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HomeMy WebLinkAboutSan Marnan Management, Ltd., f/k/a VGM Management, Ltd.-4/27/2016um11uNiu11111m11111mm11111m11111muuuiui Doc ID: 007068610017 Type: GEN Recorded: 06/30/2016 at 12:27:35 PM Fee Amt: $87.00 Page 1 of 17 Black Hawk County Iowa SANDIE L. SMITH RECORDER F11e2016-00022685 0.►4y o 3 t.4erl bD Preparer: Christopher S. Wendland, P.O. Box 596, Waterloo, Iowa 50704 (319) 234-5701 After recording, return to Community Planning & Development, 715 Mulberry Street, Waterloo, IA 50703. DEVELOPMENT AGREEMENT This Development Agreement (the "Agreement") is entered into as of , 1 a'1 u`' , 2015, by and between San Marnan Management, Ltd., f/k/a VGM Management, Ltd. ("Company"), and the City of Waterloo, Iowa, ("City"). Galactic Development Corp., f/k/a VGM Development Corp. ("Galactic"), a corporation affiliated with Company through common ownership and control, also joins in this Agreement for the limited purposes stated herein. RECITALS A. 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. B. Company is willing and able to finance and construct a multi-level, Class A office building and related improvements for expansion of the national headquarters of VGM Group, Inc. with at an expected project cost of approximately TWENTY MILLION DOLLARS ($20,000,000) on property located in the San Marnan Development Area. C. Galactic is purchasing on contract or currently owns real property directly adjacent to the Property (as defined below). A portion of the roadway and bike path referred to below are to be constructed over said real property. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants set forth herein, the parties agree as follows: 1. Property and Improvements by Company. Company shall construct a building consisting of approximately 73,048 square feet including office space and covered parking, located on parcel number 8813-08-226-012 and legally described as set forth on Exhibit "A" (the "Property") and related landscaping and outdoor parking (collectively, the "Improvements"). The Improvements shall be constructed generally in conformity with the site plan and depictions attached hereto as Exhibit "C". The Improvements shall be constructed in accordance with all applicable City, state, and federal building codes and shall comply with all applicable City ordinances. The new 89) building (including the real property assessment) will have a taxable value as set forth in the Minimum Assessment Agreement attached hereto as Exhibit "B". The Property, the Improvements, and all site preparation and development -related work to make the Property usable for Company's purposes as contemplated by this Agreement are collectively referred to as the "Project". 2. City Activities to Aid the Project. In addition to the property tax rebates provided for in Section 6 below, the City agrees to undertake each of the following activities at its own expense: a. Street Extensions. City will undertake all work of design and construction for the westerly extension of the public street known as Fitzway Drive and the southerly extension of the public street known as Galactic Drive. These two streets will intersect at a roundabout that will facilitate the flow of traffic with future street extensions and development in the area to the west. City shall complete construction of said improvements by December 31, 2017. b. San Marnan Drive. City will reconfigure the east -bound lanes of San Marnan Drive that are adjacent to the Property so that, to the greatest extent reasonably possible, road right of way abutting the Property ("Excess ROW") can be deeded to Company for use as paved parking, which Company shall construct generally in accordance with the depiction at Exhibit "C". City will also undertake all roadway, ditch and storm water improvements necessary to maximize the Excess ROW, consistent with sound principles of road and storm water design. In good faith Company estimates that approximately 49,000 square feet of Excess ROW will be needed to carry out its parking plans, which have been provided to City prior to the date hereof, and City agrees to use its best efforts to identify and convey such amount of Excess ROW or as much thereof as possible. If necessary, City will relocate traffic signals and utilities currently located in the right of way, or the parties will cooperate to negotiate an appropriate easement to allow utilities to remain in place. Company agrees to work with City to review and craft solutions for any bona fide engineering or traffic flow issues that are reasonably expected to result from the work contemplated by this paragraph. Expedited handling of said work is essential to allow Company to construct additional parking for employees whose parking will be displaced by the Project. City shall substantially complete its activities described in this paragraph no later than October 31, 2015. No later than August 31, 2015, City will vacate the Excess ROW and convey it to Company for the sum of $1.00 by special warranty deed. Company will be solely responsible for any parking, surface storm water, and landscaping improvements in the land it receives. c. Trails. City agrees to use reasonable, good -faith efforts to design and program bike and/or recreational trails ("recreational trails") in any plans for development of business parks in the San Marnan TIF district. City shall cooperate in good faith with Company and Galactic in the design, location, and construction of a recreational trail to be constructed by City on property owned by Galactic along Fitzway Drive. City shall also design and construct, no later than 2 November 1, 2020, a recreational trail on the north side of San Marnan Drive across from the Property, to connect with a planned recreational trail in the Sunnyside South Addition subdivision and to connect with a planned recreational trail on the west side of Galactic Drive. Company and/or Galactic may, at their own expense, make further improvements to the recreational trails, including but not limited to benches and landscaping, subject to the City's consent, which consent shall not be unreasonably withheld, and Company and Galactic agree to deliver title to such improvements to City, if and when requested by City. For a period of up to three (3) years after the date of this Agreement, City shall exercise its best efforts to secure funding for construction of said recreational trails. d. Dirt Work. City agrees that, in connection with construction of any road, sidewalk, or recreational trail, it shall restore the grade of any area affected by such construction, remove promptly upon completion any excess soils or other materials accumulated during construction, seed suitable grasses or lay down sod on any bare earth, and leave the soil and subsoils in such condition and at such grade or elevation as will best facilitate possible future development of properties owned by Company and/or Galactic. e. Land Cost Support. City shall, as a further inducement to Company to undertake the Project, reimburse land costs on the basis of $5 per square foot for land involved in the Project, up to a maximum of 245,000 square feet of land or $750,000, whichever is less. City shall make said payment to Company within sixty (60) days after Company obtains a building permit, but not before July 15, 2015. f. Prosect Review and Assistance. The parties acknowledge and agree that the Project will require Company to obtain various approvals from the City of Waterloo and/or other applicable governmental authorities, including but not limited to zoning, site plan, building permit and other approvals required or necessary for Company's proposed Improvements to the Property, at an anticipated cost of $95,000 in fees to City. City will make planning, building, and engineering staff available for Project planning review and consultations in order to promote expeditious progress of the Project. g. Support for Applications. City agrees that it will cooperate in good faith with Company and, if necessary for program requirements, sponsor Company applications for available state tax credits and/or rebates, community college job training funds, and other available government funding, if Company chooses to make such application. 3. Timeliness of Construction. Company must obtain a building permit and begin construction within six (6) months from the date of this Agreement. If Company has not begun construction of the Improvements before the end of the 6 - month period, this Agreement shall be voided. If construction has not begun by the end said six-month period, but the development of the Project is still imminent, the City 3 Council may, but shall not be required to, grant an extension of time for the construction of the Improvements. If construction has commenced within the required period or any extended period and is stopped and/or delayed as a result of an act of God, war, civil disturbance, court order, labor dispute, fire, or other cause beyond the reasonable control of Company, the requirement that construction of the Project shall be tolled for a period of time equal to the period of such stoppage or delay, and thereafter if construction is not completed within the allowed period of extension, this Agreement shall be voided. 4. Utilities. Company will be responsible for extending water, sewer, telephone, telecommunications, electric, gas and other utility services to any location on the Property and for payment of any associated connection fees. 5. 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 Exhibit "B" it will not seek or cause a reduction in the taxable valuation for the Property as improved pursuant to this Agreement, which shall be fixed for assessment purposes, below the amount of $6,500,000 in value added by the Improvements (the "Minimum Actual Value"), through: (i) willful destruction of the Property, the Improvements, or any part of either; (ii) a request to the assessor of Black Hawk County; or (iii) 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 sign said attached Exhibit "B" at the closing. The parties agree that, if during the time the Minimum Assessement Agreement is in effect the Iowa legislature enacts any rollback or like reductions in assessed values applicable to property of the same tax classification as the Property, then the Minimum Actual Value shall be subject to adjustment in proportion to any such rollbacks or reductions, and in such event the Minimum Assessment Agreement shall be modified to reflect such reduced value on the same terms and for the same period as prescribed by the legislature. 6. Tax Rebates. Provided that Company has completed the Improvements as set forth herein and has executed the Minimum Assessment Agreement as set forth in Section 5, City agrees to rebate property tax (with the exceptions noted below) as follows: Year 1 through Year 10 75% rebate each year 4 for any taxable value over the January 1, 2014 value of $11,810,290. Rebates are payable in respect of a given year only to the extent that Company has actually paid general property taxes due and owing for such year. To receive rebates for a given year, Company must submit a completed rebate request to City on the form provided by or otherwise satisfactory to City. 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. This 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. The first year of in which a rebate may be given ("Year 1") shall be the first full year for which the assessment is based upon the completed value of the Improvements, and not based on a prior 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 the Improvements or a partial tax year. During the period that any rebate is payable to Company, Company agrees that it will not undertake, in any other municipality in Black Hawk County, the construction or rehabilitation of any commercial property as a primary location for Company's business operations. 7. Extension of Rebate Terms. City agrees to provide to Company and Galactic, in connection with improvements that expand the operations of VGM Group on land currently owned by Company, Galactic, or VGM Group, Inc., a rebate schedule that in duration and amount is no less favorable than (a) the rebate schedule provided by this Agreement or (b) the rebate schedule provided by the City to a third party in a development agreement for a project of similar cost or square footage, whichever provides the most favorable terms to Company or Galactic. The parties acknowledge that Company or Galactic now own the following properties within Waterloo city limits: (a) the Property and adjacent lands Tying in the area bounded on the east by Ansborough Avenue, on the south by Highway 20, on the west by W. 4th Street, and on the north by San Marnan Drive; (b) 4026 Alexandra Drive, and (c) 1051 Southtown Drive. 8. Representations and Warranties of City. City hereby represents and warrants as follows: A. City is not prohibited from consummating the transaction contemplated in this Agreement by any law, regulation, agreement, instrument, restriction, order or judgment. B. Each person who executes and delivers this Agreement and all documents to be delivered hereunder is and shall be authorized to do so on behalf of City. 5 C. Title to the Excess ROW will be free and clear of all liens, claims and encumbrances of any type or nature. 9. Representations and Warranties of Company and Galactic. Company and Galactic each hereby represents and warrants for itself only, and not for the other, as follows: A. It is not prohibited from consummating the transaction contemplated in this Agreement by any law, regulation, agreement, instrument, restriction, order or judgment. B. It is duly organized, validly existing, and in good standing under the laws of the state of its organization and is duly qualified and in good standing under the laws of the State of Iowa. C. It has full right, title, and authority to execute and perform this Agreement and to consummate all of the transactions contemplated herein, and each person who executes and delivers this Agreement and all documents to be delivered to City hereunder is and shall be authorized to do so on behalf of Company. 10. Obligations Contingent. Each and every obligation of City under this 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 this Agreement is approved by the City council. City hereby agrees to timely undertake and complete all such procedures, hearings and approvals so that the benefits that City promises to Company hereunder as an inducement for Company to undertake and complete the Project as set forth in this Agreement will not be lost. 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. To the extent permitted by applicable law, City agrees to indemnify Company and hold it harmless from and against any claims, damages, costs, expenses or loss of value suffered by Company and arising from such revocation or repayment. 11. Materiality of Company's Promises, Covenants, Representations, and Warranties. Each and every promise, covenant, representation, and warranty set forth in this Agreement on the part of Company and Galactic to be performed is a material term of this Agreement, and each and every such promise, covenant, representation, and warranty constitutes a material inducement for City to enter this Agreement. Company and Galactic acknowledge that without such promises, covenants, representations, and warranties, City would not have entered this Agreement. Upon breach of any promise or covenant, or in the event of the 6 incorrectness or falsity of any representation or warranty, City may, at its sole option and in addition to any other right or remedy available to it, terminate this Agreement and declare it null and void. 12. Notices. Any notice under this Agreement shall be in writing and shall be delivered in person, by overnight air courier service, by United States registered or certified mail, postage prepaid, or by facsimile (with an additional copy delivered by one of the foregoing means), and addressed: (a) if to City, at 715 Mulberry Street, Waterloo, Iowa 50703, facsimile number 319-291-4571, Attention: Mayor, with copies to the City Attorney and the Community Planning and Development Director. (b) if to Company or Galactic, at 1111 W. San Marnan Drive, Waterloo, Iowa, 50701, Attention: Jim Walsh. Delivery of notice shall be deemed to occur (i) on the date of delivery when delivered in person, (ii) one (1) business day following deposit for overnight delivery to an overnight air courier service which guarantees next day delivery, (Hi) three (3) business days following the date of deposit if mailed by United States registered or certified mail, postage prepaid, or (iv) when transmitted by facsimile so long as the sender obtains written electronic confirmation from the sending facsimile machine that such transmission was successful. A party may change the address for giving notice by any method set forth in this section. 13. No Joint Venture. Nothing in this Agreement shall, or shall be deemed or construed to, create or constitute any joint venture, partnership, agency, employment, or any other relationship between the City and Company nor to create any liability for one party with respect to the liabilities or obligations of the other party or any other person. 14. Amendment, Modification, and Waiver. No amendment, modification, or waiver of any condition, provision, or term of this Agreement shall be valid or of any effect unless made in writing, signed by the party or parties to be bound or by the duly authorized representative of same, and specifying with particularity the extent and nature of the amendment, modification, or waiver. Any waiver by any party of any default by another party shall not affect or impair any rights arising from any subsequent default. 15. Severability. 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 7 thereof shall be deemed to be written, and shall be construed and enforced, as so limited. 16. Captions. All captions, headings, or titles in the paragraphs or sections of this Agreement are inserted only as a matter of convenience and/or reference, and they shall in no way be construed as limiting, extending, or describing either the scope or intent of this Agreement or of any provisions hereof. 17. Binding Effect. This Agreement shall be binding and shall inure to the benefit of the parties and their respective successors, assigns, and legal representatives. 18. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. 19. Entire Agreement. This Agreement, together with the exhibits attached hereto, constitutes the entire agreement of the parties and supersedes all prior or contemporaneous negotiations, discussions, understandings, or agreements, whether oral or written, with respect to the subject matter hereof. 20. Time of Essence. Time is of the essence of this Agreement. IN WITNESS WHEREOF, the parties have executed this Development Agreement by their duly authorized representatives as of the date first set forth above. CITY OF ATERLOO, IOWA SAN MA 3 AN }VIA A Bv. rnest G. Clark, Mayor Attest: 'Suzy Sch : res, City Clerk 8 mes E. Wal , Jr.,y' esident GALACTIC DEVEL ORP. mes E. Walsh, J EXHIBIT "A" Legal Description of Property UNPLATTED WATERLOO WEST E 235 FT NE SEC 8 T 88 R 13 LYING N OF S 295 FT N 1/2 N 1/2 SAID NE EXC THAT PART TO STATE OF IA IN 121 MISC 435 AND N 651.63 FT E 859.53 FT NE SEC 8 T 88 R 13 EXC E 235 FT THEREOF EXC THAT PART LYING WITHIN LIMITS DESC IN 543 LD 141 TO WIT: THAT PART NE SEC 8 T 88 R 13 DESC AS FOL: COM AT PT ON E LINE SAID SEC 8 496.6 FT S OF NE COR SAID SEC 8TH W AT RT ANG 238 FT TH S AT RT ANG 158 FT TH E AT RT ANG 238 FT TO E LINE SAID SEC 8 TH N ALONG E LINE SAID SEC 8 158 FT TO PT OF BEG EXC HWY AND EXC STATE OF IA 121 MISC 435 AND EASE DESC IN EASE B 13 P 291 AND EXC THAT PART TO CITY OF WLOO LD B 570 P 214 ALSO EXC A PARCEL OF LAND LOC IN NE 1/4 NE 1/4 OF SEC 8 T 88 R 13 DESC AS COM AT THE NE COR SAID SEC 8 TH S ON THE E LINE OF THE NE 1/4 SAID SEC 123.04 FT TH S 89 DEG 40 MIN 5 SEC W 33 FT TO PRESENT W ROW LINE OF ANSBOROUGH AV THE PT OF BEG OF PARCEL HEREIN DESC TH S ON PRESENT W ROW LINE OF ANSBOROUGH AV 242.30 FT TH S 89 DEG 5 MIN 30 SEC W 16.85 FT TH NWLY ON A 7951 FT RADIUS CURVE CONCAVE WLY AND HAVING A 101.49 FT LONG CHORD BEARING N 1 DEG 32 MIN 8 SEC W 101.49 FT (ARC LENGTH) TH NWLY ON AN 8049 FT RADIUS CURVE CONCAVE ELY AND HAVING A 166.37 FOOT LONG CHORD BEARING N 1 DEG 18 MIN 32 SEC W 166.37 FT (ARC LENGTH) TO PRESENT W ROW LINE OF ANSBOROUGH AV TH S 41 DEG 3 MIN 15 SEC E ON THE PRESENT W ROW LINE OF ANSBOROUGH AV 33.44 FT TO PT OF BEG. EXHIBIT "B" MINIMUM ASSESSMENT AGREEMENT This Minimum Asse sment Agreement (the "Agreement") is entered into as of this ,x'14" day of , 2015, by and among the CITY OF WATERLOO, IOWA ("City"), San Marnan Management, Ltd. ("Company"), and the COUNTY ASSESSOR of the City of Waterloo, Iowa ("Assessor"). WITNESSETH: WHEREAS, on or before the date hereof the City and Company have entered into a development agreement (the "Development Agreement") regarding certain real property, described in Exhibit "A" thereto, located in the City; and WHEREAS, it is contemplated that pursuant to the Development Agreement, the Company will undertake the development of an area ("Project") within the City and within the Downtown Waterloo Urban Renewal and Redevelopment Plan Area; and WHEREAS, pursuant to Iowa Code § 403.6, as amended, the City and the Company desire to establish a minimum actual value for the land and the building(s) pursuant to this Agreement and applicable only to the Project, 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 improvements (the "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 Improvements by the Company, the minimum actual taxable value which shall be fixed for assessment purposes for the land and Improvements to be constructed thereon by the Company as a part of the Project shall not be less than $6,500,000 (the "Minimum Actual Value") until termination of this Agreement. The parties agree that, if during the time this Agreement is in effect the Iowa legislature enacts any rollback or like reductions in assessed values applicable to property of the same tax classification as the Property, then the Minimum Actual Value shall be subject to adjustment in proportion to any such rollbacks or reductions, and in such event this Agreement shall be modified to reflect such reduced value on the same terms and for the same period as prescribed by the legislature. The parties hereto agree that construction of the Improvements will be substantially completed on or before June 30, 2017. 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, 2036. 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. The Company may contest its taxable valuations in full commencing with the assessment of January 1, 2037. 3. 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. 4. Neither the preambles nor provisions of this Agreement are intended to, or shall be construed as, modifying the terms of the Development Agreement. 5. 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. CITY OF ATERLOO, IOWA By. By: Ernest G. Clark, Mayor Suzy Schar-s, City Clerk STATE OF IOWA ) ) ss. COUNTY OF BLACK HAWK ) On this day ofA�� '"� { , 2015, before me, a Notary Public in and for the State of Iowa, personally appeared Ernest G. Clark and Suzy Schares, to me personally known, who being duly sworn, did say that they are the Mayor and City 2 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. STATE OF IOWA `-lYl wnt Notary Public ) ss. COUNTY OF BLACK HAWK ) Subscribed and sworn to before me on ri 1 2-1 Walsh, Jr., as President of San Marnan Managee Town CHRISTOPHER S. WEND! AND Commission Number 197109 MY Co NjlsslpQl IRES 7 nt, Ltd. 64'(--t- (112 Notary Pubic 3 , 2015 by James E. s (J a.0 � CERTIFICATION OF ASSESSOR The undersigned, having reviewed the plans and specifications for the improvements to be constructed and the market value assigned to the land upon which the 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 subject to the development, upon completion of improvements to be made on it and in accordance with the Minimum Assessment Agreement, certifies that the actual value assigned to such land, building and equipment upon completion of the development shall not be less than Six Million Five Hundred Thousand Dollars ($6,500,000) until termination of this Minimum Assessment Agreement pursuant to the terms hereof, subject to adjustment as provided in said agreement. Ass or for Black Hawk County, Iowa G -3o- . Date STATE OF IOWA ) ) ss. COUNTY OF BLACK HAWK ) 2016 Subscribed and sworn to before me on 3v , 20-16 by T.J. Koenigsfeld, Assessor for Black Hawk County, Iowa. DEBORAH L. BOECKMANN d.\Y COMMISSION NO. I ESe EXHIBIT "C" Site Plan and Depictions See pages attached hereto. ]AIaa irvuxvw rrvs.e u u 0 0 Z1 Sti G ONI011f19 :NOISNVd 9 SfldWVD WGA J z 0 W U z W W LL W 0 LL z 0 H U r N z 0 s U ce - LL ✓ 0 z 4 z J W 3Nda NVNdVw llbf M 11 tl a ONIalIf19 :NOISNVdX3 SfidVVD WOA