HomeMy WebLinkAbout4.F.5. Revision to Development Agreement (including Business Subsidy Agreement) for Rosemount, Inc. �� Consent Business 4. F. 5.
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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
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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.
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