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HomeMy WebLinkAboutOrdinances - ORD-15-1740 - 07/20/2015 - ECON.INCENTIVE AGREEMENT - CENTRAL BIG RORDINANCE NO. 15-1740 AN ORDINANCE AUTHORIZING THE MAYOR'S EXECUTION OF AN ECONOMIC INCENTIVE AGREEMENT BETWEEN THE CITY OF MCHENRY AND CENTRAL BIG R STORES 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 Economic Incentive Agreement, bearing the date of July 20, 2015, between the City of McHenry and Central Big R Stores is attached to this ordinance and incorporated herein by reference as Exhibit "A." SECTION 2: The Mayor and City Cleric are hereby authorized to affix their signatures as Mayor and City Cleric to said 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 SECTION 3: All Ordinance or parts thereof in conflict with the terms and provisions hereof are hereby repealed to the extent of such conflict.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. 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 20th day of July 2015. Voting Aye: SANTI, GLAB, CURRY, CONDON, PETERSON, WIMMER Voting Nay: NON E Abstaining: NONE Not Voting: NONE Absent: SCHAEFER 4 47 >> Mayor ATTEST: 'tv Cleric ECONOMIC INCENTIVE AGREEMENT BETWEEN THE CITY OF MCHENRY AND BIG R This Economic Incentive Agreement ("Agreement") is made and entered into this 20th day of July, 2015 ("Effective Date"), by and between the City of McHenry, 333 S Green Street, McHenry County, Illinois, an Illinois home rule municipality ("City") and Central Big R Stores Inc., an Illinois Corporation, 200 N Ernest Grove Parkway, Watseka, IL 60970 ("Big R"). RECITALS A. The City is a home rule municipality and as such has the authority, pursuant to 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. In recognition of the importance to sustaining a high -quality of life for businesses and residents, it's the City's desire to facilitate a successful business environment and assist in enhancing the long-term viability of existing and proposed businesses. Big R is proposing to purchase an approximately 95,420 square -foot building on approximately nine acres of real property and open a farm home retail store with accompanying outside storage and display of merchandise including but not limited to: lawn and garden and farm products; fence, fence posts, livestock water tanks and coils of drainage tile under Illinois Business Tax No. O.S9-00,y -9- cal at 1860 N Richmond Road (Illinois Route 31), Lot 1 in the McHenry Plaza Shopping Center (the "Subject Property") legally described on attached Exhibit "A" attached hereto and incorporated herein. C. The City and Big R desire to enter into this Agreement to foster the long-term use of the Subject Property in a manner that will enhance the City. D. Big R intends to undertake substantial expenses including but not limited to: site preparation including construction of multiple outdoor sales and storage areas to accommodate their lawn and garden, farm and other products on Subject Property, as well internal building renovations toy utilize the existing building to in an efficient manner to display, sell and ensure the security of their customer and products ("Improvements to Subject Property by Big R") attached hereto and incorporated herein on Exhibit "B." Big R has indicated to the City that, but for the commitment and agreement of the City being made herein, Big R would not have undertaken the Improvements to the Subject Property. E. As part of their Improvements to the Subject Property Big R will be purchasing fixtures to display and inventory products, information technology equipment and software, as well as video cameras and associated monitoring equipment ("Equipment Purchases") attached hereto and incorporated herein as Exhibit "C." F. It is essential to the economic and social welfare of the City that it promotes the economic vitality of the community by assuring opportunities for development and 1 redevelopment and sound and stable commercial growth within the corporate limits of the City. G. In order to make it economically feasible for Big R to agree to successfully accomplish the Improvements to the Subject Property and incur the aforementioned Improvements the City has agreed to share a portion of the Sales Tax, as defined herein, generated by Big R at the Subject Property in an amount not -to -exceed $400,000. ("Sales Tax Incentive") for Equipment Purchases included on Exhibit "C." DEFINITIONS "Base Sales Taxes" means the retailers occupation taxes and service occupation taxes received by the City, generated solely at the Subject Property and by Big R, from the State of Illinois pursuant to the Service Tax Act (35 ILCS 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 amended), and any taxes that are enacted and imposed as replacements thereto. "City Payment Obligation" means the City's obligation to pay Big R Sales Tax as set forth in Paragraph One. "The Commencement Date" means December 31, 2016 and is the first date the City shall pay a Sales Tax Incentive Annual Payment, as defined herein, to Big R as set forth in Paragraphs Two and Three. "Event of Default" means a default under this Agreement which remains uncured as set forth in Paragraph Nine. "Gross Receipts" means as defined in the Retailer's Occupation Tax Act (35 ILCS 120/1 et seq.). "Home Rule Sales Tax" means the home rule retailers occupation taxes received by the City, generated solely at the Subject Property and by Big R, 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. "IDOR" means the Illinois Department of Revenue. "Maximum Total Payment" shall mean the maximum total amount paid to Big R pursuant to this Agreement as set forth in Paragraph Two. "Sales Tax Incentive" means the payment set forth in Paragraph One and in accordance with the Sales Tax Incentive Annual Payment outlined in Table One. "Sales Tax Incentive Annual Payment" expressed as a percentage of sales tax, as defined herein and outlined in Table One. "Sales Tax Incentive Year" means the preceding twelve -months of the calendar year, with the exception of the Sales Tax Incentive Year ending December 31, 2016 as outlined in Table One. "Table One" includes the sales tax incentive year and sales tax incentive annual payment as defined herein. Now, therefore, based on the consideration stated herein, the adequacy and sufficiency of which is acknowledged by the parties hereto, it is agreed as follows: 1. Agreement to Pay. The City agrees to pay a Sales Tax Incentive to Big R an amount equal to one hundred percent (100%) of the Base Sales Tax received by the City from IDOR which are attributable to the gross sales generated at the Big R Store to be developed on the Subject Property. The City's Payment Obligation shall continue for so long as the Big R Store is generating Base Sales Taxes. Big R acknowledges and agrees Home Rule Sales Taxes received by the City which are attributable to sales generated at the Big R store shall be retained by the City. Big R also acknowledges the Sales Tax Incentive shall be utilized solely for the reimbursement to Big R for purchases of Equipment included on Exhibit "C" not exceeding the Maximum Total Payment as defined herein. Big R acknowledges that prior to any Sales Tax Incentive payment distribution Big R shall provide the City evidence of the expenditure for which reimbursement is being sought including the following information: Paid invoice(s), which includes an itemization of each Equipment expenditure; date of Equipment purchase; company from which Equipment was purchased from including name, address and federal tax identification number; a reference on the paid invoice indicating the Equipment's purchase for use on the Subject Property; as well as a sworn affidavit of purchase, by an officer of Big R including name, address and title and/or position within the Big R organization, signed and notarized. 2. Sales Tax Incentive. On December 31, 2016, ("Commencement Date") and on each anniversary of December 31 thereafter the City shall be obligated to pay the Sales Tax Incentive to Big R up to a cumulative amount of $400,000 ("Maximum Total Payment"). The amount shall be paid by the City to Big R in accordance with the timeline in Paragraph Three and amounts outlined in Table One below ("Sales Tax Incentive Annual Payment"). TABLE ONE Sales Tax Incentive Year Sales Tax Incentive Annual Payment (expressed as a percentage of Base Sales Tax up to a Maximum Total Payment of $400,000) December 31, 2016* 100% December 31, 2017 100% December 31, 2018 100% December 31, 2019 100% December 31, 2020 100% 3 *Sales Tax Incentive Annual Payment for the December 31, 2016 Sales Tax Incentive Year shall include Base Sales Tax received by the City in 2015 in addition to the Base Sales Tax in 2016. 3. Sales Tax Reports/Accounting. Within sixty (60) days after The Commencement Date and sixty (60) days following each subsequent Sales Tax Incentive Year a Sales Tax Incentive Annual Payment shall be paid to Big R by the City until the Maximum Total Payment is reached. Big R shall provide the City with a statement, accompanied by a summary of the Gross Receipts for such Sales Tax Incentive Year, in a form reasonably acceptable to the City, signed by one of its officers, which shall set forth the dollar amount of Sales Tax paid to the State of Illinois, generated solely from sales at the Subject Property, for the benefit of the City. This information will be used by the City in calculating the Sales Tax Incentive Annual Payment. Big R shall maintain and have available for inspection by the City copies of any and all sales tax returns, sales tax reports, amendments, proof of payment or any other sales tax information filed with the State of Illinois or other appropriate governmental entity, which documents are being held available for the City for purposes of identifying sales tax collected pursuant to this Agreement. The City shall use its best efforts to obtain such sales tax information directly from IDOR and/or the State of Illinois. 4. 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 Big R including the sales tax information received by the City, but shall be permitted to disclose such information and documents to employees and consultants of the City as the City in its sole discretion, deems appropriate in order to monitor compliance and audit this Agreement and comply with the Illinois Freedom of Information Act ("FOIA") and any court order or other legal requirement. The City shall give Big R notice of any request that is made under the Freedom of Information Act to disclose the Sales Tax Information. Big R shall execute any consent form requested by the City and furnish such additional consents may be required by IDOR to allow IDOR to furnish to the City sales tax information pertaining to sales on the Subject Property. 5. Mutual Assistance. The City and Big R agree to do all things necessary or appropriate to carry out the terms and provisions of this Agreement and to aid and assist each other in carrying out the terms hereof. 6. No Interest; Limited Obligations. No interest shall be due on the obligations set forth in this Agreement. Big R acknowledges that: (a) the City shall not be required to make any Sales Tax Incentive Annual Payment set forth in Paragraphs Two and Three and included in Table One to Big R unless Big R has then 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 generated by Big Rat the Subject Property; (c) the sole source of Big R's entitlement to payment of the Sales Tax Incentive shall be from those generated solely from the aforesaid Base Sales Tax; (d) the City's 0 Payment Obligation shall not be construed as general obligation of the City; and (e) Big R bears all risk of non-payment resulting from the permanent closure of Big R. For purposes of this Agreement, Big R shall be deemed to have closed permanently if it is closed and the Subject Property remains either vacant or unoccupied for a period of six (6) or more consecutive months ("Permanent Closure"). 7. Term. 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 Maximum Total Payment to Big R; (b) the Permanent Closure of Big R, defined in Paragraph Six prior to Big R's receipt of the Maximum Total Payment; (c) December 31, 2020 or (d) Improvements to the Subject Property are not completed and a certificate of occupancy obtained by December 31, 2015. This Agreement shall remain in effect for enforcement and accounting purposes following the expiration of the Term. 8. Miscellaneous. This Agreement shall be binding upon and inure to the benefit of the City and Big R and on successor corporate authorities of the City. Notices required or contemplated by this Agreement shall be sent by certified mail or First Class United States Mail as follows: If to Big R: Watseka Rural King Supply, Inc., 200 N Ernest Grove Parkway, Watseka, IL 60970 Attention: Jerald Sherman, CFO or Jerry Gibbs, CEO 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 9. Default. 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. This Agreement shall be governed by Illinois law without regard to its rules regarding conflicts of law. 0 10. Enforcement. Any action to enforce this Agreement shall only 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 attorney's fees from the other party. 11. Only Agreement. This Agreement sets forth all the promises, inducements, agreements, conditions and understandings between Big R and the City relative to the Sales Tax Incentive and there are no other promises, agreements, conditions or understandings, oral or written, express or implied, between them relative thereto. This Agreement may only be amended by way of a written instrument that is signed by both Parties. City of McHenry By: - v Susan E. Low Mayor Attest: � U_ ,k),r1 P Ja (ce '. Jones y Jerk 9 9M Attest (Big R . iP Print name and Title EXHIBIT A PARCEL 1: LOT 1 IN MCULLOM PLACE, BEING A SUBDIVISION OF PART OF THE NORTHEAST QUARTER OF SECTION 26, TOWNSHIP 45 NORTH, RANGE 8 EAST OF THE THIRD PRINCIPAL MERIDIAN, ACCORDING TO THE PLAT THEREOF RECORDED DECEMBER 1, 1993, AS DOCUMENT 93RO73961 AND CERTIFICATE OF CORRECTION RECORDED MARCH 30, 1995 AS DOCUMENT 9513011195, IN MCHENRY COUNTY, ILLINOIS, EXCEPTING THEREFROM THAT PART TAKEN BY THE CITY OF MCHENRY IN CONDEMNATION CASE NO 03ED6 PARCEL 2: NON-EXCLUSIVE EASEMENT FOR THE BENEFIT OF PARCEL 1 FOR STORM WATER DRAINAGE AS CREATED BY DRAINAGE EASEMENT DATED AS OF MARCH 6, 1992 FROM AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, AS TRUSTEE UNDER TRUST AGREEMENT DATED APRIL 8, 1977 AND KNOWN AS TRUST NO. 40362, TO DAYTON HUDSON CORPORATION, A MINNESOTA CORPORATION, RECORDED SEPTEMBER 9, 1992 AS DOCUMENT 92RO48706 PARCEL 3: NON-EXCLUSIVE EASEMENTS FOR THE BENEFIT OF PARCEL 1 AS CREATED BY OPERATION AND EASEMENT AGREEMENT MADE BY AND AMONG DAYTON HUDSON CORPORATION, A MINNESOTA CORPORATION, AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, AS TRUSTEE UNDER TRUST AGREEMENT DATED APRIL 8, 1977 AND KNOWN AS TRUST NO. 40362 AND NORTH STAR DEVELOPMENT COMPANY, DATED AS OF JULY 6, 1992 AND RECORDED SEPTEMBER 9, 1992 AS DOCUMENT 92R048705, AS AMENDED BY FIRST AMENDMENT TO OPERATION AND EASEMENT AGREEMENT DATED NOVEMBER 8, 1993 AND RECORDED DECEMBER 8, 1993 AS DOCUMENT 93R075955, AS FURTHER AMENDED BY SECOND AMENDMENT TO OPERATION AND EASEMENT AGREEMENT DATED MAY 3, 1996 AND RECORDED MAY 3, 1996 AS DOCUMENT 96RO22583 PARCEL 4: NON-EXCLUSIVE EASEMENT FOR THE BENEFIT OF PARCEL 1 FOR STORM WATER DETENTION AS CREATED BY LAND USE AND EASEMENT AGREEMENT DATED SEPTEMBER.11, 1991 MADE BY PHILLIPS SHOPPING CENTER FUND LIMITED PARTNERSHIP, ET AL., RECORDED DECEMBER 18, 1991 AS DOCUMENT 91RO49063 AND RE -RECORDED AUGUST 10, 1992 AS DOCUMENT 92R043421. SUBJECT PARCEL (PARCEL 1) - 389,284 SQ. FT./8,937 ACRES Exhibit B Improvements to the Subject Property by Big R Real estate purchase $1,900 000 Inventory $3,000,000 Fixtures $350,000 Alarm systems $50,000 Material handling equipment $50,000 Box crusher /recycling $25,000 Computers & licenses $70,000 Video camera/monitoring $30,000 Sensormatic inventory theft $40,000 Parking lot repair $80,000 FIVAC replacement $150,000 Add outdoor sales area to North of store $75,000 Remove floor tile/polish concrete $100,000 Wood grain floor the $35,000 New interior lighting/ballast replacement $60,000 Interior remodel/build out $50,000 Bathroom remodel $25,000 Interior painting $25,000 Update of foyer $25,000 Interior signage $12,000 Exterior signage $75,000 Total Improvement Expenditures $6,227,000 Exhibit C Equipment Purchases Interior Display Signage and accompanying Fixtures to display inventory for sale - $350,000 Information Technology equipment and related software licenses - $70,000 Video cameras/monitoring equipment - $30,000 Material Handling Equipment $50,000 $500,000* *Maximum total reimbursement shall not exceed $400,000 A