2007-072 Ordinance No. 2007 - 72
An Ordinance Approving an Economic Incentive Agreement
with BG Hotel LLC
WHEREAS, the Village of Buffalo Grove is a Home Rule Unit by virtue of the Illinois
Constitution of 1970; and,
WHEREAS, BG Hotel LLC, is interested in locating at the northwest corner of
Milwaukee Avenue and Deerfield Parkway and developing a 164 room Hyatt Place Suites
all-suites hotel; and
WHEREAS, an economic incentive agreement has been negotiated to provide a
portion of the Village's hotel and motel tax as an inducement to development on the
subject property.
NOW THEREFORE BE IT ORDAINED BY THE PRESIDENT AND BOARD OF
TRUSTEES OF THE VILLAGE OF BUFFALO GROVE, COOK AND LAKE COUNTIES,
ILLINOIS:
Section 1. The foregoing Whereas clauses are hereby incorporated herein.
Section 2. The Village President and Village Clerk are hereby authorized to execute the
Agreement between the Village of Buffalo Grove and BG Hotel LLC, 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: 4 - Braiman, Glover, Kahn, Hartstein
NAPES: 3 - Berman, Trilling, Rubin
n
ABSENT: 0 - None
ABSTAIN: 0 - None
PASSED: November 12 , 2007.
APPROVED: November 12 , 2007.
PUBLISHED: November 13 , 2007.
APPROVED:
Village President
ATTEST:
(]M�(ya"N
0- Village Clerk
10/30/07
N:\LEGAL\Hyatt White Ord 10/29/07.doc
Exhibit A
11-08-2007
ECONOMIC INCENTIVE AGREEMENT
BY AND BETWEEN
THE VILLAGE OF BUFFALO GROVE AND BG HOTEL LLC
THIS ECONOMIC INCENTIVE AGREEMENT ("Agreement") is made and
entered into as of the 12th day of November 2007, by and between the VILLAGE OF
BUFFALO GROVE, an Illinois home rule municipal corporation ("Village"), and BG HOTEL,
LLC, an Indiana limited liability company, authorized to conduct business in Illinois ("BG").
IN CONSIDERATION OF the recitals and mutual covenants and agreements set
forth herein, the receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
SECTION 1. RECITALS.
A. BG desires to construct "Development", as defined below, but is unwilling
to do so without the Village rebating BG certain municipal hotel taxes.
B. In order to induce BG to locate the Development in the Village and to
undertake and ensure the success of the Development, the Village has agreed, pursuant to the
terms of this Agreement, to rebate to BG an amount not to exceed three (3%) of the Village
hotel taxes that are generated by the Development and received by the Village. It is
acknowledged that effective January 1, 2008 the Village's Municipal Hotel Tax will be six (6%).
C. The Village and BG have the power and authority to enter into this
Agreement pursuant to, but without limitation, the home rule powers of the Village under
Section 6, Article VII of the 1970 Constitution of the State of Illinois.
D. The Village and BG agree that the management and operation of the
"Hotel", as defined below, by White Lodging Services Corporation, an Indiana corporation is of
significant importance to the Village.
SECTION 2. DEFINITIONS.
Whenever used in this Agreement, the following terms shall have the following
meanings unless a different meaning is required by the context.
"Accountant": An independent contractor authorized by applicable law and
certified by the examining board of the State of Illinois as having met the requirements of law to
practice public accounting and perform financial audits.
"Annual Return on Development Cost" or"ARDC" : The net annual operating
income from the Business certified by the Accountant being the total gross revenues less any
cost of goods sold, payroll and benefit costs of personnel employed at the Property, operating
expenses, a capital reserve calculated at the lesser of the actual amount reserved or an amount
not to exceed four percent (4%) of the gross revenues from the Business, and a management
fee which shall not exceed five percent (5%) of gross revenues. ARDC shall not include any
deductions for any distributions nor shall it include deductions for depreciation, amortization, or
1
other non-cash related charges. The ARDC shall include the amount of Tax Rebate received
by BG during the reporting period.
"Audit": Undertaken at the sole cost and expense of the Village, a review of the
books and records of the Business caused to be conducted by the Village for the purpose of
verifying White's compliance with the terms hereof, including but not limited to ascertaining the
amount of Municipal Hotel Tax due the Village from the operation of the Business.
"Business": All of the operations of BG that will occur on the Property on
account of the Development, including but not limited to any or all of the operations within the
Hotel.
"Certified Development Cost" or "Development Cost" or "CDC": The actual
cost of the Development certified by an Accountant, being an amount not to exceed
$21,000,000, exclusive of: concessions and incentives provided by the Village and soft costs
such as developer and other fees not paid out in cash, but treated as equity investment in the
Development.
"Commencement Date": Represents the date upon which BG establishes the
Development as determined by the issuance of a certificate of occupancy for the Hotel by the
Village.
"Cumulative Return on Development Cost" or "CRDC": The sum of the
Annual Returns on Development Cost earned each Year over the term of this Agreement.
"Development": The Hyatt Place Suites Hotel, a 164 room all-suites hotel
located at the northwest corner of Milwaukee Avenue and Deerfield Parkway in the Village of
Buffalo Grove, commonly referred to as "Berenesa Plaza".
"Force Majeure": An Act of God or other event or cause not reasonably within
the control of BG including, without limitation, fire, strikes, lockouts, civil riot, floods, wars, acts
of war, terrorism, acts of terrorism or natural catastrophe.
"Hotel": A 164 room Hyatt Place Suites all-suites hotel located on the Property.
"Municipal Code": The Municipal Code of the Village of Buffalo Grove, as
amended, and as same may be further amended from time to time hereafter.
"Municipal Hotel Tax": The hotel and motel tax levied by the Village in
accordance with Chapter 3.28 of its Municipal Code upon the rental of hotel and motel
accommodations.
"Property": The real property located at the northwest corner of Milwaukee
Avenue and Deerfield Parkway in the Village of Buffalo Grove, commonly referred to as
"Berenesa Plaza" upon which the Hotel will be located.
"Tax Rebate": The amount of Municipal Hotel Tax collected by the Business
(not to exceed a Municipal Hotel Tax of three percent (3%))that is to be returned to BG in
accordance with this Agreement.
2
"Year": For purpose of calculating the Tax Rebate, the 365 day period
commencing on the first day of the month during which the Village issues a certificate of
occupancy for the Hotel and each successive 365 day period thereafter.
SECTION 3. MUNICIPAL HOTEL TAX PAYMENT.
A. Calculation of Municipal Hotel Tax and Tax Rebate. Within thirty (30)
days following White's delivery of the financial statement as provided in Section 3. A. 2.,
following the end of each calendar quarter during a Year, the Village shall rebate to BG the
Municipal Hotel Tax (up to the maximum Municipal Hotel Tax tax rebate amount of three
percent (3%) receipts collected by BG in accordance with the Municipal Code and paid to the
Village each month during the prior three month period for the first fifteen (15) Years of
Business.
1. The Tax Rebate shall be 100% in Years 1 through 3. The Tax
Rebate shall be reduced to 50% in Year four and remain so for the duration of the remainder of
the first fifteen (15) Years of Business, or until such time as the Business achieves a 15%
Cumulative Return on Development Cost. For the purpose of determining when the Cumulative
Return on Development Cost has reached 15%, the Accountant shall certify when the
Cumulative Return on Development Cost is greater than the product of 15% multiplied by the
Certified Development Cost then multiplied by the number of Years to date. When the
Cumulative Return on Development Cost has reached 15% for two successive years, the Tax
Rebate, incentives and associated terms and conditions set forth herein shall cease. In no
event shall the Tax Rebate continue beyond the beginning of Year sixteen, at which time the
Tax Rebate shall cease.
2. For each calendar quarter for which a Tax Rebate is available, BG
shall provide the Village with financial statements of operating income, the Annual Return on
Development Cost and the Cumulative Return on Development Cost for the Business certified
by an Accountant. No Tax Rebate will be paid BG until the certified financial statements are
provided to the Village. For purposes of determining when the Cumulative Return on
Development Cost has reached 15%, the Cumulative Return on Development Cost must be
greater than the product of 15% of the Certified Development Cost multiplied by the number of
Years that have transpired to date.
3. Should the Business on the Property cease other than as a result
of Force Majeure within two years of the Commencement Date of this Agreement, then the then
owner of the Hotel shall reimburse to the Village 100% of the Municipal Hotel Tax payments
received pursuant to this Agreement.
B. Audit. Commencing after the first Year and after each Year thereafter
for which the Tax Rebate is available as provided in this Agreement, the Village shall have the
right but not the obligation to cause an Audit of the Business for any given Year. If an Audit is
conducted, BG shall cooperate fully with the Village and those persons, firms and/or
corporations retained by the Village to perform the Audit, making available all of the books and
records of the Business thereafter.
C. Duration of Rebate. During each of the above referenced Years, the
Village shall retain the remainder un-rebated amounts of such Municipal Hotel Tax for its use
and purposes. Following the fifteen (15) Year period from the first day of the month during
which the Village issues the occupancy permit for the Hotel on the Property, all of the Municipal
Hotel Tax receipts shall be retained by the Village for its own use and purposes.
3
D. No Guarantee. The parties acknowledge and agree that none of the
terms, conditions, or provisions of this Agreement shall be construed, deemed, or interpreted as
either (1) a guarantee that the Village will receive any Municipal Hotel Taxes as a result of the
Development or (2) a requirement or obligation by BG to proceed with the Development or
generate Municipal Hotel Taxes from the Development.
E. No Village Obligation. The parties acknowledge and agree that none of
the terms, conditions, or provisions of this Agreement shall be construed, deemed, or
interpreted as a restriction or prohibition on the Village from eliminating or amending its
Municipal Hotel Tax.
F. Additional Taxes. If, at any time during the term of this Agreement, the
Village becomes able to, and does increase the rate of its Municipal Hotel Tax imposed within
the Village, the incentive and terms and conditions set forth in this Agreement shall not be
changed.
SECTION 4. LITIGATION AND DEFENSE OF AGREEMENT.
A. Litigation. If, during the term of this Agreement, any lawsuits or
proceedings are filed or initiated against either party before any court, commission, board,
bureau, agency, unit of government or sub-unit thereof, arbitrator, or other instrumentality, that
may materially affect or inhibit the ability of either party to perform its obligations under, or
otherwise to comply with, this Agreement ("Litigation"), the party against which the Litigation is
filed or initiated shall promptly deliver a copy of the complaint or charge related thereto to the
other party and shall thereafter keep the other party fully informed concerning all aspects of the
Litigation.
B. Defense. The Village and BG each agree to use their respective best
efforts to defend the validity of this Agreement, and all ordinances and resolutions adopted and
agreements executed pursuant to this Agreement, including every portion thereof and every
approval given, and every action taken, pursuant thereto.
SECTION 5. REMEDIES.
A. Remedies. In the event of a breach or an alleged breach of this
Agreement by either party, either party may, by suit, action, mandamus, or any other
proceeding, in law or in equity, including specific performance, enforce or compel the
performance of this Agreement.
B. Notice and Cure. Neither party may exercise the right to bring any suit,
action, mandamus or any other proceeding pursuant to Subsection A of this Section without
first giving written notice to the other party of the breach or alleged breach and allowing 15 days
to cure the breach or alleged breach; provided, however, that if the party accused of the breach
or alleged breach cannot cure the condition within 15 days after the notice, notwithstanding the
party's diligent and continuous effort, promptly commenced and diligently continued upon
receipt of the notice, then the period to cure the violation or failure shall be extended for the
time necessary to cure the violation with diligence and continuity, but in no event longer than
180 days unless extended in writing by the Village.
4
SECTION 6. TERM.
This Agreement shall be in full force and effect from and after the date of its
execution until the date that is the earlier to occur of (a) the date when the Cumulative Return
on Development Cost has reached 15% for two successive years, (b) the date on which the
Hotel ceases to operate as a Hyatt Place Suites Hotel, (c) the date on which the Hotel ceases
to be managed by White Lodging Services Corporation, or (d) the date that is 15 years after the
Commencement Date.
SECTION 7. GENERAL PROVISIONS.
A. Complete Agreement; Supersedence. This Agreement constitutes the
complete agreement of the parties regarding the payment of Municipal Hotel Taxes to BG and
shall supersede and nullify all prior drafts and agreements concerning the payment to White.
B. Amendments. No amendment to, or modification of this Agreement
shall be effective unless and until it is in writing and is approved by the authorized
representative of BG and by the Village of Buffalo Grove corporate authorities by Ordinance
duly adopted, and executed and delivered by the authorized representatives of each party.
C. Notices. Any notice or other communication required or permitted to be
given under this Agreement shall be in writing, and shall be deemed delivered to and received
by the addressee thereof (a) when delivered in person at the address set forth below, (b) when
delivered by a nationally recognized overnight courier (such as United Parcel Service or Federal
Express),or (c) three business days after deposit thereof in any main or branch United States
Post Office, certified or registered mail, return receipt requested, postage prepaid, properly
addressed to the parties, respectively, as follows:
For notices and communications to the Village:
Village of Buffalo Grove
50 Raupp Blvd.
Buffalo Grove, Illinois 60089
Attention: Director of Finance
with a copy to:
William G. Raysa, Esq.
Raysa & Zimmermann, LLC
22 South Washington
Park Ridge, Illinois 60068
For notices and communications to BG:
Mr. Deno Yiankes
President & CEO, Investments and Development
White Lodging Services Corporation, Manager
BG Hotel, LLC
1000 East 80th Place, Suite 600 North
Merrillville, Indiana 46410
with a copy to:
Carol Ann Bowman
1000 East 80th Place, Suite 700 North
5
Merrillville, Indiana 46410
By notice complying with the foregoing requirements of this paragraph, each party shall have
the right to change the address or addressee or both for all future notices and communications
to such party, but no notice of change of address shall be effective until actually received.
D. Governing Law. This Agreement and the rights of the parties hereunder
shall be governed by, and construed, interpreted, and enforced in accordance with, the internal
laws, and not the conflict of law rules of the State of Illinois.
E. Interpretation. This Agreement has been negotiated by all parties and
shall not be interpreted or construed against the party drafting the Agreement.
F. Change in Laws. Unless otherwise explicitly provided in this Agreement,
any reference to laws, ordinances, rules, or regulations of any kind shall include such laws,
ordinances, rules, or regulations of any kind as they may be amended or modified from time to
time hereafter.
G. Headings. The headings of the sections, paragraphs, and other parts of
this Agreement are for convenience and reference only and in no way define, extend, limit, or
describe the meaning, scope, or intent of this Agreement, or the meaning, scope, or intent of
any provision hereof.
H. Time of Essence. Time is of the essence in the performance of all terms
and provisions of this Agreement.
I. Severability. It is the express intent of the parties hereto that should any
provision, covenant, agreement, or portion of this Agreement or its application to any person,
entity, or property be held void, invalid, or unenforceable by a court of competent jurisdiction,
such action shall not effect the remainder of this Agreement, which shall continue in full force
and effect.
J. No Third Party Beneficiaries. Nothing in this Agreement shall create, or
be construed to create, any third party beneficiary rights in any person or entity not a signatory
to this Agreement.
K. Counterparts. This Agreement may be executed in any number of
multiply identical counterparts and all of said counterparts shall, individually and taken together
constitute the Agreement.
L. Assignment. BG 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 be in the Village's sole discretion.
The Village acknowledges that this Agreement is an obligation running with the Property and is
not a personal covenant of BG and the obligations of BG hereunder are not personal but rather
are the obligations of the owner of the Hotel from time to time
6
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date first above written.
VILLAGE OF BUFFALO GROVE
By: we 4i r A 4�
Village President
ATTEST:
94�� "—Z
Vi ge Clerk
STATE OF ILLINOIS )
SS.
COUNTY OF LAKE )
I, the undersigned, a Notary Public in and for said County in the State aforesaid, do
hereby certify that Elliott Hartstein personally known to me to be the Village President of the
Village of Buffalo Grove, an Illinois municipal corporation, and Jane Olson personally known
to me to be the Village Clerk thereof, and both personally known to me to be the same persons
whose names are subscribed to the foregoing instrument as such Village President and Village
Clerk, appeared before me this day in person and acknowledged that they signed, sealed and
delivered said instrument as such Village President and Village Clerk and as their free and
voluntary act and as the free and voluntary act of said corporation r the uses and purposes
therein set forth.
GIVEN under my hand and official seal this day of 2007.
(SEAL) 4-Z�—v
Notary Nblic
BG Hotel, LLC
By: White Lodging Services Corporation,
Manager
m2u
By:
Den ankes
President & CEO, Investments and
Development
7
AT"' µ T:
Carol Ann Bowman
Assistant Secretary
STATE OF INDIANA )
SS.
COUNTY OF LAKE )
I, the undersigned, a Notary Public in and for said County in the State aforesaid, do
hereby certify that Deno Yiankes, personally known to me to be the President & CEO,
Investments and development of White Lodging Services Corporation, an Indiana corporation,
and Carol Ann Bowman, personally known to me to be the Assistant Secretary thereof,
Manager of BG Hotel, LLC, an Indiana limited liability company, and both personally known to
me to be the same persons whose names are subscribed to the foregoing instrument as such
President and Assistant Secretary, appeared before me this day in person and acknowledged
that they signed, sealed and delivered said instrument as such President and Assistant
Secretary and as their free and voluntary act and as the free and voluntary act of said
corporation for the uses and purposes therein set forth.
GIVEN under my hand and official seal this 30thday of November , 2007.
(SEA +'PJ•. MARGUERITE E.DRAKE ,LIZ,Z
=_ Lake County
Notary Public
My commission Expires
•>.,���'• February 26,2009
8