Gatke Property To Become A Mixed-Use Development
May 1, 2023 at 10:57 p.m.
Gatke Property To Become A Mixed-Use Development
By David [email protected]
Warsaw Community Economic and Development Director Jeremy Skinner summarized the 38-page agreement at Monday’s meeting.
“So the project is roughly an $18.3 million project, a mixed-use project - 75 apartment, roughly 12,000 (square feet) of commercial space, it could be a combination of residential and commercial, depending on” how it gets done, he said. “The big thing here, the takeaway is 75 residential apartments, with that mixed-used component.”
Of the $18.3 million, the state is giving $4 million in redevelopment tax credits and the city is contributing $3.3 million as its incentive toward the project. Rebar Development is putting $11 million toward the project.
“Our portion of the project will come from a couple different funding points. One would be a bond issue based on taxes this project is going to generate,” Skinner said. “That’s going to equate to a certain amount of money. After that, the remainder of the incentive will come from additional redevelopment funds available, potentially EDIT and other grant opportunities, to get to that total $3.3 million.”
He said the city’s incentive is being broken up into a three- or four-year period. One payment of $2.1 million would be made to the developer at closing. The city then would make three payments of $400,000 each in 2024, 2025 and 2026.
“The bond is a portion of our contribution. It’s hard for me to say exactly what that bond will yield at this point because it’s a combination of interest rates and bond costs and capitalized interest, depending on construction time from start to finish. So when we’re doing that bond issue, all those details will be laid out. And once the bond goes out to bid, we’ll know what it’s going to generate, but the thought is it’s going to generate somewhere between $1.5 million and $1.7 million, somewhere in that ballpark,” Skinner explained.
The $2.1 million from the city will be paid in cash at closing this year. The bond is being paid for by the taxes generated from the project, he said.
The project agreement lays out what the developer and the city are going to do, but more “pieces of the puzzle” will be laid out as it comes time to do them, like the bond issue. Skinner said the project agreement just “sets the stage” for everything else to come.
Redevelopment Commission President Tim Meyer asked if additionally the city would be responsible for the demolition of what remains of the Gatke building. Skinner said he doesn’t know yet but there were two options to do it and right now the demolition costs were being rolled into the project.
Rebar Development owner Shelby Bowen previously talked to the Redevelopment Commission at their March 7, 2022, about the Gatke property. He returned for Monday’s meeting.
“It’s really been several years - two, three years probably - since we started these discussions. And since then, a lot has happened that culminates really into this major step forward tonight,” Bowen said.
Since he last met with the commission, he said Rebar has executed on other projects, including one in Lafayette and another in Speedway. However, he said things seem harder than ever now with the interest rates and cost of construction going up, but Rebar has been a partner that the banks and state trust and invest in.
He said the project is much the same as it was when the memorandum of understanding was approved. The only difference was that more money was needed for it because of the economic environment.
Bowen gave credit to Mayor Joe Thallemer, Skinner and KEDCO CEO Alan Tio for working hard with the state to get Indiana’s support for the project.
“Rebar is going to invest also about the same amount of cash as the city - $3.3 million - on top of the debt, which I am a personal guarantor, so that’s very real to me,”?Bowen said. “And then the bond repayment, we will sign a minimum taxpayer payment.”
He said the project agreement includes all kinds of protections for the city before and after the close.
“This agreement allows us to make promises to each other, but before we close, which that closing will occur - that’s when your bond will actually close and those commitments will come to fruition - prior to that closing we’ll have a full set of plans so Jeremy and his team can review to make sure they’re consistent with the promises we made today, and we’ll have a guaranteed maximum cost on the project so you know we can deliver that project. And we’ll also have our loan and financing in place,” Bowen said.
On the project itself, he said they will try to preserve the steel structure of the Gatke “warehouse” and rebuild that building to kind of reflect its history, though not as big.
The project will be connected to the trail system, including a raised crosswalk across Winona Avenue. A plaza and trailhead are included in the project, too.
Councilman Mike Klondaris said it’s an exciting project and the city has been trying to find something to do with that property for years.
“Finally, I think we have a good partner and a great idea. The renderings look really nice,” Klondaris said.
Thallemer said the city has been entertaining ideas of what to do with the property since he and Councilman Jeff Grose started on the council 23 years ago.
“We’ve entertained a lot of different ideas. I think the most important thing that we need to understand is that the state has shown how important it is for Warsaw to succeed with this workforce housing project. We’ve all done a great job with the affordable housing. We’re on our third project now with Arnolt and some of the others. And this workforce housing project - the costs are such that you can’t build it and create market-rate rents that are going to be useable. You’ve got to have investment from the city and the state, and I think that’s what we’re asking here,” Thallemer said.
He said the city recognizes that workforce housing is the No. 1 concern when it comes to maintaining what the community has. Thallemer said Bowen has provided a fantastic project that will really improve the McKinley Street and Argonne Road areas.
Thallemer said Tio and KEDCO played a big part in securing the tax credits from the state. Tio said these kind of “headlining” partnerships really give the city and county something to talk about.
“Yes, Gatke’s been talked about for a while, but these projects also take a lot of time to put together, figure out how all the pieces fit, find the right partnerships ... but a lot of work takes place behind the scenes,” Tio said, and a lot more work is happening behind the scenes.
Grose made the motion to approve the agreement subject to including the three $400,000 payments in 2024-26, Klondaris seconded it and the Redevelopment Commission unanimously approved the agreement.
Built in 1906, what remains of the Gatke building is at 2321 S. McKinley St., Warsaw. Gatke Corporation owned the property beginning in 1926, but ceased production in 1992. The city has owned the property since 2003.
Warsaw Community Economic and Development Director Jeremy Skinner summarized the 38-page agreement at Monday’s meeting.
“So the project is roughly an $18.3 million project, a mixed-use project - 75 apartment, roughly 12,000 (square feet) of commercial space, it could be a combination of residential and commercial, depending on” how it gets done, he said. “The big thing here, the takeaway is 75 residential apartments, with that mixed-used component.”
Of the $18.3 million, the state is giving $4 million in redevelopment tax credits and the city is contributing $3.3 million as its incentive toward the project. Rebar Development is putting $11 million toward the project.
“Our portion of the project will come from a couple different funding points. One would be a bond issue based on taxes this project is going to generate,” Skinner said. “That’s going to equate to a certain amount of money. After that, the remainder of the incentive will come from additional redevelopment funds available, potentially EDIT and other grant opportunities, to get to that total $3.3 million.”
He said the city’s incentive is being broken up into a three- or four-year period. One payment of $2.1 million would be made to the developer at closing. The city then would make three payments of $400,000 each in 2024, 2025 and 2026.
“The bond is a portion of our contribution. It’s hard for me to say exactly what that bond will yield at this point because it’s a combination of interest rates and bond costs and capitalized interest, depending on construction time from start to finish. So when we’re doing that bond issue, all those details will be laid out. And once the bond goes out to bid, we’ll know what it’s going to generate, but the thought is it’s going to generate somewhere between $1.5 million and $1.7 million, somewhere in that ballpark,” Skinner explained.
The $2.1 million from the city will be paid in cash at closing this year. The bond is being paid for by the taxes generated from the project, he said.
The project agreement lays out what the developer and the city are going to do, but more “pieces of the puzzle” will be laid out as it comes time to do them, like the bond issue. Skinner said the project agreement just “sets the stage” for everything else to come.
Redevelopment Commission President Tim Meyer asked if additionally the city would be responsible for the demolition of what remains of the Gatke building. Skinner said he doesn’t know yet but there were two options to do it and right now the demolition costs were being rolled into the project.
Rebar Development owner Shelby Bowen previously talked to the Redevelopment Commission at their March 7, 2022, about the Gatke property. He returned for Monday’s meeting.
“It’s really been several years - two, three years probably - since we started these discussions. And since then, a lot has happened that culminates really into this major step forward tonight,” Bowen said.
Since he last met with the commission, he said Rebar has executed on other projects, including one in Lafayette and another in Speedway. However, he said things seem harder than ever now with the interest rates and cost of construction going up, but Rebar has been a partner that the banks and state trust and invest in.
He said the project is much the same as it was when the memorandum of understanding was approved. The only difference was that more money was needed for it because of the economic environment.
Bowen gave credit to Mayor Joe Thallemer, Skinner and KEDCO CEO Alan Tio for working hard with the state to get Indiana’s support for the project.
“Rebar is going to invest also about the same amount of cash as the city - $3.3 million - on top of the debt, which I am a personal guarantor, so that’s very real to me,”?Bowen said. “And then the bond repayment, we will sign a minimum taxpayer payment.”
He said the project agreement includes all kinds of protections for the city before and after the close.
“This agreement allows us to make promises to each other, but before we close, which that closing will occur - that’s when your bond will actually close and those commitments will come to fruition - prior to that closing we’ll have a full set of plans so Jeremy and his team can review to make sure they’re consistent with the promises we made today, and we’ll have a guaranteed maximum cost on the project so you know we can deliver that project. And we’ll also have our loan and financing in place,” Bowen said.
On the project itself, he said they will try to preserve the steel structure of the Gatke “warehouse” and rebuild that building to kind of reflect its history, though not as big.
The project will be connected to the trail system, including a raised crosswalk across Winona Avenue. A plaza and trailhead are included in the project, too.
Councilman Mike Klondaris said it’s an exciting project and the city has been trying to find something to do with that property for years.
“Finally, I think we have a good partner and a great idea. The renderings look really nice,” Klondaris said.
Thallemer said the city has been entertaining ideas of what to do with the property since he and Councilman Jeff Grose started on the council 23 years ago.
“We’ve entertained a lot of different ideas. I think the most important thing that we need to understand is that the state has shown how important it is for Warsaw to succeed with this workforce housing project. We’ve all done a great job with the affordable housing. We’re on our third project now with Arnolt and some of the others. And this workforce housing project - the costs are such that you can’t build it and create market-rate rents that are going to be useable. You’ve got to have investment from the city and the state, and I think that’s what we’re asking here,” Thallemer said.
He said the city recognizes that workforce housing is the No. 1 concern when it comes to maintaining what the community has. Thallemer said Bowen has provided a fantastic project that will really improve the McKinley Street and Argonne Road areas.
Thallemer said Tio and KEDCO played a big part in securing the tax credits from the state. Tio said these kind of “headlining” partnerships really give the city and county something to talk about.
“Yes, Gatke’s been talked about for a while, but these projects also take a lot of time to put together, figure out how all the pieces fit, find the right partnerships ... but a lot of work takes place behind the scenes,” Tio said, and a lot more work is happening behind the scenes.
Grose made the motion to approve the agreement subject to including the three $400,000 payments in 2024-26, Klondaris seconded it and the Redevelopment Commission unanimously approved the agreement.
Built in 1906, what remains of the Gatke building is at 2321 S. McKinley St., Warsaw. Gatke Corporation owned the property beginning in 1926, but ceased production in 1992. The city has owned the property since 2003.
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