12-32 Resolution No. 12-32
RESOLUTION
AUTHORIZING EXECUTION OF AN ECONOMIC INCENTIVE AGREEMENT
WITH A&R LOGISTICS, INC.
(164-166 E. Chicago Street)
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 A&R Logistics,Inc.on behalf of the City
of Elgin for economic development assistance in connection with the development of 164-166 E.
Chicago Street, a copy of which is attached hereto and made a part hereof by reference.
s/David J. Kaptain
David J. Kaptain, Mayor
Presented: February 8, 2012
Adopted: February 8, 2012
Vote: Yeas: 5 Nays: 1
Attest:
s/Kimberly Dewis
Kimberly Dewis, City Clerk
ECONOMIC INCENTIVE AGREEMENT
This Economic Incentive Agreement (the "Agreement") is made and entered into
as of the 8th day of February 2012, by and between the City of Elgin, an Illinois munici-
pal corporation (hereinafter referred to as the "City"), and A&R Logistics, Inc., an Illi-
nois corporation("A&R Logistics").
WHEREAS, A&R Logistics operates multiple business divisions under its corpo-
rate umbrella which include A&R Global Logistics, A&R Transport and A&R Packaging
and Distribution; and
WHEREAS, A&R Global Logistics is currently located on Davis Road in Elgin
with 14 full-time employees; and
WHEREAS, A&R Global Logistics provides outsourced third-party transporta-
tion management solutions through a combination of people, technology and processes;
and
WHEREAS, A&R Global Logistics is expanding its operations and currently an-
ticipates a present need for between 14 to 29 employees; and
WHEREAS, A&R Global Logistics has identified numerous choices on where to
relocate and expand their business; and
WHEREAS, A&R Global Logistics' recruitment efforts have identified the need
to locate the business in an urban, city-like environment with access to Metra; and
WHEREAS, Downtown Elgin, Chicago, Schaumburg and Arlington Heights were
considered among A&R Global Logistics' competitive set of suitable locations; and
WHEREAS, A&R Logistics has identified tenant space that unexpectedly came
onto the market in the Leath Building at 164-166 E. Chicago Street and intends to invest
in the build out of those premises for its purposes for use by up to 29 employees ("Sub-
ject Project"); and
WHEREAS, A&R Logistics 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)
authorizes 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;
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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 Subject Project is expected to create job opportunities within the
City; and
WHEREAS, the Subject Project will serve to further the development of adjacent
areas; and
WHEREAS, without this Agreement the Subject Project would not occur; and
WHEREAS, A&R Logistics meets high standards of credit worthiness and finan-
cial strength; and
WHEREAS, the Subject Project will strengthen the commercial sector of the City
and its downtown; 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 suf-
ficiency 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. A&R Logistics, 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 require-
ments 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 A&R Logistics.
B. A&R Logistics 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 14 full-time jobs referenced
in paragraph 3A of this Agreement, for a period of not less than three (3)
years from the date of the City's payment of the "Initial Job Incentive
Grant" described in Section 3(A)(i) of this Agreement.
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3. Economic Incentives. In consideration for A&R Logistics' undertaking of
the Subject Project, the City agrees to provide economic incentives to A&R Logistics to
be used by A&R Logistics solely and only for the Subject Project. Such economic incen-
tives shall consist of and be distributed to A&R Logistics as follows:
A. Job Incentive Grant. The City will provide A&R Logistics with a job in-
centive grant as described in this section in a total amount not to exceed
$21,000.00 with the exception of any bonus paid for hiring Elgin residents
as set forth in subparagraph 3.A.(ii), below.
(i). The City shall pay A&R Logistics a "Initial Job Incentive Grant" as
follows: $500 for each of the fourteen (14) full-time jobs being retained
having an annual salary in excess of $35,000 (excluding benefits) estab-
lished for the Subject Project within ninety (90) days of the date of this
Agreement. Prior to the City's payment of the Initial Job Incentive Grant,
A&R Logistics shall provide written verification to the City's chief finan-
cial officer utilizing Illinois Department of Employment Security Form
UI-3/40 demonstrating that A&R Logistics has established not less than 14
full-time jobs 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 Initial Job Incentive Grant shall be paid to A&R Logistics on the con-
dition of A&R Logistics providing to the City such written verification re-
garding the establishment of the jobs.
(ii). Continuing Job Incentive Grant. Following the expiration of the Initial
Job Incentive Grant, the City shall pay A&R Logistics $1000 for each ad-
ditional full-time job established 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 lim-
its of the City of Elgin. The payment of any Continuing Job Incentive
Grant will be paid by the City to A&R Logistics within ninety (90) days of
A&R Logistics providing written verification to the City's chief financial
officer utilizing Illinois Department of Employment Security Form UI-
3/40 for each new position for which a Continuing Job Incentive Grant is
being sought. A&R Logistics shall be eligible for such additional job in-
centive 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 A&R Logistics exceed the sum of twen-
ty-one thousand dollars ($21,000) with the exception of any bonus paid for
hiring Elgin residents under the conditions of this subparagraph.
4. A&R Logistics to Recruit and Hire Elgin Residents. A&R Logistics agrees
to and shall make reasonable efforts to recruit and hire Elgin residents for employment
opportunities for the Subject Project. At the City's request, A&R Logistics shall report to
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the City on its efforts to recruit and hire Elgin residents for employment opportunities at
the Subject Project. Such 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.
A&R Logistics' obligation to exercise reasonable efforts to recruit and hire Elgin resi-
dents shall be deemed satisfied by providing the Downtown Neighborhood Association
of Elgin with notice of job openings at A&R Logistics.
5. Centre of Elgin. The City shall provide six (6), one-year memberships to
The Centre of Elgin for use by full-time A&R Logistics employees. Full-time A&R Lo-
gistics employees employed for the Subject Project shall also qualify for the Elgin resi-
dent 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 provi-
sion shall remain in effect as long as A&R Logistics maintains the Subject Project.
6. Elgin Promotion. Within sixty (60) days of A&R Logistics 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 promote the City of
Elgin to A&R Logistics' employees employed at the Subject Property. The City Manager
of the City shall designate a liaison for A&R Logistics' employees to contact in the event
such employees have any questions regarding the Elgin community. At A&R Logistics'
option, the City shall also coordinate with the Downtown Neighborhood Association of
Elgin and the Elgin Area Chamber of Commerce for the purpose of conducting a ground-
breaking and ribbon cutting ceremonies for the Subject Project.
7. City's Obligations Contingent Upon A&R Logistics' Performance. The
parties understand and agree that the economic incentive grants being provided by the
City to A&R Logistics as set forth in paragraphs 3 and 5 of this Agreement are expressly
subject to and contingent upon A&R Logistics' locating to the City of Elgin and the es-
tablishment of the Subject Project as set forth in this Agreement. In the event A&R Lo-
gistics fails to establish the Subject Property as required in this Agreement, or fails to oc-
cupy and commence operations for the Subject Project as required in this Agreement, or
in the event A&R Logistics fails to provide for the creation and establishment of the jobs
as provided for in Section 3A(i) of this Agreement, and/or A&R Logistics fails to exer-
cise reasonable efforts to recruit Elgin residents as provided for in Section 4, the parties
understand and agree that the economic incentive grants or economic assistance to A&R
Logistics for the Subject Project pursuant to this Agreement or otherwise shall terminate.
In the event A&R Logistics fails to continue the Subject Project for the three (3) year pe-
riod as required in this Agreement, the parties understand and agree that A&R Logistics
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 reim-
bursement on the pro rata basis shall mean a percentage reimbursement based upon the
percentage of the three-year time period A&R Logistics has failed to continue the Subject
Project. For the purpose of further clarification and example, in the event A&R Logistics
continues the Subject Project for two years instead of three years, A&R Logistics shall
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reimburse to the City 33.3 percent of the economic incentive grants and assistance paid or
provided by the City to A&R Logistics pursuant 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 between
the parties hereto.
B. That all notices or other communications hereunder shall be made in writ-
ing and shall be deemed given if personally delivered or mailed by regis-
tered or certified mail, return receipt requested, to the parties at the follow-
ing 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
150 Dexter Court
Elgin, IL 60120-5555
Attention: William A. Cogley, Corporation Counsel
TO A&R LOGISTICS:
Mr. John Ciszek
Chief Operating Officer
A&R Global Logistics, Inc.
164 E. Chicago Street
Elgin, IL 60120
With a copy of any such notice to:
Meltzer, Purtill & Stelle, LLC
1515 East Woodfield Road, 2°' Floor
Schaumburg, IL 60173-5431
Attention: Mark R. Raymond
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.
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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 herein, all
prior agreements and understandings having been merged herein and ex-
tinguished hereby.
F. That this Agreement is and shall be deemed and construed to be a joint
and collective work product of the City and A&R Logistics and, as such,
this Agreement shall not be construed against the other party, as the oth-
erwise 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 re-
spective successors and permitted assigns. This Agreement and the obliga-
tions herein may not be assigned without the express written consent of
each of the parties hereto, which consent may not be unreasonably with-
held by either of the parties hereto. The City may record a Memorandum
of Agreement placing of record the terms and provisions of this Agree-
ment.
The City and A&R Logistics 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 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 para-
graph 3A of this Agreement, no action regarding the economic incentives
set forth in this Agreement shall be commenced by A&R Logistics 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
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Circuit Court of Kane County, Illinois. In the event any action is brought
by the City against A&R Logistics 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 A&R Logistics 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 A&R Logistics 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,
attorney, agent or independent contractor of either the City or A&R Logis-
tics 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 execution of this
Agreement.
N. Notwithstanding any other provisions of this Agreement, it is expressly
agreed and understood by A&R Logistics and the City that in connection
with the performance of this Agreement, that A&R Logistics 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 re-
quirements regarding prevailing wages, minimum wage, workplace safety
and legal status of employees. Without limiting the foregoing, A&R Lo-
gistics hereby certifies, represents and warrants to the City that all of A&R
Logistics' 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 Agree-
ment, A&R Logistics and its contractors and subcontractors shall, to the
extent required by law, comply with the Prevailing Wage Act in all re-
spects relating to the Subject Project. The City shall have the right to audit
any records in the possession or control of A&R Logistics to determine
A&R Logistics' compliance with the provisions of this section. In the
event the City proceeds with such an audit, A&R Logistics shall make
available to the City A&R Logistics' 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 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 A&R Logistics have executed this
Agreement on the date and year first written above.
CITY OF ELGIN, A&R LOGISTICS, INC.
an Illinois municipal corporation
By: /-/----27/`--
By: /
David . ptai ayor
Its: eda
Attest: DLLA):a.
Kimberly Dewis, ity Clerk
8
ti
(0111°‘ OuNCti. ELGIN
THE CITY IN THE SUBURBS'
AGENDA ITEM: M
MEETING DATE: January 25, 2012
ITEM:
Business Retention and Job Creation Incentive Agreement for A&R Global Logistics
($21,000)
OBJECTIVE:
Enter into a business retention and job creation incentive agreement with a business planning
to expand and create up to 29 jobs in the downtown.
RECOMMENDATION:
Approve the business retention and job creation incentive agreement with A&R Global Logistics
in a not to exceed amount of$21,000.
BACKGROUND
ribk
A&R Global Logistics provides outsourced third party transportation management solutions
through a combination of people, technology and processes. They are one of four companies
under the A&R Logistics corporate umbrella which also includes A&R Transport, A&R Packaging
and Distribution and UTC Overseas. A&R Global. Logistics is currently located on Davis Road in
Elgin with 14 full-time employees. The company plans to expand and is in need.of additional
office space.
In September 2011, A&R's chief executive officer, Jeff O'Connor, and chief operating officer,
John Ciszek, met with DNA executive director Tonya Hudson and city staff to discuss not only
retaining A&R in Elgin, but recruiting them to downtown. The company is the perfect target for
DNA's downtown office recruitment strategy:
• Established company with 14 professional jobs having average base salaries of$45-50K
• Creation of 15 new professional jobs with base salaries of$35-50K in 2012
• Focus on recruiting recent college graduates—a key target market for downtown
• Heavy use of technology to operate business—a key industry cluster for downtown
• Community-minded business—interested in supporting and participating in the
community
r
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In this buyer's market, A&R had numerous choices on where to relocate and expand their
business. They prefer an urban, city-like environment with access to Metra. Downtown Elgin,
Schaumburg and Arlington Heights were among their competitive set.
Ms. Hudson facilitated more than 10 showings of downtown available properties over the
course of two months and assisted with information requests throughout the process. Seeing
the competitive nature of this project and the significant impact the company could have on
downtown, Ms. Hudson recommended that the city utilize the job retention and creation
program to secure A&R's 29 employees in downtown. Staff directed Ms. Hudson to obtain a
cost-benefit analysis with the Incentis Group, LLC (Incentis)—the firm that completed the
recent analysis for Pancor and Bystronic.
During this discussion period, one of the downtown properties on A&R's short list that was
under contract with another tenant became immediately available in the Leath Building, 164-
166 E Chicago. In late December, 2011, A&R entered into lease negotiations on this space with
the understanding that staff was working on the jobs program to present to the city council in
early 2012.
OPERATIONAL ANALYSIS
A&R Global Logistics will bring 14 existing professional jobs and create 15 new professional jobs
by September, 2012. They will occupy 6,000 square feet on the second floor of the Leath
Building. This will increase the Leath Building's occupancy rate from 17 percent to 67 percent.
For reference, the Leath Building has remained largely vacant since 1997 and completely vacant
and in receivership since 2007. Leath Partners purchased the building in June, 2010 with the
goal of populating it with small to mid-size technology-reliant companies, including their own
company, FutureLink IT. A&R Global Logistics fits this target. As an established company, A&R
also provides stability for this property and its owners, which in turn contributes to the stability
and long-term success of downtown. With the addition of A&R, the Leath Building will have
available just 5,680 of its 17,000 total rentable square feet.
INTERESTED PERSONS CONTACTED •
DNA executive director Tonya Hudson facilitated this project under the city's purchase of
services agreement with the DNA.
FINANCIAL ANALYSIS
Staff is recommending to adapt the jobs grant program that has previously been used to recruit
companies such as Siemens Energy and Automation, Givaudan Flavors Corporation, Sears
Holdings Corporation and CSI Technologies for both job retention and job creation with A&R
Global Logistics. Traditionally, the program has paid $1,000 for newly created positions with
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base salaries of $35,000 annually and an additional $500 for those positions filled by Elgin
residents.
For A&R, staff is recommending $500 for each retained position and $1,000 for each newly
created position with base salaries of at least $35,000. This amounts to a total of$21,000 when
all positions are filled by September, 2012. Additional value is created by offering A&R (6) one-
year memberships for A&R employees at The Centre of Elgin, which opens the door for future
cash revenues through renewals and new memberships. The proposed economic incentive
agreement is attached as Exhibit B.
The cost-benefit analysis conducted by Incentis shows that the city would not only recoup its
$21,000.00 investment in year one but would net $26,098.00. A&R's economic impact is
estimated at approximately $ 45,257.00 per year every year following. Over ten years this
impact amounts to $478,669.00 (see attached analysis labeled as Exhibit A).
Using the same methodology as the previous analyses Incentis performed for the city, the A&R
analysis employs two basic measurables: (1) direct taxes/fees and (2) indirect taxes. Direct
taxes/fees are the city portions of tax revenues paid by the business and fees paid directly to
city, including sales, utility, property and hotel/motel taxes and impact and permit fees. Indirect
taxes are the tax revenues collected by the city as a result of the increase in indirect jobs,
earnings and economic activity. The indirect jobs and earnings are present from the multiplying
effect of the direct jobs and earnings.
There are two important things to note about this analysis:
1. The estimates reflect A&R's expanded presence in Elgin. Were Elgin to lose A&R to
another community, the city would lose the economic impact A&R is currently providing
for the city. The proposed incentive is designed to make an investment to both retain
and expand the city's economic assets.
2. This analysis is not specific to downtown; rather it is for any Elgin location. Adding 29
full-time professionals to downtown's workday population will concentrate this impact
.on downtown businesses, especially the restaurants, and supports the city's goal of
creating a stable and thriving downtown.
BUDGET IMPACT
FUND(S) ACCOUNT(S) PROJECT#(S) AMOUNT AMOUNT
BUDGETED AVAILABLE
Riverboat Lease 276-0000-791.80-27 177119 $329,000 $194,036
. 3
LEGAL IMPACT
None.
ALTERNATIVES
The city council may choose to reject staffs proposal to utilize the jobs program to retain A&R
Global Logistics in Elgin and relocate them to downtown.
NEXT STEPS
Execute business retention and job creation economic incentive agreement with A&R Global
Logistics.
Originators: Richard G. Kozal, Assistant City Manager/Chief Operating Officer
Final Review: Colleen Lavery, Chief Financial Officer
William A. Cogley, Corporation Counsel/Chief Development Officer
Sean R. Stegall, City Manager
A,
ATTACHMENTS
A. lncentis Group, LLC Fiscal Impact Analysis
B. Economic Incentive Agreement with A&R Global Logistics
•
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Anew
"*")
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Total •
Estimated Direct Tax and Fee Collections After Incentives
Increase in Property Tax Benefit(Direct City Portion) $ - $ - $ - $ - $ - $ $ - $ - $ - $ - $ -
Increasein Sales Tax Benefit $ 1,955 $ 390 S 390 $ 390 $ 390 $ 390 $ 390 $ 390 $ 390 $ 390 $ 5,855
Increase in Telecommunications Tax Benefit $ 1,404 $ 1,872 $ 1,872 $ 1,872 $ 1,872 $ 1,872 $ 1,872 $ 1,872 5 1,872 $ 1,872 $ 20,124
Increase in Hotel Tax Benefit $ 63 $ 63 $ 63 $ 63 $ 63 $ 63 5 63 5 63 $ 63 $ 63 $ 692
Increase in Natural Gas Tax $ 26 $ 51 $ 51 $ 51 $ 51 $ 51 $ 51 $ 51 $ 51 $ 51 $ 536
Increase in Electricity Tax $ 14 $ 14 $ 14 $ 14 $ 14 $ 14 $ 14 $ 14 $ 14 $ 14 $ 156
Impact Fees $ - 5 _ $ - $ - $ _ $ _ 5 - $ - $ - $ -
Permit and Plan Check Fees $ 770 $ - $ - $ - $ - 5 - $ - $ - $ - $
Total Estimated Direct Tax Collections $ 4,231 $ 2,390 $ 2,390 $ 2,390 $ 2,390 $ 2,390 $ 2,390 $ 2,390 $ 2,390 $ 2,390 $ 28,132
Incentives to Company(Cash)
Jobs Benefit $ (21,000) $ - $ - $ - $ - $ - $ -?'$ - $ - $ - $ -
Total Incentives to Company(Cash) $ (21•000) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Net;Revenue/(LOSS)to the C(tY $. (16,769) 5 2,390,, $ 2,390 $ 2,390 5 2,390 ,$ 2,390 5 2,390,$ 2,390 $ 2,390 $ 2,390 $ 7,132
Incentives to Company(Foregone Revenue)
Impact Fee Waiver 5 - $ - 5 - 5 - $ - 5 - 5 - $ - 5 - $ - 5 -
Permit Fee Waiver $ - $ - $ - $ - $ - $ - $ - $ - 5 - $ - $ -
Otherincentives $ - $ - $ - 5 - $ - 5 - $ - $ - $ - 5 - 5 -
Total Incentives to Company(Foregone Revenue) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 5 -
Net Revenue/0.05010 the Clty,aft4r foregone revenue $ (16,769) $ 2,390, $ 2,390 $ 2,390 $ 2,390 $. 2,390 $;, ,20390 5 2,390 $ 2,390 $ 2,390 $ 7,532
Estimated Indirect Business Taxes $ 42,867 $ 42,867 $ 42,867 $ 42,867 5 42,867 $ 42,867 $ 42,867 $ 42,867 S 42,867 5 42,867 $ 471,537
Net Benefit(Loss)to the City,after indirect business tax $:I, 26 098 $ 45,257:,$ 45,257 $ 45,257 $ 45,257 ':.$. 45,253,,,$ 45,257.$,. ;45,257 $ 45,257. $ 45,257. $,; 478,669
•
ECONOMIC INCENTIVE AGREEMENT
This Economic Incentive Agreement (the "Agreement") is made and entered
into as of the 8th day of February 2012, by and between the City of Elgin, an Illinois
municipal corporation (hereinafter referred to as the "City"), and A&R Logistics, Inc.,
an Illinois corporation ("A&R Logistics").
WHEREAS, A&R Logistics operates four companies under its corporate um-
brella which include A&R Global Logistics, A&R Transport, A&R Packaging and Dis-
tribution and UTC Overseas; and
WHEREAS, A&R Global Logistics is currently located on Davis Road in Elgin
with 14 full-time employees; and
WHEREAS, A&R Global Logistics provides outsourced third-party transpor-
tation management solutions through a combination of people, technology and
processes; and
WHEREAS, A&R Logistics is expanding its operations and currently antici-
pates a present need for between 14 to 29 employees; and
WHEREAS, A&R Logistics has identified numerous choices on where to re-
locate and expand their business; and
WHEREAS, A&R Logistics' recruitment efforts have identified the need to lo-
cate the business in an urban, city-like environment with access to Metra; and
WHEREAS, Downtown Elgin, Schaumburg and Arlington Heights were con-
sidered among A&R Logistics' competitive set of suitable locations; and
WHEREAS, A&R Logistics has identified tenant space that unexpectedly
came onto the market in the Leath Building at 164-166 E. Chicago Street and in-
tends to invest in the build out of those premises for its purposes for use by up to
29 employees ("Subject Project"); and
WHEREAS, A&R Logistics 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) 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
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Ammo
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
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, A&R Logistics meets high standards of credit worthiness and
financial strength; and
WHEREAS, the Subject Project will strengthen the commercial sector of the
City and its downtown; 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. A&R Logistics, 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 A&R Logistics.
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B. A&R Logistics agrees that it shall continue the j
Subject Project,, includ-
ing maintaining not less than 14 full-time jobs referenced in paragraph
3A of this Agreement, for a period of not less than five (5) years from
the date of the City's payment of the "Initial Job Incentive Grant" de-
scribed in Section 3(A)(i) of this Agreement.
C. A&R Logistics 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 14 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 A&R Logistics' undertaking
of the Subject Project, the City agrees to provide economic incentives to A&R Lo-
gistics to be used by A&R Logistics solely and only for the Subject Project. Such
economic incentives shall consist of and be distributed to A&R Logistics as follows:
A. Job Incentive Grant. The City will provide A&R Logistics with a job in-
centive grant as described in this section in a total amount not to ex-
ceed $21,000.00.
(i). The City shall pay A&R Logistics a "Initial Job Incentive Grant" as
follows: $500 for each of the fourteen (14) full-time jobs being re-
tained having an annual salary in excess of $35,000 (excluding bene-
fits) established for the Subject Project within ninety (90) days of the
date of this Agreement. Prior to the City's payment of the Initial.Job
Incentive Grant, A&R Logistics shall provide written verification ac-
ceptable to the City's chief financial officer demonstrating that A&R
Logistics has established not less than 14 full-time jobs for the Sub-
ject Project earning direct wages of not less than $35,000 on an an-
nual basis (excluding benefits). The City's payment of the Initial Job
Incentive Grant shall be paid to A&R Logistics within thirty (30) days of
the A&R Logistics providing to the City such written verification re-
garding the establishment of jobs
(ii). Following the expiration of the Initial Job Incentive Grant, the City
shall. pay A&R Logistics $1000 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 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 A&R Logistics on each anniversary of the City's
payment of the Initial Job Incentive Grant. A&R Logistics shall be eli-
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gible for such additional job incentive grants for a period of three (3)
years following the expiration of the Initial Job Incentive Grant, provid-
ed, however, than in no event shall the City's combined payment of
the Initial job Incentive Grant and any subsequent job incentive grants
to A&R Logistics exceed the sum of twenty-one thousand dollars
($21 ,000).
4. A&R Logistics to Recruit and Hire Elgin Residents. A&R Logistics
agrees to and shall make reasonable efforts to recruit and hire Elgin residents for
employment opportunities for the Subject Project. A&R Logistics 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.
5. Centre of Elgin. The City shall provide six (6), one-year memberships
to The Centre of Elgin for use by full-time A&R Logistics employees. Full-time A&R
Logistics employees employed for the Subject Project shall also 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 resi-
dence. This provision shall remain in effect as long as A&R Logistics maintains the
Subject Project.
6. Elgin Promotion. Within sixty (60) days of A&R Logistics 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 A&R Logistics' employees employed at the Subject Prop-
erty. The City Manager of the City shall designate a liaison for A&R Logistics' em-
ployees to contact in the event such employees have any questions regarding the
Elgin community. At A&R Logistics' option, the City shall also coordinate with the
Downtown Neighborhood Association of Elgin and the Elgin Area Chamber of
Commerce for the purpose of conducting a groundbreaking and ribbon cutting cer-
emonies for the Subject Project.
7. City's Obligations Contingent Upon A&R Logistics' Performance. The
parties understand and agree that the economic incentive grants being provided by
the City to A&R Logistics as set forth in paragraphs 3 and 5 of this Agreement are
expressly subject to and contingent upon A&R Logistics' locating to the City of El-
gin and the establishment of the Subject Project as set forth in this Agreement. In
the event the A&R Logistics fails to establish the Subject Property as required in this
Agreement, or fails to occupy and commence operations for the Subject Project as
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required in this Agreement, and/or in the event A&R Logistics fails to provide for the
creation and establishment of the jobs as provided for in Section 3A of this Agree-
ment, the parties understand and agree that the City will not be providing the eco-
nomic incentive grants or economic assistance to A&R Logistics for the Subject
Project pursuant to this Agreement or otherwise. In the event A&R Logistics fails to
continue the Subject Project for the four (4) year period as required in this Agree-
ment, the parties understand and agree that A&R Logistics 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 reimbursement based upon the per-
centage of the four-year time period A&R Logistics has failed to continue the Sub-
ject Project. For the purpose of further clarification and example, in the event A&R
Logistics continues the Subject Project for three years instead of four years, A&R
Logistics shall reimburse to the City 25 percent of the economic incentive grants
and assistance paid or provided by the City to A&R Logistics pursuant to Section 3
of this Agreement.
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.
.44.)
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:
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
TO A&R LOGISTICS:
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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 A&R Logistics 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,
vagueness or conflict, if any, in the terms or provisions contained
herein.
rub.' 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 A&R Logistics 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
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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 paragraph 3A of this Agreement, no action
regarding the economic incentives set forth in this Agreement shall be
commenced by A&R Logistics against the City for monetary damag-
es. 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
A&R Logistics 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 A&R Logistics 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 A&R Logistics hereunder shall be determined in accord-
ance with the laws of the State of Illinois without reference to its con-
flict 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
A&R Logistics 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 A&R Logistics and the City that in con-
nection with the performance of this Agreement, that A&R Logistics
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, A&R Logistics hereby certifies, represents and war-
rants to the City that all of A&R Logistics' 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 notwithstand-
ing anything to the contrary in this Agreement, A&R Logistics 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
4111)
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Ammis
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the possession or control of A&R Logistics to determine A&R Logis-
tics' compliance with the provisions of this section. In the event the
City proceeds with such an audit, A&R Logistics shall make available
to the City A&R Logistics' 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.
IN WITNESS WHEREOF, the City and A&R Logistics have executed this
Agreement on the date and year first written above.
CITY OF ELGIN, A&R LOGISTICS, INC.
an Illinois municipal corporation
By:
By:
David Kaptain, Mayor
Its:
Attest:
Kimberly Dewis, City Clerk
C
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