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HomeMy WebLinkAbout4.A. Tax Increment Financing (TIF) District 16 - Rahr Corporation General Business 4. A. SfiAKOITE TO: Economic Development Authority FROM: Samantha DiMaggio, Economic Development Coordinator DATE: 03/31/2015 SUBJECT: Tax Increment Financing (TIF) District No. 16 -- Rahr Corporation Background Rahr Corporation is a family-owned business that has been in operation since 1847. Rahr Malting Co., a division of Rahr Corporation, manufactures and distributes malt for the brewing/beverage industry. The original malt house was located in Manitowoc, WI; however, in 1936, Rahr relocated to Shakopee, MN with the construction of one malt house at a capacity of 38,000 MT. The malting business in Shakopee has since expanded to five malt houses and a total manufacturing capacity of 380,000 MT, making it the second largest single-site malting facility in the world. Rahr also has facilities in North Dakota and Alix, Alberta. Rahr is proposing a substantial expansion /redevelopment project in and around its current Shakopee campus, to include construction of: 1. a 112,000 square foot manufacturing, assembly, and processing plant, (the "Malt House") off of 3rd St.; 2. a 90,000 square foot warehouse located on the north side of County Rd. 69 to serve their Brewer's Supply Group (BSG); 3. a 14,500 square foot maintenance warehouse off of 2nd St, and 4. an 18,400 square foot research laboratory (the "Tech Center") at the southwest corner of 1st Ave. & Apgar St. The proposed project will bring redevelopment to the north side of 1st Ave., resulting in an increased tax base,job creation and more attractive corridor. Several deteriorating structures have been or will be removed as a result of this project. Rahr is also planning to add more staff to correspond with the expansion/redevelopment. The proposed tax increment district has been reviewed by Springsted, the City's financial consultants, and their analysis is attached for review. The proposed district would be a 9-year economic development TIF and is estimated to generate a total of $1,941,325. If granted the requested assistance, Rahr would begin construction this spring and anticipates completion by January 2017. Action Sought Following the Public Hearing, if the EDA concurs, it should by motion approve the following Resolutions: Resolution No. 15-4, A Resolution Approving a Contract for Private Development with the City of Shakopee and Rahr Corporation and Awarding the Sale of, and Providing the Form, Terms, Covenants and Directions for the Issuance of its Tax Increment Revenue Note, Series 2015, in the Original Aggregate Principal Amount of$1,883,086 Resolution No. 15-5, Resolution Approving Tax Increment Financing Plan for Tax Increment Financing (Economic Development) District No. 16 and a Modified Redevelopment Plan for the Minnesota River Valley Housing and Redevelopment Project No. 1. Attachments: Application Part 1 Application Part 2 Impact Analysis Letter of Support - School Map Res. No. 15-4 Res. No. 15-5 Scott County Comments Rahr TIF Plan Contract Contract Contract ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE RESOLUTION NO. 15-4 RESOLUTION APPROVING A CONTRACT FOR PRIVATE DEVELOPMENT WITH THE CITY OF SHAKOPEE AND RAHR CORPORATION AND AWARDING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS TAX INCREMENT REVENUE NOTE, SERIES 2015, IN THE ORIGINAL AGGREGATE PRINCIPAL AMOUNT OF $1,883,086 BE IT RESOLVED BY the Board of Commissioners (the "Board") of the Economic Development Authority for the City of Shakopee,Minnesota(the"Authority")as follows: Section 1. Authorization; Award of Sale. 1.01. Authorization. The Authority and the City of Shakopee(the"City")have heretofore approved the establishment of its Tax Increment Financing (Economic Development) District No. 16 (the "TIF District")within its Minnesota River Valley Housing and Redevelopment Project No. 1 (the"Project"), and have adopted a tax increment financing plan for the purpose of financing certain improvements within the Project. Pursuant to Minnesota Statutes, Section 469.178, the Authority is authorized to issue and sell its bonds for the purpose of financing a portion of the public development costs of the Project. Such bonds are payable from all or any portion of revenues derived from the TIF District and pledged to the payment of the bonds. The Authority hereby finds and determines that it is in the best interests of the Authority that it issue and sell its Tax Increment Revenue Note, Series 2015 (the "Note"), in the original aggregate principal amount of$1,883,086, for the purpose of financing certain public costs of the Project. 1.02. Business Subsidy. On the date hereof, the Board and the City Council held a joint public hearing relating to the Contract for Private Development (the "Agreement") between the City, the Authority, and Rahr Corporation, a Delaware corporation(the "Owner"), incorporating a business subsidy agreement,and at the public hearing the views of all interested parties were heard. 1.03. Agreement Approved; Issuance, Sale, and Terms of the Note. The Authority hereby approves, and authorizes the President and Executive Director to execute the Agreement in substantially the form on file with the City, subject to modifications that do not alter the substance of the transaction and are approved by such officials, provided that execution of the Agreement by such officials is conclusive evidence of their approval. The Authority hereby delegates to the Executive Director the determination of the date on which the Note is to be delivered, in accordance with Section 3.4 of the Agreement. The Note shall be sold to the Owner, shall be dated the date of delivery thereof, and shall not bear interest. The Authority shall receive in 1 exchange for the sale of the Note the agreement of the Owner to pay Public Development Costs(as defined in the Agreement). Section 2. Form of Note. The Note shall be in substantially the form set forth in Exhibit A, with the blanks to be properly filled in and the principal amount and payment schedule 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 R-1. 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; Payment 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 Authority hereby appoints the City Finance Officer to perform the functions of registrar, transfer agent and paying agent (the "Registrar"). The effect of registration and the rights and duties of the Authority 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. Upon 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, 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. Notwithstanding the foregoing, the Note shall not be transferred to any person other than an affiliate, or other related entity, of the Owner unless the Authority has been provided with an investment letter in a form substantially similar to the investment letter submitted by the Owner or a certificate of the transferor, in a form satisfactory to the Authority, that such transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. The Registrar may 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 Authority. (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 satisfied that the endorsement on such Note or separate instrument of transfer is legally authorized. The Registrar shall incur no 458749v2 JAE SH235-22 2 liability for its refusal, in good faith,to make transfers which it,in its judgment,deems improper or unauthorized. (e) Persons Deemed Owners. The Authority 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 Authority 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,maturity 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 Authority 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 Authority. 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 Executive Director and shall be executed on behalf of the Authority by the signatures of its President and Executive Director. 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 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 Executive Director to the Owner thereof in accordance with the Agreement. Section 4. Security Provisions. 4.01. Pledge. The Authority 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 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 Authority shall maintain a separate and special "Bond Fund"to be used for no purpose other than the payment 458749v2 JAE SH235-22 3 of the principal of the Note. The Authority irrevocably agrees to appropriate to the Bond Fund in each year Available Tax Increment. Any Available Tax Increment remaining in the Bond Fund shall be transferred to the Authority's account for the TIF District upon the payment of all principal to be paid with respect to the Note. Section 5. Certification of Proceedings. 5.01. Certification of Proceedings. The officers of the Authority are hereby authorized and directed to prepare and furnish to the Owner of the Note certified copies of all proceedings and records of the Authority, 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 Authority as to the facts recited therein. Section 6. Effective Date. This resolution shall be effective upon full execution of the Agreement. Adopted this 31St day of March,2015. President Executive Director 458749v2 JAE SH235-22 4 EXHIBIT A FORM OF NOTE UNITED STATE OF AMERICA STATE OF MINNESOTA COUNTY OF SCOTT ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE No. R-1 $ TAX INCREMENT REVENUE NOTE SERIES 2015 Date of Original Issue , 2015 The Economic Development Authority for the City of Shakopee ("Authority") for value received, certifies that it is indebted and hereby promises to pay to Rahr Corporation, a Delaware corporation(the"Owner"),the principal sum of$ 1. Payments. Principal payments ("Payments") shall be paid on August 1, 20_ and each February 1 and August 1 thereafter to and including February 1, 20_("Payment Dates") in the amounts and from the sources set forth in Section 3 herein. This Note shall not accrue interest. Payments are payable by mail to the address of the Owner or such other address as the Owner may designate upon 30 days written notice to the Authority. 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. Interest. This Note shall not accrue interest. 3. Available Tax Increment. Payments on this Note are payable on each Payment Date solely from and in the amount of"Available Tax Increment," which shall mean, on each Payment Date, 97%of the Tax Increment attributable to the Development Property and paid to the Authority by Scott County in the six months preceding the Payment Date, all as such terms are defined in the Contract for Private Development between the City,the Authority, and the Owner, as the developer, dated ,2015 (the"Agreement"). The Authority shall have no obligation to pay principal of this Note on each Payment Date from any source other than Available Tax Increment and the failure of the Authority to pay the entire amount of principal on this Note on any Payment Date shall not constitute a default A-1 hereunder as long as the Authority pays principal hereon to the extent of Available Tax Increment. The Authority shall have no obligation to pay the unpaid balance of principal that may remain after the final Payment on February 1,20 . 4. Default. If on any Payment Date there has occurred and is continuing any Event of Default under the Agreement, the Authority 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,on the next Payment Date after the Event of Default is cured. If the Event of Default is not timely cured,the Authority may terminate this Note by written notice to the Owner in accordance with the Agreement. 5. Optional Prepayment. The principal sum payable under this Note is prepayable in whole or in part at any time by the Authority without premium or penalty. No partial prepayment shall affect the amount or timing of any other regular payment otherwise required to be made under this Note. 6. Nature of Obligation. This Note is the sole note of an issue in the total principal amount of $1,883,086, issued to aid in financing certain public development costs and administrative costs of a Project undertaken by the Authority pursuant to Minnesota Statutes, Sections 469.001 through 469.047, and is issued pursuant to an authorizing resolution (the "Resolution") duly adopted by the Authority on March 31, 2015, and pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174 through 469.1794. This Note is a limited obligation of the Authority which is payable solely from Available Tax Increment pledged to the payment hereof under the Resolution. This Note shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the Authority. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of 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. Estimates of Available Tax Increment. Any estimates of Tax Increment prepared by the Authority, the City or their respective financial advisors in connection with the Available Tax Increment and the Agreement are for the benefit of the Authority and the City only, and are not intended as representations on which the Developer may rely. THE AUTHORITY AND THE CITY MAKE NO REPRESENTATIONS OR WARRANTIES THAT THE AVAILABLE TAX INCREMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF THIS NO'T'E. 8. Registration and Transfer. This Note is issuable only as a fully registered note without coupons. As provided in the Resolution, and subject to certain limitations set forth therein, this Note is transferable upon the books of the Authority kept for that purpose at the principal office of the City Finance Officer, by the Owner hereof in person or by such Owner's attorney duly authorized in writing, upon surrender of this Note together with a written instrument of transfer 458749v2 JAE 5H235-22 2 satisfactory to the Authority, duly executed by the Owner. Upon such transfer or exchange and the payment by the Owner of any tax, fee, or governmental charge required to be paid by the Authority with respect to such transfer or exchange, there will be issued in the name of the transferee a new Note of the same aggregate principal amount and maturing on the same dates. This Note shall not be transferred to any person other than an affiliate, or other related entity, of the Owner, unless the Authority has been provided with an investment letter in a form substantially similar to the investment letter submitted by the Owner or a certificate of the transferor, in a form satisfactory to the Authority,that such transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. 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 Authority 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 Board of Commissioners of the Economic Development Authority for the City of Shakopee have caused this Note to be executed with the manual signatures of its President and Executive Director,all as of the Date of Original Issue specified above. ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE Executive Director President 458749v2 JAE SH235-22 3 REGISTRATION PROVISIONS The ownership of the unpaid balance of the within Note is registered in the bond register of the City , in the name of the person last listed below. Signature of Date of Registration Registered Owner City Finance Officer Rahr Corporation Federal ID# 458749v2 JAE SH235-22 4 ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE RESOLUTION NO. 15-5 RESOLUTION APPROVING TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING (ECONOMIC DEVELOPMENT) DISTRICT NO. 16 AND A MODIFIED REDEVELOPMENT PLAN FOR THE MINNESOTA RIVER VALLEY HOUSING AND REDEVELOPMENT PROJECT NO. 1 WHEREAS,the City of Shakopee,Minnesota(the"City")has previously established its Minnesota River Valley Housing and Redevelopment Project No. 1 (the "Project") pursuant to Minnesota Statutes, Sections 469.001 to 469.047,as amended(the"HRA Act"); and WHEREAS, within the Project the City has created certain tax increment financing districts pursuant to Minnesota Statutes,Sections 469.174 to 469.1794,as amended(the"TIF Act");and WHEREAS,the Project is now administered by the Economic Development Authority for the City of Shakopee(the"Authority");and WHEREAS, the Authority has determined to modify the Redevelopment Plan for the Project(the "Redevelopment Plan")and approve a new tax increment financing plan(the"TIF Plan")for Tax Increment Financing(Economic Development)District No. 16(the"TIF District"),all as described in a plan document presented to this Board on this date; and WHEREAS,by resolution approved by the City Planning Commission on March 5,2015,the City Planning Commission found that the modified Redevelopment Plan and the 1'Lh Plan conform to the general plan for the development of the City as a whole; and WHEREAS,this Board of Commissioners(the"Board")has reviewed the contents of the modified Redevelopment Plan TIP' Plan, including the modification to the Redevelopment Plan and on this date conducted a duly noticed public hearing thereon,at which the views of all interested parties were heard. NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Economic Development Authority for the City of Shakopee that: 1. The modified Redevelopment Plan and the TIF Plan for the TIF District are hereby approved. 2. The Board hereby makes all the findings set forth in the Redevelopment Plan and the TIF Plan,which documents are incorporated herein by reference. 3. The Board hereby transmits the TIF Plan to the City Council of the City and recommends that the City Council of the City adopt the TIF Plan. 4. Upon approval of the TIF Plan by the City Council of the City, Authority staff and consultants are authorized to take all actions necessary to implement the TIF Plan. 458737v1 JAE SH235-22 Approved by the Board of Commissioners of the Economic Development Authority for the City of Shakopee this 31s1 day of March,2015. President ATTEST: Executive Director 458737v1 JAE SH235-22 2