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HomeMy WebLinkAbout5.1a TIF District and Term Sheet Memo MEMORANDUM TO: Christine Costello – Community Development Director FROM: Stacie Kvilvang - Ehlers DATE: November 9, 2011 SUBJECT: TIF District 1-20 (NorthPoint Industrial) and TIF Term Sheet Overview: NorthPoint Industrial is proposing to construct a 4-phase development consisting of approximately 3.44 million square feet of manufacturing distribution facilities. The development will be located on approximately 236 acres (six parcels) located south of 100th Street, north of 105th Street and both east and west of Ideal Avenue South in the City (see map below): In order to service the area for development, they will be required to construct various roads, install utilities to the site and provide storm water ponding. Preliminary estimates for the road improvements alone (100th Street, 105th Street, Ideal Avenue, 100th Street and Jamaica signal and portion of a roundabout connecting to the proposed Hadley Avenue) is $9.93 million and City development fees (area charges, connection fees and park dedication) is approximately $7 million. They requested tax increment to assist with offsetting some of these costs to facilitate the development of the area. Based upon review of their sources and uses, development proforma and financing, we determined that they could utilize approximately $8.311 million in Pay-As-You-Go TIF assistance over a six (6) year period in order to make the project financially feasible. TIF District: The City will be establishing TIF District 1-20 (NorthPoint Industrial), which is an economic development TIF district, on the following six (6) parcels: Parcel Number Address Owner *29.027.21.21.0001 N/A Joseph Zywiec 29.027.21.12.0001 N/A WAG Farms Inc. 29.027.21.11.0001 N/A Joseph Zywiec 29.027.21.11.0003 N/A RNR Kroll Prop. LLC 28.027.21.22.0002 N/A Eugene Smallidge 29.027.21.14.0002 N/A Todd Julen Note: Parcel 29.027.21.21.0001 is being subdivide, and approximately 50% of parcel will be in the TIF District In addition to creation of the TIF district, the City will be modifying the boundaries of Development District No. 1 to be coterminous with the corporate boundaries of the City. The Planning Commission approved the boundary expansion at their September 27th meeting (vote 7 to 0) and the EDA approved the expansion at their October 12th meeting (vote 6 to 0). The duration of this TIF District 1-20, will be 8 years after receipt of the first increment, which is anticipated in 2024. Thus, it is estimated that the District, would terminate at the earlier of satisfaction of the pay-as-you-got note and interfund loan or on December 31, 2032. However, if the first increment is received earlier than expected in 2023, then the District would terminate on December 31, 2031. The budget below is in a maximum amount, meaning over the term of the District, the amount of tax increment collected may not exceed what is noted for Project Costs ($18,699,020). If that were to happen, the City would be required to modify the budget which would entail going through the entire notification and public hearing process again as if the City were considering establishment of a new district. In order to alleviate this as a future consideration and cost, we’ve added annual inflation to increase the budget. The City/EDA will retain 10% of the tax increment generated for administrative costs of the District. USES Land/Building Acquisition $100,000 Site Improvements/Preparation $10,000,000 Utilities $3,000,000 Other Qualifying Improvements $3,472,007 Administrative Costs (up to 10%) $2,127,013 PROJECT COSTS TOTAL $18,699,020 Interest $4,698,127 PROJECT & INTEREST COSTS TOTAL $23,397,147 In addition, it should be mentioned that the budget does not resemble the amount of assistance being provided to NorthPoint Industrial for their proposed development. The actual amount of assistance will be $8.311 million in the form of a Pay-As-You-Go TIF Note. The terms of the assistance and the overall provisions regarding the issuance of a PAYGO TIF Note will be contained within the TIF Agreement and are summarized below based upon the Term Sheet agreed to by both parties (and attached to this memo). Term Sheet: Based upon the development and TIF assistance discussed above, following are the key terms of the attached Term Sheet: a) General: o The agreement is between the EDA and NP CG Logistics, LLC (the “Developer”) o The Developer has deposited with the EDA a $10,000 escrow and is responsible to pay all legal, consultant, and administrative expenses in connection with review and analysis of their proposed project, as well as creation of the TIF District and negotiation and preparation of the TIF agreement (even costs in excess of the above noted escrow). o Developer shall construct the public improvements consisting of street, water, and sanitary improvements on 105th Street, Ideal Avenue between 100th and 105th Street, and 100th Street, as well as construction of a roundabout with connection to the proposed Hadley Avenue and infrastructure installation for a future signal light at the intersection of 100th Street and Jamaica Avenue by April 30, 2024. b) Development: o Construction of the following manufacturing/distribution facilities and phases: Phase Square Feet Phase I 1,294,000 Phase II 730,000 Phase III 677,600 Phase IV 739,000 * sq/ft of each phase are subject to change but shall not be less than 3.440 million sq/ft o Must commence and complete construction by the following dates per Phase: Phase Commencement Date Completion Date Phase I April 30, 2022 July 30, 2024 Phase II April 30, 2023 July 30, 2025 Phase III April 30, 2024 July 30, 2026 Phase IV April 30, 2025 July 30, 2027 c) Job & Wage Goals: o Developer must create at least 1,870 full-time jobs within 2 years of project completion o 300 of the jobs created must exceed an hourly wage totaling 200% of the State’s minimum wage in effect at the time a Certificate of Occupancy (CO) is issued for the individual Phase per the City’s Business Assistance Policy, which will be $20.66 starting in 2022. o In addition, the building owner or the Developer is required to pay 90% or more of the employees of the building at a rate equal to or great than 160% of the Federal minimum wage for individuals over the age of 20 in effect at the time of issuance of the CO for each Phase ($18 starting in 2022). o The Developer is required to annually report its progress on achieving the Job & Wage Goals until they are met and through the term of the TIF Note for each Phase o If Job & Wage Goals are not met, TIF assistance will be repaid with interest in full or in part depending upon how many jobs were created o Operations must be maintained within the City for at least 5 years from project completion d) TIF Note: o The Developer will receive a Pay-As-You-Go TIF Note in the amount of $8,311,000 after providing proof of actual expenditures in connection with the public improvements noted above. o Term of the TIF Note will be for 6 years o Interest will be paid at 4% o Payable from 90% of available tax increments (EDA retains the remaining 10%) o If there is an event of default, the City may cancel or rescind the TIF Note and will have no further obligation to repay any outstanding principal and/or interest o Developer will not seek a reduction in the market value of their property during the term of the TIF Note e) Business Subsidy o Developer acknowledge that the EDA is providing a business subsidy in accordance with MN Statutes 116J.993 through 116J.995 and that the EDA held the required public hearing on November 9, 2021 These terms will be inputted into the TIF Agreement, which will be brought back to the EDA for formal approval on December 14, 2021. Please contact me at 651-697-8506 with any questions.