Loading...
HomeMy WebLinkAbout06-235 Resolution No. 06-235 RESOLUTION AUTHORIZING EXECUTION OF AN ECONOMIC INCENTIVE AGREEMENT WITH WAL-MART STORES, INC. (1000 S. Randall Road) BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,ILLINOIS,that Ed Schock,Mayor, and Dolonna Mecum, City Clerk, be and are hereby authorized and directed to execute an Economic Incentive Agreement with Wal-Mart Stores,Inc. on behalf of the City of Elgin for economic development assistance in connection with the development of 1000 S.Randall Road, a copy of which is attached hereto and made a part hereof by reference. s/Ed Schock Ed Schock, Mayor Presented: September 27, 2006 Adopted: September 27, 2006 Vote: Yeas: 7 Nays: 0 Attest: s/Dolonna Mecum Dolonna Mecum, City Clerk Elgin,IL Store#1814-03 9/21/06 EXHIBIT J CITY OF ELGIN, ILLINOIS ECONOMIC INCENTIVE AGREEMENT WAL-MART This Economic Incentive Agreement (this "Agreement") is made and entered into on this 27th day of September, 2006, by and between the CITY OF ELGIN, an Illinois municipal corporation (the "City"), whose offices are located at 150 Dexter Court, Elgin, Illinois 60120, and WAL-MART STORES, INC., a Delaware corporation ("Wal-Mart"), whose offices are located at 2001 S.E. 10th Street, Bentonville, Arkansas 72716. RECITALS: A. The City is a municipal corporation and enters into this Agreement pursuant to 65 ILCS 5/8-11-20 (the "Enabling Statute"), which authorizes Illinois municipalities to enter into economic incentive agreements under certain circumstances. The City is also a home rule municipality with the authority to enter into this Agreement. B. Wal-Mart is the owner of a portion of the real estate legally described on Exhibit A attached hereto, the portion of such real estate which is owned by Wal-Mart and which is being referred to in this Agreement is known and identified as Lot 10 on the Preliminary Plat of Subdivision for the property prepared by Atwell-Hicks, LLC, dated July 29, 2005 (the "Property"). After acquiring the Property, Wal-Mart intends to construct the following on the Property: a Super Wal-Mart retail store containing approximately 203,000 gross square feet of space, plus a garden center, seasonal sales area and automotive service area, substantially in accordance with Page SP-03 of the Site Plan prepared by Atwell-Hicks dated July 15, 2005, attached hereto as Exhibit B (subject to the approval of such Site Plan by the City). (Such Super Wal-Mart retail store containing approximately 203,000 gross square feet of space, plus a garden center, seasonal sales area and automotive service area is hereinafter collectively referred to as the "Project"). C. In the City resolution authorizing the entry into and execution of this agreement, the City has made the following findings, as required by the Enabling Statute: 1. The Property has remained vacant for at least one (1) year; 2. The proposed Super Wal-Mart store is expected to create or retain job opportunities within the City; 3. The development of the proposed Super Wal-Mart store will serve to further the development of adjacent areas; 4. But for this Agreement, the development of the proposed Super Wal-Mart store would not be possible; 5. Wal-Mart meets high standards of creditworthiness as demonstrated by having provided evidence of having funds available to pay the entire cost of developing the Property; 6. The development of the proposed Super Wal-Mart store will strengthen the commercial sector of the City; 7. The development of the proposed Super Wal-Mart store will enhance the tax base of the City; and 8. This Agreement is in the best interest of the City. D. Wal-Mart is conditioning its purchase of the Property and its development of the Project on the City's Agreement to pledge certain sales tax revenues to Wal-Mart, as provided in this Agreement. E. Subject to the terms of this Agreement, the City agrees to partially reimburse Wal- Mart for the costs of developing the Project. In reliance on the City's agreement, Wal-Mart intends to cause the Project to be developed, and to enter into such construction-related contracts as may be necessary to effect such development. F. This Agreement has been submitted to the City Council for consideration and review, and the City Council has —prior to the execution of this Agreement -- taken all actions required for this Agreement to become effective and enforceable. AGREEMENT: Now, therefore, for good and valuable consideration, and in order to strengthen the commercial sector and enhance the tax base of the City, and in order to induce Wal-Mart to develop the Project, the City and Wal-Mart hereby agree as follows: 1. Definitions. A. "Certificate of Occupancy" means documents issued by the City in accordance with the ordinances of the City that evidence Wal-Mart's construction of the Project in accordance with the Annexation Agreement for the Property and ordinances of the City. B. "Commencement Date" means the first day on which the Super Wal-Mart store opens for business on the Property. C. "Construction Plans" means the plans, drawings, specifications and related documents for the construction of the Improvements, together with all amendments and modifications thereto, submitted by or on behalf of Wal- Mart and approved by the City in accordance with this Agreement. 2 D. "Development Costs" means all costs incurred by Wal-Mart in connection with the design and construction of the Improvements and the development of the Project. E. "Improvements" means all buildings, facilities and site improvements necessary to the operation of the Project, including the relocation or improvement of any streets, alleys, easements or rights-of-way; and the construction or relocation of any utilities or drainage facilities. "Improvements" shall include, but not be limited to, the Reimbursable Improvements. F. "Pledged Sales Tax Fund" means the separate City account into which the Pledged Sales Tax Revenues are deposited from time to time. G. "Reimbursable Improvements" means the improvements to Randall Road and Bowes Road to be depicted in plans prepared by Wal-Mart's consulting engineer and approved by the City and the Kane County Highway Department in the proposed First Amendment to the Amended Memorandum of Intergovernmental Agreement referred to in Section 5D hereof. H. "Initial Construction" shall mean the commencement of site work in connection with the construction of the Project. 1. "Sales Tax Revenues" means for each calendar year that this Agreement is in effect, all revenues that the City receives from retail sales taxes from the State of Illinois pursuant to the Illinois Service Occupation Tax (35 ILCS 11511 et seq.), the Illinois Retailers Occupation Tax Act (35 ILCS 120/1 et seq.), and the Home Rule Municipal Retailer's Occupation Tax Act (65 ILCS 518-11-1) or any successors to (or substitutes for) any of such Acts that relate to the provision of any service or the sale of any goods from the Project on the Property. 2. Development. A. Construction. If Wal-Mart proceeds with the Project, Wal-Mart shall cause the Improvements to be constructed in accordance with all laws and ordinances of the City and the Annexation Agreement for the Property. Wal-Mart shall have sole responsibility for the selection and employment of all contractors, suppliers, agents, employees, consultants and professionals necessary to complete the Project, and for entering into contracts for the completion of the Project. Wal- Mart shall have the sole right to determine the means, methods and scheduling of construction (subject to compliance with the laws and ordinances of the City). The City shall not be a party to any such contracts and shall not be a third-party beneficiary of any such contracts. B. Construction Plans. If Wal-Mart proceeds with the Project, Wal-Mart shall submit the Construction Plans for approval by the City. The Construction Plans shall be prepared by a professional engineer licensed to practice in the State of 3 Illinois. The Construction Plans shall be sufficiently detailed to demonstrate to the City that the Improvements will be constructed substantially in accordance with the Site Plan, and in compliance with all applicable laws and ordinances and the Annexation Agreement for the Property. C. Changes to Plans. To the extent permitted by the Annexation Agreement for the Property, Wal-Mart shall have the right during construction to make reasonable changes to the Construction Plans (including without limitation modification of the construction schedule, modification of the areas in which Improvements are to be located, expansion or deletion of features, and other changes required in the exercise of Wal-Mart's business judgment), provided that the Project shall in all events be constructed substantially in accordance with the Site Plan. Notwithstanding the foregoing, no changes shall be made to the Reimbursable Improvements consisting of the improvements to Randall Road and Bowes Road without the express advanced approval of Kane County. In the event of any such changes to the Reimbursable Improvements Wal-Mart shall provide the City written notice of such changes within thirty (30) days after approval thereof by Kane County. D. Certificate of Occupancy. Promptly after substantial completion of the Improvements in accordance with this Agreement and in accordance with all applicable laws and ordinances, the City shall issue a Certificate of Occupancy ("CO") or a Temporary Certificate of Occupancy ("TCO"). Issuance of the CO or TCO will not be unreasonably withheld or delayed. Issuance of the CO or TCO shall be conclusive evidence that Wal-Mart has satisfied all conditions precedent to receiving its portion of the Pledged Sales Tax Revenues pursuant to this Agreement. If the City shall fail to issue a CO or TCO, the City shall, within ten (10) days after written request from Wal-Mart, provide Wal-Mart with a written document stating in detail the conditions that Wal-Mart will need to satisfy in order to obtain the CO or TCO (as the case may be). If the City issues a TCO, Wal-Mart shall use good-faith efforts to cause any conditions set forth in the TCO to be satisfied in order to allow the issuance of a CO. 3. Pledged Sales Tax Revenues. A. Pledge of Revenues. The City hereby pledges and agrees to pay to Wal-Mart or its designee one-third (1/3) of the Sales Tax Revenues in accordance with this Agreement, in order to reimburse Wal-Mart for a portion of the costs of the Reimbursable Improvements incurred by Wal-Mart in the construction of the Reimbursable Improvements, all as set forth in detail below (such 1/3 portion of the Sales Tax Revenues is hereinafter referred to as the "Pledged Sales Tax Revenues"). The City covenants and agrees that during the term of this Agreement, the City shall not further encumber or pledge the one-third (1/3) portion of the Pledged Sales Tax Revenues required to be deposited into the Pledged Sales Tax Fund or to take any action inconsistent with the terms and the intent of this Agreement, and agrees that such one-third (1/3) portion shall be deposited in the "Account" (as that term is defined below) and shall not be used 4 for any purposes whatsoever, except to pay Wal-Mart in accordance with this Agreement. The City hereby agrees to indemnify, defend and hold Wal-Mart harmless from and against all costs and losses (including reasonable attorneys' fees) incurred by Wal-Mart by reason of any claim, demand or suit arising from the failure of the City to properly apply and account for the Pledged Sales Tax Revenues. The City agrees to enact all ordinances and resolutions necessary to authorize the execution of this Agreement and the fulfillment by the City of its obligations under this Agreement. B. Payments by City. Beginning on the first January 15 following the calendar year in which the Project opens for business, and on each January 15 thereafter until the "Termination Date", being the earlier of (i) the date on which all principal and accrued interest hereunder has been paid in full, or (ii) January 15, 2015, the City shall pay to Wal-Mart or its designee all of the Pledged Sales Tax Revenues required to be deposited into the Pledged Sales Tax Fund. Payments shall continue annually until Wal-Mart or its designee has received the maximum principal amount of One Million Four Hundred Twenty-Five Thousand and Eight Hundred Dollars ($1,425,800), plus interest at four per cent per annum (4%) on the outstanding balance from the Commencement Date, compounded annually (collectively, the "Incentive Amount"). In the event that there are any funds remaining in the Pledged Sales Tax Fund on the Termination Date, the City shall have no obligation to pay such amounts to Wal-Mart. In the event that any principal or interest remains unpaid on the Termination Date, this Agreement shall terminate, and the City shall have no obligation to pay such amounts. Wal- Mart acknowledges that the payments hereunder are not general obligations of the City, and shall not constitute an indebtedness of the City or a loan or a liability of the City within the meaning of any Constitutional or statutory provision. The obligations of the City under this Agreement shall be secured solely by the pledge of the Pledged Sales Tax Revenues and shall be payable solely from the Pledged Sales Tax Revenues paid into the Pledged Sales Tax Fund. The parties understand and agree that the payment by the City to Wal-Mart of Pledged Sales Tax Revenues is to reimburse Wal-Mart(and Sam's Real Estate Business Trust by way of a concurrent separate agreement) for the Reimbursable Improvements consisting of offsite improvements consisting of portions of the improvements to Bowes Road and Randall Road known as the (1) Randall Road North improvements which has a current estimated cost of$511,900 and (2) known as the Randall Road South improvements which has a current estimated cost of $1,904,700, for a total reimbursement amount to both Wal-Mart and Sam's Real Estate Business Trust not to exceed $2,416,600 (an amount not to exceed $990,800 plus interest for Sam's Real Estate Business Trust and an amount not to exceed $1,425,800 plus interest for Wal-Mart). Within one hundred twenty (120) days following the completion of the Bowes Road and Randall Road improvements, Wal-Mart shall provide to the City a final accounting of all costs for the construction of such Bowes Road and Randall Road improvements including specific costs for the portion of such roadway improvements known as the Randall Road North improvements and the Randall Road South improvements. The City shall thereafter reimburse Wal-Mart fifty-nine percent 5 (59%) of the costs of construction of such Randall Road North improvements and Randall Road South improvements in a total amount not to exceed $1,425,800 plus interest at four percent (4%) per annum on the outstanding balance from the commencement date, compounded annually. C. Separate Account. The City agrees to cause its Treasurer to create a separate account within the City's accounting system designated as "Pledged Sales Tax Fund — Elgin Wal-Mart" (the "Account"). Beginning on the Commencement Date and continuing until the City's obligations hereunder are fully repaid, the City shall deposit or allocate all Pledged Sales Tax Revenues into the Account within ten (10) days after receipt of the Form ST-1. The City shall not permit the balance of any account to exceed the maximum that can be insured by the Federal Deposit Insurance Corporation or any successor agency and shall, if necessary, maintain multiple accounts in order to keep the balance of all accounts below such maximum amount, unless such deposits are collateralized with obligations of the United States of America, the State of Illinois or other entities in accordance with the City's published investment policy. D. Department of Revenue Forms. At the time of each filing of an Illinois Department of Revenue Form ST-1 or any successor reporting form with the Illinois Department of Revenue by Wal-Mart or any other commercial or retail business operating on the Property, Wal-Mart or such other business shall cause a copy of such form to be filed with the Treasurer of the City or such other official as the City may designate. Within twenty (20) days after the Treasurer or other official receives an ST-1 Form, the Treasurer or other official shall calculate and certify to the City the amount of Pledged Sales Tax Revenues due to Wal-Mart in accordance with this Agreement. The City and its Treasurer and other officials shall keep strictly confidential all information in the ST-1 Form, except to the extent that disclosure is necessary to third parties for the proper administration of this Agreement, or is required by law or under this Agreement. Wal-Mart shall advise in writing any purchaser or lessee of the Property (or any part thereof) of the reporting requirements in this Section 3D, but Wal-Mart shall not have any liability if such purchaser or lessee fails to comply with this Section 3D, unless such purchaser or lessee is an affiliate of Wal-Mart. E. Further Assurances. Wal-Mart and the City agree to co-operate and to take all additional actions as may reasonably be necessary in order to obtain the necessary information and to ensure the accurate calculation and deposits of the Pledged Sales Tax Revenues. The City agrees to take all actions necessary to provide for the systematic receipt of sales tax information for the Project from the Illinois Department of Revenue. To assist the City, Wal-Mart will supply or cause to be supplied to the City appropriate authorizations for the Illinois Department of Revenue to provide such information, including copies of filings with the Illinois Department of Revenue made by Wal-Mart and any other occupants of the Property. Wal-Mart and any other occupants of the Property shall, upon written request of the City, provide a power-of-attorney in form reasonably satisfactory to the Illinois Department of Revenue, authorizing the City to request and receive 6 gross revenue and other information necessary to allow the City to compute the amount of the Pledged Sales Tax Revenues. Wal-Mart shall advise in writing any purchaser or lessee of the Property (or any part thereof) of the power-of-attorney requirements in this Section 3E, but Wal-Mart shall not have any liability if such purchaser or lessee fails to comply with this Section 3E, unless such purchaser or lessee is an affiliate of Wal-Mart. F. Accounting of Receipts. No more than forty-five (45) days after the end of the calendar year in which Wal-Mart opens for business on the Property (and not more than forty-five [45] days after the end of each succeeding calendar year while this Agreement is in effect), the City shall cause its treasurer or other official to provide Wal-Mart with an accounting of receipts and expenditures from the Pledged Sales Tax Fund. G. Annual Resolution. The City shall provide for the payments required by this Agreement by adopting annually an appropriation therefor which shall be part of the City's annual budget pursuant to the Budget Ordinance to be adopted during each fiscal year in which payments may be due hereunder. 4. Wal-Mart's Right to Terminate. Wal-Mart may terminate this Agreement by giving written notice to the City in the event that Wal-Mart determines at any time prior to commencing construction of the Project, that the Project is not economically feasible. In the event of such termination, Wal-Mart and the City shall be released and relieved of all obligations to each other under this Agreement (except those that by their express terms are intended to survive such a termination), and the parties would execute such documents as might be necessary to effect such termination. 5. Contingencies. Notwithstanding anything to the contrary in this agreement, it shall be a condition precedent to the obligations of either party to perform its obligations under this Agreement that: A. The parties shall have executed and delivered a mutually acceptable Annexation Agreement relative to the annexation of portions of the Property into the City; B. The Property shall have been annexed into the City of Elgin; C. The City shall have enacted a Planned Development Ordinance acceptable to Wal-Mart relative to the development of the Property by Wal-Mart and others; and D. The City and Kane County shall have executed and delivered a First Amendment to "Amended Memorandum of Intergovernmental Agreement for Randall Road — I-90 Illinois Tollway to Hopps Road" permitting the creation of those access points between Randall Road and the Property depicted in the Site Plan of Wal-Mart approved by the City, and providing for the identification, specifications and approval of the offsite improvements to Randall Road and 7 Bowes Road including, but not limited to, the Randall Road North improvements and the Randall Road South improvements. In the event that any of the foregoing contingencies are not satisfied on or before twelve (12) months from the date of the entry into and execution of this agreement, then either party, upon written notice to the other party, may elect to terminate this agreement, and thereupon this agreement shall be null and void and of no further force and effect without any further obligations of the parties hereto. 6. Miscellaneous. A. Assignment. Prior to the opening of a Super Wal-Mart store for business on the Property, Wal-Mart's rights, duties and obligations under this Agreement may be assigned only with the consent of the City, which consent shall not be unreasonably withheld; provided, however, that Wal-Mart shall at all times have the right to assign its rights, duties and obligations hereunder to Wal-Mart Stores, Inc., or to any entity that is controlled by, controls, or is under common control with, Wal-Mart Stores, Inc. After the completion of construction of the Super Wal-Mart store, Wal-Mart shall have the unlimited right to assign its rights, duties and obligations under this Agreement without the consent of the City, but Wal- Mart shall provide the City with written notice of such a transfer. B. Default. Except as otherwise provided under this Agreement, in the event of any default under, or breach of, this Agreement, which default or breach remains uncured for thirty (30) days after written notice from the non-defaulting party, the non-defaulting party shall have all rights and remedies at law, or in equity. Nothing in this Agreement shall be construed as requiring Wal-Mart to open the Project for business or to operate the Project. C. Force Majeure. Neither the City nor Wal-Mart shall be considered in default under this Agreement if their performance is delayed by damage or destruction by fire or other casualty, condemnation, strike, lock-out, civil disorder, war, shortages or delays in delivery or equipment, materials or fuel, Acts of God or unusual weather conditions or other causes beyond such party's reasonable control, and the time for performance of obligations shall be extended by one day for every day of such delay. D. Notices. All notices under this Agreement shall be in writing. Notices shall be deemed properly given if personally delivered or if sent by a nationally- recognized "overnight" courier service such as Fed Ex, to the addresses set forth below: If to the City: City of Elgin 150 Dexter Court Elgin, IL 60120 Attn: City Manager 8 If to Wal-Mart: Wal-Mart Stores, Inc. 2001 S.E. 10th Street Bentonville, AR 72716 Attn: Regional Counsel, Real Estate, Illinois with a copy to: Levick, Timm & Garfinkel, LLC 770 Lake Cook Road Suite 150 Deerfield, IL 60015 Attn: Bruce D. Goodman Notices shall be deemed given on the date of delivery (if personally delivered) or (if delivered via "overnight" courier service) on the first business day after being given to the courier service with all charges prepaid. E. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Illinois, without regard to the conflicts of laws provisions of Illinois law. F. Merger. This Agreement constitutes the entire agreement of the parties hereto and supersedes all prior or contemporaneous verbal understandings between the parties concerning the allocation of sales tax revenue from the Wal-Mart project. This Agreement may be amended only by a written document executed by both parties hereto. G. Severability. In the event that any term or provision of this Agreement is held to be unenforceable by a court of competent jurisdiction, the remainder shall continue in full force and effect, to the extent that the remainder can be given effect without the unenforceable provision. H. City Representation. The City hereby represents and warrants that the City has undertaken all steps and procedures required by the Enabling Statute to enter into this Agreement, including the due and proper adoption of an ordinance specifically authorizing the City to enter into this Agreement. The City has followed, and will continue to follow, all necessary procedures and will take all such further actions as may be necessary under the Enabling Statute to fulfill its obligations under this Agreement. 1. Wal-Mart's Representation. Wal-Mart represents and warrants that Wal-Mart has full power and authority to enter into this Agreement, and that the person executing this Agreement on behalf of Wal-Mart has been duly authorized to so. 9 J. Payment of Claims. The City will pay and discharge from sources other than the Pledged Sales Tax Fund any lawful claims which, if unpaid, might become a lien or charge upon the Pledged Sales Tax Revenues payable to Wal-Mart or its designee hereunder. However, nothing herein contained shall require the City to make such payments so long as the City in good faith shall contest the validity of such claims. K. Remedies. Notwithstanding anything to the contrary in this Agreement, with the sole exception of an action to recover the Pledged Sales Tax Revenues the City has agreed to pay to Wal-Mart pursuant to Section 3B hereof, no action shall be commenced by Wal-Mart and/or any of its related entities and/or of their successors, assigns and/or grantees against the City, its officials, officers, employees, attorneys, agents, boards or commissions, and/or any other related entities for monetary damages for a breach of this Agreement. The provisions of this paragraph shall survive any termination and/or expiration of this Agreement. L. Collective Work Product. This Agreement is and shall be deemed and construed to be the joint and collective work product of the City and Wal-Mart and, as such, this Agreement shall not be construed against any party, as the otherwise purported drafter of same, by any court of competent jurisdiction in order to resolve any inconsistency, ambiguity, vagueness or conflict in the terms or provisions, if any, contained herein. M. Relationship of parties. This Agreement is not intended and shall not be construed as to create a partnership, employment, joint venture or agency relationship between the parties hereto. N. Prevailing Wage Act. Notwithstanding any other provisions of this agreement, it is expressly agreed and understood that in connection with all aspects of the design and construction of the improvements to Randall Road and Bowes Road referred to in sections 1 G and 5D hereof, that Wal-Mart and any of its contractors and sub-contractors shall comply with all requirements of the Prevailing Wage Act at 820 ILCS 130/0.01 et seq., as amended, including, but not limited to, paying the prevailing wage as required in such Act. SIGNATURE PAGE FOLLOWS 10 IN WITNESS WHEREOF, the City and Wal-Mart have executed this Agreement on the date first set forth above. CITY OF ELGIN, WAL-MART STORES, INC. an Illinois municipal corporation a Delaware corpo on By By: Ed Schock, Mayor Michael E. Gardner, Regional Vice- President-Design and Real Estate A st: City Clerk FALegal Dept\Agreement\Waknart-Economic Incentive Agr-WAC-clean 9-21-06.doc Apr a r e'tTonly by Wal-Mart Legal Team Date: ` 1 —� 11