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HomeMy WebLinkAbout2012-06-14 Regular Meeting PacketCity of Apple Va ley NOTICE: The Apple Valley Economic Development Authority will hold a special meeting at the Municipal Center, on Thursday, June 14, 2012, at 4:00 p.m. to consider the items listed in the following agenda: ECONOMIC DEVELOPMENT AUTHORITY MEETING TENTATIVE AGENDA JUNE 14, 2012 — 4:00 P.M. 1. Call to Order. 2 Approval of Agenda. Approval of Minutes of June 4, 2012. 4. Approval of Consent Item: Adopt Resolution Disclaiming Interest in Easements Located on Westerly Ten Feet (10') of Lot 1, Block 1, Carroll Center 4th Addition (Red Robin Property for Cedar Ave Road Project). 5. Adopt Memo of Understanding with IMH for Legacy North Area of Central Village. 6. Review EDA Administrative Items: a) EDA Reference Notebook. b) Establish a Regular Meeting Date and Consider Televising. 7. Public Hearing to Consider a Business Subsidy Agreement with Stream International, Inc. to Fund Improvements and Job Creation at Time Square. 8 Public Hearing to Consider a Business Subsidy Agreement with Time Square Shopping Center, LLP to Fund Improvements at Time Square. 9. Authorization of Business Assistance Agreement with Time Square Shopping Center, LLP to Fund Improvements at Time Square. 10. Project Updates 11. Other items 12. Adjourn (Agendas are also available on the City's Internet Web Site http://www.cityolapplevalley.org) ECONOMIC DEVELOPMENT AUTHORITY City of Apple Valley Dakota County, Minnesota June 4, 2012 Minutes of the special meeting of the Economic Development Authority of Apple Valley, Dakota County, Minnesota, held June 4, 2012, at 3:30 o'clock p.m., at Apple Valley Municipal Center. PRESENT: President Severson, Commissioners Bergman, Goodwin, Grendahl, Hamann- Roland, and Hooppaw. ABSENT: City staff members present were: Executive Director Lawell, City Attorney Dougherty, Associate City Planner Bodmer, Associate City Planner Dykes, Finance Director Hedberg, City Planner Lovelace, Community Development Director Nordquist, and Department Assistant Murphy. APPROVAL OF AGENDA Meeting was called to order at 3:33 p.m. by President Severson. MOTION: of Hamann-Roland, seconded by Bergman, approving the agenda for today's meeting as presented. Ayes - 6 - Nays - 0. APPROVAL OF MINUTES MOTION: of Hamann-Roland, seconded by Hooppaw, approving the minutes of the special meeting of May 7, 2012, as written. Ayes - 6 - Nays - 0. DEVELOPMENT ASSISTANCE AGREEMENT WITH SPOWD DEVELOPMENT LLC Finance Director Ron Hedberg introduced the development agreement and stated the new TIF District No. 14 would include the development of 21 acres, which would be comprised of two separate phases including four buildings, totaling 200,000 square feet of office/ show room/ warehouse. The total development costs are estimated to be $13,930,000. Discussion followed. MOTION: of Hamann-Roland, seconded by Goodwin, adopting Resolution No. EDA-12-7 authorizing the execution of a development assistance agreement with SPOWD Developments, LLC. Ayes - 6 - Nays - 0. DEVELOPMENT ASSISTANCE AGREEMENT FOR AV 147 PROPERTIES, LLC EDA- 3 Associate Planner Margaret Dykes stated the City has been approached about possible resources to assist with renovations at the former Granny's Attic building located at 7600 — 147 Street W. The building has recently been purchased and the new owner created AV 147 Properties, LLC for this property. The owner would like to lease the building for a combination of small retail and Economic Development Authority City of Apple Valley Dakota County, Minnesota June 4, 2012 Page 2 office/warehouse users. He would like assistance to help fund substantial improvements to the building amounting to $149,100. Discussion followed. MOTION: of Bergman, seconded by Goodwin, adopting Resolution No. EDA-12-8 approving development agreement with AV 147 Properties, LLC. Ayes - 5 - Nays — 0, Abstained — 1 (Severson). SECURE BUSINESS ASSISTANCE THROUGH METROPOLITAN CONSORTIUM OF COMMUNITY DEVELOPERS (MCCD) AND DAKOTA COUNTY CDA Ms. Dykes stated the Metropolitan Consortium of Community Developers (MCCD) is an organization that specifically helps small businesses and entrepreneurs through its "Open to Business" program, which is geared towards new and early stage businesses that need individual advice and counseling, and access to capital that is not available from the commercial banking system. The Dakota County Community Development Agency (CDA) has approached Apple Valley to determine if there is interest in creating an "Open to Business" program in Dakota County. The CDA would administer the program and fund half of MCCD's $150,000 fee. Apple Valley's cost to participate in this program would be $7,500 which represents 50% of the total cost for the City's participation of $15,000. Discussion followed. MOTION: of Goodwin, seconded by Hamann-Roland, authorizing participation, with available EDA funds, in the Metropolitan Consortium of Community Developers "Open to Business" Loan Program in Dakota County with an annual contribution of $7,500 to the Dakota county Community Development Agency. Ayes - 5 - Nays - 1 (Grendahl). SKYWAY AT 147 STREET AND EDA ROLE Executive Director Lawell stated that in conversations with Dakota County, the City has maintained that in order for the BRT system to be safe, successful and a catalyst for private investment along the Cedar Avenue Corridor, it is important to fully construct an enclosed station stop at 147 Street that includes an elevated skyway. If the EDA is interested in advancing Phase II construction as "local betterment", staff should be given direction to prepare a draft Joint Powers Agreement with Dakota County and the Metropolitan Council to formalize the repayment terms and conditions. Discussion followed. Economic Development Authority City of Apple Valley Dakota County, Minnesota June 4, 2012 Page 3 President Severson called for a break at 5:02 p.m. The meeting continued at 5:11 p.m. More discussion was held. IMH DEVELOPMENT PROPOSAL FOR LEGACY/CENTRAL VILLAGE, MOU Tammy Omdal, Northland Securities, reviewed the ongoing financial discussions with IMH through Titan Development and the City to resolve delinquent property tax and special assessment obligations that lead to future development of the Legacy North property. Discussion followed. Hamann-Roland left the room at 6:20 p.m. Hamann-Roland returned at 6:23 p.m. Grendahl left the meeting at 6:27 p.m. PROJECT UPDATES No project updates discussed. MOTION: of Hamann-Roland, seconded by Bergman, to adjourn. Ayes - 5 - Nays - 0. The meeting was adjourned at 6:30 p.m. Respectfully Submitted, Jo a( q Murphy, Department ssistani Approved by the Apple Valley Economic Development Authority on App e City of Vane)/ TO: President, Board Members and Executive Director, Apple Valley Economic Development Authority FROM: Kathy Bodmer, Associate City Planner MEETING DATE: June 14, 2012 MEMO Community Development SUBJECT: Resolution Disclaiming Interest in Easement Area — Lot 1, Block 1, CARROLL, CENTER 4 ADDITION (Red Robin property). Dakota County wishes to obtain the western ten feet (10') of Lot 1, Block 1, CARROLL CENTER 4 ADDITION (the Red Robin property) for a trail, drainage and utility easement, in connection with the Cedar Avenue construction project. The Apple Valley EDA holds easements in this area, so Dakota County is requesting that the City approve the attached resolution disclaiming interest in the western 10' of the property. Disclaiming interest in this portion of the property will allow Dakota County to proceed with obtaining the easements it needs. Disclaiming interest in the property gives up a portion of the City's easement, but should have no impact on the balance of the easement area. The Apple Valley EDA obtained sightline and signage easements in 1997 as part of the approval of the CARROLL CENTER 4 ADDITION. The easements were obtained to provide visibility from Cedar Avenue to the EDA-owned transit station building at 155 Street and Gaslight Drive. The sightline and sign easements will remain in effect and will be beneficial for the former transit station site when it is redeveloped in the future. Recommended Action: Staff recommends that the Apple Valley Economic Development Authority adopt the attached draft resolution Authorizing the Execution of a Disclaimer of Interest in the western ten feet (10') of Lot 1, Block 1, CARROLL CENTER 4 ADDITION. (the "EDA Easements"). APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. EDA-12- A RESOLUTION AUTHORIZING THE EXECUTION OF A DISCLAIMER OF INTEREST WHEREAS, in April 2010, Dakota County commenced a condemnation proceeding related to the Cedar Avenue Corridor Bus Rapid Transit construction (the "Project") as First District Court File No. 19HA-CV-10-2858 (the "Condemnation Proceeding"). WHEREAS, the Condemnation Proceeding included numerous parcels of land including portions of the following described property: Lot I , Block 1, CARROLL CENTER 4TH ADDITION, according to the plat on file and of record in the Dakota County Recorder's Office. he "Property") (the Red Robin Restaurant located at 15560 Cedar Avenue). 'WHEREAS, the Apple Valley Economic Development Authority ("EDA") has the following interest in the Property: 1. Sight Line Easement, dated December 23, 1997., recorded February 9, 1998 as Doc. No 1475681; 2. Signage and Access Easement, dated December 23, 1997, recorded February 9, 1998 as Doc. No 1475682; and 3. Reciprocal Cross Parking Easement, dated Decen 23, 1997, recorded February 9, 1998 as Doc. No 1475683. ADOPTED this 14th day ofJune, 2012. WI-IEREAS, the EDA is a party to the Condemnation Proceeding and did not oppose the condemnation sought by the County benefiting the Project. WHEREAS, Dakota County, in connection with the Condemnation proceeding and the Project has requested the EDA sign a Disclaimer of interest in a portion of the EDA Easements described as: The westerly 10 feet of Lot 1, Block 1, CARROLL CENTER 4TH ADDITION, according to the plat on file and of record in the Dakota County Recorder's Office. to complete a settlement with the Property owner, 2020 Minnesota, LLC and to dismiss the EDA and other parties from the Condemnation Proceeding. NOW, THEREFORE, BE IT RESOLVED, by the Boardmembers of the Apple Valley Economic Development Authority, that the EDA President is hereby authorized to sign the Disclaimer of Interest. ATTEST: Larry Severson, President Date: DISCLAIMER OF INTEREST The westerly 1O feet of Lot 1. Block 1.CARROLL CENTER 4TH ADDITION, according to the plat on file and of record in the Dakota County Recorder's Office. APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY By: Larry Severson Its: President C.P.23-5B Parcel 126 County of Dakota The undersigned, (tenant, lessee or claimant of interest), does hereby disclaim any interest whatsoever in or to the lands hereinafter described, and does hereby release the Owner and the County of Dakota, its successors and assigns, officers, agents and employees, for any and all damages or claims for damages sustained or that may be sustained by each of them by reason of the acquisition by the County of Dakota of any interest or right in real property in Dakota County, Minnesota, described as follows: Except for reimbursement for relocation benefits as provided by law, each of the undersigned does hereby further authorize the County of Dakota to eliminate each of their names as a party payee on any voucher or consideration that may be paid or made to the owner and/or claimants of interest in or to said premises or any portion thereof. This disclaimer does not change any existing agreement between the owner and the Dakota County Judicial Center 1560 Highway 55 Hastings. Minnesota 55033-2392 Phillip D. Prokopowlcz, Chief Deputy Karen A. Schaffer, First Assistant Monica Jensen, Community Relations Director April 27, 2010 Michael —5 ------ • Assistant County Attorney /Sic Enc. C: OAC1V1L\CONDEM\CD10- 2 scavice.doc Victim/Witness Coordinator Kelly Nicholson 30% post-consumer truly yours, , • Criminal Division Scott A. Hersey, Head FFICE OF III COUNTY ATI JAMES C. 11ACKSTIROM COUNTY ATTORNEY An Equal Opportunity Employer RE: County of Dakota v. Convenience Store Investments, LLC, et al. Our File No. CD-10-2 C.P. 23-70, 23-59 and 23-64 NEY TO ALL RESPONDENTS OR THEIR ATTORNEYS NAMED IN THE ABOVE-REFERENCED PROCEEDING: Gary Peppard, Dakota County Transportation Department w/enc. Juvenile and Protective Services Division Donald E. Bruce, Head Office Manager Patricia Ronken Civil Division Jay R. Slassen, Head Telephone (651) 438-4438 FAX: (651) 438-4479 (Civil Division) FAX: (651) 438-4-500 (Criminal Division) FAX: (651) 438-4 (Juvenile/Admin Division) E-mail: altorney@co.dakota.rnn.us Direct Dial: (651) 438-4445 Mike.Ring@eo.dalcota.mmos Enclosed herewith and hereby served upon you, please find Dakota County's Petition for condemnation of land for highway purposes, together with a Notice of public need hearing and Notice of Intent in connection with the above-entitled matter, If you have any questions, please feel free to contact me at the number listed above. Thank you. Child Support Enforcement Division Sandra M. Torgerson, Head STATE OF MINNESOTA COUNTY OF DAKOTA The County of Dakota, (CY. 23-70, 23-59 and 23-64) v. Petitioner, Convenience Store Investments, LLC; Wachovia Bank, National Association; MSP McDevitt Development Company, LLC, a Minnesota limited liability company; Aviva Life Insurance Company, a Delaware Corporation; Tony Joseph Padilla; Teresa Padilla; Mortgage Electronic Registration Systems, Inc. (MERS);Wells Fargo Financial Minnesota, Inc., a Minnesota Corporation; Brent A. Eilers; Nanette M. Eilers; Wells Fargo Bank, N.A, an United States National Taysnn N. KnnRpr; CitiMortgage, Inc.; Michael L. Moeller; Sharon L. Moeller; Wings Financial Federal Credit Union; U.S. Bank National Association, as Trustee for J.P. Morgan Mortgage Acquisition Trust 2006-CH2, Asset Backed Pass-Through Certificates, Series 2006-CH2; Michael G. Anderson; Lynette M. Anderson; Homecomings Financing, LLC, a Delaware Limited Liability Company; Dakota County Community Development Agency; Karyn L. Kopecko; GMAC Mortgage Corp.; Ryan T. Schulz; Kayla J. Schulz; Edward_ Wesee; Irene Toe-Wesee; Wells Fargo Bank, N.A.; James Kiet Ly; Rudolph Martin; Carol J. Martin; Chase Manhattan Mortgage Corp.; Como Northtown. Credit Union; Bruce D. Beck; John E. Boos; Denise C. Boos; Nancy A. Anderson; Ganga Parsram; Williarn A. Se lle Jr.; Amanda R. Selle; Bank of America, N.A.; Imran Ali; Sochanna Ali; ABN AMR() Mortgage Group; Inc.; PNC Bank, N.A.; Alan J. Olson; Shelly M. Olson; TCF National Bank; Inter Savings Bank, fsb; Erika M. Opdahl,. State Street Bank and Trust Company of Connecticut, National Association, not in its individual capacity but solely as Owner Trustee under Trust Agreement dated as of December 31, 1990; SuperAsh Remainderman, an Illinois limited partnership; Superamerica Group Inc.; Ashland, Inc.; First Colony Life Insurance Company, a Virginia corporation; Speedway SuperAraerica LLC, a Delaware limited liability company; Alexander K. Johnson; Lakeville Crossing III, LLC; Willmart Building, LLC, a Minnesota limited liability company; Branch Banking & Trust Company, as Trustee under that certain Pass-Through Trust Agreement and Declaration 1 CASE TYPE: CONDEMNATION DISTRICT COURT FIRST JUDICIAL DISTRICT PETITION 1 Square; Walgreen Co.; Targk Corporation; Wayne Wieber; Carol Wieber; General Electric Capital Assurance Company; Office Max, Inc.; Party City Corporation; SVH Realty, Inc.; Ryan Construction Company of Minnesota, Inc.; B and S Land Development, LLC; North Star Bank; 2020 Minnesota, LLC; GE Commercial Finance Property Corporation; Apple Valley Economic Develo ment Authorit Red Robin International, Inc.; AP Apple Valley Limited Partnership; Fairview Hospital and Healthcare Services; Majestic Cove Limited Partnership; Transamerica Occidental Life Insurance Company; Metropolitan Council/Metropolitan Waste Control Comm'n; F & W Properties; Lake Area Bank Forest Lake; Judith M. Jorgenson; Eric J. Hunter; Laura J. Hunter; The Riverbank; Wilford & Geske, P.A.; George L. Johnson; Diane R. Johnson; Minnesota Building Trades Federal Credit Union; May Jaeger; Shanda L. Jaeger; Secretary of Housing and Urban Development; HSBC Mortgage Services, Inc.; Robin J. Zarigs; Tori Anne Kidwell, fka Tori Anne Mataseastillo; Thrivent Financial Bank; Ronald J. Kveton; Angela L. Kveton; Village Bank; David E. Hohag; Jack W. Hohag; Kenneth D. Hohag; Peggy L. Hohag; Charles O. Jacobson and Jill A. Jacobson, Trustees, or their successors in trust, of the Jacobson Living Trust dated October 7, 2008; Madam. Properties, LLC; Brian Edgren; Martina Edgren; Daniel R Boerner; Timothy J. Boomer; Terry R. Cushman; Kimberly A. Cushman; Associated Bank, N.A.; Forrest G. Herbst; Patricia A. Herbst; Chad S. Hartje; Nicole A. Hartje; Revestors Group 3, LLC; Great River Energy; Michael J. Devney; and Eileen M. Devney, TO THE ]MST Respondents. District Court File No 19HA-CV-10- IN THE MATTE OF THE CONDEMNATION OF CERT IN LANDS FO 1' HIGHWAY PU1 OSES ICT COURT A (1 ) VE NAMED: 3 The County of Dakota brings this Petition and respectfully states and alleges: 1. This proceeding is taken pursuant to law in the name of and on behalf of Dakota County, a political subdivision of the State of Minnesota, by James C. Backstrom, the County Attorney of Dakota County, and Michael R. Ring and James M. Crow, Assistant County Attorneys, pursuant to the Resolution of the Board of Commissioners of Dakota County. The County of Dakota deems it necessary, expedient, and for a public use and purpose to take and acquire by "quick take" condemnation under the right of eminent domain perpetual right-of-way easements for County highway purposes and temporary easements of three years duration over the lands herein described together with the following rights: to acquire all structures, trees, shrubs, grass, aggregate and herbage within the right-of-way herein to be taken, and to keep and have the exclusive control of the same. The taking in this matter is for surface rights sufficient to support the construction and maintenance of a public highway. Unless noted to the contrary, pre-existing utility and other easement rights outside of existing public right of way which do not interfere with the right of the Petitioner to construct and maintain a public highway on the easement areas being acquired will remain in full force and effect. If any parcel being taken by this condemnation proceeding is subject to an existing utility easement of record, the taking by Petitioner is subject to those pre-existing easements, and Petitioner will work with the easement holder to adjust facilities to accommodate the road construction. TV. Notwithstanding anything to the contrary contained herein, should tests or evaluations undertaken by or on behalf of Petitioner indicate the possible presence of pollutants, contaminants, or hazardous substances on any of the property described in this Petition, Petitioner reserves the right to defer effecting the transfer of the interest to any of the property. as described herein for a reasonable time until Petitioner can evaluate whether it wishes to proceed with the taking, abandon these proceedings and dismiss the Petition as to said parcel, or otherwise respond to such information. 4 Further, Petitioner rek_eves the right to recover costs of clean-up and testing and all other damages resulting from the presence of pollutants, contaminates, or hazardous substances on the property described herein, from all potentially responsible parties in a separate legal action, V. In accordance with the provisions of Minn. Stat. §117,055, subd. 2, notice is hereby given that (1) any party wishing to challenge the public use or public purpose, necessity, or authority for a taking must appear at the court hearing on public need and state the objection or must appeal within 60 days of a court order approving public need; and (2) a court order approving the public use or public purpose, necessity, and authority for the taking is final unless an appeal is brought within 60 days after service of the order on the party. VI_ The lands proposed to be taken are situated in Dakota County, Minnesota, and are hereinafter described, The names of all persons appearing of record or known to Petitioner to be the owners of said land or to have an interest therein, together with the nature of the ownership or interest of each, as nearly as can be ascertained, are as follows: PLEASE NOTE: All parcels are identified by Parcel Number and Iakota County oad ri<ight-of-Way Map Number in parenthesis (e.g., "I(324)" indicates Parcel 1 on Iakota County Road ight-of-Way Map Number 324—as recorded in the Office of the Dakota County ecorder). P.E. indicAes parcel is a permanent easement. T.E. indicates parcel is a temporary easement only. T U indicates pared is a Trail, Drai age and Utility Easement. TM) indicates parcel is a Trail and Utility Easement. TDU&W indicates parcel is a Trail, trainage, Utility and Wall Easement. C N EMN TION P I.' 5 CELS: P.E. 1(324) Parties of Interest Name Nature of Interest Convenience Store Investments, LLC Owner Name Nature of Interest Wayne Wieber and Carol Wieber General Electric Capital Assurance Com. pany loan # 5553 OfficeMax, Inc. Party City Corporation Name B and S Land Development, LLC North Star Bank c Name t 2020 Minnesota, LLC CONDEMNATION PA CONDEMNATION PA Parties of Interest 1 NDEMNATION PARCELS: CELS: rcLtui u1 111t-clW, Name SW Realty, Inc. Ryan Construction Company of Minnesota, Inc. CONDEMNATION PARCELS: TDit. U 125(324) T.E. 125(324) Parties of Interest Parties of Interes 25 CELS: TD&U 122(324) T.E. 122(324) Owners Mortgagee Lessee Lessee P.E.. 123(324) T 1‘11 123(324) T.E. 123(324) Nature of Interest Owner Sign Agreement Nature of Interest Owner Mortgagee T &ill 126(324) Nature of Interest Owner GE Commercial Finance Property Corporation Apple Valley Economic Development Authority Easement Holder Red Robin International, Inc. c Name AP Apple Valley Limited Partnership NDEMNATION PA CELS: Parties of Interest T Mortgagee Lessee 11) Nature of Interest Owner U 127(324) Apple Valley Economic Development Authority Easement Holder Mortgagee customer # 7602022 P.E. 128(324) TD U 128(324) TED 128(324) Bremer Bank, N.A. Name Fairview Hospital and Healthcare Services CONDEMNATION PARCELS: Name Majestic Cove Limited Partnership CONDEMNATION PARCELS: Transamerica Occidental Life Insurance Company loan # 88923 Northern Natural Gas Co. a Delaware Corporation Parties of Interest Parties of Interest 26 Nature of Interest Owner P.E. 129(324) TD&U 129(324) 'LE. 129(324) Nature of Interest Owner Mortgagee Pipeline Easement Name Chad S. Hartje and Nicole A. Hartje MERS, as nominee for Bell America Mortgage LLC, dba Bell Mortgage loan # MIN 1000269-0014116753-5 CONDEMNATI Michael J. Devney and Eileen M. Devney CONDEMNATION PARCELS: ME. 159(324) ta Parties of Interest N Parties of Interest 32 Nature of Interest Owners Mortgagee CELS: P,E. 165(324) Tozu 165(324) Parties of Interest Name Nature of Interest Revestors Group 3, LLC Owner Great River Energy Utility Easement CONDEMNATION PA CELS: P.E. 166(324) Taz1/4111 166(324) Name Nature of Interest Owners WHEREFORE, Petitioner prays: 1. It be adjudged that the public use authorizes and allows condemnation of the real property herein described; and 2. It be further adjudged that Petitioner is entitled to take and hold such property for the public use pursuant to the Notice of Intent to Take Possession, on file with this Court; and 3. Commissioners be appointed to ascertain the compensation to be made to the owners of the said property and all persons interested therein; and Dated: April 21 0 . 4. Such other and further relief as the Court deems just and equitable. ACKNOWLEDGMENT . JAMES C. BACKSTROM DAKOTA COUNTY ATTORNEY By Assistant County Attorney This acknowledgment is required by Minn. Stat. § 549.211, subd. 1. 0:\CIVILCONDEKCD1 0-2 petition.doc 33 es M. Crow, Atty. Reg. No. 20060 ssistant County Attorney Dakota County Judicial Center 1560 Higliway 55 Hastings, MN 55033 Telephone: (651) 438-4438 The undersigned hereby acknowledges that pursuant to Minn. Stat. § 549.211, costs, disbursements and reasonable attorney's fees and witness fees may be awarded to the opposing party or parties in this litigation if the court should find that the undersigned acted in bad faith, asserted a claim or defense that is frivolous and that is costly to the other party, asserted an unfounded position solely to delay the ordinary course of the proceedings or to harass, or commit a fraud upon the court. Dated: Aprila, 2010. JAMES C. BACKSTROM DAKOTA COUNTY ATTORNEY By tr'N Michael R. RiTir. o. 91820 Assistant County Attorney By 40 j es M. Crow, Atty. Reg. No 20060 ssistant County Attorney Dakota County Judicial Center 1560 Highway 55 Hastings, MN 55033 Telephone: (651) 438-4438 STATE OF MINNESOTA COUNTY OF DAKOTA The County of Dakota, (C.P. 23-70, 23-59 and 23-64) Petitioner, v. Convenience Store Investments, LLC, et al., Respondents. TO THE RESPONDENTS that: IN THE MATTE OF THE CONDEMNATION OF CE. TAIN LANDS FOi IGRWAY PURPOSES EREINA OVE NAMED: 1 CASE TYPE: CONDEMNATION DISTRICT COURT FIRST JUDICIAL DISTRICT NOTICE District Court File No. 19HA-CV-10- YOU, and each of you, are hereby notified that on June 17, 2010, at 9:00 a.m.,or as soon thereafter as counsel can be heard, in the Dakota County Judicial Center, 1560 Highway 55, Hastings, Dakota County, Minnesota, the above-named Petitioner will present to the above-named Court a Petition now on file herein for the condemnation of certain lands for highway purposes. This hearing is required by Minn. Stat. § 117.075. The Court will only hear testimony offered for or against granting the petition for condemnation. The Court will not hear testimony related to damages. In accordance with the provisions of Minn. Stat. §117.055, subd. 2, notice is hereby given (1) any party wishing to challenge the public use or public purpose, necessity, or authority for a taking must appear at the court hearing on public need and state the objection or must appeal within 60 days of a court order approving public need; and A copy of the Petition describing the property being acquired and a Notice of Intent to Take Possession and Motion to Transfer Title are being served upon you under separate heading together with this Notice. Dated: April , 2010. OACIVIL\CONDENINED 10-2 petition,doc (2) a court order approving the public use or public purpose, necessity, and authority for the taking is final unless an appeal is brought within 60 days after service of the order on the party. If the Court finds public need for the project has been proven, the Court will appoint condemnation commissioners to ascertain and report damages caused to the various owners resulting from the taking. The objects of said Petition are to take perpetual right-of-way easements, fee simple title, an temporary easements for highway purposes over the lands described in the Petition, together with the following rights: to acquire all structures, trees, shrubs, grass, aggregate and herbage within the right-of-way herein to be taken, and to keep and have the exclusive control of the same. 2 JAMES C. BACKSTROM DAKOTA COUNTY ATTORNEY By Michael p Assistant County Attorney o. 91820 mes M. Crow, Atty. Reg. No, 20060 Assistant County Attorney Dakota County Judicial Center 1560 Highway 55 Hastings, MN 55033 Telephone: (651) 438-4438 STATE OF MINNESOTA COUNTY OF DAKOTA The County of Dakota, (C.P, 23-70, 23-59 and 23-64) Petitioner, v. Convenience Store Investments, LLC, et al., Respondents. IN THE MATTE OF THE CONDEMNATION CE TAIN LANDS FO!! HIGHWAY PU ' "OSES 1 TO TAKE MOTION TO TRANSFE CASE TYPE: CONDEMNATION DISTRICT COURT FIRST JUDICIAL DISTRICT NOTICE DE INTENT OBSESSION AND TITLE District Court File No. 19HA-CV-1 0- TO RESPONDENTS HEREINABOVE NAMED: YOU ARE HEREBY NOTIFIED that, pursuant to Minn. Stat. § 117.042, Petitioner, the County of Dakota, intends to take possession of those lands described in the Petition filed in the above Court and enclosed with this Notice. Possession will be taken for purposes of construction of highway improvements over the described lands. YOU ARE FURTHER NOTIFIED that Petitioner, on June 17, 2010, will ask the Court to enter an order transferring title of the property described therein to the Petitioner as of August 1, 2010, as set forth in this Notice of Intent to Take Possession. The purpose of the first hearing is only to obtain Court approval of public need. The Court will not hear any testimony on damages. YOU ARE FURTHER NOTIFIED, that an amount of money equal to Petitioner's approved appraised value of said lands will be deposited with the above Court prior to August 1, 2010. Respondents may withdraw the money upon obtaining an appropriate Court order. Petitioner reserves the right to oppose the disbursement of the deposited funds until such time as the Petitioner has satisfied itself concerning the nature, extent, feasibility and expense of clean up of contamination on the subject property, if any. Petitioner reserves the right to recover costs of clean up and testing and all other damages resulting from said pollutants, contaminants, or hazardous materials from all potential responsible parties in a separate legal action. The Petition, which describes the property being acquired, and a Notice of the date and time of hearing thereon is being served upon you under separate heading together with this Notice of Intent to Take Possession and Motion to Transfer Title. Dated: April 0:\C1VIL\CONDEM1CD 1 0-2 petition.doc 2010. JAMES C. BACKSTROM DAKOTA COUNTY ATTORNEY 2 By 1\4i. R. P ing, Aty, N 91 Assistant County Attorney es M. Crow, Atty. Reg: No. 20060 Assistant County Attorney Dakota County Judicial Center 1560 Highway 55 Hastings, MN 55033 Telephone: (651) 438-4438 Donald J. Maher, Chairman, Board of County Commissioners, Dakota County, Minnesota, 3 to The Public. There may be laws, ordinances or governmental regulations affecting the land certified to in this Abstract of Title. Unless previously set out in thisAbstract no listing of the above will be shown this Abstract and certification by DCA Title will not include them. For information as to the above contact the proper governmental authority. William P. Carroll and Kathleen J. Carroll, husband and wife; Robert L. Carroll and Joyce E. Carroll, husband and wife; and John D. Carroll and Rita K Carroll, husband and wife, herein referred to as the Landowner, to City of Apple Valley, a Minnesota municipal corporation, hereinafter referred to as the "City". County Project #23-59 Parcel #01-16253-010-01 Easement Agreement, dated Nov. 25, 1981. Recorded Jan. 4, 1982 as Doc. No. 594459. Grants, forever, a permanent easement and right-of-way for roadway purposes, over, across and under the following described premises situated within Dakota County, Minnesota, to-wit: The West 75 feet of the North 850 feet of the SW 1/4 of Section 34, Township 115, Range 20, Dakota County, Minnesota, including the right of the City, its contractors, agents and servants to enter upon said premises at all reasonable times to construct, reconstruct, inspect and maintain underground pipes, conduits, mains, roadways and streets over, under, across and through said premises...etc. DAKOTA COUNTY ROAD RIGHT OF WAY MAP NO. 64, County State Aid Highway No. 23 (Cedar Avenue), dated March 9, 1989. Filed March 9, 1989 as Doc. No. 880332. Robert L. Carroll and Joyce Carroll, husband and wife; John D. Carroll and Rita Carroll, husband and wife; and Kathleen J. Carroll, a single person, herein referred to as "Landowner", 0 Agreement, by and between, Phillips Petroleum Company, a Delaware corporation, herein referred to as "Phillips" and the Robert L. Carroll and Joyce Carroll, husband and wife, John D. Carroll and Rita Carroll, husband and wife, and Kathleen J. Carroll, a single person, hereinafter referred to as the "Carrolls". Sidew dated March 17, r e y 16, 1994 as Doc. No. 1216394. Grants, forever, the following easement: Perpetual easement for sidewalk purposes along the West 15 feet of Outfots 13, D and E, Carroll Center Second Addition, Dakota County, Minnesota. The grant of the foregoing permanent easements for sidewalk purposes includes the right of the City, its contractors, agents and servants to construct, reconstruct, inspect, repair and maintain a sidewalk. Ingress, Egress and Driveway Easement, dated March 15, 1994. Recorded May 16, 1994 as Doc. No. 1216395. WITNESSETH: WHEREAS, Phillips is the owner of Lot 1, Block 1, Carroll Center Second Addition, according to the recorded plat thereof, Dakota County, Minnesota; and WHEREAS, the Carrolls are the owners of Outlet A, Carroll Center Second Addition, Dakota County, Minnesota, according to the recorded plat thereof; and WHEREAS, Phillips and the Carrolls desire to grant to each other easements for ingress, egress and driveway purposes over a portion of their respective properties; and WHEREAS, Phillips and the Carrells desire to set forth in writing their understanding with respect to said easements. NOW, THEREFORE, Phillips and the Carrells do hereby agree as follows: 1. Phillips does hereby grant and convey onto the Carrot's, their employees, agents or contractors, a permanent easement for ingress, egress and driveway purposes over and across and under: The East 20 feet of the South 25 feet of the North 45 feet of Lot 1, Block 1, Carroll Center Second Addition, on file and of record at the Recorder's Office, Dakota County, Minnesota. (SEE NEXT PAGE) ,• This permanent easement for ingress, egress and driveway purposes is to permit the Carrot Is, their employees, agents, contractors and invitees, to use this easement for the purpose of ingress, egress and driveway access to and from Outiot A, said Carroll Center Second Addition. No obstructions such as trees, shrubs, fences, buildings, gardens, etc. will be permitted to occupy this easement. Phillips agrees for its successors and assigns that it will maintain and keep in good repair the driveway now existing or hereafter to be placed over and across the easement area. Phillips for its successors and assigns does covenant with the Carrolls, their heirs, administrators, successors and assigns, that it is the owner of the premises aforesaid and has good right to grant and convey the easement herein to the Carrolls. 2. The Carrolls do hereby grant and convey onto Phillips, its employees, agents, contractors, and invitees, a permanent easement for ingress, egress and driveway purposes over and across and under: The West 20 feet of the South 25 feet of the North 45 feet of Outlot A, Carroll Center Second Addition, on file and of record at the Recorder's Office, Dakota County, Minnesota. See also Exhibit "A" attached hereto and incorporated herein. (ABSTRACTER'S NOTE: There is no Exhibit "A" attached to this document). This permanent easement for ingress, egress and driveway purposes is to permit Phillips, its employees, agents, contractors and invitees, to use this easement for the purpose of ingress, egress and driveway access to and from Outlot A, said Carroll Center Second Addition. No obstructions such as trees, shrubs, fences, buildings, gardens, etc. will be permitted to occupy this easement. The Carrolls agree for its successors and assigns that it will maintain and keep in good repair the driveway now existing or hereafter to be placed over and across the easement area. Agreement, • ine Easem dated Dec. 23, and b & ee 997 ecor e 1998 as Doc. No 1475681. (SEE EXHIBIT "A" Al 1ACHED HERETO ereinafter re erre o as ran ee") CONSISTING OF 11 PAGES). and AP Apple Valley Limited Partnership, a Texas limited partnership, by Anthony Properties Management, Inc., a Texas corporation, its General Partner, (hereinafter referred to as "Grantor"). . Apple Valley Economic Developmen Aut orit Minnesota public body • 44 ii* IT "A PAGE OF 1 r? Q, cc ;1 C DATE RECEIVED -Re t%ri THOMAS V. NOVAK DAKOTA COUNTY TREASURER-AUDITOR SIGHT LINE EASEMENT 'AGES 44 1475681 This Sight Line Easement Agreement is made as of the 2 3 tdday of December , 1997, by the Apple Valley Economic Development Authority, a Minnesota public body (hereinafter referred to as "Grantee") and AP Apple Valley Limited Partnership, a Texas limited partnership (hereinafter referred to as ("Grantor"). WHEREAS, the Grantor is the owner of real property in Dakota County, Minnesota, legally described on Exhibit A attached hereto and made a part hereof (the "Grantor's Property"); and WHEREAS, the Grantee is the owner of real property in Dakota County, Minnesota, legally described on Exhibit B attached hereto and made a part hereof (the "Grantee's Property"); and WHEREAS, Grantee sold to Grantor the Grantor's Property with the agreement that Grantor would grant to Grantee a sight rine easement to preserve a view from Cedar Avenue to Grantee's Property; and WHEREAS, the parties hereto desire to enter into this Agreement in order to preserve the view from Cedar Avenue to Grantee's Property; NOW, THEREFORE, in consideration of the payment from Grantee to Grantor of the sum of $1.00 and other valuable consideration, the receipt and sufficiency of which is acknowledged to, the parties hereby agree as follows: 1. Crptip Grantor grants to Grantee, and the successors and assigns of Grantee, the following easement over the Grantor's Property which is for the purpose of protecting the value and desirability of, and which is for the benefit of appurtenant to and shall run with the Grantee's Property and be binding on all parties having any right, title or interest in the Grantor's Property or any part thereof, its successors and assigns: This easement includes the right to light, air and view over all parts of Grantor's Property which contains a parking lot, as shown on Exhibit C attached hereto and made a part hereof (the "Sight Line Easement Area"). The present grade within the Sight Line Easement Area will not be substantially raised, nor shall a building, n ( 3 0 Ocr < co 00 sign, fence, wall or other structure be constructed or maintained therein, nor shall any bush, tree or other plantings exceeding three feet in height be planted or maintained thereon, except grade changes, construction and plantings consented to in writing by Grantee. • 4 II: IT 7.42 PAGE c> OF ( /__PAGES Duration. The Easeinent shall be perpetual: (i) For a period of ten (10) years from the data of this Easement Agreement, or upon the termination of the use of Grantor's Property as a movie theater, whichever event is later, the site line Easement Area shall remain as shown on Exhibit (ii) Upon the occurrence of the later event set forth in Paragraph 2(i), the Sight Line Agreement Area shall be modified as to be limited to the area shown on Exhibit "D" attached hereto and made a part hereof. 3. Grantor Responsibiliti,s. Grantor agrees that it shall continue to be responsible for all taxes, maintenance costs and liability for damages associated with the Sight Line Easement Area. 4. Default. Failure by any party to perform obligations within 30 days after receipt of written notice of an alleged beach, shall be considered an event of default. The nondefaulting party to this Agreement may commence an action in a court of competent jurisdiction to collect any sums due hereunder including the reasonable costs of such action and reasonable attorneys fees. 5. Authorization. By executing below, all the parties warrant that they have taken sufficient action to make this Agreement a binding obligation upon the party, and they further warrant that the party executing this Agreement on behalf of the organization has the power to bind the organization to the terms of this Agreement. 6. Natic. All notices required or permitted to be given under this Lease shall be in writing and shall be deemed to be given upon obtaining a written acknowledgment of receipt when delivered in person to the party, or when deposited in the United States Mail in a sealed envelope with postage prepaid, addressed to the parties at the following addresses: If to Grantor: Jay Anthony Anthony Properties Management, Inc. 12770 Coit Road, Suite 1170 Dallas, TX 75251 - II. "' PAGE 3 _OFILPAGES If to Grantee: Apple Valley Economic Development Authority Executive Director 14200 Cedar Avenue South Apple Valley, MN 55124 or addressed to any such party at such other address as such party shall hereafter furnish by written notice to the other party. 7. Amendments. The parties agree that any amendment to this Sight Line Easement Agreement shall be in writing and recorded with the appropriate Dakota County land recorder office. 8. Whole Igrcement. This Agreement embodies the entire Agreement between the parties including all prior understandings and agreements and may not be modified except in writing signed by all the parties. 9. Binding emit:ram The easement created by Agreement shall bind the Grantor and its successors and assigns and run with title to the properties described above. 10. ausji This Agreement shall be construed under the laws of the State of Minnesota. 11. SQv_erability. If any terill or provision of this Agreement shall, to any extent, be invalid or unenforceable, the remainder of this Agreement or the application of such term or provision, to persons or circumstances other than those in respect of which is invalid or unenforceable) except those terms or provisions which are made subject to or conditioned upon such invalid or unenforceable term or provision, shall not be affected thereby, and each other term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 12, Exectition_Couniffparts This Agreement may be executed by the parties in any number of identical counterparts, each of which shall be considered as an original for all purposes, but this Agreement shall be responsible only if it is executed by all of the parties. IN WITNESS WHEREOF, the Grantor has executed this Easement Grant as of the day and year first above set forth. -3--- i 11 PAGE 4 oF: PAGES APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, a ivlinnesota public body Severson ent By: M B. Mueller Its: 0 rk AP APPLE VALLEY LIMITED PARTNERSHIP, a Texas limited partnership By: ANTHONY PROPERTIES MANAGEMENT, INC. , a Texas corporation Its: General Partner 13y: R. Jay Antho Its: President STATE OF MINNESOTA ) ) ss. COUNTY OF DAKOTA ) On th4 day of , 1997 before rne Notary Public within and for said County, personally appeared LARRY S. SEVERSON and MARY E. MUELLER, to me personally known, who being each by me duly sworn, each did say that they are respectively the President and Cleric of the Apple Valley Economic Development Authority, the Minnesota public body named in the foregoing instrument, and that said instrument was signed on behalf of said Minnesota public body by authority of its President and Cleric. -'1- DARLENE A JEN1SON Lamy ?tax- IZNESOTA h4Y COMkii &MON EXPIRES JANUAR( 31, 2GCO A dill` OP STATE OF ss. COUNTY OF Od-g4---...S On this day of , 1997, before me a Notary Public within and for said County, personally appeared R. JAY ANTHONY to me personally known, who being by me duly sworn, did say that he is the President of Anthony Properties Management, Inc. , a Texas corporation, the general partner of AP Apple Valley Limited Partnership, a Texas limited partnership named in the foregoing instrument, and that said instrument was signed on behalf of said partnership by said President and he acknowledged said instrument to be the free act and deed of the partnership. THIS INSTRUMENT DRAFTED BY: SEVERSON, SHELDON, DOUGHERTY & MOLENDA, P.A. 7300 West 147th Street, Suite 600 Apple Valley, MN 55124 (612) 432-3136 MGD/wkt (66-14803) PAGE Ofe. i( PAGES MARY JOY B0BB1TT Notary Public, Slate of Tons My Cotturassion Evian 4/111/00 Pzi,..„." .PAGE OfILPAGES EXHIBIT A Lots One (1) and Two (2), 'Block One (1), Carroll Center Fourth Addition, Dakota Count Minnesota. r " PAGE, Of4 fLPAGES EXE9331T B Lot One (1), Block Two (2), Caeroll Center Fourth Addition, Dakota County, Minnesota. 1 EASEMENT FOR SIGHT LINE' PRESERVATION: EXHIBIT C tur LPAnus SIGHT LINE EASEMENT EASEMENT DESCRIPTIONS A triangular shaped parcel of land over that southerly part if Lot 1, Block 1, and that north central part of Lot 2, Block 1, both of Carroll Center Fourth Addition, Dakota County, Minnesota, described as follows: Commencing at the southwesterly corner 'of Lot 11, Block 1, Carroll Centex- Fourth Addition, on file and of record at the Recorder's Office, Dakota County, Minnesota; thence due North along the west . line of said lot a distance ofi 70.00 feet; thence North 89 degrees 49 minutes 46 seconds East, _parallel with the south line of said lot, a distance of 2O5 . a0 feet- to the east line of said lot at. .a jogged corner thereof, thence continuing along the same bearing along the.. jogged lot lint a distance of 15.00 feet the easternmost line of said lot; thence due South, parallel with the west line of said lot, a distance of 70,00' feet to the south line of said lot; thence South 89 degrees 49 minutes 46 seconds West along the south line,. o .- said lot a distance' of 220.00 feet to the point of beginning_ at the southwest corner of said lot and there terminating; and Commencing at the northwesterly corner of Lot 2, Block 1, Carroll. Center Fourth Addition, on file and of record at the Recorder's Office, Dakota County, Minnesota; thence due South along the west line .of said lot a distance of 292.00 feet; thence Northeasterly on an assumed beating of' approximately North 57 degrees East a distance of approximately 405 feet to a point on the east line of said lot lying 417.04 ' feat ' dis tan t from the northeast corner thereof; thence .duo Mort=h, along the east line of said lot, a distance of 134.00_ feet; thence South 89 degrees 49 minutes 46 seconds West parallel with the north line of said lot - a distance of . 120 : 0b feet ' to .the 1 wes t line of said lot; thence due South along the west _ line o'f said lots a distance of 70.00 feet to a lot corner of said lot; thence South 99 degrees 49 minutes 46 seconds West along . the north lane of said. lot a distance of 220.00 feet to 'the point of beginning at the northwest corner of said lot and there terminating. SIGHT LINE . . E .SE NT I OF 2 • • ,,,,,,,•••••• ••• •••• ••••.• ..••• t a t ; ••■••■•••••••••• .1.1,••■•••■•.• • +-205 WEST 245.35 ••■■•••••■••••■• 135 10 , r:z) 1=1 14894S`46 205.0a., 2 1,H I • tia;- ' 46 E • Nsai.20 15G0 44 1.- L11 J , * e "' LLJ 0 OLL CENTER FO -y- N 89 ••••■•■■••.... CC := Cr) 134 _ CP • ;3-_ 03%,,Q; , 4 1..0 4". 4 Z ' 31 1. 1 s ., „..- DANE WI . 71 1 N I TH ADDITION 916.55 40.a1\ 532'02'23"E c-f Leo • q> , ,r - - . • ”. -1 -c\ ... - - - - • ,--' C.- .,.,•• • ,i - % ..:,,,-- e -r-t.,, - c :ritl!, 4' .--., `,,. s...,C ' - cl .03..$14‘`‘ ..• - - ' • C . , :4 • - - - - . -..i. , I ro, ."-- % • c•st . ..,.: 113IT C • 2 OF 2 SIGHT LINE EASEMENT •• •-■a• •as • a • a 4 EASEMENT FOR SIGHT LUTE PRESERVATIOI 4 IBIT D EnTrorr A PAGEld ,RAeritis SIGHT LINE EASEMENT EASEMENT DE SCRIPTIONS • A triangular shaped parcel of land over that southerly part of Lot 1, Bfock 1, and that north central part of Lot 2, Block 1, both of Carroll Center Additidn, Dakota County, Minnesota, described as follows: • • Commencing at the southwesterly corner of Lot 1, Brbck 1, Carroll Center • Fourth Addition, on file and of record at the Recorders Office, Dakota County, Minnesota; thence due North along the west line of said lcit a distance of /d.00 feet; thence Worth 89 degrees 49 minutes 46 seconds East, parallel with the • South line of said lot, a distance of 205.00 feet. to the east line of said lot at a jogged corner ...thereof; thence continuing along the same bearing along the jogged lot line a distance of 15.00 feet the easternmost line of said lot; thence due South, parallel with the west Line of said 10E, e distance of 70.00 feet to the south line of said lot; thence South 89 degrees 49 minutes 46 secodds West along the south line of'said Jo: a distance of 220.00 feet to the poirit: of beginning at the southwest corner of said lot and there terminating; and Commencing at the northwesterly corner of Lot 2, Block 1, • Carroll Center Fourth Addition, on file and of record at the Recorder's Office, Dakota County, Minnesota; thence due South along the west line of said lot a distance of 64.04 feet; thence North 89 degrees 49 minutes 46 .seconds East, parallel with the north line of said lot, a distance of 340.00 teat to the east line of said lot; thence due North, along the east line of_ -said lot, a distance of 134.00 feet; thence South 89 degrees 49 minutes 46 seconds West parallel with the north line of said lot a distance.of 120.00 feet-to.th'e wes't line of said lot; thence due. South along the west line of said lot a distance 'of. 70.00 feet to a '16E cdrner of said lot; thence South 89 degrees 49 minutes 45 .second West along the north line of said lot a distance of 220.00 feet to the point of beginning at the northwest corner of said lab and there terminating. SIGHT LINE EASEMENT 1 OF 2 a L4 i71 85 7 0 r p.1 0 cc 0 NE39 205.00.; EXHIBIT D ifr ACItalf_ OLL 'CENTER FO •000 tc‘ 0 : 3 V't 6 - N 894946" E ai5.55 c3.1 0' 0 s . 6 1 7 SIGHT LINE EASE.IvIENT TH. ADDITION 40.06\ ..-S32 7. . - . .97 7. 7. \V" V - V ,V ;7- t-?") .7" • • OF • 2 - .0 0 • Agreement, nd betwee Apple Valley Economic Developmen Authorit a Mi nesot ubI eod • ereinafter referre• to as "Grantee"), and AP Apple Valley Limited Partnership, a Texas limited partnership, by Anthony Properties Management, Inc., a Texas corporation, its General Partner, (hereinafter referred to as "Grantor"). Signage and Access Easement, dated ec. *9 ecor 1998 as Doc. No. 1475682. (SEE EXHIBIT "A" ATTACHED HERETO CONSISTING OF 10 PAGES). • E Pc SIGNAGE AND ACCESS EASEMENT 0 0 C3 IL .S4 0 0 to , ct 0 0 x 0 ai 1475682 TIES AGREEMENT, is entered into this 23rd day of December 1997, by the Apple Valley Economic Development Authority, a Minnesota public body (hereinafter referred to as "Grantee") and AP Apple Valley Limited Partnership, a Texas limited partnership (hereinafter referred to as "Crrantor"). WHEREAS, Grantor is the owner of that property located in Dakota County, Minnesota described on attached Exhibit "A" (the "Grantor's Property"); and WHEREAS, Grantee is the owner of that property located in Dakota County, }vlinnesota described on attached Exhibit "B" (the Grantee's Property); and WHEREAS the Grantee desires to use a portion of the Grantor's Property to construct and maintain a advertising sign for the benefit of the Grantee's Property; and WHEREAS, Grantor desires to grant the Grantee an easement for the placement of a sign and the providing of power and access to the sign so long as the obligation of maintenance and operation costs are agreed to between the parties. NOW, THEREFORE, in consideration of One Dollar and other good and valuable consideration, including the terms set forth herein, the sufficiency and receipt of which are hereby acknowledged to by the parties, it is hereby agreed as follows: 1. Creation of Sign_Accessafse EaT0Ilitmti . Grantor hereby grants to Grantee a permanent exclusive easement for sign purposes over, under and across that portion of Grantor's Property shown on attached Exhibit "C" ("Easement Area"). 2. :tise QEEasemnt. Grantee shall have the right to use the Easement Area to construct and maintain a monument or pylon sign of the dimensions in Exhibit "Dn attached hereto, Grantee's use shall 'include providing utility power service to the sign and access to repair, maintain or replace the sign. The sign shall be used to promote and advertise the use(s) located on the Grantee's Property. The sign shall meet all applicable governmental regulations. DATE RECEIVED TFIOMAS V. NOVAK L,JA_ DAKOTA COUNTY TREASURER-AUDITOR ... . Lu ic > 2: O n i 2 ' 0 • LLI - iitt 1-- m z 0 CO 0 ‹C O < 0 C) ;. twidi 0 3. Construction/Maintenance Costs. The Grantee shall be responsible for constructing and maintaining the sign in a good condition and shall pay for all costs of said constniction, maintenance, operation and repairs. 4. Limit of Obligation of Criantor. It is understood that the Grantor shall not be responsible or labile for the payment of any contractors nor for the payment of any liens or judgments which might accrue as a result of the sigg's use, ownership or maintenance. The Grantee agrees to indemnify Grantor for all such costs, including reasonable attorney fees, 5. Utilities. The Grantee shall be responsible for the cost °futilities required for the operation of the Sign. A separate meter and timeclock for utilities servicing the sign shall be installed. 6. Quiet Enjoyment. The Grantor warrants that it has not granted any right to any third party which would interfere with the rights granted under this Agreement. Grantor agrees that so long as the Grantee performs all of the covenants contained herein, the Grantee shall have the peaceful and quiet enjoyment and use of the sign. 7. Default. Failure by any party to perform obligations within thirty (30) days after receipt of written notice of an alleged breach, shall be considered an event of default. Upon occurrence of an event of default, the nondefaulting party to this Agreement may declare the Agreement terminated or may commence an action in a court of competent jurisdiction to collect any sums due hereunder including the reasonable costs ofsuch action and reasonable attorney fees. 8. Permits. Grantee shall, at its sole cost, maintain all necessary permits, licenses and other requirements pertaining to the continued use of the sign and shall provide evidence of the same upon request by Grantor. 9. Access. Grantor does hereby grant to the Grantee the right to enter the Grantor's Property in order to allow construction, maintenance and use of the sign as required under this Agreement. The Grantee's right of access shall include the Grantee's contractors, but shall not include the general public. 10. uth n. By executing below, all of the parties warrant that they have taken sufficient action to make this Agreement a binding obligation upon the party, and they further warrant that the party executing this Agreement on behalf of the organization has the power to bind the organization to the terms of this Agreement. 11. Notices. All notices required or permitted to be given under this Lease shall be in writing and shall be deemed to be given upon obtaining a written acknowledgment ofreceipt when delivered in person to the party, or when deposited in the United States Mail in a sealed envelope with postage prepaid, addressed to the parties at the following address: -2- If to Grantor: If to Grantee: T ff • " PACi.V Anthony Properties Management, Inc. Attn: Jay Anthony 12770 Coit Road, Suite 1170 Dallas, TX 75251 Apple Valley Economic Development Authority Attn: John Gretz, Executive Director 14200 Cedar Avenue South Apple Valley, MN 55124 or addressed to any such party at such other address as such party shall hereafter furnish by written notice to the other party. 12. Indemnification. Grantee agrees to defend, indemnify and hold the Grantor harmless from any liability, claim, damages, costs, judgements or expenses, including reasonable attorney fees, resulting from Grantee's use of the Grantor's Property under this Agreement. 13. ZmitAgegmfiLt. This Agreement embodies the entire Agreement between the parties including all prior understandings and agreements and may not be modified except in writing signed by all the parties. 14. BindjngS2antract. The easement created by this Agreement shall bind the Grantor and its successors and assigns and run with title to the properties described above. 15. Governing Law. This Agreement shalt be construed under the laws of the State of Minnesota. 16, Severability, If any term or provision of this Agreement shall, to any extent, be invalid or unenforceable, the remainder of this Agreement (or the application of such term or provision, to persons or circumstances other than those in respect ofwhich is invalid or unenforceable) except those terms or provisions which are made subject to or conditioned upon such invalid or unenforceable term or provision, shall not be affected thereby, and each other term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 17. .Execution Counterparts, this Agreement may be executed by the parties in any number of identical counterparts, each ofwhich shall be considered as an original for all purposes, but this Agreement shall be responsible only if it is executed by all of the parties. IN WITNESS WHEREOF; the parties have executed this Agreement as of the date and year first set forth above. [NEXT PAGE IS SIGNATURE PAGE] 1 6:1aRrirrlifir "' ." ./< APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, a Ivlinne s° lic body B A l(ff Severson I - cnt AP APPLE VALLEY LIMITED PARTNERSHIP, a Texas limited partnership By: ANTHONY PROPERTIES MANAGEMENT, INC., a Texas corporation Its: General Partner By: R. Jay And Its: President -4- _ STATE OF MINNESOTA) COUNTY OF DAKOTA ) SS. On this,?3rd day of .-b'fs-e—Pd:Der , 1997 before me a Notary Public within and for said County, personally appeared LARRY S. SEVERSON and MARY E. MUELLER, to me personally known, who being each by me duly sworn, each did say that they are respectively the President and Clerk of the Apple Valley Economic Development Authority, the Minnesota public body named in the foregoing instrument, and that said instrument was signed on behalf of said Minnesota public body by authority of its President and Clerk. -- rbk9-5 STATE OF-MINNESG-Tit ) ) ss. COUNTY OF 12-.414 ) THIS INSTRUMENT DRAFTED BY: SEVERSON, SHELDON, DOUGHERTY & MOLENDA, P.A. 7300 West 147th Street, Suite 600 Apple Valley, MN 55124 (612) 432-3136 MGD/wkt (66-14803) ILT - 4 " PI-V3E p,. A.43s • -5- MARY Joy BOBBITT Notary Puiic Slut() at Texas My Commissfan Expirus 4/18/00 DARLENE A. JENISCN NOTARY PURIC WICESOTA MY COMMISSION WIRES JANUARY 31, 20:0 On this r ,i4.-tday of 220-0-264,1.LA.i , 1997, before me a Notary Public within and for said County, personally appeared R. JAY ANTHONY to me personally known, who being by me duly sworn, did say that he is the President of Anthony Properties Management, Inc., a Texas corporation, the general partner of AP Apple Valley Limited Partnership, a Texas limited partnership named in the foregoing instrument, and that said instrument was signed on behalf of said partnership by said President and he acknowledged said instrument to be the free act and deed of the partnership. viriLir A J./.0 ,Pm3m3 EX)103.1T A Lots One (1) and Two (2), Block One (1), Carroll Center Fourth Addition, Dakota County, Minnesota. 1111111 IT B Lot One (1), Block Two (2), Carroll Center Fourth Addition, Dakota County, Minnesota. 3A g /(;) SIGN AND ACCESS EASEMENT EASEMENT DESCRIPTIONS EASEMENT FOR SIGN INSTALLATION AND MAINTENANCE: ... A parcel of land forty-four feet (44') by forty-eight feet (40') in size lying over that southwesterly part of Lot 1, Block 1, and that ,northwesterly part of Lot 2, Block 1, both of Carroll Center Fourth Addition, Dakota County, Minnesota, described as follows: Commencing at the southwesterly corner of Lot 1, Block 1, • Carroll_Center Fourth Addition, on file and of record at the Recorder's Office, Dakota County, Minnesota; thence due North along the west line of said lot a distance of 10.00 feet; thence North 09 degrees 49 minutes 46 seconds East, parallel with the South line of said lot, a distance,of 48.00 feet; thence due South, parallel with the west line of said lot, a distance of 10.00 to the south line of said lot; thence South 69 degrees 43 minutes 46 seconds West along the south line of said lot a distance of 48.00 feet to the point of beginning at the southwest corner of said lot and there terminating; and Commencing at the northwesterly corner of Lot 2, Block 1, Carroll Center Fourth Addition; on Me and of 'record at the Recorder's Office, Dakota County, Minnesota; thence due South along the west Line of said lot a distance of 34.00 feet; thence forth 89 degrees ,49 minutes 46 seconds East, parallel with the north line Of said lot, a distance of 40.00 - feet; thence due North, parallel with the west line' of said lot, a diStance of 34.00 feet to the north line of said lot; _thence South 09 degrees 4 minutes 46 seconds West along the north line of said lot a distance of 48.00 feet to the point of beginning at the northwest corner of said lot and there terminating. EASEMENT FOR SIGN ACCESS, MAINTENANCE, AND UTILITY SERVICE: EXHIBIT C -SIGN AND ACCESS S EASEMENT It A strip of land fifteen feet (15') in width aver that northerly part of Lot 2, Block 2, Carroll dente k Fourth Addition, 'Dakota County, Minnesota, lying seven and one half feet (7 1/2') on either side of the following described line Beginning at the northwesterly corner of Lot '2, Block 2, Carroll Center Fourth Addition, on file and of record at the Recorder's Office, Dakota County, Minnesota; thence 'due South along the west.line of said lot a distance of 11.60 feet tb'the point of beginning of the line to be desczibed; thence North 89 degrees 49 minutes 46,_ seconds East, parallel with the north line of said lot, a distance of 340.00 f b3 the eaat line* of • said lot and there. terminating. 1 OF 2 cj LLJ Cf3 55 4 „Ne9 205.00_ N8949'46 4 4 , I IBIT C Jo c) c (.01 ft N 89 ? 44. 4 ir • SIGN EASEMENT N 89'49 Cr I .00 CO tr) 0 cc q 0 ° • - Z 1 ° ACCE S S EASEMENT , . o ,--- v- rn ....... SIGN AND ACCESS EASEMENT R.) r 50 2 OF 2 Maximum area of sign: r .1`.1 PAGE EXHIBIT D E AW3B.': • MONUMENT/PYLON SIGN ■•• Maximum height of sign above grade: Twenty-four feet: (24') One hundred ten square feet (110 Ft • • Agreement, 8 by and between, Apple Valley Economic Development Authority (hereinafter "AVEDA"), a Minnesota public body and AP Apple Valley Limited Partnership, a Texas limited partnership, by Anthony Properties Management, Inc., a Texas corporation, its Partner, (hereinafter "AP"). Reciprocal Cross Parking Easement, dated Dec. 23, 1997. Recorded Feb. 9, 1998 as Doc. No. 1475683. (SEE EXHIBIT "A" ATTACHED HERETO CONSISTING OF 11 PAGES). • 4.. * .fl ill; DATA RECEIVED q g THOMAS V. NOVAK w DAKOTA =WY TREASURER-AUDITOR EmaDLEnommt RECIPROCAL CROSS PARKING EASEHENT RECITALS: Et 0 ai 0 0 c.n 0 -J _J 11.1 0 1475683 THIS RECIPROCAL CROSS PARKING EASEMENT is made this 2 3 r d day of ller.Prnher , 1997, by and between Apple Valley Economic Development Authority (hereinafter 'AVEDA"), a Minnesota public body and AP Apple Valley Limited Partnership, a Texas limited partnership (hereinafter "AP"). WHEREAS, AVEDA is the owner of that certain parcel of real property located in Apple Valley, Minnesota, which property is legally described on Exhibit "A" attached hereto and made a part hereof ("Parcel 1"). WHEREAS, AP is the owner of that certain parcel of real property located in Apple Valley, Minnesota, which properly is legally described on Exhibit "B" attached hereto and made a part hereof ("Parcel 2") (the word "Parcel when used herein shall mean either Parcel 1 or Parcel 2, depending on the context in which such word is used), WHEREAS, AVEDA and AP desire to create and acquire certain easements for pedestrian and vehicular ingress and egress and parking, over and across the respective Parcels and to apportion certain rights and obligations for the benefit of the owner's Parcel. NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties agree as follows: A. AVEDA hereby grants and conveys to AP, its successors and assigns, for the benefit of Parcel 2, a perpetual and permanent easement for parking, vehicular maneuvering and vehicular and pedestrian ingress and egress, over, under and across all parking areas and sidewalks located on Parcel 1 (the "AVEDA Easement Area" as shown on Exhibit "C" attached hereto) for use between 5:00 p.m. and 1:00 a. m. Monday through Friday and 11:00 a.m. through 1:00 a.m. on Saturdays and Sundays. AVEDA reserves the right to construct a parking ramp over, under and across Parcel 1 and to prohibit parking on all or pan of Parcel 1 during construction 2. Duration naellamt 3. Eau rr it'AE4f1_, of a parking ramp. AVEDA shall use its best efforts to avoid construction of the ramp during the months of July and December, and shall make temporary parking available to AP during construction. B. AP hereby grants and conveys to AVEDA, its successors and assigns, for the benefit of Parcel 1, a perpetual and permanent easementfor parking, vehicular maneuvering and vehicular and pedestrian ingress and egress, over, under and across those certain parking areas and sidewalks located on the portion of Parcel 2 as is shown on Exhibit "C" attached hereto, said portion. (the "AP Easement Area") constituting a part of Lot 2, Block 1 of Carroll Center Fourth Addition and constituting no part of Lot 1, Block 2 of Carroll Center Fourth Addition. The AVEDA Easement Area and the AP Easement Area are collectively referred to as the "Easement Areas". A. The grant of easement provided in Paragraph 1(A) shall remain in full force and effect so long as the portion of Parcel 2 described as Lot 2, Block 1 of Carroll Center Fourth Addition is used for a movie theater with not less than 1,200 seats. The easement granted on the AVEDA Easement Area shall terminate automatically upon: (i) the termination, abandonment or cessation of using said portion of Parcel 2 as a movie theater or (ii) the modification, amendment or reduction of the seating capacity of the movie theater to a total of not less than 1,200 seats. )3. The grant of easement prOvided in paragraph 1(B) shall be remain in full force and effect so long as Parcel 1 is used for a transit hub. The easement granted on the AP Easement Area shall terminate automatically upon the termination, abandonment or cessation of using Parcel 1 as a transit hub. C. For purposes of this Section 2, temporary cessation of a required use for repair or remodeling shall not result in easement termination. 1 • $ I.• - i i i A. The owner of each Parcel shall be responsible for and shall pay for construction and landscaping of parking and sidewalk area and the maintenance, repair and replacement of the surfacing and landscaping and for plowing snow removal from the Easement Areas located on said Parcel. The parties agree that the Easement Areas shall always be maintained in good condition and repair consistent with applicable governmental standards and other commercially reasonable standards, and snow removal aver the Easement Areas shall be completed by the parties daily as reasonably necessary in a reasonably prompt rnaaner so as to keep such Easement Areas in a condition which allows for safe and unobstructed driving and parking, and which shall at all times comply with applicable regulations, ordinances and codes. The owners of each Parcel will take such actions as are reasonably necessary to ensure that the structure or integrity of the utilities located within the Easement Areas will not be damaged in any manner. LIW irlr .0.1, ti 13% If a party fails to maintain the Easement Area as required under this Section, the nondefaulting party shall give the defaulting party a 24 hour written notice for failure to remove snow or a seven day written notice for other failures. If the defaulting party fails to cure the problem during the notice period, the nondefaulting party shall have the righl to enter the Easement Area and perform the maintenance. The defaulting party shall reimburse the nondefaulting party for the reasonable cost of said maintenance within seven days of receipt of an invoice. Failure to make such payment shall give the nondefaulting party the right to obtain a judgment in accordance with Section 6. C. Notwithstanding any provision hereof to the contrary, the owner of that portion of Parcel 2 described as Lot 2, Black 1 of Carroll Center Fourth Addition shall have sole responsibility for performance of the obligations hereunder applicable to the owner of Parcel 2., and the owner of that portion of Parcel 2 described as Lot 1, Block 1 of Carroll Center Fourth Addition shall have no obligation therefor. 4. Initiftm- fictayith_lasmitats. No obstructions which would prevent, restrict or otherwise inhibit the passage of pedestrians or vehicles, or the maneuvering and parking of vehicles on the Easement Areas shall be erected, condoned, or permitted to endure by the owner(s) of the Easement Area or any part thereof without written consent of the other party; except that the owner of Parcel 2, at its cost, shall have the right to restrict access to the parking areas which are not within the AP Easement Area in such manner as it shall choose. 5. Aramdmuita. Subject to the rights of termination set forth in Paragraph 1 of this Agreement, this Agreement may not be modified in any respect whatsoever or rescinded, in whole or in part, without the consent of all parties hereto, and then only by written instrument duly executed in recordable form and duly recorded in the office of the Dakota County Recorder and/or Registrar of Titles, as applicable. 6. Enfot_cement. The provisions of this easement shall be enforceable by either party and its assigns in any manner provided by law or equity, including but not limited to, one or more of the following: (a) Injunctive relief. (b) Action for specific performance. (c) Action for money damages. (d) Upon default by a party, the non-defaulting party shall have the right to enter into the easement area and cure the default and in such event the defaulting party shall be liable to the non-defaulting party for the actual costs of curing the default. -3- ............ ur :2Acffds 7. Snc.f.fm.osaandAssips. The easements and rights granted and obligations assumed herein (a) are made for the direct, mutual and reciprocal benefit or burden of the real property affected; (b) will constitute covenants running with the land; and (c) will be binding upon and inure to the benefit of the parties respectiCte successors, assigns, transferees, tenants, employees, agents, customers, licensees and invitees. 8. Exclusiyity. The parties agree that no additional easement rights will be granted to any third parties which will in any way interfere with the easement rights granted hereunder and provided that nothing herein shall restrict the owner of Parcel 2 from creating cross-access and parking rights between the two (2) lots comprising of Parcel 2 (i.e., Lots 1 and 2 of Block 1 of Carroll Center Fourth Addition). 9. Indemnification. Each of the parties shall indemnify and hold the other party harmless of and from any and all loss, cost, liability, damage, injury ar expen.se, including reasonable attorneys' fees, which may arise by reason of any violation of law, ordinance or regulation or by reason of injury to or death of a person(s), damage to the property, or claims of lien for work performed and/or materials or supplies furnished, or arising out of or in connection with the use of the Easement Area on the indemnifying party's Parcel, or arising from or hi connection with the willful or negligent acts or omissions of the indemnified party or its agents, contractors, employees ar successors in interest. However, nothing herein shall be deemed to be a waiver of any statutory limit on liability for the AVEDA and in the event the obligations of the two (2) lots comprising Parcel 2 shall be separately owned, the obligations of said owners shall be limited to the lot owned by each of them. 10. Entire. kgrement.. This instrument contains the entire agreement between the parties relating to the rights herein granted and the obligations herein assumed and no other representations or promises, written or oral, made by either party to the other which is not contained herein shall be binding or valid. 11. •AtiDnie Fees. In the event of a controversy, claim or dispute relating to this instrument or the breach thereof, the prevailing party shall be entitled to recover from the losing party reasonable expenses, attorneys' fees and costs. 12. licatitta. Any notice to be given hereunder by either of the parties hereto to the other may be either hand delivered, delivered by contract carrier, or may be deposited in the United States mail, registered or certified, postage prepaid and return receipt requested, addressed to the party for whom intended as follows: To AVEDA: Apple Valley Economic Development Authority Attn: Executive Director 14200 Cedar Avenue South Apple Valley, MN 55124 -4- arciar "- To AP: Either party may change its address at any time by notifying the other in writing of such change. Service of any notice pursuant hereto shall be deemed complete at the time of delivery. 13. If any term or provision of this Agreement shall, to any extent, be invalid or unenforceable, the remainder of this Agreement (or the application of such term or provision., to persons or circumstances other than those in respect of which is invalid or unenforceable) except those terms or provisions, which are made subject to or conditioned upon such invalid or unenforceable term or provision, shall not be affected thereby, and each other term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. Jay Anthony Anthony Properties Management, Inc. 12770 Coit Road, Suite 1170 Dallas, TX 75251 14. Golterning Lam. This Agreement shall be construed and governed in accordance with the laws of Minnesota. 15. AlithmizakEt. By executing below, all of the parties warrant that they have taken sufficient action to make this Agreement a binding obligation upon the party, and they further warrant that the party executing this Agreement on behalf of the organization has the power to bind the organization to the terms of this Agreement. 16. foant&Tarta. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and either of the parties hereto may execute this Agreement by signing any such counterpart. IN WITNESS 'WHEREOF, the parties have hereto caused the foregoing Reciprocal Cross Basement Agreement to be executed the day and year first written above. APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, a ivlinnesold blic body By: 4/1 Severson .101 Its: lent By: M . Mueller Its: CI rk -5- STATE OFWIWTA. ss. COUNTY OF DAL' As ) A • AP APPLE VALLEY LIMITED PARTNERSHIP, a Texas limited partnership By: ANTHONY PROPERTIES MANAGEMENT, INC,, a. Texas corporation Its: General Partner By: R. Jay Antho Its: President -6- NotaPublic (7 • • . . • . . . . . . 4 1.fl COMMISSIQN EXPIRES DARLENE A. JENSON How FLUIC—Lialem JANUARY 31, 2000 STAT.b.. OF MINNESOTA) ) ss. COUNTY OF DAICOTA ) On this 0 73dday of 1›.,eokhe..,r , 1997 before me a Notary Public within and for said County, personally appeared LARRY S. SEVERSON and MARY E. MUELLER, to me personally known, who being each by me duly sworn, each did say that they are respectively the President and Clerk of the Apple Valley Economic Development Authority, the Minnesota public body named in the foregoing instrument, and that said instillment was signed on behalf of said Minnesota public body by authority of its President and Clerk. On this Aid2tdaY of 1997, before me a Notary Public within and for said County, personally appeared R. JAY ANTHONY to me personally known, who being by me duly sworn, did say that he is the President of Anthony Properties Management, Inc., a Texas corporation, the general partner of AP Apple Valley Limited Parmership, a Texas limited partnership named in the foregoing instrument, and that said instrument was signed on behalf of said partnership by said President and be acknowledged said instrument to be the free act and deed of the partnership. MARY Joy EIDEIKIT Notary Pthllc Shia of Taxas My Commission Expltos 4/1U/00 igl1llJBrir 4 THIS INSTRUMENT DRAFTED BY: SEVERSON, SHELDON, DOUGHERTY & MOLENDA, P.A. 7300 West 147th Sired, Suite 600 Apple Valley, M14 55124 (612) 432-3136 IvIGD/wk (66-14803) rLj1 ::ti S 01 Lot One (1), Block Two (2), Carroll Center,Fourth Addition, Dakota County, Minnesota, iM " ENTaBni B Lot One (1) and Lot Two (2), Block One (1), Carroll Center Fourth Addition, Dakota County, Iviinnesotd. ATE DA EA.SEIdENT AREA }t il " 6wsA W�a's '�rM rt arts®. # •t N:I;1; bYM i 155TH STREET WEST d l M+ ®ot �. sae Yaaw sip N EXHIB IT C 1 OP 2 pek �4. AP EASEMENT AREA In{ : 77:11111: 1/4( k9A 4 ---- APPLE VALLEY, 1.104NESCITA COMA .11.3c • t.a 11-1.1 ",..0 EXHIBIT 2 Or 2 , n itettrothia ••••••••••• . I 155111 STRCET WEST 1__ b I 1 I : I i • • • . : J i • ; I : z 1 . ' I i . ; 1 : 1 o 4 ' . : 1 i H i .. t . I i : • 1 .1 11 11 II Hi 1 , 1 11 • °I i ,. I F:ili Il tj i 11 1 ii II It 11, 'lid tt : .1 , 11 ' g 11 i ).: t1 : - I: tt I I PI: 1 1 ill 1 1 It : I 11 1 1 1 I ill 'I: .0 0, • 0 0.. LeCarnassier LLC, a Florida limited liability company, 9 to General Electric Capital Business Asset Funding Corporation, a Delaware corporation. Combination Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing, dated Apr. 28, • 2000. Recorded May 1, 2000 as Doc. No. 1688506. Mortgages, Lot 1, Block 1, Carroll Center Fourth Addition, for $2,170,000.00. Due and payable on October 1, 2015. Subject only to the permitted exceptions set forth in Exhibit C attached hereto. (SEE RECORD FOR FULL AND COMPLETE TERMS AND CONDITIONS). Dal Ils4 469477 v 1,12416.01081 4- lit IT" EXHIBTI Permitted Exceptions 1. 15 foot Utility and Drainage Easement on West lot 1ineis) as shown on th recorded plat, and as shown on the survey prepared by Delmar H. Schwanz, Land Surveyor Registration No. 8625, dated April 12, 2000. 2. 5 foot Utility and Drainag&Easement on Northlot line(s), as shown on the recorded plat, and as shown on the survey prepared by Delmar FL Schwanz, Land Surveyor Registration No. 8625, dated April 12, 2000. 3. Drainage and Utility Easement over the East 15 feet of the Nord; 98 feet, mare or less, and the East 30 feet Of the South 70 feet, more or less, as shown on the recorded plat, and as shown oti the survey prepared by Delmar H. Schwanz, Land Surveyor, Registration No. 8625, dated April 12, 2000. • 4. Sidewalk easement over the West 15 feet in favor of the di Of Apple Valley as created in DocumetAtNo. 1216394, and as shown on the survey ptepared by Delmar H. Schwanz, Land Surveyor Registration No. 8625, dated April 12, 2000. - 5. Sight line easement over that part of lot I, described as follows: commencing at the Southwesterly corner ofLot 1, B1 ock 1, Carroll Center Fourth Adciition, on file and of record at the Recorder's Office, Dakota County, Minnesota; thence due North along the west line of said lot a distance of 70.00'fect; thence North 89 degrees 49 46secands East, parallel with the South line of said lot, a distance of 205.00 feet to the east line of said lot at a jogged corner thereof, thence continuing along the same bearing along the jogged lot line a distance of 15.00 feet the easternmost line of lot; thence due South, parallel with the wesi line of said lot, a distance of 70.00 fed to the smith line of said 1&; ihence South 89 degrees 49 minutes 46 seconds West along he south line of said lot a distance of 220.00 feet to the paint of beginning at the southwest corner of said lot and there terminating in favor of the Apple Valley Economic Development Authority as created in Document No. 1475681, and as shown on the survey prepared by Delmar H. Schwanz, Land Surveyor Registration No. 8625, dated April 12, 2000. 6. Signage and Access easement over that part ofLot 1, described as follows: commencing at the Southwesterly corner of Lot 1, Block I, Carroll Center Addition, on file and of record at the Recorder's Office, Dakota COUilty, Minnesota; thence due North along the west line of saki lot a distance of10.00 fee; thence North 89 degrees 49 minutes 46 seconds East, parallel with the South line of said lot, a distance of 48.00 feet thence due South, parallel with the west line of said lot, a distance of 10.00 feet to the south line of said lot; thence South 89 degrees 49 minutes 46 seconds West along the south line of said lot a distance of 48.00 feetto the bointf beginning at the southwest corner o f said lot and tbcre terminating in favor of 'rhe Apple Valley Economic Development Authority as created in Document No. 1475682, and as shown on the survey prepared by Delmar H. Schwanz, Land Surveyor Registration .No. 8625, dated April 12, 2000. IJ re .j Dt1i4494T 2416.01oa I 2 7. Reciprocal Cross Parking Easement recorded as Document No. 1475683. 8. All right of access from premises to C.S.A.1-1. 23 (Cedar Avenue) dedicated to Dakota County in the plat. LeCarnassier LLC, a Florida limited liability company, 10 to General Electric Capital Business Asset Funding Corporation, a Delaware corporation. 11 Assignment of Rents and Leases, dated Apr. 28, 2000. Recorded May 1, 2000 as Doc. No. 1688507. Assigns, certain rights, title and interest to further secure the Mortgagee in that certain Mortgage dated Apr. 28, 2000 in the amount of $2,170,000.00, against the lands described as: Lot 1, Block 1, Carroll Center Fourth Addition, now due and to become due to the Mortgagee secured by the mortgage between said parties or otherwise. LeCarnassier, LLC, a Florida limited liability company, as debtor in possession, to 2020 Minnesota, LLC, a Wisconsin limited liability company. 2020 Minnesota, LLC, Debtor, 12 to General Electric Capital Business Asset Funding Corporation, Secured Party. Q. C. Deed, dated Dec. 4, 2001. Recorded Jan. 4, 2002 as Doc. No. 1847668. Conveys, Lot 1, Block 1, Carroll Center Fourth Addition. UCC Financing Statement, Recorded Jan. 4, 2002 as Doc. No. 1847674. Located on Lot 1, Block 1, Carroll Center Fourth Addition, together with the rights and obligations accruing thereto set forth in the Reciprocal Cross Parking Easement recorded in the Office of the Dakota County Recorder as Document No. 1475683, shown at No. 8, together with the rights and obligations accruing thereto set forth in the Declaration of Easement and Covenants recorded in the Office of the Dakota County Recorder as Document No. 1688503, (And Other Lands). General Electric Capital Business Asset Funding Corporation, 13 to CEF Funding IV, LLC, successor of GE Commercial Finance Business Property Corporation (fka General Electric Capital Business Asset Funding Corporation). Assignment of UCC Financing Statement Doc. No. 1847674, shown at No. 12, Recorded Oct 23, 2006 as Doc. No. 2470002. Name of Secured Party of Record Authorizing this Amendment: General Electric Capital Business Asset Funding Corporation. CEF Funding IV, LLC, Secured Party, 14 to 2020 Minnesota, LLC, Debtor. Continuation of UCC Financing Statement Doc. No. 1847674, shown at No. 12, Recorded Nov. 3, 2006 as Doc. No. 2473200. Effectiveness of the Financing Statement identified above with respect to security interest(s) of the Secured Party authorizing this Continuation Statement is continued for the additional period provided by applicable law. Name of Secured Party of Record Authorizing this Amendment: CEF Funding IV, LLC. State of Minnesota,) :ss. County of Dakota). DCA Title does hereby certify that the foregoing (Nos. 1 to 14 both inclusive) is a correct abstract of the instruments showing the.present record owner of, and the encumbrances against: Lot 1, Block 1 Carroll Center Fourth Addition, to date, as the same appears from the abstract books and the and records of the office of the County Recorder of Dakota County, Minnesota. We further certify that any certification as to Townhouses includes a search as to Mechanic's Liens affecting the common area thereof. NOTE: None of the searches made in the following paragraph include names having middle initials different from those shown therein. 15 We further certify that there are no unreleased Federal Tax Liens, no unreleased State Tax Liens, no unreleased County Tax Liens, no bankruptcy proceedings initiated, and no unsatisfied Federal Judgments on file in the said County Recorder's Office and that there are no unsatisfied Judgments docketed in the Office of the Clerk of the District Court or County Court of Dakota County against any of the following: 2020 Minnesota, LLC. Dated at Hastings, Minnesota this 20th day of February, A.D., 2007 at 8 o'clock A.M. Ig DCA Title, by (SEE NEXT PAGE) P e - ) An Authorized Signature. MEMBER AMERICAN LAND TITLE ASSOCIATION and MINNESOTA LAND TITLE ASSOCIATION The liability of DCA Title is for reasonable care in making this search and shall, in no case, exceed the least of: a.) the actual loss of the applicant; or b.) the sum of $100.00. IN PREPARING THIS OWNER AND ENCUMBRANCE REPORT, DCA TITLE HAS NOT SEARCHED ALL DOCUMENTS AFFECTING TITLE TO THE PROPE.RTY FROM THE GOVERNMENT PATENT AND IS RENDERING NO OPINION AS TO THE STATUS OF TITLE. THE SEARCHES MADE IN PREPARING THIS REPORT COVER ONLY THOSE MORTGAGES OF RECORD AFFECTING THE PROPERTY COVERED HEREBY WHICH APPEAR UNSATISFIED OF RECORD. THE OWNER OF RECORD AS SHOWN IS THE LAST NAMED GRANTEE OF A CONVEYANCE WHICH PURPORTS TO TRANSFER THE FEE INTEREST TO THE PROPERTY. This is not a title insurance policy and should not be relied upon as such. For full protection, a title insurance policy should be secured. Order #A07 -53478 City of Apple Valle)/ TO: FROM: DATE: 4 4.1 SUBJECT: Updated IMH/Titan Memorandum of Understanding *See bold Items below: The EDA responded, wanting: Bruce Nordquist, Community Development Director, AICP Ron Hedberg, Financial Director June 11, 2012 June 13, 2012 Community Development President and Board Members of the Economic Development Authority, Executive Director As this memo was being prepared, the County, legal counsels for parties involved (IMH, Titan, EDA, City) and City/EDA staff are having an ongoing discussion about the contents of a restated Memorandum of Understanding (MOU). The information provided here was the best draft available at the end of the day Monday, June 11. This information will be updated as finalized for the June 14 EDA and City Council meeting. *Attached is the June 13 final City Attorney prepared and IMH accepted version of the MOU. Also, attached is a June 13 version of the Finance Director memo. Please discard the June 11 version of the Finance Director memo. At the June 4th EDA meeting, Tammy Omdal from Northland Securities reviewed with the EDA the ongoing financial discussion with IMH through Titan Development and staff to resolve delinquent property tax and special assessment obligations that leads to future development of the Legacy North property. further due diligence of the owner/developer; report from Northland attached - to review the most current understandings; attached - to consider those understandings in a timely manner as a June 20 deadline for IMH to complete a Confession of Judgement Agreement is coming shortly. Given the June 20 deadline that is approaching, staff is forwarding the attached agreement. The requested action on June 14, by both the EDA and the City Council, is to consider a final agreement in a form acceptable to the City Attorney, that meets EDA and City Council approval. *Recommended Action: Following a presentation by the City Attorney and the Finance Director, authorize the "Restated Memorandum of Understanding between IMH Special Asset NT 175 —AVN, LLC and the Apple Valley Economic Development Authority and the City of Apple Valley." Ei) Restated Memorandum of Understanding Between IMH Special Asset NT 175 - -AVN, LLC and Apple Valley Economic Development Authority and the City of Apple Valley This Memorandum of Understanding ( "MOU ") between IMH Special Asset NT 175 AVN, LLC ( "IMH" ) and the Apple Valley Economic Development Authority (the "EDA ") and the City of Apple Valley ( "the City ") is made and entered into on the date and pursuant to the terms set forth below. References to "City" refer to both the EDA and the City unless otherwise indicated. It supersedes and replaces that certain Memorandum of Understanding between IMH and the EDA, dated as of January 6, 2012. Whereas, IMH is the fee owner of fourteen (14) platted lots in a portion of the City's Legacy Village referred to as Legacy of Apple Valley North as identified in the attached Exhibit A ( "the IMH Property"), resultin g from a foreclosure action against the former owner; and Whereas, the IMH Property is subject to Ordinance No. 739, establishing the Central Village together with certain development approvals for the Legacy of Apple Valley North, entitled Planned Development Agreement, Park Dedication Agreement and Development Agreement, all of which are dated May 27, 2004; and Whereas, the IMH Property has been improved with public utilities and street improvements financed by a $6,832,152 special assessment duly adopted by the City pursuant to Minn. Stat. 429.061 and for which there was no appeal; and Whereas, IMH, as successor in possession of the IMH Property, is in default on the aforementioned special assessment in the amount of approximately $2,661,164, together with past-due taxes payable to Dakota County in the amount of approximately $452,169; and Whereas, Dakota County is exercising its statutory authority under Minn. Stat. 281.23 to pursue tax forfeiture against the IMH Property effective on June 20, 2012, based on the aforementioned delinquent special assessments and property taxes; and Whereas, the result of Dakota County's forfeiture action would be IMH' s loss of ownership of the IMH Property; and Whereas, the City's special assessments on the IMH Property would be cancelled by Dakota County's forfeiture action, but pursuant to statutory authority under Minn. Stat. 429.071 may be re- levied at a future date; and Whereas, time is of the essence to avert the pending forfeiture and elimination of the special assessments affecting the IMH Property; and Whereas, IMH and the City desire to pursue development of the IMH Property on terms mutually acceptable to the City and IMH and based on City approval of amendments to the p development approvals for the IMH Property; and Whereas, the City acknowledges that IMH has actively been pursuing the development of the IMH Property and has acted in good faith and with diligence with respect to the proposed project and IMH acknowledges that the City has acted in good faith and with diligence in seeking a resolution of the past-due and future special assessments on the IMH Property; and Whereas, any future agreement between the City and IMH regarding the terms and conditions of any new use of the IMH Property will be conditioned on resolving both the past-due taxes payable to Dakota County and the delinquent and future special assessments payable to the City related to the IMH Property. NOW THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS: 1. IMH agrees to diligently prepare and submit applications to the City seeking approvals for the use of the IMH Property, which is expected to include approximately 331 multi- family housing units and approximately 10,000 square feet of retail on a portion of the IMH Property. Initial construction is expected to commence no later than June 30, 2013, based upon City approval of the IMH plans no later than September 30, 2012, subject to business conditions and further subject to City and IMH acceptance of the terms below. 2. The City will promptly, and in good faith, process the IMH applications proposing a change to the allowed use of the IMH Property for consideration at duly scheduled meetings and special meetings of the City's Planning Commission and City Council. Nothing in this MOU is to be construed as pre-approval by the City of any IMH application. 3. In conjunction with IMH' s pursuit of approvals governing the use of the IMH Property and tax increment financing as noted below, and subject to the City and EDA actually adopting such approvals, the EDA will recommend to the City the purchase of four (4) parcels identified as A, B, C and D on Exhibit A ("the Park Parcels") of the IMH Property for the expansion of Kelly Park at a price of $7.26/square foot, for a total purchase price of $787,451. 4. The City and IMH will use their best efforts to complete the sale of the Park Parcels to the City on or before July 31, 2012. In conjunction with purchasing the Park Parcels, the City will assume responsibility for the future taxes and special assessments allocable to the Park Parcels. IMH will pay the delinquent special assessments, interest and penalties on the Park Parcels, together with the first half property taxes due in 2012. In addition, the City will pay the second half property taxes due in 2012 and the remaining assessments for the Park Parcels, which are estimated to be $251,611.00. 5. Concurrently with IMH' s sale to the City of the Park Parcels, which is anticipated to occur on or before July 31, 2012, the EDA will be asked to pay to IMH the sum of $1,150,000 as part of an eligible event under tax increment financing, in exchange for which IMH will provide a guaranty of $1,150,000 to the EDA, in a form and from an issuer reasonably satisfactory to the EDA, assuring the repayment. The IMH guaranty 2. will remain in force and not be released until the issuance of building permits and the actual commencement by IMH of construction in conformity with the approved Plans. 6. Upon submittal of an application, the EDA will be asked to approve the establishment of a Tax Increment Finance ("TIF") housing district, or other applicable TIF district category, to generate up to $6,500,000 of authorized TIF eligible expenditures with a term not to exceed 25 years. a. Twenty percent (20%) of the available increment will be retained by the EDA. b. $5,350,000 pay-as-you-go TIF Note to be issued to IMH with interest at 5%. Payments will be based upon 80% of the available increment. 7. The City will be asked to reimburse IMH within thirty (30) business days upon receipt of the funds paid by IMH to Dakota County and reimbursed by the County to the City for accrued penalties and interest on the delinquent special assessments. Currently, the total amount of such penalties and interest is approximately $1,131,324. 8. The City may be requested by IMH to consider reallocating the remaining special assessments attributed to the IMH Property over a term of up to 20 years or such other term as may be allowed by state law. If IMH is successful in extending the term of the special assessments, the City, to the extent permitted by law, will agree to the new extended term for the payments of the special assessment. 9. The City and IMH will cooperate to ensure timely consideration and approval, as appropriate, of the review of the IMH Property applications, together with the plans, specifications and agreements contemplated by this MOU and as required by law. 10. Notwithstanding the terms of this MOU, IMH reserves the right to challenge in Dakota County district court (or another court with jurisdiction), the authority of Dakota County to seize the IMH Property and to address the past-due special assessments on the IMH Property. In the event IMH determines in the interest of the development of the IMH Property that pursuit of court action is necessary, IMH and the City, nonetheless, pledge to cooperate jointly to achieve an acceptable outcome of all issues affecting the IMH Property. 11. While the parties agree to negotiate in good faith regarding all aspects of this MOU, nothing in this MOU shall bind the City, the EDA or IMH with respect to the terms and conditions identified in this MOU and no party shall have a right to pursue a claim arising from its terms. 3. AGREED TO BY: IMH Special Asset NT 175—AVN, LLC By: IMH Financial Corp., its managing member By: Will Meris Its: President Dated: Apple Valley Economic Development Authority By: Larry S. Severson Its: President Date: By: Thomas Lawell Its : Executive Director Date: City of Apple Valley By: Mary Hamann-Roland Its: Mayor By: Pamela J. Gackstetter Its: City Clerk 1409313.1 4. TO: FROM: DATE: SUBJECT: city of Apple l , Valle Updated amounts Economic Development Authority, and Tom Lawell, Executive Director Ron Hedberg, Finance Director June 13, 2012 Update to the Recap of Sources and Uses of the IMH proposal MEMO Finance Department Introduction On Tuesday we received updated numbers from the County on the Confession of Judgment (COJ) with IMH. The information in this memo beginning on page 4 following the "Financial impacts of the proposal to other funds" has not changed and is included here again. The overall outlines of the terms remain the same and they are: (1) IMH enters into Confession of Judgment (COJ) to pay delinquent taxes and special assessments current over the term of the COJ, (2) The purchase of parcels to expand Kelley Park, the rebate of penalties and interest on special assessments, and (3) The consideration of a housing TIF district on a number of parcels previously guided for a multi-use project. I have updated the sources and uses of the IMH proposal below, but the changes made by the county have to do with the execution of the COJ and the timing of the delinquencies and what items can and can not be included in the COJ. The County will not be allowing the parcel classified as commercial to participate in the COJ for the delinquent special assessment portions, they can still participate in the COJ for the delinquent property taxes at the 5 year amortization.. Also the County will allow the parcels that are classified as residential to be amortized over 10 years, rather than the original 5 years, and also there was one parcel previously not deemed eligible to participate that may now be able to participate in the COJ because it is a residential classified property. The table below recaps the proposal along with the timing of the flow of resources. • The first column shows the amounts needed to be paid by IMH by June 20 a total of $1,401,674. Of this the City will receive $1,396,832, of which $1,111,431 is for delinquent special assessments and $60,255 is delinquent property taxes. The difference is $341,881 and will be recovered over time through the COJ. • The second column shows the amounts to be paid by the end of the current year and include the 2 half payment due in 2012, IMH will pay an additional $935,160, and under the proposal the City would rebate $364,314 to IMH which equals the amount of penalties and interest received by the City during 2012. In addition during 2012 the proposal includes the City purchasing 4 parcels for the expansion of Kelley Park in the amount of $787,451 (or $7.26 per ft The source of funding for the land purchase would be the park dedication fund and in addition to the purchase price the proposal includes that the City assumes the EDA and Executive Director IIVIH Sources and Uses June 6, 2012 Page 2 remaining special assessments on the property ($225,146) and could be paid over the next 10 years as they are spread for collection or they could be prepaid at anytime. This item is $211,790 lower than the original and is the penalties and interest on the special assessments. • The 3 column represents the upfront TIF assistance in the event of an eligible TIF event and the City receiving adequate security for the TIF assistance provided. Over the life of the TIF District, the City will be reimbursed from the TIF proceeds. • Over the remaining years, IMH will continue to make payments toward the COJ of $1,377,009 in delinquent special asmts and $336,916 of property taxes and will need to stay current on the special assessments as they are spread for collection, the $2,749,340. Also under the proposal IMH would pay an additional $767,010 of penalties and interest on delinquent, under the proposal the City would rebate these amounts after collection. In addition IMH will pay interest on the COJ of $771,949 and the City of Apple Valley will receive interest of approximately $436,000 on the special assessments portion. IMH Allocation of Amounts Due: Property Taxes (incl COJ) Special Asmts (incl COJ) Penalties & Interest on Delq Taxes Penalties & Interest on Delq Spec Asmts Interest paid on COJ Park Dedication Fee Future spread Special asmts city reimbursement of Penalties on Special Assessments Purchase of Parcels by City Total Net MH Uses: City allocation of Amounts Due: Property Taxes on City Purchase Parcels (2nd half pmt) Special Asmt on City Parcels (2nd half pmt) Penalties & Interest on Delq Spec Asmts Future Special Asmts on parcels purchased Purchase of Parcels by City City contribution of upfront TIF Net City Uses Delinquent portion (years '11 and earlier) 124,255 1,111,431 25,373 140,615 1,401,674 Upfront TIF remaining Assistance Portion Current year on Eligible (Years '13 & '12 event later) Total 98,501 592,992 19,968 223,699 City contribution of upfront TIF (1,150,000) Delinquent portion (years '11 Current year and earlier) '12 (576,461) (767,010) (576,461) (787,452) (787,452) (216,606) (1,150,000) 5,756,483 5,791,551 6,555 20,794 364,314 225,146 787,452 1,404,261 Upfront TIF Assistance on Eligible event 1,150,000 1,150,000 remaining Portion (Years '13 & later) 336,916 559,672 1,377,009 3,181,432 131,269 176,610 767,010 1,131,324 771,949 771,949 390,000 390,000 2,749,340 2,749,340 767,010 767,010 (1,150,000) Total 6,555 20,794 1,131,325 225,146 787,452 1,150,000 3,321,271 EDA and Executive Director IMH Sources and Uses June 6, 2012 Page 3 The following table recaps the flow of resources into the city and totals $6,398,978 over the years. Over the term of the COJ the City will receive property taxes of $295,399, and collections on special assessments of $3,327,370. Assuming the development occurs as proposed; the City would also recover the upfront TIF assistance contemplated as well as the additional interest on the COJ payments of $436,000 on the special assessments alone. Sources for City Property Taxes Special Asmts (incl COJ) Penalties & Interst on Delq Taxes Penalties & Interst on Delq Spec Asmts Future spread Special asmts COJ Interest on special asmts Capture of TIF Park Dedication Fund As of 12-31-2011 the Park Dedication Fund has $1,594,000, but from this there is an existing commitment of up to $1,200,000 for the Valleywood Clubhouse construction. If the decision is made to purchase the parcels an interfund loan could come from the G.O. Closed Bond Fund to finance a portion of the purchase until park dedication fees are received in the future. The chart at right includes the projected park dedication fees Delinquent portion (years Current '11 and earlier) year '12 50,037 42,306 1,111,431 613,786 10,218 8,041 64,314 225,146 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 (200,000) from an earlier Community Development report showing Upfront TIF Assistance on Eligible event 1,150,000 Park Dedication Fund remaining Portion (Years '13 & later) 55,673 1,287,009 52,861 767,010 436,000 1,396,832 1253,593 1,150,000 2,598,553 6,398,978 Financial impacts of the proposal to other funds. The City of Apple Valley has 3 separate bond funds related to the installation costs of the initial streets and infrastructure for the Legacy project in addition to a fourth bond fund that is also experiencing deficits requiring future support. Because of the delinquencies on the Legacy project and the Founders Circle project it has been necessary to use funds in the Closed Bond Fund and the Future Capital Projects Fund. In addition to this reliance on other funds to support the debt services the proposal calls for the purchase of 4 parcels to expand Kelley Park with the funding coming from the Park Dedication Fund. 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 an average of $ 360,000 per year in Total 295,399 3,102,224 71,121 1,131,325 225,146 436,000 1,150,000 $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,0C)0 $2,000,000 $(2,000,000) $0,000,000) EDA and Executive Director IMH Sources and Uses June 6, 2012 Page 4 park dedication fees. This project is estimated to pay $390,000 in park dedication fees in 2013 when construction begins. Future Capital Projects Fund The 2012 CIP included a long term projection of the Future Capital Projects Fund and which includes approximately $5 million in support of special assessment bonds. If this project doesn't proceed it will likely be necessary to use these funds for debt service. If the project proceeds as proposed and the COJ is completed it would not be necessary to draw on these funds beyond the near term. If the project concludes as proposed there will be a positive swing in the cash balances in this fund of approximately $5 million. The Future Capital Projects Fund will need to support the debt service funds over the next couple of years, but once the Confession of Judgment is satisfied the fund would be made whole. The assumptions used include the projects identified in the CIP and no additional transfers from the general fund. If the proposed project does not conclude as proposed, the fund may have insufficient funds to complete the construction of capital projects shown in the later years of the City's adopted Capital Improvements Plan. Balances with Debt Service Support: Future Capital Projects Fund Balances With Support of GO Special Asmt Bonds 2010 2011 2012 2013 2014 2015 201 2017 2018 2019 2020 2021 2022 $18,000,000 S16,000,000 $14,000,000 S12,000,000 $10,000,000 S8,000,000 $6,000000 $4,000,000 $2,000,000 $- Balances without Debt Service Support: Future Capital Projects und Baiances Without Support of GO Specia l Asmt Bonds 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 EDA and Executive Director IMH Sources and Uses June 6, 2012 Page 5 Debt Service Funds Debt Outstanding There were four separate bonds that were issued to finance the Legacy project along with other improvement projects. As of 12-31-11 there is $5,120,000 of outstanding debt that included the Legacy project, there is also the 2007 Bonds that didn't include the Legacy Project but did include the Founders Circle Project and also have deficits and that would include the need to have support for future debt service in the event a COJ is not completed. 2007 Imp 2007 Imp Bond Fund Note 2008 Imp ('01 imp) 2004 Imp 2006 Imp 2008 Imp ('01 imp) 2004 Imp 2006 Imp (2) (1) (2) 12/31/2011 Principal Balance 1,590,000 2,135,000 1,395,000 5,120,000 2,725,000 7,845,000 12/31/11 Remaining Interest 141,556 182,975 57,875 382,406 695,577 1,077,983 Notes: (1)— Includes Legacy project (2)— Includes both Legacy and Founders Circle projects (3)- includes Founders Circle Project Balances in the Debt Service Funds In total these four bond funds have a negative balance of $3,178,124 as of 12-31-11 and total delinquent special assessments of $3,456,138. The delinquent special assessments are those assessments that have been levied and spread for collection and remain unpaid. As of 12-31-11 there are deferred special assessments of $6,127,977. Deferred special assessments are assessments that have not yet been spread for collection by the County for collection. For those deferred assessments related to the Legacy (and the Founders Circle) project without the completion of the COJ it is not certain that they will be Bond Fund Note 12/31/2011 Cash Balance (1,985,771) 1,306,855 (1,904,454) (2,583,370 ( (594,754) Notes: (1)— Includes Legacy project (2)— Includes both Legacy and Founders Circle projects (3)- includes Founders Circle Project paid when due. 12/31/11 Delinquent Special Asmts 114,172 142,085 2,128,833 2,385,090 1,071,048 12/31/2011 Deferred Special Asmts 913,246 492,465 1,968 801 3,374 512 2,753 465 (3,178,124) 3,456,138 6,127 977 EDA and Executive Director IMH Sources and Uses June 6, 2012 Page 6 Debt service fund projections — modeling current performance The table below recaps the projected ending balances and delinquent balances in each of the bond funds at the end of the life of the bond fund when the debt is retired. An assumption was made that no further payments are made on the Legacy (or Founders Circle) Project, and the assessments paid by the other property owners will continue to be made previously scheduled. When the debt is finally retired, the total projected deficit will be $9,989,704, and at that time the delinquent special assessments will be $9,511,808. Under this scenario, resources from the Future Capital Projects Fund ($5 million) and the Closed Bond Fund (the remainder) would be used to cover the deficits and pay the bonds as they come due. Even though the Founders Circle project is not a subject of the MOU it is included because it is a commitment towards the available resources. Bond Fund — balances Note assuming no further payments 2008 Imp ('01 imp) 2004 Imp 2006 Imp 2007 Imp Ending Cash Balance upon Debt Retired (2,635,931) (794,437) (2,838,798) (6,269,166 (3,720,538) (9,989,704) Notes: (1)— Includes Legacy project (2)— Includes both Legacy and Founders Circle projects (3)- includes Founders Circle Project Delinquent Special Asmts upon Debt Retired 215,668 573,633 4,160 135 4,949 436 4,562 372 9,511 808 EDA and Executive Director IMH Sources and Uses June 6, 2012 Page 7 Debt service fund projections — modeling COJ for Legacy project If the COJ is executed and payments are made each year when due and the future assessments are paid when due for the Legacy Project, the projected ending balances and delinquent balances in each of the bond funds are shown below. When the debt is finally retired, the total projected deficit will be $5,452,547, and at that time the delinquent special assessments will be $5,124,824. Under this scenario, the requirement for the use of resources from the Future Capital Projects Fund and the . Closed Bond Fund could be reduced by $4.5 million to cover the deficits and pay the bonds as they come due. Even though the Founders Circle project is not a subject of the MOU it is included because it is a commitment towards the available resources. Bond Fund — balances Note assuming Legacy COJ is executed 2008 Imp ('01 imp) 2004 Imp 2006 Imp 2007 Imp Action Requested: Ending Cash Balance upon Debt Retired (2,594,940) (192,617) 1,055,548 (1,732,009) (3,720,538) (5,452,547) Notes: (1)— Includes Legacy project (2)— Includes both Legacy and Founders Circle projects (3)- includes Founders Circle Project Delinquent Special Asmts upon Debt Retired 102,280 0 460,172 562,452 4,562,372 5,124,824 No action required, this memo is background to support the Memorandum of Understanding and has been updated to reflect the updated amounts received from the County NOR' 'H LAND MEMORANDUM To: City of Apple Valley From: Rusty Fifield and Tammy Omdal Date: June 11, 2012 Re: Due Diligence Signet Development, LLC Local Development Partner Timothy F. Nichols President SECURITIES --- Lawrence D. Bain Acting COO ••• Legacy Village Development Owner IMH Titan Development LLC National Development Partner 7." Stuart R. Davis President and CEO The purpose of this memorandum is to summarize the due diligence efforts by Northland Securities related to the proposed Legacy of Apple Valley North project. Our comments are based on our understanding of the proposed development. The current development proposal consists of approximately 330 units of rental housing with a small retail component. The development would be built on property owned by IMH Financial Corporation dba IMH Special Asset NT 175 — AVN, LLC. IMH will be the owner of the property, thru a single purpose entity owned 100% by the parent company. IMH will provide 100% of the equity and guarantees to the lender. The developer will be Titan Development LLC. Titan has been retained by IMH under a fee agreement to perform all development services for the project. The chart below shows the current development team for the project. New World Realty Advisors, LLC Advisors to IMH Seth B. Lipsay Executive Managing Director Our initial observations about the project and the development group are as follows: 1. IMH has the financial capacity to build the proposed development. Financial information about the company is available from SEC filings that can be accessed through the IMH website (www.imhfc.com). 45 South 7th Street, Suite 2000, Minneapolis, MN 55402 Main: (612) 851-5900 / Direct: (612) 851-4992 / Email: rfifield@northlandsecurities.com Member FINRA and SWC Due Diligence June 11, 2012 Page 2 2. Titan is a privately owned real estate firm based in Denver. Titan's portfolio of completed projects shows the capacity to undertake the project proposed in Apple Valley. 3. We have worked with Titan to create an operating pro-forma for the development concept. The pro-forma shows that financial assistance from the City/EDA is needed to make the project financially feasible. The model will allow us to monitor financial issues as the design development process provides more accurate information. 4. Our ability to more specifically opine on the developer and the project is limited by the current status of the project. Final designs for the project have not been created. The specific details of the entity to own/operate the project and its relationship to IMH have not been reviewed. That said, several factors mitigate the risk of these unknown factors. • The only immediate financial commitment of the City is the purchase of four parcels. This land will be used to expand Kelly Park. • The Confession of Judgment process will result in monies from delinquent assessments, delinquent taxes, penalties and interest coming to the City. • No other City/EDA funds will be disbursed to the developer until a development agreement is prepared and approved. The key unknown issues must be resolved for the development agreement. • The City/EDA will enter into a Memorandum of Understanding (MoU) with IMH to provide a common understanding and framework for future actions. The MoU facilitates a significant financial commitment by IMH and allows for continued work to design the project and eliminate uncertainties. We look forward to addressing these issues and answering your questions on Thursday. - 4111'.11/A 1 ,, 311N3AV 3laVrit0-1 ET) z Cr) lot areas 01= 759000 0 -07 01- 75900 - 020 -06 01- 75900 -010-06 75900- 020 -02 01-75900-010-10 01- 75900 - 030-02 01- 75900 - 020 -10 01- 75900 -010 -04 orni PARK EXPANSION & FUTURE RESERVE PARCELS EDA Reference Notebook Table of Contents 1. EDA Summary Establishment Original Bylaws Council Transfer of TIF District EDA Accepts Transfer from City for TIF District Responsibility EDA Expanded EDA Amended Bylaws 2. Analysis of Economic Development Operations Fund 3. Powers, Comparisons, Tools of EDA (Source: League of MN Cities) 4. Economic Development Growth Partnership Committee (EDGPC) Establishment Amendment 1 of EDGPC Amendment 2 of EDGPC Reconfirm EDGPC Agreement #1 Reconfirm EDGPC Agreement #2 Reconfirm EDGPC Agreement #3 Reconfirm EDGPC Agreement #4 Economic Development Strategy — 2030 Comprehensive Plan 6. EDA Business Assistance Policy 7. EDA TIF Policy 8. State EDA Statutes; 469.090 — 469.1082 CITY OF APPLE VALLEY RESOLUTION NO 1990-15 ENABLING RESOLUTION ESTABLISHING THE APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY UNDER MINNESOTA STATUTES, SECTIONS 469.090 THROUGH 469.108 BE IT RESOLVED by the City Council (the "Council") of the City of Apple Valley, Minnesota (the "City"), as follows: I. Recitals. The City is authorized pursuant to Minnesota Statutes, Sections 469.090 through 469.108 (the "Economic Development Authority Act"), to establish an economic development authority for the City, and the Council desires to do so in order to promote the economic, commercial, housing, and industrial development and redevelopment of the City and in order to consolidate the activities heretofore undertaken by the City in those areas. The City has caused notice of a public hearing on the establishment by the City of an economic development authority to be published in a newspaper of general circulation in the City once each week for two consecu- tive weeks, and pursuant to such notice, a public hearing on said question has been held by the Council on the date hereof, at which hearing all persons desiring to present their oral or written comments on this proposal were given an opportunity to do so. 2. Establishment of Economic Development Authorit Pursuant to the Economic Development Authority Act, the Council hereby establishes an economic development authority for the City, to be known as the Apple Valley Economic Development Authority (the "EDA"). The EDA shall be governed by a board of commissioners thereof consisting of the five members of the Council, and the term of each such commissioner of the EDA shall coincide with that commissioner's membership on the City Council. 3. Powers. The EDA shall have all powers given to an economic development authority pursuant to the Economic Development Authority Act. Duly adopted by the City Council of the City of Apple Valley, Minnesota, on January 11, 1990. ATTEST: Lit mclet' V Mayor (SEAL) CITY CLERK'S CERTIFICATE The undersigned, being the duly qualified and acting City Clerk of the City of Apple Valley, Minnesota, does hereby certify that the foregoing is a true and correct copy of a resolution duly adopted by the Apple Valley City Council at a duly called and regularly held meeting thereof on January 11, 1990. Said resolution relates to the establishment by the City of the Apple Valley Economic Development Authority. Councilmember Goodwin moved the adoption of said resolution. Councilmember Humphrey seconded said motion, and upon vote being taken thereon the fonowing Counciimembers voted in favor thereof: Branning, Goodwin, Holton, Humphrey and Savanick and the following voted against the same: None. whereupon said resolution was declared duly adopted. Witness my hand as such City Clerk and the official seal of this City this day of January, 1990. City Clerk Resolution Organizing the Apple Valley Economic Development Authority IT IS HEREBY RESOLVED by the Board of Commissioners (the "Board") of the Apple Valley Economic Development Authority (the "EDA") as follows: Recitals APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY Resolution No. EDA (a) On January 11, 1990, the City of Apple Valley, Minnesota (the "City"), acting through its City Council, adopted a certain enabling resolution establishing the EDA pursuant to Minnesota Statutes, Sections 469.090 through 469.108. (b) The Board desires to provide hereby for the initial organization of the EDA. 2. p4ofBlaws and ofAppijent of Officers. The Board hereby approves (1) the Bylaws of the EDA, as presented for the Board's consideration, and (2) appoints and approves the following officers of the EDA: President Vice-President Secretary Treasurer Assistant Treasurer Willis E. Brannin __C-11 Mary E. Mueller Thomas C. Goodwin Mary E. Mueller The President shall be the chief presiding officer of the Board and shall have such other responsibilities as may be required by law or conferred on the President by resolution of the Board. In the absence of the President, the Vice- President shall assume all of said responsibilities of the President. The offices of President, Treasurer, and Secretary shall be elected annually, as required by law. The Secretary shall act as the chief recording officer for the Board and ,hall maintain a file of minutes of Board meetings and resolutions. In accordance with Minnesota Statutes, Section 469.096, Subdivision 8, all checks of the EDA shall be signed by the Treasurer and the Assistant Treasurer and shall state the nature of the claim for which the check is issued. As required by law, the EDA shall adopt an official seal. Adopted by the Board of Commissioners of the Apple Valley Economic Development Authority this 25th day of January, 1990, ATTEST: i Mary E.4 ueller, Secretary Secretary's Certificate The undersigned, being the duly appointed and acting Secretary of the Apple Valley Economic Development Authority, hereby certifies that a meeting of the Board of Commissioners thereof was duly called and regularly held in the Apple Valley City Hall on January 25, 1990, and that at said meeting COMM S S ioner Savanick moved the adoption of the foregoing resolution, relating to the organization of the Apple Valley EDA, which resolution was duly seconded Commissioner Holton r and that upon vote being taken thereon, the following Commissioners voted in favor thereof: Branning, Goodwin, Holton, Humphrey and Savanick and the following voted against the same: None. whereupon said resolution was declared duly passed and adopted. Witness my hand as the Secretary of the Apple Valley Economic Development Authority this day of February, 1990. Mary E. Mueller, Secretary Apple Valley Economic Development Authority BYLAWS OF THE APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY ARTICLE - THE AUTHORITY Section 1. Name of Authority. The name of the Authority shall be the "Apple Valley Economic Development Authority" (which may sometimes be referred to as the "EDA" or the "Authority"), and its governing body shall be called the Board of Commissioners (the "Board"). The Board shall be the body responsible for the general governance of the Authority and shall conduct its official business at meetings thereof. Section 2. Seal of Authority. The Authority shall have an official seal, as required by Minnesota Statutes, Section 469.096, Subdivision 1. Section 3 Office of Authority. The offices of the Authority shall be the Apple Valley City Hall. ARTICLE II - OFFICERS Section 1. Officers. The officers of the Authority shall be a President, a Vice-President, a Treasurer, an Assistant Treasurer, and a Secretary. The President, the Vice-President, and the Treasurer shall be members of the Board and shall be elected annually, and no Commissioner may be both President and Vice-President simultaneously. Section 2. President. The President shall preside at all meetings of the Board. Except as otherwise authorized by resolution of the Board, the President and the Secretary (the Vice-President, in the Secretary's absence of incapacity) shall sign all contracts, deeds, and other instruments made or executed by the Authority, except that all checks of the Authority shall be signed by the Treasurer and Assistant Treasurer. At each meeting the President shall submit such recommendations and information as he or she may consider proper concerning the business, affairs, and policies of the Authority. Section 3. Vice - President. The Vice- President shall perform the duties of the President in the absence of incapa- city of the President; and in case of the resignation or death of the President, the Vice - President shall perform such duties as are imposed on the President until such time as the Board shall select a new President. Section 4. Secretary. The Secretary shall keep minutes of all meetings of the Board and shall maintain all records of the Authority. The Secretary shall also have such additional duties and responsibilities as the Board may from time to time and by resolution prescribe. Section 5. Treasurer. The Treasurer shall have the care and custody of all funds of the Authority and shall deposit the same in the name of the Authority in such bank or banks as the Board may select. The Treasurer and Assistant Treasurer shall sign all orders and checks for the payment of money and shall pay out and disburse such moneys under the direction of the Board. The Treasurer shall keep regular books of accounts showing receipts and expenditures and shall render to the Board, at least annually (or more often when requested), an account of such transactions and also of the financial condition of the Authority. The Assistant Treasurer shall act as the Treasurer's agent and assistant to perform the above- described duties, subject to the Treasurer's approval thereof. Section 6. Additional Duties. The officers of the Authority shall perform such other duties and functions as may from time to time be required by the Board or the bylaws or rules and regulations of the Authority. Section 7. Vacancies. Should the office of President, Vice - President, Treasurer, Assistant Treasurer, or Secretary become vacant, the Board shall elect a successor from its membership at the next regular meeting, or at a special meeting called for such purpose, and such election shall be for the unexpired term of said officer. Section 8. Additional Personnel. The Board may from time to time employ such personnel as it deems necessary to exercise its powers, duties, and functions. The selection and compensation of such personnel shall be determined by the Board. ARTICLE III MEETINGS Section 1. Reg ular Meetings. The Board may hold regular greetings according to a meeting schedule, if any, adopted or revised from time to time by resolution of the Board. 2 Section 2. §pfEl1 n211,E2!. Special meetings of the Board may be called by the President or any two members of the Board for the purpose of transacting any business designated in the call. The call for a special meeting may be delivered at any time prior to the time of the proposed meeting to each member of the Board or may be mailed to the business or home address of each member of the Board at least two (2) days prior to the date of such special meeting. At such special meeting no business shall be considered other than as designated in the call, but if at least four members of the Board are present at a special meeting, any and all business may be transacted at such special meeting, Notice of any special meeting shall be posted and/or published as may be required by law. Section 3. Quorum, The powers of the Authority shall be vested in the Board. Three Commissioners shall constitute a quorum for the purpose of conducting the business and exercising the powers of the Authority and for all other purposes, but a smaller number may adjourn from time to time until a quorum is obtained. When a quorum is in attendance, action may be taken by the Board upon a vote of a majority of the Commissioners present. Section 4 Order of Business. At the regular meetings of the Board the following shall be the order of business: 1. Roll call. 2. Approval of the minutes of previous meeting. 3 Bills and communications. 4. Reports. 5. Unfinished business. 6. New business. 7. Adjournment. All resolutions shall be written or transcribed and shall be retained in the journal of the proceedings maintained by the Secretary. Section 5. Adoption of Resolutions. Resolutions of the Board shall be deemed adopted if approved by not less than a simple majority of all Commissioners present, unless a different requirement for adoption is prescribed by law. Resolutions may but need not be read aloud prior to vote taken thereon and may but need not be executed after passage. 3 Section 6. Rules of Order. The meetings of the Board shall be governed by the most recent edition of Robert's Rules of Order. ARTICLE IV - MISCELLANEOUS Section 1. Amendments to Bylaws. The bylaws of the Authority shall be amended only by resolution approved by at least three of the members of the Board. Section 2. Fiscal Year. The fiscal year of the Authority shall coincide with the fiscal year of the City of Apple Valley. 1. Recitals. CITY OF APPLE VALLEY COUNTY OF DAKOTA STATE OF MINNESOTA Resolution No. 1990-40 Resolution Transferring to the Apple Valley EDA the Control, Authority, and Operation of the Apple Valley Master Development District and of the Tax Increment Financing Districts Therein IT IS HEREBY RESOLVED by the City Council (the "Council") of the City of Apple Valley, Minnesota (the "City"), as follows: (a) On January 11, 1990, the Council adopted a certain "enabling resolution" establishing the Apple Valley Economic Development Authority (the "EDA") pursuant to Minnesota Statutes, Sections 469.090 through 469.108. (b) The City, through the Council, has heretofore established and amended the City's Apple Valley Master Development District (including its Master Development Program) and the twelve tax increment financing districts therein (collectively, the "Development District Project"), pursuant to the Municipal Development District Act and the Tax Increment Financing Act, as presently codified in Minnesota Statutes, Sections 469.124 through 469.134 and 469.174 through 469.179, respectively. (c) Pursuant to Minnesota Statutes, Section 469.094, Subdivision 2, the City may by resolution of the Council, transfer the control, authority, and operation of the Development District Project to the EDA from the City, and the Council hereby finds that it would be in the best interests of the development and redevelopment efforts of the City to do so. 2. Project Transfer. Subject to the acceptance thereof by the EDA, pursuant to Minnesota Statutes, Section 469.094, Subdivision 2, the City hereby transfers the control, authority, and operation of the Development District Project to the EDA from the City. Upon its acceptance of such transfer, the EDA may exercise all of the powers that the City could exercise with respect to the Development District Project, In accepting such transfer, the EDA shall covenant and pledge to perform the terms, conditions, and covenants of all bond indentures and other agreements executed for the security of any bonds issued and other activities undertaken with respect to the Development District Project. Duly adopted by the City Council of the City of Apple Valley, Minnesota, on February 8, 1950-- ATTEST: City Cles,i City Clerk's Certificate The undersigned, being the duly qualified and acting City Clerk of the City of Apple Valley, Minnesota, hereby certifies that the foregoing is a true and correct copy of a resolution duly adopted by the Apple Valley City Council at a duly called and regularly held meeting thereof on February 8, 1990. Said resolution relates to the transfer of the control, authority, and operation to the Apple Valley Economic Development Authority of the City's Apple Valley Master Development District and the tax increment financing districts therein. Councilmember Goodwin introduced said resolution and moved its adoption. Councilmember Humphrey seconded said motion, and upon vote being taken thereon, the following Councilmembers voted in favor thereof: Brannlrig, Goodwin, Holton, Humphrey and Savanick and the following voted against the same: None. whereupon said resolution was declared duly passed and adopted. Witness my hand as such City Clerk and the official seal of the City this day of February, 1990. (SEAL) City Clerk ATTEST: APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY Resolution No EDA-90-4 Mary E. M4 ler, Secretary Resolution Accepting the Transfer from the City of Apple Valley of the Apple Valley Master Development District and the Tax Increment . Financing Districts therein IT IS HEREBY RESOLVED by the Board of Commissioners (the "Board") of the Apple Valley Economic Development Authority (the "EDA") as follows: 1. Recitals. (a) On January 11, 1990, the City of Apple Valley, Minnesota (the "City"), acting through its City Council, adopted a certain enabling resolution establishing the EDA pursuant to Minnesota Statutes, Sections 469.090 through 469.108. (b) Pursuant to Minnesota Statutes, Section 469.094, Subdivision 2, the City Council has, subject to the acceptance thereof by the EDA, transferred to the EDA Lhe control, authority, and operation of the City's Apple Valley Master Development District (including its Master Development Program) and the twelve tax increment financing districts therein (collectively, the "Development District Project"). 2. Acsfst9121a_ The Board hereby accepts from the City the transfer to the EDA of the control, authority, and operation of the DeveloPment District Project. Pursuant to Minnesota Statutes, Section 469.094, Subdivision 2, the EDA may and shall exercise all of the powers that the City could exercise with respect to the Development District Project, and the Board and the EDA hereby covenant and pledged to perform the terms, conditions, and covenants of all bond indentures and other agreements executed for the security of any bonds and other activities undertaken with respect to the Development District Project. Adopted by the Board of Commissioners of the Apple Valley Economic Development Authority this 8th day of February, 1990. W. E. Rranning, Presid* The undersigned, being the duly appointed and acting Secretary of the Apple Valley Economic Development Authority, hereby certifies that a meeting of the Board of Commissioners thereof was duly called and regularly held in the Apple Valley City Hall on February 8, 1990, and that at said meeting Commissioner Savanick moved the adoption of the foregoing resolution, relating to the acceptance of the transfer of certain projects from the City of Apple Valley to the EDA, which resolution was duly seconded Commissioner Goodwin 1 and that upon vote being taken thereon, the following Commissioners voted in favor thereof: Secretary's Certificate Branning, Goodwin, Holton, Humphrey and Savanick •and the following voted against the same: None. whereupon said resolution was declared duly passed and adopted. Witness my hand as the Secretary of the Apple Valley Economic Development Authority this day of February, 1990. Mary E. Mueller, Secretary Apple Valley Economic Development Authority CITY OF APPLE VALLEY RESOLUTION NO. 1995-52 .,.••••••• RESOLUTION AMENDING AND RESTATING ENABLING RESOLUTION ESTABLISHING THE APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY UNDER MINNESOTA STATUTES, SECTIONS 469.090 THROUGH 469.103 BE IT RESOLVED by the City Council (the "Council") of the City of Apple Valley, Minnesota (the "City") , as follows: 2 Amendment of Para ra h 2 of Enabling Resolution. Paragraph 2 of the Enabling Resolution is hereby amended to read as follows (added material is shown by underscoring and deleted material is enclosed in brackets): 282964.1 Recitals. (a) On January 11, 1990, the Council adopted its Resolution No. 1990-15, entitled "Enabling Resolution Establishing the Apple Valley Economic Development Authority Under Minnesota Statutes, Sections 469.090 Through 469.108" (the "Enabling Resolution"). (b) Pursuant to the Enabling Resolution, the City established the Apple Valley Economic Development Authority (the "EDA"). (c) It has been proposed that the Council amend the Enabling Resolution, and the Council has on the date hereof held a public hearing, which hearing was preceded by publication of a notice thereof in the City's official newspaper once a week for two consecutive weeks prior to the date hereof, on the question of amending the Enabling Resolution to provide for a seven-member, instead of a five- member, Board of Commissioners of the EDA. 2. Establishment of Economic Develoinent Authorit Pursuant to the Economic Development Authority Act, the Council hereby establishes an economic development authority for the City, to be known as the Apple Valley Economic Development Authority (the "EDA") . The EDA shall be governed by a board of commissioners thereof consisting of seven members five of whom shall be the members of the Council all as ovided in Minnesota Statutes Section 469.095 Subdivision 2 • ara a and [the five members of the Council] , and the term of each such commissioner of the EDA who is a Councilmember shall coincide with that commissioner's membership on the City Council. 3. Restatement of Enablin. Resolution As Amended Hereb The Enabling Resolution, as amended pursuant to this Resolution, reads as follows: ATTEST: 1. Recitals. The City is authorized pursuant to Minnesota Statutes, Sections 469.090 through 469.108 (the "Economic Development Authority Act"), to establish an economic development authority for the City, and the Council desires to do so in order to promote the economic, commercial, housing, and industrial development and redevelopment of the City and in order to consolidate the activities heretofore undertaken by the City in those areas. The City has caused notice of a public hearing on the establishment by the City of an economic development authority to be published in a newspaper of general circulation in the City once each week for two consecutive weeks, and pursuant to such notice, a public hearing on said question has been held by the Council on the date hereof, at which hearing all persons desiring to present their oral or written comments on this proposal were given an opportunity to do so. 2. Establishment of Economic Develo ment Authorit Pursuant to the Economic Development Authority Act, the Council hereby establishes an economic development authority for the City, to be known as the Apple Valley Economic Development Authority (the "EDA") . The EDA shall be governed by a board of commissioners thereof consisting of seven members, five of whom shall be the members of the Council, all as provided in Minnesota Statutes, Section 469.095, Subdivision 2, paragraphs (c) and (e), and the term of each such commissioner of the EDA who is a Councilmember shall coincide with that commissioner's membership on the City Council. 3. Powers. The EDA shall have all powers given to an economic development authority pursuant to the Economic Development Authority Act. Duly adopted by the City Council of the City of Apple Valley, Minnesota, on February 27, 199 Mary/g. Mueller, City Clerk /' 282964.1 Willis E. Brarining, ayor Section 1. Name of Authority. The name of the Authority shall be the "Apple Valley Economic Development Authority" (which may sometimes be referred to as the "EDA" or the "Authority"), and its governing body shall be called the Board of Commissioners (the "Board"). The Board shall be the body responsible for the general governance of the Authority and shall conduct its official business at meetings thereof. Section 2. Seal of Authority. The Authority shall have an official seal, as required by Minnesota Statutes, Section 469.096, Subdivision 1. Hall, BYLAWS OF THE APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY ARTICLE I - THE AUTHORITY Section 3. Office of Authority. The offices of the Authority shall be the Apple Valley City ARTICLE II - OFFICERS Section 1. Officers. The officers of the Authority shall be a President, a Vice-President, a Treasurer, an Assistant Treasurer, and a Secretary. The President, the Vice-President, and the Treasurer shall be members of the Board and shall be elected annually, and no Commissioner may be both President and Vice-President simultaneously. Section 2. President, The President shall preside at all meetings of the Board, Except as otherwise authorized by resolution of the Board, the President and the Secretary (the Vice- President, in the Secretary's absence of incapacity) shall sign all contracts, deeds, and other instruments made or executed by the Authority, except that all checks of the Authority shall be signed by the Treasurer and Assistant Treasurer. At each meeting the President shall submit such recommendations and information as he or she may consider proper concerning the business, affairs, and policies of the Authority. Section 3. Vice-President. The Vice-President shall perform the duties of the President in the absence or incapacity of the President; and in case of the resignation or death of the President, the Vice-President shall perform such duties as are imposed on the President until such time as the Board shall select a new President. Section 4, Secretaxy. The Secretary shall keep minutes of all meetings of the Board and shall maintain all records of the Authority. The Secretary shall also have such additional duties and responsibilities as the Board may from time to time and by resolution prescribe. Section 5. Treasurer. The Treasurer shall have the care and custody of all funds of the Authority and shall deposit the same in the name of the Authority in such bank or banks as the 1 Board may select. The Treasurer and Assistant Treasurer shall sign all orders and checks for the payment of money and shall pay out and disburse such moneys under the direction of the Board. The Treasurer shall keep regular books of accounts showing receipts and expenditures and shall render to the Board, at least annually (or more often when requested), an account of such transactions and also of the financial condition of the Authority. The Assistant Treasurer shall act as the Treasurer's agent and assistant to perform the above-described duties, subject to the Treasurer's approval thereof Section 6. Adslitioal_Mgip5. The officers of the Authority shall perform such other duties and functions as may from time to time be required by the Board or the bylaws or rules and regulations of the Authority. Section 7. Vacancies. Should the office of President, Vice-President, Treasurer, Assistant Treasurer, or Secretary become vacant, the Board shall elect a successor from its membership at the next regular meeting, or at a special meeting called for such purpose, and such election shall be for the unexpired term of said officer, Section 8. Additional Personnel. The Board may from time to time employ such personnel as it deems necessary to exercise its powers, duties, and functions. The selection and compensation of such personnel shall be determined by the Board. ARTICLE 111 - MEETINGS Section 1. Regular Meting. The Board may hold regular meetings according to a meeting schedule, if any, adopted or revised from time to time by resolution of the Board. Section 2. 5aesialMeettg. Special meetings of the Board may be called by the President or any two (2) members of the Board for the purpose of transacting any business designated in the call. The call for a special meeting may be delivered at any time prior to the time of the proposed meeting to each member of the Board or may be mailed to the business or home address of each member of the Board at least two (2) days prior to the date of such special meeting. Notice of any special meeting shall be posted and/or published as may be required by law. Section 3. Quorum. The powers of the Authority shall be vested in the Board, Four (4) Commissioners shall constitute a quorum for the purpose of conducting the business and exercising the powers of the Authority and for all other purposes, but a smaller number may adjourn from time to time until a quorum is obtained. When a quorum is in attendance, action may be taken by the Board upon a vote of a majority of the Commissioners present. Section 4. Order of Business. At the regular meetings of the Board for the following shall be the order of business: 1. Roll call. 2. Approval of the minutes of previous meeting. 3. Bills and communications. 4. Reports. 5. Unfinished business. 6. New business. 7. Adjournment. All resolutions shall be written or transcribed and shall be retained in the journal of the proceedings maintained by the Secretary. Section 5. Adoption of Resolutions. Resolutions of the Board shall be deemed adopted if approved by not less than a simple majority of all Commissioners present, unless a different requirement for adoption is prescribed by law. Resolutions may, but need not, be read aloud prior to vote taken thereon and may, but need not, be executed after passage. Section 6. Rules of Order. The meetings of the Board shall be governed by the most recent edition of Robert's Rules of Order. ARTICLE TV - MISCELLANEOUS Section 1. Amendments to Bylaws. The bylaws of the Authority shall be amended only by resolution approved by at least four (4) of the members of the Board. Section 2. Fiscal Year. The fiscal year of the Authority shall coincide with the fiscal year of the City of Apple Valley. 3 City of Apple \Miley TO: FROM: DATE: SUBJECT: Economic Development Authority, and Tom Lawell, Executive Director Ron Hedberg, Finance Director June 6, 2012 Analysis of the Economic Development Operations Fund A question was raised at a recent EDA meeting about the balance in the Economic Development Operations Fund. As of 12-31-2011 the balance is $938,736 and in 2012 there has been one payment made to Greater MSP for annual dues for $10,000. Below is a recap of the past 14 year's fmancial activity, which is the extent of the data available electronically in our current system. Over the past 14 years, the majority of the revenues and expenses related to efforts in the Valley Business Park development, the beginning negative balance in 1998 appears to result from these same types of activities in years prior to 1998 which were recovered through land sales and loan repayments. I have also attached a table of the 14 years history. Over the past 5 years the only activity has been interest earnings, the fee charged for a conduit debt issuance, the annual costs associated with participating the TCCCF and MSP Regional Economic Development Association and legal costs associated with the refunding bonds of 2006. Economic Development Operations Fund Land Sales (Valley Business Park) Loan Repayments Grant from Dakota Electric Conduit Debt Application fee Interest revenue (expense) Total Revenues Taxes / Special Asmts Paid Consultant Services Schools/ conferences Greater MSP / TCCF - Fees Legal Costs Transfer to other fund Total Expenditures Cash Balance - Beginning Cash balance - Ending Action Requested: No action required total $ 1,337,355 195,000 2,500 25,000 25,822 1,585,677 101,245 980 55 15,270 26,240 211 144,001 $ (502,940) $ 938,736 MEMO Finance Department EDA OPERATIONS FUND HISTORY -1998 to 2011 Account Description Cumulative 12 Cumulative 12 Cumulative 12 Cumulative 12 Cumulative 12 Cumulative 12 Cumulative 12 Cumulative 12 Cumulative 12 Cumulative 12 Cumulative 12 Cumulative 12 Cumulative 12 Cumulative 12 Ac;tual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Land Sales (Valley Business Park) 31,708 - 28,383 742,853 135,791 403,620 (5,000) - - - 1,337,355 loan Repayments - - 115,000 30,000 25,000 25,000 - 195,000 Grant from Dakota Electric - - 2,500 - - - - 2,500 Conduit Debt Application fee - - - - - - - - 25,000 25,000 Interest revenue (expense) (33,463) (28,986) (35,008) (32,509) (15,360) (4,612) 4,784 13,868 25,526 35,392 25,635 16,841 13,419 40,296 25,822 Total Revenues (33,463) 2,722 (35,008) (32,509) 13,023 855,742 170,575 442,488 45,526 35,392 25,635 16,841 13,419 65,296 1,585,677 Taxes/Special Asmts Paid 101,245 - - - - - 101,245 Consultant Services 980 - - - - - - 980 Schools/ conferences 55 - - - - 55 Other Charges - - - - - Greater MSP / TCCF - Fees - - - - - 5,270 10,000 15,270 Legal Costs 743 4,343 674 353 5,113 7,357 3,024 1,884 - - 2,750 - 26,240 Transfer to other fund - - - 211 - _ - - 211 Total Expenditures 103,023 4,343 674 353 5,113 7,357 3,234 1,884 2,750 5,270 10,000 144,001 - 10,000 - - - - total (1998 to 2011) Cash Balance - Beginning (502,940) (639,426) (641,048) (676,729) (709,592) (701,682) 146,703 314,044 754,647 800,173 835,566 861,200 875,291 883,440 (502,940) Cash balance - Ending (639,426) (641,048) (676,729) (709,592) (701,682) 146,703 314,044 754,647 800,173 835,566 861,200 875,291 883,440 938,736 938,736 CHAPTER 15 Part IV REGULATORY AND DEVELOPMENT FUNCTIONS OF CITIES CHAPTER 15: COMMUNITY DEVELOPMENT AND REDEVELOPMENT Business subsidies or financial assistance 2 A. Business subsidies 2 B. Financial assistance 3 City development tools 3 A. General city development powers 3 B. Housing and redevelopment authorities 4 C. Economic development authorities 8 D. Port authorities 10 E. Municipal or area redevelopment agencies 11 F. City development districts 11 G. City industrial development 12 Other development strategies 12 A. Housing bonds 12 B. Industrial parks 13 C. Industrial revenue bonds 13 D. Commercial rehabilitation 14 E. Tax increment financing (TIF) 14 F. Property tax abatement 17 IV. State-sponsored development tools 1 7 A. Minnesota Housing Finance Agency 17 B. Department of Employment and Economic Development (DEED) 18 C. Enterprise Minnesota 19 D. E-commerce ready cities 19 E. Corporations 20 V. Federal development tools 20 A. Community development block grants 20 B. Rural development grants 20 VI. How this chapter applies to home rule charter cities 20 HANDBOOK FOR MINNESOTA CITIES 15:1 This chapter last revised 12/1/2011 Minn. Stat. § 116J.993 to 116,1.995; Minn. Stat. § 116J.993, subd. 3. Minn. Stat. § 116J.994, subds. 5, 11; Minnesota Department of Employment and Economic Development (DEED). Minn. Stat. § 1161994, subd. 3. CHAPTER 15 Chapter 15 Community development and redevelopment This chapter describes the requirements for a city to establish criteria for awarding business subsidies, addresses the various development agencies cities may create, and provides a brief overview of state and federally sponsored programs for encouraging development and redevelopment. Most economic development tools can be applied to any size city. These tools are interrelated, and a city may use several for one project. 1. Business subsidies or financial assistance A. Business subsidies State law defines "business subsidy" or "subsidy" as a state or local government agency grant, contribution of personal property, real property, infrastructure, the principal amount of a loan at rates below those commercially available to the recipient, any reduction or deferral of any tax or any fee, any guarantee of any payment under any loan, lease, or other obligation, or any preferential use of government facilities given to a business in an amount greater than $150,000. Prior to awarding a business subsidy of more than $150,000 (and as defined by law) to any business, a city and any Housing and Redevelopment Authority (HRA), Economic Development Authority (EDA), port authority, and nonprofit created by a local government must hold a public hearing and adopt criteria for awarding business subsidies. The public hearing notice must include a statement that either a resident or a city property owner may file a written complaint with the city if the city does not follow the business subsidy law. Written complaints must be filed within specified timelines. The criteria must include a policy regarding the wages to be paid for any jobs created. Copies of the criteria adopted by cities are found on the Minnesota Department of Employment and Economic Development (DEED) web site. Once the criteria are established, the grantor and the recipient must enter into subsidy agreements that meet the statutory requirements. The agreement must include an obligation to repay part or the entire subsidy if the recipient does not meet its obligations. 15:2 LEAGUE OF MINNESOTA CITIES This chapter last revised 12/1/2011 Minn. Stat. § 116J.993, subd. 3; Minn. Stat. § 469.185. Minn. Stat. § 1163.994, subd. 11. Minn. Stat. § 1163.993, subd. 3. Minn. Stat. § 116J.994, subds. 4, 7, 8. Minn. Stat. § 116J.994, subd. 2; Minn. Stat. § 1163.994, subd. 8. Minn. Stat. § 469.041. CHAPTER 15 Types of assistance meeting the definition of a business subsidy include: grants; contributions of real or personal property or infrastructure; the principal amount of a loan at rates below those commercially available to the recipient; any reduction or deferral of any tax or any fee; any guarantee of any payment under any loan, lease or other obligation; or any preferential use of government facilities given to a business. The law imposes a 180-day statute of limitations on actions to challenge a city after approval of a business subsidy agreement. Citizens or owners of taxable property in a city may bring a civil action against the city for failure to comply with the business subsidy laws. Cities should therefore consult closely with the city attorney before awarding a business subsidy. There are several exceptions to this definition, including a subsidy of less than $150,000; subsidies for redevelopment, pollution control and land clean up, housing, industrial revenue bonds, utility property tax abatements and other similar programs. Recipients must provide grantors with information on their progress toward the goals outlined in the agreement. The goals for increasing jobs or retaining jobs must result in local job creation and job retention. Grantors must submit the annual Minnesota Business Assistance Form (MBAF) to the Department of Employment and Economic Development (DEED) by April 1 each year for each business subsidy agreement. Local government agencies in cities with a population of 2,500 or more must submit an MBAF, regardless of whether they have awarded business subsidies. Local government agencies in cities with a population of 2,500 or less are exempt from filing the MBAF if they have not awarded a subsidy in the past five years. B. Financial assistance Cities may offer "financial assistance" in the form of a business loan of more than $25,000 or a guarantee of $75,000 or more, but less than $150,000 required to constitute a business subsidy. If a city offers such financial assistance it must develop criteria and set minimum wage floor levels as prescribed in business subsidy law. Cities granting such financial assistance must submit business assistance reports to the Department of Employment and Economic Development (DEED) within one year of granting the assistance. 11. City development tools A. General city development powers Cities have authority to aid and cooperate in the planning, construction, or operation of economic development, and housing and redevelopment projects. The following is a partial list of actions cities may take, with or without compensation: HANDBOOK FOR MINNESOTA CITIES 15:3 This chapter last revised 12/1/2011 Minn. Stat. § 469.043, subd. 2. Minn. Stat. § 469.192. Judd Supply Co. v. Merchants & lt/Ifgs. Ins. Co., 448 N.W.2d 895 (Minn. Ct. App. 1989). Minn. Stat. §§ 469.001 to 469.047; Minn.. Stat. § 469.003. Minn. Stat. § 469.003, subd. 1. Minn. Stat. § 469.003, subds. 2, 4. • Dedicate, sell, convey, or lease any of its interests in any property or grant easements, licenses, or any other rights or privileges to an HRA. • Furnish parks, playgrounds, recreational, community education, water, sewer, and drainage facilities or other works adjacent to or in connection with housing and redevelopment projects. • Grant a partial tax exemption of up to 50 percent of all local taxes for housing projects in a redevelopment district. A statutory city, home rule charter city, economic development authority, housing and redevelopment authority, or port authority may make a loan to a business, a for-profit or nonprofit organization, or an individual for any purpose the entity is otherwise authorized to carry out under any of the laws cited. CHAPTER 15 Private development projects that receive public financial or other assistance will not necessarily become public projects that trigger competitive bidding or other state laws applicable to public works. B. Housing and redevelopment authorities The predominant method of delivering and administering housing and redevelopment programs in Minnesota is through a legal public agency, accountable to city government. A city may establish this public agency, which is often the HRA. There are more than 230 HRAs in Minnesota. 1. Elements of an HRA An HRA is a public corporation with power to undertake certain types of housing and redevelopment or renewal activities. While state legislation conveys authority for housing and redevelopment in each city, it is up to the city council to formally establish an HRA before it can do business and use its powers. Once a council legally establishes an HRA, it may undertake certain types of planning and community development activities on its own with council approval. To create a housing and redevelopment authority, the city council must, by resolution, make the following findings required by law: • Substandard, slum or blighted areas that cannot be redeveloped without governmental assistance; or, • A shortage of affordable, decent, safe, and sanitary dwelling accommodations available to low-income individuals and families. The council must pass this resolution after a public hearing. A copy of this resolution must go to the commissioner of DEED. 15:4 LEAGUE OF MINNESOTA CITIES This chapter last revised 12/1/2011 Minn. Stat. § 469.004, subds. 1, 2 Minn. Stat. § 469.004, subd. 5. Minn. Stat. § 469.003, subd. 6. 24 C.F.R. 964.415. Minn. Stat. § 469.003, subd. 7. Minn. Stat. § 469.011, subd. 2; Minn. Stat. § 469.0] 1, subd. 4. Minn. Stat. § 469.012, subd. 1. • To sue and be sued. CHAPTER 15 2. Area of operation for an HRA The area of operation of a city HRA is the corporate limits of the city. County and multi-county HRAs operate in areas that include all the political subdivisions within the county or counties, except they may not undertake any project within the boundaries of a city that has not adopted a resolution authorizing the county or multi-county HRA to exercise powers within that city. Establishment of a county or multi-county HRA precludes the formation of city HRAs, unless the county or multi-county HRA and the commissioner of DEED agree to let the city form one. 3. HRA membership An HRA consists of five commissioners who are residents of the city. The mayor appoints and the council approves the members who serve five-year, staggered terms. City councilmembers often serve on the HRA. The entire membership of an HRA may consist of councilmembers. Federal regulations require that at least one eligible resident be a member of a public housing agency board, which may be the HRA, an EDA or other public housing authority (PHA). This rule applies to any public housing agency that holds a public housing annual contributions contract with HUD or that administers Section 8 tenant-based rental assistance. The rule does not apply to state-financed public housing projects or Section 8 project- based assistance. A "small PHA exception" also exists. The city clerk must file a certificate of appointment for each commissioner of a city HRA and send a certified copy to the commissioner of DEED. State law allows the HRA to adopt bylaws. Commissioners may accept compensation of up to $75 for each meeting they attend. Commissioners who are elected officials may receive daily payment for a particular day only if they do not receive any other daily payment for public service on that day. Commissioners who are public employees may not receive daily payment, but may not suffer loss in compensation or benefits as a result of their service. 4. HRA powers An HRA is primarily responsible for the planning and implementation of redevelopment and/or low-rent housing assistance programs within its area of operation. An HRA has all the powers necessary to carry out the state HRA Act, including but not limited to the following powers: • To employ staff and an executive director. HANDBOOK FOR MINNESOTA CITIES 15:5 This chapter last revised 12/1/2011 Minn. Stat. § 469.001 — 469.047; Minn. Stat. § 469.033, stthd. 6; Minn. Stat. § 275.70 to 275.74; Minn. Stat. § 275.066. CHAPTER 15 • To undertake projects within its area of operation and to provide for the construction, reconstruction, improvement, extension, alteration, or repair of any project or part of a project. • To sell, buy, own, and lease property by any means necessary, including the power of eminent domain. • To cooperate with and use state and federal financial assistance programs. • To develop rehabilitation and code enforcement techniques. • To issue bonds for any of its corporate purposes backed by the pledge of revenues, grants or other contributions. • To implement renewal or redevelopment programs using tax increment financing. • To own, hold, improve, lease, sell or dispose of real or personal property. • To designate substandard, slum or deteriorating areas needing redevelopment, and unsafe, unsanitary, and overcrowded housing. • To make necessary expenditures to carry out the purposes of the HRA law. • To develop and administer an interest reduction program to assist the financing of the construction, rehabilitation, or purchase of low- or moderate-income housing. 5. HRA special assessment and levy authority HRA power to levy and collect taxes or special assessments is limited to the power provided in state law. Subject to a resolution of consent from the city council an HRA may levy a tax upon all taxable property within the city. (The council may give a consent that covers a series of years if they so choose or council may pass a resolution authorizing an HRA levy for a set amount of time, for example, the entire term of the bonds secured in part by an HRA levy and in part by a city levy.) State law recognizes the distinct nature of HRAs and designates them as "special taxing districts." The maximum general allowable operational levy of HRAs is 0.0185 percent of the previous year's taxable market value of all property in the city. The city's total taxable market value is available from the county assessor. An HRA raises its own levy because it is a separate political subdivision and not a "local governmental unit." Therefore, an HRA levy is not subject to levy limits but is subject to the 0.0185 percent market value limit. Levies collected by an HRA must be used only for purposes listed in the HRA Act. 15:6 LEAGUE OF MINNESOTA CITIES This chapter last revised 12/1/2011 Minn. Stat. § 469.107; Minn. Stat. § 275.066. Minn. Stat. § 469.012, subd. 4; Minn. Stat. § 469.028. Minn, Stat. §.469.015; Minn. Stat. § 469.015 subd. la. Minn. Stat. §§ 469.033; and Minn. Stat. § 469.034. Minn. Stat. § 469.034, subd. 1. CHAPTER 15 There is crossover between HRA and EDA levies that can be confusing. Typically, EDAs are not authorized to levy taxes under state law. However, many city EDA-enabling resolutions adopt all the powers of an HRA, and then the EDA functions as a special taxing district under state law. If the enabling resolution so allows, the EDA levies a separate tax or "HRA levy" not subject to levy limits or city debt limits—but again subject to the 0.0185 percent of total city market value limit in state law. The city attorney may verify the structure and levy authority of each city's HRA and/or EDA. While HRAs have the legal authority to "do whatever is necessary and convenient" to implement redevelopment, they are subject to the ordinances and laws of the city. The city council must approve HRA plans before the housing and redevelopment authority may begin implementation. 6. HRA contracting All HRA construction work and purchases of equipment, supplies or materials that involve expenditure of more than $100,000 must be competitively bid. An HRA (and a city) may also use the "best value alternative." There are limited exceptions to these requirements for emergencies and certain projects, such as parking ramps and certain public transit facilities. 7. HRA financing Operating funds, capital improvements, and debt retirement expenses for HRA projects may be financed by any one, or combination of, the following methods: • Federal grants. • Revenue bonds the HRA or local governing body sells. • General obligation bonds the local governing body sells. • Tax increments from redevelopment projects. • A limited mill levy for redevelopment projects and planning activities. • A limited mill levy for informational and relocation services. When an HRA issues bonds, the revenue generated must be used for the projects financed, or bond costs must be paid from income generated by designated projects. The law states that the principal and interest on bonds are payable exclusively from the income and revenues of the project financed with the proceeds of the bonds, or exclusively from the income and revenues of certain designated projects, whether or not they are financed in whole or in part with the proceeds of the bonds. HANDBOOK FOR MINNESOTA CITIES 15:7 This chapter last revised 12/1/2011 15:8 Minn. Stat. § 469.003, subds. 4, 6. Minn. Stat. § 469.003, subd. 7. Minn. Stat. § 469.013. Minn. Stat. §§ 469.090 to 469.1082; Minn. Stat. § 469.1082, subd. 5; Minnesota Department of Employment and Economic Development: The Economic Development Authorities Handbook.. CHAPTER 15 8. HRA certifications to state The following documents relating to the establishment and activities of local HRAs must go to the DEED commissioner: • Resolution of need. • Certificates of appointment or reappointment of HRA commissioners. • Project reports. • Applications for federal assistance. • Contracts with federal agencies. • Redevelopment plans. • Low rent public housing project and management plans. In addition, annual financial reports must go to the state auditor. 9. HRA federal certification In order for a local HRA to use federal Department of Housing and Urban Development (HUD) assistance programs, it must submit a transcript of organizational documents to the HUD area office. C. Economic development authorities All cities and townships have authority from the state Legislature to create economic development authorities. The city may consolidate the economic development authority (EDA) with an existing HRA or the city may grant the authority HRA powers. The city council may create an EDA by passing an enabling resolution. Before adopting the enabling resolution, the city must first conduct a public hearing. The enabling resolution establishes a board of commissioners for the EDA. The city council can choose to serve as the EDA board of commissioners or create a board composed of community members. The mayor, with approval of the council, appoints the commissioners. The board may consist of three, five or seven members who serve six-year terms. The board is subject to the open meeting law. This chapter last revised 12/1/2011 LEAGUE OF MINNESOTA CITIES Minn. Stat. § 275.70; :Minn. Stat. § 275.066. Minn. Stat. § 469.192; Minn. Stat. §§ 469.090 to 469.1082; Minn. Stat. § 469.098. CHAPTER 15 1. EDA levies The typical EDA levy is different than the HRA levy discussed above. It is not a levy raised by the EDA it is a levy set by a city at the request of the EDA. Basically, the city simply appropriates part of the money the city collects in the general city levy to the EDA. Because the EDA levy is part of the city levy, it is not a "special levy" under state law and thus the EDA levy is subject to the city's overall levy limit. However, as noted above, many EDA-enabling resolutions adopt all the powers of an HRA. If so, the EDA may levy a separate tax or "HRA levy," and then the EDA functions as a special taxing district as if it were an HRA and that levy is not subject to levy limits or to city debt limits. An EDA using the levy powers of an HRA is still limited to a levy no more than 0.0185 percent of the total taxable market value in the city. 2. EDA loans An EDA is authorized to make a loan to a business, a for-profit or nonprofit organization, or an individual. Before taking an action or making a decision which could substantially affect an EDA commissioner's or an employee's financial interests or those of an organization with which the commissioner or an employee is associated, a commissioner or employee of an authority must comply with specific requirements to disclose the conflict and obtain prior approval. Failure to do so may result in criminal charges. Loans must be for a purpose the EDA is authorized to carry out under the law. An authorized purpose must deal with or contribute to economic or industrial development. EDAs have the ability to use pooled bond reserving. In most development programs, each bond issue is independent of any other bond issue with a separate service or sinking fund account. EDAs, however, may create a single common bond reserve fund. Under this arrangement, each project's revenues go into a common fund, which in turn pays the bondholders on all projects. Through this pooling mechanism, the security of each project's bond increases and borrowing costs decrease as long as the pool has the necessary volume and diversity of cash flow. HANDBOOK FOR MINNESOTA CITIES 15:9 This chapter last revised 12/1/2011 Minn. Stat. § 469.101, subds 1, Minn. Stat. § 469.101, subd. 1; "Bill Summary H.F. 3729" House Research Department (May 16, 2010); Minn. Stat. § 469.102. D. Port authorities The state Legislature authorizes city creation of port authorities. A port authority is a separate political entity with the right to sue and be sued in its own name and is generally organized to increase commerce in a city. Unlike EDAs and HRAs, a port authority may issue general obligation bonds without holding an election. Minn. Stat. § 469.050; Minn. Cities establish a port authority by passing an enabling resolution. It may Stat. § 469.051. have from three to seven commissioners (two of whom must be on the city council) appointed by the mayor and approved by the city council, unless a different number or procedure is set out in the enabling law. State law governs commissioner pay, vacancies, duties, and port authority by-laws. A port authority shall annually elect a president or chair, vice-president or vice-chair, treasurer, secretary, and assistant treasurer. A commissioner may not serve as president or chair and vice-president or vice-chair at the same time. The other offices may be held by one commissioner. The offices of secretary and assistant treasurer need not be held by a commissioner. The treasurer of a port authority must be bonded to faithfully perform these duties: • Receive and be responsible for port authority money. • Be responsible for the acts of the assistant treasurer, if appointed. • Disburse port authority money by check or electronic procedures. • Keep an account of the source of all receipts, and the nature, purpose, and authority of all disbursements. • File the authority's detailed financial statement with its secretary at least once a year at times set by the authority. Minn. Stat. §§ 469.048- 469.068; Minn. Stat. § 469.053. Minn. Stat. § 469.051, subd. 2. CHAPTER 15 3. Other EDA powers EDAs can acquire property and facilities but cannot issue debt without an election. The city must authorize the issuance of debt in the resolution creating the EDA. Also, EDAs can create economic development districts but the districts must be contiguous. Current law eliminates the requirements that economic development districts established by EDAs meet the "blight test" under tax increment financing law for redevelopment districts. EDAs may exercise powers under the housing and redevelopment authority (HRA) law (if a particular EDA enabling resolution includes HRA power) to create a redevelopment project, housing development, or housing project under which a restrictive blight test does not apply. These projects can be used for similar purposes to those of an economic development district under the EDA law. 15:10 LEAGUE OF MINNESOTA CITIES This chapter last revised 12/1/2011 Minn. Stat. § 469.051, subd. 9. Minn. Stat. § 469.048-469..068. Minn. Stat. § 469.109 to 469.123. Minn. Stat. § 469.110, subd. 11; Minn. Stat. § 469.111. Minn. Stat. § 469.111. Minn. Stat. § 469.115. Minn. Stat. § 469.124 to 469.134. Minn. Stat. § 469.127. CHAPTER 15 The port authority's annual detailed financial statement must show all receipts and disbursements, their nature, the money on hand, the purposes to which the money on hand is to be applied, the authority's credits and assets, and its outstanding liabilities. The authority must examine the statement together with the treasurer's vouchers. If the authority finds the statement and vouchers correct, it shall approve them by resolution and record the resolution. State law governs many other aspects of port authorities, including but not limited to use of city property by a port authority, employees, contracts, and audits. The city attorney also acts as the port authority's attorney. E. Municipal or area redevelopment agencies Any rural municipality or group of municipalities may establish a public body, known as a municipal or area redevelopment agency, in and for the area the municipality covers. This law defines municipalities as home rule charter or statutory cities, counties, towns or school districts. The law includes only rural areas, which generally means all areas that are not within the boundary of any city having a population of 50,000 or more, and not immediately adjacent to urbanized and urbanizing areas with a population density of more than 100 persons per square mile—or areas with an unemployment rate of 6 percent or more. The restrictions limit applicability of the law to rural areas and to the Iron Range. The establishment of the municipal or area redevelopment agency is similar to the establishment of an HRA. A municipal or area redevelopment agency has similar powers to an HRA. F. City development districts Any home rule charter or statutory city may designate development districts within the boundaries of the city. Within these districts, cities may: • Adopt a development program to acquire, construct, reconstruct, improve, alter, extend, operate, maintain or promote developments aimed at improving the physical facilities, quality of life, and quality of transportation. • Promote pedestrian skyway systems. • Install special lighting systems, street signs and street furniture, landscaping of streets and public property, and snow removal systems. The law encourages pedestrian skyway systems, underground pedestrian concourses, people-mover systems, and publicly-owned parking structures. It exempts these structures from taxation even when they are attached to privately-owned buildings. HANDBOOK FOR MINNESOTA CITIES 15:11 This chapter last revised 12/1/2011 Minn. Stat. § 469.152 to 469.1651; Minn. Stat. § 469.152. Minn. Stat. § 469.155, subd. 4. Minn. Stat. § 469.153, subd. 2; Minn. Stat. § 469.1655. Minn. Stat. § 469.155, subd. 14. Minn. Stat. ch. 462C. CHAPTER 15 G. City industrial development For the purpose of attracting industrial and commercial development and encouraging local governments to prevent economic deterioration, any home rule charter or statutory city or its redevelopment agency has the power to promote industrial development by: • Acquiring, constructing, and holding lands, buildings, easements, improvements to lands and buildings, capital equipment, and inventory for industrial projects. • Issuing revenue bonds and entering into revenue agreements to finance these activities to promote industrial projects. • Refinancing health care and other facilities. Under the legislation, cities assist industries in starting operations and use generated revenues to repay the costs. This law is the basis for issuing most industrial revenue bonds. Industrial projects eligible for assistance include any revenue-producing enterprises engaged in assembling, fabricating, manufacturing, mixing, processing, storing, warehousing, or distributing any products of agriculture, forestry, mining, or manufacturing; or in research and development activity in these fields; or in the manufacturing, creation, or production of intangible property, including any patent, copyright, formula, process, design, know how, format, or other similar item. "Project" also includes any properties designated as a qualified green building and sustainable design project under state law. Eligible projects may include costs related to dewatering activities. The law prohibits a city from operating any of these projects as a business or in any other manner. III. Other development strategies A. Housing bonds Cities may use revenue bonds for financing single- and multi-family housing, primarily for the benefit of low- and moderate-income families. The law contains single- and multi-family housing criteria and the specific actions cities must take to comply with the law. Federal law limits the issuance of housing revenue bonds. Bonding authority is allocated by a state formula. 15:12 LEAGUE OF MINNESOTA CITIES This chapter last revised 12/1/2011 Minn. Stat. § 469.185; Minn. Stat. § 465.035; A.G. Op. 476-B-2 (Mar. 2, 1961); CVO; of l'pestone v. Madsen, 287 Minn. 357, 178 N.W.2d 594 (1970). Minn. Stat. § 469.152 to 469.1651. CHAPTER 15 B. Industrial parks An industrial park is a tract of land suitable for industrial use because of location, topography, proper zoning, availability to utilities, and accessibility to transportation. A single body has administrative control of the tract. In some cities, an industrial park may be little more than a tract of unimproved land, while in other cities it may be totally served by city services and have restrictive building requirements. An industrial park's purpose is to attract industrial development. Property a city holds for later sale for economic development purposes remains tax exempt for a period of eight years, or until buildings or other improvements that are constructed after acquisition reach one-half occupancy. Currently, private enterprise creates most new industrial park development by establishing a for-profit community development corporation. A city can cooperate with that corporation through its land-use controls and methods of financing public improvements. Many cities have also established industrial parks complete with streets, water, and sewer, in spite of the possible tax ramifications. The city then sells or leases a portion of the park to a business needing a location for its building. The law authorizes any city owning lands that are not restricted by deed to convey the lands for nominal consideration, to encourage and promote industry, and to provide employment for citizens. In finding that a conveyance of land for an indoor arena was not within the statute, the attorney general concluded the conveyance must encourage and promote industry and provide employment for citizens. A more direct promotion of industry is necessary, beyond the fact that more potential customers might be in town as a result of athletic contests. However, the courts have upheld the municipal industrial development revenue bond law, discussed subsequently, against the same objection. The city's attorney can best advise the city concerning the legality of a purchase of land for resale. C. Industrial revenue bonds The municipal industrial development laws help cities attract new commercial and industrial development, and keep existing businesses in the city. The law authorizes the council to issue revenue bonds, and use the proceeds to acquire and construct industrial sites and facilities. The city then leases these facilities to private industry and uses the rental fee proceeds to retire the bonds. A city may issue industrial revenue bonds, also known as municipal revenue bonds, without public referendum. It cannot pledge the full faith and credit of a community as security for these bonds. Thus, the city may not tax property owners to pay principal and interest on the bonds. HANDBOOK FOR MINNESOTA CITIES 15:13 This chapter last revised 12/1/2011 For more information, contact DEED 651.259.7114, 800.657.3858 or 888.438.5627. Main Office: 1st National Bank Building 332 Minnesota Street, Suite E200 Saint Paul, MN 55101-1351. Minn. Stat. § 469.184. Minn. Stat. §§ 469.174 to 469.1799. CHAPTER 15 If a city decides to investigate the use of industrial bond financing, it should contact the Department of Employment and Economic Development. The department provides the city with information, advice, and technical assistance. This assistance is important, due to the adoption of federal and state laws allocating issuance authority among the states and their political subdivisions. The commissioner of Securities must approve the project. D. Commercial rehabilitation Cities have authority to carry out programs for the rehabilitation of small- and medium-sized commercial buildings. The city must adopt a program ordinance that provides for the adoption of program regulations, including a definition of small- and medium-sized commercial buildings. Loans under the program may be for amounts up to $200,000. The city may finance the program through the sale of revenue bonds. E. Tax increment financing (TIF) Tax increment financing authority is available to most cities. Cities with housing and redevelopment authorities, economic development authorities, port authorities, redevelopment agencies, those cities administering development districts or development projects, or cities exercising port authority powers under a general or special law may use tax increment financing. Amendments to the law, however, may make the use of this development tool more complicated. Tax increment financing is a funding technique that takes advantage of the increases in tax capacity and property taxes from development or redevelopment to pay upfront public development or redevelopment costs. The difference in the tax capacity and the tax revenues the property generates after new construction has occurred, compared with the tax capacity and tax revenues it generated before the construction, is the captured value. The taxes paid on the captured value are called "increments." Unlike property taxes, increments are not used to pay for the general costs of cities, counties, and schools. Instead, increments go to the development authority and are used to repay public indebtedness or current costs the city incurred in acquiring the property, removing existing structures or installing public services. Thus, the property owner in a TIF district continues to pay the full amount of property taxes. TIF involves only the increased property taxes generated within the district. It does not change the amount of property taxes currently derived from the redevelopment area, nor does it directly affect the amount or rate of general ad valorem taxes the city levies. The result of a TIF project is an increased tax base that will benefit all local taxing jurisdictions. Additionally, TIF districts usually spur economic development and redevelopment through creating job, removing blight, and providing more affordable housing. 15:14 LEAGUE OF MINNESOTA CITIES This chapter last revised 12/1/2011 State. v. Wiekhala, 589 N.W.2d 793 (Minn. 1999). Minn. Stat. § 469.174; Minn. Stat. § 469.175 subd. 2a; Minn. Stat. § 469.176, subd. lb; Minn. Stat. § 469.176subd. Minn. Stat. § 469.176, subd. 4c; Minn. Stat § 273.13, subd. 24. Minn. Stat. § 469.176, subd. 4c; Minn. Stat. § 469.1761, subd. 2 or 3. Minn. Stat. § 469.176, subd. 4m; Minn. Stat. § 469.176, subd. 4m(d). Minn. Stat. § 469.175, subd. 5. CHAPTER 15 TIF is used to encourage four general types of private development: redevelopment, renovation and renewal, growth in low- to moderate-income housing, and economic development. Public financing using TIF funding for a privately owned facility does not make public space in the facility a public forum for free speech purposes. A TIF district may involve compact development. Two major conditions must be satisfied: • Parcels consisting of 70 percent of the area of the district are occupied by buildings or similar structures that are classified as class 3a property under state law. and • The planned redevelopment or development of the district, when completed, will increase the total square footage of buildings, classified as class 3a under state law, occupying the district by three times or more relative to the square footage of similar buildings occupying the district when the resolution is approved. The authority to establish or approve a compact development district expires on June 30, 2012. TIF economic development districts must: • Request certification of the district no later than June 30, 2012. • Must begin construction before Jan. 1, 2012, for development of housing. These districts may not be used to assist housing that is developed to qualify for owner-occupied or rental housing, or similar requirements of other law, if construction of the project begins later than July 1, 2011. Cities have temporary authority to spend TIF funds to stimulate construction using economic development districts for any type of project if three conditions are met: • The municipality funds projects that will create new jobs in the state, including construction jobs, and the project otherwise would not have begun before July 1, 2012, without assistance. • Construction of the project begins no later than July 1, 2012. • The request for certification is made by June 30, 2012. For a development consisting of housing, the authority to spend tax increments expires Dec. 31, 2011, and construction must commence before July 1, 2011, except the authority to spend tax increments on market rate housing developments expires July 31, 2012, and construction must commence before Jan. 1, 2012. This temporary authority to spend the tax increment expires Dec. 31, 2012. The city using TIF must report annually to the county board, the county auditor, the school board, and the state auditor as to the status of the TIF district or districts and publish the report. The state auditor has established a uniform system of accounting and financial reporting for TIF districts. The city must annually submit to the state auditor a financial report in compliance with these standards. HANDBOOK FOR MINNESOTA CITIES 15:15 This chapter last revised 12/1/2011 15:16 Minn. Stat. § 469.1771, subds. 1, 2b. Minn. Stat. § 469.177, subd. 8; Lake Superior Paper Indus. v. State, 624 N.W.2d 254 (Minn. 2001); Brookfield Trade Center, Inc. v. County of Ramsey, 609 N.W.2d 868 (Minn. 1998). See Minn. Stat. § 469.177, subds. lb, 11; 469.1771, subd. 1; Minn. Stat. §469.1791; Minn. Stat. § 469.1793; Minn. Stat. § 469.1799; and Minn. Stat. § 469.1814. Minn. Stat. § 469.174. Minn. Stat. § 469.175. Walser Auto Sales. Inc. v. City of Richfield, 635 N.W.2d 391 (Minn. Ct. App. 2001); aff'd, 644 N.W.2d 425 (Minn. 2002). Chenoweth v. City ©f New Brighton, 655 N.W.2d 821 (Minn. Ct. App. 2003). CHAPTER 15 The state auditor may audit TIF districts. If the state auditor notifies a TIF authority of an alleged violation, a copy of the notice is also forwarded to the county attorney. If no corrective action is brought within one year, the county attorney must notify the state auditor, who then notifies the attorney general. If the attorney general finds a substantial violation, the attorney general will petition the state tax court to suspend the authority's power to use TIF for a period of up to five years. The TIF agreement with the developer is a complex document. Assistance from a financial advisor and the city attorney is necessary in order to anticipate the many potential problems. An agreement can establish a minimum market value for tax increment assessment purposes, as well as provide that the developer pay a certain level of taxes regardless of any classification rate changes or levy decreases The agreement should be entered into before the assembly and acquisition of the land on which the completed improvements are to be located. The 2001 tax reform legislation, which reduced class rates and provided for the state takeover of the general education levy, resulted in several changes to various statutes to accommodate the changes. These changes considerably reduce the continued viability of TIF in the future. The law imposes a 180-day statute of limitations on actions to challenge the creation or modification of a TIF district. The law is complex including a "but-for" finding before a city approves a TIF plan and the creation of a TIF district. Cities must follow statutory requirements including but not limited to administrative expenses, plan modifications, reporting requirements, use of increment in pre-1979 districts, excess increments, pooling, decertification, and use of funds outside the district. Before a district can be created, the law requires a detailed estimate of the impact of a proposed district on city-provided services, such as police and fire protection, public infrastructure, and borrowing costs attributable to the district, in addition to other complex estimations must be prepared. Cities should use extreme care in establishing a TIF district and should follow all procedural requirements; otherwise a court may find the district was not properly established. In one case, a TIF district was not properly established where minimal effort was made to ensure the thorough inspection of the properties, inaccurate methodology was used to establish the condition of the buildings, and the buildings found structurally substandard were not reasonably distributed throughout the district. In another case, a cause of action for inverse condemnation does not arise where a city's involvement with an adjacent property owner's development consists of establishing a TIF district, entering into a contract with a private developer specifying the size and value of structures to be built, and providing for substantial city assistance to facilitate development. Given the complexity of the laws governing the use of TIF, cities or HRAs should not undertake this method of financing community development projects without the advice of an attorney and professional consultants. This chapter last revised 12/1/2011 LEAGUE OF MINNESOTA CITIES Minn. Stat. § 469.1812 to 469.1815. Minn. Stat. ch. 462A; For more information about1\411FA programs, contact MHFA at 400 Sibley Street Suite 300, St. Paul, MN 55101-1998 (651) 296-7608 or (800) 657-3769. HANDBOOK FOR MINNESOTA CITIES CHAPTER 15 F. Property tax abatement A city may use this development tool to segregate some or all of the taxes (or the increase in taxes) it imposes on a parcel of property if the city expects the benefits of the proposed abatement agreement to at least equal the costs of the proposed development. The term "abatement" is somewhat misleading, as in most cases the tax is not forgiven; it is paid normally, but the amount of property tax levied by the city is used to pay for the bonds. The city must determine that the agreement is in the public interest because it will increase or preserve tax base, provide employment opportunities, provide or help acquire or construct public facilities, help redevelop or renew blighted areas, or help provide access to services for residents of the city. Property taxes in a TIF district cannot be abated unless the period of the abatement will not occur until after the district is decertified. A resolution must be adopted after notice and public hearing, specifying the terms of the abatement. A city may issue bonds or other obligations to provide an amount equal to the sum of the abatements granted for a specific property. The maximum principal amount of these bonds may not exceed the estimated sum of the abatements for the property for the years authorized. The bonds may be general obligations of the city if the city council chooses to pledge the full faith and credit of the city in the resolution issuing the bonds. The law limits property tax abatements to 15 years. School districts and counties have similar abatement powers. A city, county, and school district can agree to abate their taxes on the same property. Iv. State-sponsored development tools A. Minnesota Housing Finance Agency The goals of the Minnesota Housing Finance Agency (MHFA) are to provide decent, affordable housing to low- and moderate-income people; preserve the existing housing stock in Minnesota; preserve existing neighborhoods and prevent them from deteriorating; and prevent mortgage foreclosures while promoting energy conservation in residential housing. The Minnesota Legislature created the MHFA in response to a shortage of affordable housing for low- and moderate-income people. Private enterprise and private investment were unable, without public assistance, to provide an adequate supply of safe, sanitary, and decent housing at affordable prices and rents. This chapter last revised 12/1/2011 15:17 Minn. Stat. § 462A.073 et seq; MHFA: Minnesota City Participation Program. • Minn. Stat. ch. 116j; Minnesota Department of . - - Employment and Economic Development. Minn. Stat. § 1 16J41 1 to 116J.424, The USDA Development.. Minn. Stat. § 116,1.431; Greater Minnesota Business Development Infrastructure Grant Program. Minn. Stat. § 116J.431, subd. 2. Minn. Stat. § 116J.435. CHAPTER 15 The sale of state tax-exempt bonds is the primary financing for MFHA programs. Through the Minnesota City Participation Program, Minnesota Housing sells mortgage revenue bonds on behalf of cities to meet locally identified housing needs. The proceeds of these bonds provide below-market interest rate home mortgage loans for low- and moderate-income, first-time homebuyers, or for the construction or rehabilitation of single- and multi- family housing. Appropriations from the Legislature provide additional funding for programs, including the promotion of energy conservation; an increase in home ownership opportunities for first time homebuyers; home improvement grants to very low-income homeowners; and programs to improve the housing available to Native Americans, large families, and people with disabilities. B. Department of Employment and Economic Development (DEED) The Minnesota Department of Employment and Economic Development is the primary development agency for Minnesota. DEED staff is responsible for a wide range of grant and loan programs, as well as for providing technical assistance to businesses and communities. DEED also provides grants for contamination cleanup and redevelopment; administers the rural development program; makes challenge grants to regional organizations to encourage private investment in rural areas; and administers a revolving loan fund to provide loans to new and expanding business in rural Minnesota. Local government units, including cities, may receive these loans if the community has established a local revolving loan fund and can provide at least an equal match to the loan received. Cities outside the seven-county metropolitan area may receive grants from DEED for up to 50 percent of the capital costs of public infrastructure necessary for certain specified economic development projects, excluding retail and office space. For this program, "public infrastructure" means publicly owned physical infrastructure necessary to support economic development projects, including but not limited to sewers, water supply systems, utility extensions, streets, wastewater treatment systems, stormwater management systems, and facilities for pretreatment of wastewater to remove phosphorus. Under this law, an "economic development project" for which a county or city may be eligible to receive a grant under this section includes manufacturing; technology; warehousing and distribution; research and development; agricultural processing or industrial park development that would be used by any one of these businesses. DEED runs the Innovative Business Development Public Infrastructure (BDPI) program that provides grants to local governmental units on a competitive basis statewide for up to 50 percent of the capital cost of the public infrastructure necessary to expand or retain jobs. 15:18 LEAGUE OF MINNESOTA CITIES This chapter last revised 12/1/2011 Innovative Business Development Program: Department of Employment and Economic Development; Minn. Stat. § 116.1.435. Minn. Stat. § 272.02, subd. 64. Minn. Stat. ch. 1160. Enterprise Minnesota 612-373- 2900 or 800-325-3073; Minn. Stat. § 1160.061. Minn. Stat. § 116J.037; DEED (651) 297-1291 or (800) 657-3858. CHAPTER 15 "Innovative business" means a business that is engaged in, or is committed to engage in, innovation in Minnesota in one of the following: • Using proprietary technology to add value to a product, process, or service in a high technology field; • Researching or developing a proprietary product, process, or service in a high technology field; • Researching, developing, or producing a new proprietary technology for use in the fields of tourism, forestry, mining, transportation, or green manufacturing. "Proprietary technology" means the technical innovations that are unique and legally owned or licensed by a business and includes, without limitation, those innovations that are patented, patent pending, a subject of trade secrets, or copyrighted. "Eligible project" means a bioscience an innovative business development capital improvement project in this state, including: • Manufacturing; technology; warehousing and distribution; research and development; • Bioscience innovative business incubator; • Agricultural bio-processing processing; or industrial, office, or • Research park development that would be used by a bioscience-based an innovative business. DEED administers "tax-free" job opportunity building zones (JOBZ). In each of these zones, businesses will be eligible for a broad range of tax incentives for a period of 12 years. Under the program, local units of government, including cities, must submit applications to DEED and follow all statutory requirements related to JOBZ. C. Enterprise Minnesota Enterprise Minnesota is a nonprofit business consulting organization, set up by the Legislature that helps small and medium-sized manufacturing companies, education services, and government entities in Minnesota. Enterprise Minnesota operates as a fee-for-services 501(c) (3) nonprofit. Enterprise Minnesota focuses on applied research and technology transfer and early stage funding. It may provide financial assistance, including loan guarantees, direct loans, interest subsidies, or equity investments, to sole proprietorships, corporations, other entities, nonprofit organizations, or joint ventures. Financial assistance includes but is not limited to assisting a qualified company or organization with business services and products that will enhance the operations of the entity. D. E-commerce ready cities As a tangential aid to encouraging development, the Department of Employment and Economic Development may designate cities that meet certain criteria as e-commerce ready. HANDBOOK FOR MINNESOTA CITIES 15:19 This chapter last revised 12/1/2011 15:20 Minn. Stat. § 465.717; Minn.. Stat. § 471.59; LMCIT risk information memo, Liability Coverage for joint Powers .Agreements. More information is available on the HUD web site. For more information, contact Rural .Development State Office 410 Farm Credit Service Building 375 Jackson Street St. Paul, MN 55101-1853, (651) 602-7800; See also, Handbook, Chapter 25. CHAPTER 15 E. Corporations Cities must not create nonprofit corporations unless authorized to do so by special legislation. The law allows incorporation of a joint powers entity, but these must comply with all applicable public sector laws (open meeting, gift law, conflicts of interest, competitive bidding, etc.) and must be separately insured. V. Federal development tools A. Community development block grants The Community Development Block Grant (CDBG) program, under the U.S. Department of Housing and Urban Development (HUD), provides cities with federal funding to initiate and continue a diverse array of housing and community development projects. B. Rural development grants A variety of grants and loans to encourage economic development are available to cities from the U. S. Department of Agriculture, rural development program. Sewer, water, rural enterprise, housing, and other types of grants and loans are available. VI. How this chapter applies to home rule charter cities All of the tools this chapter lists are available to charter cities. The general discussions also apply to all cities. This chapter last revised 12/1/2011 LEAGUE OF MINNESOTA CITIES CREATING AN ECONOMIC GROWTH PARTNERSHIP COMMITTEE WHEREAS, the City of Apple Valley ("City") and the Apple. Valley Chamber of Commerce ("Chamber") have identified economic development as a high priority and an important function for the economic well-being of the City; and WHEREAS, the City and the Chamber believe it is important to work cooperatively to develop a public-private sector partnership for the economic growth o the City. NOW, THEREFORE, the City of Apple Valley and the Apple Valley Chamber of Commerce shall establish an Economic Growth Partnership Committee ("Partnership") for the following purpose and structure : staternentjurose The Economic Growth Partnership Committee shall be an advisory body to the Apple Valley Economic Development Authority ("EDA"), the City and the Chamber for the purpose of assisting in appropriate efforts to expand tax base and increase job opportunities. A. The mission of the Partnership is as follows: I. Serve as an Advisory Board to the EDA, City and Chamber. 2 Receive suggestions from the Chamber, EDA and. City and provide recommendations to the City Council. 3. Act as a sounding board for development ideas and projects. 4. Assist in strategic planning for growth and development of the City. Serve as a working committee with ability to form task forces and special committees to accomplish goals and objectives. 6. Take the pulse of the community with regard to image and retention of businesses. iI Long_Rallge Goals/Work Plan The Partnership shali develop long range goals and an Annual Work Plan consistent with the guidelines set forth in the City's long range plans and objectives. L an Adopt a pro-active approach to City economic development. Attract jobs. 3. Identify and actively promote targeted development. 4. Promote, research and develop industrial and commercial business. 5 Continue participation in organizations and educational programs to further develop knowledge of current and ongoing economic development issues and opportunities. Mem ershiP The Partnership Committee shall consist. of seven (7) members (the "members') who are residents of or do business in Apple Valley. Four members shall be appointed by the City Council and three members shall be appointed by the Chamber of Commerce. The City and./or the Chamber may remove their appointees at their discretion_ Member's. terms will run for three years with the members terms being staggered to provide for no more than three of the members being appointed. annually. Replacement members will be selected by the City or the Chamber as is appropriate. Partnership Committee Members may serve more than one term. Staff will be supplied by the City with consultation of the Partnership. The EDA President and the President of the Chamber of Commerce will serve as an ex-officio member of the Economic Growth Partnership. IV. Finances ane Goais Funding, as needed, for the Economic Growth 1 Committee efforts may be budgeted by the D. Standard financial and expenditure procedures will be followed according to the funding source and the policies of the - funding source. Officers A Chair and Recording Secretary shall be elected by a majority vote of the Committee members. A quorum of five members shall be in attendance to transact business of the Economic Growth Partnership Committee. The Chair will serve a two-year term with no limit on successive terms. VI. Repprtilla A report will be provided annually to the City, EDA and Chamber. VII. flq. • All persons are welcome at all meetings. Meetings shall be scheduled monthly by the Partnership. Special meetings shall be called by the Chair. VIII Sunset Clause Every two years the Partnership shall be dissolved automatically on its anniversary date subject to reconfirmation by the City and the Chamber. NOW, BE IT FURTHER RESOLVED, the Economic Growth Partnership Committee shall continue and carry out the responsibility herein contained. Passed and duly adopted this le" ,,,,,, of ,-,,,, day . the City Council of the Cit f Apple Valley. / ATTEST: if/ City Clerk MBran Mayor 199,2' by Passed and duly adopted this /g day of fy 1993, by the Board of Directors of the Apple Valley C amber of Commerce Larry cC rson, President Passed and duly adopted this / day of k 1994, by the Board of Commissioners of the Apple Valley tconomic Development Authority. / ( Will Branning, Preside ATTEST: Sefidretary EXHIBIT •conomic D vel(120= Growth Partnership Committee §1 1994 Work Pian To assist in the: 1. Hiring of an independent marketing consultant. 2 Inventory and complete Marketing/Communications Plan A. Brochure B. Fact Sheets C. Audio Visual Review Business Retention and Expansion Pror7ram. a. Business consortium. 4. Participation in organizational and educational programs to develop current and ongoing knowledge of issues concerning economic development. 5 Pursue incentives and financing options for development. 6 Research and develop computer program to interact with G.I.S. to insure. effective economic development package. 7 Plan and host Business Appreciation Celebration for business retention. 8. Promote, research and development of Cedar Avenue/County Road 42 corridor and intersection. Meet with EDA, Planning Commission and. Council biannually. 10. Plan and host Annual. Commercial/Indu strial Tour. 11. Other suggested items. City of Apple Valley DATE: January 23, 1995 TO: Mayor, City Council and City Administrator of Apple Valley FROM: Mary Mueller, City Clerk SUBJECT: Amendment to Economic Growth Partnership Committee Agreement At its meeting of January 12, 1995, the City Council amended the Agreement with the Chamber of Commerce establishing the Economic Growth Partnership Committee. The amendment expanded the Committee's membership to eight; five of whom are appointed by the City Council. The Council also appointed Councilmember Erickson as the eighth member. A copy of the Amendment is attached for your information. When the Committee was established, on February 10, 1994; members were appointed to fill the three-year terms, but it was not designated which appointee would serve which term. The following schedule of terms is being presented to the Council for its approval: C"t Asso"ntees Terms Expire Chamber Appointees Terms Expire Karen Edgeton 2-10-96 Bruce Halbasch 2-10-96 Robert Erickson 2-10-96 Thomas Goodwin 2-10-97 LaDonna Riste 2-10-97 Gary Humphrey 2-10-97 Virginia Sterling 2-10-98 Larry Severson 2-10-98 This schedule is arbitrary, with names listed in alphabetical order, but meets the criteria of staggered terms with no more than three of the members being appointed annually. In addition to these appointed members, the EDA President and Chamber President are ex-officio, non-voting, members of the Committee. Please advise if you have any questions. Attachment Memo AMENDMENT OF ECONOMIC GROWTH PARTNERSHIP COMMITTEE AGREEMENT WHEREAS, the City of Apple Valley ("City") and the Apple Valley Chamber of Commerce ("Chamber"), desire to expand the membership of the Economic Development Growth Partnership Committee. ATTEST: NOW, TITEREFORE, the parties do hereby agree as follows: 1. Paragraph 111, Membership, shall be amended to read in its entirety as follows: MernIgiship. The Partnership Committee shall consist of eight (8) members (the "members") who are residents of or do business in Apple Valley. Five members shall be appointed by the City Council and three members shall be appointed by the Chamber of Commerce. The City and/or the Chamber may remove their appointees at their descretion, Member's terms will run for three years with the members terms being staggered to provide for no more than three of the members being appointed annually. Replacement members will be selected by the City or the Chamber as is appropriate. Partnership Committee Members may serve more than one term. Staff will be supplied by the City with consultation of the Partnership. The EDA President and the President of the Chamber of Commerce will serve as an ex - officio member of the Economic Growth Partnership. Past and duly adopted this if:V. 'ik—clay of ( 4 / 1995. CITY OF APPLE VALLEY: y: Willis E. Branning Its: Mayor ATTEST: ATTEST: Past and duly adopted this 47 Byt:„ anci xecthive Director '1* day of By: Steven Scott Its: President , 1995. BOARD OF DIRECTORS OF THE APPLE VALLEY CHAMBER OF COMMERCE: Past and duly adopted this ,:2641 day of 4'4„,c1 1995. 'John B. Gretz Its: Executive Director By: Willis E. Branning Its: President BOARD OF COMMISSIONERS OF THE APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY: 0** 0*** 000* *000 0** DATE: June 23, 1997 TO: President, Board and Executive Director of EDA FROM: Mary Mueller, Secretary SUBJECT: Second Amendment of Economic Growth Partnership Committee Agreement At its meeting of March 27, 1997, the City Council approved the attached Second Amendment to the Agreement with the Chamber of Commerce establishing the Economic Growth Partnership Committee. Even though the Agreement was between the City and the Chamber, the EDA was signatory to it and ratification is requested. The effect of the amendment is to make the Mayor an ex officio member of the Economic Growth Partnership and change the title of President of the Chamber of Commerce to "Chairman" in accordance with the Chamber's revised titles. Please advise if you have any questions. Attachment City of A *le Valley SECOND AMENDMENT OF ECONOMIC GROWTH PARTNERSHIP COMMITTEE AGREEMENT (the "Agreement") • WHEREAS, the CITY OF APPLE VALLEY ("CITY") and the APPLE VALLEY CHAMBER OF COMMERCE ("CHAMBER") created an Economic Growth Partnership Committee dated the I Oth day of-February, 1994; and WHEREAS, the CITY and CHAMBER amended the Agreement on the 12th day ofJanuary, 1995 increasing the membership on the PARTNERSHIP to eight (8) members with staggered terms; and • WHEREAS, the President of the CHAMBER is to serve as an ex officio member of the PARTNERSHIP, which title of President has now been changed to Chainnan; and WHEREAS, the CITY and CHAMBER wish to amend the terms of the PARTNERSHIP as herein agreed. NOW, THEREFORE, the CITY OF APPLE VALLEY and the APPLE VALLEY CHAMBER OF COMMERCE agree to this Second Amendment of Economic Growth 'Partnership Committee Agreement: 1. Article III of the Economic Growth Partnership shall be amended as follows: I The Partnership Committee shall consist of eight (8) members (the "members") who are residents of or do business in Apple Valley. Five (5) rriembers shall be appointed by the City Council and three (3) members shall be appointed by the Chamber of Commerce. The City and/or the Chamber may remove their appointees at their discretion. Member's terms will run for three years with the members terms being staggered to provide for no more than three of the members being appointed annually. Replacement members will be selected by the City or the Chamber as is appropriate. Partnership Committee Members may serve more than one term. Staff will be supplied by the City with consultation of the Partnership. The Mayor, EDA President and the Chairman of the Chamber of Cornrnerce shall serve as ex-officio members of the Economic Growth Partnership. 2. Final Paragraph. All other terms and conditions of the Economic Growth Partnership Committee Agreement, except as hereinbefore amended, shall remain in full force and effect. ATTEST: ATTEST: Passed and duly adopted this) 7 day of ATTEST: Its: President By: MARY/ MUELLER Its:C Clerk Passed and duly adopted this 3 day of 1 B OHN B. GRETZ Its: Executive Director CITY OF iWP/E VA GA K. HUMP EY Its: Mayor • Allir , 1997. , 1997. BOARD OF DIRECTORS OF THE APPLE VALLEY CHAMBER OF COMMERCE • t „ • ;) • V By: BRUCE HALBASCH Its: Chairman Passed and duly adopted this;?3I day of BOARD OF COMMISSIONERS OF THE APPLE VALLEY ECONOMIC DEVELOP' UTHO , 1997. City of As tle Va 1 DATE: January 22, 1996 TO: Mayor, City Council and City Administrator of Apple Valley FROM: Mary Mueller, City Clerk SUBJECT: Reconfirm Economic Growth Partnership Committee Agreement Please advise if you have any questions. Attachment fl $ The February 10, 1994, Agreement with the Apple Valley Chamber of Commerce establishing the Economic Growth Partnership Committee contained a sunset clause automatically dissolving the partnership every two years on its anniversary date. Attached is an Agreement to Reconfirm the partnership for an additional two-year period. This Agreement was approved by the Chamber Board at its meeting on December 21, 1995, and will be considered by the EDA at its meeting on January 25, 1996. AGREEMENT TO RECONFIRM ECONOMIC GROWTH PARTNERSHIP COMMITTEE WHEREAS, the City of Apple Valley ("CITY") and the APPLE VALLEY CHAMBER OF COMMERCE ("CHAMBER") entered into an Agreement (the "Agreement") creating an ECONOMIC GROWTH PARTNERSHIP COMMITTEE dated the 1 0th day of February, 1994 (the "PARTNERSHIP"); and WHEREAS, the CITY and CHAMBER amended the Agreement on the 12th day of January, 1995 increasing the members on the ECONOMIC GROWTH PARTNERSHIP COMMITTEE to eight (8) members with staggered terms; and WHEREAS, the Agreement provides that every two years the PARTNERSHIP "shall be dissolved automatically on its anniversary date subject to reconfirmation by the CITY and the CHAMBER." WHEREAS, the CHAMBER and CITY, each agreeing to be bound, have agreed to extend and reconfirm the term of the PARTNERSHIP for two (2) additional years by an affirmative vote of the Board of Directors of the CHAMBER and the City Council of the CITY. NOW, THEREFORE, the CITY OF APPLE VALLEY and APPLE VALLEY CHAMBER OF COMMERCE, each agreeing to be bound, agree as follows: 1. The CITY OF APPLE VALLEY, pursuant to an affirmative vote of its CITY COUNCIL the 25th day of January, 1996, agree to extend the PARTNERSHIP for an additional two (2) year term. 2. The APPLE VALLEY CHAMBER OF COMMERCE, pursuant to an affirmative vote of its Board of Directors the 21st day of December, 1995, agree to extend the PARTNERSHIP for an additional two (2) year term. 3. All other terms and conditions of the Agreement by and between the CITY and the CHAMBER dated the 1 0th day of February, 1993 and amended the 12th day of January, 1995, shall remain in full force and effect except as hereinbefore amended. CI APPLE VALLEY By: WILLIS E. BRANNING Its: Mayor By: MA' • MUELLER It' ; City Clerk ATTEST: :NF CY LUDW ts: President BOARD OF DIRECTORS OF THE APPLE VALLEY CHAMBER OF COMMERCE By: RI A B. WING Its: CHAIRMAN TO: 00* *0 0 0 ** 0 * 0 0 * 0 0 CITY OF APPLE VALLEY Mayor and City Council of Apple Valley FROM: Charles Grawe, Assistant to the City Administrator SUBJECT: Extend Economic Growth Partnership Committee Agreement Term DATE: February 9, 1998 Attachment MEMO Administration Department On February 10, 1994, the City and the Apple Valley Chamber of Commerce entered into an agreement establishing the Economic Growth Partnership Committee. Contained within the agreement in a sunset clause dissolving the term of the Committee every two years on its anniversary date. On January 26, 1996, the City and Chamber voted to extend the Committee's term for another two years. Attached is an Agreement to Reconfirm the Committee for another two years. Staff recommends the City Council approve the attached agreement. AGREEMENT TO RECONF1 ECONOMIC GROWTH PARTNERS':.1. Co WHEREAS, the City of Apple Valley ( "CITY") and the APPLE VALLEY CHAMBER OF COMMERCE ("CHAMEER") entered into an Agreement (the "Agreement ") creating an ECONOMIC GROWTH PARTNERSHIP COMMITTEE dated the 10th of February, 1994 (the "PARTNERSHIP"); and WHEREAS, the CITY and CHAMBER amended the Agreement on the 12th day of January, 1995, and the 27th day of March, 1997, increasing the members on the ECONOMIC GROWTH PARTNERSHIP COMMITTEE to eight (8) members with staggered terms; and WHEREAS, the Agreement provides that every two years the PARTNERSHIP "shall be dissolved automatically on its anniversary date subject to reconfirmation by the CITY and the CHAMBER." WHEREAS, the CITY and the CHAMBER reconfirmed the Agreement on the 25th day ofJanuary, 1996; and WHEREAS, the CHAMBER and CITY, each agreeing to be bound, have agreed to extend and reconfirm the term of the PARTNERSHIP for two (2) additional years by an afhrrnative vote of the Board of Directors of the CHAMBER and the City Council of the CITY. NOW THEREFORE, the CITY OF APPLE VALLEY and APPLE VALLEY CHAMBER OF COlvIMERCE, each agreeing to be bound, agree as follows: 1. The CITY OF APPLE VALLEY, pursuant to an affirmative vote of its CITY COUNCIL, the 12th day of February, 1998, agree to extend the PARTNERSHIP for an additional two (2) year tern. 2. The APPLE VALLEY CHAMBER OF COMMERCE, pursuant to an affirmative vote of its Board of Directors the 10th day of February, 1998, agree to extend the PARTNERSHIP for an additional two (2) year term. 3. All other terms and conditions of the Agreement by and between the CITY and the CHAMBER dated the 10th of February, 1993 and amended the 12th day ofJanuary, 1995, and the 27th day of March, 1997, shall remain in full force and effect except as hereinbefore amended. ATTEST: By: ti E. MUELLER City Clerk ATTEST: By: ANCYIUDWIG Its: President CITY OF AP?Lg VALLEY z / BY'; GARY L. II1RE Its: ayor BOARD OF DIRECTORS OF THE APPLE VALLEY CHAMBER OF COMMERCE By: LADOT BOYD Its: Chairman CITY OF APPLE VALLEY y icrl / 41 1,4: ,......, By: Mar , . Mueller Its: Citytlerk AGREEMENT TO RECONFIRM ECONOMIC GROWTH PARTNERSHIP COMMITTEE WHEREAS, the City of Apple Valley (hereinafter referred to as "City") and the Apple Valley Chamber of Commerce (hereinafter referred to as "Chamber") entered into an Agreement (hereinafter referred to as "Agreement") creating an Economic Growth Partnership Committee dated the 10 of February, 1994 (hereinafter referred to as "Partnership"), which Agreement was amended on January 13, 1995 and March 27, 1997; and WHEREAS, the Agreement provides that every two years the Partnership shall be dissolved automatically on its anniversary date subject to reconfirmation by the City and the Chamber; and WHEREAS, the City and the Chamber reconfirmed the Agreement on the 25' day of January, 1996 and on the . .12 th day of February, 1 998; and WHEREAS, the Chamber and the City each agreeing to be bound, have agreed to extend and reconfirm the term of the Partnership for two (2) additional years by an affirmative vote of the Board of Directors of the Chamber and the City Council of the City. NOW, THEREFORE, the City and the Chamber each agreeing to be bound, agree as follows: 1 The City, pursuant to an affirmative vote of its City Council the day of February, 2000, agree to extend the Partnership for an additional two (2) year term. 1 2. The Chamber, pursuant to an affirmative vote of its Board of Directors the IS day of February, 2000, agree to extend the Partnership for an additional two (2) year term. 3. All other terms and conditions of the Agreement, as Amended. BOARD OF DIRECTORS OF THE APPLE VALLEY CHAMBER OF COMMERCE By: Bill Quintus Its: Chairman Howie Register Its: President AGREEMENT TO RECONFIRM ECONOMIC GROWTH PARTNERSHIP COMMITTEE WHEREAS, the City of Apple Valley (hereinafter referred to as "City") and the Apple Valley Chamber of Commerce (hereinafter referred to as "Chamber") entered into an Agreement (hereinafter referred to as "Agreement") creating an Economic Growth Partnership Committee dated the 10 of February, 1994 (hereinafter referred to as "Partnership"), which Agreement was amended on January 13, 1995 and March 27, 1997; and WHEREAS, the Agreement provides that every two years the Partnership shall be dissolved automatically on its anniversary date subject to reconfirmation by the City and the Chamber; and WHEREAS, the City and the Chamber reconfirmed the Agreement on the 25 day of January, 1996 and on the 12 day of February, 1998 and on the 10 day of February, 2000: WHEREAS, the Chamber and the City each agreeing to be bound, have agreed to extend and reconfirm the term of the Partnership for two (2) additional years by an affirmative vote of the Board of Directors of the Chamber and the City Council of the City. NOW, THEREFORE, the City and the Chamber each agreeing to be bound, agree as follows: 1. The City, pursuant to an affirmative vote of its City Council the day ofMay, 2002, agree to extend the Partnership for an additional two (2) year term. The Chamber, pursuant to an affirmative vote of its Board of Directors the day of ay, 2 002, agree to extend the Partnership for an additional two (2) year term. t4-1(14 3. All other terms and conditions of the Agreement, as Amended. CITY OF APPLE VALLEY By: Mai? E. Mueller Its: Ci Clerk BOARD OF DIRECTORS OF THE APPLE VALLEY CHAMBER OF COMMERCE C OLA By: Carole Elfstrum Its: Chaimian By: Its: trick MulQueeny sident 14-A fry:A. 0 0 0 C 0 0 0 c\I (1) E ccs E > o a ci .2- < 4 c3 0 i -4- CL 0 E > 2 O CD 0 0 0 0 LU Busine 3 Relationshtps w orks Partnerships a doata a 2030 Comprehensive Plan .401:-...4ataitie - WSW Background Since the City was incorporated in 1969, Apple Valley has become a major hub of commercial activity in the south metropolitan area. The City is well served by large retailers and smaller niche businesses that bolster com- munity identity and add to the residents quality of life. Apple Valley was named by Money Magazine as one of the "Best Places to Live' in 2007 and 2008, partially due to the vibrant local economy and amenities. Maintaining a vital economy requires continued investment in economic development strategies. There are 5 areas that need par- ticular attention. Attract large employers and create places to work in areas ad'acent to the downtown that counter the out of city commutes and income and jobs data referenced in this chapter. The Metropolitan Region is known as a location for National and Regional headquarters, hospitals and supporting medical offices, and office/ manufacturing. Apple Valley is the best location that is ready, and yet to be developed for all of these uses. With places to live, shop, do business and learn, more can be done as a place to work. October 2009 Economic Development I 6-1 2. Unify the downtown. Downtown Apple Valley is unique in its planned development patterns, Ring Route focus, the purposeful design elements, and the four quadrant development emphasis that has occurred at Apple Valley's most important intersec- tion, Cedar Avenue and County Road 42. Responses to increasing traffic and congestion will need to be addressed that further unify; rather than divide this area and prevent unintended grade separation and a freeway like environment. This chapter introduces concepts for future discussion purposes. Improve connections to the region and world. Part of that discussion has to do with connecting Apple Valley to the region and the world in new ways. The primary ways to connect in the future will be through fiber optic and wireless forms of data, voice and video transfer. The other will be the connections to a regional transit way system that begins for the City with the new BRT system connections approved in 2008. This chapter will discuss how these new connections will make the City more profitable and create new value that will retain our competitiveness in the region. 4. Reinvest in Downtown with value-added improve- ments. Some of the developments that pioneered the compact growth, investment and development of Downtown are now approaching 40 years of age. While a pattern of value decline is not evident, in- vestment is more focused on maintenance and repair, rather than value added improvements. Over time, some of these locations will become obsolete without an economic development strategy Further, if Apple Valley is to be known as a partner with business, the strategy must have multiple elements that are respon- sive to the wide variety of challenges and opportuni- ties. This chapter addresses an economic development 6 I Economic Development strategy where "everything is economic development". This means the City is a partner and guides City vital- ity through new development, redevelopment and the support offered to existing commercial property. 5. Support new businesses in science, technology engi- neering and math. To develop an Economic Develop- ment vision and focus on the 21st century. the City will need to lead and attract new business investment that advances the themes of science, technology, en- gineering, and math. The home grown businesses and national retail chains will only be part of the answer to the business community profile of the future. The following sections of the Chapter discuss the issues, opportunities, goals, policies and strategies in greater detail. Economic Development Issues Economic development and redevelopment are not required contents for the Comprehensive Plan. These aspects of community development are, however, criti- cally important for the future of Apple Valley. Through this Comprehensive Plan, the City seeks to create jobs, expand the property tax base and enhance the image of the community. Redevelopment is not an immediate con- cern for Apple Valley. The public role in redevelopment is likely to become an important issue over the life of this Comprehensive Plan. This chapter is based on the fact that guiding land use by itself will not address the economic development and redevelopment needs of Apple Valley. The role of the City is to foster new development and retention of business activity and, through a healthy local economy, provide employment opportunities and a strong tax base. The critical economic devel opment issues factors facing Apple Wiley include; Property tax base. Jobs. Development potential. Redevelopment. • Community image and identity. The following section explores each of these issues as they relate to the Comprehensive Plan. Property Tax Base Under the current system of local government finance, property taxes are the largest source of revenue. For this reason, the creation of new tax base is an important focus of community development policies. Components of Property Valuation Effective strategies to promote the growth of the tax base require a clear understanding of the property tax system. There are three components of the property tax valuation that influence the amount of property taxes paid. The foundation of the property tax system is Estimated Market Value. This amount is the value of a parcel of property as set by the County Assessor. In some circumstances, the State Legislature limits the amount of Estimated Market Value that can be used for taxation. These adjustments result in the Taxable Market Value. The value used to cal- culate property taxes is Tax Capacity. Tax Capacity Value is a percentage of Taxable Market Value. The percentage October 2009 City of Apple Valley Taxable Market Value 6,000,000,000 -1 5,000,000,000 4000,000000 3,000,000,000 2,000,000,000 . ,000,000,000 M Al! Other Oinciustrial Corrwriercial El Apartments Residential factors are set by the State Legislature and vary by class of property. Valuation Trends Understanding how Apple Valley's tax base has changed in recent years provides useful guidance in planning for the future. The chart in Figure 6.1 shows the components and growth of taxable marker value of property in Apple Val- ley over the past five years. [The years in Figure 6.1 refer to the timing of the property tax system. 2004/05 means the value of property on January 2, 2004 for taxes payable in 2005; reflecting changes that occurred in 2003. Values for 2008/09 are preliminary as of 2/211084 This chart illustrates several important points about Apple Valley's property tax base: 500,000,000 400,000,000 300,000,000 200,0 ,000 100,000,000 -100,000,000 - -200,000,000 2004/05 2005/06 2006/07 2007108 200 New Construction D Non-Construction Appreciation Sources of Change in Property Valuation Figure 6.2 The residential share has increased slightly over the past five years. In 2004/05, residential property ac- counted for 86% of total value. The percent of apart- ment value was 4%. • Industrial property represents less than 1% of all 2008/09 taxable value. Total value grew by 23% over the four years from 2004/05 to 2007/08. Less than one-quarter of this growth came from value added by new construction. Housing creates the greatest amount of tax base. For 2008/09, residential property made up 84% of the total taxable value of Apple Valley. Apartments added 4% of total value. 2030 Comprehensive Plan October 2009 Jobs The appreciation of existing properties contributed the bulk of new value. Total value fell by 1% in 2008/09, despite adding $58 million in value from new construction. These trends point to the importance of using the Com- prehensive Plan to guide the expansion and diversification of the tax base and to promote the maintenance of existing property. The creation and retention of jobs is an important com- munity development objective for Apple Valley. Jobs at- tract residents to the community. Jobs provide the income needed to support local business and government services. Retention of businesses promote community stability by keeping jobs and residents in Apple Valley. The Community Context chapter of the Comprehensive Plan makes some important observations about employ- ment in Apple 'Valley: According to the 2000 Census, only 16% of Apple Valley residents in the labor force worked at places located in Apple Valley. The majority of workers in 2000 (54%) traveled to places of employment outside of Dakota County. The 2000 Census reported 26,221 workers living in Apple Valley, but only 10,720 people working at jobs located in Apple Valley. Sixty-two percent (62%) of jobs from the top fifteen employers were from uses classified as institutional (ISD 196, Dakota County, City of Apple Valley, Minnesota Zoo). Economic Development 6-3 S585 2007 Q3 1, Wage and EiliploymentTrerids 20 2005 $628 1,038 ti $630 2004 1,000 6-4 I Economic Development 3,619 3,482 0 5,000 10,000 15,000 Avg. Weekly Wage 3,616 0 Avg. # of Establishments III Avg. # of Employee 3,794 Another valuable source of employment data comes from the State of Minnesota. The Department of Employ- ment and Economic Development (DEED) conducts and publishes a Quarterly Census of Employment and Wages (QCEW). The QCEW covers all establishments reporting wage and employment to the State under the Unemployment Insurance System. The chart in Figure 6.3 contains employment in Apple Valley in the QCEW Key employment trends include: The employment base in Apple Valley is growing. The average number of employees increased by 1,439 (1296) from 2002 to the third quarter of 2007. • - • ' • - • - ' • • " • - . - • • ' ' - • - • - -'"- - • - • " • -•- - • " • -•-' - ' --"-''---•"• ' $873 I $656 Avg. Weekly 5904 Wage $786 5585 • 6,902 Avg. a of Establishments 4,305 Avg. # of Employee 13,619 3,61 436 1,187 2,231 2,381 1,044 Rosemount 0 Lakeville 52,223 *Eagan 0 Burnsville Apple Valley 0 20,000 40,000 60,000 Wage and Employment Comparisons Figure 6.4 The number of employers has expanded. The number of establishments reporting to the State increased by 122 (13%) during this period. Wages are falling. The average wage reported during this period fell by 5%. It is interesting to compare Apple Valley with other Dakota County cities. Figure 6.4 compares wages and employment (3rd Quarter 2007) in Apple Valley with four adjacent cities. The most noteworthy aspect of this chart is the disparity in wages. Apple Valley jobs pay the lowest average wages of these five cities. A key consideration in the planning process is seeking a balance of jobs and housing in Apple Valley. This balance is both in terms of the number ofjobs relative to the num- ber of households, as well as the type ofjob relative to the planned future land use patterns. The benefits of achiev- ing a balance of jobs to households are many, but most importantly, having jobs within the community and dose to housing reduces vehicle miles traveled to work which in turn reduces transportation costs, time spent in traffic and energy consumption. This is an important aspect of being a sustainable community and a healthy community. Based on 2000 Census data and Metropolitan Council household and employment data, Apple Valley had a ratio of 0.74 jobs for every household in 2000. Research suggests that a targeted standard for jobs-housing ratio is approximately 1.5 (Source: Jobs-Housing Balance: APA Planning Advisory Service Report Number 516 published in 2003). This ratio is based on the assumption that the average number of workers per household is 1.5. However, in metropolitan areas where jobs are more regionally al- located, nearby cities demonstrate a range. Inver Grove Heights is targeting closer to 1. The City of Eagan's 2000 ratio was 1.9 jobs per household. Projecting household and employment growth forward based on the future land use plan and Metropolitan Council projections, Apple Valley's job to household ratio will increase to 0.8 by 2030 with the addition of a job center in the mixed business campus area. This data supports the Vision for Apple Valley that seeks to create more local jobs and more jobs with wages capable of sustaining a family. October 2009 City of Apple Valley Development Potential The Community Context chapter refers to two recent studies that project the future demand for commercial and industrial development in Apple Valley. The Apple Valley Office/ Industrial Market Potential study completed in November of 2006 by the McComb Group, estimated the long-term potential for 4,000,000 square feet of office, office sh.owroorn and office warehouse development. There are three major policy positions from the McComb Study that require review and discussion: Apple \Talley's medical office growth and the addition of a hospital during this Comprehensive Plan is related to the population growth in the retail trade area and the desire of major medical groups to have offices and medical facilities close to their customers. 2. The City wants to create more jobs and become more ot a place to work. 3. 11ie City may need to consider leveraging limited financial resources and increasing regulatory flex- ibility in pursuing job creation and higher value development. Redevelopment At the present time, an expanded city role in redevelopment is not a pressing community development issue. The overall building supply is physically sound and economically viable. Redevelopment projects to this point have been market driven. Some examples include: Fischer Market Place (northeast corner of Galaxie Avenue and County Road 42) was developed on a reclaimed gravel mine. LA Fitness (northwest corner of Galaxie Avenue and 152nd Street) was a former used car sales lot. 'The Apple Valley Transit Station (northeast corner of Cedar Avenue and 155th Street) was the site of a former large general retail store. The City continues to support and encourage the redevel- opment of under utilized sites. These examples of market driven redevelopment should continue in the corning years as property conditions and market demand create opportunities. The Cobblestone Lake development (northwest corner of County Road 46 and Diamond Path) was developed on a reclaimed gravel mine. The Apple Valley Chrysler site (southwest quadrant of Galaxie Avenue and County Road 42) was replaced with a CVS Pharmacy and M&I Bank. Cedar Marketplace (northeast quadrant of Cedar Av- enue and 147th Street) took the place of a nursery. While the Comprehensive Plan does not currently identify areas for redevelopment, a larger city role in redevelopment 2030 Comprehensive Plan October 2009 L urrerti i ng route m can be expected over the life of this Plan. Several factors define the need for city involvement: As buildings age, some will become physically and economically obsolete. If private investment does not correct the problem, these conditions may become blight (vacancies and deferred maintenance) that spreads to other properties. • Most previous redevelopment has been on single or small groups of parcels. The City may find the need to consider change to an overall broader area. • The market may bypass the area needing redevelop- ment. With vacant available land, the market has less incentive to correct the problems on developed but blighted parcels. It is easier to develop a greenfield site than a developed site where existing structures and infrastructure may affect how the site may be used. Redevelopment property is often more expensive. Acquisition includes both land and buildings. • Redevelopment often requires the assembly of smaller parcels into a larger site. Multiple property owners Economic Development 6-5 with differing interests compound the complexity of land acquisition. Redevelopment sites may have more site preparation costs. Buildings must be demolished and the site cleared before new construction can occur. Redevelopment may face the need and cost of environ- mental remediation. Old buildings may have asbestos or other hazardous materials that require special treat- ment. Certain commercial and industrial businesses may have allowed pollutants to enter the soil. These factors describe the need for and likelihood of greater future city involvement in redevelopment. Image/Identity The image and identity of Apple Valley are small but im- portant element of economic development. An identifiable and positive image can help Apple Valley in attracting resi- dents, businesses and visitors. Distinctive signs and entry monuments signal to people that they have entered Apple Valley. Entry markers increase community name recogni- tion, send a welcoming message and offer an indication of community pride. Presently, only traditional city limit signs mark movement from a neighboring city into Apple Valley, and these should be enhanced. Signage can also be used to identify commercial districts and neighborhoods. Subdivisions and shopping centers frequently use signs to create place recognition. The City uses consistent signage to identify parks and trails. The City has also used corner monuments and enhanced streetscap- ing to help identify the Ring Route. The Ring Route shows a recognition of the importance of public actions to create community identity. The distinc- 6 I Economic Development rive streetscape improvements help to define this part of Downtown. The City will continue to enhance the Ring Route monuments and streetscape and will keep them in scale with the higher density development that is sought for Downtown. The City has committed to a vision of promoting mixed use development in the Central Village area of Downtown. Further development of the area's image is necessary to help achieve a unique identity for this area. Investments in image and identity are small pieces in a broader puzzle of attempting to positively distinguish Apple Valley in a competitive environment of attracting businesses and residents. The City will continue to work to create a positive and memorable image of Apple Valley. Economic Sustainability Economic development plans and strategies of the City have direct implications for sustainability. Expanding the supply of local jobs increases the ability of people to live and work in Apple Valley. Decreasing the distance between work and home reduces regional travel. Providing a wide range of goods and services also reduces travel by enabling residents to shop locally. Expanding the property tax base provides the City with financial resources needed to invest in services and facilities that enhance Apple Valley's environment. As Apple Valley ages, there will be greater need to moni- tor the condition of existing commercial structures and to promote the maintenance, enhancement and operating ef- ficiency of the existing community By promoting property maintenance and encouraging reinvestment, Apple Valley hopes to avoid the conditions that create blight and require more complex and expensive city intervention. Economic Development Goals The following are the goals for the City of Apple Valley relative to economic development: • Use the Comprehensive Plan to ensure that Apple Valley has an appropriate mix of development types and an adequate supply of land to secure new business investments consistent with the city's vision. Retain current businesses and assist companies with expansion where appropriate. Attract quality businesses to Apple Valley. • Establish and maintain the infrastructure system (transportation, utilities and telecon-imunications) to meet the needs of current businesses and facilitate future growth. • Work to maintain a labor force in the immediate areas that supports the growth of business and industry. Encourage a balanced supply of housing opportuni- ties ranging from high-end housing for corporate executives to affordable rental apartments for those just starting out. This will help to, attract new industry to the community. Build strong working relationships with the Apple Valley Chamber of Commerce, Dakota County Community Development Agency, Dakota Future and other entities with shared interest in economic development and redevelopment. Goals and Policies October 2009 City of Apple Valley Economic Development Policies The City seeks to achieve its economic development goals through application of the following policies: Work with property owners to address unique devel- opment challenges including the maintenance, revital- ization and redevelopment of existing buildings. Take advantage of opportunities to use public im- provements and private development to enhance the image and identity of Apple Valley. Foster private investment and economic activity with- out compromising community objectives to maintain and enhance Apple Valley's environment. Actively investigate and pursue opportunities to at- tract a hospital and other medical and health care businesses to Apple Valley. Actively investigate and pursue opportunities to at- tract businesses that create jobs with incomes that can sustain a family. In addition, attract businesses that will bring high quality development, expansion of the property tax base and will fit into the overall market desires and land use plans of Apple Valley. Periodically review and amend if necessary the Com- prehensive Plan to ensure an adequate allocation of land resources are planned for employment producing development and that those designations can be sup- ported by the marketplace. Encourage and facilitate infill commercial, industrial and retail development on remaining vacant parcels to ensure maximum efficiency of land use Work with local businesses, Dakota County and Minnesota Valley Transit Authority to provide transit services that support the economic development goals of Apple Valley. • Encourage and promote the development of advanced, state of the art telecommunication technology to and within Apple Valley. • Work with service providers to ensure adequate sup- plies and reliable distribution systems for electricity and natural gas. • Pursue ways to streamline the development approval process, while still maintaining high quality develop- ment standards. Encourage and facilitate redevelopment of underuti- lized or distressed properties into viable commercial, industrial and retail developments by working with property owners and interested developers. Create a medical campus district to encourage and facilitate development of medically related uses in certain geographic areas. Work with local businesses and industry to ensure needs for expansion and development are adequately met and maintain an open line of communication with the business community-. Review new and innovative economic development incentives for application in Apple Valley. Economic Development Strategies A more detailed discussion of the five near term economic development challenges for Apple Valley follows. See Fig- ure 6.5 for the overall structure of the Economic Develop- 2030 Comprehensive Plan October 2009 Business Relationships, Networks, Partnerships and Data Base Structure for Economic Development Strategy Economic Development Strategy Figure 6.5 ment Strategy; representing both the highest achievements sought and the foundational work that is needed to succeed. To summarize, the strategy is to: • Create jobs. • Retain jobs. • Support jobs. • Develop and review plans that result in develop- ment. • Expand and develop new business relationships, net- works and partnerships. 1) Attract large employers primarily in the designated Mixed Business Cam- pus area. There is an estimated 270 acres in the designated Mixed Business Campus Area that is presently designated with an interim use of Sand and Gravel Mining. Upon recla- mation of this area for development, with consideration Economic Development 6-7 r BRT Stage One R p ie for ponding, parks and right-of-way, approximately 210 acres are available for Mixed Business Campus. Based on historical development within the Metropolitan Area, it is suggested that approximately 170 acres be focused on Mixed Business Campus development and 40 acres be considered for a hospital and medical office area. Further modeling of land use approaches suggests there can also be medium to high density housing for up to 40 acres of 6-8 1 Economic Development Pus Town Center BRT Stage Two Cedar Commons n Sp & RT available land, reducing the 170 acres to approximately 130 acres The intensity of development will be further evalu- ated in cooperation with the land owner. Some guiding principles that will be discussed, reviewed and considered during the period of this Comprehensive Plan, and when establishing zoning requirements, include: A measure of floor-to-area (FAR) ratio. More inten- sive land uses place a higher amount of square footage, October 2009 e BRT Stage Three Stages of BRT in Cedar Avenue Corridor Figure 6.6 typically in multi-level buildings, on a given acreage If a portion of the business area proceeds as residential, then a desired FAR ratio, and job creation, does not diminish. With the land area available, a FAR ratio of .5 to .6 is a desireable intensity being observed for the first time in the Apple Valley marketplace, There is an interest in replicating that intensity The marketplace readily builds at a FAR of .25 to .30. To do more may City of Apple Valley The floor area ratio, or FAR, is a measurement of the building density upon a given parcel of land. It is the ratio of the gross floor area of the building (s) to the gross area of the lot on which the building (s) is located. Illustration Source: APA PAS 521/S22 J ratki require the consideration of financial incentives and regulatory flexibility. A measure of employeesisq.ft of building. The Met- ropolitan Council, in the system statement for Apple Valley, projects 5,200 additional jobs between 2010 and 2030. Given a 2007 employment level of 13, 600, the actual number of jobs needed to achieve the forecast is closer to 8,400. This forecast may prove to be an underestimate of both need and opportunity. The Mixed Business Campus area and the greater Downtown area are the most likely locations for job growth to occur. It is estimated that the Mixed Busi- ness Campus yields about 75 percent of the growth in jobs. Upon completion of the Mixed Business Campus, about 25 percent of all jobs in the city would be located in that area. 2) Unify and redevelop in the Down- town area, using Cedar Avenue and County Road 42 road and transit system improvements as a trigger. The City authorized a study of transit oriented develop- ment (TOD) along Cedar Avenue in 2008, which is cur- rently under review. In the draft report, the consultants introduce the concept of 20 years of evolutionary change driven by the marketplace and the need for congestion management in the Downtown area. The draft report of- fers changing land uses, including both public and private changes and new desirable building types and character. See Figure 6,6 for images of change: • In stage one, the 2009/2010 Cedar Avenue improve- ments and additions to a Bus Rapid Transit service be- gin to offer express, rapid, a hybrid of the two types of services, and east west connection points along Cedar Avenue. The addition of these services is followed by redevelopment ofland uses in the north west quadrant of Cedar Avenue and County Road 42. In stage two, projected up to 2020, the success, greater intensity of development and new vitality, influences the remaining quadrants of Cedar Avenue and County Road 42. • In stage three, by 2030, a very short segment of Cedar Avenue is depressed at County Road 4Z a "lid" is added, and within a quarter mile of that intersection, the four quadrants of the Downtown are connected with an at-grade "Cedar Green". Adjacent land uses continue to intensify around a central grand public space first visualized in the Commercial Area Plan- ning Study in 1987. 2030 Comprehensive Plan October 2009 3) Connect Apple Valley to the region in new ways; using advances in commu- nication, technology and transit. The City has long monitored the evolution of internet services in communities within and outside of Dakota County. There are multiple approaches based on the hard wire services of the past and present and the wi-ft, wi-max, and fiber optic services of the future. A discussion of this topic 10 years ago would have underestimated future sys- tems already realized. The same will be true in the future, to 2030. The advantage for the City is to utilize all three in combination to meet user needs for the transfer of voice, video and data. As development and redevelopment occur, it will be important to integrate the most cost effective and efficient systems available to remain competitive. The Metropolitan Council's 2030 transitway system envi- sions the Cedar Corridor and Apple Valley as a critical south to north and north to south route; connecting to the region. The opportunities for the City resulting from the upcoming implementation of bus rapid transit (BRT) continue to be evaluated. A review of land uses within one-half mile of the Cedar Corridor indicates: • There are over 6,000 housing units and an estimated 17,000 people living nearby. • There are over 170 commercial parcels with an esti- mated value in excess of $500,000,000. • The City places a high priority on a strong, vital Downtown. Transit improvement must be proven to be value added. Economic Development 6-9 The strategy that will make transit a success requires: • Good system design; the best ridership in the worst weather and the safest crossing of Cedar Avenue for pedestrians. Getting people where they want to go. Moving people quickly. Having it be an experience people want to repeat. Routes that shape adjacent growth and investment. The ability to add to the systems with connecting routes and networks; a mix of express, rapid and lo- cal services. 4) The City will act as a partner; to guide vitality through new development, redevelopment and support to exist- ing commercial property. For several years, the City has prioritized positive rela- tionship building with businesses and the selectively used financial loan products, tax increment and revenue bond resources to support new development. This will continue and intensify as the competition for land uses, the need to close financial gaps in redevelopment, and preferred users increasingly becomes important. The types of economic development strategies include: Financial incentives such as grants and loans, often in partnership with other agencies such as the State of Minnesota, regional investment funds, and the Dakota County Community Development Agency. • Continue the working relationship with the Apple Valley Chamber of Commerce. Provide support to small businesses, entrepreneurs, and new entrants in the marketplace with the creation 6 1 Economic Development of business plans and marketing plans. Initiatives by Dakota County Community Technical College and the Metropolitan Consortium of Community De- velopers are examples of supporting partners along with the City. Financial support tied to job creation. The role of tax increment financing (TIF) may help to support land assembly, infrastructure installation (including struc- tured parking), and higher intensity development. 5) To be forward thinking in the attrac- tion of businesses focused on science, technology, engineering and math (STEM); providing a well educated and compensated workforce. The Federal Americans Competitiveness and Workforce Improvement Act of 1998 established STEM as the 21st century response to competitiveness. The National Sci- ence Foundation (NSF) encouraged academic institutions in the United States to increase the number of students nationwide that receive degrees in science, technology, engineering and mathematics. Taking this initiative to the local level requires the City to play a role in and answer the questions to: * Where will these graduates work? • Where will these graduates live? Apple Valley offers the land resources and the cooperation with local owners to locate new and expanding business op- portunity Further, Apple Valley is already highly educated and offers the places to live, shop, learn and recreate. October 2009 City of Apple Valley WHEREAS, the EDA has determined to modify the business subsidy policy in certain respects so that it pertains to all business assistance provided by the EDA, whether the assistance is a Business Subsidy as defined by the Statutes, and has performed all actions required by law to be performed prior to the adoption and approval of the amended policy, including the holding of a duly noticed public hearing on May 7, 2012. APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. EDA42-3 WHEREAS, Minnesota Statutes, Section 116J.993 to 116J.995 (the "Statutes") required the adoption of criteria for the granting of business subsidies as defined in the Statutes; and WHEREAS, the City of Valley (the "City") and the Apple Valley Economic Development Authority (the "EDA") approved the business subsidy policy on February 10, 2000; and NOW, THEREFORE, BE IT RESOLVED, by the Apple Valley Economic Development Authority that the amended business subsidy policy, now referred to as the "Business Assistance Policy" and attached as Exhibit A of this resolution, is hereby approved. ATTEST: WHEREAS, the City and the EDA approved an amended policy on April 24, 2003; and ADOPTED this 7 day of May, 2012. o �Y Pam , ela . Ga (.st t etter, Secretary Larr rson, President CERTIFICATE 1, Pamela Gackstetter, Apple Valley Economic Development Authority Secretary, hereby certify that the forgoing is a true and correct copy of a resolution adopted by the Apple Valley Economic Development Authority on May 7, 2012, the original of - which is in my possession, dated this day of , 2012. Pamela J. Gackstetter, Secretary SECTION 1. PURPOSE CITY OF APPLE VALLEY BUSINESS ASSISTANCE POLICY Adopted: February 10, 2000 Amended: April 24, 2003 Amended: May 7, 2012 The purpose of the policy is to establish guidelines and criteria for the use of business subsidies as defined in the Business Subsidies Act (the "Act"), found in Minnesota Statutes, Chapter 116J. This policy shall be used as a guide in processing and reviewing applications requesting business assistance as may be provided by the Apple Valley Economic Development Authority (the "EDA"). Terms used in this Policy are intended to have the same meanings as used in the Act. In accordance with the Act, all business assistance requests must comply with applicable State Statutes. The EDA shall have the option of amending or waiving sections of this Policy when determined necessary or appropriate. Minnesota Statutes 116J.994, Subd. 2, allows the EDA to deviate from its criteria by documenting in writing the reason for the deviation and attaching a copy of the document to its next annual report to the Minnesota Department of Employment and Economic Development. SECTION 2. ELIGIBLE USES FOR THE RECEIPT OF BUSINESS ASSISTANCE The EDA will consider business assistance for developments and projects that demonstrate a financial need, and meet one or more of the following uses: 1. Increase the local job base, retain local jobs, and provide diversity in that job base. 2. Address building decline and encourage redevelopment in the commercial and industrial areas of the City in order to encourage high levels of property maintenance and private reinvestment in those areas. 3. Increase property values and the City' tax base to ensure the long-term ability of the City to provide adequate services for its residents while lessening the reliance on residential property tax. 4. Increase the local business and industrial market potential of the City. 5. Encourage additional unsubsidized private development in the area, either directly, or through secondary "spinoff' development. 6. Offset unusual and/or extraordinary costs of redevelopment, over and above the costs that a developer would incur in normal development, such as the remediation of contaminated sites. 1 7. Accelerate the development process and to achieve development on sites that would not be developed without assistance. 8. Encourage full utilization of existing or planned public infrastructure improvements, such as streets, sewers, water, fiber optic, transit and transportation, and energy technologies. 9. Meet the following housing related uses, particularly in mixed use commercial projects: a. Provide a diversity of housing not currently provided by the private market. b. Provide a variety of housing alternatives and housing choices. c. Promote affordable housing for low or moderate income individuals. d. Promote neighborhood stabilization and revitalization by the removal of declining buildings and the upgrading in existing housing stock in residential areas. SECTION 3: BUSINESS ASSISTANCE PROJECT THRESHOLD CRITERIA Projects to be considered by the EDA shall meet the following criteria. However, it should not be presumed that a project meeting these criteria will be approved. Meeting these criteria creates no obligation of the EDA to provide assistance. 1. Any assistance shall be provided within applicable legislative restrictions of the State, State Auditor interpretations, debt limit guidelines, and other appropriate financial requirements and policies. 2. The project should meet one or more of the uses identified in Section 2, Eligible Uses for the Receipt of Business Assistance. 3. The project must be consistent with the City's Comprehensive Plan and Zoning Ordinances to secure assistance. 4. Assistance will be provided only to projects that cannot financially proceed without benefit of the assistance. Assistance will not be provided solely to broaden a developer's profit margins on a project, or to support speculative projects. Prior to required public actions, the EDA may undertake an independent financial analysis of the project, at the applicant's cost, to ensure that the request for assistance is needed, feasible, and reasonable. 5. Business assistance will be considered only if the applicant and the project are financially sound. 6. Prior to approval of business assistance, the applicant shall provide to the EDA any required market and financial feasibility studies, appraisals, soil boring information provided to private lenders for the project, and other information or data that the EDA or its financial consultants may require. 2 7. Any applicant requesting business assistance should be able to demonstrate a history of successful operation or general development capability as well as specific capability in the type, size, and scope of development proposed. 8. New business ventures and development will be considered on the strength of the operations and development investment team acting together as the applicant. 9. The applicant must retain ownership or control of the project for a period long enough to complete project construction, stabilize its occupancy, establish the project management, and repay the business assistance, if repayment is required. 10. The level of business assistance funding will be reduced to the lowest possible level and least amount of time by maximizing the use of private debt and equity financing first, and other funding sources or income producing vehicles that can be structured into the project financing, prior to using business assistance funding. SECTION 4: BUSINESS ASSISTANCE PROJECT EVALUATION CRITERIA If an applicant meets the criteria in Section 3 and is determined to be eligible for assistance, the following criteria will be used to determine the amount of assistance and type of assistance that may be provided. 1. All development proposals should optimize the private development potential of a site. An occupied property must experience an increase of at least 25% of property valuation as a result of the investment spurred by the subsidy. A currently vacant property must experience an increase of at least 200% of property valuation as a result of the investment spurred by the subsidy. 2. All business assistance projects, regardless of whether they are considered Business Subsidies by the Act, must meet the "but for" test. Assistance will not be provided unless, in the sole determination of the EDA, that without assistance the project could not proceed in the manner as proposed. 3a. A development project receiving any business assistance must commit to continue to own and operate the facility benefitting from the assistance within the City of Apple Valley for a period of five (5) years after the date the assistance is provided. Upon any sale of the project or property receiving assistance, the transfer must be approved by the EDA. 3b. A tenant receiving any business assistance must commit to continue to maintain and operate the business benefitting from the assistance within the City of Apple Valley for a period of five (5) years after the date the assistance is provided 4. A business subsidy must result in the creation or retention of jobs, unless the EDA identifies an alternate public purpose in addition to tax base increase as identified in Section 2. If after 3 a public hearing, the creation or retention of jobs is determined not to be a goal, the wage and job goals may be set at zero. 5. Recipients of business assistance requiring the creation or retention of jobs will be required to meet the following job and wage goals: a. Wage and job goals will be set forth specifically in the business assistance agreement. b. Benefitting businesses shall pay wages to full-time and part-time employees in an amount not lower than 110% of the State Minimum Wage that is in effect at the time of the granting of assistance. 6. Some criteria, by their very nature, must remain subjective. However, wherever possible "benchmark" criteria have been established for review purposes. The fact that a given proposal meets one or more "benchmark" criteria does not mean that it is entitled to funding under this policy, but rather that the EDA is in a position to proceed with evaluations of (and comparisons between) various business assistance proposals, using uniform standards whenever possible. SECTION 5: ASSISTANCE AGREEMENT AND APPLICATION 1. Each entity receiving business assistance shall enter into a business assistance agreement with the EDA, which will include, but not be limited to the following: a. Description of the assistance; b. Statement of the public purpose; c. Statement of the reason why the assistance is needed; d. Goals for the assistance including the number of jobs created or retained and the wages and benefits; e. Description of the financial obligation of the recipient if the goals are not met and conditions under which the subsidy must be repaid in all or part; f. Commitment to continue operations as described in Section 4(3); g. Provisions securing repayment of the assistance in the event of default or failure to meet the goals; and h. Reporting requirements of the recipient to the EDA and the State as detailed in the Act. 2. The business assistance agreement may be amended from time to time as the parties may agree. Any such amendment must be in writing and signed by both parties. The business assistance agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. The business assistance agreement shall be recorded in the Office of the Dakota County Recorder or Registrar of Titles. 3. Applications for business assistance shall be made on forms provided by the EDA. A deposit shall accompany the application to cover any legal, administrative, and other costs necessary to review the request. The deposit amount shall be noted on the application form. 4 APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. EDA-12-4 WHEREAS, pursuant to Minnesota Statutes Chapter 469 (the "Statutes"), the Apple Valley Economic Development Authority (the "EDA") is authorized to adopt criteria for the use of tax increment financing as defined in the Statutes; and WHEREAS, the Apple Valley Economic Development Authority (the "EDA") approved the tax increment financing policy on February 11, 1988; and WHEREAS, the EDA approved an amended policy on January 1, 1990; and WHEREAS, the EDA has determined to modify the tax increment financing policy in certain respects so that it states the programs goals and objectives; separates the program policies and criteria; and identifies reporting requirements incumbent upon recipients of tax increment financing assistance. NOW, THEREFORE, BE IT RESOLVED, by the Apple Valley Economic Development Authority that the amended tax increment financing policy, attached as Exhibit A of this resolution, is hereby approved. ATTEST: ADOPTED this 7 day of May, 2012. Pamela J. G kstetter, Secretary Lar &son, President CERTIFICATE 1, Pamela Gackstetter, Apple Valley Economic Development Authority Secretary, hereby certify that the forgoing is a true and correct copy of a resolution adopted by the Apple Valley Economic Development Authority on May 7, 2012, the original of which is in my possession, dated this day of , 2012. Pamela J. Gackstetter, Secretary SECTION 1. PURPOSE CITY OF APPLE VALLEY TAX INCREMENT FINANCING POLICY Adopted: February 11, 1988 Amended January 1, 1990 Amended: May 7, 2012 To broaden the tax base, encourage quality construction, develop an enhanced employment base, promote the highest and best use of the land, and provide more and better services to the citizens of the community, it is the policy of the City of Apple Valley ("City") to encourage strong, viable growth and development for the mixed-use, commercial and industrial areas of the community. Tax Increment Financing ("TIF") can be an important and useful tool benefitting the community by attracting private development, creating employment opportunities, providing housing opportunities and encouraging the redevelopment of property. The Apple Valley Economic Development Authority (the "EDA"), pursuant to Minnesota State Statutes Chapter 469, as may be amended from time to time, has the authority to use TIF within the City. When appropriate, the EDA will use TIF to aid or accomplish the development goals of the City. The Apple Valley City Council has transferred authority for TIF issuance and administration to the EDA. The provisions of the TIF program are designed to provide potentially significant savings in costs, which may be an incentive for industrial, commercial, and multi-family and mixed housing enterprises to locate or expand within the City. Though the EDA has expressed support for the use of TIF as needed, the EDA may approve or reject any TIF application. Meeting policy criteria does not guarantee the use of TIF for any project. Approval or denial of one project is not precedent for approval or denial of another project. The EDA shall have the option to deviate from this policy for projects when determined necessary or appropriate. SECTION 2. TIF PROGRAM GOALS AND OBJECTIVES It is the City's intent to advance the following goals and objectives in granting TIF assistance. 1. To promote the development or redevelopment that would not occur "but for" the assistance provided through TIF. 2. To promote development or redevelopment that will build a strong tax base. 3. To improve the City's economic vitality through the creation and expansion of employment opportunities. 1 4. To assure that development projects are constructed and maintained with quality consistent with the goals of the City. 5. To enhance the competitive position of the City regarding new and expanding business. 6. To increase the local job base, retain local jobs, and provide economic diversity in that job base. SECTION 3. POLICIES FOR THE USE OF TIF 1. At all times, procedures and policies related to the proposed or actual approval of TIF usage will comply with the State laws. 2. The project must be in accord with the City's Comprehensive Plan and Zoning ordinances to secure assistance. 3. The use of TIF may be a "business subsidy" as defined by State law. In these cases, the use will comply with the requirements of applicable statutes and the EDA's Business Assistance Policy. 4. The following general types of TIF districts may be established: a. Redevelopment District b. Renewal and Renovation District c. Economic Development District d. Housing District e. Soils Condition District f. Compact Development District In addition to these districts, the EDA may also consider the creation of TIF Districts as authorized by applicable legislation. 5. When possible, TIF shall be used to pay for the costs of public improvements associated with a project, including but not limited to streets, sewers, storm water control, water, public parking lots and structures, lights, fiber optic infrastructure, transit and transportation, energy technologies, and publicly owned infrastructure. 6. TIF shall generally be used to reimburse the developer for eligible costs on a "Pay as You Go" basis. The EDA shall have the option to issue a TIF note with or without interest. The principal amount of the TIF note will not exceed the amount of eligible project costs incurred and documented by the developer. The developer shall be required to provide written receipts that show costs eligible for reimbursement have been paid. In all cases, TIF payments shall be based on available increment generated from the project. TIF payments shall be made after collection of property taxes. Requests for up front financing may be considered by the EDA on a case-by-case basis. 2 7. The applicant is required to retain and be assisted by qualified professionals, e.g. accountants, legal counsel, etc., separate and independent from the EDA. 8. TIF shall not be used for projects that would place extraordinary demands on city services or for projects that would generate significant environmental impacts. 9. Construction of an eligible project shall not commence until the EDA has given final approval to the application for financing and the TIF district has been established, if required. 10. The EDA reserves the right to deny any application for financing at any time prior to final execution of a business subsidy agreement or development agreement, which ever applies. 11. The EDA shall be reimbursed by the applicant for all its costs related to the request for TIF. At the time of application, the applicant will deposit with the EDA an amount as determined by the EDA as necessary to cover all costs incurred by the EDA in connection with the proposed project. a. The amount of the initial deposit shall be determined by the Executive Director of the EDA. b. The fact that the applicant's deposit is accepted by the EDA is not be construed as a guarantee that the EDA will authorize the project. c. The EDA may request and the applicant shall be responsible to pay any additional amounts as determined from time to time by the EDA, should associated costs exceed the initial deposit. 12. All applications and supporting materials and documents shall become the property of the EDA, and, as such, are subject to the Minnesota Data Practice Act. 13. The EDA reserves the right to select a third party to assist in the management of the TIF process. 14. All TIF proposals must take into account the direct costs to the City and County and how those costs will be addressed. The applicant shall pay all permits and fees normally charged by the City as part of the subdivision or building permit approval. 15. The EDA will reserve up to 10% of all TIF funds to pay the EDA's administrative costs. SECTION 4. TIF PROGRAM CRITERIA In addition to satisfying the provisions in Section 3, qualified projects should meet or exceed the following criteria to be eligible for TIF assistance. Meeting the threshold of eligibility does not mean automatic approval for the project. 3 1. The developer must demonstrate that the project is not financially feasible "but for" the use of TIF. The level of TIF financing shall be reduced to the lowest possible level to achieve the development or redevelopment goals of the City. 2. The developer must be willing to enter into a development agreement or business subsidy agreement that satisfies the EDA. 3. The project must comply with the City of Apple Valley Business Assistance Policy, including job and wage goals. 4. To be eligible for TIF, a project shall result in the following minimum values: a. All industrial projects must have a minimum estimated market value of $1,500,000 upon completion. b. All fee-standing commercial or office projects must have a minimum estimated market value of $1,500,000 upon completion. c. All retail shopping center projects must have a minimum estimated market value of $10,000,000. d. All multi-family projects must have a minimum estimated market value of $5,000,000 upon completion. SECTION 5. ASSISTANCE AGREEMENT AND REPORTING REQUIREMENTS 1. All recipients of TIF assistance from the EDA shall be subject to the provisions and requirements set forth by state statute. 2. All recipients of TIF assistance shall enter into an assistance agreement with the EDA that identifies the reason for the assistance, the public purpose served by the assistance, the goals of the assistance, as well as other criteria set forth by state statute. 3. The TIF assistance agreement may be amended from time to time as the parties may agree. Any such amendment must be in writing and signed by both parties. The TIF assistance agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. The TIF assistance agreement shall be recorded in the Office of the Dakota County Recorder or Registrar of Titles. 4. All recipients of TIF assistance shall file a report annually for two years after the date the benefit is received or until all goals set forth in the application and the assistance agreement have been met. Reports shall be completed using the format drafted by the State of Minnesota and shall be filed with the City no later than March 1 of each year for the previous calendar year. Businesses fulfilling job creation requirements must file a report to that effect with the City within 30 days of meeting the requirement. 4 1 MINNESOTA STATUTES 2011 469.090 469.090 DEFINITIONS. Subdivision 1. Generally. In sections 469.090 to 469.108, the terms defined in this section have the meanings given them herein, unless the context indicates a different meaning. Subd. 2. Authority. "Authority" means an economic development authority. Subd. 3. City. "City" means a home rule charter or statutory city. Subd. 4. Development. "Development" includes redevelopment, and "developing" includes redeveloping. Subd. 5. Cost of redevelopment. "Cost of redevelopment" means, with respect to an economic development district project, the cost of: (1) acquiring property, whether by purchase, lease, condemnation, or otherwise; (2) demolishing or removing structures or other improvements on acquired properties; (3) correcting soil deficiencies necessary to develop or use the property for an appropriate use as determined by the authority; (4) constructing or installing public improvements, including streets, roads, and utilities; (5) providing relocation benefits to the occupants of acquired properties; (6) planning, engineering, legal, and other services necessary to carry out the functions listed in clauses (1) to (5); and (7) the allocated administrative expenses of the authority for the project. History: 1987 c 291 s 91 Copyright © 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 1 MINNESOTA STATUTES 2011 469.091 469.091 ECONOMIC DEVELOPMENT AUTHORITY. Subdivision 1. Establishment. A city may, by adopting an enabling resolution in compliance with the procedural requirements of section 469.093, establish an economic development authority that, subject to section 469.092, has the powers contained in sections 469.090 to 469.108 and the powers of a housing and redevelopment authority under sections 469.001 to 469.047 or other law, and of a city under sections 469.124 to 469.134 or other law. If the economic development authority exercises the powers of a housing and redevelopment authority contained in sections 469.001 to 469.047 or other law, the city shall exercise the powers relating to a housing and redevelopment authority granted to a city by sections 469.001 to 469.047 or other law. Subd. 2. Characteristics. An economic development authority is a public body corporate and politic and a political subdivision of the state with the right to sue and be sued in its own name. An authority carries out an essential governmental function when it exercises its power, but the authority is not immune from liability because of this. Subd. 3. Unpaid officers, directors, and agents; liability. Section 317A.257 applies to an economic development authority or to a nonprofit corporation exercising the powers of an economic development authority. History: 1987 c 291 s 92; 1994 c 623 art 5 s 2 Copyright CD 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 1 MINNESOTA STATUTES 2011 469.092 469.092 LIMIT OF POWERS. Subdivision 1. Resolution. The enabling resolution may impose the following limits upon the actions of the authority: (1) that the authority must not exercise any specified powers contained in sections 469.001 to 469.047, 469.090 to 469.108, and 469.124 to 469.134 or that the authority must not exercise any powers without the prior approval of the city council; (2) that, except when previously pledged by the authority, the city council may by resolution require the authority to transfer any portion of the reserves generated by activities of the authority that the city council determines is not necessary for the successful operation of the authority to the debt service fund of the city, to be used solely to reduce tax levies for bonded indebtedness of the city; (3) that the sale of all bonds or obligations issued by the authority be approved by the city council before issuance; (4) that the authority follow the budget process for city departments as provided by the city and as implemented by the city council and mayor; (5) that all official actions of the authority must be consistent with the adopted comprehensive plan of the city, and any official controls implementing the comprehensive plan; (6) that the authority submit all planned activities for influencing the action of any other governmental agency, subdivision, or body to the city council for approval; (7) that the authority submit its administrative structure and management practices to the city council for approval; and (8) any other limitation or control established by the city council by the enabling resolution. Subd. 2. Modification of resolution. The enabling resolution may be modified at any time, subject to subdivision 5, and provided that any modification is made in accordance with this section. Subd. 3. Report on resolution. Without limiting the right of the authority to petition the city council at any time, each year, within 60 days of the anniversary date of the first adoption of the enabling resolution, the authority shall submit to the city council a report stating whether and how the enabling resolution should be modified. Within 30 days of receipt of the recommendation, the city council shall review the enabling resolution, consider the recommendations of the authority, and make any modification it considers appropriate. Modifications must be made in accordance with the procedural requirements of section 469.093. Subd. 4. Compliance. The city council's determination that the authority has complied with the limitations imposed under this section is conclusive. Subd. 5. Limits; security. Limits imposed under this section must not be applied in a manner that impairs the security of any bonds issued or contracts executed before the limit is imposed. The city council must not modify any limit in effect at the time any bonds or obligations are issued or contracts executed to the detriment of the holder of the bonds or obligations or any contracting party. History: 1987 c 291 s 93 Copyright © 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. MINNESOTA STATUTES 2011 469.093 469.093 PROCEDU L REQUIREMENT. Subdivision 1. Enabling resolution. The creation of an authority by a city must be by written resolution referred to as the enabling resolution. Before adopting the enabling resolution, the city council shall conduct a public hearing. Notice of the time and place of hearing, a statement of the purpose of the hearing, and a summary of the resolution must be published in a newspaper of general circulation within the city once a week for two consecutive weeks. The first publication must appear not more than 30 days from the date of the public hearing. Subd. 2. Modifications. All modifications to the enabling resolution must be by written resolution and must be adopted after notice is given and a public hearing conducted as required for the original adoption of the enabling resolution. History: 1987 c 291 s 94 Copyright © 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 464.094 TRANSFER O)F History: 1987 c 291 s 95 1990 c 532 s 11,12 MINNESOTA STATUTES 2011 469.094 Subdivision 1. Economic development, housing, redevelopment pc��' o'o� hv ordinance, div�ethe economic deve housing, aodre powers granted under sections 469.001 to 469.047 and 469.090 to 469.108 between the economic develo authority and any other authority or commission established under statute or city charter for economic development, housing, or redevelo as provided in subdivision 2. Subd. 2. P 'ect control, authority, operation. The city may, by resolution, transfer the control, authority, and operation of any project osdefinedinoection46q.)74,subdivisioo0,or any other prograrn or project au1bodzedh«oeo1bouu489.0011o469.U47or469.|241o4Gy.|34 located within the ci , from the governrnental agency or subdivision that established the project to the economic develo The ci council may also require acceptance ofcontrol, authority, and operation ofthe project ject by the economic develauthority. The economic development authority may exercise all of the powers that the governmental unit establishing the project could exercise with respect to the project. When a p 'co1orprogramio1osns{erred1o1hccoonornicdeve|opnoen1ou1horh' the authority shall covenant and pledge to perform the terms, conditions, and covenants of the bond indenture or other agreements executed for the security of any bonds issued by the governmental subdivision that initiated the project or program. The economic development authority may exercise all of the powers necessary to perform the terms, conditions, and covenants of any indenture or other agreements executed for the security of the bonds and shall become obligated on the bonds when the project or program is transferred as provided in this subdivision. If the city transfers a housing pr 'cot or a housing development pr ject to the economic development authority, the ci must transfer all housing development and management powers relating to that specific pr ject to the authority. Subd. 3. Transfer of personnel. Notwithstanding any other law or charter provision to the contrary, the city council may, by resolution, place any employees of the housing and redevelopment authority under the direction, supervision, or control of the economic development authority. The placement of any employees under the direction, supervision, or control of the economic development authority does not affect the rights of any employees of the housing and redevelopment authority, including any rights existing under a collective bargaining agreement or fringe benefit plan. The employees shall become employees of the economic development authority. Copyright 0 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 1 MINNESOTA STATUTES 2011 469.095 469.095 COMMISSIONERS; APPOINTMENT, TERMS, VACANCIES, PAY, REMOVAL. Subdivision 1. Commissioners. Except as provided in subdivision 2, paragraph (d), an economic development authority shall consist of either three, five, or seven commissioners who shall be appointed after the enabling resolution provided for in section 469.093 becomes effective. The resolution must indicate the number of commissioners constituting the authority. Subd. 2. Appointment, terms; vacancies. (a) Three-member authority: the commissioners constituting a three-member authority, one of whom must be a member of the city council, shall be appointed by the mayor with the approval of the city council. Those initially appointed shall be appointed for terms of two, four, and six years, respectively. Thereafter all commissioners shall be appointed for six-year terms. (b) Five-member authority: the commissioners constituting a five-member authority, two of whom must be members of the city council, shall be appointed by the mayor with the approval of the city council. Those initially appointed shall be appointed for terms of two, three, four, five, and six years respectively. Thereafter all commissioners shall be appointed for six-year terms. (c) Seven-member authority: the commissioners constituting a seven-member authority, two of whom must be members of the city council, shall be appointed by the mayor with the approval of the city council. Those initially appointed shall be appointed for terms of one, two, three, four, and five years respectively and two members for six years. Thereafter all commissioners shall be appointed for six-year terms. (d) The enabling resolution may provide that the members of the city council shall serve as the commissioners. (e) The enabling resolution may provide for the appointment of members of the city council in excess of the number required in paragraphs (a), (b), and (c). (f) A vacancy is created in the membership of an authority when a city council member of the authority ends council membership. A vacancy for this or another reason must be filled for the balance of the unexpired term, in the manner in which the original appointment was made. The city council may set the term Of the commissioners who are members of the city council to coincide with their term of office as members of the city council. Subd. 3. Increase in commission members. An authority may be increased from three to five or seven members, or from five to seven members by a resolution adopted by the city council following the procedure provided for modifying the enabling resolution in section 469.093. Subd. 4. Compensation and reimbursement. A commissioner, including the president, shall be paid for attending each regular or special meeting of the authority in an amount to be determined by the city council. In addition to receiving pay for meetings, the commissioners may be reimbursed for actual expenses incurred in doing official business of the authority. All money paid for compensation or reimbursement must be paid out of the authority's budget. Subd. 5. Removal for cause. A commissioner may be removed by the city council for inefficiency, neglect of duty, or misconduct in office. A commissioner shall be removed only after a hearing. A copy of the charges must be given to the commissioner at least ten days before the hearing. The commissioner must be given an opportunity to be heard in person or by counsel at the hearing. When written charges have been submitted against a commissioner, the city council may temporarily suspend the commissioner. If the city council finds that those charges have not been substantiated, the commissioner shall be immediately reinstated. If a commissioner is Copyright 0 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 2 MINNESOTA STATUTES 2011 469.095 removed, a record of the proceedings, together with the charges and findings, shall be filed in the office of the city clerk. History: 1987 c 291 s 96 Copyright CD 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. MINNESOTA STATUTES 2011 469.096 469.096 OFFICERS; DUTIES; ORGANIZATIONAL MATTERS. Subdivision 1. Bylaws, rules, seal. An authority may adopt bylaws and rules of procedure and shall adopt an official seal. Subd. 2. Officers. An authority shall elect a president, a vice-president, a treasurer, a secretary, and an assistant treasurer. The authority shall elect the president, treasurer, and secretary annually. A commissioner must not serve as president and vice-president at the same time. The other offices may be held by the same commissioner. The offices of secretary and assistant treasurer need not be held by a commissioner. Subd. 3. Duties and powers. The officers have the usual duties and powers of their offices. They may be given other duties and powers by the authority. Subd. 4. Treasurer's duties. The treasurer: (1) shall receive and is responsible for authority money; (2) is responsible for the acts of the assistant treasurer; (3) shall disburse authority money by check only; (4) shall keep an account of the source of all receipts, and the nature, purpose, and authority of all disbursements; and (5) shall file the authority's detailed financial statement with its secretary at least once a year at times set by the authority. Subd. 5. Assistant treasurer. The assistant treasurer has the powers and duties of the treasurer if the treasurer is absent or disabled. Subd. 6. Treasurer's bond. The treasurer shall give bond to the state conditioned for the faithful discharge of official duties. The bond must be approved as to form and surety by the authority and filed with the secretary. The bond must be for twice the amount of money likely to be on hand at any one time, as determined at least annually by the authority provided that the bond must not exceed $300,000. Subd. 7. Public money. Authority money is public money. Subd. 8. Checks. An authority check must be signed by the treasurer and one other officer named by the authority in a resolution. The check must state the name of the payee and the nature of the claim that the check is issued for. Subd. 9. Financial statement. The authority's detailed financial statement must show all receipts and disbursements, their nature, the money on hand, the purposes to which the money on hand is to be applied, the authority's credits and assets, and its outstanding liabilities in a form required for the city's financial statements. The authority shall examine the statement together with the treasurer's vouchers. If the authority finds that the statement and vouchers are correct, it shall approve them by resolution and enter the resolution in its records. History: 1987 c 291 s 97 Copyright © 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 1 MINNESOTA STATUTES 2011 469.097 469.097 EMPLOYEES; SERVICES; SUPPLIES. Subdivision 1. Employees. An economic development authority may employ an executive director, a chief engineer, other technical experts and agents, and other employees as it may require, and determine their duties, qualifications, and compensation. Subd. 2. Contract for services. The authority may contract for the services of consultants, agents, public accountants, and other persons needed to perform its duties and exercise its powers. Subd. 3. Legal services. The authority may use the services of the city attorney or hire a general counsel for its legal needs. The city attorney or general counsel, as determined by the authority, is its chief legal advisor. Subd. 4. Supplies. The authority may purchase the supplies and materials it needs to carry out sections 469.090 to 469.108. Subd. 5. City purchasing. An authority may use the facilities of its city's purchasing department in connection with construction work and to purchase equipment, supplies, or materials. Subd. 6. City facilities, services. A city may furnish offices, structures and space, and stenographic, clerical, engineering, or other assistance to its authority. Subd. 7. Delegation power. The authority may delegate to one or more of its agents or employees powers or duties as it may deem proper. History: 1987 c 291 s 98 Copyright © 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 1 469.098 CONFLICT OF INTEREST. MINNESOTA STATUTES 2011 469.098 Subdivision 1. Disclosure; criminal penalty. (a) Before taking an action or making a decision which could substantially affect the commissioner's or an employee's financial interests or those of an organization with which the commissioner or an employee is associated, a commissioner or employee of an authority shall: (1) prepare a written statement describing the matter requiring action or decision and the nature of the potential conflict of interest; and (2) submit the statement to the commissioners of the authority. (b) The disclosure under paragraph (a) shall be entered upon the minutes of the authority at its next meeting. The disclosure statement must be submitted no later than one week after the employee or commissioner becomes aware of the potential conflict of interest. However, no disclosure statement is required if the effect on the commissioner or employee of the decision or act will be no greater than on other members of the business, profession, or occupation or if the effect on the organization with which the commissioner or employee is affiliated is indirect, remote, and insubstantial. (c) A potential conflict of interest is present if the commissioner or employee knows or has reason to know that the organization with which the commissioner or employee is affiliated is, or is reasonably likely to become, a participant in a project or development which will be affected by the action or decision. (d) Any individual who knowingly fails to submit a statement required by this subdivision or submits a statement which the individual knows contains false information or omits required information is guilty of a misdemeanor. Subd. 2. Effect of disclosure; criminal penalty. (a) If an employee has a potential conflict of interest, the employee's superior shall immediately assign the matter to another employee who does not have a potential conflict of interest. (b) A commissioner who has a potential conflict of interest shall not attempt to influence an employee in any matter related to the action or decision in question, shall not take part in the action or decision, and shall not be counted toward a quorum during the portion of any meeting of the authority in which the action or decision is to be considered. (c) Any individual who knowingly violates this subdivision is guilty of a misdemeanor. SUbd. 3. Conflicts forbidden; criminal penalty. A commissioner or employee of an authority who knowingly takes part in any manner in making any sale, lease, or contract in the commissioner's or employee's official capacity in which the commissioner or employee has a personal financial interest is guilty of a misdemeanor. Subd. 4. Agent or attorney. For one year after termination of a position as a commissioner or employee of an authority, no former commissioner or former employee of an authority shall appear personally before any court or governmental department or agency as agent or attorney for anyone other than the authority in connection with any proceeding, application, request for ruling or other determination, contract, claim, controversy, charge, accusation, arrest, or other particular matter in which the authority is substantially interested, and with respect to which the commissioner or employee took any action or made any decision as a commissioner or employee of the authority at any time within a period of one year prior to the termination of that position. Copyright CD 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 2 MINNESOTA STATUTES 2011 469.098 Subd. 5. Limitations. With respect to each program established by the authority to provide financial assistance or financing for real property other than rental assistance programs, an employee or commissioner may not receive such financial assistance or financing more than once. Subd. 6. Injunction. The county attorney may seek an injunction in the district court to enforce the provisions of this section. Subd. 7. Exceptions. The exceptions in section 471.88 apply to this section. History: 1987 c 291 s 99; 2008 c 197 s 1 Copyright 0 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 1 MINNESOTA STATUTES 2011 469.099 469.099 DEPOSITORIES; DEFAULT; COLLATERAL. Subdivision 1. Named; bond. Every two years an authority shall name national or state banks within the state as depositories. Before acting as a depository, a named bank shall give the authority a bond approved as to form and surety by the authority. The bond must be conditioned for the safekeeping and prompt repayment of deposits. The amount of bond must be at least equal to the maximum sums expected to be deposited at any one time. Subd. 2. One bank account. An authority may deposit all its money from any source in one bank account. Subd. 3. Default; collateral. When authority funds are deposited by the treasurer in a bonded depository, the treasurer and the surety on the treasurer's official bond are exempt from liability for the loss of the deposits because of the failure, bankruptcy, or other act or default of the depository. However, an authority may accept assignments of collateral from its depository to secure deposits just as assignments of collateral are permitted by law to secure deposits of the authority's city. History: 1987 c 291 s 100 Copyright © 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 1 MINNESOTA STATUTES 2011 469.100 469.100 OBLIGATIONS. Subdivision 1 . Taxes and assessments prohibited. An authority must not levy a tax or special assessment, except as otherwise provided in sections 469.OgOto46q.0Q"pledge the credit of the state or the states municipal corporations or other subdivisions, or incur an obligation enforceable on property not owned by the Subd. 2. Budget to city. Annually, at a time fixed by charter, resolution, or ordinance of the city, an authori shall send its budget 10 its city's oouuoU.The budget oous1include ode1oUed m�uc���of�o��of money 1���� ' expects to need from the ci to do authority business duri the next fiscal year. The needed amount is what is needed iri excess of any expected recei s from other sources. Subd. 3. Fiscal year. The fiscal year of the authority must be the same as the fiscal year of its ci Subd. 4. Report to city. Annually, at a time and in a form fixed by the city council, the authority shall make a written report to the council giving a detailed account of its activities and of its receipts ts and expenditures during the precedi calendar year, together with additional matters and recommendations it deems advisabe for the economic development mf the city. Subd. 5. Audits. The financial statements ofthe authority must be prepared, audited, filed, and published or posted in the manner required for the financial statements of the city that established the authority. The financial statements must permit comparison and reconciliation with the city's accounts and financial reports. The report must be filed with the state auditor by June 30 of each year. The auditor shall review the report and may accept it or, in the public interest, audit the books of the authority. Subd. 6. Compliance examinations. At the request ofthe city or upon the auditors initiative, the state auditor may make a legal compliance examination of the authority for that city. Each authority examined must pay the total cost of the examination, including the salaries paid to the examiners while actually engaged in making the examination. The state auditor may bill monthly or at the completion of the audit. All collections received must be deposited in the general fund. History: 1987 c 291 s/0 art 4 s 88 Copyright CO 2011 by the Office of the Revisor orStatutes, State of Minnesota. All Rights Reserved. 469.181 POWERS. MINNESOTA STATUTES 2011 469.101 Subdivision 1. Establishment. An economic develo may create and define the boundaries o[ economic development districts at any place or places within the city, except that the district boundaries must be contiguous, and may use the powers granted in sections 489.090 to 469.100 to carry out its purposes. First the authority must hold a public hearing on the rnatter. At least ten days before the hearing, the authority shall publish notice of the hearing in a claily newspaper of general circulation in the city. Also, the authority shall find that an economic development district is proper and desirable to establish and develop within the ci Subd. 2. Acquire property. The economic development ' may acquire by lease, purchase, gift, devise, or condemnation proceedings the needed right, title, and interest in property to create economic development districts. It shall pay for the property out of ofrnoney it receives under sections 469.090 to 469.108. It may hold and dispose ofthe property subject to the limits and conditions bn sections 469.OgO1o4G9.)O0. The 1b�1opzopeuyocqu�edhvoondennno1ion or purchase must be in fee simple, absolute. The authority may accept an interest in property acquired in another way subject to any condition of the grantor or donor. The condition must be consistent with the proper use ofthe property under sections 469.090 to 469.108. Property acquired, owned, leased, controlled, used, or occupied by the authori for any o[the purposes of this section is for public governmental and municipal purposes and is exempt from taxation by the state or by its political subdivisions, except to the extent that the property is subject to the sales and use tax under chapter 297A. The exemption applies only while the authority holds property for its own purpose. The exemption is subject to the provisions of section 272.02, subdivision 39. When the property is sold it becornes subject to taxation. Subd. 3. Options. The economic development authority may sign options to purchase, sell, or lease property. Subd. 4. Eminent domain. The economic development authority rnay exercise the power of eminent domain under chapter 117, or under its city's charter to acquire property it is authorized to acquire by condemnation. The authority may acquire in this way property acquired by its owner by eminent dornain or property already devoted to a public use only if its city's council approves. The authority may take possession of property to be condemned after it files a petition in condemnation proceedings describing the property. The authority may abandon the condemnation before taking possession. Subd. 5. Contracts. The economic development authori may make cont acts for the purpose of economic development within the powers given it in sections 469.090 to 469.108. The authority may contract or arrange with the federal government, or any of its departments, with persons, public corporations, the state, or any of its political subdivisions, commissions, or agencies, for separate or joint action, on any matter related to using the authority's powers or performing its duties. The authority may contract to purchase and sell real and personal property. An obligation or expense must not be incurred unless existing appropriations together with the reasonably expected revenue of the authority from other sources are sufficient to discharge the obligation or pay the expense when due. The state and its municipal subdivisions are not liable on the obligations. Subd. 5a. Construction contracts. For all contracts for construction, alteration, repair, or maintenance work, the authority may award contracts to the vendor offering the best value, and "best value" shall be defined and applied as set forth in sections 16C.02" subdivision 4a, and Copyright CD 2011 by the Office ofthe Revisor of Statutes, State of Minnesota. All Rights Reserved. 2 MINNESOTA STATUTES 2011 469.101 16C.28, subdivision 1, paragraph (a), clause (2), and paragraph (c). Alternatively, the authority may award all contracts for construction, alteration, repair, or maintenance work to the lowest responsible bidder, reserving the right to reject any or all bids. Subd. 6. Limited partner. The economic development authority may be a limited partner in a partnership whose purpose is consistent with the authority's purpose. Subd. 7. Rights; easements. The economic development authority may acquire rights or an easement for a term of years or perpetually for development of an economic development district. Subd. 8. Supplies; materials. The economic development authority may buy the supplies and materials it needs to carry out this section. Subd. 9. Receive public property. The economic development authority may accept land, money, or other assistance, whether by gift, loan or otherwise, in any form from the federal or state government, or an agency of either, or a local subdivision of state government to carry out sections 469.090 to 469.108 and to acquire and develop an economic development district and its facilities under this section. Subd. 10. Development district authority. The economic development authority may sell or lease land held by it for economic development in economic development districts. The authority may acquire, sell, or lease single or multiple tracts of land regardless of size, to be developed as a part of the economic development of the district under sections 469.090 to 469.108. Subd. 11. Foreign trade zone. The economic development authority may apply to the board defined in United States Code, title 19, section 81a, for the right to use the powers provided in United States Code, title 19, sections 81a to 81u. If the right is granted, the authority may use the powers. One authority may apply with another authority. Subd. 12. Relation to other redevelopment powers. The economic development authority may exercise powers and duties of a redevelopment agency under sections 469.152 to 469.165, for a purpose in sections 469.001 to 469.047 or 469.090 to 469.108. The authority may also use the powers and duties in sections 469.001 to 469.047 and 469.090 to 469.108 for a purpose in sections 469.152 to 469.165. Subd. 13. Public facilities. The authority may operate and maintain a public parking facility or other public facility to promote development in an economic development district. Subd. 14. Government agent. An economic development authority may cooperate with or act as agent for the federal or the state government, or a state public body, or an agency or instrumentality of a government or a public body to carry out sections 469.090 to 469.108 or any other related federal, state, or local law in the area of economic development district improvement. Subd. 15. Studies, analysis, research. An authority may study and analyze economic development needs in the city, and ways to meet the needs. An authority may study the desirable patterns for land use for economic development and community growth and other factors affecting local economic development in the city and make the result of the studies available to the public and to industry in general. An authority may engage in research and disseminate information on economic development within the city. Subd. 16. Public relations. To further an authorized purpose, an authority may (1) join an official, industrial, commercial, or trade association, or another organization concerned with the purpose, (2) have a reception of officials who may contribute to advancing the city and its Copyright (0 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 3 MINNESOTA STATUTES 2011 469.101 economic development, and (3) carry out other public relations activities to promote the ci and its economic develo . Activities under this subdivision have a public purpose. Subd. 17. Accept public land. An authority may accept conveyances of land from all other public agencies,��ssioos government, properly used by the autho in an economic develo district, to carry out the purposes of seetions 469.090 to 469.108. Subd. 18. Economic development. An authority n� �����w�eoo�� deveknnen1disui�s1odevek`nond' ve1hebsndsinoneoouooiodoveboomco1dUooic110 make it suitable and available for economic uses and purposes. An authority may fill, �, grade, and protect the property and do anything necessary and expedient, after acquiring the property, to rnake it suitable and attractive as a tract for economic development. An authority may lease some or all of its lands or property and may set up local improvement districts in all or part of an econoniic development district. Subd. 19. Loans in anticipation of bonds. After authorizing bonds under sections 469.102 and 469.103, an authority may borrow to provide money immediately required for the bond purpose. The loans must not exceed the amount ofthe bonds. The authority shall by resolution decide the terms ofthe loans. The loans must be evidenced by negotiable notes due in not more than 12 months from the date of the loan payable to the order of the lender or to bearer, to be repaid with interest from the proceeds of the bonds when the bonds are issued and delivered to the bond purchasers. The loan must not be obtained from any commissioner of the authority or from any corporation, association, or other institution of which an authority commissioner is a stockholder or officer. Subd. 20 Use proceeds. The proceeds issued authority . �ro . pro obligations by uuu�uoy/ 469.103 and temporary loans obtained under subdivision 19 may be used to make or purchase loans for economic development facilities that the authority believes will require financing. To make or purchase the loans, the authority may enter into loan and related agreernents, both before and after issui the obligations, with persons, firms, public or private corporations, federal or state agencies, and governmental units under terms and conditions the authority considers appropriate. A governmental unit in the state may apply, contract for, and receive the loans. Chapter 475 does not apply to the loans. Subd. 21. [Repealed, 2000 c 490 art || s 44] Subd. 22. Secondary market. An authority may sell, at private or public sale, at the price or prices determined by the authority, any note, mortgage, lease, sublease, lease purchase, or other instrument or obligation evidencing or securing a loan made for the purpose of economic development, job creation, redevelopment, or community revitalization by a public agency to a business, for-profit or nonprofit organization, or an individual. Subd. 23. Supplying small business capital. Notwithstanding any contrary law, the authority may partici o1evvi1bpub|ioorprivo1eoorporu1ionsoco1hcrenti1ico,vvhosepurposeis1m provide seed or venture capital to small businesses that have facilities located or to be located in the district. For that purpose the authority may use not more than ten percent of available annual net income or $1,000,000 annually, whichever is less, to invest in equities or acquire equity-type investments. These investments can be made directly in eligible corporations or entities or acquired through participation in a public or private seed or venture capital fund. The participation by the authority may not exceed in any year 25 percent of the total amount of Copyright 2011 by the Office ofthe Revisor or Statutes, State �Minnesota. All Rights Reserved. 4 MINNESOTA STATUTES 2011 469.101 funds provided for venture or seed capital purposes by all of the participants. The corporation, entity, or fund shall report in writing each six months to the commissioners of the authority all investments and other action taken by it since the last report. Funds contributed to the corporation or entity must be invested pro rata with each contributor of capital taking proportional risks on each investment. As used in this subdivision, the term "small business" has the meaning given it in section 645.445, subdivision 2. History: 1987 c 291 s 102; 1988 c 580 s 5; 1991 c 295 s 2; 1992 c 363 art 1 s 13; 2000 c 418 art 2 s 7; 2006 c 214 s 20; 2007 c 148 art 3 s 30; 2010 c 389 art 7 s 5 Copyright © 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 1 MINNESOTA STATUTES 2011 469.102 469.102 GENE L OBLIGATION BONDS. Subdivision 1. Authority; procedure. An economic development authority may issue general obligation bonds in the principal omoun1uu{borLzedhv1v/o-tdrds majority vote o[its citys council. The bonds may be issued in anticipation of income from any source. The bonds may be issued: (1) to secure funds needed by the authority to pay for acquired property or (2) for other purposes in sections 469.090 to 469.108. The bonds must be in the amount and form and bear interest at the rate set by the city council. Except as otherwise provided in sections 469.090 �4Og.l�,�iosu�eof�bo���vc�d�o��475.The���w��ou' the bonds is a municipal corporation under chapter 475. Subd. 2. Detail; maturity. The authority with the consent of its citys council shall set the date, denominations, place of payment, form, and details u[the bonds. The bonds must mature serially. The first instalirnent is due in not more than three years and the last in not more than 30 years from the date of issuance. Subd. 3. Signatures; coupons; liability. The bonds must be signed by the president ofthe authority, be attested by its secretary, and be countersigned by its treasurer; the signatures may be facsimile signatures. The interest coupons if any, must be attached to the bonds. The coupons must be executed and authenticated by the printed, engrossed, or lithographed facsimile signature of the authority's president and secretary. The bonds do not impose any personal liability on u member o[the authority. Subd. 4. Pledge. The bonds must be secured by the pledge of the full faith, credit, and resources of the issuing authority's city. The authority may piedge the full faith, credit, and resources of the city only if the city specifically authorizes the authority to do so. The city council must first decide whether the issuance ofthe bonds by the authority is proper in each case and if so, the amount of bonds to issue. The city council shall give specific consent in an ordinance to the pledge of the city's full faith, credit, and resources. The authority shall pay the principal amount of the bonds and the interest on it from taxes levied under this section to make the payment or from authority income frorn any source. Subd. 5. Tax levy. An authority that issues bonds under this section, shall, before issuing thern, levy a tax for each year on the taxable property in the authoritys city. The tax must be for at least five percent more than the amount required to pay the principal and interest on the bonds as the principal and interest mature. The tax must be levied annually until the principal and interest are paid in full. After the bonds have been delivered to the purchasers, the tax must not be repealed until the debt is paid. After the bonds are issued, the authority need not take any more action to authorize extending, assessing, and collecting the tax. On or before September 15, the authority's secretary shall send a certified copy of the levy to the county auditor, together with full information on the bonds for which the tax is levied. The county auditor shall extend and assess the levied tax annually until the principal and interest are paid in full. The authority shall transfer the surplus from the excess levy in this section to a sinking fund after the principal and interest for which the tax was levied and collected is paid. The authority may direct its secretary to send a certificate to the county auditor before September 15 in a year. The certificate must state how much available income, including the amount in the sinking fund, the authority will use to pay principal or interest or both on each specified issue of the authority's bonds. The auditor shall then reduce the bond levy for that year by that arnount. The authority shall then set aside the certified amount and may not use it for any purpose except to pay the principal and interest on the bonds. Copyright 0 2011 by the Office of the Revisor orStatutes, State o/Minnesota. All Rights Reserved. 2 MINNESOTA STATUTES 2011 469.102 The taxes in this section shall be collected and sent to the authority by the county treasurer as provided in chapter 276. The taxes must be used only to pay the bonds when due. Subd. 6. Authorized securities. Bonds legally issued under this chapter are authorized securities under section 50.14. A savings bank, trust company, or insurance company may invest in them. A public or municipal corporation may invest its sinking funds in them. The bonds may be pledged by a bank or trust company as security for the deposit of public money in place of a surety bond. The authority's bonds are instrumentalities of a public governmental agency. History: 1987 c 291 s 103; 1994 c 416 art 1 s 49; 1995 c 256 s 9; 2002 c 390 s 8 Copyright © 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 1 MINNESOTA STATUTES 2011 469.103 469.103 REVENUE BONDS; PLEDGE; COVENANTS. Subdivision 1. Authority. An economic development authority may decide by resolution to issue its revenue bonds either at one time or in series from time to time. The revenue bonds may be issued to provide money to pay to acquire land needed to operate the authority, to purchase or construct facilities, to purchase, construct, install, or furnish capital equipment to operate a facility for economic development of any kind within the city, or to pay to extend, enlarge, or improve a project under its control. The issued bonds may include the amount the authority considers necessary to establish an initial reserve to pay principal and interest on the bonds. The authority shall state in a resolution how the bonds and their attached interest coupons are to be executed. Subd. 2. Form. The bonds of each series issued by the authority under this section shall bear interest at a rate or rates, shall mature at the time or times within 30 years from the date of issuance, and shall be in the form, whether payable to bearer, registrable as to principal, or fully registrable, as determined by the authority. Section 469.102, subdivision 6, applies to all bonds issued under this section, and the bonds and their coupons, if any, when payable to bearer, shall be negotiable instruments. Subd. 3, Sale. The sale of revenue bonds issued by the authority shall be at public or private sale. The bonds may be sold in the manner and for the price that the authority determines to be for the best interest of the authority. The bonds may be made callable, and if so issued, may be refunded. Subd. 4. Agreements. The authority may by resolution make an agreement or covenant with the bondholders or their trustee. The authority must first decide that the agreement or covenant is needed or desirable to do what the authority may do under this section and to assure that the revenue bonds are marketable and promptly paid. Subd. 5. Revenue pledge. In issuing general obligation or revenue bonds, the authority may secure the payment of the principal and the interest on the bonds by a pledge of and lien on authority revenue. The revenue must come from the facility to be acquired, constructed, or improved with the bond proceeds or from other facilities named in the bond-authorizing resolutions. The authority also may secure the payment with its promise to impose, maintain, and collect enough rentals, rates, and charges, for the use and occupancy of the facilities and for services furnished in connection with the use and occupancy, to pay its current expenses to operate and maintain the named facilities, and to produce and deposit sufficient net revenue in a special fund to meet the interest and principal requirements of the bonds, and to collect and keep any more money required by the resolutions. The authority shall decide what constitutes "current expense" under this subdivision based on what is normal and reasonable under generally accepted accounting principles. Revenues pledged by the authority must not be used or pledged for any other authority purpose or to pay any other bonds issued under this section or under section 469.102, unless the other use or pledge is specifically authorized in the bond-authorizing resolutions. Subd. 6. Not city debt. Revenue bonds issued under this section are not a debt of the authority's city nor a pledge of that city's full faith and credit. The bonds are payable only from project revenue as described in this section. A revenue bond must contain on its face a statement to the effect that the economic development authority and its city do not have to pay the bond or the interest on it except from revenue and that the faith, credit, and taxing power of the city are not pledged to pay the principal of or the interest on the bond. Copyright © 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 2 MINNESOTA STATUTES 2011 469.103 Subd. 7. Not applicable. Sections 469.153, subdivision 2, paragraph (e), and 469.154, subdivisions 3, 4, and 5 do not apply to revenue bonds issued under this section and sections 469.152 to 469.165 if the interest on the revenue bonds is subject to both state and federal income tax or if the revenue bond proceeds are not loaned by the authority to a private person. Subd. 8. Tax increment bonds. Obligations secured or payable from tax increment revenues and issued pursuant to this section or section 469.102 are subject to the provisions of section 469.178. History: 1987 c 291 s 104, 2006 c 259 art 9 s Copyright © 2011 by the Office of the Revisor of Statutes. State of Minnesota. All Rights Reserved. 1 MINNESOTA STATUTES 2011 469.104 469.104 SECTIONS THAT APPLY IF FEDERAL LIMIT APPLIES. Sections 474A.01 to 474A.21 apply to obligations issued under sections 469.090 to 469.108 that are limited by federal tax law as defined in section 474A.02, subdivision 8. History: 1987 c 291 s 105; 2005 c 10 art 1 s 71 Copyright CD 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 1 469.105 SALE OF PROPERTY. MINNESOTA STATUTES 2011 469.105 Subdivision 1. Power. An economic development authority may sell and convey property owned by it within the city or an economic development district if it determines that the sale and conveyance are in the best interests of the city or district and its people, and that the transaction furthers its general plan of economic development. This section is not limited by other law on powers of economic development authorities. Subd. 2. Notice; hearing. An authority shall hold a hearing on the sale. At the hearing a taxpayer may testify for or against the sale. At least ten, but not more than 20, days before the hearing the authority shall publish notice of the hearing on the proposed sale in a newspaper. The newspaper must be published and have general circulation in the authority's county and city. The notice must describe the property to be sold and state the time and place of the hearing. The notice must also state that the public may see the terms and conditions of the sale at the authority's office and that at the hearing the authority will meet to decide if the sale is advisable. Subd. 3. Decision; appeal. The authority shall make its findings and decision on whether the sale is advisable and enter its decision on its records within 30 days of the hearing. A taxpayer may appeal the decision by filing a notice of appeal with the district court in the city or economic development district's county and serving the notice on the secretary of the authority, within 20 days after the decision is entered. The only ground for appeal is that the action of the authority was arbitrary, capricious, or contrary to law. Subd. 4. Terms. The terms and conditions of sale of the property must include the use that the bidder will be allowed to make of it. The authority may require the purchaser to file security to assure that the property will be given that use. In deciding the sale terms and conditions the authority may consider the nature of the proposed use and the relation of the use to the improvement of the authority's city and the business and the facilities of the authority in general. The sale must be made on the authority's terms and conditions. The authority may publish an advertisement for bids on the property at the same time and in the same manner as the notice of hearing required in this section. The authority may award the sale to the bid considered by it to be most favorable considering the price and the specified intended use. The authority may also sell the property at private sale at a negotiated price if after its hearing the authority considers that sale to be in the public interest and to further the aims and purposes of sections 469.090 to 469.108. Subd. 5. One deadline. Within one year from the date of purchase, the purchaser shall devote the property to its intended use or begin work on the improvements to the property to devote it to that use. If the purchaser fails to do so, the authority may cancel the sale and title to the property shall return to it. The authority may extend the time to comply with a condition if the purchaser has good cause. The terms of sale may contain other provisions that the authority considers necessary and proper to protect the public interest. A purchaser must not transfer title to the property within one year of purchase without the consent of the authority. Subd. 6. Covenant running with the land. A sale made under this section must incorporate in the deed as a covenant running with the land the conditions of sections 469.090 to 469.108 relating to the use of the land. If the covenant is violated the authority may declare a breach of the covenant and seek a judicial decree from the district court declaring a forfeiture and a cancellation of the deed. Subd. 7. Plans; specifications. A conveyance must not be made until the purchaser gives the authority plans and specifications to develop the property sold. The authority must approve Copyright © 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 7 MINNESOTA STATUTES 2011 469.105 the plans and specifications in writing. The authority may require preparation of final plans and specifications before the hearing on the sale. History: 1987 c 291 s 106 Copyright 0 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 1 MINNESOTA STATUTES 2011 469.106 469.106 ADVANCES BY AUTHORITY. An authority may advance its general fund money or its credit, or both, without interest, for the objects and purposes of sections 469.090 to 469.108. The advances must be repaid from the sale or lease, or both, of developed or redeveloped lands. If the money advanced for the development or redevelopment was obtained from the sale of the authority's general obligation bonds, then the advances must have not less than the average annual interest rate that is on the authority's general obligation bonds that are outstanding at the time the advances are made. The authority may advance repaid money for more objects and purposes of sections 469.090 to 469.108 subject to repayment in the same manner. The authority must still use rentals of lands acquired with advanced money to collect and maintain reserves to secure the payment of principal and interest on revenue bonds issued to finance economic development facilities, if the rentals have been pledged for that purpose under section 469.103. Advances made to acquire lands and to construct facilities for recreation purposes if authorized by law need not be reimbursed under this section. Sections 469.090 to 469.108 do not exempt lands leased from the authority to a private person, or entity from assessments or taxes against the leased property while the lessee is liable for the assessments or taxes under the lease. History: 1987 c 291 s 107 Copyright © 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 1 MINNESOTA STATUTES 2011 469.107 469.107 CITY MAY LEVY TAXES FOR ECONOMIC DEVELOPMENT AUTHORITY. Subdivision 1. City tax levy. A city may, at the request of the authority, levy a tax in any year for the benefit of the authority. The tax must be not more than 0.01813 percent of taxable market value. The amount levied must be paid by the city treasurer to the treasurer of the authority, to be spent by the authority. Subd. 2. Reverse referendum. A city may increase its levy for economic development authority purposes under subdivision 1 in the following way. Its city council must first pass a resolution stating the proposed amount of levy increase. The city must then publish the resolution together with a notice of public hearing on the resolution for two successive weeks in its official newspaper or if none exists in a newspaper of general circulation in the city. The hearing must be held two to four weeks after the first publication. After the hearing, the city council may decide to take no action or may adopt a resolution authorizing the proposed increase or a lesser increase. A resolution authorizing an increase must be published in the city's official newspaper or if none exists in a newspaper of general circulation in the city. The resolution is not effective if a petition requesting a referendum on the resolution is filed with the city clerk within 30 days of publication of the resolution. The petition must be signed by voters equaling five percent of the votes cast in the city in the last general election. The election must be held at a general or special election. Notice of the election must be given in the manner required by law. The notice must state the purpose and amount of the levy. History: 1987 c 291 s 108; 1988 c 719 art 5s 84; 1989 c 277 art 4 s 64; 1992 c 511 art 5 s 13 Copyright © 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 1 History: 1987 c 291 s 109 MINNESOTA STATUTES 2011 469.108 469.108 SPECIAL LAW; OPTIONAL USE. A city that has established a port authority by special law or that has been granted the power to establish a port authority by special law, or a city whose city council has been authorized to exercise the powers of a port authority by special law may elect to use the powers granted in sections 469.090 to 469.108. If the election is made, the powers and duties set forth in sections 469.090 to 469.108 supersede the special law and the special law must not be used after the election. The use of powers under sections 469.090 to 469.108 by a city described in this section does not impair the security of any obligations issued or contracts or agreements executed under the special law. Control, authority, and operation of any project may be transferred to the authority in the manner provided in section 469.094. Copyright © 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 1 469.1081 LIABLE IN CONT CT OR TORT. MINNESOTA STATUTES 2011 469.1081 History: 1991 c 342 s 13 Subject to the provisions of chapter 466, an authority shall be liable in contract or in tort in the same manner as a private corporation. The commissioners of an authority shall not be personally liable as such on its contracts, or for torts, not committed or directly authorized by them. The property or funds of an authority shall not be subject to attachment, or to levy and sale on execution, but, if an authority refuses to pay a judgment entered against it in any court of competent jurisdiction, the district court for the county in which the authority is situated may, by writ of mandamus, direct the treasurer of the authority to pay the judgment from any unencumbered funds available for that purpose. Copyright K__): 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. 1 MINNESOTA STATUTES 2011 469.1002 469.1082 COUNTY ECONOMIC DEVELOPMENT AUTHORITY OR HOUSING AND REDEVELOPMENT AUTHORITY WITH ECONOMIC DEVELOPMENT POWERS. Subdivision 1. Authority to create. A county may form a county economic development authority or grant a housing and redevelopment authority the powers specified in subdivision 4, clause (Z), if it receives o recommendation to do so from a committee formed under subdivision 2. An economic development authority established under this section has all the powers and rights o[aoauthority under sections 469.090 to 469.1081, except the autho granted under section 469.094 if so limited under subdivision 4. This section is in addition to any other authority to create a county economic development authority or service provider. Nothing in this section shall alter or i air any grant of powers, or any other authori granted toocommunity development agency, a county housing and redevelopment authority, or any county as provided in section 383D.41; Laws 1974, chapter 473, as amended; or Laws |98O, chapter 402 amended. Any county that has granted economic development powers to a community development agency or a county housing and redevelopment authority under any of these provisions may not form a county economic development authority or grant a housing and redevelopment authority the powers specified in subdivision 4, clause (2). Subd. 2. Local committees. Upon notice to all local government units and development agencies within the county, a county may adopt a resolution to create a comrnittee to recommend options for a county economic development service provider. The committee shall consist of no fewer than l} and no more than 15 members appointed by the county board. At least one city official, at least one housing and redevelopment official, and at least one township official from the county to be served by the county economic service provider shall be included on the committee. Members may also represent school districts, political subdivisions that currently provide services under sections 469.001 to 469.047 and 469.090 to 469.1081, nonprofit or for-profit housing and economic development organizations, business, and labor organizations located within the county. Political subdivision representatives must be selected by their local governments and must constitute at least 50 percent of the total committee membership. The county may appoint no more than two county commissioners. The committee shall select a chair at its initial meeting. Subd. 3. Committee report. The cornrnittee shall issue its report within 90 days of its initial meeting. The committee may request one 60-day extension from the county board. The report must contain the committee's recommendation for the preferred organizational option for a county economic development service provider, including the distance from the boundary ofthe city that may be controlled by each affected city in subdivision 5. The distance may not exceed two miles from the city boundary. The report rnust contain written findings on issues considered by the committee including, but not limited to, the following: (|) identification ofthe current level of economic development, housing, and community development programs and services provided by existing agencies, any existing gaps in programs and services, and the capaci and ability ofthose agencies to expand their activities; and (2) the recommended organizational option for providing needed economic development, housing, and community development services in the most efficient, effective manner. Subd. 4. Organizational options. The committee may only recornmend: Copyright iD 2011 by the Office of the Revisor orStatutes, State orMinnesota. All Rights Reserved. 7 MINNESOTA STATUTES 2011 469.1082 (1) establishment of a county economic development authority to operate under sections 469.090 to 469.1081, except that the county shall not have the powers of section 469.094 without the consent of an existing county housing and redevelopment authority operating within that county. For the purposes of a county economic development authority's operation, the county is considered to be the city and the county board is considered to be the city council; (2) requiring an existing county housing and redevelopment authority or multicounty housing and redevelopment authority to operate under sections 469.090 to 469.1081; (3) that the county pursue special legislation; or (4) no change in the existing structure. Subd. 5. Area of operation. The area of operation of a county economic development service provider created under this section shall include all cities and townships within a county that have adopted resolutions electing to participate. A city or township may adopt a resolution electing to withdraw participation. The withdrawal election may be made every fifth year following adoption of the resolution electing participation. The withdrawal election is effective on the anniversary date of the original resolution provided notice is given to the county economic development authority not less than 90 nor more than 180 days prior to that anniversary date. The city or township electing to withdraw retains any rights, obligations, and liabilities it obtained or incurred during its participation. Any city or township within the county shall have the option to adopt a resolution to prohibit the county economic development service provider created under this section from operating within its boundaries and (1) within an agreed-upon urban service area, or (2) within the distance approved in the committee report referenced in subdivision 3. If a city or township prohibits a county economic development service provider created under this section from operating within its boundaries, the city's or township's property taxpayers shall not be subject to the property tax levied for the county economic development service provider. Subd. 6. City economic development authorities. If a county economic development service provider has been established under this section, existing city economic development authorities shall continue to function and operate under sections 469.090 to 469.1081. Additional city economic development authorities may be created within the area of operation of the county economic development service provider created under this section without the explicit concurrence of the county economic development service provider. Subd. 7. Continuation of existing county and multicounty housing and redevelopment authorities. Existing county and multicounty housing and redevelopment authorities shall continue to function and operate under the provisions of sections 469.001 to 469.047. Subd. 8. Nine boards authorized. In addition to the board options under section 469.095, a county economic development authority may have a nine-member board. If the authority has a nine-member board, at least two members must be county commissioners appointed by the county board. Of .the county economic development authority board members initially appointed, two each shall be appointed for terms of one, two, or three years, respectively, and one each for terms of four, five, or six years, respectively. Thereafter, all authority members shall be appointed for six-year terms. History: 2000 c 484 art 1 s 4; 1Sp2005 c 1 art 4 s 106, 1Sp2005 c 3 art 7 s 10; 2010 c 347 art 1 s 25 Copyright © 2011 by the Office of the Revisor of Statutes, State of Minnesota. All Rights Reserved. City of Apple Valley TO: President and Board Members of the Economic Development Authority, Executive Director FROM: Margaret Dykes, Associate City Planner MEETING DATE: June 14, 2012 SUBJECT: Business Subsidy Agreement with Stream International, Inc. The proposed project will create 300 permanent call center jobs. 6 DA- 7 MEMO Community Development Department Attached for your consideration is a Business Subsidy Agreement that will authorize funding resources for substantial renovation and construction for a 300-person call center that will be located at the Time Square Shopping Center, generally located southwest of the intersection of Cedar Avenue and 149 Street W. Background Stream International, Inc., a global provider of sales, customer service and technical support services for Fortune 1000 companies, is seeking to relocate its 40-person headquarters from Wellesley, MA to the Wings Financial building, and create a 300-person call center in the Time Square Shopping Center. Because of the high costs of relocating the corporate headquarters and the creating a call center, Stream International, Inc. ("Stream") requested assistance from both the State of Minnesota and the City of Apple Valley. The request to the State of Minnesota is discussed in a staff memo to the City Council regarding the application to the Minnesota Investment Fund program dated June 14, 2012. Project Description The owner of Time Square Shopping Center has negotiated with Stream International, Inc. to locate an approximately 19,000 sq. ft. call center in the south building located at 7530-7540 — 149 Street W. The 43-year old center has seen high vacancies and tenant turnovers, and the call center will help revitalize an aging center. Stream International, Inc. is requesting $1,350,000 in assistance from the EDA to help with improvements for the call center. The requested EDA funds will be used for expansion of the existing parking lot, interior demolition, window and lighting improvements, partition walls, heating, cooling and ventilation improvements, screening for the generator, upgrades or relocations of electrical and data/communications systems, and permits. Stream will also contribute additional resources of approximately $1 million for the tenant improvements, and call center equipment and furnishings. The attached graphic illustrates some of the improvements that will be made to the Time Square site. Also attached are estimated sources and uses for the proposed project. Funding Source Description In 2010, the Legislature approved changes to Tax Increment Financing (TIF) law that allowed the broad use of tax increment from any TIF district to assist in the construction or rehabilitation of private development. The purpose of this legislation was to help private development begin construction on projects that would create jobs, both temporary construction jobs and permanent jobs. Construction on any project receiving funds from this program must begin no later than June 30, 2012, and all expenditures must be made by December 30, 2012. The funds do not require a match from the recipient. Staff Analysis Staff is recommending support of Stream proposal for the following reasons: 1. The building improvements will modernize an outdated building, and make it ready for the 300-person call center. 2. Stream International, Inc. cannot make the project economically feasible without assistance. 3. The project will diversify the existing jobs base in Apple Valley and locate jobs in the Downtown core. 4. The project will encourage utilization of the Cedar Avenue Bus Rapid Transit line due to use by Stream employees, with approximately 20% employees estimated to use the transit system. 5. The project is ready to begin and would meet the June 30 start-date deadline. Attached to this memo is the Business Subsidy Agreement drafted by the EDA Attorney. As the agreement is finalized, non-substantive changes may occur. These changes must be approved by the Executive Director and the EDA Attorney. Recommended Action: 1. Open the public hearing, receive comments and close the hearing. 2. If the EDA concurs, staff is recommending the EDA adopt the draft resolution approving the Business Subsidy Agreement between the Apple Valley Economic Development Authority and Stream International, Inc to provide up to $1,350,000 for substantial renovation and construction costs for a 300-person call center at Time Square Shopping Center. 2 APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. EDA-12- A RESOLUTION APPROVING A BUSINESS SUBSIDY AGREEMENT BETWEEN THE APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY AND STREAM INTERNATIONAL, INC. WHEREAS, the Apple Valley Economic Development Authority (the "EDA") and the City of Apple Valley, Minnesota (the "City") have adopted a Master Development Program and established the Master Development District and created Tax Increment Financing Districts within the Master Development District and adopted Tax Increment Financing Plans with respect to these Tax Increment Districts pursuant to Chapter 469 of the Minnesota Statutes in an effort to encourage development and redevelopment of certain designated areas within the City, which program, plans and districts have been amended from time to time; and WHEREAS, the City has previously established Tax Increment Financing District No. 13 (the "TIF District") and adopted the tax increment financing plan therefor (the "TIF Plan"); and WHEREAS, on December 20, 2011, the City Council approved a spending plan for the TIF District in accordance with Minnesota Statutes, Section 469.176 Subd. 4m (the "Spending Plan") to utilize existing tax increment revenues from the TIF District in order to stimulate construction or rehabilitation of private development in a way that will also create or retain jobs; and WHEREAS, Stream International, Inc. (the "Developer") has requested assistance from the EDA to support building renovations and construction at property identified as Lots 1, 3, and 4, Block 1, Levine Subdivision No. 2, (7525-148 St. W., and 7530 and 7540-149 St. W.); and WHEREAS, a Development Agreement between the EDA and the Developer has been prepared describing a project and site improvements consistent with the Spending Plan; and WHEREAS, the EDA reviewed the Developer's request and the Development Agreement at a public hearing held June 14, 2012; and WHEREAS, the EDA deems it to be in the best interest of the EDA and City to utilize a portion of the revenues from Tax Increment Financing District No. 13 to provide assistance to the Developer for substantial building improvements listed in the Development Agreement, which include interior demolition, lighting and window improvements, partition walls, heating, cooling, and ventilation improvements, a generator, a screen wall for a generator, upgrades or relations of electrical and data/communications equipment systems, parking lot expansion, permits, and fees. NOW, THEREFORE, be it resolved by the Commissioners of the EDA that the Development Agreement is hereby approved and the President and Secretary are authorized to sign the same. DRAFT ATTEST: ADOPTED this 14 day of June, 2012. Pamela J. Gackstetter, Secretary Larry S. Severson, President DAFT CERTIFICATE I, Pamela Gackstetter, Apple Valley Economic Development Authority Secretary, hereby certify that the forgoing is a true and correct copy of a resolution adopted by the Apple Valley Economic Development Authority on June 14, 2012, the original of which is in my possession, dated this day of , 2012 . Pamela J. Gackstetter, Secretary BUSINESS SUBSIDY AGREEMENT THIS BUSINESS SUBSIDY AGREEMENT ("Agreement") is made this day of , 2012, by and between the Apple Valley Economic Development Authority, a public body corporate and a political subdivision of the State of Minnesota, and Stream International, Inc., a Delaware corporation. WHEREAS, Stream International, Inc. desires to create and maintain jobs in the City of Apple Valley by relocating its headquarters and opening a call center within the City' s jurisdiction; and accommodate Stream International, Inc.'s business; and WHEREAS, improvements to the existing retail building located at 7564-7528 149 Street, Apple Valley, Minnesota ("Time Square Premises") are necessary to establish offices to WHEREAS, Stream International, Inc. cannot make the project, as hereinafter defined, economically feasible without a subsidy; and WHEREAS, pursuant to the terms of this Agreement, the Apple Valley Economic Development Authority desires to subsidize the cost of the improvements on behalf of Stream International, Inc. in an amount of up to $1,350,000.00 using pooled tax increment financing dollars from the tax increment financing district identified in Section 2.3 of this Agreement; and NOW, THEREFORE, in consideration of the mutual undertakings, the Apple Valley Economic Development Authority and Stream International, Inc. agree as follows: [Remainder of page intentionally blank] ARTICLE 1 Definitions Section 1.1. Definitions. In addition to the defined terms set forth throughout this Agreement, the following terms are defined as follows: "Act" means the Minnesota Business Subsidy Act, set forth in Minnesota Statutes Section 116J.993-.995 and any successor statute. "Benefit Date" means the earliest date of either: (1) when the Project Improvements are complete or (2) when a certificate of occupancy is issued to the Tenant for the Time Square Premises. The "Benefit Date" shall be certified by the EDA and the Tenant in substantially the form set forth at Exhibit A. "City" means the City of Apple Valley, a Minnesota municipal corporation. "Disbursement Date" means the date of the disbursement of the Loan by the EDA to the Tenant. "EDA" means the Apple Valley Economic Development Authority, a public body corporate and a political subdivision of the State of Minnesota. "Landlord 1" means Time Square Shopping Center II, LLP, a Minnesota limited liability partnership and fee owner of retail/office space located at 7564-7520 149th Street, Apple Valley, Minnesota and legally described as Lots 3 and 4, Block 1, Levine Subdivision No. 2, Dakota County, Minnesota. "Landlord 2" means Wings Financial Federal Credit Union, a non-profit, member owned credit union headquartered in Apple Valley, Minnesota and fee owner of an office building located at 14985 Glazier Avenue, Apple Valley, Minnesota and legally described as Lot 1, Block 7, Apple Valley Commercial Addition, Dakota County, Minnesota. "Leased Premises" means the Time Square Premises and the Wings Premises, collectively. "Loan" means the funds disbursed by the EDA to Tenant for reimbursement of the actual costs of the Project in an amount of up to One Million Three Hundred Fifty Thousand and No/100 Dollars ($1,350,000.00). "Note" means the Promissory Note evidencing the Loan entered into by the Tenant in favor of the EDA, in substantially the form set forth in Exhibit B. "Parties" means the EDA and the Tenant, collectively. "Project" means the renovations of the Time Square Premises to accommodate the use of the retail building as a call center to support over 210 jobs. "Project Improvements" means the Tenant's proposed improvements to the Time Square Premises and abutting property. "Project Expenses" means the actual documented costs, expenses and fees incurred by Tenant for the Project Improvements. "Tenant" means Stream International, Inc., a Delaware corporation. "Time Square Premises" means approximately 19,589 square feet of retail/office space owned in fee by Landlord 1, located at 7564-7528 149 Street, Apple Valley, Minnesota. "Wings Premises" means the office space leased by the Tenant from Landlord 2. ARTICLE 2 Business Subsidy Section 2.1. Business Subsidy Requirements. The provisions of this Article establish the requirements set forth in the Act (Minnesota Statutes Sections 1161.993-.995 and any successor statute). Section 2.2. Incorporation of the Act. Tenant acknowledges and agrees that the provisions of the Act apply to this Agreement and are incorporated herein by reference. Section 2.3. Subsidy. The subsidy consists of the Loan provided to the Tenant. The funds for the Loan shall consist of pooled dollars from Tax Increment District 13. Section 2.4. Public Purposes. The public purposes and goals of the subsidy are to increase the tax base of the City by increasing the value of the real property upon which the Time Square Premises is located, to create jobs with a livable wage and to enhance the character of the City's business districts. Section 2.5. Goals. The measurable, specific and tangible goals for the subsidy are set forth as follows (collectively referred to as "Goals"): (a) "Jobs" Defined. In this section and hereinafter, "Jobs" includes new permanent, full-time equivalent jobs that pay a wage of at least $9.50 per hour, exclusive of benefits. (b) Job Creation. Within one year of the Benefit Date, Tenant shall create One Hundred Fifty (150) Jobs at the Time Square Premises and Forty (40) Jobs at the Wings Premises. By no later than three years following the Benefit Date, Tenant shall create a total of Two Hundred Fifty (250) Jobs at the Leased Premises. (c) Job Retention. Tenant shall maintain a total of Two Hundred Fifty (250) Jobs at the Leased Premises from the third anniversary of the Benefit Date to the seventh anniversary of the Benefit Date. 3 Section 2.6. Loan Repayment. If the Goals as set forth in Section 2.5 are not satisfied, the Tenant shall make payment to the EDA as required in Section 4.1. Section 2.7. Necessity of Subsidy. The subsidy is needed because the Tenant cannot make the Project economically feasible without the Loan. Section 2.8. Parent Company. The name and address of Tenant's parent corporation is Stream Global Services, Inc., a Delaware corporation with a registered address of 1209 Orange Street, Wilmington, DE 19801. Section 2.9. Reporting Requirements. (a) Reporting Time Period. The Tenant shall provide to the EDA information regarding the Goals for seven (7) years after the Benefit Date. (b) Reporting Form. Tenant shall make its report on forms developed by the Minnesota Department of Employment and Economic Development, pursuant to Minn. Stat. § 116J.994, subd. 7. (c) Reporting Documentation. The report must include: (1) (2) ( (4) ( (6) ( ( ( (10) The type, public purpose, and amount of subsidies; The hourly wage of each job created with separate bands of wages; The sum of the hourly wages and cost of health insurance provided by the Tenant with separate bands of wages; The date the job and wage goals will be reached; A statement of goals identified in the subsidy agreement and an update on achievement of those goals; The location of the Tenant prior to receiving the subsidy; The number of employees who ceased to be employed by the Tenant when the Tenant relocated to become eligible for the subsidy; The name and address of the parent corporation of the Tenant, if any; A list of all financial assistance by all grantors for the project; and Any other information the EDA may request. (d) Submission Deadline and Penalty. The report must be submitted to the EDA no later than March 1 of each year for the previous year. If the report is not submitted by March 1, the EDA shall mail a warning to the Tenant within one week of the required submission date. If, after 14 days of the postmark date of the warning, the Tenant fails to submit its report to the EDA, the Tenant must pay to the EDA a penalty of $100.00 for each subsequent day until the report is submitted. The maximum penalty shall not exceed $1,000.00. ARTICLE 3 Financing for Project Improvements Section 3.1. Use of Pooled TIF Funds. The Parties acknowledge that the EDA's authority to disburse pooled TIF funds to the Tenant arises out of Minn. Stat. § 469.176, subd. 4m (2012). 4 Accordingly, the Tenant shall commence construction of the Project Improvements before July 1, 2012 and shall satisfy all of the conditions set forth in Section 4.2 of this Agreement by November 16, 2012 in order for the EDA to disburse the Loan to the Tenant prior to December 31, 2012. Section 3.2. Permitted Costs. The EDA agrees to reimburse Tenant for the following costs, expenses and fees actually incurred by Tenant to improve the Time Square Premises and abutting real property: permits, interior demolition, lighting improvements, window improvements, partition walls, heating, cooling and ventilation improvements, generator, a screen wall for a generator, upgrades or relocations of electrical and data/communications systems, parking lot expansion and similar improvements, as well as architectural fees, contractor fees and labor costs. Section 3.3. Prohibited Costs. Notwithstanding any provision in this Agreement to the contrary, the subsidy shall not be used for any improvement that will become fixtures constituting part of the real estate or for legal fees, broker fees, or similar costs. Section 3.4. Sworn Construction Statement. The Project Improvements shall be completed in accordance with a sworn construction statement set forth at Exhibit C, which is incorporated in to this Agreement by reference. Section 4.1. Basic Loan Terms. The principal amount of the Loan shall be equal to the Project Expenses verified and approved by the EDA or $1,350,000.00, whichever is less. The Loan shall bear interest at a rate of six percent (6%) per annum and interest shall commence to accrue as of the Disbursement Date and continue until the Lo an is satisfied or paid in full. The Loan shall be i evidenced by the Note, the terms of which are incorporated fully herein by reference. Any and all outstanding principal and interest is due and payable seven (7) years after the Disbursement Date. Section 4.2. Disbursement of Loan. ARTICLE 4 Loan Terms and Conditions (a) The Loan shall be disbursed in one payment to Tenant after the following conditions are met: (1) Construction for the Project commences before July 1, 2012, as required by Minn. Stat. § 469.176, subd. 4m (2012); (2) The Project Improvements are complete; ( The Tenant occupies the Time Square Premises; (4) The Tenant has delivered and the EDA has approved the receipts, invoices, etc. proving the Project Expenses; ( The Tenant has executed and delivered to EDA the Note. (b) Disbursement of the Loan shall be performed by a title insurance company selected by EDA in EDA's sole discretion, in which case Tenant agrees to execute a disbursing agreement with EDA and the title company and to comply with any and all additional requirements of the title company in connection with disbursement of the Loan. Section 5.1. Security Interest. The Tenant hereby grants to the EDA a first priority security interest in the Collateral, which is defined in Section 5.2 of this Agreement, in an amount equal to the Loan, and the Tenant shall defend the EDA against any adverse claims to the Collateral. Section 5.2. Collateral. The term "Collateral" includes all Tenant improvements to the Time Square Premises including without limitation all building materials, equipment and fixtures, whether now existing or hereafter acquired, as specifically defined in Exhibit D attached hereto and incorporated herein by reference. Section 5.3. Ownership of Collateral. The Tenant hereby represents and warrants to the EDA that Tenant shall own the Collateral free and clear of any other ownership or security interest, other than the EDA's security interest granted in this section. Section 5.4. Execution of Security Agreement. The Tenant shall execute and deliver to the EDA a Security Agreement in substantially the form of Exhibit E. Section 5.5. Financing Statement. The Tenant hereby authorizes the EDA to file a UCC-1 Financing Statement in order to perfect and give notice of the security interest and lien granted in this Agreement. ARTICLE 5 Security Agreement ARTICLE 6 Loan Forgiveness Section 6.1. Loan Forgiveness Terms and Schedule. If Tenant meets the Goals set forth in Section 2.5 of this Agreement, provides sworn statement(s) evidencing the same on each anniversary of the Disbursement Date and no event of default exists as set forth in Section 8.1 of this Agreement, the EDA shall forgive portions of the subsidy loan as follows: (a) Within thirty (30) days following each of the first, second, third, fourth and fifth anniversaries of the Disbursement Date, EDA shall forgive One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) of the principal balance of the Loan. (b) Within thirty (30) days following the seventh anniversary of the Disbursement Date, the EDA shall forgive the entire outstanding principal balance of the Loan. 6 Section 7.1. Additional Reporting Requirements. In addition to the reporting requirements set forth in Section 2.9 of this Agreement, Tenant shall provide to the EDA information for incorporation into any progress reports, as required by any state or local government political agency, to monitor project implementation for compliance with state and local guidelines. Section 7.2. Nondiscrimination. The provisions of Minnesota Statutes Section 181.59, which relates to civil rights and discrimination, shall be considered a part of this Agreement as though fully set forth herein, and the Tenant shall comply with each such provision throughout the term of this Agreement. Additional Tenant Obligations ARTICLE 7 ARTICLE 8 Default 7 Section 7.3. Workers Compensation Insurance. The Tenant shall obtain and maintain workers compensation insurance as required by Minnesota Statutes, Section 176.181, subd. 2. Section 7.4. Encourage Employees' Use of Transit Services. The Tenant shall encourage employees to utilize transit options to help reduce parking demand by a minimum of 20% at the Time Square Premises. Section 8.1. Events of Default. The Tenant shall be in default under this Agreement upon the happening of any one or more of the following events: (a) the Tenant fails to create 150 Jobs at the Time Square Premises and 40 Jobs at the Wings Premises within one (1) year of the Benefit Date; (b) the Tenant fails to create a total of 210 Jobs at the Time Square Premises no later than three (3) years after the Benefit Date; (c) the Tenant fails to maintain of minimum of 40 Jobs at the Wings Premises from the first to the seventh anniversary of the Benefit Date; (d) the Tenant fails to maintain a minimum of 210 Jobs at the Time Square Premises from the third to the seventh anniversary of the Benefit Date; (e) the Tenant is in breach in any material respect, of any obligation or agreement under this Agreement (other than the Job creation and maintenance requirements) and remains in breach in any material respect for thirty (30) business days after written notice thereof to the Tenant by the EDA; (f) if any material covenant, warranty, or representation of the Tenant shall prove to be untrue in any material respect, provided such covenant, warranty or representation of the Tenant remains untrue in any material respect for thirty (30) business days after written notice thereof to the Tenant by the EDA; (g) the Tenant fails to comply with any material term of its lease agreement with Landlord 1 or Landlord 2; (h) the Tenant fails to pay its debts as they become due, makes an assignment for the benefit of its creditors, admits in writing its inability to pay its debts as they become due, files a petition under any chapter of the Federal Bankruptcy Code or any similar law, state of federal, now or hereafter existing, becomes "insolvent" as that term is generally defined under the Federal Bankruptcy Code, files an answer admitting insolvency or inability to pay its debts as they become due in any involuntary bankruptcy case commenced against it, or fails to obtain a dismissal of such case within sixty (60) days after its commencement or convert the case from one chapter of the Federal Bankruptcy Code to another chapter, or be the subject of any order for relief in such bankruptcy case, or be adjudged a bankrupt or insolvent, or has a custodian, trustee, or receiver appointed for it, or has any court take jurisdiction of its property, or any part thereof, in any proceeding for the purpose of reorganization, arrangement, dissolution or liquidation, and such custodian, trustee, or receiver is not discharged, or such jurisdiction is not relinquished, vacated or stayed within sixty (60) days of the appointment; (i) a final judgment is entered against the Tenant that the EDA reasonably deems will have a material, adverse impact on the Tenant's ability to comply with the Tenant's obligations under this Agreement; (j) the Tenant fails to maintain its existence in good standing in its state of incorporation; (k) the Tenant fails to maintain its registration to do business in the State of Minnesota with the Minnesota Secretary of State; (1) the Tenant fails to submit to the EDA a completed report as required by Section 2.9 in this Agreement; (m) the Tenant sells, transfers, assigns, leases or otherwise disposes of any improvements funded by the subsidy without first obtaining the EDA's written approval; (n) the Tenant merges or consolidates with any other entity without the prior written approval of the EDA; or (o) there is a loss, theft, substantial damages, or destruction of all or any part of the Project Improvements funded by the subsidy that is not remedied to the EDA's satisfaction within sixty (60) business days after written notice thereof by the EDA to the Tenant. 8 Section 8.2. Rights and Remedies Upon Default. (a) In the event of default, the EDA shall have the right, at its option, and without demand or notice, which is hereby waived, to declare all or any part of the Loan, together with accrued interest, less any principal forgiven in accordance with Section 6.1 of this Agreement, immediately due and payable. (b) The Tenant agrees in the event of a default to make the collateral available to the EDA. If any notice of sale, disposition or other intended action by the EDA is required by law to be given to the Tenant, such notice shall be deemed reasonably and properly given if mailed to the Tenant at least fifteen (15) days before such sale, disposition or other intended action. (c) Notwithstanding this section, the EDA shall have all rights and remedies available to it under any other provision of this Agreement or the Act. (d) In addition to the rights and remedies granted in this Agreement, the EDA shall have all of the rights and remedies available under the Uniform Commercial Code and any other applicable law. (e) The Tenant agrees to pay the costs and expenses incurred by the EDA in enforcing its rights under this Agreement, including, but not limited to, the EDA's attorneys' fees. Section 8.3. Waiver. The failure or delay of the EDA to take any action or assert any right or remedy, or the partial exercise by the EDA of any right or remedy shall not be deemed to be a waiver of such action, right or remedy if the circumstances creating such action, right or remedy continue or repeat. ARTICLE 9 Tenant's Acknowledgments, Representations and Warranties Section 9.1. Acknowledgements. The Tenant hereby acknowledges that (a) Nothing contained in this Agreement, nor any act of the EDA, shall be deemed or construed to create between the EDA and the Tenant any relationship (except as borrower and lender), including, but not limited to, that of principal and agent, limited or general partnership or joint venture. (b) There are no other beneficiaries to this subsidy other than Tenant. Section 9.2. Representations and Warranties. The Tenant hereby represents and warrants that: (a) Tenant does not appear on the Minnesota Department of Employment and Economic Development's list of recipients that have failed to meet the terms of a business subsidy agreement. 9 (b) Tenant has reviewed this Agreement with an attorney, accountant, financial advisor or other appropriate professional and fully understands the legal and tax implications of this Agreement. (c) To the best of the Tenant's knowledge, no member, officer, or employee of the EDA, or its officers, employees, designees, or agents, who exercises or has exercised any functions or responsibilities with respect to the Project during his or her tenure shall have any interest, direct or indirect, in any contract or subcontract, or the proceeds thereof, for work to be performed in connection with the Project or in any activity, or benefit there from, which is part of the Project. (d) The Project shall be carried out as promised to the EDA. (e) To the best of the Tenant's knowledge, it has obtained or will obtain all federal, state, and local government approvals, reviews and permits required by la to be obtained in connection with the Project and has undertaken and completed or will undertake and complete all actions necessary for it to lawfully execute this Agreement. (f) Tenant has fully complied with all applicable local, state and federal laws pertaining to its business and will continue such compliance throughout the term of this Agreement. If at any time notice of noncompliance is received by the Tenant, the Tenant agrees to take any necessary action to comply with the local, state or federal law in question. ARTICLE 10 Miscellaneous Provisions Section 10.1. Release and Indemnification Covenants. Tenant agrees to protect and defend the EDA and its officers, employees, designees and agents, 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 improvements to the Time Square Premises and the Tenant's activities at the Leased Premises. Section 10.2. Immunity. Nothing in this Agreement shall be construed as a waiver of the EDA of any immunities, defenses or other limitations on liability to which the EDA is entitled by law. Section 10.3. Modifications. This Agreement may be modified solely through written amendments hereto executed by the Tenant and the EDA. Section 10.4. Notices and Demands. Any notice, demand or other communication under this Agreement by either party to the other shall be sufficiently given or delivered if it is dispatched by U.S. Mail or delivered personally to: 10 (a) as to the EDA: (b) as to the Tenant: Thomas Lawell, Executive Director Apple Valley Municipal Center 7100 147 St. W. Apple Valley, Minnesota 55124 Vincent Motto la, Vice-President Stream Global 20 William Street, Suite 310 Wellesley, Massachusetts 02481 or at such other address with respect to any party as that party may, from time to time, designate in writing and forward to the other party as provided in this section. Section 10.5. Binding Effect. The covenants and agreements in this Agreement shall bind and benefit the heirs, executors, administrators, successors and assigns of the Parties. Section 10.6. Merger. None of the provisions of this Agreement are intended to or shall be merged by reason of any deed transferring any interest in the Leased Premises and any such deed shall not be deemed to affect or impair the provisions and covenants of this Agreement. Section 10.7. Choice of Law and Venue . This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota without regard to its conflict o f laws provisions. Any disputes, controversies or claims arising out of this Agreement shall be heard in the state or federal courts of Minnesota, and all parties to this Agreement waive any objection to the jurisdiction of these courts, wheth er based on convenience or otherwise. Section 10.8. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 10.9. Headings. The Parties agree the headings and sub-headings used in this Agreement are solely for convenience of reference, are no part of this Agreement, and are not be considered in construing or interpreting this Agreement. Section 10.10. Entire Agreement. This Agreement, with the exhibits hereto, constitutes the entire agreement between the Parties pertaining to its subject matter and it supersedes all prior contemporaneous ag representations and understandings of the Parties pertaining to the subject matter of this Agreement. Section 10.11. Separability. Wherever possible, each provision of this Agreement and each related document shall be interpreted so that it is valid under applicable law. If any provision of this Agreement or any related document is to any extent found invalid by a court or other government entity of competent jurisdiction, that provision shall be ineffective only to the extent of such invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement or any other related document. 11 IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be duly executed and delivered this day of , 2012. APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and a political subdivision of the State of Minnesota By: Larry S. Severson Its: President By: `' Its: 12 THIS INSTRUMENT WAS DRAFTED BY: DOUGHERTY, MOLENDA, SOLFEST, HILLS & BAUER P.A. 7300 West 147 Street, Suite 600 Apple Valley, Minnesota 55124 (952) 432 -3136 (MGD: #66- 32620) By: Thomas Lawell Its: Executive Director STREAM INTERNATIONAL, IN a Delaware corporation EXHIBIT A Pursuant to the Business Subsidy Agreement, made between Apple Valley Economic Development Authority and Stream International, Inc., (hereinafter, the "Parties ") on the day of , 2012, Stream International, Inc., was approved for a subsidy in an amount of up to One Million Three Hundred Fifty Thousand and No/ 100 Dollars ($1,350,000.00) from Apple Valley Economic Development Authority. This subsidy is subject to the terms and conditions set forth in the aforementioned Business Subsidy Agreement. IN WITNESS WHEREOF, the Parties do hereby acknowledge the Benefit Date as defined in Minnesota Statutes § 116J.993, Subd. 2, is , 20 (the "Benefit Date "). BENEFIT DATE CERTIFICATION APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY By: Larry S. Severson Its: President By: ; Thomas Lawell Its: Executive Director STREAM INTERNATIONAL, IN a Delaware corporation By: 13 Its: [Disbursement Date] , 2012 EXHIBIT B PROMISSORY NOTE Stream International, Inc., a Delaware corporation (the "Maker"), for value received, hereby promises to pay to the Apple Valley Economic Development Authority, a public body corporate and a political subdivision of the State of Minnesota (the "EDA"), or its assigns (the EDA and any assigns are hereinafter referred to as the "Holder"), at its designated principal office or such other place as the Holder may designate in writing, the principal sum of One Million Three Hundred Fifty Thousand and 00/100 Dollars ($1,350,000.00) or so much thereof as may be advanced under this Note, with interest as hereinafter provided. The principal of this Note is payable as follows: 1. The Loan shall bear interest at a rate of six percent (6%) per annum and interest shall commence to accrue as of/INSERT the "Disbursement Date. 2. All outstanding principal and interest shall be due and payable on the [INSERT seventh (7 anniversary of the Disbursement Date.] 3. This Note is given pursuant to the Business Subsidy Agreement entered into by the Maker and the EDA on , 2012, and is secured by a security agreement of even date herewith (the "Security Agreement") covering certain property located in Dakota County, Minnesota. In the event any such security is found to be invalid for whatever i reason, such invalidity shall constitute an event of default hereunder. All of the agreements, conditions, covenants, provisions, and stipulations contained in the Business Subsidy Agreement, or any instrument securing this Note are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. It is agreed that time is of the essence of this Note. If a default occurs under the Business Subsidy Agreement, or any instrument securing this Note, then the Holder of this Note may at its right and option, without notice, declare immediately due and payable the principal balance of this Note, together with any costs of collection including attorney fees incurred by the Holder of this Note in collecting or enforcing payment hereof, whether suit be brought or not, and all other sums due hereunder, or under an y instrument securing this Note. The Maker agrees that the Holder of this Note may, without notice to the e Maker of this Note and without affecting the liability of the Maker of this Note, accept additional or substitute security for this Note, or release any security or any party liable for this Note or extend or renew this Note. 4. The remedies of the Holder of this Note as provided herein, and in the Loan Agreement, or any other instrument securing this Note, shall be cumulative and concurrent and may be pursued singly, successively or together and, at the sole discretion of the Holder of this Note, may be exercised as often as occasion therefore shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof. 14 The Holder of this Note shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Holder of this Note and then only to the extent specifically set forth in the writing. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. This Note may not be amended, modified, or changed except only by an instrument in writing signed by the party against whom enforcement of any such amendment, modifications, or change is sought. 5. This Note shall be governed by and construed in accordance with the laws of the state of Minnesota without regard to its conflict of laws provisions. Any disputes, controversies, or claims arising out of this Note shall be heard in the state or federal courts of Minnesota, and all parties to this Note waive any objection to the jurisdiction of these courts, whether based on convenience or otherwise. 6. This Note, with the Business Subsidy Agreement, constitutes the entire Note between the parties pertaining to its subject matter and it supersedes all prior contemporaneous Notes, representations, and understandings of the parties pertaining to the subject matter of this Note. 7. Wherever possible, each provision of this Note and each related document shall be interpreted so that it is valid under applicable law. If any provision of this Note or any related document is to any extent found invalid by a court or other governmental entity of competent jurisdiction, that provision shall be ineffective only to the extent of such invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note or any other related document. IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts, and things required to exist, happen, and be performed precedent to or in the issuance of this Note do exist, have happened, and have been performed in regular and due form as required by law. IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed as of the day of , 2012. STREAM INTE By: 15 Its: ATIONAL, INC. By: Its: EXHIBIT C [Place holder for Sworn Construction Statement] 16 EXHIBIT D [Insert secured Collateral] 17 EXHIBIT E SECURITY AGREEMENT This security agreement (the "Security Agreement") is made and given as of this day of , 2012, by Stream International, Inc., a Delaware corporation (the "Borrower"), in favor of the Apple Valley Economic Development Authority, a public body corporate and a political subdivision of the State of Minnesota (the "EDA"), and its endorsees, successors and assigns (the "Lender"). RECITALS A. Lender and Borrower have entered into a certain Business Subsidy Agreement, dated , 2012, (the "Loan Agreement"), pursuant to which Lender will loan to Borrower no more than One Million Three Hundred Fifty Thousand and 00/100 Dollars ($1,350,000.00) (the "Loan") to finance the improvements to the office/retail space located at 7564-7528 149' A le Valley. Minnesota 55124 (the "Premises"), required for Borrower's business. Borroweis obligations under the Loan Agreement will be evidenced by a promissory note (the Note ) dated as of the date hereof. B. As security for the repayment of the Loan, Lender e ender has in that Borrow r execute and deliver to Lender this Security Agreement granting a security interest to Lender n all Tenant or Tenant-directed improvements to the Premises without limitation all building materials, equipment and fixtures, whether now exiting by reference acquired, as specifically defined in Exhibit A attached hereto and incorporated herein y re f erence (the "Collateral"). C. The Note, this Security Agreement, and any other instruments or documents given as security for the Loan are herein referred to as the "Loan Documents." NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged by Borrower, it is agreed as follows: 8. Grant of Security Interest. As security for the payment and performance of the Note and all other liabilities, obligations, and indebtedness of Borrower to Lender due or to become due, direct or indirect, absolute or contingent, joint or several, howsoever created, now or hereafter at any time created, arising, or evidenced under or pursuant to the Loan Documents, Borrower does hereby transfer, assign, and grant to Lender a security interest in all of Borrower's right, title, and interest in and to the Collateral. 9. Borrower's Representations, Warranties and Covenants. Borrower represents, warrants, covenants, and agrees: (a) Organization. Borrower is a Delaware corporation, validly existing and in good standing under the laws of the state of Delaware, and is authorized to do business in the State of Minnesota. Borrower has full power and authority to execute, deliver, and perform the 18 Loan Documents, and to own its property and conduct its business as presently conducted and as proposed to be conducted. (b) Authorization. The execution, delivery, and performance of this Security Agreement has been duly authorized by all necessary action and will not: obtained; or (i) require any consent or approval of any entity that has not been (ii) violate any provision of any indenture, contract, agreement, or instrument to which Borrower is a party or by which it is bound. (c) Performance by Borrower. Unless Borrower obtains Lender's prior written consent, Borrower shall not Premises. (i) terminate its interest in any of the Collateral; or (ii) sell, transfer, or assign, or offer to sell, transfer or assign all or any part of the Collateral or permit all or any part of the Collateral to be sold, transferred, or assigned; or (iii) remove or consent to the removal of any of the Collateral from the (d) Title to Collateral. Borrower shall keep good marketable title to all of the Collateral, and none of the Collateral is subject to any lien or security interest except for the security interest created by this Security Agreement and other security interests consented to in writing by Lender. Borrower has not granted, and will not grant or permit to exist, any lien or security interests in all or a portion of the Collateral other than the liens in favor of Lender and other liens consented to in writing by Lender. Borrower shall defend the Collateral against all claims and demands of all and any other persons at any time claiming any interest therein adverse to Lender. (e) Actions and Proceedings. There are no actions at law, suits in equity, or other proceedings pending before or expected to be filed with any governmental agency, commission, bureau, tribunal, or other arbitration proceedings against or affecting Borrower that if adversely determined would adversely affect Borrower's interest in the Collateral or would adversely affect the rights of Borrower to pledge and assign all or a part of the Collateral or the rights and security afforded Lender hereunder. (f) Insurance. Borrower agrees it will keep the Collateral insured at all times against loss by fire and other hazards concerning which, in the judgment of Lender, insurance protection is reasonably necessary and in amounts sufficient to protect against loss or damage of the Collateral. Such policy or policies will contain a loss payable clause in favor of Lender or its successors or assigns, in form satisfactory to Lender, provided, however, that Borrower may, at its reasonable discretion, self-insure the Collateral. 19 (g) No Fixture. If any of the Collateral is or becomes a fixture, Borrower agrees to furnish Lender, at Lender's request, with a bill of sale or other statement(s) signed by all persons who have or claim an interest in the real estate concerned, which statements shall provide that the signer consents to the security interest created hereby and disclaims any interest in the Collateral as fixtures. (h) Understandings Regarding Collateral. Borrower acknowledges that the Collateral is of the design, capacity, and manufacture specified for and by Borrower, and that Borrower is satisfied that the same is suitable for its n tended purposes. Borrower further acknowledges and agrees that Lender has not made, and does not make, any representation, warranty, or covenant with respect to merchantability, fitness for any purpose, durability, patent, copyright or trademark infringement, suitability, or aP ability of any item of Collateral in any respect or in connection with any other purpose or use of Borrower, or any other representation, warranty, or covenant of any kind or character expressed or implied with respect thereto. Borrower accordingly agrees not to assert any claim whatsoever against Lender based thereon. Borrower further agrees, regardless of cause, not to assert any claim whatsoever against Lender for loss of anticipatory profits or consequential damages. (i) Use of Collateral. The Collateral will be used for its intended business purpose and will at all times be located at the Premises. (j) Condition of Collateral. Borrower will keep the Collateral in good condition and repair, reasonable wear and tear excepted, and will permit Lender to enter upon the Premises at reasonable times for the purpose of examining the Collateral. (k) Costs of Collection. In the event of any action or proceeding to collect or realize upon the Collateral or to enforce any of Lender's rights hereunder, Borrower shall pay: (1) all of Lender's attorneys interest thereon, incurred by Lender; fees and other legal expenses, with (ii) all taxes, levies, insurance expenses, and costs of repairs to, or maintenance of, the Collateral; and • • (iii) all costs of Lender incurred in taking possession of, disposing of or preserving the Collateral after any Event of Default (defined below). 10. Event of Default. Upon the event of a default under the Loan Agreement, Lender may exercise any remedy available to it under the terms of the Loan Agreement. 11. Financing Statement. Borrower agrees that: (i) Lender is authorized, at its option, to file a carbon, photographic, or other reproduction of this Agreement as a financing statement and that such statement shall be sufficient as a financing statement under those set forth in the Uniform Commercial Code (the "Code"); and (ii) Lender is authorized to file financing statements or amendments thereto without the signature of Borrower, provided that if a signature 20 is required by law, then Borrower appoints Lender as Borrower's attorney-in-fact to execute any such financing statements. 12. Cumulative Remedies. All of Lender's rights and remedies herein are cumulative and in addition to any rights or remedies available at law or in equity including the Code, and may be exercised concurrently or separately. Borrower shall pay all costs, expenses, losses, damages and legal costs (including attorneys fees) incurred by Lender as a result of enforcing any terms or conditions of this Agreement. 13. No Liability Imposed on Lender. Lender shall not be obligated to perform or discharge, nor does it hereby undertake to perform or discharge any obligation, duty, or liability, nor shall this Agreement operate to place responsibility for the control, care, or management of the Collateral upon Lender. 14. Indemnification. Borrower agrees to defend, 'protect, indemnify and hold Lender harmless of and from any and all liability, loss. damage that Lender does, may, or might A incur under or by reason of this Security Agreement, and of and from any and all claims and demands whatsoever which may be asserted g a re gainst Lender by reason of any alleged obligations or undertakings to perform or discharge . any of the terms. covenants, or agreements contained herein. Should Lender incur any such ha b i, it or be required to defend against any such claims or demands, or should a judgment be entere against Lender, the amount thereof, including costs, expenses, and reasonable attorneys fees, shall g a bear interest thereon at the rate then in effect on the Note, shall be secured hereby, shall be added to the Loan, and Borrower shall reimburse Lender for the same immediately upon deman d , and upon the failure of Borrower so to do, Lender may declare the Loan immediately due and payable. 15. Expenses of Lender. All expenses in protecting, storing, warehousing, o , in handling, and shipping of the C (th latoerale,r than the of keeping the Collatera l free encumbrances and security interests he security interest created by this Security Agreement) and the removing of the same and all excise, property, sales, and use taxes imposed by state, federal, or local authority on any of the Collateral or with respect to the sale thereof, i shall be borne and paid for by Borrower and if Borrower fails to promptly pay any amounts thereof when due, Lender may, at its option, but shall not be required to, pay the same, and upon such payment, the same shall constitute obligations and shall bear interest at the rate specified in the Note and shall be secured by the security interests granted hereunder. 9. Continuing Rights. The rights and powers of Lender hereunder shall continue and remain in full force effect until the Loan is paid in full. 16. Books and Records. Borrower will permit Lender and its representatives to examine Borrower's books and records (including data processing records and systems) with respect to the Collateral and make copies thereof at any time and from time to time, and Borrower will furnish such information reports to Lender and its representatives regarding the Collateral as Lender and its representatives may from time to time request. Lender shall have the authority, at any time, to require Borrower to place upon Borrower's books and records relating to the Collateral and other rights to payment covered by the security interest created in this 21 Agreement a notation stating that any such Collateral and other rights of payment are subject to a security interest in favor of Lender. 17. Effect on Other Agreements. Nothing in this Agreement shall be construed to modify any term of any other agreement to which Lender and Borrower are parties. 18. Release and Indemnification Covenants. Except for any breach of the representations and warranties of Lender or the negligence or other wrongful act or omission of the following named parties, Borrower agrees to protect and defend Lender and the governing body members, officers, agents, servants and employees thereof, 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 acquisition, construction, installation, ownership, maintenance, and operation of the Collateral. 19, Modifications, This Agreement may be modified solely through written amendments hereto executed by Lender and Borrower. 20. Notices and Demands. Any notice, demand or other communication under this Agreement by either party to the other shall be sufficiently given or delivered if it is dispatched by U.S. Mail or delivered personally to: (a) as to the EDA: (b) as to the Tenant: Thomas Lawell, Executive Director Apple Valley Municipal Center 7100 147 St. W. Apple Valley, Minnesota 55124 Vincent Mottola, Vice-President Stream Global 20 William Street, Suite 310 Wellesley, Massachusetts 02481 22 or at such other address with respect to any party as that party may, from time to time, designate in writing and forward to the other party as provided in this section. 21. Conflict of Interests; Representatives Not Individually Liable. No officer or employee of Lender may acquire any financial interest, direct or indirect, in this Security Agreement, the Collateral, or in any contract related to the Collateral. No officer, agent, or employee of Lender shall be personally liable to Borrower, or any successor in interest, in the event of any default or breach by Lender or for any amount which may become due to Borrower or on any obligation or term of this Agreement. 22. Binding Effect. The covenants and agreements in this Agreement shall bind and benefit the heirs, executors, administrators, successors, and assigns of the parties to this Security Agreement. 23. Merger. None of the provisions of this Security Agreement are intended to or shall be merged by reason of any deed transferring any interest in the Premises and any such deed shall not be deemed to affect or impair the provisions and covenants of this Security Agreement. 24. Headings. Any headings used in this Security Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. 25. Counterparts. This Security Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. 26. Choice of Law and Venue. This Security Agreement shall be governed by and construed in accordance with the laws of the state of Minnesota without regard to its conflict of laws provisions. Any disputes, controversies, or claims arising out of this Security Agreement shall be heard in the state or federal courts of Minnesota, and all parties to this Security Agreement waive any objection to the jurisdiction of these courts, whether based on convenience or otherwise. 27. Waiver. The failure of any party to take any action or assert any right or remedy, or the partial exercise by any party of any right or remedy, shall not be deemed to be a waiver of such action, right, or remedy if the circumstances creating such action, right, or remedy continue or repeat. 28. Entire Agreement. This Security Agreement, with the other Loan Documents constitutes the entire g reement between the parties pertaining to its subject matter and it supersedes all prior contemporaneous agreements, representations, and understandings of the parties pertaining to the subject matter of this Security Agreement. 29. Separabilithall be interpreted so that it is valid under applicable found law. Wherever possible, each provision of this Security Agreement and each related document s provision of this Security Agreement or any r is t n elated document s o any w n . invalid b a e a x p t p en b court or other governmental entity of competent jurisdiction, that provision shall be ineffective only to the extent of such invalidity, without invalidating the remainder of such provision or the remaining provisions of this Security Agreement or any other related document. 30. Immunity. Nothing in this Security Agreement shall be construed as a waiver by the EDA of any immunities, defenses, or other limitations on liability to which the EDA is entitled by law. 31. Other Matters. All representations and warranties contained in this Security Agreement or in any other agreement between Borrower and Lender shall survive the execution, delivery and performance of this Security Agreement and the creation and payment of any indebtedness to Lender. Borrower waives notice of the acceptance of this Security Agreement by Lender. 23 IN WITNESS WHEREOF, Lender has caused this Security Agreement to be duly executed in its name and behalf, and Borrower has caused this Agreement to be duly executed in its name and behalf as of the date first above written. APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY By: Larry S. Severson Its: President 24 By: Thomas Lawell Its: Executive Director STREAM INTERNATIONAL, INC., a Delaware corporation EXHIBIT "A" [Insert secured Collateral] 25 H Z W W O o. ce w z w U C� Z a a 0 z w c� w A.. NC' ;'s9k o 70 0 LL INNEN 0) 0 .0 _c (/) 0 0) 0 L.. a) 0 03 ka" w c 0 0 cD 0 69- 69- 9- c 0 (1) 0 0) - 5 7- < 0 0 E 0 CD 0 ft CD 0 C 69. c 0 0 E 15' 2 0 co 0 4 8 - 0 ct 0 c\I co 0) 9- (N 0) ft 0 C) ft 0 C VD- co 0 0 CD 0 0 c 0 cts 0 0 0 0 u E 0 E c FEE (1) 0) 0 4- 4- 0 °(7) 0 0 0) 4- 0 c (1) 0 c 0 0 c •_ or; E :4= 0_ 2 (d) 0) c co 0_ 69. 0 CD (NI -1 Ed E 0 E 0 c . o_ ffs H 0 0 0 CD 0 0 00 (N te- 69- c 0 0) .se co L.() ft 0 0 0 8_° 0 c - E 17) c (7) 1 E 0 1 0 E0 0 0 0:1 0) 0) LC) ft c\i co 0) 0) 1-() ft Ed E 0 co 0 0 co E 0 0 1- 0 CD 0) 0 0) 0 0 ft c 0 w 0 CD ft L. 0.1 C.) 00 C 00 0 69' 0 0 cc; 00 0)- 0 cri Cri 0 City of Apple valley MEMO Community Development Department TO: President and Board Members of the Economic Development Authority, Executive Director FROM: Margaret Dykes, Associate City Planner MEETING DATE: June 14, 2012 SUBJECT: Business Subsidy Agreement with Time Square Shopping Center II, LLP Attached for your consideration is a Business Subsidy Agreement that will authorize funding resources for substantial construction to occur at the Time Square Shopping Center, generally located southwest of the intersection of Cedar Avenue and 149 Street W. Background Stream International, Inc., a global provider of sales, customer service and technical support services for Fortune 1000 companies, is seeking to relocate its 40-person headquarters from Wellesley, MA to the Wings Financial building, and create a 300-person call center in the Time Square Shopping Center. Because of the high costs of relocating the corporate headquarters and the creating a call center, Stream International, Inc. ("Stream") requested assistance from both the State of Minnesota and the City of Apple Valley. The request to the State of Minnesota is discussed in a staff memo to the City Council regarding the application to the Minnesota Investment Fund program dated June 14, 2012. Project Description The owner of Time Square Shopping Center has negotiated with Stream International, Inc. to locate an approximately 19,000 sq. ft. call center in the south building located at 7530-7540 — 149 Street W. The 43-year old center has seen high vacancies and tenant turnovers, and the call center will help revitalize an aging center. The property owner is requesting up to $395,000 in assistance from the EDA to help with improvements that will update the entire 10-acre shopping center site and leverage an existing $78,700 grant from the Dakota County Community Development Agency for exterior work. The requested EDA funds will be used for repairs to the existing parking lot, exterior improvements to including painting, cladding the support columns in brick, repairing the soffits to fill in holes, construction of courtyards with pergolas, new landscaping and stormwater infiltration areas, repair of sidewalks, construction of dumpster screening walls, and permit costs. The CDA funds will be used for the needed repairs to the parking lot, and extending a pedestrian walkway from the Time Square Shopping Center to the trail on Cedar Avenue. The CDA grant requires a 2:1 owner match, which means that the exterior improvements proposed for Time Square must equal a minimum of $157,400. The attached graphic illustrates some of the improvements that will be made to the site. Also attached is an estimated sources and uses for the proposed project. The proposed project will create 15 construction jobs and create approximately 50 new jobs in addition to the 300 jobs that will be created at the Stream call center. E DA Funding Source Description In 2010, the Legislature approved changes to Tax Increment Financing (TIF) law that allowed the broad use of tax increment from any TIF district to assist in the construction or rehabilitation of private development. The purpose of this legislation was to help private development begin construction on projects that would create jobs, both temporary construction jobs and permanent jobs. Construction on any project receiving funds from this program had to begin by July 1, 2011, and all expenditures needed to be completed by December 31, 2011. This legislation was extended in 2011 so that the construction needs to occur no later than June 30, 2012, and all expenditures must be made by December 30, 2012. The funds do not require a match from the recipient. Staff Analysis Staff is recommending support of Time Square proposal for the following reasons: 1. The building improvements will renovate an outdated shopping center. 2. The new construction will allow the shopping center to be occupied and made viable for a new 300-person call center, as well as other new small businesses that will created approximately 50 new additional permanent jobs. 3. The property owner cannot make the improvements economically feasible and would pass the actual costs of the site improvements onto the tenants of the shopping center without public assistance. 4. The project is ready to begin and would meet the June 30 start-date deadline. Attached to this memo is the Business Subsidy Agreement drafted by the EDA Attorney. Recommended Action: 1. Open the public hearing, receive comments and close the hearing. 2. If the EDA concurs, staff is recommending the EDA adopt the draft resolution approving the Business Subsidy Agreement between the Apple Valley Economic Development Authority and Time Square Shopping Center II, LLP to provide up to $395,000 for substantial construction costs at Time Square Shopping Center. 2 APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. EDA-12- A RESOLUTION APPROVING A BUSINESS SUBSIDY AGREEMENT BETWEEN THE APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY AND TIME SQUARE SHOPPING CENTER II, LLP WHEREAS, the Apple Valley Economic Development Authority (the "EDA") and the City of Apple Valley, Minnesota (the "City") have adopted a Master Development Program and established the Master Development District and created Tax Increment Financing Districts within the Master Development District and adopted Tax Increment Financing Plans with respect to these Tax Increment Districts pursuant to Chapter 469 of the Minnesota Statutes in an effort to encourage development and redevelopment of certain designated areas within the City, which program, plans and districts have been amended from time to time; and WHEREAS, the City has previously established Tax Increment Financing District No. 13 (the "TIF District") and adopted the tax increment financing plan therefor (the "TIF Plan"); and WHEREAS, on December 20, 2011, the City Council approved a spending plan for the TIF District in accordance with Minnesota Statutes, Section 469.176 Subd. 4m (the "Spending Plan") to utilize existing tax increment revenues from the TIF District in order to stimulate construction or rehabilitation of private development in a way that will also create or retain jobs; and WHEREAS, Time Square Shopping Center II, LLP (the "Developer") has requested assistance from the EDA to support building renovations and construction at property identified as Lots 1, 3, and 4, Block 1, Levine Subdivision No. 2, (7525-148 St. W., and 7530 and 7540- 149 St. W.); and WHEREAS, a Development Agreement between the EDA and the Developer has been prepared describing a project and site improvements consistent with the Spending Plan; and WHEREAS, the EDA reviewed the Developer's request and the Development Agreement at a public hearing held June 14, 2012; and WHEREAS, the EDA deems it to be in the best interest of the EDA and City to utilize a portion of the revenues from Tax Increment Financing District No. 13 to provide assistance to the Developer for substantial building improvements listed in the Development Agreement, which include repairs to the existing parking lot, exterior improvements to including painting, cladding the support columns in brick, repairing the soffits to fill in holes, construction of courtyards with pergolas, new landscaping and stormwater infiltration areas, repair of sidewalks, construction of dumpster screening walls, and permit costs. NOW, THEREFORE, be it resolved by the Commissioners of the EDA that the Development Agreement is hereby approved and the President and Secretary are authorized to sign the same. DRAFT ATTEST: ADOPTED this 14 day of June, 2012. Pamela J. Gackstetter, Secretary Larry S. Severson, President DAFT CERTIFICATE I, Pamela Gackstetter, Apple Valley Economic Development Authority Secretary, hereby certify that the forgoing is a true and correct copy of a resolution adopted by the Apple Valley Economic Development Authority on June 14, 2012, the original of which is in my possession, dated this day of , 2012. Pamela J. Gackstetter, Secretary BUSINESS SUBSIDY AGREEMENT THIS BUSINESS SUBSIDY AGREEMENT ("Agreement") is made this day of , 2012, by and between the Apple Valley Economic Development Authority, a public body corporate and a political subdivision of the State of Minnesota, and Time Square Shopping Center II, LLP, a Minnesota limited liability partnership. WHEREAS, Recipient owns two retail buildings that are part of the Time Square Shopping Center and are located on real property legally described as Lots 1, 3 and 4, Block 1, Levine Subdivision No. 2, Dakota County, Minnesota (Property"), WHEREAS, Stream International, Inc., a Minnesota limited liability partnership, desires to open a call center in a retail building located on the Property, thereby creating new jobs in the City of Apple Valley; WHEREAS, the lease agreement with Stream International, Inc. requires Time Square Shopping Center II, LLP to make improvements to the Property; and WHEREAS, Time Square Shopping Center II, LLP cannot make the improvements economically feasible and would pass the actual costs of the improvements along to its tenants leasing the Property without a subsidy; WHEREAS, in accordance with this Agreement, the Apple Valley Economic Development Authority desires to subsidize the improvements, as hereinafter defined, in an amount of up to $395,000.00 using pooled tax increment financing ("TIF") dollars from the TIF district identified in Section 2.3 of this Agreement; and NOW, THEREFORE, in consideration of the mutual undertakings, the parties to this Agreement agree as follows: ARTICLE 1 Definitions Section 1.1. Definitions. In addition to the defined terms set forth throughout this Agreement, the following terms are defined as follows: "Act" means the Minnesota Business Subsidy Act, set forth in Minnesota Statutes Section 116J.993-.995 and any successor statute. "Benefit Date" means the date the Improvements are complete. The "Benefit Date" shall be certified by the EDA and the Recipient in substantially the form set forth at Exhibit A. "City" means the City of Apple Valley, a Minnesota municipal corporation. "Disbursement Date" means the date of the disbursement of the Loan by the EDA to the Recipient. "EDA" means the Apple Valley Economic Development Authority, a public body corporate and a political subdivision of the State of Minnesota. "Improvements" means the following improvements to the Property: (1) milling, overlaying and spot repairing the existing parking lot located between the North and South Buildings, (2) constructing a new parking lot, (3) landscaping around the new parking lot, (4) painting the rear side of the North Building, (5) constructing walls to screen dumpsters utilized by the tenants in the North Building, and (6) related improvements. "Lease" means the lease agreement between the Recipient and the Tenant. "Leased Premises" means approximately 19,589 square feet of retail space located in the South Building. "Loan" means the funds disbursed by the EDA to Recipient for reimbursement of the actual costs of the Improvements in an amount of up to Three Hundred Ninety-Five Thousand and No/100 Dollars ($395,000.00). "North Building" means the retail building located on that part of the Property legally described as Lot 1, Block 1, Levine Subdivision No. 2, Dakota County, Minnesota. "Note" means the Promissory Note entered into between the EDA and the Recipient in substantially the form set forth in Exhibit B. "Parties" means the EDA and the Recipient, collectively. "Improvement Expenses" means the actual documented costs, expenses and fees incurred by Recipient for the Improvements. 2 "Recipient" means Time Square Shopping Center II, LLP, a Minnesota limited liability partnership. "South Building" means the retail building located on that part of the Property legally described as Lots 3 and 4, Block 1, Levine Subdivision No. 2, Dakota County, Minnesota. "Tenant" means Stream International, Inc., a Minnesota limited liability partnership. ARTICLE 2 Business Subsidy Section 2.1. Business Subsidy Requirements. The provisions of this Article establish the requirements set forth in the Act (Minnesota Statutes Sections 116J.993-.995 and any successor statute). Section 2.2. Incorporation of the Act. Recipient acknowledges and agrees that the provisions of the Act apply to this Agreement and are incorporated herein by reference. Section 2.3. Subsidy. The subsidy consists of the Loan provided to the Recipient. The funds for the Loan shall consist of pooled dollars from Tax Increment District 13 in accordance with Minnesota Statutes Section 469.1763, subdivision 2(a). Section 2.4. Public Purposes. The public purposes and goals of the subsidy are to increase the tax base of the City by increasing the value of the Property, to create jobs with a livable wage and to enhance the character of the City's business districts. Section 2.5. Goals. The measurable, specific and tangible goals for the subsidy are set forth as follows (collectively referred to as "Goals"): / Within two years of the date of this Agreement, Recipient, in relation to the Improvements Recipient, an d or Property, shall create fifteen (15) new jobs that pay an average wage of $40.00 per hour. Section 2.6. Loan Repayment. If the Goals as set forth in Section 2.5 are not satisfied, the Recipient shall make payment to the EDA as required in Section 4.1. Section 2.7. Necessity of Subsidy. The subsidy is needed because the Recipient cannot make the Improvements economically feasible without the Loan. Section 2.8. Commitment. The Recipient must continue operations in the City's jurisdiction for at least five (5) years following the Benefit Date. Section 2.9. Other Financing. In addition to the assistance provided under this Agreement, the Recipient has received or expects to receive as part of this project, the following financial assistance from other "grantors" as defined in the Act: $78,700.50 from Dakota County Community Development Agency, a public body corporate and politic ("CDA Grant Funds"). 3 Section 2.10. Reporting Requirements. (a) Reporting Time Period. The Recipient shall provide to the EDA information regarding the Goals for two years after the Benefit Date or until the Goals are met, whichever is later. (b) Reporting Form. Recipient shall make its report on forms developed by the Minnesota Department of Employment and Economic Development, pursuant to Minn. Stat. § 116J.994, subd. 7. (c) Reporting Documentation. The report must include: (1) (2) ( (4) ( (6) ( ( ( (10) The type, public purpose, and amount of subsidies; b The hourly wage of each job created with separate an d s of wa g es; The sum of the hourly wages and cost of health insurance provided by the Recipient with separate bands of wages; ill be reached; The date the job and wage goals w A statement of the Goals and an update on achievement of those Goals; The location of the Recipient prior to receiving the subsidy; The number of employees who ceased to be employed by the Recipient when the Recipient relocated to become eligible for the subsidy; The name and address of the parent corporation of the Recipient, if any; A list of all financial assistance by all grantors for the Improvements; and Any other information the EDA may request. (d) Submission Deadline and Penalty. The report must be submitted to the EDA no later than March 1 of each year for the previous year. If the report is not submitted by March 1, the EDA shall mail a warning to the Recipient within one week of the required submission date. If, after 14 days of the postmark date of the warning, the Recipient fails to submit its report to the EDA, the Recipient must pay to the EDA a penalty of $100.00 for each subsequent day until the report is submitted. The maximum penalty shall not exceed $1,000.00. ARTICLE 3 Financing for Improvements Section 3.1. Recipient's Equity. The Recipient shall commit not less than $157,400.00 of equity (exclusive of the Loan and other public financing) to be used for improvements within the City's jurisdiction ("Recipient Funds"). The Recipient Funds and CDA Grant Funds shall be utilized to cover all Improvement Expenses prior to any request for reimbursement of Improvement Expenses from the EDA. Section 3.2. Use of Pooled TIF Funds. The Parties acknowledge that the EDA's authority to disburse pooled TIF funds to the Recipient arises out of Minn. Stat. § 469.176, subd. 4m, and 469.1763, subd. 2(a). Accordingly, the Recipient shall commence construction for the Improvements before July 1, 2012 and shall satisfy all of the conditions set forth in Section 4.2 4 of this Agreement by November 16, 2012 in order for the EDA to disburse the Loan to the Recipient prior to December 31, 2012. Section 3.3. Permitted Costs. The EDA agrees to reimburse Recipient for the Improvements Expenses documented and verified by the EDA. Section 3.4. Prohibited Costs. Notwithstanding any provision in this Agreement to the contrary, the subsidy shall not be used for any improvement that will become fixtures constituting part of the real estate or for legal fees, broker fees, or similar costs. Section 3.5. Sworn Construction Statement. The Improvements shall be completed in accordance with a sworn construction statement set forth at Exhibit C, which is incorporated in to this Agreement by reference. ARTICLE 4 Loan Terms and Conditions Section 4.1. Basic Loan Terms. The principal amount of the Loan shall be equal to the Improvements Expenses verified and approved by the EDA or Three Hundred Ninety-Five Thousand and No/100 Dollars ($395,000.00), whichever is less. The Loan shall bear interest at a rate of six percent (6%) per annum, and interest shall commence to accrue as of the Disbursement Date and continue until the Loan is satisfied or paid in full. The Loan shall be evidenced by the Note, the terms of which are incorporated fully herein by reference. Any and all outstanding principal and interest is due and payable two (2) years after the Disbursement Date. Section 4.2. Disbursement of Loan. (a) The Loan shall be disbursed in one payment to Recipient after the following conditions are met. (1) Construction of the Improvements commences before July 1, 2012, as required by Minn. Stat. § 469.176, subd. 4m (2012); (2) The Improvements are complete; (3) The Recipient has delivered and the EDA has approved the receipts, invoices, etc. proving the Improvement Expenses; (4) The Recipient has executed and delivered to the EDA the Note. (b) Disbursement of the Loan shall be performed by a title insurance company selected by EDA in EDA's sole discretion, in which case Recipient agrees to execute a disbursing agreement with EDA and the title company and to comply with any and all additional requirements of the title company in connection with disbursement of the Loan. 5 ARTICLE 5 Security Agreement Section 5.1. Security Interest. The Recipient hereby grants to the EDA a first priority security interest in the Collateral, which is defined in Section 5.2 of this Agreement, in an amount equal to the Loan, and the Recipient shall defend the EDA against any adverse claims to the Collateral. Section 5.2. Collateral. The term "Collateral" includes all Recipient improvements to the Property including without limitation all building materials, equipment and fixtures, whether now existing or hereafter acquired, as specifically defined in Exhibit D attached hereto and incorporated herein by reference. Section 5.3. Ownership of Collateral. The Recipient hereby represents and warrants to the EDA that Recipient shall own the Collateral free and clear of any other ownership or security interest, other than the EDA's security interest granted in this section. Section 5.4. Execution of Security Agreement. The Recipient shall execute and deliver to the EDA a Security Agreement in substantially the form of Exhibit E. Section 5.5. Financing Statement. The Recipient hereby authorizes the EDA to file a UCC-1 Financing Statement in order to perfect and give notice of the security interest and lien granted in this Agreement. ARTICLE 6 Loan Forgiveness Section 6.1. Loan Forgiveness Terms and Schedule. If Recipient meets, or is on track to meet, as determined in the EIDA's sole discretion, the Goals set forth in Section 2.5 of this Agreement, provides a sworn statement evidencing the same and no event of default exists as set forth in Section 8.1 of this Agreement, the EDA shall forgive portions of the subsidy loan as follows: (a) Within thirty (30) days of the first anniversary of the Disbursement Date, the EDA shall forgive one-half (1/2) of the principal balance of the Loan. (b) Within thirty (30) days of the second anniversary of the Disbursement Date, the EDA shall forgive the remaining one-half (1/2) of the principal balance of the Loan. ARTICLE 7 Additional Recipient Obligations Section 7.1. Additional Reporting Requirements. In addition to the reporting requirements set forth in Section 2.10 of this Agreement, Recipient shall provide to the EDA information for incorporation into any progress reports, as required by any state or local government political 6 agency, to monitor implementation of this Agreement for compliance with state and local guidelines. Section 7.2. Nondiscrimination. The provisions of Minnesota Statutes Section 181.59, which relates to civil rights and discrimination, shall be considered a part of this Agreement as though fully set forth herein, and the Recipient shall comply with each such provision throughout the term of this Agreement. Section 7.3. Workers Compensation Insurance. The Recipient shall obtain and maintain workers compensation insurance as required by Minnesota Statutes, Section 176.181, subd. 2. ARTICLE 8 Default Section 8.1. Events of Default. The Recipient shall be in default under this Agreement upon the happening of any one or more of the following events: (a) the Recipient fails to meet the any of the goals set forth in Section 2.5 of this Agreement; (d) the Recipient is in breach in any material respect, of any obligation or agreement under this Agreement (other than the job and wage requirements) and remains in breach in any material respect for thirty (30) business days after written notice thereof to the Recipient by the EDA; (e) if any material covenant, warranty, or representation of the Recipient shall prove to be untrue in any material respect, provided such co business warranty or representation of the Recipient remains untrue in any material respec t for thirty (30) usiness days after written notice thereof to the Recipient by the EDA; (f) the Recipient fails to comply with any material term of its Lease; (g) the Recipient fails to pay its debts as they become due, makes an assignment for the benefit of its creditors, admits in writing its inability to pay its debts as they become due, files a petition under any chapter of the Federal Bankruptcy Code or any similar law, state of federal, now or hereafter existing, becomes "insolvent" as that term is generally defined under the Federal Bankruptcy Code, files an answer admitting insolvency or inability to pay its debts as they become due in any involuntary bankruptcy case commenced against it, or fails to obtain a dismissal of such case within sixty (60) days after its commencement or convert the case from one chapter of the Federal Bankruptcy Code to another chapter, or be the subject of any order for relief in such bankruptcy case, or be adjudged a bankrupt or insolvent, or has a custodian, trustee, or receiver appointed for it, or has any court take jurisdiction of its property, or any part thereof, in any proceeding for the purpose of reorganization, arrangement, dissolution or liquidation, and such custodian, trustee, or receiver is not discharged, or such jurisdiction is not relinquished, vacated or stayed within sixty (60) days of the appointment; 7 (h) a final judgment is entered against the Recipient that the EDA reasonably deems will have a material, adverse impact on the Recipient's ability to comply with the Recipient's obligations under this Agreement; (i) the Recipient fails to maintain its existence in good standing in the State of Minnesota with the Minnesota Secretary of State; (j) the Recipient fails to submit to the EDA a completed report as required by Section 2.10 in this Agreement; (k) the Recipient sells, transfers, assigns, leases or otherwise disposes of any improvements funded by the subsidy without first obtaining the EDA's written approval; Section 8.2. Rights and Remedies Upon Default. (a) In the event of default, the EDA demand or notice, which is hereby waived, to principal forgiven in accordance with Section payable. 8 (1) the Recipient merges or consolidates with any other entity without the prior written approval of the EDA; or (m) there is a loss, theft, substantial damages, or destruction of all or any part of the Improvements funded by the subsidy that is not remedied to the EDA's satisfaction within sixty (60) business days after written notice thereof by the EDA to the Recipient. shall have the right, at its option, and without declare all or any part of the Loan, less any 6.1 of this Agreement, immediately due and (b) The Recipient agrees in the event of a default to make the Collateral available to the EDA. If any notice of sale, disposition or other intended action by the EDA is required by law to be given to the Recipient. such notice shall be deemed reasonably and properly given if mailed to the Recipient at least fifteen (15) days before such sale, disposition or other intended action. (c) Notwithstanding this section, the EDA shall have all rights and remedies available to it under any other provision of this Agreement or the Act. (d) In addition to the rights and remedies granted in this Agreement, the EDA shall have all of the rights and remedies available under the Uniform Commercial Code and any other applicable law. (e) The Recipient agrees to pay the costs and expenses incurred by the EDA in enforcing its rights under this Agreement, including, but not limited to, the EDA's attorneys' fees. Section 8.3. Waiver. The failure or delay of the EDA to take any action or assert any right or remedy, or the partial exercise by the EDA of any right or remedy shall not be deemed to be a waiver of such action, right or remedy if the circumstances creating such action, right or remedy continue or repeat. ARTICLE 9 Recipient's Acknowledgments, Representations and Warranties Section 9.1. Acknowledgements. The Recipient hereby acknowledges that: (a) Nothing contained in this Agreement, nor any act of the EDA, shall be deemed or construed to create between the EDA and the Recipient any relationship (except as borrower and lender), including, but not limited to, that of principal and agent, limited or general partnership or joint venture. (b) There are no other beneficiaries to this subsidy other than Recipient. Section 9.2. Representations and Warranties. The Recipient hereby represents and warrants that: (a) Recipient does not appear on the Minnesota Department of Employment and Economic Development's list of recipients that have failed to meet the terms of a business subsidy agreement. (b) Recipient has reviewed this Agreement with an attorney, accountant, financial advisor or other appropriate professional and fully understands the legal and tax implications of this Agreement. (c) To the best of the Recipient's its knowledge, no member, officer, or employee of the EDA, or ts o leers, employees. esignees, or agents, who exercises or has exercised any functions or responsibilities with respect to the Improvements during his or her tenure shall have any interest, direct or indirect, in any contract or subcontract, or the proceeds thereof, for work to be performed in connection with the Improvements or in any activity, or benefit there from, which is part of tile Improvements. (d) The Improvements shall be carried out as promised to the EDA. (e) To the best of the Recipient's knowledge, it has obtained or will obtain all federal, state, and local government approvals, reviews and permits required by law to be obtained in connection with the Improvements and has undertaken and completed or will undertake and complete all actions necessary for it to lawfully execute this Agreement. (f) Recipient has fully complied with all applicable local, state and federal laws pertaining to its business and will continue such compliance throughout the term of this 9 Agreement. If at any time notice of noncompliance is received by the Recipient, the Recipient agrees to take any necessary action to comply with the local, state or federal law in question. ARTICLE 10 Miscellaneous Provisions Section 10.1. Release and Indemnification Covenants. Recipient agrees to protect and defend the EDA and its officers, employees, designees and agents, 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 improvements to the Property. (a) as to the EDA: (b) as to the Recipient: 10 Section 10.2. Immunity. Nothing in this Agreement shall be construed as a waiver of the EDA of any immunities, defenses or other limitations on liability to which the EDA is entitled by law. Section 10.3. Modifications. This Agreement may be modified solely through written amendments hereto executed by the Recipient and the EDA. Section 10.4. Notices and Demands. Any notice, demand or other communication under this Agreement by either party to the other shall be sufficiently given or delivered if it is dispatched by U.S. Mail or delivered personally to: Thomas Lawell, Executive Director Apple Valley Municipal Center 7100 147 Apple Valley, Minnesota 55124 Robert Levine 5005 Old Cedar Lake Rd. St. Louis Park, Minnesota 55416 or at such other address with respect to any party as that party may, from time to time, designate in writing and forward to the other party as provided in this section. Section 10.5. Binding Effect. The covenants and agreements in this Agreement shall bind and benefit the heirs, executors, administrators, successors and assigns of the Parties. Section 10.6. Merger. None of the provisions of this Agreement are intended to or shall be merged by reason of any deed transferring any interest in the Property and any such deed shall not be deemed to affect or impair the provisions and covenants of this Agreement. Section 10.7. Choice of Law and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota without regard to its conflict of laws provisions. Any disputes, controversies or claims arising out of this Agreement shall be heard in the state or federal courts of Minnesota, and all parties to this Agreement waive any objection to the jurisdiction of these courts, whether based on convenience or otherwise. Section 10.8. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 10.9. Headings. The Parties agree the headings and sub-headings used in this Agreement are solely for convenience of reference, are no part of this Agreement, and are not be considered in construing or interpreting this Agreement. Section 10.10. Entire Agreement. This Agreement, with the exhibits hereto, constitutes the entire agreement between the Parties pertaining to its subje . matter and it supersedes all prior contemporaneous agreements, representations and understandings of the Parties pertaining to the subject matter of this Agreement. Section 10.11. Separability. Wherever possible, each provision of this Agreement and each related document shall be interpreted so that it is valid under applicable law. If any provision of this Agreement or any related document is to any extent found invalid by a court or other government entity of competent jurisdiction, that provision shall be ineffective only to the extent of such invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement or any other related document. IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be duly executed and delivered this day of , 2012. Remainder of page intentionally blank] 11 APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and a political subdivision of the State of Minnesota By: Larry S. Severson Its: President By: Thomas Lawell Its Executive Director 12 THIS INSTRUMENT WAS DRAFTED BY: DOUGHERTY, MOLENDA, SOLI ES HILLS & BAUER P.A. 7300 West 147 Street, Suite 600 Apple Valley, Minnesota 55 (952) 432-3136 (MGD: #66-32620) TIME SQUARE SHOPPING CENTER II, LLP, a Minnesota limited liability partnership EXHIBIT A BENEFIT DATE CERTIFICATION Pursuant to the Business Subsidy Agreement, made between Apple Valley Economic Development Authority and Time Square Shopping Center II, LLP, (hereinafter, the "Parties ") on the day of , 2012, Time Square Shopping Center II, LLP, was approved for a subsidy in an amount of up to Three Hundred Ninety -Five Thousand and No /100 Dollars ($395,000.00) from Apple Valley Economic Development Authority. This subsidy is subject to the terms and conditions set forth in the aforementioned Business Subsidy Agreement. IN WITNESS WHEREOF, the Parties do hereby acknowledge the Benefit Date as defined in Minnesota Statutes § 116J.993, Subd. 2, is , 20 (the "Benefit Date "). By: 13 Its: APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY By: Larry S. Severson Its: President By: Thomas Lawell Its: Executive Director TIME SQUARE SHOPPING CENTER II, LLP, a Minnesota limited liability partnership , 2012 [Disbursement Date] EXHIBIT B PROMISSORY NOTE Time Square Shopping Center II, LLP, a Minnesota limited liability partnership (the "Maker"), for value received, hereby promises to pay to the Apple Valley Economic Development Authority, a public body corporate and a political subdivision of the State of Minnesota (the "EDA"), or its assigns (the EDA and any assigns are hereinafter referred to as the "Holder"), at its designated principal office or such other place as the Holder may designate in writing, the principal sum of Three Hundred Ninety--Five Thousand and 00/100 Dollars ($395,000.00) or so much thereof as may be advanced under this Note, with interest as hereinafter provided. The principal of this Note is payable as follows: 1. The Loan shall bear interest at a rate of six percent (6%) per annum and interest shall commence to accrue as of[INSERT the "Disbursement Date."' 2. Any outstanding principal and interest is due and payable on the [INSERT second (2nd) anniversary of the Disbursement Date.] 3. This Note is given pursuant to the Business Subsidy Agreement entered into by the Maker and the EDA on , 2012 (the "Loan Agreement"), and is secured by a security agreement of even date herewith (the "Security Agreement") covering certain property located in Dakota County, Minnesota. In the event any such security is found to be invalid for whatever reason, such invalidity shall constitute an event of default hereunder. All of the agreements, conditions, covenants, provisions, and stipulations contained in the Loan Agreement, or any instrument securing this Note are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. It is agreed that time is of the essence of this Note. If a default occurs under the Loan Agreement, or any instrument securing this Note, then the Holder of this Note may at its right and option, without notice, declare immediately due and payable the principal balance of this Note, together with any costs of collection including attorney fees incurred by the Holder of this Note in collecting or enforcing payment hereof, whether suit be brought or not, and all other sums due hereunder, or under any instrument securing this Note. The Maker agrees that the Holder of this Note may, without notice to the Maker of this Note and without affecting the liability of the Maker of this Note, accept additional or substitute security for this Note, or release any security or any party liable for this Note or extend or renew this Note. 4. The remedies of the Holder of this Note as provided herein, and in the Loan Agreement, or any other instrument securing this Note, shall be cumulative and concurrent and may be pursued singly, successively or together and, at the sole discretion of the Holder of this Note, may be exercised as often as occasion therefore shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof. 14 The Holder of this Note shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Holder of this Note and then only to the extent specifically set forth in the writing. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. This Note may not be amended, modified, or changed except only by an instrument in writing signed by the party against whom enforcement of any such amendment, modifications, or change is sought. 5. This Note shall be governed by and construed in accordance with the laws of the state of Minnesota without regard to its conflict of laws provisions. Any disputes, controversies, or claims arising out of this Note shall be heard in the state or federal courts of Minnesota, and all parties to this Note waive any objection to the jurisdiction of these courts, whether based on convenience or otherwise. 6. This Note, with the Loan Agreement, constitutes the entire Note between the parties pertaining to its subject matter and it supersedes all prior contemporaneous Notes, representations, and understandings of the parties pertaining to the subject matter of this Note. 7. Wherever possible, each provision of this Note and each related document shall be interpreted so that it is valid under applicable law. If any provision of this Note or any related document is to any extent found invalid by a court or other governmental entity of competent jurisdiction, that provision shall be ineffective only to the extent of such invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note or any other related document. IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts, and things required to exist, happen, and be performed precedent to or in the issuance of this Note do exist, have happened, d have bcen performed in regular and due form as required by law. IN WITNESS WI1EREOF the Maker has caused this Note to be duly executed as of the day of , 2012. TIME SQUARE SHOPPING CENTER II, LLP By: 15 Its: By: Its: EXHIBIT C [Place holder for Sworn Construction Statement] 16 EXHIBIT D [Insert secured Collateral] 17 EXHIBIT E SECURITY AGREEMENT This security agreement (the "Security Agreement") is made and given as of this day of , 2012, by Time Square Shopping Center II, LLP, a Minnesota limited liability partnership (the "Borrower"), in favor of the Apple Valley Economic Development Authority, a public body corporate and a political subdivision of the State of Minnesota (the "EDA"), and its endorsees, successors and assigns (the "Lender"). RECITALS A. Lender and Borrower have entered into a certain Business Subsidy Agreement, dated , 2012, (the "Loan Agreement"), pursuant to which Lender will loan to Borrower no more than Three Hundred Ninety-Five Thousand and 00/100 Dollars ($395,000.00) (the "Loan") to finance improvements to the real property legally described as Lots 1, 3 and 4, Block 1, Levine Subdivision No. 2, Dakota County, Minnesota (the "Property"), which are required by the Borrower's lease agreement with Stream International, Inc., a Delaware corporation that intends to open a call center in retail space located on the Property. Borrower's payment obligations under the Loan Agreement will be evidenced by a promissory note (the "Note") dated as of the date hereof B. As security for the repayment of the Loan, Lender has required that Borrower execute and deliver to Lender this Security Agreement granting a security interest to Lender in all Recipient or Recipient-directed improvements to the Property without limitation all building materials, equipment and fixtures, whether now exiting or hereafter acquired, as specifically defined in Exhibit A attached hereto and incorporated herein by reference (the "Collateral"). C. The Note, this Security Agreement, and any other instruments or documents given as security for the Loan are herein referred to as the "Loan Documents." NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged by Borrower, it is agreed as follows: 8. Grant of Security Interest. As security for the payment and performance of the Note and all other liabilities, obligations, and indebtedness of Borrower to Lender due or to become due, direct or indirect, absolute or contingent, joint or several, howsoever created, now or hereafter at any time created, arising, or evidenced under or pursuant to the Loan Documents, Borrower does hereby transfer, assign, and grant to Lender a security interest in all of Borrower's right, title, and interest in and to the Collateral. 9. Borrower's Representations, Warranties and Covenants. Borrower represents, warrants, covenants, and agrees: (a) Organization. Borrower is a Minnesota limited liability partnership, validly existing and in good standing under the laws of the state of Minnesota. Borrower has full 18 power and authority to execute, deliver, and perform the Loan Documents, and to own its property and conduct its business as presently conducted and as proposed to be conducted. (b) Authorization. The execution, delivery, and performance of this Security Agreement has been duly authorized by all necessary action and will not: obtained; or (i) require any consent or approval of any entity that has not been (ii) violate any provision of any indenture, contract, agreement, or instrument to which Borrower is a party or by which it is bound. (c) Performance by Borrower. Unless Borrower obtains Lender's prior written consent, Borrower shall not: Property. (d) Title to Collateral. Borrower shall keep good marketable title to all of the Collateral, and none of the Collateral is subject to any lien or security interest except for the security interest created by this Security Agreement and other security interests consented to in writing by Lender. Borrower has not granted, and will not grant or permit to exist, any lien or security interests in all or a portion of the Collateral other than the liens in favor of Lender and L other liens consented to in writing by Lender. Borrower shall defend the Collateral against all claims and demands of all and any other persons at any time claiming any interest therein adverse to Lender. (i) terminate its interest in any of the Collateral; or (ii) sell, transfer, or assign, or offer to sell, transfer or assign all or any part of the Collateral or permit all or any part of the Collateral to be sold, transferred, or assigned; or (iii) remove or consent to the removal of any of the Collateral from the 19 (e) Actions and Proceedings. There are no actions at law, suits in equity, or other proceedings pending before or expected to be filed with any governmental agency, commission, bureau, tribunal, or other arbitration proceedings against or affecting Borrower that if adversely determined would adversely affect Borrower's interest in the Collateral or would adversely affect the rights of Borrower to pledge and assign all or a part of the Collateral or the rights and security afforded Lender hereunder. (f) Insurance. Borrower agrees it will keep the Collateral insured at all times against loss by fire and other hazards concerning which, in the judgment of Lender, insurance protection is reasonably necessary and in amounts sufficient to protect against loss or damage of the Collateral. Such policy or policies will contain a loss payable clause in favor of Lender or its successors or assigns, in form satisfactory to Lender, provided, however, that Borrower may, at its reasonable discretion, self-insure the Collateral. (g) No Fixture. If any of the Collateral is or becomes a fixture, Borrower agrees to furnish Lender, at Lender's request, with a bill of sale or other statement(s) signed by all persons who have or claim an interest in the real estate concerned, which statements shall provide that the signer consents to the security interest created hereby and disclaims any interest in the Collateral as fixtures. (h) Understandings Regarding Collateral. Borrower acknowledges that the Collateral is of the design, capacity, and manufacture specified for and by Borrower, and that Borrower is satisfied that the same is suitable for its intended purposes. Borrower further acknowledges and agrees that Lender has not made, and does not make, any representation, warranty, or covenant with respect to merchantability, fitness for any purpose, durability, patent, copyright or trademark infringement, suitability, or capability of any item of Collateral in any respect or in connection with any other purpose or use of Borrower, or any other representation, warranty, or covenant of any kind or character expressed or implied with respect thereto. Borrower accordingly agrees not to assert any claim whatsoever against Lender based thereon. Borrower further agrees, regardless of cause, not to assert any claim whatsoever against Lender for loss of anticipatory profits or consequential damages. (i) Use of Collateral. The Collateral will be used for its intended business purpose and will at all times be located at the Property. (j) Condition of Collateral. Borrower will keep the Collateral in good condition and repair, reasonable wear and tear excepted, and will permit Lender to enter upon the Property at reasonable times for the purpose of examining the Collateral. (k) Costs of Collection. In the event of any action or proceeding to collect or realize upon the Collateral or to enforce any of Lender's rights hereunder, Borrower shall pay: (i) all of Lender's attorneys interest thereon, incurred by Lender; (ii) all taxes, levies, insurance expenses, and costs of repairs to, or maintenance of, the Collateral; and (iii) all costs of Lender incurred in taking possession of, disposing of or preserving the Collateral after any Event of Default (defined below). 10. Event of Default. Upon the event of a default under the Loan Agreement, Lender may exercise any remedy available to it under the terms of the Loan Agreement. 11. Financing Statement. Borrower agrees that: (i) Lender is authorized, at its option, to file a carbon, photographic, or other reproduction of this Agreement as a financing statement and that such statement shall be sufficient as a financing statement under those set forth in the Uniform Commercial Code (the "Code"); and (ii) Lender is authorized to file financing statements or amendments thereto without the signature of Borrower, provided that if a signature 20 fees and other legal expenses, with is required by law, then Borrower appoints Lender as Borrower's attorney-in-fact to execute any such financing statements. 12. Cumulative Remedies. All of Lender's rights and remedies herein are cumulative and in addition to any rights or remedies available at law or in equity including the Code, and may be exercised concurrently or separately. Borrower shall pay all costs, expenses, losses, damages and legal costs (including attorneys fees) incurred by Lender as a result of enforcing any terms or conditions of this Agreement. 13. No Liability Imposed on Lender. Lender shall not be obligated to perform or discharge, nor does it hereby undertake to perform or discharge any obligation, duty, or liability, nor shall this Agreement operate to place responsibility for the control, care, or management of the Collateral upon Lender. 14. Indemnification. Borrower agrees to defend, protect, indemnify and hold Lender harmless of and from any and all liability, loss, and damage that Lender does, may, or might from incur under or by reason of this Security Agreement, and of and om any and all claims and demands whatsoever which may be asserted against Lender by reason of any alleged obligations or undertakings to perform or discharge . an the terms, covenants, or agreements contained i herein. Should Lender incur any such la b i:ity or be required to defend against any such claims or demands, or should a judgment be entere against Lender, the amount thereof, including costs, expenses, and reasonable attorneys fees, s h a n ag bear interest thereon at the rate then in effect on the Note, shall be secured hereby, shall be added to the Loan, and Borrower shall reimburse Lender for the same immediately upon demand. and upon the failure of Borrower so to do, Lender may declare the Loan immediately due an d payable. 15. Expenses of Lender. All expenses in protecting, storing, warehousing, insuring, handling, and shipping of the Collateral, all costs of keeping the Collateral free of liens, encumbrances and security interests (other than the security interest created by this Security Agreement) and the removing of the same and all excise, property, sales, and use taxes imposed by state, federal, or local authority on any of the Collateral or with respect to the sale thereof, shall be borne and paid for by Borrower and if Borrower fails to promptly pay any amounts thereof when due, Lender may, at its option, but shall not be required to, pay the same, and upon such payment, the same shall constitute obligations and shall bear interest at the rate specified in the Note and shall be secured by the security interests granted hereunder. 9. Continuing Rights. The rights and powers of Lender hereunder shall continue and remain in full force effect until the Loan is paid in full. 16. Books and Records. Borrower will permit Lender and its representatives to examine Borrower's books and records (including data processing records and systems) with respect to the Collateral and make copies thereof at any time and from time to time, and Borrower will furnish such information reports to Lender and its representatives regarding the Collateral as Lender and its representatives may from time to time request. Lender shall have the authority, at any time, to require Borrower to place upon Borrower's books and records relating to the Collateral and other rights to payment covered by the security interest created in this 21 Agreement a notation stating that any such Collateral and other rights of payment are subject to a security interest in favor of Lender. 17. Effect on Other Agreements. Nothing in this Agreement shall be construed to modify any term of any other agreement to which Lender and Borrower are parties. 18. Release and Indemnification Covenants. Except for any breach of the representations and warranties of Lender or the negligence or other r wrongful act or omission of the following named parties, Borrower agrees to protec t an d defend Lender and the governing body members, officers, agents, servants and employees thereof, 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 acquisition, construction, installation, ownership, maintenance, and operation of the Collateral. 19. Modifications. This Agreement may be modified solely through written amendments hereto executed by Lender and Borrower. 20. Notices and Demands. Any notice, demand or other communication under this Agreement by either party to the other shall be sufficiently given or delivered if it is dispatched by U.S. Mail or delivered personally to (a) as to the EDA: (b) as to the Recipient: Thomas Lawell, Executive Director Apple Valley Municipal Center 7100 147 St. W. Apple Valley, Minnesota 55124 Robert Levine 5005 Old Cedar Lake Rd. St. Louis Park, Minnesota 55416 or at such other address with respect to any party as that party may, from time to time, designate in writing and forward to the other party as provided in this section. 21. Conflict of Interests; Representatives Not Individually Liable. No officer or employee of Lender may acquire any financial interest, direct or indirect, in this Security Agreement, the Collateral, or in any contract related to the Collateral. No officer, agent, or employee of Lender shall be personally liable to Borrower, or any successor in interest, in the event of any default or breach by Lender or for any amount which may become due to Borrower or on any obligation or term of this Agreement. 22. Binding Effect. The covenants and agreements in this Agreement shall bind and benefit the heirs, executors, administrators, successors, and assigns of the parties to this Security Agreement. 23. Merger. None of the provisions of this Security Agreement are intended to or shall be merged by reason of any deed transferring any interest in the Premises and any such 22 deed shall not be deemed to affect or impair the provisions and covenants of this Security Agreement. 24. Headings. Any headings used in this Security Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. 25. Counterparts. This Security Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. 26. Choice of Law and Venue. This Security Agreement shall be governed by and construed in accordance with the laws of the state of Minnesota without regard to its conflict of laws provisions. Any disputes, controversies, or claims arising out of this Security Agreement shall be heard in the state or federal courts of Minnesota, and all parties to this Security Agreement waive any objection to the jurisdiction of these courts, whether based on convenience or otherwise. 27. Waiver. The failure of any party to take any action or assert any right or remedy, or the partial exercise by any party of any right or remedy, shall not be deemed to be a waiver of such action, right, or remedy if the circumstances creating such action, right, or remedy continue or repeat. 28. Entire Agreement. This Security Agreement, with the other Loan Documents constitutes the entire agreement between the p pertaining ertaining to its subject matter and it supersedes all prior contemporaneous agreemen t s, representations, and understandings of the parties pertaining to the subject matter of this Security Agreement. 29. Separability. Wherever possible, each provision of this Security Agreement and each related document shall be interpreted so that it is valid under applicable law. If any provision of this Security Agreement or any related document is to any extent found invalid by a court or other governmental entity of competent jurisdiction, that provision shall be ineffective only to the extent of such invalidity, without invalidating the remainder of such provision or the remaining provisions of this Security Agreement or any other related document. 30. Immunity. Nothing in this Security Agreement shall be construed as a waiver by the EDA of any immunities, defenses, or other limitations on liability to which the EDA is entitled by law. 31. Other Matters. All representations and warranties contained in this Security Agreement or in any other agreement between Borrower and Lender shall survive the execution, delivery and performance of this Security Agreement and the creation and payment of any indebtedness to Lender. Borrower waives notice of the acceptance of this Security Agreement by Lender. 23 IN WITNESS WHE ' OF, Lender has caused this Security Agreement to be duly executed in its name and behalf, and Borrower has caused this Agreement to be duly executed in its name and behalf as of the date first above written. APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY By: Larry S. Severson :................ Its: President 24 Its By: Thomas Lawell Its: Executive Director TIME SQUARE SHOPPING CENTER II, LLP, a Minnesota limited liability partnership EXHIBIT "A" [Insert secured Collateral] 25 U) 1— z c4 w w a ce w 1— z w 0 0 0 0 0 1 co w ce co w � :q\ .C.- \ +a &#» �£ 2 '-'41 � } 0 1- 0 cD cD C\I CD LO ft 0 0 0 CY; 69- 0 0 0 0 0 ft 0 0 0 0 ft 0 0 LC) N M 0 0 0 LC) N M 0) 0 5 0 0 (0 ,c2 0 E 0 To 0) co 0 0 0 0 0 LC) 0 0 0 0 LO 69. 0) 0 5 -4 5 0 u-) 0 0) 0 0 0 0 0 0 CN 69. 0 0 0 co 69. CD 0 0 0 LO 71- 69- 0 0 0 0 7r- 00 0 0 0 0 0 9- 0 0 ci 0 vcr o6 0 0) 0 co 0 0 Li= co -a co 0 - 7) ( 7 1 0 0 .c 0 0 0 0 0 L() ft 0 0 0 0) L6 co 69 0 0 0 s c L" 0 0 0 0 0 0 0 ft 0 0 0 (0 ft 0 0 0 00 9- 0 0 0 0 c) co 69- 0 0 0 0 71- Lc) ft 0 1— City of Apple Valley TO: President and Board Members of the Economic Development Authority, Executive Director FROM: Margaret M. Dykes, Associate City Planner MEETING DATE: June 14, 2012 SUBJECT: Business Assistance Agreement with Time Square Shopping Center II, LLP MEMO Planning & Development Department In 2010, the City of Apple Valley received a Redevelopment Incentive Grant from the Dakota Count Community Development Agency ("CDA") for exterior renovations at Time Square, 7525 — 148 St. W., 7530- 149t St. W, and 7540-64 149 St. W. The $78,700 CDA grant is to be used to fund the following improvements: * Remilling of the parking lot asphalt * Restriping of parking spaces • Extending a pedestrian walkway from the Time Square Shopping Center to the trail on Cedar Avenue. This will require some coordination between Time Square, Dakota County, and the City. City staff is working on this item • Installing curb cuts at landscape islands to facilitate stormwater runoff. The grant requires a 2:1 match, which means the Time Square property owner must also use personal funds equaling at least $157,400 towards the improvements at the shopping center. The grant proposal referenced proposed changes to the exterior of the building to include cladding the support columns in brick, repairing the soffits to fill in holes, construction of courtyards with pergolas, new landscaping and stormwater infiltration areas, and painting the exterior. The CDA funds were to be provided to the property owner after the improvements were completed and invoices were provided. The City was to submit a report to the CDA for reimbursement, and the grant funds must be expended by June 30, 2013. At the time the City received the grant, a business assistance agreement was not required because the amount was less than $150,000. With the recent adoption of the amendments to the Apple Valley Economic Development Authority's ("EDA") Business Assistance Policy, a business assistance agreement is now required between the EDA and the owner of the Time Square Shopping Center. The City Council must authorize the transfer of the grant from the City to the EDA, which will be reviewed at the City Council meeting of June 14, 2012. The transferred funds will be one component in an overall assistance package to the owner of the Time Square Shopping Center. The assistance will allow the shopping center owner to provide tenant space for a 300-person call center for Stream International, Inc. as well as make site improvements for existing tenants, as listed above. Recommended Action Adopt the draft resolution approving the business assistance agreement between the Apple Valley EDA and Time Square Shopping Center II, LLP, subject to transfer of the Dakota County CDA grant funds from the City Council to the EDA, and authorize the President, Executive Director, and Secretary to sign all necessary documents. A RESOLUTION APPROVING A BUSINESS ASSISTANCE AGREEMENT BETWEEN THE APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY AND TIME SQUARE SHOPPING CENTER II, LLP WHEREAS, the Apple Valley Economic Development Authority (the "EDA ") and the City of Apple Valley, Minnesota (the "City ") have adopted a Master Development Program in an effort to encourage development and redevelopment of certain designated areas within the City, which program, plans and districts have been amended from time to time; and WHEREAS, the City received a Redevelopment Incentive Grant (the "Grant ") from the Dakota County Community Development Agency ( "CDA ") in 2010 in the amount of $78,700 for site improvements at Time Square Shopping Center (the "Property"), located at p �1 PP g Street W., and 7530 and 7540 -149 Street W.; and and APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. EDA -12- WHEREAS, the City and the CDA entered into a Grant Agreement on February 9, 2010; WHEREAS, the Grant will allow the owner of the Property to make certain improvements including the remilling and restriping of the existing parking lot, extending a pedestrian walkway from the Property to a pedestrian trail on Cedar Avenue, and installing curb cuts at landscape islands to facilitate stormwater runoff (the "Project "); and WHEREAS, the EDA has capability and the capacity to ensure the Project be completed and administered within the Redevelopment Incentive Grant program guidelines; and WHEREAS, subject to approval by the City Council, the EDA will have authority to administer and enforce the Grant Agreement; and WHEREAS, the EDA's Business Assistance Policy amended on May 7, 2012, considers the Grant to be business assistance to the owner of the Property; and WHEREAS, a Business Assistance Agreement between the EDA and the owner of the Property has been prepared describing the Project, which is consistent with the Grant Agreement. NOW, THEREFORE, be it resolved by the Commissioners of the EDA that the Business Assistance Agreement is hereby approved and the President and Secretary are authorized to sign . the same. ADOPTED this 14 day of June, 2012. D y AFT ATTEST: Pamela J. (Jackstetter, Secretary Larry S. Severson, President CERTIFICATE I, Pamela Gackstetter, Apple Valley Economic Development Authority Secretary, hereby certify that the forgoing is a true and correct copy of a resolution adopted by the Apple Valley Economic Development Authority on May 7, 2012, the original of which is in my possession, dated this day of , 2012. Pamela J. Gackstetter, Secretary BUSINESS ASSISTANCE AGREEMENT BY AND BETWEEN APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, MINNESOTA AND TIME SQUARE SHOPPING CENTER II, LLP BUSINESS ASSISTANCE AGREEMENT THIS AGREEMENT, made as of the day of , 2012, by and between the Apple Valley Economic Development Authority, Minnesota (the "EDA"), a public body corporate and politic under the laws of the State of Minnesota and Time Square Shopping Center II, LLP the "Developer"), a limited liability partnership. The EDA and the Developer are hereinafter referred to as the "Parties". WITNESSETH: WHEREAS, the Developer is the fee owner of two retail buildings that are part of the Time Square Shopping Center and are located on real property legally described as Lots 1, 3 and 4, Block 1, Levine Subdivision No. 2, Dakota County, Minnesota ("Property"); WHEREAS, the City of Apple Valley the "City") obtained a grant (the "Grant") in the amount of $78,700 from the Dakota County Community Development Agency in 2010 pursuant to the terms set forth in the Grant Agreement attached hereto as Exhibit "A" (the "Grant Agreement"); WHEREAS, the Grant will allow the Developer to make certain improvements to the Property, as stated in the Grant Agreement, including the remilling and restriping of the existing parking lot, extending a pedestrian walkway from the Property to a pedestrian trail on Cedar Avenue, and installing curb cuts at landscape islands to facilitate stormwater runoff (the "Proj ect"); WHEREAS, the EDA believes that the development and construction of the Project, and fulfillment of this Agreement are vital and are in the best interests of the Authority, the health, safety, morals and welfare of residents of the Authority, 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. WHEREAS, the requirements of the Business Subsidy Law, Minnesota Statutes, Section 116J.993 through 116J.995, do not apply to this Agreement because the amount paid to the Developer is less than $150,000; and WHEREAS, the City of Apple Valley Business Assistance Policy considers the Grant to be a form of business assistance to the owner of the Property, and requires the EDA to execute this agreement with the Developer. NOW, THEREFORE, in consideration of the mutual undertakings, the Parties agree as follows: 1. Incorporation of the Dakota County Community Development Agency Grant Agreement. The Grant Agreement, together with the Grant Amendment, between the City and the Dakota County Community Development Agency ("CDA") attached hereto as Exhibit "A" is incorporated in all respects into this Agreement. 1 AFT 2. Compliance with Agreements. The Parties shall comply in all respects with this Agreement, the Grant Agreement, as amended, and the City of Apple Valley's Business Assistance Policy. 3. Purpose. The purpose for this Project is to increase the tax base of the City of Apple Valley by increasing the value of the real property upon which the Time Square Premises is located, to create jobs with a livable wage and to enhance the character of the City's business districts. 4. Project. The Business Assistance is granted to the Developer for the construction of the Project as stated in the Grant Agreement. 5. Assistance. The Business Assistance shall be in the amount of $78,700 in the form of a grant to the Developer. 6. Assistance Contingency. The EDA's obligation to provide the Developer the Business Assistance shall be contingent upon the EDA receiving the grant from the CDA pursuant to the terms of the Grant Agreement. In the event the EDA fails to obtain the Grant, this Agreement shall terminate. 7. Compliance with City Codes. The Developer shall fully comply with all applicable requirements of the Apple Valley City Code of Ordinances. 8. Timing of Project. The Developer agrees that the Project shall be completed no later than June 30, 2013. 9. Reimbursement. The EDA shall reimburse the Developer for Project Costs as identified in the Grant Agreement up to $78,700, actually incurred and paid by the Developer. The EDA shall release the Business Assistance amount to the Developer upon completion of the Project. 2 IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed in its name and on its behalf and its seal to be hereunto duly affixed, and the Developer has caused this Agreement to be duly executed in their names, on or as of the date first above written. STATE OF MINNESOTA ) ) SS COUNTY OF APPLE VALLEY ECONOMIC DEVELOPMENT AUTHORITY, MINNESOTA By Its President By Its Secretary The foregoing instrument was acknowledged before me this day of 2012, by , the President and , the Secretary, respectively of the Apple Valley Economic Development Authority, Minnesota. Notary Public 3 STATE OF MINNESOTA ) )SS COUNTY OF ) TIME SQUARE SHOPPING CENTER, LLP By Its By Its The foregoing instrument was acknowledged before me this day of 2012, b y , the of Time Square Shopping Center, LLP. Notary Public EXHIBIT A Dakota County Community Development Agency Redevelopment Incentive Grant Agreement and Amendment A-1 GRANTEE By DAKOTA COUNTY COMMUNITY DEVELOPMENT AGENCY ARTICLE 1: TERMS OF GRANT REDEVELOPMENT INCENTIVE GRANT PRIG G ' NT AGREEMENT AMENDMENT DATED MAY 8, 2012 Margaret M. Dykes, Apple Valley Associate City Planner, submitted a written request dated May 2, 2012 (attached), for a second extension to the Redevelopment Incentive Grant for the Time Square Renovations Redevelopment project. Request for a second extension has been approved and requires a written amendment (per term 1.07 in grant agreement). The prior expiration date was June 30, 2012, and this approval will extend the end date to June 30, 2013. 1.04 Grant Term: The Project shall be completed in a timely manner and all Grant funds will be expended upon the later of (a) eighteen (18) months of the date of this Agreement or (b) June 30, 2013 (the "End Date "). For purposes of this Agreement, "Completed" means completion of the renovations at Time Square, 7525 -- 148 St. W; 7530 - 149 St. W; and 7540 -64 149 St. W. Documentation of the renovations to the exterior improvements (sidewalk improvements; landscaping; construction of two gathering areas) and additional improvements to the rear of the building will be submitted to the CDA upon completion. Tom Lawell City Administrator, Apple Valley DAKOTA COUNTY CDA By Date..., Date Mark Ulfers Executive Director DAKOTA COUNTY COMMUNITY DEVELOPMENT AGENCY REDEVELOPMENT INCENTIVE G G • NT AGREEMENT NT PROG • THIS G • NT AGREEMENT entered into this 9th day of February, 2010 by and between the Dakota County Community Development Agency, a public body corporate and politic (the "Agency"), and the City of Apple Valley, a political subdivision of the State of Minnesota (the "Grantee"). WHEREAS, pursuant to Resolution No. 06-4092 the Agency has established the Redevelopment Incentive Grant Program (the "Program") to improve the tax base and quality of life in Dakota County by assisting municipal redevelopment efforts and promoting the development of affordable housing; and WHEREAS, the activities to be undertaken under the Program are all activities that the Agency could undertake directly pursuant to Minnesota Statutes, §§469.001 to 469.047 and 469.090 to 469.1082; and WHEREAS, this Agreement shall constitute a cooperation agreement between the parties, as contemplated by Minnesota Statutes, §§469.041, clause (8) and 469.101, subdivisions 5 and 14; and WHEREAS, the Grantee submitted an application for a Redevelopment Incentive Grant (the "Application") in response to a request for proposals issued by the Agency and will use the grant funds made available under this Agreement to help fund the project identified in Attachment A (the "Project"); and WHEREAS, the Agency has concluded that the Grantee has the necessary expertise, skill and ability to successfully complete the Project and that the Project is in the best interests of the Agency and will positively contribute to meeting the goals of the Program; and WHEREAS, the Grantee is a municipality of Dakota County that is supportive of the Agency's mission and of the development of affordable housing; and WHEREAS, the Agency had agreed to provide grant funds to the Grantee pursuant to the Program and Resolution No. 10-4701, subject to any terms, conditions, and clarifications hereof. NOW THEREFORE, in consideration of the mutual covenants and agreement contained herein, the Agency and the Grantee agree as follows: 1 ARTICLE 1: TERMS OF G • , NT 1.01 Grant Amount: The Agency agrees to provide a grant to the Grantee in the amount of Seventy-Eight Thousand, Seven Hundred Dollars ($78,700.00) (the "Grant") from the Program upon the terms and conditions and for the purposes set forth in this Agreement. 1.02 Match Requirement: The Grantee shall match the total Grant amount received from the Agency based upon the expenditure of two dollars ($2.00) of Grantee funds for each one dollar ($1.00) of Grant funding ("Matching Funds"). Such Matching Funds shall (a) constitute the actual expenditure of Grantee funds on the Project described in Attachment A and not "in kind" contributions and (b) be in balance at the time of each Grant disbursement pursuant to Section 1.06 hereof. The source and amount of Matching Funds shall be identified by the Grantee in each Reimbursement Request, as described in Section 1.06. 1.03 Use of Funds: The Grantee agrees to use the proceeds of the Grant solely for the purposes and activities described in Attachment A. A Project summary that identifies eligible uses of Grant proceeds, as approved by the Agency, is contained in Attachment A ("Eligible Uses"). Grant funds shall not be used for (a) construction costs, (b) soft costs related to the Project, (c) costs not included in the Application, (d) residential rehabilitation or house moving or (e) administration expenses. 1.04 Grant Term: The Project shall be completed in a timely manner and all Grant funds will be expended upon the later of (a) sixteen (16) months of the date of this Agreement or (b) June 30, 2011 (the "End Date"). For purposes of this Agreement "Completed" means issuance by the City of a certificate of occupancy for all or any portion of the Project. 1.05 Term Extension: The End Date may be extended beyond the original End Date at the sole discretion of the Executive Director of the Agency. The Grantee must submit any extension request in writing at least thirty (30) calendar days prior to the End Date (a) stating the reason for the extension request, (b) providing a proposed new End Date and (c) describing in reasonable detail proposed changes to the Project activities and budget, if any. The End Date may be extended only once and the extension shall not exceed one (1) year beyond the original End Date. 1.06 Disbursement of Grant Funds: The Agency will disburse Grant funds in response to written reimbursement requests ("Reimbursement Requests") submitted to the Agency by the Grantee upon forms provided by the Agency and accompanied by (a) copies of bills and invoices from third parties for which Grantee seeks reimbursement and (b) proof of expenditure of Matching Funds in an amount at least equal to two times the amount of the Reimbursement Request. Subject to verification of the facts contained each Reimbursement Request and a determination of compliance with the terms of this Agreement, the Agency will disburse the requested amount to the Grantee within fourteen (14) days after receipt of each Reimbursement Request. 1.07 Release of Unused Grant Funds: Upon the earlier of (a) Completion of the Project or (b) the End Date (the "Grant Release Date"), any Grant funds not previously disbursed to the Grantee for any reason shall be automatically released from the terms of this Agreement. ARTICLE 2: ACCOUNTING, AUDIT AND REPORTING REQUIREMENTS 2.01 Accounting and Records: The Grantee agrees to accurately and completely establish and maintain detailed accounts and records relating to the receipt and expenditure of all Grant funds received under this Agreement. Such accounts and records shall be kept and maintained by the Grantee for a period of six (6) years following the Grant Release Date. Such financial records shall sufficiently evidence the nature and expenditure of all Match Funds required. Accounting methods shall be in accordance with generally accepted accounting principles. 2,02 Audits: The accounts and records of the Grantee described in Section 2.01 shall be audited in the same manner as all other accounts and records of the Grantee and may, for a period of six (6) years following the Grant Release Date, be inspected on the Grantee's premises by the Agency or individuals or organizations designated by the Agency, upon reasonable notice thereof to the Grantee. The books, records, documents and accounting procedures relevant to this Agreement are subject to examination by the State Auditor in accordance with State law. 2.03 Report Requirements: The Grantee shall periodically report to the Agency regarding the status of Project activities and the expenditures of the Grant funds. Reports are due on each May 31 and November 30 during the Grant term, as defined in Section 1.04. A final report is due sixty (60) days following the Grant Release Date. This reporting requirement and all others required in this Agreement shall survive the termination or expiration of this Agreement. 2.04 Appraisal: The Grantee represents that an appraisal has been or will be carried out to determine the fair market value of any real property to be acquired as a part of Project activities and that any purchase offer and price paid was made based on the appraised value. The Grantee further represents that such appraisal conforms to Uniform Standards of Professional Appraisal Practice (USPAP) requirements and was performed by a qualified appraiser licensed in the State of Minnesota. 2.05 Acquisition and Relocation: The Grantee represents that all Project activities comply with all aspects of Minnesota Statutes, §§117.50 to 117.56 and the United States Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, if applicable. 2.06 Environmental Site Assessment: The Grantee represents that a Phase I Environmental Site Assessment or other environmental reviews have been or will be carried out, if such environmental assessment or review is appropriate for the scope and nature of the Project activities funded by this Grant and that any environmental issues have 3 been or will be properly and adequately addressed. Issuance of this Grant neither implies any Agency responsibility for contamination, if any, at the Project site nor imposes any obligation on the Agency to participate in any pollution cleanup of the Project site if such cleanup is undertaken or required. 2.07 Public Bidding: The Grantee, in the expenditure of Grant funds, shall at all times comply with the requirements of Minnesota Statutes, §§469.015 and 471.345. ARTICLE 3: G • NTEE REPRESENTATIONS AND WAR NTIES 3.01 Authority: Grantee warrants that it is duly organized under applicable laws of the State of Minnesota and that it has authority to execute, deliver, and perform its obligations under this Agreement. 3.02 Use of Grant Funds: Grantee warrants that it shall use the proceeds of the Grant solely for Eligible Uses in accordance with Section 1.03 hereof. 3.03 Project Site Acknowledgements: The Grantee shall acknowledge the assistance provided by the Agency and Dakota County in promotional materials, press releases, reports and publications relating to the Project activities that are funded in whole or in part with the Grant funds. The acknowledgement should contain the following language: "Financing for this project was provided by the Dakota County CDA Redevelopment Incentive Grant Program and support from Dakota County". Until the Project is Completed, the Grantee shall ensure the above acknowledgement language, or alternative language approved by the Executive Director of the Agency, is included on all signs located at Project or construction sites that identify Project funding partners or entities providing financial support for the Project. 3.04 Assignment: Grantee shall not cause or permit any voluntary transfer, assignment, or other conveyance of this Agreement without the written consent of the Agency, which said consent may be withheld it the Agency's sole discretion. Any non-approved transfer, assignment or conveyance shall be void. 3.05 Indemnification: Grantee shall defend, hold harmless and indemnify the Agency and its elected and appointed officials, officers, agents and employees from and against all claims, liability, costs expenses, loss or damages of any nature whatsoever, including reasonable attorney's fees, arising out of or in any way connected with its failure to perform its covenants and obligations under this Agreement and any of its operations or activities related thereto, excluding the willful misconduct or the gross negligence of the person or entity seeking to be defended, indemnified, or held harmless. The provisions of this paragraph shall survive the termination of this Agreement. This indemnification shall not be construed as a waiver on the part of either the Grantee or the Agency of any immunities or limits on liability provided by applicable State law. 4 ARTICLE IV: DEFAULT AND REMEDIES 4.01 Default Defined: The term "Default" shall mean, whenever it is used in this Agreement (a) any failure by the Grantee to substantially observe or perform any material covenant, condition, obligation or agreement on its part to be observed or performed hereunder or (b) any material breach of any representation set forth herein. 4.02 Remedies: Whenever a Default occurs, the Agency may immediately, without notice, suspend its performance under this Agreement. After providing thirty (30) days written notice to Grantee of a Default, but only if the alleged Default has not been cured within said thirty (30) days or, if the alleged Default cannot be cured within said thirty (30) days, within such time as is reasonably determined by the Agency as necessary to cure (assuming Grantee diligently pursues such cure), the Agency may (a) terminate this Agreement by written notice, upon which all non-disbursed Grant Funds shall be released, and/or (b) pursue whatever action, including legal, equitable or administrative action, which may appear necessary or desirable to collect any amounts due under this Agreement or to enforce the performance and observance of any obligation, agreement, or covenant hereof. 4.03 No Remedy Exclusive: No remedy herein conferred upon or reserved to the Agency 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. In order to entitle the Agency to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as provided in Section 4.02. 4.05 No Additional Waiver Implied by One Waiver: In the event any agreement contained in this Agreement should be breached by the Grantee and thereafter waived by the Agency, 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. ARTICLE 5: GENE • L PROVISIONS 5.01 Amendments: The Agency and the Grantee may amend this Agreement by mutual agreement and shall be effective only on the execution of written amendments signed by authorized representatives of the Agency and the Grantee. 5.02 Equal Opportunity: The Grantee agrees it will not discriminate against any employee or applicant for employment because of race, color, creed, religion, national origin, sex, marital status, status with regard to public assistance, membership or activity in local civil rights commission, disability, sexual orientation or age and will take affirmative 5 action to insure applicants and employees are treated equally with respect to all aspects of employment, rates of pay and other forms of compensation, and selection for training. 5.03 Conflict of Interest: The members, officers and employees of the Grantee shall comply with all applicable state statutory and regulatory conflict of interest laws and provisions. 5.04 Severability: If one or more provisions of this Agreement are found invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, the remaining provisions shall not in any way be affected, prejudiced, disturbed or impaired thereby, and all other provisions of this Agreement shall remain in full force. 5.05 Time: Time is of the essence in the performance of the terms and conditions of this Agreement. 5.06 Contacts: Reimbursement Requests, written reports and correspondence submitted to the Agency pursuant to this Agreement shall be directed to: Dakota County CDA Attn: Assistant Director of Community Revitalization 1228 Town Centre Drive Eagan, MN 55123 Any notice, demand, or other communication under the Agreement to the Grantee shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally to Grantee at: City of Apple Valley Attn: Community Development Director 7100- 147 St W Apple Valley, MN 55124 or at such other address that Grantee may, from time to time, designate in writing. Mailed notices shall be deemed duly delivered two (2) business days after the date of mailing. 5.07 Warranty of Legal Capacity: The individuals signing this Agreement on behalf of the Grantee and on behalf of the Agency represent and warrant on the Grantee's and the Agency's behalf respectively that the individuals are duly authorized to execute this Agreement on the Grantee's and the Agency's behalf, respectively and that this Agreement constitutes the Grantee's and the Agency's valid, binding and enforceable agreements. 5.08 Counterparts: This Agreement may be executed in multiple counterparts, and all such executed counterparts shall constitute the same Agreement. It shall be necessary to account for only one (1) such counterpart executed by each party hereto in proving the existence, validity or content of this Agreement. 6 IN WITNESS WHEREOF, the Grantee and the Agency have caused this Agreement to be executed by their duly authorized representatives. This Agreement is effective on the date of final execution by the Agency. Agency: The Dak By: Its: Dated: ounty Community Development Agency 7 Grantee: The City of Apple Valley By: Its: Dated: ). *t. ATTACHMENT A Project Name: I Times Square Renovations • • - Location: (Site Map Attached) 7525 — 148 St W, 7530 — 149 St W, 7540-64 149 St W vw „ Redevelopment Project Description: Reface building exterior, construct courtyard area at Time Square 1. Funds to be used for: Re-mill parking lot asphalt, restripe parking spaces, extend pedestrian walkway from site to reconstructed trial on Cedar Avenue, install curb cuts at landscape islands to facilitate storm water runoff. Project Activities: Parking lot asphalt remilling, walkway I $300,000 " Budget: extension, curb cuts provided by: (1) Redevelopment Incentive Grant I $78,700 (2) Property Owner (3) Unknown source $50,000 $171,300 Matching Funds Sources: Amounts: Property owner for construction and $450,000 materials costs for re-facing building exterior and constructing a courtyard area at Time Square 1. . _.........„„.......„.....„ .......„...... 9 TIME SQUARE RENOVATIONS LOCATION MAP 0 CITY OF APPLE VALLEY 2010 REDEVELOPMENT INCENTIVE GRANT ,:GODDARr �} I,SCHOOL .15,040 2 9 : PENN ,K a •OFFIC: •128,958 ..CENTENNIAL , HOUSE CHr BIG AP MALL •24, 86 PENN'• • PLAZA 1 RANAE 32, CO aL B UEGG'ERS `2414 AUTO , SUPERLOCK , 46,687 RAINBOW 356,000 •BURLUNGTt N ., APPLE /ALL Y SCAR WASH 1 4t �r '' M.,,, ,,,, r = �. sSt e 4a•. ::. r ? .9 "► r.444 1► � +' ' * *►� � i ii �`" �� "t + iii *' 4Asi+•* 4 , 4 4, , ��'� ',+; , +��i� + , n ► . i + i !'' 41 , , 14r:4 0 01 . :-..: ..-V 1 1 1 +,+ + 9+ � + + , .. 0 +� + ► 'fig ; 1 AttZr:;:r 40 ENI\EE 6,200 'S - 118n • REAL I ,S 00 ; 1 •LEEANN C 1 y 3 {O _,.� .. .CHIPO �l �a BOSO ' f APPLE VALLEY SQUARE L. •119, 438 AO 649 ARP - EE'S 34.99 16,5 2 Time Square Shopping Center 2 9 4 „PARKING D ,, � N1 ��, :.��... A •GARA E 9 G��\ e.. > 1 a ttftc yTC n!t. v+ !?+. > . h i.." �'.;^✓.wy..c�vi:b`..' II 4980— MA LYNN fv1ONTESS •YGRlZZLY S .c FIL 3AMER14IN z 4 .7 75 'BLD 300 600 1,200 iF. , -F.•s ii+Y ?aN3.':•i3i ev,. Y.�S::/+`Ttx :.+5!7.i 1,800 SOUTHPORT PLAZA ARE APPLE VALLEY •23,500 4" �d rj r ,< .66 000 A LEMVALLEI .0 MMONS 11 ti APPLE VALLEY . OMMONS .60,0 010 R VIDEO 5 l� ' air 1x5' ST ST - VT' .TARGET GREATLAN •189,229 2,400 Feet P::eY- A+I -cvc.