HomeMy WebLinkAboutIV.A.2c Business Subsidy Agreement - Simply Secure Storage clean wExhibit1
BUSINESS SUBSIDY AGREEMENT
THIS AGREEMENT (“Agreement”) made this ____ day of _______________, 2021, by
and between the Hastings Economic Development and Redevelopment Authority, a Minnesota
public body corporate and politic, 101 4th Street East, Hastings, Minnesota (“HEDRA”) and
Hickory Creek Rentals LLC, a Wisconsin limited liability company d/b/a Simply Secure Storage,
2030 Spiral Boulevard (“Simply Secure Storage”).
RECITALS
WHEREAS, the City of Hastings (“City”) has long desired to improve the function and
appearance of its community through economic development, and has invested substantial
resources toward that goal; and
WHEREAS, the Hastings City Council established the HEDRA in 2009 in order to
advance these objectives; and
WHEREAS, the HEDRA adopted criteria for awarding business subsidies, pursuant to the
Business Subsidies Act, Minn. Stat., Sections 116J.993 to 116J.995 (“Business Subsidy Act”); and
WHEREAS, Simply Secure Storage owns the property located in Hastings legally
described as:
Lot 3, Block 2, HASTINGS INDUSTRIAL PARK NO. 7, according to the recorded plat thereof,
Dakota County, Minnesota
WHEREAS, the HEDRA believes the proposed Project would be desirable for the City;
and
WHEREAS, the Project meets all criteria for awarding a Business Subsidy established by
the HEDRA Policy on Business Subsidies and due to the estimated cost of the Project, it is not
financially feasible without public assistance.
NOW THEREFORE, for good and valuable consideration, the receipt of which is
acknowledged, and in consideration of the covenants and agreements made herein, Simply Secure
Storage and the HEDRA hereby agree as follows:
AGREEMENT
1. The Business Subsidy comprises of a forgivable loan in an amount up to forty thousand
four hundred dollars ($40,400). The forgivable loan shall off-set the Deferred Assessment
Agreement, attached hereto as Exhibit A.
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2. The public purposes of the Business Subsidy are as follows:
a. Promote the economic and commercial development of the City;
b. Preserve the local tax base and improve the general economy and vitality of the
City;
c. Promote the health, safety and welfare of the residents of the City; and
d. Attract, retain, rehabilitate and preserve commercial and industrial facilities.
3. The goals for the Business Subsidy are to secure timely development and maintain the
Property as an industrial business for at least five (5) years.
4. Simply Secure Storage will construct the Project pursuant to all approvals or licenses
required by the City, with a completion date of June 30, 2022 (“Completion Date”).
5. Upon completion of the Project, Simply Secure Storage, its tenants, permitted successors
or assigns, will continuously occupy the Property for at least five (5) years, except in the
event of unforeseeable casualty, in which event, Simply Secure Storage shall rebuild and
reopen as soon as commercially reasonable.
6. If Simply Secure Storage complies with the terms and conditions of this Agreement, the
Business Subsidy will be forgiven five (5) years after the Completion Date. If Simply
Secure Storage does not comply with the terms and conditions of this Agreement, Simply
Secure Storage shall pay back a portion of the Business Subsidy on a prorated basis, with
interest, based on the portion of the five-year operation period elapsed as of the date of
default.
7. Simply Secure Storage must submit to HEDRA a written report regarding Business
Subsidy goals and results by no later than March 1st of each year, commencing March 1st
of the year following completion of the improvements and continuing until the later of the
date that the goals are met; or thirty (30) days after expiration of the five-year period; or if
the goals are not met, then the date the Business Subsidy is repaid. The report must comply
with Section 116J.994 subd. 7 of the Business Subsidy Act. HEDRA will provide
information to Simply Secure Storage regarding the required forms. If Simply Secure
Storage fails to timely file any report required under this section, HEDRA will send Simply
Secure Storage a warning within one week after the required filing date. If, after 14 days
of the postmarked date of the warning, Simply Secure Storage fails to provide a report,
Simply Secure Storage must pay HEDRA a penalty of $100 for each subsequent day until
the report is filed. The maximum aggregate penalty payable under this section is $1,000.
8. The parties agree that this Agreement shall be construed pursuant to Minnesota law and
any disputes shall be venued in Dakota County, Minnesota.
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9. Notices to the parties shall be sent as follows:
If to HEDRA: Hastings Economic Development and
Redevelopment Authority
Attn: John Hinzman
101 4th Street East
Hastings, MN 55033
If to Simply Secure Storage: Hickory Creek Rentals LLC
d/b/a Simply Secure Storage
Attn: Chad Smurawa, President
1576 Grotto Street North
St. Paul, MN 55117
10. This Agreement shall not be assigned without the prior written consent of the other party,
which shall not be unreasonably withheld.
11. This Agreement shall only be amended by written agreement approved by both parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their authorized representatives as of the date first written above.
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IN AGREEMENT, the parties hereto have hereunto set their hands as of the Effective
Date.
HEDRA:
HASTINGS ECONOMIC DEVELOPMENT AND REDEVELOPMENT AUTHORITY
By ________________________________
Dennis Peine
Its President
By ________________________________
John Hinzman
Its Director
STATE OF MINNESOTA )
) ss.
COUNTY OF DAKOTA )
The foregoing instrument was acknowledged before me this ____ day of ____________,
2021 by Dennis Peine and John Hinzman, the President and Director respectively, of the Hastings
Economic Development and Redevelopment Authority, a public body corporate and politic
organized and existing under the Constitution and laws of Minnesota, on behalf of HEDRA.
Notary Public
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HICKORY CREEK RENTALS, LLC
D/B/A SIMPLY SECURE STORAGE
By
Chad Smurawa
Its: President
STATE OF MINNESOTA )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this ____ day of __________________,
2021 by Chad Smurawa, the President of Hickory Creek Rentals LLC, a Wisconsin limited liability
company, on behalf of said limited liability company.
Notary Public
This instrument was drafted by:
Korine L. Land, #262432
LeVander, Gillen & Miller, P.A.
633 South Concord Street, Suite 400
South St. Paul, MN 55075
651-451-1831
EXHIBIT A
DEFERRED ASSESSMENT WAIVER AGREEMENT
A-1
CITY OF HASTINGS
DEFERRED ASSESSMENT WAIVER AGREEMENT FOR
2030 SPIRAL BOULEVARD, HASTINGS, MN 55033
THIS AGREEMENT FOR A DEFERRED ASSESSMENT WAIVER (“Agreement”)
is entered into and effective as of the _____ day of _______________, 2021 (“Agreement Date”),
by and between the City of Hastings, a Minnesota municipal corporation (“City”), and Hickory
Creek Rentals LLC, a Wisconsin limited liability company (“Owner”).
WITNESSETH:
WHEREAS, the Owner is the fee simple owner of property legally described on the
attached Exhibit A, located in Hastings, Dakota County, Minnesota (“Property”) that will be
benefited by certain improvements; and
WHEREAS, the Owner will construct buildings with approximately 18,000 square feet of
business storage space and 23,400 square feet of mini storage space for a total of approximately
41,400 square feet of storage space on the Property (the “Improvements”); and
WHEREAS, the Owner has requested that the City assess a portion of the construction
costs of the Improvements against the Property; and
WHEREAS, as part of the consideration for the benefit to the City, the City will agree to
defer the assessments for the Improvements until December 1, 2026; and
WHEREAS, in the event that the Owner fails to pay the Deferred Assessment Amount on
or before December 1, 2026, the Owner is willing to agree to the levy of the full value of the
Deferred Assessment Amount immediately against the Property for the Assessment Term with
interest accrual at the Assessment Interest Rate; and
WHEREAS, the Owner is willing to waive any assessment appeal rights up to the full
value of the Deferred Assessment Amount which constitutes an estimated benefit of the
Improvements pursuant to Minnesota Statutes, Chapter 429 in the manner authorized by Minnesota
Statutes § 462.353.
NOW, THEREFORE, in consideration of the mutual promises and covenants of each to
the other contained in this Agreement and other good and valuable consideration, receipt of which
is hereby acknowledged, the parties hereto do covenant and agree as follows:
EXHIBIT A
DEFERRED ASSESSMENT WAIVER AGREEMENT
(CONTINUED)
A-2
ARTICLE I
THE AGREEMENT
Section 1.01 Purpose. The purpose of this Agreement is to memorialize the covenants
and agreements between the Owner and the City with regard to the Property and the Improvements
including the Owner’s deferment of the assessment up to the Deferred Assessment Amount which
constitutes an estimated benefit of the Improvements pursuant to Minnesota Statutes, Chapter 429
in the manner authorized by Minnesota Statutes § 462.3531.
Section 1.02 Term. The term of this Agreement shall commence on the Agreement Date
and shall terminate upon the expiration of the Assessment Term or repayment of the Deferred
Assessment Amount, whichever occurs first.
Section 1.03 Survival. Notwithstanding the termination of this Agreement pursuant to
Section 1.02, the Owner’s Covenants and Agreements contained in Section 3.01 and the City’s
Covenants and Agreements contained in Section 3.02 shall survive the termination of this
Agreement.
ARTICLE II
DEFINITIONS
Section 2.01 Definitions. The following are terms used in this Agreement. Their meanings
as used in this Agreement shall be expressly indicated below, unless the context of this Agreement
requires otherwise:
(a) Agreement: This Agreement to memorialize the covenants and agreements between the
Owner and the City with regard to the Property, Deferred Assessment Amount and the
Improvements including the assessment appeal waiver provided herein pursuant to
Minnesota Statutes, Chapter 429 in the manner authorized by Minnesota Statutes §
462.3531.
(b) Agreement Date: The date written in the first paragraph of the Agreement.
(c) Assessment Interest Rate: Only if not paid pursuant to 3.01(e), the Deferred Assessment
Amount shall accrue interest at a rate of three and one-half percent (3.5%) per year for the
Assessment Term beginning either December 1 two years following completion of the
Improvements, or December 1, 2026, whichever occurs first. By way of illustration, if the
Improvements are completed in October of 2021, then the Deferred Assessment Amount
would be levied on December 1, 2023 and interest would begin to accrue as of that date.
(d) Assessment Term: Only if not paid pursuant to 3.01(e), the term of the special assessment
shall be from the date that the interest accrual begins in 2.01(c) until the Deferred
Assessment Amount is paid in full, or five (5) years after the Deferred Assessment Amount
EXHIBIT A
DEFERRED ASSESSMENT WAIVER AGREEMENT
(CONTINUED)
A-3
is levied against the Property.
(e) City: The City of Hastings, a Minnesota municipal corporation.
(f) Deferred Assessment Amount: The Deferred Assessment Amount is the amount of One
Hundred Twenty-One Thousand, Fifty Dollars and 00/100s ($121,050.00), or as it may be
reduced to Section 3.01(e).
(g) Owner: Hickory Creek Rentals LLC, a Wisconsin limited liability company.
(h) Property: The real property identified and described on Exhibit A.
ARTICLE III
COVENANTS AND AGREEMENTS
Section 3.01 Covenants and Agreements of the Owner. The Owner covenants and
agrees with the City that:
(a) Assessment Appeal Waiver: Owner hereby authorizes the City to defer a special
assessment against the Property up to the Deferred Assessment Amount for the
Improvements. The Owner hereby waives all rights to assessment notices, hearings and
appeals, and all other rights pursuant to Minn. Stat. § 429.061, § 429.071 and § 429.081
for the special assessment against the Property up to the Deferred Assessment Amount.
The Owner hereby waives any and all procedural and substantive objections to the
assessment up to the Deferred Assessment Amount against the Property, including, but not
limited to, notice and hearing requirements and any claim that any or all of the Deferred
Assessment Amount against the Property exceeds the benefit to the Property for the
Improvements. The Owner acknowledges and agrees that the benefit of the Improvements
to the Property does in fact equal or exceed the Deferred Assessment Amount. The City
and the Owner acknowledge and agree that the Owner’s waiver of assessment appeal rights
pursuant to Minnesota Statutes, Chapter 429, is capped at the Deferred Assessment
Amount by operation of Minn. Stat. § 462.3531. The City and the Owner acknowledge
and agree that the Owner may appeal any special assessment above the Deferred
Assessment Amount.
(b) Owner’s Covenant Not to Sue the City: Owner hereby covenants with the City not to
appeal or sue the City for a court to set aside, reduce, repeal, or invalidate the assessment,
or for other relief from the payment of the City’s assessment up to the Deferred Assessment
Amount against the Property for the Improvements constructed by the City.
(c) Owner’s Covenant that Owner is the Property Fee Owner: Owner hereby covenants and
warrants with the City that Owner is seized in fee of the Property and has good right to
EXHIBIT A
DEFERRED ASSESSMENT WAIVER AGREEMENT
(CONTINUED)
A-4
enter into this Agreement with the City.
(d) Owner’s Agreement to Assessment Amount: Owner understands and agrees that the value
of the Improvements will increase the market value of the Property in an amount that equals
or exceeds the Deferred Assessment Amount.
(e) When Payment is Due: Following completion of the Improvements, the Deferred
Assessment Amount owed by the Owner to the City shall be reduced by an amount referred
to as the “Construction Credit.” The Construction Credit shall be equal to the taxed
assessed value as determined by the Dakota County Assessor’s Office for the fair market
value of the Improvements, exclusive of the land value, as of January 2nd two years after
the Improvements are completed, divided by 10. If the Construction Credit exceeds the
Deferred Assessment Amount, then no Assessment is owed and this Agreement is
automatically terminated. If the Deferred Assessment Amount exceeds the Construction
Credit, then the balance of the Deferred Assessment Amount is due and owing and if not
paid by December 1 of the year in which the calculation is made, the Deferred Assessment
Amount shall be assessed against the Property.
By way of illustration only: If the Dakota County Assessor’s Office values the
Improvements at $1,200,000, then:
$1,200,000/10 = $120,000 Construction Credit
$121,050-$120,000 = $1,050 Balance due on Deferred Assessment Amount
Regardless of whether the Improvements are completed, in no event shall the Deferred
Assessment Amount be levied after December 1, 2026. In that case, January 2, 2026 shall
be the date used to determine the Dakota County Assessor’s Office’s value.
Section 3.02 Covenants and Agreements of the City. The City covenants and agrees
with the Owner that:
(a) Deferred Assessment Amount: The City agrees that it will only certify/levy the Deferred
Assessment Amount against the Property if the Owner does not pay the Deferred
Assessment Amount when due according to Section 3.01(e) and then, only up to the
Deferred Assessment Amount for the Improvements pursuant to this Agreement.
(b) City Recording of this Agreement: The City will record this Agreement against the
Property.
(c) Prepayment of Assessment: The City agrees the Owner may prepay some or all of the
City’s Deferred Assessment Amount against the Property for the Improvements with no
penalty pursuant to Minn. Stat. § 429.061.
EXHIBIT A
DEFERRED ASSESSMENT WAIVER AGREEMENT
(CONTINUED)
A-5
ARTICLE IV
DEFAULT
Section 4.01 Default. If a party to this Agreement materially defaults in the due and timely
performance of any of its covenants, or agreements hereunder, the other party(s) may give notice
of default of this Agreement. The notice shall specify with particularity the default or defaults on
which the notice is based. The notice shall specify a ten (10) day cure period within which the
specified default or defaults must be cured. If the specified defaults are not cured within the cure
period, the other party(s) may pursue all remedies and sanctions available at law and in equity,
including specific performance.
Section 4.02 Attorneys’ Fees, Costs and Expenses. The Owner agrees that after
execution of this Agreement, if it challenges the validity of the Assessment up to the Deferred
Assessment Amount in any way, then Owner shall pay the City the amount of the City’s
assessment up to the Deferred Assessment Amount with accrued interest beginning as stated in
Section 2.01(c), together with the City’s attorneys’ fees, costs and expenses to defend the
assessment by the City up to the Deferred Assessment Amount pursuant to this Agreement. The
Owner acknowledges and agrees that the Owner would be unjustly enriched if the City’s
assessment up to the Deferred Assessment Amount pursuant to this Agreement was set aside,
reduced, repealed or invalidated by a court with jurisdiction over the Property. The Owner agrees
that the court with jurisdiction over the Property shall award the City the assessment up to the
Deferred Assessment Amount with accrued interest together with the City’s attorneys’ fees, costs
and expenses for breach of the Owner’s covenant not to appeal or sue the City pursuant to Article
III, Section 3.01(b).
ARTICLE V
GENERAL PROVISIONS
Section 5.01 Notices. All notices, requests, demands or other communications required or
permitted by this Agreement shall be in writing and delivery shall be deemed to be sufficient if
delivered personally or by registered or certified mail, return receipt accepted, postage prepaid,
addressed as follows:
If to the City: City of Hastings
Attention: City Administrator
101 4th Street East
Hastings, MN 55033
If to the Owner: Hickory Creek Rentals LLC
Attention: Chad Smurawa, President
1576 Grotto Street North
St. Paul, MN 55117
EXHIBIT A
DEFERRED ASSESSMENT WAIVER AGREEMENT
(CONTINUED)
A-6
Section 5.02 Non-Assignability. Neither the City nor the Owner shall assign any interest
in this Agreement nor shall either party transfer any interest in the same without the prior written
consent of the other party.
Section 5.03 Binding Effect. This Agreement and the terms, conditions and covenants
contained herein and the transaction contemplated hereunder shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, heirs, personal representatives, and
permitted assigns. This Agreement shall further be binding on subsequent purchasers of the
Property and shall run with the Property herein described.
Section 5.04 Severability. In the event any provision of this Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate
or render unenforceable any other provision hereof.
Section 5.05 Amendments, Changes and Modifications. This Agreement may be
amended or any of its terms modified or changed only by a written amendment authorized and
executed by the City and the Owner.
Section 5.06 Counterparts. This Agreement may be simultaneously executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
Section 5.07 Entire Agreement. This Agreement shall constitute the entire agreement
between the parties and shall supersede all prior oral or written negotiations.
IN WITNESS WHEREOF, the City and the Owner have caused this Agreement to be
executed by their duly authorized representatives.
[remainder of page intentionally blank]
EXHIBIT A
DEFERRED ASSESSMENT WAIVER AGREEMENT
(CONTINUED)
A-7
CITY:
CITY OF HASTINGS
By:
Mary Fasbender
Mayor
By:
Erica Henderson
City Clerk
STATE OF MINNESOTA )
) ss.
COUNTY OF DAKOTA )
On this ___ day of ______________________, 2021, before me a Notary Public within
and for said County, personally appeared Mary Fasbender and Erica Henderson, to me personally
known, who being each by me duly sworn, each did say that they are respectively the Mayor and
City Clerk of the City of Hastings, the municipality named in the foregoing instrument, and that
the seal affixed to said instrument was signed and sealed on behalf of said municipality by authority
of its City Council and said Mayor and City Clerk acknowledged said instrument to be the free act
and deed of said municipality.
Notary Public
EXHIBIT A
DEFERRED ASSESSMENT WAIVER AGREEMENT
(CONTINUED)
A-8
OWNER:
HICKORY CREEK RENTALS LLC
By:
Chad Smurawa
President
STATE OF MINNESOTA )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this ____ day of __________________,
2021 by Chad Smurawa, the President of Hickory Creek Rentals LLC, a Wisconsin limited
liability company, on behalf of said limited liability company.
Notary Public
THIS INSTRUMENT DRAFTED BY AND
AFTER RECORDING, PLEASE RETURN TO:
Korine L. Land, #262432
LeVander, Gillen, & Miller, P.A.
633 South Concord Street, Suite 400
South St. Paul, MN 55075
(651) 451-1831
A-9
EXHIBIT A
Legal Description of Property
Real property in Dakota County, Minnesota legally described as follows:
Lot 3, Block 2, HASTINGS INDUSTRIAL PARK NO. 7, according to the recorded plat thereof,
Dakota County, Minnesota
Abstract Property
PID: 19-32006-02-030