10-12-09 Common Council Minutes - Laserfiche WebLink

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REGULAR MEETINGOCTOBER 12, 2009 Mr. Alan Feldbaum, Attorney, Barnes & Thornburg, LLP, 100 North Michigan Street, South Bend, Indiana, made the presentation on behalf of PEI Genesis. Mr. Feldbaum advised that they are serving as bond counsel with respect to the modification of the City of South Bend, Indiana Variable Rate Demand Economic Development Revenue Bonds, Series 2007 (PEI/Genesis Project.) He stated that the purpose of the Supplemental Bond Ordinance is to authorize the executive of the Bond Documents for the purpose of making certain changes in the terms and provisions which are contained in the original Bond documents, including, authorizing the delivery of a confirming letter of credit to further secure the Bonds and extending the maturity date of the Bonds from April 1, 2027 to April 1, 2033. Mr. Feldbaum stated that the City bears no responsibility, financial or otherwise, with respect to the payment of, principal of and interest on the Bonds. He stated that the ordinance specifies that in Section 6. He stated that the issuance of the Bonds by the City merely allows the Borrower to obtain tax- exempt financing as provided for under the Internal Revenue Code. This being the time heretofore set for the Pubic Hearing on the above bill, proponents and opponents were given an opportunity to be heard. Councilmember Rouse advised that he has a statement and that he is fully supportive of this process, however, this bill allows for the City to be a conduit for a borrower to in this case borrow $8.1 million dollars. Consequently, it winds up being a tax-exempt investment for those who are investing in the bonds that are being handled by a financial institution. It allows the manufacturer to borrow money at a low interest rate. The City has another obligation; if this bill is permissible under IC 36-7-12-11.9 simply gives the definition of the terms. In Chapter 12, Section 24 and 25, the Redevelopment Commission has an obligation to look at the health and general welfare per that section of that Act and then issue a Resolution and then the South Bend Common Council, in Section 25 of that same chapter also is to look at the health and general welfare per this process to the City of South Bend. He stated that we are living in a post HEA 1001 and this body has raised the taxes of the residents of St. Joseph County by participating in that by .95%. He stated that when the Council has the opportunity to use an economic tool like this, there needs to be strong negotiation with the manufacturer “the horse is out of the barn” on this particular issue, but in the future when we use this particular tool, the officials of the City, the Council, and the Department of Community and Economic Development, need to be involved in intense dialogue with the perspective borrower of these monies to see that jobs are produced in the City of South Bend. Much like that takes place in Jefferson County, more specifically in the City of Madison, where they specifically list in their Tax Abatement Ordinance: The City of Madison has an article in their ordinance that states that “Indiana Workforce Development provides employment and training services in accordance with the provisions of the job training partnership act of 1982 as amended, and other applicable Federal, State and Local Laws that allow to do the following: 1. The Manufacturer is going to try to hire persons in Madison. 2. They will hire persons in Jefferson County. 3. In the State of Indiana. 4. Out of State. He stated that he is fully supportive of this process, but the Council needs to be looking at this process in more depth rather than just saying that it doesn’t really affect us. He stated that it does affect us and is a wonderful stimulus, and is an early version of a stimulus plan. He stated that this Council has passed a couple in the past and were not really cognizant of the opportunities that they had to really look out for the general welfare per the Statement in the Act of the residence of South Bend Indiana. Councilmember Varner asked Councilmember Rouse if he was referring to the Tax Abatement, because this is private money. Councilmember Rouse stated that this is money and the issuer of this bond is the City of South Bend, called a conduit, but the City is the actual issuer of the this bond, it goes to a bank, and they handled it. Councilmember Rouse asked Mr. Feldbaum to correct him if he is wrong. 4