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HomeMy WebLinkAbout09-29-15AGENDA Economic Development Commission September 29,2015-4:00 p.m. City Hall, Marion Conference Room 1. Call to order 2. Approval of August 25, 2015 minutes 3. Review of DEED Minnesota Investment Fund Grant Contract, Loan Agreement and Promissory Note for the SSB Manufacturing Company 4. Review of SSB TIF District Comments 5. Directors Report 6. Adjourn Attachments: • August Building Permit Report • August 2015 BATC Building Activity Report • Foreclosure Update, 8-28-15 • 2015's States with the Best and Worst School Systems, 9-22-15 • Employers Add 7,300 Jobs in August, DEED, 9-17-15 • BTD Manufacturing buys Georgia -based Impulse Manufacturing, 9-2-15 ism CITY OF LAKEVILLE ECONOMIC DEVELOPMENT COMMISSION MEETING MINUTES August 25, 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, Matasosky, Emond, Scherer, Vlasak, Gillen, Ex -officio members Miller and Roche Members Absent: Comms. Smith, Rajavouri, Ex -officio member Mayor Little Others Present: Gene Goddard, Greater MSP; John Shoffner, DEED; Dan Salzar, Scannell; David Olson, Community & Economic Development Director; Rick Howden, Economic Development Specialist. 2. Approval of May 26, 2015 meeting minutes Motion Comms. Matasosky/Emond moved to approve the minutes of the May 26, 2015 meeting as presented. Motion carried unanimously. 3. Review of Tax Increment Financing (TIF) Application and State Job Creation Fund and Minnesota Investment Fund applications for the SSB Manufacturing Company Mr. Olson introduced Gene Goddard, Director, Business Investment with Greater MSP as well as John Shoffner, with the Office of Business Development for DEED. Mr. Olson stated that this project started with an inquiry by Greater MSP in March and asked that Mr. Goddard describe the process by which this project decided to locate in Lakeville. Mr. Goddard explained that a representative from Greater MSP was in attendance at a Site Selector Guild conference and connected with a representative from CBRE who had recently started working on a project that may be a good candidate for Minnesota. This prompted Greater MSP to send a Request for Information (RFI) to City's throughout the Greater MSP region. Following the RFIs, site tours were also conducted. Eventually Mr. Olson stated that 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. Mr. Olson also stated that the project also incorporates new automation technology which is the first of its 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. The actual TIF will yet to be determined once the building plans are submitted to the County Assessor and a value established. 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. Based on 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. Additionally 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. Mr. Shoffner also reviewed DEED's involvement in the project which includes a $1 million forgivable loan from the Minnesota Investment Fund. DEED is also considering $1,094,000 from the Job Creation Fund for this project. $208,000 in a capital investment rebate and $886,000 in a job creation award. The company is also working on a Job Skills Partnership which requires a 1 to 1 match up to $400,000. Motion Comms. Matasosky/Scherer moved to recommend approval to the City Council of the proposed TIF Application for SSB Manufacturing Company. Motion passed unanimously. 4. Review of Minnesota Investment Fund Application for Post Holdings Division Headquarters Project Mr. Howden explained that earlier this Spring, in discussions with representatives from Post Holdings "Post", 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. Mr. Howden stated that 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 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 3rd 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. No action is required. 5. Director's Report Mr. Olson reviewed the Director's Report. On Tuesday, June 23rd the Minnesota Commercial Association of Realtors (MNCAR) held their 12th 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. 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 Jack Matasosky, Glenn Starfield and Dan Vlasak for also attending the event. 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 160th 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 or early Summer. 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. 8. Adjourn Meeting adjourned at 5:50 p.m. Respectfully submitted by Rick Howden, Economic Development Specialist 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: September 25, 2015 Subject: Review of DEED Minnesota Investment Fund Grant Contract, Loan Agreement and Promissory (Vote for SSB Manufacturing Company During the August EDC Meeting, Mr. Olson reviewed the Tax Increment Financing Request for SSB Manufacturing, the company that manufactures Serta and Simmons mattresses. The project consists of a 240,000 square foot manufacturing and warehouse facility. In addition to the City providing Tax Increment Financing and the Minnesota Department of Employment and Economic Development's (DEED) Job Creation Fund, SSB Manufacturing Company may also receive assistance from DEED's Minnesota Investment Fund in the amount of $1,000,000.00 for machinery and equipment. Because DEED only allows one application per local unit of government per calendar year, and the City of Lakeville has already submitted an application on behalf of Post Holdings for MIF Funds, the local unit of government for SSB Manufacturing Company's application is the Lakeville Housing and Redevelopment Authority (HRA). On September 8th, the HRA held a public hearing to authorize application to DEED. Initial and supplemental applications from both the business and local unit of government were submitted to DEED. Staff has been informed by DEED that an award letter approving a $1,000,000 forgivable loan for SSB Manufacturing for machinery and equipment is awaiting the Commissioner's signature and should be received very soon. Following the receipt of an award letter from DEED, a grant contract between DEED and the HRA will need to be executed. This agreement is needed as funding from the Minnesota Investment Fund will be granted to the HRA and then loaned to SSB Manufacturing Company. The HRA will also enter into a loan agreement with SSB Manufacturing Company which lays out the terms and conditions for the loan. The attached loan agreement includes the following terms: • Loan Term: 4 years • Interest Rate: 3.25% • Collateral: A corporate guaranty from Serta Simmons Bedding, LLC. • 200 permanent non -contract FTE jobs that pay a minimum of $15.20 per hour, excluding benefits and $19.76 including benefits • If borrower meets job creation and wage goals by the compliance date, the loan will be forgiven. Once the documents are executed, funds are eligible to be disbursed on a reimbursement basis after required documentation verifying expenditures are submitted. The HRA will also be required to submit a Minnesota Investment Fund Progress Report each year during the grant period or until the project is complete, whichever is later. The HRA is also required to submit a Minnesota Business Assistance Form to DEED's Office of Economic Analysis for this project, as it does for additional business subsidy projects it has been involved with. DEED has been an active partner with the City of Lakeville this year, contributing virtually as much to projects as the City has through Tax Increment Financing. ACTION REQUESTED Provide any questions or comments on the Minnesota Investment Fund project for SSB Manufacturing Company and provide a recommendation to the HRA for approval of the Grant Contract and Loan Agreement. Development New Retained DEED City Cost Jobs Jobs BTD $300,000 $1,077,832 $14,198,321.25 100 215 Menasha $422,520 $626,018 $7,183,562 15 221 Mendell $326,153 $155,912 $2,248,119.28 12 93 Post/MOM Brands $750,000 $375,000 N/A - 250 SSB Manufacturing $2,094,522 $1,607,350 $15,700,000 200 - $3,893,195 $3,842,112 $39,330,002.53 327 779 ACTION REQUESTED Provide any questions or comments on the Minnesota Investment Fund project for SSB Manufacturing Company and provide a recommendation to the HRA for approval of the Grant Contract and Loan Agreement. STATE OF MINNESOTA GRANT CONTRACT DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOPMENT BUSINESS AND COMMUNITY DEVELOPMENT DIVISION Minnesota Investment Fund Grant Contract Grant Number: CDAP-15-0011-H-FY15 Grant Amount: $1,000,000.00 The City of Lakeville Housing and Redevelopment Authority SSB Manufacturing Company This Grant Contract is between the State of Minnesota, acting through the Department of Employment and Economic Development, Business and Community Development Division, ("STATE") and the City of Lakeville Housing and Redevelopment Authority, 20195 Holyoke Avenue, Lakeville, MN 55044, ("GRANTEE"). Recitals 1. Under Minn. Stat. §§ 116JA35 and 116J.8731, Minnesota Investment Fund, the State is empowered to enter into this Grant. 2. The State is in need of local units of government to administer projects in accordance with Minn. Stat. §§ 116J.8731 Minnesota Investment Fund;, Minnesota Rules Chapter 4300; and policies and procedures developed by the State. 3. The Grantee represents that it is duly qualified and agrees to perform all services described in this Grant Contract to the satisfaction of the State. If administrative costs are eligible under this Grant pursuant to Minn..Stat. § 1613.98, subdivision 1, the Grantee agrees to minimize administrative costs as a condition of this Grant. Grant Contract 1. Term of Grant Contract 1.1 Effective Date: September 22, 2015. Per Minn. Stat. § 16B.98 subd. 5 and Minn. Stat. § 1613.98 subd. 7, no payments will be made to the Grantee until this Grant Contract is fully executed. 1.2 Benefit Date: September 1, 2016 1.3 Compliance Date: September 1, 2018 1.4 Expiration Date: December 1, 2018 1.5 Survival of Terms. The following clauses survive the expiration or cancellation of this Grant Contract: 8. Liability; 9. State Audits; 10. Government Data Practices; 12. Publicity and Endorsement; 13. Governing Law, Jurisdiction and Venue; and 15. Data Disclosure. 2. Grantee's Duties 2.1 Duties. The Grantee, who is not a State employee, will perform the duties specified in Exhibit A which is attached and incorporated into this Grant Contract. 2.2 Application. The Grantee has made application ("APPLICATION") to the State for the purpose of providing a loan to SSB Manufacturing Company ("BORROWER") in the Rev.1/14/2015 manner described in the application which is incorporated into this Grant Contract by reference. 2.3 Provisions for Contracts and Sub grants a) Contract Provisions. The Grantee must include in any contract and sub -grant, including the loan agreement with the Borrower, in addition to provisions that define a sound and complete agreement, such provisions that require contractors, sub - grantees and the Borrower to comply with applicable state and federal laws. b) Payment of Contractors and Sub -Contractors. The Grantee must ensure that all contractors and subcontractors performing work covered by this Grant are paid for their work that is satisfactorily completed. 3. Time The Grantee must comply with all of the time, requirements described in this Grant Contract. In the performance of this Grant, time is of the essence. 4. Consideration of payment 4.1 Consideration. The State will pay the Grantee under this Grant Contract as follows: a) Compensation. The Grantee will be reimbursed according to the approved Budget contained in Exhibit B, which is attached and incorporated into the Grant Contract portion of this Grant Contract. b) Total Obligation. The total obligation of the State for all compensation and reimbursement to the Grantee under this Grant Contract will not exceed $1,000,000.00 4.2 Payment. a) Invoices. The State will disburse funds to the Grantee pursuant to this Contract, based upon payment requests submitted by the Grantee and reviewed and approved by the `State. Payment requests must be accompanied by supporting invoices that relate to the activities in the approved budget and the documentation detailed in Section 4.2.b. of this Grant Contract. The State will provide payment request forms. If the Grantee has received invoices from the Borrower for expenditures made after effective date of this Grant Contract but before the Grant is closed or until all funds are disbursed, whichever is earlier, the Grantee shall submit those invoices to the State for review and approval no later than 25 days after the end date of the state fiscal year of June 30"'. To ensure that all funds are drawn down by the expiration date of the Grant, all Grantee payment requests must be received by the State at least 30 days prior to the Expiration Date. b) Documentation. The following information must be submitted and approved by the State before funds will be released: 1) Minnesota Investment Fund loan agreement, promissory note and a corporate guaranty from Serta Simmons Bedding, LLC. 2) Evidence of equity injection in the amount of $24,830,000.00 3) Invoices for equipment costs. 4) Documentation of total project costs. 5) A copy of the building lease contract between the Borrower and the landlord. Rev. 1/14/2015 c) Eligible Costs. Eligible costs include the costs identified in Exhibit B of this Grant Contract that are incurred during the contract period. 5. Conditions of Payment All services provided by the Grantee under this Grant Contract must be performed to the State's satisfaction, as determined at the sole discretion of the State's Authorized Representative and in accordance with all applicable federal, state and local laws, ordinances, rules, and regulations. The Grantee will not receive payment for work found by the State to be unsatisfactory or performed in violation of federal, state or local law. The State will not authorize disbursement of funds if there has been any adverse change in the Borrower's financial condition, organization, operations, or their ability to repay the project financing. 6. Authorized Representative The State's Authorized Representative is Jordan Zeller, Senior Loan Officer, ls` National Bank Building, 332 Minnesota Street;, Suite E200, St. Paul, MN 55101, 651-259-7426, jordan.zeller@state.mn.us, or his successor, and has the responsibility to monitor the Grantee's performance and the authority to `accept the services provided under this Grant Contract. If the services are satisfactory, the State's Authorized Representative will certify acceptance on each payment request form submitted for payment. The Grantee's Authorized Representative is David L. Olson, City of Lakeville, 20195 Holyoke Avenue, Lakeville, MN 55044 (952-) 985-4400 or his / her successor. If the Grantee's Authorized representative changes at anytime during this Grant Contract, the Grantee must immediately notify the State. 7. Assignment, Amendments, Waiver, and Grant Contract Complete 7.1 Assignment. The Grantee shall neither assign nor transfer any rights or obligations under this Grant Contract without the prior written consent of the State, approved by the same parties who executed and approved this Grant Contract, or their successors in office. 7.2 Amendments. Any amendment to this Grant Contract must be in writing and will not be effective until it has been executed and approved by the same parties who executed and approved the original Grant Contract, or their successors in office. 7.3 Waiver. If the State fails to enforce any provision of this Grant Contract, that failure does not waive the provision or the State's right to enforce it. 7.4 Grant Contract Complete. This Grant Contract contains all negotiations and agreements between the State and the Grantee. No other understanding regarding this Grant Contract, whether written or oral, may be used to bind either party. Where provisions of the Application are inconsistent with the other provisions of this Contract, the other provisions of this Contract will take precedence over the provisions of the Application. 8. Liability Subject to the provisions and limitations of Minn. Stat. § 466, the Grantee must indemnify, save, and hold the State, its agents, and employees harmless from any claims or causes of action, including attorney's fees incurred by the State, arising from the performance of this Grant Contract by the Grantee or the Grantee's agents or employees. This Clause will not be Rev. 1/14/2015 construed to bar any legal remedies the Grantee may have for the State's failure to fulfill its obligations under this Grant Contract. 9. State Audits Under Minn. Stat. § 16B.98, subd. 8, the Grantees books, records, documents, and accounting procedures and practices of the Grantee or other party relevant to this Grant Contract or transaction are subject to examination by the State and/or the State Auditor or Legislative Auditor, as appropriate, for a minimum of six (6) years from the end of this Grant Contract, receipt and approval of all final reports, date of final repayment to the State, or the required period of time to satisfy all State and program retention requirements, whichever is later. 10. Government Data Practices The Grantee and State must comply with the Minnesota Government Data Practices Act, Minn. Stat. § Ch. 13, as it applies to all data provided by the State under this Grant Contract, as it applies to all data created, collected, received, stored, used, maintained, or disseminated by the Grantee under this Grant Contract. The civil remedies of Minn. Stat. § 13.08 apply to the release of data referred to in this Clause by either the Grantee or the State. If the Grantee receives a request to release the data referred to'in this Clause, the Grantee must immediately notify the State. The .State will give the Grantee instructions concerning the release of the data to the requesting "party before the data is released. The Grantee's response to the request shall comply with all applicable law. 1.1. Workers' Compensation The Grantee certifies that it is'in compliance with Minn. Stat. § 176.181, subd. 2, pertaining to workers' compensation insurance coverage. The Grantee's employees and agents will not be considered State employees. Any claims that may arise under the Minnesota Workers' Compensation Act on behalf of these employees and any claims made by any third party as a consequence of any act or omission on the part of these employees are in no way the State's obligation or responsibility. 12. Publicity and Endorsement 12.1 Publicity. Any -publicity regarding the subject matter of this Grant Contract must identify the State as the sponsoring agency. For purposes of this provision, publicity includes notices, informational pamphlets, press releases, research, reports, signs, and similar public notices prepared by or for the Grantee individually or jointly with others, or any subcontractors, with respect to the program, publications, or services provided resulting from this Grant Contract. 12.2 Endorsement The Grantee and the Borrower must not claim that the State endorses its products or services. 13. Governing Law, Jurisdiction, and Venue Minnesota law, without regard to its choice -of -law provisions, governs this Grant Contract. Venue for all legal proceedings out of this Grant Contract, or its breach, must be in the appropriate state or federal court with competent jurisdiction in Ramsey County, Minnesota. 14. Termination 14.1 Termination by the State. The State may immediately terminate this Grant Contract with or without cause, upon 30 days' written notice to the Grantee. Upon termination, the Grantee will be entitled to payment, determined on a pro -rata basis for approved costs incurred. Rev. 1/14/2015 4 14.2 Termination for Cause. The State may immediately terminate this Grant Contract if the State finds that there has been a failure to comply with the provisions of the Grant Contract, that reasonable progress has not been made or that the purposes for which the funds were granted have not been or will not be fulfilled. The State may take action to protect the interests of the State of Minnesota, including the refusal to distribute additional funds and requiring the return of all or part of the funds already disbursed. 14.3 Termination for Insufficient Funding. The State may immediately terminate this Grant Contract if- a) £ a) It does not obtain funding from the Minnesota Legislature; b) Or, if funding cannot be continued at a level sufficient to allow for the payment of the services covered here. Termination must be by written or electronic notice to the Grantee. The State is not obligated to pay for any services that are provided after notice and effective date of termination. However, the Grantee will be entitled to payment determined on a pro -rata basis, for services satisfactorily performed to the extent that funds are available. The State will not, be assessed any penalty if the contract is terminated because of the decision of the Minnesota Legislature, or other funding source, not to appropriate funds. The State must provide the Grantee notice of lack of funding within a reasonable time of the State's receiving that notice. 15. Data Disclosure Under Minn. Stat. § 270C 65, subd. 3, and other applicable law, the Grantee consents to disclosure of its social security number, federal employer tax identification number, and/or Minnesota tax identification number, already provided to the State, to federal and state agencies and state personnel involved with the payment of state obligations. These identification numbers may be used in the, enforcement of federal and state tax laws which could result in action`requiring the Grantee to file `state tax returns and pay delinquent state tax liabilities, if any. Other Provisions 16. Affirmative Action The Grantee is encouraged to prepare and implement an affirmative action plan for the employment of minority persons, women, and the qualified disabled and submit the plan to the Commissioner of Human Rights as required by Minn. State. §363A.36. 17. Conflict of Interest The Grantee shall comply with the Conflict of Interest provisions of Minn. Stat. §§ 471.87 and 471.88. 18. Successors and Assignees This Contract shall be binding upon any successors or assignees of the parties. 19. Minnesota Business Subsidy Law This Contract must comply, if appropriate, with the Minnesota Business Subsidy Law, Minn. Stat §§ 116J.993 -116J.995. 20. Debarment and Suspension Certification (if applicable) The Grantee agrees to follow the President's Executive Order 12549 and the implementation regulation "Non -procurement Debarment and Suspension: Notice and Final Rule and Interim Rule," found at 53 FR 19189, May 26, 1988, as amended at 60 FR 33041, June 26, 1995, Rev. 1/14/2015 5 including Appendix B, "Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Execution — Lower Tier Covered Transactions;" unless excluded by law or regulation. Rev. 1/14/2015 1. STATE ENCUMBRANCE VERIFICATION 3. STATE AGENCY Individual certifies that funds have been encumbered as required by Minn. Stat. § §16,4.15 and 16C.05. Signed: Date: SWIFT Contract/PO No(s) 2. GRANTEE The Grantee certifies that the appropriate person(s) have executed the grant contract on behalf of the Grantee as required by applicable articles, bylaws, resolutions, or ordinances. Title: Date: Distribution: Agency Grantee State's Authorized Representative — Photo Copy Rev. 1/14/2015 (with delegated authority) Title: Date: EXHIBIT A GRANTEES DUTIES The Grantee, who is not a State employee, will, 1. Administer the project in accordance with the requirements of the Minnesota Investment Fund Program, Minn. Stat. § 116J.8731; Minn. Rules, Chapter 4300; and policies and procedures developed by the State. 2. Enter into a Loan Agreement with the Borrower for $1,000,000.00, ("LOAN") and assure the following conditions are included in such Agreement: 2.1 Conditions a) Loan Tenn: 4 years b) Interest Rate: 3.25% c) Collateral: A corporate guaranty from'Serta Simmons Bedding, LLC. 2.2 Job Creation and Wages a) The Borrower will create 200 permanent non -contract FTE jobs, all paying at least $15.20 per hour or more in wages, exclusive of benefits, and $19.76 per hour including benefits. Benefits are def as one or more of the following: health; dental, life and disability insurance, retirement program and profit sharing paid by the Borrower. b) If the Borrower fails to meet the jab creation and,wage goal level commitments by the Compliance Date, the Grantee may, "after holding a ppblic hearing, extend the grant period for one year from the CompliancieDate, after approval by the State. If, after the extension, the Borrower fails to meet the job creation goal and wage level commitment, the Borrower will be required to 'repay to the Grantee all or a proportional share of the Loan funds on an accelerated term: The Grantee will then also be required to return to the State all or a proportional share of the Loan funds. 2.3 Payment of Prevailing Wages to Contractors Minn. Stat. § 116J.871 applies if a business receives $500,000 or more in State loan funds and the State funds are used for construction, installation (including equipment), remodeling and repairs. 2.4 Surety Deposits Required for Construction Contracts Minn. Stat_ § 290.9705, pertains to foreign corporations that perform construction work in Minnesota and applies if state funds are used for construction. 2.5 Job Listing Agreement Minn. Stat. § 1161L.66, subd. 1, applies when a business or private enterprise receives $200,000 or more per year in funds from the State. When applicable, the business or private enterprise shall agree to enter into a Job Listing Agreement with the MN Department of Employment and Economic Development. 2.6 Loan Forgiveness Rev. 1/14/2015 8 If the job creation goals and wage level commitments detailed in Sections 2.2 a and b of this section are met by the Compliance Date, $1,000,000 of the Loan principal and all accrued interest will be forgiven. 2.7 Require the Grantee's attorney to review the loan agreement, promissory note, security agreement, mortgage, guaranty and/or other documents, if any, considered necessary to secure the loan to ensure they are valid, binding and enforceable. 3. Reporting a) Minnesota Investment Fund 1) Submit to the State annual progress reports on forms provided by the State until the project goals have been met or until the Compliance Date, whichever is later. The reports must be submitted January 25th of each year for the period ending December 31, for as long as the project remains open. 2) The final report must be submitted no later than 15 days after the Compliance Date. 3) The State, at its discretion, may require the submittal of additional progress reports. 4) Information required in this report includes, but is not limited to the following: • Permanent jobs created • Job titles • Project expenditures • Hourly base wage • Hourly value of benefits • Status of project • Date of hire • Benefits provided • Status of payments b) Minnesota Business Assistance"Form 1) Submit to the MN Department of Employment and Economic Development, Office of Economic Analysis, no later than April 1St of each -year until the project goals have been met. 4. Keep financial records, including properly executed contracts, invoices, receipts, vouchers, and other documents sufficient to evidence in proper detail the nature and propriety of the expenditures made pursuant to this contract. Accounting methods must be in accordance with generally accepted accounting principles. 5. Complete the project in accordance with the approved budget within the time frames specified in this Grant Contract. 6. Promptly notify the State .of any proposed material change in the scope of the project, budget or completion date, which must be approved by the State, prior to implementation. 7. Have on file the necessary documentations to show that all project funds have been used for the items stated in the application. Rev. 1/14/2015 EXHIBIT B APPROVED BUDGET Rev. 1/14/2015 10 MIF Bank Equity Local Government (TIF) Total Property Acquisition $2,300,000 `_ $2,300,000 Site Improvement $1,930,000 $1,930,000 New Construction $8,500,000 $8,500,000 Machinery and Equipment $1,000,000 $9,000,000 $10,000,000 Other 3,100,000` 3 $1,500,000 4,600,000 TOTAL PROJECT COST $1,000,006 $0 $24,830,000 $1,500,000 $27,330,000 Rev. 1/14/2015 10 LOAN AGREEMENT MINNESOTA INVESTMENT FUND THIS AGREEMENT is made and entered into as the _ day of , 2015 by and between the City of Lakeville Housing and Redevelopment Authority (the "Lender") and SSB Manufacturing Company (the 'Borrower"); WITNESSETH: WHEREAS, the Lender has applied to the Minnesota Department of Employment and Economic Development for a Minnesota Investment Fund Grant (the ."MIF Grant") pursuant to an application (the "Grant Application") and received approval for said grant; and WHEREAS, Grant Contract Number CDAP-15-0011-H-FY15 (the "Grant Contract") between the Minnesota Department of Employment and Economic Development (the "State") and the Lender has been executed and requires that the Borrower provide sufficient funds to complete financing and agree to loan terms with the Lender regarding the MIF Grant; and WHEREAS, the parties hereto agree to incorporate into this Agreement by reference said Grant Application and Grant Contract as if fully set forth herein word for word; NOW THEREFORE, it is agreed by and between the parties hereto as follows: ARTICLE 1 Definitions Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the context: "Benefit Date" means the date the Borrower puts the equipment into service, which is September 1, 2016. "Benefit" is defined as one or more of the following: health, dental, life and disability insurance, retirement program, profit sharing and other non -mandatory benefits paid by the Borrower. "Compliance Date" means September 1, 2018, which is the date that is two (2) years after the Benefit Date. "Continued Existence Date" means five years following benefit date "Development Property" means the real property located in the City of Lakeville and legally described in Exhibit A attached hereto. "Equipment" means the equipment purchased by the Borrower with the Loan and described in Exhibit B attached hereto. "Full -Time Equivalent (FTE)" is the equivalent of one person working 2080 hours or more per year or the ratio of the total paid hours during a calendar year (permanent part time or full time) to the total of working hours in that same period (2080 hours per year). "Full -Time Job" means an employee that is employed 2080 hours per year. "Grant Contract" means Minnesota Department of Employment and Economic Development Grant Contract # CDAP-15-0011-H-FY15 and attached as Exhibit C. "Initial Disbursement Date" means the date of the first disbursement of any Loan Proceeds by the Lender to the Borrower. "Jurisdiction" means the city limits of the City of Lakeville. "Loan" means the funds loaned by the Lender to the Borrower pursuant to this Agreement. "Loan Proceeds" means the funds disbursed to . the Borrower pursuant to this Agreement and any proceeds thereof. "MIF" means the Minnesota Investment Fund, Minn. Stat. § 1161.8731 and Minn. Rules Chapter 4300. "MIF Grant" means the award of funds by the State to the Lender pursuant to the Grant Contract. "Project" means the Borrower's construction. of an approximately 240,000 square foot facility located on the Development Property, and subsequent operation as a warehouse / manufacturing facility. "State" means the Minnesota Department of Employment and Economic Development. "Termination Date" means the date of the final payment made to the Lender. ARTICLE 2 Financing for Proiect Section 2.1. Other Project Funds. The Borrower shall commit and show proof of not less than $24,830,000.00 of equity for the completion of the Project. (a) The Other Project Financing described in the Grant Application and Grant Contract must be used for the same purposes and under the same terms, rates and conditions as specified therein unless prior written consent is received from the State. Section 2.2. MIF Loan/Grant. The MIF Grant will be used by the Lender to make a loan to the Borrower of not more than $1,000,000 for the purchase of equipment. The Borrower's obligations under this Agreement are expressly contingent on the Lender's receipt of funds from the State in an amount adequate to make the Loan. ARTICLE 3 MIF Loan Terms and Conditions Section 3.1. Basic Loan Terms. The principal amount of the Loan shall not exceed $1,000,000.00. The Loan shall be forgiven by the Lender and the State upon satisfaction by the Borrower of the terms of this Agreement. hi the event the Loan is not forgiven, the Loan shall be repayable as set forth in Section 7.2 of this Agreement. The Loan terms may not be modified without prior written approval from the State. Section 3.2. Prepayment. In the event the Loan is not forgiven, prepayment of the Loan may occur at any time during the Loan repayment period without penalty. Section 3.3. Assignment. If, prior to the Termination Date, the Borrower sells, conveys, transfers, further mortgages or encumbers, or disposes of the Development Property, or any part thereof or interest therein, or enters into an agreement to do any of the foregoing, the Borrower shall immediately repay all amounts then outstanding on the Loan. This shall be in addition to any other remedies at law or equity available to the Lender. Section 3.4. Termination. This Agreement shall automatically terminate without any notice to Borrower: (1) if no Loan Proceeds have been disbursed to the Borrower prior to the Compliance Date; or (2) if: (a) the Borrower has not received any disbursement of Loan Proceeds from the Lender; and (b) the Borrower fails to pay its debts as they become due, makes an assignment for the benefit of its creditors, admits in writing its inability to pay its debts as they become due, files a petition under any chapter of the Federal Bankruptcy Code or any similar law, state or federal, now or hereafter existing, becomes "insolvent" as that term is generally defined under the Federal Bankruptcy Code, files an answer admitting insolvency or inability to pay its debts as they become due in any involuntary bankruptcy case commenced against it, or fails to obtain a dismissal of such case within sixty (60) days after its commencement or convert the case from one chapter of the Federal Bankruptcy Code to another chapter, or is the subject of an order for relief in such bankruptcy case, or is adjudged a bankrupt or insolvent, or has a custodian, trustee, or receiver appointed for it, or.has any courttake jurisdiction of its property, or any part thereof, in any proceeding for the : purpose of reorganization, arrangement, dissolution, or liquidation, and such custodian, trustee, or receiver is not discharged, or such jurisdiction is not relinquished, vacated, or stayed within sixty (60) days of the appointment. Section 3.5. Promissory Note. The Borrower shall execute a promissory note in substantially the form set forth by the State and attached to this Agreement as Exhibit D. Section 3.6. Annual Financial Statements. For the term of the loan, upon request of the Lender, the Borrower shall submit the most recent annual financial statement prepared in accordance with generally accepted accounting principles. The annual financial statements shall include a profit and loss statement, balance sheet, statement of cash flow, notes and an opinion from the accountants of such statements acceptable to the Lender. Section 3.7. I3azard Insurance. The Borrower shall maintain insurance in adequate amounts covering loss or damage to the collateral. The Lender must be listed as loss payee. Section 3.8. Collateral. The Borrower shall furnish a corporate guaranty from Serta Simmons Bedding, LLC. ARTICLE 4 Default Section 4.1. Default. The Borrower shall be in default under this Agreement upon the happening of any one or more of the following events: (a) the Borrower fails to pay when due any amount payable on the Loan and such nonpayment is not remedied within ten (10) business days after written notice thereof to the Borrower by the Lender; (b) the Borrower is in breach in any material respect, of any obligation or agreement under this Agreement (other than nonpayment of any amount payable on the Loan) and remains in breach in any material respect for thirty (30) business days after written notice thereof to the Borrower by the Lender; provided, however, that if such breach shall reasonably be incapable of being cured within such thirty (30) business days after notice, and if the Borrower commences and diligently prosecutes the appropriate steps to cure such breach, no default shall exist so long as the Borrower is proceeding to cure such breach; (c) if any material covenant, warranty, or representation of the Borrower shall prove to be untrue in any material respect, provided such covenant, warranty or representation of the Borrower remains untrue in any material respect for thirty (30) business days after written notice thereof to the Borrower by the Lender; provided, however, that if such untruth shall reasonably be incapable of being corrected within such thirty (30) business days after notice, and if the Borrower commences and diligently prosecutes the appropriate steps to correct such untruth, no default shall exist so long as the Borrower is so proceeding to correct such untruth; (d) the Borrower. on or after the Initial Disbursement Date, fails to pay its debts as they become due, makes an assignment for the benefit of its creditors, admits in writing its inability to pay its debts as they become due, files a petition under any chapter of the Federal Bankruptcy Code or any similar law, state or federal, now or hereafter existing, becomes "insolvent" as that term is generally defined under the Federal Bankruptcy Code, files an answer admitting insolvency or inability to pay its debts as they become due in any involuntary bankruptcy, case commenced against it, or fails to obtain a dismissal of such case within sixty (60) days after its'`commencement or convert the case from one chapter of the Federal Bankruptcy Code to another chapter, or be the subject of an order for relief in such bankruptcy case, or be adjudged a bankrupt or insolvent, or has a custodian, trustee, or receiver appointed for it, or has any court take jurisdiction of its property, or any part thereof, in any proceeding for the purpose of reorganization, arrangement, dissolution, or liquidation, and such custodian, trustee, or receiver is not discharged, or suchjurisdiction is not relinquished, vacated, or stayed within sixty (60) days of the appointment; (e) a final judgment is entered against the Borrower that the Lender reasonably deems will have a material, adverse impact on the Borrower's ability to comply with the Borrower's obligations under this Agreement; (f) the Borrower sells, conveys, transfers, encumbers, or otherwise disposes of all or any part of the Development Property or the Equipment without the prior written approval of the Lender; (g) the Borrower merges or consolidates with any other entity without the prior written approval of the Lender; (h) there is a loss, theft, substantial damage, or destruction of all or any part of the Development Property or the Equipment that is not remedied to the Lender's satisfaction within sixty (60) business days after written notice thereof by the Lender to the Borrower; or (i) the borrower is in breach of the requirements of Section 7, Business Subsidy Agreement, of this Agreement. Section 4.2. Remedies Upon Default. (a) In the event of a default, the Lender shall have the right as its option and without demand or notice, to declare all or any part of the Loan immediately due and payable, and in addition to the rights and remedies granted hereby, the Lender shall have all of the rights and remedies available under the Uniform Commercial Code and any other applicable law. (b) The Borrower agrees in the event of a default to make the collateral available to the Lender. The Borrower agrees to pay the costs and expenses incurred by the Lender in enforcing its rights under this Agreement, including but not limited to the Lender's attorney's fees. If any notice of sale, disposition or other intended action by the Lender is required by law to be given to the Borrower, such notice shall be deemed reasonably and properly given if mailed to the Borrower at the Development Property or at such other address of the Borrower as may be: shown herein, at least fifteen (15) days before such sale, disposition or other intended action. ARTICLE 5 Loan Disbursement Provisions Section 5.1. Payment Requisition Documentation and Format. Loan disbursements shall be for the purchase of equipment and shall not exceed $1,000;000. The Lender will disburse the Loan funds upon receipt and approval by the Lender and the State of the following documentation: (a) This Agreement fully executed, (b) Promissory note; (c) Invoices for equipment costs; (d) Proof of a security position via corporate guaranty from Serta Simmons Bedding, LLC. (e) Evidence of equity injection iii.the amount of $24,830,OOO.00 (f) Documentation of total project costs. (g) Evidence of landlord :financed improvements in the amount of $ Upon receipt of such information, the Loan will be disbursed in a lump sum. Section 5.2. Adverse Changes. The State will not authorize disbursement of funds if there has been any adverse change in the Borrower's financial condition, organization, operations or their ability to repay the project financing. ARTICLE 6 Provision of Monitoring Information Related To Proiect Progress Section 6.1. Provision of Progress Information. The Borrower shall provide to the Lender information for incorporation into the Minnesota Investment Fund progress reports, as required by the State and as needed by the Lender, to monitor the Project for compliance with State and Lender guidelines. This information must be provided until the project goals have been met or until the Compliance Date, whichever is later. At the discretion of the State or Lender additional reporting may be required. This information must be submitted to the Lender no later than: (a) January 10, 2016 for the period ending December 31, 2015; (b) January 10, 2017 for the period ending December 31, 2016; (c) January 10, 2018 for the period ending December 31, 2017; and (c) January 10, 2019 for the period ending December 31, 2018. Section 6.2 Documentation to be provided to the Lender_ (a) Project status and the status of payments. (b) Use of Funds. The Borrower must provide to the Lender invoices, sworn construction statements, and or any other information to document that the Loan and the Other Project Funds have been used for the items and purposes as approved by the State. (c) Job Creation Documentation. The Borrower shall provide to the Lender information on the hiring of each new permanent, non -contract, full time employee on forms provided by the Lender. This information must include: (1) Permanent jobs created; (2) Job title of each new employee; (3) Date of hire of each new employee; (4) Hourly base wage paid; (5) Hourly value of benefits paid; (6) List of benefits provided::,.' ARTICLE 7 Business Subsidy Agreement Section 7.1. Business Subsidy Agreement. The provisions of this Section constitute the "Business Subsidy Agreement" for purposes of the Minnesota Business Subsidy Act (Minnesota Statutes Sections 116J.993-995 and its successor statute.) (a) The Borrower acknowledges and agrees that the provisions of Minnesota's Business Subsidy Act apply to this Agreement, as Borrower is receiving under the terms of this Agreement government assistance. (i) The subsidy provided to the- Borrower includes the $1,000,000 Loan made hereunder which will be used for the purchase of equipment. (2) The public purposes and goals of the subsidy are to increase net jobs in the City. (3) The goals for the subsidy are to create jobs that pay a livable wage, per Section 7.1(b) of this Agreement. (4) If the goals are not satisfied, the Borrower shall make payment to the Lender as required in Section 7.2 of this Agreement. (5) The subsidy is needed because the cost of equipment makes the Project economically infeasible without the Loan. (6) The Borrower must continue operations in the jurisdiction for at least five years following the Benefit Date. ("Continues Existence Date") (7) The Borrower does have a parent corporation: (8) In addition to the assistance provided under this Agreement, The Borrower has received or expects to receive as part of this project, the following financial assistance from other "grantors" as defined in the Business Subsidy Act: Job Creation Fund benefits from the Minnesota Department of employment & Economic Development and Tax Increment Financing. (b) By no later than the Compliance Date the Borrower shall: (1) Create at least Two hundred (200) new permanent, non -contract, non -seasonal FTE jobs (the "New Jobs") at the Development Property. The New Jobs must pay a base wage of at least $15.20 per hour, exclusive of benefits and $19.76 per hour including benefits. Any jobs created after September 22, 2015 will count toward the Borrower's job creation goal. Section 7.2 Default on Business Subsidy Act Requirements. (a) If the borrower fails to meet the job creation goal and wage level commitment by the Compliance Date, the Lender may, after holding a public hearing, extend the Compliance Date for one year, after approval from the State. If after the extension, the Borrower fails to meet the job creation goal and wage commitment, the borrower will be required to repay to the Lender a pro rata share of the Loan principal at $5,000 per job not created, plus interest as defined in Section 7.2 (b). (b) In an Event of Default arising from a breach by the Borrower of any provision of Section 7.1 of this Agreement, if the implicit price deflator for government consumption expenditures and gross investment for state and local governments prepared by the Bureau of Economic Analysis of the United States Department of Commerce for the 12 -month period ending March 31 s' of the previous year, exceeds three and one quarter percent (3.25)% on the date of the earliest such Event of Default, the Borrower shall, in addition to any other payment required hereunder, pay to the Lender the difference between the present value of the interest actually paid and accrued on the Loan as of the date of the payment required by this Section 7.2 (b) and (c), and the amount of interest that would have been paid and accrued on the Loan if the interest rate of the Loan at all times had been equal to the implicit price deflator on the date of the earliest Event of Default; (c) Interest required in Section 7.2.,(b) shall commence to accrue as of the Initial Disbursement Date; (d) The loan term will be Four (4) y�ears; ,and (e) Nothing in this Section 7.2 shall be construed to limit the Lender's rights or remedies under any other provision of this Agreement, and the provisions of Section 7.2 are in addition to any other such right or remedy the Lender may have available. Section 7.3 Reporting_ The Borrower shall provide to the Lender information regarding job and wage goals and results for two years after the Benefit Date or until the goals are met, whichever is later. This reporting requirement will expire if the goals are met by the Compliance Date. If the goals are not met, the Borrower must continue to provide information on the loan until the loan is repaid. The information must be filed on the Non-JOBZ Minnesota Business Assistance form as found on the MN Department of Employment and Economic Development website: http: //mn. gov/deed/govemment/business-subsidy/rgport-forms/index. jssp This information must be provided to the Lender no later than March 1 of each year for the previous year. If the Borrower does not submit the report, the Lender shall mail the Borrower a warning within one week of the required filing date. If, after 14 days of the postmarked date of the warning, the Borrower fails to provide a report, the Borrower must pay to the Lender a penalty of $100 for each subsequent day until the report is filed. The maximum penalty shall not exceed $1,000. This report is in addition to the report discussed in Section 6 of this Agreement. ARTICLE 8 Job Listing Agreement Section 8.1 Job Listing Agreement. (Minnesota Statutes Section 116L.66 and any successor statutes.) When the Loan is for $200,000 or more, the Borrower shall enter into a Job Listing Agreement with the local Workforce Development Center, MN Department of Employment and Economic Development. ARTICLE 9 Non-discrimination Section 9.1. Nondiscrimination on Account of Race, Creed, or Color. The provisions of Minnesota Statutes, Section 181.59 and any successor statutes, which relate to civil rights and discrimination, shall be considered a part of this Agreement as though wholly set forth herein and the Borrower shall comply with each such provision throughout the term of this Agreement ARTICLE 10 Borrower's Acknowledgments Representation, and Warranties Section 10.1. Acknowledgments. (a) The Borrower acknowledges that the Lender, in order to obtain funds for part of the Borrower's activities in connection with the Project, has applied for the MEF Grant to the State under the Minnesota Investment Fund Program, .Business and Community Development Division, and that the Lender has entered into the Grant Contract with the State, setting forth the terms, conditions, and requirements of the MEF Grant. The Borrower further acknowledges that it has made certain representations and statements in the Grant Application concerning its activities relating to the Project, and that the Borrower is designated and identified under the Grant Contract. (b) A copy of the Grant Contract and this Agreement shall be on file in the offices of the Lender. In the event any provision of this Agreement relating to the Borrower's obligations hereunder is inconsistent with the provisions of the Grant Contract°relating to the Borrower's activities there under, the provisions of the Grant Contract shall prevail. (c) The Borrower acknowledges that nothing contained in the Grant Contract or this Agreement, nor any act of the State or the Lender, shall be deemed or construed to create between the State and the Borrower (or, except as Borrower and Lender between the Lender and the Borrower) any relationship, including but not limited to that of third -party beneficiary, principal and agent, limited or general partnership, or joint venture. Section 10.2. Representations and Warranties. The Borrower warrants and represents, in connection with the MIF Grant and for the benefit of the State and the Lender, that: (a) Representations, statements, and other matters provided by the Borrower relating to those activities of the Project to be completed by the Borrower, which were contained in the Grant Application, were true and complete in all material respects as of the date of submission to the Lender and that such representations, statements, and other matters are true as of the date of this Agreement and that there are no adverse material changes in the financial condition of the Borrower's business. (b) To the best of the Borrower's knowledge, no member, officer, or employee of the Lender, or its officers, employees, designees, or agents, no consultant, member of the governing body of the Lender, and no other public official of the Lender, who exercises or has exercised any functions or responsibilities with respect to the Project during his or her tenure shall have any interest, direct or indirect, in any contract or subcontract, or the proceeds thereof, for work to be performed in connection with the Project or in any activity, or benefit there from, which is part of the Project. (c) The Borrower acknowledges that the State, in selecting the Lender as recipient of the Grant, relied in material part upon the assured completion of the Project to be carried out by the Borrower, and the Borrower warrants that said Project will be carried out as promised. (d) The Borrower warrants that to the best of its knowledge, it has obtained all federal, state, and local governmental approvals, reviews, and permits required by law to be obtained in connection with the Project and has undertaken and completed all actions necessary for it to lawfully execute this Agreement as binding upon it. (e) The Borrower warrants that it shall keep and maintain books, records, and other documents relating directly to the Leveraged Funds, and that any duly authorized representative of the State shall, at all reasonable times, have access to and the right to inspect, copy, audit, and examine all such books, records, and other documents of the Borrower until such time that the Lender and the State have both determined that all issues, requirements, and close-out procedures relating to or arising out of the MIF Grant have been settled and completed. (f) The Borrower warrants that no transfer of any or all of the Loan Proceeds by the Lender to the Borrower shall be or be deemed an assignment of Loan Proceeds, and the Borrower shall neither succeed to any rights, benefits, or advantages of the Lender under_ the Grant Contract, nor attain any right, privileges, authorities, or interest in or under the Grant Contract. (g) The Borrower warrants that it has fully complied with all applicable local, state, and federal laws pertaining'to its business and will: 'cont ' inne such compliance throughout the terms of this Agreement. If at any't me notice ofponcompliance is received by the Borrower, the Borrower agrees to take any necessary action to comply with the local,state, or federal law in question. ARTICLE 11 Other Special Conditions Section 11.1. Project Time Frame. The time frame outlined in the Grant Application and Grant Contract pertaining to the Project shall be met by the Borrower. Section 11.2. Prevailing Wage. < (a) If the Borrower is awarded $500,000 or more of loan proceeds and the Loan is used for construction, installation (including the Equipment), remodeling and or repairs, the Borrower shall fully and completely comply with all applicable prevailing wage requirements contained in Minn. Statutes § 116J.871 and § 177.42, subd. 6. The Borrower shall maintain or provide access to all documentation necessary to establish that the required prevailing wage was paid and shall allow the Lender, the Commissioner of the Department of Labor and Industry and the State reasonable access to such data. (b) Penalty. It is a misdemeanor for the Borrower, who has certified that prevailing wages will be paid to laborers and mechanics to subsequently fail to pay the prevailing wage. Each day a violation of this subdivision continues is a separate offense. Section 11.3. Surety Deposits Required for Construction Contracts. If the Loan is used for construction, and the Borrower is hiring, contracting, or having a contract with a nonresidential person or foreign corporation to perform construction work, the Borrower must comply with Minnesota Statutes 290.9705, as amended, by deducting and witholding eight ,percent of cumulative calendar year payments to the contractor which exceeds $50,000. This condition may be waived if (1) the contractor gives the commissioner a cash surety or a bond, secured by an insurance company licensed by Minnesota, conditioned that the contractor will comply with all applicable provisions of this chapter and chapter 297A, or (2) the contractor has done construction work in Minnesota at any time during the three calendar years prior to entering the contract and has fully complied with all provisions of this chapter and chapter 297A for the three prior years. Section 11.4. Workers Compensation Insurance. The Borrower has obtained workers compensation insurance as required by Minnesota Statutes, Section 176.181, subd. 2. The Borrower's workers compensation insurance information is as follows: (a) Company Name: (b) Policy Number: (c) Local Agent: Section 11.6. Review of Documents. The Borrower shall not be entitled to any disbursement of Loan Proceeds until the Lender's legal counsel and .the State have reviewed and approved this Agreement and the exhibits attached hereto. Section 11.7. Effect on Other Agreements: Nothing in this Agreement shall be construed to modify any term of any other agreement to which the Lender and the Borrower are parties. Section 11.8. Release and Indemnification Covenants. Except for any breach of the representations and warranties of the Lender or the negligence or other wrongful act or omission of the following named parties, the Borrower agrees to protect and defend the Lender and the governing body members, officers, agents, servants, and employees thereof, now and forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit, action, or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from the acquisition, construction, installation, ownership, maintenance, and operation of the Project and the Borrower's activities on the Development Property. Section 11.9. Modifications. This Agreement may be modified solely through written amendments hereto executed by the Borrower and the lender and approved by the State. Section 11.10. Notices and Demands. Any notice, demand, or other communication under this Agreement by either party to the other shall be sufficiently given or delivered only if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally: (a) as to the Lender: City of Lakeville ATTN: HRA Executive Director 20195 Holyoke Road Lakeville, MN 55044 (b) as to the Borrower: SSB Manufacturing Company ATTN: or at such other address with respect to any party as that party may, from time to time, designate in writing and forward to the others as provided in this Section 11.10. Section 11.11. Conflict of Interests; Representatives Not Individually Liable. No employee, officer or agent of the Lender shall participate in the administration of a contract supported by this loan if a conflict of interest, real or apparent, would be involved. No employee, officer or agent of the Lender may obtain a financial interest in any agreement with respect to this loan. No employee, officer, or agent of the Lender shall be personally liable to the Borrower or any successor in interest in the event of any default or breach by the Lender or for any amount that may become due to the Borrower or on any obligation or term of this Agreement. Section 11.12. Binding Effect. The covenants and agreements in this Agreement shall bind and benefit the heirs, executors, administrators, successors, and assigns of the parties to this Agreement. Section 11.13. Provisions Not Merged With Deed. None of the provisions of this Agreement are intended to or shall be merged by reason of any deed transferring any interest in the Development Property and any such deed shall not be deemed to -affect or impair the provisions and covenants of this Agreement. Section 11.14. Titles of Articles and Sections. Any titles of the several parts, Articles, and Sections of this Agreement are inserted only for convenience of reference and shall be disregarded in construing or interpreting any of its provisions. Section 11.15. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 11.16. Choice of Law and Venue. This Agreement shall be governed by and construed in accordance with the laws of the state' of Minnesota without regard to its conflict of laws provisions. Any disputes, controversies, or claims arising out of this Agreement shall be heard in the state or federal courts of Minnesota, and all parties to this Agreement waive any objection to the jurisdiction of these courts, whether based on convenience or otherwise. Section 11:17. Waiver. The failure or delay of any party to take any action or assert any right or remedy, or the partial exercise by any party of any right or remedy shall not be deemed to be a waiver of such action, right, or remedy if the circumstances creating such action, right, or remedy continue or repeat. Section 11.18. Entire Agreement. This Agreement, with the exhibits hereto, constitutes the entire agreement between the parties pertaining to its subject matter and it supersedes all prior contemporaneous agreements, representations, and understandings of the parties pertaining to the subject matter of this Agreement. Section 11.19. Separability. Wherever possible, each provision of this Agreement and each related document shall be interpreted so that it is valid under applicable law. If any provision of this Agreement or any related document is to any extent found invalid by a court or other governmental entity of competent jurisdiction, that provision shall be ineffective only to the extent of such invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement or any other related document. Section 11.20. Immunity. Nothing in this Agreement shall be construed as a waiver by the Lender of any immunities, defenses, or other limitations on liability to which the Lender is entitled by law, including but not limited to the maximum monetary limits on liability established by Minnesota Statutes, Chapter 466. Section 11.21. Publicity and Endorsement. (a) Publicity_ Any publicity regarding the subject matter of this loan contract must identify the State as the sponsoring agency. For purposes of this provision, publicity includes notices, informational pamphlets, press releases, research, reports, signs, and similar public notices prepared by or for the Grantee individually or jointly with others, or any subcontractors, with respect to the program, publications, or services provided resulting from this grant contract. (b) Endorsement. The Lender and the Borrower must not claim that the State endorses its products or services. [Remainder of page intentionally blank] IN WITNESS WHEREOF, the Lender has caused this Agreement to be duly executed in its name and behalf and the Borrower has caused this Agreement to be duly executed in its name and behalf as of the date first above written. City of Lakeville By — Its By Its SSB Manufacturing Company By Its By_ Its EXHIBIT A Legal Description of Development Property EXHIBIT B Equipment List Destacker: AGVs: Stuffier, Fork & Sock Closers: Racks: EXHIBIT C Grant Contract EXHIBIT D Promissory Note PROMISSORY NOTE $1,000,000.00 2015 SSB Manufacturing, Inc., a Delaware corporation (the "Maker"), for value received, hereby promises to pay to the City of Lakeville Housing and Redevelopment Authority (the "City") or its assigns (the City and any assigns are hereinafter referred to as the "Holder"), at its designated principal office or such other place as the Holder may designate in writing, the principal sum of One Million Dollars and No/100 Dollars ($1,000,000.00) (the "Loan") or so much thereof as may be advanced under this Promissory Note (this "Note"), with interest as hereinafter provided, in any coin or currency which at the time or times of payment is legal tender for the payment of private debts in the United States of America. 1. a. The Loan shall bear interest at the greater of a rate of thee and one fourth percent (3.25%) per annum or the implicit price deflator defined in Minnesota Statutes, Section 275.70, Subdivision 2 compounded semiannually. Interest shall commence to accrue as to the amount of the Loan disbursed as of the date disbursed in accordance with the Loan Agreement between the Maker and the Holder of even date herewith (the "Loan Agreement") evidencing the terms of the loan evidenced by this Note. b. Subject to the provisions of Section 7.1 of the Loan Agreement, up to $1,000,000.00 of the principal balance of this Note (the "Forgivable Portion") plus accrued interest shall be forgiven and deemed paid on the Continued Existence Date (as defined in the Loan Agreement). C. If the Goals are not met by the Compliance Date (as those terms are defined in the Loan Agreement) and maintained through the Continued Existence Date, the Maker agrees to repay all or a part of the principal amount of this Note on a pro rata basis (as further described in this Section 1(c), the "Recaptured Principal"), plus interest set at the greater of 3.25% or the implicit price deflator defined in Minnesota Statutes, Section 275.70, Subdivision 2 ("Recapture Interest"), accruing from and after the date disbursed, compounded semiannually. Recaptured Principal plus Recapture Interest thereon shall be repaid not later than 30 days after the City notifies the Maker of the amount to be repaid pursuant to Section 7.1 of the Loan Agreement. If the Goals are only met in part by the Complioance Date or are maintained only in part as of the Continued Existence Date, the Maker will repay a pro rata portion of the principal amount of this Note (plus Recapture Interest). d. Except as provided in Section 1(c), no payments shall be due on the Forgivable Portion; provided, however, accrued interest from the date of disbursement at the greater of 3.25% or the implicit price deflator defined in Minnesota Statutes, Section 275.70, Subdivision 2 will be added to any Recaptured Principal due pursuant to Section 1(c). 2. The Maker shall have the right to prepay the principal of this Note, in whole or in part, without prepayment penalty. 3. This Note is given pursuant to the Loan Agreement and is secured by a corporate guaranty given by Serta Simmons Bedding, LLC. In the event any such Guaranty is found to be invalid for whatever reason, such invalidity shall constitute an event of default hereunder. 4. All of the agreements, conditions, covenants, provisions, and stipulations contained in the Loan Agreement, or any instrument securing this Note are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. It is agreed that time is of the essence of this Note. If a default occurs under the Loan Agreement, or any instrument securing this Note, and continues beyond any applicable notice and cure periods, the Holder of this Note may at its right and option, without notice, declare immediately due and payable the principal balance of this Note, together with any costs of collection including attorney fees incurred by the Holder of this Note in collecting or enforcing payment hereof, whether suit be brought or not, and all other sums due hereunder, or under any instrument securing this Note. The Maker agrees that the Holder of this. Note may, without' notice to the Maker of this Note and without affecting the liability ' of the Maker of this Note, accept additional or substitute security for this Note, or release any security or any party liable for this Note or extend or renew this Note. 5. The remedies of the Holder of this Note as provided herein, and in the Loan Agreement, or any other instrument securing this Note, shall be cumulative and concurrent and may be pursued singly, successively, or together, and, at the sole discretion of the Holder of this Note, may be exercised as often as occasion therefore shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof 6. The Holder of this Note shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Holder of this Note and then only to the extent specifically set forth in the writing. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. This Note may not be amended, modified, or changed except only by an instrument in writing signed by the party against whom enforcement of any such amendment, modifications, or change is sought. 7. Any notices hereunder shall be deemed sufficiently given by one party to the other if in writing and if and when delivered or tendered either in person or by depositing it in the United States mail in a sealed envelope, by certified mail, return receipt requested, with postage and postal charges prepaid, addressed as follows: 2 If to Maker: SSB ManufacturingCompany Attn: If to Holder: The City of Lakeville Housing and Redevelopment Authority Attn: Executive Director 20195 Holyoke Avenue Lakeville, MN 55044 or to such other address as the parry addressed shall have previously designated by notice given in accordance with this Section. Notices shall be deemed to have been duly given on the date of service if served personally on the party to whore notice is to be given, or on the third day after mailing if mailed as provided above, provided, that a notice not given as above shall, if it is in writing, be deemed given if and when ,actually received by a party. 8. The execution and delivery of this. Note by Maker to Holder, and the performance of the covenants and obligations under it have been duly authorized by all necessary corporate action. Holder shall receive copies,,of all resolutions pertaining to that authorization, certified by the secretary of the corporation. 9. Presentment, notice of dishonor and protest are hereby waived by all makers, sureties, guarantors and endorsers hereof. The Note shall be the joint and several obligation of all makers, sureties, guarantors and endorses and shall be binding upon them, their heirs, personal representatives, successors and assigns. THE MAKER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY UNDER ANY ACTION OR PROCEEDING ARISING DIRECTLY OR INDIRECTLY OUT OF THIS NOTE. 10. This Note shall be governed by and construed in accordance with the laws of the State of Minnesota without regard to its conflict of laws provisions. Any disputes, controversies, or claims arising out of this Note shall be heard in the state or federal courts of Minnesota, and all parties to this Note waive any objection to the jurisdiction of these courts, whether based on convenience or otherwise. 11. The headings used in this Note are solely for convenience of reference, are no part of this Note, and are not to be considered in construing or interpreting this Note. 12. This Note, with the other Loan Documents, constitutes the entire Note between the parties pertaining to its subject matter and it supersedes all prior contemporaneous Notes, representations, and understandings of the parties pertaining to the subject matter of this Note. 3 13. Wherever possible, each provision of this Note, the Loan Agreement and each related document shall be interpreted so that it is valid under applicable law. If any provision of this Agreement or any related document is to any extent found invalid by a court or other governmental entity of competent jurisdiction, that provision shall be ineffective only to the extent of such invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note or any other related document. 14. IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts, and things required to exist, happen, and be performed precedent to or in the issuance of this Note do exist, have happened, and have been performed in regular and due form as required by law. [Signature page follows.] 0 IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed as of the day of 52015. Its S-1 City of Lakeville 6 ---SML 0 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: September 25, 2015 Subject: Comments Received on SSB Manufacturing Company Tax Increment Financing Request As part of the creation of any new TIF District, the City is required to provide a copy of the proposed TIF Plan for the project to the County and School District at least 30 days in advance of the public hearing at which the approval of the new TIF District is to be considered by the City Council. Attached are the comments that were received from both Dakota County and ISD 194 regarding the proposed TIF District for the recent SSB Manufacturing Company Project. These comments were included in the information that the City Council received in their agenda packet on this project. As the County staff's memo to the County Board indicated (copy attached), the County was considering its right to reserve some of the tax increment generated by the project for future upgrade to an adjacent County Road. This right is provided to counties under the TIF Statutes if the proposed project receiving TIF assistance will generate traffic that will necessitate the need for road improvements that would otherwise not be needed. The County decided in the end not to exercise this right on the SSB TIF Project, but it is apparent to City staff that the County may exercise this right with proposed TIF projects near Co. Rd. 70 in the future. ISD 194 also provided a comment letter on this proposed TIF District. While ISD 194 supported with reservations the proposed TIF District for SSB Manufacturing, the District did express concerns about the continued increase in traffic volumes on Co. Rd. 70 with continued industrial development along the corridor. The School District also included comments regarding their upcoming levy questions and the impact this TIF project would have on the ability to capture levy revenue from this property. Finally, there were also concerns expressed on the wage levels of the jobs being created. (It should be pointed out that the letter under stated the proposed wage levels of the jobs being created.) Staff recommends that City begin to discuss some of these issues before another TIF project is proposed. Some of the issues to discuss should include the appropriate percentage of increment to be provided to projects and as well a review of the wage levels of the jobs being created whether there should be a correlation between wage levels and the level of assistance being provided. ACTION REQUESTED: Provide staff with input and or additional questions on the comments received by Dakota County and ISD 194 on the proposed SSB Manufacturing TIF Project. 9.2 - RBA.docx DAKOTA COUNTY BOARD OF COMMISSIONERS Review Of Proposed Tax Increment Financing District No. 21 Within Airlake Redevelopment Project No. 1 In City Of Lakeville Meeting Date: 9/8/2015 Item Type: Consent -Action Division: Public Services and Revenue Department: Property Taxation and Records Contact: Koethe, Amy Contact Phone: (651) 438-4370 Prepared by: Koethe, Amy Fiscal/FTE Impact: ❑ None ® Other ❑ Current budget ❑ Amendment requested ❑ New FTE(s) requested Board Goal: Good for Business PURPOSE/ACTION REQUESTED Review of Proposed Tax Increment Financing (TIF) District No. 21 and Modification to Airlake Redevelopment Project No. 1 in the City of Lakeville (City). SUMMARY The Property Taxation and Records Department received the Proposed Tax Increment Plan for TIF District No. 21 and Modification to the Airlake Redevelopment Project on August 21, 2015. The City has scheduled a public hearing for September 21, 2015, to consider the proposed TIF District Plan and Project Modification. TIF District No. 21 (SSB Manufacturing Company/Scannell Properties) will be within Airlake Redevelopment Project No. 1 (Attachment A). The boundaries of the redevelopment project will be expanded to include the parcels in the proposed TIF district as well as other project improvements. The proposed district is an Economic Development TIF District consisting of two parcels of land totaling approximately 23 acres in the project area, and is located west of County State Aid Highway (CSAH) 9 (Dodd Blvd) and south of CSAH 70 (215"' St W) in the City of Lakeville (Attachment B). The District is being created to prepare the site for an approximate 240,000 square foot manufacturing facility. The Transportation Department has reviewed the TIF Plan (Attachment C). The proposed TIF parcels are adjacent to CSAH 9 with access to and from CSAH 9 via a new access. The new access will meet the County's current access spacing guidelines for a full access. Additional requirements regarding right of way dedication and turn lane requirements were identified in Transportation's comments regarding the Interstate South Logistics Park Alternative Urban Areawide Review (AUAR) (this site) last April. Staff is evaluating whether the proposed TIF district development will generate traffic that will necessitate the need for road improvements that would not otherwise be needed if the TIF development were not implemented. The County has legal right to cause the reservation of TIF funds for capital improvements (not included in the County's Capital Improvement Program (CIP)) where such impacts are caused by the TIF development. The County has 45 days from the receipt of the proposed TIF plan to notify the TIF authority of the election to use increments to finance road costs. If warranted, staff will present recommendations to the County Board on September 22, 2015. Environmental Resources staff performed an environmental audit of the parcels included in the proposed district (Attachment C), identifying a sealed well, and the likelihood of an unused unsealed well on one of the parcels. The owner is required to follow State Rule regarding unused wells. No hazardous materials or waste sites were identified. The Dakota County Community Development Agency has reviewed the TIF Plan. Since there is no redevelopment or housing component, no comment was provided. Dakota County has adopted Policy No. 8002 (Attachment D) regarding TIF, which supports the use of TIF for bonafide redevelopment efforts and affordable housing opportunities. This proposed TIF district, an economic development district, is not consistent with the TIF Policy. RECOMMENDATION Staff recommends that the Board find that proposed TIF District No. 21 in the City of Lakeville is not consistent with County Policy No. 8002. EXPLANATION OF FISCAL/FTE IMPACTS Lakeville TIF District No. 21 expects to receive approximately $1.7 million in tax increment revenue from 2018 through 2026. The result will cause Dakota County to shift nearly $479,000 in property tax revenue to taxpayers outside of the district to finance the project. -65- 9.2 - RBA.docx Supporting Documents: Previous Board Action(s): Attachment A: Various pages of TIF Plan Attachment B: TIF No. 21 Site Map Attachment C: Physical Development Memo Attachment D: TIF Policy No. 8002 RESOLUTION WHEREAS, the City of Lakeville submitted the Proposed Tax Increment Financing (TIF) Plan for TIF District No. 21 in the Airlake Redevelopment District No. 1 to Dakota County Property Taxation and Records on August 21, 2015; and WHEREAS, the City of Lakeville established a public hearing date of September 21, 2015; and WHEREAS, Minn. Stat. § 469.175, subd.1 a, provides that the Board of Commissioners may require the TIF authority to pay all or a portion of the cost of County road improvements out of tax increment revenue, under certain conditions; and WHEREAS, the County has 45 days from the receipt of the proposed TIF pian to notify the TIF authority of the election to use increments to finance road costs; and WHEREAS, the County Transportation Department has reviewed the TIF Plan and will continue to evaluate whether the proposed TIF district development will generate traffic that will necessitate the need for road improvements that would not otherwise be needed if the TIF development were not; and WHEREAS, Environmental Resources staff has reviewed the property and found record of one sealed well and the likelihood of an unused unsealed well. No hazardous materials or County -identified waste sites were found; and WHEREAS, should other unsealed wells be discovered, those wells are required to be sealed in accordance with applicable regulations; and WHEREAS, the Proposed TIF District No. 21 does not meet the criteria for support under Dakota County's TIF Policy No. 8002. NOW, THEREFORE, BE IT RESOLVED, That the Dakota County Board of Commissioners hereby acknowledges receipt of Proposed Tax Increment Plan for TIF District No. 21 in the City of Lakeville; and BE IT FURTHER RESOLVED, That the Dakota County Board of Commissioners hereby finds that the Lakeville Economic Development TIF District No. 21 is not consistent with Dakota County's TIF Policy. County Manager's Comments: ® Recommend Action ❑ Do Not Recommend Action ❑ Reviewed ---No Recommendation ❑ Reviewed ---Information Only ❑ Submitted at Commissioner Request 1-3emto Eli" County Ma 9!412015 11:34 AM Page 2 Reviewed by (if required): ® County Attorney's Office ® Financial Services ® Risk Management ❑ Employee Relations ❑ Information Technology ❑ Facilities Management Sept. 18, 2015 Mr. David Olson Community and Economic Development Director City of Lakeville 20195 Holyoke Ave. Lakeville, MN 55044 Dear Mr. Olson: On behalf of the Board of Education of Lakeville Area Public Schools, we are writing to express support with reservations for the proposal to create a Tax Increment Finance Economic Development District including the SSB Manufacturing Company/Scannell Properties Project. Lakeville Area Public Schools appreciates the development would not occur but for the $1.7 million in incentives provided by the TIF plan. We have these concerns. Lakeville Area Public Schools would encourage the City of Lakeville and Dakota County to take the following factors into consideration: Dakota County Road 70 is a two-lane road—l0-ton design. The Average Daily Trips already are high, with FedEx expecting to add 444 trips per day initially. Several new business enterprises are in development including Menasha, BTD, Mendell Machine and SSB Manufacturing. This traffic likely will increase as business increases. Lakeville Area Public Schools' Board of Education members have significant concerns for the safety of our students, families and staff traveling to and from Lakeville South High School, McGuire Middle School and John F. Kennedy Elementary School. People traveling to these schools primarily use County Road 70 to access the schools. Currently, Dakota County has not included upgrading CR 70 to a four -lane road in its five-year CIP. Lakeville Area Public Schools strongly requests the city to pursue a corridor study with Dakota County to examine the increase in truck and motor vehicle traffic along the corridor. Lakeville Area Public Schools also strongly requests the county and city consider upgrading CR 70 in two phases, with the first phase from Interstate 35 to Dodd Boulevard. Lakeville Area Public Schools will approach voters Nov. 3 for consideration of capital and operating levy referendum questions. If approved, SSB would fund their portion of the operating levy based on an estimated value of $15 million market value. It would not, however, be eligible to fund its portion of the capital levy the district considers vital to improve the quality of education our students receive and to prepare them for 215' century career pathways. Lakeville Area Public Schools strives to provide a world-class education for its students, and would encourage the City of Lakeville and Lakeville Area Chamber of Commerce to pursue business campus and office park sites to create more pathways for our students. Among the district's efforts is its Science -Technology -Engineering -Math (STEM) Academy at Lakeville South High School to prepare students for jobs in these growing fields. Other efforts include Lakeville North High School's Business Academy and the newly forming Innovation Zone partnership with Prior Lake -Savage Area Schools to provide career- and profession -based learning opportunities for our students. Jobs with wages of $14.56 per hour will not enable our students with advanced academic programs to find jobs that would enable them to reside in their "Hometown." We respectfully ask the City of Lakeville and Dakota County to take these factors into consideration going forward as Airlake Industrial Park and Scannell Properties expand. We want to thank you and the City of Lakeville for the opportunity to review and comment on this proposed TIF District plan. Respectfully, Michelle Volk Chairwoman, Lakeville Area Public Schools Board of Education CC: Mayor Matt Little Lakeville City Council City Administrator Justin Miller Dakota County Commissioners Lakeville Area Public Schools Board of Education Dr. Lisa Snyder Item No, 5 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 Date: September 25, 2015 Subject: September Director's Report The following is the Director's Report for September 2015. October 611 Manufacturers Appreciation Event This year's event is scheduled for Tuesday, October 6t" at Brackett's Crossing from 4:30 to 6:30 p.m. Please plan to attend if you can as it is a great opportunity to meet and talk with business owners and employees in an informal setting. This year's event is sponsored by Dakota Electric, Frontier Communications, Xcel, Minnesota Energy Resources, and the Lakeville Area Chamber of Commerce and Convention and Visitors Bureau. Please RSVP to Penny at pbrevig@lakevillemn.gov or 952-985-4420 if you have not already done so. Building Permit Report The City has issued building permits with a total valuation of $129,369,472 through August. This is a 45% increase compared to a total valuation of $88,958,875 for building permits issued through August of 2014. The City has issued commercial and industrial permits with a total valuation of $31,033,000 through August compared to a total valuation of $8,809,000 during the same period in 2014. The City has issued 232 new single family home permits through August compared to 200 single family permits issued during the same period in 2014. The City has also issued a total of 24 townhouse permits through August compared to 12 during the same period last year. According to the Builders Association of the Twin Cities (BATC), Lakeville also has issued the highest number of residential permits year-to-date with 244 permits issued through August. (Note: The City's report indicates that we have issued 256 permits. The Keystone Report used by BATC uses slightly different reporting dates.) The next closest City is Plymouth with 204 followed by Blaine at 193, Woodbury at 168 and Otsego at 132. Minnesota Marketing Partnership Site Selector Tour Staff again this year participated in a National Site Selector Tour organized by the Minnesota Marketing Partnership, a public-private partnership working together to promote Minnesota and the local communities. Staff joined representatives from other communities at Dakota Electric Association where Eric Stavriotis from CBRE-Chicago's Economic Incentives Group was presented with information about Lakeville and our surrounding communities. Staff also attended the Marketing Partnership Quarterly meeting which featured a wrap-up of 8 site selectors who provided feedback on their tour around Minnesota. This feedback and information is helpful to staff when projects, such as SSB Manufacturing, are brought forward. Development Updates Construction continues on the 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 car wash. Hy -Vee has begun construction of 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 or early Summer. The first two Hy -Vee stores in the Twin Cities opened this week in Oakdale and New Hope and received a lot of coverage in the local media. Building Inspections issued a building permit for the Angry Inch Brewery and Taproom which is the second tenant to be located in the former Ace Hardware Building on Holyoke Avenue in Downtown Lakeville and will be next to the Heavy Metal Grill in Downtown Lakeville that opened in July. The remodeling for the Angry Inch Brewery is expected to be completed prior to the arrival of the brewing equipment. A building permit was issued this week for the 3 story, 83 unit Candlewood Suites extended stay hotel project to be located in the southwest quadrant of County Road 70 and 1-35. The City Council previously approved a CUP to address the building height, which slightly exceeds the height requirements of the City Code. 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O O O S O kr) O O — M August 2015 Building Activity Five -Year Comparisons Permitted Units 437 901 1114 532 739 Permitted Units 2,731 4,903 6,088 6,117 5,682 Multifamily Construction as a Percentage of Total Activity Permit Value 90,289,823 146,729,664 175,144,693 147,568,728 176,709,583 Permit Value 629,637,228 945,895,427 1,230,148,309 1,221,586,757 1,296,320,266 fSep-14 Oct 14 Nov -14 Dec -14 Jan -15 Feb -15 Mar -15 April -15 May -15 June -15 July -15 Aug -15 YTD -15 50 65 55 66 5 4 65 23 32 61 45 40 1 45 Top Cities for Building Activity August 2015 Year to Date Permit Permitted Units Permits Permitted Units Plymouth 34 Minnetonka 107 Lakeville 244 Minneapolis 611 Woodbury 33 Carver 69 Plymouth 204 Blaine 430 Lakeville 28 Ramsey 52 Blaine 193 Woodbury 336 Blaine 26 Plymouth 38 Woodbury 168 Minnetonka 321 Chaska 21 Woodbury 37 Otsego 132 Lakeville 256 The Builders Association of the Twin Cities has contracted with Keystone Report, a local research firm, to nmintain a database with infonnation about new residential construction permits around the metropolitan area. After a builder has picked up the pennit from a city, Keystone Report compiles and updates weekly residential housing permits by city fur 70 percent of the metro- politan -area municipalities in the greater 13 -county region. Planned units are the total number of housing units planned to be built under the permits issued (one permits is issued per building which pray include more than one housing unit). Pennit value does not include the land/lot costs. Past Twelve Months 256 Permits Permitted Units Permit Value 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 August 2015 470 739 176,709,583 Five -Year Comparisons Permitted Units 437 901 1114 532 739 Permitted Units 2,731 4,903 6,088 6,117 5,682 Multifamily Construction as a Percentage of Total Activity Permit Value 90,289,823 146,729,664 175,144,693 147,568,728 176,709,583 Permit Value 629,637,228 945,895,427 1,230,148,309 1,221,586,757 1,296,320,266 fSep-14 Oct 14 Nov -14 Dec -14 Jan -15 Feb -15 Mar -15 April -15 May -15 June -15 July -15 Aug -15 YTD -15 50 65 55 66 5 4 65 23 32 61 45 40 1 45 Top Cities for Building Activity August 2015 Year to Date Permit Permitted Units Permits Permitted Units Plymouth 34 Minnetonka 107 Lakeville 244 Minneapolis 611 Woodbury 33 Carver 69 Plymouth 204 Blaine 430 Lakeville 28 Ramsey 52 Blaine 193 Woodbury 336 Blaine 26 Plymouth 38 Woodbury 168 Minnetonka 321 Chaska 21 Woodbury 37 Otsego 132 Lakeville 256 The Builders Association of the Twin Cities has contracted with Keystone Report, a local research firm, to nmintain a database with infonnation about new residential construction permits around the metropolitan area. After a builder has picked up the pennit from a city, Keystone Report compiles and updates weekly residential housing permits by city fur 70 percent of the metro- politan -area municipalities in the greater 13 -county region. Planned units are the total number of housing units planned to be built under the permits issued (one permits is issued per building which pray include more than one housing unit). Pennit value does not include the land/lot costs. Permits August 2011 256 August 2012 385 August 2013 494 August 2014 413 August 2015 470 Permits C YTD 2011 I 1,837 YTD 2012 2,665 YTD 2013 I 3,465 YTD 2014 I 3,213 YTD 2015 I 3,236 Five -Year Comparisons Permitted Units 437 901 1114 532 739 Permitted Units 2,731 4,903 6,088 6,117 5,682 Multifamily Construction as a Percentage of Total Activity Permit Value 90,289,823 146,729,664 175,144,693 147,568,728 176,709,583 Permit Value 629,637,228 945,895,427 1,230,148,309 1,221,586,757 1,296,320,266 fSep-14 Oct 14 Nov -14 Dec -14 Jan -15 Feb -15 Mar -15 April -15 May -15 June -15 July -15 Aug -15 YTD -15 50 65 55 66 5 4 65 23 32 61 45 40 1 45 Top Cities for Building Activity August 2015 Year to Date Permit Permitted Units Permits Permitted Units Plymouth 34 Minnetonka 107 Lakeville 244 Minneapolis 611 Woodbury 33 Carver 69 Plymouth 204 Blaine 430 Lakeville 28 Ramsey 52 Blaine 193 Woodbury 336 Blaine 26 Plymouth 38 Woodbury 168 Minnetonka 321 Chaska 21 Woodbury 37 Otsego 132 Lakeville 256 The Builders Association of the Twin Cities has contracted with Keystone Report, a local research firm, to nmintain a database with infonnation about new residential construction permits around the metropolitan area. After a builder has picked up the pennit from a city, Keystone Report compiles and updates weekly residential housing permits by city fur 70 percent of the metro- politan -area municipalities in the greater 13 -county region. Planned units are the total number of housing units planned to be built under the permits issued (one permits is issued per building which pray include more than one housing unit). Pennit value does not include the land/lot costs. Dakota County Community Development Agency CDA To: Dakota County Cities From: Lisa Alfson Date: August 28, 2015 Re: Foreclosure Update Dakota County Stats — July 2015 • # of Sheriff Sales in July — 5 I (compared to 62 in July 2014) • Total Sheriff Sales for 2015 — 338 (compared to 420 Jan. July 2014) • # of Notices of Pendency Filed in July — 70 • # of Notices of Pendency Filed in 2015 — 575 A Notice of Pendency is filed by a mortgage company's attorney as official notification that the foreclosure process has begun. Not all of these result in Sheriff Sales. Mapping Using Dakota County GIS http://gis.co.dakota.mn.us/website/dakotanetgis/ The Dakota County Office of GIS is updating the 2015 Foreclosures and Notice of Pendency layers on a monthly basis. If you need assistance using this Web page, please call Randy Knippel or Mary Hagerman with the Office of GIS at (952) 891-7081. If you have any concerns, please call me at (6S 1) 675-4467 or send me an email at I al fs o n (a7 d akotac d a. state. m n. u s. Q O a > c C Q O 0c E V YEa� m O tip Oqd E 3iffu 4J O V cd 4J O J1, Q O CD w� V �n F N M LA N C* in O M-� v M N N M O LO N—^ M co Ln N Ln h 110 O > _^ Z d' d h O Ln L Ln tiQ C� N CD 'w M Ln N �D O— N— M O O %0 D 0% N V N LA O— %0 O N Q 0 c N Ln %D 1-1 M N N %0 O N-- M ^ a= Cr, N h M V OD M O N--- A a% Or M M Ln Cl uy M V1 M m N LL N OO M me— .D V O rM N O M M Ln %0 M o Ln Ln O M — .o `o IA 4-14J � s > 2 c d a = = = >•> ickord OCNV.2 C. 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L tv •E 1 •� = d 4-0 Z !` D. 3 bA L n� � Vol d Z� QmLuU. =J 69(A O O Z 2015's States with the Best and Worst School Systems I WalletHub® Rates Companies Reviews Answers All - Search or ask a question 16K 2015's States with the Best and Worst School ""'s Systems 14 by Richie Bernardo �' SrA,arr Share 8 k Tweet G+1 Unless one is destined for the ranks of wildly successful college dropouts like Bill Gates and Mark Zuckerberg, education remains the traditional route to 266 professional and financial success for many Americans. Consider the median #ub incomes for workers aged 25 and older in 2014. Those with a bachelor's SCHOOL degree earned 65 percent more than those with only a high school diploma, SYSTFJt3 according to the Bureau of Labor Statistics. The data reveal that income 318 -, f potential grows — and chances of unemployment shrink — as one's educational attainment improves. I 344 I And with school resuming session, many parents will be seeking the best school districts to secure their children's academic success. When comparing their options, however, parents should recognize I that the amount of available public funding is by no means a determinant of a school system's quality, i as our findings demonstrate, though money is certainly helpful. M In addition, states that invest more dollars in education benefit not only their residents but also their economies. The Economic Policy Institute reported that income is higher in states where the { workforce is well educated and thus more productive. With better earnings, workers in turn can contribute more taxes to beef up state budgets over the long run. I In light of back -to -school season, WalletHub compared the quality of education in the 50 U.S. states and the District of Columbia by analyzing 13 key metrics that range from student -teacher ratios to standardized -test scores to dropout rates. By shining the spotlight on top -performing school systems, fwe aim to encourage parents to help their children realize their maximum potential and to call the attention of lawmakers on the work that remains to be done to improve America's schools. i1 Main Findings 3 Methodology Z Ask the Experts I Main Findings I Page 1 of 7 Login connect with us: Contact us to interview one of our experts https://wallethub.com/edu/states-with-the-best-schools/5335/ 9/22/2015 1 � 51 EMBED ON YOUR WEBSITE Overall I "School -System Quality" "Safety" Rank J State Rank Rank 1I Massachusetts i 2 1 3 l 2 ! I Colorado 1 47 I 3 New Jersey j 5 9 4 Wisconsin 4 14 5 t Kentucky I 10 4 6 Vermont 6 i 12 7 North Dakota l 3 46 Page 1 of 7 Login connect with us: Contact us to interview one of our experts https://wallethub.com/edu/states-with-the-best-schools/5335/ 9/22/2015 2015's States with the Best and Worst School Systems I WalletHub® https://wallethub.com/edu/states-with-the-best-schools/5335/ Page 2 of 7 Login 9/22/2015 Overall "School -System Quality" S%tes Companies Rede WS Answers "Safety" Seai''Fli or ask a t Rank i I77KK question Rarik 8 Minnesota - 9 JJ 16 16K I 9 Connecticut _..._... _ 7 i 28 L SHARES 10 I Illinois j 8 32� 14 11 Virginia 11 14 12 Kansas 14 22 13 Iowa 12 39 266 14 Utah 16 19 15 New Hampshire 15 29 16 Maryland 19 17 418 17 Nebraska i 17 26 i 18 Wyoming 13 41 344 i , t Maine 20 13 20 Montana 18 32 21 — North Carolina 24 6 E 22 - Ohio 23 29 23 Florida 26 20 24 s Indiana 22 50 25 1 Arkansas 21 q_ ! 26 Tennessee 28 :y F27 Texas 31 If) 28 Missouri 27 38 j 29 j Pennsylvania 29 43 1 30 South Dakota 25 47 E i 31 Washington 32 11 32 Michigan i 30 37 33 Oklahoma 34 2 1 34 New York i 33 27 t 35 Rhode Island 38 I 10 36 Georgia 35 20 37 Hawaii 36 5 38 i Delaware40 � I 7 39 ! Alabama 39 36 G Y 40 Mississippi 45 g 41 Idaho 42 34 42 New Mexico qq ! g 43 i California 37 49 r 44 West Virginia 46 22 I 45 South Carolina 47 24 46 Oregon 41 45 I 47 Louisiana 43 44 I i 48 Arizona ! t 48 j 40 I i 49 Nevada 50 25 f 50 ' District ofColumbia j 49 # �{ 51 I 51 Alaska 51 j 35 i A i Lowest r3rn;,nut bate }}, Highest Dropout Rate https://wallethub.com/edu/states-with-the-best-schools/5335/ Page 2 of 7 Login 9/22/2015 Olson, David From: DEED Media < M N DEED@ public.govdelivery.com > Sent: Thursday, September 17, 2015 9:45 AM To: Olson, David Subject: Employers Add 7,300 Jobs in August 1 DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOPMENT For Immediate Release September 17, 2015 Contact: Madeline Koch, 651-259-7236 madeline.koch(5)state.mn.us Steve Hine, 651-259-7396 steve.hineQd state.mn.us Employers Add 7,300 ]obs in August "Unemployment rate steady at 4 percent" ST. PAUL — Minnesota employers added 7,300 jobs in August, according to seasonally adjusted figures released today by the Minnesota Department of Employment and Economic Development (DEED). Those numbers, combined with July figures that were revised upward by 2,800 jobs, brought job gains in the state to 38,037 in the past year. Jobs in the state have grown 1.3 percent since August 2014, compared with a 2.1 percent growth rate nationally during that period. The state unemployment rate held steady in August at a seasonally adjusted 4 percent, compared with a U.S. unemployment rate of 5.1 percent. "The Minnesota labor market posted healthy gains in August, particularly in the private sector," said DEED Commissioner Katie Clark Sieben. "Private employers added more than 12,000 jobs during the month." Professional and business services and the leisure and hospitality sector each added 4,600 jobs in August. Other industries that gained jobs were education and health services (up 2,900), financial activities (up 1,600), logging and mining (up 200) and information (up 200). Government lost 5,000 jobs in August, followed by manufacturing (down 1,000), other services (down 400), construction (down 200), and trade, transportation and utilities (down 200). Over the past year, education and health services led all sectors with 15,721 new jobs. Other sectors that added jobs during that period were professional and business services (up 10,817), leisure and hospitality (up 7,871), trade, transportation and utilities (up 5,098) and financial activities (up 3,590). The following sectors lost jobs in the past year: government (down 1,985), other services (down 1,087), manufacturing (down 583), construction (down 525), logging and mining (down 466), and information (down 41.4). In the Metropolitan Statistical Areas, the following regions gained jobs in the past 12 months: Minneapolis -St. Paul MSA (up 1.9 percent), Duluth -Superior MSA (up 1.2 percent), Mankato MSA (up 1.5 percent) and St. Cloud MSA (up 0.5 percent). The Rochester MSA was the only area to shed jobs over the year (down 0.3 percent). DEED has added a section to its website that examines the unemployment rate by demographics (race, age and gender) and looks at alternative measures of unemployment. Go here for details. DEED is the state'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, go to http://mn.gov/deed Follow us on Twitter at http://twitter.com/mndeed . Seasonally adjusted i Not seasonally adjusted --_-� OTY Job i OTY Growth _ U.S. r Unemployment Rate August 2015 July 201 August 2015 August 2014 Minnesota --4.0__74.0 Total Non -Farm Employment _ _3.5 3.6 U.S.5.1 i - __— i 5.3 5.2 6.3 Employment j August 2015 _T—_August'14- July 2015 1 _ August '14- August 'is August '15 C_Level Minnesota- 2,863,400_ 2,856,100 Change Change j 38,037 i 1,3 I U.S. ^^ 142,288,000 142,115,000__T________2,894,000 1 2.1 vver i ne Year Employment Growth By Industry Sector (NSA) OTY Job i OTY Growth _ U.S. r Change Rate (%) OTY Growth Total Non -Farm Employment _ 38,037j 1.3 Rate (/o) i 2,1 Logging and Mining —__r- s. --- 466 -6.1 _ � -9 9___—___ P, Construction F -525 -0.4 3,4� rManufacturing -583_ -0.2 0,9 Trade, Trans. and UtilitiesV 5,098 1.0 2,1 Information -p 8 NSA) A) _-414 I Financial Activities ��� 3,590 36,171 1.9 I Duluth -Superior MN -WI MSA 2.0 2.1 Prof. and Bus. Services 10,817 3.0 3.4 Ed. and Health Services 15,721 3.2 2,8 I Leisure and Hospitality 7,871 �� 2.9-I— 3.0 Other Services -1,087 Government -1,985 I0.5 -0.9 1.1 0.6 -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 651-259-7161. Minnesota Department of Employment and Economic Development Communications Office Phone 651-259-7149 or 1-800-657-3858 • TTY 1-800-657-3973 http://mn.aov/deed An equal opportunity employer and service provider. • Questions? v Contact Us Department of Employment and Economic Development STAY CONNECTED: OTY OTY Metropolitan Statistical Area Employment Employment Change (#, NSA) Change (%, NSA) A) Minneapolis-St. Paul MN -WI MSA 36,171 1.9 I Duluth -Superior MN -WI MSA 1,555 1.2 Rochester MSA -317 -0.3 St. Cloud MSA 545 0.5 Mankato MSA _ 785 1.5 -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 651-259-7161. Minnesota Department of Employment and Economic Development Communications Office Phone 651-259-7149 or 1-800-657-3858 • TTY 1-800-657-3973 http://mn.aov/deed An equal opportunity employer and service provider. • Questions? v Contact Us Department of Employment and Economic Development STAY CONNECTED: BUSINESS BTD Manufacturing buys Georgia -based Impulse Manufacturing The deal by BTD Manufacturing allows for southern expansion. By Dee DePass (http://www.startribune.com/dee-depass/10644746/) Star Tribune SEPTEMBER 2, 2015 — 10:12PM Otter Tail Corp.'s BTD Manufacturing Inc. subsidiary has purchased Impulse Manufacturing of Georgia for $30.5 million, the company said. The deal gives the BTD metal -working outfit in Detroit Lakes $27 million in fresh annual revenue and helps it expand into the southeastern part of the country. Impulse is a high-tech metal fabricator about 30 miles outside of Atlanta. All 220 employees will be retained, with the exception of the retiring Ron Baysden, who founded Impulse and served as its president. 'STD's reputation and its management team provided me with the confidence that [the sale] was the right decision," Baysden said in a statement. BTD President Paul Gintner said he was delighted with the acquisition. 'Bringing our two organizations together will put us in a strong position to serve our customers." BTD has 820 employees in Detroit Lakes and Lakeville, and in Washington, Ill. The metal fabrication company does work from welding and machining to prototyping and stamping. The company is part of the publicly traded Otter Tail Corp., which owns electric utility and manufacturing businesses. ddepass@startribune.com 612-673-7725 DePassStrib