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6.2 EDSR 07-20-2015 t of Request for Action River To Item Number Economic Development Authority 6.2 Agenda Section Meeting Date Prepared by General Business July 20,2015 Amanda Othoudt, EDD Item Description Reviewed by Morrell Companies Property Tax Abatement Cal Portner, City Administrator Financing Reviewed by Action Requested Approve,by motion, and provide a recommendation to City Council for Property Tax Abatement Assistance for Scott Morrell,LLC/Morrell Oversize (Morrell Companies). Background/Discussion The Finance Committee reviewed and recommended the EDA approve Morrell Companies application for Property Tax Abatement financing. Scott Morrell,LLC is requesting a 15 year pay-as-you-go Tax Abatement from the city of Elk River for up to $121,905. The tax abatement will allow Morrell Companies to purchase the property in Natures Edge Business Center and to support annual cash flow for debt service on the approximate $2.380M project to be financed in combination of debt, equity, and EDA Jobs Incentive Microloan. The county also received a tax abatement application that they considered at their July 7 County Board meeting with formal review and a public hearing anticipated for August 4 in the amount of 89,300 for a term of 10 years. Morrell Companies is a full-service carrier offering a variety of standard and specialized transportation services. The project proposal includes a wash facility,light duty maintenance,and office space. They currently employ 105 people with an average hourly wage of$23/hour. Of the 105 employees, 13 FTE are employed by Morrell Oversize with an average hourly wage of$27.94/hour. Morrell Companies is proposing to hire 8 FTE with the proposed expansion. The proposed project would consist of a 13,824 square foot facility with an estimated taxable value of approximately$859,000. The project is estimated to generate$160,500 in total property taxes per year upon completion. The city share of the property taxes abated per year equal approximately$8,107. The project scored 39 out of 45 total possible points. Based on the analysis provided by Springsted,it appears that Morrell Companies would not proceed with the project without assistance. A public hearing has been scheduled for the July 20 City Council meeting to invite comments from the public.A public hearing must be held for any business subsidy in the amount greater than$150,000. [ 1111E1 / r NATURE Financial Impact Up to $121,905 in city tax abatement assistance, to be distributed"pay as you go" for 15 years. This abates the entire city share of taxes on the property. Attachments • Property Tax Abatement Application • Springsted Analysis (April 23, 2015) • Property Tax Abatement Agreement N:\Departments\Community Development\Economic Development\EDA\Administrative\Agenda\EDA Agenda Packets\2015\7-20-2015\6.2 sr Morrell Companies Property Tax Abatement.docx M i May 26, 2015 City of Elk River ATTN:Amanda Othoudt 13065 Orono Parkway Elk River, MN 55330 RE: City of Elk River Tax Abatement Application—Morrell Companies Dear Ms.Othoudt, This letter is my official pledge of commitment to break ground on our proposed 13,824 square foot expansion located at 10755 170th Circle NW, Elk River, MN, no later than August 31, 2015 We are planning on moving into our new facility and begin operations by the Summer of 2016. If you have any questions or need additional information, please do not hesitate to contact Annie Deckert, Decklan Group,at 763-568-9498. I appreciate your time. Respectf 1 • - y •rre President/Owner Morrell Comp. -s/Scott Morrell, LLC Attached.City of Elk River Tax Abatement Application VIII. APPLICATION FOR TAX ABATEMENT A. APPLICANT INFORMATION Name of Corporation/Partnership C a } 1 100 r I , L L C / M o OVe-tte.l,: Address 10 - 55 170 Hi C1f•-GIL Primary Contact A1,101r DecItvf_-� l Tt��-- N4or-r-ct Address j12 ItAolitn �i NWT SV�4 250 %114- - ■ 1N 55'3O Phone 1b2) 56 1111 x Email 011'►v►lec�c�rck�o,�..01°-ovp• Lon-, Brief description of the corporation/partnership's business, including history,principal product or service: MOP-p-ell Lo Nip alwrS 14 o, bv6linrLS lnw,S G'C�• iv+ 11'i�c�- 5once i'11.L• It ',rte.., nt v, 4,00,.►ti.or+ Co1Fytielf- t Gowp- - f o►►,d h�1S yIMt-c growv1 +0 a fv+ll 6sP-VIC-c C•iP4AVI- wk1 -k of Va,S1 g^ .c{.r of scv-vACC-S V A41:,}ot.....1 fo r-vvcc- o r o N L7 s•o ✓+G. J Brief description of the proposed project: 1 L r ., Mo X11 t7�ev-AP 1 1y pr-op;61 vg-6 bV:�l� a► 13, 02.4 s-I. T l.f'AL,1,-1,, o►,"G�r o wwc.k P.,tt-ccl t/h N�BG Thr Co Nw,:•■ "pp I- ,dam•► -1Lc PA o.- *Lis 4.0e, otc.P-c Po,Q-Gc l o►'' 3/i V! IS • 41...LA l-e wi I I pcc.nd fwt.:.1'4,, l - YMOn�C...v+✓CG ) o ffX r S rig-c- cow- t1•r Pvv�:�hq C o .1- Attorney Name rle iF-°I `4 -s`1iG, L4 l • Address 1,01 Mifn►-.cyo}a-p N, 'Vitt-4, MN G( 3 Phone -t 12..1Z.1' L Fax Z-1012.7. b114 Email t-KO F-1:Waw 4.1A- Accountant Name Gott oUlzF-, .011CV- u-r Address 22 5 5 o✓-1 L %vb. St. 4•43°10, Mp K, MN 65402, Phone bIL• 371 001 0 Fax Email Contractor Name C 106S1 C Lo1^0c o6-+, CJ,- -V St>( .•l Address 1,114SSn ct Ns , E".1 • MN 95011 I' Phone -7(72).434' 470 Fax�63. 43�'71Zo Email GORGI^SrStCco►.51 ►-, Engineer Name Ce."4't`14 J OC%tw'" n Soy. A►-.de -tov, Address 1360 l iil A1-4,tot^ AVz 11�"ol�+►. �✓►N 5�303 Phone-11,3. c65 •- 0465 Fax 1L3 427.0x720 Email G ' tJ '� �o�w"1P1C•Co"'In Architect Name �I Address Phone Fax Email Page 8of 14 r o r t o t o o r NATURE B. PROJECT INFORMATION 1. 'lhe project will be: p Industrial: -e New Construction '[ Expansion Redevelopment / Rehab. Office/research facility that conforms to Business Park zoning standards Commercial Redevelopment/Rehabilitation Other 2. In aidition to the City of Elk River, applicant is requesting Tax Abatement from: Sherburne County School District 728 3. The project will be:i Owner Occupied Leased Space 4. Project Address 1 0 7 5 5 170 h GI KI t Parcel Identification Number(s) 75 . 01,0• 0 V0 5. Site Plan and Construction Plans Attached: ^ Yes No L. !'oral Amount of Tax Abatement Kequeste Z 101 °�05 over 10+years. City Portion: Annual $ 101 Total $ (Z I, IOo� 15 .K County Portion: Annual $ t 1' 0 Total$ e1,'h 00 (10-iv' ISD 728 Portion: Annual $ Total $ 7. Current Real Estate Taxes on Project Site: $ Estimated Real Estate Taxes upon Completion: Phase I $ 'J 5, 3 I I Phase II $ 8. Construction Start Date: b 1 AVI1 I. l_O I Construction Completion Date: 5L )1 1'— 20 I to If Phased Project: Year "'0 Completed Year Completed C. PUBLIC PURPOSE It is the policy of the City of Elk River that the use of Tax Abatement should result in a benefit to the public. Please indicate how this project will serve a public�0 ublic pu ose. —1 Job Creation/Retention Number of existing jobs I F T L l;I II a7-e Number of jobs created by project F Average hourly wage of jobs created/retained Z7. 4 '\New industrial development which will result in additional private Ivestment in the area. nhancement and/or diversification of the City of Elk River's economic base. The project contributes to the fulfillment of the City's Economic Development Strategic Plan. Removal of blight. Rehabilitation of a high profile or priority site. Significantly increase the City's tax base. Page 9of 14 1111111 A NATURE D. SOURCES & USES SOURCES NAME AMOUNT Bank Loan ih-v-6014-0 f 5,1 k-11-■`k:11-- $ 110) 01 &45 Other Private Funds $ Owner Cash Equity $ 0 0 , 0 00 Fed Grant/Loan $ State Grant/Loan $ EDA Micro Loan $ P0100 0 Tax Abatement $ ID Bonds $ TOTAL $ j., 3(b010+5 USES AMOUNT Land Acquisition $ 41j 35 I Site Development -1-- $ Construction = $ li St4, 769 Machinery& Equipment $ el 0 i V00 Architectural& Engineering Fees $ Lege4-Fee{P lav-FrW ok.0,1 if Grill•C 0•••) $ 5 5 i Sth Interest During Construction $ Debt Service Reserve $ Contingencies $ L Oi 000 TOTAL $ a-J 3e01 549 l'ap,e it)()I 14 111111110 9 ! NATURE E. ADDITIONAL DOCUMENTATION AND CHECKLIST Applicants will also be required to provide the following documentation: A) Written business plan, including a description of the business, ownership/management, date established,products and services,and future plans B) Financial Statements for Past Two Years Profit & Loss Statement Balance Sheet C) Current Financial Statements Profit &Loss Statement to Date Balance Sheet to Date D) Two Year Financial Projections E) Personal Financial Statements of all Major Shareholders Profit& Loss Current Tax Return 1') Letter of Commitment from Applicant Pledging to Complete During the Proposed Project Duration G) Letter of Commitment from the Other Sources of Financing, Stating Terms and Conditions of their Participation in the Project H) Application deposit of$5,000,with any unused portion to be refunded if project does not proceed I) Construction Plans and Itemized Project Construction Statement J) Attach the following documentation as Exhibits Exhibit A —Corporation/Partnership Description Exhibit B —Description of Project Exhibit C —List of Shareholders/Partners Exhibit D— 13n!-For Analysis Exhibit E—List of Prospective Lessees Exhibit I —Legal Description and PID Number(s) Note: All Major shareholders will be required to sign personal guarantees and a minimum assessment agreement if up front financing of the project is required. The undersigned certifies that all information provided in this application is true and correct to the best of the undersigned's knowledge. The undersigned authorizes the City of Elk River to check credit references,verify financial and other information,and share this information with other political subdivisions as needed. The undersigned also agrees to provide any additional information as may be requested by the City after the filing of this application. Applicant Name ` .' Date Page' 11 of 14 IIMEAtI it �NATUREI Project Narrative — Morrell Companies Tax Abatement City of Elk River Background Morrell Companies is a family owned business which has been located in Elk River since 1962. Larry and Arlyce Morrell started the business as a common carrier trucking company,and after recognizing the growth potential of the business,opened an aggregate division in 1974. Throughout the years, numerous additional divisions were formed to haul concrete products, recycling material and heavy equipment. With this growth,the entire family became involved in the family business in a variety of capacities,and this involvement as allowed for continued growth and expansion. Morrell Companies was originally located on the corner of Jackson &School Street. In 1996,Morrell Companies built a 36,000 sq.ft.facility at their current location; 10752 171st Ave NW,without any assistance through businesses subsidies. This facility has provided them an even greater ability to serve their customers,while providing enough room for expansion. In the early 2000s,Todd,Terry and Trent Morrell transitioned into leadership positions within the company,with their mother and father stepping down to work in the company on a part time basis. Morrell Companies is now a full service carrier which offers a vast variety of standard and specialized transportation services. The current property is owned by Morrell Properties, LLC(a holding company),with Morrell Oversize Inc.,operating out of the facility. There are several other divisions of the entire organization which operate out of this facility. Recognizing the opportunity for growth, Morrell Oversize is looking to expand its operations onto the 4.08 acre lot adjacent to the current facility. Corporation/Partnership Description Scott Morrell, LLC(real estate entity)is owned By Terry and Renee Morrell Morrell Oversize, Inc. (business entity)is owned by Renee Morrell Project On March 16,2015,the Elk River EDA and City Council approved the purchase agreement for Morrell Oversize to expand their operation on a 4.08 acre lot in city owned Nature's Edge Business Center.Terry Morrell, is proposing to build a 13,824 square foot facility. The facility will provide a wash facility,light duty maintenance and office space for the growing company. The property will be owned by Scott Morrell, LLC(holding company). This expansion provides Morrell Oversize a huge opportunity for growth,creating new job opportunities for the Elk River community, and ensuring the long term success of Morrell Companies as a whole. Project Benefits Morrell Companies is a long-standing community business which has operated in the Elk River community for over 50 years; providing significant tax base, and well-paying jobs for the Elk River Community. Morrell Companies currently employ 105 people at an average hourly wage of$23/hr. Of these 105 FTE, 13 FTE are employed by Morrell Oversize with an average hourly wage of$27.94/hr, Morrell Oversize plans on hiring a minimum of 8 FTE within the next two years, paying an average of $23.21 an hour,as a result of this expansion. Since 2003,the Morrell's have paid nearly$1M in property taxes. Their proposed expansion is estimated to generate$35,311 a year in property taxes, bringing their total tax contribution to over $125,000 annually. According to Sherburne County,the proposed Morrell Oversize expansion is eligible for a total of $17,037/yr in abatement between the city and the county: • City:$8,107/yr • County:$8,930/yr In addition to the increase in tax base,the sale a city owned property,and creation of jobs,the attached economic impact study indicates that this project will not only increase the overall sustainability of Morrell Companies,but the expansion of Morrell Oversize will: • Create five indirect and induced jobs throughout the local economy, which will pay $36,628 in average annual salary,or$17.61 per hour • Increase consumer expenditures by$316,019 annually • Bring a total of 13 direct and indirect jobs into the area • Bring 7 residents to Elk River • Bring 17 residents to Sherburne County Enclosed you will find a 3`d party economic impact study which outlines the specific economic impacts of this project to Elk River and Sherburne County. Subsidy Impact To ensure this project moves forward in the City of Elk River and Sherburne County,Morrell Oversize is asking for pay-as-you-go tax abatement assistance from both entities. Based upon the project information,Assistant County Administrator Dan Weber has provided the following annual tax estimate: • County=$8,930 • City=$8,107 • School=$7,299 • State=$8,354 • MV=$1,798 • Other=$823 • Total=$35,311 Looking at the attached projections,to help ensure business sustainability and total project cost, Morrell Oversize is asking for a total of$210,905 in pay-as-you-go abatement;with$121,605 coming from the City of Elk River. This number is calculated based upon$8,107/yr for fifteen years. Looking at past projects Elk River has granted abatement to,this is a comparable request. Since 2004, Elk River has granted abatement to twelve businesses,with terms ranging from 10-15 years. Businesses who received abatement for 15 years include: • Envision Company, LLC(Sportech).$460,000,total of$920,00 with County abatement • O'Brien Holdings (CDI),$138,470,total of$276,940 with County Abatement • Medical Extrusion Technologies, $114,998,total of$229,996 with County abatement • Provo Enterprises(Alliance Machine),$103,978, total of$207,956 with County abatement Business who received abatement for 10-12 years include: • United HealthCare, 10 years,$850,000 • The Bank of Elk River, 12 years,$195,000,total of$495,000 with County abatement • Quality Label, 10 years,$133,947,total of$267,894 with County abatement • Orluck Industries, 12 years, $100,760,total of$201,520 with County abatement Morrell's longstanding presence in the Elk River community,existing jobs and average hourly rate far exceed past projects receiving abatement. The most recent tax incentive provided to an Elk River business was Preferred Powder Coating,who received approximately$1.15M up front,with a total project cost of over$6M,or 19%of the total project cost. Morrell's request is 8.9% of total project cost. Morrell Oversize is also applying for tax abatement from the Sherburne County,to help offset the cost of their$2.38M project,and ensure their long-term success. The attached projections demonstrate the need for the pay-as-you-go abatement over the course of 15 years. Initial scoring on the City's current tax abatement applications shows the project scoring a minimum of 30(moderate desirability),assuming worst case scenario for question 10. In the 50 years of operation, Morrell Companies has never applied for, nor received, any business subsidies to operate their business. How the Project Meets Public Purpose This project serves four of the public purposes as outlined in the City of Elk River Tax Abatement Application: Job Creation/Retention Upon completing their expansion, Morrell Companies anticipates hiring 8 FTE within two years, averaging$23.21/hr. Additional job creation is outlined above. Enhancement and/or diversification of the City of Elk River's Economic Base and Significantly increases the City's tax base This project will both enhance and diversify the city's economic base, and increase the city's tax base. Not only will this project bring a non-tax generated parcel onto the tax rolls in perpetuity,but based on the County Assessors initial valuation of the project,Morrell Companies will pay approximately$35,311 in taxes. While Morrell Companies is seeking abatement dollars from both the city and county, Independent School District 728 will receive approximately$7,299 a year in taxes per year upon project completion. The project contributes to the fulfillment of the City's Economic Development Strategic Plan The proposed project contributes to the first goal of the City's Economic Development Strategic Plan: Business Development-attract new businesses and support existing businesses to increase the city's industrial tax base,commercial tax base and employment base. Morrell Oversize's expansion supports the following Commercial Strategies as outlined in the Strategic Plan: y Promote available sites,encourage business retention and expansion to grow existing commercial base with business recruitment/attraction techniques Diversify economic base to include a wide variety of retail and service industries,as well as additional fine dining opportunities Please see information included in Job Creation/Retention, Enhancement and/or diversification of the City of Elk River's Economic Base and significantly increases the city's tax base. Legal Description&PID Lot 1, Blk 2 Nature's Edge Business Center 75-820-0205 MORRELL ENTERPRISE OVERSIZE GOVERNING SPECIFICATIONS THE 2014 EDITION OF THE MINNESOTA DEPARTMENT OF TRANSPORTATION CONSTRUCTION PLANS FOR SITE GRADING AND PARKING LOT AND MISCELLANEOUS CONSTRUCTION UVPNL(YREDNT:PPESPCCAIIONS TOR T CONSTRUCTION" AH "MATERIALS L006 LOT 1,BLOCK 2,NATURES EDGE BUSINESS CENTER SITE WORN. THE 2013 EDITIp!OF THE CITY ENGINEERS ASSOCIATION OF MINNESOTA CITY OF ELK RIVER "STANDARD SPECIFICATIONS`SHALL GOVERN FOR UTILITY NORA. AU.FEDERAL,STATE AND LOCAL LAWS.REGULATIONS.AND ORDINANCES SHALL BE COMPLIED WITH IN THE CONSTRUCTION OF THIS PROJECT. All TRAFFIC CONTROL OEVNCES AND 5WNING SHALL COMFONM 10 THE • ICES.INCLUDING ING THE 114 MINNESOTA A T FIELD MANUAL FOR TEMPORARY I TRAFFIC CONTROL \ 1 , CONTROL ZONE LAYOUTS. 1v V -� .`� j� DEVELOPER/OWNER \ TERRY MORRELL —_ __ — SHEET INDEX - `\ . A - --"`_^— J' MORRELL ENTERPRISE OVERSIZE.HNC- THIS PLAN CONTAINS 7 SHEETS ■ 10752 171ST AVENUE NW .� Ili -"t �� ` I ` I' ELM RIVER,MN 55330 SN FAT NO 010.0 344(01 \ ��. l -_V , \� ¢me�a�nrweroAmllso sam z cvi iDH NOTES.TYPICAL stcna+s.AND PROJECT LLarND -'� ∎ A �''' I ENGINEER/SURVEYOR s 4 EASING TOPOGRAPHY AND REMOVALS PLAN \ I -•�I I NAMANSON ANDERSON 6 GAMING,DRAINAGE 1262SI IN CONTROL PLAN Y. 7 1 �C"� t r"�i .T7, } 5601 THURSTON AVE. MUTT AMO PANNO 1LW 7 I/ \ \ ---1 AROMA,MN 55303 . `I t tRA10 J.JOOiVY,P.E p, ", / V �_, CHARLES R.CHRISTOPNERSON.0.L.5. '1 ! 763-427-6860 ,.> \ L Emalir Crbp.NlNea-Irlc.c.m rte, ,,. «\\ ,, \___ I 1 H t I\v I IA - _ r v a _--- I I / " i ,'d _ 1 . . _______V ■1 1 � C � l� ! ( I:�—' , 17�n Avg _ y o _i�!em®cmt � ��'` f`l \\ ,� -- i � t i '°'"i� \�A A_ k�� !I If '` PROJECT `\ CITY OF E� RIVER, ∎' \, LOCATION \ SHERBURNE COUNTY, I i'' i..', A v MINNESOTA V IL- i I A `. F V�\ J y( -i ! N\ I Mrey e.IM1y IN.1 MOIA plan.sp..Nk.lion.61'sport woe prepared S 1 1-""_--"1; I or i 1 �\ P•ma under 410,41 supervision and IRat 1 om a duly Licensed 1 u • eelana1 Eno mot under Ins laws of Ow Slate of Mtnnewb. • Iltt' �_ 23461 DATE 3/6/IS 4 BCNCHMARMS: CRAIG J. C�1R P E LTC.N0. tQ TOP NUT HYDRANT$WTNEAST QUADRANT OF TWIN LAMES T THE S1)6 IS CE UTILITY INFORMATION IN ROAD ANO 17016 LAME. DCSGNSNCNEER N - - '-"""'_DE �...� Hakanson TNIS PLAN IS UTILITY DUALITY LEVEL D. ]V THIS WAVY,.LEVEL WAS DRCRMN[0 ELEV.sn.68 GATE REVISION ACCORDING TO THE GUIDELINES OF 0)TOP NUT HYDRANT 32 EAST SIDE M TWIN LANES ROAD. I 14 E�y s�. .'+L'i oAnderson GI/ROCCINESB FOR THE COLLECTION ON AND ELIV=886.4iLY 325 FEET NOM M i]OTN LANE. No m A I i -- CNA EnLlmer and Land Surveyor DEPICTION M C%KTNC SUBSURFACE DATUM: 3601 Tnuneon Are.,AnaYe.MR,neeat.55303 UTILITY DATA_- NAVD 88 u,•at w rq ..__—_" - --�� 763-427-5660 FAM 763-A27-0520 _ SHEET 1 OF 7 SHEETS 3674.01 GENERAL CONSTRUCTION AND SOILS NOTES: I. STOP ALL LAMP,NPLACE TOPSOIL IN AREAS TO BE DISTURBED BY CONSTRUCTION AND REUSE AS STANDARD PLATES SLOPE DRESSING.IN AREAS Or PARKING LOT.SIDEWALK AND BUILDING CONSTRUCTON,THE .... -- - DUSTING CONTOUR I EXPOSED SAND SHALL BE SURFACE COMPACTED TO AT LEAST TOON Or THE STANDARD PROPERTY LAME THESE STANDARD PLATES AS APPROVED 8Y IRE F HWA SHALL APPLY PROCTOR MAXIMUM DRY DENSITY,A5TM 0666,IN AT LEAST ENE UPPER 3 FEET. DIOPERTY WAY LINE ,F>LAtE MO. ()E SGRP'ANN i. UNLESS ONSTR CTED OF SUITABLE GR DI RI THESE PLANS,THE GRADING B SPLACEOE SHALL BE GAS EWE EASEMENT i 3600. REINFORCFDCONCRFTF PIPES SwF.TTI LOOSERUCT[,AND SUITABLE GRADING MATERIAL THE FILL SHALL BC PLACED IN TRY TO 10" ''-'" LOOSE URS.AND COMPACTED TO 100%Or THE STANDARD PROCTOR YAXpA1M DRY W -- pCUNEATED WETLAND 30060 GASKET FOR R PIPE ti SHEFT5; — DENSITY. -- — - — DRAINAGE AND UTILITY CASEMENT i 300JD SHEAR REINFL1RCEME VT FOR PRECAST MANAGE STRUCTURES}, SUITABLE GRADING MATERIAL FOR THIS PROJECT SHALL CONSIST Or ALL SONS __. ._ _ ____. TEMPORARY CUL-DE-SAC EASEMENT 31410 CONC.RFTE PIPE TES ENCOUNTERED UNSTABLE PATH THE MERTON OF TOPSOL,SILT,DEBRIS,ORGANIC MATERIAL AND UNDERGROUND GAS LINE OTHER UNSTABLE MATERIAL. , 3145r COHERE TE SHORT CONE AND AD,N 31 E MOAT;SECTIONAL CONCRETE 4. WHEN PLACING NEW PAVEMENT ADJACENT TO REPLACE PAVEMENT CUT VERTICALLY TO THE . - BOTTOM Or INPLACE SURFACING OR TOP OF GRADING SUBORADE,WHICHEVER IS DEEPER,AT LYISTING CONCRETE CURB t CUTTER 1 dm IE PRECAST C(XN(ARETE RASE A I(V):2(H)TO THE BOTTOM OF EXCAVATION. - EXISTING STORM SEWER aU20. MARHOL E OR CA ICH BASIN COVER 5. PROVIDE A SAW CUT WHEN PLACING NEW PAVEMENT ADJACENT TO'NPIACE PAVEMENT AND EXISTING SANITARY SEWER J� .. rOH USE Void OR VVII•05I TRAFFIC LLMA'S)(2 SHEETS) AT TEIMNI OF CONSTRUCTION TO ENSURE A UNROOF JOINT. aA 46 DIN PRECAST SHALLOW DEPT.CATCH BASIN DESIGN SO 4. BITUMINOUS AND CONCRETE ITEMS DISTURBED BY CONSTRUCTION SHALL BECOME THE . - EMITTING NAT6RMAIN gp26A 666666E TE ENCASED CONCRETE AO U5'INL'+RNGS PROPERTY OF ENE CONTRACTOR AND SHALL RE DISPOSED Or IN ACCORDANCE WITH Mn/DOT __'.'_____,._._._..__._ EXISTING WATER VALVE 410:0 I RING CASTING FOR MANHOLE OR CATCH BASIN SPEC.3104.3. (TOR ALL _ T. USE TACK COAT BETWEEN ALL BITUMINOUS MIXTURES.THE BITUMINOUS TACK COAT MATERAL 7. EXISTING CATCH BASH Ri,- DOVER CASTING FOR MANHOLE JSE IN L 1RAFFkG AREAS) SHALL BE APPLIED AT A UNIPORY RATE Or 0.04 GAL/ST TO OA%GAL/SY BETWEEN EYIStING STORM SEWER IEANIRDLE CPSTNC.NO.TTS AND TIE ____�� BRUNNOUS LAYERS..THE APPLICATION RATES ARE FOR UNDILUTED EMULSIONS(AS SUPPLIED AIRDJ MANHOLE OR CATCH BASIN STEP FROM THE REFINERY)OR MC AND RC LORD ASPHALTS.THE ASPHALT EMULSION MAY BE EXISTING SANITARY SEWER MANHOLE I- - 1,.,_ '-'-- - FURRIER DILUTED IN THE FIELD N ACCORDANCE WITS SPEC.2337. i 71646 CONCRETE CURS AND GUTTER(DESIGN 8 AND DESIGN V) R. PERTORMANCE GRADED(PG)ASPHALT BINDER PG 5B-26,SPEC.3151 MODIFIED,SHALL BE EXISTING HYDRANT /1114 AISTALL ATTOR OF CATCH BASIN CASTINGS(CONCRETE CURB b GUTTER, USED FOR ALL BITUMINOUS MIXES ON ENS PROJECT.SPEC.3731 MODIFIED IS INCLUDED N 9015 PROPOSED CONTOUR TECHNICAL MEMORANDUM E0.02-06-■R-01.SPECIFIC PG GRADES SHALL NE STATED IN —AA---»_,� PROPOSED.STORY SEWER SPECIAL PROVISIONS AND AT THE END M INC MIX DESIGNATION NUMBER SHOWN ON THE TYPICAL SECTION. —V > PROPOSED SANITARY SEWER 9. THE BITUMINOUS MIXTURES SMALL MEET THE REQUIREMENTS OF SPECIFICATIONS 2360 AND _I , — PROPOSED WATERMAIN BASIS OF ESTIMATED QUANTITIES 3139. AGGREGATE BASE CLASS 5 I 100 R7s!YO'IIR GENERAL EROSION CONTROL NOTES: PROPOSED CATCH BASIN 1. EROSION CONTROL SHALL CONFORM TO THE Mn/DOT(BOSON CONTROL HANDBOOK, © PROPOSED SANITARY SEWER NAEHOIE NON%NEARING BITUMINOUS COURSE MIXTURE I 110 MiLnihn 2.. PRIOR TO ANT CONSTRUCTION ACTIVITIES.THE CONTRACTOR SHALL ACOUIRC THE NECESSARY ''WEARING COURSE BITUMINOUS MIXTURE Ij 1 tO bsfy0200 MPCA NPDES STORMWATER PERMIT. PROPOSED STORM SEWER MANHOLE —__.__-.-._.-- ----.z— (� BITUMINOUS MATERIAL FOR TACK COAT I 0.05 901/01 3 THE CONTRACTOR SHALL L ACTIVITIES.EROSION AND SEDIMENT CONTROL rCOUTHE(BRA'S)PRIOR 'Or PROPOSED HYDRANT TYPE i.COMMERCIAL FERTILIZER I 300 IARIRGrR TO GRADING AND REMOVAL NDTIVITIES.&HAO SEALS M MAINTAINED COP THE DURATION OF CONSTRUCTION R SHALL AND ULEEHIS FOR EROSION MAO PASSED. D'O PROPOSED WATER VALVE A ARE CAT AIR GI SHALL SCHEDULE HIS OPERATION TO YINIY17[THE AMOUNT GF DISTURBED AREA AT ANY GIVEN tIY[. °-----°--"----"- PROPOSED CONCRETE CURB R GUTTER S. BMP'S SHALL BE INSPECTED DAILY BY THE CONTRACTOR.AND RE DOCUMENTED AND INSPECTION LOG. • • • • SILT FENCE PER b. AU.EROSION AND SEDIMENT CONTROL MEASURES SHALL BE PROPERLY DISPOSED OF WITHIN vaN".w.�vxoN I.5" TYPE SP 9.5 WEARING COURSE MIXTURE(SPW'EA2AO8) THIRTY(30)DAYS ARER FINAL SITE STABIUEATION. DRAINAGE ARROW T.S� TYPE SP 12.5 NON WEARING COURSE MIXTURE(5PNWB2JOB) 7. THE CONTRACTOR SHALL FILE A NOTICE Or TERMINATION WITH THE MPCA AFTER FINAL 6 CLASS 5 AGGREGATE PAST SIABIU2ATICN HAS NUN APPROVED. '.-DETAIL NUMBER 'B'VVICA'Ba'aXwY7-•—PLACED ON APPROVED SUBGRADE �-SHCCTNVYBFR 0 LIGHT DUTY PARKING LOT SECTION 2 _ _ 2" TYPE SP 9.5 WEARING COURSE MIXTURE (SPWEA240B) `°P'"`"`>`" iAUUOIW 2"'TYPE 5P 12.5 NON WEARING COURSE MIXTURE(SPNWB23O13) H'CLASS 5 AGGREGATE BASE. owASPO%PO*IT PLACED ON APPROVED SUBGRADC f'©HEAVY DUTY PARKING LOT SECTION 2 I i a T i eY..TINT N .MS Wert•R•T rb+ rw w, R9PR 6,MEt DATE REVISION •y 4•., sr ain.f I AMT A Hakanson Anderson CONSTRUCTION NOTES. TYPICAL SECTIONS, 2 yr ;',^,�i^N „t,e'(YF+ P � aIT ER61n..R and LaNC s .ro., AIORRELL ENTERPRISE OVERSIZE AND PROJECT LEGEND p 6t �� J 'fir I homey II 1. L i '•, p'w AMT 3601 Thurston Are. Anoka Anderson 55393 Sq yp�, ��,�_ r, 761-427 HOIIW0 FAX 763-127-0530 URAIR 7 Dow 3/6/15•'""'r�'EN`��ue.NR.23461-, �CJJ w+N.NPRenson-Rneman.cRm CITY OF ELK RIVER, MINNESOTA • 3674.01 —"Y' ' --...1 •'-S'Y';',,k,?",',0 7, *//A *07, 00*,,0,'`I`e , ,,,,-,77 L,7,,7,7,LY.,7 000,,0,Y 7. •t**,,,, , © CLASS C PIPE BEDDING DETAIL ',... 0,,,'gr.) '''''' '41t? ':- ' , 4..0,0,1,0LOW,E*E e. 0,7 100077,7 $•,*•••:: ...7 •tifL*L'.4E'''' / • ,o,•°',...';7:0•0 2!D :S.0.‘,‘,.. Vg■. Pve6 , Ne-\ _ 3/ i --0•00,0001,1 Ct.El*• A A „...c. ,70,021 04707/ HI',07 ,-/---A"PVC SEWER 11011/,C —.I 0 CATCH BASIN INLET PROTECTION DETAIL (2)CATCH BASIN SEDIMENT BARRIER DETAIL \- SEWER %,:‘, CLEANOOT -.‘6\ .11 PLAN VIEW Wit,Vi'M 07,700,10.1-, ..",7'7777'00( ,,/-• , PROPOSED--• Tle r rivV/7:.m.....V..f:tH07'''' GRADE , / NAILL*0.L0t Y, 31 i f ."• I---ill_in NEENAH R-197S CASTING OR u.ouv.vou cv as; 1E1 i •i 1,1, / 6.v.us. o'da''''.,,, '11.4' •Itel"Vrillelltriallftli_ "'TH., 'fat APPROVED(OVAL ' R ....F.2_,,r__________Iri t..-Ltr.--0,,--• 2/ ''''' ;71;f40:40.*•:..?.7 0.,,,,',, ''- - ' ''' --- 5.i ,1_, tr COUPLeIG ISLIP E 1 T ..., .1, • BY THREAD)WITH si ,h1 1 I ,I 6 uu, - '";to,f;** 4 i 4.741-f:*144.40...rtif. PVC CAP. 6. +HI I-v-R.00 • 0_,I, \--SE1 CASTING ON s_1•11.46,1,' CONCRETE BLOCKS 00'L 2.2 TE4CE DEIHL / '-.11.:0311, (0.110,,I0 PVC BEND 5'PVC svAcTs,0 01 LLS,0111 11,00 It UM,70,00 0,000 '•-•,.7..',,Zt.'4`..P.:Z`i,',-- 4. 61X6T PVC WYE a 7 0,0040.,CONS07(11.0 ve,00 suusor nuNs*01'5*.t.III 000,1 A r•0 ass "HI oNN.6,100".1.WO T.Ma,* -.--6.rye•I.00x 011111111111 0 SILT FENCE DETAIL — 0 ROCK CONSTRUCTION ENTRANCE DETAIL Y ; ENCASE ENS IN CONCRETE 0 i SECTION A-A r 3 SANITARY SEWER CLEANOUT DETAIL ii DATE REVI&ON 4 N00,.01,1.0 miv p an tpoe icstro•..ef trn val rooP ,.. Hokonson Anderson DETAILS AUT .1■■•••■..... .,... ,e, CNN Englneers*NI Lond Surveyors 3 ,,, 701111F101.sliNdlilli..701144, WORRELL ENTERPRISE OVERSIZE Ci OJT 3601 Thumb.,Ave.Anoka,IlInnetoto 55103 111A 161-4.27h-.11,17 TAX 11121-427;644STO L5 /No P 7 3/6/15 Lk.No.2.3461 _ CJJ CITY OF ELK RIVER, MINNESOTA 501/LIS - 3874 01 r , ..4,',..9.4'4,.......',rif,,■.:'7' ,,,.......,4,, I - ' ,.....„ ,,..—i... „_:,...--,, \,''9 r, t .I-h--- I 1 , ,•-• , -- ,_____ 5f•/,4. _ ___..... L.,,,II BO,at,r,,,AF,r 0,'.,,1 I 144i, i ■ ,,, I r 1 i ,-• •••-.. ''''''.. ........4 -l....._. 1 h—t---,,—__ . r,,.' ''''',-.4 ft rf,=T. ,,, i.,..'mow 4,,, I 1 11 ,--.-. ■•••,,..1,rr4 4.' t 1 i- i i ,I I, . .--- ----.§r-4. -.7t--.7--' . / ?...,.. 'k,'..,-, i .4111. - ' ...1". ,'41'Iii11•0.--:. ... •••••,1,51,•,,PO",>. ./. •4 ,......B 13" 11 fa. -I,i 1 1 .5 In-j ■ f , , 3f: 1 , ,,,. ,,Z.,'V,r,,...1v;<.. .77.'. -11..-A , -I.-B /..-0,a0,61, '0 NE / 43 4 N41. •••••••01 C9.15,,,,,,.......1. -334 C,,...,-. ,,,,,•.;",••TEC.• C.V1,9 ...a ANN.,r,e,r arra (D STORM MANHOLE CASTING DETAIL (2) INLET CASTING DETAIL (D SLAB TOP MANHOLE DETAIL C) CONCRETE -v° GUTTER DETAIL I F .,i OAT( i REVISION ■.N.N,toroi,rp....tos.......tr.e.I.a..I.moo. Hakanson Anderson DETAILS ..,,viii 3601 CNN tno■nevors and Lone Surveyors III ThunNoN Ave.,Anoka.lornmsola 55303 MORREli ENTERPRISE OVERSIZE 0 763-•27-51140 EPOS 743-AZ7-0520 N, tNNIIR MT ...ow boinonson-onderson.corn CITY OF ELK RIVER, MINNESOTA t.- 0,Ne 3/4/15 I..k•No,23461 C3J 3R743! ,' RITUYINOUS--� I, CLEAR AND GRUB /' 0.15 ACRES� ,v. � I 1 110; SAWCUT�1N0 REMOVE' y/ ! 1d2LF CONCRETE CURB Ir Oil \ $' / --r. s / h.,...„ r. ' Y T,' L + { . -xa 1 I '—BTNMiNDUS #F r : II b I REMOVE vn.r RCP STUB. I • PROTECT MANHOLE STRUCTURE. B ae �•..,, i SAWCUT AND REMOVE i ' 160LF CONCRETE CURB • 170TH LANE °" .*--".—.M.'"'N\ . ,"..-.' ilk It . 1 fil4,11 ,,_ , —si � I KEEP WNWWI 2'OF CURB AROUND CATCH BASIN CASTINGS ' DATE REVISION 14.cHv""".""^." e°D" EXISTING TOPOGRAPHY AND y 7.143111107421C.1101.216.,•," "`"O'er 4�I.• ""n"'p'""'°"'" "' AMT Hokonson Anderson $TN A TA[I a..tss +.,. ••••"•'•"'"• "• `""•••. ".• •• AHT .-- (REMOVALS PLAN ay.cc WI n 11.1./PST CwR Enoin4.,,one and Surveyors MORREIl ENTERPRISE OVERSIZE J60f Tko477 A660 Anek7.WnMaMe 55]03 063-427-56N Ano 763-427-0510 YA. ter.kakonaen-onMnm.cmm CITY OF ELK RIVER. MINNESOTA beH J(b115_.N" 11e.No.21411 CAI " es 3674.01 I.SEE SNCCTE7 TOR STORM SEWER 5 RUt U �'�_ •_t T T T R[INrbkYATN)N. F� —. - --�=-- -'-_-r —.. "'- ' + '-' .Rye 2.PRIOR TO IA/PORTING OR EXPORTING MATERIAL TO THE SITE,CONTRACTOR SNAIL .__- _ .., / CONSTRUCT A ROCK CONSTRVCTNTN ENTRANCE PEP(el. 71 t ' N4TC0 TYS Y,G CJRP y' 3.SLOPES SNAIL NOT EXCEED IV:4N. C�1 1 CONSTRUCT VALLEY N I . GUTTER PER G\ f 'NNN.N.N\\ . !t79.."f Ci-J I,..._ 1..:,.. ,,,,, ` uRP Y s 1 i % �I / /,..3.53 I � r I r a LI lRS.fi6 A■ R.61d4 I t ■ I 0100*ELEVATION ■ r • 888.5 t. ■ ■ • j /' 8812 CONCRETE CURB ' • I -5i0 I AND GUTTER PER Z �' y MR/D07 STANDARD C ITT PLATE 7100(TYPICAL) 7c • I �� $4 OCT RIPRAP R 12 DEPTH ��M:.T OVER GRANULAR 0* R AND n GEOTE3TILE FAB PER y , / YMDOT 310 PLATE 3133D O • \ INLET PROTECTION -B'.IS TIPOUT CURD"' Tq �_--- -._ DEVICE PEREDAND/h ( 1uL)C7 G7 ' ° 1 <, U Y ^a 1701H DINE Y:-.Not,. m [ , � .-------.--...""") ,. Ti i CONSTRUCT Ve EM e GUTTER PER SILT TENCE(T W.) I DATE REVISION ;-*„T^ ��°„^„0 "P;',^ '"m• GRADING, DRAINAGE AND "" ANT Nokanson Anderson B A. ' , `�' `� „,,e. � :Mt c•Thurston Engine..and Lont Survey*. . MORREU. ENTERPRISE OVERSIZE EROSION CONTROL PUN CI 4 •.,wr }801 TNVtNbn e... nd o.a Survey*35303 i�A i - p,.ue i w�,1 CJJ ' 763-*27-5880 0410 783-427-OS2O 71 x, °"'II —427-5 60 PA 743-4 7-0 CITY OF ELK RIVER, MINNESOTA eN7 www w ObN.}(+.4�I:L.. Lie.NP. _ ., 3874,617 LEQEHQ \ \\I CB-t O� Q+(S}CBMH S CB DIA. LIGHT DUTY RAVf YCNT SECTION,PER 'r 18' 3 WV(S 3.53 11. RDAASSA 30 ' INV(5.0x679.10 } , ION((5).679 10- an a60 INV(5}+879 AO �C��CC\\\ 'W a SW e'KN.CPR •ROpY N PCP /l u.ot \ i ff HEAVY DUTY j y, //////'''''PAVEMENT ' / / SECTION PER 4::'''''.k4:. .;.!' I c9 TIU % w ON 1.1 MO 1 ' '""'--BITUMINOUS ,�1 T I VA' CeB' — YRlIMgS� n •a zug. R i�.%r`0s own 4V „ q� OMAN-4 INSTALL 6"THICK-1'DIAMETER -.ry « (',gyp 18'PIA. CONCRETE COLLAR AROUND CASTING. E OKI 11 1 5" CASTING:NECNM R-2575 SLOPE TO ORAIM. , ENV(sr).e79.10 , rl^y INFILTRATION TRENCH CB■H-7 ■ 6`0.0. 0 Mm- IS'REND `w. j 1861.864.80 1 ' 6'PVC / my(N).879.10 I row X I HV.676.5471 / INV(S).678 40 ` 15'BEND _ _, /,V IR s1V Ie'.M.c• ( 6'OW �e. , R GENERAL NOTES �I� • R� I.MAINTAIN A MINIMUM Of 7.5 CC7 Of COYER OVER WATER SERVICE. ¢ IS'BEND NCAYY DVfY 90^S I P.USE CLASS C REDOING PER(�{�'OR ALL UTILITY CONSTRUCTION. t�-`T./1 PAVEMENT 3.ALL PVC FITTIN05 SMALL 6E"`' ppq 26. A 1I SECTION PER® / � / REFERENCE NOTES: s' j \ _ 0)CONSTRUCT CATCH SEWN PER e. p(iOCBMN_i i , 6.DIP �N ()CASTING SHALL MEET THE REOUIICYENTS Of E!). 60"Du. ; ,J AS'AND RIMZ881.13 1140(().679.10 ,t mCONTRACTOR SHALL COORDINATE UTILITY SERVICES.1TN ARCHITECT. NV(([).679.10 1661E 6�PVC SOR 26 INV(W}.672.60 �� dw*" 1 •2.00%() li (I AGGREGATE BACKPILL 5NALL RELY THE REQUIREMENTS OF YnDOT 3119.2.6 EXCEPT TIE V(SW}879,b YARRAUY AGGREGATE SOC SHALL BE I 1/2 INCHES. SWAP PARATI75.1 1eU DRMITILE IN I 3071E r DIP(CL52)q) 131 PIPE 5NALL BC PERFORATED PER AA5NT0 CLASS 2 PERFORATION PATTERNS,2 HOLES WITH A• 2' 1 WIDE TRENCH.ED 1 DIAMETER OF 0.375 EVERY'IY. RACKFILLED PER-1 j INVS879.5 _. 0SECTION SMALL CONSIST OF 6 INCITES OF BRUYINOUS...LUNGS OVER 6 NICHES OF CUSS V / CONSTRUCT SE'R'ER AGGREGATE BASE.6ITUYINOUS(LUNGS SHALL BC PRODUCED FROM COUMMENT AS SPECIFIED CLEANWT.SEE 69 IN MNOOT STANDARD SPECIFICATIONS F011 CONSTRUCTION SECTON 2232 MILL PAVEMENT �ONNECT TO EXISTING !��% II SURFACE.MILLINGS SHALL RE 1008 pWINOUT AND SHALL NOT INCLUDE ANY UNDERLYING STORY YVERLY ,� AGGREGATE OR SOILS MATERIAL.MILLRIOS SHALL PASS 1017%ON A 2 INCH SIEVE. ,r,,.� INVze79.t 6`DIP (FIELD VCRiY} ,.,� 22.5'REND TE iJOTN LANE w - '""`-�...,,�y ., /."y""`� �` CONNECT TO EXISTING 8`WATER SERVICE. r\\ CONNECT TO[MONO ADJUST VALVE 80%TO FIMSHEDr GRADE. \ �I _. SANITARY SEWER SERVICE .� 1 i ' _ DATE REVISION "µ'H.' '/.0071,N...Myes MOW ... ��� Hakanson Anderson UTILITY AND PAVING PLAN 1 w..•..""." �ny[ '.P''.i'M+,µ.H..I AMT CIVN[nglm.n and Lana wrv.2on 7rt l � ii _= p —,,,, � seol TNVllan AVI.,Anoka.MI.M1ero 55303 MORRELL ENTERPRISE OVERSIZE m -�PA� � MD P .■■ 763-A27-666D FAX 763-A27-0520 CITY OF ELK:RIVER. MINN£SOTA .RttS DPmIS/6/15 • LF N,No.25161 _ Gil Hwy.NWOntan-anwnan,ca+n 3811.01 - Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul,MN 55101-2887 Springsted Tel: 651-223-3000 Fax: 651-223-3002 www.springsted.com DRAFT MEMORANDUM TO: Amanda Othoudt, Economic Development Director FROM: Mikaela Huot,Vice President/Consultant DATE: June 23,2015 SUBJECT: Morrell Proposed Tax Abatement—Project Analysis The City of Elk River has asked Springsted to evaluate a tax abatement request for assistance submitted by the developer, Scott Morrell, LLC/Morrell Oversize. The developer proposes to purchase land from the Economic Development Authority of the City located within the 2nd phase of the Nature's Edge Business Center and construct an approximate 13,824 square foot building that would be expanding their business in addition to the existing 36,000 square foot facility already located in the City. Morrell Companies is a full service carrier which offers a vast variety of standard and specialized transportation services. The company is purchasing land from the City for a total purchase price of$349,351. The company currently employs 105 people with an average hourly wage of$23/hour. Of the 105 employees, 13 FTE are employed by Morrell Oversize with an average hourly wage of$27.94/hour. The applicant expects to hire 8 FTE employees with the planned expansion. According to the applicant, the tax abatement assistance will be used as annual cash flow to support debt service on the approximate $2.380M project to be financed with a combination of debt,equity and EDA microloan. The purpose of this memo is to summarize the analysis that Springsted prepared, including the estimate of tax abatement revenues for the project and to assist with determining whether the project as proposed is likely to proceed "but for" the requested tax abatement assistance. The analysis is based on our review of the project components and financials and general rationale for assistance as submitted by the developer. There are several methods available to determine if a project would proceed "but for" the assistance. An analysis comparing the rates of return with and without assistance is a common method used to analyze the "but for" test. However, in some cases,a review of the project's sources and uses of funds and operating cash flow performance is done to determine if an operating gap exists or if the project performance is not expected to meet minimum financing requirements and return thresholds to assist with determining that a project meets the"but for"test. If,following the review, it is determined that the project has a shortage of debt, cash, and/or equity based on the projected value of Public Sector Advisors City of Elk River,Minnesota Morrell request for Tax Abatement June 23,2015 Page 2 the project upon completion and net operating income available to support debt service,it can be determined that the project would not proceed "but for" the assistance. It is important to note that tax abatement does not statutorily require a "but for" analysis to determine if the project would proceed without assistance, however it must be determined that the project is in the public interest and that the benefits outweigh the costs and the City's current tax abatement policy requires this finding be made. Tax Abatement Assumptions Springsted made certain assumptions to calculate the estimated amount of tax abatement revenue generated by the proposed new project. Those assumptions include the following: • City of Elk River proposed tax abatement o Abate incremental land&building value o PID:75-820-0205 o EMV as of Jan. 2,2014 for taxes payable 2015 is • Assumed to be`base'value of abatement • Tax exempt property owned by EDA with no taxable value • Value estimate provided by Sherburne County o EMV as of Jan. 2,2016 for taxes payable 2017 is$859,000 • Total Value: $859,000 • Value estimate provided by County Assessor • Abatement term and participation o City for up to 15 years • First Year of Abatement o Taxes payable 2017 o Construction complete by December 31,2015 • 2015 tax rates remain constant through term(Rates Provided by Sherburne County) o City: 47.190% • Class rates remain constant through abatement term • Fiscal disparities contribution-NA • 0%annual market value inflator assumed • Present Value Assumptions o 4%Discount Rate o Dated Date of December 31,2015 City of Elk River,Minnesota Morrell request for Tax Abatement June 23,2015 Page 3 Tax Abatement Revenue Estimates Estimated Annual Tax Abatement Revenue $8,107 Total Estimated Tax Abatement Revenues 15 Years $121,609 Estimated Present Value of Total Revenues $86,674 The above table illustrates the projected net revenues that tax abatement would generate for the proposed term of 15 years for the City. The company has also requested tax abatement assistance from the County for a term of 10 years. The estimated total abatement revenues as requested from the County are equal to$89,300. The maximum abatement term for the City is up to 20 years if only 1 or 2 entities participate in the abatement or the City receives written denial of participation from one of the other taxing entities(County or School District). All participation levels and amounts would be subject to individual policy and Board decisions following anticipated public hearings. Revenues captured through tax abatement and provided as reimbursement to the property owner for certain costs must be used only for those properties that benefit from the tax abatement. Developer Request for Tax Abatement Assistance The developer submitted a request for tax abatement assistance from the City of Elk River and Sherburne County to assist with financing the proposed$2.380 million acquisition and subsequent construction of an expansion on current City-owned property located in the 2nd phase of the Nature's Edge Business Center. The developer has requested approximately $121,609 in abatement assistance over 15 years from the City and $89,300 over 10 years from the County. The Developer's submittal includes a preliminary total project budget of$2,380,545 as shown in the table below. Land Acquisition $349,351 Bank Loan $1,680,545 Site Development/Construction $1,824,769 Equit $500,000 Machinery&Equipment $80,600 EDA microloan $200,000 Professional Fees&Other $35,825 Total Costs $2,380,545 Total Sources $2,380,545 Proiect Financing There are generally two ways in which assistance can be provided for most projects, either upfront or on a pay-as- you-go basis. With upfront financing, the City would finance a portion of the Developer's initial project costs through the issuance of bonds or as an internal loan. Future revenues would be collected by the City and used to pay debt City of Elk River,Minnesota Morrell request for Tax Abatement June 23,2015 Page 4 service on the bonds or repayment of the internal loan. With pay-as-you-go financing,the Developer would finance all project costs upfront and would be reimbursed over time for a portion of those costs as revenues are available. Pay-as-you-go-financing is generally more acceptable than upfront financing for the City because it shifts the risk for repayment to the Developer. If revenues are less than originally projected,the Developer receives less and therefore bears the risk of not being reimbursed the full amount of their financing. However, in some cases pay as you go financing may not be financially feasible. With bonds, the City would still need to make debt service payments and would have to use other sources to fill any shortfall of revenues. With internal financing,the City reimburses the loan with future revenue collections and may risk not repaying itself in full if revenues are not sufficient. The form of financial assistance proposed in this case is pay-as-you-go financing. Developer Proforma"But For"Analysis In approving an abatement project,the Elk River EDA has requested that a finding be made that the proposed project would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future. The developer has provided a "but-for" argument stating that the financial assistance from the City is necessary to provide sufficient project cash flow and market returns to investors that will achieve project feasibility. The developer has stated the assistance is necessary due to the costs of developing the site and inability of the project to fully support those costs upon completion. The current estimated project costs are in excess of the estimated future value of the building upon development as provided by the County. Based on this analysis,the EDA could be justified in determining that the project meets the"but for"test and would not proceed without assistance. As stated tax abatement does not statutorily require a"but for" analysis to determine if the project would proceed without assistance. A city, county or school district may grant a tax abatement, by contract or otherwise, of the taxes imposed by the city on a parcel of property,which may include personal property and machinery,or defer the payments of the taxes and abate the interest and penalty that otherwise would apply,if: • it expects the benefits to the city of the proposed abatement agreement to at least equal the costs to the city of the proposed agreement or intends the abatement to phase-in a property tax increase, as provided in clause(2)(vii);and • it finds that doing so is in the public interest because it will: o increase or preserve tax base; o provide employment opportunities in the political subdivision; o provide or help acquire or construct public facilities; o help redevelop or renew blighted areas; o help provide access to services for residents of the political subdivision; o finance or provide public infrastructure; o phase-in a property tax increase on the parcel resulting from an increase of 50 percent or more in one year on the estimated market value of the parcel, other than increase attributable to improvement of the parcel;or City of Elk River,Minnesota Morrell request for Tax Abatement June 23,2015 Page 5 o stabilize the tax base through equalization of property tax revenues for a specified period of time with respect to a taxpayer whose real and personal property is subject to valuation under Minnesota Rules,chapter 8100. The developer has indicated that the abatement revenues are necessary to ensure business sustainability and support projected annual debt service. The implication being that"but for" abatement assistance the project will not proceed. To complete the "but-for" test and make the determination of whether the project is likely to proceed as proposed without the use of public dollars, we review the project showing a result if the developer receives the requested assistance and one showing a result without assistance. We utilized the project cost and operating information provided by the developer to understand the anticipated performance of the project. The purpose of evaluating the operating pro forma and accompanying financial data is to understand the potential return to the developer through the initial development of the project and the operation of the enterprise over a period of time(10 years). The developer has indicated the project as proposed without assistance does not provide sufficient net operating income to provide acceptable investor returns. Generally, should the rates of return lie below a reasonable range without assistance; we could assume the project as proposed would not move forward without assistance. Should the returns lie within a reasonable range with the assistance, we could assume the amount of assistance tested is appropriate for the project. All such estimates should be viewed as general indicators of performance and not exact forecasts. The number of current and future variables affecting these estimates and actual results are great.There is no set Return on Equity(ROE)and Internal Rate of Return(IRR)benchmark that dictates whether a project needs financial assistance or not. An additional measure of project feasibility is the Debt Coverage Ratio (DCR), which is a calculation detailing the ratio by which operating income exceeds the debt-service payments for the project. If the DCR is greater than 1.0 it indicates the project has operating income that is greater than the debt-service payment by some margin;conversely if the DCR is less than 1.0 it indicates the project is incapable of meeting its debt-service payment and would need to seek additional revenue sources in order to pay its debt. Typical lending standards will require a DCR of greater than 1.0 as a measure of cushion in the event actual revenues and expenses are different than projected. The Developer's submittal includes financial and cash flow projections, sources and uses of funds, and proformas with and without abatement assistance. The application also includes a letter of commitment from the Bank of Elk River for financing of the project in the amount of$1,680,600 for a term of 20 years. There are certain conditions of the financing, one of which being a minimum debt coverage ratio of 1.20. The annual operating proformas with and without assistance indicate low return on equity based on the project not receiving abatement assistance. The proformas also illustrate that without annual tax abatement assistance,the minimum debt coverage ratios as required by the lender would not be met. The proforma with and without tax abatement is an analysis of the developer's use City of Elk River,Minnesota Morrell request for Tax Abatement June 23,2015 Page 6 of the annual abatement revenues to reduce the mortgage liability on the property and increase the projected return on equity for the project. The analysis indicates the tax abatement assistance will have a positive impact on the return. Conclusion The developer has requested assistance in the amount of$121,609 from the City of Elk River and that the project would not be feasible without assistance as demonstrated by the return on equity comparisons. There are several methods to determine if a project would proceed"but for"assistance. Based on the available information, in this case a debt service and project cash flow gap analysis was utilized to test the viability of the project. The tables as provided in the application indicate that the tax abatement assistance reduces the annual debt service burden on project cash flows and improve the projected return on equity. "But for" abatement assistance, a reduction in operating and/or borrowing costs, or increased revenues or some combination of the above, the developer has indicated the project as proposed would not go forward. In addition, it is important to note that the developer has indicated that the project will aid in the retainage of 105 jobs and creation of 8 new jobs in the City of Elk River. Thank you for the opportunity to be of assistance to the City of Elk River. Please contact me at 651-223-3036 or mhuot(a.springsted.com with any questions or to discuss. Projected Tax Abatement Report City of Elk River, Minnesota Proposed Tax Abatement for Morrell Initial Analysis based on Request: City Participation for 15 Years Total EMV of$859,000 Less: Non- Retained Times: Maximum Maximum Maximum P.V. Annual Total Total Abated Captured Tax Tax Tax Tax Total Annual Period Estimated Net Tax Net Tax Net Tax Capacity Abatement Abatement Abatement Tax Abate To Ending Market Value Capacity Capacity Capacity Rate City County School District Abatement 12/31/15 47.19% 51.98% 42.48% (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) 4.00% 12/31/17 859,000 17,180 0 17,180 146.431% 8,107 0 0 8,107 7,496 12/31/18 859,000 17,180 0 17,180 146.431% 8,107 0 0 8,107 7,207 12/31/19 859,000 17,180 0 17,180 146.431% 8,107 0 0 8,107 6,930 12/31/20 859,000 17,180 0 17,180 146.431% 8,107 0 0 8,107 6,664 12/31/21 859,000 17,180 0 17,180 146.431% 8,107 0 0 8,107 6,407 12/31/22 859,000 17,180 0 17,180 146.431% 8,107 0 0 8,107 6,161 12/31/23 859,000 17,180 0 17,180 146.431% 8,107 0 0 8,107 5,924 12/31/24 859,000 17,180 0 17,180 146.431% 8,107 0 0 8,107 5,696 12/31/25 859,000 17,180 0 17,180 146.431% 8,107 0 0 8,107 5,477 12/31/26 859,000 17,180 0 17,180 146.431% 8,107 0 0 8,107 5,266 12/31/27 859,000 17,180 0 17,180 146.431% 8,107 0 0 8,107 5,064 12/31/28 859,000 17,180 0 17,180 146.431% 8,107 0 0 8,107 4,869 12/31/29 859,000 17,180 0 17,180 146.431% 8,107 0 0 8,107 4,682 12/31/30 859,000 17,180 0 17,180 146.431% 8,107 0 0 8,107 4,502 12/31/31 859,000 17,180 0 17,180 146.431% 8,107 0 0 8,107 4,329 $121,609 $0 $0 $121,609 $86,674 Public Sector Advisors TAX ABATEMENT AND BUSINESS SUBSIDY AGREEMENT BY AND BETWEEN CITY OF ELK RIVER, MINNESOTA AND SCOTT MORRELL, LLC 464427v2 JSB EL185-33 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS 1 Section 1.1 Definitions 1 ARTICLE II REPRESENTATIONS AND WARRANTIES 3 Section 2.1 Representations and Warranties of the City 3 Section 2.2 Representations and Warranties of the Developer 3 ARTICLE III UNDERTAKINGS BY DEVELOPER AND CITY 5 Section 3.1 Construction of Project and Reimbursement of Tax Abatement Property Cost 5 Section 3.2 Limitations on Undertaking of the City 5 Section 3.3 Commencement and Completion of Construction 5 Section 3.4 Damage and Destruction 5 Section 3.5 Change in Use of Project 5 Section 3.6 Prohibition Against Transfer of Project and Assignment of Agreement 5 Section 3.7 Real Property Taxes 6 Section 3.8 Business Subsidies Act 6 Section 3.9 Duration of Abatement Program 8 ARTICLE IV EVENTS OF DEFAULT 9 Section 4.1 Events of Default Defined 9 Section 4.2 Remedies on Default 9 Section 4.3 No Remedy Exclusive 9 Section 4.4 No Implied Waiver 9 Section 4.5 Agreement to Pay Attorney's Fees and Expenses 10 Section 4.6 Release and Indemnification Covenants 10 ARTICLE V ADDITIONAL PROVISIONS 11 Section 5.1 Conflicts of Interest 11 Section 5.2 Titles of Articles and Sections 11 Section 5.3 Notices and Demands 11 Section 5.4 Counterparts 11 Section 5.5 Law Governing 11 Section 5.6 Duration 12 Section 5.7 Provisions Surviving Rescission or Expiration 12 -i- 464427v2 JSB EL185-33 TAX ABATEMENT AND BUSINESS SUBSIDY AGREEMENT THIS AGREEMENT, made as of the day of July, 2015, by and among the City of Elk River, Minnesota (the "City"), a municipal corporation and political subdivision of the State of Minnesota, and Scott Morrell, LLC, a Minnesota limited liability company(the"Developer"). W1TNESSETH: WHEREAS, pursuant to Minnesota Statutes, Sections 469.1812 through 469.1815, the City has established a Tax Abatement Program; and WHEREAS, the City believes that the development and construction of a certain Project (as defined herein), and fulfillment of this Agreement are vital and are in the best interests of the City, will result in preservation and enhancement of the tax base, provide employment opportunities and are in accordance with the public purpose and provisions of the applicable state and local laws and requirements under which the Project has been undertaken and is being assisted; and WHEREAS, the requirements of the Business Subsidy Law, Minnesota Statutes, Section 116J.993 through 116J.995, apply to this Agreement; and WHEREAS, the City has adopted criteria for awarding business subsidies that comply with the Business Subsidy Law, after public hearings for which notice was published; and WHEREAS, the Council has approved this Agreement as a subsidy agreement under the Business Subsidy Law. 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: ARTICLE I DEFINITIONS Section 1.1 Definitions. All capitalized terms used and not otherwise defined herein shall have the following meanings unless a different meaning clearly appears from the context: Agreement means this Tax Abatement and Business Subsidy Agreement, as the same may be from time to time modified, amended or supplemented; Benefit Date means the date on which a Certificate of Occupancy for the Project is issued by the City; Business Day means any day except a Saturday, Sunday or a legal holiday or a day on which banking institutions in the City are authorized by law or executive order to close; City means the City of Elk River, Minnesota; 464427v2 JSB EL185-33 County means Sherburne County, Minnesota; Developer means Scott Morrell, LLC, a Minnesota limited liability company, its successors and assigns; Event of Default means any of the events described in Section 4.1; Project means the construction of an approximate 13,824 square foot manufacturing facility to be located within the 2nd phase of the City's Nature's Edge Business Center located in the City; Morrell Oversize, Inc. means Morrell Oversize, Inc., a Minnesota corporation, its successors and assigns; State means the State of Minnesota; Tax Abatement Act means Minnesota Statutes, Sections 469.1812 through 469.1815; Tax Abatement Program means the actions by the City pursuant to Minnesota Statutes, Section 469.1812 through 469.1815, as amended, and undertaken in support of the Project; Tax Abatement Property means all and any portion of the real property currently identified as Lot 1, Block 2, Natures Edge Business Center, Parcel ID # 75-820-0205, located in the City; Tax Abatements means the City's share of annual real estate taxes on the Tax Abatement Property, abated in accordance with the Tax Abatement Program. 464427v2 JSB EL185-33 ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1 Representations and Warranties of the City. The City makes the following representations and warranties: (1) The City is a municipal corporation and a political subdivision of the State and has the power to enter into this Agreement and carry out its obligations hereunder. (2) The Tax Abatement Program was created, adopted and approved in accordance with the terms of the Tax Abatement Act. (3) To finance the costs of the Project to be undertaken by or on behalf of the Developer, the City proposes, subject to the further provisions of this Agreement, to convey the Tax Abatement Property to the Developer and apply the Tax Abatements to reimburse the Developer for a portion of the costs of the Tax Abatement Property as further provided in this Agreement. (4) The City has made the findings required by the Tax Abatement Act for the Tax Abatement Program. Section 2.2 Representations and Warranties of the Developer. The Developer makes the following representations and warranties: (1) The Developer has the power to enter into this Agreement and to perform its obligations hereunder and is not in violation of its articles, operating agreement or member control agreement or any local, state or federal laws. (2) The Developer is a limited liability company validly existing under the laws of this State and has full power and to enter into this Agreement and carry out the covenants contained herein. (3) The Developer will construct the Project or cause the Project to be constructed in accordance with the terms of this Agreement and all local, state and federal laws and regulations (including, but not limited to, environmental, zoning, energy conservation, building code and public health laws and regulations). (4) The Developer will obtain or cause to be obtained, 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 Project may be lawfully constructed (5) The construction of the Project would not be undertaken by or on behalf of the Developer, and in the opinion of the Developer would not be economically feasible within the reasonably foreseeable future, without the assistance and benefit to the Developer provided for in this Agreement. 464427v2 JSB EL185-33 (6) 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 conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of, the terms, conditions or provisions of any contractual restriction, evidence 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. (7) The Developer will cooperate fully with the City with respect to any litigation commenced with respect to the Project but only to the extent that the City and the Developer are not adverse parties to the litigation. (8) The Developer will cooperate fully with the City in resolution of any traffic, parking, trash removal or public safety problems which may arise in connection with the construction and operation of the Project. 464427v2 JSB EL185-33 ARTICLE III UNDERTAKINGS BY DEVELOPER AND CITY Section 3.1 Construction of Project and Reimbursement of Tax Abatement Property Cost. (1) The costs of the Tax Abatement Property and the construction of the Project shall be paid by the Developer or Morrell Oversize, Inc. and none of such costs shall be paid by the City except as reimbursed as specifically provided in this Agreement. The Developer will construct the Project or cause the Project to be constructed in accordance with the approved construction plans and at all times prior to the termination of this Agreement will operate and maintain, preserve and keep the Project or cause the Project to be maintained,preserved and kept with the appurtenances and every part and parcel thereof, in good repair and condition. (2) Upon submission to the City of paid invoices for site development costs of the Tax Abatement Property in an amount not less than the Reimbursement Amount, the City shall reimburse the Developer for site development costs of the Tax Abatement Property actually incurred in an amount not to exceed $121,609 (the "Reimbursement Amount") pursuant to the Abatement Program as provided in Section 3.9. Section 3.2 Limitations on Undertaking of the City. Notwithstanding the provisions of Section 3.1, the City shall have no obligation to reimburse the Developer for the site development costs of the Tax Abatement Property, if the City, at the time or times such payment is to be made, is entitled under Section 4.2 to exercise any of the remedies set forth therein as a result of an Event of Default which has not been cured. Section 3.3 Commencement and Completion of Construction. The Developer shall complete the Project or cause the Project to be completed by , 2016. All work with respect to the Project to be constructed or provided by or on behalf of the Developer shall be in conformity with the construction plans as submitted by the Developer and approved by the City. Nothing in this Agreement shall be deemed to impair or limit any of the City's rights or responsibilities under its zoning laws or construction permit processes. Section 3.4 Damage and Destruction. In the event of damage or destruction of the Project the Developer shall repair or rebuild the Project or cause the Project to be repaired or rebuild. Section 3.5 Change in Use of Project. The City's obligations pursuant to this Agreement shall be subject to the continued operation of the Project by the Developer. Section 3.6 Prohibition Against Transfer of Project and Assignment of Agreement. The Developer represents and agrees that prior to the termination date of this Agreement the Developer shall not transfer the Project or any part thereof or any interest therein, except 464427v2 JSB EL185-33 between the Developer and Morrell Oversize, Inc., without the prior written approval of the City. The City shall be entitled to require as conditions to any such approval that: (1) Any proposed transferee shall have the qualifications and financial responsibility, in the reasonable judgment of the City, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Developer. (2) Any proposed transferee, by instrument in writing satisfactory to the City shall, for itself and its successors and assigns, and expressly for the benefit of the City, have expressly assumed all of the obligations of the Developer under this Agreement and agreed to be subject to all the conditions and restrictions to which the Developer is subject. (3) There shall be submitted to the City for review and prior written approval all instruments and other legal documents involved in effecting the transfer of any interest in this Agreement or the Project. Section 3.7 Real Property Taxes. The Developer shall, so long as this Agreement remains in effect, pay or cause to be paid all real property taxes with respect to all parts of the Tax Abatement Property acquired, owned or leased by it or acquired and owned by Morrell Oversize, Inc. which are payable pursuant to any statutory or contractual duty that shall accrue subsequent to the date of its acquisition of title to the Tax Abatement Property (or part thereof) and until title to the property is vested in another person. The Developer agrees that for tax assessments so long as this Agreement remains in effect: (a) It will not seek administrative review or judicial review of the applicability of any tax statute relating to the ad valorem property taxation of real property contained on the Tax Abatement Property determined by any tax official to be applicable to the Project or the Developer or raise the inapplicability of any such tax statute as a defense in any proceedings with respect to the Tax Abatement Property, including delinquent tax proceedings; provided, however, "tax statute" does not include any local ordinance or resolution levying a tax; (b) It will not seek administrative review or judicial review of the constitutionality of any tax statute relating to the taxation of real property contained on the Tax Abatement Property determined by any tax official to be applicable to the Project or the Developer or raise the unconstitutionality of any such tax statute as a defense in any proceedings, including delinquent tax proceedings with respect to the Tax Abatement Property; provided, however, "tax statute" does not include any local ordinance or resolution levying a tax; (c) It will not seek any tax deferral or abatement, either presently or prospectively authorized under Minnesota Statutes, Section 469.181, or any other State or federal law, of the ad valorem property taxation of the Tax Abatement Property so long as this Agreement remains in effect. 464427v2 JSB EL185-33 Section 3.8 Business Subsidies Act. (1) In order to satisfy the provisions of Minnesota Statutes, Sections 116J.993 to 116J.995 (the "Business Subsidies Act"), the Developer acknowledges and agrees that the amount of the "Business Subsidy" granted to the Developer under this Agreement is the value of a portion of the Tax Abatement Property, which is approximately $121,609, and that the Business Subsidy is needed because the Project is not sufficiently feasible for the Developer to undertake without the Business Subsidy. The public purpose of the Business Subsidy is to increase the tax base in the City. The Developer represents that it currently has in the state 105 full-time equivalent permanent employees and they agree that it will meet the following goals (the "Goals"): it will cause Morrell Oversize, Inc. to retain its existing 105 jobs in Minnesota and create at least 8 full time equivalent jobs in connection with the development of the Development Project at an average hourly wage of at least $15.00 per hour or 150% of the state or federal minimum wage, whichever is greater, excluding benefits, within two years from the Benefit Date, which is the date the Developer or Morrell Oversize, Inc. receives a certificate of occupancy for the Project. (2) If none of the Goals are met, the Developer agrees to repay all of the Business Subsidy to the City, plus interest ("Interest") set at the implicit price deflator defined in Minnesota Statutes, Section 275.70, Subdivision 2, accruing from and after the Benefit Date, compounded semiannually. If the Goals are met in part, the Developer will repay a portion of the Business Subsidy (plus Interest) determined by multiplying the Business Subsidy by a fraction, the numerator of which is the number of jobs in the Goals which were not created at the wage level set forth above and the denominator of which is 8 (i.e. number of jobs set forth in the Goals). (3) The Developer agrees to (i) report its progress on achieving the Goals to the City until the later of the date the Goals are met or two years from the Benefit Date, or, if the Goals are not met, until the date the Business Subsidy is repaid, (ii) include in the report the information required in Section 116J.994, Subdivision 7 of the Business Subsidies Act on forms developed by the Minnesota Department of Employment and Economic Development, and (iii) send completed reports to the City. The Developer agrees to file these reports no later than March 1 of each year commencing March 1, 2016, and within 30 days after the deadline for meeting the Goals. The City agrees that if it does not receive the reports, it will mail the Developer a warning within one week of the required filing date. If within 14 days of the post marked date of the warning the reports are not made, the Developer agrees to pay to the City a penalty of$100 for each subsequent day until the report is filed up to a maximum of$1,000. (4) The Developer agrees to cause Morrell Oversize, Inc. to continue operations of the Project for at least five(5) years after the Benefit Date. (5) Other than a $200,000 microloan from the Economic Development Authority of the City of Elk River, the Tax Abatements and comparable tax abatements from the County, there are no other state or local government agencies providing financial assistance for the Project other than the City and the County. (6) There is no parent corporation of Morrell Oversize, Inc. or the Developer. 464427v2 JSB EL185-33 Section 3.9 Duration of Abatement Program. The Tax Abatement Program shall exist for a period of up to 15 years beginning with real estate taxes payable in 2017 through 2031. On or before February 1 and August 1 of each year commencing August 1, 2017 until the earlier of the date that the Developer shall have received the Reimbursement Amount or February 1, 2032 the City shall pay the Developer the amount of the Tax Abatements received by the City in the previous six month period. The City may terminate the Tax Abatement Program and this Agreement at an earlier date if an Event of Default occurs and the City rescinds or cancels this Agreement. 464427v2 JSB EL185-33 ARTICLE IV EVENTS OF DEFAULT Section 4.1 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 any one or more of the following events: (1) Failure by the Developer to timely pay or cause to be paid any ad valorem real property taxes, special assessments, utility charges or other governmental impositions with respect to the Project. (2) Failure by the Developer to construct or cause the construction of the Project to be completed pursuant to the terms, conditions and limitations of this Agreement. (3) Failure by the Developer to observe or perform any other covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement. Section 4.2 Remedies on Default. Whenever any Event of Default referred to in Section 4.1 occurs and is continuing, the City, as specified below, may take any one or more of the following actions after the giving of 30 days' written notice to the Developer citing with specificity the item or items of default and notifying the Developer that it has 30 days within which to cure said Event of Default. If the Event of Default has not been cured within said 30 days: (a) The City may suspend its performance under this Agreement until it receives assurances from the Developer, deemed adequate by the City, that the Developer will cure its default and continue its performance under this Agreement. (b) The City may cancel and rescind this Agreement. (c) The City may take any action, including legal or administrative action, in law or equity, which may appear necessary or desirable to enforce performance and observance of any obligation, agreement, or covenant of the Developer under this Agreement. Section 4.3 No Remedy Exclusive. No remedy herein conferred upon or reserved to the City 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. Section 4.4 No Implied Waiver. In the event any agreement contained in this Agreement should be breached by any party and thereafter waived by the other party, such waiver shall be 464427v2 JSB EL185-33 limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. Section 4.5 Agreement to Pay Attorney's Fees and Expenses. Whenever any Event of Default occurs and the City shall employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement or performance or observance of any obligation or agreement on the part of the Developer herein contained, the Developer agrees that they shall, on demand therefor, pay to the City the reasonable fees of such attorneys and such other expenses so incurred by the City. Section 4.6 Release and Indemnification Covenants. (1) The Developer releases from and covenants and agrees that the City and its governing body members, officers, agents, servants and employees shall not be liable for and agrees to indemnify and hold harmless the City and its governing body members, officers, agents, servants, and employees 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 Project. (2) Except for any willful misrepresentation or any willful or wanton misconduct of the following named parties, the Developer agrees to protect and defend the City and its governing body members, officers, agents, servants and employees, now or forever, and further agrees to hold the aforesaid harmless from any claim, demand, action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from a breach of the obligations of the Developer under this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, leasing, maintenance and operation of the Project. (3) The City and its governing body members, officers, agents, servants and employees shall not be liable for any damages 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 Project due to any act of negligence of any person. (4) All covenants, stipulations, promises, agreements and obligations of the City contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the City and not of any governing body member, officer, agent, servant or employee of the City in the individual capacity thereof. 464427v2 JSB EL185-33 ARTICLE V ADDITIONAL PROVISIONS Section 5.1 Conflicts of Interest. No member of the governing body or other official of the City shall participate in any decision relating to this Agreement which affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is directly or indirectly interested. No member, official or employee of the City shall be personally liable to the City in the event of any default or breach by the Developer or successor or on any obligations under the terms of this Agreement. Section 5.2 Titles of Articles and Sections. Any titles of the several parts, articles and sections of this Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 5.3 Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand or other communication under this Agreement by any party to any 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 (1) in the case of the Developer is addressed to or delivered personally to: Scott Morrell, LLC 10752 171st Avenue Elk River, MN 55330 Attention: Terry and Renee Morrell (2) in the case of the City is addressed to or delivered personally to the City at: City of Elk River Elk River City Hall 13065 Orono Parkway Elk River, MN 55330-5600 Attn: Director of Economic Development or at such other address with respect to any such party as that party may, from time to time, designate in writing and forward to the other, as provided in this Section. Section 5.4 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 5.5 Law Governing. This Agreement will be governed and construed in accordance with the laws of the State of Minnesota. 464427v2 JSB EL185-33 Section 5.6 Duration. This Agreement shall remain in effect through the earlier of the date the Developer receives the Reimbursement Amount or February 1, 2032, unless earlier terminated or rescinded in accordance with its terms. Section 5.7 Provisions Surviving Rescission or Expiration. Sections 4.5 and 4.6 shall survive any rescission, termination or expiration of this Agreement with respect to or arising out of any event, occurrence or circumstance existing prior to the date thereof 464427v2 JSB EL185-33 IN WITNESS WHEREOF, the City has caused this Agreement to be duly executed in its name and on its behalf, and the Developer has caused this Agreement to be duly executed in its name and on its behalf, on or as of the date first above written. SCOTT MORRELL, LLC By Its This is a signature page to the Tax Abatement and Business Subsidy Agreement by and between the City of Elk River, Minnesota and Scott Morrell, LLC 464427v2 JSB EL185-33 CITY OF ELK RIVER, MINNESOTA By Its Mayor By Its City Clerk This is a signature page to the Tax Abatement and Business Subsidy Agreement by and between the City of Elk River, Minnesota and Scott Morrell, LLC 464427v2 JSB EL185-33