11-91 1 '
Resolution No. 11-91
RESOLUTION
AUTHORIZING EXECUTION OF AN ECONOMIC INCENTIVE AGREEMENT
WITH SEARS HOLDINGS MANAGEMENT CORPORATION
(2428 Bath Road)
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,ILLINOIS,that
David J.Kaptain,Mayor,and Jennifer Quinton,Acting City Clerk,be and are hereby authorized and
directed to execute an Economic Incentive Agreement with Sears Holdings Management Corporation
on behalf of the City of Elgin for economic development assistance in connection with the
development of 2428 Bath Road, a copy of which is attached hereto and made a part hereof by
reference.
s/ David J. Kaptain
David J. Kaptain, Mayor
Presented: June 8, 2011
Adopted: June 8, 2011
Vote: Yeas: 6 Nays: 1
Attest:
s/Jennifer Quinton
Jennifer Quinton, Acting City Clerk
ECONOMIC INCENTIVE AGREEMENT
This Economic Incentive Agreement (the "Agreement") is made and entered
into as of the 25th day of May 2011, by and between the City of Elgin, an Illinois munici-
pal corporation (hereinafter referred to as the "City"), and the Sears Holdings Manage-
ment Corporation, a Delaware corporation ("Sears Holdings").
WHEREAS, Sears Holdings is the nation's fourth largest broadline retailer with
approximately 3,900 full-line and specialty retail stores in the United States and Cana-
da; and
WHEREAS, Sears Holdings operates through its subsidiaries, including Sears,
Roebuck and Co. and Kmart Corporation; and
WHEREAS, Sears Holdings is the leading home appliance retailer as well as a
leader in tools, lawn and garden, consumer electronics and automotive repair and
maintenance; and
WHEREAS, Sears Holdings is the nation's largest provider of home services,
with more than 12 million service calls made annually; and
WHEREAS, Sears Holdings generates several billion dollars in annual revenue;
and
WHEREAS, Sears Holdings is proposing to establish operations wherein it cur-
rently anticipates a present need for between approximately 40 to 66 employees in the
City of Elgin in an existing facility at 2428 Bath Road and currently intend to invest in
excess of one million dollars in capital expense to build out the facility for its purposes
("Subject Project"); and
WHEREAS, Sears Holdings would not be inclined to proceed with the Subject
Project without certain economic development assistance from the City; and
WHEREAS, section 8-11-20 of the Illinois Municipal Code (65 ILCS 5/8-11-20) au-
thorizes municipalities including the City to enter into economic incentive agreements
relating to the development or redevelopment of lands within the corporate limits of a
municipality; and
WHEREAS, the City is a home rule unit authorized to exercise any power and
perform any function relating to its government and affairs;
WHEREAS, economic incentive agreements including the economic incentive
agreement as provided for in this agreement pertain to the government and affairs of
the City; and
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WHEREAS, 2428 Bath Road has remained vacant for at least one (1)year; and
WHEREAS, the Subject Project is expected to create job opportunities within
the City; and
WHEREAS, the Subject Project will serve to further the development of adja-
cent areas; and
WHEREAS,without this Agreement the Subject Project would not occur; and
WHEREAS, Sears Holdings meets high standards of credit worthiness and finan-
cial strength; and
WHEREAS, the Subject Project will strengthen the commercial sector of the
City; and
WHEREAS,the Subject Project will enhance the tax base of the City; and
WHEREAS,this agreement is made in the best interests of the City.
NOW, THEREFORE, for and in consideration of the mutual promises and under-
takings contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Recitals. The foregoing recitals are incorporated into this Agreement in
their entirety.
2. Subject Project.
A. Sears Holdings, at its cost, shall develop the Subject Project. The devel-
opment of the Subject Project shall conform in all respects with all appli-
cable legal requirements, including, but not limited to, city ordinances
and codes, the terms of this Agreement, or as otherwise directed by the
City as is necessary to comply with ordinances, building codes or other
requirements of law. Except as otherwise provided in this Agreement, all
costs and expenses relating to the Subject Project shall be the responsi-
bility of and shall be paid for by Sears Holdings.
B. Sears Holdings shall commence business operations for the Subject
Project not later than July 31, 2011 ("Completion Date"), provided, how-
ever, such Completion Date for the Subject Project shall be extended by
one day for each day of which any construction relating to the Subject
Project is delayed or stopped due to accidents, strikes, shortage of mate-
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rials, extreme weather, acts of God or other causes not within Sears
Holdings' reasonable control. In the event Sears Holdings requires any
extension of the Completion Date for the Subject Project, any request
shall be submitted to the City in writing specifying the reasons for such
an extension and the amount of additional time being requested. Any
agreement by the City to extend the Completion Date for the Subject
Project shall be at the sole discretion of the city council of the City. The
Subject Project shall be deemed ready to commence business operations
when the City has issued to Sears Holdings a certificate of occupancy and
general business license for the Subject Project. The City shall not with-
hold the certificate of occupancy or general business license for the Sub-
ject Project if Sears Holdings otherwise complies with this agreement
and all City codes, ordinances and other requirements of law as to the
Subject Project. Notwithstanding the above mentioned Completion
Date, the City agrees to continue use good faith efforts to effectuate the
issuance of the Certificate of Occupancy and business license for the
Subject Project on or before June 10, 2010.
C. Sears Holdings agrees that it shall use commercially reasonable efforts,
subject to then current business and market conditions, to continue the
Subject Project and to maintain not less than 40 full-time jobs refe-
renced in paragraph 3A of this Agreement, for a period of not less than
four(4)years from the Completion Date.
3. Economic Incentives. In consideration for Sears Holdings' undertaking of
the Subject Project, the City agrees to provide economic incentives to Sears Holdings
to be used by the Sears Holdings solely and only for the Subject Project. Such economic
incentives shall consist of and be distributed to the Sears Holdings as follows:
A. Job Incentive Grant. The City will provide Sears Holdings with a job in-
centive grant as described in this section in a total amount not to exceed
$66,000.00.
(i).The City shall pay Sears Holdings $l000 for each such full-time job es-
tablished for the Subject Project within ninety (90) days of the Comple-
tion Date having an annual salary in excess of $35,000 (excluding bene-
fits) plus a $500 bonus for each such full-time employee residing within
the corporate limits of the City of Elgin ("Initial Job Incentive Grant").
Prior to the City's payment of the Initial Job Incentive Grant, Sears Hold-
ings shall provide written verification to the City's chief financial officer
which identifies the number of full-time jobs established for the Subject
Project earning direct wages of not less than $35,000 on an annual basis
(excluding benefits). The City's payment of the job incentive grant shall
be paid to Sears Holdings within thirty (30) days of the Sears Holdings
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providing to the City such written verification regarding the establish-
ment of jobs.
(ii). Following the expiration of the Initial Job Incentive Grant, the City
shall pay Sears Holdings $a000 for each additional full-time job estab-
lished for the Subject Project having an annual salary in excess of
$35,000 (excluding benefits) plus a $500 bonus for each such additional
full-time employee residing within the corporate limits of the City of El-
gin. The payment of any such additional job incentive grants will be paid
by the City to Sears Holdings on each anniversary of the City's payment
of the Initial Job Incentive Grant. Sears Holdings shall be eligible for such
additional job incentive grants for a period of three (3) years following
the expiration of the Initial Job Incentive Grant, provided, however, than
in no event shall the City's combined payment of the Initial job Incentive
Grant and any subsequent job incentive grants to Sears Holdings exceed
the sum of sixty-six thousand dollars($66,000).
B. Waiver of Building Permit Fees for the Subject Project. The City agrees
to waive and not require Sears Holdings to pay any building permit fees
which would otherwise be due and payable to the City in connection with
the establishment of the Subject Project. The provisions of this section
are intended and shall be construed to apply only to the building permit
fees. Any and all impact fees or other fees which may be due and owing
to the City and/or any other governmental entity other than the City
shall be paid by Sears Holdings.
4. Sears Holdings to Recruit and Hire Elgin Residents. Sears Holdings
agrees to and shall make reasonable efforts to recruit and hire Elgin residents for em-
ployment opportunities for the Subject Project. Sears Holdings shall provide an annual
report to the City on its efforts to recruit and hire Elgin residents for employment op-
portunities at the Subject Project. Such written report shall include, among other mat-
ters, recruitment efforts directed toward Elgin residents, the number of Elgin residents
applying for employment and the number of Elgin residents hired for employment posi-
tions for the Subject Project. The reporting requirements in this section shall remain in
effect for a period of one (a)year following the Completion Date of the Subject Project.
5. Centre of Elgin. Full-time Sears Holdings employees employed for the
Subject Project shall qualify for the Elgin resident annual rate for membership at the
City's Elgin family recreation center, known as the Centre of Elgin, regardless of the lo-
cation of such employee's residence. This provision shall remain in effect as long as
Sears Holdings maintains the Subject Project.
6. Elgin Promotion. Within sixty (6o) days of Sears Holdings receiving a
Certificate of Occupancy for the Subject Property, the City Manager of the City and
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other City staff will attend a meeting at the Subject Property to discuss and promote
the City of Elgin to the Sears Holdings' employees employed at the Subject Property.
The City Manager of the City shall designate a liaison for Sears Holdings' employees to
contact in the event such employees have any questions regarding the Elgin communi-
ty. At Sears option, the City shall also coordinate with the Elgin Area Chamber of
Commerce for the purpose of conducting a groundbreaking and ribbon cutting cere-
monies for the Subject Project.
7. City's Obligations Contingent Upon Sears Holdings' Performance. The
parties understand and agree that the economic incentive grants being provided by the
City to Sears Holdings as set forth in paragraphs 3 and 5 of this Agreement are express-
ly subject to and contingent upon Sears Holdings' locating to the City of Elgin and the
establishment of the Subject Project as set forth in this Agreement. In the event the
Sears Holdings fails to establish the Subject Property as required in this Agreement, or
fails to occupy and commence operations for the Subject Project as required in this
Agreement, and/or in the event Sears Holdings fails to provide for the creation and es-
tablishment of the jobs as provided for in Section 3A of this Agreement, the parties un-
derstand and agree that the City will not be providing the economic incentive grants or
economic assistance to Sears Holdings for the Subject Project pursuant to this Agree-
ment or otherwise. In the event Sears Holdings fails to continue the Subject Project for
the four(4)year period as required in this Agreement,the parties understand and agree
that Sears Holdings shall reimburse the City on a pro-rata basis the economic incentive
grants provided for in Section 3 of this Agreement. For the purposes of clarification and
example, the reimbursement on the pro rata basis shall mean a percentage reimburse-
ment based upon the percentage of the four-year time period the Sears Holdings has
failed to continue the Subject Project. For the purpose of further clarification and ex-
ample, in the event Sears Holdings continues the Subject Project for three years instead
of four years, Sears Holdings shall reimburse to the City 25 percent of the economic in-
centive grants and assistance paid or provided by the City to the Sears Holdings pur-
suant to Section 3 of this Agreement.
8. Miscellaneous.
A. That this Agreement shall not be deemed or construed to create an em-
ployment, joint venture, partnership, or other agency relationship be-
tween the parties hereto.
B. That all notices or other communications hereunder shall be made in
writing and shall be deemed given if personally delivered or mailed by
registered or certified mail, return receipt requested, to the parties at the
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following addresses, or at such other addressed for a party as shall be
specified by like notice, and shall be deemed received on the date on
which said hand delivered or the second business day following the date
on which so mailed:
TO THE CITY:
City of Elgin
150 Dexter Court
Elgin, IL 60120-5555
Attention: Richard G. Kozal
With a copy of any such notice to:
City of Elgin
15o Dexter Court
Elgin, IL 60120-5555
Attention: William A. Cogley, Corporation Counsel
TO SEARS HOLDINGS:
Teri Lucchetti
Director, Studio Services
Sears Holding Corporation
2428 Bath Road
Elgin, IL 60124
C. That the failure by a party to enforce any provision of this Agreement
against the other party shall not be deemed a waiver of the right to do so
thereafter.
D. That this Agreement may be modified or amended only in writing signed
by both parties hereto, or their permitted successors or assigns, as the
case may be.
E. That this Agreement contains the entire agreement and understanding
of the parties hereto with respect to the subject matter as set forth here-
in, all prior agreements and understandings having been merged herein
and extinguished hereby.
F. That this Agreement is and shall be deemed and construed to be a joint
and collective work product of the City and Sears Holdings 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 jurisdic-
tion in order to resolve any inconsistency, ambiguity, vagueness or con-
flict, if any, in the terms or provisions contained herein.
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G. That this Agreement is subject to and shall be governed by the laws of
the State of Illinois.
H. That this Agreement shall be binding on the parties hereto and their re-
spective successors and permitted assigns. This Agreement and the obli-
gations 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 the parties hereto. The City may record a Memoran-
dum of Agreement placing of record the terms and provisions of this
Agreement.
The City and Sears Holdings agree that, in the event of a default by the
other party, the other party shall, prior to taking any such actions as may
be available to it, provide written notice to the defaulting party stating
that they are giving the defaulting party thirty (3o) days within which to
cure such default. If the default shall not be cured within the thirty (3o)
days period aforesaid, then the party giving such notice shall be permit-
ted to avail itself of remedies to which it may be entitled under this
Agreement.
J. If either party fails or refuses to carry out any of the material covenants
or obligations hereunder, the other party shall be entitled to pursue any
and all available remedies as specified herein or otherwise available at
law, equity or otherwise. Notwithstanding the foregoing or anything else
to the contrary in this Agreement, with the sole exception of an action to
recover the monies the City has agreed to pay pursuant to the preceding
paragraphs 3A and 3B of this Agreement, no action regarding the eco-
nomic incentives set forth in this Agreement shall be commenced by the
Sears Holdings against the City for monetary damages. Venue for the
resolution of any disputes or the enforcement of any rights pursuant to
this Agreement shall be in the Circuit Court of Kane County, Illinois. In
the event any action is brought by the City against Sears Holdings or its
permitted assigns with respect to this Agreement and the City is the pre-
vailing party in such action, the City shall also be entitled to recover from
Sears Holdings reasonable interest and reasonable attorney's fees.
K. Time is of the essence of this Agreement.
L. This Agreement shall be construed, and the rights and obligations of the
City and Sears Holdings hereunder shall be determined in accordance
with the laws of the State of Illinois without reference to its conflict of
laws rules.
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M. No past, present or future elected or appointed official, officer, em-
ployee, attorney, agent or independent contractor of either the City or
Sears Holdings shall be charged personally or held contractually liable
under any term or provision of this Agreement including, but not limited
to, because of their negotiation, approval, execution or attempted ex-
ecution of this Agreement.
N. Notwithstanding any other provisions of this Agreement, it is expressly
agreed and understood by Sears Holdings and the City that in connec-
tion with the performance of this Agreement, that Sears Holdings shall
make all reasonable efforts to comply with all applicable federal, state,
city and other requirements of law including, but not limited to, any ap-
plicable requirements regarding prevailing wages, minimum wage,
workplace safety and legal status of employees. Without limiting the
foregoing, Sears Holdings hereby certifies, represents and warrants to
the City that all of Sears Holdings' employees and/or agents who will be
employed for the Subject Project shall be legal residents of the United
States. Without limiting the foregoing, and notwithstanding anything to
the contrary in this Agreement, Sears Holdings and its contractors and
subcontractors shall, to the extent required by law, comply with the Pre-
vailing Wage Act in all respects relating to the Subject Project. The City
shall have the right to audit any records in the possession or control of
the Sears Holdings to determine the Sears Holdings'compliance with the
provisions of this section. In the event the City proceeds with such an au-
dit, the Sears Holdings shall make available to the City the Sears Hold-
ings'relevant records at no cost to the City.
O. The parties agree that they will not issue press releases including the
name or logo of the other party, including but not limited to advertising
or sales/marketing materials, without the other party's prior written con-
sent. Matters subject to the Illinois Open Meetings Act shall not be sub-
ject to such prior approval.
IN WITNESS WHEREOF, the City and Sears Holdings have executed this
Agreement on the date and year first written above.
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CITY OF ELGIN, SEARS HOLDINGS MANAGEMENT
an Illinois municipal corporation CORPORATION
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By: Avil r "%�►.%_
David .ptain ayor
Its: UrCfl U t,GQ A
Attest:
Aar 09
J- nifer Q ton, Acting City Clerk
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ELGIN
THE CITY IN THE SUBURBS
AGENDA ITEM: G
MEETING DATE: May 11, 2011
ITEM:
Economic Incentive Agreement with Sears Holdings Management Corporation
($66,000)
OBJECTIVE:
Entering into an economic incentive agreement with a several billion dollar corporation that will
bring new,full-time jobs to the city.
RECOMMENDATION:
Approve the economic incentive agreement with Sears Holdings Management Corporation in a
not to exceed amount of$66,000.
BACKGROUND
Sears Holdings Management Corporation (Sears Holdings) is the nation's fourth largest
broadline retailer with approximately 3,900 full-line and specialty retail stores in the United
States and Canada. Sears Holdings operates through its subsidiaries, including Sears, Roebuck
and Co. and Kmart Corporation. It is the leading home appliance retailer as well as a leader in
tools, lawn and garden, consumer electronics and automotive repair and maintenance. Sears
Holdings is also the nation's largest provider of home services, with more than 12 million
service calls made annually. Sears Holdings generates over forty billion dollars in annual
revenue.
In mid-January 2011, Sears Holdings contacted the city to advise that it was planning to
establish a new support operation outside its corporate campus in Hoffman Estates. Sears
Holding anticipated a need for between approximately 40 to 66 employees at the new facility
and contemplated an investment in excess of one million dollars in capital expense to build out
an existing facility for its purposes. Sears Holdings told the city it was considering commercial
properties in Hoffman Estates and communities north of Elgin in the Randall Road corridor and
asked whether the city would consider providing economic incentives for locating in Elgin. Sears
Holdings requested that the negotiations remain strictly confidential, and staff agreed to abide
by that requirement.
Staff responded with an economic incentive proposal modeled upon similar agreements
approved by the city council in the past. The city's proposal included a commitment to "fast-
track" the permitting process for the build-out of Sears Holdings' proposed location in Elgin.
The city also committed to waiving building permit fees for Sears Holdings' build-out of the
proposed facility. (Permit fees required by local government agencies, such as the Kane County
Stormwater Management and the Fox River Water Reclamation District, are excluded from this
waiver.)
The city also offered an initial job incentive grant that will provide Sears Holdings with $1000
for each full-time employee having an annual salary in excess of $35,000 (excluding benefits),
plus a $500 bonus for any such full-time employee residing in Elgin. Job creation incentives at
similar grant levels for any additional full-time employees having the same minimum salary
levels that are hired by Sears Holdings after the facility has been established were also provided
as part of the city's proposal.The city also offered resident-rate memberships for Sears
Holdings' employees.
Sears Holdings requested real property tax abatements from the city as part of the economic
incentive package, but staff declined this proposal. Finally, Sears Holdings was advised that city
staff is not vested with final authority to execute economic incentive agreements, but that the
proposal staff outlined is not wholly inconsistent with the economic incentive agreements
approved by the city council in the recent past.
About a month following the city's economic incentive offer, Sears Holdings notified the city
that it had chosen to located its new facility within an existing building at 2428 Bath Road. (Bath
Road is located west of Randall Road and south of Alft Lane.) Sears Holdings currently
anticipates a present need for between approximately 40 to 66 employees at the Elgin facility
and is intending to invest in excess of one million dollars in capital expenses to build out the
facility for its purposes. The Bath Road facility will house Sears Holdings' professional services
Photography and Digital Asset Management Studio.The studio will produce photography assets
to support online and printed advertising for the Sears Holdings brands and formats including
Sears and Kmart.
Sears Holdings elected to sign a lease for the Bath Road facility and began work on the facility's
build-out during the first week of April in advance of the city council's approval of the economic
incentive agreement.To date, Sears Holdings has paid $23,751.25 in building permit fees, which
would be refunded should the city council approve the current form of the proposed economic
incentive agreement. Sears Holdings has posted the job opportunities for its new facility with
the Elgin Area Chamber of Commerce and the Downtown Neighborhood Association. The
available jobs can also be viewed at the following Web address: http://bit.ly/kjdOnL.
OPERATIONAL ANALYSIS
The use of economic development incentives has become so widespread that corporations, real
estate developers and manufacturers routinely approach city governments asking for them.
Often, these entities assert that they might move their planned investment to a competing
location with lower operating costs or more attractive incentive packages. The city has been
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utilizing job incentive grants with good success to provide Elgin with a competitive advantage
over its competing municipalities. Job incentive grants can often provide the deciding factor for
convincing a business to locate in Elgin when all other factors at a competing location are equal.
The city typically targets its incentives to large corporations with many employees or to
corporations with smaller numbers of employees with higher average wages. In exchange for
the incentive package, the business typically agrees to maintain a certain level of jobs at a
certain wage level at its facilities in Elgin or create a specified number of new jobs.
The proposed economic incentive agreement provides Sears Holdings with cash incentives to
create up to 66 jobs with annual salaries of $35,000 (excluding benefits) at an existing
commercial property in the city that has been vacant for more than a year. The agreement also
provides a $500 bonus for each full-time employee who resides within Elgin. The agreement
requires Sears Holdings to maintain 40 jobs in Elgin for a period of four years and provides
additional cash incentives for Sears Holdings to increase the size of its workforce during the
four-year term of the agreement. Each job created with an annual salary exceeding $35,000
(excluding benefits) is entitled to a one-time payment of $1,000, plus a similar $500 bonus for
any full-time employee residing in Elgin. The proposed agreement requires Sears Holdings to
recruit and hire Elgin residents and the cash incentives under the agreement are capped at
$66,000.
The proposed agreement provides an incentive for Sears Holdings employees to obtain
memberships at The Centre. The incentive allows Sears Holdings employees to join The Centre
at resident membership rates. This incentive is being provided in an effort entice Sears Holdings
employees to venture from their Bath Road location and patronize Center City businesses.
The proposed agreement also includes a waiver of any required building permit fees. As stated
above, Sears Holdings commenced construction in early April and has paid $23,751.25 in
building permit fees.These fees will be refunded if the city council approves the current form of
the proposed economic incentive agreement. It is expected that Sears Holdings will not incur
more than $500 in additional building permit fees.
INTERESTED PERSONS CONTACTED
The Elgin Area Chamber of Commerce has been consulted regarding the proposed economic
incentive agreement with Sears Holdings.
FINANCIAL ANALYSIS
Arguments in favor of economic development incentives are derived from export-base theory
which holds that incentives will generate a multiplier effect for local service industries by
helping export-oriented industries (i.e., industries selling products outside the incenting
jurisdiction) to increase their revenues and jobs. This multiplier effect arises because the
"exporting" firms employ workers who are local consumers that spend part of their income in
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the incentive-granting jurisdiction. These "exporting" firms often also have local suppliers
operating within or in close proximity to the incenting jurisdiction, pumping additional revenue
into the local economy.
Research analyzing whether economic development incentives actually help local economies to
grow can be mixed. But studies have demonstrated that the job creation and economic activity
created through economic incentives outweighed the initial costs of providing the subsidies.
(See, Rubin, M. 1999. Urban enterprise zones: Do they work? Evidence from New Jersey. Public
Budgeting and Finance 10/4, 3-17; Fainstein, S. Stokes, R. 1998. Spaces for Play: The Impacts of
Entertainment Development on New York City. Economic Development Quarterly, 12:1, 150-
165.) The growing multi-national corporate presence in the city, despite the economic
downturn, suggests the city's economic development incentives are realizing their intended
purpose of raising Elgin's presence in the global marketplace.
BUDGET IMPACT
FUND(S) ACCOUNT(S) PROJECT#(S) AMOUNT AMOUNT
BUDGETED AVAILABLE
Riverboat Lease 276-0000-791.80-27 N/A $321,000 $321,000
LEGAL IMPACT
None.
ALTERNATIVES
The city council may choose not to enter into an economic incentive agreement with Sears
Holdings Management Corporation.
NEXT STEPS
Execute the economic incentive agreement with Sears Holdings Management Corporation.
Originators: Richard G. Kozal, Assistant City Manager
Final Review: Colleen Lavery, Chief Financial Officer
William A. Cogley, Corporation Counsel/Chief Development Officer
Approved:
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Sean R. Stegall, City Manager
ATTACHMENTS
A: Economic Incentive Agreement with Sears Holdings Management Corporation
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`' ECONOMIC INCENTIVE AGREEMENT
This Economic Incentive Agreement (the "Agreement") is made and entered
into as of the 25th day of May 2011, by and between the City of Elgin, an Illinois
municipal corporation (hereinafter referred to as the "City"), and the Sears Holdings
Management Corporation, a Delaware corporation ("Sears Holdings").
WHEREAS, Sears Holdings is the nation's fourth largest broadline retailer
with approximately 3,900 full-line and specialty retail stores in the United States and
Canada; and
WHEREAS, Sears Holdings operates through its subsidiaries, including
Sears, Roebuck and Co. and Kmart Corporation; and
WHEREAS, Sears Holdings is the leading home appliance retailer as well as
a leader in tools, lawn and garden, consumer electronics and automotive repair and
maintenance; and
WHEREAS, Sears Holdings is the nation's largest provider of home services,
with more than 12 million service calls made annually; and
WHEREAS, Sears Holdings generates several billion dollars in annual reve-
rnue; and
WHEREAS, Sears Holdings is proposing to establish operations wherein it
currently anticipates a present need for between approximately 40 to 66 employees
in the City of Elgin in an existing facility at 2428 Bath Road and currently intend to
invest in excess of one million dollars in capital expense to build out the facility for
its purposes ("Subject Project"); and
WHEREAS, Sears Holdings would not be inclined to proceed with the Sub-
ject Project without certain economic development assistance from the City; and
WHEREAS, section 8-11-20 of the Illinois Municipal Code (65 ILCS 5/8-11-
20) authorizes municipalities including the City to enter into economic incentive
agreements relating to the development or redevelopment of lands within the cor-
porate limits of a municipality; and
WHEREAS, the City is a home rule unit authorized to exercise any power
and perform any function relating to its government and affairs;
WHEREAS, economic incentive agreements including the economic incen-
tive agreement as provided for in this agreement pertain to the government and af-
fairs of the City; and
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WHEREAS, 2428 Bath Road has remained vacant for at least one (1) year;
and
WHEREAS, the Subject Project is expected to create job opportunities with-
in the City; and
WHEREAS, the Subject Project will serve to further the development of adja-
cent areas; and
WHEREAS, without this Agreement the Subject Project would not occur;
and
WHEREAS, Sears Holdings meets high standards of credit worthiness and
financial strength; and
WHEREAS, the Subject Project will strengthen the commercial sector of the
City; and
WHEREAS, the Subject Project will enhance the tax base of the City; and
WHEREAS, this agreement is made in the best interests of the City.
NOW, THEREFORE, for and in consideration of the mutual promises and
undertakings contained herein, and other good and valuable consideration, the re-
ceipt and sufficiency of which are hereby acknowledged, the parties hereto agree
as follows:
1. Recitals. The foregoing recitals are incorporated into this Agreement
in their entirety.
2. Subject Project.
A. Sears Holdings, at its cost, shall develop the Subject Project. The de-
velopment of the Subject Project shall conform in all respects with all
applicable legal requirements, including, but not limited to, city ordi-
nances and codes, the terms of this Agreement, or as otherwise di-
rected by the City as is necessary to comply with ordinances, building
codes or other requirements of law. Except as otherwise provided in
this Agreement, all costs and expenses relating to the Subject Project
shall be the responsibility of and shall be paid for by Sears Holdings.
B. Sears Holdings shall commence business operations for the Subject
elkProject not later than July 31, 2011 ("Completion Date"), provided,
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however, such Completion Date for the Subject Project shall be ex-
tended by one day for each day of which any construction relating to
the Subject Project is delayed or stopped due to accidents, strikes,
shortage of materials, extreme weather, acts of God or other causes
not within Sears Holdings' reasonable control. In the event Sears
Holdings requires any extension of the Completion Date for the Sub-
ject Project, any request shall be submitted to the City in writing
specifying the reasons for such an extension and the amount of addi-
tional time being requested. Any agreement by the City to extend the
Completion Date for the Subject Project shall be at the sole discretion
of the city council of the City. The Subject Project shall be deemed
ready to commence business operations when the City has issued to
Sears Holdings a certificate of occupancy and general business li-
cense for the Subject Project. The City shall not withhold the certifi-
cate of occupancy or general business license for the Subject Project
if Sears Holdings otherwise complies with this agreement and all City
codes, ordinances and other requirements of law as to the Subject
Project. Notwithstanding the above mentioned Completion Date, the
City agrees to continue use good faith efforts to effectuate the issu-
ance of the Certificate of Occupancy and business license for the
Subject Project on or before June 10, 2010.
C. Sears Holdings agrees that it shall use commercially reasonable ef-
forts, subject to then current business and market conditions, to con-
tinue the Subject Project and to maintain not less than 40 full-time
jobs referenced in paragraph 3A of this Agreement, for a period of not
less than four (4) years from the Completion Date.
3. Economic Incentives. In consideration for Sears Holdings' undertak-
ing of the Subject Project, the City agrees to provide economic incentives to Sears
Holdings to be used by the Sears Holdings solely and only for the Subject Project.
Such economic incentives shall consist of and be distributed to the Sears Holdings
as follows:
A. Job Incentive Grant. The City will provide Sears Holdings with a job
incentive grant as described in this section in a total amount not to
exceed $66,000.00.
(i). The City shall pay Sears Holdings $1000 for each such full-time
job established for the Subject Project within ninety (90) days of the
Completion Date having an annual salary in excess of $35,000 (ex-
cluding benefits) plus a $500 bonus for each such full-time employee
residing within the corporate limits of the City of Elgin ("Initial Job In-
centive Grant"). Prior to the City's payment of the Initial Job Incentive
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Grant, Sears Holdings shall provide written verification to the City's
chief financial officer which identifies the number of full-time jobs es-
tablished for the Subject Project earning direct wages of not less than
$35,000 on an annual basis (excluding benefits). The City's payment
of the job incentive grant shall be paid to Sears Holdings within thirty
(30) days of the Sears Holdings providing to the City such written veri-
fication regarding the establishment of jobs.
(ii). Following the expiration of the Initial Job Incentive Grant, the City
shall pay Sears Holdings $1000 for each additional full-time job es-
tablished for the Subject Project having an annual salary in excess of
$35,000 (excluding benefits) plus a $500 bonus for each such addi-
tional full-time employee residing within the corporate limits of the City
of Elgin. The payment of any such additional job incentive grants will
be paid by the City to Sears Holdings on each anniversary of the
City's payment of the Initial Job Incentive Grant. Sears Holdings shall
be eligible for such additional job incentive grants for a period of three
(3) years following the expiration of the Initial Job Incentive Grant, pro-
vided, however, than in no event shall the City's combined payment
of the Initial job Incentive Grant and any subsequent job incentive
grants to Sears Holdings exceed the sum of sixty-six thousand dol-
lars ($66,000).
B. Waiver of Building Permit Fees for the Subject Project. The City
agrees to waive and not require Sears Holdings to pay any building
permit fees which would otherwise be due and payable to the City in
connection with the establishment of the Subject Project. The provi-
sions of this section are intended and shall be construed to apply only
to the building permit fees. Any and all impact fees or other fees
which may be due and owing to the City and/or any other govern-
mental entity other than the City shall be paid by Sears Holdings.
4. Sears Holdings to Recruit and Hire Elgin Residents. Sears Holdings
agrees to and shall make reasonable efforts to recruit and hire Elgin residents for
employment opportunities for the Subject Project. Sears Holdings shall provide an
annual report to the City on its efforts to recruit and hire Elgin residents for employ-
ment opportunities at the Subject Project. Such written report shall include, among
other matters, recruitment efforts directed toward Elgin residents, the number of
Elgin residents applying for employment and the number of Elgin residents hired for
employment positions for the Subject Project. The reporting requirements in this
section shall remain in effect for a period of one (1) year following the Completion
Date of the Subject Project.
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5. Centre of Elgin. Full-time Sears Holdings employees employed for the
Subject Project shall qualify for the Elgin resident annual rate for membership at the
City's Elgin family recreation center, known as the Centre of Elgin, regardless of the
location of such employee's residence. This provision shall remain in effect as long
as Sears Holdings maintains the Subject Project.
6. Elgin Promotion. Within sixty (60) days of Sears Holdings receiving a
Certificate of Occupancy for the Subject Property, the City Manager of the City and
other City staff will attend a meeting at the Subject Property to discuss and pro-
mote the City of Elgin to the Sears Holdings' employees employed at the Subject
Property. The City Manager of the City shall designate a liaison for Sears Holdings'
employees to contact in the event such employees have any questions regarding
the Elgin community. At Sears option, the City shall also coordinate with the Elgin
Area Chamber of Commerce for the purpose of conducting a groundbreaking and
ribbon cutting ceremonies for the Subject Project.
7. City's Obligations Contingent Upon Sears Holdings' Performance.
The parties understand and agree that the economic incentive grants being provid-
ed by the City to Sears Holdings as set forth in paragraphs 3 and 5 of this Agree-
ment are expressly subject to and contingent upon Sears Holdings' locating to the
City of Elgin and the establishment of the Subject Project as set forth in this Agree-
ment. In the event the Sears Holdings fails to establish the Subject Property as re-
quired in this Agreement, or fails to occupy and commence operations for the Sub-
ject Project as required in this Agreement, and/or in the event Sears Holdings fails
to provide for the creation and establishment of the jobs as provided for in Section
3A of this Agreement, the parties understand and agree that the City will not be
providing the economic incentive grants or economic assistance to Sears Holdings
for the Subject Project pursuant to this Agreement or otherwise. In the event Sears
Holdings fails to continue the Subject Project for the four (4) year period as required
in this Agreement, the parties understand and agree that Sears Holdings shall reim-
burse the City on a pro-rata basis the economic incentive grants provided for in
Section 3 of this Agreement. For the purposes of clarification and example, the re-
imbursement on the pro rata basis shall mean a percentage reimbursement based
upon the percentage of the four-year time period the Sears Holdings has failed to
continue the Subject Project. For the purpose of further clarification and example, in
the event Sears Holdings continues the Subject Project for three years instead of
four years, Sears Holdings shall reimburse to the City 25 percent of the economic
incentive grants and assistance paid or provided by the City to the Sears Holdings
pursuant to Section 3 of this Agreement.
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rik 8. Miscellaneous.
A. That this Agreement shall not be deemed or construed to create an
employment, joint venture, partnership, or other agency relationship
between the parties hereto.
B. That all notices or other communications hereunder shall be made in
writing and shall be deemed given if personally delivered or mailed by
registered or certified mail, return receipt requested, to the parties at
the following addresses, or at such other addressed for a party as
shall be specified by like notice, and shall be deemed received on the
date on which said hand delivered or the second business day follow-
ing the date on which so mailed:
TO THE CITY: TO SEARS HOLDINGS:
City of Elgin
150 Dexter Court
Elgin, IL 60120-5555
Attention: Richard G. Kozal
With a copy of any such notice to:
City of Elgin
150 Dexter Court
Elgin, IL 60120-5555
Attention: William A. Cogley, Corporation Counsel
C. That the failure by a party to enforce any provision of this Agreement
against the other party shall not be deemed a waiver of the right to do
so thereafter.
D. That this Agreement may be modified or amended only in writing
signed by both parties hereto, or their permitted successors or as-
signs, as the case may be.
E. That this Agreement contains the entire agreement and understand-
ing of the parties hereto with respect to the subject matter as set
forth herein, all prior agreements and understandings having been
merged herein and extinguished hereby.
F. That this Agreement is and shall be deemed and construed to be a
joint and collective work product of the City and Sears Holdings and,
as such, this Agreement shall not be construed against the other par-
ty, as the otherwise purported drafter of same, by any court of com-
petent jurisdiction in order to resolve any inconsistency, ambiguity,
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vagueness or conflict, if any, in the terms or provisions contained
herein.
G. That this Agreement is subject to and shall be governed by the laws
of the State of Illinois.
H. That this Agreement shall be binding on the parties hereto and their
respective successors and permitted assigns. This Agreement and
the obligations herein may not be assigned without the express writ-
ten consent of each of the parties hereto, which consent may be
withheld at the sole discretion of either the parties hereto. The City
may record a Memorandum of Agreement placing of record the terms
and provisions of this Agreement.
The City and Sears Holdings agree that, in the event of a default by
the other party, the other party shall, prior to taking any such actions
as may be available to it, provide written notice to the defaulting party
stating that they are giving the defaulting party thirty (30) days within
which to cure such default. If the default shall not be cured within the
thirty (30) days period aforesaid, then the party giving such notice
shall be permitted to avail itself of remedies to which it may be enti-
tled under this Agreement.
J. If either party fails or refuses to carry out any of the material cove-
nants or obligations hereunder, the other party shall be entitled to
pursue any and all available remedies as specified herein or otherwise
available at law, equity or otherwise. Notwithstanding the foregoing or
anything else to the contrary in this Agreement, with the sole excep-
tion of an action to recover the monies the City has agreed to pay
pursuant to the preceding paragraphs 3A and 3B of this Agreement,
no action on this Agreement or the subject matter thereof shall be
commenced by the Sears Holdings against the City for monetary
damages. Venue for the resolution of any disputes or the enforce-
ment of any rights pursuant to this Agreement shall be in the Circuit
Court of Kane County, Illinois. In the event any action is brought by
the City against Sears Holdings or its permitted assigns with respect
to this Agreement and the City is the prevailing party in such action,
the City shall also be entitled to recover from Sears Holdings reason-
able interest and reasonable attorney's fees.
K. Time is of the essence of this Agreement.
L. This Agreement shall be construed, and the rights and obligations of
the City and Sears Holdings hereunder shall be determined in ac-
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cordance with the laws of the State of Illinois without reference to its
conflict of laws rules.
M. No past, present or future elected or appointed official, officer, em-
ployee, attorney, agent or independent contractor of either the City or
Sears Holdings shall be charged personally or held contractually liable
under any term or provision of this Agreement including, but not lim-
ited to, because of their negotiation, approval, execution or attempted
execution of this Agreement.
N. Notwithstanding any other provisions of this Agreement, it is express-
ly agreed and understood by Sears Holdings and the City that in con-
nection with the performance of this Agreement, that Sears Holdings
shall make all reasonable efforts to comply with all applicable federal,
state, city and other requirements of law including, but not limited to,
any applicable requirements regarding prevailing wages, minimum
wage, workplace safety and legal status of employees. Without limit-
ing the foregoing, Sears Holdings hereby certifies, represents and
warrants to the City that all of Sears Holdings' employees and/or
agents who will be employed for the Subject Project shall be legal
residents of the United States. Without limiting the foregoing, and
notwithstanding anything to the contrary in this Agreement, Sears
rit Holdings and its contractors and subcontractors shall, to the extent
required by law, comply with the Prevailing Wage Act in all respects
relating to the Subject Project. The City shall have the right to audit
any records in the possession or control of the Sears Holdings to de-
termine the Sears Holdings' compliance with the provisions of this
section. In the event the City proceeds with such an audit, the Sears
Holdings shall make available to the City the Sears Holdings' relevant
records at no cost to the City.
O. The parties agree that they will not issue press releases including the
name or logo of the other party, including but not limited to advertis-
ing or sales/marketing materials, without the other party's prior writ-
ten consent. Matters subject to the Illinois Open Meetings Act shall
not be subject to such prior approval.
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IN WITNESS WHEREOF, the City and Sears Holdings have executed this
Agreement on the date and year first written above.
CITY OF ELGIN, SEARS HOLDINGS MANAGEMENT
an Illinois municipal corporation CORPORATION
By:
By:
David Kaptain, Mayor
Its:
Attest:
Jennifer Quinton, Acting City Clerk
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