06-42 Resolution No.06-42
RESOLUTION
AUTHORIZING EXECUTION OF A SECOND AMENDMENT TO
DEVELOPMENT AGREEMENT WITH RSC-ELGIN LLC
FOR THE FOUNTAIN SQUARE ON THE RIVER DEVELOPMENT
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 Second Amendment to Development Agreement with RSC-ELGIN LLC on behalf of the
City of Elgin in connection with the Fountain Square on the River Development,a copy of which is
attached hereto and made a part hereof by reference.
s/Ed Schock
Ed Schock,Mayor
Presented: February 22, 2006
Adopted: February 22, 2006
Vote: Yeas: 6 Nays: 1
Attest:
s/Dolonna Mecum
Dolonna Mecum, City Clerk
M Memorandum
City of Elgin
Date: February 23, 2006
To: Loni Mecum, City Clerk
From: Mary Giffort, Legal Department
Subject: Second Amendment to Development Agreement with RSC-Elgin LLC for the
Fountain Square on the River Development (Res #06-42 - City Council Meeting
of February 22, 2006)
Attached find an original executed copy of the above agreement for your files.
Mary
Attachment
s
SECOND AMENDMENT TO DEVELOPMENT AGREEMENT
THIS SECOND AMENDMENT TO DEVELOPMENT AGREEMENT ( "Second
Amendment" ) is made and entered into this 22nd day of February, 2006 by
and between the CITY OF ELGIN, an Illinois municipal corporation
(hereinafter referred to as the "City" ) ; and RSC-Elgin, LLC, an
Illinois limited liability company (hereinafter referred to as
"Developer" ) .
WHEREAS, the City and the Developer have heretofore entered into a
certain Development Agreement dated as of August 11, 2004 (the
"Development Agreement" ) , the terms and provisions of which are
incorporated herein by reference . Capitalized terms used but not
otherwise defined herein shall have the meanings as set forth in the
Development Agreement ; and
WHEREAS, the City and the Developer entered into an amendment to
the Development Agreement dated March 23 , 2005 ; and
WHEREAS, due to factors beyond the control of, and not otherwise
anticipated by, either of the parties at the time of the execution of
the Development Agreement, the cost of the Mixed Residential and
Commercial Project has escalated to the point that, without additional
capital contribution by each cf the parties, the Mixed Residential and
Commercial Project will not proceed to completion; and
WHEREAS, each of the parties recognizes and agrees that the Mixed
Residential and Commercial Project has been successfully commenced,
and that it is in the mutual and best interest of both parties to
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further amend the Development Agreement as hereafter provided in order
to promote the successful completion of same .
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other good and valuable
consideration, the receipt and sufficiency of which are mutually
acknowledged, it is agreed as follows :
1 . Increase in Total City Funds: Payment.
(a) The City hereby agrees to contribute One Million Nine Hundred
Seventy-Six Thousand and 00/100 Dollars ($1 , 976 , 000 . 00) of additional
Total City Funds, composed of (a) $610 , 000 of increased Public
Improvements Purchase Price and (b) 1 , 366 , 000 of increased Cash
Development Assistance .
(b) The additional $1 , 976, 000 . 00 of Total City Funds shall be
incorporated into the Development Agreement by replacing paragraph 12
thereof with new Exhibit 12 in the form attached hereto as Exhibit 1 .
(c) Exhibit E of the Development Agreement is hereby replaced by
"Exhibit E-Amended" attached hereto as Exhibit 2 in order to provide
for the payment of the $1 , 976, 000 . 00 of additional Total City Funds .
2 . Absorption of Additional Increased Project Costs . The budget for
the Mixed Residential and Commercial Project has escalated by more than
$7, 000, 000 ( "Additional Project Costs" ) beyond that originally
contemplated when the Development Agreement was signed. In
consideration of the additional Total City Funds to be provided by the
City as described in paragraph 1 above, the Developer agrees to absorb
the Additional Project Costs in its budget .
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3 . New Provisions. That new Sections 32 and 33 are hereby added to
the Development Agreement to read as follows :
1132 . Notwithstanding anything to the contrary in this Agreement,
Developer, its contractors and subcontractors shall comply with the
Prevailing Wage Act in all aspects of the redevelopment of the Subject
Property.
33 . Notwithstanding anything to the contrary in this Agreement,
it is agreed and understood that the percentage of residential units to
be constructed on the Subject Property which can be leased at any one
time shall be limited to thirty percent (30%) . Such a leasing
limitation shall be included in the Declaration of Condominium for the
Subject Property in a form approved by the City' s Corporation Counsel . "
4 . Ratification. Except as modified and amended hereby, the
Development Agreement, as amended by the amendment to the Development
Agreement dated March 23 , 2005, shall remain unmodified and in full
force and effect .
IN WITNESS WHEREOF, the parties hereto have entered into and
executed this Agreement on the date and year first written above .
CITY OF ELGIN, a municipal RSC-Elgin, LLC,
corporation an Illinois limited liability
company
l �
By BY
Mayor Richard S . Curto, its Manager
Attest :
City Clerk
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EXHIBIT 1
REPLACEMENT PARAGRAPH 12
12 . Public Improvements Purchase Price: Cash Development Assistance:
Fee Waiver: Collateral to the City.
A. The City hereby agrees to purchase (i) the Public
Parking Spaces to be constructed by the Developer and (ii) the
landscaping and other public infrastructure improvements to be
constructed by the Developer in the City' s right-of-way or other City-
owned property adjacent to Mixed Residential and Commercial Development
(collectively the "Project Public Improvements" ) for $3 , 210, 000
(hereinafter called the "Public Improvements Purchase Price" ) .
B. In addition to the City conveying the City Sites to the
Developer without a monetary purchase price, as a development incentive
to the Developer, and in consideration of Developer completing the
redevelopment of the Subject Property with the Mixed Residential and
Commercial Project on or before the Completion Date as set forth in
this Agreement, the City agrees to provide to the Developer financial
assistance ( "Cash Development Assistance" ) of Seven Million Six Hundred
Sixty-Six Thousand Dollars ($7 , 666, 000 . 00) .
C. The $10 , 876, 000 total of the Public Improvements
Purchase Price and the Cash Development Assistance (hereinafter called
the "Total City Funds" ) shall be payable by the City to the Developer
in installments as set forth in the Payment Schedule for Total City
Funds attached hereto as Exhibit E (the "Payment Schedule" ) . Each
disbursement of the Total City Funds by the City to the Developer shall
FALegal Dept\Agreement\Development Agr-RSC-Second Amendment-v3-Clean-WAC.doc 1
hereinafter be called a "Development Disbursement" . No interest shall
accrue on the Public Improvements Purchase Price, the Cash Development
Assistance, and / or the Total City Funds .
D. As further development assistance to the Developer, the
City agrees to waive the payment of all impact fees provided for in
Title 17 of the Elgin Municipal Code (with such waiver being
hereinafter called the "Fee Waiver" ) .
E. The parties understand and agree that the obligation of
the City to disburse the Total City Funds to the Developer as set forth
in this Section 12 is expressly contingent upon Developer' s
development of (i) the Mixed Residential and Commercial Project, and
(ii) the Project Public Improvements on or adjacent to the Subject
Property as provided in this Agreement . In the event the Developer (i)
breaches its obligations hereunder and (ii) fails to cure such breach
within 30 days following written notice thereof by the City to the
Developer (or, if such cure is not reasonably achievable with such 30-
day period, then within such longer period as might be reasonably be
required to cure such breach using diligence and good faith) then the
City may suspend any further disbursement of the Total City Funds
pending the enforcement by the City of its remedies as provided herein
and in the Subordinated Mortgage (as defined and described in Section
12I below) . It is further expressly agreed and understood by the
parties hereto that the City' s sole and only monetary and/or financial
assistance or contribution for the Mixed Residential and Commercial
Project on the Subject Property shall be (i) the conveyance of title of
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the City Sites to the Developer as provided in this Agreement, (ii) the
Total City Funds as described in this Section 12 , and (iii) the Fee
Waiver, and that the City shall have no other responsibility for any
other costs or expenses relating to the Mixed Residential and
Commercial Project on the Subject Property.
F. The Cash Development Assistance shall be paid by the
City to the Developer in the form of reimbursements to the Developer
for Redevelopment Project Costs (as hereinafter defined) incurred by
the Developer in connection with the redevelopment of the Subject
Property for the Mixed Residential and Commercial Project .
Redevelopment Project Costs shall be defined as provided in 65 ILCS
5/1174 . 4-3 (q) , which are incurred by Developer in connection with
the redevelopment of the Subject Property for the Mixed Residential
and Commercial Project and which are eligible under law for
reimbursement from the City of Elgin Central Area Tax Increment
Financing Redevelopment Project Area Special Tax Allocation Fund
(such costs as defined in 65 ILCS 5/11-74 . 4-3 (q) , which are
incurred by Developer in connection with the subject redevelopment
of the Subject Property for the Mixed Residential and Commercial
Project and which are eligible under law for reimbursement from the
City of Elgin Central Area Tax Increment Financing Redevelopment
Project Area Special Tax Allocation Fund are hereinafter referred to
as "Redevelopment Project Costs" ) . The parties stipulate and agree
that those categories of expenses anticipated to be incurred by the
Developer and listed on Exhibit I attached hereto shall (in addition
FALegal Dept\Agreement\Development Agr-RSC-Second Amendment-v3-Clean-WAC.doc 3
to any other costs which meet the statutory definition of
"Redevelopment Project Costs" ) be treated as eligible Redevelopment
Project Costs .
G . In the event Redevelopment Project Costs incurred by
the Developer exceed $7 , 666 , 000 it is agreed and understood that the
City ' s Cash Development Assistance to the Developer shall none-the-
less be limited to the total amount of $7 , 666 , 000 and in no event
shall the City pay or reimburse the Developer any amount over the
Cash Development Assistance of $7 , 666 , 000 and the Public
Improvements Purchase Price of $3 , 210 . 00 ;
H . Notwithstanding anything to the contrary in this
Agreement , as a condition of right to receive payment from the City
of the Cash Development Assistance, the Developer shall be required
to document to the City' s reasonable satisfaction that it has
incurred (or will incur in the course of the completion of the Mixed
Residential and Commercial Project) Redevelopment Project Costs in
connection with the redevelopment of the Subject Property for the
Mixed Residential and Commercial Project in an aggregate amount
equal to or greater than the Cash Development Assistance . Bids,
proposals or contracts for work or service that qualify as
"Redevelopment Project Costs" and which are (i) procured by the
Developer in connection with future work to be done in connection
with the completion of the Mixed Residential and Commercial Project
and (ii) certified by the Developer to the City as being true and
correct, shall constitute sufficient evidence of the existence of such
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Redevelopment Project Costs absent proof of bad faith or fraud. To
the extent that the Redevelopment Project Costs documented by the
Developer as of the completion of the Mixed Residential and
Commercial Project are less than the aggregate sum of $7 , 666 , 000
(with the amount by which such documented Redevelopment Project
Costs fall short of $7 , 666 , 000 being hereinafter called the
"Redevelopment Project Costs Shortfall" ) , then the Cash Development
Assistance shall similarly be reduced by an amount equal to the
Redevelopment Project Costs Shortfall .
I . To secure the full performance by the Developer of
its obligations hereunder, the Developer shall execute and deliver
to the City at the Closing a mortgage against the Subject Property
which shall be (i) junior and subordinate to the construction
loan (s) procured by the Developer against the Subject Property (or
any portion thereof) and (ii) shall be released (A) as condominium
units are sold to third-party purchasers and (B) upon substantial
completion of the Mixed Residential and Commercial Project . The said
mortgage (the "Subordinated Mortgage" ) shall be in the form set
forth on Exhibit F attached hereto .
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EXHIBIT 2
EXHIBIT E-AMENDED
PAYMENT SCHEDULE FOR TOTAL CITY FUNDS
Payment Payment Payment Payment Conditions (if
No. Date Amount any)
(provided
Payment
Conditions
are
satisfied)
1 When $1, 600, 000 At the Closing, and
Private conditional thereon
Development
Site is
acquired
(as part of
the closing
thereof)
2 April 1, $1, 000 , 000 The building on the
2005 Private Development Site
shall have been
demolished
3 June 1 , The cost of When the City' s utilities
2006 relocating situated in the now-
utilities from vacated Fountain Square
the vacated Way have been relocated
Fountain Square in compliance with the
Way but not to plans approved by the
exceed the City for such relocation
total amount of
$610, 000
4 December 100% of the All of the Residential
31, 2006 amount of tax Units built as part of
increment Phase I shall have been
generated from completed and ready for
the Subject sale to and occupancy by
Property and purchasers or tenants,
received by the subject only to the
City in 2006 installation of interior
(subject to the finishings and optional
limitations in interior selections; and
the Notes 25 public parking spaces
below) shall have been conveyed
to the City.
5 December 100% of the The foundation for the
31, 2007 amount of tax first of the 3 buildings
increment to be erected as part of
generated from Phase II is in place
the Subject
Property and
received by the
City in
2007 (sub 'ect to
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the limitations
in the Notes
below)
6 December 100% of the The foundations for all 3
31, 2008 amount of tax of the buildings to be
increment erected as part of Phase
generated from II are in place and 50%
the Subject of the Residential Units
Property and
received by the built as part of Phase II
City in shall have been completed
2008 (subject to and ready for sale to and
the limitations occupancy by purchasers
in the Notes or tenants, subject only
below) to the installation of
interior finishings and
optional interior
selections; and 91 public
parking spaces shall have
been conveyed to the
City.
7 December 100% of the 75% of the Residential
31, 2009 amount of tax Units built as part of
increment Phase II shall have been
generated from completed and ready for
the Subject sale to and occupancy by
Property and
received by the purchasers or tenants,
City in subject only to the
2009 (subject to installation of interior
the limitations finishings and optional
in the Notes interior selections;
below)
8 December 100% of the 100% of the Residential
31 , 2010 amount of tax Units and 100% of the
increment retail space built as
generated from part of Phase II shall
the Subject have been completed and
Property and
received by the ready for sale to and
City in occupancy by purchasers
2010 (subject to or tenants, subject only
the limitations to the installation of
in the Notes interior finishings and
below) optional interior
selections; and 100% of
the public parking spaces
shall have been conveyed
to the City.
9 December 100% of the Completion of the Mixed
31, 2011 amount of tax Residential and
increment Commercial Project on the
enerated from
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the Subject Subject Property
Property and including, but not
received by the limited to, Phase II
City in 2011 subject only to the
(subject to the installation of interior
limitations in
the Notes finishings and optional
below) interior selections in
unsold condominiums
10 and December 31 100% of the Such payments to the
thereaft of each amount of tax Developer shall continue
er year increment until the Developer has
following generated from received a total of
2011 the Subject $7 , 666, 000 of Cash
Property and
received by the Development Assistance
City in such
calendar year
(subject to the
limitations in
the Notes
below)
NOTES
1 . It is acknowledged and agreed that the Total City Funds to be
provided and paid by the City to the Developer shall in no event
exceed the total amount of $10 , 876, 000 . Such $10 , 876 , 000 . 00 of Total
City Funds is comprised of the $3 , 210 , 000 . 00 Public Improvements
Purchase Price and the $7, 666, 000 . 00 Cash Development Assistance . It
is acknowledged and agreed that in the event and upon the total amount
paid by the City pursuant to the above installment payments reaches
the total amount of $10 , 876 , 000 . 00 then the amount of any remaining
payment installments listed in the above table shall be reduced and/or
eliminated such that the Total City Funds paid by the City to the
Developer does not exceed the total amount of $10 , 876, 000 . 00 .
2 . The Developer and the City have reviewed the Developer ' s
Project budget and believe that there are at least $7 , 666 , 000 of costs
therein which qualify as so-called "Redevelopment Project Costs"
within the meaning of 65 ILCS 5/11-74 . 4-3 (hereinafter called "TIF-
Eligible Costs" ) .
3 . Payment nos . 1 , 2 and 3 , together, represent the payment of
the Public Improvements Purchase Price .
4 . The Payment Conditions are cumulative . For purposes of
clarification and example, payment number 5 shall not be due or paid
unless Payment Conditions 1 through 5 have been completed.
5 . In addition to the Payment Conditions listed above, the total
amount of $7 , 666 , 000 of Cash Development Assistance shall be reduced
by $1, 366, 000 in the event the entirety of the Mixed Use Residential
and Commercial Project on the Subject Property is not completed by
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December 31 , 2012 , subject only to the installation of interior
finishings and optional interior selections as to unsold / unleased
units .
6 . All performance dates applicable to the Developer as set
forth in this Exhibit E are subject to reasonable extension if delay
is caused by (i) any act, omission, or neglect of the City or its agents
or employees, (ii) strikes, (iii) fire or other casualty, (iv) Acts of
God, or (v) any other causes beyond Developer' s control (such enumerated
causes of delay being hereinafter called "Force Majeure" ) .
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