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TO: Mayor Richard C. Irvin
FROM: David Dibo, Executive Director
DATE: October 11, 2021
SUBJECT:
SUBJECT:
Request authorization to execute a Sales Tax Sharing Agreement with Windfall Group. The agreement calls for the sharing of sales tax revenues between the City of Aurora and Windfall LLC (formerly Pacific) for Phase II of the Pacifica Development project in an amount not to exceed $2.5 million for a not to exceed period of 15 years, whichever occurs first.
PURPOSE:
Sales Tax sharing was part of an incentive package given to Windfall as an inducement to move forward with their purchase, renovation, reposition and expansion of the former Yorkshire Plaza shopping center located on New York Street and State Route 59. The three-tiered incentive packages as approved by City Council on February 27, 2018 with resolution R18-048. Through resolution R19-065 on March 12, 2019 the City approved a sales tax sharing agreement associated with the Phase I improvements to the former Yorkshire Mall.
BACKGROUND:
The City continues to examine development and redevelopment activities throughout the Route 59 Development Corridor. The redevelopment of the Yorkshire Plaza is an example of revitalization of sales tax producing businesses that provide needed retail and restaurant facilities to Aurora residents. Expanding this area with more retail is complimentary to the changes immediately south at the Fox Valley Mall site, which is evolving into a mixed use of residential, experiential, and retail uses. Windfall is an international business with a variety of interests with a demonstrated expertise and significant portfolio in real estate. The company repositioned retail shopping centers in the United States by concentrating on securing Asian themed vendors that mix seamlessly with other more traditional stores. He and his team determined that Yorkshire was well positioned to offer a bustling urban ‘Chinatown” experience with an active releasing program, substantially redesigning and upgrading the existing 362,000 square foot shopping center, and now bringing in further retail as a part of Phase II. The original plan design for Yorkshire Plaza has been modified to include this new development and to not go forward with the planned office space on this site. This decision is still in keeping with and forwards the goals of the Route 59 Corridor development activities.
DISCUSSION:
This revenue sharing agreement shares some of the characteristics of the previous agreement, but as a new development the agreement is based on a first dollar sales tax sharing format as this will be completely new retail space. The agreement is based on the developer receiving the 1.0% state shared sales tax and the City receiving the 1.25% home rule sales tax for all activity in Phase II as outlined herein.
The agreement is based on retail space that is expected to generate between $300 and $400 a sq. ft in sales each year. At 48,000 sq., ft, this will generate approximately $16,800,000 in sales revenue, which in turn will create $168,000.00 in state shared tax revenue and an estimated $210,000in home-rule sales tax revenue, assuming that only 80% of total sales will be home -rule sales tax eligible. The total revenue sharing amount is capped at $2.5 million or 15 years, whichever event occurs first. The development space covers a completely unused parking area of the Pacifica Square site and will also create new jobs and improve the City property tax base. With no residential component, this development should also be attractive to School District 204 and again is in compliance with the goals of the Route 59 Corridor plan. No upfront funds are being provided by this agreement. A sample projected sales tax table is attached which shows the agreement ending in year 14.
IMPACT STATEMENT:
Executing the sale tax sharing agreement will continue to move things forward and fulfill an obligation of the City. It enables Windfall to continue the development this site.
RECOMMENDATIONS:
Staff recommends approval of the resolution authorizing the execution of the sales tax sharing agreement with Windfall.
cc: Finance Committee
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution Authorizing the Execution of a Sales Tax Reimbursement Agreement with Windfall 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, Windfall, LLC, is the owner of real property ("Subject Property") located at the northwest corner of Illinois Route 59 and New York St; and
WHEREAS, the Subject Property is currently improved as a retail shopping center commonly known as "Pacifica Square" and formerly known as "Yorkshire Plaza;" and
WHEREAS, the City has determined that the development of retail operations such as those contemplated herein is a highly competitive endeavor, and that the successful completion of the Project at the Property at this time necessitates the use of a variety of incentives and approvals, including, but not limited to, the payment of retailers’ occupation tax incentives permitted by Section 8-11-20 of the Illinois Municipal Code, 65 ILCS 5/8-11-20; and
WHEREAS, Windfall, LLC cannot successfully undertake the Project or any substantially and functionally equivalent development of the Property without the ability to obtain retailers’ occupation tax incentives pursuant to the City’s statutory and municipal home rule powers; and
WHEREAS, after due and careful consideration, the City has determined that it is in the best interests of the City to negotiate an agreement provide economic incentives to Windfall LLC, for the Project pursuant to its authority as a home rule unit of local government and the authority conferred by law); and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: that the sales tax reimbursement 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 a sales tax reimbursement agreement that substantially and materially conforms to the provisions of the sales tax reimbursement agreement set forth in Exhibit A on behalf of the City; and further
BE IT RESOLVED, that the several City Officers and employees designated in the sales tax reimbursement agreement shall be and hereby are authorized to perform the functions and duties set forth therein described.