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TO: Mayor Richard C. Irvin
FROM: Martin S. Lyons, Chief Financial Officer/City Treasurer
DATE: June 4, 2019
SUBJECT:
A resolution to amend the Redevelopment Agreement (RDA) between UEP Aurora LLC (UEP), Urban Equity Partners, LLC and the City of Aurora to allow for the release of the short term loan of $1,195,408.24 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 3 (h) if proposed TIF district #10 was not approved. The same agreement also provides for the disbursement of the short term loan of $1,195,408.24 upon satisfactory proof that the Terminal building will be eligible for historic tax credits. This has been accomplished and UEP would like to move forward with the redevelopment project. This resolution will allow for this expedited schedule and will make clear that UEP is still responsible for the loan repayment regardless of the disposition of the TIF if they choose to proceed.
BACKGROUND:
In February 2018 the City approved two RDAs involving Urban Equity Partners, LLC and its related entities. One RDA was for the renovation of the Terminal Building at Broadway and Galena and the second for the Keystone Building on Stolp south of Galena. Both agreements included the provision of a short term loan ($1.706 million for Keystone and $1.195 million for Terminal) to be paid back through the use of Historic tax credits within approximately two years depending on the construction/occupancy timing of both buildings. The Keystone loan has not been an issue due to the fact that TIF 9 has already been created. The Terminal loan has not been processed because of the originally anticipated adoption of the new TIF before financing was being processed. UEP Aurora desires (as does the City), to move ahead with their own financing and begin construction. To do this, they also need the City's short term loan financing of $1.195 million.
DISCUSSION:
The City is very excited that our development partners are moving quickly to redevelop both the Keystone and Terminal Buildings. In order to facilitate the start of the Terminal development the City and UEP need to close on financing for the construction. In this case this means that the City needs to disburse the short term loan of $1.195 million per the RDA with UEP. Under separate cover, the City Council reviewed and approved the approval of a Line of Credit at the May 28, 2019 meeting, which will provide funding for this loan. Unfortunately, the RDA for the Terminal 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 Terminal development is TIF eligible. Further, based on meetings with School District 131, there should be no objection from them at the required Joint Review Board meeting to form the TIF later this summer. As noted above the RDA also states that once the property is confirmed to be eligible for historic tax credits (the source of repayment for the short term loan), that UEP can request disbursement.
To bring the above two provisions into alignment city staff recommends amending the RDA by adding the following two paragraphs as a new Section 3(i):
(i) (1) Notwithstanding any provision of this Redevelopment Agreement to the contrary, the City Treasurer may, in his discretion, authorize the disbursement of the Bridge Loan set forth in Section (e)(1) 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 (e)(1) that constitute prerequisites to the Bridge Loan, and has provided or pledged sufficient security or surety to repay the Bridge Loan consistent with Section (i)(2) below.
(2) In the event that the TIF Redevelopment Plan and TIF District is not created, but the Bridge Loan as defined in Section 3 (e) (i) is disbursed, UEP Aurora shall be required to repay the bridge loan in full with interest from sources defined herein and according the schedule defined in this RDA. In the event the failure to adopt the TIF Redevelopment Plan and TIF District prevents the Terminal redevelopment project from being completed, UEP is required to repay the Bridge Loan with interest as defined in this RDA within thirty-six (36) months from all sources available to UEP Aurora and Urban Equity Properties, LLC.
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 the Terminal Building 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 Robert J. O'Connor
Alderman Edward J. Bugg
Alderman Theodoros C. Mesiacos
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 UEP Aurora, LLC for the Redevelopment of the Terminal Building at Galena Blvd and Broadway 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, UEP Aurora, LLC, and Urban Equity Properties, LLC have entered into an agreement for the redevelopment of the real property located at 2 N Broadway, Aurora, Illinois and commonly known as the Terminal Building pursuant to Resolution R19-054 on February 26, 2019, (hereinafter the RDA); and
WHEREAS the RDA includes the provision of a bridge loan for $1,195,408.24 upon certification of the Terminal building being eligible for historic tax credits 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 the Terminal building, and,
WHEREAS, and 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; and further
BE IT RESOLVED, that the Mayor shall be and hereby is authorized and directed to execute said amendment on behalf of the City; and further
BE IT RESOLVED, that the City Treasurer shall be and hereby is vested with all necessary powers and duties to carry the purposes of the RDA and the aforesaid amendment thereto into effect and shall exercise such powers and duties as set forth therein.