10-12-09 Common Council Minutes - Laserfiche WebLink

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REGULAR MEETINGOCTOBER 12, 2009 Mr. Feldbaum stated that the bonds are issued by the City of South Bend and then the City of South Bend takes the money, and in this case about $8 million dollars and loaned it to PEI/Genesis and then PEI/Genesis signed a promissory note and loan agreement to pay the money back. However, what happens is that promissory note that PEI/Genesis signed gets assigned by the City to the Trustee for the Bond Holders and then the City is out of the picture and that happens simultaneously with the closing and is part of it. So the note is transferred and the documents expressly state that there is no recourse back against the City or about any of the City’s property or the State, or the Council, or anybody else and that the bonds are payable solely from the payments by the Company on the note or in the event that the company doesn’t pay, then the payments by the bank that has issued the line of credit would secure it. Councilmember Rouse stated that he understands that, but this is the point that he is making that it is a win for the borrower in this case PEI/Genesis. It’s a win/win for the person who is investing in the tax exempt bond, it out to be a win/win for the City of South Bend in that we negotiate, and he is not asking that it be part of a tax abatement ordinance, but simply a paradigm shift that says listen, the City is willing to help and want to help, but at the same time have some concerns per the Act, about the health and general welfare of the persons living in this City. He stated that it is in the Act and all that has to be done is to read it and understand that collectively this is a wonderful opportunity to enhance both the borrower, the manufacturer in this case and helps the people who are willing to invest in these bonds, but it also can be a bigger win/win for the City of South Bend. He stated that is what he is driving after. Mr. Feldbaum pointed out one thing that does happen at the Economic Development Commission level is that they do ask about the creation of jobs and employment. He stated that there is a report that is actually issued by the Economic Development Commission at the time that the bonds came before in 2007, that actually talked about the jobs that were going to be created. Councilmember Rouse stated that he is willing to discuss this and is not asking for an Ordinance change, he reiterated that they need to be more cognizant of how this process works and how the City of South Bend can get a bigger piece of the employment. He stated that the City of South Bend has a massive unemployment rate compared to St. Joseph County and what he would like to see done is that when the City issues these bonds, is to see more employed in Portage Township and those townships that are directly related to South Bend, Indiana. He stated that he is all for St. Joseph County and all of those other wonderful things, but the priority needs to be the boundaries of this City. Mr. Feldbaum stated that he doesn’t have the exact number or breakdown of where workers live, but would be happy to look into that. Councilmember Rouse stated that he is an elected official and a fiscal officer in the City of South Bend and is looking to focus on opportunities to enhance this city, because the unemployment rate is a little bit higher than the rest of the county, along with some other negative situations. Councilmember Henry Davis stated that he asked earlier this afternoon who owns the building that was recently vacated by PEI/Genesis on Bendix Avenue, and who was paying the mortgage if there is one and the taxes on it and after further discussion tonight and the answers that were given it completely changed how he feels and will not be voting in favor of this in good conscience. Councilmember Oliver Davis questioned what Councilmember Rouse meant by this issue being out of the gate and what can the Council do in the future to address this issue without it being out of the gate. Councilmember Rouse stated that he looks at this bill and really does support it as lessons learned. He stated that the way he learned about this was is to take the 135 page document that was attached to the ordinance and started to study it, and what happens 5