HomeMy WebLinkAboutItem 09March 3, 2016 0 Item No.
RESOLUTIONS APPROVING A TAX ABATEMENT AGREEMENT WITH MOM BRANDS LLC
AND A CITY INTERFUND LOAN TO FUND THE TAX ABATEMENT
March 7, 2016 City Council Meeting
Proposed Action
Staff recommends adoption of the following motion: Move to adopt resolutions approving the Tax
Abatement Agreement with MOM Brands Company LLC and an Interfund Loan from the City's General
Fund.
Passage of this motion will result in providing Tax Abatement assistance to facilitate the retention of a
minimum of 250 jobs by MOM Brands Company LLC d.b.a Post Consumer Brands at their cereal
division headquarters in Lakeville.
Overview
The City's Tax Abatement Agreement proposes to provide the $375,000 incentive after the 250 jobs
have been retained by Post for one year which will be May 4, 2016. Similar to DEED's requirements,
the 250 jobs have to be retained a minimum of two years and Post has to continue their operations in
Lakeville for a minimum of five years or until 2020. It should be pointed out that over 82% of the jobs
being retained exceed the wage level of $60,000 per year established by the City's Strategic Plan for
Economic Development for the creation and/or retention of high -skill and high wage jobs.
The properties owned by Post are currently in a Tax Increment Financing (TIF) District until December
31, 2022 unless the City elects to de -certify the TIF District earlier. Staff is recommending an Interfund
Loan of $375,000 from the City's General Fund to provide the upfront financing of the proposed Tax
Abatement. The City Council indicated support for a 3.5% interest rate on the Interfund Loan at the
February 22, 2016 Council Work Session. Tax Abatement funds will not be generated for up to 7
years, thus it is recommended that interest accrue during this period.
Staff recommends approval of the resolutions approving both the Tax Abatement Agreement and the
Interfund Loan from the General Fund.
Primary Issues to Consider
• Is this request for Tax Abatement assistance consistent with the City's policies?
The request is consistent with the City's Tax Abatement and Business Subsidy Policies.
Supporting Information
• Resolutions ,Tax Abatement Agreement, March 7, 2016 Memo from Springsted
David L. Olson, Community and Economic Development Director
c: Jill Bolletteri, Post Consumer Brands LLC
Financial Impact: $375,000 Budgeted:Y/N Y Source: Internal Loan from the General Fund
Envision Lakeville Community Values: Diversified Economic Development
CITY OF LAKEVILLE, MINNESOTA
RESOLUTION NO.
RESOLUTION GRANTING A PROPERTY TAX ABATEMENT
AND APPROVING A TAX ABATEMENT AND BUSINESS
SUBSIDY AGREEMENT FOR CERTAIN PROPERTY IN THE
CITY OF LAKEVILLE, MINNESOTA
BE IT RESOLVED by the City Council (the "City Council") of the City of Lakeville, Minnesota
(the "City") as follows:
Section 1. Recitals.
1.01. MOM Brands Company, LLC, a Minnesota corporation, (the "Developer") proposes to
remain located in an existing facility in the City of Lakeville (the "Project"), with the property identification
numbers set forth in Exhibit A attached hereto (the "Property"). The Developer has requested that the City
provide financial assistance to the Developer for the Project. The City proposes to use the abatement for the
purposes provided for in Minnesota Statutes, Sections 469.1812 through 469.1815 (the "Act"), from the
property taxes to be levied by the City on the Tax Abatement Property.
1.02. The proposed term of the abatement will be for up to 10 years in an estimated principal
amount of $375,000, plus simple non -compounded interest at 3.5% for a total amount not to exceed
$813,070, as described in the Tax Abatement and Business Subsidy Agreement, dated March 7, 2016 (the
"Agreement"), among the City and Developer. The proposed abatement will apply to a portion of the City's
share of real estate taxes which relate to the Project and the value of the land and building on the Tax
Abatement Property by the Developer, as determined by the City (the "Abatement").
1.03. This City Council has reviewed information concerning the above -referenced Project,
including a Tax Abatement and Business Subsidy Agreement (the "Agreement") proposed to be entered into
by the City and the Developer. The Agreement is incorporated herein by reference.
1.04. On the date hereof, the City Council conducted a duly noticed public hearing on the
Abatement proposed to be granted by the City to the Developer pursuant to the Agreement. The views of all
interested persons were heard at the public hearing.
1.05 The Abatement is authorized under the Abatement Law.
Section 2. Findings for the Abatement.
2.01. The recitals set forth above are incorporated into this Resolution.
2.02. It is hereby found and determined that the benefits to the City from the Abatement will be at
least equal to the costs to the City of the Abatement, because (a) the City believes that the development to be
facilitated is not reasonably likely to occur absent the Abatement provided by the City, and (b) the long-term
taxes collected from the Property after termination of the Abatement will exceed the amount of the
Abatement returned to the Developer.
2.03. It is hereby found and determined that the Abatement is in the public interest because such
action will increase the tax base and provide additional employment opportunities in the City.
2.04. It is hereby found that the Property will not be included within a tax increment financing
district during the term of the Abatement.
2.05. It is fiuther specifically found and determined that the Abatement is expected to result in the
following public benefits:
(a) Retention of a minimum of 250 existing jobs in the City, as set forth in the Agreement.
(b) Retention of an estimated $10,443,600 increase in market value for property tax
purposes, which will be available to all taxing jurisdictions after expiration of the Abatement.
Section 3. Actions Ratified; Abatement Approved; Tax Abatement and Business Subsidy
Ageement Approved.
3.01. The City Council hereby ratifies all actions of the City's staff and consultants in arranging
for approval of this Resolution in accordance with the Act.
3.02. Subject to the provisions of the Act, the Abatement is hereby approved and adopted subject
to the following terms and conditions:
(a) The term "Abatement" means the real property taxes generated in any tax -payable year by
extending the City's total tax rate for that year against the tax capacity of the Project on the Property
in accordance with the Agreement, including the tax capacity of the land and building, as of January
2 in the prior year.
(b) The Abatement will be collected by the City and used to reimburse itself for the upfront
contribution to the project in accordance with all the terms and conditions of the Agreement.
(c) In accordance with Section 469.1813, subdivision 8 of the Act, in no year shall the
Abatement, together with all other abatements approved by the City under the Act and paid in
that year exceed the greater of 10% of the net tax capacity of the City for that year or $200,000
(the "Abatement Cap"). The City may grant any other abatements permitted under the Act after
the date of this Resolution, provided that to the extent the total abatements in any year exceed the
Abatement Cap, the allocation of Abatement Cap to such other abatements is subordinate to the
Abatement granted pursuant to this Resolution.
(d) The Abatement shall commence in the first taxes payable year after the existing TIF District
in which the property is currently located will be decertified.
(e) In no event shall the collection of abatement exceed $813,070 ($375,000 plus interest at the
rate of 3.5% per annum on the unpaid principal balance) or continue to be paid for more than ten
years.
(f) The Abatement is subject to modification in accordance with the Act, subject to the terms of
the Agreement.
(g) In accordance with Section 469.1815 of the Act, the City will add to its levy in each year
during the term of the Abatement the total estimated amount of current year Abatement granted
under this Resolution.
a
(h) The City makes no warranties or representations regarding the amount or availability of the
Abatement.
(i) The Abatement shall be provided to the Developer pursuant to the terms and conditions of
the Agreement as approved by the City Council.
3.03. The Agreement are hereby in all respects authorized, approved and confirmed and the
Mayor and City Clerk are hereby authorized and directed to execute and deliver the Tax Abatement and
Subsidy Agreement for and on behalf of the City in substantially the form now on file with the City but with
such modifications as shall be deemed necessary, desirable or appropriate, their execution thereof to
constitute conclusive evidence of their approval of any and all modifications therein.
Section 4. Implementation. The Mayor and City Clerk are authorized and directed to execute
and deliver any additional agreements, certificates or other documents that the City determines are necessary
to implement this Resolution.
Section 5. Effective Date. This Resolution is effective upon execution in full of the
Agreement.
Approved by the City Council of the City of Lakeville, Minnesota, this 7th day of March, 2016.
Matt Little, Mayor
ATTEST:
Charlene Friedges, City Clerk
EXHIBIT A TO ABATEMENT RESOLUTION
THE PROPERTY
That real property in the City of Lakeville, Dakota County, State of Minnesota, with the following property
identification numbers:
22-24500-01-021
22-24500-01-022
A-1
CITY OF LAKEVILLE, MINNESOTA
RESOLUTION NO.
RESOLUTION APPROVING THE TERMS OF AN
INTERNAL FINANCING IN CONNECTION WITH
A TAX ABATEMENT FOR MOM BRANDS COMPANY, LLC
BE IT RESOLVED by the City Council (the "Council") of the City of Lakeville,
Minnesota (the "City"), as follows:
Section 1. Background.
(a) The City has heretofore approved the establishment of a tax abatement to assist
MOM Brands Company, LLC with the retention of a minimum of 250 existing jobs in its current
location within the City.
(b) The City has determined to assist with the business and job retention project and
will pay for certain costs associated with the project (the "Qualified Costs"), for which will be
internally financed from City funds available for such purposes.
(c) The City intends to reimburse itself for the payment of the Qualified Costs, plus
interest thereon, from the City's share of annual tax abatements that will be levied for and
collected annually in accordance with the terms of this resolution (which terms are referred to as
the "Internal Financing").
Section 2. Terms of Internal Financing.
(a) The City hereby authorizes the advance of up to $375,000 from the City's General
Fund that may be paid as Qualified Costs. The City shall reimburse itself for such advances
together with interest at the rate stated below. Interest accrues on the principal amount from the
date of each advance. The interest rate shall be 3.50%.
(b) The Abatement shall commence in the first taxes payable year after the existing
TIF District in which the property is currently located will be decertified.
(c) Principal and interest on the Internal Financing shall be paid semi-annually on
each February 1 and August 1 (each "Payment Date") following commencement of annual levies
by the City for collection of annual tax abatements through the term of the tax abatement
collections (up to 10 years).
(d) The principal sum and all accrued interest payable under the Internal Financing
are pre -payable in whole or in part at any time by the City.
(e) The City may amend the terms of the Internal Financing at any time by resolution
of the City Council, including a determination to forgive the outstanding principal amount and
accrued interest to the extent permissible under law.
Section 3. Effective Date. This resolution is effective upon the date of its approval.
Adopted this 7th day of March, 2016.
mm
ATTEST:
Charlene Friedges, City Clerk
Matt Little, Mayor
SpringstprIl
MEMORANDUM
TO: David Olson, Community and Economic Development Director
Rick Howden, Economic Development Specialist
FROM: Mikaela Huot, Vice President/Consultant
DATE: March 7, 2016
SUBJECT: MOM Brands LLC Tax Abatement
Springsted Incorporated
380 Jackson Street, Suite 300
Saint Paul, MN 55101-2887
Tel: 651-223-3000
Fax: 651-223-3002
www.springsted.com
The City of Lakeville has agreed to provide tax abatement assistance to MOM Brands LLC for the retention of a
minimum of 250 existing jobs within the City. A public hearing will be held on March 7, 2016 to consider the tax
abatement assistance and business subsidy and Development Agreement between the City and MOM Brands LLC.
The anticipated terms of assistance to be considered as a business subsidy is the granting of $375,000 of tax
abatement assistance upfront. The property is currently within an existing Tax Increment Financing District and the
City will establish the tax abatement following termination of the district (anticipated to be as of December 31, 2022
with first abatement for taxes payable 2023). It is anticipated the City will establish an interfund loan in the amount of
the assistance and capitalize the interest on an annual basis until the abatement dollars are available. The City will
recapture the tax abatement revenues on an annual basis, with an interest rate component (as further outlined in this
memorandum), to pay the accrued and unpaid interest and principal. The maximum term of the abatement is
anticipated to be up to 10 years and the actual market values and tax rates may have an impact on what the actual
term may be. The purpose of this memo is to provide the tax abatement revenue projections and projected interfund
loan amount based on the information available as outlined below. The tax abatement revenue projections are
based on the current land and building values of the properties, as described further in the assumptions.
Tax Abatement Background
A city may grant a tax abatement, by contract or otherwise, of the taxes imposed by the city on a parcel of property,
which may include personal property and machinery, or defer the payments of the taxes and abate the interest and
penalty that otherwise would apply, if:
it expects the benefits to the city of the proposed abatement agreement to at least equal the costs to the city
of the proposed agreement or intends the abatement to phase in a property tax increase, as provided in
clause (2)(vii); and
City of Lakeville, Minnesota
MOM Brands LLC Tax Abatement
March 7, 2016
Page 2
• it finds that doing so is in the public interest because it will:
o increase or preserve tax base;
o provide employment opportunities in the political subdivision;
o provide or help acquire or construct public facilities;
o help redevelop or renew blighted areas;
o help provide access to services for residents of the political subdivision;
o finance or provide public infrastructure;
o phase in a property tax increase on the parcel resulting from an increase of 50 percent or more in
one year on the estimated market value of the parcel, other than increase attributable to
improvement of the parcel; or
o stabilize the tax base through equalization of property tax revenues for a specified period of time
with respect to a taxpayer whose real and personal property is subject to valuation under
Minnesota Rules, chapter 8100.
The maximum term of a tax abatement is 15 years if all three entities participate (City, County and School District)
and up to 20 years if two or fewer entities participate and a participating entity either receives denial of participation
or 90 days from the period in which participation was requested pass with no response.
Tax Abatement Assumptions
Springsted made certain assumptions to calculate the estimated amount of tax abatement revenues generated by the
project. Those assumptions include the following:
• City Participation Only
• Tax Abatement Term
o Maximum up to 10 years
o Commencing upon TIF District No. 10 decertification
o First year taxes payable 2023
• Abatement of existing land and building
o Value as of assess Jan. 1, 2015 for taxes payable 2016
o PID: 22-24500-01-021: $5,949,000
o PID: 22-24500-01-022: $4,494,600
o Total existing land and building value: $10,443,600
• Payable 2016 tax rates remain constant through district term
o City:
39.067%
o County:
28.589%
o ISD 194:
32.682%
o Other (v): 5.061 %
o Total:
105.399%
• Current class rates remain constant through abatement term
o 1.5% first $150,000 value and 2% value above $150,000
• No annual market value inflator
City of Lakeville, Minnesota
MOM Brands LLC Tax Abatement
March 7, 2016
Page 3
Tax Abatement Revenue Estimates
The City is financing the abatement assistance on an upfront basis and has agreed to provide assistance in the
amount of $375,000 following the scheduled public hearing on March 7, 2016. Because the property is currently
within an existing TIF District, the tax abatement on the property will not commence until termination of the TIF
District (anticipated to be as of December 31, 2022 with first year of the abatement in 2023). As a result, it is
anticipated that the City will finance the assistance as an interfund loan at an interest rate of 3.5%. The following
table provides the total loan payments based on the current values and interest rate:
Scenario 1
Term
Up to 10 Years
Fiscal Disparities Election
Not From Abatement
Property
Annual Abatement Revenue
$81,307
Estimated Total Net Revenue
$813,070
The City is financing the abatement assistance on an upfront basis and has agreed to provide assistance in the
amount of $375,000 following the scheduled public hearing on March 7, 2016. Because the property is currently
within an existing TIF District, the tax abatement on the property will not commence until termination of the TIF
District (anticipated to be as of December 31, 2022 with first year of the abatement in 2023). As a result, it is
anticipated that the City will finance the assistance as an interfund loan at an interest rate of 3.5%. The following
table provides the total loan payments based on the current values and interest rate:
Thank you for the opportunity to be of assistance to the City of Lakeville. Please let us know if you have any
questions or need additional information. Please feel free to contact me by phone at 651.223.3036 and email at
mhuot(aWringsted.com.
Scenario 1
Maximum Term
Up to 10 Years
Interfund Loan Interest Rate
3.5%
Annual Abatement Revenue
$81,307
Estimated Total Net Revenue
$813,070
Loan Principal
$375,000
Loan Interest
$143,046
Total Loan Payments
$518,046
Estimated Surplus Revenues
$295,024
Estimated Total Abatement Years
6.5 years
Thank you for the opportunity to be of assistance to the City of Lakeville. Please let us know if you have any
questions or need additional information. Please feel free to contact me by phone at 651.223.3036 and email at
mhuot(aWringsted.com.
City of Lakeville, Minnesota
MOM Brands LLC Tax Abatement
March 7, 2016
Page 4
Projected Tax Abatement Report
City of Lakeville, Minnesota
Tax Abatement Project for
MOM Brands Company LLC
$375,000 Upfront Assistance plus accrued interest
Less:
10,443,600
208,122
208,122
Non-
Less:
Retained
Times:
Annual Total Total Abated
Fiscal
Captured
Tax
Period Estimated Net Tax Net Tax
Disp.@
Net Tax
Capacity
Ending Ivlarket Value i'i Capacity Capacity
0.0000%
Capacity
Rate (Z)
Tax Tax Tax
Annual Abatement Abatement Abatement Total
Total City County School District Tax
Tax 39.07% 28.59% 32.68% Abatement
12/31/16
10,443,600
208,122
208,122
0
0
105.399%
0
0
12/31/17
10,443,600
208,122
208,122
0
0
105.399%
0
0
12/31/18
10,443,600
208,122
208,122
0
0
105.399%
0
0
12/31/19
10,443,600
208,122
208,122
0
0
105.399%
0
0
12/31/20
10,443,600
208,122
208,122
0
0
105.399%
0
0
12/31/21
10,443,600
208,122
208,122
0
0
105.399%
0
0
12/31/22
10,443,600
208,122
208,122
0
0
105.399%
0
0
12/31/23
10,443,600
208,122
0
0
208,122
105.3990/6
219,359
81,307
12/31/24
10,443,600
208,122
0
0
208,122
105.399%
219,359
81,307
12/31/25
10,443,600
208,122
0
0
208,122
105.399%
219,359
81,307
12/31/26
10,443,600
208,122
0
0
208,122
105.399%
219,359
81,307
12/31/27
10,443,600
208,122
0
0
208,122
105.399%
219,359
81,307
12/31/28
10,443,600
208,122
0
0
208,122
105.399%
219,359
81,307
12/31/29
10,443,600
208,122
0
0
208,122
105.399%
219,359
81,307
12/31/30
10,443,600
208,122
0
0
208,122
105.399%
219,359
81,307
12/31/31
10,443,600
208,122
0
0
208,122
105.399%
219,359
81,307
12/31/32
10,443,600
208,122
0
0
208,122
105.399%
219,359
81,307
12/31/33
10,443,600
208,122
208,122
0
0
105.399%
0
0
$2,193,5901 $813,070
$0 $0
0
0
0
0
0
0
0
81,307
81,307
81,307
81,307
81,307
81,307
81,307
81,307
81,307
81,307
0
t'I Total estimated market value for taxes payable 2016, assumed to remain constant in calculations, any changes in value may impact abatement amounts
(�) Proposed payable 2016 tax capacity rate used. Annual rate changes may impact total estimated tax abatement amounts
City of Lakeville, Minnesota
MOM Brands LLC Tax Abatement
March 7, 2016
Page 5
Projected Interfund Loan Report
City of Lakeville, Minnesota
Tax Abatement Project for
MOM Brands Company LLC
$375,000 Upfront Assistance plus accrued interest at 3.5%
Note Date:
05/04/16
We Rate:
3.50%
Amount:
$375,000
Cumulative
Unpaid
Semi -Annual
Loan
Interest
Accrued
Net
Balance
Date
Principal
Interest
P & I
Due
Interest
Revenue
Outstanding
(1)
(2)
(3)
(4)
(51
(6)
(7)
(8)
375,000.00
08/01/17
0.00
0.00
0.00
16,296.88
16,296.88
0.00
375,000.00
02/01/18
0.00
0.00
0.00
22,859.38
22,859.38
0.00
375,000.00
08/01/18
0.00
0.00
0.00
29,421.88
29,421.88
0.00
375,000.00
02/01/19
0.00
0.00
0.00
35,984.38
35,984.38
0.00
375,000.00
08/01/19
0.00
0.00
0.00
42,546.88
42,546.88
0.00
375,000.00
02/01/20
0.00
0.00
0.00
49,109.38
49,109.38
0.00
375,000.00
08/01/20
0.00
0.00
0.00
55,671.88
55,671.88
0.00
375,000.00
02/01/21
0.00
0.00
0.00
62,234.38
62,234.38
0.00
375,000.00
08/01/21
0.00
0.00
0.00
68,796.88
68,796.88
0.00
375,000.00
02/01/22
0.00
0.00
0.00
75,359.38
75,359.38
0.00
375,000.00
08/01/22
0.00
0.00
0.00
81,921.88
81,921.88
0.00
375,000.00
02/01/23
0.00
0.00
0.00
88,484.38
88,484.38
0.00
375,000.00
08/01/23
0.00
40,653.51
40,653.51
95,046.88
54,393.37
40,653.51
375,000.00
02/01/24
0.00
40,653.51
40,653.51
60,955.87
20,302.36
40,653.51
375,000.00
08/01/24
13,788.65
26,864.86
40,653.51
26,864.86
0.00
40,653.51
361,211.35
02/01/25
34,332.31
6,321.20
40,653.51
6,321.20
0.00
40,653.51
326,879.04
08/01/25
34,933.13
5,720.38
40,653.51
5,720.38
0.00
40,653.51
291,945.91
02/01/26
35,544.46
5,109.05
40,653.51
5,109.05
0.00
40,653.51
256,401.45
08/01/26
36,166.48
4,487.03
40,653.51
4,487.03
0.00
40,653.51
220,234.97
02/01/27
36,799.40
3,854.11
40,653.51
3,854.11
0.00
40,653.51
183,435.57
08/01/27
37,443.39
3,210.12
40,653.51
3,210.12
0.00
40,653.51
145,992.18
02/01/28
38,098.65
2,554.86
40,653.51
2,554.86
0.00
40,653.51
107,893.53
08/01/28
38,765.37
1,888.14
40,653.51
1,888.14
0.00
40,653.51
69,128.16
02/01/29
39,443.77
1,209.74
40,653.51
1,209.74
0.00
40,653.51
29,684.39
08/01/29
29,684.39
519.48
30,203.87
519.48
0.00
30,203.87
0.00
02/01/30
0.00
0.00
0.00
0.00
0.00
0.00
0.00
08/01/30
0.00
0.00
0.00
0.00
0.00
0.00
0.00
02/01/31
0.00
0.00
0.00
0.00
0.00
0.00
0.00
08/01/31
0.00
0.00
0.00
0.00
0.00
0.00
0.00
02/01/32
0.00
0.00
0.00
0.00
0.00
0.00
0.00
08/01/32
0.00
0.00
0.00
0.00
0.00
0.00
0.00
02/01/33
0.00
0.00
0.00
0.00
0.00
0.00
0.00
$375,000
$143,045.99
$518,045.99
$518,045.99
Surplus Revenue 295,024.23
Total Net Revenue $813,070.22
TAX ABATEMENT AGREEMENT
BETWEEN
CITY OF LAKEVILLE
MOM BRANDS COMPANY LLC
THIS DOCUMENT WAS DRAFTED BY:
CAMPBELL KNUTSON
Professional Association
860 Blue Gentian Road, Suite 290
Eagan, Minnesota 55121
Telephone: (651) 452-5000
AMP
185047v6
THIS AGREEMENT, made on or as of the ( day of 2016, by and between the
CITY OF LAKEVILLE, a Minnesota municipal corporation ("City") and MOM BRANDS
COMPANY LLC, a Minnesota limited liability company ("MOM" or "Developer").
WITNESSETH:
WHEREAS, Post Holdings, Inc. (Post) has acquired MOM Brands and has relocated its
division headquarters for the new combined company from Parsippany, New Jersey to the existing
MOM Brands buildings in Lakeville ("the Project") and will continue to operate its business in the
industrial facility for a minimum of 5 years following substantial completion of the Project. The new
entity in Lakeville will be called MOM Brands Company LLC;
WHEREAS, Developer has indicated that maintaining the new combined division
headquarters in Lakeville would not have occurred but for tax abatement assistance from the City and
additional business subsidies from the State of Minnesota;
WHEREAS, in order to assist Developer with the Project, the City has determined to provide
assistance to the Project through a business subsidy to the Developer through a Tax Abatement in the
amount of $375,000 to retain a minimum of 250 jobs in Lakeville;
WHEREAS, the City believes that the retention of 250 jobs and fulfillment of this Agreement
are vital and are in the best interests of the City and will result in preservation and enhancement of
the tax base, provide employment opportunities and are in accordance with the public purpose and
provisions of the applicable state and local laws and requirements under which the Project has been
undertaken and is being assisted;
WHEREAS, pursuant to the Tax Abatement Act, the City may grant an abatement of the
taxes imposed by such governmental units on parcels of property, subject to certain conditions set
forth in such act;
WHEREAS, the Tax Abatement for the Project in the amount of $375,000 for the retention
of a minimum of 250 jobs proposed under the terms of this Agreement provided by the City constitute
a business subsidy (the "Business Subsidy"), pursuant to Minnesota Statutes, Sections 116J.993-.995
(the "Business Subsidy Act");
WHEREAS, the City held a public hearing on the Tax Abatement and business subsidy policy
as required by law;
WHEREAS, the City desires to pledge Tax Abatement to encourage retention of jobs with
the Project;
WHEREAS, the Project is currently located within a tax increment financing district until
December 31, 2022 at which time the tax abatement would commence;
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WHEREAS, the City has adopted a set of criteria for awarding business subsidies that comply
with Minnesota Statutes § 116J.994;
WHEREAS, the Developer agrees to satisfy the provisions of the business subsidy reporting
requirements under the Business Subsidy statute at Minn. Stat. Section 116J.993-.995 and as
identified in the Business Subsidy Requirements of this Agreement;
WHEREAS, the City has determined that the retention of jobs serves a public purpose and
that the transaction furthers its general plan of economic development;
WHEREAS, the City believes that the Project and fulfillment of this Agreement is in the best
interest of the City and the health, safety, morals and welfare of the residents of the City of Lakeville
and in accord with the public purposes and provisions of the applicable state and local laws and
requirements.
NOW, THEREFORE, in consideration of the premises and the mutual obligations of the
parties hereto, each of them does hereby covenant and agree with the other as follows:
ARTICLE I.
DEFINITIONS
In this Agreement, unless a different meaning clearly appears from the context:
"Agreement" means this Tax Abatement Agreement by and between the City and MOM, as
the same may be from time to time modified, amended or supplemented.
"Articles and Sections" mentioned by number only are the respective Articles and Sections
of this Agreement so numbered.
"Benefit Date" means the date of the acquisition of MOM by Post which was May 4, 2015.
"Business Day" means any day except a Saturday, Sunday or a legal holiday or a day on
which banking institutions in the City are authorized by law or executive order to close.
"Business Subsidy Agreement" means this Tax Abatement agreement.
"City" means the City of Lakeville, Minnesota.
"City Tax Abatement" means the City's Tax Abatement in the amount of $375,000 as
described in Article V hereof and as authorized by the City Tax Abatement Resolution, pursuant to
the Tax Abatement Act.
"Developer" means MOM Brands Company LLC, a Minnesota limited liability company.
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"Development Property" or "Property" means real property located in the City of Lakeville
at 20802 Kensington Blvd. and 20845 Kenbridge Court, Dakota County, Minnesota, legally described
as Lots 1 and 2, Block 1 Fairfield Business Campus, according to the recorded plat thereof.
"Event of Default" means an action by the Developer listed in Article IX of this Agreement.
"Parties" means the Developer and the City.
"Party" means one of the following: Developer or the City.
"Project" means the acquisition of Developer's operating business and Development
Property by Post on May 4, 2015 and the location of a new cereal division headquarters in Lakeville
to be known as Post Consumer Brands.
"State" means the State of Minnesota.
"Tax Abatement Act" means Minnesota Statutes, Sections 469.1812 through 469.1815, as
amended or supplemented from time to time.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties by the City. The City represents and
warrants that:
(a) The City is a municipal corporation duly organized and existing under the laws of the
State of Minnesota. Under the laws of the State, the City has the power to enter into
this Agreement and carry out its obligations hereunder.
Section 2.2. Representations and Warranties by MOM. MOM represents and warrants
that:
(a) MOM is a limited liability company duly organized and operating under the laws of
the State of Minnesota, has the power to enter into this Agreement, and has duly
authorized the execution, delivery, and performance of this Agreement by proper
action of its Board of Directors.
(b) The acquisition of the Project and construction of the Project would not be undertaken
by MOM, and in the opinion of the MOM would not be economically feasible within
the reasonably foreseeable future, without the assistance and benefit to the Developer
provided for in this Agreement.
(c) MOM will reasonably cooperate with the City, and the City will reasonably cooperate
with the MOM with respect to any litigation commenced with respect to this
Agreement, or the Project.
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(d) Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the terms
and conditions of this Agreement is prevented, limited by or conflicts with, or results
in a breach of, the terms, conditions or provisions of any corporate restriction or any
evidences of indebtedness, agreement or instrument of whatever nature to which
MOM is now a party or by which it is bound or constitutes a default under any of the
foregoing.
(e) Whenever any Event of Default occurs and if the City shall employ attorneys and
engineers or incur other expenses for the collection of payments due or to become due
or for the enforcement of performance or observance of any obligation or agreement
on the part of MOM under this Agreement, MOM agrees that it shall, within ten (10)
business days of written demand by the City, pay to the City the reasonable fees of
such attorneys and such other expenses so incurred by the City.
ARTICLE III.
TAX ABATEMENT
Section 3.1. Tax Abatement. The City shall provide to Developer a job retention incentive
of $375,000 ("City Tax Abatement") pursuant to the terms of Article V of this Agreement.
The City Tax Abatement is hereby granted in respect of property taxes levied by the City on
the Property for ten (10) years, commencing with the decertification of the current tax increment
financing district for the Development Property. The City retains the right to terminate the Tax
Abatement once the total amount of the incentive and interest has been received.
ARTICLE IV.
REAL PROPERTY TAXES
4.1. Real Property Taxes. The Developer shall, so long as this Agreement remains in effect,
pay all real property taxes with respect to all parts of the Property owned by it which are payable
pursuant to any statutory or contractual duty that shall accrue until title to the Property is vested in
another person. The Developer agrees that for the period of Tax Abatement provided under Article
V:
(a) It will not seek administrative review or judicial review of the applicability of any tax
statute relating to the ad valorem property taxation of real property contained on the Property
determined by any tax official to be applicable to the Project or the Developer or raise the
inapplicability of any such tax statute as a defense in any proceedings with respect to the Property,
including delinquent tax proceedings; provided, however, "tax statute" does not include any local
ordinance or resolution levying a tax; and
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(b) It will not seek administrative review or judicial review of the constitutionality of any
tax statute relating to the taxation of real property contained on the Property determined by any tax
official to be applicable to the Project or the Developer or raise the unconstitutionality of any such
tax statute as a defense in any proceedings, including delinquent tax proceedings with respect to the
Property; provided, however, "tax statute" does not include any local ordinance or resolution levying
a tax.
ARTICLE V.
BUSINESS SUBSIDY AGREEMENT
Section 5.1. Assistance. It is the intention of the Parties that, as a necessary inducement to
Developer to complete investment in the Development Property and retain a minimum of 250 jobs
for a period of two years from the Benefit Date, the City shall provide $375,000 to Developer one
year from the Benefit Date as the business subsidy. The form of the business subsidy which shall be
provided for Developer by the City is as follows:
Job Retention Incentive $375,000
Total $375,000
Section 5.2. Business Subsidy. In order to satisfy the provisions of Minnesota Statutes,
Sections 116J.993 to 116J.995 (the "Business Subsidies Act"), the Developer Acknowledges and
agrees that the amount of the "Business Subsidy" granted to the Developer under this Agreement is
$375,000 and that this Business Subsidy is needed because the Project is not sufficiently feasible for
the Developer to undertake without the Business Subsidy. The public purpose of the Business
Subsidy is to retain existing jobs in the City and to enhance the tax base. The Developer agrees that
it will meet the following goals (the "Goals"): retain 250 full time jobs in Lakeville at an hourly wage
of at least $18.48 per hour for twenty four months from the benefit date. As of the date of this
Agreement, Developer certifies that the current number of full time employees of Developer in
Minnesota is at least 250 full time employees.
Section 5.3. Default. Upon the occurrence of a failure to retain jobs as required by Section
5.2 or a failure to continue operations as required by Section 5.5 the Developer shall repay to the City
upon written demand from the City a "pro rata share" of the Subsidy and interest on the Subsidy at
the implicit price deflator as defined in Minnesota Statutes, Section 275.70, subd. 2, accrued from the
Benefit Date. The term "pro rata share" means percentages calculated as follows:
(a) if the failure relates to the number of jobs retained, the jobs required to be retained less
the jobs actually retained, divided by the jobs required to be retained;
(b) if the failure relates to wages, the number of jobs required to be retained less the
number of jobs that meet the required wages, divided by the number of jobs required
to be retained;
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(c) if the failure relates to a failure to continue operations of the Improvements in
accordance with Section 5.5 sixty (60) less the number of months of operation (where
any month in which the Improvements are in operation for at least fifteen (15) days
constitutes a month of operation), commencing on the Benefit Date and ending with
the date the Developer ceases operation as reasonably determined by the Authority,
divided by 60; and
(d) if more than one of clauses (a) through (c) apply, the sum of the applicable percentages,
not to exceed 100%.
Section 5.4. Reports. The Developer agrees to (i) report its progress on achieving the Goals
to the City until the Goals are met, or the Business Subsidy is repaid, whichever occurs earlier; (ii)
include in the report the information required on forms developed by the Minnesota Department of
Employment and Economic Development; and (iii) send the completed reports to the City. The
Developer agrees to file these reports no later than March 1 of each year and within thirty days after
the deadline for meeting the Goals. The City agrees that if it does not receive the reports, it will mail
the Developer a warning within one week of the required filing date. If within fourteen (14) days of
the post marked date of the warning letter the reports are not made, the Developer agrees to pay to
the City a penalty of $100.00 for each subsequent day until the report is filed up to a maximum of
$1,000.
Section 5.5. Continued Operations Commitment. Developer agrees to continue the Project
at the Facility for at least five (5) years after the Tax Abatement Benefit Date.
Section 5.6. Parent Corporation. The parent corporation of Developer is as follows:
Post Consumer Brands, LLC
20802 Kensington Blvd
Lakeville, MN 55044
Section 5.7. Other Assistance. The Developer is also receiving financial assistance through
the State of Minnesota in the amount of $750,000.
ARTICLE VI.
Events of Default
Section 6.1. Events of Default Defined. The following shall be "Events of Default" under this
Agreement and the term "Event of Default" shall mean, whenever it is used in this Agreement (unless
the context otherwise provides), any one or more of the following events:
(a) Failure by the Developer to pay when due any payments required to be paid under this
Agreement or to pay when due ad valorem taxes on the Property.
(b) Failure by Developer to observe or perform any other covenant, condition, obligation or
agreement on its part to be observed or performed hereunder.
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(c) The Developer does any of the following: (i) files any petition in bankruptcy or for any
reorganization, arrangement, composition, readjustment, liquidation, dissolution, or
similar relief under United States Bankruptcy Laws or any similar federal or state laws;
or (ii) make an assignment for the benefit of its creditors; or (iii) admit, in writing, its
inability to pay its debts generally as they become due; or (iv) be adjudicated, bankrupt
or insolvent.
(d) If any warranty or representation by the Developer in this Agreement is untrue in any
material respect.
Section 6.2. City's Remedies on Default. Whenever any Event of Default by Developer
referred to in Section 6.1 of this Agreement occurs, the City may take any one or more of the following
actions and unless otherwise provided such actions may be taken only after providing thirty (30) days
written notice to the Developer of the Event of Default and the Event of Default has not been cured
within said thirty (30) days or, if the Event of Default is by its nature incurable within thirty (30) days,
the Developer does not provide assurances to the City reasonably satisfactory to the City that the Event
of Default will be cured and will be cured as soon as reasonably possible:
(a) Suspend its performance under the Agreement until it receives assurances from the
Developer, deemed adequate by the City, that the Developer will cure its default and
continue its performance under the Agreement;
(b) Terminate this Agreement; or
(c) Take whatever action, including legal, equitable or administrative action, which may
appear necessary or desirable to the City to collect any payments due or damages arising
under this Agreement or to enforce performance and observance of any obligation,
agreement, or covenant of the Developer under this Agreement.
Section 6.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the City
is intended to be exclusive of any other available remedy or remedies, but each and every such remedy
shall be cumulative and shall be in addition to every other remedy given under this Agreement or now
or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power
accruing upon any default shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right and power may be exercised from time to time and as often as may be deemed
expedient.
Section 6.4. Attorneys' Fees. Whenever any Event of Default occurs and either the City employ
attorneys or incur expenses for the collection of payments due or to become due or for the enforcement
of performance or observance of any obligation or agreement on the part of the Developer under this
Agreement, the Developer agrees that it shall, within ten (10) days of written demand by the City pay to
the City the reasonable fees of such attorneys and such other expenses so incurred by the City, provided,
that the Developer shall only be obligated to make such reimbursement if the City prevails in such
collection or enforcement action.
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ARTICLE VII.
ADDITIONAL PROVISIONS
Section 7.1. Restrictions on Use. The Developer agrees for itself and its successors and assigns
and every successor in interest to the Property, or any part thereof, that the Developer and such successors
and assigns shall devote the Property to a Division Headquarters use as provided in this Agreement.
Section 7.2. Equal Employment Opportunity. The Developer, for itself and its successors
and assigns, agrees it will comply with all applicable federal, state and local equal employment and
nondiscrimination laws and regulations.
Section 7.3. Conflicts of Interest. No member of the governing body or other official of the
City shall have any financial interest, direct or indirect, in this Agreement, the Project or any contract,
agreement or other transaction contemplated to occur or be undertaken thereunder or with respect thereto,
nor shall any such member of the governing body or other official participate in any decision relating to
the Agreement which affects his personal interest or the interest of any corporation, partnership or
association in which he is, directly or indirectly, interested. No member, official or employee of the City
shall be personally liable to the Developer or any successors in interest, in the event of any default or
breach by the City or for any amount which may become due to the Developer or successor or on any
obligations under the terms of the Agreement.
Section 7.4. Waiver and Release by Developer. The Developer hereby waives, releases and
forever discharges the City from any claim for costs incurred in preliminary plans, specifications, site
testing improvements, professional fees or legal fees in connection with the Project.
Section 7.5. Titles of Articles and Sections. Any titles of the several parts, Articles and
Sections of this Agreement are inserted for convenience of reference only and shall be disregarded in
construing or interpreting any of its provisions.
Section 7.6. Notices and Demands. Except as otherwise expressly provided in this Agreement,
a notice, demand or other communication under the Agreement by either party to the other shall be
sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return
receipt requested or delivered personally; and
185047v6 8
(a) In the case of the Developer, is addressed or delivered personally to:
Post Holdings, Inc.
Attn: Randy Ridenhour
2503 S. Hanley Road
St. Louis, MO 63144
With a copy to attorney for Developer:
Jill Bollettieri, Esq.
General Counsel
MOM Brands Company, LLC
20802 Kensington Blvd.
Lakeville, MN 55044
(b) In the case of the City, is addressed or delivered personally to:
City of Lakeville
Attn: Community and Economic Development Director
20195 Holyoke Avenue
Lakeville, MN 55044
With a copy to attorney for City:
Andrea McDowell Poehler
CAMPBELL KNUTSON, P.A.
860 Blue Gentian Road, Suite 290
Eagan, MN 55121
Telephone: (651) 452-5000
(c) Either Party may, upon written notice to the other Party, change the address to which
such notices and demands are made.
Section 7.7. Disclaimer of Relationship. The Developer acknowledges that nothing contained
in this Agreement nor any act by the City or the Developer shall be deemed or construed by the Developer
or any third person to create any relationship of third -party beneficiary, principal and agent, limited or
general partner or joint venture between the City and the Developer.
Section 7.8. Covenants Running with the Land. The terms and provisions of this Agreement
shall be deemed to be covenants running with the Property and shall be binding upon any successors or
assigns of the Developer and any future owners or encumbrances of the Property.
Section 7.9. Counterparts. This Agreement is executed in any number of counterparts, each
of which shall constitute one and the same instrument.
1850470 9
Section 7.10. Law Governing. This Agreement will be governed and construed in accordance
with the laws of Minnesota.
Section 7.11. Facsimile Signature. The parties hereto acknowledge and agree that in order to
expedite the signing of this Agreement and the processing, and review and compliance with the terms
hereof, the parties may utilize facsimile equipment to transmit and convey signatures hereto and such
other information as may be necessary. With respect to any such transmission bearing a signature for
any party hereto and on which the receiver is or may be reasonably expected to rely, than if such a
facsimile transmission is corroborated by regular facsimile printout showing the telephone number from
which transmitted together with a date and time of transmission, it shall be binding on the sending party
and may be relied upon by the party receiving the same. The sending party hereby acknowledges such
reliance and weighs any defenses to the use of such documents or signatures.
IN WITNESS WHEREOF, the City has caused this Agreement to be duly executed in its name
and behalf, and the Developer has caused this Agreement to be duly executed in its name and behalf, on
or as of the date first above written.
CITY OF LAKEVILLE
Matt Little, Mayor
Charlene Friedges, City Clerk
STATE OF MINNESOTA )
)ss.
COUNTY OF DAKOTA )
The foregoing instrument was acknowledged before me this day of , 2016, by
Matt Little and Charlene Friedges, respectively the Mayor and City Clerk of the City of Lakeville , a
Minnesota municipal corporation, on behalf of the corporation and pursuant to the authority granted by
its City Council.
Notary Public
185047v6 10
MOM BRANDS COMPANY LLC
Its:`AzI f e -e
STATE OF MINNESOTA )
/ __ //__ )ss.
COUNTY OF ��KUT� )
The foregoing instrument was acknowledged before me this / S "day of �`fi� � , 2016,
by o . e,9r,6v he SUA Fnai+ &.e-- of MOM Brands Company LLC, a Minnesota limited
liability coAnpany, on behalf of the limited liability company.
of��Esrr DEBRA KAY LAMB
' °� Notary Public
State of Minnesota
My Commission Expires
�,,1' -,� •"� January 31 , 2020
DRAFTED BY:
CAMPBELL KNUTSON, P.A.
860 Blue Gentian Road, Suite 290
Eagan, MN 55121
Telephone: (651) 452-5000
AMP
W17
E
185047v6 11