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HomeMy WebLinkAboutUnion at North Crossing, LP - Amendment to Dev Agmnt - 4.17.2023Prepared by Christopher S. Wendland, P.O. Box 596 Waterloo, IA 50703. 319-234-5701 AMENDMENT TO DEVELOPMENT AGREEMENT This Amendment to Development Agreement (the "Amendment") is entered into as of Ak,iL,. l 7 , 2023 by and between Union at North Crossing, LP (the "Company") and the City of Waterloo, Iowa (the "City"). RECITALS A. City and Union Development Holdings, LLC ("UDH") are parties to that certain Development Agreement dated April 4, 2022 and recorded June 15, 2022 as Doc. No. 2022-24319 (the "DA") concerning the development of property as described in the DA. Company is successor in interest to UDH pursuant to a certain Assignment and Assumption of Development Agreement between Company and UDH. B. The parties desire to amend the DA to modify the terms as set forth in this Amendment to provide reimbursement to Company for certain Project expenses incurred for site preparation work, including without limitation tree removal, grubbing and grading of the Property. C. In furtherance of the objectives of Chapter 403 of the Code of Iowa, as amended (the "Urban Renewal Act"), City is engaged in carrying out urban renewal project activities in an area known as the East Waterloo Unified Urban Renewal and Redevelopment Plan Area ("Urban Renewal Area"). D. Company is willing and able to finance and erect structures and related improvements on property located in the Urban Renewal Area, and legally described on Exhibit "A" to the DA. E. City considers economic development within the City a benefit to the community and is willing for the overall good and welfare of the community to provide financial incentives so as to encourage that goal, and the City further believes that the project is in the vital and best interests of the City and that the project and such incentives are in accordance with the public purposes and provisions of applicable State and local laws and Page 2 requirements under which the project has been undertaken and is being assisted. NOW, THEREFORE, in consideration of the mutual covenants set forth herein, the parties agree to amend the DA to add new terms or modify existing terms as set forth herein: 1. Minimum Assessment Agreement. Company acknowledges and agrees that it will pay when due all taxes and assessments, general or special, and all other charges whatsoever levied upon or assessed or placed against the Property. Company further agrees that prior to the date set forth in Section 2 of the Minimum Assessment Agreement (the "MAA") attached hereto as Exhibit "C" it will not seek or cause a reduction in the taxable valuation for the Property as improved pursuant to the Agreement, which shall be fixed for assessment purposes, below the amount of $5,000,000.00 (the "Minimum Actual Value"), through: (a) willful destruction of the Property, the Improvements, or any part of either; (b) a request to the assessor of Black Hawk County; or (c) any proceedings, whether administrative, legal, or equitable, with any administrative body or court within the City, Black Hawk County, the State of Iowa, or the federal government. Company agrees to execute and deliver the MAA concurrently with its execution and delivery of this Amendment. 2. Tax Rebates. Provided that Company has Substantially Completed the Improvements before the Project Completion Date, City agrees to rebate property tax (with the exceptions noted below) with respect to the Improvements, as follows: Year One through Year Four 0% rebate each year Year Five through Year Seven 40% rebate each year Year Eight through Year Nine 50% rebate each year Year Ten through Year Eleven 60% rebate each year (each such payment is a "Rebate") for any taxable value over $6,692.00. Each Rebate is payable in respect of a given property tax fiscal year (a "Fiscal Year") only to the extent that (a) Company has actually paid general property taxes due and owing for such Fiscal Year and (b) the city council has made an appropriation for the payment of the Rebate. To receive a Rebate for a given Fiscal Year, Company must, within twelve (12) months after the due date of the last installment of the property taxes for the respective Fiscal Year (i.e., the "March Installment"), submit a completed Rebate request to City on the form provided by or otherwise satisfactory to City. A failure to timely submit a request for a Rebate for a Fiscal Year will result in a forfeiture of the right to request a Rebate for such Fiscal Year. City agrees to consider a completed application for a Rebate within sixty (60) days after submission of the application to City. Page 3 The taxable value of the Property as a result of the Improvements must be increased by a minimum of 10% and must increase the annual tax by a minimum of $500.00. Rebates shall not be paid based on 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. "Year One" shall be the first full Fiscal Year for which the assessment is based upon the completed value of the Improvements and not based on a prior Fiscal Year for which the assessment is based solely upon (x) the value of the Property, or upon (y) the value of the Property and a partial value of the Improvements due to partial completion of such Improvements or a partial Fiscal Year. As an example of the above provision, in the event all Improvements on the Property are Substantially Completed prior to January 1, 2025 and the Property and Improvements are assessed as fully completed based on the Plans, as may be revised, the property taxes that would be assessed for Year Four are based on the January 1, 2029 assessed value, corresponding to the Fiscal Year ending June 30, 2031, with the taxes payable one-half by September 30, 2030 and one-half by March 31, 2031, then the first Rebate could be applied for after March 31, 2031 and prior to April 1, 2032. 3. Limitations on Payment of Rebates. A. Each payment of a Rebate is subject to annual appropriation by the city council each fiscal year. City has no obligation to make any payments to Company as contemplated under the Agreement until the city council annually appropriates the funds necessary to make such payments. The right of non - appropriation reserved to City in this paragraph is intended by the parties, and shall be construed at all times, so as to ensure that City's obligation to make future payments of Rebates shall not constitute a legal indebtedness of City within the meaning of any applicable constitutional or statutory debt limitation prior to the adoption of a budget which appropriates funds for the payment of that installment or amount. In the event that any of the provisions of the Agreement are determined by a court of competent jurisdiction or by City's bond counsel to create, or result in the creation of, such a legal indebtedness of City, the enforcement of the said provision shall be suspended, and the Agreement shall at all times be construed and applied in such a manner as will preserve the foregoing intent of the parties, and no Event of Default by City shall be deemed to have occurred as a result thereof. If any provision of the Agreement or the application thereof to any circumstance is so suspended, the suspension shall not affect other provisions of the Agreement which can be given effect without the suspended provision. To this end the provisions of the Agreement are severable. B. Notwithstanding the provisions of Section 2 above, City shall have no obligation to make a payment of a Rebate to Company if at any time during the term hereof City fails to appropriate funds for payment; City receives an opinion from its legal counsel to the effect that the use of Tax Increments resulting from the Property and Improvements to fund a Rebate payment to Company, as contemplated under Section 2 above, is not, based on a change in applicable law or its interpretation since the date of the Agreement, authorized or Page 4 otherwise an appropriate urban renewal activity permitted to be undertaken by City under the Urban Renewal Act or other applicable provisions of the Code, as then constituted or under controlling decision of any Iowa court having jurisdiction over the subject matter hereof; or City's ability to collect Tax Increment from the Improvements and Property is precluded or terminated by legislative changes to Iowa Code Chapter 403. Upon occurrence of any of the foregoing circum- stances, City shall promptly forward notice of the same to Company. If the circumstances continue for a period during which two (2) annual Rebate payments would otherwise have been paid to Company under the terms of Section 2, then City may terminate the Agreement, without penalty or other liability to City, by written notice to Company. C. For purposes of the Agreement, "Tax Increments" shall mean the property tax revenues on the Improvements and Property received by and made available to City for deposit in an account maintained under the Agreement, the provisions of Iowa Code § 403.19 and the ordinance governing the Urban Renewal Plan. 4. Conditions to City Funding. A. The complete or initial funding by City of the Rebates and other Project commitments shall be deemed an agreement of the parties that the applicable conditions to disbursement of funds shall, as of the date of such funding, have been satisfied or waived. If the conditions set forth in this Section are not satisfied at a Rebate disbursement date, the Agreement shall terminate unless a new disbursement date is established by amendment to the Agreement. The termination of the Agreement shall be the sole remedy available to City or Company if, for whatever reason, a condition set forth in this Section is not satisfied at a Rebate payment date, it being understood that each party shall nonetheless incur costs and liabilities prior thereto for which they alone are responsible. City and Company each expressly assumes all responsibility for the costs and liabilities they may each so incur prior to a Rebate payment date and agree to indemnify and hold each other harmless therefrom. B. It is recognized and agreed that the ability of the City to perform the obligations described in the Agreement, including but not limited to the Rebate payments, is subject to completion and satisfaction of certain separate city council actions and required legal proceedings relating to the creation of a tax increment financing (TIF) district, including the holding of public hearings on the same. Further, all the obligations of City under the Agreement are subject to fulfillment, on or before each Rebate payment date, of each of the following conditions precedent: (i) The representations and warranties made by Company in Section 11 of the Agreement shall be true and correct as of the Rebate disbursement date with the same force and effect as if made at such date. Page 5 (ii) Company shall be in material compliance with all the terms and provisions of the Agreement. (iii) There has not been, as of the Rebate disbursement date, a substantial change for the worse in the financial resources and ability of Company, or a substantial decrease in the financing commitments secured by Company for construction of the Improvements, which change(s) makes it likely, in the reasonable judgment of the City, that Company will be unable to fulfill its covenants and obligations under the Agreement. 5. Additional Covenants of Company. In addition to the other promises, covenants and agreements of Company as provided elsewhere in the Agreement, Company agrees as follows with respect to each phase of Improvements: A. Company agrees during construction of the Improvements and thereafter until the MAA termination date to maintain, as applicable, builder's risk, property damage, and liability insurance coverages with respect to the Improvements in such amounts as are customarily carried by like organizations engaged in activities of comparable size and liability exposure, and shall provide evidence of such coverages to the City upon request. B. Until the MAA termination date Company will maintain, preserve and keep the Property, including but not limited to the Improvements, in good repair and working order, ordinary wear and tear excepted, and from time to time will make all necessary repairs, replacements, renewals and additions. C. The Property will have a taxable value as set forth in the MAA and any amendments thereto, and Company agrees that the minimum actual value of the Property and completed Improvements as stated in the MAA and any amendments thereto will be a reasonable estimate of the actual value of the Property and Improvements for ad valorem property tax purposes. Company agrees that it will spend enough in construction of the Improvements that, when combined with the value of the Property and related site improvements, will equal or exceed the assessor's minimum actual value for the Property and Improvements as set forth in the MAA and any amendments thereto. D. Until the MAA termination date Company agrees that it will make no conveyance, lease or other transfer of the Property or any interest therein that would cause the Property or any part thereof to be classified as exempt from taxation or subject to centralized assessment or taxation by the State of Iowa. E. Company shall pay, or cause to be paid, when due, all real property taxes and assessments payable with respect to any and all parts of the Property conveyed to it. Company agrees that (1) it will not seek administrative review or judicial review of the applicability or constitutionality of any Iowa tax statute or regulation relating to the taxation of real property included within the Property that is determined by any tax official to be applicable to the Property or to Page 6 Company, or raise the inapplicability or constitutionality of any such tax statute or regulation as a defense in any proceedings of any type or nature, including but not limited to delinquent tax proceedings, and (2) it will not seek any tax deferral, credit or abatement, either presently or prospectively authorized under Iowa Code Chapter 403 or 404, or any other state law, of the taxation of real property included within the Property. 6. Obligations Contingent. Each and every obligation of City under the Agreement is expressly made subject to and contingent upon City's completion of all procedures, hearings and approvals deemed necessary by City or its legal counsel for amendment of the urban renewal plan applicable to the Property and/or project area, all of which must be completed within 180 days from the date the Agreement is approved by the City council. If such completion does not occur, then any conveyance, benefit or incentive of any type provided by City hereunder within said 180-day period is subject to reverter of title, revocation, repayment or other appropriate action to restore such property, benefit or incentive to City, and Company agrees to cooperate diligently and in good faith with any reasonable request by City to effectuate the restoration of same, or failing such restoration Company agrees to be liable for same or for the fair value thereof, plus interest on any sums owing at the rate of 5% per annum commencing with the date of demand for payment, if said payment is not remitted to City within 30 days. 7. Section 13 of the Agreement, Default, is amended to add a new paragraph F, as follows: "F. Failure by Company to pay, before delinquency, all ad valorem property taxes levied on or against any of the Property." 8. Except as modified herein, the DA shall continue unmodified in full force and effect. Terms in this Amendment that are capitalized but not defined herein will have the same meanings herein that are ascribed to them in the DA. The DA and this Amendment shall inure to the benefit of and be binding upon the parties and their respective successors and assigns. IN WITNESS WHEREOF, the parties have executed this Amendment to Development Agreement by their duly authorized representatives as of the date first set forth above. [signatures on next page] Page 7 CITY OF WATERLOO, IOWA BY: l mac' Quentin Hart, Mayor Attest: Kel �.li�L r K C.� �11�'�"i✓l hle, City Clerks ) UNION AT NORTH CROSSING, LP By Union at North Crossing, GP, its General Partner BY: Lfla Kyle Bach, General Manager EXHIBIT "C" MINIMUM ASSESSMENT AGREEMENT This Minimum Assessment Agreement (the "Agreement") is entered into as of r"1 , 2023, by and among the CITY OF WATERLOO, IOWA ("City"), UNION AT NORTH CROSSING, LP ("Company"), and the COUNTY ASSESSOR of the City of Waterloo, Iowa ("Assessor"). WITNESSETH: WHEREAS, on or before the date hereof the City and Company's predecessor in interest have entered into a development agreement (the "Development Agreement") regarding certain real property (the "Property"), described in Exhibit "A" thereto, located in the City, and Company and City have entered into an amendment of the Development Agreement; and WHEREAS, it is contemplated that pursuant to the Development Agreement, the Company will undertake the development of an area within the City and within the East Waterloo Unified Urban Renewal and Redevelopment Plan Area, including the construction of certain improvements as described in the Development Agreement (the "Minimum Improvements") on the Property (the "Project"); and WHEREAS, pursuant to Iowa Code § 403.6, as amended, the City and the Company desire to establish a minimum actual value for the Property and the Minimum Improvements to be constructed thereon by Company pursuant to the Development Agreement, which shall be effective upon substantial completion of the Project and from then until this Agreement is terminated pursuant to the terms herein and which is intended to reflect the minimum actual value of the land and buildings as to the Project only; and WHEREAS, the City and the Assessor have reviewed the preliminary plans and specifications for the Minimum Improvements which the parties contemplate will be erected as a part of the Project. NOW, THEREFORE, the parties hereto, in consideration of the promises, covenants, and agreements made by each other, do hereby agree as follows: 1. Upon substantial completion of construction of the Minimum Improvements by Company, the minimum actual taxable value which shall be fixed for assessment purposes for the Property and Minimum Improvements to be constructed thereon by Company as a part of the Project shall not be less than $5,000,000.00 (the "Minimum Actual Value") until termination of this Agreement. The parties hereto agree that construction of the Minimum Improvements will be substantially completed by the date set forth in the Development Agreement, and in any case if the Minimum Improvements are not substantially completed by December 31, 2024 the parties agree Page 2 to execute an amendment to this Agreement that will extend the date specified in Section 2 below. 2. The Minimum Actual Value herein established shall be of no further force and effect, and this Minimum Assessment Agreement shall terminate, on December 31, 2044. The Minimum Actual Value shall be maintained during such period regardless of: (a) any failure to complete the Minimum Improvements; (b) destruction of all or any portion of the Minimum Improvements; (c) diminution in value of the Property or the Minimum Improvements; or (d) any other circumstance, whether known or unknown and whether now existing or hereafter occurring. 3. Company shall pay, or cause to be paid, when due, all real property taxes and assessments payable with respect to all and any parts of the Property and the Minimum Improvements pursuant to the provisions of this Agreement and the Development Agreement. Such tax payments shall be made without regard to any loss, complete or partial, to the Property or the Minimum Improvements, any interruption in, or discontinuance of, the use, occupancy, ownership or operation of the Property or the Minimum Improvements by Company or any other matter or thing which for any reason interferes with, prevents or renders burdensome the use or occupancy of the Property or the Minimum Improvements. 4. Company agrees that its obligation to make the tax payments required hereby, to pay the other sums provided for herein, and to perform and observe its other agreements contained in this Agreement shall be absolute and unconditional obligations of Company (not limited to the statutory remedies for unpaid taxes) and that Company shall not be entitled to any abatement or diminution thereof except as set forth in the Development Agreement and as authorized by other actions necessary to obtain CURA exemptions, or set off therefrom, nor to any early termination of this Agreement for any reason whatsoever. 5. Nothing herein shall be deemed to waive the Company's rights under Iowa Code § 403.6, as amended, to contest that portion of any actual value assignment made by the Assessor in excess of the Minimum Actual Value established herein. In no event, however, shall the Company seek or cause the reduction of the actual value assigned below the Minimum Actual Value established herein during the term of this Agreement. Nothing herein shall limit the discretion of the Assessor to assign at any time an actual value to the land and Minimum Improvements in excess of the Minimum Actual Value. 6. Company agrees that during the term of this Agreement it will not: (a) seek administrative review or judicial review of the applicability or constitutionality of any Iowa tax statute relating to the taxation of property contained as a part of the Property or the Minimum Improvements determined by any tax official to be applicable to the Property or the Minimum Improvements, or raise the inapplicability or constitutionality of any such tax statute as a defense in any proceedings, including delinquent tax proceedings; or Page 3 (b) except as set forth in the Development Agreement and as authorized by other actions necessary to obtain CURA exemptions, seek any tax deferral, credit or abatement, either presently or prospectively authorized under Iowa Code Chapter 403 or 404, or any other state law, of the taxation of real property, including improvements and fixtures thereon, contained in the Property or the Minimum Improvements; or (c) request the Assessor to reduce the Minimum Actual Value; or (d) appeal to the board of review of the city, county, state or to the Director of Revenue of the State of Iowa to reduce the Minimum Actual Value; or (e) cause a reduction in the actual value or the Minimum Actual Value through any other proceedings. 7. This Agreement shall be promptly recorded by the City with the Recorder of Black Hawk County, Iowa. The City shall pay all costs of recording. 8. Neither the preambles nor provisions of this Agreement are intended to, or shall be construed as, modifying the terms of the Development Agreement. 9. Each provision, section, sentence, clause, phrase, and word of this Agreement is intended to be severable. If any portion of this Agreement shall be deemed invalid or unenforceable, whether in whole or in part, the offending provision or part thereof shall be deemed severed from this Agreement and the remaining provisions of this Agreement shall not be affected thereby and shall continue in full force and effect. If, for any reason, a court finds that any portion of this Agreement is invalid or unenforceable as written, but that by limiting such provision or portion thereof it would become valid and enforceable, then such provision or portion thereof shall be deemed to be written, and shall be construed and enforced, as so limited. 10. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties, including but not limited to future owners of the Project property. IN WITNESS WHEREOF, the parties have executed this Minimum Assessment Agreement by their duly authorized representatives as of the date first set forth above. [signatures on next page] Page 4 CITY OF WATERLOO, IOWA By: 1i•-' UNION AT NORTH CROSSING, LP By Union at North Crossing, GP, its General Partner By: ,<f7C� Quentin Hart, Mayor Kyle Bach, General Manager Attest: .h' k Kelly Felchle, City Clerk STATE OF IOWA ) ss. COUNTY OF BLACK HAWK On this /day of , 2023, before me, a Notary Public in and for the State of Iowa, perso ally appeared Quentin Hart and Kelley Felchle, to me personally known, who being duly sworn, did say that they are the Mayor and City Clerk, respectively, of the City of Waterloo, Iowa, a municipal corporation, created and existing under the laws of the State of Iowa, and that the seal affixed to the foregoing instrument is the seal of said municipal corporation, and that said instrument was signed and sealed on behalf of said municipal corporation by authority and resolution of its City Council, and said Mayor and City Clerk acknowledged said instrument to be the free act and deed of said municipal corporation by it and by them voluntarily executed. BRITNI C PERKINS COMMISSION NO. 845529 MY COMMISSION EXPIRES JANUARY 27, 2026 STATE OF W tu✓tu ) ) ss. COUNTY OF Ma (Co v ) Subscribed and sworn to before me on ;1- i', , i 1'- , 2023 by Kyle Bach as General Manager of Union at North Crossing, GP, general partner of Union at North Crossing, LP. Nota' ry Public p" p. """P" ADAM CALLOWAY . . �P.•••. e'� Notary Public, State of Indiana `Z SEAL - Marion County _.'•, :, Commission Number 718824 %�pti.Q1AN4`, My Commission Expires %0,nnm"` February 25, 2027 • 2I.1,)4R3q 0 RilTIR8 esagi 014 volealmmoo 23FINX3 Aolealonityo YtA KOS ,Cg YRAUVAt. CERTIFICATION OF ASSESSOR The undersigned, having reviewed the plans and specifications for the Minimum Improvements to be constructed and the market value assigned to the land upon which the Minimum Improvements are to be constructed for the development, and being of the opinion that the minimum market value contained in the foregoing Minimum Assessment Agreement appears reasonable, hereby certifies as follows: The undersigned Assessor, being legally responsible for the assessment of the property described in the foregoing Minimum Assessment Agreement, certifies that the actual value assigned to that land and improvements upon completion shall not be less than Five Million and 00/100 Dollars ($5,000,000.00) until termination of this Minimum Assessment Agreement pursuant to the terms hereof, subject to adjustment as provided in said agreement. STATE OF IOWA COUNTY OF BLACK HAWK ) ss. Assessor for Black Hawk County, Iowa Date Subscribed and sworn to before me on , 2023 by T.J. Koenigsfeld, Assessor for Black Hawk County, Iowa. Notary Public