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HomeMy WebLinkAbout3biv Loan Ordinance of Common CouncilBILL NO. __________ ORDINANCE NO. ____________ AN ORDINANCE OF THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, AUTHORIZING A DIRECT LOAN TO THE DEVELOPER OF AN ECONOMIC DEVELOPMENT FACILITY (BEACON HEIGHTS PROJECT) AND APPROVING OTHER MATTERS IN CONNECTION THEREWITH STATEMENT OF PURPOSE AND INTENT The City of South Bend, Indiana (the “City”), is a municipal corporation and political subdivision of the State of Indiana and by virtue of I.C. 36-7-11.9, I.C. 36-7-12 and I.C. 36-7-14 (collectively, the “Act”), is authorized and empowered to adopt this ordinance (this “Ordinance”) and to carry out its provisions. The Act declares that the financing and refinancing of economic development facilities (as defined in the Act) constitutes a public purpose. Pursuant to the Act, the City is authorized to make loans for the purpose of financing, reimbursing or refinancing all or a portion of the costs of acquisition, construction, renovation, installation and equipping of economic development facilities in order to foster diversification of economic development and creation or retention of opportunities for gainful employment in or near the City. Beacon Apartments Preservation LLC, an Indiana limited liability company (the “Developer”) has informed the City that it desires to construct, renovate and/or rehabilitate certain economic development facilities within the City which will consist of up to one hundred seventy- four (174) affordable housing rental units in the existing Beacon Heights development in the River West Development Area in the City, with an approximate total redevelopment cost of Forty-Seven Million Dollars ($47,000,000) including a private investment of no less than Forty-Seven Million Dollars ($47,000,000) to be expended by the Developer (collectively, the “Project”), and has requested that the City make a loan to the Developer for the purposes of financing or reimbursing the Developer for a portion of the costs of construction, renovation and/or rehabilitation of the Project. The Project will be located in or physically connected to, and will directly serve and benefit, the River West Development Area and the River West Development Area Allocation Area (the “Allocation Area”). 2 The Developer has requested from the City and the City of South Bend Economic Development Commission (the “Commission”) that the City make a loan to the Developer pursuant to the Act in a total amount not to exceed One Million Two Hundred Fifty Thousand Dollars ($1,250,000) for the purpose of financing or reimbursing a portion of the costs of the Project (the “Loan”) as described in the proposed Financing and Loan Agreement between the City and the Developer (the “Loan Agreement”). The completion of the Project will result in the creation of jobs, the diversification of industry and the creation of business opportunities in the City. Pursuant to I.C. § 36-7-12-24, the Commission published notice of a public hearing on the proposed financing of a portion of the Project costs (the “Public Hearing”). On the date specified in the notice of the Public Hearing, the Commission conducted the Public Hearing, and adopted its evaluative report and resolution, which have been transmitted to the Common Council, finding that the financing of a portion of the Project complies with the purposes and provisions of the Act and that such financing will be of benefit to the health and welfare of the City and its citizens. The Commission has performed all actions required of it by the Act preliminary to the adoption of this Ordinance and has approved and forwarded to the Common Council the forms of: (1) the Loan Agreement; (2) the Funding and Reimbursement Agreement (the “Funding Agreement”) between the City and the South Bend Redevelopment Commission (the “Redevelopment Commission”); and (3) this Ordinance (the Loan Agreement, the Funding Agreement, and this Ordinance, collectively, the “Financing Agreements”). Pursuant to Indiana Code 36-7-14-39(b)(4), the Redevelopment Commission may use certain incremental property taxes, among other purposes, to reimburse the City for expenditures (including loans) made for local public improvements (which include buildings, parking facilities, and all expenses reasonably incurred in connection with the acquisition and redevelopment of property) that are physically located in or physically connected to the Allocation Area. The Redevelopment Commission has adopted its Resolution No. 3672 on June 11, 2026, determining, subject to appropriation by the Redevelopment Commission, to make available tax increment revenues on deposit in the allocation fund for the Allocation Area (the “River West TIF Revenues”) to simultaneously reimburse the City for its costs incurred to fund the Loan to the Developer with respect to the Project. NOW, THEREFORE, BE IT ORDAINED BY THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, AS FOLLOWS: SECTION I. Findings; Public Benefits. The Common Council hereby finds and determines that the Project involves the acquisition and construction of an “economic development facility” as that phrase is used in the Act; that the Project will increase employment opportunities and increase diversification of economic development in the City, will improve and promote the economic stability, development and welfare in the City, will encourage and promote the expansion of industry, trade and commerce in the City and the location of other new industries in the City; that the public benefits to be accomplished by the making of the Loan to the Developer 3 to finance and/or reimburse Project costs, in tending to overcome insufficient employment opportunities, insufficient diversification of industry and lack of adequate housing, are greater than the cost of public works or services (as that phrase is used in the Act) which will be required by the Project; and, therefore, that the financing of a portion of the Project by the making the Loan to the Developer under the Act: (i) will be of benefit to the health and general welfare of the City; and (ii) complies with the Act. SECTION II. Approval of Financing. The proposed financing of the Project by the funding of the Loan to the Developer under the Act, in the form that such financing was approved by the Commission, is hereby approved. SECTION III. Terms of the Loan. (a) A portion of the costs of the Project will be funded by the Loan to the Developer. The City shall fund the Loan in the aggregate principal amount not to exceed One Million Two Hundred Fifty Thousand Dollars ($1,250,000), from River West TIF Revenues then on deposit in the allocation fund for the Allocation Area, and made available by the Redevelopment Commission to the City for the purposes of making the Loan to the Developer under the Act and the terms of the Loan Agreement. The Loan shall (i) mature no later than December 31, 2056, on the date set forth in the final Loan Agreement (the “Maturity Date”), (ii) bear no interest, except as provided herein, and (iii) be secured by the pledge of an unsecured promissory note of the Developer. Subject to the Unavoidable Delay provisions of the Loan Agreement, the principal of the Loan may be forgiven, in the sole discretion of the City, following the expiration of the Qualified Project Period (as defined in the Loan Agreement) and subject to the conditions contained in Section 4.3 of the Loan Agreement. In the event that the Developer abandons the Project or otherwise fails to proceed to substantially complete the Project as required by the Loan Agreement and the Development Agreement between the Redevelopment Commission and the Developer (the “Development Agreement”), the repayment of any outstanding amount of the Loan (the “Outstanding Amount”) will be on a date not later than thirty (30) days from the date when the City’s Department of Community Investment, on behalf of the City, provides written notice to the Developer that, in its sole discretion, it has determined that the Developer has abandoned or failed to proceed with the Project as required by the Loan Agreement and the Development Agreement (the date of such written notice being the “Trigger Date”) subject in all respects to the rights of Developer’s senior lenders. Interest will begin to accrue on the Outstanding Amount beginning on the Trigger Date at the Prime Rate (as defined in the Loan Agreement) plus three percent (3.0%) until the Outstanding Amount is fully paid by the Developer. In the event that the Loan is forgiven, it is hereby acknowledged that the consideration received by the City for the Loan being forgiven is the completion of the Project by the Developer and the economic benefits resulting to the City therefrom. (b) The Loan does not and shall never constitute an indebtedness of, or a charge against the general credit or taxing power of, the City. Forms of the Financing Agreements are before this meeting and are by this reference incorporated in this Ordinance, and the Clerk of the City is hereby directed, in the name and on behalf of the City, to insert them into the minutes of the Common Council and to keep them on file. SECTION IV. Execution and Delivery of Financing Agreements. The Mayor, the Clerk and the Controller of the City are hereby authorized and directed, in the name and on behalf 4 of the City, to execute or endorse and deliver the Financing Agreements, submitted to the Common Council, which are hereby approved in all respects. SECTION V. Changes in Financing Agreements. The Mayor, the Clerk and the Controller of the City are hereby authorized, in the name and on behalf of the City, without further approval of the Common Council or the Commission, to approve such changes in the Financing Agreements as may be permitted by the Act, such approval to be conclusively evidenced by their execution thereof. SECTION VI. General. The Mayor, the Clerk and the Controller of the City, and each of them, are hereby authorized and directed, in the name and on behalf of the City, to execute or endorse any and all agreements, documents and instruments, perform any and all acts, approve any and all matters, and do any and all other things deemed by them, or either of them, to be necessary or desirable in order to carry out and comply with the intent, conditions and purposes of this Ordinance (including the preambles hereto and the documents mentioned herein), the Project, the making of the Loan, and the securing of the Loan under the Financing Agreements, and any such execution, endorsement, performance or doing of other things heretofore effected be, and hereby is, ratified and approved. SECTION VII. Binding Effect. The provisions of this Ordinance and the Financing Agreements shall constitute a binding contract between the City and the Developer, and after making the Loan, this Ordinance shall not be repealed or amended in any respect which would adversely affect the rights of the Developer. SECTION VIII. Repeal. All ordinances or parts of ordinances in conflict herewith are hereby repealed. SECTION IX. Effective Date. This Ordinance shall be in full force and effect immediately upon adoption and compliance with I.C. 36-4-6-14. SECTION X. Copies of Financing Agreements on File. Two copies of the Financing Agreements incorporated into this Ordinance were duly filed in the office of the Clerk of the City, and are available for public inspection in accordance with I.C. 36-1-5-4. [Signature Page Follows] 5 Duly passed and adopted on this _____ day of _____________, 2026 by the Common Council of the City of South Bend, Indiana. Canneth Lee, Council President South Bend Common Council Attest: ________________________________ Bianca Tirado, City Clerk 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 _______ day of ____________________, 2026, at _______ o’clock ___. m. __________________________________________ Bianca Tirado, City Clerk Office of the City Clerk Approved and signed by me on the ______ day of _____________, 2026, at ___ o’clock ___.m. __________________________________________ James Mueller, Mayor City of South Bend, Indiana DMS 52744581v2