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HomeMy WebLinkAboutRESOLUTION - 7-20 - 1/28/2020 - Reimbursement Agreement Shapra Group LLCRESOLUTION NO.7-20 A RESOLUTION AUTHORIZING THE MAYOR AND VILLAGE CLERK TO EXECUTE A REIMBURSEMENT AGREEMENT BETWEEN THE VILLAGE OF ELK GROVE VILLAGE AND SHAPRA GROUP II, LLC AND EOUITYROOTS, INC. NOW, THEREFORE, BE IT RESOLVED by Mayor and Board of Trustees of the Village of Elk Grove Village, Counties of Cook and DuPage, State of Illinois as follows: Section 1: That the Mayor be and is hereby authorized to sign the attached documents marked: TIF REIMBURSEMENT AGREEMENT a copy of which is attached hereto and made a part hereof as if fully set forth and the Village Clerk is authorized to attest said documents upon the signature of the Mayor. Section 2: That this Resolution shall be in full force and effect from and after its passage and approval according to law. VOTE: AYES: 4 NAYS: 0 ABSENT: 2 PASSED this 28 day of January 2020. APPROVED this 28 day of January 2020. APPROVED: Mayor Craig B. Johnson Village of Elk Grove Village ATTEST: Loretta M. Murphy, Village Clerk TIF REIMBURSEMENT AGREEMENT THIS REIMBURSEMENT AGREEMENT (this "Agreement") is made and entered into as of the 281h day of January, 2020 by and between the Village of Elk Grove, an Illinois home -rule municipal corporation located in Cook and DuPage Counties, Illinois (the "Village"), and Shapra Group II, LLC, an Illinois limited liability company and Equityroots, Inc., a Delaware corporation. (Shapra Group I1, LLC and Equityroots, Inc. are jointly referred to herein as "Developer"). The Village and Developer are sometimes referred to herein collectively as the "Parties" and individually as a "Party." RECITALS A. Pursuant to the terms of a Redevelopment Plan entitled "Higgins Corridor Tax Increment Financing Redevelopment Plan and Project," dated July, 2017 ("Redevelopment Plan") the Village designated a certain area within its municipal limits for redevelopment and revitalization ("Higgins Corridor Redevelopment Project Area"). B. Included in the Redevelopment Plan is an eligibility report, outlining conditions which warrant the designation of portions of the area as an improved "conservation area" and a vacant "Blighted Area" as those terms are defined in the Tax Increment Allocation Redevelopment Act, 65 ILCS 5/11-74.4-1, el seq.; as amended (the "Act") C. The Village is desirous of having the property within the Higgins Corridor Redevelopment Project Area redeveloped and revitalized in order to strengthen the Village's economic base and enhance the quality of life of the Village as a whole. D. The Village is authorized under the provisions of the Act to reimburse Developer for certain eligible costs using tax increment financing ("TIF") as set forth in the Act. E. To stimulate the redevelopment of the Area, and pursuant to the Act, on November 14, 2017, the corporate authorities of the Village passed the following ordinances: (1) Ordinance No. 3530, "An Ordinance Approving the Village of Elk Grove Village Higgins Corridor Tax Increment Financing Development Plan and Project"; (2) Ordinance No. 3531, "An Ordinance Designating the Village of Elk Grove Village Higgins Corridor Redevelopment Project Area"; (3) Ordinance No. 3532, "An Ordinance Adopting Tax Increment Financing for the Village of Elk Grove Village, Cook County, Illinois, in Conjunction with the Designation of the Village of Elk Grove Village Higgins Corridor TIF Redevelopment Project Area" (the ordinances, together with the exhibits appended thereto, are sometimes hereinafter collectively referred to as the ("TIF Ordinances"). F. Developer has entered into an agreement to purchase Lot 2 in the Elk Grove Technology Park Subdivision, as amended, which is more fully described in Exhibit A attached hereto (the "Property"). Developer proposes to develop a hotel (the "Hotel") on the Property, as depicted on the preliminary site plan attached hereto as Exhibit B. Title to the Property shall be held in the name of Shapra Group II, LLC, a party to this Agreement. G. Developer has estimated that the acquisition of the Property and the construction of the Hotel (collectively, the "Project") will result in significant private investment, create additional revenue and employment opportunities for the Village and its residents, and provide needed hotel space for visitors to the Technology Park and other business in the Village's business park. H. The Village has the authority to promote the health, safety and welfare of its inhabitants, to prevent the onset of blight while instituting conservation measures, to encourage private development in order to enhance the local tax base, and to enter into contractual agreements with third parties for the purpose of achieving the aforesaid purposes. I. This Agreement has been submitted to the corporate authorities of the Village for consideration and review and they have determined that the completion of the Project would be, in all respects, consistent with and in furtherance of the Redevelopment Plan. The Corporate Authorities have taken all actions required to be taken prior to the execution of this Agreement in order to make the same binding upon it according to its terms. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements herein contained, and other good and valuable consideration, the receipt and suf- ficiency of which are hereby acknowledged, the Parties do hereby agree as follows: I RECITALS PART OF AGREEMENT The representations, covenants and recitations set forth in the foregoing recitals are material to this Agreement and are hereby incorporated into and made a part of this Agreement as though they were fully set forth in this Article I. II MUTUAL ASSISTANCE The Parties agree to take such actions, including the execution and delivery of such documents, instruments, petitions and certifications (and, in the Village's case, the adoption of such ordinances and resolutions), as may be necessary or appropriate, from time to time, to carry out the terms, provisions and intent of this Agreement and to aid and assist each other in carrying out said terms, provisions and intent. III REDEVELOPMENT PROJECT 3.01 Hotel. Developer hereby represents and agrees that it will construct a hotel on the Property consisting of approximately Seventy -Nine (79) rooms along with all necessary parking areas, landscaping and outdoor amenities. To complete the Project as contemplated herein, Developer shall invest not less than Nine Million Dollars ($9,000,000) in private funds. The brand of the Hotel shall be agreed to by the Parties as a condition of the financial assistance as outlined in Article IV hereof and any substitution shall be reasonably agreed to by the Village. 3.02 Other Regulatory Agencies. Prior to commencing construction on the Project, Developer shall, with the approval and cooperation of the Village, petition for and obtain approvals from any regulatory agency having jurisdiction over the Property, including the Metropolitan Water Reclamation District. When necessary, Developer shall inform Village of all meetings and provide copies of all correspondence with any regulatory agency. 3.03 Plans and Permits for Project. Developer shall submit preliminary plans to the Village for review of the Project, including a site plan, renderings of the proposed building, landscaping, signage plans, a stormwater management plan and a budget. After approval of said preliminary plans, Developer shall submit its building plans for a building permit on or before April 1, 2020 and the Village shall either issue a building permit within fourteen (14) business days or notify Developer in writing with specificity how the submitted plans fail to meet the Village's code; Developer shall then resubmit plans correcting the deficiencies cited by the Village. The Village shall then review the re -submitted plans within fourteen (14) business days of receipt. Developer shall be responsible for all applicable fees, including permit and tap -on fees. Developer shall commence construction of the Hotel on or before May 1, 2020. For the purpose of this paragraph, "commence construction" shall mean the Developer has commenced site grading for the Hotel. If plans for building permits are not submitted on or prior to April 1, 2020, or if construction of the Hotel has not commenced by May 1, 2020, the Village may terminate this Agreement, or alternatively, may agree to extensions of the dates contained in this section 3.03 upon the request of the Developer, provided that neither date shall be extended by more than 60 days. If construction of the Hotel has not commenced by September 2, 2020, and if Developer has not conveyed to another person or entity that the Village deems able to develop a hotel on the Property by November 2, 2020, the Village shall have the right, but not the obligation, to acquire the Property from Developer not later than December 1, 2020 at the same price paid by Developer exclusive of fees, costs and transfer taxes. IV FINANCIAL ASSISTANCE 4.01. Project Viability The Developer represents to the Village that but for the financial assistance set forth in this Agreement, the Project would not be economically viable. In reliance on this representation, the Village has agreed to provide financial assistance as provided for herein. 4.02. Computation of Assistance. The Village has agreed to provide assistance to the Project based on the hotel/motel tax generated by the Project. Provided Developer is not in default under this Agreement or any applicable Village Code, the financial assistance will be computed as set forth in this paragraph. A. The amount of TIF reimbursement the Village shall pay to Developer each year shall be computed based on the hotel tax paid on behalf of the hotel to the Village as follows: Year Hotel Tat Rate Hotel Tax Rebate Percentage Rebate Year 1 6% 6% A rebate equal to 100% of taxes paid Year 2 6% 6% A rebate equal to 100% of taxes paid Year 3 6% 6% A rebate equal to 100% of taxes paid Year 4 6% 6% A rebate equal to 100% of taxes paid Year 5 6% 6% A rebate equal to 100% of taxes paid Year 6 6% 6% A rebate equal to 100% of taxes paid Year 7 6% 3% A rebate equal to 50% of taxes paid Year 8 6% 3% A rebate equal to 50% of taxes paid Year 9 6% 3% A rebate equal to 50% of taxes paid Year 10 6% 3% A rebate equal to 50% of taxes paid Year 11 6% 2% A rebate equal to 33% of taxes paid Year 12 6% 1 % A rebate equal to 16.6% of taxes paid By way of example, if the hotel room occupancy generates $1.0 million in revenue during year seven, the hotel tax at 6% would generate $60, 000.00 and the Village would reimburse Developer 50%for a total of $30,000. B. The Village shall compute the rebate each quarter of the calendar year and make quarterly payments to the Developer, with a three month lag time between collection and payment as follows: I" Quarter (January — March) shall be paid no later than July I"; 2 a Quarter (April — June) shall be paid no later than October 1"; 3 Quarter (July — September) shall be paid no later than December 31 "; and 4th Quarter (October — December) shall be paid no later than April I" of the following calendar year. C. All payments made to Developer pursuant to this Agreement shall be made from the Village's Higgins Corridor Tax Allocation Fund and this entire Agreement shall be subject to the Act. D. The Village has adopted Resolution No. 41-19 supporting a Cook County Class 7B economic incentive for the Project. The Village makes no representation as to the likelihood of the incentive being approved by Cook County. 4.03. Reporting. The Developer shall file a sworn monthly hotel tax return each month and submit payment due based on the return as required by the Village Finance Director and Village ordinances. The payment of the Village's financial assistance shall be based and computed solely on the Developer's hotel tax return filed with the Village, but paid with tax increment from the Higgins Corridor Redevelopment Project Area tax increment fund. 4.04. TIF Eligible Costs. The Village agrees to provide TIF assistance in an amount not to exceed the amounts set forth in 4.02 A. The financial assistance shall be used by the Developer to defray only those costs eligible for reimbursement under the Act as set forth in Exhibit C attached hereto. Prior to receiving reimbursement from the Village, Developer shall submit evidence that it has incurred and paid for the eligible costs set forth in Exhibit C, including statements, invoices and receipts. V GENERAL PROVISIONS 5.01 Default. A. Developer Default. The Developer shall be deemed in default of this Agreement if it: (1) fails to develop the Project in accordance with this Agreement; (ii) fails to make any monthly submission of its hotel tax return or to pay the hotel tax due and owing for that month; (iii) fails to pay or cause to be paid any real estate tax due and owing; (iv) fails to operate, or cause to be operated the Hotel; (v) fails to invest at least Nine Million Dollars ( $9,000,000 in private funds in the Project, or (vi) fails to commence construction prior to May 1, 2020 as required in 3.03, or such later date as extended as provided herein. In the event of a Developer default, the Village shall give Developer notice, and Developer shall have 30 day(s) to cure such default. If the Developer does not cure its default, the Village shall have the right to stop making payments to Developer as its sole and exclusive remedy, in addition to the right to purchase the Property as set forth in section 3.03. However, nothing contained herein shall be construed as limiting the Village's remedies in enforcing Village Codes and ordinances. B. Village Default. The Village shall be in default of this Agreement in the event Developer is not in default and the Village fails to make timely payments as required herein. In case of such default, Developer shall give notice to Village of default and allow Village 30 day(s) to cure. 5.02 Construction Indemnity. The Developer covenants and agrees, at its expense, to indemnify and save the Village, and its officers, agents, employees, engineers and attorneys (the "Inderrnitees") against, any actions, claims, and damages adjudicated to be a result arising directly from the Developer's construction of the Project, unless such claims, actions, damages, and demands are adjudicated to have arisen by reason of the negligent acts or omissions of the Village. 5.03 Insurance. The Developer agrees to obtain or cause its agents and contractors to obtain workers' compensation insurance coverage as required by applicable law and general liability insurance coverage in the amount of $1,000,000 per occurrence and $2,000,000 in the aggregate, with respect to construction of the Project. The Village shall be named as an additional insured on the general liability policy. The Developer, its contractors and agents shall maintain Workers' Compensation Insurance in amounts as required by Illinois law. 5.04 Prevailing Wage. Developer shall be responsible for meeting the requirements of the Illinois Prevailing Wage Act (820 ILCS 130 et seq.), (the "Wage Act") as it may be deemed applicable to the Project as determined by the State of Illinois. Developer hereby indemnifies the Village for any fines, penalties or other charges including reasonable attorney's fees incurred as a result of Developer's failure to satisfy the requirements of the Wage Act. Moreover, if the State of Illinois determines the TIF Improvements are subject to the Wage Act, the Village shall have no obligation to make any payment agreed to herein to Developer without the Developer first submitting the documentation required by the Wage Act. The Village and Developer agree that the Project should not be subject to the Wage Act, and further agree not to take any action that may cause the Project to be subject to the Wage Act. 5.05 Delay. For the purposes of any of the provisions of this Agreement, neither the Village nor Developer, nor any successor in interest, shall be considered in breach or default of its obligations under this Agreement in the event of any delay caused by events or conditions beyond the reasonable control of the party which in fact prevents the party from discharging its respective obligations hereunder and the timeframes for performance of those obligations shall be extended accordingly. 5.06 Building, Subdivision Codes. The Parties agree that construction of the Project shall comply with all federal, state and Village building codes, subject to modifications as approved by the Village pursuant to the ordinances approving the plat and zoning relief. 5.07 Right to Inspect. The Developer agrees that with reasonable advance notice and during normal business hours, the Village shall have the right to review from time to time, the Developer's books and records specifically relating to room revenue generated by the Hotel to verify that the hotel taxes were properly computed and paid. The Village shall also have the right to review or audit any records necessary to document that Developer has incurred and paid the TIF Costs. 5.08 Covenant to Pay Taxes. Developer hereby acknowledges that the sole source of the Village's payment for the Property is the incremental real estate taxes to be generated by the Project. Developer hereby covenants to pay or cause to be paid all real estate taxes levied against the Project promptly, as soon as they become due and owing. In the event Developer fails to pay real estate taxes when due, the Village shall have the right to withhold payments to the Developer until said taxes are paid. VI AUTHORITY 6.01 Powers. The Village hereby represents and warrants that the Village is a home rule unit of government and has full constitutional and lawful right, power and authority, under currently applicable law, to execute and deliver and perform the terms and obligations of this Agreement, including but not limited to the right, power and authority to acquire the Property as described herein, and this Agreement has been or will be duly and validly authorized and approved by all necessary Village proceedings, findings and actions. 6.02 Authorized Parties. Whenever under the provisions of this Agreement and other related documents and instruments or any supplemental agreement, request, demand, approval, notice or consent of the Village or the Developer is required, or the Village or the Developer is required to agree or to take some action at the request of the other, such approval or such consent or such request shall be given for the Village, unless otherwise provided herein, by the Village Manager or his designee, and for the Developer by any managing member or officer as designated in writing from time to time (in any event, the officers or managing member executing this Agreement are so authorized); and any person shall be authorized to act on any such agreement, request, demand, approval, notice or consent or other action and neither party hereto shall have any complaint against the other as a result of any such action taken. VII GENERAL PROVISIONS 7.01 Time of Essence. Time is of the essence of this Agreement. The Parties will make every reasonable effort to expedite the subject matters hereof and acknowledge that the successful performance of this Agreement requires their continued and timely performance. 7.02 Breach. Before any failure of any party to this Agreement to perform its obligations under this Agreement shall be deemed to be a breach of this Agreement, the Party claiming such failure shall notify, in writing, the Party alleged to have failed to perform of the alleged failure and shall demand performance by serving written notice to the other. No breach of this Agreement may be found to have occurred if performance has commenced to the reasonable satisfaction of the complaining party within thirty (30) days of the receipt of such notice. 7.03 Amendment. This Agreement, and any exhibits attached hereto, may be amended only by the mutual consent of the Parties, evidenced by the execution of said amendment by the Parties or their successors in interest. 7.04 No Other Agreement. Except as otherwise expressly provided herein, this Agreement supersedes all prior agreements, negotiations and discussions of the Parties relative to the Project, the financial assistance or any other project previously contemplated by Developer. This Agreement is the full integration of the agreement of the Parties. 7.05 Assigns. This Agreement shall be binding upon the Parties and their respective corporate successors and assigns. Nothing contained herein shall be construed in any way as preventing the alienation or sale of the Project or any portion thereof, nor shall anything herein be construed as limiting any rights of any lender or equity partner or investor. No consent shall be required for any pledge of the Project and this Agreement as collateral security. However, in the event the Hotel fails to open and operate, or the brand of the Hotel is changed without the Village's prior approval, the Village shall have the right to cease making payments to Developer or its assignees and to terminate this Agreement. 7.06 Severability. If any provision, covenant, agreement or portion of this Agreement, or its application to any person, entity or property, is held invalid by a court of competent jurisdiction, such invalidity shall not affect the application or validity of any other provisions, covenants or portions of this Agreement and, to that end, any provisions, covenants, agreements or portions of this Agreement are declared to be severable. 7.07 Illinois Law. This Agreement shall be construed in accordance with the laws of the State of Illinois. 7.08 Notice. All notices and requests required pursuant to this Agreement shall be sent as follows: To the Developer: Shapra Group H, LLC Equityroots, Inc. Attn: Bhavik S Dam 3 Dam Lane Schaumburg, IL 60173 With copies to: Goldstine, Skrodski, Russian, Nemec, and Hoff, Ltd. Attn: Gregory Dose and William Brennan 835 McClintock Drive (2"a Floor) Burr Ridge, IL 60527 To the Village: Office of the Village Manager Village of Elk Grove Village 901 Wellington Elk Grove Village, Illinois 60007 With copies to: Office of the Village Attorney Village of Elk Grove Village 901 Wellington Elk Grove Village, Illinois 60007 or at such other addresses as the Parties may indicate in writing to the other either by personal delivery, courier, or by registered mail, return receipt requested, with proof of delivery thereof. Mailed notices shall be deemed effective on the third day after mailing; all other notices shall be effective when delivered. 7.09 Partnership; No Third Party Beneficiaries. Nothing contained herein shall be construed as creating a partnership between the Village and Developer or as creating or conferring any interest or benefit upon any third party. 7.10 Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same agreement. 7.11 Recordation. Either party shall have the right to record this Agreement or a memorandum thereof against the Property with the Cook County Recorder of Deeds. 7.12 Exhibits. The exhibits attached to this agreement are hereby incorporated into and made a part of this Agreement. 7.13 Joint and Several. All of the obligations set forth in this Agreement shall be joint and several obligations of Shapra Group II, LLC and any entity to which title to any portion of the Property is conveyed, as permitted by the terms of this Agreement. [SIGNATURE PAGES TO FOLLOW IN WITNESS WHEREOF, the Parties have duly executed this Agreement pursuant to all requisite authorizations as of the date first above written. ATTEST: Village Clerk VILLAGE OF ELK GROVE VILLAGE, COOK AND DUPAGE COUNTIES, ILLINOIS, an Illinois Municipal Corporation M. Mayor Craig B. Johnson SHAPRA GROUP II, LLC, a Illinois limited liability company By: Eguitvroots Inc. a Delaware Corporation Its: Manager By: Bhavik S. Dani Its: President STATE OF ILLINOIS ) ) SS COUNTY OF COOK ) I, , a Notary Public in and for the said County, in the State aforesaid, DO HEREBY CERTIFY that Craig B. Johnson, Mayor of the Village of Elk Grove Village, personally known to me to be the same person whose name is subscribed to the foregoing instrument as such Mayor, appeared before me this day in person and acknowledged that he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said Village, for the uses and purposes set forth therein; and the said Village Clerk then and there acknowledged that he/she, as custodian of the corporate seal of said Village, did affix the corporate seal of said Village to said instrument, as his/her own free and voluntary act and as the free and voluntary act of said Village, for the uses and purposes set forth therein. Witness my hand and notarial seal this _ day of , 2020. Notary Public My Commission Expires (Seal) STATE OF ILLINOIS ) ) SS COUNTY OF COOK ) I, , a Notary Public in and for said County, in the State aforesaid, DO HEREBY CERTIFY that Bhavik S. Dani, personally known to me to be the person whose name are subscribed to the foregoing instrument on behalf of Shapra Group II, LLC and Equityroots, Inc., appeared before me this day in person and acknowledged that he signed and delivered the said instrument as his free and voluntary act and as the free and voluntary act of said companies for the uses and purposes therein set forth. GIVEN UNDER my hand and Notarial Seal this day of , 2020. NOTARY PUBLIC My Commission Expires: EXHIBITS A. Legal description of the Property B. Preliminary Site Plan & 3D Renderings C. TIF Eligible Project Costs Exhibit A Legal Desc»ption LOT 2 IN THE FINAL PLAT OF ELK GROVE TECHNOLOGY PARK RESUBDIVISION, BEING A SUBDIVISION OF THAT PART OF THE SOUTHWEST QUARTER OF SECTION 22, TOWNSHIP 41 NORTH, RANGE 11, EAST OF THE THIRD PRINCIPAL MERIDIAN IN COOK COUNTY, ILLINOIS, ACCORDING TO THE PLAT THEREOF RECORDED JUNE 19, 2018 AS DOCUMENT 41817016002 IN THE OFFICE OF THE COOK COUNTY RECORDER OF DEEDS. Exhibit B Preliminary Civil Site Plan AVID HOTEL f1Qil Si ipOiPNNT - . Iz i �tAIESTR004G WARE MALCOMB Exhibit B Architectural 3D Renderings South facing view of business center and patio East facing view ofAvid hotel front entrance Typical king guestroom Sitting area near lobby Front entrance with storefront glazing and outdoor seating Exhibit C TIF Eligible Project Costs • Market analysis, survey and appraisal studies ($25,000) • Legal, planning, accounting, engineering and architectural fees ($150,000) • Village, MWRD, Illinois EPA permitting fees ($150,000) • Site development and stormwater management improvements ($500,000) • Financing costs exclusive of interest ($90,000) • Financing costs - 30% of interest expense ($850,000) • Job training, career education costs ($25,000) • Developer reserves the right to reallocate estimated costs among line items.