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HomeMy WebLinkAbout2006-05-03 Redevelopment Authority Minutes,. A SOUTH BEND REDEVELOPMENT AUTHORITY REGULAR MEETING May 3, 2006 1308 County-City Building 1:30 p.m. 227 West Jefferson Boulevard Presiding: Carolyn Pfotenhauer South Bend, IN 46601 The May 3, 2006 Regular Meeting of the Redevelopment Authority was called to order at 1:30 p.m. by Carolyn Pfotenhauer. There was a quorum present. 1. ROLL CALL Members Present: Ms. Carolyn V. Pfotenhauer, President Mr. Jose Alvarez, Secretary Redevelopment Staff: Mr. Shawn Peterson, Legal Counsel Ms. Cheryl Greene, Legal Counsel Mrs. Jenny Hullinger, Recording Secretary 2. APPROVAL OF MINUTES a. Approval of the minutes of January 18, 2006 Upon a motion by Mr. Alvarez, seconded by Ms. Pfotenhauer, and unanimously carried, the Authority approved the Minutes of the Regular Meeting of January 18, 2006. 3. NEW BUSINESS a. Authority approval requested to close the Construction Fund of the South Bend Redevelopment Authority Lease Rental Revenue Refunding Improvement Bonds of 2001 (Century Center Project) and transfer the remaining funds to the Sinking Fund. Upon a motion by Ms. Pfotenhauer, seconded by Mr. Alvarez, the Authority approved the closure of the Construction Fund of the South ;Bend Redevelopment, Authority Lease Rental Revenue Refunding Improvement Bonds of 2001 (Century Center Project) and transfer the remaining funds to the Sinking Fund. b. Certification of the South Bend Redevelopment Authority concerning Insurance and Tax Liability -Century Center Project. Upon a motion by Mr. Alvarez, seconded by Ms. Pfotenhauer, the Authority approved the Certification of the South Bend Redevelopment Authority concerning Insurance and Tax Liability for the Century Center Project. c. Certification of the South Bend Redevelopment Authority concerning Insurance M and Tax Liability -College Football Hall of Fame. • The South Bend Redevelopment Authority May 3, 2006 Meeting Minutes Upon a motion by Mr. Alvarez, seconded by Ms. Pfotenhauer, the Authority approved the Certification of the South Bend Redevelopment Authority concerning Insurance and Tax Liability for the College Football Hall of Fame. d. Certification of the South Bend Redevelopment Authority concerning Insurance and Tax Liability -Blackthorn Golf Course Project. Upon a motion by Mr. Alvarez, seconded by Ms. Pfotenhauer, the Authority approved the Certification of the South Bend Redevelopment Authority concerning Insurance and Tax Liability for the Blackthorn Golf Course Project. e. Certification of the South Bend Redevelopment Authority concerning Insurance and Tax Liability -South Bend Central Development Area Public Improvement Project. Upon a motion by Mr. Alvarez, seconded by Ms. Pfotenhauer, the Authority approved the Certification of the South Bend Redevelopment Authority • concerning Insurance and Tax Liability for the South Bend Central Development Area Public Improvement Project. Certification of the South Bend Redevelopment Authority concerning Insurance and Tax Liability -Morris Performing Arts Center Project. Upon a motion by Mr. Alvarez, seconded by Ms. Pfotenhauer, the Authority approved the Certification of the South Bend Redevelopment Authority concerning Insurance and Tax Liability for the Morris Performing Arts Center Project. g. Authority approval to Authorize and Ratify the replatting of Blackthorn Corporate Park Lot 3A. Mr. Peterson advised that the Redevelopment Commission was working with a developer for construction of a hotel on this lot. However, the developer requires an additional 40' by 340' section of the golf course for the hotel foundation and a deck. Certain sewer improvements need to be relocated as they are currently situated where the foundation for the hotel will be. Bond Counsel has already reviewed and approved these changes. The lot is being replatted and the replatting committee is scheduled to meet May 18 to finish the replatting process. The lot is also being rezoned and this process should be finished in early June. The developer wants to start cons^truction as soon as possible. Mr. Peterson asked • H:\WPDATAWUTHORTY1050306.MIN.DOC 1 • The South Bend Redevelopment Authority May 3, 2006 Meeting Minutes the Authority to ratify the actions he has been taking to this point in order to proceed with getting the lot replatted. Mr. Peterson indicated that, if the Authority authorized the Director of Redevelopment to sign documents necessary to the replat, it would ensure there were no delays in the replatting process. Mr. Inks indicated that Mr. Alvarez signed the last replat and could sign this one, as well. Mr. Alvarez asked if this is the same hotel that was talked about previously. Ms. Greene confirmed that Redevelopment Staff have been working with this developer for several years and attempting to clear off various site issues in order for the project to proceed.. She further advised that the developer has a proven track record of developing first rate hotels. Upon a motion by Ms. Pfotenhauer, seconded by Mr. Alvarez, the Authority approved the authorization of and ratify the platting of Blackthorn Corporate Park Lot 3A and authorize the signing of any other documents to facilitate the process. h. Authority approval to Authorize the Redevelopment Commission to conduct certain utility improvements on Blackthorn Corporate Park Lot 3A and other nearby lots related to the development of Lot 3A and the improvement of the Golf • Course. Mr. Peterson said there are sewer lines, a water line and some of the irrigation lines in a cart path that will not allow the developer to construct the foundation for the hotel. The Redevelopment Commission has appropriated funds to move the utilities to allow for this development. Mr. Peterson asked the Authority to allow the Commission to access the land to make the utility improvements. He noted that the Authority is not being asked to expend any funds for these actions. Upon a motion by Ms. Pfotenhauer, seconded by Mr. Alvarez, the Authority authorized the Redevelopment Commission to conduct certain utility improvements on Blackthorn Corporate Park Lot 3A and other nearby lots related to the development of Lot 3A and the improvement of the golf course. Authority approval of the Form and Authorize the Execution of a Settlement Agreement and Release, and an Easement Amendment with Marathon Pipe Line, LLC. Mr. Peterson made a presentation to the Authority and provided them with a diagram depicting the location of the Marathon Pipe line under the golf course. Mr. Alvarez asked if the pipeline went through the lake, and Mr. Peterson said the easement for the pipeline goes over the edge of the pond. . 3 H:\WPDATAW UTHORTY\050306.MIN.DOC • The South Bend Redevelopment Authority May 3, 2006 Meeting Minutes Mr. Peterson said in 1993, before the golf course was built, Marathon had a blanket easement over the entire property, which was then farmland and is now primarily the golfcourse. The City negotiated an agreement with Marathon to release all but 30' on each side of the pipeline, which is a 60' total easement. The land was then subdivided for development purposes. Lot 1 A, B and C were sold to Mr. Robert Gonderman, who built the Blue Heron facility. The Blue Heron improvements encroach upon about 5' of the easement. An asphalt driveway was also constructed over the pipeline, which led to a dispute with Marathon. Instead of suing Mr. Gonderman, Marathon has attempted to get the City to correct the problem. Marathon's attorney has taken the position that there can be no encroachment on Marathon's easement on Lot 3A (as is requested for development of the hotel) until the Blue Heron encroachment issue is resolved. Mr. Gonderman will not sign a document admitting to the encroachment and there has been a stalemate for several years. This problem has continued on despite the work of six attorneys over the course of several years. The Commission has offered Marathon an additiona120' on either side of the pipeline through out the golf course in exchange for Marathon allowing the improvements to be constructed on Lot 3A. Marathon's response was extremely unreasonable, in counsel's opinion. The developer of the hotel has also had difficulty in trying to deal with Marathon and is concerned with commencing the development because of his dealings with Marathon. The developer does not want. to have to use a gravel driveway, which is Marathon's preference. The developer is willing to put in special improvements that can easily be removed so that Marathon can get to its pipeline, which will cost the developer approximately $250,000. Marathon, through its attorney, has advised that it has no issue with the improvements the developer desires but still wants to resolve the issue with Mr. Gonderman. The City has offered an additional easement so that Marathon can relocate the pipeline around the Blue Heron improvements, and in return the City wants Marathon to allow the driveway to remain in place and to permit the improvements on Lot 3A to proceed. The City now owns Lots 1B and 1C, which have the pipeline running through them. Marathon blames the City for the construction of the Blue Heron improvements that encroach on the existing pipeline, and has taken the position that the City should pay for the costs to relocate the pipeline and grant Marathon an absolute right to destroy anything existing within the easement currently and in the future. However, it should be noted for the record that, in spite of its rather harsh position, Marathon is not presently using the pipeline, but is only keeping the pipeline in place in the event that it desires to use it in the future. Ms. Pfotenhauer asked if the corner of the Blue Heron building is actually constructed on the easement. Mr. Peterson said the deck is located 25' from the pipeline. Under Federal regulations that is OK but if the Blue Heron had to H:\WPDATAWUTHORTY\050306.M[N.DOC • The South Bend Redevelopment Authority May 3, 2006 Meeting Minutes remove the deck for any reason and rebuild it, it could be a problem. Mr. Alvarez asked the cost of rerouting the pipeline, and Mr. Peterson said Marathon is not concerned about the cost of moving the pipeline but just want the easement to be able to do it. The odds of Marathon moving the pipeline are slim, but the risks for the City are greater. The City needs the improvements on Lot 3A to proceed so that the hotel can be built. In building the golf course, calculations were not quite correct on where the pipeline was actually located with respect to the easement granted. It appears that a green, several tees, and a bunker may be jeopardized if Marathon digs up the pipeline: Marathon presently has a 6" pipeline, but if it wants to dig that up in the future and perhaps put in a 40" pipeline, then Marathon could cause a tremendous amount of damage to the golf course. Ms. Pfotenhauer asked Mr. Peterson to confirm that he was recommending that the Authority grant Marathon an additional easement of 20' on either side all the way through the golf course, and Mr. Peterson said that was correct: Mr. Inks said the easement is not a full easement, it has limitations. Mr. Peterson said what Marathon is looking for is enforceability. Under Federal law you can't build 50' from a pipeline. Under ordinance, you can't build within 50' of a pipeline. They want a private right of action so that if someone builds something within 50' feet of the pipeline, Marathon can force them to remove it. This original deal was struck in the late 90's. Marathon is not allowed to cut trees in that additional 20' so it is a limited . easement. Mr. Inks said the additional 20' of easement will not affect the golf course since Marathon is not able to cut down trees and the City doesn't have any plans to construct buildings on the golf course. Mr. Alvarez asked about the possibility of Marathon perhaps building a bigger pipeline. Mr. Peterson said the local Marathon people don't seem to care about this, only the attorney. There is now an ability to bore underneath the existing pipeline rather than using a backhoe. Mr. Alvarez asked if we give Marathon the additional 20' easement and the small piece of property should a deal be able to be struck, and Mr. Peterson said that was correct, unless Marathon's attorney continues to be unreasonable.. Ms. Greene said Mr. Peterson has been able to work closer to an agreement than any of the other attorneys have over the course of several years. Ms. Pfotenhauer asked if the. pipeline ran through anything besides the golf course, and Ms. Greene said the .only building sites impacted by the pipeline are the hotel site, the Blue Heron site, and the driveway located on the property that the City owns. Mr. Peterson said these sites could be replatted and the club house moved over if necessary for development. Mr. Peterson said the City is not willing to give more than what he has stated, and will not grant Marathon the additional easement area unless it agrees to the City's requests. These include the develoCper's request to have an inspection of the H:\WPDATAWUTHORTY\050306.M1N.DOC C • The South Bend Redevelopment Authority May 3, 2006 Meeting Minutes pipeline that is under his proposed driveway because Marathon will not commit to replacing its improvements. The City has asked the developer to pay half of the cost of the inspection. The second request for Marathon is to be more cooperative and to agree to better language with the developer as far as the possibility of destroying his improvements. Marathon has stated their desire to be able to move, destroy, and perhaps put things back the way they were. Mr. Alvarez asked if the developer has shown signs of weakening on its desire to build the hotel. Mr. Peterson said the developer has said this issue with Marathon needs to be settled or he will not build the hotel. He has waited a long time. Mr. Alvarez asked if there is an eminent domain component to this, and Ms. Greene said perhaps the civil city could be involved because. this is a utility. Mr. Peterson cautioned that could cause a very expensive lawsuit. Ms. Pfotenhauer asked if the additional easement could only be used by Marathon for maintenance or to move the pipeline within the easement and Mr. Peterson said that was correct. Ms. Pfotenhauer asked for a summary of the downside for the City. Mr. Peterson said the only possibility would be if Marathon put in a new pipeline with a very intrusive means that would damage the golf course. The liability related to that would be around $350,000. at this point. Weighing that risk • with the investment of a $17 millionhotel is a good risk. It is not certain who would pay the $350,000. if that happened, and the worse case would be that the City would have to pay it. Mi•. Alvarez asked about the attorney agreeing to terms and then changing her mind after some time, but Mr. Peterson said she is not inside counsel so she can't set policy. Mr. Peterson said the Resolution before the Authority is to approve the settlement agreement with Marathon to release the City from liability on Lot 1B and 1C for the driveway, the Blue Heron site, and granting Marathon an easement to relocate the pipeline and the additional 20' of easement through out the golf course. That additiona120' easement will not allow Marathon to cut any trees. Also, any golfing items within that 20' easement are not considered encroachments. The easement and license agreement are intended to further improve Lot 3A. The City will not give Marathon any other concessions until it agrees to our requests. If the developer chooses not to construct the hotel, then the City will stop negotiations with Marathon because it would be very doubtful that we could ever come to an agreement with Marathon on any project if it won't agree with this one. This developer has waited many years for a resolution of the conflict. Ms. Pfotenhauer wondered if Marathon was aware of this problem, and Ms. Greene said the local people are aware of it, but we have been unable to go beyond the local people to the next level. Ms. Greene said we are working from a difficult position since we allowed the first driveway to go across the existing 6 H:IWPDATAW UTHORTY\050306.MIN.DOC • The South Bend Redevelopment Authority May 3, 2006 Meeting Minutes pipeline easement. Mr. Peterson said he is hoping to resolve this in the next week so that it can be part of the replatting process, so it will be shown on the replat and people can properly .reference the easement. Upon a motion by Mr. Alvarez, seconded by Ms. Pfotenhauer, the Authority approved the Resolution No. 157 approving forms of agreement relating to a certain pipeline easement affecting the Blackthorn Golf Course and Corporate Office Park and other related matters. 4. NEXT MEETING DATE: May 17, 2006 5. ADJOURNMENT There being no further business to come before the Redevelopment Authority the meeting was adjourned at 2:20 p.m. Carolyn Pfoten auer, r nt • H:\WPDATAWUTHORTY\050306.MIN.DOC ~ ~1 ~_ oriald In s, Director 7