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TO: Mayor Richard C. Irvin
FROM: David Dibo, Economic Development Director
DATE: September 8, 2023
SUBJECT:
A Resolution Authorizing the Execution of Assignment and Assumption Agreement Regarding the Hotel Occupancy Tax Economic Incentive Agreement by and Between the City of Aurora, Illinois and Midwest Management II, Inc. (Holiday Inn Express - 111 North Broadway, Aurora, Illinois)
PURPOSE:
The owner of the Holiday Inn Express has informed the City per the original agreement referenced below, that they have received an offer that they has been conditionally accepted to sell the Hotel to an experienced hotel owner operator. This would require the assignment of the Redevelopment/Revenue Sharing Agreement.
BACKGROUND:
In 2014/2015 the old Comfort Inn was renovated into a new Holiday Inn Express (dba Midwest Management) with a total recapitalization of over $6.0 million.
Part of the investment for renovation was a forgivable loan from the City for $500,000.00 plus interest of 4.5% to be repaid from Hotel Taxes generated by the renovated Holiday Inn Express. In fact, the hotel has exceeded projections and this loan is projected to be paid back in approximately two (2) years compared to the approximate four (4) years remaining on the original mortgage. This is in spite of low occupancy that occurred during the Covid-19 pandemic. The current loan balance as of December 31, 2022, is $205,063.02.
DISCUSSION:
Assignment provisions are a standard part of City redevelopment agreements due to the long-term nature of some of the incentives involved in said agreements. The original agreement requires the City to agree to this transfer as long as the new buyer/operator has proven experience in the hotel industry. The City and Developer want any project to be successful even if a developer changes during the term of the agreement.
The requested Assignment Agreement (Exhibit B) is a complete transfer of the Hotel Occupancy Economic Incentive Agreement approved by ...
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