The URL can be used to link to this page

Home My WebLink About06/07/2018 EDAC PacketCITY OF LINO LAKES ECONOMIC DEVELOPMENT ADVISORY COMMITTEE MEETING Thursday, June 7, 2018 8:00 A.M. Community Room AGENDA 1. CALL TO ORDER AND ROLL CALL 2. APPROVAL OF MINUTES. May 3, 2018 3. DISCUSSION ITEMS A. Anoka County Economic Development Initiative B. Private Activity Tax -Exempt Financing Guidelines C. Project Updates 4. ADJOURN CITY OF LINO LAKES ECONOMIC DEVELOPMENT ADVISORY COMMITTEE MINUTES DATE: May 3, 2018 MEMBERS PRESENT: Jim Schueller, Nathan Vojtech, Andrew Cravaro Thomas Colgan, Patrick Kohler, Don Johnson, Michael Ruhland, Chad Wagner MEMBERS ABSENT: Julie Schwartz OTHERS PRESENT: Mike Grochala, Mara Strand, Ryan Saltis APPROVAL OF MINUTES It was moved by Mr. Cravaro to approve the minutes from April 5, 2018 and passed unanimously. DISCUSSION ITEMS A. 49/J Concept Plan — Lyngblomsten Senior Community Mr. Grochala updated the board on the 49/J corner. Previous applicant recently pulled their application. Mr. Grochala introduced representatives. Property is currently guided mixed use. Jeff Heinecke, President/CEO, informed the board about Lyngblomsten operations. Mr. Ruhland asked if Lyngblomsten hires or contracts employees. Mr. Heinecke hires employees directly. Current retention rate is 94%. Mr. Vojtech asked what the wait time is to use facility. Mr. Heinecke said the general care facility runs at 95% capacity. Mr. Vojtech asked about transitional care. Mr. Heinecke informed the board about available care plans. Mr. Kohler asked about Hospice. Mr. Heinecke said Lyngblomsten does not have a dedicated hospice service but serves hospice patients. Mr. Moore stated the facility focuses on small house hold feels. Mr. Judd Fenlon, of Grand Real Estate Advisors, talked about the specifics of the 49/J property and what is being proposed. • Independent living apartments (100 units), assisted living apartments (50 units), long- term skilled nursing. Mr. Fenlon presented the site plan. Mr. Cravaro asked about the increase of traffic. Mr. Judd stated a traffic study will take place. About half of residents will have vehicles and average 1 resident per unit, unlike an apartment building. Mr. Grochala stated there will be capacity improvements. Mr. Ruhland noted the parking stalls and if there is underground parking. Mr. Rick Moore, Wold Architects, stated there needs to be enough parking to allow for shift changes. Mr. Ruhland asked about height of the building. Mr. Fenlon stated buildings are 1, 3, and 4 stories. Specifics will be worked out in the application and review process. Mr. Ruhland asked about the anticipated staff needs. Mr. Heinecke stated about 30 staff. During overlap shift (2:30-3:00) will be toward 60 staff members. Mr. Moore presented building renderings — care facility, townhomes (rental and/or buy, 1350- 1750 square feet in size). Mr. Fenlon presented the reasoning behind the mixed use on the property and demand. Mr. Vojtech asked for clarification on HUD. Mr. Heinecke stated the current facility has HUD housing but not looking as an option for this facility. Mr. Ruhland stated the state average for skilled nursing is 90% and Lyngblomsten is running at 95%. Mr. Heinecke stated Anoka County is currently under bedded. Mr. Ruhland asked what the occupancy rate needs to be at from a business perspective. Mr. Heinecke stated 95% would be needed. Mr. Wagner asked about the next closest community facility similar to what is presented. Mr. Heinecke stated Presbyterian Homes in North Oaks. Mr. Cravaro stated this is quality people who want to build a quality building. Feeling like we are kicking the can down the road as far as the commercial building on the corner with no set plans. Mr. Grochala stated the value of the projects have increased over time and will spur interest on the corner. The board voted unanimously yes to move project forward. Chair Schueller requested and update at the June EDAC meeting. B. Project Updates ADJOURNMENT The meeting was adjourned at 9:22 A.M. ECONOMIC DEVELOPMENT ADVISORY COMMITTEE AGENDA ITEM 3A STAFF ORIGINATOR: Michael Grochala, Community Development Director EDAC MEETING DATE: June 7, 2018 REQUEST: Anoka County Economic Development Initiative Background In December of 2017 Anoka County, in partnership with Connexus Energy and the North Metro Chamber of Commerce, completed the "Economic Development Business Recruitment Roadmap". The study was prepared by Ady Advantage, a national economic development and site selection consultant. The study included a broad range of research and survey information across Anoka County leading to compilation of a county wide action plan. The EDAC reviewed the Executive Summary in February of 2018. The overall purpose of the project is to provide a cohesive, unified economic development strategy within Anoka County. As a result of the project, three areas of focus and goals were identified to be achieved: • Marketing and Differentiation: Address and work to change the perception of Anoka County, among stakeholders, partners, developers, and potential talent, etc. • Readiness: Ensure Anoka County is ready for development from both a talent and product (sites and buildings) perspective, etc. • Alignment/Regionalism: Clearly define roles within the county, as well as with regional partners, as it relates to marketing, incentives, business retention, and expansion, etc. Based on the recommendations of the plan a steering committee, executive team and subgroups, (comprised of representatives from cities, Anoka County, and Metro North Chamber and Connexus) have been created to implement the plan. Ady Advantage has been retained to assist with the Marketing and Differentiation component of the project. The objectives of this phase are to: Create a county -wide economic development brand/logo Create regional and target industries profiles Create/develop an economic development website Funding for the project is proposed to be shared by cities and partner organizations. Lino Lakes share is approximately $1,200. Staff s perspective is that the program is an opportunity to draw upon a larger resource for economic development assistance. Any marketing efforts that increase visibility of Anoka County to prospective businesses aids our local efforts and increases our opportunities. Bruce Sayler, of Connexus Energy, will be present at the meeting to discuss the regional efforts, process to date, and address any questions. Requested EDAC Direction Staff is seeking EDAC recommendation regarding participation in the project. Attachments 1. Executive Summary, Economic Development Business Recruitment Roadmap Anoka County, MN Economic Development Business Recruitment Roadmap December 18, 2017 Provided to: Bruce Sayler Principal - Community and Economic Development Connexus Energy 1461 Ramsey Blvd. NW Ramsey, MN 55303 763.323.2685 o/ 763.350.5119 m Bruce.sayler@connexusenergy.com Advantage � J Provided by: Janet Ady President and CEO Ady Advantage 301 S. Blount Street, Suite 103 Madison, WI 53703 608.663.9218 o/608.345.2510 m iady@adyadvantage.com Table of Contents Section 1: Executive Summary Section 2: Introduction Section 3: The Anoka County Regional Economy Section 4: Site Visit Analysis Section 5: Stakeholder & Employer Input Section 6: Target Industry Analysis Section 7: Regional and Target Industry Positioning Section 8: Goals for the Future Section 9: Best Practices 3 13 16 31 43 55 172 185 187 Section 10: Economic Development Business Recruitment Roadmap 194 Voltedge, Inc. dba Ady Advantage 1 301 S. Blount St, Suite 103 1 Madison, WI 53703 1 608.663.9218 1 AdyAdvantage.com 2 SECTION 1: EXECUTIVE SUMMARY •AAdvantage Voltedge, Inc. dba Ady Advantage 1 301 S. Blount St, Suite 103 1 Madison, WI 53703 1 608.663.9218 1 AdyAdvantage.com Executive Summary Ady Advantage was retained by Connexus Energy to create an economic development business recruitment roadmap. The following graphic shows the various elements to this project. PHASE 1: DISCOVER�� • Project Initiation Teleconference • Desk Research/Economic Base Analysis • Site Visit and Stakeholder Interviews • Target Industry Analysis • Regional Positioning Statement • Target Industry Positioning • Initial Report PHASE 2: DISTILL FAI • Vision and Goals Session • Gap Analysis • Best Practices Review PHASE 3: DO • Economic Development Strategy with Implementation Plan • Final Presentation This process consisted of on -site qualitative research with stakeholders and employers, desk research on the Anoka County economy and target industries, and the creation of positioning points for the region and for each target industry. The following pages serve as a summary of these findings. Voltedge, Inc. dba Ady Advantage 1 301 S. Blount St, Suite 103 1 Madison, WI 53703 1 608.663.9218 1 AdyAdvantage.com 4 Executive Summary STAKEHOLDER AND EMPLOYER INPUT During the on -site visit Ady Advantage conducted interviews with nearly 20 stakeholders to gain input. The stakeholders included a mix of local businesses, local economic developers, educational institutions and workforce representatives, real estate representatives, etc. These individuals provided input on strengths, weaknesses, opportunities and threats in the region. The following key themes emerged: • Positive perceptions of the county revolve around doing business in the county and quality of life. Proximity to Minneapolis/St. Paul is a benefit to businesses as well as residents from a quality of life perspective. Other business advantages include supply chain opportunities, work ethic of employees and business engagement in the community. From a quality of life perspective, perceptions are that Anoka County has a variety of housing options available and good public schools. Many of the communities are also perceived to be safe with low crime and low poverty. • The biggest negative perception of the county is that anything north of Minneapolis/St. Paul is extremely remote and rural, and that there is only blue collarjobs in this area. • Talent is currently one of the biggest challenges for local employers, both attracting and retaining talent. The local educational institutions in the region have done a good job of responding to employers' needs, however, employers are competing for labor with Minneapolis/St. Paul. • The biggest opportunities that stakeholders see for the county include changing the negative perceptions of the county, continuing to improve transportation infrastructure and developing clarity and cohesiveness between the cities and the county. Voltedge, Inc. dba Ady Advantage 1 301 S. Blount St, Suite 103 1 Madison, WI 53703 1 608.663.9218 1 AdyAdvantage.com 4 P� Executive Summary ANOKA COUNTY'S REGIONAL POSITIONING The following asset maps depict key business costs and conditions and their importance in a business location decision, as well as how well Anoka County does on each factor. Essentially the assets in the upper right hand quadrant become the county's positioning and the assets in the upper left hand quadrant become the gaps that need to be improved, if in Anoka County's control. GENERAL CONDITIONS ASSET MAP GENERAL BUSINESS COSTS ASSET MAP Availabilityof Availability of Availability of Workforce Productivity & Low -skilled Skilled/Advanced Low -Skilled LaborSemi-Skilled Labor Labor Cost High -skilled Professional/Technical Work Ethic Labor Cost Labor Cost Labor Gas Cost Electric Cost Manufacturing Tax Burden Z O Sales Tax H U W Incentives a N N W Z Property Tax H m Payroll Costs O W Cost of U Living ZQ H O a Hwy Access Buildings Sites Air Access 4 Year Ed. 2 Year Ed. Attainment HSAttainment Attainment Diversity of Access to Pop. Higher Ed. Re Enviro Rail Access g• Tech and Community Higher Ed. Student Colleges Pipeline Port Access Population Growth Natural Disaster Risk ANOKA COUNTY REGION COMPETITIVENESS ANOKA COUNTY REGION COMPETITIVENESS Voltedge, Inc. dba Ady Advantage 1 301 S. Blount St, Suite 103 1 Madison, WI 53703 1 608.663.9218 1 AdyAdvantage.com Executive Summary TARGET INDUSTRY ANALYSIS In order to determine which specific industries drive Anoka County's economy, a 6-digit NAICS code analysis was conducted on a number of industry groups. After analyzing and screening these industries, we came up with the following recommended target industries for Anoka County: Target Industry Subsectors of Focus Comments Medical Device Manufacturing ' The medical device supply chain is well developed in the region. and Related Industries ' Technologic advances in medical devices are creating opportunities for metal and advanced materials fabrication and precision instrument manufacturing. • Plastics manufacturing technologies are well established in the region Plastic Product Manufacturing • Producers are aligned with both advanced devices (e.g. medical devices) and commodity parts (e.g. food machinery, farm equipment, transportation equipment) • Instrumentation and measuring devices are critical to manufacturing precision Instrument Manufacturing products including medical devices. Light Manufacturing • There is growing demand for precision instruments. • The region has a strong tradition for precision machining and the fabrication of metal Metal Working, Machining and and other specialized materials. Specialized Materials • Advanced materials, such as carbon fiber, are growing in importance within the global economy. • Minneapolis/St. Paul region has a long history around innovation and manufacturing Chemical Manufacturing of adhesives and other industrial supply chain specialty chemicals. • Advances in medical devices, pharmaceuticals, coating technologies are present in the region and align with Anoka County skill sets. Heavy Manufacturing Machinery Manufacturing ' This includes machinery related to existing industries in the region including food processing and material handling equipment, and farm machinery. Specialized Distribution and ' The big box -type fulfillment centers are more likely to locate south of the city for better Distribution and Trucking Warehousing access to market; however, Anoka County has seen some small specialty distribution going on in the region and smaller trucking operations. • Data centers are big users of electricity and Anoka County has the infrastructure to Data Centers Smaller data centers support this. However, this industry also requires fiber access, which is only available in some parts of the county. Recruitment should be limited to only those areas. Medical services • Some available buildings for this; however, there will need to be a better inventory of Back Office Call centers these buildings in the future in order for Anoka County to realistically recruit this industry. Voltedge, Inc. dba Ady Advantage 1 301 S. Blount St, Suite 103 1 Madison, WI 53703 1 608.663.9218 1 AdyAdvantage.com Executive Summary GOALS AND VISIONING The goals for the future were determined and thoroughly discussed during a Goals and Visioning work session on Wednesday, October 11. To ensure that stakeholder input was significantly considered in this process, Connexus Energy invited a number of key stakeholders. Address and work to change the perception of Anoka County, among stakeholders, partners, developers, potential talent, etc. Ensure Anoka County is ready for development from both a talent and product (sites and buildings) perspective. T Clearly define roles within the county, as well as with regional partners, as it relates to marketing, incentives, business retention and expansion, etc. Voltedge, Inc. dba Ady Advantage 1 301 S. Blount St, Suite 103 1 Madison, WI 53703 1 608.663.9218 1 AdyAdvantage.com Executive Summary ECONOMIC DEVELOPMENT STRATEGIES The following strategies were developed to help Anoka County meet its three goals, as outlined on the previous page. The strategies fall into the categories of alignment/regionalism, readiness and marketing. Tactics within each strategy can be found in the final section of this report - Economic Development Business Recruitment Roadmap. Alignment/Regionalism IN OF ]I Goal #1: Address and work to Goal #2: Ensure Anoka Goal #3: Clearly define roles within the county, as well as change the perception of Anoka County is ready for with regional partners, as it County, among stakeholders, development from both a relates to marketing, partners, developers, potential talent and product (sites and incentives, business retention talent, etc. buildings) perspective. and expansion, etc. Articulate roles and responsibilities of Anoka County, Connexus Energy, and each local/regional economic development partner to X XXX help avoid duplication of efforts, identify gaps, and reach consensus on project coordination protocols. Communicate regularly with economic development partners and other stakeholders about economic development initiatives, X XX business news, county -wide successes, and quality of life improvements. XXX: Primary effect on goal XX: Direct effect on goal X: Indirect effect on goal Voltedge, Inc. dba Ady Advantage 1 301 S. Blount St, Suite 103 1 Madison, WI 53703 1 608.663.9218 1 AdyAdvantage.com Executive Summary ECONOMIC DEVELOPMENT STRATEGIES (CONT'D) Readiness Goal #1: Address and work to Goal #2: Ensure Anoka Goal #3: Clearly define roles change the perception of Anoka County is ready for within the county, as well as County, among stakeholders, development from both a with regional partners, as it partners, developers, potential talent and product (sites and relates to marketing, incentives, business retention talent, etc. buildings) perspective. and expansion, etc. Product Readiness Ensure sites and buildings are listed in LOIS or another sites and buildings database and X XXX X information is accurate and up-to-date. Determine the next sites/buildings for short- term, medium -term and long-term development XXX X that meet the needs of the target industries (as identified in this report) Develop and maintain relationships with local XX XX developers and real estate brokers. Re-evaluate the city and county incentive XXX X policies to ensure they align with future goals. Talent Readiness Continue to explore what Greater MSP is doing XXX X with regard to talent, and participate selectively. Identify any gaps related to the Anoka County talent strategies and develop approaches to X XXX address. XXX: Primary effect on goal XX: Direct effect on goal X: Indirect effect on goal Voltedge, Inc. dba Ady Advantage 1 301 S. Blount St, Suite 103 1 Madison, WI 53703 1 608.663.9218 1 AdyAdvantage.com 10 Executive Summary ECONOMIC DEVELOPMENT STRATEGIES (CONT'D) Marketing/Diff r n i tion J F1 Goal #1: Address and work to Goal #2: Ensure Anoka Goal #3: Clearly define roles change the perception of Anoka County is ready for within the county, as well as County, among stakeholders, development from both a with regional partners, as it partners, developers, potential talent and product (sites and relates to marketing, incentives, business retention talent, etc. buildings) perspective. and expansion, etc. All Audiences Using this economic development plan as a base of information, outline the key assets of the XXX X region from both a talent and business retention/development perspective. Communicate a consistent county -wide XXX XX economic development brand. Internal Stakeholders Market the key assets of Anoka County to internal stakeholders to ensure that everyone is XXX X communicating a consistent message about the county and region. Partners Market the key assets of Anoka County to partners so that they are aware of the unique XXX assets of the county, as well as the types of projects Anoka County is best suited for. XXX: Primary effect on goal XX: Direct effect on goal X: Indirect effect on goal Voltedge, Inc. dba Ady Advantage 1 301 S. Blount St, Suite 103 1 Madison, WI 53703 1 608.663.9218 1 AdyAdvantage.com 11 Executive Summary ECONOMIC DEVELOPMENT STRATEGIES (CONT'D) Marketing/Differentiation Ed Goal #1: Address and work to Goal #2: Ensure Anoka Goal #3: Clearly define roles within change the perception of Anoka County is ready for the county, as well as with County, among stakeholders, development from both a regional partners, as it relates to partners, developers, potential talent and product (sites and marketing, incentives, business talent, etc. buildings) perspective. retention and expansion, etc. Existing Businesses Help existing businesses continue to grow in Anoka XXX XX County. Ensure existing businesses are aware of local, regional and state programs/initiatives that would XXX X benefit their business. Developers/Real Estate Brokers Market the key assets of Anoka County to local/regional developers and real estate brokers so they are aware of the S&B product in the county, XXX as well as the target industries that are best suited for Anoka County. Site Selectors jr Market the key assets of Anoka County to site selectors who work in the target industries XXX identified in this report. Target Industries Communicate the benefits of doing business in 7 Anoka County to companies within the specific XXX target industries identified in this report. Identify companies in the recommended target XXX XX industries to attract to Anoka County XXX: Primary effect on goal XX: Direct effect on goal X: Indirect effect on goal Voltedge, Inc. dba Ady Advantage 1 301 S. Blount St, Suite 103 1 Madison, WI 53703 1 608.663.9218 1 AdyAdvantage.com 12 Site Visit Analysis - Clearwater Creek Business Park - Lino Lakes Strengths • Mix of sites apparently n development • Build -to -suit properties N. are needed in the mai • New Main St/1-35E inter( improved 21st Street N. Weaknesses • Possible presence of we - could limit developmen, No asking price provide( Limited information on parcel Unattractive industrial sLura%e operations on 21st Street North are incompatible with quality development Voltedge, Inc. dba Ady Advantage 1 301 S. Blount St, Suite 103 1 Madison, WI 53703 1 608.663.9218 1 AdyAdvantage.com 41 ECONOMIC DEVELOPMENT ADVISORY COMMITTEE AGENDA ITEM 3B STAFF ORIGINATOR: Michael Grochala EDAC MEETING DATE: June 7, 2018 REQUEST: Private Activity Tax -Exempt Financing Guidelines BACKGROUND Love To Grow On, a Minnesota nonprofit corporation, who operates early childhood education centers in the City of Lexington and the City of Circle Pines, received approval to construct a new facility located in the City of Lino Lakes. As part of their financing Love To Grown On requested City assistance to issue tax-exempt conduit bonds. Under state statutes that authorize these bonds, the city issues the bonds and loans the proceeds to the private entity. In actuality, the loan is handled entirely by a separate bond trustee and the city has almost no role in payment or administration. While creating no risk for the City, issuance allows the private entity to obtain lower interest rates. The City was not able to provide the conduit bonds for this project due to other proposed debt issuance for street reconstruction. However, the City of Columbia Heights issued a revenue note, which is allowed under state statutes, subject to the local city's approval. The City Council approved the issuance at the May 29, 2018 council meeting. As part of the discussion the City Council requested EDAC review of the city's policy and consideration, not only as an economic development tool, but also a potential revenue source to assist with economic development activities. While limited to non -profits, affordable housing and some manufacturing facilities, the city does charge a fee for issuance. The City currently charges a one-time administrative fee equal to 1% of the bond issue amount. EDAC CONSIDERATION Staff is requesting EDAC discussion and recommendations regarding the use of conduit debt. ATTACHMENTS 1. Conduit Debt summary, League of Minnesota Cities 2. Tax Exempt Bond Guidelines, adopted 2005 1 RELEVANT LINKS: Note that bond investors have very little interest in how the proceeds are used, if the bonds are general obligations. Therefore, the classification by use of proceeds is mostly relevant from a standpoint of city policy and financial management. IV. Bonds by user The most commonly -issued bonds represent borrowing by a city to finance public assets —the city itself is the "user" of the proceeds. But Minnesota law authorizes cities to issue bonds where the proceeds are actually used by private parties. These bonds are referred to in most cases as "private See Section v111-B activity bonds" —a name derived from federal tax law. Private activity Governmental versus private activity. bonds fall into two major categories, discussed in turn below. A. Conduit bonds Minn. Stat. §§ 469.152 to Unlike almost all other bonds, "conduit bonds" are initiated by and issued 469.1651. Minn. Stat. ch. 462C. for the benefit of private entities. Under the state statutes that authorize these bonds, the city issues the bonds and loans the proceeds to the private entity. That private entity repays the loan in an amount sufficient to pay principal and interest on the bonds. As a practical matter, the loan is (normally) handled entirely by a separate bond trustee (usually the trust division of a bank). After the bonds are issued, the city has almost no role in payment or administration of the bonds. The bonds are revenue bonds —the city does not pay debt service or any other cost related to the transaction. As such, the bonds have no effect on the issuing city's credit rating and are not counted against any statutory limitations on borrowing. When the bonds are sold, investors look only to the credit of the private borrower (and any related private security, such as mortgages and guarantees). While the city council must approve issuance of the bonds and all the bond documents, the transaction is largely handled See section x Participants by the private borrower and the underwriter that usually serves as the in a bona sale. initial purchaser of the bonds. The bond counsel for conduit bonds may be the city's regular bond counsel, or may be retained by the private entity (this is a matter of city policy and practice). The types of private activity bonds are governed primarily by federal tax law. Congress in effect created this kind of bond to provide tax-exempt (and therefore lower cost) borrowing to certain favored activities carried out by private entities. Much of today's tax law regarding these bonds originated with the Tax Reform Act of 1986, which sharply narrowed the scope of permissible private activity bonds (previously known as "industrial development revenue bonds" or "IDR bonds"). League of Minnesota Cities Handbook for Minnesota Cities 10/26/2017 Debt and Borrowing Chapter 23 1 Page 8 RELEVANT LINKS: The three most common conduit bonds in Minnesota are: • Qualified 501(c)(3) bonds, where the user of bond proceeds is a nonprofit 501(c)(3) entity. Typical examples include nonprofits that own nursing homes, hospitals, senior and other affordable housing, and schools (from K-12 to college). But any nonprofit with 501(c)(3) status is eligible for this type of financing, so bonds have been issued for entities as diverse as the YMCA to Minnesota Public Radio. • Housing revenue bonds (exempt facilities), where the user of bond proceeds is a private for -profit entity that builds housing intended for occupancy by persons or families who meet specified low-income guidelines. • Small issue manufacturing bonds, where the user of the proceeds is a manufacturing business that constructs manufacturing facilities that meet certain federal requirements. There are other less common conduit bonds that cities may occasionally encounter, but the three listed above represent the bulk of this bond type. B. Tax increment and abatement private activity bonds Minn. Stat. § 469.178. Minn. The other category of common private activity bonds are those issued in Stat. § 469.1814. the context of economic development and redevelopment. Cities may issue See Handbook, community bonds secured by tax increments (all the increased taxes in a TIF district or Development and Redevelopment. portion thereof) or abatements (the taxes imposed by a participating taxing jurisdiction, usually just the issuing city). The city may be the "user" of these bonds, for example, when proceeds finance public streets or other public infrastructure needed for a private development project. But bond proceeds maybe delivered to a private developer to finance aspects of the private development permitted under law —such as land acquisition, excavation, and other eligible private improvements. In those cases, the private developer becomes the "user." In most cases, where the private developer is the user, the issuing city will also require the developer to provide additional security, such as an agreement to maintain a minimum value, or a guarantee to cover debt service if tax increments or abatements fall short of expectations. The result is that these bonds are treated as "private activity bonds," and must be issued as taxable bonds. By contrast, conduit bonds are tax exempt despite the fact that they are issued for the benefit of, and secured by, a private entity —but only because the private entity accomplishes some public purpose identified by Congress in federal tax law. League of Minnesota Cities Handbook for Minnesota Cities 10/26/2017 Debt and Borrowing Chapter 23 1 Page 9 Exhibit A LINO LAKES, MINNESOTA PRIVATE ACTIVITY TAX-EXEMPT FINANCING GUIDELINES AUGUST 8, 2005 Lino Lakes, Minnesota Private Activity Tax -Exempt Financing Guidelines -_- GENERAL Under the Minnesota Municipal Industrial development Act, Minnesota Statutes, Sections 469.152 to 469.1651 (the "Industrial Development Act"), the City of Lino Lakes, Minnesota has authority to issue revenue bonds or notes to attract or promote economically sound industry and commerce to the City, including the development of facilities by qualified 501(c)(3) organizations. Under Minnesota Statutes, Chapter 462C (the "Housing Act") the City is authorized to issue housing revenue bonds to finance multi -family residential housing projects for low and moderate income persona and elderly persons. The City Council is aware that such financing for certain private activities may be of benefit to the City and will consider requests for tax exempt financing subject to these Guidelines. The City Council considers tax exempt financing to be a privilege, not a right. It is the judgment of the City Council that tax exempt financing is to be used on a selective basis to encourage certain development that offers a benefit to the City as a whole, including employment and housing opportunities. It is the applicant's responsibility to demonstrate the benefit to the City. The applicant should understand that although approval may have been granted by the City for the issuance of financing for a similar project or a similar debt structure that is not a basis upon which approval will be granted. Each application will be judged on the merits of the project as it relates to the public purposes of the Housing Act or the Industrial Development Act and the benefit to the City at the time the request for financing is being considered. PART II GUIDELINES The City Council will consider tax exempt financing for manufacturing and health care facilities, and other facilities operated by qualified 501(c)(3) organizations, under the Industrial Development Act; and housing projects under the Housing Act. An applicant for tax-exempt financing pursuant to the Industrial Development Act must submit to the City the application contained in Part IV of these Guidelines. 2. The project must be a positive benefit to the City. The project must be of a nature that the City wishes to attract, or an existing business which the City wishes to retain or expand within the City, considering employment opportunities, incentive for further development, impact on City services, and support for the industrial, commercial or health care operations currently located in the City. A housing project must provide significant housing opportunities for low and moderate income persons or the elderly. 3. The City Council will, if requested, grant an applicant a pre -application review. The purpose of the pre -application review is to inform applicants of the possibility of rejection or the possible basis for such a rejection. The fact that the project is not rejected at the pre -application stage is not to be construed as approval of the project or as an indication that the project will be approved upon formal request to the Council. Requests for tax-exempt financing may be rejected by the City whether or not the project was submitted to a pre -application review and regardless of the outcome or recommendation of that pre -application review. A request for pre -application review must be in writing, addressed to the City Finance Director, and set forth the name of the project, the type of project intended and the name, address and telephone number of the person who will be representing the applicant at the pre -application review, together with such additional information as the applicant desires to submit. The City will appoint bond counsel for the bond issue, which will normally be the City's regularly retained bond counsel. 4. Pursuant to the Industrial Development Act and the Housing Act, consideration of an application for tax exempt financing must be done at a public hearing held by the Board. 5. The City is to be reimbursed and held harmless for and from any out-of-pocket expenses related to the tax-exempt financing including, but not limited to, legal fees, financial advisor fees, bond counsel fees, the City's expenses in connection with the application, and any deposits or application fees required under state law in order to secure allocation of bonding authority. A non-refundable application fee in the amount of $2,500 must be included with the submission of the application. Prior to closing and delivery of the bonds for the project, the applicant must pay to the City, or commit to pay, as the case may be, a one-time administrative fee equal to 1 % of bond issue amount. Notwithstanding anything to the contrary herein, the administrative fees required by this paragraph will be reduced to the extent needed to ensure that the fee does not affect the tax-exempt status of the bonds under Internal Revenue Code of 1986, amended and related regulations. 6. Should the tax exempt financing request cause the City's total bonding for the year to exceed $10,000,000 in a year that the City would otherwise be eligible to issue bank qualified bonds, (bonds with tax incentives to banks), any interest rate differential between bank qualified and non -bank qualified bonds shall be estimated and the difference paid by the borrower. If the City would have exceeded this amount without the tax-exempt issue, no differential would be calculated or paid by the borrower. 7. Applications for financing must be made on the forms attached to these Guidelines. In addition, the applicant must furnish a description of the project, together with a brief description of applicant and the proposed financing in such form as required at the time of application. 8. The City may, in its sole discretion, withdraw its preliminary approval of a project any time if in its judgment the purposes of the Act will not be served by going forward with the project and it's financing. 9. The City may, in its sole discretion, reduce the administrative fee in cases where the borrower's request is related to a partnership with the City and provides a public service benefit to the community as a whole. PART III MISCELLANEOUS MATTERS Ratings. The City will give its most favorable consideration to proposed tax-exempt bond issues that have the same credit rating as the City's obligations by Moody's Investment Service or Standard & Poor's Corporation. Issues carrying lower ratings or non -rated issues may be sold only to institutional or other investors on a private placement basis and must be in denominations of at least $100,000. The City Council may depart from this guideline when, in its judgment, the project is of a level of merit and public purpose to justify the departure; and in case of such a departure, the City Council must state its reasons therefore in the resolution awarding the sale of bonds. 2. Refundings. The City Council will normally approve the refunding of a tax-exempt issue but only upon a showing by the applicant of (i) substantial debt service savings, (ii) the removal of bond covenants significantly impairing the financial feasibility of the project, or (iii) both (i) and (ii). In the case of refunding of bonds for which the administrative fee listed in paragraph 6 of Part II have been paid in full, no new administrative fees are required; but the non-refundable application fee must be paid together with all City expenses in excess of that fee. If any fees related to the initial bond issue have not been paid, such fees must be paid in full prior to closing the refunding bonds. 3. Subsequent Proceedings. Where changes to the underlying documents or credit facilities of outstanding bond issues are to be made and require Council action (including changes that are a "deemed reissuance" under Internal Revenue Service regulation), no administrative fee is charged but a non-refundable fee of $2,000 must be deposited with the City to cover administrative costs. No formal application form is required 4. Issue by Another Political Subdivision. The City will consider requests for tax exempt financing of projects in the City by other political subdivisions. In these cases the non-refundable application fee must be paid and all procedures through the approval of the preliminary resolution followed. No administrative fee is charged. At the Council's discretion, all or part of the application may be waived if there are offsetting benefits resulting from this financing. 5. City Contact. Initial contacts about tax exempt financing are made by contacting: City Finance Director City of Lino Lakes 600 Town Center Parkway Lino Lakes, MN 55014 (651) 982-2410 6. Deadlines. The City Council conducts all tax-exempt financing matters at regularly scheduled City Council meetings held on the second and fourth Mondays of each month. Documents for City Council consideration must be at the City office no later than the Friday 10 days prior to next regular Council meeting at which the matter is to be considered. In the case of a publicly offered bond issue, the documents, when submitted, may specify a maximum price and maximum effective interest rate if prices and rates have not yet been established. PART IV CITY OF LINO LAKES, MINNESOTA APPLICATION FOR TAX EXEMPT FINANCING (Commercial, Industrial, Educational or Health Care) 1. APPLICANT a. Business Name — b. Business Address — c. Business Form (corporation, partnership, sole proprietorship, etc.) d. Authorized Representative — e. Principal contact person and telephone number — 2. PURPOSE OF REQUESTED FINANCING — a. New Facility (describe) — b. Expansion (describe) — c. Refunding (attach explanatory letter) 3. GIVE BRIEF DESCRIPTION OF NATURE OF BUSINESS, PRINCIPAL PRODUCTS, ETC. 4. ESTIMATED SOURCES AND USESPROJECT COSTS: (Not required for refunding) SOURCES: Bond proceeds $ Cash Other Loans Total Sources USES: Land $ Building Equipment Architectural, Engineering Cost of Issuance Capitalized Interest Other Total Uses 5. TOTAL FINANCING REQUESTED $ ( % of project costs) 6. TYPE OF FINANCING PROPOSED: Bonds Tax -Exempt Mortgage Expected Term of Financing Years Security: Mortgage Letter of Credit Guaranty (third party) Guaranty (personal) _ Unsecured Other (specify) 7. BUSINESS PROFILE: (Not required for refunding) a. Is the business located within City Boundaries? b. Number of employees within the City of Lino Lakes geographic boundaries i. Before this project — ii. After this project — c. Approximate annual sales — d. Length of time in business — e. Length of time in City f. Do you have business operations in other locations? If so, where? 8. NAMES OF: a. Underwriter (name and contact person) — b. Corporate Counsel — c. Underwriter's Counsel — 9. WHAT IS YOUR TARGET DATE FOR: a. Construction start — b. Construction completion — 10. ATTACHMENTS: a. Project description materials — b. Draft resolution calling for public hearing — c. Notice of public hearing — d. Draft of preliminary resolution e. Draft application to Department of Trade and Economic Development — necessary attachments f. Financial feasibility letter — g. Preliminary bond counsel opinion — h. Initial filing fee (to be set by City Council) — i. Indemnification Letter of Agreement The applicant further states that it has been furnished a copy of the City of Lino Lakes's Private Activity Tax Exempt Financing Guidelines and is aware of its content and agrees to be bound by its terms and the terms of the indemnification letter. r:39 DATE For further information, contact: City Finance Director City of Lino Lakes 600 Town Center Parkway Lino Lakes, MN 55014 (651) 982-2410 Applicant PART VI INDEMNIFICATION LETTER OF AGREEMENT City of Lino Lakes Mayor And Members of the Council RE: Application of Lino Lakes for Tax Exempt Revenue Bond Financing by the City of Dear Mayor and City Council Members: This letter of agreement is given by , a under the laws of Minnesota ("Applicant") as required by the City of Lino Lakes in connection with its consideration of an application for tax-exempt revenue bond financing for the project described in the application. Applicant hereby covenants, warrants and agrees as follows: Applicant agrees to pay or reimburse the City for any and all costs and expenses which the City may incur in connection with its consideration of the project and the granting of tax-exempt revenue bond financing therefore, whether or not the project is preliminarily approved by the City, whether or not the project is approved by the Sate of Minnesota, whether or not revenue bond financing is finally approved by the City, whether or not the bonds are issued and sold, and whether or not the project is carried to completion. 2. Applicant agrees to indemnify and hold the City, its officers, employees and agents harmless against any and all losses, claims, damages, expenses or liabilities, including attorneys fees incurred in their defense, to which the City, its officers, employees and agents may become subject in connection with the City's consideration, issuance or sale of the bonds for Applicant's project and the carrying out of the transactions contemplated by this agreement and any resolutions adopted, or agreements executed by the City in connection with the issuance of its bonds for this project. 3. Applicant here by releases the City, its officers, agents and employees from any claims, causes of action, losses, damages, or liabilities which it may have against the City, its officers, agents, and employees or which it may incur in connection with: the City's consideration of the application for industrial development revenue bond financing for Applicant's project; the failure of the City, in its discretion, to issue tax exempt revenue bonds for Applicant's project; the issuance and sale of the bonds; the construction of the project; or any other matter or thing of any type or nature whatsoever which may arise in connection with the foregoing. 4. Applicant is aware of the City's application and administrative fee structure for tax exempt financing and agrees and covenants that all such fees will be paid in the amount and at the times required. Dated: (Applicant) M Its