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HomeMy WebLinkAbout11-21-08 Redevelopment Commission MinutesSOUTH BEND REDEVELOPMENT COMMISSION REGULAR MEETING November 21, 2008 10:00 a.m. 227 West Jefferson Boulevard Presiding: Marcia I. Jones, President South Bend, Indiana 1. ROLL CALL Members Present: Ms. Marcia Jones, President Mr. Greg Downes, Vice President Ms. Nancy King, Secretary Mr. Hardie Blake, Jr. Dr. David Varner Ms. Ann Rosen Legal Counsel: Mr. Charles S. Leone, Esq. Mr. Laawrence Meteiver, Esq. Redevelopment Staf£ Mr. Don Inks, Director Mrs. Cheryl Phipps, Recording Secretary Ms. Jennifer Laurent, Economic Development Specialist Ms. Debrah Jennings, Property Manager Others Present: Mr. Jeff Gibney, Executive Director Mr. Tom Price, Mayor's Office Ms. Jamie Loo, South Bend Tribune Ms. Rita Kopala Ms. GlendaRae Hernandez Ms. Peg Dalton, LePeeps Ms. Sheral Litell, Cressy & Everett, Grubb & Ellis Mr. Kevin Mahoney, Michiana News Mr. Craig Sullivan, WNIT 2. APPROVAL OF MINUTES A. Approval of Minutes of the Regular Meeting of Friday, November 7, 2008. Upon a motlOn by Mr. DOWneS, SeCOnded by MS. COMMISSION APPROVED THE MINUTES OF THE King and unanimously carried, the COmmISSIOn REGULAR MEETING OF FRIDAY, NOVEMBER 7, approved the Minutes of the Regular Meeting of zoo8 Friday, November 7, 2008. South Bend Redevelopment Commission Regular Meeting -November 21, 2008 3. APPROVAL OF CLAIMS Redevelopment Commission Claims submitted November 21, 2008 for approval. 305 FUND SBCDA BOND RE Pitts & Associates Inc 21,765.00 Ralph D Lauver MAI 16,500.00 ADG 5,600.00 324 AIRPORT AEDA C&E Excavating Inc. 27,165.00 Wells Fargo 400.00 City of South Bend 35,000.00 AEP 500,000.00 Crowe Horvath 10,366.43 Meridian Title Corp. 100.00 Wightman Petrie 290.00 Ralph D. Lauver 5,000.00 Wightman Petrie 2,300.00 DHA 375.00 Sign Designs 750.00 Ken Herceg & associates, Inc. 20,000.00 RE Pitts & Associates 21,765.00 Ralph D. Lauver 16,500.00 420 FUND TIF DISTRICT-SBCDA GENERAL CB Richard Ellis 750.13 JJR 7,500.00 Wightman Petrie 1,251.25 Indiana Michigan Power 1,924.89 Wightman Petrie 3,665.00 Ampco System Parking 2,578.41 Wightman Petrie 14,500.00 Crowe Horvath 3,945.49 DTSB 10,312.50 422 FUND WEST WASHINGTON Crowe Horvath 445.03 Kaser-Spraker Construction, Inc. 169,703.01 South Bend Heritage Foundation 16,970.30 DLZ 16,082.50 Crowe Horvath 1,483.56 DLZ 15,150.00 2 South Bend Redevelopment Commission Regular Meeting -November 21, 2008 3. APPROVAL OF CLAIMS (CONT.) 428 FUND AIRPORT 2003 BOND Abonmarche 300.00 430 FUND SOUTH SIDE DEVELOPMENT Crowe Horvath 556.50 435 FUND REDEVELOPMENT Crowe Horvath 124.89 619 BLACKTHORN GOLF COURSE Meadowbrook Golf Group, Inc. 8,000.00 Total $ 959,119.89 Upon a motion by Mr. Downes, seconded by Ms. King and unanimously carried, the Commission approved the Claims submitted November 21, 2008, and ordered checks to be released. 4. COMMUNICATIONS There were no Communications. 5. OLD BUSINESS A. South Bend Central Development Area (1) Development Agreement with Michiana Public Broadcasting Corporation. (WNIT) In May of 2008 the Commission approved a proposal from Michiana Public Broadcasting (WNIT) advancing a concept for relocation of their studios from the current facility in Elkhart to the WSBT building at 300 W. Jefferson. The public benefit of the redevelopment project is significant, as jobs that would otherwise be lost upon WSBT's relocation are replaced, and the specialized building is occupied and upgraded immediately, with an overall private investment of $3,700,000, not including the COMMISSION APPROVED THE CLAIMS SUBMITTED NOVEMBER 21, 2008, AND ORDERED THE CHECKS TO BE RELEASED THERE WERE NO COMMUNICATIONS South Bend Redevelopment Commission Regular Meeting -November 21, 2008 5. OLD BUSINESS (CONT.) A. South Bend Central Development Area (1) continued... value of the donated building. The contract presented today outlines the terms by which the Commission's assistance of $1,000,000 toward funding of construction for the new exterior and public lobby area of the building will be used. The Commission will acquire a temporary easement for a portion of the property containing the exterior facades along Jefferson and Lafayette as well as the corner where the three story atrium lobby will be located. We would work within a professional services contract with The Troyer Group to create a stand-alone project budget for construction work for the new exterior and lobby and specifications for public bidding, which would be overseen by the Board of Public Works as the Commission's agent. The public bidding phase will be initiated only upon evidence that funding is in place to complete the private portion of the project. Michiana Public Broadcasting agrees to maintain operations for a minimum of ten years. The city is extremely pleased with this project in the downtown. Mary Pruess thanked the Commission for helping WHIT to relocate to downtown South Bend. WNIT is also very excited at the prospect of being able to operate from a state of the art public media center for the next generation of viewers in our region. They will be completely upgrading the building from its analog concept to a fully digital media center. They expect to start 4 South Bend Redevelopment Commission Regular Meeting -November 21, 2008 5. OLD BUSINESS (CONT.) A. South Bend Central Development Area (1) continued... construction as soon as weather permits. Mr. Varner noted that the Common Council had some concerns at the loss of the public educational and government channels which were abandoned by Comcast. The Council hopes to see those available again through WHIT. Upon a motion by Mr. Varner, seconded by Mr. Downes and unanimously carried, the Commission approved the Development Agreement with Michiana Public Broadcasting Corporation. (WNIT) (2) Proposal for professional services. (Architectural and Engineering, WNIT) Ms. Laurent noted that the Development Agreement with WNIT requires the city to pay for architectural and engineering services related to the facade improvements. Staff solicited a proposal from The Troyer Group for architectural services to cover all associated work in the preparation of the bid specifications. The fee for those services is $21,000, plus reimbursable expenses. Staff is only requesting approval of items one through three. Item three is the only one with associated costs to The Troyer Group. We need to certify our legal descriptions and will bring a proposal for that work to the Commission separately from this proposal. COMMISSION APPROVED THE DEVELOPMENT AGREEMENT WITH MICHIANA PUBLIC BROADCASTING CORPORATION. (WNIT) Mr. Leone noted that the proposal lists a penalty for interest which must be deleted. South Bend Redevelopment Commission Regular Meeting -November 21, 2008 5. OLD BUSINESS (CONT.) A. South Bend Central Development Area (2) continued... He suggested Ms. Laurent get an updated proposal that contains only the items the Commission is approving. Upon a motion by Mr. Downes, seconded by Ms. King and unanimously carried, the Commission approved the revised proposal with The Troyer Group for a fee of $21,000 plus reimbursables, subject to legal review. 6. NEW BUSINESS A. Tax Abatements There were no Tax Abatements B. South Bend Central Development Area (1) Lease proposal for 127 S. Michigan Street. (LePeeps Restaurant, Michigan St. Shops) Mr. Inks noted that in November of 2007 the Redevelopment Commission took action to amend LePeep's Lease. The Lease was amended to reflect a renewal for 5 years, and provided for a reduced lease rate in the first year of $4.68 per square foot ($1,250 per month). The second through fifth years had a lease rate of $9.37 per square foot ($2,500 per month). Since that time, LePeep has closed its Mishawaka location to improve its overall cash flow. At the same time, LePeep has seen rising food and energy costs at its downtown location. Sales at the downtown COMMISSION APPROVED THE REVISED PROPOSAL WITH THE TROYER GROUP FOR A FEE OF $21,000 PLUS REIMBURSABLES, SUBJECT TO LEGAL REVIEW 6 South Bend Redevelopment Commission Regular Meeting -November 21, 2008 6. NEW BUSINESS (CONT.) B. South Bend Central Development Area (1) continued... location are down slightly (about 2%). While cash flow has improved it is still not positive. LePeep has shared its income statements with us, on a confidential basis, so that we could confirm their operating performance. We believe LePeep has been and continues to be a valuable retail establishment in the downtown, and that it can be a viable business going forward. However, given their current operating situation, they are requesting an additional amendment to their Lease in order to lower rent for the next year. The proposal is to go from the first year lease rate of $4.68 to $7.49 per square foot ($2,000 per month). Years three through 5 would remain at the current specified lease rate of $9.37 per square foot. We have discussed this proposal with CB Richard Ellis our property manager and they have recommended we approve this proposal, especially in light of the current economy and leasing environment. Staff recommends approving the proposal effective November 1, 2008 (the beginning of the second lease year). This will retain a long term tenant, a valuable downtown business and enhance its viability to remain so. Mr. Varner asked if staff had asked for an extension of the lease along with the reduced rent. It makes a long term tenant a longer 7 South Bend Redevelopment Commission Regular Meeting -November 21, 2008 6. NEW BUSINESS (CONT.) B. South Bend Central Development Area (1) continued... term tenant and should have been a reasonable request. Mr. Inks indicated that staff had not considered that request, since the lease was just renewed for five years. Ms. Jones said she thought the jump from the first year to the terms of the second year was a large leap and thinks this adjustment is reasonable. Ms. Jones suggested we take a look at the lease each year to see if it needs to be adjusted. Ms. Jones noted that an empty building is not only unsightly, but it isn't paying payroll and income taxes. Also, the cost of tenant improvements for a new tenant would far exceed the concessions being made here. Upon a motion by Mr. Downes, seconded by Ms. King and unanimously carried the Commission approved the lease proposal for 127 S. Michigan Street, with the additional requirement that the Lease terms be reviewed annually. (LePeeps Restaurant, Michigan St. Shops) C. Airport Economic Development Area (1) Appointment of members to Board of Directors of the Owners Association at Blackthorn. (William Mischel, three years; William Panzica, one year) Mr. Inks noted that while the Commission remains the largest landowner at Blackthorn Corporate Park, it appoints all three members COMMISSION APPROVED THE LEASE PROPOSAL FOR 127 S. MICHIGAN STREET, WITH THE ADDITIONAL REQUIREMENT THAT THE LEASE TERMS BE REVIEWED ANNUALLY. (LEPEEPS RESTAURANT, MICHIGAN ST. SHOPS South Bend Redevelopment Commission Regular Meeting -November 21, 2008 6. NEW BUSINESS (CONT.) C. Airport Economic Development Area (1) continued... of the Board of Directors of the owners association from the general membership of the organization. At the recent Owners Association at Blackthorn meeting the board recommended Bill Mischel be reappointed for another three year term. Jack Young sold his property in Blackthorn, so he needs to be replaced on the board as well. The owners' board recommended Bill Panzica fill Mr. Young's remaining term through 2010. Upon a motion by Mr. Downes, seconded by COMMISSION ArroINTED WILLIAM MISCHEL To Ms. King and unanimously carried, the THE BOARD of DIRECTORS of THE OWNERS COmmISSIOn appOlnted Wllham M1SChel t0 ASSOCIATION AT BLACKTHORN FOR A THREE the Board Of D1reCtOT'S Of the OWnerS YEAR TERM ENDING DECEMBER 31, 2011 AND WILLIAM PANZICA TO FULFILL THE REMAINING AssoclatlOn at Blackthorn for a three year TERM OF JACK YOUNG TO DECEMBER 31, 2010 term ending December 31, 2011 and William Panzica to fulfill the remaining term of Jack Young to December 31, 2010. D. West Washington-Chapin Development Area (1) Contract with South Bend Heritage Foundation for consulting services. Mr. Inks noted that the Redevelopment Commission entered into a contract with South Bend Heritage Foundation (SBHF) for the use of West Washington TIF funds for a variety of projects. That contract ran from January 2006 to December 2007. The work included acquisition and demolition of Oil Express and Basic Machine. It was our intent to renew the contract for another two years, since SBHF was continuing work in 2008 on the Natatorium reuse renovations 9 South Bend Redevelopment Commission Regular Meeting -November 21, 2008 6. NEW BUSINESS (CONT.) D. West Washington-Chapin Development Area (1) continued... which started in 2007. Mr. Inks was not sure if the form of this agreement will be an Addendum to the original contract, or a completely new contract. Mr. Inks referred Commissioners to the previous contract and noted the changes that would be made going forward. Changes to the contract terms in a new contract or Addendum would be the following. The agreement would be for two years, 2008 and 2009. Exhibit C (Project Budget) would change so that 2008 will show the Natatorium at $590,000. This amount represents a $90,000 encumbrance for Phase I from 2007, and $500,000 for Phase II previously appropriated by the Redevelopment Commission as the Development Opportunity Reserve. On February 15, 2008 the Commission approved $450,000 from the Development Opportunity Reserve to be used on Phase II. Since that time, higher than expected bids, along with some unforeseen costs such as an underground storage tank, have added about $43,000 to Phase II costs. An additional $7,000 is requested in the event any more unanticipated costs arise. The 2009 budget would be for $370,000 for future projects to be agreed upon by the Redevelopment Commission and SBHF. SBHF has been actively working on development in the West Washington area for the past three decades. SBHF has an exemplary development record during that 10 South Bend Redevelopment Commission Regular Meeting -November 21, 2008 6. NEW BUSINESS (CONT.) D. West Washington-Chapin Development Area (1) continued... time on a variety of prof ects including single family rehab, multi-family new construction and rehab, commercial property acquisition and demolition and other property reuse rehab such as the Natatorium. Their development expertise allows Redevelopment to continue the progress in West Washington, and do so in an efficient manner by working with SBHF in lieu of hiring and developing that staff capacity in house. Staff recommends approval of the contract proposal effective January 1, 2008. Mr. Varner asked if staff anticipates another agreement in 2010. Is this being funded with a budget in mind, or is this being rolled over on an annual, basis as needed? Mr. Inks responded that it depends on where the projects are at, overall. The Natatorium should be complete in 2009. There are no more projects contemplated at this time, but there could be additional projects approved by the Commission during preparation of a 2010 budget. Mr. Varner asked the annual revenue in the West Washington TIF. Mr. Inks responded that we expect it to be $390,000 in 2009. The Commission typically reserves $20,000 of the TIF funds for property maintenance and contracts with South Bend Heritage Foundation for projects in the area. Upon a motion by Mr. Downes, seconded by COMMISSION APPROVED THE ADDENDUM To Mr. Varner and unanimously carried, the AGREEMENT wlTx SouTx BEND HERITAGE Commission approved the Addendum to FOUNDATION FOR coNSULTING sERVICEs RELATED TO THE WEST WASHINGTON CHAPIN DEVELOPMENT AREA 11 South Bend Redevelopment Commission Regular Meeting -November 21, 2008 6. NEW BUSINESS (CONT.) D. West Washington-Chapin Development Area (1) continued... Agreement with South Bend Heritage Foundation for consulting services related to the West Washington Chapin Development Area. E. South Side Development Area There was no business in the South Side Development Area. F. Northeast Neighborhood Development Area (1) Sub-Sublease and Memorandum of Lease with Kite Realty Eddy Street Garage, LLC. Mr. Inks noted that the Redevelopment Authority leased the land from Kite Realty Eddy Street Garage, LLC; the Authority then leased to the Commission the land plus improvements the Authority is building on the land. The Commission went through a disposition process for the parking garage and offered it for lease. There were no bids received. In accordance with the Development Agreement for Eddy Street Commons, this is the Lease and Memorandum of Lease of the Parking Garage to Kite Realty Eddy Street Garage, LLC. The lease term matches the term of the bonds, 20 years. Lease payments are to be $1 per year, but Kite will be responsible for all maintenance, insurance, property taxes and operations of the garage, all in 12 South Bend Redevelopment Commission Regular Meeting -November 21, 2008 6. NEW BUSINESS (CONT.) F. Northeast Neighborhood Development Area (1) continued... accordance with the Development Agreement. At the end of the lease, Kite will be required to take the garage, so that the city has no responsibility at the end for major capital expenses. It is important this lease be put into place as soon as possible to make sure the property tax records reflect the newly taxable nature of this property. A property tax assessment will take place March 1, 2009 when the garage will be more than 50% complete. On that date the property will need to be leased by a taxable entity so that property taxes can be collected in 2010 to make payment on the Eddy Street Bonds. Mr. Varner asked if staff was confident that revenue from taxes from the two hotels and the garage will be sufficient to make lease payments on the bond. Mr. Inks responded that he is. An update by Crowe Horwath at the end of May 2008, showed increased revenue from the earlier estimate. Mr. Inks noted that the first assessment date is March 1, 2009. Per the development agreement, we expected the parking garage to be to be 50% complete by that time. We think we will be at least 50% complete by then. It is important for us to put this lease in place so that it becomes taxable property before March 1. Those taxes that will be paid will be necessary to make the first bond payments. 13 South Bend Redevelopment Commission Regular Meeting -November 21, 2008 6. NEW BUSINESS (CONT.) F. Northeast Neighborhood Development Area (1) continued... Upon a motion by Mr. Downes, seconded by Ms. King and unanimously carried, the Commission approved the Sub-Sublease and Memorandum of Lease with Kite Realty Eddy Street Garage, LLC. G. Douglas Road Economic Development Area There was no business in the Douglas Road Economic Development Area. H. Temporary Use Ratification COMMISSION APPROVED THE SUB-SUBLEASE AND MEMORANDUM OF LEASE WITH KITE REALTY EDDY STREET GARAGE, LLC User/Agency Lot Event Dates of Use Downtown South Bend College Football Santa House December 1 to Hall of Fame west December 30, 2008 parking area Upon a motion by Mr. Downes, seconded by Mr. Varner and unanimously carried, the Commission ratified the Temporary Use Agreement approved since November 7, 2008. 7. PROGRESS REPORTS Mr. Inks noted that the South Bend Lathe property is down along the face of Sample Street, opening up a great view of the area for future development. It is refreshing to see that building down. 8. NEXT COMMISSION MEETING The next meeting of the Redevelopment Commission is scheduled for Friday, December 5, 2008 at 10:00 a.m. Commission ratified the Temporary Use Agreement approved since November 7, 2008 PROGRESS REPORTS NEXT COMMISSION MEETING 14 South Bend Redevelopment Commission Regular Meeting -November 21, 2008 9. ADJOURNMENT There being no further business to come before the ADJOURNMENT Redevelopment Commission, Ms. King made a motion that the meeting be adjourned. Mr. Downes seconded the motion and the meeting was adjourned at 10:26 a.m. ~~ .. - ~a1~'E ;;ilis~ ~ .. .. . ~+Iar~~a I. James, Freis ~ 15