HomeMy WebLinkAboutItem 07April 18, 2014 0 Item No.
RESOLUTION APPROVING A CONTRACT FOR PRIVATE DEVELOPMENT
/BUSINESS SUBSIDY AGREEMENT WITH MENASHA PACKAGING COMPANY LLC
April 21, 2014 City Council Meeting
Proposed Action
Staff recommends adoption of the following motion: Move to adopt a resolution approving the
Contract for Private Development /Business Subsidy Agreement with Menasha Packaging LLC.
Passage of this motion will result in providing Tax Increment Financing (TIF) assistance to facilitate an
expansion of the Menasha Packaging Co. facility in Airlake Industrial Park.
Overview
Menasha Packaging is proposing a 123,000 square foot expansion of their 238,000 square foot
manufacturing facility located at 8085 220th Street West. Menasha is experiencing considerable
growth and needs to add additional warehouse, manufacturing, and office space. The company has
submitted a request for tax increment financing to assist in over $1.3 million in ELIGIBLE site
development costs associated with the project. The proposed TIF assistance will not exceed $626,018
and will be provided on a "pay -as -you -go -basis over a nine year period beginning in 2016.
Menasha Packaging has operated in Airlake since 1970 and currently has 221 employees with an
annual payroll of approximately $15.2 million. The Menasha plant after the proposed expansion will
have an estimated market value of between $8.0 - 8.75 million and will create an additional 15 jobs.
The contract provides for the City to provide "pay-as-you-go reimbursements consisting of 95% of the
captured tax increments for a period of nine years beginning with taxes payable in 2016 with a not -to -
exceed amount of $626,018. This assistance in contingent on Menasha completing the 123,000
square foot expansion as proposed, the creation of at least 15 jobs over the next two years, and
maintaining their operation in Lakeville for at least five years. The City Council approved the proposed
modification of the Redevelopment Plan and the creation of TIF District No. 18 at the April 7, 2014 City
Council meeting. The EDC recommended approval of this project on March 25, 2014.
Primary Issues to Consider
Is this request for Tax Increment Financing assistance consistent with the City's policies? The
request is consistent with the City's TIF and Business Subsidy Policies.
Supporting Information
• Resolution and Contract f r Private Development/ Business Subsidy Agreement
David L. Olson, Community and Economi Development Director
c: Greg Theis, Menasha Packaging Company
Financial Impact: $ $626,018 Budgeted:Y/N N Source: Captured Tax Increments
CITY OF LAKEVILLE
DAKOTA COUNTY, MINNESOTA
RESOLUTION NO.
RESOLUTION APPROVING THE CONTRACT FOR PRIVATE
DEVELOPMENT BY AND BETWEEN THE CITY OF LAKEVILLE AND
MENASHA PACKAGING COMPANY, LLC
WHEREAS, by Resolution No.14-01 dated March 3, 2014, the Lakeville Housing and
Redevelopment Authority ("Authority") authorized the City to undertake, on the Authority's behalf,
all of the public development activities in connection with the development of the Menasha
Packaging Company, LLC ("Developer") development proposal, including the administration of tax
increment as accounted for in the City's financial statements; and
WHEREAS, the City of Lakeville has held a public hearing regarding the establishment of
Tax Increment Financing District No. 18 as an economic development district and has adopted the
Tax Increment Financing Plan therefor; and
WHEREAS, the Developer has requested a business subsidy in amount not to exceed
$626,018.00 for its development through reimbursement of certain development costs using tax
increment on a pay -as -you go basis and Developer is proposing to meet certain wage and job goals
as a condition of the grant of the subsidy as further detailed in the proposed Contract for Private
Development between the City of Lakeville and Menasha Packaging Company, LLC ("Contract");
WHEREAS, City of Lakeville has, on the date hereof, held a public hearing on the proposed
Contract, tax increment financing and business subsidy;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Lakeville,
that the Contract for Private Development by and between the City of Lakeville and Menasha
Packaging Company, LLC, including the business subsidy, is approved and the Mayor and City
Clerk are authorized to execute the Contract.
ADOPTED this day of , 2014, by the City Council of the City of
Lakeville.
CITY OF LAKEVILLE
Matt Little, Mayor
ATTEST:
Charlene Friedges, City Clerk
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EXHIBIT "A"
ATTACH PURCHASE AGREEMENT
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CONTRACT FOR PRIVATE DEVELOPMENT
By and Between
CITY OF LAKEVILLE
and
MENASHA PACKAGING COMPANY, LLC
TRIS DOCUMENT WAS DRAFTED BY:
CAMPBELL KNUTSON
Professional Association
317 Eagandale Office Center
1380 Corporate Center Curve
Eagan, Minnesota 55121
Telephone: (651) 452-5000
AMP
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TABLE OF CONTENTS
Page
PREAMBLE.............................................................................................................................................. 4
ARTICLE I
DEFINITIONS
SECTION1.1 DEFINITIONS.................................................................................................................. 5
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1 REPRESENTATIONS AND WARRANTIES OF THE CITY ........................................ 7
SECTION 2.2 REPRESENTATIONS AND WARRANTIES OF THE DEVELOPER .......................... 8
ARTICLE III
CONSTRUCTION OF IMPROVEMENTS
SECTION 3.1 CONSTRUCTION OF IMPROVEMENTS...................................................................... 9
SECTION 3.2 CONSTRUCTION PLANS............................................................................................... 9
SECTION 3.3 COMMENCEMENT AND COMPLETION OF CONSTRUCTION .............................. 9
SECTION 3.4 CERTIFICATE OF COMPLETION............................................................................... 10
ARTICLE IV
INSURANCE AND CONDEMNATION
SECTION4.1 INSURANCE.................................................................................................................. 10
SECTION 4.2 CONDEMNATION........................................................................................................ 12
ARTICLE V
TAX INCREMENT
SECTION 5.1 REAL PROPERTY TAXES........................................................................................... 12
SECTION 5.2 IMPROVEMENTS.......................................................................................................... 13
SECTION 5.3 REIMBURSEMENT: TAX INCREMENT REVENUE NOTE ..................................... 13
SECTION 5.4 DURATION OF TAX INCREMENT DISTRICT.......................................................... 14
SECTION 5.5 TAX INCREMENT REIMBURSEMENT SCHEDULE ................................................ 14
SECTION 5.6 USE OF TAX INCREMENT.......................................................................................... 14
ARTICLE VI
BUSINESS SUBSIDY
SECTION 6.1 TAX INCREMENT FINANCING............................................................. 15
SECTION 6.2 WAGE AND JOB GOALS....................................................................... 15
SECTION 6.3 REPORTING....................................................................................... 15
SECTION 6.4 CONTINUING OBLIGATIONS............................................................... 15
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SECTION 6.5 REQUIREMENTS............................................................................ 15
SECTION 6.6 DEFAULT DEFINED........................................................................ 16
SECTION 6.7 REMEDIES ON DEFAULT................................................................. 16
SECTION 6.8 COSTS OF ENFORCEMENT.............................................................. 16
ARTICLE VII
PROHIBITIONS AGAINST ASSIGNMENT AND TRANSFER, INDEMNIFICATION
SECTION 7.1 PROHIBITION AGAINST TRANSFER OF PROPERTY AND ASSIGNMENT
OF AGREEMENT...............................................................................................
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1 EVENTS OF DEFAULT DEFINED........................................................
SECTION 8.2 REMEDIES ON DEFAULT..................................................................
SECTION 8.3 NO REMEDY EXCLUSIVE...................................................................
SECTION 8.4 NO IMPLIED WAIVER.......................................................................
SECTION 8.5 AGREEMENT TO PAY ATTORNEY'S FEES AND EXPENSES .....................
SECTION 8.6 INDEMNIFICATION OF CITY AND AUTHORITY ....................................
ARTICLE IX
ADDITIONAL PROVISIONS
SECTION 9.1 REPRESENTATIVES NOT INDIVIDUALLY LIABLE ................................
SECTION 9.2 RESTRICTIONS ON USE...................................................................
SECTION 9.3 TITLES OF ARTICLES AND SECTIONS ................................................
SECTION 9.4 DISCLAIMER OF RELATIONSHIPS......................................................
SECTION 9.5 MODIFICATIONS.............................................................................
SECTION 9.6 COUNTERPARTS.............................................................................
SECTION 9.7 JUDICIAL INTERPRETATION.............................................................
SECTION 9.8 TERMINATION OF AGREEMENT.........................................................
SECTION 9.9 CONFLICTS OF INTEREST..................................................................
SECTION 9.10 TITLES OF ARTICLES AND SECTIONS ................................................
SECTION 9.11 NOTICES AND DEMANDS................................................................
SECTION 9.12 LAW GOVERNING..........................................................................
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TESTIMONIi. M................................................................................................... 22
SIGNATURES................................................................................................ 23,24
SCHEDULES
SCHEDULE A - DESCRIPTION OF PROPERTY......................................................... 25
SCHEDULE B - TAX INCREMENT REVENUE NOTE ................................................. 26
SCHEDULE C - DESCRIPTION OF ELIGIBLE SITE IMPROVEMENTS ........................... 29
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CONTRACT FOR
PRIVATE DEVELOPMENT
THIS AGREEMENT, made as of the day of 2014, by and between the CITY OF
LAKEVILLE, a Minnesota municipal corporation (the "City"), and MENASHA
PACKAGING COMPANY, LLC, a Wisconsin limited liability company, (the "Developer"),
WITNESSETH:
WHEREAS, the Housing and Redevelopment Authority In and For the City of Lakeville
(the "Authority") was created pursuant to Minnesota Statutes, Sections 469.001-.047 (the "Act")
and was authorized to transact business and exercise its powers by a resolution of the City
Council of the City of the City pursuant to Section 469.003 of the Act; and
WHEREAS, in furtherance of the objectives of the Act, the Authority has undertaken a
program to provide impetus for private development, maintain and increase employment, and to
increase tax base for the taxing jurisdiction with the City's corporate limits and by affording
existing businesses in the City the opportunity to expand and in this connection is engaged in
carrying out a development project known as the Airlake Redevelopment Project No. 1 in an
area (hereinafter referred to as the "Project Area) located in the City; and
WHEREAS, in order to finance, in part, the public development costs of the Project the
City and Authority have created Tax Increment District No. 18 (the "Tax Increment District")
pursuant to an approved Tax Increment Financing Plan ("TIF Plan") for the Tax Increment
District; and
WHEREAS, there has been presented by the Developer to the City and the Authority for
their consideration a proposal for the development of an approximately 123,000 square foot
industrial facility constructed on land currently owned by and located within the Tax Increment
District; and
WHEREAS, the City and the Authority have reviewed the Developer's development
proposal and have determined that such proposal if completed would serve to accomplish the
goals and objectives for which the Project and the Tax Increment District were created; and
WHEREAS, by Resolution No. 14-01, dated March 3, 2014, the Authority authorized
the City to undertake, on the Authority's behalf, all of the public development activities in
connection with the development of the Developer's proposal, including the execution and
performance of this Agreement; and
WHEREAS, in order to assist the Developer in its development the City is prepared to
reimburse the Developer using tax increment on a pay-as-you-go basis for certain costs of
development; and
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WHEREAS, by June 30, 2014, the City will request Dakota County to certify the current
net tax capacity of the City of the Tax Increment District pursuant to section 469.177,
subdivision 1 of the Tax Increment Act; and
WHEREAS, the City believes that the development of the proposal and Project Area and
the construction of the Project, and fulfillment of this Agreement are vital and are in the best
interests of the Authority and the health, safety, morals and welfare of residents of the City and
in accordance with the public purpose and provisions of the applicable state and local laws and
requirements under which the Project has been undertaken and is being assisted.
NOW, THEREFORE, in consideration of the premises and the mutual obligations of
the parties hereto, each of them does hereby covenant and agree with the other as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. All capitalized terms used and not otherwise defined herein shall have
the following meanings unless a different meaning clearly appears from the context:
Act means Minnesota Statutes, Sections 469.001-469.047, as amended.
Agreement means this Agreement, as the same may be from time to time modified, amended or
supplemented.
Authoritv means the Housing and Redevelopment Authority in and for the City of Lakeville, or
its successors or assigns.
Available Tax Increment means on each Payment Date, ninety-five percent (95%) of the Tax
Increment attributable to the Development Property and paid to the City by Dakota County in the
six months preceding the Payment Date. Available Tax Increment shall not include any Tax
Increment if, as of any Payment Date, there is an uncured Event of Default under this
Agreement.
Benefit Date means the date of this Agreement.
Business Dav means any day except a Saturday, Sunday or a legal holiday or a day on which
banking institutions in the City are authorized by law or executive order to close.
City means the City of Lakeville, Minnesota.
Construction Plans means the site plan, utility plan, grading and drainage plan, landscape plan,
elevations drawings and related documents on the construction work to be performed by the
Developer on the Property which have been submitted to and approved by the City Council of
the City, together with the resolution of the Authority approving such plans.
Co un means Dakota County, Minnesota.
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Developer means Menasha Packaging Company, LLC, a Wisconsin limited liability company, its
successors and assigns.
Development Property or Property means the development property described in Schedule A
of this Agreement.
Event of Default means any of the events described in Section 8.1.
Improvements mean an approximately 123,000 square foot industrial building, together with
related and incidental improvements to be constructed by the Developer on the Property in
accordance with the approved Construction Plans.
Market Value means the market value of real property as determined by the County Assessor of
the County for real estate tax purposes.
Net Tax Increments means Tax Increments less any amount retained by the City for
administrative expenses of the Tax Increment District.
Note or Tax Increment Note means the City's Tax Increment Revenue Note in the form of the
note attached hereto as Schedule B to be issued to the Developer pursuant to Section 5.3 of this
Agreement.
Note Payment Dates means Note Payment Dates as set forth in Schedule B of this Agreement;
provided that if any such Note Payment Date should not be a Business bay, the Note Payment
Date shall be the next succeeding Business Day.
Proiect means construction of the Improvements on the Development Property.
Public Development Costs means the costs of preparing the Property for development to be
incurred by the Developer and to be reimbursed by the City through the issuance and payment of
the Note as described in Section 5.3 of this Agreement.
State means the State of Minnesota.
Tax Increments means that portion of the real property taxes paid with respect to the Property
and Improvements that is remitted to the City as tax increment pursuant to the Tax Increment
Act.
Tax Increment Act means the Tax Increment Financing Act, Minnesota Statutes, sections
469.174 through 469.1794, as amended.
Tax Increment District means Tax Increment Financing (Economic Development) District No.
18 and qualified as an economic development district under the Tax Increment Act.
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Tax Official means any City or county assessor; County auditor; City, County or State board of
equalization, the commissioner of revenue of the State, or any State or federal district court, the
tax court of the State, or the State Supreme Court.
Termination Date means the date that Tax Increment District terminates, which date is
anticipated to be December 31, 2024.
Unavoidable Delays means delays, outside the control of the party claiming its occurrence,
which are the direct result of strikes, other labor troubles, unusually severe or prolonged bad
weather, acts of God, fire or other casualty to the Project, litigation commenced by third parties
which, by injunction or other similar judicial action or by the exercise of reasonable discretion,
directly results in delays, or acts of any federal, state or local governmental unit which directly
result in delays.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties by the City. The City makes the following
representations and warranties:
(a) The City is a Minnesota municipal corporation duly organized and existing under
the laws of the State. Under the provisions of the Act and Resolution No. _ of the Authority,
the City has the power to enter into this Agreement and to perform its obligations hereunder.
(b) The Project is within a redevelopment project area within the meaning of the Act
and was created, adopted and approved in accordance with the terms of the Act.
(c) Tax Increment District is an "economic development district" within the meaning
of Minnesota Statutes, section 469.174, subdivision 12 and was created, adopted and approved in
accordance with the terms of the Tax Increment Act.
(d) The Project contemplated by this Agreement is in conformance with the
development objectives set forth in Tax Increment Financing Plan.
(e) To finance the costs of the activities to be undertaken by the City, the City shall
reimburse the Developer for the eligible site improvement costs from the Tax Increments as further
provided in this Agreement.
(0 The City has received no notice from any local, state or federal official that the activities
of the Developer or the City with respect to the Project may or will be in violation of any environmental
law or regulation (other than those notices, if any, of which the Developer have been notified). The City is
not aware of any facts, the existence of which would cause the Developer to be in violation of any local,
state or federal environmental law, regulation or review procedure, and, without any investigation or
review, the City is not aware of any violation of any local, state or federal law, regulation or review
procedure which would give any person a valid claim under the Minnesota Environmental Rights Act
or other state or federal environmental statute.
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Section 2.2. Representations and Warranties of the Developer. The Developer makes the
following representations and warranties:
(a) The Developer is a Wisconsin limited liability company and is authorized to
transact business in the State of Minnesota, and has full power and authority to enter into this
Agreement and carry out the covenants contained herein and has duly authorized the execution,
delivery and performance of this Agreement by proper action of its Board of Directors.
(b) The Developer will construct the Improvements in accordance with the terms of this
Agreement and all local, state and federal laws and regulations.
(c) The Developer will obtain or cause to be obtained, in a timely manner, all required
permits, licenses and approvals, and will meet, in a timely manner, all requirements of all applicable
local, state, and federal laws and regulations which must be obtained or met before the
Improvements may be lawfully constructed.
(d) The Developer has not received any notice or communication from any local,
state or federal official that the activities of the Developer or the City with respect to the Project
may 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 any local, state or
federal environmental law, regulation or review procedure or which would give any person a
valid claim under any of the foregoing.
(e) The construction of the Improvements would not be undertaken by the Developer,
and in the opinion of the Developer would not be economically feasible within the reasonably
foreseeable future, without the assistance and benefit to the Developer provided for in this
Agreement.
(g) 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 evidences of indebtedness, agreement or instrument of
whatever nature to which the Developer is now a party or by which the Developer is bound, or
constitutes a default under any of the foregoing.
(h) The Developer will cooperate fully with the City and the Authority with respect
to any litigation commenced with respect to the Project.
(i) The Developer agrees to pay the total amount of any costs, charges, expenses and
attorneys' fees reasonably incurred or paid at any time by City because of any Event of Default
by the Developer as to any stipulation, agreement, and covenant of this Agreement, resulting in
any suit or proceeding at law or in equity to which the City shall become a party in reference to
the Developer's interest in the Development Property or the Project.
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ARTICLE III
CONSTRUCTION OF IMPROVEMENTS
Section 3.1. Construction of Improvements. The Developer agrees that it will construct the
Improvements on the Property in accordance with the approved Construction Plans, subject to
changes approved by the City, and that it will maintain, preserve and keep those portions of the
Improvements that it owns and controls, including but not limited to all landscaping and exterior
improvements, to be maintained, preserved and kept with the appurtenances and every part and
parcel thereof, in commercially reasonable repair and condition.
Section 3.2. Construction Plans. (a) The Developer has submitted and the City and the
Authority have approved Construction Plans for the Improvements. Nothing in this Agreement
shall be deemed to limit in any way the Developer's obligation to comply with the City's normal
building construction permitting process.
(b) If the Developer desires to make any material change in any Construction Plans
after their approval by the City, the Developer shall submit the proposed change to the City
Council and the Authority Board for approval. For purposes of this Agreement, a "material"
change in the Construction Plans shall be any change that reduces the value of the
Improvements, changes the exterior appearance of the Improvements, or changes the general
nature or use of the Improvements. Any requested change in the Construction Plans shall, in any
event, be deemed approved by the City unless rejected, in whole or in part, by written notice by
the City to the Developer, setting forth in detail the reasons therefor. Such rejection shall be
made within ten (10) business days after receipt by the Executive Director of the Authority of a
written request for the change, which request shall include the proposed change in the
Construction Plans and a written narrative explaining the purpose and details of the change. No
approval of a change by the Authority under this subsection shall relieve the Developer of its
obligation to obtain the approval of the City if such approval is necessary.
Section 3.3. Commencement and Completion of Construction. Subject to Unavoidable
Delays, the Developer shall commence construction of the Improvements within thirty (30) days
following the date of this Agreement, or on such other date as the parties shall agree. Subject to
Unavoidable Delays, the Developer shall substantially complete the construction of the
Improvements within one hundred eighty (180) days after commencement of construction, or on
such other date as the parties shall agree. All work with respect to the Improvements to be
constructed or provided by the Developer on the Property shall be in conformity with the
Construction Plans as submitted by the Developer and approved by the City.
The Developer agrees for itself, its successors and assigns, and every successor in interest
to the Property, or any part thereof, that the Developer, and such successors and assigns, shall
promptly begin and diligently prosecute to completion the development of the Property through
the construction of the Improvements thereon, and that such construction shall in any event be
commenced and completed within the period specified in this Section 3.3 of this Agreement,
subject to Unavoidable Delays. Subsequent to conveyance of the Property, or any part thereof,
to the Developer, and until construction of the Improvements has been completed, the Developer
shall make construction progress reports, at such times as may reasonably be requested by the
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City, but not more than once a month, as to the actual progress of the Developer with respect to
such construction.
Section 3.4. Certificate of Comaletion. (a) Promptly after completion of the Improvements in
accordance with those provisions of the Agreement relating solely to the obligations of the
Developer to construct the Improvements, and upon request by the Developer, the City will
furnish the Developer with a certificate of completion for the Improvements in a form acceptable
for recording in the County Recorder's Office or the Office of the Registrar of Titles. The
certificate of completion shall be furnished to the Developer within ten (10) business day after
request by the Developer, and shall conclusively satisfy and terminate the agreements and
covenants in the Agreement of the Developer, and its successors and assigns, to construct the
Improvements. Such certification and such determination shall not constitute evidence of
compliance with or satisfaction of any obligation of the Developer to any Holder of a Mortgage,
or any insurer of a Mortgage, securing money loaned for construction of the Improvements, or
any part thereof.
(b) If the City shall refuse or fail to provide a certificate of completion in accordance
with the provisions of this Section 3.4 of this Agreement, the City shall, within ten (10) business
day after written request by the Developer for the certificate of completion, provide the
Developer with a written statement, indicating in adequate detail in what respects the Developer
has failed to complete the Improvements in accordance with the provisions of the Agreement, or
is otherwise in default, and what measures or acts it will be necessary, in the opinion of the City,
for the Developer to take or perform in order to obtain the certificate of completion.
(c) The construction of the Improvements shall be deemed to be completed when the
City has issued a certificate of occupancy or temporary certificate of occupancy for the
Improvements, and when all conditions imposed in connection with the City's approval of the
Developer's development, including the establishment of any completion escrow, if necessary,
have been satisfied.
ARTICLE IV
INSURANCE AND CONDEMNATION
Section 4.1. Insurance. (a) The Developer will provide and maintain or cause to be provided
and maintained at all times during the process of constructing the Improvements and, from time
to time at the request of the City, furnish the City with proof of payment of premiums on:
(i) Builder's risk or hazard 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 Improvements at the date of completion, and with coverage
available in nonreporting form on the so called "all risk" form of policy.
(ii) Commercial general liability insurance (including operations, contingent liability,
operations of subcontractors, completed operations, Broadening Endorsement
including contractual liability insurance) together with an Owner's Contractor's
Policy with limits against bodily injury and property damage of not less than
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$2,000,000.00 for each occurrence (to accomplish the above -required limits, an
umbrella excess liability policy may be used).
(iii) Worker's compensation insurance, with statutory coverage and employer's liability
protection.
(b) Upon completion of construction of the Improvements and prior to the
Termination Date, the Developer shall maintain, at its cost and expense, and from time to time at
the request of the City shall insurance binders on insurance as follows:
(i) Insurance against loss and/or damage to the Improvements under a policy or
policies covering such risk as are ordinarily insured against by similar businesses,
including (without limiting the generality of the foregoing) fire, extended
coverage, all risk vandalism and malicious mischief, boiler explosion, water
damage, demolition cost, debris removal, and collapse in an amount not less than
the full insurable replacement value of the Improvements, but any such policy
may have a deductible amount of not more than $100,000.00. No policy of
insurance shall be so written that the proceeds thereof will produce less than the
minimum coverage required by the preceding sentence, by reason of co-insurance
provisions or otherwise, without the prior consent thereto in writing by the City.
The term "full insurable replacement value" shall mean the actual replacement
cost of the Improvements (excluding foundation and excavating costs and costs of
underground flues, pipes, drains and other uninsurable items) and equipment, and
shall be determined from time to time at the request of the City, but not more
frequently than once every three years, by an insurance consultant or insurer,
selected and paid for by the Developer and approved by the City.
(ii) Comprehensive general liability insurance, including personal injury liability
(with employee exclusion deleted), and automobile insurance, including owned,
non -owned and hired automobiles, against liability for injuries to persons and/or
property, in the minimum amount for each occurrence and for each year of
$2,000,000.00, for public liability and shall be endorsed to show the City as
additional insured.
(iii) Such other insurance, including worker's compensation insurance respecting all
employees of the Developer, in such amount as is customarily carried by like
organizations engaged in like activities of comparable size and liability exposure;
provided that the Developer may be self-insured with respect to all or any part of
its liability for worker's compensation.
(c) All insurance required under this Article shall be taken out and maintained in
responsible insurance companies selected by the Developer which are authorized under the laws
of the State to assume the risk covered thereby. The Developer will deposit annually with the
City binders evidencing all such insurance, or a certificate or certificates of the respective
insurers stating that such insurance is in force and effect. Unless otherwise provided in this
Article each policy shall contain a provision that the insurer shall not cancel or modify it without
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giving written notice to the Developer and the City at least thirty (30) days before the
cancellation or modification becomes effective. Not less than fifteen (15) days prior to the
expiration of any policy, the Developer shall furnish the City evidence satisfactory to the City
that the policy has been renewed or replaced by another policy conforming to the provisions of
this Article, or that there is no necessity therefor under the terms hereof. 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 City a certificate or certificates of the respective insurers as to the amount of
coverage in force upon the Improvements.
(d) The Developer agrees to notify the City with reasonable promptness in the case of
damage to or destruction of, the Improvements or any portion thereof resulting from fire or other
casualty. In the event of any such damage or destruction, the Developer will within a reasonable
time and with due diligence repair, reconstruct and restore the 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, subject to the rights of a Holder.
The Developer shall complete the repair, reconstruction and restoration of the
Improvements, whether or not the Net Proceeds of insurance received by the Developer for such
purposes are sufficient to pay for the same. Any Net Proceeds remaining after completion of
such repairs, construction and restoration shall be remitted to the Developer.
In the event that the Improvements are damaged or destroyed so that the cost of repair or
reconstruction would exceed fifty percent (50%) or more of the value of the Improvements prior
to the event causing such damage or destruction, the Developer, in lieu of repairing or
reconstructing the Improvements, shall have the right to pay to the City the Tax Increment that
the City would have received based upon the market value and assuming that property tax
classifications and rates remain the same as when the casualty event occurred.
Section 4.2. Condemnation. In the event that title to and possession of the Improvements or
any material part thereof shall be taken in condemnation or by the exercise of the power of
eminent domain by any governmental body or other person (except the City or the Authority)
prior to the Termination Date, the Developer shall, with reasonable promptness after such taking,
notify the City as to the nature and extent of such taking. Upon receipt of any Condemnation
Award, the Developer shall use the entire Condemnation Award to reconstruct the Improvements
(or, in the event only a part of Improvements have been taken, then to reconstruct such part)
within the Tax Increment District.
ARTICLE V
TAX INCREMENT
Section 5.1. Real Property Taxes. (a) The Developer shall pay all real property taxes for the
Property in a timely manner and prior to imposition of penalty. The City shall have the right to
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institute a legal action to collect such taxes in the event that the Developer fails to pay the same
when due.
(b) The Developer agrees that prior to the Termination Date it will not take any of the
following actions to the extent that it would reduce the annual taxes generated from the Property:
(1) it will not seek administrative review or judicial review of the applicability of any tax statute
determined by any Tax Official to be applicable to the Project or the Developer or raise the
inapplicability of any such tax statute as a defense in any proceedings, including delinquent tax
proceedings; (2) it will not seek administrative review or judicial review of the constitutionality
of any tax statute determined by any Tax Official to be applicable to the Project or the Developer
or raise the unconstitutionality of any such tax statute as a defense in any proceedings, including
delinquent tax proceedings; (3) it will not cause a reduction in the Market Value of the Property
or Improvements through: (A) willful destruction of the Property, or any part thereof; (B) willful
refusal to reconstruct damaged or destroyed property pursuant to Section 4.1 of this Agreement;
(C) a request to the City assessor of the City or the county assessor of the County to reduce the
Market Value of all or any portion of the Property; (D) a petition to the board of equalization of
the City or the board of equalization of the County to reduce the Market Value of all or any
portion of the Property; (E) a petition to the board of equalization of the State or the
commissioner of revenue of the State to reduce the Market Value of all or any portion of the
Property; (F) an action in a District Court of the State or the Tax Court of the State pursuant to
Minnesota Statutes, Chapter 278, seeking a reduction in the Market Value of the Property; (G)
an application to the commissioner of revenue of the State requesting an abatement of real
property taxes pursuant to Minnesota Statutes, Chapter 270; and (H) any other proceedings,
whether administrative, legal or equitable, with any administrative body within the City, the
County, or the State or with any court of the State or the federal government. The Developer
shall not, prior to the Termination Date, apply for a deferral of property tax on the Property
pursuant to Minnesota Statutes, Section 469.181.
Section 5.2. Improvements. The parties agree that the completion of construction of Improvements
on the Development Property by the Developer is essential to the successful completion of the
Project. The Improvements are estimated to be at least $7,183,562.00. The Developer shall pay the
cost of the Improvements. The City shall reimburse the Developer, for a portion of the cost of the
Improvements, as provided in Section 5.3 hereof.
Section 5.3. Reimbursement: Tax Increment Revenue Note. The City shall reimburse the
payments made by the Developer under Section 5.2 for construction of the eligible site
improvements for the Project identified in Schedule C up to the amount specified in the Tax
Increment Revenue Note, which Note is in substantially the form attached to this Agreement as
Schedule B, and subject to the following conditions:
(a) The Note shall be dated, issued and delivered when the Developer shall have
demonstrated in writing to the reasonable satisfaction of the City that the construction of the
Project has been completed, that the Developer has incurred and paid the cost of the
Improvements, as described in and limited by Section 5.2, and that the Developer has otherwise
complied with all City requirements for the Project and the terms and conditions of this
Agreement.
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(b) The Note shall have as its maximum stated amount $626,018.00.
(c) The amounts of the Note payable by the City to the Developer shall be solely
pursuant to the formula set forth in the Note, and shall be payable solely from the Available Tax
Increments, as defined in the Note.
(d) The payment dates of the Note shall be the Note Payment Dates. On each Note
Payment Date and subject to the provisions of the Note, the City shall pay 95% of Available Tax
Increments generated by the Project and received by the City during the preceding six months.
(e) The Note shall be a special and limited obligation of the City and not a general
obligation of the City and only Net Tax Increments shall be used to pay on the Note. The
payment amounts due thereon shall be payable solely from Tax Increments from the Tax
Increment District which are paid to the City and which the City is entitled to retain pursuant to
the Tax Increment Act.
(f) The City's obligation to make payments on the Note on any Note Payment Date
or any date thereafter shall be conditioned upon the requirement that (i) there shall not at that
time be an Event of Default that has occurred and is continuing under this Agreement, (ii) this
Agreement shall not have been rescinded and (iii) the Developer has paid its' property taxes and
the City has received from the County the Tax Increments generated by the Project.
(g) The Note shall be governed by and payable pursuant to the additional terms thereof,
as set forth in Schedule B. In the event of any conflict between the terms of the Note and the terms
of this Section 5.3, the terms of the Note shall govern. The issuance of the Note pursuant and subject
to the terms of this Agreement, and the taking by the City of such additional actions as counsel for
the City may require in connection therewith, are hereby authorized and approved by the City.
Section 5.4. Duration of Tax Increment District. The Tax Increment District shall exist no
longer than through the collection, by the City, of the 2024 second half Tax Increments. The City
may choose to decertify the Tax Increment District at an earlier date if the obligations of this
Agreement have been met or an Event of Default causes the City to rescind or cancel this
Agreement.
Section 5.5. Tax Increment Reimbursement Schedule. The Developer has proposed to
construct the Improvements and in order to receive the substantial benefit of the Tax Increment
District has requested that the City establish a schedule for the reimbursement of the Tax
Increments. The City agrees to establish a nine year reimbursement schedule in substantially the
form set forth in the Note.
Section 5.6 Use of Tax Increment. The Developer acknowledges that the City has made no
warranties or representations to the Developer as to the amounts of Tax Increment that will be
generated or that the "Available Tax Increment," as defined in the Note, will be sufficient to pay
the Note in whole or in part. Nor is the City warranting that it will have throughout the term of
this Agreement and the Note the continuing legal ability under State law to apply Tax Increment
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to the payment of the Note, which continued legal ability is a condition precedent to the City's
obligations under the Note.
ARTICLE VI
BUSINESS SUBSIDY
Section 6.1. Tax Increment Financing. The Tax Increment Financing provided by the City
under this Agreement is made pursuant to the Tax Increment Financing Plan and pursuant to a
Business Subsidy under the Minnesota Statutes, Sections 116J.993 to 1161995 (the "Business
Subsidy Act").
Sections 6.2. Wage and Job Goals. Developer acknowledges and agrees that the amount of the
business subsidy granted to the Developer under this Agreement an amount not to exceed
$626,018.00 and that this business subsidy is needed because the Improvement is not sufficiently
feasible for the Developer to undertake without the business subsidy. The public purpose of the
business subsidy is to create new full-time jobs in the City of Lakeville and to enhance the tax
base. Developer agrees that it will meet the following goals (the "Goals"): (i) a net increase of
fifteen (15) new full-time jobs and retain its existing 221 full-time equivalent jobs in the City
within twenty-four (24) months of the Benefit Date at an annual wage of at least $15.00 per
hour, excluding benefits. As of the date of execution of this Agreement, Developer currently
maintains 221 full-time equivalent employee positions. Once Developer has achieved the Goals,
the Goals must be maintained for a period of at least one year. The employees filling the newly
created jobs must be filled and maintained employed, full-time, for at least one year following
the date of hire that the position is first filled.
Section 6.3. Reporting. Developer agrees to (i) report its progress on achieving the Goals to
the City until the Goals are met, or the business subsidy is repaid, whichever occurs earlier, in
accordance with Minn. Stat. Section 116J.994, subd. 7; (ii) include in the report the information
required on forms developed by the Minnesota Department of Employment and Economic
Development, and (iii) send the completed reports to the City. The Developer agrees to file
these reports no later than March 1 of each year and within thirty days after the deadline for
meeting the Goals. The City agrees that if it does not receive the reports, it will mail the
Developer a warning within one week of the required filing date. If within fourteen (14) days of
the post marked date of the warning letter the reports are not made, the Developer agrees to pay
to the City a penalty of $100.00 for each subsequent day until the report is filed up to a
maximum of $1,000, pursuant to Minn. Stat. Section I I6J.994, subd. 7(d).
Section 6.4. Continuing Obligation. The Developer agrees that it will continuously operate
the Improvements for the purposes described in the Contract for a period of at least five (5) years
from the Benefit Date.
Section 6.5. Requirements. The following requirements are required by the Business Subsidy
Act:
(a) The business subsidy is being provided for the public purposes of increasing
employment within the City and developing property that is currently vacant and underutilized.
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The subsidy is necessary to offset the high costs associated with costs associated with preparing
the Property for development. Also, absent the subsidy, the proposed development would not
occur.
(b) The subsidy is being financed with tax increment generated from the City's Tax
Increment District No. 18, an economic development tax increment district.
(c) The Developer is not receiving financial assistance from any other state or local
government agencies.
Section 6.6. Default Defined. It shall be a default under this Agreement if the Developer
fails to comply with the term or provision of this Article, and fails to cure such failure within
thirty (30) days after written notice to the Developer of the default, but only if the default has not
been cured within thirty (30) days.
Section 6.7. Remedies on Default. The parties agree that the subsidy is a forgivable loan,
repayable only if the Developer fails to fulfill its obligations under Section 6.2 of this
Agreement. Upon the occurrence of a failure to create jobs as required by Section 6.2 or a
failure to continue operations as required by Section 6.4 the Developer shall pay to the City upon
written demand from the City a "pro rata share" of the subsidy and interest on the subsidy at the
implicit price deflator as defined in Minnesota Statutes, Section 275.50, subd. 2, accrued from
the Benefit Date. The term "pro rata share" means percentages calculated as follows:
(a) if the failure relates to the number of jobs, the jobs required less the jobs created,
divided by the jobs required;
(b) if the failure relates to wages, the number of jobs required less the number of jobs
that meet the required wages, divided by the number of jobs required;
(c) if the failure relates to a failure to continue operations of the Improvements in
accordance with Section 6.4, sixty (60) less the number of months of operation (where any
month in which the Improvements are in operation for at least fifteen (15) days constitutes a
month of operation), commencing on the Benefit Date and ending with the date the Developer
ceases operation reasonably determined by the City, divided by 60; and
(d) if more than one of clauses (a) through (c) apply, the sum of the applicable
percentages, not to exceed 100%.
Section 6.8. Costs of Enforcement. Whenever any default occurs under this Agreement and
the City shall employ attorneys or incur other expenses for the collection of payments dud or for
the enforcement of performance or observance of any obligation or agreement on the part of the
Developer under this Agreement, the Developer shall be liable to the City for the reasonable fees
of such attorneys and such other expenses so incurred by the City; provided, that the Developer
shall only be obligated to make such reimbursement if the City prevails in such collection or
enforcement action.
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ARTICLE VII
PROHIBITIONS AGAINST ASSIGNMENT AND
TRANSFER. INDEMNIFICATION
Section 7.1. Prohibition Asainst Transfer of Property and Assi2nment of Amement. (a)
For the foregoing reasons the Developer represents and agrees that prior to the Termination
Date, except only by way of security for, and only for, the purpose of obtaining financing
necessary to enable the Developer or any successor in interest to the Property, or any part
thereof, to perform its obligations with respect to making the Improvements under the
Agreement, and any other purpose authorized by the Agreement, the Developer (except as so
authorized) has not made or created, and that it will not, make or create, or suffer to be made or
created, any total or partial sale, assignment, conveyance, or lease or any trust or power, or
transfer in any other mode or form of or with respect to the Agreement or the Property or any
part thereof or any interest therein, or any contract or agreement to do any of the same, without
the prior written approval of the City, which approval shall not be unreasonably withheld or
delayed.
(b) No transfer or approval by the City thereof shall be deemed to relieve the
Developer, or any other party bound in any way by this Agreement or otherwise with respect to
the construction of the Improvements, from any of its obligations with respect thereto, nor shall
Developer or any other party bound by this Agreement be released from any obligations
hereunder without the written release by the City.
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.1. Events of Default Defined. The following shall be "Events of Default" under this
Agreement and the term "Event of Default" shall mean whenever it is used in this Agreement
any one or more of the following events:
(a) Failure by the Developer to pay timely any ad valorem real property taxes or
special assessments assessed with respect to the Development Property.
(b) Failure by the Developer to cause the construction of the Project to be completed
pursuant to the terms, conditions and limitations of this Agreement.
(c) The holder of any mortgage on the Development Property or any improvements
thereon, or any portion thereof, commences foreclosure proceedings as a result of any default
under the applicable mortgage documents.
(d) Failure by the Developer to substantially observe or perform any other covenant,
condition, obligation or agreement on its part to be observed or performed under this Agreement.
(e) If the Developer shall
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(i) file any petition in bankruptcy or for any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under
the United States Bankruptcy Act of 1978, as amended or under any
similar federal or state law; or
(ii) make an assignment for the benefit of its creditors; or
(iii) admit in writing its inability to pay its debts generally as they become due; or
(iv) be adjudicated a bankrupt or insolvent; or if a petition or answer
proposing the adjudication of the Developer, as a bankrupt or its
reorganization under any present or future federal bankruptcy act or any
similar federal or state law shall be filed in any court and such petition or
answer shall not be discharged or denied within ninety (90) days after the
filing thereof; or a receiver, trustee or liquidator of the Developer, or of
the Project, or part thereof, shall be appointed in any proceeding brought
against the Developer, and shall not be discharged within ninety (90) days
after such appointment, or if the Developer, shall consent to or acquiesce
in such appointment.
(f) Failure by the City to make payments on the Tax Increment Note on the Note
Payment Dates.
Section 8.2. Remedies on Default. Whenever any Event of Default referred to in Section 8.1
occurs and is continuing, the non -defaulting parry, as specified below, may take any one or more of
the following actions after providing thirty (30) days' written notice to the defaulting party, but only
if the Event of Default has not been cured within said thirty (30) days, or if said Event of Default
cannot reasonably be cured within the time, the defaulting party fails to give assurances reasonably
satisfactory to the non -defaulting party that the Event of default will be cured within a period of time
reasonably acceptable to the non -defaulting party, but in any event not to exceed 90 days.
(a) If the Developer defaults, the City may suspend its performance under this
Agreement until it receives assurances from the Developer, deemed adequate by the City, that
the Developer will cure the default and continue its performance under this Agreement.
(b) If the Developer defaults, the City may cancel and rescind this Agreement, except
that no cancellation may be effective at any time that the Developer is proceeding in good faith to
cure the defect and/or gives reasonable assurances to the City as required in (1) above, or if there
exists a good faith dispute with the City as to an event of default as defined above, and the Developer
posts a bond or other security as reasonably adequate to cure the alleged default.
(c) If the Developer defaults, the City may take any action, including legal or
administrative action, which may appear necessary or desirable to enforce performance and
observance of any obligation, agreement, or covenant of the City under this Agreement.
(d) If the City defaults, the Developer may seek specific performance of the City's
obligations hereunder and pursuant to the Tax Increment Note.
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Section 8.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the City or the
Developer 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.
Section 8.4. No Implied Waiver. In the event any agreement contained in this Agreement
should be breached by any party and thereafter waived by any other 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.
Section 8.5. Agreement to Pay Attorney's Fees and Expenses. Whenever any Event of Default
occurs and the City or the Developer 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 other herein contained, the defaulting party agrees that
it shall, on demand therefor, pay to the other the reasonable fees of such attorneys and such other
reasonable expenses so incurred by it.
Section 8.6. Indemnification of City and Authority.
(a) The Developer releases from and covenants and agrees that the City and Authority,
and their governing body members, officers, agents, including the independent contractors,
consultants and legal counsel, servants and employees thereof (hereinafter, for purposes of this
Section, collectively the "Indemnified Parties") shall not be liable for and agrees to indemnify and
hold harmless the Indemnified Parties 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 Project, provided that
the foregoing indemnification shall not be effective for any actions of the Indemnified Parties that are
not contemplated by this Agreement, and shall not relate to any event or occurrence that is a
breach of the explicit representations or warranties of the City pursuant to this Agreement.
(b) Except for any willful misrepresentation or any willful or wanton misconduct of the
Indemnified Parties, the Developer agrees to protect and defend the Indemnified Parties, now and
forever, and 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 the
actions or inactions of the Developer (or if other persons acting on its behalf or under its direction or
control) under this Agreement, or the transactions contemplated hereby or the construction, installation,
ownership, and operation of the Project; provided, that this indemnification shall not apply to the
warranties made or obligations undertaken by the City in this Agreement or to any actions undertaken
by the City which are not contemplated by this Agreement but shall, in any event and without regard to
any fault on the part of the City, apply to any pecuniary loss or damages (including interest thereon
from the date the loss is incurred or damages is paid by the Authority at a rate equal to the "Prime Rate"
as set forth from time to time in The Wall Street Journal) as a result of the Project causing the Tax
Increment District to not qualify or cease to qualify as an "economic development district" under
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section 469.174, subdivision 10(a)(1), of the Act or to violate limitations as to the use of Tax
Increments as set forth in section 469.176, subdivision 4.
(c) All covenants, stipulations, promises, agreements and obligations of the City
contained herein shall be deemed to be the covenants, stipulations, promises, agreements and
obligations of the City and not of any governing body member, officer, agent, servant or
employee of the City, as the case may be.
ARTICLE IX
ADDITIONAL PROVISIONS
Section 9.1. Representatives Not Individually Liable. (a) No member, official, or employee
of the City shall be personally liable to the Developer, or any successor in interest, in the event
of any default or breach or for any amount which may become due to the Developer or successor
or on any obligations under the terms of the Agreement.
(b) No partner, official, or employee of the Developer shall be personally liable to the
City, or any successor in interest, in the event of any default or breach or for any amount which
may become due to the City or successor or on any obligations under the terms of the
Agreement.
Section 9.2. Restrictions on Use. (a) The Developer agrees for itself, and its successors and
assigns, and every successor in interest to the Property, or any part thereof, that the Developer,
and such successors and assigns, shall devote the Property to, and only to and in accordance
with, the uses specified in this Agreement and shall use such property solely for the uses
specified in this Agreement until the Termination Date.
(b) The Tax Increment District was created as an economic development tax increment
financing district as defined in section 469.174, subd. 12 of the Tax Increment Act. The
Developer agrees to restrict the use of the Property and Improvements so as to comply with the
restrictions on use that must be satisfied in the Tax Increment Act to allow the Tax Increment
District to continue to comply with the Tax Increment Act. Specifically, and without limiting
the foregoing, the Developer agrees that it will comply with the use restrictions contained in
Section 469.176, subd. 4c, of the Tax Increment Act and Section 469.176, subd. 7, relating to
qualified manufacturing and distribution facilities. The Developer understands that its failure to
comply with such statutory requirements may invalidate the Tax Increment District and may
impair the City's and Authority's ability to receive Tax Increment that they otherwise would
have received. In the event that there occurs a failure on the part of the Developer to comply
with the restrictions contained in the Tax Increment Act that results in liability on the part of the
City or Authority for repayment of Tax Increment or penalties or results in losses of Tax
Increment that would otherwise have been received by the City or Authority, the Developer shall
be liable to and upon demand by the City shall pay to the City the amount of such liability,
penalties or Tax Increment losses. The Developer will furnish to the City from time to time at
the request of the City documentation showing the Developer's compliance with the applicable
provisions of the Tax Increment Act. The City will not request such documentation more
frequently than annually unless it is legally required to do so.
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Section 9.3. Titles of Articles and Sections. Any titles of the several parts, Articles, and
Sections of the Agreement are inserted for convenience of reference only and shall be
disregarded in construing or interpreting any of its provisions.
Section 9.4. Disclaimer of Relationships. The Developer acknowledges that nothing contained
in this Agreement nor any act by the City or the Developer shall be deemed or construed by the
Developer or by any third person to create any relationship of third -party beneficiary, principal
and agent, limited or general partner, or joint venture between the City, the Developer and/or any
third party.
Section 9.5. Modifications. This Agreement may be modified solely through written
amendments hereto executed by the Developer and the City.
Section 9.6. Counterparts. This Agreement is executed in any number of counterparts, each of
which shall constitute one and the same instrument.
Section 9.7. Judicial Interpretation. Should any provision of this Agreement require judicial
interpretation, the court interpreting or construing the same shall not apply a presumption that
the terms hereof shall be more strictly construed against one party by reason of the rule of
construction that a document is to be construed more strictly against the party who itself or
through its agent or attorney prepared the same, it being agreed that the agents and attorneys of
both parties have participated in the preparation hereof.
Section 9.8. Termination of Agreement. Unless terminated earlier pursuant to specific
provision of this Agreement, this Agreement and the obligations of the Developer and the City
shall terminate on the Termination Date; provided, however, that any claims or causes of actions
the basis for which arose prior to the Termination shall survive such termination and nothing
herein shall be deemed as intended to limit the exercise by either party of its remedies in
connection therewith except any relevant statute of limitations. On or after the Termination Date
either party shall be entitled to receive from the other party an instrument, in recordable form
evidencing such termination.
Section 9.9. Conflicts of Interest. No member of the governing body or other official of the City
shall participate in any decision relating to the Agreement, which affects his or her personal interests
or the interests of any corporation, partnership, or association in which he or she is directly or
indirectly interested. No member, official or employee of the City shall be personally liable to the
City in the event of any default or breach by the Developer or successor or on any obligations under
the terms of this Agreement.
Section 9.10. Titles of Articles and Sections. Any titles of the several parts, articles and
sections of the Agreement are inserted for convenience of reference only and shall be
disregarded in construing or interpreting any of its provisions.
Section 9.11. Notices and Demands. Except as otherwise expressly provided in this Agreement,
a notice, demand or other communication under this Agreement by any party to any other shall
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be sufficiently given or delivered if it is dispatched by registered or certified mail, postage
prepaid, return receipt requested, or delivered personally, and
(a) in the case of the Developer is addressed to or delivered personally to Developer at:
Menasha Packaging Company, LLC
1645 Bergstrom Road
Neenah, WI 54956
Attn: Legal Department
(b) in the case of the City is addressed to or delivered personally to the City at:
City of Lakeville
20195 Holyoke Avenue
Lakeville, Minnesota 55044
Attn: City Administrator
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 other, as provided in this Section.
Section 9.12. Law Governing, This Agreement will be governed and construed in accordance
with the laws of the State of Minnesota.
IN WITNESS WHEREOF, the City and Developer have caused this Agreement to be duly
executed on or as of the date first above written.
[remainder of page intentionally left blank]
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CITY OF LAKEVILLE
Matt Little, Mayor
Charlene Friedges, City Clerk
STATE OF MINNESOTA )
(ss.
COUNTY OF DAKOTA )
The foregoing instrument was acknowledged before me this day of ,
2014, by Matt Little and Charlene Friedges, respectively the Mayor and City Clerk of the City of
Lakeville, a Minnesota municipal corporation, on behalf of the City.
Notary Public
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MENASHA PACKAGING
COMPANY, LLC
Its
STATE OF WISCONSIN )
(ss.
COUNTY OF WINNEBAGO )
The foregoing instrument was acknowledged before me this day of ,
2014, by , the of the Menasha Packaging Company, LLC,
a Wisconsin limited liability company, on behalf of the company.
Notary Public
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SCHEDULE A
Description of Property
Lot 5, Block 3, Airlake Industrial Park 1 st Addition, according to the recorded plat thereof, City
of Lakeville, Dakota County, Minnesota
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SCHEDULE B
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF DAKOTA
CITY OF LAKEVILLE
TAX INCREMENT REVENUE NOTE
(Menasha Packaging Company, LLC)
The City of Lakeville, Minnesota, (the "City"), hereby acknowledges itself to be indebted and, for value
received, hereby promises to pay the amounts hereinafter described (the "Payment Amounts") to Menasha
Packing Company, LLC (the "Developer") or its registered assigns (the 'Registered Owner"), but only in the
manner, at the times, from the sources of revenue, and to the extent hereinafter provided.
The principal amount of this Note shall be the lesser of (1) $626,018 or (2) the actual amounts incurred by the
Developer as described in Schedule C and provided with sufficient evidence to the City, as reduced to the extent
that such principal installments shall have been paid in whole or in part pursuant to the terms hereof; provided
that the sum of the principal amount listed above shall in no event exceed $626,018, as provided in that certain
Development Agreement, dated as of , 2014, as the same may be amended from time to time (the
"Development Agreement"), by and between the City, and the Developer.
The amounts due under this Note shall be payable on August 1, 2016 and on each February 1 and August 1
thereafter to and including February 1, 2025, or, if any of the preceding dates should not be a Business Day
(as defined in the Development Agreement) the next succeeding Business Day (the "Payment Dates").
However, in no event shall the City be obligated to make a payment to the Developer unless the Developer is
in full compliance with the Development Agreement. On each Payment Date the City shall pay by check or
draft mailed to the person that was the Registered Owner of this Note at the close of the last business day of
the City preceding such Payment Date Net Tax Increments received by the City following the reimbursement
to the City of reasonable administrative expenses as identified in the Development Agreement by and between
the City and Developer. All payments made by the City under this Note shall be applied to principal reduction.
The Payment Amounts due hereon shall be payable solely from tax increments (the "Tax Increments") from
Tax Increment Financing District No. 18 which are paid to the City and which the City is entitled to retain
pursuant to the provisions of Minnesota Statutes, sections 469.174 through 469.1794, as the same may be
amended or supplemented from time to time (the "Tax hicrement Act"). This Note shall terminate and be of no
fiuther force and effect following the last Payment Date defined above, on any date upon which the City or
Developer shall have terminated the Development Agreement, or on the date that all payment amounts
payable hereunder shall have been paid in full, whichever occurs earliest.
The City makes no representation or covenant, express or implied that the Tax Increments will be sufficient to
pay, in whole or in part, the amounts, which are or may become due and payable hereunder.
The City's payment obligations hereunder shall be finther conditioned on the fact that no Event of Default under
the Development Agreement shall have occurred and be continuing at the time payment is otherwise due
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hereunder, but such unpaid amounts shall become payable, without interest accruing thereon in the meantime, if
said Event of Default shall thereafter have been cured pursuant to the Development Agreement; and, further, if
pursuant to the occurrence of an Event of Default under the Development Agreement the City elects to cancel
and rescind the Development Agreement, the City shall have no further debt or obligation under this Note
whatsoever. Reference is hereby made to all of the provisions of the Development Agreement, including
without limitation Section 3.3 thereof, for a fuller statement of the rights and obligations of the City to pay the
payment amount of this Note, and said provisions are hereby incorporated into this Note as though set out in full
herein.
THIS NOTE IS A SPECIAL, LD41TED REVENUE OBLIGATION AND NOT A GENERAL
OBLIGATION OF THE CITY AND IS PAYABLE BY THE CITY ONLY FROM THE AVAILABLE
TAX INCREMENT AND SUBJECT TO THE QUALIFICATIONS STATED OR REFERENCED
HEREIN. THIS NOTE IS NOT A GENERAL OBLIGATION OF THE CITY, AND NEITHER THE
FULL FAITH AND CREDIT NOR THE TAXING POWERS OF THE CITY OF LAKEVILLE ARE
PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF THIS NOTE AND NO PROPERTY OR
OTHER ASSET OF THE CITY, SAVE AND EXCEPT THE ABOVE -REFERENCED TAX
INCREMENTS, IS OR SHALL BE A SOURCE OF PAYMENT OF THE CITY'S OBLIGATIONS
HEREUNDER
This Note is issued by the City in aid of financing a Project pursuant to and in full conformity with the
Constitution and laws of the State of Minnesota, including the Tax Increment Act.
This Note may be assigned only with the consent of the City. In order to assign the Note, the assignee shall
surrender the same to the City either in exchange for a new fully registered note or for transfer of this Note on
the registration records for the Note maintained by the City. Each permitted assignee shall take this Note
subject to the foregoing conditions and subject to all provisions stated or referenced herein.
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 have happened, and to be performed pursuant to and in the
issuance of this Note have been done, have happened, and have been performed in regular and due form, time,
and manner as required by law; and that this Note, together with all other indebtedness of the City outstanding
on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the
City to exceed any constitutional, statutory or charter limitation thereon.
IN WITNESS WHEREOF, the City of Lakeville has caused this Note to be executed by the manual
signatures of its Mayor and City Clerk of the City and has caused this Note to be issued dated
.2014.
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CERTIFICATION OF REGISTRATION
It is hereby certified that the foregoing Note, as originally issued on , 2014
was on said date registered in the name of Menasha Packaging Company, LLC, a Wisconsin Limited
Liability Company, and that at the request of the Registered Owner of this Note, the undersigned has this
day registered the Note in the name of such Registered Owner, as indicated in the registration blank
below, on the books kept by the undersigned for such purposes.
NAME AND ADDRESS OF DATE OF
REGISTERED OWNER REGISTRATION
Menasha Packaging Company, LLC
8085 220th Street West
Lakeville, MN 55044 , 2014
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SIGNATURE OF
CITY ADMINISTRATOR
SCHEDULE C
DESCRIPTION OF ELIGIBLE SITE Il"ROVEMENTS
Demolition
Grading/excavation
Soils Correction
Site Preparation
Onsite Utilities
Storm Water/Ponding
Landscaping, including irrigation
Onsite Road, Curb, Gutter, Driveway, Sidewalk and Streetscape Improvements
Reuse rail track/switch
Parking
And any other expenditure eligible to be reimbursed with tax increment revenues and approved by the
City
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