2003-018 ORDINANCE NO.2003- 18
AN ORDINANCE AMENDING AN AGREEMENT WITH EDWARD HIKES LUMBER CO.
WHERAS,the Village of Buffalo Grove is a Home Rule Unit pursuant to the Illinois Constitution of 1970;
and
WHEREAS, the Villye of Buffalo Grove("Village")and Edward Hines Lumber Co. ("Hines")are parties
to an Agreement dated the 20 day of November 2000 for the purpose of granting certain incentives to locate its
single order-acceptance point for corporate credit sales at its corporate offices located in the Village;and
WHEREAS,both the Village and Hines desire to amend certain sections of that Agreement as identified on
the attached Amendment to Agreement to be dated as of the 3'd day of March,2003.
NOW,THEREFORE,BE IT ORDAINED BY THE PRESIDENT AND BOARD OF TRUSTEES OF THE
VILLAGE OF BUFFALO GROVE,COOK AND LAKE COUNTIES,ILLMOIS,as follows:
Section 1.The foregoing Whereas clauses are hereby incorporated herein.
Section 2. The Village President and Village Clerk are hereby authorized to execute the Amendment to
Agreement between the Village of Buffalo Grove and Edward Hines Lumber Co., a copy of which is
attached hereto as Exhibit"A".
Section 3. This Ordinance shall be in full force and effect from and after its passage and approval. This
Ordinance shall not be codified.
AYES: 6 - Braiman, Glover, Berman, Johnson, Kahn, Trilling
NAYES: 0 — None
ABSENT: 0 — None
PASSED: March_...3 ........_.. . ,2003.
APPROVED: ...Mar.ch_...3................................... ...... 2003.
APPROVED:
Village President
ATTEST:
A
Villa Jerk
Amendment To Agreement
This Amendment to Agreement is made and entered into the 3rd day of March, 2003 by
and between the Village of Buffalo Grove, an Illinois Municipal Corporation, hereinafter
referred to as the "Village" and Edward Hines Lumber Co., an Illinois corporation, hereinafter
referred to as "Hines", and
Whereas, the Village and Hines have entered into an Agreement dated November 20,
2000 concerning Municipal Sales Tax (hereinafter referred to as the "Agreement")
Now, Therefore, in consideration of the mutual covenants and promises set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties, the Village and Hines agree that Sections 3" 5.A 7.C. and 8.A. of
the Agreement are amended to read as follows and that Sections 7.D.E.F. ana 8.B. are deleted
from the Agreement.
3. Sales Tax Payment: The Village agrees, warrants and guarantees to pay Hines
Municipal Sales Tax generated by Hines to be calculated as follows:
Beginning with the first month of the First Sales Tax Year, which represents Sales Tax
generated during November 2000 and throughout the Term, as defined herein, the Village and
Hines shall distribute on a monthly basis the Municipal Sales Tax resulting from taxable Credit
Sales with single order-acceptance at the Property and received by the Village in the following
amounts: For the First Sales Tax Year through calendar 2010, 80/o of the total Municipal Sales
Tax to Hines; and 20% of the total Municipal Sales Tax to the Village. For calendar 2011
through 2020 75% of the total Municipal Sales Tax to Hines; and 25% of the total Municipal
Sales lax to tie Village.
Notwithstanding the foregoing, the minimum Municipal Sales Tax to be retained by the
Village shall be no less than$456,000 annually effective as of the Third Sales Tax Year through
calendar 2010 and no less than $500,000 annually beginning with calendar 2011 through 2020
(the "Hines Guaranty") Should the Municipal Sales Tax retained by the Village fall below the
minimum so noted the Village shall document the difference and invoice Hines for said amount,
which shall be paid within thu-ty(30) days of receipt. The Hines Guaranty shall remain in effect
only as long as: (1) this Agreement remains in full force and effect and does not violate any
existing or future law, ordinance, ruling or regulation and (2) Hines is not prevented or restricted
from placing Credit Sales through the Village and the Village is not prevented or restricted from
remitting Municipal Sales Tax to Hines as provided in this Agreement by any law, ordinance,
ruling or regulation.
5. Calculation and Pa ment of Sales Tax Payment: The calculation and payment of the
Sales Tax Payment shall be as o ows:
A. The Village shall calculate in good faith the amount of the Sales Tax Payment
applicable for each month during the Term of this Agreement and shall submit those calculations
to Hines within ten(10) business days after the Village's receipt of the Forms.
7. Increase in Sales Tax Rate:
C. In the event that the Village mcreusPs its current Home Rule Sales Tax of 0.5% during
the Term, such additional Home Rule Sales Tax will be distributed to Hines in the same manner
as set forth in Section 3 of this Agreement.
8. Term of Agreement:
A. This Agreement shall be in full force and effect for a term of twenty (20) years
("Term"), starting on the Commencement Date, provided the Village's obligation to make any
payments pursuant to this Agreement, shall survive until fully discharged.
In Witness, whereof, the parties have executed this Amendment to Agreement as of the
date first above written.
Village of Buffalo Grove
V e -President
Attest:
' ,m -a`'a`'Q'.ce.w
VillagLUerk
Edward Hines Lumber Co.
eWiAer*esient!- F
Attest:
Tit e: 00EORATZ COUNSEL
ACKNOWLEDGEMENT:
STATE OF ILLINOIS
COUNTY OF LAKE SS
This instrument was acknowledged before me on the _ITwday of
2003 by 1 . v ►-� , the Vice President, CFO of Edward Hines
Lumber Co., an Illinois corporation and by AI pIIr t of
said corporation.
,�e� ennns
Fm.o..........h.
FFICIAL SEAL
ANITA K JASZKA l{• 3 l
NOTARY PlAt3LIC,STATE OF tiLLINO Notary PUbT1C
Ext Ea:o aw"
SEAL:
My Commission expires: 24y a Qc
ACKNOWLEDGEMENT
STATE OF ILLINOIS
COUNTY OF LAKE SS
This instrument was acknowledged before me on the_�J_day of
2003 by Elliott Hartstein, the Village President of the Village of Buffalo Grove Co., and Illinois
municipal corporation and by Janet Sirabian, Village Clerk of said municipal corporation.
"OFFICIAL SEAL"
ROBERTA FREED r ;
Notary Public,State of Illinois Otary Public
My Commission Expires 01/25/04
SEAL:
My Commission expires: L
"EXHIBIT A"
AGREEMENT
THIS AGREEMENT is made and entered into on this o tk day of N I', 2000,by and
between the VILLAGE OF BUFFALO GROVE,an Illinois Municipal Corporation(hereinafter referred
to as the"Village"), and EDWARD NINES LUMBER CO.,an Illinois corporation(hereinafter referred
to as"Hines'D.
Recitals
WHEREAS, Hines sells lumber and other building materials in Illinois primarily on a credit
basis;
WHEREAS,Hines has several warehousing facilities and other business locations in cities
throughout Northern Illinois;
WHEREAS, Hines recently moved its Corporate Headquarters to Buffalo Grove,Lake County,
Illinois;
WHEREAS,Hines could increase its competitiveness in the marketplace by establishing a single
order-acceptance point for all Credit Sales if Hines and the municipality, where the single order-
acceptance point is located, enter into a municipal sales tax incentive agreement;
WHEREAS, in order to induce Hines to make its Corporate Headquarters its single order-
acceptance point for Credit Sales,the Village will make payment to Hines of a portion of the municipal
component of the sales tax revenue generated by Hines from credit sales as provided in this Agreement;
WHEREAS, the entire sales tax rate applicable to credit sales within the Village is 7%, the
Village's total portion of which is 1.5%; the home-rule portion of the Village's portion of the sales tax
rate is 0.5%;
WHEREAS, the Village desires to foster an efficient and effective use of the Corporate
Headquarters that will increase the Village's sales tax base and increase employment opportunities in the
Village,and in furtherance thereof,the Village is willing to grant certain incentives to Hines subject to the
terms and conditions set forth herein;
WHEREAS,Nines believes that this Agreement is in its best interest as it will achieve cost
efficiencies by centralizhig sales and credit functions,which will improve its corril,eativeness in the
marketplace;
WHEREAS,the parties hereto acknowledge,and Hines represents and warrants that Hines would
not maintain its single order-acceptance point in the Village but for the economic incentives to be given
by the Village pursuant to this Agreement;
WHEREAS, the Village,as a Home Rule unit of government,may exercise any power and
perform any function pertaining to its government and affairs pursuant to Section 6 of Article VII of the
1970 Constitution of the State of Illinois, and pursuant to Section 10 of Article VII, is authorized to
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contract or otherwise associate with individuals in any manner not prohibited by law or ordinance;
NOW,THEREFORE, in consideration of the mutual covenants and promises set forth herein,
and for other good and valuable consideration,the receipt and sufficiency of which are hereby
acknowledged by the parties,the Village and Hines agree as follows:
1. Incorporation of Recitals: The Recitals heretofore set forth are incorporated herein and made a part
of hereof and shall constitute findings of fact made by the Village with respect to the designation of
Hines' Corporate Headquarters as its single order-acceptance point for Credit Sales.
2. Definitions: Whenever used in this Agreement,the following terms shall have the following
meanings unless a different meaning is required by the context:
A. "Commencement Date":November 1,2000,which represents the date upon which Hines
established its Corporate Headquarters as the single order-acceptance point for all credit sales
with shipping locations within the State of Illinois.
B. "Corporate Headquarters": 1000 Corporate Grove Drive, Buffalo Grove,Illinois or any
address within the Village.
C. "Credit Sales":Disposition of lumber or other building materials or products sold by Hines to
customers on a deferred-payment basis.
D. "Edward Hines Lumber Co.": The Illinois corporation, its wholly-owned subsidiaries and
joint ventures where Hines performs billing functions.
E. "First Sales Tax Pear": 2001
F. "Gross Receipts":The term "Gross Receipts"shall have the same meaning as that which
is ascribed to it in the Illinois Retailers' Occupation Tax Act,35 ILCS 120/1.
G. "Municipal Sales Tax": That portion or component of the Sales Tax generated from the
Property that the Village actually receives from the State of Illinois pursuant to the Retailers'
Occupation Tax Act,the Service Occupation Tax Act,the Service Use Tax Act,the Use Tax Act,
and the Village's Home Rule Sales Tax Ordinance.
H. "Payment Period":Taxable year as defined by the State of Illinois Department of Revenue
(hereitiafler referred to as"IDOW), unless otherwise provided.
I. "Property": The Corporate Headquarters currently Iocated in the Village of Buffalo Grove
J. "Sales Tax":Any and all taxes imposed and collected by the State of Illinois pursuant to the
Retailers' Occupation Tax Act, the Service Occupation Tax Act, Service Use Tax Act,the Use
Tax Act,and the Village's Home Rule Sales Tax Ordinance.
K. "Sales Tax Payment". The payment to Hines of a portion of the Municipal Sales Tax that the
Village as required pursuant to Paragraph 3 of this Agreement.
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L. "Sales Tax Year". The period of time from January 1"of one year to and including December
31 n of the same year.
3. Sales Tax Payment: The Village agrees,warrants and guarantees to pay Hines Municipal Sales Tax
generated by Hines to be calculated as follows:
Beginning with the first month of the First Sales Tax Year,which represents Sales Tax generated during
November,2000 and throughout the Tenn,as defined herein,the Village and Hines shall distribute on a
monthly basis the Municipal Sales Tax resulting from taxable Credit Sales with single order-acceptance at
the Property and received by the Village in the following amounts: 80%of the total Municipal Sales Tax
to Hines; and 20%of the total Municipal Sales Tax to the Village.
4. Forms and Reporting Requirements: Throughout the Term, as defined herein,Hines shall cause to
be timely delivered to IDOR Forms ST 1 and ST-2 (the"Forms"),or any form that replace or supplement
same and shall deliver copies of same to the Village. The forms provided shall detail the amount of Sales
Tax collected and paid to IDOR as well as taxable gross receipts for the Property. Hines and the Village
shall keep all Sales Tax information confidential except where disclosure of such information is required
by law.
5. Calculation and Payment of Sales Tax Payment: The calculation and payment of the Sales Tax
Payment shall be as follows:
A. The Village shall calculate in good faith the amount of the Sales Tax Payment applicable for
each month during the Initial Term and any Renewal Terms,as defined herein,and shall submit those
calculations to Hines within ten(10)business days after the Village's receipt of the Forms.
B. Payment of the Sales Tax Payment shall be monthly.
1. Within thirty(30)calendar days after the Village has received the latter of (a)payments of
Municipal Sales Tax from the State of Illinois or(b)the Forms,the Village shall forward to Hines the
Sales Tax Payment for the given month.
2. The Sales Tax Payment shall be payable solely from the Municipal Sales Tax amounts actually
received by the Village from the State of Illinois.
3. If for any reason the State of Illinois fails to distribute all of the Municipal Sales Tax to the
Village within thirty(30)calendar days of the close of any monthly period,the Village shall provide
i'�Tittcn:nutification of same to Hines and the Village shall make the r quired monthly Sales Tax Payment
to Hines within thirty(30)calendar days after all required amounts have been received by the Village.
6. Creation and Approval of Single Order-Acceptance Point:
A. As of the Commencement Date,Hines has taken the internal corporate measures necessary to
establish its Corporate Headquarters as the single order-acceptance point for all Credit Sales with
shipping locations within the State of Illinois and has requested a General Information Letter(the"GIL'�
from IDOR seeking its concurrence with Hines' analysis that single order-acceptance takes place within
the Village.
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B. The parties agree that all Municipal Sales Tax amounts shall be held by the Village in an
interest-bearing escrow account,with 80%of all interest accrued to belong to Hines and 20%to the
Village,until IDOR's issuance of the GEL and a Private Letter Ruling C PLR'I,each substantially
concurring with Hines' analysis that order-acceptance takes place within the Village.
C. Upon receipt of the GEL,Hines will request a Private Letter Ruling from IDOR which
confirms that under the facts as stated in the GIL,the order-acceptance point is the Corporate
Headquarters.
D. As long as the single order-acceptance point is within the Village,as determined by IDOR,
then the Village's Home Rule Municipal Sales Tax rate shall apply to all Credit Sales generated-by Hines
with delivery locations within the State of Illinois.
7. Increase in Sales Tax Rate:
A. This Agreement is conditioned upon existing law which currently provides for,and
allows the Village to collect,Municipal Sales Tax and allows the Village to impose a Home Rule Sales
Tax.
B. This Agreement shall in no way restrict or prohibit the Village from eliminating or
amending its Home Rule Sales Tax Ordinance.
C. In the event that the Village increases its current Home Rule Sales Tax of 0.5%,during
the Tenn,by 0.25%or less,then Hines shall receive the entire incremental increase in the Home Rule
Sales Tax.
D. In the event that the Village increases its current Home Rule Sales Tax of 0.5%,during
the Tenn,by more than 0.25%, including increases that combined are more than 0.25%,Hines shall have
the right to select one of the following at its sole discretion:
i. Terminate this Agreement by written notice to the Village within one-hundred and eighty(180)
days after implementation of said increase; or
ii. Receive 80%of the incremental increase in the Home Rule Sales Tax.
E. In the event that Lake County's current Sales Tax of 0.25% is increased during the Term,
Hines shall have the right to terminate this Agreement by whiten notice to the Village within one-hundred
and eighty(180)days after implementation of said increase;
F. In the event that the Regional Transportation Agency 's("RTA')current Sales Tax of
.25% is increased during the Tenn,and said increase applies exclusively to Lake County,Hines shall
have the right to terminate this Agreement by written notice to the Village within one hundred and eighty
(180)days after the implementation of said increase.
S. Term of Agreement:
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A. This Agreement shall be in full force and effect for a term of ten(10)years, starting on the
Commencement Date(the"Initial Term"),provided the Village's obligation to make any payments
pursuant to this Agreement,that accrued during the Initial Term and any Renewal Terms,as defined in
Paragraph S.B. but remain unpaid at the termination date, shall survive until fully discharged.
B. This Agreement will be automatically renewed for two(2)additional terms of five(5)years
each(each a"Renewal Term")(the Initial Term and any Renewal Terms shall be referred to collectively
as the"Term"),unless either party provides the other party written notice not to renew not less than one
hundred and eighty(180)days prior to the expiration of the Initial Term or any Renewal Term.
C. During the Term,Hines shall not relocate its single order-acceptance point to outside the
Village,unless maintaining its single order-acceptance point within the Village would be a violation or
contravention of any case, decision or determination of any state or federal court,agency or entity,or
maintaining its order-acceptance point in the Village would subject Hines to penalties or fines of any kind
levied or rendered by any state or federal court, agency or entity,or unless required to do so pursuant to
any state or federal court,agency or entity, in which case Hines shall have the unilateral right,upon prior
written notice to the Village,to terminate this Agreement.
9. Exclusive Agreement: During the Term,Hines agrees not to enter into any other municipal sales
tax revenue sharing agreements with other municipalities.
10. Default: The occurrence of any one of the following shall constitute a default by the respective
parties:
A. Hines shall be considered in default of this Agreement for.
1. Failure to comply with any material term,provision or condition of this Agreement; or
2. Materially misrepresenting or warranting in bad faith any information contained in this
Agreement;or
3. Filing a petition for a Chapter 7 bankruptcy or be adjudicated as bankrupt under
Chapter 7 of the U.S. Bankruptcy Code; or
4. Making a general assignment for the benefit of creditors or to an agent authorized to
liquidate its improvements on the Subject Property,provided that,as a result of such acts,Hines ceases
operations and closes its operations for more than sixty(60)consecutive days.
B. The Village shall be considered in default of this Agreement for.
1. Failure to make complete and timely payment to Hines on the terms herein provided;
or
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2. Failure to comply with any material term,provision or condition of this Agreement.
11. Notice and Cure: Before taking any action pursuant to Paragraph 10 of this Agreement,a party shall
first provide written notice to the other party of the breach or alleged breach of this Agreement which
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would be the basis for same,and allow a period of thirty(30)days for the curing of said breach or alleged
breach.
12. Remedies: Subject to the requirements of Paragraph 11 of this Agreement,the non-defaulting party
may, at its option, terminate this Agreement by written notice forwarded to the defaulting party after any
applicable cure period shall have expired; or may continue to respect and abide by the terms of this
Agreement,and may by suit,action,mandamus or any other proceeding,in law or in equity,including
specific performance, elect to enforce or compel the performance of this Agreement. The exercise of one
or more of said rights or remedies shall not impair a parry's right to exercise any other right or remedy
provided for in this Agreement, or by law.
13. Notices: All notices required or desired to be given hereunder shall be deemed given if and when
delivered personally, or on the next business day after being deposited with a national overnight courier
service, or on the next business day after being deposited in the United States certified or registered mail,
return receipt requested, postage pre-paid,or upon receipt of a facsimile transmission with a confirmation
delivered by regular mail,addressed to the party at its address set forth below, or to such other address as
the party to receive such notice may have designated to all other parties by notice in accordance herewith:
Village of Buffalo Grove Steven T. Svendsen,CFO John L.Eisel,Esq.
Attn: Director of Finance Edward Hines Lumber Co. Wildman,Harrold,Allen&
50 Raupp Blvd. 1000 Corporate Grove Drive Dixon
Buffalo Grove,IL 60089 Buffalo Grove,IL 60089-4550 225 W.Wacker Drive
Chicago,IL 60606-1229
William G.Raysa
Raysa&Skelton,P.C.
1140 Lake Street, Ste.400
Oak Park,IL 60301
14. Indemnity: Hines shall and hereby agrees to defend,hold harmless and indemnify the Village, its
President,Trustees,employees,agents and attorneys from and against any and all claims,demands,suits,
damages, liabilities, losses,expenses,and judgments which may arise out of the establishment of a single
order-acceptance point within the Village or this Agreement. The obligation of Hines in this regard shall
include but shall not be limited to all costs and expenses, including reasonable attorneys' fees, incurred by
the Village in responding to,defending against,.or settling any such claims,demands,suits, damages,
liabilities, iosses,expenses or judgments. Hines covenants that it will reimburse the Village,or pay over
to the Village,all sums of money the Village pays, or becomes Iiable to pay,by reason of any of the
foregoing, and will make payment to the Village as soon as the Village becomes liable therefor. In any
suit or proceeding brought hereunder,the Village shall have the right to appoint counsel of its own
choosing to represent it.
15. Assignment: Hines may not assign this Agreement or the amounts,in whole or part,to be
reimbursed hereunder without the Village's prior written consent,which consent shall not be
unreasonably withheld. The Village acknowledges that this Agreement is an obligation which runs to
Hines and is not a covenant running with the land.
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16. Third Party Beneficiaries: The Village and Hines agree that this Agreement is for the benefit of the
parties hereto and not for the benefit of any third party beneficiaries. No third parties shall have any
rights or claims against the Village arising from this Agreement.
17. Inspection of Books and Records: Upon prior written notice to Hines,and at a place and time that
is mutually beneficial to both parties,the Village shall have the right to inspect and review those books
and records which are directly related to establishing Credit Sales for any Sales Tax Year or portion
thereof.
18. Severability: The invalidity of any paragraph or subparagraph of this Agreement shall not impair the
validity of any other paragraph or subparagraph. If any provision of this Agreement is determined to be
unenforceable,such provision shall be determined severable and the Agreement may be enforced with
such provision severed or as modified by such court.
19. Governing Law: This Agreement shall be deemed to have been executed,delivered and accepted in
the State of Illinois and shall be construed pursuant to and in accordance with the laws of the State of
Illinois.
20. Entirety of Agreement: This Agreement embodies the entire agreement and understanding between
the parties and there are no other agreements,representations,warranties or understanding,oral or
written,between the parties with respect to the subject matter of this Agreement. No alteration,
modification,amendment or change of this Agreement shall be valid unless by like instrument.
21. Binding Effect: This Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors.
22. Counterparts: This Agreement may be executed in two(2)or more counterparts,each of which
taken together shall constitute one and the same instrument.
IN WPINESS WHEREOF,the parties hereto have executed this Agreement as of the date first above
written.
VILLAGE OF BUFFALO GROVE
By:
Village President --
ATTEST:
.G
Villa Berk '
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