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HomeMy WebLinkAbout08-202 Resolution No. 08-202 RESOLUTION AUTHORIZING EXECUTION OF A DEVELOPMENT AGREEMENT WITH ARTSPACE PROJECTS,INC. FOR PHASE I FEASIBILITY STUDY AND PHASE II PRECONSTRUCTION SERVICES BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,ILLINOIS,that pursuant to Elgin Municipal Code Section 5.02.020B(9) the City Council hereby finds that an exception to the requirements of the procurement ordinance is necessary and in the best interest of the city; and BE IT FURTHER RESOLVED that Ed Schock,Mayor,and Diane Robertson,City Clerk,be and are hereby authorized and directed to execute a development agreement on behalf of the City of Elgin with Artspace Projects, Inc. for Phase I Feasibility Study and Phase II Preconstruction Services, a copy of which is attached hereto and made a part hereof by reference. s/Ed Schock Ed Schock, Mayor Presented: August 27, 2008 Adopted: August 27,2008 Omnibus Vote: Yeas: 4 Nays: 0 Attest: s/Diane Robertson Diane Robertson, City Clerk t AGREEMENT /111 THIS AGREEMENT is made and entered into this I y day of $+ 2008, by and between the City of Elgin, an Illinois municipal corporation(hereinafter ferred to as the "City") and Artspace Projects, Inc., a Minnesota 501(c)(3) not-for-profit corporation, authorized to do business in the State of Illinois (hereinafter referred to as "Artspace"). WHEREAS, the City and Artspace have previously entered into an agreement dated May of 2008 wherein the City engaged Artspace to furnish certain services in connection with an individual artist survey in the City of Elgin and the neighboring Chicago metropolitan area; and WHEREAS, Artspace's mission is to create, foster and preserve affordable space for artists and arts organizations; and WHEREAS, the City desires to create a major, new, affordable live/workspace for artistically creative individuals and their families to live and work in the City of Elgin in or near downtown Elgin(hereinafter referred to as the "Project"); and WHEREAS, a four phased process is anticipated for the creation of the Proejct, such phases to include a Phase I Feasibility Study, Phase II Preconstruction, Phase III Construction, and Phase IV Lease Up/Operations; and WHEREAS, the City through this agreement authorizes Artspace to provide services pertaining to the Phase I Feasibility Study and the Phase II Preconstruction phase; and WHEREAS, Artspace will provide such services and collect the fees for such services more specifically described in this agreement. NOW, THEREFORE, for and in consideration of the mutual undertakings as set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledge,the parties hereto agree as follows: 1. Phase I Feasibility Study and Phase II Preconstruction Services. Artspace shall perform the Phase I Feasibility Study and Phase II Preconstruction Services (collectively the "Services") for the Project outlined in this Section 1. Artspace shall begin performing the Services within seven (7) days of the execution of this agreement by both parties hereto and upon Artspace's receipt of a payment from the City in the amount of$150,000 as outlined in Section 4 hereof. The Services as outlined below, are intended as a description of the outline of such Services to be performed by Artspace pursuant to this agreement and are not intended as an exhaustive description of the Phase I Feasibility Study or Phase II Preconstruction scope of work: a. Site Selection and Analysis (Phase I Feasibility Study) i. Investigate the identified priority sites in addition to any new sites or buildings. The existing six identified priority sites are depicted in the map entitled "Center City Map" prepared by the City of Elgin Department of Community Development attached hereto as Exhibit 1. Review existing studies as available and relating to site conditions including soil and hydrology studies, ALTA land surveys, title reports environmental phase I/II, and zoning requirements. Order updated or new studies, for the primary priority site as necessary to comply with Project's funding application requirements and to determine feasibility. Notwithstanding the foregoing or anything to the contrary in this agreement, the selection of a primary priority site, and/or the final selection of any site for the Project shall be subject to the approval of the city council of the City of Elgin. ii. Work with the property owner of the primary priority site to create a plan for site control and acquisition. Work in good faith toward the goal of establishing site control. Both parties acknowledge that obtaining site control is not a guaranteed deliverable under this Paragraph l a scope of work. iii. Integrate the individual artist market information and community goals to inform the residential portion of the project and any shared-use spaces. Determine the optimal mix of residential and community space based upon Project site, non-residential concept plan, artist market survey results, community goals and financial modeling. Notwithstanding the foregoing or anything to the contrary in this agreement, the final determination of the mix of residential, community space and non-residential shall be subject to the approval of the city council of the City of Elgin. Deliverables: new and/or updated site reports, summary of Project status b. Design and Financial Analysis (Phase II Preconstruction Services) Engage an architectural firm to create conceptual plans (site, floorplans, elevations) and schematic designs complying with funding application requirements. The selection of an architectural firm shall be subject to the approval of the City. ii. Create and refine sources and uses development budget. iii.. Complete financial modeling for priority site. iv. Engage cost estimator/contractor. The selection of the cost estimator/contractor shall be subject to the approval of the City. Deliverables: conceptual plans, schematic designs, sources and uses spreadsheet/finance model,summary of Project status c. Financing and Fundraising (Phase I Feasibility Study and Phase II Preconstruction Services, and Ongoing) 2 i. Identify public, private and philanthropic funding sources including LIHTC (9% or 4%), gap financing, HOME and CDBG funds. ii. Secure letters of interest and/or funding commitments for gap and primary funding sources to include in the LIHTC (9% or 4%) application. iii. Engage an architectural firm for the preparation of construction plans sufficient for the Illinois Housing Development Authority (IHDA) LIHTC submission. The selection of an architectural firm shall be subject to the approval of the City. iv. Complete due diligence necessary for submission of fmancing applications e.g.: housing market study, identifying property management company, affirmative fair housing marketing plan. v. Submission of financing applications for identified funding sources. Deliverables: letter of interest/funding commitments, construction plans (as defined in Paragraph iii. of this section), completed IHDA application for low income housing tax credits (9% or 4%),summary of Project status 2. Additional Scope of Work. The parties hereto understand and agree that the scope of work for the Phase I Feasibility Study and the Phase II Preconstruction Services as outlined in the preceding Section 1 is not meant to be exhaustive, but rather indicative of the work foreseen as necessary to determine feasibility of the residential portion of the Project. Artspace shall perform such additional ancillary work for the Project as part of this agreement and as part of the fees and expenses provided for in Section 4 hereof. The parties further agree to submit a complete application to the Illinois Housing Development Authority no earlier than April 2009. 3. Schedule. Artspace shall complete the Phase I Feasibility Study no later than twelve (12) months following the entry into this agreement. Artspace shall complete the Phase II Preconstruction Services no later than eighteen (18) months following the entry into this agreement. 4. Payment for Phase I Feasibility Study and Phase II Preconstruction Services. The City agrees to pay Artspace total fees and expenses of$725,000 for Artspace's fees and out- of-pocket costs and expenses related to the Phase I Feasibility Study and the Phase II Preconstruction Services outlined in Section 1 of this agreement. Artspace's current estimate of its pre-development expenses for the Project is attached hereto as Exhibit 2. Such fees and expenses shall be paid by the City to Artspace as follows: a. Within seven(7) days of the execution of this agreement by the City and Artspace the City will pay Artspace $150,000 of its total fee for the Phase I Feasibility Study and Phase II Preconstruction Services. 3 b. The City will pay Artspace $350,000 upon Artspace's establishing site control and prior to Artspace commencing the Services outlined in Section lb of this agreement. c. The City will pay Artspace $225,000 upon Artspace's submission of deliverables as outlined in Section 1 c of this agreement. Notwithstanding anything to the contrary in this agreement, any funds advanced by the City for prepaid third party vendor costs that are reimbursed by other construction or permanent sources of fmancing for the Project will be reimbursed to the City. Funds advanced by the City to Artspace to pay for Artspace related overhead and travel expenses will not be reimbursed by other sources of permanent or construction fmancing for the Project and will not be returned to the City. 5. Additional Phases of Development. The parties acknowledge and agree that each of the above Phase I and Phase II scopes of work may lead to the Project's continued progression to a point of financial closing, acquisition and construction readiness or it may result in the Project being deemed infeasible. Upon successful completion of Phase I Feasibility Study and Phase II Preconstruction Services as outlined in Section 1 above, Artspace will continue into Phase III Construction and Phase IV Lease-Up/Operations. In the event that Artspace seeks any financial contributions from the City for such additional phases any such fmancial contributions will be at the discretion of the City and will require a separate written agreement entered into between Artspace and the City. 6. Invoices. Artspace shall submit invoices in a format approved by the City. Progress reports will be included with all payment requests. Artspace shall maintain records showing actual time devoted and costs incurred. Artspace shall permit the authorized representative of the City to inspect and audit all data and records of Artspace for work done under this agreement. Artspace shall make these records available to the City at no costs and at reasonable times during the pendency of this agreement, and for a year after termination or completion of this agreement. 7. Term. This agreement shall become effective as of the date the parties have executed this agreement and, unless terminated, shall be deemed concluded on the date the City determines that all of Artspace work under this agreement is completed. A determination of completion shall not constitute a waiver of any rights or claims which the City may have or thereafter acquire with respect to any term or provision of this agreement. 8. Work Products. All work products prepared by Artspace or any of its sub- consultants pursuant hereto including, but not limited to, reports, designs, calculations, architectural rendings, work drawings, studies, photographs, models, fmancial statements or other recommendations, shall be the property of the City and shall be delivered to the City upon request provided, however, Artspace may retain copies of such work products for its records and Artspace may use such work products for the Project. 9. Termination. Notwithstanding any other provision hereof, either party may terminate this agreement upon thirty(30) days written notice to the other party if such other party has failed to perform according to the terms of this agreement. The party receiving the notice of 4 termination shall have a period of thirty (30) days from the date of such notice to correct such default, or, if such failure cannot reasonably be cured within such 30-day period, such additional reasonable period to cure such default as the other party may, in its discretion, grant, provided that the defaulting party has initiated reasonable corrective actions to cure such default during the 30-day period referenced herein. In addition, either party may terminate the Phase I Feasibility Study or the Phase II Preconstruction Services if, during the course of Artspace conducting such Services, either party reasonably determines in good faith that the Project is not feasible. In the event of termination pursuant to this section, Artspace will be entitled to payment for its out-of- pocket costs, time and expenses and for its services on a pro rata basis. In no event shall any monies paid to Artspace with respect to services it has completed be refunded. 10. Relationship of the Parties. The parties acknowledge and agree that Artspace is an independent contractor with respect to the City, and the parties to this agreement do not intend and this agreement shall not be construed to create a joint venture, partnership, employment or other agency relationship between and among the parties, nor is the city obtaining any interest in or to Artspace. 11. No Personal Liability. No official, director, officer, agent or employer of the City or Artspace shall be charged personally or held contractually liable under any term or provision of this agreement or because of their execution, approval or attempted execution of this agreement. 12. Non-Discrimination. In all hiring or employment made possible or resulting from this Agreement, there shall be no discrimination against any employee or applicant for employment because of sex, age, race, color, creed, national origin, marital status, of the presence of any sensory, mental or physical handicap, unless based upon a bona fide occupational qualification, and this requirement shall apply to, but not be limited to, the following: employment advertising, layoff or termination, rates of pay or other forms of compensation and selection for training, including apprenticeship. No person shall be denied or subjected to discrimination in receipt of the benefit of any services or activities made possible by or resulting from this Agreement on the grounds of sex, race, color, creed, national origin, age except minimum age and retirement provisions, marital status or the presence of any sensory, mental or physical handicap. Any violation of this provision shall be considered a violation of a material provision of this Agreement and shall be grounds for cancellation, termination or suspension, in whole or in part, of the Agreement by the City. 13. Assignment and Successors. This Agreement and each and every portion thereof shall be binding upon the successors and the assigns of the parties hereto; provided, however,that no assignment shall be made without the prior written consent of the City. 14. Delegations and Subcontractors. Any assignment, delegation or subcontracting shall be subject to all the terms, conditions and other provisions of this Agreement and Artspace shall remain liable to the City with respect to each and every item, condition and other provision hereof to the same extent that Artspace would have been obligated if it had done the work itself and no assignment, delegation or subcontract had been made. Any proposed subcontractor shall require the City's advanced written approval. 5 15. Severability. The parties intend and agreed that, if any paragraph, sub-paragraph, phrase, clause or other provision of this Agreement, or any portion thereof, shall be held to be void or otherwise unenforceable, all other portions of this Agreement shall remain in full force and effect. 16. Headings. The headings of the several paragraphs of this Agreement are inserted only as a matter of convenience and for reference and in no way are they intended to define, limit or describe the scope of intent of any provision of this Agreement, nor shall they be construed to affect in any manner the terms and provisions hereof or the interpretation or construction thereof. 17. Modification or Amendment. This Agreement and its attachments constitutes the entire Agreement of the parties on the subject matter hereof and may not be changed, modified, discharged or extended except by written amendment duly executed by the parties. Each party agrees that no representations or warranties shall be binding upon the other party unless expressed in writing herein or in a duly executed amendment hereof, or change order as herein provided. 18. Applicable Law. This agreement shall be deemed to have been made in, and shall be construed in accordance with the laws of the State of Illinois.Venue for the resolution of any disputes or the enforcement of any rights pursuant to this agreement shall be only in the Circuit Court of Kane County, Illinois. Notwithstanding anything else to the contrary in this agreement, with the sole exception of an action to recover the monies the City has agreed to pay to Artspace pursuant to Section 4 of this agreement, no action shall be commenced by Artspace against the City for monetary damages. 19. News Release. Artspace may not issue any news releases about the Project without prior approval from the City, nor will Artspace make public proposals developed under this agreement without prior written approval from the City prior to said documentation becoming matters of public record. 20. Cooperation With Other Consultants. Artspace shall cooperate with any other Consultants in the City's employ or any work associated with the Project. 21. Interference With Public Contracting. Artspace certifies hereby that it is not barred from bidding on this contract as a result of a violation of 720 ILCS 5/33E et seq. or any similar state or federal statute regarding bid rigging. 22. Sexual Harassment. As a condition of this agreement, Artspace shall have written sexual harassment policies that include, at a minimum,the following information: A. the illegality of sexual harassment; B. the defmition of sexual harassment under state law; C. a description of sexual harassment, utilizing examples; D. the vendor's internal complaint process including penalties; 6 E. the legal recourse, investigative and complaint process available through the Illinois Department of Human Rights, and the Illinois Human Rights Commission; F. directions on how to contact the department and commission; G. protection against retaliation as provided by Section 6-101 of the Human Rights Act. A copy of the policies shall be provided by Artspace to the Department of Human Rights upon request 775 ILCS 5/2-105. 23. Substance Abuse Program. As a condition of this agreement, Artspace shall have in place a written substance abuse prevention program which meets or exceeds the program requirements in the Substance Abuse Prevention Public Works Project Act at 820 ILCS 265/1 et seq. A copy of such policy shall be provided to the City's Assistant City Manager prior to the entry into and execution of this agreement. 24. City's Project Manager and Written Communications. The City's Project Manager for the Project shall be the City's Assistant City Manager. All recommendations and other communications by Artspace to the Assistant City Manager and to other participants which may affect cost or time of completion, shall be made or confirmed in writing. The Assistant City Manager may also require other recommendations and communications by Artspace be made or confirmed in writing. Confirmed electronic mail communications shall be deemed to be in writing. 25. Notices. All notices, reports and documents required under this Agreement shall be in writing and shall be mailed by First Class Mail, postage prepaid, addressed as follows: A. As to City: Sean R. Stegall Assistant City Manager City of Elgin 150 Dexter Court Elgin, Illinois 60120-5555 With a copy to: Cherie Murphy, Marketing Officer City of Elgin 150 Dexter Court Elgin, Illinois 60120-5555 7 B. As to Artspace: Wendy Holmes, Vice President, Consulting and Resource Development Artspace Projects, Inc. 250 Third Ave.N, Suite 500 Minneapolis, MN 55401 26. City Sponsorship. The City of Elgin shall be recognized as a sponsor of the Project and to receive the benefits of sponsorship consistent with the level of support provided in this agreement. At a minimum, the City's support shall be acknowledged on all printed materials promoting the Project and in all press releases and advertising regarding the Project through the following mandatory funding identification statement: "Funding for the Project is provided in part through the City of Elgin". Three samples of this acknowledgement shall be provided to the City. A logo provided by the City to Artspace shall be used for this purpose. 27. Compliance With Laws. Notwithstanding any other provision of this agreement it is expressly agreed and understood that in connection with the performance of this agreement that Artspace shall comply with all applicable Federal, State, City and other requirements of law, including, but not limited to, any applicable requirements regarding prevailing wages, minimum wage, workplace safety and legal status of employees. Without limiting the foregoing, Artspace hereby certifies, represents and warrants to the City that all Artspace's employees and/or agents who will be providing products and/or services with respect to this agreement shall be legal residents of the United States. Artspace shall also at its expense secure all permits and licenses, pay all charges and fees and give all notices necessary and incident to the due and lawful prosecution of the work, and/or the products and/or services to be provided for in this agreement. The City shall have the right to audit any records in the possession or control of the Artspace to determine Artspace's compliance with the provisions of this section. In the event the City proceeds with such an audit Artspace shall make available to the City Artspace's relevant records at no cost to the City. IN WITNESS WHEREOF, the parties hereto have entered into and executed this agreement as of the date and year first written above. FOR THE CITY: FOR ARTSP• CE PROJECTS, INC. B By A /LA Mayor V.P. Co g and Resource Develop• Atte City Clerk F:\Legal Dept\Agreement\Artspace Projects,Inc.-Phase I&Phase II-clean 7-7-08.doc 8 ';'.410- ,4, 4 ,,,t1.:-, . 4t: r' August 7, 2008 + 1' NIIIiii wa y TO: Mayor and Members of the City Council —_ =- FROM: Olufemi Folarin, City Manager c'""" Cherie Murphy, Marketing Officer SUBJECT: Pre-development Agreement with Artspace PURPOSE The purpose of this memorandum is to provide information to the Mayor and members of City Council to enter into a Pre-development Agreement for $725,000 with Artspace Projects, Inc. to provide services pertaining to a Phase I Feasibility Study and Phase II Preconstruction Phase for the development of an affordable live/work space for artists in Elgin's Center City area. RECOMMENDATION It is recommended that the City Council approve the Pre-development Agreement with Artspace for the amount of$725,000, to be phased over a two year period, with$150,000 payable in the 2008 budget year, and the remaining two payments totaling $575,000 payable in 2009 budget year. BACKGROUND Artspace, the nations leading nonprofit real estate developer for the arts, is based in Minneapolis, Minnesota. As a 501(c)(3) organization, their mission is to create, foster and preserve affordable space for artists and arts organizations. Since beginning in 1979, Artspace has completed twenty-one projects in cities across the United States, providing a mix of live/work units, studio space, and office and performance space. In many of their projects,retail space is often provided on the ground level. The driving force behind the success of Artspace projects is a notable community and economic impact. Market research conducted by ERA (attachment A), outlines the positive impact Artspace projects have had on other communities,including: • Provide reasonably priced housing for artists 1 • Spur new residential and retail development • Improve property values through increased homeownership and investment in the surrounding neighborhoods (an average median home value increase of 77%) Pre-development Agreement with Artspace August 7, 2008 Page 2 • Transform underutilized historic buildings • Enliven economically depressed areas (average per capital income increase of 33%) The impact of Artspace projects outlined in the ERA report reflect many of the specific goals set forth by the Elgin City Council in the Center City Master Plan adopted on May 28, 2000, including bringing more residential population to the Center City, creating more daytime work population, and attracting more retail/restaurants to the downtown. On March 6 and 7, 2008, the City of Elgin hosted focus groups and a public meeting to introduce Artspace to the Elgin community as well as local and regional arts groups. With over 130 local artists attending the public meeting on March 7th (the largest attendance Artspace has ever had for a public meeting), the results confirmed that Elgin and its arts community could support an Artspace project. In order to gather more specific information, the City Council authorized Artspace to conduct a market need and sustainability survey. Through this research, Artspace will be able to gather more definitive information to help determine the number and size of units that would be needed, as well as additional information necessary to customize the project to fit the needs of the Elgin arts community. City staff compiled a list of over 5,700 visual and performing artists who were invited to participate in this survey, which was kicked off by Artspace at a public meeting held in Elgin on July 24th. As of July 30, 108 artists have already replied to the survey, with 62 responding that they would move to Elgin to a live/work project, and 69 artists who would rent studio space. Site visits have been made to several Artspace facilities, including the original Artspace facility in St. Paul, Minnesota; the newest site which recently opened in Buffalo, New York; as well as the facility at Garfield Park in Chicago, which has been in operation approximately three years. Each facility was customized to accommodate the market needs for the local artist community and as a result, occupancy rates remain very high while tenant turn-over rates are consistently low. City staff members, working with Artspace, have toured numerous buildings and sites in the downtown Elgin area and have established a priority list of properties (attachment B) that appear to have the greatest potential as an Artspace facility. In order for Artspace to move forward with determining the feasibility of any of these sites, it is necessary to enter into a pre-development agreement that would cover a Phase I Feasibility Study and Phase II Preconstruction Services, as well as simultaneous Financing and Fundraising efforts. Pre-development Agreement with Artspace August 7, 2008 Page 3 The pre-development agreement (attachment C) includes the following key points: Phase I Feasibility Study 1. The review of environmental and site conditions of the priority site, as necessary, to comply with the project's funding application requirements and to determine feasibility. 2. Work with the current property owner to establish site control. 3. Integrate the market survey information and community goals to determine the optimal mix of residential and community space. Phase II Preconstruction Services 1. Engage an architectural firm to create conceptual and schematic plans. 2. Create and refine budget. 3. Complete financial modeling for priority site. 4. Engage cost estimator/contractor. Financing and Fundraising ( Ongoing throughout Phase I Feasibility Study and Phase II Preconstruction Services) 1. Indentify public, private and philanthropic funding sources, securing letters of interest and/or funding commitments for gap and primary funding sources. 2. Engage an architectural firm for the preparation of construction plans sufficient for Illinois Housing Development Authority LIHTC submission. 3. Complete due diligence for submission of financing application and submit financing applications for identified funding sources. Payment The $725,000 costs will be divided into three payments: 1. $150,000 within seven (7) days of the execution of the agreement(2008 budget) 2. $350,000 payable upon establishing site control (2009 budget) 3. $225,000 upon submission of deliverables outlined in Phase II (2009 budget) Pre-development Agreement with Artspace August 7, 2008 Page 4 COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED None FINANCIAL IMPACT The cost of this agreement totals $725,000 and is based upon a payment schedule phased over two years and based on deliverables outlined in the contract. The first payment of $150,000 would be made in 2008, within seven days of the execution of the agreement. This project was not budgeted in 2008 or within the 2008-2012 Financial Plan. The initial $150,000 could be funded through additional property taxes generated through the Central Area Tax Increment Financing Fund where$3.7 million was budgeted and$4.1 is levied to be received. In order to pay the remaining obligation of $575,000 an already existing funded project will need to be eliminated or postponed. LEGAL IMPACT None ALTERNATIVES 1. The City Council may choose to approve the agreement with Artspace in the amount of$725,000. 2. The City Council may choose not to enter into the agreement with Artspace in the amount of$725,000. Respectfully submitted for Council consideration. CLM Attachment