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TO: Mayor Robert J. O’Connor
FROM: Bill Wiet, Chief Development Services Officer
DATE: April 4, 2017
SUBJECT:
To approve an Amended and Restated Development Agreement with The Aurora Metropolitan Exposition, Auditorium and Office Building Authority (a.k.a., The Aurora Civic Center Authority or ACCA) and The Aurora Arts Center Developer LLC (formed by The Community Builders) for the Redevelopment of the non-residential, commercial portions of the buildings Located at 5 East Galena Boulevard and 2 - 20 S. Stolp Avenue
PURPOSE:
Much has taken place since the City Council approved in December 2016 resolution R16-384, which is a development agreement for the commercial portion of a multi-faceted development at the former Waubonsee Community College building as well as Coulter Court apartments. With the help of the DuPage County Board a $1.3 Million loan on Coulter Courts was forgiven, as well as a loan forgiveness from Neighbor Works organization, a federal funding partner for the Joseph Corporation. But what precipitated these actions described above, and what has also changed since December, is the fact that this project lost $3,000,000 in tax credit value, which is being heavily relied upon in this project. With the Coulter Court property now poised for redevelopment, it cannot succeed without additional funding sources to close that lost tax credit gap.
BACKGROUND:
This amended development agreement modifies the commercial portion of the project to help close the gap. This agreement will also be considered by the Aurora Civic Center Authority (ACCA) and the Aurora Arts Center Developer LLC (The Community Builders) Attached is a Development Agreement that reflects changes to those terms approved by City Council on June 28, 2016 in a Memorandum of Understanding between The City of Aurora and The Community Builders (TCB), a nationally renowned, non-profit developer that has expertise in utilizing Historic Tax Credits and other tax credit financing to redevelop vacant buildings into vibrant, mixed-use centers for artist residences, retail and community center-type spaces. Based on the Structure of the Partnerships involved, the Aurora Civic Center Authority (ACCA) is also a party to the Development Agreement that solidifies the previously agreed upon terms.
This Amended Development Agreement contemplates a full, historic renovation of the former Waubonsee Community College Campus buildings located at 5 E. Galena and 2 - 20 S. Stolp. The Former Coulter Opera House located at 32 S. Broadway and its existing apartments will undergo a major rehabilitation that was covered under a companion document also in December of 2016 (R16-386), which also provided a revision to the Section 108 loan program activity for the WCC commercial project. The project remains as follows:
1. Restaurant: a first-class, restaurant space in 5,000 sq. ft. of the building facing Galena;
2. School for Performing Arts & Paramount Space:
3. Artist’s Lofts: an additional 36 artist’s loft, affordable units with strong artist preferences
4. Coulter Court Repairs & Recapitalization:
DISCUSSION:
Below is a listing of all the stakeholders involved in the project and their respective contributions to the project. Also, a Comparison Sheet is attached that indicates what differs from R16-384, as well as a set of pages that are being changed from the original resolution, that were taken from the draft agreement up for consideration. They best describe the revisions, and adjustments necessary to approve the project.
Aurora Downtown Revitalization & Aurora Arts Centre
Stakeholder Contributions
DuPage County
$1.35m loan forgiveness
Illinois Housing Development Authority
$15.1m Low Income Housing Tax Credits
$1.4m Donation Tax Credits
City of Aurora
$3m Section 108 Loan ($3.8 Million including interest)
$600k HOME Funds
$700k CDBG Funds
$500k TIF Grant
$780k Arts Centre tax increment (which includes $280k interest) NEW SOURCE
$960k Food / Beverage / Home Rule Sales Tax NEW SOURCE
$1.5m Gaming Fund (backstop for Food / Bev / Home Rule Sales Tax & Restaurant Lease)
$150k Gaming Tax grant
Building Fee waiver 100% (non-profit fee waivers customarily 50%)
Aurora Civic Center Authority
$1.05m Capital Contribution
$1.04m Restaurant Lease Proceeds
The Community Builders
$1m NSP2
$750k Residential Cash Flow
$500k Deferred Developer Fee
Aurora Township
$500k CDAP Loan - repaid through Arts Centre tax increment above NEW SOURCE
Neighbor Works
$366k loan forgiveness
There are also two additional actions being considered for approval that will accompany this agreement. The first is a city obligation to provide 78 parking spaces within close proximity of both Coulter Court and the Aurora Arts Centre. The city will be considering the acquisition of parking spaces nearby Coulter Court for long term gain.
The second is a commitment to ACCA regarding future Casino Head Tax Revenues. The City will continue to pay ACCA 30% of Casino Head Tax Revenues pursuant to R95-210 regardless of the location of the casino or lease status throughout the duration of the loan repayment period. The City of Aurora would agree to continue Casino Head Tax Payments of no less than $435,000 to ACCA for a period of ten years 2018 - 2027. In such case that 30% of Casino Head Tax Revenues once again exceeds $510,000 in a calendar year, in the calendar year immediately following such occurrence, the maximum amount of Casino Head Tax Revenues payable to ACCA (30%) shall be increased above the $510,000 maximum annually each year thereafter through the duration of the loan period. The mechanism for this commitment to ACCA is being drafted by the legal staff in order to accompany this agreement.
IMPACT STATEMENT:
This action will have a positive impact on the City, its residents and the downtown. The funding sources proposed are typical sources for projects such as this. Repurposing these historically significant buildings in the downtown; creating jobs and driving additional foot-traffic will have a spin off effect on other development nearby.
RECOMMENDATIONS:
It is recommended that the attached Amended and Restated Development Agreement be approved"
cc: Alderman O’Connor, Chairman
Alderman Mervine
Alderman Bohman
Alderman Mesiacos, Alternate
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution Authorizing the Execution of an Amended and Restated Development Agreement Between the City of Aurora, The Aurora Metropolitan Exposition, Auditorium and Office Building Authority and Aurora Arts Center Developer LLC for the Properties Located at 5 East Galena Boulevard and 2-20 South Stolp Avenue - Aurora Arts Centre Commercial Project.
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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 Corporate Authorities of the City of Aurora, Kane, Kendall, Will and DuPage Counties, Illinois approved under Resolution R16-384, on December 13, 2016 a Development Agreement between the City of Aurora ("City"), the Aurora Metropolitan Exposition, Auditorium and Office Building Authority ("ACCA") and Aurora Arts Center Developer LLC (the "Developer") relative to the commercial portions of the Aurora Arts Centre Project, which concerns property at 5 East Galena Boulevard and 2-20 South Stolp Avenue, Aurora, Illinois; and
WHEREAS, the Developer is desirous to begin construction during the spring of 2017, in order to capture the maximum credit under Aurora's River Edge Redevelopment Zone State Historic Tax Credit prior to its sunset date of December 31, 2017, and to date has taken appropriate actions to further its commitment to the project, the scope of which has not substantially changed, and
WHEREAS, The City, ACCA and the Developer, since approval of R16-384, have continued to refine the development agreement, and make adjustments where necessary based upon more recently available and/or updated data; and
WHEREAS, the multiple funding sources approved as initially provided in R16-384 are revised, as well as more clearly defined in said Amended and Restated Agreement, including bridge loan sourcing, loan collateralization, guarantees, and repayment sources; and
WHEREAS, the Amended and Restated Development Agreement contemplates the provision by the City of up to $5,930,000 in Section 108 funding, a bridge loan prior to Section 108 loan funding, Community Development Block Grant funding, a TIF grant, a Community Development Assistance Program Loan through Aurora Township, and a gaming Fund grant (collectively, the “City Facilitated Funds”), to be used in furtherance of the rehabilitation and development of the commercial portions of the Aurora Arts Centre Project, all subject to the terms and conditions as set forth in the Amended and Restated Development Agreement and various sub-agreements relative to the City Facilitated Funds to be entered into prior to disbursement of any particular portion of the City Facilitated Funds; and
WHEREAS, the City Facilitated Funds are more specifically contemplated to be comprised of $3,800,000 in Section 108 funding (which includes $800,000 interest), $700,000 in Community Development Block Grant funding, a $500,000 TIF grant, $780,000 in repayment of an Community Development Assistance Program Loan through Aurora Township (which includes $280,000 interest) and a $150,000 grant from the Gaming Fund. As the section 108 funding may not occur prior to construction, a bridge loan by the City is contemplated to be made, which will be repaid by the Section 108 funding once it issues; and
WHEREAS, it is understood that the City continues to seek additional funding sources and that the sources and amounts set forth above may be revised prior to disbursement, but in no event shall the amount of City Facilitated Funds exceed Five Million Nine Hundred Thirty Thousand and No/100 Dollars ($ 5,930,000.00) without further City Council approval; and
WHEREAS, the Corporate Authorities of the City of Aurora, Kane, Kendall, Will and DuPage Counties, Illinois, find and determine that it is in the best interests of the City of Aurora and its residents to approve the Amended and Restated Development Agreement, attached hereto and made a part thereof as Exhibit A, and further find that but for the provision of the City Facilitated Funds as provided therein, the property would not otherwise be developed in the manner as provided in the Amended and Restated Development Agreement. For clarity purposes, the aforementioned Amended and Restated Development Agreement shall wholly replace the development agreement previously approved as Resolution R16-384. )
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows:
Section 1 The Preambles hereto are hereby made a part of, and operative provisions of, the Resolution as fully as if completely repeated at length therein.
Section 2 The Mayor and City Council of the City of Aurora hereby find that it is in the best interests of the City of Aurora and its residents that the aforesaid Amended and Restated Development Agreement with ACCA and the Developer, and the various sub-agreements contemplated thereunder, be entered into by the City of Aurora, with said Development Agreement to be substantially in the form attached hereto and made a part hereof as EXHIBIT A. Any additional edits, revisions or amendments to the Development Agreement subsequent to this approval are subject to the approval of the City Attorney and the Mayor, and so long as the contemplated uses of the City Facilitated Funds in furtherance of the commercial portions of the Aurora Arts Centre Project remains the same, and the amount of City Facilitated Funds does not exceed Five Million Nine Hundred Thirty Thousand and No/100 Dollars ($ 5,930,000.00).
Section 3 The Mayor and City Clerk of the City of Aurora, Kane, Kendall, Will and DuPage Counties, Illinois, are hereby authorized to execute for and on behalf of said City of Aurora, the aforesaid Amended and Restated Development Agreement, the sub-agreements contemplated thereunder, and all other documents necessary to facilitate the Amended and Restated Development Agreement and provision of the City Facilitated Funds for the uses specified in the Agreement.
Section 4 That the aforementioned Amended and Restated Development Agreement wholly replace the development agreement previously approved as Resolution R16-384.
Section 5 This Resolution shall take affect from and after its adoption and approval as required by law.