6.1. SR 07-16-2007
REQUEST FOR ACTION
To
Ci Council
Agenda Section
Community Development
Item Number
6.1.
Prepared by
Heidi Steinmetz, Assistant Director of
Economic Develo ment
Reviewed by
Scott Clark, Community Development
Director
Reviewed by
Meeting Date
July 16,2007
Item Description
Public Hearing - Consider Resolution Authorizing
Execution of a Tax Abatement and Business Subsidy Agreement
with Metal Craft Machine & Engineering
Action Requested
State statute requires local government agencies to hold a public hearing (see attached public hearing
notice) to receive comment on Tax Abatement and Business Subsidies. Following the public hearing,
staff recommends the City Council approve the attached "Resolution Authorizing Execution of a Tax
Abatement and Business Subsidy Agreement" with Metal Craft Machine & Engineering. The draft
agreement is also attached.
Bacqround/Discussion
Metal Craft Machine & Engineering is requesting property Tax Abatement for the expansion of their
manufacturing operations in Elk River. The attached staff report describes the proposed project and Tax
Abatement request that were reviewed by the EDA on July 9, 2007. The EDA is recommending the City
Council's approval of the Tax Abatement and Business Subsidy for the project.
This abatement request meets all of the EDA's policies regarding employment and valuation.
Financial Impact
. Up to $426,888 City Tax Abatement assistance for a time period of up to twelve years
o A request has also been made to Sherburne County for up to $426,888 of Tax
Abatement assistance for a time period of up to ten years
Attachments
. Staff Report dated July 9, 2007 Regarding EDA Recommendation
. Public Hearing Notice
. Resolution Approving Property Tax Abatement & Business Subsidy Agreement
. DRAFT Tax Abatement and Business Subsidy Agreement
Action
Motion by _
Second by _
Vote
Follow Up
S: \Industrial Siting\Metal Craft\Memos \ Council Action Requested, 7-16-07 .doc
MEMORANDUM
TO: Economic Development Authority
FROM: Heidi Steinmetz, Assistant Director of Economic Development
DATE: July 9,2007
SUBJECT: Consider Recommendation to City Council for Approval of Tax
Abatement Assistance for Metal Craft Machine & Engineering
Expansion Project
Attachments
. City of Elk River Tax Abatement & Business Subsidy Policies
. Metal Craft Tax Abatement Application
. Tax Abatement Application Review Worksheet
Company Background
Metal Craft Machine and Engineering provides machining for the medical, food & drug,
aerospace, and computer industries. Over the past thirty years, Metal Craft has grown from
leasing 200 square feet of space and one employee to owning 57,000 square feet of space
(Elk River & Wisconsin facilities) and 136 total employees (78 in Elk River and 58 in
Wisconsin). See the below timeline.
1978 200
1979 1,000
1980 2,000
1983 5,000
1988 Ex anded to 10,000
1996 30,000
1997 Ex anded to 27,000
Consider Tax Abatement Assistance for Metal Craft
July 9, 2007 EDA Meeting
Page 2 of 3
Metal Craft, 12797 Meadowva1e Road, Elk River
Issue
After expanding its current facility in Elk River several times, Metal Craft has reached the
point of being landlocked. Staff has been working with Metal Craft for the past several
months to identify a site and financing assistance to retain the company in Elk River.
Project Description
The company would like to construct a 60,000 square foot light industrial facility on a
portion of the 17.11-acre Sandpiper Business Park (formerly known as the Gagne property).
The company will occupy the entire 60,000 square feet with the potential to expand up to
120,000 total square feet within six to eight years. The company plans to purchase the entire
17.11-acre Sandpiper lot, construct their building on a 9. 6-acre portion and plans to hold the
remaining 7.31 acres for investment purposes.
Proposed Financing Assistance
Metal Craft has submitted the attached Tax Abatement application. A summary of the
request and job retention/creation and wage goals are as follows:
. Up to $426,888 City assistance for a time period of up to twelve years
. Up to $426,888 Sherburne County assistance for a time period of up to ten years (per
County policy)
. 104 jobs retained & to be created (78 retained & 26 to be created) at an average wage
of $21.95 per hour
Staff has evaluated the company's application based on the attached Tax Abatement and
Business Subsidy Policies and the Tax Abatement Application Review Worksheet, which
indicates that the project scored 44.5 out of 45 possible points, which equates to a "highly
desirable" project. In addition, Ehlers and Associates will prepare the "but-for" analysis for
the project in preparation for the July 16th City Council meeting.
Requested Action
Staff requests that the EDA recommend to the City Council approval of providing Tax
Abatement assistance to Metal Craft Machine & Engineering with the following criteria:
. Pay-as-you-go Tax Abatement note in the amount of up to $426,888
. Metal Craft to receive 100% of the annual Tax Abatement for a maximum period of
up to 12 years
Consider Tax Abatement Assistance for Metal Craft
July 9,2007 EDA Meeting
Page 3 of 3
. Commitment from Metal Craft to create 26 new full-time equivalent jobs at a
minimum hourly wage, exclusive of benefits required by law, of $15.00 within two
years of the final certificate of occupancy
Next Step
A City Council public hearing has been scheduled for July 16, 2007 to consider providing
Tax Abatement and a business subsidy to the Metal Craft expansion project.
VL.I. .1..1....1;;; "'" "'.1.,1,0.;;.; VL.1...!,......... V.L "........... .1..................1.
tect, BWBR Architects, 380 St.
Peter Street, #600, St. Paul, MN
55102; the Minneapolis Dodge
Plan Room; the Minneapolis
Builders Exchange; the St. Paul
Builders Exchange; and Reed's
Construction Market Data Plan
Room.
The Construction Manager will
provide a complete set of Bidding
Documents as noted in AlA
Document A701, Article 1 for a
deposit of $100.00 per set to pro-
spective bidders and trade con-
tractors. The documents will be
available about July 12, 2007 .
The Construction Manager will
refund the cost of only one set to
those bidders who submit a bona
fide bid and return the bid docu-
ments to RJM Construction
within 30 days of the bid date,
subject to the conditions of AlA
Document A701. Additional sets
may be purchased at $150.00 per
set.
There will be a pre-bid meeting
at the Elk River City Hall, 13065
Orono Parkway, Elk River, MN
55330 at 10:00 am on Monday,
July 16, 2007. All prospective bid-
ders should attend.
Make Proposals in duplicate in
exact accordance with the pro-
posal form in the Project Manual,
and sign in long-hand. No oral,
telegraphic or fax bids will
accepted or considered.
Submit with each bid a certified
check or acceptable bidders bond
payable to the City of Elk River in
the amount equal to five percent
(5%) ofthe total bid.
Bids may not be withdrawn for a
period of sixty (60) days following
the scheduled time of opening
bids, without the consent of the
owner. All bj.ds will be evaluated
by the Owner, the Architect and
the Construction Manager. The
Owner reserv€s the right to accept
any bid or reject any or all bids, or
parts of such bids and waive
informalities or irregularities in
bidding. Successful bidders will
be required to furnish satisfac-
tory Labor and Material Payment
Bond, Performance Bond, and
Certificates of Insurance and a
signed contract within 10 days of
award of contract.
The schedule calls for breaking
ground on September 18, 2007
and construction completion on
September 1, 2008. Work will be
completed according to a schedule
to be issued after the preconstruc-
tion conference and in accordance
with information presented in
Section 01-1100.
Please direct all inquiries to RJM
Construction.
(Jn27-Jy4-ll)
CERTIFICATE OF ASSUMED
NAME-STATE OF
MINNESOTA
Pursuant to Chapter 333, Minnesota
Statutes; the undersigned, who is or
will be conducting or transacting a
commercial business in the state of
Minnesota under an assumed name
hereby certifies: '
1. The assumed name under which
the business is or will be conducted is:
InSPIRE Studio. '
2. The street address of the principal
place of business is or will be: 19160
Concord St. NW, Elk River, MN 55330.
3. List the name and complete street
address of all persons conducting busi-
..........", nnrlcu" +ho nh...n.... A .......~..~nrl 1\T<::l1"'t'l^
;b~~~-=d~;-c-~-ib~d -~;di~i~-;;~
amendment, please call
763/635-1030 or visit us Elk River
City Hall, 13065 Orono Parkway.
Jeremy Barnhart
Planning Manager
(Jn27)
CITY OF ELK RIVER
NOTICE OF
PUBLIC HEARING
REGARDING PROPOSED
PROPERTY TAX
ABATEMENTS AND
BUSINESS SUBSIDY
FOR THE METAL CRAFT
MACHINE & ENGINEERING
EXPANSION 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, July 16, 2007, to
be held at City Hall, Elk River,
Minnesota, on the request of
Metal Craft Machine & Engi-
neering (the "Company") that the
City grant a business subsidy and
abate to the Company a portion of
the property taxes to be levied by
the City on a 17.14 acre property
currently identified as Parcel
Identification No. 75-131-4100 in
the City (the "Property") for an
approximately 60,000 square foot
light industrial facility (the
"Improvements") to be con-
structed by the Company. The
total amount of the taxes pro~
posed to be abated by the City'on
the Property for up to a twelve
year period is estimated to be not
more than $426,888. The City
Council will consider granting a
prop erty tax a b a tem en t 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 Devel-
opment 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 com-
plaint with the City if the City
fails to comply with Minnesota
Statutes, Sections 116J.993 to
116J.995, and rio action may be
filed against the City for the fail-
ure to comply unless a written
complaint is filed.
All interested persons may
appear at the July 16th public
hearing and present their views
orally or in writing. Anyone
needing reasonable accommoda-
tions or an interpreter should con-
tact the City Clerk's office at the
City Hall, telephone (763)
635-1000.
(Jy4)
NOTICE
CITY OF ROGERS
Notice is hereby given that the
Planning Commission will be con-
ducting a public hearing on Tues-
day, July 17, 2007 at 7:00 p.m. at
the Rogers Community Room,
located at 21201 Memorial Drive,
to consider the following requests:
"Rezoning of 2.55 acres from agri-
cultural to R-2, Single Family
Residential "Preliminary and final
plat approval of Edison Addition
The property legally described as:
That part of the E 317 ft of the
NE '4 of NW '4. Sec 22. T 120.
Run your bargO"ain ad with up to 15 words
al words are 0 cents ead.. Your ad will
VEH ICLE ADS: If your i
MERCHANDISE ADS: If y
Non-commercial items only, Price
To place y
Star News, 5C
NOTICE Of PU
Notice of Power Plant Site Permit
SUBJECT:' Gteat RiVerEllergy proposes
to construct a simple cycle combustion
turbine adjacent to it'lexisting l'acilities in
Elk River, Sherburne Cmmty, Minnesota.
GreatRiver Energy is proposing tobuildtbis
facility in order to ensure sllfiicient and
reliable electric $ervice to its members'
customers. Therefore, Great River Energy
has applied to the MinnesoUtPublic Utilities
Commission ("Commission") fot a. Site
Permit pursuant to tile Minnesota Power
Plant Siting Act (Minnesota Statutes
116C.51 through 116C,(9). and Minnesota
Rules Chapter 4400.
Project Description: Great River Energy
proposes to construct a nominal 175-
megawatt (MW) (summer capacity)
combustion turbine power plant at its
existing Elk River facility. The turbine would
be fueled primarily by natural gas withfue!
oil backup. Construction would commence
in the spring of 2008 and the plant would
start opemting in tile spring of 2009.
Site Permit Requirement: The addition
of this genemting unit at the Elk River site
falls within the definition of a Large Electric
Power Generating Plant (LEPGP) in the
Power Plant Siting Act and, thus, requires a
Site Permit from the Commission prior to
construction. Great River Energy is applying
for a site permit foHowi.ng the full review
process, wh.ich requires the applicant to
identify the preferred site for the power plant
and one alternative site. The preferred site
location is at the Elk River site. The
alternative site location is in RosetnQunt,
Dakota County, Minnesota north of Courtty
Road 42 and East of US Highway 52. The
altel'native site .is bounded by 145th St E,
ElriinentDun1mn: 0
issues the site permit,
may exercise its lluth0l1
to use eminent domain
necessary for the proje
Statutes * 216E.12. H
River Energy's prefer
sites are 011 existing j
property, so Great Riv
anticipate having to u:
acquire land for the pm
Certificate of Need
energy facility shall be
in Minnesota without
Cenii'icate of Need
Commissic)U pursuant tf
216C.30. GRE filed a
CON with the Commi~
on May 18, 2007 I!
Minnesota Rules Chapt!
The Department
Environmental Report
large electric power g\
come before the C
determination of ne
4410,70(0). The Enviro
contain infOlmation (
environmental impact:
project aSllociatcd with
timing of the project, 5J and volmge. The Enviro
also conUlin illlbrmation
proposed project and 1m
measures for anticipated
Minnesota Rule 441 (
Department to prepare ;
Environmental Report
applicant for a CON 1'01
the PUC for a site permi
EXTRACT OF MINUTES OF MEETING
OF THE CITY COUNCIL OF THE
CITY OF ELK RIVER, MINNESOTA
HELD: July 16,2007
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 16th day of July, 2007, 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 07-
RESOLUTION 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:
I. Recitals.
(a) Metal Craft Machine & Engineering, Inc. (the "Developer") proposes to
construct an approximately 60,000 square foot light industrial facility 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 twelve years in an amount not to exceed
$426,888. The abatement will apply to 100% of the City's share of the property taxes
(the "Abatement") derived from the property described as Parcel Identification Number
75-131-4100 (the "Property").
(b) On the date hereof, the Council held a public hearing on the question of
the Abatement and the business subsidy, and said hearing was preceded by at least 10
days but not more than 30 days prior published notice thereof.
( 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:
2047530vl
(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 increase or
preserve the tax base of the City and provide 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, 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; provided, however, the
this approval is contingent upon the approval by Sherburne County of an
abatement program for the Project upon the same terms as set forth below for the
County's share of property tax amount which the County receives from the
Property. The terms of the Abatement are as follows:
(a) The Abatement shall be for up to twelve (12) years and shall apply to the
taxes payable in the years 2009 through 2020, 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
$426,888.
(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
officer or officers of the City shall be conclusive evidence of the approval of the
Agreement in accordance with the terms hereof.
2047530vl
2
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:
Passed and adopted by the City Council of the City of Elk River on this 16th day of July, 2007.
Stephanie, Klinzing, Mayor
ATTEST:
Tina Allard, City Clerk
2047530vl
3
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 Metal Craft Machine & Engineering, Inc.
Project.
WITNESS my hand this 16th day of July, 2007.
Tina Allard, City Clerk
2047530vl
TAX ABATEMENT AND
BY AND
CITY OF ELK RIVER,
METAL CRAFT
2045533v2
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.................... ............................................................................. I
Section 1.1 Definitions............................................................................................ 1
ARTICLE II REPRESENTATIONS AND WARRANTIES................................................ 3
Section 2.1 Representations and Warranties ofthe City......................................... 3
Section 2.2 Representations and Warranties of the Developer............................... 3
ARTICLE III UNDERTAKINGS BY DEVELOPER AND CITy....................................... 5
Section 3.1 Construction of Project and ReimbursemeIltm!ilf..i'lax Abatement
Property Cost ........................................ .;.~:~F::':...... .~:.......................... ... 5
Limitations on Undertaking ofthe Ci~::::~~;..................................... 5
Commencement and Completion o.~::V(ms~p................................ 5
D d D. ............ ~.>,~~.... 5
amage an estructlOn...... ':;;j~~0;;.:;::'::""""'" ::~!~!il's:.'.."""""""""""""
Change in Use of Project .. ..;:~:;;.~. ..:~..,...~............... :;.;;j!?:......................... 5
Prohibition Against Tra~siirofProj~:t and Assig~~~!::~,:..:
Agreement................. .:Ff*Ff*;~'~;,.,.......... .'1;':;;;..................... .~.::~j?::;~:............. 5
Real Property Taxes........... :;~:.-..;...... "'~~"';;:""""""""'" '.;.77$.................. 6
Business Subsidies Act .........:.:~~;:~::......... ................................. ....... 6
Duration of AQatement Program::;:::!:::~.................................................. 7
Section 3.2
Section 3.3
Section 3.4
Section 3.5
Section 3.6
Section 3.7
Section 3.8
Section 3.9
ARTICLE IV EVENTS OF DEF A~5,,''":;u..;;....:.............. ..':':~i~~~i~;"";:""'''''''''''''''''''''' .......... 8
Section 4.1 Events ofDefau~~~:i0::...................:..:~~;;~...................................... 8
Section 4.2 Remedies on Defau.lt........ .M'.:.::;;;........... ...::........................................... 8
Section 4.3 ~~~~11ledy Exclusi~~;.;.I,,;!:i::.. ..:::::i;~!!j~!;:::;:..................................... ......... 8
Section 4.4 ~o....i:!f!#,ed Waiver .. .,:{;.;::....... .......;.r..................................................... 8
Section 4.5..AgreeIij1ilt to Pay Att6~ey's Fees and Expenses ............................... 9
Section 4. 6 ,.;;;;:~jj~t:!!...B.elease&d Indemnifidiio!hCovenants.............................................. 9
ARTICLE V ADDITiSNA1i;g~~SIONS . ;:~:;...... ............................................ ............... 10
..................~.,;;..w.;'".~~...:::;;,'
SeCtIglrii;K;~ Co~ts ofIn'~~....................................................................... 10
S~~ti()jf5;:2 ::;j~::.Jit1e~e";A rticles ancfSections .......................................... ................. 10
,S'Ction 5 .3ilotices~lDemands .................................................................... .... 10
;:;~~on 5.4 ;:~~~nterp~~;~:::.................................................................................. 10
Seeiin 5.5 Liij:poveriilng ............................ ...................................................... 10
SectiOij5..6 Driiiiion . ...................................................................................... ...... 11
Section5:~ Pr~isions Surviving Rescission or Expiration.................................. II
2045533v2
-1-
TAX ABATEMENT AND BUSINESS SUBSIDY AGREEMENT
THIS AGREEMENT, made as of the _ day of August, 2007, by and among the City
of Elk River, Minnesota (the "City"), a municipal corporation and political subdivision of the
State of Minnesota, and Metal Craft Machine & Engineering, Inc., a Minnesota corporation (the
"Developer").
WITNESSETH:
WHEREAS, pursuant to Minnesota Statutes, Sections
City has established a Tax Abatement Program; and
WHEREAS, the City believes that the
(as defined herein), and fulfillment of this
City, will result in preservation and
opportunities and are in accordance with the
and local laws and requirements under which the
assisted; and
WHEREAS, the requirements
116J.993 through 116J.995, apply to this
WHEREAS, the City has adopted
with the Business public
subsidies that comply
was published; and
as a subsidy agreement under the
DEFINITIONS
Section 1.
shall have the
All capitalized terms used and not otherwise defined herein
unless a different meaning clearly appears from the context:
Agreement 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;
2045533v2
1
City means the City of Elk River, Minnesota;
County means Sherburne County, Minnesota;
Developer means Metal Craft Machine & Engineering, Inc., a Minnesota corporation, its
successors and assigns;
Event of Default means any of the events described in Section 4.1;
Tax Abatement Program means the Statutes,
Section 469.1812 through 469.1815, as
60,000 square foot
Proiect means the construction by the Developer of an
light industrial facility to be located in the City;
State means the State of Minnesota;
Tax Abatement Act means Minnesota
Tax Abatement Property property currently
identified as Parcel Identification
Tax Abatements means 100% taxes on the Tax
Abatement Property abated in accordance
2045533v2 2
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of the City. The City makes the following
representations and warranties:
(I) The City is a municipal corporation and a political s~~~yision of the State and
has the power to enter into this Agreement and carry out its obligat~jsnereunder.
(2) The Tax Abatement Program was created, ad~ted~~approved in accordance
with the terms of the Tax Abatement Act. ~
terms
limited to,
regulations).
(3) To finance the costs of the Project
proposes, subject to the further provisions of
reimburse the Developer for a portion of the
provided in this Agreement.
by the::':l;)eyeloper, the City
to apply the tax~~baJements to
propetty as further
(4) The City has made the
Abatement Program.
Abatement Act for the Tax
Section 2.2
following representations and warranties:
The Developer makes the
(I)
obligations
federal laws.
Agreement and to perform its
its articles or bylaws or any local, state or
existing under the laws of this State and
carry out the covenants contained herein.
Project to be constructed in accordance with the
and federal laws and regulations (including, but not
energy conservation, building code and public health laws and
(4) The will obtain or cause to be obtained, in a timely manner, all
required permits, and approvals, and will meet, in a timely manner, all requirements of
all applicable local, and federal laws and regulations which must be obtained or met before
the Project may be lawfully constructed
(5) The construction of the Project would not be undertaken by the Developer, and in
the OpInIOn of the Developer would not be economically feasible within the reasonably
foreseeable future, without the assistance and benefit to the Developer provided for in this
Agreement.
2045533v2
3
(6) 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.
(7) 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 and the Developer are
not adverse parties to the litigation.
of any traffic,
with the
(8) The Developer will cooperate fully with
parking, trash removal or public safety problems
construction and operation ofthe Project.
2045533v2
4
ARTICLE III
UNDERTAKINGS BY DEVELOPER AND CITY
Section 3.1 Construction of Proiect and Reimbursement of Tax Abatement Property
Cost.
(1) The costs of the construction of the Project shall be p'!tit;;;\>y the Developer. The
Developer will construct the Project in accordance with the appro~d;ccofistruction plans and at
all times prior to the termination of this Agreement will operate~~~[Q}aintain, preserve and keep
the Project or cause the Project to be maintained, preserved ~~Kepi:1il:4,;Q1 the appurtenances and
every part and parcel thereof, in good repair and condition: .:::::C~
(2) Upon completion of the Project and;::1bb;iSsion to the"e~i::::ef a settlement
statement for the purchase of the Abatement,~erty actlLally incurred ;~Q:;p,!id by the
Developer or its designee, the City shall reimB~Jhe D~;~loper for su.6sts of the
Abatement Property in an amount not to exceed $2J~ti~..~~he"Reimburserflent Amount")
pursuant to the Abatement Program as provided in Sectiofi:1i~~
Section 3.2 Limitations on Unde~~~~~f the Citv.N~!~~standing the provisions of
Section 3.1, the City shall have no obliga~:~m:t~Bi1Ilburse the '~~eloper for the costs of the
Project, if the City, at the time or times such::i:eayme~m..~~~t.~:Qe mad~is entitled under Section 4.2
'C~"~, .-=~' '-S':'*'0";""';'<:~---
to exercise any of the remedies set forth there!!:g a~#resiltt:,~l'liEvent of Default which has not
been cured..,;::;;':::::::. ~.~
~m
"~~*.,, "''''_''''''_'_''''''c
Section 3.3G;~encem~ii:i and Compl1iion of Construction. The Developer shall
complete the Project by.A2I 30,~~.92. All work ~C:respect to the Project to be constructed or
provided by theJ2~velopei:~1l;~:ei1f~~ity::~Ith the construction plans as submitted by the
Developer.~fiiii~~~~~tby t~X"u :;'
-~-",^
.,;'!2thing in this .A;i~~mentSi~~!:ge deemed to impair or limit any of the City's rights or
respbn~1~~s under its ZO~!~~ laws '~fconstruction permit processes.
."^.m~,',',w._m ',"
SectiOij~~t!- Damageiiid Destruction. In the event of damage or destruction of the
Project the Dev~l~p~r shall rj~ir or rebuild the Project.
".""".,,,~_ .__e;-'
,,""_. .-=._-
Section 3.5 Cttmjiein Use ofProiect. The City's obligations pursuant to this Agreement
shall be subject to the.c:Untinued operation ofthe Project by the Developer.
Section 3.6 Prohibition Against Transfer ofProiect 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:
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(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.
(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 of the 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 ~,'priorwritten approval all
instruments and other legal documents involved in effecting thEiinsfer of any interest in this
Agreement or the Project. .~~'~"'::;," ,
Section 3.7 Real Property Taxes. The Deve!gJiiE~fi:all, so i5q~s~s this Agreement
remains in effect, pay all real property taxes with.~pect to all parts o~~;;;,Tax Abatement
Property owned by it which are payable pursuan!~;{;~y statut~ory or contractu~g~' that shall
accrue until title to the property is vested in anC)ther:p~~on. iil~,. Developer agi'~g:~that for tax
assessments so long as this Agreement remains in effect!:j~1s;.. ,::;::;:-~" ,'"
(a) It will not see~:S"~dministrative raii~~. or judicial review of the
applicability of any tax statute~_!':l~ to the ad v~l~~~m l?Foperty taxation of real
property contained on the Tax Abai'~~1t~:1faperty determ~~ by any tax official to be
applicable to the Project or the De~Joper:::~~1t~the i:gapplicability of any such tax
statute as a defens~~e(lIlY proceediij~~~ith re~i~~j~ the Tax Abatement Property,
including delinql!ElUEt~~Foceedings; p~~lded, ho~ver, "tax statute" does not include
any local ordinajCe or res~li:tion levying:~tax; ..
---- '-"""""";"""""';':';'" ~
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(b) If,,;;~ nO~.:liieek adminisjative review or judicial review of the
constitu~~gg:~ity of.~it~:::~~la.til1:g:to the taxation of real property contained on
the::I,:~~H~~~~fl3&nt Pr6fi!'t:ty deterinined::by any tax official to be applicable to the Project
?~:::tfi.e DeveI5p~~~~~: rais~,~nconstitutionality of any such tax statute as a defense in
:.:::::f~ proceedingsJg~~~~ing ai~~~U'ent tax proceedings with respect to the Tax Abatement
,;',. ~Pr:~~~rty; provided;!Il:!wever,5'tax statute" does not include any local ordinance or
res~~gl1levying a f~~,
(ar:::., It wi~:hot seek any tax deferral or abatement, either presently or
prospectiveljiiUhCU3zed under Minnesota Statutes, Section 469.181, or any other State or
federal law, 5f~i~'ad valorem property taxation of the Tax Abatement Property so long
as this Agreem~ht 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
a portion of the Tax Abatement Property, which is approximately $426,888, and that the
Business Subsidy is needed because the Project is not sufficiently feasible for the Developer to
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undertake without the Business Subsidy. The public purpose of the Business Subsidy is to create
jobs and increase the tax base in the City. The Developer agrees that they will meet the
following goals (the "Goals"): it will create at least twenty-six (26) full time jobs in connection
with the development of the Development Project at a wage of at least $ per hour, which
includes benefits 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~~~fter the Benefit Date,
compounded semiannually. If the Goals are met in part, the Dev.per will repay a portion of
the Business Subsidy (plus Interest) determined by multipl~E~~e Business Subsidy by a
fraction, the numerator of which is the number of jobs in the.~9~ls W:1Jiib were not created at the
wage level set forth above and the denominator of whichis~~nty-si~@,~ (i.e. number of jobs
set forth in the Goals). ~. "'::;ii'
(3) The Developer agrees to (i) report jtszirogress ~p. achieving th~~~to the City
until the later of the date the Goals are met or tWo~from,~~~.Benefit Date,~!~~~~ifthe Goals
are not met, until the date the Business Subsidyfi:~f:i~p~:(lfJ include in .'the report the
information required in Section 116J.994~ Subdivision 7 a!t:!~~Business Subsidies Act on forms
developed by the Minnesota Departmen~:~~"Employment an~~~enomic Development, and (iii)
send completed reports to the City. Th~Pli:f~loper agrees to~~_,t~~se reports no later than
March 1 of each year commencing Marc&}, ~~'atl~ within 3~~ays after the deadline for
meeting the Goals. The City agrees that a it do:i~II91;r~ceiye~the reports, it will mail the
Developer a warning withi!!~,9J;l,~.week of the'\lq~jf~d tilmi::~e. If within 14 days of the post
marked date of the wa.rnjj~l~'t~orts are noi::~ade, the De'Veloper agrees to pay to the City a
penalty of $100 for e~ubseq1i~I;p.ay until the:J,f~port is filed up to a maximum of $1 ,000.
,=@""",,,.
(4) The Deve~(ag;~i~:~:;;!!Lcontinue~rations of the Project for at least five (5)
years after theBe~~~~pate. ~:~!':,f:: '7':;:;::;:..,,:::~,;:
(5) Other~~the 1i!'::Abatements provided by the City and comparable tax
abat~p.jiit~ from the Colfil'&.therei!~e~tate or local government agencies providing financial
assi~iarl~~{<?!.the Proj ect~2':7. ..,.. ',' ',"
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(6) :~~~!e is no pa~t corporation of the Developer.
Section 3.9:E:.iaratioi.:'of Abatement Program. The Tax Abatement Program shall exist
for a period of up to ~%~tie years beginning with real estate taxes payable in 2009 through 2020.
On or before February'l and August I of each year commencing August 1,2009 until the earlier
of the date that the Developer shall have received the Reimbursement Amount or February 1,
2021 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
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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 valor~Ffealproperty taxes, special
assessments, utility charges or other governmental impositions "Y~m~~pect to the Project.
(2) Failure by the Developer to cause the constniel!on of m~t~f,oject to be completed
pursuant to the terms, conditions and limitations of this ~~tn~nt.'~
(3) Failure by the Developer to obse~gj~r perfoqp any other ca~~t,,~condition,
obligation or agreement on its part to be observede5I'l'!:~~2rmed'~ger this Agree~~t
Section 4.2 Remedies on Default.
4.1 occurs and is continuing, the
following actions after the giving of
specificity the item or items of default
within which to cure said Event of
said thirty (30) days:
Whenever an:m~~t of Default referred to in Section
specified belowi~ take anyone or more of the
written ii~ to the Developer citing with
the Devel~i:~Ifat it has thirty (30) days
Defaili has not been cured within
under this Agreement until it
adequate by the City, that the Developer
under this Agreement.
this Agreement.
action, including legal or administrative action, in
necessary or desirable to enforce performance and
agreement, or covenant of the Developer under this
Section No remedy herein conferred upon or reserved to the
City is intended to of any other available remedy or remedies, but each and every
such remedy shall be and shall be in addition to every other remedy given under this
Agreement or now or 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
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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.
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==~'" -""q
(I) The Developer releases from and covenant~nd agf€1€1~:::Jhat the City and its
governing body members, officers, agents, servants ~lJlj>f6o/ees sh~ll~~t be liable for and
agrees to indemnify and hold harmless the City aav~its governing bodY::!!ETIbers, officers,
agents, servants, and employees against any loss QE~age to~roperty or any.~~~o or death
of any person occurring at or about or resulting fr5ffi:;g~hdefect:!!!he Project.
"'w=,-. ="",,'.,
,,---=-. =."
(2) Except for any willful misrepresentation'();"it~y willful or wanton misconduct of
the following named parties, the Dev~~~g~r agrees to pri~~~!and defend the City and its
governing body members, officers, agent~~;~~~wts and empla~~?w or forever, and further
agrees to hold the aforesaid harmless fr~!ll~~~~!m, demari~;iciion or other proceeding
whatsoever by any person or entity whatso€i~er arr,S!ill:~~.l??TPortally arising from a breach of
the obligations of the Devel~g~~under this A:~ee~llt,~oF:tii::~ansactions contemplated hereby
or the acquisition, con.s~lia..........!J.:......'...'........,.,... installation,~~t...o.....Mrnership,..jfaintenance and operation of the
Project..m. ............ ... .:~ .
=~"'*"="""",',',',;,""
(3) The .. City.;~~ its~g~erning bod~embers, officers, agents, servants and
employees sh~lLnotbe lia~~~~oraii~:::!~~~~iP15r injury to the persons or property of the
Develope~?~::lits:i~~s, agen~~~~~rvanis:6~;~ployees or any other person who may be about
the Proj~t.aue to ari~!:~fnegligEl~~ of any person.
~~~ All covenaIi!~~:stipuhiJiIDs, promises, agreements and obligations of the City
containedh~~~i~ shall be da~'iFed taFhe the covenants, stipulations, promises, agreements and
obligations 5~.~~~.. City and~bt of any governing body member, officer, agent, servant or
employee of the:('ilil.i....t~jn the i:tifividual capacity thereof.
.....C',;",.....,'.'.'..,'.".'.'_ ,Xi=x,-
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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 emn~~~ of the City shall be
personally liable to the City in the event of any default or breach Bi~tne Developer or successor
or on any obligations under the terms of this Agreement.,~~,
.w:"
___"'''w
Section 5.2 Titles of Articles and Sections. Anytitlifi" of the~i~al parts, articles and
sections of this Agreement are inserted for convelliRe". M refereii~~c~ply and shall be
disregarded in construing or interpreting any of its p~~;Yf~ons:" ~'"
m=,=
Section 5.3 Notices and Demands. Exc~Pt,:~~..othe~:se expressly pf~~itled in this
Agreement, a notice, demand or other communication U:ii~Li'is'Kgreement by any party to any
other shall be sufficiently given or delivered if it is dispi,~d by registered or certified mail,
postage prepaid, return receipt personif~""and
or at such other
designate in writing
(1)
in the case ofthe
"-""",
to or deli~~7personally to:
Metal Craft Machine &
12797 Road
Elk
(2)
or delivered personally to the City at:
respect to any such party as that party may, from time to time,
to the other, as provided in this Section.
Section 5.4 Counterparts. This Agreement may be executed In 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 In
accordance with the laws of the State of Minnesota.
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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, 2021, 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.
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IN WITNESS WHEREOF, the City has caused this Agreement to be duly executed in its
name and on its behalf, and the Developer has caused this Agreement to be duly executed in its
name and on its behalf, on or as of the date first above written.
METAL CRAFT MACHINE &
ENGINEERING, INe.
This is a signature page to the Tax Abatement and Business Subsidy Agreement by and between
the City of Elk River, Minnesota and Metal Craft Machine & Engineering, Inc.
2045533v2
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CITY OF ELK RIVER, MINNESOTA
By
Its Mayor
This is a signature page to the Tax Abatement and Business Subsidy Agreement by and between
the City of Elk River, Minnesota and Metal Craft Machine & Engineering, Inc.
2045533v2
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