The South Bend Common Council on June 23 approved an amendment to a previously authorized loan agreement that raises the forgivable TIF loan for the Monroe Development (the Fat Daddy site at Michigan and Monroe streets) from $2,300,000 to $3,300,000 and increases the developer's private investment commitment.

The approval authorizes deployment of tax-increment-financing dollars already appropriated by the Redevelopment Commission in the form of a forgivable loan that will be forgiven after full construction is completed. Caleb Bauer, executive director of Community Investment, told the council the amendment also increases the private investment commitment from $13,700,000 to $17,700,000 and slightly lowers the planned unit count from 60 units to 57.

Bauer said the development has been in process since 2022, that tax credits were preliminarily awarded in 2023, and that the developer is now ready to sell those credits and close financing. "Real estate purchase agreement was approved in 2022, and then tax credits were preliminarily awarded announced their award by IHCDA in 2023," Bauer said. He told the council the change reflects cost increases contractors and developers have experienced in recent years.

Developer Deborah Peters described cost pressures and steps the development team took to keep quality while lowering costs, including switching general contractors and deferring some of her fee. "We changed our contractor ... who has been excellent at coming up with cost cutting measures that will save the integrity of the building," Peters said. "To make up the difference, I deferred half of my fee, as well as took out some of our funds that we already spent, that we will not be reimbursed for to make sure that we could get this building done, at a very high level."

Council members who spoke during the Committee of the Whole and on the floor expressed support while acknowledging the need for multiple funding partners to build affordable housing. The ordinance was sent forward with a favorable recommendation in committee and passed on third reading by an 8-0 vote.

The amended agreement keeps the same completion timetable: 36 months after closing. According to staff presentation, the loan comes from TIF dollars the Redevelopment Commission had already appropriated; council approval was required because the Commission is providing the funds in the form of a forgivable loan.

Council members said they hope the extra funding and revised plan will allow the project to close financing and begin construction. The council gave final passage to the ordinance at the meeting; staff and the developer said they expect to close in the coming months and begin construction thereafter.