4.9. SR 04-20-2015 �j
Elk = - Request for Action
River
To Item Number
Mayor and City Council 4.9
Agenda Section Meeting Date Prepared by
Consent Aril 20, 2015 Amanda Othoudt, EDD
Item Description Reviewed by
Contingent Sale of Lots 1 and 2, Block 2, Natures Jeremy Barnhart, Deputy Director, CODD
Edge Business Center II to Envision Companies Reviewed by
dba Sportech, Inc. Cal Portner, City Administrator
Action Requested
Approve, by motion, the purchase agreement for the contingent sale of Lots 1 and 2,Block 2, Natures
Edge Business Center II to Envision Companies, dba Sportech, Inc.
Background/Discussion
At their special meeting on March 13, 2015, the EDA recommended approval of a purchase agreement to
sell Lots 1 and 2, Block 2, NEBCII to Envision Companies, dba Sportech, Inc.
The purchase agreement proposes the sale of the lots at the appraised value of$1,288,590.
Envision Companies will pay $1 at closing and the City Development Fund will be reimbursed through
the abatement of city taxes collected on the property for the full appraised value. This is similar to the
structured agreement when Sportech purchased the lot in Northstar Business Park in 2012. Acceptance
of the purchase agreement does not constitute approval of the business subsidy application.
In exchange for selling the land for one dollar, Sportech proposes to construct an industrial building with
a value of$3.8 million, provide a certain number of jobs, and maintain operations at the property for at
least 10 years.
A subsidiary of the purchase agreement is a Promissory Note and a mortgage agreement. These
documents are intended to secure the city's interests as suggested by the EDA's attorney, by guaranteeing
satisfaction of the items above.
The note will be payable in semiannual payments each year during the abatement period,until the three
requirements are satisfied.
A mortgage agreement will provide the security for the city. The land and improvements, fixtures and
personal property, and leases and rents will be secured by the city up until sale-leaseback by a third party
real estate holding company. The mortgage will be satisfied and released upon completion of the three
events.
The City Development Fund financed, in part, the improvements serving the subject property. It is
intended that tax abatement be used to collect taxes generated by the property and be diverted to the
development fund over the term of the abatement,usually 10-15 years. It is expected that the county will
p 0 W I R E a 0
NA UREJ
participate, and their portion of the taxes would supplement the development fund income. If they don't,
the full market value of the property will not be collected.
Sportech, Inc. proposes closing by August 31, 2015, though this date may change through mutual
agreement. The contingency date is July 31, 2015. Contingencies include: Environmental testing, land
use approvals (rezoning, lot combination, easement vacation, site plan approval, tax abatement), and clean
title.
Analysis
The agreement proposes the sale at the appraised value, paid by property tax abatement. The use of the
property is consistent with the strategic plan of the EDA, and generally the Comprehensive Plan, though
a rezoning will be necessary.
Financial Impact
N/A
Attachments
■ Purchase agreement (to be distributed at the meeting)