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TO: Mayor Thomas J. Weisner
FROM: Bill Wiet, Chief Development Services officer
DATE: September 3, 2015
SUBJECT:
To recommend approval of a Hotel Occupancy Tax Rebate Agreement for the property at 111 North Broadway. It is also recommends the previous tax rebate agreement (R14-321) be rescinded.
PURPOSE:
Since the time of the original request, the project is now estimated to be $750,000 over budget as a result of unexpected costs. Midwest’s bank has agreed to refinance the project and Midwest has requested revising the structure of a reimbursement agreement to monetize the project up front.
BACKGROUND:
Pursuant to Resolution R14-321, Midwest Management II, Inc., which operates the Comfort Suites Hotel at 111 North Broadway Street, previously requested economic assistance, through a Hotel Occupancy Tax agreement, from the city for a $2 million renovation project at the hotel that would include rebranding the hotel as a Holiday Inn Express and Suites. The original request included the city providing a reimbursement of the Hotel Occupancy Taxes for up to $500,000 to Midwest to assist with the costs associated with this project. The structure of this assistance was to be as a “pay-as-you-go” type reimbursement
DISCUSSION:
The revised Hotel Occupancy Tax Incentive Agreement will provide Midwest with $250,000 up front on the condition that Midwest has obtained financing. The city will further provide Midwest with an additional $250,000 with the condition that construction has begun and that Midwest is actively pursuing completion by the agreed upon date. As each above referenced payment is made, Midwest is required to execute a mortgage and promissory note and the city will record the mortgage against the property in the amount of the payment made to Midwest with an annual interest rate of 4.5%.
IMPACT STATEMENT:
The execution of the revised development agreement will have a positive impact on the city as a whole and the downtown area in particular.
RECOMMENDATIONS:
The Seize the Future Board of Directors made a favorable recommendation on this agreement. Therefore, it is recommended that this revised agreement be approved.
cc: Alderman O’Connor, Chairman
Alderman Mervine
Alderman Bohman
Alderman Mesiacos, Alternate
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution Rescinding Resolution R14-321 and Authorizing the Execution of a Revised Hotel Occupancy Tax Rebate Agreement with Midwest Management II, Inc., for the Property Located at 111 North Broadway
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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 of Aurora previously approved, as Resolution R14-321, a Hotel Occupancy Tax Rebate Agreement with Midwest Management II, Inc. for the remodeling of the existing Comfort Suites Hotel into a Holiday Inn Express and Suites, and
WHEREAS, project costs for the renovation has substantially increased due to unexpected costs since the approval of the previous agreement, and
WHEREAS, The City of Aurora finds that it is in the best interests of the City and its residents to revise the agreement to provide the incentive as outlined in the previous agreement as upfront funding rather than the previous pay as you go funding, and
WHEREAS, budgetary authority for this project has been requested in the 2015 City Budget in account no. 101-1830-465.55-84 (General Fund).
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: 1) That Resolution R14-321 be hereby rescinded in its entirety, and 2) that the revised Hotel Occupancy Tax Rebate Agreement with Midwest Management II, Inc., attached hereto as Exhibit A, be approved