HomeMy WebLinkAboutVIII-12 Authorize Signature - Agreement for SAC-WAC Deferral – 214 2nd Street East
City Council Memorandum
To: Mayor Fasbender & City Councilmembers
From: Alex Menke, Economic Development Coordinator
Date: August 19, 2024
Item: Authorize Signature: Agreement for WAC\SAC Deferral – 214 2nd St E
Council Action Requested:
Authorize signature of the attached agreement between the City and Marathon Properties of
Hastings, LLC to defer payment of the City’s portion of water access charges and sewer access
charges (WAC\SAC) over a ten-year period.
Approval requires a simple majority of the City Council.
Background Information:
Marathon Properties of Hastings, LLC owns the property located at 214 2nd Street East. Their
newest tenant, Collateral Coffee dba Awful Gato, is in the process of building out a coffee shop
and café at the site. The construction results in the payment of Metropolitan Council SAC fees
totaling $9,940, and City WAC\SAC fees totaling $15,608 prior to receipt of a building permit.
Upfront payment of WAC\SAC fees prior to operation of the facility has created a burden for
the business owner.
The City of Hastings has established a policy to defer City WAC\SAC fees in order to minimize
the impact of these fees. Please see the attached policy document for further information. The
Hastings program requires a 20% down payment ($3,121.60) due at the time of building permit
issuance.
Additionally, Marathon Properties of Hastings, LLC plans to enter into the Metropolitan
Council’s SAC Deferral Program. The Metropolitan Council’s program requires a 20% down
payment ($1988) due at time of building permit issuance. This program is regulated by a Master
SAC Deferral Agreement executed by the City of Hastings and Metropolitan Council (attached).
Both deferred amounts will be assessed to the property and collected through semi-annual
property tax payments for a period of up to ten years.
Financial Impact:
The City would not receive full payment of the deferred amount ($12,486.4) for up to ten years.
Repayment would include an interest charge of 2.06% annually on the unpaid balance and a
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$50 administrative fee. The deferment would allow Collateral Coffee dba Awful Gato to begin
construction to add further value to the property and increase the tax base.
Advisory Commission Discussion:
N\A
Council Committee Discussion:
N\A
Attachments:
• SAC/WAC Deferral Application
• SAC/WAC Deferral Agreement
• City SAC/WAC Policy
• MetCouncil Master SAC Deferral Agreement
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CITY OF HASTINGS
AGREEMENT FOR DEFERRED PAYMENT OF WAC/SAC
THIS DEFERRED PAYMENT AGREEMENT (“Agreement”) is made this day of______________,
20__ (“Effective Date”), between the City of Hastings, a Minnesota Municipal Corporation, having an address
of 101 East 4th Street, Hastings, MN 55033, hereinafter referred to as "City" and Marathon Properties of
Hastings, LLC, having an address of 214 2nd Street East, Hastings MN 55033, the owner of property described
below, hereinafter referred to as "Owner".
RECITALS
WHEREAS, Owner owns improved commercial real property located generally at 214 2nd Street East,
in the City of Hastings, Dakota County, Minnesota, and legally described as: Mid 1/3 of Lot 2, Block 14, TOWN
OF HASTINGS, Dakota County, Minnesota (the "Subject Property"); and
WHEREAS, the Property Identification Number for the Subject Property is 193215014024; and
WHEREAS, Owner intends to operate, or allow the operation of, Collateral Coffee dba Awful Gato
(“Business”) on the Subject Property; and
WHEREAS, Metropolitan Council Environmental Services (“MCES”) is authorized by Minnesota
Statute § 473.517, subdivision 3, to charge to the City sewer availability charges (“MCES SAC”) upon
redevelopment of real property for an expanded use; and
WHEREAS, Hastings City Code 51 .05(H) provides, in part, that at the time of expansions of existing
sanitary sewer and water services that result in MCES SAC being levied, all water availability charges ("WAC"),
MCES SAC, and City sewer availability charges ("Local SAC") shall be paid by the property owner and the
number of WAC and Local SAC units charged shall be equal to the MCES SAC units charged; and
WHEREAS, MCES determined the net MCES SAC units to be charged as a result of the expansion on
the Subject Property shall be 4.0 MCES SAC units. The resulting City charges will be $3,780.00 WAC and
$11,828.00 Local SAC, totaling $15,608.00; and
WHEREAS, Owner has requested that the City defer the resulting WAC and Local SAC (MECS SAC
will be deferred according to the Master SAC Deferral Agreement executed by the City of Hastings and
Metropolitan Council), pursuant to City policy, by assessing the charges against the Subject Property and with
the assessed amount, plus interest and processing charges, paid by Owner in installments along with the real
estate tax installments due for the Subject Property over a period of ten (10) years; and
WHEREAS, pursuant to the rules and regulations of the Metropolitan Council and applicable law, the
City is authorized to defer payment on the City’s SAC obligations for business properties within the City’s
jurisdiction in an amount not to exceed eighty percent (80%) of the Local SAC due for the Subject Property; and
WHEREAS, the City is willing to defer the WAC and Local SAC, in return for Owner's agreement to
have the costs assessed against the Subject Property as provided in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the City's willingness to defer the WAC and Local SAC, the
City and Owner agree as follows:
1. The foregoing Recitals are incorporated herein to the same extent as if they were repeated here.
2. Owner, for itself, its successors and assigns, agrees to have the Subject Property assessed for eighty
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percent (80%) of the total amount of the WAC and Local SAC owed in the amount of $12,486.40 ("Base
Assessment Amount"). An initial payment of $3,121.60 representing twenty percent (20%) of the total
amount of WAC and Local SAC owed shall be due at the time of the issuance of the Building Permit from
the City
3. Owner, for itself, its successors and assigns, agrees that the Base Assessment Amount assessed against
the Subject Property shall be paid by Owner over a term of ten (10) years, with interest accruing at a rate
of 2.06% per year on the unpaid balance. Owner further agrees that the City shall assess an additional
$50.00 against the Subject Property which represents $5.00 per year for the term of the assessment to
offset the fees imposed by Dakota County for this assessment, plus the City's administrative fee.
4. Owner agrees the City shall certify this assessment against the Subject Property to Dakota County for
collection with the real estate taxes payable in the year following the Effective Date and each year
thereafter, without the necessity of the City complying with any of the procedural or notice requirements
outlined in Minnesota Statutes, Chapter 429 or elsewhere.
5. In further consideration of the City's agreement to defer the WAC and Local SAC, Owner, for itself, its
successors and assigns, also hereby waives any and all right to appeal the amount assessed against the
Subject Property for the WAC and Local SAC, whether the basis for the appeal is that the assessment
exceeds the benefits to the Subject Property; on any procedural basis; or on any other basis whatsoever.
6. Owner understands and agrees that nothing contained herein shall be construed as a deferral of the
MCES SAC, as MCES SAC is being deferred through a separate agreement (the Master SAC Deferral
Agreement) between the City of Hastings and Metropolitan Council. Owner shall pay the costs of
recording this Agreement upon the public records of Dakota County.
7. If the Business ceases operations or moves from the Subject Property, the Owner is responsible for making
the deferral payments required by this Agreement up until the time that the Owner informs the City in writing
that the business has ceased operations or has moved from the Subject Property. The Owner must continue
to make payments under this Agreement until MCES determines that the City is not required to pay MCES
sewer availability charges related to the operation of the Subject Property.
8. The Owner shall be deemed in default of this Agreement for failure to make payments pursuant to the terms
herein or any other breach of this Agreement and failure to cure the default within ten (10) days of the mailing
of written notice by the City to Owner.
9. Upon default, the Owner must alert the City’s Economic Development Director. At this time, the City will
notify MCES about the closure and cease assessing the Subject Property for unpaid fees. If MCES requires
the City to pay the sewer availability charge, any balance remaining due under this Agreement shall be due
immediately and payable by the Owner without demand or notice by the City.
10. To the extent permitted by law, Owner agrees to pay all costs of collection, including reasonable attorneys’
fees and legal expenses, incurred by the City in collection of any amounts due herein.
11. Notices to be given under this Agreement shall be given by enclosing the same in a sealed envelope, postage
prepaid and deposited in the U.S. Postal Service, addressed to the parties as listed above.
12. None of the parties shall assign this Agreement, nor any interest arising herein, without the written consent
of the other party.
13. The covenants, waivers and agreements contained in this Agreement shall run with the Subject Property and
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shall bind future owners of the Property and their heirs, successors and assigns. Owner agrees to provide a
copy of this Agreement to any buyer of the Subject Property before Owner signs a purchase agreement to
sell the Subject Property.
14. The laws of the State of Minnesota shall govern this Agreement.
15. The provisions of this Agreement are severable. If any portion of this Agreement is, for any reason, held by
a court of competent jurisdiction to be contrary to law, such decision shall not affect the remaining portions
of this Agreement.
16. The entire Agreement of the parties is contained herein. This Agreement supersedes all oral agreements and
negotiations between the parties relating to the subject matter hereof as well as any previous agreements
presently in effect between the parties relating to the subject matter hereof. Any alterations, amendments,
deletions, or waivers of the provisions of this Agreement shall be valid only when expressed in writing and
duly signed by the parties, unless otherwise provided herein.
17. This Agreement may be executed in multiple counterparts, each of which shall be considered an original.
18. Owner signs this Agreement and waiver with full understanding of its legal rights and acknowledges it
has had sufficient opportunity to discuss this matter with an attorney of its choosing.
[The remainder of this page is intentionally left blank]
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IN WITNESS WHEREOF, the City and Owner has caused this Agreement to be executed by their duly authorized
representatives in duplicate on the respective dates indicated below.
CITY OF HASTINGS
______________________________
Mary Fasbender, Mayor
______________________________
Kelly Murtaugh, City Clerk
______________________________
Date
ACKNOWLEDGMENT
STATE OF MINNESOTA )
) ss.
COUNTY OF DAKOTA )
The forgoing instrument was acknowledged before me this ___ day of ________________, 20___, by Mary
Fasbender and Kelly Murtaugh, the Mayor and City Clerk of the City of Hastings, a Minnesota Municipal Corporation.
_________________________________________
Notary Public
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OWNER
________________________________
By:
________________________________
Its:
________________________________
Date
ACKNOWLEDGMENT
STATE OF MINNESOTA )
) ss.
COUNTY OF DAKOTA )
The forgoing instrument was acknowledged before me this ___ day of ________________, 20___, by
______________, the _____________________ of _____________________________, on behalf of the company.
_________________________________________
Notary Public
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SAC & WAC Payment
Deferral
City of Hastings & Metropolitan Council
PROGRAM INFORMATION, GUIDELINES AND APPLICATION INSTRUCTIONS
City of Hastings
101 4th Street East, Hastings, MN 55033-1955
T: 651-480-2350 F: 651-437-7082
www.hastingsmn.gov
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CITY OF HASTINGS: SAC & WAC DEFERRAL//UPDATED 06.11.2018 1
CITY OF HASTINGS
SAC & WAC PAYMENT DEFERRAL
PROGRAM INFORMATION, GUIDELINES AND APPLICATION INSTRUCTIONS
In order to minimize the impact of the Sewer Availability Charge (SAC) and Water Availability Charge
(WAC) to businesses within the City of Hastings, the City can provide a deferral option to pay SAC and
WAC fees over time, instead of an upfront payment due at the time of building permit issuance.
This program is in addition to the Metropolitan Council’s SAC Deferral Program, adopted in April
2017. The MetCouncil SAC Deferral Program, which is targeted to small businesses (under 25 SAC
units), is a means of assistance in paying Metropolitan Council SAC charges and allows a portion, up to
80%, of SAC to be paid over a period not to exceed ten years.
Under the updated program, the City of Hastings will enter into an agreement with eligible businesses
and/or property owners to spread SAC and/or WAC payments over a ten year term. Property owners
will be billed annually, on their property tax statement, for a period of ten years. If eligible, businesses
and/or property owners have the option to utilize the Metropolitan Council SAC Deferral Program, the
City of Hastings SAC & WAC Deferral Program, or both.
Metropolitan Council SAC Deferral Program: 10 year term; low interest rate*; 20% down,
plus the first monthly payment; secured by the Deferred Payment Agreement; eligible to
businesses with SAC unit determination of 25 units or less. This program is established and
regulated by a Master SAC Deferral Agreement executed between the City of Hastings and
Metropolitan Council.
City of Hastings SAC & WAC Deferral Program: 10 year term; low interest rate**; secured
by the Deferred Payment Agreement; eligible to businesses with a SAC & WAC unit
determination of 25 units or less. This program is established by City Ordinance and is intended
to parallel the Metropolitan Council Program guidelines.
Participants in the program are allowed to defer a maximum of 25 SAC and/or 25 WAC units.
Businesses with SAC and WAC determinations exceeding the program limits will be considered on a
case by case basis. The business owner and/or property owner must agree to participate and fill out an
application form with the requested information, in addition to executing the Deferred Payment
Agreement.
If you have any questions or would like to submit an application for the City of Hastings SAC & WAC
Deferral Program and/or the Metropolitan Council SAC Deferral Program, please contact John
Hinzman, Community Development Director, at jhinzman@hastingsmn.gov or 651-480-2378.
*Metropolitan Council SAC Deferral Program: principal on the deferred amount will be amortized monthly at a fixed interest rate based on MCES’
average cost of debt (per statute). MCES’ average cost of debt, computed on December 31 each year, will be used as the interest rate for all new deferrals
entered into the following calendar year.
**City of Hastings SAC & WAC Deferral Program: principal on the deferred amount will be amortized monthly at a fixed interest rate based on the 10
year Treasury Rate, locked in after application approval, at time of closing/document signing.
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CITY OF HASTINGS: SAC & WAC DEFERRAL//UPDATED 06.11.2018 2
CITY OF HASTINGS
SAC & WAC PAYMENT DEFERRAL APPLICATION
SECTION 1: BUSINESS INFORMATION
Business Name:________________________________________________________________________
Business Address:______________________________________________________________________
Business Contact/Title:__________________________________________________________________
Telephone:____________________________________________________________________________
Email:_______________________________________________________________________________
SECTION 2: PROPERTY OWNER INFORMATION
Property Owner Name:__________________________________________________________________
Address:_____________________________________________________________________________
Property ID Number:___________________________________________________________________
Telephone:____________________________________________________________________________
Email:_______________________________________________________________________________
SECTION 3: SAC UNIT DETERMINATION (Please attach SAC Determination Letter)
Address on SAC Determination Letter:_____________________________________________________
Date on SAC Determination Letter:________________________________________________________
Reference # on SAC Determination Letter:__________________________________________________
SAC Units (must be less than 25 units):_____________________________________________________
SAC Credits:___________________________________________________________________
Net SAC Units:_________________________________________________________________
WAC Units (must be less than 25 units):____________________________________________________
WAC Credits:___________________________________________________________________
Net WAC Units:________________________________________________________________
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CITY OF HASTINGS: SAC & WAC DEFERRAL//UPDATED 06.11.2018 3
SECTION 4: ELIGIBILITY
Please confirm by initialing the following to determine eligibility:
_____ The property is located in the City of Hastings, MN.
_____ The SAC Determination for the property is 25 units or less, prior to SAC credits.
_____ The WAC Determination for the property is 25 units or less, prior to WAC credits.
_____ I understand that the deferral term is not to exceed 10 years.
_____ I understand that the maximum deferment amount is 80% and a down payment, equal to 20% of the total
SAC and WAC fees is due at time of application approval.
_____ I understand that the property owner will be billed monthly on their regular utility bill.
_____ I understand that SAC and WAC credits are tied to the property and may not generally be transferred to
another location.
_____ I understand that in the event of a default, any outstanding payments will be assessed to the property and
the property owners waives the right to contest the assessment.
_____ I understand that, in the case of a business closure, the business or property owner must notify the City’s
Economic Development Coordinator. They City will verify the closure and future payment obligations
will be waived. The site will not be credited with the portion of SAC & WAC not paid, but will receive
credit for actual SAC & WAC paid.
I hereby certify that the above information and/or statements are true and correct to the best of my
knowledge. I understand that any false statements may disqualify me, the property, or this business from
the program.
Business Signature:________________________________________________ Date:______________
Property Owner Signature:_________________________________________ Date:______________
Community Development Staff Approval:_____________________________ Date:_______________
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CITY OF HASTINGS: SAC & WAC DEFERRAL//UPDATED 06.11.2018 4
For Staff to Complete:
Permit Number:________________________________________________________________________
Permit Issue Date:______________________________________________________________________
Deferral Start Date: ____________________________________________________________________
(1st day of month after MCES report due)
Percentage to be financed: _______________________________________________________________
(maximum of 80%)
SAC Deferral Amount: ___________X (% Financed) = ________ X __________ = ________________
(e.g. 5 SAC x 80% = 4) (# total SAC units) Deferred Units Current SAC Rate Deferral Amount in $
WAC Deferral Amount: ___________X (% Financed) =_________ X ___________= _____________
(e.g. 5 SAC x 80% = 4) (# of total WAC units) Deferred Units Current WAC Rate Deferral Amount in $
Total Down Payment: SAC______________ = __________________
Down payment in units Down Payment Amount in $
(+)
WAC______________ = __________________
Down payment in units Down Payment Amount in $
(+)
First Monthly Payment = _________________
_____________________________________________________________________________________
Total Down Payment: $_________________
Eligibility Conditions:
_____ The fee owner’s property taxes are in good standing.
_____ The business is in good standing with the State of Minnesota and is not in violation of Hastings City Code.
_____ The property is located within the City of Hastings.
_____ The business meets the definition of eligible commercial properties as stated in the City of Hastings SAC
& WAC Deferral Program and/or the Metropolitan Council’s SAC Deferral Program.
Community Development Staff:______________________________ Date:________________
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