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5.1. & 5.3. EDSR 08-14-2000 ELK RIVER ECONOIPMENT AUTHORITY Item # 5 .1 & 5.3 • TO: Elk River EDA FROM: Cathy Mehelich, Director of Economic Development DATE: August 10, 2000 SUBJECT: David& Carole Ripplinger Project Issue Per state law, the EDA is to consider public input on the following items as it relates to the Ripplinger development proposal: 1) Sale/disposal of EDA public property—South Half of Lot 1, Block 1, Country Crossing Business Center 2nd Addition. 2) Granting Subsidy Assistance in an amount exceeding $100,000 to be provided in the form of a land sale write down Background David & Carole Ripplinger have proposed to construct a 15,200 square foot building to relocate and expand their business (Track of the Wolf, Inc.) to Elk River and also to provide leasible light industrial space on half of a site • currently owned by the EDA (located at Joplin Street & 183rd Ave). The Ripplingers have requested that the EDA provide the following assistance in order to encourage the development project to occur: • Subdivide the property into two lots $ 8,000 • Transfer the south half of the property $165,400 to David & Carole Ripplinger at a 100% write down of market value • Split the cost of water/sewer installation $ 2,500 Total value of assistance requested $175,900 Current market value of the 4.36 acres is $330,800. The City of Elk River purchased the property in December 1997 with excess tax increment finance revenues in the amount of$198,750. The property was then transferred to the EDA for sale and marketing. Limitations exist on the EDA sale of the property since the purchase was last funded by tax increment finance dollars. Any sale proceeds would be Alik considered increment and would need to be returned to the County for gr distribution. The source of funds for subdivision expenses and water/sewer installation would come from the EDA reserve fund. 13065 Orono Parkway • P. 0.Box 490 • Elk River, MN 55330-1743• (612) 441-7420 • Fax (612) 441-7425 Equal Opportunity Housing and Equal Opportunity Employment • Staff has evaluated the Ripplinger Tax Increment Financing Application and has determined that subsidy assistance is appropriate for the project based on the public purposes and project goals to be met by the development. The public purposes to be met by the development include 1) Enhance & diversify the City's industrial tax base, and 2) Contribute to the fulfillment of the City's Strategic Plan for Industrial Development, and 3) Job creation. The project has potential to stimulate additional private investment in the West Business Park and also provide additional leasible light industrial space in Elk River. The project goals for the subsidy includes the construction of a minimum of 15,000 square feet of light industrial space and the creation of 4.5 permanent full-time equivalent employee positions (in addition to the existing 5 full- time employees) at wages of at least $15.00 per hour, exclusive of benefits. Staff has worked with planning and engineering staff to design a global area storm drainage system to accommodate the three developments currently proposed in the West Business Park. Staff recommends that a condition of the property sale include the Ripplingers' participation in the global storm drainage plan. This requirement has been drafted as part of the purchase • agreement. The expenditure of approximately $10,000 for extension of water & sewer has been a point of negotiation between staff and the developer. Please refer to the attached memo from the City Administrator for staff recommendation. Requested Action Following the public hearing, staff recommends that the EDA consider action on the following items: 1) Sale of the described property to David & Carole Ripplinger in accordance with the purchase agreement and approved plans and specifications; and 2) Granting subsidy assistance in the amount of$175,900 per the Performance/Assistance Agreement to David & Carole Ripplinger with recommendation to City Council for final approval. Attachments • Site Map • Application for Tax Increment Financing - Ripplinger • Purchase Agreement - Ripplinger • Performance/Assistance Agreement - Ripplinger • Memo from City Administrator Re: EDA Site • • cKE. =• °� �.:�o ---� tm _i_si q Q Q. e�� �' ri r,•••i,1•••i l i W °. c4V ax. ••.:,: + -•„ .; 5e 3 i SEB r .. W}1--, 44 a U !Nl e•:,, a - - E t T ' a V g [ 'i:, !..,1.! oil^ 1 aTs O O� is v ,�r. ':.,.. 1 `� !; • e—o`a$ g .rg ., ',•— ���\O y 'e•i .3 ,1%.,s,- p' $r mill Q 11.1 Q i 1 Ii I Q I I � I OI I I _'f/i his•41 ./,MH J. 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I $ 1�4/ b4 6111110 o � o „.., • O F L b r11111111.1111111111 4 b �II° II° 5 b Ii° 4 R O 4 I° O C 1 R II F11° 4 �. xb V0 I $ C3 0 m t II 0 k. o ___. v.t. I II° k I b II° b R A h° 13 z Ce .a• r, • •� Y o d3 0 rr a ” 43 e li° 4 b O II° • ^ rYI 0 in ..../f . }S V' ..rw RSi AG-Si RSL 0 AO-S01 O O 0 0 VII. APPLICATION FOR TAX INCREMENT FINANCING --h/:5 application be eorrndtried liI thonCrMT • A. APPLICANT INFORMATION app . Name of Corporation/Partnership Dau/c1 S a LQ r®l e. /q• RI pp Ll fryer' Address U '//3 C'-Oar?1V finaCt l , &l k 8l tier, frJ,J 55330 Primary Contact Dau i d S e Ri Address 1104 ltd fou n hi RC/ /4/ gl Thuri Dov 55330 1 3_qaq-a5'-oo da.y3 Phone 7(13-0263-0959 Fax 7(03- 424- q F60 Email ftar/ /CLXS'.ne± eves On a separate sheet, please provide the following: • Brief description of the corporation/partnership's business, including history, principal product or service, etc... Attach as Exhibit A . • Brief description of the proposed project. Attach as Exhibit B. • List names of officers and shareholders/partners with more than • five percent (5%) interest in the corporation/partnership. Attach as Exhibit C. • A but-for analysis. Attach as Exhibit D. Attorney Name Robert Bauer - SeUerSon, Sh-eldon, Dott6herty Molendco Address `1300 tel 147411 Va.ttey IM N 6 5l aq-`7580 Phone 952-'43a-3156) Fax q5,9 -43 -3780 Email Accountant Name Ph y 1 I r 5 &aro t t e, CFR Address 5'775 tuayzatct.. &ud dude, Sig Tp15, fi9N Phone(v/A- 54(a- Wok Fax Cola-5 -L368 Email Contractor Name RIUer$ er05Siqg Address AO 13dX 5'7 Elk 'lives, MAl 55330 Phone 7,3-'J4/- 2g,29 Fax 763-yh//-gia9 Email Engineer Name Rij d-e.L L D&S r JC.n Crroup Address g04q CI-len rL,ui Lane , /5rooklyn Park A') ) 554/3 Phone 76 3-zla 5-6,5--/a Fax 7423 -1-41.6.-1:4/4 Email Architect Name tcgda . Design troop • Address q01-0 (Re Edi n Lane Brooklyn lark 562A/3 Phone 760.3-45-(v51 a Fax 73S4/ / Email 8 B. PROJECT INFORMATION The project will be: X Industrial Greenfield: X New Construction Expansion • Commercial Redevelopment: New Construction Rehabilitation Industrial Redevelopment: New Construction Rehabilitation Other The project will be: >( Owner Occupied X Leased Space If leased space,please attach a list names and addresses of future lessees and indicate the status of commitments or lease agreements.Attach as Exhibit E. Project Address S TopIrn hreet /Vt ) and. /83rd r eno-e- N Legal Description Sou.fhern/y nal f o f' Jot I Block .1 of &xtntry Cros$in :sines deo_o 7c2 �4cllrl /tion Site Plan Attached: X Yes No Pr 1 m ma rs Amount of Tax Increment Requested for: Land Purchase $ 10',000. 00 Public Improvement $ Site Improvement $ Current Real Estate Taxes on Project Site: $ linkilJUit Estimated Real Estate Taxes upon Completion: Phase I $0.1,506 based a n ` h50 • Phase II $/i, ,V5-0 '' Construction Start Date: Sul y A000 0 Construction Completion Date: SQn( ary .00l If Phased Project: a00/ Year % Completed 0004 Year 33 % Completed C. PUBLIC PURPOSE It is the policy of the City of Elk River that the use of Tax Increment Financing should result in a benefit to the public. Please indicate how this project will serve a public purpose. X Job Creation: Number of existing jobs 5 Number of jobs created by project �,- . Average hourly wage of jobs created /0 - X New industrial development which will result in additional private investment in the area. K Enhancement or diversification of the city's economic base. X The project contributes to the fulfillment of the City's Strategic Plan for Economic Development. _Removal of blight or the rehabilitation of a high profile or priority S site. )( Other: W iLL In 11-10.Ee Eh e e:u'eio pn eit of the OW- 606(Hess Parr . . 9 D. SOURCES & USES • SOURCES NAME AMOUNT Bank Loan WeLL S Fa 130 $.300,000 Other Private Funds $ Equity- m 'OSlige Di UicLcs & &p/011,yr $ x{00, 000 Fed Grant/Loan $ State Grant/Loan $ EDA Micro Loan $ Tax Increment $ ID Bonds $ TOTAL $ "100, 000 USES AMOUNT Land Acquisition $ Site Development ALL SI Tg t4JO6K $ 13g:/000 Construction $ 53,'1, 000 Machinery & Equipment $ Architectural & Engineering Fees $ 18, 000 Legal Fees $ /, 000 Interest During Construction $ 61000 Debt Service Reserve $ III Contingencies $ TOTAL $ 100, 000 • 10 E. ADDITIONAL DOCUMENTATION Applicants will also be required to provide the following documentation. IllA) 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 J C) Two Year Financial Projections F) Personal Financial Statements of all Major Shareholders `. Profit & Loss Current Tax Return )� G) Letter of Commitment from Applicant Pledging to Complete During the Proposed Project Duration . H) Letter of Commitment from the Other Sources of Financing, Stating Terms and Conditions of their Participation in Project 1 (l i A I) Application fee of$5000 (to be returned upon project completion.) Note: All Major shareholders will be required to sign personal guarantees 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 and verify financial and other information. The undersigned also agrees to provide any additional information as may be requested by the City after the filing of this application. ApR t Na F iC//i c5 G/441e6 L , , ' / te2-/AV2 A. By Add//1.0,,, . //% , ALII\ _ a .20 i Its i !'of i • 11 EXHIBIT A Description of the corporation or partnership • EXHIBIT B t/ Description of the proposed project t ., EXHIBIT C Names of officers and shareholders/partners with more than five percent (5%) interest in the corporation/partnership. EXHIBIT D But-for analysis EXHIBIT E Prospective Lessees • • 14 • City of Elk River Proposal a combined project by David & Carole Ripplinger, and Equity Management EXHIBIT A Description of the corporation or partnership The southerly half of the proposed development will be owned and occupied by David S. Ripplinger, and Carole A. Ripplinger 16413 County Road 14 Elk River,MN 55330 Tel: 763-263-0959 Tel: 763-424-2500 Fax: 763-424-9859 track@iaxs.net • • City of Elk River Proposal a combined project by David & Carole Ripplinger, and Equity Management EXHIBIT B Description of the proposed project The southerly half of the proposed development will consist of a 15,200 square foot masonry building, in phase one, 7,600 square foot masonry addition, planned for phase two, 7,000 square foot masonry addition, planned for phase three. Construction to begin during August, 2000, with phase one completion in January, 2001. Development by Rivers Crossing, Mr. Gary Santwire. Located at Joplin Street N. W. and 183rd Avenue N. W., in the new Elk River West Business Park, • the southerly half of lot 1, block 1, of Country Crossing Business Park, Second Addition. David S. Ripplinger, and Carole A. Ripplinger 16413 County Road 14 Elk River,MN 55330 Tel: 763-263-0959 Tel: 763-424-2500 Fax: 763-424-9859 track@iaxs.net • City of Elk River Proposal a combined project by David& Carole Ripplinger, and Equity Management EXHIBIT C Names of officers, shareholders / partners with more than five percent (5%) interest in the corporation / partnership. The southerly half of the proposed development will be owned by David S. Ripplinger, and Carole A. Ripplinger 16413 County Road 14 Elk River,MN 55330 Tel: 763-263-0959 Tel: 763-424-2500 • Fax: 763-424-9859 track@iaxs.net • • City of Elk River Proposal a combined project by David & Carole Ripplinger, and Equity Management EXHIBIT E Prospective Lessees The southerly half of the proposed development will be leased by Track of the Wolf, Inc., a Minnesota Corporation, marketing, manufacturing, and distributing specialty sporting goods, owned and managed by David S. Ripplinger, and Carole A. Ripplinger owner occupants, and one, or perhaps two, small light industrial businesses, as allowed by Elk River Business Park zoning. David S. Ripplinger, and Carole A. Ripplinger 16413 County Road 14 Elk River,MN 55330 Tel: 763-263-0959 Tel: 763-424-2500 Fax: 763-424-9859 track@iaxs.net Business Plan • for Track of the Wolf, Inc. We are engaged in mail-order marketing and distribution of specialty sporting goods, specifically exact replica early American tents, camp cookware, cutlery, mnz7le loading guns, kits, spare parts, craft projects, and publications on period topics. In business for more than 28 years, Track of the Wolf, Inc. is owned and operated by David S. Ripplinger and Carole A. Ripplinger, serving more than 100,000 customers. Our most successful marketing techniques include our 432 page technical catalog, direct mail, display advertising in trade journals, and personalized attention to regular customers. We create entirely original art for our catalog, direct mail, and advertising, in house. Our product line exceeds 12,000 items. Sales during 2000 will approach 2,000,000.00 dollars. Recent growth rates have been 18% and 20% per year, prior to our internet web site use. We opened a web site in February, 1999, which displays less than 1% of our product line, but accounts for 20% of current sales volume. Most surprising, the vast majority of internet sales are to new customers, and many are foreign orders, for export. • Our customersraise the recent expansion of our technical sales staff. Telephone orders P are taken by skilled technical experts, unique in our industry, who offer advice. Future plans include conservative expansion of our catalog, advertising, and direct mail programs. We plan immediate expansion of our web site, more narrowly focused target marketing, increased publishing, and light manufacturing of proprietary products. We seek to hire a Unix System administrator, a C or Perl programmer, a Web Page devel- oper, two additional technical sales experts, and four additional parcel shipping clerks. We expect to continue our 18 to 20% annual growth rate, using conservative management. Sub 'tted forur co i srati6n, ///://4/' 5217 . .vid S. .ppl' ger ;> President • Track of the Wolf, Inc. Post Office Box 6 Osseo, MN 55369 Tel: 763-424-2500 Fax: 763-424-9859 July 20, 2000 • Re: Proposal for a project, by David & Carole Ripplinger, & Equity Management. Letter of Commitment, to complete during the proposed project duration. City of Elk River City Council Dear Sirs: Please accept our letter of commitment, as requested in your project application. We, the undersigned applicants, pledge to complete phase one, consisting of a 15,200 square foot masonry building, on the southerly half of the proposed development, during the period of the proposed development. iThis new facility is essential to the continued growth and success of our business. .mc_ , y, aid S. Ripplinger 1 j !IPOLO, • Carole A. Ripplinger David S. Ripplinger, and Carole A. Ripplinger 16413 County Road 14 Elk River,MN 55330 Tel: 763-263-0959 • Tel: 763-424-2500 Fax: 763-424-9859 track@iaxs.net BUT-FOR ANALYSIS EXHIBIT D - RIPPLINGER NO TAX INCREMENT WITH TAX INCREMENT COST: Land: $109,000.00 $0.00 Site Work: $163,000.00 $163,000.00 Construction: $533.000.00 $533,000.00 Total $809,000.00 $700,000.00 MORTGAGE: $409,000.00 $300,000.00 EQUITY: $400,000.00 $400,000.00 ANNUAL INCOME: 15,000 S.F.@$4.50 S.F. $67,500.00 $67,500.00 • ANNUAL EXPENSE: Mortgage 22.5 years©9.5% $46,184.00 $33,876.00 NET INCOME: $21,316.00 $33,624.00 TOTAL RETURN ON EQUITY 5.40% 8.40% s D&C RIPPLINGER &2dee, LL / ,fl TAX INCREMENT FINANCING PROPOSAL REVIEW WORKSHEET • 1. The project meets the criteria set forth in Section III of the City's Tq.x Increment Financing policy. a) Meets minimum thresholds for size, value, and tax capacity. LZ b) Meets at least one of the objectives in Section III and satisfies the provision set forth in Section IV. t� c) Demonstrates need for TIF with the but-for analysis. l/e) Consistent with all city plans and ordinances. f) Serves at least two public purpose as defined in Section IV. 2. Ratio of Private to Public Investment in Project: Points: 7 $ 70 ,6. Private investment \� 5:1 5 $/73, 3'O Public Investment( s Sa&/v,v -��' 4:1 .3/4-I Ratio Private : Public Financing 3:1 3 2:1 2 Less than 2:1 1 3. Job Creation in the City of Elk River: Points: '5 Number of new jobs as a result of the project. 40+ 5 Number of existing/retained jobs divided by 10. 30+ 4 q 5 Total 20+ 3 10+ 2 • Less than 10 4. Ratio of TIF to new jobs created: Points: 7 $/73, yr s', TIF request $15,000 or less 5 �1. 5 Number of new jobs created $20,000 or less 4 $ /3",.2 2- of TIF per new job created $22,000 or less 3 $25,000 or less 2 Over $25,000 1 5. Wage Level of jobs created: Points: - Average hourly wag Over $21/ hour 5 of jobs created: 7 /S..©c $18-21 /hour 4 $14-17 /hour $10-13 /hour 2 Under $10 /hour 1 6. Project size: Points: 2 .4 The project will result in the construction 80,000+ 5 of square feet /6, 2c2CD y2e__ 65,000+ 4 50,000+ 3 3 -<:DO 4J '). 4)-e:fj35,000+ • �` „r, ® eT 25,000+ 1 12 7. Type of Project: Points: 100% Owner Occupied 5 V Mix Owner Occupied & Investment 4 Investment Property 3 8. Use: Points: (./•Manufacturing J./ Research & Development 4 Commercial Redevelopment 3 V Warehouse/Distribution 2 Housing 1 9. The project will pay annual Points: -3 4 property taxes in the first fully A 85,000+ 5 assessed year of$ 22, 5aCet-Cc/7u_ 70,000+ 4 33, 750 �cu y 55,000+ P g / 7, 40,000+ 2 25,000+ 1 10. Likelihood that the project will result in Points: . unsubsidized, spin-off development. l/High 5 Moderate 3 Low 1 Sub - Total Points: - / of a possible 45 points. 9. Bonus Points Bonus Points: n/9 40 The project will be 100% Pay-as-you-go TIF. 3 points The project contributes to the goals of Energy City. 2 points • Product promotes sensible use of energy, OR • Project utilizes significant energy efficient design &/or materials in construction. Total Points: Overall project analysis: High 45-38 points oderate 37-29 points Low 28-20 points Not Eligible 19-0 points • 13 { • PURCHASE AGREEMENT THIS PURCHASE AGREEMENT (the "Purchase Agreement") is made this day of August, 2000, by and between David S. and Carole A. Ripplinger, husband and wife ("Buyer"), and the Economic Development Authority in and for the City of Elk River, a public body corporate and politic ("Seller"). In consideration of the mutual covenants and undertakings contained herein the parties agree as follows: 1. Sale and Purchase of Property. Seller agrees to sell, and Buyer agrees to purchase, certain real property situated in the County of Sherburne, State of Minnesota, consisting of certain land legally described on Exhibit A attached hereto and made a part hereof, together with all the appurtenant rights, mineral rights, privileges, and easements belonging thereto (the "Property"). 2. Purchase Price. Buyer agrees to pay to Seller, as the purchase price for the Property (the "Purchase Price"), the sum of $1.00 which shall be paid in cash at closing. 3. Title. As soon as reasonably possible after Buyer's acceptance of this • Purchase Agreement, Seller shall deliver to Buyer a commitment for an owner's title insurance policy issued by a title company to be determined by Seller, naming Buyer as the proposed owner-insured of the Property in the amount of the Purchase Price (the "Commitment"). Buyer will be allowed 10 days after receipt of the Commitment for examination thereof and for making any objections to the marketability of the title to the Property, said objections to be made by written notice delivered to Seller within said 10 day period or to be deemed waived. If any objections are so made to the marketability of the title to the Property, Seller shall be allowed 90 days after the making of such objections by Buyer to cure such objections and make the title to the Property good and marketable of record in Seller. Pending the correction of the title, the Closing Date and the payments hereunder required shall be postponed, but upon correction of the title and within 15 days after written notice of such correction given by Seller to Buyer, Seller and Buyer shall perform this Purchase Agreement according to its terms. If the title to the Property, as evidenced by the Commitment, is not good and marketable of record in Seller and is not made so within 90 days after the date on which the Buyer delivers written objections thereto to Seller, or is not good and marketable of record in Seller at the Closing Date, Buyer may either: a. Terminate this Purchase Agreement by giving written notice to Seller in which event this Purchase Agreement shall become null and void and neither party shall have any further right or obligation hereunder; • or • b. Elect to accept the title in its unmarketable condition by giving written notice to Seller, in which event Buyer shall proceed to close the purchase of the Property in accordance with the terms of this Purchase Agreement and without any reduction in the Purchase Price. 4. Inspection. At Buyer's expense, Buyer, its agents and designees, are hereby granted the right at any time or times after the date hereof to enter upon and inspect, analyze, and test the Property. Buyer shall hold Seller harmless from any liability resulting from the entering upon the Property or the performing of any of the tests or inspections referred to in this Section 4 by Buyer, its agents or designees. 5. Covenants and Warranties of Seller. Seller covenants and warrants to Buyer as follows: a. To the best of Seller's knowledge, there is no action, litigation, investigation, condemnation or proceeding of any kind pending or threatened against Seller or the Property, or any interest therein, which could adversely affect the Property or title thereto, and Seller has no knowledge of any reasonable basis for the commencement of any such action, litigation, investigation, condemnation or proceeding. Seller shall give Buyer prompt written notice if any such action, litigation, investigation, • condemnation, or proceeding is commenced on or prior to the Closing Date. b. Seller certifies that to the best of Seller's knowledge there are no wells on the Property. c. Seller states that to the best of Seller's knowledge there is no individual sewage treatment system, as defined in Minn. Stat. 115.55. Buyer acknowledges that Buyer will be purchasing the Property relying only on such investigations, testing and inquiries of and regarding the Property as Buyer shall have chosen to make. Except as specifically set forth in this Purchase Agreement, the Seller has not made, and shall not be deemed to have made, and Buyer hereby disclaims any reliance on, any warranty or representation, oral or written, express or implied, regarding the Property, the condition of the Property, the soil conditions existing on the Property, the environmental conditions on the Property, the zoning or other laws and ordinances applicable to the Property, the uses to which the Property may be put, or any other thing or matter relating to the Property. 6. Closing. The closing shall take place on September 1, 2000, or such other date as is mutually agreed upon. Such date, or such other date as this • transaction actually closes, is herein referred to as the "Closing Date". The closing shall take place at Elk River City Hall, 13065 Orono Parkway, Elk River, Minnesota 55330, or -2- such other location as the parties shall mutually agree upon. At the closing, Seller shall deliver to Buyer: a. A warranty deed properly executed and in recordable form with all applicable transfer taxes paid and stamps, if any, affixed thereto, conveying the Property to Buyer and warranting title thereto subject to: real estate taxes and installments of special assessments due and payable in 2000 and thereafter; building and zoning laws and ordinances; State and Federal rules and regulations; and restrictions, reservations, rights and easements of record. The deed shall include a covenant running with the land which incorporates the conditions of this agreement with respect to use of the Property. b. All certificates, instruments and other documents necessary to permit the recording of the warranty deed. c. A Seller's Affidavit containing statements as to the knowledge of Seller with respect to judgments, bankruptcies, tax liens, mechanics liens, parties in possession, unrecorded interests, encroachment or boundary line questions, and related matters, properly executed on behalf of Seller. Sd. An affidavit of Seller in form and content satisfactory to Buyer stating that Seller is not a "foreign person" within the meaning of Section 1445 of the Internal Revenue code; e. Such other instruments and documents as are necessary to vest title to the Property in Buyer. Upon delivery of the foregoing items, Buyer shall deliver to Seller the Purchase Price payable under Section 2(b) of this Purchase Agreement. 7. Conditions Subsequent. Notwithstanding anything to the contrary contained in this Agreement, the consummation of the transaction contemplated by this Agreement and the closing provided in Paragraph 6 hereof shall be contingent upon Buyer satisfying the following conditions subsequent: a. Buyer shall provide Seller with plans and specifications for development of the Property. b. Buyer shall commence construction of an office-warehouse building on the Property (the "Building") by January 1, 2001. If Buyer has not commenced construction of the Building by January 1, 2001, Seller may, at any time before substantial construction has commenced, cancel the sale of the Property. Upon such cancellation, title to the Property shall return to Seller at no cost to Seller. -3- • c. Buyer shall complete construction of the Building and receive a certificate of occupancy for the Building no later than December 31, 2001. d. The Building shall meet the following criteria: (i) The Minimum size of the Building shall be 15,000 square feet; (ii) The Building shall comply in all respect with the Ordinances of the City of Elk River; and (iii) Buyer shall convey to Seller, or Seller's designee, such easement or other property interest as Seller shall determine necessary to accommodate a drainage pond on the Property. Buyer shall share, with the two properties immediately adjacent to the Property, in the cost of establishing and maintaining said pond. 8. Real Estate Taxes. Real estate taxes due and payable in 1999 and all prior years, if any, shall be paid by Seller. Real estate taxes due and payable in 2000, if II) any, shall be prorated as of the Closing Date based upon the parties' respective period of ownership and possession of the Property in the calendar year of closing. On or prior to the Closing Date, Seller shall pay all special assessments, whether or not then due, then levied against the Property. Seller shall pay on the date of closing any deferred real estate taxes, including "Green Acres" taxes, or special assessments, the payment of which is required as a result of the closing. Seller makes no representation concerning the amount of future real estate taxes or future special assessments. 9. Expenses, Possession. Seller agrees to deliver possession of the Property to Buyer on the Closing Date. In the event Buyer chooses to obtain title insurance or in the event Buyer's lender requires the issuance of title insurance, Buyer shall be responsible for any costs associated with closing with a title company including, but not limited to, the closing fee and all premiums for issuance of either the owner's policy or the lender's policy of title insurance. 10. Notices. All documents to be delivered and all correspondence and notices to be given in connection with this Purchase Agreement shall be in writing and given by personal delivery or sent by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to Buyer: David S. Ripplinger 16413 County Road 14 Elk River, MN 55330 • -4- too • If to Sellers: Elk River Economic Development Authority Attention: Executive Director 13065 Orono Parkway, Elk River, Minnesota 55330 With a copy to: Gray, Plant, Mooty, Mooty & Bennett Attention: Peter K. Beck 3400 City Center 33 South Sixth Street Minneapolis, Minnesota 55402 Each such mailed notice or communication shall be deemed to have been given to or served upon, the party to whom it is addressed three days after the date the same is deposited in the United States registered or certified mail, return receipt requested, postage prepaid, properly addressed in the manner above provided. Either party hereto may change such party's address for the service of notice hereunder by written notice of said change to the other party hereto, in the manner above specified ten (10) days prior to the effective date of said change. 11. Assignment. This Purchase Agreement shall be binding upon and inure to the benefit of each of the parties hereto, their respective successors and assigns. • The foregoing notwithstanding, Buyer shall not assign or convey its rights in the Property or this Purchase Agreement within one year of the Closing Date without first obtaining the consent of Seller and any such assignment or conveyance purportedly made without Seller's consent shall be null and void. Any such assignment or conveyance shall be specifically subject to the Conditions Subsequent set forth in Paragraph 7. 12. Commissions. Seller warrants and represents that it has dealt with no realtors or brokers in connection with this transaction and that it will indemnify, defend and hold harmless Buyer against any claim made by an agent or broker for a commission or fee based on acts or agreements of Seller. Buyer warrants and represents that it will indemnify, defend and hold harmless Seller against any claim made by an agent or broker for a commission or fee based on acts or agreements of Buyer. 13. Default. Should Buyer default in the performance of its obligation to purchase hereunder, Seller's shall be entitled to cancel and terminate this Purchase Agreement in accordance with Minn. Stat. 559.21, as amended. 14. Survive Closing. All of the covenants, warranties, and provisions of this Purchase Agreement shall survive and be enforceable after the closing of this transaction. S -5- Ow • 15. Complete Agreement. This is a final agreement between the parties and contains their entire agreement and supersedes all previous understandings and agreements, oral or written, relative to the subject matter of this Purchase Agreement. 16. Time of the Essence. Time is of the essence in the performance of this Purchase Agreement. 17. Controlling Law. This Purchase Agreement has been made and entered into under the laws of the State of Minnesota, and said laws shall control the interpretation hereof. 18. Captions. The paragraph headings or captions appearing in this Purchase Agreement are for convenience only, are not a part of this Purchase Agreement, and are not to be considered in interpreting this Purchase Agreement. 19. Binding Effect. This Purchase Agreement shall be binding upon and enforceable against each of the parties hereto when and only if executed by the party against whom enforcement of this Purchase Agreement is sought. IN WITNESS WHEREOF, the parties have executed this Purchase Agreement on the date first above written. • Seller: ECONOMIC DEVELOPMENT IN AND FOR THE CITY OF ELK RIVER By Its Buyer: David S. Ripplinger Carole A. Ripplinger • -6- c • Exhibit A Legal Description GP:723972 vl • • • PERORMANCE/ASSISTANCE AGREEMENT August 14, 2000 The Elk River Economic Development Authority (hereinafter referred to as the "Grantor") and David S. & Carole A. Ripplinger (hereinafter referred to as the "Recipient") agree that the assistance under this Agreement is a "Business Subsidy" as defined by Minnesota Statutes, Sections 116J.993 through 116J.995 (the "Subsidy Law") and is subject to the provisions thereof, including without limitation,job creation goals, reporting requirements, five year commitment by the Recipient, and repayment of the subsidy if the Recipient is in default under this agreement, including this Section hereof. Accordingly, it is agreed: (a) The amount if the subsidy is $ 175,900 The type of subsidy is Land sale writedown (source TIF) & subdivision and utility extension expenses incurred by the Grantor for the project. The subsidy will be used by the Recipient to Construct a 15,200 square foot light industrial building on the southerly half of the Lot 1, Block 1 Country Crossing Business Center Second • Addition. (b) The public purposes of the subsidy includes The construction of light industrial building that will 1) enhance and diversify the City's economic industrial base and 2) contribute to the fulfillment of the City's Strategic Plan for Industrial Development and 3) result in additional private investment in the area and 4) the creation of livable wage jobs. (c) The goals of the subsidy include the above public purposes, the completion of the project and the retention of the project for at least five years after the "Benefit Date" of the project, as defined in the Subsidy Law, which is hereby determined to be the date upon which this is granted, August 14, 2000. (d) If the Recipient fails to meet its obligations under this Agreement, the Recipient shall repay all amounts of the subsidy theretofore paid to the Recipient by the City of Elk River/EDA, together with interest accruing at the annual rate per annum equal to the implicit price deflator of Minnesota statutes, Section 275.70, subdivision 2, with all such interest accruing on each subsidy payment made to the Recipient • hereunder from the date of said payments. If the Recipient meets some but not all of the job goals hereinafter defined, the Recipient may 1 • request in writing, and the Grantor may agree, in its absolute discretion, that the subsidy be repaid by the Recipient on a pro rata basis. The Recipient represents that the subsidy is needed in order to induce the Recipient to complete the project in the City of Elk River. The Recipient covenants that it will continue its operations in the Grantor's jurisdiction for at least five years after the benefit date. (e) The Recipient represents that it is a subsidiary of the following parent corporation: Company Name: Address: (f) The Recipient represents that it has accepted subsidies from the following public entities: • Elk River EDA- Land sale write down & subdivision and utility extension expenses incurred by the Grantor for the project. (g) The Recipient represents that it is not in default on the date hereof on any subsidy agreement entered into by the Recipient under the Subsidy Law. • (h)The Recipient represents that it is not able to complete this project in its current location, which is Brooklyn Park because current site is being acquired for redevelopment. (i) The Recipient represents that it currently has in the State of Minnesota 5 full-time equivalent permanent employees and, for its "job goals" hereunder, will create due to the project an additional 4_5 full time equivalent permanent employee positions within two years of the benefit date, with these jobs having wage levels of at least $ 15.00 per hour, exclusive of benefits. The Recipient estimates that the actual average wage for the jobs it creates will be at least $15.00 per hour, exclusive of benefits. The Recipient represents as an additional goal, the construction of a minimum of 15,200 square feet of light industrial space, in which at least 5,000 square feet will be leasible, to be completed within one year of the benefit date. (j) The Recipient shall complete and file with the Grantor an annual report in a form supplied by its Executive Director. The Subsidy Law • requires that if the Recipient does not file such reports, when due, the Grantor must mail the Recipient a warning within one week of the 2 • filing date, and if, after 14 days after the postmark data of that warning, the Recipient continues to fail to report, then the Recipient is required to and shall pay the Grantor a penalty of$100 for each subsequent day until the report is filed, up to a maximum of$1000. The Recipient shall file these reports with the Grantor, in care of its Executive Director at the following times: • On March 1 of each year, beginning with the March 1 immediately following the benefit date. • Within 30 days of the "Compliance Date," hereby defined to be the date which is two years after the benefit date. • If the job goals are not met by the compliance date, every subsequent anniversary thereof until the subsidy is repaid, as may be required hereunder. Each March 1 report shall reflect the prior calendar year, and each subsequent report shall reflect the period since the last reporting period. (k) If the Recipient fails to meet the job goals by the compliance date, the Grantor, upon receiving written request by the Recipient indicating the reasons why the job goals have not been met and the Recipient's reasonable assurance that the goals will be met, may, in its absolute 111, discretion, grant a one year extension of the compliance date. (1) This section of this Agreement is intended to be the "Subsidy Agreement" required by Section 116J.994, Subdivision 3 of the Subsidy Law. In the event that any provision of this Section is inconsistent or in conflict with any provision of the Subsidy Law, and in the event that any provision of the Subsidy Law provides additional requirements, the provisions of the Subsidy Law shall apply and govern. In witness whereof, the Grantor and the Recipient have dully executed this agreement by their duly authorized representatives. Elk River Economic David S. & Carole A. Ripplinger Development Authority (Grantor) (Recipient) By By Pat Dwyer David S. Ripplinger Its President, By By • Catherine Mehelich Carole A. Ripplinger Its Executive Director, s:\eda\prospect\santwire\rippling.doc 3 • RESOLUTION 00-_ CITY OF ELK RIVER A RESOLUTION APPROVING SUBSIDY ASSISTANCE TO DAVID & CAROLE RIPPLINGER Whereas, David & Carole Ripplinger have filed an application for subsidy assistance for the construction of an 15,200 square foot light industrial building on the south half of Lot 1, Block 1 of the Country Crossing Business Center Second Addition, Elk River, MN; Whereas, David & Carole Ripplinger have submitted a Tax Increment Financing application that satisfies the requirements of the City of Elk River's Tax Increment Financing policy; Whereas, David & Carole Ripplinger are requesting subsidy assistance in the value of$175,900 to be provided by a land sale write down at $165,400 less than market value, approximately $8,000 in subdivision expenses incurred by the EDA, and an estimated $2,500 for utilities extension; Whereas, the goals of the project include the construction within one year of • the benefit date, a 15,000 sf light industrial building. Whereas, the project will satisfy the following public purposes: 1) enhancement and diversification of the city's economic industrial base, and 2) contributes to the fulfillment of the Strategic Plan for Economic Development, and 3) Result in additional private investment in the area and 4) Job creation. Now Therefore Be It Resolved, the Elk River City Council approves providing subsidy assistance as outlined in the Performance/Assistance Agreement with David & Carole Ripplinger for the purposes of industrial economic development as described above. Where Upon the resolution is adopted and passed this 14th day of August 2000. Stephanie Klinzing, Mayor ATTEST: • Sandra A. Peine, City Clerk ityof • Ak River MEMORANDUM TO: Economic Development Authority FROM: Pat Klaers, City Admini r DATE: August 14, 2000 SUBJECT: EDA Site The EDA has worked with Gary Santwire and the Ripplingers for the development of the EDA site. The EDA will be subdividing this property, pay the associated subdivision fees, and giving the land to the business owners for their building projects. An unfortunate situation developed in the process of putting together this project. This situation is that sewer and water is not stubbed into the site off of Joplin Street as the property was proposed to be developed by a cul-de-sac off of Business Center Drive. This relates to an approximately $10,000 additional expenditure for the extension of sewer and water to the two projects. I have discussed this issue with Gary Santwire, developer of the sites, and it was suggested to split this $10,000 expenditure. I have indicated that I would support this request and funding for the EDA share would come out of its EDA reserve. The key factor in my support of this request is that the developers substantially increased the building square footages since the initial proposal. Recommendation It is recommended that the city and the developer split the approximately $10,000 expenditure for the extension of utilities to the site with the EDA monies coming out of its reserve fund. • 13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • TDD &Phone: (612) 441-7420 • Fax: (612)441-7425