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HomeMy WebLinkAbout[02-2G] Section 2 - Exhibit GBUSINESS SUBSIDY AND TAX ABATEMENT DEVELOPER AGREEMENT This Business Subsidy and Tax Abatement Developer Agreement (the "Agreement") is entered into this day of June, 2009, by and between the City of St. Joseph (the "City") a Minnesota public body corporate and politic, and Coborns, Inc., a Minnesota corporation (the "Developer") and its successors and assigns. RECITALS A. Pursuant to Minnesota Statutes 469.1813 through 469.1815, the City has passed a Resolution authorizing a Business Subsidy Assistance in the form of tax abatement on property located within the City of St. Joseph, the legal description of which is attached hereto as Exhibit A, for the purpose of reimbursing the Developer for some of the costs associated with property acquisition and site development. B. The City recognize that the Developer's project meets the purposes as the public purposes of Minnesota Statutes 116J.993-995 by creating job opportunities with benefits and retaining and expanding existing St. Joseph businesses within the City of St. Joseph. The Business Subsidy Assistance for this project meets the following Business Subsidy Criteria: 1. To redevelop blighted or under-utilized areas of the community. 2. To increase the tax base. 3. To increase the number and diversity of the employment base. 4. To encourage additional unsubsidized private development in the area. 5. To facilitate the development process and to achieve development on sites which would not be developed without this assistance. 6. To help provide access to services for residents of the City. G-1 7. To meet other public policy objectives including promotion of quality urban design, quality architectural design, energy conservation, decreasing the capital and operating costs of local government, etc. C. The Developer recognizes the need for the Business Subsidy Assistance to finance the Project. Furthermore, the Developer states that without the Business Subsidy Assistance, the project could not move forward. In consideration of the above premises, and the covenants contained herein, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.1. Definitions. All capitalized terms used and not otherwise defined herein shall have the following meanings: Benefit Date shall be the date that the Project is partially or completely cleared for any occupancy by the building inspector which is anticipated to be January 1, 2010. The Developer shall notify the City in writing if the actual Benefit Date is different than January 1, 2010. Pr~ect means the Developer's proposal to construct a 35,000 square foot grocery store facility with an estimated building value upon completion of $2,662,500. Property means the real property legally described in the Exhibit A attached hereto and incorporated herein. Unavoidable Delays means delays, outside the control of the party claiming its occurrence, which are the direct result of strikes, other labor troubles, unusually severe or prolonged bad weather, acts of God, fire or other casualty to the Project, litigation commenced by third parties which, by injunction or other similar judicial action or by the exercise of reasonable discretion, directly results in delays, or acts of any federal, state or local governmental unit (other than the City) which directly results in delays. ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1. Representations and Warranties of the City. The City makes the following representations and warranties: (1) The City is a municipal corporation and political subdivision organized under the provisions of the Constitution and laws of the State and has the power to enter into this Agreement and carry out its obligations hereunder. (2) The Development contemplated by this Agreement is in conformance with the objectives of the Business Subsidy Act, Minn. Stat. 1 16J.993-995. G-2 Section 2.2. Representations and Warranties of the Developer. The Developer makes the following representations and warranties: (1) The Developer is a registered Minnesota corporation in good standing with the Office of the Minnesota Secretary of State, has the power to enter into this Agreement and to perform its obligations hereunder, and is not in violation of any provision of its Articles, Bylaws or other operating documents or the laws of the State. (2) The Developer will cause the Project to be constructed, operated and maintained in accordance with the terms of this Agreement and all local, state and federal laws and regulations. The Project will be substantially completed by December 31, 2009. (3) The Project will be constructed with a building value upon completion of approximately $2,662,500.00. (4) Upon completion of the Project, the Developer shall create at least one hundred ten (1 10) new part time jobs and twenty-five (25) new full time jobs paying no less than 100% of the median wage for the applicable general occupation classification within the St. Cloud Metropolitan Statistical Area, as defined by the Minnesota Workforce Center's most current report which is updated quarterly (the "Wage and Job Goals"). (5) The Developer has not received any notice from any local, state or federal official that the activities of the Developer with respect to the Property may or will be in violation of any environmental law or regulation. (6) The financing commitments which the Developer has obtained to finance construction of the Project, together with financing proved by the City pursuant to this Agreement, will be sufficient to enable the Developer to successfully complete the Project as contemplated in this Agreement. (7) The Developer would not have undertaken the Project without the financing provided by the City pursuant to this Agreement. (8) As a condition to the Business Subsidy and the use of Tax Abatement in connection with the Project, the Developer will meet the Wage and Job Goals of the Project outlined in Subparagraph 4 above within two years of the date of the Benefit Date. The Developer shall annually, commencing on March 1, 2010, and continuing until the applicable report evidences satisfaction of the Wage and Job Goals, or two years, whichever is later, furnish the City with the Minnesota Business Assistance Form, covering the preceding twelve months certified to be accurate by the Chief Operating Officer or Director of Human Resources of the Developer. If the Developer does not file a report by the due date, the City will mail a warning to the Developer within one week of the filing date. If the Developer does not file the report within 14 days after the postmarked date of the warning, the Developer must pay the City a penalty of $100 for each subsequent day until the report is filed. G-3 (9) Failure to meet the Wage and Job Goals will result in a pro rata reduction of the assistance and/or repayment of assistance based upon actual full time equivalent job creation. (10) The Developer will comply with all requirements of the Minnesota Business Subsidy Statutes 116J.993-995, as amended. ARTICLE III CONSTRUCTION OF PROJECT Section 3.1. Construction of Project. The Developer agrees that it will cause the Project to be constructed in conformance with the Construction Plans approved by the City. The Developer agrees that the scope and scale of the Project to be constructed shall not be significantly less than the scope and scale of the Project as detailed and outlined in the Construction Plans. Section 3.2. Change in Construction Plans. If the Developer desires to make any material change in the Construction Plans after the execution of this Agreement, the Developer shall submit the proposed change to the City for its approval. So long as the proposed change is deemed appropriate by the City and does not constitute a material modification to the shape, size or use of the Project or to the site plan therefore, the City shall approve the proposed changes. Section 3.3. Commencement and Completion of Construction. The Developer shall commence construction of the Project by July 1, 2009. Subject to Unavoidable Delays, the Developer shall have substantially completed the Project by December 31, 2009. Time lost as a result of Unavoidable Delays shall be added to extend this date by a number of days equal to the number of days lost as a result of Unavoidable Delays. The Developer agrees that it shall permit designated representatives of the City to enter upon the Development Property during the construction of the Project to inspect such construction. Section 3.4. City's Contribution A. The City has determined to defer SAC/WAC fees of $60,000 for a period of two (2) years which will become due and payable no later than July 1, 2011. B. The City has determined to provide Tax Abatement in the form of six (6) annual payments of the lesser of $50,000 or the actual aggregate increase in real estate taxes payable from the following parcels: i. 84.53475.0200 Credit Union ii. 84.53475.0201 Centra Care Clinic iii. 84.53475.0202 Coborn's Incl. G-4 C. If in any year, the increase in real estate taxes as a result of building value on the above parcels is not sufficient to support the annual payment of $50,000, the difference may be deferred to a later date. D. In no event shall the term of the Tax Abatement Assistance exceed ten (10) years. E. In no event shall the Tax Abatement Assistance provided to Developer exceed a total of $300,000. F. Tax Abatement Assistance payments shall be made annually on February 1, based upon the increase in taxes received in the previous year, with the first payment due on February 1, 2012. G. In accordance with Minnesota Statutes Section 469.1813, Subd. 8, in no case shall the Tax Abatement Assistance, together with all other abatements approved by the City under the statute and paid in any one year, exceed the greater of 10% of the City's tax capacity for that year or $200,000. ARTICLE IV. INSURANCE AND CONDEMNATION Section 4.1. Insurance. (1) The Developer will provide and maintain or cause to be maintained at all times during the process of constructing the Project: (a) Builder's risk insurance, written on a "completed value basis" in an amount equal to 100% of the insurable value of the Project at the date of completion, in form and content satisfactory to the City; (b) Comprehensive general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations and contractual liability insurance) together with an Owner's Contractor's Policy with limits for bodily injury and property damage of not less than $1,000,000.00 for each occurrence; and (c) Worker's compensation insurance in accordance with statutory requirements. (2) Upon completion of construction of the Project and continuing while this Agreement is in effect, the Developer shall maintain, or cause to be maintained, at its cost and expense: (a) Insurance against loss and/or damage to the Project under a policy or policies covering such risks as are ordinarily insured against by similar business, including but not limited to fire, vandalism and malicious mischief, explosion, water damage, demolition cost, debris removal and collapse in an amount not less than G-5 the full insurable replacement value of the Project. The City shall be named as additional insured. (b) Comprehensive general public liability insurance, including personal injury liability and property damage liability in the minimum amount of $1,000,000.00 per occurrence. (c) Worker's compensation insurance in accordance with statutory requirements, and employer's liability insurance in such amounts as is customarily carried by like organizations engaged in similar activities of comparable size and liability exposure. (3) The Developer will deposit annually with the City certificates evidencing such insurance. Each policy shall contain a provision that the insurer shall not cancel or modify it without giving written notice to the City at least thirty (30) days before the cancellation or modification becomes effective. Not less than fifteen (1 S) days prior to the expiration of any policy, the Developer shall furnish to the City evidence satisfactory to the City that the policy has been renewed or replaced by another policy conforming to the requirements of this Article IV. (4) The Developer agrees to notify the City immediately in the case of damage exceeding $25,000 in amount to, or destruction of the Project or any portion thereof resulting from fire or other casualty, and the Developer will forthwith repair, reconstruct and restore the Project to substantially the same or an improved condition or value as they 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 received by the Developer relating to such damage to the payment or reimbursement of the costs thereof. (5) The Developer shall complete the repair, reconstruction and restoration of the Project, whether or not the net proceeds of insurance received by the Developer for such purposes are sufficient. Section 4.2. Condemnation. In the event that title to and possession of the Project or any other material part thereof shall be taken in condemnation or by the exercise of eminent domain by any governmental body (except the City), the Developer shall, with reasonable promptness after such taking, notify the City as to the nature and extent of such taking. The Developer shall use the entire condemnation award to reconstruct the Project upon the Development Property. ARTICLE V PROPERTY TAXES Section 5.1. Real Property Taxes. The Developer shall pay all real property taxes payable with respect to all and any parts of the Development Property acquired and owned by it that shall accrue subsequent to the date of its acquisition of title to the Development Property or any part thereof and until the Developer's obligations have been assumed by any other person pursuant to the provisions of this Agreement or title to the property is vested in another person. G-6 ARTICLE VI. PROHIBITIONS AGAINST ASSIGNMENT AND TRANSFER; INDEMNIFCATION Section 6.1. Status of Developer. As security for the obligations of the Developer under this Agreement, the Developer represents and agrees that the Developer will maintain its existence as a company in good standing and will not wind up or otherwise dispose of all or substantially all of its assets, including the Property, without the prior written approval of the City. The City shall be entitled to require, as conditions to any such approval that any proposed transferee shall have the qualifications and financial responsibility, in the reasonable judgment of the City, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Developer, and shall have expressly assumed all of the obligations of the Developer under this Agreement and agreed to be subject to all of the conditions and restrictions contained herein. In the absence of a specific written agreement by the City to the contrary, no such transfer or approval by the City shall be deemed to relieve the Developer from any of its obligations hereunder. Section 6.2. Transfer or Assignment of Business Subsidy. The Business Subsidy provided pursuant to this Agreement may not be transferred or assigned to any other entity by the Developer. Section 6.3. Release and Indemnification Covenants. The Developer hereby releases the City and agrees to indemnify, defend and hold the City harmless against any claim, proceeding, demand, loss or damage, including, but not limited to claims for damage to property or any injury to or death of any person occurring at or resulting from the Project. The provisions of this Section 6.3 shall survive termination of this Agreement. ARTICLE VII EVENTS OF DEFAULT Section 7.1. Events of Default. Any one of the following shall be "Events of Default" under this Agreement: (1) Failure by the Developer to timely pay any obligation, including but not limited to real estate taxes, due under this Agreement (2) Failure by the Developer to cause the construction of the Project to be commenced and completed or failure to cause the Project to be reconstructed when required pursuant to this Agreement. (3) Transfer of any interest in the Property in violation of this Agreement. (4) Failure by the Developer to substantially observe or perform any other covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement. G-7 (6) The holder of any Mortgage on the Development Property, or any improvement thereon, or any portion thereof, commences foreclosure proceedings as a result of any default under applicable Mortgage documents. (7) The Developer shall: (a) file a petition in voluntary bankruptcy or for reorganization pursuant to the United States Bankruptcy Code or any similar law, state or federal; or (b) file any answer admitting insolvency or inability to pay its debts; or (c) be adjudicated a bankrupt or declared insolvent in any Bankruptcy Proceeding; or (d) have a trustee or receiver appointed to take possession of its property, or major part thereof, in any involuntary proceeding for the purpose of reorganization, arrangement, liquidation if such trustee or receiver shall not be discharged or if jurisdiction shall not be relinquished, vacated or stayed, on appeal or otherwise, within sixty (60) days; or (e) make an assignment for benefit of its creditors; or (f) admit in writing its inability to pay its debts generally as they become due. Section 7.2. Remedies on Default. Whenever any Event of Default occurs and is continuing, the City may take any one or more of the following actions: (1) Suspend its performance under this Agreement until it receives assurances from the Developer, deemed adequate by the City, that the Developer will cure its default and continue its performance under this Agreement. (2) Take any action, including legal or administrative action, which may appear necessary or desirable to collect any payments due under this Agreement, or to enforce performance or observance of any obligation, agreement, or covenant of the Developer under this Agreement. Section 7.3. No Remedy Exclusive. No remedy conferred upon the City hereunder is intended to be exclusive of any other remedy herein or by law provided, but each shall be cumulative and be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity. No delay or omission by the City to exercise any right or power accruing upon any Event of Default shall impair any right or power or shall be construed to be a waiver of any Event of Default or any acquiescence therein; and every power and remedy given by this Agreement to the City maybe exercised from time to time as often as maybe deemed expedient by the City. G-8 Section 7.4. Attorney's Fees and Expenses. In the event that suit is brought to enforce the Agreement, or in the event the City may be made party to any litigation because of the existence of the Agreement, the Developer agrees to pay the City's costs and reasonable attorneys' fees, both before and after judgment and whether or not suit be filed. Said costs and attorneys' fees shall include, without limitation, costs and attorneys' fees incurred in any appeal and in any proceedings under any present or future federal bankruptcy act or state receivership act. ARTICLE VIII ADDITIONAL PROVISIONS Section 8.1. Modifications. This Agreement may not be amended, modified or changed nor shall any claim of waiver of any provision hereof be effective except only by instrument in writing and signed by the party against whom enforcement thereof is sought Section 8.2. Notices. All notices to be given pursuant to this Agreement shall be sufficient if given by personal service, by guaranteed overnight delivery service, or certified first class mail, to the addresses of the parties described below or to such other address as party may request in writing from time to time. Any time period provided in the giving of any notice hereunder shall commence upon the date of personal service, the date after delivery to the guaranteed overnight delivery service, or two (2) days after any notices are deposited, postage prepaid, in the U.S. mail, certified mail. Developer's Address: City: City of St. Joseph 25 College Avenue North St. Joseph, MN ATTN: Judy Weyrens Section 8.3. Governin Law. This Agreement will be governed and construed in accordance with the laws of the State of Minnesota. IN WITNESS WHEREOF, the City and the Developer have caused this Agreement to be duly executed, effective as of the date above written. COBORNS, INC. By_ Its G-9 CITY OF ST. JOSEPH By Al Rassier, Its Mayor ATTEST: By Judy Weyrens, Its Clerk/Administrator STATE OF MINNESOTA ) SS. COUNTY OF ) This instrument was acknowledged before me on the day of 2009 by ,the of Coborns, Inc., a Minnesota corporation, who executed the foregoing instrument on behalf of the company. NOTARIAL STAMP OR SEAL (OR OTHER TITLE OR RANK) Notary Public STATE OF MINNESOTA ) ss. COUNTY OF STEARNS ) This instrument was acknowledged before me on the day of , 2009, by Al Rassier and Judy Weyrens, the Mayor and City Administrator/Clerk respectively of the City of St. Joseph, a public body, politic and corporate under the laws of the State of Minnesota, and who signed this instrument on behalf of said corporation. NOTARIAL STAMP OR SEAL (OR OTHER TITLE OR RANK) SIGNATURE OF NOTARY PUBLIC OR OTHER OFFICIAL G-10 THIS INSTRUMENT WAS DRAFTED BY: Susan M. Kadlec - 0290385 Rajkowski Hansmeier Ltd. 11 Seventh Avenue North P.O. Box 1433 St. Cloud, Minnesota 56302 Telephone: (320) 251-1055 G-11