04-10-72 Council Meeting Minutes

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REGULAR MEETING APRIL 10, 1972 RESOLUTION NO. 303 -72 (PUBLIC HEARING CONTINUED) (LETTER TO MR. KING CONTINUED) In running the hotel, we will employ quite a number of people. Although the exact number will vary with the occupancy, we anticipate the minimum employment will be approximately 55 people. All but two or three of these people would be hired from your community. This will creata a payroll of approximately $15,000 per month. Inasmuch as they are employed locally, this would not create any additional burden on the present school system. Royal Inn's program utilizes a limited partnership arrangement. Under this arrangement this Corporation maintains approximately 50% and through John Nuveen & Company we sell the other 50 %. These are sold in increments of 1 %. A 1% interest in South Bend will be approximately $13,100, which will mean that we will receive $655,000 in equity from our partners. The sale of these percentage interests are treated as securities and as such are registered with the Securities and Exchange Commission. For financing we are seeking a $2.6 million to $2,8 million 6% bond issue with a lease term of 20 to 25 years. All additional equity needed over and above the financing and the partners' contribution will be furnished by Royal Inns of America, Inc. We look forward to becoming part of the South Bend community and we hope we can move forward rapidly with this project. If you have any questions regarding our program, please give us a call. Very truly yours, /s/ Wm. L. Loizeaux Wm. L. Loizeaux Vice President - Finance WLL:vjt If April 2, 1972 " Mr. Karl King, President Economic Development Commission City of South Bend County -City Building South Bend, Indiana 46601 Dear Mr. King: Please permit this letter to serve as our commitment to purchase the Industrial Revenue Bonds in an amount not to exceed $2,800,000 to be issued for the purpose of constructing a 150 -room Royal Inns of America Hotel to be constructed on Parcel No.7 -1 situated in the Central Downtown Project, R -66. The term of these bonds will coincide with the lease entered into by the limited partnership formed by Royal Inns of America, Inc. and other investors. Cordially, /s/ Jerome B. Kearns Jerome B. Kearns Executive Vice President JBK:vjt 11 it Mr. Frederick Craven, Vice President of the Economic Development Commission said that they have made a thorough study of this proposal and commend it to the Council for adoption. Mr. Taylor said that this involves a four acre parcel of land, bounded by the new St. Joseph Street, Western Avenue, and Wayne Street, purchased by the Royal Inns of America. The resolution would authorize the Economic Development Commission to enter into a lease agreement with the Royal Inns of America to issue $2.8 million dollars in tax -free revenue bonds. The St. Joseph Bank & Trust Co. has agreed to purchase the bonds at 6% interest. Mr. King emphasized that neither the city or the commission guarantees the loan. The total cost of the proposed structure will be $4.5 millio which will add to the city's tax revenues, and it will employ about 55 persons. Mr. John O'Hanlon, 975 Riverside Drive, said that the city, by backing the loan, competes with other hotels and motels in the city, since private industry would have to pay as high as 8% interest. He also questioned the need for additional hotel and motel rooms in the city, since some that are already in operation are not filled to capacity. Mrs. Audrey Conley, Director of the Convention Bureau of the South Bend - Mishawaka Area Chamber of Commerce, spoke in support of the resolution. She said that this type of hotel would increase the possibility of bringing large conventions to South Bend and they, in turn, bring new money into the city. Last year, she said, ten million dollars in new money was brought into the area. Councilman Nemeth asked who determines who will