Loading...
HomeMy Public PortalAboutORD15476 BILL NO. 2015-85 SPONSORED BY COUNCILMAN / Prather ORDINANCE NO. 13L47t, AN ORDINANCE APPROVING A PLAN FOR AN INDUSTRIAL DEVELOPMENT PROJECT FOR THE BENEFIT OF CONTINENTAL COMMERCIAL PRODUCTS, L.L.C., A DELAWARE LIMITED LIABILITY COMPANY, CONSISTING OF RENOVATING, IMPROVING, AND EQUIPPING AN EXISTING BUILDING FOR MANUFACTURING PURPOSES; AUTHORIZING THE CITY OF JEFFERSON, MISSOURI TO ISSUE TWO SERIES OF TAXABLE INDUSTRIAL DEVELOPMENT REVENUE BONDS IN A COMBINED PRINCIPAL AMOUNT NOT TO EXCEED $2,234,000 TO FINANCE OR REIMBURSE THE COSTS OF SUCH PROJECT; AUTHORIZING AND APPROVING CERTAIN DOCUMENTS; AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION WITH THE ISSUANCE OF THE BONDS. WHEREAS, The City of Jefferson, Missouri (the "City"), is authorized under the provisions of Article VI, Section 27 of the Missouri Constitution, as amended, and Sections 100.010 to 100.200, inclusive, of the Revised Statutes of Missouri, as amended (collectively, the "Act"), to purchase, construct, extend, and improve certain projects (as defined in the Act) for the purposes set forth in the Act and to issue industrial development revenue bonds for the purpose of providing funds to pay a portion of the costs of such projects and to lease or otherwise dispose of such projects to private persons or corporations for manufacturing, commercial, warehousing, and industrial development purposes upon such terms and conditions as the City shall deem advisable; and WHEREAS, The City, in accordance with Section 100.050 of the Act, has prepared a plan for industrial development (the "Plan") for the benefit of Continental Commercial Products, L.L.C., a Delaware limited liability company ("CCP"), with respect to a project consisting of (1) the renovation of the existing R. R. Donnelly building to accommodate the installation of injection molding machines being moved from CCP's Bridgeton, Missouri facility, plus the installation of new injection molding machines and the necessary support facilities (collectively, the "Series 2015A Project"), and (2) the installation of a new resin tank farm and delivery system (the "Series 2015B Project" and, together with the Series 2015A Project, collectively referred to herein as the "Project"), notice of such Project was given to the taxing jurisdictions in accordance with Section 100.059.1 of the Act and the City now desires to approve the Plan; and WHEREAS, The City desires to finance the costs of the Project out of the proceeds of two series of industrial development revenue bonds to be issued under the Act; and WHEREAS, The City has and does hereby find and determine that it is desirable for the economic development of the City and within the public purposes of the Act that the City proceed with the issuance of the bonds for the purpose described above; and WHEREAS, the City further finds and determines that it is necessary and desirable in connection with the issuance of the bonds that the City enter into certain Bill 2015-85 Page 1 documents, and that the City take certain other actions and approve the execution of certain other documents as herein provided. NOW, THEREFORE, BE IT ENACTED BY THE COUNCIL OF THE CITY OF JEFFERSON, MISSOURI, AS FOLLOWS: Section 1. Promotion of Economic Development. The Council hereby finds and determines that the Project will promote the economic welfare and the development of the City, and the issuance of the bonds by the City to pay the costs of the Project will be in furtherance of the public purposes set forth in the Act. Section 2. Approval of Plan. The Council hereby approves the Plan for Industrial Development Project attached hereto as Exhibit A in accordance with Section 100.050 of the Act. Section 3. Authorization and Sale of the Bonds. The City is hereby authorized to issue and sell (a) its Taxable Industrial Development Revenue Bonds (Continental Commercial Products, L.L.C. Project), Series 2015A, in an aggregate principal amount not to exceed $1,734,000 (the "Series 2015A Bonds"), for the purpose of providing funds to pay the costs of the Series 2015A Project, and (b) its Taxable Industrial Development Revenue Bonds (Continental Commercial Products, L.L.C. Project), Series 2015B, in an aggregate principal amount not to exceed $500,000 (the "Series 2015B Bonds" and, together with the Series 2015A Bonds, collectively referred to herein as the "Bonds"), for the purpose of providing funds to pay the costs of the Series 2015B Project. The Bonds shall be issued and secured pursuant to the herein authorized Trust Indentures and shall bear such date, shall mature at such time, shall be in such denominations, shall bear interest at such rate, shall be in such form, shall be subject to redemption, shall have such other terms and provisions, shall be issued, executed and delivered in such manner and shall be subject to such provisions, covenants and agreements as are specified in the Trust Indentures upon the execution thereof, and the signatures of the officers of the City executing the Trust Indentures shall constitute conclusive evidence of their approval and the City's approval thereof. The sale of the Series 2015A Bonds to ZELCK Creek (as hereinafter defined) and the sale of the Series 2015B Bonds to MO Warehouse (as hereinafter defined) at private sale pursuant to the provisions of Section 108.170 of Revised Statutes of Missouri, as amended, at the interest rate and upon the terms set forth in the Trust Indentures is hereby approved. Section 4. Limited Obligations. The Bonds and the interest thereon shall be limited obligations of the City payable solely out of the payments, revenues and receipts derived by the City from the herein authorized Lease Agreements, and such payments, revenues and receipts. shall be pledged and assigned to the Trustee as security for the payment of the Bonds as provided in the Trust Indentures. The Bonds and the interest thereon shall not be deemed to constitute a debt or liability of the City within the meaning of any constitutional provision, statutory limitation or City Charter provision and shall not constitute a pledge of the full faith and credit of the City. The issuance of the Bonds shall not, directly, indirectly or contingently, obligate the City to levy any form of taxation therefor or to make any appropriation for their payment. Section 5. Approval and Authorization of Documents. The following documents (the "City Documents") are hereby approved in substantially the forms presented to the Council at this meeting (copies of which documents shall be filed in the records of the City), and the City is hereby authorized to execute and deliver the City Documents with such changes therein as shall Bill 2015-85 Page 2 be approved by the officials of the City executing such documents, such officials' signatures thereon being conclusive evidence of their approval thereof: (a) Two Trust Indentures dated as of the date set forth therein (the "Trust Indentures"), both between the City and BOKF, N.A., as trustee (the "Trustee"), pursuant to which the two series of Bonds shall be issued and the City shall pledge and assign the payments, revenues and receipts received pursuant to the respective Lease Agreements to the Trustee for the benefit and security of the respective owners of the two series of Bonds upon the terms and conditions as set forth in the Trust Indentures; (b) Lease Agreement dated as of the date set forth therein (the "Series 2015A Lease Agreement"), between the City and ZELCK Creek Properties, LLC, a Missouri limited liability company ("ZELCK Creek"), under which the City will (i) provide funds for the construction, improvement, purchase and installation of the Series 2015A Project, and (ii) lease the Series 2015A Project to ZELCK Creek pursuant to the terms and conditions set forth in the Series 2015A Lease Agreement, in consideration of rental payments by ZELCK Creek which will be sufficient to pay the principal of, premium, if any, and interest on the Series 2015A Bonds; (c) Lease Agreement dated as of the date set forth therein (the "Series 20158 Lease Agreement," and, together with the Series 2015A Lease Agreement, referred to herein as the "Lease Agreements"), between the City and MO Warehouse, LLC, a Missouri limited liability company ("MO Warehouse"), under which the City will (i) provide funds for the purchase and installation of the Series 20158 Project, and (ii) lease the Series 2015B Project to MO Warehouse pursuant to the terms and conditions set forth in the Series 20156 Lease Agreement, in consideration of rental payments by the MO Warehouse which will be sufficient to pay the principal of, premium, if any, and interest on the Series 2015B Bonds; (d) Bond Purchase Agreement dated as of the date set forth therein, between the City and ZELCK Creek, pursuant to which ZELCK Creek will agree to purchase the Series 2015A Bonds; (e) Bond Purchase Agreement dated as of the date set forth therein, between the City and MO Warehouse, pursuant to which MO Warehouse will agree to purchase the Series 2015B Bonds; and • (f) Performance Agreement dated as of the date set forth therein, among the City, ZELCK Creek, MO Warehouse and CCP, pursuant to which the City has granted certain rights with respect to the abatement of ad valorem real property taxes on the Project in consideration for CCP's expectation to maintain a certain level of employment at the Project site. Section 6. Execution of Documents. The Mayor is hereby authorized and directed to execute the Bonds and to deliver the Bonds to the Trustee for authentication for and on behalf of and as the act and deed of the City in the manner provided in the Indenture. The Mayor is hereby authorized and directed to execute the City Documents and such other documents, certificates, and instruments as may be necessary or desirable to carry out and comply with the intent of this Ordinance, for and on behalf of and as the act and deed of the City. The City Clerk is hereby authorized and directed to attest to and affix the seal of the City to the Bonds and the City Bill 2015-85 Page 3 Documents and such other documents, certificates and instruments as may be necessary or desirable to carry out and comply with the intent of this Ordinance. Section 7. Further Authority. The City shall, and the officials, agents, and employees of the City are hereby authorized and directed to, take such further action, and execute such other documents, certificates and instruments as may be necessary or desirable to carry out and comply with the intent of this Ordinance and to carry out, comply with and perform the duties of the City with respect to the Bonds and the City Documents. Section 8. Effective Date. This Ordinance shall take effect and be in full force and effect from and after its passage by the City Council and approvalbythe Mayor. / 1, Passed: J I �/)/CApproved /ex_e4J�/I )'1 � ov0 . 0_,,,,,,,„ Presiding Officer ��/i Mayor Carrie Tergin 7,-,,,,,,,t ATTEST::• - \ . , APPROVED AS TO FORM: itY_CI - -- C 91- City Counselor Bill 2015-85 Page 4 Ate 574, Q¢JL*FE� s G4' 4, ttr IN, r ti 2 Vi S November 24,2015 To: Taxing Jurisdictions Listed on the Attached Sheet Re: Proposed Plan for an Industrial Development Project in the City of Jefferson,Missouri Ladies and Gentlemen: The undersigned, on behalf of the City Council of the City of Jefferson, Missouri,provides notice that the City Council is considering the approval of a Plan for an Industrial Development Project in connection with the issuance of industrial development revenue bonds pursuant to Sections 100.010 to 100.200 of the Revised Statutes of Missouri, as amended, for the purpose of providing tax incentives for the benefit of Continental Commercial Products,L.L.C. The City Council will consider approval of the Plan for an Industrial Development Project during the Council's regular meeting at 6:00 p.m. on December 21, 2015, in Council Chambers at City Hall in the John G. Christy Municipal Building, 320 E. McCarty Street, in Jefferson City, Missouri. The Plan contains a cost-benefit analysis showing the impact of the proposed project on affected taxing jurisdictions. The City Council is expected to consider and act upon an ordinance approving the Plan for an Industrial Development Project. Enclosed is a copy of the Plan for your review. The City invites all affected taxing jurisdictions to submit comments on the proposed Plan to the City Council. All comments of the taxing jurisdictions will be fairly and duly considered by the City Council. Thank you for your assistance. Very truly yours, Phyllis Powell, CMC, City Clerk P .7 TAXING JURISDICTIONS Missouri Department of Revenue Jefferson City Public Schools County Tax Section 315 E.Dunklin Street Blind Pension Fund Jefferson City,MO 65101 301 West High,Room 330 Attn: Jason Hoffman, Chief Financial Officer/Chief Jefferson City,MO 65105 Operating Officer Cole County City of Jefferson Cole County Commission City Hall Cole County Road and Bridge John G. Christy Municipal Building 311 E.High Street 320 E.McCarty Street Jefferson City,MO 65101 Jefferson City,MO 65101 Attn: Sam Bushman,Presiding Commissioner Attn: Steven S. Crowell,Jr.,City Administrator Cole County Residential Services,Inc. Missouri River Regional Library 1908 Boggs Creek Road 214 Adams Street Jefferson City,MO 65101 P.O.Box 89 Attn: Jim Casey,Executive Director Jefferson City,MO 65102 Attn: Abbey Rimel,President Taxation Division i R T M EN T OF REVENUE Post Office Box 453 ;, P Jefferson City, Missouri 65105-0453 (573) 751-5900 E-mail: Countyfees@dor.mo.gov City of Jefferson Phyllis Powell, City Clerk 320 E. McCarty St. Jefferson City, MO 65101 November 30, 2015 Dear Ms. Powell: -- -The Departmente f Revenue acknowledges receipt Of your letter concerning=the hearing on December 21, 2015, for the proposed Continental Commercial Products L.L.C. TIF. The Department respectfully declines comment. If you require any additional information or assistance,please contact County Tax at Post Office Box 453, Jefferson City, MO 65105-0453, by telephone at (573) 751-5900 during the hours of 8:00 a.m. to 5:00 p.m., Monday through Friday, or by email at:countvtax(djdor.mo.gov. Sincerely, lad)va,44 Gerald W. Robinett Supervisor County Tax GWR:rp RECEIVED DEC 0 2 2015 OFFICE ITY OF JEFFERSON FRK EXHIBIT A TO ORDINANCE NO. 15476 PLAN FOR INDUSTRIAL DEVELOPMENT PROJECT FOR CONTINENTAL COMMERCIAL PRODUCTS, L.L.C. ____________________________ CITY OF JEFFERSON, MISSOURI PLAN FOR AN INDUSTRIAL DEVELOPMENT PROJECT AND COST-BENEFIT ANALYSIS FOR CONTINENTAL COMMERCIAL PRODUCTS, L.L.C. _____________________________ TABLE OF CONTENTS Page I. PURPOSE OF THIS PLAN .......................................................................................................... 1 II. DESCRIPTION OF CHAPTER 100 FINANCINGS .................................................................. 1 General ............................................................................................................................................ 1 Issuance and Sale of Bonds ........................................................................................................... 1 Property Tax Abatement ............................................................................................................... 2 III. DESCRIPTION OF THE PARTIES ............................................................................................ 2 Continental Commercial Products, L.L.C. .................................................................................. 2 City of Jefferson, Missouri ............................................................................................................ 2 IV. REQUIREMENTS OF THE ACT ................................................................................................ 2 Description of the Project .............................................................................................................. 2 Estimate of the Costs of the Project ............................................................................................. 3 Source of Funds to be Expended for the Project ......................................................................... 3 Statement of the Terms Upon Which the Project is to be Leased or Otherwise Disposed of by the City .............................................................................................................. 3 Affected Taxing Jurisdictions ....................................................................................................... 3 Current Assessed Valuation .......................................................................................................... 4 Payments in Lieu of Taxes ............................................................................................................ 4 Cost-Benefit Analysis and Discussion of Exhibits ....................................................................... 4 V. ASSUMPTIONS AND BASIS OF PLAN .................................................................................... 4 EXHIBIT 1 – LETTER FROM COLE COUNTY ASSESSOR’S OFFICE REGARDING VALUE OF IMPROVEMENTS EXHIBIT 2 - SUMMARY OF KEY ASSUMPTIONS EXHIBIT 3 - SUMMARY OF COST-BENEFIT ANALYSIS (2016-2025) EXHIBIT 4 - PROJECTED VALUE OF ABATEMENT (TAX REVENUES WITHOUT ABATEMENT) * * * CITY OF JEFFERSON, MISSOURI _________________________________ PLAN FOR AN INDUSTRIAL DEVELOPMENT PROJECT AND COST-BENEFIT ANALYSIS FOR CONTINENTAL COMMERCIAL PRODUCTS, L.L.C. I. PURPOSE OF THIS PLAN On December 21, 2015, the City Council of the City of Jefferson, Missouri (the “City”) will consider an ordinance regarding the proposed issuance by the City of two series of its taxable industrial development revenue bonds in the aggregate principal amount of not to exceed $2,234,000 (the “2015 Bonds”), to finance the costs of an industrial development project (the “Project,” consisting of the Series 2015A Project and the Series 2015B Project described below) for the benefit of Continental Commercial Products, L.L.C., a Delaware limited liability company (“CCP”). The 2015 Bonds will be issued pursuant to the provisions of Sections 100.010 to 100.200 of the Revised Statutes of Missouri, as amended, and Article VI, Section 27(b) of the Missouri Constitution, as amended (collectively, the “Act”). Gilmore & Bell, P.C. has prepared this Plan for an Industrial Development Project and Cost- Benefit Analysis (the “Plan”) to satisfy requirements of the Act and to analyze the potential costs and benefits, including the related tax impact on all affected taxing jurisdictions, of using industrial development revenue bonds to finance the Project and to facilitate abatement of ad valorem taxes on the bond-financed property. II. DESCRIPTION OF CHAPTER 100 FINANCINGS General. The Act authorizes cities, counties, towns and villages to issue industrial development revenue bonds to finance the purchase, construction, extension and improvement of warehouses, distribution facilities, research and development facilities, office industries, agricultural processing industries, service facilities that provide interstate commerce, industrial plants and other commercial facilities. Issuance and Sale of Bonds. Revenue bonds issued pursuant to the Act do not require voter approval and are payable solely from revenues received from the project. The municipality issues its bonds and in exchange, the benefited company promises to make payments that are sufficient to pay the principal of and interest on the bonds as they become due. Thus, the municipality merely acts as a conduit for the financing. Concurrently with the closing of the bonds, the company or an entity having a business relationship with the company (the “Intermediary”) will convey to the municipality title to (1) the site on which the industrial development project will be located and (2) the personal property included in the project. (The municipality must be the legal owner of the property while the bonds are outstanding for the property to be eligible for tax abatement, as further described below.) At the same time, the municipality will lease the project site, the improvements thereon and the personal property, including the project, either to (1) the benefitted company pursuant to a lease agreement, or (2) the Intermediary pursuant to a lease agreement, which Intermediary will sublease the project to the benefitted company. The lease agreement will require the entity responsible for the project, acting on behalf of the municipality, to use the bond proceeds to pay (or reimburse) the costs of purchasing, constructing, improving, equipping and installing the project, as applicable. -2- Under the lease agreement, the responsible entity typically: (1) will unconditionally agree to make payments sufficient to pay the principal of and interest on the bonds as they become due; (2) will agree, at its own expense, to maintain the project, to pay all taxes and assessments with respect to the project, and to maintain adequate insurance; (3) has the right, at its own expense, to make certain additions, modifications or improvements to the project; (4) may assign its interests under the lease agreement or sublease the project while remaining responsible for payments under the lease agreement; (5) will covenant to maintain its corporate existence during the term of the bond issue; and (6) will agree to indemnify the municipality for any liability the municipality might incur as a result of its participation in the transaction. Property Tax Abatement. Under Article X, Section 6 of the Missouri Constitution and Section 137.100 of the Revised Statutes of Missouri, all property of any political subdivision is exempt from taxation. In a typical transaction, the municipality holds fee title to the project and leases the project to the benefited company. Although the Missouri Supreme Court has held that the leasehold interest is taxable, it is taxable only to the extent that the economic value of the lease is less than the actual market value of the lease. See Iron County v. State Tax Commission, 437 S.W.2d 665 (Mo. 1968)(en banc) and St. Louis County v. State Tax Commission, 406 S.W.2d 644 (Mo. 1966)(en banc). If the rental payments under the lease agreement equal the actual debt service payments on the bonds, the leasehold interest should have no “bonus value” and the bond-financed property should be exempt from ad valorem taxation and personal property taxation so long as the bonds are outstanding. If the municipality and the benefitted company determine that partial tax abatement is desirable, the company may agree to make “payments in lieu of taxes.” The amount of payments in lieu of taxes is negotiable. The payments in lieu of taxes are payable by December 31 of each year, and are distributed to the municipality and to each political subdivision within the boundaries of the project in the same manner and in the same proportion as property taxes would otherwise be distributed under Missouri law. III. DESCRIPTION OF THE PARTIES Continental Commercial Products, L.L.C. CCP, a subsidiary of Katy Industries, Inc., is a manufacturer, importer and distributor of commercial cleaning and storage products for janitorial and sanitation, food service, healthcare, institutional and schools, building service, contractors, industrial and retail markets. CCP is moving its manufacturing and warehouse operations from Bridgeton, Missouri, to 534,000 square feet of space in the former R. R. Donnelly facility located at 321 Wilson Drive in the City. City of Jefferson, Missouri. The City is a home rule charter city and municipal corporation organized and existing under the laws of the State of Missouri. The City is authorized and empowered pursuant to the provisions of the Act to purchase, construct, extend and improve certain projects (as defined in the Act) and to issue industrial development revenue bonds for the purpose of providing funds to pay the costs of such projects and to lease or otherwise dispose of such projects to private persons or corporations for manufacturing, commercial, warehousing and industrial development purposes upon such terms and conditions as the City deems advisable. IV. REQUIREMENTS OF THE ACT Description of the Project. In order to accomplish the project, the site where the existing R. R. Donnelly building is located has been divided into two tracts. The primary manufacturing facility is located on the first tract (“Tract 1”), which is presently owned by ZELCK Creek Properties, LLC, a Missouri limited liability company (“ZELCK Creek”). A new resin tank farm and delivery system for resin from a rail spur to the manufacturing facility is located on the second tract (“Tract 2”), presently -3- owned by MO Warehouse, LLC, a Missouri limited liability company (“MO Warehouse”). To finance the project, the 2015 Bonds will be issued as two separate series of bonds. Proceeds of the first series of bonds (the “Series 2015A Bonds”), to be issued in the principal amount of $1,734,000, will be used to pay (or reimburse) the costs of improvements on Tract 1, including renovation of the existing R. R. Donnelly building to accommodate the installation of 23 injection molding machines being moved from CCP’s Bridgeton facility plus the installation of three new injection molding machines and the necessary support facilities, including thicker concrete pads and reinforced rebar to support machinery, new electrical lines, water pipes from a chiller system to machinery for cooling and a conveyor system (collectively, the “Series 2015A Project”). Proceeds of the second series of bonds (the “Series 2015B Bonds”), to be issued in the principal amount of $500,000, will be used to pay the costs or reimburse the costs of improvements on Tract 2, including costs associated with the new resin tank farm and delivery system (the “Series 2015B Project” and, together with the Series 2015B Project, collectively referred to herein as the “Project”). Estimate of the Costs of the Project. The costs of the Project being financed by both series of the 2015 Bonds is expected to be approximately $2,234,000. The 2015 Bonds will be issued in a principal amount not to exceed $2,234,000, consisting of $1,724,000 of Series 2015A Bonds and $500,000 of Series 2015B Bonds. Source of Funds to be Expended for the Project. The sources of funds to be expended for the Project will be the proceeds of the 2015 Bonds in a principal amount of not to exceed $2,234,000, to be issued by the City. ZELCK Creek will purchase the Series 2015A Bonds and MO Warehouse will purchase the Series 2015B Bonds (both referred to as a “Bondholder”). The 2015 Bonds will be payable solely from the revenues derived by the City from lease of both Tracts or other disposition of the Project (as further described below). The 2015 Bonds will not be an indebtedness or general obligation, debt or liability of the City or the State of Missouri. Statement of the Terms Upon Which the Project is to be Leased or Otherwise Disposed of by the City. ZELCK Creek will deed Tract 1 and the improvements thereon to the City and MO Warehouse will deed Tract 2 and the improvements thereon to the City, all subject to permitted encumbrances. The City will lease the Series 2015A Project to ZELCK Creek and the Series 2015B Project to MO Warehouse under separate lease agreements for lease payments to be made by ZELCK Creek and MO Warehouse in amounts equal to the principal and interest payments to be made on the Series 2015A Bonds and the Series 2015B Bonds, respectively. In addition, ZELCK Creek will sublease Tract 1 to CCP. Under the terms of both lease agreements with the City, ZELCK Creek and MO Warehouse will have options to purchase the Series 2015A Project and the Series 2015B Project, respectively, at any time and will have the obligation to purchase their respective Project at the termination of the leases. The leases between the City and ZELCK Creek and between the City and MO Warehouse will both terminate in 2025, unless terminated sooner pursuant to the terms set forth therein. Affected Taxing Jurisdictions.  City of Jefferson (includes Fire Pension Fund)  Cole County (General Revenue and Road & Bridge)  Cole County Special Services (Developmental Disabilities Board)  Library District  Jefferson City School District  State of Missouri Blind Pension Fund -4- Current Assessed Valuation. The most recent equalized assessed valuation of the real property included in the Project is $1,120,000 (no personal property is included in the Project). Based on an onsite inspection of the facilities located on Tract 1 and Tract 2 by a commercial real estate appraiser from the Cole County Assessor’s Office in October 2015, for the purposes of stating an opinion as to the impact on the value of such facilities by improvements financed by the 2015 Bonds, the estimated total equalized assessed valuation after development of the Project is expected to be approximately $1,120,000 plus some minimal value added due to the improvements. A copy of a letter from the appraiser is contained in Exhibit 1. Payments in Lieu of Taxes. If this Plan is approved by the City Council, the City intends to issue the 2015 Bonds and to extend tax abatement to ZELCK Creek and MO Warehouse. Under terms of a Development Agreement between CCP and the City dated July 17, 2015, CCP has agreed to create not less than 150 jobs by December 31, 2015, and an additional 30 jobs by December 31, 2016, and has agreed to maintain such level of employment through July 31, 2026. In addition, CCP has agreed that the average annual wage for such 180 jobs will be not less than $33,000. So long as CCP creates and maintains the number of jobs and the average annual wage stated in the previous sentence, no payments in lieu of taxes will be required. However, should CCP fail to create and maintain the required number of jobs or if the average annual wage for such jobs is below $33,000, ZELCK Creek will be required to make payments in lieu of taxes in an amount determined on a proportionate basis by the amount CCP failed to meet its targets. Such payments in lieu of taxes would, after reduction for actual costs of the City for distributing such payments, be distributed among the taxing jurisdictions in proportion to the amount of taxes which would have been paid in each year had the Project not been exempt from taxation, pursuant to Section 100.050.3 of the Act. Cost-Benefit Analysis and Discussion of Exhibits. In compliance with Section 100.050.2(3) of the Revised Statutes of Missouri, this Plan has been prepared to show the costs and benefits to the City and to other taxing jurisdictions affected by the tax abatements and exemptions of the Project. The following is a summary of the exhibits attached to this Plan that show the direct tax impact the Project is expected to have on each taxing jurisdiction. This Plan does not attempt to quantify the overall economic impact of the Project. Project Assumptions. Exhibit 2 presents a list of the assumptions related to the determination of assessed valuations and the tax formulas. Summary of Cost-Benefit Analysis. Exhibit 3 presents a summary for each affected taxing district of the total estimated tax revenues that would be generated if the Project did not receive tax abatement and, since no payments in lieu of taxes will be required (except as otherwise described above) thus show the total estimated value of the abatement to the Company. Exhibit 4 shows the value of tax abatement on a yearly basis. Please note that the actual value of the Project may differ from the estimated value assumed in this Plan. V. ASSUMPTIONS AND BASIS OF PLAN In preparing this Plan, we have made some key assumptions to estimate the fiscal impact of the abatement and exemptions proposed for the Project. See Exhibit 2 for a summary of these assumptions. In addition to the foregoing, in order to complete this Plan, we have generally reviewed and relied upon information furnished to us by, and have participated in conferences with, representatives of the City, representatives of ZELCK Creek and MO Warehouse and their counsel, the Bondholders and other persons as we have deemed appropriate. We do not assume any responsibility for the accuracy, -5- completeness or fairness of any of the information provided to us, and we have not independently verified the accuracy, completeness or fairness of such information. EXHIBIT 1 LETTER FROM COLE COUNTY ASSESSOR’S OFFICE REGARDING VALUE OF IMPROVEMENTS October 21, 2015 RE: 10-01-02-0004-006-007 (321 Wilson Drive & 307 Wilson Drive) To whom it may concern: Our office has been requested to provide a letter specifically addressing contributory value for improvements that have recently been completed on the above property. Currently the entire property is assessed as one parcel, however for the tax year of 2016, 307 Wilson Drive will be split off to the newly created parcel 10-01-02-0004-006-007.001. A representative from our office performed an onsite inspection of the two above locations 10/08/2015. 321 Wilson Drive: In the original main plant area, approximately 25% of this 266,400 square foot area is used for “heavy industrial manufacturing”. It was noted that several new concrete flooring bases were constructed as they were required to be in place to support the excessive weight of some of the tenant’s equipment. Specific sections of the old concrete floor were removed and replaced with new concrete pours of 12” thick. The floor levels remain the same. Additionally, it was noted that in this area, additional electric service was added to supplement existing service and electrical piping need to reach and serve the new and various locations of the tenant’s production equipment. The balance of the original plant area is used for light assembly and warehouse storage. It is noted that there was some electrical service installed to light duty assembly equipment. The remainder of the building (286,750 square feet) remains basically the same as prior. No recent improvements were noted in these areas. Cole County Assessor’s offiCe Christopher D. Estes, Assessor 210 Adams Street Jefferson City, MO 65101 Phone: 573-634-9131 fax: 573-634-9139 www.colecounty.org/assessor It is also noted that there was also some updating to the sprinkler system for the plant layout, although this system was reported to be generally in working condition. Updating also occurred to the plant’s heating/ac systems, repair of roof leakage, and cleanup and removal of unneeded fixtures and equipment from the plant. Consideration has been given to how these improvements have affected the value of the property. It is my opinion that the overall cost of these improvements in total, are in excess of what one could expect in return if this property were to be sold in its present state. It is my opinion that the new concrete flooring bases do not really add to the building value. The electrical updating, while providing the needed service for the current tenant, would still be considered a plus for this older section of the plant. It was in the opinion of our office’s field representative that some of this updating would probably be necessary for a manufacturing tenant and without these improvements this original section of the plant might be best suitable for warehousing and not manufacturing. In consideration of the updates to the sprinkler system, heating/ac system, repairing of roof leaks etc. it is my opinion that some minimal value has been added for these updates. Most of this type of updating would be expected even periodically, particularly for a building that is nearly 50 years old. 307 Wilson Drive: It was noted that new improvements on this future parcel consisted of (3) 125 ton capacity steel silos, (3) 250 ton steel silos, and a 60’ x 100’ concrete slab which is 12” thick. The (6) silos by manner of attachment, are considered by our office “Personal Property” and not “Real Estate”. It is assumed that these silos are owned by the tenant “Continental Commercial Products”. The 60’ x 100’ concrete slab is considered “Real Estate”. As far as to what value this slab contributes to the value of the property: it currently serves a purpose for this tenant for supporting the (6) silos, however a future buyer of this real estate may not pay any more for this property due to the slab being present. If you have any questions, you may contact me at the number below. Sincerely, Tom Butler Commercial Real Estate Appraiser Cole County Assessor’s Office (573) 635-3209 EXHIBIT 2 SUMMARY OF KEY ASSUMPTIONS 1. The cost of the Project financed by the 2015 Bonds is estimated to be $2,234,000 and any improvements paid either from proceeds of the 2015 Bonds or from any other funds are expected to add minimal value to the facilities being improved, based on the letter from commercial real estate appraiser from the Cole County Assessor’s Office contained in Exhibit 1. 2. The construction, improving, equipping and installing of the Project will be completed before the end of 2015. 3. The Series 2015A Project will be owned by the City and leased to the ZELCK Creek and the Series 2015B Project will be owned by the City and leased to MO Warehouse, which leases will contain an option to purchase. As long as the Project is owned by the City, it will be exempt from ad valorem taxes. 4. The Project will be excluded from the calculation of ad valorem property taxes from 2016 through 2025. 5. No payments in lieu of taxes will be required unless CCP fails to create and maintain not less than 150 jobs by December 31, 2015, and an additional 30 jobs by December 31, 2016, through July 31, 2026. 6. Commercial real property taxes are calculated using the following formula: (Assessed Value * Tax Rate)/100 7. The assessed value of the Project is calculated using the following formula: Estimated Value * Assessment Ratio of 32% 8. No rate of increase in assessed value is included in the calculation of the value of tax abatement. 9. The tax rates used in this Plan reflect the rates in effect for the tax year 2015. The tax rates were held constant through the 2025 tax year. * * * Exhibit 3 Summary of Cost-Benefit Analysis Tax Distribution Tax Rate Value of Abatement State of Missouri 0.030 3,360$ Cole County GR 0.075 8,422 Cole County Special Services 0.090 10,114 Jefferson City School District 3.693 413,594 Jefferson City 0.460 51,520 Library 0.200 22,400 Jefferson City Fire Pension Fund 0.096 10,763 Road & Bridge 0.270 30,240 Surtax 0.580 64,960 5.494 615,373$ City of Jefferson, Missouri (Continental Commercial Products, L.L.C. Project) Cost Benefit Analysis Ex h i b i t 4 Pr o j e c t e d V a l u e o f A b a t e m e n t (T a x R e v e n u e s W i t h o u t A b a t e m e n t ) Es t i m a t e d A s s e s s e d V a l u e o f R e a l P r o p e r t y 1 , 1 2 0 , 0 0 0 $ 1 , 1 2 0 , 0 0 0 $ 1 , 1 2 0 , 0 0 0 $ 1 , 1 2 0 , 0 0 0 $ 1 , 1 2 0 , 0 0 0 $ 1 , 1 2 0 , 0 0 0 $ 1 , 1 2 0 , 0 0 0 $ 1 , 1 2 0 , 0 0 0 $ 1 , 1 2 0 , 0 0 0 $ 1,120,000 $ Ta x i n g J u r i s d i c t i o n Ta x R a t e p e r $1 0 0 20 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1 2 0 2 2 2 0 2 3 2 0 2 4 2 0 2 5 T o t a l St a t e o f M i s s o u r i 0 . 0 3 0 3 3 6 $ 3 3 6 $ 3 3 6 $ 3 3 6 $ 3 3 6 $ 3 3 6 $ 3 3 6 $ 3 3 6 $ 3 3 6 $ 336 $ 3,360 $ Co l e C o u n t y G R 0 . 0 7 5 8 4 2 8 4 2 8 4 2 8 4 2 8 4 2 8 4 2 8 4 2 8 4 2 8 4 2 8 4 2 8,422 Co l e C o u n t y S p e c i a l S e r v i c e s 0 . 0 9 0 1 , 0 1 1 1 , 0 1 1 1 , 0 1 1 1 , 0 1 1 1 , 0 1 1 1 , 0 1 1 1 , 0 1 1 1 , 0 1 1 1 , 0 1 1 1,011 10,114 Je f f e r s o n C i t y S c h o o l D i s t r i c t 3 . 6 9 3 4 1 , 3 5 9 4 1 , 3 5 9 4 1 , 3 5 9 4 1 , 3 5 9 4 1 , 3 5 9 4 1 , 3 5 9 4 1 , 3 5 9 4 1 , 3 5 9 4 1 , 3 5 9 41,359 413,594 Je f f e r s o n C i t y 0 . 4 6 0 5 , 1 5 2 5 , 1 5 2 5 , 1 5 2 5 , 1 5 2 5 , 1 5 2 5 , 1 5 2 5 , 1 5 2 5 , 1 5 2 5 , 1 5 2 5,152 51,520 Li b r a r y 0 . 2 0 0 2 , 2 4 0 2 , 2 4 0 2 , 2 4 0 2 , 2 4 0 2 , 2 4 0 2 , 2 4 0 2 , 2 4 0 2 , 2 4 0 2 , 2 4 0 2,240 22,400 Je f f e r s o n C i t y F i r e P e n s i o n F u n d 0 . 0 9 6 1 , 0 7 6 1 , 0 7 6 1 , 0 7 6 1 , 0 7 6 1 , 0 7 6 1 , 0 7 6 1 , 0 7 6 1 , 0 7 6 1 , 0 7 6 1,076 10,763 Ro a d & B r i d g e 0 . 2 7 0 3 , 0 2 4 3 , 0 2 4 3 , 0 2 4 3 , 0 2 4 3 , 0 2 4 3 , 0 2 4 3 , 0 2 4 3 , 0 2 4 3 , 0 2 4 3,024 30,240 Su r t a x 0 . 5 8 0 6 , 4 9 6 6 , 4 9 6 6 , 4 9 6 6 , 4 9 6 6 , 4 9 6 6 , 4 9 6 6 , 4 9 6 6 , 4 9 6 6 , 4 9 6 6,496 64,960 5. 4 9 4 6 1 , 5 3 7 $ 6 1 , 5 3 7 $ 6 1 , 5 3 7 $ 6 1 , 5 3 7 $ 6 1 , 5 3 7 $ 6 1 , 5 3 7 $ 6 1 , 5 3 7 $ 6 1 , 5 3 7 $ 6 1 , 5 3 7 $ 61,537 $ 615,373 $ Ci t y o f J e f f e r s o n , M i s s o u r i (C o n t i n e n t a l C o m m e r c i a l P r o d u c t s , L . L . C . P r o j e c t ) Co s t B e n e f i t A n a l y s i s