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HomeMy WebLinkAboutRedevelopment Commission Minutes 04.10.25 - Signed CITY OF SOUTH BEND REDEVELOPMENT COMMISSION SOUTH BEND REDEVELOPMENT COMMISSION MINUTES April 10, 2025, at 9:30 a.m. BPW Conference Room, 13th Floor, County-City Building https://tinyurl.com/RDC-2025-2T The South Bend Redevelopment Commission was called to order at 9:32 a.m. President Troy Warner presiding. 1. ROLL CALL Members Present: Troy Warner, President David Relos, Vice President Eli Wax, Secretary Gillian Shaw, Commissioner Ophelia Gooden-Rodgers, Commissioner Marcus Ellison, Member At-Large Legal Staff: Danielle Campbell Weiss, Senior Asst. City Attorney Redevelopment Staff: Caleb Bauer, Exec. Director, DCI Sarah Schaefer, Deputy Director, DCI Joseph Molnar, Asst. Dir. of Growth and Opp., DCI Erin Michaels, Property Development Manager, DCI Blake Nipper, Intern, DCI Laura Hensley, Board Secretary, DCI Others Present: Tina Patton, 707 Sherman Ave. Matt Barrett, 110 S. Niles Ave. Randy Rompola, Barnes & Thornburg LLP Emma Adlam, Baker Tilly - virtual 2. Approval of Minutes CITY OF SOUTH BEND REDEVELOPMENT COMMISSION REGULAR MEETING – April 10, 2025 2 A. Approval of Minutes of the Regular Meeting of Thursday, March 27, 2025 Upon a motion by David Relos for approval, second by Eli Wax, the motion carried unanimously with one notation of Charity Stowe’s last name was spelled incorrectly; the Commission approved the minutes of the regular meeting of March 27, 2025. 3. Approval of Claims A. No Claims Allowances 4. Old Business A. None 5. New Business A. River West Development Area 1. Resolution No. 3633 (Tax Increment Revenue Bonds for Drewrys/Portage Elwood) Joseph Molnar, the Assistant Director of Growth and Opportunity, presented a resolution regarding tax increment revenue bonds. He explained that the Residential Infrastructure Fund (RIF) program, managed by the Indiana Finance Authority (IFA), provides fin ancial support to municipalities for residential housing construction. The bonds have a 20-year term, with an interest rate to be determined at closing, not exceeding 5.5%. In January 2025, the City was awarded $2.57 million for the Drewrys/Portage Elwood site, which will include 89 single-family homes and 21 multi-family units. Mr. Molnar explained Resolution No.3633 would authorize the preliminary determination to issue bonds up to a maximum amount of $2.57 million. This funding would be allocated exclusively to the City to support infrastructure and other site work. The bond payments would be made from the River West Development area. Both parcels involved are located within the River West TIF. The resolution also authorizes the notice of a public hearing, notice of decision, and any necessary actions to facilitate the issuance of the bonds. After approval today, the next steps will be to approve the bond resolution, appropriation resolution and the Common Council to approve issuance of the TIF revenue bonds. CITY OF SOUTH BEND REDEVELOPMENT COMMISSION REGULAR MEETING – April 10, 2025 3 Commissioner Gooden-Rodgers inquired about the project timeline and housing income levels. Mr. Molnar responded that the bond is expected to close this summer, with site preparation and construction beginning in the spring of 2026. The Area Median Income (AMI) for the housing will be set at 80%. Vice President Relos questioned the choice of financing method. Mr. Randy Rompola, with Barnes & Thornburg LLP, explained that this approach avoids the need to sell bonds on the open market, simplifying the process. Additionally, the interest rate is lower than it would be through a regular bonding process. The current rate is 3.15%, reset quarterly, and was 3.11% prior to April. They anticipate closing before the rate resets in July. This method also eliminates the need for a rating process, disclosure documents, and underwriting, thereby reducing issuance costs. Secretary Wax asked why we don’t use the cash on hand to fund the project instead of taking out a loan that we would have to pay back over 20 years with interest and Caleb Bauer, Executive Director of Community Investment, stated that this decision involves strategic considerations about when to use our cash reserves versus financing options. We chose this tool because the interest rate is significantly lower than if we issued bonds through the Redevelopment Commission's typical lease rental revenue process. This makes it an attractive option, allowing us to advance this project while preserving cash for other ongoing projects. As of March 31st, the River West account balance is $27.5 million in cash, with $6.7 million in debt service obligations for the year. By financing this project, we avoid using cash reserves, which would necessitate issuing higher-rate bonds for future projects. Currently, there's uncertainty regarding future property tax revenues due to potential legislative changes, such as the amendment to Senate Bill 1, which could impact our economic development areas. Given this uncertainty, it makes sense to pursue favorable financing options. This specific program offers a very favorable rate, making it a prudent choice over using cash. If the revolving infrastructure fund is renewed by legislature, it could be a valuable tool for future projects. Commissioner Shaw inquired whether the bond could be paid off earlier than the 20-year term. Mr. Rompola responded that he didn't see why the Indiana Finance Authority (IFA) wouldn't want the funds returned sooner to reissue loans. Caleb Bauer, Executive Director of Community Investment, wanted to clarify an important point regarding this agenda item. Although we previously mentioned affordability and an 80% AMI, the IFA program does not have an affordability requirement. Our intention is to develop a mixed-income community, with future residential units at various CITY OF SOUTH BEND REDEVELOPMENT COMMISSION REGULAR MEETING – April 10, 2025 4 affordability levels. While we envision some market-rate development at this site, we are not yet at the stage of determining specifics. I want to ensure it's clear for the record that affordability is part of our plan. Upon a motion by Eli Wax for approval, seconded by Ophelia Gooden- Rodgers, the motion carried unanimously; the Commission approved Resolution No. 3633 as presented on April 10, 2025. 2. Budget Request (Elwood Shopping Center Demo & Design Specs) Joseph Molnar, Assistant Director of Growth and Opportunity, presented a request for $115,000 for design specifications and services for the demolition of the shopping center which would begin in the Fall of 2025. President Warner asked what the estimated cost of demolition would be, and Mr. Molnar stated $550,000-$600,000. Commissioner Ellison asked if we intend to purchase the three (3) remaining parcels near the property and Mr. Molnar stated that we would welcome conversations with the businesses. Vice President Relos wanted to note that there is an easement near the Coal Line Trail nearby as well. Upon a motion by David Relos for approval, seconded by Gillian Shaw, the motion carried unanimously; the Commission approved the Budget Request as presented on April 10, 2025. 3. Resolution Nos. 3632 & 3634 and Transfer Agreement (St. Joseph Co. Airport Authority) Erin Michaels, Property Development Manager, presented two (2) Resolutions and a property transfer agreement for four (4) parcels near the South Bend International Airport located at 1743 N. Commerce Dr. to improve access to the parking lots near the airport. Also, one (1) parcel located at 4208 Old Cleveland Rd. near the proposed New Day Intake Center from the Authority to the Commission. Today, you will be approving two resolutions. Resolution 3632 involves transferring four parcels from Voorde Dr. to the Airport Authority. Resolution 3634 pertains to accepting one parcel from the Airport Authority on Old Cleveland Road. The transfer agreement includes a 30-day due diligence period, with no funds exchanged. Secretary Wax asked about the assessed value of the four properties and Mr. Molnar stated that the two properties on the north were appraised in the mid-20s a few years ago, while the properties on the south essentially have zero value. Although they might have a nominal paper value of a few thousand dollars, they are unbuildable due to CITY OF SOUTH BEND REDEVELOPMENT COMMISSION REGULAR MEETING – April 10, 2025 5 zoning codes and their small size. The only potential value might be to neighboring properties, but even then, setbacks and current building positions make them unbuildable. On paper, the value might be $20,000 to $25,000, but in reality, there is limited opportunity to build on these parcels as they were remnants from when the road was constructed through the property. The Old Cleveland Road property is assessed at around $10,000 and might appraise for slightly more. It is an acre and a half of clean industrial land, making it more valuable and buildable compared to the other four parcels. The Airport Authority approached us about these remnant parcels, as they provide better access to their parking lots. Parking has become a challenge at the airport. Commissioner Ellison asked if we intend to purchase the parcel owned by the County and Mr. Molnar stated that they have always been good partners with transferring property if needed. Upon a motion by David Relos for approval, seconded by Ophelia Gooden-Rodgers, the motion carried unanimously; the Commission approved Resolution No. 3632 and Transfer Agreement as presented on April 10, 2025. 4. Purchase Agreement (4216 Old Cleveland Rd.) Joseph Molnar, the Assistant Director of Growth and Opportunity, presented a purchase agreement for the property at 4216 Old Cleveland Road, priced at $192,500. The agreement includes a 30 -day due diligence period and a closing date 150 days thereafter. Commissioner Gooden-Rodgers inquired about the property's intended use. Mr. Molnar explained that having such properties available is advantageous when developers seek a specific amount of undeveloped land. It's valuable to maintain these options in our portfolio. Commissioner Ellison asked about the condition of the house and Mr. Molnar explained the idea is to eventually demolish the residence on the property. It is a single-family house situated on 3.5 acres. The property appraised for approximately $190,000, with most of the value attributed to the land rather than the house itself. Secretary Wax was not in favor of the purchase. Motion was made by David Relos to approve, second by Gillian Shaw. On the motion: • Troy Warner, President: Yes • David Relos, Vice President: Yes CITY OF SOUTH BEND REDEVELOPMENT COMMISSION REGULAR MEETING – April 10, 2025 6 •Eli Wax, Secretary: No •Gillian Shaw, Commissioner: Yes •Ophelia Gooden-Rodgers, Commissioner: Yes The motion carried; the Commission approved the Purchase Agreement as presented on April 10, 2025. 5.1st. Amendment to Purchase Agreement (State Theater) Caleb Bauer, Executive Director of Community Investment, presented both items 5A5 and 5A6 together, an amendment to extend the due diligence period by fifteen (15) days and a request for $350,000 to provide funding to make immediate repairs to the roof structure to prevent further moisture infiltration, clear scuppers, and external downspouts, and secure all doors and windows. Ensuring these improvements are made is crucial for the building's future in our downtown. Currently, moisture is penetrating the structure, and without intervention, it will eventually need to be demolished. We estimate the demolition costs to be around $2,000,000. There are also constraints due to easements on the facade, which would require us to salvage portions of it. These existing easements are something the Redevelopment Commission could consider adjusting if we move towards closing. Commissioner Gooden-Rodgers inquired about the goal of the building and Mr. Bauer explained we are looking at multiple options and not wanting to have to demolish. Mr. Bauer wanted to clarify; this budget request exceeds the estimated cost for the emergency roof repairs. We're asking for additional funds to address unforeseen issues as they arise, such as securing doors and boarding up windows. While these are not major expenses, we've included a cushion to allow staff to resolve issues promptly. This also covers addressing the terra cotta and preventing unauthorized access and moisture infiltration into the building. Our goal is to prevent these problems moving forward. Ms. Gooden-Rodgers is in favor of the request. Vice President Relos asked if there could be a study done on the facade prior to any sales agreements and Mr. Bauer agreed that further investigation is needed however, the immediate needs are the roof and drainage issues. Secretary Wax also spoke in favor of the request and inquired if any developers have interest. Mr. Bauer is hopeful that a partner comes forward with a plan. Matt Barrett asked what the current owner’s responsibility is and a scenario if we did nothing. Mr. Bauer explained it could start with unsafe building law violations. These violations might lead to citations, and those citations could result in fines. CITY OF SOUTH BEND REDEVELOPMENT COMMISSION REGULAR MEETING – April 10, 2025 7 A special assessment could then be placed on the building. If this assessment isn't paid, the building might go to a tax sale. At the tax sale, a buyer could pay the starting bid or cover the communication costs. If no buyer bids, the property would roll over to the Commissioner's certificate sale, where the starting bid would be discounted. If there are still no bids, we could request the Commission to transfer the certificate to the City of South Bend. By this point, likely three to four years would have passed, and the building might be beyond saving. For public safety reasons, the City would then need to procure the demolition of the building, which we estimate would cost around $2,000,000 in today's dollars and we are trying to avoid all of this. Commissioner Ellison voiced concerns about the future success of the venue and Mr. Bauer stated that today, downtown South Bend is seeing significant investment, with a billion dollars planned and many new residential units. This growth is boosting the area's viability for retail and entertainment. Unlike before, there's strong financial momentum and more people living downtown. This makes it the right time for redevelopment, despite some viability concerns. The building is historically important, requiring a unique approach beyond just economic considerations. Upon a motion by Eli Wax for approval, seconded by Ophelia Gooden- Rodgers, the motion carried unanimously; the Commission approved the 1st Amendment to the Purchase Agreement as presented on April 10, 2025. 6. Budget Request (State Theater) Upon a motion by Eli Wax for approval, seconded by Troy Warner, the motion carried unanimously; the Commission approved the Budget Request as presented on April 10, 2025. 6. Progress Reports A. Tax Abatement B. Common Council C. Other 7. Next Commission Meeting Thursday, April 24, 2025, 9:30 a.m. BPW Conference Room 13th Floor CITY OF SOUTH BEND REDEVELOPMENT COMMISSION REGULAR MEETING – April 10, 2025 8 8.Adjournment Thursday, April 10, 2025, 10:50 a.m. ______________________________ ______________________________ Eli Wax, Secretary Troy Warner, President