Economic Development Authority EDA

City of South St. Paul Economic Development Authority Agenda Monday, December 5, 2022 IMMEDIATELY FOLLOWING THE CONCLUSION OF THE 7:00 P.M. MEETING OF THE City Council 1. CALL TO ORDER: 2. ROLL CALL: 3. AGENDA: A. Approval of Agenda Action – Motion to Approve Action – Motion to Approve as Amended 4. CONSENT AGENDA: All items listed on the Consent Agenda are items, which are considered to be routine by the Economic Development Authority and will be approved by one motion. There will be no separate discussion of these items unless a Commissioner or citizen so requests, in which event the item will be removed from the consent agenda and considered at the end of the Consent Agenda. A. EDA Meeting Minutes of November 7, 2022 B. Approval of Amendment #2 to Development Agreement with Watson Trading, LLC (500 Block Concord Exchange South) C. Approval of Amendment #2 to Development Agreement with Blue River Holdings, LLC (400 Block Concord Exchange South) 5. ITEMS FOR FUTURE FOLLOW-UP: General communications of the President and Commissioners are provided and may be considered for inclusion on a future agenda. There will be no discussion or decisions made related to these items at this meeting. 6. ADJOURNMENT: Respectfully Submitted, Ryan Garcia, EDA Executive Director This meeting is being taped by Town Square Television (NDC4). Replays can be viewed on Government Channel 19. Replay Times – Friday following Meeting at 1:00 p.m. & 7:00 p.m. 651-451-7834  MINUTES OF THE ECONOMIC DEVELOPMENT AUTHORITY CITY OF SOUTH ST. PAUL DAKOTA COUNTY, MINNESOTA Regular Meeting November 7, 2022 Fleming Field Airport, 1725 Henry Avenue, South St. Paul, MN 55075 1. CALL TO ORDER The Special Meeting of the South St. Paul Economic Development Authority was held on 11/7/2022 in the Conference Room at Fleming Field Airport. President Francis called the meeting to order at 8:15 PM. 2. ROLL CALL Members Present: President Francis, Commissioners Bakken, Dewey, Hansen, Kaliszewski, Podgorski, and Seaberg. Members Absent: None Staff Present: EDA Executive Director Ryan Garcia, City Clerk Deanna Werner, City Attorney Peter Mikhail 3. AGENDA Motion/Second: Commissioner Kaliszewski moved, and Commissioner Bakken seconded approval of the agenda. Motion carried 7 ayes / 0 nays 4. CONSENT A. EDA Meeting Minutes of October 17, 2022 Motion/Second: Commissioner Kaliszewski moved, and Commissioner Bakken seconded approval of the consent agenda. Motion carried 7 ayes / 0 nays 5. PUBLIC HEARINGS: A. Approving the Conveyance of Land to the City of South St. Paul, Resolution 2022 – 16 EDA Minutes 11-7-2022  Motion/Second: Commissioner Hansen moved, and Commissioner Bakken seconded approval of Resolution 2022-16, the Conveyance of Land to the City of South St. Paul. Motion carried 7 ayes / 0 nays B. Approving a Purchase Agreement for the Sale of Land to DRS Investment VIII, LLC, Resolution 2022 – 17 Motion/Second: Commissioner Hansen moved, and Commissioner Bakken seconded approval of Resolution 2022-17, approve a purchase agreement for the sale of land to DRS Investment VIII, LLC. Motion carried 7 ayes / 0 nays 6. ITEMS FOR FUTURE FOLLOW-UP: General communications of the President and Commissioners are provided and may be considered for inclusion on a future agenda. There will be no discussion or decisions made related to these items at this meeting. 7. ADJOURNMENT: Motion/Second: Commissioner Bakken moved, and Commissioner Podgorski seconded the motion to adjourn the meeting at 8:32 PM. Motion carried 7 ayes / 0 nays Approved: Deanna Werner, City Clerk EDA Minutes 11-7-2022  EDA Agenda Item Report Date: December 5, 2022 EDA Executive Director: _________ 4-B Agenda Item: Approval of Amendment #2 to Development Agreement with Watson Trading, LLC (500 Block Concord Exchange South) Action to be considered: Through Consent, motion to approve the Second Amendment to Development Agreement with Watson Trading, LLC. Summary: On July 5, 2022 the EDA approved a Purchase and Development Agreement with Watson Trading, LLC for the construction of a 7,500 square foot commercial building at the EDA-owned property on the west side of Concord Exchange South, immediately south of Stockyards Tavern & Chophouse. The Agreement identified a closing date of December 31, 2022, and obligated the Developer to commence construction by May 31, 2023 and complete construction no later than May 31, 2024. Watson Trading LLC is making great progress through the predevelopment stage of this project, with Plan Commission review of the site plan scheduled for Wednesday, December 7 (Council Review is anticipated on December 19) and financing through CorTrust Bank well advanced through the underwriting process. Nonetheless, a December 31, 2022 closing appears at this point to be slightly aggressive to finalize all of the developer’s processes (namely, project bidding) prior to closing. As such, we are suggesting an adjustment to the closing, commencement, and construction deadlines as follows: • Closing: on or before February 28, 2023 • Commencement: On or Before August 31, 2023 • Completion: On or before August 31, 2024 These dates should be acknowledged as “deadlines” – the Developer has every intention of closing prior to 2/28, and commencing before 8/31, but we are building enough cushion in to (hopefully) buttress against unexpected delays. Staff is recommending approval of Amendment #2 as presented. Funding Sources and other fiscal considerations: The EDA-owned property has been property tax exempt for a number of years. The proposed development should be expected to generate a total market value for taxable purposes of between $800,000 and $1,000,000, which would result in a total annual property tax bill (in 2022 figures) of between $25,000 and $32,000. Proceeds from the sale, which is located within the Concord Street Tax Increment Finance District, can be used towards other eligible expenditures in the district. ATTACHMENTS: Orientation Map Amendment #2 to Development Agreement Property/Orientation Map  SECOND AMENDMENT TO DEVELOPMENT AGREEMENT THIS SECOND AMENDMENT TO DEVELOPMENT AGREEMENT (this “Second Amendment”) is entered into as of , 2022 (the “Effective Date”), by and between the South St. Paul Economic Development Authority, a public body corporate and politic organized under the laws of Minnesota (“EDA”), and Watson Trading LLC, a Minnesota limited liability company (“Developer”). RECITALS Recital No. 1. EDA and Developer entered into a Contract for Private Development dated July 5, 2022 and recorded as Document No. _______________ on ____________________________ in the Dakota County Registrar of Titles’ Office and as Document No. _______________ on ____________________________ in the Dakota County Recorder’s Office, as amended by that certain First Amendment to Development Agreement dated September 6, 2022 and recorded as Document No. _______________ on ____________________________ in the Dakota County Registrar of Titles’ Office and as Document No. _______________ on ____________________________ in the Dakota County Recorder’s Office (“First Amendment”) (collectively “Development Agreement”) for the purchase and sale of the Property identified in the Development Agreement. Recital No. 2. Developer has requested the Development Agreement be amended to extend the Closing Date and dates for commencing and completing construction. Recital No. 3. EDA does not object to the extension. NOW, THEREFORE, in consideration of the mutual promises and covenants of each to the other contained in this Second Amendment and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto do covenant and agree as follows: 1. The entire Development Agreement is hereby incorporated into this Second Amendment, except as modified below. 2. Section 1(F) of the Development Agreement shall be removed and replaced in its entirety as follows: F. “Closing” or “Closing Date” means on or before February 28, 2023, unless otherwise agreed to by the parties. 3. Section 10.6 of the Development Agreement shall be removed and replaced in its entirety as follows: 10.6 Commencement and Completion of Construction. Subject to Unavoidable Delays, Developer shall commence construction of the Minimum Improvements no later than August 31, 2023. “Commence Construction” shall mean the start of site grading and installation of utilities. Subject to Unavoidable Delays, Developer shall have substantially completed the construction of the Minimum Improvements no later than August 31, 2024. All work with respect to the Minimum Improvements to be constructed or provided by Developer on the Property shall be in substantial conformity with the Construction Plans and Developer will not modify the size or exterior appearance of the Minimum Improvements without the consent of the EDA and the City, which consent shall not be unreasonably withheld. 4. Except as provided for in the First Amendment and above, the terms and provisions of the Development Agreement shall remain in full force and effect. 5. This Second Amendment and all disputes or controversies arising out of or relating to this Second Amendment or the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal laws of the State of Minnesota, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of Minnesota. 6. Nothing contained herein shall be deemed a waiver by the EDA of any governmental immunity defenses, statutory or otherwise, or of the maximum liability limits provided by Minnesota Statutes, Chapter 466. 7. This Second Amendment may be executed in two or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by the parties and delivered to the other parties. 8. This Second Amendment shall not be amended, modified or supplemented, except by a written instrument signed by an authorized representative of each party. [remainder of page intentionally blank] 2  IN AGREEMENT, the parties hereto have hereunto set their hands as of the Effective Date. SOUTH ST. PAUL ECONOMIC DEVELOPMENT AUTHORITY By ________________________________ James P. Francis Its President By ________________________________ Ryan Garcia Its Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF DAKOTA ) The foregoing instrument was acknowledged before me this ____ day of ____________, 2022 by James P. Francis and Ryan Garcia, the President and Executive Director respectively, of the South St. Paul Economic Development Authority, a public body corporate and politic organized and existing under the Constitution and laws of Minnesota, on behalf of the EDA. Notary Public 3  DEVELOPER: WATSON TRADING LLC By: Watson Fong Its President STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this ____ day of __________________, 2022 by Watson Fong, the President of Watson Trading LLC, a Minnesota limited liability company, on behalf of said limited liability company. Notary Public THIS INSTRUMENT WAS DRAFTED BY AND AFTER RECORDING RETURN TO: LeVander, Gillen & Miller, P.A. 1305 Corporate Center Drive, Suite 300 Eagan, MN 55121 651-451-1831 4  EDA Agenda Item Report Date: December 5, 2022 EDA Executive Director: _________ 4-C Agenda Item: Approval of Amendment #2 to Development Agreement with Blue River Holdings, LLC (400 Block Concord Exchange South) Action to be considered: Through Consent, motion to approve the First Amendment to Development Agreement with Blue River Holdings, LLC. Summary: On November 1, 2021 the EDA approved a Purchase and Development Agreement with Blue River Holdings, LLC for the construction of a 12,000 square foot commercial building at the EDA-owned property on the west side of Concord Exchange South, immediately north of Al’s Corral. The Agreement identified a relatively long contingency and closing window, to afford the developer – the owner/operator of the proposed primary tenant for the new development (South St. Paul Animal Hospital) – sufficient time to work through their planning, permitting, and financing process. A 1st Amendment was approved in August that extended the contingency period (through November 30, 2022) and Closing Date (to January 31, 2023). Continued progress has been made throughout the past 13 months, with all City Approvals being completed earlier this summer and SBA Financing approved up to $4,000,000 contingent on approved bids. The Developer continues to work through pricing with his contractor team, as there is some concern that bid pricing will exceed the developer’s capacity to finance the project, based upon cost estimating that was done earlier this fall. The developer is actively working to get the project designed, priced and bid, however we have inadvertently passed the designated “Commencement Date” found in the approved Development Agreement. To provide sufficient cushion to work through the bidding and financing process, and subsequent delays to commencement and completion of the project, we are suggesting extension of the following key dates for the Development Agreement: • Closing: on or before March 31, 2023 • Commencement: On or Before August 31, 2023 • Completion: On or before December 31, 2024 These dates should be acknowledged as “deadlines” and it is anticipated that the project will meet these timelines without need for further adjustment. Staff is recommending approval of Amendment #2 as presented. Funding Sources and other fiscal considerations: The EDA-owned property has been property tax exempt for a number of years. The proposed development should be expected to generate a total market value for taxable purposes of between $1,300,000 and $1,500,000, which would result in a total annual property tax bill (in 2022 figures) of between $40,000 and $45,000. Proceeds from the sale, which is located within the Concord Street Tax Increment Finance District, can be used towards other eligible expenditures in the district. ATTACHMENTS: Orientation Map Amendment #2 to Development Agreement Orientation Map  SECOND AMENDMENT TO DEVELOPMENT AGREEMENT THIS SECOND AMENDMENT TO DEVELOPMENT AGREEMENT (this “Second Amendment”) is entered into as of , 2022 (the “Effective Date”), by and between the South St. Paul Economic Development Authority, a public body corporate and politic organized under the laws of Minnesota (“EDA”), and Blue River Holdings LLC, a Minnesota limited liability company (“Developer”). RECITALS Recital No. 1. EDA and Developer entered into a Contract for Private Development dated November 1, 2021 and recorded as Document No. _______________ on ____________________________ in the Dakota County Recorder’s Office, as amended by that certain First Amendment to Development Agreement dated August 9, 2022 and recorded as Document No. _______________ on ____________________________ in the Dakota County Recorder’s Office (“First Amendment”) (collectively “Development Agreement”) (“Development Agreement”) for the purchase and sale of the Property identified in the Development Agreement. Recital No. 2. Developer has requested the Development Agreement be amended to extend the Closing Date and dates for commencing and completing construction. Recital No. 3. EDA does not object to the extension. NOW, THEREFORE, in consideration of the mutual promises and covenants of each to the other contained in this Second Amendment and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto do covenant and agree as follows: 1. The entire Development Agreement is hereby incorporated into this Second Amendment, except as modified below. 2. Section 1(F) of the Development Agreement shall be removed and replaced in its entirety as follows: F. “Closing” or “Closing Date” means on or before March 31, 2023, unless otherwise  agreed to by the parties. 3. Section 10.6 of the Development Agreement shall be removed and replaced in its entirety as follows: 10.6 Commencement and Completion of Construction. Subject to Unavoidable Delays, Developer shall commence construction of the Minimum Improvements no later than August 31, 2023. “Commence Construction” shall mean the start of site grading and installation of utilities. Subject to Unavoidable Delays, Developer shall have substantially completed the construction of the Minimum Improvements no later than December 31, 2024. All work with respect to the Minimum Improvements to be constructed or provided by Developer on the Property shall be in substantial conformity with the Construction Plans and Developer will not modify the size or exterior appearance of the Minimum Improvements without the consent of the EDA and the City, which consent shall not be unreasonably withheld. 4. Except as provided for above, the terms and provisions of the Development Agreement shall remain in full force and effect. 5. This Second Amendment and all disputes or controversies arising out of or relating to this Second Amendment or the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal laws of the State of Minnesota, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of Minnesota. 6. Nothing contained herein shall be deemed a waiver by the EDA of any governmental immunity defenses, statutory or otherwise, or of the maximum liability limits provided by Minnesota Statutes, Chapter 466. 7. This Second Amendment may be executed in two or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by the parties and delivered to the other parties. 8. This Second Amendment shall not be amended, modified or supplemented, except by a written instrument signed by an authorized representative of each party. [remainder of page intentionally blank] 2  IN AGREEMENT, the parties hereto have hereunto set their hands as of the Effective Date. SOUTH ST. PAUL ECONOMIC DEVELOPMENT AUTHORITY By ________________________________ James P. Francis Its President By ________________________________ Ryan Garcia Its Executive Director STATE OF MINNESOTA ) ) ss. COUNTY OF DAKOTA ) The foregoing instrument was acknowledged before me this ____ day of ____________, 2022 by James P. Francis and Ryan Garcia, the President and Executive Director respectively, of the South St. Paul Economic Development Authority, a public body corporate and politic organized and existing under the Constitution and laws of Minnesota, on behalf of the EDA. Notary Public 3  DEVELOPER: BLUE RIVER HOLDINGS LLC By: David Abramowicz Its Manager STATE OF MINNESOTA ) ) ss. COUNTY OF ) The foregoing instrument was acknowledged before me this ____ day of __________________, 2022 by David Abramowicz, the Manager of Blue River Holdings LLC, a Minnesota limited liability company, on behalf of said limited liability company. Notary Public THIS INSTRUMENT WAS DRAFTED BY AND AFTER RECORDING RETURN TO: LeVander, Gillen & Miller, P.A. 1305 Corporate Center Drive, Suite 300 Eagan, MN 55121 651-451-1831 4