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HomeMy WebLinkAboutEDC Minutes 2.6.25 - SignedCITY OF SOUTHBEND ECONOMIC DEVELOPMENT COMMISSION SOUTH BEND ECONOMIC DEVELOPMENT COMMISSION MINUTES February 6, 2025, at 1.00 p.m. Mayor's Conference Room 14t" Floor, County -City Building httr)s://tinyurl.com/EDCCOSB2025 Meeting Recording Link: https:1/tinyurl.com/EDC-Meeting-Recordin s The South Bend Economic Development Commission was called to order at 1:03 pm 1. Roll Call Members Present: Rafael Morton, Vice -President* Renata Matousova, Secretary Luis Zapata, Commissioner Karen White, Commissioner * departed the meeting at 1:43 pm Members Absent: Cecilia Lopez Monterrosa, President Staff: Danielle Campbell Weiss, Asst. City Attorney Sandra Kennedy, Corporation Council - Virtual Caleb Bauer, Executive Director, DCI Sarah Schaefer, Deputy Director, DCI - Virtual Erik Glavich, Director, Growth & Opportunity, DCI Rosa Tomas, Director of Finance, DCI Joseph Molnar, Asst. Dir. of Growth and Opp., DCI Erin Michaels, Property Development Manager, DCI - Virtual Laura Hensley, Board Secretary, DCI Others Present: Randy Rompola, Barnes & Thornburg LLP Chandler Sturgis, J.C. Hart Company, Inc. Todd May, J.C. Hart Company, Inc. CITE" OF SOUTH BE -ND ECONOMIC DEVELOPMENT COMMISSION February 6, 2025 Murray Miller, 23698 Western Ave. Pastor Canneth Lee, Councilman Emma Adlam, Baker Tilly - Virtual 2. Approval of Minutes Upon a motion by Commission Karen White for approval, second by Secretary Renata Matousova, the motion carried unanimously; the Commission approved the minutes of the regular meeting of July 9, 2024. 3. Election of Officers Upon a motion by Commissioner Luis Zapata and seconded by Secretary Renata Matousova, the Commission approved keeping the current slate of officers for 2025; motion carried unanimously, on February 6, 2025. 4. New Business A. Riverwalk Project (J.C. Hart Company, Inc.) a. Presentation of Project and Economic Development Revenue Bond Financing Caleb Bauer, Executive Director of Community Investment, presented all agenda items together for the Riverwalk project. Mr. Bauer explained that today the City is proposing an economic development revenue bond financing, which is sometimes referred to as a project -based tax increment financing allocation area, which would support an apartment complex development along the St. Joseph River, from the JC Hart company. The project includes two (2) new multi -family residential buildings (291 total apartments) and a 398-space parking garage with a minimum of $61.5 million in private investment with the City funding infrastructure (new street; utilities) through a $5.64 million READI 2.0 award. Mr. Bauer explained that how the financing works, it captures the future tax increment generated from the development project to fund the bond issuance that will unlock some upfront net proceeds but ultimately will be the responsibility of the developer to back those debt service obligations and the City would not have a property tax backup. 90% of the property tax revenue after the development is completed would be committed to debt service obligations over the lifetime of this allocation area, 25 years, an additional 6% of incremental revenue would be committed to pay up to a certain sum and the City of South Bend would hold the revenue of this one (1) parcel allocation area. Mr. Bauer stated that most of the funding goes into the two (2) structures, however, the structured parking garage is estimated to be $10.3 million and is a big part of the project and is not usually viable without incentives for the developer. Mr. Bauer shared the timeline of the project completing at the end of 2028. Caleb Bauer, Executive Director of Community Investment, explained the CITY OF SOUTH BE\D I ECONOMIC DEVELOPMENT COMMISSION February 6, 2025 items before the commission today are as follows, the Resolution authorizing the creation of the economic development tax and revenue bonds, legal documents including the form of trust, indentured form of loan agreement, form of Common Council bond ordinance and the tax impact report prepared by Baker Tilly, and a public hearing. Mr. Randy Rompola, Barnes & Thornburg LLP explained the structure of the financing and that the proceeds of the bonds would be loaned to the developer, and the City is not responsible. This would also not affect the city's rating if the bonds default. Vice -President Morton asked about large number of units and Mr. Bauer explained that a market analysis has been done by RCL Co., and it shows that we have a significant potential for additional absorption of market rate housing in the next five years as part of the City's master plan. Mr. Sturgis confirmed the findings. Mr. Todd May with J.C. Hart Company, Inc. stated that there is a mix of studio apartments, 1-2 bedrooms, and 3 bedrooms and the average rent is under $2000 per month for a 900 square foot unit and is in line with other rental properties downtown. Secretary Matousova asked about the number of parking spaces for residents. Mr. May stated that there will be 398 spaces in the parking garage and 65 spaces dedicated for Crowe use, one (1) spot per bedroom is a good estimate. Commissioner White asked about the cost of parking and Mr. May stated approximately $110 per space and one space is included in the rental price. Commissioner Zapata asked if there was a cap for potential earnings for the bond holders and Mr. Rompola explained that the bond will not exceed $17 million and when the bond is issued, the principal amount and interest rate will be locked in. He also confirmed that whatever TIF is generated, if there's extra TIF or if the assessments would increase and more TIF is generated, that would mean the bond would just be paid off earlier. Secretary Matousova asked why there would be overdue principal and interest. Mr. Rompola explained that if the TIF for any year was less than expected or if there's extra, it would be used to make up for any shortfalls and if there is a non-payment event, then you can defer to excesses in future years, and the City would still get 10%. Also, the bond would not be rated because they are not sold in the municipal market, and the municipal market wouldn't buy a bond like this because it is solely project based. Mr. Bauer explained that this is the 1st time the city has used this type of financing, however, other cities have used this format for allocation areas where they are tied to one project since the 70's. Also, we don't have to have the TIF revenue cash available and appropriated for a project and there is no risk for the city. Commissioner White asked about the 25-year term and Mr. Rompola stated that is what the statute allows. Secretary Matousova asked if the rate is negotiable. Ms. Emma Adlan with Baker Tilly explained that it's a taxable bond at a 6% interest rate to upwards of CITY OF SOUTH BE.ND i ECONOMIC DEVELOPMENT COMMISSION February 6, 2025 about 8% is pretty common when the developer is purchasing the bonds. Overview of Documents for Approval i. Report of the South Bend Economic Development Commission Concerning the Proposed Financing of Economic Development Facilities for J.C. Hart Company, Inc. ii. Form of Trust Indenture iii. Form of Loan Agreement iv. Form of Common Council Bond Ordinance The motion was made by Commissioner Luis Zapata and seconded by Commissioner Karen White. On the motion to approve the Project report, Form of Trust Indenture, Form of Loan Agreement, and Form of Common Council Bond Ordinance: • Rafael Morton, Vice -President: NOT PRESENT • Renata Matousova, Secretary: YEA • Luis Zapata, Commissioner: YEA • Karen White, Commissioner: YEA The motion carried with 3 YEAs; the Commission approved the project report for the Riverwalk Project on February 6, 2025. b. Public Hearing on Project and Economic Development Revenue Bond Financing A notice was published in the South Bend Tribune on January 24, 2025, regarding the public hearing to consider the approval of the issuance by the Issuer of a maximum principal amount of $17,000,000 of its City of South Bend, Indiana, Taxable Economic Development Tax Increment Revenue Bonds, Series 2025 (J.C. Hart Development Project) (the "Bonds"), in one or more series for the Riverwalk Project. A Public Hearing regarding the Riverwalk Project was opened to the public for comments and considerations. Murray Miller asked what would happen if there were shortfalls in the TI F. Mr. Rompola stated that if there is not enough TIF for whatever reason, if residents didn't pay their taxes, or if the property didn't assess out or something happened with the tax rate or state laws, the developer would be obligated by the tax payer agreement and if they didn't pay under the taxpayer agreement, the city would have the ability to put a tax lien on the property. The Public Hearing was closed. c. Resolution No. 2025-1: Approving and Authorizing Certain Actions and Proceedings with Respect to Certain Proposed Taxable Economic Development Tax Increment Revenue Bonds and Related Matters CITYOF SOUTH BEND I ECONOMIC DEVELOPMENT COMMISSION February 6, 2025 The motion was made by Commissioner Luis Zapata and seconded by Commissioner Karen White. On the motion to approve Resolution No. 2025-1: • Rafael Morton, Vice -President: NOT PRESENT • Renata Matousova, Secretary: YEA • Luis Zapata, Commissioner: YEA • Karen White, Commissioner: YEA The motion carried with 3 YEAs; the Commission approved Resolution No. 2025-1 on February 6, 2025. 5. Adjournment at 1:48 p.m. 0 Cecilia Lop Monterrosa, President Renata Matousova, Secretary