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HomeMy WebLinkAbout5A1 Resolution No. 3679 (Auth. use TIF fund Forgivable Loan KCG) - SignedSouth Bend Redevelopment Commission 215 S. Dr. Martin Luther King, Jr. Blvd., Room 301, South Bend, Indiana Redevelopment Commission Agenda Item D ATE : 9/21/2026 FROM: Joseph Molnar Deputy Director, Community Investment SUBJECT: Resolution Authorizing Use of South Side TIF Revenues for Heartwood Commons Project Funding Source* (circle) River West; River East; South Side; Douglas Road; West Washington; RDC General; Riv. East Res. *Funds are subject to the City Controller's determination of availability; if funds are unavailable, as solely determined by the City Controller, then the authorization of the expenditure of such funds shall be void and of no effect. PURPOSE OF REQUEST: Approval of Resolution Authorizing South Side TIF Revenues for Heartwood Commons Project at 2020 S. Main Street SPECIFICS: The Redevelopment Commission approved a Purchase Agreement on June 12, 2025, with KCG Development, LLC for RDC-owned property located at 2018-2020 S. Main Street. KCG subsequently applied for Low-Income Housing Tax Credits (LIHTC) to support the development of a multifamily apartment building containing fifty (50) affordable housing units. In November 2025, KCG was awarded tax credits by the Indiana Housing and Community Development Authority (IHCDA). To maximize the project's competitiveness and increase the likelihood of a successful LIHTC application, the City partnered with KCG in support of the development. As part of that commitment, the RDC approved a Development Agreement on March 12, 2026, appropriating $1.0 million for the project and requiring the Developer to invest approximately $13 million in total project costs. As the project has advanced toward construction, site due diligence has identified conditions that have increased development costs. Among these conditions is the presence of buried building materials and unsuitable soils from previous site improvements that must be remediated prior to construction. The attached resolution represents the first step in establishing a South-Side TIF-funded loan to support the project. The resolution would increase RDC financial participation from $1.0 million to $1.7 million to address the additional costs associated with site remediation and poor soil conditions. If approved by the RDC and subsequently authorized through the required approvals by the South Bend Economic Development Commission and Common Council, staff anticipates returning to the RDC on October 22, 2026, with amendments to the Purchase Agreement and Development Agreement reflecting the expanded project scope. Under the proposed amendments, the Developer would commit to approximately $15 million in total project expenditures, an increase of $2 million from the original ______________ ___________Pres/V-Pres ATTEST: __________ _______ _ Date: _____________ _______ APPROVED Not Approved SOUTH BEND REDEVELOPMENT COMMISSION September 24, 2026 ✓ South Bend Redevelopment Commission 215 S. Dr. Martin Luther King, Jr. Blvd., Room 301, South Bend, Indiana Development Agreement, while maintaining its commitment to develop fifty (50) affordable housing units in accordance with the approved IHCDA application. The proposed loan structure is consistent with other LIHTC developments previously supported by the RDC, including Monreaux and Diamond View. Staff recommends approval of the resolution. If approved, the project will proceed through the remaining review and approval processes before returning to the Redevelopment Commission for final consideration of the related agreement amendments. RESOLUTION NO. 3679 A RESOLUTION OF THE SOUTH BEND REDEVELOPMENT COMMISSION AUTHORIZING THE USE OF SOUTH SIDE TIF REVENUES FOR THE HEARTWOOD COMMONS PROJECT AND OTHER RELATED MATTERS WHEREAS, the South Bend Redevelopment Commission (the “Commission”), the governing body of the South Bend Department of Redevelopment and the Redevelopment District of the City of South Bend, Indiana, exists and operates under the provisions of Indiana Code 36- 7-14, as amended from time to time (the “Act”); and WHEREAS, the Commission is committed to improving the City of South Bend, Indiana (the “City”) by administering and funding projects that support economic development, public infrastructure, and neighborhood revitalization; and WHEREAS, the Commission has negotiated a development agreement (the “Development Agreement”) with KCG Development LLC, a Florida limited liability company, dated as of March 12, 2026, for the construction of an apartment building with fifty (50) affordable housing units at 2018-2020 S. Main Street in the South Side Development Area (as hereinafter defined) in the City, with an approximate total development cost of Sixteen Million Seven Hundred Thousand Dollars ($16,700,000), including a private investment of no less than Fifteen Million Dollars ($15,000,000) to be expended in connection with the Project (collectively, the “Project”); and WHEREAS, KCG Donald & Main, LP, an Indiana limited partnership (the “Developer”), has been formed for the purposes of undertaking the Project and will be the borrower under the Loan Documents; and WHEREAS, the Commission is currently negotiating an amendment to the Development Agreement (the “Amendment”) pursuant to which the Funding Amount (as defined in the Development Agreement) will be provided in the form of a loan from the City to the Developer to fund a portion of the cost of the Project; and WHEREAS, the Commission has previously adopted a declaratory resolution, as subsequently confirmed and amended, which (i) declared the South Side Development Area (the “South Side Development Area”) as an economic development area pursuant to Section 41 of the Act, (ii) designated the South Side Development Area as an allocation area pursuant to Section 39 of the Act (the “South Side Allocation Area”), for the purpose of capturing property tax proceeds derived from incremental assessed valuation of real property in such allocation area which is in excess of the “base assessed value” (such property tax proceeds, hereinafter referred to as “South Side TIF Revenues”), (iii) created the South Side Allocation Area Fund (the “South Side Allocation Fund”) into which all South Side TIF Revenues are deposited, all pursuant to and as described in Section 39 of the Act, and (iv) approved an economic development plan for the South Side Development Area (the “Plan”); and WHEREAS, subject to the final terms of the Amendment to be approved by the Commission, the Commission would agree to contribute South Side TIF Revenues in an amount 2 of up to One Million Seven Hundred Thousand Dollars ($1,700,000), subject to appropriation, toward the cost of the Project, subject to the completion of all procedures required by law; and WHEREAS, the Commission has sufficient South Side TIF Revenues on deposit in the South Side Allocation Fund to contribute South Side TIF Revenues toward costs of the Project, which will directly serve and benefit, or be physically located in or connected to, the South Side Allocation Area; and WHEREAS, the Commission now desires to contribute a total amount of not to exceed $1,700,000 of South Side TIF Revenues, subject to appropriation thereof, toward the cost of the Project subject to the approval of the Amendment by the Commission and completion of all procedures required by law, and authorize and approve other actions related thereto, subject to the terms and conditions set forth below; NOW, THEREFORE, BE IT RESOLVED BY THIS SOUTH BEND REDEVELOPMENT COMMISSION AS FOLLOWS: SECTION 1. The Commission hereby finds and determines that the Project, and the use of South Side TIF Revenues to contribute to the Project as described herein, directly serves and benefits the South Side Allocation Area, furthers the purposes for which the South Side Development Area was created, and helps accomplish the Plan. SECTION 2. Subject to the approval of the Amendment by the Commission and the completion of all procedures required by law, the Commission hereby authorizes the contribution of not to exceed $1,700,000 of South Side TIF Revenues, subject to appropriation thereof, toward the cost of the Project. The use of South Side TIF Revenues as described herein shall be junior and subordinate to any currently outstanding or future bonds or lease obligations of the Commission payable from South Side TIF Revenues. SECTION 3. The Commission hereby authorizes a public hearing to be held on the appropriation of an amount of South Side TIF Revenues in an amount not to exceed $1,700,000 to provide funding to reimburse the City for draws on the loan from the City to the Developer and further authorizes the staff of the Department of Community Investment, with assistance from counsel, to cause the notice of such hearing to be published and posted as required by law. SECTION 4. This resolution shall take effect immediately upon adoption by the Commission. ADOPTED at a meeting of the South Bend Redevelopment Commission held on September 24, 2026, in Room 301, 215 Dr. Martin Luther King, Jr. Blvd., South Bend, Indiana, 46601. SOUTH BEND REDEVELOPMENT COMMISSION By: David Relos, President ATTEST: Eli Wax, Secretary DMS 55409627