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7.2 SR 06-05-2023 Request for Action To Item Number Mayor and City Council 7.2 Agenda Section Meeting Date Prepared by Public Hearings June 5, 2023 Brent O’Neil, Economic Development Director Item Description Reviewed by Extension of Tax Increment Finance District No. 26 Cal Portner, City Administrator (TIF 26) Job Creation Period Reviewed by Action Requested Approve, by motion, a resolution extending the compliance period of TIF 26 by one (1) year and authorizing execution of an amendment to the TIF 26 agreement. Background/Discussion TIF 26 was created in 2020 to support Moyer Properties and Shoot Steel constructing a new industrial facility at 17565 Tyler Street. Shoot Steel committed to relocating operations to Elk River and increasing its headcount to 13 full-time employees within two years of the building being completed on June 3, 2021. We have been notified by the company that economic conditions, and specifically the post-Covid spike in steel prices, have impacted their ability to meet its growth and payroll goals. The Business Subsidy Statute allows for a one-year extension of the job creation compliance period. We are recommending the compliance period be extended to June 3, 2024, to allow the company additional time to achieve its goals. Financial Impact N/A Mission/Policy/Goal Support industrial development and job creation. Attachments  Resolution  First Amendment to TIF 26 Agreement The Elk River Vision A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community engagement that encourages and inspires prosperity. Updated: January 2023 City of Elk River City Council Resolution 23-____ A Resolution of the City Council of the City of Elk River Approving a First Amendment to Tax Increment Development Agreement with Moyer Properties, LLC and a Compliance Date Extension to a Business Subsidy Provided Therein WHEREAS, on October 5, 2020, pursuant to a Tax Increment Development Agreement, (the “Agreement”), the City Council (the “Council”) of the City of Elk River, Minnesota (the “City”) provided a taxable tax increment revenue note (the “Note”) to Moyer Properties, LLC, a Minnesota limited liability company (the “Borrower”), in the amount of $190,000, to finance a portion of the land acquisition and site improvement costs related to the development of a 20,000 square foot warehouse facility in the City to owned by the Borrower and leased to Shoot Steel, Inc., a Minnesota corporation (the “Tenant”); and WHEREAS, the Agreement includes a business subsidy agreement under Minnesota Statutes, Sections 116J.993 to 116J.995, as amended (the “Business Subsidy Act”), which set forth certain job and wage goals to be satisfied by the Tenant, as stipulated in a certain lease between the Borrower and the Tenant, prior to the compliance date as set forth in the Agreement (the “Compliance Date”); and WHEREAS, the Borrower has requested an extension of the Compliance Date for up to one year; and WHEREAS, the Council held a duly noticed public hearing on this date hereof as required by Section 116J.994, subdivision 5 of the Business Subsidy Act regarding the extension of the Compliance Date; and WHEREAS, the City and the Borrower desire to amend the Agreement to reflect the extension of the Compliance Date as described in a First Amendment to the Tax Increment Development Agreement (the “Amendment”); and WHEREAS, the City believes that approval of the Amendment is in the best interest of the City and its residents. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River, Minnesota, as follows: 1. The Council hereby approves the Amendment in substantially the form presented to the Council, together with any related documents necessary in connection therewith (collectively, the “Amendment Documents”), and hereby authorizes the Mayor and City Clerk to execute any such Amendment Documents to which the City is a party, on behalf of the City, and to carry out, on behalf of the City, the obligations of the City thereunder when all conditions precedent thereto have been satisfied. 2. The approval hereby given to the Amendment 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 or by the City 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 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 to be executed by this resolution 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. 3. Upon execution and delivery of the Amendment 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 Amendment Documents, when all conditions precedent thereto have been satisfied. th Passed and adopted this 5 day of June 2023. John J. Dietz, Mayor ATTEST: Tina Allard, City Clerk FIRST AMENDMENT TO TAX INCREMENT DEVELOPMENT AGREEMENT THIS FIRST AMENDMENT TO TAX INCREMENT DEVELOPMENT AGREEMENT (the “Amendment”) is made and entered into this ____ day of June, 2023, 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”), and their permitted assigns. RECITALS WHEREAS, the City and the Developer entered into that certain Tax Increment Development Agreement, dated as of October 5, 2020 (the “Original Agreement”), whereby the City provided the Developer with a taxable tax increment revenue note in the amount of $190,000 (the “Note”) to finance a portion of the land acquisition and site improvement costs related to the development of a 20,000 square foot warehouse facility in the City (the “Minimum Improvements”) to owned by the Borrower and leased to Shoot Steel, Inc., a Minnesota corporation (the “Tenant”); WHEREAS, the Original Agreement contains a Business Subsidy Agreement (the “Subsidy Agreement”) which sets forth certain job and wage goals in accordance with Minnesota Statutes, Section 116J.993 to 116J.995, as amended (the “Business Subsidy Act”). The Subsidy Agreement required the Tenant to meet certain job and wage goals within two years of the Benefit Date (the “Compliance Date”) pursuant to a certain lease between the Developer and the Tenant. The Original Agreement defined the Benefit Date as the date on which a certificate of occupancy is issued by the City for the Minimum Improvements and the City has determined the Benefit Date to be June 3, 2021; WHEREAS, in accordance with the Business Subsidy Act, the City may, after a public hearing, extend the Compliance Date by up to one year; WHEREAS, the City has determined, after a duly noticed public hearing held on June 5, 2023, to extend the Compliance Date by one year; WHEREAS, the City and the Developer desire to amend the Original Agreement to extend the Compliance Date to June 3, 2024; WHEREAS, capitalized terms used in this Amendment and not otherwise defined herein have the meanings given to them in the Original Agreement; and 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: 1. Amendment to Section 3.4(1) of the Original Agreement. Section 3.4(1) of the Original Agreement is amended to read as follows. EL185\\61\\874669.v1 (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 three years from the Benefit Date (“Jobs”). 2. Any capitalized terms used herein but not otherwise defined shall have the meanings assigned to such terms in the Original Agreement. Any references to the “Agreement” or “this Agreement” in the Original Agreement shall refer to the Original Agreement, as amended by this Amendment, and as may be further amended and supplemented. 3. The amendments made to the Original Agreement, as amended by this Amendment, shall be effective as of the date hereof. 4. Except as hereby amended, all other terms and conditions of the Original Agreement shall remain in full force and effect. 2 EL185\\61\\874669.v1 IN WITNESS WHEREOF, the City and the Developer have caused this Amendment to Tax Increment Development Agreement to be duly executed in their names and on their behalf, all on or as of the date first above written. CITY OF ELK RIVER, MINNESOTA By Mayor By City Clerk S-1 EL185\\61\\874669.v1 MOYER PROPERTIES, LLC By Its ______________________ Amendment to Tax Increment Development Agreement S-2 EL185\\61\\874669.v1