HomeMy WebLinkAbout7C Prior Lake Revival Tax Abatement Report
4646 Dakota Street SE
Prior Lake, MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE: JUNE 12, 2017
AGENDA #: 7C
PREPARED BY: CASEY McCABE, COMMUNITY DEVELOPMENT DIRECTOR
PRESENTED BY: CASEY McCABE
AGENDA ITEM: PUBLIC HEARING TO CONSIDER APPROVAL OF A RESOLUTION APPROV-
ING TAX ABATEMENT AND A BUSINESS SUBSIDY AGREEMENT FOR PRIOR
LAKE REVIVAL, LLC
DISCUSSION:
Introduction
The purpose of this public hearing is to consider approval of a resolution approving
Tax Abatement and a Business Subsidy Agreement for Prior Lake Revival, LLC.
Current Circumstances
Prior Lake Revival is proposing to construct a new 12,400 square foot one-story
commercial building which will be occupied by three to four businesses. The cur-
rently vacant property is zoned TC, Town Center and is located at the southwest
corner of the Duluth Avenue SE and CH21 intersection (PID: 259021270). Prior
Lake Revival has applied for tax abatement to assist with site development costs
associated with soil corrections, soil export/import and retaining wall construction.
Prior Lake Revival, LLC is a recently formed business entity that consists of three
partners. Matthew Schafer, Chad Olson and Lisa Claussen all have equal owner-
ship in the company and Mr. Olson (Olson Dental) and Ms. Claussen (Crossroads
Optometric) would be tenants of the building.
Tax Abatement
Minnesota law authorizes political subdivisions to grant property tax abatements for
economic development (e.g., to encourage a business to locate or expand at a lo-
cation or to redevelop an area). Tax abatement is similar to Tax Increment Financ-
ing but focuses on one property instead of a district and allows each taxing district
(City, County or School District) to act independently. Prior Lake Revival has not
requested Scott County or the School District to consider tax abatement for this
project.
Staff is proposing a pay-as-you-go abatement with a maximum abatement dollar
amount of $125,000 and 15-year term. The tax abatement will terminate when the
agreed upon dollar amount has been reached or the maximum term has expired,
whichever occurs first. There is no direct financial risk to the city with the pay-as-
you-go approach. Prior Lake Revival will be responsible for the payment of property
taxes on the parcel and after receipt, the city will use its share of the property tax
increase to reimburse Prior Lake Revival per the terms of the Business Subsidy
Agreement.
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If approved by the City Council, the tax abatement provided by the City of Prior Lake
will be based on certified site development costs in an amount not to exceed
$125,000. The tax abatement paid to Prior Lake Revival will be based upon the net
amount of property taxes received by the City from the project site. The “net amount
of property taxes” shall be the actual annual amount of property taxes received by
the City attributable to an increase or increases in the property taxes as a result of
the project. The “net amount of property taxes” does not include any value or in-
crease or decrease in value attributable to the land only.
Northland Securities Inc. has projected cash flow based on several scenarios with
varying estimated market values upon completion. For the applicants to receive the
total maximum abatement of $125,000 over 15 years, the total market value would
need to be approximately $2.3 million upon completion. If the total market value
upon completion was determined to be $1.45 million, the estimated total tax abate-
ment over the 15-year term would be approximately $73,500.
Business Subsidy Agreement
In accordance with Minnesota Statute 116J.993 – 116J.995 (“Minnesota Business
Subsidy Law”), the City Council adopted a Business Subsidy Policy on October 18,
2004, which has been amended multiple times, most recently on August 26, 2013.
The policy establishes guidelines and other criteria regarding the use of business
subsidies, such as tax increment financing, tax abatement, loans and other business
subsidies for private development projects within the City of Prior Lake.
The proposed development would achieve several Public Purpose Objectives iden-
tified in the Business Subsidy Policy, including:
➢ To enhance and diversify the City’s tax base;
➢ To provide employment opportunities in the City;
➢ To help provide access to services for residents of the City;
➢ To achieve development on a site that may not be developed without busi-
ness subsidies assistance;
➢ To encourage development of a commercial area in the City that results in
higher quality development and private investment; and
➢ To offset increased costs of development of a specific property when the
unique physical characteristics of the site may otherwise preclude private
investment.
Although the applicants expect the retention of twenty positions and creation of fif-
teen new positions as a result of this project, because the tax abatement is for site
development costs staff recommends that the creation and retention of jobs not be
a goal of this business subsidy. Wage and job goals are set at zero in the Business
Subsidy Agreement, pursuant to Minnesota Statutes 116J.994, Subd. 4.
The Local Business Incentives Policy requires anyone receiving a business incen-
tive between $5,001 and $149,999 to enter into an agreement with the City. The
Prior Lake City Attorney has assisted in the development of the Business Subsidy
Agreement to ensure conformance with the City’s policy. As part of the Agreement,
Prior Lake Revival will be required to submit annual reports to the city certifying
compliance with the Business Subsidy Agreement.
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Conclusion
The EDA reviewed the proposed project with applicant on March 20, 2017, prior to
the submittal of the application. The EDA reviewed the feasibility of the project and
the applicant’s preliminary request for business subsidy assistance related to soil
correction and site development costs. Following their review, the EDA encouraged
the applicant to apply for tax abatement assistance f or site development costs.
ISSUES:
If approved, the City of Prior Lake will see the following benefits of this economic
development project:
• The Scott County estimated market value of the property will increase from
$245,000 to an estimated $1.5 to $2.5 million.
• After the tax abatement term expires, the development will generate an
estimated total property tax revenue of $70,000 (currently $7,500) to be divided
by the taxing jurisdictions. The city’s potion of property tax revenue is expected
to increase from approximately $900 to $7,500 annually.
• Although not a goal of this business subsidy, the project is expected to result in
the retention of twenty employees and provide for the creation of up to fifteen
new positions.
• A long-vacant property will be developed with a 12,400 SF commercial building
and may encourage additional development in the immediate area or elsewhere
in the downtown.
FINANCIAL
IMPACT:
The total business subsidy assistance, in the form of tax abatement provided by the
City of Prior Lake, is up to $125,000 based on certified site development costs and
the net amount of property taxes received by the City from the project site. The “net
amount of property taxes” shall be the actual annual amount of property taxes re-
ceived by the City attributable to an increase or increases in the property taxes as
a result of the project. The “net amount of property taxes” shall not include any
value or increase or increase or decrease in value attributable to the land only. All
costs related to the City’s financial and legal fees for this project are covered by the
Prior Lake Revival application fee.
ALTERNATIVES: 1. Motion and a second to approve a resolution approving Tax Abatement and au-
thorizing the Mayor and City Manager to enter into a Business Subsidy Agree-
ment with Prior Lake Revival, LLC.
2. Motion and a second to deny the resolution approving Tax Abatement for Prior
Lake Revival, LLC.
3. Motion and a second to table action to a future date and provide direction to
staff.
RECOMMENDED
MOTIONS:
Alternative #1
ATTACHMENTS: 1. Application for Financial Assistance
2. Business Subsidy Agreement
3. Estimated Tax Abatement
4. Tax Abatement Scenarios
5. Location Map
6. Proposed Site Plan
7. Proposed Building Elevations
4646 Dakota Street SE
Prior Lake, MN 55372
RESOLUTION 17-___
A RESOLUTION APPROVING TAX ABATEMENT
AND A BUSINESS SUBSIDY AGREEMENT FOR PRIOR LAKE REVIVAL, LLC
Motion By: Second By:
WHEREAS, Minn. Stat. §§ 116J.993 – 116J.995 authorize the City to grant business subsidies,
such as tax increment financing, tax abatement, and other business subsidies for
private development projects, in order to achieve a public purpose; and
WHEREAS, on August 26, 2013 the City adopted an Amended Business Subsidy Policy in
compliance with Minn. Stat. § 116J.994, Subd. 2; and
WHEREAS, Minn. Stat. §§ 469.1812 – 469.1815 authorize the City to grant tax abatement for
private development projects, in order to achieve a public purpose; and
WHEREAS,
WHEREAS,
Prior Lake Revival, LLC has proposed to construct a one-story commercial building
of approximately 12,400 square feet (“Project”) on a parcel of land located at the
southwest corner of the Duluth Avenue SE and County Highway 21 intersection in
Prior Lake, Minnesota, PID 259021270; and
Prior Lake Revival has applied for a business subsidy in the form of a pay-as-you-
go tax abatement under the City’s Amended Business Subsidy Policy in order to
assist with the site development costs associated with soil corrections, soil
export/import and retaining wall construction on the Project Site; and
WHEREAS,
WHEREAS,
on this date, June 12, 2017, the requested business subsidy was considered by the
City Council at a public hearing duly noticed and held as required by Minn. Stat. §
116J.994 at which all interested persons were given an opportunity to be heard; and
there has been presented before the City Council a Business Subsidy Agreement by
and between the City of Prior Lake and Prior Lake Revival, LLC setting forth the
terms of the proposed business subsidy; and
NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE,
MINNESOTA as follows:
1. The recitals set forth above are incorporated herein.
2. Based upon the information presented and the duly held and noticed public hearing, the
Council makes the following findings:
a. the Project will achieve several public purpose objectives, including specifically, to
enhance and diversify the City’s tax base, to provide employment opportunities in
the City, to help provide access to services for residents of the City, to achieve
development on a site that may not be developed without business subsidies
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assistance; to encourage development of a commercial area in the City that results
in higher quality development and private investment; and to offset increased costs
of development of a specific property when the unique physical characteristics of
the site may otherwise preclude private investment.
b. the Project is consistent with the City 2030 Comprehensive Plan and Vision
Statement.
c. the creation and retention of jobs is not a goal of th is business subsidy, therefore
the wage and job goals are set to zero pursuant to Minn. Stat. § 116J.994, Subd. 4.
3. Based upon the recitals and the findings both set forth above, the Council approves a
business subsidy in the form of a pay-as-you-go tax abatement to Prior Lake Revival, LLC
as set forth in the Business Subsidy Agreement in an amount not to exceed $125,000.00.
4. The Council approves the Business Subsidy Agreement subject to review by the City
Attorney.
5. The Mayor and City Manager are hereby authorized to execute on behalf of the City the
Business Subsidy Agreement and any other related documents requiring execution by the
City.
PASSED AND ADOPTED THIS 12th DAY OF JUNE, 2017.
VOTE Briggs McGuire Thompson Braid Burkart
Aye ☐ ☐ ☐ ☐ ☐
Nay ☐ ☐ ☐ ☐ ☐
Abstain ☐ ☐ ☐ ☐ ☐
Absent ☐ ☐ ☐ ☐ ☐
______________________________
Frank Boyles, City Manager
BUSINESS SUBSIDY AGREEMENT
This Business Subsidy Agreement (“Agreement”) is entered into this ___ day of ________,
2017, by and between the City of Prior Lake, a Minnesota municipal corporation (“City”) and
Prior Lake Revival, LLC, a Minnesota limited liability company (“Revival”).
Recitals
WHEREAS, Minn. Stat. §§ 116J.993 – 116J.995 (“Business Subsidy Act”) authorizes the
City to grant business subsidies, such as tax increment financing, tax abatement, and other business
subsidies for private development projects, in order to achieve a public purpose; and
WHEREAS, in order to grant a business subsidy, the City must adopt a business subsidy
policy in compliance with Minn. Stat. § 116J.994, Subd. 2 to establish guidelines and criteria
regarding the granting of business subsidies; and
WHEREAS, on August 26, 2013 the City adopted an Amended Business Subsidy Policy
in compliance with Minn. Stat. § 116J.994, Subd. 2; and
WHEREAS, Minn. Stat. §§ 469.1812 – 469.1815 authorize the City to grant tax abatement
for private development projects, in order to achieve a public purpose; and
WHEREAS, Revival has proposed to construct a one-story commercial building of
approximately 12,400 square feet (“Project”) on a parcel of land located at the southwest corner
of the Duluth Avenue SE and County Highway 21 intersection in Prior Lake, Minnesota, PID
259021270 (“Project Site”); and
WHEREAS, Revival has applied for a business subsidy in the form of tax abatement under
the City’s Amended Business Subsidy Policy in order to assist with the site development costs
associated with soil corrections, soil export/import and retaining wall construction on the Project
Site; and
WHEREAS, the Project will achieve several public purpose objectives, including
specifically, to enhance and diversify the City’s tax base, to provide employment opportunities in the
City, to help provide access to services for residents of the City, to achieve development on a site that
may not be developed without business subsidies assistance; to encourage development of a
commercial area in the City that results in higher quality development and private investment; and to
offset increased costs of development of a specific property when the unique physical characteristics
of the site may otherwise preclude private investment.
WHEREAS, the Project is consistent with the City 2030 Comprehensive Plan and Vision
Statement; and
WHEREAS, the requested business subsidy was considered at a public hearing duly
noticed and held on June 12, 2017 as required by Minn. Stat. § 116J.994; and
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WHEREAS, after the public hearing, the City Council approved a business subsidy for
the Project in the form of a pay-as-you-go tax abatement as set forth in this Agreement (“Business
Subsidy”).
NOW THEREFORE, In consideration of the mutual promises and covenants set forth
herein, the receipt and sufficiency of which are acknowledged, the parties agree as follows:
1. Recitals. The recitals set forth above are incorporated herein and made part of this Agreement.
2. Definitions. The definitions set forth in Minn. Stat. § 116J.993 are incorporated herein and
made part of this Agreement. The “Benefit Date” is defined by Minn. Stat. § 116J.993, Subd.
2 as the “date that the recipient receives the business subsidy” and for purposes of this
Agreement shall mean the date that Revival receives the first payment of any portion of the
Business Subsidy.
3. Description of the Business Subsidy. The City hereby grants to Revival a Business Subsidy
in the form of tax abatement in an amount not to exceed $125,000.00 to assist with site
development costs on the Project Site.
4. Tax Abatement. The Business Subsidy to be paid to Revival shall be based upon the Net
Amount of Property Taxes received by the City from the Project Site. The “Net Amount of
Property Taxes” shall be the actual annual amount of property taxes received by the City
attributable to an increase or increases in the property taxes as a result of the Project. The “Net
Amount of Property Taxes” shall not include any value or increase or decrease in value
attributable to the land only. The total property taxes shall be levied on the Project Site and
shall be due and payable by Revival at the times provided by law.
5. Use of Business Subsidy. The Business Subsidy shall be used for reimbursement of site
development costs associated with soil corrections, soil export/import and retaining wall
construction on the Project Site (“Site Development Costs”) to allow for construction of a one-
story commercial building of approximately 12,400 square feet.
6. Approved Costs. By June 30, 2018, Revival shall submit to the City lien waivers and a written
statement affirming that Revival has incurred and paid Site Development Costs in an amount
not to exceed $125,000.00 (“Certification”). The amount set forth in the Certification shall be
subject to the approval of the Community Development Director. The amount approved by the
Community Development Director shall be the maximum amount of the Business Subsidy
(“Approved Costs”).
7. Business Subsidy Payments. The City shall make Business Subsidy payments no later than
45 days after the Net Amount of Property Taxes has been received by City from Scott County.
If the property taxes are challenged or reviewed in any manner, the City shall not make any
payment to Revival until the challenge or review is complete and the City has received the Net
Amount of Property Taxes from Scott County. The City may begin making Business Subsidy
payments to Revival in the year 2019. The City shall cease making Business Subsidy payments
on the sooner of: (i) when the City has made Business Subsidy payments to Revival in the
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amount of the Approved Costs; (ii) upon Revival’s breach of this Agreement; or (iii) with
respect to the property taxes payable in 2033.
8. Statement of Need for Business Subsidy. Revival represents that it is eligible to receive the
Business Subsidy pursuant to Minn. Stat. § 116J.994. Revival asserts that without the Business
Subsidy, the Project would not be affordable and Revival would not proceed with the Project
as proposed.
9. Public Purpose Statement. The City and Revival agree that the public purposes served by
this Business Subsidy are as follows: to enhance and diversify the City’s tax base, to provide
employment opportunities in the City, to help provide access to services for residents of the
City, to achieve development on a site that may not be developed without business subsidies
assistance; to encourage development of a commercial area in the City that results in higher
quality development and private investment; and to offset increased costs of development of a
specific property when the unique physical characteristics of the site may otherwise preclude
private investment.
10. Wage and Job Goals of the Project. After the public hearing on June 12, 2017, the City
determined that the creation and retention of jobs is not a goal of this Business Subsidy,
therefore the wage and job goals are set to zero pursuant to Minn. Stat. § 116J.994, Subd. 4.
11. Reporting Requirement.
(a) Annually, on March 1, commencing on the March 1 immediately following the Benefit
Date and continuing until March 1, 2034, Revival will furnish to the City a completed copy
of the Minnesota Business Assistance Form in substantially the form attached hereto as
Attachment 1 (as such form may be modified to comply with reporting requirements
imposed by law including Minn. Stat. § 116J.994, Subd. 7), covering the preceding 12
months, certified to be accurate by the Chief Operating Officer or Director of Human
Resources of Revival. In addition, at the request of the City, Revival will provide to the
City any information necessary to comply with the Business Subsidy Act’s reporting
requirements.
(b) If Revival does not file a report by the due date set forth in subparagraph (a), above, the
City will mail a notice to Revival within one week of the filing date. If Revival does not
file the report within 14 days after the postmarked date of the warning, Revival must pay
the City a penalty of $100 for each subsequent day until the report is filed. The maximum
penalty shall not exceed $1,000.
12. Five Year Commitment to City.
(a) In consideration for receipt of the Business Subsidy, Revival agrees to conduct operations
at the Project Site, for at least five (5) years after the Benefit Date.
(b) The City may, in its sole discretion, authorize Revival to move operations from the Project
Site; provided such authorization shall only occur after public hearing pursuant to Minn.
Stat. § 116J.994, Subd. 3(e). If Revival seeks to move operations, it shall first notify the
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City of such decision in writing, including in its notification the specific business reasons
for such decision. Following receipt of such notice, the City may schedule and conduct a
public hearing.
13. Name and Address of Parent Corporation (if applicable). Revival does not have a parent
corporation.
14. Notice. Required notices to Revival shall be in writing, and shall be either hand-delivered to
Revival, its employees or agents, or mailed to Revival by certified mail at the following
address:
Prior Lake Revival
14476 Shady Beach Trail NE
Prior Lake, MN 55372
Notices to the City shall be in writing and shall be either hand -delivered to the City Manager
or mailed to the City by certified mail at the following address:
City of Prior Lake
Attn: City Manager
4646 Dakota Street SE
Prior Lake, MN 55372
Notices shall be deemed effective on the date of receipt. Any party may change its address for
the service of notice by giving written notice of such change to the other party, in any manner
above specified, 10 days prior to the effective date of such change.
15. Other Business Subsidies Received for this Project. Nothing herein shall preclude Revival
from receiving additional financial assistance for the Project. Revival affirms that as of the
signing of this Agreement it has not received any other financial assistance for the Project.
Revival shall update the City in writing if it receives any other financial assistance for the
Project.
16. Indemnity. Revival will defend and indemnify City, its officers, agents, and employees and
hold them harmless from and against all judgments, claims, damages, costs and expenses,
including a reasonable amount as and for its attorney’s fees paid, incurred or for which it may
be liable resulting from any breach of this Agreement by Revival, its agents, contractors and
employees, or any negligent or intentional act or omission performed, taken or not performed
or taken by Revival, its agents, contractors and employees, relative to this Agreement.
17. Successors and Assigns. This Agreement and all terms, conditions and obligations contained
herein shall be binding upon and inure to the benefit of the City and Revival and their
respective successors and assigns. Neither party shall assign this Agreement, nor any interest
arising herein, without the written consent of the other party.
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18. Audit Disclosure and Data Practices. Any reports, information, data, etc. given to, or
prepared or assembled by the City or Revival under this Agreement which the City requests to
be kept confidential, shall not be made available to any individual or organization without the
City's prior written approval. The books, records, documents and accounting procedures and
practices of Revival or other parties relevant to this Agreement are subject to examination by
the City and either the Legislative Auditor or the State Auditor for a period of six (6) years
after the effective date of this Agreement. This Agreement is subject to the Minnesota
Government Data Practice Act, Minnesota Statutes Chapter 13 (“Data Practices Act”). All
government data, as defined in the Data Practices Act § 13.02, Subd 7, which is created,
collected, received, stored, used, maintained, or disseminated by Revival in performing any of
the functions of the City during performance of this Agreement is subject to the requirements
of the Data Practice Act and Revival shall comply with those requirements as if it were a
government entity. All subcontracts entered into by Revival in relation to this Agreement shall
contain similar Data Practices Act compliance language.
19. Non-Discrimination. During the performance of this Agreement, Revival shall 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, disability,
sexual orientation or age. Revival shall post in places available to employees and applicants
for employment, notices setting forth the provision of this non-discrimination clause and
stating that all qualified applicants will receive consideration for employment. Revival shall
incorporate the foregoing requirements of this paragraph in all of its subcontracts for work on
the Project or the Project Site, and will require all of its subcontractors for such work to
incorporate such requirements in all subcontracts. Revival further agrees to comply with all
aspects of the Minnesota Human Rights Act, Minnesota Statutes §§ 363.01, et. seq., Title VI
of the Civil Rights Act of 1964, and the Americans with Disabilities Act of 1990.
20. Conflicts. No salaried officer or employee of the City and no member of the Council, or
Commission, or Board of the City shall have a financial interest, direct or indirect, in this
Agreement. The violation of this provision renders the agreement void.
21. Breach, Notice, and Remedies.
(a) Breach. If for any reason, Revival violates any provision of this Agreement or fails to meet
any requirement of this Agreement, including, but not limited to, the Reporting
Requirements and the Five-Year Commitment, Revival shall be deemed to be in breach of
this Agreement.
(b) Notice. The City shall provide Revival written notice (“Notice”) of an alleged breach. The
Notice shall include a description of the nature of the breach, a description of the actions
or accomplishments which must occur to cure the breach, and a reasonable time to cure the
breach which will be at least 15 calendar days. Notices shall be sent in accordance with
paragraph 14.
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(c) Remedies. If Revival fails to cure the breach within the time provided in the Notice, the
City may pursue any remedy at law or in equity, whether or not set forth in this Agreement,
which remedies include, but are not limited to, the following:
I. The City may cease payment of the Business Subsidy.
II. The City may demand repayment of all or a portion of the Business Subsidy and
declare all such amounts immediately due and payable with interest.
III. The parties hereto agree that, in the event of a default by Revival in the performance
of the obligations set forth in this Agreement, money damages shall not provide an
adequate remedy. As a result, the parties understand and agree that, in the event of a
default by Revival in the performance of its obligations under this Agreement, the
City shall be entitled to also seek specific performance by Revival of this Agreement.
22. Enforcement. Revival shall reimburse the City for all costs and expenses, including without
limitation, attorneys' fees paid or incurred by the City in connection with the enforcement by
the City during the term of this Agreement or thereafter of any of the rights or remedies of the
City under this Agreement.
23. Governing Law. This Agreement shall be controlled by the laws of the State of Minnesota.
24. Severability. The provisions of this Agreement are severable. If any portion hereof is, for
any reason, held by a court of competent jurisdiction to be contrary to law, such decision shall
not affect the remaining provisions of this Agreement.
25. Waiver. No action or failure to act by the City shall constitute a waiver of any right or duty
afforded it under the Agreement, nor shall any such action or failure to act constitute an
approval of or acquiescence in any breach thereunder, except as may be specifically agreed in
writing.
26. Entire Agreement. The entire agreement of the parties is contained herein. This Agreement
supersedes all oral agreements and negotiations between the parties relating to the subject
matter hereof as well as any previous agreements presently in effect between the parties
relating to the subject matter hereof. Any alterations, amendments, deletions, or waiv ers of
the provisions of this Agreement shall be valid only when expressed in writing and duly signed
by the parties, unless otherwise provided herein.
27. Not In Contravention of Law. It is intended that nothing contained herein be in contravention
of law. In the event that any provision herein conflicts with Minn. Stat. §§ 469.1812 to
469.1815, or 116J.994, the statutory provisions shall prevail. This business subsidy agreement
shall be interpreted and given effect as if the terms or prohibitions of such statutory sections
have been included herein.
28. Limitation on City's Liability. It is understood and agreed by Revival that nothing in this
Agreement or in any other document executed by the City in connection with the granting of
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the Business Subsidy, or any obligation imposed upon the City or breach thereof, shall give
rise to a pecuniary liability of the City or a charge against its general credit or taxing powers
or shall obligate the City financially in any way except with respect to the application of taxes
to be abated pursuant to this Agreement. No failure of the City to comply with any term,
condition, covenant or agreement herein shall subject the City to liability for any claim for
damages, costs or other financial or pecuniary charges except to the extent that the same can
be paid or recovered from the taxes abated. No execution on any claim, demand, cause of
action or judgement shall be levied upon or collected from the general credit, general funds or
taxing powers of the City. In executing this Agreement, the City has not obligated itself except
with respect to the abatement of taxes as provided. The obligations arising from this Agreement
do not now and shall never constitute an indebtedness or a loan of the credit of the City or the
City's general taxing powers within the meaning of any constitutional or statutory provision
whatsoever. It is further understood that the City shall not be liable for any expenses related
hereto.
29. Attachments. The following documents attached to this Agreement are hereby incorporated
by reference and made a part hereof:
Attachment 1: Minnesota Business Assistance Form
IN WITNESS WHEREOF this Agreement has been duly executed and delivered by the
parties hereto as of the date above written.
(Remainder of page intentionally blank)
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CITY OF PRIOR LAKE, MINNESOTA
Frank Boyles
Its: City Manager
Kirt Briggs
Its: Mayor
STATE OF MINNESOTA )
) ss.
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this day of ___________,
2017, by Frank Boyles and Kirt Briggs, respectively the City Manager and Mayor of the City of
Prior Lake, Minnesota, a Minnesota municipal corporation, on behalf of said corporation.
__________________________________
Notary Public
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PRIOR LAKE REVIVAL, LLC
Matthew A. Schafer, Owner
___________________________________
Chad Olson, Owner
___________________________________
Lisa Claussen, Owner
STATE OF MINNESOTA )
) ss.
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this day of ___________,
2017, by Matthew A. Schafer, Chad Olson, and Lisa Claussen as the owners of Prior Lake Revival,
LLC, a Minnesota limited liability company, on behalf of said company.
__________________________________
Notary Public
THIS INSTRUMENT WAS DRAFTED BY:
Gregerson, Rosow, Johnson & Nilan, LTD.
100 Washington Avenue South, Suite 1550
Minneapolis, MN 55401
ATTACHMENT 1
MINNESOTA BUSINESS ASSISTANCE FORM
[see attached 2016 MBAF Form.
The recipient will need to submit 2017 MBAF Form when made available by the State in 2017]
http://mn.gov/deed/assets/2016-mfaf-fillable_tcm1045-132597.pdf
Fiscal
Disparities
Contribution
1 2018 2019 3,500,000 69,250 (4,150)(24,400)40,700 32.685%13,255 13,255
2 2019 2020 3,517,500 69,600 (4,150)(24,531)40,919 32.685%13,327 26,582
3 2020 2021 3,535,088 69,952 (4,150)(24,663)41,139 32.685%13,398 39,980
4 2021 2022 3,552,763 70,305 (4,150)(24,795)41,360 32.685%13,470 53,450
5 2022 2023 3,570,527 70,661 (4,150)(24,928)41,582 32.685%13,542 66,992
6 2023 2024 3,588,379 71,018 (4,150)(25,062)41,805 32.685%13,615 80,607
7 2024 2025 3,606,321 71,376 (4,150)(25,197)42,030 32.685%13,689 94,295
8 2025 2026 3,624,353 71,737 (4,150)(25,332)42,255 32.685%13,761 108,057
9 2026 2027 3,642,475 72,099 (4,150)(25,468)42,482 32.685%13,835 121,892
10 2027 2028 3,660,687 72,464 (4,150)(25,604)42,710 32.685%13,910 135,801
11 2028 2029 3,678,990 72,830 (4,150)(25,741)42,938 32.685%13,984 149,786
12 2029 2030 3,697,385 73,198 (4,150)(25,879)43,168 32.685%14,059 163,845
13 2030 2031 3,715,872 73,567 (4,150)(26,018)43,400 32.685%14,134 177,979
14 2031 2032 3,734,452 73,939 (4,150)(26,157)43,632 32.685%14,210 192,189
15 2032 2033 3,753,124 74,312 (4,150)(26,297)43,865 32.685%14,285 206,474
TOTAL =206,474
Key Asssumptions
1 Taxable market value annual growth assumption = 0.50%
2 Assume Pay 2017 Tax Year. Abatement is for City portion of the property tax only and based on the increased in valuation.
3 Base Taxable Market Value = $245,000
4 Assumption for New Taxable Market Value = $3,500,000. This estimate was prepared by the Developer.
5 All amounts are estimated and do not represent agreement by the City on any amount of assistance or terms.
6 Developer requested abatement amount is $125,000. Based on estimated cash flow, the abatement would be satsified in year 10.
7 Fiscal disparities contribution will be paid from property and the tax abatement amount reduced by this contribution.
City of Prior Lake
Tax Abatement Project
Medical Professional Bldg
Projected Cash Flow
Taxable
Market
Value 1 4
TIF District
Year
Value
Year
Taxes
Payable
Year
New Tax
Capacity 1
Base Tax
Capacity 3
Estimated Tax
Abatement 6
Cumulative
Tax
Abatement
Captured
Tax
Capacity
Assumed
Original Tax
Rate 2
Tax Abatement Med Prof Building 2017 5/12/2017
Property Tax Comparison Pro Forma
City of Prior Lake
Medical Professional Building
Description
TMV
Per
Buildin
g SF TMV
Total Tax
Capacity
Fiscal
Disparity
Tax
Capacity
Net Tax
Capacity County City School Other Subtotal
Fiscal
Disparities State
Total Net
Capacity
Taxes School City
Total MV
Taxes Total Taxes
Maximum
Annual City
Tax
Abatement 1
Total
Maximum
Abatement
15 Years
2
Prior Lake
Rates 37.48%35.89% 32.69% 30.66% 7.75% 118.154% 150.05% 45.80%0.2043% 0.0342%
As of Pay 2017, Unimproved Land:
PID 259021270, Land n/a $245,000 4,150 $1,555 $2,595 $931 $848 $795 $201 $2,776 $2,334 $1,901 $7,010 $501 $84 $584 $7,595
After Construction of Improvements:
Scenario A $292 $3,500,000 69,250 $25,955 $43,295 $15,539 $14,151 $13,273 $3,354 $46,317 $38,945 $31,718 $116,980 $7,151 $1,198 $8,349 $125,329 $13,303 $199,544
Scenario B $190 $2,284,026 44,931 $16,840 $28,090 $10,082 $9,181 $8,612 $2,176 $30,051 $25,268 $20,579 $75,898 $4,667 $782 $5,448 $81,347 $8,333 $125,000
Scenario C $120 $1,445,000 28,150 $10,551 $17,599 $6,316 $5,752 $5,396 $1,363 $18,828 $15,831 $12,893 $47,552 $2,952 $495 $3,447 $50,999 $4,904 $73,565
Scenario D $100 $1,200,000 23,250 $8,714 $14,536 $5,217 $4,751 $4,456 $1,126 $15,550 $13,075 $10,649 $39,275 $2,452 $411 $2,863 $42,137 $3,903 $58,545
Notes:
1. Maximum Annual City Tax Abatement is the difference between the Pay 2017 City tax payable and the future City tax payable after construction of improvements.
2. Total Maximum Abatement 15 Years is calculated based on the Maximum Annual City Tax Abatement multiplied by 15 years. There is no assumption made for changes to taxable market value or change in City tax rate in future years.
3. The developer has requested tax abatement assistance in the amount of $125,000.
4. It is estimated that the abatement agreement will provide for the abatement of the increase in City taxes for a term not to exceed 15 years or the date when the maximum amount of $125,000 is reimbursed, whichever occurs first.
5/15/2017
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Scott County GIS
Ü
Location Map
UPPER PRIO R LAK E
GD
(904)
SPRING LAK E
GD
(912.8)
LO WER PRIO R LAKE
GD
(904)
MYS TIC
LA KE
NE
BLIND
LA KE
RD(948.7)
ARTIC
LA KE
NE(906.7)
MA RKLEY
LA KE
RD( )
HOWA RD LA KE
NE
(957.3)
CRYSTA L LA KE
NE
(943.3)
RICE LA KE
NE
(945)
CLEAR Y LAKE
NE
CAMPBE LL
LA KE
NE(Not Estab.)Spring Lake
Scott County GIS
SUBJECTPROPERTY
SUBJECTPROPERTY