Both of the items under new business for the Warsaw Redevelopment Commission on Monday had to do with future residential developments.
The first was a resolution pledging tax increment revenues to pay the debt service on the Residential Infrastructure Fund (RIF) bond.
Warsaw Community and Economic Development Director Jeremy Skinner reminded the commission that in fall 2024 he sought their permission to apply for the state’s RIF loan program.
“We’re going to do the bond, but the state’s going to buy the bonds. They’re going to be the bond holders, so it’s like getting a low-interest rate from the state to do infrastructure,” he said.
The project is phase five of the Belle Augusta housing development on North CR 225E, according to a previous news release from The Indiana Finance Authority (IFA). Skinner said there will be an additional 40 new lots in the subdivision. The RIF loan is for $1,055,000.
“It will be specific to the infrastructure improvements,” Skinner said. “Per the RIF loan program, you can go up to $25,000 per lot, so that’s where that number comes from, with an additional $30,000 that could be used to cover the cost to issue (the bonds). So that’s where that $1,055,000 comes from.”
Explaining the resolution itself, Thomas Everett, government and public finance attorney with Barnes & Thornburg, said, “This resolution pledges tax increment revenues to pay the bonds that will be issued (for the) Residential Infrastructure Fund loan with the Indiana Finance Authority. Particularly, it’s the North Residential Economic Development Area (NREDA) TIF (tax increment financing) revenues that are being pledged, and those would go toward infrastructure improvements to support the additional expansion of the Belle Augusta subdivision.”
He said the resolution pledges up to 100% of the TIF revenues from the NREDA for a term of up to 20 years or the life of the bonds that will be issued and purchased by the IFA, whichever is less.
“While up to 100% of the revenues would be pledged, any excess TIF revenues that are in excess of the amount needed to pay the debt service on the bonds would be retained by the Redevelopment Commission and available for use by the Redevelopment Commission for any purpose under the Redevelopment Act,” Everett said.
The resolution also allows the Redevelopment Commission in the future to enter into obligations that would be on the same level as the RIF bonds. Any parity obligations would need to meet a 125% coverage test, he said, and that’s a requirement the IFA has when they purchase bonds.
Another requirement of the IFA relating to these bonds, Everett continued, “If there were to ever be any bonds issued in the future, on parity, the Authority would have to consent to that.”
The resolution before the commission Monday also authorizes the president and secretary of the commission to enter into a pledge agreement shortly prior to the closing of the bonds.
As the project is in the Northern Residential TIF District, Skinner said that district is generating over $300,000 in revenue a year, and the bond payment will be around $88,000 a year, though the amount of bond payment won’t be set until the bonds are issued.
“So plenty of coverage,” he said, to support the other projects the commission is working on.
As for the bond rate, Everett said the IFA resets its rates for the RIF program quarterly and the new rate will set April 1. He believed the current rate is a little over 3%, but that will reset April 1.
Council President Jack Wilhite asked how long would the bond go for, and Skinner said about 15-16, or until about 2040.
Skinner said the city of Warsaw was one of the first to create residential TIFs in the state, and they got capped at 20 years.
‘They changed it, then they changed it again, so there was a couple different time periods where we could have had more than the 20 years,” he said.
Skinner said the goal is to create housing opportunities.
“I think we’ve done a pretty good job of it, especially within this area,” he said. With this project and two others, he estimated there will be 300 to 400 housing units.
Commission President George Clemens asked what the average price would be. For Belle Augusta, Skinner said they’d probably be in the low $300,000 area, while the others will probably be in the mid to high $300,000 area.
Wilhite said, “In support of bringing in more homes, bringing in more places where people can buy and live, something Warsaw’s in desperate need of, I would move that we accept resolution 2025-0303.”
Bill Curl, commission member, seconded the motion and it passed 3-0. Members Mike Klondaris and Joe Thallemer were absent.
Skinner said an ordinance on the bonds will go before the Warsaw Common Council at their meeting Tuesday for a first reading, then the matter goes before the Economic Development Commission and then the commission will have another look at it.
The second item under new business was an engagement letter with Barnes & Thornburg for the financing of the Millworks project. An ordinance approving and authorizing the issuance of the Millworks project bond will go before the Warsaw Common Council on Tuesday.
The Millworks project is the mixed-use development by AP Millworks LLC that will go on the site of the former Owen’s store at 302 W. Market St. It will consist of approximately 85 apartment units and related uses, according to information provided. The total capital investment of the project is approximately $20 million. About 3,500 square feet of the development will be for retail and commercial.
The commission approved the engagement letter with Barnes & Thornburg.
The last action by the commission was the approval of claims, including $55.60 for NIPSCO for the property at 436 S. Buffalo St. and $1,726.25 to Baker Tilly for the airport industrial park bond issue.
The next meeting of the Warsaw Redevelopment Commission is scheduled for 4 p.m. April 14 in the council chambers at City Hall.