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Home My WebLink About11264-26 Ordinance Authorizing Payments in Lieu of Taxes for Heritage Trails South Bend, LP ORDINANCE No . 11264-26 Passed by the Common Council of the City of South Bend, Indiana March 23, 26 20 Attest: City Clerk Bianca L. Tirado Attest: �_..--- j"------ President of Common Council Presented by me to the Mayor of the City of South Bend, Indiana March 24, 20 26 4A/lAtk/j. )141Wrj-....7. City Clerk Bianca L. Tirado Approved and signed by me he 4dIrN 31 i20 26 17 Mayor h �/� • touo' Ia I � ,` _;Vt. fax/,. SUBSTITUTE BILL NO. 11-26 ORDINANCE NO. 11264-26 AN ORDINANCE OF THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, AUTHORIZING PAYMENTS IN LIEU OF TAXES FOR HERITAGE TRAILS SOUTH BEND, LP STATEMENT OF PURPOSE AND INTENT The City of South Bend, Indiana(the"City")is a duly organized municipal corporation and political subdivision under the laws of the State of Indiana, and the Common Council of the City is the legislative body of the City (the"Common Council"). Heritage Trails South Bend, LP (the "Owner") has confirmed to the City that the Owner will develop, own, and operate an affordable rental apartment facility on the +/- 9.64 acre site located at 314 W. Chippewa Avenue, South Bend, Indiana and identified as Parcel Number 71- 08-26-200-004.000-002 in the St. Joseph County Assessor's records which real estate is legally described on Exhibit A attached hereto (the "Property"), and to be known as Heritage Trails (the "Project"). The Project will be developed, constructed, and operated for the purpose of providing housing to income eligible persons under the federal low-income housing tax credit program in 26 U.S.C. § 42 and will be subject to an extended use agreement under 26 U.S.C. § 42 (the"Extended Use Agreement")as administered by the Indiana Housing and Community Development Authority ("IHCDA") for a period of at least fifteen (15) years. Pursuant to the Extended Use Agreement, the apartment units in the Project will be available for rent to residents whose incomes do not exceed sixty percent (60%) or less of the applicable area median income. Additionally, pursuant to the Extended Use Agreement, the Project will be limited to charging rents as determined in accordance with the Extended Use Agreement and, from time to time, by the United States Department of Housing and Urban Development (the "Restricted Rents"). The Owner qualifies as a "property owner" under I.C. 36-1-8-14.3(d) and the Owner has agreed to make certain payments in lieu of taxes (each payment, a"PILOT", and collectively, the "PILOTs"), and the City and Owner desire to document that agreement in a written agreement which is attached to this Ordinance as Exhibit B (the"PILOT Agreement"). The City is authorized to enter into the PILOT Agreement pursuant to I.C. 36-1-8-14.3 et seq.,and pursuant to I.C. 36-1-8-14.3(e),subject to the approval of a property owner,the governing body of a political subdivision may adopt an ordinance to require the property owner to pay PILOTs at times set forth in the ordinance with respect to property that is subject to an exemption under I.C. 6-1.1-10-16.7. Pursuant to I.C. 6-1.1-10-16.7, for assessment dates after December 31, 2021,all or part of a property is exempt from property taxation if the owner of the property has entered into an agreement to make payments in lieu of taxes under I.C. 36-1-8-14.3. The PILOTs must be calculated so that the PILOTs are in an amount that is: (1) agreed upon by the property owner and the governing body of the political subdivision; (2) a percentage of the property taxes that would have been levied by the governing body for the political subdivision upon the property if the property were not subject to an exemption from property taxation; and (3) not more than the amount of property taxes that would have been levied by the governing body for the political subdivision upon the property if the property were not subject to an exemption from property taxation. NOW, THEREFORE, BE IT ORDAINED BY THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, AS FOLLOWS: SECTION I. Recitals. The above recitals are incorporated herein by reference as though set forth fully herein below. SECTION II. Approval of PILOTs. As more specifically provided in the PILOT Agreement, the Common Council hereby approves PILOTs for the Property in annual sums as follows: Year 1 $ 36,000 Year 2 $ 37,080 Year 3 $ 38,192 Year 4 $ 39,338 Year 5 $ 40,518 Year 6 $ 41,734 Year 7 $ 42,986 Year 8 $ 44,276 Year 9 $ 45,604 Year 10 $ 46,972 Year 11 $ 48,381 Year 12 $ 49,832 Year 13 $ 51,327 Year 14 $ 52,867 Year 15 $ 54,453 "Year 1" shall mean the first assessment year after the requirements of Indiana Code § 6- 1.1-10-16.7 have been satisfied and all buildings comprising the Project have received a Certificate of Occupancy. SECTION III. Authorization and Approval of Form of PILOT Agreement. The Common Council hereby authorizes and approves the form of the PILOT Agreement and authorizes its execution and delivery by the Mayor on behalf of the City substantially in the form attached hereto and incorporated herein by reference as Exhibit B, all for the purposes contemplated herein. SECTION IV. Recording of Executed Ordinance. The City Clerk is directed to provide an executed copy of this Ordinance, as approved, and a copy of the executed PILOT Agreement to the Owner for the Owner to record with the St. Joseph County Recorder's Office and for the Owner to file the recorded Ordinance and PILOT Agreement with the City Clerk's Office, the St. Joseph County Assessor's Office, the St. Joseph County Auditor's Office, and the St. Joseph County Treasurer's Office. SECTION V. Further Authorizations. The Common Council hereby requests, authorizes, and directs the Mayor, Common Council President, Controller and the City Clerk, and all official officers, members, employees, and agents of the City, and each of them, for and on behalf of the City,to negotiate,prepare, execute, and deliver any and all other instruments,letters, certificates, agreements, and documents as are determined to be necessary or appropriate to consummate the transactions contemplated by this Ordinance, and such determination shall be conclusively evidenced by the execution thereof The instruments,letters,certificates,agreements, and documents necessary or appropriate to consummate the transactions contemplated by this Ordinance shall, upon execution, as contemplated herein, constitute the valid and binding obligations or representations and warranties of the City, the full performance and satisfaction of which by the City is hereby authorized and directed. SECTION VI. Effectiveness. This Ordinance shall be in full force and effect from and after its adoption and the procedures required by law.This Ordinance remains in full force and effect until repealed or modified by the Common Council, subject to the approval of the Owner. [Signature Page Follows] ti Duly passed and adopted on this Z3` day of /V`arck , 2026 by the Common Council of the City of South Bend, Indiana. Canneth J. Lee, Council President South Bend Common Council Attest: Bianca L. Tirado, ity erk Office of the City Clerk Presented by me, the undersigned Clerk of the City of South Bend, to the Mayor of the City of South Bend, Indiana on the 24`h_day of March , 2026, at 12 o'clock p.m. ft04144104/ Bianca L. Tirado, City 1 Office of the City Clerk Approved and signed by me on the day of , 2026, at o'clock .m. James ueller, Mayor City South Bend, Indiana EXHIBIT A Property Key Number: 71-08-26-200-004.000-002 Local Parcel Number: 023-1013-0753 Legal Description: Kerasotes Theatres Minor Subdivision Lot 1 O1S4O1 o1Mil 1:- • I I op __ ..;_i,i., { , '•.-.N1 i 1 . , i . 1 411t i i go: 5 1 vii g 1 9'! I 1� I ' ,I y b EXHIBIT B Form of PILOT Agreement (See Attached) Parcel Identification No.: 71-08-26-200-004.000-002 PILOT AGREEMENT THIS PILOT AGREEMENT (this "PILOT Agreement") is entered into to be effective as of this day of , 2026, (the "Effective Date"), by and among the CITY OF SOUTH BEND, INDIANA, a municipal corporation and political subdivision of the State of Indiana(the"City"),and HERITAGE TRAILS SOUTH BEND,LP,an Indiana limited partnership (the"Owner,"with each of the City and the Owner sometimes being individually referred to as a "Party"and collectively as the"Parties"). RECITALS WHEREAS, the City is a duly organized municipal corporation and political subdivision under the laws of the State of Indiana, and the Common Council of the City is the legislative body of the City(the"Common Council"); WHEREAS, the general partner of the Owner is Heritage Trails South Bend GP, LLC, an Indiana limited liability company(the"General Partner"); WHEREAS, the Owner has confirmed to the City that the Owner will develop, own, and operate an affordable rental apartment facility on the+/-9.64 acre site located at 314 W. Chippewa Avenue, South Bend, Indiana and identified as Parcel Number 71-08-26-200-004.000-002 in the St. Joseph County Assessor's records which real estate is legally described on Exhibit A attached to and made a part of this PILOT Agreement(the"Property"), and to be known as Heritage Trails (the"Project"); WHEREAS, the Project will provide affordable housing to low-income residents whose incomes do not exceed sixty percent (60%) or less of the applicable area median income; WHEREAS,the Project will be financed, in part,utilizing federal low-income housing tax credits and tax-exempt bonds under the federal low-income housing tax credit program described in 26 U.S.C. § 42; WHEREAS, the Project will be subject to an extended use agreement which is described in 26 U.S.C. § 42 (the "Extended Use Agreement") as administered by the Indiana Housing and Community Development Authority (the"IHCDA") for a period of at least fifteen (15) years; 1 WHEREAS, pursuant to 26 U.S.C. § 42 and the Extended Use Agreement, the apartment units in the Project will be available for rent to residents whose incomes do not exceed sixty percent (60%) or less of the applicable area median income (the"Restricted Residents"); WHEREAS,pursuant to 26 U.S.C. §42 and the Extended Use Agreement,the Project will be limited to charging rents as determined, from time-to-time by the United States Department of Housing and Urban Development(the"Restricted Rents"); WHEREAS, since the Project will constitute property described in 26 U.S.C. § 42, the Project will be subject to the Extended Use Agreement, and the Parties have entered into this PILOT Agreement, the Owner qualifies as a "property owner" under Indiana Code § 36-1-8- 14.3(d); WHEREAS, the Owner has agreed to make certain payments-in-lieu-of-taxes as set forth in this PILOT Agreement; WHEREAS,the City is authorized to enter into this PILOT Agreement pursuant to Indiana Code § 36-1-8-14.3 et seq.; and WHEREAS, in order to provide for the successful development, financing and operation of the Project, the Owner and the City are entering into this PILOT Agreement, which the City represents has been ratified by the Common Council. NOW, THEREFORE, in consideration of the foregoing premises, mutual covenants, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows: AGREEMENT Section 1. Owner Compliance. Section 1.1 (a) Owner acknowledges that in order to qualify for property tax exemption for the Property under Indiana Code §6-1.1-10-16.7,the Project must be in compliance with the requirements of§ 6-1.1-10-16.7. (b) Owner further acknowledges that: (i) the mere execution of this PILOT Agreement does not confer any property tax exemption on the Property under Indiana Code § 6-1.1-10-16.7; and (ii) in order to obtain any such property tax exemption or partial exemption under Indiana Code § 6-1.1-10-16.7, the Owner must timely file its property tax exemption application, including renewal applications, if any are required, with the St. Joseph County Assessor requesting an exemption pursuant to Indiana Code § 6-1.1-10-16.7 from Owner's obligation to pay all or any portion of its real and personal property taxes on the Property. 2 Section 2. Payment In Lieu of Taxes. Section 2.1. (a) Beginning the first assessment year after the requirements of Indiana Code § 6-1.1-10-16.7 have been satisfied and all buildings comprising the Project have received a Certificate of Occupancy("Year 1"), the Owner shall make payments in lieu of taxes as described herein in consideration of the cooperation and support of the City for successful development, financing and operation of the Project, which includes, but is not limited to, the public promotion and support for the Project. The annual amount payable by the Owner to the City hereunder (the "Annual in Lieu of Amount") shall be in the annual sums as follows: Year 1 $ 36,000 Year 2 $ 37,080 Year 3 $ 38,192 Year 4 $ 39,338 Year 5 $ 40,518 Year 6 $ 41,734 Year 7 $ 42,986 Year 8 $ 44,276 Year 9 $ 45,604 Year 10 $ 46,972 Year 11 $ 48,381 Year 12 $ 49,832 Year 13 $ 51,327 Year 14 $ 52,867 Year 15 $ 54,453 (b) The Annual in Lieu of Amount has been negotiated between the City and the Owner in accordance with Indiana Code § 36-1-8-14.3(f), and by specifically taking into account the applicable provisions of Indiana Code § 6-1.1-4-40, Indiana Code § 6-1.1-4-41, and Indiana Code § 6-1.1-10-16. (c) Prior to Year 1, the Owner will pay all property taxes due on the Property. Section 2.2. The Annual in Lieu Amount payable by Owner with respect to the Property shall be imposed as property taxes and payable in two equal installments due and payable on or before May 10 and November 10 of each calendar year beginning on Year 1, with the initial installment of the payment becoming due and payable on May 10 of the year following the Project's final building receiving its Certificate of Occupancy (the "C of 0") from the City (each payment, a "PILOT", and collectively, the "PILOTs"). Upon receipt by the Owner of an Annual In Lieu Amount bill from the Controller of the City, the Owner shall remit its semi-annual PILOT to the City at the Office of the Controller on or before each installment due date. Subject to Section 2.4, the aggregate annual amount of each year's semi-annual PILOT shall not exceed the Annual in Lieu of Amount. 3 Section 2.3. The obligation of the Owner to pay the Annual In Lieu of Amounts shall be subordinate to the obligations of the Owner with respect to the Owner's obligation to make debt service payments on any financing which may now or in the future be secured by a mortgage pn the Property. The City agrees to execute whatever documents any lender to the Owner now or in the future may require which are commercially reasonable in order to confirm the foregoing subordination. Section 2.4. The City shall have the right to enforce the payment of all PILOTs when due, including all penalties, costs, and expenses imposed under Indiana Code § 6-1.1-22-1, et. seq., and Indiana Code § 6-1.1-37-1, et. seq., or any statute which amends or replaces them for delinquent PILOTs, in the same manner as the City enforces the obligations of non-exempt taxpayers. Section 3 Term. Section 3.1. Except as otherwise provided in Section 4, the PILOT Agreement and applicable PILOTs required hereunder shall continue for a period of fifteen (15) years beginning with January 1 of Year 1 and expiring on December 31 of the fifteenth year thereafter(the"Initial Term"). The Initial Term may be extended by a mutual, written agreement of the Parties. Section 4. Termination. Section 4.1. City or Owner may terminate this PILOT Agreement at any time upon a material breach of this PILOT Agreement or failure to perform any term of this PILOT Agreement by the other, unless such material breach or failure is cured within thirty (30) days after written notice is given to the party in material breach;provided,however,that if any such claimed material breach or failure is of a nature that it cannot be cured within thirty (30) days, a non-breaching party shall not have the right to terminate this PILOT Agreement as long as the party in material breach is diligently pursuing appropriate action to cure the material breach or failure within a total of forty-five (45) days if such action was commenced within thirty (30) days after the giving of notice of the material breach or failure. Section 4.2. Neither City nor Owner shall have any further obligations not enumerated in this PILOT Agreement. Upon the expiration or termination of this PILOT Agreement, neither City nor Owner shall have any further obligations hereunder except for those obligations accruing prior to the date of termination and those post-termination obligations expressly enumerated in this PILOT Agreement. Section 5. General Provisions. Section 5.1. Extended Use Agreement. Prior to Year 1, the Owner will execute and record the Extended Use Agreement. Section 5.2. Captions; Incorporation and Exhibit. The captions and headings of various Sections and Exhibits referenced herein are for convenience only and are not to be considered as defining or limiting in any way the scope or intent of the provisions hereof. 4 Notwithstanding the foregoing, each of the Recitals and the Exhibits referenced herein are incorporated and expressly made a part hereof Section 5.3. Entire Agreement. This PILOT Agreement constitutes the entire agreement of the Parties with respect to the subject matter contained herein, and all prior discussions, negotiations, and document drafts are merged herein. Section 5.4. Notices. Any notice, demand, request, or other communication which any Party hereto may be required or may desire to give hereunder shall be in writing, addressed as follows and shall be deemed to have been properly given if hand delivered (effective upon delivery), if sent by reputable overnight courier, charges prepaid (effective the business day following delivery to such courier): If to Owner: Heritage Trails South Bend, LP 8902 North Meridian Street, Suite 205 Indianapolis, Indiana 46260 Attention: Cole Caress With a copy to: Ice Miller LLP One American Square, Suite 2900 Indianapolis, Indiana 46282 Attention: Katie Marschke If to City: City of South Bend, Indiana South Bend City Hall 215 S. Dr. Martin Luther King Jr. Blvd., Suite 500 South Bend, Indiana 46601 Attn: Executive Director, South Bend Department of Community Investment With a copy to: South Bend Legal Department 215 S. Dr. Martin Luther King Jr. Blvd., Suite 600 South Bend, Indiana 46601 Attn: Corporation Counsel Email: legaldept@southbendin.gov or at such other address as the Party to be served with notice may have furnished in writing to the Party seeking or desiring to serve notice as a place for the service of notice. Notices given in any other manner shall be deemed effective only upon receipt. Section 5.5. Modification, Amendment, or Waiver. No modification, waiver, amendment, discharge, or change of this PILOT Agreement shall be valid unless the same is in writing and signed by all Parties. 5 Section 5.6. Governing Law. This PILOT Agreement shall be governed by and construed under the laws of the State of Indiana. Suit,if any,shall be brought in St.Joseph County, Indiana. Section 5.7. Execution in Counterparts. This PILOT Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Section 5.8. Severability. If any provision of this PILOT Agreement is determined by a court having jurisdiction to be illegal, invalid, or unenforceable under any present or future law, the remainder of this PILOT Agreement will not be affected thereby. It is the intention of the parties that if any provision is so held to be illegal, invalid, or unenforceable, there will be added in lieu thereof a provision as similar in terms to such provision as is possible that is legal, valid, and enforceable. Section 5.9. No Joint Venture. Nothing contained in this PILOT Agreement will be construed to constitute Owner as a joint venturer with City or to constitute a partnership between Owner and City. Section 5.10. Construction. The Parties acknowledge that each Party and each Party's counsel have reviewed and revised this PILOT Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party will not be employed in the interpretation of this PILOT Agreement or any amendments or schedules hereto. Section 5.11. Authorization. The persons executing and delivering this PILOT Agreement on behalf of the Parties hereto represent and warrant to the other Party that such person is duly authorized to act for and on behalf of said Party and execute and deliver this PILOT Agreement in such capacity as is indicated below. Section 5.12. Assignment/Successor. This PILOT Agreement shall be binding upon the City and Owner, and all successors, grantees, or assignees of Owner with respect to the Property (or any portion thereof) which would otherwise be entitled to claim an exemption for real and personal property taxes imposed on the Property. Section 5.13. Recording. The Owner will cause, at Owner's expense, this PILOT Agreement, the Ordinance of the Common Council approving this PILOT Agreement (the "Ordinance") and any other instruments of further assurance to be promptly recorded, filed, and registered as provided in the Ordinance, and at all times to be recorded, filed, and registered, in such manner and in such places as may be required by law to preserve and protect fully the rights of the City hereunder as to all of the Property. In the event the Owner does not record and file the PILOT Agreement and the Ordinance, as provided in the Ordinance,within thirty(30) days of the later of(i) adoption of the Ordinance by the Common Council and (ii) execution of this PILOT Agreement by all parties thereto, the City will cause, at Owner's expense, this PILOT Agreement and the Ordinance to be recorded and filed as provided in the Ordinance, the expense of which will be reimbursed by the Owner to the City. 6 Section 5.14 Incorporation of Recitals.The recitals contained in this PILOT Agreement are incorporated into the operative provisions of this PILOT Agreement as if separately restated and are true and correct. * * * * * [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 7 IN WITNESS WHEREOF, the undersigned Parties have caused the execution of this PILOT Agreement by their duly authorized representatives as of the day, month, and year first above written, but to be effective as of the Effective Date. CITY OF SOUTH BEND, INDIANA James Mueller, Mayor STATE OF INDIANA ) ) SS: COUNTY OF ST. JOSEPH ) Before me, a Notary Public, in and for said County and State, personally appeared James Mueller, in his capacity as the Mayor, acting for and behalf of the City of South Bend, Indiana, and who,having been duly sworn, stated that any and all representations and warranties contained therein are true and correct in all material respects. Witness my hand and Notarial Seal this day of , 202_. Notary Public Printed Name My Commission Expires: My County of Residence: [EXECUTIONS CONTINUED ON FOLLOWING PAGE] OWNER: HERITAGE TRAILS SOUTH BEND, LP, an Indiana limited partnership By: Heritage Trails South Bend GP, LLC, an Indiana limited liability company, its General Partner By: , Manager STATE OF INDIANA ) ) SS: COUNTY OF ) Before me, a Notary Public, in and for said County and State, personally appeared in his capacity as the Manager of Heritage Trails South Bend GP, LLC, an Indiana limited liability company, the General Partner of Heritage Trails South Bend, LP, an Indiana limited partnership, who acknowledged the execution of the foregoing instrument as such Manager acting for and on behalf of said limited liability company and limited partnership and who, having been duly sworn, stated that any and all representations and warranties contained therein are true and correct in all material respects. Witness my hand and Notarial Seal this day of , 202_. Notary Public Printed Name My Commission Expires: My County of Residence: 9 Prepared by and return after recording to: Thomas M. Everett, Esq., Barnes &Thornburg LLP, 201 S. Main Street, Suite 400, South Bend, IN 46601 I affirm under penalties for perjury,that I have taken reasonable care to redact each Social Security Number in this document,unless required by law. Thomas M. Everett 10 EXHIBIT A The Land referred to herein below is situated in the County of St. Joseph, State of Indiana, and is described as follows: Key Number: 71-08-26-200-004.000-002 Local Parcel Number: 023-1013-0753 Legal Description: Kerasotes Theatres Minor Subdivision Lot 1 018.e01e-07r607 4,, 018B01 �..... . - a ., CMIPPEWA-AVE � � '� 1 r I li t . oxy,asarsa I I , � � a 1 i c . G i . ,, �1_ 11