Loading...
HomeMy WebLinkAbout5B1 Lafayette Building Update - SignedSouth Bend Redevelopment Commission 215 S. Dr. Martin Luther King, Jr. Blvd., Room 301, South Bend, Indiana Redevelopment Commission Agenda Item DATE: 10/5/2026 FROM: Joseph Molnar, Deputy Director Department of Community Investment SUBJECT: Lafayette Building Update 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: Update regarding the Lafayette Building and consideration of next steps should redevelopment efforts not result in a viable project SPECIFICS: Below are multiple updates to the RDC regarding the Lafayette Building. BUILDING CONDITION On June 8, 2026, a catastrophic fire occurred at the Lafayette Building in downtown South Bend. Prior to the fire, the RDC and a private developer had entered into a purchase agreement and development agreement for the property. In late 2024 and early 2025, engineers conducted a detailed assessment of the Lafayette Building's structure as part of the previous development agreement. By opening walls and floors, they determined how the building's load-bearing elements were constructed and connected. The investigation found that key structural components were either inadequate under current building codes, had been removed during past renovations, or were damaged in the 1940 fire and never properly replaced. As a result, the project would have required rebuilding much of the building floor by floor. This would have necessarily included strengthening the foundation, reconstructing the ground floor, and then rebuilding each upper floor through the fifth floor. Because of these extensive structural needs, the project cost estimate increased from approximately $8-10 million to $12-15 million,. The developer ultimately elected not to proceed with the project, the purchase of the property did not close, and the development agreement was terminated. The fire this past June consumed the majority of the roof structure, causing the skylight to collapse to the ground floor. The roof helps brace the exterior masonry walls, which otherwise lack adequate support. As a result, parts of the fifth-floor masonry are at risk of collapsing. The fire, along with the approximately one million gallons of water used to extinguish it, caused additional damage to the fifth- ______________ ___________Pres/V-Pres ATTEST: __________ _______ _ Date: _____________ _______ APPROVED Not Approved SOUTH BEND REDEVELOPMENT COMMISSION October 8, 2026 ✓ South Bend Redevelopment Commission 215 S. Dr. Martin Luther King, Jr. Blvd., Room 301, South Bend, Indiana floor masonry and exposed lower-floor wood structural members to moisture. Winter freeze-thaw cycles are expected to accelerate the deterioration of the masonry and further weaken the building. The effects of the fire significantly complicate any effort to rehabilitate the building in advance of new occupancy. A third-party engineering consultant estimates the cost of a ‘bare bones’ rehabilitation to be approximately $11M. Beyond that, the building would still need mechanical, electrical, and plumbing systems, fire protection, an elevator, architectural buildout, and interior finishing which would then likely drive the total rehabilitation cost over $20M. INSURANCE The cause of the June 8, 2026 fire remains under investigation by the State Fire Marshal. Nevertheless, the Lafayette Building was covered under a property insurance policy maintained by the City at the time of the fire, and City staff immediately filed an insurance claim following the loss. The insurer investigated the claim, including the condition, maintenance, and security of the building prior to the fire, and ultimately determined that coverage applied and issued a total payment of $3,596,650 to the City. Those proceeds have been deposited into the Redevelopment Commission’s general fund as the building’s owner. REDEVELOPMENT EFFORTS & NEXT STEPS Staff will continue to actively pursue redevelopment opportunities for the Lafayette Building and remain engaged in discussions with potential local development partners regarding the property's future. However, given the building's deteriorating condition, the documented structural concerns, and the increased risk of further damage during the upcoming winter months, staff is requesting authority to proceed with demolition if a feasible redevelopment plan cannot be secured within an appropriate timeframe. This authority would allow the City to respond promptly should redevelopment efforts prove unsuccessful, while also protecting public safety, limiting additional deterioration, and avoiding costs associated with continued stabilization and emergency maintenance of the structure. Staff would use funds already appropriated by the RDC for the property and approved in Resolution No. 3673. If those funds were insufficient, staff requests authority to utilize funds in the RDC General Fund, including insurance proceeds received in connection with the fire, for demolition and related costs. In the event staff determines that demolition is warranted, RDC staff will provide timely notice to the Commission and ensure that Commissioners are kept informed of the status of redevelopment efforts, the basis for the demolition decision, and the anticipated next steps. If staff identifies a viable redevelopment opportunity, any proposed acquisition, development, or related agreements will be presented to the Commission for approval. Staff requests authority to proceed with demolition of the Lafayette Building if ongoing redevelopment efforts do not result in a viable redevelopment opportunity and to utilize insurance proceeds received in connection with the fire, if necessary, to fund demolition and related costs.