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HomeMy WebLinkAbout12-17-2001 EDA PacketAGENDA ECONOMIC DEVELOPMENT AUTHORITY MONDAY DECEMBER 17, 2001 6:00 P.M. 1. Ca11 to Order and Roll Call 2. Consideration of Minutes of March 12, 2001 3. Consideration Resolution No. 01-03 Approving the Elimination of Parcels from Tax Increment Financing District No. 1-5 within Development District No. 1 4. Consideration of Termination Agreement, H&L Mesabi 5. Adjourn DRAFT CITY OF LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY MINUTES DATE MEMBERS PRESENT MEMBERS ABSENT OTHERS PRESENT : March 12, 2001 : J. Bergeson, D. Carlson, C. Dahl, J. O'Donnell, J. Reinert : None : Mary Divine and Linda Waite Smith CONSIDERATION OF MINUTES OF MONDAY, NOVEMBER 13, 2000 EDA Member O'Donnell moved to approve the November 13, 2000, minutes, as presented. EDA Member Carlson seconded the motion. Motion passed unanimously. PUBLIC HEARING: PROPOSED BUSINESS SUBSIDY TO SUMMIT FIRE PROTECTION Ms. Divine advised Summit Fire Protection, a company that designs, manufactures and installs fire suppression systems, has requested tax increment financing (TIF) assistance in the amount of $217,059 for the purpose of constructing a 30,000 square foot facility in the Apollo Business Center. Summit currently is the second largest fire protection company in Minnesota, and currently has location in Savage, Roseville, Rochester and Fargo. The company plans to consolidate the Roseville and Savage locations into this new Lino Lakes facility. The company will employ approximately 60 at this new facility, including management, designers, sales positions and fabricators. The company has committed to hiring at least eight new employees within two years at no less than $22.00 per hour, plus benefits. A public hearing is required by statue when the EDA is considering granting a subsidy that exceeds $100,000. EDA President Bergeson opened the public hearing at 6:05 p.m. Ms. Divine introduced Mr. Quint Rubald, President of Summit Fire Protection, Mr. Frank Zelley, Construction Manager, and Mr. Mark Moore, Representative for Mr. Uhde. EDA Member Dahl moved to close the public hearing at 6:06 p.m. EDA Member Carlson seconded the motion. Motion passed unanimously. 1 CONSIDERATION OF RESOLUTION NO. 01— 01, APPROVING A BUSINESS SUBSIDY FOR SUMMIT FIRE PROTECTION Ms. Divine advised this resolution recognizes that Summit Fire Protections meets one or more of the goals and objectives outlined by the EDA in its business subsidy criteria. Those goals include: 1. Light industrial projects in the Apollo Business Center are consistent with the City's comprehensive plan designed to encourage economic growth and diversity. 2. 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. 3. This project is also consistent with the City's need to recover the return on its investment in the existing infrastructure within the park. Ms. Divine advised this project will be receiving site and building play review later tonight by the City Council. It is recommended that approval of the business subsidy be contingent upon final approval of the project by the City Council. EDA Member O'Donnell inquired about the amount of time that the TIF will be repaid. Ms. Divine advised the estimated total payback is in 2007. EDA Member Carlson clarified that the assessments being removed are for the road and sewer. EDA Member O'Donnell moved to approve Resolution No. 01— 01, contingent upon final approval of the project by the City Council. EDA Member Reinert seconded the motion. Motion passed unanimously. CONSIDERATION OF CONTRACT FOR PRIVATE DEVELOPMENT BETWEEN LINO LAKES EDA AND SUMMIT FIRE PROTECTION Ms. Divine advised the development contract outlines the conditions for public assistance to Summit Fire Protection for the construction of a 30,076 square foot facility on five acres on the G.M. Development property in the Apollo Business Center. The proposed facility will have a minimum market value of $1,615,000 for an estimated total of $73,000 in annual taxes. This agreement is based on a total TIF subsidy of $217,059. It removes the assessments of $87,780 upfront. The remaining pay-as-you-go TIF amounts to $129,279 for assistance with land write down and return of escrow. The City will be reimbursed first for the assessments from the available tax increment, and then the developer will receive the remaining increment. Estimated total payback is in 2007. This project is in TIF District 1-9, which requires a 10% local contribution ($23,496). It is the City's intent to apply the interest lost on the assessments that were deferred until development occurred as the local contribution. EDA Member Reinert moved to approve the contract for private development between Lino Lakes EDA and Summit Fire Protection, contingent upon final approval of the project by the City Council. EDA Member Dahl seconded the motion. Motion passed unanimously. CONSIDERATION OF RESOLUTION NO. 01— 02, DECLARING DEFAULT AND TERMINATING DEVELOPMENT AGREEMENT, H&L MESABI M. Divine advised on January 24, 2000, the EDA approved a Contract for Private Development with H&L Mesabi for $110,200. The contract required H&L Mesabi to complete the construction of its facility by December 31, 2000. Since the approval of that agreement, the company, which is based in Hibbing, Minnesota, had some setbacks that changed the outlook for the construction of this metro area facility. Because H&L Mesabi has not begun construction of the building in the Apollo Business Center, the company is in default of its development agreement. The president of the company was sent a notification that he had 30 days to cure the default by providing evidence of his intent to complete the facility. He selected not to cure the default. EDA Member O'Donnell stated the City had agreed to provide TIF. He asked if there has been any waiving of assessments to date. Ms. Divine advised the City Council will be terminating the assessment agreement. Terminating the development agreement will not carry any penalties for the city. An escrow fund did provide for all of the City's expenses. EDA Member Dahl moved to adopt Resolution No. 01 — 02, as presented. EDA Member O'Donnell seconded the motion. Motion passed unanimously. ADJOURNMENT EDA Member Dahl moved to adjourn. EDA Member O'Donnell seconded the motion. Motion passed unanimously. Meeting adjourned at 6:15 p.m. Transcribed by: Kim Points 3 AGENDA ITEM 3 STAFF ORIGINATOR: Mary Alice Divine DATE: 12/17/01 TOPIC: Consideration of Resolution No. 01-03 approving the Elimination of Parcels from TIF District No. 1-5 within Development District No. 1 Vote Required: Simple Majority BACKGROUND: In 1992 the Economic Development Authority created Tax Increment Financing District No. 1-5 for the purpose of providing TIF assistance for the Cottages of Willow Ponds senior housing (see attached map). The original intent of the developer was to construct 98 units of rental housing with maximum income limitations on the parcel. The project was later downsized to 48 units, and the developer sold off some of the parcel for 10 single family lots. In the process of gathering annual documentation for income compliance, it was decided those Tots should have been removed from the district since there is no documentation that income limitations were applied to the single family homes. Cottage Homesteads began receiving increment in 1997 and has been receiving the benefit of those homes being in the district. This Resolution removes the parcels from the District and directs staff to notify Anoka County of the reduction of the size of the district and return the increment from the district up to an amount of $50,525. Anoka County will then redistribute it to the city, county and school district. Payments to Cottage Homesteads will be withheld until that increment is recovered. OPTIONS: 1. Adopt Resolution No. 01-03 Approving the Elimination of Parcels from TIF District No. 1-5. 2. Do not adopt Resolution No. 01-03. 3. Return to staff for further consideration RECOMMENDATION: Option 1. Member introduced the following resolution and moved its adoption: LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY COUNTY OF ANOKA STATE OF MINNESOTA RESOLUTION NO. 01-03 RESOLUTION APPROVING THE ELIMINATION OF PARCELS FROM TAX INCREMENT FINANCING DISTRICT NO. 1-5 WITHIN DEVELOPMENT DISTRICT NO. 1 IN THE CITY OF LINO LAKES WHEREAS, on August 24, 1993, the Lino Lakes Economic Development Authority (the "EDA") created its Tax Increment Financing District No. 1-5 ("District No. 1-5") (Anoka County Number M6), within its Development District No. 1; and WHEREAS, District No. 1-5 was created as a Housing Tax Increment Financing District according to Minnesota Statutes, section 469.174, subd. 11; and WHEREAS, the original net tax capacities of the properties within District No. 1-5 were certified by Anoka County on August 25, 1994; and WHEREAS, the EDA desires by this resolution to eliminate the parcels listed on Attachment A within District No. 1-5, thereby reducing the size of District No. 1-5; and WHEREAS, since the current net tax capacity of the parcels to be eliminated from District No. 1-5 equals or exceeds the original net tax capacity of those parcels, the EDA may eliminate the parcels by adopting this resolution and without holding a public hearing pursuant to Minnesota Statutes, section 469.175, subd. 4. NOW, THEREFORE, BE IT RESOLVED by the Lino Lakes Economic Development authority as follows: 1. The parcels listed in Attachment A are hereby eliminated from District No. 1-5. 2. Star will take such action as is necessary to notify the Anoka County Auditor of the reduction in the geographic area of District No. 1-5. 3. Staff will return to Anoka County the increment associated with the parcels that have been removed. Dated: , 2001. RHB-206243v 1 LN140-25 1 President ATTEST: Secretary 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. RHB-206243v1 LN 140-25 Attachment A Parcel Numbers to Remove from Tax Increment District No. 1-5 (M6) PIN KEY PIN KEY R18-31-22-33-0049 01272964 R18-31-22-33-0054 01273017 R18-31-22-33-0050 01272973 R18-31-22-33-0055 01273026 R18-31-22-33-0051 01272982 R18-31-22-33-0056 01273035 R18-31-22-33-0052 01272991 R18-31-22-33-0057 01273044 R18-31-22-33-0053 01273008 R18-31-22-33-0058 01273053 1.5 parcel_elim.doc — .1717.41,•0 3 10 %A" 8.A.141V3H .SPW Var rODIP 1101W, 054. .• AV POW ;ZVeti •41t4 . .11 'WA AGENDA ITEM 4 STAFF ORIGINATOR: Mary Alice Divine DATE: 12/17/01 TOPIC: Consideration of Termination Agreement with H&L Mesabi Vote Required: Simple Majority BACKGROUND: In March 2001 the EDA passed a resolution declaring H&L Mesabi in default on a Development Agreement and Assessment Agreement it had entered into with the Authority. The company had already purchased three acres of property in the Apollo Business Park before making a decision not to build its new facility. According to state statute, all parties that enter intoan Assessment Agreement must terminate the agreement by "mutual consent." Mr. Bernard Carey, president of H&L Mesabi, was advised that he must take action to terminate the Assessment Agreement with the EDA, the school district and the county, or pay taxes on a building that didn't exist. Mr. Carey is now planning to sell the three acres of land, and as a condition of sale his attorney is requesting a Termination Agreement be executed so that when signed by Mr. Carey, there will be evidence of mutual consent. The agreement is consistent with the resolution adopted in March, but the EDA never explicitly authorized the president and executive director to sign such an agreement. This action makes that authorization. OPTIONS 1. Approve the execution of a Termination Agreement with H&L Mesabi 2. Do not approve 3. Return to staff for further consideration RECOMMENDATION: Option 1 TERMINATION AGREEMENT THIS AGREEMENT is made as of November 1, 2001, by and between the Lino Lakes Economic Development Authority, a public body corporate and politic under the laws of Minnesota (the "Authority"), and Bernard V. Carey (the "Developer"). RECITALS: A. Pursuant to the Contract for Private Development dated April 25, 2000 (the "Development Contract"), the Authority and the Developer entered into an agreement providing for the development of certain property located in the City of Lino Lakes, and legally described in Exhibit A hereto (the "Property"). B. Pursuant to the Development Contract, the Authority and the Developer also entered into the April 25, 2000 Assessment Agreement (the "Assessment Agreement") with respect to the Property. The Assessment Agreement was recorded June 8, 2000, with the Anoka County Recorder as Document No. 1505096. C. Developer's business in the State of Minnesota, which Developer hoped to expand by the development of the Property, in accordance with the terms of the Development Agreement, has suffered extremely adverse financial setbacks, as the customers of Developer's business have failed, gone out of business or otherwise ceased placing orders with Developer's business, such that the development of the Property by Developer is no longer possible. D. Developer now hopes to sell the Property to a prospective purchaser, which can itself develop the Property, and make the same a productive site, having an increased market value. However, in order to sell the Property to the prospective purchaser, the Development Contract and the Assessment Agreement must be terminated, as a condition to the sale of the Property. E. The Authority has recognized the plight of the Developer, and has issued its resolution approving the termination of the contractual relationships between the Authority and the Developer. Pursuant to the Developer's request and the resolution issued by the Authority, the Authority is willing to enter into this Termination Agreement, which includes the termination of the Assessment Agreement pursuant to the requirements of Minn. Stat. Section 469.177, subd. 8. NOW, THEREFORE, the Authority and the Developer hereby agree as follows: 1. Termination of Development Contract. The April 25, 2000 Contract for Private Development between the Authority and the Developer is hereby terminated, shall be without further force or effect, and neither party shall have any further rights or obligations thereunder. 2. Termination of Assessment Agreement. The April 25, 2000 Assessment Agreement between the Authority and the Developer is hereby terminated, shall be without further force or effect, and neither party shall have any further rights or obligations thereunder. The improvements contemplated by the Development Contract never having been constructed, the parties agree that the Anoka County Assessor's certification of value shall no longer be binding with respect to the valuation of the Property. IN AGREEMENT, the parties have executed this Termination Agreement as of the date first set forth above. DEVELOPER: By Bernard V. Carey STATE OF MINNESOTA ) )ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 2001, by Bernard V. Carey. Notary Public jbw-965.doc LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY: By Its STATE OF MINNESOTA ) )ss. COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 2001, by , the of the Lino Lakes Economic Development Authority, a public body politic and corporate under the laws of Minnesota, on behalf of the Authority. Notary Public jbw-965.doc EXHIBIT A. That part of the Southeast Quarter of Section 18, Township 31, Range 22, Anoka County, Minnesota, lying north of the CITY OF LINO LAKES RIGHT-OF-WAY PLAT NO. 1, APOLLO DRIVE, according to the recorded plat thereof; lying westerly of a line to be hereafter known as "Line B" for the purposes of this description; and lying easterly of a line to be hereafter known as "Line C" for the purposes of this description. Said Line B being described as: Commencing at the Northeast comer of said Southeast Quarter, thence South 88 degrees 22 minutes 57 seconds West, assumed basis of bearings, along the North line of said Southeast Quarter for a distance of 1106.24 feet to the actual Point Of Beginning of said Line B to be hereby described; thence South 1 degree 37 minutes 03 seconds East along said Line B for a distance of 163.00 feet; thence South 30 degrees 29 minutes 14 seconds East along said Line B for a distance of 284.48 feet, more or less, to terminate said Line B at the intersection thereof with said Northwesterly line of the CITY OF LINO LAKES RIGHT-OF-WAY PLAT NO. 1, APOLLO DRIVE. Said Line C being described as: Commencing at the Northeast corner of said Southeast Quarter, thence South 88 degrees 22 minutes 57 seconds West, assumed basis of bearings, along the North line of said Southeast Quarter for a distance of 1359.24 feet to the actual Point Of Beginning of said Line C to be hereby described; thence South 1 degree, 37 minutes 03 seconds East along said Line C for a distance of 221.08 feet; thence South 19 degrees 24 minutes 42 seconds East along said Line C for a distance of 314.24 feet, more or less, to terminate said Line C at the intersection thereof with said Northwesterly line of the CITY OF LINO LAKES RIGHT-OF-WAY PLAT NO. 1, APOLLO DRIVE. APPROVAL BY THE CITY OF LINO LAKES The City of Lino Lakes by its City Council hereby approves the termination of the Development Contract and the termination of the Assessment Agreement pursuant to the terms of the foregoing Termination Agreement, and certifies that attached hereto is a complete and accurate copy of the City's records approving such termination. Dated: , 2001 CITY OF LINO LAKES By Its STATE OF MINNESOTA ) )ss. COUNTY OF ) The foregoing approval was acknowledged , 2001, by of the City of Lino Lakes, a Minnesota municipal City. jbw-965.doc before me this day of ,the corporation, on behalf of the Notary Public NOV-07-2001 10:24 CITY OF LINO LAKES 651 982 2499 P.02/02 • :° Council Member O'Donnell introduced the following resolution and moved its adoption; City of Lino Lakes Resolution No. 01-39 RESOLUTION TER1VMINATINo ASSESSMENT AGREEMENT WHEREAS, the Lino Lakes Economic Development Authority (the "Authority") entered into a Contract for Private Development dated April , ar , 2000 (the "Development Agreement") with Bernard V. Carey (the "Developer") for construction of a 15,000 square foot manufacturing facility (the "Minimum Improvements") to be completed by December 31, 2000; and WHEREAS, the Authority and Developer also entered into an Assessment Agreement calling for a minimum market value of $690,800 with regard to the Minimum- Improvements as of January 2, 2001 for taxes payable beginning in 2002; and WHEREAS, the Developer has defaulted under the Development Agreement by failing to construct the Minimum Improvements; and WHEREAS, the Authority has terminated the Development Agreement as a result of the Developer's default and wishes to terminate the Assessment Agreement. NOW, THEREFORE, BE IT RESOLVED By the city cotmcil of the city of Lino Lakes that the Assessment Agreement entered into by the Authority and the Developer and recorded on the �"'�, day of 9 2000 as document number /f9fe in Anoka County, Minnesota, is hereby terminated. Dated: March 12, 2001. John Bergeson, Mayor Attest:: Ota-aretex. Ry Chel Gaustad CMC, City Clerk The motion for the foregoing resolution was duly seconded by Council Member Reinert and upon a vote being taken thereon, the following voted in favor thereof: All and the following voted against same: None Whereupon said resolution was declared duly adopted. RFIB-19419911 LNI40469 1 TOTAL P.02