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HomeMy WebLinkAboutDeer Creek Development LLC-3/14/2011Prepared by Chris Wendland, Clark, Butler, Walsh & Hamann, PO Box 596, Waterloo, Iowa 50704, (319) 234-5701 SECOND AMENDMENT TO DEVELOPMENT AGREEMENT This Second Amendment to Development Agreement (the "Second Amendment") is entered into as of March ikef'JT 2011, by and between the City of Waterloo, Iowa ("City") and Deer Creek Development, LLC ("Company"). RECITALS A. Company and City are parties to a certain Development Agreement entered into as of October 13, 2006 (the "Agreement"). The Agreement provided for certain grants to be made by City to Company from specific tax revenues generated by the Property in connection with specified development activities. The Agreement was amended by an Amendment to Development Agreement entered into as of July 7, 2008 (the "First Amendment"). B. The parties desire to further amend the Agreement on the terms set forth herein in order to revise the amount of grants to be paid. NOW, THEREFORE, in consideration of the mutual promises set forth herein, the parties hereby agree to amend the Agreement as follows: 1. The Agreement is hereby amended to strike Section 3 in its entirety and to add a new Section 3 as follows: "3. Grants to Company. As an inducement for Company to make the Street Improvements in connection with development of the Property, the City agrees to make grants to Company as follows: A. Company acknowledges receipt of the sum of $80,000.00 previously paid by City. B. City shall pay Company the sum of $300,000.00, on or before April 1, 2011. 1 C. City shall pay Company the greater of (i) the sum of $200,000.00 or (ii) the amount due under paragraph 3.G or 3.H below, as applicable, for each fiscal year ending in 2012, 2013, 2014, and 2015. D. If a building project with a minimum assessed value of $1,000,000.00 is built on the Property after January 1, 2011 and is completed on or before December 31, 2015, City shall pay Company the greater of (i) the sum of $200,000.00 or (ii) the amount due under paragraph 3.G or 3.H below, as applicable, for each fiscal year ending in 2016 and 2017. If these conditions are not met, City shall pay Company the amount due under paragraph 3.G or 3.H, as applicable, for said fiscal years. E. If a building project is completed on the Property in accordance with paragraph 3.0 above, and if a second building project with a minimum assessed value of $1,000,000.00 is built on the Property and is completed on or before December 31, 2017, City shall pay Company the greater of (i) the sum of $200,000.00 or (ii) the amount due under paragraph 3.G or 3.H below, as applicable, for the fiscal year ending in 2018. If these conditions are not met, City shall pay Company the amount due under paragraph 3.G or 3.H, as applicable, for said fiscal year. F. Beginning in fiscal year 2019 and continuing until City has paid Company all sums payable under this Agreement, City shall pay Company in accordance with the provisions of paragraph 3.G or 3.H below, as applicable. G. This paragraph sets forth the default method for calculating grant payments when a party making improvements on the Property (a "Developer") has a separate development agreement with City. City shall pay to Company a semi-annual grant equal to 100% of the property taxes collected by the City (excluding Non -TIF Collections as defined in paragraph 3.H.2 below) from a Developer pursuant to a separate development agreement with City, reduced by any and all tax rebates that the City is required to pay to the Developer pursuant to the terms of any development agreement with such Developer. For purposes of illustration only, if an agreement between City and a Developer provides for rebatement of 50% of qualifying property taxes for a period of five years, then Company would receive a grant equal to the remaining 50% of qualifying property taxes in each year of such period. No grant with respect to such Developer's project shall be made to Company before a property tax rebate is first paid to the Developer. At the end of the Developer's tax rebatement period, City will grant to Company 100% of property tax rebates allowable until Company has been repaid pursuant to paragraph 3.K below. For purposes of this paragraph, the term "Developer" may include Company with respect to improvements made on 2 the Property other than the improvements that are the subject of this Agreement. Notwithstanding that Company has no right of approval or disapproval with respect to any development agreement that City may enter into with a Developer, Company acknowledges that City has entered into a development agreement with Mauer Land, L.L.C. as Developer, and Company hereby consents to such agreement for purposes of this paragraph 3.G. H. This paragraph sets forth the default method for calculating grant payments that are not within the scope of paragraph 3.G above. With respect to any taxable improvements ("Non -Qualifying Improvements") constructed on the Property that are not subject to a separate development agreement between the City and the owner -builder of the Non -Qualifying Improvements, City shall pay to Company a semi- annual grant equal to 100% (with the exceptions noted below) of the property tax capable of rebatement, if not for the non -qualifying character of the improvements, starting in "Year One" and continuing thereafter until Company has been repaid pursuant to paragraph 3.K below. For purposes of illustration, a "Non -Qualifying Improvement" means, generally, an improvement of a type that is not eligible for property tax rebates or similar incentives, such as improvements for a retail business. 1. "Year One" shall be the first year for which the assessment is based upon the partial or completed value of the Non -Qualifying Improvements, but not a prior year for which the assessment is based solely upon the value of the land. 2. The above-described rebate program is not applicable to any special assessment levy, debt service levy, or any other levy that is exempted from treatment as tax increment financing under the provisions of applicable law (collectively, "Non -TIF Collections"). I. Rebates are payable in respect of a given year only to the extent that general property taxes that are due and owing for such year have actually been paid. The City will pay rebates in equal semi-annual installments on or before November 1 and the following May 1 of each fiscal year. J. Notwithstanding anything to the contrary in this Section 3, in no event will the cumulative amount of grants payable by City to Company exceed the total of Street Improvement costs incurred by Company, as documented to City's reasonable satisfaction, plus interest on such costs at the rate of 7% per annum commencing on the date that Company made payment of such costs, and continuing until grants paid to Company by City equal such costs plus interest. Effective as of April 1, 2011 and thereafter, the interest rate shall be adjusted to 4.75%. K. If City fails to make payment of any installment due under this Section 3 within ninety (90) days of it being due and payable, Company shall have the right to declare City to be in default of this Agreement following City's failure to cure the default within an additional sixty (60) days after written notice from Company to City that specifically references this paragraph 3.K. In addition to the City officials required to be notified under paragraph 6(a), Company shall also deliver a copy of the foregoing notice to City's Chief Financial Officer. 2. Except as modified herein, the Agreement shall continue in full force and effect. The Agreement, as amended by the First Amendment and this Second Amendment, shall inure to the benefit of and be binding upon the parties and their respective successors and assigns. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement. IN WITNESS WHEREOF, the parties have executed this Second Amendment to Development Agreement by their duly authorized representatives as of the date first set forth above. Deer Creek Development, LLC By: JaiJD Harold L. You 4 City of Waterloo, Iowa BY ( - %fleaMar res, City Clerk