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2007-11-12 - Village Board Special Meeting - Agenda Packet Meeting of the Village of Buffalo Grove Board of Trustees Special Meeting November 12, 2007 7:30 PM I. Call to Order II. Pledge of Allegiance III. Roll Call IV. Approval of Minutes V. Approval of Warrant VI. Village President Report VII. Reports from the Trustees Vill. Village Manager's Report IX. Special Business X. Questions from the Audience Discussion on questions from the audience will be limited to 10 minutes. Presentations before the Village Board should be scheduled through the Village Manager's Office five days prior to each meeting. XI. Consent Agenda None XII. Ordinances and Resolutions XIII. Old Business XIV. New Business XV. Executive Session XVI. Adjournment: Approximately 10.30 p.m. The Village Board will make every effort to accommodate all items on the agenda by 10.30 p.m. The Board, does, however, reserve the right to defer consideration of matters to another meeting should the discussion run past 10.30 p.m. The Village of Buffalo Grove, in compliance with the Americans With Disabilities Act, requests that persons with disabilities, who require certain accommodations to allow them to observe and/or participate in this meeting or have questions about the accessibility of the meeting or facilities, contact the ADA Coordinator at 459-2518 to allow the Village to make reasonable accommodations for those persons. Consent Agenda November 12, 2007 7:30 PM XI. Ordinances and Resolutions None New Business None Old Business None Board Agenda Item Submittal xII-A Requested By: Ghida Neukirch Entered By: Ghida Neukirch Agenda Item Title: Ordinance No.2007- An Ordinance Approving an Economic Incentive Agreement By and Between The Village of Buffalo Grove and BG Hotel LLC(Hyatt Place Suites). Date Submitted: Meeting Date Agenda Place Requested: Requested: Department: 10/16/2007 11/12/2007 0 Consent Agenda OVM Regular Agenda 0 None Does this item Does this item include Will AV equipment be relate to another additional reference required to present item on the info separate from the this item to the agenda? Board packet? board? 0 Yes 0No 0 Yes 0No 0 Yes 0No Item Description Will this action involve an expenditure in 0 Yes 0 No funds? Additional Notes regarding Expenditures: Type the body of the cover memo here. Requests cannot be submitted if this field is blank. As a follow-up to the Board direction on November 5, 2007, attached please find an updated Economic Incentive Agreement between the Village and White Lodging. The incentive relates to the development of a Hyatt Place Suites hotel at the northwest corner of Milwaukee Avenue &Deerfield Parkway. Two major changes were made to the Agreement as follows: • Within Section 6, Term, the document sets forth that the Agreement shall be in full force and effect, including but not limited to the date the date on which the Hotel ceases to operate as a Hyatt Place Suites Hotel and managed by White Lodging Services Corporation. • The Assignment information within the Agreement, Section 7, now sets forth that 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. Approval is recommended. Letter-Sized Legal-Sized Ledger-Sized Odd-Sized Attached Files Attached Files Attached Files Attached Files Hyatt White Ord 11-7-07.doc Hyatt White Tax Sharing 11-08-07.doc Approval Section: Draft Name: Date and Time: Submitted By: Pre-Approved By: Approved By: Published to Web: Ordinance No. 2007 - 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: NAYES: ABSENT: ABSTAIN: PASSED: 2007. APPROVED: 2007. PUBLISHED: 2007. APPROVED: Village President ATTEST: Village Clerk 10/30/07 N:\LEGAL\Hyatt White Ord 10/29/07.doc 11-08-2007 ECONOMIC INCENTIVE AGREEMENT BY AND BETWEEN THE VILLAGE OF BUFFALO GROVE AND WHITE LODGING SERVICES CORPORATION THIS ECONOMIC INCENTIVE AGREEMENT ("Agreement") is made and entered into as of the day of , 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. "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. 2 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. 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 3 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. SECTION 6. TERM. 4 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 Merrillville, Indiana 46410 5 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: Village President ATTEST: Village 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 Janet Sirabian, 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 for the uses and purposes therein set forth. GIVEN under my hand and official seal this day of 12007. (SEAL) Notary Public BG Hotel, LLC By: White Lodging Services Corporation, Manager By: Deno Yiankes President & CEO, Investments and Development 7 ATTEST: 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 day of 12007. (SEAL) Notary Public 8 Board Agenda Item Submittal xv A Requested By: William H Brimm Entered By: Leisa M Niemotka Agenda Item Title: Pending Litigation: Section 2(c)(11)of the Illinois Open Meetings Act Date Submitted: Meeting Date Agenda Place Requested: Requested: Department: 09/20/2007 11/12/2007 0 Consent Agenda OVM Regular Agenda 0 None Does this item Does this item include Will AV equipment be relate to another additional reference required to present item on the info separate from the this item to the agenda? Board packet? board? 0 Yes 0No 0 Yes 0No 0 Yes 0No Item Description Will this action involve an expenditure in 0 Yes 0 No funds? Additional Notes regarding Expenditures: Type the body of the cover memo here. Requests cannot be submitted if this field is blank. Pending Litigation: Section 2(c)(I 1) of the Illinois Open Meetings Act Letter-Sized Legal-Sized Ledger-Sized Odd-Sized Attached Files Attached Files Attached Files Attached Files Approval Section: Draft Name: Date and Time: Submitted By: Pre-Approved By: Approved By: Published to Web: