Agenda Packets - 2016/02/08 - Laserfiche WebLink

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Public Financing Policy Report February 8, 2016 Page 2  Any reference to Tax “Rebate” Financing was replaced by the statutory language of Tax Abatement.  We removed the section about administration of TIF, as many of the concepts discussed in that section are handled elsewhere in the policy. The remaining TIF administration items are very detailed to include in a policy. Instead, we included in the Public Financing Principles section this language: “Tax Increment Finance districts will be administered in accordance with applicable Minnesota State Statutes, the Tax Increment Finance Plan, and the Development District Plan.”  In the Business Subsidy section, we simplified the language to harmonize with the Business Subsidy Policy and avoid being redundant.  The application process and fees match the Business Subsidy Policy (i.e., $3,000 non-refundable application fee and a $10,000 deposit once the assistance has been approved to move forward, to be prorated and returned to the applicant for any unused portion at the City’s discretion.)  The TIF and Abatement policies differed in their approach to having the applicant agree to the fee. The Abatement policy had a stand-alone agreement to be executed, whereas the TIF application requires a signature acknowledging the fee (and requires it to be remitted with the application). The latter approach is cleaner so that is how the policy is written. There would be a term sheet, preliminary development agreement, or some other type of agreement if the applicant gets to that point that will contractually obligate payment of the fees.  At the advice of Ehler’s, we modified the sample but-for analysis to reflect current financing rates and to show a return with assistance that is just under 8%, rather than the 12% listed in the previous policy. Since Ehler’s typically advises returns limited below 12%, we thought this made sense, so as not to give the wrong impression.  There is now one application document that combines the two previous to preserve all previous elements of both.  There is one Commercial Industrial review worksheet and one Housing worksheet. We tried to leave this exactly the same as before, however there are minor changes for consistency with the policy revisions.