HomeMy WebLinkAboutOrdinances - ORD-11-1558 - 09/26/2011 - ECON INCENTIVE AGMT REGENCY CENTEROrdinance No ORD-11-1558
AN ORDINANCE REPEALING ORDINANCE NO ORD-11-1539 AND AUTHORIZING
THE EXECUTION OF AN ECONOMIC INCENTIVE AGREEMENT BETWEEN THE CITY OF MCHENRY, AN ILLINOIS
MUNICIPAL CORPORATION, AND FW IL-MCHENRY COMMONS SHOPPING CENTER LLC (MCHENRY COMMONS
SHOPPING CENTER)
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; and
WHEREAS, the City of McHenry ("City"), by Ordinance No ORD-11-1539, adopted June 6, 2011,
authorized the execution of an economic incentive agreement with GRI Regency, LLC, a Delaware limited liability
company ("Regency") ("Original Agreement"); and
WHEREAS, since the date of adoption of Ordinance No ORD-11-1539, the Original Agreement was never
fully executed and the City and Regency have since determined that it in their mutual interests to modify the
language of the Original Agreement in order to correct and clarify some of its terms.
NOW THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITY COUNCIL OF THE CITY OF MCHENRY,
MCHENRY COUNTY, ILLINOIS, as follows:
Section 1: Ordinance No ORD-11-1539 be and is hereby repealed.
Section 2: The copy of Original Agreement, as revised and attached hereto as "Exhibit A" is hereby
approved and the Mayor is hereby authorized to sign it as Mayor upon its full execution by all of the other
parties referenced therein.
Section 3: All ordinances 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repealed to the extent of such conflict.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, Illinois.
Section 5: This Ordinance shall be in full force and effect from and after is passage, approval, and
publication in pamphlet form as provided by law.
Passed and approved this 26 1h day of September, 2011.
Voting Aye: Santi, Schaefer, Wimmer, Peterson, Condon.
Voting Nay: Glab, Blake.
Not Voting: None.
Abstaining: None.
Absent: None.
Mayor
ATTEST:
/-,qN C\ "C-Q-,
City�ler
(D
ECONOMIC INCENTIVE AGREEMENT
(MCHENRY COMMONS SHOPPING CENTER)
THIS ECONOMIC INCENTIVE AGREEMENT (the "Agreement") is entered into as of
September 26, 2011 (the "Effective Date"), by and between the CITY OF MCHENRY, an Illinois
municipal corporation (the "City") and FW IL-MCHENRY COMMONS SHOPPING CENTER,
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"),
have entered into a lease (the "Hobby Lobby Lease") for a portion of the Shopping Center
containing approximately 53,472 square feet (the "Hobby Lobby Premises") within which Hobby
Lobby intends to open and thereafter operate a Hobby Lobby store (the "Hobby Lobby Store").
The Hobby Lobby Premises have remained unoccupied for more than one year.
D. Prior to the Effective Date of this Agreement, Regency constructed substantial
improvements to that portion of the Shopping Center that formerly contained tile Dominick's
grocery store (the "Improvements"), at a significant expense to Regency, which Improvements
make it possible for Hobby Lobby to occupy the Hobby Lobby Premises and open the Hobby
Lobby Store. Such Improvements, which are described in greater detail in Section 4 of this
Agreement, also made it possible for Regency to lease a portion of the Shopping Center,
consisting of approximately 21,620 square feet, to Goodwill Industries, Inc. Thus, the total
amount of leasable space benefitted by the construction of the Improvements is '75,092 square
feet, 71.2% of which leasable space is allocable to the Hobby Lobby Premises.
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. For those reasons, the City has concluded
that it is reasonable to reimburse Regency 71.2% of the costs Regency incurred in undertaking
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the Improvements by entering into this Agreement pursuant to which Regency will receive a
percentage of the sales tax revenues received by the City as a result of retail sales occurring at
the Hobby Lobby Store.
F. 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
(35 ILCS 115/1 et seq.), the Retailer's 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
City issues a certificate of occupancy for the Hobby Lobby Premises.
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.
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2.9 "Sales Taxes" means the aggregate amount of Base Sales Taxes and Home
Rule Sales Taxes.
SECTION3. 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 Citil'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 Six Hundred Seventy Seven
Thousand Four Hundred Ninety Nine and 49/XX Dollars ($677,499.49), which is the
proportionate amount of the cost Regency incurred in constructing the Improvements that is
fairly allocable to the Hobby Lobby Premises (i.e., 71.2%), as set forth on Exhibit A attached
hereto and made a part hereof by this reference thereto.
SECTION 4. Evidence of Cost of Improvements/Conditions Precedent to City
Payment Obligation/Calculating and Distributing Payments to Regency.
4.1 The City acknowledges that Regency, prior to the Effective Date of this
Agreement, has delivered to the City evidence (in the form of general contractor sworn
statements, mechanics lien waivers, and paid receipts for goods and services purchased or
rendered) of Regency's expenditure of $1,026,634.29 in constructing the Improvements. The
manner in which Regency expended such sum is set forth on the aforesaid Exhibit A.
4.2 Regency acknowledges that the City's Payment Obligation is contingent upon:
(a) the continued occupancy and operation of the Hobby Lobby Premises by a business
generating Base Sales Taxes, which may include either Hobby Lobby or other successor
tenants ("Successor Tenants"); and (b) the continued filing by Hobby Lobby arid Successor
Tenants of an IDOR form Authorization to Release Sales Tax Information to Local
Governments. Regency further acknowledges that it shall have no right to be reimbursed
pursuant to this Agreement for improvements undertaken at or to the Shopping Center or the
Hobby Lobby Premises after the Effective Date of this Agreement and that neither Hobby Lobby
nor any other Shopping Center tenant or party shall have any right to receive any portion of the
Sales Tax Incentive.
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4.3 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
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 'Fax 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 Regency represents to the City that in constructing the Improvements Regency
complied with the provisions of the Illinois Prevailing Wage Act (820 ILCS 130/0.01 et seq.).
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 annurn over the rate announced from time to time in the Wall
Street Journal 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 Ito 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 Hobby Lobby 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 io 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
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inability of Regency to re -lease the Hobby Lobby 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 and the Hobby Lobby 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
by 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 (unless Regency and such successors and assigns agree
otherwise in writing), and on successor corporate authorities of the City.
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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:
If to Regency: FW IL -McHenry Commons Shopping Center, LLC
c/o Regency Centers
1211 W. 22nd Street, Suite 300
Oak Brook, IL 60523
Attention: Regional Officer
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, agreemerts, 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.
10.8 Regency shall have the right, by notice to the City, to waive the City's payment to
it of the Sales Tax Incentive, in whole or in part, at any time and nothing contained in this
Agreement shall be construed or interpreted as precluding such right.
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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
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.
[SIGNATURE PAGES TO FOLLOW]
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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.
FW IL-MCHENRY COMMONS SHOPPING CENTER, LLC,
a Delaware limited liability company
By: FW-Req 11 Holding Company Two, LLC,
a Delaware limited liability company, its sole member
By: GRI-REGENCY, LLC, a Delaware limited liability company, its sole member
By: Regency Centers, L.P., a Delaware limited partnership, its managing
member
By: Regency Centers Corporation, a Florida corporation,
its general partner
By: -I--
Its: Name /Mw- k ftMe
Date: I ()�TT ril
CITY OF CHENRY
By:
Mayor
ATTEST:
By: /Nwlc�-(- vnne'L-�
Date7C't
q YrC
� -n I I
APPROVED BY MCHENRY CITY
COUNCIL
on September 26, 2011, per Ordinance
No. i) ev- i) - i S^S F
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FAST�44689634 M
Exhibit A
Hobby Lobby Cost Breakout
July 22, 2011
General Contractor and Subs
Work Performed
Schedule of Values
Hobby Lobby
Prorate share
based on square
footage
Comments
General Contractor
Cord Construction
Cenral conditions
$ 109,392.00
$ 77,896.57
Cord Construction
Bond
$ 10,382.00
$ 7,392.88
SubsiSuppliers
$ -
$ -
McClellan Blakemore
Architect
$ 15,700.00
$ 11,179.76
Robinette Demolition
Demolition
$ 221,400.00
$ 157,655.95
-
Concrete Syglems
Concrete
$ 8,400.00
$ 5,981.53
Diamond Mason
Masonry
$ 27,000.00
$ 19,226.34
Arrow Glass & Door
Glazing
$ 7,900.00
$ -
100% GW - New storefront for GW
RaerConstruchon
Drywall
$ 43,00000
$ 30,619.72
All Amengan Exterior Solutions
Roofing
$ 220,000.00
156,659.03
Executive Plastering
EIFS
$ 28,520.00
20,308.71
Raynor Door
OH Door
$ 6,579.00
$ 4,r,84.32
Rockford OmarrMala�
Misc. slee/
S 12,750.00
$ 9,079.10
Block Iron
HU & Hardware
$ 6,035.00
$ 4,297.44
m1dwest pairiting
Painting
$ 32,292.00
22,994.70
Hadvig-Plumbing & Heating
Plumbing
$ 14,352.00
10,219.87
Hartwig Plumbino & Heating
HVAC
$ 75,462.00
$ -
100% GW - H VAC units for GW
Nelson Fire Protections
Fire Protection
S 64,058.00
$ 45,614.84
Associated Electrical ConLractors
Electric
$ 90,300.00
$ 64,301.41
Change on:,L�
$ -
seebreakout
s ch M�aarchan a
item #1
$ (6,700.00)
$ (4,770.98)
2LMbnaAAMeLs
item #2
$ (2,28000)
$ (1,623.56)
cauLkinq
item #3
$ 5,302.00
$ 3,775.48
EIFS/masonry changes
item 44
$ 16,280.00
$ 16,290.00
100% HL - Oevation change
Structural st-eel
item #5
$ 6,800.00
$ 6,800.00
100% HL -Mezzanine work
Gw sign arcult
item #6
$ 1,710.50
$ -
100% GW
C kin M�sall she
item #7
$ 2,772.00
$ -
Nlc�
item 98
$ 1,048.59
$ 746.69
Tenant B floorqm�
item #9
$7 7,315.70
$ 7,315.70
100% HL - flooring
Tenant B raLaUmpift
item #10
$ 863.50
$ 863.50
100% HL - railing
F— TOTAL
$ 1,026,634.29
, $677,499.49
Hobby Lobby (HL) SF
53,472
Goodwill (GW) SF
21,620
TOTALGLA
75,092
H L prorata share
71.2%