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RES 13-53 i CITY OF ELK RIVER COUNTY OF SHERBURNE STATE OF MINNESOTA RESOLUTION NO. 13-53 RESOLUTION APPROVING THE MODIFICATION OF THE DEVELOPMENT PROGRAM FOR A DEVELOPMENT DISTRICT NO. 1, ESTABLISHING A TAX INCREMENT FINANCING DISTRICT, APPROVING A TAX INCREMENT FINANCING PLAN THEREFOR AND AUTHORIZING THE EXECUTION OF A DEVELOPMENT AGREEMENT BE IT RESOLVED by the City Council (the "Council") of the City of Elk River, Mimiesota(the "City"), as follows: Section 1. Recitals. 1.01. It has been proposed that the City modify the Development Program (the "Program Modification") for Development District No. 1 (the "Development District"), establish Tax Increment Financing District No. 23 within the Development District (the "TIF District") and adopt the related Tax Increment Financing Plan therefor (the "TIF Plan") all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.124 through 469.133 and Sections 469.174 through 469.1794, as amended (the "TIF Act"), all as reflected in that certain document entitled "Modification to the Development Program for Development District No. 1 and the Tax Increment Financing Plan for Tax Increment Financing (Economic Development) District No. 23 (Preferred Powder Coating Project)", and presented for the Council's consideration. 1.02. The City has performed all actions required by law to be performed prior to the modification and approval of the Program Modification and the TIF Plan, delivery of the Program Modification and the TIF Plan to the Board of Sherburne County (the "County") and the Board of Independent School District No. 728 (the "School District"), and the holding of a public hearing by the City thereon following notice thereof published in the City's official newspaper at least 10 but not more than 30 days prior to the public hearing. 1.03. The Council has investigated the facts relating to the Program Modification and the TIF Plan; at the public hearing the City Council heard testimony from all interested parties on the TIF Plan; the City Council has considered the documentation submitted in support of the TIF District and TIF Plan, including data, information and/or substantiation constituting or relating to why the TIF District meets the requirements to be an economic development tax increment financing district and why the assistance satisfies the "but for" test; and the City Council has taken into account the information and knowledge gained in hearings upon and during consideration of other matters relating to the proposed Development. 1.04. The City has caused to be prepared a Development Agreement, among the City, and Preferred Real Estate Holdings, LLC (the "Developer") and Preferred Powder Coating, LLC (the "Company"), a form of which is on file with the City, pursuant to which the Developer 430951Q JSB ELI 85-22 agrees to construct the Development described below and the City agrees to provide tax increment assistance for the costs of the Development (the "Development Agreement") and an Agreement of Purchase and Sale, between the City and the Developer, a form of which is on file with the City, pursuant to which the City agrees to sell to the Developer approximately 10.36 acres of real property on which the Development will be constructed (the "Purchase Agreement"). Section 2. Findings for the Adoption and Approval of the Program Modification and TIF Plan. 2.01. The City Council hereby finds that the TIF District is in the public interest and is an "economic development district" within the meaning of Minnesota Statutes, Section 469.174, Subd. 12, because it will result in increased employment in the state and it will result in preservation and enhancement of the tax base of the state. In addition, the TIF District will facilitate the increase in manufacturing in the City by the construction of an approximately 100,224 square foot manufacturing facility for the Company, a metal powder coating company (the "Development"), and at least 85% of the facility will be used for manufacturing, warehousing, distribution, or research, with less than 15% available for office or other space not related to such functions. Based on representations by the Developer and the Company, the City finds that the Development will be fully constructed in 2013. The City finds that jobs will be created and maintained in this state, including construction jobs. 2.02. The City Council hereby makes the following additional findings in connection with the Tax Increment District: (a) The City Council further finds that the proposed Development, in the opinion of the City Council, would not occur solely through private investment within the reasonably foreseeable future and,therefore,the use of tax increment financing is deemed necessary. The specific basis for such finding being: The property on which the Development will occur would not be developed in the reasonably foreseeable future due to the high costs related to construction of manufacturing facilities and the acquisition and development of the site, including extraordinary site improvement costs associated with wetlands remediation and development of the site. The Developer and the Company have represented that they could not proceed with the development without tax increment assistance. (b) The City Council further finds that the TIF Plan conforms to the general plan for the development or redevelopment of the City as a whole. The specific basis for such finding being: The TIF Plan will generally compliment and serve to implement policies adopted in the City's comprehensive plan. The Development contemplated is in accordance with the existing zoning for the property and the City's Plamling Commission has determined that the Development is consistent with the comprehensive plan. 2 430951v2 JSB EU 85-22 I i (c) The City Council further finds that the TIF Plan will afford maximum opportunity consistent with the sound needs of the City as a whole for the development of the TIF District by private enterprise. The specific basis for such finding being: i The proposed assistance will help finance public costs related to the Development. The Development will increase the taxable market valuation of the City, and increase manufacturing facilities in the City. (d) For purposes of compliance with Minnesota Statutes, Section 469.175, Subdivision 3(d), the City Council hereby finds that the increased market value of the property to be developed within the TIF District that could reasonably be expected to occur without the use of tax increment financing is $0, which is less than $4,029,653, which is the increased market value estimated to result from the proposed development (i.e., $5,101,056) less the present value of the projected tax increments for the maximum duration of the TIF District (i.e., approximately ($1,071,403). In making these findings, the City Council has noted that the property has not been developed for many years and would likely remain undeveloped if tax increment financing were not available. Thus, the use of tax increment financing will be a positive net gain to the City, the School District, and the County, and the tax increment assistance does not exceed the benefit which will be derived therefrom. The provisions of this Section 2.02 are hereby incorporated by reference into and made a pant of the TIF Plan. i 2.03. The Council further finds that the Program Modification and the TIF Plan are intended and in the judgment of the Council their effect will be to promote the public purposes and accomplish the objectives specified in the TIF Plan for the TIF District and the Development Program for the Development District. Section 3. Approval of Development Agreement. 3.01. The Development Agreement and the Purchase Agreement as presented to the City Council is hereby in all respects approved, in substantially the forms submitted, together with any related documents necessary in connection therewith (collectively, the "Documents") and the Mayor and the City Administrator are hereby authorized and directed to execute the Documents on behalf of the City and to carry out, on behalf of the City, the City's obligations li thereunder. 3.02. The approval hereby given to the Documents includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by legal counsel to the City and by the officers authorized herein to execute said documents prior to their execution; and said officers are hereby authorized to approve said changes on behalf of the City. The execution of any instrument by the appropriate officers of the City herein authorized shall be conclusive evidence of the approval of such document in accordance with the terms hereof. In the event of absence or disability of the officers, any of the Documents authorized by this Resolution to be executed may be executed without further act or authorization of the City I 3 430951v2 JSB EL185-22 i Council by any duly designated acting official, or by such other officer or officers of the City Council as, in the opinion of the City Attorney, may act in their behalf. Section 4. Effective Date. This resolution is effective upon execution in full of the Contract. Adopted this 3rd day of September, 2013. ay ATTEST: s City Clerk 4 430951v2 JSB ELI 85-22