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1 Ogden Redevelopment Agency Work Session: August 8, 2017, 2016 TRACKLINE ECONOMIC DEVELOPMENT PROJECT AREA - OGDEN BUSINESS EXCHANGE PROJECT - Participation and Incentive Agreement – OBE Vision, LLC for SR56, LLC Action: To Review and Discuss a Proposed Participation and Incentive Agreement with OBE Vision, LLC for the Benefit of SR56, LLC Executive Summary Representatives from Community and Economic Development will review the terms and conditions of a proposed Participation and Incentive Agreement with OBE Vision, LLC, the Developer of the Ogden Business Exchange business park located in the Trackline Economic Development Area. The Agreement provides $531,412 in incentives to offset lease costs for a 15,850 sq. ft. research and development facility to be occupied by SR56, LLC, a subsidiary of Selle Royal, an international bicycle components manufacturer and distributor. Background April 23, 2013 The Board adopted Resolution 2013-8 approving the Trackline Economic Development Area Plan and Budget. June 17, 2014 The Board adopted Resolution 2014-9 authorizing the acquisition of 51 acres of property located within the Trackline EDA for development of the Ogden Business Exchange business park. January 6, 2015 The Board approved Resolution 2015-1 authorizing the Agency to enter into a Master Land Transfer and Development Agreement (MLTDA) with OBE Vision, LLC. OBE now serves as the Developer for the Ogden Business Exchange business park. January 2015-July 2017 The Administrative staff have worked jointly with OBE to develop the business park in accordance with the Trackline EDA plan. The infrastructure for the park was completed in 2016 and the first business, ---PAGE BREAK--- 2 Ogden Redevelopment Agency Work Session: August 8, 2017, 2016 Enve Composites, located its headquarters in a new 70,000 square foot building in the Ogden Business Exchange business park. Staff continue to recruit new businesses to the Ogden Business Exchange, specifically targeting businesses tied to the outdoor recreation industry. July 11, 2017 The Board Office received an Administrative Transmittal requesting that the Board approve a Participation and Incentive Agreement with OBE Vision, LLC for the benefit of SR56, LLC. August 8, 2017 The Board will hold a work session to review the terms and conditions of the proposed Participation and Incentive Agreement with OBE Vision, LLC for the benefit of SR56, LLC. Proposal The Administration is requesting approval of a Participation and Incentive Agreement (Agreement) with OBE Vision, LLC for the benefit of SR56, LLC (OBE). Under the terms of the Agreement, the Agency would provide $531,412 in incentives over a five year period. Incentives would be used to provide reduced rent for a new 15,850 sq. ft. research and development facility for use by SR56, LLC, a subsidiary of Selle Royal Company, an international bicycle components manufacturer and distributor. A summary of key elements of the proposed Participation and Incentive Agreement follows: Parties to the Agreement Ogden Redevelopment Agency OBE Vision, LLC, (Brad Knowlton, Representative) ---PAGE BREAK--- 3 Ogden Redevelopment Agency Work Session: August 8, 2017, 2016 OBE Vision, LLC; Responsibilities Construct facility in accordance with plans and specifications under an Ogden City issued permit Obtain all other necessary permits Bear all cost of constructing improvements Allow access for purposes of determining compliance by Ogden City and Agency Comply with all local, state and federal laws Enter into a five year lease with a five year extension for 15,850 square foot research and development facility Ensure SR56 maintains continual occupancy of building Collect “Fixed Rent” from SR56 as follows: o Year 1 - $0 o Year 2 - $6,023 o Year 3 - $6,204 o Year 4 - $6,391 o Year 5 - $6,582 (Fixed Rent is a below market rate) Substantially complete facility no later than June 15, 2017 Obtain certificate of occupancy Comply with terms of agreement Agency Responsibilities Contribute $531,412 in incentives over a five year period as follows: o Year 1 - $157,890 o Year 2 - $99,562 o Year 3 - $89,418 o Year 4 - $91,320 o Year 5 - $93,222 Payment shall be made by July 31 of each year. Agency may elect to prepay all or any portion without Developer consent Notice of default must be made to Developer in writing Other ---PAGE BREAK--- 4 Ogden Redevelopment Agency Work Session: August 8, 2017, 2016 Agreement terminates upon last payment of incentive Disputes will be resolved by alternative dispute resolution Funding Source for Incentive Funding for the incentive is proposed to come from BDO Lease Revenues. The FY18 RDA Budget approved by the Board on June 6, 2017 included $160,000 for “Trackline Incentives,” funds which were programed to cover the first year incentive payment for the SR56 project. Therefore, if the Board decides to approve the Participation and Incentive Agreement a budget amendment will not be required. Staff Note: The SR56 project was not specifically identified during the budget process because the Administration and Developer were still in negotiations. Questions 1. Please review the terms and conditions of the proposed Participation and Incentive Agreement with OBE Vision, LLC. 2. Please provide additional information about Selle Royale and SR56 (e.g. type of business, what will occur at the Ogden facility, etc.) 3. Has construction of the SR56 building been completed? Has work by SR56 started at the facility? 4. Please identify the benefits to the Agency and City of this Participation Agreement. Board Staff Contact: Janene Eller-Smith, (801)629-8165 ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK---