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HomeMy WebLinkAbout08-25-15t�" ake';'1e AGENDA Economic Development Commission August 25, 2015 — 4:30 p.m. City Hall, Marion Conference Room 1. Call to order 2. Approval of May 26, 2015 minutes 3. Review of Tax Increment Financing (TIF) Application and State Job Creation Fund and Minnesota Investment Fund applications for the SSB Manufacturing Company 4. Review of Minnesota Investment Fund Application for Post Holdings Division Headquarters Project 5. Directors Report 6. Adjourn Attachments - July Building Permit Report • July 2015 BATC Building Activity Report • Minnesota News Release regarding Mendell, Inc. 6-17-2015 • "Lakeville unveils details of Post deal," Sun ThisWeek, 6-25-2015 • "Small firms laud end of Mennesota capital -equipment sales tax rebate program," 7-5-2015 • MINNPOST, "Tax and spin: Most families in Wisconsin, it turns out, would save on taxes by moving to Minnesota," 8-17-2015 • "Suburbs embrace tax subsides as Minneapolis' interest fades," StarTribune, 8-17-2015 • "What's driving new optimism in industrial real estate?" Minneapolis/St. Paul Business Journal, 8-3-2015 • "Texas company pays $12.1 M for Lakeville retail center," 7-20-2015 • "Motivated buyers sparked Twin Cities metro home sales to a record pace in June," StarTribune 7-14-2015 • "Apartment boom in Twin Cities begins shift to suburbs," StarTribune 7-28-2015 Item No. 6' CITY OF LAKEVILLE ECONOMIC DEVELOPMENT COMMISSION MEETING MINUTES May 26, 2015 1. Chair Starfield called the meeting to order at 4:30 p.m. in the Marion Conference Room at City Hall. Members Present: Comms. Starfield, Longie, Collman, Rajavuori, Matasosky, Emond, Sherer, Smith, Vlasak, Ex -officio member City Administrator Justin Miller Members Absent: Comms. Gillen, Ex -officio members Roche and Mayor Little Others Present: David Olson, Community & Economic Development Director; Rick Howden, Economic Development Specialist. 2. Approval of April 28, 2015 meeting minutes Motion Comms. Matasosky/Smith moved to approve the minutes of the April 28, 2015 meeting as presented. Motion carried unanimously. 3. Presentation of Dakota Countywide Broadband Study City Administrator Justin Miller gave a brief background on a working group of City Administrator and Managers focused on fiber infrastructure. The group is focused on positioning Dakota County to be competitive in economic development with enhancing its fiber infrastructure. Neighboring counties had made significant investments in fiber infrastructure early on and saw an increase in major economic development projects. Mr. Miller distributed a map showing known existing fiber networks in Dakota County. Mr. Miller explained that the next steps include entering into a Joint Powers Agreement with Dakota County and the other cities to agree to move forward. In the meantime, the City has been working with the County when road construction projects are taking place to incorporate a design -once process to incorporate the necessary infrastructure to accommodate fiber throughout the City. 4. Review of Proposed TIF Plan for TIF District No. 20 for Mendell Inc. Expansion Mr. Olson stated that Mendell Inc. contacted the City recently and presented plans for a 18,700 square foot expansion of their building located at 21463 Grenada Avenue . Mendell is a medical device manufacturing company and is experiencing considerable growth and needs to add additional manufacturing and warehouse space to their existing building. The company has submitted a request for Tax Increment Financing (TIF) to assist with the $360,000 in eligible site improvement costs associated with the project. Mendell has operated in Airlake since 2003 and currently has 94 employees. In addition to retaining the existing 94 jobs in Lakeville, the proposed expansion will create an additional 12-25 jobs. The City Council reviewed this proposed TIF project at the April 27th Work Session and the EDC reviewed this request at the April 28th meeting and both recommended proceeding with the necessary steps to create a new TIF District for the project. Mr. Olson also pointed out that Exhibit III indicates, the estimated net amount of increment that will be available over the life of the proposed TIF District for Mendell is approximately $156,000. This is based on the County Assessor's Office estimate market value of $1,047,000 for the proposed expansion. It also assumes a 3% market value inflator which may or may not occur. Additionally, the assistance will be provided on a pay-as-you-go reimbursement basis each year after the property taxes have been paid by Mendell. Mr. Olson explained that this request will go to the Dakota County Board of Commissioners on June 2nd for their opportunity to comment. Following that meeting, the Lakeville City Council will hold a public hearing on June 15th, in which a recommendation from the EDC would be included. Motion Comms. Longie/Emond moved to recommend approval of the Tax Increment Financing Plan for Tax Increment Financing District No. 20 to the City Council. Motion carried. Comms. Matasosky abstained due to his firm's involvement in the project. 5. Update on Post Holdings Headquarters Announcement Mr. Olson provided an update on the summary of the discussions with Post since the announcement as well as the next steps to be taken by both the City and the State of Minnesota on this job retention project. 6. Review Strategic Plan for Economic Development 2015 Work Program Mr. Howden presented an updated version of the 2015 Strategic Plan for Economic Development Work Program. Included in this version are target dates that have been identified for each activity. With no objections, staff will utilize the presented work program for the remainder of 2015. 7. Director's Report Mr. Olson reviewed the Director's Report. Because of the significant increase in building permit activity, the City Council recently authorized the hiring of an additional Plans Examiner/Building Inspector position. The person that was hired for this position started this past Monday, May 18tH It was announced at the May 13th Downtown Lakeville Business Association meeting that Metro Equity is in discussions with a restaurant operator and micro brewer regarding a proposed brew pub to be located in the former VFW building in Downtown Lakeville. The project, if it proceeds, will involve considerable renovation of the interior of the former VFW and will also include the construction of an outdoor patio. The City was notified in late April that the joint City/Chamber of Commerce/School District's application to the Frontier Communications America's Best Communities was not selected to be a quarter finalist. There were 347 cities that applied in states served by Frontier Communications and only the City of Chisago was selected to move on in the process. While Lakeville was not selected, there was still considerable benefit from going through the application process in partnership with the Chamber of Commerce and School District. City staff recently participated in a meeting coordinated by Greater MSP with a national site selector and a major national manufacturer looking to locate a regional manufacturing in Minnesota. Representatives of the Minnesota Department of Employment and Economic Development were also in attendance. They expect to make a location decision sometime this summer. The City recently issued a building permit and construction will be starting soon on the expansion of Applied Power Products (APP) located at the intersection of Lakeville Boulevard and Heron Way. The expansion involves a 43,900 square foot expansion of the Company's existing 70,000 square foot building. 8. Adjourn Meeting adjourned at 5:40 p.m. Respectfully submitted by Rick Howden, Economic Development Specialist Item No. City of Lakeville Community & Economic Development Memorandum To: Economic Development Commission From: David L. Olson, Community and Economic Development Director Copy: Justin Miller, City Administrator Rick Howden, Economic Development Specialist Mikaela Huot, Springsted Inc. John Shoffner, DEED Gene Goddard, Greater MSP Chris Shastock, CBRE Dan Salzer, Scannell Properties Date: August 21, 2015 Subject: SSB Manufacturing Company Tax Increment Financing Request SSB Manufacturing Company has submitted an application for Tax Increment Financing. The proposed project is a 240,000 square foot manufacturing and warehouse facility. SSB Manufacturing is the company that manufactures Serta and Simmons mattresses and is the #1 mattress manufacturer in the United States. The facility would be the company's first manufacturing site in Minnesota. SSB Manufacturing is pursuing this project because of projected growth and heightened demand and the project also incorporates new automation technology which is the first of it's kind in the industry. This has resulted in SSB undertaking a major restructuring of their manufacturing footprint in the United States including the consolidation of facilities and establishing new regional manufacturing sites. The estimated development cost of the project is $15.7 million and it is proposed to be located on a 23 acre site in the new Interstate South Logistics Park located in the southwest corner of Co. Rd. 70 and Dodd Blvd (see attached site plan.) The project would be a build -to - suit -to -lease project with Scannell Properties constructing the building and leasing it back to SSB Manufacturing. The project will result in the creation of 200 new jobs in Lakeville and the State of Minnesota. The average starting wage is $36,100 ($17.35 per hour) excluding benefits. These jobs will be quality positions that are not manual labor jobs but rather will require automation experience based on the new investments in advanced machinery. The total investment in machinery and equipment for this project is $10 Million in addition to the $15.7 million project construction cost. The SSB Manufacturing Tax Increment Financing (TIF) application is seeking TIF assistance in the amount of $1,645,929 which is identified as the financing gap in the project. The total amount of TIF eligible costs for the project is estimated at $7.7 million. Springsted Inc., the City's financial consultant, has prepared a Draft TIF Plan for the project based on the $15.7 million construction cost / market value estimate. Springsted also used an assumption of 25% project completion in 2015 and 100% completion of construction by the end of 2016 and a 3% market value increase each year. Based on these assumptions, Springsted estimates that providing 95% of the available increment to the project would result in a maximum amount of $1,607,350 that would be available in pay-as-you-go TIF reimbursements beginning in 2017 and ending 2025 for TIF eligible project costs. The City designated most of Airlake Industrial Park as a Redevelopment Project Area in 1984 and has approved a number of TIF Districts for various projects over the years. The primary purpose of designating this redevelopment project area was to provide the impetus for private development, maintain and increase employment, and to increase the tax base for the City. Interstate South Logistics Park is not currently located within the Airlake Redevelopment Project Area. It is proposed in the proposed TIF Plan for this project that the current Airlake Redevelopment Project Area be amended to include the Interstate South Logistics Park in order to create a new TIF District for this project. Representatives of SSB Manufacturing are also working with the Minnesota Department of Employment and Economic Development (DEED) on Minnesota Investment Fund and Job Creation Fund applications. If approved, these two programs could provide up to $2 million of additional assistance for this project. A DEED representative will be at the EDC Meeting. Staffs analysis of this proposed project indicates that it is consistent with the City's Business Subsidy and TIF policies, and thus recommends approval of the proposed level of financial assistance for SSB Manufacturing Company. Representatives of Greater MSP will also be in attendance at the EDC Meeting. Greater MSP has assisted SSB Manufacturing and its representative from the CBRE Office in Chicago on the site selection process. The City Council is scheduled to discuss this project at the September 8th HRA Meeting and is scheduled to hold a public hearing on this proposed TIF Project on Monday, September215t ACTION REQUESTED Provide any questions or comments on the proposed TIF Application for SSB Manufacturing Company and forward a recommendation to the City Council. ' Gr�r,�r�r��rr�,nTl��rm����rrrrr�mr�r< �,.r1i.if " mi III till I] I III lip 1111 1 ' D 1 iF j i• IIILLL __ll _ � 1_ I _ �. law � ;r a i r� -p r j ) MJTI 1{lil {j�jj ;illl�7j7?(l fTTi�fi�iTllTah' 7111III#IIIIll l Iw.r•- �rw W W_J c In Ilk CITY OF LAKEVILLE TAX INCREMENT FINANCING APPLICATION PROJECT: 1. Business Name: SSB Manufacturing Company Address: 3560 Lenox Rd., Suite 1100 Atlanta, GA 30326 Telephone: 770-206-2722 Contact: Ronald Richmond 2. Brief description of the business: Today, under one ownership Serta and Simmons are the #1 mattress manufacturers in the United States and are one of the most recognized home furnishing brands in the marketplace. Serta is a privately held company, owned by 6 licensees and represented by 23 manufacturing facilities in the U.S. and four in Canada. In addition, Serta is distributed internationally in more than 150 other countries. With its worldwide network, Serta is able to respond quickly to customers' needs while still preserving strict control standards to ensure the highest quality products. Today, Simmons manufactures and distributes premium branded bedding products principally to retail and hospitality customers throughout the United States, Canada and Puerto Rico. Products are distributed through a diverse base of furniture stores, specialty sleep shops, department stores and mass merchandisers. 3. Present ownership of the site: Scannell Properties 4. Proposed project: Building square footage, size of property, description of buildings — materials, etc.: approximately 240,000 SF manufacturing/warehouse facility with 15,000 SF of main office plus 2,000 SF of warehouse office. The building will be a double - loaded building on an approximately 23 acre site. The building will consist of a thirty foot (28'-0") clear conventional steel frame building with load bearing precast walls and either a ballasted EPDM membrane or a TPO roof. $ l OM of new automated machinery & equipment is planned for the facility. GENERAL BUILDING SPECS. 1. Total building — 240,000 SF 2. Warehouse — 225,000 SF 2.1 Warehouse office space —1,000 SF 2.2 Warehouse bathroom —1,000 SF 3. Main office —15,000.00 SF 3. 1 Convertibal Show room — 6,000 SF 3.2 Office Space — 4,200SF 3.3Kitchen/ Break room — 3,404SF 3.4 Bathrooms- 1,400SF 4. Building clear height — 28' minimum 5. Number of Docks- 40 6. Number of Ramp docks with oversized door — 1 minimum 7. Number of Tractor trailer Parking spaces - 130 8. Number of employee Parking Spaces -200 5. Total Estimated Project Costs: a. Land Acquisition $2,304,324 b. Site Development $1,870,026 C. Building Cost $8,388,421 d. Soft Costs $2,621,239 e. GC General Conditions $575,419 f. M&E $10,000,000 Total $25,759,429 6. Estimated Project Costs Eligible for TIF Assistance (i.e. Acquisition, Demolition, Site Improvements, Utilities, Streets): a. Building Costs $1,352,800 b. Site Improvements $1,870,026 C. Acquisition $2,304,324 d. Streets (217"' St) $556,500 e. Impact/Permit/Development Fees $1,621,239 Total $7,704,889 7. PLEASE SUBMIT PROJECT PROFORMAS SHOWING NEED FOR ASSISTANCE (I.E. WITH ASSISTANCE AND WITHOUT). 2 Bankisj Equity State Local Gov't Other Total Property Acquisition $2,300,000 $2,300,000 Site Improvement 51,930,000 51,930,000 New Construction $8,500,000 $8,500.000 Renovation of an Existing Building $0 Purchase of Machinery 5$.000,000 $1,000,000 $10,000,000 & Equipment Infrastructure 5 t ,500,000 51, 500,000 Other: 52,500,000 Other{) Other. ,500,000 Other: $575.000 $575.000 Total Project Cost $0 $24,865000 $1.600.000 51,500,000 50$27.305,000 2 8. Total Estimated Market Value at completion: $15.7M 9. Estimated real estate taxes upon completion: $TBD 10. Source of Financing a. Equity $24,113,500 b. Bank Loan $0 C. TIF (Gap) $1,645,929 Total $25,759,429 11. Amount of Assistance (Estimated Gap):$1,645,929 12. Type of Assistance Requested (Upfront or Pay -as -you -Go): PAYG 13. Name & Address of architect, engineer, and general contractor: GC: RJ Ryan Construction or Rochon Construction Architect: Pope Architect or Lampert Engineer: Sambatek 14. Project construction schedule: a. Construction Start Date August 17 2015 b. Construction Completion Date July 12016 15. State specific reasons why assistance is necessary for the project (the "but for" test). This is a "multi -site" project, if located in Minnesota it represents a new expansion of SSB Manufacturing. If located outside of the State of Minnesota the project would represent an expansion of an existing SSB facility, e.g. new automation technology and equipment to enhance the existing facility's operational capacity. Projected growth, heightened demand, and a new investment in automated manufacturing which is the first of its kind in the industry has resulted in the undertaking of a major restructuring of their manufacturing footprint, including consolidation of facilities and establishing new manufacturing sites. This assistance will facilitate the project occurring in Lakeville — neither site has public infrastructure existing and the TIF support makes the development feasible. Over a 10 -year period, the cost of a new expansion in Minnesota versus the new capital investment at an existing out of state facility is an additional $11.19M. The cost gap is primarily related to labor costs. Incentives have not yet been included in these figures. The TIF incentive would help reduce the overall cost of this option and improve the likelihood of this expansion occurring in Minnesota. The company has an existing facility that could receive new capital investment in machinery and equipment and they 3 are considering making a continued investment in its existing operation outside of the State of MN. 16. Please indicate how the project would meet one or more of the following: Economic Development goals; creation of jobs that pay wages adequate to support households, job retention, or tax base expansion. This project represents the creation of 200 net new jobs to the State of Minnesota and the City of Lakeville with an average starting salary of $36,100 with full benefits package. These jobs are high-quality positions and are not manual labor but rather require automation experience based on the new investments in advance machinery. Total investment in the build -to -suit facility is $15.7M in addition to $ l OM in new machinery and equipment. Thus, the project creates new jobs, investment, and therefore an expansion of the local and state tax base. 17. Municipal Reference (if applicable). Please name any other municipalities wherein the applicant, or other corporations the applicant has been involved with, has completed developments within the last five years. 18. Additional Comments: The company is conducting a national footprint realignment of their entire manufacturing portfolio. This project represents the company's first entrance from a location perspective into the State of Minnesota, e.g. 100% this project represents all net new job creation and capital investment for one of the company's premier automated facilities. 19. Submit this form along with an initial $500 nonrefundable application fee. An additional fee of $5,500 will need to be submitted should the request for assistance proceed. ADDITIONAL DOCUMENTATION AND CHECKLIST Applicants will also be required to provide the following documentation. All personal financial information will be kept private and confidential. ® 1. Written business plan or a description of the business, ownership/ management, date established, products and services, and future plans. ® 2. Two year financial projections, or if housing project, or leased space, include a 10 -year operating pro -forma. ® 3. Letter of commitment from other sources of financing, stating terms and conditions of their participation in the project. ® 4. Initial nonrefundable application fee of $500, with a $5,500 fee to follow should the request for assistance proceed. In addition to defraying the cost of staff time, the fee will be used to pay costs associated with processing this request for financial assistance such as legal, engineering and financial analysis. The City reserves the right to stop the processing of the request until additional fees are paid should the original amount be insufficient to pay such costs. That portion which remains unspent, if any, will be returned only if the project is denied approval. ® 5. Attach the following documentation: Attached Part 1 - Corporation/Partnership Description N/A Part 2 - List of Shareholders/Partners Attached Part 3 - Description of Project Attached Part 4 - But For Analysis 4 N/A Part 5 — List of Prospective Lessees Attached Part 6 — Legal Description, Property Identification Numbers, maps of the project area, and project renderings Attached Part 7 — Public Purpose Narrative Attached Part 8 — Sources & Uses of Funds — Additional Information The undersigned certifies that all information provided in this application is true and correct to the best of the undersigned's knowledge. The undersigned authorizes the City of Lakeville to check credit references, verify financial and other information, and share this information with other political subdivisions as needed. The undersigned also agrees to provide any additional information as may be requested by the City after the filing of this application. Applicant Na e S 5/5 Z l*%,WFnGnm, Date Its ' _ _1 r1 k4 -, "-;r-e - - - - The company is seeking to establish a new manufacturing facility as it continues to upgrade and invest in advanced equipment and facilities across its entire national footprint. The company is looking to site this new facility in a market that offers not only customer access but also provides the ability to attract talent and offers lower operating costs. US durable goods manufacturers' shipments of furniture and related products, an indicator of mattress production, rose 7.6% year-to-date in March 2015 compared to the same period in 2014. US retail sales for furniture and home furnishings stores, a potential measure of demand for mattresses, increased 4.6% in the first four months of 2015 compared to the same period in 2014. With the two mattress makers under one ownership umbrella, Serta and Simmons anticipated significant growth. 2051_001.pdf a. SIMMONS HISTORY i. Today, Simmons manufactures and distributes our premium branded bedding products principally to retail and hospitality customers throughout the United States, Canada and Puerto Rico. We sell our products through a diverse base of furniture stores, specialty sleep shops, department stores and mass merchandisers. We also license our intellectual property to international companies that manufacture and sell Simmons premium branded products throughout the world. ii. 1870, Zalmon G. Simmons opened his first factory in Kenosha, Wisconsin. He started out by manufacturing wooden telegraph insulators and cheese boxes. He branched into making bedsprings after receiving a patent for a woven -wire bedspring in payment of a debt. In 1876, Simmons became the first manufacturer to mass- produce woven wire mattresses. This process helped the company produce beds faster and cheaper, and by 1889, with the introduction 5 of spiral coil springs into woven mattresses, Simmons' mattress prices dropped from $12 to 95 cents, making mattresses more widely affordable. The business was incorporated in 1884 as the Northwestern Wire Mattress Company, adopting Simmons Manufacturing Company as its name in 1889. By 1891 it was the largest company of its kind in the world. iii. 1876 - Zalmon G. Simmons changed an entire industry with his decision to mass-produce woven wire mattresses. iv. 1920 - Simmons created a nationwide service -station program under which retail stores could only carry samples of Simmons products but the customer would receive direct delivery from the Simmons warehouse within 24 hours. v. 1925 Simmons' engineer, John Franklin Gail, invented a machine that could mass-produce the coils and insert them into fabric 'encasements'. This made mass -production of the previously luxury - only product possible. vi. Equipment developed by Simmons in 1925 automated the process of coiling wire and inserting it into fabric sleeves, called encasements. This allowed mass production of pocketed coils, a type of coil that previously was available only in very high-priced luxury mattresses. The pocketed coil is the basis for the Simmons Beautyrest mattress brand, which was introduced in 1925. Although the new manufacturing technology greatly reduced its cost, at the time of its introduction a Beautyrest mattress sold for $39.50, three to four times more than the typical price for a standard wire mattress. vii. 1929 - Simmons used some of the most sensational testimonials in advertising history, including gratis testimonials from such giants as Henry Ford, H.G. Wells, Thomas Edison, Guglielmo Marconi and George Benard Shaw viii. 1940, Simmons introduced the Hide -A -Bed, a sofa that incorporates a fold -out spring and mattress that pull out to form a bed. This was to become one of the company's best known products and was manufactured until the 1980s. During World War II, Simmons' facilities were diverted to military production, making cots, parachutes, bazooka rockets and other products. By the post-war year of ix. 1947, the company was back in the mattress business and started using advertising to associate its products with the Hollywood glamor of actresses including Dorothy Lamour and Maureen O'Hara. x. A research and development facility was established in Munster, Indiana, in 1957, building upon pioneering studies on human sleep behavior that Simmons had sponsored in the 1930s. In 1958, the company became the first U.S. mattress maker to produce mattresses in king and queen sizes, an innovation that was promoted as solving the "space battle in the bedroom". xi. 1995, Simmons launched a commercial for the Simmons Beautyrest using the 'bowling ball' demonstration. The demonstration remains a registered trademark. xii. 2001 - Simmons introduces the first new mattress size in 42 years. The Olympic Queen mattress was developed to be a full six inches larger - that's 10% more sleeping space than a queen size mattress, but made to fit on a traditional queen frame. 0 xiii. 2004 - Simmons introduced the HealthSmart Bed, the best mattress for a clean and healthy sleep environment. Now you can wash away stains, germs, bacteria, dust mites, odors, and perspiration just like when you clean your sheets. xiv. 2006 - The famous Beautyrest mattress is made even more luxurious with the introduction of the Beautyrest Black mattress. The new line features enhancements in opulent fabrics, foam layers and stronger, motion dampening coil spring technology. b. SERTA HISTORY i. For more than 80 years, Serta has been making consistent investments into the highest quality and most innovative features to ensure that every mattress set we manufacture delivers superior comfort and support. Throughout its history, Serta has been an industry leader, offering many product "firsts" — including the world's first-ever "tuftless" mattress. Today, Serta is proud to offer a variety of exclusive features including our breakthrough Cool ActionTM Gel Memory Foam available in our iComfort® and iSeries® mattresses. ii. Today, Serta is #1 mattress manufacturer in the United States and one of the most recognized home furnishing brands in the marketplace. Serta is a privately held company, owned by 6 licensees and represented by 23 manufacturing facilities in the U.S. and four in Canada. In addition, Serta is distributed internationally in more than 150 other countries. With its worldwide network, Serta is able to respond quickly to customers' needs while still preserving strict control standards to ensure the highest quality products. iii. National Bedding Company, LLC (NBC) is the largest shareholder of Serta, Inc. and the largest of the 6 Serta, Inc. licensees, with 18 manufacturing plants in the United States and 3 in Canada. Headquartered in Hoffman Estates, IL, the state-of-the-art NBC headquarters provides critical services to all of Serta's licensees including product development, national brand building and marketing programs and national account management. iv. NBC is owned and managed by Serta Simmons Bedding, LLC, which also owns Simmons Bedding Company (SBC). NBC has primary responsibility for its competing brands of Serta®, including Perfect Sleeper®, iComfort®, iSeries®, Perfect Day®, Sertapedic® and its portfolio of licensed products while SBC is responsible for its competing brands of Beautyrest®, Beautyrest Black®, ComforPedic® and BeautySleep®. v. Under Serta Simmons Bedding's leadership, NBC and SBC compete in the marketplace, but work together where joint activities will achieve efficiencies, enhance sales or provide better products and services to customers. vi. Company History vii. 2014 viii. Serta introduces all-new iComfort and iSeries mattresses featuring Serta's breakthrough Cool ActionTM Dual Effects® gel memory foam. ix. Serta launches its VIP Rewards program, a consumer loyalty program that allows members to earn up to $1,000 towards their next Serta mattress purchase. 7 x. The "Always Comfortable" campaign for iComfort is introduced. xi. Seita is named the Most Recommended Brand in America with the 2014 Women's Choice Award®. xii. 2013 xiii. Serta expands its iComfort® gel memory foam mattress collection with iComfort DirectionsTM featuring 4 exclusive technologies designed to balance comfort, support and temperature regulation.* xiv. *The Acumen Firm model features 3 of the 4 exclusive technologies. xv. 2012 xvi. Seita expands its Cool ActionTM Gel Memory Foam technology into the innerspring category with its new iSeries® technology, which combines the Cool Action material with an advanced coil innerspring. The new technology becomes available in Trump HomeTM, Perfect Day® and select Serta® brand mattresses. xvii. Serta becomes the #1 mattress manufacturer in the United States. xviii. 2011 xix. Serta introduces a breakthrough in memory foam technology with its new iComfort® Sleep System featuring Cool ActionTM gel memory foam, designed to provide enhanced cooling comfort and extra support where you need it most. xx. Serta partners with the renowned Bellagio hotel to launch the Bellagio at Home® mattress collection, built to the high quality and comfort standards of the Bellagio. xxi. 2000-2010 xxii. Serta introduces the Serta Counting Sheep as the reluctant brand icons. The Counting Sheep eventually win a Gold Effie and are named Advertising Icon of the Year in 2008. xxiii. Serta becomes the first national mattress brand to offer a flame- retardant system in its mattresses. xxiv. Serta launches the Vera Wang by Serta® mattress collection. (The line is no longer in production) xxv. Serta launches the Trump HomeTM mattress collection in partnership with the Trump Organization. xxvi. Serta redesigns its flagship mattress, the Perfect Sleeper, with input from the National Sleep Foundation, and it becomes the Official Mattress of the National Sleep Foundation. xxvii. The Serta Perfect Sleeper and the iComfort Sleep System are named Consumers Digest Best Buys. xxviii. 1990s xxix. "We Make the World's Best MattressTM" campaign is launched. xxx. 1980s xxxi. Progress marches on! Serta now has 43 manufacturing plants in six countries and 34 licensees. xxxii. Another industry first! Serta introduced a continuous coil innerspring in its Serta Perfect Sleeper line that provided better support to the shoulders, back and hips. xxxiii. 1970s xxxiv. Serta was first to introduce a plusher Pillow Soft® mattress. This new construction countered the theory that you needed a hard mattress for proper back support. xxxv. 1960s xxxvi. Americans are sleeping on Serta in droves. 39 plants and over $70 million in sales. xxxvii. 1950s xxxviii. Serta slants advertising toward growing trend in health consciousness. xxxix. In response to consumer demand for firmer mattresses, the Sertapedic line is introduced with the tagline: "You sleep ON it, not in it." xl. 1940s xli. The company name evolves to Serta, Inc. xlii. 1930s xliii. Original Guardian Knight, Sleeper Products, Inc. is formed as a consortium of 13 independent mattress manufacturers. That same year, they produced the industry's first tuftless innerspring mattress. It was the world's first most comfortable mattress of many to come. xliv. Company changes its name to Serta Sleeper Products and moves corporate headquarters from Philadelphia to Chicago. 2. Financials a. Embedded are consolidated financial statements. SSB had a split year in 2012 due to the acquisition by Advent. These are consolidated financial statements that include all companies as we do not prepare company specific financials n Q3 2012 Serta 2012 Serta Simmons Serta Simmons Serta Simmons b. Simmons Holdings FinHoldings LLC Financia Bedding LLC 2013 FinBedding, LLC 2014 Fir 3. Owner's equity 4. Fee 5. Additional Detail a. Part I i. All companies are 100% owned except for Serta, Inc. This is the entity used for the Serta brand national accounts and approximately 18 % is owned by the Serta independent licensees. ii. On October 1, 2012, controlling interest of Serta Simmons Bedding, LLC (67%) was acquired by Advent International Corporation with the existing shareholders retaining the remaining interest. b. Part III i. The company is seeking to establish a new manufacturing facility as it continues to upgrade and invest in advanced equipment and facilities across its entire national footprint. The company is looking to site this new facility in a market that offers not only customer access but also provides the ability to attract talent and offers lower operating costs. ii. Project Shore represents at 240,000 square foot build -to -suit manufacturing facility. The company is considering a 10 year lease at the finalist location. The estimated costs to construct the facility is $15.7M; however, the final costs will depend on the final location. Additionally, the company plans to spend $ l OM on new automated machinery and equipment. The final site under consideration is 23 acres. As part of this project the company intends to hire 200 net new jobs in the State of MN with an average starting salary (e.g. year 1) of $36,100, excluding benefits. These jobs are high-quality positions 9 and are not manual labor but rather require automation experience based on the new investments in advance machinery. The Company has no existing presence in the state. c. Part IV i. Project Shore would not occur without TIF assistance and that the market value of the TIF Development (Project Shore) will be higher than would occur on the site if TIF were not used. ii. This is a "multi -site" search project, if located in Minnesota it represents a new expansion of SSB Manufacturing. If located outside of the State of Minnesota the project would represent an expansion of an existing SSB facility, e.g. new automation technology and equipment to enhance the existing facility's operational capacity. Projected growth, heightened demand, and a new investment in automated manufacturing which is the first of its kind in the industry has resulted in the undertaking of a major restructuring of their manufacturing footprint, including consolidation of facilities and establishing new manufacturing sites. This assistance will facilitate the project occurring in Lakeville since the proposed site currently does not have public infrastructure existing and the TIF support makes its development feasible. Over a 10 -year period, the cost of a new expansion in Minnesota versus the new capital investment at an existing out-of-state facility is an additional $11.19M. The cost gap is primarily related to labor costs. Incentives have not yet been included in these figures. The TIF incentive would help reduce the overall cost of this option and improve the likelihood of this expansion occurring in Minnesota. The company has an existing facility that could receive new capital investment in machinery and equipment and they are considering making a continued investment in its existing operation outside of the State of MN. in. d. Part VI i. Property Identification Number: 22 03100 75 010 and 22 03200 50 010 ii. Legal Description: All that part of the Southeast Quarter (SE 1/4) of Section Thirty-one (31), Township One Hundred Fourteen (114) North, Range Twenty (20) West of the Fifth Principal Meridian, Dakota County, Minnesota lying westerly of the highway known as Dodd Boulevard; and also all that part of the Southwest Quarter (SW 1/4) of Section Thirty-two (32), Township One Hundred Fourteen (114) North, Range Twenty (20) West, Dakota. County, Minnesota, lying westerly of the highway known as Dodd Boulevard. 10 11 Part VII — Public Purpose Narrative - Project Shore will (1) result in increased employment and (2) result in preservation and enhancement of the tax base. Project Shore represents at 240,000 square foot build -to -suit manufacturing facility. The company is considering a 10 year lease at the finalist location. The estimated costs to construct the facility is $15.7M; however, the final costs will depend on the final location. Additionally, the company plans to spent $ l OM on new automated machinery and equipment. The final sites under consideration are 23 acres. As part of this project the company intends to hire 200 net new jobs in the State of MN with an average starting salary (e.g. year 1) of $36,100, excluding benefits. These jobs are 12 high-quality positions and are not manual labor but rather require automation experience based on the new investments in advance machinery. The Company has no existing presence in the state. Part VIII — Sources and Uses 13 Bank(s) Equity State local Gov't Other Total Property Acquisition 52,300,000 52„300,000 Site Improvement $1,930,000 $1,930,000 New Construction $8.500.000 58,500,000 Renovation of an Existing Building $0 Purchase of Machinery & Equipment $s,000,000 51,000,000 $10,000,000 Infrastructure 51,SOC,,000 $” „500,000 Other: $2,500,000 71�1thu ,500,000 Other: $575,000 $575,000 Total Project Cost SC $24,805,000 $1,000.000 51,500,000 $0 $27,305,000 13 City of Lakeville, Minnesota Housing and Redevelopment Authority for the City of Lakeville Tax Increment Financing Plan for Tax Increment Financing (Economic Development) District No. 21 ithin Airlake Redevelopment Project No.1 (SSB Manufacturing Company/Scannell Properties) Draft Dated: August 21, 2015 Public Hearing Scheduled: September 21, 2015 Anticipated Approval Date: September 21, 2015 Prepared by: SPRINGSTED INCORPORATED 380 Jackson Street, Suite 300 St. Paul, MN 55101.2887 (651) 223-3000 WWW.SPRINGSTED.COM TABLE OF CONTENTS PART LAKEVILLE AIRLAKE REDEVELOPMENT PLAN MODIFICATION NO. 10 I. INTRODUCTION AND LEGAL BASIS A. Statement of Intent of Modification.....................................................................................1 B. Statement of Public Purpose............................................................................................1 C. Project Area Boundary...................................................................................................1 D. Statement of Authority....................................................................................................1 II. REDEVELOPMENT PROJECT A. Redevelopment Plan Objectives.......................................................................................1 B. Land Use.................................................................................................................... 2 C. Development Standards................................................................................................. 2 D. Environmental Controls.................................................................................................. 2 E. Redevelopment Activities................................................................................................ 2 1. City Activities -Original Plan 2. City Activities - Plan Modification 3. Private Activities - Original Plan F. Project Cost Estimates................................................................................................... 3 G. Relocation................................................................................................................... 3 H. Development Contracts.................................................................................................. 3 I. Operation of Public Improvements.................................................................................... 3 J. Administriation of Project................................................................................................ 4 K. Modification Plan.......................................................................................................... 4 PARTI............................................................................................................................................................... EXHIBIT TABLE OF CONTENTS (Continued) PART II TAX INCREMENT FINANCING PLAN NO. 21 Section A. Definitions...................................................................................................................5 B. Statutory Authorization.................................................................................................. 5 C. Statement of Need and Public Purpose.............................................................................. 5 D. Statement of Objectives.................................................................................................. 5 E. Designation of Tax Increment Financing District as an Economic Development District .................. 6 F. Duration of the TIF District............................................................................................... 6 G. Property to be Included in the TIF District............................................................................ 6 H. Property to be Acquired in the TIF District........................................................................... 7 I. Specific Development Expected to Occur Within the TIF District ............................................... 7 J. Findings and Need for Tax Increment Financing................................................................... 7 K. Estimated Public Costs................................................................................................... 9 L. Estimated Sources of Revenue........................................................................................ 9 M. Estimated Amount of Bonded Indebtedness......................................................................10 N. Original Net Tax Capacity............................................................................................. 10 0. Original Tax Capacity Rate............................................................................................ 10 P. Projected Retained Captured Net Tax Capacity and Projected Tax Increment ............................11 Q. Use of Tax Increment...................................................................................................11 R. Excess Tax Increment..................................................................................................12 S. Tax Increment Pooling and the Five Year Rule...................................................................12 T. Limitation on Administrative Expenses.............................................................................13 U. Limitation on Property Not Subject to Improvements - Four Year Rule ...................................... 13 V. Estimated Impact on Other Taxing Jurisdictions..................................................................14 W. Prior Planned Improvements..........................................................................................14 X. Development Agreements............................................................................................. 14 Y. Assessment Agreements.............................................................................................. 15 Z. Modifications of the Tax Increment Financing Plan.............................................................. 15 AA. Administration of the Tax Increment Financing Plan............................................................. 15 AB. Financial Reporting and Disclosure Requirements............................................................... 16 Page(s) Map of the Tax Increment Financing District within Redevelopment Project Area ............................. EXHIBIT I AssumptionsReport........................................................................................................................... EXHIBIT II Projected Tax Increment Report......................................................................................................... EXHIBIT III Estimated Impact on Other Taxing Jurisdictions Report..................................................................... EXHIBIT IV Market Value Analysis Report............................................................................................................. EXHIBIT V Housing and Redevelopment Authority for the City of Lakeville and City of Lakeville, Minnesota PART MODIFICATION NO. 10 TO AIRLAKE REDEVELOPMENT PROJECT INTRODUCTION AND LEGAL BASIS Section A Statement of Intent of Modification The City proposes to implement the plan objective listed in Section II.A.3 of the Original Redevelopment Plan approved by the Authority and Council in 1984. The activity objective primarily includes the expansion of the project boundary to include the proposed SSB Manufacturing Company/Scannell Properties Project TIF 21 as well as certain Airlake public Improvements. Section B Statement of Public Purpose No Change The Authority and Council find that there is a need to provide impetus for private development, maintain and increase employment, and to increase tax base for the taxing jurisdiction within the City's corporate limits. These public purpose goals are not attainable in the foreseeable future without the intervention of the Authority and City in the normal development process. Section C Project Area Boundary The modification dated September 21, 2015 includes the addition of properties within the current Project Area boundaries to further meet the City's Redevelopment Plan objectives. The expanded boundaries of the Project area (including those added with the modification) are shown in Exhibit "I" "Project Area Boundary Map". All land included in the Project Area is within the legal boundaries of the City Section D Statement of Authority No Change The Authority is authorized to modify a project pursuant to Minnesota Statutes Sections 469.001 to 469.047 (the HRA Act) within boundaries of municipalities. The project as contemplated by this Plan consists of a Redevelopment Project in the HRA Act, pursuant to Section 469.002, Subdivision 14 and Minnesota Statutes, Section 469.028, Subdivision 3. II. REDEVELOPMENT PROJECT Section A Redevelopment Plan Objectives No Change The Authority and City, through the implementation of this Plan, seek to achieve the following objectives: 1. To provide logical and organized land use for the Project Area consistent with the Comprehensive Land Use Plan and the zoning ordinance of the City. SPRINGSTED Pagel Housing and Redevelopment Authority for the City of Lakeville and City of Lakeville, Minnesota 2. To promote the prompt development of property in the Project Area with a minimal adverse impact on the environment 3. To provided adequate streets, utilities, and other public improvements and facilities to enhance the Project Area and the City for new and existing development. 4. To enhance the project Area and the City and surrounding area by retaining current, and providing additional employment opportunities for the residents of the City and surrounding community. 5. To increase the City's tax base. 6. To afford existing business in the City the opportunity to expand or relocate within the Project Area. 7. To stimulate development and investment within the project Area by private interest by providing land of suitable size and configuration to permit it's economic and appropriate development. Section B Land Use No Change 1. Current use: a. The project is partially vacant and undeveloped and used for both industrial and farming purposes. The Area is principally Zoned 1-1 and 1-2, which provides for the establishment of warehousing, light and heavy industrial and manufacturing development. 2. Future Land Use: a. It is anticipated that the Project Area will develop consistent with existing zoning districts. The uses of the Project Area proposed are consistent with the Plan, the Lakeville Comprehensive Plan, and, to the knowledge of the City and Authority at this time, all other federal state and local laws and regulation. Section C Development Standards The Authority and City will consider, among other things, the following factors when evaluating development proposals in all phases: 1. Degree to which development objectives are provided for or enhanced. 2. Consistency with this Plan and the Lakeville Comprehensive Plan. 3. Ability of proposed tax increment projects to generate enough annual tax increment to retire the debt created by the project. 4. Developer's ability to perform both from a standpoint of financial ability to perform and the necessary experience and expertise to complete the proposed development. 5. Displaced Project Area property owners and tenants will be given priority over competing projects of similar scale and magnitude. Section D Environmental Controls It is presently anticipated that the proposed development in the Project Area will not present major environment problems. All municipal actions, public improvements, and private development will be carried out in a manner that will comply with applicable environmental standards. Then environmental controls to be applied within the Area are contained within the codes an ordinance of the City of Lakeville. The Minnesota Code of Agency Rules (6 MCAR 3.021-3.056) defines Minnesota's environmental policy. The threshold factor for the industrial/commercial projects on second class cities is 1,000,000 square feet (gross floor area). Projects above this threshold would require an Environmental Impact Statement. There are no properties on the National Historic Register of Historic Places within the Project Area. Section E Redevelopment Activities SPRINGSTED Housing and Redevelopment Authority for the City of Lakeville and City of Lakeville, Minnesota The Authority and the City proposes to implement this plan in phases. The activities of this Plan are described as follows: 1. City Activities — Original Plan a. To acquire the land from the current owners and dedicate the land to an acceptable developer for the purposes of constructing a 150,000 square foot office, warehouse and manufacturing facility. 2. City Activities — Plan Modification a. A full discussion of the proposed City Activities can be found in Tax Increment District No. 4, 13, 14, 15, 16, 17, 18 and 19 Plans prepared by the City's consultant(s) and is hereby adopted by reference. 3. Private Activities — Original plan a. Phase One (TIF# 4) included a major private development project— Please see TIF #4 Plan. b. Phase Two (TIF #13) included a major private development project - Please see TIF #13 Plan. c. Phase Three (TIF #14) included a major private development project — Please see TIF #14 Plan. d. Phase Four (TIF #15) included a major private development project — Please see TIF #15 Plan. e. Phase Five (TIF #16) included a major private development project. — Please see TIF #16 Plan. f. Phase Six (TIF #17) — Please see TIF #17 Plan g. Phase Seven (TIF #18) — Please see TIF # 18 Plan h. Phase Eight (TIF #19) — Please see TIF # 19 Plan i. Phase Nine (TIF #20) — Please see TIF #20 Plan j. Phase Ten (TIF #21) — Please see TIF #21 Plan Section F Project Cost Estimates A full description of project costs is provided in Tax Increment Financing District No.21 project budget. Section G Relocation No Change Phase One of the Plan requires no relocation. In subsequent phases where development proposals require the acquisition of either commercial, industrial or residentially occupied parcels of land, the displaced party or parties shall be eligible for and receive those relocation benefits in conformance with the Minnesota Uniform Relocation Act. Minnesota Statutes, Section 117.50-56. The relocation plan will be part of any tax increment financing plan that provides for acquisition and subsequent displacement. Section H Development Contracts No Change The City and Authority will not authorize any public improvement or facilities projects nor acquire any property for development which will be wholly or partially funded by the use of tax increment financing without first having secured development contracts. The Development Contracts shall require the developer to among other things, cause to be constructed an industrial facility of at least a specified minimum cost, and having a specified minimum Assessor's Market Value; to complete the work by a specified date pursuant to plans and specifications submitted to and building permits issued by or on behalf of the City, and pursuant to an and in accordance with all other applicable governmental regulations; and to demonstrate its financial capability for doing so. Section I Operation of Public Improvements SPRINGSTED Page 3 Housing and Redevelopment Authority for the City of Lakeville and City of Lakeville, Minnesota No Change All public improvements constructed under the provisions of this program shall be operated by the City of Lakeville in the same manner as all publicly owned streets and utilities. Section J Administration of Project No Change The Lakeville Housing Authority shall be responsible for seeing that contents of this plan are promoted, implemented and enforced. The Executive Director shall be delegated day by day responsibilities while the Board of Directors shall make all policy regarding the Project Area. Administrative maintenance activities will be funded out of tax increment revenue and other HRA funds. Section K Modification of Plan No Change Modifications or revisions of this Plan which change the permitted uses; modify the Project Area Boundary; set forth, revise, or modify and Developers Contract with respect to any part of the Project or terminate all or any part of the Project require approval of such modifications by the Authority and the City, upon notice and other public hearing as required for the adoption of this Plan and in accordance with Section 462.525, Subdivision 6 of the Act. SPRINGSTED Page 4 Housing and Redevelopment Authority for the City of Lakeville and City of Lakeville, Minnesota PART II TAX INCREMENT FINANCING PLAN NO. 21 Section A Definitions The terms defined in this section have the meanings given herein, unless the context in which they are used indicates a different meaning: "Authority" means the Housing and Redevelopment Authority for the City of Lakeville. "City" means the City of Lakeville, Minnesota; also referred to as a "Municipality". "City Council" means the City Council of the City; also referred to as the "Governing Body". "County" means Dakota County, Minnesota "Redevelopment Project Area" means Airlake Redevelopment Project No. 1 in the City, which is described in the corresponding Redevelopment Plan. "Redevelopment Plan" means the Redevelopment Plan for the Redevelopment Project Area. "Project Area" means the geographic area of the Redevelopment Project Area. "School District" means Independent School District No. 194, Minnesota. "State" means the State of Minnesota. "TIF Act" means Minnesota Statutes, Sections 469.174 through 469.1794, both inclusive. "TIF District" means Tax Increment Financing (Economic Development) District No. 21 "TIF Plan" means the tax increment financing plan for the TIF District (this document). Section B Statutory Authorization See Section I.D. of the Redevelopment Plan for the Redevelopment Project Area. Section C Statement of Need and Public Purpose See Section LA and 1.B of the Redevelopment Plan for the Redevelopment Project Area. Section D Statement of Objectives See Section II.A of the Redevelopment Plan for the Redevelopment Project Area. SPRINGSTED Page 5 Housing and Redevelopment Authority for the City of Lakeville and City of Lakeville, Minnesota Section E Designation of Tax Increment Financing District as an Economic Development District Economic development districts are a type of tax increment financing district which consist of any project, or portions of a project, which the City finds to be in the public interest because: (1) it will discourage commerce, industry, or manufacturing from moving their operations to another state or municipality; (2) it will result in increased employment in the state; or (3) it will result in preservation and enhancement of the tax base of the state. The TIF District qualifies as an economic development district in that the proposed development described in this TIF Plan (see Section 1) meets the criteria listed above in (2) and (3). Without establishment of the TIF District, the proposed development would not occur within the City. The proposed development will also result in increased employment and enhancement of the tax base in both the City and the State. Tax increments from an economic development district must be used to provide improvements, loans, subsidies, grants, interest rate subsidies, or other assistance in which at least 85% of the square footage of the facilities to be constructed are used for any of the following purposes: (1) manufacturing or production of tangible personal property, including processing, resulting in the change of the condition of the property; (2) warehousing, storage and distribution of tangible personal property, excluding retail sales; (3) research and development related to the activities listed in (1) or (2) above; (4) telemarketing if that activity is the exclusive use of the property; (5) tourism facilities (see M.S. Section 469.174, Subd. 22); (6) qualified border retail facilities (see M.S. Section 469.176, Subd. 4c); or (7) space necessary for and related to the activities listed in (1) through (6) above. Section F Duration of the TIF District Economic development districts may remain in existence 8 years from the date of receipt by the City of the first tax increment. The City anticipates that the TIF District will remain in existence the maximum duration allowed by law (projected to be through the year 2025, assuming first increment is received in 2017). The district will remain open through the year 2026 if the first collection of increment is in taxes payable 2018. The City may decertify the TIF District earlier if fulfillment of all District obligations occurs prior to the statutory maximum duration of 9 total years. Section G Property to be Included in the TIF District The TIF District is an approximate 23 -acre area of land located within the Project Area. A map showing the location of the TIF District is shown in Exhibit I, The boundaries and area encompassed by the TIF District are described below: SPRINGSTED Page 6 Housing and Redevelopment Authority for the City of Lakeville and City of Lakeville, Minnesota Parcel ID Number Legal Description The area encompassed by the TIF District shall also include all street or utility right-of-ways located upon or adjacent to the property described above, Section H Property to be Acquired in the TIF District The City may acquire and sell any or all of the property located within the TIF District; however, the City does not anticipate acquiring any such property at this time, Section I Specific Development Expected to Occur Within the TIF District The proposed development is expected to consist of an approximate 240,000 square foot build -to -suit manufacturing facility. The development will result in increased employment (200 net new jobs with average wages of $36,100) within the City in compliance with statutory requirements. It is anticipated tax increment will be used to finance a portion of the site development costs deemed necessary for the project to proceed. In addition, the City anticipates using available tax increment for related administrative expenses and any other eligible expenditures associated with the development of the site. Construction of the facility is projected to start in 2015. The project is expected to be fully constructed by December 31, 2016, and be 100% assessed and on the tax rolls as of January 2, 2017 for taxes payable in 2018, At the time this document was prepared there were no signed construction contracts with regards to the above described development. Section J Findings and Need for Tax Increment Financing In establishing the TIF District, the City makes the following findings: (1) The TIF District qualifies as an economic development district; See Section E of this document for the reasons and facts supporting this finding. (2) The proposed development, in the opinion of the City, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future, and the increased market value of the site that could reasonably be expected to occur without the use of tax increment would be less than the increase in market value estimated to result from the proposed development after SPRINGSTED Page 7 All that part of the Southeast Quarter (SE 1/4) of Section Thirty-one (31), Township One 22 03100 75 010 Hundred Fourteen (114) North, Range Twenty (20) West of the Fifth Principal Meridian, Dakota County, Minnesota lying westerly of the highway known as Dodd Boulevard All that part of the Southwest Quarter (SW 1/4) of Section Thirty-two (32), Township One 22 03200 50 010 Hundred Fourteen (114) North, Range Twenty (20) West, Dakota County, Minnesota, lying westerly of the highway known as Dodd Boulevard The area encompassed by the TIF District shall also include all street or utility right-of-ways located upon or adjacent to the property described above, Section H Property to be Acquired in the TIF District The City may acquire and sell any or all of the property located within the TIF District; however, the City does not anticipate acquiring any such property at this time, Section I Specific Development Expected to Occur Within the TIF District The proposed development is expected to consist of an approximate 240,000 square foot build -to -suit manufacturing facility. The development will result in increased employment (200 net new jobs with average wages of $36,100) within the City in compliance with statutory requirements. It is anticipated tax increment will be used to finance a portion of the site development costs deemed necessary for the project to proceed. In addition, the City anticipates using available tax increment for related administrative expenses and any other eligible expenditures associated with the development of the site. Construction of the facility is projected to start in 2015. The project is expected to be fully constructed by December 31, 2016, and be 100% assessed and on the tax rolls as of January 2, 2017 for taxes payable in 2018, At the time this document was prepared there were no signed construction contracts with regards to the above described development. Section J Findings and Need for Tax Increment Financing In establishing the TIF District, the City makes the following findings: (1) The TIF District qualifies as an economic development district; See Section E of this document for the reasons and facts supporting this finding. (2) The proposed development, in the opinion of the City, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future, and the increased market value of the site that could reasonably be expected to occur without the use of tax increment would be less than the increase in market value estimated to result from the proposed development after SPRINGSTED Page 7 Housing and Redevelopment Authority for the City of Lakeville and City of Lakeville, Minnesota subtracting the present value of the projected tax increments for the maximum duration of the TIF District permitted by the TIF Plan. Factual basis: Proposed development not expected to occur: The project includes the development of an approximate 240,000 square toot build -to -suit manufacturing facility. The proposed developer of the site has submitted information to the city demonstrating that the development of this site is not financially feasible without the assistance provided in this TIF Plan. The City has determined that the proposed development would not occur but for the financial assistance provided in this TIF Plan because of the increased costs related to site development and subsequent construction. Due to the high costs of investment for the proposed project, including site improvements, infrastructure, machinery & equipment and development costs incurred by the developer in conjunction with development of the project, the developer has stated that the project as proposed would not occur without the financial assistance provided by the City, as it would not be economically feasible without financial assistance. The City finds the use of tax increment necessary to finance a portion of the site improvements costs to facilitate development of the project and developer investment. The City anticipates providing financial assistance on a pay-as-you-go basis. No higher market value expected: The increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the TIF District permitted by the TIF Plan. Without improvements the City has no reason to expect that significant development would occur without assistance similar to that provided in this plan. For the same reasons that the desired development described above is not feasible without tax increment assistance, the City believes that no alternative development is likely to occur without similar assistance. To summarize the basis for the City's findings regarding alternative market value, in accordance with Minnesota Statutes, Section 469.175, Subd. 3(d), the City makes the following determinations: a. The City's estimate of the amount by which the market value of the site will increase without the use of tax increment financing is $0 (for the reasons described above), except some unknown amount of appreciation. b. If the proposed development to be assisted with tax increment occurs in the District, the total increase in market value would be approximately $18,197,937, including the value of the building (See Exhibit V). C. The present value of tax increments from the District for the maximum duration of the district permitted by the TIF Plan is estimated to be $1,317,785 (See Exhibit V). d. Even if some development other than the proposed development were to occur, the City finds that no alternative would occur that would produce a market value increase greater than $16,880,152 (the amount in clause b less the amount in clause c) without tax increment assistance. (3) The TIF Plan would afford maximum opportunity, consistent with the sound needs of the City as a whole, for development of the Project Area by private enterprise. SPRINGSTED Page 8 Housing and Redevelopment Authority for the City of Lakeville and City of Lakeville, Minnesota Factual basis: The proposed development is the construction of an expansion to an existing business facility in the Project Area that is proposed to create new jobs in the City, while creating these jobs in the State, plus create new tax base for the City and the State. The development clearly meets the City's economic development goals in terms of tax base expansion, job retention and creation, and wage levels. (4) The TIF Plan conforms to general plans for development of the City as a whole. Factual basis: The City Planning Commission has determined that the development proposed in the TIF Plan conforms to the City comprehensive plan. Section K Estimated Public Costs The estimated public costs of the TIF District are listed below. Such costs are eligible for reimbursement from tax increments of the TIF District. Land/building acquisition 0 Utilities 0 Other qualifying Improvements 1,607,350 Loan Interest payments 0 Administrative expenses 84.596 Total $1,691,946 The City anticipates using tax increment to the extent available to assist with financing a portion of the site improvement costs, related administrative expenses, and other TIF -eligible expenditures as necessary and related to development of the project. The City reserves the right to administratively adjust the amount of any of the items listed above or to incorporate additional eligible items, so long as the total estimated public cost is not increased. Section L Estimated Sources of Revenue Tax increment revenue 1,691,946 Interest on invested funds 0 Loan proceeds 0 Special assessments 0 Rent/lease revenue 0 Grants 0 Total $1,691,946 The City anticipates providing financial assistance on a pay-as-you-go basis for site improvement costs, as well as other TIF -eligible expenses related to the proposed development. As tax increments are collected from the TIF District in future years, a portion of these taxes will be used by the City to reimburse the developer/owner for public costs incurred (see Section K). The City reserves the right to finance any or all public costs of the TIF District using pay-as-you-go assistance, internal funding, general obligation or revenue debt (referred to together as "TIF Bonds"), or any other financing mechanism authorized by law. The City also reserves the right to use other sources of revenue legally applicable to the Project Area to pay for such costs including, but not limited to, special assessments, utility revenues, federal or state funds, and investment income. SPRINGSTED Page 9 Housing and Redevelopment Authority for the City of Lakeville and City of Lakeville, Minnesota Section M Estimated Amount of Bonded Indebtedness The maximum principal amount of bonds (as defined in the TIF Act) secured in whole or part with tax increment from the TIF District is $1,691,946. The City currently plans to finance the improvement costs in the form of a pay -as -you go revenue note, but reserves the right to issue bonds in any form, including without limitation any interfund loan with interest not to exceed the maximum permitted under Section 469.178, subd. 7 of the TIF Act. Section N Original Net Tax Capacity The County Auditor shall certify the original net tax capacity of the TIF District. This value will be equal to the total net tax capacity of all property in the TIF District as certified by the State Commissioner of Revenue. For districts certified between January 1 and June 30, inclusive, this value is based on the previous assessment year. For districts certified between July 1 and December 31, inclusive, this value is based on the current assessment year. The Estimated Market Value of all property within the TIF District as of January 2, 2015, for taxes payable in 2016, is $1,255,900 and the estimated tax capacity is $24,368, which is estimated to be the original net tax capacity of the TIF District upon establishment, reclassification and subsequent certification. Each year the County Auditor shall certify the amount that the original net tax capacity has increased or decreased as a result of: (1) changes in the tax-exempt status of property; (2) reductions or enlargements of the geographic area of the TIF District; (3) changes due to stipulation agreements or abatements; or (4) changes in property classification rates. Section 0 Original Tax Capacity Rate The County Auditor shall also certify the original tax capacity rate of the TIF District. This rate shall be the sum of all local tax rates that apply to property in the TIF District. This rate shall be for the same taxes payable year as the original net tax capacity. In future years, the amount of tax increment generated by the TIF District will be calculated using the lesser of (a) the sum of the current local tax rates at that time or (b) the original tax capacity rate of the TIF District. It is anticipated the request for certification of the District will occur prior to June 30, 2016 and the local tax rates for taxes levied in 2015 and payable in 2016 will apply. At the time of the drafting of this document, the local tax rate is not available. For purposes of estimating the tax increment generated by the TIF District, the sum of the local tax rates for taxes levied in 2014 and payable in 2015, is 105.073% as shown below. 2014/2015 Taxing Jurisdiction Local Tax Rate City of Lakeville 38.948% Dakota County 29.633% ISD #194 31.459% Other 5.033% SPRINGSTED Page 10 Housing and Redevelopment Authority for the City of Lakeville and City of Lakeville, Minnesota Total 105.073% Section P Projected Retained Captured Net Tax Capacity and Projected Tax Increment The City anticipates that the project will begin construction in 2015 and be partially completed by December 31, 2015 and 100% completed by December 31, 2016, creating a total tax capacity for TIF District No. 21 $315,605 as of January 2, 2017. The captured tax capacity as of that date is estimated to be $176,570. The first year of tax increment is estimated to be $185,527 payable in 2018. A complete schedule of estimated tax increment from the TIF District is shown in Exhibit III. The estimates shown in this TIF plan assume that commercial class rates remain at 1.5% of the estimated market value up to $150,000 and 2.0% of the estimated market value over $150,000, and assume 3% annual increases in market values. Each year the County Auditor shall determine the current net tax capacity of all property in the TIF District. To the extent that this total exceeds the original net tax capacity, the difference shall be known as the captured net tax capacity of the TIF District. The County Auditor shall certify to the City the amount of captured net tax capacity each year. The City may choose to retain any or all of this amount. It is the City's intention to retain 100% of the captured net tax capacity of the TIF District. Such amount shall be known as the retained captured net tax capacity of the TIF District. Exhibit II gives a listing of the various information and contained in this TIF Plan, including Exhibit III which anticipated life of the TIF District. Section Q Use of Tax Increment assumptions used in preparing a number of the exhibits shows the projected tax increment generated over the Each year the County Treasurer shall deduct 0.36% of the annual tax increment generated by the TIF District and pay such amount to the State's General Fund. Such amounts will be appropriated to the State Auditor for the cost of financial reporting and auditing of tax increment financing information throughout the state. Exhibit III shows the projected deduction for this purpose over the anticipated life of the TIF District. The City has determined that it will use 100% of the remaining tax increment generated by the TIF District for any of the following purposes: (1) pay for the estimated public costs of the TIF District (see Section K) and County administrative costs associated with the TIF District (see Section T); (2) pay principal and interest on tax increment bonds or other bonds issued to finance the estimated public costs of the TIF District; (3) accumulate a reserve securing the payment of tax increment bonds or other bonds issued to finance the estimated public costs of the TIF District; (4) pay all or a portion of the county road costs as may be required by the County Board under M.S. Section 469.175, Subdivision 1a; or (5) return excess tax increments to the County Auditor for redistribution to the City, County and School District. SPRINGSTED Page 11 Housing and Redevelopment Authority for the City of Lakeville and City of Lakeville, Minnesota Tax increments from property located in one county must be expended for the direct and primary benefit of a project located within that county, unless both county boards involved waive this requirement. Tax increments shall not be used to circumvent levy limitations applicable to the City. Tax increment shall not be used to finance the acquisition, construction, renovation, operation, or maintenance of a building to be used primarily and regularly for conducting the business of a municipality, county, school district, or any other local unit of government or the State or federal government, or for a commons area used as a public park, or a facility used for social, recreational, or conference purposes. This prohibition does not apply to the construction or renovation of a parking structure or of a privately owned facility for conference purposes. If there exists any type of agreement or arrangement providing for the developer, or other beneficiary of assistance, to repay all or a portion of the assistance that was paid or financed with tax increments, such payments shall be subject to all of the restrictions imposed on the use of tax increments. Assistance includes sale of property at less than the cost of acquisition or fair market value, grants, ground or other leases at less then fair market rent, interest rate subsidies, utility service connections, roads, or other similar assistance that would otherwise be paid for by the developer or beneficiary. Section R Excess Tax Increment In any year in which the tax increments from the TIF District exceed the amount necessary to pay the estimated public costs authorized by the TIF Plan, the City shall use the excess tax increments to: (1) prepay any outstanding tax increment bonds; (2) discharge the pledge of tax increments thereof; (3) pay amounts into an escrow account dedicated to the payment of the tax increment bonds; or (4) return excess tax increments to the County Auditor for redistribution to the City, County and School District. The County Auditor must report to the Commissioner of Education the amount of any excess tax increment redistributed to the School District within 30 days of such redistribution. Section S Tax Increment Pooling and the Five Year Rule At least 80% of the tax increments from the TIF District must be expended on activities within the district or to pay for bonds used to finance the estimated public costs of the TIF District (see Section E for additional restrictions). No more than 20% of the tax increments may be spent on costs outside of the TIF District but within the boundaries of the Project Area, except to pay debt service on credit enhanced bonds. All administrative expenses are considered to have been spent outside of the TIF District. Tax increments are considered to have been spent within the TIF District if such amounts are: (1) actually paid to a third party for activities performed within the TIF District within five years after certification of the district; (2) used to pay bonds that were issued and sold to a third party, the proceeds of which are reasonably expected on the date of issuance to be spent within the later of the five-year period or a reasonable temporary period or are deposited in a reasonably required reserve or replacement fund. (3) used to make payments or reimbursements to a third party under binding contracts for activities performed within the TIF District, which were entered into within five years after certification of the district; or SPRINGSTED Page 12 Housing and Redevelopment Authority for the City of Lakeville and City of Lakeville, Minnesota (4) used to reimburse a party for payment of eligible costs (including interest) incurred within five years from certification of the district, Beginning with the sixth year following certification of the TIF District, at least 80% of the tax increments must be used to pay outstanding bonds or make contractual payments obligated within the first five years. When outstanding bonds have been defeased and sufficient money has been set aside to pay for such contractual obligations, the TIF District must be decertified. The City does not expect that allowable pooling expenditures will be made outside of the TIF District but within the Project Area (along with allowable administrative expenses), but such expenditures are expressly authorized in this TIF Plan. Section T Limitation on Administrative Expenses Administrative expenses are defined as all costs of the City other than: (1) amounts paid for the purchase of land; (2) amounts paid for materials and services, including architectural and engineering services directly connected with the physical development of the real property in the project; (3) relocation benefits paid to, or services provided for, persons residing or businesses located in the project; (4) amounts used to pay principal or interest on, fund a reserve for, or sell at a discount bonds issued pursuant to section 469.178; or (5) amounts used to pay other financial obligations to the extent those obligations were used to finance costs described in clause (1) to (3). Administrative expenses include amounts paid for services provided by bond counsel, fiscal consultants, planning or economic development consultants, and actual costs incurred by the County in administering the TIF District. Tax increments may be used to pay administrative expenses of the TIF District up to the lesser of (a)10% of the total tax increment expenditures authorized by the TIF Plan or (b) 10% of the total tax increments received by the TIF District. Section U Limitation on Property Not Subject to Improvements - Four Year Rule If after four years from certification of the TIF District no demolition, rehabilitation, renovation, or qualified improvement of an adjacent street has commenced on a parcel located within the TIF District, then that parcel shall be excluded from the TIF District and the original net tax capacity shall be adjusted accordingly. Qualified improvements of a street are limited to construction or opening of a new street, relocation of a street, or substantial reconstruction or rebuilding of an existing street. The City must submit to the County Auditor, by February 1 of the fifth year, evidence that the required activity has taken place for each parcel in the TIF District. If a parcel is excluded from the TIF District and the City or owner of the parcel subsequently commences any of the above activities, the City shall certify to the County Auditor that such activity has commenced and the parcel shall once again be included in the TIF District. The County Auditor shall certify the net tax capacity of the parcel, as most recently certified by the Commissioner of Revenue, and add such amount to the original net tax capacity of the TIF District. Section V Estimated Impact on Other Taxing Jurisdictions SPRINGSTED Page 13 Housing and Redevelopment Authority for the City of Lakeville and City of Lakeville, Minnesota Exhibit IV shows the estimated impact on other taxing jurisdictions if the maximum projected retained captured net tax capacity of the TIF District was hypothetically available to the other taxing jurisdictions. The City believes that there will be no adverse impact on other taxing jurisdictions during the life of the TIF District, since the proposed development would not have occurred without the establishment of the TIF District and the provision of public assistance. A positive impact on other taxing jurisdictions will occur when the TIF District is decertified and the development therein becomes part of the general tax base. The fiscal and economic implications of the proposed tax increment financing district, as pursuant to Minnesota Statutes, Section 469.175, Subdivision 2, are listed below. 1. The total amount of tax increment that will be generated over the life of the district is estimated to be $1,698,059. 2. To the extent the facility in the proposed TIF District generates any public cost impacts on city -provided services such as police and fire protection, public infrastructure, and borrowing costs attributable to the district, such costs will be levied upon the taxable net tax capacity of the City, excluding that portion captured by the District. The City does not anticipate issuing bonds in conjunction with this project. 3. The amount of tax increments over the life of the district that would be attributable to school district levies, assuming the school district's share of the total local tax rate for all taxing jurisdictions remained the same, is estimated to be $434,531. 4. The amount of tax increments over the life of the district that would be attributable to county levies, assuming the county's share of the total local tax rate for all taxing jurisdictions remained the same is estimated to be $578,862. 5. No additional information has been requested by the county or school district that would enable it to determine additional costs that will accrue to it due to the development proposed for the district. Section W Prior Planned Improvements The City shall accompany its request for certification to the County Auditor (or notice of district enlargement), with a listing of all properties within the TIF District for which building permits have been issued during the 18 months immediately preceding approval of the TIF Plan. The County Auditor shall increase the original net tax capacity of the TIF District by the net tax capacity of each improvement for which a building permit was issued. There have been no building permits issued in the last 18 months in conjunction with any of the properties within the TIF District. Section X Development Agreements If within a project containing an economic development district, more than 10% of the acreage of the property to be acquired by the City is purchased with tax increment bonds proceeds (to which tax increment from the property is pledged), then prior to such acquisition, the City must enter into an agreement for the development of the property. Such agreement must provide recourse for the City should the development not be completed. The City anticipates entering into an agreement for development, but does not anticipate acquiring any property located within the TIF District. SPRINGSTED Page 14 Housing and Redevelopment Authority for the City of Lakeville and City of Lakeville, Minnesota Section Y Assessment Agreements The City may, upon entering into a development agreement, also enter into an assessment agreement with the developer, which establishes a minimum market value of the land and improvements for each year during the life of the TIF District. The assessment agreement shall be presented to the County or City Assessor who shall review the plans and specifications for the improvements to be constructed, review the market value previously assigned to the land, and so long as the minimum market value contained in the assessment agreement appears to be an accurate estimate, shall certify the assessment agreement as reasonable. The assessment agreement shall be filed for record in the office of the County Recorder of each county where the property is located. Any modification or premature termination of this agreement must first be approved by the City, County and School District. The City does not anticipate entering into an assessment agreement. Section Z Modifications of the Tax Increment Financing Plan Any reduction or enlargement in the geographic area of the Project Area or the TIF District; increase in the amount of bonded indebtedness to be incurred; increase in the amount of capitalized interest; increase in that portion of the captured net tax capacity to be retained by the City; increase in the total estimated public costs; or designation of additional property to be acquired by the City shall be approved only after satisfying all the necessary requirements for approval of the original TIF Plan. This paragraph does not apply if: (1) the only modification is elimination of parcels from the TIF District; and (2) the current net tax capacity of the parcels eliminated equals or exceeds the net tax capacity of those parcels in the TIF District's original net tax capacity, or the City agrees that the TIF District's original net tax capacity will be reduced by no more than the current net tax capacity of the parcels eliminated. The City must notify the County Auditor of any modification that reduces or enlarges the geographic area of the TIF District. The geographic area of the TIF District may be reduced but not enlarged after five years following the date of certification. Section AA Administration of the Tax Increment Financing Plan Upon adoption of the TIF Plan, the City shall submit a copy of such plan to the Minnesota Department of Revenue. The City shall also request that the County Auditor certify the original net tax capacity and net tax capacity rate of the TIF District. To assist the County Auditor in this process, the City shall submit copies of the TIF Plan, the resolution establishing the TIF District and adopting the TIF Plan, and a listing of any prior planned improvements. The City shall also send the County Assessor any assessment agreement establishing the minimum market value of land and improvements in the TIF District, and shall request that the County Assessor review and certify this assessment agreement as reasonable. The County shall distribute to the City the amount of tax increment as it becomes available. The amount of tax increment in any year represents the applicable property taxes generated by the retained captured net tax capacity of the TIF District. The amount of tax increment may change due to development anticipated by the TIF Plan, other development, inflation of property values, or changes in property classification rates or formulas. In administering and implementing the TIF Plan, the following actions should occur on an annual basis: SPRINGSTED Page 15 Housing and Redevelopment Authority for the City of Lakeville and City of Lakeville, Minnesota (1) prior to July 1, the City shall notify the County Assessor of any new development that has occurred in the TIF District during the past year to insure that the new value will be recorded in a timely manner. (2) if the County Auditor receives the request for certification of a new TIF District, or for modification of an existing TIF District, before July 1, the request shall be recognized in determining local tax rates for the current and subsequent levy years. Requests received on or after July 1 shall be used to determine local tax rates in subsequent years. (3) each year the County Auditor shall certify the amount of the original net tax capacity of the TIF District. The amount certified shall reflect any changes that occur as a result of the following: (a) the value of property that changes from tax-exempt to taxable shall be added to the original net tax capacity of the TIF District. The reverse shall also apply; (b) the original net tax capacity may be modified by any approved enlargement or reduction of the TIF District; (c) if laws governing the classification of real property cause changes to the percentage of estimated market value to be applied for property tax purposes, then the resulting increase or decrease in net tax capacity shall be applied proportionately to the original net tax capacity and the retained captured net tax capacity of the TIF District. The County Auditor shall notify the City of all changes made to the original net tax capacity of the TIF District. Section AB Filing TIF Plan, Financial Reporting and Disclosure Requirements The City will file the TIF Plan, and any subsequent amendments thereto, with the Commissioner of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes, Section 469.175, subdivision 4A. The City will comply with all reporting requirements for the TIF District under Minnesota Statutes, Section 469.175, subdivisions 5 and 6. SPRINGSTED Page 16 Assumptions Report City of Lakeville, Minnesota Tax Increment Financing (Economic Development) District No. 21 Proposed Project Shore within ISD 194 Draft TIF Plan Exhibits: $15.7M EMV with 3% MV Inflator Type of Tax Increment Financing District Economic Development Maximum Duration of TIF District 8 years from 1st increment Projected Certification Request Date Decertification Date 10/01/15 12/31/25 (9 Years of Increment) Exhibit 11 City of Lakeville 38.948% 2015/2016 29.633% ISD #194 Base Estimated Market Value Other $1,255,900 Local Tax Capacity Rate 105.073% 2014/2015 Original Net Tax Capacity 39.3723% $24,368 5.00% Pooling Percent 0.00% Present Value Date & Rate Assess ment/Collection Year 4.00% Present Value Amount $1,247,391 2015/2016 2016/2017 2017/2018 2018/2019 Base Estimated Market Value $1,255,900 $1,255,900 $1,255,900 $1,255,900 Increase in Estimated Market Value 0 2,669,100 14,561,850 15,036,383 Total Estimated Market Value 1,255,900 3,925,000 15,817,750 16,292,283 Total Net Tax Capacity $24,368 $77,750 $315,605 $325,096 City of Lakeville 38.948% Dakota County 29.633% ISD #194 31.459% Other 5.033% Local Tax Capacity Rate 105.073% 2014/2015 Fiscal Disparities Contribution From TIF District 39.3723% Administrative Retainage Percent (maximum = 10%) 5.00% Pooling Percent 0.00% Bonds Note (Pay -As -You -Go) Bonds Dated NA Note Dated 10/01/15 Bond Issue @ 0.00% (NIC) NA Note Rate 0.00% Eligible Project Costs NA Note Amount $1,607,350 Present Value Date & Rate 10/01/15 4.00% Present Value Amount $1,247,391 Notes Assumptions assume no change to future tax rates, class rates, and a 3% annual MV inflator is assumed Final 2015 Tax Rates were used. Total EMV upon completion based on company estimate of $15.7M of investment, to be updated as info is available Base EMV of 2 properties as provided by Dakota County SPRINGSTED Page 18 W 0 3 j a O O N O R M 00 M Ln Ln (D N 0) h 'R N 0) CD n O 00 n (D Lo M N 0) M N O d C p O d O 0) CO N M N O 0) 00 N V) Ln Lo LC) 0 iY 'IT ti N z (D N Cpl Lo O CD CY _ 00 � CO M NO CO tT (O N Lo 00 r LQ Cc L L N C C O J O r 69 N � p p C 00 O co 0U')00 0 0 00 (ND V co O It N N 0000000 I�r 000000 0) h E O M O r. 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O 7 V L - L) U fE L )L F- cu '@ L U Oca 7 a c o o c yQ L L to .2 ED m O O O O UJ .— •cu T) U — U a) a a) — fa XCo Mn ❑ to ;~ C LL o fa a) LL -a r -O CC J _0OC)O a) C O O rLO•` L a) 3 O O N co •U " a) h; CL .�, CU a) N aa) p U CLLL m a W❑ =O H X:2 •V a) O H— o a) JF w L z o .. c a) O 0 O a d a) to Z a) O T 7 5 i O Q Co to co U x E Q � E U fu 9 cco X w a a) U o o ca (ad o l— M .9 C o C y Ca) o Z CU o -p a L +' ^a N cn _0 o p O a) a a) a) N ax f0. a) . 0 O N U C C 0) .L.. r N d d aR+ rte+ U LL Q U 3 •c y f6 N U a) a c cu U to ca O 0 N N (0 A z 0-4a un Exhibit V Market Value Analysis Report City of Lakeville, Minnesota Tax Increment Financing (Economic Development) District No. 21 Proposed Project Shore within ISD 194 Draft TIF Plan Exhibits: $15.7M EMV with 3% MV Inflator Assumptions Present Value Date P.V. Rate - Gross T.I. 10/01/15 4.00% Increase in ENV With TIF District Less: P.V of Gross Tax Increment Subtotal Less: Increase in EMV Without TIF Difference $18,197,937 1,317,785 $16,880,152 0 $16,880,152 Annual Present Gross Tax Value @ Year Increment 4.00% 1 2017 34,006 31,440 2 2018 185,527 164,933 3 2019 191,574 163,758 4 2020 197,801 162,578 5 2021 204,215 161,394 6 2022 210,821 160,207 7 2023 217,626 159,017 8 2024 224,635 157,826 9 2025 231,854 156,632 $1,698,059 $1,317,785 SPRINGSTED Page 21 Lakeville �■r.r Memorandum Item No. City of Lakeville Community & Economic Development To: Economic Development Commission From: Rick Howden, Economic Development Specialist Copy: David L. Olson, Community and Economic Development Director Justin Miller, City Administrator Date: August 21, 2015 Subject: Post Holdings Minnesota Investment Fund Application In discussions with representatives from Post Holdings ("Post") earlier this Spring, regarding locating their new combined cereal division that will be called Post Consumer Brands, both the City and the Minnesota Department of Employment and Economic Development (DEED) proposed job retention incentives. The City has submitted an application to the Minnesota Investment Fund (MIF) administered by DEED on behalf of Post. The application will propose a state funded incentive of $3,000 per job retained up to 250 jobs for a maximum of $750,000. DEED has proposed that this be a deferred loan with the balance being forgiven after 1 year if all job goals have been achieved. The Minnesota Investment Fund provides financing to help add new workers and retain high- quality jobs on a statewide basis. Funds are awarded to local units of government who provide loans to assist expanding businesses. The process of applying for the Minnesota Investment Fund involves the following steps: a) An initial application submitted to DEED containing information on the project; b) If project meets eligibility criteria, supplemental applications from both the local government and business providing additional details are to be submitted. a. The local unit of government must hold a public hearing to provide citizen notification and involvement prior to submission. b. A Local Government Resolution must also be approved by the City Council. c) If approved, DEED will determine a maximum funding amount and job requirements. d) DEED then drafts a Grant Agreement between the local government and DEED which stipulates the details of the award and job requirements. e) After the Grant Agreement is fully executed, the local government will enter into a Loan Agreement with the business. MIF Funds will be paid on a reimbursement basis after required documentation verifying expenditures is submitted. f) The local government will submit required annual progress reports, payment request documentation and other information requested by DEED. The initial and supplemental application has been submitted to DEED and is attached. As part of the supplemental application information, a public hearing was held at the August 311 City Council meeting. The next step will be for Post Holdings to submit their supplemental application before the Commissioner of DEED will provide an award letter. Following the award, the City will need to approve a grant agreement between the City and DEED as well as a loan agreement between the City and Post Holdings Inc. ACTION REQUESTED No action is required. This is an update on the progress and information on the process of applying for the Minnesota Investment Fund. POSITIVELY initial Application sMinnesota Investment Fund Department of Employment and Economic Devetopmeni Application should not be submitted without consulting with DEED Loan Officer to discuss project eligibility. DEED will use the information below to better understand the project scope and to determine if the local government, business and project are eligible for Minnesota Investment Fund (MIF) program funds. DEED will make a project eligibility determination within 30 days of receiving a complete application. Supplemental project documents will be required following application approval. LOCAL UNIT OF GOVERNMENT INFORMATION Applicant Name: Post Holdings, Inc. Address: 2503 S. Hanley Road Telephone: (314) 644-7615 Contact Name/Title; Steve Smith, SVP of HR City St. Louis, MO State: Zip: 63144 Email: steve.smith@postfoods.com 1Mo Does the local government have an EDA? Q Yes ❑No 1) Does applicant have a Revolving Loan Fund? ❑ Yes Q No If yes: What is the balance of the DEED revolving loan funds? What is the balance of all other revolving loan funds? What is the amount the local government is committing to this project? Please note, any federal revolving loan fund balance must be used prior to requesting additional federal MIF funding. 2) Is the applicant up to date with the filing of Minnesota Business Assistance Forms? ❑ Yes ❑ No N/A 3) Does the community have any outstanding TIF issues associated with the property? ❑ Yes ❑■ No BUSINESS/PROJECT BACKGROUND INFORMATION Business Name: MOM Brands Company Contact Name/Title: Steve Smith, SVP HR Address: 20802 Kensington Blvd. City Lakeville State: MN Zip: 55044 Telephone: (314) 644-7615 Email: steve.smith@postfoods.com 4) Business Type: []startup ❑ Expansion 5) Will anyjobs be relocated from another Minnesota site or from outside of Minnesota? ❑ Yes QNo If yes, which location(s) will the employees be relocated from? 6) Current Number of Full Time Equivalent (FTE) Employees in Minnesota: approximately 980 with MOM Brands; 1,53 *Full Time Equivalent (FTE) is based on a total annual hours of 2080. 7) Number of new FTE jobs to be created within 2 years in Minnesota: None at this time -growth may generate new jobs *Job number will be used to determine eligibility, for scoring and forjob creation commitments. 8) What is the hourly base wage of the lowest paid job that will be created? Ne1� 03/25/14 Page 1 POSITIVELY Department IF Employment and Economic Development 9) Will benefits be provided? ❑■ Yes ❑No Initial Application Minnesota Investment Fund If yes: What is the hourly value of the benefits? C.untA i I,ttgst ks Ut MoK 16Ctar s 4,Mp�oy�,s Which benefits will be provided? WOv.14 Co"V� "%A. ❑■ Health ■❑ Dental ❑■ Retirement ■❑ Life 0 Profit Sharing/Bonuses 10) Does the property or the business have any outstanding local, state or federal tax liabilities? ❑ Yes [XNo If so, please detail tax and liability: ESTIMATED PROJECT TIMETABLE Task: Estimated Completion Date: Commitment of all funds 5/4/15 Start of construction Other Purchase equipment Property Acquisition Complete construction Begin operations ESTIMATED SOURCES AND USES OF FUNDS Page 2 MIF Bank Equity Local Government Other Total Property Acquisition Site Improvement New Construction Renovation of an Existing Building Purchase of Machinery & Equipment Public Infrastructure Other $ 841,250,000.0[ $ 308,750,000.0 $ 1,150,000,000. Total Project Costs $ 841,250,000.0($ 308,750,000.0 $ 1,150,000,000. Page 2 POSITIVELY Initial Application Minnesota Investment Fund Department of Employment and Economic Development ATTACHMENTS Attach the following information with the application. Application is not considered complete until all documents have been received. 10) Include a project narrative which answers the following questions: A) Briefly describe the past and present operations of the business and/or events leading up to its creation. Include when business was established and any change in controlling ownership within the last five years. Does the marketing strategy support the planned expansion or start-up? What is the business' competitive position in the marketplace? B) Describe the proposed project for which financing is being requested. Discuss such topics as square footage of the new building, lease or ownership, etc. C) Provide local governments' summary of the projects financial feasibility. For example, summarize other funding sources, the debt/equity ratio and the retained earnings levels. D) Describe the local governments' ability to manage the grant, revolving loan fund, state and local compliance requirements, and the implementation of the project: E) Explain why MIF financing is necessary for this project? 11) Three years historical financial information & 2 years projected: Balance Sheets, Profit and Loss Statements and Cash Flow Statements. 12) Business Plan: Company History, Market Opportunity and Competitive Advantage ENVIRONMENTAL 13) Are there any environmental risks associated with the site, building, or the business itself? ❑ Yes 0 No 14) Will the project result in the loss or diminution of wetlands? ❑ Yes No *If yes, attach a narrative that describes the measures which will be taken to mitigate all functional values of the wetlands that will be lost or diminished. 15) Will the proposed project be located in a flood plain? ❑ Yes ❑■ No If yes, is flood insurance required? ❑ Yes ❑ No 16) Have state environmental review requirements been met, if applicable? Q Yes ❑ No 17) Does the project involve a historical property? ❑ Yes ❑■ No 18) Does the project include the expansion of the building footprint by 20% or more? ❑ Yes [E:] No 19) Does the project include the installation of a new sewer and/or water system? ❑ Yes ❑E Page 3 POSITIVEL��Y''rr Initial Application '00000,vV� Minnesota Investment Fund Department of Employment and Economic Development BUSINESS OFFICIAL MUST READ AND SIGN THE FOLLOWING INFORMATION DATA PRIVACY ACKNOWLEDGEMENT: Tennessen Warning Notice: per MN Statutes 13.04, Subd.2, this data is being requested from you to determine if you are eligible for a loan under the Minnesota Investment Fund program. You are not required to provide the requested information, but failure to do so may result in the department's inability to determine your eligibility for a loan pursuant to the criteria developed under the program's enabling legislation. The data you provide is classified as private or non- public and cannot be shared without your permission except as specified in statute. Data Privacy Notice: per MN Statutes 13.591, Subdivision 1, certain data provided in this application is private or non- public data; this includes financial information about the business, including credit reports, financial statements, net worth calculations, business plans; income and expense projections; balance sheets; customer lists; income tax returns; and design, market, and feasibility studies not paid for with public funds. Per MN Statutes 116J.401, Subd. 3., certain data provided in this application is private data; this includes data collected on individuals pursuant to the operation of the Minnesota Investment Fund program. I have read the above statements and I agree to supply the information requested to the MN Department of Employment and Economic Development, Office of JOBZ and Business Finance with full knowledge of the information provided herein. I certify that all information provided herein is true and accurate and that the official signing this form has authorization to do so. Steve Smith, Senior Vice President of Hum Name/Title of Business Official: Resources Signature of Business Official: Date: 55115 Page 4 Minnesota Investment Fund Application MOM Brands Acquisition Project Narrative April 23, 2015 Introduction Post Holdings, Inc. ("Post"), a Missouri Corporation and holding company of various consumer packaged goods businesses, is purchasing MOM Brands Company ("MOM Brands"). The transaction is scheduled to close on May 4, 2015. Business Overview MOM Brands headquartered in Lakeville, MN, was founded in 1919 by John Campbell and has been privately held by the family since inception. The company was originally focused on hot cereal products and has grown primarily in the ready -to- eat (RTE) cereal category. Today the business generates approximately $700 million in gross sales and maintains an 8% share in the RTE category. Post incorporated in 2012 and headquartered in St. Louis, Missouri, is a consumer packaged goods holding company operating in the center -of -the store, active nutrition, refrigerated and private label food categories. Post's Consumer Brands portfolio dates to 1897 with the Post cereal brands and spans from center -of -the store to active nutrition, offering a broad rand of choices to meet the taste and nutritional needs of a variety of consumers. The portfolio includes recognized brands such as Honey Bunches of Oats®, Pebbles""', Great Grains°, Grape -Nuts, Honeycomb®, PowerBar®, Premier Protein°, Supreme Protein® and Dymatize®. Through its Michael Foods Group, Post supplies value-added egg products, refrigerated potato products, cheese and other dairy case products and dry pasta products to the private label retail, foodservice and ingredient channels and markets retail brands including All Whites®, Better'n Eggs", Simply Potatoes® and Crystal Farms®. Post also manufactures private label cereal, granola, peanut butter and other nut butters, dried fruits and baking and snacking nuts. Acquisition of MOM Brands by Post Post is acquiring MOM Brands in order to combine the value brands of MOM Brands with the long- standing brands of Post. The combined business will represent approximately $1.7 billion dollars in gross sales and an 18% share in the RTE category. The combined entity also increases Post's scale and market position, significantly increases a presence in the growing bagged and hot cereal segments, and makes Post the leader in the RTE value segment and the growing RTE bagged segment. This will also result in the combined business having 16 of the top 50 cereal brands and adds Mom's Best to the Post portfolio, the fastest growing brand in the Natural & Organic segment. MOM Brands currently employs approximately 980 employees in Minnesota. The headquarters office has 260 employees in Lakeville and its largest manufacturing plant located in Northfield, MN employs approximately 710 employees in manufacturing, distribution and administrative jobs. MOM Brands also employs 227 employees in North Carolina, 225 in Utah, and 40 in Iowa. MOM Brands has also demonstrated a commitment to its facilities and employees having invested $400 million over the past five years to modernize and upgrade its facilities. The Post cereal organization currently maintains headquarters in Parsippany, N1 with satellite corporate employees located at the largest manufacturing facility in Battle Creek, MI. Additional manufacturing facilities are located in Jonesboro, Arkansas and Niagara Falls, Canada. Request for Local, Regional and State Economic Development Support As Post prepares to close the transaction, the company is evaluating the headquarters location of the combined business. As expressed in our meeting April 16, 2015, with representatives from Lakeville and the state of Minnesota, we are evaluating the advantages of both the MOM Brands Lakeville location and the existing Post cereal Parsippany, NJ location. At risk are the existing 260 jobs and $35 million payroll in Lakeville. Job retention is the primary focus for local, regional, and state assistance. The acquisition of MOM Brands by Post does have the potential to provide future job growth. Growth through acquisition is a key strategy for Post as represented by the eight acquisitions completed in the past 18 months. The chosen headquarters will not only house the cereal leadership team but will also serve as the growth platform for future acquisitions. Thus, future acquisitions would be integrated into and managed by the existing team in Lakeville or Parsippany resulting in new jobs. This transaction could also benefit the manufacturing plant in Northfield. As the manufacturing network for the combined company is optimized, decisions may be made to add capabilities and expansion to the Northfield site which could also result in additional jobs. Financial Information Attached to this Application Narrative are the annual reports for Post' three previous fiscal years. Conclusion Thank you in advance for your support and consideration of assistance in maintaining the presence of MOM Brands in Lakeville. The Post team looks forward to working with you. If you have any questions or need additional information, please don't hesitate to ask. I can be reached at 314-644-7615. My email is steve.smith@postfoods.com. Respectfully, "� q c, Steven E. Smith Senior Vice -President of Human Resources Post Holdings, Inc. POSITIVELY w Department of Employment end Economic Development Applicant: City of Lakeville State Legislative District for Project Area: 58A Application Author: David Olson Author's E-mail: dolson @ lakevillemn.gov SUPPLEMENTAL APPLICANT INFORMATION (LOCAL UNIT OF GOVERNMENT) MINNESOTA INVESTMENT FUND STATE LOAN PROGRAM Business Name: Post Holdings, Inc. DUNS I€: 805730178 Author's Phone: (952) 985-4421 Attach the following information with the application. Application is not considered complete until all documents have been received. 1) COMMUNITY NEEDS NARRATIVE Attach a community and economic development needs narrative which identifies in detail the priorities and strategies for resolving these needs based on the following criteria: A. Economic vulnerability of the community: B. Events contributing to a depressed economy: C. Unemployment (longterm, chronic, current, seasonal): D. Need to attract or retain essential services: E. Events contributing to a unique situation: F. Infrastructure conditions: G. Out -migration due to lack of jobs: H. Need to diversify industrial base: I. Project will support the economic viability of small, minority, or women -owned businesses: J. Under -employment of existing labor pool: K. Labor pool needs: L. An increase in the value of the parcel(s) of land that will be directly assisted by the project. Provide a letter from the county/city assessor that provides the following information: Current assessed valuation, current real estate taxes payable, projected assessed valuation and projected real estate taxes payable 2) CITIZEN PARTICIPATION • A public hearing is required to provide citizen notification and involvement prior to submitting the application. Submit a copy of the public hearing minutes, a copy of the public notice and affidavit of publication, and the Local Government Resolution. 3) BUSINESS CREDIT CHECK • The following information searches on the business and owners holding 10 percent or more of the business must be acquired and reviewed prior to passing the Local Government Resolution: Lien/Judgment, Criminal Record, Pending Lawsuit, Dunn and Bradstreet, Credit Status Report, Bankruptcy (Also attach summary of findings and deposition). • ASSURE THAT PROJECT COSTS ARE REASONABLE: A breakdown of project costs must be analyzed. Provide cost estimates for all activities involved in the project, and review proposed collateral pledge. 1 03/25/2014 POSITIVELY Department Of Employment and Economic Development 4) PROJECT COMPLIANCE SUPPLEMENTAL APPLICANT INFORMATION (LOCAL UNIT OF GOVERNMENT) MINNESOTA INVESTMENT FUND STATE LOAN PROGRAM • Review and sign attached document titled Project Compliance with State Laws, Statues, and Rules which outlines various state laws, statutes and rules that must be adhered to while implementing this project. These same requirements must be used in the administration of the local Revolving Loan Funds. S) REVOLVING LOAN FUND • Submit a copy of the Local Government's Revolving Loan Fund policies and procedures. 6) CHECKLIST OF REQUIRED DOCUMENTATION: Q■ Completed Application (Applicant and Business) 0■ Notice of job listing agreement Revolving loan fund guidelines �■ Public hearing minutes 0 Affidavit of publication Q■ Local unit of Government Resolution [■ Project Compliance with State Laws, Statutes, and Rules If an award is provided for the project, the information contained in the application will become a matter of public record with the exception of those items protected under the Minnesota Government Data Practices Act found in Minnesota Statutes 1997, Chapter 13. have read the above statement and I agree to supply the information requested to the Minnesota Department of Employment and Economic Development, Division of Business and Community Development with full knowledge of the information provided herein. 1 certify the information contained herein is true and accurate. David L. Olson, Community & Economic Development Director Typed Name/Title ature of Local Government Official Date POSITIVELY w Department Of Employment and Economic Development SUPPLEMENTAL APPLICANT INFORMATION (LOCAL UNIT OF GOVERNMENT) MINNESOTA INVESTMENT FUND STATE LOAN PROGRAM PROJECT COMPLIANCE WITH STATE LAWS, STATUTES. AND RULES 1. Minnesota Statutes, Section 181.59, discrimination on account of race, creed, or color prohibited in contracts... 2. Minnesota Statutes, Section 363A.08 prohibits unfair discrimination practices related to employment or unfair employment practices. 3. Minnesota Statutes Chapter 363 Minnesota Human Rights Act. Requires that all public services be operated in such a manner that does not discriminate against any person in the access to, admission to, full utilization of or benefit from such public service. 4. Minnesota Statutes, Sections 176.181-176.182. Requires recipients and subcontractors to have worker's compensation insurance coverage. 5. Minnesota Statutes, Sections 290.9705. Requires that 8 percent of payments made to out-of-state contractors be withheld once cumulative payments made to the contractor for work done in Minnesota exceed $50,000 in a calendar year, unless a waiver is granted by the Department of Revenue. 6. Minnesota Statutes, Section 116.1.871 applies to this project. This statute requires of recipients of state assistance to pay the prevailing wage rate to laborers and mechanics at the project construction site when state funds are provided for construction in the amount of $200,000 or more. 7. Minnesota Statutes Sections 471.87 and 471.88 - Forbids public officials from engaging in activities which are, or have the appearance of being, in conflict of interest. 8. Antitrust or unfair trade practices laws - Regulates and controls the sale of goods and services and prohibits deceptive and unfair competition between businesses. 9. Minnesota Statutes 116!.993-995, Business Subsidy Statute, applies to this project. 10. Minnesota Statutes, 116J.8731, Minnesota Investment Fund applies to this project. 11. Minnesota Investment Fund Rules Chapter 4300. 12. Minnesota Statutes, Chapter 13, the Minnesota Government Data Practices Act. certifies compliance as so stated in the accompanying Local Government Resolution. (Signature of Applicant) 3 CITY OF LAKEVILLE DAKOTA COUNTY, MINNESOTA RESOLUTION NO. 15-97 RESOLUTION AUTHORIZING AN APPLICATION TO THE DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOPMENT FOR MINNESTOA INVESTMENT FUND ON BEHALF OF POST HOLDINGS INC. BE IT RESOLVED that the City of Lakeville act as the legal sponsor for project(s) contained in the Business and Community Development Application to be submitted on August 10, 2015 and that the Mayor and City Clerk are hereby authorized to apply to the Department of Employment and Economic Development for funding of this project on behalf of City of Lakeville. BE IT FURTHER RESOLVED that the City of Lakeville has the legal authority to apply for financial assistance, and the institutional, managerial, and financial capability to ensure adequate construction, operation, maintenance and replacement of the proposed project for its design life. BE IT FURTHER RESOLVED that the City of Lakeville has not incurred any costs and has not entered into any written agreements to purchase property. BE IT FURTHER RESOLVED that the City of Lakeville has not violated any Federal, State, or local laws pertaining to fraud, bribery, kickbacks, collusion, conflict of interest or other unlawful or corrupt practice. BE IT FURTHER RESOLVED that upon approval of its application by the state, the City of Lakeville may enter into an agreement with the State of Minnesota for the above -referenced project, and that the City of Lakeville certifies that it will comply with all applicable laws and regulations as stated in all contract agreements and described on the Compliance Section (S-7) of the Business and Community Development Application. AS APPLICABLE, BE IT FURTHER RESOLVED that the City of Lakeville has obtained credit reports and credit information from Post Holdings Inc. Upon review by The City of Lakeville and the City's financial advisor, no adverse findings or concerns regarding, but not limited to, tax liens, judgments, court actions, and filings with state, federal and other regulatory agencies were identified. Failure to disclose any such adverse information could result in revocation or other legal action. NOW, THEREFORE, BE IT RESOLVED that the Mayor and City Clerk, or their successors in office, are hereby authorized to execute such agreements, and amendments thereto, as are necessary to implement the project(s) on behalf of the applicant. Dated this 3' day of August, 2015 CITY OF LAKEVILLE c Ma Little, dayor A Charlene Friedges, City Clerlr AFFIDAVIT: Oil PUBLICATION STATE OF MINNESOTA � ss COUNTY OF DAKOTA Charlene Vold being duly sworn on an oath, states or affirms that he/she is the Publisher's Designated Agent of the newspaper(s) known as: STW Lakeville with the known office of issue being located in the county of: DAKOTA with a substantial portion of the circulation in the counties of: SCOTT and has full knowledge of the facts stated below: (A) The newspaper has complied with all of the requirements constituting qualifica- tion as a qualified newspaper as provided by Minn. Stat. §331A.02. (B) This Public Notice was printed and pub- lished in said newspaper(s) once each week, for I successive week(s); the first insertion being on 07/24/2015 and the last insertion being on 07/24/2015. MORTGAGE FORECLOSURE NOTICES Pursuant to Minnesota Stat. §580.033 relating to the publication of mortgage foreclosure notices: The newspaper complies with the conditions described in §580.033, subd. 1, clause (1) or (2). If the newspaper's known office of issue is located in a county adjoining the county where the mortgaged premises or some part of the mortgaged premises described in the notice are located, a substantial portion of the newspaper's circulation is in the latter county. By: C".J1,lLC-Lt.��1��C� Designated Agent Subscribed and sworn to or affirmed before me on 07/24/2015. Notary Public DARLENE tublicMinnescta IE MACf�IFASM Notary MY Commission Expkea don 31,2018 Rate Information: (1) Lowest classified rate paid by commercial users for comparable space: 527.40 per column inch Ad ID 424165 CITY OF LAKEVILLE PUBLIC HEARING NOTICE Notice is hereby given that on August 3, 2015 at 7pm at the Lakeville City Hal, 20195 Holy- oke Avenue, Lakeville, Minnesota 55044 the Lakeville City Council will hold a public hearing conceming submittal of an application to the Minnesota Department of Employ- ment and Economic Development for a grant under the Minnesota In- vestment Fund (MIF) program. The City of Lakeville is request- ing approximately $750,000 to as- sist with the retention of 250 jobs of Post Holdings, Inc. All interested parties are invited to attend the public hearing at which time you will be given the opportunity to express comments on the project. Written testimony will also be accepted at the public hearing. Specific questions can be di- rected to David Olson, Community & Economic Development Director at 952-9e5-4420. DATED this 21st day of July 2015 CITY OF LAKEVILLE By: /s/ Judi Hawkins Deputy City Clerk Published in Lakeville July 24, 2015 424165 CITY OF LAKEVILLE CITY COUNCIL MEETING MINUTES August 3, 2015 Mayor Little called the meeting to order at 7:00 p.m, in the Council Chambers at City Hall. The pledge of allegiance to the flag was given. Members Present: Mayor Little, Council Members Swecker and LaBeau Absent: Council Members Anderson and Davis Staff Present: Allyn Kuennen, Assistant City Administrator; Roger Knutson, City Attorney; Jeff Long, Police Chief; Chris Petree, Public Works Director; David Olson, Community & Economic Development Director; Jerilyn Erickson, Finance Director; Brett Altergott, Parks & Recreation Director; Charlene Friedges, City Clerk 3. Citizen Comments: Avery Hildebrand, Southeast Metro Community Coordinator for Conservation Minnesota, presented the results of a Dakota Electric renewable energy survey. 4. Additional agenda information. None 5. Presentations/Introductions Chris Petree presented the July Public Works Department monthly report. Consent Agenda Motion was made by LaBeau, seconded by Swecker, to approve the following consent agenda items: a. Claims for payment b,. Minutes of the July 20, 2015 City Council meeting c. Acceptance of improvements and final payment to McNamara Contracting for the 2014 street reconstruction project d. Contract with South Metro Storm Swim Club and Resolution No. 15-96 authorizing temporary closing of City streets for a triathlon to be held at Antlers Park on August 16, 2015 e. ALF Ambulance 2016 Budget City Council Meeting Minutes, August 3, 2015 Page 2 f. Encroachment Agreement with Emerald and Zachary Harrison for installation of a private drain tile system g. Amendment to Silvarum Development Contract with Encore Development, LLC h. Amendment to Avonlea Development Contract with Mattamy Minneapolis, LLC i. Joint Powers Agreement with Vermillion River Watershed Joint Powers Organization for stream and wetland restoration within the Avonlea development j. Joint Powers Agreement with Vermillion River Watershed Joint Powers Organization and Cost Share Contract with Dakota County Soil and Water Conservation District for water quality improvements along Hamburg Avenue, Improvement Project 15-05 k. Encroachment Agreement with Magellan Pipeline for rehabilitation of the Fire Station No. 2 parking lot, Improvement Project 15-01 Voice vote was taken on the motion. Ayes - unanimous 7. Supplemental Minnesota Investment Fund Application - Post Holdings, Inc. Community & Economic Development Director David Olson requested Council approval of a resolution authorizing submittal of a Minnesota Investment Fund application to the Department of Employment and Economic Development (DEED) on behalf of Post Holdings, Inc. The DEED has tentatively committed to $3,000 per job on at least 200 and up to 250 retained positions meeting wage guidelines, for a maximum of $750,000. The business must provide a 5096 match for funds received from DEED. The City of Lakeville will provide the project $1,500 per job for the retention of 200 to 250 positions, up to $375,000. Mr. Olson stated a grant agreement between the City of Lakeville and State of Minnesota for the project will be brought forward at a later date. There were no questions or comments from the audience. Motion was made by Swecker, seconded by LaBeau, to close the public hearing Roll call was taken on the motion. Ayes - Little, Swecker, LaBeau Motion was made by Swecker, seconded by LaBeau to approve Resolution No. 15-97 authorizing submittal of a Minnesota Investment Fund application to the Department of Employment and Economic Development on behalf of Post Holdings, Inc. City Council Meeting Minutes, August 3, 2015 Roll call was taken on the motion. Ayes - Swecker, LaBeau, Little 8. Unfinished business: None 9. New business: None Announcements: Next regular Council meeting, August 17, 2015 Mayor Little adjourned the meeting at 7:27 p.m. Respectfully submitted, Charlene Friedges, City Clerk Matt Little, Mayor Page 3 Post Holdings, Inc. Minnesota Investment Fund Application Community Needs Narrative A. Economic vulnerability of the community: Lakeville's percentage of jobs in professional, management and administrative services only account for 11.4%, which is just below the metro average. This City of Lakeville has identified this industry sector to focus on growing in the future. In the City's "Envision Lakeville" initiative as well as the City's "2014-2016 Strategic Plan for Economic Development" has identified the attraction of businesses that can provide higher skill, higher wage, and head of household jobs as a main priority. Retaining the MOM Brands jobs is vital to meeting this key initiative. In addition, 21.7°% of Lakeville's population is out of the labor force altogether. Six and a half percent (6.5%) of families with children in Lakeville have a household income that falls below the poverty threshold. B. Events contributing to a depressed economy: In 2015 YTD, over 3,100 workers in the Minneapolis Saint Paul metro were laid off, according to DEED'S Dislocated Worker Program. Many of these dislocated workers are coming from life science facilities and back office operations. Target Corp. conducted another round of layoffs on Wednesday, June 17, 2015, this time eliminating 140 metro -area headquarters employees. Target said the layoffs are part of the company's $2 billion restructuring plan announced in February. The Minneapolis-based retailer, Minnesota's fifth-largest employer, has now cut 2,360 jobs in the U.S. The largest U.S. cuts came in March, when Target laid off 1,700 headquarters workers and eliminated another 1,400 open positions. Target is likely to lay off more employees following the $1.9B sale of its pharmacy and retail clinic business to CVS Health later this year. C. Unemployment: While unemployment in Lakeville is relatively low, at 3.4% unemployment currently, if the existing 250 jobs are not retained, the City of Lakeville could see an increase in our current unemployment rate. D. Need to attract or retain essential services: In the City's "Envision Lakeville" initiative as well as the City's "2014-2016 Strategic Plan for Economic Development" has identified the attraction of businesses that can provide higher skill, higher wage, and head of household jobs as a main priority. Retaining the MOM Brands jobs is vital to meeting this key initiative. E. Events contributing to a unique situation: In January 2015, Post Holdings, Inc. announced its intentions to purchase MOM Brands Company, a privately held company headquartered in Lakeville since 2013. MOM Brands first located to Lakeville in 2009 with 120 administrative employees. In 2012, MOM Brands announced they would be relocating their corporate headquarters from the IDS Center in Minneapolis to the Fairfield Business Campus in Lakeville. In 2013, MOM Brands finalized the relocation of their headquarters to Lakeville and employed approximately 260 people. Following the announcement by Post in January 2015, Lakeville Mayor Matt Little reached out to the current CEO of Mom Brands, Chris Neugent to discuss how the City could help Post Holdings continue a base of operations in Lakeville. In response to the letter, a meeting in Lakeville with representatives of Post Holdings, MOM Brands, Minnesota's Department of Employment and Economic Development and the City of Lakeville was held on April 16, 2015. At this meeting, Post informed the City and State that they were evaluating two locations to locate their Cereal Division Headquarters. The two locations were Parsippany, New Jersey where their existing headquarters is located and the other being the MOM Brands Headquarters in Lakeville. As stated in the application submitted by Post Holdings, "the acquisition of MOM Brands by Post does have the potential to provide future job growth. Growth through acquisition is a key strategy for Post as represented by the eight acquisitions completed in the past 18 months. The chosen headquarters will not only house the cereal leadership team but will also serve as the growth platform for future acquisitions". Following the meeting in April, the City and DEED were able to propose assistance to encourage Post to locate their new Cereal Division Headquarters in Lakeville. A letter signed by Kevin McKinnon, Deputy Commissioner and Mayor Matt Little was sent on April 23, 2015 which detailed the assistance each would provide. DEED will provide $3, 000 per job retained up to $750, 000 from the Minnesota Investment Fund based on at least 200 and up to 250 retained positions meeting wage guidelines. The business must provide a 50% match for funds received from DEED. The City of Lakeville will provide the project $1,500 per job for the retention of 200 to 250 positions up to $375, 000. The City is proposing to use tax abatement to fund the City's portion. F. Infrastructure conditions: The current infrastructure in place is sufficient to serve the retention of existing jobs and also allows for future growth. G. Out -migration due to lack of jobs: Of those who currently live in Lakeville, a disproportionate amount, 88%, work outside of the city. Lakeville 3,411 13% Minneapolis 3,276 12% Bloomington 2,336 9% Burnsville 2,313 9% Eagan 1,792 7% St. Paul 1,736 6% Apple Valley 1,500 6% Edina 1,006 4% Eden Prairie 798 3% Minnetonka 629 1 2% Other Total 7,959 26,756 30% Inflow/Outflow Job Counts in 2012 M 9,275 - Employed in Selection Area, Live Outside 23,345 - Live In Selection Area, Employed Outside 3,411 - Employed and Live in Selection Area This issue continues to be a focus of the City. In its community vision, Envision Lakeville, a strategic priority for economic sustainability states: Lakeville exists within a growing interconnected region, but a successful future depends upon Lakeville being a more self- sufficient community. This will largely depend upon the City being able to attract a broad mix of economic development to support the services and daily needs desired by the community. Working diligently to secure economic development and redevelopment of all types will ensure success. Additionally, the plan also includes key initiatives to be addressed in years 1-5 including: Emphasize the attraction of businesses that can provide higher skill, higher wage, head of household jobs. Retain existing businesses and facilitate growth and expansion. The City of Lakeville feels that the proposed project by Post which will retain up to 250 existing MOM Brands jobs with the possibility of future growth through acquisitions fit the city's community vision. H. Need to diversify industrial base: Currently, the top three industries operating in Lakeville comprise nearly 60% of the jobs in 2014. The City has seen continued growth in Manufacturing and Transportation jobs recently and expects growth to continue, whereas professional and business service jobs only account for 10%. Retaining the jobs at MOM Brands will assist in keeping these industries diverse. Natural Resources and Mining (10 11) 50 0.3% Construction (10 12) 702 4.3% Manufacturing (1013) 3,120 19.2% Trade, Transportation and Utilities 3,241 (1021) 0 19.9/0 Information (1022) 223 1.4% Financial Activities (1023) 666 4.1% Professional and Business Services 1,770 (1024) 10.9% Education and Health Services (1025) 3,258 20.0% Leisure and Hospitality (1026) 2,240 13.8% Other Services (1027) 601 3.7% Public Administration (1028) 388 2.4% Total, All Industries (000000) 16,263 I. Project will support the economic viability of small, minority, or women -owned businesses: The project is anticipated to provide additional employment opportunities to the Lakeville and surrounding communities. J. Under -employment of existing labor pool: In 2014, Lakeville's labor force was 30,513 of which 44.5% or 13,591 residents were employed in management and business occupations. Today there are only 1,770 professional and business jobs in Lakeville. Being able to retain these existing jobs, with the potential for future growth, will add additional opportunities for Lakeville residents. K. Labor pool needs: Lakeville's population is highly educated, with 96.3% of its population holding at least a high school diploma, and 46% being college graduates. Professional and business service occupations like those provided by MOM Brands and Post are well -paying opportunities for current Lakeville Residents, L. An increase in the value of the parcel(s) of land that will be directly assisted by the project: MOM Brands has two buildings which have enough capacity for the existing jobs and some future growth. Additional renovation of these buildings as needed to accommodate retained or new jobs in Lakeville will result in an increase in the value of the properties. D�p�nMnt o� EmglnymeM anA 5txeramk Pnnllopinrlt April 23, 2015 Mr. Steven Smith Post Holdings Inc. 2503 S. Hanley Rd. St. Louis, MO 63144-2503 Dear Mr. Smith: Posit toned to 7hrtve Congratulations on the purchase of MOM Brands and thank you for meeting with us last week in Lakeville. We appreciate you considering the retention of the Lakeville headquarters for the POST Holdings Cereal Division. As you know, Minnesota is proud of its long heritage in cereal production and consumer packaged goods. We are committed to maintaining our competitive edge in this sector by working with industry leaders, promoting continual workforce development and investing in our infrastructure. We are pleased to inform you that based on the project we discussed and the receipt of your applications for assistance, both the state and city are excited to partner with you. The assistance is based upon the retention of a minimum of 200 positions to a maximum of the approximately 250 positions that currently exist in Lakeville. + DEED will provide $3,000 per job retained up to $750,000 from the Minnesota Investment Fund based on at least 200 and up to 250 retained positions meeting wage guidelines. The business must provide a 50% match for funds received from DEED. The business match could consist of 50% for working capital and 50% for expenditures that are capital in nature (computers, cubicles, computer software etc.). The City of Lakeville will provide the project $1,500 per jab up to $375,000 for the retention of at least 200 and up to 250 positions. The City will offer a tax abatement that will be created after the retirement of the current tax increment financing (TIF) district for the facility. This assistance would be up to a period of 5 years from the date of the expiration of the district which is currently scheduled to terminate in 2022. Therefore, the tax abatement could be effective from 2023-2027. Assistance Summary: Minnesota Investment Fund Property Tax Abatement Total Assistance $600,000 - 750,000 $300,000 - 375,000 $900,000 -1,125,000 The combined use of these programs for this type of project is very unique and expresses the high value that both the city and the state place on the long term relationship with POST Holdings. Please accept aur thanks for considering this important retention project in Lakeville and the state of Minnesota. We believe this is a great fit for POST Holdings and please know we are excited to discuss future growth opportunities as they may arise. Should you have any questions please do not hesitate to contact Kevin at 651-259-7440. Sincerely, Kevin McKinnon Matt Little Deputy Commissioner Mayor Department of Employment and Economic Development City of Lakeville C: Bob Isaacson, Director, BCD Finance Office, DEED Justin Miller, Lakeville City Administrator David Olson, Lakeville Community and Economic Development Director Item No. 5 City of Lakeville QN Community & Economic Development Memorandum To: Economic Development Commission From: David L. Olson, Community and Economic Development Director Copy: Justin Miller, City Administrator Rick Howden, Economic Development Specialist Date: August 21, 2015 Subject: August Director's Report The following is the Director's Report for August 2015. Building Permit Report The City has issued building permits with a total valuation of $114,272,268 through July. This is an 85% increase compared to a total valuation of $79,698,574 for building permits issued through July of 2014. The City has issued commercial and industrial permits with a total valuation of $26,859,000 through July compared to a total valuation of $8,592,000 during the same period in 2014. According to the Builders Association of the Twin Cities, the City of Lakeville issued more new residential building permits in July than any other City in the Twin Cities by issuing permits for 34 new single family dwellings and one detached townhome permit. This is the third month in a row that Lakeville issued the highest number of residential permits. Lakeville also has issued the highest number of residential permits year-to-date with 222 permits issued through July. The next closest City is Plymouth with 170 followed by Blaine at 167, Woodbury at 135 and Otsego at 114. MINICAR Golf Event On Tuesday, June 2311 the Minnesota Commercial Association of Realtors (MNCAR) held their 12' Annual Golf Tournament at Legends Golf Club in Prior Lake. The Golf Tournament hosts over 150 brokers from around the metro area. As in 2014, the City was once again the dinner sponsor for the event and Mayor Little welcomed the golfers to the dinner. Mendell Machine and Manufacturing A groundbreaking was held on August 20th for the 18,700 square -foot addition to the Mendell Machine and Manufacturing in Airlake Industrial Park. In addition, Mendell recently received approval for $155,912 in Tax Increment Financing (TIF) for its expansion which will require them to add at least 12 new jobs over the next two years. The company plans to add 12 to 25 new jobs within three years with an average wage of $24.67 an hour. The Minnesota Department of Employment and Economic Development (DEED) also will award Mendell up to $326,135 from the Job Creation Fund if it reaches its goal of 25 new jobs within the next three years. Jeff Rossate, Director of Business Development for DEED attended the ground -breaking. Thanks to EDC Members Glenn Starfield and Dan Vlasak for also attending the event. Development Updates The Life Time Fitness business, based out of Chanhassen, was sold to a group of three investors for $900 million. As part of the deal, the new owners are selling off individual buildings, which will then be leased back to Life Time, Inc. for 20 years. A New York City investor purchased the Lakeville building for $29.2 million. The buildings in St. Louis Park and Eden Prairie were sold to other buyers for a combined $60.2 million. Construction has recently begun on a new SuperAmerica located in the Timbercrest Development, northeast of 185th Street (County Road 60) and Orchard Trail. The proposed 2,800 square -foot building will include fuel sales, convenience store, and a car wash. Sonnet Montessori School is constructing 5,600 -square -foot Montessori School located on Idealic Avenue, behind the Heritage Commons Cub Foods. The project is expected to be completed by late September or early October. Construction began recently on The Goddard School, an 8,855 square -foot daycare facility in the Spirit of Brandtjen Farm commercial district east of Pilot Knob Road (CSAH 31) and south of 1601h Street (CSAH 46). This project is also expected to be completed this fall. Hy -Vee has received a building permit for their 92,000 square -foot grocery store that includes a sit-down restaurant and a free-standing gas convenience store as well as a separate four - bay automatic car wash. Hy -Vee will also be located in the Spirit of Brandtjen Farm commercial district at the southeast corner of County Road 46 and Pilot Knob Road. Construction is expected to be completed sometime next Spring. Building Inspections issued a Temporary Certificate of Occupancy for Heavy Metal Grill in Downtown Lakeville that opened on Thursday, July 9th in the south half of the former Ace Hardware Building. Building Inspections also recently issued a Final Certificate of Occupancy for NPL's new 15,000 square foot office warehouse building on County Road 70 just west of Performance Office Paper. The Center for Diagnostic Imaging opened last month in the Oak Corners Development, southeast of County Road 60 (185th Street) and County Road 50 (Kenwood Trail). The new medical office building will be nearly 8,500 square feet with multiple tenants. Center for Diagnostic Imaging will be one tenant and will occupy over 4,200 square feet of the building. A Conditional Use Permit (CUP) Application was approved by the City Council for a 3 story, 83 unit extended stay hotel project to be located in the southwest quadrant of County Road 70 and 1-35. The CUP is required to address the building height, which is currently planned to slightly exceed the height requirements of the City Code. This project is being developed by a partnership that includes Jamie Dahlen, who owns and operates the Holiday Inn Hotel & Suites. 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W --7 W O S O O O 0 0 0 0 IOI O O O IOI O O O O O O O O O O O O O O O O O O O O O O O O O 0 0 0 0 0 0 0 0 0 O O O O O O O O O O O O 0 0 0 0 0 0 0 0 0 0 O O O O O O O O O O O O O N N N oo A O O O O O O O O O July 2015 Building Activity Multifamily Construction as a Percentage of Total Activity Aug -14 Past Twelve Months Nov -14 Dec -14 Permits Permitted Units Permit Value July 2014 443 903 162,589,635 August 2014 413 532 147,568,728 September 2014 436 791 184,305,677 October 2014 397 1,210 177,708,939 November 2014 405 865 180,312,569 December 2014 355 987 158,580,831 January 2015 308 529 135,411,906 February 2015 347 357 119,387,235 March 2015 334 928 175,491,116 April 2015 350 451 124,785,234 May 2015 359 516 132,481,620 June 2015 476 1,150 197,667,693 July 2015 459 795 183,981,191 Multifamily Construction as a Percentage of Total Activity Aug -14 Sep- 14 Five -Year Comparisons Nov -14 Dec -14 Permits Permitted Units Permit Value July 2011 257 370 84,251,612 July 2012 403 783 I 141,544,175 July 2013 533 698 177,481,827 July 2014 443 903 I 162,589,635 July 2015 459 795 183,981,191 The Builders Association of the Twin Cities Permits Permitted Units Permit Value YTD 2011 I 1,581 I 2,294 I 539,347,405 YTD 2012 2,239 3,953 787,774,426 YTD 2013 I 2,912 I 4,914 I 1,035,307,976 YTD 2014 2,800 5,585 1,074,018,029 YTD 2015 2,766 I 4,943 I 1,119,610,683 Multifamily Construction as a Percentage of Total Activity Aug -14 Sep- 14 Oct -14 Nov -14 Dec -14 Jan -15 Feb -15 Mar -15 April -15 May -15 June 15 July -15 YTD -15 26 50 65 55 66 5 4 65 23 32 61 1 45 46 Top Cities for Building Activity July 2015 Year to Date Permit Permitted Units Permits Permitted Units Lakeville 49 Blaine 266 Lakeville 228 Minneapolis 549 Blaine 35 Minneapolis 154 Plymouth 170 Blaine 402 Plymouth 33 Lakeville 49 Blaine 167 Maple Grove 359 Otsego 21 Maple Grove 38 Woodbury 135 Woodbury 299 Grove 15 Plymouth 36 y Otsego 114 Lakeville 228 PTIOTL,Maplee Prior Lake, Rosemount The Builders Association of the Twin Cities has contracted with Keystone Report, a local research firm, to maintain a database with infOrMation about nein residential construction permits around the metropolitan area. After a builder has picked up the permit,from a city, Keystone Report compiles and updates meekly residential housing permits by city for 70 percent of the metro- politan -area municipalities in the greater 13 -county regiott. Platuied wmits are the total umnber ofltousing units plaiured to be built under the permits issued tone permits is issued per building which may include more thatt one housing uttit). Pernrit vahre docs not include the landllot costs. Olson, David From: Koch, Madeline (DEED) < Madeline. Koch @state.mn.us> Sent: Wednesday, June 17, 2015 4:12 PM To: Olson, David Subject: FW: Mendell Expanding in Lakeville David — FYI, we got clearance from the company to announce this today. Thanks! From: DEED Media[mailto:MNDEED@public.govdelivery.comj Sent: Wednesday, June 17, 2015 1:53 PM To: Koch, Madeline (DEED) Subject: Mendell Expanding in Lakeville NEWS RELEASE For Immediate Release Contact: Madeline Koch, 651-259-7236 June 17, 2015 madeline.koch(&state.mn.us Mendell, Inc Expanding in Lakeville —Company plans building renovation and addition, 25 new jobsN ST. PAUL — Mendell, Inc. announced plans today to expand its operations in Lakeville and add 25 full-time jobs. The company said it will spend $2.36 million to renovate an existing facility at 21463 Grenada Ave. and build an 18,700 -square -foot addition. The new jobs, which the company plans to add within three years, will pay an average wage of $24.67 an hour. Once Mendell meets its hiring and investment goals, the Minnesota Department of Employment and Economic Development (DEED) will award the company $326,135 from the Job Creation Fund. "Mendell has earned a national reputation for producing high-quality medical device components from Minnesota," said DEED Commissioner Katie Clark Sieben. "We are grateful for the company's commitment to the state, and congratulate them on this expansion that 1 will help meet the growing needs of their customers." Mendell is a precision medical life sciences company that manufactures custom implants for orthopedic, orthopedic spine, cardiovascular and other device markets. The Job Creation Fund, which was first proposed by Governor Mark Dayton in 2013, is a pay - for -performance program that provides funding to businesses after they meet certain criteria, including minimum requirements for job creation and private investments. Under the program, businesses must create at least 10 full-time jobs and invest at least $500,000 to be eligible for financial assistance. Since the Job Creation Fund was launched in January 2014, DEED has awarded $19.3 million to 37 companies in Minnesota. Those companies have committed to creating 2,181 full-time jobs and plan to invest $378.5 million to expand. DEED is Minnesota's principal economic development agency, promoting business recruitment, expansion and retention, workforce development, international trade and community development. For more details about the agency and our services, visit us at http://mn.ciov/deed . Follow us on Twitter at twitter.com/mndeed . -30- Upon request, the information in this news release can be made available in alternative formats for people with disabilities by contacting the DEED Communications Office at 651-259-7236. Minnesota Department of Employment and Economic Development Communications Office Phone 651-398-9459 or 1-800-657-3858 - TTY 1-800-657-3973 An equal opportunity employer and service provider. a Questions? .000# Contact Us i�prrt+�+�r� d � and Arnie i�+rrtnkwn�nt STAY CONNECTED: SHRRE SUBSCRIBER SERVICES: Manage Preferences I Unsubscribe I Hell) Lakeville unveils details of Post deal By Laura Adelmann June 25, 2015 at 4:44 am Tweet Jobs staying after $1.1 million deal with city, state Post Consumer Brands headquarters will retain all 250 jobs in Lakeville and may add more after striking a deal with the city and state of Minnesota that provides the company about $1.1 million in combined incentives. Details of the tax abatement proposal were presented to Lakeville City Council members at a June 22 work session. Steve Smith, senior vice president of human relations of Post Holdings, and Chris Neugent, head of Post Consumer Brands Division, meet with Lakeville officials, including City Administrator Justin Miller, at a June 22 work session. (Photo by Laura Adelmann) Under the plan, the city and state are offering incentives to the company to retain jobs at its Lakeville headquarters for at least five years. The incentive offers the new company $1,500 per job from the city and $3,000 per job from the state in tax abatements. Post Consumer Brands, created after Post Holdings purchased Lakeville - headquartered MOM Brands for $1.15 billion in January, now says it will retain 250 jobs in Lakeville. Lakeville will provide the funds after the jobs have been in place one year, according to Lakeville Community and Economic Development Director Dave Olson. He said incentive options were limited to abatements because the Fairfield Business Campus where the new combined company will locate (formerly MOM Brands headquarters) in two buildings is already a tax -increment financing district that does not expire until 2022. "It's not even possible in Minnesota to do a tax -increment district on top of an existing tax -increment district," Olson said. "So ... the only other tool that is really available to the city is tax abatement." Olson said tax abatement is similar to tax -increment financing, which subsidizes development costs with money generated by the property's increased value, diverting that amount from local taxing governments for a set period of time. Olson said the difference with tax abatement is that those taxing entities that the money would go to, the city, county and school district, must agree to participate. Lakeville is planning to use money from its liquor fund to pay the company $375,000 after the jobs have been in place a year. In 2023, Lakeville will start to abate about $80,545 annually from its portion of the business's property taxes for about three to four years to repay the liquor fund loan with interest. The city's incentives will dovetail with the state's portion, which Olson said was an unusual project for the Minnesota Investment Fund because its purpose is retention, not capital costs. Jim Gromberg, metro area business development representative with the Minnesota Department of Employment and Economic Development, agreed. He called use of the state's fund for job retention "outside of our comfort zone," but said they made some adjustments regarding what capital investments are comprised of and how they track it. "It's a good project," Gromberg said. Olson said having the state's backing proves it recognizes "the importance of keeping MOM Brands in Minnesota, as well as the city's priority of trying to keep MOM Brands offices — soon to be Post Consumer Brand's offices — here." Post Consumer Brands announced in May it would be led by MOM Brands President Chris Neugent and selected Lakeville as the location for its corporate headquarters of its cereal division. Neugent said they are now hiring and added there will be "significant" new hires, particularly in marketing. This week, about 35 people came from the company's two offices to tour Lakeville, see the office and what the city has to offer. Mayor Matt Little said the city wanted to provide a package that was useful to the company and provided them a "reason to stay here." "We are incredibly grateful that you did," Little said. "We look forward to continuing this partnership." Steve Smith, senior vice president of human resources for Post Holdings, said company officials this spring were considering whether to headquarter in Lakeville; Parsippany, New Jersey, or St. Louis, Missouri. He said Lakeville's location, employees and community all weighed in as a "strong positive" of making headquarters in Lakeville. He called the actions of the city and state to arrange the deal a "great effort" that was quickly and timely. "I've worked with states all over the country putting together some of these packages," Smith said. "Quite honestly, I haven't had anybody that's stepped up and put something together at the rate of speed that you did." Neugent said they plan for Post Consumer Brands to grow even more with future acquisitions and also base in Lakeville. "We're excited," Neugent said. "It's a pretty fast pace right now. We're moving fast to make the consolidation work, and it's a very great opportunity for the employees here and certainly great for Minnesota not to have lost a cereal business versus to expand one." BUSINESS Small firms laud end of Minnesota capital -equipment sales tax rebate program Capital equipment purchases for small businesses are now tax- exempt. By Dee DePass (http://www.startribune.com/dee-depass/106"7"/) Star Tribune JULY S. 2015 — 8:37PM On Monday, Haberman Machine Controller Kim Arrigoni groaned as she faced the 10 - inch stack of tax rebate forms, tax schedules and equipment receipts the state required just so her family-owned business could get back thousands in sales taxes Haberman Machine never really owed in the first place. The stacks are now going away. After a two-year delay, Minnesota's much hated 1989 sales tax rebate program for capital equipment purchases ended last week. The change is a major coup for small businesses and the Minnesota Chamber of Commerce, which lobbied hard for legislators to rescind a law many considered an unnecessary hardship. Under the law, Minnesota factories had to pay sales tax, file returns and wait months to get rebates on every piece of equipment bought or repaired According to the Minnesota Department of Revenue, about 2,000 factories spend $4 billion each year on new equipment and repair parts and then shell out $270 million for a sales tax they eventually get back. 'When you are talking cash flow, that is a big number," said Beth Strinden Kadoun, director of tax and fiscal policy for the Minnesota Chamber of Commerce, which has 2,300 members. About 80 percent are small companies affected by the change. The change makes newly purchased capital equipment, parrs and repairs tax -exempt - 'This is a huge win for our industry in Minnesota," Arrigoni said. "It's been a huge pain for businesses because of the cost and the time involved.... It took reams of documents" to get the state to issue each tax rebate. Gov. Mark Dayton believes the change is "making it easier for business owners," said spokesman Matt Swenson. Katie Clark Sieben, commissioner of the Minnesota Department of Employment and Economic Development [DEED], said the "unnecessary burden" is now removed. The upfront tax exemption "will save Minnesota businesses both time and money as they plan for future growth.... Having access to capital can often be the largest hurdle to development." In January, Mike Yeager, owner of the medical and auto parts manufacturer Yeager Machine, paid $10,000 in sales tax on a $150,000 machine he bought for his Norwood Young America factory. He had to hire an accountant who charged $1,000 to $2,000 per filing to get the rebate on sales tax charges like this. Then he had to wait three to six months to get the rebate check. A second new machine arrives next month at his company. His tax bill this time around? Nada. "I am so happy," Yeager said. "I had to buy this machine. But it doesn't arrive until August, so my accountants have assured me that I won't have to pay sales taxes on it since it doesn't get installed until after July 1. I love it" And the money saved? He'll put it toward hiring a 26th employee or buying more equipment. Arrigoni said Haberman Machine also will"reinvest that tax money in our inf wtructure." The company in September plans to spend $500,000 to $1 million replacing outdated machines that fabricate parts for manufacturers of medical devices to escalators. Under the old law, the company would have paid $35,625 to $71,250 in state and county taxes, (httpV/strnedi&starMbLme.com/iniages/0ws_1435893. Blaine Weber worked at a vertical machine center to curt and clean clamps for medical IV poles at Yeager Machine in Norwood Young... causing more consideration on the number of machines to buy. Such company reinvestments are a "great result" of this tax change, said Minnesota Revenue Commissioner Cynthia Bauerly. Her department followed all the legislative hearings that dealt with the disliked tax policy. "People have been waiting a long time for this one," Bauerly said. "We are really excited for businesses who are seeing this change. Now they won't have to go through the paperwork to get their exemption." As of Wednesday, businesses can simply give their equipment supplier an ST -3 certificate of exemption form, she said. "You have to indicate that [the purchase] is for capital equipment and everybody is good to go." ddepass@startribune.com 612-673-7725 DePassStrib Tax and spin: Most families in Wisconsin, it turns out, would save on taxes by moving to ... Page 1 of 5 MINNPOST Tax and spin: Most families in Wisconsin, it turns out, would save on taxes by moving to Minnesota By Lindsay Snider and Steven Fischer 111:06 am REUTERSlrami Chappell The taxes on Gov. Scott Walker's $360,000 home in suburban Milwaukee County were more than $8,000 in 2014. On Tuesday, Scott Walker- will bring his presidentialTampaign-tcy-Minnesota, where -he'll -give a speech on the Affordable Care Act and attend a fundraiser. At those events, Walker will no doubt boast about his conservative record as governor of Wisconsin: an ambitious if sometimes polarizing set of public policies that have reduced government spending, curtailed collective bargaining rights and — as he is sure to remind people — reduced the state's taxes by more than $2 billion. http: //www. minnpost. com/politics-policy/2015/08/tax-and-spin-most-families-wisconsin-it... 8/17/2015 Tax and spin: Most families in Wisconsin, it turns out, would save on taxes by moving to ... Page 2 of 5 Just as predictably, Walker is likely to be asked more than a few questions about the state where he'll be holding forth, a place where his counterpart, Democratic Gov. Mark Dayton, has pursued the sort of agenda that might cause Walker to break out in hives: expanding union membership, increasing school funding and — most notably — implementing a tax hike on the wealthiest Minnesotans. Comparing the two states under the two men over the last few years has become something of a national sport, after all, a favorite pastime among journalists, academics and politicians alike. Even President Barack Obama has gotten in on the act. Before an audience in La Crosse last month, he paraphrased the local paper by saying that Minnesota was "winning this border battle" when it came to the states' respective economic fortunes. And yet, despite all the ink spilled about both Walker and Dayton and their records, almost all of the assessments overlook a longstanding but seldom -discussed fact about life on either side of the St. Croix River: that a majority Minnesotans actually pay a smaller share of their household income toward taxes than Wisconsinites. The primacy of property taxes How can that be the case? In 2013, Walker delivered on one of his big campaign promises when the Wisconsin Legislature passed a bill that compressed five income tax brackets into four and lowered all rates, reducing the average rate from 6.4 percent to 5.9 percent. That same year, Minnesota went in the opposite direction, with the Legislature passing a Dayton -led initiative to add a fourth state income bracket for individuals earning over $150,000 or couples earning over $250,000. The rate, of 9.85 percent, was among the highest in the country, and it meant the state's average income tax rate would go from 6.8 percent to 7.5 percent. But those high-profile changes only affected the income tax, not sales tax or, importantly, property tax — the key factor in comparing the overall tax burden between Minnesota and Wisconsin. For years, Wisconsin has had some of the highest residential property taxes in the country. The result is that across every income bracket, homeowners in Wisconsin pay a higher share of their income to property taxes than those in Minnesota, according to data compiled by the Institute on Taxation & Economic Policy, a nonpartisan think tank that studies tax policy. To take just one example, the taxes on Walker's $360,00o home in suburban Milwaukee County were more than $8,00o in 2014. http://www.minnpost. comlpolitics-policy/2015/08/tax-and-spin-most-families-wisconsin-it... 8/17/2015 Tax and spin: Most families in Wisconsin, it turns out, would save on taxes by moving to ... Page 3 of 5 In fact, for all but the top earners, Wisconsin homeowners who work in Minnesota would often fare better by staying on this side of the river, largely because property tax rates are low enough to make up for higher income tax rates. As a report from the National Center for Policy Analysis noted last year: "While a renter would fare worse in Minnesota thanks to the higher income tax, homeowners would fare better because of Minnesota's lower property tax rate." Walker didn't create the higher property taxes, but he also hasn't been able to do much about them, either. The reason lies in Wisconsin's state constitution. Unlike Minnesota and all but seven other states, Wisconsin is required to tax all property equally, be it commercial or residential. That means Wisconsin can't shift any of the tax burden from homeowners to owners of other types of property, as many states do (including Minnesota). As a result, Wisconsin's high property tax essentially wipes out any savings most taxpayers would see due to the lower income, sales and excise taxes compared to Minnesota. In fact, the only group that faces a higher tax burden in Minnesota than in Wisconsin are families with household incomes over $200,000. Small businesses benefit Just as the Wisconsin's tax -code restrictions hurt homeowners compared to those in Minnesota, they help business, because they bear a smaller share of all property taxes in the state. Small business owners in Wisconsin have another advantage over their counterparts in Minnesota: Because many small businesses are known as "pass-through entities" whose owners pay their corporate tax on their personal income tax form, they benefit from Wisconsin's lower income tax rate vs. Minnesota's. Given all that, one might expect business to be flocking to Wisconsin. But two years after the states' biggest tax changes took effect, there's little evidence to suggest any such migration is happening. David Ross, president and CEO of the Duluth Area Chamber of Commerce, says he doesn't see businesses moving across the border to Superior, despite Wisconsin's efforts. That's partly because moving a business can be risky, Ross said, if for no other reason than political ideology can change with each election. Instead, what's reliable is a quality work force — the main incentive for businesses to locate in an area, he said, as is quality of life. "All of these wild incentives from these different states are often from a state that is the least attractive," Ross said. "The cost of government is certainly, within a state, an important factor http://www.minnpost.comlpolitics-policy/2015/08/tax-and-spin-most-families-wisconsin-it... 8/17/2015 Tax and spin: Most families in Wisconsin, it turns out, would save on taxes by moving to ... Page 4 of 5 to keep in mind. (But) people want to live in a community where there's a strong public school system, where it's a safe place to raise a family, where there's strong recreation. I think those states that are focusing on cost of government are in a bad place. We're promoting much more lifestyle and a place to live, not just a place to work.... So I am not impressed with the position of Walker. We have done nothing other than become stronger, our state as an economic entity, since his election." Lindsay Snider and Steven Fischer are students at the University of Minnesota School of Journalism and Mass Communication, which partnered with MinnPost to produce this article. Get MinnPost's top stories in your inbox I First Name Last Name SUBSCRIBE NOW Email address © Daily newsletter © Sunday review ❑ Greater Minnesota newsletter COMMENTS (3) Research, research, research SUBMITTED BY JOHN EDWARDS ON AUGUST 17, 2015 - 12:09PM. Two students wasted time writing this article because it is based on the faulty premise that the "Institute on Taxation & Economic Policy, (is) a nonpartisan think tank that studies tax policy." No, the ITEP is affiliated with the Citizens for Tax Justice, a well-known liberal organization, founded by labor unions, that lobbies for higher taxes on financial achievers—not themselves. What exactly did the students expect this think tank would find? The ITEP simply cherry picked statistics to advance a now familiar political talking point that Minnesota with a Democrat as a governor is now better off than Wisconsin that has a Republican ... even though their respective predecessors—who arguably laid much of the foundation for what is happening today—were exactly the opposite. The Milwaukee Journal Sentinel newspaper did a similar comparison when this issue first arose and concluded which state has fared better depended on what statistics were chosen. I hope these two students eventually learn that virtually all think tanks, especially those that claim the credibility of non-partisanship, have a political bias. The students' major misstep, a common one among even experienced reporters, was not accurately alerting readers to the bias of ITEP. http://www.mim-oost.com/politics-policy/2015/08/tax-and-spin-most-families-wiseonsin-it... 8/17/2015 Tax and spin: Most families in Wisconsin, it turns out, would save on taxes by moving to ... Page 5 of 5 Tax & Spin SUBMITTED BY DALE PEDERSON ON AUGUST 17, 2015 - 12:09PM. Kudos! Data SUBMITTED BY JOSEPH SKAR ON AUGUST 17, 2015 - 1:02PM. The title refers to most families, then the body says, "that a majority Minnesotans actually pay a smaller share of their household income toward taxes than Wisconsinites." So what is the underlying data, families or individuals? The references seem to be a mix of renters vs homeowners but use two different sources. The link above only goes to the Institute on Taxation & Economic Policy homepage and not the actual support. MinnPost 1900 6th Avenue SE I Minneapolis, MN 55414 1612.455.6950 http://www.minnpost-comlpolitics-policy/2015/08/tax-and-spin-most-families-wisconsin-it... 8/17/2015 Suburbs embrace tax subsides as Minneapolis' interest fades By Eric Roper and John Reinan Star Tribune staff writers AUGUST 17, 2015 -• 10:43AM Suburban communities across the metro area are rebuilding themselves with the aid of a controversial development subsidy that once played a major role in reshaping Minneapolis. While Minnesota's largest city has largely weaned itself off the tool, the taxpayer subsidy is now underwriting growing visions of suburban renewal as the first generation of postwar suburbia reaches middle age. It's the backbone of Edina's plan to rebuild a massive 19 6o office park; of Wayzata's new downtown housing and retail complex; of glitzy outdoor malls in St. Louis Park and Eagan; and mixed-use districts around several Northstar commuter rail stations. The 15 costliest subsidy districts approved in the last five years — based on potential budgets — were all in the suburbs or outstate Minnesota, according to the state auditor's office. "The more savvy cities know that they have to constantly upgrade infrastructure, deal with blighting influences, work on major redevelopment projects," said Jim Casserly, an attorney who advises cities. "They have to do that or they go into decline." Called tax -increment financing, the tool diverts anticipated local government tax revenue from a project to pay for some development costs. Developers say that they couldn't afford to complete such ambitious projects without the financial assistance, but the incentive also shorts cities, schools and counties of the new tax revenue. What is TIF? Tax -increment financing aids development by paying for certain costs (land acquisition, site prep, parking, etc.) with the new taxes generated by the project. Costs listed above, in several cases, reflect the investment in the initial phases of larger -scale visions, not including interest. Stacie Kvilvang, a senior director at the consulting firm Ehlers, said suburbs are seeking "wholesale change" with large mixed-use projects that typically include retail, housing and offices. Use of the tool dates back decades, but she said that visions have grown grander in the last io to 15 years. Only some costs are eligible for assistance, such as parking ramps, demolishing buildings, utility work or improving roads. The budget estimates are based on each city's highest development aspirations and the needed public support, which do not always materialize. Taxes from the new projects are often used for decades to pay off the initial public support — about half of which is often for interest — effectively growing the city without generating additional money for police, fire and schools. But once the initial subsidy is paid off, the theory goes, the properties will generate ongoing tax revenue that would never have existed if the cities hadn't helped get the projects off the ground. Once a dominant user of the tool, Minneapolis now uses it largely on a small scale for affordable - housing projects. The subsidies gobbled up 15 percent of the city's tax base as recently as 2004, but that number has been cut approximately in half and continues to fall as older districts expire, like this year with the former Neiman Marcus downtown and the Laurel Village project. `Super tempting' Casserly said suburban use has expanded from targeted business incentive projects to large-scale redevelopments. The public aid often occurs in phases as needed. The city of Champlin bought land and demolished some apartments to lure housing and commercial development to 6o acres beside the Mississippi River, billed as "one of the largest infill, mixed-use redevelopment locations in the entire metro area." New Hope demolished an abandoned Kmart in an area they had planned a mix of uses and space for people to "to linger and to have fun," but ultimately approved a Hyvee grocery store for the site. Anoka acquired property, demolished buildings and contributed $1.9 million toward a parking ramp at its Northstar station, with hopes of ultimately attracting nearly foo housing units and commercial space. Edina officials estimated that parking ramps could eat up as much as $52 million of their potential $log million in public support for The Link, a 42 -acre office campus complete with hotel. Bloomington is committing $34 million from an existing district to pay primarily for new parking facilities at the Mall of America expansion. The subsidy program is attractive to cities because it allows them to capture taxes that would otherwise go to the county and school districts, said Rep. Ann Lenczewski of Bloomington, lead DFLer on the Minnesota House Taxes Committee. "It's super tempting because they get all this extra money," Lenczewski said. "So they're leveraging this huge tax base that isn't even theirs." Not all of them work out as planned. In Eagan, the school district blocked an attempt to extend the duration of the district that helped create the Twin Cities Premium Outlets and several nearby housing projects. Delayed by the unexpected downturn during the recession, city leaders sought the extension to cover a $13 million gap repaying their $62 million investment in land, a parking ramp and development costs. Chuck Marohn, president of the Brainerd -based Strong Towns, said suburbs often make the mistake of chasing large, "home run" projects. "Nobody ever really sits down and really says, `What is a high -return investment?"' Marohn said. "Because when you do that, it winds up to not be the stuff with parking lots, and the stuff that's real huge and the stuff that requires massive amounts of public infusion. It tends to be small, little things." `A really challenged site' The proposal for Edina's "The Link" make it among the largest new districts certified in the last 15 years. Pentagon Park in Edina was the Twin Cities' first suburban office park, a series of low-rise modern buildings ringed by surface parking lots near the intersection of Hwy. loo and Interstate 494• For decades, a succession of owners failed to invest in the property. Roofs and windows leaked, heating and ventilation systems didn't work, weeds sprouted from cracked asphalt parking lots. Vacancy rates in Pentagon Park's buildings rose as high as go percent. Link developer Scott Tankenoff and his investors are in line for eventual reimbursement of about $54 million in principal costs, not including interest, if the project is completed. Tankenoff and city officials say the incentives were critical to getting the $500 million multiphase project underway. "Everybody sees the location. Everybody thinks it's wonderful," Tankenoff said. "But it's a really challenged site with a lot of problems." Steve Timmer, a retired corporate lawyer and Edina resident, has emerged as a leading critic of the city's tax subsidy deals. "It seems like a financial deal that's better than you need to give," he said. Edina city officials acknowledge that the market could have sustained lower -rent office space on that site. "We'd much rather scrap it and start over, and deliver that Class A amenity for the 21st century," said Bill Neuendorf, the city's economic development manager. A similar philosophy is at work in Wayzata, where a `hos-era shopping center has been replaced by a dense new district that includes retail, senior living apartments and a planned hotel. "Could you have torn down the old mall and built a couple of strip malls? Sure," City Manager Heidi Nelson said. "But I think the community had a vision for something broader." Minneapolis -St. Pawl These large tax -subsidy districts once helped transform Minneapolis, from the redevelopment of the central riverfront to the construction of Block E on Hennepin Avenue. Much of that changed after the 2oo1 election of Mayor R.T. Rybak, who was more skeptical of the subsidy. The last major project was a $3o million subsidy — not including interest — to redevelop the former Sears building into the Midtown Exchange on Lake Street in 2004. But newer districts are geared toward modest affordable housing projects, where low rents make private financing difficult. "We are trying to grow the city. That doesn't just mean growing in terms of population," said Council Member Lisa Goodman, a leader on the issue. "It means growing in terms of tax base so the existing population doesn't have increasing property taxes." Notably, however, the city also received legislative approval to redirect taxes from several apartment projects — including LPM tower and Nic on 5th — to eventually fund a streetcar line. Though technically not tax -increment financing, the amount of taxes ultimately redirected could reach $loo million. St. Paul has recently been more aggressive in using the subsidy for housing, often to add affordable units. The 15 districts approved by the city in the last five years — 11 of them for housing — are collectively estimated to redirect $log million in new taxes toward project costs and interest, vs. $24.5 million for those in Minneapolis. The city's use of the tool has become a campaign issue for Jane Prince, an attorney now running unopposed for an east side council seat vacated by Kathy Lantry. She specifically cites the city's aid for an affordable senior housing project on Bates Avenue, a site she felt would have ultimately attracted development without a subsidy. "When we do a project that brings more residents to St. Paul, if it's a housing project and it's a tax increment project, we're creating an increased need for city services," Prince said. "But we're actually taking the money away to pay for them." Mayor Chris Coleman said the recent uptick in the city's tax -increment financing use reflects renewed interest by developers. "We've taken a very aggressive approach to try and build more housing so that as we revitalize the city, it continues to be a place where everybody can live." Coleman said. What's driving new optimism in industrial real estate? (Sponsored content) - Minneapolis... Page 1 of 2 From the Minneapolis / St. Paul Business ]ournal :http://www.biziournals.com/twincities/blocs/real estate/2015/08/whats- drivina-new-industrial-real-estate.html What's driving new optimism in industrial rea I estate? (Sponsored content) Sponsor Content: Aug 3, 2015, 10:22am CDT This local trend report was written by Real Estate Inc. blog sponsor Western Bank, not Business Journal staff. All sponsored content will be clearly labeled. Western Bank has increased loan capacity to get your commercial real estate deal done, and bankers who are looking out for you. Tats the Western Way. Optimism about the future among Minnesota's manufacturers is higher than any point since 2009, according to The State of Manufacturing, a survey sponsored by Enterprise Minnesota and partners. Overwhelmingly, Minnesota manufacturing executives say they are confident about the future of their firms. An eye-opening 89 percent responded positively, the highest mark in the survey's seven-year history; five points up from last year. See Also • Baby boomers drive Twin Cities senior housing boom (Sponsored content) • Trends that are driving the market in CRE (Sponsored content) The survey said firms expect to grow, create jobs, and increase wages in 2015. But it's not all good news: a gap in workforce skills, health care costs, and government oversight could still hold back growth. According to the National Association of Realtors, industrial markets across the country are benefitting from rising trade and a continuing shift towards electronic commerce, which is driving strong demand for distribution warehouse space. Jeff Wosje, senior vice president of commercial banking and west metro team lead at Western Bank, has taken note of national statistics as well. http ://www.bizj oumals. comltwincitieslblog/real_estate/2015 /08lwhats-driving-new-industr... 8/12/2015 What's driving new optimism in industrial real estate? (Sponsored content) - Minneapolis... Page 2 of 2 "The U.S. small business survey came back very promising — manufacturers are more optimistic than they have been" he said. "After the recession, a lot of manufacturing came back from overseas." The Minnesota Commercial Association of Real Estate's first quarter 2015 report states that the Twin Cities industrial market experienced 721,911 square feet of positive absorption for the quarter, and the vacancy rate has dropped from 9.9 percent to 9.3 percent. Wosje says, "There's a lot to feel good about, but many companies still haven't gotten to the point where they're expanding. Here in our market, factory capacity is still below 80 percent. Companies may be hiring, but they're starting a second shift." Wosje believes that everyone's waiting for the economy to heat up to the 5 percent GDP growth. "But it's really critical for bankers to understand how the global economy can impact a small privately held manufacturing company right here in Minnesota," he said. "We keep an eye on what's going on in China, Europe, South America — because these international components play into the local manufacturing market." Doris Bevers, vice president of commercial banking at Western Bank, adds, "Community banking has had its roots deep in commercial real estate financing: owner occupied real estate, investment real estate financing including multi -housing and retail projects, and residential land development." "In addition, in the past 20 plus years community banking has been expanding into providing more working capital lines and equipment financing by working with business owners to meet all their needs," she said. This local trend report was written by Real Estate Inc. blog sponsor Western Bank, not Business Journal staff. All sponsored content will be clearly labeled. Contact Digital Editor Jim Hammerand with questions or feedback on this sponsored content. http://www.bizj oumals.comltwincitieslbloglreal_estate/2015/08lwhats-driving-new-industr... 8/12/2015 Olson, David From: Skip Nienhaus<Skip.Nienhaus@burnsvillemn.gov> Sent: Tuesday, July 21, 2015 3:01 PM To: Olson, David Subject: RE: Heritage Commons article R11 The 138,690 -square -foot Heritage Commons retail center in Lakeville sits on 30 acres, 9 of which could be redeveloped, according to Mrd -America (Submitted photo CoStai) Texas company pays $12.1 M for Lakeville retail center l3;': <\urlic 1�'�inmxnn.luly Vii). ?01; x:58 pm 0 An Austin, Texas-based real estate investment group has purchased Lakeville's Heritage Commons retail center for $12.1 million, according to a certificate of real estate value made public on Monday. The 138,690 -square -foot property, anchored by a Cub Foods store, sits at the northeast corner of Dodd Boulevard and Kenwood Trail, at 20250 Heritage Drive. The purchase price shakes out to $87.17 per square foot. The buyer is Epic Real Estate Partners, which invests in retail real estate in the top 60 markets, according to its website. The seller is Edina -based Sentinel Management Co. Other Heritage Commons tenants include Subway, Papa Murphy's, Great Clips and American Dental. The property's appraised value was unclear in Dakota County property records. Of the nearly 30 acres trading hands in the sale, more than 9 acres are ripe for potential redevelopment, according to broker Mid-America Real Estate Corp. Epic Real Estate Partners could add up to 44,500 square feet of in-line gross leasable area, the broker said in a news release. Epic, founded in 2012, owns two other retail centers with grocery stores — one in California and one in Florida. Sentinel Management primarily owns and manages apartment buildings throughout the Twin Cities. The deal closed April 29, according to the CRV. City Of Skip NienhausI Economic Development Coordinator 16 M irnwillp 9III 52 Civic Center Parkway I Burnsville, 155337 952-895-4454 (office) Iwww.burnsville.o.org/whyburnsville I www.burnsville.org BUSINESS Motivated buyers sparked Twin Cities metro home sales to a record pace in June By Jim Buchta (http://www.startribune.com/jim-buchta/106"536/) Star Tribune JULY 14, 2015 — 11:02AM In the midst of the peak shopping season, houses in the Twin Cities metro sold at a record pace in June. Both closed and pending sales reached 10 year highs and, with buyers outpacing sellers in some parts of the metro, houses on average sold in an unprecedented 66 days, according to a monthly report from the Minneapolis Area Association of Realtors. "Buyers are very motivated right now," said Betsy Lucas of Coldwell Banker Burnet, who was recently involved with three lightning -speed sales. "When something really fabulous comes on the market, people are ready." In the 13 -county metro area, there were 6,928 closings in June, a 22 percent increase over last year. New listings rose only 4.6 percent, leading the total inventory of listings at the end of the month to slip 9.4 percent. 8,000 6,000 v v� 4,000 2.000 Total metro monthly home sales since January 2004 All Sales 0 Jan -2004 Jan -2006 Jan -2008 Jan -2010 Jan -2012 Jan -2014 Month - Year After a disappointing 2014, the recovery of the Twin Cities real estate market is back on track this year and exceeding expectations in some cases. Mortgage rates remain near historic lows and wage growth is emboldening buyers and their pocketbooks. "Buyers have been extraordinarily active this spring and summer," said Mike Hoffman, Minneapolis Area Association of Realtors (MAAR) president. "Consumers, particularly first-time buyers, understand that the timing is right." Facing the threat of higher home prices and rising mortgage rates, buyers are far more motivated than they were last year at this time. About one in four homes sold so far this year have received more than one offer. On average, sellers received 99.6 percent of their last list price. While many agents say the market has returned to pre -recession conditions, home prices are still 3.5 percent shy of the June 2006 record high. And not everything is working in favor of sellers. Low appraisals are still killing some deals, for instance, and nearly one in 10 homeowners still owed more than their house was worth last month. As well, buyers have real-time access to sale data, so they are also keenly aware of what other buyers are paying. And with new construction on the rise in the suburbs, people with move -up houses have far more competition than in recent years. W th thtet��f@Wi@W _1436825: Association of Realtors. From left, Scotty Gillette and Realtor Betsy Lucas walked upstairs in the Gillette's townhouse in Minneapolis on July 10. The... In Scott County, where there is an abundance of inexpensive, undeveloped land and a bumper crop of houses being built, resale prices softened. In Minneapolis, St. Paul and inner -ring suburbs, however, houses in move -in condition and priced right don't linger. "It's been a crazy month," said Jennifer Lundquist of Edina Realty. She recently listed an end -unit townhouse in Woodbury for $159,900. In just 48 hours, there were 22 showings and she had four offers in hand. It was so busy the seller and her two children had to move out during the two days. "It was like a revolving door," she said. Average days on the market during June ® Days on market in June 80 60 c m w 40 E c 0 0 20 0 — 2013 2014 2015 Year At the opposite extreme, the upper -bracket condo market has been hopping as well. Lucas, the Coldwell Banker Burnet agent, last month sold a downtown Minneapolis condo for $1.6 million right after a brokers' open house and before it hit the open market. "People want what they want," she said. "And when they see it they jump on it." jim.buchta@startribune.com 612-673-7376 BUSINESS Apartment boom in Twin Cities begins shift to suburbs By Jim Buchta (http://wwwstartribune.com/jim-buchta/10644536/) Star Tribune JULY 28, 2015 — 5:25AM The Twin Cities apartment boom, which is transforming Minneapolis and St. Paul, is now thundering into the suburbs, where rentals are full and there's plenty of developable land. Last month, the average vacancy rate across the 13 -county area was just 2.5 percent, according to new data from NAI Everest, a local brokerage. The average monthly rent in the Twin Cities is now $1,051, up 6 percent from a year ago in an economy where inflation and wage growth are flat. With a healthy economy and demographics in its favor, the rental market in the Twin Cities remains one of the strongest in the nation. "Developers, owners and buyers are bullish on the market,' said Gina Dingman, president of NAI. Apartment brokers across the metro have been overwhelmed by out-of-town investors looking for rich returns and a place to park their money. Dingman recently spent time with an investor from South America. "Me market fundamentals are phenomenal," she said. And after five years of intense development in the core cities, the action is shifting to the suburbs where there's been relatively little building since the 1980s. In the eastern suburbs, for example, the average vacancy rate was just 1.5 percent compared with 6.6 percent in downtown Minneapolis. Patrick Carson, a leasing director for the Downtown Resource Group in the North Loop neighborhood in Minneapolis, said that while there are growing concerns about too much supply in some parts of Minneapolis, buildings in the hottest locations are still commanding high prices. At the Paxon North Loop, for example, DRG was able to lease 60 percent of the units four months after the building opened last year. That was without concessions and after five rent increases. "People are still getting crazy rents," he said. The NAI report showed that the average rent in downtown as of June was $1,320, up 10 percent over last year. Investors are paying more, as well. A blue-chip New York investment film recently paid a near -record price for the Paxon North Loop, and it then paid more than $300,000 per unit for another North Loop building called Velo. The situation is creating challenges for low-income renters. The average vacancy rate at income -restricted buildings in the Twin Cities was just 1.7 percent and only 1,000 new units have been built since 2013. That's compared with 10,000 units that have no income restrictions. Development is beginning to moderate in downtown Minneapolis, where renters signed up for 886 units so far this year, slightly more than the total number of new units that came available for rent. But in the suburbs, demand is deepening and projects are leasing up well ahead of expectations. From April through June, 787 luxury units came online in the suburbs, including MartinBlu, a 192 -unit development in Eden Prairie, and Boatworks Commons, an 85 - unit project on White Bear Lake. Both projects opened in April and were over 70 percent leased by July. Since opening in January, the second phase of Edina's One Southdale Place, where rents average $2.32 per square foot, is already 70 percent leased. "There is room for developers to increase rental rates," Dingman said. (http://stmedia.startribune.com/images/ows_1438047 7 One Southdale Place in Edina, which opene3in � �gap'fsb4�?SPR;V36/08- rentals in the gyri &j�i��yk}�i ,�nNW(0YVRE Gallery: At One Southdale Place in Edina, the inner courtyard features a pool. Nationwide, the decade is on pace to be the strongest for renter growth in history. The apartment vacancy rate has dropped to its lowest level in nearly 20 years as Americans shifted away from owning houses and condos after the 2008 downturn. The rate of homeownership has plunged, erasing nearly all of the gains from the previous two decades, according to Harvard's Joint Center for Housing Studies. Despite so much positive data in the Twin Cities rental market, it's unclear how long and how intensely the trend will persist. Kelly Doran, principal of Bloomington -based Doran Companies and one of the region's most active developers, said that while the second phase of his Mill & Main project across the Mississippi River from downtown Minneapolis is 78 percent leased after just three months, he's growing cautious. "Nobody really knows how big that market is," he said. "I don't think it's overbuilt today, but the question is `Will it get overbuilt?"' jim.buchta@startribune.com 612-6737376 ,tz (http://stmedia.startribune.corn/images/ows_1438047 One Southdale Place in Edina, which opened in January, is already 70 percent leased. Above: The courtyard features a pool.