7.1 SR 10-05-2020Request for Action
To
Item Number
Mayor and City Council
7.1
Agenda Section
Meeting Date
Prepared by
Public Hearing
October 5, 2020
Amanda Othoudt, ED Director
Item Description
Reviewed by
Establish Tax Increment Financing District #26
Cal Portner, City Administrator
and TIF Development Agreement
Reviewed by
Action Requested
1. Open Public Hearing to consider the TIF Plan and invite public comment.
2. Close the Public Hearing.
3. Adopt, by motion, a resolution approving a modification to the development program for
Development District No. 1, establishing an economic development tax increment financing
district, approving a tax increment financing plan and authorizing the execution of a tax
increment development agreement.
Background/Discussion
Shoot Steel, Inc., has applied for Tax Increment Financing as a form of gap financing for this project.
They manufacture AR500 and AR550 steel targets, target stands, and other valuable range equipment.
They propose to relocate 7 FT and 1 PT employees and hire 6-7FT employees over the next two years.
The positions will pay a minimum of $18 per hour depending on skill level.
The applicant is proposing a pay-as-you-go method for eligible costs as reimbursement from the city to
construct their new facility.
This project is estimated to generate $268,083 in gross tax increment over 9 years, the maximum term for
an Economic Development District. The net amount available for this project is $241,274 or 90%, with
the city retaining 10% for administrative expenses over the term of the district. The present value of the
increment generated considering a 4% interest rate is $192,196.
The authorized tax increment eligible costs include out-of-pocket administrative expenses up to $26,809;
land acquisition and other public improvement costs up to $241,274.
At their September 16, 2020, meeting, the Joint Finance Committee recommended approval of a 9-year
TIF district for $190,000, plus 4% interest.
On September 21, 2020, the EDA held a public hearing and approved a purchase agreement with Shoot
Steel, Inc. for the property located at 17565 Tyler Street, NW. Following the public hearing, the EDA
recommended the Council approve a TIF Plan to assist Shoot Steel for $190,000 plus interest at 4%.
The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional,` 01 e
service, and community engagement that encourages and inspires pi ospei l_ y INAWRE1
The city has performed all actions required by law to be performed prior to the adoption and approval of
the Development Program Modification and the TIF Plan, including, but not limited to, delivery of the
Development Program Modification and the TIF Plan to the Board of Sherburne County and the Board
of Independent School District No. 728 and the holding of a public hearing published in the city's official
newspaper at least 10 but not more than 30 days prior to the public hearing.
Sherburne County provided comments regarding the establishment of Tax Increment Financing District
No. 26 in their letter dated September 22, 2020.
A public hearing must be held to approve the TIF Plan and to make the requisite findings in the
resolution required by Minnesota Statutes, Sections 469.124 to 469.133 and Sections 469.174 to 469.1794,
all inclusive, as amended, reflected in the program and TIF plan.
Financial Impact
N/A
Attachments
■ Joint Finance Committee Packet (September 16, 2020)
■ EDA Packet (September 21, 2020)
■ Notice of Public Hearing
■ Memo from Sherburne County (September 22, 2020)
■ Final Draft TIF Plan for TIF District No. 26
■ Development Agreement
■ Resolution
Special Meeting Notice
Elk River joint Finance Committee Meeting
September 16, 2020
3:00PM
Elk River City Hall
13065 Orono Parkway
Elk River, Minnesota
The purpose of the meeting is as follows:
Shoot Steel, Inc. Tax Increment Financing Application
Dan Tveite Date
I HEREBY CERTIFY, that this notice has been posted and that I have served this notice
upon the members of the Joint Finance Committee by mail at least one day prior to the
above -called special meeting. In accordance with State Statute, this notice will be posted at
least three days prior to the meeting date.
` f
TUM _ lLrd, City u
Date
P®1EIfO if
NA�UR�
City of
Elk —
River
CALL MEETING TO ORDER
2. CONSIDER AGENDA
Meeting
of the
Joint Finance
Committee
AGENDA
Wednesday, September 16, 2020
3:00 p.m.
Elk River City Hall
Upper Town Conference Room
Meeting Protocol
■ No sidebar discussions
■ No interruptions
■ State vour concern
■ Ensure you understand
■ Don't take things personally
■ Adhere to time limits
■ Come prepared
■ Ensure all are heard
3. CONSENT AGENDA
Considered to be routine and noncontroversial by the Economic Development Finance Committee and will be approved by one
motion. There will be no separate discussion of tlxese items unless a Committee member, staff member, or citizen so requests, in
which case the item will be removed from the consent agenda and considered under the regular agenda.
3.1 June 30, 2020, Meeting Minutes
3.2 Revolving Loan Fund Balance Report
4. GENERAL BUSINESS
4.1 Shoot Steel TIF Application
5. ANNOUNCEMENTS
6. ADJOURNMENT
P 0 W I R 1 0 8r
NATURE
of
Elk
Weer Meeting of the Elk River Joint Finance Committee
Held at Elk River City Hall
Held Via Zoom Meeting
Tuesday, June 30, 2020
Members Present: Dan Tveite, Ryan Hardin, Nate Ovall, Rhonda Magnussen, Charlie Blesener,
Larry Toth, and Michelle Eder
Members Absent: Chad Vitzthum
Staff Present: Amanda Othoudt, Economic Development and Colleen Eddy, Economic
Development Specialist
Others Present: None
I. Call Meeting to Order
Pursuant to due call and notice thereof, the meeting of the Elk River Joint Finance
Committee was called to order by Dan Tveite at 7:34 a.m.
2. Consider Agenda
Motion by Toth and seconded by Eder to approve the June 30, 2020, Joint Finance
Committee agenda.
Motion carried 7-0.
3. Consent Agenda
Motion by Blesener and seconded by Eder to approve the June 15, 2020 Joint Finance
Committee meeting minutes with the following change:
Charlie Blesener attended the May 26, 2020 meeting.
Motion carried 7-0.
4.1 COVID-19 Small Business Emergency Microloan Applications
Ms. Othoudt presented the staff report and explained the application and microloan criteria.
The commission discussed the following application:
1. Pinnacle Foods, LP dba Perkins Elk River
a. Requested $5,000 Property Tax Relief
b. President Tveite asked if this was one of the incomplete applications from last
month. Ms. Othoudt said yes and Commissioner Toth asked if the application
was for tax relief, of which Ms. Othoudt stated yes.
c. Motion by Ovall and seconded by Magnussen to approve Pinnacle Foods, LP dba
Perkins Elk River $5,000 Property Tax Relief application. Motion carried 7-0.
5.1 Announcements
Ms. Othoudt notified the committee that there is an at large vacancy on the committee and
to send Ms. Othoudt any recommendations.
6. Adjournment
There being no further business, Mr. Tveite adjourned the meeting at 7:43 a.m.
Minutes prepared by Colleen Eddy.
Tina Allard
City Clerk
Amanda Othoudt
Economic Development Director
ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY
MICRO LOANS
Current
Current
8/13/20
Loan
Loan
Interest
Term
Monthly
Principal
Borrower
Date
Amount
Rate
(Months)
Payment
Outstanding
Current
Die Concepts
6/3/2016
$185,200
2.00%
60
$936.90
$153,802.10
N Making payment 8/13/20
Heritage Millwork
12/22/2016
$100,000
3.00%
60
$965.61
$67,631.70
Y
Ralphies#1
9/10/2013
$74,999
3.00%
120
$724.20
$25,093.46
Y
Ralphies#2
8/28/2018
$19,175
3.00%
60
$343.65
$12,162.01
Y
TOTAL MICRO LOANS
$258,689.27
Micro Loan Fund 240
Distinctive Iron
10/1/2019
$126,000
2.03%
60
$1,050.07
$ 184,095.51
Y
Scott Morrell LLC
8/6/2015
$200,000
2.00%
60
$1,011.77
157,925.93
Y 5-Year Balloon is up
Orluck
7/17/2018
$200,000
3.00%
84
$2,642.66
147,070.25
Y
COVID-19 Small Business Emergency Loans
Chow Mixed Grill and BBQ
Daddy-O's Cafe, Inc.
Inspire Studio, LLC
Pinnacle Foods, LP
Pyramid Fitness Group
$489,091.69 DEED Jobs Incentive Loan Fund 242
Current
8/13/20
Loan
Loan
Interest
Term
6-month
Monthly
Principal
Forgivable
Date
Amount
Rate
(Months)
Deferment
Payment
Outstanding
7/6/2020
$20,000.00
0%
60
1/1/2021
166.67
$20,000.00
$5,000.00
7/6/2020
$5,000.00
0%
60
1/1/2021
41.67
$5,000.00
$5,000.00
7/6/2020
$20,000.00
0%
60
1/1/2021
166.67
$20,000.00
$0.00
7/6/2020
$5,000.00
0%
60
1/1/2021
41.67
$5,000.00
$5,000.00
7/6/2020
$20,000.00
0%
60
1/1/2021
166.67
$20,000.00
$5,000.00
Snap Fitness
8/3/2020
$20,000.00
0%
60
2/1/2022
166.67
Elk River Country Club
8/3/2020
$5,000.00
0%
60
2/1/2020
41.67
Eagles Club
8/3/2020
$2,374.00
0%
60
2/1/2020
19.78
Fund Cash Balances 08/13/20:
Micro Loan Fund - 240 $804,887.39
State DEED Jobs Incentive - 242 $135,731.14
$20,000.00 $0.00
$5,000.00 $5,000.00
$2,374.00 $2,374.00
$97,374.00 $27,374.00
Ells
River
Request for Action
To
Item Number
joint Finance Committee
4.1
Agenda Section
Meeting Date
Prepared by
General Business
September 16, 2020
Amanda Othoudt, EDD
Item Description
Reviewed by
Shoot Steel TIF Application and Financial Review
Mikaela Huot, Baker Till
Reviewed by
Cal Portner, City Administrator
Action Requested
Review application and provide a recommendation to the Economic Development Authority to establish
Tax Increment Financing District No. 26.
Background/Discussion
Shoot Steel is Shoot Steel, Inc. manufactures AR500 and AR550 steel targets, target stands, and other
valuable range equipment. They are currently operating out of their Ramsey, MN facility.
At their August 17, 2020, meeting, the FDA approved a purchase agreement from Shoot Steel contingent
on the FDA holding a public hearing on September 21, 2020, and making the requisite findings required by
Minnesota Statutes Section 469.105, subdivision 2 that the sale and conveyance of the property to the buyer
are in the best interests of the city and the transaction furthers the EDA's general plan of economic
development. Shoot Steel also indicated their intentions to apply for incentives through the FDA.
The purchase agreement proposes the purchase of a 4.34-acre lot at the asking price of $2.00 per square
foot, or market rate, for a total of $378,100.
Shoot Steel, Inc. is proposing to relocate 7 FT and 1 PT employees from their Ramsey location. They plan
to hire 6-7FT employees over the next two years. The positions will pay a minimum of $18 per hour
depending on skill level.
Shoot Steel, Inc is requesting up to $400,000 in financial assistance from the city in the form of Tax
Increment Financing to construct their new facility. The maximum term for an Economic Development
district is 8 years after receipt of first increment, for a total of 9 years. The developer is proposing a pay-as-
you- o method for eligible costs as reimbursement from the city to construct their new facility.
This project is estimated to generate $269,050 in total gross tax increment over 9 years, the maximum term
for an Economic Development District. The total net amount available for this project is $241,274 or 90
percent, with the city retaining 10 percent for administrative expenses over the term of the district. The
present value of the increment generated considering a 4% interest rate is $192,196. There is a remaining
financing gap of $210,000 in which the developer must fill from a combination of equity or other funding
sources.
The Elk River Vision
A welcoming community n ith revolutionary and spirited resourcefulness, exceptional p p N E I E 0 e r
service, and community engagement that encourages and inspires prosperity
IWATUR
The developer's proposed financial package for the Shoot Steel project includes long-term, private
financing of $1,259,050 from Village Bank, $1,036,000 in SBA financing, $200,000 from a private investor
and $98,258 in equity from the owner, for a total estimated project budget of $2,993,308.
Policy Review
Staff completed a review of the application in accordance of the city's Tax Increment Financing Policy
adopted on December 4, 2017.
Based on the Estimated Market Value of the project as calculated by Sherburne County, the project's
EMV is approximately $1,349,100 or $67 per square foot.
Public Purpose
The project must achieve one or more of the following public purpose statements:
1. Demonstrate long-term benefits to the community.
2. Retain local jobs and/or increase the number and diversity of jobs that offer stable
employment and/or attractive wages and benefits through.
■ Diversification of the local economy
■ Significant addition of permanent, high -wage, full-time jobs
■ Addition of jobs attractive to those unemployed or underemployed
3. Significantly increases the city's commercial and industrial tax base.
4. Demonstrates the ability to encourage unsubsidized private development through "spin
off' development.
5. Facilitates the development process and achieves development on sites that would not
develop "but for" the use of TIF.
6. Removes blight and/or encourages redevelopment of commercial and industrial areas
resulting in high quality redevelopment and private reinvestment.
7. Offsets redevelopment costs (i.e. contaminated site cleanup) over and above the costs
normally incurred in development.
8. Aids the implementation of the Mississippi Connections Plan.
The proposed project meets public purpose objective #1, #2, and #3.
TIF District Term
According to the city's policy adopted by Council on December 14, 2017, TIF Districts shall be limited to
the minimum term necessary to meet the project needs. Only projects exceeding the objectives identified
in the policy will be considered to exceed the maximum term allowed. The maximum term allowed for an
economic development district is 8 years after receipt of the first increment, for a total of 9 years.
The applicant has requested the maximum term allowed for an economic development district.
Policy Considerations
1. Each Project is required to meet the but for test to determine the need for and level of assistance.
■ Baker Tilly completed a but for analysis and determined without TIF assistance the project
would not proceed.
2. Developers receiving TIF assistance shall provide a minimum of ten percent cash equity
investment in the project. TIF is not to be used to supplement cash equity.
N:\Departments\Community Development\Economic Development\EDA\Admuiistcative\Agenda\Jouit Finance Committee Agenda
Packets\2020\09162020 Special Meeting\4.1 sr Shoot Steel'nF Application Review.docx
■ The developer indicated Owner Cash Equity in the Shoot Steel project of $298,258,
equivalent to 9.96% percent equity in the project. Which is slightly less then our minimum
requirement for equity investment.
3. TIF will not be used in circumstances where land and property price is of fair market value.
■ The developer paid fair market value for the EDA property.
4. The developer shall demonstrate a market demand for the proposed project. TIF shall not be
used to support purely speculative projects.
■ The developer is proposing to relocate from their Ramsey location.
5. The developer shall adequately demonstrate, to the city's sole satisfaction, an ability to complete
the proposed project base don past development experience, general reputation, and credit
history, amount other factors, including size and scope of the proposed project.
■ The city and the developer will enter into a development agreement outlining conditions
and expectations of the proposed project.
6. For the purposes of underwriting the proposal, the developer shall provide any requested market,
financial, environmental, or other data requested by the city or its consultants.
■ The developer provided all requested materials as part of the application.
■ Mikaela Huot from Baker Tilly Municipal Advisors will present the but for analysis.
7. The City of Elk River shall only use TIF to encourage economic growth and development within
the city limits.
■ The project is located within the city limits of Elk River.
Financial Impact
Per the city policy, the total estimated gross increment available over 9 years for economic development is
$269,050. The developer could receive 90 percent of the gross increment over 15 years of $241,274, or a
present value of $192,196.
Attachments
■ Shoot Steel TIF Application and Supporting Materials
■ Baker Tilly analysis and supporting documents dated September 11, 2020
N:\Departments\Community Development\Economic Development\EDA\Admuiistcative\Agenda\Jouit Finance Committee Agenda
Packets\2020\09162020 Special Meeting\4.1 sr Shoot Steel'nF Application Review.docx
City off"1
Elk
vRf
er
64 Tax Increment
Financing Policy
Tax Increment Financing Policy
Purpose
The purpose of this policy is to ensure development receiving Tax Increment Financing
(TIF) is consistent with the long-term city Comprehensive Plan, Strategic Plan, Mississippi
Connections Plan and/or most recent Housing Study. This is a guide for processing and review
of TIF applications. The City of Elk River shall utilize TIF to encourage desirable
development or redevelopment that would not otherwise occur but for TIF.
The city is empowered to utilize TIF by the Minnesota Tax Increment Financing Act, as
amended in Minnesota Statutes 469-174 through 469-1794. The city provides the minimum
amount of TIF at the shortest term required for a project to proceed. The city reserves the
right to approve or reject projects on a case -by -case basis, taking into consideration
established policies, project criteria, and demand on city services in relation to the potential
benefits from the project. Projects meeting policy criteria are not guaranteed the award of
TIF. Approval or denial of a certain project is not a precedent for approval or denial of
another project.
The City Council and Economic Development Authority and the Housing and
Redevelopment Authority can deviate from this policy for projects that supersede the
objectives identified herein.
Authority
Minnesota Statutes 469-174 through 469-1794 govern the use of TIF and exceed any issues
that conflict with this policy.
Public Purpose
The City of Elk River will consider TIF for projects that achieve one or more of the
following.
1. Demonstrate long-term benefits to the community.
2. Retain local jobs and/or increase the number and diversity of jobs that offer stable
employment and/or attractive wages and benefits through:
■ Diversification of the local economy
• Significant addition of permanent, high -wage, full-time jobs
■ Addition of jobs attractive to those unemployed or underemployed
3. Significantly increases the city's commercial and industrial tax base.
4. Demonstrates the ability to encourage unsubsidized private development through
"spin off' development.
5. Facilitates the development process and achieves development on sites that would
not develop "but for" the use of TIF.
6. Removes blight and/or encourages redevelopment of commercial and industrial
areas resulting in high quality redevelopment and private reinvestment.
7. Offsets redevelopment costs (i.e. contaminated site cleanup) over and above the
costs normally incurred in development.
8. Aids the implementation of the Mississippi Connections Plan.
Policy Statements
1. The primary intent of TIF is direct funding for public improvements and secondarily
for developer assistance.
2. The use of TIF shall be in accordance with state law. The more restrictive language
will apply when a conflict exists between this policy and state law.
I Projects must be consistent with the Comprehensive Plan and/or the Mississippi
Connectionst Plan.
4. Projects must be consistent with the Strategic Plan for Economic Development
and/or the most recent Housing Study.
5. Preferred projects promote the completion of major public improvement projects
within the city such as the installation of trunk sewer and water lines and major
transportation projects.
6. The level of assistance provided will be determined on a case -by -case basis as
referenced in Public Purpose.
Based on the extent to which the project achieves the policy statements (1-6 above), the city
will consider TIF for projects in the following categories:
a Manufacturing
■ Major office warehouse/production facilities
■ Research and development
Commercial projects encouraging substantial redevelopment of substandard
properties
• Housing needs identified in the most recent city housing study
Assistance for TIF is required to meet the uses identified by statute including, but not
limited to the following:
■ Public improvements
■ Land acquisition and land write down
Loans
• Site preparation and improvement
' Demolition
' Legal, administration, and engineering
2. The preferred method of TIF is pay-as-you-go for eligible costs as reimbursement,
upfront financing maybe considered on a case -by -case basis.
3. A maximum of ten percent (10%) of any tax increment received from the district
shall be retained by the city to reimburse administrative costs.
4. All TIF assistance must be accompanied by a signed development agreement
including a minimum assessment value. The developer must provide additional
financing guarantees to ensure completion of the project, including, but not limited
to: letters of credit, personal guarantees, corporate guarantees, etc.
5. TIF District's shall be limited to the minimum term necessary to meet the project
needs. Only projects exceeding the objectives identified in this policy will be
considered to exceed the following general thresholds:
■ Redevelopment District 15 Years (lvlax is 26)
' Housing District 15 Years (Max is 26)
■ Soils Condition District 15 Years (Max is 21)
■ Renewal and Renovation District 10 Years (Max is 16)
■ Economic Development District S Years (Max is 9)
6. Policy Considerations
■ Each project is required to meet the "but -for" test to determine the need for and
level of assistance. This test and the amount of tax increment generated
determines the district's term. It is difficult to facilitate a redevelopment, housing
or soils condition district for less than the maximum term as the extraordinary
costs involved are usually significant.
■ The term of the district could coincide with the amount of tax increment the city
has to spend on its priorities within a project area.
Of all the TIF districts, the Economic Development District is most often the
one limited to a lesser term. Economic Development Districts are really
"incentive" districts where it is not so much the extraordinary costs as it is an
"incentive" to get a business to locate in a community. In the other districts, the
costs are easily identifiable and usually significant such as demolition, relocation,
environmental remediation, and the cost differential between market rate and
income/rent restricted housing.
r�
7. Developers receiving TIF assistance shall provide a minimum often percent (10%)
cash equity investment in the project. TIF will not be used to supplant cash equity.
8. TIF will not be used in circumstances where land and/or property price is in excess
of fair market value. A third -party appraiser agreed upon by the city and developer
will determine the fair market value of the land.
9. The developer shall demonstrate a market demand for a proposed project. TIF shall
not be used to support purely speculative projects.
10. The developer shall adequately demonstrate, to the city's sole satisfaction, an ability
to complete the proposed project based on past development experience, general
reputation, and credit history, among other factors, including the size and scope of
the proposed project.
11. For the purposes of underwriting the proposal, the developer shall provide any
requested market, financial, environmental, or other data requested by the city or its
consultants.
12. The city of Elk River shall only use TIF to encourage economic growth and
development within the city limits.
Application Process
Applicant submits a complete application and a $10,000 application deposit by the
first Monday of the month. The application deposit will be used toward the cost of
services provided in the evaluation of financial feasibility, establishment or
modification of the district, and preparation of legal documents and agreements. An
additional deposit of $10,000 shall be required for projects requiring statutory
redevelopment substandard tests. The applicant shall reimburse the city for
professional services in excess of the initial deposit. Deposit portions not utilized
shall be refunded.
2. City staff reviews the application for completeness and submits the application to the
city's financial consultant for review and preparation of a financial analysis.
I The Joint Finance Committee shall review the proposal's financial strength and make
a recommendation to the appropriate commission with findings of fact.
4. The appropriate authority reviews the proposal and the recommendation to
determine conformance with this policy. The authority makes a recommendation to
the City Council.
5. After meeting the statutory requirements for establishing the Tax Increment District,
the City Council holds a Public Hearing and takes action on the proposal
(Approximately 45-60 days).
C
APPLICATION FOR TAX INCREMENT FINANCING
A. APPLICANT INFORMATION
Name of Entity Shoot Steei. INC
Address 6230 McKinley St. NW Unit C2 Ramsev, MN 55303
Primary Contact _ Evan Mover
Address _ 32428 N Center LN Center Cir t _MN 55012
Phone 651-587-4711 Fax _ N_A _Email evan<,i sho_otsteel.com
Brief description of the entity business, including history, principal product or service:
Shoot Steel INC manufactures and sells AR500 and AR550 steel targets, stands and other
Lange equipment. Shoot Steel INC was formed in 2014. the founding corn any Multiplex
Svstems LLC was formed in 2009. The first targets were cut in 2010
Brief description of the proposed project:
Shoot Steel INC intends to buy the land at 17565 Tvler St NW in Elk River MN. The land
will be used to con a 20 OOOsf warehouse. The warehouse will be used fox licht
manufacturing, warehousing and sales
Attorney Name eff Vest
Address 7077 Northland Circle STE 300 Brookh n arL MN 55428 _
Phone_763-566-3720 Fax 763-566-3722 Email 'eff vestandmesserl .com
Accountant Name Matt Lind
Address 1000 Shelard PKY 61h Floor St. Louis Park MN 55426
Phone 952-544-4147 —Fax 952-544-2628 Email matt.lind m sla'ek.com
Contractor Name And Lax o
Address 200 1u St. S. Buffalo MN 55313
Phone 763-634-5600 Fax Email andy.larso� sonbulding.com
Engineer Name Brian Shultz
Address 18 South Riverside, STE 230 SartelL UN 56377
Phone.320-339-0669 Fax
Email shultzeng@live.com
Architect Name _ Erik Johnson
Address 15001 140s' St. Foreston MN 56330
Phone, 612-508-8099 Fax Email_ erik@stonetentarchitecture.com
B. PROJECT INFORMATION
1. The project will be:
Redevelopment District
Housing District
Soils Condition District
Renewal and Renovation District
X Economic Development District
2. The project will be: X Owner Occupied Leased Space
3. Project Address 17565 Tyler Street Northwest Elk River MN 55330
Legal Description & Parcel Identification Number(s)
LOT1 BLK 2 3UB-1 TO EASEMENT OF RECORD
75-757-0205
4. Site Plan and Preliminary Construction Plans Attached: _X Yes____ No
5. Amount of Tag Increment Requested for:
Land Purchase $ 378100
Public Improvement $
Site Improvement $ 513,377
6. Current Real Estate Taxes on Project Site: $ D
Estimated Real Estate Taxes upon Completion: Phase I $44,039
Phase II $111,660
7. Construction Start Date: October 2020 _
Construction Completion Date: June 2021
If Phased Project: PH1 2021 Year _100_% Completed
PH2 2025 Year _100_% 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/Retention:
X_ Number of existing jobs
X Number of jobs created by project
X Average hourly wage of jobs created/retained
New industrial development, which will result in additional private investment in the area.
X Enhancement or diversification of the city's economic base.
The project contributes to the fulfillment of the City's Plan.
Removal of blight or the rehabilitation of a high profile or priority site.
X Significantly increase the City's tax base.
Other:
D. SOURCES & USES
SOURCES
Bank Loan
Other Private Funds
Owner Cash Equity
Fed Grant/Loan
State Grant/Loan
EDA Micro Loan
Tax Increment
ID Bonds
TOTAL
NAME
Village Bank_
Private Investor
SBA Loan
TIF__
AMOUNT
$1,259,050_
$200,000
$98,258_
$1,036,000_
$
$400,000._
$2,993,308
USES
AMOUNT
Land Acquisition
$378,100
Site Development
$513,377`
Construction
$1,926,944___
Machinery & Equipment
$
Architectural & Engineering Fees
$61,365�
Legal Fees
$—
Interest During Construction
$
Debt Service Reserve
$
Contingencies
$113,522
TOTAL $2,993,308
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
Current Tax Return
Letter of Commitment from Applicant Pledging to Complete
During the Proposed Project Timeline
G) Letter of Commitment from the Other Sources of Financing,
Stating Terms and Conditions of their Participation in
Project
I� Application deposit of $10,000, with any unused portion to be refunded.
i) Construction Plans and Itemized Project Construction Statement
J) Attach the following documentation as Exhibits
Exhibit A — Entity Documents
Exhibit B — Description of Project
I-Xhibit C — List of Shareholders/Partners
Exhibit D — But -For Analysis
Exhibit E — List of Prospective Lessees
Exhibit F — Legal Description and PID Number(s)
Note: All Major shareholders will be requited to sign personal guarantees if up front financing of the
project is required.
C�.
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 fitimg of this application.
Applicant Name t��w+ yer
C:
Date 2 ?P
Tax Increment Financing
Policy History
On
T Council 12/4/2017
EDA 11 /20/2017
HRA 11 /6/2017
Item #
-, ; Inge Bar*
(f'cb
August 3, 2020
Evan Moyer
Shoot Steel, Inc.
6230 McKinley Ave NW Unit C2
Ramsey, MN 55303
Dear Mr. Moyer,
Village Bank is pleased to present the following proposal. This proposal is for discussion purposes only and should not be
construed as a lending commitment on the part of Village Bank. A commitment can only be made after completion of our
underwriting process, management approval, and completion of documentation acceptable to the bank and its counsel.
Loan #1: Commercial Real Estate Loan Bank Portion):
Borrower: A to -be -determined Limited Liability Company
Loan Amount: Up to $1,259,050 (based upon and approximately 50% of total project)
Maturity: 12-month Interest -Only draw phase, followed by a 25 year fully amortizing Note.
Interest Rate: 4.05% per annum, fixed for 7 years, then adjusting and fixing (between adjustment periods) every 5 years
thereafter based upon the highest published Wall Street Journal Prime + 1% with a floor of 4.05%, per
annum.
Payment Amount; Initial 12-month Interest -Only draw phase, based upon the amount of credit outstanding, followed
by fully amortizing monthly Principal and Interest payments of approximately $6,681.00 (based
upon full advance of the loan at the time of conversion).
Prepayment
Penalty: 3%, 3%, 3%, 2%, 2%, 1%, 1% over the first 7 years from the date of loan closing and based upon
outstanding principal balance at the time of payoff should the loan be refinanced at another
financial institution. No prepayment penalty shall be applicable should the funds be derived from
Borrower or affiliate of Borrower/Guarantor.
Purpose: A dual phase note to finance commercial real estate purchase and construction for a to -be -
constructed building to be located at: 17565 Tyler St NW, Elk River, MN 55330
Member
FDIC #ItTakesaVillage I www.villagebankonline.bank „a4.,.�,
L k'.N{J�ft
Use of Funds
Purchase of Land
378,100
Construction Build -out & related expenses
2,100,000
Soft Costs
40,000
Subtotal
2,518,100
Debenture Pricing
28,760
Total Use of Funds
2,546,860
Final Project Source of Funds
Bank 1,259,050
SBA (net Debenture $1,027,240) 1,036,000
Owners' Equity 251,810
Total Source of Funds 2,546,860
Fees & Costs:
Estimated Soft Costs for Project:
Bank Origination Fee
12,591
Senior Mortgage Fee/Colson Subordination Fee
(SBA)
6,295
Appraisal (as-built/review/final)
3,500
Phase I Environmental Assessment
2,500
Mortgage Registration
5,279
Title Insurance
3,443
Abstracting Fee & Exam Fee
400
Assessment Search
35
Recording Fees
150
Flood Search and Certification
19
Closing Costs
300
Legal Fee
0
SBA Title Re -issue Fee/payable to CDC
8,288
Miscellaneous
0
Total Soft Costs
42,799
Required Eguity
In iection: Estimated to be $251,810 (approximately 10% of the total project).
Collateral: A perfected priority real estate mortgage on commercial real estate located at: 17565 Tyler St NW,
Elk River, MN 55330
Personal Personal guaranty of all owners with 20% or more ownership will be required to guaranty the
Guarantor(s): loan on an unlimited basis.
FDIC #ItTakesaVillage I www.villagebankonline.bank
LENDER
Corporate
Guarantor: Shoot Steel, Inc.; Conductive Cooking, Inc.
Lease: Lease amongst Shoot Steel, Inc., Conductive Cooking, Inc., and Borrower (entity to -be -
determined) with options to extend at least as long as the term of the loan.
Insurance: - Evidence of Property Insurance (ACORD Form 27) naming the borrowing entity as
Insured, the address of the property and the bank as Lender Loss Payee and Mortgagee.
A Certificate of Liability Insurance (ACORD Form 25) naming the borrowing entity as
insured, the address of the property and the bank as Additional Insured.
Automatic
Payment: We require monthly payments to be made automatically from a Village Bank account.
Deposit
Accounts: All primary operating and depository accounts of Borrower and Corporate Guarantor(s) to be
maintained at Village Bank. Should this condition not be met, the bank, in its sole discretion, may
increase the interest rate charged on the loan by .25%, per annum, until the violation is cured.
Loan #2: Commercial Real Estate Loan (To be paid off by SBA 504):
Borrower: A To -be -determined Limited Liability Company
Loan Amount: Up to $1,027,240 (based upon and approximately 40% of total project)
Maturity: 12 months
Interest Rate: 4.09%, per annum, fixed to maturity
Payment Amount: Interest -only payments based upon the outstanding principal balance of the loan, to be made
monthly.
Prepayment
Penalty; 3% on outstanding principal if refinanced at another financial institution other than the SBA 504
CDC/ Debenture Financing.
Purpose; See loan #1
Fees & Costs: See loan #1
Required Equity
Inicetion: See loan #1
Collateral: A 2nd real estate mortgage on commercial real estate located at: 17565 Tyler St NW, Elk River,
MN 55330
Personal Personal guaranty of all owners with 20% or more ownership will be required to guaranty the
Guarantor(s): loan on an unlimited basis.
Corporate
Member
FDIC #ItTakesaVillage I www.villagebankonline.bank ,,,,,..,h,
e ENIWR
Guarantor: Shoot Steel, Inc.; Conductive Cooking, Inc.
Lease: Lease amongst Shoot Steel, Inc., Conductive Cooking, Inc., and Borrower (entity to -be -
determined) with options to extend at least as long as the term of the loan.
Insurance: - Evidence of Property Insurance (ACORD Form 27) naming the borrowing entity as
Insured, the address of the property and the bank as Lender Loss Payee and Mortgagee.
- A Certificate of Liability Insurance (ACORD Form 25) naming the borrowing entity as
insured, the address of the property and the bank as Additional Insured.
Automatic
Payment: We require monthly payments to be made automatically from a Village Bank account.
Documentation &
Other Village Bank and/or an entity as assigned by Village Bank will prepare all documents which are
drafted in connection with the proposed potential financing package as stated herein.
Requirements: In addition to other documents and information as determined through final underwriting, the
Borrower, Personal Guarantor, Corporate Guarantor(s), or as required will provide:
1) SBA 504 Loan Authorization
2) The delivery to the Bank of the following:
■ Annual Federal Tax Return of the Borrower;
Annual Financial Statements of the Borrower;
■ Annual Tax Return of the Guarantor(s); and
■ Annual Personal Financial Statement of the Guarantor(s).
Good Faith
Deposit: As a consideration for the Bank making this proposal, a deposit in the amount of $5,000, will be
required. Should the loan(s) not close for any reason, the deposit will be refunded, less any cost(s)
incurred by the Bank relative to the transaction(s) being contemplated herein.
This proposal is for discussion purposes only and is subject to village Bank's final underwriting and approval. Village
Bank is not to be legally obligated to make any loan except upon the terms and subject to any loan documents actually
signed and delivered by the Borrower to Village Bank. This letter is not intended to be all-inclusive, rather to serve as a
basis for working towards a mutually acceptable agreement.
Should you wish to proceed, please counter -sign and return a copy of this letter along with the $5,000 Good Faith
Deposit to indicate your interest in further pursuing the transaction as outlined above. Should a fully executed
copy and Good Faith Deposit not be received by 5:00 pm on Wednesday, August 12, 2020, the terms as stated
herein shall be deemed void.
Please call me at 763-398-3586 if you have any questions or require additional information. We appreciate the
opportunity to present this proposal and look forward to assisting you with your financial needs.
Sincerely,
raig J. Kliber
Sr. Vice President
M,nih—
FDIC #ItTakesaVillage I wwwmillagebankonline.bank ,f,�,,,
I rN01FR
ACKNOWLEDGEMENT AND ACCEPTANCE
Acknowledged and accepted this day of .20 . The proceeds of this loan, if
any, will be used for business purposes exclusively. By signing below, the obligor further acknowledges they are not
required to obtain or pay for any unwanted services.
By:
Evan Moyer
Member
FDIC #ItTakesaVillage I www.villagebankonline.bank
u STEEL
�-ro
M
Shoot Steel, INC
6230 McKinley St NW
Unit C2
Ramsey, MN 55303
763-205-2109
ShootSteel.com
Letter of Commitment
City of Elk River
I am pledging to commit to finish this project at 17567 Tyler Street Northwest, Elk River MN. I would
greatly appreciate any assistance the City of Elk River can provide.
Sincerely,
Evan Moyer
President, Owner
LARSON
E3iJ11_..€?ItJt
rGeneral
Conditions
ivision 2
Sitework
Division 3
Concrete
Division 4
Masonry N-A.
Division 5
Metals
Division 6
Carpentry/Woods/Plastic
Division 7
Rooting/Insulatian
Division
Doors/Windows
Division 9
Finishes
Division 10
Specialties
Division 11 Loading Dock Equipment
Division 15 Plumbing/HVAC/Fire Prot
Division 16 Electrical
- Project Exclusions
5ignage
Window Treatments
Furniture
Design Fee's (Separate Contract'
Bad Sail Dewatering
Utility hook Up Fee's
SAC / WAC / Trunk / Park Dedication Fee's
Project Allowances (Included)
Utilities
Landscaping + Irrigation
$i25,000
$50,000
Low Voltage / Security
$15,000
Electrical
$120,13DD
Plumbing
$100,000
Winter Conditions
$30,00D
Shoot Steel Estimate
New
Remodel
Elk River, MN
Total
8/21/2020
Total Cc
Cost per
6.45% $ 8.17
20.10% $ 25.47
27.41% $ 34,73
0.00% _$
7.46% $ 9.45
1.12% $ 1.42
3.92% $ 4.96
3.17% $ 4.02
4.38% $ 5.55
0.08% $ 0.10
0.59% $ 0.74
7.73% $ 9.79
5:29% $ 6.70
87,71% $ 111.11
87.7_1% $ 111.11
1,09
0.00% $
0.00%� $
0.34% $ 0.42
88.90% $ 112.62
0.12% $ 0.15
4.45% $ 5,63
6.53% $ 9.28
100.00% $ 126.68
Mats
$0 $0
$o $0
1 20,1601
700I $28,
$0
$0
$81,000
$81,000
$0
$0
$111,923
$111,923
$0
$0
$2,000
$2,000
$0 $D
$15,000
$15,000
$0 $BI
$197,400
$197,400
So $0
$135,000
$135,000
$0 $0
$2,239,919
52.239.919
5.005
7.005
Subtotal
Permit
SAC/WAC
Bond
GLlnsurance
$2,239,919
$21,959
$0
$0
$8,565
Subtotal
Builders Risk
Contingency
aH&P
$2,270,443
$ 3,000,00
$ 113,522
$ 156,878
Assuprions/Clarifications
Add Demising Wall W/ Paint & 2 Doors $ g6,500,60
Add Mezzaning With Finished office Space $ 139,000.00
Add Concrete Mez & Stairs No office Finish $ 55,W.00
Add AC Warehouse Is 49,750 00
Budget Based on Site Plan Al, Floor Plan A2, Floor Plan A3 Dated 8-11-2o20
Larson Building reserves the right to final price the work once permit documents
are finalized.
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Memo - Draft for Review
To: Members of the Joint Finance Committee
Amanda Othoudt, Economic Development Director
From: Mikaela Huot, Director
Date: September 11, 2020
Application for Tax Increment Financing Assistance related to proposed
Subject: establishment of Tax Increment Financing Economic Development (TIF)
District No. 26 Financial Analysis and But -For Review
Background
The City of Elk River received an application from Shoot Steel, INC, the applicant, for financial assistance
through Tax Increment Financing (TIF) to assist with financing a portion of the extraordinary development costs
related to the construction of a new 20,000 square foot warehousing facility. The applicant is proposing the
acquisition of City -owned property located at 17565 Tyler St NW in the City of Elk River for business location
and expansion of its existing company operations. The applicant's company is currently leasing approximately
10,000 square feet of space in a neighbouring city and has reached capacity. Due to current capacity
concerns, the company has been limited in opportunities for product growth and future development. As a
result, it is looking for land that will facilitate existing business needs, as well as allowing for potential additional
future expansion. The proposed property for this project has been identified as an ideal location for the
company to relocate and meet current demands, as well as allow for future anticipated growth plans, subject to
a feasible financing plan. The applicant's original budget for the project did not account for the level of
acquisition and site development costs that are required for construction on the identified proposed site. The
increased costs related to acquisition, site development and potential winter construction have created a
financial gap of approximately $400,000.
The project is expected to locate 7 full time and 1 part time position to the City of Elk River. The applicant is
anticipating hiring an additional 6-7 new employees over the next two years at a minimum wage of $18/hour
and would meet the City's business subsidy policy provisions.
Baker Tilly has been retained by the City to review the application for financial assistance. The purpose of this
memorandum is to provide a summary of Baker Tilly's review of the development project costs and sources of
funds, and operating pro forma as provided by the applicant to assist the City with making a determination if the
project as proposed would be unlikely to proceed "but -for" the requested Tax Increment Financing (TIF)
assistance, and to determine the appropriate amount, if any, of public assistance. Prior to establishing a tax
increment financing district, there are findings that need to be made by the City that include: 1) determination
that the project qualifies as a TIF district and 2) determination that the project as proposed would not proceed
without public assistance (meeting the "but -for" test. When reviewing requests for financial assistance it is
important to understand how the level of financial assistance would impact the ability of the project to proceed
as proposed and maximize new value created on the current project site.
Applicant Request for Assistance
The applicant's application for financial assistance includes an approximate $2.993 million project that would be
funded by an estimated $1.259 million first mortgage from Village Bank, $298,258 of equity from both a private
investor ($200,000) and owner cash ($98,258), and a $1.036M SBA loan, leaving a $400,000 gap. The
applicant has asked for tax increment financing assistance to close the financial gap. The extraordinary
acquisition and site development costs that cannot be supported solely by the project alone may justify the
need for public financial assistance. The assistance would allow the project to proceed as proposed and to
provide appropriate upfront funding and to meet minimum debt coverage requirements. The applicant has
indicated in the application that the receipt of City financial assistance is necessary for the project to proceed
based on current financing limitations.
The sources and uses of funds from the applicant's financial materials is illustrated in the table below.
Sources
Amount
Uses
Amount
First Mortgage
$1,259,050
Acquisition
$378,100
TIF Mortgage *
$400,000
Site Development
$513,377
Private Investor
$200,000
Construction
$1,926,944
Owner Cash Equity
$98,258
Architectural and Engineering
fees
$61,365
SBA Loan
$1,036,000
Contingencies
$113,522
Total
$2,993,308
Total
$2,993,308
* financed as pay as you go for reimbursement of certain costs
Qualifications
Providing financial assistance through tax increment financing would require the City to proceed with the
establishment of a Tax Increment Financing (Economic Development) District. Tax increment financing is a tool
the City may consider using to support financial assistance for the project, subject to meeting the but -for test
and need for public financial participation. The definition of an economic development district is included as an
attachment to this memo. A public hearing date of October 5 has been established for the City Council to
consider taking action on establishment of the Tax Increment Financing District. The Economic Development
Authority of the City of Elk River will review the request and tax increment financing documents at its
September 21 meeting.
Project 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 applicant's initial project costs
through the issuance of bonds or as an internal loan. Future tax increment would be collected by the City and
used to pay debt service on the bonds or repayment of the internal loan. With pay-as-you-go financing, the
applicant 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 applicant. If tax increment revenues are less than originally projected, the applicant
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 tax increment revenues.
With internal financing, the City reimburses the loan with future revenue collections and may risk not repaying
itself in full if tax increment revenues are not sufficient. The project financing would be pay-as-you-go for
reimbursement of eligible costs.
Tax Increment Revenue Assumptions
The County Assessor provided a taxable value estimate for the project. To estimate the amount of available
TIF revenues generated by the proposed project, certain assumptions were made based on the value of the
project, construction schedule, and anticipated financing terms.
• Total existing value of $378,100
o Parcel ID: 75-757-0205
o Base value as of Jan. 1, 2020
o Original net tax capacity (ONTC) of $6,812
o Assuming classification as commercial -industrial (C-1)
■ C-1 classification rate is 1.5% first $150,000 value and 2% value above $150,000
• Estimated total market value upon completion
0 20,000 square foot warehouse facility
■ $67 per square foot (approximate)
■ $1,349,100
• Incremental value based on difference between existing and new land/building value
• Construction commences in 2020 and is completed in 2021
0 Project values 100% complete for assess 2022 and taxes payable 2023
• First increment collected in 2022
• Net present value (discount) rate of 4%
• 3% annual market value inflation
Tax Increment Revenue Estimates
Revenue Estimates
Estimated annual available increment (first year)
$22,739
Total gross tax increment
$268,083
City retainage (10%)
$26,809
Net amount available for development (90%)
$241,274
Total estimated present value (4%)
$192,196
Estimated Applicant Principal TIF Note
$190,000
Estimated interest payments at 4%
$41,880
Total payments
$239,556
Estimated surplus ($241,274 - $239,556)
$1,718
The level of tax increment revenues projected for this project are less than what the applicant has requested.
As a result, the applicant will be required to obtain additional funding from other sources, presumably equity
and/or equity, low -interest loans or forgivable loans/grants to fill the remaining gap.
Applicant Pro forma Analysis including But -For
Upon approval of a TIF district and project, the City must make several findings, including the "but for" test: that
the proposed development would not reasonably be expected to occur solely through private investment within
the reasonably foreseeable future. The applicant has stated that but for the provision of tax increment
financing, the project as proposed would not occur. In the application for financial assistance and supporting
materials, including the but -for statement, the applicant provided sources and uses of funds illustrating an
approximate $400,000 gap due to increased costs of the project relating to acquisition, site development and
stormwater ponding, and winter construction. The applicant provided a letter from its lender indicating the
estimated amount of financing available is 50% of total project costs. Based on total original cost estimates of
$2.5 million, this would equate to approximately $1.259 million of potential lending. Remaining funding sources
include SBA loan and equity. Ability to obtain an increased level of funding through one or more of the other
funding sources would be subject to financial feasibility and availability of annual revenues to support
repayment, as well as willingness of the lender to provide additional funding.
Based on the applicant's stated position relative to the need for tax increment financing assistance, the City
could make its "but for" finding and provide tax increment assistance. We recommend, however, that the City
review the provided assumptions to consider if the project meets the but -for test and, if so, what an appropriate
level and type of TIF assistance may be based on the information submitted by the applicant. Following
thorough evaluation of the project as provided allows the City to be prepared to make an informed "but -for"
decision based on the likelihood of the project needing assistance, as well as the appropriate level of
assistance. As stated previously, the applicant's request for financial assistance of $400,000 is more than the
projected available tax increment revenues generated by the project ($190,000). As a result, any level of
financial assistance provided would be less than what has been requested.
To complete the but -for analysis, we reviewed the applicant's provided sources and uses of funds and
operating proforma and constructed similar ten-year project proformas, showing a result if the applicant
received the assistance as pay-as-you-go (reimbursement for TIF eligible costs) and showing a result if the
applicant did not receive assistance. Our analysis of the proformas included a review of the development
budget, projected operating revenues and expenditures, and the project's capacity to support annual debt
service payments. The purpose of evaluating the operating proformas is to understand the potential cash flow
performance and projected rates of return of the project over a 10-year period to assist with making the
determination that 1) tax increment assistance is necessary and 2) an appropriate level of assistance will be
provided.
An additional measure of project need and financial 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 applicant's operating proforma without tax increment
assistance includes a 1.15x DCR, which is the minimum level generally required for this type of project.
Altering the level of financing through tax increment financing assistance is expected to increase the
performance of the project, resulting in approximately 1.28x DCR with assistance.
To understand viability of the project and need for public assistance, we provided a sensitivity analysis to the
proformas with adjustments made to the upfront funding sources. The applicant provided a `with' and `without'
scenario based on a $400,000 gap. The `with assistance' scenario assumes receipt of the entire $400,000 of
requested assistance and would provide additional annual cash flow and higher return on equity (18.86%).
With no assistance, the annual cash flow and returns are reduced to a level the applicant has deemed
infeasible for the project to proceed (8.06%-9.07%). In addition to reduced returns, the annual revenues may
not be sufficient to support the level of debt necessary for the project to proceed. The applicant is also limited
in the level of debt financing and equity investment it can receive based on project performance. A modified
level of assistance based on availability of revenues and need for assistance is estimated to provide more
reasonable annual cash flow and returns on equity (12.78%).
The amount of financing available for the project is typically based on net operating income, which is lease
revenues less operating expenses. The annual cash flow is based on assumptions relative to lease revenues,
operating expenses and debt repayment. The applicant provided terms of the lease revenues that includes 5-
year term at $17,000 per month. Rent is adjusted equal to the real estate taxes to be paid during the calendar
year. Moyer Properties, LLC will lease the building to Shoot Steel, Inc for occupancy. Debt repayment is based
on payments to be made to both Village Bank as first mortgage lender and SBA loan with remaining cash flow
available as returns to the equity investor(s).
The City's current TIF policy provides parameters regarding maximum amount of assistance that could be
provided and minimum cash equity contributions. The policy guidelines and statutory limitations for the term an
economic development is 8 years after receipt of first increment. The policy guidelines also include a
requirement that owner cash equity is a minimum of 10%. The current sources of funds include approximately
9.96% of investor and cash equity. A reduction in the amount of tax increment assistance based on availability
of revenues is expected to result in the increase of both lender and equity requirements.
Conclusion
The applicant has requested financial assistance related to construction of the new project and relocation of the
business from existing small leased space to owner -occupied space in the City of Elk River. Due to estimated
costs for land acquisition, site improvements and storm water ponding, the project is expected to experience an
estimated $400,000 cost overrun prior to construction commencing. The applicant's primary lender, Village
Bank, has provided a financing proposal for a loan amount of $1,259,050 based on approximately 50% of total
original project costs. Terms of the loan are 4.05% interest rate, fixed for 7 years then adjusting and fixing
every 5 years. Terms of the SBA loan include 25-year repayment at 2.75% interest rate. Remaining funding
sources include investor equity and owner cash. The project includes the transition to a new location and also
from lease to ownership for the company and owner. The company has been operating at a reduced capacity in
the existing location and would have the opportunity to expand post -relocation. Tax increment financing
revenues would provide an additional cash flow source during the early years of the project to allow for
business growth and development and fulfilment of increased employment goals.
Tax increment financing is a tool that can assist with covering a portion of the additional eligible costs
associated with the project. The level of financial assistance the applicant has requested is less than what is
expected to be available and based on financial analysis appears to be more in alignment with what the project
would need for financial support. Since terms of the assistance include pay-as-you-go as reimbursement for
certain costs, the applicant will be responsible for obtaining all upfront funding sources and using cash flow from
the project and any tax increment revenues to repay obligations. Total estimated tax increment revenues that
could be available for this project are approximately $190,000. Should the City choose to provide tax increment
assistance, the applicant will need to find an additional $210,000 from other funding sources to fill the remaining
gap. Aligning the level of assistance to the availability of projected revenues provides a method of closing a
portion of the financial gap and allows the public participation for the project to remain at a reasonable level,
while still providing a means for allowing the project to proceed as proposed.
Thank you for the opportunity to be of assistance to the City of Elk River. Please contact me at 651.368.2533
or Mikaela.huotCc-)bakertilv.com with any questions or comments.
Definition of Economic Development Tax Increment Financing District
Economic development district means a type of tax increment financing district which consists of any project, or
portions of a project, which the authority finds to be in the public interest because:
1. it will discourage commerce, industry, or manufacturing from moving their operations to another
state or municipality;
2. it will result in increased employment in the state;
3. it will result in preservation and enhancement of the tax base of the state; or
4. it satisfies the requirements of a workforce housing project under section M.176, subdivision 4c,
paragraph (d).
MN Statutes 469.176, Subd. 4c.
Revenue derived from tax increment from an economic development district may not be used to provide
improvements, loans, subsidies, grants, interest rate subsidies, or assistance in any form to developments
consisting of buildings and ancillary facilities, if more than 15 percent of the buildings and facilities (determined
on the basis of square footage) are used for a purpose other than:
1. the manufacturing or production of tangible personal property, including processing resulting in
the change in condition of the property;
2. warehousing, storage, and distribution of tangible personal property, excluding retail sales;
3. research and development related to the activities listed in clause (1) or (2);
4. telemarketing if that activity is the exclusive use of the property;
5. tourism facilities;
6. space necessary for and related to the activities listed in clauses (1) to (5); or
7. a workforce housing project that satisfies the requirements listed below.
A project qualifies as a workforce housing project under this subdivision if:
(1) increments from the district are used exclusively to assist in the acquisition of property; construction of
improvements; and provision of loans or subsidies, grants, interest rate subsidies, public infrastructure, and
related financing costs for rental housing developments in the municipality;
(2) the governing body of the municipality made the findings for the project required by section 469.175,
subdivision 3, paragraph (f); and
(3) the governing bodies of the county and the school district, following receipt, review, and discussion of
the materials required by section 469.175, subdivision 2, for the tax increment financing district, have each
approved the tax increment financing plan, by resolution.
The maximum term of an economic development district is eight years after receipt of first increment for a total
collection term of 9 years.
Projected Tax Increment Report
City of Elk River, Minnesota
Tax Increment Financing (Economic Development) District No. 26
Shoot Steel, INC
Draft TIF Plan Exhibits
Annual
Period
Ending
1
Total
Estimated
Market Value (1)
2
Total
Net Tax
Capacity (2)
3
Less:
Original
Net Tax
Capacity(3)
4
Retained
Captured
Net Tax
Capacity
5
Times:
Tax
Capacity
Rate (4)
6
Annual
Gross Tax
Increment
7
Less:
State Aud.
Deduction
0.360%
8
Subtotal
Net Tax
Increment
9
Less:
Admin.
Retainage
10.00%
10
Annual
Net
Revenue
11
P.V.
Annual
Net Rev. To
02/01/21
4.00%
12/31 /20
378,100
6,812
6,812
0
130.571%
0
0
0
0
0
0
12/31 /21
378,100
6,812
6,812
0
130.571%
0
0
0
0
0
0
12/31/22
1,349,100
26,232
6,812
19,420
130.571%
25,357
91
25,266
2,527
22,739
21,300
12/31 /23
1,389,573
27,041
6,812
20,229
130.571%
26,415
95
26,320
2,632
23,688
21,336
12/31/24
1,431,260
27,875
6,812
21,063
130.571%
27,502
99
27,403
2,740
24,663
21,359
12/31/25
1,474,198
28,734
6,812
21,922
130.571%
28,624
103
28,521
2,852
25,669
21,376
12/31/26
1,518,424
29,618
6,812
22,806
130.571%
29,779
107
29,672
2,967
26,705
21,383
12/31/27
1,563,977
30,530
6,812
23,718
130.571%
30,968
ill
30,857
3,086
27,771
21,381
12/31/28
1,610,896
31,468
6,812
24,656
130.571%
32,194
116
32,078
3,208
28,870
21,373
12/31/29
1,659,223
32,434
6,812
25,622
130.571%
33,456
120
33,336
3,334
30,002
21,356
12/31 /30
1,709,000
33,430
6,812
26,618
130.571%
34,755
125
34,630
3,463
31,167
21,332
$269,050 1 $967 $268,083 $26,809 1 $241,274 1 $192,196
(1) value based on estimate provided by City for the anticipated construction of newbusinesses and possible existing business expansions
(2) tax capacity based on commercial -industrial class rate of 1.50% for first $150,000 of value and 2% for value above $150,000
(3) original net tax capacity mall be based on existing land and building values and commercial -industrial class rate for payable 2021
(4) combined local tax capacity rate of City of Elk River, ISD 728 and Sherburne County for payable 2020
City of Elk River, Minnesota
Tax Increment Financing (Economic Development) District No. 26
Shoot Steel, INC
Draft TIF Plan Exhibits
Note Date:
Note Rate:
Amount:
Date
(1)
02/01/21
4.00%
$190,000
Principal
(2)
Interest
(3)
P & I
(4)
Semi -Annual
Net
Revenue
(5)
Capitalized
Interest
(6)
Loan
Balance
Outstanding
(7)
190, 000.00
02/01/21
0.00
0.00
0.00
0.00
0.00
190,000.00
08/01 /21
0.00
0.00
0.00
0.00
3,800.00
193, 800.00
02/01/22
0.00
0.00
0.00
0.00
3,876.00
197,676.00
08/01/22
7,415.98
3,953.52
11,369.50
11,369.50
0.00
190,260.02
02/01 /23
7,564.30
3,805.20
11, 369.50
11, 369.50
0.00
182, 695.72
08/01 /23
8,190.09
3,653.91
11, 844.00
11, 844.00
0.00
174, 505.63
02/01/24
8,353.89
3,490.11
11,844.00
11,844.00
0.00
166,151.74
08/01/24
9,008.47
3,323.03
12,331.50
12,331.50
0.00
157,143.27
02/01/25
9,188.63
3,142.87
12,331.50
12,331.50
0.00
147,954.64
08/01/25
9,875.41
2,959.09
12,834.50
12,834.50
0.00
138,079.23
02/01 /26
10, 072.92
2,761.58
12, 834.50
12, 834.50
0.00
128, 006.31
08/01/26
10,792.37
2,560.13
13,352.50
13,352.50
0.00
117,213.94
02/01/27
11,008.22
2,344.28
13,352.50
13,352.50
0.00
106,205.72
08/01/27
11,761.39
2,124.11
13,885.50
13,885.50
0.00
94,444.33
02/01 /28
11, 996.61
1,888.89
13, 885.50
13, 885.50
0.00
82, 447.72
08/01/28
12,786.05
1,648.95
14,435.00
14,435.00
0.00
69,661.67
02/01/29
13,041.77
1,393.23
14,435.00
14,435.00
0.00
56,619.90
08/01 /29
13, 868.60
1,132.40
15, 001.00
15, 001.00
0.00
42, 751.30
02/01/30
14,145.97
855.03
15,001.00
15,001.00
0.00
28,605.33
08/01 /30
15, 011.39
572.11
15, 583.50
15, 583.50
0.00
13, 593.94
02/01/31
13,593.94
271.88
13,865.82
13,865.82
0.00
0.00
08/01 /31
0.00
0.00
0.00
0.00
0.00
0.00
02/01 /32
0.00
0.00
0.00
0.00
0.00
0.00
08/01 /32
0.00
0.00
0.00
0.00
0.00
0.00
02/01/33
0.00
0.00
0.00
0.00
0.00
0.00
08/01 /33
0.00
0.00
0.00
0.00
0.00
0.00
02/01 /34
0.00
0.00
0.00
0.00
0.00
0.00
08/01 /34
0.00
0.00
0.00
0.00
0.00
0.00
02/01 /35
0.00
0.00
0.00
0.00
0.00
0.00
08/01 /35
0.00
0.00
0.00
0.00
0.00
0.00
02/01 /36
0.00
0.00
0.00
0.00
0.00
0.00
$197,676
$41,880.32
$239,556.32
$239,556.32
$7,676.00
Surplus Tax Increment
1,717.68
Total Net Revenue
$241,274.00
Ells
River
Request for Action
To
Item Number
Economic Development Authori
6.1
Agenda Section
Meeting Date
Prepared by
Consent
September 21, 2020
Amanda Othoudt, ED Director
Item Description
Reviewed by
Sale of 17565 Tyler Street NW, Northstar Business
Cal Portner, City Administrator
Reviewed by
Park and TIF Request
Action Requested
Open Public Hearing to consider the sale of EDA property located at 17565 Tyler Street NW and
invite public comment.
2. Close the Public Hearing.
3. Approve, by motion, a resolution approving the purchase agreement and conveyance of the
property located at 17565 Tyler Street NW, Northstar Business Park.
4. Review TIF Plan and application for assistance and provide a recommendation to the City
Council.
Background/Discussion
The EDA has received a purchase agreement for 17565 Tyler Street, NW from Shoot Steel, Inc. of
Ramsey, MN. They manufacture AR500 and AR550 steel targets, target stands, and other valuable range
equipment.
The purchase agreement proposes the purchase of a 4.34-acre lot at of $2.00 per square foot for a total of
$378,100. Shoot Steel will provide $20,000 earnest funds and will be credited against the purchase price.
They propose to relocate 7 FT and 1 PT employees and hire 6-7FT employees over the next two years. The
positions will pay a minimum of $18 per hour depending on skill level.
At their August 17, 2020, meeting, the EDA approved the purchase agreement contingent on the EDA holding
a public hearing on September 21, 2020, and making the requisite findings required by Minnesota Statutes
Section 469.105, subdivision 2 that the sale and conveyance of the property to the buyer are in the best interests
of the city and the transaction furthers the EDA's general plan of economic development. Shoot Steel also
indicated their intention to apply for incentives through the EDA and have applied for Tax Increment
Financing to fund a portion of the acquisition and infrastructure improvement costs necessary to proceed.
The purchase agreement has been amended to include contingencies to address public financing.
The developer's proposed financial package includes long-term, private financing of $1,259,050 from Village
Bank, $1,036,000 in SBA financing, $200,000 from a private investor and $98,258 in owner equity for a total
estimated budget of $2,993,308. There is an identified gap of $400,000.
The Elk River Vision
A welcoming community nrith revolutionary and spirited resourcefulness, exceptional p p W E R E 0 e r
service, and community engagement that encourages and inspires prosperity
IWATUR
This project is estimated to generate $269,050 in total gross tax increment over 9 years, the maximum term for
an Economic Development District. The total net amount available for this project is $241,274 or 90 percent,
with the city retaining 10 percent for administrative expenses over the term of the district. The present value of
the increment generated considering a 4% interest rate is $192,196. The applicant has committed to filling the
remaining gap of approximately $210,000 through additional equity contributions.
The developer is proposing a pay-as-you-go method for eligible costs as reimbursement from the city to
construct their new facility.
At their September 16, 2020, meeting, the Joint Finance Committee recommended approval of a tax increment
financing package for Shoot Steel, Inc. in the amount of $190,000 subject to the creation of the TIF District.
Financial Impact
N/A
Attachments
■ Joint Finance Committee Packet (September 16, 2020)
■ Purchase Agreement (Amended September 16, 2020)
■ Notice of Public Hearing
■ Resolution
■ TIF Plan for TIF District No. 26
PURCHASE AGREEMENT
1. PARTIES. This Purchase Agreement (this "Agreement'') is made on this day
of 202095 (the "Effective Date"), by and between the Elk River Economic
Development Authority, a Minnesota body corporate and politic (the "EDA") and Shoot Steel, Inc.,
a Minnesota corporation (the `Buyer").
2. SALE OF PROPERTY. The EDA agrees to sell to the Buyer and the Buyer agrees
to buy from the EDA, the real estate located at: 17565 Tyler Street in the City of Elk River, Sherburne
County, Minnesota, legally described on the attached Exhibit A (the "Property").
3. PURCHASE PRICE AND MANNER OF PAYMENT. The Buyer shall pay the
EDA $378,100 dollars for the Property (the "Purchase Price"). Upon approval and execution of this
Agreement by the Buyer and the EDA, the Buyer shall deposit $20,000.00 in earnest money to be
held by the Buyer's title company in an escrow account. Said earnest money shall be deducted from
the Purchase Price at Closing.
4. OBLIGATIONS OF THE EDA. The EDA shall provide the following
documentation:
4.1. Representations and Warranties. The representations and warranties of the EDA
contained in this Agreement must be true now and on the Closing Date in all material
respects as if made on the Closing Date and the EDA shall have delivered to the Buyer
on the Closing Date, a certificate dated the Closing Date, signed by an authorized
representative of the EDA, certifying that such representations and warranties are true
as of the Closing Date in all material respects (the "Closing Certificate").
4.2. Title. Title to the Property shall have been found marketable, or been made
marketable, in accordance with the requirements and terms of Section 8 below.
4.3. Performance of the EDA's Obligations. The EDA shall have performed all of the
obligations required to be performed by the EDA under this Agreement in all material
respects. Included within the obligations of the EDA under this Agreement shall be
the following:
4.3.1. The EDA agrees to cooperate with the Buyer as reasonably necessary to
permit the Buyer to investigate the Property.
4.3.2. The EDA shall deliver to the Buyer the Title Evidence required in Section 8
10 days from the Effective Date of this agreement.
4.3.2 The EDA shall deliver to the Buyer copies of all surveys, the plat, civil plans,
soils reports, environmental reports (including all investigations performed on
the Property in the last five years), and title work relating to the Property which
are in the EDA's possession or control within ten (10) days from the Effective
Date of this Agreement.
457530v2 SJS EL185-33
5. CONTINGENCIES WHICH MUST BE EXERCISED BY WRITTEN NOTICE TO
THE EDA ON OR BEFORE 120 DAYS OF THE EFFECTIVE DATE OF THIS
AGREEEMENT (THE "CONTINGENCY DATE"):
5.1. Buyer's Contingencies.
5.1.1. Testing. The Buyer shall have determined that the Buyer is satisfied with the
results of, and matters disclosed by, any environmental site assessments
(including a Phase I and Phase II if necessary), soil tests, surveys, engineering
inspections, hazardous substances and environmental reviews of the Property,
all such tests, assessments, inspections and reviews to be obtained at the
Buyer's sole cost and expense.
a. The Buyer shall pay all costs and expenses of such investigation and
testing and shall promptly repair and restore any damage to the
Property caused by the Buyer's testing and return the Property to
substantially the same condition as existed prior to entry. The Buyer
shall indemnify, defend and hold the EDA harmless from any claim
for damage to person or property arising from any investigation or
inspection of the Property conducted by the Buyer, the Buyer's agents
or contractors, including the cost of attorneys' fees.
b. Copies of any written reports, studies or test results obtained by the
Buyer in connection with the Buyer's inspection of the Property or
investigation relating to the Property shall be delivered to the EDA
promptly upon receipt of the same at no cost to the EDA.
5.1.2. Land Use Approvals. The Buyer shall have obtained, at the Buyer's sole cost
and expense, on or before the Contingency Date, all consents, agreements,
approvals, easements, licenses and adequate assurances that are legally
necessary for the Buyer to use the Property as intended, including, but not
limited to, land use approvals from the City of Elk River.
5.1.3 Financing. The Buyer shall have obtained suitable financing in a form and
amount acceptable to the Buyer in its sole discretion.
5.1.4 Tax Increment. The City of Elk River (the "City") shall have approved the
establishment of an economic development tax increment financing district
after a public hearing and upon satisfaction of all other conditions required by
Minnesota Statutes Sections 469.174 through 469.1794 prior to the Closing
Date.
5.1.5 Development Agreement. The Buyer and the City shall have negotiated,
mutually agreed to, and executed, effective not later than the Closing Date, a
457530v2 SJS EL185-33
development agreement relating to the provision of tax increment financing
assistance for the proposed project to be constructed on the Property.
5.2. EDA's Contingencies.
5.2.1. Determination by the EDA after a holding a public hearing required by
Minnesota Statutes Section 469.105, subdivision 2 that the sale and
conveyance of the Property to the Buyer are in the best interests of the City of
Elk River and its people, and that the transaction furthers the EDA's general
plan of economic development.
5.2.2. Tax Increment. The City of Elk River (the "City") shall have approved the
establishment of an economic development tax increment financing district
after a public hearing and upon satisfaction of all other conditions required by
Minnesota Statutes Sections 469.174 through 469.1794 prior to the Closing
Date.
5.2.3. Development Agreement. The Buyer and the City shall have negotiated,
mutually agreed to, and executed, effective not later than the Closing Date, a
development agreement relating to the provision of tax increment financing
assistance for the proposed project to be constructed on the Property.
If, on or before the Contingency Date, either party determines that any of their respective
contingencies listed in this Section have not been satisfied in their sole discretion, then this Agreement
may be terminated by written notice from the party to the other, which notice must give no later than
the Contingency Date. If the party does not give written notice of termination on or before the
Contingency Date, all of such contingencies will be deemed to have been satisfied and the parties
shall proceed to close this transaction in accordance with the terms of this Agreement. All of the
contingencies set forth in this Agreement are specifically stated and agreed to be for the sole and
exclusive benefit of the respective party and each party shall have the right to unilaterally waive any
of its contingencies by written notice to the other party. If this Agreement is terminated by either
party in accordance with this Section, the EDA shall return the Buyer's earnest money to the Buyer
and neither party shall have any further rights or obligations regarding this Agreement or the Property.
The Buyer may extend the Contingency Date by an additional 60 days by notifying the EDA in
writing and depositing into an escrow account held by the Buyer's title company an additional $5,000
in nonrefundable earnest money prior to the expiration of the original Contingency Date. The
nonrefundable earnest money shall be applied to the Purchase Price at Closing.
6. CLOSING. The closing of the purchase and sale contemplated by this Agreement (the
"Closing") shall occur on or before 30 days after the Contingency Date or its extension if such an
extension is requested by the Buyer or such other date on which the parties may agree (the "Closing
Date"). The EDA agrees to deliver possession of the Property to the Buyer on the Closing Date.
457530v2 SJS EL185-33
6.1. EDA's Closing Documents. On the Closing Date, the EDA shall execute and deliver
to the Buyer the following (collectively, "EDA's Closing Documents"), all in form
and content reasonably satisfactory to the EDA and the Buyer:
6.1.1. Deed. A quit claim deed conveying the Property to the Buyer. Said quit claim
deed shall contain a covenant running with the Property that the building on
the Property must be constructed and completed within one year from the date
of the deed or the Property will automatically revert back to the EDA.
6.1.2. Seller's Affidavit. An Affidavit of Title by the EDA stating that on the
Closing Date there are no outstanding, unsatisfied judgments, tax liens or
bankruptcies against or involving the EDA or the Property; that there has been
no skill, labor or material furnished to the Property for which payment has not
been made or for which mechanics' liens could be filed; and that there are no
other unrecorded instruments affecting the Property, together with whatever
standard owner's affidavit (ALTA form) which may be required by the Title
Company to issue an Owner's Policy of Title Insurance with the standard
exceptions waived.
6.1.3. Original Documents. Original copies of any surveys, plans and records in the
EDA's possession.
6.1.4. FIRPTA Affidavit. A non -foreign affidavit, properly executed, containing
such information as is required by the Internal Revenue Code Section
1445(b)(2) and its regulations.
6.1.5. Other Documents. Any other documents reasonably required in order to
complete the transaction contemplated by this Agreement.
6.2. Buyer's Closing Documents. On the Closing Date, the Buyer shall execute, as
appropriate and deliver to the EDA the following (collectively, "Buyer's Closing
Documents"):
6.2.1. Purchase Price. The Purchase Price in good funds (certified or cashier's check
or wire transfer).
6.2.2. Other Documents. Such affidavits of Purchaser, Certificates of Value or other
documents as may be reasonably required in order to complete the transaction
contemplated by this Agreement.
7. PRORATIONS. The EDA and the Buyer agree to the following proration and allocation
of costs regarding this Agreement:
7.1. Title Insurance and Closing Fees. The EDA shall pay the cost of the title insurance
commitment, including any associated title examination and search charges. Oe
457530v2 SJS EL185-33
Buyer shall pay the cost of any title insurance or endorsement premiums.) The parties CammeMed [ail: en°r these niri�ur ile sever°s expenses?
shall split any closing fee charged by the title company.
7.2. Real Estate Taxes and Special Assessments. The EDA shall pay the state deed tax.
The EDA shall also pay, on or before the Closing Date, all levied special assessments,
constituting a lien against the Property as of the effective date, including, without
limitation, any installments of special assessments that are payable with general real
estate taxes in the year in which Closing occurs. Any general real estate taxes payable
in all years prior to the year in which the Closing occurs shall be paid by the EDA.
Any general real estate taxes payable in the year in which Closing occurs shall be
prorated between the Buyer and the EDA as of the date of Closing.
7.3. Recording Costs. The EDA shall pay the cost of recording all documents necessary
to vest marketable title in the EDA and cure title objections, if any. The Buyer shall
pay the cost of recording all other documents, including, but not limited to, the quit
claim deed.
7.4. Attorneys' Fees. Each of the parties shall pay its own attorneys' fees.
7.5. Brokers' Fees. The Buyer is represented by Richard Lee of Premier Commercial
Properties, LLC (the `Buyer's Broker"). Brokerage fees of three percent of the
Purchase Price shall be paid to the Buyer's Broker by the EDA at Closing. The Buyer
confirms that no other brokers are representing it in this transaction. The EDA
represents that it is not represented by a broker in this transaction.
8. TITLE EXADIINATION. Title examination shall be conducted as follows:
8.1. EDA's Title Evidence. Within 10 days of the Effective Date, the EDA shall furnish
the following (collectively, "Title Evidence") to the Buyer.
8.1.1. Title Commitment. A title insurance commitment for the Property. The Buyer
shall be responsible for selecting the title insurance company.
8.1.2. Survey. A copy of any existing land survey of the Property in the EDA's
possession or control. The Buyer, at the Buyer's option, also may obtain, at
the Buyer's expense, a new survey of the Property. Any new survey shall be
certified and delivered to the EDA as well as the Buyer and any other parties
that the Buyer may designate.
8.2. Buyer's Objections. No later than 14 days after receiving the updated Title
Commitment, the Buyer must make written objections ("Objections") to the
marketability of title to the Property based on the Title Evidence. If the Buyer elects
to obtain a new survey, objections based upon the survey must be made within 14
days after receipt of said survey but in no event later than the Contingency Date. The
Buyer's failure to make Objections within such time period will constitute a waiver
of Objections. However, any matter which is not referenced in the title commitment
457530v2 SJS EL185-33
and is first recorded, discovered or disclosed after the effective date of the title
commitment, may be objected to by the Buyer in the manner described herein. If not
sooner satisfied, the EDA shall cause the Property to be released from any mortgages
or other liens against the Property at the closing. Any matter shown on such Title
Evidence, other than a mortgage or other lien and not objected to by the Buyer shall
be a "Permitted Encumbrance" hereunder. Within seven days after receipt of the
Buyer's Objections, the EDA shall notify the Buyer in writing if the EDA elects not
to cure the Objections. If such notice is given within said seven-day period, the Buyer
may either waive the Objections or terminate this Agreement by giving written notice
of termination to the EDA within 10 days after the EDA's notice is given to the Buyer.
If written notice by the EDA is not given within the 10-day period, the EDA shall use
commercially reasonable efforts to correct any Objections within 30 days after the
expiration of the 10-day period ("Cure Period"). If the Title Company is willing to
issue a title insurance policy to the Buyer that does not except from title insurance
coverage an item the Buyer has objected to, the objection relating to such item shall
be deemed cured. If the Objections are not cured within the Cure Period, the Buyer
shall have the option to do any of the following:
8.2.1. Terminate this Agreement by giving written notice to the EDA within 10
days after the expiration of the Cure Period and neither the EDA nor the
Buyer shall have further rights or obligations hereunder. In such event the
EDA shall return all earnest money to the Buyer.
8.2.2. Waive the objections and proceed to close without reduction in the Purchase
Price.
The Buyer shall make the election within 10 days after expiration of the EDA's
Cure Period. A failure to make an election within such period shall be deemed an
election to proceed to close pursuant to subsection 8.2.2.
9. REPRESENTATIONS AND WARRANTIES BY THE EDA. The EDA
represents and warrants to the Buyer that the following are true in all material respects now and,
as modified by any changes about which the EDA notifies the Buyer in writing following after the
date hereof, will be true in all material respects on the Closing Date:
9.1. Authori1y. The EDA is a public body corporate and politic, duly created under and
subject to the laws of the State of Minnesota; the EDA has the requisite power and
authority to enter into and perform this Agreement and those EDA Closing
Documents signed by it; such documents have been or will be duly authorized by
all necessary action on the part of the EDA and have been or will be duly executed
and delivered; such execution, delivery and performance by the EDA of such
documents does not conflict with or result in a violation of any judgment, order, or
decree of any court or arbiter to which the EDA is a party; such documents are valid
and binding obligations of the EDA, and are enforceable in accordance with their
terms, subject to bankruptcy, reorganization, insolvency, moratorium and other
laws affecting the rights and remedies of creditors generally and principles of
equity.
457530v2 SJS EL185-33
9.2. Utilities. The EDA has received no notice of actual or threatened curtailment of
any utility service now supplied to the Property.
9.3. Rights of Others to Purchase the Property. The EDA has not entered into any other
contracts for the sale of the Property, nor are there any rights of first refusal or
options to purchase the Property or any other rights of others that might prevent the
sale of the Property contemplated by this Agreement.
9.4. Use of the Property. To the best of the EDA's knowledge without investigation, the
Property is usable for its current uses without violating any federal, state, local or
other governmental building, zoning, health, safety, platting, subdivision or other
law, ordinance or regulation, or any applicable private restriction.
9.5. Proceedings. There is no action, litigation, investigation, condemnation or
proceeding of any kind pending or, to the best of the EDA's knowledge without
investigation, threatened against the EDA with respect to the Property or any
portion of the Property.
9.6. Wells. No wells exist on the Property.
9.7. Sewage Treatment Systems. No sewage treatment system exists on the Property.
9.8. Title. The EDA owns fee title to the Property.
The EDA's representations shall be true, accurate and complete as of the date of this Agreement,
in all material respects and, as modified by any notices given by the EDA to the Buyer, on the
Closing Date in all material respects. If any time prior to Closing, the Buyer shall determine that
any representation herein made by the EDA was not true in all material respects when made, the
Buyer's sole remedy shall be to terminate this Agreement by giving notice to the EDA and seeking
any applicable remedies for breach from the EDA. The earnest money paid by the Buyer shall be
returned to the Buyer.
Notwithstanding the above paragraph, all representations and warranties shall terminate on the
Closing Date. Any claim by the Buyer not made by written notice delivered to the EDA before
the date the representation or warranty terminates shall be deemed waived.
10. "AS IS, WHERE IS." The Buyer acknowledges that the Buyer has inspected or has had the
opportunity to inspect the Property and agrees to accept the Property "AS IS" with no right of set off
or reduction in the Purchase Price. Such sale shall be without representation of warranties, express
or implied, either oral or written, made by the EDA or any official, employee or agent of the EDA
with respect to the physical condition of the Property, including but not limited to, the existence or
absence of petroleum, hazardous substances, pollutants or contaminants in, on, or under, or affecting
the Property or with respect to the compliance of the Property or its operation with any laws,
ordinances, or regulations of any government or other body, except as stated above. The Buyer
acknowledges and agrees that the EDA has not made and does not make any representations,
warranties, or covenants of any kind or character whatsoever, whether expressed or implied, with
respect to warranty of income potential, operating expenses, uses, habitability, tenant ability, or
suitability for any purpose, merchantability, or fitness of the Property for a particular purpose, all of
45753M SJS EL185-33
which warranties EDA hereby expressly disclaims, except as stated above. The Buyer is relying
entirely upon information and knowledge obtained from the Buyer's own investigation, experience
and knowledge obtained from the Buyer's own investigation, experience or personal inspection of the
Property. The Buyer expressly assumes, at closing, all environmental and other liabilities with respect
to the Property and release and indemnify the EDA from same, whether such liability is imposed by
statute or derived from common law including, but not limited to, liabilities arising under the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), the
Hazardous and Solid Waste Amendments Act, the Resource Conservation and Recovery Act
("RCRA"), the federal Water Pollution Control Act, the Safe Drinking Water Act, the Toxic
Substances Act, the Superfund Amendments and Reauthorization Act, the Toxic Substances Control
Act and the Hazardous Materials Transportation Act, all as amended, and all other comparable
federal, state or local environmental conservation or protection laws, rules or regulations. The
foregoing assumption and release shall survive Closing. All statements of fact or disclosures, if any,
made in this Agreement or in connection with this Agreement, do not constitute warranties or
representations of any nature. The foregoing provision shall survive Closing and shall not be deemed
merged into any instrument of conveyance delivered at Closing.
11. REPRESENTATIONS AND WARRANTIES BY THE BUYER. The Buyer represents
and warrants to the EDA that the Buyer is a Minnesota corporation; that the Buyer has the requisite
capacity, power and authority to enter into this Agreement and the Buyer's Closing Documents;
such execution, delivery and performance by the Buyer of such documents does not conflict with
or result in a violation of any judgment, order or decree of any court or arbiter to which the Buyer
is a party; such documents are valid and binding obligations of the Buyer, and are enforceable in
accordance with their terms.
12. CONDEMNATION. If, prior to the Closing, eminent domain proceedings are
commenced against all or any material part of the Property, the EDA shall immediately give notice
to the Buyer of such fact and at the Buyer's option (to be exercised within 15 days after the EDA's
notice), this Agreement shall terminate, in which event neither party will have further obligations
under this Agreement. The earnest money paid by the Buyer shall be returned to the Buyer. If the
Buyer fails to give such notice, then there shall be no reduction in the Purchase Price, and the EDA
shall assign to the Buyer at the Closing all of EDA's right, title and interest in and to any award
made or to be made in the condemnation proceedings. Prior to the Closing, the EDA shall not
designate counsel, appear in, or otherwise act with respect to the condemnation proceedings
without the Buyer's prior written consent. For purposes of this section, the words "a material part"
means a part if acquired by a condemning authority would materially hinder Buyer's operations
on the Property.
13. COMMISSIONS. With the exception of the Buyer's Broker, both the Buyer and the
EDA represent that they have not entered into a contract with any other real estate broker, whereby
the broker is entitled to a commission resulting from the transaction contemplated by this
Agreement. Each party agrees to indemnify, defend and hold harmless the other party against any
claim made by a real estate broker for a commission or fee based on alleged acts or agreements
with the indemnifying party.
14. REMEDIES.
457530v2 SJS EL185-33
14.1. Buyer's Remedies. If the EDA fails to consummate this Agreement for any reason
except the Buyer's default or the termination of this Agreement pursuant to a right to
terminate given herein, the Buyer, as its sole and exclusive remedy, terminate this
Agreement by giving 30 days' written notice to the EDA, pursuant to Minnesota
Statutes Section 559.21, as amended from time to time, in which event the earnest
money shall be promptly released to the Buyer and upon such release, neither party
shall be further obligated to the other (except for the Buyer's and the EDA's
indemnities set forth in this Agreement). The Buyer specifically waives any right to
make a claim against the EDA for compensatory or consequential damages or any
other type of monetary claim, except for the indemnity obligations set forth in this
Agreement.
14.2. EDA's Remedy. If the Buyer fails to consummate this Agreement for any reason
except the EDA's default or the termination of this Agreement pursuant to a right to
terminate given herein, the EDA's sole and exclusive remedy shall be to terminate
this Agreement by giving 30 days' written notice to the Buyer, pursuant to Minnesota
Statutes Section 559.21, as amended from time to time, in which case, the earnest
money shall be retained by the EDA.
14.3 Indemnification Remedy. Notwithstanding the foregoing provisions of this
Section 14, in the event of any default by the Buyer or the EDA under or in
connection with any indemnification pursuant to this Agreement, and in the event
of any failure by the defaulting party to cure such default within 30 days after the
date of notice of default by the non -defaulting party to the defaulting party, the non -
defaulting party shall be entitled to seek and recover all legal and equitable relief
available under applicable law, including, without limitation, monetary damages.
15. ASSIGNMENT. The Buyer may not assign the Buyer's rights under this Agreement,
without prior consent of the EDA.
16. SURVIVAL. All of the terms of this Agreement and warranties and representations herein
contained shall survive and be enforceable after the Closing.
17. NOTICES. Any notice required or permitted hereunder shall be given by personal
delivery upon an authorized representative of a party hereto; or if mailed by United States mail
postage prepaid; or if transmitted by facsimile copy followed by mailed notice; or if deposited cost
paid with a nationally recognized, reputable overnight courier, properly addressed as follows:
If to the EDA: Elk River Economic Development Authority
Attn: Executive Director
13065 Orono Parkway
Elk River, MN 55330
If to the Buyer: Shoot Steel, Inc.
Attn: Evan Moyer
32428 N Center Lane
Center City, M 55012-5501
457530v2 SJS EL185-33
Notices shall be deemed effective on the earlier of the date of receipt or the date of deposit, as
aforesaid; provided, however, that if notice is given by deposit, the time for response to any notice
by the other party shall commence to run one business day after any such deposit. Any party may
change its address for the service of notice by giving notice of such change 10 days prior to the
effective date of such change.
18. CAPTIONS. The paragraph headings or captions appearing in this Agreement are for
convenience only, are not a part of this Agreement and are not to be considered in interpreting this
Agreement.
19. ENTIRE AGREEMENT, MODIFICATIONS. This written Agreement constitutes the
complete agreement between the parties and supersedes any prior oral or written agreements
between the parties regarding the Property. There are no verbal agreements that change this
Agreement and no waiver of any of its terms will be effective unless in a writing executed by the
parties.
20. BINDING EFFECT. This Agreement binds and benefits the parties and their successors
and assigns.
21. CONTROLLING LAW. This Agreement has been made under the substantive laws of
the State of Minnesota, and such laws shall control its interpretation.
457530v2 SJS EL185-33 10
BUYER
SHOOT STEEL, INC.
By
Its:
SELLER
ELK RIVER ECONOMIC DEVELOPMENT
AUTHORITY
By:
Its: President
By:
Its: Executive Director
457530v2 SJS EL185-33 I I
EXHIBIT A
Legal Description of the Property
Lot 1, Block 2, Northstar Business Park, according to the recorded plat thereof, Sherburne County,
Mimiesota.
PID 75-757-0205
457530v2 SJS EL185-33
NOTICE OF PUBLIC HEARING
ECONOMIC DEVELOPMENT AUTHORITY
FOR THE CITY OF ELK RIVER, MINNESOTA
Notice is hereby given that the Board of Commissioners of the Economic Development Authority
for the City of Elk River, Minnesota (the "EDA") will meet at or after 5:30 p.m. on September 21, 2020,
at the Elk River City Hall, 13065 Orono Parkway, Elk River, Minnesota, to conduct a public hearing on
the proposed sale of real property owned by the EDA and located at 17565 Tyler Street in the City of Elk
River, Sherburne County, Minnesota to Shoot Steel, Inc. The property is legally described as:
Lot 1, Block 2, Northstar Business Park, according to the recorded plat thereof, Sherburne County,
Minnesota.
PID 75-757-0205
(the "Property")
A copy of all documents relating to the proposed sale of the Property will be on file and available for
inspection at City Hall during regular business hours.
Any person wishing to express an opinion on the matters to be considered at the public hearing will be
heard. PLEASE NOTE, due to COVID-19, the public hearing may be conducted via telephone or other
electronic means as allowed under Minnesota Statutes, Section 13D.021. Please refer to the City's
website at https://www.elkrivermn.gov/ or call City Hall at 763-635-1000 to learn how to attend and
participate in the public hearing via telephone or electronically.
ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF ELK RIVER
COUNTY OF SHERBURNE
STATE OF MINNESOTA
RESOLUTION NO. 2020-
RATIFYING THE APPROVAL OF A PURCHASE AGREEMENT AND
CONVEYANCE OF THE PROPERTY LOCATED AT 17565 TYLER STREET,
ELK RIVER, MN TO SHOOT STEEL, INC.
BE IT RESOLVED By the Board of Commissioners of the Economic Development
Authority of the City of Elk River (the "Authority") as follows:
Section 1. Recitals.
1.01. The Authority is authorized pursuant to Minnesota Statutes, Sections
469.090 to 469.1081 (the "EDA Act"), to acquire and convey real property and to undertake
certain activities to facilitate the development of real property by private enterprise.
1.02. On , 2020, the Authority approved that certain Purchase
Agreement with Shoot Steel, Inc. ("Shoot Steel") to allow Shoot Steel to purchase the
property owned by the Authority that is legally described as:
Lot 1, Block 2, Northstar Business Park, according to the recorded plat thereof,
Sherburne County, Minnesota
(the "Property")
1.03. The Authority has on this date conducted a duly noticed public hearing
regarding the sale of the Property to Shoot Steel, at which all interested persons were given
an opportunity to be heard.
1.04. The Authority finds and determines that the conveyance of the Property to
Shoot Steel is in the public interest and will further the objectives of its general plan of
economic development because it will provide an opportunity for increased business and job
opportunities in the City and could serve as an impetus for further development.
Section 2. AuthorityApproval, Further Proceedings.
2.01. The Board hereby ratifies its approval of the Purchase Agreement to Shoot
Steel that was made on 52020.
2.02. Authority staff and officials are authorized to take all actions necessary to
perform the Authority's obligations under the Purchase Agreement as a whole, including,
without limitation, execution of any documents necessary to which the Authority is a party
referenced in or attached to the Purchase Agreement, and any deed or other documents
necessary to convey the Property to Shoot Steel, all as described in the Purchase Agreement.
Approved by the Board of Commissioners of the Economic Development Authority of the
City of Elk River this day of 12020.
President
ATTEST:
Executive Director
CC bakertilly
Tax Increment Financing Plan
for
Tax Increment Financing (Economic
Development) District No. 26
within
Development District No. 1
(Shoot Steel, INC Project)
City of Elk River, Minnesota
Prepared by
Baker Tilly Municipal Advisors, LLC
Draft Dated: September 4, 2020
Anticipated Public Hearing: October 5, 2020
Anticipated Approval by City Council: October 5, 2020
Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and wholly -owned subsidiary of Baker Tilly Virchow
Krause, LLP, an accounting firm. Baker Tilly Virchow Krause, LLP trading as Baker Tilly is a member of the global network of Baker
Tilly International Ltd., the members of which are separate and independent legal entities.
TABLE OF CONTENTS
Section
Page(s)
A.
Definitions...................................................................................................................................
1
B.
Statutory Authorization...............................................................................................................
1
C.
Statement of Need and Public Purpose.....................................................................................
2
D.
Statement of Objectives.............................................................................................................
2
E.
Designation of Tax Increment Financing District as an
Economic Development District...............................................................................................
2
F.
Duration of the TIF District.........................................................................................................
3
G.
Property to be Included in the TIF District..................................................................................
3
H.
Property to be Acquired in the TIF District.................................................................................
3
I.
Specific Development Expected to Occur Within the TIF District ..............................................
3
J.
Findings and Need for Tax Increment Financing.......................................................................
3
K.
Estimated Public Costs..............................................................................................................
5
L.
Estimated Sources of Revenue..................................................................................................
5
M.
Estimated Amount of Bonded Indebtedness..............................................................................
6
N.
Original Net Tax Capacity..........................................................................................................
6
O.
Original Tax Capacity Rate........................................................................................................
6
P.
Projected Retained Captured Net Tax Capacity and Projected Tax Increment .........................
7
Q.
Use of Tax Increment.................................................................................................................
7
R.
Excess Tax Increment................................................................................................................
8
S.
Tax Increment Pooling and the Five -Year Rule.........................................................................
9
T.
Limitation on Administrative Expenses......................................................................................
9
U.
Limitation on Property Not Subject to Improvements - Four Year Rule .....................................
10
V.
Estimated Impact on Other Taxing Jurisdictions........................................................................
10
W.
Prior Planned Improvements......................................................................................................
11
X.
Development Agreements..........................................................................................................
11
Y.
Assessment Agreements...........................................................................................................
11
Z.
Modifications of the Tax Increment Financing Plan...................................................................
11
AA.
Administration of the Tax Increment Financing Plan.................................................................
12
AB.
Financial Reporting and Disclosure Requirements....................................................................
13
Map of the Tax Increment Financing District........................................................................ EXHIBIT I
AssumptionsReport.............................................................................................................. EXHIBIT II
Projected Tax Increment Report........................................................................................... EXHIBIT III
Estimated Impact on Other Taxing Jurisdictions Report ....................................................... EXHIBIT IV
Market Value Analysis Report............................................................................................... EXHIBIT V
City of Elk River, Minnesota
SECTION I — MODIFICATION TO THE DEVELOPMENT PROGRAM
FOR DEVELOPMENT DISTRICT NO. 1
Foreword
The following text represents a Modification to the Development Program for Development
District No. 1. This modification represents a continuation of the goals and objectives set forth
in the Development Program for Development District No. 1. The changes generally include the
establishment of Tax Increment Financing (Economic Development) District No. 26.
For further information, a review of the Development Program for Development District No. 1 is
recommended. It is available from the City Administrator at the City of Elk River. Other relevant
information is contained in the Tax Increment Financing Plans for the Tax Increment Financing
Districts located within Development District No. 1.
SECTION II — ESTABLISHMENT OF THE TAX INCREMENT FINANCING PLAN
FOR TAX INCREMENT FINANCING (ECONOMIC DEVELOPMENT) DISTRICT NO. 26
Section A Definitions
The terms defined in this section have the meanings given herein, unless the context in which they are
used indicates a different meaning:
"City„ means the City of Elk River, Minnesota; also referred to as a "Municipality".
"City Council" means the City Council of the City.
"County" means Sherburne County, Minnesota.
"Development District" means Development District No.1 in the City, which is described in the
corresponding Development Program.
"Development Program" means the Development Program for the Development District.
"Project Area" means the geographic area of the Development District.
"School District" means Independent School District No. 728, Minnesota.
"State" means the State of Minnesota.
"TIF Act" means Minnesota Statutes, Sections 469.174 through 469.1794, both inclusive.
"TIF District" means Tax Increment Financing (Economic Development) District No. 26.
"TIF Plan" means the tax increment financing plan for the TIF District (this document).
Section B Statutory Authorization
See Section B of the Development Program for the Development District.
SPRINGSTED Pagel
City of Elk River, Minnesota
Section C Statement of Need and Public Purpose
See Section C of the Development Program for the Development District.
Section D Statement of Objectives
See Section D of the Development Program for the Development District.
Section E Designation of Tax Increment Financing District as an
Economic Development District
Economic development districts are a type of tax increment financing district which consist of any project,
or portions of a project, which the City finds to be in the public interest because:
(1) it will discourage commerce, industry, or manufacturing from moving their
operations to another state or municipality;
(2) it will result in increased employment in the state; or
(3) it will result in preservation and enhancement of the tax base of the state.
The TIF District qualifies as an economic development district in that the proposed development
described in this TIF Plan (see Section I) meets the criteria listed above in (2) and (3). Without
establishment of the TIF District, the proposed development would not occur within the City. The
proposed development will also result in increased employment and enhancement of the tax base in both
the City and the State.
Tax increments from an economic development district must be used to provide improvements, loans,
subsidies, grants, interest rate subsidies, or other assistance in which at least 85% of the square footage
of the facilities to be constructed are used for any of the following purposes:
(1) manufacturing, production, or processing of tangible personal property;
(2) warehousing, storage and distribution of tangible personal property, excluding retail
sales;
(3) research and development related to the activities listed in (1) or (2) above;
(4) telemarketing if that activity is the exclusive use of the property;
(5) tourism facilities (see M.S. Section 469.174, Subd. 22);
(6) space necessary for and related to the activities listed in (1) through (5) above;
(7) a workforce housing project that satisfies the requirements of paragraph (d).
Tax increments from the TIF District will be used to provide financial assistance to the proposed
development (see Section 1), in which over 85% of the square footage of the facilities to be constructed
will be used for manufacturing or other purposes as listed in (1) through (7) above.
SPRINGSTED Page 2
City of Elk River, Minnesota
Section F Duration of the TIF District
Economic development districts may remain in existence 8 years from the date of receipt by the City of
the first tax increment. The City anticipates that the TIF District will remain in existence the maximum
duration allowed by law (projected to be through the year 2030, due to anticipated receipt of first
increment in 2022). Modifications of this plan (see Section AA) shall not extend these limitations.
Section G Property to be Included in the TIF District
The TIF District is an area of land comprising of the parcels listed below that are located within the Project
Area. A map showing the boundaries of the TIF District is shown in Exhibit I.
Parcel ID Number
Legal Description
75-757-0205 1 LOT 1, BLK 2 SUBJ TO EASEMENT OF RECORD
The area encompassed by the TIF District shall also include all street or utility right-of-ways located upon
or adjacent to the property described above.
Section H Property to be Acquired in the TIF District
The City may acquire and sell any or all of the property located within the TIF District. It will not be
acquiring any property at this time but will be selling the property to the developer to facilitate
development.
Section I Specific Development Expected to Occur Within the TIF District
The proposed project is anticipated to consist of the acquisition of approximately 4.34 acres at 17565
Tyler Street Northwest in the City of Elk River by the developer from the City. The developer is planning
to construct an approximate 20,000 square foot warehouse building on the site. The proposed uses of the
building include primarily production and operations with a small office portion for operations directly
related to the business. The square footage of the business within the District will comply with the
requirements of an economic development district with at least 85% being used for a qualifying purpose
and less than 15% will be office space.
It is anticipated that the City will use the tax increment to finance a portion of the extraordinary acquisition
and infrastructure improvement costs that are necessary for this project to proceed. In addition, the city
may use tax increment for related administrative expenses, and any other eligible expenditures
associated with development of the site that may include additional necessary public improvements.
Construction of the project is expected to commence in 2020 and be 100% assessed and on the tax rolls
as of January 2, 2021 for taxes payable in 2022.
At the time this document was prepared there were no signed construction contracts with regards to the
above described development.
Section J Findings and Need for Tax Increment Financing
In establishing the TIF District, the City makes the following findings:
(1) The TIF District qualifies as an economic development district;
SPRINGSTED Page 3
City of Elk River, Minnesota
See Section E of this document for the reasons and facts supporting this finding.
(2) The proposed development, in the opinion of the City, would not reasonably be expected
to occur solely through private investment within the reasonably foreseeable future and
the increased market value of the site that could reasonably be expected to occur without
the use of tax increment financing would be less than the increase in the market value
estimated to result from the proposed development after subtracting the present value of
the projected tax increments for the maximum duration of the district permitted by the TIF
Plan.
Factual basis:
Proposed development not expected to occur:
The proposed development consists of the construction of an approximate 20,000 square foot new
warehousing facility. The new facility will be used primarily for warehousing to allow for further
business growth and development. The business has requested financial assistance to write down a
portion of the acquisition and site improvement costs associated with development of the site. The
provided supplemental financial information demonstrates that the development of this site would not
occur without the assistance provided in this TIF Plan.
Therefore, the City has determined that the proposed development would not occur but for the
financial assistance provided in this TIF Plan because of the increased costs related to development
within the TIF District. The property requires additional expenditures related to development of the
site, including acquisition, site improvements, storm water ponding and winter construction, which
currently do not allow development on the property.
No higher market value expected:
The land located within TIF District No. 26 requires site improvements including site preparation,
grading, and landscaping, as well as storm water ponding. To commence construction of the new
business facility, assistance with financing a portion of those costs will be necessary. The financial
assistance provided under this TIF Plan will help offset the costs of these improvements. Given the
nature of this property, there is no reasonable expectation of any development occurring that would
generate as much market value increase as is estimated to be generated by the proposed
development by the new business. Therefore, the City has concluded that substantial
development at this particular site --and hence any significant increase in market value --is not
reasonably expected to occur unless the City provides tax increment assistance as described in
this Tax Increment Plan.
To summarize the basis for the City's findings regarding alternative market value, in accordance with
Minnesota Statutes, Section 469.175, Subd. 3(d), the City makes the following determinations:
a. The City's estimate of the amount by which the market value of the site will increase
without the use of tax increment financing is $0 (for the reasons described above), except
some unknown amount of appreciation.
b. If the proposed development to be assisted with tax increment occurs in the District,
the total increase in market value would be approximately $1,330,900, including the value of
the building (See Exhibit II).
C. The present value of tax increments from the District for the maximum duration of
the district permitted by the TIF Plan is estimated to be $214,321 (See Exhibit V).
SPRINGSTED Page 4
City of Elk River, Minnesota
d. Even if some development other than the proposed development were to occur, the
Council finds that no alternative would occur that would produce a market value increase
greater than $1,116,579 (the amount in clause b less the amount in clause c) without tax
increment assistance.
(3) The TIF Plan will afford maximum opportunity, consistent with the sound needs of the
City as a whole, for development of the Project Area by private enterprise.
Factual basis: The proposed development is the construction of a new business in the Project Area
that is expected to create new jobs in the City and State, plus create new tax base for the City and
the state. The development meets the City's economic development goals in terms of land use, job
retention, and wage levels.
(4) The TIF Plan conforms to general plans for development of the City as a whole.
Factual basis: The City Council has determined that the development proposed in the TIF Plan
conforms to the City comprehensive plan.
Section K Estimated Public Costs
The estimated public costs of the TIF District are listed below. Such costs are eligible for reimbursement
from tax increments of the TIF District.
Estimated Public Costs
Estimated Amount
Land/Building acquisition
$0
Site Improvements/Preparation costs
$0
Utilities
$0
Other public improvements
$241,274
Construction of affordable housing
$0
Administrative expenses
$26,809
Total Estimated Public Costs
$268,083
Interest expenses
$0
Total Costs
$268,083
The City reserves the right to administratively adjust the amount of any of the items listed above or to
incorporate additional eligible items, so long as the total estimated public costs ($268,083) do not
increased. The City also reserves the right to fund any of the identified costs with any other legally
available revenues, such as grants and/or loans, but anticipates that such costs will be primarily financed
with tax increments.
Section L Estimated Sources of Revenue
Estimated Sources of Revenue
Estimated Amount
Tax Increment revenue
$268,083
Interest on invested funds
Total
$268,083
SPRINGSTED Page 5
City of Elk River, Minnesota
The City anticipates providing financial assistance to the proposed development through pay-as-you-go
financing in which the City will provide funding to the developer to offset a portion of the infrastructure
fees and collect annual increments to repay the note. As tax increments are collected from the TIF
District in future years, a portion will be retained by the City and the remaining funds will be provided as
reimbursement for certain identified costs as necessary within the TIF District to assist with financing the
public costs incurred (see Section Fn.
The City reserves the right to finance any or all public costs of the TIF District using pay-as-you-go
assistance, internal funding, general obligation or revenue debt, or any other financing mechanism
authorized by law. The City also reserves the right to use other sources of revenue legally applicable to
the Project Area to pay for such costs including, but not limited to, special assessments, utility revenues,
federal or state funds, and investment income. The projected tax increment report is included as Exhibit
III.
Section M Estimated Amount of Bonded Indebtedness
The maximum principal amount of bonds (as defined in the TIF Act) secured in whole or part with tax
increment from the TIF District is $268,083. The City currently plans to finance the improvement costs
through pay-as-you-go financing. The City reserves the right to issue an interfund loan or issue bonds in
any form, including without limitation any interfund loan with interest not to exceed the maximum
permitted under Section 469.178, subd. 7 of the TIF Act.
Section N Original Net Tax Capacity
The County Auditor shall certify the original net tax capacity of the TIF District. This value will be equal to
the total net tax capacity of all property in the TIF District as certified by the State Commissioner of
Revenue. For districts certified between January 1 and June 30, inclusive, this value is based on the
previous assessment year. For districts certified between July 1 and December 31, inclusive, this value is
based on the current assessment year.
The Estimated Market Value of all property within the TIF District as of January 2, 2020, for taxes payable
in 2021, is $378,100. Upon establishment of the TIF District, it is estimated that the original net tax
capacity of the TIF District will be $6,812, upon classification as commercial -industrial.
Each year the County Auditor shall certify the amount that the original net tax capacity has increased or
decreased as a result of:
(1) changes in the tax-exempt status of property;
(2) reductions or enlargements of the geographic area of the TIF District;
(3) changes due to stipulation agreements or abatements; or
(4) changes in property classification rates.
Section O Original Tax Capacity Rate
The County Auditor shall also certify the original tax capacity rate of the TIF District. This rate shall be the
sum of all local tax rates that apply to property in the TIF District. This rate shall be for the same taxes
payable year as the original net tax capacity.
SPRINGSTED Page 6
City of Elk River, Minnesota
In future years, the amount of tax increment generated by the TIF District will be calculated using the
lesser of (a) the sum of the current local tax rates at that time or (b) the original tax capacity rate of the
TIF District.
It is anticipated the request for certification of the District will occur after June 30, 2020 and the local tax
rates for taxes levied in 2020 and payable in 2021 will apply. The payable 2021 rates are not available at
the time of drafting of the TIF Plan. For purposes of estimating the tax increment generated by the TIF
District, the sum of the local tax rates for taxes levied in 2019 and payable in 2020 of 130.571% have
been used and are shown below:
2019/2020
Taxing Jurisdiction Local Tax Rate
City of Elk River
46.241 %
Sherburne County
47.426%
ISD 728
34.371 %
Other
2.533%
Total 130.571 %
Section P Projected Retained Captured Net Tax Capacity and
Projected Tax Increment
The City anticipates that the building construction for all businesses will be completed by December 31,
2020 creating a total tax capacity for TIF District No. 26 of $26,232 as of January 2, 2021. The captured
tax capacity as of that date is estimated to be $19,420 and the first full year of tax increment is estimated
to be $25,357 payable in 2022. A complete schedule of estimated tax increment from the TIF District is
shown in Exhibit III.
The estimates shown in this TIF Plan assume that commercial class rates remain at 1.50% of the
estimated market value up to $150,000 and 2.0% of the estimated market value over $150,000; and
assume 3% annual increase in market values.
Each year the County Auditor shall determine the current net tax capacity of all property in the TIF
District. To the extent that this total exceeds the original net tax capacity, the difference shall be known
as the captured net tax capacity of the TIF District.
The County Auditor shall certify to the City the amount of captured net tax capacity each year. The City
may choose to retain any or all of this amount. It is the City's intention to retain 100% of the captured net
tax capacity of the TIF District. Such amount shall be known as the retained captured net tax capacity of
the TIF District.
Exhibit II gives a listing of the various information and
exhibits contained in this TIF Plan, including Exhibit
generated over the anticipated life of the TIF District.
Section Q Use of Tax Increment
assumptions used in preparing a number of the
III which shows the projected tax increment
Each year the County Treasurer shall deduct 0.36% of the annual tax increment generated by the TIF
District and pay such amount to the State's General Fund. Such amounts will be appropriated to the
State Auditor for the cost of financial reporting and auditing of tax increment financing information
throughout the state. Exhibit III shows the projected deduction for this purpose over the anticipated life of
the TIF District.
SPRINGSTED Page 7
City of Elk River, Minnesota
The City has determined that it will use 100% of the remaining tax increment generated by the TIF District
for any of the following purposes:
(1) pay for the estimated public costs of the TIF District (see Section K) and County
administrative costs associated with the TIF District (see Section T);
(2) pay principal and interest on tax increment bonds or other bonds issued to finance the
estimated public costs of the TIF District;
(3) accumulate a reserve securing the payment of tax increment bonds or other bonds
issued to finance the estimated public costs of the TIF District;
(4) pay all or a portion of the county road costs as may be required by the County Board
under M.S. Section 469.175, Subdivision 1 a; or
(5) return excess tax increments to the County Auditor for redistribution to the City, County
and School District.
Tax increments from property located in one county must be expended for the direct and primary benefit
of a project located within that county, unless both county boards involved waive this requirement. Tax
increments shall not be used to circumvent levy limitations applicable to the City.
Tax increment shall not be used to finance the acquisition, construction, renovation, operation, or
maintenance of a building to be used primarily and regularly for conducting the business of a municipality,
county, school district, or any other local unit of government or the State or federal government, or for a
commons area used as a public park, or a facility used for social, recreational, or conference purposes.
This prohibition does not apply to the construction or renovation of a parking structure or of a privately -
owned facility for conference purposes.
If there exists any type of agreement or arrangement providing for the developer, or other beneficiary of
assistance, to repay all or a portion of the assistance that was paid or financed with tax increments, such
payments shall be subject to all of the restrictions imposed on the use of tax increments. Assistance
includes sale of property at less than the cost of acquisition or fair market value, grants, ground or other
leases at less then fair market rent, interest rate subsidies, utility service connections, roads, or other
similar assistance that would otherwise be paid for by the developer or beneficiary.
Section R Excess Tax Increment
In any year in which the tax increments from the TIF District exceed the amount necessary to pay the
estimated public costs authorized by the TIF Plan, the City shall use the excess tax increments to:
(1) prepay any outstanding tax increment bonds;
(2) discharge the pledge of tax increments thereof;
(3) pay amounts into an escrow account dedicated to the payment of the tax increment
bonds; or
(4) return excess tax increments to the County Auditor for redistribution to the City, County
and School District. The County Auditor must report to the Commissioner of Education
the amount of any excess tax increment redistributed to the School District within 30 days
of such redistribution.
SPRINGSTED Page 8
City of Elk River, Minnesota
Section S Tax Increment Pooling and the Five -Year Rule
At least 80% of the tax increments from the TIF District must be expended on activities within the district
or to pay for bonds used to finance the estimated public costs of the TIF District (see Section E for
additional restrictions). No more than 20% of the tax increments may be spent on costs outside of the
TIF District but within the boundaries of the Project Area, except to pay debt service on credit enhanced
bonds. All administrative expenses are considered to have been spent outside of the TIF District. Tax
increments are considered to have been spent within the TIF District if such amounts are:
(1) actually paid to a third party for activities performed within the TIF District within five
years after certification of the district;
(2) used to pay bonds that were issued and sold to a third party, the proceeds of which are
reasonably expected on the date of issuance to be spent within the later of the five-year
period or a reasonable temporary period or are deposited in a reasonably required
reserve or replacement fund.
(3) used to make payments or reimbursements to a third party under binding contracts for
activities performed within the TIF District, which were entered into within five years after
certification of the district; or
(4) used to reimburse a party for payment of eligible costs (including interest) incurred within
five years from certification of the district.
Beginning with the sixth year following certification of the TIF District, at least 80% of the tax increments
must be used to pay outstanding bonds or make contractual payments obligated within the first five years.
When outstanding bonds have been defeased and sufficient money has been set aside to pay for such
contractual obligations, the TIF District must be decertified.
The City does not anticipate that any tax increments will be spent outside of the TIF District (including
allowable administrative expenses); but the City reserves the right to allow for tax increment pooling from
the TIF District in the future.
Section T Limitation on Administrative Expenses
Administrative expenses are defined as all costs of the City other than:
(1) amounts paid for the purchase of land;
(2) amounts paid for materials and services, including architectural and engineering services
directly connected with the physical development of the real property in the project;
(3) relocation benefits paid to, or services provided for, persons residing or businesses
located in the project;
(4) amounts used to pay principal or interest on, fund a reserve for, or sell at a discount
bonds issued pursuant to section 469.178; or
(5) amounts used to pay other financial obligations to the extent those obligations were used
to finance costs described in clause (1) to (3).
Administrative expenses include amounts paid for services provided by bond counsel, fiscal consultants,
planning or economic development consultants, and actual costs incurred by the County in administering
SPRINGSTED Page 9
City of Elk River, Minnesota
the TIF District. Tax increments may be used to pay administrative expenses of the TIF District up to the
lesser of (a) 10% of the total tax increment expenditures authorized by the TIF Plan or (b) 10% of the total
tax increments received by the TIF District.
Section U Limitation on Property Not Subject to Improvements - Four Year Rule
If after four years from certification of the TIF District no demolition, rehabilitation, renovation, or qualified
improvement of an adjacent street has commenced on a parcel located within the TIF District, then that
parcel shall be excluded from the TIF District and the original net tax capacity shall be adjusted
accordingly. Qualified improvements of a street are limited to construction or opening of a new street,
relocation of a street, or substantial reconstruction or rebuilding of an existing street. The City must
submit to the County Auditor, by February 1 of the fifth year, evidence that the required activity has taken
place for each parcel in the TIF District.
If a parcel is excluded from the TIF District and the City or owner of the parcel subsequently commences
any of the above activities, the City shall certify to the County Auditor that such activity has commenced
and the parcel shall once again be included in the TIF District. The County Auditor shall certify the net tax
capacity of the parcel, as most recently certified by the Commissioner of Revenue, and add such amount
to the original net tax capacity of the TIF District.
Section V Estimated Impact on Other Taxing Jurisdictions
Exhibit IV shows the estimated impact on other taxing jurisdictions if the maximum projected retained
captured net tax capacity of the TIF District was hypothetically available to the other taxing jurisdictions.
The City believes that there will be no adverse impact on other taxing jurisdictions during the life of the
TIF District, since the proposed development would not have occurred without the establishment of the
TIF District and the provision of public assistance. A positive impact on other taxing jurisdictions will
occur when the TIF District is decertified and the development therein becomes part of the general tax
base.
The fiscal and economic implications of the proposed tax increment financing district, as pursuant to
Minnesota Statutes, Section 469.175, Subdivision 2, are listed below.
1. The total amount of tax increment that will be generated over the life of the district is estimated to
be $269,050.
To the extent the facility in the proposed TIF District generates any public cost impacts on city -
provided services such as police and fire protection, public infrastructure, and borrowing costs
attributable to the district, such costs will be levied upon the taxable net tax capacity of the City,
excluding that portion captured by the District. The City does not anticipate issuing tax increment
revenue bonds in conjunction with this project but reserves the right to issue bonds as necessary
to facilitate development.
The amount of tax increments over the life of the district that would be attributable to school
district levies, assuming the school district's share of the total local tax rate for all taxing
jurisdictions remained the same, is estimated to be $70,823.
4. The amount of tax increments over the life of the district that would be attributable to county
levies, assuming the county's share of the total local tax rate for all taxing jurisdictions remained
the same is estimated to be $97,724.
SPRINGSTED Page 10
City of Elk River, Minnesota
5. No additional information has been requested by the county or school district that would enable it
to determine additional costs that will accrue to it due to the development proposed for the
district.
Section W Prior Planned Improvements
The City shall accompany its request for certification to the County Auditor (or notice of district
enlargement), with a listing of all properties within the TIF District for which building permits have been
issued during the 18 months immediately preceding approval of the TIF Plan. The County Auditor shall
increase the original net tax capacity of the TIF District by the net tax capacity of each improvement for
which a building permit was issued.
There have been no building permits issued in the last 18 months in conjunction with any of the properties
within the TIF District.
Section X Development Agreements
If within a project containing an economic development district, more than 10% of the acreage of the
property to be acquired by the City is purchased with tax increment bonds proceeds (to which tax
increment from the property is pledged), then prior to such acquisition, the City must enter into an
agreement for the development of the property. Such agreement must provide recourse for the City
should the development not be completed.
The City anticipates entering into an agreement for development but does not anticipate acquiring any
property located within the TIF District.
Section Y Assessment Agreements
The City may, upon entering into a development agreement, also enter into an assessment agreement
with the developer, which establishes a minimum market value of the land and improvements for each
year during the life of the TIF District.
The assessment agreement shall be presented to the County or City Assessor who shall review the plans
and specifications for the improvements to be constructed, review the market value previously assigned
to the land, and so long as the minimum market value contained in the assessment agreement appears to
be an accurate estimate, shall certify the assessment agreement as reasonable. The assessment
agreement shall be filed for record in the office of the County Recorder of each county where the property
is located. Any modification or premature termination of this agreement must first be approved by the
City, County and School District.
The City does not anticipate entering into an assessment agreement
Section Z Modifications of the Tax Increment Financing Plan
Any reduction or enlargement in the geographic area of the Project Area or the TIF District; increase in
the amount of bonded indebtedness to be incurred; determination to capitalize interest on the debt if it
was not part of original plan; increase in that portion of the captured net tax capacity to be retained by the
City; increase in the total estimated public costs; or designation of additional property to be acquired by
the City shall be approved only after satisfying all the necessary requirements for approval of the original
TIF Plan. This paragraph does not apply if:
(1) the only modification is elimination of parcels from the TIF District; and
SPRINGSTED Page 11
City of Elk River, Minnesota
(2) the current net tax capacity of the parcels eliminated equals or exceeds the net tax
capacity of those parcels in the TIF District's original net tax capacity, or the City agrees
that the TIF District's original net tax capacity will be reduced by no more than the current
net tax capacity of the parcels eliminated.
The City must notify the County Auditor of any modification that reduces or enlarges the geographic area
of the TIF District. The geographic area of the TIF District may be reduced but not enlarged after five
years following the date of certification.
Section AA Administration of the Tax Increment Financing Plan
Upon adoption of the TIF Plan, the City shall submit a copy of such plan to the Minnesota Department of
Revenue. The City shall also request that the County Auditor certify the original net tax capacity and net
tax capacity rate of the TIF District. To assist the County Auditor in this process, the City shall submit
copies of the TIF Plan, the resolution establishing the TIF District and adopting the TIF Plan, and a listing
of any prior planned improvements. The City shall also send the County Assessor any assessment
agreement establishing the minimum market value of land and improvements in the TIF District and shall
request that the County Assessor review and certify this assessment agreement as reasonable.
The County shall distribute to the City the amount of tax increment as it becomes available. The amount
of tax increment in any year represents the applicable property taxes generated by the retained captured
net tax capacity of the TIF District. The amount of tax increment may change due to development
anticipated by the TIF Plan, other development, inflation of property values, or changes in property
classification rates or formulas. In administering and implementing the TIF Plan, the following actions
should occur on an annual basis:
(1) prior to July 1, the City shall notify the County Assessor of any new development that has
occurred in the TIF District during the past year to ensure that the new value will be
recorded in a timely manner.
(2) if the County Auditor receives the request for certification of a new TIF District, or for
modification of an existing TIF District, before July 1, the request shall be recognized in
determining local tax rates for the current and subsequent levy years. Requests received
on or after July 1 shall be used to determine local tax rates in subsequent years.
(3) each year the County Auditor shall certify the amount of the original net tax capacity of
the TIF District. The amount certified shall reflect any changes that occur as a result of
the following:
(a) the value of property that changes from tax-exempt to taxable shall be added to
the original net tax capacity of the TIF District. The reverse shall also apply;
(b) the original net tax capacity may be modified by any approved enlargement or
reduction of the TIF District;
(c) if laws governing the classification of real property cause changes to the
percentage of estimated market value to be applied for property tax purposes,
then the resulting increase or decrease in net tax capacity shall be applied
proportionately to the original net tax capacity and the retained captured net tax
capacity of the TIF District.
The County Auditor shall notify the City of all changes made to the original net tax capacity of the TIF
District.
SPRINGSTED Page 12
City of Elk River, Minnesota
Section AB Filing TIF Plan, Financial Reporting and Disclosure Requirements
The City will file the TIF Plan, and any subsequent amendments thereto, with the Commissioner of
Revenue and the Office of the State Auditor pursuant to Minnesota Statutes, Section 469.175, subdivision
4A. The City will comply with all reporting requirements for the TIF District under Minnesota Statutes,
Section 469.175, subdivisions 5 and 6.
SPRINGSTED Page 13
Exhibit 1
Map of
Tax Increment Financing (Economic Development) District No. 26
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Exhibit 11
Assumptions Report
City of Elk River, Minnesota
Tax Increment Financing (Economic Development) District No. 26
Shoot Steel, INC
Draft TIF Plan Exhibits
Type of Tax Increment Financing District Economic Development
Maximum Duration of TIF District 8 years from 1st increment
Projected Certification Request Date
Decertification Date
Base Estimated Market Value
Original Net Tax Capacity *
Base Estimated Market Value
Increase in Estimated Market Value
Total Estimated Market Value
Total Net Tax Capacity
11 /01 /20
12/31/30 (9 Years of Increment)
2020/2021
$378,100
$6, 812
Assess ment/Collection Year
2020/2021 2021 /2022
2022/2023
2023/2024
$378,100 $378,100
$378,100
$378,100
0 971,000
1,011,473
1,053,160
378,100 1,349,100
1,389,573
1,431,260
$6,812 $26,232
City of Elk River
46.241%
Sherburne County
47.426%
ISD #728
34.371%
Other
2.533%
Local Tax Capacity Rate
$27, 041 $27, 875
130.571 % 2019/2020
Fiscal Disparities Contribution From TIF District NA
Administrative Retainage Percent (maximum = 10%) 10.00%
Pooling Percent 0.00%
Bonds PayGO Note
Bonds Dated NA Note Dated 02/01/21
Bond Issue @ 0.00% (NIC) NA Note Rate 4.00%
Eligible Project Costs NA Note Amount $190,000
Present Value Date & Rate 02/01/21 4.00% Present Value Amount $192,196
Notes
Assumptions assume no change to future tax rates, class rates, and a 3% annual MV inflator is assumed
Calculations include payable 2020 final tax capacity rates
Total EMV upon completion based on value estimates for new business
* Base EMV of property as provided by Sherburne County property taxes
Exhibit ///
Projected Tax Increment Report
City of Elk River, Minnesota
Tax Increment Financing (Economic Development) District No. 26
Shoot Steel, INC
Draft TIF Plan Exhibits
Annual
Period
Ending
(1)
Total
Estimated
Market Value (')
(2)
Total
Net Tax
Capacity (2)
(3)
Less:
Original
Net Tax
Capacity (3)
(4)
Retained
Captured
Net Tax
Capacity
(5)
Times:
Tax
Capacity
Rate (4)
(6)
Annual
Gross Tax
Increment
(7)
Less:
State Aud.
Deduction
0.360%
(8)
Subtotal
Net Tax
Increment
(9)
Less:
Admin.
Retainage
10.00%
(10)
Annual
Net
Revenue
(11)
P.V.
Annual
Net Rev. To
02/01/21
4.00%
12/31 /20
378,100
6,812
6,812
0
130.571 %
0
0
0
0
0
0
12/31 /21
378,100
6,812
6,812
0
130.571 %
0
0
0
0
0
0
12/31 /22
1,349,100
26,232
6,812
19,420
130.571 %
25,357
91
25,266
2,527
22,739
21,300
12/31 /23
1,389,573
27,041
6,812
20,229
130.571 %
26,415
95
26,320
2,632
23,688
21,336
12/31/24
1,431,260
27,875
6,812
21,063
130.571%
27,502
99
27,403
2,740
24,663
21,359
12/31 /25
1,474,198
28,734
6,812
21,922
130.571 %
28,624
103
28,521
2,852
25,669
21,376
12/31 /26
1,518,424
29,618
6,812
22,806
130.571 %
29,779
107
29,672
2,967
26,705
21,383
12/31 /27
1,563,977
30,530
6,812
23,718
130. 571 %
30,968
ill
30,857
3,086
27,771
21,381
12/31 /28
1,610,896
31,468
6,812
24,656
130.571 %
32,194
116
32,078
3,208
28,870
21,373
12/31 /29
1,659,223
32,434
6,812
25,622
130.571 %
33,456
120
33,336
3,334
30,002
21,356
12/31/30
1,709,000
33,430
6,812
26,618
130.571%
34,755
125
34,630
3,463
31,167
21,332
$269,050
$967
$268,083
$26,809
$241,274
$192,196
value based
on estimate provided by City for the anticipated construction of newbusinesses and possible existing business expansions
(2) tax capacity
based on commercial -industrial class rate of 1.50% for
first $150,000 of value and 2% for value above $150,000
(3) original net tax capacity will be based on
existing land and building values and commercial -industrial class rate for payable
2021
(4) combined local tax capacity rate of City of Elk River, ISD 728 and Sherburne County
for payable 2020
Exhibit IV
Estimated Impact on Other Taxing Jurisdictions Report
City of Elk River, Minnesota
Tax Increment Financing (Economic Development) District No. 26
Shoot Steel, INC
Draft TIF Plan Exhibits
Without
Project or TIF District
With Project and TIF District
Projected
Hypothetical
2019/2020
2019/2020
Retained
New
Hypothetical
Hypothetical
Tax Generated
Taxable
2019/2020
Taxable
Captured
Taxable
Adjusted
Decrease In
by Retained
Taxing
Net Tax
Local
Net Tax
Net Tax
Net Tax
Local
Local
Captured
Jurisdiction
Capacity (1)
Tax Rate
Capacity (1) +
Capacity
= Capacity
Tax Rate (*)
Tax Rate (*)
N.T.C. (*)
City of Elk River
27, 823, 086
46.241 %
27, 823, 086
$26, 618
27, 849, 704
46.197%
0.044%
12,297
Sherburne County
106,729,866
47.426%
106,729,866
26,618
106,756,484
47.414%
0.012%
12,621
IS D #728
41, 735, 916
34.371 %
41, 735, 916
26,618
41, 762, 534
34.349%
0.022%
9,143
Other (2)
---
2.533%
---
26,618
---
2.533%
---
---
Totals
130.571%
130.493%
0.078%
* Statement 1: If the projected Retained Captured Net Tax Capacity of the TIF District was hypothetically available to each of
the taxing jurisdictions above, the result would be a lower local tax rate (see Hypothetical Adjusted Tax Rate above)
which would produce the same amount of taxes for each taxing jurisdiction. In such a case, the total local tax rate
would decrease by 0.078% (see Hypothetical Decrease in Local Tax Rate above). The hypothetical tax that the
Retained Captured Net Tax Capacity of the TIF District would generate is also shown above.
Statement 2: Since the projected Retained Captured Net Tax Capacity of the TIF District is not available to the taxing jurisdictions,
then there is no impact on taxes levied or local tax rates.
(1) Taxable net tax capacity = total net tax capacity - captured TIF - fiscal disparity contribution, if applicable.
(2) The impact on these taxing jurisdictions is negligible since they represent only 1.94% of the total tax rate.
Exhibit V
Market Value Analysis Report
City of Elk River, Minnesota
Tax Increment Financing (Economic Development) District No. 26
Shoot Steel, INC
Draft TIF Plan Exhibits
Assumptions
Present Value Date
P.V. Rate - Gross T.I.
02/01 /21
4.00%
Increase in EMV With TIF District
Less: P.V of Gross Tax Increment
Subtotal
Less: Increase in EMV Without TIF
Difference
$1,330,900
214,321
$1,116, 579
0
$1,116,579
Annual
Present
Gross Tax
Value @
Year
Increm ent
4.00%
1 2022
25,357
23,752
2 2023
26,415
23,792
3 2024
27,502
23,818
4 2025
28,624
23,836
5 2026
29,779
23,844
6 2027
30,968
23,843
7 2028
32,194
23,833
8 2029
33,456
23,815
9 2030
34,755
23,788
$269,050
$214,321
Assumptions Report
City of Elk River, Minnesota
Tax Increment Financing (Economic Development) District No. 26
Shoot Steel, INC
Draft TIF Plan Exhibits
Type of Tax Increment Financing District Economic Development
Maximum Duration of TIF District 8 years from 1 st increment
Projected Certification Request Date
11/01/20
Decertification Date
12/31/30 (9 Years of Increment)
2020/2021
Base Estimated Market Value
$378,100
Original Net Tax Capacity'
$6,812
Assessment/Collection Year
2020/2021
2021/2022 2022/2023
2023/2024
Base Estimated Market Value
$378,100
$378,100 $378,100
$378,100
Increase in Estimated Market Value
0
971,000 1,011,473
1,053,160
Total Estimated Market Value
378,100
1,349,100 1,389,573
1,431,260
Total Net Tax Capacity
$6,812
$26,232 $27,041
$27,875
City of Elk River
46.241 %
Sherburne County
47.426%
I S D #728
34.371 %
Other
2.533%
Local Tax Capacity Rate
130.571 % 2019/2020
Fiscal Disparities Contribution From TIF District
NA
Administrative Retainage Percent (maximum = 10%)
10.00%
Pooling Percent
0.00%
Bonds
PayGO Note
Bonds Dated NA
Note Dated
02/01/21
Bond Issue @ 0.00% (NIC) NA
Note Rate
4.00%
Eligible Project Costs NA
Note Amount
$190,000
Present Value Date & Rate 02/01/21
4.00%
Present Value Amount
$192,196
Notes
Assumptions assume no change to future tax rates, class rates, and a 3% annual MV inflator is assumed
Calculations include payable 2020 final tax capacity rates
Total EMV upon completion based on value estimates for new business
Base EMV of property as provided by Sherburne County property taxes
Prepared by: Baker Tilly (printed on 9/11/2020 at 11:46 AM) Elk River ED TIF 26 draft TIF Plan Exhibits 091120Assumptions
CITY OF ELK RIVER, MINNESOTA
NOTICE OF PUBLIC HEARING
NOTICE IS HEREBY GIVEN that the City Council (the "Council') of
the City of Elk River, Minnesota (the "City', will hold a public hear-
ing at a meeting of the Council beginning at 6:30 p.m., on Monday,
October 5, 2020, to be held at the Elk River City Hall,13065 Orono
Parkway, Elk River, Minnesota on the proposal to modify the Devel-
opment Program for Development District No.1 (the "Project Area')
to establish Tax Increment Financing (Economic Development) Dis-
trict No. 26 within Development District No. 1 (Shoot Steel, Inc.
Project) (the 'TIF District'); all pursuant to and in conformity with
applicable law, including Minnesota Statutes, Sections 469.124
through 469.133, as amended, and 469.174 through 469.1794, as
amended (together, the "TIF Act'), and to review the Tax Increment
Financing Plan (the "Plan') for the TIF District. A copy of the Plan
for the TIF District and all documents relating to the proposed mod-
ification to the Development Program for Development District No.
1 to establish the TIF District as an economic development district,
will be on file and available for inspection at City Hall during regular
business hours.
Adjacent to this notice is a map which shows the area of the pro-
posed TIF District and the boundaries of the Project Area where the
increments may be collected and expended, respectively, pursuant
to the TIF Act.
In addition, the City proposes entering into an agreement with
Shoot Steel, Inc., or an affiliate thereof or entity related thereto (the
"Developer) under which the City will provide tax increment as-
sistance to the Developer, and the Developer will agree to acquire
approximately 4.34 acres of land within the City and construct and
equip an approximately 20,000 square foot warehouse facility and
associated office space on the property. The assistance will be a
"business subsidy" under Minnesota Statues, Sections 116J.993
to 116J.995, as amended (the "Business Subsidy Law'J. A copy of
the proposed business subsidy agreement is on file and available
for public inspection at the office of the City's Economic Develop-
ment Director in City Hall.
A person with residence in or the owner of taxable property in the
City may file a written complaint with the City if the City fails to
comply with the Business Subsidy Law, and no action may be filed
against the City for the failure to comply unless a written complaint
is filed.
At the time and place fixed for the public hearing, the Council will
give all persons who appear or submit comments in writing prior
to the hearing, an opportunity to express their views with respect
to the proposal. Interested persons may file written comments re-
specting the proposal with the City Clerk at or prior to said public
hearing.
PLEASE NOTE, due to COVID-19, the public hearing may be con-
ducted via telephone or other electronic means as allowed under
Minnesota Statutes, Section 13D.021. Please refer to the City's
website at httpsJ/www.elkdvermn.gov/ or call City Hall at 763-635-
1000 to learn how to attend and participate in the public hearing via
telephone or electronically.
BY ORDER OF THE CITY COUNCIL
Published in the Elk River Star New September 19, 2020 1076482
AFFIDAVIT OF PUBLICATION
STATE OF MINNESOTA ) ss
COUNTY OF SHERBURNE
Diane Erickson being duly sworn on an oath,
states or affirms that he/she is the Publisher's
Designated Agent of the newspaper(s) known
as:
Star News
with the known office of issue being located
in the county of:
SHERBURNE
with additional circulation in the counties of.
WRIGHT
and has full knowledge of the facts stated
below:
(A) The newspaper has complied with all of
the requirements constituting qualifica-
tion as a qualified newspaper as provided
by Minn. Stat. §331A.02.
(B) This Public Notice was printed and pub-
lished in said newspaper(s) once each
week, for 1 successive week(s); the first
insertion being on 09/19/2020 and the last
insertion being on 09/19/2020.
MORTGAGE FORECLOSURE NOTICES
Pursuant to Minnesota Stat. §580.033
relating to the publication of mortgage
foreclosure notices: The newspaper complies
with the conditions described in §580.033,
3ubd. 1, clause (1) or (2). If the newspaper's
known office of issue is located in a county
adjoining the county where the mortgaged
premises or some part of the mortgaged
premises described in the notice are located,
a substantial portion of the newspaper's
circulation is in the latter county.
By:.,.. _
Designated Agent
Subscribed and sworn to or affirmed before
me on 09/19/2020 by Diane Erickson.
.0
Notary Public
r vw+�w�.w.ux?imwaamFww WNNw.uuIV4mwnnl�'. �' wn.
DARLENE MARIE MACPHERSON
_ = Notary Public
Minnesota 312024
My CommMW E)Ores January
`.ate Information:
(1) Lowest classed rate paid by commercial users
for comparable space:
$23.00 per column inch
[legal.text]
Ad ID 1076482
SHERBl1RNE
C O U N T Y
OWEEN
September 22, 2020
Ms. Mikaela Huot
Baker Tilly Municipal Advisers
380 Jackson Street
Suite 300
St. Paul, MN 55101-2887
Re: City of Elk River TIF District #26
Dear Ms. Huot:
Board of Commissioners
Barbara Burandt, District 1
Raeanne Danielowski, District 2
Tim Dolan, District 3
Felix Schmiesing, District 4
Lisa A. Fobbe, District 5
Thank you for the opportunity to provide comments concerning the establishment of tax increment
financing (TIF) district #26.
Sherburne County adopted an economic development strategic plan in 2018. That plan identifies the
county's intent to support the economic development efforts of our cities and other partners that help
enhance the quality of life for all residents, create and sustain living wage jobs, expand the county's
property tax base, and allow the county to be a partner with other public agencies and private sector
stakeholders.
Pursuant to Minnesota Statute 479.175, subdivision 2, and consistent with the county's economic
development strategic plan, Sherburne County submits the following comments:
The County Board supports the city's effort to encourage and facilitate the development of
the 20,000 sfwarehousing facility. The development, when complete, is projected to add
approximately $1,350,000 in taxable value.
2. The TIF district proposal has been reviewed by our Taxation Division staff and no
administrative issues were identified.
3. The TIF district proposal has been reviewed by our Public Works Department and one
administrative issue was identified. In order to ensure that there is no negative impact to the
downstream drainage system as a result of the proposed improvements and increased
impervious surface, a drainage report should be prepared that meets the standards and
requirements for the City of Elk River. Typically no increase in the 10 year runoff rate from
the existing condition as compared to the proposed development is allowed. Onsite
detention/retention may be required to mitigate this.
Preferred access location for the proposed improvements are off of Tyler Street NW.
We appreciate the opportunity to provide comments on the proposed district. We request that these
comments be incorporated into the record at the public hearing on October 5, 2020.
Sincerely,
Dan Weber
Assistant County Administrator
Cc: Sherburne County Board of Commissioners
Amanda Othoudt, Economic Development Director
CC bakertilly
Tax Increment Financing Plan
for
Tax Increment Financing (Economic
Development) District No. 26
within
Development District No. 1
(Shoot Steel, Inc Project)
City of Elk River, Minnesota
Prepared by
Baker Tilly Municipal Advisors, LLC
Draft Dated: October 5, 2020
Anticipated Public Hearing: October 5, 2020
Anticipated Approval by City Council: October 5, 2020
Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and wholly -owned subsidiary of Baker Tilly Virchow
Krause, LLP, an accounting firm. Baker Tilly Virchow Krause, LLP trading as Baker Tilly is a member of the global network of Baker
Tilly International Ltd., the members of which are separate and independent legal entities.
TABLE OF CONTENTS
Section
Page(s)
A.
Definitions...................................................................................................................................
1
B.
Statutory Authorization...............................................................................................................
1
C.
Statement of Need and Public Purpose.....................................................................................
2
D.
Statement of Objectives.............................................................................................................
2
E.
Designation of Tax Increment Financing District as an
Economic Development District...............................................................................................
2
F.
Duration of the TIF District.........................................................................................................
3
G.
Property to be Included in the TIF District..................................................................................
3
H.
Property to be Acquired in the TIF District.................................................................................
3
I.
Specific Development Expected to Occur Within the TIF District ..............................................
3
J.
Findings and Need for Tax Increment Financing.......................................................................
3
K.
Estimated Public Costs..............................................................................................................
5
L.
Estimated Sources of Revenue..................................................................................................
5
M.
Estimated Amount of Bonded Indebtedness..............................................................................
6
N.
Original Net Tax Capacity..........................................................................................................
6
O.
Original Tax Capacity Rate........................................................................................................
6
P.
Projected Retained Captured Net Tax Capacity and Projected Tax Increment .........................
7
Q.
Use of Tax Increment.................................................................................................................
7
R.
Excess Tax Increment................................................................................................................
8
S.
Tax Increment Pooling and the Five -Year Rule.........................................................................
9
T.
Limitation on Administrative Expenses......................................................................................
9
U.
Limitation on Property Not Subject to Improvements - Four Year Rule .....................................
10
V.
Estimated Impact on Other Taxing Jurisdictions........................................................................
10
W.
Prior Planned Improvements......................................................................................................
11
X.
Development Agreements..........................................................................................................
11
Y.
Assessment Agreements...........................................................................................................
11
Z.
Modifications of the Tax Increment Financing Plan...................................................................
11
AA.
Administration of the Tax Increment Financing Plan.................................................................
12
AB.
Financial Reporting and Disclosure Requirements....................................................................
13
Map of the Tax Increment Financing District........................................................................ EXHIBIT I
AssumptionsReport.............................................................................................................. EXHIBIT II
Projected Tax Increment Report........................................................................................... EXHIBIT III
Estimated Impact on Other Taxing Jurisdictions Report ....................................................... EXHIBIT IV
Market Value Analysis Report............................................................................................... EXHIBIT V
City of Elk River, Minnesota
SECTION I — MODIFICATION TO THE DEVELOPMENT PROGRAM
FOR DEVELOPMENT DISTRICT NO. 1
Foreword
The following text represents a Modification to the Development Program for Development
District No. 1. This modification represents a continuation of the goals and objectives set forth
in the Development Program for Development District No. 1. The changes include the
establishment of Tax Increment Financing (Economic Development) District No. 26.
For further information, a review of the Development Program for Development District No. 1 is
recommended. It is available from the City Administrator at the City of Elk River. Other relevant
information is contained in the Tax Increment Financing Plans for the Tax Increment Financing
Districts located within Development District No. 1.
SECTION II — ESTABLISHMENT OF THE TAX INCREMENT FINANCING PLAN
FOR TAX INCREMENT FINANCING (ECONOMIC DEVELOPMENT) DISTRICT NO. 26
Section A Definitions
The terms defined in this section have the meanings given herein, unless the context in which they are
used indicates a different meaning:
"City„ means the City of Elk River, Minnesota; also referred to as a "Municipality".
"City Council" means the City Council of the City.
"County" means Sherburne County, Minnesota.
"Development District" means Development District No.1 in the City, which is described in the
corresponding Development Program.
"Development Program" means the Development Program for the Development District.
"Project Area" means the geographic area of the Development District.
"School District" means Independent School District No. 728, Minnesota.
"State" means the State of Minnesota.
"TIF Act" means Minnesota Statutes, Sections 469.174 through 469.1794, both inclusive.
"TIF District" means Tax Increment Financing (Economic Development) District No. 26.
"TIF Plan" means the tax increment financing plan for the TIF District (this document).
Section B Statutory Authorization
See Section B of the Development Program for the Development District.
SPRINGSTED Pagel
City of Elk River, Minnesota
Section C Statement of Need and Public Purpose
See Section C of the Development Program for the Development District.
Section D Statement of Objectives
See Section D of the Development Program for the Development District.
Section E Designation of Tax Increment Financing District as an
Economic Development District
Economic development districts are a type of tax increment financing district which consist of any project,
or portions of a project, which the City finds to be in the public interest because:
(1) it will discourage commerce, industry, or manufacturing from moving their
operations to another state or municipality;
(2) it will result in increased employment in the state; or
(3) it will result in preservation and enhancement of the tax base of the state.
The TIF District qualifies as an economic development district in that the proposed development
described in this TIF Plan (see Section I) meets the criteria listed above in (2) and (3). Without
establishment of the TIF District, the proposed development would not occur within the City. The
proposed development will also result in increased employment and enhancement of the tax base in both
the City and the State.
Tax increments from an economic development district must be used to provide improvements, loans,
subsidies, grants, interest rate subsidies, or other assistance in which at least 85% of the square footage
of the facilities to be constructed are used for any of the following purposes:
(1) manufacturing, production, or processing of tangible personal property;
(2) warehousing, storage and distribution of tangible personal property, excluding retail
sales;
(3) research and development related to the activities listed in (1) or (2) above;
(4) telemarketing if that activity is the exclusive use of the property;
(5) tourism facilities (see M.S. Section 469.174, Subd. 22);
(6) space necessary for and related to the activities listed in (1) through (5) above;
(7) a workforce housing project that satisfies the requirements of paragraph (d).
Tax increments from the TIF District will be used to provide financial assistance to the proposed
development (see Section 1), in which over 85% of the square footage of the facilities to be constructed
will be used for warehousing, storage and distribution of tangible property, excluding retail sales, or other
purposes as listed in (1) through (7) above.
SPRINGSTED Page 2
City of Elk River, Minnesota
Section F Duration of the TIF District
Economic development districts may remain in existence 8 years from the date of receipt by the City of
the first tax increment. The City anticipates that the TIF District will remain in existence the maximum
duration allowed by law (projected to be through the year 2030, due to anticipated receipt of first
increment in 2022). Modifications of this plan (see Section AA) shall not extend these limitations.
Section G Property to be Included in the TIF District
The TIF District is an area of land comprising of the parcel listed below that is located within the Project
Area. A map showing the boundaries of the TIF District is shown in Exhibit I.
Parcel ID Number
Legal Description
75-757-0205 1 LOT 1, BLK 2 SUBJ TO EASEMENT OF RECORD
The area encompassed by the TIF District shall also include all street or utility right-of-ways located upon
or adjacent to the property described above.
Section H Property to be Acquired in the TIF District
The City may acquire and sell any or all of the property located within the TIF District. It will not be
acquiring any property at this time but will be selling the property to the developer to facilitate
development.
Section I Specific Development Expected to Occur Within the TIF District
The proposed project is anticipated to consist of the acquisition of approximately 4.34 acres at 17565
Tyler Street Northwest in the City of Elk River by Moyer Properties, LLC (the "Developer") from the City.
The Developer is planning to construct an approximate 20,000 square foot warehouse building on the site
and plans to lease the property to its affiliate, Shoot Steel, Inc. The proposed uses of the building include
primarily production and operations with a small office portion for operations directly related to the
business. The square footage of the completed building will comply with the requirements of an economic
development district with at least 85% being used for a qualifying purpose and less than 15% will be
office space.
It is anticipated that the City will use the tax increment to finance a portion of the extraordinary acquisition
and infrastructure improvement costs that are necessary for this project to proceed. In addition, the city
may use tax increment for related administrative expenses, and any other eligible expenditures
associated with development of the site that may include additional necessary public improvements.
Construction of the project is expected to commence in 2020 and be 100% assessed and on the tax rolls
as of January 2, 2021 for taxes payable in 2022.
At the time this document was prepared there were no signed construction contracts with regards to the
above described development.
Section J Findings and Need for Tax Increment Financing
In establishing the TIF District, the City makes the following findings:
(1) The TIF District qualifies as an economic development district;
SPRINGSTED Page 3
City of Elk River, Minnesota
See Section E of this document for the reasons and facts supporting this finding.
(2) The proposed development, in the opinion of the City, would not reasonably be expected
to occur solely through private investment within the reasonably foreseeable future and
the increased market value of the site that could reasonably be expected to occur without
the use of tax increment financing would be less than the increase in the market value
estimated to result from the proposed development after subtracting the present value of
the projected tax increments for the maximum duration of the district permitted by the TIF
Plan.
Factual basis:
Proposed development not expected to occur:
The proposed development consists of the construction of an approximate 20,000 square foot new
warehousing facility. The new facility will be used primarily for warehousing to allow for further
business growth and development. The Developer has requested financial assistance to write down
a portion of the acquisition and site improvement costs associated with development of the site. The
Developer has provided supplemental financial information demonstrating that the development of
this site would not occur without the assistance provided in this TIF Plan.
Therefore, the City has determined that the proposed development would not occur but for the
financial assistance provided in this TIF Plan because of the increased costs related to development
within the TIF District. The location and condition of the property requires expenditures related to
development of the site, including acquisition, site improvements, storm water ponding, which
currently do not allow development on the property.
No higher market value expected:
The land located within TIF District No. 26 requires site improvements including site preparation,
grading, and landscaping, as well as storm water ponding. To commence construction of the new
business facility, assistance with financing a portion of those costs will be necessary. The financial
assistance provided under this TIF Plan will help offset the costs of these improvements. Given the
nature of this property, there is no reasonable expectation of any development occurring that would
generate as much market value increase as is estimated to be generated by the proposed
development by the new business. Therefore, the City has concluded that substantial
development at this particular site --and hence any significant increase in market value --is not
reasonably expected to occur unless the City provides tax increment assistance as described in
this Tax Increment Plan.
To summarize the basis for the City's findings regarding alternative market value, in accordance with
Minnesota Statutes, Section 469.175, Subd. 3(d), the City makes the following determinations:
a. The City's estimate of the amount by which the market value of the site will increase
without the use of tax increment financing is $0 (for the reasons described above), except
some unknown amount of appreciation.
b. If the proposed development to be assisted with tax increment occurs in the District,
the total increase in market value would be approximately $1,330,900, including the value of
the building (See Exhibit II).
C. The present value of tax increments from the District for the maximum duration of
the district permitted by the TIF Plan is estimated to be $214,321 (See Exhibit V).
SPRINGSTED Page 4
City of Elk River, Minnesota
d. Even if some development other than the proposed development were to occur, the
Council finds that no alternative would occur that would produce a market value increase
greater than $1,116,579 (the amount in clause b less the amount in clause c) without tax
increment assistance.
(3) The TIF Plan will afford maximum opportunity, consistent with the sound needs of the
City as a whole, for development of the Project Area by private enterprise.
Factual basis: The proposed development is the construction of a new business in the Project Area
that is expected to create new jobs in the City and State, plus create new tax base for the City and
the state. The development meets the City's economic development goals in terms of land use, job
retention, and wage levels.
(4) The TIF Plan conforms to general plans for development of the City as a whole.
Factual basis: The City Council has determined that the development proposed in the TIF Plan
conforms to the City comprehensive plan.
Section K Estimated Public Costs
The estimated public costs of the TIF District are listed below. Such costs are eligible for reimbursement
from tax increments of the TIF District.
Estimated Public Costs
Estimated Amount
Land/Building acquisition
$241,274
Site Improvements/Preparation costs
$0
Utilities
$0
Other public improvements
$0
Construction of affordable housing
$0
Administrative expenses
$26,809
Total Estimated Public Costs
$268,083
Interest expenses
$0
Total Costs
$268,083
The City reserves the right to administratively adjust the amount of any of the items listed above or to
incorporate additional eligible items, so long as the total estimated public costs ($268,083) do not
increase. The City also reserves the right to fund any of the identified costs with any other legally
available revenues, such as grants and/or loans, but anticipates that such costs will be primarily financed
with tax increments.
Section L Estimated Sources of Revenue
Estimated Sources of Revenue
Estimated Amount
Tax Increment revenue
$268,083
Interest on invested funds
Total
$268,083
SPRINGSTED Page 5
City of Elk River, Minnesota
The City anticipates providing financial assistance to the proposed development through pay-as-you-go
financing in which the City will provide funding to the Developer to offset a portion of the project costs and
collect annual increments to repay the note. As tax increments are collected from the TIF District in future
years, a portion will be retained by the City and the remaining funds will be provided as reimbursement for
certain identified costs as necessary within the TIF District to assist with financing the public costs
incurred (see Section K).
The City reserves the right to finance any or all public costs of the TIF District using pay-as-you-go
assistance, internal funding, general obligation or revenue debt, or any other financing mechanism
authorized by law. The City also reserves the right to use other sources of revenue legally applicable to
the Project Area to pay for such costs including, but not limited to, special assessments, utility revenues,
federal or state funds, and investment income. The projected tax increment report is included as Exhibit
III.
Section M Estimated Amount of Bonded Indebtedness
The maximum principal amount of bonds (as defined in the TIF Act) secured in whole or part with tax
increment from the TIF District is $268,083. The City currently plans to finance the improvement costs
through pay-as-you-go financing. The City reserves the right to issue an interfund loan or issue bonds in
any form, including without limitation any interfund loan with interest not to exceed the maximum
permitted under Section 469.178, subd. 7 of the TIF Act.
Section N Original Net Tax Capacity
The County Auditor shall certify the original net tax capacity of the TIF District. This value will be equal to
the total net tax capacity of all property in the TIF District as certified by the State Commissioner of
Revenue. For districts certified between January 1 and June 30, inclusive, this value is based on the
previous assessment year. For districts certified between July 1 and December 31, inclusive, this value is
based on the current assessment year.
The Estimated Market Value of all property within the TIF District as of January 2, 2020, for taxes payable
in 2021, is $378,100. Upon establishment of the TIF District, it is estimated that the original net tax
capacity of the TIF District will be $6,812, upon classification as commercial -industrial.
Each year the County Auditor shall certify the amount that the original net tax capacity has increased or
decreased as a result of:
(1) changes in the tax-exempt status of property;
(2) reductions or enlargements of the geographic area of the TIF District;
(3) changes due to stipulation agreements or abatements; or
(4) changes in property classification rates.
Section O Original Tax Capacity Rate
The County Auditor shall also certify the original tax capacity rate of the TIF District. This rate shall be the
sum of all local tax rates that apply to property in the TIF District. This rate shall be for the same taxes
payable year as the original net tax capacity.
SPRINGSTED Page 6
City of Elk River, Minnesota
In future years, the amount of tax increment generated by the TIF District will be calculated using the
lesser of (a) the sum of the current local tax rates at that time or (b) the original tax capacity rate of the
TIF District.
It is anticipated the request for certification of the District will occur after June 30, 2020 and the local tax
rates for taxes levied in 2020 and payable in 2021 will apply. The payable 2021 rates are not available at
the time of drafting of the TIF Plan. For purposes of estimating the tax increment generated by the TIF
District, the sum of the local tax rates for taxes levied in 2019 and payable in 2020 of 130.571% have
been used and are shown below:
2019/2020
Taxing Jurisdiction Local Tax Rate
City of Elk River
46.241 %
Sherburne County
47.426%
ISD 728
34.371 %
Other
2.533%
Total 130.571 %
Section P Projected Retained Captured Net Tax Capacity and
Projected Tax Increment
The City anticipates that the building construction will be completed by December 31, 2020 creating a
total tax capacity for TIF District No. 26 of $26,232 as of January 2, 2021. The captured tax capacity as
of that date is estimated to be $19,420 and the first full year of tax increment is estimated to be $25,357
payable in 2022. A complete schedule of estimated tax increment from the TIF District is shown in Exhibit
III.
The estimates shown in this TIF Plan assume that commercial class rates remain at 1.50% of the
estimated market value up to $150,000 and 2.0% of the estimated market value over $150,000; and
assume 3% annual increase in market values.
Each year the County Auditor shall determine the current net tax capacity of all property in the TIF
District. To the extent that this total exceeds the original net tax capacity, the difference shall be known
as the captured net tax capacity of the TIF District.
The County Auditor shall certify to the City the amount of captured net tax capacity each year. The City
may choose to retain any or all of this amount. It is the City's intention to retain 100% of the captured net
tax capacity of the TIF District. Such amount shall be known as the retained captured net tax capacity of
the TIF District.
Exhibit II gives a listing of the various information and
exhibits contained in this TIF Plan, including Exhibit
generated over the anticipated life of the TIF District.
Section Q Use of Tax Increment
assumptions used in preparing a number of the
III which shows the projected tax increment
Each year the County Treasurer shall deduct 0.36% of the annual tax increment generated by the TIF
District and pay such amount to the State's General Fund. Such amounts will be appropriated to the
State Auditor for the cost of financial reporting and auditing of tax increment financing information
throughout the state. Exhibit III shows the projected deduction for this purpose over the anticipated life of
the TIF District.
SPRINGSTED Page 7
City of Elk River, Minnesota
The City has determined that it will use 100% of the remaining tax increment generated by the TIF District
for any of the following purposes:
(1) pay for the estimated public costs of the TIF District (see Section K) and County
administrative costs associated with the TIF District (see Section T);
(2) pay principal and interest on tax increment bonds or other bonds issued to finance the
estimated public costs of the TIF District;
(3) accumulate a reserve securing the payment of tax increment bonds or other bonds
issued to finance the estimated public costs of the TIF District;
(4) pay all or a portion of the county road costs as may be required by the County Board
under M.S. Section 469.175, Subdivision 1 a; or
(5) return excess tax increments to the County Auditor for redistribution to the City, County
and School District.
Tax increments from property located in one county must be expended for the direct and primary benefit
of a project located within that county, unless both county boards involved waive this requirement. Tax
increments shall not be used to circumvent levy limitations applicable to the City.
Tax increment shall not be used to finance the acquisition, construction, renovation, operation, or
maintenance of a building to be used primarily and regularly for conducting the business of a municipality,
county, school district, or any other local unit of government or the State or federal government, or for a
commons area used as a public park, or a facility used for social, recreational, or conference purposes.
This prohibition does not apply to the construction or renovation of a parking structure or of a privately -
owned facility for conference purposes.
If there exists any type of agreement or arrangement providing for the developer, or other beneficiary of
assistance, to repay all or a portion of the assistance that was paid or financed with tax increments, such
payments shall be subject to all of the restrictions imposed on the use of tax increments. Assistance
includes sale of property at less than the cost of acquisition or fair market value, grants, ground or other
leases at less then fair market rent, interest rate subsidies, utility service connections, roads, or other
similar assistance that would otherwise be paid for by the developer or beneficiary.
Section R Excess Tax Increment
In any year in which the tax increments from the TIF District exceed the amount necessary to pay the
estimated public costs authorized by the TIF Plan, the City shall use the excess tax increments to:
(1) prepay any outstanding tax increment bonds;
(2) discharge the pledge of tax increments thereof;
(3) pay amounts into an escrow account dedicated to the payment of the tax increment
bonds; or
(4) return excess tax increments to the County Auditor for redistribution to the City, County
and School District. The County Auditor must report to the Commissioner of Education
the amount of any excess tax increment redistributed to the School District within 30 days
of such redistribution.
SPRINGSTED Page 8
City of Elk River, Minnesota
Section S Tax Increment Pooling and the Five -Year Rule
At least 80% of the tax increments from the TIF District must be expended on activities within the district
or to pay for bonds used to finance the estimated public costs of the TIF District (see Section E for
additional restrictions). No more than 20% of the tax increments may be spent on costs outside of the
TIF District but within the boundaries of the Project Area, except to pay debt service on credit enhanced
bonds. All administrative expenses are considered to have been spent outside of the TIF District. Tax
increments are considered to have been spent within the TIF District if such amounts are:
(1) actually paid to a third party for activities performed within the TIF District within five
years after certification of the district;
(2) used to pay bonds that were issued and sold to a third party, the proceeds of which are
reasonably expected on the date of issuance to be spent within the later of the five-year
period or a reasonable temporary period or are deposited in a reasonably required
reserve or replacement fund.
(3) used to make payments or reimbursements to a third party under binding contracts for
activities performed within the TIF District, which were entered into within five years after
certification of the district; or
(4) used to reimburse a party for payment of eligible costs (including interest) incurred within
five years from certification of the district.
Beginning with the sixth year following certification of the TIF District, at least 80% of the tax increments
must be used to pay outstanding bonds or make contractual payments obligated within the first five years.
When outstanding bonds have been defeased and sufficient money has been set aside to pay for such
contractual obligations, the TIF District must be decertified.
The City does not anticipate that any tax increments will be spent outside of the TIF District (including
allowable administrative expenses); but the City reserves the right to allow for tax increment pooling from
the TIF District in the future.
Section T Limitation on Administrative Expenses
Administrative expenses are defined as all costs of the City other than:
(1) amounts paid for the purchase of land;
(2) amounts paid for materials and services, including architectural and engineering services
directly connected with the physical development of the real property in the project;
(3) relocation benefits paid to, or services provided for, persons residing or businesses
located in the project;
(4) amounts used to pay principal or interest on, fund a reserve for, or sell at a discount
bonds issued pursuant to section 469.178; or
(5) amounts used to pay other financial obligations to the extent those obligations were used
to finance costs described in clause (1) to (3).
Administrative expenses include amounts paid for services provided by bond counsel, fiscal consultants,
planning or economic development consultants, and actual costs incurred by the County in administering
SPRINGSTED Page 9
City of Elk River, Minnesota
the TIF District. Tax increments may be used to pay administrative expenses of the TIF District up to the
lesser of (a) 10% of the total tax increment expenditures authorized by the TIF Plan or (b) 10% of the total
tax increments received by the TIF District.
Section U Limitation on Property Not Subject to Improvements - Four Year Rule
If after four years from certification of the TIF District no demolition, rehabilitation, renovation of property
or other site preparation, including qualified improvement of an adjacent street, has commenced on a
parcel located within the TIF District, then that parcel shall be excluded from the TIF District and the
original net tax capacity shall be adjusted accordingly. Qualified improvements of a street are limited to
construction or opening of a new street, relocation of a street, or substantial reconstruction or rebuilding
of an existing street. The City must submit to the County Auditor, by February 1 of the fifth year, evidence
that the required activity has taken place for each parcel in the TIF District.
If a parcel is excluded from the TIF District and the City or owner of the parcel subsequently commences
any of the above activities, the City shall certify to the County Auditor that such activity has commenced
and the parcel shall once again be included in the TIF District. The County Auditor shall certify the net tax
capacity of the parcel, as most recently certified by the Commissioner of Revenue, and add such amount
to the original net tax capacity of the TIF District.
Section V Estimated Impact on Other Taxing Jurisdictions
Exhibit IV shows the estimated impact on other taxing jurisdictions if the maximum projected retained
captured net tax capacity of the TIF District was hypothetically available to the other taxing jurisdictions.
The City believes that there will be no adverse impact on other taxing jurisdictions during the life of the
TIF District, since the proposed development would not have occurred without the establishment of the
TIF District and the provision of public assistance. A positive impact on other taxing jurisdictions will
occur when the TIF District is decertified and the development therein becomes part of the general tax
base.
The fiscal and economic implications of the proposed tax increment financing district, as pursuant to
Minnesota Statutes, Section 469.175, Subdivision 2, are listed below.
1. The total amount of tax increment that will be generated over the life of the district is estimated to
be $269,050.
To the extent the facility in the proposed TIF District generates any public cost impacts on city -
provided services such as police and fire protection, public infrastructure, and borrowing costs
attributable to the district, such costs will be levied upon the taxable net tax capacity of the City,
excluding that portion captured by the District. The City does not anticipate issuing tax increment
revenue bonds in conjunction with this project but reserves the right to issue bonds as necessary
to facilitate development.
The amount of tax increments over the life of the district that would be attributable to school
district levies, assuming the school district's share of the total local tax rate for all taxing
jurisdictions remained the same, is estimated to be $70,823.
4. The amount of tax increments over the life of the district that would be attributable to county
levies, assuming the county's share of the total local tax rate for all taxing jurisdictions remained
the same is estimated to be $97,724.
SPRINGSTED Page 10
City of Elk River, Minnesota
5. No additional information has been requested by the county or school district that would enable it
to determine additional costs that will accrue to it due to the development proposed for the
district.
Section W Prior Planned Improvements
The City shall accompany its request for certification to the County Auditor (or notice of district
enlargement), with a listing of all properties within the TIF District for which building permits have been
issued during the 18 months immediately preceding approval of the TIF Plan. The County Auditor shall
increase the original net tax capacity of the TIF District by the net tax capacity of each improvement for
which a building permit was issued.
There have been no building permits issued in the last 18 months in conjunction with any of the properties
within the TIF District.
Section X Development Agreements
If within a project containing an economic development district, more than 10% of the acreage of the
property to be acquired by the City is purchased with tax increment bonds proceeds (to which tax
increment from the property is pledged), then prior to such acquisition, the City must enter into an
agreement for the development of the property. Such agreement must provide recourse for the City
should the development not be completed.
The City anticipates entering into an agreement with the Developer relating to the project but does not
anticipate acquiring any property located within the TIF District.
Section Y Assessment Agreements
The City may, upon entering into a development agreement, also enter into an assessment agreement
with the developer, which establishes a minimum market value of the land and improvements for each
year during the life of the TIF District.
The assessment agreement shall be presented to the County or City Assessor who shall review the plans
and specifications for the improvements to be constructed, review the market value previously assigned
to the land, and so long as the minimum market value contained in the assessment agreement appears to
be an accurate estimate, shall certify the assessment agreement as reasonable. The assessment
agreement shall be filed for record in the office of the County Recorder of each county where the property
is located. Any modification or premature termination of this agreement must first be approved by the
City, County and School District.
The City does not anticipate entering into an assessment agreement
Section Z Modifications of the Tax Increment Financing Plan
Any reduction or enlargement in the geographic area of the Project Area or the TIF District; increase in
the amount of bonded indebtedness to be incurred; determination to capitalize interest on the debt if it
was not part of original plan; increase in that portion of the captured net tax capacity to be retained by the
City; increase in the total estimated public costs; or designation of additional property to be acquired by
the City shall be approved only after satisfying all the necessary requirements for approval of the original
TIF Plan. This paragraph does not apply if:
SPRINGSTED Page 11
City of Elk River, Minnesota
(1) the only modification is elimination of parcels from the TIF District; and
(2) the current net tax capacity of the parcels eliminated equals or exceeds the net tax
capacity of those parcels in the TIF District's original net tax capacity, or the City agrees
that the TIF District's original net tax capacity will be reduced by no more than the current
net tax capacity of the parcels eliminated.
The City must notify the County Auditor of any modification that reduces or enlarges the geographic area
of the TIF District. The geographic area of the TIF District may be reduced but not enlarged after five
years following the date of certification.
Section AA Administration of the Tax Increment Financing Plan
Upon adoption of the TIF Plan, the City shall submit a copy of such plan to the Minnesota Department of
Revenue. The City shall also request that the County Auditor certify the original net tax capacity and net
tax capacity rate of the TIF District. To assist the County Auditor in this process, the City shall submit
copies of the TIF Plan, the resolution establishing the TIF District and adopting the TIF Plan, and a listing
of any prior planned improvements. The City shall also send the County Assessor any assessment
agreement establishing the minimum market value of land and improvements in the TIF District and shall
request that the County Assessor review and certify this assessment agreement as reasonable.
The County shall distribute to the City the amount of tax increment as it becomes available. The amount
of tax increment in any year represents the applicable property taxes generated by the retained captured
net tax capacity of the TIF District. The amount of tax increment may change due to development
anticipated by the TIF Plan, other development, inflation of property values, or changes in property
classification rates or formulas. In administering and implementing the TIF Plan, the following actions
should occur on an annual basis:
(1) prior to July 1, the City shall notify the County Assessor of any new development that has
occurred in the TIF District during the past year to ensure that the new value will be
recorded in a timely manner.
(2) if the County Auditor receives the request for certification of a new TIF District, or for
modification of an existing TIF District, before July 1, the request shall be recognized in
determining local tax rates for the current and subsequent levy years. Requests received
on or after July 1 shall be used to determine local tax rates in subsequent years.
(3) each year the County Auditor shall certify the amount of the original net tax capacity of
the TIF District. The amount certified shall reflect any changes that occur as a result of
the following:
(a) the value of property that changes from tax-exempt to taxable shall be added to
the original net tax capacity of the TIF District. The reverse shall also apply;
(b) the original net tax capacity may be modified by any approved enlargement or
reduction of the TIF District;
(c) if laws governing the classification of real property cause changes to the
percentage of estimated market value to be applied for property tax purposes,
then the resulting increase or decrease in net tax capacity shall be applied
proportionately to the original net tax capacity and the retained captured net tax
capacity of the TIF District.
SPRINGSTED Page 12
City of Elk River, Minnesota
The County Auditor shall notify the City of all changes made to the original net tax capacity of the TIF
District.
Section AB Filing TIF Plan, Financial Reporting and Disclosure Requirements
The City will file the TIF Plan, and any subsequent amendments thereto, with the Commissioner of
Revenue and the Office of the State Auditor pursuant to Minnesota Statutes, Section 469.175, subdivision
4A. The City will comply with all reporting requirements for the TIF District under Minnesota Statutes,
Section 469.175, subdivisions 5 and 6.
SPRINGSTED Page 13
Exhibit 1
Map of
Tax Increment Financing (Economic Development) District No. 26
Elks.
KYvcr
p un d Se Ve Mea
Palce16(1-24-2O171
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TIF District 425
If
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Exhibit 11
Assumptions Report
City of Elk River, Minnesota
Tax Increment Financing (Economic Development) District No. 26
Shoot Steel, INC
Draft TIF Plan Exhibits
Type of Tax Increment Financing District Economic Development
Maximum Duration of TIF District 8 years from 1st increment
Projected Certification Request Date
Decertification Date
Base Estimated Market Value
Original Net Tax Capacity *
Base Estimated Market Value
Increase in Estimated Market Value
Total Estimated Market Value
Total Net Tax Capacity
11 /01 /20
12/31/30 (9 Years of Increment)
2020/2021
$378,100
$6, 812
Assess ment/Collection Year
2020/2021 2021 /2022
2022/2023
2023/2024
$378,100 $378,100
$378,100
$378,100
0 971,000
1,011,473
1,053,160
378,100 1,349,100
1,389,573
1,431,260
$6,812 $26,232
City of Elk River
46.241%
Sherburne County
47.426%
ISD #728
34.371%
Other
2.533%
Local Tax Capacity Rate
$27, 041 $27, 875
130.571 % 2019/2020
Fiscal Disparities Contribution From TIF District NA
Administrative Retainage Percent (maximum = 10%) 10.00%
Pooling Percent 0.00%
Bonds PayGO Note
Bonds Dated NA Note Dated 02/01/21
Bond Issue @ 0.00% (NIC) NA Note Rate 4.00%
Eligible Project Costs NA Note Amount $190,000
Present Value Date & Rate 02/01/21 4.00% Present Value Amount $192,196
Notes
Assumptions assume no change to future tax rates, class rates, and a 3% annual MV inflator is assumed
Calculations include payable 2020 final tax capacity rates
Total EMV upon completion based on value estimates for new business
* Base EMV of property as provided by Sherburne County property taxes
Exhibit ///
Projected Tax Increment Report
City of Elk River, Minnesota
Tax Increment Financing (Economic Development) District No. 26
Shoot Steel, INC
Draft TIF Plan Exhibits
Annual
Period
Ending
(1)
Total
Estimated
Market Value (')
(2)
Total
Net Tax
Capacity (2)
(3)
Less:
Original
Net Tax
Capacity (3)
(4)
Retained
Captured
Net Tax
Capacity
(5)
Times:
Tax
Capacity
Rate (4)
(6)
Annual
Gross Tax
Increment
(7)
Less:
State Aud.
Deduction
0.360%
(8)
Subtotal
Net Tax
Increment
(9)
Less:
Admin.
Retainage
10.00%
(10)
Annual
Net
Revenue
(11)
P.V.
Annual
Net Rev. To
02/01/21
4.00%
12/31 /20
378,100
6,812
6,812
0
130.571 %
0
0
0
0
0
0
12/31 /21
378,100
6,812
6,812
0
130.571 %
0
0
0
0
0
0
12/31 /22
1,349,100
26,232
6,812
19,420
130.571 %
25,357
91
25,266
2,527
22,739
21,300
12/31 /23
1,389,573
27,041
6,812
20,229
130.571 %
26,415
95
26,320
2,632
23,688
21,336
12/31/24
1,431,260
27,875
6,812
21,063
130.571%
27,502
99
27,403
2,740
24,663
21,359
12/31 /25
1,474,198
28,734
6,812
21,922
130.571 %
28,624
103
28,521
2,852
25,669
21,376
12/31 /26
1,518,424
29,618
6,812
22,806
130.571 %
29,779
107
29,672
2,967
26,705
21,383
12/31 /27
1,563,977
30,530
6,812
23,718
130. 571 %
30,968
ill
30,857
3,086
27,771
21,381
12/31 /28
1,610,896
31,468
6,812
24,656
130.571 %
32,194
116
32,078
3,208
28,870
21,373
12/31 /29
1,659,223
32,434
6,812
25,622
130.571 %
33,456
120
33,336
3,334
30,002
21,356
12/31/30
1,709,000
33,430
6,812
26,618
130.571%
34,755
125
34,630
3,463
31,167
21,332
$269,050
$967
$268,083
$26,809
$241,274
$192,196
value based
on estimate provided by City for the anticipated construction of newbusinesses and possible existing business expansions
(2) tax capacity
based on commercial -industrial class rate of 1.50% for
first $150,000 of value and 2% for value above $150,000
(3) original net tax capacity will be based on
existing land and building values and commercial -industrial class rate for payable
2021
(4) combined local tax capacity rate of City of Elk River, ISD 728 and Sherburne County
for payable 2020
Exhibit IV
Estimated Impact on Other Taxing Jurisdictions Report
City of Elk River, Minnesota
Tax Increment Financing (Economic Development) District No. 26
Shoot Steel, INC
Draft TIF Plan Exhibits
Without
Project or TIF District
With Project and TIF District
Projected
Hypothetical
2019/2020
2019/2020
Retained
New
Hypothetical
Hypothetical
Tax Generated
Taxable
2019/2020
Taxable
Captured
Taxable
Adjusted
Decrease In
by Retained
Taxing
Net Tax
Local
Net Tax
Net Tax
Net Tax
Local
Local
Captured
Jurisdiction
Capacity (1)
Tax Rate
Capacity (1) +
Capacity
= Capacity
Tax Rate (*)
Tax Rate (*)
N.T.C. (*)
City of Elk River
27, 823, 086
46.241 %
27, 823, 086
$26, 618
27, 849, 704
46.197%
0.044%
12,297
Sherburne County
106,729,866
47.426%
106,729,866
26,618
106,756,484
47.414%
0.012%
12,621
IS D #728
41, 735, 916
34.371 %
41, 735, 916
26,618
41, 762, 534
34.349%
0.022%
9,143
Other (2)
---
2.533%
---
26,618
---
2.533%
---
---
Totals
130.571%
130.493%
0.078%
* Statement 1: If the projected Retained Captured Net Tax Capacity of the TIF District was hypothetically available to each of
the taxing jurisdictions above, the result would be a lower local tax rate (see Hypothetical Adjusted Tax Rate above)
which would produce the same amount of taxes for each taxing jurisdiction. In such a case, the total local tax rate
would decrease by 0.078% (see Hypothetical Decrease in Local Tax Rate above). The hypothetical tax that the
Retained Captured Net Tax Capacity of the TIF District would generate is also shown above.
Statement 2: Since the projected Retained Captured Net Tax Capacity of the TIF District is not available to the taxing jurisdictions,
then there is no impact on taxes levied or local tax rates.
(1) Taxable net tax capacity = total net tax capacity - captured TIF - fiscal disparity contribution, if applicable.
(2) The impact on these taxing jurisdictions is negligible since they represent only 1.94% of the total tax rate.
Exhibit V
Market Value Analysis Report
City of Elk River, Minnesota
Tax Increment Financing (Economic Development) District No. 26
Shoot Steel, INC
Draft TIF Plan Exhibits
Assumptions
Present Value Date
P.V. Rate - Gross T.I.
02/01 /21
4.00%
Increase in EMV With TIF District
Less: P.V of Gross Tax Increment
Subtotal
Less: Increase in EMV Without TIF
Difference
$1,330,900
214,321
$1,116, 579
0
$1,116,579
Annual
Present
Gross Tax
Value @
Year
Increm ent
4.00%
1 2022
25,357
23,752
2 2023
26,415
23,792
3 2024
27,502
23,818
4 2025
28,624
23,836
5 2026
29,779
23,844
6 2027
30,968
23,843
7 2028
32,194
23,833
8 2029
33,456
23,815
9 2030
34,755
23,788
$269,050
$214,321
TAX INCREMENT DEVELOPMENT AGREEMENT
BY AND BETWEEN
THE CITY OF ELK RIVER, MINNESOTA
AND
MOYER PROPERTIES, LLC
This document drafted by: Kennedy & Graven, Chartered
470 U.S. Bank Plaza
200 South 6th Street
Minneapolis, MN 55402
TABLE OF CONTENTS
ARTICLE I DEFINITIONS......................................................................................................
2
Section 1.1
Definitions..............................................................................................
2
ARTICLE II REPRESENTATIONS
AND WARRANTIES......................................................
5
Section 2.1
Representations and Warranties of the City .............................................
5
Section 2.2
Representations and Warranties of the Developer ...................................
5
ARTICLE III UNDERTAKINGS
BY DEVELOPER AND CITY ............................................
7
Section 3.1
Costs of the Project.................................................................................
7
Section 3.2
Reimbursement: TIF Note......................................................................
7
Section 3.3
Effect of Delay.......................................................................................
8
Section 3.4
Business Subsidy Law............................................................................
9
Section 3.5
Real Property Taxes.............................................................................
10
Section3.6
.............................................................................................................
10
Section 3.7
Change in Use of Minimum Improvements ...........................................
10
Section 3.8
Legal and Administrative Expenses......................................................
11
Section 3.9
Compliance with Environmental Requirements...................................101
Section 3.10
Right to Collect Delinquent Taxes.......................................................102
ARTICLE IV PROJECT COVENANTS.................................................................................
13
Section 4.1
Construction and Completion of Improvements by the Developer.........
13
Section 4.2
Certificate of Completion.....................................................................
13
Section4.3
Insurance..............................................................................................
14
Section 4.4
Condemnation, Damage or Destruction ................................................
15
ARTICLE V PROHIBITS
AGAINST ASSIGNMENT AND TRANSFER .............................
13
Section 5.1
Transfer of Substantially All Assets ......................................................
17
Section 5.2
Prohibition Against Transfer of Property and Assignment of TIF
Note.....................................................................................................
17
ARTICLE VI EVENTS
OF DEFAULT..................................................................................
19
Section 6.1
Events of Default Defined....................................................................
19
Section 6.2
Remedies on Default............................................................................
20
Section 6.3
No Remedy Exclusive..........................................................................
20
Section 6.4
No Implied Waiver...............................................................................
20
Section 6.5
Agreement to Pay Attorney's Fees and Expenses ..................................
20
Section 6.6
Indemnification of City.........................................................................
20
ARTICLE VII ADDITIONAL PROVISIONS........................................................................
22
Section 7.1
Conflicts of Interest..............................................................................
22
Section 7.2
Titles of Articles and Sections..............................................................
22
Section 7.3
Notices and Demands...........................................................................
22
Section7.4
Counterparts.........................................................................................
22
Section 7.5
Law Governing.....................................................................................
22
Section7.6
Expiration.............................................................................................
22
Section 7.7
Provisions Surviving Rescission or Expiration ......................................
23
Section7.8
Amendment..........................................................................................
23
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Page
EXHIBIT A Description of Development Property A-1
EXHIBIT B Form of TIF Note................................................................................................B-1
EXHIBIT C Certificate of Completion.................................................................................... C-1
2356261v4 ll
LL185\61\675612.v1
TAX INCREMENT DEVELOPMENT AGREEMENT
THIS TAX INCREMENT DEVELOPMENT AGREEMENT (the "Agreement"), made
as of the 5th day of October, 2020, by and between the City of Elk River, Minnesota, a municipal
corporation organized and existing under the Constitution and laws of the State of Minnesota
(the "City") and Moyer Properties, LLC, a Minnesota limited liability company (the
"Developer").
WITNESSETH:
WHEREAS, the City has undertaken a program to promote economic development and
job opportunities and to promote the development of land which is underutilized within the City,
and in connection therewith created a development project known as Development District No. 1
(the "Development District") and developed a Development Program (the "Development
Program") therefor pursuant to Minnesota Statutes, Sections 469.124 to 469.134, as; and
WHEREAS, pursuant to the provisions of Minnesota Statutes, Sections 469.174 through
469.1794, as amended (the "TIF Act"), the City has created, within the Development District,
Tax Increment Financing (Economic Development) District No. 26 (Shoot Steel, Inc. Project)
qualified as an economic development tax increment financing district (the "TIF District") and
has adopted a Tax Increment Financing Plan therefor (the "TIF Plan") approved by the City
Council on October 5, 2020 which provides for the use of tax increment financing in connection
with certain development within the Development District and TIF District; and
WHEREAS, in order to achieve the objectives of the Development Program (as
hereinafter defined) and particularly to make the land in the Development District available for
development by private enterprise in conformance with the Development Program, the City has
determined to assist the Developer with the financing of certain costs of certain Minimum
Improvements (as hereinafter defined) to be constructed within the TIF District as more
particularly set forth in this Agreement; and
WHEREAS, the City believes that the development and construction of the Minimum
Improvements, and fulfillment of this Agreement are vital and are in the best interests of the
City, the health, safety, morals and welfare of residents of the City, and in accordance with the
public purpose and provisions of the applicable state and local laws and requirements under
which the Minimum Improvements has been undertaken and is being assisted; and
WHEREAS, the requirements of the Business Subsidy Law, Minnesota Statutes, Section
116J.993 through 116J.995, as amended, apply to this Agreement; and
WHEREAS, the City has adopted criteria for awarding business subsidies that comply
with the Business Subsidy Law, after a public hearing for which notice was published; and
WHEREAS, the City Council has approved this Agreement as a subsidy agreement under
the Business Subsidy Law and held a duly noticed public hearing thereon.
LL185\61\675612.v1
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 Increment Development 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 is issued by the City for
the Minimum Improvements;
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;
Business Subsidy Law means Minnesota Statutes, Sections 116J.993 to 116J.995, as
amended, in effect as of the date hereof,
City means the City of Elk River, Minnesota;
Condemnation Award means any compensation for a condemnation or transfer in relation
to the exercise of a power of eminent domain;
Construction Plans means the plans, specifications, drawings and related documents of
the construction work to be performed by the Developer on the Minimum Improvements and the
Development Property and the plans (a) shall be as detailed as the plans, specifications drawings
and related documents which are submitted to the building inspector of the City; (b) shall include
at least the following: (1) site plan; (2) foundation plan; (3) basement plans; (4) floor plan for
each floor; (5) cross sections of each (length and width); (6) elevations (all sides); (7) grading
and drainage; and (8) landscape; and (c) shall be approved by the City in connection with the
issuance of a building permit for the Minimum Improvements;
CoqM means Sherburne County, Minnesota;
Developer means Moyer Properties, LLC, a Minnesota limited liability company, its
successors and assigns;
Development District means Development District No. 1, as amended;
Development Program means the Development Program for the Development District, as
amended;
Development Property means the real property located at 17565 Tyler Street NW in the
City and legally described in Exhibit A attached to this Agreement;
2
LL185\61\675612.v1
Event of Default means any of the events described in Section 6.1 hereof,
Land Acquisition means the acquisition of the Development Property by the Developer
from The Economic Development Authority for the City of Elk River, Minnesota;
Lease means the lease agreement between the Developer and the Tenant;
Legal and Administrative Expenses means the fees and expenses incurred by the City in
connection with the adoption and administration of the TIF Plan, the preparation and negotiation
of this Agreement, and the issuance of the TIF Note;
Minimum Improvements means acquisition, construction and equipping of an
approximately 20,000 square foot warehouse facility including 3,000 square feet of office space
to be located on the Development Property;
Net Proceeds means any proceeds paid by an insurer to the Developer under a policy or
policies of insurance required to be provided and maintained by the Developer pursuant to
Article V of this Agreement and remaining after deducting all expenses (including fees and
disbursements of counsel) incurred in the collection of such proceeds;
Note Payment Date means each February 1 and August 1, commencing on August 1,
2022 and thereafter to and including the Termination Date; provided, that if any such Note
Payment Date should not be a Business Day, the Note Payment Date shall be the next succeeding
Business Day;
Site Improvements means excavation, grading, filling, site development, curb and gutter,
utility improvements and extensions, access and parking preparations to be undertaken by the
Developer on the Development Property and any other improvements reimbursable with Tax
Increments in accordance with the TIF Act determined in the sole discretion of the City;
State means the State of Minnesota;
Tax Increments means 90% of the tax increments derived from the Development
Property which have been received and retained by the City in accordance with the provisions of
the TIF Act, including without limitation Minnesota Statutes, Section 469.177, as amended;
Tenant means Shoot Steel, Inc., a Minnesota corporation, its successors and assigns;
Termination Date means the earlier of (i) February 1, 2031, (ii) the date the TIF Note is
paid in full, (iii) the date on which the TIF District expires or is otherwise terminated, or (iv) the
date this Agreement is terminated or rescinded in accordance with its terms;
TIF Act means Minnesota Statutes, Sections 469.174 through 469.1794, as amended;
TIF District means Tax Increment Financing (an Economic Development District)
District No. 26 (Shoot Steel, Inc. Project), located within the Development District, which was
qualified as an economic development district under the TIF Act;
3
LL185\61\675612.v1
TIF Plan means the tax increment financing plan approved for the TIF District by the
City Council of the City;
TIF Note means the Taxable Tax Increment Revenue Note (Shoot Steel, Inc. Project) to
be executed by the City and delivered to the Developer pursuant to Article III hereof, a copy of
which is attached hereto as Exhibit B; and
Unavoidable Delays means delays, outside the control of the parry claiming its
occurrence, which include but are not limited to those which are the direct result of strikes, other
labor troubles, unavailability of materials, hazardous materials, terrorism, unusually severe or
prolonged bad weather, acts of God, fire or other casualty to the Minimum Improvements,
litigation commenced by third parties which, by injunction or other similar judicial action or by
the exercise of reasonable discretion, directly results in delays, or acts of any federal, state or
local governmental unit (other than the City) which directly result in delays.
4
LL185\61\675612.v1
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 organized and existing under the Constitution
and laws of the State of Minnesota and has the power to enter into this Agreement and carry out
its obligations hereunder.
(2) The subject TIF District is an "economic development district" within the
meaning of Minnesota Statutes, Section 469.174, Subdivision 12, and was created, adopted and
approved in accordance with the terms of the TIF Act.
(3) The development contemplated by this Agreement is in conformance with the
development objectives set forth in the Development Program. Land use permits shall be
governed by City land use ordinances and specific land use approvals separate from this
Agreement.
(4) The City makes no representation or warranty, either express or implied, as to the
Development Property or its condition or the soil conditions thereon, or that the Development
Property shall be suitable for the Developer's purposes or needs.
Section 2.2 Representations and Warranties of the Developer. The Developer makes
the following representations and warranties:
(1) The Developer is a Minnesota limited liability company, has power to enter into
this Agreement and to perform its obligations hereunder and, by doing so, is not in violation of
any provisions of its operating agreement, articles of organization or the laws of the State.
(2) The Developer will cause the Minimum Improvements to be constructed in
compliance with the terms of this Agreement, the Development Program, all issued permits for
the Minimum Improvements 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).
(3) The construction of the Minimum Improvements would not have been undertaken
by 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.
(4) 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 provision 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.
5
LL185\61\675612.v1
(5) The Developer will reasonably cooperate with the City in resolution of any traffic,
parking, trash removal or public safety problems on or adjacent to the Development Property
which may arise in connection with the construction of the Minimum Improvements.
(6) The financing commitments which the Developer has obtained to finance
construction of the Minimum Improvements, together with the equity funds available to the
Developer, together with financing to be provided by the City pursuant to this Agreement, will
be sufficient to enable the Developer to successfully complete the Minimum Improvements.
(7) The Developer has made its own projections of Tax Increments and revenues to
be generated from the Minimum Improvements and of the Developer's return on investment and
the Developer has not relied on any assumptions, calculations, determinations or conclusions
made by the City, its governing body members, officers or agents, including the independent
contractors, consultants and legal counsel, servants and employees thereof, with respect to the
foregoing or in determining to proceed with the Minimum Improvements.
(8) The Developer is not currently in default under any business subsidy agreement
with any grantor, as such terms are defined in the Business Subsidy Act.
m
LL185\61\675612.v1
ARTICLE III
UNDERTAKINGS BY DEVELOPER AND CITY
Section 3.1 Costs of the Project. The Developer agrees that it will acquire the
Development Property and cause the Minimum Improvements to be constructed on the
Development Property substantially in conformance with the approved Construction Plans and as
further provided in Article IV. The Developer agrees that the scope and scale of the Minimum
Improvements to be constructed shall not be significantly less than the scope and scale of the
Minimum Improvements as detailed and outlined in the Construction Plans. Subject to
Unavoidable Delays, the Developer shall cause construction of the Minimum Improvements to
be commenced on or before October 31, 2020 and, barring Unavoidable Delays, the Minimum
Improvements will be substantially completed by July 31, 2021. All work with respect to the
Minimum Improvements to be constructed or provided by the Developer on the Development
Property shall be in substantial conformity with the Construction Plans as submitted by the
Developer and approved by the City in connection with the issuance of a building permit as
further provided in Article IV. The parties agree that the acquisition of the land and construction
of the Site Improvements to be constructed by the Developer is essential to the successful
completion of the Minimum Improvements. The Developer shall pay or reimburse the City for
Legal and Administrative Expenses upon execution of this Agreement as provided in Section
3.7. The cost of the Land Acquisition, Site Improvements and the Minimum Improvements shall
be paid by the Developer. Solely as provided in Section 3.2, the City shall reimburse the
Developer for the lesser of $190,000 or the costs of the Land Acquisition and Site Improvements
actually paid by the Developer substantiated under Section 3.2 hereof (the "Reimbursement
Amount"). All costs of the Land Acquisition and Site Improvements in excess of the
Reimbursement Amount are the sole responsibility of the Developer.
Section 3.2 Reimbursement: TIF Note. The City shall reimburse the Developer for
costs of the Land Acquisition and Site Improvements, in part, through the issuance of the City's
TIF Note in substantially the form attached to this Agreement as Exhibit B in an amount not to
exceed $190,000 subject to the following conditions:
(1) Provided that no Event of Default shall have occurred and be continuing, the TIF
Note shall be dated (the "Issuance Date"), issued in a principal amount equal to the
Reimbursement Amount and delivered to the Developer when:
(a) The Developer shall be in material compliance with all terms and
provisions of this Agreement;
(b) The Developer has submitted signed settlement statements showing the
cost of the Land Acquisition and paid invoices or other evidence reasonably satisfactory
to the City showing the costs of construction of the Site Improvements in an amount,
together with the Land Acquisition costs, not less than the Reimbursement Amount;
(c) The Developer shall have completed construction of the Minimum
Improvements as evidenced by a Certificate of Completion issued by the City pursuant to
Section 4.2; and
7
LL185\61\675612.v1
(d) The Developer shall have provided a copy of the Lease for a term of at
least 15 years and including language requiring the Tenant to comply with Section 3.4
hereof.
(2) Except during any period that the payments on the TIF Note have been
suspended, the outstanding principal amount of the TIF Note shall accrue simple, non -
compounding interest from and after the Issuance Date at the rate of 4.0% per annum,.
(3) The TIF Note shall be payable solely and exclusively from the Tax Increments.
(4) On each Note Payment Date and subject to the provisions of the TIF Note, the
City shall pay, solely from the Tax Increments received by the City during the preceding 6
months (or, with respect to the first Note Payment Date, in the period commencing on the date of
issuance of the TIF Note through the day prior to the first Note Payment Date) to the extent of
the outstanding principal amount of the TIF Note. All such payments shall be applied first to
accrued interest and then to the payment of the principal of the TIF Note.
(5) The TIF Note shall be a special and limited obligation of the City and not a
general obligation of the City, and only Tax Increments shall be used to pay the principal amount
of the TIF Note. The City makes no representations or warranties regarding the amount of Tax
Increments or that revenues pledged to the TIF Note will be sufficient to pay the principal of and
interest on the TIF Note. The Developer further acknowledges that estimates of Tax Increments
prepared by the City or its financial advisors in connection with the TIF District or this
Agreement are for the benefit of the City, and are not intended as representations on which the
Developer may rely.
(6) The City's obligation to make payments on the TIF Note on any Note Payment
Date or any date thereafter shall be conditioned upon the requirement that there shall not at that
time be an Event of Default that has occurred and is continuing under this Agreement or if the
City notifies the Developer that it is not in compliance with any issued permits for the Minimum
Improvements.
(7) All conditions for delivery of the TIF Note must be met by no later than the date 5
years after the date of certification of the TIF District. If the conditions for delivery of the TIF
Note are not satisfied by the date described in this paragraph, the City has no further obligations
under this Section 3.2.
(8) The TIF Note shall be governed by and payable pursuant to the additional terms
thereof, as set forth in Exhibit B. In the event of any conflict between the terms of the TIF Note
and the terms of this Section 3.2, the terms of the TIF Note shall govern. The issuance of the
TIF Note pursuant and subject to the terms of this Agreement, and the taking by the City of such
additional actions as bond counsel for the City may require in connection therewith, are hereby
authorized and approved by the City.
Section 3.3 Effect of Delay. The Developer acknowledges that if construction of the
Minimum Improvements is delayed or not completed, the effect of such delay or failure to
complete may be to reduce the amount of the Tax Increment available to pay the TIF Note.
8
LL185\61\675612.v1
Section 3.4 Business Subsidv Law.
(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 amount
of the tax increment assistance paid pursuant to Section 3.2, which is approximately $190,000,
and that the Business Subsidy is needed because the Minimum Improvements are not sufficiently
feasible for the Developer to undertake without the Business Subsidy. The public purpose of the
Business Subsidy is to construct the Minimum Improvements and enable the Developer to locate
a warehouse facility in the City increasing the tax base in the City and the State and stimulate
construction and the creation of jobs, including construction jobs. The Developer further
represents that, pursuant to the Lease between the Developer and the Tenant, the Tenant has
agreed that, it will meet the following job creation goals (the "Goals"): It will in relocate 7 full-
time and 1 part-time existing jobs to the Development Property and create at least 6 full-time
equivalent jobs at an average salary of at least $18/hour excluding benefits, within two years
from the Benefit Date ("Jobs").
(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 13.5 (i.e. the number of Jobs set forth
in the Goals).
(3) The Tenant has agreed, pursuant to the Lease with the Developer, 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 or cause the Tenant to file these reports no later than March 1 of each year commencing
March 1, 2021, 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 Tenant has agreed, pursuant to the Lease with the Developer, to continue
operations at the Minimum Improvements for at least 5 years after the Benefit Date.
(5) Other than the tax increment assistance paid pursuant to Section 3.2 there are no
other state or local government agencies providing financial assistance for the Minimum
Improvements other than the City.
(6) There is no parent corporation of the Developer or the Tenant.
9
LL185\61\675612.v1
Section 3.5 Real Property Taxes. The Developer shall pay or cause to be paid all real
property taxes payable with respect to all and any parts of the Development Property acquired
and owned by it and any statutory or contractual duty that shall accrue subsequent to the date of
its acquisition of title to the Development Property (or part thereof) and until the Developer's
obligations have been assumed by any other Person pursuant to the provisions of this Agreement
or title to the property is vested in another Person.
The Developer agrees that prior to the Termination Date, so long as it owns all or any
portion of the Development Property:
(1) It will not seek administrative review or judicial review of the applicability or
constitutionality of any tax statute relating to the taxation of real property contained on the
Development Property determined by any tax official to be applicable to the Minimum
Improvements or the Developer or raise the inapplicability or constitutionality of any such tax
statute as a defense in any proceedings, including delinquent tax proceedings; provided,
however, that "tax statute" does not include any local ordinance or resolution levying a tax; and
(2) It will not seek any tax exemption, tax deferral or abatement, either presently or
prospectively authorized under Minnesota Statutes, Section 469.1813 through 469.1815, or any
other State or federal law, of the taxation of real property contained in the Development Property
between the date of execution of this Agreement and the Termination Date.
(3) The Developer shall notify the City within 10 days of filing any petition to seek
reduction in market value or property taxes on any portion of the Development Property under
any State law (referred to as a "Tax Appeal"). If as of any Payment Date, any Tax Appeal is
then pending, the City will continue to make payments on the TIF Note but only to the extent
that the Tax Increments relate to property taxes paid with respect to the market value of the
Development Property not being challenged as part of the Tax Appeal and the City will withhold
the Tax Increments related to property taxes paid with respect to the market value of the
Development Property being challenged as part of the Tax Appeal, all as determined by the City
in its sole discretion. The City will apply any withheld amount to the extent not reduced as a
result of the Tax Appeal promptly after the Tax Appeal is fully resolved and the amount of Tax
Increments, as applicable, attributable to the disputed tax payments is finalized.
Section 3.6 Change in Use of Minimum Improvements. The Developer agrees that for
itself, and its successors and assigns, until the Termination Date, it shall devote the Development
Property to, and in accordance with, the uses described in this Agreement. The Developer
warrants that the use of the Development Property during the term of this Agreement will be a
warehouse facility with office space consisting of less than 15% of the total square footage of the
facility pursuant to the Lease, unless the City first approves any change in use in writing. If the
Developer fails to comply with the requirements of this Section 3.6, the City will decertify the
TIF District and cease payments to the Developer on the TIF Note.
Section 3.7 Legal and Administrative Expenses.
(1) The Developer shall be solely responsible for all costs incurred by the Developer.
10
LL185\61\675612.v1
(2) In addition, the Developer shall be responsible for the City's Legal and
Administrative Expenses. In addition, certain engineering, environmental advisor, legal, land
use, zoning, subdivision and other costs related to the development of the Development Property
are required to be paid, or additional funds deposited in escrow, in accordance with the City's fee
schedule.
(3) The Developer has previously deposited $10,000 with the City for the payment or
reimbursement of the City's reasonable Legal and Administrative Expenses incurred prior to the
full execution and acceptance of this Agreement. If at any time the City determines that the
amount deposited by Developer will be insufficient to pay the City's Legal and Administrative
Expenses, the City may notify the Developer in writing as to any additional amount required to
be deposited. The Developer must deposit such additional funds within 10 business days after
receipt of the City's notice. The City will notify the Developer at any point when it has received
invoices for Legal and Administrative Expenses equal, in aggregate, to $10,000 and the
Developer shall notify the City whether it is willing to incur additional Legal and Administrative
Expenses. If the Developer fails to notify the City of its willingness to continue to incur
additional Legal and Administrative Expenses within 10 days, the City will instruct all Legal and
Administrative Expenses service providers to discontinue further work and submit final invoices
which the Developer shall reimburse the City for reasonable Legal and Administrative Expenses
within 10 business days after receipt of the City's notice even if the remaining Legal and
Administrative Expenses exceed $10,000 as a result of work done prior to the notification to
discontinue work.
(4) Any funds deposited by Developer and not expended by the City for its Legal and
Administrative Expenses will be returned to the Developer upon the issuance of the Certificate of
Completion.
(5) This Section 3.7 shall survive termination of this Agreement and shall be binding
on the Developer regardless of the enforceability of any other provision of this Agreement.
Section 3.8 Compliance with Environmental Requirements.
(1) The Developer shall comply with all applicable local, state, and federal
environmental laws and regulations, and will obtain, and maintain compliance under, any and all
necessary environmental permits, licenses, approvals or reviews.
(2) The City makes no warranties or representations regarding, nor does it indemnify
the Developer with respect to, the existence or nonexistence on or in the vicinity of the
Development Property or anywhere within the TIF District of any toxic or hazardous substances
or wastes, pollutants or contaminants (including, without limitation, asbestos, urea
formaldehyde, the group of organic compounds known as polychlorinated biphenyls, petroleum
products including gasoline, fuel oil, crude oil and various constituents of such products, or any
hazardous substance as defined in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 ("CERCLA"), 42 U.S.C. §§ 961-9657, as amended) (collectively, the
"Hazardous Substances").
11
LL185\61\675612.v1
(3) The Developer agrees to take all necessary action to remove or remediate any
Hazardous Substances located on the Development Property to the extent required by and in
accordance with all applicable local, state and federal environmental laws and regulations.
Section 3.9 Right to Collect Delinquent Taxes. The Developer acknowledges that the
City is providing substantial aid and assistance in furtherance of the Project through
reimbursement of a portion of the costs of the Land Acquisition and Site Improvements. To that
end, the Developer agrees for itself, its successors and assigns, that in addition to the obligation
pursuant to statute to pay real estate taxes, it is also obligated by reason of this Agreement, to pay
before delinquency all real estate taxes assessed against the Development Property and the
Project. The Developer acknowledges that this obligation creates a contractual right on behalf of
the City through the Termination Date to sue the Developer or its successors and assigns, to
collect delinquent real estate taxes related to the Development Property and any penalty or
interest thereon and to pay over the same as a tax payment to the county auditor. In any such suit
in which the City is the prevailing party, the City shall also be entitled to recover its costs,
expenses and reasonable attorney fees.
12
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ARTICLE IV
PROJECT COVENANTS
Section 4.1 Construction and Completion of Improvements by the Developer.
(1) The Developer agrees to construct at its expense the Minimum Improvements
substantially in accordance with the Construction Plans. Prior to the completion of the Minimum
Improvements, the Developer shall submit any material design modifications for the Minimum
Improvements, including but not limited to material changes to the size of the Minimum
Improvements, the number of parking spaces, exterior materials, color pallet or the quality of
materials, to the City for review and reasonable approval by the City.
(2) The Developer will obtain or cause Tenant to obtain all permits, licenses and
approvals, when and as required, and shall construct, operate and maintain the Minimum
Improvements at its expense, substantially in accordance with this Agreement, any applicable
permits, and with all applicable local, state and federal laws and regulations (including without
limitation environmental, zoning, building code, housing code, and public health laws and
regulations).
(3) The Developer will use commercially reasonable efforts to obtain all required
permits, licenses and approvals, and comply with all requirements of all applicable local, state
and federal laws and regulations which must be obtained or met before the Minimum
Improvements may be lawfully constructed and completed.
(4) The Developer shall pay or cause to be paid all costs of the Minimum
Improvements, including without limitation the abatement of hazardous materials, the demolition
of any improvements on the Development Property, the relocation or removal of any utilities,
required sidewalk, alley or street construction or reconstruction, landscaping and streetlighting
and any other improvements located in the public right of way that are required in connection
with approving the Construction Plans or obtaining any required permits, licenses and approvals
for the Minimum Improvements.
(5) The Developer shall pay or cause to be paid all costs of any damage to roadways,
sidewalks, streets, alleys utilities, landscaping, streetlighting or any other improvements located
in the public right of way caused by the Developer or its contractors or agents or otherwise in
connection with the construction of the Minimum Improvements.
(6) The Minimum Improvements shall be operated and maintained in accordance
with this Agreement, with any applicable permits and with all applicable local, state and federal
laws and regulations (including without limitation environmental, zoning, building code, housing
code, and public health laws and regulations).
Section 4.2 Certificate of Completion. The Developer shall notify the City when
construction of the Minimum Improvements have been substantially completed. The City shall,
within 30 days after such notification, inspect the Minimum Improvements in order to determine
whether the Minimum Improvements have been substantially completed and constructed in
accordance with all applicable local, state and federal laws and regulations (including without
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limitation environmental, zoning, building code, housing code, and public health laws and
regulations), and any applicable permits and in substantial conformity with this Agreement, and
the Construction Plans approved by the City in connection with issuing construction permits,
each as applicable. The following shall be conditions precedent to the City's obligation to
execute the Certificate of Completion:
(1) There shall exist no Event of Default hereunder;
(2) The City shall have issued a certificate of occupancy for all of the Minimum
Improvements, including all Tenant improvements sufficient to make the Minimum
Improvements operable by the Tenant in accordance with the Lease;
(3) The City Administrator and City Engineer on behalf of the City shall have
reasonably determined in a timely manner and consistent with the City's practice for similar
construction projects that the Minimum Improvements have been substantially completed and
constructed in accordance with all local, state and federal laws and regulations (including
without limitation environmental, zoning, building code, housing code, and public health laws
and regulations), and in substantial conformity with this Agreement and the Construction Plans
approved by the City in connection with issuing construction permits, each as applicable.
If the City determines that it cannot execute the Certificate of Completion as set forth in
Section 4.2, it shall, within 45 days after the Developer's written request for the Certificate of
Completion, provide a written statement indicating in adequate detail why it cannot do so and
also indicating what measures or acts will be necessary to be taken or performed in order to
permit execution of the Certificate of Completion. The Developer shall have a reasonable period
of time to remedy such deficiencies. The City shall re -inspect the Minimum Improvements
within 30 days after receiving notice that such deficiencies have been remedied in order to
determine whether the conditions set forth above have been satisfied.
Within 30 days after determining that the Minimum Improvements have met the
conditions set forth in this Section 4.2, the City will furnish to the Developer a Certificate of
Completion in the form attached hereto as Exhibit C, which shall then be a conclusive
determination of satisfaction and termination of the agreements and covenants in this Agreement
with respect to the completion of the Minimum Improvements.
Section 4.3 Insurance.
(1) The Developer will maintain or cause its contractor to provide and maintain, at all
times during the process of constructing the Minimum Improvements, a "Special Form"
Insurance Policy or Policies and, from time to time during that period, at the request of the City,
furnish the City with appropriate certificates of insurance covering the following:
(a) Builder's risk insurance, written on the so-called `Builder's Risk
Completed Value Basis," in an amount equal to 100% of the insurable value of the
Minimum Improvements at the date of substantial completion, and with coverage
available in nonreporting form on the so-called "Special Form" form of policy (to
accomplish the above -required insurance, a master or portfolio -based property insurance
policy may be used);
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(b) Commercial general liability insurance (including operations of
subcontractors, completed operations and contractual liability insurance) with limits
against bodily injury and property damage of not less than $2,000,000 for each
occurrence (to accomplish the above -required limits, an umbrella excess liability policy
may be used). The City shall be listed as an additional insured on the policy; and
(c) Workers' compensation insurance, with statutory coverage.
(2) Upon completion of construction of the Minimum Improvements and prior to the
Termination Date, the Developer shall maintain, or cause to be maintained, at its cost and
expense, and from time to time at the request of the City shall furnish proof of the payment of
premiums on, insurance as follows:
(a) Property insurance against physical loss and/or damage to the Minimum
Improvements under a policy or policies covering such risks as are ordinarily insured
against by similar businesses.
(b) Commercial general public liability insurance, including personal injury
liability, against liability for injuries to persons and/or property, in the minimum amount
for each occurrence and for each year of $2,000,000 and shall be endorsed to show the
City and City as additional insureds (to accomplish the above -required limits, an
umbrella excess liability policy may be used).
(c) Such other insurance in such amount as is customarily carried by like
organizations engaged in like activities of comparable size and liability exposure,
including workers' compensation insurance respecting all employees of Developer with
statutory coverage.
(3) All insurance required in this Article V of the Agreement shall be taken out and
maintained in responsible insurance companies selected by the Developer that are authorized
under the laws of the State to assume the risks covered thereby. Upon request, the Developer
will deposit annually with the City material policies evidencing all such insurance, if requested
by the City, or a certificate or certificates or binders of the respective insurers stating that such
insurance is in force and effect. The Developer shall give written notice to the City at least 30
days before the effective date of any cancellation. In lieu of separate policies, Developer may
maintain a single policy, blanket or umbrella policies, or a combination thereof, having the
coverage required herein, in which event Developer shall deposit with the City a certificate or
certificates of the respective insurers as to the amount of coverage in force upon the Minimum
Improvements.
Section 4.4 Condemnation, Damage or Destruction. In the event that title to and
possession of the Minimum Improvements or any material part thereof shall be taken in
condemnation or by the exercise of the power of eminent domain by any governmental body or
other person (except the City) or the Minimum Improvements is damaged or destroyed, the
Developer shall, with reasonable promptness after such taking, notify the City as to the nature
and extent of such taking. Upon receipt of any Condemnation Award or insurance proceeds the
Developer shall elect to either: (a) use the entire Condemnation Award or insurance proceeds to
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reconstruct the Minimum Improvements (or, in the event only a part of Minimum Improvements
have been taken, then to reconstruct such part) upon the remaining Development Property to the
extent necessary to maintain and continue operations of the Tenant required by the Lease; or (b)
in the event that the condemnation affects or taking or damage or destruction affects the
Development Property but not the Minimum Improvements thereon, retain, for the account of the
Developer, all of the Condemnation Award or insurance proceeds.
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ARTICLE V
PROHIBITIONS AGAINST ASSIGNMENT AND TRANSFER
Section 5.1 Transfer of Substantially All Assets. Except as permitted by and subject
to Section 5.2 hereof, as security for the obligations of the Developer under this Agreement, the
Developer represents and agrees that prior to the Termination Date, the Developer will not
dispose of all or substantially all of its assets; provided that the Developer may sell or otherwise
transfer to any Person all or substantially all of its assets and thereafter be discharged from
liability hereunder if the transferee Person assumes in writing all of the obligations of the
Developer under this Agreement.
Section 5.2 Prohibition Against Transfer of Property and Assignment of TIF Note.
The Developer represents and agrees that prior to the Termination Date:
(1) Except with respect to the Lease and otherwise only for the purpose of obtaining
financing necessary to enable the Developer to perform its obligations with respect to acquiring
the Development Property and constructing the Minimum Improvements under this Agreement
and related improvements and any other purpose authorized by this Agreement, the Developer
has not made or created and will not make or create or suffer to be made or created any total or
partial sale, assignment, conveyance, or lease (other than in the normal course of business), or
any trust or power, or transfer in any other mode or form each a "Transfer") of or with respect to
the Agreement, the TIF Note or the Development Property or any part thereof or any interest
therein, or any contract or agreement to do any of the same, without the prior written approval of
the City. This prohibition on Transfers shall not apply if Developer Transfers the Agreement, the
TIF Note or the Development Property to any entity controlling, controlled by, or under common
control with, Developer, which Transfer may be done by the Developer without limitation, upon
(i) notice to the City and (ii) delivery to the City of all instruments and other legal documents
involved in effecting the Transfer and, with respect to any Transfer of the TIF Note, the items
listed in Section 5.2(2)(e).
(2) The City shall be entitled to require, except with respect to those Transfers under
Section 5.2(1) for which no consent from the City is required or as otherwise provided in the
Agreement, as conditions to any such approval that:
(a) 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.
(b) Any proposed transferee, by instrument in writing satisfactory to the City
and in form recordable among the land records, 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 (unless the Developer agrees
to continue to fulfill those obligations, in which case the preceding provisions of this
Section 5.2(2)(b) shall not apply); provided, however, that the fact that any transferee of,
or any other successor in interest whatsoever to, the Development Property, or any part
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thereof, shall not, for whatever reason, have assumed such obligations or so agreed, shall
not (unless and only to the extent otherwise specifically provided in this Agreement or
agreed to in writing by the City) deprive the City of any rights or remedies or controls
with respect to the Development Property or the construction of the Minimum
Improvements under this Agreement; it being the intent of the parties as expressed in this
Agreement that (to the fullest extent permitted at law and in equity and excepting only in
the manner and to the extent specifically provided otherwise in this Agreement) no
transfer of, or change with respect to, ownership in the Development Property or any part
thereof, or any interest therein, however consummated or occurring, and whether
voluntary or involuntary, shall operate, legally or practically, to deprive or limit the City
of or with respect to any rights or remedies or controls provided in or resulting from this
Agreement with respect to the Minimum Improvements that the City would have had
under this Agreement, had there been no such transfer or change. In the absence of
specific written agreement by the City to the contrary, no such transfer or approval by the
City thereof shall be deemed to relieve the Developer, or any other parry bound in any
way by this Agreement or otherwise with respect to the construction of the Minimum
Improvements, from any of its obligations with respect thereto during the term of this
Agreement.
(c) 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, the TIF Note or the Development Property governed by this
Article V, other than matters approved herein.
(d) No such transfer shall result in the termination of the Tenant's operations
of the Minimum Improvements.
(e) In any event, no Transfer of the TIF Note shall be effective unless the
proposed transferee of the TIF Note shall (i) execute and deliver to the City the
Acknowledgment Regarding TIF Note in the form included as Exhibit 1 to the TIF Note
and (ii) surrender the TIF Note to the City either in exchange for a new fully registered
note or for Transfer of the TIF Note on the registration records for the TIF Note
maintained by the City.
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ARTICLE VI
EVENTS OF DEFAULT
Section 6.1 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, subject to applicable notice and cure
periods:
(1) Failure by the Developer to timely pay or cause to be paid any ad valorem real
property taxes or special assessments assessed with respect to the Development Property.
(2) Failure by the Developer to cause the construction of the Minimum Improvements
to be completed pursuant to the terms, conditions and limitations of this Agreement and/or any
issued permits for the Minimum Improvements.
(3) If the Lease shall be terminated or the operations under the Lease discontinue at
the Minimum Improvements.
(4) Failure of the Developer to observe or perform any other covenant, condition,
obligation or agreement on its part to be observed or performed under this Agreement.
(5) The holder of any mortgage on the Development Property, or any improvements
thereon, or any portion thereof, commences foreclosure proceedings as a result of any default
under the applicable mortgage documents.
(6) If the Developer shall:
(a) file any petition in bankruptcy or for any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under the United
States Bankruptcy Act of 1978, as amended or under any similar federal or state law; or
(b) make an assignment for the benefit of its creditors; or
(c) admit in writing its inability to pay its debts generally as they become due;
or
(d) be adjudicated as bankrupt or insolvent; or if a petition or answer
proposing the adjudication of the Developer, as a bankrupt or its reorganization under any
present or future federal bankruptcy act or any similar federal or state law shall be filed in
any court and such petition or answer shall not be discharged or denied within 60 days
after the filing thereof, or a receiver, trustee or liquidator of the Developer, or of the
Minimum Improvements, or part thereof, shall be appointed in any proceeding brought
against the Developer, and shall not be discharged within 60 days after such appointment,
or if the Developer, shall consent to or acquiesce in such appointment.
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Section 6.2 Remedies on Default. Whenever any Event of Default referred to in
Section 6.1 occurs and is continuing, the City, as specified below, may take any one or more of
the following actions after the giving of 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; provided, however, that if an Event of Default under Section 6.1,
paragraph (2) or (4), cannot be cured within 30 days, then Developer shall have such additional
time, not to exceed 180 days, as reasonably necessary to cure the Event of Default if Developer
is diligently pursing the same to completion. If the Event of Default has not been cured within
said time period:
(1) The City may suspend its performance under this Agreement and the TIF Note
until it receives written assurances from the Developer, deemed adequate by the City, that the
Developer will cure its default and continue its performance under this Agreement, and no
interest shall accrue on the TIF Note for the benefit of the Developer while performance is
suspended in accordance with this Section 6.2.
(2) The City may cancel and rescind this Agreement and the TIF Note.
(3) 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 6.3 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 6.4 No Implied Waiver. In the event any agreement contained in this
Agreement should be breached by any parry and thereafter waived by any other parry, such
waiver shall be limited to the particular breach so waived and shall not be deemed to waive any
other concurrent, previous or subsequent breach hereunder.
Section 6.5 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
it shall, on demand therefor, pay to the City the reasonable fees of such attorneys and such other
expenses so incurred by the City.
Section 6.6 Indemnification of City.
(1) The Developer releases from and covenants and agrees that the City, its governing
body members, officers, agents, including the independent contractors, consultants and legal
counsel, servants and employees thereof (hereinafter, for purposes of this Section, collectively
the "Indemnified Parties") shall not be liable for and agrees to indemnify and hold harmless the
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Indemnified Parties 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 Minimum Improvements.
(2) Except for any willful misrepresentation or any willful or wanton misconduct of
the Indemnified Parties, the Developer agrees to protect and defend the Indemnified Parties, now
and forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit,
action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly
arising from the actions or inactions of the Developer (or if other persons acting on its behalf or
under its direction or control) under this Agreement, or the transactions contemplated hereby or
the Developer's acquisition, construction, installation, and ownership of the Minimum
Improvements.
(3) 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, as the case may be.
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ARTICLE VII
ADDITIONAL PROVISIONS
Section 7.1 Conflicts of Interest. No member of the governing body or other official
of the City shall have any financial interest, direct or indirect, in this Agreement, the
Development Property or the Minimum Improvements, or any contract, agreement or other
transaction contemplated to occur or be undertaken thereunder or with respect thereto, nor shall
any such member of the governing body or other official participate in any decision relating to
the 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 7.2 Titles of Articles and Sections. Any titles of the several parts, articles and
sections of the Agreement are inserted for convenience of reference only and shall be
disregarded in construing or interpreting any of its provisions.
Section 7.3 Notices and Demands. Except as otherwise expressly provided in this
Agreement, a notice, demand or other communication under this Agreement by any parry 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
at:
(a) in the case of the Developer is addressed to or delivered personally to:
Moyer Properties, LLC
2428 N Center Lane
Center City, MN 55012-5501
Attn: Evan Moyer
(b) in the case of the City is addressed to or delivered personally to the City
City of Elk River, Minnesota
13065 Orono Parkway
Elk River, Minnesota 55330
Attn: City Administrator
or at such other address with respect to any such parry as that parry may, from time to time,
designate in writing and forward to the other, as provided in this Section.
Section 7.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one and the same instrument.
Section 7.5 Law Governing. This Agreement will be governed and construed in
accordance with the laws of the State.
Section 7.6 Expiration. This Agreement shall expire on the Termination Date.
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Section 7.7 Provisions Surviving Rescission or Expiration. Sections 6.5 and 6.6 shall
survive any rescission, and any termination or expiration of this Agreement with respect to or
arising out of any event, occurrence or circumstance existing prior to the date thereof.
Section 7.8 Amendment. This Agreement may be amended only by written agreement
approved by the City and the Developer.
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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.
CITY OF ELK RIVER, MINNESOTA
By
Its Mayor
By
Its City Clerk
Signature page to Tax Increment Development Agreement
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MOYER PROPERTIES, LLC
By
Its
Signature page to Tax Increment Development Agreement
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EXHIBIT A
Description of Development Property
The property located in the City of Elk River, Sherburne County, Minnesota legally
described as:
Lot 1, Block 2, Northstar Business Park, according to the recorded plat thereof, Sherburne
County, Minnesota.
PID 75-757-0205
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No. R-1
EXHIBIT B
Form of TIF Note
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER, MINNESOTA
TAXABLE TAX INCREMENT REVENUE NOTE
(SHOOT STEEL, INC. PROJECT)
Rate Date of Issuance Principal Amount
4.0% , 20 $190,000
The City of Elk River, Minnesota (the "City"), hereby acknowledges itself to be indebted
and, for value received, hereby promises to pay the amounts hereinafter described (the "Payment
Amounts") to Moyer Properties, LLC (the "Developer") or its registered assigns (the "Registered
Owner"), but only in the manner, at the times, from the sources of revenue, and to the extent
hereinafter provided.
The principal amount of this Note shall equal from time to time the principal amount
stated above, as reduced to the extent that such principal installments shall have been paid in
whole or in part pursuant to the terms hereof, provided that the sum of the principal amount
listed above shall in no event exceed $190,000 as provided in that certain Tax Increment
Development Agreement, dated as of October 5, 2020, as the same may be amended from time
to time (the "TIF Agreement"), by and between the City and the Developer. Simple, non -
compounding interest shall accrue on the outstanding principal amount of the Note at a rate equal
to 4.0% per annum. Interest shall be computed on the basis of a 360 day year of twelve 30-day
months. Capitalized terms not otherwise defined herein shall have the meanings set forth in the
TIF Agreement.
The amounts due under this Note shall be payable on each February 1 and August 1
commencing August 1, 2022 and thereafter to and including February 1, 2031, or, if the first
should not be a Business Day (as defined in the TIF Agreement) the next succeeding Business
Day (the "Payment Dates"). On each Payment Date the City shall pay by check or draft mailed
to the person that was the Registered Owner of this Note at the close of the last business day of
the City preceding such Payment Date an amount equal to the Tax Increments (hereinafter
defined) received by the City during the 6-month period preceding such Payment Date (or, with
respect to the first Note Payment Date, in the period commencing on the date of issuance of the
TIF Note through the day prior to the first Note Payment Date). All payments made by the City
under this Note shall be applied first to accrued interest and then to principal. This Note is pre-
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payable by the City, without penalty, in whole or in part, on any date. Interest shall not accrue
during the period of any suspension of payments in accordance with the TIF Agreement.
The Payment Amounts due hereon shall be payable solely from 90% of tax increments
(the "Tax Increments") from the Development Property within the City's Tax Increment
Financing (an Economic Development District) District No. 26 (Shoot Steel, Inc. Project) (the
"TIF District") within its Development District No. 1 which are actually paid to the City and
which the City is entitled to retain pursuant to the provisions of Minnesota Statutes, Sections
469.174 through 469.1794, as the same may be amended or supplemented from time to time (the
"TIF Act"). This Note shall terminate and be of no further force and effect following the earlier
of (a) the last Payment Date defined above, (b) any date upon which the City shall have
terminated the TIF Agreement in accordance with its terms, (c) the date the TIF District is
terminated, or (d) the date that all principal and interest payable hereunder shall have been paid
in full.
The City makes no representation or covenant, express or implied, that the Tax
Increments will be sufficient to pay, in whole or in part, the amounts which are or may become
due and payable hereunder. In the event Tax Increments are not sufficient, the City is not
responsible to further fund or reimburse the Developer (or its assigns or creditors) for any such
shortfall. The City is not responsible to fund or reimburse any obligation of the Developer (or its
assigns or creditors) unless expressly stated in the TIF Agreement.
Subject to the terms of the TIF Agreement, the City's payment obligations hereunder
shall be further conditioned on the fact that no Event of Default under the TIF Agreement shall
have occurred and be continuing at the time payment is otherwise due hereunder, but such
unpaid amounts shall become payable if said Event of Default shall thereafter have been cured;
and further, if pursuant to the occurrence of an Event of Default under the TIF Agreement the
City elects, subject to the provisions of Section 6.2 of the TIF Agreement, to cancel and rescind
the TIF Agreement, the City shall have no further debt or obligation under this Note whatsoever.
Reference is hereby made to all of the provisions of the TIF Agreement for a fuller statement of
the rights and obligations of the City to pay the principal of and interest on this Note, and said
provisions are hereby incorporated into this Note as though set out in full herein.
This Note is a special, limited revenue obligation and not a general obligation of the City
and is payable by the City only from the sources and subject to the qualifications stated or
referenced herein. This Note is not a general obligation of the City, and neither the full faith and
credit nor the taxing powers of the City are pledged to the payment of the principal of and
interest on this Note and no property or other asset of the City, save and except the
above -referenced Tax Increments, is or shall be a source of payment of the City's obligations
hereunder.
This Note is issued by the City in aid of financing the Construction of certain Minimum
Improvements pursuant to and in full conformity with the Constitution and laws of the State of
Minnesota, including the TIF Act.
This Note may be assigned only with the consent of the City in accordance with the
Development Agreement. The Note may only be assigned if the assignee shall (i) execute and
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deliver to the City the Acknowledgment Regarding TIF Note in the form included in Exhibit 1
hereto and (ii) surrender this Note to the City either in exchange for a new fully registered Note
or for transfer of this Note on the registration records for the Note maintained by the City. Each
Registered Owner of this Note which assigns, transfers or otherwise grants any interest herein
agrees to comply with all applicable laws in so doing, including without limitation all applicable
state and federal registration and securities laws and regulations. Each permitted assignee shall
take this Note subject to the foregoing conditions and subject to all provisions stated or
referenced herein and the TIF Agreement.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things
required by the Constitution and laws of the State of Minnesota to be done, to have happened,
and to be performed precedent to and in the issuance of this Note have been done, have
happened, and have been performed in regular and due form, time, and manner as required by
law; and that this Note, together with all other indebtedness of the City outstanding on the date
hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the
City to exceed any constitutional or statutory limitation thereon.
IN WITNESS WHEREOF, the City of Elk River, Minnesota, by its City Council, has
caused this Note to be executed by the manual signatures of its Mayor and City Clerk and has
caused this Note to be dated as of
By
Its Mayor
By
Its City Clerk
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CERTIFICATION OF REGISTRATION
It is hereby certified that the foregoing Note was registered in the name of Moyer
Properties, LLC, and that, at the request of the Registered Owner of this Note, the undersigned
has this day registered the Note in the name of such Registered Owner, as indicated in the
registration blank below, on the books kept by the undersigned for such purposes.
NAME AND ADDRESS OF
REGISTERED OWNER
Moyer Properties, LLC
DATE OF SIGNATURE OF
REGISTRATION FINANCE DIRECTOR
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Exhibit I
To Taxable TIF Note
ACKNOWLEDGMENT REGARDING TIF NOTE
The undersigned,
acknowledges that:
a ("Note Holder"), hereby certifies and
A. On the date hereof the Note Holder has [acquired from]/[made a loan (the
"Loan") [to/for the benefit] of] Moyer Properties, LLC, a Minnesota limited liability company
(the "Developer") [secured in part by] the Taxable Tax Increment Revenue Note (Crown Iron
Works Project), a pay-as-you-go tax increment revenue note in the original principal amount of
$ dated , 20 of the City of Elk River, Minnesota (the "City"), a copy of
which is attached hereto ("Note").
B. The Note Holder has had the opportunity to ask questions of and receive all
information and documents concerning the Note as it requested, and has had access to any
additional information the Note Holder thought necessary to verify the accuracy of the
information received. In determining to [acquire the Note]/[make the Loan], the Note Holder has
made its own determinations and has not relied on the City or information provided by the City.
C. The Note Holder represents and warrants that:
1. The Note Holder is acquiring [the Note]/[an interest in the Note as
collateral for the Loan] for its own account, and without any view to resale or other
distribution.
2. The Note Holder is (i) the owner of the Development Property or (ii) a
financial institution or an "accredited investor" as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act of 1933, and as further described in Exhibit lA
hereto and has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of acquiring [and holding the Note] [an interest
in the Note as collateral for the Loan].
3. The Note Holder understands that the Note is a security which has not
been registered under the Securities Act of 1933, as amended, or any state securities law,
and must be held until its sale is registered or an exemption from registration becomes
available.
4. The Note Holder is aware of the limited payment source for the Note and
interest thereon and risks associated with the sufficiency of that limited payment source.
D. The Note Holder understands that the Note is payable solely from certain tax
increments derived from certain properties located in a tax increment financing district, if and as
received by the City. The Note Holder acknowledges that the City has made no representation or
covenant, express or implied, that the revenues pledged to pay the Note will be sufficient to pay,
in whole or in part, the principal and interest due on the Note. Any amounts which have not
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been paid on the Note on or before the final maturity date of the Note shall no longer be payable,
as if the Note had ceased to be an obligation of the City. The Note Holder understands that the
Note will never represent or constitute a general obligation, debt or bonded indebtedness of the
City, the State of Minnesota, or any political subdivision thereof and that no right will exist to
have taxes levied by the City, the State of Minnesota or any political subdivision thereof for the
payment of principal and interest on the Note.
E. The Note Holder understands that the Note is payable solely from certain tax
increments, which are taxes received on improvements made to certain property (the
"Improvements") in a tax increment financing district from the increased taxable value of the
property over its base value at the time that the tax increment financing district was created,
which base value is called "original net tax capacity". There are risk factors in relying on tax
increments to be received, which include, but are not limited to, the following:
1. Value of Improvements. If the contemplated Improvements constructed in
the tax increment financing district are completed at a lesser level of value than originally
contemplated, they will generate fewer taxes and fewer tax increments than originally
contemplated.
2. Damage or Destruction. If the Improvements are damaged or destroyed
after completion, their value will be reduced, and taxes and tax increments will be
reduced. Repair, restoration or replacement of the Improvements may not occur, may
occur after only a substantial time delay, or may involve property with a lower value than
the Improvements, all of which would reduce taxes and tax increments.
3. Change in Use to Tax -Exempt. The Improvements could be acquired by a
parry that devotes them to a use which causes the property to be exempt from real
property taxation. Taxes and tax increments would then cease.
4. Depreciation. The Improvements could decline in value due to changes in
the market for such property or due to the decline in the physical condition of the
property. Lower market valuation will lead to lower taxes and lower tax increments.
5. Non-payment of Taxes. If the property owner does not pay property taxes,
either in whole or in part, the lack of taxes received will cause a lack of tax increments.
The Minnesota system of collecting delinquent property taxes is a lengthy one that could
result in substantial delays in the receipt of taxes and tax increments, and there is no
assurance that the full amount of delinquent taxes would be collected. Amounts
distributed to taxing jurisdictions upon a sale following a tax forfeiture of the property are
not tax increments.
6. Reductions in Taxes Levied. If property taxes are reduced due to
decreased municipal levies, taxes and tax increments will be reduced. Reasons for such
reduction could include lower local expenditures or changes in state aids to
municipalities. For instance, in 2001 the Minnesota Legislature enacted an education
funding reform that involved the state increasing school aid in lieu of the local general
education levy (a component of school district tax levies).
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7. Reductions in Tax Capacity Rates. The taxable value of real property is
determined by multiplying the market value of the property by a tax capacity rate. Tax
capacity rates vary by certain categories of property; for example, the tax capacity rates
for residential homesteads are currently less than the tax capacity rates for commercial
and industrial property. In 2001 the Minnesota Legislature enacted property tax reform
that lowered various tax capacity rates to "compress" the difference between the tax
capacity rates applicable to residential homestead properties and commercial and
industrial properties.
8. Changes to Local Tax Rate. The local tax rate to be applied in the tax
increment financing district is the lower of the current local tax rate or the original local
tax rate for the tax increment financing district. In the event that the Current Local Tax
Rate is higher than the Original Local Tax Rate, then the "excess" or difference that
comes about after applying the lower Original Local Tax Rate instead of the Current
Local Tax Rate is considered "excess" tax increment and is distributed by Sherburne
County to the other taxing jurisdictions and such amount is not available to the City as
tax increment.
9. Legislation. The Minnesota Legislature has frequently modified laws
affecting real property taxes, particularly as they relate to tax capacity rates and the
overall level of taxes as affected by state aid to municipalities.
F. The Note Holder acknowledges that the Note was issued pursuant to a Tax
Increment Development Agreement between the City and the Developer dated ,
2020 ("Development Agreement"), and that the City has the right to suspend payments under
this Note and/or terminate the Note upon an Event of Default under the Development
Agreement.
G. The Note Holder acknowledges that the City makes no representation about the
tax treatment of, or tax consequences from, the Note Holder's acquisition of [the Note]/[an
interest in the Note as collateral for the Loan].
WITNESS our hand this day of , 20
Note Holder:
By
Name:
Its
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Exhibit J A
To Acknowledgment Regarding TIF Note
The Note Holder understands that the representations contained below are made for the purpose of
qualifying the Note Holder as an "accredited investor" as that term is defined in Regulation D of the General Rules
and Regulations under the Act and for the purpose of inducing a sale of securities to the Note Holder. The Note
Holder agrees to furnish any additional information which the City of Elk River, Minnesota (the "City") deems
necessary to verify the answers set forth below. The Note Holder hereby represents that the statement or
statements checked or initialed below are true and correct in all respects. The Note Holder understands that a
false representation may constitute an Event of Default as defined in that certain Tax Increment Development
Agreement, dated as of _, 2020 (as the same may be amended from time to time, the "Development
Agreement"), between the City and Moyer Properties, LLC, a Minnesota limited liability company, or its registered
assigns (the "Developer").
For purposes of this letter an Accredited Investor shall mean any one of the following entities which by
check mark or initials the Note Holder represents that it qualifies:
The Note Holder is a natural person whose individual net worth, or joint net worth with his or her
spouse, exceeds $1,000,000, exclusive of the fair market value of primary residence of the Note
Holder, at the time of the purchase.
The Note Holder is a natural person who had an individual income in excess of $200,000 in each
of the two most recent years or joint income with the Note Holder's spouse in excess of $300,000
in each of those years and who reasonably expects to reach the same income level in the current
year.
The Note Holder hereby certifies that all of the equity owners of the Note Holder qualify as
accredited individual investors. (Please submit a copy of this page countersigned by each such
equity owner if relying on this item).
The Note Holder is a bank or savings and loan association as defined in Sections 3(a)(2) and
3(a)(5)(A), respectively, of the Act acting either in its individual or fiduciary capacity.
The Note Holder is an insurance company as defined in Section 2(13) of the Act.
The Note Holder is an investment company registered under the Investment Company Act of
1940, as amended, or a business development company as defined in Section 2(a)(48) of that Act.
The Note Holder is a Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) of the Small Business Investment Act of 1958.
The Note Holder is an employee benefit plan within the meaning of Title I of the Employee
Retirement Security Act of 1974 and either (check one or more, as applicable):
the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such
Act, which is either a bank, savings and loan association, insurance company, or
registered investment adviser; or
the employee benefit plan has total assets in excess of $5,000,000; or
the plan is a self -directed plan with investment decisions made solely by persons who are
"Accredited Investors" as defined under the Act.
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The Note Holder is a private business development company as defined in Section 202(a)(22) of
the Investment Advisers Act of 1940.
The Note Holder has total assets in excess of $5,000,000, was not formed for the specific purpose
of acquiring the Note and is one or more of the following (check one or more, as appropriate):
an organization described in Section 501(c)(3) of the Internal Revenue Code; or
a corporation; or
a Massachusetts or similar business trust; or
a partnership.
The Note Holder is a trust with total assets exceeding $5,000,000, which was not formed for the
specific purpose of acquiring the TIF Note and whose purchase is directed by a person who has
such knowledge and experience in financial and business matters that he or she is capable of
evaluating the merits and risks of the investment in the TIF Note.
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EXHIBIT C
CERTIFICATE OF COMPLETION
WHEREAS, the City of Elk River, Minnesota and Moyer Properties, LLC, a Minnesota
limited liability company (the "Developer"), have executed a Tax Increment Development
Agreement, dated as of October 5, 2020 (the "Development Agreement"), with respect to the
completion by the Developer of certain improvements (the "Minimum Improvements"), more
specifically described in the Development Agreement; and
WHEREAS, the Developer has performed its obligations under the Development
Agreement to substantially complete the Minimum Improvements in a manner deemed sufficient
by the City to permit the execution of this certificate pursuant to Section 4.2 of the Development
Agreement:
NOW, THEREFORE, this is to certify that the construction of the Minimum
Improvements has been completed in substantial conformance with the terms of the
Development Agreement.
CITY OF ELK RIVER, MINNESOTA
LIZ
Its
Dated: .20
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City of
Elk
River
City of Elk River
City Council
Resolution 20-
A Resolution of the City Council of the City of Elk River approving a
modification to the development program for development district no. I,
establishing an economic development tax increment financing district,
approving a tax increment financing plan therefor (Shoot Steel, Inc. Project),
and authorizing execution of a tax increment development agreement
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk
River, Minnesota, as follows:
Section 1. Recitals.
1.01 The Council of the City of has heretofore established Development
District No. 1 and adopted a Development Program therefor. It has been proposed that
the City adopt a Modification to the Development Program (the "Development Program
Modification") for Development District No. 1 (the "Development District") and
establish Tax Increment Financing (Economic Development) District No. 26 (Shoot
Steel, Inc. Project) (the "TIF District") therein and adopt a Tax Increment Financing Plan
(the "TIF Plan") therefor (the Development Program Modification and the TIF Plan are
referred to collectively herein as the "Program and Plan"); all pursuant to and in
conformity with applicable law, including Minnesota Statutes, Sections 469.124 to
469.133 and Sections 469.174 to 469.1794, all inclusive, as amended, (the "Act") all as
reflected in the Program and Plan, and presented for the Council's consideration.
1.02 The City has performed all actions required by law to be performed prior
to the adoption and approval of the Development Program Modification and the TIF Plan,
including, but not limited to, delivery of the Development Program Modification and the
TIF Plan to the Board of Sherburne County (the "County") and the Board of Independent
School District No. 728 (the "School District") and the holding of a public hearing
thereon following notice thereof published in the City's official newspaper at least 10 but
not more than 30 days prior to the public hearing.
1.03 Certain written reports and other documentation (collectively, the
"Reports") relating to the TIF Plan including the tax increment application made and
other information supplied by Moyer Properties, LLC, a Minnesota limited liability
company (or an affiliate thereof, the "Developer") and Shoot Steel, Inc., a Minnesota
corporation (the "Operator"), as to the activities contemplated therein, have heretofore
been assembled or prepared by staff or others and submitted to the Council and/or made a
part of the City files and proceedings on the TIF Plan. The Reports include data,
information and/or substantiation constituting or relating to (1) why the TIF District
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meets the requirements to be an economic development tax increment financing district
and why the assistance satisfies the so-called "but for" test and (2) the bases for the other
findings and determinations made in this resolution. The Council hereby confirms,
ratifies and adopts the Reports, which are hereby incorporated into and made as fully a
part of this resolution to the same extent as if set forth in full herein.
1.04 The Developer has proposed to acquire, construct and equip an
approximately 20,000 square foot warehouse facility to be leased to the Operator
(collectively, the "Development") and has requested that the City provide tax increment
assistance to pay a portion of the public development costs of the Development.
1.05. There has been presented before the Council, a Tax Increment
Development Agreement between the City and the Developer (the "Agreement"), setting
for the terms and conditions of the Development and provides certain tax increment
assistance (the "TIF Assistance") to the Developer repayable from tax increment
generated from the TIF District. The TIF Assistance constitutes a business subsidy
within the meaning of Minnesota Statutes, Section 116J.993 to 116J.995, as amended (the
"Business Subsidy Act"), and the Agreement includes a "business subsidy agreement" as
required under the Business Subsidy Act.
1.06. The Council has on this date conducted a duly noticed public hearing
regarding the granting of a business subsidy being provided to the Developer in
accordance with the Business Subsidy Act, at which all interested persons were given an
opportunity to be heard.
Section 2. Findings for the Creation of the TIF District and Adoption of a TIF
Plan Therefor
2.01 The Council hereby finds that the land within the Development District is
proper and desirable to establish and develop within the City, its effect will be to carry
out the objectives of the Development District by creating an impetus for the
development of warehouse and related structures in the City, and otherwise promote
certain public purposes and accomplish certain objectives as specified in the Plans. The
Development District has been previously established by the City and is not being
expanded in connection with the establishment of the TIF District. The only modification
to the Development Program relates to the incorporation of the proposed TIF District and
the terms of the TIF Plan therefor.
2.02 The Council hereby finds that the TIF District is in the public interest and
is an "economic development district" within the meaning of Minnesota Statutes,
Section 469.174, Subdivision 12, because it will result in increased employment in the
state, including construction jobs, and it will result in capital investment in the City and
therefore preservation and enhancement of the tax base in the state.
2.03 The Council hereby makes the following additional findings in connection
with the TIF District and hereby incorporates the findings set forth in the TIF Plan herein by
reference as part of this resolution.
(a) The City further finds that the proposed development, in the opinion of the
City Council, would not occur solely through private investment within the reasonably
foreseeable future and, therefore, the use of tax increment financing is deemed necessary.
The specific basis for such finding being:
2.04 The Developer and the Operator have represented that they could
not proceed with the proposed construction of the Development in the TIF District
without tax increment assistance due to the high cost of the construction of the
facility. The property requires additional expenditures related to development of
the site, including acquisition, site improvements, and storm water ponding which
currently do not allow development on the property.
(b) The Council further finds that the TIF Plan conforms to the general plan
for the development or redevelopment of the City as a whole. The specific basis for such
finding being:
The TIF Plan will generally complement and serve to implement policies adopted
in the City's comprehensive plan. The City Council has concluded that the
Development contemplated on the property is in accordance with the existing
zoning for the property and is consistent with the City's comprehensive plan.
(c) The Council further finds that the TIF Plan will afford maximum
opportunity consistent with the sound needs of the City as a whole for the development of
the TIF District by private enterprise. The specific basis for such finding being.
The proposed Development will be used by the Operator, a private enterprise, for
warehousing and related activities and will afford maximum opportunity for the
development of the applicable parcels consistent with the needs of the City. The
Development will maximize the potential of an underutilized site and will increase
the taxable market valuation of the City and warehouse facilities in the City. The
land located within the TIF District requires site improvements including site
preparation, grading, and landscaping, as well as storm water ponding. Given the
nature of the property, there is no reasonable expectation of any development
occurring that would generate as much market value increase as is estimated to be
generated by the proposed Development. Therefore, the City has concluded that
substantial development at this particular site --and hence any significant increase in
market value --is not reasonably expected to occur unless the City provides tax
increment assistance as described in the TIF Plan.
(d) For purposes of compliance with Minnesota Statutes, Section 469.175,
Subdivision 3(b)(2)(ii), the Council hereby finds that the increased market value of the
property to be developed within the TIF District that could reasonably be expected to
occur without the use of tax increment financing is probably $0 (other than amounts due
to inflation), which is less than the increased market value estimated to result from the
proposed development (i.e., approximately $1,330,900) after subtracting the present
value of the projected tax increments for the maximum duration of the TIF District (i.e.,
approximately $214,321) which is approximately $1,116,579. Thus, the use of tax
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increment financing will be a positive net gain to the City, the School District, and the
County, and the tax increment assistance does not exceed the benefit which will be
derived therefrom.
2.05 The provisions of this Section 2 are hereby incorporated by reference into
and made a part of the TIF Plan.
2.06 The Council further finds that the Development Program Modification and
the TIF Plan are intended and, in the judgment of this Council, their effect will be, to
promote the public purposes and accomplish the objectives specified therein.
Section 3. Creation of the TIF District and Approval and Adoption of the
Plans; Interfund Loans.
3.01 The Development Program Modification, the creation of the TIF District
and the adoption of the TIF Plan, as presented to the Council on this date, including
without limitation the findings and statements of objectives contained therein, are hereby
approved, ratified, established, and adopted. The City Administrator, or his or her
designee, is hereby directed to request, in writing, the Sherburne County Auditor to
certify the new TIF District and to file the TIF Plan with the Commissioner of Revenue
and the Office of the State Auditor.
3.02 The Council hereby approves a policy on interfund loans or advances
("Loans") for the TIF District, as follows:
(a) The authorized tax increment eligible costs (including without
limitation out-of-pocket administrative expenses in an amount up to $26,809 and
land acquisition other public improvement costs in an amount up to $241,274)
payable from the TIF District, as its TIF Plan is originally adopted or may be
amended, may need to be financed on a short-term and/or long-term basis via one
or more Loans, as may be determined by the City Finance Director from time to
time.
(b) The Loans may be advanced if and as needed from available
monies in the City's general fund or other City fund designated by the City
Finance Director. Loans may be structured as draw -down or "line of credit"
obligations of the lending fund(s).
(d) Neither the maximum principal amount of any one Loan nor the
aggregate principal amount of all Loans may exceed $268,083 outstanding at any
time.
(e) All Loans mature not later than February 1, 2031 or such earlier
date as the City Finance Director may specify in writing. All Loans may be
prepaid, in whole or in part, whether from tax increment revenue, TIF bond
proceeds or other eligible sources.
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(f) The outstanding and unpaid principal amount of each Loan shall
bear interest at the rate prescribed by the statute (Minnesota Statutes, Section
469.178, Subdivision 7), which is the greater of the rates specified under
Minnesota Statutes, Sections 270C.40 or 549.09 at the time a Loan, or any part of
it, is first made, subject to the right of the City Finance Director to specify a lower
rate (but not less than the City's then -current average investment return for similar
amount and term).
(g) Such Loans within the above guidelines are pre -approved. The
Loans need not take any particular form and may be undocumented, except that
the City Finance Director shall specify the principal amount and interest rate and
maintain all necessary or applicable data on the Loans.
Section 4. Approval of Agreement.
4.01. The Developer has presented the City with a proposal for the construction
of the Development and there has been prepared the Agreement between the City and the
Developer, stating the terms and conditions of the Developer's responsibilities with respect
to the Development and the City's the assistance therefor, which has been presented to the
Council for its consideration.
4.02. The Council hereby approves the Agreement substantially in the form
presented to the Council, including the provisions granting a business subsidy to the
Developer, together with any related documents necessary in connection therewith,
including but not limited to the TIF Note and any documents or certifications referred to in
the Agreement or attached thereto (collectively, the "Development Documents"), and
hereby authorizes the Mayor and City Clerk, in their discretion and at such time, if any, as
they may deem appropriate, to execute the same on behalf of the City, and to carry out, on
behalf of the City, the City's obligations thereunder.
4.03. The approval hereby given to the Development Documents includes
approval of such additional details therein as may be necessary and appropriate and such
modifications thereof, deletions therefrom and additions thereto as may be necessary and
appropriate and approved by legal counsel to the City and by the officers authorized herein
to execute said documents prior to their execution; and said officers are hereby authorized to
approve said changes on behalf of the City. The execution of any instrument by the
appropriate officers of the City herein authorized shall be conclusive evidence of the
approval of such document in accordance with the terms hereof. In the event of absence or
disability of the officers, any of the documents authorized by this Resolution to be executed
may be executed without further act or authorization of the Council by any duly designated
acting official, or by such other officer or officers of the Council as, in the opinion of the
City Attorney, may act in their behalf.
4.04. Upon execution and delivery of the Development Documents, the officers
and employees of the City are hereby authorized and directed to take or cause to be taken
such actions as may be necessary on behalf of the City to implement the Development
Documents, including without limitation the issuance of the Tax Increment Revenue Note
thereunder.
4.05. The Council hereby determines that the execution and performance of the
Development Documents will help realize the public purposes of the Act.
Passed and adopted this day of 2020.
John J. Dietz, Mayor
ATTEST:
Tina Allard, City Clerk