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HomeMy WebLinkAboutOrdinances - ORD-14-1689 - 09/08/2014 - PHOENIX FARMS ECONOMIC AGREEMENTDepartment of Community & Economic Development Doug Martin, Deputy City Administrator McHenry Municipal Center 333 Green Street McHenry, Illinois 60050 Phone: (815) 363-2170 Fax: (815) 363-2173 www.ci.mchenry.il.us ORDINANCE NO. ORD-14-1689 AN ORDINANCE AUTHORIZING THE EXECUTION OF A COMMUNITY AND ECONOMIC CONTRIBUTION AGREEMENT BETWEEN THE CITY OF MCHENRY, AN ILLINOIS MUNICIPAL CORPORATION AND PHOENIX FARMS OF ILLINOIS LLC 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. NOW, THEREFORE, BE IT ORDAINED by the CITY COUNCIL of the CITY OF MCHENRY, McHenry County, Illinois, as follows: SECTION 1: The Community and Economic Contribution Agreement, bearing the date of September 8,2014, between the City of McHenry, an Illinois Municipal Corporation and Phoenix Farms of Illinois LLC be and the same is hereby approved. A complete and accurate copy of said agreement, labeled "Community and Economic Contribution Agreement" is attached to this ordinance and incorporated herein by reference as Exhibit "A". SECTION 2: The Mayor and City Clerk are hereby authorized to affix their signatures as Mayor and City Clerk to said 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 SECTION 3: All Ordinance or parts thereof in conflict with the terms and provisions hereof are hereby repealed to the extent of such conflict.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, Illinois. Department of Community & Economic Development Doug Martin, Deputy City Administrator McHenry Municipal Center 333 Green Street McHenry, Illinois 60050 phone: (815) 363'2170Fax: (815) 363-2173 www.ci.mchenry.il.us 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 THIS 8th DAY OF SEPTEMBER, 2014 AYES: Santi, Schaefer, Blake, Wimmer, Peterson, Condon NAYS: Glab ABSTAINED: None ABSENT: None NOT VOTING: None APPROVED THIS 8th DAY OF SEPTEMBER, 2014 ATTEST: IVIAYOR McHenr Department of Community & Economic Development Doug Martin, Deputy City Administrator McHenry Municipal Center 333 Green Street McHenry, Illinois 60050 Phone: (815) 363-2170 Fax: (815) 363-2173 www.ci.mchenry.il.us Exhibit A Community and Economic Contribution Agreement COMMUNITY AND ECONOMIC CONTRIBUTION AGREEMENT This Community and Economic Contribution Agreement ("Agreement") is made and entered into this // day of SeptemS&r , 2014 ("Effective Date"), by and between the City of McHenry, McHenry County, Illinois, an Illinois home rule municipality ("City") and Phoenix Farms of Illinois, LLC, an Illinois corporation ("Phoenix"). RECITALS A. In August 2013 the State of Illinois enacted the Compassionate Use of Medical Cannabis Pilot Program Act (hereinafter referred to as the "Act"), which pertains to the cultivation and dispensing of medical marijuana for use in serious diseases causing chronic pain and debilitating conditions, which became effective January 1, 2014. B. In accordance with the Act cultivation centers are permitted to locate within any municipality, subject to only those limitations imposed by the State Act and the Act authorizes the State the right to grant a license ("License") to a Medical Cannabis Cultivation Center ("Cultivation Center"). C. Phoenix has represented to the City that it intends to apply for a License to operate a Cultivation Center within the corporate boundaries of the City. D. The City has agreed that in the event Phoenix obtains a License to open and operate a Cultivation Center as required by the Act, that in exchange for good and valuable consideration as set forth herein, the City will cooperate with Phoenix in allowing the Cultivation Center to be located in the City. The City will also provide Phoenix with all appropriate support in connection with the State application process, including evidence of local municipal support, assistance in completing a Local Community/Neighborhood Report, and assistance in preparing a Community Benefits Plan. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements made herein, the adequacy and sufficiency of which is acknowledged as being received by the parties hereto, it is agreed as follows: 1. Incorporation of Recitals. The Parties incorporate each of the above recitals into this Agreement as if set forth in their entirety. 2. Mutual Assistance. The Parties agree to take such actions, including the execution and delivery of such documents, instruments, petitions and certifications, as may be necessary or appropriate, from time to time, to carry out the terms, provisions and intent of this Agreement and to aid and assist each other in carrying out said terms, provisions and intent. 3. Phoenix's Application for License. Phoenix hereby represents and warrants that it intends to complete and submit an application to the Illinois Department of Agriculture ("Department") for a License to operate a Cultivation Center as soon as reasonably practicable after the Department makes such applications available and begins accepting the same. 4. Economic Contribution to City. Phoenix agrees to pay the City an annual economic contribution in accordance with Table 1 below. The annual economic contribution dollar amount shall equal the rate listed in Column B applied to net earnings, net earnings is defined as the amount of sales revenue left over after all operating expenses, interest ,taxes and preferred stock dividends (but not common stock dividends) have been deducted from Phoenix's total revenue for medical cannabis produced at the Cultivation Center in the City and sold to medical cannabis dispensary organizations. The net earnings shall be determined in accordance with generally accepted accounting principles. The annual contribution shall be remitted to the City on or before the dates in Column A and shall be for the preceding calendar year. 5. Minimum Economic Contribution to City. Phoenix agrees to pay the City an annual contribution in accordance with the provisions outlined in paragraph four herein or $20,000/year, whichever is greater, on the following dates: April 30, 2015, April 30, 2016, April 30, 2017, April 30, 2018 and April 30, 2019. Phoenix agrees to pay the City an annual contribution in accordance with the provisions outlined in paragraph four herein or $40,000/year, whichever is greater on the following dates April 30, 2020, April 30, 2021, April 30, 2022, April 30, 2023, April 30, 2024 and each subsequent April 30 each year the Agreement is in effect following April 30, 2024.Notwithstanding anything to the contrary herein, no contribution shall be due from Phoenix to the City during any calendar year in which Phoenix shall not operate a Cultivation Center in City for at least three full months, whether due to the General Assembly failing to extend the medical marijuana program beyond the initial sunset date established in the Act, or for any other reason 6. Submission of Economic Reporting Data. No later than April 30 of each year, commencing on April 30, 2015 Phoenix shall submit to the City the following information reviewed and authenticated by an independent Certified Professional Accountant: a. Name of taxpayer. b. Net earnings before income taxes for medical cannabis produced at the Cultivation Center in the City and sold to medical cannabis dispensary organizations during the preceding calendar year. c. Amount of the tax. d. Signature of the taxpayer. e. Copy of the financial statements of the taxpayer for the medical cannabis business. f. Letter from an independent Certified Professional Accountant stating that the financial statements for the Cultivation Center in the City have been reviewed and are reasonable. TABLE I (Economic Contribution to City and Community Contributions) Column A Column B Column C April 30, 2015 April 30, 2016 April 30, 2017 April 30, 2018 April 30, 2019 April 30, 2020 April 30, 2021 April 30, 2022 April 30, 2023 April 30, 2024 1.75% 1.75% 1.75% 1.75% 1.75% 3.50% 3.50% 3.50% 3.50% 3.50% $5,000 $5,000 $5,000 $5,000 $5,000 $10,000 $10,000 $10,000 $10,000 $10,000 7. Confidentiality of Financial Information. To the extent permitted by law, the City shall endeavor to maintain the confidentiality of the information contained in any financial reports submitted by Phoenix. 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. The City shall give Phoenix prompt notice of any request that is made under the FOIA to disclose the financial Information outlined in paragraph six herein. In its application of FOIA regarding any such request, the City will exercise its right to deny disclosures that would fall within the exemptions outlined in the law, including private information, and trade secrets and commercial or financial information. In connection with FOIA and its exemptions, the City acknowledges that Phoenix provides the financial information that is required under this Agreement under a claim that it is proprietary, privileged or confidential. 8. Community Contributions. In addition to the economic contributions to the City previously outlined in this Agreement, Phoenix shall make annual contributions for community outreach and benefit. Phoenix shall provide annual contributions to the City that are to be given to the following organizations: • McHenry Riverwalk Foundation • Historic Petersen Farm Foundation The annual schedule of disbursement of Community Contributions shall be as outlined in Table 1 above. Phoenix agrees to pay the annual Community Contribution in Column C no later than the date listed in Column A of Table 1. Phoenix agrees to pay an annual community contribution of $10,000 each subsequent April 30 each year the Agreement is in effect following April 30, 2024. The City reserves the right to reallocate the annual community contributions outlined in this paragraph eight and may also add additional organizations however the annual contribution amounts in Table 1 above shall not be altered or amended without prior amendment to this Agreement in accordance with paragraph 10 of this Agreement. Notwithstanding anything to the contrary herein, no Community Contribution shall be due from Phoenix to the City during any calendar year in which Phoenix shall not operate a Cultivation Center in City for at least three full months, whether due to the General Assembly failing to extend the medical marijuana program beyond the initial sunset date established in the Act, or for any other reason. 9. Indemnification. Phoenix shall indemnify and hold harmless the City, its City Council members and employees from any and all liability and expenses, including reasonable attorney's fees relative to any FOIA that shall be filed that directly relates to this Agreement or operation of its Cultivation Center in the City. 10. Amendment. This Agreement may not be amended or modified except by written agreement signed by all parties and following approval by the City Council. 11. Severability. If any provision, covenant, agreement or portion of this Agreement, or its application to any person, entity or property, is held invalid, such invalidity shall not affect the application or validity of any other provisions, covenants or portions of this Agreement and, to that end, any provisions, covenants, agreements or portions of this Agreement are declared to be severable. 12. Term. This Agreement shall be in full force and effect upon execution by all parties. Should Phoenix not be issued a License to operate a Cultivation Center in the City by February 15, 2015 this Agreement shall automatically terminate. Should the Act be repealed or not extended beyond the initial Pilot period outlined in the Act this Agreement shall terminate and Phoenix shall cease operating a cultivation center in the City. Should the State of Illinois extend the time period for the Act or enact new legislation enabling the Compassionate Use of Medical Cannabis Program (or any successor version of the Act) to continue, then, so long as Phoenix maintains a valid License this Agreement shall remain in force and effect. 13. Miscellaneous. This Agreement shall be binding upon and inure to the benefit of the Parties, on Phoenix's successors and assigns (unless Phoenix and such successors and assigns agree otherwise in writing), and on successor corporate authorities of the City. Any notices required or contemplated by this Agreement shall be sent by certified mail or via a nationally-recognized private carrier (such as Fed Ex or UPS), as follows: If to Phoenix: Patrick Buck Manager Phoenix Farms of Illinois, LLC 350 N.Orleans Street, Suite 2N Chicago, Illinois 60654 If to the City: City of McHenry 333 S. Green Street McHenry, IL 60050 Attention: City Administrator With a copy to: David W. McArdle Zukowski, Rogers, Flood & McArdle 50 Virginia Street Crystal Lake, Illinois 60014 14. Default. In the event of a claimed default under this Agreement, the nondefaulting 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. This Agreement shall be governed by Illinois law without regard to its rules regarding conflicts of law. 15. Arbitration Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by binding arbitration administered by the American Arbitration Association under its Construction Industry Arbitration Rules or JAMS Dispute Resolution, in the discretion of the Client, at the McHenry Municipal Center, 333 S. Green Street, McHenry, Illinois, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. In the event of arbitration or litigation of this Agreement between the Client and the Company, the prevailing party to any litigation or arbitration shall be entitled to recover from the nonprevailing party all of its expenses incurred, including, but not limited to (a) reasonable attorneys' fees, (b) filing costs, (c) witness fees, and (d) other reasonable expenses of the litigation or arbitration. 16. Entire Agreement. This Agreement sets forth all the promises, inducements, agreements, conditions and understandings between Phoenix and the City relative to Community and Economic Contributions and there are no other promises, agreements, conditions or understandings, oral or written, express or implied, between them relative thereto. IN WITNESS WHEREOF, the Parties have duly executed this Agreement pursuant to all requisite authorizations as of the Execution date. City of McHenry G- C7&-" E. Low Mayor City of McHenry Attest: /^V(\\ti t A /anice\C. Jon/s Gty Clerk City o^ Phoenix Phoenix Farms of Illinois, LLC Its: Manager Tom Sekiguchi Attest: Phoeni^Taarms of Illinois, LLC IK- Print Name and Title