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HomeMy WebLinkAbout07-163 Resolution No. 07-163 RESOLUTION AUTHORIZING EXECUTION OF A SECOND AMENDMENT TO DEVELOPMENT AGREEMENT WITH WATER STREET PLACE LLC FOR THE DEVELOPMENT OF 200 N. GROVE AVENUE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,ILLINOIS,that Ed Schock, Mayor, and Diane Robertson, City Clerk, be and are hereby authorized and directed to execute a Second Amendment to Development Agreement on behalf of the City of Elgin with Water Street Place, LLC for the development of 200 N. Grove Avenue, Elgin, Illinois, a copy of which is attached hereto and made a part hereof by reference. s/Ed Schock Ed Schock, Mayor Presented: June 27, 2007 Adopted: June 27, 2007 Vote: Yeas: 7 Nays: 0 Attest: s/Diane Robertson Diane Robertson, City Clerk 0„, OF,�C'2 aCity of Elgin Memorandum ���''1ILll1AA�, Date: June 21, 2007 To: Mayor and Members of the City Council Olufemi Folarin, City Manager From: William A. Cogley, Corporation Counsel Subject: Development Agreement between the City of Elgin and Water Street Place LLC for Redevelopment of Old Library Property Attached is an additional copy of my May 4, 2007 memorandum to you regarding the above- referenced development agreement. At the City Council meeting on May 9, 2007 the City Council approved the proposed amendment to the development agreement by extending to June 29, 2007, the date by which the City may terminate the development agreement based upon a review of the fiscal impact analysis provided by the developer. Following the City Council's approval of the Amendment Agreement on May 9, 2007, city staff met with representatives of the developer on May 16, 2007. The developer's representatives advised city staff that they would be submitting a proposal to the city regarding a further amendment to the development agreement which among other matters would provide for an extension of the commencement date of the development. The City Council meeting on June 27 2007 is the last City Council meeting prior to the expiration of the amended deadline of June 29, 2007 for the city to terminate the development agreement based upon the fiscal impact analysis. The developer has requested additional time to submit its proposed further amendment to the development agreement to the city. Based upon these circumstances I have prepared the attached Second Amendment to the Development Agreement which would further extend the current date of June 29, 2007 in Section 2(b) of the development agreement to and including August 10, 2007. It is expected that a resolution on this issue will be submitted to the City Council prior to such date. The attached Second Amendment to the Development Agreement is Item 10 on the Other Business portion of the City Council agenda for Wednesday, June 27, 2007. In the event the council determines not to approve the Second Amendment Agreement, it will be necessary for the council to adopt a motion directing staff to terminate the agreement pursuant to paragraph 2(b) of the development agreement, otherwise the city's right to terminate the agreement based upon such provision will expire and be waived as of June 29, 2007. Mayor and members of the City Council -2- June 21 2007 Olufemi Folarin Please contact me if you wish to discuss this matter or if you require any additional information at this time. WAC mg Attachments cc: Sean R. Stegall (w/att.) James R. Nowicki (w/att.) a ' - City of Elgin Memorandum (-'-IILUit, Date: May 4, 2007 To: Mayor and Members of the City Council Olufemi Folarin, City Manager From: William A. Cogley, Corporation Counsel Subject: Development Agreement between the City of Elgin and Water Street Place LLC for Redevelopment of Old Library Property Item 2 on the Other Business portion of the City Council agenda for next Wednesday, May 9, 2007, is a proposed amendment to the development agreement between the city and Water Street Place LLC providing for the redevelopment of the old library property at 200 N. Grove Avenue. The city and the developer previously entered into the subject development agreement dated December 6, 2006. Section 2(b) of the subject development agreement provides in part for the developer to provide to the city within a 120-day feasibility period further specified documentation in the form of a market study to demonstrate and validate to the city's reasonable satisfaction the developer's projected sales prices, lease rates and absorption schedule for the proposed mixed use residential and commercial development on the subject property such that the city can independently determine that it is likely to receive the estimated tax increment revenue and sales tax for the proposed mixed use residential and commercial development on the subject property. Developer's projected sales prices, lease rates and absorption schedule for the proposed development on the subject property and the estimated tax increment revenue and sales tax for the proposed development are set forth in Exhibits B and B-1 to the development agreement, copies of which are attached hereto. Also attached is a copy of Exhibit F to the development agreement which provides for the payment schedule for the city's cash development incentives which total $10,842,494 plus interest. Developer provided the city the market study referred to in Section 2(b) of the development agreement on April 6, 2007. Pursuant to Section 2(b) the city has 45 days from the receipt of such market study to provide written notice to the developer to terminate the development agreement in the event such documentation does not demonstrate and validate to the city's reasonable satisfaction the developer's proposed sales prices, lease rates and absorption schedule for the mixed use residential and commercial development on the subject property such that the city can independently determine that it is likely to receive the estimated tax increment revenue and sales tax for the proposed mixed use residential and commercial development on the subject property. Such a termination by the city would require City Council approval. Mayor and members of the City Council -2- May 4, 2007 Olufemi Folarin The city has previously retained the services of the consultant Virchow, Krause and Company to conduct a fiscal impact analysis of the proposed development. The city has forwarded developer's market study to Virchow Krause and city staff continues to review developer's market study with Virchow Krause. The 45-day time period in Section 2(b) of the development agreement, being the time period the city has to provide the developer written notice to terminate the agreement, will otherwise expire on May 21, 2007. City staff and the developer have mutually agreed to amend the development agreement by extending such 45-day time period to and including June 29, 2007. The amendment to the development agreement on next Wednesday's night's City Council agenda provides for such extension. City staff is currently in the process of completing its analysis with Virchow Krause. An additional meeting will be scheduled with the developer's representatives to further review developer's market study. City staff will then prepare a report for the City Council including among other matters the developer's market study and the Virchow Krause and Company analysis. Please contact me if you wish to discuss this matter or if you require any additional information at this time. WAC mg Attachments cc: Sean R. Stegall (w/att.) James R. Nowicki (w/att.) SECOND AMENDMENT TO DEVELOPMENT AGREEMENT THIS SECOND AMENDMENT TO DEVELOPMENT AGREEMENT is made and entered into as of the 27th day of June, 2007, by and between the City of Elgin, Illinois, a municipal corporation, (hereinafter referred to as the "City")and Water Street Place,LLC,an Illinois limited liability company, (hereinafter referred to as the "Developer"). WHEREAS,the City and the Developer previously entered into a Development Agreement dated December 6, 2006, relating to the City-owned property at the southwest corner of Kimball Street and Grove Avenue, Elgin, Illinois (hereinafter referred to as the "Subject Development Agreement" and WHEREAS, Section 2(b) of the Subject Development Agreement provided in part for the Developer to provide to the City within the 120-day Feasibility Period further specified documentation in the form of a market study to demonstrate and validate to the City's reasonable satisfaction the Developer's projected sales prices, lease rates and absorption schedule for the proposed Mixed Use Residential and Commercial Development on the Subject Property such that the City can independently determine that it is likely to receive the estimated tax increment revenue and sales tax for the proposed Mixed Use Residential and Commercial Development on the Subject Property; and WHEREAS,Developer provided the City the market study referred to in Section 2(b)of the Subject Development Agreement on April 6, 2007; and WHEREAS,pursuant to Section 2(b)of the Subject Development Agreement the City had forty-five(45)days from the receipt of such market study to provide written notice to the Developer to terminate the Subject Development Agreement in the event such documentation does not demonstrate and validate to the City's reasonable satisfaction the Developer's proposed sales prices, lease rates and absorption schedule for the proposed Mixed Use Residential and Commercial Development on the Subject Property such that the City can independently determine it is likely to receive the estimated tax increment revenue and sales tax for the proposed Mixed Use Residential and Commercial Development on the Subject Property; and WHEREAS,such forty-five(45)day time period in Section 2(b)of the Subject Development Agreement would have otherwise expired on May 21, 2007; and WHEREAS, the City and the Developer entered into an Amendment to the Development Agreement as of May 9, 2007, (hereinafter referred to as the "First Amendment Agreement") wherein the City and the Developer mutually agreed to amend the Subject Development Agreement by extending such forty-five (45) days time period in Section 2(b) of the Subject Development Agreement to and including June 29, 2007; and WHEREAS, the Developer has requested the City enter into a Second Amendment to the Development Agreement to further extend such time period in Section 2(b) of the Subject Development Agreement to and including August 10,2007 in order to allow Developer additional time to submit a proposed further amendment to the Development Agreement for the City's review. NOW,THEREFORE,for and in consideration of the mutual undertakings as set forth herein, and in consideration of the mutual undertakings set forth in the Subject Development Agreement, and in consideration of other good and valuable consideration,the receipt and sufficiency of which is hereby acknowledged,the parties hereto hereby agree as follows: 1. Section 2(b) of the Subject Development Agreement is hereby further amended to read as follows: "During such one hundred twenty (120) day Feasibility Period Developer shall provide to the City further documentation which shall demonstrate and validate to the City's reasonable satisfaction the Developer's projected sales prices, lease rates and absorption schedule for the residential and retail/restaurant components of the proposed Mixed Use Residential and Commercial Development on the Subject Project as set forth in Exhibit B attached hereto such that the City can independently determine that it is likely to receive the estimated tax increment revenue and sales tax for the proposed Mixed Use Residential and Commercial Development on the Subject Property. Such estimated tax increment revenue and sales tax expected to be received by the City for the proposed Mixed Use Residential and Commercial Development of the Subject Property for the time period ending in 2026 to be validated are as set forth in the Water Street Place Real Estate Tax Revenue Schedule dated September 20, 2006, attached hereto and made a part hereof as Exhibit B-1. The further documentation to be provided by the Developer to the City shall consist of a market study from a reputable independent sales and marketing firm,appraisal firm or real estate development consulting firm which shall analyze, among other matters, the projected sales prices (assuming an annual price increase of not more than 3.5%), upgrade targets, lease rates and a sales absorption schedule for the proposed Mixed Use Residential and Commercial Development of the Subject Property.Such market study shall include a comparable sales and leasing analysis as part of the sales and lease pricing analysis and shall include an analysis of comparable developments in the area as part of the absorption schedule analysis. In the event the Developer fails to provide the City with such documentation during such one hundred twenty(120)day Feasibility Period,then the City may,by written notice to the Developer within ten (10) days following such one hundred twenty (120) day Feasibility Period, elect to terminate this Agreement. In the event the Developer does provide such documentation to the City within such one hundred twenty(120)day Feasibility Period, and such documentation does not demonstrate and validate to the City's reasonable satisfaction the Developer's projected sales prices,lease rates and absorption schedule for the proposed Mixed Use Residential and Commercial Development on the Subject Property as set forth in Exhibit B attached hereto such that the City can independently determine that it is likely to receive the estimated tax increment revenue and sales tax for the proposed Mixed Use Residential and Commercial Development on the Subject Property as set forth in Exhibit B-1 attached hereto,the City may,by written notice to the Developer on or before August 10, 2007, elect to terminate this Agreement. If the Developer is so notified in writing by the City on or before August 10, 2007, then this Agreement shall be canceled and null and void with no further liability of either party hereunder. In the absence of written notice from the City to the Developer on or before August 10, 2007 electing to terminate this Agreement, or in the event the City provides the Developer written notice on or before August 10,2007 that the City is waiving its rights to cancel this Agreement pursuant to the provisions of this section, the City's right to cancel this agreement pursuant to the provisions of this section 2(b) shall be deemed waived, and this Agreement shall remain in full force and effect." 2 2. That in the event of any conflict between the terms of this Second Amendment Agreement, and the terms of the Subject Development Agreement and/or the First Amendment Agreement,the terms of this Second Amendment Agreement shall control. 3. That except as expressly amended in the First Amendment Agreement and this Second Amendment Agreement,the terms of the Subject Development Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have entered into and executed this Second Amendment Agreement on the date and year first written above. CITY OF ELGIN By Ed Schock, Mayor Attest: City Clerk WATER STREET PLACE LLC, an Illinois limited liability company By Richard S. Curto, a Manager By Ryan Companies, US,Inc., a Manager By Its Vice President F:\Legal Dept\Agreement\Development Agr-WaterStPl-2ndAmend-clean 6-21-07.doc 3