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HomeMy Public PortalAboutResolutions-2022-087Tiffin / 436989-38 / Hold Hrg & App Dev Agmt AA HOLD HEARING ON AND APPROVE DEVELOPMENT AGREEMENT AND TAX INCREMENT PAYMENTS (Iowa Development Group, Inc.) 436989-38 Tiffin, Iowa October 18, 2022 A meeting of the City Council of the City of Tiffin, Iowa, was held at 7:00 o'clock p.m., on October 18, 2022, at the City Hall Council Chambers, Tiffin, Iowa, pursuant to the rules of the Council. The Mayor presided and the roll was called, showing members present and absent as follows: Present: Havens, Olney, Schnedler, Limkemann. Absent: Orris. The City Council investigated and found that notice of the intention of the Council to conduct a public hearing on a Development Agreement between the City and Iowa Development Group, Inc. had been published according to law and as directed by the City Council and that this is the time and place at which the Council shall receive oral or written objections from any resident or property owner of the City. All written objections, statements, and evidence heretofore filed were reported to the Council, and all oral objections, statements, and all other exhibits presented were considered. The following named persons presented oral objections, statements, or evidence as summarized below; filed written objections or statements, copies of which are attached hereto; or presented other exhibits, copies of which are attached hereto: (Here list all persons presenting written or oral statements or evidence and summarize each presentation.) -1- DORSEY & WHITNEY LLP, ATTORNEYS, DES MOINES, IOWA Tiffin / 436989-38 / Hold Hrg & App Dev Agmt AA There being no further objections or comments, the Mayor announced that the hearing was closed. Council Member Havens introduced the resolution next hereinafter set out and moved its adoption, seconded by Council Member Schnedler; and after due consideration thereof by the City Council, the Mayor put the question upon the adoption of said resolution, and the roll being called, the following named Council Members voted: Ayes: Havens, Olney, Schnedler, Limkemann. Nays: None. Whereupon, the Mayor declared said resolution duly adopted, as follows: -2- DORSEY & WHITNEY LLP, ATTORNEYS, DES MOINES, IOWA Tiffin / 436989-38 / Hold I-Irg & App Dev Agmt AA RESOLUTION NO. 2022-087 Resolution Approving Development Agreement with Iowa Development Group, Inc., Authorizing Annual Appropriation Tax Increment Payments and Pledging Certain Tax Increment Revenues to the Payment of the Agreement WHEREAS, the City of Tiffin, Iowa (the "City"), pursuant to and in strict compliance with all laws applicable to the City, and in particular the provisions of Chapter 403 of the Code of Iowa, has adopted an Urban Renewal Plan for the Tiffin Urban Renewal Area (the "Urban Renewal Area"); and WHEREAS, this City Council has adopted an ordinance providing for the division of taxes levied on taxable property in the Urban Renewal Area pursuant to Section 403.19 of the Code of Iowa and establishing the fund referred to in Subsection 2 of Section 403.19 of the Code of Iowa (the "Urban Renewal Tax Revenue Fund"), which fund and the portion of taxes referred to in that subsection may be irrevocably pledged by the City for the payment of the principal and interest on indebtedness incurred under the authority of Section 403.9 of the Code of Iowa to finance or refinance in whole or in part projects in the Urban Renewal Area; and WHEREAS, a certain development agreement (the "Agreement") between the City and Iowa Development Group, Inc. (the "Developer") has been prepared, pursuant to which the Developer would undertake the development of a commercial building in the Urban Renewal Area for use in the business operations of a dental clinic; and WHEREAS, under the Agreement, the City would provide annual appropriation tax increment payments to the Developer in a total amount not exceeding $55,000; and WHEREAS, this City Council, pursuant to Section 403.9 of the Code of Iowa, has published notice, has held a public hearing on the Agreement on October 18, 2022, and has otherwise complied with statutory requirements for the approval of the Agreement; and WHEREAS, Chapter 15A of the Code of Iowa ("Chapter 15A") declares that economic development is a public purpose for which a City may provide grants, loans, tax incentives, guarantees and other financial assistance to or for the benefit of private persons; and WHEREAS, Chapter 15A requires that before public funds are used for grants, loans, tax incentives or other financial assistance, a City Council must determine that a public purpose will reasonably be accomplished by the spending or use of those funds; and WHEREAS, Chapter 15A requires that in determining whether funds should be spent, a City Council must consider any or all of a series of factors; NOW, THEREFORE, It Is Resolved by the City Council of the City of Tiffin, Iowa, as follows: Section 1. Pursuant to the factors listed in Chapter 15A, the City Council hereby finds that: -3- DORSEY & WHITNEY LLP, ATTORNEYS, DES MOINES, IOWA Tiffin / 436989-38 / Hold Hrg & App Dev Agmt AA (a) The Project will add diversity and generate new opportunities for the Tiffin and Iowa economies; (b) The Project will generate public gains and benefits, particularly in the creation of new jobs, which are warranted in comparison to the amount of the proposed property tax incentives. Section 2. The City Council further finds that a public purpose will reasonably be accomplished by entering into the Agreement and providing the incremental property tax payments to the Developer. Section 3. The Agreement is hereby approved and the Mayor and City Clerk are hereby authorized and directed to execute and deliver the Agreement on behalf of the City, in substantially the form and content in which the Agreement has been presented to this City Council, and such officers are also authorized to make such changes, modifications, additions or deletions as they, with the advice of bond counsel, may believe to be necessary, and to take such actions as may be necessary to carry out the provisions of the Agreement. Section 4. All Payments by the City under the Agreement shall be subject to annual appropriation by the City Council, in the manner set out in the Agreement. As provided and required by Chapter 403 of the Code of Iowa, the City's obligations under the Agreement shall be payable solely from a subfund (the "Iowa Development Group, Inc. Subfund") which is hereby established, into which shall be paid that portion of the income and proceeds of the Urban Renewal Tax Revenue Fund attributable to property taxes derived from the property as described as follows: Certain real property situated in the City of Tiffin, Johnson County, State of Iowa, bearing Johnson County Property Tax Parcel Identification Number 0629411001. Section 5. The City hereby pledges to the payment of the Agreement the Iowa Development Group, Inc. Subfund and the taxes referred to in Subsection 2 of Section 403.19 of the Code of Iowa to be paid into such Subfund, provided, however, that no Payment will be made under the Agreement unless and until monies from the Iowa Development Group, Inc. Subfund are appropriated for such purpose by the City Council. Section 6. After its adoption, a copy of this resolution shall be filed in the office of the County Auditor of Johnson County to evidence the continuing pledging of the Iowa Development Group, Inc. Subfund and the portion of taxes to be paid into such Subfund and, pursuant to the direction of Section 403.19 of the Code of Iowa, the County Auditor shall allocate the taxes in accordance therewith and in accordance with the tax allocation ordinance referred to in the preamble hereof. -4- DORSEY & WHITNEY LLP, ATTORNEYS, DES MOINES, IOWA Ti1'lin / 436989-38 / Hold Hrg & App Dev Agent AA Attest: Section 7. All resolutions or parts thereof in conflict herewith are hereby repealed. Passed and approved October 18, 2022. On motion and vote the meeting adjourned. Mayor Mayor -5- DORSEY & WHITNEY LLP, ATTORNEYS, DES MOINES, IOWA Tiflin / 436989-38 / Hold Hrg & App Dev Agmt AA STATE OF IOWA JOHNSON COUNTY CITY OF TIFFIN SS: I, the undersigned, Clerk of the City of Tiffin, hereby certify that the foregoing is a true and correct copy of the minutes of the Council of the City relating to holding a public hearing and adopting a resolution to approve a Development Agreement. WITNESS MY HAND this day of f �.; , 2022. -6- DORSEY & WHITNEY LLP, ATTORNEYS, DES MOINES, IOWA ORSEY' always ahead October 14, 2022 VIA EMAIL Doug Boldt City Administrator/City Hall Tiffin, IA Re: Iowa Development Group, Inc. Development Agreement File No. 436989-38 Dear Doug: Attached please find the proceedings covering the City Council's public hearing on the proposed Development Agreement with Iowa Development Group, Inc., followed by a resolution approving the Agreement and pledging certain incremental property tax revenues to the payment of the Agreement. We would appreciate receiving one fully executed copy of these proceedings and of the executed Development Agreement as soon as they are available. Please call John Danos, Erin Regan, Severie Orngard or me with questions. Kind regards, Amy Bjork Attachments cc: Abigail Hora 8oi Grand Avenue i Suite 4100 l Des Moines, IA 150309-2790 I T 515.283.10001 F 515.283.10601 dorsey.com DEVELOPMENT AGREEMENT This Agreement is entered into between the City of Tiffin, Iowa (the "City") and Iowa Development Group, Inc. (the "Developer") as of the 18th day of October, 2022 (the "Commencement Date"). WHEREAS, the City has established the Tiffin Urban Renewal Area (the "Urban Renewal Area") and has adopted a tax increment ordinance for the Urban Renewal Area; and WHEREAS, the Developer owns certain real property which is situated in the City, lies within the Urban Renewal Area and is more specifically described on Exhibit A hereto (the "Property"); and WHEREAS, the Developer has proposed to sell the Property to a corporate dental clinic (the "Dental Clinic"); and WHEREAS, the Dental Clinic has proposed to construct a new dental clinic building (the "Project") on the Property for use in the business operations of a dental practice; and WHEREAS, the City has agreed to provide a financial incentive to the Developer in the form of incremental property tax payments in recognition of the Developer's economic development initiatives on the Property; and WHEREAS, the base valuation of the Property for purposes of calculating Incremental Property Tax Revenues (as herein defined) under this Agreement and Section 403.19 of the Code of Iowa shall be the assessed taxable valuation of the Property as of January 1, 2023 (the "Base Valuation"); and WHEREAS, Chapter 15A of the Code of Iowa authorizes cities to provide grants, loans, guarantees, tax incentives and other financial assistance to or for the benefit of private persons; NOW THEREFORE, the parties hereto agree as follows: A. Developer's Covenants 1. Disposition of Property. The Developer agrees to sell the Property to the Dental Clinic by December 31, 2022. The Developer agrees to notify the City when the real estate transaction with respect to the disposition of the Property to the Developer is complete. The Developer acknowledges that in order for the Developer to be eligible to receive the Payments (as hereinafter defined), the Dental Clinic must complete construction of the Project by December 31, 2023. 2. Property Taxes. The Developer hereby acknowledges that the funding of Payments is contingent upon the full and timely payments of property taxes as may from time to time become due and owing with respect to the Property with the Project thereon. 4856-5549-5732\5 3. Property Tax Payment Certification. Furthermore, the Developer agrees to certify to the City by no later than October 15 of each year during the Term (as hereinafter defined), commencing October 15, 2024, an amount (the "Developer's Estimate") equal to the estimated Incremental Property Tax Revenues (as hereinafter defined) anticipated to be paid by the Dental Clinic in the fiscal year immediately following such certification with respect to the taxable valuation of the Property. In submitting each such Developer's Estimate, the Developer will complete and submit the worksheet attached hereto as Exhibit B. The City reserves the right to review and request revisions to each such Developer's Estimate to ensure the accuracy of the figures submitted. For purposes of this Agreement, Incremental Property Tax Revenues are calculated by: (1) determining the consolidated property tax levy (city, county, school, etc.) then in effect with respect to taxation of the Property; (2) subtracting (a) the debt service levies of all taxing jurisdictions, (b) the school district instructional support and physical plant and equipment levies and (c) any other levies which may be exempted from such calculation by action of the Iowa General Assembly; (3) multiplying the resulting modified consolidated levy rate times any incremental growth in the taxable valuation of the Property, as shown on the property tax rolls of Johnson County, above and beyond that of the Base Valuation; and (4) deducting any property tax credits which shall be available with respect to the incremental valuation of the Property. Upon request, the City staff shall provide reasonable assistance to the Developer in completing the worksheet(s) required under this Section A.3. 4. Default Provisions. A. Events of Default. The following shall be "Events of Default" under this Agreement, and the term "Event of Default" shall mean, whenever it is used in this Agreement (unless otherwise provided), any one or more of the following events: (i) Failure by the Developer to sell the Property to the Dental Clinic pursuant to the terms and conditions of this Agreement. (ii) Failure by the Developer to comply with Section A.3 of this Agreement. (iii) Failure by the Developer to observe or perform any other material covenant on its part, to be observed or performed hereunder. B. Notice and Remedies. Whenever any Event of Default described in this Agreement occurs, the City shall provide written notice to the Developer describing the cause of the default and the steps that must be taken by the Developer in order to cure the default. The Developer shall have sixty (60) days after receipt of the notice to cure the default or to provide assurances satisfactory to City that the default will be cured as soon as reasonably possible. If the Developer fails to cure the default or provide assurances, the City shall then have the right to: (i) Pursue any action available to it, at law or in equity, in order to enforce the terms of this Agreement. (ii) Withhold the future Payments provided for under Section B.1 below. -2- 4856-5549-5732\5 5. Legal and Administrative Costs. The Developer hereby acknowledges that the City will cover the initial payment of legal fees and administrative costs (the "Actual Admin Costs") incurred by the City in connection with the drafting, negotiation and authorization of this Agreement, including the necessary amendment to the Urban Renewal Area. Furthermore, the Developer agrees that the City shall withhold an amount (the "Admin Withholding Amount") equal to the lesser of (1) $6,000 or (2) the Actual Admin Costs from the initial Payments, as hereinafter set forth, in order to recover some or all of the Actual Admin Costs. B. City's Obligations 1. Payments. In recognition of the Developer's obligations set out above, the City agrees to make seven (7) annual economic development tax increment payments (the "Payments" and each, individually a "Payment") to the Developer during the Tenn of this Agreement pursuant to Chapters 15A and 403 of the Code of Iowa, provided however that the aggregate, total amount (the "Maximum Payment Total") of the Payments shall not exceed Fifty-five Thousand Dollars ($55,000), and all Payments under this Agreement shall be subject to annual appropriation by the City Council, as provided hereunder. The Payments shall not constitute general obligations of the City, but shall be made solely and only from Incremental Property Tax Revenues received by the City from the Johnson County Treasurer attributable to the taxable valuation of the Property in the Urban Renewal Area. This Agreement assumes that new taxable resulting valuation from the Project will go on the property tax rolls as of January 1, 2024. Accordingly, Payments will be made on June 1 of each fiscal year, beginning June 1, 2026, and continuing through and including June 1, 2032, or until such earlier date upon which total Payments equal to the Maximum Payment Total have been made. 2. Annual Appropriation. Each Payment shall be subject to annual appropriation by the City Council. Prior to December 1 of each year during the Term (as hereinafter defined) of this Agreement, commencing in calendar year 2024, the City Council of the City shall consider the question of obligating for appropriation to the funding of the Payment due in the following fiscal year, an amount (the "Appropriated Amount") of Incremental Property Tax Revenues to be collected in the following fiscal year equal to or less than the most recently submitted Developer's Estimate. In any given fiscal year, if the City Council determines to not obligate the then -considered Appropriated Amount, then the City will be under no obligation to fund the Payment scheduled to become due in the following fiscal year, and the Developer will have no rights whatsoever to compel the City to make such Payment or to seek damages relative thereto or to compel the funding of such Payment in future fiscal years. A determination by the City Council to not obligate funds for any particular fiscal year's Payment shall not render this Agreement null and void, and the Developer shall make the next succeeding submission of the Developer's Estimate as called for in Section A.3 above, provided however that no Payment shall be made after June 1, 2032, except as otherwise set forth in Section B.1. 3. Payment Amounts. Each Payment shall be in an amount equal to the corresponding Appropriated Amount (for example, for the Payment due on June 1, 2026, the -3- 4856-5549-5732\5 amount of such Payment would be determined by the Appropriated Amount determined for certification by December 1, 2024), provided, however, that no Payment shall exceed the amount of Incremental Property Tax Revenues received by the City from the Johnson County Treasurer attributable to the taxable valuation of the Property with the Project thereon. 4. Certification of Payment Obligation. In any given fiscal year, if the City Council determines to obligate the then -considered Appropriated Amount, as set forth in Section B.2 above, then the City Clerk will certify by December 1 of each such year to the Johnson County Auditor an amount equal to the most recently obligated Appropriated Amount. C. Administrative Provisions 1. Amendment and Assignment. Neither party may cause this Agreement to be amended, assigned, assumed, sold or otherwise transferred without the prior written consent of the other party. However, the City hereby gives its permission that the Developer's rights to receive the Payments hereunder may be assigned by the Developer to a private lender, as security on a credit facility taken with respect to the Project, without further action on the part of the City. 2. Successors. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties. 3. Term. The term (the "Term") of this Agreement shall commence on the Commencement Date and end on June 1, 2032 or on such earlier date upon which the aggregate sum of Payments made to the Developer equals the Maximum Payment Total. 4. Choice of Law. This Agreement shall be deemed to be a contract made under the laws of the State of Iowa and for all purposes shall be governed by and construed in accordance with laws of the State of Iowa. -4- 4856-5549-5732\5 EXHIBIT A LEGAL DESCRIPTION OF THE PROPERTY Lot 1, Prairie Village, Commercial Development Part 2, Tiffin, Johnson County, Iowa, according to the plat thereof recorded in Book 65, Page 349, Plat Records of Johnson County, Iowa. -6- 4856-5549-5732\5 The City and the Developer have caused this Agreement to be signed, in their names and on their behalf by their duly authorized officers, all as of the day and date written above. CITY OF TIFFIN, IOWA Attest: By: 4856-5549-5732\5 -5- EXHIBIT B DEVELOPER'S ESTIMATE WORKSHEET (1) Date of Preparation: October , 20 (2) Assessed Valuation of Property as of January 1, 20 (3) Base Taxable Valuation of Property: (4) Incremental Taxable Valuation of Property (2 minus 3): (5) (the "TIF Value"). Current City fiscal year consolidated property tax levy rate for purposes of calculating Incremental Property Tax Revenues (the "Adjusted Levy Rate"): $ per thousand of value. (6) The TIF Value (4) factored by the Adjusted Levy Rate (5). $ x $ /1000 = $ (the "Developer's Estimate") -7- 4856-5549-5732\5