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HomeMy WebLinkAbout11-13-2000 EDA PacketAGENDA ECONOMIC DEVELOPMENT AUTHORITY MONDAY NOVEMBER 13, 2000 6:00 P.M. 1. Call to Order and Roll Call 2. Consideration of Minutes of Monday, August 14, 2000 3. Public hearing: Proposed Business Subsidy to North American Composites 3A. Consideration of Resolution No. 00-04 Approving a Business Subsidy for North American Composites 4. Consideration of Contract for Private Development between Lino Lakes EDA and North American Composites 5. Adjourn CITY OF LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY MINUTES DATE MEMBERS PRESENT MEMBERS ABSENT OTHERS PRESENT : August 14, 2000 : J. Bergeson, D. Carlson, C. Dahl, J. O'Donnell, J. Reinert (6:15 p.m.) : None : Brian Wessel, Mary Divine, Ron Batty CONSIDERATION OF MINUTES OF MONDAY, JANUARY 24, 2000 EDA Member Dahl moved to approve the January 24, 2000 ' utes, as presented. EDA Member Carlson seconded the motion. Motion passed u® ously. CONSIDERATION OF TIF POLICY Mr. Wessel advised the board that Ms. Divine has bee orking closely with Marmon/Keystone and Twin City Fab, Inc , fo st months. The actions tonight begin a series of actions regarding these project essel reviewed the proposed schedule relating to each project. Ms. Divine advised in 1995 a T as . proved that gave direction for qualifying projects for TIF. Since then k Crt s i `t up the Apollo Business Park and several projects in the Clearwater 'r Indust ial area. With the momentum the City has gained over those five years, EDAC re and recommended some changes to the TIF policy to help reduce the City's depende ;k'e on TIF to attract new industrial development, while leaving the City Council discretion to go beyond the policy when it is appropriate. Under the new draft policy: 1. Prospects must continue to qualify according to the selection criteria. 2. TIF will be sued to pay qualifying reimbursable costs, with landscaping and site preparation added as a qualifying cost. 3. Land write down will continue on the basis that construction of 10,000 square feet (or more) of facility per acre of land is considered best use of the land. 4. Each project will be self sufficient within the allowable TIF capacity of the district. 5. TIF commitments will not exceed 16% of the estimated market value. This is a reduction from the old policy, which allowed 20% of the total project cost. 1 6. Administrative fees (upfront escrow) will be reimbursed using TIF funds at the completion of the project. This has traditionally been part of the agreements. 7. Assessments will be paid up front in the Apollo Business Park to allow for a more expedient return of the City's investment in the park's improvements. 8. In other TIF districts, the subsidy for land and assessments will be on a pay-as- you-go basis. This is a change from the old policy, which generally split the subsidy into approximately 50/50 upfront and pay-as-you-go. 9. If the subsidy includes upfront payments of assessments, the City will be reimbursed first from available increment. The grantee will receive its pay-as- you-go after the City is paid back. This is more restrictive than in the past, generally the City and the grantee split the increment. 10. The source of the 10% local contribution will be identified before the project is approved. EDA Member O'Donnell asked if the TIF commitment of 16% is a minimum or estimate of the market value. Ms. Divine advised the minimum and e .'mated market values are generally the same. EDA Member Carlson suggested the following be a,c y: "Prospects are not competitors with or replace is for existing local businesses." Ms. Divine advised there is a compan is cu gently a prospect and would be a competitor for an existing business EDA Member Carlson asked es are under TIF. Ms. Divine advised one of the businesses is leasing sp EDA President Bergeson stated the problem'with the addition to the policy is that typically these types of businesses are not dependent upon locations. He stated the City would not want to turn down a business that is an asset to the community because of competition with an existing business. EDA Member Carlson advised she was thinking about the addition to the policy more for tax abatement than TIF relating to bars/restaurants and convenience stores. Tax abatement to these types of businesses would give them a strong competitive edge to existing businesses in the community Ms. Divine advised the board they would be addressing that issue separately during the discussion of the tax abatement policy. EDA Member O'Donnell moved to approve the TIF policy, as presented. EDA Member Dahl seconded the motion. Motion passed unanimously. 2 PUBLIC HEARING: PROPOSED BUSINESS SUBSIDY TO MARMON/KEYSTONE Ms. Divine informed the board that Marmon/Keystone has requested tax increment financing (TIF) assistance in the amount of $322,242 for the purpose of constructing an 80,000 square foot distribution facility in the Apollo Business Center. The company has been in business for 90 years as an entity, with a Minnesota location for the past four years as a distributor of tubing and piping, mainly for the agricultural industry. The local distributor currently employs 11, including warehouse, drivers, office and sales. The company has committed to hiring at least four new employees at no less than $15 per hour, plus benefits, which include medical, sick leave and vacation. This is well above the minimum established in the EDA's business subsidy requirement. The proposed facility will have a minimum market value of $3,152,600 for a total of $145,509 in annual taxes (based on 2000 dollars). According to the Minnesota Business Subsidy law, the EDA before granting a subsidy that exceeds $100,000. In additi the granting of a subsidy can be evaluated in terms of w the following: st hold a public hearing to increasing the tax base, romotes one or more of 1. Encourage economic and commercial dive within the community; 2. Contribute to the establishment of within an area; 3. Provide basic goods and se available or encourage f 4. Promote redevelopm cleanup; 5. Promote the ret significance; 6. Promote additional or in -off development within the community; 7. Encourage full utilization of existing or planned infrastructure improvements. al mess of commercial development inc`: ase the range of goods and services finesses; d removal of blight, including pollution ptive use of buildings of historical or architectural EDA President Bergeson opened the public hearing at 6:20 p.m. EDA Member Dahl moved to close the public hearing at 6:20 p.m. EDA Member Carlson seconded the motion. Motion passed unanimously. CONSIDERATION OF RESOLUTION NO. 00 — 03 APPROVING A BUSINESS SUBSIDY FOR MARMON/KEYSTONE Ms. Divine advised light industrial projects in the Apollo Business Center are consistent with the City's comprehensive plan designed to encourage economic growth and diversity. As part of the Lino Lakes Town Center, the projects moving into the park play a significant role in providing a critical mass of development to support retail and service 3 businesses in the commercial center. This project is also consistent with the City's need to recover the return on its investment in the existing infrastructure within the park. This resolution recognizes that Marmon/Keystone meets the goals and objectives outlined by the EDA in its business subsidy criteria. This project must go through a series of approvals, including approval of the development agreement, site and building plan and conditional use permit. The City Council will be considering the site plan and CUP at the August 28, 2000, Council meeting. It is recommended that approval of the business subsidy be contingent upon final approval of the project by the City Council. EDA Member O'Donnell moved to approve Resolution No. 00 — 03 contingent upon final approval of the project by the City Council. EDA Member Reinert seconded the motion. Motion passed unanimously. CONSIDERATION OF CONTRACT FOR PRIVATE D ELOPMENT BETWEEN LINO LAKES EDA AND MARMON/KE ONE Ms. Divine advised this development contract out1in t ; con s for pubic assistance to Marmon/Keystone for the construction of an 8 , '' 0 ` are f of facility on 8 acres on the G.M. Development property in the Apollo Busin• `Center. The total market value (MMV) of the completed project will be $3,1 In this agreement, the City agrees to which amount to approximately 10 assessments of $139,839 upfront company when the building i $177,403. It will be used t p tax crement financing totaling $322,242, The agreement removes the escrow, which will be returned to the e remaining pay-as-you-go TIF amounts to the cost of the land, except for $3,000, which will be used to assist with maintenane native landscaping on the site. The City will be reimbursed first for the assessmen and then the developer will receive the remaining increment. Estimated payback is in December 2005. This project is in TIF District 1-9, which requires a 10% local contribution ($38,994). It is the City's intent to apply the interest lost on the assessments that were deferred until development occurred as the local contribution. EDA Member Carlson asked staff to explain the reason for the 10% local contribution. Ms. Divine advised state stature requires that for any tax increment assistance, the City pays 10% of the gross increment towards the project out of the General Fund. EDA Member Carlson moved to approve the contract for private development between Lino Lakes EDA and Marmon/Keystone, as presented. EDA Member Dahl seconded the motion. Motion passed unanimously. 4 CONSIDERATION OF CONTRACT FOR PRIVATE DEVELOPMENT BETWEEN LINO LAKES EDA AND TWIN CITY FAB, INC. Ms. Divine advised this development contract outlines the conditions for public assistance to Twin City Fab for the construction of a 19,200 square foot facility on 4 acres on the G.M. Development property in the Apollo Business Center. The total minimum market value (MMV) of the completed project will be $920,500, with an estimated tax of $41,041. In this agreement, the City agrees to provide tax increment financing totaling $77,185, which amounts to approximately 8% of the MMV. The agreement removes the assessments of $70,185 upfront, plus a $5000 escrow, which will be returned to the company when the building is complete. The remaining pay-as-you-go TIF amount of $2000 will be used to assist with maintenance of the native landscaping on the site. The City will be reimbursed first for the assessments and then the developer will receive the remaining increment. Estimated payback is in July 2005. The project is in TIF District 1-9, which requires a 10% to the City's intent to apply the interest lost on the assess development occurred as the local contribution. contribution ($8,749). It is were deferred until The business subsidy proposed for Twin City Fab, Inc under $100,000, and therefore does not require a public hearing under the Mir' • to B ' ess Subsidy Law. However, al subsidies of more than $25,000 require a busy sidy agreement, which is now included in the development agreeme twee the developer and the EDA. Twin City Fab has agreed to a w . ' + go 1 of at least five new employees at a minimum starting wage of $� our, us efits. EDA President Bergeson reques escription of the business. Ms. Divine advised Twin City Fab, Inc. is a manufact a ng shop with metal parts, awnings, staircases, etc. EDA Member O'Donnell moved to approve the contract between Lino Lakes EDA and CJN Investments, LLP, as presented. EDA Member Reinert seconded the motion. Motion passed unanimously. ADJOURNMENT EDA Member Dahl moved to adjourn. EDA Member Carlson seconded the motion. Motion passed unanimously. 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AGENDA ITEM 3 STAFF ORIGINATOR: Mary Alice Divine DATE: 11 /13/00 TOPIC: Public Hearing on the proposed business subsidy to North American Composites Vote Required: Simple Majority BACKGROUND: North American Composites, a subsidiary of Interplastic Corporation, has requested tax increment financing (TIF) assistance in the amount of $122,250 for the purpose of constructing a 25,000 square foot distribution facility in the Apollo Business Center. North American Composites is a national distributor of polyester resins, fiberglass, and related products to the composites industry. The local distributor will employ 21 at this new facility, including management, warehouse, drivers, office and sales positions. The company has committed to hiring at least three new employees within two years at no Tess than $25,000 annual salary, plus benefits. A public hearing is required by statute when the EDA is considering granting a subsidy that exceeds $100,000. OPTIONS: 1. Open the public hearing 2. Continue the public hearing RECOMMENDATION: Option 1 AGENDA ITEM 3A STAFF ORIGINATOR: Mary Alice Divine DATE: 11/13/00 TOPIC: Consideration of Resolution No. 00-04 approving the proposed business subsidy to North American Composites VOTE REQUIRED: Simple Majority BACKGROUND: This resolution recognizes that North American Composites meets one or more of the goals and objectives outlined by the EDA in its business subsidy criteria. Those goals include: 1. Light industrial projects in the Apollo Business Center are consistent with the city's comprehensive plan designed to encourage economic growth and diversity. 2. As part of the Lino Lakes Town Center, the projects moving into the park play a significant role in providing a critical mass of development to support retail and service businesses in the commercial center. 3. This project is also consistent with the city's need to recover the return on its investment in the existing infrastructure within the park. This project will be receiving site and building plan review later tonight by the City Council. It is recommended that approval of the business subsidy be contingent upon final approval of the project by the City Council. OPTIONS: 1. Adopt Resolution No. 00-04 2. Return to staff for further consideration RECOMMENDATION: Option 1 Member introduced the following resolution and moved its adoption: LINO LAKES ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 00-04 RESOLUTION AUTHORIZING APPROVING BUSINESS SUBSIDY TO NORTH AMERICAN COMPOSITES BE IT RESOLVED by the Lino Lakes Economic Development Authority as follows: Section 1. Recitals 1.01. The Lino Lakes Economic Development Authority (the "Authority") approved a tax increment financing plan (the "Plan") for the Tax Increment Financing District No. 1-9 (TIP - District No. 1-9) on December 14, 1998. 1.02. On December 14, 1998, the City Council of the City of Lino Lakes (the "City") approved the Plan. 1.03 On November 8, 1999, following a public hearing, the Authority approved the Lino Lakes Economic Development Authority. Business Subsidy Criteria (the "Criteria"), pursuant to Minnesota Statute, sections 116J.993 through 1167.995 (the `Business Subsidy Act.") 1.04. North American Composites Company, a subsidiary of Interplastic Corporation, a Minnesota Corporation, (the "Developer") has requested a business subsidy through tax increment financing in the amount of $122,250 for the construction of a light industrial facility in the Apollo Business Center. 1.05. Pursuant to Section 1167.994, subd. 5 of the Business Subsidy Act, the Authority has on this date held a public hearing on the proposed subsidy to the Developer, following published notice as required by law, at which hearing all persons wishing to express an opinion were given an opportunity to do so. Section 2. Findings. 2.01. It is hereby found and determined that the business subsidy is in the best interest of the Authority because it is consistent with and promotes the goals established by the Authority in adopting the Criteria. 2.02. It is hereby found and determined that granting the business subsidy to the Developer furthers the Authority's general plan of economic development of the community by encouraging growth and expansion of an industrial park which has not been used to its full potential. 2.03. Pursuant to the Criteria established by the Authority, it is hereby found and determined that the business subsidy promotes the following: 1. Encourages economic and commercial diversity within the community; 2. Contributes to the establishment of a critical mass of commercial development within an area; and 3. Encourages full utilization of existing or planned infrastructure improvements. Section 3. Authorization. 3.01. The business subsidy to the Developer as described above is hereby approved. 3.02. The President and Acting Executive Director are hereby authorized and directed to execute a Development Agreement, including the business subsidy agreement required by the Business Subsidy Act, and other appropriate documents to facilitate the finalization of the business subsidy to the Developer. 3.03. Staff and consultants are hereby authorized and directed to take any and all other actions necessary or convenient to effect the intent of this resolution, including seeking approval of the subsidy from the Lino Lakes City Council. Dated: , 2000. President ATTEST: Acting Executive Director The motion for the adoption of the foregoing resolution was duly seconded by member and upon vote being taken thereon, the following voted in favor thereof: and the following voted against same: Whereupon said resolution was declared duly passed and adopted. STAFF ORIGINATOR: DATE: TOPIC: VOTE REQUIRED: BACKGROUND: AGENDA ITEM 4 Mary Alice Divine 11/13/00 Consideration of the Contract for Private Development between Lino Lakes EDA and North American Composites 3/5 This development contract outlines the conditions for public assistance to North American Composites for the construction of a 25,000 square foot facility on 2.4 acres on the G.M. Development property in the Apollo Business Center (see attached map). The proposed facility will have a minimum market value of $938,400 for a total of $42,000 in annual taxes (based on pay 2001 dollars). The costs for land, assessments and escrow are approximately $226,000. In this agreement, the city agrees to provide tax increment financing totaling $122,250 towards those costs. The agreement removes the assessments of $63,877 upfront. The remaining pay-as-you-go TIF amounts to $58,373 for assistance with land write down and return of escrow. The city will be reimbursed first for the assessments from the available tax increment, and then the developer will receive the remaining increment. Estimated total payback is in 2007. This project is in TIF District 1-9, which requires a 10% local contribution ($13,753). It is the city's intent to apply the interest lost on the assessments that were deferred until development occurred as the local contribution. OPTIONS: 1. Approve the contract for private development between Lino Lakes EDA and North American Composites 2. Return to staff for further consideration RECOMMENDATION: Option 1 KEp L./ Nf: o LPL' Section 5.1. Special Assessments. The City has levied or will levy against the Property in the principal amount of $63,877 for the PublicpSpecial been constructed and which benefit the Property. P Assessments fer-tli�s `The Authority agrees to ements which have the time of issuance of obility fnr the Special Assessments against the Property at Certificate of Completion for the Minimum Improvemen � the Special Assessments n ' principal and interest at -a ef°-pe�* • Section 5.2. Administrative Fee. Administrative Fee in The Developer has the amount of $5,000 to partially cover the negotiating this Agreement and other costs associated with the ro'ect reimburse the Developer for the Administrative Fee P r ���t?1f'ilYl •w. T�_ paid the Authority the Authority's expenses in The Authority agrees to Section 5.3. Pro nertv Write Down. development of the Property In order to facilitate the financial feasibility of the P y and in consideration for the Developer's fulfillment of its covenan ts and obligations under this Agreement, the Authority agrees to Property for the under write down Developer.The Developer represents that it has entered into an agreement the cost of te purchase the property from the Seller for $�-8.I6 provide theh Authority a copy$ Authority agrees o ty reimburse the the purchaseeagree ent to verifypThe Developer agrees The of the Property. 3 out of Available Tax Increment ice of the or the cost Section 5.4. No Re � resentation Re financial commitment under this Agreement Available Tax Increment. The Authority's 11I1 �r ment of tho e,� -• Authority oni Fpp --� D y after Tax �-� is a revenue obligation only including Increment has been used to full and will be paid by the n h g pn3id hand interest, Y pay for the Special Assessments, oteunn Available Tax . The Authority makes no representations or warranties Increment will be sufficient to payes that the e�� r 'm r the Developer for the Land Write Down and ce th Adn,�n���,..,•_ T The Developer acknowledges that Avail y and chap all of the Land Write Down gas in State law and that someb Tax Increment is subject to calculations by the County c-ests be made prior to the Termination Date. n Adm�T., �trativ F p ''�.:llhnr The Developer also acknowledges that the estimates of Available Tax Increment which may have been made by the Authority employees are estimates only and are not intended for reliance bythe e itsp agents, officers or Developer. RHB-188393v2 LN140-74 (i) For purposes of this Article X, the Developer includes any party to whom the Developer leases the Property or Minimum Improvements. Section 10.2. Job and Wa a Goals. Within two years after issuance of the Certificate of Completion or the date the Developer occupies the earlier of the date of "Compliance Date"), the Developer shall cause to be createdatleast the Propertyw equivalent jobs on the Pro ert , and shall cause the wages for the three (the three new full-time less than $�''�`�p�air, exc u ive of benefits. Notwithstanding new employees to be no herein, if the wage and job goals described in this Section 10.2 armet anything tom thea contrarye Date, those goals are deemed satisfied despite the Developer's continuingobligations by the Compliance Date, 10.1(f) and 10.4. The Authority may, after a public hearing, extend the Compliance under Date p to one year, provided that nothing in this Section 10.2 will be construed to limithDate by up legislative discretion regarding this matter. the Authority's Section 10.3. Remedies. If the Developer fails to meet the goals described in Section 10.1(c), the Developer shall repay the Authority a pro rata share of the granted by this Agreement, plus interest on said amount at the implicit price deflator the subsidy in Minnesota Statutes,.Section 275.50, subd. 2, r as defined Certificate of Completion to the date ofpayment. accrued from the date of issuance of the within thirty (30) days of written demand by the AuthoThe nment shall be made by the Developer tpercentages calculated as follows: Y The term pro rata share means (i) if the failure relates to the number of jobs, the jobs required created, divided by the jobs required; q less the jobs (ii) if the failure relates to wages, the number of jobs required less the number of jobs that meet the required wages, divided by the number of jobs required; q (iii) if the failure relates to maintenance of the warehouse/distribution facility accordance with Section 10.1(f), 60 less the number of months of o erat onas in warehouse/distribution facility (where anywP as a at least 15 days constitutes a month of operation), commencich the ing tonsthein odate for Certificate of Completion ending with the date the facility ceases operation as date of the by the Authority, divided by 60; and determined (iv) if more than one of clauses (i) through (iii) appl , the su percentages, not to exceed 100%. Y m of the applicable Nothing in this Section 10.3 shall be construed to limit the Authority's Article IX hereof. In addition to the remedy described in this Section .3and any other remedies under available to the Authority for failure to meet the goals stated in Section 10. , the other vemedy agrees and understands that its may not a receive a business subsidy from the Authority grantor as defined in the Business Subsidy Act for a e • O, Developer failure or until the Developer satisfies its repayment obligation or any period of five years from the date of the whichever occurs first. g under this Section 10.3, RHB-.188393v2 LNI40-74 17