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HomeMy WebLinkAbout5A9 Second Amendment to Development Agreement (The Monreaux) - TABLEDSouth Bend Redevelopment Commission 227 West Jefferson Boulevard, Room 1308, South Bend, Indiana Redevelopment Commission Agenda Item DATE : 8/11/2025 FROM: Erik Glavich, Director, Growth and Opportunity SUBJECT: Second Amendment to Development Agreement for “The Monreaux” Funding Source* (circle) River West; River East; South Side; Douglas Road; West Washington; RDC General; Riv. East Res. * Funds are subject to the City Controller's determination of availability; if funds are unavailable, as solely determined by the City Controller, then the authorization of the expenditure of such funds shall be void and of no effect. PURPOSE OF REQUEST: Second Amendment to a Development Agreement for the Monreaux residential development SPECIFICS: The Commission will consider a Second Amendment to the Monreaux Development Agreement that, if adopted, would authorize an additional $303,000 in TIF expenditures to support the Monreaux project. Cost increases and other challenges since the execution of the Development Agreement have necessitated consideration by the Commission to increase support to ensure successful completion of the project. The additional funds would be used to assist the Developer in making architectural improvements. On November 20, 2023, the Commission entered into a Development Agreement with the Developer for the construction of “The Monreaux” affordable housing project at 505, 507, 511, and 513 S. Michigan Street, the former “Fat Daddy’s” site. The Commission also entered into a Purchase Agreement on July 14, 2022, for the sale of the property for the Monreaux project. The due diligence period established by the Purchase Agreement was amended 3 times—now set to expire on September 30, 2025—as the Developer has worked through design, engineering, and financing. The Development Agreement was amended on May 22, 2025 (the First Amendment). It increased the Funding Amount to $3,300,000 (from $2,300,000) and increased the Private Investment commitment to $17,700,000 (from $13,700,000). The total project will consist of a 57,000 square foot building and 57 residential units, of which 45 are income-restricted. The Funding Amount authorized through the original Development Agreement and First Amendment would be provided to the Developer in accordance with a loan agreement, which establishes that the loan would be forgiven if the Developer completes the project as committed. In alignment with the Real Estate Purchase Agreement, as amended, the Developer agrees to complete the project within 36 months of the Closing Date. If the Commission were to approve this Second Amendment to the Development Agreement, the additional $303,000 would not be included in the loan amount; it would instead be subject to the procurement processes _________________________Pres/V-Pres ATTEST: __________________Secretary Date: ____________________ APPROVED Not Approved SOUTH BEND REDEVELOPMENT COMMISSION August 14, 2025 South Bend Redevelopment Commission 227 West Jefferson Boulevard, Room 1308, South Bend, Indiana to which most local public improvements are subject. This Second Amendment does not amend the forgivable loan fund amount or details. Staff recommends approval of the Second Amendment. The Monreaux project is vital to the stabilization and continued growth of the southern end of downtown South Bend. In addition to providing needed affordable housing options, the project along with others in the area will be transformative. SECOND AMENDMENT TO DEVELOPMENT AGREEMENT This SECOND AMENDMENT TO DEVELOPMENT AGREEMENT (this “Second Amendment”) is made and entered into to be effective as of August 14, 2025, by and between the City of South Bend, Department of Redevelopment, acting by and through its governing body, the South Bend Redevelopment Commission (“Commission”), and The Monreaux LLC, an Indiana limited liability company with offices at 1335 Pyle Avenue, South Bend, Indiana 46615, and Delta Ventures Ltd. (collectively, the “Developer”). RECITALS A.The Commission and the Developer entered into that certain Development Agreement dated effective November 20, 2023, as amended by a First Amendment to Development Agreement dated May 22, 2025 (collectively the “Development Agreement” or as may be referred to as simply the “Agreement”), for development of certain real property located in St. Joseph County, City of South Bend, State of Indiana, as more particularly described in Exhibit A of the Development Agreement. All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Development Agreement. B.Certain circumstances have changed since the execution of the First Amendment to Development Agreement, and the Commission and the Developer now collectively desire to further amend the Development Agreement to increase the Funding Amount to support architectural improvements to the Project. C.The Developer has revised designs for the Project and is prepared to move forward to fulfill the commitments of the Development Agreement and other agreements with the Commission related to this Project. D.The Commission believes that the architectural changes to which the Developer is committed and to which the increase in the Funding Amount would be used for are in the best interests of the health, safety, and welfare of the City and its residents. E.The Commission and the Developer now desire to amend the Development Agreement as set forth herein. AGREEMENT NOW, THEREFORE, in consideration of these premises, and the mutual covenants and promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Developer and the Commission hereby agree as follows: 1.Recitals. The recitals set forth above, including each and every recital contained therein, are incorporated into and made a part of this Second Amendment as though fully set forth herein. 2.Amendments. The Development Agreement is hereby amended as follows: a)Section 1.2 shall be deleted in its entirety and replaced with the following: “1.2 Funding Amount. “Funding Amount” means the total of: (a)an amount not to exceed Three Million Three Hundred Thousand Dollars ($3,300,000.00) of tax increment finance revenues provided to the City by the Commission, subject to annual appropriation by the Commission, to simultaneously reimburse the City for its costs incurred, or to be incurred, through the Loan Agreement that will be subsequently executed by the Parties pursuant to the terms of the Loan Agreement, which will be used for paying a portion of the Local Public Improvements; and (b)an amount not to exceed Three Hundred Three Thousand Dollars ($303,000.00) of tax increment finance revenues to be used for paying the costs associated with the Local Public Improvements procured by the Board of Works to purchase exterior siding materials for certain architectural improvements to the Project.” b)A new Section 1.4 shall be inserted in SECTION 1. DEFINITIONS, which states as follows: “1.4 Board of Works. “Board of Works” means the Board of Public Works of the City, a public body granted the power to award contracts for public works pursuant to I.C. 36-1-12.” c)In the last sentence of Section 3.1, the text “January 31, 2024” shall be deleted and replaced with the following: “January 31, 2026.” d)In Section 3.7, the reference to “Exhibit F” shall be deleted and replaced with “Exhibit E.” e)A new Section 3.9 shall be inserted in SECTION 3. DEVELOPER’S OBLIGATIONS, which states as follows: “3.9 Grant of Easement. Upon assuming ownership of the Developer Property, the Developer will grant to the Commission a temporary, non-exclusive easement on, in, over, under and across any part(s) of the Developer Property (the “Easement”) in the form attached hereto as Exhibit F, to permit the Commission to fulfill its obligations under this Agreement, including the construction, equipping, inspection, and delivery of the Local Public Improvements. The Easement shall (a) inure to the benefit of the Commission and the Board of Works or any contractors acting on behalf of the Commission in connection with the construction, equipping, inspection, and delivery of the Local Public Improvements; (b) shall bind the Developer and its grantees, successors, and assigns; and (c) shall terminate no later than upon completion of the Local Public Improvements, as determined by the Board of Works.” f)A new Exhibit F shall be inserted in the form attached hereto as Exhibit 1. g)A new Section 3.10 shall be inserted in SECTION 3. DEVELOPER’S OBLIGATIONS, which states as follows : “3.10 Obtain Necessary Easements. The Developer agrees to obtain any and all easements from any governmental entity and/or any other third parties that the Developer or the Commission deems necessary or advisable in order to complete the Local Public Improvements, and the obtaining of such easements is a condition precedent to the Commission’s obligations under this Agreement.” h)A new Section 3.11 shall be inserted in SECTION 3. DEVELOPER’S OBLIGATIONS, which states as follows : “3.11 Costs and Expenses of Construction of Project. The Developer hereby agrees to pay, or cause to be paid, all costs and expenses of planning, construction, management, and all other activities or purposes associated with the Project (including legal, architectural, and engineering fees), exclusive of the Local Public Improvements, which shall be paid for by the Commission by and through the Funding Amount subject to the terms of this Agreement.” i)A new Section 3.12 shall be inserted in SECTION 3. DEVELOPER’S OBLIGATIONS, which states as follows : “3.12 Specifications for Local Public Improvements. The Developer will be responsible for the preparation of all bid specifications related to the Local Public Improvements, and the Developer will pay all costs and expenses of such preparation, provided, however, that if the Commission pays any costs or expenses of such preparation, then the amount paid by the Commission will be deducted from the Funding Amount. The Developer will submit all bid specifications related to the Local Public Improvements to the City of South Bend Engineering Department (the “Engineering Department”). The Engineering Department may approve or disapprove said bid specifications for the Project in its sole discretion and may request revisions or amendments to be made to the same. The Commission shall not be required to expend the Funding Amount unless the Engineering Department has approved all bid specifications.” j)A new Section 4.4 shall be inserted in SECTION 4. COMMISSION’S OBLIGATIONS, which states as follows: “4.4 Completion of Local Public Improvements. (a)The Commission hereby agrees to complete (or cause to be completed) the Local Public Improvements described in Exhibit C attached hereto on a schedule to be reasonably determined and agreed to by the Commission and the Developer, as may be modified due to unforeseen circumstances and delays. (b)Before any work on the Local Public Improvements will commence, (a) the Commission will have received satisfactory plans and specifications for the Project and responded in accordance with Section 3.5 (“Submission of Plans and Specifications for Project”) of this Agreement, and (b) the Engineering Department will have received satisfactory bid specifications for the Local Public Improvements and approved the same in accordance with Section 3.12 (“Specifications for Local Public Improvements”) of this Agreement. (c)The Local Public Improvements will be completed in accordance with all applicable public bidding and contracting laws and will be subject to inspection by the Engineering Department or its designee. (d)Notwithstanding anything contained herein to the contrary, in the event the costs associated with the Local Public Improvements procured by the Board of Works to purchase exterior siding materials for certain architectural improvements to the Project are in excess of the Funding Amount, Developer, at its sole option, may determine to pay to the Commission the amount of the excess costs to permit timely completion of the Local Public Improvements by the Commission, or an agent of the Commission, which amounts shall be applied for such purpose. If Developer chooses not to pay any such excess costs of the Local Public Improvements (above the Funding Amount), the Commission may reduce the scope of the Local Public Improvements to the amount which may be funded with the Funding Amount. In no event will the Commission be required to spend more than the Funding Amount in connection with the Local Public Improvements.” k)In Section 6.1, the last sentence shall be deleted in its entirety and replaced with the following text: “In the event that the Developer fails (a) to complete the Project by the Mandatory Project Completion Date, or (b) to expend the full amount of the Private Investment by the Mandatory Project Completion Date, Developer will be considered in default, and the Developer will be required to repay (i) all Funding Amounts received in accordance with the terms of the Loan Agreement; and (ii) One Hundred Fifty Percent (150%) of the portion of the Funding Amount expended by the Commission for costs associated with the the Local Public Improvements procured by the Board of Works to purchase exterior siding materials for certain architectural improvements to the Project, as of the date of the Commission’s demand, as agreed upon monetary damages sustained by the Commission, the City, and citizens of South Bend for the Commission’s direct investment into the Project, the negative impact upon the Commission’s ability to develop other projects in South Bend, and expenses of City employees supporting the Project, including, redevelopment staff, engineering staff, and legal department staff.” l)In EXHIBT C, Description of Local Public Improvements, the first sentence shall be deleted in its entirety and replaced with the following: Local Public Improvements will include site work, purchase of exterior siding materials for certain architectural improvements to the Project, and other improvements in support of the construction of the Project as agreed upon between the Parties, in accordance with all applicable laws and regulations. 3.Entire Agreement; Conflict. Except as otherwise stated herein, all other terms, conditions and agreements contained in the Development Agreement remain unmodified and in full force and effect. To the extent a conflict exists between the terms of this Second Amendment and the Development Agreement, the terms of this Second Amendment shall control. Capitalized terms used in this Second Amendment will have the meanings set forth in the Development Agreement unless otherwise stated herein. 4.Counterparts; Electronic or Facsimile Transmission. This Second Amendment may be executed in counterparts which, when combined, shall constitute one instrument. The electronic or facsimile transmission of a signed counterpart of this Second Amendment shall be binding upon the party whose signature is contained on the transmitted copy. Signature Page Follows IN WITNESS WHEREOF, Commission and Developer have executed this Second Amendment to Development Agreement to be effective as of the date set forth above. SOUTH BEND REDEVELOPMENT COMMISSION ___________________________________ Troy Warner, President Attest: ___________________________________ Eli Wax, Secretary THE MONREAUX LLC ___________________________________ Devereaux Peters, Managing Member DELTA VENTURES LTD. ___________________________________ Sophia Porter, Director B-1 EXHIBIT 1 EXHIBIT F Form of Easement B-2 GRANT OF TEMPORARY EASEMENT THIS INDENTURE, made as of the _________ of ____________, 20___ (the “Effective Date”), by and between The Monreaux LLC, an Indiana Limited Liability Company, with offices at 1335 Pyle Avenue, South Bend, Indiana 46615 (the “Grantor”), and the South Bend Redevelopment Commission, governing body of the City of South Bend Department of Redevelopment, 1400S County-City Building, 227 West Jefferson Boulevard, South Bend, Indiana 46601 (the “Grantee”). WITNESSETH: For the sum of One Dollar ($1.00) and other good and valuable consideration, the receipt of which Grantor hereby acknowledges, Grantor hereby grants, conveys, and warrants to Grantee a temporary, non-exclusive easement (the “Easement”) on, in, over, under and across the real property described in attached Exhibit 1 (the “Property”) for the construction, equipping, and delivery of certain improvements on the Property (the “Local Public Improvements”), together with the right of ingress to and egress from the Easement for said purposes, all pursuant to a certain Development Agreement by and between Grantor and Grantee, dated November 20 2023, and subsequently amended on May 22, 2025, and August 14, 2025 (the “Development Agreement”). Capitalized terms not otherwise defined herein shall have the meanings set forth in the Development Agreement. The Easement granted herein shall pertain to the air, surface, and subsurface rights and interests of Grantor, for the use and benefit of Grantee, and its successors and assigns, to the extent necessary to accomplish and carry out the construction, equipping, and delivery of the Local Improvements on the Property. The Easement hereby granted includes the right and privilege for Grantee at reasonable times to clean and remove from said Easement any debris or obstructions interfering with said Easement. The Easement granted herein, and its associated benefits and obligations, shall inure to the benefit of Grantee and Grantee’s contractors acting on Grantee’s behalf in connection with the Local Public Improvements. Notwithstanding anything contained herein to the contrary, unless extended in writing by Grantor, the Easement shall terminate and be of no further force and effect on the date (hereinafter, the “Construction Termination Date”) of the earliest of the following: (a) completion of the Local Public Improvements; (b) expiration or earlier termination of the Development Agreement; or (c) such earlier date as Grantor and Grantee may agree to in writing. B-3 IN WITNESS WHEREOF, Grantor has executed this Grant of Temporary Easement on the date shown in the acknowledgment set forth below to be effective as of the Effective Date. GRANTOR: The Monreaux LLC Printed: Devereaux Peters Its: Managing Member STATE OF _________________ ) ) SS: COUNTY OF _________________ ) Before me, the undersigned, a Notary Public in and for said State, personally appeared Devereaux Peters, to me known to be the Managing Member of the Grantor in the above Grant of Temporary Easement, and acknowledged the execution of the same as the Grantor’s free and voluntary act and deed. WITNESS my hand and Notarial Seal this __________ day of _______________, 20____. ________________________________________________ ___________________________________, Notary Public Residing in _________________ County, _____________ My Commission Expires: _______________________ I affirm, under the penalties for perjury, that I have taken reasonable care to redact each Social Security number in this document, unless required by law. /s/ Danielle Campbell Weiss This instrument was prepared by Danielle Campbell Weiss, Senior Assistant City Attorney, City of South Bend, Indiana, Department of Law, 227 W. Jefferson Boulevard, Suite 1200S, South Bend, IN 46601. B-4 EXHIBIT 1 Description of Property Tax ID No. 018-3017-0628 Parcel Key No. 71-08-12-306-010.000-026 Legal Description: 132 Ft E End Lot 19 Martins Add Commonly known as: 505 S. Michigan Street, South Bend, Indiana 46601 Tax ID No. 018-3017-0629 Parcel Key No. 71-08-12-306-011.000-026 Legal Description: N 44' Lot 20 Martins Add Commonly known as: 507 S. Michigan Street, South Bend, Indiana 46601 Tax ID No. 018-3017-0631 Parcel Key No. 71-08-12-306-012.000-026 Legal Description: S 1-3 Lot 20 Martins Add Commonly known as: 511 S. Michigan Street, South Bend, Indiana 46601 Tax ID No. 018-3017-0632 Parcel Key No. 71-08-12-306-013.000-026 Legal Description: Lot 21 & N 1/2 Vac Alley S & Adj Martins Add Commonly known as: 513 S. Michigan Street, South Bend, Indiana 46601