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HomeMy WebLinkAbout95-174 Resolution No. 95-174 RESOLUTION AUTHORIZING EXECUTION OF A REDEVELOPMENT AGREEMENT WITH PLANNED DEVELOPMENT AND CONSTRUCTION, INC. AND MICHAEL ORIGER AND NAIM J. ELIAS BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that Kevin Kelly, Mayor, and Dolonna Mecum, City Clerk, be and are hereby authorized and directed to execute a Redevelopment Agreement on behalf of the City of Elgin with Planned Development and Construction, Inc . and Michael Origer and Naim J. Elias for redevelopment of the property commonly known as 127 South Grove Avenue, Elgin, a copy of which is attached hereto and made a part hereof by reference. s/ Kevin Kelly Kevin Kelly, Mayor Presented: August 9, 1995 Adopted: August 9, 1995 Vote: Yeas 5 Nays 2 Attest: s/ Dolonna Mecum Dolonna Mecum, City Clerk REDEVELOPMENT AGREEMENT THIS AGREEMENT made and entered into this 9th day of August, 1995, by and between the CITY OF ELGIN, an Illinois municipal corporation (hereinafter referred to as the "City" and PLANNED DEVELOPMENT AND CONSTRUCTION, INC. , an Illinois corporation (hereinafter referred to as "Planned Development and Construction" ) , MICHAEL ORIGER and NAIM J. ELIAS . WITNESSETH WHEREAS, Planned Development and Construction is the owner and developer of the property commonly known as 127 South Grove Avenue, Elgin, Illinois, Kane County, Illinois (hereinafter referred to as the "Subject Property" ) ; and WHEREAS, Michael Origer and Naim J. Elias are officers and the owners of Planned Development and Construction; and WHEREAS, Planned Development and Construction desires to redevelop the Subject Property by constructing the Prairie Rock Brewery and Restaurant; and WHEREAS, Planned Development and Construction has requested assistance from the City regarding the redevelopment of the Subject Property; and WHEREAS, the City Council has determined that the redevelopment of the Subject Property is an integral part of the redevelopment of the center city area, is consistent with the adopted Center City Master Plan and will encourage further beneficial redevelopment within said area; and WHEREAS, the City Council has further determined that it is in the best interests of the City to provide assistance to Planned Development and Construction for the redevelopment of the Subject Property in accordance with the terms and conditions of this redevelopment agreement; and WHEREAS, the City of Elgin is a home rule municipality as defined in Article 7 , Section 6a of the 1970 Constitution of the State of Illinois; and WHEREAS, a home rule unit may exercise any power and perform any function pertaining to its government and affairs; and WHEREAS, the redevelopment of the City of Elgin center city area pertains to the government and affairs of the City of Elgin. NOW, THEREFORE, for and in consideration of the mutual promises and undertakings contained in this agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows : 1 . That the foregoing recitals are hereby incorporated into this agreement in their entirety. 2 . That Planned Development and Construction agrees to complete the redevelopment of the Subject Property in accordance with the plans and specifications submitted and on file with the City so as to provide for the construction of Prairie Rock Brewery Company and Restaurant. Planned Development and Construction represents that it has scheduled to have said establishment open for business on October 1, 1995, but agrees that in any event such establishment shall be open for business no later than December 1, 1995 . 2 3 . That during the construction and redevelopment of the Subject Property, Planned Development and Construction agrees to employ qualified workers and to complete said construction and redevelopment in compliance with all applicable statutes, ordinances, rules and regulations . 4 . That the City agrees to complete, at its cost, sidewalk, curb and street replacement for Prairie Street from Riverside Drive to Wellington Avenue. 5 . That the parties understand and agree that Planned Development and Construction will be obtaining a development loan from Commercial National Bank pursuant to the terms and conditions as set forth in the commitment letter from Commercial National Bank dated July 28, 1995, a copy of which is attached hereto as Exhibit A. The City agrees to provide an interest subsidy for Planned Development and Construction' s loan with Commercial National Bank in a total amount not to exceed $200,000 . Said interest subsidy shall be paid by the City directly to Commercial National Bank in the amounts not to exceed $50,000 each in years one and two, $40,000 in year three and $30,000 each in years four and five. Said interest payments shall be made in monthly installments due at the time of payment of the loan, provided, however, the City' s obligation to begin with such monthly installment payments shall begin only after the Prairie Rock Brewery Company and Restaurant has commenced full time operations as hereinafter defined. The City' s obligation to pay such interest subsidy is expressly contingent upon Planned Development and Construction' s redevelopment of the Subject 3 Property and commencement and continued full time operation of a microbrewery and restaurant at the Subject Property. For the purposes of this Agreement, full time operation of the microbrewery and restaurant shall mean that the establishment is open for business to the public seven days a week for a minimum of nine hours each day. The City' s obligation to pay such interest subsidy is further expressly contingent upon Michael T. Origer and Naim J. Elias maintaining a majority interest in the Subject Property and the Prairie Rock Brewery and Restaurant located thereon. In the event the full time operation of such microbrewery and restaurant shall cease at any time during such five year period, or in the event Michael T. Origer and Naim J. Elias fail to maintain a majority interest in the Subject Property or in the Prairie Rock Brewery and Restaurant located thereon during such five year period, then the City' s obligation to continue payment of interest subsidy shall be null and void and the City shall have no further obligation to make any payments with respect thereto. 6 . That the parties agree and intend that the City is not a party to nor an obligee of Planned Development and Construction' s loan with Commercial National Bank it being expressly agreed and intended that the City' s obligations to pay the interest subsidy is expressly limited as described in the preceding Paragraph 5 herein. In the event of any conflict between the terms of this Redevelopment Agreement and the commitment from Commercial National Bank dated July 28, 1995, attached hereto as Exhibit A or any other loan documents 4 concerning said loan, it is agreed and understood that the terms of this Redevelopment Agreement shall control with respect to the City's obligation to pay the interest subsidy. Planned Development and Construction along with Michael Origer and Naim J. Elias, both personally and in their capacity as officials of Planned Development and Construction, do hereby indemnify and hold the City harmless for any claims, causes of action and expenses whatsoever regarding the subject loan with Commercial National Bank which involve claims or purported obligations of the City beyond the City's obligation to pay the interest subsidy and the limitations with respect thereto as described in the preceding Paragraph 5 hereof . 7 . That nothing contained within this agreement shall be construed to constitute a partnership or joint venture by the parties hereto. IN WITNESS WHEREOF, the parties have entered into and executed this agreement on the date and year first written above. CITY OF ELGIN PLANNED DEVELOPMENT CO TRUC- TION, INC. By By N , 1 Kevin Kelly, or Its Attest: Attest: % V.A-Z-ct� City Clerk i Michael Naim J. E s 5 NO.537 D02 07i28/95 17:08 C N B 7088420013 i Connnercial National Bank 4t4W Ninth Wt,,aUn-n Avcnu" C:hloVri.llhnois 6062,-4086 �{ 31'�A$d51(JO Mr'MHEFi t'Ji(; t July 28, 1995 Planned Development&Construction,Inc. j Michael Origer Nairn J. Elias 61 S. Barrington Road South Barrington,IL 60010 I Dear Messrs. Origer and Elias: This letter shall constitute an agreement of Commercial National Bank of Chicago (hereinafter referred to as the"Bank")to lend and the agreement of the Borrower(as defined below)to borrow a sum not to exceed Seven Hundred Fifty Thousand and no/100---Dollars($750,000.00)(the "Loan") in accordance with the following terms and conditions: Borrower: ]Manned Development & Construction, Inc., an Illinois S-corporation AND Michael T. Origer AND Naim J. Elias II (the"Borrower"). Loan Amount: Seven Hundred Fifty Thousand and no/100---Dollars($750,000.00). Term: The Term of the loan shall be ten(10)years. Loan Purpose: The Loan shall be used to refinance the loan currently secured by the Property (approximately $l 70,000 principal amount outstanding) and to provide additional funding to be used to renovate and construct the restaurant and microbrewery now known as The Prairie Rock Brewing Company (the "Restaurant") located at 127 South Grove Street, Elgin, IL 60120 (the "Property"). Prior to closing, Borrowers shall provicte-the Bank with verifiable proof that $750,000 of the Borrowers' funds has been spent on acquiring and renovating the Property to date. Interest Rate: The Interest Rate charged on the principal balance remaining from time to time outstanding shall be equal to one percent (1.0%) per annum above the rate per annum charged by the Bank and identified by The Wall Street Journal as the Prime Rate(the"Prime Rate") which might not necessarily be the lowest rate of interest charged by the Bank. Interest shall be computed on the basis of a 360 day year and charged for the actual number of days elapsed. The Interest Rate shall be adjusted monthly. 7rZM 4:v9 PM JA-M.bad*-)* f'4xYcerS.mrn fi Exhibit A NO.537 D03 07/28/95 17:08 C N B 7068420013 Cvmmercial National Bank July 28, 1995 YDC,Origer,Elias Page 2 After maturity, whether by acceleration or otherwise, or upon any declaration of default of the loan terms,interest shall be charged at a rate per annum equal to four percent (4.0%) above the Interest Rate that would othemise be in effect(the"Default Interest Rate"). Notwithstanding the foregoing, at no time shall the Interest Rate charged be less than six percent (6.00%) (the "Floor") or greater than sixteen percent (16.00%) (the "Ceiling"), provided, however, that the aforesaid Floor and Ceiling shall not apply to the Default Interest Rate. Payment Schedule: Principal and interest shall be payable monthly and shall be based on a ten (10) year amortization schedule. The principal and interest payments shall be adjusted monthly in order to fully amortize the remaining loan balance over the remaining amortization term based on the then current interest rate. Additional Principal Payments: The Borrowers shall make additional principal payments of seventy-five percent (75%) of Net Income, but never exceeding $150,000 in any Operating Year or $300,000 in total. An Operating Year is defined as each twelve consecutive month period beginning on the day that the Restaurant opens for business to paying customers. Net Income is defined as revenues less all expenses. The calculation of Net Income shall not include any f expenses arising from any payments or disbursements of fiords from the Restaurant or on the Restaurant's behalf to the Borrowers or entities controlled by any of the Borrowers. Such Additional Principal Payments shall be made to the Bank within forty-five (45) days of the end of each Operating Year. Notwithstanding the foregoing, any Additional Principal Payment made hereunder shall not be deemed to be in lieu of regularly scheduled principal payments, which will continue according to the original amortization schedule. Late Charges: A late charge equal to five percent(5%)of the monthly payment of principal and interest will be payable on any payment that is received fifteen (15) or more days afler the payment due date. Real Estate Tax Escrow: In order to provide for the payment of real estate taxes, in addition to the A principal and interest payments set forth above, Borrower shall pay monthly �pp Tr1SA7�UC+CM h*nM 6e►i Ok `n Fy N0.537 D04 O'?28�95 17:09 C N 13 7088420013 CommereW National Bank July 28, i99s PDC,Origm,Elias Pagel 3 an amount equal to one-twelfth(IJl2)of one hundred percent(1001/4)of the annual real estate taxes due with respect to the Property. These payments shall be held in a tax escrow account for payment of real estate taxes when due. Prepayment Charge: The principal balance may be prepaid at any time in whole or in part without penalty. Collateral: A. A first mortgage,assignment of rents,security agreement and fixture financing statement on the Property. The Property must be free and clear of all liens and encumbrances, except for the first mortgage described herein,at the time of the Closing. B. If title to the Property is to be held in a land trust, the Bank shall be granted an assignment of the entire beneficial interest in the land trust holding title to the Property. C. An assignment of any management contract pertaining to the Property- D. A security agreement covering all items whether now owned or hereafter acquired and associated with the Property, including, but not limited to, fiuniture and fixtures,personal property, attachments and replacements, construction documents, rents, insurance policies and proceeds,eminent domain proceeds,and proceeds from sale. Additional Collateral: A. A first mortgage,assignment of rents, security agreement and fixture financing statement on the single family home located at 22 Pentwater, The Ponds, South Barrington, IIlinois (the "Additional Collateral"). At the Closing, the Property must he free and clear of all liens and encumbrances, except for the first mortgage described herein. B. If title to the Property is to be held in a land trust, the Bank shall be granted an assignment of the entire beneficial interest in the land trust holding title to the Property. a z MM 4 09➢M kka M awk4l), a br»crS.mc N0.537 905 0 Tl28/95 17 09 C N B 7088420013 C'plt1tI19rew NiLtionW Batik hsly 28, 1995 PDC,Origcr,Elias Page 4 C. A security agreement covering all items whether now owned or hereafter acquired and associated with the Property, including, but not limited to, furniture and fixtures, personal property, attaclunents and replacements, construction documents, rents, insurance policies and proceeds,eminent domain proceeds,and proceeds from sale. D. The mortgage and security interest on the Additional Collateral shall be released (the "Release Date") after the renovation and construction on the Property are complete, provided that the verifiable total costs of the constriction are not less than $1,500,000.00. Points: The Bank shall charge a fee equal to one percent (1.0%) of the loan amount ($7,500.00),payable in the form of a Commitment Fee, the terms of which are described below. Commitment Fee: Upon acceptance of this Commitment Letter, Borrower shall pay to the Bank a Commitment Fee equal to $7,500.00. The Commitment Fee is non-refundable unless the Bank, at its sole option, cancels the Commitment Letter due to environmental contingencies contained herein. Subordinate Financing: The Borrower shall not be permitted to have any other mortgages, liens, or encumbrances on the Property or the Additional Collateral without the prior written consent of the Bank, which may be granted or withheld in the Bank's sole discretion. Appraisal: The Bank shall procure,from an appraiser of its own choice,a market value appraisal of the Property and the Additional Collateral (the "Appraisal"). The Borrower shall be responsible for paying the cost of the Appraisal. A copy of the Appraisal will be supplied to Borrower upon request subsequent to Closing. Commitment Subject to Environmental Audit: The Borrower shall, at its own expense, furnish the Bank with a Phase I Frivironmental Audit of the Property prepared by an environmental consulting firm acceptable to the Bank and addressed to the Bank. :s Acceptability of the environmental consulting firm shall be determined by the Bank in its sole discretion. In the event that the Bank acquires WnM 4 M?M hew M bwWjyt r u.yvS.cae NO.53'7 D06 'U/28i95 17:10 C N B 7088420013 Commercial National Bank July 28, 1995 PDC.Origer,Elias Page 5 information relating to the environmental condition of the Property which in the Bank's sole discretion may diminish the value of the Property, then the Bank may terminate this Commitment for environmental reasons. Termination of the Commitment due to environmental reasons shall not affect the Borrower's obligation to pay the Bank's fees, costs or expenses relating to this Commitment. IRPTA Statements: Prior to Closing, Borrower shall deliver to the Bank a completed disclosure document as required pursuant to the Illinois Responsible Property Transfer Act of 1988, as amended (P.A. 86-0679) ("IRPTA"). Alternatively, Borrower or its counsel shall deliver to the Bank a Transferor's Affidavit Statement which indicates that the Property is not real property subject to the terms of IRPTA. Borrower acknowledges that the Bank has the right, within ten (10) days after demand for the completed disclosure document or within ten (10)days of the Bank's receipt of a completed disclosure document which describes a previously undisclosed environmental condition, to terminate this Commitment. Termination of this Commitment due to environmental concerns shall not affect the Borrower's obligation to pay the Bank's fees, costs or expenses relating to this Commitment Letter. Title Insurance: Prior to Closing, Borrower will famish the Bank with a fully paid commitment for an ALTA loan title insurance policy with gap insurance coverage that will cover the gap between the date of the title commitment and the Closing,and with such location notes and endorsements as the Bank or the Bank's counsel requires. Said insurance is to be in an amount not less than the Loan herein and issued by a title insurance company acceptable to the Bank. The title insurance policy shall insure (i)the mortgage as a valid first mortgage lien encumbering the P g Property, and (ii) the mortgage as a valid first mortgage lien encumbering the Additional Collateral, and shall be in form and substance satisfactory to the Bank and its counsel, without exceptions other than those deemed acceptable by the Bank or its counsel. It" Insurance: Prior to Closing, Borrower shall furnish evidence of appropriate hazard, , liability, and flood insurance issued by an insurance company deemed satisfactory by the Bank insuring the Property and the Additional Collateral, and in form and content acceptable to the Bank. Said insurance shall at all times be equal to or greater than the amount of the loan balance then outstanding. All insurance policies required hereunder must designate the r. r� NO.537 907 07 Z8�95� 17:10 C N B 7088420013 C.rornmerciAl National Bask ' July 29, 1995 PDC,Origcr,Elias Page 6 Bank as loss payee and mortgagee. Said insurance policy shall provide at s least ten(10)days notice to the Bank prior to cancellation. Surveys: Prior to Closing, Borrower shall fiirnish the Bank current ALTA form surveys of the Property and the Additional Collateral prepared by a licensed surveyor satisfactory to the Bank. The surveys shall be certified to the Borrower, the title insurer, and the Bank. The surveys shall show the legal description of the Property and the Additional Collateral, the dimensions and locations of all improvements thereon, the location of all easements,the location of all adjoining streets, parking areas (including the number of parking spaces), and the square footage of the Property and the Additional Collateral. Costs: All costs, appraisal fees, processing fees, legal fees (including the fees and costs of the Bank's counsel for its services provided in connection with the origination of this Loan, vokiek shall not exceed $I 000), and other expenses related to this Loan are to be paid by the Borrower prior to or at closing or the Bank is authorized to deduct same from the Loan. If the actual amount of charges are not ascertainable at the time of the disbursement of the Loan, then the Bank may deduct from the Loan its estimate of applicable charges with Borrower to be responsible for any excess monies due. It is expressly understood that this paragraph shall survive any termination of this Commitment. Default Pertaining to Transfer or Sale of Property or Additional Collateral: Any sale, conveyance, transfer, pledge, or mortgage, other than the Bank's mortgage described herein, or other encumbrance of any right, title to, or interest in the Property or the Additional Collateral or any portion thereof,or i any sale, transfer or assignment (either outright or collateral) of all or any �c part of the beneficial interest in any trust holding title to the Property or the Additional Collateral,or any transfers of stock in the owner of the Property W1 or Additional Collateral (where the owner of the Property is a corporation) or transfer of a partnership interest (where the owner of the Property or the Additional Collateral is a partnership), without the prior written approval of }, the Bank shall,at the option of the Bank,constitute a default of the Loan, in which event the Bank may declare the entire indebtedness to be immediately • j 7ISiR5 I try YtiS w.M.awwpp S cna CO?28/95 17:11 C N B 7088420013 N0.537 D08 Conmemial _ National Batik July 28, 1995 PDC,Origer,Elias Page 7 i' I`1 due and payable and foreclose the mortgage immediately or at any time such default occurs. Loan Documentation: Borrower shall sign and/or furnish all documents deemed necessary by the Bank. All documents shall be in form and content acceptable to the Bank and its legal counsel. Borrower acknowledges and agrees that facsimile reproductions of executed or certified documents, including this Commitment Letter and all other statements, verifications and loan documents, shall have the same use, force and effect as the original executed documents. In addition, Borrower agrees to provide the Bak with the original of all executed or certified documents t within a reasonable time following the facsimile transmittal. E i City of Elgin Support: The Loan is made subject to the City of Elgin providing the Borrowers with S200,000 in debt service supplements to assist in the repayment of this Loan. Such supplement shall be paid as follows: $50,000 in the first year of the Loan, $50,000 in the second year of the Loan, $40,000 in the third year of the Loan, $30,000 in the fourth year of the Loan and$30,000 in the fifth year of the Loan. Payments shall be made directly to the Bank on a monthly basis, and shall be t-redited towards the monthly payments due from the Borrower. The City of Elgin payments shall continue as long as the Restaurant is in operation. Conditions Precedent to Disbursement of Loan Proceeds: A. Execution and delivery of all Loan documents to evidence and secure the Loan in form and substance satisfactory to the Bank and its counsel, and in accordance with the terms hereof and after completion of all UCC searches. B. There shall have been no material adverse change in the condition of the Property or the Additional Collateral or in the financial condition of the Borrower since November, 1994 (and receipt from Messrs. Origer and Elias of updated personal financial statements and receipt from Mr. Elias and Planned Development & Construction, Inc. of copies of their 1994 federal income tax returns confirming no such material adverse change). 7raM 4'Wvu k,eo M i'r .bdpus a n NO.537 D09 0"7/28i95 17:11 C N B 708842e013 __ _..•• �;a:a � �._..., t.. coIt1II1Q1''w NatlazW Bulk July 28, 1995 PDC,Origer,Elias Page 8 i j C. Neither the Property, the Additional Collateral nor any part thereof shall have suffered any casualty or be subject to any existing or s threatened condemnation or taking by eminent domain proceeding or otherwise. D. There shall be no pending or threatened litigation known to Borrower, or their counsel, against the Borrower, the Property or the Additional Collateral. L. There shall have been full compliance by the Borrower with all of the terms and conditions of this Commitment. F. The Bank shall have received evidence satisfactory to it that the Property and the Additional Collateral is in compliance with all local, state, and federal environmental laws, and that there are no conditions existing currently or likely to exist during the Term of the Loan that require or are likely to require clean-up, removal or other remedial action pursuant to any of the aforesaid environmental laws. G. An Environmental Indemnity Agreement shall be executed by the Borrower at the Closing. Additional Information: Prior to Closing, Borrower agrees to supply any additional information, documentation, or verifications that the Bank or its counsel may reasonably deem necessary. Financial Condition Warranty: Borrower warrants that the financial information submitted to the Bank is accurate and complete, and that all charges payable with respect to the Property and the Additional Collateral are current and not in default. Financial Information: Annually during the Team of the Loan, Borrower shall provide the Bank with financial information which will include, but not be limited to: financial statements of income and expenses for the Property within 30 days �F No.537 D10 07/28/95 17:12 C N B 7008420013 CrOIC mereW National Bank July 28, 1995 PDC,Origer,Elias Page 9 of the end of each Operating Year; tax returns for all entities reporting the income and expenses of the Property; the federal and state income tax returtis 1br the Borrower; and signed and dated personal financial statements for the Borrower. Borrower also agrees to make the Property and also the books and records of the Property available for inspection by the Bank if so requested, and agrees to provide the Bank with copies of any leases pertaining to the Property and with copies of any other information as the Bank may reasonably request. Business Loan Recital: Borrower represents and agrees that this Ioan constitutes a business loan, • and that the loan proceeds will not be used for personal, household or family purposes. Waiver: The Bank shall not be deemed to have waived any of the terms and conditions hereof except in writing signed by an officer of the Bank and delivered to the Borrower. Entire Agreement: Any statements,agreements,or representations,oral or written, which may have been made either by the Bank or by any employee, agent, or broker acting on the Bank's behalf with respect to this Commitment, and all prior agreements and representations in respect to this Commitment and the Loan are merged herein so that this Commitment shall contain the entire agreement with respect to the Loan. The provisions hereof supersede any contrary provisions in any application executed by the Borrower. No provisions hereof may be modified, amended, or waived, other than in i; writing signed by both the Borrower and the Bank. Expiration: This Commitment Letter,if not accepted by the Borrower and returned to the Bank along with the Commitment Fee, shall expire on August 15, 1995. In addition, if the Closing is not on or before August 31, 1995, this Commitment Letter shall expire. a i Cancellation and Termination: Bank reserves the right to cancel this Commitment to terminate its obligations hereunder without liability in the event of any of the following, or should Borrower be in default of any of the provisions or conditions set forth in this Commitment: Ulm t: 1!eNv!.wPM JohnM Ru►,dpp e1Mpr5rnm NO.537 [711 07i28i95 17:12 C N B 7088420013 Cm memial National Batik July 28, 1995 PDC,Origer,Elias Page 10 A. Borrower fails to comply in the time and form specified with any provision or condition set forth in this Commitment. B. Borrower's nonpayment of fees and/or expenses provided for herein. C. Failure by the Borrower to deliver to the Bank the aforesaid title insurance coverage showing the mortgage securing the Loan as a valid first lien on the Property and the Additional Collateral, general real estate taxes not delinquent, and those exceptions acceptable to the Bank and its counsel. D. Filing by or against the Borrower of any petition in bankruptcy or insolvency or appointment of a receiver or trustee, or the making by the Borrower of any assignment or arrangement for the benefit of creditors or the filing of a petition for arrangement by the Borrower which petition is not withdrawn or dismissed, or which appointment, assignment, or arrangement is not canceled or terminated prior to the expiration of this Commitment. E. The receipt"of any information by the Bank or any change subsequent to this Commitment deemed by the Bank to be materially adverse or substantial in the assets, net worth or credit standing of the Borrower,or which the Bank, in its sole discretion, determines materially affects the current fair market value of the Property or the Additional Collateral. F. Any misstatement of fact in the Loan Application or any r documents submitted in support thereof or hereof. G. Any survey reveals a violation of building line or restrictive covenants, encroachments, easements, or other matters of surveys not acceptable to the Batik. i Survival and Right .... of Assignment: This Commitment and all representations,warranties, and covenants of the Borrower herein contained or contained in Borrower's application for the Loan shall survive the closing of the loan. The rights under the Commitment are not assignable by the Borrower. `>a� VZW 4 09 Py hbn i44 NO.537 P12 07/28/95 17:13 C N B 708842e013 . F- Commercial National Bank July 28, 1993 PDC,Origer,Elias Page 11 j: Not a Joint Venture: Notwithstanding anything to the contrary herein contained, the Bank, by making this Commitment or by any action taken pursuant hereto, will not y be deemed a partner or joint venturer with the Borrower and the Borrower will indemnify and hold the Bank harmless from any and all damages resulting from such a construction of the parties and their relationship. Other Covenants: During the term, the Borrower shall pay, or cause to be paid, all charges due with respect to the Property and the Additional Collateral. i Governing Law and Severability: This Commitment shall be governed by and construed under the laws of the State of Illinois. If any provision of this Commitment shall be declared invalid by the court having jurisdiction of the subject matter hereof, such declaration shall not affect the balance of the provisions hereof. If the foregoing is satisfactory to you, kindly indicate your acceptance thereof and your agreement to borrow the proceeds of the Loan from the Bank upon the terms and conditions contained herein by Irzvss.vsru f 07i28i95 17:13 C N B 7088420013 N0.537 P13 ConlmereW National Bank July 28,1995 PDC,Origer,Elias Page 12 signing and returning the original of this Commitment to the Bank at the address indicated above by August 15, 1995, along with the Commitment Fee in the amount of Seven Thousand Five i Hundred and no/100---Dollars ($7,500.00) payable to Commercial National Bank of Chicago, otherwise, this Commitment will, at the option of the Bank and without notice, be of no force or effect. The undertakings by the Bank in this Commitment cannot be accepted conditionally, and any such conditional acceptance or modifications will terminate absolutely the undertakings made herein. $' Very truly yo CO C1A L BANK IFCHICAGO BY: Michael tcin Senior Vi4jPresident } ACCEPTANCE 1 3 The ufgerersigned hcrcby agree to the terms and conditions contained in the foregoing Commitment this L. day of 1995. Planned Development&Construction,Inc. I By: Mic 1 Ori er By _ Nairn J. 'as N xtf95•a.►ul kilo KP • El Agenda Item No. July 7, 1995 TO: Mayor and Members of the City Council FROM: Richard B. Helwig, City Manager SUBJECT: Consideration of Incentive Package for Prairie Rock Brewery Co. Restaurant PURPOSE The purpose of this memorandum is to present information for consideration of a request for assistance from Prairie Rock Brewery Co. BACKGROUND At its June 14, 1995 meeting, the City Council was addressed by Mike Origer and Joe Elias, Planned Development & Construc- tion, Inc. , who requested assistance from the City of Elgin with the Prairie Rock Brewery project to be located at 127 South Grove Avenue. Specifically, the City Council was asked to consider assistance in the following forms : 1 . 4 : 00 a.m. liquor license. 2 . Ability to sell beer produced wholesale to vendors and in packaged form to patrons. 3 . Infrastructure improvements including street, sidewalk and curb replacement. 4 . Waiver of 3/4% City sales tax as provided for by ordi- nance S7-94, effective January 1, 1995 . 5. Interest subsidy on loan through Commercial National Bank of Chicago totalling approximately $300,000 over a ten-year period. The City Council requested that staff continue discussions with Mr. Origer and Mr. Elias and research the impact of the requests made. Each item is discussed separately below. Prairie Rock Brewery Co. July 7 , 1995 Page 2 Issue One: Public Improvements Sidewalk and curb replacement for Prairie Street from River- side Drive to Wellington Avenue are, according to the Public Works Department, already scheduled as part of the downtown sidewalk replacement program. The estimated cost for the sidewalk, curb and street overlay is estimated at $65,000 . The work could be performed by Triggi Construction, who is currently doing sidewalk work in the City's residential ar- eas . The work on Prairie Street would be treated as a change order to the present contract if performed by Triggi . Issue Two: Gap Financing After further discussions with Mr. Origer, Mr. Elias and their lender - Commercial National Bank of Chicago - a pro- gram to provide "gap" financing fox the project is proposed. Financing from the City would total $200,000 to be paid out according to the following schedule: Year 1 $50,000 Year 2 50, 000 Year 3 40, 000 Year 4 30,000 Year 5 30,000 Payments would be made directly to the lending institution and would commence upon opening of the facility. Payments would cease if the facility would close and/or Mr. Origer and Mr. Elias were no longer involved in the ownership and manage- ment of the microbrewery/restaurant and/or the building. Provided is a letter from Commercial National Bank of Chica- go. Mr. Origer advises that a final commitment letter is in process. Finance Director Jim Nowicki has prepared a sched- ule of estimated sales tax and property tax which would apply for comparison with this incentive item and is attached for your review. Issue Three: 4 :00 a.m. Liquor License Permit The ability to obtain a 4 : 00 a.m. liquor license is consid- ered to be essential to the project principals . Legal staff has determined that providing for such a license is possible, but would suggest the following conditions : a. A special permit which would provide for sale of alcohol on premises during the hours of 2:00 a.m. and 4 :00 a.m. b. Special permit to be available to establishments on the east side of the Fox River, as defined by the CC-1 zoning district with the following conditions : r.. l Prairie Rock Brewery Co. July 7, 1995 Page 3 food service during hours of operation regular minimum seating capacity of 325 C. Establishment will be required to hire and have present one police officer between the hours of 1 :00 a.m. and 4 :00 a.m. d. Ordinance creating special 4 :00 a.m. permit would automatically expire after one year and would re- quire further City Council action to continue the special permit. The Center City 1 (CC1) zoning district boundaries and site design regulations are intended to recognize the unique pat- tern of development associated with the original "heart" of the City. Historically, the regional focus of this area combined with its era of development resulted in a greater land use intensity than patterns found Elsewhere in the City. This greater intensity is reflected in design elements such as full lot coverage and building heights . A map of the district (CC-1) is provided. Police Department staff has contacted a number of communities across the country to determine whether there are any experi- ences with 4 :00 a.m. liquor licenses . Among the cities con- tacted were: Peoria, IL Rockford, IL Joliet, IL Waukegan, IL Springfield, IL San Antonio, TX Carpentersville, IL Boston, MA Schaumburg, IL Denver, CO Bartlett, IL Among those contacted above, only Peoria had a 4 :00 a.m. liquor license available and has similar circumstances as Elgin is considering for licensing. The Peoria Police Depart- ment did report an increase in calls after such licenses became available. The Elgin Police Department feels that problems can be anticipated, but that measures can be taken to minimize the occurrence. It was suggested that the own- er/manager could establish a "tone" for the business by pro- viding for a dress code, valet service and proper exteri- or/interior lighting. Issue Four: Package Sales Package sales anticipated by Prairie Rock are of two types : a. wholesale, to licensed vendors and b. small quantities, such as six-packs, as souvenirs to patrons. It is suggested that these sales be limited to no later than 2 :00 a.m. � 4 Prairie Rock Brewery Co. July 7, 1995 Page 4 Regulations governing package sales are provided under exist- ing City ordinance. An amendment to the existing liquor code is suggested to create a new license classification which incorporates package sales, on premises consumption and whole- sale sales . Issue Five: Sales Tax Staff would not recommend any assistance relative to the sales tax issue. COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED None. FINANCIAL IMPACT 1 . The cost of providing public improvements for sidewalk and curb replacement and street overlay is estimated at $65,000 . Funds would be utilized from additional river- boat proceeds, account number 275-0000-791 . 93-80. 2 . The proposed financing package totalling payments of $200,000 to Commercial National Bank of Chicago would be paid from riverboat proceeds. LEGAL IMPACT None. RECOMMENDATION Staff feels that this project represents an excellent develop- ment opportunity for the center city area and reflects the type of business desired to promote vitality in the area. Staff also feels that providing assistance to encourage this type of development is appropriate for a public body, as evidenced by similar activities by governmental bodies and downtown organizations across the nation. Staff would fur- ther encourage consideration of more formal incentive pro- grams to respond to future requests of this type. In response to specific requests relative to the Prairie Rock project: 1. Public Improvements . Staff feels that the public im- provements are necessary to enhance the appearance of the area and provide for pedestrian safety. These types of public improvements are an essential element to the vitality and image of the center city, as evidenced by the work done on South Grove Avenue. Indeed, center city businesses have indicated that such improvements should be a priority for the area. Prairie Rock Brewery Co. July 7, 1995 Page 5 2 . Gap Financing. The current Special Business Loan Pro- gram for Building Improvements functions to subsidize interest payments on building improvement projects . Although the program has been used by existing downtown businesses, the projects have not approached the size of the investment by Prairie Rock. The estimated $1 .5 million project represents one of the largest private investments in the area in recent years . It would seem to be in keeping with the redevelopment goals of center city to provide a means to facilitate such investment. The City Council should expect continued interest in financial incentives from existing businesses and those contemplating Elgin as a new location. 3 . 4 : 00 a.m. Liquor License. Staff recommends a special permit allowing sales between 2 : 00 a.m. and 4 :00 a.m. , based on the criteria discussed above. 4 . Package Sales . Package sales would take place in confor- mance with City ordinance as discussed above. 5 . Sales Tax Waiver. Given the importance of sales tax contributions to City basic services and maintaining a strong financial base, waiver of any portion of the sales tax is not recommended. Respectfully submitted, Charles A. Gruber Chief of Police U..", ke "IceErwin W. Jentsch Corporation Counsel rah K. ier, Director New Century Partnership gnan Elgin R. Nowicki ce Director Richard B. Helwig City Manager amp �I IIG 11111 ' �I Wr am NONNI 11�� ?: ;f 1111 IIII �\ �: Ells" mdL 101 ► �11 4 I i"n -_ Memorandum r July 7, 1995 TO: Richard B. Helwig, City Manager �1 FROM: James R. Nowicki, Finance Director 7� SUBJECT: Prairie Rock Brewing Company Pursuant to your request to review potential sales and proper- ty taxes generated by the proposed Prairie Rock Brewing Compa- ny (PRBC) , I have analyzed the documentation submitted by Planned Development and Construction and developed the follow- ing: Sales Tax: PRBC projects their sales to be approximately $3 .5 million. This number appears to be very aggressive. National sales figures for food and food service establish- ments serving liquor indicate a median sales per square foot figure of $105 .48 . Those establishments in the top ten per- cent of this same category generate $210 .70 in sales per square foot. The estimated square footage of the PRBC is 16,885 . Therefore it is projected that sales could range from approximately $1 . 78 to $3 .56 million. I had the opportunity to review the PRBC information with Jim McConnahay, the Economic Development Coordinator for the Elgin Chamber of Commerce. He was familiar with this type of brewery/pub operation having worked on a similar project in Ohio. In projecting preliminary sales numbers based on the number of seats in the bar, restaurant and banquet facility, it is estimated that the PRBC could generate $2 .2 to $2 .6 million in sales . If the 1. 75% sales tax rate is applied to the anticipated sales, approximately $31, 150 to $62, 300 could be generated. ' Property Tax: The 1994 assessed valuation (A.V. ) for 127 South Grove is $33,848 . The projected 1995 A.V. , prior to improvements, is $85,000. It appears (from PRBC material ) that approximately $550,000 in fair market value improvements would be added as a result of construction. Since improve- ments are typically valued at 1/3 their market value, approxi- mately $183,000 would be added to the A.V. Any changes in the A.V. would need to be reviewed with the Township Assessor since they have the responsibility to determine the final as- Richard B. Helwig Prairie Rock Brewing Company July 7 , 1995 Page 2 sessed valuation. The new A.V. total of $268,000 ($85,000 + $183,000) when applied to the $1 . 92 property tax rate would generate $5, 145 in property tax. Summary: Based on the above information the following proper- ty and sales taxes could be generated. No increase in sales or property values due to inflation were taken into considera- tion. 1996 1997 1998 1999 2000 Total Sales Tax $31, 500 $31,500 $31,500 $31, 500 $31 ,500 $155,750 $62, 300 $62, 300 $62 , 300 $62 , 300 $62 , 300 $311,500 Property Tax $ 1,632 $ 5, 145* $ 5, 145 $ 5 , 145 $ 5, 145 $ 22 ,212 * Reflects improvements being taxed at their full value in 1997 . JRN:daw 07/07/95 15:13 C N B 4 17089315610 Nn.321 UO2 Coniinercial National Bank 4800 North Western Avenue C'.hirigo,Illinois 6062 5-1586 312/989-5100 MEMBER FDIC July 7, 1995 Planned Development&Construction 61 South Barrington Road Barrington,Illinois 60010 RE: Prairie Rock Brewery Dear Mike and Joe: Regarding our May meeting in which we discussed possible lending on your restaurant project in Elgin,the following terms must be incorporated in the loan in order to maintain our interest: 1. The loan would be for $750,000.00 at Prime plus 1% floating with a 10 year amortization and a five year balloon; 2. Commercial National Bank must be in a first mortgage position; 3, Planned Development and Construction will first fund 50% of total project cost (estimated at$1,500,000.00)via a construction escrow; 4. The City of Elgin will provide an interest subsidy of$200,000.00 to be based on the following amounts per year: $50,000.00 in each of year one and year two; $40,000.00 in year three;slid$30,000.00 in each of years four and five. 5. Michael T. Origer and Naim J.Elias shall each guaranty the loan in full. If you can conform to these guidelines, Commercial National Bank will happy to proceed with underwriting the loan. Of course,this letter is not a commitment to fund tho loan, but rather an indication of our strong interest in the transaction. If I can be of any further assistance,please do not hesitate to call. MM ichae , S / Senior Vi a Pres dent MGS:ro 7/7/95 1021'M Rosc Odeshoo c:ldocslplamied.let