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TO: Mayor and City Council
FROM: Alex Alexandrou
Chief Management Officer
Martin S. Lyons
City Treasurer/Chief Financial Officer
David Dibo
Executive Director, Division of Economic Development
DATE: June 7, 2019
SUBJECT:
The acquisition of real property on Bilter Rd in the unincorporated area of Kane County, located north of the Chicago Premium Outlet
PURPOSE:
To authorize the City to accept the assignment of all contractual rights and responsibilities of Invest Aurora to acquire 9 parcels of real property located along Bilter Rd for a total purchase price not to exceed $10 million and to authorize and direct various City Officers to take all actions necessary to complete the acquisition of said property no later than July 31, 2019.
BACKGROUND:
In 2018, negotiations with the owners of 9 parcels of property located directly north of the Chicago Premium Outlet Mall on Bilter Rd. commenced (City Comprehensive Plan show these properties as zoned ORI). Taken together, and when combined with property already owned by the City, these parcels comprise a 50.22 acre block of land adjacent to the outlet mall and easily accessible from I-88 and represent a significant opportunity for economic development. Over the course of many months, agreements with all of the owners were negotiated and Invest Aurora helped resolve an ongoing dispute with a previous contract purchaser. However, the properties are under contract for a period ending July 31, 2019.
In light of the significant effort necessary to bring all of these properties under contract, and recent media reports that have discussed potential future uses of the property, it is unlikely that circumstances will permit Invest Aurora to extend the existing contracts or again have all of these properties under contract. Thus, the City has a unique, and very time-sensitive opportunity to acquire, and therefore control, the future development of the site.
DISCUSSION:
The Farnsworth Avenue corridor, which includes the Outlet Mall as well as the former Motel 6 and Fox Valley Inn, represents a significant economic development opportunity for the City. By acquiring the properties on Bilter Rd., the City will be well-positioned to ensure that any future development is in Aurora's best interest. These properties will also be included in the consultant study for the city owned properties on the Farnsworth Avenue Corridor so that all of the potential development uses will be examined and evaluated for economic development opportunities and highest and best uses. The study including these newly acquired parcels will focus on potential development projects that would complement and build upon on the success of the Outlet Mall and capitalize on the location as a prime destination.
The property represents a long sought market assemblage of nine home sites each with different ownerships, expectations and circumstance. The overall pricing at less than five dollars per square foot reflects this delicate and rigorously pursued aggregation providing ownership with a positive arbitrage in a market with few remaining "greenfield sites" especially in close proximity to the Tollway (I-88). Land in the area has been sold recently or is under contract for at least thirty percent (30%) higher than the Bilter contract pricing. The intention would be to annex this unincorporated parcel into the City. The individual pricing for each parcel is attached. The site directly northeast of Simon's Chicago Premium Outlet Mall, has readily availability of city infrastructure, including water and sewer. This acquisition also presents an opportunity to improve the two lane road portion of Bilter Rd. and provides for a higher use outcome consistent with the transformations that have been occurring in the immediate area.
If the City chooses to use line of credit financing for this purchase, the current carrying costs of the properties will be approximately $385,000 in interest cost annually. This cost can be reduced through the use of funds on hand to offset/payoff the line of credit. Please note that this transaction will be a part of total development costs/incentives/agreements once a final development is chosen. As will be discussed with the City Council at the June 18, 2019 Committee of the Whole meeting, the City's outstanding fixed debt has been declining while, while the assessed property value that supports this debt has been increasing. While a total impact analysis of this development cannot be made until a final development is approved, it is a clear goal that the purchase of this property along with development incentives/costs at this site and at the sites west of Farnsworth and North of I-88 will not come from general property taxes, even if General Obligation Bonds are issued to fund parts of these agreements. Please see the attached summary of the presentation to be provided on debt financing for the City. This purchase will require a budget amendment which will be handled at the same time as the amendment needed for the new Tax Increment Financing Districts in the Downtown and on Ogden/75th Street. Staff will also confirm that funds are available for this purchase through the lines of credit authorized by the City Council at its May 28, 2019 meeting.
IMPACT STATEMENT:
Acquisition and development of these long underdeveloped properties can have a tremendous positive impact to the Equalized Assessed Value of the City as well as provide a unique attractive economic development for future revenue sources. Not approving this acquisition will result in the City losing the opportunity to acquire and consolidate prime real estate in order to ensure the highest and best economic development for the City in this area.
RECOMMENDATIONS:
That the resolution be adopted.
cc: Alderman Robert J. O'Connor, Chairperson
Alderman Edward J. Bugg, Vice Chairperson
Alderman Carl Franco
Alderman Scheketa Hart-Burns
Alderman Emmanuel Llamas
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution accepting the assignment of the contractual rights and responsibilities of the Seize the Future Economic Development Foundation, Inc. (Invest Aurora), for the purchase of certain real property located on Bilter Rd. and authorizing the City's officers and employees to complete the transactions contemplated by said contracts.
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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 Seize the Future Economic Development Foundation, Inc, d/b/a Invest Aurora, is a not-for-profit corporation, that promotes economic development in the City of Aurora; and
WHEREAS, Invest Aurora is the contract purchaser of nine (9) parcels of real property constituting approximately 45.4 acres located south of Bilter Rd. in the unincorporated area of Kane County; and
WHEREAS, Invest Aurora desires to assign its contractual obligations with respect to all nine (9) parcels to the City of Aurora and the City of Aurora desires to accept said assignment; and
WHEREAS, the descriptions of the aforesaid nine (9) parcels are attached to this resolution as Exhibit A and incorporated as if fully set forth herein;
WHEREAS, said contractual obligations include a duty to close on the purchase of the nine (9) parcels by July 31, 2019; and
WHEREAS, the total purchase price for all nine (9) parcels, including all costs, fees, assessments, liens, and reimbursements is approximately Nine Million Seven Hundred Thirty-Nine Thousand Seven Hundred and Forty-One ($9,739,741) dollars representing an average price per square foot of four dollars and ninety-two cents ($4.92).
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: That the recitals shall be and hereby are adopted and made part of this resolution; and further
BE IT RESOLVED, that the Mayor shall be and hereby is authorized to sign on behalf of the City such document or documents necessary to accept the assignment of all of Invest Aurora's rights and obligations with respect to the real property described in Exhibit A; and further
BE IT RESOLVED, upon the assignment of Invest Aurora's rights to the City, that the Mayor, the Clerk, the Treasurer, and the Corporation Counsel shall be and hereby are authorized and directed to take any and all actions necessary to complete the acquisition of the real property described in Exhibit A not later than July 31, 2019.