cover
TO: Mayor Thomas J. Weisner
FROM: Bill Wiet, Chief Development Services Officer
DATE: January 15, 2016
SUBJECT:
The City of Aurora is seeking to enter into an agreement with Wennlund Farm LLC (Developer) to redevelop the project area defined by the area approximately bounded by Downer Place (north) to Benton Street (south), between the Fox River (west) and Water Street (east). More specifically, the agreement takes into consideration 1) the demolition of properties owned by Developer (43-49 East Downer Place), 2) A “Parking Lot Lease Agreement”, which allows for the City's continued use of the Benton Street Parking lots (Lots Q and R) for employee and public parking, and 3) A “Compromise and Release Agreement”, which agrees to settle past disputed claims by both parties on the Developer properties south of Benton Street. The following information highlights the specific details of the Redevelopment Agreement.
PURPOSE:
There are three interdependent agreements. The first is the Redevelopment Agreement which provides for a mechanism by which the Developer demolishes the buildings they own across from City Hall (43-49 East Downer Place) as part of an overall development plan for the riverfront between Downer Place and Benton. The second is the Parking Lease Agreement which provides for the City's continued use of the Benton Street parking lots (owned by Developer) for $5,000 annually plus taxes insurance and maintenance, to be used by employees and the general public. The third is the Compromise, Settlement and Mutual Release Agreement which settles disputed past financial reimbursement claims by both parties from the 2007 Redevelopment Agreement. It shall be noted that all agreements are being considered as a package given they are interdependent on each other.
BACKGROUND:
In 2007, with Resolution R-07-124, the City of Aurora approved an Amended and Restated Redevelopment Agreement with Aurora Redevelopment Company L.L.C. (d.b.a. Shodeen Inc.) for the approximately 30 acres south of Benton Street. Included in this area are the properties at 129 Water Street (Lot Q) and 126 Water Street (Lot R) which are zoned B-2 and are currently utilized as surface parking lots for public and city employee parking. The intent is that the parking lot use would continue until the area is redeveloped in the future. The same Developer has also purchased the property at 43-49 East Downer Place which includes two parcels zoned DC - Downtown Core being approximately .42 acres. The property currently includes 4 story office/retail building(s) and an adjacent parking lot. The building(s) are obsolete and deteriorated and the owner wishes to demolish them to facilitate new development on the site.
DISCUSSION:
Under the Redevelopment Agreement, Developer agrees to the demolition of buildings on the property at43-49 East Downer Place that are vacant, blighted, dilapidated, and/or in serious disrepair, as well as making the property available for redevelopment. After signing the agreement, Developer has 60 days to submit to the City a proposed construction budget and schedule for demolition. Within 60 days of construction budget approval, Developer must prepare and submit final plans for demolition. Developer is eligible for reimbursement for the project, through TIF 1 Funds, which is not to exceed $250,000. Developer will advance the funds to complete the work, after which the City will reimburse for documented costs as set forth in the construction budget and schedule, and only where eligible and allowable under the TIF Plan. The City will place an interest free, no payment mortgage lien on the property in the amount of the eligible reimbursement. The City will release the lien on the property within 5 years of reimbursement provided all conditions are met. The constructed building must have a minimum construction value of $500,000. Developer will repay the full amount of the incentive reimbursement upon timely failure to commence construction. Failure to repay will constitute a default on the mortgage, and the City may prosecute foreclosure proceedings.
Also, should the City desire to provide improvements above and beyond what is planned under the project description (resurface existing parking, decorative fencing, etc.) the City shall complete the improvements at its own expense.
Under the Parking Lot Lease Agreement, provides for the City of Aurora to enter into an agreement with Developer for the lease of parking lots along Benton Street that were provided to Developer as part of the original development agreement. Developer agrees to lease the defined parking lots to the City of Aurora. The lease shall expire either 5 years from the date of the agreement, or 30 days after Developer obtains building permits for a commercial/residential structure on the property, whichever comes sooner.
Rent due to Developer will be equal to the property taxes due from the prior year. Rent will be paid directly to Developer in 2 installments within 30 days of receipt of proof of payment of property taxes. At the expiration of the term above, if neither party has terminated the lease, the City will pay Developer the amount of $5,000 per year plus applicable real estate taxes, insurance, and maintenance. The lease will be subject and subordinate to any first mortgage.
Funds are available for this agreement by way of a budget transfer into Account Number 231- 1830-465.73-99 (Capital Outlay Improvements - Other)
Under the Compromise and Settlement Agreement, a framework is established for full compromise and settlement of disputed past claims between Developer and the City. This agreement seeks to avoid further dispute, litigation, and expense. Both the City and Developer agree to fully and forever discharge and release all claims and causes to future action, which will result in no party having to reimburse or seek reimbursement from the other party.
The claims being released by the City are as follows:
Engineering costs through January 1, 2015;
Legal fees incurred prior to the Amended Redevelopment Agreement;
Legal fees following execution of the Amended Redevelopment Agreement through January 1, 2015;
Legal fees arising from litigation involving the Citgo Station at Broadway and North Avenue;
Developer’s share of the incurred environmental costs;
The claims being released by Developer are as follows:
Engineering fees;
Legal fees incurred during discussions regarding ComEd substation relocation;
Lobbying fees and legislative representation relating to ComEd substation relocation;
Fees relating to the parking leases entered into prior to January 1, 2015;
Both the City and Developer acknowledge that neither has made any promise or representation not explicitly contained in the three agreements. Each agree to defend, indemnify, and hold harmless the other. Should any provision of the agreement be found invalid, the remainder of the agreement will be construed as if the invalid part were never included. The remainder of the agreement would as such remain valid and enforceable to the fullest extent permitted by law.
IMPACT STATEMENT:
The continued maintenance of the Benton Street parking lots will be an ongoing expense.
RECOMMENDATIONS:
It is recommended that the three interdependent agreements be approved in their entirety.
cc: Alderman O’Connor, Chairman
Alderman Mervine
Alderman Bohman
Alderman Mesiacos, Alternate
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
title
A Resolution Authorizing the Execution of Agreements between the City of Aurora and Wennlund Farm LLC an Illinois Limited Liability Company as Successor in Interest to and to Aurora Redevelopment Company, LLC
body
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, Developer Family Property Company (Developer) is the owner of the property located at 43 - 47, and 49 E. Downers Place, Aurora, Illinois, PIN Nos: 15-22-379-001 and 15-22-379-002,all of which is located within the City; and
WHEREAS, the Buildings are vacant, blighted, dilapidated, in serious disrepair, preventing redevelopment of this area, and are a threat to the health, safety and welfare of the residents of the City; and
WHEREAS, the City and the Developer desire the buildings be demolished, thereby making the property and surrounding area available for redevelopment that will serve the needs of the City and the community, produce increased employment opportunities for area residents and increase tax revenues for the various taxing districts authorized to levy taxes within the City; and
WHEREAS, in order to induce the Developer to demolish the buildings thereby making the property available for redevelopment, the Mayor and City Council of the City have determined it is in the best interest of the City to enter into a Redevelopment Agreement, attached hereto and made a part thereof as Exhibit A, to incentivize the Developer in the amount not to exceed TWO HUNDRED FIFTY THOUSAND and no/100 ($250,000.00) of actual, documented, eligible Redevelopment Project Costs as further described herein; to consider a Parking Lot Lease Agreement for the City's use of the parking lot located along Benton Street; and to consider a Compromise and Settlement Agreement for past disputed expenses regarding properties generally south of Benton Street, and
WHEREAS, funds are available for the project from Account Number 231- 1830-465.73-99 (TIF 1 Capital Outlay Improvements - Other), for the demolition reimbursement as well as for improvements the City may desire to undertake above and beyond the proposed project (i.e., resurfacing of existing parking lot and decorative fencing)
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: 1) That the Redevelopment Agreement, Parking Lot Lease Agreement, and Compromise and Settlement Agreement, attached hereto and made a part thereof as Exhibit A, between the City of Aurora and Wennlund Farm LLC, an Illinois Limited Liability Company as Successor in Interest to and to Aurora Redevelopment Company LLC, be approved, and 2) should the City desire to undertake additional improvements as described above at its own expense, that those expenses shall not exceed $75,000.