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HomeMy WebLinkAboutOrdinances - ORD-16-1792 - 05/02/2016 - ECON. INCENTIVE AGREE. 3017 ROUTE 120 LLCORDINANCE 114O.ORD-16-1792 An Ordinance Authorizing the Mayor's Execution of an Economic Incentive Agreement Between the City of McHenry, 3017 Route 120, LLC and Northwest suburban Auto Group, Inc. d/b/a Auto Villa Outlet 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 Mayor and City Clerk are hereby authorized to sign the attached Economic Incentive Agreement, bearing the date of May 2, 2016, be the City of McHenry, 3017 Route 120, LLC and Northern Illinois Auto Group, Inc. SECTION 2: All Ordinance or parts thereof in conflict with the terms and provisions hereof are hereby repealed to the extent of such conflict.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. APPROVED THIS 2"d DAY OF MAY 2016. Voting Aye: Voting Nay: Abstaining: Not Voting: Absent: ATTEST: CONDON, PETERSON, WIlVIMER, CURRY, SCHAEFER, GLAB, SANTI NONE ONE ONE ONE Susan E. Low Economic Incentive Agreement Between City of McHenry; 3017 Route 120, LLC and Northwest Suburban Auto Group, Inc. d/b/a Auto Villa Outlet This Economic Incentive Agreement ("Agreement") is made and entered into this 2" a day of May, 2016 ("Effective Date"), by and between the City of McHenry, an Illinois home rule municipality ("City"); 3017 Route 120 LLC ("Owner") and Northwest Suburban Auto Group, Inc. d/b/a Auto Villa Outlet ("Tenant"). A. In recognition of the importance of a successful business environment to the City's tax base, the City desires to enhance the long-term viability of the area on Illinois Route 120 east of the Fox River. B. The property owner is the current titleholder of the following property: 3017 Route 120, McHenry, IL 60050, consisting of approximately 3.36 acres with associated PINS: 09-25-355-024; 09-25-355-035; 09-25-355-036; 09-36-101-026 and 09-36-101-028 ("Subject Property"), legally described as follows: PARCELI`. LOTS 2, 3, 4 AND 5 IN CHICAGO ROAD SUBDIVISION, BEING A SUBDIVISION OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 25, TOWNSHIP 45 NORTH, RANGE 8 EAST OF THE THIRD PRINCIPAL MERIDIAN, ACCORDING TO THE PLAT THEREOF RECORDED OCTOBER 27, 1924 AS DOCUMENT NO.65665, IN BOOK 4 OF PLATS, PAGE 115, INMCHENRY COUNTY, ILLINOIS. PARCEL 2: LOTS 6 AND 7 (EXCEPT THAT PART OF THE LAND DEEDED TO THE PEOPLE OF THE STATE OF ILLINOIS, DEPARTMENT OF TRANSPORTATION, BY DOCUMENT NO. 91R0417982) IN CHICAGO ROAD SUBDIVISION, BEING A SUBDIVISION OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 25, TOWNSHIP 45 NORTH, RANGE 8 EAST OF THE THIRD PRINCIPALMERIDIAN, ACCORDING TO THE PLAT THEREOF RECORDED OCTOBER 27, 1924 AS DOCUMENT NO. 65665, IN BOOK 4 OF PLATS, PAGE 115, INMCHENRY COUNTY, ILLINOIS. PARCEL 3: ALL THAT PART OF LOTS 40, 41 AND 42 IN SUNNYSIDE SUBDIVISION, ACCORDING TO THE PLAT THEREOF RECORDED AS DOCUMENT 13880 AND PART OF LOT 4 IN EDGEWATER SUBDIVISION, ACCORDING TO THE PLAT THEREOF RECORDED AS DOCUMENT 48334 DESCRIBED AS FOLLOWS: COMMENCING AT THE MOST SOUTHERLY CORNER OF LOT 1 IN BLOCK 1 OF SAID EDGEWATER SUBDIVISION AND RUNNING THENCE NORTHEASTERLY ON THE SOUTHEASTERLY LINETHEREOF FORA DISTANCE OF 105. FEET TO A POINT ON A LINE DRAWN 20 FEET SOUTHWESTERLY OF AND PARALLEL TO THE NORTHEASTERLY LINES OF LOTS 1 AND 2 OF BLOCK 1 OF SAID EDGEWATER SUBDIVISION; THENCE NORTHWESTERLY ON THE LAST DESCRIBED PARALLEL LINE FOR A DISTANCE OF 72.63 FEET TO A POINT; THENCE NORTHEASTERLY ON A LINE FORMING AN ANGLE OF 90 DEGREES 44 MINUTES AND 20 SECONDS TO THE RIGHT OF A PROLONGATION OF THE LAST DESCRIBED LINE, AT THE LAST DESCRIBED POINT, FOR A DISTANCE OF 50 FEET TO A POINT; THENCE NORTHWESTERLY PARALLEL TO THE NORTHEASTERLY LINES OF SAID LOTS 1 AND 2 FORA DISTANCE OF 10 FEET TO A POINT; THENCE NORTHEASTERLY FOR A DISTANCE OF 9.89 FEET ALONG A LINE WHICH WOULD INTERSECT THE SOUTH LINE OF THE NORTH 100 FEET OF SAID LOT 42 AT A POINT 175.62 FEET WEST OF THE EAST LINE THEREOF, FOR A POINT OF BEGINNING; THENCE CONTINUING NORTHEASTERLY FOR A DISTANCE OF 141.51 FEET TO A POINT ON SAID LINE DRAWN 100 FEET SOUTH OF THE NORTH LINE OF SAID LOT 42 AND 175.62 FEET WEST OF THE EAST LINE THEREOF; THENCE NORTH PARALLEL WITH THE EAST LINE OF SAID LOT 42, A DISTANCE OF 15 FEET TO A POINT ON A LINE DRAWN 05 FEET SOUTH OF AND PARALLEL WITH THE NORTH LINE OF SAID LOT 42; THENCE EAST ON THE SOUTH LINE OF THE NORTH 85 FEET OF SAID LOT 42, A DISTANCE OF 65.62 FEET TO A POINT ON THE WEST LINE OF THE EAST 110 FEET OF SAID LOT 42; THENCE NORTH ON THE LAST DESCRIBED LINE A DISTANCE OF 85 FEET TO A POINT ON THE NORTH LINE OF SAID LOT 42; THENCE WEST ON THE NORTH LINE OF SAID LOT 42 FOR A DISTANCE OF 350 FEET TO A POINT, SAID POINT BEING 51.5 FEET EAST OF THE NORTHWEST CORNER OF SAID LOT 42; THENCE SOUTH PARALLEL WITH THE WEST LINE OF SAID LOT 42 FOR A DISTANCE OF 152.85 FEETTO A POINT; THENCE WEST PARALLEL WITH THE NORTH LINES OF LOTS 40,41 AND 42 OF SAID SUNNYSIDE SUBDIVISON FOR A DISTANCE OF 124.5 FEET TO THE NORTHEASTERLY LINE OF FOX RIVER ROAD, BEING ALSO THE SOUTHWESTERLY LINE OF LOT 40; THENCE SOUTHEASTERLY FOR A DISTANCE OF 10.7 FEET ALONG THE NORTHEASTERLY LINE OF SAID FOX RIVER ROAD TO AN ANGLE POINT THEREIN; THENCE SOUTHEASTERLY ON THE NORTHEASTERLY LINE OF SAID FOX RIVER ROAD TO A POINT 23.83 FEET NORTHWESTERLY OF THE MOST SOUTHERLY CORNER OF LOT 4 IN SAID EDGEWATER SUBDIVISION; THENCE NORTHEASTERLY ALONG A LINE DRAWN 23.03 FEET NORTHWESTERLY OF AND PARALLEL WITH THE SOUTHEASTERLY LINE OF SAID LOT 4 AND SAID SOUTHEASTERLY LINE EXTENDED, A DISTANCE OF 168.34 FEET; THENCE SOUTHEASTERLY FORA DISTANCE OF 102.84 FEETTO THE POINTOF BEGINNING. C. The Subject Property has been vacant for several years and the Owner is working with the Tenant to relocate one of its automobile sales and repair facilities ("Tenant Business") to the Subject Property. D. The City, Owner and Tenant desire to enter into this Agreement to stimulate the long-term use of the Subject Property in a manner that will enhance the Illinois Route 120 Corridor east of the Fox River. E. In order to accommodate the needs of the Tenant and ensure its long-term viability and successful business operation at the Subject Property, the Owner intends to undertake site improvements at the Subject Property described and valued as follows ("Improvements"): Parking lot seal coating and striping not -to -exceed: Four new truck lifts and installation not -to -exceed: Interior and exterior painting, including floor paint and epoxy, and signage not -to -exceed: Air Compressor and installation not -to -exceed: Interior and Exterior LED lighting conversion not -to -exceed: Roof, interior ceiling tile and HVAC replacement not -to -exceed: Total Maximum Reimbursement: $ 8,000 $ 16,000 $ 20,000 $ 4,000 $ 10,000 $ 92,000 $ 150,000 F. In order to attract the Tenant and to make it economically feasible for the Owner to complete the Improvements, the City has agreed to share a portion of the Sales Tax, as defined herein, generated by the Tenant at the Subject Property in an amount not -to -exceed $150,000, for certain Improvements to the Subject Property referred to herein. G. Definitions. The following definitions shall apply to terms used in this Agreement: 2 "Base Sales Taxes" means the retailers occupation taxes and service occupation taxes received by the City, generated solely at the Subject Property and by the Tenant, from the State of Illinois pursuant to the Service Tax Act (35 ILCS 11511 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 Owner Sales Tax as set forth in Paragraph Three and in accordance with the schedule outlined in Table One. "The Commencement Date" means December 31, 2017 and is the first date the City shall pay a Sales Tax Incentive Annual Payment, as defined herein, to the Owner as set forth in Paragraph Three and in accordance with the schedule outlined in Table One. "Event of Default" means a default under this Agreement which remains uncured as set forth in Paragraph Fifteen. "Gross Receipts" means as defined in the Retailer's Occupation Tax Act (35 ILCS 120/1 et seq.). "IDOR" means the Illinois Department of Revenue. "Maximum Total Payment Obligation" shall mean the maximum total amount, payable by the City hereunder not to exceed $150,000. "Sales Tax Incentive" means the payment set forth in Paragraph Six and in accordance with the Sales Tax Incentive Annual Payment outlined in Table One. "Sales Tax Incentive Annual Payment" expressed as a percentage of Base Sales Tax generated by the Tenant at the Subject Property. "Sales Tax Incentive Year" means the preceding twelve -months of the calendar year." H. The Owner and Tenant have indicated to the City that, but for the commitment and agreement of the City being made herein, the Owner would not have undertaken and will not undertake the Improvements and the Tenant will not relocate to the Subject Property. I. 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 sound and stable commercial growth within the corporate limits of the City. J. In order to make it economically feasible for the Owner and Tenant to agree to relocate and operate their business at the Subject Property, the City has agreed to share a portion of the Base Sales Tax generated by the Tenant, in an amount not -to -exceed the Maximum Total Payment Obligation. K. The parties hereto agree that the Base Sales Tax being shared hereunder shall only be that Base Sales Tax generated in the future by the Tenant not to exceed the Maximum Total Payment Obligation. 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: 3 1. Incorporation of Recitals. The Parties incorporate each of the above recitals into this Agreement as if set forth in their entirety in this Section 1. 2. Authority. This Agreement is made and entered into pursuant to the City's home rule powers and functions as granted in the Constitution if the State of Illinois. 3. Agreement to Pay. The City agrees to pay a Sales Tax Incentive to the Owner in an amount outlined in Table One. The City's payment obligation shall continue for so long as the Tenant is generating and the City is receiving Base Sales Taxes as defined herein. The Owner also acknowledges the Sales Tax Incentive shall be utilized solely for reimbursement for the purchase of Equipment and Labor included in the Improvements, not exceeding the Maximum Total Payment Obligation. 4. Evidence of Equipment Purchase and/or Labor Expenditure. The Owner acknowledges that prior to any Sales Tax Incentive payment distribution, the Owner shall provide the City evidence of the expenditure for which reimbursement is being sought, including, but not limited to, the following information: Paid invoice(s), which includes an itemization of each Equipment and/or Labor expenditure; date of Equipment purchase and/or when Labor was completed; company from which Equipment was purchased from or labor was completed 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 and/or Labor performed on the Subject Property; as well as a sworn affidavit of purchase and/or Labor which was completed, from and signed by the Owner signed and notarized. 5. Prevailing Wages to be Paid. Pursuant to 820 ILCS 130/0.01 et seq., not less than the prevailing rate of wages, as found by the City or determined by a court on review, shall be paid to all laborers, workers and mechanics performing work under the contract relating to the Improvements. 6. Limitation of City Responsibilities. Other than the Sales Tax Incentive agreed to be made pursuant to this Agreement, the City shall have no obligation to incur any expense or share any revenue associated with the Owner or Tenant. 7. Sales Tax Incentive. Commencing on December 31, 2017 and on the anniversary of December 31 every year thereafter, not -to -exceed the Maximum Total Payment Obligation of $150,000, the City shall pay an economic incentive, in the form of a Sales Tax Rebate, to the Owner, in accordance with Table One, below. The Sales Tax Incentive payment shall be paid by the City to the Owner following calculation of the amount due but not later than ninety (90) days after the Owner produces to the City the Tenant's Annual Sales Tax Reports, below. Provided, however, no Sales Tax Incentive Annual payment shall be paid to the Owner until such time the Owner fully completes the Improvements, and an occupancy permit is issued ("Occupancy Permit") to the Tenant, which has established their Tenant Business at the Subject Property. 0 TABLE ONE Sales Tax Incentive Year Sales Tax Incentive Annual Payment (expressed as a percentage of Base Sales Tax up to a Maximum Total Pa ment Obli ation Year 1 (December 31, 2017) 50% Year 2 (December 31, 2018) 50% Year 3 (December 31, 2019) 50% Year 4 (December 31, 2020) 50% Year 5 (December 31, 2021) 50% Year 6 (December 31, 2022) 25% Year 7 (December 31, 2023) 25% Year 8 (December 31, 2024) 25% Year 9 (December 31, 2025) 25% Year 10 (December 31, 2026) 25% 8. Sales Tax Reports/Accounting. Within ninety (90) days after the end of the twelfth month of each Sales Tax Incentive Year, the Tenant 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 for the benefit of the City during the prior Sales Tax Incentive Year. This information will be used by the City in calculating the Sales Tax Incentive Annual Payment due hereunder. The term "Gross Receipts," as used herein, shall have the same meaning as that which is ascribed to it in the Retailer's Occupation Tax Act. The Tenant 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 Revenue collected pursuant to this Agreement. The City shall use its best efforts to obtain such Sales Tax Information directly from the IDOR or the State of Illinois. 9. 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 the Tenant, the Lease and Sales Tax information received by the City, but shall be permitted to disclose such information and documents to employees and consultants as the City (except for any consultant that has a financial interest in any motor vehicle dealership within the Chicago metropolitan area, which consultant shall not be retained), in its sole discretion, deems appropriate in order to monitor compliance and audit this Agreement. The Owner and Tenant understand and agree that the provisions of this Agreement and any and all payments to the Owner pursuant to this Agreement are public records. The Owner and Tenant also agree to execute any consent form requested by the City and furnish such additional consent, powers of attorney or waivers as may be required by the IDOR to allow the IDOR to furnish to the City Sales Tax Information concerning automobile sales and leases transacted by the Tenant at the Subject Property. 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 5 permitted by the Illinois Freedom of Information Act 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. 10. Provisions Concerning Limitation on Debt. The receipt, or anticipated receipt, of Sales Tax Revenue, either directly or indirectly, from the Tenant Business at the Subject Property, as provided earlier in this Agreement, shall be a condition precedent to any obligation of the City to rebate money to the Owner. 11. Performance of the Work. Pursuant to 820 ILCS 130/0.01 et seq., not less than the prevailing rate of wages, as found by the City or determined by a court on review, shall be paid to all laborers, workers and mechanics performing work under the contract relating to the Improvements. Note that the prevailing rate of wages is revised by the Illinois Department of Labor and are available on the Department's official website. 12. No Interest; Limited Obligations. No interest shall be due on the monetary obligations set forth in this Agreement. The Owner acknowledges that: (a) the City shall not be required to make any payments of the Sales Tax Incentive to the Owner unless the Tenant 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 attributable to the gross sales generated at the Subject Property by the Tenant; (c) the sole source of the Owner's and Tenant's entitlement to payment of the Sales Tax Incentive shall be based upon the aforesaid Base Sales Taxes; (d) the City's Payment Obligation shall not be construed as general obligation of the City; and (e) the Owner bears all risk of non-payment resulting from the permanent closure of the Tenant's business operation at the Subject Property. For purposes of this Agreement, permanent closure shall mean the Subject Property remains either vacant or unoccupied for a period of twelve (12) or more consecutive months ("Permanent Closure"). 13. 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 payment to the Owner of the Maximum Total Payment Obligation; (b) the Permanent Closure of the Tenant prior to the City's payment to the Owner of the Maximum Total Payment Obligation of the City; or (c) the end of the tenth revenue year (December 31, 2026). This Agreement shall remain in effect for enforcement and accounting purposes following the expiration of the Term. 14. Miscellaneous. This Agreement shall be binding upon and inure to the benefit of the Parties. 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 Owner: 3017 Route 120, LLC C/O Terrance H. Upton (Manager) 1000 W Route 173 P.O. Box 899 Antioch, IL 60002 0 If to Tenant: Northwest Suburban Auto Group, Inc. d/b/a Auto Villa Outlet C/O James Gosnell (President) 3100 Kendall Crossing Johnsburg,IL 60051 If to the City: City of McHenry C/O City Administrator 333 S. Green Street McHenry, IL 60050 With a copy to: David W. McArdle Zukowski, Rogers, Flood & McArdle 50 Virginia Street Crystal Lake, Illinois 60014 15. 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. 16. 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 attorneys fees from the other party. 17. Only Agreement. This Agreement sets forth all the promises, inducements, agreements, conditions and understandings between the Owner, the Tenant 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 IC Mayor Date Tenant (Northwest Suburban Auto Group Inc. d/b/a Auto Villa Outlet) By `- James Snell, President Z:�McHenryCityoflEconomicIncentiveAgmtAutovilla. do c Owner (3017 Route 120, LLC) 7