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HomeMy WebLinkAbout08-25-82 Council Special Meeting MinutesSPECIAL MEETING AUGUST 25, 1982 TO: MEMBERS OF THE SOUTH BEND COMMON COUNCIL SUBJECT:' CALL FOR A SPECIAL MEETING OF THE COMMON COUNCIL The Council Members signing below are called a special meeting of the South Bend Common Council to be held Wednesday, August 25, 1982, at 7:00 p.m., in the Council Chambers on the Fourth Floor of the County -City Building. The purpose of this special meeting is to have public hearing and second reading on the following two bills and resolution: BILL NO. 86 -82 A BILL ENABLING THE CITY TO PROVIDE FINANCIAL AND STAFF SUPPORT TO A LOCAL DEVELOPMENT CORPORATION FOR PURPOSES OF ASSISTING THE ECONOMIC DEVELOPMENT OF THE CITY. BILL NO. 88 -82 A BILL APPROPRIATING $500,000 FROM THE 1982 COMMUNITY BLOCK GRANT FUND TO SUPPLEMENT THE ECONOMIC DEVELOPMENT CAPITAL FUND TO BE ADMINISTERED BY THE CITY OF SOUTH BEND, INDIANA,' THROUGH ITS DIVISION OF COMMUNITY DEVLEOPMENT. A RESOLUTION OF THE COMMON COUNCIL AUTHORIZING THE MAYOR TO SUBMIT AN AMENDMENT TO AN URBAN DEVELOPMENT ACTION GRANT (UDAG) APPLICATION TO THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT. /s/ Lewis A. McGann 1 /s /Joseph T. Serge /s/ Walter M. Szymkowiak /s /Beverly D. Crone /s/ John Voorde /s/ Beverlie J., Beck /s/ Raymond C. Zielinski I /s/ John J. Harris ATTEST: I /s/ Irene K. Gammon l DATE- August 23, 1982 Be it remembered that the Common Council of the City of South Bend met for a special meeting in the Council Chambers of the County -City Building on Wednesday, August 25 -, at 7:17 p.m. The meeting was called to order and the Pledge to the Flag was given. ROLL CALL Present: Council Members Serge, Szymkowiak, Beck, Zielinski, Crone, Dombrowski, Voorde and McGann Absent: Council Member Taylor Council Member Beck made a motion to resolve into the Committee of the Whole, seconded by Council Member Zielinski. The motion carried. COMMITTEE OF THE WHOLE Be`it• remembered that the Common Council of the City of South Bend met in the committee of the Whole on August 15, 1982, at 7:19 p.m., with eight members present. Chairman Voorde presiding. i a 3 SPECIAL MEETING BILL NO. 86 -82 AUGUST 25, 1982 A BILL ENABLING THE CITY TO PROVIDE FINANCIAL AND STAFF SUPPORT TO A LOCAL DEVELOPMENT CORPORATION FOR PURPOSES OF ASSISTING THE ECONOMIC DEVELOPMENT OF THE CITY. Now is the time heretofore set for public hearing on the above bill, proponents and opponents were given an opportunity to be heard. Mayor Roger Parent: I want to thank you for continuing the public hearing of last Monday to this evening to consider an -issue which pertains to the eventual construction of a 186 million dollar ethanol plant in South Bend. My presentation will include five (5) other people. About a month ago, we decided and talked about the formation of a local development corporation in order that some group may come to us in anticipation of saving Robersons. We proceeded unaware of the timetable. I followed a procedure whereby I sent out a number of letters to people representing the financial community, business community, unions, neighborhood groups, and other people who might be considered at large. I asked them if they would come together and form a local development corporation. At some point in time, after about three meetings, a good number of the group whom I had invited, decided that they would form a local development coproration. Last Wednesday the papers of the corporation were filed with the Secretary of State in Indianapolis. It was Friday of the same week that we found out that the local developmen corporation would be required with the City to be able to fulfill commitments which were required as a result of better recent negotiations. The whole matter of the local development corporation came up rather unanticipated in relation to the Ethanol Plant, but was also something which was done very fast. I wish to thank all the people who helped form the Local Development Corporation. A Local Development Corporatio simply means for a community to be able to accept public funds and to make loans. Most part, city governments are not allowed to use their funds whether they be federal or othrwise. The powers we aksed be given us have been given to others throughtout the country. We have not devised something that has not been done anywhere else. There are many precedents for city councils and mayors to provide funds for corporations who then in turn make their own decisions to how they are going to use that money, without coming back to the council or mayor. We also have an industrial revolving fund_w,hich came about as a result of the city receiving 5 million dollars to keep South Bend Lathe in operation some years ago. Since that time South Bend Lathe has been paying back that loan to the corporation. At this point I would like to ask Mr. Barry Direnfield, President of New Energy Corporation to say a few words. Barry Direnfeld: I appreciate the time that each member of the Council gave to me this week and being able to take the time to discuss a compressed timetable that New Energy is operating under. In the last week events have happened with New Energy which permitted us to close our equity offering and to assure ourselves that the equity offering will be closed and have funds available to build the ethanol plant. In addition to that, we have our bank commitments in place and negotiations with the Department of Energy are going along at a very rapid and successful rate at this moment. The last major block of our financial plan is the issue that is before you tonight which is to permit an amendment to the City's application for a UDAG grant to incrase it by 5 million dollars and permit the local development corporation 'to be admitted as a special limited partner. The federal regulatory agencies have given approval to this plan. The timetable for us to implement it is extremely short. I think today we are on a schedule whereby we could have groundbreaking in October. I urge you to take whatever action you feel is appropriate, but in a manner that would assure that our project go forward. Thank you. Council Member Beck made a motion to accept the amended version of the bill, filed with the City Clerk, seconded by Council Member Zielinski. The motion carried. Carl Ellison, former Redevelopment Director: During my time at the Small Business Administration, Washington, D. C., I had an opportunity to observe a number of local devlopment corporations around the country. Generally, local development corporations have originated because of desires of entrepreneuers along the strip sometimes because of local government. Generally, local development corporations have enjoyed local government support, and are successful only if they enjoy bi- partisan support, broad community support, and high level of trust and confidence. Local devleopment corporation; have worked very well, they have not abused local public trust and have done an efficient job of orderly local development activities, securing orderly economic targets and opportunities available to the community. Anytime a third party receives community development money by statute and regulation, and by local practice, the City utilizes a third party contract which requires the recipient to comply with state, local and federal laws as well as with other local requirements. Based on the group of individuals who are involved in this corporation, it is my opinion that the public has little cause to worry about its integrity and the fact that it would operate fully within the spirit and practice of local economic decision making consistent with all the policies. I would highly recommend that the Council pass Bill No. 88- 82, as amended. Thank you. Patrick McMahon, Director of Project Future: This bill is very significant in that it will serve to bring South Bend - Mishawaka area out of the dark ages with rspect to economic development. Most areas around the country that have been extremely active in.:ec,onomic development and have been very successful in economic development, have a number of tools at their disposal in their community that allow their total community to bring their resources to bear. Government and financial institutions play a role. There is often a need for coordinated effort to be utilized and develop various programs such as we are trying to develop with the ethanol project; that require both the private financial community and various aspects of our community outside the government to get together with government and as a result, bring to the table certain aspects or proposals to companies that previously could not be considered. SPECIAL MEETING AUGUST 25, 1982 Certainly the type of activities that are contemplated by the local development corporation -are not activities that would be pursued by the civil city of South Bend simply as it is governed by state law. Indiana is one of the few states that has had in the past very few number of local development corporations available to its communities. I believe of the corporations presently in the State of Indiana you will find that none of them are more than a year or so old. As opposed to other areas that we are attempting to compete with around the country, that have had corporatio in place for ten to fifteen years, and have been building substantial resources to bring to their table and really to compete with our community. This is a very significan step and that this is the first such organization that we have put together that will allow us to compete with the same tools and the same equipment as our competition has. It also serves as an aspect to bring our community together. Now we will have the flexibility of having a corporation that stands ready to address a number of issues that come up and which, in the interest of the community, should be served on an immediate basis, without having to go through a full service of the community. I am certain that many opportunities have slipped through our fingers because we lacked this type of a tool. The individuals associated with the newly composed local developmen corporation are individauls that have been involved very actively in the community in the past, and are very experienced at addressing a number of the issues that come to be in the best interests of this community in dealing with the problems. I have all the confidence with this particular group as it will change through the process that has been established here. Thank you. Warren Deahl, Local attorney, and president of the South Bend Development Corporation: This is the last bridge that is needed to make the ethanol project a success. They have to have five million dollars replacement money or monies not forthcoming from the area of E. F. Hutton Company, because of circumstances beyond their control. They have taken the unprecedented position of buying for their own account of up to thirty -two million dollars, less what they have already subscribed in the neighborhood of ten million dollars. That expresses in the grandest sort of terms the kind of confidence they have in the project. Personalities involved have approached the Department of Energy and HUD and they have their assurance of favorable action with respect to the five million dollar grant. With the dedication of a number of people from all walks, and each of whom has a great stake among the citizenry, and its environment. These monies are to be repaid assuming the success of the financial operation of the plant over a period of years with an 8% interest. When these monies come back this will enable the South Bend Development Corporation to use these funds to receive further economic development in the area. We have seen an erosion in our population and we vitally need resources brought back into this community and that is what this project does. In summation, you have our pledge that we are going to do our utmost to see to the appropriate application of these funds, initially in the ethanol plant, and later, and urge your favorable action on this legislation. Christopher Murphy, President, First Source Bank: I stand before you in.a number of capacities both as President of First Source Bank that will participate in the loan to New Energy and has been working hard to bring other banks into the syndicate so that a plant could be built here in South Bend to employ people here in South Bend, and to import dollars and export products. I also stand here as a member of the LDC asking your support of Bill No. 86 -82, as amended, to give us a tool to be much more competitive in economic devleopment efforts. We have an awful lot of small business that can be helped with the LDC, businesses that are growing and expanding and with capital available to them, through LDC and through the funding that is available through HUD, for the ethanol plant, we will be able to eventually put back into the community another eight to nine million dollars in economic development funds. I think it is very important in the long term. Thank you. Phil Crone, Chairman UAW -CAP Council: On behalf of the auto workers we feel that the ethanol plant is needed for this community. I urge your support for the ordinance and resolution. Joy Wilson, Vice President, St. Joseph Valley Building Trade: I speak for quite a few citizens of the community who are wholeheartedly behind this project. It looks like this is our last chance to bring South Bend out of the hole. You gentlemen have the fate of South Bend in your hands and I hope you see the way. Thank you. Lloyd Robinson, President, Electrician's Union: Our industry is in a chaotic condition presently, and if this project doesn't go, it will be our last glimmer of hope. We see no light at the end of the tunnel and at this time our vision has improved, and are all praying that this project will be a reality. I highly hope that you will endorse these amendments that are proposed by the administratiol Melvin Reed, Attorney: The council has an opportunity to assist and encourage those industries to located in South Bend. You have an opportunity here to develop a mechanism by which you can fund business opportunities that want to locate in South Bend. This is a golden opportunity and it would be in the best interest of South Bend for all people if you would support this ordinance. James Benjamin, Business agent for Cement Masons: We have two ordinances that can't do anything but help the community. The total unemployment picture has been so bad that people are just rejoicing that they were going to get ten weeks more of unemployment. When we have to look -at news like that to lift up our spirits, I think these two ordinances that are proposed here tonight, can do much for the City. I would like to thank the council for giving the ordinances due consideration. Thank you. Ralph Johnson, 1822 Sherman: When things are done like this to bring more employment to the City, and greatly benefit the City, it should be dome right at the beginning, and nothing that would help it, be better left out. Could methanol be considered at a later date? John Voorde, Chairman: These particular bills under consideration now, don't deal specifically with the process of the New Energy Corporation at all, SPECTAL MEETING AUGUST 25, 1982 it only enables the City of South Bend to engage in business and provide financial and staff support to the South Bend Development Corporation. I don't feel we can address those questions. It is not covered under this type of bill. James Grummel, 1126 Cleveland: I understand that you have just formed a corporation. We have another corporation called the South Bend Development Corporation. How long will this new corporation last or are we going to have two development corporations. Chairman Voorde pointed out that the amended version of the bill enables the City of South Bend to provide financial and staff support to the South Bend Development Corporation. Leslie Doty, 3502 Lincoln Way West: I don't have any quarrel with this project except for the location of the plant and the removal of the great amounts of muck for farmland that is a real resource. Kathryn Brookins, 701 W. LaSalle: I am here tonight representing an economist who is unable to be here this evening. There'are grave problems with this kind of idea. It has been tried all over the world, all over the country and not worked. Some of my confusion stems from the LDC terminology, providing public funds for private investment with no sufficient returns for the-public sector. There is no problem with providing public funds to the private sector as long as the public secor is getting fair returns on its money. Dr. Clifford Ades, 1308 Elliott: If the government creates some jobs with this money but what it creates with one hand, it takes away and destroys with the other. Will the ethanol create a number of jobs and just how many? I have heard many figures. In proportion to thee money invested, it is in my opinion, that there are not enough jobs being created. Clarence Abdul Nabar, 2022 W. Linden: One of the biggest crisis that has been preached here in recent times, is the burdensome of spending of government. This, as a result, has placed a burden on the taxpayers. We have many financial institutions here in this ara. Why is it that we cannot get these financial institutions to invest in this project? The people of South Bend have made these institutions what they are today. I feel the City is wrong to involve the federal government in the project. Council Member McGann: We have held various meetings concerning the ethanol plant. Some of the points expressed this evening are very important. All members of this Council are behind the project, and are very important. All members of this Council are behind the project, and are very much behind saving Robertson's or what is left downtown. One important thing the Council was concerned about is the displacement of workers. This project is geared toward the creation of jobs or the retention of jobs within the City. I will be supporting this bill. Council Member Crone: I would like to express my appreciation to the members of the South Bend Development Corporation who did meet with us at various times along with the administration, and to the labor representatives. I will support this bill with the amendments. Council member Beck: We appreciate the efforts of the Local Development Corporation. Council Member Voorde: Explained the composition of the members of the LDC. He said the concerns of the average citizen are going to be address to the greater good of everyone. I am more than pleased to support this bill. Council Member Harris: I would like to say that I support the bill and I hope that the corporation does not betray the public trust that will be placed upon them tonight. Those that I have met with know my concern and they should pursue the course for which it was created. Council Member'Szymkowiak: The board of men selected for the LDC are a fine group of professiona- who know what is right and what is wrong. They are aware of what would be good for the community. I feel this project is going to be very successful. South Bend has waited for a number of years for a project like this to occur. Council Member Zielinski: I would like to echo the sentiments expressed by the rest of the Council this evening. I think this project will be a great success and I see no reason why I cannot support the bill, and I am going to support the passage of this ordinance wholeheartedly. Council Member Serge made a motion that Bill No. 86 -82 as amended, go to Council favorable, seconded by Council Member Beck. The motion carried. BILL NO. 88 -82 A BILL APPROPRIATING $500,000 FROM THE 1982 COMMUNITY BLOCK GRANT FUND TO SUPPLEMENT THE ECONOMIC DEVELOPMENT CAPITAL FUND TO BE ADMINISTERED BY THE CITY OF SOUTH BEND, INDIANA, THROUGH ITS DIVISION OF COMMUNITY DEVELOPMENT. Council Member McGann made a motion to continue this bill indefinitely, seconded by Council Member Crone. The motion carried. Council Member Zielinski made a motion to rise and report to the Council, seconded by Council Member Crone. The motion carried. REGULAR MEETING RECONVENED Be it remembered that the Common Council of the City of South Bend reconvened in the Council Chambers on the fourth floor of the County- CityBuildng at 8:40 p.m. Council President McGann presiding and eight members present. BILLS, SECOND READING ORDINANCE NO. 7094 -82 AN ORDINANCE ENABLING THE CITY TO PROVIDE FINANCIAL AND STAFF SUPPORT TO A LOCAL DEVELOPMENT CORPORATION FOR PURPOSES OF ASSISTING THE ECONOMIC DEVELOPMENT OF THE CITY. This bill had second reading. Council Member Serge made a motion amend this bill, as amended in the Committee of the Whole, seconded by Council Member Zielinski. The motion carried. Council Member Serge made a motion to pass this bill, as amended, seconded by CouncilMember Beck. The bill passed by a roll call vote of eight ayes. a3 f SPECIAL MEETING AUGUST 25, 1982 RESOLUTIONS RESOLUTION NO. 983 -82 A RESOLUTION OF THE COMMON COUNCIL AUTHORIZING THE MAYOR TO SUBMIT AN AMENDMENT TO AN URBAN DEVELOPMENT ACTION GRANT (UDAG) APPLICATION TO THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT. WHEREAS, the Mayor submitted an application for an Urban Development Action Grant to the U. S. Department of Housing and Urban Development on September 30, 1980, for purposes of acquiring public right -of -way, preparing a site and roadway through soil stablization /excavation backfill, constructing, improving and signalizing access roadways, extending water and sewer lines, relocating overhead electrical transmission lines, acquiring and relocating adversely impacted residents, in connection with the development of an ethanol plant in the City of South Bend; and WHEREAS, in order to develop and restore the industrial base of the City of South Bend, it continues to be necessary to secure federal aid in the form of an Urban Development Action Grant for that project; and in order to assure the successful development of that project, it has become necessary to request increased funds for direct participation in the project; and WHEREAS, the Common Council of the City of South Bend is interested in promoting development of industrial opportunity in the City; NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of South Bend, Indiana, that: SECTION I. The Mayor has the authority to submit an Amendment to the City's Urban .Development Action Grant Application to the U.S. Department of Housing and Urban Development, under Title 1 of the Housing and Community Development Act of -1977, as amended, which application relates to facilitating the location in South Bend of an ethanol plant. SECTION II. The Council supports and is in favor of committing public sector resources in the form of Urban Development Action Grant funds to the direct participation in the ethanol plant project which is the subject of the Urban Development Action Grant Amendment, in addition to the public improvements and on -site improvements which are the subjects of the original grant application. SECTION III. This resolution shall be in full force and effect upon passage by the Common Council and approval by the Mayor. /s/ Lewis A. McGann Member of the Common Council A public hearing was held on the resolution at this time. Richard Hill, City Attorney: This resolution would authorize an amendment of the prior UDAG application within the timetable set out by HUD. It would be by September 3. The present UDAG Grant request is in the amount of 3.9 million dollars. The essential amendment would be to request an additional 5 million dollars to permit the equity purchase of partnership interest by the South Bend Development Corporation and, additionally, to request those portions of the project which previously were to be funded by St. Joseph County. That would constitute an additional 1.2 million dollars. We anticipate, based on verbal,disucssions with HUD, that the amendments would be considered favorable; and we are looking forward to a release date of HUD funds that would approximate the first week of October. James Grummel, 1146 Cleveland, indicated that he heard on the news that this resolution had passed authorizing 5 million be given to LDC. Council President McGann explained this resolution had not passed previously, and this was only to allow the mayor to make an applicant for this grant. Council Member Serge made a motion to adopt this resolution, seconded by Council Member Beck. The resolution was adopted by a roll call vote of eight ayes. Council Member Zielinski made a motion to adjourn, seconded by Council Member Beck. The motion carried and the meeting was adjournedfat 8:50 p.m. ATTEST: City Clerk AP ROVED: President