12-129 Resolution No. 12-129
RESOLUTION
AUTHORIZING EXECUTION OF AN ECONOMIC INCENTIVE AGREEMENT
WITH PANCOR CONSTRUCTION & DEVELOPMENT, LLC
(2150 Madeline Lane)
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,ILLINOIS,that
David J. Kaptain, Mayor, and Kimberly A. Dewis, City Clerk, be and are hereby authorized and
directed to execute an Economic Incentive Agreement with Pancor Construction & Development,
LLC on behalf of the City of Elgin for economic development assistance in connection with the
development of 215 Madeline Lane, a copy of which is attached hereto and made a part hereof by
reference.
s/David J. Kaptain
David J. Kaptain, Mayor
Presented: August 8, 2012
Adopted: August 8, 2012
Omnibus Vote: Yeas: 7 Nays: 0
Attest:
s/Kimberly Dewis
Kimberly Dewis, City Clerk
ECONOMIC INCENTIVE AGREEMENT
This Economic Incentive Agreement (the "Agreement") is made and entered into as
of this 8th day of August 2012, by and between the City of Elgin, an Illinois municipal cor-
poration (hereinafter referred to as the "City"), and Pancor Construction & Development,
LLC, an Illinois corporation ("Pancor").
WHEREAS, Pancor is a fully integrated real estate developer, investor, contractor
and management company actively engaged in developing and acquiring office and indus-
trial properties in the Chicago metropolitan area, and:
WHEREAS, during the last 25 years, Pancor has successfully completed the devel-
opment of millions of square feet of office and industrial buildings at Illinois locations such
as Elgin, Addison, Bensenville, Bolingbrook, Carol Stream, Glendale Heights, Naperville,
Oakbrook Terrace, Schaumburg, St. Charles, Tinley Park and Vernon Hills, and;
WHEREAS, Elgin has a limited supply of industrial and commercial building space
and is not able to effectively compete for companies seeking to relocate or for existing
businesses to expand into more efficient facilities, and;
WHEREAS, Amano Enzymes, a Japanese multinational corporation, is the world's
leading producer of specialty enzymes for food processing, healthcare and diagnostic ap-
plications, and;
WHEREAS, Amano Enzymes has, since 2003, been providing bulk microbial, non-
genetically modified (non-GMO) enzymes for many of the top food and pharmaceutical
companies in North America from its United States subsidiary located at 2150 Point
Boulevard, and;
WHEREAS, Amano Enzymes' current facility includes warehouse space, a research
application lab and office space for sales personnel, and;
WHEREAS, Amano Enzymes is seeking to expand its presence in Elgin, and;
WHEREAS, Amano's new facility will double its current space to 50,000 square
feet, and;
WHEREAS, in addition to retaining 18 jobs, Amano Enzymes' new facility will allow
the corporation to move a portion of its manufacturing operations from Japan to Elgin and
potentially create approximately twelve full-time jobs; and
WHEREAS, to induce Pancor into constructing a new commercial and industrial
building totaling 50,000 square feet at 1415 Madeline Lane for the expansion of Amano
Enzymes, ("Subject Project") and to keep the City competitive in the commercial and in-
dustrial property metropolitan Chicago real estate market, the City will waive the cost for
building permit fees associated with the construction of a new industrial and commercial
building, and;
WHEREAS, Pancor and Amano Enzymes would not have been inclined to proceed
with the construction of a specialized commercial and industrial building development in
Elgin 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 relat-
ing to the development or redevelopment of lands within the corporate limits of a munici-
pality; and
WHEREAS, the City is a home rule unit authorized to exercise any power and per-
form 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
WHEREAS, the real property for the Subject Property 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 adjacent ar-
eas; and
WHEREAS, Pancor and Amano Enzymes meet high standards of credit worthiness
and financial strength; and
WHEREAS, the Subject Project will strengthen the commercial and industrial 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 undertak-
ings contained herein, and other good and valuable consideration, the receipt and suffi-
ciency of which are hereby acknowledged, the parties hereto agree as follows:
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1. Recitals. The foregoing recitals are incorporated into this Agreement in their en-
tirety.
2. Subject Project. Pancor shall develop the Subject Project. The development of
the Subject Project shall conform in all respects with all applicable legal requirements, in-
cluding, 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 responsibility of and shall be paid
through Pancor by Amano Enzymes.
3. Economic Incentives. In consideration for Pancor's undertaking of the Subject
Project, the City agrees to provide economic incentives to Pancor to be used by Pancor
solely and only for the Subject Project. Such economic incentives shall consist of and be
distributed to Pancor as follows:
"Fast-Track" Permitting Process and Waiver of Building Permit Fees for the Subject
Project. The City agrees to conduct a "fast-track" permitting process for the Subject
Project and agrees to waive and not require Pancor to pay any building permit fees
that would otherwise be due and payable to the City in connection with the estab-
lishment 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, wa-
ter connection fees or other fees that may be due and owing to the City and/or any
other governmental entity other than the City shall be paid by Pancor. The City's re-
imbursement of any building permit fees paid by Pancor for the Subject Project shall
be paid to Pancor within thirty (30) days of Pancor and/or Amano Enzymes obtain-
ing a certificate of occupancy from the City for the Subject Project.
4. 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, re-
turn receipt requested, to the parties at the following addresses, or at such other ad-
dressed 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:
3
a
period aforesaid, then the party giving such notice shall be permitted to avail itself of rem-
edies 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 obliga-
tions 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 para-
graph 3 of this Agreement, no action shall be commenced by Pancor 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 Pancor 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 Pancor reasonable interest and reasonable attorney's fees.
Notwithstanding anything to the contrary stated herein or otherwise, PANCOR'S AGGRE-
GATE LIABILITY UNDER THIS AGREEMENT AND IN CONNECTION WITH ITS RECEIPT
OF THE ECONOMIC INCENTIVE DESCRIBED HEREIN SHALL BE EXPRESSLY LIMITED
TO THE AMOUNTS RECEIVED BY PANCOR FROM THE CITY IN CONNECTION WITH
THIS AGREEMENT AND SUCH ECONOMIC INCENTIVE. Pancor shall have no other liabil-
ity whatsoever, whether based on breach of contract, negligence, strict liability or any oth-
er claim and under no circumstances shall Pancor be liable for lost profits or revenues,
special incidental, indirect, consequential or exemplary damages incurred by the City or
any third party.
K. Time is of the essence of this Agreement.
L. This Agreement shall be construed, and the rights and obligations of the City and
Pancor hereunder shall be determined in accordance 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, employee, attor-
ney, agent or independent contractor of the City shall be charged personally or held con-
tractually liable under any term or provision of this Agreement including, but not limited to,
because of their negotiation, approval, execution or attempted execution of this Agree-
ment.
N. Notwithstanding any other provisions of this Agreement, it is expressly agreed
and understood by Pancor and the City that in connection with the performance of this
Agreement, that Pancor shall comply with all applicable federal, state, city and other re-
quirements of law including, but not limited to, any applicable requirements regarding pre-
vailing wages, minimum wage, workplace safety and legal status of employees. Without
limiting the foregoing, Pancor hereby certifies, represents and warrants to the City that all
of Pancor's 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
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TO THE CITY: TO PANCOR:
City of Elgin Daniel D. Corrado
150 Dexter Court Principal
Elgin, IL 60120-5555 Pancor Construction & Development, LLC
Attention: Richard G. Kozal 2175 Point Boulevard, Suite 125
Assistant City Manager Elgin, IL 60123
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 assigns, as the case may be.
E. That this Agreement contains the entire agreement and understanding of the par-
ties 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 col-
lective work product of the City and Pancor and, as such, this Agreement shall not be
construed against the other party, as the otherwise purported drafter of same, by any
court of competent jurisdiction in order to resolve any inconsistency, ambiguity, 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 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
Memorandum of Agreement placing of record the terms and provisions of this Agreement.
I. The City and Pancor 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) day
4
anything to the contrary in this Agreement, Pancor and its contractors and subcontractors
shall 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 Pancor to
determine Pancor's compliance with the provisions of this section. In the event the City
proceeds with such an audit, Pancor shall make available to the City Pancor's relevant
records at no cost to the City. Pancor shall also pay any and all costs associated with any
such audit. If so desired by Pancor, the audit shall, to the extent permitted by law, be sub-
ject to reasonable confidentiality restrictions set forth in a confidentiality agreement agreed
to by the parties. The provisions of this section shall survive any termination, completion
and/or expiration of this Agreement.
O. Pancor, on behalf of itself and its respective successors, assigns and grantees
hereby acknowledges the propriety, necessity and legality of all of the terms and provisions
of this Agreement and does hereby further agree and does waive any and all rights to any
and all legal or other challenges or defenses to any of the terms and provisions of this
Agreement and hereby agrees and covenants on behalf of itself and its successors, as-
signs and grantees of the Subject Property, not to sue the City or maintain any legal action
or other defenses against the City with respect to any challenges of the terms and provi-
sions of this Agreement. The provisions of this section shall survive any termination, com-
pletion and/or expiration of this Agreement.
IN WITNESS WHEREOF, the City and Pancor have executed this Agreement on the
date and year first written above.
CITY OF ELGIN, PANCOR, CONSTRUCTION & DEVELOPMENT,
an Illinois municipal corporation LLC
By: __ , _/7 By: 1
David J. K.:ain, l ayor
Its:
Attest:
‘rae.446
Kimberly Dewis, ity Clerk
6
.
J4 ►
ELGIN
THE CITY IN THE SUBURBS-
AGENDA ITEM:
MEETING DATE: July 25, 2012
ITEM:
Economic Incentive Agreement with Pancor Construction and Development, LLC
(No Outflow of Funds)
OBJECTIVE:
Entering into an economic incentive agreement to induce the construction of a 45,000 square
foot research lab, office space and warehouse facility for Amano Enzymes, Inc.
RECOMMENDATION:
Approve the economic incentive agreement with Pancor Construction and Development, LLC
BACKGROUND
Pancor Construction & Development, LLC ("Pancor") is a fully integrated real estate developer,
investor, contractor and management company actively engaged in developing and acquiring
office and industrial properties in the Chicago metropolitan area. During the last 25 years,
Pancor has successfully completed the development of millions of square feet of office and in-
dustrial buildings at Illinois locations such as Elgin, Addison, Bensenville, Bolingbrook, Carol
Stream, Glendale Heights, Naperville, Oakbrook Terrace, Schaumburg, St. Charles, Tinley Park
and Vernon Hills.
Pancor has developed over $150 million of office and industrial facilities in Elgin during the past
twenty years.
Amano Enzymes (Amano), a Japanese multinational corporation, is the world's leading in
producer of specialty enzymes for food processing, healthcare and diagnostic applications.
Since 2003, Amano has been providing bulk microbial, non-genetically modified (non-GMO)
enzymes for many of the top food and pharmaceutical companies in North America from its
United States subsidiary located at 2150 Point Boulevard.
Amano's current facility includes warehouse space, a research application lab and office space
for sales personnel. Amano's new planned facility will double its current space to 45,000 square
feet and include manufacturing capacity. In addition to retaining eighteen jobs, the new facility
1
will allow Amano to move a portion of its manufacturing operations from Japan to Elgin and
'41)potentially create approximately twelve full-time jobs.
Pancor is the developer and lessor of Amano's current facility and is also the developer and
general contractor for Amano's new headquarters. Pancor is requesting that the city waive
development fees for the Amano project and is also requesting a fast-track permitting review.
OPERATIONAL ANALYSIS
The city's economic incentive proposal provides Pancor with a "fast-track" permitting process
for the construction of Amano's new $9 million facility in Elgin. The city will also commit to
waiving building permit fees estimated in the amount of $36,500 for the construction of
Amano's 45,000 square-foot facility at 2150 Point Boulevard. As stated above, Amano's new
facility will retain eighteen jobs and has the potential to create twelve new full-time positions.
Permit fees required by local government agencies, such as the Kane County Stormwater Man-
agement permit and review fees, are excluded from this waiver, as are any city impact fees and
water connection fees.
Pancor initially requested waivers not only for building permit fees, but for impact fees and
water connection fees as well. The amount of all such fee waivers for the 45,000 square-foot,
$9 million facility totals approximately $94,400. Staff contracted with the Incentis Group, LLC
(Incentis) to perform an economic and fiscal impact analysis based on that initial request. While
that analysis was being conducted, staff had the benefit of receiving additional guidance from
the city council during the council's consideration of economic incentive agreements for NTN
Bearing Manufacturing Corporation and Mueller & Co., LLP. Consistent with the economic
development incentives the city council approved for those businesses, staff advised Pancor
that it would not be recommending a development incentive that included impact fee and
water connection fee waivers totaling approximately $57,800 in addition to the approximately
$35,000 in building permit fee waivers. Pancor did not object to the staff's recommendation.
INTERESTED PERSONS CONTACTED
The Elgin Area Chamber of Commerce has been consulted regarding the proposed economic
incentive agreement with Pancor Construction and Development, LLC and Amano Enzymes, Inc.
FINANCIAL ANALYSIS
This economic incentive proposal reflects the city council's policy directive to eliminate direct
cash incentives for business expansion or retention initiatives outside the Central Area TIF Dis-
trict. The threshold principles that must be satisfied in every economic incentive award now
considered by the city are whether the business provides additional tax revenue to the city (i.e.,
contributes to the General Fund); creates or retains jobs with above-average wages (i.e., more
than minimum wage), and; otherwise provides a significant enhancement to the city.
2
The economic and fiscal impact analysis of the city's proposed economic incentive agreement
conducted by Incentis determined that the total annual economic activity generated by the
Pancor/Amano project will be $6.3 million. This amount includes the direct, indirect and in-
duced effects of the Pancor/Amano project upon the Elgin economy. The Incentis analysis also
found the project will create 24 full-time equivalent direct jobs within the city resulting in the
generation of thirteen indirect and induced jobs for a total of 37 full-time equivalent jobs. The
fiscal impact of the Pancor/Amano project over the next fifteen years is estimated to include
total additional direct tax collections of $663,095 which will benefit the city of Elgin general
fund.
The Incentis analysis demonstrates that the city's return on its approximately $36,500 in build-
ing fee waivers will be realized shortly after the first year of the project's startup given the es-
timated direct tax collections totaling$32,930 during year one of the project's operation.
BUDGET IMPACT
FUND(S) ACCOUNT(S) PROJECT AMOUNT AMOUNT
#(S) BUDGETED AVAILABLE
NA NA NA NA NA
LEGAL IMPACT
None.
ALTERNATIVES
The city council may choose not to enter into an economic incentive agreement with Pancor
Construction and Development, LLC.
NEXT STEPS
Execute an economic incentive agreement with the Pancor Construction and Development, LLC.
Originators: Richard G. Kozal, Assistant City Manager
Final Review: Colleen Lavery, Chief Financial Officer
William A. Cogley, Corporation Counsel/Chief Development Officer
Sean R. Stegall, City Manager
C
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ATTACHMENTS
A. Incentis Group, LLC Economic and Fiscal Impact Analysis
B. Economic Incentive Agreement with Pancor Construction & Development, LLC
A)
4
intent
Incentives and credits for
Amano Enzyme Economic and Fiscal
Impact Analysis
May 2012
Commissioned By: The City of Elgin
incentis Group, LLC
1304 West Washington Blvd
Chicago, IL 60607
41111)
Executive Summary
Incentis Group LLC was commissioned by the City of Elgin to assess the economic and fiscal impacts on the
City of Elgin of the relocation and expansion of Amano Enzyme USA, CO ("Amano Enzyme"). into a new
facility which will double their current space and is designed to include a capacity for enzyme blending, a
function previously carried out only at their facilities in Japan, in addition to warehouse space, a research
application lab and office space for sales personnel.
Amano Enzyme, a leading producer of specialty enzymes for food processing, healthcare and diagnostic
applications, has 19 full-time positions which will be retained from the current Elgin facility. The new facility is
expected to allow for the creation of 5 new full-time Elgin jobs in 2013. As an incentive for Amano Enzyme to
locate the new facility in Elgin,the City of Elgin has offered to waive permit and impact fees for the project.
The total benefit provided to Amano Enzyme in the form of impact and fee waivers will be $96,465.
The Economic and Fiscal Impacts Analysis was conducted to estimate the annual economic and fiscal impacts
of the Amano Enzyme project on the Elgin economy. The economic impacts included in this study are direct,
indirect and induced jobs impacts, direct, indirect and induced earnings impacts, and overall economic activity
that are generated by the Amano Enzyme project. The fiscal impacts include an analysis of the incentives
provided by Elgin to Amano Enzyme relative to the future direct and indirect taxes that are generated as a result
of the project.
Methodology
4111)
In conducting the Economic and Fiscal Impact Analysis, Incentis Group incorporated methodologies that are
highly accepted as reasonable in estimating economic and fiscal impacts associated with a given project or
event. It should be noted, however, that our estimates may differ from actual outcomes resulting from the
Amano Enzyme project due to a number of events and factors including changes in tax rates, future volatility
within the City economy and its industries and sectors, inflation variances, reliability of tax and data sources,
and other unforeseen factors.
In estimating the economic impacts of the Amano Enzyme project, including jobs, earnings, and economic
activity, Incentis Group utilized input-output multipliers developed by Minnesota IMPLAN Group (IMPLAN).
IMPLAN is the developer of the IMPLAN economic impact modeling system. IMPLAN's tools are in use by
over 1,000 public and private institutions. The IMPLAN economic multipliers are specific to the City of Elgin
and to the industries/sectors associated with the Amano Enzyme project. The IMPLAN multipliers assist us in
estimating the jobs, earnings, and economic activity resulting from the Amano Enzyme project. When goods
and services are produced in an industry a"multiplier effect" is created by the demand generated for other
goods and services. This demand then dissipates through other industries and sectors within a given economy
until it is immaterial.
In estimating the fiscal impacts of the Amano Enzyme project upon the City of Elgin, including direct and
indirect tax generation, Incentis Group has applied the appropriate tax rates to the property assessments and
project parameters provided by the City of Elgin. Estimates related to the increase in property tax for the new
location at were calculated using information provided by Amano Enzyme. Additionally, where appropriate, we
have utilized the IMPLAN economic impact modeling system to estimate indirect taxes generated in the city
economy as a result of the Amano Enzyme project occurring in Elgin.
Summary of Findings
The Economic and Fiscal Impact Analysis resulted in the following findings associated with the Amano
Enzyme project. Details regarding these findings are presented in this Analysis. The Analysis estimated the
annualized impacts of the Amano Enzyme project on the City of Elgin.
Summary of Economic Impacts
Operational Facility Impact
The annual economic impact of the Amano Enzyme project,post-completion, upon the City of Elgin is
estimated to include annualized economic activity of$6,368,560 the equivalent of 37 full-time jobs on an
annualized basis and$2,105,669 of annualized employee earnings.
Direct Effect Multiplier Indirect/Induced Total Effect
Effect
Employment 24 1.5616 13 37
Employee Compensation $ 1,448,300 1.4539 $ 657,369 $2,105,669
Economic Output $ 4,696,963 1.3580 $ 1,681,597 $6,378,560
Economic Activity
Economic activity at the city level is an estimate of the annual generation of output by the Amano Enzyme and
the flow through of these dollars within the city economy. We estimate that this total annual economic activity
generated by the Amano Enzyme project to be $6,378,560. This amount includes the direct, indirect, and
induced effects of the Amano Enzyme project upon the City of Elgin economy.
Top Industries Affected by Indirect/Induced Economic Output
Indirect/Induced
Description Direct Effect Multiplier Effect Total Effect
'l l #mat' cons tp ... . . . .:='!.. 9, ., . r .. .. . . 1$81s97 ,
Imputed rental activity for owner-occupied dwellings - - $ 128,614 $ 128,614
Private hospitals - - $ 85,384 $ 85,384
Real estate establishments - - $ 81,577 $ 81,577
Monetary authorities and depository credit intermediation activities - - $ 76,291 $ 76,291
Wholesale trade businesses - - $ 73,439 $ 73,439
Nondepository credit intermediation and related activities - - $ 70,781 $ 70,781
Employment services - - $ 67,950 $ 67,950
Food services and drinking places - - $ 66,706 $ 66,706
Offices of physicians,dentists, and other health practitioners - - $ 66,675 $ 66,675
All Other Industries - - $ 964,180 $5,661,143
Jobs Impact
The Jobs Impact within the City of Elgin is an estimate of the direct full-time equivalent jobs generated by the
41111)
Amano Enzyme project plus the effects of these jobs upon secondary job generation in Elgin. The Amano
Enzyme project is expected to create 24 full-time equivalent direct jobs within the City of Elgin resulting in the
generation of 13 indirect and induced jobs within the City for a total of 37 full-time equivalent jobs.
Top Industries Affected by Indirect/Induced Employment
Indirect/Induced
�
Description Direct Effect Multiplier Effect
.,w Total Effect
Employment services - - 2.1 2.1
Food services and drinking places - - 1.1 1.1
Real estate establishments - - 0.7 0.7
Private hospitals - - 0.6 0.6
Offices of physicians,dentists,and other health practitioners - - 0.5 0.5
Wholesale trade businesses - - 0.4 0.4
Services to buildings and dwellings - - 0.3 0.3
Accounting,tax preparation, bookkeeping,and payroll services - - 0.3 0.3
Retail Nonstores-Direct and electronic sales - - 0.3 0.3
All Other Industries - - 7 31
Earnings Impact
The Earnings Impact within the City of Elgin is an estimate of the direct annualized compensation generated by Al)
the Amano Enzyme jobs and the effects of these jobs upon secondary earnings generation. The annual earnings
for the direct employees referenced above are approximately $1,448,300. We estimate that this compensation
will result in $657,369 of additional indirect and induced household earnings in Elgin, for a total of$2,105,669
in annualized earnings.
Top Industries Affected by Indirect/Induced Employee Compensation
Description Direct Effect Multiplier Indirect/Induced Total Effect
Effect
l- l % O ; 9 , 9=$Z1O5�69'To *, t -�f .. .. . r. . :,,_ , '',.',0 ' ,I ,4, ,
Employment services - - $ 46,090 $ 46,090
Private hospitals - - $ 38,248 $ 38,248
Offices of physicians,dentists,and other health practitioners - - $ 37,387 $ 37,387
Wholesale trade businesses - - $ 31,345 $ 31,345
Food services and drinking places - - $ 24,295 $ 24,295
Monetary authorities and depository credit intermediation activities - - $ 19,160 $ 19,160
Accounting,tax preparation,bookkeeping,and payroll services - - $ 15,153 $ 15,153
Services to buildings and dwellings - - $ 11,909 $ 11,909
Insurance carriers - - $ 11,759 $ 11,759
All Other Industries - - $ 422,023 $1,870,323
41111)
Summary of Fiscal Impacts
The fiscal impact of the Amano Enzyme project upon the City of Elgin over the next 15 years is estimated to
include total additional direct tax collections of$663,095 which will directly benefit the city of Elgin. The
City of Elgin will provide a total of$96,465 in incentives as cash in the form of impact and permit fee
waivers. The net present value ("NPV") of these new direct revenues at a rate of 6% over a period of 15 years
is estimated to be $424,116 compared to an NPV of($96,465) offered to Amano Enzyme in the form of
incentives. Total estimated direct and indirect business tax revenues are estimated to be $403,620 over the
fifteen year period
Sales Tax Benefit
The total 3% direct sales tax benefit for the City of Elgin from combined local purchases at the new location is
estimated to be $30,000 on an annual basis.
Telecommunications Tax Benefit
The City of Elgin collects a 6%tax on Telecommunication which will result in additional annual direct tax
revenue of$900 from the combined locations.
Natural Gas Tax Benefit
The City of Elgin collects a $0.03 tax per therm of natural gas consumed which will result in direct tax revenue
of$386 per year based on estimated usage of 12,869 therms of natural gas.
Electricity Tax Benefit
The City of Elgin collects a $0.0061 tax on the first 2,000 Kwh/month used and $0.0041 on the next 48,000
Kwh/month used which will result in additional direct tax revenue of$1,435 annually based on estimated usage
of 346,080 Kwh/year.
Indirect Business Tax Benefit
Indirect business taxes are the tax revenues collected by the City of Elgin as a result of the increase in indirect
jobs, earnings and economic activity. The estimated increase in indirect business taxes is presented for the first
four years below. The total indirect business taxes over 15 years are estimated to equal $403,620.
Indirect Business Tax Annual
Sales Tax $ 9,020
Property Tax $ 10,583
Other Taxes $ 958
Fees $ 932
Estimated Total Indirect Business Taxes $ 26,908
r
Appendix A.
Year 1 Year Year Year Year Year Year7 Year8 Year Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Total
Estimated Direct Tax and Fee Collections After Incentives
Property Tax Benefit(Direct City Portion) S - $ 6,264 S 12,529 $ 12,529 5 12,529 $ 12,529 $ 12,529 $ 12,529 $ 12,529 $ 12,529 $ 12,529 $ 12,529 $ 12,529 $ 12,529 $ 12,529 9 169,139
Sales lax Benefit $ 30,000 $ 30,000 S 30,000 $ 30,000 $ 30,000 $ 30,000 $ 30,000 S 30,000 $ 30,000 $ 30,000 $ 30,000 $ 30,000 5 30,000 $ 30,000 $ 30,000 $ 450,000
Telecommunications Tax Benefit $ 900 $ 900 $ 900 $ 900 5 900 S 900 $ 900 $ 900 $ 900 $ 900 $ co 9 $ 900 $ 900 $ 900 $ 900 $ 13,500
Natural Gas Tax 5 386 $ 386 $ 386 $ 386 $ 386 S 386 $ 386 $ 386 $ 386 $ 386 $ 386 $ 386 $ 386 $ 386 $ 386 $ 5,791
Electricity Tao $ 1,435 $ 1,435 $ 1,435 $ 1,435 $ 1,435 S 1,435 $ 1,435 S 1,435 5 1,435 S 1,435 $ 1,435 $ 1.435 5 1,435 $ 1,435 $ 1,435 $ 21,521
Permit and Plan Check Fees $ - 5 - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ • 5 _ $ - $
TotaIAMlmated DifectUtCollections , $ 32,930 $ 39,395 $ 45,459 $ 45,459 $ :45459 $, 45,459 $v 45,499:.$:, 45,459;,$ 45,459: $ 45,459 $ 45459 $ 45,459 $ 45,459 $ 45;459 $ -45,459 $ .'663,095
HetReventaii(tasatto tlieChy, $. ,-,:t .,,32930. $ 39,195 $ .45.459.:$ -45,4S9,$ :4$ 59 S,,,i 45.459 S"s"r4s, ::;5.: 40459 $" 45459;:5. .,45,459 $ 450659..$ 45,459 $: 45.459 $ 45.459 $ 45,459"$ 663,895
Incentives to Company(Foregone Revenue)
Permit and Impact Fee Waivers $ 96,465 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 96,465
784311000ttves :._ $ 96,485 $. $ $ ': _ $ • ; ,. $ -S.: • r6 ,.,., 5 :. - $ 5" 5 $ ''. $ .,96,4665.
N etuvenGeRt at o tdthecit%dttittoregimetotenuk. "= „„ ". 535)..S. ..33.)95 5..". 45,459:..$.. 45.455..$ 4.459.;>¢ +4 459,4, 45440,$-i. .45,439 5.,: 4459:;R•,- ,49,444 $... .45,459.$; :45.499., ¢5,459 $ .45,459 $ .;45s459°$ 566630;.
Estimated Indirect Business Taxes $ 26,908 $ 26,908 $ 26,908 $ 26,908 $ 26,908 S 26,908 $ 26,908 $ 26,908 $ 26,908 $ 26,908 $ 26,908 $ 26,908 $ 26,908 $ 26,908 $ 26,908 $ 403,620
7440617e62116%.5)te,the GhYs+itet1649Fext.b0419465168, _i .,=$,„,'.. }35617J.$. 66,103 78367 $,, 22,363 $ 72„$67 $,,...:73,367 $:.- 7767 5.. 72367 r5 " 72.367:$ 72,367 $ 14367 $ 77:367 $ 72.367 $ /Oa $ -72,367 $:" 970,250
NPV Discount Rate 6.00%
Total Direct and Indirect Revenues $ 1,066,715
NPV of Direct Revenues $ 424,116
NPV of Direct Incentives $ 96,465
ECONOMIC INCENTIVE AGREEMENT
This Economic Incentive Agreement (the "Agreement") is made and entered into as
of this 8th day of August 2012, by and between the City of Elgin, an Illinois municipal cor-
poration (hereinafter referred to as the "City"), and Pancor Construction & Development,
LLC, an Illinois corporation ("Pancor").
WHEREAS, Pancor is a fully integrated real estate developer, investor, contractor
and management company actively engaged in developing and acquiring office and indus-
trial properties in the Chicago metropolitan area, and:
WHEREAS, during the last 25 years, Pancor has successfully completed the devel-
opment of millions of square feet of office and industrial buildings at Illinois locations such
as Elgin, Addison, Bensenville, Bolingbrook, Carol Stream, Glendale Heights, Naperville,
Oakbrook Terrace, Schaumburg, St. Charles, Tinley Park and Vernon Hills, and;
WHEREAS, Elgin has a limited supply of industrial and commercial building space
and is not able to effectively compete for companies seeking to relocate or for existing
businesses to expand into more efficient facilities, and;
WHEREAS, Amano Enzymes, a Japanese multinational corporation, is the world's
leading in producer of specialty enzymes for food processing, healthcare and diagnostic
applications, and;
WHEREAS, Amano Enzymes has, since 2003, been providing bulk microbial, non-
genetically modified (non-GMO) enzymes for many of the top food and pharmaceutical
companies in North America from its United States subsidiary located at 2150 Point
Boulevard, and;
WHEREAS, Amano Enzymes' current facility includes warehouse space, a research
application lab and office space for sales personnel, and;
WHEREAS, Amano Enzymes is seeking to expand its presence in Elgin, and;
WHEREAS, Amano's new facility will double its current space to 45,000 square
feet, and;
WHEREAS, in addition to retaining 18 jobs, Amano Enzymes' new facility will allow
the corporation to move a portion of its manufacturing operations from Japan to Elgin and
potentially create approximately twelve full-time jobs; and
WHEREAS, to induce Pancor into constructing a new commercial and industrial
rb‘ building totaling 45,000 square feet at 2150 Madeline Lane for the expansion of Amano
Enzymes, ("Subject Project") and to keep the City competitive in the commercial and in-
dustrial property metropolitan Chicago real estate market, the City will waive the cost for
building permit fees associated with the construction of a new industrial and commercial
building, and;
WHEREAS, Pancor and Amano Enzymes would not have been inclined to proceed
with the construction of a speculative commercial and industrial building development in
Elgin 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 relat-
ing to the development or redevelopment of lands within the corporate limits of a munici-
pality; and
WHEREAS, the City is a home rule unit authorized to exercise any power and per-
form 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
WHEREAS, the real property for the Subject Property 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 adjacent ar-
eas; and
WHEREAS, Pancor and Amano Enzymes meet high standards of credit worthiness
and financial strength; and
WHEREAS, the Subject Project will strengthen the commercial and industrial 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 undertak-
ings contained herein, and other good and valuable consideration, the receipt and suffi-
ciency of which are hereby acknowledged, the parties hereto agree as follows:
2
1. Recitals. The foregoing recitals are incorporated into this Agreement in their en-
tirety.
2. Subject Project. Pancor, at its cost, shall develop the Subject Project. The devel-
opment of the Subject Project shall conform in all respects with all applicable legal re-
quirements, 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 ordinanc-
es, 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 responsibil-
ity of and shall be paid for by Pancor.
3. Economic Incentives. In consideration for Pancor's undertaking of the Subject
Project, the City agrees to provide economic incentives to Pancor to be used by Pancor
solely and only for the Subject Project. Such economic incentives shall consist of and be
distributed to Pancor as follows:
"Fast-Track" Permitting Process and Waiver of Building Permit Fees for the Subject
Project. The City agrees to conduct a "fast-track" permitting process for the Subject
Project and agrees to waive and not require Pancor to pay any building permit fees
that would otherwise be due and payable to the City in connection with the estab-
lishment 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, wa-
ter connection fees or other fees that may be due and owing to the City and/or any
other governmental entity other than the City shall be paid by Pancor. The City's re-
imbursement of any building permit fees paid by Pancor for the Subject Project shall
be paid to Pancor within thirty (30) days of Pancor and/or Amano Enzymes obtain-
ing a certificate of occupancy from the City for the Subject Project.
4. 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, re-
turn receipt requested, to the parties at the following addresses, or at such other ad-
dressed 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:
r
3
TO THE CITY: TO PANCOR:
415
City of Elgin Daniel D. Corrado
150 Dexter Court Principal
Elgin, IL 60120-5555 Pancor Construction & Development, LLC
Attention: Richard G. Kozal 2175 Point Boulevard, Suite 125
Assistant City Manager Elgin, IL 60123
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 assigns, as the case may be.
E. That this Agreement contains the entire agreement and understanding of the par-
ties hereto with respect to the subject matter as set forth herein, all prior agreements and
Al)
understandings having been merged herein and extinguished hereby.
F. That this Agreement is and shall be deemed and construed to be a joint and col-
lective work product of the City and Pancor and, as such, this Agreement shall not be
construed against the other party, as the otherwise purported drafter of same, by any
court of competent jurisdiction in order to resolve any inconsistency, ambiguity, 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 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
Memorandum of Agreement placing of record the terms and provisions of this Agreement.
I. The City and Pancor 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) day
4
period aforesaid, then the party giving such notice shall be permitted to avail itself of rem-
edies 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 obliga-
tions 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 para-
graph 3 of this Agreement, no action shall be commenced by Pancor 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 Pancor 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 Pancor reasonable interest and reasonable attorney's fees.
Notwithstanding anything to the contrary stated herein or otherwise, PANCOR'S AGGRE-
GATE LIABILITY UNDER THIS AGREEMENT AND IN CONNECTION WITH ITS RECEIPT
OF THE ECONOMIC INCENTIVE DESCRIBED HEREIN SHALL BE EXPRESSLY LIMITED
TO THE AMOUNTS RECEIVED BY PANCOR FROM THE CITY IN CONNECTION WITH
THIS AGREEMENT AND SUCH ECONOMIC INCENTIVE. Pancor shall have no other liabil-
ity whatsoever, whether based on breach of contract, negligence, strict liability or any oth-
er claim and under no circumstances shall Pancor be liable for lost profits or revenues,
special incidental, indirect, consequential or exemplary damages incurred by the City or
any third party.
K. Time is of the essence of this Agreement.
L. This Agreement shall be construed, and the rights and obligations of the City and
Pancor hereunder shall be determined in accordance 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, employee, attor-
ney, agent or independent contractor of the City shall be charged personally or held con-
tractually liable under any term or provision of this Agreement including, but not limited to,
because of their negotiation, approval, execution or attempted execution of this Agree-
ment.
N. Notwithstanding any other provisions of this Agreement, it is expressly agreed
and understood by Pancor and the City that in connection with the performance of this
Agreement, that Pancor shall comply with all applicable federal, state, city and other re-
quirements of law including, but not limited to, any applicable requirements regarding pre-
vailing wages, minimum wage, workplace safety and legal status of employees. Without
limiting the foregoing, Pancor hereby certifies, represents and warrants to the City that all
of Pancor's 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
5
anything to the contrary in this Agreement, Pancor and its contractors and subcontractors '
shall 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 Pancor to
determine Pancor's compliance with the provisions of this section. In the event the City
proceeds with such an audit, Pancor shall make available to the City Pancor's relevant
records at no cost to the City. Pancor shall also pay any and all costs associated with any
such audit. If so desired by Pancor, the audit shall, to the extent permitted by law, be sub-
ject to reasonable confidentiality restrictions set forth in a confidentiality agreement agreed
to by the parties. The provisions of this section shall survive any termination, completion
and/or expiration of this Agreement.
0. Pancor, on behalf of itself and its respective successors, assigns and grantees
hereby acknowledges the propriety, necessity and legality of all of the terms and provisions
of this Agreement and does hereby further agree and does waive any and all rights to any
and all legal or other challenges or defenses to any of the terms and provisions of this
Agreement and hereby agrees and covenants on behalf of itself and its successors, as-
signs and grantees of the Subject Property, not to sue the City or maintain any legal action
or other defenses against the City with respect to any challenges of the terms and provi-
sions of this Agreement. The provisions of this section shall survive any termination, com-
pletion and/or expiration of this Agreement.
IN WITNESS WHEREOF, the City and Pancor have executed this Agreement on the
date and year first written above.
CITY OF ELGIN, PANCOR, CONSTRUCTION & DEVELOPMENT,
an Illinois municipal corporation LLC
By: By:
David J. Kaptain, Mayor
Its:
Attest:
Kimberly Dewis, City Clerk
6