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Home My WebLink About4.F.5. Revision to Development Agreement (including Business Subsidy Agreement) for Rosemount, Inc. �� Consent Business 4. F. 5. ��c��a��- TO: Mayor and City Council Mark McNeill, City Administrator FROM: Samantha DiMaggio, Economic Development Coordinator DATE: 08/20/2013 SUBJECT: Revision to Development Agreement (including Business Subsidy Agreement) for Rosemount, Inc. (F) Action Sought Council is being asked to approve a revision to the Development Agreement (including Business Subsidy Agreement) for Rosemount, Inc to reflect a correction to the dollar value of Sewer Availability Charges (SAC) Credits. Background In the Development Agreement originally approved by Council on Apri12, 2013, the value of the City Sewer Availability Charges Credits (SAC Credits) was incorrect based on the per unit amount. The correct value should have been 125 units equaling $59,375 instead of 125 units equaling $39,900. These totals were based on incorrect calculations of the per unit SAC valuations, and have been corrected in the Recitals and in section 3.7. Recommendation Staff is recommending a revision to the Development Agreement (including Business Subsidy Agreement) for Rosemount, Inc to reflect the change from $39,900, to $59,375. Budget Impact The reduction of SAC credits remains unchanged at 125; however, the amount of available funds in the Sanitary Sewer funds (in which City SAC credits are credited), will be adjusted by $19,475. Relationship to Vision Housekeeping Item (F) Requested Action If the Council (and EDA) concurs, it should, by motion, authorize an amendment to Section 3.7 , and the "Recitals" section of the Development Agreement with Rosemount. Inc. Attachments: Proposed Contract Changes EXECUTION COPY CONTRACT FOR PRIVATE DEVELOPMENT between CITY OF SHAKOPEE,NIINNESOTA, ECONONIIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE,MINNESOTA, SCOTT COUNTY,MINNESOTA, INDEPENDENT SCHOOL DISTRICT N0. 191 � (BURNSVILLE—EAGAN---SAVAGE), and ROSEMOUNT INC. Dated: Jane�2�7 2013 This document was drafted by: KENNEDY&GRAVEN,Chartered(JAE) 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis,Minnesota 55402 Telephone: 337-9300 CONTRACT FOR PRIVATE DEVELOPMENT THIS CONTRACT FOR PRNATE DEVELOPMENT {the "Agreement") is made as of June _,?� 2013, by and between the CITY OF SHAKOPEE, MINNESOTA, a Minnesota municipal corporation (the "City"), the ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE, MINNESOTA,a public body corporate and politic under the laws of the State of Minnesota (the"Autharity"), SCOTT COUNTY,MINNESOTA,a political subdivision of the State of Minnesota(the "County"), INDEPENDENT SCHOOL DISTRICT NO, 191 (BURNSVILLE EAGAN—SAVAGE), a duly organized and existing school district in the State of Minnesota (the "School District"), and ROSEMOUNT INC.,a Minnesota corporation(the"Developer"). RECITALS � WHEREAS, pursuant to Minnesota Statutes, Sections 469.1812 to 469.1815 (the "Abatement Act"), the City, the County, and the Schaol District are authorized to abate property taxes in order to increase or preserve tax base and provide empioyment opporiunities;and WHEREAS,the Authority was created pursuant to Minnesota Statutes,Sections 469.090 to 469.1081, as amended(the"EDA Act")and was authorized to transact business and exercise its powers by a resolution of the City Council of the City;and WHEREAS,pursuant to Minnesota Statutes, Sections 116J.993 through 116J,995,as amended{the "Business Subsidy AcY'),the City,the Authority,and the County are authorized to grant business subsidies to facilitate development in the City,the County,and the State of Minnesota(the"State");and WHEREAS, Rosemount Inc., a Minnesota corporation, or any of its affiliates(the"Developer"), has proposed to acquire real property located in the City and described in Schedule A{the"Development Property")and construct and equip improvements to the existing 500,000 square feet building shell over five years to create an approximately 285,000 square foot facility which will include manufacturing, a research and development lab, o�ce space and warehouse space (collectively, the "Minimum Improvements");anci WHEREAS, pursuant to the Abatement Act, the City Council of the City, the Board of Commissioners of the County, and the Board of Education of the School District have each approved resolutions authorizing abatements of a portion of real property taxes on the Development Property; and WHEREAS, in order to help finance the Minimum Improvements, the Authority has agreed to provide a forgivable loan to the Developer in the amount of$3 50,000(the"Authority Loan"),provided that the Developer complies with Sections 3.12 and 3.13 hereof; and WHEREAS, in order to reimburse the Developer for certain costs related to the construction of the Minimum Improvements and make the Project financially feasible,the Developer has requested the following assistance:(i)tax abatement from the City for up to nine years in the maximum amount of$590,496 pursuant to the Act; (ii) tax abatement from the County for up to nine years in the maximum amount of$570,608 pursuant to the Act,with an annual maximum of$64,401;(iii)tax abatement from the School District for up to nine years in the maximum amount of$366,925 with an annual maximum of$40,769;(iv)a sewer availability charge("SAC")credit from the City in the amount of up to$304,375;(v)a waiver of SAC access fee from the City in the amount of up to$3s}-,�859.375;(vi)a waiver of trunk sanitary sewer charge from the City in the amount of up to $112,000; (vii) the Authority Loan in the amount of $350,000; and (viii) fiber optic network/broadband access from the County for up to twenty(20)years at a set price and up to$150,000 from �- 1 i County has not granted any other abatement under the Act as of the date of this Agreement,and agrees that if the County grants any additional abatements under the Act during the term of this Agreement,the County's Abatement Volume Cap will be allocated first to the abatements granted priorto thc date ofthis Agreement and to the County Abatement pledged pursuant to this Agreement. Section 3.6. School District Property Tax Abatement. (a) Generallv. In order to make the Project economically feasible, the School District wil[ grant the School District Abatement to the Developer commencing August 1,20I5 and continuing through February l,2024. In no event shall the School Dish�ict Abatement exceed$40,769 in any year or a cumulative total of$366,925 over the term of the Schoo] Disfict Abatement. Further, in no event shall the cumulative City Abatement,County Abatement and School District Abatement paid to the Developer during the term of this Agreement exceed an amount of$1,528,029. The School District Abatement will reimburse the Developer for a portion of the costs of the Project. Subject to the School District Abatement Volume Cap described in Section 3.6(b),the District shall direct the County to pay the City the School District Available Abatement on or before the business day prior to each Payment Date,commencing the business day prior to August 1, 201 S, and conrinuing through the business day prior to February 1, 2024. The transfer by the County of the School District Available Abatement ta the City will be accompanied by electronic communication to the City's Finance Director providing the amount of the School District Available Abatement transferred. The City shall disburse the School District Available Abatement received pursuant to this Section to the Devetoper on each Payment Date. (b) Limitations. The pledge of School District Available Abatement is subject to all the terms and conditions of the School District Abatement Resolution. The School District Available Abatement is payable solely from and to the extent of the School District Abatement, and nothing herein shall be construed to obligate the School District to make payments from any other funds. The School District makes no warranties or representations as to the amount ofthe School District Available Abatement. Any estimates of 5chool District Available Abatement amounts prepared by the County's fmancial consultants are for the benefit of tha County only,and the Developer is not entitled to rely on such estimates. � The Developer further acknowledges that the total property tax abatements payable by the School District in any year may not exceed the greater of$200,000 or ten percent{10%)of the net tax capacity of the School District for the taxes payable year to which the abatement applies (the "School District Abatement Volume Cap"), all pursuant to Section 469.1813, subdivision 8 of the Act. The School District does not warrant or represent that the School District Abatement in the amounts pledged under this Agreement will be within the School District's Abatement Volume Cap. The School District has not granted any other abatement under the Act as of the date of this Agreement, and agrees that if the School District grants any additional abatements under the Act during the term of this Agreement,the School DistricYs Abatement Volume Cap will be allocated first to the abatements granted prior to the date of this Agreement and to the School District Abatement pledged pursuant to this Agreement. Section 3.7. City Develo�ment Assistance. In addition to the City Abatement and in consideration for the Developer's promise to construct the Minimum Improvements and create the jobs set forth in Sections 3.12 and 3.13,the City has agreed to provide the Developer with SAC credits for the Minimum Improvements in the amount of up to$304,375,a waiver of the SAC access fee for the Minimum Improvements in the amount of up to $3�;989;5 ,� and a waiver of the trunk sanitary sewer charge for the Minimum Improvements in an amount of up to $112,000 (the "City Development Assistance"). If the Developer does not complete the Minimum Improvements and does not create the jobs required by Sections 3.12 and 3.13 within two years of the Compliance Date, the Developer must repay all or a portion of the City Development Assistance as required by Sections 3.12(c)and 3.13{6). Any SAC credits not used by the Developer shall be returned to the City. '' 11