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HomeMy WebLinkAbout10-161 Resolution No. 10-161 RESOLUTION AUTHORIZING EXECUTION OF A DEVELOPMENT AGREEMENT WITH WINERGY DRIVE SYSTEMS CORPORATION FOR DEVELOPMENT OF A TWO-PHASED EXPANSION OF THE TOLLGATE ROAD FACILITY (950 Tollgate Road) 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 Development Agreement on behalf of the City of Elgin with Winergy Drive Systems Corporation for development of a two-phased expansion of the Tollgate Road Facility located at 950 Tollgate Road, a copy of which is attached hereto and made a part hereof by reference. s/Ed Schock Ed Schock, Mayor Presented: August 11, 2010 Adopted: August 11, 2010 Omnibus Vote: Yeas: 7 Nays: 0 Attest: s/Diane Robertson Diane Robertson, City Clerk ** Signed agreement was never provided to the City Clerk's Office. Resolution No. 10-161 RESOLUTION AUTHORIZING EXECUTION OF A DEVELOPMENT AGREEMENT WITH WINERGY DRIVE SYSTEMS CORPORATION FOR DEVELOPMENT OF A TWO-PHASED EXPANSION OF THE TOLLGATE ROAD FACILITY (950 Tollgate Road) 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 Development Agreement on behalf of the City of Elgin with Winergy Drive Systems Corporation for development of a two-phased expansion of the Tollgate Road Facility located at 950 Tollgate Road, a copy of which is attached hereto and made a part hereof by reference. s/Ed Schock Ed Schock, Mayor Presented: August 11, 2010 Adopted: August 11, 2010 - - Omnibus Vote: Yeas: 7 Nays: 0 IMPORTANT MESSAGE Attest: FOR A.M. 5/Diane Robertson DAT % -\\-VD TIME PM. Diane Robertson, City Clerk m OF CS: 40K\ PHONE/ CELL TELEPHONED PLEASE CALL bigLibf #4ft6WNNia (13.4getla.414:a RETURNED YOUR !`006:i4W6)-AW MESSAGE N_41 Qurcv \+s-• • SIGNED Resolution No. 10-161 RESOLUTION AUTHORIZING EXECUTION OF A DEVELOPMENT AGREEMENT WITH WINERGY DRIVE SYSTEMS CORPORATION FOR DEVELOPMENT OF A TWO-PHASED EXPANSION OF THE TOLLGATE ROAD FACILITY (950 Tollgate Road) 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 Agreement on behalf of the Cityof Elgin with Drive Systems execute a Development g Winergy y Corporation for development of a two-phased expansion of the Tollgate Road Facility located at 950 Tollgate Road, a copy of which is attached hereto and made a part hereof by reference. Ed Schock, Mayor Presented: August 11, 2010 Adopted: Vote: Yeas Nays: Recorded: Attest: \)\N__015 Diane Robertson, City Clerk (7\ ‘ b � 1 Resolution No. 10-161 RESOLUTION AUTHORIZING EXECUTION OF A DEVELOPMENT AGREEMENT WITH- WINERGY DRIVE SYSTEMS CORPORATION FOR DEVELOPMENT OF A TWO-PHASED EXPANSION OF THE TOLLGATE ROAD FACILITY (950 Tollgate Road) 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 Development Agreement on behalf of the City of Elgin with Winergy Drive Systems Corporation for development of a two-phased expansion of the Tollgate Road Facility located at 950 Tollgate Road, a copy of which is attached hereto and made a part hereof by reference. s/Ed Schock Ed Schock,'Mayor Presented: August 11, 2010 Adopted: August 11, 2010 Omnibus Vote: Yeas: 7 Nays: 0 Attest: s/ Diane Robertson Diane Robertson, City Clerk DEVELOPMENT AGREEMENT Winergy Drive Systems Corporation. (950 TOLLGATE ROAD) This Agreement made and entered into this 28th day of July, 2010, by and be- tween the CITY OF ELGIN, an Illinois municipal corporation (hereinafter referred to as the "City"), and Winergy Drive Systems Corporation., a corporation organized and exist- ing under the laws of the State of Delaware and authorized to do business in the State of Illinois, (hereinafter referred to as "Developer"). WITNESSETH WHEREAS, Developer is the owner of the property commonly known as 950 Tollgate Road, Elgin, Illinois 60123, where both the Developer's Mechanicals Drives Di- vision, and its affiliate Winergy Drive Systems Corporation, service and produce com- ponents for wind turbines for alternative energy suppliers, and provide other compo- nents and services for other industrial gear boxes and mechanical drives (hereinafter referred to as the "Tollgate Road Facility"); and WHEREAS, Developer is proposing a two-phased expansion of the Tollgate Road Facility; and WHEREAS, the Developer's first phase of the expansion will involve a $5 million investment adding 28,000 square feet to the Tollgate Road Facility (hereinafter referred to as the "Phase 1 Expansion")and will bring an estimated 25-30 new jobs to the Toll- gate Road Facility; and WHEREAS, the Developer's construction costs for the Phase 1 Expansion of the Tollgate Road Facility have exceeded the budget approved by the Developer's corpo- rate parent and has resulted in a delay in the Developer obtaining approval from its cor- porate parent to proceed with the Phase 1 Expansion of the Tollgate Road Facility; and WHEREAS, the Developer has reexamined all of its Phase 1 Expansion project expenses in an effort to identify and realize reductions and savings; and WHEREAS, the Developer has reduced the project scope, negotiated lower con- struction costs through a competitive bidding process and has value-engineered many aspects of the Phase 1 Expansion; and WHEREAS, the Developer has examined the fees and other additional charges associated with the Phase 1 Expansion of the Tollgate Road Facility; and WHEREAS, the Developer is requesting that the City waive its fees and charges relating to building permits, water taps and stormwater management review for the Phase 1 expansion of the Tollgate Road Facility; and WHEREAS, the Phase 1 Expansion of the Tollgate Road Facility may not occur in the absence of the City's commitment to limited economic development assistance; and WHEREAS, in order to provide for the continued development of the City includ- ing the Phase 1 Expansion of the Tollgate Road Facility, the City has agreed to provide the Developer certain development assistance for the Phase 1 Expansion of the Toll- gate Road Facility as hereinafter described; and WHEREAS, the Phase 1 Expansion of the Tollgate Road Facility will result in creating a significant number of new jobs in the City, and will result in increases in the City's tax revenues and an increase in tax revenues to other local taxing districts; and 2 WHEREAS, the City of Elgin is a home rule unit authorized to exercise any power and perform any function relating to its government and affairs; and WHEREAS, the development assistance as hereinafter described resulting in significant increases in employment opportunities, significant increases in the City's tax base and spurring additional development opportunities within the City are matters within the government and affairs of the City of Elgin. NOW, THEREFORE, for and in consideration of the mutual promises and under- takings contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. In consideration for Developer's commencement and completion of the Phase 1 Expansion of the Tollgate Road Facility and substantial investment in the City of Elgin, the City agrees to waive the following development fees and charges associated with the Phase 1 Expansion of the Tollgate Road Facility as follows: A. Water System Capital Connection Fees established under Section 17.04.050 I, of the Elgin Municipal Code, 1976, as amended which shall include: i. Waiver of one (1) water system capital connection fee for water service size exceeding four (4) inches; $25,000.00 ii. Waiver of one (1) water system capital connection fee for four (4)-inch water service size; $20,680.00 Developer shall be responsible, at its own cost, for making the physical water main tap necessary to provide water service for the Phase 1 Expansion of the Tollgate Road Facility. B. Building Permit Fees established under Chapter 16.48 of the Elgin Municipal Code, 1976, as amended, and pursuant to Ordinance No. G66-09, "Establishing Fees For Various City Services, Permits, Licenses, Use Of Facilities And Other Matters" which shall include: i. Waiver of one (1) water meter fee for 3-inch automatic meter reader (AMR); $1830.00 3 ii. Waiver of one (1) fire alarm fee plan review fee for 51-75 devices; $500.00 iii. Waiver of one (1) building permit fee @ $40.00 per 100 square feet; $1200.00 iv. Waiver of one (1) plan review fee: $300.00 v. Waiver of one (1) sprinkler plan review fee for 101-300 sprinkler heads; $600.00 vi. Waiver of one (1) plumbing permit fee for 38 fixtures; $2285.00 vii. Waiver of one (1) heating permit fee @ $60.00 per 1000 square feet, plus seven (7) rooftop and/or air conditioning units; $665.00 viii. Waiver of one (1) electrical permit fee @ $60.00 per 1000 square feet, plus two electrical services; $660.00 C. Stormwater Management Application and Review Fees established under Section 21.01.030 of the Elgin Municipal Code, 1976, as amended: i. The City utilizes third-party consultants to review plans submitted for sediment and soil erosion control; floodplain review; stormwater control; variance applications; and, the determination of any fees in lieu of site runoff storage. The City shall pass the direct cost of any such reviews or fees in lieu of site runoff storage to the Developer in accordance with Sec- tion 21.01.030 of the Elgin Municipal Code, 1976, as amended. ii. The City shall waive any applicable application or administrative costs fees associated with the plan reviews described in subparagraph i of this subsection, immediately above, that are not derived from the review of any such plans by the City's third-party consultants. D. Unforeseen Permits, Fees and Charges. In the event construction relating to the Phase 1 expansion of the Tollgate Road Facility requires Developer to obtain development permits from the City, or to pay City-imposed development-related fees for costs directly borne by the City, either or both of which that were not originally identified as part of this agreement, the City shall waive any such un- foreseen permit or development fees or costs provided the Phase 1 Expansion of the Tollgate Road Facility is substantially completed in the manner described in this agreement. 2. In further consideration of the Developer's commencement and completion of the Phase 1 Expansion of the Tollgate Road Facility and substantial investment in the 4 City of Elgin, the City shall file an application with the Illinois Department of Commerce and Economic Opportunity (DCEO) within ninety (90) days of the execution of this agreement seeking to amend the boundaries of the City's existing Enterprise Zone to include the Tollgate Road Facility. The City will undertake all reasonable action neces- sary to have the boundary amendment approved by DCEO and Developer will assist City in providing any documentary or factual information necessary to secure approval of the boundary amendment from DCEO. Developer recognizes and acknowledges that the determination on whether to approve the City's application to amend the boundaries of its Enterprise Zone is within the sole discretion of DCEO. In the event that the DCEO determines to so expand the boundaries of the Enterprise Zone, the City shall cooperate in the issuance of an Certificate of Eligibility for Sales Tax Exemption for the Enterprise Zone administrator. 3. Developer agrees to utilize commercially reasonable efforts to hire qualified Elgin residents for the initial employment opportunities at the Phase 1 Expansion of the Tollgate Road Facility. Developer shall have the sole discretion in determining whether any such applicant is qualified for the available employment positions. Such commer- cially reasonable efforts shall include, at a minimum, publicly advertising in newspapers published in the City of Elgin and posting notices at the Tollgate Road Facility specifying that Elgin residents qualified for available employment opportunities at the Phase 1 Ex- pansion of the Tollgate Road Facility will be given an initial hiring preference for such employment opportunities. Such commercially reasonable efforts shall also include pub- licly advertised job fairs to be conducted in the City of Elgin not later than ninety (90) days prior to the opening of the Phase 1 Expansion of the Tollgate Road Facility 5 whereby Elgin residents will be invited to such a job fairs and allowed to complete em- ployment applications. Developer shall also provide the City with written information on initial employment opportunities at the Phase 1 Expansion of the Tollgate Road Facility and provide the City advance written notice regarding the job fair. Not more than one hundred eighty (180) days following the opening of the Phase 1 Expansion of the Toll • - gate Road Facility, Developer shall provide a written report to the City identifying the number of Elgin residents who applied for employment at the Phase 1 Expansion of the Tollgate Road Facility and the number of Elgin residents who were hired as employees at the Phase 1 Expansion of the Tollgate Road Facility. For purposes of this section, El- gin residents shall be defined as persons whose principal and bona fide residence at the time of applying for employment is located within the corporate city limits of the City of Elgin. Residency shall be established by applicants through government-issued iden- tification consisting of a driver's license, state identification card, passport or military 1. identification card. Developer shall be entitled to rely on such government identification for the purposes of determining residency within the City of Elgin. 4. That the parties understand and agree that the economic development assis- tance being provided by the City to the Developer as set forth herein is expressly con- tingent upon Developer's commencing and completing the Phase 1 Expansion of the Tollgate Road Facility. In the event the Developer fails to construct the Phase 1 Expan- sion of the Tollgate Road Facility by July 1, 2011, such date to be extend for force mae- jure and causes beyond the reasonable control of Developer, the parties understand and agree that, subject to the provisions of paragraph 13 below the City will not be pro- viding the Developer any economic and development assistance pursuant to this 6 Agreement or otherwise, and Developer shall promptly pay to the City any applicable permit and impact fees set forth in paragraph 1 of this Agreement commensurate with the scope of the Phase 1 Expansion of the Tollgate Road Facility at the time construc- tion ceases, and the City's obligation to provide the Developer any permit or impact fee waivers shall be null and void. 5. That this agreement shall not be deemed or construed to create an employ- ment, joint venture, partnership, or other agency relationship between the parties hereto. 6. That all notices or other communications hereunder shall be made in writing and shall be deemed given if personally delivered or mailed by registered or certified mail, return receipt requested, to the parties at the following addresses, or at such other addressed for a party as shall be specified by like notice, and shall be deemed received on the date on which said hand delivered or the second business day following the date on which so mailed: TO THE CITY: TO THE DEVELOPER: City of Elgin Winergy Drive Systems Corporation. 150 Dexter Court 950 Tollgate Road Elgin, IL 60120-5555 Elgin, IL 60123 Attention: Richard G. Kozal Attention: With a copy of any such notice to: City of Elgin 150 Dexter Court Miller, Canfield, Paddock and Stone, Elgin, IL 60120-5555 P.L.C. Attention: William A. Cogley 840 West Long Lake Road, Suite 200 Corporation Counsel Troy, Michigan 48089 7 7. That the failure by a party to enforce any provision of this agreement against the other party shall not be deemed a waiver of the right to do so thereafter. 8. That this agreement may be modified or amended only in writing signed by both parties hereto, or their permitted successors or assigns, as the case may be. 9. That this agreement contains the entire agreement and understanding of the parties hereto with respect to the subject matter as set forth herein, all prior agreements and understandings having been merged herein and extinguished hereby. 10. That this agreement is and shall be deemed and construed to be a joint and collective work product of the City and the Developer and, as such, this agreement shall not be construed against the other party, as the otherwise purported drafter of same, by any court of competent jurisdiction in order to resolve any inconsistency, ambiguity, vagueness or conflict, if any, in the terms or provisions contained herein. 11. That this agreement is subject to and shall be governed by the laws of the State of Illinois. 12. That this agreement shall be binding on the parties hereto and their respec- tive successors and permitted assigns. This agreement and the obligations herein may not be assigned without the express written consent of each of the parties hereto, which consent may be withheld at the sole discretion of either the parties hereto. 13. The City and Developer agree that, in the event of a default by the other party, the other party shall, prior to taking any such actions as may be available to it, provide written notice to the defaulting party stating that they are giving the defaulting party sixty (60) days within which to cure such default. If the default shall not be cured 8 within the sixty (60) days period aforesaid, then the party giving such notice shall be permitted to avail itself of remedies to which it may be entitled under this agreement. 14. If either party fails or refuses to carry out any of the material covenants or ob- ligations hereunder, the other party shall be entitled to pursue any and all available remedies as specified herein or otherwise available at law, equity or otherwise. Notwith- standing the foregoing or anything else to the contrary in this agreement, no action shall be commenced by the Developer against the City for monetary damages. Venue for the resolution of any disputes or the enforcement of any rights pursuant to this agreement shall be in the Circuit Court of Kane County, Illinois. 15. Time is of the essence of this agreement. 16. This agreement shall be construed, and the rights and obligations of the City and the Developer hereunder shall be determined in accordance with the laws of the State of Illinois without reference to its conflict of laws rules. 17. With the sole exception of the fee waivers being provided by the City pursu- ant to section 1 of this Agreement, it is agreed and understood that all costs and ex- penses relating to the Phase 1 Expansion of the Tollgate Road Facility shall be the re- sponsibility of and shall be paid for by the Developer. 18. Developer agrees to and shall provide to the City written reports on the status of the Phase 1 Expansion of the Tollgate Road Facility. Such written reports shall be provided to the City quarterly or upon reasonable request to the City. Such written re- port shall contain a description of the progress on the project and such other information with respect to the performance of Developer's obligations as may be reasonably re- quested by the City. 9 19. Notwithstanding any other provisions of this agreement, it is expressly agreed and understood by the Developer and the City that in connection with the performance of this agreement and the Phase 1 Expansion of the Tollgate Road Facility that Devel- oper shall comply with all applicable federal, state, city and other requirements of law. 20. To the fullest extent permitted by law, Developer agrees to and shall indem- nify, defend and hold harmless, the City, its officials, officers, employees, attorneys, agents, boards and commissions from and against any and all claims, suits, judgments, costs, attorney's fees, damages or other relief, to the extent resulting from or arising out of negligent actions or omissions of the Developer in connection with this agreement, including negligent acts or omissions of employees, agents of the Developer arising out of the performance of this agreement, or in any way resulting from or arising out of or alleged to be resulting from or arising out of any violation and/or breach of the terms or provisions of this agreement by the Developer, including any violation and/or breach by employees, agents of the Developer. In the event of any action against the City, its offi- cials, officers, employees, agents, attorneys, boards or commissions covered by the foregoing duty to indemnify, defend and hold harmless such action shall be defended by legal counsel of the Developer's choosing, subject to the City's approval, the costs of which shall be paid by the Developer. The provisions of this paragraph shall survive any termination and/or expiration of this agreement. 21. To the fullest extent permitted by law, Developer agrees to and shall indem- nify, defend and hold harmless the City, its officials, officers, employees, attorneys, agents, boards and commissions, from and against any and all third party claims, suits, judgments, costs, attorneys' fees, expert witness fees and expenses, damages or other 10 i. relief, in any resulting from or arising out of the City's execution of this agreement and the City's performance of this agreement, and the development approvals provided by the City as provided for in this agreement. In the event of any action against the City, its officials, officers, employees, agents, attorneys, boards or commissions, covered by the foregoing duty to indemnify, and defend and hold harmless, such action shall be de- fended by legal counsel of the Developer's choosing and the costs of which will be paid for by the Developer. Additionally, in the event of such third party action the Developer to the extent permitted by law shall upon the request of the City attempt to intervene in such proceedings and join the City in the defense thereof. 22. Developer on behalf of itself and its respective successors and assigns hereby acknowledges the propriety, necessity and legality of all of the terms and provi- sions of this agreement, and does hereby further agree and does waive any and all rights to any and all legal or other challenges or defenses to contest the propriety, ne- cessity and legality of any of the terms and provisions of this agreement and hereby agrees and covenants on behalf of itself and its successors, assigns and grantees of the Subject Property, not to sue the City or maintain any legal action or other defenses against the City with respect to any challenges the propriety, necessity and legality of any of the terms and provisions. 11 i' IN WITNESS WHEREOF, the parties hereto have entered into and executed this agreement on the date and year first written above. CITY OF ELGIN, a municipal Winergy Drives Systems Corporation, corporation By: By: � - 2_.C- Mayor C-Mayor \ 1 Its \ ar,2 c^;c__ \ � -Fe Attest: City Clerk i. 12 • OF ESC O`4 ` Q' City of Elgin Agenda Item No. a. l• 'III- _ _> q -'1 TEDVt3'.- Jul 22 2010 Y , NORTHWEST -J 16 D ♦ K TO: Mayor and Members of the City Council ;onpc{row(ii ari:( FROM: Sean R. Stegall, City Manager ,, D;,,•,sq;,,t r,t+3;,C Richard G. Kozal, Assistant Ci Manager SUBJECT: Siemens Industry, Inc. (950 Tollgate Road)Economic Development Agreement PURPOSE The purpose of this memorandum is to provide the mayor and members of the city council with information for considering the approval of an economic development agreement with Siemens Industry, Inc. at 950 Tollgate Road. RECOMMENDATION It is recommended that the city council approve the economic development agreement with • Siemens Industry, Inc. BACKGROUND Executive Summary Siemens AG is a German multinational corporation with two facilities in Elgin that are being operated by wholly-owned Siemens subsidiaries. The Mechanical Drives facility is operating at 950 Tollgate Road and the Winergy facility is located at 1401 Madeline Drive (off Big Timber Road west of Randall Road). Siemens is contemplating a two-phased expansion of its Mechanical Drives facility and is requesting development assistance from the city to help defray the construction costs. The first phase of the Siemens construction will require a $5 million investment to add 28,000 square feet as part of the physical plant expansion. The additional property tax increment from this new construction is estimated to be $126,000 annually. The plant expansion will bring an estimated 25-30 new jobs to Siemens' Mechanical Drives facility. Work on the first phase of the expansion will commence this year. The second phase of the development is scheduled to occur within several years and is still being refined at this time. • Siemens Industry, Inc. Economic Development Agreement July 22, 2010 , Page 2 The city will not incur any cost under the proposed development agreement with Siemens. Siemens is requesting that the city waive certain building and impact fees as part of the city's development assistance: • Water System Capital Connection Impact Fees—$45,680 • Building Permits---$8,040 • Total Estimated Amount of Fee Waiver: $53,720 Siemens will be extending hiring preferences to qualified Elgin residents seeking employment for the new jobs created with the expansion of the Mechanical Drives facility under the proposed economic development agreement. Siemens is also requesting that the city seek to expand the boundaries of its existing Enterprise Zone (EZ) to include Siemens' Mechanical Drives facility. Being located within the city's EZ will enable Siemens to save approximately $150,000 in sales tax on construction materials used for the facility's expansion. There is no cost to the city to expand the EZ boundaries. The management staff is recommending that the city council agree to Siemens' proposed development assistance. Siemens Development History within Elgin and Potential for Future Expansion A. Fried. Flender AG, Bocholt, a German multinational corporation, established its North American headquarters in Elgin 25 years ago as the Flender Corporation. The Flender Corporation is currently operating at 950 Tollgate Road. Flender developed Winergy AG in 1981 as a "wind energy" business unit to satisfy the growing worldwide demand for drive systems in wind turbines. Flender spun off its wind energy business unit in 2001 and established the Winergy Drive Systems Corporation in Elgin. Production commenced at the Elgin facility that same year. Siemens AG acquired Flender and its Winergy subsidiary about five years ago. The businesses were originally absorbed into Siemens Energy and Automation, Inc. (SEA), a subsidiary of Siemens. Last year, SEA changed its name to Siemens Industry, Inc., and remains a subsidiary of Siemens AG. About a year-and-a-half ago, Siemens AG contracted with PANCOR to develop and construct a build-to-suit, long-term lease production facility designed to meet the demands for Winergy gear boxes for wind turbines. Winergy moved its operations from 950 Tollgate Road to 1401 Madeline Drive and expanded its manufacturing and service operations for gear boxes. The Winergy site on Madeline Drive is approximately 170,000 square feet and can be expanded to twice its current size when sales warrant. Siemens Industry, Inc. Economic Development Agreement • July 22, 2010 Page 3 Siemens Mechanical Drives (SMD), the sister company of Winergy, continues to occupy 950 Tollgate Road. SMD manufacturers the gears for the gear boxes and is a supplier to its sister company, Winergy. SMD also supplies gears and service for gears to other heavy industries such as mining and earth-moving equipment. The existing SMD site at 950 Tollgate Road comprises approximately 106,000 square feet. The phase 1 expansion will meet the growing demands for the wind power business and add approximately 28,000 square feet to expand the facility's heat treatment operations. This expansion will add 25-30 new jobs and is expected to satisfy demand for the next 3-5 years. The current master plan for SMD is to build another mirror image (28,000 square feet) of the current expansion space when sales demand increased production. This would bring the 950 Tollgate Road location to about 162,000 square feet when fully built out. Siemens AG has previously expressed interest in establishing future manufacturing processes to the U.S. and co-locating in the Elgin area. It is not unreasonable to believe that the team that will be responsible for selecting these future manufacturing locations will look back at the cooperation Siemens received from the city on past projects. The Elgin Area Chamber of Commerce has played a critical role in assisting Siemens with its facility expansions in the city and was instrumental in facilitating SMD's current expansion plans. Economic Development Agreement The proposed economic development agreement recites the city's purposes in providing economic development assistance to SMD and conditions the city's award on the completion of the phase 1 expansion of the SMD site by July 1, 2011. In the event the phase 1 expansion is not completed by that date, or in the event the expansion is modified so that it does not provide 25- 30 new jobs or create an additional 28,000 square feet of floor area, SMD is required to reimburse the city for the permit and impact fees the city waived in conjunction with the construction. The proposed economic development agreement recites the specific building and impact fees the city will be waiving. The water system capital connection impact fees comprise the largest component of the city's assistance. Water system capital connection fees in the amount of $25,000 and $20,680 are being waived for one water service connection in excess of four inches and one four-inch water service connection, respectively. The $8,040 in building permit fee waivers includes the fee for the automatic water reader, $1,830; fire alarm plan review fee, $500; building permit fee, $1,200; plan review fee, $300; sprinkler plan review fee, $600; plumbing permit, $2,285; heating permit, $665; and, electrical permit, $660. • Siemens Industry, Inc. Economic Development Agreement July 22, 2010 Page 4 The proposed economic development agreement also provides that in the event construction relating to the phase 1 expansion requires SMD to obtain permits or pay city-imposed development-related fees for costs directly borne by the city that were not originally contemplated at the time construction commenced, the city shall also waive those unforeseen permit or development fees or costs provided the phase 1 expansion is substantially completed in the manner described in the agreement. The city utilizes third-party consultants to review plans submitted for sediment and soil erosion control; floodplain review; stormwater control; variance applications; and, the determination of any fees in lieu of site runoff storage. The proposed economic development agreement provides that the city shall pass the direct cost of any such reviews, or any fees in lieu of site runoff storage,to SMD. The city will file an application with the Illinois Department of Commerce and Economic Opportunity (DCEO) within 90 days of the execution of this agreement seeking to amend the boundaries of the city's existing EZ to include the SMD facility. The expansion of the EZ will benefit not only SMD, but other businesses in the Tollgate Road area that are seeking to expand their facilities and realize the attendant sales tax and utility tax savings that can be realized from being located within an EZ. VIt The proposed economic development agreement also requires SMD to utilize commercially reasonable efforts to hire qualified Elgin residents for the initial employment opportunities associated with the phase 1 expansion. Such efforts include publicly advertising in newspapers published in Elgin and conducting publicly advertised job fairs in the city specifying that Elgin residents qualified for available employment opportunities at SMD's phase 1 expansion will be given an initial hiring preference for such employment opportunities. COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED The Elgin Area Chamber of Commerce is supporting the approval of the city's proposed economic development agreement with Siemens Industry, Inc. FINANCIAL IMPACT 9_.. wh ile there is no cost to the city for entering into the economic development agreement with Siemens, the city will be waiving $53,720 in permit and impact fees. LEGAL IMPACT WMNone. 4 Siemens Industry, Inc. Economic Development Agreement • July 22,2010 Page 5 ALTERNATIVES 1. The city council may choose to approve the economic development agreement with Siemens Industry, Inc. 2. The city council may choose not to approve the economic development agreement with Siemens Industry, Inc. Respectfully submitted for council consideration. RGK Attachment • DEVELOPMENT AGREEMENT I°_q SIEMENS INDUSTRY, INC. (950 TOLLGATE ROAD) This Agreement made and entered into this 28th day of July, 2010, by and be- tween the CITY OF ELGIN, an Illinois municipal corporation (hereinafter referred to as the "City"), and SIEMENS INDUSTRY, INC., a corporation organized and existing under the laws of the State of Delaware and authorized to do business in the State of Illinois, (hereinafter referred to as "Developer"). WITNESSETH WHEREAS, Developer is the owner of the property commonly known as 950 Tollgate Road, Elgin, Illinois 60123, where both the Developer's Mechanicals Drives Di- vision, and its affiliate Winergy Drive Systems Corporation, service and produce wind- mill turbines for alternative energy suppliers, and provide other components and servic- es for other industrial gear boxes and mechanical drives (hereinafter referred to as the "Tollgate Road Facility"); and WHEREAS, Developer is proposing a two-phased expansion of the Tollgate Road Facility; and WHEREAS, the Developer's first phase of the expansion will involve a $5 million investment adding 28,000 square feet to the Tollgate Road Facility and will bring an es- timated 25-30 new jobs to the Tollgate Road Facility (hereinafter referred to as the Phase 1 Expansion); and WHEREAS, the Developer's construction costs for the Phase 1 Expansion of the Tollgate Road Facility have exceeded the budget approved by the Developer's corpo- • rate parent and has resulted in a delay in the Developer obtaining approval from its cor- porate parent to proceed with the Phase 1 Expansion of the Tollgate Road Facility; and WHEREAS, the Developer has reexamined all of its Phase 1 Expansion project expenses in an effort to identify and realize reductions and savings; and WHEREAS, the Developer has reduced the project scope, negotiated lower con- struction costs through a competitive bidding process and has value-engineered many aspects of the Phase 1 Expansion; and WHEREAS, the Developer has examined the fees and other additional charges associated with the Phase 1 Expansion of the Tollgate Road Facility; and WHEREAS, the Developer is requesting that the City waive its fees and charges relating to building permits, water taps and stormwater management review for the Phase 1 expansion of the Tollgate Road Facility; and • WHEREAS, the Phase 1 Expansion of the Tollgate Road Facility may not occur in the absence of the City's commitment to limited economic development assistance; and WHEREAS, in order to provide for the continued development of the City includ- ing the Phase 1 Expansion of the Tollgate Road Facility, the City has agreed to provide the Developer certain development assistance for the Phase 1 Expansion of the Toll- gate Road Facility as hereinafter described; and WHEREAS, the Phase 1 Expansion of the Tollgate Road Facility will result in creating a significant number of new jobs in the City, and will result in increases in the City's tax revenues and an increase in tax revenues to other local taxing districts; and • 2 WHEREAS, the City Elgin EI in is a home rule unit authorized to exercise any �' pow- -; �_� er and perform any function relating to its government and affairs; and WHEREAS, the development assistance as hereinafter described resulting in significant increases in employment opportunities, significant increases in the City's tax base and spurring additional development opportunities within the City are matters with- in the government and affairs of the City of Elgin. NOW, THEREFORE, for and in consideration of the mutual promises and under- takings contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. In consideration for Developer's commencement and completion of the Phase 1 Expansion of the Tollgate Road Facility and substantial investment in the City of Elgin, the City agrees to waive the following development fees and charges associated with the Phase 1 Expansion of the Tollgate Road Facility as follows: A. Water System Capital Connection Fees established under Section 17.04.050 of the Elgin Municipal Code, 1976, as amended: i. Waiver of one (1) water system capital connection fee for water service size exceeding four (4) inches; $25,000.00 ii. Waiver of one (1) water system capital connection fee for four (4)-inch water service size; $20,680.00 Developer shall be responsible, at its own cost, for making the physical water main tap necessary to provide water service for the Phase 1 Expansion of the Tollgate Road Facility. B. Building Permit Fees established under Chapter 16.48 of the Elgin Municipal Code, 1976, as amended, and pursuant to Ordinance No. G66-09, "Establishing Fees For Various City Services, Permits, Licenses, Use Of Facilities And Other Matters": i. Waiver of one (1) water meter fee for 3-inch automatic meter reader (AMR); $1830.00 3 • ii. Waiver of one (1) fire alarm fee plan review fee for 51-75 devices; $500.00 iii. Waiver of one (1) building permit fee @ $40.00 per 100 square feet; $1200.00 iv. Waiver of one (1) plan review fee: $300.00 v. Waiver of one (1) sprinkler plan review fee for 101-300 sprinkler heads; $600.00 vi. Waiver of one (1) plumbing permit fee for 38 fixtures; $2285.00 vii. Waiver of one (1) heating permit fee @ $60.00 per 1000 square feet, plus seven (7) rooftop and/or air conditioning units; $665.00 viii. Waiver of one (1) electrical permit fee @ $60.00 per 1000 square feet, plus two electrical services; $660.00 C. Stormwater Management Application and Review Fees established under Section 21.01.030 of the Elgin Municipal Code, 1976, as amended: • i. The City utilizes third-party consultants to review plans submitted for se- diment and soil erosion control; floodplain review; stormwater control; va- riance applications; and, the determination of any fees in lieu of site runoff storage. The City shall pass the direct cost of any such reviews or fees in lieu of site runoff storage to the Developer in accordance with Section 21.01.030 of the Elgin Municipal Code, 1976, as amended. ii. The City shall waive any applicable application or administrative costs fees associated with the plan reviews described in subparagraph i of this subsection, immediately above, that are not derived from the review of any such plans by the City's third-party consultants. D. Unforeseen Permits, Fees and Charges. In the event construction relating to the Phase 1 expansion of the Tollgate Road Facility requires Developer to obtain development permits from the City, or to pay City-imposed development-related fees for costs directly borne by the City, either or both of which that were not orig- inally identified as part of this agreement, the City shall waive any such unfore- seen permit or development fees or costs provided the Phase 1 Expansion of the Tollgate Road Facility is substantially completed in the manner described in this agreement. 2. In further consideration of the Developer's commencement and completion of 110 the Phase 1 Expansion of the Tollgate Road Facility and substantial investment in the 4 City of Elgin, the City shall file an application with the Illinois Department of Commerce and Economic Opportunity (DCEO) within ninety (90) days of the execution of this agreement seeking to amend the boundaries of the City's existing Enterprise Zone to include the Tollgate Road Facility. The City will undertake all reasonable action neces- sary to have the boundary amendment approved by DCEO and Developer will assist City in providing any documentary or factual information necessary to secure approval of the boundary amendment from DCEO. Developer recognizes and acknowledges that the determination on whether to approve the City's application to amend the boundaries of its Enterprise Zone is within the sole discretion of DCEO. 3. Developer agrees to utilize all commercially reasonable efforts to hire qualified Elgin residents for the initial employment opportunities at the Phase 1 Expansion of the Tollgate Road Facility. Developer shall have the sole discretion in determining whether any such applicant is qualified for the available employment positions. Such commer- cially reasonable efforts shall include, at a minimum, publicly advertising in newspapers published in the City of Elgin and posting notices at the Tollgate Road Facility specifying that Elgin residents qualified for available employment opportunities at the Phase 1 Ex- pansion of the Tollgate Road Facility will be given an initial hiring preference for such employment opportunities. Such commercially reasonable efforts shall also include pub- licly advertised job fairs to be conducted in the City of Elgin not later than ninety (90) days prior to the opening of the Phase 1 Expansion of the Tollgate Road Facility where- by Elgin residents will be invited to such a job fairs and allowed to complete employ- ment applications. Developer shall also provide the City with written information on ini- tial employment opportunities at the Phase 1 Expansion of the Tollgate Road Facility 5 • and provide the City advance written notice regarding the job fair. Not more than one hundred eighty (180) days following the opening of the Phase 1 Expansion of the Toll- gate Road Facility, Developer shall provide a written report to the City identifying the number of Elgin residents who applied for employment at the Phase 1 Expansion of the Tollgate Road Facility and the number of Elgin residents who were hired as employees at the Phase 1 Expansion of the Tollgate Road Facility. For purposes of this section, El- gin residents shall be defined as persons whose principal and bona fide residence at the time of applying for employment is located within the corporate city limits of the City of Elgin. Residency shall be established by applicants through government-issued iden- tification consisting of a driver's license, state identification card, passport or military identification card. Developer shall be entitled to rely on such government identification for the purposes of determining residency within the City of Elgin. • 4. That the parties understand and agree that the economic development assis- tance being provided by the City to the Developer as set forth herein is expressly con- tingent upon Developer's commencing and completing the Phase 1 Expansion of the Tollgate Road Facility. In the event the Developer fails to complete the Phase 1 Expan- sion of the Tollgate Road Facility by July 1, 2011, the parties understand and agree that the City will not be providing the Developer any economic and development assistance pursuant to this Agreement or otherwise, and Developer shall promptly pay to the City any applicable permit and impact fees set forth in paragraph 1 of this Agreement com- mensurate with the scope of the Phase 1 Expansion of the Tollgate Road Facility at the time construction ceases, and the City's obligation to provide the Developer any permit or impact fee waivers shall be null and void. 1111 6 5. That this agreement shall not be deemed or construed to create an employ- ment, joint venture, partnership, or other agency relationship between the parties here- to. 6. That all notices or other communications hereunder shall be made in writing and shall be deemed given if personally delivered or mailed by registered or certified mail, return receipt requested, to the parties at the following addresses, or at such other addressed for a party as shall be specified by like notice, and shall be deemed received on the date on which said hand delivered or the second business day following the date on which so mailed: TO THE CITY: TO THE DEVELOPER: City of Elgin Siemens Industry, Inc. 150 Dexter Court 950 Tollgate Road Elgin, IL 60120-5555 Elgin, IL 60123 Attention: Richard G. Kozal Attention: With a copy of any such notice to: City of Elgin 150 Dexter Court Miller, Canfield, Paddock and Stone, Elgin, IL 60120-5555 P.L.C. Attention: William A. Cogley 840 West Long Lake Road, Suite 200 Corporation Counsel Troy, Michigan 48089 7. That the failure by a party to enforce any provision of this agreement against the other party shall not be deemed a waiver of the right to do so thereafter. 8. That this agreement may be modified or amended only in writing signed by both parties hereto, or their permitted successors or assigns, as the case may be. 7 • 9. That this agreement contains the entire agreement and understanding of the parties hereto with respect to the subject matter as set forth herein, all prior agreements and understandings having been merged herein and extinguished hereby. 10. That this agreement is and shall be deemed and construed to be a joint and collective work product of the City and the Developer and, as such, this agreement shall not be construed against the other party, as the otherwise purported drafter of same, by any court of competent jurisdiction in order to resolve any inconsistency, ambiguity, va- gueness or conflict, if any, in the terms or provisions contained herein. 11. That this agreement is subject to and shall be governed by the laws of the State of Illinois. 12. That this agreement shall be binding on the parties hereto and their respec- tive successors and permitted assigns. This agreement and the obligations herein may • not be assigned without the express written consent of each of the parties hereto, which 9 p consent may be withheld at the sole discretion of either the parties hereto. 13. The City and Developer agree that, in the event of a default by the other par- ty, the other party shall, prior to taking any such actions as may be available to it, pro- vide written notice to the defaulting party stating that they are giving the defaulting party sixty (60) days within which to cure such default. If the default shall not be cured within the sixty (60) days period aforesaid, then the party giving such notice shall be permitted to avail itself of remedies to which it may be entitled under this agreement. 14. If either party fails or refuses to carry out any of the material covenants or ob- ligations hereunder, the other party shall be entitled to pursue any and all available re- medies as specified herein or otherwise available at law, equity or otherwise. Notwith- • 8 standing the foregoing or anything else to the contrary in this agreement, no action shall be commenced by the Developer against the City for monetary damages. Venue for the resolution of any disputes or the enforcement of any rights pursuant to this agreement shall be in the Circuit Court of Kane County, Illinois. 15. Time is of the essence of this agreement. 16. This agreement shall be construed, and the rights and obligations of the City and the Developer hereunder shall be determined in accordance with the laws of the State of Illinois without reference to its conflict of laws rules. 17. With the sole exception of the fee waivers being provided by the City pur- suant to section 1 of this Agreement, it is agreed and understood that all costs and ex- penses relating to the Phase 1 Expansion of the Tollgate Road Facility shall be the re- sponsibility of and shall be paid for by the Developer. 18. Developer agrees to and shall provide to the City written reports on the status of the Phase 1 Expansion of the Tollgate Road Facility. Such written reports shall be provided to the City quarterly or upon reasonable request to the City. Such written re- port shall contain a description of the progress on the project and such other information with respect to the performance of Developer's obligations as may be reasonably re- quested by the City. 19. Notwithstanding any other provisions of this agreement, it is expressly agreed and understood by the Developer and the City that in connection with the performance of this agreement and the Phase 1 Expansion of the Tollgate Road Facility that Devel- oper shall comply with all applicable federal, state, city and other requirements of law. 9 20. To the fullest extent permitted by law, Developer agrees to and shall indemni- fy, defend and hold harmless, the City, its officials, officers, employees, attorneys, agents, boards and commissions from and against any and all claims, suits, judgments, costs, attorney's fees, damages or other relief, to the extent resulting from or arising out of negligent actions or omissions of the Developer in connection with this agreement, including negligent acts or omissions of employees, agents of the Developer arising out of the performance of this agreement, or in any way resulting from or arising out of or alleged to be resulting from or arising out of any violation and/or breach of the terms or provisions of this agreement by the Developer, including any violation and/or breach by employees, agents of the Developer. In the event of any action against the City, its offi- cials, officers, employees, agents, attorneys, boards or commissions covered by the foregoing duty to indemnify, defend and hold harmless such action shall be defended by legal counsel of the Developer's choosing, subject to the City's approval,roval, the costs of which shall be paid by the Developer. The provisions of this paragraph shall survive any termination and/or expiration of this agreement. 21. To the fullest extent permitted by law, Developer agrees to and shall indemni- fy, defend and hold harmless the City, its officials, officers, employees, attorneys, agents, boards and commissions, from and against any and all third party claims, suits, judgments, costs, attorneys' fees, expert witness fees and expenses, damages or other relief, in any resulting from or arising out of the City's execution of this agreement and the City's performance of this agreement, and the development approvals provided by the City as provided for in this agreement. In the event of any action against the City, its officials, officers, employees, agents, attorneys, boards or commissions, covered by the 0 10 • foregoing duty to indemnify, and defend and hold harmless, such action shall be de- fended by legal counsel of the Developer's choosing and the costs of which will be paid for by the Developer. Additionally, in the event of such third party action the Developer to the extent permitted by law shall upon the request of the City attempt to intervene in such proceedings and join the City in the defense thereof. 22. Developer on behalf of itself and its respective successors and assigns here- by acknowledges the propriety, necessity and legality of all of the terms and provisions of this agreement, and does hereby further agree and does waive any and all rights to any and all legal or other challenges or defenses to contest the propriety, necessity and legality of any of the terms and provisions of this agreement and hereby agrees and co- venants on behalf of itself and its successors, assigns and grantees of the Subject Property, not to sue the City or maintain any legal action or other defenses against the City with respect to any challenges the propriety, necessity and legality of any of the terms and provisions. IN WITNESS WHEREOF, the parties hereto have entered into and executed this agreement on the date and year first written above. CITY OF ELGIN, a municipal SIEMENS INDUSTRY, INC. corporation By: By: Mayor Its Attest: City Clerk 11