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HomeMy WebLinkAboutOrdinances - ORD-09-1454 - 01/19/2009 - APPROVE GARY LANG BUSINESS DISTRICT PLANORDINANCE NO.ORD-09-1454 AN ORDINANCE APPROVING THE GARY LANG BUSINESS DISTRICT PLAN IN THE CITY OF MCHENRY, MCHENRY COUNTY, ILLINOIS WHEREAS, a petition has been filed by Gary Lang Auto Group requesting approval of the Gary Lang Business District Plan hereby attached as Exhibit B; and WHEREAS, the McHenry City Council has considered the proposed Gary Lang Business District Plan (PLAN) and finds that the approval of the PLAN is consistent with the objectives of the City of McHenry to protect: the public health, safety, morals and general welfare of its residents. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THI? CITY OF MCHENRY, MCHENRY COUNTY, ILLINOIS, AS FOLLOWS: SECTION 1: That the Gary Lang Business District Plan for the property located at 1103 South Route 31 and described on Exhibit A "Legal Description of the Subject Property" hereby attached is hereby approved. SECTION 2: All Ordinances or parts thereof in conflict with the terms and provisions hereof are hereby repealed to the extent of such conflict. SECTION 3: This Ordinance shall be published in pamphlet form by and under the authority of the corporate authorities of the City of McHenry, McHenry County, Illinois. SECTION 4: This Ordinance shall be in full force and effect from and after its passage, approval, and publication in pamphlet form as provided by law. PASSED and APPROVED THIS 19t` DAY OF January, 2009. AYES: Santi, Glab, Schaefer, Murgatroyd, Wimmer, Peterson, Condon. NAYS: None ABSTAINED: None ABSENT: None NOT VOTING: None ATTEST: CITY L C _0 Exhibit A Legal Description of the SUBJECT PROPERTY Lot 1 and that part of Lot 2 of McHenry Corporate Center Unit 4 according to the plat thereof recorded January 30, 1996 as Document No 96R005000 lying easterly of the easterly line of Lot 2 of McHenry Corporate Center Unit 7 according to the plat thereof recorded May 26, 1999 as Document No 1999R0039000, ALSO Lots 3 and 4 of said McHenry Corporate Center Unit 7 of Section 10, Township 44 North, Range 8 East of the Third Principal Meridian in McHenry County, Illinois Exhibit B to the Ordinance Approving the Business District Plan Business District Plan - Gary Lang Business District Summary. The City of McHenry, Illinois relies heavily on sales tax revenue to fund a significant portion -- between 45 and 50% - of the general operations of the city organization. Currently, the city receives approximately $7 million in sales tax revenue annually. As such, the economic development efforts of the city have primarily focused on attracting, retaining, expanding and improving retail developments. The goal of these efforts has been to preserve the property tax base, promote the expansion of sales tax generating commercial development, and attract and retain jobs within the community. New car dealers have historically been large producers of sales tax revenue; for local and state governments. Consequently, it makes financial sense for municipalities to protect the large sales tax generators it currently has while trying to expand these businesses or attract new businesses to the area. Within the last decade, competition among municipalities for new car dealers in western Lake County and McHenry County has increased. It is not uncoinmon for one village or municipality to provide incentives to attract new automobile dealers at the expense of other entities. Rebate agreements (sales tax rebate agreements) have been the predominant form of incentive used in these efforts at attraction and retention. The Gary Lang Auto Group has been a successful corporate citizen of the city of McHenry for more than 20 years. The business has grown to sell products by a number of different auto manufacturers including Chevrolet, Pontiac, Buick, GMC, Cadillac, and Subaru. Due to the success of the Gary Lang Auto Group, it has become an attractive target on which other municipalities have focused their economic development efforts in an attempt to get the dealership to relocate. In an effort to re-establish the mutual long term commitment between the Gary Lang Auto Group and the city of McHenry, an incentive agreement has been negotiated between the two parties to provide a graduated level of sales tax rebates back to Gary Lang in exchange for the physical expansion of the Gary Lang Auto Group to not only provide additional showroom and display lot room but also to add new product lines. The incentive agreement, attached as Appendix A of this Business District Plan, provides a sales tax rebate to be used for the hard (land, construction, etc.) and soft costs (engineering, architectural, etc) of one or more expansion projects and is limited to the totals cost of the improvement. The annual rebate is based on the sales level as enumerated in Section 8 of the Business District Development Agreement attached to this plan as Appendix A. With regard to the Business District Plan, the rebate is the only city action included in the Business District Plan. ['here are no additional taxes being enacted, no funds are being borrowed, and eminent domain is not being exercised. The sole: purpose for creating the Business District is to provide for the incentive agreement (sales tax rebate) for the costs of the expansion of the business. Enabling Legislation. As a non -home rule community, the city of McHenry must have: explicit authority from the state to provide a financial incentive (sales tax rebate) for the development or redevelopment of property for the expansion of an automobile dealership. The statute providing the authority for the city of McHenry to create a Business District (65 ILCS 5/11-74.3) provides the explicit authority necessary to create the Business District and enter into a Business District Development Agreement with Gary Lang for the expansion of the dealership. In general terms, the above referenced statute enumerates certain powers available to municipalities through the creation of business districts. These powers include the following: • The power to approve of all development and redevelopment proposals for a business district; • The use of eminent domain to acquire real estate; • To borrow funds as necessary for business district development and redevelopment; • To enter into contracts for the purposes of carrying out a business district development or redevelopment plan; • To expend public funds for the implementation of business district plans; • To impose -a retailers' occupation tax and a service occupation tax within the business district to fund the implementation of the business district plan; and, • To issue obligations (bonds) to provide for the payment of business district costs. For the Gary Lang Business District, the city will be entering into a Business District Development Agreement to provide a financial incentive for the physical expansion of the Gary Lang Auto Group and to expend public funds for the implementation of the Business District Plan. No borrowing of funds is anticipated or included in the Business Plan nor is the imposition of a retailer's occupation tax or service occupation tax included. The entire scope of financial incentive is limited to that specifically addressed in the Business District Development Agreement with Gary Lang included as Appendix A to this Business District Plan. Requirements and Procedures for the Creation of the Gary Lang Business District. The enabling legislation for the creation of business districts is definitive in the requirements that must be met for the creation of a business district with the intention of imposing an additional retailers' occupation tax, service occupation tax, or a hotel operators' occupation tax. The legislation is less clear on the requirements for business districts that will not be assessing these additional taxes such as the Gary Lang Business District. One item that is clearly required prior to approval of the Gary Lang Business District is that the corporate authorities of the city shall find that the Business District Plan conforms to the Comprehensive Plan for the city of McHenry. The McHenry City Council declared such a finding in the Resolution of Intent approved at the December 15, 2008 regular City Council meeting. The resolution is attached as Attachment 1. In addition, 65 ILCS 5/11-74.3 requires the city to create a specific Business District Plan and to approve the plan following a public hearing. The Gary Lang Business District can also be 2 created following the public hearing. A public hearing is scheduled for January 19, 2009. Notice for the public hearing was published on January 7, 2009. The creation of the Gary Lang Business District by ordinance is scheduled for consideration and approval by the corporate authorities following the close of the public hearing. Likewise, the consideration and approval of the Gary Lang Business District Plan will be considered and approved upon close of the public hearing. 65 ILCS 5/11-74.3 also enumerates a number of procedures and requirements that must be met if the corporate authorities of the city desire to impose a tax by ordinance for an additional retailers' occupation tax, a service occupation tax, or a hotel operators' occupation tax in the business district. Since the city of McHenry does not intend to implement any of these taxes, adherence to the supplemental designation procedures is not required. Location of the Business District. The Gary Lang Business District is delineated generally by the aerial map included as Attachment 2 to this document. Attachment 3 provides the legal description for the property included within the Business District. The common address for the property in question is 1103 S. Route 31, McHenry, IL 60050. All property located with the Gary Lang Business District is owned, operated or otherwise controlled by Gary Lang. Name of the Business District. The name of the proposed business district shall be the Gary Lang Business District. General Description of Each Project. Gary Lang Auto Group will be expanding the current car dealership to include additional showroom area, additional display lots, and additional service facilities. Specific improvements covered by this Gary Lang Business District Plan are addressed in the Business District Development Agreement included with this plan as Appendix A. Estimated Project Costs. The total costs for the expansion of the dealership, including land, construction labor and materials, engineering and architectural services, franchise fires, permits, licenses, and fees, are not expected to exceed $15 million dollars. The maximum, cumulative sales tax rebate provided by the city to Gary Lang cannot exceed the total amount spent on the expansion projector projects as addressed in the Business District Development Agreement included with this plan as Appendix A. Actual expenses for the expansion will be provided by Gary Lang. Source of Funds to Pay Project Costs. Sales taxes generated by the Gary Lang Auto Group will be used to fund up to 100% of the dealership expansion costs over a 20 year period. The sales tax rebate, addressed specifically in Section 8 of the Business District Development Agreement (Appendix A to this document), is structured as follows: A. They city shall retain the city's share of the sales tax revenue generated within the Business District Property and received by the city up to and including the first $450,000 annually; 3 B. The city shall rebate to Gary Lang 100% of the city's share of sales tax revenue generated within the Business District Property and received by the city between $450,000 and $750,000 annually; C. The city shall rebate to Lang 60% of the city's share of sales tax revenue generated within the Business District Property and received by the city in excess of $750,000 annually; D. The total amount rebated by the city to Lang shall not exceed 55% of the: total annual sales tax revenue generated with the Business District Property and received by the city. Financial Obligations Issued for the Project. No funds will be borrowed nor shall any bonds be issued by the city for this project. The sole financial obligation shall be the commitment to provide a sales tax rebate to Gary Lang for the reimbursement of the franchise expansion costs. Rate of tax to be implemented. No additional retailer's occupation tax, service occupation tax, or hotel operator's occupation tax will be imposed as part of the Business District Plan iFor the Gary Lang Business District. Effective Date of the Business District Plan. The Business District Plan shall be effective following approval by the corporate authorities of the city of McHenry and shall expire upon the expiration of the Business District Development Agreement attached to this document as Appendix A. Further Information. Questions regarding the Business District Plan for the Gary Lang Business District can be addressed to the City Administrator, City of McHenry, 333 S. Green Street, McHenry, IL 60050. id