cover
TO: Mayor Richard C. Irvin
FROM: David Dibo, Executive Director of Economic Development
DATE: November 15, 2020
SUBJECT:
A Resolution Authorizing and Approving a Business Development District Sales Tax Sharing Agreement with Pacific Square, DE LLC and Authorizing and Approving the Use of Business District Taxes to Reimburse Pacific Square, DE LLC for Eligible Costs in Redeveloping Pacifica Square Shopping Center.
PURPOSE:
Staff is requesting authorization to reimburse the developer for their eligible costs in redeveloping Pacifica Square Shopping Center. The Business District Development District Tax Sharing Agreement is the Mechanism that allows the City to Use the Business District Taxes to reimburse the Developer for their eligible costs in redeveloping the shopping center.
BACKGROUND:
This resolution is the final step in a series of Council actions that created mechanisms that enables the City to impose tax on customers of merchants within the center to help defray the significant costs of redevelopment of the center. This is one leg of a three-tier approach of an incentive package that keys off new dollars created by virtue of the shopping center’s redevelopment. (In February when the Center was purchased, occupancies were running about 40%; they are now above 90%)
The City previously passed ordinances creating the Business Development District and imposing a Business Development District Tax. On June 11, 2019, the City approved Ordinance (O19-225) that proposed the plan for creation of a Business District and on August 27, 2019 designated the Aurora Business District no. 1 with ordinance O19-057. With its formation, on the same date the City approved the Business District Retailer’s Occupation Tax (O2019-058) that allows for the imposition of up to a 1% tax imposed in 0.25% increments. On September 24, 2019, the City amended O2019-058 to set the tax imposed at the rate of 0.25% (O2019-063). This final resolution enables the City to use the Business District Taxes to reimburse the Developer from taxes specifically imposed within the Business District.
DISCUSSION:
As recently reported, the developer (Pacific Square, DE, LLC) has made significant improvements to the shopping center and has created a unique brand that has garnered much attention with their countercyclical retail success. They have plans to add additional structures to create more traffic and increased sales that will enhance the retail, shopping and dining experience for its growing patronage. This resolution is a key element to approve a financial mechanism that has facilitated this redevelopment.
IMPACT STATEMENT:
The resolution will enable the developer to continue to meet its obligations as part of a financial structure that is the foundation OF the success of the Pacifica Square shopping center.
RECOMMENDATIONS:
Staff recommends approval of the resolution authorizing and approving the City to use Business District Taxes to reimburse the developer for their eligible costs in redeveloping Pacifica Square Shopping Center and the execution of the agreement governing the terms in which the City will use the Business District Taxes to reimburse developer for their eligible costs.
cc: Finance Committee
Alderman Robert J. O'Connor, Chairman
Alderman Edward J. Bugg, Vice Chairperson
Alderman Carl Franco
Alderwoman Scheketa Hart-Burns
Alderman Emmanuel Llamas
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
title
A Resolution Authorizing and Approving a Business Development District Sales Tax Sharing Agreement with Pacific Square, DE LLC and Authorizing and Approving the Use of Business District Taxes to Reimburse Pacific Square, DE LLC for Eligible Costs in Redeveloping Pacifica Square Shopping Center.
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, the City is authorized, pursuant to 65 ILCS 5/11-74.3-3 to establish a Business Development District and to grant sales tax rebates under certain circumstances; and
WHEREAS, Pacific Square, DE LLC (“Pacific”) is redeveloping and rehabilitating a retail shopping center (the “Project”) located at the northwest corner of Route 59 and New York Street; and
WHEREAS, to facilitate and encourage the completion of the Project, the City, on August 27, 2019, passed Ordinance No. 019-057, titled “An Ordinance Designating Aurora Business District No. 1 (Pacifica Square Business District)”, establishing the Aurora Business District No. 1 (“Pacifica Square Business District” or the “Business District”); and
WHEREAS, in addition to the foregoing, the City on August 27, 2019, passed Ordinance No. 019-058, titled “An Ordinance Imposing a Business District Retailer’s Occupation Tax, a Business District Service Occupation Tax, and a Hotel Operators’ Occupation Tax Within the Boundaries of the Aurora Business District No. 1 (Pacifica Square Business District).”, which, pursuant to 65 ILCS 5/11-74.3-6(b), imposed a “Business District Retailers’ Occupation Tax” upon all persons engaged in the business of selling tangible personal property at retail within the Business District at the rate of one percent (1%) of the gross receipts from the sales made in the course of such business; and, pursuant to 65 ICLS 5/11-74.3-6(c), imposed a “Business District Service Occupation Tax” upon all persons engaged in the business of making sales of services within the Business District, who, as an incident to making those sales of service, transfer tangible personal property within the Business District, either in the form of tangible personal property or in the form of real estate as an incident to sales of service, at the rate of one percent (1%) of the selling of price of tangible personal property so transferred within the Business District; and, pursuant to 65 ILCS 5/11-74-3-6(d), imposed a “Business District Hotel Operators’ Occupation Tax” upon all persons within the Business District engaged in the business of renting, leasing, or letting rooms in a hotel, as defined in the Illinois Hotel Operator’s Occupation Tax Act, 35 ILCS 145/1, at the rate of one percent (1%) of the gross rental receipts from the renting, leasing or letting of hotel rooms within the Business District (for the purposes of this Agreement, Business District Retailers’ Occupation Tax, Business District Service Occupation Tax, and Business District Hotel Operators’ Occupation Tax shall collectively be referred to as the “Business District Taxes”.); and
WHEREAS, the City on September 24, 2019, passed Ordinance No. 019-063, titled “An Ordinance Amending the Business District Retailers’ Occupation Tax Rate, the Business District Service Occupation Tax Rate and the Hotel Operators’ Occupation Tax Rate Imposed in Ordinance 19-058 Within the Boundaries of the Aurora Business District No. 1 (Pacifica Square Business District)”, which reduced the Business District Taxes to the rate of 0.25%; and
WHEREAS, pursuant to 65 ILCS 5/11-74.3-3, the City desires to provide Pacific, pursuant to the terms of a certain Business Development District Sales Tax Sharing Agreement (the “Agreement”), a copy of which is attached hereto as Exhibit A, with rebates on the Business District Taxes imposed in the Business District in order to reimburse Pacific for certain Business District Project Costs, as such term is defined by 65 ILCS 5/11-74.3-5, in the aggregate maximum amount of $3,300,000.00 during the term of the Agreement;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, in the exercise of its home-rule, statutory and other powers, as follows:
Section 1: All of the recitals hereinbefore stated as contained in the preambles to this Resolution are full, true and correct, and the City Council does hereby, by reference, incorporate and make them part of this Resolution as legislative findings.
Section 2: The Agreement, as set forth in Exhibit A attached hereto, which sets forth the terms in which the City will provide Pacific rebates on the Business District Taxes imposed in the Business District in order to reimburse Pacific for certain Business District Project Costs in the aggregate maximum amount of $3,300,000.00 during the term of the Agreement shall be and is hereby approved; and
Section 3: The Mayor is authorized to execute a Business Development District Sales Tax Sharing Agreement that substantially and materially conforms to the provisions of the Agreement set forth in Exhibit A on behalf of the City.
Section 4: The City is authorized to provide Pacific with rebates on the Business District Taxes in accordance with the terms of the Agreement.
Section 5: City officers and employees shall be and are hereby authorized to perform the necessary actions to carryout the purpose of this Resolution and the terms of the Agreement.
Section 6: This Resolution shall be in full force and effect after its passage, approval and publication in accordance with applicable law.