HomeMy WebLinkAboutItem 07February 19, 2019 Item No.________
RESOLUTION APPROVING A CONTRACT FOR PRIVATE DEVELOPMENT WITH QA1
PRECISION PRODUCTS INC. FOR TAX INCREMENT FINANCING ASSISTANCE
Proposed Action
Staff recommends adoption of the following motion: Move to adopt a resolution approving the Contract
for Private Development with QA1 Precision Products Inc for Tax Increment Financing Assistance.
Overview
QA1 Precision Products Inc. (QA1) has applied for Tax Increment Financing (TIF) for a proposed new
100,000 square foot manufacturing facility. This new facility will be located in Interstate South Logistics
Park, located at the southwest quadrant of Co. Rd. 70 and Dodd Blvd. The proposed new manufacturing
facility would replace two smaller buildings owned and occupied by QA1 in Airlake Industrial Park.
The County Assessor has provided an estimated market value of $6,000,000 for the proposed project which
would generate an estimated $555,701 of tax increment over seven years. The Contract for Private
development provides that 95% of the tax increment collected over seven years up to a maximum of
$526,015 will be reimbursed to QA1 to offset infrastructure and site development costs. QA1 is required to
create a minimum of 19 new full-time jobs with an average wage of $40,600 within two years of the date of
this agreement and maintain their operations in Lakeville for a minimum of five years. Failure to meet
these requirements will require reimbursement of all or a pro-rata portion of the TIF assistance provided
by the City.
The EDC reviewed the proposed TIF Agreement terms on January 29, 2019 and recommended approval of
the proposed project. The City Council discussed the proposed terms at the City Council Work Session on
January 28, 2019. Staff recommends approval of the Contract for Private Development with QA1 Precision
Products Inc.
Primary Issues to Consider
• Is this Contract of Private Development for TIF assistance consistent with the City’s policies? The
project will result in the retention of an existing business with 95 employees, the creation of a
minimum of 19 new jobs and will result in $6,000,00 in new tax base.
Supporting Information
• City Council Resolution, Signed Contract Private for Development
Financial Impact: $_$ 555,701 Budgeted:Y/N__N___Source:_Captured Tax Increments
Envision Lakeville Community Value: Diversified Economic Development_____________
Report Completed by: David L. Olson, Community & Economic Development Director
1
200493v1
CITY OF LAKEVILLE
RESOLUTION NO. 19-__
RESOLUTION APPROVING A CONTRACT FOR PRIVATE DEVELOPMENT,
AND PROVIDING THE FORM,
TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF A TAX
INCREMENT REVENUE NOTE TO QA1 PRECISION PRODUCTS, INC.
BE IT RESOLVED BY the City Council (“Council”) of the City of Lakeville, Minnesota (the
“City”), as follows:
Section 1. Background; Authorization; Award of Sale.
1.01. Background; Authorization. (a) The City has approved the establishment of its Tax
Increment Financing District No. 24 (the “TIF District”) within the Airlake Redevelopment Project
No. 1 (“Project”), and has adopted a tax increment financing plan (the “TIF Plan”) for the purpose
of financing certain improvements within the Project; and
(b) Pursuant to Minnesota Statutes, Section 469.178, the City is authorized to issue and sell
its bonds for the purpose of financing a portion of the public development costs of the TIF District.
The City hereby finds and determines that it is in the best interests of the City that it issue and sell
its Tax Increment Revenue Note (the “Note”) for the purpose of financing certain public
development costs of the Project, pursuant to the terms of this Resolution.
1.02. Agreement Approved; Issuance, Sale and Terms of Note. (a) The City hereby approves
the Contract for Private Development (“Agreement”) between the City and QA1 Precision
Products, Inc. (the “Owner”), and authorizes the Mayor and City Clerk to execute such Agreement
in substantially the form attached hereto, subject to modifications that do not alter the substance
of the transaction and are approved by such official, provided that execution of the Agreement by
such officials is conclusive evidence of their approval. The City staff, Mayor and City Clerk are
hereby authorized to take all actions necessary to perform the City’s obligations under the
Agreement as a whole, including without limitation execution of any documents to which the City
is a party referenced in or attached to the agreement, all as described in the Agreement.
(b) The City hereby authorizes the Mayor and City Clerk to issue the Note, in accordance
with the Agreement. All capitalized terms in this resolution have the meaning provided in the
Agreement unless the context requires otherwise.
2
200493v1
(c) The Note shall be issued in the maximum aggregate principal amount of $526,015.00
to the Developer in consideration of certain eligible costs incurred by the Developer under the
Agreement and shall be dated the date of delivery thereof. The Note will be issued in the principal
amount of Public Development Costs submitted and approved in accordance with Section 3.3 of
the Agreement. The Note is secured by Available Tax Increment, as further described in the form
of the Note herein. The City hereby delegates to the City Administrator the determination of the
date on which the Note is to be delivered, in accordance with the Agreement.
Section 2. Form of Note. The Note shall be in substantially the form attached as
Schedule B to the Agreement, with the blanks to be properly filled in and the principal amount
adjusted as of the date of issue.
Section 3. Terms, Execution and Delivery.
3.01. Denomination, Payment. The Note shall be issued as a single typewritten note
numbered ____.
The Note shall be issuable only in fully registered form. Principal of the Note shall be
payable by check or draft issued by the Registrar described herein.
3.02. Dates. Principal of the Note shall be payable by mail to the owner of record thereof as
of the close of business on the fifteenth day of the month preceding the Payment Date, whether or
not such day is a business day.
3.03. Registration. The City hereby appoints the City Finance Director to perform the
functions of registrar, transfer agent and paying agent (the “Registrar”). The effect of registration
and the rights and duties of the City and the Registrar with respect thereto shall be as follows:
(a) Register. The Registrar shall keep at its office a bond register in which the Registrar shall
provide for the registration of ownership of the Note and the registration of transfers and
exchanges of the Note.
(b) Transfer of Note. Subject to Section 3.03(d) hereof, within 15 days after surrender for
transfer of the Note duly endorsed by the registered owner thereof or accompanied by a written
instrument of transfer, in form reasonably satisfactory to the Registrar, duly executed by the
registered owner thereof or by an attorney duly authorized by the registered owner in writing, and
consent to such transfer by the City if required pursuant to the Agreement, the Registrar shall
authenticate and deliver, in the name of the designated transferee or transferees, a new Note of a
like aggregate principal amount and maturity, as requested by the transferor. The Registrar may
3
200493v1
close the books for registration of any transfer after the fifteenth day of the month preceding each
Payment Date and until such Payment Date.
(c) Cancellation. The Note surrendered upon any transfer shall be promptly cancelled by
the Registrar and thereafter disposed of as directed by the City.
(d) Improper or Unauthorized Transfer. When the Note is presented to the Registrar for
transfer, the Registrar may refuse to transfer the same until it is reasonably satisfied that the
endorsement on such Note or separate instrument of transfer is legally authorized. The Registrar
shall incur no liability for its refusal, in good faith, to make transfers which it, in its judgment,
deems improper or unauthorized.
(e) Persons Deemed Owners. The City and the Registrar may treat the person in whose
name the Note is at any time registered in the bond register as the absolute owner of the Note,
whether the Note shall be overdue or not, for the purpose of receiving payment of, or on account
of, the principal of such Note and for all other purposes, and all such payments so made to any
such registered owner or upon the owner’s order shall be valid and effectual to satisfy and discharge
the liability of the City upon such Note to the extent of the sum or sums so paid.
(f) Taxes, Fees and Charges. For every transfer or exchange of the Note, the Registrar may
impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee, or
other governmental charge required to be paid with respect to such transfer or exchange.
(g) Mutilated, Lost, Stolen or Destroyed Note. In case any Note shall become mutilated or
be lost, stolen, or destroyed, the Registrar shall deliver a new Note of like amount, Termination
Dates and tenor in exchange and substitution for and upon cancellation of such mutilated Note or
in lieu of and in substitution for such Note lost, stolen, or destroyed, upon the payment of the
reasonable expenses and charges of the Registrar in connection therewith; and, in the case the Note
lost, stolen, or destroyed, upon filing with the Registrar of evidence satisfactory to it that such Note
was lost, stolen, or destroyed, and of the ownership thereof, and upon furnishing to the Registrar
of an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which
both the City and the Registrar shall be named as obligees. The Note so surrendered to the Registrar
shall be cancelled by it and evidence of such cancellation shall be given to the City. If the mutilated,
lost, stolen, or destroyed Note has already matured or been called for redemption in accordance
with its terms, it shall not be necessary to issue a new Note prior to payment.
3.04. Preparation and Delivery. The Note shall be prepared under the direction of the City
Administrator and shall be executed on behalf of the City by the signatures of its Mayor and City
Clerk. In case any officer whose signature shall appear on the Note shall cease to be such officer
before the delivery of the Note, such signature shall nevertheless be valid and sufficient for all
4
200493v1
purposes, the same as if such officer had remained in office until delivery. When the Note has been
so executed, it shall be delivered by the City Administrator to the Owner thereof in accordance
with the Agreement.
Section 4. Security Provisions.
4.01. Pledge. The City hereby pledges to the payment of the principal of the Note all
Available Tax Increment as defined in the Note. Available Tax Increment shall be applied to
payment of the principal of and interest on the Note in accordance with the terms of the form of
Note set forth in Section 2 of this resolution.
4.02. Bond Fund. Until the date the Note is no longer outstanding and no principal thereof
(to the extent required to be paid pursuant to this resolution) remains unpaid, the City shall
maintain a separate and special “Bond Fund” to be used for no purpose other than the payment of
the principal of the Note. The City irrevocably agrees to appropriate to the Bond Fund on or before
each Payment Date the Available Tax Increment in an amount equal to the Payment then due, or
the actual Available Tax Increment, whichever is less. Any Available Tax Increment remaining in
the Bond Fund shall be transferred to the City’s account for the TIF District upon the termination
of the Note in accordance with its terms.
4.03. Additional Obligations. The City will issue no other obligations secured in whole or
in part by Available Tax Increment unless such pledge is on a subordinate basis to the pledge on
the Note.
Section 5. Certification of Proceedings.
5.01. Certification of Proceedings. The officers of the City are hereby authorized and
directed to prepare and furnish to the Owner of the Note certified copies of all proceedings and
records of the City, and such other affidavits, certificates, and information as may be required to
show the facts relating to the legality and marketability of the Note as the same appear from the
books and records under their custody and control or as otherwise known to them, and all such
certified copies, certificates, and affidavits, including any heretofore furnished, shall be deemed
representations of the City as to the facts recited therein.
Section 6. Effective Date. This resolution shall be effective upon approval.
Approved by the City Council of the City of Lakeville on _____________________, 2019.
5
200493v1
CITY OF LAKEVILLE
By:____________________________
Douglas P. Anderson, Mayor
And ___________________________
Charlene Friedges, City Clerk
QA1 Proposed Project Site
Property Information
October 25, 2018 0 450 900225 ft
0 130 26065 m
1:4,800
Disclaimer: Map and parcel data are believed to be accurate, but accuracy is not guaranteed. This is not a legal document and should not be substituted for a title search,appraisal, survey, or for zoning verification.
Proposed
Project Site
8 Acres
Schneiderman's
Distribution Center
Future 150,000 SF
Spec Building
STAINED PRECAST WALL
PANELS
ALUMINUM
STOREFRONT
WINDOWS
ALUMINUM CURTAIN
WALL GLAZING
PREFINISHED METAL
PANELS
PREFINISHED METAL
PANELS
ALUMINUM
STOREFRONT
WINDOWS
STAINED PRECAST WALL
PANELS
FIRST LEVEL
100'-0"
SECOND LEVEL
114'-0"
TOP OF WALL AT ENTRANCE
132'-0"
C:\Revit Projects\61166-18093 QA1 - R18 - workshared_rlister.rvt
QA1 PRECISION PRODUCTS - NEW FACILITY
1234 ANY STREET
LAKEVILLE, MN
10/25/18 | COMM#61166-18093
3/32" = 1'-0"A3.1P1A
1 PRELIMINARY SOUTH BUILDING ELEVATION
3/32" = 1'-0"A3.1P1A
4 PRELIMINARY EAST BUILDING ELEVATION
3/32" = 1'-0"A3.1P1A
2 PRELIMINARY NORTH BUILDING ELEVATION
3/32" = 1'-0"A3.1P1A
3 PRELIMINARY WEST BUILDING ELEVATION
PRELIMINARY EXTERIOR ELEVATIONS
1
200483v10
CONTRACT FOR PRIVATE DEVELOPMENT
By and Between
CITY OF LAKEVILLE
and
QA1 PRECISION PRODUCTS, INC.
THIS DOCUMENT WAS DRAFTED BY:
CAMPBELL KNUTSON
Professional Association
Grand Oak Office Center I
860 Blue Gentian Road, Suite 290
Eagan, Minnesota 55121
Telephone: (651) 452-5000
AMP
2
200483v10
TABLE OF CONTENTS
Page
PREAMBLE ............................................................................................................................................... 5
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS .................................................................................................................... 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1 REPRESENTATIONS AND WARRANTIES OF THE CITY ......................................... 9
SECTION 2.2 REPRESENTATIONS AND WARRANTIES OF THE DEVELOPER ......................... 10
ARTICLE III
PROPERTY ACQUISITION, CONVEYANCE; PUBLIC DEVELOPMENT COSTS; ISSUANCE
OF NOTE
SECTION 3.1 STATUS OF DEVELOPMENT PROPERTY ................................................................. 11
SECTION 3.2 ENVIRONMENTAL CONDITIONS .............................................................................. 11
SECTION 3.3 PUBLIC DEVELOPMENT COSTS; ISSUANCE OF NOTE ........................................ 11
SECTION 3.4 RECORDS ....................................................................................................................... 13
ARTICLE IV
CONSTRUCTION OF MINIMUM IMPROVEMENTS
SECTION 4.1 CONSTRUCTION OF MINIMUM IMPROVEMENTS ................................................ 13
SECTION 4.2 CONSTRUCTION PLANS ............................................................................................. 13
SECTION 4.3 COMMENCEMENT AND COMPLETION OF CONSTRUCTION ............................. 14
SECTION 4.4 CERTIFICATE OF COMPLETION ............................................................................... 15
ARTICLE V
INSURANCE
SECTION 5.1 INSURANCE ................................................................................................................... 16
SECTION 5.2 SUBORDINATION ......................................................................................................... 18
ARTICLE VI
TAXES
SECTION 6.1 REAL PROPERTY TAXES ............................................................................................ 18
SECTION 6.2 REVIEW OF TAXES ...................................................................................................... 18
3
200483v10
ARTICLE VII
BUSINESS SUBSIDY
SECTION 7.1 TAX INCREMENT FINANCING…………………………………………………… . 19
SECTION 7.2 WAGE AND JOB GOALS.……………………………………………………………. 19
SECTION 7.3 REPORTING………………..…………………………………………………………. 19
SECTION 7.4 CONTINUING OBLIGATIONS……………………………………………………… 19
SECTION 7.5 REQUIREMENTS………………………………………………………………….…. 19
SECTION 7.6 DEFAULT DEFINED…………………………………………………………………. 20
SECTION 7.7 REMEDIES ON DEFAULT………………………………………………………..…. 20
SECTION 7.8 COSTS OF ENFORCEMENT……………………………………………………..…. 21
ARTICLE VIII
SUBORDINATION; ASSIGNMENT AND TRANSFER
SECTION 8.1 SUBORDINATION FOR THE BENEFIT OF MORTGAGEE………………………..21
SECTION 8.2 PROHIBITION AGAINST TRANSFER OF PROPERTY AND ASSIGNMENT
OF AGREEMENT…………………………………………………………………………………..…. 21
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1 EVENTS OF DEFAULT DEFINED……………………………………………….. 23
SECTION 9.2 REMEDIES ON DEFAULT………………………………………………………… 23
SECTION 9.3 NO REMEDY EXCLUSIVE…………………………………………………………. 24
SECTION 9.4 NO IMPLIED WAIVER…………………………………………………………….. 25
SECTION 9.5 AGREEMENT TO PAY ATTORNEY’S FEES AND EXPENSES………………… 25
SECTION 9.6 INDEMNIFICATION OF CITY AND AUTHORITY……………………………… 25
ARTICLE X
ADDITIONAL PROVISIONS
SECTION 10.1 REPRESENTATIVES NOT INDIVIDUALLY LIABLE………………………….. 26
SECTION 10.2 RESTRICTIONS ON USE…………………………………………………………. 26
SECTION 10.3 TITLES OF ARTICLES AND SECTIONS………………………………………… 26
SECTION 10.4 DISCLAIMER OF RELATIONSHIPS……………………………………………… 26
SECTION 10.5 MODIFICATIONS………………………………………………………………….. 27
SECTION 10.6 COUNTERPARTS………………………………………………………………….. 27
SECTION 10.7 JUDICIAL INTERPRETATION……………………………………………………. 27
SECTION 10.8 TERMINATION OF AGREEMENT………………………………………………... 27
SECTION 10.9 CONFLICTS OF INTEREST………………………………………………………… 27
SECTION 10.10 TITLES OF ARTICLES AND SECTIONS………………………………………… 27
SECTION 10.11 NOTICES AND DEMANDS………………………………………………………. 27
SECTION 10.12 LAW GOVERNING……………………………………………………………….. 28
TESTIMONIUM……………………………………………………………………………………... 29
4
200483v10
SIGNATURES…………………………………………………………………………………… 29, 30
SCHEDULES
SCHEDULE A – DESCRIPTION OF DEVELOPMENT PROPERTY………………………………. 31
SCHEDULE B – TAX INCREMENT REVENUE NOTE………………………………………….… 32
SCHEDULE C – DESCRIPTION OF PUBLIC DEVELOPMENT COSTS ……………………….… 36
5
200483v10
CONTRACT FOR
PRIVATE DEVELOPMENT
THIS AGREEMENT, made as of the day of _________, 2019, by and between the CITY OF LAKEVILLE, a Minnesota municipal corporation (the "City"), and QA1
PRECISION PRODUCTS, INC., a Minnesota corporation, (the "Developer"),
WITNESSETH:
WHEREAS, the Housing and Redevelopment Authority In and For the City of Lakeville
(the “Authority”) was created pursuant to Minnesota Statutes, Sections 469.001-.047 (the "Act")
and was authorized to transact business and exercise its powers by a resolution of the City Council
of the City of the City pursuant to Section 469.003 of the Act; and
WHEREAS, in furtherance of the objectives of the Act, the Authority has undertaken a
program to provide impetus for private development, maintain and increase employment, and to
increase tax base for the taxing jurisdiction with the City’s corporate limits and by affording
existing businesses in the City the opportunity to expand and in this connection is engaged in
carrying out a development project known as the Airlake Redevelopment Project No. 1 in an area
(hereinafter referred to as the “Project Area) located in the City; and
WHEREAS, in order to finance, in part, the public development costs of the Project, as
hereinafter defined, located in the Project Area, the City and Authority have created Tax Increment
District No. 24 (the "Tax Increment District") pursuant to an approved Tax Increment Financing
Plan (“TIF Plan”) for the Tax Increment District; and
WHEREAS, Developer has presented to the City and the Authority for their consideration
a proposal for the acquisition of Development Property, as hereafter defined, located in the Tax
Increment District, and construction thereon of an approximately 100,000 square foot building-to-
suit facility to be used primarily for manufacturing with some warehouse space; and
WHEREAS, the City and the Authority have reviewed the Developer's development
proposal and have determined that such proposal if completed would serve to accomplish the goals
and objectives for which the Project and the Tax Increment District were created; and
WHEREAS, by Resolution No. 19-01, dated February 4, 2019, the Authority authorized
the City to undertake, on the Authority’s behalf, all of the public development activities in
connection with the development of the Developer’s proposal, including the execution and
performance of this Agreement; and
WHEREAS, in order to assist the Developer in its acquisition and development of the
Development Property the City is prepared to reimburse the Developer using tax increment on a
pay-as-you-go basis for certain costs of acquisition and development; and
6
200483v10
WHEREAS, by July 31, 2019, the City will request Dakota County to certify the current
net tax capacity of the City of the Tax Increment District pursuant to section 469.177, subdivision
1 of the Tax Increment Act; and
WHEREAS, the City believes that the development of the proposal and Project Area and
the construction of the Project, and fulfillment of this Agreement are vital and are in the best
interests of the Authority and the health, safety, morals and welfare of residents of the City and in
accordance with the public purpose and provisions of the applicable state and local laws and
requirements under which the Project has been undertaken and is being assisted; and
WHEREAS, pursuant to Minnesota Statutes, Sections 116J.993 to 116J. 995, as amended
(the “Business Subsidy Act”) the City is authorized to grant business subsidies to facilitate
development in the City and the State of Minnesota; and
WHEREAS, the Authority and the City have adopted criteria for awarding business
subsidies that comply with the Business Subsidy Law, after a public hearing for which notice was
published; and
WHEREAS, pursuant to the Business Subsidy Law, the City has designated this
Agreement as a subsidy agreement in connection with the subsidy provided under this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual obligations of the
parties hereto, each of them does hereby covenant and agree with the other as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. All capitalized terms used and not otherwise defined herein shall have
the following meanings unless a different meaning clearly appears from the context:
Act means Minnesota Statutes, Sections 469.001-469.047, as amended.
Agreement means this Agreement, as the same may be from time to time modified, amended or
supplemented.
Authority means the Housing and Redevelopment Authority in and for the City of Lakeville, or
its successors or assigns.
Available Tax Increment means on each Payment Date, ninety-five percent (95%) of the Tax
Increment attributable to the Development Property and paid to the City by Dakota County in the
six (6) months immediately preceding the Payment Date. Available Tax Increment shall not
include any Tax Increment if, as of any Payment Date, there is an uncured Event of Default under
this Agreement.
Benefit Date means the date of this Agreement.
7
200483v10
Business Day means any day except a Saturday, Sunday or a legal holiday or a day on which
banking institutions in the City are authorized by law or executive order to close.
Business Subsidy Act means Minnesota Statutes, Sections 116.993 to 116J.995, as amended.
City means the City of Lakeville, Minnesota.
Construction Plans means the plans, specifications, drawings and related documents on the
construction work to be performed by the Developer on Development Property which a) shall be
as detailed as the plans, specifications, drawings and related documents which are submitted to the
appropriate building officials of the City, and (b) shall include at least the following for: (1) site
plan; (2) foundation plan; (3) basement plans; (4) floor plans; (5) cross sections of each (length
and width); (6) elevations (all sides); (7) landscape plan; and (8) such other plans or supplements
to the foregoing plans as the City may reasonably request to allow it to ascertain the nature and
quality of the proposed construction work.
County means Dakota County, Minnesota.
Developer means QA1 Precision Products, Inc., a Minnesota corporation, its successors and
assigns.
Developer Agent means Scannell Development Company II. City agrees that Developer may
delegate certain of Developer’s obligations under this Agreement to Developer Agent through and
until completion of construction of the Minimum Improvements. City will accept performance of
Developer’s obligations performed by Developer Agent.
Development Property means the development property described in Schedule A of this
Agreement.
Event of Default means any of the events described in Section 9.1.
Minimum Improvements mean an approximately 100,000 square foot building-to-suit facility to
be used primarily for manufacturing with some warehouse space, together with related and
incidental improvements to be constructed by the Developer on the Development Property in
accordance with the approved Construction Plans.
Market Value means the market value of real property as determined by the County Assessor of
the County for real estate tax purposes.
Net Tax Increments means Tax Increments less any amount retained by the City for
administrative expenses of the Tax Increment District.
Note or Tax Increment Note means the City’s Tax Increment Revenue Note in the form of the
note attached hereto as Schedule B to be issued to the Developer pursuant to Section 3.3 of this
Agreement.
8
200483v10
Payment Dates means August 1 of the year following substantial completion of the Minimum
Improvements and each February 1 and August 1 thereafter pursuant to the terms of the Note;
provided that if any such Note Payment Date should not be a Business day, the Note Payment
Date shall be the next succeeding Business Day.
Project means acquisition and development of the Development Property and construction of the
Minimum Improvements on the Development Property.
Public Development Costs means a portion of the costs of acquisition of the Development
Property and preparing the Development Property for development to be incurred by the
Developer and to be reimbursed by the City through the issuance and payment of the Note as
described in Section 3.3 of this Agreement as further delineated in Schedule C.
State means the State of Minnesota.
Tax Increment means the tax increments derived from the TIF District which have been received
and retained by the City in accordance with the provisions of Minnesota Statutes, Section 469.177,
or otherwise pursuant to the Tax Increment Act, to the extent not otherwise pledged to other
obligations within the TIF District.
Tax Increment Act means the Tax Increment Financing Act, Minnesota Statutes, sections
469.174 through 469.1794, as amended.
Tax Increment District or TIF District means Tax Increment Financing (Economic
Development) District No. 24 and qualified as an economic development district under the Tax
Increment Act.
Tax Official means any City or county assessor; County auditor; City, County or State board of
equalization, the commissioner of revenue of the State, or any State or federal district court, the
tax court of the State, or the State Supreme Court.
Termination Date means the earlier of (a) seven (7) years after the receipt by the City of the first
certification by the Dakota County Auditor, State of Minnesota, of the captured net tax capacity,
as defined in Minn. Stat. 469.174, subd. 4, with respect to the Tax Increment, which date is
anticipated to be December 31, 2028; (b) the date the Note has been paid or prepaid in full, or
defeased or terminated in accordance with its terms; or (c) the date of termination of the Note and
this Agreement by the City due to an Event of Default by Developer as set forth in Section 9.1
hereof; or (d) as otherwise provided under Section 10.8 hereof.
Unavoidable Delays means delays, outside the control of the party claiming its occurrence, which
are the direct result of strikes, other labor troubles, shortages of materials, unusually severe or
prolonged bad weather, acts of God, fire or other casualty to the Project, termination of the
Development Agreement between Developer and Developer Agent or the contract between
Developer Agent and the general contractor constructing the Minimum Improvement; delays in
approvals of the subdivision of the Development Property, litigation commenced by third parties
which, by injunction or other similar judicial action or by the exercise of reasonable discretion,
9
200483v10
directly results in delays, or acts of any federal, state or local governmental unit which directly
result in delays. With respect to any Unavoidable Delay due to a contract termination, Developer
shall use commercially reasonable efforts to locate and contract with a replacement party for such
terminated contract and re-commence construction and the Unavoidable Delay shall cease and
expire on the date that construction recommences. If Developer has not re-commenced
construction within sixty (60) days after the date of such contract termination, then from and after
the 61st day, such delay shall no longer be an Unavoidable Delay. The performance of any
obligation or other act required in this Agreement shall be excused for the period of the
Unavoidable Delay, and the period for the performance of the same shall be extended by such
period.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties by the City. The City makes the following
representations and warranties:
(a) The City is a Minnesota municipal corporation duly organized and existing under
the laws of the State. Under the provisions of the Act and Resolution No. __ of the Authority, the
City has the power to enter into this Agreement and to perform its obligations hereunder.
(b) The Project is within a redevelopment project area within the meaning of the Act
and was created, adopted and approved in accordance with the terms of the Act.
(c) The Redevelopment Plan was duly created, adopted and approved in accordance
with the terms of the Act and the redevelopment contemplated by this Agreement is in
conformance with the redevelopment objectives set forth in the Redevelopment Plan.
(d) Tax Increment District is an "economic development district" within the meaning
of Minnesota Statutes, section 469.174, subdivision 12 and was created, adopted and approved in
accordance with the terms of the Tax Increment Act.
(e) The TIF Plan was duly created, adopted and approved in accordance with the terms
of the TIF Act, including, without limitation, all requirements under Section 469.175 of the TIF
Act.
(f) The Project contemplated by this Agreement is in conformance with the
development objectives set forth in Tax Increment Financing Plan.
(g) To finance the costs of the activities to be undertaken by the City, the City shall
reimburse the Developer for the eligible public development costs from the Tax Increments as further
provided in this Agreement.
(h) The City will use its best efforts to facilitate development of the Minimum
Improvements, including but not limited to cooperating with the Developer in obtaining necessary
10
200483v10
administrative and land use approvals; provided, however, the City makes no guaranty that such
approvals will ultimately be granted.
(i) There are no pending or threatened legal proceedings, of which the City has notice, to
restrain or enjoin the execution or delivery of this Agreement or in any way contesting the validity of
this Agreement, or contesting the authority of the City to execute, deliver and perform this Agreement.
(j) The consummation of the transactions contemplated by this Agreement, and
compliance by the City with the terms of this Agreement, will not result in any breach of any of the
terms of, or constitute a default under, any indenture, lease, loan agreement, or other instrument to
which the City is a party or by which the City is bound, or any law applicable to the City or this
transaction.
Section 2.2. Representations and Warranties of the Developer. The Developer makes the
following representations and warranties:
(a) The Developer is a Minnesota corporation and is authorized to transact business
in the State of Minnesota, and has full power and authority to enter into this Agreement and carry
out the covenants contained herein and has duly authorized the execution, delivery and
performance of this Agreement by proper action of its Board of Directors.
(b) Developer will acquire and cause the Development Property to be platted and will
construct the Minimum Improvements in accordance with the terms of this Agreement and all local,
state and federal laws and regulations.
(c) The Developer will use commercially reasonable efforts obtain or cause to be obtained,
in a timely manner, all required permits, plat approvals, licenses and other required approvals, and will
meet, in a timely manner, all requirements of all applicable local, state, and federal laws and regulations
which must be obtained or met before the Minimum Improvements may be lawfully constructed.
(d) The Developer has not received any notice or communication from any local, state
or federal official that the activities of the Developer or the City with respect to the Project may
or will be in violation of any environmental law or regulation. The Developer is aware of no facts
the existence of which would cause the Developer to be in violation of any local, state or federal
environmental law, regulation or review procedure or which would give any person a valid claim
under any of the foregoing.
(e) The construction of the Minimum Improvements would not be undertaken by the
Developer, and in the opinion of the Developer would not be economically feasible within the
reasonably foreseeable future, without the assistance and benefit to the Developer provided for in
this Agreement.
(f) Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the terms and
conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of,
the terms, conditions or provisions of any evidences of indebtedness, agreement or instrument of
11
200483v10
whatever nature to which the Developer is now a party or by which the Developer is bound, or
constitutes a default under any of the foregoing.
(g) The Developer will reasonably cooperate with the City and the Authority with
respect to any litigation commenced with respect to the Project.
(h) The Developer agrees to pay the total amount of any costs, charges, expenses and
attorneys' fees reasonably incurred or paid at any time by City because of any Event of Default by
the Developer as to any stipulation, agreement, and covenant of this Agreement, resulting in any
suit or proceeding at law or in equity to which the City shall become a party in reference to the
Developer's interest in the Development Property or the Project; but only to the extent a court of
competent jurisdiction issues an order or judgment in such matter.
ARTICLE III
PROPERTY ACQUISITION, CONVEYANCE; PUBLIC DEVELOPMENT COSTS
Section 3.1. Status of the Development Property. As of the date of this Agreement, the Developer
has entered into a purchase agreement with a third party for the purchase of the Development Property.
The City has no obligation to acquire any portion of the Development Property.
Section 3.2. Environmental Conditions. (a) The Developer acknowledges that the City makes no
representations or warranties as to the condition of the soils on the Development Property or the fitness
of the Development Property for construction of the Minimum Improvements or any other purpose for
which the Developer may make use of such Development Property, and that the assistance provided
to the Developer under this Agreement neither implies any responsibility by the Authority or the City
for any contamination of the Development Property or poor soil conditions nor imposes any obligation
on such parties to participate in any cleanup of the Development Property or correction of any soil
problems (other than the financing described in this agreement).
(b) Without limiting its obligations under Section 9.6 of this Agreement the Developer further
agrees that it will indemnify, defend, and hold harmless the Authority, the City, and their governing
body members, officers, and employees, from any claims or actions arising out of the presence, if any,
of hazardous wastes or pollutants existing on or in the Development Property, unless and to the extent
that such hazardous wastes or pollutants are present as a result of the actions or omissions of the
indemnitees. Nothing in this section will be construed to limit or affect any limitations on liability of
the City or Authority under State or federal law, including without limitation Minnesota Statutes
Sections 466.04 and 604.02.
Section 3.3. Public Development Costs; Issuance of Note
(a) If the Developer acquires the Development Property, in order to make construction of the
Minimum Improvements financially feasible, the City will reimburse the Developer for a portion of
the Public Development Costs incurred by the Developer in accordance with this section. The parties
agree that the completion of construction of Minimum Improvements on the Development Property
12
200483v10
by the Developer is essential to the successful completion of the Project. The construction costs of the
Minimum Improvements are estimated to be at least $6,000,000.00. The Developer shall pay the cost
of the Minimum Improvements.
(b) To reimburse the Public Development Costs incurred by Developer, the City shall issue
and the Developer shall purchase the Note in the maximum principal amount of $526,015.00. The
Note shall be dated, issued and delivered when the Developer shall have demonstrated in writing to
the reasonable satisfaction of the City that the construction of the Minimum Improvements has been
completed and that the Developer has incurred and paid all costs of the Public Development Costs, as
described in Schedule C and shall have submitted paid invoices for the costs of construction of the
Public Development Costs in an amount not less than principal amount of the Note, provided no
uncured Event of Default by the Developer has occurred and is continuing under the Agreement and
Developer has otherwise complied with all City requirements for the Project and the terms and
conditions of this Agreement.
The terms of the Note will be substantially those set forth in the form of the Note shown in
Schedule B, and the Note will be subject to all terms of the Authorizing Resolution, which is
incorporated herein by reference.
(c) All conditions for delivery of the Note must be met by no later than the date which is
less than five (5) years after the date of certification of the TIF District by the County and complies
with the so-called five-year rule under Section 469.1763, subd. 3(c) of the Act. If the conditions for
delivery of the Note are not satisfied by the date described in this paragraph, the City has no further
obligations under this section 3.3.
(d) The amounts of the Note payable by the City to the Developer shall be solely pursuant
to the formula set forth in the Note, and shall be payable solely from the Available Tax Increments, as
defined in the Note.
(e) The payment dates of the Note shall be the Note Payment Dates. On each Note
Payment Date and subject to the provisions of the Note, the City shall pay 95% of Available Tax
Increments generated by the Project and received by the City during the preceding six months.
(f) The Note shall be a special and limited obligation of the City and not a general
obligation of the City and only Net Tax Increments shall be used to pay on the Note. The payment
amounts due thereon shall be payable solely from Tax Increments from the Tax Increment District
which are paid to the City and which the City is entitled to retain pursuant to the Tax Increment Act.
(g) The City's obligation to make payments on the Note on any Note Payment Date or any
date thereafter shall be conditioned upon the requirement that (i) there shall not at that time be an Event
of Default that has occurred and is continuing under this Agreement, (ii) this Agreement shall not have
been rescinded and (iii) the Developer has paid its property taxes and the City has received from the
County the Tax Increments generated by the Project.
(h) The Note shall be governed by and payable pursuant to the additional terms thereof, as
set forth in Schedule B. In the event of any conflict between the terms of the Note and the terms of
13
200483v10
this Section 3.3, the terms of the Note shall govern. The issuance of the Note pursuant and subject to
the terms of this Agreement, and the taking by the City of such additional actions as counsel for the
City may require in connection therewith, are hereby authorized and approved by the City.
(i) The Developer acknowledges that the City has made no warranties or representations
to the Developer as to the amounts of Tax Increment that will be generated or that the “Available Tax
Increment,” as defined in the Note, will be sufficient to pay the Note in whole or in part. Nor is the
City warranting that it will have throughout the term of this Agreement and the Note the continuing
legal ability under State law to apply Tax Increment to the payment of the Note, which continued legal
ability is a condition precedent to the City’s obligations under the Note.
Section 3.4. Records. The City and its representatives shall have the right at all reasonable times after
reasonable notice to inspect, examine, and copy all books and records of Developer relating to the
Minimum Improvements. Developer shall also use its best efforts to cause the contractor or
contractors, all sub-contractors and their agents and lenders to make their books and records relating
to the Project available to City, upon reasonable notice, for inspection, examination and audit. Such
records shall be kept and maintained by Developer until the Termination Date.
ARTICLE IV
CONSTRUCTION OF MINIMUM IMPROVEMENTS
Section 4.1. Acquisition of the Development Property and Construction of Minimum
Improvements. The Developer agrees that it will acquire the Development Property and will
construct the Minimum Improvements on the Development Property in accordance with the
approved Construction Plans, subject to changes approved by the City, and that it will maintain,
preserve and keep those portions of the Minimum Improvements that it owns and controls,
including but not limited to all landscaping and exterior improvements, to be maintained,
preserved and kept with the appurtenances and every part and parcel thereof, in commercially
reasonable repair and condition.
Section 4.2. Construction Plans. (a) Before commencing construction of the Minimum
Improvements, the Developer shall submit to the City Construction Plans. The Construction Plans
shall provide for the construction of the Minimum Improvements and shall be in conformity with the
TIF Plan, Redevelopment Plan, this Agreement, the Site Plan, and all applicable state and local laws
and regulations. The City shall approve the Construction Plans in writing if, in the reasonable discretion
of the City: (i) the Construction Plans conform to the terms and conditions of this Agreement; (ii) the
Construction Plans conform to the terms and conditions of the Redevelopment Plan; (iii) the
Construction Plans conform to all applicable federal, State and local law, ordinances, rules and
regulations; (iv) the funds available to the Developer from all sources for construction of the Minimum
Improvements are adequate to construct the project described in the Construction Plans; and (v) no
Event of Default has occurred. No approval by the City under this Section 4.2 shall relieve the
Developer of the obligation to comply with the terms of this Agreement, the terms of the
Redevelopment Plan, applicable federal, state and local laws, ordinances, rules and regulations, or to
14
200483v10
construct the Minimum Improvements. No approval by the City shall constitute a waiver of an Event
of Default. Such Construction Plans shall, in any event, be deemed approved unless rejected in writing
by the City, in whole or in part. Such rejection shall set forth in detail the reasons therefor, and shall be
made within twenty (20) days after the date of their receipt by the City. If the City rejects the
Construction Plans in whole or in part, the Developer shall submit new or corrected Construction Plans
within twenty (20) days after written notification to the Developer of the rejection. The provisions of
this Section relating to approval, rejection and resubmission of corrected Construction Plans shall
continue to apply until the Construction Plans have been approved by the City. The City's approval
shall not be unreasonably withheld, conditioned or delayed. Said approval shall constitute a conclusive
determination that the Construction Plans (and the Minimum Improvements, if constructed in
accordance with said plans) comply to the City's satisfaction with the provisions of this Agreement
relating thereto.
The Developer waives any and all claims and causes of action whatsoever resulting from
the review of the Construction Plans by the City and/or any changes in the Construction Plans
requested by the City that comply with applicable codes and laws. Neither the Authority, the City,
nor any employee or official of the Authority or City shall be responsible in any manner
whatsoever for any defect in the Construction Plans or in any work done pursuant to the
Construction Plans, including changes requested by the City, if such changes comply with
applicable codes and laws.
(b) If the Developer desires to make any material change in any Construction Plans
after their approval by the City, the Developer shall submit the proposed change to the City
Council and the Authority Board for approval. For purposes of this Agreement, a “material”
change in the Construction Plans shall be any change that reduces the value of the Minimum
Improvements by $500,000 or more, changes the exterior appearance of the Minimum
Improvements, or changes the general nature or use of the Minimum Improvements. If the
Construction Plans, as modified by the proposed change, conform to the requirements of this
Section 4.2 of this Agreement with respect to such previously approved Construction Plans, the
City shall approve the proposed change an notify the Developer in writing of its approval. Such
change in the Construction Plans shall, in any event, be deemed approved by the City unless
rejected, in whole or in part, by written notice by the City to the Developer, setting forth in detail
the reasons therefore. Such rejection shall be made within ten (10) business days after receipt of
the notice of such change. The City’s approval of any such change in the Construction Plans will
not be unreasonably withheld, conditioned or delayed.
Section 4.3. Commencement and Completion of Construction. (a) Subject to Unavoidable
Delays, the Developer shall commence construction of the Minimum Improvements on or before
September 1, 2019, or on such other date as the parties shall agree.
(b) Subject to Unavoidable Delays, the Developer shall substantially complete the
construction of the Minimum Improvements by June 30, 2020, or on such other date as the parties
shall agree.
15
200483v10
(c) All work with respect to the Minimum Improvements to be constructed or provided
by the Developer on the Development Property shall be in conformity with the Construction Plans
as submitted by the Developer and approved by the City.
(d) The Developer agrees for itself, its successors and assigns, and every successor in
interest to the Development Property, or any part thereof, that the Developer, and such successors
and assigns, shall promptly begin and diligently prosecute to completion the development of the
Development Property through the construction of the Minimum Improvements thereon, and that
such construction shall in any event be commenced and completed within the period specified in
this Section 4.3 of this Agreement, subject to Unavoidable Delays. Subsequent to conveyance of
the Development Property, or any part thereof, to the Developer, and until construction of the
Minimum Improvements has been completed, the Developer shall make construction progress
reports, at such times as may reasonably be requested by the City, but not more than once a month,
as to the actual progress of the Developer with respect to such construction.
Section 4.4. Certificate of Completion. (a) Promptly after substantial completion of the
Minimum Improvements in accordance with those provisions of the Agreement relating solely to
the obligations of the Developer to construct the Minimum Improvements (including the date for
completion thereof), and upon request by the Developer, the City will furnish the Developer with
a Certificate of Completion in substantially the form attached as Schedule D. Such certification by
the City shall be a conclusive determination of satisfaction and termination of the agreements and
covenants in the Agreement with respect to the obligations of the Developer, and its successors
and assigns, to construct the Minimum Improvements and the date for the completion thereof.
Such certification and such determination shall not constitute evidence of compliance with or
satisfaction of any obligation of the Developer to any holder of a mortgage, or any insurer of a
mortgage, securing money loaned for construction of the Minimum Improvements, or any part
thereof.
(b) The Certificate of Completion provided for in this Section 4.4 of this Agreement
shall be in such form as will enable it to be recorded in the proper office for the recordation of
deeds and other instruments pertaining to the Development Property. If the City shall refuse or
fail to provide a certificate of completion in accordance with the provisions of this Section 4.4 of
this Agreement, the City shall, within ten (10) business day after written request by the Developer
for the certificate of completion, provide the Developer with a written statement, indicating in
adequate detail in what respects the Developer has failed to complete the Minimum Improvements
in accordance with the provisions of the Agreement, or is otherwise in default, and what measures
or acts it will be necessary, in the opinion of the City, for the Developer to take or perform in order
to obtain such certification.
(c) The construction of the Minimum Improvements shall be deemed to be completed
when the City has issued a certificate of occupancy or temporary certificate of occupancy for the
Minimum Improvements (the issuance of which certificate shall not be unreasonably withheld,
conditioned or delayed), and upon determination of the City that all related site improvements on
the Development Property have been substantially completed in accordance with the approved
Construction Plans, subject to landscaping that cannot be completed until seasonal conditions
permit.
16
200483v10
ARTICLE V
INSURANCE AND CONDEMNATION
Section 5.1. Insurance. (a) The Developer will provide and maintain or cause to be provided
and maintained at all times during the process of constructing the Minimum Improvements and,
from time to time at the request of the City, furnish the City with proof of payment of premiums
on:
(i) Builder's risk or hazard insurance, written on the so-called "Builder's Risk --
Completed Value Basis," in an amount equal to one hundred percent (100%) of the
insurable value of the Minimum Improvements at the date of completion, and with
coverage available in nonreporting form on the so called "all risk" form of policy.
(ii) Commercial general liability insurance (including operations, contingent liability,
operations of subcontractors, completed operations, Broadening Endorsement
including contractual liability insurance) together with an Owner's Contractor's
Policy with limits against bodily injury and property damage of not less than
$2,000,000.00 for each occurrence (to accomplish the above-required limits, an
umbrella excess liability policy may be used).
(iii) Worker's compensation insurance, with statutory coverage and employer's liability
protection.
(b) Upon completion of construction of the Minimum Improvements and prior to the
Termination Date, the Developer shall maintain, at its cost and expense, and from time to time at
the request of the City shall provide insurance binders on insurance as follows:
(i) Insurance against loss and/or damage to the Minimum Improvements under a
policy or policies covering such risk as are ordinarily insured against by similar
businesses, including (without limiting the generality of the foregoing) fire,
extended coverage, all risk vandalism and malicious mischief, boiler explosion,
water damage, demolition cost, debris removal, and collapse in an amount not less
than the full insurable replacement value of the Minimum Improvements, but any
such policy may have a deductible amount of not more than $100,000.00. No
policy of insurance shall be so written that the proceeds thereof will produce less
than the minimum coverage required by the preceding sentence, by reason of co-
insurance provisions or otherwise, without the prior consent thereto in writing by
the City. The term "full insurable replacement value" shall mean the actual
replacement cost of the Minimum Improvements (excluding foundation and
excavating costs and costs of underground flues, pipes, drains and other
uninsurable items) and equipment, and shall be determined from time to time at the
request of the City, but not more frequently than once every three years, by an
insurance consultant or insurer, selected and paid for by the Developer and
approved by the City.
17
200483v10
(ii) Comprehensive general liability insurance, including personal injury liability (with
employee exclusion deleted), and automobile insurance, including owned, non-
owned and hired automobiles, against liability for injuries to persons and/or
property, in the minimum amount for each occurrence and for each year of
$2,000,000.00, for public liability and shall be endorsed to show the City as
additional insured.
(iii) Such other insurance, including worker's compensation insurance respecting all
employees of the Developer, in such amount as is customarily carried by like
organizations engaged in like activities of comparable size and liability exposure;
provided that the Developer may be self-insured with respect to all or any part of
its liability for worker's compensation.
(c) All insurance required under this Article shall be taken out and maintained in
responsible insurance companies selected by the Developer which are authorized under the laws
of the State to assume the risk covered thereby. Upon request, the Developer will deposit annually
with the City binders evidencing all such insurance, or a certificate or certificates of the respective
insurers stating that such insurance is in force and effect. Unless otherwise provided in this Article
each policy shall contain a provision that the insurer shall not cancel or modify it without giving
written notice to the Developer and the City at least thirty (30) days before the cancellation or
modification becomes effective. Not less than fifteen (15) days prior to the expiration of any
policy, the Developer shall furnish the City evidence satisfactory to the City that the policy has
been renewed or replaced by another policy conforming to the provisions of this Article, or that
there is no necessity therefor under the terms hereof. In lieu of separate policies, the Developer
may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the
coverage required herein, in which event the Developer shall deposit with the City a certificate or
certificates of the respective insurers as to the amount of coverage in force upon the Minimum
Improvements.
(d) The Developer agrees to notify the City with reasonable promptness in the case of
damage exceeding $500,000 in amount to, or destruction of, the Minimum Improvements or any
portion thereof resulting from fire or other casualty. In the event of any such damage or
destruction, the Developer will, within a reasonable time and with due diligence, repair,
reconstruct and restore the Minimum Improvements to substantially the same or an improved
condition or value as existed prior to the event causing such damage and, to the extent necessary
to accomplish such repair, reconstruction and restoration, the Developer will apply the net
proceeds of any insurance relating to such damage received by the Developer to the payment or
reimbursement of the costs thereof.
The Developer shall complete the repair, reconstruction and restoration of the Minimum
Improvements, whether or not the net proceeds of insurance received by the Developer for such
purposes are sufficient to pay for the same. Any net proceeds remaining after completion of such
repairs, construction and restoration shall be the property of the Developer.
(e) In lieu of its obligation to reconstruct the Minimum Improvements as set forth in this
18
200483v10
Section, the Developer shall have the option of: (i) paying to the City an amount that, in the opinion
of the City and its fiscal consultant, is sufficient to pay or redeem the outstanding principal and
accrued interest on the Note, or (ii) so long as the Developer is the owner of the Note, waiving its
right to receive subsequent payments under the Note.
(f) The Developer and the City agree that all of the insurance provisions set forth in this
Article V shall terminate upon the termination of this Agreement.
Section 5.2. Subordination. Notwithstanding anything to the contrary herein, the rights of the
City with respect to the receipt and application of any insurance proceeds shall, in all respects, be
subordinate and subject to the rights of any holder under a mortgage allowed pursuant to Article
VIII of this Agreement.
ARTICLE VI
TAX INCREMENT; TAXES
Section 6.1. Right to Collect Delinquent Taxes. The Developer acknowledges that the City is
providing substantial aid and assistance in furtherance of the redevelopment described in this
Agreement, through reimbursement of the Public Development Costs. The Developer understands
that the Tax Increment pledged to payment of the Public Development Costs is derived from real
estate taxes on the Minimum Improvements, which taxes must be promptly and timely paid. To
that end, the Developer agrees for itself, its successors and assigns, that in addition to the obligation
pursuant to statute to pay real estate taxes, it is also obligated by reason of this Agreement to pay
before delinquency all real estate taxes assessed against the Development Property and the
Minimum Improvements. The Developer acknowledges that this obligation creates a contractual
right on behalf of the City through the Termination Date to sue the Developer or its successors
and assigns to collect delinquent real estate taxes and any penalty or interest thereon and to pay
over the same as a tax payment to the county auditor. In any such suit, the City shall also be entitled
to recover its costs, expenses and reasonable attorney fees.
Section 6.2. Review of Taxes. The Developer agrees that prior to the Termination Date, it will
not cause a reduction in the real property taxes paid in respect of the Development Property
through: (A) willful destruction of the Development Property or any part thereof; or (B) willful
refusal to reconstruct damaged or destroyed property pursuant to Section 5.1 of this Agreement.
The Developer also agrees that it will not, prior to the Termination Date, apply for a deferral of
property tax on the Development Property pursuant to any law, or transfer or permit transfer of
the Development Property to any entity whose ownership or operation of the property would result
in the Development Property being exempt from real estate taxes under State law (other than any
portion thereof dedicated or conveyed to the City or Authority in accordance with this Agreement).
19
200483v10
ARTICLE VII
BUSINESS SUBSIDY
Section 7.1. Tax Increment Financing. The Tax Increment Financing provided by the City under
this Agreement is made pursuant to the Tax Increment Financing Plan and pursuant to a Business
Subsidy under the Minnesota Statutes, Sections 116J.993 to 116J.995 (the “Business Subsidy
Act”).
Sections 7.2. Wage and Job Goals. Developer acknowledges and agrees that the amount of the
business subsidy granted to the Developer under this Agreement is an amount not to exceed
$526,015.00 and that this business subsidy is needed because the acquisition of the Development
Property and construction of the Minimum Improvements are not sufficiently feasible for the
Developer to undertake without the business subsidy. The public purpose of the business subsidy
is to create new full-time jobs in the City of Lakeville and to enhance the tax base. Developer
agrees that it will meet the following goals (the “Goals”): (i) it will provide a net increase of
nineteen (19) new full-time equivalent jobs in the City within twenty-four (24) months of the
Benefit Date with twelve (12) jobs at a wage of at least $14.00 per hour and seven (7) jobs at a
wage of at least $20.00 per hour, in each case, excluding benefits; and (ii) retain its existing 95
full-time equivalent jobs in the City. As of the date of execution of this Agreement, Developer
currently maintains 95 full-time equivalent employee positions. Once Developer has achieved the
Goals, the Goals must be maintained for a period of at least one year.
Section 7.3. Reporting. Developer agrees to (i) report its progress on achieving the Goals to the
City until the Goals are met, or the business subsidy is repaid, whichever occurs earlier, in
accordance with Minn. Stat. Section 116J.994, subd. 7; (ii) include in the report the information
required on forms developed by the Minnesota Department of Employment and Economic
Development, and (iii) send the completed reports to the City. The Developer agrees to file these
reports no later than March 1 of each year and within thirty days after the deadline for meeting the
Goals. The City agrees that if it does not receive the reports, it will mail the Developer a warning
within one week of the required filing date. If within fourteen (14) days of the post marked date
of the warning letter the reports are not made, the Developer agrees to pay to the City a penalty of
$100.00 for each subsequent day until the report is filed up to a maximum of $1,000, pursuant to
Minn. Stat. Section 116J.994, subd. 7(d).
Section 7.4. Continuing Obligation. The Developer agrees that it will continuously operate the
Minimum Improvements for the purposes described in the Contract for a period of at least five (5)
years from the Benefit Date.
Section 7.5. Requirements. The following requirements are required by the Business Subsidy
Act:
(a) The business subsidy is being provided for the public purposes of increasing
employment within the City and developing property that is currently vacant and underutilized.
The subsidy is necessary to offset the high costs associated with costs associated with preparing
20
200483v10
the Development Property for development. Also, absent the subsidy, the proposed development
would not occur.
(b) The subsidy is being financed with tax increment generated from the City’s Tax
Increment District No. 24, an economic development tax increment district.
(c) The Developer is applying for the following financial assistance from the
Minnesota Department of Employment and Economic Development, which assistance has not
yet been approved:
Minnesota Investment Fund $100,000
Minnesota Job Creation Fund $350,000
(d) The Developer certifies that it does not have a parent company.
Section 7.6. Default Defined. It shall be a default under this Agreement if, after written notice
to the Developer of the default, the Developer fails to comply with the term or provision of this
Article, and fails to cure such failure to the reasonable satisfaction of the City within thirty (30)
days, provided that if Developer commences its attempts to cure within such 30 day period and
diligently continues its attempts to cure such default, then Developer shall have up to an additional
30 days (or such additional time as the City agrees based on the circumstances presented by
Developer) to cure the default.
Section 7.7. Remedies on Default. The parties agree that the subsidy is a forgivable loan,
repayable only if the Developer fails to fulfill its obligations under Section 7.2 of this Agreement.
Upon the occurrence of a failure to create jobs as required by Section 7.2 or a failure to continue
operations as required by Section 7.4 the Developer shall pay to the City upon written demand
from the City a “pro rata share” of the subsidy and interest on the subsidy at the implicit price
deflator as defined in Minnesota Statutes, Section 275.50, subd. 2, accrued from the Benefit Date.
The term “pro rata share” means percentages calculated as follows:
(a) if the failure relates to the number of jobs, the jobs required less the jobs created,
divided by the jobs required;
(b) if the failure relates to wages, the number of jobs required less the number of jobs
that meet the required wages, divided by the number of jobs required;
(c) if the failure relates to a failure to continue operations of the Minimum
Improvements in accordance with Section 7.4, sixty (60) less the number of months of operation
(where any month in which the Minimum Improvements are in operation for at least fifteen (15)
days constitutes a month of operation), commencing on the Benefit Date and ending with the date
the Developer ceases operation reasonably determined by the City, divided by 60; and
(d) if more than one of clauses (a) through (c) apply, the sum of the applicable
percentages, not to exceed 100%.
21
200483v10
Section 7.8. Costs of Enforcement. Whenever any default occurs under this Agreement and the
City shall employ attorneys or incur other expenses for the collection of payments due or for the
enforcement of performance or observance of any obligation or agreement on the part of the
Developer under this Agreement, the Developer shall be liable to the City for the reasonable fees
of such attorneys and such other expenses so incurred by the City; provided, that the Developer
shall only be obligated to make such reimbursement if the City prevails in such collection or
enforcement action and provided that the amount of such attorney fees and such other expenses
shall not exceed the amount of any “pro rata share” due under Section 7.7.
.
ARTICLE VIII
FINANCING; ASSIGNMENT AND TRANSFER
Section 8.1. Subordination for the Benefit of Mortgagee. In order to facilitate Developer
obtaining financing to acquire the Development Property and construct the Minimum
Improvements according to the Construction Plans, the City agrees to subordinate its rights under
this Agreement provided that such subordination shall be subject to such commercially reasonable
terms as Developer’s lender may require.
Section 8.2. Prohibition Against Transfer of Development Property and Assignment of
Agreement. Prior to the issuance of a Certificate of Completion for the Minimum Improvements
and expiration of the five (5) year period in Section 7.4 of this Agreement:
(a) Except only by way of security for, and only for, the purpose of obtaining financing
necessary to enable the Developer or any successor in interest to the Development Property, or
any part thereof, to acquire the Development Property and thereafter to perform its obligations
with respect to making the Minimum Improvements under this Agreement; and (ii) any other
purpose authorized by this Agreement, the Developer has not made or created and will not make
or create or suffer to be made or created any total or partial sale, assignment, conveyance, or lease,
or any trust or power, or transfer in any other mode or form of or with respect to the Agreement
or the Development Property or any part thereof or any interest therein, or any contract or
agreement to do any of the same (“Transfer"), except to an Affiliate of Developer, without the
prior written approval of the City unless the Developer remains liable and bound by this
Agreement in which event the City' s approval is not required. Any such Transfer shall be subject
to the provisions of this Agreement.
(b) In the event the Developer, upon Transfer of the Development Property or any portion
thereof, seeks to be released from its obligations under this Development Agreement as to the
portions of the Development Property that is transferred or assigned, the City shall be entitled to
require, except as otherwise provided in the Agreement, as conditions to any such release that:
(i) Any proposed transferee shall have the qualifications and financial
responsibility, in the reasonable judgment of the City, necessary and adequate to fulfill the
obligations undertaken in this Agreement by the Developer as to the portion of the
Development Property to be transferred.
22
200483v10
(ii) Any proposed transferee, by instrument in writing satisfactory to the City and
in form recordable in the public land records of Dakota County, Minnesota, shall, for itself
and its successors and assigns, and expressly for the benefit of the City, have expressly
assumed all of the obligations of the Developer under this Agreement as to the portion of
the Development Property to be transferred and agreed to be subject to all the conditions
and restrictions to which the Developer is subject as to such portion; provided, however,
that the fact that any transferee of, or any other successor in interest whatsoever to, the
Development Property, or any part thereof, shall not, for whatever reason, have assumed
such obligations or so agreed, and shall not (unless and only to the extent otherwise
specifically provided in this Agreement or agreed to in writing by the City) deprive the
City of any rights or remedies or controls with respect to the Development Property or any
part thereof or the construction of the Minimum Improvements; it being the intent of the
parties as expressed in this Agreement that (to the fullest extent permitted at law and in
equity and excepting only in the manner and to the extent specifically provided otherwise
in this Agreement) no transfer of, or change with respect to, ownership in the Development
Property or any part thereof, or any interest therein, however consummated or occurring,
and whether voluntary or involuntary, shall operate, legally or practically, to deprive or
limit the City of or with respect to any rights or remedies on controls provided in or
resulting from this Agreement with respect to the Minimum Improvements that the City
would have had, had there been no such transfer or change. In the absence of specific
written agreement by the City to the contrary, no such transfer or approval by the City
thereof shall be deemed to relieve the Developer, or any other party bound in any way by
this Agreement or otherwise with respect to the construction of the Minimum
Improvements, from any of its obligations with respect thereto.
(iii) Any and all instruments and other legal documents involved in effecting the
transfer of any interest in this Agreement or the Development Property governed by this
Article VIII, shall be in a form reasonably satisfactory to the City.
In the event the foregoing conditions are satisfied then the Developer shall be released
from its obligation under this Agreement, as to the portion of the Development Property that is
transferred, assigned or otherwise conveyed. The restrictions under this Section terminate upon
issuance of the Certificate of Completion and expiration of the five (5) year period under Section
7.4.
Notwithstanding anything herein to the contrary, the Developer shall have the right to
assign or transfer its rights hereunder (including the TIF Note) to a third party without any consent
requirement of the City, provided the third party has agreed, in writing, to assume all of the
Developer' s obligations hereunder.
23
200483v10
ARTICLE IX
EVENTS OF DEFAULT
Section 9.1. Events of Default Defined. The following shall be "Events of Default" under this
Agreement and the term "Event of Default" shall mean whenever it is used in this Agreement any
one or more of the following events:
(a) Failure by the Developer to pay timely any ad valorem real property taxes or special
assessments assessed with respect to the Development Property.
(b) Failure by the Developer to cause the construction of the Project to be completed
pursuant to the terms, conditions and limitations of this Agreement.
(c) The holder of any mortgage on the Development Property or any improvements
thereon, or any portion thereof, commences foreclosure proceedings as a result of any default
under the applicable mortgage documents.
(d) Failure by the Developer to substantially observe or perform any other covenant,
condition, obligation or agreement on its part to be observed or performed under this Agreement.
(e) If the Developer shall
(i) file any petition in bankruptcy or for any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under
the United States Bankruptcy Act of 1978, as amended or under any similar
federal or state law; or
(ii) make an assignment for the benefit of its creditors; or
(iii) admit in writing its inability to pay its debts generally as they become due; or
(iv) be adjudicated a bankrupt or insolvent; or if a petition or answer proposing
the adjudication of the Developer, as a bankrupt or its reorganization under
any present or future federal bankruptcy act or any similar federal or state
law shall be filed in any court and such petition or answer shall not be
discharged or denied within ninety (90) days after the filing thereof; or a
receiver, trustee or liquidator of the Developer, or of the Project, or part
thereof, shall be appointed in any proceeding brought against the
Developer, and shall not be discharged within ninety (90) days after such
appointment, or if the Developer, shall consent to or acquiesce in such
appointment.
(f) Failure by the City to make payments on the Tax Increment Note on the Note Payment
Dates.
Section 9.2. Remedies on Default. Whenever any Event of Default referred to in Section 9.1
occurs and is continuing, the non-defaulting party, as specified below, may take any one or more of
24
200483v10
the following actions after providing thirty (30) days’ written notice to the defaulting party, but only if
the Event of Default has not been cured within said thirty (30) days, or if said Event of Default cannot
reasonably be cured within the time, the defaulting party fails to give assurances reasonably
satisfactory to the non-defaulting party that the Event of default will be cured within a period of time
reasonably acceptable to the non-defaulting party, but in any event not to exceed 90 days.
(a) If the Developer defaults, the City may suspend its performance under this
Agreement until it receives assurances from the Developer, deemed adequate by the City, that the
Developer will cure the default and continue its performance under this Agreement.
(b) If the Developer defaults, the City may cancel and rescind this Agreement, except that
no cancellation may be effective at any time that the Developer is proceeding in good faith to cure the
defect and/or gives reasonable assurances to the City as required in (1) above, or if there exists a good
faith dispute with the City as to an event of default as defined above, and the Developer posts a bond
or other security as reasonably adequate to cure the alleged default.
(c) If the Developer defaults, the City may take any action, including legal or
administrative action, which may appear necessary or desirable to enforce performance and
observance of any obligation, agreement, or covenant of the City under this Agreement.
(d) If the City defaults, the Developer may seek specific performance of the City's
obligations hereunder and pursuant to the Note and may exercise any and all other rights and
remedies that it may be entitled under the Note, any other provision of this Agreement, or
applicable laws or in equity.
(e) Notwithstanding any other term or condition to the contrary contained herein or
otherwise, in no event shall the Developer be obligated or responsible for or on account of any
Event of Default by the Developer in excess of an amount equal to a sum of the amounts that
Developer actually received under Section 5.3 hereof and under the Note prior to the date of such
Event of Default, upon payment of which amount this Agreement shall automatically terminate
without any action on the part of any party hereto and shall be null and void thereafter without any
further force or effect as against any party hereto.
(f) For clarity, in all other articles of this Agreement, when a party is entitled to take
action upon the occurrence of an “Event of Default,” such right to act shall not accrue until any
applicable notice and cure periods appurtenant to an Event of Default have been given and run,
respectively.
Section 9.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the City or the
Developer is intended to be exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power accruing upon any default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised from time to time and
as often as may be deemed expedient.
25
200483v10
Section 9.4. No Implied Waiver. In the event any agreement contained in this Agreement should
be breached by any party and thereafter waived by any other party, such waiver shall be limited to
the particular breach so waived and shall not be deemed to waive any other concurrent, previous
or subsequent breach hereunder.
Section 9.5. Agreement to Pay Attorney's Fees and Expenses. Whenever any Event of Default
occurs and the City or the Developer shall employ attorneys or incur other expenses for the collection
of payments due or to become due or for the enforcement of performance or observance of any
obligation or agreement on the part of the other herein contained, the defaulting party agrees that it
shall, on demand therefor, pay to the other the reasonable fees of such attorneys and such other
reasonable expenses so incurred by it.
Section 9.6. Indemnification of City and Authority.
(a) The Developer releases from and covenants and agrees that the City and Authority,
and their governing body members, officers, agents, including the independent contractors, consultants
and legal counsel, servants and employees thereof (hereinafter, for purposes of this Section,
collectively the "Indemnified Parties") shall not be liable for and agrees to indemnify and hold
harmless the Indemnified Parties against any loss or damage to property or any injury to or death of
any person occurring at or about or resulting from any defect in the Project, provided that the foregoing
indemnification shall not be effective for any actions of the Indemnified Parties that are not
contemplated by this Agreement, and shall not relate to any event or occurrence that is a breach
of the explicit representations or warranties of the City pursuant to this Agreement.
(b) Except for any willful misrepresentation or any willful or wanton misconduct of the
Indemnified Parties, the Developer agrees to protect and defend the Indemnified Parties, now and
forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit, action or other
proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from the actions
or inactions of the Developer (or if other persons acting on its behalf or under its direction or control)
under this Agreement, or the transactions contemplated hereby or the construction, installation,
ownership, and operation of the Project; provided, that this indemnification shall not apply to the
warranties made or obligations undertaken by the City in this Agreement or to any actions undertaken
by the City which are not contemplated by this Agreement but shall, in any event and without regard to
any fault on the part of the City, apply to any pecuniary loss or damages (including interest thereon from
the date the loss is incurred or damages is paid by the Authority at a rate equal to the "Prime Rate" as set
forth from time to time in The Wall Street Journal) as a result of the Project causing the Tax Increment
District to not qualify or cease to qualify as an "economic development district" under section 469.174,
subdivision 10(a)(1), of the Act or to violate limitations as to the use of Tax Increments as set forth in
section 469.176, subdivision 4.
(c) All covenants, stipulations, promises, agreements and obligations of the City
contained herein shall be deemed to be the covenants, stipulations, promises, agreements and
obligations of the City and not of any governing body member, officer, agent, servant or
employee of the City, as the case may be.
26
200483v10
ARTICLE X
ADDITIONAL PROVISIONS
Section 10.1. Representatives Not Individually Liable. (a) No member, official, or employee
of the City shall be personally liable to the Developer, or any successor in interest, in the event of
any default or breach or for any amount which may become due to the Developer or successor or
on any obligations under the terms of the Agreement.
(b) No partner, official, or employee of the Developer shall be personally liable to the
City, or any successor in interest, in the event of any default or breach or for any amount which
may become due to the City or successor or on any obligations under the terms of the Agreement.
Section 10.2. Restrictions on Use. (a) The Developer agrees for itself, and its successors and
assigns, and every successor in interest to the Development Property, or any part thereof, that the
Developer, and such successors and assigns, shall devote the Development Property to, and only
to and in accordance with, the uses specified in this Agreement and shall use such property solely
for the uses specified in this Agreement until the Termination Date.
(b) The Tax Increment District was created as an economic development tax increment
financing district as defined in section 469.174, subd. 12 of the Tax Increment Act. The Developer
agrees to restrict the use of the Development Property and Minimum Improvements so as to
comply with the restrictions on use that must be satisfied in the Tax Increment Act to allow the
Tax Increment District to continue to comply with the Tax Increment Act. Specifically, and
without limiting the foregoing, the Developer agrees that it will comply with the use restrictions
contained in Section 469.176, subd. 4c, of the Tax Increment Act and Section 469.176, subd. 7,
relating to qualified manufacturing and distribution facilities. The Developer understands that its
failure to comply with such statutory requirements may invalidate the Tax Increment District and
may impair the City’s and Authority’s ability to receive Tax Increment that they otherwise would
have received. In the event that there occurs a failure on the part of the Developer to comply with
the restrictions contained in the Tax Increment Act that results in liability on the part of the City
or Authority for repayment of Tax Increment or penalties or results in losses of Tax Increment that
would otherwise have been received by the City or Authority, the Developer shall be liable to and
upon demand by the City shall pay to the City the amount of such liability, penalties or Tax
Increment losses. The Developer will furnish to the City from time to time at the request of the
City documentation showing the Developer’s compliance with the applicable provisions of the
Tax Increment Act. The City will not request such documentation more frequently than annually
unless it is legally required to do so.
Section 10.3. Titles of Articles and Sections. Any titles of the several parts, Articles, and
Sections of the Agreement are inserted for convenience of reference only and shall be disregarded
in construing or interpreting any of its provisions.
Section 10.4. Disclaimer of Relationships. The Developer acknowledges that nothing contained
in this Agreement nor any act by the City or the Developer shall be deemed or construed by the
Developer or by any third person to create any relationship of third-party beneficiary, principal
27
200483v10
and agent, limited or general partner, or joint venture between the City, the Developer and/or any
third party.
Section 10.5. Modifications. This Agreement may be modified solely through written
amendments hereto executed by the Developer and the City.
Section 10.6. Counterparts. This Agreement is executed in any number of counterparts, each of
which shall constitute one and the same instrument.
Section 10.7. Judicial Interpretation. Should any provision of this Agreement require judicial
interpretation, the court interpreting or construing the same shall not apply a presumption that the
terms hereof shall be more strictly construed against one party by reason of the rule of construction
that a document is to be construed more strictly against the party who itself or through its agent or
attorney prepared the same, it being agreed that the agents and attorneys of both parties have
participated in the preparation hereof.
Section 10.8. Termination of Agreement. Unless terminated earlier pursuant to specific
provision of this Agreement, this Agreement and the obligations of the Developer and the City
shall terminate on the Termination Date; provided, however, that any claims or causes of actions
the basis for which arose prior to the Termination shall survive such termination (for a period of
one (1) year) and nothing herein shall be deemed as intended to limit the exercise by either party
of its remedies in connection therewith except any relevant statute of limitations. On or after the
Termination Date either party shall be entitled to receive from the other party an instrument, in
recordable form evidencing such termination.
Section 10.9. Conflicts of Interest. No member of the governing body or other official of the City
shall participate in any decision relating to the Agreement, which affects his or her personal interests
or the interests of any corporation, partnership, or association in which he or she is directly or indirectly
interested. No member, official or employee of the City shall be personally liable to the City in the
event of any default or breach by the Developer or successor or on any obligations under the terms of
this Agreement.
Section 10.10. Titles of Articles and Sections. Any titles of the several parts, articles and sections
of the Agreement are inserted for convenience of reference only and shall be disregarded in
construing or interpreting any of its provisions.
Section 10.11. Notices and Demands. Except as otherwise expressly provided in this Agreement,
a notice, demand or other communication under this Agreement by any party to any other shall be
sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid,
return receipt requested, or delivered personally, and
(a) in the case of the Developer is addressed to or delivered personally to Developer at:
QA1 Precision Products, Inc.
21730 Hanover Ave.
Lakeville, MN 54044
Attn: Travis Scoles, Vice President
28
200483v10
(b) in the case of the City is addressed to or delivered personally to the City at:
City of Lakeville
20195 Holyoke Avenue
Lakeville, Minnesota 55044
Attn: City Administrator
or at such other address with respect to any such party as that party may, from time to time,
designate in writing and forward to the other, as provided in this Section.
Section 10.12. Law Governing. This Agreement will be governed and construed in accordance
with the laws of the State of Minnesota.
[remainder of page intentionally left blank]
[signature pages to follows]
29
200483v10
IN WITNESS WHEREOF, the City and Developer have caused this Agreement to be duly
executed on or as of the date first above written.
CITY OF LAKEVILLE
By _________________________________
Douglas P. Anderson, Mayor
By _________________________________
Charlene Friedges, City Clerk
STATE OF MINNESOTA )
(ss.
COUNTY OF DAKOTA )
The foregoing instrument was acknowledged before me this day of __________, 2019,
by Douglas P. Anderson and Charlene Friedges, respectively the Mayor and City Clerk of the City
of Lakeville, a Minnesota municipal corporation, on behalf of the City.
____________________________________
Notary Public
31
200483v10
SCHEDULE A
Description of Development Property
That part of the Southeast Quarter of Section 31, Township 114, Range 20, and Outlot C and
Outlot D, INTERSTATE SOUTH LOGISTICS PARK, according to the recorded plat thereof,
Dakota County, Minnesota, described as follows:
Commencing at the northwest corner of said Outlot C; thence South 89 degrees 59 minutes 25
seconds East, along the north line of said Outlot C, a distance of 88.42 feet to the point of
beginning; thence South 23 degrees 29 minutes 24 seconds West a distance of 447.46 feet; thence
South 66 degrees 30 minutes 36 seconds East a distance of 618.78 feet to the southwesterly
extension of the southeasterly line of said Outlot D; thence North 23 degrees 31 minutes 55
seconds East, along said southeasterly line and its extension, a distance of 663.14 feet to the
northeast corner of said Outlot D; thence northwesterly and westerly along the north line of said
Outlot D and the south line of 217th Street West, as dedicated on said plat, and the north line of
said Outlot C, to the point of beginning;
To be platted as Lot 1, Block 1, _________________________ Addition.
[to be confirmed upon final plat recording]
32
200483v10
SCHEDULE B
$________________
Date of Original Issue: ___________, 20__
UNITED STATES OF AMERICA
STATE OF MINNESOTA
DAKOTA COUNTY
CITY OF LAKEVILLE
TAX INCREMENT REVENUE NOTE
Rate Accrual Date
0%(to be determined)
The City of Lakeville, Minnesota (the “City”), for value received, certifies that it is
indebted and hereby promises to pay to QA1 Precision Products, Inc., a Minnesota corporation, or
registered assigns (the “Owner”), the principal sum of $526,015.00, without interest, as and to the
extent set forth herein.
1. Payments. Principal (the “Payments”) will be paid on August 1, 20__, and each
February 1 and August 1 thereafter to and including February 1, 20__ (the “Payment Dates”), in
the amounts and from the sources set forth in Section 3 herein.
Payments are payable by mail to the address of the Owner or any other address as the
owner may designate upon thirty (30) days’ written notice to the City. Payments on this Note are
payable in any coin or currency of the United States of America which, on the Payment Date, is
legal tender for the payment of public and private debts.
2. Available Tax Increment. Payments on this Note are payable on each Payment
Date in the amount of and solely payable from “Available Tax Increment,” which will mean, on
each Payment Date, ninety-five percent (95%) of the Tax Increment attributable to the
Development and paid to the City by Dakota County in the six (6) months preceding the Payment
Date, all as the terms are defined in the Agreement. Available Tax Increment will not include any
Tax Increment if, as of any Payment Date, there is an uncured Event of Default under the
Agreement (continuing beyond applicable notice and cure periods); provided, however, that once
an Event of Default is cured, any Available Tax Increment withheld shall be deemed Available
Tax Increment for the next Payment Date.
The City will have no obligation to pay principal on this Note on each payment Date from
any source other than Available Tax Increment, and the failure of the City to pay the entire amount
of principal of or interest on this Note on any Payment Date will not constitute a default hereunder
as long as the City pays principal of and interest hereon to the extent of Available Tax Increment.
33
200483v10
The City will have no obligation to pay unpaid balance of principal that may remain after the final
Payment on February 1, 20__.
4. Optional Prepayment. The principal sum payable under this Note is prepayable in
whole or in part at any time by the City without premium or penalty. No partial prepayment will
affect the amount or timing of any other regular payment otherwise required to be made under this
Note.
5. Default. If on any Payment Date there has occurred and is continuing any Event
of Default under the Agreement (beyond applicable notice and cure periods), the City may
withhold from payments hereunder under all Available Tax Increment. If the Event of Default is
thereafter cured in accordance with the Agreement, the Available Tax Increment withheld under
this Section shall be deferred and paid, without interest thereon, within thirty (30) days after the
Event of Default is cured. If the Event of Default is not cured in a timely manner, the City may
terminate this Note by written notice to the Owner in accordance with the Agreement.
6. Nature of Obligation. This Note is issued to aid in financing certain public
development costs and administrative costs of a Redevelopment Project undertaken by the City on
behalf of the City of Lakeville Housing and Redevelopment Authority, pursuant to Minnesota
Statutes, Sections 469.090 through 469.1081, and is issued pursuant to an authorizing resolution
(“the “Resolution”) duly adopted by the City on __________, 2019, and pursuant to and in full
conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes,
Section 469.174 to 469.1794, as amended. This Note is a limited obligation of the City which is
payable solely from Available Tax Increment pledged to the payment hereof under the Agreement.
This Note will not be deemed to constitute a general obligation of the State of Minnesota or any
political subdivision thereof, including, without limitation, the City. Neither the State of Minnesota
nor any political subdivision thereof will be obligated to pay the principal on this Note or other
costs incident hereto except out of Available Tax Increment, and neither the full faith and credit
nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to
the payment of the principal of this Note or other costs incident hereto.
7. Estimated Tax Increment Payments. Any estimates of Tax Increment prepared by
the City or its municipal advisors in connection with the TIF District or the Agreement are for the
benefit of the City, and are not intended as representations on which the Owner or Developer may
rely.
THE CITY MAKES NO REPRESENTATION OR WARRANTY THAT THE
AVAILABLE TAX INCREMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF
THIS NOTE.
8. Registration and Transfer. This Note is issuable only as a fully registered note
without coupons. Subject to certain limitations set forth therein, this Note is transferable upon the
books of the City kept for that purpose at the principal office of the City Finance Director, by the
Owner hereof in person or by the Owner's attorney duly authorized in writing, upon surrender of
this Note together with a written instrument of transfer satisfactory to the City duly executed by
the Owner. Upon the transfer or exchange and the payment by the Owner of any tax, fee, or
governmental charge required to be paid by the City with respect to the transfer or exchange, there
will be issued in the name of the transferee a new Note of the same aggregate principal amount,
34
200483v10
bearing interest at the same rate and maturing on the same dates within 15 days after the delivery
by the Owner of its request and approval of such request by the City if required under the
Agreement.
Except as otherwise provided in Section 8.2 of the Agreement, this Note shall not be
transferred to any person or entity, unless the City has provided written consent to such transfer,
which consent shall not be unreasonably withheld, conditioned or delayed.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required
by the Constitution and laws of the State of Minnesota to be done, to exist, to happen, and to be
performed in order to make this Note a valid and binding limited obligation of the City according
to its terms, have been done, do exist, have happened, and have been performed in due form, time
and manner as so required.
IN WITNESS WHEREOF, the City of Lakeville has caused this Note to be executed by the manual
signatures of its Mayor and City Clerk of the City and has caused this Note to be issued dated
________________, 20__.
______________________________________ ________________________________
35
200483v10
CERTIFICATION OF REGISTRATION
It is hereby certified that the foregoing Note, as originally issued on _______________________ , 20__,
was on said date registered in the name of QA1 Precision Products, Inc., a Minnesota corporation, and
that at the request of the Registered Owner of this Note, the undersigned has this day registered the Note
in the name of such Registered Owner, as indicated in the registration blank below, on the books kept by
the undersigned for such purposes.
NAME AND ADDRESS OF DATE OF SIGNATURE OF
REGISTERED OWNER REGISTRATION CITY ADMINISTRATOR
QA1 Precision Products, Inc.
_______________________
Lakeville, MN 55044 __________, 20__ ________________________
36
200483v10
SCHEDULE C
DESCRIPTION OF ELIGIBLE PUBLIC DEVELOPMENT COSTS
Acquisition of Development Property
Site improvements
Utilities
Other qualifying improvements pursuant to the Act and Tax Increment Act