HomeMy WebLinkAboutItem 07i
January 29, 2015 Item No..
RESOLUTION APPROVING A CONTRACT FOR PRIVATE DEVELOPMENT
/BUSINESS SUBSIDY AGREEMENT WITH FULFORD GROUP LLC AND
BTD MANUFACTURING, INC.
February 2, 2015, City Council Meeting
Proposed Action
Staff recommends adoption of the following motion: Move to adopt a resolution approving the
Contract for Private Development with Fulford Group LLC and BTD Manufacturing, Inc..
Passage of this motion will result in providing Tax Increment Financing (TIF) assistance to facilitate an
expansion of the Fulford Group Warehouse facility in Airlake Industrial Park.
Overview
The Fulford Group is proposing a 199,615 square foot expansion of their 304,000 square foot
manufacturing facility located at 21350 Cedar Avenue. BTD 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 $4.3 million in ELIGIBLE site development costs
associated with the project. The proposed TIF assistance will not exceed $1,077,832 and will be
provided on a "pay -as -you -go -basis over a nine year period beginning in 2016.
BTD Manufacturing has operated in Airlake since 2005 and currently has 215 employees in three
different locations in Airlake Industrial Park. The Fulford Group Warehouse d expansion will have an
estimated market value of between $12.6 — 14.1 million afterthe proposed expansion.
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 2017 with a not -to -
exceed amount of $1,077,832. This assistance in contingent on Fulford Group completing the 199,615
square foot expansion as proposed. BTD Manufacturing is also required to create at least 100 jobs
over the next two years, and will maintain 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. 19 at the October 20, 2014 City Council meeting. The EDC recommended approval of this
contract at their January 27, 2015 meeting.
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 for Private Development / Business Subsidy Agreement
David L. Olson, Community and Economic Development Director
c: James Fulford, Dave Welte, BTD Manufacturing, Jack Matasosky, APPRO Development
Financial Impact: $ $1,077,832 Budgeted:Y/N N Source: Captured Tax Increments
Envision Lakeville Community Values: Diversified Economic Development
CITY OF LAKEVILLE
DAKOTA COUNTY, MINNESOTA
RESOLUTION NO.
RESOLUTION APPROVING THE CONTRACT FOR PRIVATE
DEVELOPMENT BY AND BETWEEN THE CITY OF LAKEVILLE AND
FULFORD GROUP LLC
AND BTD MANUFACTURING INC.
WHEREAS, by Resolution No. 14-04 dated September 22, 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 Fulford Group
LLC and BTD Manufacturing Inc. ("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. 19 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
$1,077,832 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 Fulford Group LLC and BTD Manufacturing Inc.
("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 Fulford Group
LLC and BTD Manufacturing Inc. including the business subsidy, is approved and the Mayor and
City Clerk are authorized to execute the Contract.
ADOPTED this day of , 2015, by the City Council of the City of
Lakeville.
CITY OF LAKEVILLE
Matt Little, Mayor
ATTEST:
Charlene Friedges, City Clerk
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CONTRACT FOR PRIVATE DEVELOPMENT
By and Between and Among the
CITY OF LAKEVILLE
and
FULFORD GROUP, LLC
and
BTD MANUFACTURING INC.
THIS 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
SECTION1.1 DEFINITIONS.................................................................................................................. 6
ARTICLE H
REPRESENTATIONS AND WARRANTIES
SECTION 2.1 REPRESENTATIONS AND WARRANTIES OF THE CITY ........................................ 8
SECTION 2.2 REPRESENTATIONS AND WARRANTIES OF THE DEVELOPER .......................... 9
ARTICLE III
CONSTRUCTION OF MIND" IWROVEMENTS
SECTION 3.1 CONSTRUCTION OF MINIMUM IMPROVEMENTS ................................................ 10
SECTION 3.2 CONSTRUCTION PLANS............................................................................................. 10
SECTION 3.3 COMMENCEMENT AND COMPLETION OF CONSTRUCTION ............................10
SECTION 3.4 CERTIFICATE OF COMPLETION............................................................................... 11
ARTICLE N
INSURANCE
SECTION4.1 INSURANCE.................................................................................................................. 12
ARTICLE V
TAX INCREMENT
SECTION 5.1 REAL PROPERTY TAXES........................................................................................... 14
SECTION 5.2 MINIMUM IMPROVEMENTS...................................................................................... 14
SECTION 5.3 REIMBURSEMENT: TAX INCREMENT REVENUE NOTE ..................................... 15
SECTION 5.4 DURATION OF TAX INCREMENT DISTRICT.......................................................... 15
SECTION 5.5 TAX INCREMENT REIMBURSEMENT SCHEDULE ................................................ 16
SECTION 5.6 USE OF TAX INCREMENT.......................................................................................... 16
ARTICLE VI
BUSINESS SUBSIDY
SECTION 6.1 TAX INCREMENT FINANCING............................................................. 16
SECTION 6.2 WAGE AND JOB GOALS....................................................................... 16
SECTION 6.3 REPORTING....................................................................................... 16
SECTION 6.4 CONTINUING OBLIGATION............................................................... 17
SECTION 6.5 REQUIREMENTS............................................................................ 17
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SECTION 6.6 DEFAULT DEFINED....................................................................... 17
SECTION 6.7 REMEDIES ON DEFAULT................................................................. 17
SECTION 6.8 COSTS OF ENFORCEMENT.............................................................. 18
ARTICLE VII
PROHIBITIONS AGAINST ASSIGNMENT AND TRANSFER
SECTION 7.1 PROHIBITION AGAINST TRANSFER OF PROPERTY AND ASSIGNMENT
OFAGREEMENT................................................................................ . .............. 18
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1 EVENTS OF DEFAULT DEFINED........................................................ 19
SECTION 8.2 REMEDIES ON DEFAULT.................................................................. 20
SECTION 8.3 NO REMEDY EXCLUSIVE................................................................... 20
SECTION 8.4 NO IMPLIED WAIVER....................................................................... 20
SECTION 8.5 AGREEMENT TO PAY ATTORNEY'S FEES AND EXPENSES ..................... 20
SECTION 8.6 INDEMNIFICATION OF CITY AND AUTHORITY .................................... 21
ARTICLE IX
ADDITIONAL PROVISIONS
SECTION 9.1 REPRESENTATIVES NOT INDIVIDUALLY LIABLE ................................
21
SECTION 9.2 RESTRICTIONS ON USE...................................................................
22
SECTION 9.3 TITLES OF ARTICLES AND SECTIONS
................................................
22
SECTION 9.4 DISCLAIMER OF RELATIONSHIPS......................................................
22
SECTION 9.5 MODIFICATIONS
.............................................................................
22
SECTION 9.6 COUNTERPARTS.................................................. . ..........................
22
SECTION 9.7 JUDICIAL INTERPRETATION.............................................................
23
SECTION 9.8 TERMINATION OF AGREEMENT
.........................................................
23
SECTION 9.9 CONFLICTS OF INTEREST..................................................................
23
SECTION 9.10 NOTICES AND DEMANDS................................................................
23
SECTION 9.11 LAW GOVERNING
..........................................................................
24
TESTIMONIUM................................................................................................... 24
SIGNATURES.................................................. ........................................... 25, 26, 27
SCHEDULES
SCHEDULE A - DESCRIPTION OF PROPERTY......................................................... 29
SCHEDULE B - TAX INCREMENT REVENUE NOTE ......................................... . ....... 30
SCHEDULE C - DESCRIPTION OF ELIGIBLE SITE MINIMUM IMPROVEMENTS............ 33
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CONTRACT FOR
PRIVATE DEVELOPMENT
THIS AGREEMENT, made as of the day of , 2015, by
and between and among the CITY OF LAKEVILLE, a Minnesota municipal corporation (the
"City"), FULFORD GROUP, LLC, Minnesota limited liability company ("Fulford" or
"Developer"), and BTD MANUFACTURING, INC., a Minnesota corporation ("BTD").
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 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. 19 (the "Tax Increment District")
pursuant to an approved Tax Increment Financing Plan ("TIF Plan") for the Tax Increment
District; and
WHEREAS, Fulford owns property within the City of Lakeville and leases the facility
located on the property to BTD;
WHEREAS, BTD desires to expand its facility and Fulford has agreed to acquire
additional property and expand the facility to accommodate BTD's expansion;
WHEREAS, there has been presented by Fulford and BTD to the City and the Authority
for their consideration a proposal for the development of an approximately 199,615 square foot
industrial/warehouse facility expansion constructed on land within the Tax Increment District
currently owned by Fulford and additional property to be acquired by Fulford and leased to
BTD;
WHEREAS, Fulford and BTD are parties to a Lease Agreement dated February 28,
2013, as amended, ("Lease") whereby Fulford has agreed to construct the improvements
contemplated under this Contract and BTD has agreed to reimburse Fulford for the
improvements with any subsidy applied to BTD as a rent credit;
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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, pursuant to Minnesota Statutes, Sections 1161993 to 116J. 995, as
amended (the "Business Subsidy Act") the City is authorized to grant business subsidies to
facilitate development in the City and the State of Minnesota; and
WHEREAS, by Resolution No. , dated 2015, 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 Fulford in the development of the property and expansion
of the BTD operations the City is prepared to reimburse Fulford using tax increment on a pay-as-
you-go basis for certain costs of development; and
WHEREAS, by 2015, 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 I 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; and
WHEREAS, the requirements of the Business Subsidy Law, Minnesota Statutes, Section
116J.993 through 1161995 apply to this Agreement; and
WHEREAS, the Authority has adopted criteria for awarding business subsidies that
comply with the Business Subsidy Law, after a public hearing for which notice was published;
and
WHEREAS, pursuant to the Business Subsidy Law, the City has designated this
Agreement as a subsidy agreement in connection with the subsidy provided under this
Agreement.
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:
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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.
Aareement means this Agreement, as the same may be from time to time modified, amended or
supplemented.
Authorily 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.
Benefits means health, dental, life and long-term disability insurance, profit sharing, retirement
contributions by BTD, clothing allowance, tuition reimbursement or direct pay for education
expense, vacation and sick time (hourly value), child care subsidy, average bonuses and other
quantifiable, non -mandated benefits, but excludes state or federally mandated benefits such as
social security, unemployment insurance and workers compensation insurance.
Benefit Date means the date of this Agreement.
BTD means BTD Manufacturing, Inc., a Minnesota corporation.
Business Day 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.
Business Subsidy Act means Minnesota Statutes, Sections 116.993 to 116J.995, as amended.
City means the City of Lakeville, Minnesota.
Construction Plans means the plans, specifications, drawing and related documents for the
construction work to be performed on the Property which have been submitted to and approved
by the City Council of the City.
Coun means Dakota County, Minnesota.
Developer means Fulford Group, LLC, a Minnesota limited liability company, its permitted
successors and assigns.
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Development Property, or Provertv Provemeans the development property described in Schedule A
of this Agreement.
Event of Default means any of the events described in Section 5.1.
Fulford means Fulford Group, LLC, a Minnesota limited liability company.
_Minimum Improvements mean an approximately 199,615 square foot industrial/warehouse
building expansion, together with related and incidental improvements to be constructed 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 Proceeds means, in the case of an insurance award, the proceeds paid by an insurer to the
Developer under a policy or policies of insurance required to be provided and maintained by
Developer pursuant to Article IV of this Agreement and remaining after deducting all expenses
(including reasonable attorney fees) incurred in the collection of such proceeds.
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 substantially in the
form attached hereto as Schedule B to be issued to Fulford 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 Day, the Note Payment
Date shall be the next succeeding Business Day.
Proiect means construction of the Minimum 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 Increment means the tax increments derived from the TIF District which have been
received and retained by the City in accordance with the provisions of Minnesota Statutes,
Section 469.177, or otherwise pursuant to the Tax Increment Act, to the extent not otherwise
pledged to other obligations within the TIF District.
Tax Increment Act or TIF Act means the Tax Increment Financing Act, Minnesota Statutes,
Sections 469.174 through 469.1794, as amended.
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Tax Increment District or TIF District means Tax Increment Financing (Economic
Development) District No. 19 and qualified as an economic development district under the Tax
Increment Act.
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.
Tenant means BTD Manufacturing, Inc., a Minnesota corporation.
Termination Date means the earlier of (a) December 31, 2024; (b) the date the Note has been
paid in full, defeased or terminated in accordance with its terms; or (c) the date of termination of
the Note and this Agreement by the City due to an Event of Default as set forth in Section 8.1
hereof.
Unavoidable Delays means delays beyond the reasonable control of the party seeking to be
excused as a result thereof which are the direct result of war, terrorism, strikes, other labor
troubles, fire or other casualty to the Minimum Improvements, litigation commenced by third
parties which, by injunction or other similar judicial action, directly results in delays, or acts of
any federal state or local governmental unit (other than the City in exercising its rights under this
Agreement) which directly result in delays. Unavoidable Delays shall not include delays in the
Developer's and/or Property Owner's obtaining of permits or governmental approvals necessary
to enable construction of the Minimum Improvements by the date such construction is required
under Section 3.3 of this Agreement, unless (a) Developer and/or Property Owner has timely
filed any application and materials required by the City for such permit or approvals and (b) the
delay is beyond the reasonable control of the Developer and/or Property Owner.
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.
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(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.
Section 2.2. Representations and Warranties of the Developer. The Developer makes
the following representations and warranties:
(a) The Developer is a limited liability company duly organized and in good standing
under the laws of the State of Minnesota, 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 officers.
(b) The Developer will construct the Minimum Improvements, and will operate and
maintain the Minimum Improvements, in accordance with the terms of this Agreement and all
applicable local, state and federal laws and regulations (including, but not limited to, environmental,
zoning, building code and public health laws and regulations) subject to Developer's right to contest
the same pursuant to applicable law.
(c) The Developer will use commercially reasonable efforts to obtain, in a timely
manner, all required and applicable 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 Minimum Improvements may be lawfully constructed, subject to
Unavoidable Delays.
(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 Minimum 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, but for the assistance and benefit to the Developer provided for in
this Agreement.
(f) 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.
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(g) The Developer will cooperate fully with the City and the Authority with respect
to any litigation commenced by any third party with respect to the Project.
(h) 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.
ARTICLE III
CONSTRUCTION OF MRgMUM IMPROVEMENTS
Section 3.1. _ Construction of Minimum Improvements. The Developer agrees that it will
construct or cause construction of the Minimum Improvements on the Property in accordance
with the approved Construction Plans, subject to changes approved by the City. Developer
further agrees that all times through the Termination Date it will operate, maintain, preserve and
keep the respective components of the Minimum Improvements or cause such components to be
operated, maintained, preserved and kept with the appurtenances and every part and parcel
thereof, in good 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 Minimum 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 the Construction Plans or
any component thereof after their approval by the City, the Developer shall submit the proposed
change to the City and the Authority for approval. For purposes of this Agreement, a "material"
change in the Construction Plans shall be any change that reduces the value of the Minimum
Improvements, changes the exterior appearance of the Minimum Improvements, or changes the
general nature or use of the Minimum 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 City 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.
(a) Subject to Unavoidable Delays, the Developer shall commence construction, or
cause commencement of construction, of the Minimum Improvements within thirty (30) days
after approval of this Agreement, or on such other date as the parties shall agree. Construction is
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considered to be commenced upon the beginning of physical improvement to the Property,
including grading, excavation or other physical site preparation work.
(b) Subject to Unavoidable Delays, the Minimum Improvements must be
substantially completed by December 31, 2015 or on such other date as the parties shall agree.
(c) All work with respect to the Minimum Improvements to be constructed or
provided by the Developer and/or Property Owner on the Property shall be in conformity with
the Construction Plans as submitted by the Developer and/or Property Owner and approved by
the City.
(d) 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 Minimum 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. Until construction of the Minimum
Improvements has been completed, the Developer or BTD shall make construction progress
reports, at such times and in such detail as may reasonably be requested by the 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 Completion.
(a) Promptly after substantial completion of the Minimum Improvements in
accordance with those provisions of the Agreement relating solely to the obligations of the
Developer to construct the Minimum Improvements, and upon request by the Developer, the
City will furnish the Developer with a certificate of completion for the Minimum 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 days 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 Minimum 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
days 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 Minimum 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.
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(c) The construction of the Minimum Improvements shall be deemed to be completed
when the City has issued a certificate of occupancy or temporary certificate of occupancy for the
Minimum 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
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 Minimum Improvements an All Risk Broad
Form Basis Insurance Policy and, from time to time during that period, at the request of the City,
furnish the City with proof of payment of premiums on policies covering the following:
(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 Minimum Improvements at the date of completion, and with
coverage available in nonreporting form on the so called "all risk" form of policy.
The interest of the City shall be protected in accordance with a clause in form and
content satisfactory to the City;
(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
$2,000,000.00 for each occurrence and shall be endorsed to show the City as an
additional insured (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 Minimum Improvements and prior to the
Termination Date, the Developer shall maintain, or cause to be maintained, at its cost and
expense, and from time to time at the request of the City shall provide insurance binders on
insurance as follows:
(i) Insurance against loss and/or damage to the Minimum 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 Minimum Improvements.
The term "full insurable replacement value" shall mean the actual replacement
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cost of the Minimum 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) Commercial general public 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. The Developer shall give written
notice to the City at least thirty (30) days before the effective date of any cancellation or
modification which reduces the coverage provided below the amounts required herein. 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 Minimum Improvements.
(d) The Developer dgrees to notify the City with reasonable promptness in the case of
damage exceeding $500,000 in amount to, or destruction of, the Minimum 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, or cause the repair, reconstruct or restoration of the Minimum
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 or repay
the TIF Note payment Developer received under Section 5.3.
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The Developer shall complete the repair, reconstruction and restoration of the Minimum
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.
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 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 Minimum 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. Minimum Improvements. The parties agree that the acquisition of additional property
and completion of construction of Minimum Improvements on the Development Property by the
Developer is essential to the successfUl completion of the Project. The estimated cost of land
acquisition and construction of the Minimum Improvements is estimated to be at least
$14,198,321.25. The Developer shall pay the cost of acquisition and construction of the Minimum
Improvements. The City shall reimburse the Developer, for a portion of the cost of the Minimum
Improvements, as provided in Section 5.3 hereof.
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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 Minimum
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.
(b) The Note shall have as its maximum stated amount $1,077,832.00.
(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 ninety-five percent
(95%) of Available Tax Increments generated by the Project and received by the City during the
preceding six (6) 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
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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 Minimum 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
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 1161993 to 116J.995 (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 is an amount not to exceed
$1,077,832.00 and that this business subsidy is needed because the acquisition of a portion of the
Development Property and construction of the Minimum Improvements are 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") through its lease with
Tenant: (i) BTD agrees it will provide a net increase of one hundred (100) new full-time
equivalent jobs and retain its existing two hundred fifteen (215) full-time equivalent jobs in the
City within twenty-four (24) months of the Benefit Date at an annual wage of at least $14.00 per
hour, excluding benefits. As of the date of execution of this Agreement, BTD currently
maintains two hundred fifteen (215) full-time equivalent employee positions. Once BTD 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 employed, full-time, for at least one year
following the date of hire.
Section 6.3. Reporting. BTD agrees to (i) report BTD's 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 1161994, 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. BTD agrees to file these reports
no later than March 1 of each year and within thirty (30) days after the deadline for meeting the
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Goals. The City agrees that if it does not receive the reports, it will mail the Developer and BTD
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, BTD agrees to pay to the City a
penalty of One Hundred Dollars ($100.00) for each subsequent day until the report is filed up to
a maximum of One Thousand Dollars ($1,000.00), pursuant to Minn. Stat. Section 116J.994,
subd. 7(d).
Section 6.4. Continuing Obligation. The Developer and BTD agree that they will
continuously operate the Minimum 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.
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. 19, an economic development tax increment district.
(c) Neither the Developer nor BTD are 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 either the
Developer or BTD fail 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 and BTD 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 and BTD fail to fulfill the 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 BTD 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;
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(c) if the failure relates to a failure to continue operations of the Minimum
Improvements for the purposes described in this Contract in accordance with Section 6.4, sixty
(60) less the number of months of operation (where any month in which the Minimum
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 operation is ceased, as reasonably
determined by the City, divided by sixty (60); and
(d) if more than one of clauses (a) through (c) apply, the sum of the applicable
percentages, not to exceed one hundred percent (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 due or for
the enforcement of performance or observance of any obligation or agreement on the part of the
Developer and BTD under this Agreement, the Developer and BTD 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 and BTD shall only be obligated to make such reimbursement if the City
prevails in such collection or enforcement action.
ARTICLE VTI
PROHIBITIONS AGAINST ASSIGNMENT AND TRANSFER
Section 7.1. Prohibition Against Transfer of Property and Assignment of Agreement.
(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 Minimum 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 parry bound in any way by this Agreement or otherwise with respect to
the construction of the Minimum 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.
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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 or BTD 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
(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
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 as required under this Contract.
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Section 8.2. Remedies on Default. Whenever any Event of Default referred to in Section 8.1
occurs and is continuing, the non -defaulting party, 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 parry 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 ninety (90) days.
(a) If the Developer or BTD default, the City may suspend its performance under this
Agreement until it receives assurances from the Developer or BTD, deemed adequate by the
City, that the Developer or BTD will cure the default and continue its performance under this
Agreement.
(b) If the Developer or BTD defaults, the City may cancel and rescind this Agreement,
except that no cancellation may be effective at any time that the Developer or BTD is proceeding in
good faith to cure the defect and/or gives reasonable assurances to the City as required in (a) above,
or if there exists a good faith dispute with the City as to an event of default as defined above, and the
Developer or BTD posts a bond or other security as reasonably adequate to cure the alleged default.
(c) If the Developer or BTD 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 or BTD may seek specific performance of the
City's obligations hereunder and pursuant to the Tax Increment Note.
Section 8.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the City,
Developer or BTD 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 parry, 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, Developer or BTD 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.
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Section 8.6. Indemnification of City and Authority.
(a) The Developer and BTD release from and covenant and agree 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 and BTD agree 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 BTD (or if other persons acting on their behalf or under their
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 section 469.174, subdivision 12, 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 BTD, 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 BTD or their successor or on any
obligations under the terms of the Agreement.
(b) No partner, official, or employee of the Developer or BTD shall be personally
liable to the City, or any successor in interest, in the event of any default or breach or for any
21
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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 Minimum 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 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.
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, BTD 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.
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179074v4
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, ETD 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
each party shall be entitled to receive from any 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. 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
be sufficiently given or delivered if it is dispatched by
(a) in the case of the Developer is addressed to or delivered personally to Developer at:
Fulford Group, LLC
13651 Dunbar Way
Apple Valley, Minnesota 55124
Attn: James M. Fulford
(b) in the case of ETD is addressed to or delivered personally to ETD at:
ETD Manufacturing, Inc.
1111 13th Avenue S.E.
Detroit Lakes, Minnesota 56501
Attn: Kristi Flyen
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(c) 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 9.11. 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]
24
179074v4
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 ,
2015, 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
25
179074v4
FUL O"Chief
LC
By
6 pits Manager
r
STATE OF )
r (SS.
COUNTY OF
'The foregoing instrument was acknowledged before me this
2015, by James M. Fulford, the Chief Manager of the Fulford Group. LLC_
liability company, on behalf of the company.
C;�iNuli
day oJ"V4
a Minnesota limit
Adrtrme Workman, Notary Public
ADRIE NE WORKMAN
My 00mmission expires 4-3-2017
179074v4 26
BTD MANUFACTURING, INC.
BY
Its: V fp o 1" F ;"`n G"� C
AMY KATHLEEN PRUSSIA
STATE OF MINNESOTA Notary Public
} �_' Minnesota
(ss. ' � Mr comm. Expires
COUNTY OF
Jan 31, 2016
The foregoing instrument was acknowledged before me this -13 day of J�1 dluLt
2015, by !'�r, y _. i.Vki, I -(Z the y f-inyye—of BTD Manufacturing, Inc.,
Minnesota corporation, on behalf of the corporation.
Noublic
27
1790744
MORTGAGE HOLDER CONSENT
TO
CONTRACT FOR PRIVATE DEVELOPMENT
TRANSAMERICA FINANCIAL LIFE INSURANCE COMPANY, a New York corporation,
which holds a mortgage on the subject property, the development of which is governed by the foregoing
Contract for Private Development, agrees that the Contract for Private Development shall remain in full force
and effect even if it forecloses on its mortgage.
Dated this day of , 2015.
TRANSAMERICA FINANCIAL
LI
LM
STATE OF -1� w z )ss. )
COUNTY OF L.c n n )
0
The foregoing in tru nt was acknowledged before me thiel day of
2015, by zaV-r\ n r r the of
Transamerica Financial Life Insurance Company, a New York corporation, on behalf of said corporation.
Notary Public
DRAFTED BY:
CAMPBELL, KNUTSON
Professional Association
317 Eagandale Office Center
1380 Corporate Center Curve
Eagan, MN 55121
Telephone: 651-452-5000
AMP:cjh
28
179074v4
< <� TERI R. CRAVEN
Commission Number 138915
My Commission Expires
March 13, 2016
SCHEDULE A
Description of Property
Leizal Description of Existing Land
Lot 1, Block 1, Toro Second Addition Airlake Industrial Park, according to the recorded plat
thereof, Dakota County, Minnesota.
Legal Description of Expansion Land
Beginning at the southeast corner of Lot 1, Block 1, Toro Second Addition Airlake Industrial
Park, Dakota County, Minnesota, according to the recorded plat thereof; thence South 89
degrees -59 minutes 35 seconds East, assumed bearing, along the easterly extension of the south
line of said Lot 1 a distance of 760.02 feet; thence North 00 degrees 26 minutes 22 seconds East
a distance of 674.02 feet; thence North 89 degrees 59 minutes 35 seconds West a distance of
110.00 feet; thence South 00 degrees 26 minutes 22 seconds West a distance of 44.00 feet;
thence North 89 degrees 59 minutes 35 seconds West a distance of 630.02 feet to the northeast
corner of said Lot 1; thence South 00 degrees 26 minutes 22 seconds West, along the east line of
said Lot 1, a distance of 630.02 feet to the point of beginning.
The Existing Land and Expansion Land are to be re -platted as:
Lot 1, Block 1, Fulford Group 1" Addition
29
179074v4
SCHEDULE B
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF DAKOTA
CITY OF LAKEVILLE
TAX INCREMENT REVENUE NOTE
(Fulford Group, 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 Fulford
Group, 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) $1,077,832.00 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 $1,077,832.00, as
provided in that certain Development Agreement, dated as of , 2015, as the same may
be amended from time to time (the "Development Agreement"), by and between the City, Developer and BTD
Manufacturing, Inc.
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. 19 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 Increment Act"). This Note shall terminate and be of no
further 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.
30
179074A
The City's payment obligations hereunder shall be further 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
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, LIMITED 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
.2015.
Matt Little, Mayor
31
1790744
Charlene Friedges, City Clerk
CERTIFICATION OF REGISTRATION
It is hereby certified that the foregoing Note, as originally issued on , 2015
was on said date registered in the name of Fulford Group, LLC, a Minnesota 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
Fulford Group, LLC
13651 Dunbar Way
Apple Valley, MN 55124 2015
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179074v4
SIGNATURE OF
CITY ADMINISTRATOR
SCHEDULE C
DESCRIPTION OF ELIGIBLE SITE MINIMUM IMPROVEMENTS
A. Land acquisition
B. Land development fees, costs
C. Site development:
a. Demolition
b. Excavation
c. Utilities — includes connection to
Met Council sanitary sewer line
d. Asphalt paving
e. Concrete curb
f. Landscaping
BTD office/dock Warehouse
Expansion Expansion
$ 0.00
$1,800,000
$ 0.00
$
366.650
$ 9,400
$
0.00
$ 45,000
$
558,563
$ 40,000
$
450,000
$ 33,331 $ 868,677
$ 4,400 $ 49,950
8,500 $ 45,000
$140,631 $4,138,840
Total Office/Dock and Warehouse Expansion - $4,279,471
Note - East road to Hwy 50 — deferred