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Home My WebLink About[02] TIF, CMCU rAA.Set Council Agenda Item O a CITY OF NT.JOSEPH MEETING DATE: March 16,2015(Joint Meeting with EDA) AGENDA ITEM: Request for Tax Increment Financing: Central Minnesota Credit Union SUBMITTED BY: Cynthia Smith Stack BOARD/COMMISSION/COMMITTEE RECOMMENDATION: The EDA will make a recommendation to the City Council following the TIF Hearing. PREVIOUS COUNCIL ACTION: Call for TIF Public Hearing BACKGROUND INFORMATION: Please see the attached memo. BUDGET/FISCAL IMPACT: Costs associated with establishment of the TIF District will be reimbursed through increment.The project is pay-as-you-go. The project will ultimately result in increased property taxes for the subject parcel. ATTACHMENTS: Staff Memo TIF 3-1 Program/Plan Resolution Approving Establishment of TIF District TIF Development Agreement REQUESTED COUNCIL ACTION: (1) Approve resolution authorizing establishment of TIF District 3-1. (2) Approve and authorize execution of a TIF development Agreement with CMCU. • CITY OF ST. JOSEPH www.cityofstjoseph.com DATE: March 4, 2015 Administrator Judy Weyrens MEMO TO: Honorable Mayor Schultz EDA Chairperson Wick Mayor Members of the City Council Rick Schultz Members of the Economic Development Authority Administrator Weyrens Councilors Matt Killam FROM: Cynthia Smith-Strack, Municipal Development Group Bob Loso Renee Symanietz RE: Consideration of TIF: Central Minnesota Credit Union Dale Wick EDA REQUEST: Doug Danielson Central Minnesota Credit Union has submitted a final application for tax increment financing Larry Hosch assistance in conjunction with a$4.2M office building at 1140 Elm Street East. Gary Osberg Rick Schultz The following are attached to this memo: Dale Wick • Final TIF Application Submitted by CMCU • TIF Plan The project involves the construction of a one story professional office building which will house a call center, information technology support/equipment, and other administrative and support staff.The office is expected to house a minimum of 30 workers initially but is designed to accommodate up to 80 employees. A total of 11 to 16 jobs will be retained in St. Joseph and 40 to 68 new full-time equivalent positions will be added over five years following project completion. CMCU will commit to retaining 12 jobs and creating 30 jobs in St. Joseph within two(2)years of project completion. CMCU will provide FTE employees a full complement of benefits including, but not limited to, medical insurance, dental insurance, term life insurance, short term disability, long term disability, 401 K,flexible spending accounts, paid time office and holiday leave.Wage and benefit packages range from $19.35 to$43.30 per hour for jobs created/retained. The Applicant reports a financing gap of$125,300;the gap is indicative of building costs for the exact structure on a similar sized lot in a different community. The Applicant is a financial entity and,as such,will self-finance the project making a requirement for a lead lender non-applicable. A pay-as-you-go arrangement is requested. Economic development TIF is available for the project. Maximum term of the applicable district is nine years. For the CMCU project a maximum term of five years is requested. TIF POLICY REVIEW: The policies for the use of TIF include the following: 3 1. General Policy — The City of St. Joseph and EDA shall consider Tax Increment Financing for projects that serve to accomplish the City's goals for housing and economic development as they may change over time. The goals include facilitating projects that would result in the creation of quality jobs (i.e. stable employment and/or attractive wages and benefits)and the attraction, retention, and expansion of business and housing options in the City. The request appears to meet policy criteria. 2. Objectives: As a matter of adopted policy, the City of St. Joseph and EDA will consider using tax Increment Financing(TIF)to assist private development projects to achieve one or more of the following purposes: The project appears to meet objectives: a. To retain local jobs and/or increase the number and diversity of quality jobs(i.e. stable employment and/or attractive wages and benefits. b. To facilitate the development process and to achieve development on sites which would not be developed without this assistance. 3. Costs that qualify for TIF assistance: TIF would assist with eligible development costs estimated at$670,000. 4. Minimum Qualifications: a. TIF would facilitate development that would not occur without the assistance. The Applicant has provided analysis illustrating the project will not move forward in St. Joseph without the requested assistance. This would result in the loss of 16 employment positions in St. Joseph. b. But-For Test. The pre-application requires the developer to submit a statement identifying how the increment will be uses and why it is needed to complete the project. The Applicant has illustrated the project will not move forward in St. Joseph if the gap is not closed. c. Comprehensive Plan/Zoning. The project is consistent with the Comprehensive Plan and the applicable zoning district. d. Financial Credentials. Not applicable—financial institution is applicant. e. The Applicant owns the subject property. 5. Desired Qualifications: a. Taxes paid before and after the development will be greater than a 2:1 ratio. Current property taxes payable on the subject parcels combined equal$8,962 (payable 2015).Projected taxes payable after project completion are$64,623, equating to a 7:1 ratio. b. TIF should not be used for speculative projects. CMCU was organized in 1939 and has been increasing assets including being a national leader in commercial and agricultural lending. Pay as you go TIF is requested. c. TIF should not be used to pay for overpriced land. The Applicant owns the subject parcel, as such, land cost is not included in the TIF project. y d. TIF should be pay-as-you go. The request is for pay-as-you go assistance. e. Preference is given to projects that do not cause extraordinary demands on City services. The Applicant is proposing administrative, call center, and technical assistance office space. The site is serviced by existing facilities. Existing facilities were sized to accommodate the intended use. f. Preference is given to projects that are consistent with the Comprehensive Plan, improve surrounding land uses, provide new employment, are financially feasible and provide the highest and best desired use for the property. The project appears to meet all of the aforementioned. ACTION: I have prepared a brief presentation.The Developer and the City's TIF Consultant will be present to answer questions and provide comment as requested. The EDA/Council will hold the public hearing. Following the hearing and discussion, we kindly request a MOTION by the EDA recommending the City Council approve/not approve of the TIF Plan and authorize TIF in the amount of $125,000 plus cost of district establishment and/or a maximum term of five(5)years whichever comes first. Following a recommendation by the EDA if the Council is supportive of utilizing TIF for this project,a MOTION to approve the RESOLUTION authorizing the establishment of a TIF District is in order. Following action on the TIF plan consideration of a MOTION to approve and authorize execution of the TIF development agreement is in order. 5 CITYOFST.JOSEPH,MINNESOTA DevelopmentProgramfor MunicipalDevelopmentDistrictNo.3 & TaxIncrementFinancingPlanfor ECONOMICDEVELOPMENTTAXINCREMENT FINANCINGDISTRICT#31 InconnectionwiththeCentralMinnesotaCreditUnionOfficeBuildingProject TALEOFCONTENTS DevelopmentProgramforMunicipalDevelopmentDistrictNo.3 SectionADefinitions SectionBStatutoryAuthorization SectionCStatementofNeedandPublicPurpose SectionDStatementofObjectives SectionEBoundariesofDevelopmentDistrict SectionFDevelopmentActivities SectionGPaymentofPublicCosts SectionHEnvironmentalControls SectionIParks&OpenSpace SectionJPropertyAcquisition SectionKAdministration&Maintenance SectionLRelocation SectionMAmendments TaxIncrementFinancingPlanforEconomicDevelopmentTIFDistrictNo.31 SECTION1ΑCREATIONOFDISTRICT Section1.1Definitions Section1.2StatementofNeed&PublicPurpose Section1.3StatutoryAuthorizations Section1.4StatementsofObjectives Section1.5DesignationasanEconomicDevelopmentDistrict Section1.6StatementastothePropertytheAuthorityMayAcquire Section1.7ActivitiesProposedforwhichDevelopmentAgreementshavebeenEntered Section1.8SpecificDevelopmentReasonablyExpectedtoOccur Section1.9EstimatedCosts Section1.10AmountofBondstobeIssued Section1.11OriginalNetTaxCapacity Section1.12Theestimatedcapturednettaxcapacityofthetaxincrementfinancingdistrict: Section1.13Durationofthetaxincrementfinancingdistrict Section1.14EstimatesofImpactonOtherJurisdictions Section1.15IdentificationanddescriptionofstudiesandanalysesusedtomaketheFindings Section1.16Identificationofallparcelstobeincludedinthedistrict Section1.17Findings&NeedforTaxIncrementFinancing SECTION2ΑADMINISTRATIONOFDISTRICT Section2.1.UseofTaxIncrementsΑEconomicDevelopmentDistricts Section2.2.UseofTaxIncrementsΑGeneral Section2.3.ͻDƩĻĻƓ!ĭƩĻƭͼ Section2.4.4YearKnockDownRule Section2.5.TaxIncrementPoolingΑ5yearRule Section2.6.ExcessTaxIncrement Section2.7.LimitationonAdministrativeExpenses 2|Page Section2.8.PriorPlannedImprovements Section2.9.DevelopmentAgreements Section2.10.BusinessSubsidyLaws Section2.11.AssessmentAgreements Section2.12.ModificationsoftheTaxIncrementFinancingPlan Section2.13.AdministrationoftheTaxIncrementFinancingPlan Section2.14.FinancialReportingandDisclosureRequirements EXHIBITS Map(s)Exhibit1 Parcels,Values,ImprovementsExhibit2 TIFProjectionsExhibit3 EstimatedImpactonOtherTaxingJurisdictionsExhibit4 MarketValueAnalysisExhibit5 3|Page DevelopmentProgramfor MunicipalDevelopmentDistrictNo.3 Introduction ΑThisDevelopmentDistrictisreferredto,forthepurposesofthisPlanastheSt.Joseph ProfessionalPlatArea.TheCityhasidentifiedthisareaasonewithsimilarconditionsdistributed throughoutwheretheCityproposestoencouragedevelopmentthatgenerallypresentseconomic opportunitiesthatcreateprofessionalandtechnicaljobopportunitiesandahigherthanaveragequality ofconstructionanddesign. SectionADefinitions Thetermsdefinedinthissectionhavethemeaningsgivenherein,unlessthecontextinwhichtheyare usedindicatesadifferentmeaning: "Authority"meanstheCityCounciloftheCityofSt.Joseph,Minnesota. "City"meanstheCityofSt.Joseph,Minnesota,amunicipalcorporationandpoliticalsubdivisionofthe StateofMinnesota. "CityCouncil"meanstheCityCounciloftheCity;alsoreferredtoasthe"GoverningBody." "County"meansSteamsCounty,Minnesota. "DevelopmentDistrict''meansMunicipalDevelopmentDistrictNo.3oftheCity,whichhasbeen createdandestablishedpursuanttoandinaccordancewiththeDevelopmentDistrictAct,the boundariesofwhicharedescribedinSectionE. "DevelopmentDistrict!ĭƷͼγmeansMinnesotaStatutesSections469.124through469.134,both inclusive. "DevelopmentProgram"meanstheDevelopmentProgramfortheDevelopmentDistrict. "LandUseRegulations"meansallfederal,stateandlocallaws,rules,regulations,ordinancesandplans relatingtoorgoverningtheuseordevelopmentoflandintheCity,includingbutnotlimitedto environmental,zoningandbuildingcodelawsandregulations. "ProjectArea"meansthegeographicareaoftheDevelopmentDistrict "PublicCosts"meansthecostsoflandacquisition,publicandsiteimprovements,repaymentof debtserviceontaxincrementbonds,andothereligiblecostsassetforthintheDevelopmentProgram andTaxIncrementFinancingPlan(s). "SchoolDistrict''meanstheIndependentSchoolDistrictNo.742inMinnesota "State"meanstheStateofMinnesota. 4|Page 'TIFAct''meansMinnesotaStatutes,Sections469.174through469.1799,bothinclusive. 'TIFDistrict''meansanytaxincrementfinancingdistrictpresentlyestablishedortobeestablishedinthe futureintheDevelopmentDistrict. 'TIFPlan"meanstherespectiveTaxIncrementFinancingPlanforeachTIFDistrictlocatedwithinthe DevelopmentDistrict. SectionBStatutoryAuthorization TheDevelopmentDistrictActauthorizestheAuthority,uponcertainpublicpurposefindingsbytheCity Council,toestablishanddesignatedevelopmentdistrictswithintheCityandtodevelopandadminister developmentprogramsthereforetomeettheneedsandaccomplishthepublicpurposesspecified inSectionC.InaccordancewiththepurposessetforthinSection469.124oftheDevelopmentDistrict Act,theAuthorityhasestablishedtheDevelopmentDistrictcomprisingtheareadescribedinSectionE andhasadoptedthisDevelopmentProgram. TheTIFActalsoauthorizestheAuthoritytoestablishandadministertaxincrementfinancingdistricts withintheDevelopmentDistrict.EligiblepubliccostsoftheDevelopmentDistrictandTIFDistrictmay bepaidfromtaxincrementscollectedfromtheTIFDistrict. SectionCStatementofNeedandPublicPurpose TheCityCouncilhasdeterminedthatthereisaneedfortheCitytotakecertainactionsitdeems necessaryinordertoencourage,ensureandfacilitatedevelopmentandredevelopmentbytheprivate sectorofunderutilized,inappropriatelyusedandunusedlandlocatedwithinthecorporatelimitsof theCity.Suchactionsarenecessaryinordertoprovideadditionalemploymentopportunitiesfor residentsoftheCityandthesurroundingarea;toimprovethetaxbaseoftheCity,theCountyandthe SchoolDistrict,therebyenablingthemtobetterprovideneededpublicservices;andtoimprovethe generaleconomyoftheCity,theCountyandtheState. SectionDStatementofObjectives TheestablishmentoftheDevelopmentDistrict,pursuanttotheDevelopmentDistrictAct,isinthebest interestsoftheCityanditsresidents,andisnecessaryinordertogivetheAuthoritytheabilitytomeet certainpublicpurposeobjectivesthatwouldotherwisenotbeobtainableintheforeseeablefuture withoutinterventionbytheAuthorityinthenormaldevelopmentprocess. TheAuthorityintends,totheextentpermittedbylaw,toaccomplishthefollowingobjectives throughtheimplementationoftheDevelopmentProgram: (1)ProvidefortheconstructionandfinancingofPublicCostsintheDevelopmentDistrict,whichare necessaryfortheorderlyandbeneficialdevelopmentoftheDevelopmentDistrict. (2)Promoteandsecurethepromptandunifieddevelopmentandredevelopmentofcertain propertyintheDevelopmentDistrict,suchpropertyisnotnowinproductiveuseorinits 5|Page highestandbestuse,withaminimumadverseimpactontheenvironment,andthereby promoteandsecurethedesirabledevelopmentofotherlandintheCity. (3)PromoteandsecureadditionalemploymentopportunitieswithintheDevelopmentDistrictfor residentsoftheCityandthesurroundingarea,therebyimprovinglivingstandardsand reducingunemploymentandthelossofskilledandunskilledlaborandotherhumanresources intheCity. (4)SecuretheincreaseofassessedvaluesofpropertysubjecttotaxationbytheCity,theCounty, theSchoolDistrict,andothertaxingjurisdictionsinordertoenablesuchentitiestopayfor governmentalservicesandprogramsthattheyarerequiredtoprovide. (5)Encouragetheexpansionandimprovementoflocalbusinessandeconomicdevelopment wheneverpossible. SectionEBoundariesoftheDevelopmentDistrict TheboundariesoftheDevelopmentDistrictareidentifiedinExhibit1ofthisdocument. SectionFDevelopmentActivities TheAuthoritywillperformorcausetobeperformed,totheextentpermittedbylaw,allproject activitiespursuanttotheDevelopmentDistrictAct,theTIFActandotherapplicablestatelaws.Indoing sotheAuthorityanticipatesthatthefollowingmaybeundertaken: Themakingofstudies,planningandotherformalandinformalactivitiesrelatingtothe DevelopmentProgram. TheimplementationandadministrationoftheDevelopmentProgram. Theacquisitionofproperty,orinterestsinproperty,bypurchaseorcondemnation,whensuch acquisitionisconsistentwiththeobjectivesoftheDevelopmentDistrict. ThepreparationofpropertyforuseanddevelopmentinaccordancewithapplicableLandUse Regulations,includingdemolitionofstructures,clearanceofsites,placementoffillandgrading andothersiteimprovements. Theresaleofpropertytoprivateparties. Theconstructionorreconstructionofpublicimprovements,includingbutnotlimitedto,streets, stormsewer,sanitarysewer,waterandcurbandgutterimprovements. Theissuanceoftaxincrementbondsandtheuseoftaxincrements,orotherfundsavailableto theCity,topayorfinancethePublicCostsoftheDevelopmentProgram. orotherwisepayor Theuseoftaxincrementstopaydebtserviceontaxincrementbonds reimbursewithinterestthePublicCostsoftheDevelopmentProgram. SectionGPaymentofPublicCosts PublicCostsoftheDevelopmentProgramwillbepaidprimarilyfromtaxincrementsand/orproceedsof taxincrementbonds.SuchcostsareidentifiedintheTIFPlanforthecorrespondingTIFDistrictlocated 6|Page withintheDevelopmentDistrict.TheAuthorityreservestherighttoutilizeotheravailablesourcesof revenuetopayforaportionofthePublicCosts. SectionHEnvironmentalControls;LandUseRegulations Allmunicipalactions,publicimprovementsandprivatedevelopmentshallbecarriedoutinamanner consistentwithexistingenvironmentalcontrolsandallapplicablelanduseregulations. SectionIParkandOpenSpacetobeCreated ParkandopenspacecreatedwithintheDevelopmentDistrictwillbedoneinaccordancewiththezoning andplattingordinancesorstandardsoftheCity. SectionJPropertyAcquisitionandProposedReuse TheAuthoritymayacquirepropertyforpublicorprivatedevelopmentpurposes.Priortoformal considerationoftheacquisitionofanypropertyforprivatedevelopmentpurposes,theCityCouncilwill requiretheexecutionofabindingdevelopmentagreementwithrespecttheretoandevidencethattax incrementsorotherfundswillbeavailabletorepaythePublicCostsassociatedwiththeproposed acquisition.ItistheintentoftheAuthoritytonegotiatetheacquisitionofpropertywheneverpossible. Appropriaterestrictionsregardingthereuseandredevelopmentofpropertywillbeincorporatedinto anydevelopmentagreementtowhichtheAuthorityisaparty. SectionKAdministrationandMaintenance MaintenanceandoperationoftheDevelopmentDistrictwillbetheresponsibilityoftheCity AdministratorwhoshallserveasadministratoroftheDevelopmentDistrict.Theadministratorwill administertheDevelopmentDistrictpursuanttotheprovisionsofSection469.131oftheDevelopment beexercisedatthedirectionoftheCity DistrictAct;provided,however,thatsuchpowersmayonly Council.Noactiontakenbytheadministratorpursuanttotheabovementionedpowersshallbe effectivewithoutauthorizationbytheAuthorityandtheCityCouncil. SectionLRelocation willbe AnypersonorbusinessthatisdisplacedasaresultoftheDevelopmentProgram relocatedinaccordancewithMinnesotaStatutes,Sections117.50to117.56.TheCityacceptsits responsibilityforprovidingforrelocationassistancepursuanttoSection469.133oftheDevelopment DistrictAct. SectionMAmendments TheAuthorityreservestherighttoalterandamendtheDevelopmentProgramsubjecttotheprovisions ofstatelawregulatingsuchaction. 7|Page TaxIncrementFinancingPlanfor ECONOMICDEVELOPMENTTAXINCREMENTFINANCINGDISTRICTNO.31 Introduction TheCityofSt.JosephhasbeenaskedtoprovideTaxIncrementFinancing(TIF)assistancetotheCentral MinnesotaCreditUnioninconnectionwiththeconstructionofa$4.2millionofficebuildingintheCityofSt. Josephwhichwillhouseacallcenterandrelatedactivities.ThebusinessisrequestingpayasyougoTIF assistancetowritedowndevelopmentcoststoadegreethatwouldmaketheSt.Josephsitecompetitivewith otherlocationsthathavebeenconsideredoutsideoftheCityofS.Joseph.Thisdevelopmentisproposedto commenceandcompleteconstructionin2015.Theprojectsitewouldallowforadditionalexpansionthatmay becontemplatedinthefuturewhichhasnotbeenruledoutbythedeveloper. SECTION1ȟCREATIONOFDISTRICT Section1.1Definitions Thetermsdefinedinthissectionhavethemeaningsgivenherein,unlessthecontextinwhichtheyareused indicatesadifferentmeaning: ͻ!ǒƷŷƚƩźƷǤͼmeanstheCityCounciloftheCityofSt.Joseph,Minnesota. ͻ/źƷǤͼmeanstheCityofSt.Joseph,Minnesota,amunicipalcorporationandpoliticalsubdivisionoftheStateof Minnesota. "CityCouncil"meanstheCityCounciloftheCity;alsoreferredtoasthe"Governing.ƚķǤ͵ͼ "County"meansStearnsCounty,Minnesota. "DevelopmentDistrict"meansDevelopmentDistrictNo.3oftheCity,whichhasbeencreatedandestablished pursuanttoandinaccordancewiththeDevelopmentDistrictAct,theboundariesofwhichareanddescribedin Exhibit1. "DevelopmentDistrict!ĭƷͼmeansMinnesotaStatutes,Sections469.124through469.134,bothinclusive. "DevelopmenttƩƚŭƩğƒͼmeanstheDevelopmentProgramfortheDevelopmentDistrictNo.3. "ProjectArea"meansthegeographicareaoftheDevelopmentDistrict. "PublicCosts"meansthecostsoflandacquisition,publicandsiteimprovements,repaymentofdebtserviceon taxincrementbonds,andothereligiblecostsassetforthintheDevelopmentProgramandTaxIncrement FinancingPlan(s). "SchoolDistrict"meanstheIndependentSchoolDistrictNo.742inMinnesota. "State"meanstheStateofMinnesota. "TIFAct"meansMinnesotaStatutes,Sections469.174through469.1794,bothinclusive. "TIFDistrict"meansTaxIncrementFinancingdistrictNo.31. "TIFPlan"meanstherespectiveTaxIncrementFinancingPlanforeachTIFDistrictlocatedwithinthe DevelopmentDistrict. Section1.2StatementofNeed&PublicPurpose TheͷbĻĻķ&PublictǒƩƦƚƭĻ͸remainsconsistentwiththoselistedinSectionCoftheDevelopmentProgramfor MunicipalDevelopmentDistrictNo.3. Section1.3StatutoryAuthorization ͷ{ƷğƷǒƷƚƩǤ!ǒƷŷƚƩźǩğƷźƚƓ͸remainsconsistentwiththoselistedinSectionBoftheDevelopmentProgramfor MunicipalDevelopmentDistrictNo.3. Section1.4StatementofObjectives TheͷhĬƆĻĭƷźǝĻƭ͸remainconsistentwiththoselistedinSectionDoftheDevelopmentProgramforMunicipal DevelopmentDistrictNo.3. Section1.5DesignationasanEconomicDevelopmentDistrict "EconomicDevelopmentdistrict"meansatypeoftaxincrementfinancingdistrictconsistingofanyproject,or portionsofaproject,whichtheAuthorityfindstobeinthepublicinterestbecause: (1)Itwilldiscouragecommerce,industry,ormanufacturingfrommovingtheiroperationstoanother stateormunicipality; (2)Itwillresultinincreasedemploymentinthestate;or thestate. (3)Itwillresultinpreservationandenhancementofthetaxbaseof TheTIFDistrictqualifiesasaneconomicdevelopmentdistrictinthattheproposeddevelopmentdescribedin thisTIFPlan(seeSection1.8)meetsthecriterialistedabovein(1)and(2).Withouttheestablishmentofthe TIFDistrict,theproposeddevelopmentwouldnotoccurwithintheCity.Theproposeddevelopmentwillalso resultinincreasedemploymentandenhancementofthetaxbaseinboththeCityandtheState. 9|Page TaxIncrementsfromtheTIFDistrictwillbeusedtoprovidefinancialassistancetotheproposeddevelopment inwhich85%ofthesquarefootageofthefacilitiestobeconstructedwillbeusedforTelemarketingandthe spacesnecessaryforandrelatedtothetelemarketingcallcenteroperation. StatementastothePropertytheAuthorityMayAcquire Section1.6 WhiletheCitydoesnotanticipateacquiringpropertywithintheTIFDistrict,itreservestherighttodoso and/orreimbursedeveloper(s)forTIFeligiblecostsincludingbutnotlimitedtolandacquisition. Section1.7DevelopmentActivitiesProposedwithDevelopmentAgreements TheCityhasnotenteredintodevelopmentagreementsbutanticipatesthatitwilldosouponcreationofthe TIFDistricttoprovidepayasyougoassistancetoreimburseprivatedevelopersforTIFauthorized improvements. Section1.8SpecificDevelopmentReasonablyExpectedtoOccur TheCentralMinnesotaCreditUnionisproposingtoconstructa$4.2millionofficebuildingintheCityofSt. Josephwhichwillhouseacallcenterandrelatedactivities.ThebusinessisrequestingpayasyougoTIF assistancetowritedowndevelopmentcoststoadegreethatwouldmaketheSt.Josephsitecompetitivewith otherlocationsthathavebeenconsideredoutsideoftheCityofS.Joseph.Thisdevelopmentisproposedto commenceandcompleteconstructionin2015.Theprojectsitewouldallowforadditionalexpansionthatmay becontemplatedinthefuturewhichhasnotbeenruledoutbythedeveloper. Section1.9EstimatedCosts ThefollowingbudgetisproposedfortheTIFDistrict.Thebudgetreflectsthemaximumrevenuesand expendituresfortheTIFDistrictbasedupontheincrementsthatcouldberealizedfromdevelopmentthatis reasonablyanticipatedwithintheTIFDistrict. REVENUES TaxIncrements$450,998 InterestEarnings4,510 Loan/AdvanceRepayments LeaseProceeds Repayments/ReturnofIncrements SaleofProperty TOTAL$455,508 EXPENDITURES LandAcquisition$ SiteImprovements130,000 Utilities PublicImprovements158,267 AffordableHousing 10|Page SmallCityAuthorityCosts AdministrationCosts45,551 CountyAdminCosts TOTAL$333,818 FinancingCosts$121,690 MaximumBonds$333,818 TheAuthorityreservestherighttoadjusttheamountofCapitalandAdministrationlineitemslistedaboveor toincorporateadditionaleligibleitems,solongasthetotalCapitalandAdministrationcostsarenot increased.Adjustingfinancingcosts,principalorinterest,willrequireapublichearing. TheCityanticipatesprovidingfinancialassistanceonapayasyougobasisforacquisitionandsite improvementandsitepreparationcostsaswellasotherTIFeligibleexpensesrelatedtotheproposed development.Indoingso,incrementscollectedinfutureyearswillbeusedtoreimbursedevelopers/thecity foreligiblecostsincurred. Section1.10AmountofBondstobeIssued ThemaximumprincipalamountofbondstobesecuredinwholeorinpartwithincrementsfromTIFDistrict No.31shallnotexceed$333,818.TheAuthorityreservestherighttofundallProjectcostspermittedbylaw usinginternalfunding,generalobligationbonds,payasyougofinancingoranyotherfinancingmechanism authorizedbylaw. InternalLoans,includinganegativebalanceintheTIFfund,mustbeauthorizedbyresolutionoftheentity advancingtheloanbeforemoneyistransferred,advancedorspent.Theresolutionmustincludethetermsand conditionsforrepaymentoftheloantoinclude,ataminimum,theprincipalamountoftheloan,theinterest rateandthemaximumterm.Theinterestratetobechargedoninternalloansshallbe4%baseduponthelimit ofthegreateroftheratesspecifiedunderMinnesotaStatutes270C.40or549.09asofthedatethisPlanis approved. Section1.11Theoriginalnettaxcapacityoftaxablerealpropertywithinthetaxincrement financingdistrict TheCountyAuditorshallcertifytheoriginalnettaxcapacityoftheTIFDistrict.Thisvaluewillbeequaltothe totalnettaxcapacityofallpropertyintheTIFDistrictascertifiedbytheStateCommissionerofRevenue.For districtscertifiedbetweenJanuary1andJune30,inclusive,thisvalueisbasedonthepreviousassessment year.FordistrictscertifiedbetweenJuly1andDecember31,inclusive,thisvalueisbasedonthecurrent assessmentyear. 11|Page TheEstimatedMarketValueofallpropertywithinTIFDistrictasofJanuary2,2013,fortaxespayablein2014,is $496,200andtheestimatedtaxcapacityis$4,962,whichisestimatedtobetheoriginalnettaxcapacityofthe TIFDistrictuponestablishmentandsubsequentcertification. EachyeartheCountyAuditorshallcertifytheamountthattheoriginalnettaxcapacityhasincreasedor decreasedasaresultof: 1.Changesinthetaxexemptstatusofproperty; 2.ReductionsorenlargementsofthegeographicareaoftheTIFDistrict; 3.Changesduetostipulationagreementsorabatements;or 4.Changesinpropertyclassificationrates TheCountyAuditorshallalsocertifytheOriginalLocalTaxRateoftheTIFDistrict.Thisrateshallbethesumof alllocaltaxratesthatapplytopropertyintheTIFDistrict.Thisrateshallbeforthesametaxespayableyearas theOriginalNetTaxCapacity. Infutureyears,theamountoftaxincrementgeneratedbytheTIFDistrictwillbecalculatedusingthelesserof (a)thesumofthecurrentlocaltaxratesatthattimeor(b)theOriginalLocalTaxRateoftheTIFDistrict. ThesumofalllocaltaxratesthatapplytopropertyintheTIFDistrictfortaxesleviedin2013andpayablein 2014is128.4618%.ThefinalOriginalLocalTaxRatemaybehigherorlowerthanthisvalue,dependingupon thefinallocaltaxratesforpayable2015. 2013/2014 TaxingJurisdictionLocalTaxRate CityofSt.Joseph52.0569% StearnsCounty54.7913% SchoolDistrict74220.0983% Other1.5153% Total128.4618% TheprojectedoriginallocaltaxratedoesnotincludetheStateofMinnesotapropertytaxrateoncommercial, industrialandseasonalrecreationpropertyof50.840%(2015),whichisnotcapturedastaxincrement. Section1.12Theestimatedcapturednettaxcapacityofthetaxincrementfinancingdistrict ThecapturednettaxcapacityfortheTIFDistrictisestimatedtobe$45,816. Section1.13Durationofthetaxincrementfinancingdistrict EconomicDevelopmentdistrictsmayremaininexistence8yearsfromthedateofreceiptofthefirstax increment,resultingin9TIFcollections.TheAuthorityanticipatesthattheTIFDistrictmayreceivethefirst incrementin2017.Theauthoritymayspecifyinthetaxincrementfinancingplanthefirstyearinwhichit electstoreceiveincrement,uptofouryearsfollowingtheyearofapprovalofthedistrict,withtheexceptionof economicdevelopmentdistricts.TheDistrictisexpectedtoremaininexistencethemaximumduration 12|Page allowedbylaw(projectedtobethrough2025).Modificationsofthisplanshallnotextendtheseduration limits. Section1.14EstimatesofImpact Exhibit4showstheestimatedimpactonothertaxingjurisdictionsiftheprojectedRetainedCapturedNetTax CapacityoftheTIFDistrictwerehypotheticallyavailabletootherotherjurisdictions.TheAuthoritybelieves thattherewillbenoadverseimpactonothertaxingjurisdictionsduringthelifeoftheTIFDistrict,sincethe proposeddevelopmentwouldnothaveoccurredwithouttheestablishmentoftheTIFDistrictandtheprovision ofpublicassistance.ApositiveimpactonothertaxingjurisdictionswilloccurwhentheTIFDistrictisdecertified andtherespectivetaxingjurisdictionscanenjoytheincreaseintaxesgeneratedbythedevelopment. Section1.15IdentificationanddescriptionofstudiesandanalysesusedtomaketheFindings outlinedinSection1.17 NospecificstudieswereconducteddirectlybytheCity. Section1.16Identificationofallparcelstobeincludedinthedistrict. ThepropertyproposedtobeincludedwithintheboundariesofTIFDistrictNo.31includestwononcontiguous areaswitheachareahavingfourparcels.Thepropertyincludesthefollowing: 184.53798.0574CentralMNCreditUnion Findings&NeedforTaxIncrementFinancing Section1.17 Beforeoratthetimeofapprovalofthetaxincrementfinancingplan,themunicipalityshallmakethe followingfindings,andshallsetforthinwritingthereasonsandsupportingfactsforeachdetermination: (1)thattheproposedtaxincrementfinancingdistrictisanEconomicDevelopmentdistrict StatementofFact:SeeSection1.5ofthisdocumentforthereasonsandfactssupportingthis finding. (2)that,intheopinionofthemunicipality,theproposeddevelopmentwouldnotreasonablybeexpected tooccursolelythroughprivateinvestmentwithinthereasonablyforeseeablefuture;andtheincreased marketvalueofthesitethatcouldreasonablybeexpectedtooccurwithouttheuseoftaxincrement financingwouldbelessthantheincreaseinthemarketvalueestimatedtoresultfromtheproposed developmentaftersubtractingthepresentvalueoftheprojectedtaxincrementsforthemaximum durationofthedistrictpermittedbytheplan.Therequirementsofthisitemdonotapplyifthedistrict isahousingdistrict; StatementofFact:Thedeveloper(s)haveindicatedintheirapplicationsandverbally,that wereitnotfortheuseofTaxIncrementFinancingassistancetheywouldnotmoveforward withtheirproject.Instead,theywouldchooseanotherlocationoutsideoftheCityofSt. 13|Page Josephwherethecoststodevelopwouldbelessexpensive.Theuseofincrementisnecessary toovercomethedifferenceincostsassociatedwiththealternativesite. (3)thatthetaxincrementfinancingplanconformstothegeneralplanforthedevelopmentofthe municipalityasawhole; StatementofFact:Theproposeddevelopmentandplanisconsistentwiththeplanningefforts, zoningordinancesandeffortsoftheCityofSt.JosephtopromotedevelopmentwithintheCity. (4)thatthetaxincrementfinancingplanwillaffordmaximumopportunity,consistentwiththesound needsofthemunicipalityasawhole,forthedevelopmentorredevelopmentoftheprojectbyprivate enterprise; StatementofFact:TheCityofSt.JosephandtheSt.JosephEconomicDevelopmentAuthority haveworkeddiligentlytopromotedevelopmenteffortsintheareaoftheproposedprojectand believethatprojectscontemplatedinthisTIFDistrictwillaffordmaximumopportunity consistentwiththeneedsofthemunicipalityasawhole. SECTION2ȟADMINISTRATIONOFDISTRICT Section2.1.UseofTaxIncrementsȟEconomicDevelopmentDistricts Taxincrementsfromaneconomicdevelopmentdistrictmustbeusedtoprovideimprovements,loans, subsidies,grant,interestratesubsidies,orotherassistanceinwhichatleast85%ofthesquarefootabgeof thefacilitiestobeconstructedareusedforanyofthefollowingpurposes: (1)Manufacturingorproductionoftangiblepersonalproperty,includingprocessing,resultingin thechangeoftheconditionoftheproperty; (2)Warehousing,storageanddistributionoftangiblepersonalproperty,excludingretailsales; (3)Researchanddevelopmentrelatedtotheactivitieslistedin(1)or(2)above; (4)Telemarketingifthatactivityistheexclusiveuseoftheproperty; (5)Tourismfacilities (6)Qualifiedborderretailfacilities;or, (7)Spacenecessaryforandrelatedtotheactivitieslistedin(1)through(6)above. Inadditiontotheusesspecifiedabove,taxincrementsmayalsobeusedtoprovideassistanceforupto 15,000squarefeetofanyseparatelyownedcommercialfacilitylocatedwithinaͻƭƒğƌƌĭźƷǤͼasdefinedby MinnesotaStatutes469.176,Subd.4c). Section2.2.UseofTaxIncrementsȟGeneral Eachyearthecountytreasurerwilldeductanestimated0.36%oftheannualtaxincrementgeneratedby theTIFDistrictandpaysuchamounttothestategeneralfund.Suchamountswillbeappropriatedtothe stateauditorforthecostoffinancialreportingandauditingoftaxincrementfinancinginformation 14|Page throughoutthestate.Exhibit3showstheprojecteddeductionforthispurposeovertheanticipatedlifeof theTIFDistrict. TheAuthorityhasdeterminedthatitwilluse100%oftheremainingtaxincrementgeneratedbytheTIF Districtforanyofthefollowingpurposes: 1.payfortheestimatedpubliccostsoftheTIFDistrict(includingadministrativeexpenses,seeSection7) andCityadministrativecostsassociatedwiththeTIFDistrict(seeSection22); 2.payprincipalandinterestontaxincrementbonds,notesorotherfinancialobligationsissuedtofinance thepubliccostsoftheTIFDistrict; 3.accumulateareservesecuringthepaymentoftaxincrementbondsorotherbondsissuedtofinance thepubliccostsoftheTIFDistrict; 4.payalloraportionofthecountyroadcostsasmayberequiredbytheCountyBoardunderM.S. Section469.175,Subdivision1a;or 5.returnexcesstaxincrementstotheCountyAuditorforredistributiontotheCity,CountyandSchool Districtinproportiontotheirlocaltaxcapacityrates. Taxincrementsfrompropertylocatedinonecountymustbeexpendedforthedirectandprimarybenefit ofaprojectlocatedwithinthatcounty,unlessbothCountyBoardsinvolvedwaivethisrequirement.Tax incrementsshallnotbeusedtocircumventlevylimitations. Taxincrementcannotbeusedtofinancetheacquisition,construction,renovation,operation,or maintenanceofabuildingtobeusedprimarilyandregularlyforconductingthebusinessofamunicipality, county,schooldistrict,oranyotherlocalunitofgovernmentortheStateorFederalgovernment.This prohibitiondoesnotapplytotheconstructionorrenovationofaparkingstructure,acommonareausedas apublicpark,orafacilityusedforsocial,recreational,orconferencepurposesandnotprimarilyfor conductingthebusinessofthecommunity. Ifthereexistsanytypeofagreementorarrangementprovidingforthedeveloper,orotherbeneficiaryof assistance,torepayalloraportionoftheassistancethatwaspaidorfinancedwithtaxincrements,such paymentsshallbesubjecttoalloftherestrictionsimposedontheuseoftaxincrements.Assistance includessalesofpropertyatlessthanthecostofacquisitionorfairmarketvalue,grants,groundorother leasesatlessthanfairmarketrent,interestratesubsidies,utilityserviceconnections,roads,orother similarassistancethatwouldotherwisebepaidforbythedeveloperorbeneficiary. Section2.3.ȏ'±¤¤!¢±¤²Ȑ ATIFDistrictmayNOTincludeparcelsthatqualifiedasͻŭƩĻĻƓğĭƩĻƭͼinanyofthefive(5)yearspreceding therequestforcertification,unless85%ofdevelopmentinthedistrictisrestrictedtoqualified personalpropertyand manufacturingordistributionfacilitiesdirectlyrelatedtoproductionoftangible payingatleast90%ofitsĻƒƦƌƚǤĻĻƭ͸wagesequaltoorgreaterthan160%ofthefederalminimumwage, orthedevelopmentinthedistrictisaqualifiedhousingproject 15|Page Section2.4.4YearKnockDownRule IfafterfouryearsfromcertificationoftheTIFDistrictnodemolition,rehabilitation,renovation,orqualified improvementofanadjacentstreethascommencedonaparcellocatedwithintheTIFDistrict,thenthat parcelshallbeexcludedfromtheTIFDistrictandtheOriginalNetTaxCapacityshallbeadjusted accordingly.Qualifiedimprovementsofastreetarelimitedtoconstructionoropeningofanewstreet, relocationofastreet,orsubstantialreconstructionorrebuildingofanexistingstreet.TheAuthoritymust submittotheCountyAuditor,byFebruary1ofthefifthyear,evidencethattherequiredactivityhastaken placeforeachparcelintheTIFDistrict. IfaparcelisexcludedfromtheTIFDistrictandtheAuthorityorowneroftheparcelsubsequently commencesanyoftheaboveactivities,theAuthorityshallcertifytotheCountyAuditorthatsuchactivity hascommencedandtheparcelshallonceagainbeincludedintheTIFDistrict.TheCountyAuditorshall certifytheNetTaxCapacityoftheparcel,asmostrecentlycertifiedbytheCommissionerofRevenue,and addsuchamounttotheOriginalNetTaxCapacityoftheTIFDistrict. Section2.5.TaxIncrementPoolingȟ5yearRule Atleast75%ofthetaxincrementsfromtheTIFDistrictmustbeexpendedonactivitiesinthedistrictorto paybonds,totheextentthattheproceedsofthebondswereusedtofinanceactivitiesinthedistrictorto pay,orsecurepaymentof,debtserviceoncreditenhancedbonds.Fordistricts,otherthanEconomic DevelopmentdistrictsforwhichtherequestforcertificationwasmadeafterJune30,1995,theindistrict percentageforpurposesoftheprecedingsentenceis80percent.Notmorethan25percentofthetotal derivedfromtaxincrementspaidbypropertiesinthedistrictmaybeexpended,througha revenue developmentfundorotherwise,onactivitiesoutsideofthedistrictbutwithinthedefinedgeographicarea oftheprojectexcepttopay,orsecurepaymentof,debtserviceoncreditenhancedbonds.All areconsideredtohavebeenspentoutsideoftheDistrict.Taxincrementsare administrativeexpenses consideredtohavebeenspentwithintheTIFDistrictifsuchamountsare: 1.actuallypaidtoathirdpartyforactivitiesperformedwithintheTIFDistrictwithinfiveyearsafter certificationofthedistrict; 2.usedtomakepaymentsorreimbursementstoathirdpartyunderbindingcontractsforactivities performedwithintheTIFDistrict,whichwereenteredintowithinfiveyearsaftercertificationofthe district;or 3.usedtopaybondsthatwereissuedandsoldtoathirdparty,theproceedsofwhicharereasonably expectedonthedateofissuancetobespentwithinthelaterofthefiveyearperiodorareasonable temporaryperiodoraredepositedinareasonablyrequiredreserveorreplacementfund. BeginningwiththesixthyearfollowingcertificationoftheTIFDistrict,atleast75%ofthetaxincrements mustbeusedtopayoutstandingbondsormakecontractualpaymentsobligatedwithinthefirstfiveyears. Whenoutstandingbondshavebeendefeasedandsufficientmoneyhasbeensetasidetopayforsuch contractualobligations,theTIFDistrictmustbedecertified. TheAuthorityalsoelectstheoptionprovidedbyM.S.469.1763toincreasetheamountofexpenditures permittedoutsidetheDistrictbyuptoanadditional10%.However,theseexpendituresarelimitedto 16|Page assistinghousingwhichmeetstherequirementsofalowincomehousingbuildingdefinedundersection 42(c)oftheInternalRevenueCode. TheAuthorityexpectsthataportionoftaxincrementsmaybeusedforhousingexpenseselsewherewithin theDevelopmentDistrict. Section2.6.ExcessTaxIncrement OnDecember31stofeachyear,theAuthoritymustdeterminetheamountofexcessincrementsfortheTIF District.SeeM.S.Section469.176subdivision2foracompletedefinition.Excessincrementsmayonlybe usedto: 1.prepayanyoutstandingtaxincrementbonds,notesorotherobligations; 2.dischargethepledgeoftaxincrementsthereon. 3.payamountsintoanescrowaccountdedicatedtothepaymentofthetaxincrementbonds,notesor otherobligations;or 4.returnexcesstaxincrementstotheCountyAuditorforredistributiontotheCity,CountyandSchool mustreporttothe Districtinproportiontotheirlocaltaxcapacityrates.TheCountyAuditor CommissionerofEducationtheamountofanyexcesstaxincrementredistributedtotheSchoolDistrict within30daysofsuchredistribution. AllocationofexcessincrementsmustbecompletedbySeptember31stintheyearfollowingtheyearin whichtheexcessincrementsweregenerated. Section2.7.LimitationonAdministrativeExpenses AdministrativeexpensesaredefinedasallcostsoftheAuthorityotherthan: 1.amountspaidforthepurchaseofland; 2.amountspaidformaterialsandservices,includingarchitecturalandengineeringservicesdirectly connectedwiththeproposeddevelopmentwithintheTIFDistrict; 3.relocationbenefitspaidto,orservicesprovidedfor,personsorbusinesseslocatedwithintheTIF District;or 4.amountsusedtopayprincipalorintereston,fundareservefor,orsellatadiscount,taxincrement bonds. 5.amountsusedtomakepaymentsonotherfinancialobligationsusedtofinancecostsoutlinedabove. 17|Page Administrativeexpensesincludeamountspaidforservicesprovidedbybondcounsel,fiscalconsultants, planningoreconomicdevelopmentconsultants,andactualcostsincurredbytheCityinadministeringthe TIFDistrict.TaxincrementsmaybeusedtopayadministrativeexpensesoftheTIFDistrictuptothelesser ofthetotalestimatedpubliccostsauthorizedbytheTIFPlanor(b)10%ofthetotaltax of(a)10% incrementexpendituresoftheproject. Section2.8.PriorPlannedImprovements TheCityshallaccompanyitsrequestforcertificationtotheCountyAuditorwithalistingofallproperties withintheTIFDistrictforwhichbuildingpermitshavebeenissuedduringthe18monthsimmediately precedingapprovaloftheTIFPlan.TheCountyAuditorshallincreasetheOriginalNetTaxCapacityofthe TIFDistrictbytheNetTaxCapacityofeachimprovementforwhichabuildingpermitwasissued. Section2.9.DevelopmentAgreements Ifmorethan10%oftheacreageofaproject(whichcontainsahousingdistrict)istobeacquiredbythe Authoritywithproceedsfromtaxincrementbondsthen,priortosuchacquisition,theAuthoritymustenter intoanagreementforthedevelopmentoftheproperty.Suchagreementmustproviderecourseforthe Authorityshouldthedevelopmentnotbecompleted. Section2.10.BusinessSubsidyLaws MinnesotaStatutes116J.991requiresanAuthorityprovidingabusinesswithasubsidyworth$25,000to completeasubsidyapprovalprocess.Housingassistanceisexemptfromtherequirements. Section2.11.AssessmentAgreements TheAuthoritymay,uponenteringintoadevelopmentagreement,alsoenterintoanassessment agreementwiththedeveloper,whichestablishesaminimummarketvalueofthelandandimprovements foreachyearduringthelifeoftheTIFDistrict. TheassessmentagreementshallbepresentedtotheCountyorCityAssessorwhoshallreviewtheplans andspecificationsfortheimprovementstobeconstructed,reviewthemarketvaluepreviouslyassignedto theland,andsolongastheminimummarketvaluecontainedintheassessmentagreementappearstobe areasonableestimate,shallcertifytheassessmentagreementasreasonable.Theassessmentagreement shallbefiledforrecordintheofficeoftheCountyRecorderofeachcountywherethepropertyislocated. AnymodificationorprematureterminationofthisagreementmustfirstbeapprovedbytheCity,andifthe projectisvaluedbelowtheminimummarketvalue,alsoapprovedbytheCountyandSchoolDistrict. Section2.12.ModificationsoftheTaxIncrementFinancingPlan AnyreductionorenlargementinthegeographicareaoftheProjectAreaortheTIFDistrict;increaseinthe amountofbondedindebtednesstobeincurred;increaseintheamountofcapitalizedinterest;increasein 18|Page thatportionoftheCapturedNetTaxCapacitytoberetainedbytheAuthority;increaseinthetotal estimatedpubliccosts;ordesignationofadditionalpropertytobeacquiredbytheAuthorityshallbe approvedonlyaftersatisfyingallthenecessaryrequirementsforapprovaloftheoriginalTIFPlan.These restrictionsdonotapplyif: 1.theonlymodificationiseliminationofparcelsfromtheProjectAreaortheTIFDistrict;and 2.thecurrentNetTaxCapacityoftheparcelseliminatedequalsorexceedstheNetTaxCapacityofthose parcelsintheTIFDistrict'sOriginalNetTaxCapacity,ortheAuthorityagreesthattheTIFDistrict's OriginalNetTaxCapacitywillbereducedbynomorethanthecurrentNetTaxCapacityoftheparcels eliminated. TheAuthoritymustnotifytheCountyAuditorofanymodificationthatreducesorenlargesthegeographic areaoftheProjectAreaortheTIFDistrict.ThegeographicareaoftheTIFDistrictmaybereducedbutnot enlargedafterfiveyearsfollowingthedateofcertification. Section2.13.AdministrationoftheTaxIncrementFinancingPlan !ǒķźƷƚƩ͸ƭOffice. UponadoptionoftheTIFPlan,theAuthorityshallsubmitacopyofsuchplantotheState TheAuthorityshallalsorequestthattheCountyAuditorcertifytheOriginalNetTaxCapacityandNetTax CapacityRateoftheTIFDistrict.ToassisttheCountyAuditorinthisprocess,theAuthorityshallsubmit adoptingtheTIFPlan,andalistingof copiesoftheTIFPlan,theresolutionestablishingtheTIFDistrictand anypriorplannedimprovements.TheAuthorityshallalsosendtheCountyAssessoranyassessment agreementsestablishingtheminimummarketvalueoflandandimprovementsintheTIFDistrict,andshall requestthattheCountyAssessorreviewandcertifyanyassessmentagreementsasreasonable. TheCountyshalldistributetotheAuthoritytheamountoftaxincrementasitbecomesavailable.The amountoftaxincrementinanyyearrepresentstheapplicablepropertytaxesgeneratedbytheRetained CapturedNetTaxCapacityoftheTIFDistrict.Theamountoftaxincrementmaychangedueto developmentanticipatedbytheTIFPlan,otherdevelopment,inflationofpropertyvalues,orchangesin propertyclassificationratesorformulas. InadministeringandimplementingtheTIFPlan,thefollowingactionsshouldoccuronanannualbasis: 1.PriortoJuly1,theAuthorityshallnotifytheCountyAssessorofanynewdevelopmentthathas occurredintheTIFDistrictduringthepastyeartoinsurethatthenewvaluewillberecordedinatimely manner. 2.IftheCountyAuditorreceivestherequestforcertificationofanewTIFDistrict,orformodificationof anexistingTIFDistrict,beforeJuly1,therequestshallberecognizedindetermininglocaltaxratesfor thecurrentandsubsequentlevyyears.RequestsreceivedonorafterJuly1shallbeusedtodetermine localtaxratesinsubsequentyears. EachyeartheCountyAuditorshallcertifytheamountoftheOriginalNetTaxCapacityoftheTIF District.Theamountcertifiedshallreflectanychangesthatoccurasaresultofthefollowing: 19|Page a)thevalueofpropertythatchangesfromtaxexempttotaxableshallbeaddedtotheOriginalNetTax CapacityoftheTIFDistrict.Thereverseshallalsoapply; b)theOriginalNetTaxCapacitymaybemodifiedbyanyapprovedenlargementorreductionoftheTIF District; c)iftheTIFDistrictisclassifiedasaneconomicdevelopmentdistrict,thentheOriginalNetTaxCapacity shallbeincreasedbytheamountoftheannualadjustmentfactor;and d)iflawsgoverningtheclassificationofrealpropertycausechangestothepercentageofEstimated MarketValuetobeappliedforpropertytaxpurposes,thentheresultingincreaseordecreaseinNet TaxCapacityshallbeappliedproportionatelytotheOriginalNetTaxCapacityandtheRetained CapturedNetTaxCapacityoftheTIFDistrict. TheCountyAuditorshallnotifytheAuthorityofallchangesmadetotheOriginalNetTaxCapacityoftheTIF District. Section2.14.FinancialReportingandDisclosureRequirements TheAuthorityisresponsibleforinformationandfinancialreportingontheactivitiesoftheTIFDistrict. Theseresponsibilitiesinclude: 1.PrepareandPublishanAnnualStatement.NolaterthanAugust1ofeachyear,theAuthoritymust prepareandpublishanannualstatementwhichincludesatleastthefollowinginformation: (a)taxincrementreceivedandexpendedinthatyear (b)OriginalNetTaxCapacity (c)capturedNetTaxCapacity (d)amountofoutstandingbondedindebtedness (e)incrementspaidtoothergovernmentbodies (f)administrativecosts (g)incrementspaiddirectlyorindirectlyoutsideofthedistrict (h)ifafiscaldisparitiescontributioniscomputedundersection469.177,Subd.3(a),theincreasein propertytaximposedonotherpropertiesinthemunicipalityasaresultofthefiscaldisparities contributioninthemannerprescribedbythecommissionerofrevenue. AcopyoftheannualstatementmustalsobeprovidedtotheStateAuditor,countyboardandcounty auditor,schoolboard,andthemunicipality. 2.PrepareanAnnualReport.(469.175Subds.5and6)TheStateAuditorenforcestheprovisionsofthe TIFActandhasfullresponsibilityforfinancialandcomplianceauditingoftheAuthority'suseoftax incrementfinancing.TheState!ǒķźƷƚƩ͸ƭofficeprovidesdetailedtaxincrementreportingformsforuse incomplyingwithannualreportingrequirements.OnorbeforeAugust1ofeachyear,theAuthority andsubmitittothestate and/ortheCitymustprepareastatusandfinancialreportfortheTIFDistrict auditor,thecountyboard,thecountyauditor,theschoolboard,andthegoverningbodyofthe municipality,ifthemunicipalityisnotalsotheauthority. 20|Page 3.BusinessSubsidyAnnualReportsΑMinnesotaStatutes116J.993995requireunitsofgovernmentto adoptcriteriaforawardingassistancetobusiness,tomonitortheprogressofprojectsreceiving assistanceandtosubmitannualreportstotheMinnesotaDepartmentofEmployment&Economic Reports,whenrequired,mustbefilednolater Developmentdependinguponthelevelofassistance. thanMarch1ofeachyearforthepreviousyear 21|Page EXHIBITS Map(s)Exhibit1 Parcels,Values,ImprovementsExhibit2 TIFProjectionsExhibit3 EstimatedImpactonOtherTaxingJurisdictionsExhibit4 MarketValueAnalysisExhibit5 PreliminaryPayAsYouGoScheduleExhibit6 22|Page 2 EXHIBIT Cap. 4,9624,962 IDOwnerLandBuildingTotalTax $$ 496,200496,200 Valualtions 1 3 No. $$ District 2013/2014 Projects Financing 3/16/2015 Minnesota $ Development 496,200496,200 Date: Increment Joseph,$ Adoption Plat C (CM Professional Union Saint Tax Plan Credit Development Proposed of Joseph Minnesota City St. 184.53798.0574Central Economic Parcel 3 NetDistrict Val.Duration123456789 144,377151,96055,7414,203356,281 EXHIBIT %AnnualDistrict o EstimatedLife f $ $ $$$$ 4.00%4.00% naCityCity40.52%16,042County128.4618%County42.65%16,884SchoolSchool15.65%6,193OtherOther1.18%467Total100.00%39,58732,82264,38194,726123,905151,961178,938204,877229,819253,801 Val.Present NetCumm $ $ $$$ $ $$$$$$$$$ 32,82231,55930,34529,17828,05626,97725,93924,94223,982 253,801 MaxIncrementPresent $$$$$$$$$$ InrementCummulative 35,50071,000106,500141,999177,499212,999248,499283,999319,499 $$$$$$$$$ C/I Incremen 35,50035,50035,50035,50035,50035,50035,50035,50035,500 319,499 t C/I50.840%State Net of $ $$$$$$$$$ Share Authority 3,9443,9443,9443,9443,9443,9443,9443,9443,944 35,500 1 3 No. IncrementAdmin District 10% Project $$$$$$$$$ $ s Financing Development 3/16/2015 39,44439,44439,44439,44439,44439,44439,44439,44439,444 52.0569%54.7913%20.0983%179.302%354,998 Minnesota AuditorAvailable 1.5153% Rates Assumptions Date: (.36%)Tax 2013/2014 Increment $$$$$$$$$$ Joseph, Adoption Plat 143143143143143143143143143 1,283 Rate State Professional RateIncrementDeduction Tax Saint TaxState Tax Plan Base Development $$$$$$$$$$ Proposed of City $ Joseph 39,58739,587128.462%39,587128.462%39,587128.462%39,587128.462%39,587128.462%39,587128.462%39,587128.462%39,587128.462%39,587128.462%39,587 356,281 Gross ValueCapacityTaxPortion St. MarketTaxTotalTIF Economic $$$$$$$$$$$$$$$$ 128.462%128.462% 8,89755,25464,151 PayableBaseProjectedCapturedProjected Tax CapacityBase $ $$$$$ 4,96230,81635,77830,81630,81630,81630,81630,81630,81630,81630,81630,816 Capacity CapacityTax Tax Area Captured $$$$$$$$$$$$$$ 1% 29%31%11%28% 4,9624,96235,77835,77835,77835,77835,77835,77835,77835,77835,778 Values496,200CMCU1,578,300Total2,074,500 Disparity use d net were CapacityTax the Fiscal Abatement of $$$ $$$$$$$$$$$$$$ a 100% Demolition 20154,96220164,96220174,96220184,96220194,96220204,96220214,96220224,96220234,96220244,96220254,962 7,190.77542.14 64,150.60 18,624.9219,603.2318,189.54 within retain Taxes If ONL Original fall Y 0% YearTax Tax not to to Estimated Projections Annual lost intends does $$$$$$$$$$$ $$$$$ $ SchoolC/I ValueOther City County District = Total Authority RateState & Valuations of Inflation TIF CMCU Share This The 4 EXHIBIT InrementCummulativeCimmul.District 123456789 MaxIncrementNPVDuration 50,553 130,939137,8173,811127,878450,998 %AnnualDistrict o EstimatedLife f $ $ $$$$ 4.00% County54.7913%128.4618%County30.56%5,30132,82231,55961,90591,083 naCity52.0569%City29.03%5,036School20.0983%School11.21%1,944Other1.5153%Other0.85%147C/I28.35%4,918Total179.302%100.00%17,346132,796172,904211,469248,552284,208 $ $$$$ $ $$$$$$$$$ 35,50071,000106,500141,999194,779247,559300,339353,118405,898 $$$$$$$$$ Increment 35,50035,50035,50035,50052,78052,78052,78052,78052,780 405,898 C/I50.840%State Net of $$$$$$$$$$ Share 3,9443,9443,9443,9445,8645,8645,8645,8645,864 45,100 Authority IncrementAdmin 1 3 $$$$$$$$$ $ No. Projects District 39,44439,44439,44439,44458,64458,64458,64458,64458,644 450,998 AuditorAvailable Rates Assumptions Financing Development Minnesota 2013/2014 (.36%)Tax $$$$$$$$$$ 3/16/2015 143143143143212212212212212 1,629 Rate Increment State Joseph, RateIncrementDeduction Tax TaxState Plat Date: Base $$ $$$$$$$$ Professional Adoption Saint Tax Development of 39,58719,26958,856128.462%39,587128.462%39,587128.462%39,587128.462%39,587128.462%58,856128.462%58,856128.462%58,856128.462%58,856128.462%58,856 452,627 Plan City Gross ValueCapacityTaxPortion Proposed Joseph MarketTaxTotalTIF $$$$$$$$$$$$$$$ St. Economic 128.462%128.462% 8,89755,25419,26983,420 PayableBaseProjectedCapturedProjected Tax CapacityBase $$$$$ Capacit 4,96230,81615,00050,77830,81630,81630,81630,81645,81645,81645,81645,81645,816 y Tax CapacityTax Area Captured $$$$$$$$$$$$$$ Disparity CMCU1,578,300Expansion1,000,0004,9624,96235,77835,77835,77835,77850,77850,77850,77850,77850,778 Values496,200Total3,074,500 net the Fiscal CapacityTax of a $$$ $$$$$$$$$$$$$100% within Demolition 20154,96220164,962 20174,96220184,96220194,96220204,96220214,96220224,96220234,96220244,96220254,962 Projections retain Taxes fall Original 0% not YearTax to Estimated Future tointends does lost $$ $$$$$$$$$ TIF District = Value Authority Rate & Ultimate Valuations Inflation TIF This The 4 EXHIBIT than 51.33%0.73%54.77%0.02%20.09%0.01%127.70%0.76% taxing Thisis generate jurisdictions, 2013/2014ProjectedHypotheticalNewHypotheticalHypothetical above. would in the LocalDecrease Rate of pose rate would 1 Rate" each the RateTax 3 No. tax not taxing District to on Tax local 1.52% do available impact Projects District in the projects total Decrease TIF to NetAdjusted no the available hypothetically the have Financing Development 3/16/2015 the of Minnesota CapacityTax case, "Hypothetical Capacitythus will 3,261,278125,212,19270,658,032 not a project and such is Date: Increment was TaxDistrict services In Joseph,GeneratedTaxable Net the District thejurisdiction. Adoption Plat TIFTax thus see TIF Captured public Professional the TIF 23,85025,1039,208694Totals58,856 and Saint rate Tax all Plan of the project taxing tax Capacity retained by Development of Proposed of local served Capacity rates. each City the lower Tax the for Joseph foralready tax NetTax that Net Tax CapacityBy $ localbonds taxes a costs. be Net 52.0569%54.7913%20.0983%1.5153%Totals128.462% 45,81645,81645,81645,816 Captured tax is St. Economic or of would District 2013/2014Original Rate issuing hypotetical Captured debt. NetLocal amount levied or NetCaptured CapacityTax services result Retained anticipate issue TIF taxes CapacityTax Retainedsame $$$$ the the The to public on Joseph3,215,462County125,166,37674070,612,216Joseph3,215,462County125,166,37674070,612,216 in above, ability projected the .76%. impact includednot projected produce in does or increase jurisdictionsshown. by District nodebt the decrease area City TaxingTaxableTaxingTaxable is District would there city's theSince also ImpactsTheanyThe JurisdictionTaxJurisdictionTax $$$$$$ If TIF Without TIF 12 StatementStatement With Local St.St. ImpactImpact StearnsStearns ofof OtherOther CityCity ISDISD EXHIBIT6 CityofSaintJoseph,Minnesota EconomicDevelopmentTaxIncrementFinancingDistrictNo.31 St.JosephProfessionalPlatDevelopmentProjects ProposedPlanAdoptionDate:3/16/2015 MARKETVALUEANALYSIS IncreasedMarketValueofSite2,578,300$ LessPresentValueofTIFRevenues$ $2,578,300 Reasonablyexpectedincreasew/outTIF*500,000$ NetValueIncrease2,078,300$ PresentValueCalculation CalculationDate2015 PresentValueFactor4% GrossTaxPresent PeriodYearIncrementValue 2015 2016 1201739,44436,468 2201839,44435,066 3201939,44433,717 4202039,44432,420 5202158,64446,347 6202258,64444,565 7202358,64442,851 8202458,64441,203 9202558,64439,618 450,998352,255 EXHIBIT6 CityofSaintJoseph,Minnesota EconomicDevelopmentTaxIncrementFinancingDistrictNo.31 St.JosephProfessionalPlatDevelopmentProjects ProposedPlanAdoptionDate:3/16/2015 PayasyougoPaymentSchedule CentralMinnesotaCreditUnionCallCenterProjec t 0%TIF DatePrincipalRateInterestPaymentBalance 1/1/2015StartingReimbursableExpenses>130,000 2/1/20160.00%$130,000 12/1/201725,5000.00%$25,500 104,500 22/1/201835,5000.00%$35,50069,000 32/1/201935,5000.00%$35,50033,500 42/1/202035,5000.00%$35,500(1,999) 52/1/202135,5000.00%$35,500(37,499) 62/1/202235,5000.00%$35,500(72,999) 35,500 72/1/20230.00%$35,500(108,499) 35,500 0.00%$35,500(143,999) 82/1/2024 35,500 92/1/20250.00%$35,500(179,499) ThisScheduleisforillustrativepurposesonly.TheactualTIFNotewillbebasedupon actualincrementgenerated. Note:ThefirstpaymentisreducedbythecostsincurredbytheCity/EDAtoprovide assistanceestimatedtobe$10,000 This page intentionally left blank RESOLUTION 2015-009 ESTABLISHING MUNICIPAL DEVELOPMENT DISTRICT NO. 3, APPROVING THE DEVELOPMENT PROGRAM THEREFOR, ESTABLISHING TAX INCREMENT FINANCING DISTRICT NO. 3-1 WITHIN MUNICIPAL DEVELOPMENT DISTRICT NO. 3 AND APPROVING THE TAX INCREMENT FINANCING PLAN THEREFOR WHEREAS: A. It has been proposed that the City of St. Joseph, Minnesota (the “City”) establish Municipal Development District No. 3 (the “Development District”) and establish Tax Increment Financing District No. 3-1 therein (the “TIF District”) and approve and accept the proposed Tax Increment Financing Plan therefor under the provisions of Minnesota Statutes, Sections 469.174 to 469.1799 (the “Act”); and B. The City Council has investigated the facts and has caused to be prepared a proposed development program for the Development District (the “Development Program”), and has caused to be prepared a proposed tax increment financing plan for the TIF District therein (the “TIF Plan”); and C. The City has performed all actions required by law to be performed prior to the establishment of the Development District and the TIF District therein, and the adoption of a proposed Development Program and TIF Plan therefor, including, but not limited to, notification of Stearns County and Independent School District No. 742 having taxing jurisdiction over the property to be included in the TIF District and the holding of a public hearing upon published and mailed notice as required by law; and NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of St. Joseph as follows: 1. Municipal Development District No. 3. There is hereby established in the City a Municipal Development District No. 3 (the “Development District”), the initial boundaries of which are fixed and determined as described in the Development Program. 2. Development Program. The Development Program for the Development District, a copy of which is on file in the office of the City Administrator-Clerk-Treasurer, is adopted as the development program for the Development District. 3. TIF District No. 3-1. There is hereby established in the City within the Development District, Tax Increment Financing District No. 3-1 therein (the “TIF District”), the initial boundaries of which are fixed and determined as described in the TIF Plan. 4. Tax Increment Financing Plan. The TIF Plan is adopted as the tax increment financing plan for the TIF District, and the City Council makes the following findings: (a) The TIF District is an economic development district as defined in Minnesota Statutes, Section 469.174, Subd. 12, the specific basis for such determination being that construction of a Call Center and activities subordinate to such by the Central Minnesota Credit Union will increase employment in the State, help prevent the emergence of blight and result in the preservation and enhancement of the tax base of the State. 3450481v2 (b) The proposed development in the opinion of the City Council, would not occur solely through private investment within the reasonably foreseeable future. The reasons supporting this finding are that: (i) Central Minnesota Credit Union has represented to the City that without assistance to reduce the projects costs that could be achieved outside of the municipality, the development would not occur in the City of St. Joseph. It is necessary to finance these development activities through the use of tax increment financing so that this and other development by private enterprise will occur within the Development District. (ii) A comparative analysis of estimated market values both with and without establishment of TIF District No. 3-1 and the use of tax increments has been performed as described above. Such analysis is found in Exhibit 5 of the TIF Plan, and indicates that the increase in estimated market value of the proposed development (less the indicated subtractions) exceeds the estimated market value of the site absent the establishment of the TIF District and the use of tax increments. (c) In the opinion of the City Council, 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 TIF District permitted by the TIF Plan. The reasons supporting this finding are that: (i) The estimated amount by which the market value of the site will increase without the use of tax increment financing is $500,000; (ii) The estimated increase in the market value that will result from the development to be assisted with tax increment financing is $2,578,300 (from $496,200 to $2,578,300); and (iii) The present value of the projected tax increments for the maximum duration of the district permitted by the tax increment financing plan is $284,208. (d) The TIF Plan for the TIF District conforms to the general plan for development or redevelopment of the City of St. Joseph as a whole. The reasons for supporting this finding are that: (i) The TIF District is properly zoned; and (ii) The TIF Plan will generally compliment and serve to implement policies adopted by the City. (e) The TIF Plan will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of the Development District by private enterprise. The reasons supporting this finding are that: The development activities are necessary so that development and redevelopment by private enterprise can occur within the Development District. 2 5. Public Purpose. The adoption of the Development Program for the Development District, and the adoption of the TIF Plan for the TIF District therein conform in all respects to the requirements of the Act and will help fulfill a need to develop an area of the State which is already built up to provide employment opportunities to improve the tax base and to improve the general economy of the State and thereby serves a public purpose. 6. Certification. The Auditor of Stearns County is requested to certify the original net tax capacity of the TIF District as described in the TIF Plan, and to certify in each year thereafter the amount by which the original net tax capacity has increased or decreased in accordance with the Act; and the City Administrator-Clerk-Treasurer is authorized and directed to forthwith transmit this request to the County Auditor in such form and content as the Auditor may specify, together with a list of all properties within the TIF District for which building permits have been issued during the 18 months immediately preceding the adoption of this Resolution. 7. Filing. The City Administrator-Clerk-Treasurer is further authorized and directed to file a copy of the Development Program and TIF Plan for the TIF District with the Commissioner of Revenue and the Office of the State Auditor. 8. Administration. The administration of the Development District is assigned to the City Administrator-Clerk-Treasurer who shall from time to time be granted such powers and duties pursuant to Minnesota Statutes, Sections 469.130 and 469.131 as the City Council may deem appropriate. 9. Interfund Loan. The City has determined to pay for certain costs (the “Qualified Costs”) identified in the TIF Plan not to exceed the total project costs of $455,508, which costs may be financed on a temporary basis from the City’s general fund or any other fund from which such advances may be legally made (the “Fund”). Under Minnesota Statutes, Section 469.178, Subd. 7, the City is authorized to advance or loan money from the Fund in order to finance the Qualified Costs. The City intends to reimburse itself for the payment of the Qualified Costs, plus interest thereon, from tax increments derived from the TIF District in accordance with the following terms (which terms are referred to collectively as the “Interfund Loan”): (a) The City shall repay to the Fund from which the Qualified Costs are initially paid, the principal amount of $455,508 (or, if less, the amount actually paid from such fund) together with interest at 4.00% per annum (which is not more than the greater of (i) the rate specified under Minnesota Statutes, Section 270.75, or (ii) the rate specified under Minnesota Statutes, Section 549.09) from the date of the payment. (b) Principal and interest on the Interfund Loan (“Payments”) shall be paid semi- annually on each February 1 and August 1 commencing with the first February 1 or August 1 occurring after the date the tax increments from the TIF District are available and not otherwise pledged to and including the earlier of (a) the date the principal and accrued interest of the Interfund Loan is paid in full, or (b) the date of last receipt of tax increment from the TIF District (“Payment Dates”) which Payments will be made in the amount and only to the extent of Available Tax Increment as hereinafter defined. Payments shall be applied first to accrued interest, and then to unpaid principal. (c) Payments on the Interfund Loan are payable solely from “Available Tax Increments” which shall mean, on each Payment Date, all of the tax increment generated in the preceding six (6) months with respect to the Development Property within the TIF District and remitted to the City by Stearns County, all in accordance with Minnesota Statutes, Sections 469.174 to 469.1799. Payments on this Interfund Loan are subordinate to any outstanding or future bonds, notes or contracts secured in 3 whole or in part with Available Tax Increment, and are on parity with any other outstanding or future interfund loans secured in whole or in part with Available Tax Increment. (d) The principal sum and all accrued interest payable under this Interfund Loan are pre-payable in whole or in part at any time by the City 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 Interfund Loan. (e) The Interfund Loan is evidence of an internal borrowing by the City in accordance with Minnesota Statutes, Section 469.178, Subd. 7, and is a limited obligation payable solely from Available Tax Increment pledged to the payment hereof under this resolution. The Interfund Loan and the interest hereon shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the City. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or interest on the Interfund Loan 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 the Interfund Loan or other costs incident hereto. The City shall have no obligation to pay any principal amount of the Interfund Loan or accrued interest thereon, which may remain unpaid after the termination of the TIF District. (f) The City may amend the terms of the Interfund Loan at any time by resolution of the City Council, including a determination to forgive the outstanding principal amount and accrued interest to the extent permissible under law. Adopted this day of , 2015 Dale Wick, Acting Mayor ATTEST Judy Weyrens, Administrator 4 DEVELOPMENT AGREEMENT BY AND BETWEEN CITY OF ST. JOSEPH, MINNESOTA AND CENTRAL MINNESOTA CREDIT UNION This document drafted by: BRIGGS AND MORGAN (MLI) Professional Association 2200 First National Bank Building St. Paul, Minnesota 55101 6965517v1 Table of Contents Page ARTICLE I DEFINITIONS ..............................................................................................2 Section 1.1. Definitions .........................................................................................2 ARTICLE II REPRESENTATIONS AND WARRANTIES ..............................................4 Section 2.1. Representations and Warranties of the City ........................................4 Section 2.2. Representations and Warranties of the Developer ..............................4 ARTICLE III UNDERTAKINGS BY DEVELOPER AND CITY .......................................6 Section 3.1. Project and Site Improvements...........................................................6 Section 3.2. Limitations on Undertaking of the City ..............................................6 Section 3.3. Reimbursement: Tax Increment Revenue Note ..................................6 Section 3.4. Job Goals ...........................................................................................7 ARTICLE IV EVENTS OF DEFAULT...............................................................................8 Section 4.1. Events of Default Defined ..................................................................8 Section 4.2. Remedies on Default ..........................................................................8 Section 4.3. No Remedy Exclusive .......................................................................9 Section 4.4. No Implied Waiver ............................................................................9 Section 4.5. Agreement to Pay Attorney's Fees and Expenses ...............................9 Section 4.6. Indemnification of City ......................................................................9 ARTICLE V DEVELOPER'S OPTION TO TERMINATE AGREEMENT ..................... 11 Section 5.1. The Developer's Option to Terminate............................................... 11 Section 5.2. Action to Terminate ......................................................................... 11 Section 5.3. Effect of Termination....................................................................... 11 ARTICLE VI ADDITIONAL PROVISIONS .................................................................... 12 Section 6.1. Restrictions on Use .......................................................................... 12 Section 6.2. Conflicts of Interest ......................................................................... 12 Section 6.3. Titles of Articles and Sections.......................................................... 12 Section 6.4. Notices and Demands ...................................................................... 12 Section 6.5. Counterparts .................................................................................... 13 Section 6.6. Law Governing ................................................................................ 13 Section 6.7. Expiration ........................................................................................ 13 Section 6.8. Provisions Surviving Rescission or Expiration ................................. 13 Section 6.9. Assignability of Agreement ............................................................. 13 EXHIBIT A Description of Development Property ....................................................... A-1 EXHIBIT B Form of TIF Note ...................................................................................... B-1 EXHIBIT C Site Improvements .................................................................................... C-1 i 6965517v1 DEVELOPMENT AGREEMENT THIS AGREEMENT, made as of the 1st day of March, 2015, by and between the City of St. Joseph, Minnesota (the "City"), a municipal corporation existing under the laws of the State of Minnesota and Central Minnesota Credit Union, a Minnesota Chartered Credit Union (the "Developer"). WITNESSETH: WHEREAS, pursuant to Minnesota Statutes, Section 469.124 to 469.133, the City has heretofore established Municipal Development District No. 3 (the "Development District") and has adopted a development program therefor (the "Development Program"); and WHEREAS, pursuant to the provisions of Minnesota Statutes, Section 469.174 through 469.1794, as amended (hereinafter, the "Tax Increment Act"), the City has heretofore established, within the Development District, Tax Increment Financing District No. 3-1 (the "Tax Increment District") and has adopted a tax increment financing plan therefor (the "Tax Increment Plan") which provides for the use of tax increment financing in connection with certain development within the Development District; and WHEREAS, in order to achieve the objectives of the Development Program and particularly to make the land in the Development District available for development by private enterprise in conformance with the Development Program, the City has determined to assist the Developer with the financing of certain costs of a Project (as hereinafter defined) to be constructed within the Tax Increment District as more particularly set forth in this Agreement; and WHEREAS, the City believes that the development and construction of the Project, and fulfillment of this Agreement are vital and are in the best interests of the City, the health, safety, morals and welfare of residents of the City, and in accordance with the public purpose and provisions of the applicable state and local laws and requirements under which the Project has been undertaken and is being assisted; and WHEREAS, other than certain reporting requirements, the requirements of the Business Subsidy Law, Minnesota Statutes, Section 116J.993 through 116J.995, do not apply to this Agreement because the assistance given to the Developer under this Agreement is a business subsidy of less than $150,000; and 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: 6965517v1 ARTICLE I DEFINITIONS Section 1.1.Definitions. All capitalized terms used and not otherwise defined herein shall have the following meanings unless a different meaning clearly appears from the context: Agreement means this Agreement, as the same may be from time to time modified, amended or supplemented; Business Day means any day except a Saturday, Sunday or a legal holiday or a day on which banking institutions in the City are authorized by law or executive order to close; City means the City of St. Joseph, Minnesota, its successors and assigns; County means Stearns County, Minnesota; Developer means Central Minnesota Credit Union, a Minnesota Chartered Credit Union, its successors and assigns; Development District means the real property included in Municipal Development District No. 3 heretofore established; Development Program means the Development Program approved in connection with the Development District; Development Property means the real property described in Exhibit A attached to this Agreement; Event of Default means any of the events described in Section 4.1 hereof; Note Payment Date means August 1, 2017, and each February 1 and August 1 of each year thereafter to and including February 1, 2026; provided, that if any such Note Payment Date should not be a Business Day, the Note Payment Date shall be the next succeeding Business Day; Prime Rate means the rate of interest from time to time publicly announced by U.S. Bank National Association in St. Paul, Minnesota, as its "prime rate" or "reference rate" or any successor rate, which rate shall change as and when that rate or successor rate changes; Project means the construction of an approximately 13,842 square foot telemarketing call center facility and space necessary for and related to the activities of the telemarketing call center facility on the Development Property located in the City; Site Improvements means the site improvements undertaken or to be undertaken on the Development Property, more particularly described on Exhibit C attached hereto; State means the State of Minnesota; 2 6965517v1 Tax Increments means 90% of the tax increments derived from the Development Property which have been received by the City in accordance with the provisions of Minnesota Statutes, Section 469.177; Tax Increment Act means Minnesota Statutes, Sections 469.174 through 469.1794, as amended; Tax Increment District means Tax Increment Financing District No. 3-1 located within the Development District, a description of which is set forth in the Tax Increment Financing Plan, which was qualified as an economic development district under the Tax Increment Act; Tax Increment Financing Plan means the tax increment financing plan approved for the Tax Increment District by the City Council on March , and any future amendments thereto; Termination Date means the earlier of (i) February 1, 2026, (ii) the date the Reimbursement Amount is paid in full, (iii) the date on which the Tax Increment District expires or is otherwise terminated, or (iv) the date this Agreement is terminated or rescinded in accordance with its terms; and TIF Note means the Tax Increment Revenue Note (Central Minnesota Credit Union Project) to be executed by the City and delivered to the Developer pursuant to Article III hereof, the form of which is attached hereto as Exhibit B; and 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 result in delays. 3 6965517v1 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 has the power to enter into this Agreement and carry out its obligations hereunder. (2)The Tax Increment District is an "economic development district" within the meaning of Minnesota Statutes, Section 469.174, Subdivision 12, and was created, adopted and approved in accordance with the terms of the Tax Increment Act. (3)The development contemplated by this Agreement is in conformance with the development objectives set forth in the Development Program. (4)To finance certain costs within the Tax Increment District, the City proposes, subject to the further provisions of this Agreement, to apply Tax Increments to reimburse the Developer for a portion of the costs of acquisition of the Development Property and a portion of the costs of construction of Site Improvements incurred in connection with the Project as further provided in this Agreement. (5)The City makes no representation or warranty, either express or implied, as to the Development Property or its condition or the soil conditions thereon, or that the Development Property shall be suitable for the Developer's purposes or needs. Section 2.2.Representations and Warranties of the Developer. The Developer makes the following representations and warranties: (1)The Developer is a Minnesota Chartered Credit Union, has power to enter into this Agreement and to perform its obligations hereunder and, by doing so, is not in violation of any provisions of its articles or bylaws or the laws of the State. (2)The Developer shall cause the Project to be constructed in accordance with the terms of this Agreement, the Development Program, and all local, state and federal laws and regulations (including, but not limited to, environmental, zoning, energy conservation, building code and public health laws and regulations). (3)The construction of the Project would not be undertaken by the Developer, and in the opinion of the Developer would not be economically feasible within the reasonably foreseeable future, without the assistance and benefit to the Developer provided for in this Agreement. (4)The Developer will use its best efforts to 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 Project may be lawfully constructed. 4 6965517v1 (5)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 provision of any contractual restriction, evidence 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. (6)The Developer will cooperate fully with the City with respect to any litigation commenced with respect to the Project. (7)The Developer will cooperate fully with the City in resolution of any traffic, parking, trash removal or public safety problems which may arise in connection with the construction and operation of the Project. (8)Construction shall begin by June 30, 2015 and the construction of the Project will be substantially completed by December 31, 2015, subject to Unavoidable Delays. (9)The Developer acknowledges that Tax Increment projections contained in the Tax Increment Financing Plan are estimates only and the Developer acknowledges that it shall place no reliance on the amount of projected Tax Increments and the sufficiency of such Tax Increments to reimburse the Developer for a portion of the costs of the acquisition of the Development Property and a portion of the costs of the Site Improvements as provided in Article III. (10)The Developer will not seek a reduction in the market value as determined by the Stearns County Assessor of the Project or other facilities, if any, that it constructs on the Development Property, pursuant to the provisions of this Agreement, for so long as the TIF Note remains outstanding. 5 6965517v1 ARTICLE III UNDERTAKINGS BY DEVELOPER AND CITY Section 3.1.Project, Development Property and Site Improvements. (1) The parties agree that the acquisition of the Development Property and the installation of the Site Improvements is essential to the successful completion of the Project. The costs of the Development Property and the Site Improvements shall be paid by the Developer. The City shall reimburse the Developer for the lesser of $125,300 or the costs of acquisition of the Development Property and the construction of Site Improvements for the Phase I Project actually incurred and paid by the Developer (the "Reimbursement Amount"), as further provided in Section 3.2 hereof. Section 3.2.Limitations on Undertaking of the City. Notwithstanding the provisions of Sections 3.1, the City shall have no obligation to the Developer under this Agreement to reimburse the Developer for the Reimbursement Amount, if the City, at the time or times such payment is to be made is entitled under Section 4.2 to exercise any of the remedies set forth therein as a result of an Event of Default which has not been cured. Section 3.3.Reimbursement: Tax Increment Revenue Note. The City shall reimburse the payments made by the Developer under Section 3.1 for costs of the acquisition of the Development Property and the construction of Site Improvements through the issuance of the City's TIF Note in substantially the form attached to this Agreement as Exhibit B, subject to the following conditions: (1)The TIF Note shall be dated, issued and delivered when the Developer shall have demonstrated in writing to the reasonable satisfaction of the City that the construction of the Site Improvements has been completed and that the Developer has incurred and paid the costs of the acquisition of the Development Property and of the construction of Site Improvements and a settlement statement or other evidence of payment of the costs of the Development Property, as described in and limited by Section 3.1 and shall have submitted paid invoices for the costs of construction of the Site Improvements and a settlement statement or other evidence of payment of the costs of the Development Property in an amount not less than the Reimbursement Amount. (2)The principal amount of the TIF Note shall be payable solely from the Tax Increments. (3)From the first tax increments received from the Development Property, the City shall retain tax increments in an amount sufficient to pay the Legal and Administrative Expenses. On each Note Payment Date and subject to the provisions of the foregoing sentence and the provisions of the TIF Note, the City shall pay, against the principal outstanding on the TIF Note, the Tax Increments received by the City during the preceding 6 months. All such payments shall be applied to reduce the principal of the TIF Note. 6 6965517v1 (4)The TIF Note shall be a special and limited obligation of the City and not a general obligation of the City, and only Tax Increments shall be used to pay the principal of the TIF Note. (5)The City's obligation to make payments on the TIF Note on any Note Payment Date or any date thereafter shall be conditioned upon the requirements that: (A) there shall not at that time be an Event of Default that has occurred and is continuing under this Agreement and (B) this Agreement shall not have been rescinded pursuant to Section 4.2. (6)The TIF Note shall be governed by and payable pursuant to the additional terms thereof, as set forth in Exhibit B. In the event of any conflict between the terms of the TIF Note and the terms of this Section 3.3, the terms of the TIF Note shall govern. The issuance of the TIF Note pursuant and subject to the terms of this Agreement, and the taking by the City of such additional actions as bond counsel for the TIF Note may require in connection therewith, are hereby authorized and approved by the City. Section 3.4.Job Goals. (1)The Developer agrees that it will meet the following goals (the "Goals") in connection with the development of the Development Property. It will create at least thirty (30) full time jobs at not less than $19.35, inclusive of benefits, within two years from the "Benefit Date", which is the date the Developer completes the Project. (2)If the Goals are not met, the Developer agrees to repay all or a part of the Reimbursement Amount to the City, plus interest ("Interest") set at the implicit price deflator defined in Minnesota Statutes, Section 275.70, Subdivision 2, accruing from and after the Benefit Date, compounded semiannually. If the Goals are met in part, the Developer will repay a portion of the Reimbursement Amount (plus Interest) determined by multiplying the Reimbursement Amount by a fraction, the numerator of which is the number of jobs in the Goals which were not created at the wage level set forth above and the denominator of which is thirty (30) (i.e. number of jobs set forth in the Goals). (3)The Developer agrees to (i) report the progress on achieving the Goals to the City until the later of the date the Goals are met or two years from the Benefit Date, or, if the Goals are not met, until the date the Reimbursement Amount is repaid; and (ii) provide the City with information about the Project as requested by the City so that the City can satisfy the reporting requirements of Minnesota Statutes, Section 116J.994, Subd. 8. 7 6965517v1 ARTICLE IV EVENTS OF DEFAULT Section 4.1.Events of Default Defined. The following shall be "Events of Default" under this Agreement and the term "Event of Default" shall mean whenever it is used in this Agreement any one or more of the following events: (1)Failure by the Developer to timely pay any ad valorem real property taxes assessed and special assessments or other City charges with respect to the Development Property. (2)Failure of the Developer to observe or perform any covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement. (3)The holder of any mortgage on the Development Property or any improvements thereon, or any portion thereof, commences foreclosure proceedings as a result of any default under the applicable mortgage documents. (4)If the Developer shall: (a)file any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under the United States Bankruptcy Act of 1978, as amended or under any similar federal or state law; or (b)make an assignment for the benefit of its creditors; or (c)admit in writing its inability to pay its debts generally as they become due; or (d)be adjudicated a bankrupt or insolvent; or if a petition or answer proposing the adjudication of the Developer as bankrupt or its reorganization under any present or future federal bankruptcy act or any similar federal or state law shall be filed in any court and such petition or answer shall not be discharged or denied within sixty (60) days after the filing thereof; or a receiver, liquidator or trustee of the Developer, or of the Project, or part thereof, shall be appointed in any proceeding brought against the Developer, and shall not be discharged within sixty (60) days after such appointment, or if the Developer, shall consent to or acquiesce in such appointment. Section 4.2.Remedies on Default. Whenever any Event of Default referred to in Section 4.1 occurs and is continuing, the City, as specified below, may take any one or more of the following actions after the giving of thirty (30) days' written notice to the Developer, but only if the Event of Default has not been cured within said thirty (30) days: (1)The City may suspend its performance under this Agreement and the TIF Note 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. 8 6965517v1 (2)The City may cancel and rescind the Agreement and the TIF Note. (3)The City may take any action, including legal or administrative action, in law or equity, which may appear necessary or desirable to enforce performance and observance of any obligation, agreement, or covenant of the Developer under this Agreement. Section 4.3.No Remedy Exclusive. No remedy herein conferred upon or reserved to the City is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall 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 exercise any right or power accruing upon any default shall impair any such right or power or shall 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. Section 4.4.No Implied Waiver. In the event any agreement contained in this Agreement should be breached by any party and thereafter waived by any 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 4.5.Agreement to Pay Attorney's Fees and Expenses. Whenever any Event of Default occurs and the City shall employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement or performance or observance of any obligation or agreement on the part of the Developer herein contained, the Developer agrees that it shall, on demand therefor, pay to the City the reasonable fees of such attorneys and such other expenses so incurred by the City. Section 4.6.Indemnification of City. (1)The Developer (a) releases the City and its governing body members, officers, agents, including the independent contractors, consultants and legal counsel, servants and employees (collectively, the "Indemnified Parties") from, (b) covenants and agrees that the Indemnified Parties shall not be liable for, and (c) agrees to indemnify and hold harmless the Indemnified Parties against, any claim, cause of action, suit or liability for loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Project or on the Development Property. (2)Except for any willful misrepresentation or any willful or wanton misconduct of the Indemnified Parties, 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 the actions or inactions of the Developer (or if other persons acting on its behalf or under its direction or control) under this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, and operation of the Project; provided, that this indemnification shall not apply to the warranties made or obligations undertaken by the City in this Agreement or to any actions undertaken by the City which are not contemplated by this Agreement but shall, in any event and without regard to any fault on the part of the City, apply to any pecuniary loss or penalty (including interest thereon 9 6965517v1 from the date the loss is incurred or penalty is paid by the City at a rate equal to the Prime Rate) as a result of the Project causing the Tax Increment District to not qualify or cease to qualify as an "economic development district" under Section 469.174, Subdivision 12, of the Act and Section 469.176, Subdivision 4c. or to violate limitations as to the use of Tax Increments as set forth in Section 469.176, Subdivision 4c. (3)All covenants, stipulations, promises, agreements and obligations of the City contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the City and not of any governing body member, officer, agent, servant or employee of the City. 10 6965517v1 ARTICLE V DEVELOPER'S OPTION TO TERMINATE AGREEMENT Section 5.1.The Developer's Option to Terminate. This Agreement may be terminated by the Developer, if (i) the Developer is in compliance with all material terms of this Agreement and no Event of Default has occurred; and (ii) the City fails to comply with any material term of this Agreement, and, after written notice by the Developer of such failure, the City has failed to cure such noncompliance within ninety (90) days of receipt of such notice, or, if such noncompliance cannot reasonably be cured by the City within ninety (90) days, of receipt of such notice, the City has not provided assurances, reasonably satisfactory to the Developer, that such noncompliance will be cured as soon as reasonably possible. Section 5.2.Action to Terminate. Termination of this Agreement pursuant to Section 5.1 must be accomplished by written notification by the Developer to the City within sixty (60) days after the date when such option to terminate may first be exercised. A failure by the Developer to terminate this Agreement within such period constitutes a waiver by the Developer of its rights to terminate this Agreement due to such occurrence or event. Section 5.3.Effect of Termination. If this Agreement is terminated pursuant to this Article V, this Agreement shall be from such date forward null and void and of no further effect; provided, however, the termination of this Agreement shall not affect the rights of either party to institute any action, claim or demand for damages suffered as a result of breach or default of the terms of this Agreement by the other party, or to recover amounts which had accrued and become due and payable as of the date of such termination. Upon termination of this Agreement pursuant to this Article V, the Developer shall be free to proceed with the Project at its own expense and without regard to the provisions of this Agreement; provided, however, that the City shall have no further obligations to the Developer with respect to reimbursement of the expenses set forth in Section 3.2. 11 6965517v1 ARTICLE VI ADDITIONAL PROVISIONS Section 6.1.Restrictions on Use. Until termination of this Agreement, the Developer agrees for itself, its successors and assigns and every successor in interest to the Development Property, or any part thereof, that the Developer and such successors and assigns shall operate, or cause to be operated, the Project as a telemarketing call center facility and shall devote the Development Property to, and in accordance with, the uses specified in this Agreement. Section 6.2.Conflicts of Interest. No member of the governing body or other official of the City shall have any financial interest, direct or indirect, in this Agreement, the Development Property or the Project, or any contract, agreement or other transaction contemplated to occur or be undertaken thereunder or with respect thereto, nor shall any such member of the governing body or other official participate in any decision relating to the Agreement which affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is directly or indirectly interested. No member, official or employee of the City shall be personally liable to the City in the event of any default or breach by the Developer or successor or on any obligations under the terms of this Agreement. Section 6.3.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 6.4.Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand or other communication under this Agreement by any party to any other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, and (1)in the case of the Developer is addressed to or delivered personally to: Central Minnesota Credit Union Attention: Bernie Brixius th 20 4 Avenue SE P.O. Box 10 Melrose, MN 56352 (2)in the case of the City is addressed to or delivered personally to the City at: City of St. Joseph, Minnesota Attention: Administrator St. Joseph City Hall 25 College Avenue North P.O. Box 668 St. Joseph, Minnesota 56374-0668 12 6965517v1 with a copy to: Briggs and Morgan, P.A. Attention: Mary Ippel W2200 First National Bank Building 332 Minnesota Street St. Paul, MN 55101 or at such other address with respect to any such party as that party may, from time to time, designate in writing and forward to the other, as provided in this Section. Section 6.5.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 6.6.Law Governing. This Agreement will be governed and construed in accordance with the laws of the State. Section 6.7.Expiration. This Agreement shall expire on the Termination Date. Section 6.8.Provisions Surviving Rescission or Expiration. Sections 4.5 and 4.6 shall survive any rescission, termination or expiration of this Agreement with respect to or arising out of any event, occurrence or circumstance existing prior to the date thereof. Section 6.9.Assignability of Agreement. This Agreement may be assigned only with the consent of the City. The TIF Note may only be assigned pursuant to the terms of the TIF Note. 13 6965517v1 IN WITNESS WHEREOF, the City has caused this Agreement to be duly executed in its name and on its behalf and the Developer has caused this Agreement to be duly executed in its name and on its behalf, on or as of the date first above written. CITY OF ST. JOSEPH, MINNESOTA By__________________________________ Its Mayor By__________________________________ Its Administrator This is a signature page to the Development Agreement by and between the City of St. Joseph, Minnesota and Central Minnesota Credit Union. 14 6965517v1 CENTRAL MINNESOTA CREDIT UNION By ____________________________________ Its Chief Operating Officer This is a signature page to the Development Agreement by and between the City of St. Joseph, Minnesota and Central Minnesota Credit Union. 15 6965517v1 EXHIBIT A Description of Development Property Property located in the City of St. Joseph, Stearns County, Minnesota with the following Parcel Identification Number: 84.53798.0574 A-1 6965517v1 EXHIBIT B Form of TIF Note No. R-1 $______ UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF STEARNS CITY OF ST. JOSEPH TAX INCREMENT REVENUE NOTE (CENTRAL MINNESOTA CREDIT UNION PROJECT) The City of St. Joseph, Minnesota (the "City"), hereby acknowledges itself to be indebted and, for value received, hereby promises to pay the amounts hereinafter described (the "Payment Amounts") to Central Minnesota Credit Union (the "Developer") or its registered assigns (the "Registered Owner"), but only in the manner, at the times, from the sources of revenue, and to the extent hereinafter provided. The principal amount of this Note shall equal from time to time the principal amount stated above, as reduced to the extent that such principal installments shall have been paid in whole or in part pursuant to the terms hereof; provided that the sum of the principal amount listed above shall in no event exceed $125,300 as provided in that certain Development Agreement, dated as of March 1, 2015, as the same may be amended from time to time (the "Development Agreement"), by and between the City and the Developer. This Note bears no interest. The amounts due under this Note shall be payable on August 1, 2017, and on each February 1 and August 1 thereafter to and including February 1, 2026, or, if the first should not be a Business Day (as defined in the Development Agreement), the next succeeding Business Day (the "Payment Dates"). Subject to the first sentence of Section 3.3 (4), on each Payment Date the City shall pay by check or draft mailed to the person that was the Registered Owner of this Note at the close of the last business day of the City preceding such Payment Date an amount equal to the sum of the Tax Increments (hereinafter defined) received by the City during the six month period preceding such Payment Date. All payments made by the City under this Note shall be applied to principal. The Payment Amounts due hereon shall be payable solely from 90% of tax increments (the "Tax Increments") from the Development Property (as defined in the Development Agreement) within the City's Tax Increment Financing District No. 3-1 (the "Tax Increment District") within its Municipal Development District No. 3 which are paid to the City and which the City is entitled to retain pursuant to the provisions of Minnesota Statutes, Sections 469.174 through 469.1794, as the same may be amended or supplemented from time to time (the "Tax Increment Act"). This Note shall terminate and be of no further force and effect following the last Payment Date defined above, on any date upon which the City shall have terminated the Development Agreement under Section 4.2(2) thereof or the Developer shall have terminated the Development Agreement under Article V thereof, on the date the Tax Increment District is terminated, or on the date that all principal payable hereunder shall have been paid in full, whichever occurs earliest. The City makes no representation or covenant, express or implied, that the Tax Increments will be sufficient to pay, in whole or in part, the amounts which are or may become due and payable hereunder. B-1 6965517v1 The City's payment obligations hereunder shall be further conditioned on the fact that no Event of Default under the Development Agreement shall have occurred and be continuing at the time payment is otherwise due hereunder, but such unpaid amounts shall become payable if said Event of Default shall thereafter have been cured; and, further, if pursuant to the occurrence of an Event of Default under the Development Agreement the City elects to cancel and rescind the Development Agreement, the City shall have no further debt or obligation under this Note whatsoever. Reference is hereby made to all of the provisions of the Development Agreement, including without limitation Section 3.2 thereof, for a fuller statement of the rights and obligations of the City to pay the principal of this Note, and said provisions are hereby incorporated into this Note as though set out in full herein. This Note is a special, limited revenue obligation and not a general obligation of the City and is payable by the City only from the sources and subject to the qualifications stated or referenced herein. This Note is not a general obligation of the City and neither the full faith and credit nor the taxing powers of the City are pledged to the payment of the principal of this Note and no property or other asset of the City, save and except the above-referenced Tax Increments, is or shall be a source of payment of the City's obligations hereunder. This Note is issued by the City in aid of financing a project pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including the Tax Increment Act. This Note may be assigned only with the consent of the City which consent shall not be unreasonably withheld. In order to assign the Note, the assignee shall surrender the same to the City either in exchange for a new fully registered note or for transfer of this Note on the registration records for the Note maintained by the City. Each permitted assignee shall take this Note subject to the foregoing conditions and subject to all provisions stated or referenced herein. 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 have happened, and to be performed precedent to and in the issuance of this Note have been done, have happened, and have been performed in regular and due form, time, and manner as required by law; and that this Note, together with all other indebtedness of the City outstanding on the date hereof and on the date of its actual issuance and delivery, does not cause the indebtedness of the City to exceed any constitutional or statutory limitation thereon. IN WITNESS WHEREOF, City of St. Joseph, Minnesota, by its City Council, has caused this Note to be executed by the manual signatures of its Mayor and Administrator and has caused this Note to be dated as of __________________, 20___. _________________________________ Administrator Mayor DO NOT EXECUTE UNTIL PAID INVOICES FOR LAND ACQUISITION AND SITE IMPROVEMENTS ARE GIVEN TO THE CITY - REFER TO SECTION 3.3(1). B-2 6965517v1 CERTIFICATION OF REGISTRATION It is hereby certified that the foregoing Note was registered in the name of Central Minnesota Credit Union, and that, at the request of the Registered Owner of this Note, the undersigned has this day registered the Note in the name of such Registered Owner, as indicated in the registration blank below, on the books kept by the undersigned for such purposes. NAME AND ADDRESS OF DATE OF SIGNATURE OF REGISTERED OWNER REGISTRATION ADMINISTRATOR Central Minnesota Credit Union Attention: Bernie Brixus th 20 4 Avenue SE P.O. Box 10 Melrose, MN 56352 B-3 6965517v1 EXHIBIT C Site Improvements Landscaping, including irrigation Foundations and Footings Grading/earthwork Engineering Survey Environmental Testing Soil Borings Site Preparation Onsite Utilities Storm Water/Ponding Outdoor Lighting Onsite Road, Curb, Gutter, Driveway, Sidewalk and Streetscape Improvements Parking C-1 6965517v1