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Home My WebLink About5.1 First Amendment to Contract for Private Development between the Cottage Grove Economic Development Authority and Up North Plastics, Inc., and Mars II, Inc. TO: Economic Development Authority FROM: Matt Wolf, Economic Development Coordinator DATE: January 9, 2020 RE: Public Hearing - First Amendment to Contract for Private Development between the Cottage Grove Economic Development Authority and Up North Plastics, Inc., and Mars II, Inc. Background Up North Plastics located at 9480 Jamaica Avenue South has been in the Cottage Grove Business Park since 1981. Up North Plastics produces agricultural plastics and construction film at the facility. Up North Plastics is located on 88 acres and currently includes a 451,000 square foot manufacturing and warehouse facility and employs 309 full-time employees. Up North Plastics has seen tremendous success in their business and as a result are adding an additional 428,353 square foot building at their current facility and employing an additional 200 employees. Up North Plastics when considering their options for expansion were looking for the opportunity to lower costs through business subsidies. The City of Cottage Grove worked with Up North Plastics and offered assistance in the form of tax increment financing in an amount not to exceed $892,000. A contract for private development between the Cottage Grove Economic , Development Authority and Up North Plastics, Inc. and Mars II, Inc. was executed on January 8 2019 by a vote of 6-to-0. The contract was approved by the Cottage Grove City Council at their January 16, 2019 meeting by a vote of 4-to-0. Figure 2. 3D View of Up North Plastics Expansion from the Figure 1. Up North Plastics Addition Area CP Rail Line looking towards Hastings Economic Development Authority January 9, 2020 Page 2 of 2 Discussion As part of the development agreement that was signed in order for Up North Plastics to receive financial assistance Up North Plastics is required to create 200 full-time jobs at their Cottage Grove facility within two years of the benefit date, which is the date the Certificate of Completion is issued or the developer occupies the property. The starting date for measuring the jobs created in the original development agreement was 90 days prior to the Benefit Date. Recently Up North Plastics parent company Poly-America opened a plant in South Carolina. As part of the hiring at that plant they found that employees needed significant training and job shadowing in order to get their new plant running at full efficiency at the time of opening. As a result, Up North Plastics is requesting that they begin hiring employees for their expansion in Cottage Grove starting on January 1, 2020. This will allow enough time for training and job shadowing to begin at their current facility. The amendment to the development agreement would allow for Up North Plastics to begin hiring as of January 1, 2020. This amendment currently has the Cottage Grove Up North Plastics facility with 309 employees as of December 31, 2019. Up North Plastics will need to provide written proof to the EDA that 200 additional non-transitory, full-time jobs were created on or after January 1, 2020 and still exist on the property two years following the benefit date. Up North Plastics, Inc. and Mars II, Inc. have agreed and signed the proposed amendment, that signed amendment is attached. Current estimates of construction put completion of their expansion in the summer of 2020. Recommendation Hold a Public Hearing By motion: Authorize the First Amendment to Contract for Private Development between the Cottage Grove Economic Development Authority and Up North Plastics, Inc., and Mars II, Inc. Attachments 1. First Amendment for Private Development 2. Contract for Private Development between the EDA and Up North Plastics, Inc., and Mars II, Inc. FIRST AMENDMENT TO CONTRACT FOR PRIVATE DEVELOPMENT This First Amendment to Contract for Private Development (the “First Amendment”) is made this ___ day of ___________, 2020 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 Up North Plastics, Inc. and Mars II, Inc., both business corporations formed under the laws of the state of Minnesota, having their principal offices at 9480 Jamaica Avenue South, Cottage Grove, MN 55016. Up North Plastics, Inc., and Mars II, Inc. are referred to collectively in this First Amendment as the “Developer”. WITNESSETH: WHEREAS, the EDA and the Developer entered into that certain Contract for Private Development, dated January 16, 2019 and recorded as Document No. 4186616 on March 7, 2019 in the Office of the County Recorder, Washington County, Minnesota (the “Development Agreement”), regarding the land (the “Development Property”) legally described on Exhibit A attached hereto; and WHEREAS, the EDA and the Developer wish to amend the terms of the Development Agreement as specified herein. NOW, THEREFORE, in consideration of the covenants and obligations contained herein, the EDA and the Developer agree as follows: 1. Section 5.2 of the Development Agreement ishereby amended by adding the double- underlined language and deleting the strickenlanguage as follows: 1 630468v1CT165-55 Section 5.2. Job and Wage Goals. a) Within two years of the Benefit Date, the Developer shall cause to be created at least 200 new full-time equivalent jobs on the Property and shall cause the wages paid for at least one of the new jobs to be no less than $15.74 per hour and the remaining 199 new jobs to be no less than $13.00 per hour, all exclusive of benefits. In order to count toward this requirement, said full-timejobs must be located on the Property and there shall be no expectation or intent on behalf of the Developer or the employees hired that said jobs will be transitory in nature or otherwise permanently moved to other locations. Notwithstanding anything to the contrary herein, if the wage and job goals described in this section 5.2 are met within two years of the Benefit Date, those goals are deemed satisfied despite the Developer’s continuing obligations under sections 5.1(f) and 5.4. The anticipated completion of the Minimum Improvements is expected to provide the Developer with anability to accommodate additional full-time employees on the Property prior tothe Benefit Date. Accordingly, Thethestarting date for measuring the job and wage goals required by this section 5.2 is 90 days prior to the Benefit Date. shall be January 1, 2020. As of December 31, 2019, 309 full-time employees were employed by the Developer on the Property. Pursuant to the reporting requirements contained in section 5.4 of this Agreement, the Developer shall provide written proof to the EDA that 200 additional non- transitory, full-time jobs, as required herein, were created on or after January 1, 2020 and concurrently existed on the Property within two years following the Benefit Date. 2. Except as otherwise specifically noted in this First Amendment, the Development Agreement shall remain in full force and effect. *********************** 2 630468v1CT165-55 COTTAGE GROVE ECONOMIC DEVELOPMENT AUTHORITY By: _________________________________ President By: _________________________________ Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF WASHINGTON ) The foregoing instrument was acknowledged before me this ____ day of ________________, 2020, by _______________________ and _______________________, 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 3 630468v1CT165-55 EXHIBIT A LEGAL DESCRIPTION OF DEVELOPMENT PROPERTY A-1 630468v1CT165-55