Title
RESOLUTION APPROVING THE FIRST AMENDMENT TO THE AMENDED AND RESTATED DEVELOPMENT AGREEMENT BETWEEN THE DULUTH ECONOMIC DEVELOPMENT AUTHORITY AND GARFIELD BUSINESS PARK LLC.
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CITY PROPOSAL:
RESOLVED, that the city council of the city of Duluth does hereby approve the first amendment to the amended and restated development agreement, attached hereto as Exhibit A, between the Duluth economic development authority (DEDA) and Garfield Business Park LLC (developer) related to the Garfield warehousing/office project.
Statement of Purpose
STATEMENT OF PURPOSE: The purpose of this resolution is to obtain the city council’s approval of the first amendment to the amended and restated development agreement between DEDA and developer for the Garfield warehouse/office project as to required pursuant to the business subsidy law, Minnesota Statute Section 116J.994 Subd. 3(d).
In 2001, DEDA entered into a development agreement with developer and approved the creation of a tax increment financing district for the redevelopment of a major portion of the unused railroad yards southwest of Garfield Avenue on Rice’s Point. The development agreement contemplated a phased development and required a minimum development of 100,000 square feet of combined office/warehousing facilities (Business Subsidy Goal).
At the time the development agreement was signed and the district created, the property was owned by the Burlington Northern Railroad (BN). The developer was able to acquire property from BN upon which the first phase (48,960 square feet) was constructed (the “Developer Property”). The developer had purchase options to acquire additional adjacent property from BN once environmental conditions on the option property were remediated (the “Option Property”). To date, BN has unfortunately been unable to obtain clearance from the MPCA on the Option Property. Consequently, developer has been unable to acquire the Option Property necessary to build the additional square footage required to satisfy the Business Subsidy Goal, and developer has been receiving tax increment solely with respect to the Developer Property upon which it constructed 48,960 square feet.
Additionally, because a larger phased development was originally contemplated, the developer was required to build large storm water detention ponds on the Developer Property. Consequently, there is not sufficient area available on the Developer Property to build another building to meet the Business Subsidy Goal of 100,000 square feet. See attached map.
The developer is selling the property, assigning the TIF Notes and the portion of the development agreement relating to the first phase and wants to conform the agreement to the actual amount of square footage developer was able to construct.