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EDA Agenda - 05/08/2024AGENDA REGULAR MEETING - ECONOMIC DEVELOPMENT AUTHORITY (EDA) Wednesday, May 08, 2024 — 6:00 p.m. Mississippi Room, Monticello Community Center ECONOMIC DEVELOPMENT AUTHORITY SPECIAL MEETING Academy Room 4:30 p.m. Review and Discussion of Block 34 Area Redevelopment Concept Meetings and Next Steps 5:30 p.m. Follow-up Discussion of Retail Market Analysis Proposal Question Responses Commissioners: President Steve Johnson, Vice President Jon Morphew, Treasurer Hali Sittig, 011ie Koropchak-White, Rick Barger, Councilmember Tracy Hinz, Mayor Lloyd Hilgart Staff: Executive Director Jim Thares, Rachel Leonard, Angela Schumann, Hayden Stensgard, Sarah Rathlisberger 1. General Business A. Call to Order B. Roll Call 6:00 p.m. 2. Consideration of Additional Agenda Items 3. Consent Agenda A. Consideration of Payment of Bills B. Consideration of Approving Regular Meeting Minutes — March 27, 2024 C. Consideration of Approving Joint Workshop Meeting Minutes — April 10, 2024 D. Consideration of Approving Regular Meeting Minutes — April 10, 2024 E. Consideration of Resolution 2024-08 Requesting the City Council call a Public Hearing for the proposed Modification of Tax Increment Financing District 1-42 CHC- Headwaters Development 22 Unit Villa Twin Home Proposal F. Consideration Approving a Certificate of Completion for Wiha Tools, Inc. 75,000 square foot facility expansion in connection with TIF District 1-46 G. Consideration of Authorizing the Wright County Sherriff's Office to use Lot 1 and Lot 2, Block 1, 7th Addition, as a K-9 Training site 4. Public Hearing A. PUBLIC HEARING —Consideration of adopting Resolution 2024-09 Extending UMC Business Subsidy Agreement in connection with Purchase and Development Contract (TIF Dist. 1-41) related to 2022 Facility Expansion B. PUBLIC HEARING — Consideration of authorizing a Greater Minnesota Enterprise Fund Loan and a related Business Subsidy Agreement in the amount of $250,000 with Excelsior Tool Company, Inc. in connection with the purchase of property and relocation of equipment 5. Regular Agenda A. Consideration of Adopting Resolution 2024-10 authorizing a Purchase Agreement with Civil Engineering Site Design, LLC for the acquisition of 118 Broadway East in the amount of $665,000 and authorizing a Property Management and Lease Agreement for 118 Broadway East with Civil Engineering Site Design, LLC B. Consideration of adopting Resolution 2024-11 Authorizing an Interfund Loan for Advance of Certain Costs in Connection with a Tax Increment Financing District in Block 34 related to the acquisition of the 118 Broadway East 6. Other Business A. Consideration of Economic Development Manager's Report 7. Adjournment EDA Agenda: 5/8/2024 3A. Consideration of Approving Payment of Bills Prepared by: Meeting Date: ❑ Regular Agenda Item Community & Economic Development 5/8/2024 ® Consent Agenda Item Coordinator Reviewed by: Approved by: N/A Economic Development Manager REFERENCE AND BACKGROUND: Accounts Payable summary statements listing bills submitted during the previous month are included for review. ALTERNATIVE ACTIONS: 1. Motion to approve payment of bills through April 2024. 2. Motion to approve payment of bills through April 2024 with changes as directed by the EDA. STAFF RECOMMENDATION: Staff recommend approval of Alternative 1. SUPPORTING DATA: • Accounts Payable Summary Statements for April. Accounts Payable Transactions by Account User: julie.cheney Printed: 04/03/2024 - 3:02PM Batch: 00202.04.2024 Account Number Vendor Description CITY OF • onticeflo GL Date Check No Amount PO No e 213-00000-103010 RIVERWOOD BANK Funding Bliss Salon Facade Improven 04/09/2024 128334 48,422.00 Vendor Subtotal: 48,422.00 213-46522-443991 BLOCK 52 HOLDINGS LLC Disbursement #1 - Funding EDAAuth 04/09/2024 128313 212,660.00 Vendor Subtotal: 212,660.00 213-46534-443991 BLOCK 52 HOLDINGS LLC Disbursement #1 - Funding EDAAuth 04/09/2024 128313 77,340.00 Vendor Subtotal: 77,340.00 Subtotal for Fund: 213 338,422.00 Report Total: 338,422.00 AP -Transactions by Account (04/03/2024 - 3:02 PM) Page 1 Accounts Payable Transactions by Account User: julie.cheney Printed: 04/17/2024 - 2:29PM Batch: 00203.04.2024 Account Number Vendor Description CITY OF Monticeflo GL Date Check No Amount PO No 213-46301-430400 CAMPBELL KNUTSON PA EDA -March 2024 04/23/2024 0 1,275.00 Vendor Subtotal: 1,275.00 213-46301-431990 WRIGHT CO RECORDER Outlot A Great River A #1548351 04/23/2024 128391 52.65 Vendor Subtotal: 52.65 213-46301-431990 WSB & ASSOCIATES INC 202401 - Block 34/Pine St Phase 1 - F 04/23/2024 0 6,965.25 Vendor Subtotal: 6,965.25 213-46301-431990 NORTHLAND SECURITIES INC Project MOB - March 2024 04/23/2024 128379 4,250.00 Vendor Subtotal: 4,250.00 213-46301-431993 WSB & ASSOCIATES INC 2024 Economic Development Service: 04/23/2024 0 2,071.00 Vendor Subtotal: 2,071.00 213-46301-434990 AE2 - ADVANCED ELEMENTS, R IMCP Templates - March 2024 04/23/2024 128358 2,246.50 Vendor Subtotal: 2,246.50 213-46301-443300 WRIGHT COUNTY ECONOMIC E 2024 Membership Dues 04/23/2024 128392 3,401.00 Vendor Subtotal: 3,401.00 AP -Transactions by Account (04/17/2024 - 2:29 PM) Page 1 Account Number Vendor Description GL Date Check No Subtotal for Fund: 213 Report Total: Amount PO No 20,261.40 20,261.40 AP -Transactions by Account (04/17/2024 - 2:29 PM) Page 2 Accounts Payable Transactions by Account User: julie.cheney Printed: 04/17/2024 - 2:51PM Batch: 00201.04.2024 Account Number Vendor Description CITY OF • onticeflo GL Date Check No Amount PO No e 213-46301-438200 CITY OF MONTICELLO 7256-004 - 130 Brdwy- Stormwtr 04/15/2024 0 31.50 213-46301-438200 CITY OF MONTICELLO 7256-015 - 216 Pine St - EDA 04/15/2024 0 52.61 Vendor Subtotal: 84.11 213-46301-443990 US BANK CORPORATE PMT SYS WALMART - Sandwich Tray - EDA S 04/15/2024 0 38.00 Vendor Subtotal: 38.00 Subtotal for Fund: 213 122.11 Report Total: 122.11 AP -Transactions by Account (04/17/2024 - 2:51 PM) Page 1 Accounts Payable Transactions by Account User: julie.cheney Printed: 05/01/2024 - 3:OOPM Batch: 00204.04.2024 Account Number Vendor Description CITY OF Monticeflo GL Date Check No Amount PO No 213-46301-431991 DEMVI LLC Parking Lot Maintenance - April 2024 04/30/2024 0 213.86 Vendor Subtotal: 213.86 213-46301-438100 CENTERPOINT ENERGY 12045691-8 - 216 Pine St (EDA) 04/30/2024 0 174.70 Vendor Subtotal: 174.70 213-46301-438100 XCEL ENERGY 14698960-5 - 101 E 3rd St (Finders Ki 04/30/2024 0 44.86 Vendor Subtotal: 44.86 Subtotal for Fund: 213 433.42 Report Total: 433.42 The preceding list of bills totaling $359,238.93 was approved for payment. Date: 5/8/24 Approved by: Hali Sittig - Treasurer AP -Transactions by Account (05/01/2024 - 3:00 PM) Page 1 MINUTES (draft) REGULAR MEETING - ECONOMIC DEVELOPMENT AUTHORITY (EDA) Wednesday, March 27, 2024— 7:00 a.m. Academy Room, Monticello Community Center Commissioners Present: President Steve Johnson, Vice President Jon Morphew, Treasurer Hali Sittig, 011ie Koropchak-White, Rick Barger, Councilmember Tracy Hinz Mayor Lloyd Hilgart joined the meeting at 7:13 a.m. Staff Present: Jim Thares, Angela Schumann 1. General Business A. Call to Order President Steve Johnson called the regular meeting of the Monticello EDA to order at 7:06 a.m. B. Roll Call 7:00 a.m. Mr. Johnson called the roll. 2. Consideration of Additional Agenda Items None 3. Consent Agenda A. Consideration of Resolution No. 2024-06 supporting Wright County Economic Development Partnership (WCEDP) Fundine from Wrieht Countv Jim Thares, Economic Development Manager, presented the item. The Wright County Board of Commissioners is reevaluating funding to the Wright County Economic Development Partnership (WCEDP). The WCEDP leadership team is asking City Councils and/or EDAs to adopt a resolution showing their support in continuous funding. JON MORPHEW MOVED TO APPROVE RESOLUTION 2024-06 SUPPORTING WRIGHT COUNTY ECONOMIC DEVELOPMENT PARTNERSHIP REQUESTING CONTINUED FUNDING FROM WRIGHT COUNTY, TRACY HINZ SECONDED MOTION. MOTION CARRIED UNANIMOUSLY. 4. Public Hearing None 5. Regular Agenda A. Consideration of Business Subsidy Pre -Application Review — Fairfield Marriott Hotel Proposal Jim Thares, Economic Development Manager introduced the item. There is an application to build a Fairfield Inn on the 3.5-acre Deephaven site which was the top recommended choice in the 2023 Hotel Market Study. Mr. Thares provided an overview of the $16,000,000 proposal. The applicant is requesting Tax Abatement to fill a gap in their available funding. This is a pre -application, and a final review will be presented to the EDA on April 10th with a score for final approval to move to City Council or table. Thares introduced Rod Thompson, Ted Thompson, and Ted Christianson from Monticello Hospitality Group, LLC (MHG). The MHG is also in discussions with a restaurant group which they have worked with in the past to have a facility attached to the hotel. Rob Thompson presented their application. The full application, if supported, would allow tax abatement to be a portion of the financing, to be used in the financing for the development of a 4 story, 98-room hotel. Due to substantial increases in labor and material pricing, the cost per room has increased from 95k to 150k over the past 5 years. This increase is also having an impact on room charge rates. The hotel construction cost increases and the expected mid -level room occupancy in the Monticello market is projected to result in a return on investment below industry standards and is thus the reason for the request to seek Tax Abatement. It was also noted that the Marriott brand has a loyalty program which they feel will help draw people to this hotel and the community. The facility would have a pool, and three or four small meeting rooms which can be opened to make larger spaces. Typically, they work with two restaurant chains and are confident they will be able to build a restaurant to connect this to the hotel building. Projected employment is 25 to 30 full and part-time employees, with a total payroll estimated to be between $800,000 to $1,000,000 +/-. Rob Thompson said that there is an advantage to being the first in the Pointes at Cedar District and are committed to the esthetics of the facility along with the required landscaping in the Pointes at Cedar ordinance. He further stated that it would be their intention to bring an "extended stay' hotel brand to Monticello as well in the next four or five years. Tax Abatement would also likely be requested for this development due to the extensive costs. Steve Johnson, President, inquired what is the target return on investment both with and without the tax abatement. Ted addressed the question; the return on investment with the abatement is expected to be 11-12% cash on cash for investors and without abatement is 5.2% cash on cash. Mr. Thares stated the financial page will be included in the following agenda. Thares addressed Chair Johnson's question regarding a pay go format or a bond; there are no public infrastructure improvements required for this site and because of that the City would not be selling a bond. MHG would fund through the upfront development costs through their bank and investors. Mayor Hilgart pointed out that the hotel study noted a hotel would require an abatement. He also said that a hotel is one of the few abatements the County would consider. MHG asked if the abatement would apply to the restaurant as well to help offset their cost of opening. The MHG would own the building and lease the space to a restaurant. President Johnson stated they could apply. Mayor Hilgart stated the City would likely not support this. The abatement would be for the entire building. Jon Morphew, Vice President, concurred with Mayor Hilgart. President Johnson asked what the timeframe is for stabilization once it is built. MHG is hoping for 12-18 months. The height of the signage is being reviewed by city staff. Rob Thompson noted that the abatement application with county needs to be completed and forwarded to the County as soon as possible. Jim Thares requested the payroll information for the hotel be sent for review by City staff. HALI SITTIG MOVED TO RECOMMEND MONTICELLO HOSPITALITY GROUP, LLC CONTINUE FORWARD WITH A BUSINESS SUBSIDY APPLICATION FOR TAX ABATEMENT, RICK BARGER SECONDED THE MOTION. MOTION CARRIED UNANIMOUSLY. 6. Other Business A. Consideration of Economic Development Manager's Report Mr. Thares provided an overview of the Economic Development Manager's Report. 7. Adjournment TRACY HINZ MOVED TO ADJOURN, HALI SITTIG SECONDED MOTION. MOTION CARRIED UNANIMOUSLY. MEETING ADJOURNED AT 8:00 A.M. MINUTES ECONOMIC DEVELOPMENT AUTHORITY SPECIAL MEETING Wednesday, April 10, 2024 — 5:00 p.m. Academy Room, Monticello Community Center Members Present: President Steve Johnson, 011ie Koropchak-White, Councilmember Tracy Hinz, Mayor Lloyd Hilgart Members Absent: Vice President Jon Morphew, Treasurer Hali Sittig, Rick Barger Staff Present: Executive Director Jim Thares, Angela Schumann, Hayden Stensgard 1. Call to Order President Steve Johnson called the special meeting of the Monticello Economic Development Authority (EDA) to order at 5:05 p.m. 2. Review and Discussion of Retail Market Analysis Proposal Executive Director Jim Thares provided an overview of the agenda item to the EDA and the public. Recently, Jim McComb of the McComb Group presented on the benefits of communities conducting a Retail Market Analysis Report. Following the meeting, the McComb Group submitted a proposal to the EDA to create a report for Monticello. The members reviewed the proposal and the deliverables (reports) the EDA would derive from completing the multi -phase proposal. The EDA indicated early in the discussion they would want more information and to have several questions answered by Mr. McComb as well as seek to have the full EDA membership present at a meeting before taking a vote on this proposal. After further discussion, the EDA decided to list and seek responses to a set of questions from the McComb Group. They would like to see this information and before they decide on the proposal reviewed at a future meeting. Staff will reach out to the McComb Group with the questions and bring back the responses for the EDA to further review and consider as part of further discussion of the proposal at a subsequent meeting. No action was taken on the item. 3. Adjournment TRACY HINZ MOVED TO ADJOURN THE SPECIAL MEETING OF THE MONTICELLO EDA. OLLIE KOROPCHAK-WHITE SECONDED THE MOTION. MOTION CARRIED UNANIMOUSLY, 4-0. MEETING ADJOURNED AT 6:01 P.M. MINUTES REGULAR MEETING - ECONOMIC DEVELOPMENT AUTHORITY (EDA) Wednesday, April 10, 2024 — 6:00 p.m. Mississippi Room, Monticello Community Center ECONOMIC DEVELOPMENT AUTHORITY SPECIAL MEETING Academy Room 5:00 p.m. Review and Discussion of Retail Market Analysis Proposal Commissioners Present: President Steve Johnson, Treasurer Hali Sittig, 011ie Koropchak- White, Councilmember Tracy Hinz, Mayor Lloyd Hilgart Commissioners Absent: Vice President Jon Morphew, Rick Barger Staff Present: Executive Director Jim Thares, Angela Schumann, Hayden Stensgard 1. General Business A. Call to Order President Steve Johnson called the regular meeting of the Monticello EDA to order at 6:06 p.m. B. Roll Call 6:00 p.m. President Johnson called the roll. 2. Consideration of Additional Agenda Items None 3. Consent Agenda A. Consideration of Payment of Bills B. Consideration of Approving Regular Meeting Minutes — October 25, 2023 C. Consideration of Approving Joint Workshop Meeting Minutes — March 13, 2024 D. Consideration of Approving Regular Meeting Minutes — March 13, 2024 LLOYD HILGART MOVED TO APPROVED THE APRIL 10, 2024, REGULAR MEETING CONSENT AGENDA. OLLIE KOROPCHAK-WHITE SECONDED THE MOTION. MOTION CARRIED UNANIMOUSLY, 4-0. 4. Public Hearing None 5. Regular Agenda A. Consideration of Business Subsidy Pre -Application Monticello Hospitality, LLC - Fairfield by Marriott Hotel Development Proposal Executive Director Jim Thares provided an overview of the agenda item to the EDA and the public. The EDA was asked to review and make a recommendation to the City Council on a formal Tax Abatement application for a hotel and restaurant development proposal. Staff reviewed the application and companion materials, and recommended approval of the application for Tax Abatement. Commissioner Holi Sittig joined the meeting of 6:16 p.m. Mayor Lloyd Hilgart referenced the recently completed hotel study in 2023, and that it implied some sort of business subsidy would be needed to support the development of a new hotel location in Monticello. Applicant Rob Thompson addressed the EDA and the public. He noted that the development team is excited about the project, and added that without the use of Tax Abatement, the project would not be feasible. President Johnson added that the hotel study noted that many potential visitors to Monticello were choosing to stay in St. Cloud or Maple Grove, due to the lack of hotel brands such as Marriott in the area. Councilmember Tracy Hinz appreciated the development team's interest in bringing this project to the Monticello community. LLOYD HILGART MOVED TO ADOPT RESOLUTION EDA-2024-07 RECOMMENDING THAT THE CITY COUNCIL AUTHORIZE THE USE OF TAX ABATEMENT IN SUPPORT OF A 98-ROOM FAIRFIELD BY MARRIOTT HOTEL WITH A RESTAURANT DEVELOPMENT PROPOSAL BY MONTICELLO HOSPITALITY GROUP, LLC. HALI SITTIG SECONDED THE MOTION. MOTION CARRIED UNANIMOUSLY, 5-0. B. Consideration of Greater Monticello Enterprise Fund (GMEF) Pre -Application - Excelsior Tool, Inc. in the amount of $250,000 Mr. Thares provided an overview of the agenda item to the EDA and the public. A GMEF pre -application loan request was submitted by Excelsior Tool Company, Inc. The firm has been in contact with City staff regarding a relocation from Maple Plain, MN (Hennepin County) to Monticello and identified a building and are in discussions with the owner regarding the terms of a purchase agreement. Mayor Hilgart asked why the Small Cities Development Fund is not being utilized for this loan request. Mr. Thares clarified that the Small Cities Development Fund is specifically for equipment purposes. The costs associated with equipment in the pre -application submittal indicate they are to be used for equipment relocation purposes, and not for funding new equipment. Applicants Bob Bush and Scott Thompson addressed the EDA and the public. They noted they have identified a building in town that they would plan to move into. Councilmember Hinz asked if Excelsior Tools rents or owns their current location in Maple Plain. Mr. Bush clarified that they currently rent, and they would own the new location in Monticello. HALI SITTIG MOTIONED TO AUTHORIZE STAFF TO PROCEED WITH FURTHER DUE DILIGENCE RELATED TO THE GMEF LOAN CREDIT APPLICATION REQUEST FROM EXCELSIOR TOOL AND PREPARATION OF A LOAN AGREEMENT FOR CONSIDERATION AT A FUTURE MEETING. OLLIE KOROPCHAK-WHITE SECONDED THE MOTION. MOTION CARRIED UNANIMOUSLY, 5-0. C. Consideration of Authorizing a Certificate of Completion and approval of a partial disbursement of the EDA "Authority Grant" to Block 52 Holdings, LLC - Block 52 Mixed Use Development in the amount of $290,000 Mr. Thares provided an overview of the agenda item to the EDA and the public. As per the "Authority Grant" Terms in the Block 52 Purchase and Development contract executed September 16, 2022, the EDA is being asked to authorize a partial disbursement of the "Authority Grant" for various public improvement activities, as noted in the Contract that have been completed by Block 52 Holdings, LLC. Mr. Thares also reviewed the Certificate of Completion which is required to be approved by the EDA upon acceptable completion of the development. It was noted by Thares that the Temporary Certificate of Occupancy (CO) issued by the City Building Official on January 31, 2024, has a list of outstanding work activities that are yet to be completed by the developer. Fortunately, the developer is making good progress on these items including the pouring of sidewalks and installation of landscaping. Staff recommend approval of the item contingent on the developer completing the outstanding items identified in the temporary certificate of occupancy. TRACY HINZ MOVED TO EXECUTE THE CERTIFICATE OF COMPLETION FOR BLOCK 52 MIXED -USE REDEVELOPMENT PROJECT, AND AUTHORIZE DISBURSEMENT OF THE AUTHORITY GRANT FUNDING IN THE AMOUNT OF $290,000 TO BLOCK 52 HOLDINGS, LLC AS AUTHORIZED IN THE PURCHASE AND DEVELOPMENT CONTRACT, CONTINGENT ON SATISFACTION OF ITEMS LISTED ON THE TEMPORARY CERTIFICATE OF OCCUPANCY (CO) ISSUED BY CITY BUILDING OFFICIAL ON JANUARY 31, 2024, AND RESOLUTION OF REMAINING APPLICABLE CONDITIONS OF THE BLOCK 52 PLANNED UNIT DEVELOPMENT APPROVAL. LLOYD HILGART SECONDED THE MOTION. MOTION CARRIED UNANIMOUSLY, 5-0. 6. Other Business A. Consideration of Economic Development Manager's Report Mr. Thares provided an overview of the agenda item to the EDA and the public. No action was taken on the item. 7. Adjournment TRACY HINZ MOVED TO ADJOURN THE APRIL 10, 2024, REGULAR MEETING OF THE MONTICELLO EDA. SECONDED THE MOTION. MOTION CARRIED UNANIMOUSLY, 5-0. MEETING ADJOURNED AT 7:03 P.M. EDA Agenda: 05/08/2024 3E. Consideration of Adoptine Resolution 2024-08 Reauestine the Citv Council Call for a Public Hearing on the Proposed Modification of Affordable Housing Tax Increment Financing (TIF) District 1-42 and the Tax Increment Financing Plan relating thereto (CHC-Headwaters Development Villas Twin home Proposal) Prepared by: Meeting Date: ❑ Regular Agenda Item Economic Development Manager 05/08/2024 ® Consent Agenda Item Reviewed by: Approved by: Community Development Director, City Administrator Finance Director, Community & Economic Development Coordinator ACTION REQUESTED Motion to adopt Resolution 2024-08 requesting the City Council call a public hearing on the proposed modification of Affordable Housing TIF District 1-42 and the TIF Plan relating thereto (CHC-Headwaters Villa Twinhomes development proposal). REFERENCE AND BACKGROUND The EDA is asked to consider adopting Resolution 2024-08 requesting the City Council call a public hearing related to the proposed modification of TIF District 1-42 as well as the TIF Plan. CHC-Headwaters Development is proposing to eliminate the 108-unit apartment building, as originally approved, in TIF District 1-42 and instead develop 22 new Twinhomes similar to the 60 Twinhome unit development currently under construction in TIF District 1-43. The two TIF Districts are adjacent to each other along 7t" Street West near the Monticello Country Club. The TIF application submittal packet from CHC-Headwaters Development includes a short narrative providing contextual background about proposed change as well as an illustration of the 22-unit development site plan (TIF 1-42) and the recently approved plat (approved by City Council on April 22, 2024). As part of the changes to the development plan, through the platting steps, the TIF District is slightly larger than it previously was. This size increase requires the TIF District modification consideration process to include a public hearing reviewing the proposed changes to the TIF District. Also, since the scale of the proposed development is approximately 60 percent smaller in terms of total investment and projected future valuation, the TIF Plan budget will be revised to reflect the reality of 22 Twinhome units versus the 108-unit apartment building. CHC-Headwaters Development is proposing to designate 40 percent of the units (a total of 9 units) as affordable at 60 percent of the Wright County AMI (Area Median Income). With the submittal of the TIF application and supporting documentation by CHC-Headwaters EDA Agenda: 05/08/2024 Development, City staff have asked Northland Securities to complete a modified TIF Plan reflecting the new estimated taxable valuation and potential increment flow. The new TIF Plan and an amended Development Contract will be presented to the City Council and the EDA for consideration after the Council holds the public hearing in late June 2024. A TIF notice and review -actions steps calendar is attached in the exhibits. Budget Impact: The cost of the proposed TIF District modification is estimated to be $8,450 +/-. The costs are related to Northland Securities charges for financial analysis tasks and completing a new TIF Plan and to EDA attorney service for drafting the resolutions (initial and approving resolutions) and amended development contract documents. The developer will be invoiced for the various costs related to the proposed TIF District modification activities. Generally, there is no expected impact on the EDA General Fund including the changes in increment flow in connection with the previously completed land conveyance. II. Staff Workload Impact: City staff workload related to the TIF District modification call for public hearing is minimal. In-house staff involved in the work tasks related to the proposed modification include the Community Development Director, Finance Director, and Economic Development Manager. Consultants involved in this effort include Northland Securities staff and the EDA attorney. III. Comprehensive Plan Impact: N/A STAFF RECOMMENDATION City staff recommend approval of Resolution 2024-08 calling for the City Council to hold a public hearing regarding the proposed TIF District 1-42 modification and the TIF Plan. Calling for the public hearing (call by the EDA and the City) is a required initial step in consideration of the TIF modification. As part of the action steps in this process, the City Council and the EDA will be asked to review and consider very minor changes to TIF District 1-43 as well (no public hearing required for these minor changes). SUPPORTING DATA A. EDA Resolution 2024-08 B. TIF Application from CHC-Headwaters Development C. Proposed TIF Review and Approval Calendar CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2024-08 RESOLUTION REQUESTING A PUBLIC HEARING ON THE PROPOSED MODIFICATION OF TAX INCREMENT FINANCING DISTRICT NO.1-42 AND THE TAX INCREMENT FINANCING PLAN RELATING THERETO WHEREAS, on February 23, 2022, the City of Monticello Economic Development Authority (the "Authority") approved a Tax Increment Financing Plan (the "Original TIF Plan") for Tax Increment Financing District No. 1-42 (Headwaters Apartment Project) (the "TIF District") located within the Central Monticello Redevelopment Project Area No. 1 (the "Redevelopment Project"), pursuant to Minnesota Statutes, Sections 469.001 to 469.047, 469.090 to 469.1081, and 469.174 to 469.1794, all as amended (collectively, the "TIF Act"), and on February 14, 2022, the City of Monticello, Minnesota (the "City") approved the establishment of the TIF District; and WHEREAS, on May 23, 2022 and June 8, 2022, respectively, the City and the Authority approved a modification to the Original TIF Plan (the "2022 Modification" and, together with the Original TIF Plan, the "TIF Plan"), which amended the budget; WHEREAS, the Authority wishes to further revise the TIF Plan to expand the geographic area of the TIF District (the "2024 Modification"), a modification which requires the same notice, discussion, public hearing and findings required for the approval of the Original TIF Plan, pursuant to Section 469.175, subd. 4(b)(1) of the TIF Act; WHEREAS, in addition, the TIF Plan is based on plans to construct an approximately 108-unit rental multi -family housing facility for seniors, and a new project has been proposed for the TIF District which would require a modification of the TIF Plan to amend the project, the budget and the estimated costs of the project, and the Authority wishing to include those amendments in the 2024 Modification; and WHEREAS, the Authority requests that the City Council of the City (the "City Council") call a public hearing on the 2024 Modification. NOW, THEREFORE BE IT RESOLVED by the Board of Commissioners of the Authority (the "Board") as follows: The Authority hereby requests that the City Council call for a public hearing to be held on June 24, 2024 or a later date to be determined by the Executive Director of the Authority to consider the 2024 Modification and cause notice of said public hearing to be given, all as required by and pursuant to the TIF Act. Adopted by the Board of Commissioners of the City of Monticello Economic Development Authority this 8th day of May, 2024. MN190\163\950736.v1 President Attest: Executive Director MN190\163\950736.v1 CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY TAX INCREMENT FINANCING (TIF) PRE -APPLICATION BUSINESS SUBSIDY APPLICATION BUSINESS ASSISTANCE FINANCING Legal name of applicant: CHC Monticello Townhomes H LLC Address: 161 Rondo Avenue, Suite 825, St Paul, MN 55103 Telephone number: 651-605-5222 Name of contact person: Wesley Butler REQUESTED INFORMATION Addendum shall be attached hereto addressing in detail the following: l . A map showing the exact boundaries of proposed development. 2. Give a general description of the project including size and location of building(s); business type or use; traffic information including parking, projected vehicle counts and traffic flow; timing of the project; estimated market value following completion. 3. The existing Comprehensive Guide Plan Land Use designation and zoning of the property. Include a statement as to how the proposed development will conform to the land use designation and how the property will be zoned. 4. A statement identifying how the increment assistance will be used and why it is necessary to undertake the project. 5. A statement identifying the public benefits of the proposal including estimated increase in property valuation, new jobs to be created, hourly wages and other community assets. 6. A written description of the developer's business, principals, history and past projects I understand that the application fee will be used for EDA staff and consultant costs and may be partially refundable if the request for assistance is withdrawn_ Refunds will be made at the discretion of the EDA Board and be based on the costs incurred by the EDA prior to withdraw of the request for assistance. If the initial application fee is insufficient, I will be responsible for additional deposits. SIGNATURE Applicant's signature: E .0,rie @ re to, C H C- Date: April 25, 2024 CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY Application for Tax Increment Financing (TIF) Assistance GENERAL INFORMATION: Business Name: CHC Monticello Townhomes II LLC Address: 161 Rondo Avenue, Suite 825, St Paul, MN 55103 Limited Type (Partnership, etc.): Liability Company Authorized Representative: Wesley Butler Description of Business: Real Estate Development Legal Counsel: Winthrop & Weinstine 225 South Sixth Street, Suite 3500 Address: Minneapolis, MN 55402 FINANCIAL BACKGROUND: 1. Have you ever filed for bankruptcy? No 2. Have you ever defaulted on any loan commitment? No 3. Have you applied for conventional fmancing for the project? No 4. List financial references: Bremer Bank, Andrew Rickers (320-762-4705) — Alexandria, MN a. b. Date: April 25, 2024 Phone: 651-605-5222 Phone: 612-604-6755 2 5. Have you ever used Business Assistance Financing before? If yes, what, where and when? PROJECT INFORMATION: 1. Location of Proposed Project: 71 Street West and Golf Course Road No 2. Amount of Business Assistance requested? Land contribution for $1, $1,650,000 TIP 3. Need for Business Assistance: To provide affordable housing 4. Present ownership of site: Monticello MF West LLC 5. Number of permanent jobs created as a result of project? Approximately 3 FTEs 6. Estimated annual sales: Present: $0 Future: $750 thousand 7. Market value of project following completion: We estimate the value to be around $8.6 million for for the twin home project S. Anticipated start date: June 2024 FINANCIAL INFORMATION: 1. Estimated project related costs: a. Land acquisition b. Site development c. Building cost d. Equipment e. Architectural/engineering fee f. Legal fees g. Off -site development costs Completion Date: December 2024 $ 1.00 * *Incl. in Building Cost $7,447,000.00 $0.00 $160,000.00 $15,000.00 $984,200.00 3 2. Source of financing: a. Private financing institution b. Tax increment funds c. Other public funds d. Developer equity PLEASE INCLUDE: $ 0.00 1,230,000.00 (net amount) 0.00 7,376,201.00 1. Preliminary financial commitment from bank. [NA] 2. Plans and drawing of project. [Provided with Plat Application] 3. Background material of company. [Provided with Phase I] 4. Pro Forma analysis. [Attached] 5. Financial statements. [IOTA] 6. Statement of property ownership or control. [Currently owned by Monticello MT West LLC, property to be conveyed to CHC Monticello Townhomes H LLC at land closing] 7. Payment of application fee of $15,000 [NA] 4 Memorandum for Monticello TwinHome Phase II Development City of Monticello c/o Jim Thares Economic Development Manager 505 Walnut Street Monticello, MN 55362 Re: Modification of Tif District-42 for Expansion of TwinHome Project Mr. Thares, Headwaters Development, in partnership with Community Housing Corporation (CHC), worked with the City to create a development plan for its City owned land located off 7tn Street West near Golf Course Rd and Highway 94. The original development plan called for an affordable 60 unit twinhome development (located in TIF District-43) and a 103 unit multifamily development (located in TIF District-42) also known as Phase I (Twinhomes) and Phase II (Multifamily Apartments) developments. CHC has completed the majority of Phase I construction of the 60 Twinhome units (and residence have started moving in). The Phase I project is expected to be fully complete by July 2024. In the process of building, pre -leasing, and tenant move -ins, it was determined by CHC that the demand for "Garden Level" homes was high, the City of Monticello really needed this housing type and it is benefiting the affordable housing need. Furthermore, there was significant activity in new multifamily developments in and around the City, which appear to be satisfying the need for those units. It is CRCs belief that the best use for the City land in Phase II would be to continue the Twinhome development into a newly constructed cul-de-sac and increase the neighborhood size by an additional 22 twinhome units (see Exhibit A site Plan). CHC is proposingto change the use in TIF District-42 from Multifamily Apartments to 22 units of Twinhome Villas. Headwaters has worked with the City to replat the Phase II property, which was approved 4/22 and a copy of the Plat is attached as Exhibit B. With this modification, CHC will also be deeding Outlot A and Outlot B back to the City (outlots currently house water retention ponds for the properties). They will also be removed from the TIF Districts 42 and 43. It is our believe this has no impact to the valuation of the property and no impact to expected Real Estate Tax Estimates. Pending approval of the newly drawn TIF District-42, CHC anticipates starting construction on Phase II in late June of 2024 with an anticipated completion date of December 31,2024. CHC will also continue to fill the Phase I units while construction is underway on Phase II. We hope this memorandum provides sufficient summary of proposed project modifications. If you should need anyfurther information, please do not hesitate to contact me at (612) 723- 3330 or MHoagberg�C�headwatersdevelopment.com. Regards, -1A J - q Michael Hoag rg President Headwaters Development w 1 w»- o C9. , ! Q 2 z a,�2 Q^� +° ` /b// G ! \ } { ) !/§|, ; § 2 & 3 ® w O ® / p{) §�§&u;;® ( ! & N {/! y t�§ & « u 3 6 = JJeeaK ± \ O z»/+ _ q 2 a E \ / / /® N /! 2 E 2 3 r ± » O O z-�,;§:,r /gw�aG§ °/#�-°�_�� ~ ! :.: § _ ° �/ LLJ E m o b ® § § O / §i°` § ! E:t(!!r:l;E! § ! I: I! E i z LLJ (D LLJ z ui g z LU f)f > LU D LU U) 41 Z < OE is o LA z S-5 66 14 ms H %E I a o /* lqQ LU re ZoH ed\ ILLY_LU 'Ode In CN "FP oo-°" m2 v, F- 0 0 10 LL -5� F-�L 1p :0, o) zg All z 1p re i z pp H 0 `s, 1p� '40 .,fi- 1) 1p In 1p Q L,j S Ld u- cr N\ 'o op It Lt J In n IT) C5 z 'o ce iu C�D �14 C- g g ir P d 6 7 9 :S n I n" TAX INCREMENT FINANCING (HOUSING) DISTRICT NO. 1-42 EXHIBIT V Boundaries of Tax Increment Financing District No. 1-42 within Central Monticello Redevelopment Project No. 1 TIF District is inclusive of parcels within the TIF District and the adjacent roads and right of way U (%l U .L 0 M C ro (V d' c1 LL N O a O L a DRAFT JANUARY 14, 2021 13 City of Monticello Central Monticello Redevelopment Project No. 1 Modification of Tax Increment Financing District No. 1-42 and Tax Increment Financing District No. 1-43 Housing TIF Districts Headwaters Townhome Project and Headwaters Villas Project Public Hearings on June 24 S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 May 8 EDA request City Council call for hearing 12 13 14 15 16 17 18 May 13 City Council calls for public hearing 19 20 21 22 23 24 25 May 14 Last day for written notice to County Commissioner 26 27 28 29 30 31 May 24 Last day for notice and TIF plan and fiscal implications to County and School District S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 June 10 Last day to submit public hearing notice to newspaper 16 17 18 19 20 21 22 June 13 Public hearing notice published in the newspaper 23 24 25 26 27 28 29 June 24 Public hearing and adoption of modified TIF Disticts/TIF Plans 30 June 26 EDA approval of TIF Districts S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 July 12 Submit modifications to County, State Auditor, and MN Dept of Revenue 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Notes: 1 City Council regular meeting dates. 2 Economic Development Authority (EDA) regular meeting dates. 3 Calendar does not include review by the Planning Commission. The TIF Districts will be modified. There is no proposed modification to the Central Monticello Redevelpoment Project No. 1. 4 City needs to confirm publication dates and is responsible for submitting notice to newspaper. Modification of TIF Districts ID northland Public Finance 5/1/2024 EDA Agenda: 05/08/2024 3F. Consideration Approving a Certificate of Completion for Wiha Tools, Inc. 75,000 square foot facility expansion in connection with TIF District 1-46 Prepared by: Meeting Date: ❑ Regular Agenda Item Economic Development Manager 05/08/2024 ® Consent Agenda Item Reviewed by: Approved by: Community Development Director, City Administrator Community & Economic Development Coordinator ACTION REQUESTED Motion to approve the Certificate of Completion for Wiha Tools, Inc.'s 75,000 square foot warehouse and assembly facility located at 516 East 7t" Street, Monticello in connection with TIF District 1-46. REFERENCE AND BACKGROUND The EDA is asked to approve a Certificate of Completion for Wiha Tools, Inc.'s new 75,000 square foot warehouse and assembly facility (and North American Corporate Office) located at 516 East 7t" Street. The Certificate of Completion is typically authorized by the EDA after the completion of a TIF supported development. Typically, the issuance of a Certificate of Occupancy (CO) by the City Building Official is the signal that a development project is complete. When issued, the Certificate of Completion will ultimately become part of the TIF Revenue Note documentation packet in the coming months allowing Wiha Tools, Inc. to begin to receive tax increment payments to reimburse itself for the project land acquisition costs. A final CO was issued to Wiha Tools, Inc. by City Building Official, Ron Hackenmueller, on February 2, 2024. Wiha Tools, Inc. then had a very nice ribbon cutting ceremony with presentations and tours of the facility for its customers, business partners and State and local officials on Tuesday April 9, 2024. Budget Impact: The cost related to the issuance of the Certificate of Completion for Wiha Tools, Inc.'s new warehouse assembly facility is minimal. II. Staff Workload Impact: City staff workload related to Certificate of Completion is minimal. City staff involved include the City Building Official and the Economic Development Manager. III. Comprehensive Plan Impact: N/A EDA Agenda: 05/08/2024 STAFF RECOMMENDATION City staff recommend approval of the Certificate of Completion of the Wiha Tools, Inc. 75,000 square foot warehouse, assembly facility located at 516 East 71" Street. SUPPORTING DATA A. Certificate of Completion B. Certificate of Occupancy EXHIBIT C FORM OF CERTIFICATE OF COMPLETION CERTIFICATE OF COMPLETION WHEREAS, the City of Monticello Economic Development Authority (the "Authority") and Willi Hahn Corporation ("Developer") entered into a certain Contract for Private Development dated July 13, 2022 (the "Contract"), recorded at the office of the County Recorder of Wright County as Document No. ; and WHEREAS, the Contract contains certain covenants and restrictions set forth in Articles III and IV thereof related to constructing the [Phase I Project/Phase Il Project], as defined in the Contract; and WHEREAS, the Developer has performed said covenants and conditions insofar as it is able in a manner deemed sufficient by the Authority to permit the execution and recording of this certification; NOW, THEREFORE, this is to certify that all construction and other physical improvements related to the [Phase I Project/Phase lI Project] specified to be done and made by the Developer have been completed and the agreements and covenants in Articles III and IV of the Contract relating to such construction have been performed by the Developer, and this Certificate is intended to be a conclusive determination of the satisfactory termination of the covenants and conditions of Articles III and IV of the Contract related to completion of the [Phase I Project/Phase lI Project], but any other covenants in the Contract shall remain in full force and effect. C-1 MNIW173\803751.0 Dated: , 20 . STATE OF MINNESOTA ) ) SS. COUNTY OF WRIGHT CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY LZ Authority Representative The foregoing instrument was acknowledged before me this _ day of 20_, by , the of the City of Monticello Economic Development Authority, a public body corporate and politic under the laws of the State of Minnesota, on behalf of the authority. Notary Public This document was drafted by: KENNEDY & GRAVEN, Chartered (GAF) 150 South 5th Street, Suite 700 Minneapolis, MN 55402 Telephone: (612) 337-9300 (Signature page to Certificate of Completion) C-2 MN190\173\803751.0 I CITY OF PHONE:763-295-2711 FAx:763-295-4404 iceflo 505 Walnut Street I Suite 1 I Monticello, MN 55362 City of Monticello CERTIFICATE OF OCCUPANCY This Certificate is issued certifying that at the time of issuance, this structure was inspected for compliance with the requirements of the 2020 Minnesota State Building Code and ordinances of the City regulating building construction for the following: Building Address: 516 7TH ST E PIN: 155279001010 Legal Description: WIHI ADDN B lock 001 Lot 001 Zoning District: Permit No: 2023-00270 Work Activity: NEW CONSTRUCTION Construction Type: II-B Occupancy: B, S-1, F- I , A-3 Occupant Load: 522 Com Fire Sprinkler: Y Owner Name: WILLI HAHN CORPORATION USA Owner Address: 1348 DUNDAS CIRCLE City, State, Zip: MONTICELLO, MN 55362- /V Apl�e az9-Jr0)-0;') L1 Ronald G Hackenmueller, Building Date Official #B0002915 Comments: Warehouse (S-1) Office OK Finish Landscape Agreement Balance Report www.ci.monticello.mn.us EDA Agenda: 05/08/2024 3G. Consideration of Authorizing the Wright Countv Sherriff's Office to use Lot 1 and Lot Block 1, 7th Addition, OCC (OCBP) for K-9 Dog Handling Training activities from approximately May 10 through June 30, 2024 Prepared by: Meeting Date: ❑ Regular Agenda Item Economic Development Manager 05/08/2024 ® Consent Agenda Item Reviewed by: Approved by: Community Development Director, City Administrator Community & Economic Development Coordinator ACTION REQUESTED Motion to authorize the use of Lot 1 and Lot 2, Block 1, 7th Addition, OCC (OCBP) by the Wright County Sherriff's Office (WCSO) for K-9 Dog Handling Training activities from May 10 through June 30, 2024. REFERENCE AND BACKGROUND The EDA is asked to authorize the usage of Lot 1 and Lot 2, Block 1, 71h Addition, OCC (OCBP) by the WCSO for K-9 Dog Handling Training activities from May 10 through June 30, 2024. The WCSO will mow the grass, creating defined pathways with obstacles (hurdle jumps and block structures, etc.) placed in the training runs. No permanent structures will be placed on the EDA site. A similar request by the WCSO for the same training was made in the spring of 2021. The EDA granted permission to the WCSO to the use these two OCBP lots for those same K-9 Training activities at that time. I. Budget Impact: The cost related to the request by WCSO to use the two EDA lots is minimal. II. Staff Workload Impact: City staff workload related to WCSO request is minimal. III. Comprehensive Plan Impact: N/A STAFF RECOMMENDATION Since these two lots are still vacant, staff recommend that the EDA authorize the use of the site for the K-9 Training activities. The K-9 Training is a short window of time, approximately 6 or 7 weeks in May and June. There will not be any permanent structures placed on the lots or any damage to the site from the training activities. SUPPORTING DATA A. Email from WCSO EDA Agenda: 05/08/2024 B. Aerial Photo of Lots 1 and 2, Block 1, 7t" Addition, OCC (OCBP) From: Rachel Leonard To: Jim Thares Cc: Angela Schumann Subject: WCSO K9 Trials Request Date: Friday, April 19, 2024 8:51:02 AM Hello, Here is the information for WCSO's request to the EDA to use property in Otter Creek Business Park: • Request to use EDA-owned vacant parcel(s) for K9 Trials • June 16-18 • Understand they will need to notify adjacent property owners • Contact: Dan Cotton, Daniel.cottenCcbco.wright.mn.us, 763-286-6994 Rachel Leonard City Administrator City of Monticello 763.271.3275 1 www.ci.monticello.mn.us Email correspondence to and from the City of Monticello government offices is subject to the Minnesota Government Data Practices Act and may be disclosed to third parties. L o rti� Beacon Wright County, MN 0 Overview Legend Highways Interstate State Hwy US Hwy City/Township Limits ®c �t Parcels ® Torrens Parcel ID 155273001020 Alternate ID n/a Owner Address CITY OF MONTICELLO Sec/Twp/Rng 10-121-025 Class 958- 5E MUNICIPAL -PUBLIC SERVICE -OTHER 505 WALNUT ST SUITE 1 Property Address Acreage 6.19Acres MONTICELLO, MN 55362 District (1101) CITY OF MONTICELLO-0882 Brief Tax Description SECT-10 TWP-121 RANGE-025 OTTER CREEK CROSSING 7TH ADDN LOT 2 BLOCK 1 (Note: Not to be used on legal documents) Date created: 5/3/2024 Last Data Uploaded: 5/3/2024 2:43:50 PM Developed by4� Schneider GEOSPATIAL EDA Agenda: 05/08/2024 4A. PUBLIC HEARING - Consideration of Adopting Resolution 2024-09 Amending the UMC TIF Purchase and Development Contract Business Subsidy terms extending the iob creation performance timeline from April 5, 2024, to April 5, 2025 Prepared by: Meeting Date: ® Regular Agenda Item Economic Development Manager 05/08/2024 ❑ Consent Agenda Item Reviewed by: Approved by: Community Development Director, City Administrator Community & Economic Development Coordinator ACTION REQUESTED Open Public Hearing and after closing the hearing; Motion to adopt Resolution 2024-09 amending the UMC Purchase and Development Contract (TIF District 1-41) Business Subsidy terms to extend the job creation performance timeline from April 5, 2024, to April 5, 2025. REFERENCE AND BACKGROUND As part of entering into the Purchase and Development Contract (TIF District 1-41) with the EDA in April 2020 in connection with its 58,000 sq. ft. facility expansion, UMC is required to create 43 new FTE (full-time equivalent) jobs. Upon completion of its new building on April 5, 2022 (the Benefit Date), UMC began installing equipment and hiring new employees. In a recent update to City staff regarding progress in meeting its hiring objectives, UMC reported that it has not yet achieved the job creation goals. Company officials indicated they are making progress and currently have approximately 233 +/- full-time equivalent (FTE) employees on the payroll. As of the Benefit date UMC had 203 FTEs, so as of mid -April 2024, they are about 13 FTEs +/- short of the 43 FTE job goal. By providing UMC with an additional 11 months of time to add employees, they will have a strong chance of meeting the job creation goals. Per Minnesota's Business Subsidy statute, a public hearing is required to be held as part of the EDA's consideration of the proposed Purchase and Development Contract Amendment. The public hearing notice is attached to the staff report. The EDA can consider a motion of action following the completion of the Public Hearing. Similarly, last June the City amended the MIF Grant agreement with UMC and MN -DEED allowing the company to have an additional 12-month timeframe to reach its hiring goals. The MIF Business Subsidy job creation performance timeline was extended from June 30, 2023, to June 30, 2024. The MIF Grant funding was a total of $300,000 which was awarded to the City and passed through to UMC as a forgivable loan in exchange for completing the nearly EDA Agenda: 05/08/2024 $10,600,000 facility expansion and creating 43 new jobs. UMC used the MIF funds to purchase equipment. If UMC achieves its hiring goals by the extension date, the loan is 100 percent forgiven (becomes a grant). If UMC falls short of its job creation goals, a pro-rata portion ($6,976.75 per new job) of the funding is forgiven. The balance would need to be repaid to the State. The proposed amendment is the second amendment of the Purchase and Development Contract. The first amendments, approved by the EDA in September 2020, revised the expansion project timeline after COVID-19 Pandemic supply chain issues caused a nearly 12- month delay in the project construction start. Budget Impact: The budget impact related to the Second Amendment to the Purchase and Development Contract is relatively minor. Various documents drafted by the EDA attorney include the resolution, the Second Amendment as well as the public hearing notice. Publication costs in the amount of $214 were also incurred. The total cost for these items is expected to be approximately $1,750. II. Staff Workload Impact: Tasks related to the proposed Second Amendment consisted of document drafting and report completion. Staff involved in the amendment effort included the EDA attorney, and the Economic Development Manager. No additional staff are required to be involved in this effort. III. Comprehensive Plan Impact: Continuing to support Monticello industrial users who meet the city's goals for employment and tax base is consistent with the Monti 2040 Value Statement for "A diversified and strong local economy competitive at regional, state and national levels." The Monti 2040 Plan's Economic Development chapter includes numerous statements aligning with the UMC expansion project, including those for business retention, reinvestment, tax base growth and workforce development. STAFF RECOMMENDATION City staff supports approval of the Resolution authorizing the Second Amendment to the UMC Purchase and Development Contract extending the job creation performance timeline from April 5, 2024, to April 5, 2025. While UMC is making strong progress toward the goal of 43 new FTE employees, it has indicated that workforce recruitment has been and continues to be challenging for the manufacturing sector. The timeline extension amendments will help UMC by allowing them 11 months of additional time to add approximately 13 +/- new FTE staff to its payroll. In the April 19, 2024, meeting with UMC leadership discussing their employee headcount and the job creation efforts, they were optimistic that the goals would be met by 2025 as they continue to add staff and currently have openings for 20 +/- new employees. EDA Agenda: 05/08/2024 SUPPORTING DATA A. EDA Resolution 2024-09 B. Second Amendment to the Purchase and Development Contract C. UMC - Recent Employee Headcount (4-19-24) D. Public Hearing Notice CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO.2024-09 RESOLUTION APPROVING A SECOND AMENDMENT TO PURCHASE AND DEVELOPMENT CONTRACT WITH UMC REAL ESTATE, LLC AND A COMPLIANCE DATE EXTENSION TO A BUSINESS SUBSIDY PROVIDED THEREIN WHEREAS, on February 12, 2020, the Board of Commissioners (the "Board") of the City of Monticello Economic Development Authority (the "Authority") provided a tax increment interfund loan to UMC Real Estate, LLC, a Minnesota limited liability company (the "Borrower"), in the amount of $1,031,000 (the "Loan") to assist in financing the acquisition, construction and equipping of a manufacturing facility in the City of Monticello, Minnesota (the "City"); and WHEREAS, on February 26, 2020, the Authority and the Borrower entered into a Purchase and Development Contract, as amended by the First Amendment to Purchase and Development Contract, dated as of September 9, 2020 (as amended, the "Contract"), pursuant to which the Borrower, among other things, agreed to certain terms and conditions under which the Authority made the Loan to the Borrower; and WHEREAS, the Contract includes a business subsidy agreement under Minnesota Statutes, Sections 116J.993 to 116J.995, as amended (the "Business Subsidy Act"), which set forth certain job and wage goals to be satisfied by the Borrower prior to the compliance date as set forth in the Contract (the "Compliance Date"); and WHEREAS, the Borrower has requested an extension of the Compliance Date for up to one year; and WHEREAS, the Board held a duly noticed public hearing on this date hereof as required by Section 116J.994, subdivision 5 of the Business Subsidy Act regarding the extension of the Compliance Date; and WHEREAS, the Authority and the Borrower desire to amend the Contract to reflect the extension of the Compliance Date as described in a Second Amendment to the Purchase and Development Contract (the "Amendment"); and WHEREAS, the Authority believes that approval of the Amendment is in the best interest of the City and its residents. Now, therefore, be it resolved by the Board of Commissioners (the "Board") of the City of Monticello Economic Development Authority as follows: MN190\160\870781.v1 1. The Board hereby approves the Amendment in substantially the form presented to the Board, together with any related documents necessary in connection therewith (collectively, the "Amendment Documents"), and hereby authorizes the President and Executive Director to execute any such Amendment Documents to which the Authority is a party, on behalf of the Authority, and to carry out, on behalf of the Authority, the obligations of the Authority thereunder when all conditions precedent thereto have been satisfied. 2. The approval hereby given to the Amendment 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 Authority and by the officers authorized herein or by the Authority to execute said documents prior to their execution; and said officers are hereby authorized to approve said changes on behalf of the Authority. The execution of any instrument by the appropriate officers of the Authority shall be conclusive evidence of the approval of such document in accordance with the terms hereof. In the event of absence or disability of the officers, any of the documents authorized to be executed by this resolution 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. 3. Upon execution and delivery of the Amendment Documents, the officers and employees of the Authority are hereby authorized and directed to take or cause to be taken such actions as may be necessary on behalf of the Authority to implement the Amendment Documents, when all conditions precedent thereto have been satisfied. Approved by the Board of Commissioners of the City of Monticello Economic Development Authority this 8t' day of May, 2024. President ATTEST: Executive Director MN190\160\870781.v1 SECOND AMENDMENT TO PURCHASE AND DEVELOPMENT CONTRACT THIS SECOND AMENDMENT TO PURCHASE AND DEVELOPMENT CONTRACT (the "Second Amendment") is made and entered into this day of , 2024, between the CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY a public body corporate and politic of the State of Minnesota (the "Authority"), and UMC REAL ESTATE, LLC, a Minnesota limited liability company (the "Developer"), and their permitted assigns. RECITALS WHEREAS, the Authority and the Developer entered into that certain Purchase and Development Contract, dated as of February 26, 2020, and recorded on April 2, 2020 in the office of the Wright County Recorder as Document No. A1422590 (the "Original Agreement"), whereby the Authority agreed to provide the Developer with an interfund loan in the amount of $1,031,000 (the "Loan") to finance a portion of the cost to acquire, construct and equip a 52,000 square foot manufacturing facility in the City of Monticello, Minnesota (the "Minimum Improvements"); WHEREAS, due to unanticipated delays experienced by the Developer in the construction of the Minimum Improvements, the parties entered into a First Amendment to Purchase and Development Contract, dated as of September 9, 2020, and recorded on October 6, 2020 in the office of the Wright County Recorder as Document No. A1443064 (the "First Amendment" and, together with the Original Agreement, the "Agreement") which extended the required construction completion date for the Minimum Improvements and extended the maturity dates of both the Note and Mortgage; WHEREAS, the Agreement contains a Business Subsidy Agreement (the "Subsidy Agreement") which sets forth certain job and wage goals in accordance with Minnesota Statutes, Section 1161993 to 1161995, as amended (the "Business Subsidy Act"). The Subsidy Agreement required the Developer to meet certain job and wage goals within two years of the Benefit Date (the "Compliance Date"). The Agreement defined the Benefit Date as the earlier of the date of issuance the Certificate of Completion for the Minimum Improvements or the date the Minimum Improvements are occupied by Developer or a tenant of Developer and the Authority has determined the Benefit Date to be April 5, 2022; WHEREAS, in accordance with the Business Subsidy Act, the Authority may, after a public hearing, extend the Compliance Date by up to one year; WHEREAS, the Authority has determined, after a duly noticed public hearing held on June 14, 2023, to extend the Compliance Date by one year; WHEREAS, the Authority and the Developer desire to amend the Agreement to extend the Compliance Date to April 5, 2025; MN190\160\870796.v1 WHEREAS, capitalized terms used in this Second Amendment and not otherwise defined herein have the meanings given to them in the Agreement; and NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: 1. Amendment to Section 3.8(b) of the Agreement. Section 3.8(b) of the Agreement is amended to read as follows. (b) Job and Wage Goals. The "Benefit Date" of the assistance provided in this Agreement is the earlier of the date of issuance of completion of the Minimum Improvements or the date the Minimum Improvements are occupied by Developer or a tenant of Developer. By or before the "Compliance Date", defined as the date three years after the Benefit Date, the Developer shall cause to be created at least 43 full-time jobs permanent to the Development Property. The Developer shall cause the average hourly wage of 4 of the new jobs to be at least $15 per hour, and shall cause the average hourly wage of 39 of the new jobs to be at least $17 per hour, exclusive of benefits. Notwithstanding anything to the contrary herein, if the wage and job goals described in this paragraph are met by the Compliance Date, those goals are deemed satisfied despite the Developer's continuing obligations under Sections 3.8(a)(6) and 3.8(d). The Compliance Date may not be extended. In addition to the job and wage goals to be met by the Compliance Date, the Developer agrees to cause to be created, by the date one year after the Compliance Date, at least 17 additional full-time jobs permanent to the Development Property, for a total of at least 60 new full-time permanent jobs. The Developer shall cause the average hourly wage of these additional jobs to be at least $15 per hour, exclusive of benefits. The parties agree and acknowledge that any failure by the Developer to create the additional 17 jobs at the designated wages in the year following the Compliance Date shall constitute an Event of Default under this Agreement, but that the Authority shall not be authorized to pursue the remedies provided in Section 3.8(c) hereof for failure to meet such goals. 2. Any capitalized terms used herein but not otherwise defined shall have the meanings assigned to such terms in the Agreement. Any references to the "Agreement" or "this Agreement" in the Agreement shall refer to the Original Agreement, as amended by the First Amendment and this Second Amendment, and as may be further amended and supplemented. 3. The amendments made to the Agreement, as amended by this Second Amendment, shall be effective as of the date hereof. 4. Except as hereby amended, all other terms and conditions of the Agreement shall remain in full force and effect. 2 MN190\160\870796.v1 IN WITNESS WHEREOF, the Authority and the Developer have caused this Second Amendment to Purchase and Development Contract to be duly executed in their names and on their behalf, all on or as of the date Second above written. CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY By President By Executive Director S-1 MN190\160\870796.v1 UMC REAL ESTATE, LLC By Its Second Amendment to Purchase and Development Contract S-2 MN190\160\870796.v1 uIAA. C- M� c4 I VI UMC Anticipated Headcount on 6/30/2024 Employment Type Headcount Full Time 227 Part Time 13 *These numbers do not include open postions. No • O K d /v... a 4-,QL . 11IL r e 6 1, 1% V q�4ems b� -Y►K► NOTICE OF PUBLIC HEARING CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY WRIGHT COUNTY, MINNESOTA NOTICE IS HEREBY GIVEN that the Board of Commissioners of the City of Monticello Economic Development Authority (the "Authority") will meet on Wednesday, , 2024 at approximately 6:00 P.M. or as soon thereafter as the matter may be heard, at the Monticello Community Center located at 505 Walnut Street in the City of Monticello, Minnesota (the "City") to conduct a public hearing regarding a business subsidy previously granted by the Authority to UMC Real Estate, LLC, a Minnesota limited liability company (the "Recipient"), pursuant to Minnesota Statutes, Sections 116J.993 through I I6J.995, as amended (the "Business Subsidy Act"). The business subsidy previously granted by the City to the Recipient was a tax increment interfund loan in the amount of $1,031,000 in connection with the acquisition, construction, and equipping of a manufacturing facility in the City. The purpose of the public hearing is to discuss an extension for the compliance date for the Recipient to meet the job and wage goals provided in the Purchase and Development Contract, dated as of February 26, 2020, and as amended by the First Amendment to Purchase and Development Contract, dated as of September 9, 2020, by and between the Authority and the Recipient, which would extend the date of compliance for up to one year. Information about the business subsidy and the proposed extension is available for inspection at the office of the Authority's Executive Director at City Hall during regular business hours. After the public hearing the Authority will consider extending the business subsidy pursuant to the Business Subsidy Act. A person with residence in or the owner of taxable property in the City may file a written complaint with the Authority if the Authority fails to comply with the Business Subsidy Act, and no action may be filed against the Authority for the failure to comply unless a written complaint is filed. All interested persons may appear at the hearing and present their views on the matter orally or provide their comments prior to the meeting in writing. Dated: 92024 BY ORDER OF THE BOARD OF COMMISSIONERS OF THE CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY /s/ Jim Thares Executive Director MN190\160\870757.v1 NOTICE OF PUBLIC HEARING CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY WRIGHT COUNTY, MINNESOTA NOTICE IS HEREBY GIVEN that the Board of Commissioners of the City of Monticello Economic Development Authority (the "Authority") will meet on Wednesday, May 8, 2024 at approximately 6:00 P.M. or as soon thereafter as the matter may be heard, at the Monticello Community Center located at 505 Walnut Street in the City of Monticello, Minnesota (the "City") to conduct a public hearing regarding a business subsidy previously granted by the Authority to UMC Real Estate, LLC, a Minnesota limited liability company (the "Recipient"), pursuant to Minnesota Statutes, Sections 116J.993 through I I6J.995, as amended (the "Business Subsidy Act"). The business subsidy previously granted by the City to the Recipient was a tax increment interfund loan in the amount of $1,031,000 in connection with the acquisition, construction, and equipping of a manufacturing facility in the City. The purpose of the public hearing is to discuss an extension for the compliance date for the Recipient to meet the job and wage goals provided in the Purchase and Development Contract, dated as of February 26, 2020, and as amended by the First Amendment to Purchase and Development Contract, dated as of September 9, 2020, by and between the Authority and the Recipient, which would extend the date of compliance for up to one year. Information about the business subsidy and the proposed extension is available for inspection at the office of the Authority's Executive Director at City Hall during regular business hours. After the public hearing the Authority will consider extending the business subsidy pursuant to the Business Subsidy Act. A person with residence in or the owner of taxable property in the City may file a written complaint with the Authority if the Authority fails to comply with the Business Subsidy Act, and no action may be filed against the Authority for the failure to comply unless a written complaint is filed. All interested persons may appear at the hearing and present their views on the matter orally or provide their comments prior to the meeting in writing. Dated: April 25, 2024 BY ORDER OF THE BOARD OF COMMISSIONERS OF THE CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY /s/ Jim Thares Executive Director MN190\160\870757.v1 EDA Agenda: 5/08/24 4B. PUBLIC HEARING - Consideration of authorizing a Greater Minnesota Enterprise Fund Loan and a related Business Subsidy Agreement in the amount of $250,000 with Excelsior Tool Company, Inc. in connection with the purchase of property and relocation of eauioment Prepared by: Meeting Date: ® Regular Agenda Item Economic Development Manager 5/08/24 ❑ Consent Agenda Item Reviewed by: Approved by: Community Development Director, City Administrator Finance Director, Community & Economic Development Coordinator ACTION REQUESTED The Public Hearing is cancelled. No action needed. REFERENCE AND BACKGROUND Excelsior Tool has informed City staff that it is pausing the pursuit of its relocation to the City of Monticello. The EDA is asked to open the public hearing and consider public input and the continue to the hearing to a future date. City staff will reach out to Excelsior Tool for further consultation regarding potential viable site or building options in Monticello. I. Budget Impact: The budget impact from opening the Public Hearing is minimal. II. Staff Workload Impact: The Community Development Director, Finance Director and Economic Development Manager have committed time to completing tasks related to the review of the proposed loan request and the required step of holding the Business Subsidy public hearing. No other staff are required to complete the work in this effort. III. Comprehensive Plan Impact: The Economic Development section of the Comprehensive Plan encourages formation of an effective economic development effort which creates a supportive business environment and builds a vibrant, thriving local economy. STAFF RECOMMENDATION No recommendation. Staff will continue monitor the status of the Excelsior Tool proposal and proceed with appropriate action steps related to sourcing GMEF loan funds and/or collaborating with other economic development partners such as Wright County Economic Development Partnership (WCEDP) or the Initiative Foundation (IF). SUPPORTING DATA A. Public Hearing Notice NOTICE OF PUBLIC HEARING CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY WRIGHT COUNTY, MINNESOTA NOTICE IS HEREBY GIVEN that the Board of Commissioners of the City of Monticello Economic Development Authority (the "Authority") will hold a public hearing on Wednesday, May 8, 2024, at approximately 6:00 P.M. or as soon thereafter as the matter may be heard, in the Mississippi Room of the Monticello Community Center located at 505 Walnut Street in the City of Monticello, Minnesota (the "City") to consider the provisions of a proposed business subsidy under Minnesota Statutes, Sections 116J.993 through 116J.995, as amended (the "Business Subsidy Law"), to Excelsior Tool Co., Inc., a Minnesota corporation (the "Recipient"), to finance a portions ofthe costs of the acquisition, improvement and equipping of an approximately 12,000 square foot building located at 208 Dundas Road in the City (the "Building") and the moving of certain equipment to the Building in connection with the relocation of the Recipient's plastic injection mold manufacturing company (the "Project"). Information about the proposed business subsidy for the Recipient is available for inspection at the office of the Authority's Executive Director at City Hall during regular business hours. After the public hearing, the Authority will consider granting the business subsidy in accordance with the proposed terms. A person with residence in or the owner of taxable property in the City may file a written complaint with the Authority if the Authority fails to comply with the Business Subsidy Law, and no action may be filed against the Authority for the failure to comply unless a written complaint is filed. All interested persons may appear at the hearing and present their views on the matters orally or provide their comments prior to the meeting in writing. Dated: April 25, 2024 BY ORDER OF THE BOARD OF COMMISSIONERS OF THE CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY /s/ Jim Thares Executive Director MN325\52\928400.v1 EDA Agenda: 05/08/2024 5A. Consideration of Adopting Resolution 2024-10 authorizing a Purchase Agreement with Civil Engineering Site Design, LLC for the acquisition of 118 Broadway East in the amount of $665,000 and authorizing a Property Management and Lease Agreement for 118 Broadwav East with Civil Engineering Site Design. LLC Prepared by: Meeting Date: ® Regular Agenda Item Economic Development Manager 05/08/2024 ❑ Consent Agenda Item Reviewed by: Approved by: Community Development Director, City Administrator Community & Economic Development Coordinator, Finance Director ACTION REQUESTED Motion to adopt Resolution 2024-10 authorizing a Purchase Agreement with Civil Engineering Site Design, LLC for the acquisition of 118 Broadway East, Monticello, MN (PID 155010034120), in the amount of $665,000 plus closing costs and further authorizing a Property management and Lease Agreement with Civil Engineering Site Design, LLC. REFERENCE AND BACKGROUND The EDA is asked to consider authorizing the purchase of a small commercial property located at 118 Broadway East in the amount of $665,000 plus closing costs estimated to be approximately $4,700. The property is located within Block 34 in downtown Monticello. The acquisition of this property is an important goal in the EDA's Workplan (2022-2024). The EDA currently owns property on both sides of 118 Broadway East. By purchasing the Civil Engineering Site Design property, the EDA can consolidate its property holdings in Block 34 and begin to explore potential redevelopment concepts for this visible area of downtown Monticello. At approximately 24.5 feet in width, the 118 Broadway East parcel has a total lot size of 3,952.13 square feet (.09 acres). The proposed purchase price is $665,000, or $168.26 per square foot. The 2024 Wright County tax value is $178,200. The Seller, Civil Engineering Site Design, LLC, a survey and engineering services firm, operates in the building and has requested to stay at the property by entering into a Property Management and Lease Agreement with the EDA. The Lease is proposed as a one-year term and renewable in additional 12-month increments. At the time of property vacation, the seller is required to remove all personal property from the premises. Key terms of the Purchase Agreement include the following: EDA Agenda: 05/08/2024 • Purchase price: $665,000 • Earnest Money Deposit: $5,000 • Warranty Deed/Marketable Title conveyance at closing: Yes • Proposed closing date: Not sooner than May 31, 2024 (target date is June 14, 2024) • Real Estate Property Taxes: Pro -rated between the Seller and the EDA • Closing Costs: Typical Seller -Buyer 50-50 split, including Deed Tax • Relocation Benefits: Included in Purchase Price • Other: Seller desires to 1031 Exchange the property and identifies the Exchange entity in the Purchase Agreement; no anticipated cost to the EDA Key Lease Agreement terms include: ✓ Rental term: 12 months (one year); Renewable Annually in additional 12-month increments ✓ Rental rate: No Charge ✓ Occupancy costs including Property Taxes: Paid by Tenant ✓ Escrow Agreement: Yes, to facilitate tenant payment of property taxes paid by the EDA The purchase agreement for the property also identifies a closing contingency requiring approval of a lease for an adjacent City -owned building, which the Seller would occupy at the time the 118 Broadway East is vacated. That lease is a separate consideration of the City Council, scheduled for review on May 13, 2024. The City and EDA combined currently own approximately 82 percent or 1.94 acres of the entire 2.36-acre +/- Block 34 land area. EDA acquisition of this property would increase the total publicly held land area to 86 percent of Block 34. The Block is identified as a future redevelopment opportunity. Due to the presence of several economically obsolete buildings, high visibility along MN-TH#25 and County Road 75 along with its location being in the traditional core downtown area, Block 34 was identified as a prime future redevelopment opportunity in the 2017 Small Area Plan. Redevelopment of the Block is envisioned as mixed -use commercial, and residential development similar to Block 52. The EDA last acquired property (Finders Keepers) in this Block in September 2023 with the goal of further positioning the area to allow possible future redevelopment. Budget Impact: The budget impact from the proposed purchase of the property will decrease the EDA General Fund in the amount of the purchase price of $665,000 plus closing costs estimated to be approximately $4,700 +/-. The legal fees related to drafting the purchase agreement and lease documents are estimated to be $3,100. The EDA General Fund cash reserves are sufficient to cover the proposed purchase by the EDA. EDA Agenda: 05/08/2024 II. Staff Workload Impact: Staff involved in the property acquisition discussion includes the City Administrator, Community Development Director, Finance Director, and the Economic Development Manager. Consultant staff involved in tasks related to the proposed purchase include the EDA attorney and Northland Securities staff. No additional staff are needed to complete the acquisition of the property. III. Comprehensive Plan Impact: EDA acquisition of the property is in alignment with the City of Monticello 2040 Vision + Plan goals; Chapter 5. Economic Development. Language cited in this chapter includes "Goal 3: Downtown Vitality - "A vibrant and thriving Downtown that contributes to the City's economic development and housing objectives", and "Goal 4: Redevelopment and Reinvestment - "Redevelopment of vacant and underutilized parcel consistent with meeting the City's economic development, land use, and community development design objectives". The acquisition is further supported by the Downtown Small Area Plan (Exhibit 1) and its identification of Block 34 as a redevelopment opportunity area. Comprehensive Plan excerpts are attached as Exhibit J. The Planning Commission reviewed the proposed property acquisition for conformity with the Comprehensive Plan on February 6, 2024, and found that the purchase conforms to the Comprehensive Plan. STAFF RECOMMENDATION City staff recommends that the EDA authorize the purchase agreement for the commercial property located at 118 Broadway Street East. The opportunity to consolidate land and add to the City and EDA publicly held ownership in Block 34 is supported by the City's adopted goals for the Downtown. Moving forward with the purchase of the property is consistent with the City of Monticello 2040 Vision + Plan's goals of revitalizing the downtown area and creating a vibrant and dynamic local economy. SUPPORTING DATA A. EDA Resolution 2024-10 B. Purchase Agreement C. Property Management and Lease Agreement D. Escrow Agreement E. Aerial Site Image F. Wright County Beacon Property Info Report G. Illustration - Block 34 public (EDA and City) ownership H. Planning Commission Staff Report & Resolution I. Monticello 2040 Vision + Plan, Excerpts J. Monticello Downtown Small Area Plan, Excerpts CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO.2024-10 RESOLUTION APPROVING A PURCHASE AGREEMENT FOR THE ACQUISITION OF 118 BROADWAY STREET EAST BY THE CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY BE IT RESOLVED BY the Board of Commissioners (the "Board") of the City of Monticello Economic Development Authority (the "Authority") as follows: Section 1. Recitals. 1.01. The Authority and Civil Engineering Site Design, LLC, a Minnesota limited liability company, or an entity related thereto or affiliated therewith (the "Seller"), desire to enter into a Purchase Agreement (the "Purchase Agreement") pursuant to which the Authority will acquire certain property located at 118 Broadway Street East (the "Property") in the City of Monticello, Minnesota (the "City") from the Seller for economic development purposes. The Property is described in Exhibit A attached hereto. 1.02. Pursuant to the Purchase Agreement, the Authority will purchase the Property from the Seller for a total purchase price of $665,000, plus the Authority's share of the closing costs as defined in the Purchase Agreement. 1.03. Pursuant to Minnesota Statutes, Section 462.356, subd. 2, the Planning Commission of the City met on February 6, 2024, and reviewed the proposed acquisition of the Property and found that the acquisition is in conformity to the City's 2040 Comprehensive Plan (the "Comprehensive Plan") because the Property is located on Block 34, a key redevelopment site in the Central Community District which makes up the City's downtown, and the Comprehensive Plan supports the Authority assisting in site and land assembly at key redevelopment sites to foster redevelopment and reinvestment in the City's downtown. 1.04. The Authority finds that acquisition of the Property conforms to the Comprehensive Plan and further finds that it will facilitate economic development in the City by allowing the Authority to convey the Property to a private developer. 1.05. The Purchase Agreement provides that the Seller may continue to occupy the Property following the Closing Date (as defined in the Purchase Agreement) pursuant to a certain Property Management and Lease Agreement to be entered into and made by and between the Authority and the Seller (the "Lease"), a form of which is presented to the Board. Section 2. Documents Approved. 1 MN325\51\924563.v1 1. The Board approves the Purchase Agreement and the Lease in substantially the forms presented to the Board, together with any related documents or certifications necessary in connection therewith, including without limitation the Escrow Agreement and all documents and certifications referenced in or attached to the Purchase Agreement and the Lease, and any other documents necessary to acquire the Property and to lease the Property to the Seller, all as described in the Purchase Agreement and the Lease (collectively, the "Documents") and the President and the Executive Director are hereby authorized and directed to execute the Documents on behalf of the Authority and to carry out, on behalf of the Authority, the Authority's obligations thereunder when all conditions precedent thereto have been satisfied. 2. Authority staff and officials are authorized to take all actions necessary to perform the Authority's obligations under the Documents as a whole, including without limitation execution of any documents or certifications to which the Authority is a party referenced in or attached to the Purchase Agreement or the Lease, and any other documents necessary to acquire the Property from the Seller and lease the Property to the Seller. 3. The approval hereby given to the 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 Authority 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 Authority subject to the following conditions: (a) such modifications do not materially adversely affect the interests of the Authority; and (b) such modifications do not contravene or violate any policy of the Authority or applicable provision of law. The execution of any instrument by the appropriate officers of the Authority herein authorized shall be conclusive evidence of the approval of such document in accordance with the terms hereof. 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. This resolution shall not constitute an offer and the purchase agreement shall not be effective until the date of execution thereof. 4. Upon execution and delivery of the Documents, the officers and employees of the Authority are hereby authorized and directed to take or cause to be taken such actions as may be necessary on behalf of the Authority to implement the Documents. Approved this 8th day of May, 2024, by the Board of Commissioners of the City of Monticello Economic Development Authority. President ATTEST: Executive Director MN325\51\924563.v1 EXHIBIT A Legal Description of the Property The West 24 feet of Lot 12, Block 34, City of Monticello, according to the plat thereof on file or of record in the County Recorder, Wright County, Minnesota. PID 155-010-034120 1 MN325\51\924563.v1 PURCHASE AGREEMENT 118 East Broadway Street, Monticello, Minnesota This Purchase Agreement (this "Agreement") is made as of this day of May, 2024, by and between Civil Engineering Site Design, LLC, a Minnesota limited liability company ("Seller"), and the City of Monticello Economic Development Authority, a public body politic and corporate under the laws of the State of Minnesota ("Buyer"). 1. PROPERTY. Seller is the owner of the property located at 118 East Broadway Street in the City of Monticello, Minnesota (the "City"), which is legally described on the attached Exhibit A (the "Property"). 2. OFFER/ACCEPTANCE. In consideration of and subject to the terms and provisions of this Agreement, Buyer offers and agrees to purchase, and Seller agrees to sell and hereby grant to Buyer the exclusive right to purchase the Property and all improvements thereon, together with all appurtenances. All fixtures located on the Property on the date of this Agreement are included in the purchase of the Property, whether attached or detached, such as light fixtures, shades, rods, blinds, awnings, windows, storm doors, screens, plumbing fixtures, boilers, water heater, water softener, air conditioning equipment, built-in items, outside television antenna, fencing gates, and landscaping. Personal property is not included in the sale of the Property. 3. PURCHASE PRICE FOR PROPERTY AND TERMS. a. PURCHASE PRICE: The total purchase price for the Property, representing the fair market value of the Property is: Six Hundred Sixty -Five Thousand Dollars and NO/100 ($665,000.00) ("Purchase Price"). Seller hereby acknowledges that Buyer's consideration includes consideration for all relocation services and relocation benefits to which Seller may be entitled to by law. b. TERMS: EARNEST MONEY: Earnest money in the amount of Five Thousand and no/100 Dollars ($5,000) (the "Earnest Money") shall be deposited by Buyer into escrow with Land Title, Inc. ("Title") within five business days after this Agreement has been executed by both parties. The Earnest Money is refundable to the extent provided herein. 2. BALANCE DUE SELLER: Buyer agrees to pay the Purchase Price to the Seller by check or wire transfer on the Closing Date (defined hereafter) according to the terms of this Agreement. 3. DEED/MARKETABLE TITLE: Subject to performance by Buyer, Seller agrees to execute and deliver to Buyer a Warranty Deed conveying marketable fee simple title to the Property, free and clear of any mortgages, liens, or encumbrances other than matters created by or acceptable to Buyer, subject only to the following exceptions: MN325-51-924464.v7 i. Building and zoning laws, ordinances, state, and federal regulations; ii. Reservation of minerals or mineral rights to the State of Minnesota, if any; and iii. Public utility and drainage easements of record which will not interfere with Buyer's intended use of the Property. 4. DOCUMENTS TO BE DELIVERED AT CLOSING BY SELLER. In addition to the Warranty Deed required at paragraph 3.b.3. above, Seller shall deliver to Buyer at closing: a. A standard affidavit from Seller sufficient to remove any exception in Buyer's policy of title insurance for mechanics' and materialmens' liens and rights of parties in possession; b. A "bring -down" certificate, certifying that all of the warranties made by Seller in this Agreement remain true as of the Closing Date; C. FIRPTA Affidavit of Seller confirming that Seller is not a foreign person within the meaning of Section 1445 of the Internal Revenue Code; d. Well disclosure certification, if required, or, if there is no well on the Property, the Warranty Deed given pursuant to paragraph 3.b.3. above must include the following statement: "The Seller certifies that the Seller does not know of any wells on the described real property;" e. Any notices, certificates, and affidavits regarding any private sewage systems, underground storage tanks, and environmental conditions as may be required by state or federal statutes, rules, or regulations; and g. Any other documents reasonably required by Title or Buyer's attorney to evidence that title to the Property is marketable and that Seller has complied with the terms of this Agreement. 5. CONTINGENCIES. Buyer's obligation to purchase the Property is contingent upon the following: a. Approval of this Agreement by Buyer's governing body; b. Approval of the City Lease (as hereinafter defined) by the City Council of the City; C. Written findings by the Planning Commission of the City that the acquisition of the Property conforms to the City's Comprehensive Plan; d. Buyer conducting environmental, geotechnical, and building investigations on the 2 MN325-51-924464.v7 Property and receiving reports that are satisfactory to Buyer; and e. Buyer's determination of marketable title pursuant to paragraph 6 of this Agreement. Buyer shall have 120 days from the date of approval of this Agreement by the Buyer to remove or waive the foregoing contingencies (the "Due Diligence Period"). These contingencies are solely for the benefit of Buyer and may be waived by Buyer. If Buyer or its attorney gives written notice to Seller that all contingencies are duly satisfied or waived, Buyer and Seller shall proceed to close the transaction as contemplated herein. If one or more of the contingencies is not satisfied, or is not satisfied within the Due Diligence Period, and is not waived by Buyer, this Agreement shall thereupon be void at the written option of Buyer, Buyer and Seller shall execute and deliver to each other documentation effecting the termination of this Agreement, and the Earnest Money shall be refunded to Buyer in full. Buyer shall also deliver to Seller copies of all documentation gathered during the Due Diligence Period, including without limitation all surveys and any environmental or soil tests. 6. TITLE EXAMINATION/CURING TITLE DEFECTS. Buyer will, at its expense, obtain a commitment for title insurance ("Commitment") for the Property from Title. Buyer shall have 20 business days after the later of execution in full of this Agreement or receipt of the Commitment to examine the Commitment and to deliver written objections to title, if any, to Seller, or Buyer's right to do so shall be deemed waived. Seller shall have until the end of the Due Diligence Period (or such later date as the parties may agree upon) to make title marketable, at Seller's cost. In the event that title to the Property cannot be made marketable or is not made marketable by Seller within the Due Diligence Period, then this Agreement may be terminated at the option of Buyer. 7. PROPERTY INVESTIGATIONS. (a) Buyer acknowledges that it has been authorized by Seller to enter the Property and conduct environmental investigations of the Property. Buyer shall give Seller at least 48-hours emailed notice prior to entering the Property to conduct such environmental investigations and shall pay all costs for such investigations. Buyer shall not unreasonably disrupt Seller's business operations during such environmental investigations and shall immediately repair any damage caused by the investigations and return the Property to substantially the same condition as existed prior to such entry. Seller shall provide to Buyer any environmental reports or information concerning the Property in Seller's possession at the time of execution of this Agreement. Buyer hereby agrees to indemnify and hold Seller harmless from and against any and all losses, claims, causes of action, liabilities and costs of defense incurred by Seller arising out of the actions of Buyer, its agents, employees, contractors or invitees in carrying out Buyer's environmental investigations, including without limitation mechanics' liens caused by the activities of Buyer or Buyer's' agents and contractors, unless due to the negligence or willful misconduct of Seller or its agents, employees or contractors. MN325-51-924464.v7 (b) Within seven business days of the date hereof, Seller shall provide Buyer with copies of all relevant materials in Seller's possession relating to the Property, including but not limited to, title reports, soil reports, environmental studies, surveys, environmental reports, agreements with governmental authorities, or other records of the Property that Seller has in Seller's possession (collectively "Seller's Deliverables"). 8. CLOSING DATE. The date of closing shall be no earlier than May 31, 2024, and may be on said date or such later date as is mutually agreed by the parties ("Closing Date"). Delivery of all papers and the closing shall be made through escrow with Title, or at such other location as is mutually agreed upon by the parties. All deliveries and notices to Buyer shall be made as provided in paragraph 16 of this Agreement. 9. POSSESSION/HOLDOVER TENANCY. a. Possession. Seller agrees to deliver title of the Property to Buyer on the Closing Date, provided that the Property is currently occupied by Seller, who shall be permitted to occupy the Property pursuant to a lease and property management agreement between Buyer and Seller in substantially the form attached as Exhibit B (the "Lease"). The Seller shall be permitted to occupy the Property pursuant to the Lease until the Expiration Date (as defined in the Lease). The terms and conditions of any holdover tenancy by Seller are as described in Section 9b. hereof. b. Holdover Tenancy. 1. The lease rate for the Lease shall be $0.00 per month, provided that (i) Seller shall pay all costs of natural gas, electricity, garbage collection, sewer and water, and property taxes, and insurance attributable to the Property; and (ii) Seller shall undertake property management and routine maintenance obligations as set forth in the Lease. Seller shall be authorized to occupy the Property and to conduct Seller's regular business activities within the Property until the Expiration Date. The Expiration Date may be extended pursuant to the terms of the Lease. Buyer shall take possession of the Property on the Expiration Date. 2. The parties expressly agree and understand that the Seller shall not enter into any third -party leases for any portion of the Property on or after the date of this Agreement. The parties agree that any personal property of the Seller remaining on the Property after the Expiration Date shall become property of the Buyer. C. City Lease Following the Expiration Date. Following the Expiration Date, the Seller shall enter into a lease with the City in substantially the form attached as Exhibit C (the "City Lease") pursuant to which the Seller shall lease all or a portion of the City -owned property located at 119 3rd Street East in the City (the "City Property") at a rate of $0.00 per year, plus all property taxes, utilities and insurance coverage related to the Seller's use of the City Property for a term of 10 years per the "City Lease". 10. SELLER'S WARRANTIES AND REPRESENTATIONS. Seller hereby represents and warrants to Buyer and Seller will represent and warrant to Buyer as of the Closing Date that: 4 MN325-51-924464.v7 a. Sewer and water. Seller represents that to the best of Seller's knowledge; the Property is connected to City sewer and water. b. Mechanics' Liens. Seller warrants that, prior to the closing, Seller shall pay in full all amounts due for labor, materials, machinery, fixtures, or tools furnished within the 120 days immediately preceding the closing in connection with construction, alteration, or repair of any structure upon or improvement to the Property caused by or resulting from any action of Seller. C. Notices. Seller represents that Seller has not received any notice from any governmental authority as to violation of any law, ordinance, or regulation in connection with the Property. d. Tenants. Seller warrants that there are no tenants or third parties in possession of the Property. Seller represents that the "Civil Engineering Site Design" shop that is currenly operating on the Property is solely owned and operated by Seller and is not a third party in possession or a tenant. e. Broker Commission. Seller warrants that as of the date of this Agreement, there is no agreement in effect with any broker, agent, or representative who shall be entitled to any commission in connection with this transaction. Seller agrees to indemnify, defend, and hold Buyer harmless from the claims of any broker, real estate agent or similar party claiming through Seller. Seller further agrees to indemnify, defend, and hold Buyer harmless for any costs incurred by Buyer as a result of any legal process to adjudicate any fees claimed by any broker, agent, or representative in connection with this transaction. f. Condemnation. Seller has received no notice that there is any pending or, to the actual knowledge of Seller, threatened condemnation or similar proceeding affecting the Property or any portion thereof, and Seller has no actual knowledge that any such action is contemplated. g. Legal Proceedings. There are no legal actions, suits or other legal or administrative proceedings, pending or threatened, that affect the Property or any portion thereof, and Seller has no knowledge that any such action is presently contemplated. h. Legal Capacity. Seller has the authority and the legal capacity to enter into this Agreement. Seller has not filed, voluntarily or involuntarily, for bankruptcy relief within the last year under the United States Bankruptcy Code, nor has any petition for bankruptcy or receivership been filed against Seller within the last year. i. Methamphetamine Production. To the best of Seller's knowledge, methamphetamine production has not occurred on the Property. j. Underground Tanks. To the best of Seller's knowledge, the Property does not contain any underground storage tanks of any size or description. MN325-51-924464.v7 k. Wells. Seller certifies that the Seller does not know of any wells on the Property. 1. Sewage Systems. Seller does not know of any individual sewage treatment systems on or serving the Property, or if any individual sewage treatment systems exist, Seller shall comply with all applicable statutory disclosure requirements regarding such individual sewage treatment systems. in. Marketable Title. Seller has good and marketable fee simple title interest to the Property. The Property will as of the date of closing be free and clear of all mortgages, liens, security interests, encumbrances, leases, or other restrictions except encumbrances permitted by Buyer. There are no third parties in possession of the Property. n. Hazardous Waste. No hazardous wastes or materials are located on or under the Property and no notices have been received by Seller from any federal, state, local, or other governmental agency (or a compliance letter). Seller's representations and warranties set forth in this paragraph shall be continuing and are deemed to be material to Buyer's execution of this Agreement and Buyer's performance of its obligations hereunder. All such representations and warranties shall be true and correct on or as of the Closing Date with the same force and effect as if made at that time; and all of such representations and warranties shall survive closing and any cancellation or termination of this Agreement, and shall not be affected by any investigation, verification or approval by any part hereto or by anyone on behalf of any party hereto. Seller agrees to defend, indemnify, and hold Buyer harmless for, from and against any loss, costs, damages, expenses, obligations, and attorneys' fees incurred should an assertion, claim, injury, demand, or cause of action be instituted, made, or taken, which is contrary to or inconsistent with the representations or warranties contained herein. 11. CLOSING COSTS/RECORDING FEES/DEED TAX. At Closing, Seller shall pay: (a) prorated property taxes due and payable in the year of Closing through the Closing Date; (b) prorated special assessment payments due and payable in the year of Closing through the Closing Date; (c) the cost of any documents required to clear title or to evidence marketable title, including fees and charges to record such documents; (d) any operating costs of the Property up to the Closing Date; (e) one-half of all closing fees customarily charged by Title; and (f) Seller's legal fees. Buyer shall pay: (a) the costs of any environmental investigation and survey costs ordered by Buyer; (b) costs of an initial title commitment, title insurance and endorsements; (c) recording fees and charges related to the filing of the Warranty Deed from Seller; (d) any transfer or deed taxes due as a result of this transaction; (e) one-half of all closing fees customarily charged by Title; and (f) Buyer's legal and accounting fees. 12. INSPECTIONS. From the date of this Agreement to the Closing Date, Buyer, its employees, and agents, shall be entitled to enter upon the Property to conduct such surveying, inspections, investigations, soil borings and testing, and drilling, monitoring, sampling, and testing of groundwater monitoring wells (collectively `Buyer's Inspection Activity"), as Buyer shall elect. Buyer shall give Seller at least 48-hours emailed notice prior to entering upon the Property to conduct Buyer's Inspection Activity and shall pay all costs associated therewith. Buyer shall not 6 MN325-51-924464.v7 unreasonably disrupt Seller's business operations during Buyer's Inspection Activity and shall immediately repair any damage caused thereby and return the Property to substantially the same condition as existed prior to such entry upon the Property. Buyer hereby agrees to indemnify and hold Seller harmless from and against any and all losses, claims, causes of action, liabilities and costs of defense incurred by Seller arising out of the actions of Buyer, its agents, employees, contractors or invitees in carrying out Buyer's Inspection Activity, including without limitation mechanics' liens caused by the activities of Buyer or Buyer's' agents and contractors, unless due to the negligence or willful misconduct of Seller or its agents, employees or contractors. Buyer shall also be entitled to a general walk-through inspection within five days of the Closing Date. 13. INSURANCE; RISK OF LOSS. a. If there is any loss or damage to the Property between the date hereof and the Closing Date, for any reason including fire, vandalism, flood, earthquake or act of God, the risk of loss shall be on Seller. If the Property is destroyed or substantially damaged before the Closing Date, this Agreement shall become null and void, at Buyer's option. At the request of Buyer, Seller agree to sign a cancellation of Purchase Agreement. b. Following the Closing Date, the Buyer shall procure and maintain property and renter's insurance on the Property in the amounts specified in the Lease until the Expiration Date. 14. DEFAULT/REMEDIES. If Buyer defaults under this Agreement, Seller have the right to terminate this Agreement by giving written notice of such election to Buyer, pursuant to Minnesota Statutes, Section 559.21. Time is of the essence of this Agreement. The termination of this Agreement and retention by Seller of the Earnest Money will be the sole remedy available to Seller for such default by Buyer, and Buyer will not be further liable for damages. If Seller defaults under this Agreement, Buyer shall have the right (i) to terminate this Agreement and receive reimbursement of the Earnest Money, or (ii) to enforce and recover from Seller specific performance of this Agreement. The termination of this Agreement and reimbursement of the Earnest Money or the enforcement and recovery from Seller of specific performance of this Agreement shall be the sole remedies available to Buyer for such default by Seller, and Seller shall not be further liable for damages. 15. RELOCATION BENEFITS; INDEMNIFICATION. Seller acknowledges that Seller is not being displaced from the Property as a result of the transaction contemplated by this Agreement and that Seller is not eligible for relocation assistance and benefits or in the event that Seller is deemed eligible for relocation assistance and benefits, that the Purchase Price includes compensation for any and all relocation assistance and benefits for which Seller may be eligible. The provisions of this Section shall survive closing of the transaction contemplated by this Agreement. 16. NOTICE. Any notice, demand, request, or other communication which may or shall be given or served by the parties, shall be deemed to have been given or served on the date the same is personally served upon one of the following indicated recipients for notices or is deposited in 7 MN325-51-924464.v7 the United States Mail, registered or certified, return receipt requested, postage prepaid and addressed as follows: SELLER: Civil Engineering Site Design, LLC P.O. Box 566 Monticello, MN 55362 BUYER: City of Monticello Economic Development Authority 505 Walnut Street, Suite 1 Monticello, MN 55362 Attn: Executive Director 17. ENTIRE AGREEMENT. This Agreement, including exhibits attached hereto, and any amendments hereto signed by the parties, shall constitute the entire agreement between Seller and Buyer and supersedes any other written or oral agreements between the parties relating to the Property. This Agreement can be modified only in a writing properly signed on behalf of Seller and Buyer. 18. SURVIVAL. Notwithstanding any other provisions of law or court decision to the contrary, the provisions of this Agreement shall survive closing. 19. BINDING EFFECT. This Agreement binds and benefits the parties and their successors and assigns. 20. ELECTRONIC SIGNATURES; EXECUTION IN COUNTERPARTS. The electronic signature of the parties to this Agreement shall be as valid as an original signature of such party and shall be effective to bind the parties hereto. For purposes hereof, (i) "electronic signature" means a manually signed original signature that is then transmitted by electronic means; and (ii) "transmitted by electronic means" means sent in the form of a facsimile or sent via the internet as a portable document format ("pdf ') or other replicating image attached to an electronic mail or internet message. 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. 21. Severability. If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions herein will remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the agreements contemplated herein are not affected in any manner materially adverse to any Party. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to affect the original intent of the Parties. 22. Governing Law. The provisions of this Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. 23. Partnership or Joint Venture. Nothing in this Agreement shall be construed or interpreted as creating a partnership or joint venture between the Parties relative to the Property. 8 MN325-51-924464.v7 24. 1031 Exchange. Buyer herein acknowledges that it is the intention of Seller to conduct an IRC Section 1031 Tax -Deferred Exchange and that the Seller's rights under this Agreement shall be assigned to Commercial Partners Exchange Company, LLC, to facilitate such exchange. However, any warranties that may be expressed in this Agreement shall remain and be enforceable between Seller and Buyer. Buyer agrees to cooperate with Seller and/or Seller's assigns in a manner necessary to enable the Seller to initiate said exchange at no additional cost or liability. This Agreement is part of an integrated, interdependent, mutual and reciprocal plan intended to effectuate an exchange by Seller of a like -kind real properties pursuant to and in accordance with the provisions of Section 1031 of the Internal Revenue Code. Buyer shall execute and provide to Seller prior to closing, an acknowledgement that Buyer has received written notice of the assignment of Seller's rights under this Agreement to Commercial Partners Exchange Company, LLC. 25. Time is of the Essence. Time is of the essence for all provisions of this Agreement. 9 MN325-51-924464.v7 IN WITNESS WHEREOF, the undersigned have executed this Agreement on the date and year above. Buyer: Seller: City of Monticello Economic Development Authority By: By: Its: President By: Its: Executive Director Civil Engineering Site Design, LLC 10 MN325-51-924464.v7 EXHIBIT A Legal Description of Property The West 24 feet of Lot 12, Block 34, City of Monticello, according to the plat thereof on file or of record in the County Recorder, Wright County, Minnesota. PID 155-010-034120 A-1 MN325-51-924464.v7 EXHIBIT B EDA LEASE B-1 MN325-51-924464.v7 EXHIBIT C CITY LEASE C-1 MN325-51-924464.v7 PROPERTY MANAGEMENT AND LEASE AGREEMENT THIS PROPERTY MANAGEMENT AND LEASE AGREEMENT ("Agreement") is entered into and made as of the day of , 2024 by and between the CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and politic and political subdivision of the State of Minnesota ("Landlord"), and CIVIL ENGINEERING SITE DESIGN, LLC, a Minnesota limited liability company ("Tenant"). The parties mutually agree as follows: 1. LEASED PREMISES. Subject to the terms and conditions of this Agreement and the Purchase Agreement between Landlord and the Tenant dated as of , 2024 (the "Purchase Agreement"), Landlord leases to Tenant and Tenant rents from Landlord, the commercial building located on the property at 118 East Broadway Street in the City of Monticello, Minnesota (the "City") and legally described in the attached Exhibit A (the "Property"), currently occupied by the Tenant prior to the acquisition of the Property by Landlord, hereinafter referred to as the "Leased Premises". 2. TERM. The term of this Agreement (the "Term") shall be for a period of 12 months, commencing on the date hereof (the "Commencement Date"), and ending midnight on , 2025 (the "Expiration Date"), unless this Agreement shall be earlier terminated or extended as hereinafter provided. 3. RENT. No rent shall be payable by Tenant to Landlord, provided that Tenant shall pay the amounts described in Paragraph 3(a) with respect to the Leased Premises, all of which are hereinafter collectively referred to as the "Charges," and the obligation of the Tenant to pay said Charges through the Expiration Date or the earlier or extended termination, shall survive the termination of this Agreement. Tenant and Landlord have entered into an Escrow Agreement of even date herewith (the "Escrow Agreement") whereby Tenant deposited the amount of Three Thousand Dollars ($3,000) into escrow (the "Escrow Funds") to secure Tenant's obligation to pay real estate taxes under this Agreement. Landlord shall pay the real estate taxes from the Escrow Funds. Following termination of this Agreement, absent Tenant default, any Escrow Funds remaining shall be refunded to Tenant pursuant to the terms of this Agreement and the Escrow Agreement. (a) Charges. Except as set forth in this Agreement, and starting on the Commencement Date, Tenant shall be solely responsible for paying the operating costs of the Leased Premises under the terms of this Agreement (as further described in this Agreement) including, but not limited to, Operating Charges described in Paragraph 4(b) of this Agreement, Utility Charges described in Paragraph 5(a) of this Agreement, Taxes subject to the terms and conditions of Paragraph 6 of this Agreement, Insurance subject to the terms and conditions of Paragraphs 12 and 13 of this Agreement, and any other direct out-of-pocket costs and expenses of routine maintenance, repair, and care of the Leased Premises attributable to the activities of Tenant. The parties agree that Tenant shall undertake the maintenance, operations, and repair of the Leased Premises during the Term and shall pay directly, when possible, all costs and fees incurred with respect to such maintenance, operation, and repair. MN325\51\924532.v6 (b) Service Charge. Tenant's failure to make any monetary payment required of Tenant hereunder by the due date therefor shall bear interest as set forth in the City's adopted fee schedule. 4. OPERATING CHARGES. (a) Tenant shall pay to Landlord, as a portion of the Charges, Operating Charges as hereinafter defined. Within fifteen (15) days after the first day of each month during the Term of this Agreement, Landlord shall notify Tenant of the actual Operating Charges incurred during the immediately preceding month, and shall provide Tenant a statement thereof in reasonable detail. Tenant shall pay to Landlord the actual amount of the Operating Charges as shown on such statement by the stated due date, or shall provide to Landlord, in writing, any objection to the statement of Operating Charges and the reason for such objection. Thereupon, Landlord shall promptly provide such additional documentation of Operating Charges due and payable by Tenant as Tenant may reasonably request. Tenant's obligation to pay Operating Charges through the Termination Date shall survive the termination of this Agreement. Operating Charges are actual and direct out-of-pocket expenses incurred by Landlord as described in Paragraph 4(b). (b) "Operating Charges" as used herein shall mean all direct sums expended or obligations incurred by Landlord and not already handled and paid for by Tenant directly with respect to the Leased Premises, whether or not now foreseen, determined on an accrual basis (including reasonably foreseeable expenditures not occurring annually), including, but not limited to, the actual costs of third party contractors and/or other third party entities providing services; inspection fees; and reasonable legal fees incurred in enforcement of the maintenance and operation of the Leased Premises; materials and supplies, which materials and supplies were used in or charges were incurred in maintenance and operation of the Leased Premises; replacements respecting the Leased Premises, including costs of materials, supplies, tools and equipment used in connection therewith, which are necessary as a result of Tenant's use; costs incurred in connection with the operation, maintenance, repair, inspection and servicing (including maintenance contracts, if any) of mechanical equipment and the cost of materials, supplies, tools and equipment used in connection therewith; parking lot lighting; and all other expenses and costs of every kind and nature necessary or desirable to be incurred for the purpose of operating and maintaining of the Leased Premises, which Tenant is obligated to pay under the terms of this Agreement, due to the failure of Tenant to pay such costs when due. Operating Charges expressly excludes (1) any premiums paid by Landlord for premises liability or property insurance coverage; and (2) the repair or replacement of structural components of the Leased Premises in an amount over $1,000, subject to the provisions of Paragraph 11(c). 5. UTILITIES AND SERVICES. (a) Utility Charges. Tenant shall be solely and exclusively responsible for the actual cost of the following utilities and any other building services necessary for the Leased Premises as may be required by law or directed by governmental authority ("Utility Charges") which shall be paid by Tenant directly to the applicable service provider: i. Cost of all heating, ventilation and air conditioning of the Leased Premises including electrical and gas; MN325\51\924532.v6 ii. Cost of all electricity for lighting and operating business machines and other equipment in the Leased Premises; iii. Cost of all water and sewer; iv. Cost of internet services; V. Cost of security system, if applicable; vi. Costs of refuse and recycling services; vii. Cost of all replacement of all lamps, bulbs, starters, and ballasts used in the Leased Premises. (b) Additional Services. If Tenant requests any other utilities or building services in addition to those identified above, the cost thereof shall be borne by Tenant, who shall pay such costs of services directly to the applicable service provider. (c) Interruption of Services. Tenant understands, acknowledges and agrees that any one or more of the utilities or other building services identified above may be interrupted by reason of accident, emergency or other causes beyond Landlord's control, or may be discontinued or diminished temporarily by Landlord or other persons until certain repairs, alterations or improvements can be made; that Landlord does not represent or warrant the uninterrupted availability of such utilities or building services; and that any such interruption shall not be deemed an eviction or disturbance of Tenant's right to possession, occupancy and use of the Leased Premises or any part thereof, or render Landlord liable to Tenant in damages by abatement of rent or otherwise, or relieve Tenant from the obligation to perform its covenants under this Agreement. Notwithstanding the foregoing to the contrary, in the event Tenant is unable to occupy the Leased Premises due to an interruption of services, Tenant shall not be responsible for payment of those Utility Charges itemized at section 5(a) i, ii, and iii above that are attributable to the period of time Tenant was unable to occupy the Leased Premises. 6. TAXES. Charges payable by Tenant include Taxes. "Taxes" shall mean all real estate taxes levied or assessed upon or with respect to the land or improvements comprising the Property, including the Leased Premises. Tenant's responsibility to pay Taxes shall be prorated to the term of occupancy. Prepaid tax escrow for the period beyond the term of occupancy shall be refunded to the Tenant pursuant to the Escrow Agreement. 7. LEASEHOLD IMPROVEMENTS. Tenant shall not be authorized to make any leasehold improvements to the Leased Premises ("Tenant Improvements") during the Term of this Agreement. 8. USE OF THE LEASED PREMISES. (a) Specific Use / "As is" Basis. The Leased Premises shall be occupied and used exclusively for Tenant's business activities of civil engineering and site design for commercial, industrial and residential development projects and related services incidental thereto, and shall not be used for any other purpose, without written permission of the Landlord. Tenant hereby accepts MN325\51\924532.v6 the Leased Premises on an "as is" basis without any representations or warranties by Landlord as to its fitness for Tenant's business or use or for any other particular purpose except as expressly set forth herein. (b) Covenants Regarding Use. In connection with its use of the Leased Premises, Tenant agrees to do the following: (i) Tenant shall use the Leased Premises and conduct its business thereon in a safe, careful, reputable, and lawful manner; shall keep and maintain the Leased Premises in as good a condition as they were when Tenant first took possession thereof, ordinary wear and tear excepted, and subject to Paragraph 11(c), shall make all necessary repairs to the Leased Premises other than those which Landlord is obligated to make as provided elsewhere herein. (ii) Tenant shall not commit, nor allow to be committed, in, on or about the Leased Premises any act of waste, or use or permit to be used on the Leased Premises any hazardous substance, equipment or other thing which might cause injury to person or property or increase the danger of fire or other casualty in, on or about the Leased Premises; permit any objectionable or offensive noise or odors to be emitted from the Leased Premises; or do anything, or permit anything to be done, which would, in Landlord's reasonable opinion, disturb or tend to disturb the owners or tenants of any adjacent buildings. Tenant will be solely liable for and will defend, indemnify, and hold Landlord, its officials, employees, contractors, and agents harmless from and against any and all claims, costs, and liabilities, including reasonable attorneys' fees and costs, arising out of or in connection with Tenant's use, storage, handling, transportation, or disposal of hazardous substances on, at, or under the Leased Premises, including cleanup or restoration of the Leased Premises. (iii) Tenant shall not use the Leased Premises, nor allow the Leased Premises to be used, for any purpose or in any manner which would invalidate any policy of insurance now or hereafter carried on the Leased Premises or directly increase the rate of premiums payable on any such insurance policy by ten (10) percent or more. Should Tenant fail to comply with this covenant, Landlord may, at its option, require Tenant to stop engaging in such activity or to reimburse Landlord for any increase in premiums charged during the term of this Agreement on the insurance carried by Landlord on the Leased Premises and attributable to the use being made of the Leased Premises by Tenant. (c) Compliance with Laws. Tenant shall not use or permit the use of any part of the Leased Premises for any purpose prohibited by law. 9. ASSIGNMENT AND SUBLETTING. Tenant may not assign or otherwise transfer its interest in this Agreement or sublet the Leased Premises or any part thereof without Landlord's written consent, at Landlord's sole discretion. 10. SIGNS. Tenant shall not inscribe, paint, affix or display any new or additional signs, advertisements, or notices on the Leased Premises or in the Leased Premises and visible 4 MN325\51\924532.v6 from outside the Leased Premises, except for such signage, advertisements or notices as Landlord at Landlord's discretion specifically permits by written consent. Tenant's current signage on the Property at commencement of this Agreement is expressly authorized. All signs shall comply with all ordinances, rules and regulations of the Landlord. 11. REPAIRS, MAINTENANCE, ALTERATIONS, IMPROVEMENTS AND FIXTURES. (a) Landlord shall at its own expense keep in good order, safe condition and repair the structural parts of the building, including maintenance of exterior walls, windows/glass, exterior doors, roof, and foundation, in which the leased premises are located, except where repairs to the structural parts are required due to the fault or negligence of the Tenant, its employees or invitees, in which case the Tenant shall be responsible. (b) Landlord shall, at its expense, make any necessary repairs to the Leased Premises including the heating, air conditioning, electrical and plumbing equipment and facilities servicing the Leased Premises. Tenant shall, at is expense, make any necessary repairs which may be required by reason of acts, or negligence of Tenant, its agents, employees, customers or invitees, or the particular nature of Tenant's use of the Leased Premises including the heating, air conditioning, electrical and plumbing equipment and facilities servicing the Leased Premises, ordinary wear and tear expected. Tenant shall be responsible for repairing any damage to the Leased Premises caused by the installation or moving of Tenant's furniture, equipment, and personal property. (c) If a repair deemed by Tenant to be necessary to the continued occupancy of the Leased Premises is estimated to exceed $10,000, the Landlord is not obligated to make such repair, and shall not be liable for the cost of such repair, on the condition that Landlord notifies the Tenant in writing that Landlord declines to make such repair. If Landlord provides such notice to the Tenant, the Tenant shall vacate the Leased Premises as soon as practicable after receiving such notice, but no later than 30 days after giving such notice. (d) Except as otherwise provided herein, in the event that, at the request of Tenant, Landlord, at its option, performs any maintenance, repairs or servicing of the Leased Premises, which is the obligation of Tenant hereunder, then Tenant shall pay Landlord directly therefor as Operating Charges. In the event there is any warranty in effect in connection with repairs or replacements made by Tenant and if Landlord is unwilling to pursue the warranty claim, then Tenant shall have the option to pursue the warranty claim in connection with the repair and/or replacement made by Tenant. (e) Tenant shall be responsible for the general maintenance of the walks, driveways, parking lots, and landscaped areas adjacent to the Leased Premises including the removal of snow and all costs associated therewith. (f) Upon the Expiration Date or earlier or extended termination of this Agreement, Tenant shall surrender the Leased Premises to Landlord broom clean and in good condition and repair, normal wear and tear excepted. The parties shall meet to create a checklist of the condition of the Property to be approved by signature of both parties within three (3) business days of the Commencement Date, which will be recognized and referenced as the starting condition for 5 MN325\51\924532.v6 purposes of the release of Tenant's Escrow Funds. (g) Tenant shall, at Tenant's expense, promptly repair all damage caused by the Tenant to the Leased Premises and replace or repair all damaged or broken fixtures and appurtenances with materials equal in quality and class to the original materials, under the supervision and subject to the approval of Landlord, and within any reasonable period of time specified by Landlord. If Tenant fails to do so, Landlord may, but need not make such repairs and replacements, and Tenant shall pay Landlord the cost thereof, including Landlord's Costs, forthwith upon being billed for same. As used in this Agreement, the term "Landlord's Costs" shall mean five percent (5%) of any costs or expenses paid by Landlord, in order to reimburse Landlord for all overhead, general conditions, fees and other costs and expenses arising from Landlord's actions or involvement. (h) Trade fixtures installed on the Leased Premises by Tenant, a list of which is attached as Exhibit B (the "Trade Fixtures") shall be removed by Tenant on the Expiration Date or upon earlier termination of this Agreement. Tenant agrees that Tenant will bear the cost of such removal, and further that Tenant will repair at its own expense any and all damage to the Leased Premises resulting from the original installation of and subsequent removal of such Trade Fixtures. If Tenant fails so to remove any and all such Trade Fixtures from the Leased Premises on the Expiration Date or upon earlier termination of this Agreement, Landlord may have same removed and the Leased Premises repaired to their prior condition, all at Tenant's expense. (i) When required by law, the Landlord reserves the right to make, at any time or times, at its own expense, repairs, alterations, additions, and improvements, structural or otherwise, in or to the Leased Premises, and to perform any acts related to the safety, protection or preservation thereof, and during such operations to take into and through the Leased Premises all material and equipment required and to close or temporarily suspend operation of entrances, doors, corridors, or other facilities, provided that Landlord shall cause as little inconvenience or annoyance to Tenant as is reasonably necessary in the circumstances. 12. FIRE OR OTHER CASUALTY; CASUALTY INSURANCE. (a) Substantial Destruction of the Leased Premises. If the Leased Premises should be substantially destroyed (which, as used herein, means destruction or damage to at least sixty percent (60%) of the Leased Premises) by fire or other casualty, the Landlord will terminate this Agreement by giving written notice thereof to the Tenant within thirty (30) days of such casualty. In such event, the Charges shall be apportioned to and shall cease as of the date of such casualty. Landlord shall have no obligation to perform any repairs to the Leased Premises in the event of fire or other casualty. Landlord shall provide replacement office space for Tenant's use of equivalent size and features acceptable to Tenant at no cost to Tenant for the remainder of the Term as specified in this Lease. (b) Property and Casualty Insurance. Without limiting Tenant's liability under this Agreement, Landlord shall procure and maintain a policy or policies of property and public liability insurance with minimum coverage amounts of at least $500,000 per occurrence and $1,000,000 general aggregate, insuring against injury or death to persons and " all risk" hazard insurance for loss or damage to the Leased Premises; provided, however, that Landlord shall not be responsible for, and shall not be obligated to insure against, any loss or damage to personal MN325\51\924532.v6 property (including, but not limited to, any furniture, machinery, equipment, goods, or supplies) of Tenant or which Tenant may have on the Leased Premises or any Trade Fixtures or any additional improvements which Tenant may construct on the Leased Premises. If Tenant's operation or any alterations or improvements made by Tenant pursuant to the provisions of this Agreement directly result in an increase in the premiums charged of ten (10) percent or more during the Term on the casualty insurance carried by Landlord on the Leased Premises, then the cost of such increase in insurance premiums shall be borne by Tenant as an Operating Charge. Tenant shall, at its expense during the term of this Agreement, keep in full force and effect a policy or policies of rental insurance with an insurance company licensed to do business in the State of Minnesota, covering its personal property, furniture, machinery, equipment, supplies, stored goods, Trade Fixtures, or any additional improvements which Tenant may construct on the Leased Premises which coverage shall be no less than eighty percent (80%) of replacement value. Tenant shall furnish Landlord with a certificate evidencing that such coverages are in full force and effect. (c) Waiver of Subrogation. Landlord and Tenant hereby release each other and each other's employees, agents, customers, and invitees from any and all liability for any loss, damage or injury to property occurring in, on, or about or to the Leased Premises, improvements to the Leased Premises or personal property within the Leased Premises, by reason of fire or other casualty which are covered by applicable standard fire and extended coverage insurance policies. Because the provisions of this paragraph will preclude the assignment of any claim mentioned herein by way of subrogation or otherwise to an insurance company or any other person, each party to this Agreement shall give to each insurance company which has issued to it one or more policies of fire and extended coverage insurance notice of the terms of the mutual releases contained in this paragraph, and have such insurance policies properly endorsed, if necessary, to prevent the invalidation of insurance coverages by reason of the mutual releases contained in this paragraph. 13. LIABILITY AND INSURANCE. Tenant shall obtain renters insurance and be responsible for negligence of Tenant. Landlord and its officers, agents, servants, and employees shall not be liable for any damage to person, property, or business resulting from negligence of Tenant. Landlord shall obtain property insurance and be responsible for negligence of Landlord. Tenant and its partners, shareholders, affiliates, officers, agents, servants and employees shall not be liable for any damage to person, property, or business resulting from negligence of Landlord. 14. LIENS. Tenant shall not cause or allow any mechanic's lien or other lien to be filed against the Leased Premises or against other property of Landlord (whether or not such lien is valid or enforceable as such). In the event any mechanic's lien shall at any time be filed against the Leased Premises by reason of work, labor, services, or materials performed or furnished to Tenant or to anyone holding the Leased Premises through or under Tenant, Tenant shall forthwith cause the same to be discharged of record. If Tenant shall fail to cause such lien forthwith to be discharged within sixty (60) days after being notified of the filing thereof, then, in addition to any other right or remedy of Landlord, Landlord may, but shall not be obligated to, discharge the same by paying the amount claimed to be due, or by bonding, and the amount so paid by Landlord and all costs and expenses, including reasonable attorneys' fees incurred by Landlord in procuring the discharge of such lien, 7 MN325\51\924532.v6 shall be due and payable in full by Tenant to Landlord on demand. 15. RENTAL, PERSONAL PROPERTY AND OTHER TAXES. Tenant shall pay before delinquency any and all sales, gross income, rental, business occupation, or other taxes, levied or imposed upon Tenant's business operation in the Leased Premises and any personal property or similar taxes levied or imposed upon Tenant's Trade Fixtures, leasehold improvements or personal property located within the Leased Premises. In the event any such taxes are charged to the account of, or are levied or imposed upon the property of Landlord, Tenant shall reimburse Landlord for the same. 16. DEFAULTS AND REMEDIES. (a) Default by Tenant. The occurrence of any one or more of the following events shall be an event of default ("Event of Default") and breach of this Agreement by Tenant: (i) Tenant shall fail to pay any uncontested monthly installment of Charges set forth in this Agreement within twenty-one (21) days after the same shall be due and payable. (ii) Tenant shall fail to perform or observe any term, condition, covenant or obligation required to be performed or observed by it under this Agreement for a period of thirty (30) days after notice thereof from Landlord; provided, however, that if the term, condition, covenant or obligation to be performed by Tenant is of such nature that the same cannot reasonably be performed within such thirty -day period, such default shall be deemed to have been cured if Tenant commences such performance within said thirty -day period and thereafter diligently undertakes to complete the same, but in any event completes cure within ninety (90) days after notices from Landlord. (iii) Tenant vacation or abandonment or fail to occupy for a period of ninety (90) days, the Leased Premises or any substantial portion thereof; (iv) Tenant causes or permits a hazardous condition to exist on the Leased Premises and fails to cure such condition immediately after notice thereof from Landlord. (b) Remedies of Landlord. Upon the occurrence of any Event of Default set forth in this Agreement, Landlord shall have the following rights and remedies, in addition to those allowed by law, any one or more of which may be exercised without further notice to or demand upon Tenant: (i) Landlord may re-enter the Leased Premises and cure any Event of Default of Tenant, in which event Tenant shall reimburse Landlord for any costs and expenses which Landlord may incur to cure such Event of Default; and (ii) Landlord may, in accordance with law, re-enter the Leased Premises and dispossess Tenant or any other occupants of the Leased Premises by summary proceedings, ejectment, or otherwise, and may remove their effects, without MN325\51\924532.v6 prejudice to any other remedy which Landlord may have for possession or arrearages in rent. Any such right of termination of Landlord contained herein shall continue during the Term of this Agreement. (c) Default by Landlord and Remedies of Tenant. Landlord shall not be deemed to be in default under this Agreement until Tenant has given Landlord written notice specifying the nature of the Event of Default and Landlord does not cure such Event of Default within thirty (30) days after receipt of such notice or within such reasonable time thereafter as may be necessary to cure such Event of Default where such default is of such a character as to reasonably require more than thirty (30) days to cure. Landlord failure to cure an Event of Default under this Agreement shall entitle Tenant to terminate the Agreement immediately, and pursue claims for any damages caused Tenant by Landlord's default hereunder, in addition to such other rights and remedies as may exist under applicable law. (d) Waiver of Covenants. Failure of Landlord to insist, in any one or more instances, upon strict performance of any term, covenant, condition, or option of this Agreement, or to exercise any option herein contained, shall not be construed as a waiver, or a relinquishment for the future, of such term, covenant, condition, or option, but the same shall continue and remain in full force and effect. The receipt by Landlord of Charges with knowledge of breach in any of the terms, covenants, conditions, or options, of any of this Agreement to be kept or performed by Tenant shall not be deemed a waiver of such breach, and Landlord, shall not be deemed to have waived any provision of this Agreement unless expressed in writing and signed by Landlord. (e) Attorney If Tenant defaults in the performance or observance of any of the terms, conditions, covenants, or obligations contained in this Agreement and Landlord placed the enforcement of all or any part of this Agreement, the collection of any Charges due or to become due or the recovery of possession of the Leased Premises in the hands of an attorney, or if Landlord incurs any fees or out-of-pocket costs in any litigation, negotiation or transaction in which Tenant causes Landlord (without Landlord's fault) to be involved or concerned, Tenant agrees to reimburse Landlord for the reasonable attorney's fees and costs incurred thereby, whether or not suit is actually filed. This provision does not apply if Tenant default results from negligence of Landlord. 17. ACCESS TO THE LEASED PREMISES. Landlord, its employees, and agents of the Leased Premises shall have the right after reasonable notice and during regular business hours unless another entry time has been approved by Tenant to enter any part of the Leased Premises for the purposes of examining or inspecting the same and for making such repairs or alterations to the Leased Premises as Landlord may deem necessary or desirable. If representatives of Tenant shall not be present to open and permit such entry into the Leased Premises at any time when such entry is necessary or permitted hereunder, so long as notice has been given, Landlord and its employees and agents may enter the Leased Premises by means of a master key or otherwise. Landlord shall incur no liability to Tenant for such entry, nor shall such entry constitute an eviction of Tenant or a termination of this Agreement, nor entitle Tenant to any abatement of payments due and payable under this Agreement. 9 MN325\51\924532.v6 18. TERMINATION. (a) Landlord Termination. Landlord may terminate this Agreement upon ninety (90) days' written notice for reason of Tenant default as authorized under the provisions of this Agreement. This provision does not apply if Tenant default results from negligence of Landlord. (b) Tenant Termination. In addition to any other provisions for termination under this Agreement, Tenant may terminate this Agreement upon thirty (30) days' written notice. 19. SURRENDER OF LEASED PREMISES. Upon the Expiration Date or earlier termination of this Agreement unless modified per Section 20, Tenant shall surrender the Leased Premises to Landlord (the "Vacation"), together with all keys, access cards, alterations, improvements, and other property as provided elsewhere herein, in broom -clean condition and in good order, condition and repair, except for ordinary wear and tear and damage which Tenant is not obligated to repair. Within Twenty -One (21) days of the Vacation, Landlord shall either cause release of Tenant's Escrow Funds in full or provide Tenant with a Notification pursuant to the Escrow Agreement. If Landlord does not release Tenant's Escrow Funds in full, Tenant shall be allowed a reasonable opportunity, but no more than thirty (30) days, to cure any claimed defaults. Upon such Vacation, Tenant's trade fixtures, furniture, and equipment shall remain Tenant's property, and if Tenant shall not then be in default under this Agreement, Tenant shall have the right to remove the same prior to the expiration or earlier termination of this Agreement. Tenant shall promptly repair any damage caused by any such removal and shall restore the Leased Premises to the condition existing prior to the installation of the items so removed. Any of Tenant's trade fixtures, furniture, or equipment not so removed shall be considered abandoned and may be retained by Landlord or be destroyed. 20. HOLDING OVER. (a) No holding over by Tenant is permitted after the Expiration Date or earlier termination of this Agreement unless the parties negotiate and execute a new lease mutually acceptable to Landlord and Tenant no later than thirty (30) days prior to the Expiration Date (the "New Lease"). The New Lease and the benefit to the Tenant therein may qualify as a "business subsidy" within the meaning of Minnesota Statutes, Sections 116J.993 to 116J.995 (the "Business Subsidy Act") and may require a public hearing and/or a business subsidy agreement, all pursuant to the Business Subsidy Act. (b) If Tenant remains in possession of the Leased Premises without the consent of Landlord after the Expiration Date or earlier termination of this Agreement, Tenant shall be deemed to hold the Leased Premises as a tenant from month to month, terminable on thirty (30) days' notice given by one party to the other and subject to all of the terms, conditions, covenants, and provisions of this Agreement (which shall be applicable during the holdover period), except that if such holdover period by Tenant extends beyond June 30, 2025, Tenant shall pay to Landlord costs as defined in the New Lease. 21. QUIET ENJOYMENT. Except as may be provided in this Agreement to the extent that it may be applicable, if and so long as Tenant performs or observes all of the terms, conditions, covenants, and obligations of this Agreement required to be performed or observed 10 MN325\51\924532.v6 by it hereunder, Tenant shall at all times during the term hereof have the peaceable and quiet enjoyment, possession, occupancy and use of the Leased Premises without any interference from Landlord or any person or persons claiming the Leased Premises by, through, or under Landlord, subject to any mortgages, underlying leases, or other matters of record to which this Agreement is or may become subject. 22. NOTICE AND PLACE OF PAYMENT. (a) All payments required to be made by Tenant to Landlord shall be delivered or mailed to Tenant at the address set forth in Paragraph 22(b) hereof or at any other address within the United States as Tenant may specify from time to time by written notice given to Landlord. (b) Any notice, demand, or request required or permitted to be given under this Agreement or by law shall be deemed to have been given if reduced to writing and mailed by Registered or Certified mail, postage prepaid, to the party who is to receive such notice, demand, or request at the address set forth below or at such other address as Landlord or Tenant may specify from time to time by written notice. When delivering such notice, demand, or request shall be deemed to have been given as of the date it was so delivered or mailed. Landlord: City of Monticello Economic Development Authority 505 Walnut Street Monticello, MN 55362 Attention: Executive Director Tenant: Civil Engineering Site Design, LLC P.O. Box 566 Monticello, MN 55362 Attn: Scott Dahlke 23. MISCELLANEOUS GENERAL PROVISIONS. (a) Memorandum of Agreement. If requested by either party, a Memorandum of Agreement, containing the information required by law concerning this Agreement shall be recorded in Wright County, Minnesota. (b) Applicable Law. This Agreement and all matters pertinent thereto shall be construed and enforced in accordance with the laws of the State of Minnesota. (c) Entire Agreement. This Agreement, including all Exhibits and Addenda, constitutes the entire agreement between the parties hereto and may not be modified except by an instrument in writing executed by the parties hereto. (d) BindingEffect. ffect. This Agreement and the respective rights and obligations of the parties hereto shall inure to the benefit of and be binding upon the successors and assigns of the parties hereto as well as the parties themselves; provided, however, that Landlord, its successors and assigns shall be obligated to perform Landlord's covenants under this Agreement only during and in respect of their successive periods as Landlord during the term of this Agreement. 11 MN325\51\924532.v6 (e) Severability. If any provision of this Agreement shall be held to be invalid, void, or unenforceable, the remaining provisions hereof shall not be effected or impaired, and such remaining provisions shall remain in full force and effect. (f) No Partnership. Landlord shall not, by virtue of the execution of this Agreement or the leasing of the Leased Premises to Tenant, become or be deemed a partner of Tenant in the conduct of Tenant's business on the Leased Premises or otherwise. (g) Limitation of Landlord's Personal Liability. Tenant specifically agrees to look solely to Landlord's interest in the Leased Premises for the recovery of any judgment against Landlord, it being agreed that Landlord shall never be personally liable for any such judgment. (h) Time of Essence. Time is of the essence of this Agreement and each of its provisions. (i) Eminent Domain. If the whole or any part of the Leased Premises shall be taken by any public authority under the power of eminent domain, Tenant shall have no claim to, nor shall Tenant be entitled to, any portion of any award, for damages or otherwise. In the event only a portion of the Leased Premises is taken, this Agreement shall terminate as to the part taken, and the Charges shall be adjusted for the remainder of the Leased Premises so that Tenant shall be required to pay for the balance of the term that portion of the Charges which the value of the part of the Leased Premises remaining after condemnation bears to the value of the Leased Premises immediately prior to the date of condemnation. The Charges shall be apportioned as asforesaid by agreement between the parties or by legal proceedings, but pending such determination, Tenant shall pay at the time and in the manner above provided the Charges herein required to be paid by Tenant, without deduction, and upon such determination, Tenant shall be entitled to credit for any excess Charges paid. If, however, by reason of condemnation, there is not sufficient space left in the Leased Premises for Tenant to reasonably conduct business, this Agreement shall terminate. All though all damages in the event of condemnation belong to Landlord whether awarded as compensation for diminution in value of the leasehold or to the fee of the Leased Premises, nothing herein shall be construed to prevent Tenant to claim and recover from the condemning authority such compensation as may be separately awarded or recoverable by Tenant in Tenant's own right for its leasehold interest. (Signature pages follow.) 12 MN325\51\924532.v6 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. LANDLORD: CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY By: Its: President By: Its: Executive Director TENANT: CIVIL ENGINEERING SITE DESIGN, LLC By: Its: 13 MN325\51\924532.v6 EXHIBIT A PROPERTY The West 24 feet of Lot 12, Block 34, City of Monticello, according to the plat thereof on file or of record in the County Recorder, Wright County, Minnesota. PID 155-010-034120 A-1 MN325\51\924532.v6 EXHIBIT B TRADE FIXTURES OFFICE FURNITURE AND CUBLICES AIR CONDITIONING SPLIT SYSTEM FIRE EXTINGUISHERS SECURITY SYSTEM PHONE SYSTEM B-1 MN325\51\924532.v6 ESCROW AGREEMENT THIS ESCROW AGREEMENT (this "Agreement"), dated May _, 2024, is by and between Civil Engineering Site Design, LLC, a Minnesota limited liability company (the "Seller") and the City of Monticello Economic Development Authority, a public body politic and corporate under the laws of the State of Minnesota (the "Buyer"). Recital c A. The Seller and the Buyer entered into a Purchase Agreement ("Purchase Agreement"), dated May _, 2024, pursuant to which the Seller agreed to sell the property located at 118 East Broadway Street in the City of Monticello, Minnesota and legally described in Exhibit A of the Purchase Agreement (the "Property") to the Buyer for $665,000.00 (the "Purchase Price"). B. Following the sale of the Property, the Seller is leasing the Property from the Buyer pursuant to a certain Property Management and Lease Agreement, by and between the Buyer and the Seller, dated May _, 2024 (the "Lease"). C. As a condition of the Lease, the Seller must enter into this Agreement and must deposit into escrow with the Buyer a portion of the Purchase Price in order to secure the Seller's obligation to pay real estate taxes for the term of the Lease (the "Term"). Agreement NOW, THEREFORE, the parties hereto agree as follows: 1. Upon closing and execution of this Agreement, the Seller agrees to deposit into escrow the sum of $3,000.00 (the "Escrowed Funds") from the Purchase Price, to be held by the Buyer in a non -interest bearing account. 2. During the Term, the Buyer shall pay all real estate taxes on the Property from the Escrowed Funds. 3. Following the Term, absent Seller default, any Escrowed Funds remaining shall be refunded to the Seller pursuant to the terms of this Agreement and the Lease. 4. Notices to be sent to the parties to this Agreement shall be sent by mail or personal delivery to: A. If to Seller: Civil Engineering Site Design, LLC P.O. Box 566 Monticello, MN 55362 Attn: Scott Dahlke B. If to the Buyer: City of Monticello Economic Development Authority 505 Walnut Street Monticello, MN 55362 Attention: Executive Director This Agreement may be executed in separate counterparts together which form one document. IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year written above. MN325\51\949990.v2 SELLER CIVIL ENGINEERING SITE DESIGN, LLC By: Its: BUYER CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY By: Its: President By: Its: Executive Director MN325\51\949990.v2 #N.Beacon'' Wright County, MN Overview Legend Highways Interstate State Hwy US Hwy City/Township Limits ❑c ❑t ❑ Parcels Torrens Parcel ID 155010034120 Alternate n/a Owner CIVIL ENGINEERING SITE Sec/Twp/Rng 11-121-025 ID Address DESIGN LLC Property 118 BROADWAY Class 233 - 3A COMMERCIAL LAND AND 118 E BROADWAY ST PO BOX Address E BUILDING 566 MONTICELLO Acreage 0.09Acres MONTICELLO, MN 55362 District (1101) CITYOF MONTICELLO-0882 Brief Tax Description SECT-11 TWP-121 RANGE-025 ORIGINAL PLAT MONTICELLO LOT-012 BLOCK-034 W24FT OF LT12 (Note: Not to be used on legal documents) Date created: 5/1/2024 Last Data Uploaded: 5/1/2024 6:20:09 PM Developed by" Schneider OEOS PAT I AL 5/1/24, 5:08 PM Beacon - Wright County, MN - Report: 155010034130 Wright County, MN Summary Parcel ID 155010034130 Property Address 112 BROADWAY E MONTICELLO MN 55362 Sec/Twp/Rng 11-121-025 Brief Tax SECT-11 TWP-121 RANGE-025 ORIGINAL PLAT MONTICELLO Description LOT 013 BLOCK-034 (Note: Not to be used on legal documents) Class 958 - 5E MUNICIPAL -PUBLIC SERVICE -OTHER District (1101) CITY OF MONTICELLO-0882 School District 0882 (Note: Class refers to Assessor's Classification Used For Property Tax Purposes) Sales Adjusted Multi Instr Qualified Sale Sale Sale Sale SS. Parcel Type Sale Sale Date Book Page Type Buyer Seller Price Price eCRV # eCRV Type Rcmd. N WD U 5/15/2012 1- CITY OF MONTGOMERY $181,950 $181,950 118053 1 Improved MONTICELLO FARMS LLC ECONOMIC DEV AUTHORIT N WD U 11/1/2001 1- THOMAS0 RICHARD $188,000 $188,000 75910 1 Improved PALMBY CLINE Valuation Transact S.S. Rjt. Rsn. Num 03- 118053 GOVERNMENT 06-UNUSUAL 75910 FI 2024 Assessment 2023 Assessment 2022 Assessment 2021 Assessment 2020 Assessment + Estimated Land Value $101,700 $84,600 $63,100 $63,100 $63,100 + Estimated Building Value $30,000 $30,000 $30,000 $30,000 $30,000 + Estimated Machinery Value $0 $0 $0 $0 $0 = Total Estimated Market Value $131,700 $114,600 $93,100 $93,100 $93,100 % Change 14.92% 23.09% 0.00% 0.00% 7.26% Taxation 2023 and 2024 taxation data can be found here 2022 Payable 2021 Payable Estimated Market Value $93,100 $93,100 Excluded Value $0 $0 Homestead Exclusion $0 $0 = Taxable Market Value $0 $0 Net Taxes Due $0.00 $0.00 + Special Assessments $0.00 $0.00 = Total Taxes Due $0.00 $0.00 % Change 0.00% 0.00% Sketches https://beacon.schneidercorp.com/Application.aspx?ApplD=187&LaverlD=2505&PageTvpelD=4&PageID=1310&KevValue=155010034130 1/4 5/1/24, 5:08 PM Beacon - Wright County, MN - Report: 155010034130 32' 1 1 1 r # r # r SIZ # _ 10885f _ r # 1 Ione story I # unheated storage 1 # r r # r 32' 1 .�map Amw.sww.,..sdw=amwa...� # r # r # r � 1 ! r # 1 + r # SIz 1 N 15365f # 1 # 1 two story r # reta 11 1 # 1 # # # 1 # r # r # 32' r 32' Bas 1536sf Apartment above retail 3 2' https://beacon.schneidercorp.com/Application.aspx?APPID=187&LaverlD=2505&PageTvpelD=4&PageID=13108KevValue=155010034130 2/4 5/1/24, 5:08 PM Beacon - Wright County, MN - Report: 155010034130 Map No data available for the following modules: Taxes Paid. he information provided on this site is intended for reference purposes only The information is not Contact 11,s Developed b�-, suitable for legal, engineering, or surveying Purposes. Wright County does not guarantee the accuracy Schneider of the information contained herein GEOSPAT IAL I User Privacy Policy 1 GDPR Privacy Notice Last Data Upload: 5/1/2024,1:54:39 PM https://beacon.schneidercorp.com/Application.aspx?APPID=l 87&LayerlD=2505&PaqeTvpelD=4&Paqe[D=1 31 O&KevValue=l 55010034130 4/4 F�� far�_y Cwne�sl,�'P BLOCK 34 0. 0.25 a t� 0.2E At:. 07 .oad way s� 0.25 ac. +s i a 3 ac. ; ,"Not i y.. 4 4� r 1 in=84Ft City 0 EDA 0 Private 1 T 11 o January 2024 Mont1Cell Map Powered By Datafi wsb Planning Commission Agenda: 02/06/23 3A. Consideration of adopting Resolution PC-2024-08, a Resolution Finding that the Proposed Acquisition of Certain Land, a portion of Lot 12, Block 34, Original Plat of Monticello, PID 155010034120. by the City of Monticello Economic Development Authority is Consistent with the City of Monticello Comprehensive Plan (Monticello 2040 Vision + Plan) Prepared by: Meeting Date: Council Date (pending Community Development Director 02/06/2024 Commission action): NA Additional Analysis by: City Administrator, Economic Development Manager, Community & Economic Development Coordinator ALTERNATIVE ACTIONS 1. Motion to adopt Resolution PC-2024-08 finding that the proposed acquisition of certain land, the West 24 feet of Lot 12, Block 34, Original Plat of Monticello, PID 155010034120, by the City of Monticello Economic Development Authority is consistent with the City of Monticello Comprehensive Plan (Monticello 2040 Vision + Plan). 2. Motion of other. REFERENCE AND BACKGROUND The Planning Commission is asked to consider a recommendation finding that the acquisition of parcel 155010034120 by the City of Monticello Economic Development Authority (EDA) is in conformance to the City's Comprehensive Plan. The acquisition of the parcel is intended to facilitate future revitalization and redevelopment efforts on Block 34 in accordance with the City's adopted Downtown Small Area Plan. The subject parcel is approximately .09 acres and is located along Broadway East on Block 34 of the Original Plat of Monticello. The parcel is currently occupied by an existing commercial building that is owned and utilized by an engineering firm. Acquisition of this parcel will expand the opportunity for redevelopment on Block 34 consistent with the Monticello 2040 Vision + Plan and the Downtown Small Area Plan. The parcel is guided "Downtown Mixed Use" within the current Monticello 2040 Vision + Plan. The Comprehensive Plan adopts the Monticello Downtown Small Area Plan as the guiding document for downtown development and land use. The Downtown Small Area Plan establishes a vision for "solidifying Downtown as the heart of the community with a series of coordinated public and private investments." The investments are intended to "create a Planning Commission Agenda: 02/06/23 human -scaled environment that encourages gathering, socializing, visiting and enjoying on a daily basis - throughout the year." Acquisition of the parcel by the EDA is a significant strategic opportunity given the significant existing public ownership of parcels within the block (shown on Exhibit C), including the most recent purchase of property at 216 Pine Street. There are also two active municipal wells on Block 34. The presence of the wells limit development within their immediate vicinity due to water supply regulations, making the acquisition of this parcel key to achieving development density on the block. In summary, the subject property makes quarter block development and beyond a more realistic possibility given the current ownership and existing use configurations on the block. The following statements within the vision for Downtown are relevant to this acquisition: "To promote Broadway Street as a storefront district with restaurants and specialty retail" and to "improve the experience of Pine Street for all users". This parcel's location on the Block 34 corner will support the EDA's efforts to continue the revitalization of Downtown along Broadway and Pine Street consistent with the Downtown vision. The Downtown Small Area Plan further cites the redevelopment of Block 34 as a specific redevelopment opportunity for the City, providing proposed development concepts and frontage configurations. At this time, there is no immediate plan to redevelop the site. Similar to Block 52 located to the northwest of this site, the EDA will work with the development community to accomplish a development in accordance with the Downtown Plan. The EDA has entered into a purchase agreement on the property, which is contingent on the Planning Commission's finding. The Commission's role is to provide a report to the City and EDA on the conformance of the acquisition to the adopted Comprehensive Plan. STAFF RECOMMENDATION City staff supports Alternative #1 above. Acquisition of this property by the City is consistent with the Monticello 2040 Plan's goals for encouraging a revitalized downtown, as it is a key property in supporting redevelopment on Block 34. Revitalization of Block 34 is a critical component of strengthening the Broadway and Pine Street corridors of the Downtown. SUPPORTING DATA A. Resolution PC-2024-08 B. Aerial Site Image C. Public Property Ownership Exhibit, Block 34 D. Monticello Downtown Small Area Plan, Excerpts E. MN Statute 462.356 2 CITY OF MONTICELLO WRIGHT COUNTY, MINNESOTA PLANNING COMMISSION RESOLUTION NO. PC-2024-08 A RESOLUTION FINDING THAT THE PROPOSED ACQUISITION OF CERTAIN LAND FOR REDEVELOPMENT PURPOSES BY THE CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY IS CONSISTENT WITH THE CITY OF MONTICELLO'S COMPREHENSIVE PLAN WHEREAS, the City of Monticello Economic Development Authority (the "Authority") proposes to purchase certain property (the "Property") located at 118 Broadway Street East in the City of Monticello, Minnesota (the "City"), and legally described in Exhibit A attached hereto, for the purposes of redevelopment; and WHEREAS, Minnesota Statutes, Section 462.356, subd. 2, requires the City Planning Commission (the "Planning Commission") to review the proposed acquisition or disposal of publicly owned real property within the City prior to its acquisition or disposal, to determine whether in the opinion of the Planning Commission, such acquisition or disposal is consistent with the City's comprehensive municipal plan (the "Comprehensive Plan"); and WHEREAS, the Planning Commission has reviewed the proposed acquisition of the Property and has determined that the Property is located on Block 34, a key redevelopment site in the Pine Steet subdistrict of the Central Community District, and is designated for mixed use development within the Comprehensive Plan and the City's Downtown Small Area Plan, and that the Authority's purpose is to redevelop the Property consistent with these uses, and that the proposed acquisition is therefore consistent with the Comprehensive Plan. NOW, THEREFORE, BE IT RESOLVED, by the Planning Commission of the City of Monticello, that the acquisition of the Property by the Authority is consistent with the Comprehensive Plan and will promote the successful redevelopment of Block 34 in the City. BE IT FURTHER RESOLVED that this resolution be communicated to the Board of Commissioners of the Authority. ADOPTED this 6th day of February, 2024, by the Monticello Planning Commission. MONTICELLO PLANNING COMMISSION ME ATTEST: Paul Konsor, Chair Angela Schumann, Community Development Director MN325\49\901589.v 1 CITY OF MONTICELLO WRIGHT COUNTY., MINNESOTA PLANNING COMMISSION RESOLUTION NO. PC-2024-08 f_*13,1131r_l Legal Description of the Property The West 24 feet of Lot 12, Block 34, Original Plat of Monticello, County of Wright, State of Minnesota. PID: 155-010-034120 Address: 118 Broadway Street East, Monticello, MN 55362 MN325\49\901589.v1 Subject Parcel p y I, fw C, tom,, �"c � E , '^ J 41C� fAr- 41 U. 6 •ev too Ir. a MY Boundary 1 in = 116 Ft Parcels N CITY Oi A Monticello January 31, 2024 Map Powered By Dated wsb AREAS OF ECONOMIC DEVELOPMENT FOCUS AND INVESTMENT The following areas represent opportunities in the city to help drive economic growth and further support the community's goals related to economic development. 1. Industrial Land: This comprehensive plan designates approximately 1,600 acres of land for industrial uses, including land within the Northwest area, south along Highway 25, and in the Otter Creek Business Park. In 2020, the City completed an industrial feasibility study evaluating these areas in greater detail for their industrial potential. In alignment with the goals and policies of this chapter, the City should actively pursue the development of additional industrial land through business attraction. 2. Oakwood Industrial Park: In alignment with the goals for advancement of living wage employment and intensification of tax base, there is opportunity to convert some parcels within Oakwood Industrial Park to light manufacturing from their current heavy industrial uses and/or convert large areas of unused land or outdoor storage. The City should explore opportunities to use State redevelopment grants and rehabilitation programs for these sites. 3. 1-94 Interchange and Highway 25 Interchange Area: The land uses and parcel configurations in these key intersection areas may not be optimal. The City should be prepared to work with property owners and developers as market opportunities arise to better align these visible areas for future reinvestment and/or redevelopment. 4. Downtown: The Downtown area, identified as Downtown Mixed Use in this plan, represents a focused opportunity area. This includes specific attention on the Walnut Corridor, Block 52, Block 34, and the Northeast corner of Cedar Street and Broadway. Opportunities for improvement include land uses consistent with the Downtown Small Area Plan as well as streetscape, landscape and circulation improvements. 5. Mixed Neighborhood Areas: The City should work to maintain the oldest residential neighborhoods in areas adjacent to the Downtown. Efforts should be made to maintain housing choices, redevelopment where appropriate, the introduction of neighborhood centers and the possible introduction of local specialty retail where appropriate. 6. Highway 25 Corridor South: There are a number of areas and sites that could present reinvestment and/or redevelopment opportunity along Highway 25 south between 1-94 and School Boulevard. The Economic Development Authority (EDA) should continue to work with property owners on their desire to sell, redevelop and reinvest in their sites for commercial development. Downtown Monticello Monticello Crossing Apartments Carlisle Village Townhomes, Source: City of Monticello 128 ECONOMIC DEVELOPMENT IMPLEMENTATION CHART: ECONOMIC DEVELOPMENT SHORT- LONG- ONGOING THEME TERM TERM Policy2.3. Local Strategy2.3.1- Proactively support small • • = • • • Y Partner Collaboration business start-up efforts through funding Work collaboratively with partners and programs made available by the State of Minnesota's Department of Employment, ) i� to foster the attraction of Initiative Foundation and Economic new businesses. Development (DEED) and Wright County Economic Development Partnership. • • • • Policy 2.4. Industrial and Business Strategy2.4.1- Identify funding sources for infrastructure and proactively engage `•r Site Analysis and Availability a variety of partners to help complete the )'' �■� development of a new business park. Identify, plan, and develop new Strategy2.4.2- Develop partnerships to assist industrial/business park areas to ensure site availability for with marketing and promotion of industrial/ industrial projects as existing business park areas. areas fully develop. Strategy2.4.3- Monitor industrial land absorption to help prioritize future site development and readiness. Strategy2.4.4- Investigate opportunities for grants, legislation, transition aid, or bonding funds to support industrial land area development. • Policy3.1: Downtown Small Area Plan Stmtegy3.1.1- Develop and support the appropriate policies, programs, and incentives �``4. A �■� • • that enable the type of development described Use and implement the Downtown in the Downtown Small Area Plan. Small Area Plan as the guiding _ • document to improve, develop and • redevelop Downtown. Strategy3.1.2- Install improvements to the downtown as envisioned in the Walnut Street ,< ((( Corridor Plan. JJJ Strategy3.1.3 - Continue to build a funding base for use in property acquisition and redevelopment efforts in targeted areas. Strategy3.1.4 - Continue to support the facade improvement program and promote to downtown business and property owners. MONTICELLO 2040 VISION + PLAN 225 IMPLEMENTATION CHART: ECONOMIC DEVELOPMENT SHORT- LONG- ONGOING THEME TERM TERM . Policy31 Downtown Small Area Plan Strategy3.1.5- Continue to meet with downtown property owners either in an informal group setting or individually to understand Continue to follow and implement their concerns with traffic, parking, land use, building improvements and reinvestment in their !` the Downtown Small Area Plan. property as well as willingness to sell, partner, price, etc. Strategy 3.1.6 - Encourage continued incorporation of arts as an economic ((( development tool for Downtown Monticello ))) and the community at -large. Strotegy3.1.7- Ensure trail and pedestrian/ cycle connections are considered within the downtown and from the downtown to other ) areas within the community. Strategy3.1.8- Maintain and update annually property availability maps for downtown property or property investment parcels. ' .. Policy4.1: Redevelopment Strategy 4.1.1 - Continue to focus on site control for a potential future targeted redevelopment in Continue to support redevelopment • - - efforts as identified in the N oil Downtown Small Area Plan and - in strategic opportunity areas ' - • # - - throughout the Community. Block 52 as envisioned in the Downtown Small Area Study Plan. �(( )) Strategy4.1.2-Develop and implement marketing of city -owned properties identified,, for redevelopment, including Block 52, 34 and Cedar Street/Broadway site. 1! Strategy4.1.3- Reconnect Walnut Street to River Street in support of redevelopment. Strategy4.1.4 - Use the Block 52 redevelopment project as a catalyst and template for future redevelopment projects in )) ))) the downtown area. 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Consideration Adopting Resolution No. 2024-11 Authorizing an Interfund Loan for advance of certain costs in connection with a Tax Increment Financing (TIF) District in Block 34 related to the acquisition of 118 Broadway East Prepared by: Meeting Date: ® Regular Agenda Item Economic Development Manager 05/08/2024 ❑ Consent Agenda Item Reviewed by: Approved by: Community Development Director, City Administrator Community & Economic Development Coordinator ACTION REQUESTED Motion to adopt Resolution 2024-11 approving an Interfund Loan for advance of certain costs related to EDA acquisition of real property located at 118 Broadway East in connection with a future Tax Increment Financing (TIF) District in Block 34. REFERENCE AND BACKGROUND The EDA is asked to consider adopting Resolution 2024-11 approving an interfund loan related to the purchase of a small commercial property located at 118 Broadway East in Block 34 in downtown Monticello. By adopting the interfund loan resolution, the EDA's immediate costs of acquiring the property along with other related expenses connected to the purchase are considered a "loan or funding advance" and may be reimbursed through tax increments generated in a future Tax Increment Financing (TIF) District. The total amount of the proposed interfund loan as noted in the Resolution is $785,000. This total includes the acquisition amount of $665,000 plus closing costs and any potential environmental studies, soil clean up expenditures or property maintenance costs that may be needed for an interim time frame leading up to the establishment of a new TIF District. If the interfund loan resolution is not authorized at this time, the EDA mayjeopardize its ability to be reimbursed for property acquisition and related expenses from the future tax increments. Budget Impact: The immediate cost attributed to the EDA connected to the proposed interfund loan resolution is estimated to be about $550 +/ which are related to EDA attorney services to draft the resolution. Long-term, the budget impact may be positive by equating the immediate $785,000 cost as being allocated as a future TIF District expenditure rather than an EDA general fund cost item. II. Staff Workload Impact: City staff workload related to the interfund loan resolution is modest. Staff involved in the interfund loan discussions include the Community EDA Agenda: 05/08/2024 Development Director, Finance Director, and Economic Development Manager. Consultants involved include Northland Securities staff and the EDA attorney. III. Comprehensive Plan Impact: N/A STAFF RECOMMENDATION City staff recommend approval of Interfund Loan Resolution 2024-11. By approving the interfund loan resolution, the EDA preserves the potential to have its General Fund be reimbursed for land acquisition and related expenses incurred in connection with the purchase of the small commercial property in Block 34 through possible future tax increment collections in a new TIF District. The 118 Broadway East property is a key parcel in Block 34. The entire Block remains a high -priority redevelopment focus for the City Council and EDA. The range of uses envisioned in the Block includes a mix of commercial, office and/or residential. SUPPORTING DATA • EDA Resolution 2024-11 CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2024-11 AUTHORIZING AN INTERFUND LOAN FOR ADVANCE OF CERTAIN COSTS IN CONNECTION WITH A TAX INCREMENT FINANCING DISTRICT WHEREAS, the City of Monticello, Minnesota (the "City") and the City of Monticello Economic Development Authority (the "Authority") are considering establishing a tax increment financing district in the City (the "TIF District"), pursuant to Minnesota Statutes, Sections 469.174 through 469.1794, as amended (the "TIF Act"); and WHEREAS, the City and the Authority may incur certain costs related to the TIF District which costs may be financed on a temporary basis from available City or Authority funds; and WHEREAS, pursuant to Section 469.178, subdivision 7 of the TIF Act, the City and the Authority are authorized to advance or loan money from any fund from which such advances may be legally made in order to finance expenditures that are eligible to be paid with tax increments under the TIF Act; and WHEREAS, in connection with the TIF District, the Authority intends to acquire certain property and existing structures thereon located at 118 Broadway Street East in the City as legally described on the attached Exhibit A (the "Property"); and WHEREAS, the City and the Authority have determined to pay for certain costs of the TIF District, including administrative costs incurred prior to the establishment of the TIF District, subject to the limitations of the TIF Act, including but not limited to the preparation of a blight study for the Property and neighboring properties to be included in the TIF District and the costs associated with acquiring the Property (together, the "Qualified Costs") which costs may be financed on a temporary basis from the Authority's General Fund; and WHEREAS, the Authority hereby designates the Cost Advances as an interfund loan in accordance with the terms of this resolution and the TIF Act. NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the City of Monticello Economic Development Authority as follows: 1. The Authority and the City will reimburse themselves for the Qualified Costs in an aggregate amount not to exceed $785,000 (the "Interfund Loan"), together with interest at the rate stated below. Interest accrues on the principal amount from the date of each advance. The maximum rate of interest permitted to be charged is limited to the greater of the rates specified under Minnesota Statutes, Section 270C.40 and Section 549.09 as of the date the loan or advance is authorized, unless the written agreement states that the maximum interest rate will fluctuate as the interest rates specified under Minnesota Statutes, Section 270C.40 or Section 549.09 are from time to time adjusted. The interest rate shall be 8.0% and will not fluctuate. 2. Principal and interest ("Payments") on the Interfund Loan shall be paid semiannually on each February 1 and August 1 (each a "Payment Date"), commencing on the first Payment Date on which the City or the Authority has received Available Tax Increment (defined below), or on any other dates MN325\51\924561.v2 determined by the City Finance Director, through the date of last receipt of tax increment from the TIF District (the "Maturity Date"). 3. Payments on the Interfund Loan will be made solely from the tax increment from the TIF District received by the Authority or the City from Wright County in the 6-month period before any Payment Date, net of the amount paid under any agreement with a private developer or otherwise pledged to the payment of any obligation (the "Available Tax Increment"). Payments shall be applied first to accrued interest, and then to unpaid principal, unless otherwise specified by the City Finance Director. Interest accruing from the date the loan of funds is made will be compounded semiannually on February 1 and August 1 of each year and added to principal, unless otherwise specified by the City Finance Director. Payments on this Interfund Loan may be subordinated to any outstanding or future bonds, notes, or contracts secured in whole or in part with available tax increment and are on a parity with any other outstanding or future interfund loans secured in whole or in part with available tax increment. 4. The principal sum and all accrued interest payable under this resolution is pre -payable in whole or in part at any time by the Authority without premium or penalty. 5. This resolution is evidence of an internal borrowing by the Authority or the City in accordance with Section 469.178, subdivision 7 of the TIF Act, and is a limited obligation payable solely from Available Tax Increment pledged to the payment hereof under this resolution. The Interfund Loan shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the Authority or the City. Neither the State of Minnesota, nor any political subdivision thereof shall be obligated to pay the principal of or interest on the Interfund Loan or other costs incident hereto except out of Available Tax Increment and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest on this Interfund Loan or other costs incident hereto. Neither the Authority nor the City shall have any obligation to pay any principal amount of the Interfund Loan or accrued interest thereon, which may remain unpaid after the termination or expiration of the TIF District. 6. The Authority or the City, as applicable, may at any time decide to forgive the outstanding principal amount and accrued interest on the Interfund Loan, in whole or in part, on any date from time to time, to the extent permissible under law. 7. The Authority may from time to time amend the terms of this Resolution to the extent permitted by law, including without limitation amendment to the payment schedule and the interest rate; provided that the interest rate may not be increased above the maximum specified in Section 469.178. subd. 7 of the TIF Act. Adopted by the Board of Commissioners of the City of Monticello Economic Development Authority this 8' day of May, 2024. President ATTEST: Executive Director 2 MN325\51\924561.v2 EXHIBIT A Legal Description of the Property The West 24 feet of Lot 12, Block 34, City of Monticello, according to the plat thereof on file or of record in the County Recorder, Wright County, Minnesota. I' � F�17[Ia17G��U�1] A-1 MN325\51\924561.v2 EDA Agenda: 5/08/2024 6A. Economic Development Manager's Report Prepared by: Meeting Date: ® Other Business Economic Development Manager 5/08/2024 Reviewed by: Approved by: N/A N/A REFERENCE AND BACKGROUND 1. Prospect List Update - See Exhibit A. PROSPECT LIST 05/03/2024 Date of Contact Company Name Business Category Project Description Building -Facility Retained Jobs New Jobs Total Investment Project Status 5/22/2018 2/16/2021 3/19/2021 2/28/2022 6/16/2021 10/28/2021 2/7/2022 4/28/2022 Karlsburger Foods Project Cold Project Orion Project Emma II Project UBAA Project Stallion Project Shepherd III Project Cougar Food Products Mfg. Industrial -Warehouse -Di stri Warehouse-Distributi on Light Ind -Assembly Child Care Services Technology Service Lt Assembly Distribution Precision Machining -Mfg. Facilty Expansion New Construction New Construction New Construction New Construction or Exist New Construction New Construction New Construction 20,000 sq. ft. +/- 80,000 sq. ft. 832,500 sq. ft. 20,000 sq. ff. 5,000 sq. ft. 42,000 sq. ft. 75,000 sq. ft. 35,000 to 45,000 sq. ft. 42 0 0 0 0 10 to 20 21 500 4 14 to 19 40 75 38 $4,500,000 $12,000,000 $125,000,000 $1,350,000 $2,000,000 $3,600,000 $10,500,000 $4,700,000 On Hold Concept Stage Active Search Active Search Act Search Active Search Active Search Active Search 8/11/2022 Project Sing Precision Machining New Construction 400,000 sq. ft. 0 500 $90,000,000 Active Search 10/28/2022 Project IAG Mfg. New Construction 300,000 sq. ft.? 0 50? $70 to $80,000,000 Active Search 11/9/2022 Project Tea Mfg New Construction 25,000 sq. ft. 55 20 $5,800,000 Active Search 12/13/2022 Project Love Mfg New Construction 250,000 130 $24,000,000 Active Search 4/20/2023 Project Lodge DH1 Lodging -Service New Construction ? ? ? $9,500,000 to $12,500,000 Active Search 4/20/2023 Project Lodge R52 Lodging Service New Construction ? ? ? $9,500,000 to $12,500,000 Active Search PROSPECT LIST 05/03/2024 Date of Contact Company Name Business Category Project Description Building -Facility Retained Jobs New Jobs Total Investment Project Status 5/30/2023 Project Flower-M &M Commercial Concept Expansion ? ? ? Concept 6/9/2023 Project Pez Mfg New Construction 6,000 to 8,500 sq. ft. 12 2 $1.300,000 Active Search 7/1/2023 Project V-MOB MOB New Construction 175,000 +sq. ft. ? $21,000,000 Identified Site 8/16/2023 Project Lodge RT4 Lodging-Hopsitality New Construction 98 Room Hotel N/A 30 $12,500,000 to $13,600,000 Identified Site 8/31/2023 Project Enclave- W300 Industrial - Warehouse- Distr New Construction 300,000 sq. ft. N/A ? $30,000,000 to $34,000,000 Active Search 9/19/2023 Project Panda #4 Sz Childcare Facility New Construction ? N/A ? $2,000,000+/- Active Search 10/12/2023 Project Fun Entertainment Expansion 2,400 sq. ft. N/A 4 $200,000 Concept 1/17/2024 Project Tex Industrial New Construction 500,000 sq. ft. 0 100 $500,000,000 Active Search 1/17/2024 Project G Industrial New Construction 1,000,000 sq. ft. 0 ? $120,000,000 Focused Search 1/2/2024 Project Simpl Office New Construction -Build Out 13,303 sq. ft. 23 50 $2,000,000 Identified Site 2/12/2024 Project Lodge- MSMWDC Lodging -Hospitality New Construction ? 0 10 $12,000,000 Identified Site 3/5/2024 Project Panda 20- MS Child Care Facility New Construction 20,000 sq. ft. 0 20 $2,000,000 Active Search PROSPECT LIST 05/03/2024 Date of Contact Company Name Business Category Project Description Building -Facility Retained Jobs New Jobs Total Investment Project Status 3/29/2024 Project ET-BB-12-9 Industrial Relocate - Existing Bldg 12,000 sq. ft. 12 $1,150,000 Identified Site 4/12/2024 Project Rest B52 Restaurant New build out -Finish 5,000 sq. ft. +/- 0 15 $1,500,000+/- Identified Site Contacts: M = 03 YTD = 18