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HomeMy WebLinkAboutResolution No. 16-05 EDALINO LAKES ECONOMIC DEVELOPMENT AUTHORITY, MINNESOTA RESOLUTION NO. 16-05 RESOLUTION APPROVING CONTRACT FOR PRIVATE DEVELOPMENT AND AWARDING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS TAX INCREMENT REVENUE NOTE, SERIES 2016; IN THE MAXIMUM PRINCIPAL AMOUNT OF $1,200,000. BE IT RESOLVED BY the Board of Commissioners ("Board") of the Lino Lakes Economic Development Authority, Minnesota (the "Authority") as follows: Section 1. Authorization; Award of Sale. 1.01. Authorization. The Authority has heretofore approved the establishment of Tax Increment Financing (Economic Development) District No. 1-12 (the "TIF District") within Development District No. 1 ("Project"), and has adopted a tax increment financing plan for the purpose of fmancing certain improvements within the Project. Pursuant to Minnesota Statutes, Section 469.178, the Authority is authorized to issue and sell its bonds for the purpose of financing a portion of the public development costs of the Project. Such bonds are payable from all or any portion of revenues derived from the TIF District and pledged to the payment of the bonds. The Authority hereby finds and determines that it is in the best interests of the Authority that it issue and sell its Tax Increment Revenue Note, Series 2016 (the "Note") in the maximum aggregate principal amount of $1,200,000, for the purpose of financing certain public costs of the Project. 1.02. Business Subsidy. On the date hereof, the Board held a public hearing relating to the Contract for Private Development (the "Agreement") between the Authority, United Properties Development LLC (the "Owner"), and Distribution Alternatives, Inc. (the "Tenant"), incorporating a business subsidy agreement and at the public hearing, the views of all interested parties were heard. 1.03. Agreement Approved; Issuance, Sale, and Terms of the Note. The Authority hereby authorizes the President and Executive Director to execute such Agreement in substantially the form on file with Authority, subject to modifications that do not alter the substance of the transaction and are approved by such officials, provided that execution of the Agreement by such officials is conclusive evidence of their approval. The Authority hereby delegates to the Executive Director the determination of the date on which the Note is to be delivered, in accordance with Section 3.4 of the Agreement. Pursuant to the Agreement, the Note shall be issued to the Owner. The Note shall be dated as of the date of delivery and shall not bear any interest. The Authority shall receive in exchange for the delivery of the Note the payment by the Owner of the Public Development Costs as defined in the Agreement. The Note will be delivered in accordance with the terms of Section 3.3 of the Agreement. Section 2. Form of Note. The Note shall be in substantially the form attached hereto as EXHIBIT A, with the blanks to be properly filled in and the principal amount adjusted as of the date of issue: Section 3. Terms, Execution and Delivery. 3.01. Denomination, Payment. The Note shall be issued as a single typewritten note numbered R-1. 483310v2 JAE LN140-116 The Note shall be issuable only in fully registered form. Principal of the Note shall be payable by check or draft issued by the Registrar described herein. 3.02. Dates. Principal of the Note shall be payable by mail to the owner of record thereof as of the close of business on the fifteenth day of the month preceding the Payment Date, whether or not such day is a business day. 3.03. Registration. The Authority hereby appoints the Executive Director to perforin the functions of registrar, transfer agent and paying agent (the "Registrar"). The effect of registration and the rights and duties of the Authority and the Registrar with respect thereto shall be as follows: (a) Register. The Registrar shall keep at its office a bond register in which the Registrar shall provide for the registration of ownership of the Note and the registration of transfers and exchanges of the Note. (b) Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form reasonably satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, a new Note of a like aggregate principal amount and maturity, as requested by the transferor. Notwithstanding the foregoing, the Note shall not be transferred to any person other than an affiliate, or other related entity, of the Owner unless the Authority has been provided with a certificate of the transferor, in a form reasonably satisfactory to the Authority, that such transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. The Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding each Payment Date and until such Payment Date. (c) Cancellation. The Note surrendered upon any transfer shall be promptly cancelled by the Registrar and thereafter disposed of as directed by the Authority. (d) Improper or Unauthorized Transfer. When the Note is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Note or separate instrument of transfer is legally authorized. The Registrar shall incur no liability for its refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. (e) Persons Deemed Owners. The Authority and the Registrar may treat the person in whose name the Note is at any time registered in the bond register as the absolute owner of the Note, whether the Note shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of such Note and for all other purposes, and all such payments so made to any such registered owner or upon the owner's order shall be valid and effectual to satisfy and discharge the liability of the Authority upon such Note to the extent of the sum or sums so paid. (f) Taxes, Fees and Charges. For every transfer or exchange of the Note, the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee, or other governmental charge required to be paid with respect to such transfer or exchange. (g) Mutilated, Lost, Stolen or Destroyed Note. In case any Note shall become mutilated or be lost, stolen, or destroyed, the Registrar shall deliver a new Note of like amount, maturity dates and tenor in exchange and substitution for and upon cancellation of such mutilated Note or in lieu of and in substitution for such Note lost, stolen, or destroyed, upon the payment of the reasonable expenses and charges of the 483310v2 JAE LN140-116 2 Registrar in connection therewith; and, in the case of such Note lost, stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that such Note was lost, stolen, or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both the Authority and the Registrar shall be named as obligees. The Note so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given to the Authority. If the mutilated, lost, stolen, or destroyed Note has already matured or been called for redemption in accordance with its terms, it shall not be necessary to issue a new Note prior to payment. 3.04. Preparation and Delivery. The Note shall be prepared under the direction of the Executive Director and shall be executed on behalf of the Authority by the signatures of its President and Executive Director. In case any officer whose signature shall appear on the Note shall cease to be such officer before the delivery of the Note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. When the Note has been so executed, it shall be delivered by the Executive Director to the Owner in accordance with the Agreement. Section 4. Security Provisions. 4.01. Pledge. The Authority hereby pledges to the payment of the principal on the Note all Available Tax Increment as defined in the Note. Available Tax Increment shall be applied to payment of the principal of the Note in accordance with the terms of the form of Note set forth in Section 2 of this resolution. 4.02. Bond Fund. Until the date the Note is no longer outstanding and no principal thereof remains unpaid, the Authority shall maintain a separate and special "Bond Fund" to be used for no purpose other than the payment of the principal of the Note. The Authority irrevocably agrees to appropriate to the Bond Fund in each year Available Tax Increment. Any Available Tax Increment remaining in the Bond Fund shall be transferred to the Authority's account for TIF District No. 1-12 upon the payment of all principal to be paid with respect to the Note. Section 5. Certification of Proceedings. 5.01. Certification of Proceedings. The officers of the Authority are hereby authorized and directed to prepare and furnish to the Owner of the Note certified copies of all proceedings and records of the Authority, and such other affidavits, certificates, and information as may be required to show the facts relating to the legality and marketability of the Note as the same appear from the books and records under their custody and control or as otherwise known to them, and all such certified copies, certificates, and affidavits, including any heretofore furnished, shall be deemed representations of the Authority as to the facts recited therein. Section 6. Effective Date. This resolution shall be effective upon full execution of the Agreement. Adopted by the Board of Commissioners of the Lino Lakes Economic Development Authority this 25th day of July, 2016. 483310v2 JAE LN140-116 3 The motion for the adoption of the foregoing resolution was introduced by Board Member Manthey and was duly seconded by Board Member Maher and upon vote being taken thereon the followingvoted in favor thereof: Manthey, Maher, Raferty, Reinert, Kusterman The following voted against same: none ATIEST: :1:r . son, Executive Director 483310v2 JAE LN 140-116 4 iTliam Kusterman, President LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY AGENDA ITEM 3B STAFF ORIGINATOR: Michael Grochala, Community Development Director MEETING DATE: July 25, 2016 TOPIC: Public Hearing. Consider Resolution No. 16-05, Approving Contract for Private Development and Awarding Sale of Tax Increment Revenue Note. VOTE REQUIRED: 3/5 BACKGROUND United Properties has made a request for tax increment financing on behalf of the tenant, Distribution Alternatives, Inc. (DAI). United Properties will be constructing a 402,000 square foot building in the proposed Clearwater Creek Business Park and leasing the building to DAI. DAI is a third party distribution center that provides warehousing and administrative services for a variety of clients. In 2004, DAI consolidated its headquarters and distribution services in Lino Lakes, moving into a 265,000 square foot facility in the Marshan Lake Industrial Park. The company has continued to grow and is in need of a larger facility. DAI currently employs 120 full time employees, plus additional temporary positions during the year. The new facility will be the located in the southwest quadrant of the I-35E/CSAH 14 interchange. The location will allow utilization of the transportation improvements that have been completed over the past 8 years. The estimated value of the new construction is approximately $18,000,000. The estimated tax increment generated over the life of the district is approximately $2,613,000. Based on an analysis of information provided by United Properties, staff and the City's financial consultants, are recommending providing $1.2 million in assistance over a period of approximately 5.5 years. The assistance will be on a "pay as you go" basis for site improvements and infrastructure costs. The EDA will issue a "note" in the amount of $1,200,000 in exchange for the improvements identified in the agreement. The developer will be reimbursed by tax increments generated by the development on an annual basis. In addition to completion of the improvements, the developer will be responsible for ensuring the tenant meets the following Job and Wage goal requirements over the term of the assistance: (i) the retention of sixty (60) full-time equivalent jobs in the City on the Development Property, and (ii) the hourly wage of the jobs to be retained under subdivision (i) to be at least 110% of the federal minimum wage, exclusive of benefits. The developer will also be required to cause the tenant to pay ninety percent (90%) or more of the employees at the facility at a rate equal to or greater than one hundred and sixty percent (160%) of the federal minimum wage for individuals over the age of twenty (20). The EDA Business Subsidy Criteria has been established for use in evaluating a request for financial assistance. These include the following: Public purpose. A business subsidy must meet a public purpose, including but not limited to increasing the tax base. Job retention may only be considered a public purpose if the loss of jobs is specific and demonstrable. (b) Increase in tax base. While an increase in the tax base cannot be the sole rounds for granting a subsidy, the City and the EDA believe it is a necessary condition for any subsidy. (c) Jobs and Wages. In instances in which job creation is determined to be a goal, the City and the EDA will review all of the unique circumstances surrounding the proposed development to determine how many jobs should be required in exchange for the proposed subsidy. If job creation is determined to be one of the main goals of a proposed development, it is the City's and the EDA's intent that the recipient create the maximum number of livable wage jobs at the site with no fewer than 5 jobs. This may include jobs to be retained but only if retention is specific and demonstrable. The job and wage goal must be attained within two years of the benefit date (as defined in the Business Subsidy Act). The City and the EDA may, after a public hearing, extend for up to one year the period for meeting the job and wage goal. Qualifying jobs are those which pay, at a minimum, 110 percent of the federal minimum wage, plus benefits. Any deviation from the established wage level must be documented in conformity with the requirements set forth in the Business Subsidy Act. If the City or the EDA, following a public hearing, determines that job creation or retention is not part of the public purpose of the subsidy, the wage and job goal may be set at zero. (d) Economic Development. Projects should promote one or more of the following: 1. Encourage economic and commercial diversity within the community; 2. Contribute to the establishment of a critical mass of commercial development within an area; 3. Increase the range of goods and services available or encourage fast growing or other desirable businesses to locate or expand within the community; 4. Promote redevelopment objectives and removal of blight, including pollution cleanup; 5. Promote the retention or adaptive reuse of buildings of historical or architectural significance; 6. Promote additional or spin-off development within the community; 7. Development of safe and affordable housing; or 8. Encourage full utilization of existing or planned infrastructure improvements. The City's Economic Development Advisory Committee reviewed the project and recommended that the EDA support the project. The proposed project will increase the City's tax base. retain existing jobs and provide for new job creation. Local job and wage goals will be met per the agreement. Development of the Clearwater Creek Business Park will create new economic development opportunities within the I -35E commercial corridor. The development will also encourage full utilization of existing infrastructure improvements within this area. Julie Eddington from Kennedy and Graven will be present at the meeting to address questions from the board. RECOMMENDATION Staff is recommending approval of Resolution No. 16-05. ATTACHMENTS 1. Resolution No. 16-05 2. Contract for Private Development