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HomeMy WebLinkAbout08-14-2000 EDA Minutes (Approved)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 eeously. CONSIDERATION OF TIF POLICY Mr. Wessel advised the board that Ms. Divine has bee Marmon/Keystone and Twin City Fab, Inc., fo begin a series of actions regarding these project schedule relating to each project. Ms. Divine advised in 1995 a T projects for TIF. Since then projects in the Clearwater over those five years, EDAC re to help reduce the City's dependene on TIF to attract new industrial development, while leaving the City Council discretion to go beyond the policy when it is appropriate. orking closely with months. The actions tonight essel reviewed the proposed Under the new draft policy: proved that gave direction for qualifying t up the Apollo Business Park and several 'al area. With the momentum the City has gained and recommended some changes to the TIF 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 d o the'. y: "Prospects are not competitors with or replace is for existing local businesses." Ms. Divine advised there is a compan is cu ently a prospect and would be a competitor for an existing business EDA Member Carlson asked s ` otli it es are under TIF. Ms. Divine advised one of the businesses is leasing sp. c EDA President Bergeson stated th;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 ' al m s of commercial development within an area; 3. Provide basic goods and se , inc , ase the range of goods and services available or encourage f a t Y ' ®b finesses; 4. Promote redevelopm ' •bj ves . d removal of blight, including pollution cleanup; 5. Promote the ret ny or a �FLL Live use of buildings of historical or architectural significance; 6. Promote additional or .''in -off development within the community; 7. Encourage full utilization of existing or planned infrastructure improvements. 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 outlines. t con • • s for pubic assistance to Marmon/Keystone for the construction of an 8® '0 • are fot 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 p y,, tax crement financing totaling $322,242, which amount to approximately 10' M The agreement removes the assessments of $139,839 upfront s - 1 i' escrow, which will be returned to the company when the building i e remaining pay-as-you-go TIF amounts to $177,403. It will be used L. : ; t wit;the cost of the land, except for $3,000, which will be used to assist with maintenari • e 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 MI . •ta B ess Subsidy Law. However, al subsidies of more than $25,000 require a bus sidy agreement, which is now included in the development agreeme _ twee ' the developer and the EDA. Twin City Fab has agreed to a w . n � go .1 of at least five new employees at a minimum starting wage of $ our, us efits. EDA President Bergeson reques . ,6 escription of the business. Ms. Divine advised Twin City Fab, Inc. is a manufact 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. Meeting adjourned at 6:32 p.m. Transcribed by: Kim Points, TimeSaver Off Site Secretarial, Inc. 5