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01-154
Resolution No. 01-154 RESOLUTION AUTHORIZING EXECUTION OF A DEVELOPMENT AGREEMENT WITH SCHLEIFRING MEDICAL SYSTEM LLC FOR THE DEVELOPMENT OF 1420 CRISPIN DRIVE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that Ed Schock, Mayor, and Dolonna Mecum, City Clerk, be and are hereby authorized and directed to execute a Development Agreement on behalf of the City of Elgin with Schleif ring Medical System LLC for the development of a slip ring production facility at the property located at 1420 Crispin Drive, a copy of which is attached hereto and made a part hereof by reference . s/ Ed Schock Ed Schock, Mayor Presented: June 13, 2001 Adopted: June 13 , 2001 Omnibus Vote: Yeas 6 Nays 0 Attest: s/ Dolonna Mecum Dolonna Mecum, City Clerk DEVELOPMENT AGREEMENT This Development Agreement is made and entered into this aT day of J cJ A C , 2001 , by and between the CITY OF ELGIN, an Illinois municipal corporation , (hereinafter referred to as the "City") and SCHLEIFRING MEDICAL SYSTEM LLC , a Delaware limited liability company, registered to do business in Illinois (hereinafter referred to as "Developer") . WITNESSETH WHEREAS, Developer intends to purchase the property commonly known as 1420 Crispin Drive , Elgin , Illinois and to develop such property with a slip ring production facility (such property being hereinafter referred to as the "Subject Property" and such proposed development being hereinafter referred to as the "Subject Development") ; and WHEREAS, Developer , after consultations and negotiations with the City concerning certain development assistance has determined to proceed with the Subject Development of the Subject Property ; and WHEREAS, the Subject Development of the Subject Property is currently estimated to represent a 6 . 1 million dollar investment by the Developer resulting in the creation of not less than 32 new full-time jobs within the next two years and projects not less than 45 new full-time jobs over the next five years ; and WHEREAS, it is unlikely that the development of the Subject Property will occur in the absence of limited economic assistance ; and WHEREAS, the City providing development assistance to Developer for the Subject Development will result in a substantial increase in the City ' s tax base and provide new and additional employment opportunities in the City of Elgin ; and WHEREAS, in order to provide for the continued development of the City including the development of the Subject Property by the Developer with its slip ring production facility the City has agreed to provide certain development assistance as hereinafter described ; and WHEREAS, the City of Elgin is a home rule unit authorized to exercise or perform any function relating to its government and affairs ; and WHEREAS, economic development initiatives as provided herein and resulting in significant increases in the City of Elgin ' s tax base and employment opportunities within the City of Elgin are matters within the government and affairs of the City of Elgin . NOW, THEREFORE , for and in consideration of the mutual promises and undertakings contained herein , and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged , the parties hereto agree as follows : 2 1 . That the foregoing recitals are incorporated into this agreement in their entirety . 2 . That Developer shall develop the Subject Property with a new slip ring production facility according to the site plan dated December 19, 2000, prepared by Arete" 3 LTD attached hereto as Exhibit A . Developer shall complete all improvements for the Subject Development, occupy same and commence operations at the Subject Property on or before July 1 , 2001 . 3 . That within two (2) years of the occupancy of the Subject Development on the Subject Property the Developer shall create not less than 32 new full -time jobs at the Subject Development . Within five (5) years of Developer ' s occupancy of the Subject Development , Developer projects not less than 45 new full -time jobs at the Subject Development . Developer shall use its best efforts to hire Elgin residents for all such jobs . It is anticipated that the breakdown of the types of jobs that Developer will provide at the Subject Development is as follows : (1) electro/mechanical assembly workers, PU casting specialists, Quality Inspectors , Shipping and Receiving/Material Handlers- - Salary Ranges depending upon experience $25, 000-$35, 000 annually ; (2) Milling and Lathing Machinists- -Salary Range $36, 000-$40, 000 annually ; (3) Administrative Support- -Salary Range $30, 000- $34, 000; (4) Operational/Financial Supervisors and Managers- - Salary Range depending upon experience and responsibility $50, 000-$140, 000 annually . 3 4 . That in consideration of Developer ' s taking title to the Subject Property and initiating the required physical improvements to the building on the Subject Property and providing for the creation of jobs as set forth herein , the City agrees to provide the economic development assistance to Developer as set forth in this paragraph to be used by Developer for costs associated with the Subject Development on the Subject Property . Such economic development assistance from the City to Developer for the Subject Development shall be provided to Developer as follows : A. In the event of and upon Developer ' s purchasing the Subject Property and initiating the required physical improvements to the building on the Subject Property and commencing operations at the Subject Development on or before July 1 , 2001 , the City shall pay to the Developer the sum of $30, 000 to be utilized by the Developer for technical upgrades related to the Subject Development including primarily the electrical system at the Subject Property . B . In the event of and upon Developer ' s completion , occupancy of and commencing operations of the Subject Development at the Subject Property on or before July 1 , 2001 , and in the event of Developer creating and establishing not less than 32 new full time jobs at the Subject Development on or before July 1 , 2003 , as required in the preceding Paragraph 3 hereof , the City shall pay to the Developer the total sum of $35, 000 to be used by 4 the Developer towards the costs of the Subject Development . The City shall pay $32 , 000 of such $35 , 000 to the Developer in installments of $1, 000 with such installments to be paid upon the creation and establishment by Developer of each of such 32 new full time jobs at the Subject Development . The City shall pay the remaining $3 , 000 of such $35 , 000 to the Developer in the event the Developer has completed the creation and establishment of not less than 32 new full time jobs at the Subject Development on or before July 1 , 2003 . The total payments by the City to the Developer for the creation of new full time jobs at the Subject Development shall not to exceed $35 , 000 . Developer shall submit its employment records to the City on a quarterly basis and shall identify therein each of the new full time jobs that the Subject Development created and established by the Developer as required in the preceding Paragraph 3 hereof . 5 . That the parties understand and agree that the economic development assistance being provided by the City to Developer as set forth herein is expressly contingent upon Developer ' s development of the Subject Development on the Subject Property as set forth herein . In the event Developer fails to complete , occupy and commence operations of the Subject Development on the Subject Property on or before July 1 , 2001 , and/or in the event Developer fails to provide for the creation and establishment of jobs at the Subject Development as required in the preceding Paragraph 3 hereof, the parties understand and 5 agree that the City will not be providing any economic development assistance to Developer for the Subject Development pursuant to this agreement or otherwise , and that the Developer shall reimburse the City in full any funds distributed to the Developer under the economic development grants provided for the preceding Paragraph 4 hereof . 6 . That this agreement shall not be deemed or construed to create an employment, joint venture, partnership, or other agency relationship between the parties hereto . 7 . That all notices or other communications hereunder shall be made in writing and shall be deemed given if personally delivered , sent by overnight courier or mailed by registered or certified mail , return receipt requested, to the parties at the following addresses , or at such other addresses for a party as shall be specified by a like notice and shall be deemed received on the date which said notice is hand delivered or the second business day following the date on which so mailed : TO THE CITY : TO THE DEVELOPER : City of Elgin Ms . Joann Reynolds 150 Dexter Court 4345 Barharbor Drive Elgin, IL 60120-5555 Lake in the Hills , IL 60156 Attention : City Manager 8 . 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 . 6 9 . That this agreement may be modified or amended only in writing signed by both parties hereto, or their permitted successors or assigns , as the case may be . 10 . That this agreement contains the entire agreement and understanding of the parties hereto with respect to the subject matter as set forth herein , all prior agreements and understandings having been merged herein and extinguished hereby . 11 . That this agreement is and shall be deemed and construed to be a joint and collective work product of the City and Developer and, as such, this agreement shall not be construed against the other party, as the otherwise purported drafter of same , by any court of competent jurisdiction and in order to resolve any inconsistency, ambiguity, vagueness or conflict , if any, in the terms or provisions contained herein . 12 . That this agreement is subject to and shall be governed by the laws of the State of Illinois . Venue for the resolution of any disputes or the enforcement of any rights pursuant to this agreement shall be in the Circuit Court of Kane County, Illinois . 13 . 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 written consent of each of the parties hereto which consent may be withheld at the sole discretion of either of the parties hereto . 7 14 . That upon Developer ' s compliance with the requirements of the preceding Paragraphs 2 and 3 hereof , Developer shall provide the City reasonable data and records of Developer which documents Developer ' s compliance with the requirements of the preceding Paragraphs 2 and 3 hereof . IN WITNESS WHEREOF , the parties have entered into and executed this agreement on the date and year first written above . CITY OF ELGIN, a municipal SCHLEIFRING MEDICAL SYSTEM LLC , corporation an Illinois limited liability company By By y 1 Ed Sc ock , ayor Na Title Co/ C=a Attest : Whi""-45- E-c414,,,-- Dolonna Mecum, city Clerk C:\TEMP\Schleifringdevagree 8 • ' ••• i422g. mimm• . .m.ir ftee• ..• •••••••••TNIC. ....• ....... id b 1 Fri zoi1/4. 1 st M7-0' 1 I kis! le'IT . 11) - • ...-- 1)' 40...,, 74 1 1 b I I 1' .3%•5' 1 iv I Exer.oacsiee ,.., il •••• I A, 25.0 IIII) PROPOSED was LANDscota) - , BUILD1% 1 isupv .......... 1 1 1 '>“ -;.:;-•. . '...,. Milli . , cacti kali_ _ b, - 1pow. : 1 To flool moor - ---,-• . - . • 'sizil'.. 111 htio coc ; 7;) PeanDE Na7 „cm,. ., MIMS AS 1 ( •5°iii ' II 1 : Si Z --— I ) I = -,----, $4 • .,. . A A g.• s N 4,•.. I .•——.—.....• I I NEI MID -I I AEA . I 1 --. - ....-....-..- . D1151)fi INVING Ell VO WWI 1 I I --- I 111 : I e-cr IY-b• W4e 37-o. III-V-4 if -.„. ... : CRICE -• AREA -1a! 9s , . I IIt? SPP k. T , .---.......N1.—....._ IL 1=) V..10' MY N 8/Parr f !so :CO CRIS°IN DRIVE ___... ••••••• .....• .. ... ....... . ..•. ..... ..— ., . ---. ...- .. - —_ TOTAL P.EP Exhibit A OF ftC'' Agenda Item No. ° 7 City of Elgin g E _�. L g � °lT1 ca October 12, 2000 G • ire!`". � ,1 ..a N TO: Mayor and Members of the City Council ECONOMIC GROWTH FROM: Joyce A. Parker, City Manager SUBJECT: Development Assistance Request/ Schleifring Medical System LLC PURPOSE The purpose of this memorandum is to present to the Mayor and members of the City Council a request from Schleifring Medical System for development incentives related to the location of their business in Elgin. BACKGROUND On June 15, 2000, a representative from Schleifring Medical System made a presentation to the Staff Development Review Team regarding Schleifring' s interest in locating their new medical-related high tech slip ring production facility in Elgin. A variety of incentive options were discussed: 1 . Industrial Revenue Bonds 2 . Job Training/Incentive Allowance 3 . Facility Upgrade Allowance Due to the corporate structure of this venture between General Electric Corporation and Schleifring of Germany, it was determined that Schleifring Medical System LLC did not qualify for IRB assistance. However, staff and the Elgin Area Chamber has reviewed and recommend that the following incentive package be provided to Schleifring: 1. Job Creation Allowance - $35, 000 Seventy-Five percent of employment opportunities shall be filled with current or future Elgin residents . The incentive allowance of approximately $1, 000/job is consistent with other job related incentives provided to businesses relocating to Elgin. Development Assistance Request/Schleifring October 12, 2000 Page 2 2 . Facility Upgrade Allowance - $30, 000 Certain tech upgrades, primarily to the electrical system must be made to the building at 1420 Crispin Drive, in order for Schleifring to produce this product at this location. The cost of the electrical upgrade is approximately $30, 000 . With the assistance from the City as outlined above, Schleifring Medical System, LLC intends to purchase a 31, 300 square foot building at 1420 Crispin Drive (Fox Bluff Corporate Center) . Schleifring' s current investment is estimated to be $6 . 1 million . The location of the facility will result in the creation of approximately 32 new full-time jobs within the next 12 to 24 months . Job opportunity should grow to approximately 45 new jobs over the next 4 to 5 years . Additionally, plans call for the addition of Engineering and Research and Development functions at the Fox Bluff site. The breakdown of the types of jobs being created at the site is as follows: (19) electro/mechanical assembly workers, PU casting specialists, Quality Inspectors, Shipping and Receiving/Material Handlers-Salary Range ) depending on experience) is $25, 000-$35, 000 annually; (5) Milling and Lathing Machinists-Salary Range is $36, 000-$40, 000 annually; (2) Administrative Support-Salary Range is $30, 000-$34, 000; (6) Operational/Financial Supervisors and Managers (depending on experience and responsibility) $50, 000- $140, 000 annually. Future growth during the next 4-5 years will be in Machinist and Assembly/Quality Inspectors . In addition to the assistance required from the City, the Elgin Area Chamber of Commerce has coordinated the following additional assistance for Schleifring: 1 . Training funds through the Prairie State 2000 Training Program 2 . Training funds through the Industrial Training Program 3. Recruitment services through the Elgin office of the Illinois Department of Employment Services 4 . Training assistance through Elgin Community College COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED City of Elgin Staff Development Review Team. elim- Development Assistance Request/Schleifring October 12, 2000 Page 3 Nii1/4-1- FINANCIAL IMPACT Economic development incentive expenses are charged to fund 276- 0000-791. 80-27 . Funds allocated to this budget have either been spent or encumbered for the current year. Should the Mayor and City Council Members wish to proceed forward with the project yet this year, additional dollars must be transferred to this account . Otherwise, incentive dollars could be utilized from the upcoming 2001 budget. WNWLEGAL IMPACT A Development Agreement with the City would be required. ALTERNATIVES 1 . Fund the incentive to Schleifring Medical System LLC as requested. (011. 2 . Deny the request from Schleifring. RECOMMENDATION Staff recommends that the City enter into a development agreement with Schleifring Medical Systems LLC for the incentive program as outlined. Respectfully submitted, Joyce A. Parker City Manager RHM: sp Attachments em. . _ - H© Schleifring Medical System LLC _ _ '_- Sch|edNngyNodico| SyotemLLC Tehephnno047>O0Q'35U9 4345 Barharbor Drive FAX (847)669-3509 . Lake in the Hills, IL 60102 Email Jreyno5842@aoicnm October 4, 2000 Raymond H. Moller Director of Economic Development&Business Services 150 Dexter Court Elgin,Illinois 60120-5555 • Dear Mr.Moller First, I would like to thank you and your team for the great support and help provided to us during this initial start up period for our new organization. Both the Chamber of Commerce and the City of Elgin made the decision to locate in Elgin an easy sell to our parent companies. As outlined in my letter of September 28 to Chris Manheim,we would very much like to use the grant funds generously offered to us by the City of Elgin. The specific grants that we would like to use are: 1. City of Elqin Job Creation AHowance of$35,000 for year one. We gratefully accept this grant from the City of Elgin and will continue to work with the Elgin Employment Office to use our 'best effort" to fill 75% of our employment openings with current or future Elgin residents. We have already hired one Elgin resident so are on our way to making this happen. 2. Technology AJ\owencenf$3O.00Ofor year one. VVeMhan�bUyocm»p1this grant 8nmthe CdyofBgin. Projected investment costs for this project are currently in the neighborhood of$6M and this assistance from the city is greatly « appreciated. In consideration for this assistance from City of Elgin,Schleifring Medical Systems,LLC agrees: 1. Schleifring Medical Systems,-LLC will locate and equip its manufacturing facility in Elgin, Illinois. We have decided to purchase a facility rather than rent. The site contemplated is 31,300 SF of high end manufacturing space located at 1420 Crispin Drive. The current investment planned for this project is approx.$6.1M. 2. Schleifring Medical Systems, LLC will create approximately 32 new full time jobs in Elgin, Illinois in the over the next 1-2 years as a result of this project. This number is projected to grow to approximately 45 new jobs over the next 4- 5 years. Additionally,plans call for the addition of Engineering and R&D functions to this facility. The breakdown of the types of jobs being created at this site is as follows:(19)electro/mechanical assembly workers, PU casting specialists, Quality Inspectors, Shipping and Receiving/Material Handlers-Salary Range (depending on experience)is$25,000-$35,000 annually; (5)Milling and Lathing Machinists—Salary Range is $3O.00O'$4O.00Oannually;(2)Administrative Support—Salary Range in$3O.DOO'$34.000;(G) OperationaVFinanical Supervisors and Managers(depending on experience and responsibility)$50,000—140,000 annually. Future growth during the next 4-5 years will be in Machinist and Assembly/Quality Inspectors. I understand that you have an upcoming City Council meeting. Please let me know if you need any other information to facilitate a positive decision on these grants.Thank you again for your help and support this year. We look forward to a long and mutually beneficial relationship with your team. Best regards, Joann Reynolds CF000O Schleifring Medical Systems,LLC cc: Chris Manheim, Elgin Chamber of Commerce -: John Rice, Schleifring Medical Systems, LLC • r I - J Schleifrtng Medical System LLC Telephone (847)669 3509 4345 Barharbor Grine FAX (847)669-3509 Lake in the Hills. IL 60102 Email .1reyno5842@aol com September 28,2000 Chris.).Manheim,CED Elgin Area Chamber of Commerce • 32 S.Grove Avenue.PO Box 648 Elgin,Illinois 60102 Dear Chris First, I would like to thank you and your team for the great support and help provided to us dunce;} this initial stat up period for cur ircev(.Ayanization. Both the Illinois and Elgin teams have been a tremendous help throughout the process. After much wort;with the local real estate and banking teams,our plans have firmed up and we are ready to define more clearly the elements of your generous assistance offer.which we will be able to use. 1. Tratntoglends through the Prairie State 2000 Training Inoentrye. We most definitely would like to 1.*2 this program. As you know,our plans are to hire six employees and send them to Germany fur extensive lirac-ess and equipment training. The remaining employees will be trained locally through formal manufacturing training and a train the trainer approach. The projected date to start this training is now set at October 2, 2000. i understand the program could provide up to$100,000 over a five-year period. i also understand that we need to workwith Susan Vespa. Director e4 the program to arrange for an application. 2. Training funds through the Industrial Training Program(ITP). As indicated in our letter dated August 30. 2000 to Don Byrd.we are very interested in this program and will work with his team to take full advantage of this generous offer. 3. City of Elgin Job Creation Allowa - of., 000 for ar one. We gratefully accept this giant acorn the City of Elgin and will continue to work with the Elgin Employment Office to use our est effort"to fill 75% of our employ1ticmit openings with current or future Elgin residents- We have already hired Wu Elgin resident so are on our way to making ti-s happen. 4. Industrial Revenue Bonds. We appreciate your willingness to offer this financial assistance to Schieifrinq Medical Systems, LLC. Unfortunately,due to outstanding bond amounts currently held by our parent companies,we will not be able to use this program. We have been able to arrange necessary financing through the local Elgin branch of American National Bank-Torn Finnegan,Andy Stollfuss and the whole team at American National have been great Thank you for bringing our two groups together. 5. Technology Allowance of$30000 for year one We thankfully accept this grant from the City of Elgin. Projected investment costs for this project are currently iii the neighborhood of S6M anti this assistance from the city is greatly appreciated. 6 1n=_Elland recruitment services through the Elgin office Illinois Department of Employment Services. We absolutely a:rept this assistance in staffing our production facility. Manpower was one on of the greatest concerns going into this project and Jackie Bolger and her team have worked diligently to help us find the right people for our project. We have hired two (2) employees so far and I am confident that Bruce Olson and John I faffey will not stop tree recruiting efforts until we are fully staffed 7 le__irul.tr oning assistance from the Elgin Commonly College Vile rappieciatc ano accept this assista:r:,c from the euliege as ire move forward with aur i lain the Bailor programs gals next year e have already met wdh Susan (1. Moylan and toured the training facility. It is quite impressive and we are confident Susan and her team will be able [. toassist us as we move forward into production. Additionally,it is our strong desire to work with the college going forward to help build a strong apprenticeship program. . • In consideration for this assistarice tram the State of Illinois and the City of Elgin,Schleifring Medicai Systems,LLC agrees. 1. Schleitring Medical Systems LLC will locate and equip its manufacturing facility in Elgin Illinois, We have decided to purchase a facility rather than rent. The site contemplated is 31 300 SF of high end manufacturing space located at 1420 Cnspin Drive. The current investment planned for this project is approx.$6 1M. 2. Schleifring Medical Systems,LLC wilt create approximately 32 new full time jobs in Elgin, Illinois in the over the next 1.2 years as a result of this project, This number is projected to grow to approximately 45 new jobs over the iiw1 4- 5 years Additionally,plans call for the addition of Engineering arid R&D functions to this facility -filo breakdown of the types of jobs being created at this ite is follows: (19)tilt-A-troiertrliaiiir:alasv.e.mt..Ay workers,PU casting specialists,Quality Inspectors,Shipping and Receiving/Material Handlers- Solely Range (depending on experience)is$25,000-535,000 annually,(5)Milling and Lathing Machinists—Salary Range is $36.000-$40,000 annually,(2)Adrninistialive Support—Salary Range is S30,000-$34,000-. (6) Operational/Finanical Supervisors and Managers(depending on experience and responsibility)$50,000—140,000 annually. Future growth during the next 4-5 years will be in Machinist and Assembly/Quality Inspectors. Thank you again for all the help and support this year. We look forward to a long and mutually beneficial relationship voth your team Best regards, Joann Reynolds CFO/C00 Schlerfring Medical Systems,LLC Zlayreond Moller,City of Elgin Jahn Rice,Schleifring Medical Systems,LLC