HomeMy WebLinkAboutContract 21702170
BUSINESS SUBSIDY AGREEMENT
THIS AGREEMENT, made as of the 8th day of December, 2008, by and between the CITY
OF COLUMBIA HEIGHTS (the ``City"} and Stadium Village Properties, LLC (the "Developer").
RECITALS
WHEREAS, the City and the Developer have entered into that certain Preliminary
Development Agreement dated August 25, 2008 (the "Development Agreement"), which
specifies the parties' responsibilities regarding exterior facade reconstruction of an office facility
owned by Developer (the "Facility") and the conveyance of City-owned real property located
adjacent to the Facility and described in Exhibit A attached hereto (the "Walkway Property");
and
WHEREAS, the Facility and the Walkway Property are located within the Downtown
CBD Redevelopment Project ("Project"} originally established by the City and the Housing and
Redevelopment Authority in and for the City of Columbia Heights (the "HRA") and now
administered by the Columbia Heights Economic Development Authority ("EDA"); and
WHEREAS, the Facility and Walkway Property were developed with assistance from the
HRA as part of redevelopment efforts along Central Avenue, and such property remains a critical
component of the City's and EDA's redevelopment plans for the Project; and
WHEREAS, the City, as a state public body under Milmesota Statutes, Section 469.041,
is authorized to make contributions in aid of the Project; and
WHEREAS, the Development Agreement contemplates, among other things, that the
City will convey the Walkway Property to the Developer for $1..00, subject to the terms of
conveyance agreements to be entered into by the parties; and
WHEREAS, the City has determined that its contribution of land to the Developer
constitutes a business subsidy within the meaning of Mimlesota Statutes, Section 116J.993 to
116J.995 (the "Business Subsidy Act"); and
WHEREAS, the Developer has substantially completed its obligation to reconstruct tl~e
external facade of the Facility, in recognition of weather concerns related to such reconstruction
and in reliance on the representations made by the City within the Development Agreement; and
WHEREAS, the City Council 11as held a duly noticed public hearing regarding the
business subsidy described in this Agreement;
NOW, THEREFORE, in consideration of the premises anal the mutual obligations of the
parties hereto, each of them does hereby covenant and agree with. the other as follows:
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General Teims. The parties agree and represent to each other as follows:
(a) The subsidy provided by the City to the Developer consists of the fair market value
of the Walkway Property, which the parties agree is $245,000, based on a "value in use'' appraisal
commissioned by the City. The timing of the conveyance of the Walkway Property will be
determined by the parties as part of agreements entered into in connection with such conveyance.
The parties agree and understand that the "Benefit Date" (within the meaning of the Business
Subsidy Act) for the subsidy under this Agreement is the date of closing on such conveyance.
(b} The public purpose of the subsidy is to reconstruct the exterior facade of the Facility
anal thereby preserve and enhance this Ivey site within the Project and encourage additional
investment in this long-tern redevelopment effort within the City.
(c) The goals for the subsidy are to (i) secure completion of exterior facade
reconstruction of the Facility by December 31, 2008; and (ii) ensure that the Facility is operated for
at least five years as described m clause (f) below.
(d) If the goals described iti clause (c) are not inet, the Developer must make the
payments to the City described in Section 3.
(e) The subsidy is needed to enable the Developer to leverage the value of the Walkway
Property to finance additional maintenance and redevelopment activities related to the Facility and
the Walkway Property.
(f) The Developer must continue or cause to be continued operation of the Facility as aii
office facility for at least five years after the Benefit Date. For purposes of this section, the Facility
will be considered operated as aii office facility as long as any portion of the Facility is operated
by Developer or any permitted successors acid assigns, or a ter~ar~t therco~ for office purposes.
During ally period when the Facility is vacant and not operated for office purposes, the Facility
will not constitute aii office facility; provided that the Facility will be considered an office
facility if Developer is using best efforts to lease the Facility for office purposes.
(g) The Developer must maintain commercially reasonable insurance coverage on the
Facility and Walkway Property, including without limitation insurance against loss and/or
damage to the Facility and Walkway Property and comprehensive general public liability
insurance. The Developer agrees to notify the City iininediately in the case of damage exceeding
$100,000 in amount to, or destruction of, the Facility or Walkway Property or airy portion thereof
resulting from fire or other casualty. In such event the Developer will forthwith repair, reconstruct,
and restore the Facility or Walkway Property to substantially the same or aii improved condition or
value as it existed prior to the event causing such damage and, to the extent necessary to accomplish
such repair, reconstruction, and restoration, the Developer will apply the net proceeds of any
insurance relating to such damage received by the Developer to the payment or reimbursement of
the costs thereof. The Developer shall complete the repair, reconstruction and restoration of the
Facility or Walkway Property, regardless of whether the net proceeds of insurance received by the
Developer for such purposes are sufficient to pay for the same, provided that if Developer delivers
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evidence that such repair is financially infeasible or that the holder of any mortgage on the Facility
or Walkway Property withholds consent to such repair, the City shall waive this requirement. Airy
net proceeds remaining after completion of such repairs, construction, and restoration shall be the
property of the Developer.
(li) The Developer does not have a parent corporation.
(i) The Developer has not received, and does not expect to receive, financial assistance
from any other "grantor" as defined in the Business Subsidy Act, in comlection with the Walkway
Property or the Facility.
2. Job and Wade Goals. In accordance with Section 116J.994, subdivision 4, the City
has determined after a public hearing that the creation or retention of jobs is not the goal of the
business subsidy provided under this Agreement. Accordingly, the wage and job goals are set at
zero.
3. Remedies. If the Developer fails to meet the goals described in Section 1(c), the
Developer shall repay to the City upon written demand from the City (a} the total amount of the
subsidy described in Section 1(a) hereof; and (b) interest on the amounts in clause (a) at the rate set
forth in the Business Subsidy Act, accrued from the Benefit Date to the date of the default. If the
reconstruction of the Facility is timely completed but the Developer fails to meet the five-year
operation goal, the total subsidy to be repaid will be prorated by the portion of the five-year
operation period elapsed as of the date of default.
Developer agrees atzd understands that it may not receive a business subsidy from the City
or any grantor (as defined in the Business Subsidy Act) for a period of five years from the date of
the failure or until the Developer satisfies its repayment obligation under this Section, whichever
occurs first.
4. Reports. Developer must submit to the City a written report regarding business
subsidy goals and results by no later than March 1 of each year, cormnencing March 1, 2009 and
continuing until the later of (i) the date the goals stated Section 1(c) are met; (ii) 30 days after
expiration of the five-year period described in Section 1(f) or (iii) if the goals are not met, the date
the subsidy is repaid in accordance with Section 3. The report must comply with Section 116J.994,
subdivision 7 of the Business Subsidy Act. The City will provide information to the Developer
regarding the required forms. If Developer fails to timely file any report required under ties
Section, the City will mail the Developer a waning within one week after the required filing date.
If, after 14 days of the postmarked date of the warning, the Developer fails to provide a report, the
Developer must pay to the City a penalty of $100 far each subsequent day until the report is filed.
Failure by the City to deliver a timely wa171ing notice will not relieve the Developer's obligation to
pay a penalty within 14 days after receipt of a notice to pay. The maxunwn aggregate penalty
payable under this Section is $1,000.
5. Relation to Development Agreement. This Agreement supplements the
Development Agreement. In the event of any conflict between this Agreement and the
Development Agreement, this Agreement controls.
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6. Notices and Demands. Except as otherwise expressly provided in this
Agreement, a notice, demand, or other conununication under the Agreement by either party to
the other shall be sufficiently given or delivered it if is dispatched by registered or certified mail,
postage prepaid, return receipt requested, or delivered personally:
As to the City: City of Columbia Heights
590 40t~' Avenue NE
Columbia Heights, MN 55421
Attention: Scott Clarl{
With Copy to: Stephen Bubul
Kennedy & Graven
470 U.S. Bank Plaza
Mimzeapolis, MN 55402
As to the Developer: Stadium Village Properties, LLC
1313 Fifth Street SE, Suite 100
Minneapolis, MN 55414
or at such other address with respect to either such party as that party may, from time to time,
designate in writing and forward to the other.
7. Counterparts. This Agreement may be simultaneously executed in any number of
counterparts, all of which shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the City has caused this Agreement. to be duly executed in its
name and behalf and the Developer has caused this Agreement to be duly executed in its name
and behalf as of the date first above written. f~--~ -
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CITY OF COLMBIA HEIGH~4I'S
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Its Mayoyr-G 'y L. Peterson
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Its City Mananer=Walter R. Fehst
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STADIUM VILLAGE PROPERTIES, LLC
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Its
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EXHIBIT A
Description of Walkway Property
Those parts of Lots 27 through 31, Block 6, Reservoir Hills and those parts of Lots 23 and 24,
Block 1, Walton's Rearrangement of Lots 33 and 34, Bloclc 6, Reservoir Hills and of the vacated
alley abutting Bloclc 1, "Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills", as
dedicated in said plat, lying within the following described tract: Commencing at a point on the
south line of said Block 1, Walton's Rearrangement distant 18.00 feet west of the southeast
confer of Lot 23, said Block 1, Walton's Rearrangement; thence northerly on a line 18.00 feet
west of acid parallel with the east line of said Lot 23, a distance of 87.00 feet, to the actual point
of begimning of the tract to be described; thence continuing northerly on the extension of said
line to the north line of Block 6, Reservoir Hi11s; thence westerly along said north line of Bloclc
6, to a point being 47.23 feet easterly of the northwest conger of Lot 30, Block 6, Reservoir I-fills;
thence southeasterly, to the point of beginning.
Reserving and subject to easements to the City of Columbia Heights for roadway purposes over
the north 4.00 feet of the west 232.00 feet of said Block 6, Reservoir Hills.
Reserving to the City of Columbia Heights a utility easement over, under, and across the east
15.00 feet of the west 22.00 feet of Lot 27, Block 6, Reservoir Hills, and the east 15.00 feet of
the west 22.00 feet of Lot 23, Block 1, Walton's Rearrangement of Lots 33 and 34, Block 6,
Reservoir Hills, and that portion of the vacated alley abutting Bloclc 1, "Walton's Rearrangement
of Lots 33 and 34, Block 6, Reservoir Hills", as dedicated in said plat, lying between the
northerly extensions of the east and west lines of the east 15.00 feet of the west 22.00 feet of said
Lot 23, Block 1.
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