HomeMy WebLinkAbout04-57 Resolution No. 04-57
RESOLUTION
AUTHORIZING EXECUTION OF A SECOND AMENDMENT TO A
PARTICIPATION AGREEMENT WITH ROBERT LOQUERCIO ENTERPRISES
UNDER THE COOK COUNTY AUTOMOBILE DEALERSHIP INCENTIVE PROGRAM
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 a Participation Agreement on behalf of the City of Elgin with Robert Loquercio Enterprises,
doing business as Elgin Toyota under the Cook County Automobile Dealership Incentive Program,a
copy of which is attached hereto and made a part hereof by reference.
s/Ed Schock
Ed Schock, Mayor
Presented: March 10, 2004
Adopted: March 10, 2004
Omnibus Vote: Yeas: 6 Nays: 0
Attest:
s/Dolonna Mecum
Dolonna Mecum, City Clerk
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SECOND AMENDMENT TO
CITY OF ELGIN
COOK COUNTY AUTOMOBILE DEALERSHIP INCENTIVE PROGRAM
PARTICIPATION AGREEMENT
This Second Amendment is made and entered into this /t day of L- vut ,
2004,by and between the CITY OF ELGIN,an Illinois municipal corporation(hereinafter referred to
as the"City")and ROBERT LOQUERCIO ENTERPRISES,an Illinois corporation,doing business
as ELGIN TOYOTA(hereinafter referred to as "Elgin Toyota").
WITNESSETH
WHEREAS,the City Council and Elgin Toyota executed an agreement on March 10, 1999 es-
tablishing the terms and conditions of Elgin Toyota's participation in the sales tax rebate component
of the City of Elgin Cook County Automobile Dealership Incentive Program(the"Original Agree-
ment"); and
WHEREAS,Elgin Toyota and the City amended the Original Agreement to extend the date
for completing the required capital improvements at the Elgin Toyota facility until April 30, 2002,
accordingly executing a First Amendment to City of Elgin Cook County Automobile Dealership In-
centive Program Participation Agreement dated May 4, 2001 (the"First Amendment"); and
WHEREAS,Elgin Toyota and the City have independently determined that the neither the fi-
nancial nor the surety industry will issue either a letter of credit or performance bond guaranteeing
that Elgin Toyota will not relocate its automobile dealership from its present location before March
10,2009 without essentially requiring Elgin Toyota to encumber funds in an amount equal to the re-
tail sales tax rebate Elgin Toyota receives from the City through the sales tax rebate component of
the City of Elgin Cook County Automobile Dealership Incentive Program; and
WHEREAS,the City's withholding payment of the sales tax rebate that Elgin Toyota is enti-
tied to under the City of Elgin Cook County Automobile Dealership Incentive Program for a period
of ten years(in the absence of a letter of credit or performance bond from Elgin Toyota)is contrary
to the intent of the City of Elgin Cook County Automobile Dealership Incentive Program because it
significantly diminishes the incentive for an automobile dealership to invest in substantial capital
improvements at its facility; and,
WHEREAS,the City has passed Ordinance No.T 1-04 in order to provide greater flexibility in
the manner in which an automobile dealership participating in the Sales Tax Rebate component of
the City of Elgin Cook County Automobile Dealership Incentive Program may guarantee repayment
on any sales tax rebate paid by the City in event the dealership breaches the conditions for participat-
ing in the Sales Tax Rebate Program; and
WHEREAS, Elgin Toyota's president, Robert Loquercio, has agreed to execute a personal
guarantee to the benefit of the City guaranteeing the repayment of all sales tax rebates to the City in
the event Elgin Toyota fails to comply with conditions of the City of Elgin Cook County Automobile
Dealership Incentive Program; and
WHEREAS,the City's fiscal services manager has examined the financial records of Mr.Lo-
quercio and has determined that Mr. Loquercio's personal assets are sufficient to provide the City
with financial security for the repayment of any sales tax rebates to Elgin Toyota in the event the
agreement is breached; and
WHEREAS,the City has agreed to accept a personal guarantee from Mr. Loquercio guaran-
teeing the repayment of all sales tax rebates to the City in the event Elgin Toyota fails to comply with
conditions of the City of Elgin Cook County Automobile Dealership Incentive Program; and
WHEREAS,the City consented to Elgin Toyota's execution of an Assignment of Participa-
tion Agreement with Toyota Motor Credit Corporation, that agreement being dated November 1,
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2002 and providing that all City payments under the Original Agreement and the First Amendment
shall be made to Toyota Motor Credit Corporation(the"Assignment"); and
WHEREAS,the City and Elgin Toyota agree that the Assignment is and shall remain binding
upon this second amendment to the Original Agreement(as amended by the First Amendment).
NOW,THEREFORE,for and in consideration of the mutual promises and undertakings as set
forth herein, and for other good and valuable consideration,the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1.The foregoing recitals to this second amendment to the Original Agreement(as amended by
the First Amendment)are substantive and are hereby incorporated in the second amendment agree-
ment at though fully set forth herein.
2. Each instance of the term"Ordinance No. T1-99 " in paragraphs 3 and 9 of the Original
Agreement and paragraph 7 of the First Amendment shall be deleted and replaced with the term"Or-
dinance No. T 1-04."
3. Paragraph 6 of the Original Agreement is hereby amended to read as follows:
In accordance with Ordinance No.T 1-04,Elgin Toyota shall post or cause to
be posted in favor of the City a performance bond or letter of credit for the
benefit of the City before any sales tax rebate is paid to Elgin Toyota. The
performance bond or letter of credit shall be in an amount equal to any sales
tax rebate being sought by Elgin Toyota plus the amount of any sales tax re-
bate previously paid by the City to Elgin Toyota under the terms of this
agreement.In the event Elgin Toyota chooses not to provide a letter of credit
or performance bond guaranteeing the repayment of all sales tax rebate funds
sought by Elgin Toyota or paid to Elgin Toyota by the City during the con-
secutive periods,the City shall not disburse any sales tax rebate funds to El-
gin Toyota until Elgin Toyota has continued to operate the retail automobile
dealership operating at the facility for a period of not less than ten years from
the date of this agreement and has otherwise satisfied all applicable terms and
conditions of this agreement effective at that time.Alternatively,the City may
accept a personal guarantee designating specific individuals who will make
repayment of all sales tax rebate funds paid to Elgin Toyota by the City under
the terms of the agreement,provided the City's fiscal services manager,in his
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or her sole discretion,determines the guarantor of any such personal guaran-
tee presents documentation establishing a history of sound credit and solid fi-
nancial strength indicative of the guarantor's financial ability to satisfy any
repayment under the agreement. In the event Elgin Toyota elects to provide
the City with any such personal guarantee,the City shall withhold payment of
the final sales tax rebate earned by Elgin Toyota during the seventh consecu-
tive period referenced in paragraph 5 of this agreement, or during the con-
secutive period referenced in paragraph 5 of this agreement in which Elgin
Toyota attains the maximum$600,000.00 in sales tax rebates from the City,
whichever occurs first(collectively referred to as the "Final Sales Tax Re-
bate"). The City shall not make payment on the Final Sales Tax Rebate until
Elgin Toyota has continued to operate the retail automobile dealership operat-
ing at the facility for a period of not less than ten years from the date of this
agreement and Elgin Toyota has otherwise satisfied all applicable terms and
conditions of this agreement effective at that time.
IN WITNESS WHEREOF,the parties have entered into and executed this agreement on the
date and year first written above.
CITY OF ELGIN ROBERT LOQUERCIO ENTERPRISES., an Illi-
nois corp ation, d/b/a ELGIN TOYOTA
By By x
Mayor Robert Loquercio is President
Attest: Attest:
City Clerk auri&Quind , Its Secretary-Treasurer
4 Ad/. eit4
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F:\Legal Dept\Agreement\Elgin Toyota K Amd 04 Rev 1.doc
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4G" + , City of Elgin Agenda Item No. \
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January 9, 2004 of rig
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TO: Mayor and Members of the City Council N
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FROM: David M. Dorgan, City Manager ' FINANCIALLY STABLE CITYGOVERNNIENT
EFFICIENT SERVICES,
James R. Nowicki, Fiscal Servic:s AND QUALITY INFRASTRUCTURE
Director
SUBJECT: Amendment to the Cook County Automobile Dealership
Incentive Program
PURPOSE
The purpose of this memorandum is to provide the Mayor and
members of the City Council with information to consider
amending the existing Cook County Automobile Dealership
Incentive Program to eliminate the requirement for collateral .
RECOMMENDATION
It is recommended that the City Council amend the existing
ordinance to remove the collateral requirement under the Cook
County Automobile Dealership Incentive Program.
BACKGROUND
On August 28, 1996, the City Council passed an ordinance
establishing an incentive program for automobile dealers located
in the Cook County portion of Elgin. The program consists of
three facets: 1) Sales Tax Sharing; 2) Investment Grant; and 3)
Business Retention Rebate. Five automobile dealers have taken
advantage of the program since its inception.
In March, 1999, the original incentive program was modified for
Elgin Toyota (i . e. the rebate term was increased from five years
to seven years, the sales tax base amount was not changed, but
remained at the original May, 1994 , to April, 1997, time frame
and a rebate limit was set at $600, 000) .
Additionally, the revised ordinance required . . . (Section 5
paragraph 4) "that in the event the Automobile Dealer' s motor
vehicle dealership ceases to operate at the property at any time
Amendment/Cook County Automobile Dealership Incentive Program
January 9, 2004
Page 2
during the duration of the agreement, the retail auto dealership
agrees to remit to the City monies received from the City
pursuant to this agreement . In order to secure the requirement
of payment, the retail auto dealership shall post or cause to be
posted in favor of the City, a performance bond, letter of
credit, or such other instrument acceptable to the City (the
"Credit Facility") in an amount equal to any amounts paid out . "
The agreement and its requirements expire in 2007 .
To date, Elgin Toyota has earned $505, 107 . 26 in rebate. The
City has yet to pay out any money because Elgin Toyota has not
provided the required collateral, i . e. performance bond or
letter of credit . They have indicated that the cost and/or the
availability of the collateral makes it impractical to obtain.
Staff has contacted financial institutions as well as a
representative from a national insurance brokerage/consultant to
confirm the collateral issue. Due to the tight insurance
market, performance bonds guaranteeing the dealership will not
relocate are not obtainable. The letter of credit requires the
dealership to set aside a like amount of money equal to the
rebate that would be held in trust.
Therefore, Elgin Toyota is requesting that the City eliminate
the collateral requirement, but instead hold Robert Loquercio
(owner of Elgin Toyota) personally liable. While not as secure
as a letter of credit or bond, the City at a minimum, could sue
Mr. Loquercio should the original agreement be violated.
COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED
None
FINANCIAL IMPACT
To date, Elgin Toyota has earned $505, 107 . 26 in rebate
representing the past four years. Sufficient funds are budgeted
($1, 018, 573) and are available ($593, 446) in the Riverboat and
Riverboat Lease Funds, account numbers 275-0000-791 . 80-24 and
276-0000-791 . 80-27 to pay the rebate amount .
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Amendment/Cook County Automobile Dealership Incentive Program
January 9, 2004
Page 3
, I LEGAL IMPACT
1�v�'►'" An amendment to the current ordinance will be required.
ALTERNATIVES
1 . Modify the existing requirements .
2 . Continue with the existing requirements .
Respectfully submitted for Council consideration.
JRN/kk