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TO: Mayor Richard C. Irvin
FROM: Alex Minnella, senior planner
DATE: December 1, 2021
SUBJECT:
A Resolution Authorizing the Execution of a First Amendment to the Redevelopment Agreement Previously Entered into Between the City of Aurora and Sandri Properties LLC.
PURPOSE:
To approve a first amendment to allow for a three years extension to the previously approved redevelopment agreement between the city of Aurora and Sandri Properties LLC.
BACKGROUND:
Paul Soderstrom owned and ran the Soderstrom Pallet Co. a manufacturing use from the late 1970s to 1995, when he sold the business. Despite the sale of the buildings, new business owners continued to operate it as the Soderstrom Pallet Co. while Paul Soderstrom continued to own the property.
The property, zoned M-1 Manufacturing District Limited, consists of 4.87 acres and located north of Indian Trail Road and adjacent to the Fox River Trail on the west side of the Fox River, had a large dilapidated building and a residential structure as well.
The property owner, Paul Soderstrom deceased in October of 2012 and the property sit vacant for years until June 14, 2016 when the City entered into a redevelopment agreement with Sandri Properties, LLC by approving resolution R2016-174.
The City, recognizing the potentials of the property located within a TIF and in the River Edge Redevelopment Zone and hoping to attain residential uses along the river, decided to assist the heiress Karna Sandri with the costs entailed with the demolition and remediation of the site. By doing this the joint effort was aimed to have the property ready for development.
A copy of the plat of survey (Attachment A) has been provided. The property had been appraised with a land value of $635,000 (Attachment B). The property sits outside of the floodplain as it was estimated by Engineering Enterprises, Inc. (Attachment C). The City of Aurora also owns property nearby to this property which would likely be included as part of a future redevelopment of the subject property (Attachment D). There are City water mains that run through the property (Attachment E). A Phase II Environmental was conducted on the subject property (Attachment F). Additional soil borings were requested as part of a focused Phase II Environmental (Attachment G). An Asbestos Study was conducted by Gabriel Environmental Services (Attachment H). A copy of the Title Insurance (Attachment I) and a copy of the Warranty Deed (Attachment J) have been provided for the original ownership. The property has been transferred to the Trust and now to Sandri Properties LLC. Those documents are forthcoming as they have been recorded in the last week.
The demolition bid came in at $140,565 (Attachment K). The Asbestos abatement bid came in at $136,755 (Attachment l). The insurance premium cost was $5,870 (Attachment M).
The original RDA had the property owner to be reimbursed up to $285,000 for the “Demolition Project” which entailed the removal of asbestos and the demolition of the structures on the property. The owner was given a strict timeline to perform in accordance with Section 3 of the agreement attached. The owner had five (5) years to redevelop the property with a building having a minimum construction value of $2,500,000. If the property had not been redeveloped in accordance with Section 5 of the agreement, the City would have had a mortgage and note which would then be in default.
Despite any and all efforts put forward to requalify the site and effectively market the property, the adverse physical location of the property and market conditions have not brought residential uses to fruition.
DISCUSSION:
Due to limited accessibility to the site, visibility from Indian Trail, and specific site features, property owner Karna Sandri had only received qualified offers from potential users that have proposed intense land uses not adhering to the Comprehensive Plan which recommends high density residential, conservation, open space, recreation and drainage; although the current underlying M-1 zoning (Manufacturing District Limited) would allow for industrial uses. The Comprehensive Plan recommendation also align with the housing demand and intent to requalify the shores along the Fox River. The City would be amenable to less intensive uses such as landscaping businesses with limited outdoor storage, and offices.
Approving the first amendment of the existing redevelopment agreement will grant a three (3) years extension to fulfill the requirements which are still standing. In the event Sandri Properties LLC was not able to secure a qualified buyer, the agreement would be in default and the note should be due.
IMPACT STATEMENT:
Approving the first amendment of the existing redevelopment agreement will grant a three (3) years extension and will allow the owner, to market the property for alternative and comparable uses.
RECOMMENDATIONS:
Staff recommends approval of the resolution authorizing the execution of a first amendment to the redevelopment agreement previously entered into between the city of Aurora and Sandri Properties. LLC.
ATTACHMENTS:
Exhibit A - First Amendment to RDA
First Amendment to Mortgage
First Amendment to Note
Resolution R2016-174
Attachment A - Plan
Attachment B - Appraisal Report
Attachment C - Floodplain
Attachment D - Property Ownership Map
Attachment E - Water Atlas
Attachment F - Environmental Investigation
Attachment G - Environmental Investigation
Attachment H - Environmental Investigation Asbestos Analysis
Attachment I- Conditions of Stipulation
Attachment J - Warranty Deed
Attachment K - Invoice
Attachment L - Proposal
Attachment M - Liability Declaration
cc:
Alderman Carl Franco, Chairperson
Alderman Sherman Jenkins, Vice Chairperson
Alderman Edward Bugg
Alderwoman Scheketa Hart-Burns
Alderwoman Shweta Baid
Edward T. Sieben, Zoning & Planning Director
John P. Curley, Chief Development Services Officer
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
title
A Resolution Authorizing the Execution of a First Amendment to the Redevelopment Agreement Previously Entered into Between the City of Aurora and Sandri Properties LLC.
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, the City and Sandri Properties, LLC, an Illinois limited liability company (the “Developer”) have entered into a certain Redevelopment Agreement dated June 14, 2016 and approved by City of Aurora Resolution No. R16-174 (the “Agreement”), pursuant to which Developer agreed to demolish the Buildings (as defined in the Agreement) located at 115 W. Indian Trail Road, Aurora, Illinois (the “Property”); and
WHEREAS, as an incentive for the Developer to complete the Demolition Project (as defined in the Agreement), the Village reimbursed the Developer for $285,000.00 of Developer’s eligible “Redevelopment Project Costs” incurred in completing the Demolition Project (the “City Incentive”); and
WHEREAS, as a condition of receiving the City Incentive and as security for the same, the Developer agreed to execute a Commercial, Interest and Payment Free Promissory Note (the “Note”) and a Commercial, Interest and Payment Free Mortgage (the “Mortgage”) in the amount of the Redevelopment Costs reimbursed to the Developer for the Demolition Project; and
WHEREAS, pursuant to Section 5.02 of the Agreement, the City will release the Mortgage and Note (as defined in the Agreement) on the Property upon the City being fully reimbursed the City Incentive, or upon the Developer’s Commencing Construction (as defined in the Agreement) of a Building (as defined in the Agreement) on the Property within five (5) years of the date Developer was first reimbursed by the City for eligible Redevelopment Project Costs for the Demolition Project; and
WHEREAS, due to various factors, the Developer is unable to commence construction of a Building on the Property by December 31, 2021, which is the five (5) year anniversary date of the date the Developer was first reimbursed by the City for eligible Redevelopment Project Costs for the Demolition Project; and
WHEREAS, the City wishes to amend the Agreement in order to extend the deadline by which the Developer is required to commence construction of a Building on the Property; and
WHEREAS, in light of the foregoing, the City Council desires to amend the Agreement pursuant to the terms of that certain first amendment (the “First Amendment”), a copy of which is attached hereto and incorporated herein as Exhibit A.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Aurora, Illinois, as follows: that the First Amendment attached to this resolution as Exhibit A shall be and hereby is approved; and further
BE IT RESOLVED, that the Mayor is authorized to execute an amendment to the Agreement, and applicable exhibits attached thereto, that substantially and materially conforms to the provisions of the First Amendment set forth in Exhibit A on behalf of the City; and further
BE IT RESOLVED, that the Mayor, Chief Financial Officer, Director of Economic Development, the Chief Development Services Officer, and each of their respective designees shall be and hereby are authorized to perform the City’s duties set forth therein described.