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TO: Mayor Richard C. Irvin
FROM: David Dibo, Director of Economic Development
DATE: February 8, 2019
SUBJECT:
A Resolution authorizing the execution of a Redevelopment Agreement with Aurora Town Center Associates, LLC to facilitate the redevelopment of certain real property located adjacent to the intersection of Ogden Ave. and 75th St. in the City of Aurora.
PURPOSE:
To promote desired development in and around the Route 59 corridor, the Economic Development Division recommends the approval of a Redevelopment Agreement between the City of Aurora, IL and Cedarwood. This development will provide for an assisted living facility in Phase I and independent senior living in Phase II.
BACKGROUND:
There are a number of benefits to facilitating the Cedarwood development: (1) Bring shorter term (construction) and longer term (operations) employment. Current estimates are the creation of almost 600 construction jobs and 130 permanent jobs. (2)Assessments and real estate taxes revenue will increase substantially and when both phases are completed are estimated to be between $800,000 and $1.0 million. (3)The buildings will service a proven need in the market and do so without adding any student population to Indian Prairie School District 204, a key motivation when the city was first approached by Cedarwood. (4)The agreement will provide the underlying revenues that will enable the extension of Commons Drive, a missing link of the road that will open up traffic to the south and take traffic burden from Route 59 and do so based on future/incremental tax revenue rather than coming from existing City coffers.
Current plans are for an 87 bed assisted living facility (Phase I) followed by the construction of a 144 unit independent living complex. Despite substantial development in the immediate area, the site has remained vacant due to a combination of factors, most notably a prior annexation agreement that contemplates the extension of Commons Drive with the majority of its cost being the responsibility of the land owner rather than a more equitable sharing amongst prior beneficiaries. Circumstances today, including a strong economy, a growing demand for senior housing and the recently completed draft Route 59 Master Plan, that envisions alternatives to traditional retail development, have provided impetus for the site’s timely development.
Cedarwood has an option to purchase the land from Old Second Bank. The City has been working with Cedarwood to frame a development plan that will not only generate sufficient revenues to justify the extension of Commons Drive, but contemplates certain reasonable zoning variances, (while not applied for or approved), will facilitate economically feasible development.
The requirement for the property to provide for the construction/extension of Commons Drive has created a burden on the property that has prevented development to date. The developer initially requested the use of Tax Increment Financing (TIF) to provide them with a direct source to complete Commons Drive as well as complete required storm water improvements on and around the site. The format of this request would have captured the entire tax increment for the life of the TIF, which the City declined to provide.
DISCUSSION:
The Cedarwood development proposal provides an excellent utilization of this site as a transition from the retail commercial area to the north and the residential areas to the south and west. This proposal is also sensitive to the goals of School District 204 for providing increased equalized assessed valuation without bringing in additional student populations. As noted above, the requirement and demonstrated need to provide better transportation in the area through the extension of Commons Drive has prohibited the development of the site over the past two decades. The extension of this road will provide an area-wide benefit as well as giving access to the far west parcels once the site is subdivided.
It is estimated that the design and construction of the Commons Drive extension will be $7.1 million. Based on the value of Phase I and Phase II of this development, staff estimates that the tax increment produced from this total development will be approximately $1.0 million. This will provide sufficient funding for the complete construction of the road, a required coverage ratio if the City elects to do revenue bonds instead of General Obligation Bonds and further revenues for future development or distribution of funds to taxing bodies. A complete description of this analysis will be provide in the near future when the City reviews the approval of a TIF for this site. Execution of this RDA will be contingent upon the approval of such a TIF as outlined in Exhibit A.
IMPACT STATEMENT:
The approval of the RDA will set in motion a series of events that will lead to the development of a vibrant senior community undertaken by a national experienced developer which in turn will cause Commons Drive to be extended, improving traffic flow and accessibility all while not adding to the local student population. Jobs will be created and positive economic activity will result. Assessments will rise geometrically creating funds that will not only go to amortizing the costs of Commons Drive but will be available in the future for all taxing bodies. Because the size of the project is an anchor to the previously vacant property, adjacent auxiliary commercial lots will also likely be developed, increasing assessments with the resultant tax dollars being immediately available for the benefit of all taxing bodies.
RECOMMENDATIONS:
Staff recommends the approval of the Redevelopment Agreement attached as Exhibit A"
cc: Finance Committee
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
title
A Resolution authorizing the execution of a Redevelopment Agreement with Aurora Town Center Associates, LLC to facilitate the redevelopment of certain real property located adjacent to the intersection of Ogden Ave. and 75th St. in the City of Aurora.
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, Aurora Town Center Associates, LLC, (the "Developer") proposes to redevelop the Property by constructing a senior housing development initially consisting of an “assisted living” facility containing approximately 87 residential dwelling units (“Phase I”) followed by an “independent living” facility containing approximately 144 residential dwelling units (“Phase II”) and various other commercial uses (all of which shall hereinafter be referred to together as, the “Project”) located adjacent to the intersection of Ogden Ave. and 75th St.; and
WHEREAS, the Project would not be economically viable but for the assistance and participation of the City; and
WHEREAS, the real property constituting the Project area is subject to a 1998 Annexation Agreement requiring the developer of the property to cover the majority of the costs regarding the extension of Commons Drive, as well as stormwater improvements, utility connections and traffic related expenses, has heretofore prevented the property from being developed; and
WHEREAS, the City finds that it is in the best interests of the City and the health, safety, morals and welfare of the residents of the City for the City to execute an amendment to the 1998 Agreement as part of the Redevelopment Agreement;
WHEREAS, the City has further determined that it is in the best interests of the City and the health, safety, morals and welfare of the residents of the City to consider a Redevelopment Plan and Redevelopment Project Area, approve tax increment financing for the purpose of implementing the Redevelopment Plan and the Redevelopment Project Area and to finance and complete the necessary construction for the extension of Commons Drive and improvements to an existing retention pond located in the northeast corner of the Property east of the Commons Drive extension; and
WHEREAS, the City and the Developer have negotiated a Redevelopment Agreement to the aforedescribed objectives; and
WHEREAS, the Redevelopment Agreement is contingent on the City adopting a Redevelopment Plan and approving a Redevelopment Project Area and Redevelopment Financing, commonly referred to as, "Establishing a TIF District" to achieve the aforementioned objectives; and
WHEREAS, said Redevelopment Agreement is attached to this resolution as Exhibit A and incorporated into this resolution as if fully set forth herein;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: that the Redevelopment Agreement attached to this resolution as Exhibit A shall be and hereby is approved; and further
BE IT RESOLVED, that the Mayor is authorized to execute a Redevelopment Agreement that substantially and materially conforms to the provisions of the Redevelopment Agreement set forth in Exhibit A on behalf of the City; and further
BE IT RESOLVED, that the several City Officers and employees designated in the Redevelopment Agreement shall be and hereby are authorized to perform the function and duties set forth in the Redevelopment Agreement; and further
BE IT RESOLVED, that the Mayor is authorized to execute such additional documents or agreements between the City and the Developer which are related to and subordinate to the Redevelopment Agreement so long as (1) such additional documents or agreements are consistent with and do not conflict with the provisions of the Redevelopment Agreement authorized by this Resolution (2) are necessary to carry into effect the purposes of the Redevelopment Agreement, and (3) do not impose any additional liabilities upon the City.