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Resolution No. 12-60
RESOLUTION
AUTHORIZING EXECUTION OF AN ECONOMIC INCENTIVE AGREEMENT
WITH SHG OF ILLINOIS, LLC
(227 DuPage Street)
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,ILLINOIS,that
David J. Kaptain, Mayor, and Kimberly A. Dewis, City Clerk, be and are hereby authorized and
directed to execute an Economic Incentive Agreement with SHG of Illinois, LLC on behalf of the
City of Elgin for economic development assistance in connection with the development of 227
DuPage Street, a copy of which is attached hereto and made a part hereof by reference.
s/David J. Kaptain
David J. Kaptain, Mayor
Presented: March 21, 2012
Adopted: March 21, 2012
Omnibus Vote: Yeas: 6 Nays: 0
Attest:
s/Kimberly Dewis
Kimberly Dewis, City Clerk
• ,
ECONOMIC INCENTIVE AGREEMENT
This Economic Incentive Agreement (the "Agreement") is made and entered into as
of the 21 st day of March, 2012, by and between the City of Elgin, an Illinois municipal cor-
poration (hereinafter referred to as the "City"), and SHG of Illinois, LLC, an tftinois limited
liability company (hereinafter referred to as the "Developer").
WHEREAS, the Developer is acquiring a Honda motorsports franchise to operate at
its current facility at 222 Dundee Avenue (the "Existing Dealership") and is searching for a
suitable site to relocate its existing Kawasaki motorsports franchise within a territory that
includes the City and neighboring municipalities; and
WHEREAS, the Developer would be unable to proceed with the establishment of
the Honda motorsports franchise in the City without securing a new dealership facility for
its Kawasaki motorsports franchise without certain economic development assistance
from the City as hereinafter described; and
WHEREAS, the Developer is leasing the property commonly known as 227 DuPage
Street, Elgin, Illinois, at the time of the lease said property being improved with a vacant,
one-story masonry structure formerly occupied as a warehouse for a furniture retailer; and
WHEREAS, the Developer has obtained conditional use zoning approval to estab-
lished a Kawasaki motorsports franchise at 227 DuPage Street, Elgin, Illinois (the "New
Dealership") and the Developer will be investing approximately $150,000 to expand its
business within the City, including completing various facade and other improvements to
buildings on the Dealership at an estimated cost of$30,000 to $50,000; and
WHEREAS, Section 8-11-20 of the Illinois Municipal Code (65 ILCS 5/8-11-20) au-
thorizes municipalities including the City to enter into economic incentive agreements relat-
ing to the development or redevelopment of lands within the corporate limits of a munici-
pality and under such agreements the municipality may agree to share or rebate a portion
of any Retailer's Occupation Taxes received by the municipality that were generated by the
development or redevelopment over a finite period of time; and
WHEREAS, the City is a home rule unit authorized to exercise any power and per-
form any function relating to its government and affairs;
WHEREAS, economic incentive agreements including the economic incentive
agreement as provided for in this Agreement pertain to the government and affairs of the
City; and
WHEREAS, the New Dealership has remained vacant for at least one (1)year; and
WHEREAS, the buildings established at the New Dealership no longer comply with
current building codes; and
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WHEREAS, the building established at the New Dealership has remained signifi-
cantly underutilized for a period of at least one year; and
WHEREAS, the New Dealership is expected to create job opportunities within the
City; and
WHEREAS, the New Dealership will serve to further the development of adjacent
areas; and
WHEREAS, without this Agreement the New Dealership would not be possible; and
WHEREAS, the Developer meets high standards of credit worthiness and financial
strength as demonstrated by equity financing for not less than ten percent (10%) of the
total project costs; and
WHEREAS, the New Dealership will strengthen the commercial sector of the City;
and
WHEREAS, the New Dealership will enhance the tax base of the City; and
WHEREAS, this Agreement is made in the best interests of the City.
NOW, THEREFORE, for and in consideration of the mutual promises and undertak-
ings contained herein, and other good and valuable consideration, the receipt and suffi-
ciency of which are hereby acknowledged, the parties hereto agree as follows:
1. Recitals. The foregoing recitals are incorporated into this Agreement in their
entirety.
2. Definitions.
A. "Commencement Date" means March 1, 2012.
B. "Sales Tax Revenues" means for the six (6) years following the Com-
mencement Date, all revenues that the City receives from retail sales
taxes from the State of Illinois pursuant to the Illinois Service Occupa-
tion Tax (35 ILCS 115/1 'et seq.), the Illinois Retailer's Occupation Tax
(35 ILCS 120/1 et seq.), and the Home Rule Municipal Retailer's Oc-
cupation Tax (65 ILCS 5/8-11-1) derived solely from the sale of motor
vehicles and merchandise at the Existing Dealership and the Dealer-
ship.
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3. Rebate of a Portion of Sales Tax Revenues.
A. The City hereby agrees to rebate and pay to the Developer a portion
of the Sales Tax Revenues received by the City in accordance with
this Agreement, in order to reimburse the Developer for a portion of
the costs incurred by Developer in conjunction with the establishment
of the Dealership, all as set forth and detailed below.
B. The City shall pay to the Developer a rebate of a portion of Sales Tax
Revenues received by the City over the six-year period following the
Commencement Date. Such rebate of Sales Tax Revenues from the
City to the Developer shall be paid in annual installments according to
the following formula:
The City and the Developer agree that the annual average
amount of Sales Taxes Revenues paid by the Existing Dealer-
ship during the years 2010 and 2011 is eighty thousand and
00/100 dollars ($80,000.00), hereafter referred to as the "base
rate."
ii. The Developer is eligible to receive a Sales Tax Revenues P
re-
bate in the amount of fifty percent (50%) of any annual in-
crease in the base rate.
iii. The Developer, when eligible, may apply for a fifty percent
(50%) Sales Tax Revenues rebate over the base rate annually
for six (6) consecutive periods. The first annual period shall
commence on January 1, 2012 and shall terminate on De-
cember 31, 2012. Each of the five remaining periods shalt
commence annually on January 1st and terminate on Decem-
ber 31st.
iv. The City and Dealership agree that the City shall not be reim-
burse Dealership more than fifty thousand dollars ($50,000.00)
under the terms of this agreement.
C. Notwithstanding any other provision of this Agreement to the contra-
ry, it is agreed and understood that the amount of the rebates of
Sales Tax Revenues provided herein have been agreed to based up-
on the current share of sales taxes received by the City in the amount
of 2.25 percent, being 1 percent from the State of Illinois and 1.25
percent of the City's home rule tax. It is further agreed and under-
stood that in the event the City's share of sales taxes is reduced from
the current amount of 2.25 percent during the five years following the
Commencement Date that the subsequent rebate of Sales Tax Reve-
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nues from the City to the Developer shall be reduced proportionately.
in the event of any conflict between the provisions of this paragraph
and any other provisions of this Agreement, the provisions of this
paragraph shall supersede and control.
D. The city shall pay to the Developer, when eligible, the annual install-
ments of the rebates of Sales Tax Revenues provided for herein with-
in ninety (90) days of each of the six (6) annual anniversaries of the
Commencement Date and the City having determined the amount of
sales and Sales Tax Revenues generated by the Dealership and the
New Dealership in the preceding year. in the event the State of Illinois
fails to distribute documentation to the City providing for the sales
and Sales Tax Revenues generated by the Dealership or New Dealer-
ship in sufficient time for the City to make the annual payments, then
the City shall provide notice of such fact to the Developer. In such
event, the City shall make the required Sales Tax Revenue rebate
payment to the Developer within sixty (60) days after the date on
which the City actually receives the supporting documentation for the
applicable payment.
E. At the time of each filing of an Illinois Department of Revenue form
ST-1 or any successor reporting form with the Illinois Department of
Revenue by the Dealership, the Developer shall cause a copy of such
form to be filed with the Treasurer of the City or such other official as
the City may designate. Within twenty (20) days after the Treasurer or
other official receives an ST-1 Form, the Treasurer or other official
shall calculate and certify to the City the amount of sales tax revenues
due to the Developer in accordance with this Agreement. The City
and its Treasurer and other officials shalt keep strictly confidential all
information in the ST-1 Form, except to the extent that disclosure is
necessary to third parties for the proper administration of this Agree-
ment, or is required by law or under this Agreement.
F. Developer, as a condition of the City's obligation to pay to such Sales
Tax Revenue rebate, shall be required to perform and observe the
following covenants, collectively referred to as the "Dealership and
New Dealership Reporting and Compliance Obligations":
(i) Make written request that the Local Tax Division of the Illinois
Department of Revenue ("LTD-IDOR"), or such successor to
such agency, supply to the City on an semi-annual basis a
letter certifying the amount of Sales Tax Revenues received by
the City for the Dealership and New Dealership operations •
during the preceding twelve (12) month period, with such letter
from the LTD-IDOR certifying the amount of sales tax revenue
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received by the City from the Dealership and New Dealership
being hereinafter referred to as a "IDOR Sales Tax Revenue
Certification Letter."
(ii) Take all additional actions as may reasonably be necessary in
order to for the City to obtain the information to insure the
accurate calculation of Sales Tax Revenues from the
Dealership and New Dealership;
(iii) Supply or cause to be supplied to the City appropriate
authorizations for the Illinois Department of Revenue to provide
such information, including copies of filings with the Illinois
Department of Revenue made by the Developer and/or the
Dealership and New Dealership.
(iv) Upon written request of the City, provide a power of attorney
in favor of the City in a form reasonably satisfactory to the
LTD-IDOR, authorizing the City to request and retrieve gross
revenue and other information necessary to allow the City to
compute the Sales Tax Revenues.
(v) Upon the request of the City, provide to the City copies of any
form ST-1 or form ST-556, or any successor reporting forms,
filed with the Illinois Department of Revenue by the Dealership
and New Dealership.
G. Developer and the City agree to cooperate and take all additional ac-
tions as may reasonably be necessary in order to obtain the neces-
sary information and to insure the accurate collection of deposits of
Sales Tax Revenues. The City agrees to take all actions necessary to
provide for the systematic receipt of sales tax information for the
Dealership and New Dealership from the Illinois Department of Reve-
nue. To assist the City, Developer will supply or cause to be supplied
to the City appropriate authorizations for the Illinois Department of
Revenue to provide such information, including copies of filings with
the Illinois Department of Revenue made by Dealership and New
Dealership. Developer shall cause Dealership and New Dealership,
upon written request of the City, to provide a Power of Attorney in a
form reasonably satisfactory to the Illinois Department of Revenue,
authorizing the City to request and receive gross revenue and other
information necessary to allow the City to compute the amount of
Sales Tax Revenues.
H. Notwithstanding any other provision of this Agreement to the contra-
ry, it is agreed and understood that the City's obligation under this
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Agreement to rebate a portion of Sales Tax Revenues shall not be a
general debt of the City on or a charge against its general credit or
taxing powers, and shall constitute a special limited obligation paya-
ble solely and only out of the Sales Tax Revenues received by the
Dealership. The Developer shall have no right, and agrees that it shall
not, compel any exercise of the taxing power of the City to pay the
Sales Tax Revenues rebates, and no execution of any claim, demand,
cause of action, or judgment shall be levied upon or collected from
the general credit, general funds, or any other property of the City.
The payments of a rebate of a portion of Sales Tax Revenues by the
City to the Developer as provided for in this Agreement shall not con-
stitute an indebtedness of the City or a loan or a liability of the City
within the meaning of any constitutional or statutory provision. No in-
terest shall be due, owing or paid by the City with respect to the re-
bate of any Sales Tax Revenues.
4. Contingency. Notwithstanding any other provision of this Agreement to the
contrary, it shall be a condition precedent to the obligations of the City under
this Agreement that the Developer commences operations at the New Deal-
ership on or before April 1, 2012, and that the New Dealership continues
with its operations at the for a period of not less than six (6) years after so
commencing New Dealership operations. In the event that any of the forego-
ing contingencies are not satisfied, then the City, upon written notice to the
Developer, may elect to terminate this Agreement, and thereupon this
Agreement shall be null and void and of no further force and effect without
any further obligations of the City hereto.
5. Miscellaneous.
A. That this Agreement shall not be deemed or construed to create an
employment, joint venture, partnership, or other agency relationship
between the parties hereto.
B. 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 follow-
ing the date on which so mailed:
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TO THE CITY: TO THE DEVELOPER:
City of Elgin
Brian S Martin
150 Dexter Court
Managing Partner—
SHG of Illinois, LLC
Elgin, IL 60120-5555
222 Dundee ST
Elgin, IL 60120
Attention: Richard G. Kozal
With a copy of any such notice to:
City of Elgin
150 Dexter Court
Elgin, IL 60120-5555
Attention: William A. Cogley, Corporation Counsel
C. 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.
D. That this Agreement may be modified or amended only in writing
signed by both parties hereto, or their permitted successors or as-
signs, as the case may be.
E. That this Agreement contains the entire agreement and understand-
ing 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.
F. 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 par-
ty, as the otherwise purported drafter of same, by any court of com-
petent jurisdiction in order to resolve any inconsistency, ambiguity,
vagueness or conflict, if any, in the terms or provisions contained
herein.
G. That this Agreement is subject to and shall be governed by the laws
of the State of Illinois.
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H. That this Agreement shall be binding on the parties hereto and their
respective successors and permitted assigns. This Agreement and
the obligations herein may not be assigned without the express writ-
ten consent of each of the parties hereto, which consent may be
withheld at the sole discretion of either the parties hereto.
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 thirty (30) days within
which to cure such default. If the default shall not be cured within the
thirty (30) days period aforesaid, then the party giving such notice
shall be permitted to avail itself of remedies to which it may be enti-
tled under this Agreement.
J. If either party fails or refuses to carry out any of the material cove-
nants or obligations 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. Notwithstanding the foregoing or
anything else to the contrary in this Agreement, with the sole excep-
tion of an action to recover the monies the City has agreed to pay
pursuant to the preceding Section 3 hereof, no action shall be com-
menced 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. In the event any action is brought by the City against
the Developer or its permitted assigns with respect to this Agreement
and the City is the prevailing party in such action, the City shall also
be entitled to recover from the Developer reasonable interest and
reasonable attorney's fees.
K. Time is of the essence of this Agreement.
L. This Agreement shall be construed, and the rights and obligations of
the City and the Developer hereunder shall be determined in accord-
ance with the laws of the State of Illinois without reference to its con-
flict of laws rules.
M. No past, present or future elected or appointed official, officer, em-
ployee, attorney, agent or independent contractor of the City shall be
charged personally or held contractually liable under any term or pro-
vision of this Agreement including, but not limited to, because of their
negotiation, approval, execution or attempted execution of this
Agreement.
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N. Notwithstanding any other provisions of this Agreement, it is express-
ly agreed and understood by the Developer and the City that in con-
nection with the performance of this Agreement, including, but not
limited to, providing for improvements to the New Dealership, and
that Developer shall comply with all applicable federal, state, city and
other requirements of law. Developer shall also at its expense secure
all permits and licenses, pay all charges and fees and give notices
necessary and incident to the due and lawful prosecution of the work
necessary to provide for the improvements to the New Dealership.
Without limiting the foregoing, and notwithstanding anything to the
contrary in this Agreement, Developer and its contractors and sub-
contractors shall comply with the Prevailing Wage Act in all respects
relating to the improvements to the New Dealership.
O. To the fullest extent permitted by law, Developer agrees to and shall
indemnify, 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, including but not limited to workers' com-
pensation claims, in any way resulting from or arising out of or alleged
to be resulting from or arising out of negligent actions or omissions of
the Developer in connection herewith, including negligence or omis-
sions of employees, agents or subcontractors of the Developer aris-
ing 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 Agree-
ment by the Developer, including any violation and/or breach by em-
ployees, agents or subcontractors of the Developer. 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, defend and hold harmless such action shall be defended
by legal counsel of the City's choosing the costs of which shall be
paid by the Developer. The provisions of this paragraph shall survive
any termination, completion and/or expiration of this Agreement.
P. To the fullest extent permitted by law, Developer agrees to and shall
indemnify, 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, attor-
neys' fees, expert witness fees and expenses, damages or other re-
lief, in any resulting from or arising out of or alleged to be resulting
from or arising out of the existence of this Agreement, the provisions
of this Agreement, the performance of this Agreement, and/or any
other actions to the parties hereto provided for or arising from this
Agreement. In the event of any action against the City, its officials, of-
9
ficers, employees, agents, attorneys, boards or commissions, cov-
ered by the foregoing duty to indemnify, and defend and hold harm-
less, such action shall be defended by legal counsel of the City'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.
Q. Developer agrees to and shall provide to the City written reports on
the status of the New Dealership. Such written reports shall be pro-
vided to the City upon request of the City. Such written reports shall
contain a status report on construction activities and such other in-
formation as may be requested by the City.
R. Developer, on behalf of itself and its respective successors, assigns
and grantees of the Dealership hereby acknowledges the propriety,
necessity and legality of all of the terms and provisions of this Agree-
ment and does hereby further agree and does waive any and all
rights to any and all legal or other challenges or defenses to any of
the terms and provisions of this Agreement and hereby agrees and
covenants on behalf of itself and its successors, assigns and grant-
ees of the Dealership, not to sue the City or maintain any legal action
or other defenses against the City with respect to any challenges of
the terms and provisions of this Agreement. The provisions of this
paragraph shall survive any termination, completion and/or expiration
of this Agreement.
6. In the event Developer exercises its option to purchase the real property and
improvements at which the New Dealership is located (the "Premises"), De-
veloper agrees that it shall not renew, exercise any option to renew, or oth-
erwise enter into any lease agreement for the existing billboards or any future
billboards on the Premises' roof, or any other exterior property area on the
Premises, provided, however, that Developer shall not be not be required to
incur any costs for complying with the provisions of this paragraph, including
any costs associated with the removal of the billboards or any repairs that
may be necessary to the Premises' roof structure or elsewhere on the Prem-
ises resulting from the removal of the billboards. Any future revenue stream
Developer may have derived from leasing the Premises for the placement of
billboards shall not be considered to be a cost incurred by the Developer for
the purposes of this paragraph. This paragraph shall survive the term of this
Agreement.
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iN WITNESS WHEREOF, the City and Rosen SHG of Illinois, LLC have executed
this Agreement on the date first set forth above.
CITY OF ELGIN, SHG OF ILLINOIS, LLC, a limited liability
an Illinois municipal corporation company
By B :
David . ap in, Mayor
Attest:
g:C14..A-- ity onse,e,e_
Kimberly Dewis, City Clerk
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4
as
REPORT TO MAYOR & MEMBERS OF CITY COUNCIL E LG I N
THE CITY IN THE SUBURBS
AGENDA ITEM: P
MEETING DATE: March 7, 2012
ITEM:
Sales Tax Sharing Agreement with BBK Motorsports
(Net Revenue Generation)
OBJECTIVE:
Generate additional sales tax and other revenue for the city through the retention and
expansion of an existing downtown business.
RECOMMENDATION:
Approve the sales tax sharing agreement with BBK Motorsports that rebates $50,000 of the
incremental sales tax revenue generated through a business expansion in downtown.
BACKGROUND
BBK Motorsports (BBK) has owned and operated a successful Kawasaki motorsports dealership
at 222 Dundee Avenue in downtown Elgin since 2004. BBK currently sells Kawasaki motorcycles,
ATVs, watercraft and utility vehicles and Ural brand motorcycles. Gross annual sales average
approximately$2.5 million.
BBK has a unique opportunity to expand its business in Elgin by adding Honda motorcycles to its
sales portfolio. Honda is consistently number one in national overall motorsports sales with a
loyal customer base, strong brand recognition and strict financial and operational requirements
for its dealers. The addition of Honda would also open opportunities for BBK to bring additional
franchises such as Triumph, Yamaha and Suzuki to Elgin. Should BBK not act quickly on the
opportunity to bring Honda to Elgin, it is highly likely that Honda will choose to locate in
Schaumburg or South Elgin in the next year.
Honda requires its own dealer site with brand exclusivity and high visibility. As such, BBK
proposes to open the Honda sales and service dealership at its current location at 222 Dundee
Avenue and adapt a vacant warehouse to retail use at 227 DuPage Street to house Kawasaki
sales and service and future brand expansion. The property was the home of Leath Furniture
Warehouse for much of its life and has been vacant or underutilized for the past ten years. The
conditional use application for 227 DuPage was unanimously recommended by the zoning and
subdivision hearing board on February 15 and unanimously approved by city council on
February 22. It awaits final city council approval on March 7.
Supporting the retention and expansion of BBK in Elgin will:
• Contribute additional sales tax and other revenues to the city. A detailed explanation of
this economic impact is provided in Attachment A.
• Bring additional destination foot traffic to downtown.
• Adapt a vacant, challenged warehouse building to retail sales use, thereby increasing its
value and property tax contribution.
BBK is committed to invest approximately $150,000 in this business expansion, which includes
$30,000 to $50,000 in property improvements to the 227 DuPage property and the remainder
to inventory expansion, signage, marketing, point of sales systems and other operational
expenses.
OPERATIONAL ANALYSIS
An economic impact analysis of this project (Attachment A) was conducted by the Incentis
Group, LLC. The analysis shows that BBK's retention and expansion in Elgin will net the
following benefits:
• Total direct tax benefit to city in 2012: $54,519 ($32,711 attributable to new location)
• Total direct tax benefit to city over 15 year period: $1,015,397 ($609,238 attributable to
new location; assuming no expansion of additional franchises)
• Total direct and indirect tax benefit to city over 15 year period: $3,590,405
• 11 additional full-time equivalent jobs
In an effort to retain the tax benefit BBK currently provides the city and capture the significant
additional tax benefit that the Honda expansion would generate, a sales tax sharing agreement
with BBK similar to the Cook County Retail Automobile Dealership Incentive Program is being
proposed (Attachment B).
A baseline annual sales tax amount is being established from BBK's sales tax history. The city's
portion of all new sales tax generated above the agreement's $80,000 baseline is estimated to
be approximately$18,673 annually. That increment will be eligible for sharing at 50 percent not
to exceed a total of$50,000. Payments would be made in March of each year beginning in 2013
and ending in 2018. Should annual sales fall short of the baseline or exceed the sales
projections, the annual sales tax rebate payment adjusts accordingly.
INTERESTED PERSONS CONTACTED
Downtown Neighborhood Association facilitated this project in conjunction with the services it
provides to the city through its purchase of services agreement.
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FINANCIAL ANALYSIS
Cities often utilize sales tax sharing programs for recruitment, retention and expansion
purposes for businesses that contribute a significant amount of sales tax to the city. Elgin has
historically utilized such programs to incent automobile dealerships due to the fact that motor
vehicle sales tax makes up the largest portion of the city's sales tax revenue. Specifically, the
city has utilized the Cook County Retail Automobile Dealership Incentive Program to incent
dealerships to locate or remain on East Chicago Street, such as the new Rosen Kia dealership
which opened last year, and has used other tax incentives to recruit or relocate dealerships to
the auto mall at the northwest corner of Randall Road and U.S. Interstate 90.
Staff is proposing to adapt these programs for the purpose of retaining the existing sales tax
generated by BBK and to capture the new taxes generated by the business's expansion in
downtown.
Sales tax revenue is deposited in the General Fund with sales tax rebates being paid from the
Riverboat Fund.
BUDGET IMPACT
FUND(S) ACCOUNT(S) PROJECT#(S) AMOUNT AMOUNT
BUDGETED AVAILABLE
Riverboat 275-0000-791.80.24 n/a $440,790 266,128
LEGAL IMPACT
None.
ALTERNATIVES
1. The city council may modify the provisions of the proposed economic incentive agreement.
2. The city council may choose not to enter into the economic incentive agreement.
NEXT STEPS
1. Execute the sales tax sharing agreement.
2. Calculate the sales tax revenue generated over the base rate in each year following the
agreement's commencement date for the following five years.
3. Process the first payment under the agreement in March 2013.
Y
Originators: Richard G. Kozal, Assistant City Manager
Final Review: Colleen Lavery, Chief Financial Officer
William A. Cogley, Corporation Counsel/Chief Development Officer
Sean R. Stegall, City Manager
ATTACHMENTS
A. BBK Motorsport Economic and Fiscal Impact Analysis
B. Proposed Economic Incentive Agreement
grou
incentvs
Incentives and credits for growing y business
BBK Motorsport Economic and Fiscal
Impact Analysis
February 2012
Commissioned By: The City of Elgin
incentis Group, LLC
1304 West Washington Blvd
Chicago,IL 60607
Executive Summary
Incentis Group LLC was commissioned by the City of Elgin to assess the economic and fiscal impacts on the
City of Elgin of the expansion of BBK Motorsport into the Honda brand with a new dealership located at 227
Du Page St. in Elgin.
BBK Motorsport, which currently operates the Kawasaki dealership and employs 1 part-time and 4 full-time
employees at 222 Dundee Rd. in Elgin,plans to expand its operations with a new Honda dealership located at
227 Du Page St. in Elgin. The new dealership is expected to allow for the creation of 5 new full-time jobs and 3
part-time jobs Elgin jobs in 2012. As an incentive for BBK Motorsport to locate the new dealership in Elgin,
the City of Elgin has offered a sales tax sharing agreement in the amount equal to 75%of the city's 1%portion
of the motor vehicle sales tax collected on incremental vehicle sales and 75%of the 1.25%home rule sales tax
collected on incremental parts sales on an annual basis. The total benefit to BBK Motorsport will be capped at
$50,000.
The Economic and Fiscal Impacts Analysis was conducted to estimate the annual economic and fiscal impacts
of the BBK Motorsport project on the Elgin economy. The economic impacts included in this study are direct,
indirect and induced jobs impacts, direct, indirect and induced earnings impacts, and overall economic activity
that are generated by the BBK Motorsport project. The fiscal impacts include an analysis of the incentives
provided by Elgin to BBK Motorsport relative to the future direct and indirect taxes that are generated as a
result of the project.
Methodology
In conducting the Economic and Fiscal Impact Analysis,Incentis Group incorporated methodologies that are
highly accepted as reasonable in estimating economic and fiscal impacts associated with a given project or
event. It should be noted,however,that our estimates may differ from actual outcomes resulting from the BBK
Motorsport project due to a number of events and factors including changes in tax rates, future volatility within
the City economy and its industries and sectors, inflation variances,reliability of tax and data sources, and other
unforeseen factors.
In estimating the economic impacts of the BBK Motorsport project, including jobs, earnings, and economic
activity, Incentis Group utilized input-output multipliers developed by Minnesota IMPLAN Group (IMPLAN).
IMPLAN is the developer of the IMPLAN economic impact modeling system. IMPLAN's tools are in use by
over 1,000 public and private institutions. The IMPLAN economic multipliers are specific to the City of Elgin
and to the industries/sectors associated with the BBK Motorsport project. The IMPLAN multipliers assist us in
estimating the jobs, earnings, and economic activity resulting from the BBK Motorsport project. When goods
and services are produced in an industry a"multiplier effect" is created by the demand generated for other
goods and services. This demand then dissipates through other industries and sectors within a given economy
until it is immaterial.
In estimating the fiscal impacts of the BBK Motorsport project upon the City of Elgin, including direct and
indirect tax generation, Incentis Group has applied the appropriate tax rates to the property assessments and
project parameters provided by the City of Elgin. Estimates related to the increase in property tax for the new
location at 227 Du Page St. were calculated based on the actual taxes per square foot paid at the current
location. Additionally,where appropriate, we have utilized the IMPLAN economic impact modeling system to
estimate indirect taxes generated in the city economy as a result of the BBK Motorsport project occurring in
Elgin.
Summary of Findings
The Economic and Fiscal Impact Analysis resulted in the following findings associated with the BBK
Motorsport project. Details regarding these findings are presented in this Analysis. The Analysis estimated the
annualized impacts of the BBK Motorsport project on the City of Elgin.
Summary of Economic Impacts
Operational Facility Impact
The annual economic impact of the BBK Motorsport project,post-completion, upon the City of Elgin is
estimated to include annualized economic activity of$1,386,850 the equivalent of 15 full-time jobs on an
annualized basis and$819,866 of annualized employee earnings.
Direct Effect Multiplier Indirect/Induced Total Effect
Effect
Employment 11 1.3455 4 15
Employee Compensation $ 653,192 1.2552 $ 166,674 $ 819,866
,Economic Output $ 900,994 1.5392 $ 485,856 $ 1,386,850
Economic Activity
Economic activity at the city level is an estimate of the annual generation of output by the BBK Motorsport and
the flow through of these dollars within the city economy. We estimate that this total annual economic activity
generated by the BBK Motorsport project to be $1,386,850. This amount includes the direct, indirect, and
induced effects of the BBK Motorsport project upon the City of Elgin economy.
Top 10 Industries Affected by Indirect/Induced Economic Output
Indirect/Induced
Description Direct Effect Multiplier Total Effect
Effect
Total Estimated Economic Output $ 900,994 1.5392 $ 485,856 $ 1,386,850
Imputed rental activity for owner-occupied dwellings - - $ 59,230 $ 59,230
Private hospitals - - $ 39,126 $ 39,126
Wholesale trade businesses - - $ 30,716 $ 30,716
Offices of physicians,dentists,and other health practitioners - - $ 30,563 $ 30,563
Real estate establishments - - $ 23,550 $ 23,550
Food services and drinking places - - $ 18,451 $ 18,451
Monetary authorities and depository credit intermediation activities - - $ 17,976 $ 17,976
Nondepository credit intermediation and related activities - - $ 17,762 $ 17,762
Insurance carriers - - $ 14,793 $ 14,793
All Other Industries - - $ 233,689 $ 1,134,683
Jobs Impact
The Jobs Impact within the City of Elgin is an estimate of the direct full-time equivalent jobs generated by the
BBK Motorsport project plus the effects of these jobs upon secondary job generation in Elgin. The BBK
Motorsport project is expected to create 11 full-time equivalent direct jobs within the City of Elgin resulting in
the generation of 4 indirect and induced jobs within the City for a total of 15 full-time equivalent jobs.
Top 10 Industries Affected by Indirect/Induced Employment
Description Direct Effect Multiplier Indirect/Induced Total Effect
Effect
Total Estimnated Jobs 11 1.3455 4 15
Food services and drinking places - - 0.30 0.30
Private hospitals - - 0.30 0.30
Offices of physicians,dentists,and other health practitioners - - 0.20 0.20
Real estate establishments - - 0.20 0.20
Wholesale trade businesses - - 0.20 0.20
Employment services - - 0.10 0.10
Retail Nonstores-Direct and electronic sales - - 0.10 0.10
Nursing and residential care facilities - - 0.10 0.10
Retail Stores-Food and beverage - - 0.10 0.10 1
All Other Industries - - 2 13
Earnings Impact
The Earnings Impact within the City of Elgin is an estimate of the direct annualized compensation generated by
the BBK Motorsport jobs and the effects of these jobs upon secondary earnings generation. The annual earnings
for the direct employees referenced above are approximately$653,192. We estimate that this compensation will
result in$166,674 of additional indirect and induced household earnings in Elgin, for a total of$819,866 in
annualized earnings.
Top 10 Industries Affected by Indirect/Induced Employee Compensation
Indirect/Induced
Description Direct Effect Multiplier Total Effect
Effect
Total Estimated Employee Compensation $ 653,192 1.2552 $ 166,674 $ 819,866
Private hospitals - $ 17,527 $ 17,527
Offices of physicians,dentists,and other health practitioners - $ 17,138 $ 17,138
Wholesale trade businesses - - $ 13,110 $ 13,110
Food services and drinking places - - $ 6,720 $ 6,720
Nursing and residential care facilities - - $ 4,605 $ 4,605
Monetary authorities and depository credit intermediation activities - - $ 4,514 $ 4,514
Retail Stores-Food and beverage - - $ 3,480 $ 3,480
Insurance carriers - - $ 3,280 $ 3,280
Other state and local government enterprises - - $ 3,262 $ 3,262
All Other Industries - - $ 93,038 $ 746,230
Summary of Fiscal Impacts
The fiscal impact of the BBK Motorsport project upon the City of Elgin over the next 15 years is estimated to
include total additional direct tax collections of$1,065,397 which will directly benefit the city of Elgin. The
City of Elgin will provide a total of$50,000 in incentives as cash in the form of a sales tax sharing
agreement. The net present value("NPV") of these new direct revenues at a rate of 6% over a period of 15
years is estimated to be$671,168 compared to an NPV of($41,808) offered to BBK Motorsport in the form of
incentives. Total estimated direct and indirect business tax revenues are estimated to be$3,640,405 over the
fifteen year period.
Sales Tax Benefit
Motor Vehicles Sales
The total 1.75%direct sales tax benefit for the City of Elgin from motor vehicle sales is estimated to be
$40,171 with$24,102 attributable to the new location on an annual basis.
Parts Sales
The total 3%direct sales tax benefit for the City of Elgin from parts sales is estimated to be $19,602
with$11,761 attributable to the new location on an annual basis.
Annual Local Spending
The total 3%direct sales tax benefit for the City of Elgin from combined local purchases at both
locations is estimated to be$2,550 on an annual basis.
Sales Tax Sharing Agreement
The City of Elgin arranged a sales tax sharing agreement with BBK Motorsport as an incentive to locate the
Honda dealership in the City of Elgin. The agreement calls for a benefit to BBK Motorsport of 50%per year of
the annual incremental sales tax benefit to the City of Elgin generated from motor vehicle and parts sales at the
new location for 5 years. The total benefit will be $50,000 with the remainder paid out in the fifth year.
The annual incremental sales tax available for sales tax sharing was calculated using a flat line sales estimate for
Honda motor vehicles and parts given pro forma estimates from BBK motorsport. The total incremental sales
tax available for sales tax sharing is estimated to be$18,673 per year with a benefit to BBK Motorsport of
$9,337 per year(50%)in the first four years of operation with the remainder of the total $50,000 available
benefit collected in year five.
Motor Vehicle Sales
The annual incremental motor vehicle sales tax available for sales tax sharing will be calculated as the
1%sales tax benefit to the City of Elgin of the incremental motor vehicle sales at the new location.
Parts Sales
The annual incremental parts sales tax available for sales tax sharing will be calculated as the 1.25%
home-rule sales tax benefit to the City of Elgin of the incremental parts sales at the new location.
Telecommunications Tax Benefit
The City of Elgin collects a 6%tax on Telecommunication which will result in additional annual direct tax
revenue of$480 from the combined locations.
Natural Gas Tax Benefit
The City of Elgin collects a$0.03 tax per therm of natural gas consumed which will result in additional direct
tax revenue of$53 per year based on estimated usage of 3,125 therms of natural gas. The current location
produces an annual natural gas tax benefit to the city of$30 per year based on usage of 2,000 therms of natural
gas for a total annual benefit of$83.
Electricity Tax Benefit
The City of Elgin collects a$0.0061 tax on the first 2,000 Kwh/month used and$0.0041 on the next 48,000
Kwh/month used which will result in additional direct tax revenue of$110 annually based on estimated usage
of 57,000 Kwh/year. The current location produces an annual electricity tax benefit of$90 per year based on
45,000 Kwh/year for a total annual benefit of$200.
Indirect Business Tax Benefit
Indirect business taxes are the tax revenues collected by the City of Elgin as a result of the increase in indirect
jobs, earnings and economic activity. The estimated increase in indirect business taxes is presented for the first
four years below. The total indirect business taxes over 15 years are estimated to equal $2,414,070.
Indirect Business Tax 2012 2013 2014 2015
Sales Tax $ 66,684 $ 66,684 $ 66,684 $ 66,684
Property Tax $ 78,238 $ 78,238 $ 78,238 $ 78,238
Other Taxes $ 7,085 $ 7,085 $ 7,085 $ 7,085
Fees $ 6,891 $ 6,891 $ 6,891 $ 6,891
Estimated Total Indirect Business Taxes r$160,938 $160,938 $160,938 $160,938
Appendix A.
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Total
Estimated Direct Tax and Fee Collections After Incentives
Property TaxBenefit(DirectCityPortion) $ - $ 3,038 $ 6,076 $ 6,076 $ 6,076 $ 6,076 $ 6,076 $ 6,076 $ 6,076 $ 6,076 $ 6,076 $ 6,076 $ 6,076 $ 6,076 $ 6,076 $ 6,076 $ 88,109
Sales Tax Benefit(Incl.Motor Vehide Tax) $ 62,323 $ 60,133 $ 60,133 $ 60,133 $ 60,133 $ 60,133 $ 60,133 $ 60,133 $ 60,133 $ 60,133 $ 60,133 $ 60,133 $ 60,133 $ 60,133 $ 60,133 $ 60,133'$
Telecommunications Tax Benefit $ 480 $ 480 $ 480 $ 480 $ 480 $ 480 $ 480 $ 480 $ 480 $ 480 $ 480 $ 480 $ 480 $ 480 $ 480 $ 480 $ 7,680
Natural Gas Tax $ 83 $ 83 $ 83 $ 83 $ 83 $ 83 $ 83 $ 83 $ 83 $ 83 $ 83 $ 83 $ 83 $ 83 $ 83 $ 83 $ 1,325
Electricity Tax $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 2D0 $ 200 $ 200 $ 200 $ 3,200
Permit and Plan Check Fees $ 770 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 770
Total Estimated Direct Tax Collections $ 63,856 $ 63,934 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 1,065,397
Net Revenue/(Loss)to the City $ 63,856 $ 63,934 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 1,065,397
Sales Tax Sharing% S0%
Sales Tax Sharing Cap $50,000
Incentives to Company(Foregone Revenue) -
AnnualSalesTaxAvailableForSalesTaxSharing $ 18,673 $ 18,673 $ 18,673 $ 18,673 $ 18,673 $ 18,673 $ 18,673 $ 18,673 $ 18,673 $ 18,673 $ 18,673 $ 18,673 $ 18,673 $ 18,673 $ 18,673 $ 18,823 $ -
SalesTaxSharing% 50% 50% 50% 50% 68% 0% 0% 0% 0% 0% 096 0% 0% 0% 0% 0% a.
Annual Sales Tax Sharing $ 9,337 $ 9,337 $ 9,337 $ 9,337 $ 12,654 $ - $ • $ - $ • $ • $ • $ • $ • $ • $ • $ - $ 50,000
Total Incentives $ 9,337 $ 9,337 $ 9,337 $ 9,331 $ 12,654 $ - $ - $ - $ - $ • $ • $ - $ - $ • $ • $ - $ 50,000
Net Revenue/(Loss)to the City,after foregone revenue $ 54,519 $ 54,597 $ 57,635 $ 57,635 $ 54,318 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 66,972 $ 1,015,397
Estimated Indirect Business Taxes $ 160,938 $ 160,938 $ 160,938 $ 160,938 $ 160,938 $ 160,938 $ 160,938 $ 160,938 $ 160,938 $ 1E0,938 $ 160,938 $ 160,938 $ 1E0,938 $ 160,938 $ 160,938 $ 160,938 $ 2,575,008
Net Benefit(Loss)to the City,after indirect business tax $ 215,457 $ 215,535 $ 218,573 $ 218,573 $ 215,256 $ 227,910 $ 227,910 $ 227,910 $ 227,910 $ 227,910 $ 227,910 $ 227,910 $ 227,910 $ 227,910 $ 227,910 $ 227,910 $ 3,590,405
NPV Discount Rate 6.00%
Total Direct and Indirect Revenues $ 3,640,405
NPV of Direct Revenues $671,168
NPV of Direct Incentives $41,:r:
Incremental Sales Tax(City Portion) $ 38,413 $ 36,223 $ 36,223 $ 36,223 $ 36,223 $ 36,223 $ 36,223 $ 36,223 $ 36,223 $ 36,223 $ 36,223 $ 36,223 $ 36,223 $ 36,223 $ 36,223 $ 36,223 $ 581,758
Incremental Property Tax(City Portion) $ 1,775 $ 1,775 $ 1,775 $ 1,775 $ 1,775 $ 1,775 $ 1,775 $ 1,775 $ 1,715 $ 1,775 $ 1,775 $ 1,775 $ 1,775 $ 1,775 $ 1,775 $ 1,775 $ 28,405
. 1
ECONOMIC INCENTIVE AGREEMENT
This Economic Incentive Agreement (the "Agreement") is made and entered into as
of the 21 st day of March, 2012, by and between the City of Elgin, an Illinois municipal cor-
poration (hereinafter referred to as the "City"), and SHG of Illinois, LLC, an Illinois limited
liability company (hereinafter referred to as the "Developer").
WHEREAS, the Developer is acquiring a Honda motorsports franchise to operate at
its current facility at 222 Dundee Avenue (the "Existing Dealership") and is searching for a
suitable site to relocate its existing Kawasaki motorsports franchise within a territory that
includes the City and neighboring municipalities; and
WHEREAS, the Developer would be unable to proceed with the establishment of
the Honda motorsports franchise in the City without securing a new dealership facility for
its Kawasaki motorsports franchise without certain economic development assistance
from the City as hereinafter described; and
WHEREAS, the Developer purchased the property commonly known as 227 Du-
Page Street, Elgin, Illinois, at the time of purchase said property being improved with a va-
cant, one-story masonry structure formerly occupied as a warehouse for a furniture retail-
er; and
WHEREAS, the Developer has obtained conditional use zoning approval to estab-
lished a Kawasaki motorsports franchise at 227 DuPage Street, Elgin, Illinois (the "New
Dealership") and the Developer will be investing approximately $150,000 to expand its
business within the City, including completing various facade and other improvements to
buildings on the Dealership at an estimated cost of $30,000 to $50,000; and
WHEREAS, Section 8-11-20 of the Illinois Municipal Code (65 ILCS 5/8-11-20) au-
thorizes municipalities including the City to enter into economic incentive agreements relat-
ing to the development or redevelopment of lands within the corporate limits of a munici-
pality and under such agreements the municipality may agree to share or rebate a portion
of any Retailer's Occupation Taxes received by the municipality that were generated by the
development or redevelopment over a finite period of time; and
WHEREAS, the City is a home rule unit authorized to exercise any power and per-
form any function relating to its government and affairs;
WHEREAS, economic incentive agreements including the economic incentive
agreement as provided for in this Agreement pertain to the government and affairs of the
City; and
WHEREAS, the New Dealership has remained vacant for at least one (1) year; and
WHEREAS, the buildings established at the New Dealership no longer comply with
current building codes; and
WHEREAS, the building established at the New Dealership has remained signifi-
cantly underutilized for a period of at least one year; and
WHEREAS, the New Dealership is expected to create job opportunities within the
City; and
WHEREAS, the New Dealership will serve to further the development of adjacent
areas; and
WHEREAS, without this Agreement the New Dealership would not be possible; and
WHEREAS, the Developer meets high standards of credit worthiness and financial
strength as demonstrated by equity financing for not less than ten percent (10%) of the
total project costs; and
WHEREAS, the New Dealership will strengthen the commercial sector of the City;
and
WHEREAS, the New Dealership will enhance the tax base of the City; and
WHEREAS, this Agreement is made in the best interests of the City.
NOW, THEREFORE, for and in consideration of the mutual promises and undertak-
ings contained herein, and other good and valuable consideration, the receipt and suffi-
ciency of which are hereby acknowledged, the parties hereto agree as follows:
1. Recitals. The foregoing recitals are incorporated into this Agreement in their
entirety.
2. Definitions.
A. "Commencement Date" means March 1 , 2012.
B. "Sales Tax Revenues" means for the six (6) years following the Com-
mencement Date, all revenues that the City receives from retail sales
taxes from the State of Illinois pursuant to the Illinois Service Occupa-
tion Tax (35 ILCS 115/1 et seq.), the Illinois Retailer's Occupation Tax
(35 ILCS 120/1 et seq.), and the Home Rule Municipal Retailer's Oc-
cupation Tax (65 ILCS 5/8-11-1) derived solely from the sale of motor
vehicles and motor vehicle parts at the Existing Dealership and the
Dealership.
2
7
3. Rebate of a Portion of Sales Tax Revenues.
A. The City hereby agrees to rebate and pay to the Developer a portion
of the Sales Tax Revenues received by the City in accordance with
this Agreement, in order to reimburse the Developer for a portion of
the costs incurred by Developer in conjunction with the establishment
of the Dealership, all as set forth and detailed below.
B. The City shall pay to the Developer a rebate of a portion of Sales Tax
Revenues received by the City over the six-year period following the
Commencement Date. Such rebate of Sales Tax Revenues from the
City to the Developer shall be paid in annual installments according to
the following formula:
The City and the Developer agree that the annual average
amount of Sales Taxes Revenues paid to the City by the Exist-
ing Dealership during the years 2010 and 2011 is eighty thou-
sand and 00/100 dollars ($80,000.00), hereafter referred to as
the "base rate."
ii. The Developer is eligible to receive a Sales Tax Revenues re-
bate in the amount of fifty percent (50%) of any annual in-
crease in the base rate.
iii. The Developer, when eligible, may apply for a fifty percent
(50%) Sales Tax Revenues rebate over the base rate annually
for six (6) consecutive periods. The first annual period shall
commence on January 1, 2012 and shall terminate on De-
cember 31, 2012. Each of the five remaining periods shall
commence annually on January 1st and terminate on Decem-
ber 31 st.
iv. The City and Dealership agree that the City shall not be reim-
burse Dealership more than fifty thousand dollars ($50,000.00)
under the terms of this agreement.
C. Notwithstanding any other provision of this Agreement to the contra-
ry, it is agreed and understood that the amount of the rebates of
Sales Tax Revenues provided herein have been agreed to based up-
on the current share of sales taxes received by the City in the amount
of 2.25 percent, being 1 percent from the State of Illinois and 1 .25
percent of the City's home rule tax. It is further agreed and under-
stood that in the event the City's share of sales taxes is reduced from
3
the current amount of 2.25 percent during the five years following the
Commencement Date that the subsequent rebate of Sales Tax Reve-
nues from the City to the Developer shall be reduced proportionately.
For the purposes of clarification and example, in the event the City's
share of sales taxes currently in the amount of 2.25 percent is re-
duced by 10 percent, then the amount of the subsequent rebate of a
portion of Sales Tax Revenues from the City to the Developer will also
be reduced by 10 percent. In the event of any conflict between the
provisions of this paragraph and any other provisions of this Agree-
ment, the provisions of this paragraph shall supersede and control.
D. The city shall pay to the Developer, when eligible, the annual install-
ments of the rebates of Sales Tax Revenues provided for herein with-
in ninety (90) days of each of the six (6) annual anniversaries of the
Commencement Date and the City having determined the amount of
sales and Sales Tax Revenues generated by the Dealership and the
New Dealership in the preceding year. In the event the State of Illinois
fails to distribute documentation to the City providing for the sales
and Sales Tax Revenues generated by the Dealership or New Dealer-
ship in sufficient time for the City to make the annual payments, then
the City shall provide notice of such fact to the Developer. In such
event, the City shall make the required Sales Tax Revenue rebate
payment to the Developer within sixty (60) days after the date on
which the City actually receives the supporting documentation for the
applicable payment.
E. At the time of each filing of an Illinois Department of Revenue form
ST-1 or any successor reporting form with the Illinois Department of
Revenue by the Dealership, the Developer shall cause a copy of such
form to be filed with the Treasurer of the City or such other official as
the City may designate. Within twenty (20) days after the Treasurer or
other official receives an ST-1 Form, the Treasurer or other official
shall calculate and certify to the City the amount of sales tax revenues
due to the Developer in accordance with this Agreement. The City
and its Treasurer and other officials shall keep strictly confidential all
information in the ST-1 Form, except to the extent that disclosure is
necessary to third parties for the proper administration of this Agree-
ment, or is required by law or under this Agreement.
F. Developer, as a condition of the City's obligation to pay to such Sales
Tax Revenue rebate, shall be required to perform and observe the
following covenants, collectively referred to as the "Dealership and
New Dealership Reporting and Compliance Obligations":
4
(i) Make written request that the Local Tax Division of the Illinois
Department of Revenue ("LTD-IDOR"), or such successor to
such agency, supply to the City on a semi-annual basis a letter
certifying the amount of Sales Tax Revenues received by the
City for the Dealership and New Dealership operations during
the preceding twelve (12) month period, with such letter from
the LTD-IDOR certifying the amount of sales tax revenue
received by the City from the Dealership and New Dealership
being hereinafter referred to as a "IDOR Sales Tax Revenue
Certification Letter."
(ii) Take all additional actions as may reasonably be necessary in
order to for the City to obtain the information to insure the
accurate calculation of Sales Tax Revenues from the
Dealership and New Dealership;
(iii) Supply or cause to be supplied to the City appropriate
authorizations for the Illinois Department of Revenue to provide
such information, including copies of filings with the Illinois
Department of Revenue made by the Developer and/or the
Dealership and New Dealership.
(iv) Upon written request of the City, provide a power of attorney
in favor of the City in a form reasonably satisfactory to the
LTD-IDOR, authorizing the City to request and retrieve gross
revenue and other information necessary to allow the City to
compute the Sales Tax Revenues.
(v) Upon the request of the City, provide to the City copies of any
form ST-1 or form ST-556, or any successor reporting forms,
filed with the Illinois Department of Revenue by the Dealership
and New Dealership.
(vi) Allow the City the right, upon reasonable notice to the
Developer and/or Dealership or New Dealership, to audit
Dealership or New Dealership records in order to confirm
Sales Tax Revenues being generated by the Dealership and
New Dealership.
G. Developer and the City agree to cooperate and take all additional ac-
tions as may reasonably be necessary in order to obtain the neces-
sary information and to insure the accurate collection of deposits of
Sales Tax Revenues. The City agrees to take all actions necessary to
provide for the systematic receipt of sales tax information for the
Dealership and New Dealership from the Illinois Department of Reve-
5
nue. To assist the City, Developer will supply or cause to be supplied
to the City appropriate authorizations for the Illinois Department of
Revenue to provide such information, including copies of filings with
the Illinois Department of Revenue made by Dealership and New
Dealership. Developer shall cause Dealership and New Dealership,
upon written request of the City, to provide a Power of Attorney in a
form reasonably satisfactory to the Illinois Department of Revenue,
authorizing the City to request and receive gross revenue and other
information necessary to allow the City to compute the amount of
Sales Tax Revenues.
H. Notwithstanding any other provision of this Agreement to the contra-
ry, it is agreed and understood that the City's obligation under this
Agreement to rebate a portion of Sales Tax Revenues shall not be a
general debt of the City on or a charge against its general credit or
taxing powers, and shall constitute a special limited obligation paya-
ble solely and only out of the Sales Tax Revenues received by the
Dealership. The Developer shall have no right, and agrees that it shall
not, compel any exercise of the taxing power of the City to pay the
Sales Tax Revenues rebates, and no execution of any claim, demand,
cause of action, or judgment shall be levied upon or collected from
the general credit, general funds, or any other property of the City.
The payments of a rebate of a portion of Sales Tax Revenues by the
City to the Developer as provided for in this Agreement shall not con-
stitute an indebtedness of the City or a loan or a liability of the City
within the meaning of any constitutional or statutory provision. No in-
terest shall be due, owing or paid by the City with respect to the re-
bate of any Sales Tax Revenues.
4. Contingency. Notwithstanding any other provision of this Agreement to the
contrary, it shall be a condition precedent to the obligations of the City under
this Agreement that the Developer commences operations at the New Deal-
ership on or before April 1, 2012, and that the New Dealership continues
with its operations at the for a period of not less than six (6) years after so
commencing New Dealership operations. In the event that any of the forego-
ing contingencies are not satisfied, then the City, upon written notice to the
Developer, may elect to terminate this Agreement, and thereupon this
Agreement shall be null and void and of no further force and effect without
any further obligations of the City hereto.
5. Miscellaneous.
A. That this Agreement shall not be deemed or construed to create an
employment, joint venture, partnership, or other agency relationship
between the parties hereto.
6
•
B. 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 follow-
ing the date on which so mailed:
TO THE CITY: TO THE DEVELOPER:
City of Elgin Robert A. Sternberg
150 Dexter Court Registered Agent—SHG of
Illinois, LLC
Elgin, IL 60120-5555 750 Lake-Cook Road
Suite 350
Attention: Richard G. Kozal Buffalo Grove, IL 60089
With a copy of any such notice to:
City of Elgin
150 Dexter Court
Elgin, IL 60120-5555
Attention: William A. Cogley, Corporation Counsel
C. 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.
D. That this Agreement may be modified or amended only in writing
signed by both parties hereto, or their permitted successors or as-
signs, as the case may be.
E. That this Agreement contains the entire agreement and understand-
ing 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.
F. 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 par-
ty, as the otherwise purported drafter of same, by any court of com-
petent jurisdiction in order to resolve any inconsistency, ambiguity,
vagueness or conflict, if any, in the terms or provisions contained
herein.
7
•
G. That this Agreement is subject to and shall be governed by the laws
of the State of Illinois.
H. That this Agreement shall be binding on the parties hereto and their
respective successors and permitted assigns. This Agreement and
the obligations herein may not be assigned without the express writ-
ten consent of each of the parties hereto, which consent may be
withheld at the sole discretion of either the parties hereto.
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 thirty (30) days within
which to cure such default. If the default shall not be cured within the
thirty (30) days period aforesaid, then the party giving such notice
shall be permitted to avail itself of remedies to which it may be enti-
tled under this Agreement.
J. If either party fails or refuses to carry out any of the material cove-
nants or obligations 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. Notwithstanding the foregoing or
anything else to the contrary in this Agreement, with the sole excep-
tion of an action to recover the monies the City has agreed to pay
pursuant to the preceding Section 3 hereof, no action shall be com-
menced 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. In the event any action is brought by the City against
the Developer or its permitted assigns with respect to this Agreement
and the City is the prevailing party in such action, the City shall also
be entitled to recover from the Developer reasonable interest and
reasonable attorney's fees.
K. Time is of the essence of this Agreement.
L. This Agreement shall be construed, and the rights and obligations of
the City and the Developer hereunder shall be determined in accord-
ance with the laws of the State of Illinois without reference to its con-
flict of laws rules.
M. No past, present or future elected or appointed official, officer, em-
ployee, attorney, agent or independent contractor of the City shall be
charged personally or held contractually liable under any term or pro-
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vision of this Agreement including, but not limited to, because of their
negotiation, approval, execution or attempted execution of this
Agreement.
N. Notwithstanding any other provisions of this Agreement, it is express-
ly agreed and understood by the Developer and the City that in con-
nection with the performance of this Agreement, including, but not
limited to, providing for improvements to the New Dealership, and
that Developer shall comply with all applicable federal, state, city and
other requirements of law. Developer shall also at its expense secure
all permits and licenses, pay all charges and fees and give notices
necessary and incident to the due and lawful prosecution of the work
necessary to provide for the improvements to the New Dealership.
Without limiting the foregoing, and notwithstanding anything to the
contrary in this Agreement, Developer and its contractors and sub-
contractors shall comply with the Prevailing Wage Act in all respects
relating to the improvements to the New Dealership.
O. To the fullest extent permitted by law, Developer agrees to and shall
indemnify, 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, including but not limited to workers' com-
pensation claims, in any way resulting from or arising out of or alleged
to be resulting from or arising out of negligent actions or omissions of
the Developer in connection herewith, including negligence or omis-
sions of employees, agents or subcontractors of the Developer aris-
ing 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 Agree-
ment by the Developer, including any violation and/or breach by em-
ployees, agents or subcontractors of the Developer. 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, defend and hold harmless such action shall be defended
by legal counsel of the City's choosing the costs of which shall be
paid by the Developer. The provisions of this paragraph shall survive
any termination, completion and/or expiration of this Agreement.
P. To the fullest extent permitted by law, Developer agrees to and shall
indemnify, 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, attor-
neys' fees, expert witness fees and expenses, damages or other re-
lief, in any resulting from or arising out of or alleged to be resulting
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from or arising out of the existence of this Agreement, the provisions
of this Agreement, the performance of this Agreement, and/or any
other actions to the parties hereto provided for or arising from this
Agreement. In the event of any action against the City, its officials, of-
ficers, employees, agents, attorneys, boards or commissions, cov-
ered by the foregoing duty to indemnify, and defend and hold harm-
less, such action shall be defended by legal counsel of the City'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.
Q. Developer agrees to and shall provide to the City written reports on
the status of the New Dealership. Such written reports shall be pro-
vided to the City upon request of the City. Such written reports shall
contain a status report on construction activities and such other in-
formation as may be requested by the City.
R. Developer, on behalf of itself and its respective successors, assigns
and grantees of the Dealership hereby acknowledges the propriety,
necessity and legality of all of the terms and provisions of this Agree-
ment and does hereby further agree and does waive any and all
rights to any and all legal or other challenges or defenses to any of
the terms and provisions of this Agreement and hereby agrees and
covenants on behalf of itself and its successors, assigns and grant-
ees of the Dealership, not to sue the City or maintain any legal action
or other defenses against the City with respect to any challenges of
the terms and provisions of this Agreement. The provisions of this
paragraph shall survive any termination, completion and/or expiration
of this Agreement.
IN WITNESS WHEREOF, the City and Rosen SHG of Illinois, LLC have executed
this Agreement on the date first set forth above.
CITY OF ELGIN, SHG OF ILLINOIS, LLC, a limited liability
an Illinois municipal corporation company
By: By:
David J. Kaptain, Mayor
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Attest:
Kimberly Dewis, City Clerk
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