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6.2. SR 07-06-2004Item ~ *6.2.* MEMORANDUM TO: FROM: DATE: Mayor & City Council Catherine Mehelich, Director of Economic Development July 6,2004 SUBJECT: Consider Approval of Assignment of Tax Rebates (Abatements) from Badger Ventures, LLC to The Bank of Elk River Attachment · DRAFT Assignment of Tax Rebates Agreement Issue Badger Ventures, LLC has requested that the City of Elk River authorize an assignment of the Tax Rebate (Abatement) payments to The Bank of Elk River. The Tax Abatement and Business Subsidy Agreement between the City of Elk River and Badger Ventures, LLC requires written approval from the City of any transfer or assignment of the Agreement. An assignment of tax abatement and tax increment financing payments is quite common among other cities and development projects. The city's attorney is reviewing the attached draft Assignment of Tax Rebates Agreement document and staff will provide a recommendation at the City Council meeting. Jul O1 04 11:06a Hess Lam 0££ice (763)274-1452 DRA;:? ASSIGNMENT OF TAX REBATES THIS AGREEMENT, Made this 84 day o£ July, 2004, by and between Badger Ventures, LLC (the "Borrower") and The Bank of Elk River (the "Lender"). RECITALS The Borrower has entered into a Loan Agreement of even date herewith with the Lender (the "Loan Agreement"), under which the Lender has agreed to make advances to the Borrower not exceeding the aggregate principal sum of Nine Hundred Seventy-seven Thousand Five Hundred and 00/00's Dollars ($977,500.00) in accordance with the terms thereof, to finance construction on land located within the City of Elk River, Sherbume County, State of Minnesota, legally described on Exhibit "A" attached hereto (the "Project"). Advances to be made under the Loan Agreement will be evidenced by the Borrower's Mortgages, Security Agreements and Fixture Financing Statements (the "Mortgages") and Promissory Notes (hereafter "Notes") of even date therewith payable to the order of the Lender in the aggregate principal amount of Nine Hundred Seventy-seven Thousand Five Hundred and 00/00's Dollars ($977,500.00). Badger Ventures, LLC, has been approved through the City of Elk River for Tax Rebate Financing. The Lender has required, as a condition to making any Advances under the Loan Agreement, the execution hereof by the Borrower. ACCORDINGLY, in consideration of the foregoing, the Borrower does hereby grant, assign, transfer and set over unto the Lender all of its rights, title and interest in and to any and all tax rebates ("Rebates") received from the City of Elk River in connection with the tax abatement financing. The Borrower agrees that no change in the terms thereof shall be valid without the written approval of the Lender. The Borrower agrees not to assign, sell, pledge, mortgage or otherwise transfer or encumber its interest in the Rebates so long as this Assignment is in effect. The Borrower hereby irrevocably constitutes and appoints the Lender as its attorney-in-fact to demand, receive, and enforce the Borrower's right with respect to the Rebates, to receive payments under the Rebates and file appropriate receipts, releases and satisfactions for and on behalf of and in the name of the Borrower or, at the option of the Lender, in the name of the Lender, with the same force and effect as the Borrower could if this Assignment had not been made. Borrower authorizes the rebates to be paid directly to Lender. This Assignment shall constitute a perfected, absolute and present assignment. The Lender may, without affecting any of its rights or remedies against the Borrower under any other instrument, document or Jul O1 04 ll:OSa Hess Lac OFFice (763)274-1452 p.3 agreement, exercise its right under this Assignment as the Borrower's attorney-in-fact in any manner permitted by law, and in addition, the Lender shall have the right to exercise and enforce any or all rights and remedies available at~er default to a secured party under the Uniform Commercial Code, as adopted in the State of Miunesota. The Borrower hereby agrees to pay all reasonable costs and expenses (including without limitation reasonable attorneys' fees) which the Lender may incur in exercising any of its rights under this Assignment. This Assignment shall be binding upon the Borrower, its heirs, representatives, assigns, and successors, mad shall inure to the benefit of the Lender, its successors and assigns. The Borrower has concurrently executed and delivered to the Lender this Assignment, and the Borrower intends to be bound by the terms of this Assignment. This Agreement can be waived, modified, amended, terminated or discharged only explicitly in writing, signed by the Lender. A waiver signed by the Lender shall be effective only in a specific instance and for the specific purpose given. Mere delay or failure to act shall not preclude the exercise or enforcement of any of the Lender's rights or remedies hereunder. All rights and remedies of the Lender shall be cumulative and may be exercised singularly or concurrently, at the Lender's option, and the exercise or enforcement of any one such right or remedy shall neither be a condition to nor bar the exercise or enforcement of any other. IN WITNESS WHEREOF, the Borrower has executed this Assignment as of the day and year first above written. BADGER VENTURES, LLC By: Duane A. Goetsch Its: President This Assignment is hereby acknowledged. It is understood that all payments shall be made directly to Lender at The Bank of Elk River, 630 Main Street, Elk River, Minnesota 55330. CITY OF ELK RIVER By: Stephanie Klinzing Its: Mayor By: Pat Klaers Its: Administrator 2 ASSIGNMENT OF TAX REBATES THIS AGREEMENT, Made this 6th day of July, 2004, by and between Badger Ventures, LLC (the "Borrower") and The Bank of Elk River (the "Lender"). RECITALS The Borrower has entered into a Loan Agreement of even date herewith with the Lender (the "Loan Agreement"), under which the Lender has agreed to make advances to the Borrower not exceeding the aggregate principal sum of Nine Hundred Seventy-seven Thousand Five Hundred and 00/00's Dollars ($977,500.00) in accordance with the terms thereof, to finance construction on land located within the City of Elk River, Sherburne County, State of Minnesota, legally described on Exhibit "A" attached hereto (the "Project"). Advances to be made under the Loan Agreement will be evidenced by the Borrower's Mortgages, Security Agreements and Fixture Financing Statements (the "Mortgages") and Promissory Notes (hereafter "Notes") of even date therewith payable to the order of the Lender in the aggregate principal amount of Nine Hundred Seventy-seven Thousand Five Hundred and 00/00's Dollars ($977,500.00). Badger Ventures, LLC, has been approved through the City of Elk River, a municipal corporation and political subdivision of the State of Minnesota and by Sherburne County, State of Minnesota for Tax Rebate Financing, and has entered into Tax Abatement and Business Subsidy Agreements with each on or about this same date. The Lender has required, as a condition to making any Advances under the Loan Agreement, the execution hereof by the Borrower, the City of Elk River, and Sherburne County. ACCORDINGLY, in consideration of the foregoing, the Borrower does hereby grant, assign, transfer and set over unto the Lender all of its rights, title and interest in and to any and all tax rebates or abatements ("Rebates") received from the City of Elk River and Sherburne County in connection with the tax abatement financing. The Assignment shall terminate when Borrower has fully performed. The Borrower agrees that no change in the terms thereof shall be valid without the written approval of the Lender. The Borrower agrees not to assign, sell, pledge, mortgage or otherwise transfer or encumber its interest in the Rebates so long as this Assignment is in effect. The Borrower hereby irrevocably constitutes and appoints the Lender as its attorney-in-fact to demand, receive, and enforce the Borrower's right with respect to the Rebates, to receive payments under the Rebates and file appropriate receipts, releases and satisfactions for and on behalf of and in the name of the Borrower or, at the option of the Lender, in the name of the Lender, with the same force and effect as the Borrower could if this Assignment had not been made. Borrower authorizes the rebates to be paid directly to Lender. This Assignment shall constitute a perfected, absolute and present assignment. The Lender may, without affecting any of its fights or remedies against the Borrower under any other instrument, document or agreement, exercise its fight under this Assignment as the Borrower's attorney-in-fact in any manner permitted by law, and in addition, the Lender shall have the rio~ht to exercise and enforce any or all rights and remedies available after default to a secured party under the Uniform Commercial Code, as adopted in the State of Minnesota. The Borrower hereby agrees to pay all reasonable costs and expenses (including without limitation reasonable attorneys' fees) which the Lender may incur in exercising any of its rights under this Assignment. This Assignment shall be binding upon the Borrower, its heirs, representatives, assigns, and successors, and shall inure to the benefit of the Lender, its successors and assigns. The Borrower has concurrently executed and delivered to the Lender this Assignment, and the Borrower intends to be bound by the terms of this Assignment. This Agreement can be waived, modified, amended, terminated or discharged only explicitly in writing, signed by the Lender. A waiver signed by the Lender shall be effective only in a specific instance and for the specific purpose given. Mere delay or failure to act shall not preclude the exercise or enforcement of any of the Lender's fights or remedies hereunder. All rights and remedies of the Lender shall be cumulative and may be exercised singularly or concurrently, at the Lender's option, and the exercise or enforcement of any one such fight or remedy shall neither be a condition to nor bar the exercise or enforcement of any other. IN WITNESS WHEREOF, the Borrower has executed this Assignment as of the day and year first above written. Bf~GER VENTURES, LLC By: Duane A. Goetsch Its: President 2 This Assignment is hereby acknowledged. It is understood that all payments shall be made directly to Lender at The Bank of Elk River, 630 Main Street, Elk River, Minnesota 55330. CITY OF ELK RIVER By: Stephanie Klinzing Its: Mayor By: Pat Klaers Its: Administrator This Assignment is hereby acknowledged. It is understood that all payments shall be made directly to Lender at The Bank of Elk River, 630 Main Street, Elk River, Minnesota 55330. SHERBURNE COUNTY By: Brian J. Bensen Its: County Administrator