The first of two public meetings on the city of Warsaw Public Works Building project drew no members of the public Tuesday at the Redevelopment Commission meeting.
The second public meeting is set for 4:30 p.m. March 3 in the council chambers at City Hall.
On Feb. 3, the Redevelopment Commission and Warsaw Common Council heard presentations on the building project and approved resolutions to advertise the public hearings. The cost of the project is not to exceed $14.5 million, though it’s expected to come in closer to $13 million.
Randy Rompola, with Barnes & Thornburg LLP, explained Tuesday that the public hearing wasn’t on the resolution approving a proposed lease related to the project.
“The requirements are that you have two public hearings - one today and then one in March. And this resolution then would be just simply to approve the form of the lease and then have a second public hearing on the lease in March as well. So, what you would be doing today is having a standalone public hearing - open it, close it - and then go on to the resolution. It’s a subtle difference, but it’s important to us from a legal standpoint,” he said.
Andy Mouser, financial advisor with Baker Tilly, reminded the Redevelopment Commission that the potential financing structure for the project would be through a property tax-supported bond issue due to the size of project. It is subject to controlled project procedures, he said, and a piece of those procedures is putting together preliminary determination information.
The maximum lease rental payment payable under the lease is $1.3 million, but Mouser said based on the size of the project and current interest rates, that payment should be below $1.1 million. The maximum term of the lease is 20 years. The estimated interest rate range on the financing is between 3.75 and 4.77%. The bonds have a total estimated interest cost of $6,770,079, according to the preliminary determination narrative provided by Mouser at Tuesday’s meeting.
“The information sheet also includes information on the city’s existing debt service levies through property tax. So, between the 2016 general obligation bonds for the fire station project and the 2023 park district bonds for the parks department project, the city currently levies just over $483,000, and that results in a debt service tax rate of just over 3 cents per $100 of assessed value,” he stated.
The information provided also includes estimates on the new financing.
“So, again, assuming a payment of just under $1.1 million, isolated impacts from just this financing alone would be just over 7 cents,” he said, pointing out that there’s a number of different factors that should reduce what that actual impact is on taxpayers. “One, you have been and continue to be a fast-growing community so as assessed values grow, it continues to push that tax rate impact down. In fact, we’ve seen quite a reduction in tax rates over the last several years.”
The Redevelopment Commission also could use TIF (tax increment financing), EDIT (economic development income tax) and other revenues to buy down the debt service.
He also reminded the commission many of the city’s taxpayers are already at the property tax caps, so any increase in that debt service tax rate would not result in an increase in tax bills because they’re already at their 1, 2 or 3% caps in many cases.
“We believe this will be a mostly tax rate neutral financing for the project,” Mouser concluded.
Tom Everett, Barnes & Thornburg attorney, reminded the commission that the project is being structured as a lease financing with the Redevelopment Authority.
“The lease will be between the Redevelopment Commission and Redevelopment Authority, under which the Redevelopment Authority will lease roads to the Redevelopment Commission, which in turn will allow the Authority to then issue lease rental bonds, which will finance the cost of the project,” he explained.
The reason roads are being leased is because it’s more efficient over the long term for the city and it will reduce the financing cost to the city over the long term, he continued. The roads to be leased include a portion of Center and Parker streets and Husky Trail in the city.
Redevelopment Commission President George Clemens opened the public hearing, and when no one spoke up, he closed the hearing.
Councilman Mike Klondaris made a motion to approve the resolution, with member Bill Curl providing the second. The motion unanimously passed.
The resolution sets a public hearing, in addition to the second preliminary determination public hearing, on March 3, as well as preliminarily approves the form of the lease, Everett explained.
Earlier in the meeting, the commission approved two engagement letters for the building project. The first was with Barnes & Thornburg LLC to serve as bond counsel to the city, and the second was with Baker Tilly to provide financial bond issuance oversight.
Not related to the Public Works building project, the commission approved an engagement letter with Bakery Tilly for the Belle Augusta Indiana Finance Authority (IFA) financing for the Residential Infrastructure Fund (RIF) loan requested by the city from the state.
Warsaw Community and Economic Development Director Jeremy Skinner said he got the commission’s approval for the loan in 2024.
“We were awarded over a million dollars as part of that infrastructure loan program,” Skinner said. The bond issue will be covered by the Northern Residential TIF. “So this engagement letter is for those financial services on that bond issue.”
Explaining the project, he said there’s about $1 million in infrastructure costs, the developer has a loan for more than $26 million and is putting in about $800,000 in cash. The homes on the roughly 90 lots would range from about $250,000 to $280,000, Skinner estimated. Ideally, the homes would generate over $2 million for the residential TIF. The buildout will cover the bond issue.
In other business, the commission approved:
• The notice to award the CR 300N reconstruction bid to Phend & Brown Inc. for $724,224.60. The bids were opened Feb. 7 at the Board of Public Works and Safety. The project is being covered 50% by the state’s Community Crossings Matching Grant program. The other half will be covered by Northern TIF funds.
• A claim for $59.88 from NIPSCO for the former Marsh property at 436 S. Buffalo St., Apt. A.