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HomeMy WebLinkAbout2003-02-11Packet CITY OF COTTAGE GROVE ECONOMIC Secretary DEVELOPMENT AUTHORITY AGENDA February 11, 2003 7:30 A.M. 1. Call to Order 2. Roll Call 3. Approval of January 14, 2003 Minutes • 4. Business Items A. Business Subsidies Public Hearing for Schmid and Sons/SSP Properties B. Development Agreement for Schmid and Sons C. Project Updates D. Gateway North Development District E. Business Breakfast Recap F. Calendar G. River Oaks/EDA Joint Venture H. EDA Vacancy 5. Miscellaneous Business Items 6. Adjourn Next Meeting Date: March 11, 2003 • E:\Economic Development\E D A\Agendas\2003\February11 Regular.doc CITY OF COTTAGE GROVE • ECONOMIC DEVELOPMENT AUTHORITY MINUTES January 14, 2003 Pursuant to due call and notice thereof, a regular meeting of the Economic Development Authority was held at City Hall, 7516 80th Street South, Cottage Grove, Minnesota on the 14th day of January 2003. CALL TO ORDER The meeting was called to order at 7:30 a.m. by EDA President Wolcott. ROLL CALL • Members Present: Jim Wolcott, EDA President Sandy Shiely, EDA Vice-President Mike Wennen, Authority Member Dick Pederson, Authority Member Gerry Weingartner, Authority Member Members Absent: Fred Luden, Authority Member Glen Kleven, Authority Member Others Present: Ryan Schroeder, City Administrator Michelle Wolfe, Assistant City Administrator Nancy Hanzlik, City Engineer Scott Johnson, Management Analyst APPROVAL OF MINUTES Authority Member Wennen moved to approve the December 10, 2002 EDA Minutes. EDA Vice-President Shiely seconded. Motion carried unanimously. PROJECT UPDATES Applebee's— Restaurant opened in December. It has been very busy and a number of citizens have commented to commission members about the customer service. Economic Development Authority- Minutes January 14, 2003 Page 2 3.82 Acres next to Kohl's—The City has received a couple of offers on this parcel. The City will counter offer on one of the offers in the near future. RFP from MEDP—City staff will put together a proposal for a recent request for proposal from Metro Economic Development Partnership for a project. METRO EAST DEVELOPMENT PARTNERSHIP UPDATE Ryan Schroeder gave the EDA an update on the Metro East Development Partnership. In 2002 MEDP experienced some financial difficulties. They tried to merge with the St. Paul Chamber of Commerce. This did not work and many businesses cut ties with MEDP. MEDP currently only has one staff member left. They have now become affiliated with the Minneapolis Chamber of Commerce. They hope to become a regional development organization. Mr. Schroeder thinks this move will help with regional economic development matters because of the higher probability of spin-off projects from other businesses in the metro area. Eventually, the organization may have separate divisions for the east and west metro. They have offered a seat on the board of directors to DTED. Amie Wetterlin is the interim Executive Director for the organization. ELECTION &APPOINTMENT OF OFFICERS Dick Pederson nominated Jim Wolcott for the EDA President position. Mayor Shiely seconded the motion and the motion carried unanimously. Dick Pederson nominated Mayor Shiely for the EDA Vice President position. Mike Wennen seconded the motion and the motion carried unanimously. Mayor Shiely nominated Gerry Weingartner for the EDA Treasurer position. Mike Wennen seconded the motion and the motion carried unanimously. GATEWAY REDEVELOPMENT Acquisition of property for the Kohls project continues. City staff is working on a land swap with US Bank and will have possession of property from MNDOT in February. Staff needs the EDA to approve the land swap and the demolition of existing buildings on the Kohls site. The City is currently trying to negotiate for the Ruvelson property and an easement from CB Burnett. If a settlement cannot be reached, both properties will be going through condemnation hearings at the end of January or the beginning of February. The land swap with US Bank will consist of the City receiving 23,000 sf for the Hardwood Court project and US Bank receiving 17,400 sf on the north side of CB Burnett. Neither • Economic Development Authority- Minutes • January 14, 2003 Page 3 parcels are developable property. The current CB Burnett access will be eliminated and moved to Hardwood Court. It is impossible to construct a safe access at or near the bank's current access. The current road does not allow for future development in the area. There will be six lanes of traffic on the new Hardwood Court. Kohls will have a joint access with US Bank. The Pet Clinic and Victory Church area will be used during road construction for access to the bank, Tutor Time, and the office condos. Jim Wolcott expressed some concerns about the safety of the access. Nancy Hanzlik, the City Engineer, will look into the possible options for this intersection. The time-line for the project is difficult to determine without control of all the property for the project. The tenants in the existing buildings will need time to locate space in Cottage Grove and move. Dick Pederson made a motion to accept and approve the land swap agreement between • US Bank and the City. Mike Wennen seconded the motion and the motion carried unanimously. Mayor Shiely made a motion to accept and approve a purchase agreement for the Victory Church. Gerry Weingartner seconded the motion and the motion carried unanimously. • Gerry Weingartner made a motion to accept and approve the demolition of commercial buildings for the Kohls project. Mike Wennen seconded the motion and the motion carried unanimously. INDUSTRIAL PARK SSP Properties LLC has signed a purchase agreement with the City and Wag Farms for a prepared site in the Industrial Park. Schmid and Sons Packaging will locate in this new facility. WAG Farms has put together a purchase agreement that can be used for future purchase agreements in the Industrial Park. Ryan Schroeder said the agreement is pretty much the same for every purchase agreement, but the legal descriptions and other language is added when needed. A letter of intent and business subsidies will be discussed at the next EDA meeting, which will include a public hearing on the business subsidies. Jim Wolcott wanted to know how much land was left at the current price in the Industrial Park. Ryan Schroeder said there is 150 developable acres in the Industrial Park. The City currently has an option on 22 acres adjacent to the Renewal site. WAG Farms is currently doing a market study on other metro area Industrial Parks to find out how much they charge per square foot. Mr. Schroeder thought it would be a mistake to increase the cost of the land because of the current economic situation. Dick Pederson wanted to know how many people the business would employ. Michelle Wolfe said the business will employ 20 to 40 employees depending on the time of year. • RECOMMENDED ACTION • Hold the public hearing and then consider adoption of the attached resolution related to the project. Attachments: 1999 Resolution Establishing Business Subsidies Criteria Resolution Approving Business Subsidy for SSP Properties G:\Economic Development\E D A\Documents\2003\Feb Schmid Subsidy.doc • • RESOLUTION NO. 99-204.1 • RESOLUTION TO ESTABLISH CRITERIA FOR GRANTING BUSINESS SUBSIDIES WHEREAS, the City of Cottage Grove is required by Minnesota Statutes, Sections 116J.993— 116J.995 to adopt criteria for awarding business subsidies; and WHEREAS, the City Council conducted a public hearing at its meeting of December 1, 1999 for the establishment of a business subsidy policy required by state law to continue tax increment activity and other business subsidies offered by the City; and WHEREAS, the City of Cottage Grove has an established history of providing financial assistance and other business subsidies to private enterprises meeting certain public goals and objectives; NOW THEREFORE BE IT RESOLVED, that the following Business Subsidy Policy is hereby established in the City of Cottage Grove: Section 1. This Policy is adopted for purposes of the business subsidies act (the "Act"), which is Minnesota Statutes, Sections 116J.993— 116J.995. The terms used in this Policy are intended to have the same meanings as used in the Act, and this Policy shall apply only with respect to subsidies granted under this Act. • Section 2. With respect to granting subsidies, the determination of the number of jobs to be created and the wage levels thereof shall be guided by the following principles and criteria: A. Each project shall be evaluated on a case-by-case basis, recognizing its importance and benefit to the community from all perspectives, including created or retained employment positions. B. If a particular project does not involve the creation of jobs, but is nonetheless found to be worthy of support and subsidy, it may be approved without any specific job or wage goals, as may be permitted by state law. C. In cases where the objective is the retention of existing jobs, the recipient of the subsidy shall be required to provide reasonably demorstrable evidence that the loss of those jobs is imminent. D. The setting of wage and job goals must be sensitive to prevailing wage rates, local economic conditions, external economic forces over which neither the grantor nor the recipient of the subsidy has control, the individual financial resources of the recipient and the competitive environment in which the recipient's business exists. E. While the creation of jobs is a desirable goal, which benefits the community, it must be recognized that not all projects assisted with subsidies derive their public purposes and importance solely by virtue of job creation. In addition, the imposition of high job creation requirements and high wage levels may be . unrealistic and counterproductive in the face of larger economic forces and the financial and competitive circumstances of an individual business. In instances where a worthwhile project does not involve job creation, it may be approved for a subsidy, as may be permitted by law, with consideration given to the following: 1. Enhancing economic diversity by improving the mix of businesses in the area, providing essential customer services to the area, or generating a high level of secondary spin-off economic effects. 2. Stabilizing the community by investing in an area that i s economically depressed, investing in an area with slum and blight conditions, or stimulating additional capital investment in real property, equipment, and/or infrastructure in the area. 3. Increasing the tax base by providing a positive impact on the short and long term tax base, or providing a positive impact on other local business and individual property tax bills. 4. The projects risk-reward ratio, with special consideration of the type of assistance requested and the current status of that specific tool or program. Section 3. Because it is not possible to anticipate every type of project which may in its context and time present desirable community development and/or • preservation goals and objectives, the City must retain the right in its discretion to approve projects and subsidies which may vary from the principles and criteria of this Policy. Passed this 1st day of December 1999. en D. Denzer, Mayor I Attest: Zi.../..4rom,he.444act, Caron M. Stransky, City Clerk • ,, I • RESOLUTION NO. 03-XX • ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION CALLING FOR APPROVING BUSINESS SUBSIDIES TO A PROJECT REPRESENTED BY SSP PROPERTIES LLC WHEREAS, the SSP Properties Project is proposed to take place in Cottage Grove; and WHEREAS, plans call for the SSP Properties Project to locate within the Tax Increment Financing District No. 1-10; and WHEREAS, the Cottage Grove City Council held a public hearing on the adoption of Tax Increment Financing District 1-10, and approved the creation of Tax Increment District No. 1-10 in accordance with Minnesota Statutes, Sections 469.124 through 469.134, and Minnesota Statutes, Sections 469.174 through 469.179; and WHEREAS, awarding business subsidies associated with Tax Increment Financing District 1-10 for the SSP Properties Project is consistent with the City of Cottage Grove's Criteria for Awarding Business Subsidies, as adopted by Resolution No. 99-204.1, in accordance with Minnesota Statutes, Sections • 116J.993 through 116J.995, as amended; and WHEREAS, the City of Cottage Grove City Council approved a development agreement, including the designated subsidy, on February 5, 2003; and WHEREAS, a public hearing was held by the Cottage Grove Economic Development Authority (as Grantor) on February 11, 2003; NOW THEREFORE BE IT RESOLVED, the Economic Development Authority of the City of Cottage Grove, County of Washington, State of Minnesota, approves awarding business subsidies associated with Tax Increment Financing District No. 1-10 for the SSP Properties Project. Passed this 11th day of February 2003. Jim Wolcott, President Attest: 11111 Ryan Schroeder, Executive Director City of Cottage Grove 40 Memo To: Cottage Grove Economic Development Authority From: Michelle Wolfe, Assistant City Administrator K kjki-Q94 c Date: January 31, 2003 Re: Approve a Development Agreement with SSP properties LLC BACKGROUND In December the EDA approved (and the Council ratified) a predevelopment agreement with SSP Properties LLC for a 35,120 square foot office/warehouse project. SSP Properties will be the owner of the building, which will house • Schmid and Sons Packaging. The project will be constructed this spring (we are working towards a March groundbreaking) and will be located next to CCE Technologies on 95th Street. DISCUSSION Once a predevelopment agreement is approved, staff proceeds to obtain a purchase agreement from the property owner (WAG Farms) and to prepare the development agreement. The EDA has already taken action to authorize entering into a purchase agreement, and the Council will be asked to ratify that action at the February 5 meeting. The EDA is asked to approve the attached Development Agreement. The City Council was asked to approve the same agreement at the February 5th meeting, contingent upon EDA approval. The attached agreement is substantially similar to development agreements approved for previous Industrial Park projects. Article V of the Development Agreement outlines the Business Subsidy Act Requirements. As grantor in this transaction, the EDA is required by State Statute to follow a business subsidies process that includes a public hearing, which is scheduled for Tuesday, February 5 at 7:30 a.m. Once the public hearing has been concluded, the EDA will be asked to approve the business IDsubsidies resolution and the development agreement. This will take place prior to your consideration of the development agreement. ACTION REQUESTED • Approve the attached development agreement ("Contract for Private Development") by and between the Cottage Grove Economic Development Authority and SSP Properties LLC. Attachment G:\Economic Development\E D A\Documents\2003\Feb Schmid Dev Agmt.doc • 1110 Draft 1/20/03 CONTRACT FOR PRIVATE DEVELOPMENT By and Between 111 COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY and SSP PROPERTIES LLC This document drafted by: KENNEDY&GRAVEN, CHARTERED 470 Pillsbury Center Minneapolis,MN 55402 (612)337-9300 S RHB-225293v1 CT165-22 • TABLE OF CONTENTS • PAGE PREAMBLE 1 ARTICLE I Definitions Section 1.1. Definitions 1 Section 1.2. Exhibits 3 Section 1.3. Rules of Interpretation 4 ARTICLE II Representations and Warranties Section 2.1. Representations by the Authority 4 Section 2.2. Representations and Warranties by the Developer 4 ARTICLE III Acquisition and Conveyance of Development Property; Public Improvements Section 3.1. Acquisition and Conveyance of the Development Property 5 Section 3.2. Condition of Title 6 • Section 3.3. Financing 6 Section 3.4. Testing 6 Section 3.5. Conditions Precedent to Conveyance 7 Section 3.6. Closing; Delivery and Recording 7 Section 3.7. Storm Water Improvements; Connection Charges 8 Section 3.8. Fill 8 Section 3.9 Plat 8 ARTICLE IV Construction of Minimum Improvements Section 4.1. Construction of Minimum Improvements 8 Section 4.2. Preliminary and Construction Plans 9 Section 4.3. Commencement and Completion of Construction 9 Section 4.4. Certificate of Completion and Release of Forfeiture 9 Section 4.5 Reconstruction of Improvements 10 ARTICLE V Business Subsidy Act Requirements Section 5.1. Compliance with Business Subsidy Provisions 10 Section 5.2. Job and Wage Goals 11 • Section 5.3. Remedies 11 RHB-225293v1 CT165-22 Section 5.4. Reports 12 • ARTICLE VI Insurance Section 6.1. Required Insurance 12 Section 6.2 Evidence of Insurance 13 ARTICLE VII Collection of Taxes;Assessment Agreement; Reimbursement of Increment Section 7.1. Taxes 14 Section 7.2. Assessment Agreement 14 Section 7.3 Right to Collect Delinquent Taxes 15 Section 7.4 Use of Tax Increments 15 Section 7.5. Reimbursement of Tax Increment 15 ARTICLE VIII Prohibition Against Sale; Encumbrances Section 8.1 Prohibition Against Sale of Minimum Improvements 15 Section 8.2 Limitation Upon Encumbrance of Development Property 16 ARTICLE IX Events of Default Section 9.1. Events of Default Defined 16 Section 9.2. Remedies on Default 17 Section 9.3. Revesting Interest in the Authority Upon Happening of Event of Default Subsequent to Conveyance to Developer 17 Section 9.4. No Remedy Exclusive 18 Section 9.5. No Additional Waiver Implied by One Waiver 19 ARTICLE X Additional Provisions Section 10.1. Conflict of Interests; Representatives Not Individually Liable 19 Section 10.2. Equal Employment Opportunity 19 Section 10.3. Restrictions on Use 19 Section 10.4. Provisions Not Merged With Deed 19 Section 10.5. Notices and Demands 19 Section 10.6. Counterparts 20 Section 10.7. Disclaimer of Relationships 20 S REB-225293v1 CT165-22 11 TESTIMONIUM 21 SIGNATURES 21 EXHIBIT A LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY EXHIBIT B FORM OF QUIT CLAIM DEED EXHIBIT C LIST OF PRELIMINARY PLAN DOCUMENTS EXHIBIT D FORM OF CERTIFICATE OF COMPLETION AND RELEASE OF FORFEITURE EXHIBIT E FORM OF ASSESSMENT AGREEMENT • • RHB-225293v1 111 CT165-22 • CONTRACT FOR PRIVATE DEVELOPMENT THIS AGREEMENT, made this day of , 2003, by and between the Cottage Grove Economic Development Authority, a public body corporate and politic under the laws of Minnesota, having its principal office at 7516 80th Street South, Cottage Grove, Minnesota 55016-3195 (the "Authority") and SSP Properties LLC, a Minnesota limited liability company, having its principal office at 4209 Salem Drive West,Woodbury MN 55125 (the"Developer"). WITNESSETH: WHEREAS, the Authority created Development District No. 1 (the "Development District") and adopted a program (the "Program") for it, all in conformance with Minnesota Statutes, Sections 469.124 through 469.134, the Authority Development Districts Act (the "Act"); and WHEREAS, the Authority has established tax increment financing district No. 1-10 ("TIF District No. 1-10") and has adopted a tax increment financing(the"TIF Plan")related thereto; and WHEREAS, in order to achieve the objectives of the Program and the TIF Plan, the Authority is prepared to write down the cost of the Development Property, as hereinafter defined, and to otherwise assist the Developer in order to bring about development of the Development Property in accordance with the Program,the TIF Plan and this Agreement; and WHEREAS, the Authority believes that the development of land within TIF District No. 1- 10 pursuant to this Agreement and the fulfillment generally of this Agreement are in the vital and best interests of Cottage Grove and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of the applicable state and local laws and requirements under which the Development District has been undertaken. NOW, THEREFORE, in consideration of the covenants and the mutual obligations contained herein, the Authority and the Developer hereby covenant and agree with the other as follows: ARTICLE I Defmitions Section 1.1. Definitions. In this Agreement the following terms shall have the meanings given unless a different meaning clearly appears from the context: "Act" means the City Development Districts Act, Minnesota Statutes, sections 469.124 through 469.134, as amended. S RHB-225293v 1 1 CT1 65-22 "Agreement" means this Agreement, as the same may be from time to time modified, ip amended,or supplemented. "Assessment Agreement"means the agreement, in the form contained in Exhibit E attached hereto, among the Developer, the Authority and the Assessor and entered into pursuant to Article VII of this Agreement, which establishes a Minimum Market Value for the Development Property and the Minimum Improvements. "Assessor"means the assessor for Washington County,Minnesota. "Authority"means the Cottage Grove Economic Development Authority. "Business Subsidy Act"means Minnesota Statutes, sections 116J.993 through 116J.995 (the "Business Subsidy Act"). "Certificate of Completion and Release of Forfeiture" means the certificate, in the form contained in Exhibit D attached hereto, which will be provided to the Developer pursuant to Article IV of this Agreement. "City"means the city of Cottage Grove,Minnesota. "Construction Plans"means the final plans for construction of the Minimum Improvements to be submitted by the Developer and approved by the Authority. • "County"means Washington County,Minnesota. "Developer"means SSP Properties LLC. "Development Property" means the real property upon which the Minimum Improvements will be constructed,which property is legally described in Exhibit A attached hereto. "Development Property Deed" means the quit claim deed in the form attached hereto as Exhibit B,by which the Authority will convey the Development Property to the Developer. "EDA Act"or"Economic Development Authority Act"means Minnesota Statutes, sections 469.090 through 469.1081, as amended. "Event of Default"means an action by the Developer or the Authority listed in Article IX of this Agreement. "Minimum Improvements" means an office/warehouse facility containing approximately 35,120 square feet constructed in accordance with the Construction Plans submitted to and approved by the Authority. After completion of the Minimum Improvements, the term shall mean the Development Property as improved by the Minimum Improvements. • R1-IB-225293v1 2 CT165-22 "Minimum Market Value" means a market value for real estate tax purposes of at least $1,325,200 with respect to the Development Property and Minimum Improvements as of January 2, 2004 for taxes payable beginning in 2005 through the Termination Date. "Preliminary Plans" means, collectively, the plans, drawings and specifications for the construction of the Minimum Improvements which are listed on Exhibit C attached hereto. "Sale" means any sale, conveyance, lease, exchange, forfeiture or other transfer of the Developer's interest in the Minimum Improvements or the Development Property, whether voluntary or involuntary. "State"means the state of Minnesota. "Tax Increment Financing Act" or "TIF Act" means Minnesota Statutes, sections 469.174 through 469.179, as amended. "Tax Increment Financing District"or"TIF District"means the Authority's TIF District No. 1-10. "Tax Increment Financing Plan" or "TIF Plan" means the tax increment plan for TIF District No. 1-10. "Tax Official" means the Assessor, County auditor, County or State board of equalization, the commissioner of revenue of the State, or any State or federal district court, the tax court of the State, or the State supreme court. "Termination Date"means the date the TIF District terminates,which is expected to be after nine years after receipt of the first increment or 11 years after the date of approval of the TIF Plan, whichever occurs first. "Unavoidable Delays" means delays which are the direct result of unanticipated adverse weather conditions; strikes or other labor troubles; fire or other casualty to the Minimum Improvements; litigation commenced by third parties which, by injunction or other similar judicial action, directly results in delays; or, except those of the Authority or the City reasonably contemplated by this Agreement, any acts or omissions of any federal, State or local governmental unit which directly result in delays in construction of the Minimum Improvements. Section 1.2. Exhibits. The following exhibits are attached to and by reference made a part of this Agreement: Exhibit A. Legal description of the Development Property Exhibit B. Form of Quit Claim Deed Exhibit C. List of Preliminary Plan Documents Exhibit D. Form of Certificate of Completion and Release of Forfeiture Exhibit E. Form of Assessment Agreement 1111 RHB-225293v1 3 CT165-22 Section 1.3. Rules of Interpretation. (a) This Agreement shall be interpreted in accordance with and governed by the laws of Minnesota. (b) The words "herein" and "hereof' and words of similar import, without reference to any particular section or subdivision, refer to this Agreement as a whole rather than any particular section or subdivision hereof. (c) References herein to any particular section or subdivision hereof are to the section or subdivision of this Agreement as originally executed. (d) Any titles of the several parts, articles and sections of this Agreement are inserted for convenience and reference only and shall be disregarded in construing or interpreting any of its provisions. ARTICLE II Representations and Warranties Section 2.1. Representations by the Authority. The Authority makes the following representations as the basis for the undertakings on its part herein contained: (a) The Authority is a public body corporate and politic under the laws of Minnesota. • The Authority has the power to enter into this Agreement and carry out its obligations hereunder. The persons executing this Agreement and related agreements and documents on behalf of the Authority have the authority to do so and to bind the Authority by their actions. (b) Development District No. 1 is a development district within the meaning of the Act and was created, adopted and approved in accordance with the terms of the Act. (c) TIF District No. 1-10 is an economic development tax increment financing district within the meaning of the TIF Act. (d) The Authority has received no notice or communication from any local, State or federal official that the activities of the Developer or the Authority in the Development District may be or will be in violation of any environmental law or regulation. The Authority is aware of no facts the existence of which would cause it to be in violation of any local, State or federal environmental law,regulation or review procedure. Section 2.2. Representations and Warranties by the Developer. The Developer makes the following representations as the basis for the undertakings on its part herein contained: (a) The Developer is a Minnesota limited liability company, duly organized and in good standing under the laws of Minnesota and is not in violation of any provisions of its organizational documents. The Developer has the power to enter into this Agreement and carry out its obligations • R1-IB-225293v1 4 CTI 65-22 111 hereunder. The persons executing this Agreement and related agreements and documents on behalf of the Developer have the authority to do so and to bind the Developer by their actions. (b) hi the event the Development Property is conveyed to the Developer, the Developer will construct, operate and maintain the Minimum Improvements on the Development Property in substantial accordance with the terms of this Agreement, the Program, the TIF Plan, the Construction Plans and all local, State and federal laws and regulations, including, but not limited to, environmental,zoning,building code and public health laws and regulations. (c) The Developer will apply for and use its best efforts to obtain, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner, the requirements of all applicable local, State and federal laws and regulations which must be obtained or met before the Minimum Improvements may be lawfully constructed or used for their intended purpose. (d) 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 or any restriction or any 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. (e) The Developer would not be willing to construct the Minimum Improvements but for the commitment by the Authority to grant the financial assistance outlined in this Agreement and the use of tax increment for such assistance is essential to the Developer's ability to carry out its obligations under this Agreement. ARTICLE III Acquisition and Conveyance of Development Property; Public Improvements Section 3.1. Acquisition and Conveyance of the Development Property. The Authority is negotiating a purchase agreement with the fee owners to acquire the Development Property. In order to facilitate the financial feasibility of the development of the Development Property and in consideration of the Developer's fulfillment of its covenants and obligations under this Agreement to construct the Minimum Improvements, and subject to the conditions precedent to closing outlined in Section 3.5 of this Agreement, the Authority agrees to sell the Development Property to the Developer for $173,708. The Development Property is legally described in Exhibit A attached hereto. The Authority agrees to convey title and possession of the Development Property to the Developer under a quit claim deed in the form attached hereto as Exhibit B. The Authority shall arrange for the payment of all levied or pending special assessments prior to closing. The Developer and the Authority agree to pro rate as of the date of closing any real property taxes for the Development Property payable in the year of closing. The Developer agrees to pay all real estate taxes payable with regard to the Development Property in the years after closing. The conveyance of the Development Property and the Developer's use of the Development Property shall be subject to all of the conditions, covenants, restrictions and limitations imposed by this RHB-225293v 1 5 CT1 65-22 Agreement, the Assessment Agreement and the Development Property Deed. The conveyance of 40 title to the Development Property and the Developer's use of the Development Property shall also be subject to the building and zoning laws and ordinances and all other City, State and federal laws and regulation. Section 3.2. Condition of Title. Within 30 days of the date of this Agreement,the Authority agrees to submit to the Developer a commitment for title insurance regarding the Development Property. The Developer shall have 20 days after delivery of the commitment to examine same and to make any objections concerning the condition of title regarding the Development Property. Objections to the condition of title shall be made in writing and addressed to the Authority. Failure on the part of the Developer to make objections within 20 days shall constitute a waiver of same and of the Developer's right to object to the condition of title. If the Developer provides written objections to title, the Authority shall have 45 days thereafter to cure the defects cited by the Developer or to inform the Developer in writing that the Authority cannot or will not cure said defects. If there are no defects in title to which the Developer objects in writing or the Developer fails to object in a timely manner or if the Authority cures the defects within the prescribed period, the parties will proceed to closing. If there are defects in title to which the Developer has objected in a timely manner and which the Authority cannot or will not cure, the Developer may terminate this Agreement at its option within 10 days of notice from the Authority of its inability or unwillingness to cure. The Authority shall have no obligation to cure any defects in the title of the Development Property. If the Developer chooses to terminate this Agreement pursuant to this Section 3.2, the Developer agrees to execute a quit claim deed regarding the Development Property in favor of the Authority. Thereafter the parties shall have no further obligation towards one • another with regard to this Agreement or the Development Property. The Developer may also choose to proceed to closing on the Development Property and take title subject to the defect. Notwithstanding any other provision herein to the contrary, if the Developer proceeds to closing within less than the time periods set forth herein for receipt of a commitment for title insurance and objection to title defects, such action shall be deemed to be a waiver by the Developer of its right to examine and object to the condition of title of the Development Property. Section. 3.3. Financing. Before conveyance of the Development Property by the Authority, the Developer agrees to submit to the Authority evidence of a commitment for financing which is adequate, in the Authority's sole opinion, for the construction of the Minimum Improvements. If the Authority finds that the financing complies with the terms of this Section 3.3 and is sufficiently committed and adequate in amount to provide for the construction of the Minimum Improvements, the Authority shall notify the Developer in writing of its approval. Such approval shall not be unreasonably withheld. If the Authority rejects the evidence of financing as inadequate, it shall do so in writing specifying the basis for the rejection and the Developer shall have 30 days thereafter to submit a commitment for additional or alternate financing acceptable to the Authority. If the Developer fails to submit a commitment for financing acceptable to the Authority within said period of time or any additional period to which the Authority may agree, the Authority may notify the Developer of its failure to comply with the requirement of this Section 3.3 and may terminate this Agreement at its sole discretion. Section 3.4. Testing. After execution of this Agreement and within 30 days thereafter, the Developer may notify the Authority of its desire to undertake tests and inspections of the 110 RHB-225293v1 6 CT165-22 Development Property regarding the presence of pollution, contamination or hazardous substances on the Development Property and the suitability of the soils for the Developer's intended purposes. The Authority agrees to seek permission from the fee owners to allow the Developer to enter the Development Property for such tests and inspections if the Authority has not yet acquired the Development Property. In the event that the Developer, following such tests and inspections, determines in its sole judgment that the condition of the Development Property is unsuitable for construction of the Minimum Improvements, the Developer may terminate this Agreement and return the Development Property to its condition prior to undertaking such tests and inspections. Regardless of whether the Developer avails itself of the right to conduct tests and inspections on the Development Property pursuant to this Section 3.4, after closing the Authority shall have no obligation or liability to the Developer for any unsuitability with respect to the soil conditions or the presence of any pollution, contamination or hazardous substances on the Development Property. Notwithstanding any other provision herein to the contrary, if the Developer proceeds to closing within less than the period of time allowed in this Section 3.4 for testing, such action shall be deemed to be a waiver by the Developer of its right to test on the Development Property. Section 3.5. Conditions Precedent to Conveyance. Notwithstanding anything herein to the contrary, the Authority shall not be obligated to convey the Development Property to the Developer until the following conditions precedent have been satisfied: (1) The Authority has acquired the Development Property from the fee owners; (2) The Developer has submitted a commitment or other evidence of financing which is adequate, in the Authority's sole discretion, to fully finance construction of the Minimum Improvements; (3) The Developer has submitted and the Authority has approved the Construction Plans; (4) The Developer has executed the Assessment Agreement in the form attached hereto as Exhibit E; and (5) There has been no Event of Default on the part of the Developer which has not been cured. Section 3.6. Closing; Delivery and Recording. Subject to the substantial satisfaction of all of the terms and conditions contained in this Agreement which must be satisfied prior to the Authority's conveyance of the Development Property to the Developer, the Authority shall execute and deliver the Development Property Deed to the Developer at closing. Closing shall occur on March 14, 2003 or as soon thereafter as reasonably practicable. If closing has not occurred by March 31, 2003, either party may terminate this Agreement by notice to the other in accordance with Section 9.4 of this Agreement. The Developer shall have possession of the Development Property upon closing. Closing shall be at the offices of the Authority or such other location to which the parties may agree. Prior to closing, the Authority shall submit to the Developer a copy of the Development Property Deed and other closing documents for review. The Development Property Deed shall be in recordable form and shall be recorded among the County land records. RI-1B-225293v1 7 CT165-22 The Developer shall be responsible for the cost of recording the Development Property Deed, this • Agreement and the Assessment Agreement. The Developer shall pay at closing all fees associated with obtaining the commitment for title insurance for the Development Property and for the policy of title insurance. The Developer and the Authority shall each pay at closing one-half of the closer's fee. Section 3.7. Storm Water Improvements., Connection Charges. The Minimum Improvements will be constructed within an industrial park being developed through the efforts of the Authority and which includes or will include numerous other developments. Storm water management will be accomplished within the industrial park through the construction of one or more regional storm water detention ponds. The Developer will be responsible for the cost of the storm water drainage pipe and all inlet/outlet structures on the Development Property. The Authority will pay for any off-site piping needed. The price the Developer will pay for the Development Property includes applicable area charges for sanitary sewer and water but the Developer will be responsible for regular connection charges at the time of issuance of a building permit for the Minimum Improvements. Section 3.8. Fill. The Developer has requested that the Authority make available excess fill for the Developer's use in preparing the Development Property for construction of the Minimum Improvements. The Authority has a limited amount of excess fill near the terminus of 97th Street which it is willing to make available to the Developer. The authority agrees to allow the Developer to move fill from the Authority's excess fill site to the Development Property in an estimated amount of 13,000 cubic yards or such lesser amount as may be determined by the Authority's or City's engineer. The Developer agrees to restore the Authority's excess fill site with a MnDOT approved seed mixture to control erosion and as otherwise required by the Authority's or City's engineer. The Authority makes no representations to the Developer as to the quality of the fill being made available to the Developer nor whether such amounts as the Authority's or City's engineer determines may be used will be adequate for the purposes of the Developer. Section 3.9. Plat. In order to accommodate the Developer's construction schedule for the Minimum Improvements,the Authority and the Developer have agreed to convey the Development Property with the metes and bounds description used in Exhibit A, which property is approximately 123,197 square feet in area. The Developer and the Authority expect that the Development Property will be platted after closing and agree to cooperate in preparing, approving and recording the plat. ARTICLE IV Construction of Minimum Improvements Section 4.1. Construction of Minimum Improvements. The Developer agrees that it will construct the Minimum Improvements on the Development Property in accordance with the Construction Plans and at all times prior to the Termination Date will maintain, preserve and keep the Minimum Improvements or cause the Minimum Improvements to be maintained,preserved and kept in good repair and condition. The Developer recognizes that it is because the Developer has agreed to construct the Minimum Improvements that the Authority is willing to offer the assistance 110 RHB-225293v1 8 CT165-22 outlined in this Agreement. The Developer acknowledges that, in addition to the requirements of • this Agreement, construction of the Minimum Improvements will necessitate compliance with other reviews and approvals by the Authority and possibly other governmental agencies and agrees to submit all applications for and pursue to their conclusion all other approvals needed prior to constructing the Minimum Improvements. Section 4.2. Preliminary and Construction Plans. (a)Within 30 days after execution of this Agreement, the Developer shall submit dated Construction Plans to the Authority. The Construction Plans shall provide for the construction of the Minimum Improvements and shall be in substantial conformity with the Preliminary Plans and this Agreement. The Authority will approve the Construction Plans if they (1) conform to the Preliminary Plans listed in Exhibit C attached hereto; (2) conform to all applicable federal, State and local laws, ordinances,rules and regulations; (3) are adequate to provide for the construction of the Minimum Improvements; (4) conform to the State building code; and (5) if there has occurred no uncured Event of Default on the part of the Developer. No approval by the Authority shall relieve the Developer of the obligation to comply with the terms of this Agreement, the terms of any applicable federal, State and local laws, ordinances, rules and regulations in the construction of the Minimum Improvements. No approval by the Authority shall constitute a waiver of an Event of Default. (b) If the Developer desires to make any change in the Construction Plans after their approval by the Authority, including any change to the design or materials of the Minimum Improvements or any other change which would also require review or reapproval under any applicable code, ordinance or regulation, the Developer shall submit the proposed change to the 1110 Authority for its approval. If the proposed change conforms to the requirements of this section 4.2 with respect to the original Construction Plans or is otherwise acceptable to the Authority, the Authority shall approve the proposed change. Such change in the Construction Plans shall be deemed approved by the Authority unless rejected, in whole or in part, by written notice by the Authority to the Developer, setting forth in detail the reasons therefor. Such rejection shall be made within 10 days after receipt of the written notice of such change from the Developer. Section 4.3. Commencement and Completion of Construction. Subject to Unavoidable Delays, the Developer shall commence construction of the Minimum Improvements no later than April 1, 2003. Subject to Unavoidable Delays,the Developer shall have substantially completed the construction of the Minimum Improvements no later than December 31, 2003. All work with respect to the Minimum Improvements to be constructed or provided by the Developer on the Development Property shall be in conformity with the Construction Plans. The Developer shall make such reports to the Authority regarding construction of the Minimum Improvements as the Authority deems necessary or helpful in order to monitor progress on construction of the Minimum Improvements. Section 4.4. Certificate of Completion and Release of Forfeiture. (a) After substantial completion of the Minimum Improvements in accordance with the Construction Plans and all terms of this Agreement, the Authority will furnish the Developer with a Certificate of Completion and Release of Forfeiture in the form of Exhibit D hereto. Such certification by the Authority shall be a conclusive determination of satisfaction and termination of the agreements and covenants in this Agreement and in the Development Property Deed with respect to the obligations of the Developer RHB-225293v1 9 CT165-22 to construct the Minimum Improvements and the dates for the beginning and completion thereof. The Certificate of Completion and Release of Forfeiture shall only be issued after issuance of a • certificate of occupancy by the City. (b) The Certificate of Completion and Release of Forfeiture provided for in this section 4.4 shall be in such form as will enable it to be recorded in the proper County office for the recordation of deeds and other instruments pertaining to the Development Property. If the Authority shall refuse or fail to provide such certification in accordance with the provisions of this section 4.4, the Authority shall, within 30 days after written request by the Developer, provide the Developer with a written statement, indicating in adequate detail in what respects the Developer has failed to complete the Minimum Improvements in accordance with the provisions of the Agreement, or is otherwise in default of a material term of this Agreement, and what measures or acts will be necessary, in the opinion of the Authority, for the Developer to take or perform in order to obtain such certification. Section 4.5. Reconstruction of Improvements. If the Minimum Improvements are damaged or destroyed before or after completion thereof and issuance of a Certificate of Completion and Release of Forfeiture, but before the Termination Date, the Developer agrees, for itself and its successors and assigns, to reconstruct the Minimum Improvements to a value at least equal to the Minimum Market Value within one year of the date of the damage or destruction. Failure by the Developer or any successor or assign to reconstruct the Minimum Improvements as required by this Section 4.5 shall not alter or limit the Developer's obligations under the Assessment Agreement. The Minimum Improvements shall be reconstructed in accordance with the approved Construction • Plans, or such modifications thereto as may be requested by the Developer and approved by the Authority in accordance with Section 4.2 of this Agreement. The Developer's obligation to reconstruct the Minimum Improvements pursuant to this Section 4.5 shall end on the Termination Date. ARTICLE V Business Subsidy Act Requirements Section 5.1. Compliance with Business Subsidy Provisions. The parties agree and represent to each other as follows: (a) The subsidy provided to the Developer is the conveyance of the Development Property to the Developer for $167,821 for land which has a fair market value of$252,554, representing a subsidy of$78,846. (b) The public purposes of the subsidy are to promote development of an office/warehouse facility in the Authority, generate spin-off development at a key location in the City, increase net jobs in the City and the State, and increase the tax base of the Authority and the State. (c) The goals for the subsidy are to secure construction of the Minimum Improvements on the Development Property; to maintain the Minimum Improvements as an office/warehouse facility R1-IB-225293v 1 10 CTI 65-22 for at least five years as described in clause (f) below; and to create the jobs and wage levels in • accordance with this section 5.1. (d) If the goals described in clause (c) above are not met, the Developer must make the payments to the Authority described in section 5.3. (e) The subsidy is needed because the cost of the Development Property at fair market value makes development of an office/warehouse facility financially infeasible without public assistance, all as determined by the Authority upon approval of the TIF Plan. (f) The Developer must continue operation of the Minimum Improvements as an office/warehouse facility for at least five years after the date of issuance of the Certificate of Completion and Release of Forfeiture. (g) The Developer does not have a parent corporation. (h) The Developer has not received, and does not expect to receive financial assistance from any other grantor as defined in the Business Subsidy Act in connection with purchase of the Development Property or construction of the Minimum Improvements. Section 5.2. Job and Wage Goals. Within two years after the date of issuance of the Certificate of Completion and Release of Forfeiture (the "Compliance Date"), the Developer shall cause to be created at least one new full-time equivalent jobs on the Development Property (excluding any jobs previously existing in the State as of the date of this Agreement and relocated to this site) and shall cause the wages for the one new employee to be no less than $10 per hour, exclusive of benefits. Notwithstanding anything to the contrary herein, if the wage and job goals described in this section 5.2 are met by the Compliance Date, those goals are deemed satisfied despite the Developer's continuing obligations under Sections 5.1(f) and 5.4. The Authority may, after a public hearing, extend the Compliance Date by up to one year, provided that nothing in this Section 5.2 will be construed to limit the Authority's legislative discretion regarding this matter. Section 5.3. Remedies. If the Developer fails to meet the goals described in Section 5.1(c), the Developer shall repay to the Authority upon written demand from the Authority a pro rata share of the amount of$78,846, representing the amount of the subsidy granted to the Developer (unless the Authority exercises its right of reverter as to the Development Parcel under Section 8.3 hereof); and interest on said amount at the implicit price deflator as defined in Minnesota Statutes, Section 275.50, subd. 2, accrued from the date of issuance of the Certificate of Completion and Release of Forfeiture to the date of payment. The term pro rata share means percentages calculated as follows: (i) if the failure relates to the number of jobs, the jobs required less the jobs created, divided by the jobs required; (ii) if the failure relates to wages, the number of jobs required less the number of jobs that meet the required wages, divided by the number of jobs required; • RHB-225293v1 11 CT1 65-22 (iii) if the failure relates to maintenance of the manufacturing facility in accordance with Section 5.1(f), 60 less the number of months of operation as an office/warehouse facility (where any month in which the office/warehouse facility is in operation for at least 15 days constitutes a month of operation), commencing on the date of the Certificate of Completion and Release of Forfeiture and ending with the date the office/warehouse facility ceases operation as determined by the Authority,divided by 60; and (iv) if more than one of clauses (i) through (iii) apply, the sum of the applicable percentages,not to exceed 100%. Nothing in this Section 5.3 shall be construed to limit the Authority's remedies under Article IX hereof. In addition to the remedy described in this Section 5.3 and any other remedy available to the Authority for failure to meet the goals stated in Section 5.1(c), the Developer agrees and understands that it may not a receive a business subsidy from the Authority or any grantor as defined in the Business Subsidy Act for a period of five years from the date of the failure or until the Developer satisfies its repayment obligation under this Article V,whichever occurs first. Section 5.4. Reports. The Developer must submit to the Authority a written report regarding business subsidy goals and results by no later than March 1 of each year, commencing March 1, 2004 and continuing until the later of(i) the date the goals stated Section 5.1(c) are met; (ii)30 days after expiration of the five-year period described in Section 5.1(f); or(iii)if the goals are not met,the date the subsidy is repaid in accordance with Section 5.3. The report must comply with Section 116J.994, subdivision 7 of the Business Subsidy Act. The Authority will provide information to the Developer regarding the required forms. If the Developer fails to timely file any report required under this Section 5.4, the Authority will mail the Developer a warning within one week after the required filing date. If, after 14 days of the postmarked date of the warning, the Developer fails to provide a report, the Developer must pay to the Authority a penalty of$100 for each subsequent day until the report is filed. The maximum aggregate penalty payable under this Section 5.4 is $1,000. ARTICLE VI Insurance Section 6.1. Required Insurance. (a) The Developer agrees to provide and maintain at all times during the process of constructing the Minimum Improvements and, from time to time at the request of the Authority, furnish the Authority with proof of payment of premiums on: (i) Builder's risk insurance, written on the so-called `Builder's Risk -- Completed Value Basis," in an amount equal to one hundred percent (100%) of the insurable value of the Minimum Improvements at the date of completion, and with coverage available in nonreporting form on the so called"all risk"form of policy; (ii) Comprehensive general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations and contractual liability RHB-225293v1 12 CT165-22 insurance)together with an Owner's Contractor's Policy with limits against bodily injuryand • property damage of not less than $1,000,000 for each occurrence(to accomplish the above - required limits, an umbrella excess liability policy may be used); and (iii) Workers'compensation insurance,with statutory coverage. The policies of insurance required pursuant to clauses (i) and(ii) above shall be in form and content reasonably satisfactory to the Authority and shall be placed with financially sound and reputable insurers licensed to transact business in Minnesota. The policy of insurance delivered pursuant to clause (i) above shall contain an agreement of the insurer to give not less than 30 days' advance written notice to the Authority in the event of cancellation of such policy or change affecting the coverage thereunder. (b) Upon completion of construction of the Minimum Improvements, and prior to the Termination Date, the Developer shall maintain, or cause to be maintained, at its cost and expense, and from time to time at the request of the Authority shall furnish proof of the payment of premiums on,insurance as follows: (i) Insurance against loss and/or damage to the Minimum Improvements under a policy or policies covering such risks as are ordinarily insured against by similar businesses, including (without limiting the generality of the foregoing) fire, extended coverage, vandalism and malicious mischief, heating system explosion, water damage, • demolition cost, debris removal, collapse and flood, in an amount not less than the full insurable replacement value of the Minimum Improvements or the Minimum Market Value, whichever is greater. No policy of insurance shall be so written that the proceeds thereof will produce less than the minimum coverage required by the preceding sentence,by reason of coinsurance provisions or otherwise, without the prior consent thereto in writing by the Authority. The term "full insurable replacement value" shall mean the actual replacement cost of the Minimum Improvements and shall be determined from time to time at the request of the Authority, but not more frequently than once every three years, by an insurance consultant or insurer, selected and paid for by the Developer and approved by the Authority; and (ii) Such other insurance, including worker's compensation insurance respecting all employees of the Developer, in such amount as is customarily carried by like organizations engaged in like activities of comparable size and liability exposure; provided that the Developer may be self-insured with respect to all or any part of its liability for worker's compensation. Section 6.2. Evidence of Insurance. All insurance required in this Article VI shall be taken out and maintained in responsible insurance companies selected by the Developer which are authorized under the laws of Minnesota to assume the risks covered thereby. The Developer agrees to deposit annually with the Authority copies of policies evidencing all such insurance, or a certificate or certificates or binders of the respective insurers stating that such insurance is in force • and effect. Unless otherwise provided in this Article VI, each policy shall contain a provision that the insurer shall not cancel nor materially modify it without giving written notice to the Developer RHB-225293v1 13 CT165-22 and the Authority at least 30 days before the cancellation or modification becomes effective. Not 110 less than 15 days prior to the expiration of any policy, the Developer shall furnish the Authority evidence satisfactory to the Authority that the policy has been renewed or replaced by another policy conforming to the provisions of this Article VI,or that there is no necessity therefor under the terms of this Agreement. In lieu of separate policies, the Developer may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein, in which event the Developer shall deposit with the Authority a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Minimum Improvements. ARTICLE VII Collection of Taxes; Assessment Agreement; Reimbursement of Increment Section 7.1. Taxes. The Developer agrees that prior to the Termination Date it will not cause a reduction in the real property taxes paid in respect to the Development Property or the Minimum Improvements through willful destruction of the Minimum Improvements or any part thereof or refusal to reconstruct the Minimum Improvements if damaged or destroyed. The Developer also agrees that it will not, prior to the Termination Date, engage in a sale, or permit the sale of, the Development Property or the Minimum Improvements to any entity whose ownership would render the Development Property or the Minimum Improvements exempt from real property taxes under State law, other than the Authority or the City, or apply for a deferral or abatement of • property tax on the Development Property or the Minimum Improvements pursuant to Minnesota Statutes, section 469.1812 to 469.1815,or any similar law. Section 7.2. Assessment Agreement. (a)Prior to conveyance of the Development Property, the Developer and the Authority agree to execute an Assessment Agreement pursuant to Minnesota Statutes, Section 469.177, subd. 8, specifying the Minimum Market Value for the Development Property together with the Minimum Improvements. The amount of the Minimum Market Value shall be no less than $1,325,280 as of January 2, 2004 for taxes payable beginning in 2005 through the Termination Date, notwithstanding any failure to complete construction of the Minimum Improvements by the date specified in Section 4.3 of this Agreement. (b) The Assessment Agreement shall be substantially in the form attached hereto as Exhibit E. Nothing in the Assessment Agreement shall limit the discretion of the Assessor to assign a market value to the Development Property and Minimum Improvements in excess of such Assessor's Minimum Market Value nor prohibit the Developer from seeking through the exercise of legal or administrative remedies a reduction in such market value for property tax purposes; provided, however, that the Developer shall not seek a reduction of such market value below the Assessor's Minimum Market Value set forth in the Assessment Agreement in any year so long as such Assessment Agreement shall remain in effect. The Assessment Agreement shall remain in effect until the Termination Date; provided that if at any time before the Termination Date the Assessment Agreement is found to be terminated or unenforceable by any Tax Official or court of competent jurisdiction, the Minimum Market Value described in this Section 7.2 shall remain an obligation of the Developer or its successors and assigns (whether or not such value is binding on • RHB-225293v 1 14 CT165-22 • the Assessor), it being the intent of the parties that the obligation of the Developer to maintain, and not seek reduction of, the Minimum Market Value specified in this Section 7.2 is an obligation under this Agreement as well as under the Assessment Agreement, and is enforceable by the Authority against the Developer, its successors and assigns in accordance with the terms of this Agreement. Section 7.3. Right to Collect Delinquent Taxes. The Developer acknowledges that the Authority is providing substantial aid and assistance to the Developer through sale of the Development Property for less than full market value. The Developer understands that the real estate taxes on the Development Property and the Minimum Improvements must be promptly and timely paid. To that end, the Developer agrees for itself, its successors and assigns, in addition to the obligation pursuant to statute to pay real estate taxes, that the Developer is also obligated at all times prior to the Termination Date by reason of this Agreement to pay before delinquency all real estate taxes assessed against the Development Property and the Minimum Improvements. The Developer acknowledges that at all times prior to the Termination Date this obligation creates a contractual right on behalf of the Authority to sue the Developer or its successors and assigns to collect delinquent real estate taxes and any penalty or interest thereon and to pay over the same as a tax payment to the County auditor. In any such suit, the Authority shall also be entitled to recover its reasonable out-of-pocket costs, expenses and attorney fees. Section 7.4. Use of Tax Increments. The Authority shall be free to use any tax increment received from the Minimum Improvements for any purpose for which such increments may lawfully be used under the TIF Plan and pursuant to the provisions of State law, and the Authority shall have no obligations to the Developer with respect to the use of such increment. Section 7.5. Reimbursement of Tax Increment. Minnesota Statute, section 469.176, subd. 4c limits the use of tax increment in an economic development district to projects occupied by permitted uses. Minnesota Statutes, section 469.1771 requires the Authority to reimburse increment distributed to it and used to assist a project which does not qualify for tax increment assistance. If the Authority is required to reimburse increment to the County or any other governmental entity pursuant to Minnesota Statutes, section 469.1771, or any other provision of the TIF Act,the Developer agrees to reimburse a similar amount to the Authority within 30 days' written notice to the Developer. ARTICLE VIII Prohibition Against Sale; Encumbrances Section 8.1. Prohibition Against Sale of Minimum Improvements. The Developer represents and agrees that its use of the Development Property and its other undertakings pursuant to the Agreement, are, and will be, for the purpose of development of the Development Property and not for speculation in land holding. The Developer further recognizes that in view of the importance of the construction of the Minimum Improvements on the Development Property to the general welfare of Cottage Grove and the substantial assistance that has been • made available by the Authority for the purpose of making such Development possible, the fact that any act or transaction involving or resulting in a significant change in the identity of the RHB-225293v1 15 CT165-22 Developer is of particular concern to the Authority. The Developer further recognizes that it is • because of such qualifications and identity that the Authority is entering into the Agreement with the Developer, and, in so doing, is further willing to accept and rely on the obligations of the Developer for the faithful performance of all undertakings and covenants hereby by it to be performed. For the foregoing reasons, the Developer represents and agrees that, prior to the issuance of the Certificate of Completion and Release of Forfeiture, there shall be no Sale of the Development Property or the Minimum Improvements by the Developer nor shall the Developer suffer any such Sale to be made,without the prior written approval of the Authority. Section 8.2. Limitation Upon Encumbrance of Development Property. Prior to the issuance of the Certificate of Completion and Release of Forfeiture, the Developer agrees not to engage in any financing creating any mortgage or other encumbrance or lien upon the Development Property or the Minimum Improvements, whether by express agreement or operation of law, or suffer any encumbrance or lien to be made on or attached to the Development Property or the Minimum Improvements, other than the liens or encumbrances directly and solely related to construction of the Minimum Improvements and approved by the Authority, which approval shall not be withheld or delayed unreasonably if the Authority determines that such lien or encumbrance will not threaten • its security in the Development Property or the Minimum Improvements. ARTICLE IX Events of Default • Section 9.1. Events of Default Defined. Each and every one of the following shall be an Event of Default under this Agreement: (a) Failure by the Authority or the Developer to proceed to closing on the Development Property after compliance with or the occurrence of all conditions precedent to closing; (b) Failure by the Developer to commence and complete construction of the Minimum Improvements pursuant to the terms, conditions and limitations of Article IV of this Agreement, including the timing thereof,unless such failure is caused by an Unavoidable Delay; (c) Failure by the Developer to pay real estate taxes or special assessments on the Development Property and Minimum Improvements as they become due; (d) Appeal or challenge by the Developer or any party on its behalf of the Minimum Market Value prior to the Termination Date; (e) Failure by the Developer to use or allow the use of the Minimum Improvements for the purposes contemplated by this Agreement, including failure to comply with Sections 7.5 and 10.3 of this Agreement. • RHB-225293v 1 16 CT165-22 • (0 Transfer or Sale of the Development Property or the Minimum Improvements or any part thereof by the Developer in violation of Sections 7.1 or 8.1 of this Agreement and without the prior written permission by the Authority; (g) If the Developer shall file a petition in bankruptcy, or shall make an assignment for the benefit of its creditors or shall consent to the appointment of a receiver; or (h) Failure by either party to observe or perform any material covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement or the Assessment Agreement; Section 9.2. Remedies on Default. Whenever any Event of Default referred to in section 9.1 of this Agreement occurs, the non-defaulting party may take any one or more of the following actions after providing 30 days written notice to the defaulting party of the Event of Default, but only if the Event of Default has not been cured within said 30 days or, if the Event of Default is by its nature incurable within 30 days, the defaulting party does not provide assurances to the non- defaulting party reasonably satisfactory to the non-defaulting party that the Event of Default will be cured and will be cured as soon as reasonably possible: (a) Suspend its performance under this Agreement, including refusing to close on the Development Property, until it receives assurances from the defaulting party, deemed adequate by the non-defaulting party, that the defaulting party will cure its default and continue its performance under this Agreement; • (b) Terminate or rescind this Agreement; (c) If the default occurs prior to completion of the Minimum Improvements, the Authority may withhold the Certificate of Completion and Release of Forfeiture; (d) If the default occurs prior to issuance of the Certificate of Completion and Release of Forfeiture,revest title in the name of the Authority pursuant to Section 9.3 of this Agreement; (e) Enforce the Assessment Agreement; (f) Enforce the provisions of this Agreement relating to the Business Subsidy Act; and (g) Take whatever action, including legal or administrative action, which may appear necessary or desirable to the non-defaulting party to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant of the defaulting party under this Agreement or the Assessment Agreement. Section 9.3. Revesting Interest in the Authority Upon Happening of Event of Default Subsequent to Conveyance to Developer. In the event that subsequent to conveyance of the Development Property to the Developer and prior to the issuance of a Certificate of Completion and Release of Forfeiture for the Minimum Improvements: • RHB-225293v 1 17 CT1 65-22 (a) the Developer, subject to Unavoidable Delays, fails to begin construction of the . Minimum Improvements in conformity with this Agreement and such failure to begin construction is not cured within 60 days after written notice from the Authority to the Developer to do so; or (b) subject to Unavoidable Delays, the Developer, after commencement of the construction of the Minimum Improvements, fails to carry out its obligations with respect to the completion of construction of the Minimum Improvements(including the nature and the date for the completion thereof), or abandons or substantially suspends construction work, and any such failure, abandonment, or suspension shall not be cured, ended, or remedied within 60 days after written demand from the Authority to the Developer to do so; or (c) the Developer shall fail to pay real estate taxes or assessments on the Development Property when due, or shall place thereon any encumbrance or lien unauthorized by this Agreement, or shall suffer any levy or attachment to be made, or any materialmen's or mechanics' lien, or any other unauthorized encumbrance or lien to attach, and such taxes or assessments shall not have been paid, or the encumbrance or lien removed or discharged or provision satisfactory to the Authority made for such payment, removal, or discharge, within 30 days after written demand by the Authority to do so or such longer period, not to exceed 60 days, as may reasonably be necessary to remove said lien or encumbrance; provided, that if the Developer shall first notify the Authority of its intention to do so, it may in good faith contest any mechanics' or other lien to remain undischarged and unsatisfied during the period of such contest and any appeal, but only if the Developer provides the Authority with a bank letter of credit or other security in the amount of the lien, in a form satisfactory to the Authority,pursuant to which the bank will pay to the Authority the • amount of any lien in the event the lien is finally determined to be valid or, as an alternative to such forms of security, has made a deposit with the district court in the manner provided in Minnesota Statutes, section 514.10. During the course of such contest, the Developer shall keep the Authority informed respecting the status of such defense; or (d) there is, in violation of Sections 7.1 or 8.1 of this Agreement, any sale or other transfer of the Development Property to an entity exempt from payment of real estate taxes or any Sale of the Development Property or the Minimum Improvements or any part thereof, and such violation shall not be cured within 60 days after written demand by the Authority to the Developer, then the Authority shall have the right to re-enter and take possession of the Development Property and to terminate and revest in the Authority the interest of the Developer in the Development Property; provided, however, that any exercise by the Authority of its rights or remedies hereunder shall always be subject to and limited by, and shall not defeat,render invalid or limit in any way the lien of any mortgage or other encumbrance specifically and previously authorized by the Authority in writing under this Agreement or any rights or interests provided in this Agreement for the protection of the holders of an approved encumbrance. Section 9.4. No Remedy Exclusive. No remedy herein conferred upon or reserved to the parties 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 RHB-225293v1 18 CT165-22 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. In order to entitle the Authority or the Developer to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be required in Article X of this Agreement. Section 9.5. No Additional Waiver Implied by One Waiver. In the event any covenant or agreement contained in this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent,previous or subsequent breach hereunder. ARTICLE X Additional Provisions Section 10.1. Conflict of Interests; Representatives Not Individually Liable. No officer, official, or employee of the Authority shall have any personal financial interest, direct or indirect, in this Agreement, nor shall any such officer, official, or employee participate in any decision relating to the Agreement which affects his or her personal financial interests, directly or indirectly. No officer, official, or employee of the Authority shall be personally liable to the Developer, or any successor in interest,in the event of any default or breach or for any amount which may become due or on any obligation under the terms of this Agreement. • Section 10.2. Equal Employment Opportunity. The Developer, for itself and its successors and assigns, agrees that during the construction of the Minimum Improvements provided for in this Agreement, it will comply with all applicable equal employment and nondiscrimination laws and regulations. Section 10.3. Restrictions on Use. The Developer, for itself and its successors and assigns, agrees to devote the Property and Minimum Improvements only to such land use or uses as may be permissible under the City's land use regulations. The Developer, for itself, its successors and assigns, acknowledges the limitations on use of the Property and the Minimum Improvements imposed by Section 469.105 of the EDA Act and agrees to comply with such restrictions. The Developer, for itself and its successors and assigns, acknowledges the limitations on the use of the Property and the Minimum Improvements imposed by Section 469.176, subd. 4c of the TIF Act and agrees to comply with such restrictions through the Termination Date. Section 10.4. Provisions Not Merged With Deed. None of the provisions of this Agreement is intended to or shall be merged by reason of delivery of the Development Property Deed and the Development Property Deed shall not be deemed to affect or impair the provisions and covenants of this Agreement. Section 10.5. Notices and Demands. Except as otherwise expressly provided in this Agreement, any notice, demand, or other communication under the Agreement or any related document by either party to the other shall be sufficiently given or delivered if it is dispatched by RHB-225293v 1 19 CTI 65-22 registered or certified United States mail, postage prepaid, return receipt requested, or delivered • personally to: (a) in the case of the Authority: 7516 80th Street South Cottage Grove MN 55016 Attn: EDA Executive Director (b) in the case of the Developer: 4209 Salem Drive West Woodbury MN 55125 or at such other address with respect to either such party as that party may, from time to time, designate in writing and forward to the other as provided in this section 10.5. Section 10.6. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 10.7. Disclaimer of Relationships. The Developer acknowledges that nothing contained in this Agreement nor any act by the Authority or the Developer shall be deemed or construed by the Developer or by any third person to create any relationship of third-party beneficiary, principal and agent, limited or general partner, or joint venture between the Authority and the Developer. • • RHB-225293v1 20 CT165-22 • IN WITNESS WHEREOF, the Authority and the Developer have caused this Agreement to be duly executed in their names and behalves on or as of the date first above written. COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY By Its President By Its Executive Director STATE OF MINNESOTA ) ) SS COUNTY OF ) The foregoing instrument as acknowledged before me this day of ,2003,by and , president and executive director, respectively, of the Cottage Grove Economic Development Authority, a public body corporate and politic under the laws of Minnesota,on behalf of the Economic Development Authority. Notary Public s RHB-225293v1 21 CT165-22 . SSP PROPERTIES LLC III By Its STATE OF MINNESOTA ) )ss COUNTY OF ) The foregoing instrument was executed this day of , 2003, by , the of SSP Properties LLC, a Minnesota limited liability company, on behalf of the limited liability company. Notary Public • • RHS-225293v1 22 CT165-22 EXHIBIT A • LEGAL DESCRIPTION The Development Property is located in Washington County, Minnesota, and is legally described as follows: [to be completed] • • RHB-225293v 1 CT165-22 A-1 Corporation or Partnership • to Corporation or Partnership No delinquent taxes and transfer entered; Certificate of Real Estate Value( )filed( )not required • Certificate of Real Estate Value No. _,19 County Auditor by (reserved for recording data) Deputy Consideration for this transfer is less than$500.00. STATE DEED TAX DUE HEREON: $1.70 Date: FOR VALUABLE CONSIDERATION, SSP Properties LLC, a Minnesota limited liability company under the laws of the State of Minnesota, Grantor, hereby conveys and quitclaims to Cottage Grove Economic Development Authority, Grantee, a public body corporate and politic under the laws of Minnesota,real property in Washington County,Minnesota,described as follows: (see Attachment One attached hereto) • (if more space is needed,continue on back) together with all hereditaments and appurtenances. OO The Seller certifies that the seller does not know of any wells on the described real property. DA well disclosure certificate accompanies this document. ❑I am familiar with the property described in this instrument and I certify that the status and number of wells on the described real property have not changed since the last previously filed well disclosure certificate. SSP Properties LLC Affix Deed Tax Stamp Here By Its President STATE OF MINNESOTA } ss. COUNTY OF The foregoing was acknowledged before me this _ day of , 2003, by the President of SSP Properties LLC,a limited liability company under the laws of Minnesota,on behalf of the limited liability company,Grantor. Notary Public This Instrument Drafted By Check here if part of all of land is Registered Kennedy&Graven,Chartered Tax Statements for the real property described in this • 470 Pillsbury Center instrument should be sent to: 200 South Sixth Street Cottage Grove Economic Development Authority Minneapolis MN 55402 7516 80th Street 612-337-9300 Cottage Grove MN 55016-3195 RHB-225293v1 CT165-22 B-2 . .. , I .. City of Cottage Grove AMinnesota : faATTACIIMENT ONE 516 80th Street South/Cottage Grove, Minnesota 55016-3195 651 458 2800 Fax 651 458-2897 www.cottage-grove.org TDD 651-458-2880 [to be completed] H . i EQUAL OPPORTUNITY EMPLOYER EXHIBIT C • LIST OF PRELIMINARY PLAN DOCUMENTS The Minimum Improvements shall be constructed in accordance with the following preliminary plan documents: [to be completed] • • RHB-225293v1 CT165-22 C-1 • EXHIBIT D FORM OF CERTIFICATE OF COMPLETION AND RELEASE OF FORFEITURE WHEREAS, the Cottage Grove Economic Development Authority (the "Grantor"), by a deed recorded in the office of the County Recorder in Washington County,Minnesota, as Document No. , has conveyed to SSP Properties LLC, a Minnesota limited liability company(the "Grantee"),the following described land in County of Washington and State of Minnesota,to-wit: (to be completed prior to execution) and WHEREAS, said deed was executed pursuant to that certain Contract for Private Development by and between the Grantor and the Grantee dated the day of , 2003 and recorded in the office of the County Recorder in Washington County, Minnesota, as Document No. , which Contract for Private Development contained certain covenants and restrictions regarding completion of the Minimum Improvements; and WHEREAS, said Grantee has performed said covenants and conditions in a manner deemed sufficient by the Grantor to permit the execution and recording of this certification. • NOW, THEREFORE, this is to certify that all construction of the Minimum Improvements specified to be done and made by the Grantee has been completed and the covenants and conditions in the Contract for Private Development have been performed by the Grantee therein and that the provisions for forfeiture of title and right to re-entry for breach of condition subsequent by Grantor is hereby released absolutely and forever, and the County Recorder in Washington County, Minnesota, is hereby authorized to accept for recording and to record the filing of this instrument, to be a conclusive determination of the satisfactory termination of the covenants and conditions relating to completion of the Minimum Improvements. Dated: , COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY By Its President By Its Executive Director • RI-I13-225293v1 CTI65-22 D-1 • STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument as acknowledged before me this day of , 2003, by and , the president and executive director, respectively, of the Cottage Grove Economic Development Authority, a public body corporate and politic,on behalf of the Economic Development Authority. Notary Public • • R1-1B-225293v1 CT165-22 D-2 • EXHIBIT E FORM OF ASSESSMENT AGREEMENT and ASSESSOR'S CERTIFICATION By and among • THE COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY and SSP PROPERTIES LLC and ASSESSOR FOR WASHINGTON COUNTY,MINNESOTA This Document was drafted by: KENNEDY&GRAVEN, Chartered 470 Pillsbury Center Minneapolis,Minnesota 55402 (612) 337-9300 RHB-225293v1 CT165-22 E-1 THIS ASSESSMENT AGREEMENT, dated as of this day of , 2003, by • and between the Cottage Grove Economic Development Authority, a public body corporate and politic under the laws of Minnesota(the"Authority") and SSP Properties LLC, a Minnesota limited liability company(the"Developer"). WITNESSETH: WHEREAS, on or before the date hereof, the Authority and the Developer have entered into a Contract for Private Development (the "Development Agreement") pursuant to which the Authority will convey to the Developer certain real property in Washington County, Minnesota, which property is legally described on Exhibit A hereto, (the"Property"); and WHEREAS, pursuant to the Development Agreement, the Developer will construct an office/warehouse facility containing approximately 35,120 square feet (the "Minimum Improvements")on the Property; and WHEREAS, the Authority and Developer desire to establish a minimum market value for the Property and the Minimum Improvements to be constructed thereon, pursuant to Minnesota Statutes, section 469.177, Subd. 8; and WHEREAS, the Authority and the Assessor for Washington County, Minnesota have reviewed the plans and specifications for the Minimum Improvements which the Developer has agreed to construct on the Property pursuant to the Development Agreement. • NOW, THEREFORE, the parties to this Assessment Agreement, in consideration of the promises, covenants and agreements made herein and in the Development Agreement by each to the other, do hereby agree as follows: 1. The Minimum Market Value for the Property with the Minimum Improvements shall be One Million Three Hundred Twenty Five Thousand Two Hundred Eighty Dollars ($1,325,280). The parties agree that this Minimum Market Value shall be placed against the Property as of January 2, 2004, for taxes payable beginning in 2005, notwithstanding any failure to complete construction of such Minimum Improvements by that date. 2. The Minimum Market Value herein established shall be of no further force and effect and this Assessment Agreement shall terminate on the Termination Date. The Termination Date will occur when the Authority's TIF District No. 1-10 is decertified, which is expected to be after nine years after receipt by the Authority of the first tax increment or 11 years after approval of the TIF Plan,whichever occurs first. 3. This Assessment Agreement shall be promptly recorded by the Developer with a copy of Minnesota Statutes, section 469.177, Subd. 8, set forth in Exhibit B hereto. The Developer shall pay all costs of recording this Assessment Agreement. 4. Neither the preambles nor the provisions of this Assessment Agreement are intended to, nor shall they be construed as, modifying the terms of the Development Agreement. Unless the RHB-225293v 1 CT165-22 E-2 • context indicates clearly to the contrary,the terms used in this Assessment Agreement shall have the same meaning as the terms used in the Development Agreement. 5. This Assessment Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties. 6. Each of the parties warrants and represents that it has authority to enter into this Assessment Agreement and to take all actions required of it and has taken all actions necessary to authorize the execution and delivery of this Assessment Agreement. 7. In the event that any provision of this Assessment Agreement is held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 8. The parties hereto agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements, amendments and modifications hereto, and such further instruments as may reasonably be required for correcting any inadequate, or incorrect, or amended description of the Property, or for carrying out the expressed intention of this Assessment Agreement. 9. Except as provided in Section 8 hereof, this Assessment Agreement may not be amended nor any of its terms modified except by a writing authorized and executed by all parties • hereto. 10. This Assessment Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. 11. This Assessment Agreement shall be governed by and construed in accordance with the laws of Minnesota. RHB-225293v1 CT165-22 E-3 • COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY By Its President By Its Executive Director STATE OF MINNESOTA ) ) SS COUNTY OF ) The foregoing instrument as acknowledged before me this day of , 2003, by and ,president and executive director,respectively,of the Cottage Grove Economic Development Authority, a public body corporate and politic under the laws of Minnesota,on behalf of the Economic Development Authority. Notary Public S RHB-225293v1 CT165-22 E-4 • SSP PROPERTIES LLC By Its STATE OF MINNESOTA ) ss COUNTY OF ) The foregoing instrument was executed this day of , 2003, by , the of SSP Properties LLC, a Minnesota limited liability company, on behalf of the limited liability company. Notary Public i • R1-1B-225293v1 CT165-22 E-5 ti CERTIFICATION BY ASSESSOR • The undersigned, having reviewed the plans and specifications for the improvements to be constructed and the market value assigned to the land upon which the improvements are to be constructed, and being of the opinion that the minimum market value contained in the foregoing Assessment Agreement appears reasonable, hereby certifies as follows: The undersigned Assessor, being legally responsible for the assessment of the described property as Washington County Assessor, hereby certifies that the market value assigned to such land and improvements beginning on January 1, 2004 shall be not less than One Million Three Hundred Twenty Five Thousand Two Hundred Eighty Dollars($1,325,280)until termination of this Agreement. Assessor for Washington County,Minnesota STATE OF MINNESOTA ) ) ss COUNTY OF ) The foregoing instrument was acknowledged before me this day of 2003 by ,the Assessor for Washington County, Minnesota. 410 Notary Public • RHB-225293v1 CT1 65-22 E-6 a • EXHIBIT A TO ASSESSMENT AGREEMENT The Property is legally described as follows: [to be completed] • • • RHB-225293v I CT165-22 E-7 T EXHIBIT B TO • ASSESSMENT AGREEMENT Section 469.177, subd. 8. Assessment Agreements. An authority may enter into a written assessment agreement with any person establishing a minimum market value of land, existing improvements, or improvements to be constructed in a district, if the property is owned or will be owned by the person. The minimum market value established by an assessment agreement may be fixed, or increase or decrease in later years from the initial minimum market value. If an agreement is fully executed before July 1 of an assessment year, the market value as provided under the agreement must be used by the county or local assessor as the taxable market value of the property for that assessment. Agreements executed on or after July 1 of an assessment year become effective for assessment purposes in the following assessment year. An assessment agreement terminates on the earliest of the date on which conditions in the assessment agreement for termination are satisfied, the termination date specified in the agreement, or the date when tax increment is no longer paid to the authority under section 469.176, subdivision 1. The assessment agreement shall be presented to the county assessor, or city assessor having the powers of the county assessor, of the jurisdiction in which the tax increment financing district and the property that is the subject of the agreement is located. The assessor shall review the plans and specifications for the improvements to be constructed, review the market value previously assigned to the land upon which the improvements are to be constructed and, so long as the minimum market value contained in the assessment agreement appears, in the judgment of the assessor, to be a reasonable estimate, shall execute the following certification upon the agreement: The undersigned assessor, being legally responsible for the assessment of the above • described property, certifies that the market values assigned to the land and improvements are reasonable. The assessment agreement shall be filed for record and recorded in the office of the county recorder or the registrar of titles of each county where the real estate or any part thereof is situated. After the agreement becomes effective for assessment purposes, the assessor shall value the property under section 273.11, except that the market value assigned shall not be less than the minimum market value established by the assessment agreement. The assessor may assign a market value to the property in excess of the minimum market value established by the assessment agreement. The owner of the property may seek, through the exercise of administrative and legal remedies, a reduction in market value for property tax purposes, but no city assessor, county assessor, county auditor,board of review, board of equalization, commissioner of revenue, or court of this state shall grant a reduction of the market value below the minimum market value established by the assessment agreement during the term of the agreement filed of record regardless of actual market values which may result from incomplete construction of improvements, destruction, or diminution by any cause, insured or uninsured, except in the case of acquisition or reacquisition of the property by a public entity. Recording an assessment agreement constitutes notice of the agreement to anyone who acquires any interest in the land or improvements that is subject to the assessment agreement, and the agreement is binding upon them. • RHB-225293v 1 CT165-22 E-8 City of Cottage Grove Memo To: Economic Development Authority Members From: Michelle Wolfe,Assistant City Administrator illy"� Date: 2/4/2003 v Re: Project Updates Attached is the list of active projects. Staff will provide a verbal update regarding all current active leads at the meeting. Since the January meeting we received three new inquiries. 4 Attachment I G:\Economic Development\E D A\Documents\2003\Feb Proj Update.doc ACTIVE LEADS QUERY EDA PACKET 2/4/2003 Proposal ID Project Description SF/Acres Needed ED-00-31 Grove Plaza NA ED-00-64 Manufacturing/Distribution 8-10 acres ED-01-001 90,000 SF Retail 90,000 ED-01-002 Manufacturing ED-01-006 Re- Development ED-01-010 Restaurant#2 ED-01-018 Commercial ED-01-021 Remodel ED-01-030 Distribution 25-30 acres ED-01-032 Distribution 400,000 SF distribution center ED-01-034 Distribution Center 9 acres ED-01-037 Multi-tenant Industrial 80,000- 100,000 SF ED-01-038 Commercial 40,000- 50,000 SF ED-02-004 Office 2 acres ED-02-007 Restaurant ED-02-008 Manufacturing ED-02-009 Steel Fabricator 20,000 SF ED-02-013 Office ED-02-015 Remodel ED-02-016 Bank ED-02-017 Bank ED-02-018 Manufacturer 30 acres ED-02-020 Light Industrial 2-3 acres . ED-02-021 Retail 75,000- 100,000 sf retail ED-02-023 Restaurant ED-02-025 Office/Warehouse ED-02-026 Biotech ED-02-027 Redevelopment ED-02-028 Commercial ED-02-029 Manufacturing ED-02-030 Commercial ED-02-031 Commercial ED-02-032 Restaurant ED-02-033 Restaurant ED-02-034 Restaurant ED-02-035 Multi-tenant Office/Warehou 20-30 acres ED-02-036 Restaurant 3,500-5,000 SF ED-02-037 Truck Repair 40,000 to 50,000 SF on 4-6 acres ED-02-038 Restaurant ED-02-039 Restaurant ED-02-040 Mixed-use 50-300 acres ED-02-041 Commercial ED-02-042 Industrial 10 acres/80,000 SF ED-02-043 Industrial 250,000 to 300,000 sf ED-02-044 Industrial 3 -4 acres ED-02-045 Light Manufacturing 3-4 acres Page 1 ACTIVE LEADS QUERY EDA PACKET 2/4/2003 s Proposal ID Project Description SF/Acres Needed • ED-02-046 Industrial 2 acres ED-02-047 Redevelopment Commercial ED-03-001 Light Manufacturing ED-03-002 Manufacturing 30,000 sf facility ED-03-003 Manufacturing 2 acres S I Page 2 4 City of Cottage Grove I Memo To: Economic Development Authority From:Ryan R. Schroeder Date: 02/06/03 Re: Gateway North Redevelopment District As the EDA is aware, there are a number of moving parts to the Gateway North Redevelopment District project. By way of update: 1. We have acquired all of the necessary property for the Gateway project but for two small parcels. These two parcels are A)the Ruvelson property, which is a 110 small vacant piece of land adjacent to the commercial condominium, project; and B) right of way acquisition from the 1501 property. We went through the public purpose hearing on the Ruvelson property on January 31, 2002. There was no objection to public purpose from the owner(which is a partnership) and Judge Cass is entering a judgement in our favor. The next step is for each party to present evidence in a Commissioners hearing as to value. Our appraisal is for $75,500. This appraisal, while an update from the original 2001 appraisal is being reviewed at this time. However,the $75,500 amount is that amount that we testified was the value and therefore it is the deposit amount. The owner's appraisal is for$225,000. The wide variance in value results from different positions as to how much commercial structure can be built upon the property. The owner has represented that they will accept a settlement below their appraised value but at this time we do not believe their offer is within an acceptable range. 2. The public purpose hearing on the 1501 property was delayed at our request due to a change in a temporary easement required for the project that varied from our original discussions with the owner. That hearing will be held later this month. As a result of the noted change, we will bring a number to be certified to the court to your meeting. At this point, we do not expect a public purpose objection, particularly since we just received a favorable ruling from the Court on the Ruvelson property. We also continue to negotiate. The owner has ordered site planning in order to become comfortable that upon project completion his property will not be harmed from an aesthetic, access or visibility perspective. •Page 1 s The intent is that we would grade to that site plan. We have not yet been • afforded the opportunity to review the plan but that should be available shortly. Under ordinance, we are required to advertise notice of expected sale of public property. Notice is published for March. Sale of property includes the Oakwood commercial lot and also 17,394 square feet of property traded to 1501 in exchange for 20,668 square feet of land along Hardwood Avenue (and temporary easements). 3. The City has approved zoning and comprehensive plan changes to provide an opportunity to construct a commercial project(s)on 3.82 acres on the east side of Hardwood Avenue across from Kohl's. We have received various expressions of interest in that property including a purchase offer from a quick serve restaurant (not fast food)and an expression of interest from an owner/developer interested in a two-phase commercial project that would include a multi-tenant retail building with a restaurant anchor. Other parties have also shown interest. Currently we are working on a purchase agreement format in an effort to address City Council demands for a certain aesthetic and a certain level of control over types of commercial activities. While a project would normally be able to lease or sell for any particular use allowed under zoning we have specifically excluded auto uses from this parcel under a covenant as part of the draft purchase agreement. Other use types could also be excluded. We are also attempting to refine the character of this property. Toward that end, we have sketched the enclosed site plan in an attempt to visualize the potential project scale. On this site plan we have included a restaurant pad with a size that is similar to Applebee's as well as a multi-tenant project of approximately 20,000 to 25,000 square feet. 1110 Staff had assumed, throughout development of this parcel that a project such as attached here would be the appropriate project scale. As noted the parcel is 3.82 acres in size. The Gateway/Walgreen's development is 5.1 acres and includes the 12,948 square foot Gateway multi-tenant building, the 14,490 square foot Walgreen's and the TCF bank building. We have spoken with a couple representatives of the broker/developer community about this parcel for moderate sized single small box users such as a Michael's (20,000 to 24,000 square feet), a Best Buy(small market stores start at 40,000 square feet)or a Galyans (80,000 square feet). The feedback we have received is that the parcel is neither situated, nor sized to easily accommodate users such as that(suggesting that we would need a parcel significantly larger in order to accommodate the small box user as well as several smaller tenants). Our expectations have been that we could attract anchors in the 3,000 to 8,000 square foot size with smaller tenants in the 1500 to 2,000 square foot size to this parcel. We have felt, alternatively, that the Fratalone parcel (dependent upon site development restrictions) can provide an opportunity to attract small box users to the Gateway. We have represented in the past that that project could, perhaps provide for 130,000 square foot of commercial but that our expectation is that due to development constraints expected to be imposed that actual pad size may drop to 65,000 to 85,000 square feet. • •Page 2 • • We need to clarify with the City Council their expectations for development scope and scale on the Oakwood parcel. It would likewise be helpful for Council and the EDA to provide staff direction on similar issues on the other developable parcels within the district(Fratalone, 60,000 square foot Kohl's remnant, and 2.5-acre Bruhn/Stoltz parcel). As noted the proposed purchase agreement template on the Oakwood site is being developed intending to provide Council significant control over project aesthetics and end users. Complete control of aesthetics is expected. Substantial, but not total control of end users is also contemplated (including a total exemption on some types of users by covenant). 4. The Grove Plaza has presented that they are desirous of starting reconstruction of their interior small tenant spaces this spring for September occupancy. Council and the EDA have previously approved the façade for the reconstruction project. Subsequent to that approval, the owner requested revisions due to expected cost overruns. Those revisions were rejected. They have resubmitted new elevations, which will be brought to your meeting for review. The new revisions do not achieve the same structure height throughout the Center as originally proposed but it is improved from the most recent submittal. The entire facade of the small tenant space is about 300 feet. Of that, about 145 feet does achieve the desired structure height and facilitates a single expected tenant. The balance of the project is reduced in height due to concerns over load bearing on the remaining structure. Given the load bearing concerns,which were 410 not known to be an issue at the time of the original architectural renderings we believe the City should positively consider ratification of the facade improvements. We do believe, however, that that approval should be conditioned upon verification of signed leases with the larger user, and all other expected tenants, proving out the asserted load bearing issues to our inspections division and landscaping/lighting or other site enhancements to mitigate the reduction in facade elevation (or in the alternative a reduction in EDA financial assistance toward facade construction in lieu of such mitigation). 5. The EDA has set aside funding for Gateway streetscaping. Included, as an expense from this line item has been "welcome banners"that are expected to be installed this spring. We have also been able to work with Walgreen's, Home Depot and Hollywood Video to erect Pylon signs on the south quadrants of the 80th/East Point intersection. Community Development staff has been working on monument signage for the north side of this same intersection. We have attached one of the concepts for your review. We will bring additional exhibits to your meeting for review and comment. EDA Action: 1. We will be requesting action from the Board regarding the Ruvelson and 1501 properties including certification of appraised values. We expect to also walk •Page 3 • a through the construction timing of the project at the 80th/Hardwood intersection • and how that relates to access to Bumet Realty and the land swap between the City and 1501. 2. Staff would appreciate receiving any comments/direction you may suggest regarding the Oakwood commercial property and other development property within the Gateway. 3. We are requesting approval of the Grove Plaza rehabilitation plan with contingencies as suggested above. 4. We are requesting comments/suggestions for Gateway monument signage. F:\USERS\RSCHROED\FebEDA.doc 11110 •Page 4 • li . . 80 TH STREET SO. TENANT ..%) /- P -•• REQ Q I CARIBOU COFFEE OI • 14 STALLS DOMINO'S PIZZA 5 STALLS • RED NAILS 6 STALLS FANTASTIC SAM 7 STALLS PP • i : QUIZINO'S 11 STALLS I SELVIG JEWELERS 4 STALLS ^� LADIES WORKOUT EXPRESS 10 STALLS , / 141 . / •S, ( COFFEE ` / CATCH — A — TAN 18 STALLS 1589 S.F. . i TOTAL REQUIRED ■ 75 STALLS �� ,IJ TOTAL PROVIDED �' ^ �3 6 S.F. 1 78 STALLS RID 4 NAIIS ` III �/ ^�y 1170 S.F. .• .i' W. F • /� 1263 S.F. 11/110 U 376 S.F. SEIM 74442 " 3ADffi 1527 S.F. s .04 J.\ 1527 S.F cazaB A TAN •' 1191111,E PARKING'I O 3110 S.F. /` K \ \\: � , ,\, SITE PLAN \\ \\�� �� 116 10/24/02 • POPE ASSOCIATES � • HJ. DEVELOPMENT . ARCHITECTS • INTERIOR DESIGNERS GATEWAY TEWAY ass Emmy Nut DANE . • C E N T E R StAwi•MNssoasiis PH.(a1)sa-92oo Mt) I 10' • COTTAGE GROVE, MN I I • „g-II - 1 = • — ,- -, 44ijuI : = - :1 1111141111 91111 _ = 11I IL t IID 11 ` - f 1 I n = J iu0 410 City of Cottage Grove • Memo To: Cottage Grove Economic Development Authority • From: Michelle Wolfe, Assistant City Administrator ejkll Date: January 31, 2003 Re: Gateway North Development District: Approve the Appraisal for Properties and Authorize Deposits in the Amount of Appraisals, Subject to EDA Approval BACKGROUND 111 For several months, staff has been in the process of negotiating with the owners of various parcels to purchase property for the Hardwood Avenue/Kohl's project. The EDA and City Council have previously approved action required by statute to proceed with the eminent domain process, should we be unable to purchase property through regular negotiations. The timeline for this project is such that we need to finalize the process of securing title to all necessary parcels. Therefore, while negotiations continue, it is necessary to continue with the eminent domain process in order to ensure that we will have all necessary parcels for the project, per our commitment in the development agreement with Kohl's. DISCUSSION As part of the eminent domain process, we have obtained appraisals for two remaining parcels. Those appraisals are in the amounts as follows: Ruvelson/Jenson: $ 75,500 1501 Partnership (CB Burnet): $ TBD* *Information expected prior to the February 11th meeting. • At this time it is necessary to formally approve the appraisals and to authorize staff to make a deposit to the District Court in those same amounts. The City Council has been asked to approve the described actions, subject to the approval of the EDA. ACTION REQUESTED Approve the appraisals as outlined above, and authorize staff to make the appropriate deposits to the District Court. G:\Economic Development\E D A\Documents\2003\Feb Gateway Appraisals.doc • City of Cottage Grove Memo To: EDA Members From: Scott Johnson, Management Analyst , • Date: 2/7/2003 Re: Business Breakfast 3M The 2003 Business Breakfast was held at 3M on Monday, January 27th. The Business Breakfast was attended by local business leaders and representatives. 78 people RSVP'd for this year's event. According to the sign-in sheet 45 people attended (this number does not include 3M employees). Ten Cottage Grove staff members attended the breakfast. The keynote speaker for this event was State Finance Commissioner Dan McElroy. Commissioner McElroy did an excellent job and was extremely informative on the issues facing State Government. Staff was able to distribute copies of the 2002 Development Update to the audience. • G:\Scott\2003 Business Recognition Breakfast\Memo to EDA.doc City of Cottage Grove • Memo To: Economic Development Authority Members Q From: Michelle Wolfe, City Assistant Administrator 1�/�A91" Date: 2/6/2003 Re: Calendar EDA Meeting February 11 Home Depot Grand Opening February 12 9:00 a.m. • Regina Medical Clinic Ribbon Cutting February 20 12:30 p.m. EDA Meeting March 11 Chamber Business Luncheon March 19 11:30 a.m. (Location TBA) Business Day at the Capitol March 25 Volunteer Banquet April 22 River Oaks Golf Course Chamber Spring Banquet May 2 6:00 p.m. Chamber Golf Classic June 16 EDA Golf Tournament August 19 • G:\Economic Development\E D A\Documents\2003\Feb Calendar.doc • • City of Cottage Grove • Memo To: Economic Development Authority From: Ryan R. Schroeder Date: 02/05/03 Re: River Oaks/ EDA Joint Venture The municipally owned River Oaks Golf Course currently offers a patron program for Cottage Grove residents. River Oaks management is proposing to offer a very similar program to employees of the major businesses within the Cottage Grove Industrial Park. At the same time, a program such as this one allows the EDA to add yet another benefit to current and future tenants of the industrial park. For definitional • purposes the eligible employers includes CCE, Renewal by Andersen, American AgCo, TradeHome Shoes, Advance Corporation, Up North Plastics, Cogentrix, 3M, and future tenants entering into a development agreement with the EDA such as Schmid Packaging. Suggested is the following: 1. During the weeks of May 5th —18th and June 2nd — 15th we would invite all employees of the Industrial Park businesses to business appreciation golfing at River Oaks. 2. The program would be marketed as providing appreciation discounts to our valued industrial businesses and their employees at no cost the employer. We would require proof of employment with the employer in order to take advantage of our program discounts such as ID Badges or pay stubs but we would not require that the employee provide proof of employment at the Cottage Grove location (we have employers with multiple locations and we believe there are benefits to both River Oaks and the EDA of extending these benefits throughout these companies). 3. Program discounts are available only for employees. This would exclude spouses, dependants or other guests from receiving the employee discounts. In addition, we are proposing to use this program as a pilot and therefore the offering would be limited to the above named businesses. Our expectation at • • Page 1 • • this time is that if the program were successful we would consider broadening • the program to additional businesses within the community. 4. Marketing costs of the program would be shared between River Oaks and the EDA. There are undesignated funds within the EDA marketing budget at this time. 5. With approval of this program, we would add a notation of the program in our business attraction materials. 6. Expected program benefits to business employees are: A. 50% discount off lunch specials B. 50% discount on food and beverage minimum if the company hosts a meeting at River Oaks C. Gift Certificate of two (2) rounds of golf and a cart for use on a subsequent (non-event/post program) date for any company hosting a golf tournament of 48 golfers or more during the program dates D. Discounts for General Golf, Twilight Golf and Range Balls as follows: 1. Twilight: Standard $12/$20 (walk/ride)to $12 either 2. General: Standard $26.50/$29.50 to $23.50/$26.50 • 3. Range: Standard $6 to a two for one program River Oaks staff is meeting with area businesses regarding this idea. We will bring any comments to your meeting for discussion. EDA Action: By motion, authorize participation in the Industrial Park Business Appreciation program. F:\USERS\RSCHROED\Golf Industrial Appreciation.doc • • Page 2 a City of Cottage Grove • Memo To: EDA Members ��,� From: Michelle Wolfe,Assistant City Administrator J� Date: 2/6/2003 Re: EDA Member Terms At the end of 2002, terms for three current members of the EDA expired. Members Dick Pederson and Gerry Weingartner were reappointed by the Council, beginning new terms in January. This leaves one remaining vacancy. • During the past year or so there have been some suggestions on possible authority members. In light of those discussions we have made some inquires with some possible authority members. We have discussed some of those possibilities at past meetings. There is no requirement specified in the EDA Bylaws or Enabling Resolution regarding residency or owning/operating a business in Cottage Grove. • G:\Economic Development\E D A\Documents\2003\Feb EDA Terms.doc