HomeMy WebLinkAbout6.g. Approval of Host Agreement with Geronimo Energy RC�SEI�✓IOLINT EXECUTIVE SUMMARY
CITY CQUNCIL
City Council Meeting: December 2, 2014
AGENDA ITEM: Approval of Host Agreement with AGENDA SECTION:
Geronimo Energy Consent
PREPARED BY: Kim Lindquist, Community Development AGENDA NO. �
D i rector .�
ATTACHMENTS: Agreement APPROVED BY:
RECOMMENDED ACTION: Motion to authorize the Mayor to execute the attached
Agreement
SUMMARY
As part of the review of the Geronimo Energy project there have been discussions about payment in lieu of
taxes. The agreement attached recognizes some payment to the City as the solar garden improvements are
not subject to property taxes because of they qualify for an equipment and personal propert�� tax exemption.
The land where the solar gardens are located will continue to pay property taxes.
BACKGROUND
The City was recendy approached by Geronimo Energy about supporting a solar project in the City with a
location to be determined. Initial support by the City Council was based upon the idea that the project could
comply with the newly approved zoning ordinance and that the developed property would pay taxes. Under
the program Geronimo is now operating under, the solar equipment will be exempt from property taxes.
Should the Council approve the IUP for Geronuno, the attached host agreement would lead to payment in
lieu of taxes. If the Council does not approve the IUP, the host agreement would not be applicable. The
agreement requires payment based upon the amount of solar arrays that are installed. It is estimated that if
full build out of the site occurs in the manner anticipated by Geronimo, payments would equal $25,000/year.
RECOMMENDATION
Staff recomtnends the Mayor execute the attached agreement relating to payment of a host fee in
conjunction�vith development of a solar community garden by Geronimo Energy- Rosemount
Communiry Solar Garden (RCSG),LLC.
HOST COMMUNITY AGREEMENT
This HOST COMMLTNITY AGREEMENT ("Agreement"), dated and effective as of
, 2014 (the "Effective Date"), is entered into by and between Rosemount
Community Solar Gardens, LLC ("RCSG"), a Delaware limited liability company, and the City
of Rosemount ("City"), a Minnesota municipal corporation (collectively, the "Parties").
RECITALS
WHEREAS, RCSG intends to develop one or more solar garden projects, pursuant to
Minn. Stat. § 216B.1641, each with a nameplate capacity of up to 1 MW, located in Section 31,
Township ll5, Range 18, City of Rosemount, Dakota County, Minnesota (collectively, the
"Projects");
WHEREAS, the City possesses certain regulatory authority over the development,
construction and operation of the Projects, and pursuant to the City of Rosemount Zoning
Ordinance Section 11-2-12, RCSG must obtain an Interim Use Permit (the "IUP") from the City
prior to construction and operation of the Projects;
WHEREAS, the Parties acknowledge that the City will incur certain administrative
expenses in connection with issuing, administering and enforcing the IUP and monitoring and
inspecting the Projects (collectively, the "Administrative Costs");
WHEREAS, the Projects may qualify for certain personal property and solar energy
production tax exemptions provided under Minn. Stat. §§ 272.02 and 272.0295 to certain solar
energy generating systems, as defined in Minn. Stat. § 272.0295 (collectively, the "Tax
Exemptions");
WHEREAS, the Parties acknowledge that if the Projects qualify for such personal
property and solar energy production tax exemptions, the City will not have available to it certain
tax revenues that would otherwise be available to offset the City's Administrative Expenses;
NOW, THEREFORE, in consideration of the promises and the mutual obligations of
the Parties contained herein, the Parties agree as follows:
ARTICLE 1
ANNUAL REIMBURSEMENT
l.l Annual Reimbursement. To provide the City a source of revenue to offset the
Administrative Costs incurred by the City during the prior year, RCSG will pay or cause to be
Host Community Agreement
5 1 762373—November ,2014
paid to the City annually $1.20 per kilowatt of project nameplate capacity for the Projects that
(the "Annual Reimbursement") until the Agreement is terminated pursuant to Section 2.1 below.
The amount of the Annual Reimbursement will be calculated based upon the nameplate capacity
of the Projects that are fully developed and in operation as of the date such payment is made.
Any Annual Reimbursement shall be accompanied by a signed statement identifying the number
of kilowatts of nameplate capacity to which the payment applies. The first Annual
Reimbursement is due to the City on the first anniversary of the date of Commencement of
Commercial Operation (as defined below). For each subsequent year that the Agreement
remains in effect, Annual Reimbursement payments are due to the City on the annual
anniversary of Commencement of Commercial Operation. For example, if Commencement of
Commercial Operation occurs on December 15, 2014, the first Annual Reimbursement would be
due to the City on December 15, 2015, and each subsequent Annual Reimbursement payment
would be due on December 15 of each subsequent year that the Agreement remains in effect.
For purposes of this Agreement, "Commencement of Commercial Operation" shall mean the
date that the first of the Projects is fully developed and has commenced commercial operation.
1.2 No Reimbursement. The Parties acknowledge and agree that the purpose of this
Agreement is to mitigate the impact to the City of the Tax Exemptions, and further that, if the
Tax Exemptions are unavailable to RCSG during any year, RCSG should not be required to pay
the Annual Reimbursement. Notwithstanding anything in this Agreement to the contrary, the
City and RCSG acknowledge and agree that RCSG will not pay or cause to be paid to the City
any Annual Reimbursement if, under Chapter 272 of the Minnesota Statutes or any successor or
equivalent state or local law, regulation or ordinance, the Projects are subject to personal
property or solar energy production taxes at any time during the year prior to the due date of the
Annual Reimbursement. If RCSG determines that the Projects are subject to such personal
property or production tax for a particular year, RCSG shall provide written notice to the City of
such tax applicability, including the basis of RCSG's determination.
1.3 Reimbursement Limitation. The Parties agree that, for the duration of this
Agreement, the Annual Reimbursement shall be the only payment RCSG is obligated to make to
the City relating to the Administrative Costs, except for customary permit fees (e.g., building
permit fees), utility use fees (e.g., water bills), special assessments for public improvements, any
payment agreed to under an approved IUP by the City of Rosemount, and any penalties and/or
related enforcement costs assessed against RCSG pursuant to City Code as a result of violations
of the terms of the IUP.
Host Community Agreement
51762373—November ,2014
ARTICLE 2
GENERAL PROVISIONS
2.1 Termination. This Agreement shall terminate upon the earlier of: (i) termination
of the IUP; (ii) RCSG's written notice to the City that the Projects have been decommissioned;
or(iii) mutual written agreement of the Parties.
2.2 Amendments to Agreement. This Agreement may be amended by mutual
written agreement of the Parties. Amendments shall be effective only if in writing and signed by
the Parties.
2.3 Assi�nments. Upon written notice to the City, RCSG may assign this Agreement
to a successor or assign. Any such successor or assign shall assume all of RCSG's obligations,
responsibilities and duties pursuant to this Agreement. This Agreement shall not be assigned by
the City without the advance written consent of RCSG.
2.4 Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Minnesota.
2.5 Severability. If any provisions of this Agreement are determined to be
unenforceable, invalid or excessive, the remainder of this Agreement shall remain unaffected and
in full force and effect.
2.6 Authority. The Parties represent and warrant that they have the respective power
and authority, and are duly authorized, to enter into this Agreement on the terms and conditions
herein stated, and to execute, deliver and perform their obligations under this Agreement.
2.7 No Third-Party Beneficiary. This Agreement is made and entered into for the
sole protection and benefit of RCSG, and its successors and assigns, and the City, and its
successors and assigns. No other person shall have any right of action based upon any provision
of this Agreement.
2.8 Entire Agreement. This Agreement, together with all exhibits hereto, constitutes
the entire agreement between the Parties with respect to the subject matter of this Agreement.
This Agreement is specifically intended to supersede all prior agreements whether written or
oral.
2.9 Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same instrument.
Host Community Agreement
51762373—November ,2014
ARTICLE 3
NOTICE
3.1 Addresses. Written notices under this Agreement shall be given to the Parties at
their addresses set forth below. Notices may be given by U.S. certified mail, personal delivery,
or professional messenger.
If to the Ciry.•
Dwight Johnson, City Administrator
2875 145`" Street W
Rosemount MN 55068
If to RCSG:
Rosemount Community Solar Gardens, LLC
7650 Edinborough Way, Ste 725
Edina, MN 55435
With Copy to:
Dan Yarano
Fredrikson & Byron, P.A.
200 South Sixth Street, Suite 4000
Minneapolis, MN 55402-1425
Telephone: (612) 492-7149
Fax: (612) 492-7077
dyarano@fredlaw.com
3.2 When Notice Effective. Unless otherwise provided in this Agreement, notice by
U.S. certified mail, personal delivery, or professional messenger shall be effective upon receipt.
Any party at any time by Notice to the other party may designate a different address or person to
which such notice or communication shall be given.
[Signature page followsJ
Host Community Agreement
51762373—November ,2014
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
Effective Date.
ROSEMOUNT COMMUNITY SOLAR
GARDENS, LLC
By:
Name:
Title:
CITY OF ROSEMOUNT
By:
Name:
Title:
Host Community Agreement
51762373—November ,2014