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TO: Mayor Richard C. Irvin
FROM: Martin S. Lyons, Chief Financial Officer/City Treasurer
DATE: July 5, 2019
SUBJECT:
A resolution to amend the Redevelopment Agreement (RDA) between the City of Aurora and 80 S. River LLC, for the redevelopment of the former West Aurora School District Administration Building located at 80 S. River Street to allow for the release of the grant of $850,000 prior to final adoption of the Tax Increment Finance (TIF) District approval.
PURPOSE:
The RDA provided for the whole agreement to be void in Section 2 (j) if the proposed Benton River TIF district is not approved. The same agreement also provides the Developer in the amount of $850,000 (the “Grant”). The City shall disburse thirty-three percent (33%) of the Grant amount to the Developer upon (i) the developer providing the City with final architectural drawings for the Project; (ii) the building permits being pulled by the Developer for the Project; (iii) completion of all applicable studies and reports; and (iv) the Developer providing the City with proof of sufficient financing, including but not limited to a written loan commitment from a registered bank, chartered credit union or other financial institutions and pledged equity, to fulfill its obligations under this Agreement. The City shall disburse the second thirty-three percent (33%) of the Grant amount upon the satisfactory completion of the rough-in inspection for the Project. The City shall disburse the final thirty-three percent (33%) of the Grant amount upon the Developer’s receipt of the Certificate of Project Completion, as is hereinafter defined. This resolution will allow for 80 S. River to proceed and for the City to disburse according to the above schedule. The developer will need to make a substantial investment in the project in order to receive all three payments and as such the investment of the $850,000 will result in substantial improvement of the property regardless of the disposition of the TIF.
BACKGROUND:
In March 2019 the City approved an RDA involving 80 S River, LLC. The RDA is for the renovation of the The former West Aurora School District Administration building, a two-story building with approximately 34,000 square feet. Current plans are for the development of 22 market rate apartments on the second floor and readapting the first floor to accommodate a mix of office and retail users. Fundamental to this transaction and part of the City’s calculus when evaluating this proposal, is the commitment from Kluber Architects and Engineers, a 25 year old award winning architectural and design firm, will be relocating its corporate headquarters in approximately 8,000 square feet in a renovated 80 S. River St.
DISCUSSION:
The City is very excited that 80 S River, LLC is moving quickly to redevelop 80 S. River St. In order to facilitate the project the City and the Developer need to close on financing for the construction. This is just one of the conditions to be met for the City to disburse the 1st 33% distribution amount of the $850,000. It is also very likely that all of the other conditions for this disbursement will be met before the TIF is approved by the City Council later this fall or even at the start of 2020 (the timing of the TIF approval can impact the total financing received by the TIF over the 23 year life).Unfortunately, the RDA for the 80 S River St project states that the RDA is void if a TIF is not adopted. The City is confident based on discussions with our consultant Kane McKenna and Associates that the property for the 80 S. River St development is TIF eligible. Further, based on meetings with School District 129, there should be no objection from them at the required Joint Review Board meeting to form the TIF
To bring the above two provisions into alignment city staff recommends amending the RDA by adding the following as a new Section 3(i):
(i) Notwithstanding any provision of this Redevelopment Agreement to the contrary, the City Treasurer may, in his discretion, authorize the disbursement of the $850,000 grant as defined in Section 1 (i) prior to the City’s establishment of the TIF District contemplated by the Redevelopment Agreement when the City Treasurer is satisfied that the Developer has met its obligations under Section 1 (i) that constitute prerequisites to the grant.
All other conditions of the RDA will remain in full force and effect.
IMPACT STATEMENT:
Approval of this amendment to the RDA will allow for the expedited renovation of 80 S. River St and bring new residents into the downtown in accordance with total redevelopment goals of the City.
RECOMMENDATIONS:
That the City Council approve an amendment to the RDA through the attached resolution.
cc: Finance Committee Chairman O'Connor
Alderman Bugg
Alderman Hart-Burns
Alderman Llamas
Alderman Franco
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution Amending the Redevelopment Agreement (RDA) between the City of Aurora and 80 S. River, LLC for the Redevelopment of 80 S. River St.
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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 of Aurora, and 80 S. River, LLC have entered into an agreement for the redevelopment of the real property located at 80 S. River St., Aurora, Illinois and R19-066 on March 12, 2019, (hereinafter the RDA); and:
WHEREAS, the RDA includes the provision of a grant for $850,000 upon meeting criteria enumerated in the RDA and upon the adoption of a Tax Increment Redevelopment Plan and Tax Increment Financing District; and
WHEREAS, the parties desire the expeditious completion of the redevelopment of 80 S River St. and
WHEREAS, an amendment to the RDA is required to allow for the disbursement of the bridge loan prior to the adoption of the TIF as noted above;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: that the amendment to the RDA as set forth in Exhibit A to this resolution and incorporated as if fully set forth herein shall be and hereby is authorized.