REDEVELOPMENT COMMISSION REGULAR MEETING – March 27, 2025 5 Michigan Street. The buildings are known as the former Hope Rescue Mission and the Monarch Building respectively. Both buildings have been long-vacant and unused. The developers have envisioned transforming the two buildings and the vacant lot between them as Milkweed Commons. The end results will be 15 small businesses’ commercial spaces, a community kitchen, and a food market. The proposed agreement commits the Developer to expending a minimum of $2.2 million on the restoration of the property. The proposed agreement commits the Redevelopment Commission to expend no more than $350,000 to aid in the redevelopment of the property including primarily replacement and installation of new roofs on the two buildings. Mr. Molnar also shared a slide of the numerous new developments the City is involved in South of downtown. Charity Stowe from Empowerher Development LLC stated that Hertoric Development is actively working in Monroe Park. She explained that they have rehabilitated several residential properties, which are now being rented out at affordable rates. They are thrilled to be part of this initiative, led by women-owned developers, revitalizing this corner of the city. Vice President Relos asked if they owned the lot between the two buildings. Ms. Stowe confirmed that they do, as well as the lot north of the Monarch building. She mentioned plans to include a stage for music events, a public restroom, seating, and urban farming. Secretary Wax inquired about plans to manage the unhoused population. Ms. Stowe responded that they have a phased plan in place, which includes installing fences soon. They are also working with Code Enforcement and the Police Department to ensure this remains a walkable community space. Vice President Relos inquired about the funds from the RDC. Ms. Stowe explained that the back roof of the Monarch building needs to be replaced, and the Hope building requires roof work, a 50-foot skylight, and some terracotta repairs. Secretary Wax asked about the project's timeline. Ms. Stowe stated that they expect to close on the Monarch building in May, with construction anticipated to take six months. The Hope building, being larger and needing more work, is projected to be completed by 2027. Mr. Molnar also mentioned that with the $2.2 million investment, the city is aiming to achieve some form of occupancy in each building as part of this development agreement. Beth Weber (virtual) spoke in favor of the project. Murray Miller inquired about plans to hire local contractors for the construction work. Ms. Stowe responded that all the construction will be carried out by local women and minority-owned companies. Commissioner Shaw asked about the target of the 15 business spaces across the two buildings and Ms. Stowe stated they will be focused on food centric businesses. CITY OF SOUTH BEND REDEVELOPMENT COMMISSION REGULAR MEETING – March 27, 2025 6 Upon a motion by Eli Wax for approval, seconded by Ophelia Gooden- Rodgers, the motion carried unanimously; the Commission approved the Development Agreement as presented on March 27, 2025. 3. Development Agreement (Penny Hill Homes LLC) Joseph Molnar, Assistant Director of Growth and Opportunity, presented the agreement for restoration of 425 & 435 S. Michigan St. (property known as the Inwoods building). The proposed agreement commits the Developer to expending a minimum of $1.44 million on the restoration of the property and the creation of a minimum of three commercial spaces for rent, each receiving a Certificate of Occupancy from the Building Department. The proposed agreement commits the Redevelopment Commission to expending no more than $350,000 to aiding in the redevelopment of the property including primarily replacement and installation of a new roof. Mr. Molnar states that this project is part of a broader READI 2.0 award for South downtown with Milkweed Commons and The Monreaux. Vice President Relos asked if this would cover the Inwoods building only and Mr. Molnar confirmed that both buildings need new roof work. Sarah Hill from Penny Hill Homes LLC explained that the interior damage was caused by a water leak from the third floor during restoration work for a brewery project. She mentioned that the water was left on for several days, resulting in water damage throughout the building. Consequently, the third floor is in better condition compared to the first and second floors, as well as the basement. Upon a motion by Gillian Shaw for approval, seconded by Eli Wax, the motion carried unanimously; the Commission approved the Development Agreement as presented on March 27, 2025. 4. Budget Request (Main/Wayne Elevator) Joseph Molnar, Assistant Director of Growth and Opportunity, presented a request for $550,000 for the consultation, design, and replacement of the elevator at 119 W. Wayne St. Staff from both Venues Parks and Arts and the RDC have been preparing the garage for public parking. This preparation includes updating signage, computer systems, and internet connectivity, as well as installing new gate equipment. The goal is for the garage to operate similarly to the other three downtown public parking garages, offering the same rates, including free 2-hour parking, and free parking on nights and weekends. The South Bend Bike Garage, which leases the retail space on the ground floor, has also been making improvements. There will be CITY OF SOUTH BEND REDEVELOPMENT COMMISSION REGULAR MEETING – March 27, 2025 7 a significant increase in parking with the new City Hall needs at the MLK and Wayne parking garage for city employees and attendees of public meetings. We anticipate a large surplus of parking in that garage. Bringing this garage online, especially with all the developments happening just to the south, will provide an excellent parking option for people coming downtown. This will be particularly beneficial on busy days at the library, such as during science fairs, when parking extends for blocks in every direction. Getting this garage operational will be very helpful. The Vice President Relos inquired about which elevator was being discussed, and Mr. Molnar clarified that it is the main elevator that goes to the top deck. Secretary Wax asked if the garage would be managed by the same company as the other garages. Mr. Molnar confirmed that it would, under the same agreement with VPA and LAZ. Secretary Wax then inquired about the revenues generated, and Mr. Molnar explained that the revenues would go towards maintenance. Mr. Wax also asked if there would be a capital campaign to promote these garages and highlight their affordability. Mr. Molnar stated that the new General Manager from VPA aims to rejuvenate and promote downtown parking options to ensure the garages are more utilized. Commissioner Gooden-Rodgers asked if there would be any cost savings by replacing both elevators at the same time. Mr. Molnar responded that there would not be. Upon a motion by Eli Wax for approval, seconded by Gillian Shaw, the motion carried unanimously; the Commission approved the Budget Request as presented on March 27, 2025. B. Administrative 1. Fiscal Report for the Redevelopment Commission Erik Glavich, Director of Growth and Opportunity, presented the fiscal report which Indiana Code requires from the fiscal officer. We reviewed the incremental property tax revenues for the past year compared to 2023. This review focused solely on incremental tax revenue and did not include grants or other items. The report shows a significant increase in expenses, nearly 60% higher in 2024 compared to 2023. This increase is detailed in the report, and I can provide further insights into where these expenses originated. Regarding debt service, I included the projected 2025 debt service, which is not in the report's table but gives an idea of this year's debt service payments. For the recently approved Riverfront allocation area, the city will pay interest only on the debt, approximately $460,000 per payment, totaling CITY OF SOUTH BEND REDEVELOPMENT COMMISSION REGULAR MEETING – March 27, 2025 8 $920,000 annually for the next few years. These projections are not included in the current figures as the bonds have not been issued yet. At the end of the year, we have about $71 million in total balances across the six TIF districts. Secretary Wax asked about the expenditure increases, which are more pronounced in some districts. He stated the RDC has been aggressive in spurring economic development, but continuing at this spending level is not sustainable. Secretary Wax expressed the need to ensure we can support important projects that drive economic development and increase the city's value. Internal conversations are ongoing about future investments to maintain our ability to support key projects. Mr. Glavich explained our strategic priorities include spurring economic development and being good stewards of funds. We reviewed expenditures through 2024 and projected similar spending trends moving forward. Revenue projections are modest, with a 1.02% annual increase, avoiding overestimation of assessed values. The 2025 projected revenues are for planning purposes only and not used for budgeting. We manage economic development projects conservatively to avoid significant balance drawdowns. Some expenses, like the $4 million purchase for the Madison Lifestyle District and $2.7 million for the Main/Wayne parking garage, are not reflected in the current figures but will be reimbursed through the READI 2.0 award. In 2024, we were reimbursed over $500,000, and 2025 reimbursements will be reflected in next year's numbers. Despite the 60% increase in expenses, we still have healthy balances. Mr. Glavich explained, for example, the MLK Dream Center came out of the West Washington TIF district, contributing to a $500,000 decrease in the end-of-year balance. We need to balance spending on impactful projects with maintaining reserves to support future opportunities. In summary, we aim to spur economic development while managing funds conservatively to ensure we can support key projects and maintain healthy balances. Commissioner Gooden-Rodgers asked, "If there are funds that haven't been included here, at what point will we know about them? Where are they set aside?" Mr. Glavich’s response was that the TIF management report, due on April 15th, will provide a full snapshot of the financial situation as of year-end 2024. Matt Barrett pointed out a discrepancy in the report, noting that using a multiplier of 1.02 means the tax revenues are projected to increase by 2%. Caleb Bauer, Executive Director of Community Investment, confirmed that it is a 2% escalator in our revenue projections. Mr. CITY OF SOUTH BEND REDEVELOPMENT COMMISSION REGULAR MEETING – March 27, 2025 9 Glavich indicated the report will be corrected so that it is clear the projections are based on a 2% escalator. Vice President Relos asked about the remaining $800,000 left in the West Washington TIF district after the South Bend Range demolition and Mr. Bauer explained that the project revenues are about $667,000 in the West Washington TIF. That would be in the June distribution and then the December distribution. The TIF will have one distribution in 2026 to reach that total. 6.Progress Reports A.Tax Abatement B.Common Council C.Other 7.Next Commission Meeting Thursday, April 10, 2025, 9:30 a.m. BPW Conference Room 13th Floor 8.Adjournment Thursday, March 27, 2025, 10:53 a.m. ______________________________ ______________________________ Eli Wax, Secretary Troy Warner, President