HomeMy WebLinkAbout10.A.1. J & J Application for Tax Increment Financing (TIF) for SanMar Project � �,�� �3
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CITY OF SHAKOPEE •
Memorandum
TO: Economic Development Authority (EDA)
Honorable Mayor and City Council
Mark McNeill, EDA Executive Director/City Administrator
FROM: R. Michael Leek, Community Development Director
SUBJECT: J& J Application for Tax Increment Assistance (TIF) for SanMar
Project
MEETING DATE: March 6, 2012
INTRODUCTION:
J& J Minneapolis, L.L.C. (J&J), has submitted an application to the City requesting tax
increment financing (10-year term) in the amount of $1,516,559.00 to be used
principally for site development costs in connection with a proposed 580,000 square
foot warehouse distribution facility. (A copy of report to the EDAC on January 21, 2012
and the application is attached for the EDA's information) Construction of the facility is
planned to begin on or about July 1, 2012 in the Opus MVW project, located on the
south side of Fourth Avenue near CR 83.
The EDA is to make a decision whether to direct staff and the City's consultants to
proceed with the development of a TIF plan for the project and setting of a public
hearing on the TIF plan.
DISCUSSION:
Description of the Project:
J. & J. proposes the construction of a 580,000 square foot warehouse distribution facility
on 44.66 acres of land located in Opus MVW 2" and along C.R. 83 and Fourth Avenue.
The building is proposed to be a single story structure and have a 36-foot clear height.
The building would also have about 10,000 square feet of office space and a 160,000
square foot mezzanine for a"piece picking" operation.
The estimated total cost of the project is $35,871.437.00. The applicant proposes
funding in the amount of $17,177,439.00 each in the form of equity and bank loan, and
$1,516,559.00 in the form of TIF assistance on a"pay as you go" basis for a term on 6
years. '
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The project is projected to employ about 150 full-time employees at opening. According
to the application, about 78% (or 117) will have wages less than $14.16 per hour, while
20% (or 30) will have wages that are between $14.17 and $18.99 per hour. The �
estimated value of fringe benefits for each hour worked is about $3.81.
Process for Approval of a TIF Plan:
In the event that the City Council/EDA decides that it wishes to proceed with TIF for the
project, the following is the sequence of events/timeline that would occur or be
followed;
1. The City would, with the assistance of its attorneys and financial consultants
(Springstedj would develop a master schedule of notices and resolutions, as well
as the TIF plan and development agreement for TIF.
2. 30 days before the public hearing—the TIF Plan must be sent to Scott County
and ISD 720 for review and comment. While these bodies might not agree with
the concept of TIF, they cannot per se object.
3. Sometime prior to the public hearing, the Planning Commission must review the
TIF Plan only to determine that the proposal is consistent with the City's adopted
2030 Comprehensive Plan.
4. At least 10 days, but no more than 30 days before the public hearing — publish
notice of the public hearing.
5. EDA approves the TIF plan.
6. City Council holds the public hearing on the TIF plan, and approves it after the
public hearing. On the same night the City Council may approve the
development agreement.
Generally speaking the public hearing is set for a date at least sixty (60) days from step 1
above. It should be noted that the applicant for assistance must agree to pay the City's
costs in developing and approving the TIF plan and agreement.
Attached for the EDA and Council's information is a copy of the timeline for the SanMar
TIF plan process. The public hearing on the TIF plan will be scheduled for a special .
meeting to be convened on April 24, 2012.
City Criteria for Business Assistance:
The City's current policy includes the current criteria for granting a business subsidy;
a. Increase in Tax Base — An increase in tax base is a necessary condition for
granting a business subsidy under the policy, but cannot be the sole grounds for
granting a subsidy.
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b. lobs and Wages:— Every recipient must create "...the maximum number of livable
wage jobs feasible for the proposed project." These jobs should pay 275% of
' federal minimum wage, exclusive of benefits.
c. If creation of jobs is not the goal, then the goal is to be specific, tangible and
' measurable.
The subject property is currently vacant, and the material submitted to date indicates
that the value of the completed project would be almost $36 million.
Increase in Tax Base:
The specific calculations related to this proposed project and request are found in the
accompanying application. Some of the relevant information is as follows;
Original Tax Capacity $ 68,500.00
Projected Tax Capacity $511,250.00 (beginning in 2014)
Net Retained Tax Capacity $265,650.00 �
Gross Revenue Increase $281,972.00
Net Revenue Increase $252,760.00 (tax increment through 2019)
Of the net gain in tax capacity, approximately $177,000 is allocated to the metropolitan
fiscal disparities pool. In other words, the contributions to fiscal disparities pool are
made from within the TIF District, which reduces the amount of captured tax capacity
forTlF purposes.
, In summary, the proposed project is proposed to increase the tax capacity of the parcel
by about $442,750.00, and thus does result in a significant increase in tax base for the
parcel. '
Jobs and Wages: '
The current city policy requires that "every recipient �must create "...the maximum
number of livable wage jobs feasible for the proposed project." These jobs should pay
275% of federal minimum wage, exclusive of benefits. The current federal minimum
wage is $7.25 per hour. Thus, 275% of federal minimum wage is $19.94 per hour.
� The "But For" Test:
When approving the TIF�PIan, the Council will be required to find that this proposed
development is not likely to occur without assistance, and that no other development is
likely to occur at this site without assistance that would create a higher market value
than the proposed development (after adjusting for the TIF assistance). If the City
moves forward with this proposal, staff and financial advisors will be analyzing these
points, and also the amount of tax increment that is reasonably necessary.
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Attached for the EDA's/Council's information is a copy of Springsted's pro forma analysis
related to the "but for" test. A representative of Springsted will be available at the
meeting to respond to questions related to the but for analysis and TIF timeline.
ALTERNATIVES:
EDA:
1. Offer and approve a motion recommending to the City Council that it initiate the
process, and set the public hearing, for creating a TIF District to provide assistance
(in an amount to be determined to be necessary) for the proposed 580,000 square
foot warehouse/distribution center because (a) the project represents significant job
creation consistent with the City's business subsidy policy, (b) the project will result
in a significant increase in tax base for the City, and (c) the project would not occur
but for the proposed assistance. .
2. Offer and approve a motion recommending to the City Council that it not direct staff
to initiate the process for creating a TIF District to provide assistance for the
proposed 580,000 square foot warehouse/distribution center because (a) the
project does not represent significant job creation consistent with the City's business
subsidy policy, and (b) the project will not result in a significant increase in tax base
for the City.
3. Recommend to the City Council that it table the matter with direction to obtain
additional, required information.
CITY COUNCIL:
4. Offer and approve a motion initiating the process, and set the public hearing, for
creating a TIF District to provide assistance (in an amount to be determined to be
necessary) for the proposed 580,000 square foot warehouse/distribution center
because (a) the project represents significant job creation consistent with the City's
business subsidy policy, and (b) the project will result in a significant increase in tax
base for the City.
5. Offer and approve a motion directing that staff not initiate the process for creating a
TIF District to provide assistance for the proposed 580,000 square
foot warehouse/distribution center because (a) the project does not represent
significant job creation consistent with the City's business subsidy policy, and (b) the
project will not result in a significant increase in tax base for the City.
6. Table the matter with direction to obtain additional, required information.
RELATIONSHIP TO CITY GOALS:
The proposed project and City action on the request relate to City Goals;
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B. Positively manage the challenges and opportunities presented by growth,
development and change, and to
D. Maintain, improve and create strong partnerships with other public and private
sector entities.
EDAC RECOMMENDATION:
The EDAC recommended unanimously that the EDA/City Council direct staff and its
consultants to develop a TIF plan for the proposed SanMar project and set the public
hearing on the TIF plan.
REQUESTED ACTION:
EDA:
The EDA is asked to offer and approve a motion recommending that the City initiate the
process for creating a TIF District to provide assistance (in an amount to be determined
to be necessary) for the proposed SanMar 580,000 square foot warehouse/distribution
center to be located in the Opus MVW plat at 4 Avenue and CR 83 because (a) the
project represents significant job creation consistent with the City's business subsidy
policy, and (b) the project will result in a significant increase in tax base for the City. The
EDA is also asked to recommend that the public hearing be set for a special meeting of
the EDA/City Council to be set for April 24, 2012 �
CITY COUNCIL:
Offer and approve a motion initiating the process, and setting the public hearing, for the
creation of a TIF District to provide assistance (in an amount to be determined to be
necessary) for the proposed SanMar 580,000 square foot warehouse/distribution center
to be located in the Opus MVW plat at 4 Avenue and CR 83 because (a) the project
represents significant job creation consistent with the City's business subsidy policy, and
(b) the project will result in a significant increase in tax base for the City. The Council is
further asked to direct staff to set the TIF public hearing for a special meeting of the
EDA/City Council to be convened on April 24, 2012.
0
R. Michael Leek '
Community Development Director
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City of Shakopee, Minnesota
Creation of a Tax Increment Financing Plan for
Tax Increment Financing (Economic Development) District No.
(J & JISanMar Project)
' Proposed Schedule of Events
Schedule of Events
Date Event Responsible Party
February - March Evaluate Developer information and drafting of TIF Plan City, Kennedy & Graven,
Springsted
Establishment of TIF Plan and TIF District
Tuesday,
March 6, 2012 City Council calls for public hearing City, Kennedy & Graven
Prior to Friday, County and School District receive impact letters & draft TIF plan
March 23, 2012 (at least 30 days prior to public hearingJ Springsted
Thursday, April 12,
2012 Publication of notice of public hearing in Shakopee Valley News Springsted
Deadline: A ril 5 10-30 da s rior to ublic hearin
April 12, 2012 City Planning Commission reviews TIF plan City, Kennedy & Graven
� Tuesday, City, Kennedy & Graven,
April 24, 2012 EDA reviews and adopts resolution approving TIF Plan and TIF District . Springsted
S ecial Meetin
Tuesday, City Council holds public hearing, and adopts resolution approving TIF Plan and City, Kennetly & Graven,
April 24, 2012 TIF District Springsted
S ecial Meetin
Tuesday, City, Kennedy & Graven
April 24, 2012 City Council approves Development Agreement
After April 24 Springsted
Public Hearing State filing and request for county certification
�-,
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/�e U is�� Covn� il � I D, A. I.
Springsted Incorporated
, 380 Jackson Street, Suite 300 .
,
Saint Paul, MN 55101-2887
� S p r � n 9 S t e d Tel: 651-223-3000
j Fax: 651-223-3002
+ www.springsted.com
MEMORANDUM �
T0: Michael Leek, Community Development Director
FROM: Tony Schertler, Senior Vice President
Tom Denaway, Analyst �
DATE: February 29, 2012 � �
SUBJECT: But-For Analysis of J& J Application for Tax Increment Assistance for SanMar Project
The purpose of this memorandum is to examine the development project costs, operating pro forma and expected
rate of return as provided by the Developer in order to determine whether the development is would be unlikely to
proceed "but-for" the requested Tax increment Financing (TIF) assistance, and if the assistance requested by the
Developer would provide a rate of return in excess of typical market expectations.
Background
The TIF application proposes the development of a 580,000 square foot apparel antl accessories warehouse
distribution facility including 10,000 square feet of office and a 160,000 square foot mezzanine. The Developer is
proposing the approximately $35M project will be funtled by an even split of $17,935,719 of private financing and an
equal amount of private equity. Additionally, the Developer is requesting the project be supported by TIF on a pay-
as-you-go basis totaling $1,516,560, through the creation of an Economic Development TIF District. 'The TIF is
proposed to be provided in annual amounts of $252,760 annually over a period of 6-years in compliance with the
City's TIF policy. The TIF application proposes the start of construction in May 2012 with completion expected by
May 2013. For the purposes of evaluating the Developer's operating pro forma we have utilized the Developer's
projected TIF annual TIF assistance of $252,760. If the project were to move forward the TIF projections will be
more accurately refined with the drafting of the TIF plan,
The TIF applicant is J& J Minneapolis LLC who will be property developer and owner of the building. J& J has
proposed they wili enter into a long term 20-year lease with SanMar. The tenant SanMar is projected to only lease
the Suite One (370,000 sfl portion of the building initially. SanMar is projected to take occupancy of the remaining
Suite Two (210,000 sfl portion property in the sixth year of the operating pro froma; during the unoccupied period
SanMar will not be paying operating expenses or rent on the vacant space. The Developer has indicated that it
would be cost prohibitive to expand the building to meet the additional tenant space requirements in year 6, and thus
has proposed the construction of the 580,000 square foot facility in its entirety at project initiation, The Developer J
& J LLC and the tenant SanMar are affiliated but separate entities.
Public Sector Advisors
Financial Analysis of J& J Application for Tax Increment '
3/6/2012
Page 2 "
The purpose of this analysis is two-foltl, first to determine if the project is unlikely to proceed "but-for" the assistance,
and second to determine if the requested assistance would create a rate of return in excess of typical market
expectations.
Project Costs
The Developer's submittal includes a preliminary total project budget of $35,871,437.
The total cost is broken down below;
,r : :- :J & J Buildin ,.Total Cost
Land Ac uisition $5,349,222
Site Develo ment 9,000,000
Buildin Cost 18,800,000
Utilit Im rovements Onsite 1,000,000
Professional Services 800,000
Fees and Permits 922,215
Total Costs $35,871,437
The Developer has indicated they have entered into a purchase agreement to acquire the 44.66 acre parcel for a
cost of $5,339,222, which equates to a per acre purchase price of $119,777, The purchase price appears to be
reasonable and likely to occur as projected.
The total costs related to the construction of the building total $18,800,000, which includes the following line-items;
$500,000 for design and development, $14,500,000 for building shell, $600,000 for interior o�ces, and $3,200,000
for mezzanine space. The construction costs equate to approximately $32 per square foot for total development
costs, with the building shell costing approximately $25 per square foot, the office space costing approximately $60
per square foot, and the mezzanine space costing approximately $20 per square foot. The proposed construction
costs, while preliminary in nature, appear reasonabie based on a comparison to the RSMeans Quickcost Estimator,
which is an online resource for reviewing construction cost estimates. Additional tenant improvement expenses of
$4.11 are projected to be incurred in the fifth year of the pro forma in anticipation of the occupancy of the Suite Two
portion of the building, with the tenant improvement costs totaling $863,100.
The developer provided a cost estimate for the site work of $9,000,000, which includes costs related to demolition of
existing pads, parking, truck courts, earthwork, grading and landscaping. The site is approximately 44.66 acres or
1,945,171.80 square feet, which results in a per square foot site development cost of $4.62. Based on a review of
similar projects this is a reasonable estimate of the site costs. The Developer stated they are likely to request
reimbursement for a portion of the site development costs through TIF. Since the reimbursement of site development
costs will be reimbursed on an as-incurred basis the Developer will be responsible for providing receipts for the TIF
reimbursed costs of $1,516,560.
Finally the Developer included onsite utility costs of $1,000,000, professional services of $800,000 antl fees and
permits of $922,215. The professional fees equate to approximately 2% of the total project costs, which is a
1
Financial Analysis of J& J Application for Tax Increment
3/6/2012
Page 3
reasonable amount. The application details the individual fees and permits totaling the butlgeted amount of
$922,215. No additional detail was provided regarding the utility improvements.
Sources of Funds , '
- Sourcesof'Funds- � . . . , . , . _ : '
�� .
+ Private E uit $17,935,719 �
Private Financin 17,935,718
Total Source $35,871,437
The Developer has indicated they will expecting the terms of their private lending to require equity of approximately
50% of the project cost, or $17,935,719. The private financing is projected to be based on a term of 30-years at a
rate of 4.5%; which are reasonable assumptions. Due to the tightened financial markets as a result of the recent
economic situation the Developer is anticipating being required to pay up to half of the project costs from equity
sources.
Return Analysis
In order to understand the potential return realized by the Developer, with and without the TIF assistance, we utilized
the information in their supplied pro forma to perform an internal rate of return (IRR) analysis. The IRR analysis
allows for measuring the potential return to the developer over an operating period, while accounting for the time
value of money. In this case the Developer prepared an operating pro forma based on a 10-year period. The
purpose of evaluating the operating pro forma is to understand the potential return to the Developer through the initiai
development of the project and the operation of the enterprise over a period of time. The use of a 10-year period to
illustrate the return is not indicative of the Developer's intended investment period, as they indicate the facility will be
leased for a 20-year term. �
The first step in analyzing the return to the Developer is to determine if the costs presented are reasonable. We have
discussed a portion of the costs above and have commented on the impact of potential project cost savings. If cost
savings occur absent any other changes, the Developer would realize a greater return than projected. Though the
costs outlined above are estimates, and subject to future change, the assumptions do appear to be reasonable.
The second step in calculating the return to the Developer is to determine if the operating revenues and expenses
are reasonable. �
• The Developer proposes a modified net lease rates of $4.28 for the initial Suite One and Mezzanine space,
� with the tenant responsible for approximately 72% of the operating expenses. We examined various intlustrial
" and warehouse lease rates in the Twin Cities area market, and the proposed lease rate appears reasonable.
• The Developer is assuming operating costs of approximately 28% of the operating expenses, plus an
� additional management expense of 3% and capital reserves of 1%. These are reasonable assumptions.
� The operating pro forma assumes a 3% inflation assumption for both revenues and expenses.
The third step in performing an internal rate of return analysis is to assume a hypothetical sale of the asset at the end
of the pro forma review period, which in this case is 10-years. The use of a hypothetical sale in this analysis is only
Financial Analysis of J& J Application for Tax Increment
3/612012
Page 4
for purposes of calculating the potential return to the Developer, and is by no means indicative of the likelihood of a
sale in Year 10, In order to accurately perform the return analysis all assets have to be converted to a cash position
at the end of the pro forma, in order to calculate the return on the initial equity investment. The Developer has
indicated they intend to own and lease the building for an extentled term greater than the 10-years analyzetl for
purposes of calculating the return. For the purpose of accounting for the value of the building asset in year 10 of the
operating pro forma, we used a capitalization rate of 8.5% to determine the building value. For the purpose of
calculating the return to the Developer we added this hypothetical sale to the operating pro forma; which was not
originally included in the Developer's pro forma.
The table below shows the Developer's base pro forma with the rate of return with and without TIF.
�Base Derreloper i ""`� �'UVith ���' � � Wittiout "��'�
� Pro Forma �, � � TIF Assistance � �.1'IF�Assistance �
�'(L'_everaged) . ' � 1
� - r ��
i . ,
5.86% � �5.01 %
Typically, in the review of development projects of this nature we define the typical reasonable rate of return as a
� range of IRR between 10% - 20% for a leveragetl return. Due to the nature of this project, and the affiliation of the
Developer J&J LLC, antl the tenant SanMar, the Developer has indicated a willingness to accept a lower rate of
return in order fo maintain market lease rates for the tenant. This results in a lower rate of return than typically
required for more traditional real estate developments. Additionally, the relatively low amount of TIF Assistance
($1,516,559) in relation to total project cost, and the short 6-year periotl of which it is provided on a pay-as-you-go
basis, results in a relatively narrow margin between the rate of return with assistance and without assistance. The
narrowness of this spread of returns makes it difficult to articulate specifically through the rate of return analysis the
need for the TIF assistance.
However, when viewing the Developer's operating pro forma as a whole, the need for assistance becomes apparent.
It appears based on the Developer's pro forma, that the need for TIF assistance largely centers arountl the tenant
occupying only a portion of the development initially. Due to the prohibitive cost of expantling the project in year 6,
the Developer will be carrying 100% of the debt and operating cost of the project starting in year 1, while only
receiving lease revenue on 64% of the property until year 6. As a result, the Developer is likely to need the additional
operating assistance provided by the TIF in these initial years for the project to be feasible, Basetl on this analysis, it
could be stated the Developer would be unlikely to undertake this project, as proposed, "but-for" the provision of the
TIF assistance as requested.
Additionally given our review of the Developer's projected rate of return, and the assumptions on which this analysis
is based, the projectetl return with assistance of 5.86°/a with assistance is reasonable and not in excess of typical
market expectations. The need for assistance analysis is based on the development proposal as currently
presented. However, to understand the potential benefit if the future the development were to occupy the space at a
rate greater than currently projected we performed a sensitivity analysis and the rate of return with assistance in this
event is still not in excess of market expectations.
�
Springsted Incorporated
380 Jackson Street, Suite 300
; .. s -;� Saint Paul, MN 55101-2887
. R'`�+ � a
�,. �� p r i n g s fi e cl Tel: 651-223-3000
� Fax: 651-223-3Q02
www.springsted.com
MEMORANDUM
T0: Michael Leek, Community Development Director �
FROM: Tony Schertler, Senior Vice President , � �
Tom Denaway, Analyst �
DATE: February 29, 2012 '
SUBJECT: But-For Analysis of J& J Application for Tax Increment Assistance for SanMar Project
The purpose of this memorandum is to examine the development project costs, operating pro forma and expected
rate of return as provided by the Developer in order to tletermine whether the development is would be unlikely to
proceed "but-for" the requested Tax Increment Financing (TIF) assistance, and if the assistance requested by the
Developer would provide a rate of retum in excess of typical market expectations.
Background
The TIF application proposes the development of a 580,000 square foot apparel and accessories warehouse '
distribution facility including 10,000 square feet of office and a 160,000 square foot mezzanine, The Developer is
proposing the approximately $35M project will be funded by an even split of $17,935,719 of private financing and an
equal amount of private equity, Additionally, the Developer is requesting the project be supported by TIF on a pay-
as-you-go basis totaling $1,516,560, through the creation of an Economic Development TIF District, The TIF is
proposed to be provided in annual amounts of $252,760 annually over a period of 6-years in compliance with the
City's TIF policy. The TIF application proposes the started of construction in May 2012 with completion expected by
May 2013. For the purposes of evaluating the Developer's operating pro forma we have utilized the Developer's
projected TIF annual TIF assistance of $252,760. If the project were to move forward the TIF projections will be
� more accurately refined with the drafting of the TIF plan,
The TIF applicant is J& J Minneapolis LLC who will be property developer and owner of the building. J& J has
proposed they will enter into a long term 20-year lease with SanMar. The tenant SanMar is projected to only lease
the Suite One (370,000 sfl portion of the building initially. SanMar is projected to take occupancy of the remaining
Suite Two (210,000 sfl portion property in the sixth year of the operating pro froma; during the unoccupied period
SanMar will not be paying operating expenses or rent on the vacant space. The Developer has intlicated that it
would be cost prohibitive to expand the building to meet the additional tenant space requirements in year 6, and thus
has proposed the construction of the 580,000 square foot facility in its entirety at project initiation. The Developer J
& J LLC antl the tenant SanMar are affiliatetl but separate entities.
- Public Sector Advisors
Financial Analysis of J& J Application for Tax Increment
2l29/2012 .
Page 2
The purpose of this analysis is two-fold, first to determine if the project is unlikely to proceed °but-for" the assistance,
and second to determine if the requested assistance would create a rate of return in excess of typical market
expectations.
Project Costs
The Developer's submittal includes a preliminary total project budget of $35,871,437,
The total cost is broken down below:
' � J:& J'Buildin ' `Total Cost_ :
Land Ac uisition $5,349,222
Site Develo ment 9,000,000
Buildin Cost 18,800,000
Utilit Im rovements Onsite 1,000,000
Professional Services 800,000
Fees and Permits 922,215
Total Costs $35,871,437
The Developer has indicated they have enteretl into a purchase agreement to acquire the 44.66 acre parcel for a
cost of $5,339,222, which equates to a per acre purchase price of $119,777. The purchase price appears to be
reasonable and likely to occur as projected.
The total costs related to the construction of the building total $18,800,000, which includes the following line-items;
$500,000 for design and development, $14,500,000 for building sheli, $600,000 for interior o�ces, and $3,200,000
for mezzanine space. The construction costs equate to approximately $32 per square foot for total development
costs, with the builtling shell costing approximately $25 per square foot, the office space costing approximately $60
per square foot, and the mezzanine space costing approximately $20 per square foot. The proposed construction
costs, while preliminary in nature, appear reasonable basetl on a comparison to the RSMeans Quickcost Estimato�
which is an online resource for reviewing construction cost estimates. Additional tenant improvement expenses of
$4.11 are projected to be incurred in the fifth year of the pro forma in anticipation of the occupancy of the Suite Two
portion of the building, with the tenant improvement costs totaling $863,100.
The developer provided a cost estimate for the site work of $9,000,000, which includes costs related to demolition of
existing pads, parking, truck courts, earthwork, grading and lantlscaping. The site is approximately 44.66 acres or
1,945,171.80 square feet, which results in a per square foot site development cost of $4.62. Basetl on a review of
similar projects this is a reasonabie estimate of the site costs. The Developer stated they are likely to request
reimbursement for a portion of the site development costs through TIF. Since the reimbursement of site development
costs will be reimbursed on an as-incurred basis the Developer will be responsible for providing receipts for the TIF
reimbursed costs of $1,516,560.
Finally the Developer included onsite utility costs of $1,000,000, professional services of $800,000 antl fees and
permits of $922,215, The professional fees equate to approximately 2% of the total project costs, which is a
Financial Analysis of J& J Application for Tax Increment
2/29l2012
Page 3
� reasonable amount. The application details the individual fees and permits totaling the budgeted amount of
$922,215. No additional detail was provided regarding the utility improvements. .
Sources of Funds �
Sources of Funds ` ' • ` `
Private E uit ' $17,935,719
Private Financin 17,935,718
Total Taxes and Le al Fees $35,871,437
The Developer has indicated they will expecting the terms of their private lending to require equity of approximately
50% of the project cost, or $17,935,719, The private financing is projected to be based on a term of 30-years at a
rate of 4.5%; which are reasonable assumptions. Due to the tightened financiai markets as a result of the recent
economic situation the Developer is anticipating being required to pay up to half of the project costs from equity
sources.
Return Analysis
In order to understantl the potential return realizetl by the Developer, with and without the TIF assistance, we utilized
the information in their supplied pro forma to perform an internal rate of return (IRR) analysis. The IRR analysis
allows for measuring the potential retum to the developer over an operating period, while accounting for the time
value of money. In this case the Developer prepared an operating pro forma based on a 10-year period. The
purpose of evaluating the operating pro forma is to understand the potentiai return to the Developer through the initial
development of the project and the operation of the enterprise over a period of time. The use of a 10-year period to
illustrate the return is not indicative of the Developer's intendetl investment periotl, as they intlicate the facility will be
leased for a 20-year term. �
The first step in analyzing the return to the Developer is to determine if the costs presentetl are reasonable. We have
discussed a portion of the costs above and have commented on the impact of potential project cost savings. If cost
savings occur absent any other changes, the Developer would realize a greater return than projectetl. Though the
costs outlinetl above are estimates, and subject to future change, the assumptions do appear to be reasonable,
� The second step in calculating the return to the Developer is to determine if the operating revenues and expenses
are reasonable. �
• The Developer proposes a modified net lease rates of $4.28 for the initial Suite One and Mezzanine space,
with the tenant responsible for approximately 72% of the operating expenses. We examined various industrial
and warehouse lease rates in the Twin Cities area market, and the proposed lease rate appears reasonable.
• The Developer is assuming operating costs of approximately 28% of the operating expenses, plus an
. additional management expense of 3% and capitai reserves of 1%. These are reasonable assumptions.
• The operating pro forma assumes a 3% inflation assumption for both revenues and expenses.. �
The third step in performing an internal rate of return analysis is to assume a hypothetical sale of the asset at the end
� of the pro forma review period, which in this case is 10-years. The use of a hypothetical sale in this analysis is only .
Financial Analysis of J& J Application for Tax Increment
2/29/2012
Page 4
for purposes of calculating the potential return to the Developer, and is by no means indicative of the likelihood of a
sale in Year 10. In order to accurately perform the return analysis all assets have to be converted to a cash position
at the end of the pro forma, in order to calculate the return on the initial equity investment. The Developer has
intlicated they intend to own and lease the building for an.extentled term greater than the 10-years analyzed for
purposes of calculating the return. For the purpose of accounting for the value of the building asset in year 10 of the
operating pro forma, we used a capitalization rate of 8�,5% to determine the building value. For the purpose of
calculating the return to the Developer we added this hypothetical sale to the operating pro forma; which was not
originally included in the Developer's pro forma.
The table below shows the Developer's base pro forma with the rate of return with and without abatement.
,
�.Base Developer ; � `'Wifh � ` 'Wi[iiout
Pro�.Forma ~; TIF�Assistance ,; �1'IF Assistance �
: (Leveraged) � � ' -� `-�
5.86% 5.01 %
Typically, in the review of development projects of this nature we define the typical reasonable rate of return as a
range of IRR between 10% - 20% for a leveragetl return. Due to the nature of this project, and the affiliation of the
Developer J&J LLC, and the tenant SanMar, the Developer has indicated a willingness to accept a lower rate of
return in order to maintain market lease rates for the tenant. This results in a lower rate of return than typically
required for more traditional real estate developments. Additionally, the relatively low amount of TIF Assistance
($1,516,559) in relation to total project cost, and the short 6-year period of which it is provided on a pay-as-you-go
basis, results in a relatively narrow margin between the rate of return with assistance and without assistance. The
narrowness of this spread of returns makes it difficult to articulate specifically through the rate of return analysis the
need for the TIF assistance.
However, when viewing the Developer's operating pro forma as a whole, the need for assistance becomes apparent.
It appears based on the Developer's pro forma, that the neetl for TIF assistance largely centers around the tenant
occupying only a portion of the development initially. Due to the prohibitive cost of expanding the project in year 6,
the Developer will be carrying 100% of the debt and operating cost of the project starting in year 1, while only
receiving lease revenue on 64% of the property until year 6. As a result, the Developer is likely to need the additional
operating assistance provided by the TIF in these initial years for the project to be feasible. Based on this analysis, it
could be stated the Developer would be unlikely to undertake this project, as proposetl, "but-for" the provision of the .
TIF assistance as requested.
Additionally given our review of the Developer's projectetl rate of return, and the assumptions on which this analysis
is based, the projected return with assistance of 5.86% with assistance is reasonable and not in excess of typical
market expectations. The need for assistance analysis is basetl on the development proposal as currently
• presented. However, to understand the potential benefit if the future the development were to occupy the space at a
rate greater than currently projected we performed a sensitivity analysis and the rate of return with assistance in this
event is still not in excess of market expectations.
':�, r
�
CITY OF SHAKOPEE
Memorandum
TO: Economic Development Advisory Committee (EDAC)
FROM: R. Michael Leek, Community Development Director
SUBJECT: J& J Application for Tax Increment Assistance (TIF)
MEETING DATE: January 21, 2012
INTRODUCTION: �
J& J Minneapolis, L.L.C. (J&J), has submitted an application to the City requesting tax ,
increment financing in the amount of $1,516,559.00 to be used principally for site
development costs in connection with a proposed 580,000 square foot warehouse
distribution facility. (A copy of the application is attached for the EDAC's information) �
Construction of the facility is planned to begin on or about July 1, 2012 in the Opus
MVW project.
The EDAC is asked to review, discuss and make a recommendation to the City
Council/EDA regarding the application and whether to offer TIF assistance to the
project.
DISCUSSION: �
Description of the Project:
J. & J. proposes the construction of a 580,000 square foot warehouse distribution facility
on 44.66 acres of land located in Opus MVW 2" and along C.R. 83 and Fourth Avenue.
The building is proposed to be a single story structure and have a 36-foot clear height.
The building would also have about 10,000 square feet of office space and a 160,000
square foot mezzanine for a"piece picking" operation.
The estimated total cost of the project is $35,871.437.00. The applicant proposes
funding in the amount of $17,177,439.00 each in the form of equity and bank loan, and
$1,516,559.00 in the form of TIF assistance.
The project is projected to employ about 150 full-time employees at opening. According
to the application, about 78% (or 117) will have wages less than $14.16 per hour, while
20% (or 30) will have wages that are between $14.17 and $18.99 per hour. The
� estimated value of insurance benefits for each hour worked is about $3.81.
H:�EDAC�2012\01212012\SanMar TIF\SanMar Report.docx 1
�,
. •
Process for Approval of a TIF Plan: �
In the event that the City Council/EDA ultimately decides that it wishes to proceed with
TIF for the project, the following is the sequence of events/timeline that would occur or
be followed;
1. The City would, with the assistance of its attorneys and financial consultants
would develop a master schedule of notices and resolutions, as well as the TIF
plan and development agreement for TIF.
2. 30 days before the public hearing —the TIF Plan must be sent to Scott County
and ISD 720 for �eview and comment. These bodies cannot per se object.
3. Sometime prior to the public hearing—The Planning Commission must review
the TIF Plan only to determine.that the proposal is consistent with the City's
adopted 2030 Comprehensive Plan.
, • 4. At least 10 days, but no more than 30 days before the public hearing — publish
- notice of the public hearing.
5. EDA approves the TIF plan.
6. City Council holds the public hearing on the TIF plan, and approves it after the
public hearing. On the same night the City Council may approve the
development agreement. .
Generally speaking the public hearing is set for a date at least sixty (60) days from step 1
above. It should be noted that the applicant for assistance must agree to pay the City's
costs in developing and approving the TIF plan and agreement.
City Criteria for Business Assistance:
The City's current policy includes the current criteria for granting a business subsidy;
a. Increase in Tax Base — An increase in tax base is a necessary condition for
granting a business subsidy under the policy, but cannot be the sole grounds for
granting a subsidy.
b. Jobs and Wages — Every recipient must create "...the maximum number of livable
wage jobs feasible for the proposed project." These jobs should pay 275% of
federal minimum wage, exclusive of benefits.
c. If creation of jobs is not the goal, then the goal is to be specific, tangible and
measurable.
The subject property is currently vacant, and the material submitted to date indicates
that the value of the completed project would be almost $36 million.
Increase in Tax Base:
H:�EDAC\2012\01212012\SanMar TIF\SanMar Report.docx 2
v
The specific calculations related to this proposed project and request are found in the
accompanying application. Some ofthe relevant information is as follows;
Original Tax Capacity $ 68,500.00
Projected Tax Capacity $511,250.00 (beginning in 2014)
Net Retained Tax Capacity $265,650.00
Gross Revenue Increase $281,972.00
Net Revenue Increase $252,760.00 (tax increment through 2019) �
Of the net gain in tax capacity, approximately $177,000 is allocated to the metropolitan
fiscal disparities pool. In other words, the contributions to fiscal disparities pool are
made from within the TIF District, which reduces the amount of captured tax capacity
� for TIF purposes.
In summary, the proposed project is proposed to increase the tax capacity of the parcel
by about $442,750.00, and thus does result in a significant increase in tax base for the
parcel. �
lobs and Wages:
The current city policy requires that "every recipient must create "...the maximum
number of livable wage jobs feasible for the proposed project." These jobs should pay
275% of federal minimum wage, exclusive of benefits. The current federal minimum
wage is $7.25 per hour. Thus, 275% of federal minimum wage is $19.94 per hour.
The "But For" Test: �
,
When approving the TIF Plan, the Council will be required to find that this proposed
development is not likely to occur without assistance, and that no other development is
likely to occur at this site without assistance that would create a higher market value
than the proposed development (after adjusting for the TIF assistance). If the City
moves forward with this proposal, staff and financial advisors will be analyzing these
points, and also the amount of tax increment that is reasonably necessary.
ALTERNATIVES: •
1. Offer and approve a motion recommending to the Shakopee City Council and EDA
that they initiate the process for creating a TIF District to provide assistance (in an
amount to be determined to be necessary) for the proposed 580,000 square
foot warehouse/distribution center because (a) the project represents significant job
creation consistent with the City's business subsidy policy, and (b) the project will
result in a significant increase in tax base for the City.
2. Offer and approve a motion recommending to the Shakopee City Council and EDA
that they do not initiate the process for creating a TIF District to provide assistance
H:�EDAC�2012\01212012\SanMar TIF\SanMar Report.docx 3
v
for the proposed 580,000 square foot warehouse/distribution center because (a) the
project does not represent significant job creation consistent with the City's business
subsidy policy, and (b) the project will not result in a significant increase in tax base
for the City.
3. Table the matter with direction to obtain additional, required information.
RELATIONSHIP TO CITY GOALS:
The proposed project and City action on the request relate to City Goals;
B. Positively manage the challenges and opportunities presented by growth,
development and change, and to
D. Maintain, improve and create strong partnerships with other public and private
sector entities.
REQUESTED ACTION:
After discussion of the proposed project and request for assistance offer a motion
making a recommendation to the City Council/EDA consistent with the EDAC's wishes.
a
�
��� �L .
R. Michael Leek
. Community Development Director
H:�EDAC\2012\01212012\Sa.nMar TIF\SanMar Report.docx 4
�
Fredrilcson
....... ,�
December 23, 2011
VIA EMAIL AND U.S. MAIL
� Mr. Michael Leek �
Director, Community Development
City of Shakopee
129 Holmes Street South '
Shakopee, Minnesota 55379
Re: J& J Minneapolis LLC development of Opus MVW Addition along County Rd. 83 and
4 Avenue in Shakopee
Dear Mr. Leek:
We aze counsel to J& J Minneapolis LLC (J &�. J& J has�entered into a purchase agreement
to purchase from RP Land, L.L.C. approximately 44.66 acres of land located along County Road �
83 and 4 Avenue in the Opus MVW Addifion and the Opus MVW 2 Addition, in the City of
Shakopee. J& J proposes to build a 580,000 square foot warehouse distribution facility (the
"Project"), which will include approximately 10,000 squared feet of o�ce space. The building
will also have 160,000 square feet of inezzanine space to be used for a piece-picking operation
where the workers will assemble all of the items for an order when several individual �items are
ordered. Tlie Project will be a 36-foot clear height, single-story plus mezzanine building with
related parking.
The proposed site plan for the project is enclosed. The building described above is the large
building on the site plan. J& J intends to develop the smaller building on the site on the future,
as the need for it arises. The estimated hard cost of constructing the building is $17,700,000.
' Project costs total $35,871,437 or $48.47 per square foot (including the mezzanine). No
allowance has been given for the normal developer's fees. We have discussed the proposed
building with the Scott County Assessor's office and he believes the assessed value upon
completion will be between $22,000,000 and $25,000,000. The contractor will be an
independent contractor, which has not yet been selected.
Attorneys & Advisors Fredrikson & Byron, P.A.
main 612.492.7000 200 South Sixth Street, Suite 4000
fax 612.492.7077 Minneapolis, Minnesota
www.fredlaw.com 55402-1425
MEMBER OF THE WORLD SERVICES GROUP OFFICES:
AWoridwide NetworkolPiolessional5ervice Providers Minneapolis / Bismarck / Des Moines / Fargo J Monterrey, Mexico / Shanghai
i
Mr. Michael Leek
December 23, 2011
Page 2
We have enclosed the application form and a copy of the tax increment run prepared by Shannon
Sweeney of David Drown Associates, Inc., which assumes a value on completion of
$25,600,000. We are requesting the City to consider assisting this development by the issuance
of a"pay as you go" tax increment revenue note.
We believe the proposed Project is consistent with the development goals of the City for this
location and the City's Tax Increment Financing Policy. In particular, we believe the use of tax
increment financing for this project will promote development that will build a strong tax base.
We thank you for your consideration and respectfully request your approval of J& J's request for '
tax increment assistance.
Since ely,
C�`���� •
Sherrill R. Oman
Direct Dial: 612.492.7131
Email: soman�n,fredlaw.com
cc: Jordan Lott
Katie Michals
Timothy Jones, Esq.
CITY OF SHAKOPEE
Application for Business Subsidies
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129 Hoimes Street South Shakopee, MN 55379
Phone (952) 496-9661 Fax (952) 233-3801
C:�NrPortbl�F'B1\OMANSFi�5020833 1.DOC 1
' Section I: General information
** With this application, please submit a formal letter requesting the assistance.
1. Business Name: J& J Minneapolis LLC
2. Address: 30500 SE 79th Street, Issaquah WA 98027 �
3. Contact Person: Katie Michals
4. Telephone: (206) 770-5674 �
5. Fax: (206) 770-5566
6. E-Mail: katiem@Ikwp.com
7. Brief Description of the Business / Company:
J& J Minneapolis LLC will own the land and buildings to be constructed thereon as a
build to suit for SanMar. The buildings will be leased to SanMar for use as a warehouse
and distribution facility. SanMar is a family-owned Seattle-based company since 1972, and
is a supplier of retail, private label and mill brands; distributing apparel and accessories to
screen printers, embroiderers, promotional products distributors, athletic dealers,
industrial launderers and more — whether they are outfitting a Fortune 500 corporation or
the local bowling team. SanMar features approximately 1,000 products, currently
distributed through six national distribution centers.
8. Parent Corporation, if any: Lake Washington Partners, LLC, a Washington limited liability
company
9. Consultant information, if applicable:
Name: Sherrill R. Oman, Esq. — Fredrikson & Byron, P.A.
Address: 200 South Sixth Street, Suite 4000, Minneapo(is, MN 55402
Telephone: 612-492-7131 Fax: 612-492-7077
E-Mail: soman@fredlaw.com
10. Type of Subsidy Requested: Tax Increment Financing X Tax Abatement
Other (Describe: )
(Check appropriate item)
11. Amount of Subsidy Requested: $ 1,434,350 •
C:�NrPortbl�FB1\OMANSH�5020833 1.DOC 2
12. Public Purposes of the Subsidy: The primary.public purpose is to increase the property tax
base in the City of Shakopee and Scott County. In addition, the distribution facility will
provide approximately 75-100 jobs to start and, when fully operational, 300-350 jobs. We
are projecting 3 salaried positions at $45,000 -$80,000 per year. The addition of this
facility will provide significant economic impact within the community as businesses may
look to relocate to the Shakopee community so to be closer to SanMar's facility;
increasing the range of goods and services available while encouraging fast-growing and
local businesses. SanMar continually contributes to local cammunities by, among other
things, donating articles of clothing and contributing items to food banks.
. 13, Location of Proposed Project: Along County Rd. 83 and 4 Avenue in Opus MV1N Addition
and Opus MVW 2" Addition.
14. Legal Description of Project Location:
That part of Lot 2, Block 1, OPUS MVW, according to the recorded plat,thereof, Scott County,
Minnesota, which lies easterly of a line desc�ibed as follows: commencing at the corner of
said Lot 2; thence North 89 degrees 49 Minutes 19 seconds East, assumed bearing along the
north line of said Lot 2 a distance of 744.71 feet to the point of beginning of the line to be
described; thence South 0 degrees 10 minutes 41 seconds East a distance of 1294.77 feet to
the south line of said Lot 2 and said line there terminating AND Lot 1, Block 1, OPUS MVW 2"
Addition, according to the recorded plat thereof, Scott County, Minnesota.
15. Property Identification Number{s): 27-298-002-0 and 27-406-001-0
16. Present Ownership of the Site: RP Land, L.L.C., a Delaware limited liability company
17. Name / Description of the proposed project (Attach site plan, if available): An apparel and
accessories warehouse distribution facility to be leased to SanMar. The proposed site plan is
attached. .
18. Size of the Property: 1,945,171.80 sq. ft.
19. Estimated Total Building Square Footage: 580,000 sq. ft., including approximately
10,000 square feet of office, plus 160,000 square feet of inezzanine
20. Estimated size of the Proposed Facility:
. Manufacturing/Assembly/Processing sq. ft.: The 160,000 square foot mezzanine will be used
for a piece-picking operation where the workers will assemble all of the items for an order
when individual items are ordered
Office sq. ft. Approximately 10,000
Research Laboratory sq. ft.: None
Warehousing sq. ft. Approximately 570,000 of warehouse/distribution
Other (Please Specify) sq. ft.
TOTAL sq. ft. 580,000 + 160,000
C:�NrPortbl�FB1\OMANSH�5020833 1.DOC 3
/ ' :
21. Estimated Project Costs (including relocation, construction):
Land Acquisition $ 5,349,222
Site Development (grading, (andscaping, etc.)
$4,000,000 — Includes demolition of existing pad(s), parking, truck courts, etc.
$5,000,000 — Earthwork, grading, etc. _
Buiiding Cost $ 500,000— Design & Development
$14,500,OOQ— Building Shell
$ 600,000 — Interior Offices
$ 3,200,000 — Mezzanine
Street/Road Improvements (include yourcosts only) $ N/A
Utility Improvements (include your costs only) $ 1,000,000
Capital (machinery and equipment)
Professional Services (archit., engin., legal, fiscal) $800,000
Fees and Permits (same as total from below) $922,215
Other (Please specify ) $ �
TOTAL $ 35,871,437
22. Estimated Fee and Permit Costs:
Building Permit fee ..........................$ 1,380.00
Suilding Plan Review fee .................$ 1,630.00
MN State Surcharge fee ...................$ 10,000.00 •
Refundable Building CO Escrow...$110,000.00 . �
Erosion Control Escrow ...................$ 1,500.00
Met Waste Environmental SAC......$187,600.00
City SAC ............................................$ 38,000.00
City WAC ..........................................$345,120.00
Storm Sewer Trunk Fee ...............$226,985.00
TOTAL $ 922,215
The City SAC and WAC fees are estimates only. SAC/WAC is based on 80 units, assuming
544,000 square feet of warehouse and 6,000 square feet of office.
The storm sewer trunk fee is 11.8 cents per sq. ft. — approximately $226.985.
C:�NrPortbl�FB1\OMANSH�5020833 1.DOC 4
In addition, there will be a Landscaping Escrow in the form of a letter of credit equal to
110% of the Landscaping Contract.
There will be a fire protection system fee of $5,000 to $10,000
23. Indicate the proposed start date for construction and estimated date of completion: The
proposed start date is May, 2012, and completion is expected to be May, 2013.
24. Proposed Financing Source(s):
Equity $17,177,439
Bank Loan $17,177,439
(Check one): Tax Increment Financing: $1,516,559
Industrial Development Revenue Bonds $ None
Other Loca) Government Assistance $ None
(Please specify ) '
State of Minnesota Assistance $ None
(Please specify)
TOTAL $ 35,871,437
25. If tax increment financing is requested, please submit a list of eligib/e project costs (Refer to
Section V of the Business Subsidy Policy): .
If construction starts prior to July 1, 2012, tax increment may be used for anything on the site.
Nevertheless, we anticipate that it will all be used for site development costs.
26. The City reserves the right to request tax returns and/or other financial statements from the
applicant for the years of operation.
27. The City reserves the right to request three bank references from the applicant. '
C:�NrPortbl�FBl\OMANSH�5020833 1.DOC � 5
Section II:
� Empioyment, Wage and Beneflt Information
A. EMPLOYMENT
1. Does this project involve the relocation of jobs within the State of Minnesota?
No
� � a. If so, provide a statement of why the project cannot be compieted at its current
location / facility:
b. Number of full time equivalent (FTE) permanent employee positions at current
� Minnesota location / facility to be relocated to Shakopee:
2. If the project is an expansion of an existing Shakopee facility, what is the current number of
FTE permanent employee positions?
N/A �
The project is not an expansion.
3. Estimated Number of FTE permanent employee positions to be created (within 2 years of
- issuance of Certificate of Occupancy) as a result of the project
150 - All employees at the Shakopee facility will be full-time employees �
4. TOTAL number of current and estimated new FTE permanent employee positions (No. 2+
No. 3 from above)
150
. B. WAGES .
' 1. What will be the minimum hourly wage (exclusive of benefits) of the FTE permanent '
employee positions created by the p�oject? _
$9.00 to $15.00. In addition to the hourly wage, each hourly employee is entitled to a bonus ,
for production achieved above a certain level. The bonuses range from 5% to 20% of weekly
pay, .
C:�NrPortbl�FBl\OMANSH�5020833 l.DOC 6
r
. 2. The hourly wage of each new permanent FTE employee position, with separate bands of
wages, is as follows: •
Total Number of
Wa�e Levels Per Hour FTE Permanent Empiovee Positions
Less Than $14.16 78%
$14.17 —18.99 20%
$29.00 — 33.99 1% •
$34.00 and Over 1%
*$19.94 is equal to 275% of the federa) minimum wage in 2011
C. HEALTH INSURANCE BENEFITS
The value of health insurance benefits provided by the empioyer for the above referenced jobs,
� separated by bands of wages, is as foliows:
� Wa�e Levels Per Hour
SanMar does not break out the value of health care benefits by wage levels. The average
health care benefit per hour worked per employee is $3.81.
*$19.94 is equal to 275% of the federal minimum wage in 2011
Attached is SanMar's 2011 Benefit Highlights.
C:�I�TrPortbl�FB1\OMANSH�5020833 1.DOC 7
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Highlights of the SanMar employee benefits are oudined below. Prior to enrollment, employees receive a benefits packet that
describes each of the benefits in more detail. You can also find more information in our Enrollment Guide that is available on
Clothesline on the Bene�ts main page.
*You will be eli ible for the followin benefits on the first of the month followin 90 da s from hire date unless otherwise noted *
SanMar offers you two medical plan options:
• Premera Gold PPO Plan �
• Premera Silver PPO Plan
�
Each option provides different levels of coverage, co-payments and coinsurance. Our
medical plans include vision and prescription drug coverage.
_ . . ..__ ._. _ _ . _ __.._. ._ __ . .- -_._ . _._. .----
SanMar offers you two dental PPO plan oprions:
• Washington Dental Service Basic PPO Plan
• Washington Dental Service Buy-Up PPO Plan � �
� ,
Each option provides different levels of coverage, co-payments and coinsurance. Our
medical plans include vision and prescription drug coverage.
,� SanMar provides Basic Life and Accidental Death & Dismemberment (AD&D) insurance in the
amount of $20,000 at no cost to the employee. Employees may elect to purchase additional
Supplemental Life in increments of $10,000 (ranging from $10,000 to $500,000). Employees
� � �� �� also have the option to purchase spouse and child life insurance coverage.
� : �
You will be eligible for the, flexible spending account plans the first of the month following 90
' 1 � '� days from hire date. SanMar's Flexible Spending Accounts [FSAs) offer a convenient, tax-free
�' � 1 � way to pay for your out-of pocket health care and dependent day care expenses for yourself
� � ' � and all of your qualiHed dependents.
SanMar offers em.ployees the option to purchase short term disability coverage in the income
�� � replacement amounts of 40% or 60% of gross income if you are out of work during a non work
related disabling illness or injury. Benefits could begin on the 8� calendar day of disability.
SanMar provides long term disability to full time employees after one year of service. Coverage
f � � provides 60% of your monthly base salary up to a maximum of $10,000 per month starting on
the 7� month of disability. .
Upon completing three months of service, full-time employees and part-time (at least 20 hours
,� a week) employees will be enrolled in SANMAR's 401(k) Plan on the 15C of the following month.
401(k) Investment Savings Plan: Employees may contribute from 1% to 100% of their
earnings on a before-tax basis. SanMar has a two step match approach. Under the first step,
' SanMar will make a matching contribution of $2.00 for every $1.00 you contribute to the
401(k) Plan, up to your first $650.00 for the year. The second step, if applicable, is an additional
dollar for dollar match for salary deferrals up to 4% of your annual salary. The match is funded
once a year in January based on your contributions in the prior year.
SanMar offers PTO, flexible approach to time off from work. Please refer to the Employee
'� � �� Handbook, starting on page 27, for detailed information about accrual and use of PTO.
SanMar observes the seven holidays below. Part-time employees' holiday pay is prorated
based on their regularly scheduled hours.
�: � � i�
New Years Day, Memorial Day, 4� of July, Labor Day, Thanksgiving Day, Day after
Thanksgiving, and Christmas Day .
SanMar's Employee Assistance Program (EAP) offers confidential assistance to employees and
�� � family members regarding any type of personal or work-related problem. Visit their website at
�� 4 �. GuidanceResources.com or call the toll-free number 1-877-595-5284. Our company Web ID is
EAP Complete. You are eligible for this benefit upon hire.
City of Shakopee, IVIN �
Distribution Facility
Tax Increment P�ojection
Valuations � Projected Increases Tax Rate Assumptions:
• . 2011
Market Tax Capacity Tax Rates
. Original Values: Vacant 41 acre site 3,500,000 68,500 City of Shakopee 34.731 %
Scott County 35.541% '
New Value: 580,000 sq ft+ Mea @$20/sq 25,600,000 511,250 School District 31.182% •
State of MN 49.043% -Not TIF
.Other 4.691% •
. 106.144% .
Projected i'ax Increment � . � Adjustments "
Retained Projected Gross 10.00% ' 0.36°/a TOTAL.
Payable Original: Projected Net Captured Less Fiscal Net Captured Tax • Tax Admin. State Auditor's NET �
Year Tax Capacity Tax Capacity Tax Capaciry Disparities Tax Capacity Rate" Increment Retainage Deduction REVENUES -
2012 68,500 68,500 - - - 106.14% . � �
2013 68,500 68,500 - - - 106.14% - - - . .
2014 68,500 511,250 442,750 177,100 265,650 106.14% 281,972 28,197 1,015 252,T60 �
2015 68,500 511,250 442,750 177,100 265,650 106.14% 281,972 28,197 1,015 252,760 �
2016 68,500 511,250 442,750 177,100 265,650 106.14% 281,972 28,197 1,015 252,760
2017 68,500 511,250 442,750 177,100 265,650 106.14% 281,972 28,197 1,015 252,760
2018 68,500 511,250 442,750 177,100 265,650 106.14% 281,972 28,197 1,015 252,760
2019 68,500 511,250 442;750 177,100 265,650 106.14% 281,972 28,197 1,015 252,760
1,691,832 169,183 6,091 1,516,559
David Drown Associates, Inc.
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