HomeMy WebLinkAbout02-28-2005 EDA PacketAGENDA
ECONOMIC DEVELOPMENT AUTHORITY
MONDAY
FEBRUARY 28, 2005
6:00 P.M.
1. Ca11 to Order and Roll Call
2. Consideration of Minutes of December 20, 2004
3. Consideration of Annual Appointments
4. Public Hearing: Consideration of Business Subsidy for Schwan's Home Services, Inc.
4A. Resolution No. 05-01 Approving the Contract for Private Development by
and between the Lino Lakes Economic Development Authority and Schwan's
Home Service, Inc., and awarding sale of $91,715 Tax Increment Revenue Note.
Adjourn
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DATE
MEMBERS PRESENT
MEMBERS ABSENT
OTHERS PRESENT
CITY OF LINO LAKES
ECONOMIC DEVELOPMENT AUTHORITY
MINUTES
: December 20, 2004
: J. Bergeson, D. Carlson, C. Dahl, J. Reinert, D. Stoltz
: 'None
: Mary Divine, Gordon Heitke, Steve Bubul and Barry
Sullivan
CONSIDERATION OF MINUTES OF SEPTEMBER 27, 2004
EDA Member Bergeson moved to approve the September 27, 2004 minutes, as presented. EDA
Member Stoltz seconded the motion. Motion passed unanimously.
CONSIDERATION OF RESOLUTION NO. 04-04 TERMINATING TAX INCREMENT
FINANCING DISTRICT NO. 1-8 AND DIRECTING THE DECERTIFICATION BY THE
COUNTY AUDITOR
Ms. Divine summarized the Staff report, noting that Staff is recommending approval.
EDA Member Carlson noted she is a member of the Fairview Board; however she will not abstain
because this is not a benefit to Fairview and she was not a part of the City Council when this TIF
District was set up.
EDA Member Bergeson moved to adopt Resolution No. 04-04 terminating Tax Increment Financing
District No. 1-8 and Directing Decertification by the County Auditor. EDA Member Carlson
seconded the motion.
Motion carried unanimously.
CONSIDERATION OF RESOLUTION NO. 04-05 APPROVING MODIFICATION OF TAX
INCREMENT FINANCING DISTRICT PLAN FOR TAX INCREMENT FINANCING
DISTRICT NO. 1-11
Ms. Divine summarized the Staff report, indicating that Staff is recommending approval.
EDA Member Carlson asked if this would create a net loss or gain in size and dollars. Ms. Divine
indicated that originally there would have been a small amount of development on the site, but
because the YMCA has moved, and does not pay taxes, there may be a slight loss
EDA Member Carlson asked if the City gained additional environmental benefit by gaining woods.
Ms. Divine stated there was significant preservation.
EDA MINUTES DECEMBER 20, 2004
DRAFT
46 EDA Member Stoltz moved to adopt Resolution No. 04-05 approving modification of Tax Increment
47 Financing Plan for Tax Increment Financing District No. 1-11. EDA Member Carlson seconded the
48 motion.
49
50 Motion carried unanimously.
51
52 CONSIDERATION OF RESOLUTION NO. 04-06 AWARDING THE SALE OF, AND
53 PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE
54 ISSUANCE OF ITS $1,000,000 TAXABLE TAX INCREMENT REVENUE NOTE, SERIES
55 2004
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57 Ms. Divine summarized the Staff report, stating that Staff is recommending approval.
58
59 EDA Member Bergeson moved to adopt Resolution No. 04-06 awarding the sale of, and providing
60 the form, terms, covenants and directions for the issuance of its $1,000,000 taxable tax increment
61 revenue note, series 2004. EDA Member Stoltz seconded the motion.
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63 Motion carried. Vote: 3:2 EDA Members Carlson and Dahl opposed.
64
65 CONSIDERATION OF RESOLUTION NO. 04-07 AUTHORIZING INTERNAL LOAN IN
66 CONNECTION WITH TAX INCREMENT FINANCING DISTRICT NO. 1-11
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68 Ms. Divine summarized the Staff report, indicating that Staff is recommending approval.
69
70 EDA Member Stoltz moved to adopt Resolution No. 04-07 authorizing internal loan in connection
71 with Tax Increment Financing District No. 1-11. EDA Member Bergeson seconded the motion.
72
73 EDA Member Bergeson asked if this is for the same number of years as originally presented. Ms.
74 Divine stated it is up one year, and also shows payments twice a year.
75
76 EDA Member Carlson noted that the balance increases the first few years. She asked if that was
77 because they do not have TIF yet but are paying interest. Mr. Bubul indicated that is correct. He
78 stated there would not be incremental financing until 2004, but the loan starts collecting interest right
79 away. He added they were also charging 4% interest, which is the maximum they can charge. He
80 stated this rate can be reviewed every year, so if the maximum allowable rate goes up it can be
81 adjusted. He indicated this loan is also for the full amount, however if the Metropolitan Council grant
82 comes in, the loan amount can be reduced.
83
84 EDA Member Stoltz asked when the Metropolitan Council decision is expected. Ms. Divine stated
85 they will discuss it on January 2nd, with a decision at the full meeting on January 12th.
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87 Motion carried. Vote: 3:2 EDA Members Carlson and Dahl opposed.
88
2
EDA MINUTES DECEMBER 20, 2004
DRAFT
89 ADJOURNMENT
90
91 There being no further business, EDA Member Carlson moved to adjourn. EDA Member Dahl
92 seconded the motion. Motion passed unanimously.
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94 Meeting adjourned at 6:00 p.m.
95
96
97 Transcribed by:
98 Karen Bucklen
99 TimeSaver Off Site Secretarial, Inc.
100
AGENDA ITEM 3
STAFF MEMBER Mary Alice Divine
DATE February 28, 2005
SUBJECT Annual Appointments
VOTE REQUIRED Simple Majority
BACKGROUND
Each year the Economic Development Authority is required to make a number of
appointments at its first meeting of the year. The following is a list of appointments for
your consideration:
2004
2005 Recommended
1. President
Jeff Reinert
(Council Prerogative)
2 Vice President
Donna Carlson
(Council Prerogative)
3. Treasurer
Dan Stoltz
(Council Prerogative)
4. Secretary
Economic Development
Coordinator
Economic Development
Coordinator
5. Assistant Treasurer
Finance Director
Finance Director
6. Executive Director
City Administrator
City Administrator
7. Official Newspaper
Quad Community Press
Quad Community Press
8. Legal Depositories
Community National Bank
Wells Fargo
US Bank
Merrill Lynch
RBC Dain Rauscher
Wachovia Prudential
Securities
Lino Lakes State Bank
LMC 4M Fund
Smith,Barney, Citi Group
Others as needed
(Council prerogative)
RECOMMENDATION
As recommended or council prerogative.
AGENDA ITEM 4
STAFF ORIGINATOR: Mary Alice Divine
DATE: 02/28/05
TOPIC: Public Hearing: Consideration of a Business Subsidy
for Schwan's Home Service, Inc.
Vote Required: Simple Majority
BACKGROUND:
Schwan's Home Service, Inc. is one of the largest producers of frozen food
products in the United States, and the largest direct -to -home food delivery
provider. Headquartered in Marshall, Minnesota, Schwan's has had a
warehouse/distribution facility in Lino Lakes for the past 21 years on Lake Drive
just north of the 35W interchange.
Schwan's has outgrown its facility on Lake Drive, and is planning to relocate in
the Marshan Lake Industrial Park next to Distribution Alternatives. This facility will
be a 12,400 sq. ft. distribution facility on a 6.4-acre site. Approximately 1/3 of the
building will be used as office, the remainder for warehousing and shipping
areas. Because this site is highly visible from 35W, staff requested that
Schwan's design of the building exceed the minimum standards required in the
City's Light Industrial Zoning Ordinance, and the proposed architectural design
submitted by Schwan's does achieve a level of design that will enhance the look
of the industrial park from the freeway.
The company is requesting Tax Increment Financing assistance for site
improvement costs, including site preparation, landscaping, and grading. The
company has committed to hiring a minimum of six (6) new employees within two
years at no less than $9.00 per hour, exclusive of benefits. Based on an analysis
by staff and the city's TIF consultant, the recommendation is to provide five years
of increment on a pay-as-you-go basis for a total of $91,715.
A condition of the agreement requires that the existing Schwan's facility on Lake
Drive be demolished, which is consistent with Comprehensive Plan policies and
recommendations, among them:
• To "Redevelop select, commercial/industrial properties which display
deteriorated building conditions, obsolete site design, incompatible land
use and/or under -utilization of the site."
• "The City will pursue the relocation of (small isolated industrial sites on
Lake Drive) into a community industrial park and the redevelopment of
these existing industrial sites."
• "Public assistance may be applicable where the redevelopment is
consistent with the goals of the Lino Lakes Comprehensive Plan and
within the financial capabilities of the city."
The existing Schwan's building is abutting the city's new shopping center area.
This relocation is an opportunity to ensure the existing structures are removed
for future commercial development.
Business Subsidy Criteria have been established by the city for use in evaluating
a request for a business subsidy. The criteria used in evaluating a request for a
business subsidy include:
1. The business subsidy meets a public purpose, including but not limited to
increasing the tax base.
2. While an increase in the tax base cannot be the sole rounds for granting a
subsidy, the city believes it is a necessary condition for any subsidy.
3. The recipient creates the maximum number of livable wage jobs at the
site.
4. Projects of this type should promote economic and commercial diversity
within the community, contribute to the establishment of a critical mass of
commercial development within an area, or encourage full utilization of
existing or planned infrastructure improvements.
The city's Economic Development Advisory Committee has reviewed this project.
The committee recommended supporting the project, since it met the necessary
subsidy criteria, building standards and zoning codes.
RECOMMENDATION:
Open the public hearing
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Authorizing Resolution
LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY
RESOLUTION NO. 05-01
RESOLUTION APPROVING CONTRACT FOR PRIVATE DEVELOPMENT AND
AWARDING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS
AND DIRECTIONS FOR THE ISSUANCE OF ITS $91,715 TAX INCREMENT
REVENUE NOTE, SERIES 2005.
BE IT RESOLVED BY the Board of Commissioners ("Board") of the Lino Lakes
Economic Development Authority (the "Authority") as follows:
Section 1. Authorization; Award of Sale.
1.01. Authorization. The Authority has heretofore approved the establishment of Tax
Increment Financing District No. 1-10 (the "TIF District") within Development District No. 1
("Project"), and have adopted a tax increment financing plan for the purpose of financing 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
Development District. 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 $91,715 Tax
Increment Revenue Note, Series 2005 (the "Note") for the purpose of financing certain public
development costs of the Project.
1.02. Agreement Approved; Issuance, Sale, and Terms of the Note. The Authority
hereby approves the Contract for Private Development (the "Agreement") between the Authority
and the Schwan's Home Service, Inc. (the "Owner") and 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. Pursuant to the Agreement, the Note shall be sold to the Owner. The Note shall
be dated as of the date of deliver. The Authority shall receive in exchange for the sale of the
Note the agreement of the Owner to pay the Site Improvement 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 following form, with
the blanks to be properly filled in and the principal amount and payment schedule adjusted as of
the date of issue:
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UNITED STATE OF AMERICA
STATE OF MINNESOTA
COUNTY OF ANOKA
LINO LAKES ECONOMIC DEVELOPMENT' AUTHORITY
No. R-1 $91,715
TAX INCREMENT REVENUE NOTE
SERIES 20
Date
of Original Issue
The Lino Lakes Economic Development Authority (the "Authority"), for value received,
certifies that it is indebted and hereby promises to pay to Schwan's Home Service, Inc. or
registered assigns (the "Owner"), the principal sum of $91,715, without interest thereon, as and
to the extent set forth herein.
1. Payments. Principal payments ("Payments") shall be paid on August 1, 2006 and
each February 1 and August 1 thereafter to and including February 1, 2011 ("Payment Dates") in
the amounts and from the sources set forth in Section 2 herein.
Payments are payable by mail to the address of the Owner or such other address as the
Owner may designate upon 30 days written notice to the Authority. Payments on this Note are
payable in any coin or currency of the United States of America which, on the Payment Date, is
legal tender for the payment of public and private debts.
2. Available Tax Increment. Payments on this Note are payable on each Payment
Date in the amount of and solely from "Available Tax Increment," which means, on each
Payment Date, 95 percent of the Tax Increment attributable to the Development Property and
paid to the Authority by Anoka County in the six months preceding the Payment Date, all as
such terms are defined in the Contract for Private Development between the Authority and
Owner dated as of , 2005 (the "Agreement").
Available Tax Increment shall not include any Tax Increment if, as of any Payment Date,
there is an uncured Event of Default under the Agreement.
The Authority shall have no obligation to make any payment on this Note on any
Payment Date from any source other than Available Tax Increment, and the failure of the
Authority to pay principal on any Payment Date shall not constitute a default hereunder as long
as the Authority pays principal to the extent of Available Tax Increment. The Authority shall
have no obligation to pay unpaid balance of principal that may remain after the final Payment on
February 1, 2011.
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4. Optional Prepayment. The principal sum payable under this Note is prepayable in
whole or in part at any time by the Authority without premium or penalty.
5. Termination. At the Authority's option, this Note shall terminate and the
Authority's obligation to make any payments under this Note shall be discharged upon the
occurrence of an Event of Default on the part of the Developer as defined in Section 9.1 of the
Agreement, but only if the Event of Default has not been cured in accordance with Section 9.2 of
the Agreement.
6. Nature of Obligation. This Note is one of an issue in the total principal amount of
$91,715, all issued to aid in financing certain public development costs and administrative costs
of a Project undertaken by the Authority pursuant to Minnesota Statutes, Sections 469.125
through 469.134, and is issued pursuant to an authorizing resolution (the "Resolution") duly
adopted by the Authority on February 28, 2005 pursuant to and in full conformity with the
Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174
to 469.179. This Note is a limited obligation of the Authority which is payable solely from
Available Tax Increment pledged to the payment hereof under the Resolution. This Note shall
not be deemed to constitute a general obligation of the State of Minnesota or any political
subdivision thereof, including, without limitation, the Authority. Neither the State of Minnesota,
nor any political subdivision thereof shall be obligated to pay the principal of this Note or other
costs incident hereto except out of Available Tax Increment, and neither the full faith and credit
nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to
the payment of the principal of this Note or other costs incident hereto.
7. Registration and Transfer. This Note is issuable only as a fully registered note
without coupons. As provided in the Resolution, and subject to certain limitations set forth
therein, this Note is transferable upon the books of the Authority kept for that purpose at the
principal office of the Authority Administrator, by the Owner hereof in person or by such
Owner's attorney duly authorized in writing, upon surrender of this Note together with a written
instrument of transfer satisfactory to the Authority, duly executed by the Owner. Upon such
transfer or exchange and the payment by the Owner of any tax, fee, or governmental charge
required to be paid by the Authority with respect to such transfer or exchange, there will be
issued in the name of the transferee a new Note of the same aggregate principal amount, bearing
no interest and maturing on the same dates.
This 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 an opinion of counsel or a
certificate of the transferor, in a form satisfactory to the Authority, that such transfer is exempt
from registration and prospectus delivery requirements of federal and applicable state securities
laws.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things
required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen,
and to be performed in order to make this Note a valid and binding limited obligation of the
Authority according to its terms, have been done, do exist, have happened, and have been
performed in due form, time and manner as so required.
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IN WITNESS WHEREOF, the Board of Commissioners of the Lino Lakes Economic
Development Authority has caused this Note to be executed with the manual signatures of its
President and Executive Director, all as of the Date of Original Issue specified above.
LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY
Executive Director President
REGISTRATION PROVISIONS
The ownership of the unpaid balance of the within Note is registered in the bond register
of the City Finance Director, in the name of the person last listed below.
Date of
Registration
Director
Registered Owner
Schwan's Home Service, Inc.
Federal Tax I.D. No. 41-0879087
Section 3. Terms, Execution and Delivery.
Signature of
City Finance
3.01. Denomination, Payment. The Note shall be issued as a single typewritten note
numbered R-1.
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. Payment Dates. Installments of 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 City Finance Director to perform
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
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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 an opinion of counsel or a certificate of the transferor, in a
form 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 Registrar in connection therewith; and, in the case
the 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
Authority's 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
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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 thereof upon satisfaction of the conditions for delivery under the
Agreement.
Section 4. Security Provisions.
4.01. Pledge. The Authority hereby pledges to the payment of the principal of the Note
all Available Tax Increment as defined in the Note.
4.02. Bond Fund. Until the date the Note is no longer outstanding and no principal
thereof (to the extent required to be paid pursuant to this resolution) 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. Any Available Tax Increment remaining in the Bond
Fund shall be transferred to the Authority's account for TIF District No. 1-10 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 this February 28, 2005
President:
ATTEST by Secretary:
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Third Draft
February 17, 2005
CONTRACT
FOR
PRIVATE DEVELOPMENT
By and Between
LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY
and
SCHWAN'S HOME SERVICE, INC.
Dated as of: , 2005
This document was drafted by:
KENNEDY & GRAVEN, Chartered
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, Minnesota 55402
Telephone: (612) 337-9300
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TABLE OF CONTENTS
Page
PREAMBLE 1
ARTICLE I
Definitions
Section 1.1. Definitions 2
Section 2.1.
Section 2.2.
Section 3.1.
Section 3.2.
Section 3.3.
Section 3.4.
Section 3.5
Section 3.6
Section 4.1.
Section 4.2.
Section 4.3.
Section 4.4.
Section 4.5.
ARTICLE II
Representations and Warranties
Representations by the Authority 5
Representations and Warranties by the Developer 5
ARTICLE III
Site Improvement Costs; Financing
Status of Development Property 7
Environmental Conditions 7
Financing of Site Improvement Costs 7
Payment of Administrative Costs 8
Records 8
Business Subsidy Agreement 8
ARTICLE IV
Construction of Minimum Improvements
Construction of Improvements 11
Construction Plans 11
Commencement and Completion of Construction 12
Certificate of Completion 12
Demolition of Existing Buildings 12
ARTICLE V
Insurance and Condemnation
Section 5.1. Insurance 14
Section 5.2. Subordination 15
Section 6.1.
Section 6.2.
Section 6.3.
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ARTICLE VI
Tax Increment; Taxes
Right to Collect Delinquent Taxes 16
Reduction of Taxes 16
Covenant Not to Petition 16
ARTICLE VII
Financing
Section 7.1. Financing 17
Section 7.2 Subordination 17
ARTICLE VIII
Prohibitions Against Assignment and Transfer; Indemnification
Section 8.1. Representation as to Development 18
Section 8.2. Prohibition Against Developer's Transfer of Property and
Assignment of Agreement 18
Section 8.3. Release and Indemnification Covenants 19
ARTICLE IX
Events of Default
Section 9.1. Events of Default Defined 21
Section 9.2. Remedies on Default 21
Section 9.3. [Intentionally Omitted] 21
Section 9.4. [Intentionally Omitted] 21
Section 9.5 No Remedy Exclusive 21
Section 9.6 No Additional Waiver Implied by One Waiver 22
ARTICLE X
Additional Provisions
Section 10.1. Conflict of Interests; Authority Representatives Not Individually
Liable 23
Section 10.2. Equal Employment Opportunity 23
Section 10.3. Restrictions on Use 23
Section 10.4. Provisions Not Merged With Deed 23
Section 10.5. Titles of Articles and Sections 23
Section 10.6. Notices and Demands 23
Section 10.7. Counterparts 24
Section 10.8. Recording 24
Section 10.9. Minnesota Law 24
TESTIMONIUM
SIGNATURES
SCHEDULE A
SCHEDULE B
SCHEDULE C
SCHEDULE D
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Development Property
Certificate of Completion
Authorizing Resolution
Existing Property
11
CONTRACT FOR PRIVATE DEVELOPMENT
THIS AGREEMENT, made as of the day of , 2005, by and between
the LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and
politic under the laws of Minnesota (the "Authority"), and SCHWAN'S HOME SERVICE,
INC., a Minnesota corporation (the "Developer").
WITNESSETH:
WHEREAS, the Authority has undertaken a program to promote economic development
and job opportunities and to promote the development of land which is underutilized within the
City, and in this connection created Development District No. 1 (hereinafter referred to as the
"Project") in an area (hereinafter referred to as the "Project Area") located in the City and a Tax
Increment Financing District No. 1-10 (the "TIF District") within the Project Area, all pursuant
to Minnesota Statutes, Sections 469.124 to 469.134 (the "Act") and Minnesota Statutes, Sections
469.174 to 469.179; and
WHEREAS, pursuant to the Act, the Authority is authorized to undertake certain
activities to prepare such real property for development by private enterprise; and
WHEREAS, in order to achieve the objectives of the Development Plan for the Project
the Authority is prepared to pay certain public improvement costs of the Project, in order to bring
about development in accordance with the Development Plan and this Agreement; and
WHEREAS, the Authority believes that the development of the Project Area pursuant to
this Agreement, and fulfillment generally of this Agreement, are in the vital and best interests of
the Authority and the health, safety, morals, and welfare of its residents, and in accord with the
public purposes and provisions of the applicable State and local laws and requirements under
which the Project has been undertaken and is being assisted.
NOW, THEREFORE, in consideration of the premises and the mutual obligations of the
parties hereto, each of them does hereby covenant and agree with the other as follows:
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ARTICLE I
Definitions
Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears
from the context:
"Act" means Minnesota Statutes, Sections 469.124 to 469.134, as amended.
"Agreement" means this Agreement, as the same may be from time to time modified,
amended, or supplemented.
"Authority" means the Lino Lakes Economic Development Authority.
"Authority Representative" means the Authority's Executive Director.
"Authorizing Resolution" means the resolution of the Authority, substantially in the form
of the attached Schedule C to authorize the issuance of the Note.
"Business Subsidy Act" means Minnesota Statutes, Sections 116J.993 to 116J.995.
"City" means the City of Lino Lakes.
"Certificate of Completion" means the certification provided to the Developer, or the
purchaser of any part, parcel or unit of the Development Property, pursuant to Section 4.4 of this
Agreement.
"Construction Plans" means the plans, specifications, drawings and related documents on
the construction work to be performed by the Developer on the Development Property, including
the Minimum Improvements, which (a) shall be as detailed as the plans, specifications, drawings
and related documents which are submitted to the appropriate building officials of the City, and
(b) shall include at least the following: (1) site plan; (2) foundation plan; (3) basement plans; (4)
floor plan for each floor; (5) cross sections of each (length and width); (6) elevations (all sides);
(7) landscape plan; and (8) such other plans or supplements to the foregoing plans as the
Authority may reasonably request to allow it to ascertain the nature and quality of the proposed
construction work.
"County" means the County of Anoka, Minnesota.
"Developer" means Schwan's Home Service, Inc., or its permitted successors and
assigns.
"Development Property" means the real property described in Schedule A of this
Agreement.
"Development Plan" means the Authority's Modified Development Program for
Development District No. 1 as modified August 11, 2003 and as it may be further modified.
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"Event of Default" means an action by the Developer listed in Article IX of this
Agreement.
"Holder" means the owner of a Mortgage.
"Maturity Date" means the later of (a) date that the Note has been paid in full or
terminated in accordance with its terms, or (b) five years after substantial completion of the
Minimum Improvements.
"Minimum Improvements" means the construction on the Development Property of an
approximately 12,400 square -foot distribution facility.
"Mortgage" means any mortgage made by the Developer which is secured, in whole or in
part, with the Development Property and which is a permitted encumbrance pursuant to the
provisions of Article VIII of this Agreement.
"Note" means a Tax Increment Revenue Note, substantially in the form contained in the
Authorizing Resolution, to be delivered by the Authority to the Developer in consideration for
the Developer's payment of Site Improvement Costs, and any obligation issued to refund the
Note.
"Project" means the Authority's Development District No. 1.
"Project Area" means the real property located within the boundaries of the Project.
"Site Improvement Costs" has the meaning provided in Section 3.3.
"State" means the State of Minnesota.
"Tax Increment" means that portion of the real property taxes which is paid with respect
to the TIF District and which is remitted to the Authority as tax increment pursuant to the Tax
Increment Act.
"Tax Increment Act" or "TIF Act" means the Tax Increment Financing Act, Minnesota
Statutes, Sections 469.174 to 469.179, as amended.
"Tax Increment District" or "TIF District" means the Authority's Tax Increment
Financing District No. 1-10.
"Tax Increment Plan" or "TIF Plan" means the Authority's Tax Increment Financing
Plan for Tax Increment Financing District No. 1-10, as approved August 11, 2003 and as it may
be amended.
"Tax Official" means any County assessor; County auditor; County or State board of
equalization, the commissioner of revenue of the State, or any State or federal district court, the
tax court of the State, or the State Supreme Court.
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3
"Unavoidable Delays" means delays beyond the reasonable control of the party seeking
to be excused as a result thereof which are the direct result of strikes, other labor troubles,
prolonged adverse weather or acts of God, fire or other casualty to the Minimum Improvements,
litigation commenced by third parties which, by injunction or other similar judicial action,
directly results in delays, or acts of any federal, state or local governmental unit (other than the
Authority in exercising its rights under this Agreement) which directly result in delays.
Unavoidable Delays shall not include delays in the Developer's obtaining of permits or
governmental approvals necessary to enable construction of the Minimum Improvements by the
dates such construction is required under Section 4.3 of this Agreement, unless (a) Developer has
timely filed any application and materials required by the City for such permit or approvals, and
(b) the delay is beyond the reasonable control of the Developer.
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ARTICLE II
Representations and Warranties
Section 2.1. Representations by the Authority. The Authority makes the following
representations as the basis for the undertaking on their part herein contained:
(a) The Authority is an economic development authority duly organized and existing
under the laws of the State. Under the provisions of Minnesota Statutes, Sections 469.090 to
469.108 and the Act, the Authority has the power to enter into this Agreement and carry out its
obligations hereunder.
(b) The activities of the Authority are undertaken for the purpose of fostering the
development of certain real property which for a variety of reasons is presently unutilized and
underutilized, and to promote job and tax base growth in the City.
Section 2.2. Representations and Warranties by the Developer. The Developer
represents and warrants that:
(a) The Developer is a corporation duly organized and in good standing under the
laws of Minnesota, is duly authorized to transact business within the State, has the power to enter
into this Agreement, and has duly authorized execution of this Agreement by action of its
governing body.
(b) The Developer will construct, operate and maintain the Minimum Improvements
in accordance with the terms of this Agreement, the Development Plan and all local, state and
federal laws and regulations (including, but not limited to, environmental, zoning, building code
and public health laws and regulations).
(c) The Developer has received no notice or communication from any local, state or
federal official that the activities of the Developer or the Authority in the Project Area may be or
will be in violation of any environmental law or regulation (other than those notices or
communications of which the Authority is aware). The Developer is aware of no facts the
existence of which would cause it to be in violation of or give any person a valid claim under any
local, state or federal environmental law, regulation or review procedure.
(d) The Developer will construct the Minimum Improvements in accordance with all
local, state or federal energy -conservation laws or regulations.
(e) The Developer will obtain, in a timely manner, all required permits, licenses and
approvals, and will meet, in a timely manner, all requirements of all applicable local, state and
federal laws and regulations which must be obtained or met before the Minimum Improvements
may be lawfully constructed. The Developer did not obtain a building permit for any portion of
the Minimum Improvements before the date of approval of the TIF Plan for the TIF District.
(f) Neither the execution and delivery of this Agreement, the consummation of the.
transactions contemplated hereby, nor the fulfillment of or compliance with the terms and
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conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of,
the terms, conditions or provisions of any corporate restriction or any evidences 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.
(g) Whenever any Event of Default occurs and if the Authority shall employ
attorneys or incur other expenses for the collection of payments due or to become due or for the
enforcement of performance or observance of any obligation or agreement on the part of the
Developer under this Agreement, and the Authority prevails in such action, the Developer agrees
that it shall, within ten days of written demand by the Authority, pay to the Authority the
reasonable fees of such attorneys and such other expenses so incurred by the Authority.
(h) The proposed development by the Developer hereunder would not occur but for
the tax increment financing assistance being provided by the Authority hereunder.
(i) The Developer shall promptly advise Authority in writing of all litigation or
claims affecting any part of the Minimum Improvements and all written complaints and charges
made by any governmental authority materially affecting the Minimum Improvements or
materially affecting Developer or its business which may delay or require changes in
construction of the Minimum Improvements.
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ARTICLE III
Site Improvement Costs, Financing
Section 3.1. Status of Development Property. In order to secure access to the property
and meet the terms of its purchase agreement with a third party, the Developer acquired the
Development Property prior to the date of this Agreement. The Authority has no obligation to
acquire the Development Property or any portion thereof.
Section 3.2. Environmental Conditions. (a) For purposes of this Section, the following
terms will have the indicated definitions. "Law or Regulation" means and includes the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA" or the
Federal Superfund Act) as amended by the Superfund Amendments and Reauthorization Act of
1986 ("SARA") 42 U.S.C. §§9601-9675; the Federal Resource Conservation and Recovery Act
of 1986 ("RCRA"); the Minnesota Environmental Response and Liability Act ("MERLA")
Minnesota Statutes, Chapter 115B; the Clean Water Act 33 U.S.C. §§ 1321 et seq.; the
Minnesota Petroleum Tank Release Cleanup Act, Minnesota Statutes, Chapter 115C; the Clean
Air Act 42 U.S.C. §§ 7401 et seq.; all as the same may be from time to time amended and any
other federal, state, county, municipal, local or other statute, law, ordinance or regulation which
may relate to or deal with human health, hazardous substances or materials or the environment
including without limitation all pursuant to any such statute, law or ordinance. "Hazardous
Substance or Materials" means asbestos, urea formaldehyde, polychlorinated biphenyls, nuclear
fuel or materials, chemical waste radioactive materials, explosives, known carcinogens,
petroleum products or other dangerous or toxic or hazardous pollutant, contaminant, chemical
material or other substance defined as hazardous or as a pollutant or contaminant in, or the
release or disposal of which is regulated by, any Law or Regulation.
(b) The Developer acknowledges that the Authority makes no representations or
warranties as to the condition of the soils or presence or absence of Hazardous Substance or
Materials on the Development Property (including without limitation the Development Property)
or the fitness of the Development Property for construction of the Minimum Improvements or
any other purpose for which the Developer may make use of such property.
(c) Without limiting its obligations under Section 8.3 of this Agreement, upon and after
Developer's acquisition of the Development Property, the Developer agrees that it will
indemnify, defend, and hold harmless the Authority, its governing body members, officers, and
employees, from any claims or actions arising out of the presence, if any, of Hazardous Wastes
and Materials existing on or in the Development Property. Nothing in this section will be
construed to limit or affect any limitations on liability of the Authority under State or federal
law, including without limitation Minnesota Statutes, Sections 466.04 and 604.02.
Section 3.3. Financing of Site Improvement Costs. (a) In order to make development of
the Minimum Improvements financially feasible, the Authority will reimburse the Developer for
a portion of the costs incurred by the Developer on the Development Property in landscaping,
grading, on -site utilities, and parking facilities (collectively, the "Site Improvement Costs").
Such reimbursement will be made through issuance of the Note in the principal amount of
$91,715, in substantially the form set forth in the Authorizing Resolution attached as Schedule C.
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The Authority shall deliver the Note to Developer upon Developer's having submitted to the
Authority the evidence, in a form reasonably satisfactory to Authority, that Developer has
incurred and paid Site Improvement Costs in at least the principal amount of. the Note. Such
evidence must be submitted by no later than the date required for substantial completion of the
Minimum Improvements under Section 4.3.
(b) The Developer understands and acknowledges that the Authority makes no
representations or warranties regarding the amount of Available Tax Increment (as defined in the
Note), or that revenues pledged to the Note will be sufficient to pay the principal of the Note.
Any estimates of Tax Increment prepared by the Authority or its financial advisors in connection
with the TIF District or this Agreement are for the benefit of the Authority, and are not intended
as representations on which the Developer may rely.
Section 3.4. Payment of Administrative Costs. The Developer is responsible to pay all
reasonable out of pocket costs, not to exceed $10,000, incurred by the Authority through the date
of execution of this Agreement that are attributable to or incurred in connection with the
negotiation and preparation of this Agreement and other documents and agreements in
connection with the development contemplated hereunder (collectively, "TIF Administrative
Costs"). TIF Administrative Costs shall be evidenced by invoices, statements or other
reasonable written evidence of the costs incurred by the Authority. Upon termination of this
Agreement in accordance with its terms, Developer remains obligated to pay TIF Administrative
Costs incurred as of the effective date of termination.
Section 3.5. Records. The Authority and its representatives shall have the right at all
reasonable times after reasonable notice to inspect, examine and copy all books and records of
Developer relating to the Minimum Improvements and the Development Property.
Section 3.6. Business Subsidy Agreement. The provisions of this Section constitute the
"business subsidy agreement" for the purposes of the Business Subsidy Act.
(a) General Terms. The parties agree and represent to each other as follows:
(1) The subsidy provided to the Developer consists of payments on the Note,
which payments represent a forgivable loan that is repayable by the Developer in
accordance with this Section. The Note is payable from a portion of the Tax Increments
from the TIF District, an economic development tax increment financing district.
(2) The public purposes of the subsidy are to facilitate development of the
Authority's industrial park, increase net jobs in the City and the State, and increase the
tax base of the City and the State.
(3) The goals for the subsidy are: to secure development of the Minimum
Improvements on the Development Property; to maintain such improvements as a
distribution facility for the time period described in clause (6) below; and to create the
jobs and wage levels in accordance with Section 3.6(b) hereof.
(4) If the goals described in clause (3) are not met, the Developer must make the
payments to the Authority described in Section 3.6(c).
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(5) The subsidy is needed to induce Developer to locate its business at this site,
and to mitigate the cost of land acquisition compared to comparable sites available
elsewhere.
(6) The Developer must continue operation of the Minimum Improvements as a
distribution, warehouse or manufacturing facility (a "Qualified Facility") through the
Maturity Date. During any period while the Minimum Improvements are vacant and not
operated as a distribution, warehouse or manufacturing facility, the Minimum
Improvements will not constitute a Qualified Facility.
(7) The Developer's parent corporation is The Schwan Food Company.
(8) 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 the Development Property or the Minimum Improvements.
(b) Job and Wage Goals. Within two years after substantial completion of the Minimum
Improvements (the "Compliance Date"), the Developer shall cause to be created at least 6 new
full-time equivalent jobs on the Development Property (over and above the 31 full time
equivalent jobs previously existing in the State as of the date of this Agreement and relocated to
this site) and shall cause the wages for the 6 additional employees on the Development Property
to be no less than $9.00 per hour, exclusive of benefits. Notwithstanding anything to the
contrary herein, if the wage and job goals described in this paragraph are met by the Compliance
Date, those goals are deemed satisfied despite the Developer's continuing obligations under
Sections 3.6(a)(6) and 3.6(d). The Authority may, after a public hearing, extend the Compliance
Date by up to one year, provided that nothing in this section will be construed to limit the
Authority's legislative discretion regarding this matter.
(c) Remedies. If the Developer fails to meet the goals described in Section 3.6(a)(3), the
Developer shall repay to the Authority upon written demand from the Authority a "pro rata
share" of the amount of any Note payments made to the Developer together with interest on that
amount at the implicit price deflator for government consumption expenditures and gross
investment for state and local governments prepared by the Bureau of Economic Analysis of the
United States Department of Commerce for the 12-month period ending March 31 of the
previous year, accrued from the date of substantial completion of the Minimum Improvements to
the date of payment. 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 facility as a Qualified Facility in
accordance with Section 3 .6(a)(6), 60 less the number of months of operation as a
Qualified Facility (where any month in which the Qualified Facility is in operation for at
least 15 days constitutes a month of operation), commencing on the date of substantial
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completion and ending with the date the Qualified Facility ceases operation as
determined by the Authority Representative, 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 shall be construed to limit the Authority's remedies under Article
IX hereof. In addition to the remedy described in this Section and any other remedy available to
the Authority for failure to meet the goals stated in Section 3.6(a)(3), the Developer agrees and
understands that it 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, whichever occurs first.
(d) Reports. The Developer must submit to the Authority a written report regarding
business subsidy goals and results by no later than February 1 of each year, commencing
February 1, 2006 and continuing until the later of (i) the date the goals stated Section 3.6(a)(3)
are met; (ii) 30 days after expiration of the period described in Section 3.6(a)(6); or (iii) if the
goals are not met, the date the subsidy is repaid in accordance with Section 3.6(c). 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, 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 Developer fails to provide a report, the Developer must pay to the Authority a
penalty of $100 for each subsequent day until the report is filed. The maximum aggregate
penalty payable under this Section $1,000.
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10
ARTICLE IV
Construction of Minimum Improvements
Section 4.1. Construction of Improvements. The Developer agrees that it will construct
the Minimum Improvements on the Development Property in accordance with the approved
Construction Plans and at all times prior to the Maturity Date will operate and maintain, preserve
and keep the Minimum Improvements or cause such improvements to be maintained, preserved
and kept with the appurtenances and every part and parcel thereof, in good repair and condition.
The Authority shall have no obligation to operate or maintain the Minimum Improvements.
Section 4.2. Construction Plans. (a) Before commencement of construction of the
Minimum Improvements, the Developer shall submit to the Authority Construction Plans. The
Construction Plans shall provide for the construction of the Minimum Improvements and shall be
in conformity with the Development Plan, this Agreement, and all applicable State and local
laws and regulations. The Authority Representative will approve the Construction Plans in
writing if: (i) the Construction Plans conform to the terms and conditions of this Agreement; (ii)
the Construction Plans conform to the goals and objectives of the Development Plan; (iii) the
Construction Plans conform to all applicable federal, state and local laws, ordinances, rules and
regulations; (iv) the Construction Plans are adequate to provide for construction of the Minimum
Improvements; (v) the Construction Plans do not provide for expenditures in excess of the funds
available to the Developer from all sources (including Developer's equity) for construction of the
Minimum Improvements; and (vi) no Event of Default has occurred. Approval may be based
upon a review by the City's Building Official of the Construction Plans. No approval by the
Authority Representative shall relieve the Developer of the obligation to comply with the terms
of this Agreement or of the Development Plan, applicable federal, state and local laws,
ordinances, rules and regulations, or to construct the Minimum Improvements in accordance
therewith. No approval by the Authority Representative shall constitute a waiver of an Event of
Default. If approval of the Construction Plans is requested by the Developer in writing at the
time of submission, such Construction Plans shall be deemed approved unless rejected in writing
by the Authority Representative, in whole or in part. Such rejections shall set forth in detail the
reasons therefore, and shall be made within 10 days after the date of their receipt by the
Authority. If the Authority Representative rejects any Construction Plans in whole or in part, the
Developer shall submit new or corrected Construction Plans within 10 days after written
notification to the Developer of the rejection. The provisions of this Section relating to approval,
rejection and resubmission of corrected Construction Plans shall continue to apply until the
Construction Plans have been approved by the Authority. The Authority Representative's
approval shall not be unreasonably withheld, delayed or conditioned. Said approval shall
constitute a conclusive determination that the Construction Plans (and the Minimum
Improvements constructed in accordance with said plans) comply to the Authority's satisfaction
with the provisions of this Agreement relating thereto.
(b) If the Developer desires to make any material change in the Construction Plans
after their approval by the Authority, the Developer shall submit the proposed change to the
Authority for its approval. If the Construction Plans, as modified by the proposed change,
conform to the requirements of this Section 4.2 of this Agreement with respect to such
previously approved Construction Plans, the Authority shall approve the proposed change and
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notify the Developer in writing of its approval. Such change in the Construction Plans shall, in
any event, be deemed approved by the Authority unless rejected, in whole or in part, by written
notice by the Authority to the Developer, setting forth in detail the reasons therefor. Such
rejection shall be made within ten (10) days after receipt of the notice of such change. The
Authority's approval of any such change in the Construction Plans will not be unreasonably
withheld.
Section 4.3. Commencement and Completion of Construction. Subject to Unavoidable
Delays, the Developer shall commence construction of the Minimum Improvements by April 1,
2005 and shall complete the construction of the Minimum Improvements and by December 31,
2005. All work with respect to the Minimum Improvements to be constructed or provided by the
Developer on the Development Property shall be in conformity with the Construction Plans as
submitted by the Developer and approved by the Authority.
The Developer agrees for itself, its successors and assigns, and every successor in interest
to the Development Property, or any part thereof, that the Developer, and such successors and
assigns, shall promptly begin and diligently prosecute to completion the development of the
Development Property through the construction of the Minimum Improvements thereon, and that
such construction shall in any event be commenced and completed within the period specified in
this Section 4.3 of this Agreement. After the date of this Agreement and until construction of the
Minimum Improvements has been completed, the Developer shall make reports, in such detail
and at such times as may reasonably be requested by the Authority, as to the actual progress of
the Developer with respect to such construction.
Section 4.4. Certificate of Completion. (a) Promptly after completion of the Minimum
Improvements in accordance with those provisions of the Agreement relating solely to the
obligations of the Developer to construct the Minimum Improvements (including the dates for
beginning and completion thereof), the Authority Representative will furnish the Developer with
a Certificate shown as Schedule B. Such certification and such determination shall not constitute
evidence of compliance with or satisfaction of any obligation of the Developer to any Holder of a
Mortgage, or any insurer of a Mortgage, securing money loaned to finance the Minimum
Improvements, or any part thereof.
(b) If the Authority Representative shall refuse or fail to provide any certification in
accordance with the provisions of this Section 4.4 of this Agreement, the Authority
Representative shall, within thirty (30) 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 Improvements shall be deemed to be complete
when the City has both issued a certificate of occupancy and has determined that related site
improvements all have been completed in accordance with Construction Plans.
Section 4.5. Demolition of Existing Buildings. Prior to the first payment date on the
Note, the Developer must demolish (or cause to be demolished by a successor or assign) all
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existing buildings on the property now owned by Developer or a related entity in the City legally
described as attached on Schedule D (the "Existing Site"), and must clear the Existing Site of all
rubble and debris. Developer understands and acknowledges that performance of the obligations
under this Section is a condition to receipt of any payments under the Note.
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ARTICLE V
Insurance and Condemnation
Section 5.1. Insurance. (a) The Developer will provide and maintain at all times during
the process of constructing the Minimum Improvements an All Risk Broad Form Basis Insurance
Policy and, from time to time during that period, at the request of the Authority, furnish the
Authority with proof of payment of premiums on policies covering the following:
(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 Protective Liability Policy with limits
against bodily injury and property damage of not less than $1,000,000 for each
occurrence (to accomplish the above -required limits, an umbrella excess liability policy
may be used); and
(iii) Workers' compensation insurance, with statutory coverage.
(b) Upon completion of construction of the Minimum Improvements and prior to the
Maturity 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 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.
(ii) Comprehensive general public liability insurance, including personal
injury liability (with employee exclusion deleted), against liability for injuries to persons
and/or property, in the minimum amount for each occurrence and for each year of
$1,000,000.
(iii) Such other insurance, including workers' compensation insurance
respecting all employees of the Developer in such amount as is customarily carried by
like organizations engaged in like activities of comparable size and liability exposure;
provided that the Developer may be self -insured with respect to all or any part of its
liability for workers' compensation.
(c) All insurance required in Article V of this Agreement shall be taken out and
maintained in responsible insurance companies selected by the Developer which are authorized
under the laws of the State to assume the risks covered thereby. Upon request, the Developer
will deposit annually with the Authority policies evidencing all such insurance, or a certificate or
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certificates or binders of the respective insurers stating that such insurance is in force and effect.
Unless otherwise provided in this Article V of this Agreement each policy shall contain a
provision that the insurer shall not cancel nor modify it in such a way as to reduce the coverage
provided below the amounts required herein without giving written notice to the Developer and
the Authority at least thirty (30) days before the cancellation or modification becomes effective.
In lieu of separate policies, the Developer may maintain a single policy, blanket or umbrella
policies, or a combination thereof, having the coverage required herein, in which event the
Developer shall deposit with the Authority a certificate or certificates of the respective insurers
as to the amount of coverage in force upon the Minimum Improvements.
(d) The Developer agrees to notify the Authority immediately in the case of damage
exceeding $100,000 in amount to, or destruction of, the Minimum Improvements or any portion
thereof resulting from fire or other casualty. In such event the Developer will forthwith repair,
reconstruct and restore the Minimum Improvements to substantially the same or an improved
condition or value as it existed prior to the event causing such damage and, to the extent
necessary to accomplish such repair, reconstruction and restoration, the Developer will apply the
Net Proceeds of any insurance relating to such damage received by the Developer to the payment
or reimbursement of the costs thereof.
The Developer shall complete the repair, reconstruction and restoration of the Minimum
Improvements, whether or not the Net Proceeds of insurance received by the Developer for such
purposes are sufficient to pay for the same. Any Net Proceeds remaining after completion of
such repairs, construction and restoration shall be the property of the Developer.
(e) In lieu of its obligations under paragraph (d), Developer may repay to the
Authority all amounts previously paid by the Authority to the holder of the Note. Upon the
Authority's receipt of such payment, the Note and this Agreement will be deemed terminated
and neither party will have any further liability hereunder, except that the provisions of Section
8.3 survive termination.
(f) The Developer and the Authority agree that all of the insurance provisions set
forth in this Article V shall terminate upon the termination of this Agreement.
Section 5.2. Subordination. Notwithstanding anything to the contrary contained in this
Article V, the rights of the Authority with respect to the receipt and application of any proceeds
of insurance shall, in all respects, be subject and subordinate to the rights of any lender under a
Mortgage approved pursuant to Article VII of this Agreement.
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15
ARTICLE VI
Tax Increment; Taxes
Section 6.1. Right to Collect Delinquent Taxes. The Developer acknowledges that the
Authority is providing substantial aid and assistance in furtherance of the redevelopment through
issuance of the Note. The Developer understands that the Tax Increments pledged to payment on
the Note are derived from real estate taxes on the Development Property, which taxes must be
promptly and timely paid. To that end, the Developer agrees for itself, its successors and
assigns, in addition to the obligation pursuant to statute to pay real estate taxes, that it is also
obligated by reason of this Agreement to pay before delinquency all real estate taxes assessed
against the Development Property and the Minimum Improvements. The Developer
acknowledges that this obligation creates a contractual right on behalf of the Authority to sue the
Developer or its successors and assigns to collect delinquent real estate taxes and any penalty or
interest thereon and to pay over the same as a tax payment to the county auditor. In any such
suit, the Authority shall also be entitled to recover its costs, expenses and reasonable attorney
fees.
Section 6.2. Reduction of Taxes. The Developer agrees that prior to completion of the
Minimum Improvements, it will not cause a reduction in the real property taxes paid in respect of
the Development Property through: (A) willful destruction of the Development Property or any
part thereof; (B) willful refusal to reconstruct damaged or destroyed property, except to the
extent otherwise provided in Section 5.1(e); (C) subject to Section 6.3, apply for a deferral or
abatement of property tax on the Development Property pursuant to any law; or (D) convey or
transfer or allow conveyance or transfer of the Development Property to any entity that is exempt
from payment of real property taxes under State law.
Section 6.3. Covenant Not to Petition. Prior to the Maturity Date, the Developer agrees
not to file any petition or claim with any Tax Official, seeking to reduce the market value of the
Development Property and the Minimum Improvements for ad valorem tax purposes below a
minimum value of $1,310,000. Nothing in this section is intended to constitute a minimum
assessment agreement within the meaning of Section 469.177, subd. 8 of the TIF Act. However,
failure by Developer to comply with this Section is an Event of Default under this Agreement,
entitling the Authority to the remedies described in Article IX hereof.
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ARTICLE VII
Financing
Section 7.1. Financing. [Intentionally Omitted.]
Section 7.2. Subordination. In order to facilitate the Developer obtaining financing for
the development of the Minimum Improvements, the Authority agrees to subordinate its rights
under this Agreement to the Holder of any Mortgage, provided that such subordination shall be
subject to such reasonable terms and conditions as the Authority and Holder of a Mortgage
mutually agree in writing.
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ARTICLE VIII
Prohibitions Against Assignment and Transfer; Indemnification
Section 8.1. Representation as to Development. The Developer represents and agrees
that its purchase of the Development Property, and its other undertakings pursuant to the
Agreement, are, and will be used, for the purpose of development of the Development Property
and not for speculation in holding. -
Section 8.2. Prohibition Against Developer's Transfer of Property and Assignment of
Agreement. The Developer represents and agrees that prior to issuance of the Certificate of
Completion for the Minimum Improvements:
(a) Except only by way of security for, and only for, the purpose of obtaining
financing necessary to enable the Developer or any successor in interest to the Development
Property, or any part thereof, to perform its obligations with respect to making the Minimum
Improvements under this Agreement, and any other purpose authorized by this Agreement, the
Developer has not made or created and will not make or create or suffer to be made or created
any total or partial sale, assignment, conveyance, or lease, or any trust or power, or transfer in
any other mode or form of or with respect to the Agreement or the Development Property or any
part thereof or any interest therein, or any contract or agreement to do any of the same, without
the prior written approval of the Authority unless the Developer remains liable and bound by this
Development Agreement in which event the Authority's approval is not required. Any such
transfer shall be subject to the provisions of this Agreement.
(b) In the event the Developer, upon transfer or assignment of the Development
Property or any portion thereof, seeks to be released from its obligations under this Development
Agreement as to the portions of the Development Property that is transferred or assigned, the
Authority shall be entitled to require, except as otherwise provided in the Agreement, as
conditions to any such release that:
(i) Any proposed transferee shall have the qualifications and financial
responsibility, in the reasonable judgment of the Authority, necessary and adequate to
fulfill the obligations undertaken in this Agreement by the Developer as to the portion of
the Development Property to be transferred.
(ii) Any proposed transferee, by instrument in writing satisfactory to the
Authority and in form recordable among the land records, shall, for itself and its
successors and assigns, and expressly for the benefit of the Authority, have expressly
assumed all of the obligations of the Developer under this Agreement as to the portion of
the Development Property to be transferred and agreed to be subject to all the conditions
and restrictions to which the Developer is subject as to such portion; provided, however,
that the fact that any transferee of, or any other successor in interest whatsoever to, the
Development Property, or any part thereof, shall not, for whatever reason, have assumed
such obligations or so agreed, and shall not (unless and only to the extent otherwise
specifically provided in this Agreement or agreed to in writing by the Authority) deprive
the Authority of any rights or remedies or controls with respect to the Development
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Property or any part thereof or the construction of the Minimum Improvements; it being
the intent of the parties as expressed in this Agreement that (to the fullest extent
permitted at law and in equity and excepting only in the manner and to the extent
specifically provided otherwise in this Agreement) no transfer of, or change with respect
to, ownership in the Development Property or any part thereof, or any interest therein,
however consummated or occurring, and whether voluntary or involuntary, shall operate,
legally or practically, to deprive or limit the Authority of or with respect to any rights or
remedies on controls provided in or resulting from this Agreement with respect to the
Minimum Improvements that the Authority would have had, had there been no such
transfer or change. In the absence of specific written agreement by the Authority to the
contrary, no such transfer or approval by the Authority thereof shall be deemed to relieve
the Developer, or any other party bound in any way by this Agreement or otherwise with
respect to the construction of the Minimum Improvements, from any of its obligations
with respect thereto.
(iii) Any and all instruments and other legal documents involved in effecting
the transfer of any interest in this Agreement or the Development Property governed by
this Article VIII, shall be in a form reasonably satisfactory to the Authority.
In the event the foregoing conditions are satisfied then the Developer shall be released from its
obligation under this Agreement, as to the portion of the Development Property that is
transferred, assigned or otherwise conveyed.
After issuance of the Certificate of Completion for the Minimum Improvements, the
Developer may transfer or assign any portion of the Development Property or the Developer's
interest in this Agreement without the prior written consent of the Authority, provided that the
transferee or assignee is bound by all the Developer's obligations hereunder. The Developer
shall submit to the Authority written evidence of any such transfer or assignment, including the
transferee or assignee's express assumption of the Developer's obligations under this Agreement.
If the Developer fails to provide such evidence of transfer and assumption, the Developer shall
remain bound by all it obligations under this Agreement.
Section 8.3. Release and Indemnification Covenants. (a) Except for any willful or
wanton misconduct of the following named parties, the Developer releases from and covenants
and agrees that the Authority and the governing body members, officers, agents, servants and
employees thereof shall not be liable for and agrees to indemnify and hold harmless the
Authority and the governing body members, officers, agents, servants and employees thereof
against any loss or damage to property or any injury to or death of any person occurring at or
about or resulting from any defect in the Minimum Improvements.
(b) Except for any willful misrepresentation or any willful or wanton misconduct of
the following named parties, the Developer agrees to protect and defend the Authority and the
governing body members, officers, agents, servants and employees thereof, now or forever, and
further agrees to hold the aforesaid harmless from any claim, demand, suit, action or other
proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from
this Agreement, or the transactions contemplated hereby or the acquisition, construction,
installation, ownership, maintenance and operation of the Minimum Improvements.
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(c) The Authority and the governing body members, officers, agents, servants and
employees thereof shall not be liable for any damage or injury to the persons or property of the
Developer or its officers, agents, servants or employees or any other person who may be about
the Development Property or Minimum Improvements due to any act of negligence of any
person.
(d) All covenants, stipulations, promises, agreements and obligations of the Authority
contained herein shall be deemed to be the covenants, stipulations, promises, agreements and
obligations of the Authority and not of any governing body member, officer, agent, servant or
employee of the Authority in the individual capacity thereof.
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ARTICLE IX
Events of Default
Section 9.1. Events of Default Defined. 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 (unless the context otherwise provides), any failure by any party to observe or
perform any other covenant, condition, obligation or agreement on its part to be observed or
performed hereunder, or under any loan agreement, promissory note, or related document in
connection with a loan from the Authority to the Developer from the Authority's revolving loan
fund, including without limitation any Authority participation in a bank or other third party loan.
Section 9.2. Remedies on Default. Whenever any Event of Default referred to in Section
9.1 of this Agreement occurs, the non -defaulting party may exercise its rights under this Section
9.2 after providing thirty days written notice to the defaulting party of the Event of Default, but
only if the Event of Default has not been cured within said thirty days or, if the Event of Default
is by its nature incurable within thirty days, the defaulting party does not provide assurances
reasonably satisfactory to the non -defaulting party that the Event of Default will be cured and
will be cured as soon as reasonably possible:
(a) Suspend its performance under the Agreement until it receives assurances that the
defaulting party will cure its default and continue its performance under the Agreement.
(b)
Cancel and rescind or terminate the Agreement.
(c) Upon a default by the Developer, the Authority may terminate the Note and
eliminate the Development Property from the TIF District.
(d) Take whatever action, including legal, equitable or administrative action, which
may appear necessary or desirable to collect any payments due under this Agreement, or to
enforce performance and observance of any obligation, agreement, or covenant under this
Agreement.
Section 9.3. [Intentionally Omitted.]
Section 9.4. [Intentionally Omitted.]
Section 9.5. No Remedy Exclusive. No remedy herein conferred upon or reserved to any
party is intended to be exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power accruing upon any default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and power may be exercised from
time to time and as often as may be deemed expedient. To entitle the Authority to exercise any
remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be
required in this Article IX.
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Section 9.6. No Additional Waiver Implied by One Waiver. In the event any agreement
contained in this Agreement should be breached by either party and thereafter waived by the
other party, such waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other concurrent, previous or subsequent breach hereunder.
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ARTICLE X
Additional Provisions
Section 10.1. Conflict of Interests; Authority Representatives Not Individually Liable.
The Authority and the Developer, to the best of their respective knowledge, represent and agree
that no member, official, or employee of the Authority shall have any personal interest, direct or
indirect, in the Agreement, nor shall any such member, official, or employee participate in any
decision relating to the Agreement which affects his personal interests or the interests of any
corporation, partnership, or association in which he is, directly or indirectly, interested. No
member, official, or employee of the Authority shall be personally liable to the Developer, or any
successor in interest, in the event of any default or breach by the Authority or County or for any
amount which may become due to the Developer or successor or on any obligations under the
terms of the Agreement.
Section 10.2. Equal Employment Opportunity. The Developer, for itself and its
successors and assigns, agrees that during the construction of the Minimum Improvements
provided for in the Agreement it will comply with all applicable federal, state and local equal
employment and non-discrimination laws and regulations.
Section 10.3. Restrictions on Use. The Developer agrees that, prior to the Maturity Date,
the Developer, and such successors and assigns, shall devote the Development Property to the
operation of the Minimum Improvements as a distribution facility within the meaning of Section
469.176, subd. 4c of the TIF Act, and shall not discriminate upon the basis of race, color, creed,
sex or national origin in the sale, lease, or rental or in the use or occupancy of the Development
Property or any improvements erected or to be erected thereon, or any part thereof.
Section 10.4. Provisions Not Merged With Deed. None of the provisions of this
Agreement are intended to or shall be merged by reason of any deed transferring any interest in
the Development Property and any such deed shall not be deemed to affect or impair the
provisions and covenants of this Agreement.
Section 10.5. Titles of Articles and Sections. Any titles of the several parts, Articles, and
Sections of the Agreement are inserted for convenience of reference only and shall be
disregarded in construing or interpreting any of its provisions.
Section 10.6. Notices and Demands. Except as otherwise expressly provided in this
Agreement, a notice, demand, or other communication under the Agreement by either party to
the other shall be sufficiently given or delivered if it is dispatched by registered or certified mail,
postage prepaid, return receipt requested, or delivered personally; and
(a) in the case of the Developer, is addressed to or delivered personally to the
Developer at Schwan's Home Service, Inc., Attn: Sharon Van Moer, 115 West College Drive,
Marshall, MN 56258; and
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(b) in the case of the Authority, is addressed to or delivered personally to the
Authority at City Hall, 600 Town Center Parkway, Lino Lakes, MN 55014, Attn: Executive
Director.
or at such other address with respect to either such party as that party may, from time to time,
designate in writing and forward to the other as provided in this Section.
Section 10.7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one and the same instrument.
Section 10.8. Recording. The Authority may record this Agreement and any
amendments thereto with the Anoka County recorder. The Developer shall pay all costs for
recording.
Section 10.9. Minnesota Law. This Agreement will be construed in accordance with the
laws of the State, and any claim arising from this Agreement will be adjudicated in the State.
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IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed
in its name and behalf and its seal to be hereunto duly affixed and the Developer has caused this
Agreement.to be duly executed in its name and behalf as of the date first above written.
LINO LAKES ECONOMIC DEVELOPMENT
AUTHORITY
By
Its President
By
Its Executive Director
STATE OF MINNESOTA )
) SS.
COUNTY OF ANOKA )
The foregoing instrument was acknowledged before me this day of , 2005
by and , the President and Executive Director of the Lino Lakes
Economic Development Authority, on behalf of the Authority.
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Notary Public
25
STATE OF
COUNTY OF
The
2005 by
Inc., a
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) SS.
SCHWAN'S HOME SERVICE, INC.
By
Its
foregoing instrument was acknowledged before me this day of
the of Schwan's Home Service,
corporation, on behalf of the corporation.
Notary Public
26
SCHEDULE A
DEVELOPMENT PROPERTY
As to that part of said Lot 3 contained in Section 18, Township 31, Range 22: Glenn Rehbein
Excavating, Inc., a Minnesota corporation; as to that part of said Lot 3, contained within Section
17, Township 31, Range 22: Glenn R. Rehbein and Myrna L. Rehbein, husband and wife, as
joint tenants, as to an undivided 1/2 interest, created by Deed dated July 21, 1975, recorded
August 18, 1975, as Document No. 431425; Glenn R. Rehbein as to an undivided 1/12 interest;
Myrna L. Rehbein as to an undivided 1/12 interest; Clyde L. Rehbein as to an undivided 1/12
interest; Arlene M. Rehbein as to an undivided 1/12 interest; Michael D. Winge as to an
undivided 1/12 interest; Cheryl P. Winge as to an undivided 1/12 interest.
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A-1
SCHEDULE B
CERTIFICATE OF COMPLETION
The undersigned hereby certifies that Schwan's Home Service, Inc. (the "Developer")
has fully complied with its obligations under Articles III and IV of that document titled
"Contract for Private Development," dated , 2005 between the Lino Lakes Economic
Development Authority and the Developer (the "Contract"), with respect to construction of the
Minimum Improvements in accordance with the Construction Plans, and that the Developer is
released and forever discharged from its obligations to construct of the Minimum Improvements
under Articles III and IV.
Dated: , 20 LINO LAKES ECONOMIC DEVELOPMENT
AUTHORITY
By
Executive Director
STATE OF MINNESOTA )
) SS.
COUNTY OF ANOKA )
The foregoing instrument was acknowledged before me this day of , 2005
by and , the Executive Director of the Lino Lakes Economic
Development Authority, on behalf of the Authority.
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Notary Public
B-1
SCHEDULE C
Authorizing Resolution
LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY
RESOLUTION NO.
RESOLUTION APPROVING CONTRACT FOR PRIVATE DEVELOPMENT AND
AWARDING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS
AND DIRECTIONS FOR THE ISSUANCE OF ITS $91,715 TAX INCREMENT
REVENUE NOTE, SERIES 2005.
BE IT RESOLVED BY the Board of Commissioners ("Board") of the Lino Lakes
Economic Development Authority (the "Authority") as follows:
Section 1. Authorization; Award of Sale.
1.01. Authorization. The Authority has heretofore approved the establishment of Tax
Increment Financing District No. 1-10 (the "TIF District") within Development District No. 1
("Project"), and have adopted a tax increment financing plan for the purpose of financing 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
Development District. 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 $91,715 Tax
Increment Revenue Note, Series 2005 (the "Note") for the purpose of financing certain public
development costs of the Project.
1.02. Agreement Approved; Issuance, Sale, and Terms of the Note. The Authority
hereby approves the Contract for Private Development (the "Agreement") between the Authority
and the Schwan's Home Service, Inc. (the "Owner") and 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. Pursuant to the Agreement, the Note shall be sold to the Owner. The Note shall
be dated as of the date of deliver. The Authority shall receive in exchange for the sale of the
Note the agreement of the Owner to pay the Site Improvement 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 following form, with
the blanks to be properly filled in and the principal amount and payment schedule adjusted as of
the date of issue:
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C-1
UNITED STATE OF AMERICA
STATE OF MINNESOTA
COUNTY OF ANOKA
LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY
No. R-1 $91,715
TAX INCREMENT REVENUE NOTE
SERIES 20
Date
of Original Issue
The Lino Lakes Economic Development Authority (the "Authority"), for value received,
certifies that it is indebted and hereby promises to pay to Schwan's Home Service, Inc. or
registered assigns (the "Owner"), the principal sum of $91,715, without interest thereon, as and
to the extent set forth herein.
1. Payments. Principal payments ("Payments") shall be paid on August 1, 2006 and
each February 1 and August 1 thereafter to and including February 1, 2011 ("Payment Dates") in
the amounts and from the sources set forth in Section 2 herein.
Payments are payable by mail to the address of the Owner or such other address as the
Owner may designate upon 30 days written notice to the Authority. Payments on this Note are
payable in any coin or currency of the United States of America which, on the Payment Date, is
legal tender for the payment of public and private debts.
2. Available Tax Increment. Payments on this Note are payable on each Payment
Date in the amount of and solely from "Available Tax Increment," which means, on each
Payment Date, 95 percent of the Tax Increment attributable to the Development Property and
paid to the Authority by Anoka County in the six months preceding the Payment Date, all as
such terms are defined in the Contract for Private Development between the Authority and
Owner dated as of , 2005 (the "Agreement").
Available Tax Increment shall not include any Tax Increment if, as of any Payment Date,
there is an uncured Event of Default under the Agreement.
The Authority shall have no obligation to make any payment on this Note on any
Payment Date from any source other than Available Tax Increment, and the failure of the
Authority to pay principal on any Payment Date shall not constitute a default hereunder as long
as the Authority pays principal to the extent of Available Tax Increment. The Authority shall
have no obligation to pay unpaid balance of principal that may remain after the final Payment on
February 1, 2011.
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C-2
4. Optional Prepayment. The principal sum payable under this Note is prepayable in
whole or in part at any time by the Authority without premium or penalty.
5. Termination. At the Authority's option, this Note shall terminate and the
Authority's obligation to make any payments under this Note shall be discharged upon the
occurrence of an Event of Default on the part of the Developer as defined in Section 9.1 of the
Agreement, but only if the Event of Default has not been cured in accordance with Section 9.2 of
the Agreement.
6. Nature of Obligation. This Note is one of an issue in the total principal amount of
$91,715, all issued to aid in financing certain public development costs and administrative costs
of a Project undertaken by the Authority pursuant to Minnesota Statutes, Sections 469.125
through 469.134, and is issued pursuant to an authorizing resolution (the "Resolution") duly
adopted by the Authority on February 28, 2005 pursuant to and in full conformity with the
Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174
to 469.179. This Note is a limited obligation of the Authority which is payable solely from
Available Tax Increment pledged to the payment hereof under the Resolution. This Note shall
not be deemed to constitute a general obligation of the State of Minnesota or any political
subdivision thereof, including, without limitation, the Authority. Neither the State of Minnesota,
nor any political subdivision thereof shall be obligated to pay the principal of this Note or other
costs incident hereto except out of Available Tax Increment, and neither the full faith and credit
nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to
the payment of the principal of this Note or other costs incident hereto.
7. Registration and Transfer. This Note is issuable only as a fully registered note
without coupons. As provided in the Resolution, and subject to certain limitations set forth
therein, this Note is transferable upon the books of the Authority kept for that purpose at the
principal office of the Authority Administrator, by the Owner hereof in person or by such
Owner's attorney duly authorized in writing, upon surrender of this Note together with a written
instrument of transfer satisfactory to the Authority, duly executed by the Owner. Upon such
transfer or exchange and the payment by the Owner of any tax, fee, or governmental charge
required to be paid by the Authority with respect to such transfer or exchange, there will be
issued in the name of the transferee a new Note of the same aggregate principal amount, bearing
no interest and maturing on the same dates.
This 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 an opinion of counsel or a
certificate of the transferor, in a form satisfactory to the Authority, that such transfer is exempt
from registration and prospectus delivery requirements of federal and applicable state securities
laws.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things
required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen,
and to be performed in order to make. this Note a valid and binding limited obligation of the
Authority according to its terms, have been done, do exist, have happened, and have been
performed in due form, time and manner as so required.
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IN WITNESS WHEREOF, the Board of Commissioners of the Lino Lakes Economic
Development Authority has caused this Note to be executed with the manual signatures of its
President and Executive Director, all as of the Date of Original Issue specified above.
LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY
Executive Director President
REGISTRATION PROVISIONS
The ownership of the unpaid balance of the within Note is registered in the bond register
of the City Finance Director, in the name of the person last listed below.
Date of
Registration
Director
Registered Owner
Schwan's Home Service, Inc.
Federal Tax I.D. No. 41-0879087
Section 3. Terms, Execution and Delivery.
Signature of
City Finance
3.01. Denomination, Payment. The Note shall be issued as a single typewritten note
numbered R-1.
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. Payment Dates. Installments of 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 City Finance Director to perform
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
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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 an opinion of counsel or a certificate of the transferor, in a
form 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 Registrar in connection therewith; and, in the case
the 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
Authority's 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
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