Approved Agreements and Contracts Brownfield Development and Reimbursement Agreement The Docks 03-24-20

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                      Agenda Item Review Form
                                                   us
                           Muskegon City Commission

Commission Meeting Date: March 24, 2020                Title: Brownfield Development and
                                                       Reimbursement Agreement, The Docks
                                                       (Damfino Development LLC)

Submitted By: Dave Alexander                            Department: Economic Development


Brief Summary: Approval of the Brownfield Development and Reimbursement Agreement for the
Damfino Development LLC (The Docks) brownfield

Detailed Summary: The Brownfield Plan Amendment for Damfino Development LLC (The Docks)
was approved by the commission on Dec. 10, 2019. This agreement outlines how the Brownfield
Redevelopment Authority will reimburse the developer for eligible costs for the 240 residential site
condominiums at 1490 Edgewater for the next 30 years from property tax increments. The
$20,097,500 in eligible costs includes $3 million for the city's public infrastructure to support the
development. Reimbursement of the developer vs. the city will be done on a prorated basis, 82.5
percent to the developer and 17.5 percent to the city. The Muskegon Brownfield Redevelopment
Authority approved this agreement at its March 10, 2020 meeting.

Amount Requested: none immediately                    Amount Budgeted :


Fund(s) or Account(s):                                Fund(s) or Account(s) :


Recommended Motion: Approval of the Damfino Development LLC brownfield Development and
Reimbursement Agreement and authorize the city clerk and mayor to sign the same.



Check if the following Departments need to approve the item first:
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Fire Dept.   D
IT Dept.0


For City Clerk Use Only:
Commission Action :
                 DEVELOPMENT AND REIMBURSEMENT AGREEMENT

       This DEVELOPMENT AND REIMBURSEMENT AGREEMENT (the "Agreemei1t") is
made on March 10, 2020, by and among the CITY OF MUSKEGON BROWNFIELD
REDEVELOPMENT AUTHORITY, a Michigan public body corporate whose address is 933
Terrace Street, Muskegon, Michigan 49443 (the "Authority"), the CITY OF MUSKEGON, a
public body corporate whose addt'.eSs is 933 Terrace Street, Muskegon, Michigan 49443 (the
"City"), and DAMFINO DEVELOPMENT, LLC, a Michigan limited liability company whose
address is 560 Mart Street, Muskegon, Michigan 49440 (the "Developer").

                                            RECITALS

       A.      Pursuant to P.A. 381 of 1996, as amended ("Acf 381"), the Authority approved and
recommended a Brownfield Plai1 which was duly approved by the City (the ''Plan''). The Plan was
amended on November 12, 2019 (the "Amendment/' and, together with the Plan, the "B1·ownfielcl
Plan") to identify a new residential site condominium project proposed by Developer.

        B.      The Brownfield Plan includes specific eligible activities associated with the
Developees plati to develop approximately 76 acres of land located at 1490 Edgewater Street,
1875 Waterworks Road, and 3400, 3460, and 3474 Wilcox Avenue in Muskego11, Michigan
(collectively, the "Property").         ·

        C.     The Developer owns the Property, which is included in the Brownfield Plan as an
"eligible property" because it was determined to be a "facility", as defined by Part 201 of the
Natural Resources and Environmental Protection Act ("Part 201").

        D.      The Developer ii1tends to conduct eligible activities 011 the Ptoperty in ordet to
develop the site into appro::dmately 240 site condomini1.1n1s (the "Project"); including demolition,
site preparation, infrastructure improvements, a 15% contingency and brownfield plan/work plan
preparation and development, as described in the Brownfield Plan, with an estimated cost of
$17,047,500, plus intet'est at the current Applicable Federal Rate (the "Developer Eligible
Activities"). As part of the Project, the City also intends to co11duct certain eligible infrastrncture
improvement activities on the Ptoperty, as described in the Brownfield Plan, with an estimated
cost of $3,050,000, plus interest at the cmrent Applicable Federal Rate (the "City Eligible
Activities"). All of the Developer Eligible Activities and the City Eligible Activities (together,
the "Eligible Activities")' ate eligible for reimbursement under Act 381. The total cost of the
Eligible Activities, including contingencies, are not to exceed $20,097,500, plus intetest calculated
annually at the Applicable Federal Rate (the "Total Eligible Brownfield TIF Costs").

        E.       Act 38 l permits the Authority to capture and use local and ce11ain school property
tax revenues generated from the incremental increase in property value of a redeveloped
brownfield site constituting an "eligible property" under Act 381 (the "Brownfield TIF
Revenue") to pay or to reimburse the payineht of Eligible Activities co11ducted on the "eligible
property." The Brownfield TIF Revenue will be used to reimburse the Developer for the
Developer Eligible Activities and the City for the City Eligible Activities incm1'ed and approved
for the Project.

       F. ··· ·· In· accordance with Act 3 81,the parties desire to· establish the procedure for using
the available Bmwnfield TIF Revenue generated from the Property to reimburse the Developer

                                                  7
   and the City for completion of Eligible Activities on the Property in an amount not to exceed the
   Total Eligible Brownfield TIF Costs.

           NOW, THERFORE, the parties agree as follows:

   1.      Reimbutsement Source.

            (a)    During the Tenh (as defined below) of this Agreement, and except as set fo11h in
   paragraph 2 below, the Attthority shall teimbutse the Developer and City for the costs of their
   Eligible Activities conducted on the Ptoperty from the Brownfield TIF Revenue collected from
   the real and personal prope11y taxes on the Property. The amount reimbursed to the Developer and
   City, respectively, for their Eligible Activities shall not exceed the Total Eligible Brownfield TIF
   Costs, and reimbursements shall be made on a pro rata basis of approved costs sub1nitted and
   approved in connection with the Developer Eligible Activities and the City Eligible Activities, as
   follows:

                   (i) for any period for which both the Developer and the City request reimbursement
           for Eligible Activities, the Authority shall pay 82. 5% of available Brownfield TIF Revenue
           to the Developer to reimburse the costs of Developer Eligible Activities submitted for that
           period, and pay 17 .5% of available Brownfield TIF Revenue to the City to reimburse the
           costs of City Eligible Activities submitted during that period; and

                   (ii) for any period for which the Developer or the City have Eligible Activities
           submitted and approved for reimbursement by the Authority that are less than the available
           Browi1field TIF Revenue, the Authority may use the Brownfield TIF Revenue to first pay
           the lesser of the Eligible Activities and use the balance ofthe Btownfield TIF Revenue to
           reimburse the other party,

           (b)     The Authority shall capture Brow11field TIF Revenue from the Prope11y a.nd
   reimburse the Developer and City for their Eligible Activities until the earlier of the City and
   Developer each being fully reimbursed, with interest, or December 31, 2051. Unless otherwise
   prepaid by the Authority, payments to the City and Developer shall be made on a semi-annual
   basis as ii1creme11tal local taxes are captured and available.

   2.     Developer Reimbursement Process.

            (a)     The Developer shall submit to the Authority; not more frequently than on a
   qua11erly basis, a "Request for Cost Reimbursement" for Developer Eligible Activities paid for by
   the Developer during the prior period. All costs for the Developer Eligible Activities must be
   consistent with the approved Brownfield Plan. The Developer must include documentation
   sttfflcient for the Authority to determine whether the costs incurred were for Developer Eligible
   Activities, including detailed invoices and proof of payment. Copies of all invoices for Developer
   Eligible Activities must note what Developer Eligible Activities they support.

               (b)      Unless the Authority disputes whether such costs are· for Developer Eligible
       Activities within thirty (30) days after receiving a Request for Cost Reimbursement from the
       Developer, the Authority shall pay the Developer the ainounts for which· submissions have been
...... made pursuantto paragraph 2(a) .of this Agreement, fromwhich the submission may.be.wholly.or...
       pa11ially paid from available pro rata Brownfield TIF Revenue from the Ptoperty.

                                                   8
              (i)    The Developer shall cooperate with the Authority's review of its Request
       for Cost Reimbursement by providing supplemental information and documentation which
       may be reasonably teqltested by the Authority.

               (ii)    If the Attthority determines that requested costs are ineligible for
       reimbursement, the Authority shall notify the Developer in writing of its reasons for such
       ineligibility within the Authority's thirty (30) day period of review. The Developer shall
       then have thirty (30) days to provide supplemental information or documents to the
       Authority den1onstrating that the costs are for Developer Eligible Activities and are eligible
       for reimbursement.

        (c)     If a pai1ial payment is made to the Developer by the Authority because of
insufficient Brownfield TIF Revenue captured in the semi-annual period for which reimbursement
is sought, the Authority shall make additional payments toward the remaining amount within thirty
(30) days of its receipt of additional Brownfield TIF Reve:nue from the Pl'operty until all of the
amounts for which submissions have been made have been fully paid to the Developel', or by the
end of the Term (as defined below), whicheve1· occurs first. The Authority is not required to
reimburse the Developer from any source other than Brnwnfield TIF Revenue.

        (d)     The Authority shall send all payments to the Developer by registered or certified
mail, addressed to the Developei• at the address shown above, or by electronic ftmds transfer
dfrectly to the Developer's bank account, The Developer may change its address by providing
written notice sent by registered or certified mail to the Authority.
3,     City Reimbursement Process.

        (a)     The City shall submit to the Authority, not more frequently than on a quatterly
basis, a (\Request for Cost Reimbursement" for City Eligible Activities paid for by the City during
the prior period, All costs for the City Eligible Activities must be consistent with the apprnved
Brownfield Plan. The City must include docmJ1entation sufficient for the Authority to determine
whether the costs incurred were fot City Eligible Activities, including detailed invoices and proof
of payment. Copies of all invoices for City Eligible Activities must note what City Eligible
Activities they support.

        (b)     Unless the Alithodty disputes whether such costs are for City Eligible Activities
within thirty (30) days after receiving a Request for Cost Reini.bl1rsement from the City, the
Authority shall pay the City the amounts for which submissions have been made pursuant to
paragraph 3(a) ofthis Agreement, from which the submission may be wholly or partially paid from
available pro rctta Brownfield TIF Revenue from the Prnperty.

               (i)   The City shall cooperate with the Authority's review of its Request for Cost
       Reimbutsement by providing supplemental infortnation artd documentation which may be
       reasonably requested by the Authority,

               (ii)   If the Authority determines that requested costs are ineligible for
          reimbursement, the Authority shall notify the City in writing of its reasons for such
          ineligibility within the Authority's thirty (30) day period of review. The City shall then
     · •· have:thhty (30} days to provide supplemental information· or dociunents to the Authority ·
          demonstrating that the costs ai·e fot City Eligible Activities and are eligible for
          reimbursement.
                                                9
         (c)    If a partial payment is made to the City by the Authority because of insufficient
Brownfield TIF Revenue captured in the semi-annual period for which reimbursement is sought,
the Authority shall make additional payments toward the remaining amount within thirty (30) days
of its receipt of additional Brownfield TIF Revenue from the Property until all of the amounts for
which submissions have been made have been fully paid to the City, or by the end of the Term (as
defined below), whichever occurs first. The Authority is not required to reimburse the City from
any source other than Brownfield TIF Revenue.

        (d)     The Authority shall send all payments to the City by registered or certified mail,
addressed to the City at the address shown above, or by electronic funds transfer directly to the
City's bank account. The City may change its address by providing written notice sent by
registered or certified mail to the Authority.

4.      Term of Agreement.

        The Authority's obligation to reimburse the City and Developer for the Total Eligible
Brownfield TIF Costs incurred by each party under this Agreement shall terminate the earlier of
the date when all reimbursements to the City and Developer required under this Agreement have
been made or December 31, 2051 (the "Term"). If the Brownfield TIF Revenue ends before all of
the Total Eligible Brownfield TIF Costs have been fully reimbursed to the City and Developer, the
last reimbursement payment by the Authority shall be paid from the summer and winter tax
increment revenue collected during the final year of this Agreement.

5.      Adjustments.

         If, due to an appeal of any tax assessment or reassessment of any portion of the Pr9perty,
or for any other reason, the Authority is required to reimburse any Brownfield TIF Revenue to any
tax levying unit of government, the Authority may deduct the amount of any such reimbursement,
including interest and penalties, from any amounts due and owing to the Developer and City on a
pro r(tla basis. If all amounts due to the City and Developer under this Agreement have been fully
paid or the Authority is no longer obligated to make any further payments to the City or Developer,
the Authority shall invoice the Developer and City for the amount of such reimbursement on a pro
1'Ctfa basis and the Developer and City shall pay the Authority such invoiced amount within thirty
(30) days of the receipt of the invoice. Amounts withheld by or invoiced and paid to the Authority
by the Developer and City pursuant to this paragraph shall be reinstated as Developer Eligible
Activities and City Eligible Activities, respectively, for which the Developer and City shall have
the opportunity to be reimbursed in accordance with the terms, conditions, and limitations of this
Agreement. Nothing in this Ag1·eement shall limit the right of the Developer to appeal any tax
assessment.

6.     Legislative Authorization.

        This Agreement is governed by and subject to the restrictions set forth in Act 381. lfthere
is legislation enacted in the future that alters or affects the amount of Brownfield TIF Revenue
subject to capture, eligible prope1iy, 01· Eligible Activities, then the Developer's and City's rights
and the Authority's obligations under this Agreement shall be modified accordingly as required
by law, or by agreement of the parties.



                                                 10
 7.     Notices.

         All notices shall be given by registered or certified mail addressed to the parties at their
 respective addresses as shown above. Any party may change the address by written notice sent by
 registered or certified mail to the other party.

 8.     Assignment.

         This Agreement' and the rights and obligations under this Agreement shall not be assigned
 or otherwise trnnsferred by any party without the consent of the other pa1ty, which shall not be
 unreasonablywithheld,provided, however, the Developer and City may assign their interest in this
 Agreement to an affiliate without the pl'ior written consent of the Authority if such affiliate
 acknowledges its obligations to the Authority under this Agreement upon assignment in writing
 on or prior to the effective date of such assignment, provided,further, that the Developer and City
 may each make a collateral assignment of their pro rata share of the Brownfield TIF Revenue for
 project financing purposes. As used in this paragraph, "affiliate" means any corporation, company,
 pa1inership, limited liability company, trust, sole proprietorship or other entity or individuaf which
 (a) is owned or controlled by the Developer or City, (b) owns or controls the Developer or City or
 (c) is under common ownership or control with the Developer or City. This Agreement shall be
 binding upon and inure to the benefit of any successors or permitted assigns of the pa1iies.

 9.     Entire Agreement.

         This Agreement supersedes all agreements previously made between the parties relating to
 the subject matter. There are no other understandings or agreements between the parties.

· 10,   Non-Waiver.

         No delay or failure by either party to exercise any right under this Agreement, and no partial
 or single exercise of that right, constitutes a waiver of that or any other right, unless otherwise
 expressly provided herein.

 11.    Governing Law.

        This Agreement shall be construed in accordance with and-governed by the laws of the
 State of Michigan.

 12.    Counterparts.

       This Agreement may be executed in two or more counterparts, each of which shall be
 deemed an original but all of which together shall constitute one and the same instrument.



                                       [Signature page follows]




                                                  11
       The parties have executed this Agreement on the date set forth above.



                                               CITY OF MUSKEGON BROWNFIELD
                                               REDEVELOPMENT AUTHORITY


                                             -~~~
                                                By: Martha Bottomle)/
                                                Its: Chairperson




                                                DAMFINO DEVELOPMENT, LLC



                                                By:    fc.dTi' A, M     tuse( M4')
                                                Its:   MC< n a.~ ~ r-
19355689-3




                 Signature Page to Development and Reimbursement Agreement

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