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TO: The Honorable Mayor and City Council
FROM: The Law Department
DATE: August 17, 2018
SUBJECT:
A proposed settlement agreement to resolve the City's pending and threatened litigation against the owners of the former Copley Hospital.
PURPOSE:
The proposed settlement agreement will result in the partial demolition and the complete environmental remediation of the former Copley Hospital.
BACKGROUND:
In 1995, Rush-Copley closed its hospital complex southeast of Aurora's downtown. The buildings on the site has been vacant since at least 2000. In 2006, Raghuveer P. and Anita R. Nayak purchased the complex for $1.25 Million through a limited liability company and paid approximately $137,250 in outstanding fines to the City. Over the course of the next several years, the condition of the site significantly deteriorated with the City imposing fines for numerous health and safety violations. In 2014, the City sued the site's seeking to have the property repaired or demolished. That case is still pending. In 2017, the City served the owners with a notice of its intention to sue (NOITS) under the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the Resource Conservation and Recovery Act (RCRA) to compel the owners to remediate asbestos contamination in the building. Following the City's service of the NOITS, the site's commenced settlement negotiations with the City, the result of which is presently before the City Council.
DISCUSSION:
The proposed settlement agreement is between the City and Raghuveer P. Nayak and Anita P. Nayak, as well as various limited liability companies they control (collectively "The Nayaks"). The proposed settlement is conditioned on, and subject to, agreements between and among the Nayaks, a developer group, and Invest Aurora.
The settlement requires the Nayaks to enter immediately into an agreement with the developer to partially demolish and completely remediate all environmental contamination at the former Copley Hospital. The Nayaks will contribute $1.6 million toward this work. The developer will then demolish the interior of each of the buildings down to their structural elements, remove all asbestos and lead paint from the buildings, replace their roofs, and board up their windows. The developer will begin this work immediately.
Upon the City's and Invest Aurora's certification that the remediation is complete, the Nayaks will donate the entire property to Invest Aurora, and contemporaneously with the donation, pay the City a settlement amount $200,000. Invest Aurora will subsequently convey the entire property to the developer for nominal consideration.
In exchange, the City will dismiss its 2014 litigation at the time the settlement agreement is executed and, upon the Nayak's donation of the site to Invest Aurora, agree not to file suit under the NOITS.
IMPACT STATEMENT:
If the parties perform as the agreement contemplates, the safety and environmental problems that have plagued the former Copley Hospital will be fully remediated and the site will be a condition suitable for redevelopment. In addition, the payment of $200,000 substantially resolves all outstanding fines pending against the property and reimburses the City for the vast majority of its legal expenses
RECOMMENDATIONS:
That the Council review and subsequently approve the proposed settlement agreement.
CITY OF AURORA, ILLINOIS
ORDINANCE NO. _________
DATE OF PASSAGE ________________
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An Ordinance approving a settlement agreement between the City of Aurora and Raghuveer P. Nayak, et. al. related to the real property commonly known as Old Copley Hospital.
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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 City is presently engaged in or has threatened litigation regarding the real property commonly known as Old Copley Hospital against Raghuveer P. Nayak and the other individuals and companies specifically named in the settlement agreement ("Settlement Agreement") attached to this Ordinance as Exhibit A.
WHEREAS the Settlement Agreement represents a compromise of the City's claims and threatened claims against the individuals and companies therein named; and
WHEREAS, approval of the Settlement Agreement is in the best interest of the City)
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Aurora, Illinois, as follows: that Mayor and City Clerk shall be and hereby are authorized and directed to enter into a settlement agreement that substantially confirms to the provisions of Settlement Agreement attached to this Ordinance as Exhibit A and incorporated as if fully set forth herein.