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TO: Mayor Richard C. Irvin
FROM: David Dibo, Executive Director
DATE: March 9, 2021
SUBJECT:
A Resolution Authorizing the Execution of a First Amendment to the Redevelopment Agreement Previously Entered into Between the City of Aurora and Bernie Laskowski/Craft Urban.
PURPOSE:
To modify certain provisions of the previously approved RDA to allow construction to begin immediately and enable the owner/restaurateur Bernie Laskowski to draw from the previously approved $600,000 loan.
BACKGROUND:
There were two Council actions that are material to this amendment. The first is resolution R19-421 on December 30, 2019 provided for the City’s purchase of the adjacent vacant lot (I W Downer Place) and a commitment to fund up to $600,000 in a renovation/construction loan subject to terms to be spelled out in a subsequent RDA and the second with resolution R20-077 on April 1, 2020 that formalized mutual understandings and commitments between Mr. Laskowski and the City.
The pandemic had a direct impact of the timing laid out in the timeline attached to the original RDA. In addition, after purchasing the building in December of 2019, Mr. Laskowski and his team re-evaluated certain aspects within the restaurant that led to a decision to replace three planned upstairs apartments with additional function and restaurant space. A number of meetings with the development services team under the guidance of John Curley occurred that vetted the proposed modified plan. The result is that building permits are about to be issued.
Since the RDA was approved, the City has determined that having all if its monetary advances go through a title company is a more efficient best practice. As such, the City has agreed to an arrangement with Chicago Title that will enable the city to retain the protections of sign offs by John Curley and Marty Lyons while ensuring that lien waivers and other third-party protections are in place.
John Curley has approved the first $50,000 advance based on approved upfront costs.
DISCUSSION:
Staff reviewed both the plan changes and it financial impacts. The new configuration will increase the restaurant space by an additional 50 seats and allow private dining/small banquets for up to 100 persons. The resultant seating capacity will more than double. An elevator will be installed as well fire sprinklers.
The City has reviewed the economics of forgoing the costs of fitting out the three apartments against the additional costs of installing an elevator and fire sprinklers. The increase costs for the elevator and other items will be more than offset by avoiding the buildout of the three apartments, estimated to cost almost $300,000. There is a substantial benefit to utilizing the fixed costs of the restaurant build out and amortizing them over a sizably increased seating capacity.
The original projection had Craft Urban using their net revenues as payments for the City’s debt service of about $76,000 a year for a term of ten years. Taking in account the increased seating capacity and segmenting of the market to include banquets, the restaurant’s profitability is projected to almost double.
Traditional lenders often look at a “coverage ratio” meaning how much “extra” money is available to the owner once they have paid their debt serve obligations. In the original projection, there was a cushion of about 20%. Based on this new configuration this margin can increase substantially so that for every dollar that the owner has in obligations to the city, there is another dollar in “excess” funds that will serve as additional security for the City’s loan.
IMPACT STATEMENT:
Approval of this amendment will enable this redevelopment, primed to start just as the pandemic took hold, to move forward, the reconfiguration will enhance the security of the City’s loan. The project will begin construction as soon as approvals are in place so that opening will occur soon after the Paramount reopens and commensurate with the city return to a sense of normalcy.
The restaurant use is consistent with the downtown master plan and with the current Downtown Core zoning district.
RECOMMENDATIONS:
Staff recommends the approval of the resolution Authorizing the Execution of a First Amendment to the Redevelopment Agreement Previously Entered into Between the City of Aurora and Bernie Laskowski/Craft Urban.
ATTACHMENTS:
Exhibit A - First Amendment to RDA
cc:
Alderman Robert O’Connor, Chairperson
Alderman Edward J. Bugg, Vice Chairperson
Alderman Carl Franco
Alderwoman Scheketa Hart-Burns
Alderman Emmanuel Llamas
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
title
A Resolution Authorizing the Execution of a First Amendment to the Redevelopment Agreement Previously Entered into Between the City of Aurora and Bernie Laskowski/Craft Urban.
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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 desires to increase the number of quality restaurant establishments in its downtown area; and
WHEREAS, Bernie Laskowski is a successful chef and restaurant owner and founder of the Craft Urban restaurant located in Geneva, Illinois and is planning a sister restaurant in the City of Aurora; and
WHEREAS, the City of Aurora desires to lend Bernie Laskowski, or a designated entity managed and operated by Bernie Laskowski, up to Six Hundred Thousand and No/100 U.S. Dollars ($600,000.00) from existing lines of credit for the purpose of redeveloping 41 S. Stolp Avenue and the adjacent lot as a Craft Urban restaurant and/or reimburse certain expenses related to the closing of the contemplated transaction;
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Aurora, Illinois, that the First Amendment 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 an amendment to the Agreement that substantially and materially conforms to the provisions of the First Amendment set forth in Exhibit A on behalf of the City; and further
BE IT RESOLVED, that the Mayor, Chief Financial Officer, Director of Economic Development, the Chief Development Services Officer, and each of their respective designees shall be and hereby are authorized to perform the City’s duties set forth therein described.