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07-220 Resolution No. 074220 RESOLUTION AUTHORIZING EXECUTION OF A FOURTH AMENDMENT TO DEVELOPMENT AGREEMENT WITH WATER STREET PLACE LLC FOR THE DEVELOPMENT OF 200 N. GROVE AVENUE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,ILLINOIS,that Ed Schock, Mayor, and Diane Robertson, City Clerk, be and are hereby authorized and directed to execute a Fourth Amendment to Development Agreement on behalf of the City of Elgin with Water Street Place, LLC for the development of 200 N. Grove Avenue, Elgin, Illinois, a copy of whi4h is attached hereto and made a part hereof by reference. s/Ed Schock Ed Schock, Mayor Presented: August 22, 2007 Adopted: August 22, 2007 Vote: Yeas: 5 Nays: 2 Attest: s/Diane Robertson Diane Robertson, City Clerk FOURTH AMENDMENT TO DEVELOPMENT AGREEMENT THIS FOURTH AMENDMENT TO DEVELOPMENT AGREEMENT ("Fourth Amendment Agreement") is made and entered into as of the 22nd day of August, 2007, by and between the City of Elgin,Illinois,a municipal corporation,(hereinafter referred to as the"City")and Water Street Place, LLC, an Illinois limited liability company, (hereinafter referred to as the "Developer"). WHEREAS,the City and the Developer previously entered into a Development Agreement dated December 6, 2006, relating to the City-owned property at the southwest corner of Kimball Street and Grove Avenue, Elgin, Illinois (hereinafter referred to as the "Subject Development Agreement"); and WHEREAS, Section 2(b) of the Subject Development Agreement provided in part for the Developer to provide to the City within the 120-day Feasibility Period further specified documentation in the form of a market study to demonstrate and validate to the City's reasonable satisfaction the Developer's projected sales prices, lease rates and absorption schedule for the proposed Mixed Use Residential and Commercial Development on the Subject Property such that the City can independently determine that it is likely to receive the estimated tax increment revenue and sales tax for the proposed Mixed Use Residential and Commercial Development on the Subject Property; and WHEREAS,Developer provided the City the market study referred to in Section 2(b)of the Subject Development Agreement on April 6, 2007; and WHEREAS,pursuant to Section 2(b) of the Subject Development Agreement the City had forty-five(45)days from the receipt of such market study within which to provide written notice to the Developer of the City's election to terminate the Subject Development Agreement in the event such documentation did not demonstrate and validate to the City's reasonable satisfaction the Developer's proposed sales prices, lease rates and absorption schedule for the proposed Mixed Use Residential and Commercial Development on the Subject Property such that the City could independently determine that it is likely to receive the estimated tax increment revenue and sales tax for the proposed Mixed Use Residential and Commercial Development on the Subject Property;and WHEREAS,such forty-five(45)day time period in Section 2(b)of the Subject Development Agreement would have otherwise expired on May 21, 2007; and WHEREAS, the City and the Developer entered into an Amendment to the Development Agreement as of May 9,2007,(hereinafter referred to as the"First Amendment Agreement")wherein the City and the Developer mutually agreed to amend the Subject Development Agreement by extending such forty-five (45) day time period in Section 2(b) of the Subject Development Agreement to and including June 29, 2007; and WHEREAS, the City and the Developer entered into a Second Amendment to the Development Agreement as of June 27, 2007, (hereinafter referred to as the"Second Amendment Agreement") wherein the City and Developer mutually agreed to further amend the Subject Development Agreement by further extending such time period in Section 2(b) of the Subject Development Agreement to and including August 10, 2007; and WHEREAS, the City and the Developer entered into a Third Amendment to the Development Agreement as of August 8, 2007, (hereinafter referred to as the "Third Amendment Agreement") wherein the City and the Developer mutually agreed to further amend the Subject Development Agreement by further extending such time period in Section 2(b) of the Subject Development Agreement to and including August 24, 2007; and WHEREAS, based upon current adverse conditions affecting the local and national residential market,the parties deem it unwise to proceed at this time with the Mixed Use Residential and Commercial Development on the Subject Property; and WHEREAS,the parties currently continue to believe in the value and appropriateness of the Mixed Use Residential and Commercial Development on the Subject Property as provided for in the Subject Development Agreement and wish to herein provide for certain further amendments to the Subject Development Agreement that will provide a mechanism to defer such project until market conditions are more appropriate. NOW,THEREFORE,for and in consideration of the mutual undertakings as set forth herein, and in consideration of the mutual undertakings set forth in the Subject Development Agreement, and in consideration of other good and valuable consideration,the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. Section 2(b)of the Subject Development Agreement is hereby further amended to read as follows: "On or before July 1, 2009, or on such earlier date within ninety (90) days of a written notice from the City to the Developer to provide the requested documentation (hereinafter referred to as the"Market Study Due Date"),Developer shall provide to the City further documentation which shall demonstrate and validate to the City's reasonable satisfaction the Developer's projected sales prices, lease rates and absorption schedule for the residential and retail / restaurant components of the proposed Mixed Use Residential and Commercial Development on the Subject Project as set forth in Exhibit B attached hereto such that the City can independently determine that it is likely to receive the estimated tax increment revenue and sales tax for the proposed Mixed Use Residential and Commercial Development on the Subject Property. Such estimated tax increment revenue and sales tax expected to be received by the City for the proposed Mixed Use Residential and Commercial Development of the Subject Property for the time period ending in 2026 to be validated are as set forth in the Water Street Place Real Estate Tax Revenue Schedule dated September 20, 2006, attached hereto and made a part hereof as Exhibit B-1. The further documentation to be provided by the Developer to the City shall consist of a market study from a reputable independent sales and marketing firm, appraisal firm or real estate development consulting firm which shall analyze, among other matters, the projected sales prices (assuming an annual price increase of not more than 3.5%), upgrade targets, lease rates and a sales absorption schedule for the proposed Mixed Use Residential and Commercial Development of the Subject Property. Such market study shall include a comparable sales and leasing analysis as part of the sales and lease pricing analysis and shall include an analysis of comparable developments in the area as part of the absorption schedule analysis. (All of the materials to be presented by the Developer to the City shall hereinafter be called the "Market Analysis") C:\Documents and Settings\jmcdonal\Local Settings\Temporary Internet Files\OLK2O\Development Agr-WaterStPl-4thAmend-v6-clean.doc 2 • (i) In the event the Developer fails to provide the City with such Market Analysis on or before the Market Study Due Date, then the City may, by written notice to the Developer within thirty (30) days following such Market Study Due Date, and as its exclusive remedy, elect to terminate this Agreement. (ii) In the event the Developer does provide such Market Analysis to the City on or before the Market Study Due Date, and such Market Analysis does not demonstrate and validate to the City's reasonable satisfaction the Developer's projected sales prices, lease rates and absorption schedule for the proposed Mixed Use Residential and Commercial Development on the Subject Property as set forth in Exhibit B attached hereto such that the City can independently determine that it is likely to receive the estimated tax increment revenue and sales tax for the proposed Mixed Use Residential and Commercial Development on the Subject Property as set forth in Exhibit B-1 attached hereto the City may,by written notice to the Developer within ninety (90) days following receipt of such Market Analysis documentation from the Developer, and as its exclusive remedy, elect to terminate this Agreement. (iii) If the Developer is so notified in writing by the City of the termination of this Agreement,then this Agreement shall be canceled and null and void with no further liability of either party hereunder. E. In the absence of written notice from the City to the Developer on or before the dates specified herein electing to terminate this Agreement,or in the event the City provides the Developer written notice that the City is specifically waiving its rights to cancel this Agreement pursuant to the provisions of this section,the City's right to cancel this agreement pursuant to the provisions of this section 2(b)shall be deemed waived, and this Agreement shall remain in full force and effect." 2. Section 5(a) of the Subject Development Agreement is hereby amended to read as follows: "(a) The Closing(hereinafter the "Closing") shall take place within thirty(30) days following the procurement by the Developer of the Governmental Authorizations(as described in Section 10 below), but not prior to (i) the satisfaction of the Closing conditions contained in Section 5(b)below or(ii)without the City's written consent, the Developer having provided the City the Market Analysis documentation required in Section 2(b) hereof and the expiration of the ninety(90) day time period after the Developer having provided the City such documentation. At the Closing the City shall convey the Subject Property to the Developer in the condition required herein. Unless subsequently mutually agreed otherwise,Closing shall take place at the office of Chicago Title Insurance Company in Elgin, Illinois, provided that the Closing conditions, as set forth in subsection 5(b) below, have been fulfilled or otherwise waived." 3. Section 5(b)(x)(iii) of the Subject Development Agreement is hereby amended',by amending the last sentence thereof to read as follows: C:\Documents and Settings\jmcdonal\Local Settings\Temporary Internet Files\OLK20\Development Agr-WaterStPl-4thAmend-v6-clean.doc 3 "Such final plat of subdivision shall be recorded simultaneously with the Closing and immediately prior to the City's conveyance of the Subject Property to the Developer. Notwithstanding anything to the contrary in this Agreement, it is agreed and understood that the City's conveyance of the Subject Property to the Developer shall not include those portions of the Subject Property to be dedicated to the City." 4. Section 5(b) of the Subject Development Agreement is hereby further amended'by amending the last paragraph thereof to read as follows: "In the event any of the foregoing Closing conditions cannot be resolved or agreed to within one hundred eighty(180) days after the Market Study Due Date referred to in Section 2(b) hereof, either party, may, by written notice to the other party elect to terminate this agreement and in such event,this agreement shall be deemed cancelled and null and void with no further liability of either party hereunder. In the absence of such a written notice prior to the Closing this agreement shall be deemed to continue to be in full force and effect." 5. Section 12 of the Development Agreement is hereby amended by adding a new subparagraph(j)thereto to read as follows: "(j) Notwithstanding anything to the contrary in Section 12 hereof,or anything to the contrary in this agreement,it is agreed and understood that as a result of the deferral of the Mixed Use Residential and Commercial Development on the Subject Property as provided for in the Fourth Amendment Agreement, the provisions of Section 12 and the parties obligations to proceed under this agreement are subject to and contingent upon the parties renegotiating and reaching a new agreement on any development assistance to be provided by the City to the Developer including, but not limited to, the terms and amount of any Cash Development Assistance, Restaurant Cash Development Assistance, Total City Funds, any Fee Waiver, proposed revisions to Exhibit F and any and all other proposed development assistance to be provided by the City to the Developer pursuant to this agreement or otherwise. In the event the City and the Developer do not reach a new agreement on the development assistance to be provided by the City to the Developer by way of further written amendment to this agreement,on or before ninety(90)days following the Market Study Due Date,either party,may,by written notice to the other party elect to terminate this agreement and in such event, this agreement shall be deemed cancelled and null and void with no further liability of either party hereunder." 6. Section 16 of the Subject Development Agreement is hereby amended to read as follows: "16. Demolition of Existing Improvements on the Subject Property by the City. The parties acknowledge and agree that the City has provided for the demolition of the existing building and other improvements on the Subject Property pursuant to the specifications attached hereto as Exhibit H (such demolition pursuant to such specifications being hereinafter referred to as the "Subject Demolition Activities"). The Total City Funds to be paid by the City to the Developer as otherwise provided herein with such total City Funds to be paid by the City to the Developer being subject to renegotiation and subsequent agreement as set forth in the preceding Section 12(j) hereof, shall be reduced by the City's costs to accomplish such demolition in the amount of$404,500 plus the additional costs to remove the Commonwealth Edison vault at the eastern edge of the Subject Property. Such reduction shall be taken from any initial installment of development assistance to be paid by the City to the C:\Documents and Settings\jmcdonal\Local Settings\Temporary Internet Files\OLK2O\Development Agr-WaterStPl-4thAmend-v6-clean.doc 4 Developer, as may be hereinafter renegotiated between the City and the Developer pursuant to Section 12(j)." 7. The Subject Development Agreement is hereby further amended by adding the following new Sections 35, 36 and 37 thereto to read as follows: "35. New Residential Developer. The parties acknowledge that one of the previous managers of the Developer,namely RSC&Associates,LLC,has withdrawn from the proposed development and has assigned its interests in Water Street Place,LLC to the remaining manager,Ryan Companies,US,Inc. Ryan Companies,US,Inc. shall,not later than the Market Study Due Date, obtain a new residential development partner ("Residential Partner") for the Subject Project to be part of the development entity Water Street Place,LLC. Such new residential developer shall be subject to the City's written approval,which approval shall not be unreasonably withheld,conditioned or delayed. In the event Ryan Companies, US, Inc. fails to obtain a new Residential Partner for the Subject Project and approved by the City on or before the Market Study Due Date, the City may, upon written notice to the Developer, terminate this agreement and in such event, this agreement shall be deemed cancelled and null and void with no further liability of either party hereunder. 36. Status Reports. Commencing 180 days after the execution of this Fourth Amendment and every ninety(90)days thereafter,Developer shall provide to the City written status reports on the status of the proposed Mixed Use Residential and Commercial Development on the Subject Property including, but not limited to, Developer's efforts to secure a partner with a new Residential Partner and the Developer's current internal analysis and opinion on market conditions and the feasibility of proceeding at that time with a new market study and with the proposed project. 37. Other Written Reports and Documentation. Developer shall provide to the City such other written reports and documentation regarding the proposed development of the Subject Property as requested by the City from time to time, including but not limited to, efforts at obtaining financing and sales and marketing activities on the project. All such reports and documentation shall be provided at Developer's costs and at no cost to the City. 8. Exhibit F to the Subject Development Agreement is hereby amended by amending subparagraph 1(b) thereof to read as follows: "(b) The sum of Two Million Seven Hundred Thousand Dollars($2,700,000)shall be paid by the Developer within thirty (30) days of, and conditioned upon, Developer having commenced construction of the foundation of the Mixed Use Residential and Commercial Building (the "Tower") on the Subject Property on or before the Construction Commencement Deadline;" 9. Exhibit F to the Subject Development Agreement is hereby further amended by adding a new Section 4 thereof to read as follows: "4. Notwithstanding anything to the contrary in this Exhibit F, or anything to the contrary in the agreement,it is agreed and understood that as a result of the deferral of the Mixed Use Residential and Commercial Development on the Subject Property as provided for in the Fourth Amendment Agreement, that the provisions of Exhibit F and the obligations of the parties to proceed under this Agreement are subject to and contingent upon the parties renegotiating and reaching a new agreement on any C:\Documents and Settings\jmcdonal\Local Settings\Temporary Internet Files\OLK20\Development Agr-WaterStPl-4thAmend-v6-clean.doc 5 development assistance to be provided by the City to the Developer including,but not limited to, the terms and amounts of any Cash Development Assistance, Restaurant Cash Development Assistance,Total City Funds,any Fee Waiver,proposed revisions to Exhibit F and any and all other proposed development assistance to be provided by the City pursuant to this Agreement or otherwise. In the event the City and the Developer do not reach a new agreement on the development assistance to be provided by the City to the Developer by way of further written amendment to this Agreement,on or before ninety(90)days following the Market Study Due Date,either party,may,by written notice to the other party elect to terminate this Agreement and in such event, this Agreement shall be deemed canceled and null and void with no further liability of either party hereunder." 10. That in the event of any conflict between the terms of this Fourth Amendment Agreement,and the terms of the Subject Development Agreement,the First Amendment Agreement, the Second Amendment Agreement, and/or the Third Amendment Agreement, the terms of this Fourth Amendment Agreement shall control. 11. That except as expressly amended in the First Amendment Agreement, the Second Amendment Agreement,the Third Amendment Agreement and this Fourth Amendment Agreement, the terms of the Subject Development Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have entered into and executed this Fourth Amendment Agreement on the date and year first written above. CITY OF ELGIN By c o , ayor Attest: City Clerk WATER STREET PLACE LLC, an Illinois limited liability company By Ryan Companies, US, Inc., a Manager By ----TAistanc___ Its Vice President C:\Documents and Settings\jmcdonal\Local Settings\Temporary Internet Files\OLK20\Development Ag-WaterStPl-4thAmend-v6clean.doc 6 Resolution No. 07-207 RESOLUTION AUTHORIZING EXECUTION OF A THIRD AMENDMENT TO DEVELOPMENT AGREEMENT WITH WATER STREET PLACE LLC FOR THE DEVELOPMENT OF 200 N. GROVE AVENUE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,ILLINOIS,that Ed Schock, Mayor, and Diane Robertson, City Clerk,be and are hereby authorized and directe4 to execute a Third Amendment to Development Agreement on behalf of the City of Elgin with Water Street Place, LLC for the development of 200 N. Grove Avenue, Elgin,Illinois, a copy of which is attached hereto and made a part hereof by reference. s/Ed Schock Ed Schock, Mayor Presented: August 8, 2007 Adopted: August 8, 2007 Vote: Yeas: 5 Nays: 2 Attest: s/Diane Robertson Diane Robertson, City Clerk , THIRD AMENDMENT TO DEVELOPMENT AGREEMENT THIS THIRD AMENDMENT TO DEVELOPMENT AGREEMENT is made and entered into as of the 8th day of August, 2007, by and between the City of Elgin, Illinois, a municipal corporation, (hereinafter referred to as the "City") and Water Street Place, LLC, an Illinois limited liability company, (hereinafter referred to as the "Developer"). WHEREAS,the City and the Developer previously entered into a Development Agreement dated December 6, 2006, relating to the City-owned property at the southwest corner of Kimball Street and Grove Avenue, Elgin, Illinois (hereinafter referred to as the "Subject Development Agreement" and WHEREAS, Section 2(b) of the Subject Development Agreement provided in part for the Developer to provide to the City within the 120-day Feasibility Period further specified documentation in the form of a market study to demonstrate and validate to the City's reasonable satisfaction the Developer's projected sales prices, lease rates and absorption schedule for the proposed Mixed Use Residential and Commercial Development on the Subject Property such that the City can independently determine that it is likely to receive the estimated tax increment revenue and sales tax for the proposed Mixed Use Residential and Commercial Development on the Subject Property; and WHEREAS,Developer provided the City the market study referred to in Section 2(b)of the Subject Development Agreement on April 6, 2007; and WHEREAS, pursuant to Section 2(b) of the Subject Development Agreement the City had forty-five(45)days from the receipt of such market study to provide written notice to the Developer to terminate the Subject Development Agreement in the event such documentation does not demonstrate and validate to the City's reasonable satisfaction the Developer's proposed sales prices, lease rates and absorption schedule for the proposed Mixed Use Residential and Commercial Development on the Subject Property such that the City can independently determine it is likely to receive the estimated tax increment revenue and sales tax for the proposed Mixed Use Residential and Commercial Development on the Subject Property; and WHEREAS, such forty-five(45)day time period in Section 2(b)of the Subject Development Agreement would have otherwise expired on May 21, 2007; and WHEREAS, the City and the Developer entered into an Amendment to the Development Agreement as of May 9,2007,(hereinafter referred to as the"First Amendment Agreement")wherein the City and the Developer mutually agreed to amend the Subject Development Agreement by extending such forty-five (45) days time period in Section 2(b) of the Subject Development Agreement to and including June 29, 2007; and WHEREAS, the City and the Developer entered into a Second Amendment to the Development Agreement as of June 27, 2007. (hereinafter referred to as the "Second Amendment Agreement") wherein the City and Developer mutually agreed to further amend the Subject Development Agreement by further extending such time period in Section 2(b) of the Subject Development to and including August 10, 2007; and WHEREAS,the City and the Developer have agreed to enter into this Third Amendment to Development Agreement to further extend such time period in Section 2(b) of the Subject Development Agreement to and including August 24, 2007 in order to allow the Developer additional time to submit a proposed further amendment to the Development Agreement for the City's review. NOW,THEREFORE,for and in consideration of the mutual undertakings as set forth herein, and in consideration of the mutual undertakings set forth in the Subject Development Agreement, and in consideration of other good and valuable consideration,the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. Section 2(b)of the Subject Development Agreement is hereby further amended to read as follows: "During such one hundred twenty (120) day Feasibility Period Developer shall provide to the City further documentation which shall demonstrate and validate to the City's reasonable satisfaction the Developer's projected sales prices, lease rates and absorption schedule for the residential and retail / restaurant components of the proposed Mixed Use Residential and Commercial Development on the Subject Project as set forth in Exhibit B attached hereto such that the City can independently determine that it is likely to receive the estimated tax increment revenue and sales tax for the proposed Mixed Use Residential and Commercial Development on the Subject Property. Such estimated tax increment revenue and sales tax expected to be received by the City for the proposed Mixed Use Residential and Commercial Development of the Subject Property for the time period ending in 2026 to be validated are as set forth in the Water Street Place Real Estate Tax Revenue Schedule dated September 20, 2006, attached hereto and made a part hereof as Exhibit B-l. The further documentation to be provided by the Developer to the City shall consist of a market study from a reputable independent sales and marketing firm, appraisal firm or real estate development consulting firm which shall analyze, among other matters, the projected sales prices (assuming an annual price increase of not more than 3.5%), upgrade targets, lease rates and a sales absorption schedule for the proposed Mixed Use Residential and Commercial Development of the Subject Property. Such market study shall include a comparable sales and leasing analysis as part of the sales and lease pricing analysis and shall include an analysis of comparable developments in the area as part of the absorption schedule analysis. In the event the Developer fails to provide the City with such documentation during such one hundred twenty(120)day Feasibility Period,then the City may,by written notice to the Developer within ten (10) days following such one hundred twenty (120) day Feasibility Period, elect to terminate this Agreement. In the event the Developer does provide such documentation to the City within such one hundred twenty(120) day Feasibility Period, and such documentation does not demonstrate and validate to the City's reasonable satisfaction the Developer's projected sales prices, lease rates and absorption schedule for the proposed Mixed Use Residential and Commercial Development on the Subject Property as set forth in Exhibit B attached hereto such that the City can independently determine that it is likely to receive the estimated tax increment revenue and sales tax for the proposed Mixed Use Residential and Commercial Development on the Subject Property as set forth in Exhibit B-1 attached hereto, the City may, by written notice to the Developer on or before August 24, 2007, elect to terminate this Agreement. If the Developer is so notified in writing by the City on or before August 24, 2007, then this Agreement shall be canceled and null and void with no further liability of either party hereunder. 2 • In the absence of written notice from the City to the Developer on or before August 24, 2007 electing to terminate this Agreement, or in the event the City provides the Developer written notice on or before August 24, 2007 that the City is waiving its rights to cancel this Agreement pursuant to the provisions of this section, the City's right to cancel this agreement pursuant to the provisions of this section 2(b) shall be deemed waived, and this Agreement shall remain in full force and effect." 2. That in the event of any conflict between the terms of this Third Amendment Agreement,and the terms of the Subject Development Agreement,the First Amendment Agreement, and/or the Second Amendment Agreement, the terms of this Third Amendment Agreement shall control. 3. That except as expressly amended in the First Amendment Agreement, the Second Amendment Agreement, and this Third Amendment Agreement, the terms of the Subject Development Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have entered into and executed this Third Amendment Agreement on the date and year first written above. CITY OF ELGIN d Schoc , ayor Attest: 9-' City Clerk WATER STREET PLACE LLC, an Illinois limited liability company By Ryan Companies, US, Inc., a Manager By Its Vice President F:\Legal Dept\Agreement\Development Agr-WaterStPl-3rdAmend-8-2-07.doc 3 ``,,(.OF,,c, - 4 City of Elgin Memorandum ,� '-.4D,o, '�i Date: August 2, 2007 To: Mayor and Members of the City Council Olufemi Folarin, City Manager From: William A. Cogley, Corporation Counsel Subject: Development Agreement between the City of Elgin and Water Street Place LLC for Redevelopment of Old Library Property Attached are additional copies of my May 4, and June 21, 2007 memoranda to you regarding',the above-referenced development agreement. At the City Council meeting on June 27, 2007, the City Council approved the Second Amendment to the Development Agreement which extended to August 10, 2007 the date by which the city may terminate the development agreement based upon a review of the fiscal impact analysis provided by the developer. The Developer Water Street Place LLC has been made up of two manager entities being RSC and Associates, LLC and Ryan Companies US, Inc. RSC and Associates is the same developer that is currently developing the Fountain Square development. RSC and Associates and Ryan Companies US have agreed that RSC and Associates will be withdrawing from the proposed Water Street Place development and assigning its interests in the development entity to Ryan Companies US. City staff met with representatives of Ryan Companies US on July 26, 2007 to further discuss the status of the project. It was agreed between city staff and the developer's representatives that based upon current adverse conditions affecting the local and national residential market it would be unwise to proceed at this time with the attempted marketing and development of the project. The developer and city staff discussed a proposed further amendment to the development agreement. City staff is in the process of preparing a further amendment to the development agreement which would include the following terms: 1. The developer would be required to provide the city a new market study to demonstrate and validate to the city's reasonable satisfaction the marketability and financial benefits of the project no later than July 1, 2009. In the event the city determined that the market for the project had sufficiently recovered prior to that date the city could direct the developer to provide such market study at an earlier time within 90 days of written notice from the city for same. The city would have 45 days from the receipt of any such market study to determine the desirability and feasibility of the project and could elect to proceed with the project or terminate the development agreement in the event the market study and other documentation provided to the city does not demonstrate an validate to the city's reasonable satisfaction the marketability and benefits of the project. Mayor and Members of the City Council -2- August 2, 2007 Olufemi Folarin 2. The development agreement and any obligation of either party to proceed with the development would be contingent upon the parties renegotiating and reaching agreement on the development assistance to be provided by the city to the developer for the project. It is expected that these negotiations would take place after the new market study is received which will include among other matters new financial projections and new TIF increment projections for the project. 3. Ryan Companies US would be required to obtain a new residential developer for the project to be a part of the development entity within 12 months of the entry into the further amendment to the agreement. Such new residential developer would be subject to the city's approval. 4. Developer would be required to provide the city written status reports every 90 days on the proposed development including, but not limited to, developer's efforts to partner with a new residential developer and the developer's current analysis and opinion on market conditions and the feasibility of proceeding with the new market study and with the project. 5. Developer would be required to provide the city with such other written reports and documentation regarding the development of the subject property as requested by the city from time to time including, but not limited to, efforts at obtaining financing and sales and marketing activities on the project. The foregoing terms would be incorporated into the development agreement by way of further amendment to the development agreement. In order to allow city staff and the developer time to finalize such a further amendment to the development agreement it will be necessary to further extend the date of August 10, 2007 in Section 2(b) of the development agreement for an additional two weeks to and including August 24, 2007. The attached Third Amendment to the Development Agreement would provide for such extension and is Item 0-4 on the Other Business portion of the City Council agenda for next Wednesday, August 8, 2007 In the event the council determines not to approve the Third Amendment Agreement, it will be necessary for the council to adopt a motion directing staff to terminate the agreement pursuant to Paragraph 2(b) of the Development Agreement, otherwise the city's right to terminate the agreement based on such a provision will expire and be waived as of August 10, 2007. Please contact me if you wish to discuss this matter or if you require any additional information at this time. VY w WAC mg Attachment cc: Sean R. Stegall (w/attachment) James R. Nowicki (w/attachment) • (,(OF EtC `` `` �� City of Elgin Memorandum n Date: June 21, 2007 To: Mayor and Members of the City Council Olufemi Folarin, City Manager From: William A. Cogley, Corporation Counsel Subject: Development Agreement between the City of Elgin and Water Street Place LLC for Redevelopment of Old Library Property Attached is an additional copy of my May 4, 2007 memorandum to you regarding the above- referenced development agreement. At the City Council meeting on May 9, 2007 the City Council approved the proposed amendment to the development agreement by extending to June 29, 2007, the date by which the City may terminate the development agreement based upon a review of the fiscal impact analysis provided by the developer. Following the City Council's approval of the Amendment Agreement on May 9, 2007, city staff met with representatives of the developer on May 16, 2007. The developer's representatives advised city staff that they would be submitting a proposal to the city regarding a further amendment to the development agreement which among other matters would provide for an extension of the commencement date of the development. The City Council meeting on June 27 2007 is the last City Council meeting prior to the expiration of the amended deadline of June 29, 2007 for the city to terminate the development agreement based upon the fiscal impact analysis. The developer has requested additional time to submit its proposed further amendment to the development agreement to the city. Based upon these circumstances I have prepared the attached Second Amendment to the Development Agreement which would further extend the current date of June 29, 2007 in Section 2(b) of the development agreement to and including August 10, 2007. It is expected that a resolution on this issue will be submitted to the City Council prior to such date. The attached Second Amendment to the Development Agreement is Item 10 on the Other Business portion of the City Council agenda for Wednesday, June 27, 2007. In the event the council determines not to approve the Second Amendment Agreement, it will be necessary for the council to adopt a motion directing staff to terminate the agreement pursuant to paragraph 2(b) of the development agreement, otherwise the city's right to terminate the agreement based upon such provision will expire and be waived as of June 29, 2007. 0 • Mayor and members of the City Council -2- June 21 2007 Olufemi Folarin Please contact me if you wish to discuss this matter or if you require any additional information at this time. WAC mg Attachments cc: Sean R. Stegall (w/att.) James R. Nowicki (w/att.) :„OFf(C Memorandum City of Elgin Date: May 4, 2007 To: Mayor and Members of the City Council Olufemi Folarin, City Manager From: William A. Cogley, Corporation Counsel Subject: Development Agreement between the City of Elgin and Water Street Place LLC for Redevelopment of Old Library Property Item 2 on the Other Business portion of the City Council agenda for next Wednesday, May 9, 2007, is a proposed amendment to the development agreement between the city and Water Street Place LLC providing for the redevelopment of the old library property at 200 N. Grove Avenue. The city and the developer previously entered into the subject development agreement dated December 6, 2006. Section 2(b) of the subject development agreement provides in part for the developer to provide to the city within a 120-day feasibility period further specified documentation in the form of a market study to demonstrate and validate to the city's reasonable satisfaction the developer's projected sales prices, lease rates and absorption schedule for the proposed mixed use residential and commercial development on the subject property such that the city can independently determine that it is likely to receive the estimated tax increment revenue and sales tax for the proposed mixed use residential and commercial development on the subject property. Developer's projected sales prices, lease rates and absorption schedule for the proposed development on the subject property and the estimated tax increment revenue and sales tax for the proposed development are set forth in Exhibits B and B-1 to the development agreement, copies of which are attached hereto. Also attached is a copy of Exhibit F to the development agreement which provides for the payment schedule for the city's cash development incentives which total $10,842,494 plus interest. Developer provided the city the market study referred to in Section 2(b) of the development agreement on April 6, 2007. Pursuant to Section 2(b) the city has 45 days from the receipt of such market study to provide written notice to the developer to terminate the development agreement in the event such documentation does not demonstrate and validate to the city's reasonable satisfaction the developer's proposed sales prices, lease rates and absorption schedule for the mixed use residential and commercial development on the subject property such that the city can independently determine that it is likely to receive the estimated tax increment revenue and sales tax for the proposed mixed use residential and commercial development on the subject property. Such a termination by the city would require City Council approval. 0 D Mayor and members of the City Council -2- May 4, 2007 Olufemi Folarin The city has previously retained the services of the consultant Virchow, Krause and Company to conduct a fiscal impact analysis of the proposed development. The city has forwarded developer's market study to Virchow Krause and city staff continues to review developer's market study with Virchow Krause. The 45-day time period in Section 2(b) of the development agreement, being the time period the city has to provide the developer written notice to terminate the agreement, will otherwise expire on May 21, 2007. City staff and the developer have mutually agreed to amend the development agreement by extending such 45-day time period to and including June 29, 2007. The amendment to the development agreement on next Wednesday's night's City Council agenda provides for such extension. City staff is currently in the process of completing its analysis with Virchow Krause. An additional meeting will be scheduled with the developer's representatives to further review developer's market study. City staff will then prepare a report for the City Council including among other matters the developer's market study and the Virchow Krause and Company analysis. Please contact me if you wish to discuss this matter or if you require any additional information at this time. WAC mg Attachments cc: Sean R. Stegall (w/att.) James R. Nowicki (w/att.)