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6.2. SR 12-18-2006 Item Description Consider Approving Tax Abatement and Business Subsidy with United HealthCare Services, Inc. - Public Hearin Item Number 6.2 Prepared by Catherine Mehelich, Director of Economic Develo ment Reviewed by Scott Clark, Community Development Director City of Elk River REQUEST FOR COUNCIL ACTION Agenda Section Meeting Date Community Development December 18, 2006 Introduction A request for property tax abatement has been made by United HealthCare Services, Inc. for their proposed data center project in Elk River. The attached staff report describes the proposed project, tax abatement request and analysis that were reviewed by the EDA on December 8th. The EDA has recommended the Council approve the tax abatement and business subsidy that has been negotiated. Discussion State statute requires local government agencies to hold a public hearing to receive comment on the proposed tax abatement and business subsidy. Financial Impact The proposed data center project will significandy increase the city's tax base by adding approximately $15-million of new taxable value. The City's financial assistance to the project is limited to 5% of the project's completed market value, and is estimated to be extinguished in a 7 year term. Attachments . Staff report dated December 8, 2006 regarding EDA Recommendation . Public hearing notice . Resolution Approving Property Tax Abatements and Authorizing Execution of a Tax Abatement and Business Subsidy Agreement . DRAFT Tax Abatement and Business Subsidy Agreement Action Requested Following the public hearing, staff recommends that the Council consider approval of the attached resolution approving property tax abatements and authorizing execution of a tax abatement and business subsidy agreement. Council Action Motion by _ Second by _ Vote Follow Up S: \Industrial Siting\ UHC Data Center\ Tax Abatement\REQUEST COUNCIL ACTION.12.18.06.uhc.doc MEMORANDUM FROM: Economic Development Authority Catherine Mehelich, Director of Economic Developme{Jt! December II, 2006 TO: DATE: SUBJECT: Consider Tax Abatement Application and Recommendation to City Council - United HealthCare Service, Inc. Technology Center Project Issue Pursuant to direction received from the EDA at its March 6, 2006 special meeting, staff has been working with United HealthCare Services, Inc. representatives over the past year with regard to their proposed data center development and request for tax abatement. The company has recendy submitted an application for the City's consideration of tax abatement. The EDA is asked to review the company's request and consider recommending to the City Council approval of the tax abatement request and business subsidy. Attachments . March 6, 2006 Special Meeting Minutes of the EDA and Staff Report . City of Elk River Tax Abatement and Business Subsidy Policies . United HealthCare Services, Inc. Tax Abatement Application, November 20, 2006 . Tax Abatement Application Review Worksheet . Preliminary Site Plan Project Description United HealthCare provides resources, services and technologies for the health care industry. Headquartered in Minnetonka, United HealthCare offers products and services through its family of businesses; United Health Technologies, United HealthCare, Uniprise, Ingenix, AmeriChoice, Ovations and Specialized Care Services. The company has indicated the need to construct a new data technology center facility that will increase the company's capabilities and capacities for improved availability and disaster recovery for its computing systems, and an active configuration with its primary data center in Plymouth. S:\lndustrial Siting\UHC Data Center\Tax Abatement\12.11.06 EDA staffreport.doc Consider Tax Abatement for United HealthCare Services, Inc. Technology Center Project December II, 2006 EDA Meeting Page 2 00 The proposed project includes the acquisition of approximately 21 acres (a 3.88 privately owned parcel and a 16.88 acre portion of the county owned parcel) located at the southeast intersection of Business Center Drive and Waco Street. The company proposes to construct approximately 189,000-square foot technology center, as indicated on the attached preliminary site plan. In addition, the site plan indicates an area for future building expanslOn. Tax Abatement Request At is March 6, 2006 special meeting the EDA discussed the issue of potentially offering a financial incentive for the data technology center project based on the preliminary information that was available at the time. Based on the significant tax base to be generated as a result of the project, the EDA unanimously approved a motion directing staff to offer the company pay-as-you-go tax abatement from the city of up to 5% of the assessed market value with a $l-million cap. Pursuant to EDA direction, staff negotiated a proposal that included the offer of tax abatement. In August 2006 the company notified staff of their selection of the City of Elk River as the location for the technology center project. United HealthCare Services, Inc. has requested Tax Abatement from the City in an amount up to $850,000, with an understanding that the maximum amount would be based on 5% of the assessed market value (upon completion). Staff recommends that the tax abatement be provided on a pay-as-you-go basis, which means that upon receipt of the company's annual real estate taxes by the city, the company would receive reimbursement of 100% of the city portion of real estate taxes derived from the property for up to 10-years or until the maximum amount is reached (estimated to be 7-years). As discussed at the EDA meeting in March, the market value for this type of project has not yet been established. Therefore the actual amount of assistance is dependant on a percentage of the assessed market value upon completion a anuary 2009 assessment, payable 2010). The following table indicates the level of tax base generated for the city and level of tax abatement to the company depending on the final market value determination: Estimated Market Value $11.3 million $14 million $17 million $20 million ($60/sf) ($75/Sf) ($90/sf) ($111/sf) Maximum Abatement $567,000 $708,750 $850,000 $850,000 Allowed at 5% of MV Total Annual Tax Payable $399,000 $499,000 $599,000 $738,000 (City, County, School, State, etc) Annual City Portion $94,000 $118,000 $141,000 $174,000 Est. Abatement Term 7 years 7 years 7 years 6 years * Estimates based on 2006 Proposed Tax Rates and 189,000-square foot building. Consider Tax Abatement for United HealthCare Services, Inc. Technology Center Project December II, 2006 EDA Meeting Page 3 of3 The company has submitted a complete application to the City for Tax Abatement. Staff has evaluated the application based on the City's attached Tax Abatement Application Review Worksheet to measure the strength of the project against the city's goals and objectives for the use of Tax Abatement. The project scored 44 out of 45 possible points, which equates to a "highly desirable" project. The provision of Tax Abatement assistance to this project would qualify, under the City's Tax Abatement Policy, as a "location incentive", due to the significant tax base, the creation of higher paying jobs and that it is likely to assist in the marketing and attraction of additional desired developments, rather than based on butfor financial need and job creation criteria. In addition, staff believes that without the offering of the assistance, the company would not have selected the City of Elk River as the location for the technology center project. lob and Wage Goals The Minnesota Business Subsidy Law requires projects which receive over $25,000 of public financing assistance to meet job and wage goals as established by the city. A requirement of the financing assistance will include a commitment from the company for the creation of a minimum of 20 new full-time positions at a minimum hourly wage, exclusive of benefits required by law, of $24.00 within two years of occupancy. The minimum hourly wage rate that the company is committing as a result of the project exceeds the City's Business Subsidy Policy minimum hourly wage criteria of $15.00. Requested Action Staff requests that the EDA recommend to the City Council approval of providing Tax Abatement assistance to United HealthCare Services, Inc. in the form of a pay-as-you-go Tax Abatement note for up to 5% of the assessed market value up to a maximum of $850,000 with the company receiving 100% of the annual city portion of real estate taxes for a maximum period of up to 10 years. A requirement of the financing assistance will include a commitment from the company for the creation of 20 new full-time positions at a minimum hourly wage of $24.00 within two years. A City Council public hearing has been scheduled for December 18, 2006 to consider providing Tax Abatement and business subsidy to the United HealthCare Services, Inc. technology center project. SPECIAL MEETING OF THE ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY HELD AT THE ELK RIVER CITY HALL MONDAY, MARCH 6, 2006 Members Present: President GongoIl, Commissioners Dwyer, Farber, Gumphrey, Klinzing, Motin and Tveite Members Absent: None Staff Present: Community Development Director Scott Clark, Director of Economic Development Catherine Mehelich, Assistant Director of Economic Development Heidi Steinmetz, City Administrator Lori Johnson, and Recording Secretary Jessica Miller 1. Call Meeting To Order Pursuant to due call and notice thereof, the meeting of the Economic Development Authority was called to order at 5:45 p.m. by President Gongoll. 2. Consider Agenda It was the consensus of the Economic Development Authority to approve the March 6, 2006 agenda. 3. Discuss Potential Financial Incentive for a Business Seeking Location with the City Director of Economic Development Catherine Mehelich explained that a business that is seeking location within the City of Elk River has recently requested financial assistance from the city. Ms. Mehelich stated that Elk River is among the top two or three communities in which the company is considering a location. Ms. Mehelich indicated that the company wishes to remain anonymous until a community is selected. Ms. Mehelich described the company and indicated that the company has identified an approximately 20-acre parcel of land in the city to acquire for the construction of an 180,000 square foot data technology center. She stated that the company's estimated cost of the project is $125 million including land, design and construction, equipment, and extensive mechanical systems and that the company's end real estate value may have a range of $10- $20 million. She stated that the company anticipates a minimum of 15 full-time employment positions within the project with an average annual salary of $70,000 each. She noted that the company is Minnesota based and among the top 50 Fortune 500 ranking and one of the largest employers in the state. Ms. Mehelich described the issues that the EDA needs to consider with this request: . This request does not fit the city's tax abatement application model for the financial "but-for" test although it appears that "but-for" the offering of assistance this company would not select Elk River as a location but rather a community that is offering a location incentive. Economic Development Authority Minutes March 6, 2006 - Special Meeting Page 2 . Job creation is not a significant component to this project, but would result in significant tax base generation. This request should be considered as a "lbcation incentive" for the purpose of tax base generation and not based on a proven financial need nor on a large number of jobs. . The market value hasn't been established for this project. Staff estimates a market value range of $10.8 million to $13.5 million for the proposed 180,000 square foot project. . Based on past industrial projects, an average of 20% total assistance was provided to market value, although market value previously has not been a measurement for the amount of assistance to be provided. Ms. Mehelich indicated that staff is requesting EDA direction on this request and is not looking to set a formal policy. She stated that if the EDA desires to provide a location incentive for the proposed project in the form of a pay-as-you-go tax abatement, then staff would like direction from the EDA on the percentage of financial assistance to the end market value and a cap dollar amount since the market value of the project is undetermined at this time. Ms. Mehelich reviewed a range of financial assistance amounts based on a range- of 3% to 6% of financial assistance to market value. Community Development Director Scott Clark explained that staffs struggle with this request is that the company has indicated the real estate value will be $20 million but it is difficult to compare with other data centers of its kind. Mr. Clark indicated that if the EDA provides direction on a percentage of assistance, staff can go back to the company with a range of assistance the city will provide. Commissioner Tveite stated that he believes there are risks and opportunities with this project-He stated that a large risk is if the Utilities provides electricity to that area and the company leaves before the electric bonds are paid off. He stated that one of the opportunities will be the increased marketability of Elk River if we are home to such a large, well known company. Commissioner Tveite indicated that he is in support of providing a location incentive and believes 5% of the market value is fair. Councilmember Dietz spoke on behalf of the Utilities Commission. He stated that Elk River Municipal Utilities is spending $3.5 million to provide a direct feeder line to the Target Technology Center and they have agreed to spend an additional $3.5 million to provide the same for this company. Mr. Dietz explained that there are risks for the Utilities if they provide a direct feeder line for this company. He stated that the Utilities will have to use electric revenue bonds and if the company should leave prior to those being paid off, the Utilities would have to request assistance to pay the bonds from the city. He noted that there will be no other use for the direct feeder line in this area should this company leave Elk River. Mr. Dietz explained that if the Target Technology Center were to relocate there would be other uses for the direct feeder line that was installed on that side of town. Councilmember Dietz indicated that the Utilities agreeing to spend $3.5 million to install a direct feeder line should be enough incentive and that he is not in favor of providing any additional incentive to this company. He noted that Target did not receive any incentives to come to Elk River. Commissioner Dwyer indicated that he agrees with Commissioner Tveite that the company should receive some sort of location incentive. He stated that he believes that Elk River will Economic Development Authority Minutes March 6, 2006 - Special Meeting Page 3 gain in its appeal with each additional large company that locates here. Commissioner Dwyer explained that this is an opportunity to increase the city's tax base which the County and the School District will benefit from. Mr. Dwyer noted that he appreciates that the Utilities Commission has offered to install the direct feeder lines for both Target and this company. Mr. Clark stated that if it is the consensus of the EDA that they would like to provide a financial incentive to the company, staff can begin negotiations with the company. Mr. Clark stated that if staff recognizes that there is a larger risk than originally anticipated, they will return to the EDA and may request that no financial incentive be offered. Commissioner Motin indicated that he is not opposed to providing financial assistance to the company but is concerned that we are filling the industrial area with companies that do not offer many jobs. He stated that he believes offering the company 4%-5% is fair and if they request additional incentives, they can request assistance from the County. President Gongoll stated that he concurs that the city should offer some financial incentive for the company and believes that up to 6% would be fair but would like the amount capped. He stated that eventhough this company will not create many jobs, it will have other benefits to the city. Commissioner Klinzing explained that she also concurs that the city should offer the company an incentive of up to 5% and if the company requests additional assistance they should request assistance from the County since the County is not currently offering any incentive to this company. She noted that she doesn't feel that companies should need incentives to locate in Elk River and that she feels that the city continues to get caught in bidding wars with other communities. MOVED BY COMMISSIONER TVEITE AND SECONDED BY COMMISSIONER KLINZING TO DIRECT STAFF TO OFFER THE COMPANY PAY-AS-YOU-GO TAX ABATEMENT FROM THE CITY OF UP TO 5% OF THE ASSESSED MARKET VALUE WITH A $1 MILLION CAP. MOTION CARRIED 7-0. 4. Adjournment There being no other business, President Gongoll adjourned the special meeting of the Elk River Economic Development Authority adjourned at 6: 17 p.m. f[dItk essica Miller Recording Secretary MEMORANDUM TO: Economic Development Authority FROM: Catherine Mehelich, Director of Economic Development Scott Clark, Community Development Director DATE: March 6, 2006 SUBJECT: Discuss Potential Financial Incentive for a Business Seeking Location within the City of Elk River Attachment . Table: Recent Assisted Industrial Development Projects Background A business that is seeking location within the City of Elk River has recently requested financial assistance from the city. The purpose of the special EDA meeting is not to establish a formal policy on this type of request but rather to provide staff direction in the response for this particular request. As with most projects timing is of the essence as the company wishes to start construction by August 2006. It is staffs understanding that Elk River is now among the top two or three communities in which the company is considering a location and they are attempting to expedite their selection process. The company wishes to remain anonymous until a community is selected. Approximately two months ago staff was contacted by the company's site selection consultant. The company has identified approximately 20-acres in the City to acquire for the construction of a 180,000 square foot data technology center. The company's estimated cost of the project is $125 million including land, design and construction, equipment and extensive mechanical systems, albeit that the end real estate value may have a range of $10-20 million. The company anticipates a minimum of 15 full-time employment positions within the project with an average annual salary of $70,000 each. The company is :Minnesota based and among the top 50 Fortune 500 ranking and one of the largest employers in the state. Issue There are a number of issues for the EDA to consider with this particular request, the following provides background information for policy consideration and discussion: Discuss Location Incentive for Prospect March 6, 2006 Special EDA Meeting Page 2 of3 1) In the past the city's use of public fmancial assistance has most typically been to expedite the development of industrial property in the city with the key component being job creation. Typically financial assistance requests are reviewed based upon the number of jobs to be created at a minimum hourly wage of $15.00jhour and upon completion of a financial gap analysis or "but-for" test. A "but-for" test is not required by state statute for the city's use of tax abatement, although the City of Elk River's policy normally requires it. This particular request does not fit the city's tax abatement application model for the financial "but-for" test although it appears that "but-for" the offering of assistance this company would not select Elk River as a location but rather a community that is offering a location incentive. 2) This particular request is different from requests in the past in that job creation is not a significant component to the project. However this project would result in significant tax base generation. Therefore this request should be considered as a "location incentive" for the purpose of tax base generation and not based on a proven financial need nor on a large number of jobs. 3) When considering this particular project it is important to note that the market value hasn't been established. The company has estimated a market value upon completion of $20 million. Based on staff's research of a similar use in Brooklyn Park the value would range from $60-75 per square foot, which equates to a range of$10.8 to $13.5 million for the proposed 180,000 square foot project. The following table indicates the level of tax base generated for the city depending on the final market value determination: Estimated Market Value $10.8 million $13.5 million $20 million ($60/ sf) ($75/sf) ($l11/sf) Total Annual Tax Payable $385,000 $482,000 $714,000 (City, County, State, Schoo~ etc) Annual City Portion $94,000 $118,000 $175,000 Annual County Portion $93,000 $117,000 $173,000 * Estimates based on 2006 Proposed Tax Rates 4) The attached table indicates recent assisted industrial development projects in which the city and county provided financial assistance. The table includes the percentage of financial assistance to the estimated market value as a result of the project. Based on past projects an average of 20% total assistance was provided to market value, although market value previously has not been a measurement for the amount of assistance to be provided. Requested Action Staff requests the EDA's discussion and direction as to the willingness to provide a location incentive for this particular project and if so, under what terms. Discuss Location Incentive for Prospect March 6, 2006 Special EDA Meeting Page 3 of3 If the EDA desires to provide a location incentive for the proposed project in the form of a pay-as-you-go tax abatement, then staff recommends the EDA provide staff direction with a percentage of financial assistance to the end market value and a cap dollar amount since the market value of the project is undetermined at this point. Staff's reasoning for the range of "percentage of assistance" given is: 1) Since the City's portion of past incentives has been approximately 10%, the range in the below table of 3% to 6% appropriately discounts the small number of jobs being created and 2) The effective actual dollar amounts being proposed should be in the range to compete as a location incentive. The following table indicates a range of fInancial assistance amounts based on a percentage of fInancial assistance to market value. The number in parentheses is the estimated number of years it would take to amortize the amount of assistance from the city alone. Market Value Percentage of Assistance 3% 4% 5% 6% t.... ~ - L ....... Tax Abatement Policy & Application Amended: May 2006 Amended: August 2002 Adopted: April 1 0, 2000 City of Elk River Economic Development Division 13065 Orono Parkway Elk River, JIv1l\I 55330 763.635.1040 Table of Contents I. Policy Purpose 3 II. Difference Between Tax Abatement & Tax Increment Financing 3 III. Objectives of Tax Abatement 3 IV. Policies for the Use of Tax Abatement 4 V. Project Qualifications 5 VI. Subsidy Agreement & Reporting Requirements 6 VII. Application Process for Tax Abatement 7 City of Elk River 7 Application to Other Jurisdictions 7 VIII. Application for Tax Abatement 8 Applicant Information 8 Project Information 9 Public Purpose 9 Sources & Uses 10 Additional Documentation and Checklist 11 IX. Sample But-For Analysis 12 X. Application Review Worksheet 13 XI. City of Elk River Business Subsidy Policy 15 City of Elk River Tax Abatement Policy Amended May 2006 - 2- I. POLICY PURPOSE For the purposes of this document, the term "City" shall include the Elk River City Council, Economic Development Authority, and Housing and &development Authority. The purpose of this policy is to establish the City of Elk River's position relating to the use of Tax Abatement for private development above and beyond the requirements and limitations set forth by State Law. This policy shall be used as a guide in the processing and review of applications requesting Tax Abatement assistance. The fundamental purpose of providing Tax Abatement in Elk River is to encourage desirable development or redevelopment that would not otherwise occur butfor the assistance provided through the Tax Abatement. The City of Elk River is granted the power to utilize Tax Abatement by Minnesota Statutes, Sections 469.1812 to 469.1815 (the "Minnesota Tax Abatement Act"), as amended. It is the intent of the City to provide the minimum amount of Tax Abatement, as well as other incentives, at the shortest term required for the project to proceed. Preference is given to projects in which the total amount of Tax Abatement request includes participation from the county. 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 _ project. Meeting policy crIteria does not guarantee the award of Tax Abatement to the project. Approval or denial of one project is not intended to set precedent for approval or denial of another project. II. DIFFERENCE BETWEEN TAX ABATEMENT AND TAX INCREMENT FINANCING The primary difference between Tax Abatement and Tax Increment Financing (TIF) is the way in which the dollars are awarded to the project. When TIF is awarded to a project by the city, the other taxing jurisdictions (the school district and the county) are required to contribute their portion of the increased taxes to the project. Conversely, when Tax Abatement is requested, each political subdivision has the option of granting its portion of the increased taxes to the project. Subsequently, the dollars generated for the project with Tax Abatement are generally less than the dollars generated with TIF. III. OBJECTIVES OF TAX ABATEMENT As a matter of adqpted policy, the City will consider using Tax Abatement to assist private development projects to achieve one or more of the following objectives: . To retain local jobs and/or increase the number and diversity of jobs that offer stable employment and/ or attractive wages and benefits as defined in the City's Business Subsidy Policy. . To enhance and diversify the City of Elk River's economic base. . To encourage additional unsubsidized private development in the area, either directly ot indirectly through "spin off" development. City of Elk River Tax Abatement Policy Amended May 2006 - 3- . To facilitate the development process and to achieve development on sites which would not be developed without Tax Abatement assistance. . To remove blight and/or encourage redevelopment of commercial and industrial areas in the city that result in high quality redevelopment and private reinves tmen t. . To offset increased costs of redevelopment (i.e. contaminated site clean up) over and above the costs normally incurred in development. . To create opportunities for affordable housing. . To contribute to the implementation of other public policies, as adopted by the city from time to time, such as the promotion of quality urban or architectural design, energy conservation, and decreasing capital and/or operating costs of local government. . To significantly increase the City of Elk River's tax base. IV. POLICIES FOR THE USE OF TAX ABATEMENT a. Tax Abatement assistance will be provided to the developer upon receipt of taxes by the City, otherwise referred to as the pqy-as-you-go method. Requests for up front financing will be considered on a case-by-case basis. b. Any developer receiving Tax Abatement assistance shall provide a minimum of ten percent (10%) owner cash equity investment in the project. c. Tax Abatement will not be used in circumstances where land and/or property price is in excess of fair market value. d. Developer shall be able to demonstrate a market demand for a proposed project. e. Tax Abatement will not be utilized in cases where it would create an unfair and significant competitive financial advantage over other projects in the area. f. Tax Abatement shall not be used for projects that would place extraordinary demands on city services or for projects that would generate significant environmental impacts. g. The developer must provide adequate financial guarantees to ensure completion of the project, including, but not limited .to: minimum assessment agreements, letters of credit, personal guaranties, and etcetera. h. The developer shall adequately demonstrate, to the City's sole satisfaction, an ability to complete the proposed project based on past development City of Elk River Tax Abatement Policy Amended May 2006 - 4- experience, general reputation, and credit history, among other factors, including the size and scope of the proposed project. 1. For the purposes of underwriting the proposal, the developer shall provide any requested market, fmancial, environmental, construction plans or other data requested by the City or its consultants. J. Tax Abatement proposals shall not be used to support speculative office projects. Speculative projects are defined as those projects which have pre- leasing agreements or letters of intent for less than 50% of the available space. In addition, leasable office projects must meet the following guidelines: 1. Evidence of the 50% occupancy must be reported to the Director of Economic Development six months following an issued Certificate of Occupancy. 2. Of the occupants certified at the six month period, 50% of the jobs must be considered "new" jobs to the City of Elk River, meaning jobs not located in the City at any time prior to occupying space in the project. 3. Business retention jobs will be considered on a one-for-one match to __ job creation only in cases where job loss is specific and demonstrable in accordance with the MN Business Subsidy Law. Evidence may include documentation that the company will have to close involuntarily, or the company has received an attractive offer to move to another state or community. k. All Tax Abatement proposals shall optimize the private development potential of a site. v. PROJECT QUALIFICATIONS All Tax Abatement projects considered by the City of Elk River must meet each of the following requirements: a. The project shall meet at least one of the objectives set forth in Section III of this document. b. The use of Tax Abatement will be limited to: . Industrial development, expansion, redevelopment, or rehabilitation; or . Commercial redevelopment or rehabilitation; or . Research and development facilities that satisfy Business Park zoning requirements; or . Office facilities with a minimum new construction of 25,000 square feet; or City of Elk River Tax Abatement Policy Amended May 2006 - 5- . Residential development and redevelopment may be eligible for Tax Abatement under a separate set of policies and only with the recommendation of the BRA. c. The developer shall demonstrate that the project is not financially feasible butfor the use of Tax Abatement. Evaluation of the project's financial feasibility without Tax Abatement shall be provided by the City's financial advisor on all requests of over $25,000 total public investment. d. The City will consider the use of Tax Abatement assistance for projects that may not meet the butjor and job creation criteria, but rather would be considered as a "location incentive". These projects may result in other public benefits such as a significant tax base increase, the creation of higher paying jobs (at least twice the minimum hourly rate stated in the City's Business Subsidy Policy), and is likely to assist in the marketing and attraction of additional desired developments. e. The project shall comply with all provisions set forth in the Minnesota Tax Abatement Law, State Statues 469.1812 to 469.1815, as amended. f. The project must be consistent with the City's Comprehensive Plan, Land - Use Plan, and Zoning Ordinances. g. The project shall serve at least two of the following public purposes: · Job creation or job retention. . Significantly increase the tax base. . Enhancement or diversification of the city's economic base. . Development or redevelopment that will spur additional private investment in the area. . Fulfillment of defined city objectives, such as those identified in the Economic Development Strategic Plan or the City's Comprehensive Plan, among others. . Removal of blight or the rehabilitation of a high prof1le or priority site. VI. SUBSIDY AGREEMENT & REPORTING REQUIRMENTS All developers/businesses receiving Tax Abatement assistance from the City of Elk River shall be subject to the provisions and requirements set forth by the City's Business Subsidy Policy as amended and attached as Section XI of this document, and Minnesota State Statute 116].993 (the "Minnesota Business Subsidy LaW'). City of Elk River Tax Abatement Policy Amended May 2006 - 6- .-.,,, Business Subsidy Policy Amended: EDA Adopted: City Council Adopted: May 2006 May 8, 2006 May 15, 2006 Original Adopted: Housing & Redevelopment Authority City Council Economic Development Authority November 25, 2002 November 25, 2002 December 9, 2002 City of Elk River Economic Development Division 13065 Orono Parkway Elk River, MN 55330 763.635.1040 CITY OF ELK RIVER POLICY AND PROCEDURES RELATING TO THE USE OF BUSINESS SUBSIDIES I. PURPOSE For the purposes of this document, the tenn "City" shall include the Elk River City Council, Economic Development Authority, and Housing and Redevelopment Authority. The purpose of this policy is to establish guidelines and criteria regarding the use of business subsidies, such as tax increment financing (TIF), tax abatement, and other business subsidies for private development projects within the City of Elk River. This policy shall be used as criteria for providing subsidies, in addition to the requirements and limitations set forth by provisions of Minnesota State Statute 116].993 (MN Business Subsidy Law), and the City's policy and guidelines of the particular form of subsidy. These guidelines shall be used in processing and reviewing applications requesting business subsidy assistance. The fundamental purpose of business subsidies in the City is to encourage desirable development or redevelopment that would not otherwise occur "bufe. for" the assistance provided through business subsidies. It is the intent of the City to provide business subsidies, as well as other incentives that the City may deem appropriate, at the shortest term required for the project to proceed. The City reserves the right to approve or reject projects on a case-by-case basis, taking into account established policies, specific project criteria, and demand on city services in relation to the potential benefits to be received from a proposed project. Meeting policy guidelines or other criteria does not guarantee the award of a business subsidy. Furthermore, the approval or denial of one project is not intended to set precedent for approval or denial of another project. Whenever possible it is the City's intent to coordinate the use of business subsidies with other applicable taxing jurisdictions. II. DEFINITION OF "BUSINESS SUBSIDY" The following types of assistance having a value in excess of $25,000 are defined as a "business subsidy" within the MN Business Subsidy Law: . State and local government agency grants; . Contributions of personal property, real property, or infrastructure; . The principal amount of a loan that exceeds $75,000 at rates below those commercially available; . Reductions or deferrals of taxes or fees; . Guarantees of any payment under any loan, lease, or other obligation; and, . Preferential use of government facilities. City of Elk River Business Subsidy Policy Amended May 2006 2 III. PUBLIC PURPOSE OBJECTIVES OF BUSINESS SUBSIDIES In accordance with the MN Business Subsidy Law, the City will consider using business subsidies to assist private development projects to achieve one or more of the following public purpose objectives: . To retain local jobs and/or increase the number and diversity of jobs that offer stable employment and/or attractive wages and benefits. . To enhance and diversify the City of Elk River's tax base. . To encourage additional unsubsidized private development in the area, either directly or indirectly through "spin off' development. . To achieve development on sites which would not be developed without business subsidies assistance. . To remove blight and/or encourage development of commercial and industrial areas in the city that result in higher quality development or redevelopment and private investment. . To offset increased costs of development of specific properties when the unique physical characteristics of the site may otherwise preclude private investment. . To create opportunities for the construction, operation and maintenance of- affordable housing. IV. GENERAL POLICIES FOR THE USE OF BUSINESS SUBSIDIES A. Business subsidy assistance will be provided from the City, on a "pay-as-you-go" note method, to the developer if the business subsidy is tax increment financing or tax abatement. Requests for up front financing will be considered on a case-by-case basis. B. A developer requesting business subsidy assistance must demonstrate, to the satisfaction of the City, sufficient cash equity investment in the project as required within the City's policy for the particular form of subsidy. C. Business subsidy assistance will not be provided in circumstances where land and/or property price is demonstrated by the County Assessor to be in excess of fair market value. This would normally be where the acquisition price is more than 10% in excess of market value. D. A developer must be able to demonstrate to the City, or, if applicable, to the underwriting authority, a market-demand for a proposed project. E. Business subsidy assistance will not be used in cases where the subsidy would create an unfair and significant competitive fmancial advantage over other similar projects in the area. F. Business subsidy assistance will not be used for projects that would place extraordinary demands on city infrastructure and services. City of Elk River Business Subsidy Policy Amended May 2006 3 G. If requested by the City the developer shall provide adequate financial guarantees to ensure completion of the project, including, but not limited to: minimum assessment agreements, letters of credit, cash escrows, and personal guaranties. H. Each developer must be able to demonstrate to the City's satisfaction, an ability to construct, operate, and maintain the proposed project based on past experience, general reputation, and credit history. 1. If requested by the City, or its consultants, the developer shall provide sufficient market, financial, environmental, or other data relative to the successful operation of the project. 1. Projects receiving business subsidy approval from other affected taxing jurisdictions will be more favorably received by the City. V. GUIDELINES FOR COMMERCIAUINDUSTRIAL BUSINESS SUBSIDIES A. Business subsidies will not be used for retail or service businesses unless it is a redevelopment project that demonstrates that it will result in a substantial increase in tax base and a significant improvement in quality employment. B. The project must be consistent with the City's Comprehensive Plan, Land Use Plan, and Zoning Ordinances. C. The project must result in the retention of existing jobs that would be lost "but for" the proposed development or result an increase and diversification in local jobs. Business retention jobs will be considered on a one-for-one match to job creation only in cases where job loss is specific and demonstrable in accordance with the MN Business Subsidy Law. D. Specific wage and job goals will be determined by the City giving consideration to the particular form of the subsidy, nature of the development, the purpose of the subsidy, local economic conditions and similar factors. The recipient will have up to two years from the benefit date, which is the date that the recipient receives the subsidy, to meet the job and wage goals established by the City. E. The minimum wage for a job to be considered a new or retained job shall be $15.00 per hour, exclusive of benefits required by law. Deviations from the job and wage goal may be considered for projects that will result in a significant increase in tax base. Deviations less than the wage floor will be considered on a case-by-case basis and in accordance with the requirements of the MN Business Subsidy Law. F. Business subsidies will not be used for commercial/industrial projects that have a history of inconsistent compliance with applicable environmental rules and regulations. City of Elk River Business Subsidy Policy Amended May 2006 4 VI. GUIDELINES FOR REDEVELOPMENT AND RENOVATION BUSINESS SUBSIDIES In accordance with the MN Business Subsidy Law, the following forms of financial assistance related to redevelopment and renovation are not a "business subsidy": A. Assistance provided for the sole purpose of renovating old or decaying building stock or bringing it up to code, provided that the assistance is equal to or less than SO percent of the total cost; B. Assistance for pollution control or abatement; C. Redevelopment when the recipient's investment in the purchase of the site and in site preparation is 70 percent or more of the assessor's current year's estimated market value. VII. SUBSIDY APPLICATION PROCESS AND PROCEDURE A. Application for business subsidies shall be made on the City's forms for the particular type of assistance. The application for business subsidies shall request information required within the City's policies on the particular form of subsidy including but not limited to; a detailed description of the project; a preliminary site plan; the amount of business subsidy requested; the public purpose of the project; the number and types of jobs to be created; the wages and benefits to be paid new employees; and verifiable funding sources and uses. B. Following a review by appropriate City Staff the application shall be referred to the either the Economic Development Authority, or Housing and Redevelopment Authority, for recommendation to the City Council for denial or approval. C. Before granting a business subsidy that exceeds $100,000, the City shall provide public notice and hold a hearing on the subsidy unless a hearing and notice on the subsidy is otherwise required by law. VIII. SUBSIDY AGREEMENT AND REPORTING REQUIREMENTS Each company receiving a business subsidy shall be subject to the subsidy agreement and reporting provisions and requirements set forth by the MN Business Subsidy Law and summarized below: A. Progress Reports The recipient shall file a report annually for two years after the receiving the subsidy or until all goals set forth in the subsidy agreement have been met, which ever is later. Reports shall be completed using the format drafted by the State of Minnesota and shall be filed with the City's Economic Development Division no later than March 1 of each year for the progress made the previous year. City of Elk River Business Subsidy Policy Amended May 2006 5 B. Maintain Facility . The recipient agrees to maintain and operate its facility at the site where the subsidy is used for a period of five years after the date the subsidy is provided. C. Failure to Comply Businesses failing to comply with the subsidy agreement will be subject to fUles, repayment requirements at the rate established within the MN Business Subsidy Law, and be deemed ineligible by the State to receive any loans or grants from public entities for a period of five years. City of Elk River Business Subsidy Policy Amended May 2006 6 VII. APPLICATION PROCESS FOR TAX ABATEMENT A. CITY OF ELK RIVER 1. Applicant submits the completed application along with a non- refundable $5,000 application deposit. The application deposit will be used toward the cost of services provided in the evaluation of financial feasibility and preparation of legal documents and agreements. Projects that demand professional services in excess of the initial deposit shall be 'required to reimburse the City for the additional expenses. 2. City staff reviews the application and completes the Application Review Worksheet. 3. Results of the Worksheet are submitted to the appropriate governing authorities (EDA or BRA) for recommendation to the City Council of approval or denial of the request, 4. If preliminary approval is granted, all necessary notices, resolutions and agreements are prepared by City staff and/ or consultants. 5. Public hearing(s) on the proposed request are held. 6. The City Council grants final approval or denial of the request. B. APPLICATIONS TO OTHER JURISDICTIONS It is recommended that applicants intending to seek Tax Abatement from Sherburne County and/ or School District 728 make their applications to those bodies concurrent with their application to the City of Elk River. For more information on applying for Tax Abatement through Sherburne County and/or School District 728, contact: Sherburne County Administrator 763-241-2701 School District 728 Superintendent 763-241-3400 City of Elk River Tax Abatement Policy Amended May 2006 - 7- I. DnitedHealth Group. UnitedHealth Group 9900 Bren Road East MNOOB-E305 Minnetonka MN 55343 November 20th, 2006 Catherine Mehelich Director of Economic Development 13065 Orono Parkway Elk River, MN 55330 RE: Tax abatement application Dear Ms. Mehelich: Attached is our application for tax abatement with the $5000.00 application fee. The applicant pledges to complete the proposed Data Center within two years of groundbreaking. The project architect EYP has indicated that this is a realistic schedule unless ,there are major material shortages or severe weather delays. Please call me at 952-936-3653 if you have any questions. Sincerely, \ "J fxh :20 cxJ~..I'-'l~! b VJP ,'--" ~.~ Dennis Spalla Director, Real Estate Services VIII. APPLICATION FOR TAX ABATEMENT A. APPLICANT INFORMATION Name of Corporation/Partnership United HealthCare Services, Inc. Address 9900 Bren Road East, MN008-E305, Minnetonka, MN 55343 Primary Contact Ms. Lana J. Weber, Director, Corporate Real Estate Address 9900 Bren Road East MN008-E305, Minnetonka, MN 55343 Phone (952)936-3643 Fax (952)936-3642 Ennail Lweber@Uhc.com Brief description of the corporation/partnership's business, including history, principal product or service: lJnitedHealth Group is dedicated to making health care work better by designing products, providing services and applying technologies that improve access to health and well-being services, simplify the healthcare experience. promote quality and make healthcareCcmore afford- ~l& t~rgyg~ it~ fi~ilJ' of gy~iR&S~&~i URit&Q H&ilt~ T&QhQQ1Qgi&s, URit&QH&ilt~Care, Uniprise, Ingenix, AmeriChoice, Ovations and Specialized Care Services. Brief description of the proposed project: increase ~nitedHealfh Group's data center capabilities and capacities to satisfy requirements for improved high availability and disaster recovery for midrange and mainframe computing. by providing high availability and disaster recovery for UnitedHealth Group's primary data center in Plymouth by developing an active-active configuration between Plymouth and the new facility. Property size: 20.49 acres, building size: approximately 189,000 sq. ft. Attorney Name Dorsey & Whitney, LLP - Robert Olson Address 50th South 6th Street, Minneapolis, MN 55402 Phone (612) 340-2600 Fax (612) 340-2868 Ennail Accountant Name Deloitte & Touche Address 400 One Financial Plaza, 400 So. 6th Street, Minneapolis, MN 55402 Phone 612-397-4000 Fax 612-340-4450 E~ Contractor Name M.A. Mortensen - Mark Miller Address 700 Meadow Lane, North Minneapolis, MN 55422 Phone 763-287-5376 Fax 763-287-5430 Email mark.miller@mortenson.com EngineerName EYP Mission Critical Facilities-Tim Colleran Address 200 West Adams Street, Suite 2750, Chicago, IL Phone 312-846-8514 Fax 312-846-8501 Email tcolleran@eypmcf.com Architect Name Corgan - poc - Scott Ruch Address 501 Elm, Suite 500, Dallas, TX 75202 Phone 214-757-1666 Fax 214-977-3366 Ennail sruch@corQan.com City of Elk River Tax Abatement Policy Amended May 2006 - 8- B. PROJECT INFORMATION 1. The project will be: _Industrial: ~New Construction _Expansion _Redevelopment / Rehab. _Office/research facility that conforms to Business Park zoning standards _Commercial Redevelopment/Rehabilitation _Other 2. In addition to the City of Elk River, applicant is requesting Tax Abatement from: Sherburne County School District 728 3. The project will be: _Owner Occupied ~Leased Space 4. Project Address ID# 75-661-0040 3.88 acres lot/#75-7580010 County Outlet A 16.88 acres Parcel Identification Number(s) 5. Site Plan and Construction Plans Attached: Yes x No 6. Total Amount of Tax Abatement Requested: $ City Portion: Annual $ County Portion: Annual $ ISD 728 Portion: Annual $ Rl)() ()()() Total $ Total $ Total $ over~ years. 7. Current Real Estate Taxes on Project Site: $ 0 Estimated Real Estate Taxes upon Completion: Phase I $ Phase II $ unknown unknown 8. Construction Start Date: March 1, 2007 Construction Completion Date: September 30 I 2008 If Phased Project: 1/1/08 Year 50 % Completed 1/1/09 Year 100 % Completed C. PUBLIC PURPOSE It is the policy of the City of Elk River that the use of Tax Abatement should result in a benefit to the public. Please indicate how this project will serve a public purpose. ~J ob Creation/Retention o Number of existing jobs Number of jobs created by project 20 Average hourly wage of jobs created/retained $24.00 ~New industrial development which will result in additional private investment in the area. ~Enhancement and/or diversification of the City of Elk River's economic base. ---1LThe project contributes to the fulfillment of the City's Economic Development Strategic Plan. _Removal of blight. _Rehabilitation of a high profile or priority site. ~Significantly increase the City's tax base. City of Elk River Tax Abat=ent Policy Amended May 2006 - 9- D. SOURCES & USES SOURCES NAME Bank Loan Other Private Funds JP Morgan Company Owner Cash Equity Fed Grant/Loan State Grant/Loan EDA Micro Loan Tax Abatement ill Bonds TOTAL USES Land Acquisition Site Development Construction Machinery & Equipment Architectural & Engineering Fees Legal Fees Interest During Construction Debt Service Reserve Contingencies TOTAL AMOUNT $ $ 100% $ $ $ $ $ $ $ AMOUNT $ 2.8M $ 0.8M $ 95. 5M $ 0.25M $ 8.1M $ 0.02M $ $ $ 15 . 3M $ 124M plu~ Other would likely be incurred. OTHER Potential Costs-In the event a second feeder was needed, the following expenses $ 1. 3+M City of Elk River Tax Abatement Policy Amended May 2006 - 10- 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 To Be Submitted /' B) Financial Statements for Past Two Years See UHG Annual Reports Profit & Loss Statement Balance Sheet / C) Current Financial Statements See UHG Annual Reports Profit & Loss Statement to Date Balance Sheet to Date tJjA D) Two Year Financial Projections Proprietary Information N/A E) Personal Financial Statements of all Major Shareholders Profit & Loss Current Tax Return v F) Letter of Commitment from Applicant Pledging to Complete During the Proposed Project Duration Best Effort Letter to be submitted A G) Letter of Commitment from the Other Sources of Financing, Stating 'Terms and Conditi.ons of their Participation in the Project Prdpr~etary Informat~on /H) Non-refundabl~ application deposit of $5,000 To be subm~tt'e'd /' 1) Construction Pbns and Itemized Project Construction Statement submitted /]) Attach the following documentation as Exhibits V"" Exhibit A - Corporation/Partnership Description v' Exhibit B - Description of Project see proj ect Description Page 1 N/A Exhibit C - List of Shareholders/Partners N/A Exhibit D - But-For Analysis V-Exhibit E - List of Prospective Lessees UHG is sole tenant ,/'" Exhibit F - Legal Description and PID Number(s) See Section B 4. above Note: All Major shareholders will be required to sign personal guarantees and a minimum assessment agreement if up front financing of the project is required. The undersigned certifies that all information provided in this application is true and correct to the best of the undersigned's knowledge. The undersigned authorizes the City of Elk River to check credit references, verify financial and other information, and share this information with other political subdivisions as needed. The undersigned also agrees to provide any 'ddi;:}.O information", may be requested b. y the City after the filing of this application. () () I~ . ApplicantNam , ~ -j tlX.Jl.t-....., . Date /(. t...o . 6? City of Elk River '_.' fc ~ u JQ ) -( ~ . I j;: 'L-:fH:: ~ 't t'! It ICe -j) I/\)c... Tax Abatement Policy Amended May 2006 - 11- ) ~~~~~~~~~~~~~~~~~~-- '0 l> ...-1 "1m \}J~ -'~A--- l)m li'- < m c 1 I I I I I r r I I 1 r I r I I I 1 I I I I , , I I , , I I , \\ \ \\ ~~ ~n~! a~ U~ I ~~ ~ ~! ~~~i; II ;!I ; I~ ~ '~~ ~iii~ I~ ~j~ i ~~ ~ I~' ~i;~~ ;1 I!i ~ i; ~ ~ ~s!~ ~~ ~9~ ~ :~ ~ ~ g. ~ ~ ~~, 1 .... z z ~~ii:' . i 2 ;>... Gl ~ ~~~~~ ~ :', ~ ~~ z i, I:m ! .!~~ ~ ~ ~ ' ~ g ~~ 8 -'v ~ en ~ '~6~ i! zl1l~ : 2 ~ ~il a ~~ I! :: mij~i ~ ~I ~ ,~INARY PLANS - NOT FOR CONSTRUCTION ~ ~O en It,. !i:i ~ ~P1 iij 1= I ;UJ ~o i!: 'fH~ '" Z: m 8 I !i! --en .~ ~ 15 i,: r: z .,... ... r- -I m i~ ; ~ .~ iii 0 ~q IOn i! I! I ~ I! ~ ~ Oi Ea o~ iZii:~i ~ i i I~ ~i i; i;18~ ~, · ~ ~~ ~i ~ ia~~i ~ a w ~~ =~ ~ .'E~! ~ ! ~ p~ ~~ p~ ~~gc1~ ill il ~ q!li!l ! "o~ ill S III i ~S1 i "~~~Ii III ~ ! ~s il ~~;~ei ;! ~ ~ii: ~ ~~t~~ i ~ ~. ~ A I~~g g; ~ ~ ~ ~~~~ ~. K k ~ ..I!g~ 8 III l! M ! ~~~o m g i' ~ ~ ~~~~ ~'a a ~ ~i !:l o. II!ij cle1} I E~r ~ of ~ I If · II UnitedHealth Group NEXT TECHNOLOGY CENTER ELK'RIVER, MINNESOTA m-.... '11 .. '11 en il~ ~Ull j iij l!~~'.m~~@~ ~1Il1 .1 J . );! ~~.. ~h ~~! ~i1I~ j;l~9 ~t;~ ~~lD ,..;gi ~ II U ;~i1I ~ ~ ~= ~~~ ! ~ (luum ~ I!!IIU~ mIl" ~H'~ Ii I R Iii ~lj~~ I! I ~~. ~: -<JD-- ~' I ,------- I I I \ I:. i ~ . z lJ) ~ ,,' li~ . I!lg. (, [ 11..[ '1111 x. TAX ABATEMENT APPLICATION REVIEW WORKSHEET I TO BE COMPLETED BY CITY STAFF I 1. ~roiect meets the criteria set forth in Section V of the Tax Abatement policy. a) Meets at least one of the objectives in Section III. b) Demonstrates need for Tax Abatement with the butforanalysis:-~ e<<c~cff7 c) Consistent with all city plans and ordinances. v" d) Serves at least two public purposes as defined in Section V(g). 2. Ra~~ 9f !Il:;te to All Public Investment in Project: $ /27"~ rivate Investment $ .g>SO,ooo Public Investment-.n?~ ;~tuP7 /"9'~ : / Ratio Private: Public Financing 3. Job Creation in the City of Elk River: 20 Number of new jobs as a result of the project. Number of existing/retained jobs 2/:) Total 4. Ratio of Public Investment to Job Creation: $8SacoO Public Investment -/1'?~i/?7t(/?7 2CJ Number of new jobs created/retained $ '12. "S 00 of Public Investment per new job 5. Wage Level of new jobs created/retained Minimum hourly wage . :I of jobs created/retained: 2 ~ 00 6. Project size: The project will result in the construction of square feet /87; Q:)C!> City of Elk River Tax Abatement Policy Amended May 2006 Less than Points: ~1 4:1 3:1 2:1 2:1 '5 ~ 4 3 2 1 Points: ~ Less than 25+ /"20+ 15+ 10+ 10 5 4- -::: 3 2 1 Points:~ $8,000 or less 5 $10,000orless 4 $12,000 or less 3 $15,000 or less 2 ~5,000 ~ Points: S- ~~hOur $18-21 our $14-17 / hour $10-13 / hour Under $10 / hour ~ 4 3 2 1 Points: ~m+ 30,000+ 20,000+ 10,000+ 10,000 or less '5"" ~ 4 3 2 1 - 13- 7. Market Value/Tax Base Generation: The project will result in a per square foot estimated market value (land and building) of i /I/7?i/.fi ~ - t / 7 miL6"eYJ? i" (2;cy-sr - :t 9'o/~ 8. Type of Project: ,;.;- 100% Owner Occupied Mix Owner Occupied & Investment Investment Property 9.~ Industrial or Business Park Project Commercial Rehabilitation/Redevelopment 10. Likelihood that the project will result in unsubsidized, spin-off development. Sub - Total Points: 3~ of a possible 45 points. Points: fI Commercial $110/sf+ 5 $100/sf+ 4 $90/sf+ 3 $80/sf+ 2 $70/sf+ 1 Points:~ 5 4 3 Points: S Points: -S- t/'" High - 5 Moderate 3 Low 1 11. Bonus Points Bonus Points: "5"" V The project will be 100% Pqy-as-)lou-go Tax Abatement V The project contributes to the goals of Energy City. . . Product promotes sensible use of energy, OR . Project utilizes significant energy efficient design &/ or materials in construction. Total Points: 7151 Overall project desirability: ~ Moderate Low Not Eligible City of Elk River Tax Abatement Policy Amended May 2006 3 points 2 points 45-38 points~ 37-29 points 28-20 points 19-0 points 5 4 - 14- CITY OF ELK RNER NOTICE OF PUBLIC HEARING REGARDING PROPOSED PROPERTY TAX ABATEMENTS FOR THE UNITED HEALTHCARE SERVICES, INe. PROJECT NOTICE IS HEREBY GIVEN that the City Council of the City of Elk River, Minnesota, will hold a public hearing at a meeting of the City Council beginning at 6:30 p.m., on Monday, December 18, 2006, to be held at City Hall, Elk River, Minnesota, on the request of United HealthCare Services, Inc. (the "Company") to have the City abate to the Company a portion of the property taxes to be levied by the City on property currently identified as Parcel Identification No. 75-661-0040 and a 16.88 acre portion of property currently identified as Parcel Identification No. 75-758-0010 in the City (the "Property") for an approximately 189,000 square foot data technology center (the "Improvements") to be constructed by the Company. The total amount of the taxes proposed to be abated by the City on the Property for up to a ten year period is estimated to be not more than $850,000. The City Council will consider granting a property tax abatement in response to the request. Information about the proposed tax abatements and a copy of the draft Tax Abatement Agreement for the recipient are available for inspection at the office of the Director of the Economic Development Authority at the City Hall during regular business hours. Any 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 Minnesota Statutes, Sections 116J.993 to 116J.995, and no action may be filed against the City for the failure to comply unless a written complaint is filed. All interested persons may appear at the December 18th public hearing and present their views orally or in writing. Anyone needing reasonable accommodations or an interpreter should contact the City Clerk's office at the City Hall, telephone (763) 635-1000. [Publish on December 6] 1970231v2 EXTRACT OF MINUTES OF MEETING OF THE CITY COUNCIL OF THE CITY OF ELK RIVER, MINNESOTA HELD: December 18, 2006 Pursuant to due call and notice thereof, a meeting of the City Council of the City of Elk River, Sherburne County, Minnesota, was duly called and held at the City Hall in said City on Monday, the 18th day of December, 2006, at 6:30 o'clock p.m. The following members were present: and the following were absent: Member adoption: introduced the following resolution and moved its RESOLUTION APPROVING PROPERTY TAX ABATEMENTS AND AUTHORIZING EXECUTION OF A TAX ABATEMENT AND BUSINESS SUBSIDY AGREEMENT BE IT RESOLVED by the City Council (the "Council") of the City of Elk River, Minnesota (the "City"), as follows: 1. Recitals. (a) United HealthCare Services, Inc. (the "Developer") proposes to construct an approximately 189,000 square foot data technology center in the City (the "Project"). The Developer has requested that the City provide financial assistance to the Developer for the Project. The City proposes to use the abatement for the purposes provided for in the Abatement Law (as hereinafter defined), including the Project. The proposed term of the abatement will be for up to ten years in an amount not to exceed the lesser of $850,000 or 5% of the assessed market value as determined by County Assessor for 2009 assessment and taxes payable in 2010. The abatement will apply to 100% of the City's share of the property taxes (the "Abatement") derived from the property currently described as Parcel Identification No. 75-661-0040 and an approximately 16.88 acre portion of property currently identified as Parcel Identification No. 75-758-0010 (the "Property") . (b) On the date hereof, the Council held a public hearing on the question of the Abatement, and said hearing was preceded by at least 10 days but not more than 30 days prior published notice thereof. 1970824v3 (c) The Abatement is authorized under Minnesota Statutes, Sections 469.1812 through 469.1815 (the "Abatement Law"). 2. Findings for the Abatement. The City Council hereby makes the following findings: (a) The Council expects the benefits to the City of the Abatement to at least equal or exceed the costs to the City thereof. (b) Granting the Abatement is in the public interest because it will significantly increase the tax base of the City and provide quality employment opportunities in the City. (c) The Property is not located in a tax increment financing district. (d) In any year, the total amount of property taxes abated by the City by this and other resolutions and agreements, if any, does not exceed the greater of ten percent (10%) of the current levy or $200,000. 3. Terms of Abatement. The Abatement is hereby approved. The terms of the Abatement are as follows: (a) The Abatement shall be for up to ten (10) years ten years beginning with real estate taxes payable in 2009 and continuing through 2018, inclusive. (b) The City will abate and pay to the Developer 100% of the City's share of the property tax amount which the City receives from the Property, not to exceed the lesser of $850,000 or 5% of the assessed market value as determined by County Assessor for 2009 assessment and taxes payable in 2010. (c) The Abatement shall be subject to all the terms and limitations of the Abatement Law. (d) The Abatement may not be modified or changed during its term. 4. Approval of Tax Abatement and Business Subsidy Agreement. (a) The City Council hereby approves a Tax Abatement and Business Subsidy Agreement with the Developer providing for payment of the Abatement and the City's assistance for the Project in substantially the form submitted, and the Mayor and Administrator are hereby authorized and directed to execute the Tax Abatement and Business Subsidy Agreement on behalf of the City. (b) The approval hereby given to the Tax Abatement and Business Subsidy Agreement 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 the City officials authorized by this resolution to execute the Agreement. The execution of the Agreement by the appropriate 1970824v3 2 officer or officers of the City shall be conclusive evidence of the approval of the Agreement in accordance with the terms hereof. 1970824v3 3 The motion for the adoption of the foregoing resolution was made by member and duly seconded by member and, upon a vote being taken thereon after full discussion thereof, the following voted in favor thereof: and the following voted against the same: Whereupon said resolution was declared duly passed and adopted. 1970824v3 4 STATE OF MINNESOTA ) ) SS COUNTY OF SHERBURNE) I, the undersigned, being the duly qualified and acting Clerk of the City of Elk River, Minnesota (the "City"), by reason of my office as Clerk, DO HEREBY CERTIFY that I have compared the attached and foregoing extract of minutes with the original thereof on file in my office, and that the same is a full, true and complete transcript of the minutes of a meeting of the City Council of the City, duly called and held on the date therein indicated, insofar as such minutes relate to property tax abatements for the United HealthCare Services, Inc. Project. WITNESS my hand this _ day of December, 2006. City Clerk 1970824v3 1970792v3 TAX ABATEMENT AND BUSINESS SUBSIDY AGREEMENT BY AND BETWEEN CITY OF ELK RIVER, MINNESOTA AND UNITED HEALTHCARE SERVICES, INe. TABLE OF CONTENTS Page ARTICLE I DEFINITIONS................................................................................................. 1 Section 1.1 Definitions............................................................................................ 1 ARTICLE II REPRESENTATIONS AND WARRANTIES................................................ 3 Section 2.1 Representations and Warranties of the City......................................... 3 Section 2.2 Representations and Warranties of the Deve1oper............................... 3 ARTICLE III UNDERTAKINGS BY DEVELOPER AND CITy....................................... 5 Section 3.1 Construction of Project and Reimbursement of Tax Abatement......... 5 Section 3.2 Limitations on Undertaking of the City............................................... 5 Section 3.3 Operation and Maintenance of Project ................................................ 5 Section 3.4 Damage and Destruction.................. ..................................... ......... ...... 5 Section 3.5 Change in Use of Project ......... .................................................. .......... 5 Section 3.6 Prohibition Against Transfer of Project and Assignment of Agreement............................................................................................ 5 Real Property Taxes............................................................................. 6 Business Subsidies Act........................................................................ 6 Duration of Abatement Program...... .................................................... 7 Section 3.7 Section 3.8 Section 3.9 ARTICLE IV EVENTS OF DEFAULT................................................................................. 8 Section 4.1 Events of Default Defined ................................................................... 8 Section 4.2 Remedies on Default............................................................................ 8 Section 4.3 No Remedy Exclusive.......................................................... ....... ......... 8 Section 4.4 No Implied Waiver ..............................................................................8 Section 4.5 Agreement to Pay Attorney's Fees and Expenses ............................... 9 Section 4.6 Release and Indemnification Covenants.............................................. 9 ARTICLE V ADDITIONAL PROVISIONS ...................................................................... 10 Section 5.1 Conflicts of Interest.......... ........................... .................. ..................... 10 Section 5.2 Titles of Articles and Sections ........................................................... 10 Section 5.3 Notices and Demands...... ................. ................................................. 10 Section 5.4 Counterparts....................................................................................... 10 Section 5.5 Law Governing .................................................................................. 10 Section 5.6 Duration............................................................................................. 11 Section 5.7 Provisions Surviving Rescission or Expiration.................................. 11 1970792v3 -1- TAX ABATEMENT AND BUSINESS SUBSIDY AGREEMENT THIS AGREEMENT, made as of the _ day of December, 2006, by and among the City of Elk River, Minnesota (the "City"), a municipal corporation and political subdivision of the State of Minnesota, and United HealthCare Services, Inc., a Minnesota corporation (the "Developer"). WITNESSETH: WHEREAS, pursuant to Minnesota Statutes, Sections 469.1812 through 469.1815, the City has established a Tax Abatement Program; and WHEREAS, the City believes that the development and construction of a certain Project (as defined herein), and fulfillment of this Agreement are vital and are in the best interests of the City, will result in preservation and enhancement of the tax base, provide employment opportunities and are in accordance with the public purpose and provisions of the applicable state and local laws and requirements under which the Project has been undertaken and is being assisted; and WHEREAS, the requirements of the Business Subsidy Law, Minnesota Statutes, Section 116J.993 through 116J.995, apply to this Agreement; and WHEREAS, the City has adopted criteria for awarding business subsidies that comply with the Business Subsidy Law, after public hearings for which notice was published; and WHEREAS, the Council has approved this Agreement as a subsidy agreement under the Business Subsidy Law. 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 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 for the Project is issued by the City; 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; City means the City of Elk River, Minnesota; 1970792v3 County means Sherburne County, Minnesota; Developer means United HealthCare Services, Inc., a Minnesota corporation, its successors and assigns; Event of Default means any of the events described in Section 4.1; Proiect means the construction by the Developer of an approximately 189,000 square foot data technology center to be located in the City; State means the State of Minnesota; Tax Abatement Act means Minnesota Statutes, Sections 469.1812 through 469.1815; Tax Abatement Program means the actions by the City pursuant to Minnesota Statutes, Section 469.1812 through 469.1815, as amended, and undertaken in support of the Project; Tax Abatement Propertv means all and any portion of the real property currently identified as Parcel Identification No. 75-661-0040 and a 16.88 acre portion of property currently identified as Parcel Identification No. 75-758-0010, located in the City; Tax Abatements means 100% of the City's share of real estate taxes on the Tax Abatement Property abated in accordance with the Tax Abatement Program. 1970792v3 2 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 and a political subdivision of the State and has the power to enter into this Agreement and carry out its obligations hereunder. (2) The Tax Abatement Program was created, adopted and approved in accordance with the terms of the Tax Abatement Act. (3) The City has made the findings required by the Tax Abatement Act for the Tax Abatement Program. Section 2.2 Representations and Warranties of the Developer. The Developer makes the following representations and warranties: (1) The Developer is a corporation validly existing under the laws of this State and has the power to enter into this Agreement and to perform its obligations hereunder and is not in violation of its articles, bylaws or any local, state or federal laws. (2) The Developer will cause the Project to be constructed in accordance with the terms of this Agreement 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 Developer will obtain or cause to be obtained, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner, all requirements of all applicable local, state, and federal laws and regulations which must be obtained or met before the Project may be lawfully constructed (4) The construction of the Project in the City would not be undertaken by the Developer without the assistance and benefit to the Developer provided for in this Agreement. (5) 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 provisions 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. (6) The Developer will cooperate fully with the City with respect to any litigation commenced with respect to the Project but only to the extent that the City and the Developer are not adverse parties to the litigation. 1970792v3 3 (7) The Developer will cooperate fully with the City in resolution of any traffic, parking, trash removal or public safety problems which may arise in connection with the construction and operation ofthe Project. 1970792v3 4 ARTICLE III UNDERTAKINGS BY DEVELOPER AND CITY Section 3.1 Construction ofProiect and Reimbursement of Tax Abatement. (1) (2) Developer. The Developer shall complete the Project by January 1, 2009. The costs of the acquisition and construction of the Project shall be paid by the (3) Upon submission to the City of paid invoices and receipts for Project costs, including the cost of the Tax Abatement Property, actually incurred and paid by the Developer, the City shall reimburse the Developer for the Project costs actually incurred in an amount not to exceed the lesser of$850,000 or 5% of the assessed market value of the Tax Abatement Property as determined by the County Assessor for 2009 assessment and taxes payable in 2010 (the "Reimbursement Amount") pursuant to the Abatement Program as provided in Section 3.9. Section 3.2 Limitations on Undertaking of the City. Notwithstanding the provisions of Section 3.1, the City shall have no obligation to reimburse the Developer for the Proj ect costs in any amount, if the City, at the time or times such payment is to be made, is entitled under Section 4.2 to exercise any of the remedies set forth therein as a result of an Event of Default which has not been cured. Section 3.3 Operation and Maintenance ofProiect. The Developer further agrees that, at all times prior to the termination of this Agreement, it will operate and maintain, preserve and keep the Project or cause the Project to be maintained, preserved and kept with the appurtenances and every part and parcel thereof, in good repair and condition. Section 3.4 Damage and Destruction. In the event of damage or destruction of the Project the Developer shall repair or rebuild the Project. Section 3.5 Change in Use ofProiect. The City's obligations pursuant to this Agreement shall be subject to the continued operation ofthe Project by the Developer. Section 3.6 Prohibition Against Transfer of Proiect and Assignment of Agreement. The Developer represents and agrees that prior to the termination date of this Agreement the Developer shall not transfer the Project or any part thereof or any interest therein, without the prior written approval of the City. The City shall be entitled to require as conditions to any such approval that: (1) 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. 1970792v3 5 (2) Any proposed transferee, by instrument in writing satisfactory to the City shall, for itself and its successors and assigns, and expressly for the benefit of the City, have expressly assumed all of the obligations ofthe Developer under this Agreement and agreed to be subject to all the conditions and restrictions to which the Developer is subject. (3) 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 or the Project. Section 3.7 Real Property Taxes. The Developer shall, so long as this Agreement remains in effect, pay all real property taxes with respect to all parts of the Tax Abatement Property acquired and owned by it which are payable pursuant to any statutory or contractual duty that shall accrue subsequent to the date of its acquisition of title to the Tax Abatement Property (or part thereof) and until title to the property is vested in another person. The Developer agrees that for tax assessments so long as this Agreement remains in effect: (a) It will not seek administrative review or judicial review of the applicability of any tax statute relating to the ad valorem property taxation of real property contained on the Tax Abatement Property determined by any tax official to be applicable to the Project or the Developer or raise the inapplicability of any such tax statute as a defense in any proceedings with respect to the Tax Abatement Property, including delinquent tax proceedings; provided, however, "tax statute" does not include any local ordinance or resolution levying a tax; (b) It will not seek administrative review or judicial review of the constitutionality of any tax statute relating to the taxation of real property contained on the Tax Abatement Property determined by any tax official to be applicable to the Project or the Developer or raise the unconstitutionality of any such tax statute as a defense in any proceedings, including delinquent tax proceedings with respect to the Tax Abatement Property; provided, however, "tax statute" does not include any local ordinance or resolution levying a tax; (c) It will not seek any tax deferral or abatement, either presently or prospectively authorized under Minnesota Statutes, Section 469.181, or any other State or federal law, of the ad valorem property taxation of the Tax Abatement Property so long as this Agreement remains in effect. Section 3.8 Business Subsidies Act. (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 value of the Tax Abatements in an amount not to exceed $850,000, and that the Business Subsidy is needed because the Project would not be constructed within the City without the Business Subsidy. The public purpose of the Business Subsidy is to significantly increase the tax base in the City and to create quality employment. The Developer represents and agrees that it will meet the following goals (the "Goals"): in connection with the development of the Development 1970792v3 6 Project it will create at least twenty (20) full time equivalent jobs (in addition to full-time equivalent permanent employees relocated from other locations in the State) at an hourly wage of at least $24.00 per hour, which includes benefits that are not required by law, within two years from the Benefit Date. (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 twenty (20) (i.e. number of jobs set forth in the Goals). (3) The Developer agrees to (i) report its progress on achieving the Goals to the Authority 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 Authority. The Developer agrees to file these reports no later than March 1 of each year commencing March 1, 2007, and within 30 days after the deadline for meeting the Goals. The Authority 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 Authority a penalty of $100 for each subsequent day until the report is filed up to a maximum of $1,000. (4) The Developer agrees to continue operations of the Project for at least five (5) years after the Benefit Date. (5) Other than the Tax Abatements, there are no other state or local government agencies providing financial assistance for the Project. (6) [There is no parent corporation of the Developer]. Section 3.9 Duration of Abatement Program. The Tax Abatement Program shall exist for a period of up to ten years beginning with real estate taxes payable in 2009 and continuing through 2018. On or before February 1 and August 1 of each year commencing August 1,2010 until the earlier of the date that the Developer shall have received the Reimbursement Amount or February 1, 2019 the City shall pay the Developer the amount of the Tax Abatements received by the City in the previous six month period. The City may terminate the Tax Abatement Program and this Agreement at an earlier date if an Event of Default occurs and the City rescinds or cancels this Agreement. 1970792v3 7 ARTICLE IV EVENTS OF DEFAULT Section 4.1 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 anyone or more of the following events: (1) Failure by the Developer to timely pay any ad valorem real property taxes, special assessments, utility charges or other governmental impositions with respect to the Project. (2) Failure by the Developer to cause the construction of the Project to be completed pursuant to the terms, conditions and limitations of this Agreement. (3) Failure by the Developer to observe or perform any other covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement. Section 4.2 Remedies on Default. Whenever any Event of Default referred to in Section 4.1 occurs and is continuing, the City, as specified below, may take anyone or more of the following actions after the giving of thirty (30) days' written notice to the Developer citing with specificity the item or items of default and notifying the Developer that it has thirty (30) days within which to cure said Event of Default. If the Event of Default has not been cured within said thirty (30) days: (a) The City may suspend its performance under this Agreement until it receives assurances from the Developer, deemed adequate by the City, that the Developer will cure its default and continue its performance under this Agreement. (b) The City may cancel and rescind this Agreement. ( c) 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 4.3 No Remedv 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 4.4 No Implied Waiver. In the event any agreement contained in this Agreement should be breached by any party and thereafter waived by the other party, such waiver shall be 1970792v3 8 limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. Section 4.5 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 they shall, on demand therefor, pay to the City the reasonable fees of such attorneys and such other expenses so incurred by the City. Section 4.6 Release and Indemnification Covenants. (1) The Developer releases from and covenants and agrees that the City and its governing body members, officers, agents, servants and employees shall not be liable for and agrees to indemnify and hold harmless the City and its governing body members, officers, agents, servants, and employees 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 Project. (2) Except for any willful misrepresentation or any willful or wanton misconduct of the following named parties, the Developer agrees to protect and defend the City and its governing body members, officers, agents, servants and employees, now or forever, and further agrees to hold the aforesaid harmless from any claim, demand, action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from a breach of the obligations of the Developer under this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, maintenance and operation of the Project. (3) The City and its governing body members, officers, agents, servants and employees shall not be liable for any damages or injury to the persons or property of the Developer or its officers, agents, servants or employees or any other person who may be about the Proj ect due to any act of negligence of any person. (4) 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 in the individual capacity thereof. 1970792v3 9 ARTICLE V ADDITIONAL PROVISIONS Section 5.1 Conflicts of Interest. No member of the governing body or other official of the City shall participate in any decision relating to this 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 5.2 Titles of Articles and Sections. Any titles of the several parts, articles and sections of this Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 5.3 Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand or other communication under this Agreement by any party 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 (1) in the case of the Developer is addressed to or delivered personally to: United HealthCare Services, Inc. 9900 Bren Road East, MN008- E305 Minnetonka, MN 55343 (2) in the case of the City is addressed to or delivered personally to the City at: City of Elk River, Minnesota Elk River City Hall 13065 Orono Parkway Elk River, MN 55330-5600 Attn: Director of Economic Development or at such other address with respect to any such party as that party may, from time to time, designate in writing and forward to the other, as provided in this Section. Section 5.4 Counterparts. This Agreement may be executed III any number of counterparts, each of which shall constitute one and the same instrument. Section 5.5 Law Governing. This Agreement will be governed and construed III accordance with the laws of the State of Minnesota. 1970792v3 10 Section 5.6 Duration. This Agreement shall remain in effect through the earlier of the date the Developer receives the Reimbursement Amount or February 1, 2019, unless earlier terminated or rescinded in accordance with its terms. Section 5.7 Provisions Surviving Rescission or Expiration. Sections 4.5 and 4.6 shall survive any rescission, termination or expiration of this Agreement with respect to or arising out of any event, occurrence or circumstance existing prior to the date thereof. 1 970792v3 11 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. UNITED HEALTHCARE SERVICES, INC. By Its By Its This is a signature page to the Tax Abatement and Business Subsidy Agreement by and between the City of Elk River, Minnesota and United HealthCare Services, Inc. 1970792v3 S-l CITY OF ELK RIVER, MINNESOTA By Its Mayor By Its Administrator This is a signature page to the Tax Abatement and Business Subsidy Agreement by and between the City of Elk River, Minnesota and United HealthCare Services, Inc. 1970792v3 S-2