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Ordinance # 1824
i ORDINANCE NO. 1824 ORDINANCE AUTHORIZING SALE OF MUNICIPALLY OWNED REAL PROPERTY WHEREAS, the City of Canton owns the following described real property: The East One-half of Lot 71, the East One-half of Lot 72, the South 37 feet of Lot 73, the East One-half of Lot 73, Lot 74 and Lot 75 of Jones Second Addition to the City of Canton; and Lots 5, 12, 21, 28, 37, 44 and 53 in Wright's Addition to the City of Canton; All situated in the County of Fulton and State of Illinois, which real property is generally located in the 200-300 block of Second Avenue, between Second Avenue and Van Buren in Canton, Illinois; and WHEREAS, the City Council of the City of Canton has determined that it is in the public interest to promote the redevelopment of abandoned and underutilized lands within the City of Canton and that the property above-described is in an underutilized state and lies within the International Harvester Tax Increment Finance District; and WHEREAS, in conveying the property, the City must comply with various Illinois state statutes, local ordinances and relevant binding legal agreements currently in effect that outline procedures for conveyance of this specific property, as well as other property owned or controlled by the City and other lllinois municipalities; and WHEREAS, Section 11-74.4-4© of the TIF Act (65 ILCS § 11-74.4-4©) provides that no agreement relating to the development of property owned by the municipality shall be made except upon the adoption of an ordinance by the corporate authorities and that no conveyance, lease, mortgage or other disposition of land owned by a municipality, or agreement relating to the development of such municipal property, shall be made without making public disclosure of the terms of the disposition and all bids and proposals made in response to the municipality's request; and WHEREAS, the City has adopted a redevelopment plan for the International Harvester Tax Increment Finance District; and WHEREAS, the City has determined that to promote redevelopment, eliminate blight and expand the tax base of the City, to provide for job creation and retention, and to improve the quality of development at Second Avenue in the City, it must provide incentives for development to a developer in order to enable a developer to construct a development that is consistent with the City's goals; and WHEREAS, negotiations between the City and Petersen Health Resources, LLC ("the Developer") resulted in a Memorandum of Understanding, dated August 18, 2004; and WHEREAS, the Developer has submitted to the City a development plan that meets the City's redevelopment goals and criteria as set forth in its redevelopment plan for the International Harvester Tax Increment Finance District, which development plan is for construction of an Assisted Living Center, to consist of a 48,000 square foot, two-story Victorian-style assisted living center, with 25 one-bedroom and 25 studio apartments, access to the second story by elevator, nursing and health care assistance, dietary services serving three meals a day for the residents, full housekeeping, laundry and transportation, a garden, and a geriatric wellness and fitness center; and WHEREAS, the City Council finds that no alternative development plan has been submitted that is equivalent in scope, detail and the accomplishment of redevelopment goals and criteria as set forth in the redevelopment plan adopted by the City of Canton for the International Harvester Tax Increment Finance District; and WHEREAS, the City Council finds and determines that the best interests of the City of Canton and its residents will be served by the acceptance of the development agreement submitted by Petersen Health Resources, LLC and the sale of the real property to the Developer. NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Canton, Fulton County, Dlinois, as follows: Section One: The foregoing recitals are incorporated herein as findings of the City council. Section Two: The development plan submitted by Petersen Health Resources, LLC is accepted by the City Council of the City of Canton and the real property will be sold to the Developer for implementation of its development plan. Section Three: The Mayor is authorized and directed to execute the Development Agreement with Petersen Health Resources, LLC and to proceed with the sale and transfer of the real property by a proper deed of conveyance, stating the consideration paid, and the City Clerk is authorized to acknowledge and attest such deed and to affix thereto the seal of the City of Canton. Section Four: The Mayor and the Clerk are authorized, respectively, to execute and attest such other documents as may be necessary to the conveyance herein authorized. Section Five: This Ordinance shall be in full force and effect from and after its passage, by a vote of at least three fourths of the corporate authorities now holding office, and approval in the manner provided by law. 2 PASSED THIS lst DAY OF MARCH, 2005. AYES: Aldermen Reed, Hartford, Csrl, Harn, P7olleck, Sarff, NAYS: None, ABSENT: Aldermen Nest, Fillingham. ABSTAIN: None, APPROVED THIS lst DAY OF MARCH, 2005. Mayor ATTEST: ., . / ` ' City Clerk 3 PASSED THIS 1st DAY OF MARCH, 2005. AYES: Aldermen Reed, Hartford, Csrl, Harn, ~`1olleck, Sarff , NAYS: None, ABSENT: Aldermen West, Fillinghain, ABSTAIN: Nome, APPROVED THIS ~~ DAY OF MARCH, 2005. Mayor ATTEST: ~~ ', City Clerk 3 NOTICE OF SALE of Property Owned by the City of Canton and Invitation for Equivalent Alternative Proposals PLEASE TAKE NOTICE THAT the City Council of the City of Canton intends to enter into a development agreement and sell a parcel of property located in the 200-300 block of Second Avenue between Second Avenue and Van Buren in Canton, Illinois, which is more particularly described as follows: The East One-half of Lot 71, the East One-half of Lot 72, the South 37 feet of Lot 73, the East One-half of Lot 73, Lot 74 and Lot 75 of Jones Second Addition to the City of Canton; and Lots 5, 12, 21, 28, 37, 44 and 53 in Wright's Addition to the City of Canton; All situated in the County of Fulton and State of Illinois. In conveying the property, the City must comply with various Illinois state statutes, local ordinances and relevant binding legal agreements currently in effect that outline procedures for conveyance of this specific property, as well as other property owned or controlled by the City and other Illinois municipalities. Section 11-74.4-4(c) of the TIF Act (65 ILCS § 11-74.4-4(c)) provides that no agreement relating to the development of property owned by the municipality shall be made except upon the adoption of an ordinance by the corporate authorities and that no conveyance, lease, mortgage or other disposition of land owned by a municipality, or agreement relating to the development of such municipal property, shall be made without making public disclosure of the terms of the disposition and all bids and proposals made in response to the municipality's request. The City of Canton has received a development proposal for an Assisted Living Center, which will consist of a 48,000 square foot, two-story Victorian-style assisted living center. It will include 25 one-bedroom and 25 studio apartments. Access to the second story will be by elevator for the convenience of the residents. Services will include nursing and health care assistance, as well as dietary services, serving three meals a day for the residents. Full housekeeping, laundry and transportation will also be provided to the residents. The facility will be fully landscaped, with a garden, and will contain a geriatric wellness and fitness center. Copies of the development proposal will be on file for examination in the office of the City Clerk, City of Canton, between the hours of 8:30 a.m. and 5:00 p.m. from February 16, 2005 through March 1, 2005. Any alternative proposals must be submitted to the City Clerk, 2 North Main Street, Canton, Illinois 61520, no later than 5:00 p.m. February 28, 2005, with copies to Dave Byerly, Economic Director of the City of Canton, at the same address. In order to be properly considered by the City Council, alternative proposals must be equivalent in scope, detail and the accomplishment of redevelopment goals and criteria as set forth in the redevelopment plan adopted by the City of Canton for the International Harvester Tax Increment Finance District. NOTICE OF SALE of Property Owned by the City of Canton and Invitation for Equivalent Alternative Proposals PLEASE TAKE NOTICE THAT the City Council of the City of Canton intends to enter into a development agreement and sell a parcel of property located in the 200-300 block of Second Avenue between Second Avenue and Van Buren in Canton, Illinois, which is more particularly described as follows: The East One-half of Lot 71, the East One-half of Lot 72, the South 37 feet of Lot 73, the East One-half of Lot 73, Lot 74 and Lot 75 of Jones Second Addition to the City of Canton; and Lots 5, 12, 21, 28, 37, 44 and 53 in Wright's Addition to the City of Canton; All situated in the County of Fulton and State of Illinois. In conveying the property, the City must comply with various Illinois state statutes, local ordinances and relevant binding legal agreements currently in effect that outline procedures for conveyance of this specific property, as well as other property owned or controlled by the City and other Illinois municipalities. Section 11-74.4-4(c) of the TIF Act (65 ILCS § 11-74.4-4(c)) provides that no agreement relating to the development of property owned by the municipality shall be made except upon the adoption of an ordinance by the corporate authorities and that no conveyance, lease, mortgage or other disposition of land owned by a municipality, or agreement relating to the development of such municipal property, shall be made without making public disclosure of the terms of the disposition and all bids and proposals made in response to the municipality's request. The City of Canton has received a development proposal for an Assisted Living Center, which will consist of a 48,000 square foot, two-story Victorian-style assisted living center. It will include 25 one-bedroom and 25 studio apartments. Access to the second story will be by elevator for the convenience of the residents. Services will include nursing and health care assistance, as well as dietary services, serving three meals a day for the residents. Full housekeeping, laundry and transportation will also be provided to the residents. The facility will be fully landscaped, with a garden, and will contain a geriatric wellness and fitness center. Copies of the development proposal will be on file for examination in the office of the City Clerk, City of Canton, between the hours of 8:30 a.m. and 5:00 p.m. from February 16, 2005 through March 1, 2005. Any alternative proposals must be submitted to the City Clerk, 2 North Main Street, Canton, Illinois 61520, no later than 5:00 p.m. February 28, 2005, with copies to Dave Byerly, Economic Director of the City of Canton, at the same address. In order to be properly considered by the City Council, alternative proposals must be equivalent in scope, detail and the accomplishment of redevelopment goals and criteria as set forth in the redevelopment plan adopted by the City of Canton for the International Harvester Tax Increment Finance District. DEVELOPMENT AGREEMENT This DEVELOPMENT AGREEMENT (Agreement) is entered into as of , 2004, by and between the City of Canton (the City), an Illinois municipal corporation, and Petersen Health Resources, LLC . (Petersen or the Developer), an Illinois limited liability company. WHEREAS, the City intends to sell a parcel of property located on Second Avenue in Canton, Illinois ("Project Area"), which is more particularly described on the attached Exhibit A. In conveying the Project Area, the City must comply with various Illinois state statutes, local ordinances and relevant binding legal agreements currently in effect that outline procedures for conveyance of this specific property, as well as other property owned or controlled by the City and other Illinois municipalities; and WHEREAS, Section 11-74.4-4(c) of the TIF Act (65 ILCS ' 11-74.4-4(c)) provides that no agreement relating to the development of property owned by the municipality shall be made except upon the adoption of an ordinance by the corporate authorities and that no conveyance, lease, mortgage or other disposition of land owned by a municipality, or agreement relating to the development of such municipal property, shall be made without making public disclosure of the terms of the disposition and all bids and proposals made in response to the municipality's request; and WHEREAS, the City has fully complied with Section 11-74.4-4(c); and WHEREAS, the City has determined that to promote redevelopment, eliminate blight and expand the tax base of the City, to provide for job creation and retention, and to improve the quality of development at Second Avenue in the City, it must provide incentives for development to the Developer in order to enable the Developer to construct an Assisted Living Center (the "Project"); and WHEREAS, negotiations between the City and the Developer resulted in a Memorandum of Understanding (MOU), dated August 18, 2004, a copy of which is attached as Exhibit B; and WHEREAS, the City and Petersen desire to implement the provisions of the MOU; and WHEREAS, both the City and Petersen have performed all of the conditions precedent to execution of this Agreement that are contained in the MOU; and WHEREAS, the City proposes to enter into this Agreement with Petersen to achieve the City's objectives and in order to facilitate the development of the Project Area. The City is prepared to perform various tasks, more particularly outlined below, in order to bring about development in accordance with this Agreement; and WHEREAS, prudent fiscal management by the City requires that this assistance to the Developer be provided with appropriate assurances to the City that the Project will be developed substantially as presented to the City. NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties, each of them does covenant and agree as follows: Section 1. Definitions. All capitalized terms used and not otherwise defined shall have the following meanings, unless the text expressly or by necessary implication requires otherwise: (1) City Council means the City Council of the City. (2) "Design Review Team" means the following individuals or entities, collectively: the City's Zoning Officer, Economic Development Director, Director of Public Works, the City's Engineer, a representative from the City's Fire Department, and the City's Planning Firm (Vandewalle & Associates). (3) Project Area means the property more fully described on Exhibit A, upon which the Project will be constructed. (4) Project Area Acquisition means the acquisition by Petersen of the Project Area. (5) Assisted Living Center or Project will consist of a 48,000 square foot, two-story Victorian-style assisted living center. It will include 25 one-bedroom and 25 studio apartments. Access to the second story will be by elevator for the convenience of the residents. Services will include nursing and health care assistance, as well as dietary services, serving three meals a day for the residents. Full housekeeping, laundry and transportation will also be provided to the residents. The facility will be fully landscaped, with a garden, and will contain a geriatric wellness and fitness center. (6) TIF Act means Section 5/11 of Chapter 65 of the Illinois Compiled Statutes, as amended from time to time. (7) Tax Increment means that portion of the real property taxes generated with respect to the Assisted Living Center on the Project Area, which is remitted to the City as tax increment, pursuant to the TIF Act. (8') Municipal Development Costs means costs incurred directly by the City in connection with the Project, which are referenced in Section 4.2 and more fully described in Section 3.1 below. (9) Site Plan shall be defined as the identification and location of the Project improvements in the Project Area. A copy of the Site Plan is attached as Exhibit C. (10) "Minimum Project Improvements" means the baseline of project 2 construction/improvements required for the Project to reach the minimum assessed value required by this Agreement. Section 2. Findings and Determinations. The City finds and determines as follows: (1) The private development of the Project is consistent with the public purposes, plans and objectives of the City; and (2) The expenditure of the Municipal Development Costs and the reduction of the land acquisition price to be paid by Petersen to acquire the Project Area would act as inducements for the private development of the Project, making the accomplishment of the City's and the TIF Act's public purpose objectives more likely; and (3) The construction of the Project is consistent with the overall objectives of the City and would provide employment, expand the City's tax base and generally enhance the quality of this area of the City. Section 3.1. Representations by the City. The City makes the following representations as the basis for the undertaking on its part: (1) The City is a public body corporate and politic duly organized and existing under the laws of the State of Dlinois. (2) The City proposes to provide assistance to the Developer in accordance with the provisions of this Agreement. (3) The activities of the City are undertaken for the purposes defined in the TIF Act. (4) The parties signing below on behalf of the City have been fully authorized to execute this Agreement on behalf of the City. (5) The City shall commit the municipal funds necessary to perform its obligations under this Agreement and to construct any and all improvements it has agreed in this Agreement to construct. These funds maybe obtained by the issuance of municipal bonds or by other means. (6) The City shall perform the following tasks: (a) Cause to be funded and performed, the demolition of the existing buildings located on the International Harvester site, leaving all concrete foundations and temporary environmental barriers pending further environmental investigation. (b) Install a fence barrier along Second Avenue across from the Project Area, 3 which shall restrict the view and enclose the balance of the International Harvester site. (7) The City acknowledges that but for the representations and the obligations of the City, the Developer would not enter into this Agreement. The City further acknowledges that the failure of the City to undertake and complete its obligations under this Agreement could cause the Developer irreparable injury. Section 3.2. Representations and Warranties by the Developer. The Developer represents and warrants as follows: (1) The Developer has full authority to execute and perform this Agreement. (2) The parties signing below for the Developer warrant that they have full power and authority to execute this Agreement on behalf of the Developer and to bind the Developer to this Agreement. (3) The Developer's proposed Project would not occur but for the assistance and inducements being provided by the City. (4) Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated by the parties, nor the fulfillment of or compliance with the terms and conditions of this Agreement is prevented or limited by,conflicts with, or results in the breach of, the terms, conditions or provisions of any contractual restriction, evidence of indebtedness, agreement or instrument of whatever nature to which the Developer is now a party or by which it is bound, or constitutes a default under any of the foregoing. (5) The Developer shall cause to be funded, develop and construct an Assisted Living Center as described in Section 1(5) above. The estimated fair market value of the Project is $4,000,000.00, with an estimated assessed value of $1,333,000.00. (6) The Developer will undertake all on-site landscaping and related improvements, including all private walkways, roadways and parking, at its own expense. (7) The Developer acknowledges that but for the representations and the obligations of the Developer, the City would not enter into this Agreement. The Developer further acknowledges that the failure of the Developer to undertake and complete its obligations under this Agreement could cause the City irreparable injury. (8) Economic Development Incentives. The Developer recognizes that the Project may be eligible for various business and development incentives as provided by federal, state or municipal statutes or ordinances. The City will continue to cooperate with 4 and help the Developer to access the various programs; however, this agreement offers no pledge or guarantee of program awazd other than that specifically described within this document. The Developer recognizes that the property is located within a Tax Increment Financing District and, as such, in accordance with state statute, 65 1LCS S/ 11-74.4-8c, is not eligible for real estate property tax abatements. Section 4. Mutual UnderstandinQS and City and Developer Obli ations. The City and the Developer understand and agree as follows: Section 4.1. Municipal Development Costs. The City agrees to construct, and pay for, any items and/or improvements described in Section 3.1 above. Section 4.2. Land Acquisition Costs. The City agrees to sell the Project Area to the Developer for One Hundred and no/ 100 Dollars ($100.00), on the condition that the Developer fully comply with all of the terms and conditions of this Agreement. Section 5. Conditions to Mutual Obligations. This Agreement is being executed before certain portions of the Project aze fully identified, in order to provide evidence of the City's willingness to undertake the obligations contained in Section 3 above. Therefore, the City's obligations contained in Section 3 are expressly made subject to the following preconditions, which the City has the right to deem satisfied or waived, in its reasonable discretion. Section 5.1. Proof of Entity. The City's obligations under this Agreement are contingent upon (1) the Developer providing documents, certified to the City as being true, correct and complete, to provide evidence of the ownership of Petersen as identified on Exhibit D, and (2) the City's approval of the Developer's documents, which approval will not be unreasonably withheld, on or before the final execution of this Agreement. Execution of this Agreement by the City shall be deemed acknowledgement by the City that the Developer has satisfied this condition. Note that Section 8.2(3) below prevents the transfer of the ownership interests in Petersen after the ownership documentation has been certified to the City. Section 5.2. Proof of Proiect Costs and Sources and Uses. The City is satisfied that the methodology and amounts shown for all funding sources and uses of funds for the Projectas shown on the attached Exhibit E and incorporated into this Agreement- (the Sources and Uses), are reasonably satisfactory for the execution of this Agreement. Execution of this Agreement by the City shall be deemed acknowledgement by the City that the Developer has satisfied this condition. However, the City's obligations under this Agreement are contingent upon the Developer's providing evidence, reasonably satisfactory to the City, based on a fixed price contract proposal by the Developer's azchitect, of updated and more definite Sources and Uses for the Project. The City's obligations are further contingent upon the receipt of evidence reasonably satisfactory to the City, prior to the City's conveying the land for the Project, that the Developer has a written commitment for financing for the Project, sufficient to cover all Project costs. Any material changes in the Sources and. Uses for the Project must be approved by the City in writing. Further, the City may 5 terminate this Agreement, or refuse to approve plans and specifications for the Project, if the proposed value of the Project is less than the floor value identified in Section 3.2(5) above. Section 5.3. Qualit o~ Improvements. The quality of the improvements for the Project is important to the City. Accordingly, the Developer shall minimize any appearances of sheet metal and other metal construction-related components. This Agreement is contingent upon the City's final approval of the Site Plan and the Plans and Specifications and, although the City's approval shall not unreasonably be withheld, the City, as a municipality, has normal permit and approval procedures that must be followed. The overall Site Plan for the Project will be organized along public streets and spaces in apedestrian-oriented, urban development format. Section 5.4 Approval of Plans and Specifications. The Developer shall present to the Design Review Team for its approval all of the plans and specifications for the appearance of the Project improvements, including the quality of materials, size of buildings, location of improvements in the Project Area, detailed site plans and building elevations, and the character of the improvements (together, "Plans and Specifications"). The Design Review Team shall have a period of sixty (60) days after submission of the Developer's Plan and Specifications to review and approve same or to provide specific written objections to the Plans and Specifications. If the Design Review Team rejects any portion, or all, of the Plans and Specifications, the Developer shall submit revised Plans and Specifications to the Design Review Team for its review within thirty (30) days. Thereafter, the Design Review Team shall have a period of thirty (30) days to review the revised Plans and Specifications and to approve same. Once the Design Review Team has finally approved the Plans and Specifications, the Developer shall build the Project in material accordance with the approved Plans and Specifications provided, however, that the Developer retains the right to make minor reasonable modifications that do not materially affect the nature, scope or aesthetics of the Project. Section 5.5. Site Plan Approval. The Developer shall present the Site Plan to the Design Review Team for its approval. The Design Review Team shall have a period of sixty (60) days after submission of the Developer's Site Plan to review and approve same or to provide specific written objections to the Site Plan. The Design Review Team may reject the Site Plan if the overall Site Plan for the Project is not organized along public streets and spaces in apedestrian-oriented, urban development format or is otherwise unacceptable to the Design Review Team. ff the Design Review Team rejects the Site Plan, the Developer shall submit a revised Site Plan to the Design Review Team for its review within Thirty (30) days. Thereafter, the Design Review Team shall have a period of thirty (30) days to review the revised Plans and Specifications and to approve same. Once the Design Review Team has finally approved the Site Plan, the Developer shall construct the Project in material accordance with the approved Site Plan provided, however, that the Developer retains the right to make minor reasonable modifications that do not materially affect the nature, scope or aesthetics of the Project. Section 5.6 Final approval of the Site Plan and the Plans and Specificationsmay not be withdrawn or modified by the Design Review Team or the City with the sole exception of safety 6 issues or changes made by the Developer as permitted by this Agreement. Section 5.7. Confirmation of Developer Control. The City's obligations under this Agreement are contingent upon the Developer's providing, and the City's approving prior to conveyance of the land, the contract under which the Developer has control over the entire Project throughout its construction and its operation upon completion of construction, and upon the Developer's providing evidence that the Developer cannot be replaced as Developer of the Project without the approval of the City, which shall not be unreasonably withheld. Section 5.8. Confirmation of Major DeveloQment Team Members. The City's obligations under this Agreement are contingent upon the Developer's providing, and the Design Review Team's approving, before the earlier of the date it approves the Plans and Specifications for the Project or the date the City conveys the land to the Developer, the following key team members for the entire Project: the architect, general contractor, environmental consultant, Project manager, Assisted Living Center operator and construction lender, none of whom may be removed from the Project team without the City's prior written consent. Section 5.9. Development Plan. Pursuant to the MOU, the Developer has prepared a Development Plan, which includes, among other things, a proposed project cost schedule, a detailed site plan, a proposed development schedule, a description of the legal structure of the Developer, a proposal for the Developer's performance guarantees, and a proposed increment schedule based upon assumptions of the fair market value of the Project. The Developer has presented its Development Plan to the City, the City Council, the Joint Review Board of the IH Redevelopment Site Tax Increment Financing District and other agencies, organizations and groups required to approve this Agreement. Execution of this Agreement by the City shall be deemed acknowledgement bythe City that the Developer has satisfied this condition. Section 6. Developer Obli atg ions. Section 6.1. Completion Schedule. Once the Minimum Project Improvements are determined by the approval of the Plans and Specifications, and after satisfaction of all other contingencies to this Agreement, the Developer shall, subject to unavoidable delays, promptly commence and diligently pursue and complete the Project, including the Minimum Project Improvements, on or before the timetable contained in Exhibit F. Section 6.2. Construction Completion in Accordance with Approved Plans and Specifications. The Developer shall construct the Project, including the Minimum Project Improvements, in compliance with all codes and applicable rules and laws and in conformity with the Approved Plans and Specifications as defined in Section 5 above. Section 6.3. The Minimum Project Improvements, when completed, must constitute a permitted use under the zoning ordinance of the City. 7 Section 6.4. Construction Easements. The Developer shall provide construction easements and reasonable access to the Project Area to complete the work identified as Municipal Development Costs and to make reasonable inspections to confirm that the work on the Project is being completed pursuant to the terms of this Agreement. Section 6.5. Taxable Property. The Developer shall ensure that the Project will be assessed for real estate taxes. Section 6.6. Developer Contingency. a. The Developer's obligations under this Agreement shall be contingent upon the City conveying to Developer good and merchantable title to the Project Area. The City shall convey good marketable and insurable fee simple title to the Project Area, together with all air rights, to the Developer in the form of a Deed, free and clear of all liens and encumbrances, subject only to any other matters of title that the Developer deems acceptable in its sole judgment and to which it does not object to in writing. The City shall pay at closing the cost of an Owner's title insurance policy with Extended Coverage to be issued by the title insurer insuring the Developer's title in the amount of b. The Developer's obligations hereunder are contingent upon the Developer's ability to secure financing. c. The Developer's obligations to consummate this transaction are contingent upon the Developer's satisfaction of the following matters: (1) Title to and Survey of the Project Area. Within thirty (30) days of the date of this Agreement, the City shall delivered to Developer: (a) a current ALTA 1970 Form B (Amended 10/ 17/70) title commitment for owner's policy of title insurance for the Real Property set forth on Exhibit "A", issued by a reputable title insurance company engaged in business in Fulton County, together with copies of all documents identified in the title commitment as Schedule B exceptions (the "Title Binder"); and (b) an ALTA survey (the "Survey"). The Title Binder describes the Real Property set forth on Exhibit "A", shall name Developer as the party to be insured hereunder and shall commit to insure Developer with good and marketable fee simple title upon Closing subject only to taxes, assessments, building and use restrictions now of record, facts an accurate survey would disclose, easements and reservations now of record and all acts of Developer and Developer's assigns. Developer shall have thirty (30) days after receipt of the Title Binder and Survey (the "Title Review Period") in which to notify the City in writing of any objections Developer has to any matter shown or referred to in such Title Binder. Any title encumbrances or exceptions which are set forth in the Title 8 Binder or Survey as to which Developer does not object within the Title Review Period shall be deemed to be a permitted exception to the status of title to the Project Area. With regard to items to which Developer does object within the Title Review Period, the City shall have a period of ten (10) business days following receipt of Developer's written notice in which to cure such objections. If the City is unable to cure such objections within such period, Developer may, at Developer's option, waive the objections not cured or terminate this Agreement by written notice to the City. (2) Physical Inspection. The Developer shall, at its sole cost and expense, have a period of sixty (60) days from the date of the execution of this Agreement to investigate the physical condition of the Project Area as to all matters the Developer deems relevant with respect to its acquisition, ownership and operation thereof. In the event the Developer discovers any matter which it, in its sole discretion, deems unacceptable, Developer shall notify the City in writing of any objections to the condition of the Project Area. The City shall have a period of ten (10) business days following receipt of Developer's written notice in which to cure such objections. If the City is unable to cure such objections within such period, Developer may, at Developer's option, waive the objections not cured or terminate this Agreement by written notice to the City. The City agrees to cooperate reasonably with any such investigations, inspections or studies made by or at the Developer's direction. During the pendency of this Agreement, the Developer and its agents, employees and representatives shall have a continuing right of reasonable access to the Project Area (subject to a 24-hour notice requirement). (3) Appraisal. The Developer may, at its own expense, cause to have completed an appraisal for the value of the Project Area. (4) Zonine. The City shall confirm in writing to the Developer within ten (10) days of this Agreement that the Project Area is properly zoned for use as an assisted living center. (5) Environmental Report. The Developer may, at its sole cost and expense, cause to have completed a Phase I Environmental Audit (the "Environmental Audit"). The Environmental Audit, if performed, shall discuss, among other things, whether there has been or currently is any environmental contamination or other toxic material stored or located on the Project Area. In the event the Environmental Audit discloses any matter which the Developer, in its sole discretion, deems unacceptable, Developer shall notify the City in writing of any objections to such condition of the Project Area. Developer may, at Developer's option, waive the objections or 9 terminate this Agreement by written notice to the City. Section 6.6 Developer's Option to Terminate. This Agreement may be terminated by the Developer if (i) the Developer is in compliance with all material terms of this Agreement and no Event of Default has occurred and (ii) the City fails to comply with any material term of this Agreement and, after the City has received from the Developer written notice of its failure to comply, the City has failed to cure its noncompliance within 90 days of receipt of the notice, or, if the noncompliance cannot reasonably be cured by the City within 90 days of receipt of the notice, the City has not provided assurances, reasonably satisfactory to the Developer, that its noncompliance will be cured as soon as reasonably possible. Section 7. Continuing Obli ations. Section 7.1. Certificate of Compliance. When a final Certificate of Occupancy has been issued for the Project Area, the Developer shall apply to the City for a Certificate of Compliance with the requirements of Sections 6.1 and 6.2 above, which, when issued, shall be recorded in the Office of the Recorder of Fulton County, Illinois, and maybe relied on by third parties as evidence that the requirements of those sections of this Agreement have been satisfied. Such certificate shall not be unreasonably withheld. Section 7.2. Continuing Obli atg ions. Notwithstanding the issuance of the Certificate of Compliance identified in Section 7.1 above, the following obligations of the Developer shall be continuing obligations under this Agreement: (1) Obligation to Maintain Property in Good Condition. The Developer and its successors and assigns shall maintain the improvements in the Project Area in good condition and shall operate the improvements in compliance with the terms of this Agreement, with all local, state and federal laws and regulations, and with any and all covenants placed upon the Project Area. The Developer shall indemnify and hold the City harmless from any and all liability resulting from the Developer's breach of any local, state or federal law or regulation. (2) Sale or Lease of Project. No portion of the Project Area maybe sold or leased to any party without the prior written consent of the City until the completion of construction of the entire Project. (3) Warranty of Entity: Non-transferabilitX. The City has entered into this Agreement with the Developer on the basis of the identity of the parties who own the Developer and on the strength of their experience. Therefore, the Developer warrants and represents to the City that the owners of all interests in the Developer are as shown on Exhibit "D" and that, as a material consideration to this Agreement, the Developer may not transfer interest in the Project, in the Project Area or a majority interest in the Developer without the prior written consent of the City, which shall not be 10 unreasonably withheld, for a period of 6 months following completion of construction. Any transfer by the Developer of any interest in this Agreement or the transfer of any interest in the Developer, or material amendment to the Developer's bylaws or operating agreement, without first securing the written consent of the City, shall be considered an event of default. In any event, any permitted transferee of the Project or Project Area must agree to be bound by the terms of this Agreement. (4) Taxation of Project. The Developer agrees that the Project shall be assessed at its full assessed value of $1,333,000.00 by January 1, 2007. The Developer further agrees that, if the assessed value does not reach $1,333,000.00 within that time, the Developer will file a Complaint with the Office of the Tax Assessor of Fulton County, seeking an increase in assessed value to $1,333,000.00. In the alternative, the Developer agrees that, if it fails to file a Complaint to increase the assessed value to $1,333,000.00 within the allotted time and the City files such a Complaint, the Developer will not protest. (5) Taxable Entitv. The Developer warrants that the Project Area shall not be sold to an entity that is exempt from real estate taxation, without the prior written consent of the City during the existence of the T1F (which shall expire in the year 2027), which consent may be conditioned upon the execution by the proposed new owner or occupant of an agreement to make payments in lieu of taxes. Section 7.3. The parties agree to provide a certificate to one another and to the Developer's lender, if requested, as each contingency is satisfied, certifying that the contingency has been satisfied. The parties and the Developer's lender may rely on the certificates. Section 8. Events of Default. The following shall be Events of Default under this Agreement and the term Event of Default shall mean, whenever it is used in this Agreement, any one or more of the following events (described in Sections 8.1-8.3): Section 8.1. Failure by the Developer to cause substantial and material completion of the Project to occur pursuant to the terms, conditions and limitations of this Agreement shall constitute an Event of Default. Section 8.2. Failure by the Developer to observe or perform any covenant, condition, obligation or agreement that it is required by this Agreement shall constitute an Event of Default. Section 8.3. Failure by the City to observe or perform any covenant, condition, obligation or agreement that it is required by this Agreement shall constitute an Event of Default. Section 8.4. Remedies on Default. Whenever any Event of Default referred to in this Section occurs and is continuing, the non-defaulting party shall have available to it any remedy allowed by law or in equity. 11 Section 8.5. No Remedy Exclusive. No remedy is intended to be exclusive of any other available remedy or remedies, but each and every remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or existing at law, in equity or by statute. The delay or failure to exercise any right or power accruing upon any default shall not impair the non- defaultingparty from later exercising the right or power, nor shall it be construed as a waiver of the right or power, but the parties may exercise any right or power from time to time and as often as they may deem expedient. Section 8.6. No Implied Waiver. In the event any breach of this Agreement by either party shall be waived by the other party, that waiver shall be limited to the particular breach waived and shall not be deemed to waive any other concurrent, previous or subsequent breach of this Agreement. Section 8.7. Agreement to Pay Attorney's Fees and Expenses. Whenever any Event of Default occurs and the Non-Defaulting party employs attorneys or incurs other expenses to enforce any obligation or agreement of the Defaulting party, the Defaulting party shall, on demand by the Non-Defaulting party, pay the Non-Defaulting party's reasonable attorney's fees and other expenses. Section 8.8. Release of Liability. The Developer and the City agree that each party shall be responsible for its own actions, the actions of its employees and the actions of parties directly under its control and shall not be responsible or liable for the actions of the other party, its employees or others directly under the other party's control. If one party is determined to be liable to the other, it shall not be liable for consequential damages, such as lost profits or loss of use, but may be held liable only for actual damages, attorneys' fees and costs of litigation, where applicable. Section 8.9. Unavoidable Delays. In addition to specific provisions of this Agreement, performance by any party shall not be deemed to be in default where delays or defaults are caused directly by war, insurrection, strikes, lock-outs, riots, floods, earthquakes, fires, casualties, acts of the public enemy, epidemics, quarantine restrictions or freight embargoes (together, Unavoidable Delays). An extension of time for completion resulting from Unavoidable Delay shall only be for the period that action is actually prevented by the Unavoidable Delay. Times of performance under this Agreement may also be extended in writing by the parties. Section 9. Miscellaneous. Section 9.1. Conflicts of Interest. No member of the governing body or other official of the City shall have any direct financial interest in this Agreement, the Project or the Project Area; or any contract, agreement or other transaction contemplated to occur or be undertaken with respect to this Agreement, the Project or the Project Area, nor shall any member of the governing body or other official participate in any decision relating to the Agreement that directly affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is directly interested. No member, official or employee of the City shall be personally liable to the City in the event of any default or breach by the Developer or successor or on any obligations under the terms of 12 this Agreement. Section 9.2. Headings. Descriptive headings are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement. Section 9.3. Notices. Any notice required by this Agreement shall be given in writing, signed by the party giving notice, personally delivered or mailed by certified or registered mail, return receipt requested, to the parties' respective addresses as follows: To the City: City of Canton 2 North Main Street Canton, Illinois 61520 Attn: Mayor With a copy to: Ronald Weber, Esq. City Attorney Froehling, Weber & Evans 167 West Elm Street Canton, Illinois 61520 To the Developer: Petersen Health Resources, LLC c/o Mark B. Petersen 7218 North Villa Lake Drive Peoria, Illinois 61614 With a copy to: Marikay L. Snyder, Esq. Petersen Health Resources, LLC 7218 North Villa Lake Drive Peoria, Illinois 61614 Notice shall be deemed delivered (a) in the case of personal delivery, on the date when personally delivered, or (b) in the case of certified or registered mail, on the date when deposited in the United States mail with sufficient postage to effect such delivery. Section 9.4. Entire Agreement. This document contains the entire agreement between the Developer and the City with respect to the matters set forth, and it shall inure to the benefit of and shall bind the parties, their respective heirs, executors, successors or assigns. This Agreement may be modified only by a writing signed by all parties. Section 9.5. Governin Law. This Agreement shall be construed in accordance with the laws of the State of Illinois. The parties agree that disputes under this Agreement shall be decided in the courts of the County of Fulton or the United States District Court for the Central District of Illinois, and the parties consent to that jurisdiction. 13 Section 9.6. Cooperation. The City and the Developer agree to cooperate in the prosecution of applications made by either party for any governmental certificates or approvals appropriate or necessary for the consummation of the transactions contemplated by this Agreement or the use and occupancy of the Property. The City and the Developer each agree at any time, or from time to time at the written request of the other, to sign and deliver other documents as may be reasonably requested or as maybe reasonably necessary or appropriate to give full effect to the terms and conditions of this Agreement. Section 9.7. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original. Section 9.8. Provisions Surviving Rescission or Expiration. Sections 7.2, 7.3, 8.7 and 8.8 shall survive any rescission, termination or expiration of this Agreement with respect to or arising out of any event, occurrence or circumstance existing prior to the date of this Agreement. Section 9.9. Amendments. This Agreement may only be amended in writing, signed by the City and the Developer. Notwithstanding the above, by approving this Agreement, the City designates the Mayor and the City Engineer to act as its agents, to approve modifications to this Agreement, and to approve the final form of the Exhibits attached to this Agreement, such as the Site Plan and Approved Plans and Specifications, which are only preliminary at the time the Agreement is executed. Section 9.10. Exhibits. All Exhibits referenced in this Agreement and attached to it are incorporated by this reference. Section 9.11. Survival. This Agreement shall run with the Project Area and be binding upon the Developer and the owners of the Project Area, their successors and assigns in ownership and possession of the Project Area and any part of it. Section 9.12. Termination. Unless otherwise terminated as provided above, this Agreement shall terminate automatically upon the completion of all obligations contained within it, except as provided in Section 9.8 and 9.11 above. Section 10. Closing. The Closing for the sale and purchase of the Project Area shall be held at the offices of the City within 30 days of the satisfaction or waiver of all conditions precedent to Closing as provided herein, or at such other time, date, and place as the parties hereto shall mutually agree in writing (the "Closing Date"). Possession of the Assets shall be delivered by Seller to Buyer at Closing. The Closing Date may be extended as may be necessary by reason of any EPA issues disclosed by the EPA survey. 14 Section 10.01 Documents to be Delivered by the City. At the Closing (or, if so indicated, prior thereto), the City shall deliver to Developer, in addition to any and all other instruments required hereunder to be delivered to Developer by the City, or otherwise comply with, each of the following: (a) An Illinois Warranty Deed duly executed by the City, witnessed and attested for recording, inform and substance satisfactory to Developer, in its reasonable discretion, conveying fee simple title to the Project Area to Developer, free and clear of all liens, claims, encumbrances and interests, except for those permitted exceptions described in Section 6.6(d) together with possession of the Project Area and an ALTA Owner's Title Insurance Policy which shall be provided at the City's expense; (b) Duly completed and executed Illinois P-TAX Form 203 Illinois Real Estate Transfer Declaration listing the transaction as exempt in a form and substance satisfactory to Developer in its reasonable discretion together with all lists and exhibits required by the State of Illinois. (c) Upon execution of this Agreement, the City shall deliver to the Developer an opinion of counsel for the City that includes the following: (1) The City is a municipal corporation and political subdivision duly organized and existing under the laws of the State of Illinois. (2) All official proceedings of the City necessary to enter into, and consummate the transactions contemplated by, this Agreement have been taken in accordance with law. (3) All of the documents required to be executed, delivered or acknowledged by the City have been duly and validly authorized, executed and delivered and are enforceable against the City in accordance with their terms, except to the extent that enforcement shall be limited or affected by any bankruptcy proceedings or similar debtor relief law and except that certain remedies may not be available under Illinois law. (4) The execution and delivery of this Agreement did not, and the consummation of the transactions contemplated under this Agreement and the execution and delivery of the documents required to be executed, delivered or acknowledged by the Developer will not, violate any provision of the City's charter or any applicable statute, rule, regulation, judgment, order or decree of the State of Illinois or court having jurisdiction over the City or its properties. 15 10.02 Documents to be Delivered by the Developer. At the Closing (or, if so indicated, prior thereto), Developer shall deliver to the City, in addition to any and all other instruments required hereunder to be so delivered to the City by Developer, or otherwise comply with, each of the following: (a) The Purchase Price in accordance with Section 4.03 hereof ; (b) Certified copy of Buyer's Articles of Organization the resolutions adopted by Developer, to the extent required by law, authorizing and approving the execution and performance of this Agreement, certified by an officer of Developer as of the Closing Date; (d) Certificate of Good Standing for Developer issued by the Illinois Secretary of State not earlier than ninety (90) days prior to the date of Closing; and (e) Such other certificates, opinions, consents, instruments, agreements, documents, and other papers as are required under this Agreement (f) Upon execution of this Agreement, the Developer shall deliver to the City an opinion of the Developer's legal counsel that includes the following: (1) The Developer is an Illinois limited liability company, duly organized and existing under the laws of the State of Illinois. (2) All required proceedings of the Developer necessary to consummate the transaction contemplated by this Agreement have been taken in accordance with law. (3) All of the documents required to be executed, delivered or acknowledged by the Developer have been duly and validly authorized, executed and delivered by the Developer and are enforceable against it in accordance with their terms, except to the extent that enforcement shall be limited or affected by any bankruptcy proceedings or similar debtor relief law and except that certain remedies may not be available under Illinois law. (4) The execution and delivery of this Agreement did not, and the consummation of the transactions contemplated under this Agreement, and the execution and delivery of the documents required to be executed, delivered or acknowledged by the Developer will not, violate any provision of the Developer's articles of organization or bylaws or any applicable statute, rule, regulation, judgment, order or decree of the State of Illinois or court having jurisdiction over the Developer or its properties. 16 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. CITY OF CANTON By: Jerry Bohler, Mayor PETERSEN HEALTH CARE, INC. By: Mark Petersen, President 17 LEGAL DESCRIPTION The East One-half of Lot 71, the East One-half of Lot 72, the South 37 feet of Lot 73, the East One- half of Lot 73, Lot 74 and Lot 75 of Jones Second Addition to the City of Canton; and Lots 5, 12, 21, 28, 37, 44 and 53 in Wright's Addition to the City of Canton; All situated in the County of Fulton and State of Illinois. EXHIBIT MEMORANDUM OF UNDERSTANDING This Memorandum of Understanding ("Memorandum") is entered into this ~(~ day of August, 2004, by and between the City of Canton, Illinois, an Illinois municipal corporation ("City") and Petersen Health Caze, Inc., an Illinois corporation ("Developer"), regazding the Development identified below. This Memorandum is intended to be anon-binding representation of the basic business terms the City and the Developer are willing to undertake, and certain commitments to work together in good faith to negotiate a final binding Development Agreement between the developer and the City regarding the Development, pursuant to necessary approvals and proceedings, as set forth herein. 1. Enti .The overall development of the proposed project will be undertaken by Petersen Health Care, Inc. 2. Summary of Project. The Developer will undertake development of the Petersen Health Caze Project, a development to be constructed on property currently owned by the City along 2"d Avenue between the streets of Pine and Maple in the City of Canton. The project will be an assisted living complex designed for senior residents. The project will be a private-pay facility and contain no space that will be subject to tax-exemption or reduction. The land which will be included in the Project is shown on the attached Exhibit A ("Project Area"). 3. Land Acquisition. The City intends to sell the described Project Area to the Developer for the consideration sum of one-hundred dollars (US). In conveying the Project Area, the City must comply with various Illinois state statutes, local ordinances and relevant binding legal agreements currently in effect that outline procedures for conveyance of this specific property, as well as other property owned or controlled by the City of Canton and other Illinois municipalities. Section 11.74.4-4(c) of the TIF Act § 65 ILCS provides that no agreement relating to the development of property owned by the municipality shall be made except upon the adoption of an ordinance by the corporate authorities and that no conveyance, lease, mortgage, or other disposition of land owned by a municipality or agreement relating to the development of such municipal property shall be made without making public disclosure of the terms of the disposition and all bids and proposals made in response to the municipality's request. The procedures for obtaining such bids and proposals must provide reasonable opportunity for any person to submit alternative proposals or bids. As such, the City will be required to publicly invite alternative proposals before signing a final development agreement conveying ownership of the Project Area. 4. Developer Improvements. The Developer will cause to be funded, develop and construct an assisted living complex as described in the Pazagraph 2 "Summary of Project". The estimated fair market value of the Project is $4,500,000.00 US, with an estimated assessed value at $1,500,000.00 US. 5. City Improvements. The City shall design, prepare plans and specs for public bidding and pay for the asbestos abatement and demolition of buildings located on the International Harvester Site between the North/South boundaries of Elm Street and EXHIBIT .+ Memorandum of Understanding: City of Canton/Petersen Health Care Page 2 of 3 Maple Street and the EastlWest boundaries of Second Avenue and Fourth Avenue. The improvements will include the preservation of existing foundations and surface coverings until such time that future sub-surface sampling determines future remediation courses and options. 6. Ouality of Improvements. The Development Agreement will identify a method of approval of plans and specifications for the Project built by the Developer, requiring the Developer to construct high-quality buildings and improvements. The City desires this to be a long lasting, image-building structure within the community's downtown district and, as such, desires that every effort be made to insure the appearance of the structure and development. The Developer will strive to minimize any appearances of sheet metal and other metal construction related components. 7. Site Plan. The overall site plan for the Project is subject to the approval of the City and will be organized in apedestrian-oriented, urban development format, organized along public streets and spaces. 8. Developer Liabilitv. The City and the Developer will work expeditiously and in good faith to negotiate and execute a formal Development Agreement specifying the duties and obligations of each party to the other pursuant to the development of the Project. This Agreement will be negotiated and completed, to the extent possible, but not executed, prior to the presentation by the Developer of its Development Plan before the City, the City Council and any such other agencies, organizations or groups required to approve such Development Agreement. a. The Developer will work in good faith to prepare and present the Development Plan no later than February 20, 2005. This Development Plan will include, among other things, a proposed project cost schedule, a detailed site plan, proposed development schedule, description of the legal structure of the Developer, proposal for performance guarantees of the Developer and a proposed increment schedule based upon assumptions of fair market value of the Project. b. Upon final approval of the Development Plan and Development Agreement by those agencies, organizations or groups as required, the City and the Developer shall execute the Development Agreement and shall then be subject to the terms and conditions contained therein on a binding basis. 9. Mutual Liability. a. The development agreement shall provide performance language requiring both parties to provide proof of financial capability to complete their stated improvements before either party shall be required to begin said improvements. b. Each party shall complete their stated improvements within 365 days from the satisfaction of the financial performance clause described in Paragraph 9, sub-section « „ a. T~ Memorandum of Understanding: City of Canton/Petersen Health Care Page 3 of 3 10. Taxable Propertv. At the completion of construction, the Developer will assure that the Project will be assessed for real estate taxes and that no portion of the property shall be subject to exempt or reduced taxation. 11. Economic Development Incentives. In addition to representations specifically expressed within this Memorandum of Understanding, the Developer recognizes that the Project may be eligible for various business and development incentives as provided by federal, state or municipal statute. The City will continue to cooperate with and help the Developer to access the various programs; however, this agreement offers no pledge or guarantee of program award other than that specifically described within this document. 12. Final Development Agreement. The City and the Developer will negotiate and execute a formal written Development Agreement, which will specify the duties of each party related to the development of the project. Once the Development Agreement is executed, this Memorandum of Understanding will be null and void and the Development Agreement will represent the sole agreement between the City and the Developer. 13. Exclusive Dealing. By executing this Memorandum of Understanding, the City agrees that for a period commencing on the date hereof and ending on February 20, 2005 ("the Exclusivity Period"), the City shall not solicit, negotiate, or accept any other proposal(s) from any individual, group or legal entity, other than the proposal which has been put forth by the Developer to develop the Project Area. Dated this ~ day of August, 2004. Petersen Health Care, Inc. ~~~~~~ Mark Petersen, President City of Canton ~, . May ,Jerry Bohler