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TO: Mayor Richard C. Irvin
FROM: Loretta Daly, Acting President/CEO Invest Aurora
David Dibo, Economic Development Director
DATE: March 27, 2023
SUBJECT:
A Resolution Approving a Development Agreement By and Among the City of Aurora, Atlanta Land L.K.E. LLC, and US Foods, Inc. for the development of property located at 2810 Duke Parkway, Aurora, Illinois, 60502.
PURPOSE:
Atlanta Land L.K.E. LLC is the owner of the currently vacant land measuring approximately 49.7-acre parcel and located at 2810 Duke Parkway, Aurora Illinois. For the purposes of clarity, Atlanta Land L.K.E. LLC is a wholly owned special purpose entity subsidiary of US Foods, and US Foods, Inc. is the sole member of Atlanta Land L.K.E. LLC. In considering this location for the development of this parcel to include an approximately 300,000+ square foot distribution and truck maintenance facility housed in one main building and two outbuildings, US Foods has requested that the City consider entering into a sales and property tax sharing agreement for a 10-year period. This new $100,000,000+ development would consist of approximately 280,000 sf distribution facilities, including approximately 19,000 sf of new office space, and a 12,650 sf of truck maintenance facility.
BACKGROUND:
As part of the final stages of their site selection process, US Foods requested their agent, CBRE, issue a Location Incentive Proposal to candidate market which would allow them (US Foods) to evaluate opportunities from state and local authorities to help mitigate location specific one-time and recurring costs that would assist in supporting the projects financial objectives. The Development Agreement before you tonight has been preliminarily reviewed and approved by the Company.
DISCUSSION:
The cost of the improvements to this currently vacant land will be substantial, estimated to be $100,000,000, and will greatly enhance the real estate tax base for the city. Interestingly, because of the nature of the sales activities associated with this new facility, the City will also realize a substantial increase to revenues generated through the state municipal sale taxes, as well as a slight increase to home rule sales tax assessments. Additionally, when completed, the project will provide a minimum of 260 jobs to the Aurora area.
Upon final approval, the Development Agreement before you provides for a property tax rebate to US Foods of 50% of the property taxes paid annually, excluding any portion of the City's property tax levy for pension funding; a 50% rebate of all sales taxes generated by the development for a 10 year period at which time the property and sales tax revenue generated will be retained by the city at 100%. The Development Agreement also provides for a waiver of Building Permit Plan Review Expediting fee.
IMPACT STATEMENT:
The development site under consideration is currently undeveloped and as such generates approximately $1,200 in annual real estate property taxes. The substantial improvement to the site will dramatically increase the property taxes generated at this location as follows:
Approximately $600,000+ in total property tax
Approximately $126,000+ in total property tax to the City of Aurora
Additionally, sales at this site will be subject to Illinois State Sales Taxes and as such should generate new sales tax revenues to the city as follows:
Approximately $250,000 in average annual sales tax.
RECOMMENDATIONS:
Staff recommends approval of the resolution authorizing the execution of development agreement with Atlanta Land L.K.E. LLC, and US Foods, for the purposes of facilitating the expansion of the 2810 Duke Parkway parcel.
ATTACHMENTS:
Development Agreement
cc:
Alderman Carl Franco, Chairperson
Alderman Sherman Jenkins, Vice Chairperson
Alderman Edward Bugg
Alderwoman Scheketa Hart-Burns
Alderwoman Shweta Baid
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution Approving a Development Agreement By and Among the City of Aurora, Atlanta Land L.K.E. LLC, and US Foods, Inc. for the development of property located at 2810 Duke Parkway, Aurora, Illinois, 60502.
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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 Owner is the owner of the approximately 49.79-acre parcel located at 2810 Duke Parkway, Aurora, Illinois, and legally described in Exhibit A attached to and, by this reference, incorporated herein (“Land”), and
WHEREAS, the Owner, which is a subsidiary of the Developer, intends to enter into a ground lease for the Land (the “Ground Lease”) to a third party as the ground lessee who in turn intends to enter into a sublease of the Land and the Improvements (as defined below), once constructed, with the Developer, as sublessee (“Lease” and such ground lessee in its capacity as lessor under the Lease is referred to herein as the “Lessor”) as part of a synthetic lease transaction to provide financing for the construction of the Improvements, and
WHEREAS, the City anticipates that the Project (as defined below) will be a significant
contributor to the economic stability of the City through contributions of substantial Property Tax and Sales Tax revenues and employment opportunities; and
WHEREAS, the Development Agreement, Exhibit A, provides for a property tax rebate to US Foods of 50% of the property taxes paid annually, excluding any portion of the City's property tax levy for pension funding; a 50% rebate of all sales taxes generated by the development for a 10 year period at which time the property and sales tax revenue generated will be retained by the city at 100%; and
WHEREAS, the Development Agreement also provides for a waiver of Building Permit Plan Review Expediting fee; and
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Aurora, Illinois, as follows: pursuant to its statutory and home rule powers, as follows: that the Agreement 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 Agreement that substantially and materially conforms to the provisions of the Agreement set forth in Exhibit A on behalf of the City for development of the Property as an approximately 300,000+ square foot distribution and truck maintenance facility housed in one main building and two outbuildings; and the provision of economic incentives to the Developer to make the Project economically viable, as set forth in the Agreement; and further
BE IT RESOLVED, that the several City Officers and employees designated in the Agreement are authorized to perform the function and duties set forth in the Agreement; and further
BE IT RESOLVED, that the Mayor is authorized to execute such document or agreement between the City and the Developer which are related to and subordinate to the Agreement so long as (1) such additional documents or agreements are consistent with and do not conflict with the provisions of the Agreement authorized by this Resolution (2) are necessary to carry into effect the purposes of the Agreement, and (3) do not create any additional liabilities upon the City.