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4.13 SR 07-15-2024The Elk River Vision A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community engagement that encourages and inspires prosperity Request for Action To City Council Item Number 4.13 Meeting Date July 15, 2024 Prepared By Brent O'Neil, Economic Development Director Item Description Resolution 24-41 Amending the Development Agreement and Note for Tax Increment District No. 26 (Shoot Steel) Agreement 24-21 Reviewed by Cal Portner Action Requested Adopt, by motion, Resolution 24-41 amending the Development Agreement for Tax Increment Financing (TIF) No. 26 and TIF Note Agreement 24-21. Background/Discussion Shoot Steel relocated to Elk River in 2021 and was the beneficiary of assistance through TIF No. 26. As part of the assistance, Shoot Steel was required to increase its employee headcount to 13.5. The development agreement, as amended, requires the new jobs to be created by June 2024. Due to post-Covid hardships, the company has been unable to meet those hiring objectives and presently employs five. The headcount at the time of the TIF application was 7.5. The development agreement contains a prescriptive remedy in the event the jobs goal is only partially fulfilled. The number of jobs created or retained are divided by the total job requirement, and the TIF amount is reduced proportionately. The original TIF award was $190,000 and the number of counted positions are approximately 37% of those required, reducing the TIF award to $70,370.37 This action amends the development agreement to memorialize this change and concurrently amends the TIF Note, which is a formal obligation of TIF district proceeds to the developer. The company has stabilized despite not meeting the hiring goals and has a bright future in Elk River. Staff will continue to be engaged with Shoot Steel to support its future plans. Financial Impact The TIF award is reduced by $119,629.63, and the anticipated payback period is shortened from 2031 to 2026. The developer would continue to receive full bi-annual payments until the amended principal amount has been paid in full, which is presently at $53,989.93 outstanding after 2023 and 2024 payments were applied. Mission/Policy/Goal Support business growth in Elk River. Page 214 of 389 Attachments 1. Executed TIF Development Agreement 2. Shoot Steel Second Amendment to Development Agreement 3. Resolution Amending TIF 26 Development Agreement and Note Page 215 of 389 Page 216 of 389 Page 217 of 389 Page 218 of 389 Page 219 of 389 Page 220 of 389 Page 221 of 389 Page 222 of 389 Page 223 of 389 Page 224 of 389 Page 225 of 389 Page 226 of 389 Page 227 of 389 Page 228 of 389 Page 229 of 389 Page 230 of 389 Page 231 of 389 Page 232 of 389 Page 233 of 389 Page 234 of 389 Page 235 of 389 Page 236 of 389 Page 237 of 389 Page 238 of 389 Page 239 of 389 Page 240 of 389 Page 241 of 389 Page 242 of 389 Page 243 of 389 Page 244 of 389 Page 245 of 389 Page 246 of 389 Page 247 of 389 Page 248 of 389 Page 249 of 389 Page 250 of 389 Page 251 of 389 Page 252 of 389 Page 253 of 389 Page 254 of 389 Page 255 of 389 EL185\61\949053.v3 SECOND AMENDMENT TO TAX INCREMENT DEVELOPMENT AGREEMENT THIS SECOND AMENDMENT TO TAX INCREMENT DEVELOPMENT AGREEMENT (the “Second Amendment”) is made and entered into this ____ day of July, 2024, 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, as amended by that First Amendment to Tax Increment Development Agreement, dated as of June __, 2023 (together, “Original Agreement”), whereby the City provided the Developer with a Taxable Tax Increment Revenue Note (Shoot Steel, Inc. Project) in the amount of $190,000 (the “Original TIF 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 relocate 7 full-time and 1 part-time existing jobs to the Minimum Improvements and create at least 6 full-time equivalent jobs at an average salary of at least $18/hour excluding benefits (the “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 May 3, 2021; WHEREAS, following a public hearing held on May 5, 2023, in compliance with the Business Subsidy Act, the City extended the Compliance Date by one year to May 3, 2024 (the “Amended Compliance Date”) by adopting the First Amendment; WHEREAS, the Developer has informed the City that the Tenant will not be able to meet the Goals by the Amended Compliance Date; as of the Amended Compliance Date the Tenant will have only created or relocated 5 full-time equivalent jobs at an average salary of at least $18/hour excluding benefits; WHEREAS, due to the Tenant’s failure to meet the Goals, the City and the Developer desire to amend the Original Agreement to reduce the tax increment assistance provided to the Developer pursuant to Section 116J.994, subd. 6 of the Business Subsidy Act; the tax increment assistance shall be prorated to reflect the partial fulfillment of the Goals; Page 256 of 389 2 EL185\61\949053.v3 WHEREAS, the City has already made principal and interest payments on the Original TIF Note to the Developer and those previous payments shall be taken into account when calculating the new tax increment assistance amount; WHEREAS, capitalized terms used in this Second 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. Definitions. The definitions of TIF Note in the Original Agreement is hereby deleted and replaced with the following: TIF Note means the Amended and Restated 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 2. Amendment to Section 3.1 of the Agreement. Section 3.1 of the Original Agreement is hereby deleted and replaced with the following: 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 $53,989.93 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. 3. Amendment to Section 3.2 of the Agreement. Section 3.2 of the Original Agreement is amended to read as follows: 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 Page 257 of 389 3 EL185\61\949053.v3 TIF Note in substantially the form attached to this Agreement as Exhibit B in an amount not to exceed $53,989.93 subject to the following conditions: No amendments are made to subsections (1)-(8) in Section 3.2. 4. Amendment to the Form of TIF Note. The Form of the Original TIF Note attached as Exhibit B to the Original Agreement shall be replaced with the amended and restated Form of TIF Note attached hereto as Exhibit A (the “Amended TIF Note”). The Amended TIF Note represents a proportionate reduction of the principal amount of Original TIF Note based on the number of jobs created or retained compared to the job and wage goals set forth in the Subsidy Agreement ($70,370.37) less principal payments that have already been made by the City to the Developer ($3,504.21). Interest shall be paid on the Amended TIF Note assuming that the principal amount of the Original TIF Note was $53,989.93 on the date of issuance. Interest shall be calculated in the sole discretion of the City. The Original TIF Note shall have no further force or effect. 5. Capitalization. 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 Agreement shall refer to the Original Agreement, as amended by this Second Amendment, and as may be further amended and supplemented. 6. Amendments. The amendments made to the Agreement, as amended by this Second Amendment, shall be effective as of the date hereof. 7. Effectiveness. Except as hereby amended, all other terms and conditions of the Original Agreement shall remain in full force and effect. Page 258 of 389 S-1 EL185\61\949053.v3 IN WITNESS WHEREOF, the City and the Developer have caused this Second Amendment to Tax Increment Development Agreement to be duly executed in their names and on their behalf, all on or as of the date Second above written. CITY OF ELK RIVER, MINNESOTA By Mayor By City Clerk Page 259 of 389 S-2 EL185\61\949053.v3 MOYER PROPERTIES, LLC By Its ______________________ Second Amendment to Tax Increment Development Agreement Page 260 of 389 A-1 EL185\61\949053.v3 EXHIBIT A Form of TIF Note No. R-1 UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF SHERBURNE CITY OF ELK RIVER, MINNESOTA AMENDED AND RESTATED TAXABLE TAX INCREMENT REVENUE NOTE (SHOOT STEEL, INC. PROJECT) Rate Date of Issuance Principal Amount 4.0%July__, 2024 $53,989.93 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 $53,989.93, as provided in that certain Tax Increment Development Agreement, dated as of October 5, 2020, as amended by that First Amendment to Tax Increment Development Agreement, dated June __, 2023, and that Second Amendment to Tax Increment Development Agreement, dated July __, 2024 (collectively, 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. The principal amount of Note represents a proportionate reduction of the principal amount of Original TIF Note (as defined in the TIF Agreement) based on the number of jobs created or retained compared to the job and wage goals set forth in the Subsidy Agreement ($70,370.37) less principal payments that have already been made by the City to the Developer on the Original TIF Note ($3,504.21). Interest shall be paid on the Amended TIF Note assuming that the principal amount of the Original TIF Note was $70,370.37 on the date of issuance. Interest shall be calculated in the sole discretion of the City. 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, 2024 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 Page 261 of 389 A-2 EL185\61\949053.v3 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- 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. Page 262 of 389 A-3 EL185\61\949053.v3 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 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 Page 263 of 389 A-4 EL185\61\949053.v3 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 DATE OF REGISTRATION SIGNATURE OF FINANCE DIRECTOR Moyer Properties, LLC ___________ ________________ ________________ __________________________ __________________________ __________________________ __________________________ __________________________ __________________________ __________________________ __________________________ __________________________ __________________________ __________________________ __________________________ Page 264 of 389 A-5 EL185\61\949053.v3 Exhibit 1 To Taxable TIF Note ACKNOWLEDGMENT REGARDING TIF NOTE The undersigned, ______________ a ___________ (“Note Holder”), hereby certifies and acknowledges that: 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 1A 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 Page 265 of 389 A-6 EL185\61\949053.v3 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 party 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). Page 266 of 389 A-7 EL185\61\949053.v3 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 October 5, 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 ________________________ Page 267 of 389 A-8 EL185\61\949053.v3 Exhibit 1A 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 October 5, 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. Page 268 of 389 A-9 EL185\61\949053.v3 ______ 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. Page 269 of 389 EL185\61\949054.v2 CITY OF ELK RIVER COUNTY OF SHERBURNE STATE OF MINNESOTA RESOLUTION NO. _____ RESOLUTION APPROVING A SECOND AMENDMENT TO TAX INCREMENT DEVELOPMENT AGREEMENT WITH MOYER PROPERTIES, LLC AND AN AMENDED TIF NOTE THEREIN WHEREAS, on October 5, 2020, the City Council (the “Council”) of the City of Elk River, Minnesota (the “City”), entered into a Tax Increment Development Agreement, (the “Original Agreement”) with Moyer Properties, LLC, a Minnesota limited liability company (the “Developer”), pursuant to which the City provided a taxable tax increment revenue note (the “Note”) to the Developer 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 (the “Minimum Improvements”) to be owned by the Developer and leased to Shoot Steel, Inc., a Minnesota corporation (the “Tenant”); and WHEREAS, the Original Agreement included a business subsidy agreement under Minnesota Statutes, Sections 116J.993 to 116J.995, as amended (the “Business Subsidy Act”), which required the Tenant relocate 7 full-time and 1 part-time existing jobs to the Minimum Improvements and create at least 6 full-time equivalent jobs at an average salary of at least $18/hour excluding benefits (the “Goals”), as stipulated in a certain lease between the Developer and the Tenant, prior to the compliance date as set forth in the Original Agreement (the “Compliance Date”); and WHEREAS, following a public hearing held on May 5, 2023, in compliance with the Business Subsidy Act, the City extended the Compliance Date by one year to May 3, 2024 (the “Amended Compliance Date”) by executing a First Amendment to Tax Increment Development Agreement, between the Developer and the City (the “First Amendment” and, together with the Original Agreement, the “Agreement”); WHEREAS, the Developer has informed the City that the Tenant will not be able to meet the Goals by the Amended Compliance Date; WHEREAS, due to the Tenant’s failure to meet the Goals, the City and the Developer desire to amend the Agreement (the “Amendment”) to reduce the tax increment assistance provided to the Developer pursuant to Section 116J.994, subd. 6 of the Business Subsidy Act; the tax increment assistance shall be prorated to reflect the partial fulfillment of the Goals and previously made payments to the Developer by the City under the Note, and the Amended and Restated Tax Increment Revenue Note (the “Amended Note”) shall be issued in the amount of $53,989.93; WHEREAS, the City believes that approval of the Amendment and the Amended Note Page 270 of 389 EL185\61\949054.v2 therein is in the best interest of the City and its residents. Now, therefore, be it resolved by the City Council (the “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 the Amended Note and 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. Prior to delivery of the Amended Note, the City shall require the Developer return the Note and execute the Acknowledgement Regarding TIF Note attached to the Amended Note. 4. 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. Approved by the City Council of the City of Elk River, Minnesota this 15th day of July, 2024. Mayor ATTEST: City Clerk Page 271 of 389