Title/Name/Summary
Terry's Agreement
History
Background
In 2000, the Village entered into a business development agreement with Terry’s Lincoln Mercury, Inc. In summary, the agreement was in anticipation of the dealership expansion. In exchange for the expansion, Terry’s was entitled to sales tax sharing and other incentives. In 2005, the agreement was amended, which changed the base level of sales tax sharing. A summary of the current terms of the agreement is attached for review.
Storm Water Detention Issue
As part of the agreement, the Village and Terry’s would pursue the relocation of the existing detention area to the adjacent wetlands, located across the street from John Humphrey Drive. Terry’s would then use the existing detention area for his future expansion needs. Terry’s was responsible for the acquiring the land (which he did) and the Village was responsible for constructing the new detention area. The original agreement estimated the cost of the detention area to be $170,000. However, after additional analysis, conducted by both Village staff and Christopher Burke Engineering, it has been determined the relocation of the detention area, into the wetlands, is no longer a feasible option. This area has been identified as a High Aquatic Resource, which will require a 3:1 land mitigation by the Corps of Engineering. However, it is extremely doubtful the Corps would agree to any disturbance. Additionally, the cost is now estimated to be approximately $1.7 million.
Proposed Amendment to Agreement
Staff has met with Terry’s to discuss possible changes to the existing agreement. We have reached agreement with Terry’s on the following revised terms:
Repayment of Terry’s cost of wetlands $175,000
Economic Development Loan $750,000
(10 year balloon, 15 yr. Amortization, 2%)
Sales Tax Rebate (Base set at $150,000) $1,625,000 (max)
(Ten year term)
Total Incentive $2,550,000
It is important to note the original agreement offered a $2.6 million financial incentive plus the cost of construction of the detention. However, the base was much higher ($255,000). As it relates to the detention issue, agreement has been reached that this outstanding obligation will be removed. Both parties may continue to pursue alternative regional detention options, but it will no longer be a contractual obligation. Terry’s will pursue expansion of his dealership on the existing property that is not needed for detention. If regional detention is constructed in the future, Terry’s will also agree to pay back to the Village the $175,000 as his recapture costs.
On January 26, 2009 the Development Services and Planning Committee moved 2-0 to recommend to the Village Board of Trustees approval of the proposed amended terms of the Terry’s Lincoln Mercury, Inc. Business Development Agreement, as outlined.
This is now before the Village Board for consideration.
Recommended Action/Motion
I move to approve the proposed amended terms of the Terry’s Lincoln Mercury, Inc. Business Development Agreement, as outlined.