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HomeMy WebLinkAbout07-211 r Resolution No. 07-211 RESOLUTION AUTHORIZING EXECUTION OF A PARTICIPATION AGREEMENT WITH McGRATH NISSAN, INC. 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 Diane Robertson, City Clerk,be and are hereby authorized and directed to execute a Participation Agreement on behalf of the City of Elgin with McGrath Nissan, Inc. 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: August 22, 2007 Adopted: August 22, 2007 Omnibus Vote: Yeas: 7 Nays: 0 Attest: s/Diane Robertson Diane Robertson, City Clerk Ordinance No. T 1-04 AN ORDINANCE AMENDING THE ORDINANCE ESTABLISHING AN INCENTIVE PROGRAM FOR COOK COUNTY RETAIL AUTOMOBILE DEALERSHIPS WHEREAS, the City of Elgin is located in Cook and Kane Counties; and WHEREAS, the real estate assessment classification system for Cook County results in a competitive disadvantage for automobile dealers operating in the Cook County section of the City of Elgin with respect to automobile dealers operating in Kane County; and WHEREAS, it is necessary to protect the city's tax base and promote employment within the City of Elgin to provide economic incentives to automobile dealers operating in that part of the City of Elgin situated in Cook County to continue such operations and invest in capital im- provements at such locations; and WHEREAS, the City of Elgin is a home rule unit within the meaning of Article VII of the Constitution of Illinois of 1970; and WHEREAS, the City Council of the City of Elgin previously adopted Ordinance No. T1- 99 to provide economic incentives to automobile dealers operating in that part of the City of El- gin situated in Cook County; and WHEREAS, the City Council of the City of Elgin has determined it is necessary and de- sirable to amend Ordinance No. T1-99 as provided herein; and WHEREAS, the program established herein is in furtherance of the promotion of the economic well being of the City of Elgin, a public purpose. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS THAT ORDINANCE NO. T1-99 BE AMENDED IN ITS ENTIRETY TO READ AS FOLLOWS: Section 1. Incentive Program. That there is hereby established an economic incentive program to be known as the Cook County Retail Automobile Dealership Incentive Program. For the purposes of this ordinance, the term "retail automobile dealership" shall mean any person, partnership, corporation or other entity that has been issued a sales tax identification number by the Illinois Department of Revenue in conjunction with the operation of a retail automobile deal- ership within the City of Elgin, Cook County, Illinois. EXHIBIT 8 Section 2. Sales Tax Rebate Program. Any retail automobile dealership operating in that portion of the City of Elgin located in the County of Cook that makes a minimum capital im- provement to property currently owned, including furniture and fixtures, in an amount in excess of two hundred percent (200%) of the average annual amount of local retail sales tax it has paid to the City of Elgin in the three years immediately proceeding the proposed date of the agree- ment to participate in the Sales Tax Rebate Program, as verified by the Illinois Department of Revenue, shall be eligible to receive a rebate of fifty percent (50%) of the increase in sales tax in excess of the preceding three year month average retail sales tax distributed to the City of Elgin from the sale of automobiles at the participating retail automobile dealership, as verified by the City of Elgin in accordance with section five of this ordinance. This incentive shall be available for a period of seven years from the date of the approval of the corporate authorities of the City of Elgin of a participation agreement between the City of Elgin and an eligible retail automobile dealership. Section 3. Capital Investment Grant Program. Any retail automobile dealership operating in the Cook County portion of the City of Elgin is eligible to receive an investment grant equal to fifteen percent (15%) of a capital investment in an amount of Fifty Thousand Dollars ($50,000) or more but not to exceed Two Hundred Thousand ($200,000). Capital improvements qualifying for such grant shall be completed within two years after approval by the corporate authorities of the City of Elgin of an agreement that includes a description of the capital improvements to be made between the City of Elgin and the dealership under this program. Capital improvements for which the City of Elgin has previously issued a certificate of occupancy or for which the City of Elgin has issued any other similar final approval for the construction of the capital improve- ments are not eligible for participation in the capital investment grant program. At the end of the first full month of the year following commencement of construction, one half of the estimated investment grant shall be paid. The remainder of the grant shall be paid at the earlier of the completion of construction or thirteen months after commencement of construction. No retail automobile dealership shall be eligible for a grant more than once in a period of five years. Any grant amounts received shall be repaid if capital improvements for which a grant is received are not completed within two years. Section 4. Business Retention Rebate. Any retail automobile dealership operating in Cook County that agrees in writing to continue such retail operation in the Cook County portion of the City of Elgin for a period of not less than five years is eligible to receive a retail sales tax rebate in the amount of thirty-five percent(35%) of the increase in retail sales tax received by the City of Elgin from the sale of automobiles. Any such rebate shall be repaid with interest if a dealership fails to remain for the five-year period. The rebate shall be based on the increase in sales tax over the average retail sales tax distributed to the City of Elgin during the past three years by the participating retail automobile dealership. Section 5. In order to participate in the Cook County Retail Automobile Dealership Sales Tax Rebate Program, an applicant shall submit copies of Illinois Department of Revenue ("IDR") form "IDR ST-1" and IDR form "IDR ST-556" that have been issued to the retail automobile dealership for each of the thirty-six (36) consecutive months immediately proceeding the execu- tion of the Retail Automobile Dealership Sales Tax Rebate Program with the City of Elgin. The 2 CITY OF ELGIN PARTICIPATION AGREEMENT COOK COUNTY AUTOMOBILE DEALERSHIP INCENTIVE PROGRAM This agreement is made and entered into thioW day of u • IA• 2007, by and between the CITY OF ELGIN, an Illinois municipal corporation (hereinafter referred to as the "City") and McGRATH NISSAN, INC., an Illinois corporation, doing business as "McGrath Nissan," (hereinafter referred to as "McGrath Nissan"). WITNESSETH WHEREAS, the City Council of the City of Elgin has enacted Ordinance No. No. T1-04 which provides for the establishment of an incentive program for automobile dealerships located within that area of the City of Elgin lying within Cook County; and WHEREAS, McGrath Nissan has made application to the City to participate in the sales tax rebate portion of the incentive program; and WHEREAS, the City Council has determined that it is in the best interest of the City to approve McGrath Nissan's application to participate in the sales tax rebate portion of the program. 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. That the application of McGrath Nissan to participate in the sales tax rebate portion of the City of Elgin Cook County Automobile Dealership Incentive Program is hereby approved by the City Council of the City of Elgin. 2. That the terms of Ordinance No. T1-04, a copy of which is attached hereto as Exhibit B, are hereby incorporated into this agreement in their entirety. McGrath Nissan agrees to comply with all conditions and terms as specified in the automobile dealership incentive program and as set forth in the attached Ordinance No. T1-04. In the event of any conflict between the provisions of this agreement and those of Ordinance No. T1-04, the provisions of this agreement shall control. 3. McGrath Nissan and the City agree that the annual average amount of local retail sales tax paid to the City during the three years immediately preceding the date of this agreement is one hundred fifty-four thousand, five hundred twenty-eight and 00/100 dollars ($154,528.00), hereafter referred to as the "base rate." In consideration of McGrath Nissan completing, on or before July 31, 2007, minimum capital improvements at the improved real property McGrath Nissan owns at 945 East Chicago Street, Elgin, Cook County, Illinois, hereafter referred to as the "facility") in an amount in excess of two hundred percent (200%) of the base rate, the City agrees that McGrath Nissan is eligible to receive a retail sales tax rebate in the amount of fifty percent (50%) of any annual increase from the base rate. 4. McGrath Nissan, when eligible, may apply for a fifty percent (50%) retail sales tax rebate annually for seven (7) consecutive periods. The first annual period shall commence on August 1, 2007 and shall terminate on July 31, 2008. Each of the six remaining periods shall commence annually on August 1st and terminate on July 31st. 5. In accordance with Ordinance No. T1-04, McGrath Nissan 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 McGrath Nissan. The performance bond or letter of credit shall be in an amount equal to any sales tax rebate being sought by McGrath Nissan plus the amount of any sales tax rebate previously paid by the City to McGrath Nissan under the terms of this agreement. In the event McGrath Nissan chooses not to provide a letter of credit or performance bond guaranteeing the repayment of all sales tax rebate funds sought by McGrath Nissan or paid to McGrath Nissan by the City during the consecutive periods, the City shall not disburse any sales 2 tax rebate funds to McGrath Nissan until McGrath Nissan 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 McGrath Nissan by the City under the terms of the agreement, provided the City's fiscal services director, in his or her sole discretion, determines the guarantor of any such personal guarantee presents documentation establishing a history of sound credit and solid financial strength indicative of the guarantor's financial ability to satisfy any repayment under the agreement. In the event McGrath Nissan elects to provide the City with any such personal guarantee, the City shall withhold payment of the final sales tax rebate earned by McGrath Nissan during the seventh consecutive period referenced in paragraph 4 of this agreement, or during the consecutive period referenced in paragraph 4 of this agreement in which McGrath Nissan attains the maximum amount in sales tax rebates from the City pursuant to Ordinance No. T1-04, whichever occurs first (collectively referred to as the "Final Sales Tax Rebate"). The City shall not make payment on the Final Sales Tax Rebate until McGrath Nissan 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 McGrath Nissan has otherwise satisfied all applicable terms and conditions of this agreement effective at that time. 6. McGrath Nissan agrees that it will not relocate the retail automobile dealership operating at the facility for a period of not less than ten years from the date of this agreement. Upon the expiration of said ten-year term, McGrath Nissan agrees to provide the City with written notice of its intent to relocate the retail automobile dealership operating at the facility six months before any such relocation and further 3 agrees to participate in good faith negotiations with the city to maintain a retail automobile dealership at the facility or at another location within the City's corporate limits. 7. The City and McGrath Nissan agree that the City shall not reimburse McGrath Nissan more than six hundred eighty-nine thousand, eight hundred two and no/100 dollars ($689,802.00) during McGrath Nissan's participation in the sales tax rebate portion of the City of Elgin Cook County Automobile Dealership Incentive Program created under Ordinance No. T1-04. 8. This agreement shall be binding on the parties hereto and their respective permitted successors and assigns. No assignments of this agreement shall be made without the express written consent of the City, it being expressly agreed and understood that any such consent may be provided or withheld by the City in its sole and exclusive discretion. 9. This agreement shall not be modified, amended or supplemented without the written agreement of the parties hereto. 10. This agreement shall be subject to and governed by the laws of the State of Illinois. Venue for the resolution of any disputes or the enforcement of any rights arising out of or in connection with this agreement shall be in the Circuit Court of Kane County, Illinois. 11. This agreement shall not be construed so as to create a joint venture, partnership, employment, or other agency relationship between the parties hereto. 12. The terms of this agreement shall be severable. In the event any of the terms or provisions of this agreement are deemed to be void or otherwise unenforceable, for any reason, the remainder of this agreement shall remain in full force and effect. 13. This agreement constitutes the only agreement between the parties hereto. No other agreements, either oral or written, exist between the parties hereto. 4 IN WITNESS WHEREOF, the parties have entered into and executed this agreement on the date and year first written above. CITY OF ELGIN McGRATH NISSAN, INC., an Illinois corporation, d/ b/a a McGRAT NISSAN By Gi- je4t. By - Mayor Its President Attest: Attest: City Cler Its Seetetary-Treasurer 5 applicant shall also execute a written agreement that shall include the items necessary to comply with the provisions of this ordinance, including but not limited to the following: 1. The retail automobile dealership's agreement that, at any time upon the reasonable re- quest of the City, it will demonstrate evidence of the cost of improvements equivalent to the City's payments hereunder. 2. The retail automobile dealership's agreement that it will not, during the life of the agreement, protest, contest, or in any other way seek to lower the amount of property tax rate with respect to the property. Nothing herein contained shall prevent the retail auto- mobile dealership from protesting the assessed valuation of the property. 3. The retail automobile dealership's agreement to promptly commence and diligent pur- sue renovation activities. Once construction has begun, the retail automobile dealership agrees to construct the improvements, both on-site and off-site, in substantial accordance with plans and specifications submitted at the time of application. 4. The retail automobile dealership's agreement that in the event that Automobile Dealer's motor vehicle dealership ceases to operate at the property at any time during the duration of the agreement, the retail automobile dealership agrees to remit to the City monies received from the City pursuant to this agreement. In order to secure the require- ment to make repayment, the retail automobile dealership shall post or cause to be posted in favor of the City a performance bond or letter of credit. Alternatively, the City may ac- cept a personal guarantee designating specific individuals who will make repayment in accordance with the agreement, provided the City's fiscal services manager, in his or her sole discretion, determines the guarantor of any such personal guarantee presents docu- mentation establishing a history of sound credit and solid financial strength indicative of the guarantor's financial ability to satisfy any repayment under the agreement. 5. Within seventy-five (75) days after each annual period, the retail automobile dealership shall provide the City with a statement signed by one of its officers as to the dollar amount of sales tax revenue paid to the State of Illinois for the benefit of the City during the prior annual period. Additionally, the retail automobile dealership 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 pursu- ant to this agreement for each calendar years during the life of the agreement. Addition- ally, the City shall use its best efforts to obtain such sales tax information directly from the Illinois Department of Revenue or the State of Illinois. To the extent permitted by law, the City shall endeavor to maintain the confidentiality of the information contained in such reports, but shall be permitted to disclose such information and documents to em- ployees 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 compli- ance and audit this agreement. The retail automobile dealership also agrees, upon the re- 3 quest of the City, to furnish such consents or waivers as may be required by the Illinois Department of Revenue to allow the Illinois Department of Revenue to furnish to the City sales tax information concerning the retail automobile dealership. 6. No recourse under or upon any obligation, covenant or agreement of this agreement or for any claim based thereon or otherwise in respect thereof shall be had against the City, its officers, agents and employees, in any amount or in excess of any specific sum agreed by the City to be paid to the retail automobile dealership, subject to the terms and condi- tions herein, and no liability, right or claim at law or in equity shall attach to or shall be incurred by the City, its officers, agents and employees in excess of such amounts, and all and any such rights or claims of the retail automobile dealership against the City, its offi- cers, agents and employees are hereby expressly waived and released as a condition of and as consideration for the execution of this agreement by the City. No recourse under or upon any obligations, covenant or agreement of this agreement or for any claim based thereon or otherwise in respect thereof shall be had against the retail automobile dealer- ship, its officers, agents and employees, in excess of their obligations to the City here- under, subject to the terms and conditions herein, and no liability, right or claim at law of or in equity shall attached to or shall be incurred by the retail automobile dealership, its officers, agents and employees, in excess of their obligations hereunder. 7. Such agreement may also include a limitation on the total amount of the rebate the re- tail automobile dealership may receive from any of the incentives contemplated in this ordinance and may also provide for a minimum period of time for which the retail auto- mobile dealership must continue operating in the portion of the City of Elgin located in Cook County, Illinois. 8. The City and the retail automobile dealership agree to do all things necessary or appro- priate to carry out the terms and provisions of this agreement and to aid and assist each other in carrying out the terms hereof. 9. This agreement shall be governed by the laws of the State of Illinois and the sole and exclusive venue for any disputes arising out of this agreement shall be within the Circuit Court for the Sixteenth Judicial Circuit, Kane County, Illinois. A waiver of any part of this agreement shall be limited to that specific event and shall not be a waiver of the en- tire agreement. Any notices required in this agreement shall be effective when in writing and three (3) days after mailing by certified mail, return receipt requested, or by deliver- ing the same in person or to an officer of such party or by prepaid telegram or private overnight courier, when appropriate, addressed to the party to be notified. Section 6. The provisions of this ordinance are intended to provide guidelines for consid- ering applications from retail automobile dealerships that are seeking to participate in the Cook County Retail Automobile Dealership Incentive Program. The City Council of the City of Elgin, in its sole and exclusive discretion, shall determine whether to provide any of the incentives con- templated in this ordinance after duly considering the costs incurred by the City of Elgin for pro- viding the incentives and after considering the relative gain derived by the public from those in- centives. 4 • Section 7. This ordinance shall be in full force and effect from and after its passage and publication in the manner prescribed by law, provided, however, that the amendatory provisions of this ordinance may be applied retroactively to any retail automobile dealership having an ex- isting agreement with the City of Elgin for participation in the Cook County Retail Automobile Dealership Incentive Program. s/Ed Schock Ed Schock, Mayor Presented: March 10, 2004 Passed: March 10, 2004 Omnibus Vote: Yeas: 6 Nays: 0 Recorded: March 11, 2004 Published: March 11, 2004 Attest: s/Dolonna Mecum Dolonna Mecum, City Clerk 5 • OFE�C ' I `'o-" ` � Agenda Item No. City of Elgin .....,..rye,, -QgTED cos June 8 2007 NORTHWEST —I ARK '. TO: Mayor and Members of the City Council i'4,. . _..,.M. FROM: Olufemi Folarin, City Manager romnrr�ir Grmr.tit and Raymond H. Moller, Director o Economic Divers jIed Thx Bti« Development &Business Services SUBJECT: Cook County Automobile Dealership Incentive Program Application — McGrath Nissan PURPOSE The purpose of this memorandum is to provide the Mayor and members of the City Council with information to consider an agreement with McGrath Nissan for participation in Cook County Automobile Dealership Incentive Program. RECOMMENDATION It is recommended that the City Council authorize staff to enter into a participation agreement with McGrath Nissan for the Sales Tax Sharing facet of the Cook County Automobile Dealership Incentive Program. BACKGROUND On August 29, 1996, the City Council passed an ordinance establishing an incentive program for automobile dealerships located in the Cook County portion of Elgin. The Cook County Automobile Dealership Incentive Program consists of three facets: 1) Sales Tax Sharing Agreement: Any Elgin automobile dealership whose facility is located in Cook County may take advantage of the sales tax sharing agreement by making a capital improvement to their facility of more than 200 percent of the average sales taxes paid over the past three years. During the next seven years, the eligible dealership will receive 50 percent of the increased local sales tax revenue generated over the business's three year average sales tax base. Cook County Automobile Dealership Incentive Program Application—McGrath Nissan June 8, 2007 Page 2 2) Investment Grant Program: Automobile dealers who make capital investments of at least $50,000 and up to $200,000 may be eligible for a 15 percent investment grant from the City. Upon approval, a participating dealer has up to two years to complete capital improvements. The City will pay half of the grant amount in the first month that improvement construction begins, with the balance being paid in thirteen months or when construction is completed, which ever comes first. The required improvements must be completed within the two-year period or all grant money previously distributed will be forfeited. Dealers are eligible for the Investment Grant Program only once every five years. 3) The Business Retention Rebate: To be eligible for the 35 percent business retention rebate, a dealership must agree in writing to continue their retail operations in Elgin for a period of at least five years. The dealership is also required to supply the City with Illinois Department of Revenue documentation of the revenues and sales taxes paid for the past three years. All sales tax information required from the Illinois Department of Revenue is required to remain confidential. McGrath Nissan previously indicated that they wouldl be making a $689,802 addition/renovation to the facility located at 945 E. Chicago Street. The renovations have been completed. The request to participate in the program was initiated prior to the completion of the improvements. COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED None DieA_FJNANCIAL IMPACT Should their request be approved, McGrath Nissan could receive 50% of the sales tax base above the past three year average for a seven year period. The McGrath Nissan rebate for the first year of the program is estimated at approximately $30,500. In subsequent years McGrath Nissan could receive payments of as much as $52,000. A total of$500,000 is budgeted in the Riverboat Fund, account number 275-0000-791.80-24, Economic Development Incentives-Car Dealers. To date there has been nothing encumbered or expended from this fund. The initial year's incentive would be paid in 2008. \r1 % AJEGAL IMPACT An agreement with the dealership will need to be prepared. Cook County Automobile Dealership Incentive Program Application—McGrath Nissan June 8, 2007 Page 3 ALTERNATIVES 1. The City Council may choose to consider an agreement with McGrath Nissan for Participation in the Cook County Automobile Dealership Incentive Program. 2. The City Council may choose to deny an agreement with McGrath Nissan for participation in Cook County Automobile Dealership Incentive Program. Respectfully submitted for Council consideration. RHM/jr