HomeMy WebLinkAbout2018-05-29 PACKET 05.03.
TO: Economic Development Authority
FROM: Matt Wolf, Economic Development Specialist
DATE: March 23, 2018
RE: Modern Automotive Performance Expansion
Background
Modern Automotive Performance (MAP), located at 9800 Hemingway Avenue, currently
operates in a 20,000 square foot facility and employs 45 people. MAP is an automotive
aftermarket distributer, which manufactures, remanufactures, and distributes vehicle
parts and accessories after the vehicle has been sold through a dealership. In 2017 MAP
presented at an area entrepreneurial conference stating that they were looking to expand
their operations due to their continual growth.
The City of Cottage Grove, GreaterMSP, and the Department of Employment and
Economic Development (DEED) met with MAP to determine what they were looking for
in either a new facility or at an expansion at their existing site. MAP is looking to expand
by an additional 25,000 square feet. MAP also need the addition of two loading dock
doors and two overhead doors to meet their continued company growth. As part of the
expansion of the company, MAP would also be adding an additional 20+ jobs.
MAP has been transparent that they were searching throughout the Midwest for a list of
interested communities and the associated options with sites (land/facility, incentives,
why their company would be a good fit). MAP wanted to consider sites that could help
them lower costs through business subsides during the construction process, and a site
that made geographical sense to ship their products around the United States.
In August 2017, the City of Cottage Grove made three proposals to MAP to remain in
Cottage Grove. The proposals were:
1. Consider buying or leasing the building to the south of their current property (9850
Hemingway Avenue), which was up for sale/lease for their business growth needs.
2. Expand on their current lot using the approved site plan from 2006 that included a
second building (25,000 square feet) to the west of the current building.
3. Consider construction of a new facility on vacant land in Cottage Grove’s Business
Park.
MAP determined that since they would qualify for public financing programs through
DEED and tax increment financing through the City of Cottage Grove’s Business Subsidy
Policy, expanding on their current site was the best option for their continued growth.
Sale of Land to 9800 Hemingway LLC
Due to the nature of their business operations, MAP’s proposed expansion will need to
be attached to their existing building. The original 2006 plan where the second building
was not attached will not work for MAP’s expansion needs. In order to accommodate the
expansion and needed layout for business operations, that would not require a variance
or reduction in setbacks to the site, MAP needs to purchase a 21,104 square foot section
of land (50 feet in width) to the north of their site that is owned by the EDA. A letter of
intent for the purchase of that land was approved by the EDA at their February 13, 2018,
meeting with a vote of 5-to-0.
Figure 1. MAP Site Layout with expansion highlighted in blue and the land to be purchased
highlighted in yellow.
The purchase of the 21,104 square foot section of land will leave the City of Cottage
Grove with a viable parcel for future development. The remaining parcel will be 3.03
acres, which would allow for a building up to 59,394 square feet to be developed
according to the I-2 zoning ordinance. MAP’s site plan was reviewed and approved by
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the City of Cottage Grove Planning Commission by a vote of 8-to-1 at their April 23
meeting. The City of Cottage Grove City Council approved the site plan by a 5-to-0 vote
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at their May 16 meeting.
Business Subsidy Agreement
The purchase price of the 50 foot wide strip of land to the north of their site was set at a
price of $1.75/SF for a total of $36,932. The City of Cottage Grove Economic
Development Authority (EDA) is the property owner of the land and no improvements
are required by the City of Cottage Grove for development to occur on site. The price
was set at $1.75/SF due to the developer potentially relocating the existing business
and expansion outside of Cottage Grove. The project also met the following
requirements of the Business Subsidy Policy passed by the City of Cottage Grove:
a. Promote the economic and commercial redevelopment of the City;
b. Preserve the local tax base and improve the general economy and vitality of the City;
c. Promote the health, safety and welfare of the residents of the City;
d. Remove, prevent or reduce blight, blighting factors or the cause of blight in the City;
e. Attract, retain, rehabilitate and preserve commercial facilities;
f. Afford maximum opportunities, consistent with the needs of the City as a whole, for
the redevelopment of the area by private enterprise.
The estimated fair market value for the land is $3.00/SF, which would result in a total
land price of $63,312, this is a difference of $26,380 from what was offered MAP. As a
result, the Business Subsidies Act requires a business subsidy agreement memorialize
the discounted land purchase price. The business subsidy agreement allows for the
City of Cottage Grove EDA to collect some or all of the discounted purchase price if
9800 Hemingway LLC fails to develop and occupy their new expansion for at least five
years after completion. After the project is completed and the expansion is maintained
for a period of five years the subsidy will be forgiven.
Development Agreement
Modern Automotive Performance when considering their options for expansion were
looking for the opportunity to lower costs through business subsidies. The City of
Cottage Grove determined the project met the Business Subsidy Policy and as a result
worked with Ehlers Inc., the EDA’s financial consultant to determine if the expansion
met the “but for” test for tax increment financing (TIF). To initiate the process of
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establishing the TIF district at the March 13, 2018 EDA meeting, the EDA requested
the City Council call for a public hearing on the proposed modification to the
development program for Development District No. 1 and the proposed establishment of
Tax Increment Financing District No. 1-18. Modern Automotive Performance was
required to submit detailed project costs, plans for the project, three years of financial
statements and a preliminary financial commitment from its bank. Through Ehlers Inc.
review of the project the determination was made the project met the “but for” test. The
City of Cottage Grove Planning Commission reviewed the program modification and TIF
Plan to make sure the project was consistent with the City of Cottage Grove 2030
Comprehensive Plan, they voted 9-to-0 to approve TIF District No. 1-18 was consistent
with the 2030 Comprehensive Plan. The Cottage Grove City Council approved
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establishment of Tax Increment Financing District No. 1-18 at their May 2 meeting.
A Contract for Private Development is the formal contract between the City of Cottage
Grove EDA and 9800 Hemingway LLC that defines the terms, agreements,
improvements and restrictions that must be made by 9800 Hemingway LLC in order to
receive annual distributions of tax increment over nine years, totaling $117,000 in
financial assistance. If either party breaks the agreement at anytime, the agreement
sets the process for default.
Interfund Loan
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The creation of Tax Increment Financing District No. 1-18 at the May 2 City Council
meeting, the EDA is authorized to use tax increment to pay for certain costs identified
collectively in the TIF Plan as qualified costs, which may be financed on a temporary
basis from EDA funds available for such purposes.
Qualified costs are set in the TIF Plan that was created as part of TIF District No. 1-18.
Qualified costs include site improvements/preparation, public utilities, other qualifying
improvements, interest and administrative costs.
The resolution authorizing an interfund loan allows for up to $20,000 from the City of
Cottage Grove’s Future Economic Development Fund be transferred to the EDA’s TIF
Fund to pay for a portion of those qualified costs. As the City of Cottage Grove EDA
receives tax increment revenue from the TIF District No. 1-18 or other revenue derived
from the project, the EDA TIF Fund will repay the Interfund Loan to the City of Cottage
Grove’s Future Economic Development Fund.
Recommendation
A. Approve the resolution approving the sale of property to 9800 Hemingway LLC
for development purposes
B. Approve the Business Subsidy Agreement between the Cottage Grove Economic
Development Authority and 9800 Hemingway, LLC
C. Authorize the contract for private development by and between the Cottage
Grove Economic Development Authority and 9800 Hemingway, LLC
D. Approve the resolution authorizing an interfund loan for advance of certain costs
in connection with Tax Increment Financing District No.1-18 (Modern
Automotive)
Attachment
1. Resolution Approving Sale
2. Purchase Agreement
3. Business Subsidy Agreement
4. Private Development Agreement
5. Interfund Loan Resolution
COTTAGE GROVE
ECONOMIC DEVELOPMENT AUTHORITY
WASHINGTON COUNTY
STATE OF MINNESOTA
RESOLUTION NO. 2018-006
A RESOLUTION APPROVING THE SALE OF PROPERTY TO 9800 HEMINGWAY
LLC FOR DEVELOPMENT PURPOSES
Whereas, the Cottage Grove Economic Development Authority (“EDA”) owns certain
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real property legally described as Lot 1, Block 1, Glengrove Industrial Park 5 Addition,
according to the recorded plat thereof, Washington County, Minnesota (“EDA Property”); and
Whereas, 9800 Hemingway LLC (“Developer”) desires to purchase the south 50 feet of
the EDA Property (“Additional Property”) for the purpose of undertaking a 24,080 square foot
expansion of Developer’s existing business located at 9800 Hemingway Ave. S. (“the Project”);
and
Whereas, Developer intends to use the Additional Property for parking and truck access,
which will increase jobs and promote economic development; and
Whereas, on May 29, 2018, the EDA held a public public hearing on the sale of the
Additional Property and the EDA considered all of the information presented at the public
hearing.
NOW THEREFORE BE IT RESOLVED by the Board of Commissioners of the Cottage
Grove Economic Development Authority as follows:
1. The sale of the Additional Property to the Developer is in the public interest of the City
and its people, furthers its general plan of economic development and furthers the aims
and purposes of Minn. Stat. Sections 469.090 to 469.108.
2. The plans and specifications for the development of the Additional Property are hereby
approved.
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Passed this 29 day of May, 2018.
Myron Bailey, President
Attest:
Charlene Stevens, Executive Director
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this “Agreement”) is entered into as of May 29, 2018
(the “Effective Date”), by and between the Cottage Grove Economic Development Authority, a
public body corporate and politic under the laws of Minnesota (“Seller”), and 9800 Hemingway,
LLC, a Minnesota limited liability company (“Buyer”).
RECITALS
A. Seller is the owner of approximately 21,104 square feet of unimproved real
property, located in Cottage Grove, Washington County, Minnesota legally
described as:
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The south 50’ of Lot 1, Block 1, Glengrove Industrial Park 5 Addition,
according to the recorded plat thereof, Washington County, Minnesota,
and depicted on the survey attached hereto as Exhibit A (the “Additional
Property”).
B. Buyer desires to purchase the Additional Property from Seller, and Seller desires
to sell the same to Buyer, all on the terms and conditions of this Agreement.
C. Buyer is undertaking a 24,000 square foot expansion of Buyer’s existing
distribution/warehousing business located at 9800 Hemingway, which is
immediately adjacent to the Additional Property.
D. Buyer intends to use the Additional Property for parking needs and truck access
as a result of the planned expansion.
E. Pursuant to Minn. Stat. §469.105 subd. 5, within one year of Closing, Buyer must
devote the Additional Property to the intended use described in C and D above or
begin work on the improvements to devote the Additional Property to that use or
the EDA may cancel the sale and title to the Additional Property will return to the
EDA.
NOW, THEREFORE, Buyer and Seller agree as follows:
1. Sale.
1.1 Sale. Subject to the terms and provisions of this Agreement, Seller shall sell to
Buyer, and Buyer shall purchase from Seller, the Additional Property.
1.2 Purchase Price. The purchase price to be paid by Buyer to Seller for the
Additional Property shall be One Dollar and 75/100 ($1.75) per square foot
multiplied by actual total number of square feet for the Additional Property, for an
estimated value of Thirty-Six Thousand Nine Hundred Thirty-Two Dollars
($36,932) (the “Purchase Price”). There shall be no setoff to the Purchase Price
for a loss of square footage of the Additional Property caused by wetland
dedication, easement or roadway dedication or the like which may cause a portion
of the Additional Property to become unusable for the Proposed Use as herein
defined. The Purchase Price shall be payable on the Closing Date, as defined in
Section 6, subject to those adjustments, prorations and credits described in this
Agreement, in certified funds or by wire transfer pursuant to instructions from
Seller.
1.3 Earnest Money. Within three (3) days after the Effective Date, Buyer agrees to
deposit in escrow with City an earnest money deposit in the amount of Three
Thousand Dollars ($3,000) (“Earnest Money”). Except to the extent otherwise set
forth herein, Earnest Money shall be non-refundable and shall be applied for
Buyer’s benefit against the Purchase Price at Closing (as defined below).
2. Available Surveys, Tests, and Reports. Within ten (10) days of the Effective Date,
Seller shall cause to be delivered to Buyer, (a) copies of any surveys, soil tests and
environmental reports previously conducted on the Additional Property and in the
possession of Seller, (b) copies of existing title work for the Additional Property and in
the possession of Seller, and (c) any land use approvals or restrictions on use of the
Additional Property (the “Due Diligence Materials”). Seller makes no representations or
warranties regarding the accuracy of the Due Diligence Materials.
3. Buyer’s Investigations. For a period up to sixty calendar (60) days following the
Effective Date, Seller shall allow Buyer and Buyer’s agents access to the Additional
Property without charge and at all times for the purpose of Buyer’s investigation and
testing of the Additional Property, including surveying and testing of soil and
groundwater (“Buyer’s Investigations”); provided, however, Buyer shall not perform any
invasive testing unless (a) Seller gives its prior approval of Buyer’s consultant that will
perform the testing, which approval shall not be unreasonably withheld, conditioned or
delayed, and (b) Buyer gives Seller reasonable prior notice of such testing. Seller shall
have the right to accompany Buyer during any of Buyer’s Investigations of the
Additional Property. Buyer shall provide to Seller copies of all third-party, non-
confidential written test results and reports conducted as part of Buyer’s Investigations.
Buyer agrees to pay all of the costs and expenses associated with Buyer’s Investigations,
to cause to be released any lien on the Additional Property arising as a result of Buyer’s
Investigations and to repair and restore, at Buyer’s expense, any damage to the
Additional Property caused by Buyer’s Investigations. Buyer shall indemnify and hold
Seller and the Additional Property harmless from all costs and liabilities, including, but
not limited to, reasonable attorneys’ fees, arising from Buyer’s Investigations. The
indemnification obligations provided herein shall survive the termination or cancellation
of this Agreement.
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4. Insurance; Risk of Loss. Seller assumes all risk of destruction, loss or damage to the
Additional Property prior to the Closing Date. If, prior to the Closing Date, all or any
portion of the Additional Property or access thereto is condemned, taken by eminent
domain, or damaged by cause of any nature, Seller shall immediately give Buyer notice
of such condemnation, taking or damage. After receipt of notice of such condemnation,
taking or damage (from Seller or otherwise), Buyer shall have the option (to be exercised
in writing within thirty (30) days thereafter) either:
4.1 To require Seller to (i) convey the Additional Property at Closing (as defined in
Section 6) to Buyer in its damaged condition, upon and subject to all of the other
terms and conditions of this Agreement without reduction of the Purchase Price,
(ii) assign to Buyer at Closing all of Seller’s right, title and interest in and to any
claims Seller may have to insurance proceeds, condemnation awards and/or any
causes of action with respect to such condemnation or taking of or damage to the
Additional Property or access thereto, and (iii) pay to Buyer at Closing by
certified or official bank check all payments made prior to the Closing Date under
such insurance policies or by such condemning authorities; or
4.2 To terminate this Agreement by giving notice of such termination to Seller,
whereupon this Agreement shall be terminated, the Earnest Money shall be
refunded to Buyer and thereafter neither party shall have any further obligations
or liabilities to the other, except for such obligations as survive termination of this
Agreement. If the right to terminate this Agreement is not exercised in writing
within such thirty (30) day period, such right shall be deemed to have been
waived. Seller shall not designate counsel, appear in, or otherwise act with respect
to the condemnation proceedings without Buyer's prior written consent, which
consent shall not be unreasonably withheld.
5. Contingencies.
5.1 Buyer’s Contingencies.
(a) Unless waived by Buyer in writing, Buyer’s obligation to proceed to
Closing shall be subject to performance by Seller of its obligations
hereunder, the continued accuracy of Seller’s representations and
warranties provided in Section 9.1, and Buyer’s satisfaction, in Buyer’s
sole discretion, as to the contingencies described in this Section 5.1 within
the time periods set forth below:
(1) On or before ninety (90) days following the Effective Date, Buyer
shall have determined, in its sole discretion, that it is satisfied with
the results of and matters disclosed by Buyer’s Investigations,
surveys, soil tests, engineering inspections, hazardous substance
and environmental reviews of the Additional Property and all other
inspections and due diligence regarding the Additional Property,
including any Due Diligence Materials.
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(2) On or before the Contingency Date (defined below), Buyer shall
have determined the acceptability of the Additional Property for its
intended use and incidental uses thereto (collectively, the
“Proposed Use”). All costs and expenses related to applying for
and obtaining any governmental permits and approvals for the
Additional Property for the Proposed Use shall be the
responsibility of the Buyer.
(3) On or before the Contingency Date, Buyer shall have obtained all
appropriate approvals and permits necessary for the Proposed Use
on the Additional Property, which approvals may include, without
limitation, platting or replatting, zoning approvals and/or rezoning
of the Additional Property, conditional use permits, access permits,
signage permits, building permits, required licenses, site plan
approvals and architectural approvals. All costs and expenses
related to the preparation of any documentation necessary to create
any plans, specifications or the like shall be the responsibility of
the Buyer.
(4) On or before the Contingency Date, and without limitation of the
terms of Section 5.1(a)(3), Buyer shall be satisfied that it may
develop the Additional Property in accordance with a site plan,
architectural plan, building plan, grading and drainage plan and
other plans and specifications satisfactory to Buyer in its sole
discretion.
(5) On or before sixty (60) days following the Effective Date, Buyer
shall have received from Title an irrevocable commitment to issue
a title insurance policy for the Additional Property in a form and
substance satisfactory to Buyer in Buyer’s sole discretion, not
disclosing any encumbrance not acceptable to Buyer in Buyer’s
sole discretion (the “Approved Commitment”).
(6) On or before the Closing Date, Buyer shall have received from
Title an irrevocable commitment to issue a title insurance policy
for the Additional Property in the form of the Approved
Commitment with such endorsements as requested by Buyer in its
sole and absolute discretion, subject only to such changes in title as
are Permitted Encumbrances or as are acceptable to Buyer in
Buyer’s sole discretion.
(7) On or before sixty (60) days following the Effective Date, Buyer
shall review and approve the books and records in Seller’s
possession, if any, including site plans, surveys, engineering or
environmental reports associated with the Additional Property.
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(8) On or before sixty (60) days following the Effective Date, Buyer
shall review and approve a Phase I Environmental Review of the
Additional Property.
(9) On or before sixty (60) days following the Effective Date, Buyer
shall review and approve the ALTA Survey of the Additional
Property.
(10) On or before the Closing date, Buyer has received funding from
the State of Minnesota of certain incentives under the Minnesota
Job Creation Fund (the “State Incentives”). If Buyer elects to
terminate this Agreement due to a failure to receive the State
Incentives, Buyer agrees that Buyer shall pay the cost for or the
removal of any and all improvements Seller installed or made to
the Additional Property at Buyer’s written request.
The foregoing contingencies are for Buyer’s sole and exclusive benefit and
one (1) or more may be waived in writing by Buyer in its sole discretion. Seller
shall reasonably cooperate with Buyer’s efforts to satisfy such contingencies, at
no out of pocket cost to Seller or assumption of any obligation or liability by
Buyer. Buyer shall bear all cost and expense of satisfying Buyer’s contingencies.
If any of the foregoing contingencies have not been satisfied on or before the
applicable date, then this Agreement may be terminated, at Buyer’s option, by
written notice from Buyer to Seller. Such written notice must be given on or
before the applicable date, or Buyer’s right to terminate this Agreement pursuant
to this Section shall be waived. If Buyer terminates this Agreement pursuant to
this Section, the Earnest Money shall immediately be refunded to Buyer. Upon
termination, neither party shall have any further rights nor obligations against the
other regarding this Agreement or the Additional Property, except for such
obligations as survive termination of this Agreement.
(b) If Buyer elects not to exercise any of the contingencies set out herein, such
election may not be construed as limiting any representations or
obligations of Seller set out in this Agreement, including without
limitation any indemnity or representations with respect to environmental
matters.
(c) As used in this Agreement, the “Contingency Date” shall mean the first
st
(1) business day occurring ninety (90) days from the Effective Date.
5.2 Seller’s Contingencies. Seller’s obligation to proceed to Closing shall be subject
to the satisfaction, on or prior to the Closing Date, of each of the following
conditions:
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(a) Buyer shall have performed and satisfied all agreements, covenants and
conditions required pursuant to this Agreement to be performed and
satisfied by or prior to the Closing Date.
(b) All representations and warranties of Buyer contained in this Agreement
shall be accurate as of the Closing Date.
Seller may in its sole discretion waive any of the conditions precedents set out in this
Section.
6. Closing. The closing of the purchase and sale contemplated by this Agreement (the
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“Closing”) shall occur on the first (1) business day occurring thirty (30) days after the
Contingency Date (the “Closing Date”). Notwithstanding the foregoing sentence, the
Closing shall occur no later than June 30, 2018. Seller agrees to deliver legal and actual
possession of the Additional Property to Buyer on the Closing Date. Closing shall occur
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at DCA Title, 7373 147 Street West, Apple Valley, MN 55124 (“Title”). The Closing
will be an escrow closing where all closing documents and funds required to be paid or
provided by each party pursuant to this Agreement will be delivered to Title in escrow on
or before the Closing Date and upon receipt of all required funds and documents from the
parties, Title will close the transaction in accordance with the provisions of this
Agreement.
6.1 Seller’s Closing Documents and Deliveries. On the Closing Date, Seller shall
execute and/or deliver, as applicable, to Buyer the following, in such form and
substance as reasonably approved by Buyer and its counsel:
(a) Warranty Deed. A general warranty deed conveying title to the
Additional Property to Buyer, free and clear of all encumbrances, except
the Permitted Encumbrances (the “Deed”). The deed shall contain the
provisions required in Minn. Stat. §469.105 subd. 6, that if the Additional
Property is not devoted to its intended use as described in the Recitals C
and D within one year of closing, the EDA may seek a judicial decree
cancelling the sale.
(b) FIRPTA Affidavit. An affidavit of Seller certifying that Seller is not a
“foreign person,” “foreign partnership,” foreign trust,” “foreign estate” or
“disregarded entity” as those terms are defined in Section 1445 of the
Internal Revenue Code of 1986, as amended.
(c) Seller’s Affidavit. A standard owner’s affidavit (ALTA form) from
Seller which may be reasonably required by Title to issue an owner’s
policy of title insurance with respect to the Additional Property with the
so-called “standard exceptions” deleted (excluding the survey exception).
(d) Settlement Statement. A settlement statement with respect to this
transaction.
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(e) General Deliveries. All other documents reasonably determined by Title
to be necessary to transfer the Additional Property to Buyer and to
evidence that Seller has:
i. Satisfied all monetary indebtedness with respect thereto,
ii. Obtained such termination statements or releases from such
secured creditors as may be necessary to ensure that the Additional
Property is subject to no monetary liens,
iii. Obtained all consents from third parties necessary to effect Seller’s
performance of the terms of this Agreement, including, without
limitation, the consents of all parties holding an interest in the
Additional Property,
iv. Provided such other documents as are reasonably determined by
Title to be necessary to issue policies of title insurance to Buyer
with respect to the Additional Property with the so-called
“standard exceptions” deleted (excluding the survey exception),
and
v. Duly authorized the transactions contemplated hereby.
6.2 Buyer Closing Documents and Deliveries. On the Closing Date, Buyer shall
execute and/or deliver, as applicable, to Seller the following, in such form and
substance as reasonably approved by Buyer and its counsel:
(a) Payment of Purchase Price. The Purchase Price shall be payable on the
Closing Date.
(b) Settlement Statement. A settlement statement with respect to this
transaction.
(c) FIRPTA Affidavit. An affidavit of Buyer certifying that Buyer is not a
“foreign person,” “foreign partnership,” foreign trust,” “foreign estate” or
“disregarded entity” as those terms are defined in Section 1445 of the
Internal Revenue Code of 1986, as amended.
(d) General Deliveries. All other documents reasonably determined by Title
to be necessary to evidence that Buyer has duly authorized the transactions
contemplated hereby and evidence the authority of Buyer to enter into and
perform this Agreement and the documents and instruments required to be
executed and delivered by Buyer pursuant to this Agreement, or may be
required of Buyer under applicable law, including any purchaser’s
affidavits or revenue or tax certificates or statements.
7. Prorations. Seller and Buyer agree to the following prorations and allocation of costs
regarding this Agreement:
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7.1 Title Evidence, Survey, Lot Split and Closing Fee. Buyer shall pay all
premiums for any title insurance policy it desires with respect to the Additional
Property. Buyer shall pay for survey and lot split fees. Buyer and Seller shall
each pay one half (1/2) of any reasonable closing fee or charge imposed by Title.
7.2 Transfer Taxes. Seller shall pay all state deed tax regarding the Deed.
7.3 Recording Costs. Buyer will pay all recording costs with respect to the recording
of the Deed.
7.4 Real Estate Taxes and Special Assessments. General real estate taxes
applicable to any of the Additional Property due and payable in the year of
Closing shall be prorated between Seller and Buyer on a daily basis as of 12:00
a.m. CT on the Closing Date based upon a calendar fiscal year, with Seller paying
those allocable to the period prior to the Closing Date and Buyer being
responsible for those allocable to the Closing Date and subsequent thereto. Seller
shall pay in full all special assessments (and charges in the nature of or in lieu of
such assessments) levied, pending, postponed or deferred with respect to any of
the Additional Property as of the Closing Date. Buyer shall be responsible for any
special assessments that are levied or become pending against the Additional
Property after the Closing Date, including, without limitation, those related to
Buyer’s development of the Additional Property.
7.5 Attorneys’ Fees. Seller and Buyer shall each pay its own attorneys’ fees incurred
in connection with this transaction.
7.6 Survival. The obligations set forth in this Section 7 survive the Closing.
8. Title Examination. Buyer shall obtain a commitment for an owner’s title insurance
policy (ALTA Form 2006) issued by Title for the Additional Property, and copies of all
encumbrances described in the commitment (the “Commitment”); and (ii) an ALTA-
certified survey bearing the legal description of the Additional Property, and showing the
area, dimensions and location of the Additional Property (the “Survey” and, together with
the Commitment, the “Title Evidence”).
8.1 Buyer’s Objections. Within ten (10) days after Buyer’s receipt of the last of the
Title Evidence, Buyer may make written objections (“Objections”) to the form or
content of the Title Evidence. The Objections may include without limitation, any
easements, restrictions or other matters which may interfere with the Proposed
Use of the Additional Property or matters which may be revealed by the Survey.
Any matters reflected on the Title Evidence which are not objected to by Buyer
within such time period or waived by Buyer in accordance with Section 8.2(b)
shall be deemed to be permitted encumbrances (“Permitted Encumbrances”).
Notwithstanding the foregoing, the following items shall be deemed Permitted
Encumbrances:
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(a) Covenants, conditions, restrictions (without effective forfeiture provisions)
and declarations of record, if any;
(b) Reservation of minerals or mineral rights by the State of Minnesota, if
any;
(c) Utility and drainage easements which do not interfere with the Proposed
Use; and
(d) Applicable laws, ordinances, and regulations.
Buyer shall have the renewed right to object to the Title Evidence as the same
may be revised or endorsed from time to time.
8.2 Seller’s Cure. Seller shall be allowed twenty (20) days after the receipt of
Buyer’s Objections to cure the same but shall have no obligation to do so. If such
cure is not completed within said period, or if Seller elects not to cure such
Objections, Buyer shall have the option to do any of the following:
(a) Terminate this Agreement with respect to all of the Additional Property.
(b) Waive one or more of its objections and proceed to Closing.
If Buyer so terminates this Agreement, neither Seller nor Buyer shall be liable to the
other for any further obligations under this Agreement (except for such obligations as
survive termination of this Agreement) and the Earnest Money shall be refunded to
Buyer.
9. Warranties and Representations.
9.1 By Seller. Seller warrants and represents the following to Buyer, and
acknowledges that Buyer has relied on such representations and warranties in
agreeing to enter into this Agreement:
(a) This Agreement has been duly executed and delivered and constitutes the
legal, valid and binding obligation of Seller enforceable in accordance
with its terms. Seller has been duly formed under the laws of the State of
Minnesota and is in good standing under the laws of the jurisdiction in
which the Additional Property is located, is duly qualified to transact
business in the jurisdiction in which the Additional Property is located,
and has the requisite power and authority to enter into and perform this
Agreement and the documents and instruments required to be executed
and delivered by Seller pursuant hereto. This Agreement and the
documents and instruments required to be executed and delivered by
Seller pursuant hereto have each been duly authorized by all necessary
action on the part of Seller and such execution, delivery and performance
does and will not conflict with or result in a violation of Seller’s
organizational agreement or any judgment or order.
9
(b) The execution, delivery and performance by Seller of this Agreement will
not violate any provision of any law, statute, rule or regulation or any
order, writ, judgment, injunction, decree, determination or award of any
court, governmental agency or arbitrator presently in effect having
applicability to Seller, or result in a breach of or constitute a default under
any indenture, loan or credit agreement or any other agreement, lease or
instrument to which Seller is a party or by which it or any of its properties
may be bound.
(c) Except as contemplated herein or as otherwise disclosed to Buyer in
writing, no order, consent, approval, license, authorization or validation
of, or filing, recording or registration with, or exemption by, any
governmental or public body or authority, or any other entity, is required
on the part of Seller to authorize, or is required in connection with, the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, this Agreement, except for Buyer obtaining all
the Approvals (as defined below).
(d) There are no actions, suits or proceedings pending or, to Seller’s
knowledge, threatened against or affecting Seller or any of its properties,
before any court or arbitrator, or any governmental department, board,
agency or other instrumentality which in any of the foregoing challenges
the legality, validity or enforceability of this Agreement, or if determined
adversely to Seller, would have a material adverse effect on the ability of
Seller to perform its obligations under this Agreement.
(e) Seller has not received written notice, and has no knowledge, of (i) any
pending or contemplated annexation or condemnation proceedings, or
purchase in lieu of the same, affecting or which may affect all or any part
of the Additional Property, (ii) any proposed or pending proceeding to
change or redefine the zoning classification of all or any part of the
Additional Property, (iii) any proposed changes in any road patterns or
grades which would adversely and materially affect access to the roads
providing a means of ingress or egress to or from all or any part of the
Additional Property, or (iv) any uncured violation of any legal
requirement, restriction, condition, covenant or agreement affecting all or
any part of the Additional Property or the use, operation, maintenance or
management of all or any part of the Additional Property.
(f) To Seller’s knowledge, there are no wells or sewage treatment systems
located on any portion of the Additional Property. To Seller’s knowledge,
there has been no methamphetamine production on or about any portion of
the Additional Property. To Seller’s knowledge, the sewage generated by
the Additional Property, if any, goes to a facility permitted by the
Minnesota Pollution Control Agency and there is no “individual sewage
10
treatment system” (as defined in Minnesota Statutes § 115.55, Subd. 1(g))
located on the Additional Property.
(g) Seller is not a “foreign person,” “foreign corporation,” “foreign trust,”
“foreign estate” or “disregarded entity” as those terms are defined in
Section 1445 of the Internal Revenue Code.
(h) To Seller’s knowledge, except as may be disclosed as part of the Due
Diligence Materials, (i) no condition exists on the Additional Property that
may support a claim or cause of action under any Environmental Law (as
defined below) and there are no Hazardous Substances (as defined below)
on the Additional Property, (ii) there has been no release, spill, leak or
other contamination or otherwise onto the Additional Property, and (iii)
there are no restrictions, clean ups or remediation plans regarding the
Additional Property. To Seller’s knowledge, except as may be disclosed
as part of the Due Diligence Materials, there is no buried waste or debris
on any portion of the Additional Property, except for shredded automobile
tire chips included in fill previously placed on the Additional Property.
“Environmental Law” shall mean (a) the Comprehensive Environmental
Response Compensation and Liability Act of 1980, 42 U.S.C. § 9601-
9657, as amended, or any similar state law or local ordinance, (b) the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901, et
seq., (c) the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et
seq., (d) the Clean Air Act, 42 U.S.C. § 7401, et seq., (e) the Toxic
Substances Control Act, 15 U.S.C. § 2601 et seq., (f) the Safe Drinking
Water Act, 42 U.S.C. § 300(f) et seq., (g) any law or regulation governing
aboveground or underground storage tanks, (h) any other federal, state,
county, municipal, local or other statute, law, ordinance or regulation,
including, without limitation, the Minnesota Environmental Response and
Liability Act, Minn. Stat. § 115B.01, et seq., (i) all rules or regulations
promulgated under any of the foregoing, and (j) any amendments of the
foregoing. “Hazardous Substances” shall mean polychlorinated biphenyls,
petroleum, including crude oil or any fraction thereof, petroleum products,
heating oil, natural gas, natural gas liquids, liquefied natural gas or
synthetic gas usable for fuel, and shall include, without limitation,
substances defined as “hazardous substances,” “toxic substances,”
“hazardous waste,” “pollutants or contaminants” or similar substances
under any Environmental Law.
(i) There are no leases or tenancies with respect to the Additional Property.
There are no unrecorded agreements or other contracts of any nature or
type relating to, affecting or serving the Additional Property.
(j) There will be no indebtedness attributable to the Additional Property
which will remain unpaid after the Closing Date.
11
(k) Seller has received no notice of, nor is Seller aware of, any actual or
pending special assessments or reassessments of the Additional Property.
As used in this Agreement, the term “to Seller’s knowledge” shall mean and refer
to only the current actual knowledge of the designated representative of Seller and shall
not be construed to refer to the knowledge of any other partner, officer, manager,
member, director, agent, authorized person, employee or representative of Seller, or any
affiliate of Seller, or to impose upon such designated representative any duty to
investigate the matter to which such actual knowledge or the absence thereof pertains, or
to impose upon such designated representative any individual personal liability. As used
herein, the term “designated representative” shall refer to the City Engineer and City
Administrator.
The representations, warranties and other provisions of this Section 9.1 shall
survive Closing; provided, however, Seller shall have no liability with respect to any
breach of a particular representation or warranty if Buyer shall fail to notify Seller in
writing of such breach within two (2) years after the Closing Date, and provided further
that Seller shall have no liability with respect to a breach of the representations and
warranties set forth in this Agreement if Buyer has actual knowledge of Seller’s breach
thereof prior to Closing and Buyer consummates the acquisition of the Additional
Property as provided herein.
Buyer acknowledges and agrees that, except as expressly specified in this Section
9 of this Agreement, Seller has not made, and Seller hereby specifically disclaims, any
representation, warranty or covenant of any kind, oral or written, expressed or implied, or
rising by operation of law, with respect to the Additional Property, including but not
limited to, any warranties or representations as to the habitability, merchantability, fitness
for a particular purpose, title, zoning, tax consequences, physical or environmental
condition, utilities, valuation, governmental approvals, the compliance of the Additional
Property with governmental laws, the truth, accuracy or completeness of any information
provided by or on behalf of Seller to Buyer, or any other matter or item regarding the
Additional Property. Buyer agrees to accept the Additional Property and acknowledges
that the sale of the Additional Property as provided for herein is made by Seller on an
“AS IS,” “WHERE IS,” and “WITH ALL FAULTS” basis. The limitations set forth in
this paragraph shall survive the Closing and shall not merge in the deed.
9.2 By Buyer. Buyer warrants and represents the following to Seller, and
acknowledges that Seller has relied on such representations and warranties in
agreeing to enter into this Agreement:
(a) Buyer has all requisite authority to enter into this Agreement and to
perform all of its obligations under this Agreement.
(b) The execution, delivery and performance by Buyer of this Agreement will
not (i) violate any provision of any law, statute, rule or regulation or any
order, writ, judgment, injunction, decree, determination or award of any
12
court, governmental agency or arbitrator presently in effect having
applicability to Buyer, (ii) violate or contravene any provision of the
articles of incorporation or bylaws of Buyer, or (iii) result in a breach of or
constitute a default under any indenture, loan or credit agreement or any
other agreement, lease or instrument to which Buyer is a party or by which
it or any of its properties may be bound.
The representations, warranties and other provisions of this Section 9.2 shall survive
Closing; provided, however, Buyer shall have no liability with respect to any breach of a
particular representation or warranty if Seller shall fail to notify Buyer in writing of such breach
within two (2) years after the Closing Date.
10. Additional Obligations of Seller.
10.1 Licenses and Permits. Seller shall transfer to Buyer all transferable rights, if
any, in any permits or licenses held by Seller with respect to the Additional
Property. Seller shall execute all applicable transfer forms and applications to
facilitate and effect any such transfer and to cooperate fully with Buyer in its
efforts to obtain all of the necessary licenses and permits for the Proposed Use, at
no out-of-pocket cost to Seller, or the assumption of any obligations or liabilities
by Seller.
10.2 Condition of Property at Closing. Prior to Closing, the Additional Property
shall be operated in the ordinary course consistent with previous practice. On the
Closing Date, Seller shall deliver to Buyer exclusive vacant possession of the
Additional Property, free and clear of any personal property, surface waste and
surface debris of any kind. On or before the Closing Date, Seller shall remove all
trash and personal property from the Additional Property. Seller agrees that Buyer
may dispose of any trash or personal property remaining on the Additional
Property as of the Closing Date in Buyer’s sole discretion and Seller agrees to pay
for all costs and expenses incurred by Buyer with respect to the transport and/or
disposal of the personal property within ten (10) days after receipt of an invoice
from Buyer.
10.3 Further Assurances. From and after the Closing Date, Seller agrees to execute,
acknowledge and deliver to Buyer such other documents or instruments of
transfer or conveyance as may be reasonably required to carry out its obligations
pursuant to this Agreement.
10.4 Non-Assumption of Contracts or Other Obligations. The parties understand
and agree that Buyer is only acquiring certain of Seller’s real property assets and
that this Agreement and any related agreements shall not be construed to be in any
manner whatsoever an assumption by Buyer of any agreements, indebtedness,
obligations or liabilities of Seller which are owing with respect to the operation of
the Additional Property prior to the Closing Date.
13
10.5 Mortgages. On or before the Closing Date, Seller shall satisfy all mortgage
and/or lien indebtedness with respect to all or any portion of the Additional
Property and shall obtain recordable releases of the Additional Property from any
and all such mortgages or other liens affecting all or any portion of the Additional
Property.
10.6 Approvals. Buyer may elect to seek certain approvals in order for Buyer to
develop the Additional Property for the Proposed Use, including rezoning the
Additional Property or receipt of a conditional use permit (the “Approvals”).
Seller, at no out-of-pocket cost to Seller, or the assumption of any obligations or
liabilities by Seller, will reasonably cooperate with Buyer’s efforts to obtain the
Approvals at or prior to Closing. Seller hereby grants Buyer the right to file and
prosecute applications and petitions for the Approvals and any special use permits
and variances desired by Buyer; provided, however, any special use permits or
variances shall (a) be contingent on the occurrence of the Closing and shall not be
binding upon Seller or the Additional Property unless and until the Closing
occurs, or (b) be approved in writing in advance by Seller. Seller, at no out-of-
pocket cost to Seller, or the assumption of any obligations or liabilities by Seller,
agrees to cooperate with Buyer in the filing and prosecution of such applications
and petitions, including the filing of the same in Seller’s name, if required.
11. Commissions. Each party represents that all negotiations on its behalf relative to this
Agreement and the transactions contemplated by this Agreement have been carried on
directly between the parties, without the intervention of any party as broker, finder or
otherwise and that there are no claims for brokerage commissions or finders’ fees in
connection with the execution of this Agreement. Each party hereby indemnifies the
other from and against all losses, damages, costs, expenses (including reasonable fees and
expenses of attorneys), causes of action, suits or judgments of any nature arising out of
any claim, demand or liability to or asserted by any broker, agent or finder, claiming to
have acted on behalf of the indemnifying party in connection with this transaction.
12. Notice. Any notice to be given by one party hereto shall be personally delivered
(including messenger delivery) or be sent by registered or certified mail, or by a
nationally recognized overnight courier which issues a receipt, in each case postage
prepaid, to the other party at the addresses in this Section (or to such other address as may
be designated by notice given pursuant to this Section), and shall be deemed given upon
personal delivery, three (3) days after the date postmarked or one (1) business day after
delivery to such overnight courier.
If to Seller: Cottage Grove EDA
Attn: EDA Executive Director
12800 Ravine Parkway South
Cottage Grove MN 55016
14
with a copy to: LeVander, Gillen & Miller, P.A.
Attn: Korine L. Land
633 South Concord Street, Suite 400
South St. Paul, MN 55075
If to Buyer: 9800 Hemingway, LLC
Attn: Christopher Carey
9800 Hemingway Avenue South
Cottage Grove, MN 55016
with a copy to: Fafinski Mark & Johnson, P.A.
Attn: Nathan M. Brandenburg
775 Prairie Center Drive, Suite 400
Eden Prairie, MN 55344
13. Default; Remedies. If either Seller or Buyer fails to perform any of its obligations under
this Agreement in accordance with its terms, and such failing party does not cure such
failure within thirty (30) days after written notice thereof from the other party (provided
that no notice or cure period shall be required for obligations to be performed at Closing),
then the other party shall have the right to terminate this Agreement by giving the failing
party written notice of such election. In the case of any default by Buyer, Seller’s sole
and exclusive remedies shall be (i) termination of this Agreement as provided above and,
upon any such termination, the Earnest Money shall be forfeited to Seller as agreed and
final liquidated damages. In the case of any default by Seller, Buyer’s sole and exclusive
remedies shall be (i) specifically enforce this Agreement, or (ii) terminate this
Agreement, in which case the Earnest Money shall be returned to Buyer as agreed and
final liquidated damages. In no event shall Buyer be entitled to record a notice of Lis
Pendens against the Additional Property, unless Buyer is pursuing specific performance
of this Agreement. In any action or proceeding to enforce this Agreement or any term
hereof, the prevailing party shall be entitled to recover its reasonable costs and attorneys’
fees.
14. Cumulative Rights. No right or remedy conferred or reserved to Seller or Buyer is
intended to be exclusive of any other right or remedy herein or by law provided, but each
shall be cumulative in and in addition to every other right or remedy existing at law, in
equity or by statute, now or hereafter.
15. Entire Agreement; Modification. This written Agreement constitutes the complete
agreement between the parties with respect to this transaction and supersedes any prior
oral or written agreements between the parties regarding this transaction. There are no
verbal agreements that change this Agreement and no waiver of any of its terms will be
effective unless in writing executed by the parties.
16. Binding Effect; Survival. This Agreement binds and benefits the parties and their
respective successors and assigns. All representations and warranties, and
indemnification obligations of the parties hereto shall survive the Closing.
15
17. Buyer’s Assignment. Buyer may assign this Agreement without the prior written consent
of the Seller (but with written notice to Seller). No assignment shall relieve Buyer from
its obligations under this Agreement.
18. Governing Law. The provisions of this Agreement shall be governed by and construed
in accordance with the laws of the State of Minnesota.
19. Counterparts; Facsimiles. This Agreement may be executed in any number of
counterparts, and all of the signatures to this Agreement taken together shall constitute
one and the same agreement, and any of the parties hereto may execute such agreement
by signing any such counterpart. Facsimile or “PDF” signatures on this Agreement shall
be treated as originals until the actual original signatures are obtained.
20. Represented by Counsel. Each party has been represented and advised by counsel in
the transaction contemplated hereby.
21. Time of the Essence. Time is of the essence of this Agreement.
IN AGREEMENT, the parties hereto have hereunto set their hands as of the date
hereinbefore first written.
\[remainder of page intentionally blank\]
16
SELLER:
COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY
By: ____________________________
Myron Bailey
Its President
By: ____________________________
Charlene R. Stevens
Its Executive Director
17
BUYER:
9800 HEMINGWAY, LLC
By:____________________________
Christopher Carey
Its: Chief Manager
18
EXHIBIT A
DEPICTION OF THE ADDITIONAL PROPERTY
(ALTA Survey)
A-1
BUSINESS SUBSIDY AGREEMENT
THIS AGREEMENT (“Agreement”) made this 29th day of May, 2018, by and between
the Cottage Grove Economic Development Authority, a Minnesota public body corporate and
politic, 12800 Ravine Parkway South, Cottage Grove, MN 55016 (“EDA”) and 9800
Hemingway, LLC, a Minnesota limited liability company, 9800 Hemingway Ave. South,
Cottage Grove, MN 55016 (“Developer”).
RECITALS
WHEREAS, the City of Cottage Grove (“City”) has long desired to improve the function
and appearance of its community through economic development, and has invested substantial
resources toward that goal; and
WHEREAS, the Cottage Grove City Council established the EDA in order to advance
these objectives; and
WHEREAS, the EDA adopted criteria for awarding business subsidies, pursuant to the
Business Subsidies Act, Minn. Stat., Sections 116J.993 to 116J.995 (“Business Subsidy Act”);
and
WHEREAS, the EDA owns the property located in Cottage Grove legally described as
th
Lot 1, Block 1, Glengrove Industrial Park 5 Addition (“the Property); and
WHEREAS, 9800 Hemingway, LLC (“Developer”) desires to purchase the south 50 feet
of the EDA Property (“Additional Property”) for the purpose of undertaking a 24,080 square foot
expansion of Developer’s existing business located at 9800 Hemingway Ave. S. (“the Project”);
and
WHEREAS, without the ability to expand the existing business in its current location
with the Additional Property, Developer would be required to move his business out of the City;
and
WHEREAS, Developer intends to specifically use the Additional Property for parking
and truck access; and
WHEREAS, the Project, which doubles the size of the Developer’s existing building,
will increase jobs and promote economic development; and
WHEREAS, the Developer is also receiving financial assistance through tax increment
financing from the EDA and a grant from the State of Minnesota; and
1
WHEREAS, due to the potential loss of the Developer’s existing business without the
Additional Property, the economic benefit that the Project will bring to the City, and the job
creation resulting from the Project, the EDA is selling the Additional Property at a per square
foot value that is below the fair market value, which is a business subsidy under Minn. Stat.
§116J.993 (“Business Subsidy Statute”); and
WHEREAS, the business subsidy is a subsidy by definition under the Business Subsidy
Statute, but it is less than $150,000 and therefore does not require a public hearing, however, it
does require a business subsidy agreement pursuant to Minn. Stat. §116J.994; and
WHEREAS, the EDA believes the proposed redevelopment of the Property would be
desirable for the City; and
WHEREAS, the redevelopment meets all criteria for awarding a Business Subsidy
established by the EDA Policy on Business Subsidies and due to the estimated cost of the
redevelopment, it is not financially feasible without public assistance.
NOW THEREFORE, for good and valuable consideration, the receipt of which is
acknowledged, and in consideration of the covenants and agreements made herein, Developer
and the EDA hereby agree as follows:
AGREEMENT
1. The Business Subsidy comprises of a discounted purchase price for the Additional
Property of $1.75 per square foot. The estimated fair market value of the Additional
Property is $3.00 per square foot, therefore, there is a subsidy value of $26,380.
2. The public purposes of the Business Subsidy are as follows:
a. Promote the economic and commercial redevelopment of the City;
b. Preserve the local tax base and improve the general economy and vitality of the
City;
c. Promote the health, safety and welfare of the residents of the City;
d. Remove, prevent or reduce blight, blighting factors or the cause of blight in the
City;
e. Attract, retain, rehabilitate and preserve commercial facilities;
f. Afford maximum opportunities, consistent with the needs of the City as a whole,
for the redevelopment of the area by private enterprise.
2
3. The goals for the Business Subsidy are to secure timely development and maintain the
Property as a commercial building for at least five (5) years.
4. Developer will construct the Project pursuant to a Site Plan and any other approvals or
licenses required by the City, with a completion date of December 31, 2018.
5. Upon the issuance of a certificate of occupancy (“Completion Date”), Developer, its
tenants, permitted successors or assigns, will continuously occupy the Property for at
least five (5) years, except in the event of unforeseeable casualty, in which event,
Developer shall rebuild and reopen as soon as commercially reasonable.
6. If Developer complies with the terms and conditions of this Agreement, the Business
Subsidy will be forgiven five (5) years after the Completion Date. If Developer does not
comply with the terms and conditions of this Agreement, Developer shall pay back a
portion of the Business Subsidy on a prorated basis, with interest, based on the portion of
the five-year operation period elapsed as of the date of default.
7. Developer must submit to the EDA a written report regarding Business Subsidy goals and
st
results by no later than March 1 of each year, commencing March 1, 2019 and
continuing until the later of the date that the goals are met; or thirty (30) days after
expiration of the five-year period; or if the goals are not met, then the date the Business
Subsidy is repaid. The report must comply with Section 116J.994 subd. 7 of the Business
Subsidy Act. The EDA will provide information to Developer regarding the required
forms. If Developer fails to timely file any report required under this section, the EDA
will send Developer a warning within one week after the required filing date. If, after 14
days of the postmarked date of the warning, Developer fails to provide a report,
Developer must pay the EDA a penalty of $100 for each subsequent day until the report
is filed. The maximum aggregate penalty payable under this section is $1,000.
8. The parties agree that this Agreement shall be construed pursuant to Minnesota law and
any disputes shall be venued in Dakota County, Minnesota.
9. Notices to the parties shall be sent as follows:
If to EDA: Cottage Grove EDA
Attn: Executive Director
12800 Ravine Parkway South
Cottage Grove, MN 55016
If to Developer: 9800 Hemingway, LLC
Attn: Chris Carey
9800 Hemingway Ave. South
Cottage Grove, MN 55016
10. This Agreement shall not be assigned without the prior written consent of the other party,
which shall not be unreasonably withheld.
3
11. This Agreement shall only be amended by written agreement approved by both parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their authorized representatives as of the date first written above.
COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY
Myron Bailey
Its: President
Charlene Stevens
Its: Executive Director
STATE OF MINNESOTA )
)ss
COUNTY OF WASHINGTON )
The foregoing instrument was acknowledged before me this ________ day of
______________, 2018, by Myron Bailey and Charlene Stevens, the President and Executive
Director, respectively, of the City of Cottage Grove Economic Development Authority, a
Minnesota public body corporate and politic existing under the Constitution and laws of
Minnesota, on behalf of the EDA.
Notary Public
4
DEVELOPER
9800 Hemingway, LLC
Chris Carey
Its: Chief Manager
STATE OF MINNESOTA )
)ss
COUNTY OF WASHINGTON )
The foregoing instrument was acknowledged before me this ___ day of ___________,
2018, by Chris Carey, the Chief Manager of 9800 Hemingway, LLC, on behalf of the limited
liability company.
Notary Public
5
EXECUTION COPY
CONTRACT
FOR
PRIVATE DEVELOPMENT
BY AND BETWEEN
COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY
AND
9800 HEMINGWAY, LLC
This document was drafted by:
KENNEDY & GRAVEN, Chartered (RHB)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
(612) 337-9300
522088v5 CT165-54
TABLE OF CONTENTS
Page
PARTIES AND RECITALS ....................................................................................................... 1
ARTICLE I
Definitions
Section 1.1. Definitions ........................................................................................................... 2
Section 1.2. Exhibits................................................................................................................ 4
Section 1.3. Rules of Interpretation.......................................................................................... 5
ARTICLE II
Representations and Warranties
Section 2.1. Representations by the EDA ................................................................................ 5
Section 2.2. Representations and Warranties by the Developer ................................................ 5
ARTICLE III
Acquisition and Conveyance of Additional Property
Section 3.1. Acquisition and Conveyance of the Additional Property ...................................... 7
Section 3.2. Combination of Existing Property and Additional Property .................................. 7
ARTICLE IV
Construction of Minimum Improvements
Section 4.1. Construction of Minimum Improvements ............................................................. 7
Section 4.2. Preliminary and Construction Plans ...................................................................... 7
Section 4.3. Commencement and Completion of Construction................................................. 8
Section 4.4. Certificate of Completion and Release of Forfeiture ............................................ 8
Section 4.5. Restrictions on Use; Land Use Approvals ............................................................ 9
Section 4.6. Reconstruction of Minimum Improvements ......................................................... 9
Section 4.7. Additional City Approvals and Permits ................................................................ 9
ARTICLE V
Financial Assistance; Issuance of Note
Section 5.1. Financial Assistance ............................................................................................. 9
Section 5.2. Conditions Precedent to Issuance of Note ........................................................... 10
Section 5.3. Records .............................................................................................................. 10
Section 5.4. No Business Subsidy .......................................................................................... 10
i
522088v5 CT165-54
ARTICLE VI
Insurance
Section 6.1. Required Insurance ............................................................................................ 11
Section 6.2. Evidence of Insurance ........................................................................................ 11
ARTICLE VII
Use of Tax Increment; Restrictions on Uses
Section 7.1. Use of Tax Increment ......................................................................................... 12
Section 7.2. Restrictions on Use in Economic Development TIF District ............................... 12
ARTICLE VIII
Restrictions on Sale or Encumbrance of Minimum Improvements; Assignment
Section 8.1. Prohibition Against Sale of Minimum Improvements ......................................... 13
Section 8.2. Limitation Upon Encumbrance of Property ........................................................ 13
ARTICLE IX
Events of Default
Section 9.1. Events of Default Defined .................................................................................. 13
Section 9.2. Remedies on Default .......................................................................................... 14
Section 9.3. No Remedy Exclusive ........................................................................................ 15
Section 9.4. Remedies after Certification of Completion........................................................ 15
Section 9.5. No Additional Waiver Implied by One Waiver ................................................... 16
ARTICLE X
Additional Provisions
Section 10.1. Conflict of Interests; Compliance of State Law .................................................. 16
Section 10.2. Release and Indemnification Covenants ............................................................. 16
Section 10.3. Titles of Articles and Sections ............................................................................ 17
Section 10.4. Notices and Demands ......................................................................................... 17
Section 10.5. Counterparts....................................................................................................... 17
Section 10.6. Recording .......................................................................................................... 17
Section 10.7. Attorney Fees ..................................................................................................... 18
Section 10.8. Governing Law; Venue ...................................................................................... 18
Section 10.9. Disclaimer of Relationship ................................................................................. 18
Section 10.10. Entire Agreement ............................................................................................... 18
ACKNOWLEDGMENT
SIGNATURES
EXHIBIT A Legal Description of the Existing Property
EXHIBIT B Legal Description of the Additional Property
ii
522088v5 CT165-54
EXHIBIT C Legal Description of the Property
EXHIBIT D Form of Certificate of Completion and Release of Forfeiture
EXHIBIT E Form of Investment Letter
EXHIBIT F Form of Authorizing Resolution
iii
522088v5 CT165-54
CONTRACT FOR PRIVATE DEVELOPMENT
THIS CONTRACT FOR PRIVATE DEVELOPMENT (the “Agreement”) is made as of
the __ day of ______________, 2018, 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 12800 Ravine Parkway South, Cottage Grove, Minnesota 55016 (the
“EDA”), and 9800 Hemingway, LLC, a limited liability company formed under the laws of the
state of Minnesota, having its principal office 9800 Hemingway Avenue South, Cottage Grove,
MN 55016 (the “Developer”).
RECITALS
WHEREAS, on May 2, 2018 the EDA modified the development district program (the
“Program”) for Development District No. 1 (the “Development District”), pursuant to Minnesota
Statutes, sections 469.090 to 469.1082; and
WHEREAS, on May 2, 2018 the EDA approved a tax increment financing plan (the “TIF
Plan”) for Tax Increment Financing District No. 1-18 (Modern Automotive), an economic
development tax increment financing district, (the “TIF District”), pursuant to Minnesota
Statutes, sections 469.174 to 469.179; and
WHEREAS, on May 2, 2018 the city of Cottage Grove (the “City”) held a public hearing
and approved the modified Program and the TIF Plan; and
WHEREAS, the Developer currently owns the property located at 9800 Hemingway
Avenue South, Cottage Grove, Minnesota (the “Existing Property”) whereupon the Developer
owns and operates an existing manufacturing and warehousing facility, and which property is
legally described on Exhibit A attached hereto; and
WHEREAS, on May 29, 2018, the EDA and the Developer entered into a purchase
agreement regarding the land legally described on Exhibit B attached hereto (the “Additional
Property”); and
WHEREAS, the Developer intends, upon or contemporaneous to the completion of the
acquisition of the Additional Property, to legally combine it with the Existing Property to form
one legal lot of record (the “Property”), which property is legally described on Exhibit C hereto;
and
WHEREAS, in order to achieve the objectives of the amended Program and the TIF Plan,
the EDA is prepared to offer certain financial assistance to the Developer in order to bring about
expansion of an existing manufacturing and warehousing facility on the Property in accordance
with this Agreement; and
WHEREAS, the EDA believes that the fulfillment generally of this Agreement is in the
vital and best interests of Cottage Grove and the health, safety, and welfare of its residents, and
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in accord with the public purposes and provisions of the applicable State and local laws and
requirements under which the Development District and TIF District have been established.
NOW, THEREFORE, in consideration of the mutual covenants and obligations of the
City and the Developer, each party does hereby represent, covenant and agree with the other as
follows:
ARTICLE I
Definitions
Section 1.1. Definitions. This Agreement, unless a different meaning clearly appears
from the context:
“Additional Property” means the property which is currently owned by the EDA, but
which the Developer seeks to acquire and combine with the Existing Property in order to create a
single legal lot of record. The Additional Property is legally described in Exhibit B.
“Administrative Expenses” means the costs incurred by the EDA associated with
modifying the Development District and establishing and administering the TIF District,
including the drafting and negotiating of this Agreement, as permitted by the TIF Act.
“Agreement” means this Contract for Private Development, as the same may be from
time to time modified, amended, or supplemented.
“Authorizing Resolution” means the EDA resolution, in substantially the form attached
hereto as Exhibit F, which authorizes the issuance of the Note by the EDA Executive Director to
the Developer.
“Available Tax Increment” means 90 percent of the Tax Increment paid by the County to
the EDA with regard to the Minimum Improvements and the Property prior to the Termination
Date.
“Business Subsidy Act” means Minnesota Statutes, sections 116J.993 through 116J.995,
as amended.
“Certificate of Completion and Release of Forfeiture” means the certificate, in the
general form attached hereto as Exhibit D, which will be provided to the Developer upon
completion of the Minimum Improvements.
“City” means the city of Cottage Grove, Minnesota.
“Construction Plans” means, collectively, the plans, drawings and specifications for the
Minimum Improvements which are consistent with the Preliminary Plans and submitted by the
Developer pursuant to Article IV of this Agreement.
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“County” means Washington County, Minnesota.
“Developer” means 9800 Hemingway, LLC, a limited liability company formed under
the laws of the state of Minnesota.
“Development District” means the City’s Development District No. 1.
“Development District Program” or “Program” means the plan for development and
redevelopment of Development District No. 1, as modified.
“Economic Development Authorities Act” or “EDA Act” means Minnesota Statutes,
sections 469.090 through 469.1082, as amended.
“EDA” means the Cottage Grove Economic Development Authority, a public body
corporate and politic under the laws of Minnesota.
“Event of Default” means an action by the Developer listed in Article X of this
Agreement.
“Existing Property” means the property that the Developer currently owns located at
9800 Hemingway Avenue South, Cottage Grove, Minnesota.
“Interfund Loan” means the interfund loan approved by the City on May 2, 2018 and by
the EDA on May 29, 2018, pursuant to section 469.178, subd. 7 of the TIF Act.
“Minimum Improvements” means the construction on the Property of an expansion to an
existing facility which includes an approximately 24,000 square foot addition of manufacturing
and warehousing space. After completion of the Minimum Improvements, the term shall mean
the Property as improved by the Minimum Improvements.
“Parties” means, collectively, the Developer and the EDA.
“Preliminary Plans” means, collectively, the plans, drawings, and specifications for the
Minimum Improvements which have been submitted by the Developer and approved by the
EDA.
“Property” means the resulting lot of record which shall exist following the Developer’s
acquisition of the Additional Property and the legal combination of the Existing Property with
the Additional Property.
“Property Deed” means the deed by which the EDA will convey the Additional Property
to the Developer.
“Purchase Agreement” means that purchase agreement between the EDA and the
Developer dated May 29, 2018, regarding the sale of the Additional Property.
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“Qualifying Costs” means the cost of grading, site preparation, installation of utilities and
land acquisition, and other qualifying expenditures made by the Developer related to completion
of the Minimum Improvements which the EDA intends to reimburse partially through the Note.
“Sale” means any sale, conveyance, exchange, assignment, refinancing or other transfer
of the Developer’s interest in the Property or the Minimum Improvements, as more fully defined
in Article IX of this Agreement.
“State” means the state of Minnesota.
“Substantial Completion” means completion of the Minimum Improvements to a degree
allowing issuance of a certificate of occupancy by the City’s building official.
“Tax Increment” means that portion of the real property taxes paid to the County with
respect to the Property and the Minimum Improvements and which is remitted to the EDA as tax
increment pursuant to the TIF Act prior to the Termination Date.
“Tax Increment Financing Act” or “TIF Act” means the Tax Increment Financing Act,
Minnesota Statutes, sections 469.174 to 469.179, as amended.
“Tax Increment District” or “TIF District” means the EDA’s Tax Increment Financing
District No. 1-18 (Modern Automotive).
“Tax Increment Plan” or “TIF Plan” means the Tax Increment Financing Plan for the
EDA’s Tax Increment Financing District No. 1-18 (Modern Automotive), adopted by the EDA
on April 10, 2018 and approved by the City on May 2, 2018, as it may be amended from time to
time.
“Tax Official” means any County assessor, County auditor, County or State board of
equalization, the commissioner of revenue of the State, or any State or federal court.
“Termination Date” means the date the TIF District terminates, which is estimated to be
after eight years after receipt of the first Tax Increment.
“Unavoidable Delays” means delays beyond the reasonable control of the party seeking
to be excused as a result thereof which are the direct result of strikes, other labor troubles,
prolonged adverse weather or acts of God, 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 acts of any federal, State or local governmental unit (other than the
EDA in exercising its rights under this Agreement) which directly result in delays.
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 Existing Property
Exhibit B. Legal Description of the Additional Property
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Exhibit C. Legal Description of the Property
Exhibit D. Form of Certificate of Completion and Release of Forfeiture
Exhibit E. Form of Investment Letter
Exhibit F. Authorizing Resolution
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 EDA. The EDA makes the following representations
as the basis for the undertaking on its part herein contained:
(a) The EDA is a public body corporate and politic under the laws of Minnesota and
has the power to enter into this Agreement and carry out its obligations hereunder.
(b) The individuals executing this Agreement and related documents on behalf of the
EDA have the authority to do so and bind the EDA by their actions.
(c) The activities of the EDA authorized herein are undertaken to facilitate the
development of land within the Development District and the TIF District.
(d) The TIF District is an economic development tax increment financing district
within the meaning of the TIF Act and is subject to the limitations on use specified in section
469.176, subd. 4c of the TIF Act.
Section 2.2. Representations and Warranties by the Developer. The Developer
represents and warrants that:
(a) The Developer is a Minnesota limited liability company in good standing and has
the power to enter into this Agreement and carry out its obligations hereunder.
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(b) The persons executing this Agreement and related agreements on behalf of the
Developer have the authority to bind the Developer by their actions.
(c) The Developer has received no notice or communication from any local, State, or
federal official that the activities of the Developer on the Property or in the Development
District may be or will be in violation of any environmental law or regulation. The Developer is
aware of no facts the existence of which would cause the Developer to be in violation of or give
any person a valid claim under any local, State, or federal environmental law, regulation, or
review procedure.
(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 of any organizational document or other restriction of the
Developer 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 to which it will be bound to
finance construction of the Minimum Improvements or constitutes a default under any of the
foregoing.
(e) In the event the Additional Property is conveyed to the Developer, the Developer
will construct, operate, use and maintain the Minimum Improvements in accordance with the
terms of this Agreement, the Program, the TIF Plan, the Property Deed, all local, State and
federal laws and regulations including, but not limited to, environmental, zoning, building code,
public health laws and regulations, and, through the Termination Date, the provisions of section
469.176, subd. 4c of the TIF Act regarding allowable uses within economic development TIF
districts.
(f) The Developer has analyzed the economics of the project and has determined that
acquisition of the Additional Property and construction of the Minimum Improvements
described in this Agreement would not occur but for the tax increment financing assistance
being provided hereunder.
(g) The Developer did not obtain a building permit for any portion of the Minimum
Improvements or for any other improvements on the Additional Property or the Existing
Property not included in the calculation of the original tax capacity before the date of approval
of the TIF Plan by the City.
(h) The Developer will apply for and use all commercially reasonable efforts to
obtain in a timely manner all permits, licenses and approvals required by the City and will meet
requirements of all applicable City, State and other laws and regulations which must be met
before the Minimum Improvements may be lawfully constructed and used for their intended
purpose.
(i) The Developer shall promptly advise the EDA in writing of all litigation or claims
affecting any part of the Property or the Minimum Improvements and all written complaints and
charges made by any governmental authority materially affecting the Property or the Minimum
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Improvements or materially affecting the Developer or its business which may delay or require
changes in construction of the Minimum Improvements.
ARTICLE III
Acquisition and Conveyance of Additional Property
Section 3.1. Acquisition and Conveyance of the Additional Property. The EDA has
entered into a purchase agreement with the Developer regarding the Additional Property. The
EDA and the Developer entered into the Purchase Agreement whereby the EDA agreed to sell
and the Developer agreed to buy the Additional Property. The Purchase Agreement is subject to
various contingencies and other terms and conditions. The parties’ performance of their
respective obligations under this Agreement is contingent on the fulfillment of the terms of the
Purchase Agreement and acquisition of the Additional Property by the Developer. If the EDA
and Developer have not closed on the sale of the Additional Property by September 23, 2018,
this Agreement shall be null and void and of no further force and effect.
Section 3.2. Combination of Existing Property and Additional Property. The Developer
agrees to combine the Existing Property and the Additional Property contemporaneous with the
purchase thereof. Upon completion of the acquisition of the Additional Property, the Developer
shall legally combine such Additional Property with the Existing Property, resulting in a single
legal lot, subject to all required City approvals. This Agreement shall be recorded against the
resulting Property.
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 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, normal wear and tear excepted. The Developer recognizes that it is because
the Developer has agreed to construct the Minimum Improvements that the EDA is willing to offer
the assistance 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 City 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) The Developer has submitted and the
EDA has approved the Preliminary Plans. After execution of this Agreement, but at least 30 days
prior to construction, the Developer shall submit dated Construction Plans to the EDA. 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 EDA will approve the
Construction Plans if they (1) substantially conform to the Preliminary Plans; (2) conform to all
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applicable federal, State and City 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 EDA shall relieve the Developer of the obligation to comply with the terms of this
Agreement, the terms of any applicable federal, State and City laws, ordinances, rules and
regulations in the construction of the Minimum Improvements. No approval by the EDA 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 EDA, 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
EDA 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 EDA, the EDA shall
approve the proposed change. Such change in the Construction Plans shall be deemed approved by
the EDA unless rejected, in whole or in part, by written notice by the EDA to the Developer setting
forth in detail the reasons therefor. Such rejection shall be made within 10 business 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 by no later than
September 24, 2018. Subject to Unavoidable Delays, the Developer shall have achieved Substantial
Completion of the Minimum Improvements by no later than September 24, 2019. All work with
respect to the Minimum Improvements to be constructed or provided by the Developer on the
Property shall be in conformity with the Construction Plans. The Developer shall make such reports
to the EDA regarding construction of the Minimum Improvements as the EDA 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 EDA will furnish the Developer with a Certificate of Completion and
Release of Forfeiture in the form of Exhibit D attached hereto. Such certification by the EDA shall
be a conclusive determination of satisfaction and termination of the agreements and covenants in
this Agreement with respect to the obligations of the Developer 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’s building official.
(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 Property. If the EDA shall refuse or fail
to provide such certification in accordance with the provisions of this section 4.4, the EDA 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
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default of a material term of this Agreement, and what measures or acts will be necessary, in the
opinion of the EDA, for the Developer to take or perform in order to obtain such certification.
Section 4.5. Restrictions on Use; Land Use Approvals. The Developer, for itself and its
successors and assigns, agrees to devote the Property and the Minimum Improvements only to such
use or uses as may be permissible under the City’s land use regulations. The City has granted
certain land use approvals for the Property and the Minimum Improvements, including a lot split
and combination. The Developer agrees to construct and to operate the Minimum Improvements in
accordance with those approvals.
Section 4.6. Reconstruction of Minimum Improvements. The Developer agrees to notify
the EDA immediately in the case of damage exceeding $100,000 in amount to, or destruction of,
the Minimum Improvements resulting from fire or other casualty. In such event, the Developer
will, at its option, forthwith repair, reconstruct, and restore the Minimum Improvements to
substantially the same or an improved condition or value as existed prior to the event causing
such damage and, to the extent necessary to accomplish such repair, reconstruction, and
restoration, the Developer will apply the net proceeds of any insurance relating to such damage
received by the Developer to the payment or reimbursement of the costs thereof.
Section 4.7. Additional City Approvals and Permits. The Developer acknowledges that
certain additional approvals and permits must be granted by the City in order for the Developer
to implement its plans to construct the Minimum Improvements on the Property. The Developer
agrees to pursue at its expense such approvals and permits as are necessary to construct the
Minimum Improvements in accordance with all land use approvals, restrictions and other
regulations of the City related to the Property and the Minimum Improvements.
ARTICLE V
Financial Assistance; Issuance of Note
Section 5.1. Financial Assistance. (a) The Developer has represented to the EDA that
the cost of acquisition of the Additional Property and construction of the Minimum
Improvements exceeds the amount of private financing available and has requested assistance
from the EDA. The EDA agrees to offer the financial assistance to the Developer in accordance
with this Article V.
(b) In consideration for the Developer’s construction of the Minimum Improvements,
the EDA will issue and the Developer will purchase the Note in the principal amount of
$117,000.00 with an interest rate of 5% in substantially the form attached hereto as Exhibit F.
The EDA and the Developer agree that the consideration from the Developer for the purchase of
the Note will consist of the Developer’s payment of the Qualifying Costs which are incurred by
the Developer in at least the principal amount of the Note. The EDA will deliver the Note upon
satisfaction by the Developer of all the conditions precedent specified in section 5.2 of this
Agreement.
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(c) The Developer understands and acknowledges that the EDA makes no
representations or warranties regarding the amount of Available Tax Increment, or that revenues
pledged to the Note will be sufficient to pay the principal of and interest on the Note. Any
estimates of Tax Increment or Available Tax Increment prepared by the EDA or its financial
advisors in connection with the TIF District or this Agreement are for the benefit of the EDA and
are not intended as representations on which the Developer may rely.
Section 5.2. Conditions Precedent to Issuance of Note. Notwithstanding anything in this
Agreement to the contrary, the EDA shall not be obligated to issue the Note until all of the
following conditions precedent have been satisfied:
(a) The Developer has acquired the Additional Property in fee;
(b) The Developer has completed the lot combination of the Additional Property and
the Existing Property resulting in the existence of a single legal lot;
(c) This Agreement has been executed by the parties and recorded against the
Property;
(d) The Developer has submitted a certification as detailed below that it has paid for
the Qualifying Costs;
(e) The Developer has completed the Minimum Improvements and the EDA has
issued the Certification of Completion and Release of Forfeiture;
(f) The Developer has submitted an Investment Letter in substantially the form
attached hereto as Exhibit E; and
(g) There has been no Event of Default on the part of the Developer which has not
been cured.
The Developer shall deliver to the EDA a certification that it has incurred and paid the Qualified
Costs in an amount at least equal to the principal amount of the Note together with reasonable
evidence supporting that certification. Reasonable evidence must include, at a minimum, a
settlement statement regarding acquisition of the Additional Property and paid invoices
describing the other Qualified Costs incurred and paid.
Section 5.3. Records. The EDA and its representatives will have the right at all
reasonable times after reasonable notice to inspect, examine and copy all books and records of
the Developer relating to the Minimum Improvements and the Qualifying Costs for which the
Developer has been reimbursed under the Note.
Section 5.4. No Business Subsidy. The parties agree and understand that the financial
assistance being offered by the EDA is less than $150,000 and therefore is not a “business subsidy”
within the meaning of Minnesota Statutes, sections 116J.993 to 116J.995.
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ARTICLE VI
Insurance
Section 6.1. Required Insurance. 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 EDA, furnish the EDA with proof of payment of premiums on:
(a) 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 non-
reporting form on the so-called “all risk” form of policy;
(b) Comprehensive general liability insurance (including operations, contingent
liability, operations of subcontractors, completed operations and contractual liability insurance)
together with an Owner’s Contractor’s Policy with limits against bodily injury and 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
(c) Workers’ compensation insurance, with statutory coverage.
The policies of insurance required pursuant to clauses (a) and (b) above shall be in form and
content reasonably satisfactory to the EDA and shall be placed with financially sound and
reputable insurers licensed to transact business in Minnesota. The policy of insurance delivered
pursuant to clause (a) above shall contain an agreement of the insurer to give not less than 30
days’ advance written notice to the EDA in the event of cancellation of such policy or change
affecting the coverage thereunder.
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. Upon written
request by the EDA, the Developer agrees to deposit with the EDA 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. Not less than 15 days prior to the expiration of any policy,
the Developer shall furnish the EDA evidence satisfactory to the EDA 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 EDA a
certificate or certificates of the respective insurers as to the amount of coverage in force upon the
Minimum Improvements.
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ARTICLE VII
Use of Tax Increment; Restrictions on Uses
Section 7.1. Use of Tax Increment. Except as provided for in this Agreement, the EDA
shall be free to use any Tax Increment paid to it with respect to the TIF District for any purpose
for which such increment may lawfully be used, pursuant to the provisions of State law, and the
EDA shall have no obligation to the Developer with respect to the use of such Tax Increment.
Section 7.2. Restrictions on Use in Economic Development TIF District. (a) TIF
District No. 1-18 (Modern Automotive) is an economic development tax increment financing
district within the meaning of the TIF Act and is subject, among other things, to the limitations
of the types of uses permitted within the TIF District specified in section 469.176, subd. 4c of the
TIF Act. Prior to the Termination Date, no more than 15 percent of the square footage of the
Minimum Improvements may be used for a purpose other than:
(1) The manufacturing or production of tangible personal property, including
processing resulting in the change in condition of the property;
(2) Warehousing, storage, and distribution of tangible personal property, excluding
retail sales;
(3) Research and development related to the activities listed in clause (1) or (2);
(4) Telemarketing if that activity is the exclusive use of the property;
(5) Tourism facilities;
(6) Qualified border retail facilities; or
(7) Space necessary for and related to the activities listed in clauses (1) to (6).
The Developer understands and acknowledges that a violation of the above limitations on use
may cause the termination of the TIF District and constitutes an Event of Default under this
Agreement. The Developer agrees to notify the EDA immediately if at any time prior to the
Termination Date more than 15 percent of the Minimum Improvements are occupied by any use
other than one or more of the above uses.
(b) Developer acknowledges that the reason for requiring that the Minimum
Improvements be used predominately for one or more of the uses specified in Section 7.2(a) is to
ensure compliance with the TIF Act and the TIF District’s eligibility as an economic
development tax increment financing district. If at any time prior to the Termination Date the
Minimum Improvements cease to be used in conformance with the requirements of Section
7.2(a), the EDA may declare an Event of Default. Developer agrees to indemnify, defend and
hold harmless the EDA for any damages or costs resulting from a failure to limit the Minimum
Improvements to the uses allowed in an economic development tax increment financing district.
Those damages or costs may include reimbursement of any tax increment the EDA may be
required or agrees to repay as a result of any action taken under Section 469.1771 of the TIF Act
for violation of said Act relating to disqualification of the TIF District or any other costs
associated with any compliance audit.
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ARTICLE VIII
Restrictions on Sale or Encumbrance of Minimum Improvements; Assignment
Section 8.1. Prohibition Against Sale of Minimum Improvements. The Developer
represents and agrees that its use of the Property and its other undertakings pursuant to the
Agreement, are, and will be, used for the purpose of construction of the Minimum Improvements
on the Property and not for speculation in land holding. The Developer represents and agrees
that, prior to the issuance of a Certificate of Completion and Release of Forfeiture regarding the
Minimum Improvements, there shall be no Sale of the Property or the Minimum Improvements
constructed thereon nor shall the Developer suffer any such Sale to be made, without the prior
written approval of the EDA and except as permitted by this Article VIII. As a condition of
approval of any such sale, the EDA shall require, at a minimum, that the proposed transferee
shall have entered into an agreement whereby the transferee expressly assumes all of the
Developer’s obligations under this Agreement. Any such agreement shall include the EDA as a
party and otherwise be in form and substance acceptable to the EDA.
Section 8.2. Limitation Upon Encumbrance of Property. With the exception of the type
of encumbrances placed in the ordinary course of lending and development of the Property, prior
to issuance of the Certificate of Completion and Release of Forfeiture, the Developer agrees not
to engage in any financing or any other transaction creating any mortgage or other encumbrance
or lien upon the Property or Minimum Improvements, whether by express agreement or
operation of law, or suffer any encumbrance or lien to be made on or attached to the Property or
Minimum Improvements other than the liens or encumbrances approved by the EDA, which
approval shall not be unreasonably withheld or delayed if the EDA determines that such lien or
encumbrance will not threaten its security under this Agreement.
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 Developer to acquire the Additional Property in fee by September
23, 2018, or failure to satisfy any other condition precedent specified in section 5.2 of this
Agreement;
(b) \[intentionally omitted\];
(c) 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
or waived by the Developer and the EDA;
(d) Failure of the Developer to pay real estate taxes or special assessments on the
Property or Minimum Improvements as they become due;
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(e) The Developer transfers the Minimum Improvements or the Property, or any part
thereof, to an entity exempt from the payment of real estate taxes under state law;
(f) Sale of the Property or the Minimum Improvements, or any portion thereof, by
the Developer in violation of Article VIII of this Agreement and without written permission by
the EDA;
(g) If 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;
(h) Prior to the Termination Date, there occurs with regard to the Property or the
Minimum Improvements a violation of section 469.176, subd. 4c of the TIF Act regarding
permitted uses within an economic development tax increment financing district;
(i) Failure of the Developer to comply with any law or regulation related to the
treatment of conflicts of interest as such law or regulation applies to this Agreement;
(j) Failure by the Developer to use the Property in accordance with the terms and
conditions of the Property Deed; or
(k) Failure by the EDA or Developer to observe or perform any material covenant,
condition, obligation or agreement on its part to be observed or performed under this Agreement,
including but not limited to any action necessary for the establishment of the TIF District.
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 from the receipt
of Notice 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 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 further performance pursuant to this Agreement;
(c) If the default occurs prior to completion of the Minimum Improvements, the EDA
may withhold the Certificate of Completion and Release of Forfeiture;
(d) The EDA may terminate or suspend payments under the Note;
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522088v5 CT165-54
(e) The EDA may seek repayment of some or all of the financial assistance pursuant
to Article VII of this Agreement; and
(f) Take whatever legal or administrative action which may appear necessary or
desirable to the non-defaulting party to collect any payments due under this Agreement,
including reimbursement of the financial assistance previously granted, or to enforce
performance and observance of any obligation, agreement, or covenant of the defaulting party
under this Agreement.
Section 9.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the
any party in this Agreement is intended to be exclusive of any other available remedy or
remedies, but each and every such remedy shall be cumulative and shall be in addition to every
other remedy given under this Agreement or now or hereafter existing at law or in equity or by
statute. No delay or omission to exercise any right or power accruing upon any default shall
impair any such right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed expedient. In
order to entitle the EDA 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 9.4. Remedies after Certificate of Completion. After the EDA has issued its
Certificate of Completion for the Minimum Improvements, the EDA may exercise its rights
under Section 9.2 only for the following Events of Default:
(a) the Developer fails to pay real estate taxes or assessments on the Property or
Minimum Improvements or any part thereof when due, and the taxes or assessments have not
been paid, or provision satisfactory to the EDA made for their payment, within 30 days after
written demand by the EDA to do so; or
(b) the Developer takes or permits an action prohibited by Section 9.1 of this
Agreement; or
(c) the Developer fails to operate the Minimum Improvements as a use permitted in
an Economic Development District in accordance with Section 7.2 of this Agreement; or
(d) the Developer fails to comply with Developer’s obligation to operate and
maintain, preserve and keep the Minimum Improvements or cause the Minimum Improvements
to be maintained, preserved and kept with the appurtenances and every part and parcel thereof, in
good repair and condition (reasonable wear and tear excepted), pursuant to Article IV hereof;
provided that, upon Developer’s failure to comply with Developer’s obligations under Article IV
hereof, if uncured after 30 days’ written notice to the Developer of the failure, the EDA may
only suspend payments under the Note until the Developer complies with said obligations. If the
Developer fails to comply with said obligations for a period of 18 months, the EDA may
terminate the Note and the TIF District; or
15
522088v5 CT165-54
(e) a final determination by the State or a court of competent jurisdiction that the TIF
District does not or no longer qualifies as an economic development tax increment financing
district under the TIF Act; or
(f) the Developer transfers the Minimum Improvements or the Property, or any part
thereof, to an entity exempt from the payment of real estate taxes under State law.
Section 9.5. No Additional Waiver Implied by One Waiver. In the event any covenant
or obligation contained in this Agreement should be breached by any party and thereafter waived
by another 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; Compliance with State Law. The Developer’s
principal acknowledges that he serves as a commissioner on the EDA Board. Such relationship
creates a conflict of interest within the meaning of Minnesota Statutes, Section 469.098. The
EDA has entered into this Agreement based on the following express warranties made by
Developer’s principal:
(a) certification that he has taken all necessary steps to comply with the provisions of
Minnesota Statutes, Section 469.098;
(b) acknowledgement that there is an ongoing obligation to comply with all conflict of
interest laws and rules; and
(c) that he waives any claims it may now or in the future have against the EDA, or its
officers, agents, or employees related to a violation of the applicable law or rules arising
from Developer’s conflict of interest.
Section 10.2. Release and Indemnification Covenants. (a) Except for any negligent act
of the following named parties, the Developer hereby releases from and covenants and agrees
that the EDA, and its governing body members, officers, agents, servants, and employees shall
not be liable for, and hereby agree to indemnify and hold harmless the EDA, and its governing
body members, officers, agents, servants, and employees against any loss or damage to property
or any injury to or death of any person occurring at or about or resulting from any defect in the
Minimum Improvements.
(b) Except for any willful misrepresentation or any willful or wanton misconduct or
negligence of the following named parties, the Developer hereby agrees to protect and defend the
EDA, and its governing body members, officers, agents, servants, and employees, now or
forever, and hereby further agrees to hold the aforesaid harmless from any claim, demand, suit,
action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly
arising from this Agreement, or the transactions contemplated hereby or the acquisition,
construction, installation, ownership, and operation of the Property or Minimum Improvements.
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522088v5 CT165-54
(c) Except for any negligent act of the following named parties, the EDA, and its
governing body members, officers, agents, servants, and employees shall not be liable for any
damage or injury to the persons or property of the Developer or its partners, officers, agents,
servants or employees or any other person who may be about the Property or Minimum
Improvements due to any act of negligence of any person.
(d) All covenants, stipulations, promises, agreements, and obligations of the EDA
contained herein shall be deemed to be the covenants, stipulations, promises, agreements, and
obligations of the EDA, and not of any governing body member, officer, agent, servant, or
employee of the EDA in his or her individual capacity.
Section 10.3. Titles of Articles and Sections. Any titles of the several parts, articles, and
sections of this Agreement are inserted for convenience of reference only and shall be
disregarded in construing or interpreting any of its provisions.
Section 10.4. Notices and Demands. Except as otherwise expressly provided in this
Agreement, a notice, demand, or other communication under this Agreement by any party to
another shall be sufficiently given or delivered if it is dispatched by United States registered or
certified mail, postage prepaid, return receipt requested, or delivered personally to:
(a) in the case of the EDA: Cottage Grove Economic
Development Authority
12800 Ravine Parkway South
Cottage Grove, MN 55016
Attn: Charlene Stevens,
EDA Executive Director
with a copy to: Ron Batty
Kennedy & Graven, Chartered
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
(b) in the case of the Developer: 9800 Hemingway, LLC
Attn: Christopher Carey
9800 Hemingway Avenue South
Cottage Grove, MN 55016
with a copy to: Fafinski Mark & Johnson, P.A.
Attn: Nathan M. Brandenburg
775 Prairie Center Drive, Suite 400
Eden Prairie, MN 55344
or at such other address with respect to any such party as that party may, from time to time,
designate in writing and forward to the others as provided in this Section 10.4.
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Section 10.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one and the same instrument.
Section 10.6. Recording. The EDA may record this Agreement and any amendments
thereto among the County land records.
Section 10.7. Attorney Fees. Whenever any Event of Default occurs on the part of the
Developer and if the EDA shall employ attorneys or incur other expenses for the collection of
payments due or to become due, or for the enforcement of performance or observance of any
obligation or agreement on the part of the Developer under this Agreement, the Developer agrees
that it shall, within 10 days of written demand by the EDA, pay to the EDA the reasonable fees
of such attorneys and such other expenses so incurred by the EDA in the collection of payments
due in the enforcement of this Agreement.
Section 10.8. Governing Law; Venue. This Agreement shall be construed in accordance
with the laws of Minnesota. Any dispute arising from this Agreement shall be heard in the State
or federal courts of Minnesota, and the Parties waive any objection to the jurisdiction thereof,
whether based on convenience or otherwise.
Section 10.9. Disclaimer of Relationship. The Developer acknowledges that nothing in
this Agreement nor any act of the EDA shall be deemed or construed by the Developer or by any
third party to create any relationship of third-party beneficiary, principal and agent, limited or
general partner or joint venture between the EDA and the Developer.
Section 10.10. Entire Agreement. Except with regard to the Purchase Agreement and the
sale of the Additional Property by the EDA to the Developer pursuant to same, this Agreement
constitutes the entire agreement between the parties pertaining to its subject matter and it
supercedes all prior contemporaneous agreements, representations, and understandings of the
parties pertaining to the subject matter of this Agreement. This Agreement may be modified,
amended, terminated, or waived, in whole or in part, only by a writing signed by all of the
parties. Notwithstanding the above, nothing herein shall supersede the City’s land use
regulations applicable to the Property and Minimum Improvements or any agreement, permit or
approval by or between the Developer and the City regarding the land use regulations applicable
to the Property and the Minimum Improvements.
***********************
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522088v5 CT165-54
COTTAGE GROVE ECONOMIC
DEVELOPMENT AUTHORITY
By: _________________________________
Myron Bailey, President
By: _________________________________
Charlene R. Stevens, Executive Director
STATE OF MINNESOTA )
) ss.
COUNTY OF WASHINGTON )
The foregoing instrument was acknowledged before me this ____ day of
________________, 2018, by Myron Bailey and Charlene R. Stevens, the 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 Authority.
____________________________________
Notary Public
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522088v5 CT165-54
9800 HEMINGWAY, LLC
By: _________________________________
Christopher M. Carey, Chief Manager
STATE OF MINNESOTA )
) ss.
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this ____ day of ____________,
2018, by Christopher M. Carey, the Chief Manager of 9800 Hemingway, LLC a Minnesota
limited liability company, on behalf of the company.
Notary Public
20
522088v5 CT165-54
EXHIBIT A TO
DEVELOPMENT AGREEMENT
LEGAL DESCRIPTION OF THE EXISTING PROPERTY
Real property located in the County of Washington, State of Minnesota, legally
described as follows:
rd
Lot 3, Block 1, Glengrove Industrial Park 3 Addition
A-1
522088v5 CT165-54
EXHIBIT B TO
DEVELOPMENT AGREEMENT
LEGAL DESCRIPTION OF THE ADDITIONAL PROPERTY
Real property located in the County of Washington, State of Minnesota, legally
described as follows:
th
The south 50.00 feet of Lot 1, Block 1, Glengrove Industrial Park 5 Addition,
according to the recorded plat thereof, Washington County, Minnesota.
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522088v5 CT165-54
EXHIBIT C TO
DEVELOPMENT AGREEMENT
LEGAL DESCRIPTION OF THE PROPERTY
Real property located in the County of Washington, State of Minnesota, legally
described as follows:
rd
Lot 3, Block 1, Glengrove Industrial Park 3 Addition
and
th
The south 50.00 feet of Lot 1, Block 1, Glengrove Industrial Park 5 Addition,
according to the recorded plat thereof, Washington County, Minnesota.
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522088v5 CT165-54
EXHIBIT D TO
DEVELOPMENT AGREEMENT
FORM OF
CERTIFICATE OF COMPLETION
AND RELEASE OF FORFEITURE
WHEREAS, the Cottage Grove Economic Development Authority, a public body
corporate and politic under the laws of Minnesota (the “EDA”) and 9800 Hemingway, LLC, a
Minnesota limited liability company (the “Developer”), have entered into that certain Contract
for Private Development by and between the EDA and the Developer dated the __ day of
_________, 2018, and recorded in the office of the Washington County _________________,
Minnesota on __________________ as Document No. __________, which Contract for Private
Development contained certain covenants and restrictions regarding completion of the Minimum
Improvements; and
WHEREAS, the land to which the Contract for Private Development applies (the
“Property”) is legally described on Exhibit A attached hereto; and
WHEREAS, said Developer has performed said covenants and conditions in a manner
deemed sufficient by the EDA to permit the execution and recording of this certification.
NOW, THEREFORE, this is to certify that, with respect to the Property, all building
construction and other physical improvements specified to be done and made by the Developer
have been completed and the above covenants and conditions in said Contract for Private
Development have been performed by the Developer therein and that the provisions for
forfeiture of title and right to re-entry for breach of condition subsequent by the EDA are hereby
released absolutely and forever, and the Washington County _________ 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 with respect to the Property.
Dated: _______________, 2018.
COTTAGE GROVE ECONOMIC
DEVELOPMENT AUTHORITY
By: _________________________________
Myron Bailey, President
By: _________________________________
Charlene R. Stevens, Executive Director
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522088v5 CT165-54
STATE OF MINNESOTA )
) ss.
COUNTY OF WASHINGTON )
The foregoing instrument was acknowledged before me this ____ day of
________________, 2018, by Myron Bailey and Charlene R. Stevens, the 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 Authority.
____________________________________
Notary Public
This instrument was drafted by:
Kennedy & Graven, Chartered (RHB)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
(612) 337-9300
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522088v5 CT165-54
EXHIBIT A
Legal Description of Property
rd
Lot 3, Block 1, Glengrove Industrial Park 3 Addition
and
th
The south 50.00 feet of Lot 1, Block 1, Glengrove Industrial Park 5 Addition,
according to the recorded plat thereof, Washington County, Minnesota.
D-A-1
522088v5 CT165-54
EXHIBIT E TO
DEVELOPMENT AGREEMENT
FORM OF INVESTMENT LETTER
To the Cottage Grove Economic Development Authority (the “EDA”)
Attention: Executive Director
Dated: __________________, 2018
Re: $117,000.00 Taxable Tax Increment Revenue Note (Modern Automotive Project)
The undersigned, as Purchaser of $117,000.00 in principal amount of the above-
captioned Taxable Tax Increment Revenue Note (Modern Automotive Project) (the “Note”),
approved by the Board of Commissioners of the Cottage Grove Economic Development
Authority on ______________, 2018, hereby represents to you and to Kennedy & Graven,
Chartered, Minneapolis, Minnesota, as legal counsel to the EDA, as follows:
1. We understand and acknowledge that the Note is delivered to the Purchaser on
this date pursuant to the Contract for Private Development by and between the EDA and the
Purchaser dated ________________, 2018 (the “Agreement”).
2. The Note is payable as to principal and interest solely from Available Tax
Increment pledged to the Note, as defined therein.
3. We have sufficient knowledge and experience in financial and business matters,
including purchase and ownership of municipal obligations, to be able to evaluate the risks and
merits of the investment represented by the purchase of the above-stated principal amount of the
Note.
4. We acknowledge that no offering statement, prospectus, offering circular or other
comprehensive offering document or disclosure containing material information with respect to
the EDA and the Note has been issued or prepared by the EDA, and that, in due diligence, we
have made our own inquiry and analysis with respect to the EDA, the Note and the security
therefor, and other material factors affecting the security and payment of the Note.
5. We acknowledge that we have either been supplied with or have access to
information, including financial statements and other financial information, to which a
reasonable investor would attach significance in making investment decisions, and we have had
the opportunity to ask questions and receive answers from knowledgeable individuals concerning
the EDA, the Note and the security therefor, and that as reasonable investors we have been able
to make our decision to purchase the above-stated principal amount of the Note.
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522088v5 CT165-54
6. We have been informed that the Note (i) is not being registered or otherwise
qualified for sale under the “Blue Sky” laws and regulations of any state, or under federal
securities laws or regulations, (ii) will not be listed on any stock or other securities exchange, and
(iii) will carry no rating from any rating service.
7. We acknowledge that the EDA and Kennedy & Graven, Chartered, as legal
counsel to the EDA, have not made any representations or warranties as to the status of interest
on the Note for the purpose of federal or state income taxation.
8. We represent to you that we are purchasing the Note for our own account and not
for resale or other distribution thereof, except to the extent otherwise provided in the Note or as
otherwise approved in writing by the EDA.
9. All capitalized terms used herein have the meaning provided in the Agreement
unless the context clearly requires otherwise.
10. The Purchaser’s federal tax identification number is 45-4918138.
11. We acknowledge receipt of the Note on the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Investment Letter as of the
date and year first written above.
9800 HEMINGWAY, LLC
By:
Christopher M. Carey, Chief Manager
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522088v5 CT165-54
EXECUTION COPY
EXHIBIT F TO
DEVELOPMENT AGREEMENT
FORM OF AUTHORIZING RESOLUTION
COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY
RESOLUTION NO. ______
RESOLUTION APPROVING THE ISSUANCE OF, AND PROVIDING
THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE
ISSUANCE OF ITS TAXABLE TAX INCREMENT REVENUE NOTE,
SERIES 2018__ IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO
EXCEED $117,000
BE IT RESOLVED BY the Cottage Grove Economic Development Authority (the “EDA”),
as follows:
Section 1. Authorization; Award of Sale.
1.01. Authorization. The Cottage Grove Economic Development Authority (the
“EDA”) heretofore approved the establishment of Tax Increment Financing District No. 1-18
(the “TIF District”) within the Development District No.1 (“Development District”), and adopted
a tax increment financing plan for the purpose of financing certain improvements within the
Development District. The EDA has authority over the TIF District and the Development
District.
Pursuant to Minnesota Statutes, Section 469.178, the EDA is authorized to issue and sell
its bonds for the purpose of financing a portion of the public development costs of the
Development District. The bonds are payable from all or any portion of revenues derived from
the TIF District and pledged to the payment of the bonds. The EDA hereby finds and determines
that it is in the best interests of the EDA that it issue and sell its Taxable Tax Increment Revenue
Note, Series 2018__ (the “Note”), in the aggregate principal amount of $117,000.00, for the
purpose of financing certain public costs of the Development District.
1.02. Agreement Approved; Issuance, Sale and Terms of the Note. The EDA has
previously approved the Contract for Private Development (the “Agreement”) between the EDA
and 9800 Hemingway, LLC, a Minnesota limited liability company (the “Owner”), and
authorized the President and Executive Director to execute the Agreement. Pursuant to the terms
and conditions of the Agreement, the Note will be issued to the Owner. The Note will be dated
as of the date of delivery and will bear interest at the rate of 5.0 percent per annum. In exchange
for the EDA’s issuance of the Note to the Owner, the Owner will pay certain costs related to the
Minimum Improvements (the “Qualifying Costs”, as defined in the Agreement) pursuant to
F-1
Article V of the Agreement. The Note will be delivered in the principal amount of $117,000.00
for reimbursement of the Owner’s costs in accordance with the terms of the Agreement.
Section 2. Form of Note. The Note will be in substantially the following form, with
the blanks to be properly filled in and the principal amount and payment schedule adjusted as of
the date of issue:
UNITED STATE OF AMERICA
STATE OF MINNESOTA
WASHINGTON COUNTY
No. R-1 $117,000.00
COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY
TAXABLE TAX INCREMENT REVENUE NOTE
(MODERN AUTOMOTIVE PROJECT)
Date
Rate of Original Issue
5.0% __________
The Cottage Grove Economic Development Authority (the “EDA”), for value received,
certifies that it is indebted and hereby promises to pay to 9800 Hemingway, LLC, or registered
assigns (the “Owner”), the principal sum of $117,000.00 and to pay interest thereon at the rate of
5.0% per annum, as and to the extent set forth herein. This Note is issued pursuant to the Contract
for Private Development between the EDA and the Owner dated _______________, 2018 (the
“Agreement”). Capitalized terms not otherwise defined herein have the meanings provided in the
Agreement.
1. Payments. Principal and interest (“Payments”) will be paid on August 1, 2020,
and each February 1 and August 1 thereafter to and including February 1, 2029 (“Payment
Dates”), in the amounts and from the sources set forth in Section 3 herein. Payments will be
applied first to accrued interest, and then to unpaid principal.
Payments are payable by mail to the address of the Owner or any other address as the
Owner may designate upon 30 days written notice to the EDA. Payments on this Note are
payable in any coin or currency of the United States of America which, on the Payment Date, is
legal tender for the payment of public and private debts.
2. Interest. Interest at the rate stated herein will accrue on the unpaid principal,
commencing on the date of original issue. Interest will be simple, non-compounding interest and
will be computed on the basis of a year of 360 days and twelve 30-day months and charged for
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522088v5 CT165-54
actual days principal is unpaid. To the extent that Available Tax Increment is insufficient to pay
principal and interest on any Payment Date, unpaid interest will not be added to principal.
3. Available Tax Increment. Payments on this Note are payable on each Payment
Date in the amount of and solely payable from “Available Tax Increment,” which will mean, on
each Payment Date, 90 percent of the Tax Increment attributable to the Property (defined in the
Agreement) and paid to the EDA by Washington County in the six months preceding the
Payment Date. Available Tax Increment will not include any Tax Increment if, as of any
Payment Date, there is an uncured Event of Default by the Owner under the Agreement.
The EDA will have no obligation to pay principal of and interest on this Note on each
Payment Date from any source other than Available Tax Increment, and the failure of the EDA
to pay the entire amount of principal or interest on this Note on any Payment Date will not
constitute a default hereunder as long as the EDA pays principal and interest hereon to the extent
of Available Tax Increment. If on any Payment Date there is insufficient Available Tax
Increment to pay accrued and unpaid interest on this Note on such date, the amount of such
deficiency shall be deferred and paid, without interest thereon, on the next Payment Date on
which the EDA has Available Tax Increment in excess of the amount necessary to pay the
accrued and unpaid interest on this Note on such subsequent Payment Date. The EDA will have
no obligation to pay unpaid balance of principal or accrued interest that may remain after the
final Payment on February 1, 2029.
4. Optional Prepayment. The principal sum and all accrued interest payable under
this Note is pre-payable in whole or in part at any time by the EDA without premium or penalty.
No partial prepayment will affect the amount or timing of any other regular payment otherwise
required to be made under this Note.
5. Default. If on any Payment Date there has occurred and is continuing any Event
of Default under the Agreement, the EDA may, notwithstanding any notice and cure provisions
in the Agreement, withhold from Payments hereunder all Available Tax Increment. If the Event
of Default is thereafter cured in accordance with the Agreement, the Available Tax Increment
withheld under this Section shall be deferred and paid, without interest thereon, within 30 days
after the Event of Default is cured. If on any date there has occurred and is continuing, after
notice and opportunity to cure have been provided in accordance with the Agreement, any Event
of Default under the Agreement, the EDA may exercise its remedies under the Agreement,
including but not limited to terminating this Note. Reference is hereby made to all of the
provisions of the Agreement, including without limitation Article XI thereof for a fuller
statement of the rights and obligations of the EDA to pay the principal of and interest on this
Note, and said provisions are hereby incorporated into this Note as though set out in full herein.
6. Nature of Obligation. This Note is a single note in the total principal amount of
$117,000.00 issued to aid in financing certain Qualifying Costs of a Development District
undertaken by the EDA pursuant to Minnesota Statutes, Sections 469.001 through 469.047, as
amended and is issued pursuant to and in full conformity with the Constitution and laws of the
State of Minnesota, including Minnesota Statutes, Sections 469.174 through 469.179, as
amended. This Note is a limited obligation of the EDA which is payable solely from Available
F-3
522088v5 CT165-54
Tax Increment pledged to the payment hereof. This Note and the interest hereon will not be
deemed to constitute a general obligation of the State of Minnesota or any political subdivision
thereof, including, without limitation, the EDA. Neither the State of Minnesota, nor any political
subdivision thereof will be obligated to pay the principal of or interest on this Note or other costs
incident hereto except out of Available Tax Increment, and neither the full faith and credit nor
the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the
payment of the principal of or interest on this Note or other costs incident hereto.
7. Estimated Tax Increment Payments. Any estimates of Tax Increment or
Available Tax Increment prepared by the EDA or its financial advisors in connection with the
TIF District or the Agreement are for the benefit of the EDA, and are not intended as
representations on which the Developer may rely.
THE EDA MAKES NO REPRESENTATION OR WARRANTY THAT THE
AVAILABLE TAX INCREMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF
AND INTEREST ON THIS NOTE.
8. Registration and Transfer. This Note is issuable only as a fully registered note
without coupons. Subject to certain limitations set forth herein, this Note is transferable upon the
books of the EDA kept for that purpose at the principal office of the Executive Director of the
EDA as Registrar, by the Owner hereof in person or by the Owner’s attorney duly authorized in
writing, upon surrender of this Note together with a written instrument of transfer satisfactory to
the EDA, duly executed by the Owner. Upon the transfer or exchange and the payment by the
Owner of any tax, fee, or governmental charge required to be paid by the EDA with respect to
the transfer or exchange, there will be issued in the name of the transferee a new Note of the
same aggregate principal amount, bearing interest at the same rate and maturing on the same
dates.
This Note will not be transferred to any person other than an affiliate, or other related
entity, of the Owner unless the EDA has been provided with an investment letter in a form
substantially similar to the investment letter submitted by the Owner or a certificate of the
transferor, in a form satisfactory to the EDA, that the transfer is exempt from registration and
prospectus delivery requirements of federal and applicable state securities laws.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things
required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen,
and to be performed in order to make this Note a valid and binding limited obligation of the EDA
according to its terms, have been done, do exist, have happened, and have been performed in due
form, time and manner as so required.
**************************
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522088v5 CT165-54
IN WITNESS WHEREOF, the board of commissioners of the Cottage Grove Economic
Development Authority has caused this Note to be executed with the manual signatures of its
President and Executive Director, all as of the Date of Original Issue specified above.
COTTAGE GROVE ECONOMIC
DEVELOPMENT AUTHORITY
Myron Bailey, President Charlene R. Stevens, Executive Director
REGISTRATION PROVISIONS
The ownership of the unpaid balance of the within Note is registered in the bond register
of the Executive Director of the EDA, in the name of the person last listed below.
Date of Registration Registered Owner Signature of EDA Executive Director
980 Hemingway, LLC
9800 Hemingway Avenue
South
Cottage Grove, MN 55016
Federal ID #_____________
\[End of Form of Note\]
Section 3. Terms, Execution and Delivery.
3.01. Denomination, Payment. The Note will be issued as a single typewritten note
numbered R-1.
The Note will be issuable only in fully registered form. Principal of the Note will be
payable by check or draft issued by the Registrar described herein.
3.02. Dates. Principal of and interest on the Note will be payable by mail to the owner
of record thereof as of the close of business on the fifteenth day of the month preceding the
Payment Date, whether or not the day is a business day.
3.03. Registration. The EDA hereby appoints the Executive Director to perform the
functions of registrar, transfer agent and paying agent (the “Registrar”). The effect of
registration and the rights and duties of the EDA and the Registrar with respect thereto will be as
follows:
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522088v5 CT165-54
(a) Register. The Registrar will keep at her office a bond register in which the
Registrar will provide for the registration of ownership of the Note and the registration of
transfers and exchanges of the Note.
(b) Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the
registered owner thereof or accompanied by a written instrument of transfer, in form reasonably
satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly
authorized by the registered owner in writing, the Registrar will authenticate and deliver, in the
name of the designated transferee or transferees, a new Note of a like aggregate principal amount
and maturity, as requested by the transferor. Notwithstanding the foregoing, the Note will not be
transferred to any person other than an affiliate, or other related entity, of the Owner unless the
EDA has been provided with an investment letter in a form substantially similar to the
investment letter submitted by the Owner or a certificate of the transferor, in a form satisfactory
to the EDA, that the transfer is exempt from registration and prospectus delivery requirements of
federal and applicable state securities laws. The Registrar may close the books for registration of
any transfer after the fifteenth day of the month preceding each Payment Date and until the
Payment Date.
(c) Cancellation. The Note surrendered upon any transfer will be promptly cancelled
by the Registrar and thereafter disposed of as directed by the EDA.
(d) Improper or Unauthorized Transfer. When the Note is presented to the Registrar
for transfer, the Registrar may refuse to transfer the same until she is satisfied that the
endorsement on the Note or separate instrument of transfer is legally authorized. The Registrar
will incur no liability for her refusal, in good faith, to make transfers which she, in her judgment,
deems improper or unauthorized.
(e) Persons Deemed Owners. The EDA and the Registrar may treat the person in
whose name the Note is at any time registered in the bond register as the absolute owner of the
Note, whether the Note is overdue or not, for the purpose of receiving payment of, or on account
of, the principal of and interest on the Note and for all other purposes, and all the payments so
made to any registered owner or upon the owner’s order will be valid and effectual to satisfy and
discharge the liability of the EDA upon the Note to the extent of the sum or sums so paid.
(f) Taxes, Fees and Charges. For every transfer or exchange of the Note, the
Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for
any tax, fee, or other governmental charge required to be paid with respect to the transfer or
exchange.
(g) Mutilated, Lost, Stolen or Destroyed Note. In case the Note becomes mutilated or
is lost, stolen, or destroyed, the Registrar will deliver a new Note of like amount, maturity dates
and tenor in exchange and substitution for and upon cancellation of the mutilated Note or in lieu
of and in substitution for the Note lost, stolen, or destroyed, upon the payment of the reasonable
expenses and charges of the Registrar in connection therewith; and, in the case the Note lost,
stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that the Note was
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lost, stolen, or destroyed, and of the ownership thereof, and upon furnishing to the Registrar of
an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both
the EDA and the Registrar will be named as obligees. The Note so surrendered to the Registrar
will be cancelled by him and evidence of the cancellation will be given to the EDA. If the
mutilated, lost, stolen, or destroyed Note has already matured or been called for redemption in
accordance with its terms, it will not be necessary to issue a new Note prior to payment.
3.04. Preparation and Delivery. The Note will be prepared under the direction of the
Executive Director and will be executed on behalf of the EDA by the signatures of its President
and Executive Director. In case any officer whose signature appears on the Note ceases to be the
officer before the delivery of the Note, the signature will nevertheless be valid and sufficient for
all purposes, the same as if the officer had remained in office until delivery. When the Note has
been so executed, it will be delivered by the EDA to the Owner following the delivery of the
necessary items delineated in Section 5.2 of the Agreement.
Section 4. Security Provisions.
4.01. Pledge. The EDA agrees to pay the principal of and interest on the Note from
Tax Increment as defined in the Note. Tax Increment will be applied first to accrued interest,
and then to unpaid principal of the Note in accordance with the terms of the form of Note set
forth in Section 3 of this resolution.
4.02. Bond Fund. Until the date the Note is no longer outstanding and no accrued
interest or principal thereof (to the extent required to be paid pursuant to this resolution) remains
unpaid, the EDA will maintain a separate and special “Bond Fund” to be used for no purpose
other than the payment of the principal of and interest on the Note. The EDA irrevocably agrees
to appropriate to the Bond Fund in each year Tax Increment which is not otherwise obligated.
Any Tax Increment remaining in the Bond Fund will be transferred to the EDA’s account for the
TIF District upon the payment of all principal and interest to be paid with respect to the Note.
Section 5. Certification of Proceedings.
5.01. Certification of Proceedings. The officers of the EDA are hereby authorized and
directed to prepare and furnish to the Owner of the Note certified copies of all proceedings and
records of the EDA, and the other affidavits, certificates, and information as may be required to
show the facts relating to the legality and marketability of the Note as the same appear from the
books and records under their custody and control or as otherwise known to them, and all the
certified copies, certificates, and affidavits, including any heretofore furnished, will be deemed
representations of the EDA as to the facts recited therein.
Section 6. Effective Date. This resolution will be effective upon execution by the
President and Executive Director following authorization by the board of commissioners of the
EDA.
Adopted by the board of commissioners of the Cottage Grove Economic Development
Authority, this ____ day of ________, 2018.
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President
Executive Director
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COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY
CITY OF COTTAGE GROVE
WASHINGTON COUNTY
STATE OF MINNESOTA
RESOLUTION NO. 2018-007
RESOLUTION AUTHORIZING AN INTERFUND LOAN FOR ADVANCE OF
CERTAIN COSTS IN CONNECTION WITH TAX INCREMENT FINANCING
DISTRICT NO. 1-18 (MODERN AUTOMOTIVE)
BE IT RESOLVED by the Board of Commissioners (the “Board”) of the Cottage Grove Economic
Development Authority (the “EDA”) as follows:
Section 1. Background.
1.01. The EDA has heretofore approved the establishment of Tax Increment Financing District No.
1-18 (Modern Automotive) (the “TIF District”) within Development District No. 1 (the “Project”), and has
adopted a Tax Increment Financing Plan (the “TIF Plan”) for the purpose of financing certain improvements
within the Project.
1.02. The EDA is authorized to use tax increment to pay for certain costs identified in the TIF Plan,
including site improvements/preparation, public utilities, other qualifying improvements, interest and
administrative costs (collectively, the “Qualified Costs”), which costs may be financed on a temporary basis
from EDA funds available for such purposes.
1.03. Under Minnesota Statutes, Section 469.178, Subd. 7, the city of Cottage Grove (the “City”) is
authorized to advance or loan money from any fund from which such advances may be legally authorized in
order to finance the Qualified Costs.
1.04. The EDA has proposed to borrow funds from the City’s Future Economic Development
Fund in the amount of up to $20,000.00 to pay a portion of the costs of the Qualified Costs (the “Interfund
Loan”). Such funds are proposed to be deposited to the EDA’S TIF Fund and disbursed to pay a portion of
the Qualified Costs. As the EDA receives tax increment revenues from the TIF District or other revenues
derived from the Project, it will repay the Interfund Loan to the City.
1.05. It is expected that the City Council of Cottage Grove will adopt a resolution on May 29,
2018, approving the terms of the Interfund Loan to be made to the EDA.
Section 2. Terms of Interfund Loan.
2.01. The City shall advance $20,000.00 from the Future Economic Development Fund to the EDA
to be used in accordance with the terms herein. The EDA shall reimburse the City for such advances together
with interest at the rate stated below. Interest accrues on the principal amount from the date of each advance.
The maximum rate of interest permitted to be charged is limited to the greater of the rates specified under
Minnesota Statutes, Section 270C.40 or Section 549.09 as of the date the loan or advance is authorized,
unless the written agreement states that the maximum interest rate will fluctuate as the interest rates specified
under Minnesota Statutes, Section 270C.40 or Section 549.09 are from time to time adjusted. The interest
rate shall be 4 percent and will not fluctuate.
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2.02. Principal and interest (“Payments”) on the Interfund Loan shall be paid semi-annually on each
February 1 and August 1 (each a “Payment Date”), commencing on the first Payment Date on which the
EDA has Available Tax Increment (defined below), or on any other dates determined by the Executive
Director of the EDA, through the date of last receipt of tax increment from the TIF District.
2.03. Payments on this Interfund Loan are payable solely from “Available Tax Increment,” which
shall mean, on each Payment Date, tax increment available after other obligations have been paid, or as
determined by the Executive Director of the EDA, generated in the preceding six months with respect to the
property within the TIF District and remitted to the EDA by Washington County, all in accordance with
Minnesota Statutes, Sections 469.174 to 469.1794, all inclusive, as amended. Payments on the Interfund
Loan may be subordinated to any outstanding or future bonds, notes or contracts secured in whole or in part
with Available Tax Increment and are on parity with any other outstanding or future interfund loans secured
in whole or in part with Available Tax Increment.
2.04. The principal sum and all accrued interest payable under this Interfund Loan are pre-payable in
whole or in part at any time by the EDA without premium or penalty. No partial prepayment shall affect the
amount or timing of any other regular payment otherwise required to be made under this Interfund Loan.
2.05. This Interfund Loan is evidence of an internal borrowing by the EDA in accordance with
Minnesota Statutes, Section 469.178, Subd. 7, and is a limited obligation payable solely from Available Tax
Increment pledged to the payment hereof under this resolution. This Interfund Loan and the interest hereon
shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision
thereof, including, without limitation, the EDA. Neither the State of Minnesota, nor any political subdivision
thereof shall be obligated to pay the principal of or interest on this Interfund Loan or other costs incident
hereto except out of Available Tax Increment, and neither the full faith and credit nor the taxing power of the
State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest
on this Interfund Loan or other costs incident hereto. The EDA shall have no obligation to pay any principal
amount of the Interfund Loan or accrued interest thereon, which may remain unpaid after the final Payment
Date.
2.06. The City may amend the terms of this Interfund Loan, with permission from the EDA, at any
time by resolution of the City Council, including a determination to forgive all or a portion of the outstanding
principal amount and accrued interest to the extent permissible under law.
Section 3. Interfund Loan Approved.
3.01. The Interfund Loan with the terms set forth in Section 2 hereof is hereby approved subject to
the approval of the Interfund Loan by the City Council.
3.02. EDA Staff and officials are hereby authorized and directed to execute any collateral
documents and take any other actions necessary to carry out the intent of this resolution.
Section 4. Effective Date. This resolution is effective upon the date of its approval.
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th
Approved by the Board on this 29 day of May, 2018.
By:
Myron Bailey, President
Attest:
Charlene Stevens, Executive Director
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