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South Bend Redevelopment Commission Regular Meeting – December 8, 2022 <br />opposed to a building where you may have rental interruption insurance, which <br />adds additional annual expense. The lease itself provides terms that are <br />parameters. The maximum lease rental is $10.5M with a maximum lease term of <br />20 years. The $10.5M is based on estimated assumptions. We are contemplating <br />two series of bonds. The first series is for the River West and East infrastructure <br />improvements that would proceed once those bonds are issued. <br />April 2023 is the proposed closing date; the second series of bonds would be for <br />the Beacon project. The second paragraph of the lease provides another <br />financing; once the bonds are issued at $10.5M, these would be reduced to the <br />actual amount of the principal and interest that would be due on the bonds at that <br />time. There are some interest rate and project cost assumptions that may make <br />that a little higher. Once the rates are sorted out on the bonds the rental amount <br />will decrease. <br />Today, we are asking the Commission to consider the lease in its initial form. If <br />you adopt the resolution approved the form of lease, then we would publish some <br />notices that there would be a public hearing on the meeting of December 19, <br />2022. Following that, we anticipate going before the Common Council in January <br />2023 for approval of the lease financing which is required by Indiana law. <br />The lease financing would proceed to sale after Common Council approval. We <br />are estimating closing in April 2023. The rentals would be payable from River <br />West and River East tax increment revenues. When the bonds are sold the lease <br />does contemplate a tax backup. You are able to get the best rate that the COSB <br />can get in the market on any given day because of the tax back up. It does <br />provide a lower cost of financing from the city’s perspective. <br />Baker Tilly has analyzed the increment that is available for both River West and <br />River East and there is sufficient amount of coverage; you can be assured that <br />there would be sufficient TIF revenues to pay the debt service on the bonds. The <br />debt throughout the lease rentals would be used to pay the debt service. <br />Dan Parker, the City Controller stated that Baker Tilly ran a full financial analysis. <br />River West has two, three series of bonds that are rolling off in 2023 that are debt <br />service for the proposed bonds and are well within the proposed TIF increments <br />for both TIF areas. This would be the first debt issuance. Baker Tilly is putting <br />together maintain a 225% coverage ratio against parity bonds which is very <br />healthy. <br />Caleb Bauer, Executive Director DCI handed out the Baker Tilly analysis to the <br />Commission and will have it posted online after the meeting. He notes that it is a <br />pro-rated breakout. Mr. Bauer presented a PowerPoint of the projects being <br />funded. A number of infrastructure and parks projects in both TIF districts at a <br />$34M bond. We projected roughly $18.3M in revenue out of River West TIF for <br />2023 and just shy of $10M in River East. On the River West side $2.5M will go to <br />the Walker Field improvement project. There has been a lot of concerns about the <br />safety in crossing Ewing, so we will look into that. $800k for some SE park <br />upgrades including a splash pad and playground resurfacing. $5M match to the