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HomeMy WebLinkAboutOrdinances - ORD-11-1539 - 06/06/2011 - AUTHORIZE EXEC ECONOMIC DEVELOP AGMT HOBBY LOBBYr ORDINANCE NO.ORD-11-1539 AN ORDINANCE AUTHORIZING THE EXECUTION OF AN ECONOMIC INCENTIVE AGREEMENT BETWEEN THE CITY OF MCHENRY, AN ILLINOIS MUNICIPAL CORPORATION AND GRI-REGENCY, LLC, A DELEWARE LIMITED LIABILITY COMPANY WHEREAS, the City of McHenry, McHenry County, Illinois, is a home rule municipality as contemplated under Article VII, Section 6, of the Constitution of the State of Illinois, and the passage of this Ordinance constitutes an exercise of the City's home rule powers and functions as granted in the Constitution of the State of Illinois. WHEREAS, the City of McHenry ("CITY") and GRI-Regency LLC ("REGENCY") recognize the importance of employment and municipal revenue generation and economic revitalization; and WHEREAS, the CITY and REGENCY have entered into an agreement whereby the CITY will rebate REGENCY an amount equal to one hundred percent (100%) of the Base Sales Tax received by the CITY fi-om the Illinois Department of Revenue, attributable to the gross sales generated at the Leased Premises, as defined in the Agreement, from .and after the Commencement Date, as defined, up to a maximum amount of one million (1,000,000) dollars over a twenty (20) year time period. NOW, THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITY COUNCIL OF THE CITY OF MCHENRY, MCHENRY COUNTY, ILLINOIS AS FOLLOWS: SECTION l: The Economic Incentive Agreement McHenry Commons Shopping Center, bearing the date of June 6, 2011, between the CITY and REGENCY be and the same is hereby approved. A complete and accurate copy of said agreement, labeled "Economic Incentive Agreement McHenry Commons Shopping Center" is attached to this ordinance and incorporated herein by reference. SECTION 2: The Mayor is hereby authorized to affix their signature as Mayor to said Intergovernmental Agreement for the uses and purposes therein set forth. SECTION 3: All Ordinance or parts thereof in conflict with the terms and provisions hereof are hereby repealed to the extent of such conflict. SECTION 4: This Ordinance shall be published in pamphlet form by and under the authority of the corporate authorities of the City of McHenry, McHenry County, II linois. SECTION 5: 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 6TH DAY OF JUNE 92011 AYES: GT.AR, RCHATIEER, WTMMRR, PETERSON NAYS: SANTI, BLAKE, CONDON NONE ABSTAINED: NONE ABSENT: NOT VOTING: NONE MAYOR ATTEST: C1,4 Y ERK ECONOMIC INCENTIVE AGREEMENT (MCHENRY COMMONS SHOPPING CENTER) THIS ECONOMIC INCENTIVE AGREEMENT (the "Agreement') is entered into as of June 6, 2011 (the "Effective Date"), by and between the CITY OF MCHENRY, an Illinois municipal corporation (the "City") and GRI--REGENCY, LLC, a Delaware limited liability company ("Regency'). The City and Regency are hereinafter sometimes individually referred to as a "Party" and collectively as the "Parties". RECITALS A. The City is a home rule municipality located in McHenry County, Illinois. As such, it has the authority, pursuant to the Article VII, Section 6(a) of the Constitution of the State of Illinois of 1970, to adopt ordinances and to promulgate rules and regulations that pertain to its government and affairs. B. Regency owns a shopping center in the City of McHenry situated on U.S. Route 31 commonly known as "McHenry Commons" (the "Shopping Center'). C. Regency and Hobby Lobby Stores, Inc., an Oklahoma corporation ("Hobby Lobby"), are currently negotiating a lease (the "Hobby Lobby Lease") for a portion of the Shopping Center containing approximately 52,334 square feet (the "Leased Premises") within which Hobby Lobby intends to open and thereafter operate a Hobby Lobby store (the "Hobby Lobby Store"). The Leased Premises have remained unoccupied for more than one year. D. Before Hobby Lobby can occupy the Leased Premises and open the Hobby Lobby Store Regency must undertake substantial improvements to the Shopping Center and to the Leased Premises at a significant expense to Regency. Regency has indicated to the City that, but for the commitments and agreements of the City being made in this Agreement, Regency would not undertake such improvements or enter into the Hobby Lobby Lease with Hobby Lobby. E. Regency estimates that the establishment of the Hobby Lobby Store will create approximately 30 job opportunities within the City, and the City has determined that the Hobby Lobby Store will serve to further the development of adjacent areas, strengthen the City's commercial sector, and enhance the City's tax base. The City has further determined that it is in the City's best interest to enter into an agreement with Regency pursuant to which Regency will receive payments from the City in the form of a percentage of the sales tax revenues received by the City as a result of retail sales occurring at the Hobby Lobby Store. F. It is the purpose of this Agreement to set forth the terms and conditions pursuant to which the Parties will effectuate the revenue sharing described in these Recitals. G. The Parties are entering into this Agreement pursuant to the City's authorities as a home rule municipality. NOW, THEREFORE, BASED ON 'THE FOREGOING RECITALS, AND IN CONSIDERATION OF THE COVENANTS AND AGREEMENTS CONTAINED IN THIS AGREEMENT, AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE PARTIES HEREBY AGREE AS FOLLOWS: SECTION 1. Incorporation of Recitals. The Parties acknowledge the truth and accuracy of the foregoing Recitals and incorporate said Recitals in this Agreement as if set forth in their entirety in this Section 1. SECTION 2. Definitions. 2.1 "Base Sales Taxes" means the retailers occupation taxes and service occupation taxes received by the City from the State of Illinois pursuant to the Service Occupation Tax Act (351LCS 115/1 et seq.), the Retailers Occupation Tax Act (35 ILCS 120/1 et seq.), and the State Finance Act (30 ILCS 105/6z-18)(as said Acts may be amended), and any taxes that are enacted and imposed as replacements thereto. 2.2 "City Payment Obligation" means the City's obligation to pay Regency Base Sales Taxes as set forth in Section 3.1 below. 2.3 "Commencement Date" means the first day of the month following the date the improvements to the Leased Premises are complete, as evidenced and confirmed by the City's issuance of a certificate of occupancy therefor. 2.4 "Event of Default" means a default under this Agreement which remains uncured as set forth in Section 10.3 below. 2.5 "Home Rule Sales Taxes" means the home rule retailers occupation taxes received by the City from the State of Illinois pursuant to the Home Rule Municipal Retailers' Occupation Tax Act (65 ILCS 5/8-11-1.1)(as said Act may be amended), and any taxes that may be enacted and imposed as replacements thereto. 2.6 "IDOR" means the Illinois Department of Revenue. 2.7 "Maximum Total Payment" shall mean the maximum total amount paid to Regency pursuant to this Agreement as set forth in Section 3.2 below. 2.8 "Sales Tax Incentive" means the payment set forth in Section 3.1 below. 2 2.9 "Sales Taxes" means the aggregate amount of Base Sales Taxes and Home Rule Sales Taxes. SECTION 3. Agreement to Pay: Maximum Total Payment. 3.1 The City agrees to pay Regency, up to the Maximum Total Payment, an amount equal to one hundred percent (100%) of the Base Sales Taxes received by the City from the IDOR which are attributable to the gross sales generated at the Hobby Lobby Store from and after the Commencement Date (the "City's Payment Obligation"). The City's Payment Obligation shall continue for so long as the Hobby Lobby Store is generating Base Sales Taxes. Regency acknowledges and agrees that any Home Rule Sales Taxes received by the City which are attributable to sales generated at the Hobby Lobby Store shall be retained by the City. 3.2 The Maximum Total Payment to Regency shall be One Million Dollars ($1,000,000.00). SECTION 4. Calculating and Distributing Payments to Regency. 4.1 Regency acknowledges that the City's Payment Obligation is contingent upon: (a) Regency delivering evidence to the City of Regency's expenditure of at least $1,000,000 in improving the Leased Premises and that portion of the Shopping Center that formerly contained the Dominick's grocery store, which costs shall include, but not be limited to, costs incurred in undertaking plumbing, electrical and HVAC work and in constructing a new roof (collectively, approximately $400,000 in costs); costs incurred in undertaking storefront and tenant improvements (collectively, approximately $648,000 in costs); demolition and space preparation work (approximately $150,000 in costs); and building permit, architectural and engineering fees incurred in furtherance of all of such worlk (Regency acknowledging that leasing commissions and attorneys fees incurred in the negotiation of this Agreement shall not be included as improvement costs), which evidence shall consist of general contractor sworn statements, mechanics lien waivers or paid receipts for goods and services purchased or rendered; (b) the continued occupancy and operation of the Leased Premises by a business generating Base Sales Taxes, which may include either Hobby Lobby or other successor tenants ("Successor Tenants"); and (c) the continued filing by Hobby Lobby and Successor Tenants of an IDOR form Authorization to Release Sales Tax Information to Local Governments. 4.2 Except as hereinafter provided, the City shall make periodic payments to Regency on a semi-annual basis not later than thirty (30) days after the City's final receipt of Base Sales Taxes for each six calendar month period occurring during the Term of this Agreement. Notwithstanding the foregoing, the first payment shall be made by the City after the 3 end of the calendar year in which the Commencement Date occurs and the final payment shall be made by the City not later than ninety (90) days after expiration of the Term of this Agreement. The Parties acknowledge that the first and last payment of the Sales Tax Incentive may cover a period of time which is greater than or less than a full six calendar month period of time. The City's payment shall be accompanied by all documentation received by the City from the IDOR which accompanies payment to the City of the Base Sales Taxes attributable to the gross sales generated at the Hobby Lobby Store. SECTION 5. Performance of the Work. 5.1 In constructing the improvements described in Paragraph D of the Recitals, Regency shall comply with the provisions of the Illinois Prevailing Wage Act (820 ILCS 130/0.01 et seq.), if and to the extent required by law. SECTION 6. No Interest: Limited Obligations. 6.1 No interest shall be due on the obligations set forth in this Agreement unless and until an Event of Default occurs in the payment of the Sales Tax Incentive to Regency. From and after the occurrence of an Event of Default as to a portion of the Sales Tax Incentive which was then to have been paid to Regency, interest shall accrue and be payable, until paid, at the rate of four percent (4%) per annum over the rate announced from time to time in the Wall Street Joumal or other comparable publication as the so-called "base rate" or "prime rate" of interest. 6.2 Regency acknowledges that: (a) the City shall not be required to make any payments of the Sales Tax Incentive to Regency unless Regency or a Successor Tenant has then delivered, or caused to be delivered, to the City the IDOR form Authorization to Release Sales Tax Information to Local Governments that is needed to facilitate the City's Payment Obligation; (b) the City's Payment Obligation is a limited obligation of the City payable solely out of the Base Sales Taxes the City receives from the IDOR which are attributable to the gross sales generated at the Leased Premises; (c) for so long as no Event of Default on the part of the City exists under this Agreement, the sole source of Regency's entitlement to payment of the Sales Tax Incentive shall be the aforesaid Base Sales Taxes: (d) the City's Payment Obligation shall not be construed as general obligation of the City; and (e) Regency bears all risk of non- payment resulting from the Permanent Closure of the Hobby Lobby Store and the inability of Regency to re -lease the Leased Premises to a Successor Tenant. For purposes of this Agreement, the Hobby Lobby Store shall be deemed to have closed permanently if it is closed 4 and the Leased Premises remain either vacant or unoccupied by a Successor Tenant for a period of twelve (12) or more consecutive months ("Permanent Closure"). SECTION 7. Term. 7.1 This Agreement shall be in full force and effect for a Term commencing on the Effective Date of this Agreement and ending on the earlier to occur of: (a) the City's payment to Regency of the Maximum Total Payment; (b) the Permanent Closure of the Hobby Lobby Store prior to Regency's receipt of the Maximum Total Payment; and (c) the twenty (20) year anniversary of the Commencement Date. 7.2 This Agreement shall remain in effect for enforcement and accounting purposes following the expiration of the Term. SECTION 8. Confidentiality. 8.1 The City agrees to utilize Sales Tax information obtained by it pursuant to the terms of this Agreement solely for the purpose of effectuating the provisions of this Agreement. To the extent permitted by the Illinois Freedom of Information Act ("FOIA") and other relevant laws, the City shall endeavor to keep such information confidential. The foregoing, however, shall not preclude the City from disclosing such information to the extent it is mandated to do so court order or to the extent it makes a good faith determination that such disclosure is required by law. 8.2 The City shall give Regency prompt notice of any request that is made under the FOIA to disclose the Sales Tax Information described above. SECTION 9. Assignment.. 9.1 Regency may assign this Agreement and its right to receive the Sales Tax Incentive to a third party upon notice to the City. Upon notice of an assignment, the City shall make all payments due hereunder and send all reports called for herein solely to said assignee. SECTION 10. Miscellaneous. 10.1 This Agreement shall be binding upon and inure to the benefit of the Parties, on Regency's successors and assigns, and on successor corporate authorities of the City. 10.2 Any notices required or contemplated by this Agreement shall be sent by certified mail or via nationally -recognized private carrier (such as Fed Ex or UPS), as follows: 5 If to Regency: GRI--Regency, LLC Go Regency Centers 1211 W. 22nd Street, Suite 300 Oak Brook, IL 60523 Attention: Matthew Hendy With a copy to: Harold W. Francke DLA Piper LLP (US) 203 N. LaSalle Street, Suite 1900 Chicago, IL 60601 If to the City: City of McHenry 333 South Green Street McHenry, IL 60050 Attention: City Administrator With a copy to: David W. McArdle Zukowski Rogers Flood & McArdle 50 Virginia Street Crystal Lake, IL 60014 10.3 In the event of a claimed default under this Agreement, the non -defaulting Party shall provide notice of default to the defaulting Party. No legal action may be commenced with respect to a claimed default until thirty (30) days after said notice has passed, during which time the claimed defaulting Party may cure the claimed default. 10.4 This Agreement shall be governed by Illinois law without regard to its rules regarding conflicts of law 10.5 Any action to enforce this Agreement shall be filed in the Twenty Second Judicial Circuit, McHenry County, Illinois. The Party who prevails in any such action shall be entitled to recover its reasonable attorneys fees from the other Party. 10.6 This Agreement sets forth all the promises, inducements, agreements, conditions and understandings between Regency and the City relative to the Sales Tax Incentive and there are no other promises, agreements, conditions or understandings, either oral or written, express or implied, between them relative thereto. 10.7 This Agreement may only be amended by way of a written instrument that is signed by both Parties. SECTION 11. Future Cooperation. 11.1 The Parties shall cooperate with one another on an ongoing basis, make every reasonable effort and take all required actions to implement and give effect to the provisions of this Agreement and the intentions of the Parties as reflected by the provisions of this z Agreement. Such actions, with respect to the City, shall include but not be limited to the City's appropriation of funds as may be necessary to implement the provisions of this Agreement. The Parties have executed this Agreement as of the dates set forth below their respective signatures, to be effective as of the Effective Date set forth above. GRI--REGENCY, LLC, By: Its: Date: CITY OF MCHENRY By: Its: Mayor Date: June 6, 2011 APPROVED BY MCHENRY CITY COUNCIL on June 6, 2011, per Ordinance No. ORD-11-1539 7