The URL can be used to link to this page

Home My WebLink About4. Joint Council/EDA Public Hearing on Establishing Tax Increment Financing District No. 14 and Adoption of a Tax Increment Financing Plan for the Proposed TIF District-Council Res. No 7191; EDA Res. No 12-2 and 12-3 CITY OF SHAKOPEE Memorandum CASE NO.: 12003 TO: Honorable Mayor and City Council Economic Development Authority Maxk McNeill, City Administrator/EDA Executive Director FROM: R. Michael Leek, Community Development Director SUBJECT: Meeting Process for Apri124, 2012 TIF Public Hearing on the J&J Minneapolis, L.L.C./SanMar Project MEETING DATE: Apri124, 2012 DESCRIPTION OF PROCESS FOR CONDUCTING THE PUBLIC HEARING: On Tuesday, April 24, 2012 the City Council and EDA will convene so that they are both in session, and can each in turn open, conduct and close a single public hearing on the TIF Plan for TIF District 14 and the business subsidy provided pursuant to the Contract for Private Development between the City, the EDA, and J&J/SanMar. Once the City Council and EDA each close the public hearing, first the City Council, and then the EDA will move and vote on the specific resolutions provided for each of them in the cover report. 0 � R. Michael Leek Community Development Director \\KGDC01\Users�ae\SanMar rpt mtg process.doc 1 �� CITY OF SHAKOPEE Memorandum CASE NO.: 12003 TO: ' Honorable Mayor and City Council Economic Development Authority(EDA) Mark McNeill, City Administrator/EDA Executive Director FROM: R. Michael Leek, Community Development Director SUBJECT: Consideration of Proposed J&J/SanMar Tax Increment Financing(TIF) Plan and Contract for Private Development MEETING DATE: Apri124, 2012 � INTRODUCTION: The City Council and EDA Board are asked to open, conduct, and close the public hearing on the TIF Plan for TIF District#14 within the River Valley Housing and Redevelopment Project No. 1 (J&J/SanMar Project)and the proposed business subsidy to be granted to J&J Minneapolis,L.L.C. At the conclusion of the public hearing and the discussion,the City Council and EDA are asked to consider approval of the above-named TIF plan and Contract for Private Development(CPD)for the J&J/SanMar project(which includes a business subsidy agreement). The EDA is also asked to approve the TIF Plan and Contract for Private Development(CPD)for TIF District#14 within the River Valley Housing and Redevelopment Project No. 1 (J&J/SanMar Project)and the CPD (which includes a business subsidy agreement). DISCUSSION: � � The proposed TIF district is an economic development TIF district, and so may, and would,remain in existence for up to nine(9)years(i.e.the first year of increment plus eight(8)years). Under the TIF plan at least 85%of the building is to be used for warehousing and distxibution. Estimated tax increment revenues and uses are found at pages 5 and 6 of the TIF plan. The TIF Plan contains the analysis regarding whether the project would occur without assistance in the form of TIF. In that regard, it is significant to note that the properry was originally platted for development in 2001,and has remained vacant to date. On April 12, 2012 the Planning Commission(the Commission)met to determine whether the use is consistent with the City of Shakopee 2030 Comprehensive Plan. The Commission approved Resolution PC12-003 finding that the proposed project and TIF Plan are consistent with the adopted City of Shakopee 2030 Comprehensive Plan. . On April 18,2012,the Shakopee Economic Development Advisory Committee(EDAC) discussed the proposed project and TIF Plan. At the conclusion of their discussion,the EDAC voted 6-0 to recommend to the City Council and EDA that after it conducts the public hearing,they approve the proposed TIF Plan and CPD as specifically outlined below. H:\CC\2012\4-24-12\SanMar rpt_04242012_�nal.doc 1 The following documents are attached for the Council's and EDA's information; • Draft TIF Plan for TIF District No. 14; • Contract for Private Development for TIF District No. 14; � • City Council Resolution No. 7191 approving the TIF Plan and CPD ; • EDA Resolution No. 12-2 approving the TIF Plan; • EDA Resolution NO. 12-3 approving the CPD and issuance of the TIF note; • Contract for Private Development; • Planning Commission Resolution No. PC12-003 RELATIONSHIP TO CITY GOALS: ' The proposed project and requested actions relative to the TIF Plan and CPD relate to the following City Goals; B. Positively manage the challenges and opportunities presented by growth,development and � change. D. Maintain,improve and create strong partnerships with other public and private sector entities. ACTIONS REQUESTED: City Council: After opening the public hearing, taking testimony, and closing the public hearing,the City Council is asked to approve Resolution No. 7191. By this action,the City Council would approve the TIF Plan for TIF District#14 within River Valley Housing and Redevelopment District No. 1 (J&J/SanMar Project), as well as the contract for private development. EDA: After opening the public hearing, taking testimony, and closing the public hearing,the EDA is asked to take the following actions; 1. Approve Resolution No. 12-2 approving the TIF Plan; 2. Approve Resolution No. 12-3 approving the CPD and issuance of the TIF note. By these actions, the EDA would approve a)the TIF Plan for TIF District#14 within River Valley Housing and Redevelopment District N. 1 (J&J/SanMar Project); b)the CPD; and c) ` issuance of the TIF note. R. Michael Leek Community Development Director H:\CC\2012\4-24-12\SanMar rpt_04242012_final.doc 2 Shakopee, Minnesota Shakopee Economic Development Authority � � . Draft Tax Increment Financing Plan ., _ � �� for � �� . . �� . � Tax Increment Financing (Economrc�Development) � District No. 14 �� . �� Within � �% . � ,�. y�,;,,,�a... '4� ��c ,;�. . ,+� • � . River Valley Housing tand .Rede�elopment Pro�ect No. 1 �_:�. �� ., (J&J SanMar Project),�` .r,� �� x. � . Draft.�.April 3, 2012 �� :` Prepared by: � SPRINGSTED INCORPORATED 380 Jackson Street, Suite 300 St. Paul, MN 55101-2887 (651) 223-3000 WWW.SPRINGSTED.COM TABLE OF CONTENTS � Section Pa e s A, Definitions....................................................................................................................... 1 B. Statutory Authorization....................................................................................................... 1 C, Statement of Neetl and Public Purpose...................................................1.-............................. 1 D. Statement of Objectives...........................:.......................................:�:.�......................... 1 �,.;: � E. Designation of Tax Increment Financing District as an Economic Development�Distnct...................... 2 G. Property to be includetl in the TIF District....................................:�...�.:�'::............................. 3 H. Property to be Acquired in the TIF District........................... � � � �......................... 3 ..... ........ I. Specific Development Expected to Occur Within the TIF Districf�� 3 ............... ... ................... . J. Findings and Need for Tax Increment Financing............::�..:!'�........................�'�,.............. 4 K. Estimated Public Costs.......................................::'�..:�..................................�..�:�.......... 5 L. Estimated Sources of Revenue ..........................� '�.... ......� ....��..... 6 , ......... M. Estimated Amount of Bonded Indebtedness..............� � �.:� ............................. 6 N. Original Net Tax Capacity ................ �,:.... �'...... .�:� :.�..�. ....................................... 6 , ............ 0. Original Tax Capacity Rate............... � °�°�' ...,............ ..: ........................................ 7 �.�;`�, . . P. Projected Retained Capturetl Net Tax Capacify and_Projectetl Tax crement................................. 7 Q. Use of Tax Increment...................... ......�"'�..��......��::'�- ....�`"� ,:'�:................................ 8 R. Excess Tax Increment :^^�..............� �..... �..�:`� � .� 9 •... ,� . <,.. S. T a x I n c r e m e n t P o o l i n a n d t h e F i v e Y e a r R u l e � �``�..:�... .......................................... 9 T. Limitation on Administrative Expen s .� �..�. ....... ................................................... 10 U. Limitation on Prope�ty`Not Subject to�Improvements�Four Year Rule........................................... 10 V. Estimated Impact on Oth r Taxing urisdictions .....� �....................................................... 10 � W. Prior Planned-Improve ents.. �;�'.�::"� .....�.�,.�......................................................... 11 X. Development Agreements�:. ��........................................................................................ 11 `� �" �'" � � �., Y. Assessment Agreements...... .. ................................................................................. 11 .,;, � �. �•:�. Z. �Modifications of the Tax Increment Financing Plan.................................................................... 12 � �, � ,� � � AA. Admirnstration of the Tax Increment Financing Plan ..................................................:............... 12 � -.�. �,. AB, Financial Reporting and Disclosure Requirements .................................................................... 13 � �1 �� .�:�. Map of the Tax Increment Financing District....................................................................................... EXHIBIT I Assumptions Report ,.......�`�............................................................................................................ EXHIBIT II Projected Tax Increment Report......................................................................................................... EXHIBIT III . Estimated Impact on Other Taxing Jurisdictions Report...................................................................... EXHIBIT IV Market Value Analysis Report.................................:........................................................................... EXHIBIT V City of Shakopee and Shakopee Economic Deve/opment Authority, Minnesota Section A Definitions The terms defined in this section have the meanings given herein, unless the conte�in which they are used indicates a different meaning: "Authoritv" means the Shakopee Economic Development Authority. "Citv" means the City of Shakopee, Minnesota;also referred to as a"Municipalitv". • "Citv Council"means the City Council of the City;also referred to as the"Governinq Bodv", "Countv"means Scott County, Minnesota. '� ��.' .�;,. "Project" means the Minnesota River Valley Housing antl Redevelopment-Pro�ect�No. 1.; ... � �-�,, "Project Area" means the property within the Project, as described in the Project Plan antl as shown in Exhibit I attached. p tl �� Proiect Plan means the Redevelopment Plan for the Project,as modified from�me to time. ��. ,� "School District"means Independent School District No.720, Minnesota.�'.�°' '�� :`� "State"means the State of Minnesota '� � ' � N: '�.� .�.,.:,� ��- "TIF Act"means Minnesota Statutes,Sections 469.174'through�469.1799,both�inclusive. `� '�''"�'� � � "TIF District"means Tax Increment�Financing (Ec��ic Developmept)�Distn'�ct�14. N H �)5`:.5�`^�v� , �i��p L TIF Plan means the tax increment financing�plan for the TIF�District(this�do�c��ument). � `��" �` a � � � ,e� �� Section B Statuto.ry Authorization; ��.,�,�' �°' � � � .�`��`�:..- �,. The Author'ity;with�:approval of�,the City Council, is�aut�ized to establish TIF District No. 14 and this TIF Plan pursuant to the Acfiand.the�TlF Act:= �, �� :`.:; '� :; Section C�,,t Statement of�Need and Rub lic Purpose � �. � The Authority�has�determined that�c�ditions exist within the Project Area which have prevented further development of land by private enterprise. I�has,�been fountl that the Project Area is potentially more useful and valuable for contributing to the public health;safety and welfare than has been realized under existing development. ��°� The development of these<pa�cels is not attainable in the foreseeable future without the intervention of the Authority in the private development process. The Authority has prepared the Project Plan, which provitles for the elimination of these conditions,thereby making the land useful and valuable for contributing to the public health,safety and welfare, Section D Statement of Objectives The objectives outlined in Section 1.4 of the Project Plan,as amended,are incorporated herein by reference. SPRINGSTED Page 1 City of Shakopee and Shakopee Economic Development Authority, Minnesota Section E Designation of Tax Increment Financing District as an Economic Development District � Economic development districts are a type of tax increment financing district which consist of any project, or portions of a project,which the City finds to be in the public interest because; (1) it will discourage commerce, industry, or manufacturing from moving their operations to another state or municipality; � (2) it will result in increasetl employment in the state;or �� (3) it will result in preservation and enhancement of the tax base"�of the state. • ��>s�. " The TIF District qualifies as an economic development district in that�,the,proposetl development described in this TIF Plan (see Section I) meets the criteria listed above in (2) and (3)�. :Without establishment of the TIF District, the proposetl development would not occur within the City. Th�proposed development will also result in increased employment and enhancement of the tax base in both the City and�ttie State � �.� .�.. ��. Tax increments from an economic development district must be used to�provide improvements;�loans, subsidies, grants, interest rate subsidies, or other assistance in which at�least 85%`of the square footage of the facilities to be constructed are used for any of the following purposes: �� "'''�°�..... �'"� �� (1) manufacturing, production,or processing,of tangible personal property; ��,:'��'`"�,µ_''�.� �'`�,��''�. (2) warehousing,storage antl distribution of tangible'personal p%y,excluding retail sales; ��:, ry�� 'g�� ,_ (3) research and development�related to the,activities listed.in(�:)or(2)above; �,�,r `,� � :'�-�' w�` ' (4) telemarkefing if that activity is the exclusive use of the property; a� ,s�,�` � � �; .� � � � . (5) tounsmtfacilities(see M.S. Section 469.174,Subtl.22); � .:� - �-�..,0,ro �'� (6),�,�'°s°qualifietl border etail-facili�ee M.S..Section 469.176, Subd.4c);or ,.��-:��-��,� � � ��(7)�'' space necessary for antl�related to the activities listetl in(1)through(6)above. � � . � .:� �,.� . °� '� �, �<.:'��., In atldition to the uses specified above, tax increments may also be used to provitle assistance for up to 15,000 square feet�of any separately owned commercial facility located within a"small city"(see M.S. Section 469.176, Subd. 4c), or to pay�for,.excessive sitelpreparation and public improvement costs in a district containing bedrock soils conditions in 80°/a or more of its acreage(see M.S.Section 469.176, Subd.4c). �'�* � ,� Tax increments from the TIF Distnct will be used to provide financial assistance to the proposed development (see Section I), in which ove�85%of the square footage of the facilities to be constructed will be used for manufacturing, warehousing,or research or other purposes as listed in(1),(2), &(3)above. Section F Duration of the TIF District Economic development districts may remain in existence 8 years from the date of receipt by the Authority of the first tax increment. The Authority anticipates that the TIF District will remain in existence for a period of six years, however the Authority retains the right for the district to be in place the maximum duration allowed by law(projected to be through the year 2022). Modifications of this plan (see Section AA) shall not extend these limitations. All tax increments from taxes payable in the year the TIF District is decertified shall be paitl to the Authority. SPRINGSTED Page 2 City of Shakopee and Shakopee Economic Development Authority, Minnesota Section G Property to be Included in ihe TIF District The TIF District is an approximate 44,66 acre area of land located within the Project Area. A map showing the location of the TIF District is shown in Exhibit I. •The boundaries and area encompassed by the TIF District are described below: Parcel ID Number Leqal Descriqtion �.�.,.� . 27-298-002-0 That part of L;ot 2; Biock 1, OPUS MVW, accortling to ,�_., _,; �.�, the recor.ded�plat.ther,of, Scott County, Minnesota, whichf,lies�,easterly`�o,f,�a,�line described as follows: . commencing at the corne,r of�saitl Lot 2; thence North 89�degrees 49 Minutes 19�seconds East, assumetl �beanng along the north line of�seid.Lot 2 a distance of 744.71 feet to the point of beginn ng�of the line to be described; thence South 0 degress 10 minutes 41 �`�seconds�,East�a'�distance of 1294.77 feet to the south hne of sait Lot 2 and said line there terminating. � ,�� 27-406-001-0 �� Lot 1, Block;1., OPUS MVW 2�d Adtlition, according to � �.,��^�the recotletl,plat�therof, Scott County, Minnesota �= �'�. � � � .." �.. �:� The area encompassed by the TIF District shall also include all"street or utility right-of-ways located upon or adjacent to the property tlescribed above'"`�'°,,,�°'*+,� � �� ;� ' ,.�`b � �;� �� Section H Property�to be Acquired�'the TIF Dist�ct �� ' .��. �:� The Authority may acquire and sell�,any or-all,of the prope�ty,,located within the TIF District; however, the Authority does not ant�cipate�acquiring any such;property at tfiis•time,;other than for roatl right of way or utility purposes. ..�,.••-"-�,. °�r.� , °� ��,y }i;>" . �. ,"�9 � ,� ,F�: Section I�' Specific Development�Expected to Occur Within the TIF District `�._ �e � � ��. The proposetl development is expected to consist of a 580,000 square foot warehouse and tlistribution facility. At least 85%of'the;facility will be used for warehousing and tlistribution, with less than 15%available for o�ce space. The tlevelopment will�result in mcreased employment within the City, in compliance with statutory requirements. It is anticipated tax in rc ement will be�used to flnance a portion of the site improvement and infrastructure costs incurred in the development of�the site`;"�In addition, the Authority anticipates using available tax increment for relatetl administrative expenses,'`pooling for TIF-eligible improvements outside of the boundaries of the district but within the Project Area for eligible purposes set forth in Minn. Stat. section 469,176 subd. 4c., and any other eligible expenditures associated with the development of the site, Construction of the facility is projected to occur from May of 2012 through May of 2013. The project is expected to be fully constructed in 2013,and be 100%assess and on the tax rolls as of January 2,2014 for taxes payable in 2015, At the time this document was preparetl there were no signed construction contracts with regards to the above described development. SPRINGSTED Page 3 City of Shakopee and Shakopee Economic Deve/opment Authority, Minnesota Section J Findings and Need for Tax Increment Financing In establishing the TIF District,the Authority makes,the following findings: (1) The TIF District qualifies as an economic development district; See Section E of this document for the reasons and facts supporting this finding. (2) The proposed development, in the opinion of the Authority, would nof�a onably be expected to occur solely through private investment within the reasonably foreseeable future, and the increased market value of the site that could reasonably be expectetl to occur witfiout�the use of tax increment would be less than the increase in market value estimated to resu`It fro`m. the proposed development after subtracting the present value of the projectetl tax increments for the maximum duration of the TIF District permitted by the TIF Plan. Factual basis �,m� � Proposed deve%pment not expected to occur. �•,-� � The proposed development consists of an approximately 580,000 square foot warehouse and distribution facility. The developer of the site�has��submitted inforrnation to the Authority demonstrating that the development of this site is not financiall�y�f�si6le.w,i�hout the assistance provided in this TIF Plan. �� The Authority has determined that the proposed-.development wguld not occur but for the financial assistance provided in this,.�TIF Plan because o�the�,Y,in,c��eased costs relatetl to the acquisition and development of the site. Due`to the higti'�cost�,of site improvements and infrastructure incurred by the developer,the de�velopme t woald not occur w�thout�fhe financial a`ssistance provitled by the Authority, as it would not be economically feasible without finan,�cial assistance, A review of the Developer's operating pro forma indicates development of the site would not be feasible, and woultl not occur, but-for the use of tax increment to finance�a portion�of the._costs rela'ted #o site improvements and infrastructure costs. The Authority finds the�use�of tax increment necessary�,to finance the additional improvements such as site improvements�and infrast�uctu e costs tfiat�curren�ly do not allow development on the property. The Authority�anticipates providing financial assistance on a pay-as-you-go basis. �;,t � � � , �� No higher ma�ket value expected.•� Th proposed develop t in th p�n of the Authority,woultl not reasonably be expectetl to occur solely throagh'private investment within the reasonably foreseeable future, antl the increased market value of the site that.�could reasonably be expected to occur without the use of tax increment would be less than the increase in�market value estimated to result from the proposed development after subtracting the present value of the projected tax'increments for the maximum duration of the TIF District permitted by the TIF Plan; The proposed de el p ent project shall consist of an approximately 580,000 square foot warehouse and distribution facility antl requires substantial tlevelopment costs including site improvements and infrastructure. The increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the TIF District permitted by the TIF Plan, Without improvements the Authority has no reason to expect that significant development would occur without assistance similar to that provided in this plan. For the same reasons that the desired development described above is not feasible without tax increment assistance,the Authority believes that no alternative development is likely to occur without similar assistance. Almost any other development of the site would require the same improvements —site improvements and infrastructure— unless the development was significantly smaller, Finally, the Authority SPRINGSTED Page 4 City of Shakopee and Shakopee Economic Development Authority, Minnesota believes that the desired project represents the maximum tlevelopment density available to the project site. Therefore, the Authority concludes as follows: The proposed development, in the opinion of the Authority, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future. , To summarize the basis for the Authority's findings regartling alternative market value, in accordance with Minnesota Statutes, Section 469.175, Subd.3(d),the Authority makes the following determinations: � a. The Authority's estimate of the amount by which the market value of the site will increase without the use of tax increment financing is $0 (for the reasons described above), except some unknown amount of appreciation. �� °` :y4:�. � ,T.�. b. If the proposed development to be assisted with�tax increment occurs in the District, the total increase in market value would be approximately$28;551�497, including the value of the building(See Exhibit V), �� c. The present value of tax increments from the District for the,maximum duration of the district permitted by the TIF Plan is estimated to be$2,253,411 (See Exhibit:V). . � f� �� ' d. Even if some development other than��th�pro�,posed development were to occur, the Authority finds that no alternative would occu�that'would produce a market value increase greater than $26,298,096 (the amount'�in clause b less�the'amount in clause c) without tax increment assistance. ��. ��:�. (3) The TIF Plan would afford maximur� opportunify;consistent with the sound needs of the Authority as a whole,for development of the Project Area by private enterp�ise. � � � �� , � ��_. �� Factual basis: T�he p�oposed,development is�the construction of a warehouse and distribution facility to be constructed in�the�Pro�ect Area that�is expected to create approximately 150 new jobs in the City, while retaining these jobs in the State� plus create substantial new tax base for the City and the State. The development clearly meets the�Authority's�ec�onomic development goals in terms of land use,job retention, and wage levels. ��' T�,.�-��.�,, ��``�,.,�'``��°�, (4)„ �o�The TIF�PIan nforms to general plans for development of the City as a whole. � �.� k � F•.a�al basis: Tfie,�City�Pl�i g pCommission has determined that the tlevelopment proposed in the TIF Plan conforms to the City.co�mprehen�sive plan, �-�'� Section.K` � Estimated�Public Costs �:: ��°� The estimatetl public costs�of the�TlF District are listed below. Such costs are eligible for reimbursement from tax increments of the TIF District, Land/building acquisition,site improvements/infrastructure costs, installation of public utilities,and other eligible expenses $2,095,577 Bond principal payments 0 Bond interest payments 0 Loan Interest payments . 682,346 Administrative expenses 308,660 Capitalized interest 0 Total 3 086 583 SPRINGSTED Page 5 City of Shakopee and Shakopee Economic Development Authority, Minnesota The Authority anticipates using tax increment to the extent available to finance land acquisition, site improvements and infrastructure costs, related administrative expenses,antl other TIF-eligible expenditures. The Authority reserves the right to atlministratively adjust the amount of any of the items listed above or to incorporate additional eligible items, so long as the total estimated public cost ($3,086,583) is not increased. The Authority also reserves the right to fund any of the itlentified costs with any other legally available revenues, but anticipates that such costs will be primarily financed with tax increments. Section L Estimated Sources of Revenue . ��V"�, Tax increment revenue $3 086,583� Interest on invested funds �0 Bond proceeds 0 � Loan proceeds , � 0 r� Real estate sales ,� 0 -� �� Special assessments .�� 0 Rentllease revenue ' �,� 0 Grants � � 0 ��. Total ��< 3 086 583 � �� "� �..� The Authority anticipates providing-financial assistan�e for land acquisi_,t�ion;site improvements and infrastructure,and other TIF eligible expenses to�ttie prop�e'd developmgnt�on a;pay-as-you=go�basis. As tax increments are collected from the TIF District in future�years, a�poction of these taxes will be used by the Authority to reimburse the developer/owner for public costs incurred(seerSection K)� �" ,� � �a� � � The Authority reserves the.�ight,to finan e any�or all�public costs of the TIF District using pay-as-you-go assistance, intemal funding,_general obligation�or revenue�debt (referred�to together as °TIF Bonds"), or any other financing mechanism,�a'uthorizetl��by Iaw�The�Authority also reserv�es the right to use other sources of revenue legally applicable'to the'Project.Area�to pay�for such costs including, but not limited to,special assessments, utility revenues, federal'or sCate funds,and'investment income�. � : . �� %'� Section M Estimated Amount of Bonded Indebtedness �. �.�� • The City currently�plans to issue bonds only in the form of one or more pay-as-you go revenue notes, but reserves the right to issue bonds�n�any�fo�m�;�inclutling without limitation any interfund loan with interest not to exceed the maximum permitted under Section 469.178, subd. 7 of the TIF Act. Such bonds shall be issued in an amount not to exceetl$3,086,583(total estimated public cost). Section N Original Net Tax Capacity The County Auditor shall certify the original net tax capacity of the TIF District. This value will be equal to the total net tax capacity of all property in the TIF District as certified by the State Commissioner of Revenue. For districts certified between January 1 and June 30, inclusive, this value is based on the previous assessment year. For tlistricts certified between July 1 and December 31, inclusive,this value is based on the current assessment year. The Authority intends to file the request for certification prior to July 1, 2012. Therefore, the orginal net tax capacity will be the net tax capacity as of of January 2,2011. SPRINGSTED . Page 6 City of Shakopee and Shakopee Economic Deve/opment Authority, Minnesota � The Estimatetl Market Value of all property within the TIF District as of January 2, 2011,for taxes payable in 2012, is $3,500,000 and the estimated tax capacity is$68,500,which is estimated to be the original net tax capacity of the TIF District. Each year the County Auditor shall certify the amount that the original net tax capacity has increased or decreased as a result of: (1) changes in the tax-exempt status of property; (2) reductions or enlargements of the geographic area of the TIF District;- (3) changes due to stipulation agreements or abatements;or (4) changes in property classification rates, Section 0 Original Tax Capacity Rate � � The County Auditor shall also certify the original tax capacit r`ate of the TIF�Distcict, This rate shall be the sum of all local tax rates that apply to property in the TIF D'istrict. This�rate�shall�be for the same taxes payable year as the original net tax capacity. '��"� In future years,the amount of tax increment gepe�r,ated`by.thAe TIF Distnct will�be calculated using the lesser of(a)the sum of the current local tax rates at that time or(b)the original tax capacity�rate of the TIF District. �� , As noted in Section N, the Authority mtends to file the TIF D�stnct,for�certificatio prior to July 1, 2012;therefore,the Original Local Tax Rate will be the�rate th`at applies for,taxes payable in 2012.,� �� :� � �� The sum of all local tax�ates,that apply to�property in the.TlF District,for taxes levied in 2011 and payable in 2012 is 116.298%as shown below.;� �-:� '�; �,,� � ��, _.�,-h., -� � �_ �""�. �,,:� 2011/2012 �Taxing Juri diction°` '°``�.�' Local Tax Rate ,�'� b ��..�.. _ �"�. ?'�, �� City of Shakopee�� 36.6550% � � Scott Count 38.802/o Y :�. � ISD#720 35.512% ' �` �Other �.�� • 5.329% .,� Total� `� 116.298% �� Section P Projected Retained Captured Net Tax Capacity and Projected'Tax Increment The Authority anticipates that the warehouse antl distribution facility will begin construction in 2012 and will be completetl by December 31, 2013, creating a partial tax capacity for TIF District No. 14 of$306,450 as of January 2, 2013,and a completed total tax capacity of$520,466 as of January 2,2014. The captured tax capacity as of January 2, 2013 for taxes payable 2014 is estimatetl to be $146,756 and the first year of tax increment is estimated to be $170,674. The first full year of captured tax capacity is projected for taxes payable 2015, with captured tax capacity of$278,751, and the first full year of tax increment estimated to be$324,182. A complete schetlule of estimated tax increment from the TIF District is shown in Exhibit III. SPRINGSTED Page 7 City of Shakopee and Shakopee Economic Deve/opment Authority, Minnesota The estimates shown in this TIF plan assume that commercial class rates remain at 1.5% of the estimated market value up to $150,000 and 2.0%of the estimated market value over$150,000, and assume 3% annual increases in market values. Each year the County Auditor shall determine the current net tax capacity of all property in the TIF District. To the extent that this total exceeds the original net tax capacity, the difference shall be known as the captured net tax capacity of the TIF District, In accordance with the TIF act,fiscal disparity contributions for this economic development district wifi be made from within the district, • The County Auditor shall certify to the Authority the amount of captured net tax c`��p city each year. The Authority may choose to retain any or all of this amount. It is the Authority's intention to retain 100%of the captured net tax capacity of the TIF District. Such amount shall be known as the retained�cap�tured�net tax capacity of the TIF District, Exhibit II gives a listing of the various information and assumptions u ed in preparing"a�number of the exhibits contained in this TIF Plan, including Exhibit III which shows'�the�rojected tax mcrement generatetl over the anticipated life of the TIF District. ' Section Q Use of Tax Increment Each year the County Treasurer shall deduct 0:36%,of the annual tax mcr�nt generated by the TIF District and pay such amount to the State's General Fund. Such�amounts will be appropriated to the State Auditor for the cost of financial reporting and auditing of tax increme`nt financing information t}iroughout the state. Exhibit III shows the projected deduction for this purpose over the anticipated life of the TIF�,District:�,� ��.. ��. . ,��":`�,�''�.. The City has determined that it-will use 100%of the remaming:.tax incremen�,t generated by the TIF District for any of the following purposes � �� .�'�� :� (1) pay for,the estimated publie costs of the 1'IF District (see Section K) and County atlministrative costs associated with the TIF District(see�Section T); � .�, �.�,, ;..x � 't�' (2) � u pay�principal�antl ir�teres"on o or more pay—go—notes, tax increment bonds or other bonds � -��issued to finance�the estimated public costs of the TIF District; ��:F�' '�'- � '�, � � �: �, � ry��,, (3) � accumulate�a reserve�,securing the payment of tax increment bonds or other bonds issued to �- ��finance the estimated pu61ic�costs of the TIF District; �, �=� (4) :-r pay all or a portion�of the county road costs as may be requiretl by the County Board under M.S. Section 469175;'Subdivision 1 a;or (5) retum e ees`s taz ncrements to the County Auditor for redistribution to the City, County and School District� Tax increments from property located in one county must be expended for the direct and primary benefit of a project located within that county, unless the county board involved waives this requirement. Tax increments shall not be used to circumvent levy limitations applicable to the City. Tax increment shall not be used to finance the acquisition, construction, renovation, operation, or maintenance of a building to be used primarily and regularly for conducting the business of a municipality,county,school district,or any other local unit of government or the State or federal government, Further, tax increments may not be used to finance: a commons area used as a public park;facilities used for social or recreational purposes (whether public or private); or publicly-owned facilities used for conference purposes; providetl that tax increment may be used for a SPRINGSTED Page 8 City of Shakopee and Shakopee Economic Deve/opment Authority, Minnesota privately owned conference facility, and for parking structures whether public or privately owned and whether or not they are ancillary to one of the othenNise prohibited uses describetl above. If there exists any type of agreement or arrangement providing for the developer,or other beneficiary of assistance,to repay all or a portion of the assistance that was paid or financetl with tax increments,such payments shall be subject to all of the restrictions imposed on the use of tax increments, Assistance includes sale of property at less than the cost of acquisition or fair market value, grants, grountl or other leases at less then fair market rent, interest rate subsidies, utility service connections, roads, or dther similar assistance that would otherwise be paitl for by the developer or beneficiary. Section R Excess Tax Increment � ��'�. . In any year in which the tax increments from the TIF District exceed the>amount�necessary to pay the estimated public costs authorized by the TIF Plan,the Authority shall use the ex ess fax increments to: � �:� �, ;.. (1) prepay any outstanding tax increment bonds, ,� ��-� ' � (2) discharge the pledge of tax increments tfier�eof; �� .'�.. (3) pay amounts into an escrow account dedicated�to the payment of the tax increment bonds;or �� (4) refurn excess tax increments t�County Autlitor for`�tlistribution to the City, County and School District. The County Audito��iust repo�t�to„the Co missioner of Education the amount of any excess tax increment redistributed'to the School�District within 30 days of such redistribution. ��`�" �° �` `�� pr Section S Tax Increment-�nd the Five YeanRule � 9 � .� At least 80%of the tax'i�ments from the�'T�IF District must be expended on activities within the district or to pay for bonds used to finance the;estimated public costs of the TIF District (see Section E for additional restrictions). No more than 20%of the tax increments�may-be�spent omcoststoutside of the TIF District but within the bountlaries of the Project Area;exeept,to pay debt service on creditenhanced bonds. All administrative expenses are consitlered to � have been spent�outside of the TIF,District. Tax increments are considered to have been spent within the TIF District if such,amounts are: � '''� �` .��, �� . �(1) actually paitl to a�third part�y for activities performed within the TIF District within five years after certification of the district; � . (2) �used to pay bonds t at were issued and sold to a third party, the proceeds of which are reasonably expected on�the date of issuance to be spent within the later of the five-year period or a reasonable temporary�period or are deposited in a reasonably requiretl reserve or replacement fund. (3) used to ma'ke payments or reimbursements to a third party under bintling contracts for activities performed within the TIF District, which were entered into within five years after certification of the district;or (4) used to reimburse a party for payment of eligible costs(including interest)incurred within five years • from certification of the district. Beginning with the sixth year following certification of the TIF District,at least 80%of the tax increments must be used to pay outstantling bonds or make contractual payments obligatetl within the first five years. When outstanding bonds have been defeased and sufficient money has been set aside to pay for such contractual obligations,the TIF District must be decertifietl. . � SPRINGSTED Page 9 City of Shakopee and Shakopee Economic Deve/opment Authority, Minnesota The Authority does not expect that allowable pooling expenditures will be made outside of the TIF District but within the Project Area (along with allowable administrative expenses), but such expenditures are expressly authorized in this TIF Plan. Section T Limitation on Administrative Expenses Administrative expenses are defined as all costs of the Authority other than: (1) amounts paid for the purchase of lantl; � -; � r�.. (2) amounts paitl for materials antl services, inclutling architectural;antl engineering services directly connectetl with the physical development of the real prope�ty�ui�the project; , ,,� �`�, (3) relocation benefits paid to, or services provided fo'r,'"persons residing,or`businesses located in the project; ' � �� (4) amounts used to pay principal or interest on,�fund a reserve for, or sell at a discount bonds issued pursuant to section 469,178;or � �``� ``4� � �.. ,.� � ._'. (5) amounts used to pay other financial obligations to the e�ent those obligations were used to finance costs describetl in clause(1.)�to(3).,� '� '�w�,�`�, Administrative expenses include amounts paid fo�servic provided by bond co�sel,fiscal consultants, planning or . economic development consultants, and actual costs.incurred by the County m administering the TIF District. Tax increments may be used to pay administrative expenses of the TIF Di'strict up�to the lesser of(a) 10% of the total estimated public costs authorized by the:TlF Plan or(b)10%�of the t t 1-t�increment expenditures for the project. .� �'" `� �'�:`�'�' 'v' � ��n � �, Section U Limitation on Property Not Subject to lmprovements-Four Year Rule �� 4' �ik� If after four years from certification�o�the-.:.TIF District�no demolition, rehabilitation, renovation, or qualified improvement of"an adjacent streetyhas�commence`d on•a_parcel located within the TIF District, then that parcel shall be excluded f�om�the,�TIF�District�and the original net tax capacity shall be adjusted accordingly. Qualified impro�ements of a streef'are limited to construction or opening of a new street, relocation of a street, or substantial reconstrucfion or rebuilding of�an�existing,�street. The Authority must submit to the County Auditor, by February 1 of the fifth�year,�evidence that the required acti�itylhas taken place for each parcel in the TIF District. � �, `�'� If a parcel is excluded from the TIF District and the Authority or owner of the parcel subsequently commences any of the above activities,the Authonty�shall certify to the County Auditor that such activity has commenced and the parcel shall once again be�included in�the�,TIF District. The County Auditor shall certify the net tax capacity of the parcel, as most recently certifietl�by`the Co missioner of Revenue, and add such amount to the original net tax capacity of the TIF District. Section V Estimated Impact on Other Taxing Jurisdictions Exhibit IV shows the estimated impact on other taxing jurisdictions if the maximum projected retained captured net tax capacity of the TIF District was hypothetically available to the other taxing jurisdictions. The Authority believes that there will be no adverse impact on other taxing jurisdictions during the life of the TIF District, since the proposed development woultl not have occurred without the establishment of the TIF District and the provision of public assistance. A positive impact on other taxing jurisdictions will occur when the TIF District is decertified and the development therein becomes part of the general tax base. SPRINGSTED Page 10 City of Shakopee and Shakopee Economic Development Authority, Minnesota The fiscal and economic implications of the proposed tax increment financing district, as pursuant to Minnesota Statutes,Section 469.175, Subdivision 2,are listed below. 1. The total amount of tax increment that will be generated over the life of the district is estimated to be $3,097,733. ,� 2. To the extent the manufacturing and warehouse facility in the proposed TIF District generates any public cost impacts on city-provided services such as police and fire protection, public infrastructure,antl borrowing costs attributable to the district, such costs will be levietl upon the taxable net tax capacity of the City,� exclutling that portion captured by the District.The City does not anticipate issuing bonds in conjunction with this project. t `�� 3. The amount of tax increments over the life of the district that woultl be attributable to school district levies, assuming the school districYs share of the total local tax rate for a�xing;ju'risdictions remained the same, is estimated to be$945,910. � �� 4. The amount of tax increments over the life of the ,district that would be attributable to county levies, assuming the county's share of the total local tax�ate�for all taxing jurisdictions�remainetl the same is estimated to be$1,033,532. � � .� �� 5. No additional information has been requested by the county:or�;school district that woultl enable it to determine additional costs that will accrue to it due to the�development proposed for the district. � Section W Prior Planned Improvements "• `� �' �'"'`�.,,� �` The Authority shall accompany its,.request for certification t/the,,Covunty��Audifor�(or notice of district enlargement), with a listing of all prope�ties within.the TIF,�District for�which building permits have been issued during the 18 months immediately precetling approval�,of`the TIF�PIan. The County;Auditor shall increase the original net tax capacity of the TIF District by the net tax-c�city of each improvement for which a building permit was issued. � �, � There have been no bu�ding permits issued in the la�st 18 months in conjunction with any of the properties within the TIF District. �� ..�� >°-""�.,,,��.� ..�� . ��' �``�: .�,�. ��?�. Section X °� Development Agreements �� '�� , If within a project containing amgconomic de�velopment district,�more than 10%of the acreage of the property to be acquired by the,Authority is purchased with tax increment bonds proceeds (to which tax increment from the property is pledged), then prior to such acquisition, the Authority must enter into an agreement for the development of the property. Such agreement must provide recourse for the Authority should the development not be completed. �°� �.� The Authority anticipates entenng�into an agreement for development, but does not anticipate acquiring any property located within the TIF Distric�otfier than for roatl or utility purposes. Section Y Assessment Agreements The Authority may, upon entering into a tlevelopment agreement, also enter into an assessment agreement with antly person,which establishes a minimum market value of the land and improvements for each year during the life of the TIF District. The assessment agreement shall be presented to the County or City Assessor who shall review the plans and specifications for the improvements to be constructetl, review the market value previously assigned to the land, and so long as the minimum market value containetl in the assessment agreement appears to be an accurate estimate, shall certify the assessment agreement as reasonable, The assessment agreement shall be filed for record in the SPRINGSTED Page 11 City of Shakopee and Shakopee Economic Deve/opment Authority, Minnesota o�ce of the County Recorder of each county where the property is located, Any modification or premature termination of this agreement must first be approved by the City,County and School District. The Authority does not anticipate entering into an assessment agreement. Section Z Modifications of the Tax Increment Financing Plan� Any reduction or enlargement in the geographic area of the Project Area or the TIF District; increase in the amount of bonded indebtedness to be incurretl; increase in the amount of capitalizetl interest;�increase in that portion of the captured net tax capacity to be retained by the City; increase in the total estimated-cap'tal and administrative costs;or designation of additional property to be acquired by the Authority shall be approved only after satisfying all the necessary requirements for approval of the original TIF Plan. This paragraph�oes�not apply if: �:� (1) the only modification is elimination of parcels from�T,IF,Districfi�and� (2) the current net tax capacity of the parcels elimmatetl equals or exceeds the net tax capacity of .�. ,..., those parcels in the TIF District's original�net tax�apacity, or the City agrees�ha,t the TIF District's original net tax capacity will be reduced by no�more than the,current net tax capacity of the parcels eliminated, , �� The Authority must notify the County Auditor of any modification that reduces or enlarges the geographic area of the TIF District, The geographic area of the TIF District may be reduced but not enlargetl after five years following the date of certification, � ;`�.,, `r-- � k�"��: Section AA Administration of-the Tax Increment Financing Plan� � � r� �°•� `'�;� � � ;:�,.� �"'�,,.. � ��: :� '�: Upon adoption of the TIF Plan�the Authority shall submit�a copy of such plan to the Minnesota Department of Revenue. The Authority�shall�also request that the Counfy;�Auditor certify the original net tax capacity and net tax capacity rate of the TIF�Dist�ict. To assist�the'County Audi�tor�,�n this process, the City shall submit copies of the TIF Plan, the resolution establishing the TIF .District.and adopting the TIF Plan, and a listing of any prior planned improvements, The Autho�ity�shall:also�send,the,County Assessor any assessment agreement establishing the minimum markef'valae�of land�and improvements m�the TIF District, and shall request that the County Assessor review and certify-this�assessment'agreement as reasonable. � ,�''�' `� "",�. �,�'� The County shall distribute to�the�Authority the amount of tax increment as it becomes available. The amount of tax increment in�any year represents�the applicable property taxes generated by the retained captured net tax capacity of the TIF District�The amount of tax��ncrement may change due to development anticipated by the TIF Plan, other development;inflation of property values,or changes in property classification rates or formulas, In atlministering and implementing the TIF�PIan,the following actions should occur on an annual basis: (1) ��to�July th Authority shall notify the County Assessor of any new development that has occurred,in;the TIF District during the past year to insure that the new value will be recorded in a timely manner. (2) if the County Auditor receives the request for certification of a new TIF District,or for modification of an existing TIF District, before July 1, the request shall be recognized in determining local tax rates for the current and subsequent levy years. Requests received on or after July 1 shall be used to determine local tax rates in subsequent years. (3) each year the County Autlitor shall certify the amount of the original net tax capacity of the TIF District, The amount certifietl shall reflect any changes that occur as a result of the following: SPRINGSTED Page 12 City of Shakopee and Shakopee Economic Deve/opment Authority, Minnesota (a) the value of property that changes from tax-exempt to taxable shall be added to the original net tax capacity of the TIF District, The reverse shall also apply; � (b) the original net tax capacity may be modified by any approved enlargement or reduction of . the TIF District; (c) if laws governing the classification of real property cause changes to the percentage of estimated market value to be applietl for property tax purposes,then the resulting increase or decrease in net tax capacity shall be applied proportionately to the original net tax capacity antl the retainetl captured net tax capacity of the TIF District, The County Auditor shall notify the Authority of all changes made to the originalsner t tax�pacity of the TIF District. �, ";�, Section AB Filing TIF Plan, Financial Reporting and Disclosure,Requirements �. ,� � �, The Authority will file the TIF Plan,and any subsequent amendments t er o,with the C m�ssioner of Revenue and t he O ff ice o f t he S ta te Au di tor pursuan t to Minneso ta S ta tu tes,Sec tio��4 6 9.1 7 5,su b division 4 A: T he Au t hori ty wi l l comply with all reporting requirements for the TIF District unde�nnesota Statutes,Section 469�17�5,subtlivisions 5 and 6, �'� ,�`�'� � ��. �� Y�� N•3 Y �^y �� ^t �� .r�.V� � � �^�� .��:�m� • ��1y �TM��`"yr. .�`�:'"':"""^.r. ��N,. �",n�� . x�-�«� � �� ; f.� .�� , •.;' '^.... . �� J±� , � � ..z��,�-".�.. SPRINGSTED Page 13 - Exhibit I Map of Tax Increment Financing(Economic Development) District No. 14 Within River Valley Redevelopment Project 1 .�''�. ,� � - � � �e .�,_. r t � � G TIF District No.14 J S.J San ivi��u•TIF � Project Area QSan34iarProject OTZF ProjectArea �City Boundazy �� S�-IAKQPEI� � �.. ��y�.�... �. � � SPRINGSTED � � Page 14 Exhibit ll Assumpfions Report City of Shakopee,Minnesota Tax Increment Financing(Economic Development)District No.14 Proposed J&J SanMar Project TIF Plan Exhibiu:Tatal EMV of S25.6M with Maximum Term Type ofTax Increment Financing District ' Ecanomic Development tNaximum Duratian of TIF District 8 years from 1st increment Pro�ected Certifica6on Request Date 06/30l12 Decertifica6an Date 12/31/22 (9 Years of Increment} 2011/2012 Base Esfimated Market Value $3,500,000 driginal Net Tax Capaciiy $68,500 AssessmentlCollection Year 2012/2073 2093/2414 2014/2015 2015/2016 Base Esfimated Market Value �3,500,OUD $3,500,000 �3,500,000 $3,500,000 Increase in Estimated Market Vaiue , 0 11,86(1,D00 22,560,8DQ 23,3d2,624 Total Estimated Market Value 3,540,000 15,360,000 26,060,8D0 26,842,624 Total NetTax Capacify $68,500 �306,450 $520,466 �535,'f02 Cily of Shakopee 36.655°� Scott County 38.802°,6 ! ISD#720 35.512% Other 5_329�'0 locai Tax Capaciiy Rate � 196.298% 2011l2Q12 Fscal Disparities Contribution From TIF District 38.3247% Administrative Retainage Percent{maximum=10°fa) 70_00°!0 Pooling Percent 0.00°!0 8onds Note(Pay-As-You-Gol Bonds Dated • NA Note Dated OGJ30/12 Bond Issue{c�0.00%(N1C) NA Note Rate 5.00% Eligible Praject Costs NA Note Amount S2,Oa5,9�0 Present Value Date�Rafe 06l�0/12 5.00% �totes Projections assume no future changes fa classiflcation rakes and current tax rates remain constani. Projections are based on a tot�i post devetopment estimated market vaiue of�25.6M, and inctude a 3%market value inflatar(for esfimafion purpnses onlyj_ SPRINGSTED Page 15 i � Exhibit lll ' �`:a� � � Prajected Tax Increment Report City of Shakopee,Minnesota Tax Increment Financing{Economic Development)District No.14 Proposed J8�J SanMar Project TIF Plan Exhibits:Total EMV of$25.6M with Maximum Term Less: Less: Retained Times Less: Annual Less: Annual Total Total Original Fiscal Captured Tax Annual State Aud. Revenue Admin. Annual Period Market Net Tax Net Tax Disp.@ Net Tax Capaciry Gross Tax Deduction Net of Retainage Net � Ending Value Capacity Capaciry 38.3247% Capacity Rate Increment 0.360% OSA Deduction 10.00°k Revenue 1 2 3 4 5 6 7 8 9 10 11 12 2012 12f31l12 3,500,000 68,500 . 68,500 0 0 116.298% 0 0 0 0 0 2013 12f31l13 3,500,000 68,500 68,500 0 0 116.298% 0 0 0 0 0 2014� 12l31l14 15,360,000 306,450 68,500 � 91,194 146,756 � 116.298% 170,674 � 614 170,060 ' 17,006 153,054 � 2015 12/31l15 26,060,800 520,466 69,500 173,215 278,751 116.298% 324,182 1,167 323,015 32,302 290,713 2016 12/31116 26,842,624 536,102 68,500 179,207 288,395 116.298% 335,398 1,207 334,191 33,419 300,772 2017 12l31l17 27,647,903 552,208 68,500 185,380 298,328 116.298% 346,949 1,249 345,700 34,570 311,130 2018 12l31l18 28,477,340 568,797 68,500 191,737 308,560 116.298% 358,849 1,292 357,557 35,756 321,801 2019 12l31l19 29,331,660 585,883 68,500 198,286 319,097 116,298% 371,103 1,336 369,767 36,977 332,790 2020 12/31l20 30,211,610 603,482 68,500 205,030 329,952 116.298% 383,727 1,381 382,346 38,235 344,111 2021 12l31l21 31,117,958 621,609 68,500 211,977 341,132 116.298% 396,730 1,428 395,302 39,530 355,772 2022 1Zl31l22 32,051,497 640,280 68,500 219,133 352,647 116.298% 410121 1,476 406,645 40,865 367,780 $3,097,733 $11,150 $3,066,583 $308,660 $2,777,923 ' _ 'k°�� -� �,, . �. �� . �� SPRINGSTED Page 16 Exhibit I V ,��`��'� � Estimated Impact on Other Taxin Jurisdictions`Report . City of Shakopee, Minnesota�`��`"��'� ,•:-; ,� .�,..�TMS Tax Increment Financing(Economic Develop"ment)Districf No.14 �ti! `4 z J&J SanMar Proj�ct� �"+. Scenario A$25 6M EMV �� Without � �'�s Project or TIF District �i_;:i- �_With Project and TI'F�D strict �Projected�' � Hypothetical 2011/2012 2011/2012 Retamed New Hypothetical Hypothetical Tax Generated Taxable 2011/2012 Taxable Captured Taxable Adjusted Decrease In - by Retained Taxing Net Tax Local �Net�Tax`'�.� Net Taz '�i�; Net Tax Local Local Captured Jurisdiction Capacity(1) Tax Rate Cap city(1),. +`-Capacity�:=..Capacity Tax Rate(*) Tax Rate(`) N.T.C.(*) �,: '� ,',�-.. �s 3 a'�'. • City of Shakopee 42,027,883 36.655% 42;027,883��`" .'$352;647 �+"42,380,530 36.350% 0.305% 128,188 � �: Scott County 150,734,997 38.802% 150,7 '34,97'° ,y 352,647 , 151,087,644 38.711% 0.091% 136,514 - � ' ,;�+�� '�< � ., ISD#720 42,660,617 35.512% 42,660 61.7� 352,647 43,013,264 35.221% 0.291°/a 124,206 � �':� Other(2) — ' 5.3�o — � 352,647 — 5.329% — — �..� : _ . Totals ,,�" : , �116.298% 115.611% 0.687°/a �c ,�.��"'�'"� �`�.: * �� ;, �� ' . Statement 1: If-the projected Retained Captured'Nef Tax Capacity of the TIF District was hypothetically available to each of �the taxing jurisdictions bove�the re ult ould be a lower local tax rate(see Hypothetical Adjusted Tax Rate above) which would produce the sa�rie`amount oftaxes for each taxing jurisdiction. In such a case,the total local tax rate would d crease by 0.687%(see;Hypothetical Decrease in Local Tax Rate above). The hypothetical tax that the Retained Captured Net Tax Cap�acity of the TIF District would generate is also shown above. � �� ,Y Statement 2: Since the pro�ected�Retained�Captured Net Tax Capacity of the TIF District is not available to the taxing jurisdictions, then there is no impa�n'taxes levied or local tax rates. (1) Taxable net tax capacity=total net tax capacity-captured TIF-fiscal disparfty contribution,if applicable. (2) The impact on these taxing jurisdictions is negligible since they represent only 4.58%of the total tax rate. SPRINGSTED � Page 17 Exhibit V Market V�(ue Analysis Report City of Shakopee, Minnesota Tax Increm�nt Financing (Economic Developmentj District No. 14 Proposed J8�J SanMar Projecf TfF Plan Exhibits:Total EMV of$25.6M with Maximum Term Assuniptions Present Value Dafe 06/30/12 P.V. Rate-Gross T.f. 5_OQ% Increase in EMV With TIF District �28,551,497 Less:P.V of Gross Tax Increment 2,253,418 Subtotal �26,298,079 Less: Increase in EMV Without TIF 0 Difference �26,298,079 Annual Present Gross Tax Value @ Year Increment 5.0�% 1 2094 170,G74 152,909 2 20'15 324,9 82 276,608 3 20'16 335,398 272,559 4 24'17 34G,949 268,512 5 2018 358,849 264,496 6 2{I'19 371,9 03 260,503 7 •2020 383,727 256,538 $ 2021 396,730 252,601 9 2022 4't0,121 248,693 $3,fl97,753 $2,253,418 SPRINGSTED Page 18 Second Draft Friday,Apri120,2012 CONTRACT FOR PRIVATE DEVELOPMENT between THE CITY OF SHAKOPEE,MINNESOTA and ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE,MINNESOTA and J&J MINNEAPOLIS LLC Dated as of: ,2012 This document was drafted by: KENNEDY&GRAVEN, Chartered(JAE), 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis,Minnesota 55402 (612) 337-9300 http://www.kennedy-graven.com 401088v2 JAE SH235-19 • TABLE OF CONTENTS Pa�e PREAMBLE .........................................................................................................................................1 ARTICLE I Definitions Section1.1. Definitions.....................................................................................................................3 ARTICLE II � Representations and Warranties Section 2.1. Representations by the Authority.................................................................................6 Section 2.2. Representations and Warranties by the City................................................................6 Section 2.3. Representations and Warranties by the Developer......................................................6 ARTICLE III Tax Increment Financing Assistance Section 3.1. Status of Development Property...................................................................................8 Section 3.2. Environmental Conditions..:.........................................................................................8 Section 3.3. Reimbursement of Certain Developer Costs................................................................8 Section 3.4 Issuance of TIF Note ....................................................................................................8 Section 3.5. Business Subsidy Agreement.......................................................................................9 Section 3.5. Payment of Authority and City Costs.........................................................................12 ARTICLE IV Construction of Minimum Improvements Section 4.1. Construction of Improvements...................................................................................13 Section 4.2. Construction Plans......................................................................................................13 Section 4.3. Commencement and Completion of Construction.....................................................14 Section 4.4. Certificate of Completion...........................................................................................14 Section4.5. Records.......................................................................................................................15 ARTICLE V Insurance Section5.1. Insurance.....................................................................................................................15 Section5.2. Subordination..............................................................................................................16 ARTICLE VI Tax Increment; Taxes Section 6.1. Right to Collect Delinquent Taxes.............................................................................17 Section6.2. Reduction of T�es.....................................................................................................17 Section 6.3 Covenant Not to Petition............................................................................................17 401088v2 JAE SH235-19 1 ARTICLE VII Other Financing Section7.1. Generally.............................:.......................................................................................18 Section 7.2. Authority's Option to Cure Default on Mortgage......................................................18 Section 7.3. Modification; Subordination.......................................................................................18 ARTICLE VIII Prohibitions Against Assi�nment and Transfer;Indemnification Section 8.1. Representation as to Development.............................................................................19 Section 8.2. Prohibition Against Developer's Transfer of Property and Assignment of Agreement..........................................................................................19 Section 8.3. Release and Indemnification Covenants....................................................................20 ARTICLE IX Events of Default Section 9.1. Events of Default Defined..........................................................................................22 Section 9.2. Remedies on Default..................................................................................................22 Section 9.3. No Remedy Exclusive..................................................................:.............................22 Section 9.4. No Additional Waiver Implied by One Waiver ........................................................23 Section9.5. Attorney Fees..............................................................................................................23 ARTICLE X � Additional Provisions Section 10.1. Conflict of Interests;Representatives Not Individually Liable..................................24 Section 10.2. Equa1 Employment Opportunity................................................................................24 Section 10.3. Restrictions on Use.....................................................................................................24 Section 10.4. Titles of Articles and Sections....................................................................................24 Section 10.5. Notices and Demands.................................................................................................24 Section10.6. Counterparts................................................................................................................25 Section10.7. Recording....................................................................................................................25 . Section 10.8. Amendment.........................:.......................................................................................25 Section 10.9. Authority and City Approvals....................................................................................25 TESTIIVIONIUM ................................................................................................................................25 " SIGNATURES .................................................................................................................................S-1 SCHEDULE A Development Property SCHEDULE B Authorizing Resolution SCHEDULE C Certificate of Completion SCHEDULE D Form of Subordination Agreement 401088v2 JAE SH235-19 I1 CONTRACT FOR PRIVATE DEVELOPMENT THIS CONTRACT FOR PRIVATE DEVELOPMENT (the "Agreement"), made as of the day of ,2012, among the City of Shakopee,a statutory city organized and existing under the laws of the State of Minnesota(the"City"),the Economic Development Authority for the City of Shakopee, Minnesota, a public body corporate and politic under the laws of Minnesota(the "Authority"), and J & J Minneapolis LLC, a Washington limited liability company (the "Developer"). WITNESSETH: • 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, the City has undertaken a program to promote economic development and job opportunities and to promote the development and redevelopment of land which is underutilized within the City, and in this connectiori created the Minnesota River Valley Housing and Redevelopment Project No. 1 (hereinafter referred to as the "Project") in an area (hereinafter referred to as the "Project Area") located in the City pursuant to Minnesota Statutes, Sections 469.001 to 469.047,as amended(the"HRA Act"); and WHEREAS, by resolution dated April 4, 1995, the City Council of the City transferred control, authority, and operation of the Project to the Authority, which currently administers the Project, exercising the powers of a housing and redevelopment authority under the HRA Act, in accordance with the EDA Act; and WHEREAS, pursuant to the EDA Act and the HRA Act, the Authority is authorized to undertake certain activities to prepare such real property for development and redevelopment by private enterprise; and WHEREAS, the Developer has acquired certain property (as hereinafter defined, the "Development Property") in the Project Area to develop a new warehouse and distribution facility to be constructed in the Project(as hereinafter defined,the"Minimum Improvements"); and ' WHEREAS, in order to achieve the objectives of the Housing and Redevelopment Plan (the "Redevelopment Plan") for the Project, the Authority is prepared to pay certain public development costs related to the Minimum Improvements, in order to bring about development in accordance with the Plan and this Agreement; and WHEREAS, the Authority has established the Tax Increment Financing (Economic Development) District No. 14 ("TIF District") pursuant to Minnesota Statutes, Sections 469.174 to 469.1799, as amended,made up of the area to be developed by the Developer; and 401088v2 JAE SH235-19 � 1 WHEREAS, the Authority and the City believe that the development of the Development Property pursuant to and in general fulfillment of this Agreement, are in the vital and best interests of the City, will promote the health, safety, morals, and welfare of its residents, and will be in accord with the public purposes and provisions of the applicable State and local laws and requirements under which the Project has been undertaken and is being assisted. 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: [Remainder of this page intentionally left blanlc.] 401088v2 JAE SH235-19 2 ARTICLE I Definitions Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the context: "Agreement" means this Contract for Private Development, as the same may be from time to time modified, amended,or supplemented. "Authority" means the Economic Development Authority for the City of Shakopee, Minnesota. "Authority Representative" means the Executive Director of the Authority, or any person designated by the Executive Director to act,as the Authority Representative for the purposes of this Agreement. "Authorizing Resolution"means the resolution of the Authority, substantially in the form of attached Schedule B, adopted by the Authority April 24, 2012, approving this Agreement and authorizing the issuance of the Note. "Available Tax Increment"has the meaning provided in the Authorizing Resolution. "Business Day" means any day except a Saturday, Sunday, legal holiday, a day on which the City is closed for business, 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, Section 116J.993 to 116J.995, as amended. "Certificate of Completion" means the Certificate, in substantially the form attached as Schedule C, provided to the Developer, or the purchaser of any part, parcel, or unit of the Development Property,pursuant to Section 4.4 of this Agreement. "Gity"means the City of Shakopee,Minnesota. "City Representative" means the City Administrator of the City, or any person designated by the City Administrator to act as the City Representative for the purposes of this Agreement. "Constxuction Plans" means the plans, specifications, drawings and related documents on the construction work to be performed by the Developer on the 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 each building: (1) site plan; (2) foundation plan; (3) basement plans; (4) floor plan for each floor; (5)cross sections of each(length and width); (6) elevations (all sides); (7)landscape plan; and 401088v2 JAE SH235-19 3 (8) such other plans or supplements to the foregoing plans as the Authority may reasonably request to allow it to ascertain the nature and quality of the proposed construction work. "County"means Scott County,Minnesota. "Developer" means J & J Minneapolis LLC, a Washington limited liability company, or its permitted successors and assigns. "Development Property" means the real property described in Schedule A of this • Agreement. "EDA Act"means Minnesota Statutes, Sections 469.090 to 469.1081, as amended. "Event of Default"means an action by the Developer listed in Article IX of this Agreement. "Holder"means the owner of a Mortgage. "HRA Act"means Minnesota Statutes, Sections 469.001 to 469.047,as amended. "Maturity Date" means the date that the Note has been paid in full or terminated in accordance with its terms,whichever is earlier. "Minimum Improvements" means.the construction on the Development Property of an approximately 580,000 square foot warehouse and distribution facility with an additional approximately 160,000 square foot mezzanine area for piece picking and 10,000 square feet of related office space. "Mortgage"means any mortgage made by the Developer that is secured, in whole or in part, with the Development Properiy and that is a permitted encumbrance pursuant to the provisions of Article VIII of this Agreement. "Note" means a Tax Increment Revenue Note, substantially in the form contained in the Authorizing Resolution, to be delivered by the Authority to the Developer in accordance with Section 3.4 hereof. "Project"means the Minnesota River Valley Housing and Redevelopment Project No. 1. "Project Area"means the property within the Project, as described in the Project Plan. "Public Development Costs"has the meaning provided in Section 3.2 hereof. "Redevelopment Plan"means the Redevelopment Plan for the Project. "State"means the state of Minnesota. 401088v2 JAE SH235-19 q, "Tax Increment"means that portion of tlie real property taxes that is paid with respect to the Development Property and that is remitted to the Authority as tax increment pursuant to the Tax Increment Act. "T� Increment Act" or "TIF Act" means the T� Increment Financing Act, Minnesota. Statutes Sections 469.174 to 469.1799,as amended. "Tax Increment District" or "TIF District" means Tax Increment Financing (Economic Development)District No. 14, an economic development tax increment financing district created by the City and the Authority. "T� Increment Plan" or "TIF Plan" means the Tax Increment Financing Plan for the TIF District approved by the City Council on Apri124,2012,and as it may be amended. "T� Official" means any County assessor, County auditor, 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. "Transfer"has the meaning set forth in Section 8.2(a)hereof. "Unavoidable Delays" means delays beyond the reasonable control of the party seeking to be excused as a result thereof which are the direct result of strikes, other labor troubles, prolonged adverse weather or acts of God, fire or other casualty to the Minimum Improvements, litigation commenced by third parties which, by injunction or other similar judicial action, directly results in delays, or acts of any federal, state or local governmental unit (other than the Authority or City in exercising their rights under this Agreement), including without limitation condemnation or threat of condemnation of any portion of the Development Property, which directly result in delays. Unavoidable Delays shall not include delays experienced by the Developer in obtaining permits or governmental approvals necessary to enable construction of the Minimum Improvements by the dates such construction is required under Section 4.3 of this Agreement, so long as the Construction Plans have been approved in accordance with Section 4.2 hereof. [Remainder of this page intentionally le$blank.] 401088v2 JAE SH235-19 5 ARTICLE II Renresentations�and Warranties Section 2.1. Representations by the Authority. (a) The Authority is an economic development authority duly organized and existing under the laws of the State. Under the provisions of the EDA Act and the HRA Act, the Authority has the power to enter into this Agreement and carry out its obligations hereunder. (b) The Authority will use its best efforts to facilitate development of the Minimum , Improvements, including but not limited to cooperating with the Developer in obtaining necessary administrative and land use approvals and construction financing pursuant to Section 7.1 hereof. (c) The Authority will issue the Note, subject to all the terms and conditions of this Agreement. (d) The activities of the Authority are undertaken for the purpose of fostering the development of certain real property in the City, which will create new tax base in the City and create employment opportunities in the City. Section 2.2. Representations and Warranties by the City. (a) The City is a statutory city organized and existing under the Constitution and the laws of the State. Under the provisions of the HR.A Act, the City has the power to enter into this Agreement and carry out its obligations hereunder. (b) The activities of the City are undertaken for the purpose of fostering the development of certain real property in the City, which will create new ta�c base in the City and create employment opportunities in the City. Section 2.3. Representations and Waxranties bv the Developer. The Developer represents and warrants that: (a) The Developer is a limited liability company, which is duly organized and in good standing under the laws of the State of Washington; the Developer is not in violation of any provisions of its bylaws or operating agreement; the Developer is duly authorized to transact business within the State, has power to enter into this Agreement and has duly authorized the execution, delivery, and performance of this Agreement by proper action of its respective officers, directors, managers, governors or members (as applicable). The Developer will purchase the Development Property and construct the Minimum Improvements on the Development Property. (b) The Developer will construct, operate and maintain the Minimum Improvements in accordance with the terms of this Agreement, the Redevelopment Plan and all local, state, and 401088v2 JAE SH235-19 6 federal laws and regulations (including, but not limited to, environmental, zoning, building code, and public health laws and regulations). (c) The Developer has received no notice or communication from any local, state or federal official that the activities of the Developer or the Authority in the Project Area may be or will be in violation of any environmental law or regulation (other than those notices or communications of which the Authority is aware). The Developer is aware of no facts the existence of which would cause it to be in violation of or give any person a valid claim under any local, state or federal environmental law,regulation or review procedure. (d) The Developer will obtain or cause to be obtained, in a timely manner, all required permits, licenses and 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. (e) Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of, the terms, conditions or provisions of any corporate restriction or any evidences of indebtedness, agreement or instrument of whatever nature to which the Developer is now a party or by which it is bound, or constitutes a default under any of the foregoing, which default or breach might prevent the Developer from performing its obligations under this Agreement. (� The Developer shall promptly advise Authority in writing of all litigation or claims affecting any part of the Minimum Improvements and all written complaints and charges made by any governmental authority materially affecting the Minimum Improvements or materially affecting Developer or its business which may delay or require changes in construction of the Minimum Improvements. (g) The proposed development by the Developer hereunder would not occur but for the tax increment financing assistance being provided by the Authority hereunder. (h) The Developer is not in default under any business subsidy agreement pursuant to Minnesota Statutes, Section 116J.994. [Remainder of this page intentionally left blank.] � 401088v2 JAE SH235-19 7 ARTICLE III Tax Increment Financin�Assistance Section 3.1. Status of Development Property. As of the date of this Agreement, the Developer has entered or will enter into a purchase agreement to acquire the Development Properly (the "Purchase Agreement"). Neither the Authority nor the City has any obligation to acquire the Development Property. Section 3.2. Environmental Conditions. (a) The Developer acknowledges that neither the Authority nor the City make any 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 Minunum Improvements or any other purpose for which the Developer may make use of such 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 nor imposes any obligation on such parties to participate in any cleanup of the Development Property. (b) Without limiting its obligations under Section 8.3 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 Properly, . 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. Reimbursement of Certain Developer Costs. The Developer shall undertake all necessary installation of public infrastructure and site improvements needed to construct the Minimum Improvements (such activities are collectively referred to as the "Public Development Costs"). In order to make the development of the Minimum Improvements economically feasible, the Authority shall reimburse the Developer for Public Development Costs in the maximum amount of$2,000,000. The Authority, in consultation with its public finance advisors, will determine what Public Development Costs are eligible to be reimbursed with Tax Increment pursuant to the Act. • Section 3.4. Issuance of TIF Note. (a) Terms. In order to reimburse the Developer for a portion of the Public Development Costs related to constructing the Minimum Improvements on the Development Property, the Authority shall issue and Developer shall purchase the Note in the maximum principal amount of $2,000,000. The Authority and the Developer agree that the Note shall be�issued in consideration of the Developer paying the Public Development Costs. Before delivery of the Note the Developer shall have: 401088v2 JAE SH235-19 • g � (i) delivered to the Authority written evidence in a form satisfactory to the Authority that the Developer has paid the cost of Public Development Costs in at least the principal amount of the Note; (ii) submitted the Construction Plans to the Authority and obtained approval for the Constructiori Plans from the Authority; (iii) submitted and obtained Authority approval of financing in accordance with Section 7.1; and (iv) delivered to the Authority an investment letter in a form reasonably satisfactory to the Authority. The terms of the Note will be substantially those set forth in the form of the Note shown in Schedule C. (c) Termination of Right to Note. Notwithstanding anything to the contrary in this Agreement, if the conditions for delivery of the Note are not met by December 31, 2014, the Authority may terminate the Note and this Agreement by ten days written notice to the Developer. Thereafter neither party shall have any obligations or liability to the other hereunder,except that any obligations of the Developer under Sections 3.5 and 8.3 survive such termination. (d) Qualifications. The Developer understands and acknowledges that the Authority makes no representations or warranties regarding the amount of Available T� Increment, or that revenues pledged to the Note will be sufficient to pay the principal and interest on the Note. Any estimates of Tax Increment prepared by the Authority or its financial advisors in connection with the TIF District or this Agreement are for the benefit of the Authority, and are not intended as representations on which the Developer may rely. If the Public Development Costs exceed the principal amount of the Note, such excess is the sole responsibility of Developer. Section 3.5. Business Subsidv Agreement. The provisions of this Section constitute the "business subsidy agreement" in connection with the business subsidy provided by the Authority and the City for the purposes of the Business Subsidy Act. (a) General Terms. The parties agree and represent to each other as follows: (i) The subsidy provided to the Developer consists of reimbursements of a portion of the costs of the Public Development Costs related to the construction of the Minimum Improvements on the Development Property through the issuance of the Note in the maximum aggregate principal amount of$2,000,000. The Note is secured solely by the Available Tax Increment generated from the TIF District, which is an economic development district. (ii) The public purposes of the subsidy are to provide employment opportunities in the City and increase the tax base of the City. 401088v2 JAE SH235-19 9 (iii) The goals for the subsidy are: to secure development of the Development Property; to maintain the Development Property as a warehouse and distribution facility with related office space as described in clause (vi) below; and to create the jobs and wage levels in accordance with Section 3.5(b)hereof. (iv) If the goals described in clause (iii) are not met, the Developer must make the payments to the City described in Section 3.5(c). (v) The subsidy is needed to induce the Developer to develop the Development Property in the City and to locate its operations in the City, thus creating employment opportunities and increasing tax base in the City, County, and the State as a whole. Absent the subsidy provided in this Agreement, the Developer would likely not choose to locate its business in the City. (vi) The Developer must continue operation of the Minimum Improvements as a warehouse and distribution facility for at least five years after the date of issuance of the Certificate of Completion. (vii) The Developer does not have a parent company. [OR The Developer's parent company is .] (viii) The Developer has not received and does not expect to receive financial assistance from any other"grantor" as defined in the Business Subsidy Act in connection with the Development Property or�the construction of the Minimum Improvements other than the tax increment financing described in Section 3.5 hereof. (ix) The fair market value of the tax increment financing subsidy provided to the Developer is $2,000,000,the principal amount of the Note. (b) Job and Wa�e Goals. Within two years after the Benefit Date, the Developer shall cause to be created at least 150 full-time equivalent jobs on the Development Property. In addition, within two years after the Benefit Date, the Developer shall cause the average wages for at least 117 of the full-time equivalent jobs to be no less than $12.00 per hour, exclusive of benefits (provided, however, the wages for such jobs are no less than $9.00 per hour, exclusive of benefits) and shall cause the average wages of at least 33 full-time equivalent jobs to be no less than $16.50 per hour, exclusive of benefits (provided, however, the wages for such jobs are no less than $14.00 per hour, exclusive of benefits). The "Benefit Date" is the earliest of: (i) the date of issuance of the Certificate of Completion for the Minimum Improvements, or (ii)the date the Developer occupies the Minimum Improvements. Notwithstanding anything to the contrary herein, if the wage and job goals described in this paragraph are met within two years after the Benefit Date, those goals are deemed satisfied despite the Developer's continuing obligations under Sections 3.5(a)(vi) and 3.5(d). The Authority and the City may, after public hearings held by the City Council and the Board of Commissioners of the Economic Development Authority and approval by both bodies, extend the date for compliance with these job and wage covenants by up to one year, provided that nothing 401088v2 JAE SH235-19 1� in this section will be construed to limit the Authority's or the City's legislative discretion regarding this matter. (c) Remedies. If the Developer fails to meet or maintain the goals described in Section 3.5(a)(iii), the Note and this Agreement will be deemed terminated, and the Developer shall repay to the Authority upon written demand from the Authority a "pro rata share" of prior payments under the Note, if any, together with interest on such amounts at the implicit price deflator as defined in Section 116J.994, subd. 6 of the Business Subsidy Act, accrued from the date of issuance of the Certificate of Completion to the date of payment. The term "pro rata share"means percentages calculated as follows: (i) if the failure relates to.the number of jobs, the jobs required less the jobs created, divided by the jobs required; (ii) 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; (iii) if the failure relates to maintenance of the warehouse and distribution facility in accordance with Section 3.5(a)(vi), 60 less the number of months of operation as a warehouse and distribution facility(where any month in which the facility is in operation for at least 15 days constitutes a month of operation), commencing on the date of the certificate of completion and ending with the date the facility ceases operation as determined by the Authority, divided by 60; and (iv) if more than one of clauses (i) through (iii) apply, the sum of the applicable percentages,not to exceed 100%. Nothing in this Section shall be construed to limit the Authority's and the City's remedies under Article IX hereof. In addition to the remedy described in this Section and any other remedy available to the Authority or the City for failure to meet the goals stated in Section 3.5(a)(iii), the Developer agrees and understands that it may not receive a business subsidy from the Authority,the City, or any other grantor (as defined in the Business Subsidy Act) for a period of five years from the date of the failure or until the Developer satisfies its repayment obligation under this Section,whichever occurs first. (d) Reports. The Developer must submit to the Authority, with a copy to the City, a written report regarding business subsidy goals and results by no later than March 1 of each year, commencing March 1, 2013 and continuing until the later of (i) the date the goals stated in Section 3.5 (a)(iii) are met; (ii) 30 days after expiration of the five-year period described in Section 3.5(a)(vi); or (iii) if the goals are not met, the date the subsidy is repaid in accordance with Section 3.5(c). The report must comply with Section 116J.994, subdivision 7 of the Business Subsidy Act. The Authority will provide information to the Developer regarding the required forms. If the Developer fails to timely file any report required under this Section, the Authority will mail the Developer a warning within one week after the required filing date. If, after 14 days of the postmarked date of the warning, the Developer fails to provide a report, the 401088v2 JAE SH235-19 11 Developer must pay to the Authority a penalty of$100 for each subsequent day until the report is filed. The m�imum aggregate penalty payable under this Section is $1,000. Section 3.5. Payment of Authori , .and Citv Costs. The Developer agrees that it will pay, within 15 days after written notice from the Authority, the reasonable costs of consultants and attorneys retained by the Authority or the City in connection with the creation of the TIF District and the negotiation in preparation of this Agreement and other incidental agreements and documents related to the development contemplated hereunder. Any amount deposited by the Developer, upon application for assistance from the City or Authority, will be credited to the Developer's obligation under this Section. Upon termination of this Agreement in accordance with its terms,the Developer remains obligated under this section for costs incurred through the effective date of termination. � [Remainder of this page intentionally left blank.] 401088v2 JAE SH235-19 12 ARTICLE IV Construction of Minimum Improvements Section 4.1. Construction of Improvements. The Developer agrees that it will construct the Minimum Improvements on the Development Property in accordance with the approved Construction Plans and at all times prior to the Maturity Date, will operate and maintain, preserve and keep the Minimum Improvements or cause the Minimum Improvements to be maintained, preserved and kept with the appurtenances and every part and parcel thereof, in good repair and condition. Section 4.2. Construction Plans. ' (a) Before corrunencing construction of the Minimum Improvements, the Developer shall submit to the Authority Construction Plans for the Minimum Improvements. The Construction Plans shall provide for the construction of the Minimum Improvements and shall be in conformity with this Agreement, the Redevelopment Plan and all applicable State and local laws and regulations. The Authority will approve the Construction Plans in writing if(i)the Construction Plans conform to a11 terms and conditions of this Agreement; (ii)the Construction Plans conform to the goals and objectives of the Redevelopment Plan; (iii) the Construction Plans conform to all applicable federal, state and local laws, ordinances, rules and regulations; (iv) the Construction Plans are adequate to provide for construction of the Minimum Improvements; (v)the Construction Plans do not provide for expenditures in excess of the funds available to the Developer for construction of the Minimum Improvements; and (vi) no Event of Default has occurred. No approval by the Authority shall relieve the Developer of the obligation to comply with the terms of this Agreement, applicable federal, state and local laws, ordinances, rules and regulations, or to construct the Minimum Improvements in accordance therewith. No approval by the Authority shall constitute a waiver of an Event of Default. If approval of the Construction Plans is requested by the Developer in writing at the time of submission, such Construction Plans shall be deemed approved unless rejected in writing by the Authority, in whole or in part. Such rejections shall set forth in detail the reasons therefore, and sha11 be made within 20 days after the date of receipt of final plans from the Developer. If the Authority rejects any Construction Plans in whole or in part, the Developer shall submit new or corrected Construction Plans within 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 Authority. The Authority's approval shall not be unreasonably withheld. Said approval shall constitute a conclusive determination that the Construction Plans (and the Minimum Improvements, constructed in accordance with said plans) comply to the Authority's satisfaction with the provisions of this Agreement relating thereto. (b) If the Developer desires to make any material change in the Construction Plans or any component thereof after their approval by the Authority, the Developer shall submit the proposed change to the Authority for its•approval. For the purpose of this section, the term "material" means net changes that increase or decrease construction costs by $200,000 or more. 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 401088v2 JAE SH235-19 13 Authority shall approve the proposed change and notify the Developer in writing of its approval. Such change in the Construction Plans shall, in any event, be deemed approved by the Authority unless rejected, in whole or in part,by written notice by the Authority to the Developer, setting forth in detail the reasons therefor. Such rejection shall be made within 20 days after receipt of the notice of such change. The Authority's approval of any such change in the Construction Plans will not be unreasonably withheld. Section 4.3. Commencement and�Completion of Construction. Subject to Unavoidable Delays, the Developer shall commence construction of the Minimum Improvements within 90 days after closing on Developer's acquisition of the Development Properly. Subject to Unavoidable Delays, the Developer shall complete the construction of the Minimum Improvements by December 31, 2013. All work with respect to the Minimum Improvements to be constructed or provided by the Developer on the Development Properiy shall be in conformity with the Construction Plans as submitted by the Developer and approved by the Authority. The Developer agrees for itself,its successors, and assigns, and every successor in interest to the Development Properly, 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. After the date of this Agreement and until construction of the Minimum Improvements has been completed, the Developer shall make reports, in such detail and at such times as may reasonably be requested by the Authority, as to the actual progress of the Developer with respect to such construction Section 4.4. Certificate of Completion. (a) Promptly after 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 dates for beginning and completion thereo�, the Authority Representative will furnish the Developer with a Certificate shown as Schedule D. (b) If the Authority Representative sha11 refuse or fail to provide any certification in accordance with the provisions of this Section 4.4 hereof,the Authority Representative shall,within 30 days after written request by the Developer, provide the Developer with a written statement, indicating in adequate detail in what respects the Developer has failed to complete the Minimuxn 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 Authority, for the Developer to take or perform in order to obtain such certification. (c) The construction the Minunum Improvements shall be deemed to be complete upon a determination by the Authority Representative that all Minimum Improvements on the Development Properly have been substantially completed in accordance with approved Construction Plans. 401088v2 JAE SH235-19 14 ARTICLE V Insurance Section 5.1. Insurance. (a) The Developer will provide and maintain at all times during the process of constructing the Minimum Improvements an All Risk Broad Form Basis Insurance Policy and,from time to time during that period, at the request of the Authority or the City, furnish the Authority or the City with proof of payment of premiums on policies covering the following: (i) builder's risk insurance, written on the so-called "Builder's Risk -- Completed Value Basis," in an amount equal to 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. The interest of the Authority and the City shall be protected in accordance with a clause in form and content satisfactory to the Authority and the City; (ii) comprehensive general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations, and contractual liability insurance) together with an Owner's Protective Liability Policy with limits against bodily injury and property damage of not less than $1,000,000 for each occurrence (to accomplish the above-required limits, an umbrella excess liability policy may be used). The Authority and the City sha11 be listed as additional insureds on the policy; and (iii) workers' compensation insurance, with statutory coverage, provided that the Developer may be self-insured with respect to all or any part of its liability for workers' compensation. (b) Upon completion of construction of the Minimum Improvements and prior to the Maturity Date,the Developer shall maintain, or cause to be maintained, at its cost and expense, and from time to time at the request of the Authority or the City shall furnish proof of the payment of premiums on,insurance as follows: (i) Insurance against loss and/or damage to the Minimum Improvements under a policy or policies covering such risks as are ordinarily insured against by similar businesses. (ii) Comprehensive general public liability insurance, including personal injury liability (with employee exclusion deleted), against liability for injuries to persons and/or properly, in the minimum amount for each occurrence and for each year of$1,000,000, and sha11 be endorsed to show the City and Authority as additional insureds. (iii) Such other insurance, including workers' compensation insurance respecting all employees of the Developer, in such amount as is customarily carried by like 401088v2 JAE SH235-19 . 15 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 workers' compensation. (c) All insurance required in Article V of this Agreement shall be taken out and maintained in responsible insurance companies selected by the Developer that are authorized under the laws of the State to assume the risks covered thereby. Upon request,the Developer will deposit annually with the Authority policies evidencing a11 such insurance, or a certificate or certificates or binders of the respective insurers stating that such insurance is in force and effect. Unless otherwise provided in this Article V of this Agreement each policy shall contain a provision that the insurer shall not cancel nor modify it in such a way as to reduce the coverage provided below the amounts required herein without giving written notice to the Developer, the City, and the Authority at least 30 days before the cancellation or modification becomes effective. 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 Authority 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 Authority and the City immediately 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 such event the Developer will promptly repair, reconstruct, and restore the Minunum Improvements to substantially the same or an improved condition or value as it 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, regardless of whether 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) The Developer,the City, and the Authority agree that all of the insurance provisions set forth in this Article V sha11 terminate upon the ternunation of this Agreement. Section 5.2. Subordination. Notwithstanding anything to the contrary herein, the rights of the Authority and 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 VII of this Agreement. 401088v2 JAE SH235-19 16 ARTICLE VI Tax Increment; Taxes Section 6.1. Right to Collect Delinquent TaXes. The Developer acknowledges that the Authority is providing substantial aid and assistance in furtherance of the development through the issuance of the Note. The Developer understands that the Tax Increments pledged to payment on the Note are derived from real estate taYes on the Development Property, which taxes must be promptly and timely paid. To that end,the Developer agrees for itself, its successors and assigns,in addition to the obligation pursuant to statute to pay real estate ta�ces, that it is also obligated by reason of this Agreement to pay before delinquency all real estate taxes assessed against the Development Properly and the Minimum Improvements. The Developer acknowledges that this obligation creates a contractual right on behalf of the Authority 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 couniy auditor. In any such suit, the Authority shall also be entitled to recover its costs,expenses and reasonable attorney fees. Section 6.2. Reduction of T�es. The Developer agrees that prior to the Maturity Date it will not cause a reduction in the real property taxes paid in respect of the Development Property through: (A) willful desiruction of the Development Property or any part thereof; or (B) willful refusal to reconstruct damaged or destroyed properly. The Developer also agrees that it will not, prior to the Maturity Date, seek exemption from property t� for the Development Property or any portion thereof or transfer or permit the transfer of the Development Property to any entity that is exempt from real properly taxes and state law(other than any portion thereof dedicated or conveyed to the City in accordance with platting of the Development Property), or apply for a deferral of property tax on the Development Property pursuant to any law. Section 6.3. Covenant Not to Petition. Prior to the Maturity Date,the Developer agrees not to file any petition or claim with any Tax O�cial, seeking to reduce the market value of the Development Property and the Minunum Improvements for ad valorem tax purposes below a minimum value of $25,600,000. Nothing in this section is intended to constitute a minimum assessment agreement within the meaning of Section 469.177, Subdivision 8 of the TIF Act. However, failure by the Developer to comply with this Section is an Event of Default under this Agreement,entitling the Authority to the remedies described in Article IX hereof. [Remainder of this page intentionally left blank.] 401088v2 JAE SH235-19 17 ARTICLE VII Other Financin� Section 7.1. Generallv. Before issuance of the Note, the Developer shall submit to the Authority or provide access thereto for review by Authority staff, consultants, and agents, evidence reasonably satisfactory to the Authority that Developer has available funds, or commitments to obtain funds, whether in the nature of mortgage financing, equity, grants, loans, or other sources sufficient for paying the cost of the developing the Minimum Improvements, provided that any lender or grantor commitments sha11 be sub,�ect only to such conditions as are normal and customary in the commercial lending indusiry. Section 7.2. Authorit '��ption to Cure Default on Mort�a�e. In the event that any portion of the Developer's funds is provided through mortgage financing, and there occurs a default under any Mortgage authorized pursuant to Article VII of this Agreement, the Developer shall cause the Authority to receive copies of any notice of default received by the Developer from the holder of such Mortgage. Thereafter, the Authority shall have the right, but not the obligation, to cure any such default on behalf of the Developer within such cure periods as are available to the Developer under the Mortgage documents. Section 7.3. Modification; Subordination. If Developer requires mortgage financing for the development of the Minimum Improvements, the Authority agrees to subordinate its rights under this Agreement to the Holder of any Mortgage securing construction or permanent financing and the � City agrees to consent to .such subordination, in accordance with the terms of a subordination agreement substantially in the form attached as Schedule D, or such other form as the Authority approves. • [Remainder of this page intentionally left blank.] 401088v2 JAE SH235-19 1 g ARTICLE VIII Prohibitions A�ainst Assi�nment and Transfer; Indemnification Section 8.1. Representation as to Development. The Developer represents and agrees that its purchase of the Development Properly, and its other undertakings pursuant to the Agreement, are, and will be used, for the purpose of development of the Development Property and not for speculation in land holding. Section 8.2. Prohibition A�ainst Developer's Transfer of Property and Assignment of A�reement. The Developer represents and agrees that prior to issuance of a Certificate of Completion for the Minimum Improvements: (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 perform its obligations with respect to undertaking the development contemplated under this Agreement, and 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 this Agreement or the Development Property or any part thereof or any interest therein, or any contract or agreement to do any of the same, to any person or entity whether or not related in any way to the Developer (collectively, a "Transfer"), without the prior written approval of the Authority and the City (whose approval will not be unreasonably withheld, subject to the ' standards described in paragraph(b) of this Section)unless the Developer remains liable and bound by this Agreement in which event the Authority's approval and the City's approval are not required. Any such Transfer shall be subject to the provisions of this Agreement. For the purposes of this Agreement, the term Transfer does not incl'ude acquisition of a controlling interest in Developer by another entity or merger of Developer with another entity. (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 Agreement as to the portions of the Development Properly that is transferred or assigned,the Authority and the City sha11 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 Authority and 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. (ii) Any proposed transferee, by instrument in writing satisfactory to the Authority and the City shall, for itself and its successors and assigns, and expressly for the benefit of the Authority and the City, have expressly assumed all of the obligations of the Developer under this Agreement as to the portion of the Development Property and Minimum Improvements 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 401088v2 JAE SH235-19 19 fact that any iransferee of, or any other successor in interest whatsoever to,the Development Property and Minimum Improvements, 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 Authority and the City) deprive the Authority or the City of any rights or remedies or controls with respect to the Development Properiy,the Minimum Improvements 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, the Minimum Improvements 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 Authority or the City of or with respect to any rights or remedies on controls provided in or resulting from this Agreement with respect to the Development Property and Minimum Improvements that the Authority or the City would have had, had there been no such transfer or change. In the absence of specific written agreement by the Authority and the City to the contrary,no such transfer or approval by the Authority and 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 Development Property and 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 reasdnably satisfactory to the Authority and the City. In the event the foregoing conditions are satisfied then the Developer sha11 be released from its obligation under this Agreement, as to the portion of the Development Properly that is transferred, assigned, or otherwise conveyed. The restrictions under this Section terminate upon issuance of the Certificate of Completion. Section 8.3. Release and Indemnification Covenants. (a) The Developer releases from and covenants and agrees that the Authority, the City, and the governing body members, officers, agents, servants, and employees thereof (the "Indemnified Parties") shall not be liable for and agrees to indemnify and hold harmless the Indemnified Parties against any loss or damage to properiy or any injury to or death of any person occurring at or about or resulting from any defect in the Development Property or the Minimum Improvements. (b) Except for any willful misrepresentation or any willful or wanton misconduct or negligence of the Indemnified Parties, and except for any breach by any of the Indemnified Parties of their obligations under this Agreement, 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 this Agreement, or the transactions contemplated hereby or the 401088v2 JAE SH235-19 20 acquisition, construction, installation, ownership, maintenance, and operation of the Development Property. (c) The Indemnified Parties shall not be liable for any damage or injury to the persons or property of the Developer or its officers, agents, servants, or employees or any other person who may be about the Development Property or Minimum Improvements. (d) All covenants, stipulations, promises, agreements, and obligations of the Authority and the City contained herein shall be deemed to be the covenants, stipulations, promises, agreements, and obligations of such entity and not of any governing body member, officer, agent, servant,or employee of such entities in the individual capacity thereof. [Remainder of this page intentionally left blank.] 401088v2 JAE SH235-19 21 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" sha11 mean, whenever it is used in this Agreement, any one or more of the following events: ' (a) Failure by the Developer,the City, or Authority to observe or perform any covenant, condition, obligation,or agreement on its part to be observed or performed under this Agreement. (b) commencement by the Holder of any Mortgage on the Development Property or any improvements thereon, or any portion thereof, of foreclosure proceedings as a result of default under the applicable Mortgage documents; (c) 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 or under any similar federal or State law; or (ii) make an assignment for 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. Section 9.2. Remedies on Default. Whenever any Event of Default referred to in Section 9.1 of this Agreement occurs,the Authority or the City may: (a) Suspend its performance under the Agreement until it receives reasonably satisfactory assurances that the defaulting pariy will cure its default and continue its performance under the Agreement. (b) Upon a default by the Developer, the Authority may terminate the Note and this Agreement. (c) Take whatever action, including legal, equitable, or administrative action, which may appear necessary or desirable to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant of the Developer under this Agreement. Section 9.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to any party is intended to be exclusive of any other available remedy or remedies,but each and every such remedy sha11 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 401088v2 JAE SH235-19 22 exercise any right or power accruing upon any default shall impair any such right or power or sha11 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. In order for the Authority and the City to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be required in this Article IX. Section 9.4. No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Agreement should be breached by either party and thereafter waived by the 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. Attornev Fees. Whenever any Event of Default occurs and if the Authority or the City 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 Developer under this Agreement,the Developer agrees that it shall,within 10 days of written demand by the Authority or the City,pay to the Authority or the City the reasonable fees of such attorneys and such other expenses so incurred by the Authority or the City. [Remainder of this page intentionally left blank.] 401088v2 JAE SH235-19 23 ARTICLE X Additional Provisions Section 10.1. Conflict of Interests; Representatives Not Individuallv Liable. The City, the Authority, and the Developer,to the best of their respective knowledge, represent and agree that no member, official, or employee of the City or Authority shall have any personal interest, direct or indirect, in the Agreement, nor shall any such member, official, or employee participate in any decision relating to the Agreement that affects his personal interests or the interests of any corporation, partnership, or association in which he, directly or indirectly, is interested. No member, official, or employee of the City or Authority sha11 be personally liable to the Developer, or any successor in interest, in the event of any default or breach by the City or the Authority or for any amount that may become due to the Developer or successor or on any obligations under the terms of the Agreement. Section 10.2. Equal Emplo�ment Opportunitv. The Developer, for itself and its successors and assigns, agrees that during the construction of the Minimum Improvements provided for in the Agreement it will comply with all applicable federal, state, and local equal employment and non- discrimination laws and regulations. Section 10.3. Restrictions on Use. The Developer agrees that until the Maturity Date, the Developer, and such successors and assigns, shall devote the Development Property to the operation of the Minimum Improvements as a warehouse and distribution facility within the meaning of Section 469.176, subd. 4c, clauses (2) and (7) of the TIF Act, and shall not discriminate upon the basis of race, color, creed, sex or national origin in the sale, lease, or rental or in the use or occupancy of the Development Property or any improvements erected or to be erected thereon, or any part thereof. Section 10.4. 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 10.5. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand, or other communication under the Agreement by either pariy to the other sha11 be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, to the following addresses (or to such other addresses as either party may notify the other): To Developer: J&J Minneapolis LLC 100 South Fifth Street Minneapolis,MN 55402 Attn: 401088v2 JAE SH235-19 24 To City: City of Shalcopee 129 Holmes Street South Shakopee,Minnesota 55379 Attn: City Administrator To Authority: Shakopee EDA 129 Holmes Street South Shakopee,Minnesota 55379 Attn: Executive Director Section 10.6. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 10.7. Recordin�. The Authority may record this Agreement and any amendments thereto with the Scott County recorder. The Developer shall pay all costs for recording. Section 10.8 Amendment. This Agreement may be amended only by written agreement approved by the City,the Authority, and the Developer. Section 10.9. Authority and Cit,�pprovals. Unless otherwise specified, any approval required by the Authority under this Agreement may be given by the Authority Representative and any approval required by the City under this Agreement may be given by the City Representative, except that final approval of issuance of the Note shall be made by the Authority's Board of Commissioners. [Remainder of this page intentionally left blank.] 401088v2 JAE SH235-19 � 25 IN WITNESS WHEREOF, the City, Authority and Developer have caused this Contract for Private Development to be duly executed by their duly authorized representatives as of the date first above written. . CITY OF SHAKOPEE,MINNESOTA By: Its: Mayor • By: Its: City Administrator By: Its: City Clerk STATE OF MINNESOTA ) ) SS. COLTNTY OF SCOTT ) ' The foregoing instrument was acknowledged before me this day of , 2012, by Brad Tabke,the Mayor of the City of Shakopee, Minnesota, on behalf of the City. Notary Public STATE OF MINNESOTA ) ) SS. COUNTY OF SCOTT ) The foregoing instrument was acknowledged before me this day of , 2012, by Mark McNeill, the City Administrator of the City of Shakopee, Minnesota, on behalf of the City. Notary Public STATE OF MINNESOTA ) ) SS. COUNTY OF SCOTT ) The foregoing instniment was acknowledged before me this day of , 2012, by Julie Linnihan, the City Clerk of the City of Shakopee, Minnesota, on behalf of the City. Notary Public 401088v2 JAE SH235-19 ' S-1 Execution page of the Authority to the Contract for Private Development, dated as of the date and year first written above. ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE,MINNESOTA By: Its: President By: Its: Executive Director STATE OF MINNESOTA ) ) SS. COUNTY OF SCOTT ) The foregoing instrument was acknowledged before me this day of , 2012,by ,the President of the Economic Development Authority for the City of Shakopee, Minnesota, on behalf of the Authority. Notary Public STATE OF MINNESOTA ) ) SS. ' COUNTY OF SCOTT ) The foregoing instrument was acknowledged before me this day of , 2012, by , the Executive Director of the Economic Development Authority for the City of Shakopee,Minnesota, on behalf of the Authority. � Notary Public 401088v2 JAE SH235-19 S_2 Execution page of the Developer to the Contract for Private Development, dated as of the date and year first written above. , J& J MINNEAPOLIS LLC By: Its: STATE OF ) • ) SS. COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 2012, by , the of J & J Minneapolis LLC, a Washington limited liability company, on behalf of the company. Notary Public 401088v2 JAE SH235-19 S-3 SCHEDULE A DEVELOPMENT PROPERTY 1"hat part of Lot 2, Black 1,OPUS MVW,accord6ng tm t�re recarded plat#hereof,Scatt County. Minnesota, wi�ich Hes easter[y of a [ine described as foltows: c�mmenctng at the corner of sai� �.at 2; thence Nor�h 88 degrees 49 fVrinutes 19 secands £ast, assumed bearing along the narth line csf said I,ot 2 a distance of 744.73. feet t� the point of beginning of the line to be described; thence 5outh 4 degrees 1� rr�fnutes 4�, seconds �ast a distance af Iz94.77 feet to the so�th line of saicM�.o�2 and said line there termina#in�AND l.�t�., Blvck 7., �P41S MVW 2"d Additton,according to the recorded pfat thereaf, Scott Ceunty, Niinnesota, 401088v2 JAE SH235-19 A-1 SCHEDULE B AUTHORIZING RESOLUTION � ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE RESOLUTION NO. RESOLUTION APPROVING CONTRACT FOR PRIVATE DEVELOPMENT WITH THE CITY OF SHAKOPEE AND J & J MINNEAPOLIS LLC AND AWARDING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS $2,000,000 TAX INCREMENT REVENUE NOTE,SERIES 2012 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 l. Authorization;Award of Sa1e. 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. 14 (the "TIF District") within its Minnesota River Va.11ey 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 $2,000,000 T� Increment Revenue Note, Series 2012(the"Note") for the purpose of financing certain public costs of the Project. 1.02 A�reement Approved; Issuance, Sale, and Terms of the Note. The Authority hereby approves the Contract for Private Development between the City, the Authority, and J&J Minneapolis LLC (the "Agreement"), and authorizes the President and Executive Director to execute such 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 J & J Minneapolis LLC, a Washington limited liability company (the "Owner"). The Note sha11 be dated the date of delivery thereof, and shall bear interest at the rate of 5.00% per annum to the 401088v2 JAE SH235-19 B-1 earlier of maturity or prepayment. The Authority shall receive in exchange for the sale of the Note the agreement of the Owner to pay the cost of land acquisition as defined in the Agreement. Section 2. Form of Note. The Note shall be in substantially the following form, with the blanks to be properly filled in and the principal amount and payment schedule adjusted as of the date of issue: UNITED STATE OF AMERICA STATE OF MINNESOTA COUNTY OF SCOTT ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE No. R-1 $2,000,000 TAX INCREMENT REVENUE NOTE SERIES 2012 Date Rate of Original Issue 5.00% The Economic Development Authority for the City of Shakopee ("Authority") for value received, certifies that it is indebted and hereby promises to pay to J & J Minneapolis LLC, a Washington limited liability company (the "Owner"), the principal sum of$2,000,000 and to pay interest thereon at the rate of 5.00%per annum,as and to the extent set forth herein. 1. Pavments. Principal and interest ("Payments") sha11 be paid on August l, 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. Payments shall be applied first to accrued interest, and then to unpaid principal. Interest accruing from the date of issue through and including February 1, 20_sha11 be compounded semiannually on February 1 and August 1 of each year and added to principal. 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 Sta.tes of America which, on the Payment Date, is legal tender for the payment of public and private debts. 2. Interest. Interest at the rate stated herein shall accrue on the unpaid principal, commencing on the date of original issue. Interest shall be computed on the basis of a year of 360 days and charged for actual days principal is unpaid. 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 401088v2 JAE SH235-19 B_2 Date, 90% of the T�Increment attributable to the Development Property and paid to the Authority by Scott County in the six months preceding the Payment Date, a11 as such terms are defined in the Contract for Private Development between the City,the Authority, and the Owner, as the developer, dated as of ,2012 (the"Agreement"). The Authority sha11 have no obligation to pay principal of and interest on 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 or interest on this Note on any Payment Date shall not constitute a default hereunder as long as the Authority pays principal and interest hereon to the extent of Available Tax Increment. The.Authority shall have no obligation to pay the unpaid balance of principal or accrued interest 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 Prepa�. The principal sum and a11 accrued interest 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 Obli ag tion. This Note is the sole note of an issue in the total principal amount of $2,000,000, 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 April 24, 2012, and pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174 to 469.179. 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 and the interest hereon sha11 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 or interest 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 or interest on this Note or other costs incident hereto. . 7. Estimates of Available T� 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 Contract are for the benefit of the Authority and the City only, and are not intended as representations on which the Developer may rely. 401088v2 JAE SH235-19 B_3 THE AUTHORITY AND THE CITY MAKE NO REPRESENTATIONS OR WARR.ANTIES THAT THE AVAILABLE ABATEMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF THIS NOTE. 8. Re�istration 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 Director/City Clerk,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 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, bearing interest at the same rate 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 opinion of counsel 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 a11 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. 1N 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 401088v2 JAE SH235-19 B-4 REGISTRATION PROVISIONS The ownership of the unpaid balance of the within Note is registered in the bond register of the City Finance Director/City Clerk,in the name of the person last listed below. Signature of Date of Re�istration Re�istered Owner Citv Finance Director/City Clerk J &J Minneapolis LLC Federal ID# Section 3. Terms,Execution and Deliverv. 3.01. Denomination, Pavment. 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 and interest on the Note shall be payable by check or draft issued by the Registrar described herein. 3.02. Dates; Interest Pavment Dates. Principal of and interest on 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. Re�istration. The Authority hereby appoints the City Finance Director/City Clerk to perform the fiulctions 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) Re i� ster. 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 sha11 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 sha11 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 opinion of counsel 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. 401088v2 JAE SH235-19 • B-5 (c) Cancellation. The Note surrendered upon any transfer sha11 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 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 sha11 be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on 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. (� 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 ta�c, fee, or other governmental charge required to be paid with respect to such transfer or exchange. (g) Mutilated, Lost, Stolen or Destroved Note. In case any Note shall become mutilated or be lost, stolen, or destroyed,the Registra'r 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 Deliverv. 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 deliverx of the Note, such signature shall nevertheless be valid and sufficient for a11 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. Pled�e. The Authority hereby pledges to the payment of the principal of and interest on the Note all Available Tax Increment as defined in the Note. 401088v2 JAE SH235-19 B-( 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 or interest thereon (to the extent required ta 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 of the principal of and interest on 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 sha11 be transferred to the Authority's account for the TIF District upon the payment of all principal and interest to be paid with respect to the Note. Section 5. Certification of Proceedin�s. 5.01. Certification of Proceedin�s. 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 �davits, including any heretofore fuinished, 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 24�'day of April,2012. � President Executive Director 401088v2 JAE SH235-19 B_7 SCHEDULE C CERTIFICATE OF COMPLETION WHEREAS, the City of Shakopee (the "City"), the Economic Development Authority for the City of Shakopee (the"Authority"), and J &J Minneapolis LLC (the "Developer") entered into a certain Contract for Private Development dated , 2012 ("Contract"); and WHEREAS, the Contract contains certain covenants and restrictions set forth in Articles III and IV thereof related to completing certain Minimum Improvements; and WHEREAS, the Developer has performed said covenants and conditions insofar as it is able in a manner deemed su�cient by the Authority to permit the execution and recording of this certification; NOW, THEREFORE, this is to certify that all construction and other physical improvements related to the Minimum Improvements specified to be done and made by the Developer have been completed and the agreements and covenants in Articles III and IV of the Contract have been performed by the Developer, and this Certificate is intended to be a conclusive determination of the satisfactory termination of the covenants and conditions of Articles III and IV of the Contract related to completion of the Minimum Improvements, but any other covenants in the Contract shall remain in full force and effect. Dated: ,20_. ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE,MINNESOTA BY Authority Representative 401088v2 JAE SH235-19 C-1 SCHEDULE D FORM OF SUBORDINATION AGREEMENT THIS SUBORDINATION AGREEMENT (this "Agreement") is made as of this day of , 20_, between ("Lender"), whose address is at , and the ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE, a public body corporate and politic ("Authority"). RECITALS A. J&J Minneapolis LLC, a Washington limited liability company ("Developer"), is the owner of certain real property situated in Scott County, Minnesota and legally described in Exhibit A attached hereto and incorporated herein(the"Property"). B. Lender has made a mortgage loan to Developer in the original principal amount of $ (the"Loan"). The Loan is the evidenced and secured by the following documents: [insert loan documents] The Note, the Mortgage, the Assignment, and all other documents and instruments evidencing, securing and executed in connection with the Loan, are hereinafter collectively referred to as the"Loan Documents." . C. Authority is the owner and holder of certain rights under a certain unrecorded Contract for Private Development (the "Contract") among the City of Shakopee (the "City"), the Authority,and the Developer, dated ,2012. D. Developer is entitled under the Contract to acquire a certain Tax Increment Tax Revenue Note, Series 2012 in the original principal amount of$2,000,000 (the"TIF Note"). NOW, THEREFORE, in consideration of the foregoing and as an inducement to Lender to make the Loan, and for other good and valuable consideration,the receipt and sufficiency of which are hereby acknowledged,the parties hereto represent,warrant and agree as follows: 1. Consent. The Authority acknowledges that the Lender is making the Loan to the Developer and consents to the same. The Authority also consents to and approves the assignment of the Contract and TIF Note (when and if issued) by the Developer to the Lender as collateral for the Loan; provided, however, that this consent shall not deprive the Authority of or otherwise limit any of the Authority's rights or remedies under the Contract and TIF Note and shall not relieve the Developer of any of its obligations under the Contract and TIF Note;provided fizrther, however,the limitations to the Authority's consent contained in this Paragraph 1 are subject to the provisions of Paragraph 2 below. � 2. Subordination. The Authority hereby agrees that the rights of the Authority with respect to the Development Property under the Contract are and shall remain subordinate and 401088v2 JAE SH235-19 D-1 subject to liens, rights and security interests created by the Loan Documents and to any and all amendments, modifications, extensions, replacements or renewals of the Loan Documents; provided, however, that nothing herein shall be construed as subordinating the requirement contained in the Contract that the Property be used in accordance with the provisions of Section 10.3 of the Contract, or as subordinating the Authority's rights under the TIF Note to suspend payments in accordance with the TIF Note. 3. Notice to Authoritv. Lender agrees to notify Authority of the occurrence of any Event of Default given to Developer under the Loan Documents, in accordance with Section 7.2 of the Contract. The Lender shall not be bound by the other requirements in Section 7.2 of the Contract. 4. Statutorv Exception. Nothing in this Agreement sha11 alter, remove or affect Lender's obligation under Minnesota Statutes, Section 469.029 to use the Property in conformance with Section 10.3 of the Contract. 5. No Assumption. The Authority acknowledges that the Lender is not a party to the Contract and by executing this Agreement does not become a party to the Contract, and specifically does not assume and shall not be bound by any obligations of the Developer to the Authority under the Contract, and that the Lender shall inciar no obligations whatsoever to the Authority except as expressly provided herein. 6. Notice from Authority. So long as the Contract remains in efFect, the Authority agrees to give to the Lender copies of notices of any Event of Default given to Developer under the Contract. 7. Governing Law. This Agreement is made in and shall be construed in accordance with the laws of the State of Minnesota. ' 8. Successors. This Agreement and each and every covenant, agreement and other provision hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, including any person who acquires title to the Property through the Lender of a foreclosure of the Mortgage. 9. Severabilitv. The unenforceability or invalidity of any provision hereof shall not render any other provision or provisions herein contained unenforceable or invalid. 10. Notice. Any notices and other communications permitted or required by the provisions of this Agreement shall be in writing and shall be deemed to have been properly given or served by depositing the same with the United States Postal Service, or any o�cial successor thereto, designated as registered or certified mail, return receipt requested, bearing adequate postage,or delivery by reputable private carrier and addresses as set forth above. 11. Transfer of Title to Lender: The Authority agrees that in the event the Lender, a transferee of Lender, or a purchaser at foreclosure sa1e, acquires title to the Property pursuant to a foreclosure, or a deed in lieu thereof, the Lender, transferee, or purchaser shall not be bound by the terms and conditions of the Contract except as expressly herein provided. Further the Authority agrees that in the event the Lender, a transferee of Lender, or a purchaser at foreclosure sale 401088v2 JAE SH235-19 D_2 acquires title to the Property pursuant to a foreclosure sale or a deed in lieu thereof,then the Lender, transferee, or purchaser shall be entitled to all rights conferred upon the Developer under the Contract, provided that no condition of default exists and remains uncured beyond applicable cure periods in the obligations of the Developer under the Contract. 12. Estoppel. The Authority hereby represents and warrants to Lender, for the purpose of inducing Lender to make advances to Deyeloper under the Loan Documents that: (a) No default or event of default by Developer exists under the terms of the Contract on the date hereof; (b) The Contract has not been amended or modified in any respect, nor has any material provision thereof been waived by either the Authority or the Developer, and the Contract is in full force and effect; (c) Such other reasonable certifications as the Lender may request. 13. Amendments. The Authority hereby represents and warrants to Lender for the purpose of inducing Lender to make advances to Developer under the Loan Documents that Authority will not agree to any amendment or modification to the Contract or any TIF Note issued under the Contract that materially affects the collection of Available Tax Increment (as defined in the Contract)in any way affects the Property without the Lender's written consent. 401088v2 JAE SH235�19 D-3 IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the day and year first written above. ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE . By: Its President By: Its Executive Director STATE OF MINNESOTA ) )ss COUNTY OF SCOTT ) The foregoing instrument was acknowledged before me this day of , by and , the President and Executive Director, respectively, of the Economic Development Authority for the City of Shakopee, a public body corporate and politic, on behalf of such public body. Notary Public 401088v2 JAE SH235-19 D-4 [LENDER] By: Its Consented to by the City of Shakopee: • THE CITY OF SHAKOPEE By Its Mayor By Its City Administrator By . Its City Clerk 401088v2 JAE SH235-19 D-5 CITY OF SHAKOPEE,MiNNESOTA RESOLUTION NO.7191 RESOLUTION APPROVING TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING (ECONONIIC DEVELOPMENT) DISTRICT NO. 14 WITHIN THE MINNESOTA RIVER VALLEY HOUSING AND REDEVELOPMENT PROJECT NO. 1; AND APPROVING CONTRACT FOR PRIVATE DEVELOPMENT BETWEEN THE CITY, THE ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE, AND J & J MINNEAPOLIS LLC,WHICH INCLUDES A BUSINESS SUBSIDY AGREEMENT 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, Section 469.001 to 469.047(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 469.1799(collectively,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 and City have determined to approve a new tax increment financing plan (the"TIF Plan")for Tax Increment Financing(Economic Development)District No. 14(the"TIF District"), all as described in a plan document presented to the City Council on this date;and WHEREAS, the TIF Plan was, in accordance with the HRA Act and TIF Act, referred to the City Planning Commission and by resolution adopfed by the City Planning Commission on April 12, 2012, the City Planning Commission found that the TIF Plan conforms to the general plan for the development of the City as a whole;and WHEREAS, pursuant to Minnesota Statutes, Section 469.175, subd. 2, the proposed TIF Plan and the estimates of the fiscal and economic implications of the TIF Plan were presented to the School Board of Independent School District No. 720 and to the County Board of Commissioners of Scott County on or about March 23,2012;and WHEREAS, during a joint meeting of the Board of Commissioners of the Authority and City Council of the City and by resolution adopted on the date hereof, the Authority approved the TIF Plan and referred it to the City Council of the City(the"Council")for public hearing and consideration;and WHEREAS,this Council has reviewed the contents of the TIF Plan; WHEREAS,this Council has also reviewed a Contract for Private Development(the"Agreement") between the City,the Authority,and J&J Miqneapolis LLC(the"Developer")which agreement includes a "business subsidy agreement"as defined in Minnesota Statutes, Section 166J.993 to 116J.995; and WHEREAS, on the date hereof, the Board of the Authority and the City Council held a joint public hearing relating to the establishment of the TIF District, the TIF Plan and the Agreement, which 402378v1 JAE SH235-19 incorporates a business subsidy agreement, and at the public hearing, the views of all interested parties were heard. NOW,THEREFORE,BE IT RESOLVED by the City Council of the City of Shakopee,Minnesota that: � Section 1. Findin�,s;TIF District No. 14 1.01. It is found and determined that it is necessary and desirable for the sound and orderly development of the Project, and for the protection and preservation of the public health, safety,and general welfare, that the authority of the TIF Act be exercised by the City to provide public financial assistance to the TIF District and the Project. 1.02. It is further found and determined, and it is the reasoned opinion of the City, that the development proposed in the TIF Plan could not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the district permitted by the TIF Plan. 1.03. The proposed public improvements to be financed in part through tax increment financing are necessary to permit the City to realize the full potential of the TIF District and the Project in terms of development intensity,employment opportunities,and tax base. 1.04. The TIF Plan conforms to the general plan for development of the City as a whole. 1.05. The TIF Plan will afford maximum opportunity,consistent with the sound needs of the City as a whole,for the development of the TIF District and the Project by private enterprise. 1.06. The TIF District is an economic development district under Section 469.174, subd. 12 of the TIF Act. 1.07. Reasons and facts supporting all the above findings are set forth in the TIF Plan and are incorporated herein by reference. The Council has also relied upon the reports and recommendations of its staff and consultants, as well as the personal knowledge of inembers of the Council, in reaching its conclusions regarding the TIF Plan. ' Section 2. Public Purpose The adoption of the TIF Plan conforms in all respects to the requirements of the TIF Act. The TIF Plan will help facilitate development that will create new commercial uses, provide employment opportunities, and improve the tax base. The City expressly finds that any private benefit to be received by the Developer is incidental, as the tax increment assistance is provided solely to make the redevelopment financially feasible and thus produce the public benefits described. Therefore, the City finds,that the public benefits of the TIF Plan exceed any private benefits. Section 3. Approvals;Further Proceedin�s 3.01. The TIF Plan for the TIF District is hereby approved and adopted in substantially the form on file at City Hall. 402378v1 JAE SH235-19 2 3.02. The Authority is authorized and directed to file a request for certification of the TIF District with the Scott County Auditor and to file a copy of the TIF Plan with the Minnesota Commissioner of Revenue as required by the TIF Act. 3.03. The Council approves the Agreement, including the business subsidy agreement contained therein, in substantially the form on file in City Hall. The Mayor, City Administrator, and Finance Director/City Clerk are hereby authorized and directed to execute and deliver the Agreement. All of the provisions of Agreement, when executed and delivered as authorized herein, shall be deemed to be a part of this resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and effect from the date of execution and delivery thereof. The Agreement shall be substantially in the form on file with the City which are hereby approved, with such omissions and insertions as do not materially change the substance thereof, or as the Mayor, the City Administrator, and the Finance Director/City Clerk in their discretion, shall determine, and the execution thereof by the Mayor, the City Administrator,and the Finance Director/City Clerk shall be conclusive evidence of such determination. Approved by the City Council of the City of Shakopee,Minnesota this 24`h day of April,2012. Mayor ATTEST: Finance Director/City Clerk 402378v1 JAE SH235-19 3 ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE RESOLUTION N0. 12-3 RESOLUTION APPROVING CONTRACT FOR PRIVATE DEVELOPMENT WITH TI� CITY OF SfIAKOPEE AND J & J MINNEAPOLIS LLC AND AWARDING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIltECTIONS FOR THE ISSUANCE OF ITS $2,000,000 TAX INCREMENT REVENUE NOTE,SERIES 2012 BE IT RESOLVED BY the Board of Commissioners (the "Board") of the Economic Development Authority for the City of Shakopee(the"Authority")as follows: Section 1. Authorization;Award of Sale. 1.01. Authorization. The Authority and the City of Shakopee, Minnesota (the "City") have heretofore approved the establishment of the Tax Increment Financing (Economic Development) District No. 14 (the "TIF District") within the 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 fmds and determines that it is in the best interests of the Authority that it issue and sell its $2,000,000 T�Increment Revenue Note, Series 2012 (the "Note") for the purpose of financing certain public costs of the Project. 1.02 Agreement Approved; Issuance, Sale, and Terms of the Note. On the date hereof, the Board of the Authority and the City Council held a joint public hearing relating to the establishment of the TIF District and the Contract for Private Development between the City, the Authority, and J & J Minneapolis LLC (the "Agreement"), which incorporates a business subsidy agreement. At the public ' hearing,the views of all interested parties were heard. , The Authority hereby approves the Agreement and authorizes the President and Executive Director to execute such 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 J & J Minneapolis LLC, a Washington limited liability company (tlie "Owner"). The Note shall be dated the date of delivery thereof, and shall bear interest at the rate of 5.00%per annum to the earlier of maturity or prepayment. The Authority shall receive in exchange for the sale of the Note the agreement of the Owner to pay the cost of land acquisition as defined in the Agreement. . Section 2. Form of Note. The Note shall be in substantially the following form, with the blanks to be properly filled in and the principal amount and payment schedule adjusted as of the date of issue: 402381v1 JAE SH235-19 iJNITED STATE OF AMERICA ' STATE OF MINNESOTA COUNTY OF SCOTT ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE No.R-1 $2,000,000 TAX INCREMENT REVENUE NOTE 'SERIES 2012 Date � Rate of Original Issue 5.00% The Economic Development Authority for the City of Shakopee ("Authority") for value received, certifies that it is indebted and hereby promises to pay to J & J Minneapolis LLC, a Washington limited liability company (the "Owner"), the principal sum of$2,000,000 and to pay interest thereon at the rate of 5.00%per annum,as and to the extent set forth herein. 1. Pavments. Principal and interest ("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. Payments shall be applied first to accrued interest,and then to unpaid principal. Interest accruing from the date of issue through and including February 1, 20_ shall be compounded semiannually on February 1 and August 1 of each year and added to principal. 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. Interest at the rate stated herein shall accrue on the unpaid principal, commencing on the date of original issue. Interest shall be computed on the basis of a year of 360 days and charged for actual days principal is unpaid. � 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, 90%of the T�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 as of , 2012 (the "Agreement"). The Authority shall have no obligation�to pay principal of and interest on 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 or interest on this Note on any Payment Date shall not constitute a default hereunder as long as the Authority pays principal and interest hereon to the extent of Available T� Increment. The Authority shall have no obligation to pay,the unpaid balance of principal or accrued interest that may remain after the final Payment on February 1,20_. 402381v1 JAE SH235-19 2 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 Pre�avment. The principal sum and all accrued interest 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 Obli ation. This Note is the sole note of an issue in the total principal amount of $2,000,000, 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 April 24,2012,and pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.174 to 469.179. 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 and the interest hereon shall not be deemed to constitute a general obligation of tlie 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 or interest on this Note or other costs incident hereto except out of Available Tax Increment, and neither the full faith and credit nor the taYing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest on 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 Contract 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 ABATEMENT 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. 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 Director/City Clerk, 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 satisfactory to the Authority, duly executed by the Owner. Upon such transfer or exchange and the payment by the Owner of any ta�c, 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,bearing interest at the same rate and maturing on the same dates. This Note shall not be transferred to any person other than an a�liate, or other related entity, of the Owner, unless the Authority has been provided with an opinion of counsel 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. 402381v1 JAE SH235-19 3 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 REGISTRATION PROVISIONS The ownership of the unpaid balance of the within Note is registered in the bond register of the City Finance Director,in the name of the person last listed below. , Signature of Date of Re�istration Re�istered Owner City Finance Director/Ci , Clerk J&J Minneapolis LLC Federal ID# Section 3. Terms,Execution and Deliverv. 3.01. Denomination, Pa,�. 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 and interest on the Note shall be payable by check or draft issued by the Registrar described herein. 3.02. Dates; Interest Payment Dates. Principal of and interest on 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. Re is� tration. The Authority hereby appoints the City Finance Director/City Clerk 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) Re i�. 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 tl�e 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 402381v1 JAE SH235-19 4 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 opinion of counsel 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 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 and interest on 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. (fl Ta�ces, Fees and Char�es. 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 Deliverv. 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. Securitv Provisions. 4.01. Pled�e. The Authority hereby pledges to the payment of the principal of and interest on the Note all Available Tax Increment as defined in the Note. Available Tax Increment shall be applied to 402381v1 JAE SH235-19 5 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 ofthis resolution. 4.02. Bond Fund. Until the date the Note is no longer outstanding and no principal thereof or interest thereon (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 of the principal of and interest on 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 and interest to be paid with respect to the Note. Section 5. Certification of Proceedin�s. 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 24`�'day of April,2012. President Executive Director 402381v1 JAE SH235-19 ( ECONOMIC DEVELOPMENT AUTHORITY FOR THE CITY OF SHAKOPEE � RESOLUTION NO. 12-2 A RESOLUTION APPROVING TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING(ECONOMIC DEVELOPMENT)DISTRICT N0. 14 WITHIN 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("HRA Act");and WHEREAS, within the Project the City has created certain tax increment financing districts pursuant to Minnesota Statutes,Sections 469.174 to 469.179(collectively,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 approve a new t�increment financing plan (the"TIF Plan") for Tax Increment Financing (Economic Development) District No. 14 (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 April 12,2012,the City Planning Commission found that the TIF Plan conforms to the general plan for the development of the City as a whole;and � WHEREAS,this Board has reviewed the contents of the TIF 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 (the "Board") of the Economic Development Authority for the City of Shakopee that: 1. The TIF Plan for the TIF District is hereby approved and adopted. 2. 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. 3. Upon approval of the TIF Plan by the City Council of the City, Authority staff and consultants are autllorized to take all actions necessary to implement the TIF Plan. Approved by the Board of Commissioners of the Economic Development Authority for the City of Shakopee this 24�'day of April,2012. President . Executive Director H:\CC�2012\4-24-12�EDA Res_Approvin�TIF_Plan-SanMar.doc • CITY OF SHAKOPEE � PLANNING COMMISSION � �, RESOLUTION NO. 12-003 ' RESOLUTION FINDING THE TAX INCREMENT FINANCING PLAN FOR � TAX INCREMENT FINANCING DISTRICT NO. 14 LOCATED IN THE MINNESOTA RIVER VALLEY HOUSING AND REDEVELOPMENT PROJECT NO. 1 CONSISTENT WITH THE GENER.AL PLAN FOR DEVELOPMENT OF THE CITY OF SHAKOPEE WHEREAS, the City Council of the City of Shakopee has authorized preparation of a Ta.x Increment Financing Plan("TIF Plan") for Tax Increment Financing District No. 14, located within the Minnesota River Valley Housing and Redevelopment Project No. 1 ("Project") and the TIF Plan has been submitted to the Planning Commission for comment; and WHEREAS, the Planning Commission has reviewed the TIF Plan and has compared it with the general plan for development(i.e. the adopted 2030 Comprehensive Plan) of the City as a whole. , NOW, THEREFORE,BE IT RESOLVED By the Planning Commission of the City of Shalcopee, Minnesota as follows: � 1. The TIF Plan for TIF District No. 14 is found to conform to the general plan for the development of the City of Shakopee as a whole. 2. City staff are authorized and directed to provide a copy of this resolution to the City Council and the Board of Commissioners of the Economic Development Authority for � the City of Shakopee as the Planning Commission's written comment regarding the proposed TIF Plan. Approved this 12th day of April 2012 by the Planning Commission of the City of Shakopee, Minnesota. Chairperson ATTEST: o � • /�l � Community Development Director Superintendent:Dr. Rod Thompson Finance Manager:Mike Burlager P6J�3B..IC SCHOOd.S . �s�S .�, � 1&C]' �� .- ..a�g�,�� R::_ w e� � . . . li�swos�a� T ^ , Business Office April 13, 2012 Mr. Mark McNeill 123 Holmes St S Shakopee, MN 55379 Re: TIF Economic District 14 and TIF Housing District 15 Dear Mark, The Shakopee Public S hhool Board voted to endorse TIF District 14 and TIF District 15 at its meeting on April 9 . The motion adopted and carried was as follows: - "Support the City of Shakopee's proposals for TIF Economic District 14 and TlF Housing District 15." Please add this to the record for these projects. If you need further information, please call me at 952 496-5011 Sincerely, ;:�,�� . � ----�`. ; Michael Burlager Director of Finance 505 Holmes Street South,Shakopee, MN 55379 AN EQUAL OPPORTUNITY EMPLOYER (952)496-5011 •fax:(952)496-5099 AGENDA# `l�• I � SCOTT COUNTY, MINNESOTA REQUEST FOR BOARD ACTION MEETING DATE: APRIL 10, 2012 ORIGINATING DIVISION: Community Services � ORIGINATING DEPARTMENT: Property & Customer CONSENT AGENDA: (- yes r No Services - PRESENTER: Cynthia Geis - 8167 ATTACHMENTS: r' yes i�`No PROJECT: TIME REQWESTED: 15 minutes ACTION REQUESTED: Provide Comment to the City of Shakopee on the Creation of the Proposed Tax Increment Financing District#14; J&J SanMar Project CONTRACT/POLICY/GRANT: r' County Attomey Review FISCAL: I� Finance Review ('" Risk Management Review r Budget Change ORGANIZATIONAL f/ALUES: �°- Provide a Supporti�e Organizational Culture (—' De�lop Strong Public Partnerships r Manage Challenges and Create Opportunities (°Assure Long Term Fiscal Stability . �'" Emphasize Excellence in Customer Senrice DEPARTMENT/DIVISION HEAD SIGNATURE: COUNTY ADMINISTRATOR SIGNATURE: r • s � . A roved: DISTRIBUTION/FILING INSTRUCTIONS: Denied: Tabled: Cynthia Geis, Property & Customer Service Manager Other: e r c�Jt o � �r Michael Sobota, Economic Development Director m n, -inc u�s � Michael Leek, City of Shakopee , . De ut Clerk : Date: -/Q� Background/Justification: The purpose of this agenda item is to provide comment to the City of Shakopee on the creation of the Proposed Tax Increment Financing (TIF) District#14; J&J SanMar Project (see attached TIF plan). The City of Shakopee has scheduled a public hearing on April 24, 2012 at 7:00 pm to gain input on the establishment of TIF District#14, known as the SanMar Project. The project is located in the OPUS MVW & OPUS MVW 2"d Additions which are south of 4�'Ave and west of County Road 83 (Canterbury Road). The parcel is located in an industrial part of Shakopee and lies directly east of the Conagra building and adjacent to Cokem and Outdoor Motor Parts businesses. (see attached map) The proposed development is expected to consist of a 580,000 square foot warehouse and distribution facility. (see proposed facility plan). At least 85% of the facility will be used for warehousing and distribution and 15% available for office space. The anticipated development is projected to create approximately 150 new jobs in r � ' " Public 5ector Advisors Cl�Of�.711a.ICOp88 Presentation to City Council � ,T,,,. ,,,,_ April 24,2012 �_ . � 4 �+�� T � . �"..� ;. � �;: �j� �� c� � � Public Hearing-Approval of Establishment of TIF '��-`� �� 1(��, . � � ``; �� a':= District No. 14(J&J SanMar Project) , ,-,.��. 4'.:, �� 11j . �.-_ • Presenlers:Tom Denaway,Analyst _ Q Sprinqsted • Puthc Sectcr AeNsa�s , Q 5pr�ngsled J&J SanMar Project � Purpose of Presentation • � � � � • The Developers have proposed the construction of a 580,000 square foot warehouse/distribution facility • To provide overview of the Shakopee TIF District No. 14 � • The City intends to create an.Economic Development - Overview of�evelopment Scenario . TIF District as part of the proposed project _ - Outline the major components of a TIF Plan - • Qualification as an E.D.TIF District • But-ForTest • The purpose of the TIF District will be to fund public � • aro�e��d�se orTax increment infrastructure and site improvement costs related to • imPactorTiF��str�cc the development of the warehouse/distribution facility • - Pay-As-You-Go Note . h:Cli�Se:turAdv�sors z � Q Sprinq5ted PWIicSrclorhnxisor, a Q Sprinq5ted 1 r� � Economic Development District What Statutory Findings are Made to Qualifications Approve a TIF Plan? • Term • That the TIF Plan will afford maximum opportunity, — 8 years after the date of receipt of first increment(9 years , COf1SISf@flt wlfh lh@ SOUI1d it@@dS Of th@ Clty aS a maximum). ' • � • Restrictions whole,for development by private enterprise — At least 85°k of the square footage of the buildings is used for • That the TIF Plan conforms to general plans for manufacmring,warenous�ny or dismbuuon development of the City as a whole • That the project will qualify as an Economic � � Development TIF District PUDI�CSfCPo�AdVI50f5 � �Sprinqi�ed PuohcSeUCrAtlr�zcn � s �Sprinqsted What Staiutory Findings are Made to What Statutory Findings are Made to Approve a TIF Plan? " ��onr� Approve a TIF Plan? ��onr� • That the proposed development, in the opinion • °But-For"Finding from TIF Plan: of the City,WOUId flOt f@aS0118bIY b@ @Xp@Ct@CJ . — Development will include substanlial site improvements and public infrastructure expenses,in addition to ihe cost of acquiring the site t0 OCCU�S0121y thfOUgh pflVat@ I�V@StCTt@Ilt — Developer has submitted information demonstra6ng the Wlthlll th@�@BSOflab�y f0�@S@@8b�8 fUtU�e development of the site is not financially feasible without assistance —ThB bU�/f0�tBSt: — A review of the Developers operating pro fortna verified the development of the site would not be feasible � The proposed development would not occur but/for the — 7he City finds the development of this site,and the Use of taX if1C�2meflt flnanCing construction of the propose warehouseldistribution facility � , would not occur but for the use of TIF � h�bilc Secmr aavisors - e Q Sprinqsted PuUlic Seclm FOrlxnr. � Q Spfingsted � What Statutory Findings are Made to TIF Plan for TIF Economic Development . Approve a TIF Plan? ��onr� District No. 14 • That the increased market value that could • Budget of revenues,maximum amount statutorily . reasonably be expected to occur without the required to be represented � use of TIF would be less than the increase in - Tax increment revenue $ s,oas,583 — Bond proceeds the market value estimated to result from the - �oan proceeds proposed development after subtracting the - Rea�estate saies total subsidy provided - speciai assessments . — GrantslOther • — Total $ 3,086,583 � PubOcSacro�Advinurs . e �Sprioqited PuchcSe;lcrAOrlscri c �Sprfnqsted TIF Plan for TIF Economic Development TIF Plan for TIF Economic Development District No. 14 (�o„t) District No. 14 (�ont) • Budget of expenses,maximum amount statutorily required to • Impact on other taxing jurisdictions-hypothetical be represented � decrease in local tax rate over term of District — Sile improvements and infrasWclure costs $2,095,577 — Clty (0.305%) — Interest Payments 682,346 0 — Administrative Expenses 308,660 — COU�ty (0.091/o) — Other Expenses — School District (0.291%) • CapitaC¢ed Inlerest � 0 • Hypothetical because it assumes all development will — Total $3,oas,583 occur regardless of the use of TIF Pub�!c5ectrrAavisors ' m Q Sp�inq5ted PUUIit5tC4o�F.prf�of+ 11 �Sp�inq5ted . . 3 .'(. �� ~� . " Y � Pay-As-You-Go Note . . Questions? • The Developer has`requested the TIF assistance be provided on a pay-as-you-go basis • The Developer will be financing the improvement Thomas J.Denaway,Analyst . costs upfront,and will be reimbursed by TIF as 651-223-3075 � generated - ' • The providing of assistance on a pay-go basis shifts the riskto the Developer in the event TIF projections , Springsted Incorporated are lower than projected.� - � 380 Jackson Street,Suite 300 • The maximum amount of reimbursement eligibie Saint Paul,MN 55101-2887 under the TIF Plan is a principal amount of$2.OM aunn,secrorqav�sors ix � Q Springsled PuO�mSeUnrA�vlsors io � Q Sprinqsted \ - 4