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HomeMy WebLinkAbout4.4 Issuance of Taxable Increment Revenue Note - Series 2019A (Modern Automotive Performance Project TIF 1-18) TO: Economic Development Authority FROM: Matt Wolf, Economic Development Specialist DATE: May 9, 2019 RE: Issuance of Taxable Increment Revenue Note – Series 2019A (Modern Automotive Performance Project TIF 1-18) Background Modern Automotive Performance (MAP), located at 9800 Hemingway Avenue, which operates a 20,000 square foot facility and employed 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. MAP in 2017 began looking for sites to expand their operations. MAP was 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 in the end decided to expand at their current facility with a 25,000 square foot expansion that would add 21 new full-time jobs over three years after completion of the expansion. Due to the creation of jobs at a livable wage and a capital investment expenditure of $1.7 million. The City of Cottage Grove determined that the project qualified for assistance in the form of a tax increment financing (TIF) economic development district (1-18). TIF District 1-18 was formally approved by the EDA and City Council in May of 2018. Discussion Modern Automotive Performance has submitted certified copies of payments made to RJ Ryan in the amount of $1,816,428. Additionally, Modern Automotive Performance has submitted their signed Investment Letter as the purchaser of $117,000 in principal amount of a Taxable Tax Increment Revenue Note. Payments on the note will begin on August 1, 2020 and each February 1 and August 1 thereafter and conclude February 1, 2029. The principal amount of the note will not exceed $117,000 and those funds will only be paid through available tax increment funds from the project. Recommendation By Motion: Approve the resolution issuing, and providing the form, terms, covenants and directions for the issuance of its taxable Tax Increment Revenue Note, Series 2019A in an aggregate principal amount not to exceed $117,000. Attachments 1. Resolution Approving the Issuance of TIF Note 2. Certification of Completion and Release of Forfeiture 3. Investment Letter (signed) 4. Certified Copy of Payment to RJ Ryan COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2019-008 RESOLUTION APPROVING THE ISSUANCE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS TAXABLE TAX INCREMENT REVENUE NOTE, SERIES 2019A 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 Development District No.1 (the “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 2019A (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 has paid certain costs related to the Minimum Improvements (the “Qualifying Costs”, as defined in the Agreement) pursuant to 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: F-1 561649v1 AMB CT165-54 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, SERIES 2019A (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 May 29, 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 365 days and twelve 30-day months and charged for 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. F-2 561649v1 AMB CT165-54 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 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. F-3 561649v1 AMB CT165-54 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. 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 Jennifer Levitt, Executive Director REGISTRATION PROVISIONS F-4 561649v1 AMB CT165-54 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 9800 Hemingway, LLC 9800 Hemingway Avenue South Cottage Grove, MN 55016 Federal ID #20-4894629 \[End of Form of Note\] 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: (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 F-5 561649v1 AMB CT165-54 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 is lost, stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that the Note was 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 her 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. F-6 561649v1 AMB CT165-54 Section 4. Security Provisions. 4.01. Pledge. The EDA agrees to pay the principal of and interest on the Note from Available Tax Increment as defined in the Note. Available 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, th this 14 day of May, 2019. Myron Bailey, President Jennifer Levitt, Executive Director F-7 561649v1 AMB CT165-54 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 th for Private Development by and between the EDA and the Developer dated the 29 day of May, th 2018, and recorded in the office of the Washington County Recorder Minnesota on June 29, 2018 as Document No. 4159123, 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 Recorder 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. 1 Dated: _______________, 2019. COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY By: _________________________________ Myron Bailey, President By: _________________________________ Jennifer Levitt, Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF WASHINGTON ) The foregoing instrument was acknowledged before me this ____ day of ________________, 2019, by Myron Bailey and Jennifer Levitt, 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 (AMB) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 (612) 337-9300 2 EXHIBIT A Legal Description of 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. 3