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HomeMy WebLinkAbout2024-03-18 I01G_04 Kettleview DA_Second and Restated AgreementAGENDA ITEM: CITY OF WAUKEE, IOWA CITY COUNCIL MEETING COMMUNICATION MEETING DATE: March 18, 2024 AGENDA ITEM:Consideration of approval of a resolution approving and authorizing execution of a Second Amendment to and Assignment of Amended and Restated Agreement for Private Development by and between the City of Waukee and Kettleview, LLC. FORMAT:Resolution SYNOPSIS INCLUDING PRO & CON: The City entered into an Agreement for Private Development with Kettleview, LLC on May 19, 2019. The agreement required the construction of event space, six commercial buildings and other site related improvement. The total anticipated investment was $55M and a Minimum Assessment was approved. The project was modified in June of 2020 reducing the size of the project. In spring 2023, Kettleview LLC went into foreclosure. Chris Costa with Knapp Properties, L.C. was appointed Receiver and granted authority to navigate through the process. A buyer for 2565 SE Encompass Drive (Bldg A) was found late summer of 2023. Throughout 2023, City Staff and Mr. Costa were in discussion regarding the proposed Seconded to and Assignment of Amended and Restated Agreement for Private Development by and between the City of Waukee and Kettleview, LLC. The following changes discussed and proposed are included: Assignment of economic development payments to Farmers State Bank Termination of Minimum Assessment Agreement Required minimum improvements include SE Encompass Drive, construction of four commercial buildings (Buildings A,B,D & C) and related site improvements Removal of buildings A-1 and F Removal of requirement to build event space Economic development grants shall commence June 1, 2025 for 5 years at 60% of the tax increment. The maximum grant shall not exceed $1,599,244 minus $40,755.99. The minimum investment for the total project is $22.7M. FISCAL IMPACT INCLUDING COST/BENEFIT ANALYSIS: Due to the change in project and developer circumstance, the economic development grants have decreased from $4.2M in the first agreement to $1.599,244 in the Second Amended Restated. The original agreement also provided 100% of the tax increment for 5 years. Removal of the Minimum Assessment Agreement (MAA) may impact the valuation of the commercial buildings. However, it will help with the perception the MAA inflates the value of the Kettleview properties. COMMISSION/BOARD/COMMITTEE COMMENT: I1G4 STAFF REVIEW AND COMMENT: Staff recommends approval of the proposed changes to the Second Amendment to the Agreement for Private Development. RECOMMENDATION: Approve the resolution. ATTACHMENTS: I. Proposed Resolution II. Second Amendment to and Assignment of Amended and Restated Agreement for Private Development PREPARED BY: Jennifer Brown, Director of Economic Development REVIEWED BY: PUBLIC NOTICE INFORMATION – NAME OF PUBLICATION: DATE OF PUBLICATION: RESOLUTION NO. ______ RESOLUTION APPROVING AND AUTHORIZING EXECUTION OF A SECOND AMENDMENT TO AND ASSIGNMENT OF AMENDED AND RESTATED AGREEMENT FOR PRIVATE DEVELOPMENT BY AND BETWEEN THE CITY OF WAUKEE AND KETTLEVIEW, L.L.C. WHEREAS, the City of Waukee, Iowa ("City") and Kettleview, L.L.C. ("Original Developer") previously entered into an Agreement for Private Development dated May 20, 2019 ("Original Agreement") regarding the development of certain property within the Consolidated Urban Renewal Area ("Development Property"), which Original Agreement was replaced in its entirety by an Amended and Restated Agreement between the City and Developer dated November 4, 2019 ("Amended and Restated Agreement"); and WHEREAS, the Amended and Restated Agreement included an Amended and Restated Minimum Assessment Agreement between the City, Original Developer, and Lush Properties, LLC ("Lush") also dated November 4, 2019 ("Amended and Restated Minimum Assessment Agreement"), which replaced the minimum assessment agreement executed in connection with the Original Agreement in its entirety; and WHEREAS, the City and Original Developer executed an Amendment to the Amended and Restated Agreement ("First Amendment") dated June 15, 2020, pursuant to which the parties made a number of changes to the terms of the Amended and Restated Agreement and to the terms of the Amended and Restated Minimum Assessment Agreement; and WHEREAS, Farmers State Bank ("Bank") has claimed an interest in the Economic Development Grants to be paid under the Amended and Restated Agreement, as previously amended, pursuant to certain loan documents as described in a Petition for Foreclosure filed in the Iowa District Court for Dallas County on June 23, 2023 ("Foreclosure Petition"); and WHEREAS, the parties now desire to amend the Amended and Restated Agreement pursuant to a proposed Second Amendment to and Assignment of Amended and Restated Agreement (the "Second Amendment") to make additional changes to the Amended and Restated Agreement, terminate the Amended and Restated Minimum Assessment Agreement, and assign Original Developer’s rights and obligations under the Amended and Restated Agreement to the Bank; and WHEREAS, Knapp Properties, L.C., as Receiver, has the authority to enter into the Second Amendment on behalf of the Original Developer as set out in the Order Appointing Receiver dated June 23, 2023 filed in the Foreclosure Petition; and WHEREAS, Chapters 15A and 403, Code of Iowa, authorize cities to make grants for economic development in furtherance of the objectives of an urban renewal project and to appropriate such funds and make such expenditures as may be necessary to carry out the purposes of said Chapters, and to levy taxes and assessments for such purposes; and WHEREAS, the Council has determined that the Second Amendment is in the best interests of the City and the residents thereof and that the performance by the City of its obligations thereunder is a public undertaking and purpose and, further, that the Amended and Restated Agreement, as amended by the Second Amendment, and the City's performance thereunder is in furtherance of appropriate economic development activities and objectives of the City within the meaning of Chapters 15A and 403, Code of Iowa, taking into account any or all of the factors set forth in Chapter 15A, Code of Iowa, to wit: a. Businesses that add diversity to or generate new opportunities for the Iowa economy should be favored over those that do not. b. Development policies in the dispensing of the funds should attract, retain, or expand businesses that produce exports or import substitutes, or which generate tourism- related activities. c. Development policies in the dispensing or use of the funds should be targeted toward businesses that generate public gains and benefits, which gains and benefits are warranted in comparison to the amount of the funds dispensed. d. Development policies in dispensing the funds should not be used to attract a business presently located within the state to relocate to another portion of the state unless the business is considering in good faith to relocate outside the state or unless the relocation is related to an expansion which will generate significant new job creation. Jobs created as a result of other jobs in similar Iowa businesses being displaced shall not be considered direct jobs for the purpose of dispensing funds. NOW THEREFORE, BE IT RESOLVED, BY THE CITY COUNCIL OF THE CITY OF WAUKEE IN THE STATE OF IOWA: Section 1.That the performance by the City of its obligations under the Second Amendment and the Amended and Restated Agreement, as amended, be and is hereby declared to be a public undertaking and purpose and, further, that the Second Amendment, the Amended and Restated Agreement, as amended, and the City's performance thereunder is in furtherance of appropriate economic development activities and objectives of the City within the meaning of Chapters 15A and 403, Code of Iowa, taking into account the factors set forth therein. Section 2.That the form and content of the Second Amendment, the provisions of which are incorporated herein by reference, be and the same hereby are in all respects authorized, approved and confirmed, and the Mayor and the City Clerk be and they hereby are authorized, empowered and directed to execute, attest, seal and deliver the Second Amendment for and on behalf of the City in substantially the form and content now before this meeting, but with such changes, modifications, additions or deletions therein as shall be approved by such officers, and that from and after the execution and delivery of the Second Amendment, the Mayor and the City Clerk are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Amended and Restated Agreement, as amended, and the Second Amendment as executed. PASSED AND APPROVED this 18th day of March, 2024. Mayor ATTEST: City Clerk