Two resolutions before the Warsaw Redevelopment Commission on Monday were for starting the process to finalize the Gatke multi-use development project.
The project will transform the old Gatke property at 2321 E. Winona Ave. into 75 units of housing, as well as commercial and office space.
Community Economic and Development Director Jeremy Skinner told the commission that bond issue for the project will probably be sometime in February or March.
The first resolution Monday was for the disposal of the property to the developer, Rebar Development, for $1.
Skinner said the city has owned the Gatke property since 1999. The city received some loans from the state to remove the asbestos, remove contaminants and do some demolition to clean up the site. Those loans were paid off in 2009 or 2010, he said. Since then, the city has actively been trying to redevelop the property but nothing materialized until now.
“This time, we’re pretty confident we’re going to get this through to the finish line,” he stated.
The main warehouse will remain and be remodeled.
Skinner said the project will have three funding sources for it. Rebar will have a bank loan for about $10 million, as well as cash in it. There’s $4 million in state tax credits for it, and the city’s participation will be the bond issue not to exceed $3.3 million. The total project value will be around $20 million.
The bond will be paid back by the taxes generated by the project, he said. Rebar will agree to pay a certain amount that will pay for the bond, Skinner said, and the taxpayer agreement bond will go on the market.
“So, let’s say whatever our bond issue is, we don’t know that yet, we’ll get to that as we go through this process, but whatever that bond ends up being, the tax payments that need to be made to make that bond, he will guarantee to make those tax payments,” he said.
The resolution for the disposal of the property was unanimously approved, and then the commission approved the second resolution, which authorized the publication of notice of public hearing in connection with the Gatke property.
Randy Rompola, bond counsel with Barnes & Thornburg, explained the second resolution was the first step in the lease financing.
“What it provides for is the lease between yourselves as the lessee and the not-for-profit building corporation. This involves a bond financing. So, the city of Warsaw would issue bonds that would be payable from the increment that this project would generate. And the way to secure the bonds, we need to have a lease in place, so we use the Redevelopment Commission because you have access to the tax increment and the building corporation because the statute allows you to enter into a lease with a redevelopment authority or building corporation, and here it makes more sense to do a building corporation,” Rompola explained.
Explaining the process, he said the commission will enter into a lease with the building corporation and it technically will be leasing a portion of East Market Street from Argonne Road to Ind. 15.
“And the reason for that is that the tax increment that will secure the bonds has to be paid from the building corporation to the city and the mechanism that will provide that security would be the lease, so that there will a lease in place between the building corporation and the Redevelopment Commission. The increment that will be generated from the project will be paid by you as a lease rental to the building corporation. The building corporation will then technically pay that to the city, but in reality they’ll be paying the bond trustee,” Rompola said.
He said it’s a mechanism that is commonly applied in Indiana, particularly for economic development purposes.
The lease is not to exceed 25 years and not to exceed an annual lease rental of $250,000. Both of those are subject to be reduced once the bonds are finally sold.
The approval process includes a public hearing with the commission, approval by the city council, approval of financing by the Economic Development Commission and the bonds going to market and closing at the end of February or early March.
With the commission adopting the resolution Monday, Rompola said the public hearing on the lease will be at the commission’s Jan. 8 meeting after the council approving the lease on Jan. 2. The building corporation was scheduled to approve the form of the lease Tuesday, Dec. 5.
Commission member and Councilman Mike Klondaris asked who the building corporation was. Rompola said it’s a not-for-profit corporation whose sole purpose was to act on behalf of the city. Members include the mayor, city attorney Scott Reust and Chris Hanson.
In other business, the commission:
• Approved the agreement and notice to proceed with G & G Hauling & Excavating for Sheldon Street improvements. The bid was awarded to G & G at their last meeting.
The project includes sidewalk work, lane widening and striping.
• Approved an amendment to the existing agreement for $4,950 between the city and Wessler Engineering for additional work that was completed on the Airport Road lift station and force main. The additional cost brings the total estimated fee for the project to $156,527.
Skinner said the project is 99% done except NIPSCO still has to get power out to the lift station, which hopefully will be done by the end of this week.
• Recognized President Tim Meyer with a plaque as Meyer has stepped down from the commission after serving on it since 2010.
Skinner said on behalf of the Redevelopment Commission and the city of Warsaw, they wanted to present the plaque to Meyer in recognition and appreciation of his service to the city and the Redevelopment Commission.
Meyer gave credit to his predecessors. When he started in 2010, Charlie Smith was president of the Redevelopment Commission. Meyer said he learned a lot from Smith. He then also served with Rick Snodgrass, who he served as vice president and president with over a number of years.
“I learned a lot from both. I hope I was able to pass that (knowledge) on to you. Thank you very much for allowing me to serve on the board. I appreciate it very much,” he said. “I will miss all of you guys.”
• Approved the December claims, including: $3,145, ER Engineering Resources; $5,000, A & Z Engineering; $37,687.76, HRP Construction; $245,812.50, HRP Construction; $477.88, Indiana American Water; $120, Skinner; $200, Liberty Mutual; $600,000, city of Warsaw; $59,896.88, Regions Corp. Trust; and $5,885, Emans Engineering.
Claims also included five payments to Huntington National Bank for 2024 bond payments for $141,367.50; $55,775; $29,112.50; $83,500; and $192,000.