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CREDIT ENHANCEMENT AGREEMENT betweenAAA, _________(ADDRESS) and BBB CORPORATION Dated as of _________,_________,_________(M/D/Y) .
TABLE OF CONTENTS
ARTICLE I
Section 1.1. Definitions
Section 1.2. Interpretation and Construction
Section 1.3. Development Program
Section 1.4. Completion
Section 1.5. City Costs
Section 1.6. Agreement Controls
ARTICLE II
Section 2.1. Creation of Development Program Fund
Section 2.2. Liens
Section 2.3. Deposits into Development Program Fund
Section 2.4. Monies Held in Trust
ARTICLE III
Section 3.1. Credit Enhancement Payments
Section 3.2. Failure to Make Payment
Section 3.3. Manner of Payments
Section 3.4. Obligations Unconditional
Section 3.5. Limited Obligation
Section 3.6. Calculation of Retained Tax Increment
Section 3.7. Revaluation
ARTICLE IV
Section 4.1. Pledge of Project Cost Account
Section 4.2. Perfection of Interest
Section 4.3. Further Instruments
Section 4.4. No Disposition of Developer Subaccount
Section 4.5. Access to Books and Records
ARTICLE V
Section 5.1. Events of Default
Section 5.2. Remedies on Default
Section 5.3. Remedies Cumulative
Section 5 .4. Agreement to Pay Attorneys' Fees and Expenses
Section 5.5. Tax Laws
ARTICLE VI
Section 6.1. Effective Date and Term
Section 6.2. Cancellation and Expiration of Term
ARTICLE VII
Section 7.1. Consent to Pledge and/or Assignment
Section 7.2. Pledge, Assignment or Security Interest
Section 7.3. Assignment
ARTICLE VIII
Section 8.1. Successors
Section 8.2. Parties in Interest
Section 8.3. Severability
Section 8.4. No Personal Liability of Officials of the City
Section 8.5. Counterparts
Section 8.6. Governing Law
Section 8.7. Notices
Section 8.8. Amendments
Section 8.9. Net Agreement
Section 8.10. Benefit of Assignee or Pledges
Section 8.11. Integration
Section 8.12. Disputes
Section 8.13. Arbitration
THIS CREDIT ENHANCEMENT AGREEMENT dated as of _________,_________,_________(M/D/Y), between the AAA, _________ (the 'City'), a municipal body corporate and politic and a political subdivision of the State of _________, and BBB Corporation (the 'Developer'), a _________(ADDRESS) corporation with a place of business in Bath, _________(ADDRESS) .
WITNESSETH THAT
WHEREAS, the City designated The BBB Municipal Development and Tax Increment Financing District #1 and The BBB Municipal Development and Tax Increment Financing District #2 (the 'Districts') pursuant to Chapter 207 of Title 30-A of the _________(ADDRESS) Revised Statutes, as amended, by action of the City Council at a City Council Meeting held on _________,_________,_________(M/D/Y) (the 'Vote') and pursuant to the same Vote adopted a development program and financial plan for the Districts (the 'Development Program'); and
WHEREAS, the _________(ADDRESS) Department of Economic and Community Development has reviewed and accepted the District and the Development Program effective _________,_________,_________(M/D/Y); and
WHEREAS, the Development Program contemplates the execution and delivery of a credit enhancement agreement between the City and the Developer; and
WHEREAS, the City and the Developer desire and intend that this Credit Enhancement Agreement be and constitute the credit enhancement agreement contemplated by and described in the Development Program;
NOW, THEREFORE, in consideration of the foregoing and in consideration of the mutual promises and covenants set forth herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS: INTERPRETATIONS
SECTION 1.1. DEFINITIONS. The terms defined in this Article I shall, for all purposes of this Agreement, have the meanings herein specified, unless the context clearly requires otherwise:
'Agreement' shall mean this Credit Enhancement Agreement between the City and the Developer.
'Captured Assessed Value' shall mean the valuation amount by which the then current assessed value of the Districts exceeds the Original Assessed Value of the Districts.
'City' means the AAA, _________(ADDRESS), a municipality duly organized and existing under the laws of the State of _________(ADDRESS).
'City Share' means (a) all of the Retained Tax Increment Revenues other than the Developer Share thereof plus (b) all interest and earnings on all of the Retained Tax Increment Revenues, except as provided in Section 3.1(e) hereof.
'Developer' means BBB Corporation, a _________(ADDRESS) corporation with a place of business in Bath, _________(ADDRESS).
'Development Program' means the development program for the District as adopted by the Bath City Council at a Meeting held on _________,_________,_________(M/D/Y).
'Development Program Fund' means the development program fund described in the Financial Plan section of the Development Program and established and maintained pursuant to Article II hereof.
'Developer Share' means (a) 100% of the Real Property Increment with respect to the Land Level Facility and 50% of the Real Property Increment with respect to the Existing Facility and 50% of the Personal Property Increment with respect to the Land Level Facility and 50% of the Personal Property Increment with respect to the Existing Facility, for each of the twenty-five years of the term of this Agreement (commencing with the year _________ Tax Year) of the Retained Tax Increment Revenues, provided, however, that such percentages shall be reduced to the following amounts at such time that the aggregate amount of payments by the City to the Developer during the term of this Agreement and pursuant to this Agreement equal $ _________; 100% of the Real Property Increment with respect to the Land Level Facility with respect to assessed value equal to the assessed value of Land Level Facility (District #1) real property as of _________,_________,_________(M/D/Y); 35% of the Real Property Increment with respect to the Land Level Facility with respect to assessed value of real property in excess of the assessed value of Land Level Facility (District #1) real property as of _________,_________,_________(M/D/Y); 35% of the Personal Property Increment with respect to the Land Level Facility; 35% of the Real Property Increment with respect to the Existing Facility; and 35% of the Personal Property Increment with respect to the Existing Facility.
In the event that the Tax Shift Formulas are changed and as a result the City's Tax Shift amount is decreased by reason of inclusion in the City's valuation for purposes of the Tax Shift Formulas of any portion of the Captured Assessed Value with respect to which the Developer's Share is determined hereunder, then, commencing with the later of (a) the _________ Fiscal Year or (b) the Fiscal Year in which the Tax Shift Formulas are changed, the Developer Share shall be reduced by an amount equal to 50% of the difference, calculated solely with respect to the Developer Share of the Retained Tax Increment, between (a) the Tax Shift as determined using the method set forth in the current Tax Shift Formulas and (b) the Tax Shift as properly determined using the then effective State laws relating to state aid to education, revenue sharing and county tax; any reduction under this paragraph shall be calculated annually and applied to reduce the payments of the Developer Share on the next scheduled payment date herein following such calculation.
A change in the Tax Shift resulting other than from including Captured Assessed Value in the City's valuation shall not result in a reduction of the Developer's Share.
Anything in this Agreement to the contrary notwithstanding, for purposes of calculating the Developer's Share, the platform for the Land Level Transfer System (the concrete pad, filled land and pilings supporting the structures thereon) shall be included within the real property increment of the Land Level Facility.
'District(s)' means the BBB Corporation Municipal Development and Tax Increment Financing District #1 ('District #1') and The BBB Municipal Development and Tax Increment Financing District #2 ('District #2') designated by the City pursuant to Chapter 207 of Title 30-A of the _________(ADDRESS) Revised Statutes, as amended, by vote at City Council Meeting held on _________,_________,_________(M,D,Y), which Districts shall include the Existing Facility and the Land Level Facility.
'Effective Date' means _________,_________,_________(M/D/Y).
'Existing Facility' means the Property consisting of the existing shipbuilding facility of the Developer, located on the parcel shown on Tax _________,_________(M,D) as Parcel 142 within District #2, including all land, buildings, and all personal property located on such parcel as of _________,_________(M,D) each year subject to City ad valorem taxes together with all improvements or additions thereto within the existing geographic boundaries of such facility, all as currently depicted on Exhibit A hereto.
'Financial Plan' means the financial plan described in the 'Financial Plan' Section of the Development Program.
'Fiscal Year' means _________,_________(M/D) to _________,_________(M/D) of each year or such other fiscal year as the City may from time to time establish; for purposes of this Agreement, the Fiscal Year _________ means the Fiscal Year commencing _________,_________,_________(M/D/Y) and ending _________,_________,_________(M/D/Y) and the Fiscal Year _________$ means the Fiscal Year commencing _________,_________,_________(M/D/Y) and ending _________,_________,_________(M/D/Y).
'Land Level Facility' means the land level facility to be constructed in District #1 by the Developer adjacent to the Existing Facility, together with all land, buildings, personal property located on such adjacent land as of April 1 of each year subject to City ad valorem taxes together with all improvements or additions thereto as depicted on Exhibit B hereto.
'Original Assessed Value' means $ _________, the assessed value of the Districts as of _________,_________,_________(M/D/Y) as the same may be adjusted from time to time in accordance with Section 3.7 hereof.
'Personal Property Increment' means that portion of the Tax Increment attributable to increases in personal property valuations with respect to personal property located in the Districts.
'Project' means the design, planning, development, acquisition, construction and operation of the Land Level Facility and other BBB Corporation improvements within the Districts as described in the Development Program.
'Project Cost Account' means the project cost account described in the Financial Plan Section of the Development Program consisting of the City Subaccount and the Developer Subaccount and established and maintained pursuant to Article II hereof and to provisions of 30-A M.R.S.A. Section 5254(3)(A)(2).
'Project Costs' means 'project costs' as defined in 30-A M.R.S.A.
Section 5152(8).
'Property' means all real property and all personal property now or hereafter located in the Districts.
'Property Taxes' means any and all ad valorem property taxes levied, charged or assessed against real or personal property in the Districts by the City, or on its behalf.
'Real Property Increment' means that portion of the Tax Increment attributable to increases in real estate valuations with respect to real estate located in the Districts.
'Retained Tax Increment Revenues' means that portion of the Tax Increment to be retained by the City and deposited into the Development Program Fund pursuant to the terms of the Development Program and this Agreement.
'Tax Increment' means the real and personal property taxes exclusive of any state, country or special district tax, assessed by the City on the captured assessed value of property within the Districts, which Tax Increment shall consist of the Real Property Increment and the Personal Property Increment.
'Tax Payment Date' means the date(s) on which property taxes levied by the City are due and payable from owners of property located within the City.
'Tax Shift' means the decrease in county tax payable by the City and the increases in State aid for education and revenue sharing in all three cases resulting from the exclusion of Captured Assessed Value from the City's valuation in calculating such amounts of county tax, State aid to education and revenue sharing under the current Tax Shift Formulas.
'Tax Shift Formulas' mean the formulas currently utilized by the State of _________(ADDRESS) in calculating (a) the county tax payable in accordance with 30-A M.R.S.A.Section 706 and 36 M.R.S.A. Sections 305(1), 381; (b) the municipal revenue sharing distribution of the Local Government Fund in accordance with 30-A M.R.S.A. Section 5681; and (c) State aid to education, including aid for total operating costs, total program cost allocation (taking into account the maximum local share or circuit breaker) and total debt service cost allocation (taking into account the maximum local share or circuit breaker), all as computed in accordance with _________(ADDRESS) Department of Education Form ED 261.
SECTION 1.2. INTERPRETATION AND CONSTRUCTION. In this Agreement, unless the context otherwise requires:
(a) The terms 'hereby,' 'hereof,' 'hereto,' 'herein,' 'hereunder' and any similar terms, as used in this Agreement, refer to this Agreement, and the term 'hereafter' means after, and the term 'heretofore' means before, the date of delivery of this Agreement.
(b) Words importing a particular gender mean and include correlative words of every other gender and words importing the singular number mean and include the plural number and vice versa.
(c) Words importing persons mean and include firms, associations, partnerships (including limited partnerships), trusts, corporations and other legal entities, including public or governmental bodies, as well as any natural persons.
(d) Any headings preceding the texts of the several Articles and Sections of this Agreement, and any table of contents or marginal notes appended to copies hereof, shall be solely for convenience of reference and shall not constitute a part of this Agreement, nor shall they affect its meaning, construction or effect.
(e) Except as otherwise provided herein, all approvals, consents and acceptances required to be given or made pursuant to this Agreement by any signatory hereto shall not be withheld unreasonably, provided, that this paragraph shall not apply to approvals, consents and acceptances under applicable laws, ordinances and codes, including, without limitation, land use ordinances.
(f) All notices to be given hereunder shall be given in writing and, unless a certain number of days is specified, within a reasonable time.
(g) If any clause, provision or Section of this Agreement shall be ruled invalid by any court of competent jurisdiction, the invalidity of such clause, provision or Section shall not affect any of the remaining provisions hereof except as otherwise provided in Section 3.4 hereof.
SECTION 1.3. DEVELOPMENT PROGRAM. Neither this Agreement nor the Development Program obligate the Developer to construct the Land Level Facility or to make any other improvements to its facility.
SECTION 1.4. COMPLETION. The Developer shall have completed as much of the Development Program as will qualify for financial assistance hereunder within five (5) years after the Effective Date. If none of the Development Program is completed within five (5) years after the Effective Date, then this Agreement (except Section 1.5 pertaining to costs) and the District shall terminate at the end of five (5) years after the Effective Date. Notwithstanding any other provision hereof, no payments shall be made or be payable by the City to the Developer under this Agreement unless such payments are used to pay or reimburse the Developer for Project Costs incurred within five (5) years of the Effective Date pursuant to proper documentation thereof provided by the Developer pursuant to Section 3.1(d) hereof.
SECTION 1.5. CITY COSTS. The Developer shall pay or reimburse the City for all reasonable fees, expenses and other charges of the City and its consultants, including the City's attorneys, accountants and overtime of the City's appraiser, tax assessor and other City staff, in connection with the review, negotiation, approval, execution, administration, enforcement and carrying out of this Agreement and the review, negotiation, approval, administration, enforcement and carrying out of the Development Program. Notwithstanding any of the provision of this Agreement, this section shall survive any termination of this Agreement.
SECTION 1.6. AGREEMENT CONTROLS. In the event of any inconsistency between this Agreement and the Development Program, the terms and provisions of this Agreement shall take precedence, to the extent permitted by law, over the inconsistent provisions of the Development Program.
ARTICLE II
PROJECT COST ACCOUNT AND FUNDING REQUIREMENTS
SECTION 2.1. CREATION OF DEVELOPMENT PROGRAM FUND. The City hereby confirms the creation and establishment of a segregated fund in the name of the City designated as the 'BBB Corporation Municipal Development Tax Increment Financing District Program Fund' (the 'Development Program Fund') pursuant to, and in accordance with the terms and conditions of, the Development Program. The Development Program Fund shall consist of the Project Cost Account. The Project Cost Account shall consist of the City Subaccount and the Developer Subaccount.
SECTION 2.2. LIENS. The City shall not create any liens, encumbrances or other interests of any nature whatsoever, nor shall it hypothecate the Developer Subaccount of the Project Cost Account of the Development Program Fund or any funds therein or revenues resulting from investment of funds therein, other than the interest of the Developer granted under this Agreement in and to the amounts on deposit in the Developer Subaccount, provided, however, nothing herein shall prohibit creation of real and personal property tax liens on the Developer's property in accordance with, and entitled to the priority provided under, _________(ADDRESS) law.
SECTION 2.3. DEPOSITS INTO DEVELOPMENT PROGRAM FUND. The City shall deposit into the Developer Subaccount of the Project Cost Account within fifteen (15) days after the City's receipt thereof, an amount equal to the Developer Share of the Retained Tax Increment Revenues for the period to which the payment relates. All amounts deposited in or transferred to the Developer Subaccount of the Project Cost Account shall be paid to the Developer in accordance with Article III of this Agreement. All interest and earnings on the Retained Tax Increment Revenues prior to and after deposit thereof into the Project Cost Account shall be the sole property of the City and shall be free and clear of any interest of the Developer under this Agreement.
SECTION 2.4. MONIES HELD IN TRUST. Except as otherwise permitted in this Agreement, all monies required to be deposited with or paid into the Developer Subaccount of the Project Cost Account to fund payments to Developer under the provisions hereof and the provisions of the Development Program, shall be held by the City, in trust, for the benefit of the Developer in accordance with the provisions of this Agreement. All funds in the City Subaccount of the Project Cost Account shall be the sole and exclusive property of the City and shall not be subject in any way to the terms or provisions of this Agreement.
ARTICLE III
PAYMENT OBLIGATIONS
SECTION 3.1. CREDIT ENHANCEMENT PAYMENTS.
(a) The City shall retain and deposit, within fifteen (15) days following each Tax Payment Date or the date payment is actually received by the City with respect to Property in the Districts, whichever is later, in the Developer Subaccount of the Project Cost Account, the Developer Share of the Tax Increment in each year commencing with the City's Fiscal Year _________ and continuing thereafter through and including the Fiscal Year _________. Notwithstanding the foregoing, if at any time the assessed value of the Existing Facility is less than the Original Assessed Value, then the amount payable with respect to the Land Level Facility shall be reduced by an amount equal to the difference between the Property Taxes that would be then payable on an amount equal to Original Assessed Value and the Property Taxes payable on the then assessed value of the Existing Facility.
(b) Subject to the provisions of this Agreement, the City agrees to pay Developer, within fifteen (15) days following each Tax Payment Date or the date payment is actually received by the City, whichever is later, the Developer Share of the Retained Tax Increment Revenues resulting from the Property Tax payments due on such Tax Payment Date and actually received by the City with respect to Property in the Districts.
(c) If, with respect to any Tax Payment Date, Developer fails to pay any portion of the Property Taxes assessed by the City, because of a valuation dispute or otherwise, the property taxes actually paid by Developer with respect to such Tax Payment Date shall, first, be applied to taxes due on account of Original Assessed Value and, second, shall constitute Retained Tax Increment Revenues.
(d) The Developer agrees that all payments made will be used and applied to either pay debt service on indebtedness incurred to finance 'Project Costs' as that term is defined under Act and described in the Development Program or used to pay directly, amortize or reimburse Developer for payment of, qualified Project Costs. The City shall be required to make payments under this Agreement only upon receipt of satisfactory documentation that the amounts are being paid for Project Costs pursuant to Section 1.4 hereof, which documentation shall be in the form of properly completed certificates, executed by the Developer in the form attached hereto as Exhibit A. In addition, notwithstanding any other provisions of this Agreement, including, without limitation, the provisions of Section 3.1(a)-(b), the City shall not be obligated to make any payments to the Developer unless the Developer provides such documentation evidencing that Developer has incurred Project Costs after the date of this Agreement equal to or greater than $ _________$ by _________,_________,_________(M/D/Y)and $ _________ by _________,_________,_________(M/D/Y) relating to construction and equipping of the Land Level Facility and/or the Existing Facility. Developer shall repay to City any payments made hereunder if Developer fails to meet its obligation set forth above.
(e) The Developer (and its successors and assigns, as owners of property in the District) shall pay to the City, when due, all Property Taxes and assessments with respect to property of the Developer in the AAA. If such Property Taxes and assessments are not paid when due, the City may withhold and suspend all payments under this Agreement until such Property Taxes and assessments and all interest thereon and other costs relating thereto are paid in full. In addition, if the Developer institutes any tax abatement proceeding with respect to any Property in the District, the City may withhold and suspend all payments of the Developer Share of the Tax Increment with respect to the items of Property subject to the abatement proceeding, and shall deposit the withheld amount into a separate interest bearing escrow account. Upon final action and completion of such abatement proceeding, the proper amount (based on the results of the abatement proceedings plus an allocable share of the interest accrued thereon) held in escrow account shall be paid to the Developer.
(f) Developer covenants and agrees that (i) in the event any part of the Property now or hereafter located in the District should be valued at less than its full value or is now exempt from payment of Property Tax for any reason or for any reason hereafter becomes exempt from payment of Property Tax, including, but not limited to, any portion of the Land Level Facility being located on submerged land or if any of the Property is now or hereafter leased by Developer from any person or entity including, without limitation, any submerged or intertidal lands lease from the State of _________(ADDRESS) and any lease from any private land owner or (ii) in the event that title to any property in the District is hereafter transferred to any entity exempt from the payment of Property Taxes, including, without limitation, the State of _________(ADDRESS) or any agency or authority thereof, or (iii) in the event that any submerged lands lease expires or is transferred to another party, then Developer, its successors and assigns, as owner, lessee or user of real estate in the District and as a covenant running with the land shall be obligated to pay to the City each year during and after the expiration or termination of this Agreement, an amount equal to (a) 100% of the Property Taxes that would be assessed by the City on such Property, as if and under the assumption that all such Property were fully taxable and owned in fee by Developer and not exempt from Property Taxes less (b) solely during the twenty-five (25) year term of this Agreement, the portion of the amounts described in the preceding clause (a) that would have been payable to the Developer, or its successors and assigns, under Section 3.1(a) if such Property were taxable. The covenants in this paragraph shall survive expiration or termination of this Agreement. Notwithstanding the foregoing, the provisions of this paragraph 3.1(f) shall not apply to property taken by eminent domain or conveyed to any governmental entity under a bona fide threat of condemnation, ........................
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