HomeMy WebLinkAbout08-14-2000 EDA PacketGENDA
ECONOMIC DEVELOPMENT AUTHORITY
MONDAY
AUGUST 14, 2000
6:00 P.M.
1. Call to Order and Roll Call
2. Consideration of Murutes of Monday, January 24, 2000
2.5. Consideration of TIF Policy
3. Public hearing: Proposed Business Subsidy to Marmon/Keystone
3A. Consideration of Resolution No. 00-03 Approving a Business Subsidy for
Marmon/Keystone
4. Consideration of Contract for Private Development between Lino Lakes EDA and
Marmon/Keystone
5. Consideration of Contract for Private Development between Lino Lakes EDA and Twin
City Fab, Inc.
6. Adjourn
CITY OF LINO LAKES
ECONOMIC DEVELOPMENT AUTHORITY
MINUTES
DATE: Monday, January 24, 2000
MEMBERS
PRESENT: J. Bergeson, C. Dahl, D. Carlson, J. O'Donnell
MEMBERS
ABSENT: None
OTHERS
PRESENT: Brian Wessel, Mary Divine, Ron Batty
CONSIDERATION OF MINUTES
Only two current members of the EDA were present at the November 8, 1999 meeting.
EDA Member Dahl moved to approve the minutes from the meeting. EDA Member
Bergeson seconded the motion. Motion passed unanimously.
CONSIDERATION OF ANNUAL APPOINTMENTS
EDA member Dahl moved to appoint Donna Carlson as treasurer of the EDA. EDA
Member O'Donnell seconded the motion. Motion passed unanimously.
EDA Member Carlson moved to appoint the following:
EDA President: John Bergeson
EDA Vice President: Caroline Dahl
EDA Secretary: Mary Divine
EDA Assistant Treasurer: Ry-Chel Gaustad
EDA Executive Director: Linda Waite Smith
EDA Member Dahl seconded the motion. Motion passed unanimously.
EDA member O'Donnell moved to appoint the Quad Community Press as the EDA
official newspaper. EDA Member Dahl seconded the motion. Motion passed unanimously.
EDA Member Carlson moved to appoint the following as EDA legal depositories:
Norwest Bank, First Bank NA, Firstar Bank, Merrill Lynch, Dain Bosworth, Juran &
Moody, Prudential Bache, Lino Lakes State Bank, Lakeland National Bank, and League
of Minnesota Cities 4M Fund. EDA Member O'Donnell seconded the motion. Motion
passed unanimously.
PUBLIC HEARING ON THE PROPOSED BUSINESS SUBSIDY TO H&L MESABI
EDA President opened the hearing at 6:20 p.m. Mr. Wessel informed the board that H&L
Mesabi was requesting tax increment financing (TIF) in the amount of $110,200 for the
purpose of constructing a facility in the Apollo Business Center. Ms. Divine stated that the
Minnesota Business Subsidy Law requires a public hearing if a public entity provides a
subsidy of more than $100,000. The granting of the subsidy should be evaluated by the
EDA in terms of meeting the EDA criteria, which include encouraging economic and
commercial diversity, and encouraging full utilization of existing infrastructure. The law
also requires that a business commit to a wage and job goal. This company has agreed to a
goal of one job within two years with a starting wage of $10 per hour, plus benefits. Ms.
Carlson asked to explain the benefits. Mr. Tom Immen, representing the owner, stated it
included medical insurance and vacation.
Mr. Batty stated that the EDA adopted broad criteria so that jobs can be looked at in
context with each proposal. The issue is whether the emphasis is on creating tax base or
creating jobs. Ms. Carlson noted she had approved the site plan at the Planning & Zoning
Board, but that job creation is a part of the statute and should not be overlooked. The
wage proposed is not considered a living wage. This needs to be a topic of discussion for
the city. Mr. Immen noted that the nine employees at the new facility have an average
wage of $57,000/year. However, if a job goal is set too high and the company does not
meet it, the loss of subsidy after making a large capital investment would be devastating.
EDA Member Carlson moved to close the public hearing. EDA Member Dahl seconded
the motion. Motion passed unanimously.
RESOLUTION NO. 00-01 APPROVING THE PROPOSED BUSINESS SUBSIDY TO
H&L MESABI
EDA member O'Donnell moved to approve Resolution No. 00-01 contingent upon final
project approvals by the city council. EDA Member Carlson seconded the motion. Motion
passed unanimously.
CONSIDERATION OF CONTRACT FOR PRIVATE DEVELOPMENT BETWEEN
EDA AND H&L MESABI
Mr. Wessel stated that the development contract provides $110,200 in TIF. The
agreement removes $65,394 in assessments upfront, and reimbursed the developer the
$5,000 escrow upon completion of the building. The remaining $39,806 will be provided
on a pay-as-you-go basis toward land costs. The city will be reimbursed for assessments
and administration costs before the developer is reimbursed. The project's local
contribution of $13,220 is covered by the loss of interest the city has lost on deferred
assessments.
EDA Member O'Donnell moved to approve the contract contingent upon final project
approvals by the city council. EDA Member Dahl seconded the motion. Motion passed
unanimously.
RESOLUTION NO. 00-02 REQUESTING ANOKA COUNTY TO DECERTIFY TIF
DISTRICT NO. 1-4.
Mr. Wessel stated that this economic development district was established in 1990 to
include the G.M. Development portion of the Apollo Business Park. Assistance was
provided to Emtech and Blue Heron Development within this district. The district has run
its course and any unused increment will be used for eligible district expenses, after which
any excess increment will be returned to Anoka County. EDA Member Carlson moved to
approve Resolution No. 00-02. EDA Member O'Donnell seconded the motion. Motion
passed unanimously.
ADJOURNMENT
EDA Member O'Donnell moved to adjourn. EDA Member Dahl seconded the motion.
Motion passed unanimously.
Meeting adjourned at 6:45 p.m.
STAFF ORIGINATOR:
DATE:
TOPIC:
Vote Required:
AGENDA ITEM 2.5
Mary Alice Divine
8/14/00
Consideration of TIF Policy
Simple Majority
BACKGROUND:
In 1995 a TIF policy was approved that gave direction for qualifying projects for
TIF. Since then the city has built up the Apollo Business Park and several
projects in the Clearwater Creek industrial area. With the momentum the city has
gained over those five years, EDAC reviewed and recommended some changes
to the TIF policy to help reduce the city's dependence on TIF to attract new
industrial development, while leaving the city council discretion to go beyond the
policy when it is appropriate.
Under the new draft policy:
1. Prospects must continue to qualify according to the selection criteria.
2. TIF will be used to pay qualifying reimbursable costs, with landscaping and
site preparation added as a qualifying cost.
3. Land write down will continue on the basis that construction of 10,000 square
feet (or more) of facility per acre of land is considered best use of the land.
4. Each project will be self sufficient within the allowable TIF capacity of the
district. tilib
5. TIF commitments will not exceed of the estimated market value. This is
a reduction from the old policy, which allowed 20% of the total project cost.
6. Administrative fees (upfront escrow) will be reimbursed using TIF funds at the
completion of the project. This has traditionally been part of the agreements.
7. Assessments will be paid upfront in the Apollo Business Park to allow for a
more expedient return of the city's investment in the park's improvements.
8. In other TIF districts, the subsidy for land and assessments will be on a pay-
as-you-go basis. This is a change from the old policy, which generally split
the subsidy into approximately 50/50 upfront and pay-as-you-go.
9. If the subsidy includes upfront payments of assessments, the city will be
reimbursed first from available increment. The grantee will receive its pay-as-
you-go after the city is paid back. This is more restrictive than in the past,
generally the city and the grantee split the increment.
10.The source of the 10% local contribution will be identified before the project
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OPTIONS:
1. Approve the TIF policy
2. Return to staff for further consideration
RECOMMENDATION:
Option 1
MEMORANDUM
TO: File DRAFT
FROM: Brian Wessel
DATE: January 25, 2000
SUBJECT: TIF PROPOSAL POLICY - ECONOMIC DEVELOPMENT
The following is standard policy for use of tax increment financing in Lino Lakes:
1. The prospect must qualify according to the Economic Development selection
criteria.
2. A TIF commitment can be made to a project for the following qualified site
improvement expenses:
a. Special assessments
b. Land write down
c. Administrative fees
d. Site preparation/landscaping
3. A land write down commitment will be based on a minimum of 10,000 square feet of
building per one acre of land.
4. Each project will be self sufficient within the allowable TIF capacity.
5. TIF commitments are not to exceed 16% of the minimum market value unless the scope
of the economic development benefit is significant and City Council (EDA) approves it.
6. Administrative fees (upfront escrow) will be reimbursed upon the completion of the
building.
7. In the Apollo Business Park assessments can be on an upfront basis.
8. In other TIF Districts, assessments and land write down will be on a pay-as-you-go
basis unless the scope of the economic development benefit is significant and City
Council (EDA) approves it.
9. The city will be reimbursed first for upfront costs from available increment, after which
the grantee will receive the pay-as-you-go portion of the subsidy.
10. The source of a local contribution will be identified before the project is approved.
MEMORANDUM
TO: File
FROM: Brian Wessel
DATE: October 13, 1995
SUBJECT: TIF PROPOSAL POLICY - ECONOMIC DEVELOPMENT
The following is standard policy for use of tax increment financing in Lino Lakes:
1. The prospect must qualify according to the Economic Development selection
criteria.
2. A TIF commitment will be made to a project for the following qualified site
improvement expenses:
a. Special assessments
b. Land write down
c. Administrative fees
3. A land write down commitment will be based on a minimum of 10,000 square feet
of building per one acre of land.
4. Each project will be self sufficient within the allowable TIF capacity.
5. Payback will be within five years of the year the company makes its first tax
payment.
6. TIF commitments are not to exceed 20% of the total project cost.
7. Fifty percent of a TIF commitment to a company will be upfront at closing and 50
percent will be on a pay-as-you-go basis.
AGENDA ITEM 3
STAFF ORIGINATOR: Mary Alice Divine
DATE: 8/14/00
TOPIC: Public Hearing on the proposed business subsidy to
Marmon/Keystone
Vote Required: Simple Majority
BACKGROUND:
Marmon/Keystone has requested tax increment financing (TIF) assistance in the
amount of $322,242 for the purpose of constructing an 80,000 square foot
distribution facility in the Apollo Business Center. The company has been in
business for 90 years as an entity, with a Minnesota location for the past four
years as a distributor of tubing and piping, mainly for the agricultural industry.
The local distributor currently employs 11, including warehouse, drivers, office
and sales. The company has committed to hiring at least four new employees at
no Tess than $15 per hour, plus benefits, which include medical, sick leave and
vacation. This is well above the minimum established in the EDA's business
subsidy requirement.
The proposed facility will have a minimum market value of $3,152,600 for a total
of $145,509 in annual taxes (based on 2000 dollars).
According to the Minnesota Business Subsidy law, the EDA must hold a public
hearing before granting a subsidy that exceeds $100,000. In addition to
increasing the tax base, the granting of a subsidy can be evaluated in terms of
whether it promotes 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. Provide basic goods and services, increase the range of
goods and services available or encourage fast-growing
businesses;
4. Promote redevelopment objectives and removal of blight,
including pollution cleanup;
5. Promote the retention or adaptive use of buildings of
historical or architectural significance;
6. Promote additional or spin-off development within the
community;
7. Encourage full utilization of existing or planned
infrastructure improvements.
OPTIONS:
1. Open the public hearing
2. Continue the public hearing
RECOMMENDATION:
Option 1
ARTICLE X
Business Subsidy Act Requirements
Section 10.1. Compliance with Business Subsidy Provisions. The parties agree and
represent to each other as follows:
(a) The subsidy provided to the Developer pursuant to this Agreement consists of the
Property Write Down in the amount of $174,403, assumption of the Special Assessments in the
amount of $139,839 and reimbursement of up to $3,000 for the additional cost of maintaining native
vegetation, if the Developer installs native vegetation. The Development Property is located within
the Authority's TIF District No•. 1-9, an economic development district.
(b) The public purposes of the subsidy are to promote development of a site within the
City's industrial park, make fuller use of existing public infrastructure which is currently under-
utilized, generate spin-off development within the community, increase jobs in the City and the
State, and increase the tax base•of the City and the State.
(c) The goals for the subsidy are to secure construction of the Minimum Improvements
on the Property; to maintain the Minimum Improvements as a warehouse/distribution facility for at
least five years as described in clause (f) below; and to create the jobs and wage levels in
accordance with Section 10.2 of this Agreement.
(d) If the goals described in clause (c) above are not met, the Developer must make the
payments to the Authority described in Section 10.3 of this Agreement.
(e) The subsidy is needed because the cost of acquiring the Property at fair market value
plus the cost of the Special Assessments make development of the site financially infeasible without
public assistance.
(f) The Developer must continue operation of the Minimum Improvements as an
industrial facility for at least five years after the date of issuance of the Certificate of Completion.
(g) The Developer's parent corporation is The Marmon Corporation, a Delaware
corporation, located at 225 West Washington, Chicago, Illinois 60606-3418.
(h) The Developer has not received, and does'not expect to receive financial assistance
from any other grantor as defined in the Business Subsidy Act in connection with purchase of the
Property or construction of the Minimum Improvements.
(i) For purposes of this Article X, the Developer includes any party to whom the
Developer leases the Property or Minimum Improvements.
Section 10.2. Job and Wage Goals. Within two years after the earlier of the date of
issuance of the Certificate of Completion or the date the Developer occupies the Property (the
"Compliance Date"), the Developer shall cause to be created at least four new full-time equivalent
jobs on the Property, and shall cause the wages for the four new employees to be no less than
R1-1B-183249v3 16
LN 140-72
$15.00 per hour, exclusive of benefits. Notwithstanding anything to the contrary herein, if the wage
and job goals described in this Section 10.2 are met by the Compliance Date, those goals are
deemed satisfied despite the Developer's continuing obligations under Sections 10.1(f) and 10.4.
The Authority may, after a public hearing, extend the Compliance Date by up to one year, provided
that nothing in this Section 10.2 will be construed to limit the Authority's legislative discretion
regarding this matter.
Section 10.3. Remedies. If the Developer fails to meet the goals described in Section
10.1(c), the Developer shall repay the Authority a pro rata share of the amount of the subsidy
granted by this Agreement, plus interest on said amount at the implicit price deflator as defined in
Minnesota Statutes, Section 275.50, subd. 2, accrued from the date of issuance of the Certificate of
Completion to the date of payment. The repayment shall be made by the Developer within one year
of written demand by the Authority. The term pro rata share means percentages calculated as
follows:
(i) if the failure relates to the number of jobs, the jobs required less the jobs created,
divided by the jobs required;
(ii) if the failure relates to wages, the number of jobs required less the number of
jobs that meet the required wages, divided by the number of jobs required;
(iii) if the failure relates to maintenance of the warehouse/distribution facility in
accordance with Section 10.1(f), 60 less the number of months of operation as a
warehouse/distribution facility (where any month in which the facility is in operation for at
least 15 days constitutes a month of operation), commencing on the date of the Certificate of
Completion ending with the date the facility ceases operation as determined by the
Authority, divided by 60; and
(iv) if more than one of clauses (i) through (iii) apply, the sum of the applicable
percentages, not to exceed 100%.
Nothing in this Section 10.3 shall be construed to limit the Authority's remedies under
Article IX hereof. In addition to the remedy described in this Section 10.3 and any other remedy
available to the Authority for failure to meet the goals stated in Section 10.1(c), the Developer
agrees and understands that its may not a receive a business subsidy from the Authority or any
grantor as defined in the Business Subsidy Act for a period of five years from the date of the failure
or until the Developer satisfies its repayment obligation under this Section 10.3, whichever occurs
first.
Section 10.4. Reports. The Developer must submit to the Authority a written report
regarding business subsidy goals and results by no later than March 1 of each year, commencing
March 1, 2001 and continuing until the later of (i) the date the goals stated Section 10.1(c) are met;
(ii) 30 days after expiration of the five-year period described in Section 10.1(f); or (iii) if the goals
are not met, the date the subsidy is repaid in accordance with Section 10.3. The report must comply
with Section 116J.994, subdivision 7 of the Business Subsidy Act. The Authority will provide
information to the Developer regarding the required forms. =If the Developer fails to timely file any
report required under this Section 10.4, the Authority will mail the Developer a warning within one
week after the required filing date. If, after 14 days of the postmarked date of the warning, the
RHB-183249v3 17
LN 140-72
AGENDA ITEM 3A
STAFF ORIGINATOR: Mary Alice Divine
DATE: 8/14/00
TOPIC: Consideration of Resolution No. 00-03 approving the
proposed business subsidy to Marmon/Keystone
VOTE REQUIRED: 3/5
BACKGROUND:
Light industrial projects in the Apollo Business Center are consistent with the
city's comprehensive plan designed to encourage economic growth and diversity.
As part of the Lino Lakes Town Center, the projects moving into the park play a
significant role in providing a critical mass of development to support retail and
service businesses in the commercial center. This project is also consistent with
the city's need to recover the return on its investment in the existing infrastructure
within the park.
This resolution recognizes that Marmon/Keystone meets the goals and objectives
outlined by the EDA in its business subsidy criteria.
This project must go through a series of approvals, including approval of the
development agreement, site and building plan and conditional use permit. The
city council will be considering the site plan and CUP at the August 28 council
meeting. It is recommended that approval of the business subsidy be contingent
upon final approval of the project by the City Council.
OPTIONS:
1. Adopt Resolution No. 00-03
2. Return to staff for further consideration
RECOMMENDATION:
Option 1
Member introduced the following resolution and moved its adoption:
LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY
RESOLUTION NO. 00-03
RESOLUTION AUTHORIZING APPROVING BUSINESS SUBSIDY
TO MARMON/KEYSTONE
BE IT RESOLVED by the Lino Lakes Economic Development Authority as follows:
Section 1. Recitals
1.01. The Lino Lakes Economic Development Authority (the "Authority") approved a tax
increment financing plan (the "Plan") for the Tax Increment Financing District No. 1-9 (TIF
District No. 1-9) on December 14, 1998.
1.02. On December 14, 1998, the City Council of the City of Lino Lakes (the "City")
approved the Plan.
1.03 On November 8, 1999, following a public hearing, the Authority approved the Lino
Lakes Economic Development Authority Business Subsidy Criteria (the "Criteria"), pursuant to
Minnesota Statute, sections 116J.993 through 116J.995 (the `Business Subsidy Act.")
1.04. Marmon/Keystone, a Minnesota Corporation, (the `Developer") has requested a
business subsidy through tax increment financing in the amount of $322,242 for the construction
of a light industrial facility in the Apollo Business Center.
1.05. Pursuant to Section 116J.994, subd. 5 of the Business Subsidy Act, the Authority
has on this date held ,a public heating on the proposed subsidy to the Developer, following
published notice as required by law, at which hearing all persons wishing to express an opinion
were given an opportunity to do so.
Section 2. Findings.
2.01. It is hereby found and determined that the business subsidy is in the best interest of
the Authority because it is consistent with and promotes the goals established by the Authority in
adopting the Criteria.
2.02. It is hereby found and determined that granting the business subsidy to the
Developer furthers the Authority's general plan of economic development of the community by
encouraging growth and expansion of an industrial park which has not been used to its full
potential.
2.03. Pursuant to the Criteria established by the Authority, it is hereby found and
determined that the business subsidy promotes the following:
1. Encourages economic and commercial diversity within the community;
2. Contributes to the establishment of a critical mass of commercial development
within an area; and
3. Encourages full utilization of existing or planned infrastructure improvements.
Section 3. Authorization.
3.01. The business subsidy to the Developer as described above is hereby approved.
3.02. The President and Executive Director are hereby, authorized and directed to execute
a Development Agreement, including the business subsidy agreement required by the Business
Subsidy Act, and other appropriate documents to facilitate the finalization of the business subsidy
to the Developer.
3.03. Staff and consultants are hereby authorized and directed to take any and all other
actions necessary or convenient to effect the intent of this resolution, including seeking approval
of the subsidy from the Lino Lakes City Council.
Dated: , 2000.
President
ATTEST:
Executive Director
The motion for the adoption of the foregoing resolution was duly seconded by member
and upon vote being taken thereon, the following voted in favor
thereof
and the following voted against same:
Whereupon said resolution was declared duly passed and adopted.
STAFF ORIGINATOR:
DATE:
TOPIC:
VOTE REQUIRED:
AGENDA ITEM 4
Mary Alice Divine
8/14/00
Consideration of the Contract for Private
Development between Lino Lakes EDA and
Marmon/Keystone
3/5
BACKGROUND:
This development contract outlines the conditions for public assistance to
Marmon/Keystone for the construction of an 83,000 square foot facility on 8
acres on the G.M. Development property in the Apollo Business Center (see
attached map). The total minimum market value (MMV) of the completed project
will be $3,152,600.
In this agreement, the city agrees to provide tax increment financing totaling
$322,242, which amounts to approximately 10% of the MMV. The agreement
removes the assessments of $139,839 upfront, plus a $5,000 escrow, which will
be returned to the company when the building is complete. The remaining pay-
as-you-go TIF amounts to $177,403. It will be used to assist with the cost of the
land, except for $3,000, which will be used to assist with maintenance of the
native landscaping on the site. The city will be reimbursed first for the
assessments and then the developer will receive the remaining increment.
Estimated payback is in December 2005.
This project is in TIF District 1-9, which requires a 10% local contribution
($38,994). It is the city's intent to apply the interest lost on the assessments that
were deferred until development occurred as the local contribution.
OPTIONS:
1. Approve the contract for private development between Lino Lakes EDA and
Marmon/Keystone
2. Return to staff for further consideration
RECOMMENDATION:
Option 1
Section 4.3. Certificate of Completion. (a) Promptly after completion of the Minimum
Improvements in accordance with the Construction Plans and all terms of this Agreement, the
Authority will furnish the Developer with a Certificate of Completion. The Certificate of
Completion shall be in the form of Exhibit C attached hereto. Such certification by the Authority
shall be a conclusive determination of satisfaction and termination of the agreements and covenants
in this Agreement with respect to the obligations of the Developer to construct the Minimum
Improvements and the date for the completion thereof.
(b) The Certificate of Completion provided for in this section 4.3 shall be in such form
as will enable it to be recorded in the proper office for the recordation of deeds and other
instruments pertaining to the Property. If the Authority refuses or fails to provide certification in
accordance with the provisions of this section 4.3, the Authority shall, within ten (10) days after
written request by the Developer, provide the Developer with a written statement, indicating in
adequate detail in what respects the Developer has failed to complete the Minimum Improvements
in accordance with the provisions of the Agreement, or is otherwise in default, and what measures
or acts it will be necessary, in the opinion of the Authority, for the Developer to take or perform in
order to obtain such certification.
(c) The construction of the Minimum Improvementsshall be deemed to be completed
when such Minimum Improvements are substantially completed by certification of the architect of
record. The Minimum Improvements will be deemed to be substantially completed when the
Minimum Improvements have received a certificate of occupancy from the City's building official.
Section 4.4. Reconstruction of Minimum Improvements. If the Minimum Improvements
are damaged or destroyed before or after completion thereof but before the Termination Date, the
Developer agrees, for itself and its successors and assigns, to reconstruct the Minimum
Improvements so that the Minimum Improvements and the Property have a value at least equal to
the Minimum Market Value. The Minimum Improvements shall be reconstructed in accordance
with the Construction Plans, or such modifications thereto as may be requested by the Developer
and approved by the Authority and the City.
•
Section 4.5. Property Taxes; Special Assessments. After closing, the Developer agrees to
pay all ad valorem taxes and special assessments on the Minimum Improvements and the Property
as they become due. The Developer shall not cause the Property to be removed from the public tax
rolls or to become exempt from assessment for general real estate taxes by reason of any
conveyance, lease, abatement or other action prior to the Termination Date.
ARTICLE V
Public Assistance
Section 5.1. Special Assessments. The City has levied or will levy Special Assessments
against the Property in the principal amount of $139,839 for the Public Improvements which have
been constructed and which benefit the Property. The Authority agrees to arrange with the City for
the satisfaction of the Special Assessments against the Property at the time of issuance of a
Certificate of Completion for the Minimum Improvements by paying the Special Assessments at
RHB-183249v3
LN 140-72
8
that time in full or by arranging with the City for a schedule of payments, including principal and
interest at a rate of 8 percent per annum.
Section 5.2. Administrative Fee. The Developer has paid the Authority the Administrative
Fee in the amount of $5,000 to partially cover the Authority's expenses in negotiating this
Agreement and other costs associated with the project. The Authority agrees to reimburse the
Developer for the Administrative Fee upon issuance of the Certificate of Completion for the
Minimum Improvements.
Section 5.3. Property Write Down. In order to facilitate the financial feasibility of the
development of the Property and in consideration for the Developer's fulfillment of its covenants
and obligations under this Agreement, the Authority agrees to write down the cost of the Property
for the Developer. The Developer represents that it has entered into an agreement to purchase the
Property from the Seller for $435,600, which price is subject to an adjustment for exact acreage of
no more than ± $5,000. The Developer agrees to provide the Authority a copy of the purchase
agreement to verify the price of the Property. The Authority agrees to reimburse the Developer
$174,403 out of Available Tax Increment for the cost of the Property.
Section 5.4. Native Landscaping. The City has requested the Developer to install native
landscaping on the' Property after completion of the Minimum Improvements. Native landscaping
requires a degree of maintenance while the plantings become established which is greater than more
traditional landscaping. Maintenance of native landscaping is generally provided by persons
familiar with the environmental and ecological demands of such vegetation. If the Developer
installs native vegetation on the Property, the Authority agrees to reimburse the Developer for the
cost of maintaining the vegetation in an amount not to exceed $3,000; provided, however, that the
Developer by the time of issuance of the certificate of occupancy must provide a copy of an
executed agreement between the Developer and an individual or firm experienced in maintenance of
native vegetation for a minimum of three years after issuance of the Certificate of Completion or
installation of the native vegetation, whichever occurs last. Reimbursement for the maintenance of
the native vegetation shall be made out of Available Tax increment.
Section 5.5. No Representation Regarding Available Tax Increment. The Authority's
financial commitment under this Agreement is a revenue obligation only and will be paid by the
Authority only after Tax Increment has been used to fully pay for the Special Assessments,
including principal and interest, and to reimburse the Authority for the Administration Expenses.
The Authority makes no representations or warranties that the Available Tax Increment will be
sufficient to pay the Developer for the Land Write Down and other costs. The Developer
acknowledges that Available Tax Increment is subject to Calculations by the County and changes in
State law and that some or all of the Land Write Down and other costs may not be repaid prior to
the Termination Date. The Developer also acknowledges that the estimates of Available Tax
Increment which may have been made by the Authority or its agents, officers or employees are
estimates only and are not intended for the Developer's reliance.
RH13-183249v3
LN 140-72
9
3IIN3AY ONYN031
AGENDA ITEM 5
STAFF ORIGINATOR: Mary Alice Divine
DATE: 8/14/00
TOPIC: Consideration of the Contract for Private
Development between Lino Lakes EDA and CJN
Investments, LLP (Twin City Fab, Inc.)
VOTE REQUIRED: 3/5
BACKGROUND:
This development contract outlines the conditions for public assistance to Twin
City Fab for the construction of a 19,200 square foot facility on 4 acres on the
G.M. Development property in the Apollo Business Center (see attached map).
The total minimum market value (MMV) of the completed project will be
$920,500, with an estimated tax of $41,041.
In this agreement, the city agrees to provide tax increment financing totaling
$77,185, which amounts to approximately 8% of the MMV. The agreement
removes the assessments of $70,185 upfront, plus a $5,000 escrow, which will
be returned to the company when the building is complete. The remaining pay-
as-you-go TIF amount of $2,000 will be used to assist with maintenance of the
native landscaping on the site. The city will be reimbursed first for the
assessments and then the developer will receive the remaining increment.
Estimated payback is in July 2005.
This project is in TIF District 1-9, which requires a 10% local contribution
($8,749). It is the city's intent to apply the interest lost on the assessments that
were deferred until development occurred as the local contribution.
The business subsidy proposed for Twin City Fab, Inc. is under $100,000, and
therefore does not require a public hearing under the Minnesota Business
Subsidy Law. However, all subsidies of more than $25,000 require a business
subsidy agreement, which is now included in the development agreements
between the developer and the EDA.
Twin City Fab has agreed to a wage and job goal of at least 5 new employees at
a minimum starting wage of $11 /hour, plus benefits.
OPTIONS:
1. Approve the contract for private development between Lino Lakes EDA and
CJN Investments, LLP
2. Retum to staff for further consideration
RECOMMENDATION:
Option 1
(c) The construction of the Minimum Improvements shall be deemed to be completed
when such Minimum Improvements are substantially completed by certification of the architect of
record. The Minimum Improvements will be deemed to be substantially completed when the
Minimum Improvements have received a certificate of occupancy from the City's building official.
Section 4.4. Reconstruction of Minimum Improvements. If the Minimum Improvements
are damaged or destroyed before or after completion thereof but before the Termination Date, the
Developer agrees, for itself and its successors and assigns, to reconstruct the Minimum
Improvements so that the Minimum Improvements and the Property have a value at least equal to
the Minimum Market Value. The Minimum Improvements shall be reconstructed in accordance
with the Construction Plans, or such modifications thereto as may be requested by the Developer
and approved by the Authority and the City.
Section 4.5. Property Taxes; Special Assessments. After closing, the Developer agrees to
pay all ad valorem taxes and special assessments on the Minimum Improvements and the Property
as they become due. The Developer shall not cause the Property to be removed from the public tax
rolls or to become exempt from assessment for general real estate taxes by reason of any
conveyance, lease, abatement or other action prior to the Termination Date.
ARTICLE V
Public Assistance
Section 5.1. Special Assessments. The City has levied or will levy Special Assessments
against the Property in the principal amount of $70,185 for the Public Improvements which have
been constructed and which benefit the Property. The Authority agrees to arrange with the City for
the satisfaction of the Special Assessments against the Property at the time of issuance of a
Certificate of Completion for the Minimum Improvements by paying the Special Assessments at
that time in full or by arranging with the City for a schedule of payments, including principal and
interest, at a rate of 8 percent per annum.
Section 5.2. Administrative Fee. The Developer has paid the Authority the Administrative
Fee in the amount of $5,000 to partially cover the Authority's expenses in negotiating this
Agreement and other costs associated with the project. The Authority agrees to reimburse the
Developer for the Administrative Fee upon issuance of the Certificate of Completion for the
Minimum Improvements.
Section 5.3. Native Landscaping. The City has requested the Developer to install native
landscaping on the Property after completion of the Minimum Improvements. Native landscaping
requires a degree of maintenance while the plantings become established which is greater than more
traditional landscaping. Maintenance of native landscaping is generally provided by persons
familiar with the environmental and ecological demands of such vegetation. If the Developer
installs native vegetation on the Property, the Authority agrees to reimburse the Developer for the
cost of maintaining the vegetation in an amount not to exceed $2,000; provided, however, that the
Developer by the time of issuance of the certificate of occupancy must provide a copy of an
executed agreement between the Developer and an individual or firm experienced in maintenance of
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native vegetation for a minimum of three years after issuance of the Certificate of Completion or
installation of the native vegetation, whichever occurs last. The Authority agrees to reimburse the
Developer for the additional cost of maintaining the native vegetation out of tax increment received
from the Minimum Improvements after first reimbursing itself for the Administrative Fee but before
payment of the Special Assessments.
ARTICLE VI
Insurance
Section 6.1. Insurance. (a) The Developer agrees to provide and maintain at all times during
the process of constructing the Minimum Improvements and, from time to time at the request of the
Authority, furnish the Authority with proof of payment of premiums on:
(i) Builder's risk insurance, written on the so-called `Builder's Risk --
Completed Value Basis," in an amount equal to one hundred percent (100%) of the
insurable value of the Minimum Improvements at the date of completion, and with coverage
available in nonreporting form on the so called "all risk" form of policy;
(ii) Comprehensive general liability insurance (including operations, contingent
liability, operations of subcontractors, completed operations and contractual liability
insurance) together with an Owner's Contractor's Policy with limits against bodily injury
and property damage of not less than $2,000,000 for each occurrence (to accomplish the
above required limits, an umbrella excess liability policy may be used); and
(iii) Worker's compensation insurance, with statutory coverage.
The policies of insurance required pursuant to clauses (i) and (ii) above shall be in form and content
satisfactory to the Authority and shall be placed with financially sound and reputable insurers
licensed to transact business in Minnesota. The policy of insurance delivered pursuant to clause (i)
above shall contain an agreement of the insurer to give not less than thirty (30) days' advance
written notice to the Authority in the event of cancellation of such policy or change affecting the
coverage thereunder.
(b) Upon completion of construction of the Minimum Improvements and prior to the
Termination Date, the Developer shall maintain, or cause to be maintained, at its cost and expense,
and from time to time at the request of the Authority shall furnish proof to the Authority of the
payment of premiums on, insurance as follows:
(i) Insurance against loss and/or damage to the Minimum Improvements under
a policy or policies covering such risks as are ordinarily insured against by similar
businesses, including (without limiting the generality of the foregoing) fire, extended
coverage, vandalism and malicious mischief, heating system explosion, water damage,
demolition cost, debris removal, collapse and flood, in an amount not less than the full
insurable replacement value of the Minimum Improvements. No policy of insurance shall
be so written that the proceeds thereof will produce less than the minimum coverage
required by the preceding sentence, by reason of coinsurance provisions or otherwise,
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ARTICLE X
Business Subsidy Act Requirements
Section 10.1. Compliance with Business Subsidy Provisions. The parties agree and
represent to each other as follows:
(a) The subsidy provided to the Developer pursuant to this Agreement consists of the
assumption of the Special Assessments in the principal amount of $70,185 and the Native
Vegetation Maintenance Grant of $2,000, if the Developer installs native vegetation. The
Development Property is located within the Authority's TIF District No. 1-9, an economic
development district.
(b) The public purposes of the subsidy are to promote development of a site within the
City's industrial park, make fuller use of existing public infrastructure which is currently under-
utilized, generate spin-off development within the community, increase jobs in the City and the
State, and increase the tax base of the City and the State.
(c) The goals for the subsidy are to secure construction of the Minimum Improvements
on the Property; to maintain the Minimum Improvements as a manufacturing facility for at least five
years as described in clause (f) below; and to create the jobs and wage levels in accordance with
Section 10.2 of this Agreement.
(d) If the goals described in clause (c) above are not met, the Developer must make the
payments to the Authority described in Section 10.3 of this Agreement.
(e) The subsidy is needed because the cost of acquiring the Property at fair market value
plus the cost of the Special Assessments make development of the site financially infeasible without
public assistance.
(f) The Developer must continue operation of the Minimum Improvements as a
manufacturing facility for at least five years after the date of issuance of the Certificate of
Completion.
(g) The Developer does not have a parent corporation.
(h) The Developer has not received, and does not expect to receive financial assistance
from any other grantor as defined in the Business Subsidy Act in connection with purchase of the
Property or construction of the Minimum Improvements.
(i) For purposes of this Article X, the Developer includes any party to whom the
Developer leases the Property or Minimum Improvements.
Section 10.2. Job and Wage Goals. Within two years after the earlier of the date of
issuance of the Certificate of Completion or the date the Developer occupies the Property (the
"Compliance Date"), the Developer shall cause to be created at least 5 new full-time
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equivalent jobs on the Property, and shall cause the wages for the new employees to be no less than
$ / /. "1'1 per hour, exclusive of benefits. Notwithstanding anything to the contrary herein, if the
wage and job goals described in this Section 10.2 are met by the Compliance Date, those goals are
deemed satisfied despite the Developer's continuing obligations under Sections 10.1(f) and 10.4.
The Authority may, after a public hearing, extend the Compliance Date by up to one year, provided
that nothing in this Section 10.2 will be construed to limit the Authority's legislative discretion
regarding this matter.
Section 10.3. Remedies. If the Developer fails to meet the goals described in Section
10.1(c), the Developer shall repay the Authority a pro rata share of the amount of the subsidy
granted by this Agreement, plus interest on said amount at the implicit price deflator as defined in
Minnesota Statutes, Section 275.50, subd. 2, accrued from the date of issuance of the Certificate of
Completion to the date of payment. The repayment shall be made by the Developer within one year
of written demand by the Authority. The term pro rata share means percentages calculated as
follows:
(i) if the failure relates to the number of jobs, the jobs required less the jobs created,
divided by the jobs required;
(ii) if the failure relates to wages, the number of jobs required less the number of
jobs that meet the required wages, divided by the number of jobs required;
(iii) if the failure relates to maintenance of the manufacturing facility in accordance
with Section 10.1(f), 60 less the number of months of operation as a manufacturing facility
(where any month in which the facility is in operation for at least 15 days constitutes a
month of operation), commencing on the date of the Certificate of Completion ending with
the date the facility ceases operation as determined by the Authority, divided by 60; and
(iv) if more thanone of clauses (i) through (iii) apply, the sum of the applicable
percentages, not to exceed 100%.
Nothing in this Section 10.3 shall be construed to limit the Authority's remedies under
Article IX hereof. In addition to the remedy described in this Section 10.3 and any other remedy
available to the Authority for failure to meet the goals stated in Section 10.1(c), the Developer
agrees and understands that its may not a receive a business subsidy from the Authority or any
grantor as defined in the Business Subsidy Act for a period of five years from the date of the failure
or until the Developer satisfies its repayment obligation under this Section 10.3, whichever occurs
first.
Section 10.4. Reports. The Developer must submit to the Authority a written report
regarding business subsidy goals and results by no later than March 1 of each year, commencing
March 1, 2001 and continuing until the later of (i) the date the goals stated Section 10.1(c) are met;
(ii) 30 days after expiration of the five-year period described in Section 10.1(f); or (iii) if the goals
are not met, the date the subsidy is repaid in accordance with Section 10.3. The report must comply
with Section 1167.994, subdivision 7 of the Business Subsidy Act. The Authority will provide
information to the Developer regarding the required forms. If the Developer fails to timely file any
report required under this Section 10.4, the Authority will mail the Developer a warning within one
week after the required filing date. If, after 14 days of the postmarked date of the warning, the
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