Meeting Date: February 4th, 2013

ISSUE STATEMENT

AN ORDINANCE APPROVING AN ECONOMIC DEVELOPMENT AGREEMENT (DARIEN TOWNE CENTRE/HOME DEPOT)

BACKGROUND/HISTORY

The city received a proposal from RPAI (previously referred to as Inland) which they claim is a necessary financial incentive to keep Home Depot in the center. RPAI has said they need to have any agreement approved by the city no later than the February 4^th city council COW meeting in order to meet the timeframe established by Home Depot.

Home Depot’s lease expires in April of 2014 and they have told the city staff that they are looking at a property out of town and would be relocating unless the RPAI could match the lease term of the out of town property owner. The city council held a special meeting on January 30, 2013 to review the request by RPAI and a draft agreement providing for an economic incentive to keep Home Depot in Darien. The attached agreement reflects the council direction at that meeting.

Home Depot generates an estimated $560,000 to $660,000 in sales taxes to the city each year. If Home Depot were to leave Darien, it would be extremely difficult for RPAI to recruit a business that generates that amount of local sales tax revenue.

An overview of the agreement is as follows:

· The city will continue to receive an estimated annual sales tax revenue from Home Depot in the amount of $492,000 to $592,000

· Home Depot will exercise two lease options which would keep the store in Darien for a minimum of 10 more years

· RPAI will receive $750,000 over 11 years. They will receive $68,000 per year for the first 9 years of the agreement and then receive $69,000 for the remaining two years.

STAFF/COMMITTEE RECOMMENDATION

The city council recommends approval of the ordinance approving the agreement.

ALTERNATE CONSIDERATION

As directed.

DECISION MODE

This will be placed on the February 4, 2013, City Council meeting for formal consideration.