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HomeMy WebLinkAboutNo. 2394 approving a Development Agreement with Douglas Road Retail Partners L.P., Douglas Road Partners L.P. and the City of South Bend, Indiana and other related matters• RESOLUTION NO. 2394 A RESOLUTION OF THE SOUTH BEND REDEVELOPMENT COMMISSION APPROVING A DEVELOPMENT AGREEMENT WITH DOUGLAS ROAD RETAIL PARTNERS, L.P., DOUGLAS ROAD PARTNERS, L.P. AND THE CITY OF SOUTH BEND, INDIANA AND OTHER RELATED MATTERS WHEREAS, the South Bend Redevelopment Commission ("Commission") is the governing body of the City of South Bend Department of Redevelopment established under the Redevelopment of Cities and Towns Act of 1953, as amended, being Indiana Code § 36-7-14-1 et seq. (the "Act"); and WHEREAS, redevelopment and the stimulation of economic development are of benefit to the health and welfare of the people of Indiana and the citizens of the City of South Bend, Indiana (the "City"), are public uses and purposes for which public money may be spent and are a public utility and benefit; and • WHEREAS, the Commission has the power and duty to investigate, study, and develop areas within the corporate boundaries of the South Bend Redevelopment District (the "District") that the Commission has determined to be blighted, stagnant or deteriorating in order to encourage economic development and redevelopment; and WHEREAS, on December 2, 2005, the Commission adopted its Resolution No. 2199, designating the Douglas Road Economic Development Area ("Area") as an economic development area and as a tax increment financing allocation area in accordance with the Act, which was confirmed by the Commission's adoption of its Resolution No. 2206 on February 17, 2006; and WHEREAS, DRP is a limited partnership, in good standing in the state of its origin and authorized to do business in the State of Indiana; and WHEREAS, DRP represents and warrants that is the owner of the property commonly described as 3355 Douglas Road, South Bend, Indiana 46635, currently leased, at least in part, to an entity affiliated with Memorial Hospital of South Bend, Indiana (the "Memorial Building"); and WHEREAS, Developer is a limited partnership, in good standing in the state of its origin and authorized to do business in the State of Indiana; and • WHEREAS, Developer owns, controls, or has developed a significant amount of area with the Area and desires to provide for its further development; and • he Develo er ro oses to develo ro ert in the Area from 2008 throu h WHEREAS, t p p p p p p y g 2011, which will provide for or spur at least $3,300,000.00 in additional investment in real property in the Area by the Developer or other parties that will be available to be captured for tax-increment purposes for the Area (the "Proposed Development") and will provide for additional jobs and investment in the City; and WHEREAS, the parties hereto desire to provide for the widening of Douglas Road to four (4) lanes, among other improvements, from just west of State Road 23 intersection to the Mishawaka city limits in accordance with the terms and obligations set forth in this Development Agreement (the "Project"); and WHEREAS, the Commission desires to provide for the completion of the Project and to encourage the development of the Area; and WHEREAS, there has presented a form of Development Agreement with the Developer, DRP, the Commission and the City of South Bend, by and through its Board of Public Works (the "City"); and WHEREAS, in order to provide for the Project and to induce Developer to constrict improvements in the Area, including the Proposed Development, the Commission desires to enter into this Development Agreement; and • WHEREAS, the Commission further desires to approve the Development Agreement and the documents contained or contemplated therein (collectively, the "Development Documents"), and to authorize the President of the Commission (the "President") or the Vice-President of the Commission (the "Vice-President") to execute, and the Vice-President or Secretary of the Commission (the "Secretary") to attest, the Development Documents, with such changes as such executing and attesting officers may approve upon the advice of legal counsel; THE COMMISSION NOW FINDS THAT: 1. The development of the Area (i) would not be accomplished through the ordinary operations of private enterprise; (ii) will promote a substantial likelihood of creating or retaining opportunities for gainful employment and create additional business opportunities in the Area; (iii) will serve a public purpose as it will benefit the public health, safety, morals, and welfare of the City and the District and increase their economic well-being and that of the State of Indiana (the "State"); and (iv) will protect and increase property values in the City, the District and the State. 2. The Project will create or retain additional permanent jobs in the Area and will significantly improve the opportunities for gainful employment in the District and • the City. 3. Without the Commission's involvement as contemplated by the Development Documents, development would not occur to enable the City to afford the Project. 4. The Development Documents and the Project comply with applicable federal, state and local laws under which the Project has been undertaken and is being assisted and the Development Documents and the actions contemplated therein are authorized. NOW, THEREFORE, BE IT RESOLVED BY THE SOUTH BEND REDEVELOPMENT COMMISSION AS FOLLOWS: The Project as contemplated in the Development Documents, is hereby approved. 2. The Commission hereby approves the Development Documents in the form attached hereto as Appendix I, including the Development Agreement and any other certificates or agreements attached thereto or contemplated therein. 3. The Commission hereby authorizes the President or the Vice-President to execute, and the Vice-President or Secretary to attest, the Development Documents with such changes either in form or in substance as such executing and attesting officers may approve upon the advice of legal counsel with such approval to be conclusively evidenced by such execution and attestation. 4. The staff is hereby authorized to administer the Development Documents, and the President, Vice-President, the Secretary, and the Director of Economic Development of the Department of Redevelopment are each authorized to execute any administrative certificates or documents related to the administration of the Development Documents on behalf of the Commission. 5. This Resolution shall be in full force and effect after its adoption. (remainder of page ifrtentio»ally left blanks) • ' AD PTED at a meetin of the South Bend Redevelopment Commission held on O g November 8, 2007 at 1308 County-City Building, 227 West Jefferson Boulevard, South Bend, Indiana 46601. CITY OF SOUTH BEND, DEPARTMENT O DEVELOPMENT i/~~~ .C- ~ l- Gc`s- S~~nnhu•e Primed Nmne and "!'itle South Bend Redevelopment Commission • • ATTEST: ~~, S'ignanu~e Primed Name and ~r~le South Bend Redevelopment Commission 4 • APPENDIX I Form of Development Agreement • • • DEVELOPMENT AGREEMENT By and Among SOUTH BEND REDEVELOPMENT COMMISSION, CITY OF SOUTH BEND, INDIANA, DOUGLAS ROAD RETAIL PARTNERS, L.P., DOUGLAS ROAD PARTNERS, L.P. THIS DEVELOPMENT AGREEMENT, (the or this "Agreement" or "Development Agreement") dated as of the 8th day of November, 2007, is made and entered into between the SOUTH BEND REDEVELOPMENT COMMISSION, having its office at 1200 County-City Building, 227 West Jefferson Boulevard, South Bend, Indiana 46601 ("Commission"), the CITY OF SOUTH BEND, INDIANA, by and through the City of South Bend, Indiana Board of Public Works having its office at 1300 County-City Building, 227 West Jefferson Boulevard, South Bend, Indiana 46601 (the "Board" and with the Commission, the "City"), DOUGLAS ROAD PARTNERS, L.P., an Indiana limited partnership (the "DRP"), and having its principal place of business at 227 South Main Street, Suite 300, South Bend, Indiana 46601, and DOUGLAS ROAD RETAIL PARTNERS, L.P., an Indiana limited partnership (the "Developer"), and having its principal place of business at 227 South Main Street, Suite 300, South Bend, Indiana 46601. RECITALS WHEREAS, pursuant the authority granted by Indiana Code § 36-7-14 (the "Act"), the Commission has the power and duty to investigate, study, and develop areas within the corporate boundaries of the City of South Bend, Indiana that the Commission has established as an economic development area; and WHEREAS, on December 2, 2005, the Commission adopted its Resolution No. 2199, designating the Douglas Road Economic Development Area ("Area") as an economic development area and as a tax increment financing allocation area in accordance with the Act, which was confirmed by the Commission's adoption of its Resolution No. 2206 on February 17, 2006; and • • WHEREAS, DRP is a limited partnership, in good standing in the state of its origin and authorized to do business in the State of Indiana; and WHEREAS, DRP represents and warrants that is the owner of the property commonly described as 3355 Douglas Road, South Bend, Indiana 46635, currently leased, at least in part, to an entity affiliated with Memorial Hospital of South Bend, Indiana (the "Memorial Building"); and WHEREAS, Developer is a limited partnership, in good standing in the state of its origin and authorized to do business in the State of Indiana; and WHEREAS, Developer owns, controls, or has developed a significant amount of area with the Area and desires to provide for its further development; and WHEREAS, the Developer proposes to develop property in the Maximum Allocation Area (as defined below) from 2008 through 2011, which will provide for or spur at least $3,300,000.00 in additional investment in real property in the Maximum Allocation Area by the Developer or other parties that will be available to be captured for tax-increment purposes for the Maximum Allocation Area (the "Proposed Development") and will provide for additional jobs and investment in the City; and WHEREAS, the parties hereto desire to provide for the widening of Douglas Road to four (4) lanes, among other improvements, from just west of State Road 23 intersection to the Mishawaka city limits in accordance with the terms and obligations set forth in this Development Agreement; and WHEREAS, the Commission desires to provide for the completion of the Project (as defined in Section I) and to encourage the development of the Area; and WHEREAS, in order to provide for the Project and to induce Developer to construct improvements in the Area, the Commission desires to enter into this Development Agreement; and WHEREAS, the total cost of the Project, including all financing charges, is currently estimated to be approximately Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00); and • 2 WHEREAS, the Commission proposes to issue bonds in the approximate amount of One Million One Hundred and 00/100 Dollars ($1,100,000.00) (the "Bonds") payable from tax increment financing revenues ("TIF Revenues") of the Area; and WHEREAS, the South Bend Common Council has appropriated One Million and 00/100 Dollars ($1,000,000.00) in funds for the Project (the "City Funds"); provided that the Commission pledge to reimburse the City of South Bend, Indiana (the "City") for the use of those funds from TIF Revenues of the Area (the "City Obligation"), which pledge shall be junior and subordinate to the Bonds; and WHEREAS, the Board further desires to expend approximately Four Hundred Fifty Thousand and 00/100 Dollars ($450,000.00) in currently appropriated funds for the storm sewers portion of the Project (the "Utility Funds"); and WHEREAS, the Board desires to act as the agent of the Commission for the purposes of constructing the Project in accordance with the plan for construction of the Project; WHEREAS, in order to induce the Commission to incur the City Obligation, the Developer and DRP have each agreed to guarantee .the debt service payments on the City Obligation until the Proposed Development is completed and the TIF Revenues generated therefrom are available to repay the City Obligation unless such guarantees are earlier terminated as provided herein; and WHEREAS, the Commission and the Board hereby find that constructing the Project and approving the terms of this Development Agreement and the transactions contemplated therein is in the best interests of the citizens of the City of South Bend, Indiana; and WHEREAS, the Developer hereby understands and acknowledges that certain terms of the Development Agreement are subject to certain findings and approvals of the Board, the Commission, and the South Bend Common Council; and NOW, THEREFORE, in consideration of the mutual promises and obligations in this Agreement, the adequacy of which consideration is hereby acknowledged, the Parties agree as follows: • 3 r I. PROJECT DEFINITION AND FINDINGS A. Bond Project Definition. The term "Bond Project" shall mean the construction ofright-of--way improvements for the expansion and improvement of Douglas Road from two (2) lanes to four (4) lanes from just west of State Road 23 and Douglas Road intersection to the Mishawaka City limits and for other related improvements, including but not limited to additional turn lanes near intersections, curbing and other streetscape in the right-of--way along the expanded stretch of Douglas Road and improvements to provide for additional storm water drainage resulting from the expanded road improvements. B. Project Definition. The term "Project" shall be mean the purchase of right-of- way necessary to construct the Bond Project, any expenses related to or incidental to the Bond Project, including but not limited to engineering or geotechnical fees, and the Bond Project. C. Findings. By the approval and execution of this Agreement, the Commission and the Board hereby agree and find that the Project and entering into this Agreement are in the best interests of the citizens of City of South Bend, Indiana. II. OBLIGATIONS WITH RESPECT TO THE FINANCINGS A. Commission Bond Obligations. The Commission shall issue tax-exempt redevelopment revenues bonds (the "Bonds") in the approximate amount of One Million One Hundred Thousand 00/100 Dollars ($1,100,000.00) and at a fixed interest rate of not to exceed six and one-half percent (6.500%), for a term of not to exceed twenty (20) years payable solely from TIF Revenues in the Area, subject to the completion of all of the procedures related to such action under Indiana law. The Bonds are anticipated to be sold to or privately placed by Wells Fargo Brokerage Services, LLC ("Wells Fargo") on a 15-year maturity schedule. The Commission's obligation to issue the Bonds is contingent upon the Developer's obligation to provide sufficient security to provide for Wells Fargo's purchase or placement of the Bonds, as discussed in subsection (B). To the extent necessary for Wells Fargo to place the Bonds, the Commission agrees to pledge available TIF Revenues in excess of those necessary to pay the debt service payments on the Bonds first to replenish the debt service reserve fund (or reimburse the provider of the security used to fulfill the Debt Service Reserve Obligation (as defined in subsection B) if the security remains in place for the full amount (or the Developer if the Developer already reimbursed the security provider for such draw and the security remains in place for the full amount) but without • 4 ~~ ~_ J interest) for a draw on the debt service reserve fund. After the debt service reserve has been fully funded to the Debt Service Reserve Amount, any excess available TIF Revenues will first be used to pay the City interest on the City Obligation (as calculated in accordance with Section II(C) and then be used to build a reserve in the Area's general account of One Hundred Thousand Dollars ($100,000.00) for the benefit of the holders of the Bonds and available for paying debt service on the Bonds is no other funds are available for such purpose (which reserve will be yield restricted to the arbitrage yield of the Bonds) (the "General Account Reserve"). The Commission's obligations set forth in this paragraph are as set forth in Resolution No. 2390 adopted by the Commission on November 8, 2007 (the "Bond Resolution"), and to the extent this section is inconsistent with the Bond Resolution, the Bond Resolution shall control. B. Developer Bond Obligations. The Developer shall secure and pledge a letter of credit from Wells Fargo Bank, N.A. or similar consideration to act as a debt service reserve for the Bonds, for the benefit of the holders of the Bonds and in a form acceptable to the holders of the Bonds (the "Debt Service Reserve Obligation"). The security must be sufficient to secure an anticipated interest rate of approximately five and three-quarters percent (5.75%) on the Bonds. The Debt Service Reserve Obligation shall be equal to the least of the following: (i) the maximum annual debt service on the bonds, or (ii) one and one-quarter (1'/4) times the average annual debt service on the Bonds, or (iii) ten percent (10%) of the proceeds of the Bonds within the meaning of Section 148(d) of the Internal Revenue Code of 1986, as amended (the "Code") (the "Debt Service Reserve Amount"). Subject to the provisions of the following sentence, the Developer and DRP, each individually, agree to continue to maintain said security until the Bonds are retired or until sufficient funds are placed on deposit with the Commission or the registrar and paying agent of the Bonds to replace said Debt Service Reserve Obligation. Neither the Developer nor the DRP are obligated to replenish the debt service reserve fund (or any security fulfilling the Debt Service Reserve Obligation) in the event that a draw is made on the debt service reserve fund (or any security fulfilling the Debt Service Reserve Obligation). If the Developer desires to purchase a security to fulfill its Debt Service Reserve Obligation, the Developer shall reduce principal amount of the security, if and when necessary, to insure that the security does not cause the debt service reserve to exceed the Debt Service Reserve Amount, as such amount is determined under the Code and its accompanying regulations. C. City Obligation. The Board hereby commits to using an amount not to exceed One Million and 00/100 Dollars ($1,000,000.00) appropriated by the South Bend Common Council Ordinance No. 9801-07 for the Project (the "City Funds"). In consideration for inducing the City's use of the City Funds for the Project, the Commission hereby commits to reimbursing • t the City the City Funds, plus interest at a rate of three percent (3.00%) per annum (the "City Obligation"), from TIF Revenues of the Area in excess of those necessary to meet the Commission's obligations with respect to the Bonds set forth in the Bond Resolution. Interest shall be payable annually on February 1 and August 1 of each year commencing February 1, 2009 and shall be calculated based upon athirty-day (30-day) month and three hundred sixty day (360-day) year. Principal payments shall be made on the dates and in the amounts set forth on the schedule attached hereto as Appendix I (the "Debt Service Schedule"). The City Obligation shall be guaranteed by the Developer and DRP in accordance with Section II(D). The City Obligation shall be junior and subordinate to the Bonds with respect to pledge of TIF Revenues from the Area and the principal of the City Obligation shall not be scheduled to be paid until after the Bonds are scheduled to be repaid. The Debt Service Schedule shall be developed after the sale of the Bonds and provide for the City Obligation's repayment as allowable under the terms of this Agreement and under the projected TIF Revenues for the Area with additional coverage of ten percent (10%), as reflected on the consultant's report prepared for the Bonds, but rounded down to the nearest Five Thousand Dollar ($5,000) Denomination. In addition to the City Obligation, the Commission will reimburse the City for additional financing charges (including additional interest) related to the City Obligation amounting to an additional two and one-half percent (2.5%) of the principal amount of the City Obligation (collectively, the "Additional Financing Charges") with available TIF Revenues of the Area after the Commission has satisfied in full the City Obligation. The City will also expend the Utility Funds on the Project. D. Developer and DRP Obligations Re~ardin~ City Obligation. The Developer and DRP, each hereby guaranty, joint and severally, to pay the debt service payments on the City Obligation (but not the Additional Financing Charges or the Utility Funds), to the extent that TIF Revenues are insufficient for such purpose until the Investment Threshold (as defined in Section II(E)) is met provided that no principal payment be scheduled on the City Obligation until after the Bonds are scheduled to be paid off. Developer and DRP (collectively referred to herein as the "Guarantor") hereby recognize and acknowledge that the City Obligation will be junior and subordinate to Commission's obligations with respect to the Bonds as set forth in the Bond Resolution. In the event that the Commission determines that available TIF Revenues are insufficient to meet the debt service payment on the City Obligation, the Commission shall notify the Guarantor of the deficiency of the available TIF Revenues, and the Guarantor shall place on deposit with the Commission the amount necessary for the Commission to meet its debt service on the City Obligation after the application of the available TIF Revenues in accordance • 6 t with Section II(G), which deposit shall be made upon the later of: (i) ten (10) business days from the delivery of the notice of the deficiency or (ii) the date on which the debt service payment is due under Section II(C) hereof. E. Investment Threshold. The Developer hereby represents and commits to constructing or in otherwise allowing third parties to accomplish additional commercial developments in the Maximum Allocation Area amounting to at least Three Million Three Hundred Thousand and 00/100 Dollars ($3,300,000.00) worth of additional investment or in otherwise allowing to accomplish (the "Proposed Development"). The Developer shall achieve the Investment Threshold upon the earlier of the following: (i) the date on which the Developer completed the Proposed Development resulting in the additional investment if such date is prior to December 31, 2011 or if third-parties together with Developer construct commercial developments in the Maximum Allocation Area (if expanded to include the Area) by December 31, 2011, (ii) the date one year after the assessment date on which the completed additional investment for the Proposed Development is assessed or (iii) the date on which the property is assessed or if such date is after December 31, 2011 then one year after the assessment date on which the total assessed value of the Area eligible to be captured for tax incremental purposes equals or exceeds $7,650,000. (For example, if the Developer completes projects resulting in $3,300,000 in additional investment in commercial real property in the Area as of December 1, 2011, the Investment Threshold would be met on December 1, 2011. If the Developer completes projects resulting in $3,300,000 in additional investment in commercial real property in the Area as of April 1, 2012, the Investment Threshold would be met on March 1, 2014 because such projects would be assessed as of March 1, 2013.) The parties acknowledge that the Area is currently comprised of a few parcels, and that the parcels owned by DRP and the Developer are the only ones projected to generate TIF Revenues sufficient to cover the Bonds and the City Obligation. DRP hereby represents that it will not sell or dispose of the Memorial Building to a nonprofit entity allowing said property to become exempt from property taxation until the Bonds and the City Obligation have been satisfied. The parties further acknowledge that investment in the Area that results in improvements that are ineligible to be captured for tax increment financing purposes shall not be considered when determining whether the Investment Threshold has been met. For instance, if the Developer constructs a residential structure or constructs and disposes of a commercial structure for the use and ownership of a nonprofit or governmental entity, such improvements would not count toward the Investment Threshold. • 7 • F. Douglas Road Economic Development Area. The entire Area has been designed as an allocation area under Indiana Code §36-7-14-39 for purposes of collecting TIF Revenues. The Commission will pledge to the repayment of the Bonds and the other uses provided in Section II(G) hereof the TIF Revenues of the Area, as currently constituted and as expanded in the future, at the request of the Developer, to include the parcels depicted at Exhibit A and any property annexed into the City and made a part of the Area that is west of the current Area, east of State Road 23, south of the northern boundary line of the current Area if it were extended to State Road 23, and north of the southern boundary of the current Area if it were extended to State Road 23, as also depicted on Exhibit A (collectively, the "Maximum Allocation Area"). To the extent the Area is amended to include property not within the aforementioned described Maximum Allocation Area, the Commission may, but is not obligated to, pledge any tax increment revenues from those parcels to the payment of the Bonds or the City Obligation. The Commission may only pledge TIF Revenues from parcels in the Area to the extent they are annexed into the City and added to the Area. While it is the intent of the Commission to expand the Area to include the Maximum Allocation Area to the extent they are voluntarily annexed and scheduled for development, the addition of the property to the Area is subject to the Commission's completion of the procedures required under Indiana Code § 36-7- 14 and the City's completion of its annexation procedures and of its expansion procedures for economic development area, which are subject to the approval of the South Bend Common Council. The Developer and DRP hereby consents and agrees to the City's annexation of any property they own or may own in the Maximum Allocation and to the Commission's expansion of the Area to include said property. The Developer and DRP further commit to work with the City and the Commission to add said property to the Area in a manner that will maximize the TIF Revenues of the Area. The Commission will not approve an application for tax abatement in the Area as it currently exists or as it is proposed to be expanded as depicted at Exhibit A, without the prior consent of the Developer. G. Excess TIF Revenues. Available TIF Revenues in excess of those necessary to meet the Commission's obligations with respect to the Bonds as set forth in the Bond Resolution shall be deposited into the debt service reserve fund of the Bonds to reduce the Debt Service Obligation. In reducing the Debt Service Obligation, the face value of the security acting as the debt service reserve shall be reduced by the amount of TIF Revenues deposited or any funds placed on deposit in the debt service reserve by the Developer (or the security provider in the Developer's stead) shall be refunded to the Developer without interest. Any available TIF Revenues in excess of those necessary to fulfill all of the foregoing shall be used first to pay debt service payments on the City Obligation due and owing and then to reimburse the Developer or • 8 • DRP for any debt service payments made on the City Obligation pursuant to their obligations set forth in Section II(D) hereof, without interest. H. Conditional Approval of Certain Terms. Notwithstanding any other provision of this Agreement, the parties understand and acknowledge that the terms and conditions related to the issuance of the Bonds, the expansion of the Area, the sale of the Bonds, and the annexation and zoning of property are subject to the completion of the procedures required under Indiana law for those actions and therefore are not binding upon the Commission until that time. The parties further understand and acknowledge that the aforementioned terms and conditions will be finalized and memorialized in various resolutions, ordinances and financing documents which are to be approved subsequent to, or contemporaneously with, the execution of this Agreement. III. USE OF FUNDS, CONSTRUCTION OF PROJECT A. Use of Funds. The Bonds will be issued as tax-exempt bonds under the Code and its accompanying regulations. The Board covenants to expend the proceeds of the Bonds on the Bond Project, which only includes road improvements within the right-of--way or for improvements that benefit the expanded road and not for the benefit of any private person. The Board shall use the City Funds, the proceeds of the Bonds and the Utility Funds as follows: City Funds: Amount ROW acquisition $ 250,000 Engineering Fees 198,000 Incremental Signal Costs: 111,355 Other Construction Costs: 398,397 Contingency (3%) (City & Utility Funds) 42,348 SUBTOTAL COSTS $1, 000, 000 Utility Funds Amount Storm Sewer Improvements $ 450,518 SUBTOTAL COSTS ~ 450, S 18 Bond Proceeds Amount Construction Costs $1,019,417 Contingency (3%) 30,583 Issuance Costs 50,000 SUBTOTAL COSTS X1,100, 000 t 9 t TOTAL PROJECT COSTS X2,550,518 B. Construction of Project. The Board and the Commission hereby approve the Project as a local public improvement for purposes of Indiana Code § 36-7-14-1 et seq. The Commission hereby empowers and appoints the Board to act as the Commission's agent for the purpose of contracting for the acquisition and construction of the Project in accordance with the plans as approved by the Commission and filed with the Board from time to time (the "Plan"). The Board shall select the type, quantity, suppliers, construction contractors and subcontractors, materialmen and installers of the improvements and appurtenances on behalf of the Commission and the Board. The Board is independently empowered to construct the Project, and the Commission hereby agrees to reimburse the Board of expenditures related to the construction of the Project from the proceeds of the Bonds to the extent permissible under the Commission's obligations and agreements relating to the Bonds. This agency may be terminated upon breach by the Commission or the Board of this section by the non-breaching party at least seven (7) days in advance of the date of termination of agency. The authority and appointment by the Commission herein contained is limited to a total construction and financing cost for the Project, as established by the receipt and award of construction contracts by the Board pursuant to the Project Agreement. The Board hereby accepts the appointment of agency by the Commission as described in section. The Board shall construct the Project pursuant to Indiana Code § 36-1-12 and shall execute all contracts pursuant to said chapter on behalf of the Commission. The Board, in the bidding of the contracts pursuant to said chapter, shall adopt specifications pertaining to the work to be performed, the timetable for the performance of the work, require performance, payment, and maintenance bonds, and such other matters as may be required by statute and/or the prevailing conditions in the South Bend community for public construction, provided such conditions, specifications, and matters are in accordance with the Plans and all supplements and amendments thereto. The Board may make such modifications and amendments to the Plans as required for the construction of the Project consistent with the overall design set forth in the Plans, as approved by the Commission, and may adopt such special conditions as may be required in its opinion to satisfactorily complete the construction of the Project, provided that such modifications, amendments or special conditions do not alter the character of the Project or reduce the value thereof. • 10 • The Commission hereby empowers the Board to assume full responsibility for obtaining all necessary licenses, inspections, zoning approvals, building permits and any and all acts necessary to comply with the applicable statutory and regulatory requirements regarding the construction, zoning and leasing of the Project. The sole responsibility for construction and purchase of items constituting the Project shall be that of the Board, which has the sole responsibility for dealing with contractors and subcontractors in the construction of the Project. The Board shall ensure that all components of the Project are properly invoiced to and titled in the Commission or the City prior to the commencement of Project. The Board shall have sole responsibility to inspect, on behalf of the Commission, the construction of improvements and the appurtenances and their installation although the Commission reserves the right, at any time, to conduct such independent inspection as it deems appropriate. If the improvements or appurtenances are not properly constructed or installed in accord with specifications, do not operate or hold up as represented or warranted by any supplier or contractor, or are unsatisfactory for any reason, the Board, during the term of this Project Agreement, shall make any claim on account thereof solely against said supplier or contractor. The Commission hereby assigns to the Board, during the term of this Project Agreement, all its rights and benefits pursuant to any warranties, duties, or obligations of any manufacturer, wholesaler, retailer, installer, contractor, or subcontractor who provides any labor or materials for or in the Project. C. Plans and Specifications for Project. The Commission and the City hereby agree to purchase from the Developer the plans and specifications for the Project (the "Plans") prepared by Abonmarche Consultants, L.L.C. ("Abonmarche") or, alternatively, to assume the Developer's contract with Abonmarche for the Plan; provided that the total cost of the Plans (or the contract) not-exceed One Hundred Ninety-Eight Thousand and 00/100 Dollars ($198,000.00). D. Right-of-Way for Project. To the extent that the Developer has purchased or secured right-of--way necessary for the completion of the Project as set forth in the Plans (the "ROW'), the Commission and the City hereby agree to purchase said ROW from the Developer for the amount paid for the ROW but not in excess of the appraised value, subject to the completion of their respective acquisition procedures. The ROW must be limited to the contemplated Project and must be provided to the City or the Commission via a warranty deed i 11 • and free of all liens and encumbrances. It is the understanding of the parties that the Developer will dedicate the right-of-way on the frontage of their developments and the easement necessary to provide for the storm-water drainage solution set forth in the Plans without expectation of payment or reimbursement. In order to expedite the awarding of the bid for the contract, the Developer hereby agrees to grant the City a limited right of entry on the ROW to commence the construction the Project. IV. MISCELLANEOUS A. Entirety of Agreement. This Agreement embodies the entire agreement between the parties and cannot be varied except by the written agreement of the parties. No representation, promise, or inducement not included in this Agreement shall be binding upon the parties hereto. B. Essence of Time. Time is of the essence of this Agreement. C. Notices. Any notice required or permitted to be delivered hereunder shall be deemed to be delivered, whether or not actually received, when deposited in the United States Postal Service, postage prepaid, registered or certified mail, return receipt requested, addressed to the Developer or the Commission, as the case may be, at the address set forth below. Developer: John T. Phair President Douglas Road Retail Partners, L.P 227 South Main Street, Suite 300 South Bend, IN 46601 Commission: Donald E. Inks, Director Department of Redevelopment City of South Bend, Indiana 227 W. Jefferson Boulevard South Bend, IN 46601-1830 With copy to: Philip J. Faccenda, Jr. Barnes & Thornburg LLP 100 North Michigan Street 600 1St Source Bank Center South Bend, IN 46601 Board: Gary A. Gilot, President • With copy to: Charles S. Leone, Esq. City Attorney City of South Bend, Indiana 227 W. Jefferson Boulevard, Suite 1400 South Bend, IN 46601-1830 With copy t°: Shawn E. Peterson, Esq. 12 t Board of Public Works Assistant City Attorney City of South Bend, Indiana City of South Bend, Indiana 227 W. Jefferson Boulevard, Suite 1300 227 W. Jefferson Boulevard, Suite 1400 South Bend, IN 46601-1830 South Bend, IN 46601-1830 Developer: John T. Phair President Douglas Road Partners, L.P 227 South Main Street, Suite 300 South Bend, IN 46601 D. Binding Obligations. All the terms and conditions of this Agreement are hereby made binding on the successors and permitted assigns of both parties hereto. E. Choice of Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Indiana and venue for any action shall be St. Joseph County, Indiana. F. Effectiveness. This Agreement shall not be effective or binding until fully executed by the parties hereto. G. Agreement Survives Closing. This Agreement will survive closing. H. Severability Clause. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. I. Supplemental Documentation. Unless otherwise specified herein, each party shall execute and deliver to the other all such other further instruments and documents as may be reasonably necessary to accomplish the actions contemplated by this Agreement and to provide and secure to the other party the full and complete enjoyment of its rights and privileges hereunder. Without limitation, this shall include acknowledging any exhibits or appendixes called for to be attached hereto or included herewith, and the failure to attach any such items to this Agreement at the date of execution shall not void this Agreement so long as all required items are supplied on or before December 31, 2007. • 13 • J. Arm's Length Transaction. This Agreement was negotiated by the parties at arm's length and each of the parties hereto has reviewed the agreement after the opportunity to consult with independent counsel. Neither party shall maintain that the language in the Agreement shall be construed against any signatory hereto. K. Interpretation. Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise. L. Counterpart Signature Pales. This Development Agreement may be executed in duplicate or through counterparts, each of which shall be deemed to be an original and all of which shall constitute but one and the same agreement. M. Authorized Officials. The undersigned persons executing and delivering this Agreement on behalf of each of the parties respectively represent and certify that they are the duly authorized officers of each and have been fully empowered to execute and deliver this Agreement and that all necessary corporate action has been taken and completed. (remainder of page intentionally left blank) 14 t IN WITNESS WHEREOF, the Parties hereby execute this Development Agreement the date first written above. DOUGLAS ROAD RETAIL PARTNERS, L.P. an Indiana limited partnership By: John T. Phair, President STATE OF INDIANA ) )SS: COUNTY OF ST. JOSEPH ) Before me, the undersigned, a Notary Public in and for said County and State, personally appeared John T. Phair, known to be the President of ,the General Partner of Douglas Road Retail Partners, L.P. and acknowledged the execution of the foregoing Development Agreement. IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal on , 2007. ,Notary Public My Commission Expires: Residing in St. Joseph County, Indiana (Signature Page for Development Agreement) • • DOUGLAS ROAD PARTNERS, L.P. an Indiana limited partnership By: John T. Phair, President STATE OF INDIANA ) )SS: COUNTY OF ST. JOSEPH ) Before me, the undersigned, a Notary Public in and for said County and State, personally appeared John T. Phair, known to be the President of ,the General Partner of Douglas Road Retail Partners, L.P. and acknowledged the execution of the foregoing Development Agreement. IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal on , 2007. ,Notary Public My Commission Expires: Residing in St. Joseph County, Indiana (Signature Page for Development Agreement) t t CITY OF SOUTH BEND, BY ITS DEPARTMENT OF REDF,~ELOPMENT ;. Printed: Marcia I. Jones, President Its: South Bend Redevelopment Commission • ATTEST: By: Printe .Gregory S . D canes , Secretary Its: South Bend Redevelopment Commission STATE OF INDIANA ) )SS: ST. JOSEPH COUNTY ) Before me, the undersigned, a Notary Public in and for said County and State, personally appeared Marcia I. Jones and Gregory S Downes ,known to me to be President and Secretary ,respectively, of the South Bend Redevelopment Commission and acknowledged the execution of the foregoing Development Agreement. IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal on November 8 , 2007 2007. (SEAL) ~~~~t ,~~~-~-~ ~ No ary Public My Commission Expires: Residing in St. Joseph County, Indiana Cheryl K. Phipps ~ State of Indiana Notary PuWk Resident of S't. Joseph County Commisabn E 1R/2015 (Signature Page for Development Agreement) • t CITY OF SOUTH BEND, INDIANA, by and through the City of South Bend, Indiana Board of Public Works Gary A. Gilot, President ATTEST: Carl P. Littrell, Member Clerk Donald E. Inks, Member STATE OF INDIANA ) )SS: ST. JOSEPH COUNTY ) Before me, the undersigned, a Notary Public in and for said County and State, personally appeared Gary A. Gilot, Carl P. Littrell, Donald E. Inks, known to me to members of the City of South Bend, Indiana Board of Public Works, and acknowledged the execution of and transfer of rights under the foregoing Development Agreement. IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal on , 2007. (SEAL) Notary Public My Commission Expires: Residing in St. Joseph County, Indiana This instrument was prepared by: Shawn E. Peterson, Assistant City Attorney, City of South Bend. 1400 County- City Building, South Bend, IN 46601 "I affirm, under the penalties for perjury, that I have taken reasonable care to redact each Social Security number in this document, unless required by law." Shawn E. Peterson (Signature Page for Development Agreement) • t EXHIBIT A Depiction of Douglas Road Economic Development Area • • • APPENDIX I [Debt Service Schedule for City Obligation] (To be determined after the pricing of the Bonds) • •