With the Gatke mixed-use development project expected to begin sometime this year, the Warsaw Common Council approved a resolution and an ordinance on first reading Tuesday to help move it along.
Warsaw Community and Economic Development Director Jeremy Skinner told the Council the process started back in July with the Redevelopment Commission. The project was brought back into the TIF (tax increment financing) district, the city “re-upped that TIF district,” and then they started the development agreement with Rebar Development for the Gatke Lofts (RW Lofts).
“And they have gotten to this point now where you have before you this lease agreement,” he said, followed by an ordinance that “pretty much moves that ball forward another inch or so as we get closer to the bond issue and closing on this Gatke project.”
Skinner said it was one more step and they’ve came a long way since July in the process.
Randy Rompola, bond counsel with Barnes & Thornburg, said the resolution essentially “approves a form of lease between the Redevelopment Commission and the Building Corporation. The commission took initial action at its meeting in December to approve the form of the lease.” The Redevelopment Commission is scheduled at its next meeting (Jan. 8) to approve the lease after a public hearing.
“What the lease does is provides a financing mechanism to provide the incentive to the developer,” Rompola said. “The incentive effectively is the city issuing bonds and making the proceeds of those bonds available to the developer. The bonds will be issued to the bond market. The security for the bonds would come by virtue of the lease that you are approving by this resolution tonight.”
The city issues the bonds and then provides the proceeds to the Warsaw Building Corporation, which was created years ago as a “on behalf of issuer” entity. The Building Corporation has only two roles it can do: It can lease projects to the civil city and it can lease projects to the Redevelopment Commission, he said.
“So, here, we’ve structured the transaction so that the Building Corporation will enter into the lease with the Redevelopment Commission and by that lease, the Redevelopment Commission can make a lease payment to the Building Corporation. It’s those lease payments that pay the bonds back,” Rompola said.
If for some reason the project TIF would fall short, Rompola said the developer is signing a taxpayer agreement, which is a guarantee by the developer to make payments in the event the project TIF is insufficient. He went into detail about the security set up for the project to make sure all the payments needed to pay for the project will be met.
Baker Tilly, the municipal adviser for the financial transaction, has reviewed it, Rompola said, and structured the financing so that the project TIF will be sufficient alone to pay the debt service on the bonds.
“Levels of security, ultimately for the bond holder ... you’re providing yourselves with some security knowing that the strongest security - the tax levy - shouldn’t be needed under any circumstance,” Rompola said, adding that it’s a common approach in Indiana for municipalities to use.
The resolution before the council Tuesday approved the form of the lease that the Redevelopment Commission and Building Corporation approved initially in December. By approving it Tuesday, the council authorized the lease to be signed. After the Redevelopment Commission’s public hearing and approval of the lease at their meeting Monday, the commission and Building Corporation will sign the lease and the financing will go forward, Rompola said.
As for the bond ordinance, it was approved on first reading with the second reading set for the council’s next meeting.
Closing on the bonds is anticipated in early March. The bond is not to exceed $3 million and bond payment not to exceed 25 years, but those are maximums so additional approvals aren’t necessary.
“So to simplify this even further, in essence, this project will end up paying for itself,” Councilwoman Diane Quance said.
“It should, yes,” Rompola agreed.
Skinner said the total project is around $20 million, with the city’s contribution being around $3.3 million (bond issue plus three years of cash payment of $400,000 per year out of the Economic Development Income Tax fund); the developer has to get a $10 million loan and he’s putting cash in on top of that. The state is providing about $4 million in tax credits.
There will be over 75 apartment units, but the mixed-use portion could add some additional residential units if they don’t become commercial.
Skinner said the warehouse building at the Gatke property will be rehabbed, with the rest demolished and then a new apartment building will connect to the warehouse building, with parking and landscaping that tie in to the greenway.
In other business:
• The council approved a resolution transferring $105,554 from the fire territory equipment replacement fund to the general obligation bond fund. The transfer is temporary and must be repaid by Dec. 31, 2024.
Clerk-Treasurer Lynne Christiansen said, “So we noticed ... when our budget came in late last year that there had been some numbers transposed on our 1782 Notice for last year. The numbers transposed were for the general bond collections where we collected tax revenue in. With our last distribution in December, we fell short of the payment for Feb. 1, and this is for the fire station number three being built.”
She looked at state statutes and found that they could borrow money from a fund that has a tax base. Since the fire territory equipment replacement fund is “robust,” she said they were going to borrow from there but it has to be paid back by the end of the year.
Christiansen stated she assumed they would have to do it again at the first or second meeting of 2025, too, depending on how the city’s tax collections go.
• The council unanimously approved on second reading an ordinance amending the city’s employee personnel policy handbook for the fire department, as recommended by Human Resource Director Denny Harlan. It was approved on first reading at the Council’s Dec. 18 meeting.
He said Tuesday, “What this has done is change the language to where we will pay the fire fighters time and a half when they are called back in, either covering shifts for those that are on vacation or out sick, or if there’s a large fire that they need all hands on deck for - those guys that come back that are not scheduled to be on duty that day are going to make time and a half.”
Councilman Juergen Voss asked if it “kicked in” after 40 hours or was it for any time. Harlan said it was for “any time they are not regularly scheduled.”
• Mayor Jeff Grose gave the oath of office to Rick Keeven, who serves on the Warsaw Board of Zoning Appeals; and to Quance and Voss, who serves on the Warsaw Plan Commission.
• Council President Jack Wilhite was elected by the council to continue serving as president for 2024.
• Grose told the council due to the Martin Luther King Jr. federal holiday on Monday, Jan. 15, the council’s next meeting will be at 7 p.m. Tuesday, Jan. 16.