Economic Development Authority - Erik Thorvig, Community Development Director
Title
Title
Approval of Blaine 35 Phase Two Tax Increment Financing (TIF) Development Agreements
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Executive Summary
Artis is preparing to start construction on Buildings B and C as part of the Blaine 35 project. Tax Increment Financing (TIF) development agreements are required prior to the start of construction.
Background
In 2021, Artis received approvals to construct three industrial buildings totaling 317,000 square feet. The site is located at 85th Avenue/35W. As part of the development approval, an economic development tax increment financing (TIF) district was approved to assist project financing due to unique, extraordinary site development costs. Two separate TIF districts were created because of the project being done in two different phases.
Phase one consists of a 118,500 multi-tenant office/manufacturing/warehousing building. Necessary TIF documents were executed for this project in 2021 prior to the start of construction last fall. Two companies have executed leases for space in Building A. Those companies are Jonco Die Company and Caerus Corporation. Jonco Die Company is a manufacturer specializing in steel rule cutting dies and related tooling for the packaging industry. Jonco will be occupying 51,800 square feet of Building A. Caerus Corporation is a medical device company specializing in orthopedic and pain management technologies for both human and veterinary patients. Caerus will be occupying 34,477 square feet of Building A. There is approximately 32,000 square feet of space still available in Building A.
Phase two consists of Buildings B and C. Building B is approximately 98,900 square feet and Building C is approximately 100,000 square feet. Site grading was completed last fall and the developer is ready to start construction of buildings this spring. Building C is already fully leased by Chandler Industries. Chandler Industries is a precision machining manufacturer specializing in the aerospace, defense, and medical device markets. They are consolidating two locations and this location will be their corporate headquarters with over 140 jobs in skilled labor, management, and executive level positions. Building B is still available for lease.
Two separate TIF development agreements are required for Buildings B and C. Attached are the draft agreements. The following are general requirements of the developer/EDA outlined in the documents.
• Minimum Improvements: Construction of a 100,000 and 98,900 square foot buildings.
• Start Date: On or before June 1, 2022
• Completion Date: On or before August 1, 2023
• Job Creation Requirement: Building B, 30 full-time jobs; Building C, 100 full-time jobs. When combining it with the 59 jobs required for Building A, the total amount required for the project is 189 jobs. It’s anticipated the overall project will exceed this. Jobs are required to be created within two years of building completion. The developer is required to provide the EDA information annually on the job creation and wages until the requirement is fulfilled.
• Developer shall construct project to be consistent with all approved plans.
• EDA shall reimburse the developer for development costs by issuance of a TIF note of up to Building B, $838,341 for Building B and $816,986 for Building C. This will be in the form of pay-as-you-go (PAYGO) financing.
Strategic Plan Relationship
Development of this site as proposed is consistent with the strategic priority of Successful Development of the 35W Corridor.
Board/Commission Review
No board or commission review is required.
Financial Impact
TIF dollars provided to the developer are created as a result of this specific development. General property taxes from other taxpayers or other city funds are not the source of TIF dollars. The agreement is structured as a PAYGO, meaning the developer will not receive TIF dollars unless they complete the project, therefore there is no financial risk to the city, nor is the city obligated to pay the developer if they do not perform and/or taxable values are below projections.
Staff Recommendation
By motion, adopt the attached resolution.
Attachment List
Site Plan
Building B Agreement
Building C Agreement
Body
WHEREAS, Economic Development Authority of the City of Blaine (the “EDA”), has reviewed a proposal AX Blaine 35 L.P, a Delaware Limited Partnership (the “Developer”), to develop on certain real property within the City of Blaine, Minnesota (the “City”) (the “Development Property”) an 98,900 square foot industrial facility, to be constructed, owned, and operated by the Developer (the “Building B Project”) and an approximately 100,000 square foot industrial facility, to be constructed, owned, and operated by the Developer (the “Building C Project” and, together with the Building B Project, the “Projects”);
WHEREAS, pursuant to Minnesota Statutes, Section 469.090 through 469.1082, as amended (the “Municipal Development Act”), the EDA has undertaken a program to promote the development and redevelopment of land which is underutilized or characterized by blight within the City, and in connection therewith created the Development District No. 1 (the “Development District”) and adopted a Development Program therefor (the “Development Program”); and
WHEREAS, pursuant to the provisions of Minnesota Statutes, Section 469.174 through 469.1794, as amended, (the “TIF Act”), the EDA has created, within the Development District, Tax Increment Financing District No. 1-23 (an economic development district) qualified as an economic development financing district (the “TIF District”), which includes the Development Property; and
WHEREAS, on May 3, 2021, the Board of Commissioners (the “Board”) of the EDA approved a tax increment financing plan therefor (the “TIF Plan”), which provides for the use of tax increment financing in connection with the Projects; and
WHEREAS, there has been prepared and presented to the Board for its consideration a Tax Increment Development Agreement - Tax Increment Financing District No. 1-23 (Building B) and a Tax Increment Development Agreement - Tax Increment Financing District No. 1-23 (Building C) (collectively, the “TIF Agreements”), each between the EDA and the Developer stating the Developer’s responsibilities and the terms and conditions EDA’s assistance with financing certain costs of the Projects (collectively the “TIF Agreements”);
NOW THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Economic Development Authority of the City of Blaine, Minnesota, as follows:
Section 1. Approval of TIF Agreements.
1.01. The Board hereby approves the TIF Agreements in substantially the forms presented to the Board, together with any related documents necessary in connection therewith, including but not limited to any documents, exhibits, certifications or consents referenced in or attached to the TIF Agreements including without limitation the TIF Notes (as defined in each of the TIF Agreements) (collectively, the “Development Documents”), and hereby authorizes the President and Executive Director to negotiate the final terms thereof and, in their discretion and at such time, if any, as they may deem appropriate, to execute the same on behalf of the EDA, and to carry out, on behalf of the EDA, the EDA’s obligations thereunder.
1.02. The approval hereby given to the Development Documents includes approval of such additional details therein as may be necessary and appropriate and such modifications thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by legal counsel to the EDA and by the officers authorized herein to execute said documents prior to their execution; and said officers are hereby authorized to approve said changes on behalf of the EDA. The execution of any instrument by the appropriate officers of the EDA herein authorized shall be conclusive evidence of the approval of such document in accordance with the terms hereof. This Resolution shall not constitute an offer and the Development Documents shall not be effective until the date of execution thereof as provided herein.
1.03. In the event of absence or disability of the officers, any of the documents authorized by this Resolution to be executed may be executed without further act or authorization of the Board by any duly designated acting official, or by such other officer or officers of the Board as, in the opinion of the City Attorney, may act in their behalf. Upon execution and delivery of the Development Documents, the officers and employees of the EDA are hereby authorized and directed to take or cause to be taken such actions as may be necessary on behalf of the EDA to implement the Development Documents, including without limitation the issuance of the TIF Note thereunder, when all conditions precedent thereto have been satisfied.
1.04. The Board hereby determines that the execution and performance of the Development Documents will help realize the public purposes of the Act.
PASSED by the Blaine Economic Development Authority this 18th day of April, 2022.