HomeMy WebLinkAboutResolution 00-EDA135
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RESOLUTION NO. OO-EDA-135
MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY
COUNTY OF RAMSEY
STATE OF MINNESOTA
RESOLUTION ADOPTING A TAX ABATEMENT FINANCE POLICY
WHEREAS, Pursuant to Minnesota Statues, 9469.1812 to 9469.1815 (collectively, the "Act") the City
of Mounds View can utilize tax abatement financing for a variety of economic development,
redevelopment and public infrastructure purposes; and
WHEREAS, the Mounds View Economic Development Authority has determined that it is necessary
and appropriate to adopt a policy governing the use of tax abatement finance in accordance with
Minnesota State Statutes; and,
WHEREAS, the Mounds View Economic Development Commission has evaluated and is
recommending adoption of the "Tax Abatement Finance Policy & Application."
NOW, THEREFORE, BE IT RESOLVED, by the Mound View Economic Development Authority,
Mounds View Minnesota, that the "Tax Abatement Finance Policy & Application" contained in Exhibit A
of this resolution is hereby approved, ratified, established, and adopted and shall be placed on file at
City Hall.
The motion for adoption of the foregoing resolution was introduced by Commissioner Quick seconded
by Commissioner Marty, and upon a vote being taken thereon, the following voted in favor thereof:
President Coughlin, Vice-President Stigney, Commissioner Thomason
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(SEAL)
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JL''''''J<...:., ,
Dancou;hlin,
-<" .' '-:Yl,-~ ,--?'l[A.1-~
Kathl en Miller, Executive Director
ATTEST:
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Tax Abatement Finance Policy & Application
City of Mounds View, Minnesota
Adopted: October 10, 2000
Table of Contents
. I. Policy Purpose 3
II. Difference Between Tax Abateluent & TIF 3
III. Objcctives of Tax Abatement Financing 3
IV. Policies for the Use of Tax Abatement 4
V. Project Qualifications 5
VI. Subsidy Agreement & Reporting Requirements 6
VII. Application Process for Tax Abateluent Financing 6
VIII. Attachment A: Application 8
IX. Attachment B: Deposit Agreement 12
X. Attachmcnt C: Application Review Worksheet 15
. XI. Attachment D: Sample But-For Analysis 17
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I. POLICY PURPOSE
The purpose of this policy is to establish the Mounds View Economic
Development Authority's, hereafter referred to as the EDA, position relating to
the use of tax abatement financing for private development above and beyond
the requirements and limitations set forth by State Law. This policy shall be
used as a guide in the processing and review of applications requesting tax
abatement. The fundamental purpose of tax abatement in Mounds View is to
encourage desirable development 01' redevelopment that would not otherwise
occur but for the assistance provided.
The Mounds View EDA is granted the power to utilize tax abatement financing
by the :Minnesota Tax Abatement Act, as amended. It is the intent of the EDA
to provide the minimum tax abatement, as well as other incentives, at the
shortest term required for the project to proceed. The EDA reserves the right to
approve 01' reject projects on a case by case basis, taking into consideration
established policies, project criteria, and demand on city services in relation to
the potential benefits from the project. IVleeting policy criteria does not
guarantee the award of tax abatement to the project. Approval 01' denial of one
project is not intended to set precedent for approval 01' denial of another project.
II. DIFFERENCE BETWEEN TAX ABATEMENT & TIF
The primary difference between Tax Abatement Financing and Tax Increment
Financing (TIF) is the way in which the dollars are awarded to the project.
When TIF is awarded to a project by the EDA, the other political subdivisions
(the school district and the county) are required to contribute their portion of the
increased taxes to the project. Conversely, when tax abatement financing is
requested, each political subdivision has the option of granting its portion of the
increased taxes to the project. Depending on the position of the respective taxing
jurisdictions, the dollars generated by tax abatement have the potential to be
less than the dollars generated with TIF.
III. OBJECTIVES OF TAX ABATEMENT FINANCING
As a matter of adopted policy, the EDA will consider using tax abatement
financing to assist private development projects to achieve one 01' more of the
following objectives:
. To enhance and diversify the City of Mounds View's economic base.
. To encourage the revitalization and redevelopment of the Highway 10
Corridor.
. To encourage additional unsubsidized private development in the area,
either directly 01' indirectly through "spin off' development.
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. To facilitate the development process and to achieve development on sites
which would not be developed without assistance.
. To remove blight and/or encourage redevelopment of commercial and
industrial areas in the city that result in high quality redevelopment and
private reinvestment.
. To encourage the removal of blight 01' the rehabilitation of a high profile
or priority site.
. To offset increased costs of redevelopment (i.e. contaminated site clean
up, demolition expenses etc. . .) over and above the costs normally
incurred in development.
. To increase the tax base.
. To create housing opportunities.
. To retain local jobs and/or increase the number and diversity of jobs that
offer stable employment and/or attractive wages and benefits.
. To finance the costs associated with public infrastructure and public
facilities
. To contribute to the implementation of other public policies, as adopted
by the EDA from time to time, such as the promotion of quality
architectural design, enhanced recreational opportunities, and decreasing
capital and/or operating costs of local government.
IV. POLICIES FOR THE USE OF TAX ABATEMENT
a. Tax abatement assistance will be provided to the developer upon
receipt of taxes by the EDA, otherwise referred to as the pay-as-you-go
method. Requests for up front financing will be considered on a case
by case basis.
b. Any developer receiving a tax abatement shall provide a minimum of
twenty percent (20%) equity investment in the project.
c. Tax abatement will not be used in circumstances where land and/or
property price is in excess of fair market value as established by a
licensed appraiser.
d. A market demand shall be demonstrated for the proposed project.
C. Tax abatement will not be utilized in cases where it would create an
unfair and significant competitive financial advantage over other
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projects in the area.
f. Tax abatement shall not be used for projects that would place
extraordinary demands on city services or for projects that would
generate significant environmental impacts.
g. The developer must provide adequate financial guarantees to ensure
completion of the project, including, but not limited to: assessment
agreements, letters of credit, personal guaranties, and additional
documentation as necessary.
h. The developer shall adequately demonstrate, to the EDA's sole
satisfaction, an ability to complete the proposed project based on past
development experience, general reputation, and credit history, among
other factors, including the size and scope of the proposed project.
1. For the purposes of underwriting the proposal, the developer shall
provide any requested market, financial, environmental, or other data
requested by the EDA or its consultants.
v. PROJECT QUALIFICATIONS
All tax abatement projects considered by the :Mounds View EDA must meet
each of the following requirements:
a. The project shall meet at least one of the objectives set forth in section
III of this document.
b. The use of tax abatement will be limited to:
. Industrial development, expansion, redevelopment, or
rehabilitation; or
. Commercial redevelopment or rehabilitation; or
. Office or research facilities;
. Housing and infrastructure.
. Public Infrastructure
c. The developer shall demonstrate that the project is not financially
feasible but-for the tax abatement financing provided.
d. The project shall comply with all provisions set forth in Minnesota's
Tax Abatement Law, statues 4G9.1812 to 4G9.1815, as amended.
e. The project must be consistent with the City's Comprehensive Plan
and Zoning Ordinances.
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VI.
SUBSIDY AGREEMENT & REPORTING REQUIRMENTS
All developers/businesses receiving a tax abatement, 01' other assistancE~ in
excess of $100,0000 from the :Mounds View EDA shall be subject to the
provisions and requirements set forth by state statute 116J.m)3 as
summarized below.
All d(~vclopers/businesses receiving tax abatement assistance shall enter into
a subsidy agreement with the Mounds View EDA that identifies: the reason
for the subsidy, the public purpose served by the subsidy, and the goa.ls for
the subsidy, as well as other criteria set forth by statute 11GJ.993.
The developer/business shall file a report annually for two years after the
elate the benefit is received 01' until all goals set forth in the application and
business subsidy agreement have been meet, whichever is later. Reports
shall be completed using the format drafted by the State of :Minnesota and
shall be filed with the :Mounds 'hew EDA no later than :March 1 of each year
f(w the previous calendar year. Businesses fulfilling job creation
rcquirements must file a report to that effect with the city within 30 days of
meeting the requirements.
The developer/business owner shall maintain and operate its facility at the
site where the tax abatement and/or other assistance is used for a period of
five yeaTS after the benefit is received.
In addition to attaining 01' exceeding the jobs and wages goals set forth in the
Subsidy Agreement, the bOlTower shall achievc at least one of the objectives
set forth in Section III of this document.
Developers / Businesses failing to comply with the above provisions will be
subject to finos, repayment requirements, and be deemed ineligible by the
State to receive any loans 01' grants from public entities for a period of five
yoars. See the City's Business Subsidy Policy for additional information.
VII. APPLICATION PROCESS FOR TAX ABATEMENT FINANCING
A. PRIVATE (RE) DEVELOPMENT PROJECTS
1. Applicant submits the completed application along with all application
fees.
2. City staff roviews the application and completes the Application Review
\Vorksheet.
3. Results of the \V orksheet are submitted to the appropriate governing
a uthorities for preliminary approval of the proposal.
4. If preliminary approval is granted, all necessary notices, resolutions and
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certificates are prepared by City staff and/or consultants.
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B.
If necessary, public hearing(s) on the proposed project are held.
The EDA grants final approval 01' denial of the proposal.
OTHER POLITICAL SUBDIVISIONS
It is recommended that applicants intending to seek tax abatement
financing from Ramsey County and/or School District 621 make their
applications to those bodies concurrent with their application to the :Mounds
View EDA. For more information on applying for a tax abatement financing
from Ramsey County and/or School District 621, contact:
Judy Karon
Director, Conullunity and Economic Development
Ramsey County
651-266-8006
Dr. Jan vVitthuhn
Superintendent
Mounds View School District #621
651-639-G001
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C.
PUBLIC FACILITY AND INFRASTRUCTURE PROJECTS
vVhen abatement is being utilized to finance public facility and infrastructure
projccts, as opposed to those oriented toward private business and
development objectives, the following process will be adhered to:
L The EDA will recommend the preliminary use of tax abatement financing
for a particular facility/infrastructure project. A formal application,
deposit agrcement, and application worksheet will not be required.
2. If preliminary approval is granted, all necessary notices, resolutions and
certificates are prepared by city staff and/or consultants.
3. If necessary, public hcaring(s) on the proposed project are held.
4. The EDA grants final approval 01' denial of the proposal.
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VIII. ATTACHMENT A: APPLICATION FOR TAX ABATEMENT
FINANCING
A. APPLICANT INFORMATION
Name of Corporation/Partnership
Address
Primary Contact
Address
Phone
Email
Fax
On a separate sheet, please provide the following:
. Brief description of the corporation/partnership's business, including
history, principal product 01' service, etc... Attach as Exhibit A .
. Brief description of the proposed project. Attach as Exhibit B.
. List names of officers and shareholders/partners with more than five
percent (5%) interest in the corporation/partnership. Attach as Exhibit C.
. A but-for analysis and narrative. Attach as Exhibit D.
Attorney Name
Addrcss
Phone
Email
Fax
Accountant Name
Address
Phone
Email
Fax
Contractor Name
Address
Phone
Email
Fax
Engineer Name
Address
Phone
Email
Fax
Architect Name
Addrcss
Phonc
Email
Fax
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B. PROJECT INFORMATION
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L The project will be:
_Vacant Land Development
_Commercial Redevelopment:
_Industrial Redevelopment:
_Housing
__Other
_New Construction _ Expansion
New Construction _ Expansion
_:--Jew Construction Rehabilitation
~ew Construction Rehabilitation
2,. In addition to the Mounds View EDA, applicant is requesting abatement
funds from: Ramsey County _ School District 621
3. The project will be: _Owner Occupied _Leased Space
. If leased spacc, pleasc attach a list names and addresscs of future lessces and indicate
the status of commitments 01' lease agreemcnts. Attach as Exhibit E.
4. Project Address
. Include Legal Description and PIn Number. Attach as Exhibit F
5. Site Plan Attached: Yes No
G. Total Abatement Requested: $ over years.
City Abatement Ann ual $ Total $
. County Abatement: Annual $ Total $
ISD 621 Abatement: Annual $ Total $
n Current Real Estate Taxes on Project Site: $
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Estimated Real Estate Taxes upon Completion: $
8. Construction Start Date:
Construction Completion Date:
If Phased Project:
Year
Year
% Completed
% Completed
c. PUBLIC PURPOSE
It is the policy of the Mounds View EDA that the use of tax abatement
financing should result in a benefit to the public. Please indicate how this
project will serve a public purpose.
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_Industrial development resulting in additional private investment
_Enhancement and/or diversification of the city's economic base.
_Removal of blight.
_Provide housing opportunities
_Expand the tax base
_Rehabilitation of a high profile or priority site.
_Job Creation/Retention: Numbcr of existing jobs
Number of jobs created by pl'Oject
Avcrage hourly wage of jobs created
_Other:
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D. SOURCES & USES
SOURCES NAME
Bank Loan
Other Private Funds
Equity
Fed Grant/Loan
State Grant/Loan
Tax Abatement
ID Bonds
Other
TOTAL
USES
Land Acquisition
Site Development
Construction
Machinery & Equipment
Architectural & Engineering Fees
Legal Fees
Interest During Construction
Debt Service Reserve
Contingencies
Other
TOTAL
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AMOUNT
$
$
$
$
$
$
$
$
$
AMOUNT
$
$
$
$
$
$
$
$
$
$
$
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E. ADDITIONAL DOCUMENTATION AND CHECKLIST
Applicants will also be required to provide the following documentation.
A)
Written business plan, including a description of the business,
ownership/management, date established, products and services, and
future plans
B) Financial Statements for Past Three Yeal'S
Profit & Loss Statement
Balance Sheet
C) Current Financial Statements
Profit & Loss Statement to Date
Balance Sheet to Date
D) Two Year Projections
E) Personal Financial Statements of all Major Shareholders if "Up Front"
Financing is Requested
Profit & Loss
Current Tax Return
F) Letter of Commitment from ,Applicant Pledging to Complete During
the Proposed Project Duration
G)
Application fee of $1000
H)
Additional information that wil I be helpful in evaluating your
application
Note: All Major shareholders will be required to sign personal guarantees if up front
financing ofthe project is required.
The undersigned certifies that all information provided in this application is true
and COiTect to the best of the undersigned's knowledge. The undersigned authorizes
the Mounds View Economic Development Authority to check credit references and
verify financial and other information. The undersigned also agrees to provide any
additional information as may be requested by the Authority after the filing ofthis
application.
Applicant Name
Date
By
Its
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IX. Attachment B: Deposit Agreement
Deposit Agreement for Evaluation of Tax Abatement Finance
Assistance
By and Between the Mounds View Economic Development
Authority and (The Applicant)
This agreement made as of the _ day of , 2000 by and between
the MOUNDS VIE\V ECONOMIC DEVELOPMENT AUTHORITY, a body
corporate and politic, organized and existing under the laws of the State of
l\Iinnesota (the "EDA") and (The Applicant).
\VITNESSETH:
WHEREAS, the EDA has the powers provided in Minnesota Statutes,
Sections 469.1812 to 469.1815, as amended (collectively, the "Act"); and
'WHEREAS, pursuant to and in furtherance of the objectives of the Act, the
EDA has undertaken a program to promote development and redevelopment of
certain land within the City of Mounds View
NOW THEREFORE, in consideration of a mutual covenants made herein and
for other good and valuable consideration set forth in the Agreement, the parties
agree as follows:
Section 1. (The Applicant) agrees to provide the EDA with a deposit of
$1,000 for the EDA's consultants to investigate the feasibility of providing Tax
Abatement Financing assistance to (The Applicant) for the redevelopment of the
(the "Property"). If the EDA incurs additional expenses directly related to the
feasibility of providing Tax Abatement Assistance to (The Applicant) beyond the
$1.000, prior to the execution of the Developer's Agreement, the EDA shall notify
(The Applica.nt) in writing and (The Applicant) will be required to deposit additional
funds as a condition of the EDA entering into any such Development Agreement.
Section 2. If the project is approved and (The Applicant) proceeds with the
project, the EDA shall reimburse (The Applicant's) deposit to the extent permissible
under applicable statute including statues 469.1812 to 469.1815, as amended. If
(The Applicant) does not proceed with the redevelopment of the Property due to the
decision of either the EDA or (The Applicant), the EDA shall reimburse the
applicant for the unused portion of the deposit.
Section 3. Nothing contained in this agreement shall in any way obligate
either party to proceed with the redevelopment of the Property or otherwise enter
into a Development Agreement.
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IN \VITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
MOUNDS VIEW ECONOMIC
DEVELOPMENT AUTHORITY
BY:
Dan Coughlin
ITS PRESIDENT
BY:
Kathleen Miller
ITS EXECUTIVE DIRECTOH
STATE OF MINNESOTA)
) SS
COUNTY OF )
The foregoing instrument was acknowledged before me on this
day of
, 2000, by Dan Coughlin and Kathleen :Miller, the President and
Executive Director respectively of the Mounds View Economic Development
Authority named in the foregoing instrument.
Notary Public
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(The Applicant)
BY:
ITS:
STATE OF MINNESOTA)
) SS
COUNTY OF )
The foregoing instrument was acknowledged before me on this
day of
, 2000, by
,the
of
(The Applicant) named in the foregoing instrument.
Notary Public
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x. ATTACHMENT C: APPLICATION REVIEW WORKSHEET
I TO BE COMPLETED BY CITY STAFF I
1. The project meets the criteria set forth in Section V of the Tax
Abatement Financing policy.
a) Meets at least one of the objectives in Section III.
__ b) Demonstrates need for TAF with the but-for analysis.
__ c) Consistent with all city plans and ordinances.
__ d) Conforms with the criteria defined in Section V.
2. Ratio of Private to Public Investment in Project:
$ Private investment
$ Public Investment.
Ratio Private: Public Financing
3. Job Creation in the City of Mounds View:
__ Number of net new jobs as a result of the project.
Number of existingiretained jobs divided by 10.
Total
4. Ratio of TAF to new jobs created:
S TAF request
Number of nelL' jobs created
$ of TAF per new job created
5. Wage Level of jobs created:
AveralTe hourlv waae
!co . b
of jobs created:
6. Project size:
The project will result in the construction
of net square feet
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Points:_
5:1 5
4
3
2
1
4:1
3:1
2:1
Less than 2:1
Points:_
25+ 5
20+ 4
15+ 3
10+ 2
Less than 10 1
Points:
$8,000 or less 5
$10,000 or less 4
$12,000 or less 3
$15,000 or less 2
Over $15,000 1
Points:
Over $21/ hour 5
$18-21/ hour 4
$14-17 / hour 3
$10-13/ hour 2
Under $10 / hour 1
Points:
30,000+ 5
20,000+ 4
10,000+ 3
5,000+ 2
5,000 or less 1
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7. Type of Project:
100% Owner Occupied
Mix Owner Occupied & Investment
__ Investment Property
8. Use:
Industrial
Office
vVarehouse/Distribution
Commercial
___ Housing
9. The project will pay annual
property taxes in the first fully
assessed year of $
10. Likelihood that the project will result in
unsubsidized, spin-off development.
Points:_
5
4
3
Points:
5
5
4
3
3
Points:_
25,000+ 5
15,000+ 4
10,000+ 3
5,000+ 2
Under $5,000 1
Points:_
High 5
Moderate 3
Low 1
Sub - Total Points:
of a possible ...5 points.
The project will be 100% pay-as-you-go TAF.
The project contributes to Highway 10 Redevelopment
The project results in substantial interior or exterior
renovation
Tht' project will enhance the aesthetics of the
surrounding area through high quality
architectural and/or urban de8ign
9. Bonus Points
Bonus Points:
3 points
3 points
3 points
3 points
Total Points:
Overall project analysis:
High
Moderate
Low
Not Eligible
45-38 points
37 -29 points
28-20 points
19-0 points
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XI. SAMPLE BUT-FOR ANALYSIS
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WITH NO WITH
TAX ABATEMENT FINANCING TAX ABATEMENT FINANCING
SOURCES AND USES SOURCES AND USES
SOURCES SOURCES
Mortgage 9,600,000 8,667,000
Equity 2,400,000 2,400,00
Tax Abatement Financing 0 933,000
TOTAL SOURCES 12,000,000 12,000,000
USES USES
Land 1,500,000 1,500,000
Site Work 300,000 300,000
Soil Correction 468,000 468,000
Demolition 100,000 100,000
Relocation 65,000 65,000
Subtotal Land Costs 2,433,000 2,433,000
Construction 6,750,000 6,750,000
Finish Manufacturing 250,000 250,000
Subtotal Construction Costs 7,000,000 7,000,000
Soft Costs 350,000 350,000
Taxes 35,000 35,000
Finance Fees 850,000 850,000
Project Manager 542,000 542,000
Developer Fee 540,000 540,000
Contingency 250,000 250,000
Subtotal Soft Costs 2,567,000 2,567,000
TOTAL USES 12,000,000 12,000,000
Income Statement Income Statement
Sq.Ft. PerSq.Ft. Sq. Ft. Per Sq. Ft.
Rent-Space 1 100,000 $8.00 800,000 100,000 $8.00 800,000
Rent-Space 2 25,000 $8.50 212,500 25,000 $8.50 212,500
Rent-Space 3 25,000 $9.00 225,000 25,000 $9.00 225,000
Other 0 $0.00 0 0 $0.00 0
1,237,500 1,237,500
Mortgage 20 Term 1,051,646 20 Term 949,439
9.00% Interest 9.00% Interest
9,600,000 Principal 8,667,000 Principal
Net Income 185,854 288,061
Total Return on Equity 7.74% 12.00%
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N:'DAfA{,ROLPSTCONDE\"Tax Abatclllcnt\i\batclllcnt Plllicy,DOC
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