Title
Committee Report: Finance (Paper #477 That the Mayor be authorized to execute a Special Tax Assessment Agreement with Hoff's Bakery Co.)
The Standing Committee on Finance, to whom was referred Paper #477 Series of 2014, having considered the same make the following report: Committee recommends that this paper be reported out favorably with the following amendment: That the following language be substituted:
Whereas The City Council of the City of Malden strongly supports increased economic development to provide additional jobs for qualified residents of the city, which will enhance commercial and industrial activity within the city and develop a healthy economy and stronger tax base; and
Whereas The City Council desires a beneficial economic use, creating jobs for local residents, expanding business within the city and developing a healthy robust economy and stronger tax base for the property known as and numbered 35 Green St. and
Whereas The City Council intends to use Special Tax Assessments as an economic development tool, allowed under the Massachusetts Economic Development Incentive Program, where the needs of a specific project are reasonably expected to be offset by resulting economic development benefit;
Now, therefore, be it
Ordered: That the City Council finds the following:
that the proposed relocation of Hoff's Kitchen Co. Inc. to 35 Green St. complies with the definition of a project proposal set forth in section 3A of Chapter 23A of the Massachusetts General Laws;
that the project will not overburden the municipality's supporting resources including, but not limited to, transportation access, water and sewer hook-ups, lighting, and other utilities;
that the project proposal includes a workable plan, with precise goals and objectives, by which Hoff's proposes to realize the increased employment objectives for the project;
that the business plans to employ aggressive affirmative action goals, objectives and identification and recruitment techniques and a plan for increased employment from among residents of the community;
that the project as described in the proposal, together with the municipal resources committed to the project, will, if certified, have a reasonable chance of increasing or retaining employment opportunities as advanced in the proposal; and
And be it further ordered that, based on the foregoing findings, the City Council endorses the Hoff's Kitchen Co. Inc. Economic Development Incentive Proposal for the property known as and numbered 35 Green St. and authorizes submission of an application related thereto to the Massachusetts Economic Assistance Coordinating Council;
And be it further ordered that the Mayor be authorized to sign the attached Special Tax Assessment agreement with Hoff's Kitchen Co. Inc.
SPECIAL TAX ASSESSMENT AGREEMENT
BETWEEN
THE CITY OF MALDEN, MASSACHUSETTS
And
HOFF'S KITCHEN CO., INC.
And
VINCENT FRATTURA, PRESIDENT AND OWNER
This AGREEMENT is made this _____ day of ______________________________________, 2014 by and between the City of Malden, Hoff's Kitchen Co., Inc. and Vincent Frattura, President and Owner of Hoff's Kitchen Co., Inc.
WHEREAS Hoff's Kitchen Co., Inc., hereafter the "Company", is a Massachusetts corporation with a principal place of business at 1 Brainard Avenue, Medford, MA 02155; and
WHEREAS, Vincent Frattura, hereafter the "Owner", is the President and Owner of Hoff's Kitchen Co., Inc., with a principal place of business at 1 Brainard Avenue, Medford, MA 02155; and
WHEREAS the City of Malden, hereafter the "City", is a Massachusetts municipal corporation acting through its Mayor as authorized by the Malden City Council, with a principal place of business at City of Malden, 200 Pleasant Street, Massachusetts, 02148; and
WHEREAS, the Owner intends to purchase the property located at 35 Green Street in Malden, and identified as Malden Assessor's Parcel ID 058 241 102, hereinafter the "Property" and/or the "Project"; and
WHEREAS, the Company intends to expand its gourmet dessert manufacturing business and plans by leasing a 101,200 square foot facility located at 35 Green Street in Malden, and identified as Malden Assessor's Parcel ID 058 241 102, the "Property" and/or the "Project"; and
WHEREAS the Project is expected to result in an estimated capital investment of fifteen million three hundred thousand dollars, $15,300,000.00, including seven million dollars, $7,000,000.00 for building purchase and eight million three hundred thousand dollars, $8,300,000.00 for renovation costs by Owner and Company; and
WHEREAS the Company shall retain sixty (60) full-time jobs and create seventy (70) new permanent full-time jobs, which Company agrees will be opened and made available first to qualified residents of Malden; and
WHEREAS the City strongly supports increased economic development to provide for additional jobs, to expand business within the City, and to develop a healthy economy and stronger tax base; and
WHEREAS, the Malden City Council resolved November 18, 2014, to allow the use of Special Tax Assessment as a tool to encourage economic development within the City; and
WHEREAS, the Malden City Council resolved on November, 2014 to endorse the within Special Tax Assessment Agreement between the City and the Company; and,
WHEREAS, the City, the Owner and the Company agree that this Special Tax Assessment Agreement, the "Agreement", shall have independent significance and operate as a sealed Agreement between the City, the Owner and the Company for the term stated herein;
NOW, THEREFORE, in consideration of the obligations contained herein, the City, the Owner and the Company mutually agree as follows:
A. THE CITY'S OBLIGATIONS
1. Subject to the Company's compliance with its obligations herein, the City shall grant a Special Tax Assessment "STA" exemption to the Company in accordance with Massachusetts General Laws, Chapter 23A, Section 3E. Said exemption shall be valid for a period of five (5) years, the "Exemption Term", beginning with Fiscal Year 2016 and shall provide an exemption from taxation on the full assessed value of the Property as follows:
FISCAL YEAR EXEMPTION
2016 100%
2017 80%
2018 60%
2019 40%
2020 20%
2. For each of the five (5) years of this Agreement, the Company will pay taxes on a percentage of the value of the Property and be granted an exemption of a percentage of the full value of the Property. In the sixth (6th) year and thereafter, the Company will pay the full value of Property taxes assessed.
3. The exemption schedule shall be based on the assessed value of the Property for each year in which the exemption applies.
4. The STA will apply to the full assessed valuation of the Property. The STA shall remain in place regardless of any increased value of the Property during the STA term.
B. THE COMPANY'S OBLIGATIONS
1. The Owner shall purchase, and the Company shall renovate, a 101,200 sq. ft. facility at 35 Green Street in Malden for use by the Company.
2. The Owner and the Company shall comply with all state and local building, zoning, permitting and ordinance requirements with respect to renovation of the Property.
3. The Company shall retain seventy-eight (78) full-time jobs in the Commonwealth and create 70 new permanent full-time jobs within sixty (60) months following the Start Date. The Company agrees that these jobs will be offered and made available to qualified Malden residents prior to being offered to any other candidates for employment. The City may assist the Company by providing names, when available to the City, of qualified persons to be contacted by the Company or its Employment Agency for the created jobs, or jobs which become available through attrition. The City's agreement to assist when able shall not mitigate the Company's obligation hereunder
4. The Company's job creation plans are outlined in the Job Creation and Workforce Analysis Plan section of the Incentive Application submitted to the State by the Company in connection with the Company's request for an STA exemption, the "Application".
5. The Owner and the Company expect to invest fifteen million three hundred thousand dollars, $15,300,000.00, including seven million dollars, $7, 000,000.00 for building purchase and eight million three hundred thousand dollars, $8,300,000.00 for renovation costs.
6. The Company shall submit annual reports on job creation, job retention, and new investments at the Property to the City and the State Economic Assistance Coordinating Council each year of the Application designation. The annual report shall include the number of permanent full-time jobs created, the number of Malden residents hired and total hired, and the value of capital investments made by the Company with respect to the Property annually and on a cumulative basis.
7. If the Company fails to meet the obligations specified in Section 1 through 5 above, the City, acting through its City Council, may take action to request decertification of the Project by the Massachusetts Economic Assistance Coordinating Council in accordance with Massachusetts General Law Chapter 23A Section 3F. Upon decertification, the City shall discontinue the Special Tax Assessment Exemption benefits provided to the Company prospectively, commencing the first fiscal year in which the Project is decertified, or if such benefits have already been received by the Company for the fiscal year in which the Project has been decertified, commencing as of the fiscal year immediately following that fiscal year.
8. During the term of this Agreement, if the Owner decides to sell the Property, or the Company decides to sell the business or to otherwise convey or transfer control of the Property or business and/or operations thereof, Owner and Company shall provide three (3) months advanced notice of said sale, conveyance or transfer. Said notice shall be given by certified mail, return receipt requested, to the Mayor, City Hall, 200 Pleasant Street, Malden, Massachusetts, 02148, with a copy to the Malden City Council, c/o Malden City Clerk, 200 Pleasant Street, Malden, Massachusetts, 02148.
9. The Owner agrees and acknowledges that in the event of its sale, conveyance or transfer of the Property, or any portion thereof, the City shall discontinue the Special Tax Assessment Exemption benefits provided to the Company prospectively, commencing the first fiscal year in which the Property or any portion thereof is sold, conveyed or transferred, decertified, or if such benefits have already been received by the Company for the fiscal year in which the Property or any portion thereof is sold, conveyed or transferred, commencing as of the fiscal year immediately following that fiscal year.
10. The Company shall maintain its legal existence and Massachusetts corporate status and remain in good standing in accordance with the laws of the Commonwealth of Massachusetts.
11. The Company shall comply with all regulatory requirements to remain eligible for Certification in accordance with M.G.L. c. 23A and Chapter 287 of the Acts of 2014.
12. The Company shall continue to operate business and remain at the Property for a minimum period of fifteen (15) years from the date of the first fiscal year STA exemption granted hereunder.
13. If the Company relocates within the fifteen-year period, the City shall be entitled to damages and the Company shall pay damages as described in Paragraph 15 herein.
14. If the Company is decertified by the Massachusetts Economic Assistance Coordinating Council, the City shall discontinue the Special Tax Assessment Exemption benefits provided to the Company prospectively, commencing the first fiscal year in which the Project is decertified, or if such benefits have already been received by the Company for the fiscal year in which the Project has been decertified, commencing as of the fiscal year immediately following that fiscal year.
15. Damages to the City for breach of Company's obligations herein shall fixed at the difference between the STA exemption granted and the amount paid during each of the Fiscal Years the STA exemption is in effect, according to the following schedule:
FISCAL YEAR DAMAGES TO BE PAID
2016 100% of Property assessed value
2017 80% of Property assessed value
2018 60% of Property assessed value
2019 40% of Property assessed value
2020 20% of Property assessed value
The Company agrees that it shall repay the full amount of any exemption provided during the five-year STA exemption period in the event it fails to comply with its obligations herein.
16. During the term of this Agreement, if the Company files any petition relative to any bankruptcy, insolvency, request for reorganization, for appointment of receiver or trustee, or for the arrangement of debt, the Company shall provide written advance notice to the City which shall be given by certified mail, return receipt requested, to the Mayor, City Hall, 200 Pleasant Street, Malden, Massachusetts, 02148, with a copy to the Malden City Council, c/o Malden City Clerk, 200 Pleasant Street, Malden, Massachusetts, 02148.
C. OTHER CONSIDERATIONS
17. This Agreement shall commence upon execution, and its term shall continue for fifteen years following the date of the first fiscal year STA exemption granted pursuant to Paragraph 1 herein.
18. If the Company decides to expand the Property at any time during the life of the Special Tax Assessment Agreement, the City and the Company may renegotiate the Special Tax Assessment Agreement to exempt all or part of the expansion from property taxes. The exact amount of that exemption will be determined at the time of the expansion.
19. This Agreement shall be interpreted and enforced in accordance with the laws of the Commonwealth of Massachusetts.
20. The City, the Owner and the Company hereby acknowledge and agree that this Agreement is intended to be executed as a sealed instrument.
Executed as sealed instrument on the day and year first above written.
CITY OF MALDEN HOFF'S KITCHEN CO., INC.
___________________________ ______________________________
Gary Christenson, Mayor Vincent Frattura, President
______________________________
Vincent Frattura, Owner
By this vote, the City Council, on behalf of the City of Malden, intends to comply in all respects with any provisions of MGL Chapter 23A required of the City to achieve project certification for the application of Hoff's Kitchen Co. Inc