01-05-81 Council Special Meeting Minutes

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SPECIAL MEETING January 5, 1981 from the Federal Government that we have been awarded this Urban Development Action Grant, therefore that application cannot suffice as a commitment from the City. New Energy has asked for a binding commitment that the City would fulfill all of the things we said we would do. He said the Administration suggested as an alternative a resolution from the City that would not be binding, but would be a public statement and commitment that we wanted the plant in South Bend, and would seek all available means to pay for making the site both buildable and accessible. He indicated that would suffice for the time being, and New Energy was meeting with the Department of Energy and they will tell them that the City will make that site equally competitive with other sites. He indicated it was not going to be easy for the City to fulfill their commitment, but we think we have devised a way. He indicated that when_ they met in Washington, D. C. they were able to negotiate the total amount down from 6.6 million to 5.6 million. He indicated the City's proposal is that we borrow through the Community Development Program, what is called a 108 Loan Guarantee, the total amount of money and the loan will be paid back through the Comm- unity Development Block Grant allocation we receive on an annual basis. He indicated we receive 4 million a year from C.D. Funds and we can utilize a portion of these funds to pay back whatever loans we make through this 108 Loan Guarantee. He indicated this is going to hurt the City because the only way we can do it is to borrow money through the Community Development Program. He indicated it was going to take away the flexibility we have had in the past because we will be committed to almost our maximum limit. He indicated there was a 5.6 million cost to do all of the on -site improvemnts we are also going to assess New Energy Corporation 2 million for the on -site costs. He indicated they have not yet determined the interest or the time period, but it was estimated the interest would be 6 to 10 percent and maybe a 6 to 10 year pay back period. He indicated this was nothing more than the City has done in the past when we have committed for new industry, such as the Airport Industrial Park. He indicated they were not sure New Energy would receive their loan guarantee, so even if we make another public commitment, in fact the plant might not build here, if they do not receive their loan guarantee. He indicated it was very im- portant to the City that the plant build here, as there will be approximately 500 construc- tion jobs at the building peak, there will be a significant impact on the farmers in the area, as well as the citizens of South Bend. He said a large amount of the construction will take place on -site and we hope the number of jobs that will be triggered by the plant will be close to 1,000. He indicated it was also a new kind of energy that will stimulate other type of developments. He indicated this resolution should be amended in Section 5 to read; "Hereby supports and is in favor of obligating other resources as available, to meet the commitments established in this Resolution; and supports the continuted pursuit of an Urban Development Action grant from the United States Department of Housing and Urban Development;" Council Member Taylor made a motion to amend the resolution, seconded by Council Member Dombrowkki. The motion carried. Mrs. Jane Swan, 1706 S. Walnut, indicated that she was not for or against this project at this point. She indicated when this started she thought it was great, however, it seems to be running into problems. She asked if Community Development funds were used was that going to short change the neighborhoods. She asked the Council to make sure on this issue that what is done is going to be in the best interest of the citizens of South Bend. Mayor Parent indicated he could not think of anything more positive than having New Energy Corporation in the City. He indicated they will pay, the first year after tax abatement, 3.7 million in property taxes. He said this is the type of industry that is going to be important for the next thirty to forty years. He indicated we have to be able to make a positive step forward to support this plant. Jon Hunt, Administrative Assistant to the Mayor, indicated that in terms of the Community Development Block Grant applications, they examined the Community Development budget in term: of the impact on neighborhood and housing programs and other on -going programs. He indica- ted that from 1975 to 1981.the City has committed 82 million dollars to Economic Development Programs; i.e., Monroe /Sample, East Bank, Century Mall. He indicated they do not feel they are going to disrupt any of the neighborhood or housing programs. He commitment to pay back the 108 Loan Guarantee is what we have being doing with other projects the last seven years. Council Member Serge indicated the reason he was in favor of this project. He indicated it will cost 50 million to build this plant, and our local unions would lose the work if the plant was not built in South Bend. He indicated that if the plant was built 15 miles from here, Chicago unions will benefit. He indicated that taking away 50 million in the labor market is taking away a lot of money from our local citizens. He indicated he thought this was a wise investment. Council Member Taylor indicated that if the New Energy Corporation was successful in obtain- ing their loan guarantee, and if they are successful they are going to build an ethanol plant either in South Bend,. Indiana or Rolling Prairie. He indicated he was elected to the South Bend City Council and a vote against this tonight would indicate to New Energy that we are not interested in having them in our Community and it would be an automatic signal to them to build in Rolling Prairie. He said as a South Bend City Councilman (Taylor) he wanted to go on record as strong as possible that he wanted New Energy Corporation to come to our community and that he would do everything in his power to assist them in that goal. Council Member Kopczynski indicated that he felt New Energy Corporation would be an oppor- tunity for South Bend to diversify its industrial base for a long time to come. He indicated he felt it was an industry that will stabilize the employment market. He indica he felt this::was_..an-opportunity that South Bend should not bypass. He made a motion that Council adopt this resolution, seconded by Council Member Taylor. Council Member Dombrowski indicated this plant will be a very good thing for South Bend. Council Member Beck indicated this plant Member Szymkowiak indicated this was not encourage other manufacturers to come to was a financial commitment that the City our representatives in Cashington, D. C. Bend, as Congressman Brademas and Senato will be a big asset to our community. Council only going to be a great asset, but it will the City. Council Member Voorde indicated this cannot easily make, and he would urge publically to work as vigorously for the Citizens of South r Bayh did when they were there.