Exhibit 10.15


 


JOB
OPPORTUNITY BUILDING ZONE

BUSINESS SUBSIDY AGREEMENT


 


I.              PARTIES


 


This agreement is made on January 2,
2007, the Approval Date, by and between the City of Fergus Falls, Minnesota,
local unit of government with offices at 112 West Washington (Telephone Number
(218) 739-0128; (hereinafter “subzone administrator”) and Otter Tail Ag
Enterprises, LLC, a non-retail, non-commercial trade or business organized and
operating under the laws of the State of Minnesota (hereinafter “qualified
business”), with its principal offices at 1220 North Tower Road, Fergus Falls
MN 56537 (Telephone Number (218) 998-4301). This agreement shall become
effective upon its Approval Date, the date on which the last person signs the
agreement. In order to satisfy the provisions of the Job Opportunity Building
Zone statute (M.S. §§ 469.310 - 469.320) and the Business Subsidy Statute (M.S.
§§ 116J.993 - 116J.995), the subzone administrator and a representative of the
qualified business acknowledge and agree as follows:


 


II.            RECITALS


 


A.    Whereas, Otter Tail Ag Enterprises, LLC is the fee owner of the
Property located at the Intersection of 170th Avenue and 240th
Street, in Fergus Falls Township, Otter Tail County, Minnesota, with property
tax identification number 26-000-20-0128-000; and


 


B.    Whereas, Fergus Falls Township signed a Resolution on June 13, 2006
to approve 32 acres of the above parcel number to be included in the Fergus
Falls subzone. By including the 32 acres in the Fergus Falls Subzone it is
understood that the City of Fergus Falls will act as the subzone administrator
and will be responsible for all reporting requirements.


 


C.    Whereas, a 32 acre land swap was submitted to and approved by the
Department of Employment and Economic Development and is currently comprised of
vacant land on which Otter Tail Ag Enterprises, LLC will construct a 57,500,000
gallon ethanol plant, permitted to 65 million gallon per year.


 


D.    Whereas, Otter Tail Ag Enterprises, LLC has been approved by the
subzone administrator to be a non-retail, non-commercial new trade or business,
start-up located within a Zone.


 


E.     Whereas, the qualified business plans to begin business operations in
the subzone on March 1, 2008 (Operation Start Date).


 


F.     Whereas the local unit of government has considered the factors M.S. §
469.310 subd. 11(c).


 


G.    Whereas the Job Zone Term shall be effective from the approval date
until December 31, 2018 per 2006 Legislation that was passed specifically
for ethanol plants.


 


H.    Whereas, the qualified business agrees to satisfy the provisions of the
business subsidy reporting requirements under the business subsidy statute at
(M.S. §116J.993 -116J.995); and as required by M.S. § 469.320 Subd. 1.,
identified in Section IV. of this agreement.


 


III.           DEFINITIONS


 


A.    “Agreement” means this Job Opportunity Building Zone Business Subsidy
Agreement by and between “subzone administrator” and the “qualified business”.


 


B.    “Approval Date” means the date upon which the final execution of this
agreement and, if necessary, a relocation agreement takes place; and after
which a qualified business has been approved by the subzone administrator.


 


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C.    “Business Subsidy” means tax exemptions or tax credits available to a
qualified business located in a job zone, and or a state or local government
agency grant, contribution of personal property, real property, infrastructure,
the principal amount of a loan at rates below those commercially available to
the recipient, any reduction or deferral of any tax or any fee, any guarantee
of any payment under any loan, lease, or other obligation, or any preferential
use of government facilities given to a business, and as defined by the
Business Subsidy statute.


D.    “Business Subsidy Report” means the annual report required to comply
with M.S. § 1161.994 Subd. 7. (b).


E.     “DEED” means Minnesota Department of Employment and Economic
Development.


F.     “Job Zone Term” shall mean stated period of time stated in Section II.
G. of this agreement.


G.    “JOBZ” means Job Opportunity Building Zone as defined in M.S. §
469.310.


H.    “Local Government Unit” means a statutory or home rule charter
city, county, town, iron range resources and rehabilitation agency, regional
development commission, or federally designated economic development district.


I.      “Operation Start Date” shall mean the date on which the qualifying
business is staffed and running its business operations in the Subzone.


J.     “Person” includes an individual, corporation, partnership, Limited
Liability Company, association, or any other entity.


K.    “Property” means the parcel or parcels located within a subzone, as
modified, on which the qualified business will be operating, that excludes any
building footprint of a business operating in a subzone prior to January 1,
2004; and as identified in Exhibit A.


L.     “Qualified Business” means a person that carries on a trade or business
at a place of business located within a Job Opportunity Building Zone as
referenced in M.S. § 469.310 Subd. 11; and complies with the reporting
requirements specified by M.S. § 469.313 Subd. 2. (5); and shall comply with
the criteria in Section II.C. of this agreement; and shall also mean “Recipient”
mean any business entity that receives a business subsidy as defined by M.S. §
116J.993, and that has signed a Business Subsidy Agreement with a designated
subzone administrator. A qualified business shall not include a retail,
low-wage service, agricultural production business, or provide less than the
minimum wages provided in section IV.D.4. of this agreement.


M.   “Relocation Agreement” means a binding written agreement between a
relocating qualified business and the commissioner of DEED pledging that the
qualified business will increase full-time employment in the first year of
operation within the job opportunity building zone by a minimum of five jobs or
20 percent, whichever is greater, measured relative to the operations that were
relocated and maintains the required level of employment for each year the zone
designation applies, and provides for repayment of all tax benefits if these
requirements are not met.


N.    “Subzone” means the parcel or parcel of land designated by the
Commissioner of Employment and Economic Development within a Job Opportunity
Building Zone within the boundaries of Fergus Falls to receive certain tax
credits and exemptions specified under M.S. § 469.310-469.320.


O.    “Subzone Administrator” means the representative designated by the
Local Governmental Unit to administer the subzone and shall also mean “Grantor”
as defined by the business subsidy statute M.S. § 116J.993 Subd. 4.


P.     “Zone” means a Job Opportunity Building Zone or an Agricultural
Processing Facility Zone designated by the commissioner of Employment and
Economic Development under M.S. § 469.314.


 


IV.           BUSINESS SUBSIDY
REQUIREMENTS


 


Whereas, compliance with provisions of the Minnesota business subsidy
statutes (M.S. §116J.993 -116J.995) require the following, the parties agree
that:


 


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A.    The Job Opportunity Building Zone business subsidy shall include all
tax exemptions, job credits or other business subsidies provided from the
Approval Date until the last date of the Job Zone Term, including but not
limited to:


(1)           Exemption from individual income taxes as provided under
M.S. § 469.316; and


(2)           Exemption from corporate franchise taxes as provided under
M.S. § 469.317; and


(3)           Exemption from the state sales and
use tax and any local sales and use taxes on qualifying purchases as provided
in M.S. § 297A.68, subdivision 37; and


(4)           Exemption from the state sales tax on
motor vehicles and any local sales tax on motor vehicles as provided under M.S.
§ 297B.03; and


(5)           Exemption from the property tax as provided in M.S. §
272.02, subdivision 64; and


(6)           Exemption from the wind energy production tax under M.S. §
272.029, subdivision 7; and


(7)           The jobs credit allowed under M.S. § 469.318.


 


B.    Other business subsidies provided to the qualified business, as
described in the Business Subsidy statute at M.S. § 116J.993 -116J.995, shall
be identified, including the amounts and type of subsidy provided,
specifically:


 


A loan provided by Otter Tail County in the aggregate principal amount
of $5,000,000 from the proceeds of the County’s General Obligation Tax
Abatement Bonds.


 


C.    The public purpose(s) for the Job Opportunity Building Zone
business subsidy agreed to by the Parties shall include, but not be limited to:


 


(1)   The
enhancement of economic diversity


(2)   The
creation of high quality job growth


(3)   Stabilizing
the community


 


D.    The measurable, specific, and tangible goals for the job zone
subsidy shall include:


 


(1)   The
qualified business shall create new FTE jobs. The number of FTE jobs will equal
or exceed 33. The Qualified Business must create at least 33 FTE jobs within two
years of the Approval Date.


(2)   The
Qualified Business shall maintain the FTE jobs (equaling or exceeding 33)
during the Job Zone Term and within the subzone boundary.


(3)   The
qualified business shall provide a specific wage and benefit floor for the
wages and benefits to be paid to the newly created FTE jobs that on an
annualized basis is equal to at least 110 percent of the federal poverty level
for a family of four. At the time of this Agreement that equals $10.58, but
this is subject to change annually, on July 1 of each year. The wage and
benefit floor for each new FTE job must be adjusted each year if necessary to
maintain the annualized basis for the wage and benefit floor. The wage and
benefit floor and its annual adjustment apply to each employee located in the
subzone.


(4)   Notwithstanding
M.S. § 116J.994 Subd.4 (3) wage and benefit and job goals for job zone
business subsidy recipients shall not be set at zero.


 


E.     A properly noticed public hearing shall be held by the subzone
administrator as provided by M.S. § 116J.994. The purpose of the hearing is to
define the criteria that a qualified business must meet in order to be eligible
to receive a Job Opportunities Building Zone business subsidy. The hearing may
also specify the public purpose(s) that shall be achieved and the measurable,
specific, and tangible goals committed to by the qualified business. A business
subsidy may not be granted until the subzone administrator has adopted criteria
as required by M.S. § 116J.994 Subd. 2. A copy of the criteria shall be
submitted to the Department of


 


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Employment and Economic Development along with the first annual report.
As provided by M.S. § 116J.994, Subd. 5., a public notice shall be published in
print and if possible, on the internet, at least 10 days prior to the hearing,
identifying the location, date time and place of the hearing; and providing
information about the business subsidy proposed, including a summary of the
terms of the subsidy.


 


F.     The Qualified Business, who will receive tax benefits under the JOBZ
law, is required to repay those tax benefits if:


 


	
  ·

  	
   

  	
  The
  Qualified Business ceases to operate in the JOBZ Subzone;

  
	
  ·

  	
   

  	
  The
  Qualified Business is no longer a qualifying business;

  
	
  ·

  	
   

  	
  The
  Qualified Business fails to execute a Relocation Agreement with DEED, if
  applicable;

  
	
  ·

  	
   

  	
  The
  Qualified Business does not increase full time employment by at least 33 FTE
  jobs in the first two years following the Approval Date of this Agreement or
  first year following the Approval Date of this Agreement for a Relocation;

  
	
  ·

  	
   

  	
  The
  Qualified Business does not maintain the above-stated increase in full-time
  employment during the Job Zone Term (see Section II.G);

  
	
  ·

  	
   

  	
  The
  Qualified Business does not pay the required specific wage and benefit floor
  to all newly created FTE jobs that on an annualized basis is equal to at
  least 110 percent of the federal poverty level for a family of four;

  
	
  ·

  	
   

  	
  Fails
  to meet goals specified in the Business Subsidy Agreement with the City.

  



 


A Qualified Business must repay the amount of the total tax reduction
listed in section 469.315, and any refund under section 469.318 in excess of
tax liability, received during the two years immediately before it ceased to
operate in the subzone.


 


The repayment must be paid to the state to the extent it represents a
state tax reduction and to the county to the extent it represents a property
tax reduction. Any amount repaid to the county for the property tax exemption
must be distributed to the local governments with authority to levy taxes in
the zone in the same manner provided for distribution of payment of delinquent
property taxes. Any repayment of local sales taxes must be repaid to the city
or count imposing the local sales tax.


 


For the repayment of taxes imposed under chapter 290 or 297A or local
taxes collected pursuant to section 297A.99, a business must file an amended
return with the Commissioner of Revenue and pay any taxes required to be repaid
within 30 days after ceasing to do business in the subzone. The amount required
to be repaid is determined by calculating the tax for the period or periods for
which repayment is required without regard to the exemptions and credits
allowed under section 469.315.  The
provisions of chapters 270 and 289A relating to the Commissioner of Revenue’s
authority to audit, assess, and collect the tax and to hear appeals are
applicable to the repayment required. The Commissioner of Revenue may impose
civil penalties as provided in chapter 289A, and the additional tax and
penalties are subject to interest at the rate provided in section 270.75, from
30 days after ceasing to do business in the subzone until the date the tax is
paid. The Commissioner of Revenue may assess the repayment of taxes any time
within two years after the business ceases to operate in the subzone, or within
any period of limitations for the assessment of tax under section 289A.38,
whichever period is later.


 


For the repayment of taxes imposed under
chapter 297B, a business must pay any taxes required to be repaid to the motor
vehicle registrar, as agent for the Commissioner of Revenue, within 30 days
after ceasing to do business in the zone. The provisions of chapters 270 and
289A relating to the Commissioner of Revenue’s authority to audit, assess, and
collect the tax and to hear appeals are applicable to the repayment required.
The Commissioner of Revenue may impose civil penalties as provided in chapter
289A, and the additional tax and penalties are subject to interest at the rate
provided in section 270.75, from 30 days after ceasing to do business in the


 


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subzone until the date the tax is paid.  The Commissioner of Revenue may assess the
repayment of taxes any time within two years after the business ceases to
operate in the subzone, or within any period of limitations for the assessment
of tax under section 289A.38, whichever period is later.


 


For the repayment of property taxes, the
county auditor shall prepare a tax statement for the business, applying the
applicable tax extension rates for each payable year and provide a copy to the
business. The business must pay the taxes to the county treasurer within 30
days after receipt of the tax statement. The taxpayer may appeal the valuation
and determination of the property tax to the Tax Court within 30 days after
receipt of the tax statement.  If a
property tax is not repaid the county treasurer shall add the amount required
to be repaid to the property taxes assessed against the property for payment in
the year following the year in which the treasurer discovers that the business
ceased to operate in the subzone.


 


For determining the tax required to be
repaid, a tax reduction is deemed to have been received on the date that the
tax would have been due if the taxpayer had not been entitled to the exemption
or on the date a refund was issued for a refundable tax credit.


 


The Commissioner of Revenue may waive all or
part of a repayment, if the Commissioner of Revenue, in consultation with the
Commissioner of DEED and appropriate officials from the local government
officials in which the Qualified Business is located, determines that requiring
repayment of the tax is not in the best interest of the state or the local
government units and the business ceased operating as a result of circumstances
beyond its control, including, but not limited to:


 


(1)      a
natural disaster;


(2)      unforeseen
industry trends; or


(3)      loss
of a major supplier or customer.


 


A recipient that fails to meet the terms of a
subsidy agreement may not receive a business subsidy from any grantor for a
period of five years from the date of failure or until a recipient satisfies
its repayment obligation under this section, whichever occurs first.


 


G.    Where M.S. § 469.319 subd. 6 is inconsistent with section 116J.994
subdivision 3, paragraph (e), or 6, or any other provisions of sections
116J.993-116J.995, M.S. § 469.319 prevails.


H.    Otter Tail County is responsible for monitoring compliance of the
Business Subsidy statute at M.S. § 116J.993 - 116J.995 as it relates to Section IV.B.
of this Agreement.


I.      A commitment to continue operations in the jurisdiction where the
subsidy is used for the duration of the job zone term.


J.     The Qualified Business agrees to furnish to the subzone administrator, on
or before March 1 in each year, an annual business subsidy report required
in M.S. § 116J.994, Subd. 7., on a form developed and made available by DEED.


K.    The Qualified Business agrees not to compete with or displace local
businesses currently operating within the subzone community.


L.     The Local Government Unit will provide the qualified business with all
of the local tax benefits and property tax benefits permitted under M.S. §
469.315.


M.   The Qualified Business receiving tax exemptions provided under M.S.
297A.68, subdivision 37(b) and (c) and (d) agrees to comply with
prevailing wages requirements under M.S. 116J.871.


N.    The Qualified Business is encouraged to list new job opportunities in
the Minnesota Job Bank by contacting the MN Job Bank Help Desk at 651-296-8400,
or go directly to the MN Job Bank at www.mnworks.org.


 


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This
agreement shall be binding upon any successors or assignees of the parties.


 


IN WITNESS WHEREOF, the subzone administrator and the qualified
business have acknowledged their assent to this agreement and agree to be bound
by its terms through the signatures entered below:


 


	
  QUALIFIED BUSINESS: I have read and I agree to all of the above
  provisions of this agreement; Byland through the Representative of the Otter
  Tail Ag Enterprises, LLC

  	
  SUBZONE ADMINISTRATOR:  I have read and I agree to all of the above
  provisions of this agreement; By and through the Representatives of the City
  of

  Fergus Falls:

  
	
   

  	
   

  
	
  By

  	
  /s/ Jerry Larson

  	
   

  	
  By

  	
   /s/ Russell Q. Anderson

  	
   

  
	
   

  	
  Russell
  Q. Anderson

  
	
  Title

  	
  President

  	
   

  	
  Title

  	
  Mayor

  	
   

  
	
   

  	
   

  
	
  Date

  	
  12-28-06

  	
   

  	
  Date

  	
  01-02-07

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ Mark Sievert 

  	
   

  
	
   

  	
  Mark Sievert 

  
	
   

  	
   

  
	
   

  	
  Title

  	
  City
  Administrator

  	
   

  
	
   

  	
   

  
	
   

  	
  Date
  

  	
  01-02-07

  	
   

  
											



 


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