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TO: The Honorable Mayor and City Council
FROM: Law Department
DATE: November 26, 2018
SUBJECT:
A resolution authorizing the execution of additional documents related and subordinate to the redevelopment agreement between the City of Aurora and Pizzuti Aurora Industrial, LLC dated August 28, 2018.
PURPOSE:
To assist the developer, Pizzuti Aurora Industrial, LLC. (Pizzuti) secure funding for the project contemplated by the August 28, 2018 redevelopment agreement.
BACKGROUND:
In August, the City Council approved a redevelopment agreement pursuant to Resolution R18-0218 with Pizzuti to redevelop property on the City's northwest side and to provide for the extension of Corporate Boulevard to Mitchell Road, a long-desired public improvement. Pizzuti is a nationally-known and highly-regarded developer with an excellent reputation.
The redevelopment agreement provides that the City must offer reasonable assistance to Pizzuti in its pursuit of financing, but as was the City's intention, does not insert the City into Pizzuti's "debt chain." The transaction contemplates a pay-as-you-go TIF, meaning the City would reimburse Pizzuti's TIF-eligible costs from the tax increment generated by the improvements.
Pizzuti hopes to secure funding for this project through the Wisconsin Public Finance Authority, which like Illinois' Capital Development Board, is a governmental entity that provides bonding for public improvements. The prospective purchaser of the bonds, a Wisconsin-based investor, has insisted that the City and Pizzuti execute an additional "cooperation agreement" which further defines each's responsibility to the other under the redevelopment agreement. The investor will not purchase the Pizzuti bonds without the agreement in place. Separately, the Public Finance Authority conditions its bonding on the City's written authorization, though the City does not become part of the debt process when it authorizes the bond issue.
The City's Law and Finance Departments, as well as the Economic Development Division, have reviewed the two proposed documents. Though staff feels the cooperation agreement is unnecessary in principle, it does not appear that the redevelopment agreement, on its own, will satisfy the investor. To that end, staff has attempted to reduce the scope of the agreement as much as possible to conform to the provisions of the original redevelopment agreement without making the City a financer of the project.
Pizzuti has worked very closely with staff to accommodate the City's concerns while balancing the requirements of its investor whose participation in this project is essential to its success. The attached cooperation agreement represents the compromise position reached through patience and good faith negations. Most importantly, under the negotiated cooperation agreement, the City remains outside of the "debt chain" in the transaction.
The attached resolution contains three separate authorizations 1) it authorizes the Mayor to execute the cooperation agreement, 2) it authorizes the Mayor to sign the bond issue authorization letter, and 3) it authorizes the City Engineer enter an agreement with Pizzuti allowing him to sign the plat of subdivision in advance of Pizzuti installing or providing security for the required public improvements. Allowing the City Engineer to sign the plat of subdivision subject to reasonable assurances from Pizzuti is appropriate given the uniqueness of the development, Pizzuti's construction of the Corporate Boulevard extension, the configuration of the plat with all four lots having short access to the right of way, and the presence of a redevelopment agreement.
DISCUSSION:
As noted above, if given the choice, staff would prefer to allow the redevelopment agreement to "speak for itself" and not amplify its provisions through a cooperation agreement. Nevertheless, the extension of Corporate Boulevard to Mitchell Rd has been a significant goal of the City for quite some time and, when coupled with the anticipated reconfiguration of the Corporate Boulevard intersection at Farnsworth Rd, will have a very positive impact on economic development activity in the area.
For these reasons, as well as the City's duty to cooperate with Pizzuti under the redevelopment agreement and Pizzuti's willingness to work with the City on negotiating these difficult points, staff gives its qualified recommendation to accede to the investor's request in light of the totality of the circumstances.
IMPACT STATEMENT:
Approval of this resolution will allow the developer to obtain its financing for the project contemplated by the August 28, 2018 redevelopment agreement previously approved by the Council. Failure to approve will mean, at a minimum, the developer will need to find alternative investor. It is not unreasonable to expect that a subsequent investor may condition its participation upon approval of a similar cooperation agreement.
RECOMMENDATIONS:
That the Council approve the resolution.
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution authorizing the execution of additional documents related and subordinate to the redevelopment agreement between the City of Aurora and Pizzuti Aurora Industrial, LLC dated August 28, 2018..
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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, on August 28, 2018, the City Council approved a redevelopment agreement Pizzuti Aurora Industrial, LLC (Pizzuti) for the redevelopment of a vacant parcel of land and the extension of Corporate Boulevard west to Mitchell Rd; and
WHEREAS, said redevelopment agreement provides that the City shall reasonably cooperate with Pizzuti in obtaining financing for the project contemplated by the agreement; and
WHEREAS, Pizzuti has secured an investor who desires to purchase bonds issued by the Public Finance Authority of the State of Wisconsin to provide funding for the project; and
WHEREAS, the Public Finance Authority requires the written authority of governmental entities to issue bonds for public purposes, and
WHEREAS, such authorization does not create a debt obligation for the governmental entity authorizing the issuance; and
WHEREAS, Pizzuti requests that the City approve and execute Exhibit A, attached to this Resolution and incorporated herein, to authorize the issuance of bonds by the Public Finance Authority; and
WHEREAS, Pizzuti has represented that its investor requires, as a condition of purchasing bonds issued by the Public Finance Authority, that Pizzuti and the City approve and execute a cooperation agreement that conforms substantially to the document attached to this Resolution and incorporated herein as Exhibit B that further defines the parties obligations to each other as set forth in the redevelopment agreement; and
WHEREAS, Pizzuti requests the City approve and execute Exhibit B; and
WHEREAS, the redevelopment agreement requires the parties to cooperate in the approval of a final plat of subdivision, with approval of such plat being executed by the City prior to the closing date.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: that the City Council consents to and approves the financing of the project contemplated by the redevelopment agreement by the Wisconsin Public Finance Authority; and further
BE IT RESOLVED that the Mayor is authorized to communicate such consent and approval to the Wisconsin Public Finance Authority substantially in the form set forth in Exhibit A; and further
BE IT RESOLVED, that the Mayor is authorized on behalf of the City to execute a cooperation agreement substantially in the same form as set forth in Exhibit B to the extent such agreement is consistent with and does not conflict with the provisions of the redevelopment agreement previously approved by Resolution R18-0218; and further
BE IT RESOLVED, that in furtherance of the mutual obligations imposed under the redevelopment agreement, the nature of the project contemplated, and notwithstanding any other provision of the redevelopment agreement, the City Engineer is authorized to sign a subdivision plat as is substantially set forth in said redevelopment agreement, subject to obtaining Pizzuti's written agreement that it will post or cause to be posted the full value of security required by Section 43-55 of the Code of the City of Aurora 1) prior to the construction of any public improvements or mass grading, 2) prior to the issuance of a building permit of any kind within the subdivision, and 3) prior to March 1, 2019 or upon such other conditions the City Engineer may in his discretion deem appropriate to carry out the purposes of the Subdivision Control Ordinance.