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HomeMy WebLinkAbout4.2a Amended and Restated TIF Agreement NP Logistics Park memo TO: Economic Development Authority FROM: Christine Costello, Community Development Director DATE: May 5, 2022 RE: Amended and Restated Agreement with NorthPoint Cottage Grove Logistics, LLC Background NorthPoint Development (Developer), a Kansas City based development company, received Master Site Plan approval in December 2021 for Cottage Grove Logistics Park (Logistics Park), which consists of approximately 252 acres of land. The Logistics Park will include uses such as warehouse, manufacturing, distribution, and office space. The Developer will phase the development and come back before the Planning Commission and City Council for each phase of development to ensure the proposed phases align with the approved Master Site Plan. Location of the Cottage Grove Logistics Park In December 2021, the EDA approved the creation of TIF District No. 1-20 for the Logistics Park. The TIF Agreement that was approved as part of the TIF District provided the phasing schedule and required job creation as well as the amount of tax increment financing that would be provided. In addition, the TIF Agreement also required the EDA to accept submittal of each phase of development. The EDA accepted Phase I of the Logistics Park on March 16, 2021, with a vote of 5-to-0. On April 6, 2022, the City Council approved the first phase of development (vote 5-to-0) within the Cottage Grove Logistics Park Master Plan area. Phase I consists of construction of two buildings with approximately 700,000 square feet. In addition, to the construction of the two Economic Development Authority May 5, 2022 Page 2 of 4 buildings NorthPoint will also be completing public improvements to 100th Street, Ideal Avenue, and the construction of 105th Street. Phase I Building Construction Discussion The Developer is 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. Based on the estimated numbers in 2021 NorthPoint was to receive TIF in the form of a Pay-As-You-Go (PAYGO) TIF Note, for assistance in the amount of $8.311 million over six years. The EDA at their December 14th meeting approved the TIF and Interfund Loan on December 14th with a vote of 6-to-0. In early March, NorthPoint received bids for engineering and construction of the public roads, which were approximately $4.5 million more than preliminary estimates. In addition, overall construction costs increased as well due to supply issues. The documentation related to the increase in road, engineering and building costs was sent to the City’s Financial Consultant, Ehlers for a proforma review and evaluation. Due to the increased in costs, Ehlers analysis determined that the TIF can be increased by approximately $3.689 million to $12 million over eight years as opposed to the previously approved $8.311 million over six years. The revised TIF and collection period is still within State Statute for an Economic TIF District, which allows increment to be collected for nine years. Economic Development Authority May 5, 2022 Page 3 of 4 Provisions Based upon the development and TIF assistance discussed above, the following are the key terms of the attached amended and restated TIF Agreement: a) Development: o Construction of the following manufacturing/distribution facilities and phases has been modified from the original TIF agreement to now include an additional phase in 2022, called Phase Ia. The commencement and completion of construction for each phase is also outlined within the TIF Agreement. Phase Square Feet Commencement Date Completion Date I 776,252 April 30, 2022 July 30, 2024 Ia 520,000 August 30, 2022 July 30, 2024 II 730,000 April 30, 2023 July 30, 2025 III 677,600 April 30, 2024 July 30, 2026 IV 739,000 April 30, 2025 July 30, 2027 * total square footage of all phases shall not be less than 3,442,000 b) Job & Wage Goals: Job and wage goals are the same as before but were updated to reflect the inclusion of Phase Ia (moving some of the jobs from Phase I). Phase No. of Jobs at 200% of State Minimum No. of Jobs at 160% of Federal Minimum No. of Additional Jobs to Total 1,870 I 50 275 25 Ia 25 200 25 II 75 308 50 III 75 300 50 IV 75 300 37 TOTAL 300 1,383 187 c) TIF Note: o The TIF Note is being increased to $12 million, payable over an eight (8) year term. o Interest will be paid at the lesser of 3.5% or actual rate on the permanent first mortgage. d) Project Costs: o Total project costs were increased by approximately $65 million to $359,868,340 for purposes of the lookback. Recommendation By motion: A. Approve the Amended and Restated Contract for Private Development by and between the Cottage Grove Economic Development Authority and NP BGO Cottage Grove Logistics Park, LLC. Economic Development Authority May 5, 2022 Page 4 of 4 Attachment 1. Amended and Restated Contract for Private Development by and between Cottage Grove EDA and NP BGO Cottage Grove Logistics Park, LLC.