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TO: Mayor Robert J. O’Connor
FROM: Bill Wiet, Chief Development Services Officer
DATE: April 20, 2017
SUBJECT:
To provide financial assistance in the amount of $310,000 to M14 Properties to help in the construction of a 39,200 square foot basketball skills development center, using Tax Increment Financing District No. 7 funds, as well as a property tax rebate.
PURPOSE:
M14 Hoops provides basketball skills development for boys and girls in grades 3-12. They also sell apparel and digital ball handling workout programs. For the past six years, M14 Hoops has been renting court time from facility located at 525 N Washington Street in Naperville. To accommodate their increased need for court time, they will be building a new 39,200 square foot facility near the intersection of Church Road and Corporate Boulevard.
M14 Hoops anticipates bringing sixteen full-time and sixteen part-time jobs to Aurora in the first year of the project. Two years from now, that number will grow to twenty full-time and sixteen part-time jobs. With an expected salary of $40,000 per full-time job, this represents an annual payroll of $1,120,000.
BACKGROUND:
Since selecting the site, the budget for the entire project has increased from $4,900,000 to $5,210,000. The budget increases are due to unforeseen infrastructure and site costs including looping the water main from Raddant Road, acquiring two easements from NiGAS to bore directly underneath the gas main and extending sewer and water. As a result there is a $310,000 gap in the project.
M14 Hoops has been approved for a loan in the amount of $310,000.00 under the Aurora Township Development Assistance Program (CDAP). The CDAP is a revolving loan fund that is used for companies that are locating or expanding in Aurora Township. Projects are required to benefit at least 51% low-to-moderate income individuals and are required to create at least one job for every $15,000 loaned. The loan term will be 10 years at an interest rate of 4.5%.
DISCUSSION:
M14 is seeking $181,600 for water infrastructure improvements from TIF #7. These watermain improvements will benefit TIF #7. Upon completion and acceptance of the watermain improvements the City would release a two party check to M14 Hoops and Aurora Township. The payment would then be applied to the outstanding balance of the $310,000 CDAP Loan. The City would also provide a property tax rebate from its share of the property tax collected on the subject property to the value of $128,400 plus annual interest of 4.5%. M14 Hoops projects an annual property tax revenue of $145,040 based on an assumed property tax rate of $3.70 per square foot. The City of Aurora’s share of the property tax revenue generated by the parcel is 20% which amounts to $29,000 annually. It is estimated that based upon the property taxes to be generated the tax abatement will last five (5) years. However the agreement will provide up to ten years but not longer than it generating $128,400 plus 4.5% interest. As a result the CDAP Loan will be paid off prior to the ten (10) year loan term, making those funds available again for others.
Funding for the water infrastructure improvements ($181,600) are available in Account Number 237-1830-465.73-99 (TIF 7 Capital Improvement - Other)
The Invest Aurora Board of Directors recommended that the City of Aurora authorize a reimbursement of $181,600 for installation of watermain and a property tax rebate agreement in the amount of o$128,400 plus 4.5%.
IMPACT STATEMENT:
The project will have a positive benefit to the area, providing property taxes and jobs at a location that is currently vacant. The watermain improvements will also be a benefit to Tax Increment Financing District #7, although the project itself is not in TIF 7.
RECOMMENDATIONS:
It is recommended that the Tax Abatement and Public Utility Improvements Cost Reimbursement Agreement between the City of Aurora and M14 Properties 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 Approving Tax Abatement and Public Utility Improvements Costs Reimbursement Agreement between the City of Aurora and M14 Properties for Property at Church Road and Corporate Boulevard.
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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, , M14 provides basketball facilities and skill development for children in third grade to twelfth grade, as well as sells basketball apparel and digital ball handling workout programs; and
WHEREAS, M14 is under contract to acquire the real property generally located at the intersection of Church Road and Corporate Boulevard in the City of Aurora, and desires to develop on the M14 Property a Thirty-Nine Thousand Two Hundred (39,200) square foot basketball training facility; and
WHEREAS, as a result of unique difficulties in constructing the Project, the budget for the entire project has increased from $4,900,000.00 to $5,210,000.00, causing a $310,000.00 gap in funding; and
WHEREAS, due to this funding gap, M14 is seeking $181,600 for water infrastructure improvements from TIF #7, and a property tax rebate from its share of the property tax collected on the subject property to the value of $128,400 plus annual interest of 4.5%; and
WHEREAS, funding for the water infrastructure improvements are available in Account Number 237-1830-465.73-99 (TIF 7 Capital Improvement - Other)
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: That the Tax Abatement and Public Utility Improvements Costs Reimbursement Agreement between the City of Aurora and M14 Hoops for Property at Church Road and Corporate Boulevard be approved pursuant to the provisions contained in Exhibit A, attached thereto and made a part thereof.