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Home My WebLink About12-20-2002 Avon"e 6p) ECONOMIC DEVELOPMENT COMMISSION AGENDA December 20, 2002 7:30 A.M. MOUNDS VIEW CITY HALL - CITY COUNCIL CHAMBERS 1. CALL TO ORDER 17 5° A.M. 2. ROLL CALL (Present = P, Absent = A) Belting Fox Field Helgemoe - nBckM Johnson Open (Staff) Ericson (Staff) 3. APPROVE EDC MINUTES November 20, 2002 Motion: Second: a;'- Vote: y 0 4. SPECIAL BUSINESS No Special Business Scheduled 5. REPORT OF COMMISSIONERS, STAFF AND EDA LIAISON A. Report of Commissioners -No Materials Attached B. Report of EDA Liaison -No Materials Attached C. Chamber of Commerce Update -No Materials Attached D. Report of Staff 1. Activity Report (Business Beat) 2. I-35W Corridor Coalition Insert in Twin Cities Business Monthly 3. Rob Carlson Builders Activities—Hwy 10 Business Center 4. Developer Activities—Amoco Site Prospect C:\Documents and Settings\AaronB\Local Settings\Temporary Internet Files\OLK8B\12-20-02.doc • 6. EDC BUSINESS A. Discussion of Tax Abatement Policy & Usage B. Consideration of Resolution 02-EDC-35 setting the 2003 Meeting Schedule C. Other /704 J1( D / 69f 7. ADJOURN at g - b A.M. Next Regularly Scheduled Meeting: January 17, 2003 (?) • • C:\Documents and Settings\AaronB\Local Settings\Temporary Internet Files\OLK8B\12-20-02.doc • MOUNDS VIEW ECONOMIC DEVELOPMENT COMMISSION RESOLUTION NO. 02-EDC-35 CITY OF MOUNDS VIEW tr t COUNTY OF RAMSEY STATE OF MINNESOTA 064, f ., e RESOLUTION ESTABLISHING CALENDAR OF MEETING DA WHEREAS, The Mounds View Economic Development Commission plans to hold one business meeting per month throughout 2003, with the exception of Special Meetings; and WHEREAS, the adoption of a list of meeting dates provides an orderly system of advance notification for the benefit of the EDC, City staff and the general public. NOW, THEREFORE, BE IT RESOLVED that the Economic Development Commission hereby adopts the calendar of 2003 meeting dates attached hereto. • Adopted this 20th day of December 2002. Chair ATTEST: City Administrator \\Ntserver\CityH all\DATA\GROUPS\ECON DEV\EDC\Resolutions\Res02\02-35.doc S • CITY OF MOUNDS VIEW ECONOMIC DEVELOPMENT COMMISSION 2003 MEETING DATES January 17, 2003 February 21, 2003 March 21, 2003 April 18, 2003 May 16, 2003 June 20, 2003 • July 18, 2003 August 15, 2003 September 19, 2003 October 17, 2003 November 21, 2003 December 19, 2003 (All meetings will be held at Mounds View City Hall at 7:30 a.m. unless otherwise noted) • i.. DEC-19-2002 14:56 ROSEVILLE-COMM-DEV 6514902931 P.14/27 • i TABLE OF CONTENTS This table of contents is not part of the Tax Abatement Act and is only for convenience of reference. • 469.1812 bEFINITIONS 1 Subd. 1. Scope 1 Subd. 2. Governing body 1 Subd. 3, Municipality 1 Subd.4. Political subdivision or subdivision 1 469.1813 ABATEMENT AUTHORITY 1 -1 Subd_ 1. Authority 1 s Subd. 1a. Use of term 2 Subd. 2. Abatement resolution 2 Subd. 3. School district abatements 3 1 Subd.4. Property located in tax increment financing districts 4 • Subd. 5. Notice and public hearing 4 Subd. 6. Duration limit 4 Subd. 6a. Deferment payment schedule 6 Subd. 6b. Extended duration limit 6 Subd. 7. Review and modification of abatements 9 Subd. 8. Limitation on abatements 9 Subd. 9. Consent of property owner not required 9 1 469.1814 BONDING AUTHORITY 9 Subd. 1. Authority 9 Subd. 2. Chapter 475 applies 10 Subd. 3. Municipal issue for combined abatements 10 Subd. 4. Bonded abatements not subject to review 10 Subd. 5. Use of proceeds 10 Subd. 6. Levy to offset tax changes 11 tri 469.1815 ADMINISTRATIVE 12 Subd. 1. Inclusion in proposed and final levies 12 Subd. 2. Property taxes; abatement payment 12 i • • DEC-19-2002 14:56 ROSEVILLE-COMM-DEV 6514902931 P.14/27 • • TABLE OF CONTENTS • This table of contents is not part of the Tax Abatement Act and is only for convenience of reference. 469.1812 DEFINITIONS 1 Subd. 1. Scope 1 Subd. 2. Governing body 1 Subd. 3. Municipality 1 Subd.4. Political subdivision or subdivision 1 469.1813 ABATEMENT AUTHORITY 1 ..1 Subd. 1. Authority 1 Subd. la. Use of term 2 Subd. 2. Abatement resolution 2 Subd. 3. School district abatements 3 i Subd.4. Property located in tax increment financing districts 4 Subd. 5. Notice and public hearing 4 • Subd. 6. Duration limit 4 Subd. 6a. Deferment payment schedule 6 Subd. 6b. Extended duration limit 6 Subd. 7. Review and modification of abatements 9 . Subd. 8. Limitation on abatements 9 Subd. 9. Consent of property owner not required 9 „i 469.1814 BONDING AUTHORITY 9 Subd. 1. Authority 9 Subd. 2. Chapter 475 applies 10 Subd. 3. Municipal issue for combined abatements 10 Subd. 4. Bonded abatements not subject to review 10 Subd. 5. Use of proceeds 10 Subd. 6. Levy to offset tax changes 11 469.1815 ADMINISTRATIVE. 12 Subd. 1. Inclusion in proposed and final levies 12 Subd. 2. Property taxes; abatement payment 12 • DEC-19-2002 14:56 ROSEVILLE-COMM-DEV 6514902931 P.16/27 469.1812 • TAX ABATEMENT 469.1812 DEFINITIONS. Subdivision 1. Scope. For purposes of sections 469.1812 to 1 469.1815, the following terms have the meanings given. Subd. 2. Governing body. "Governing body" means, for a city, the city council; for a school district, the school board; for a county, the county board; and for a town, the board of supervisors. ..l 1 Subd. 3. Municipality. "Municipality" means a statutory or home rule charter city or a town. Subd. 4. Political subdivision or subdivision. "Political • subdivision" or "subdivision" means a statutory or home rule charter city, town, school district, or county. i • HIST: 1997 c 231 art 2 s 45; 1999 c 248 $ 19; 1 Sp2001 c 5 art 15 s 25 469.1813 ABATEMENT AUTHORITY. Subdivision 1. Authority. The governing body of a political .,) subdivision may grant an abatement of the taxes imposed by the political subdivision on a parcel of property, or defer the payments of the taxes and .'1 abate the interest and penalty that otherwise would apply, if: (a) it expects the benefits to the political subdivision of the proposed abatement agreement to at least equal the costs to the political subdivision of the proposed agreement or intends the abatement to phase • in a property tax increase, as provided in clause (b)(7); and s Krass Monroe, P.A. 1 DEC-19-2002 14:56 ROSEVILLE-COMM-DEV 6514902931 P.16/27 ' 469.1812 • TAX ABATEMENT 469.1812 DEFINITIONS. Subdivision 1. Scope. For purposes of sections 469.1812 to 469.1815, the following terms have the meanings given. Subd. 2. Governing body. "Governing body" means, for a city, ") the city council; for a school district, the school board; for a county, the county board; and for a town, the board of supervisors. • 1 Subd. 3. Municipality. "Municipality" means a statutory or home rule charter city or a town. • Subd. 4. Political subdivision or subdivision. "Political . subdivision" or "subdivision" means a statutory or home rule charter city, town, school district, or county. HIST: 1997 c 231 art 2 s 45; 1999 c 248 $ 19; 1 Sp2001 c 5 art 15 s 25 469.1813 ABATEMENT AUTHORITY. Subdivision 1. Authority. The governing body of a political 1 subdivision may grant an abatement of the taxes imposed by the political subdivision on a parcel of property, or defer the payments of the taxes and abate the interest and penalty that otherwise would apply, if: (a) it expects the benefits to the political subdivision of the proposed abatement agreement to at least equal the costs to the political subdivision of the proposed agreement or intends the abatement to phase • in a property tax increase, as provided in clause (b)(7); and Krass Monroe, P.A. DEC-19-2002 14:57 ROSEVILLE-COMM-DEV 6514902931 P.17/27 469.1813 •i1:1 (b) it finds that doing so is in the public Interest because it will: 3 (1) increase or preserve tax base; I (2) provide employment opportunities in the political subdivision; (3) provide or help acquire or construct public facilities; I (4) help redevelop or renew blighted areas; 77+ (5) help provide access to services for residents of the political subdivision; (6)finance or provide public Infrastructure; or 3 (7) phase in a property tax increase on the parcel resulting from an increase of 50 percent or more in one year on the estimated market .•s • value of the parcel, other than increase attributable to improvement of the parcel. Subd. 1a. Use of term. As used in this section and sections 469.1814 and 469.1815, "abatement" includes a deferral of taxes with abatement of interest and penalties unless the context indicates otherwise. Subd. 2. Abatement resolution. (a) The governing body of a political subdivision may grant an abatement only by adopting an abatement resolution, specifying the terms of theabatement. In the case of a town, the board of supervisors may approve the abatement resolution. I The resolution must also include a specific statement as to the nature and • extent of the public benefits which the governing body expects to result 2 Kress Monroe, P.A. , DEC-19-2002 14:57 ROSEV I LLE-COMM-DEV 6514902931 P./7/27 469.1813 3 • (b) it finds that doing so is in the public interest because it will: (1) Increase or preserve tax base; (2) provide employment opportunities in the political subdivision; (3) provide or help acquire or construct public facilities; 1 (4) help redevelop or renew blighted areas; (5) help provide access to services for residents of the political subdivision; (6)finance or provide public infrastructure; or '1 .:4 (7) phase in a property tax increase on the parcel resulting from t an increase of 50 percent or more in one year on the estimated market • value of the parcel, other than increase attributable to improvement of the parcel. Subd. 1a. Use of term. As used in this section and sections 469.1814 and 469.1815, "abatement" includes a deferral of taxes with abatement of interest and penalties unless the context indicates otherwise. Subd. 2. Abatement resolution. (a) The governing body of a political subdivision may grant an abatement only by adopting an71113 abatement resolution, specifying the terms of the abatement. In the case of a town, the board of supervisors may approve the abatement resolution. The resolution must also include a specific statement as to the nature and IPextent of the public benefits which the governing body expects to result 2 Krass Monroe, P.A. DEC-19-2002 1457 ROSEVILLE-COMM-DEV 6514902931 P.18/27 469.1813 • 11.11 1 from the agreement. The resolution may provide that the political subdivision will retain or transfer to another political subdivision the abatement to pay for all or part of the cost of acquisition or improvement of 111 public infrastructure, whether or not located on or adjacent to the parcel for which the tax is abated. The abatement may reduce all or part of the property tax amount for the political subdivision on the parcel. A political subdivision's maximum annual amount for a parcel equals its total local tax rate multiplied by the total net tax capacity of the parcel. (b)The political subdivision may limit the abatement . j , (1)to a specific dollar amount per year or in total; (2) to the increase in property taxes resulting from improvement of the property; (3) to the increases in property taxes resulting from increases In the market value or tax capacity of the property; (4) in any other manner the governing body of the subdivision determines is appropriate; or (5) to the interest and penalty that would otherwise be due on taxes that are deferred. (c) The political subdivision may not abate tax attributable to the areawide tax under chapter 276A or 473F, except as provided in this subdivision. Subd. 3. School district abatements. An abatement granted 1 3 Kress Monroe, P.A. MEL DEC-19-2002 14:57 ROSEVILLE-COMM-DEV 6514902931 P.18/27 469.1813 from the agreement. The resolution may provide that the political subdivision will retain or transfer to another political subdivision the abatement to pay e for all or part of the cost of acquisition or improvement of public infrastructure, whether or not located on or adjacent to the parcel for which the tax is abated. The abatement may reduce all or part of the property tax amount for the political subdivision on the parcel. A political .j subdivision's maximum annual amount for a parcel equals its total local tax rate multiplied by the total net tax capacity of the parcel. • (b)The political subdivision may limit the abatement • (1)to a specific dollar amount per year or in total; • " (2) to the increase in property taxes resulting from improvement of the property; (3) to the increases in property taxes resulting from increases in the market value or tax capacity of the property; (4) in any other manner the governing body of the subdivision ..� determines is appropriate; or (5) to the interest and penalty that would otherwise be due on taxes that are deferred. (c) The political subdivision may not abate tax attributable to the areawide tax under chapter 276A or 473F, except as provided in this subdivision. } • Subd. 3. School district abatements. An abatement granted 3 Kress Monroe, P.A. DEC-19-2002 14:57 ROSEVILLE-COMM-DEV 6514902931 P.19/27 469.1813 • • 3 under this section is not an abatement for purposes of state aid or local levy under sections 127A.40 to 127A.51. Subd. 4. Property located in tax Increment financing districts. The governing body of a political subdivision may not enter into I a property tax abatement agreement under sections 469.1812 to 469.1815 .241 that provides for abatement of taxes on a parcel, if the abatement will occur while the parcel is located in a tax increment financing district. Subd. 5. Notice and public hearing. (a)The governing body of 4.0 the political subdivision may approve an abatement under sections 469.1$12 to 469.1815 only after holding a public hearing on the abatement. j (b) Notice of the hearing must be published in a newspaper of general circulation in the political subdivision at least once more than ten .j days but less than 30 days before the hearing. The newspaper must be one of general interest and readership in the community, and not one of limited subject matter. The newspaper must be published at least once per week. The notice must indicate that the governing body will consider 3.. granting a property tax abatement, identify the property or properties for which an abatement is under consideration, and the total estimated amount of the abatement. Subd. 6. Duration limit. (a) A political subdivision may grant an • abatement for a period no longer than ten years, except as provided under 4 Kress Monroe, P.A. • DEC-19-2002 1457 ROSEVILLE-COMM-DEV 6514902931 P.19'27 469.1813 ' ' • •• under this section is not an abatement for purposes of state aid or local levy under sections 127A.40 to 127A.51. Subd. 4. Property located in tax Increment financing districts. The governing body of a political subdivision may not enter into I a property tax abatement agreement under sections 469.1812 to 469.1815 that provides for abatement of taxes on a parcel, if the abatement will occur while the parcel is located in a tax Increment financing district. Subd. 5. Notice and public hearing. (a)The governing body of the political subdivision may approve an abatement under sections 469.1612 to 469.1815 only after holding a public hearing on the J • abatement. j (b) Notice of the hearing must be published In a newspaper of general circulation in the political subdivision at least once more than ten days but less than 30 days before the hearing. The newspaper must be ` one of general interest and readership in the community, and not one of limited subject matter. The newspaper must be published at least once per week. The notice must indicate that the governing body will consider granting a property tax abatement, identify the property or properties for which an abatement is under consideration, and the total estimated amount of the abatement. I Subd. 6. Duration limit. (a) A political subdivision may grant an abatement for a period no longer than ten years, except as provided under 4 Krass Monroe, P.A. • DEC-19-2002 14:57 ROSEVILLE-COMM-DEV 6514902931 P.20/27 469.1813 411 .1 paragraph (b). The subdivision may specify in the abatement resolution a shorter duration. If the resolution does not specify a period of time, the abatement is for eightyears. If an abatement has been granted to a 9 parcel of property and the period of the abatement has expired, the political subdivision that•granted the abatement may not grant another abatement for eight years after the expiration of the first abatement. This prohibition does not apply to improvements added after and not subject to the first abatement. (b) A political subdivision proposing to abate taxes for a parcel may request, in writing, that the other political subdivisions in which the 410 parcel is located grant an abatement for the property. If one of the other political subdivisions declines, in writing, to grant an abatement or if 90 days pass after receipt of the request to grant an abatement without a written response from one of the political subdivisions, the duration limit for an abatement for the parcel by the requesting political subdivision and any other participating political subdivision is increased to 15 years. If the political subdivision which declined to grant an abatement later grants an abatement for the parcel, the 15-year duration limit is reduced by one year IIS for each year that the declining political subdivision grants an abatement for the parcel during the period of the abatement granted by the l requesting political subdivision. The duration limit may not be reduced I below the limit under paragraph (a). 5 Kress Monroe, P.A. 1 • DEC-19-2002 14:57 ROSEVILLE-COMM-DEV 6514902931 P.20/27 469.1813 . paragraph (b). The subdivision may specify in the abatement resolution a shorter duration. If the resolution does not specify a period of time, the abatement is for eightyears. If an abatement has been granted to a g parcel of property and the period of the abatement has expired, the .. political subdivision that'granted the abatement may not grant another abatement for eight years after the expiration of the first abatement. This j prohibition does not apply to improvements added after and not subject to the first abatement. (b) A political subdivision proposing to abate taxes for a parcel may request, in writing, that the other political subdivisions in which the • parcel it located grant an abatement for the property. If one of the other political subdivisions declines, in writing, to grant an abatement or if 90 days pass after receipt of the request to grant an abatement without a written response from one of the political subdivisions, the duration limit for an abatement for the parcel by the requesting political subdivision and any other participating political subdivision is increased to 15 years. If the political subdivision which declined to grant an abatement later grants an abatement for the parcel, the 15-year duration limit is reduced by one year for each year that the declining political subdivision grants an abatement for the parcel during the period of the abatement granted by the requesting political subdivision. The duration limit may not be reduced .i • below the limit under paragraph (a). i .,I 5 Krass Monroe, P.A. DEC-19-2002 14:57 ROSEVILLE—COMM—DEV 6514902931 P.21/27 469.1813 • Subd. 6a. Deferment payment schedule. When the tax is deferred and the interest and penalty abated,the political subdivision must set a schedule for repayments. The deferred payment must be included with the current taxes due and payable in the years the deferred payments I are due and payable and must be levied accordingly. Subd. 6b. Extended duration limit. (a) Notwithstanding the c1 provisions of subdivision 6, a political subdivision may grant en abatement 3 for a period of up to 20 years, if the abatement is for a qualified business. (b) To be a qualified business for purposes of this subdivision, at •3 least 50 percent of the payroll of the operations of the business that qualify • for the'abatement must be for employees engaged in one of the following "! lines of business or any combination of them: (1) manufacturing; (2) agricultural processing; (3) mining; (4) research and development; (5)warehousing; or3 (6) qualified high technology. c (1) "Manufacturing" means the material stain and production O 9 staging of tangible personal property by procedures commonly regarded as I manufacturing, processing, fabrication, or assembling which changes • some existing material into new shapes, new qualities, or new 6 Kress Monroe, P.A. DEC-19-2002 14:57 ROSEVILLE-COMM-DEV 6514902931 P.21/27 469.1813 Subd. 6a. Deferment payment schedule. When the tax is 3 deferred and the interest and penalty abated, the political subdivision must set a schedule for repayments. The deferred payment must be Included with the current taxes due and payable in the years the deferred payments I are due and payable and must be levied accordingly. Subd. 6b. Extended duration limit. (a) Notwithstanding the provisions of subdivision 6, a political subdivision may grant an abatement for a period of up to 20 years, if the abatement is for a qualified business, (b) To be a qualified business for purposes of this subdivision, at least 50 percent of the payroll of the operations of the business that qualify •.] • for the'abatement must be for employees engaged in one of the following lines of business or any combination of them: (1) manufacturing; (2) agricultural processing; (3) mining; (4) research and development; (5)warehousing; or (6) qualified high technology. .111 (c) (1) "Manufacturing" means the material staging and production of tangible personal property by procedures commonly regarded as I manufacturing, processing, fabrication, or assembling which changes • some existing material into new shapes, new qualities, or new 6 Kress Monroe, PA. DEC-19-2002 14:57 ROSEVILLE-COMM-DEU 6514902931 P.22/2'? 469:1813 combinations. (2) "Mining" has the meaning given in section 613(c) of the Internal Revenue Code of 1986. (3) "Agricultural processing" means transforming, packaging, sorting, or grading livestock or livestock products, agricultural .} commodities, or plants or plant products into goods that are used for. .i intermediate or final consumption including goods for nonfood use. (4) "Research and development" means qualified research as defined in section 41(d)of the Internal Revenue Code of 1986. { (5) "Qualified high technology" means one or more of the 1111 following activities: (i) advanced computing, which is any technology used in the design and development of any of the following: (A) computer hardware and software; (B) data communications; and .1 (C) information technologies; (ii) advanced materials, which are materials with engineered properties created through the development of specialized process and synthesis technology; • (iii) biotechnology, which is any technology that uses living organisms, cells, macromolecules, microorganisms, or substances from living organisms to make or modify a product, improve plants or animals, 7 Krass Monroe, P.A. DEC-19-2002 14:57 ROSEVILLE-COMM-DEV 6514902931 P.22/27 4 469:1813 • combinations. (2) "Mining" has the meaning given in section 613(c) of the Internal Revenue Code of 1986. (3) "Agricultural processing" means transforming, packaging, sorting, or grading livestock or livestock products, agricultural } commodities, or plants or plant products into goods that are used for intermediate or final consumption including goods for nonfood use. (4) "Research and development" means qualified research as defined in section 41(d)of the Internal Revenue Code of 1986. j , (5) "Qualified high technology" means one or more of the • following activities: (i) advanced computing, which is any technology used in the design and development of any of the following: (A) computer hardware and software; (B) data communications; and (C) information technologies; 1 (ii) advanced materials, which are materials with engineered properties created through the development of specialized process and synthesis technology; (iii) biotechnology, which is any technology that uses living organisms, cells, macromolecules, microorganisms, or substances from living organisms to make or modify a product, improve plants or animals, 7 Kress Monroe, P.A. 1 DEC-19-2002 14:58 ROSEVILLE-COMM-DEV 6514902931 P.23'27 469.1813 • or develop microorganisms for useful purposes; (iv) electronic device technology, which Is any technology that Involves microelectronics, semiconductors, electroniceq p ui ment and instrumentation, radio frequency, microwave, and millimeter electronics, ! and optical and optic-electrical devices, or data and digital communications and imaging devices; (v) engineering or laboratory testing related to the development of a product; (vi) technology that assists in the assessment or prevention of threats or damage to human health or the environment, including, but not .,a • limited to, environmental cleanup technology, pollution prevention .] technology, or development of alternative energy sources; : (vii) medical device technology , which is any technology that involves medical equipment or products other than a pharmaceutical product that has therapeutic or diagnostic value and is regulated; or (viii) advanced vehicles technology which is any technology that involves electric vehicles, hybrid vehicles, or alternative fuel vehicles, or components used in the construction of electric vehicles, hybrid vehicles, or alternative fuel vehicles. An electric vehicle is a road vehicle that draws propulsion energy only from an on-board source of electrical energy. A I hybrid vehicle is a road vehicle that can draw propulsion energy from both a consumable fuel and a rechargeable energystorage system. • 9 9 Y i 8 Kress Monroe, P.A. DEC-19-2002 14:58 ROSEVILLE-COMM-DEV 5514902931 P.23/27 4 469.1813 • or develop microorganisms for useful purposes; 1.4 (iv) electronic device technology, which Is any technology that involves microelectronics, semiconductors, electronic is equipment, and instrumentation, radio frequency, microwave, and millimeter electronics, 1 and optical and optic-electrical devices, or data and digital communications and Imaging devices; (v)engineering or laboratory testing related to the development of a product; (vi) technology that assists in the assessment or prevention of threats or damage to human health or the environment, including, but not • limited to, environmental cleanup technology, pollution prevention i technology, or development of alternative energy sources; (vii) medical device technology , which is any technology that involves medical equipment or products other than a pharmaceutical product that has therapeutic or diagnostic value and is regulated; or (viii) advanced vehicles technology which is any technology that involves electric vehicles, hybrid vehicles, or alternative fuel vehicles, or .13 components used in the construction of electric vehicles, hybrid vehicles, or alternative fuel vehicles. An electric vehicle is a road vehicle that draws propulsion energy only from an on-board source of electrical energy. A hybrid vehicle is a road vehicle that can draw propulsion energy from both a consumable fuel and a rechargeable energy storage system. • 8 Krass Monroe, P.A. DEC-19-2002 14:58 ROSEVILLE-COM1M-DEV 6514902931 P.24'2'? T 469.1814 , • (d) The authority to grant new abatements under this subdivision • expires on July 1, 2004. Subd. 7. Reviewm modification odificatlon of abatements. The political subdivision may provide in the abatement resolution that the .) abatement may not be modified or changed during its term. If the abatement resolution does not provide that the abatement may not be .. modified or changed, the governing body of the political subdivision may review and modify the abatement every second year after it was i approved. Subd. 8. limitation on abatements. In any year, the total • amount of property taxes abated by a political subdivision under this section may not exceed (1) five percent of the current levy, or (2) 1 $100,000, whichever is greater. 'i Subd. 9. Consent of property owner not required. A political subdivision may abate the taxes on a parcel under sections 469.1812 to 469.1815 without obtaining the consent of the property owner. HIST: 1997 c 231 art 2 s 46; 1998 c 397 art 11 s 3; 1999 c 243 art 10 s 8- 14; 1999 c 248 s 19; 2000 c 490 art 11 s 33-35; 1 Sp2001 c 5 art 15 s 26 469.1814 BONDING AUTHORITY. } Subdivision 1. Authority. A political subdivision may issue bonds or other obligations to provide an amount equal to the sum of the abatements granted for a property under section 469.1813. The 9 Krass Monroe, P.A. ~ DEC-19-2002 14:58 ROSEVILLE-COMM-DEV 6514902931 P.24/27 J 469.1814 • J (d) The authority to grant new abatements under this subdivision expires on July 1, 2004. Subd. 7. Review modification and modification of abatements. The political subdivision may provide in the abatement resolution that the .� abatement may not be modified or changed during its term. If the abatement resolution does not provide that the abatement may not be modified or changed, the governing body of the political subdivision may review and modify the abatement every second year after it was approved. Subd. 8. Limitation on abatements. In any year, the total • amount of property taxes abated by a political subdivision under this section may not exceed (1) five percent of the current levy, or (2) $100,000, whichever is greater. Subd. 9. Consent of property owner not required. A political ..t subdivision may abate the taxes on a parcel under sections 469.1812 to 469.1815 without obtaining the consent of the property owner. 3 HIST: 1997 c 231 art 2 s 46; 1998 c 397 art 11 s 3; 1999 c 243 art 10 s 8- 14; 1999 c 248 s 19; 2000 c 490 art 11 s 33-35; 1 Sp2001 c 5 art 15 s 26 469.1814 BONDING AUTHORITY. Subdivision 1. Authority. A political subdivision may issue bonds or other obligations to provide an amount equal to the sum of the abatements granted for a property under section 469.1813. The 9 Krass Monroe, P.A. • DEC-19-2002 14:58 ROSEVILLE-COMM-DEV 6514902931 P.2527 4 469.1814 • 3 maximum principal amount of these bonds may not exceed the estimated sum of the abatements for the property for the years authorized. The • bonds may be general obligations of the political subdivision if the governing body of the political subdivision elects to pledge the full faith I and credit of the subdivision in the resolution issuing the bonds. Subd. 2. Chapter 475 applies. Chapter 475 applies to the • obligations authorized by this section, except bonds are excluded from the ', calculation of the net debt limit. ...'j Subd. 3. Municipal issue for combined abatements. If two or more political subdivisions decide to grant abatements for the same • property, the municipality in which the property is located may issue bonds 1'1 to provide an amount equal to the sum of the abatements for each of the jurisdictions that agrees. The governing body of each of the other jurisdictions must guarantee and pledge to pay annually to the municipality the amount of the abatement. This pledge and guarantee is a binding obligation of the political subdivision and must be included in the •� abatement resolution. _+ Subd. 4. Bonded abatements not subject to review. If bonds are issued toprovide advance payment of abatements under this section, pY the amount of abatement is not subject to periodic review by the political subdivision under section 469.1813, subdivision 7. • Subd. 5. Use of proceeds, The proceeds of bonds issued 10 Krass Monroe, PA. 1 • DEC-19-2002 14:58 ROSEVILLE-COMM-DEV 6514902931 P.25/2? 4 469.1814 • 3 maximum principal amount of these bonds may not exceed the estimated 3 sum of the abatements for the property for the years authorized. The en bonds may be general obligations of the political subdivision if the governing body of the political subdivision elects to pledge the full faith I and credit of the subdivision in the resolution issuing the bonds. a: Subd, 2. Chapter 475 applies. Chapter 475 applies to the obligations authorized by this section, except bonds are excluded from the , calculation of the net debt limit. 111• Subd. 3. Municipal issue for combined abatements. If two or more political subdivisions decide to grant abatements for the same _ • property, the municipality in which the property is located may issue bonds to provide an amount equal to the sum of the abatements for each of the jurisdictions that agrees. The governing body of each of the other .. jurisdictions must guarantee and pledge to pay annually to the municipality the amount of the abatement. This pledge and guarantee is a binding obligation of the political subdivision and must be included in the abatement resolution. Subd. 4. Bonded abatements not subject to review. If bonds are issued to provide advance payment of abatements under this section, pYm the amount of abatement is not subject to periodic review by the political I • subdivision under section 469.1813, subdivision 7. • Subd. 5. Use of proceeds, The proceeds of bonds issued 10 Krass Monroe, P.A. 1 • 6514902931 P.26/27 DEC-19-2002 14:58 ROSEVILLE-COMM-DEV 469.1814 S under this section may be used to (1) pay for public improvements that • benefit the property, (2) to acquire and convey land or other property, as Provided under this section, (3) to reimburse the property owner for the cost of improvements made to the property, or (4) to pay the costs of I issuance of the bonds. Subd. 6. Levy to offset tax changes. (a) This subdivision applies only to abatements pledged to pay preexisting obligations. (b) For purposes of this subdivision, "preexisting obligation" means a bond or binding contract that: (1)was issued or approved before August 1, 2001; ' (2) Is secured by abatements approved before August 1, 2001; and (3) is not a general obligation. (c) If a political subdivision granted an abatement pledged to pay .1 a preexisting obligation and if the changes in the property tax class rates enacted in calendar year 2001 reduce the abatement by an amount sufficient to prevent payment in full of the preexisting obligation, the political subdivision may add to its levy under section 469.1815 an amount sufficient to provide an abatement equal to the least of: 24, 11. (1) the amount of the abatement using the political subdivision's •j tax rate for the current year and the class rates for property taxes payable in 2001; 11 Krass Monroe, P.A. 6514902931 P.26/27 DEC-19-2002 14:58 ROSEVILLE-COMM-DEV 469.1814 •o under this section may be used to (1) pay for public improvements that benefit the property, (2) to acquire and convey land or other property, as provided under this section, (3) to reimburse the propertyowner for the cost of Improvements made to the property, or (4) to pay the costs of issuance of the bonds. i Subd. 6. Levy to offset tax changes. (a) This subdivision applies only to abatements pledged to pay preexisting obligations. (b) For purposes of this subdivision, "preexisting obligation" means a bond or binding contract that: : (1)was issued or approved before August 1, 2001; 411 (2) is secured by abatements approved before August 1, 2001; and (3) is not a general obligation. (c) If a political subdivision granted an abatement pledged to pay a preexisting obligation and if the changes in the property tax class rates enacted in calendar year 2001 reduce the abatement by an amount sufficient to prevent payment in full of the preexisting obligation, the political subdivision may add to its levy under section 469.1815 an amount sufficient to provide an abatement equal to the least of: (1) the amount of the abatement using the political subdivision's tax rate for the current year and the class rates for property taxes payable in 2001; 11 Krass Monroe, P.A. 6514902931 P.27/27 DEC-19-2002 14:58 ROSEVILLE-COMM-DEV 469.1815 ID (2)the amount required to pay the amount due on the preexisting obligation for the year from the political subdivision; or (3) the maximum dollar amount oftha political subdivision's abatement, if any,under the abatement resolution. I HIST: 1997 c 231 art 2 s 47; 1999 c 248 s 19; 1 Sp2001 c 5 art 15 s 27 469.1815 ADMINISTRATIVE. Subdivision 1. Inclusion in proposed and final levies. The political subdivision must add to its levy amount for the current year under 3 sections 275.065 and 275.07 the total estimated amount of all current year abatements granted. The tax amounts shown on the proposed notice _1 • under'section 275.065, subdivision 3, and on the property tax statement • under section 276.04, subdivision 2, are the total amounts before the reduction of any abatements that will be granted on the property. -ii Subd. 2. Property taxes; abatement payment. The total property taxes shall be levied on the property and shall be due and payable to the county at the times provided under section 279.01. The political subdivision will pay the abatement to the property owner, lessee, or a representative of the bondholders or will retain the abatement to pay } public infrastructure costs, as provided by the abatement resolution. HIST; 1997 c 231 art 2 s 48; 1999 c 243 art 10 s 15; 1999.c 248 s 19 • 12 Krass Monroe, P.A. TOTAL P.27 • 6514902931 P.27'27 DEC-19-2002 14:58 ROSEVILLE-COMM-DEV t 469.1815 • .3 (2)the amount required to pay the amount due on the preexisting obligation for the year from the political subdivision; or (3) the maximum dollar amount of thepo litical subdivision's abatement, if any, under the abatement resolution. I HIST: 1997 c 231 art 2 s 47; 1999 c 248 s 19; 1 Sp2001 c 5 art 15 s 27 469.1815 ADMINISTRATIVE. Subdivision 1. Inclusion in proposed and final levies. The political subdivision must add to its levy amount for the current year under sections 275.065 and 275.07 the total estimated amount of all current year abatements granted. The tax amounts shown on the proposed notice J • under'section 275.065, subdivision 3, and on the property tax statement under section 276.04, subdivision 2, are the total amounts before the ..s reduction of any abatements that will be granted on the property. Subd. 2. Property taxes; abatement payment. The total property taxes shall be levied on the property and shall be due and payable to the county at the times provided under section 279.01. The political subdivision will pay the abatement to the property owner, lessee, 3 or a representative of the bondholders or will retain the abatement to pay public infrastructure costs, as provided by the abatement resolution. HIST: 1997 c 231 art 2 s 48; 1999 c 243 art 10 s 15; 1999.c 248 s 19 1 • 12 Krass Monroe, P.A. TOTAL P.27 • • City of Elk River • Economic Development Tax Rebate Financing Policy & Application Amended:August 2002 Adopted: April 10, 2000 City of Elk River, Minnesota • City of Elk rr River • Economic Development Tax Rebate Financing Policy & Application Amended:August 2002 • Adopted: April 10, 2000 City of Elk River, Minnesota Table of Contents I. Policy Purpose 3 II. Difference Between TRF & TIF 3 III. Objectives of Tax Rebate Financing 3 - 4 IV. Policies for the Use of TRF 4 - 5 V. Project Qualifications 5 - 6 VI. Subsidy Agreement & Reporting Requirements 6 VII. Application Process 7 City of Elk River 7 Application to Other Political Subdivisions 7 VIII. Application 8 410 Applicant Information Project Information 8 9 Public Purpose 9 Sources &Uses 10 Checklist&Additional Information 11 IX. Application Review Worksheet 12 X. Exhibits 14 A Corporation/Partnership Description B Project Description C Shareholders D But-for Analysis E Prospective Lessees F Legal Description and PID Number XI. Sample But-For Analysis 15 City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 2 - Table of Contents 1111 I. Policy Purpose 3 II. Difference Between TRF & TIF 3 III. Objectives of Tax Rebate Financing 3 - 4 IV. Policies for the Use of TRF 4 - 5 V. Project Qualifications 5 - 6 VI. Subsidy Agreement & Reporting Requirements 6 VII. Application Process 7 City of Elk River 7 Application to Other Political Subdivisions 7 VIII. Application 8 Applicant Information 8 • Project Information 9 Public Purpose 9 Sources &Uses 10 Checklist&Additional Information 11 IX. Application Review Worksheet 12 X. Exhibits I4 A Corporation/Partnership Description B Project Description C Shareholders D But for Analysis E Prospective Lessees F Legal Description and PID Number XI. Sample But-For Analysis 15 411 City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 2 - I. POLICY PURPOSE • For the proposes of thio document, the term "CiDI"shall include the EA River City Council, Economic Development Authorio,and Housing and Redevelopment Authort The purpose of this policy is to establish the City of Elk River's position relating to the use of Tax Rebate Financing(TRF), otherwise referred to as Tax Abatement, 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 rebate assistance.The fundamental purpose of tax rebate financing in Elk River is to encourage desirable development or redevelopment that would not otherwise occur but for the assistance provided through TRF. The City of Elk River is granted the power to utilize TRF by the Minnesota Tax Abatement Act, as amended. It is the intent of the City to provide the minimum amount of TRF, as well as other incentives, at the shortest term required for the project to proceed. The City reserves the right to approve or 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. Meeting policy criteria does not guarantee the award of TRF to the project. Approval or denial of one project is not intended to set precedent for approval or denial of another project. II. DIFFERENCE BETWEEN TRF & TIF The primary difference between Tax Rebate Financing(IRF) 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 city, 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 TRF is requested, each political subdivision has the option of granting its portion of the increased taxes to the project. Subsequently, the dollars generated for the project with TRF are generally less than the dollars generated with TIF. III. OBJECTIVES OF TAX REBATE FINANCING As a matter of adopted policy,the City will consider using TRF to assist private development projects to achieve one or more of the following objectives: • To retain local jobs and/or increase the number and diversity of jobs that offer stable employment and/or attractive wages and benefits. • To enhance and diversify the city of Elk River's economic base. • To encourage additional unsubsidi7ed private development in the area, either directly or indirectly through "spin off' development. • To facilitate the development process and to achieve development on sites which would not be developed without TRF 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. City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 3 I. POLICY PURPOSE For the purposes of this document, the term "Ci ,"shall include the Elk River CiD,Council, Economic Development Authoti,and Housing and Redevelopment Authority. The purpose of this policy is to establish the City of Elk River's position relating to the use of Tax Rebate Financing(TRF), otherwise referred to as Tax Abatement, 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 rebate assistance.The fundamental purpose of tax rebate financing in Elk River is to encourage desirable development or redevelopment that would not otherwise occur but for the assistance provided through TRF. The City of Elk River is granted the power to utilize TRF by the Minnesota Tax Abatement Act, as amended. It is the intent of the City to provide the minimum amount of TRF, as well as other incentives, at the shortest term required for the project to proceed. The City reserves the right to approve or 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 Meeting policy criteria does not guarantee the award of TRF to the project Approval or denial of one project is not intended to set precedent for approval or denial of another project II. DIFFERENCE BETWEEN TRF & TIF The primary difference between Tax Rebate Financing(TRF) 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 city, 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 TRF is requested, each political subdivision has the option of granting its portion of the increased taxes to the project. Subsequently, the dollars generated for the project with TRF are generally less than the dollars generated with TIF. III. OBJECTIVES OF TAX REBATE FINANCING As a matter of adopted policy,the City will consider using TRF to assist private development projects to achieve one or more of the following objectives: • To retain local jobs and/or increase the number and diversity of jobs that offer stable employment and/or attractive wages and benefits. • To enhance and diversify the city of Elk River's economic base. • To encourage additional unsubsidized private development in the area, either directly or indirectly through "spin off' development. • To facilitate the development process and to achieve development on sites which would not be developed without TRF 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. City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 3 - • To offset increased costs of redevelopment(i.e. contaminated site dean up) over and above the costs normally incurred in development. • • To create opportunities for affordable housing. • To contribute to the implementation of other public policies,as adopted by the city from time to time, such as the promotion of quality urban or architectural design, energy conservation,and decreasing capital and/or operating costs of local government. IV. POLICIES FOR THE USE OF TRF a. TRF assistance will be provided to the developer upon receipt of taxes by the City, otherwise referred to as the pg-arlou-so method. Requests for up front financing will be considered on a case-by-case basis. b. Any developer receiving TRF assistance shall provide a minimum of twenty percent (20%) cash equity investment in the project. Projects utilizing the SBA504 program will be required to provide a minimum of ten percent (10%) cash equity investment. c. TRF will not be used in circumstances where land and/or property price is in excess of fair market value. • d. Developer shall be able to demonstrate a market demand for a proposed project. e. TRF will not be utilized in cases where it would create an unfair and significant competitive financial advantage over other projects in the area. f. TRF 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 etcetera. h. The developer shall adequately demonstrate, to the City'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. i. For the purposes of underwriting the proposal, the developer shall provide any requested market, financial, environmental, or other data requested by • the City or its consultants. j. TRF proposals shall not be used to support speculative office projects. Speculative projects are defined as those projects which have pre-leasing agreements or letters of intent for less than 50% of the available space. City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 4 - ( • • To offset increased costs of redevelopment (i.e. contaminated site clean up) over and above the costs normally incurred in development. • To create opportunities for affordable housing. • To contribute to the implementation of other public policies,as adopted by the city from time to time, such as the promotion of quality urban or architectural design, energy conservation,and decreasing capital and/or operating costs of local government. IV. POLICIES FOR THE USE OF TRF a. TRF assistance will be provided to the developer upon receipt of taxes by the City,otherwise referred to as the pay-asyougo method. Requests for up front financing will be considered on a case-by-case basis. b. Any developer receiving TRF assistance shall provide a minimum of twenty percent(20%) cash equity investment in the project. Projects utilizing the SBA504 program will be required to provide a minimum of ten percent (10%) cash equity investment. c. TRF will not be used in circumstances where land and/or property price is in excess of fair market value. d. Developer shall be able to demonstrate a market demand for a proposed project. e. TRF will not be utilized in cases where it would create an unfair and significant competitive financial advantage over other projects in the area. f. TRF 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 etcetera. h. The developer shall adequately demonstrate, to the City'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. i. For the purposes of underwriting the proposal, the developer shall provide any requested market, financial, environmental, or other data requested by the City or its consultants. • j. TRF proposals shall not be used to support speculative office projects. Speculative projects are defined as those projects which have pre-leasing agreements or letters of intent for less than 50% of the avaiL,ble space. City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 4 - In addition,leasible office projects must meet the following guidelines: 1. Evidence of the 50%occupancy must be reported to the Director of Economic Development six months following an issued certificate of occupancy. 2. 50% of the jobs within the leasible office building space must be considered"new" jobs to the City of Elk River,meaning jobs not located in the City at any time prior to occupying space in the project. 3. Business retention jobs will be considered on a one-for-one match to job creation only in cases where job loss is specific and demonstrable in accordance with the MN Business Subsidy Law. Evidence may include documentation that the company will have to close involuntarily, or the company has received an attractive offer to move to another state or community. k. All TRF proposals shall optimize the private development potential of a site. V. PROJECT QUALIFICATIONS All TRF projects considered by the City of Elk River must meet each of the following requirements: a. The project shall meet at least one of the objectives set forth in Section HI of this document. b. The use of TRF will be limited to: • Industrial development, expansion, redevelopment, or rehabilitation; or • Commercial redevelopment or rehabilitation; or • Research and development facilities that satisfy Business Park zoning requirements; or • Office facilities with a minimum new construction of 25,000 square feet and minimum market value of$1,000,000 upon project completion;or • Residential development and redevelopment maybe eligible for TRF under a separate set of policies and only with the recommendation of the HRA. c. The developer shall demonstrate that the project is not financially feasible but-for the use of TRF. Evaluation of the project's financial feasibility without TRF shall be provided by the City's financial advisor on requests of over $25,000 total. d. The project shall comply with all provisions set forth in the state's Tax • Abatement Law, statues 469.1812 to 469.1815, as amended. City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 5 t In addition,leasible office projects must meet the following guidelines: 1. Evidence of the 50%occupancy must be reported to the Director of Economic Development six months following an issued certificate of occupancy. 2. 50% of the jobs within the leasible office building space must be considered"new"jobs to the City of Elk River,meaning jobs not located in the City at any time prior to occupying space in the project. 3. Business retention jobs will be considered on a one-for-one match to job creation only in cases where job loss is specific and demonstrable in accordance with the MN Business Subsidy Law. Evidence may include documentation that the company will have to close involuntarily, or the company has received an attractive offer to move to another state or community. k. All TRF proposals shall optimize the private development potential of a site. V. PROJECT QUALIFICATIONS All TRF projects considered by the City of Elk River must meet each of the following requirements: a. The project shall meet at least one of the objectives set forth in Section III of Mthis document. b. The use of TRF will be limited to: • Industrial development, expansion, redevelopment,or rehabilitation;or • Commercial redevelopment or rehabilitation;or • Research and development facilities that satisfy Business Park zoning requirements; or • Office facilities with a minimum new construction of 25,000 square feet and minimum market value of$1,000,000 upon project completion;or • Residential development and redevelopment maybe eligible for TRF under a separate set of policies and only with the recommendation of the HRA. c. The developer shall demonstrate that the project is not financially feasible but for the use of TRF. Evaluation of the project's financial feasibility without TRF shall be provided by the City's financial advisor on requests of over $25,000 total. d. The project shall comply with all provisions set forth in the state's Tax • Abatement Law, statues 469.1812 to 469.1815, as amended. City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 5 - e. The project must be consistent with the City's Comprehensive Plan,Land Use Plan, and Zoning Ordinances. 11111 f. The project shall serve at least two of the following public purposes: • Job creation or job retention. • Increase of tax base. • Enhancement or diversification of the city's economic base. • Development or redevelopment that will spur additional private investment in the area. • Fulfillment of defined city objectives, such as those identified in the Strategic Plan for Economic Development or the city's Comprehensive Plan, among others. • Removal of blight or the rehabilitation of a high profile or priority site. VI. SUBSIDY AGREEMENT & REPORTING REQUIRMENTS All developers/businesses receiving Tax Rebate Financing assistance from the City of Elk River shall be subject to the provisions and requirements set forth by the City's Business Subsidy Criteria as adopted, and State Statute 116J.993 as summarind below. All developers/businesses receiving TRF assistance shall enter into a Subsidy Agreement with the City of Elk River that identifies: the reason for the subsidy,the public purpose served by the subsidy, and the goals for the subsidy, as well as other IIsubsidy agreement criteria set forth by Statute 116J.993. The developer/business shall file a report annually for two years after the date the benefit is received or until all goals set forth in the application and Subsidy Agreement have been met,whichever is later. Reports shall be completed using the format drafted by the State of Minnesota and shall be filed with the City of Elk River no later than March 1 of each year for the previous calendar year. Businesses fulfilling job creation requirements 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 TRF assistance is used for a period of five years after the benefit is received. In addition to attaining or exceeding the jobs and wages goals set forth in the Subsidy Agreement, the borrower shall achieve 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 fines, repayment requirements, termination of the assistance, and be deemed ineligible by the State to receive any loans or grants from public entities for a period of five years. • City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 6 - e. The project must be consistent with the City's Comprehensive Plan,Land Use Plan,and Zoning Ordinances. • f. The project shall serve at least two of the following public purposes: • Job creation or job retention. • Increase of tax base. • Enhancement or diversification of the city's economic base. • Development or redevelopment that will spur additional private investment in the area. • Fulfillment of defined city objectives, such as those identified in the Strategic Plan for Economic Development or the city's Comprehensive Plan,among others. • Removal of blight or the rehabilitation of a high profile or priority site. VI. SUBSIDY AGREEMENT & REPORTING REQUIRMENTS All developers/businesses receiving Tax Rebate Financing assistance from the City of Elk River shall be subject to the provisions and requirements set forth by the City's Business Subsidy Criteria as adopted, and State Statute 116J.993 as summarized below. All developers/businesses receiving TRF assistance shall enter into a Subsidy Agreement with the City of Elk River that identifies: the reason for the subsidy,the public purpose served by the subsidy,and the goals for the subsidy, as well as other • subsidy agreement criteria set forth by Statute 116J.993. The developer/business shall file a report annually for two years after the date the benefit is received or until all goals set forth in the application and Subsidy Agreement have been met,whichever is later. Reports shall be completed using the format drafted by the State of Minnesota and shall be filed with the City of Elk River no later than March 1 of each year for the previous calendar year. Businesses fulfilling job creation requirements 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 TRF assistance is used for a period of five years after the benefit is received. In addition to attaining or exceeding the jobs and wages goals set forth in the Subsidy Agreement, the borrower shall achieve 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 fines, repayment requirements, termination of the assistance, and be deemed ineligible by the State to receive any loans or grants from public entities for a period of five years. • City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 6 - VII. APPLICATION PROCESS FOR TRF A. CITY OF ELK RIVER 1. Applicant submits the completed application along with a $5,000 application fee. The application fee will be used toward the cost of services provided in the evaluation of financial feasibility and preparation of legal documents. The balance of the application fee will be returned to the applicant. 2. City staff reviews the application and completes the Application Review Worksheet. 3. Results of the Worksheet are submitted to the appropriate governing authorities for preliminary approval of the proposal 4. If preliminary approval is granted,all necessary notices, resolutions and agreements are prepared by City staff and/or consultants. 5. Public hearing(s) on the proposed project are held. 6. The EDA or HRA recommends approval or denial of the proposal to the City CounciL 7. The City Council grants final approval or denial of the proposal. • B. APPLICATIONS TO OTHER POLITICAL SUBDIVISIONS It is recommended that applicants intending to seek TRF from Sherburne County and/or School District 728 make their applications to those bodies concurrent with their application to the City of Elk River. For more information on applying for TRF through Sherburne County and/or School District 728, contact: Alex Wikstrom Sherburne County Budget / Economic Development Coordinator 763-241-2700 Dr. Alan Jensen Superintendent- School District 728 763-241-3400 110 City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 7 - VII. APPLICATION PROCESS FOR TRF • A. CITY OF ELK RIVER 1. Applicant submits the completed application along with a $5,000 application fee. The application fee will be used toward the cost of services provided in the evaluation of financial feasibility and preparation of legal documents. The balance of the application fee will be returned to the applicant. 2. City staff reviews the application and completes the Application Review Worksheet. 3. Results of the Worksheet are submitted to the appropriate governing authorities for preliminary approval of the proposal. 4. If preliminary approval is granted, all necessary notices, resolutions and agreements are prepared by City staff and/or consultants. 5. Public hearing(s) on the proposed project are held. 6. The EDA or HRA recommends approval or denial of the proposal to the City Council. 7. The City Council grants final approval or denial of the proposal B. APPLICATIONS TO OTHER POLITICAL SUBDIVISIONS It is recommended that applicants intending to seek TRF from Sherburne County and/or School District 728 make their applications to those bodies concurrent with their application to the City of Elk River. For more information on applying for TRF through Sherburne County and/or School District 728, contact: Alex Wikstrom Sherburne County Budget/ Economic Development Coordinator 763-241-2700 Dr. Alan Jensen Superintendent- School District 728 763-241-3400 City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 7 - VIII. APPLICATION FOR TAX REBATE FINANCING • A. APPLICANT INFORMATION Name of Corporation/Partnership Address Primary Contact Address Phone Fax Email On a separate sheet,please provide the following: • Brief description of the corporation/partnership's business,including history, principal product or 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 Address Phone Fax Email Accountant Name Address Phone Fax Email Contractor Name Address Phone Fax Email Engineer Name Address Phone Fax Email Architect Name Address • Phone Fax Email City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 8 - VIII. APPLICATION FOR TAX REBATE FINANCING • A. APPLICANT INFORMATION Name of Corporation/Partnership Address Primary Contact Address Phone Fax Email On a separate sheet,please provide the following: • Brief description of the corporation/partnership's business,including history, principal product or 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 Address Phone Fax Email Accountant Name Address Phone Fax Email Contractor Name Address Phone Fax Email Engineer Name Address Phone Fax Email Architect Name Address • Phone Fax Email City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 8 - B. PROJECT INFORMATION 1.The project will be: • Industriql: New Construction Expansion Redevelopment/ Rehab. _Office/research facility that conforms to business park standards Commercial Redevelopment/Rehabilitation Other 2. In addition to the City of Elk River, applicant is requesting TRF funds from: Sherburne County School District 728 3.The project will be:_Owner Occupied Leased Space • If leased space,please attach a list names and addresses of future lessees and indicate the status of commitments or lease agreements.Attach as Exhibit E. 4. Project Address • Include Legal Description and PID Number. Attach as Exhibit F 5. Site Plan Attached: Yes No 6. Total Amount of TRF Requested: $ over years. City Portion of TRF: Annual$ Total$ County Portion of TRF: Annual$ Total$ ISD 728 Portion of TRF: Annual$ Total$ • 7. Current Real Estate Taxes on Project Site: $ Estimated Real Estate Taxes upon Completion:Phase I $ Phase II $ 8. Construction Start Date: Construction Completion Date: If Phased Project: Year % Completed Year % Completed C. PUBLIC PURPOSE It is the policy of the City of Elk River that the use of Tax Rebate Financing should result in a benefit to the public. Please indicate how this project will serve a public purpose. Job Creation/Retention Number of existing jobs Number of jobs created by project Average hourly wage of jobs created/retained _New industrial development which will result in additional private investment in the area. Enhancement and/or diversification of the city's economic base. The project contributes to the fulfillment of the City's Strategic • Plan for Economic Development. _Removal of blight. Rehabilitation of a high profile or priority site. Other: City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 9 - B. PROJECT INFORMATION 1.The project will be: • Industrial: New Construction Expansion Redevelopment/ Rehab. _Office/research facility that conforms to business park standards Commercial Redevelopment/Rehabilitation Other 2. In addition to the City of Elk River, applicant is requesting TRF funds from: Sherburne County School District 728 3. The project will be: Owner Occupied Leased Space • If leased space,please attach a list names and addresses of future lessees and indicate the status of commitments or lease agreements.Attach as Exhibit E. 4. Project Address • Include Legal Description and PID Number. Attach as Exhibit F 5. Site Plan Attached: Yes No 6. Total Amount of TRF Requested: $ over years. City Portion of TRF: Annual$ Total$ County Portion of TRF: Annual$ Total$ ISD 728 Portion of TRF: Annual$ Total$ 7. Current Real Estate Taxes on Project Site: Estimated Real Estate Taxes upon Completion:Phase I $ Phase II $ 8. Construction Start Date: Construction Completion Date: If Phased Project: Year % Completed Year % Completed C. PUBLIC PURPOSE It is the policy of the City of Elk River that the use of Tax Rebate Financing should result in a benefit to the public. Please indicate how this project will serve a public purpose. Job Creation/Retention Number of existing jobs Number of jobs created by project Average hourly wage of jobs created/retained _New industrial development which will result in additional private investment in the area. Enhancement and/or diversification of the city's economic base. The project contributes to the fulfillment of the City's Strategic • Plan for Economic Development. __Removal of blight. _Rehabilitation of a high profile or priority site. Other: City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 9 - • D. SOURCES & USES • SOURCES NAME AMOUNT Bank Loan $ Other Private Funds $ Equity $ Fed Grant/Loan $ State Grant/Loan $ EDA Micro Loan $ Tax Rebate Financing $ ID Bonds $ TOTAL $. USES AMOUNT Land Acquisition $ Site Development $ Construction $ Machinery&Equipment $ Architectural&Engineering Fees $ Legal Fees $ Interest During Construction $ Debt Service Reserve $ Contingencies $ TOTAL • City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 10 - D. SOURCES & USES SOURCES NAME AMOUNT Bank Loan Other Private Funds Equity Fed Grant/Loan State Grant/Loan EDA Micro Loan Tax Rebate Financing ID Bonds TOTAL USES AMOUNT Land Acquisition Site Development Construction Machinery&Equipment Architectural&Engineering Fees Legal Fees Interest During Construction • Debt Service Reserve Contingencies TOTAL City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 10 - • 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 Two Years Profit &Loss Statement Balance Sheet C) Current Financial Statements Profit& Loss Statement to Date Balance Sheet to Date D) Two Year Financial Projections F) Personal Financial Statements of all Major Shareholders Profit&Loss Current Tax Return G) Letter of Commitment from Applicant Pledging to Complete During the Proposed Project Duration H) Letter of Commitment from the Other Sources of Financing, • Stating Terms and Conditions of their Participation in the Project I) Application fee of$5000 J) Itemized Project Construction Statement K) Attach the following documentation as Exhibits Exhibit A—Corporation/Partnership Description Exhibit B—Description of Project Exhibit C—List of Shareholders/Partners Exhibit D—But-For Analysis Exhibit E—List of Prospective Lessees Exhibit F—Legal Description Note:All Major shareholders will be required to sign personal guarantees if up front financing of the project is required. The undersigned certifies that all information provided in this application is true and correct to the best of the undersigned's knowledge. The undersigned authorizes the City of Elk River to check credit references,verify financial and other information, and share this information with other political subdivisions as needed. The undersigned also agrees to provide any additional information as may be requested by the City after the filing of this • application. Applicant Name Date City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 11 - ' E. ADDITIONAL DOCUMENTATION AND CHECKLIST 411 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 Two Years Profit&Loss Statement Balance Sheet C) Current Financial Statements Profit&Loss Statement to Date Balance Sheet to Date D) Two Year Financial Projections F) Personal Financial Statements of all Major Shareholders Profit&Loss Current Tax Return G) Letter of Commitment from Applicant Pledging to Complete During the Proposed Project Duration H) Letter of Commitment from the Other Sources of Financing, Stating Terms and Conditions of their Participation in the Project I) Application fee of$5000 J) Itemized Project Construction Statement K) Attach the following documentation as Exhibits Exhibit A—Corporation/Partnership Description Exhibit B—Description of Project Exhibit C—List of Shareholders/Partners Exhibit D —But-For Analysis Exhibit E—List of Prospective Lessees Exhibit F—Legal Description Note:All Major shareholders will be required to sign personal guarantees if up front financing of the project is required. The undersigned certifies that all information provided in this application is true and correct to the best of the undersigned's knowledge. The undersigned authorizes the City of Elk River to check credit references,verify financial and other information, and share this information with other political subdivisions as needed. The undersigned also agrees to provide any additional information as may be requested by the City after the filing of this • application. Applicant Name Date City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 11 - TAX REBATE FINANCING PROPOSAL REVIEW WORKSHEET • TO BE COMPLETED BY CITY STAFF 1.The project meets the criteria set forth in Section V of the Tax Rebate Financing policy. a) Meets at least one of the objectives in Section III. b) Demonstrates need for TRF with the but for analysis. c) Consistent with all city plans and ordinances. d) Serves at least two public purposes as defined in Section V. 2. Ratio of Private to Public Investment in Project: Points: $ Private investment 5:1 5 $ Public Investment 4:1 4 Ratio Private : Public Financing 3:1 3 2:1 2 Less than- 2:1 1 3.Job Creation in the City of Elk River: Points: Number of new jobs as a result of the project. 25+ 5 Number of existing/retained jobs 20+ 4 Total 15+ 3 • 10+ 2 Less than 10 1 4. Ratio of TRF to new jobs created/retained: Points: $ TRF request $8,000 or less 5 Number of new jobs created/retained $10,000 or less 4 $ of TRF per new job created/retained $12,000 or less 3 $15,000 or less 2 Over$15,000 1 5.Wage Level of jobs created: Points: Average hourly wage Over$21/ hour 5 of jobs created/retained: $18-21 / hour 4 $14-17 / hour 3 $10-13 / hour 2 Under$10 / hour 1 6. Project size: Points: The project will result in the construction 40,000+ 5 of square feet 30,000+ 4 20,000+ 3 10,000+ 2 10,000 or less 1 City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 12 - • TAX REBATE FINANCING PROPOSAL REVIEW WORKSHEET TO BE COMPLETED BY CITY STAFF 1. The project meets the criteria set forth in Section V of the Tax Rebate Financing policy. a) Meets at least one of the objectives in Section III. b) Demonstrates need for TRF with the but for analysis. c) Consistent with all city plans and ordinances. d) Serves at least two public purposes as defined in Section V. 2. Ratio of Private to Public Investment in Project: Points: $ Private investment 5:1 5 $ Public Investment 4:1 4 Ratio Private : Public Financing 3:1 3 2:1 2 Less than 2:1 1 3.Job Creation in the City of Elk River: Points: Number of new jobs as a result of the project. 25+ 5 Number of existing/retained jobs 20+ 4 Total 15+ 3 • 10+ 2 Less than 10 1 4. Ratio of TRF to new jobs created/retained: Points: $ TRF request $8,000 or less 5 Number of new jobs created/retained $10,000 or less 4 $ of TRF per new job created/retained $12,000 or less 3 $15,000 or less 2 Over$15,000 1 5. Wage Level of jobs created: Points: Average hourly wage Over$21/ hour 5 of jobs created/retained: $18-21 / hour 4 $14-17 / hour 3 $10-13 / hour 2 Under$10 / hour 1 6. Project size: Points: The project will result in the construction 40,000+ 5 of square feet 30,000+ 4 20,000+ 3 10,000+ 2 10,000 or less 1 • City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 12 - • 7.Type of Project: Points: 100% Owner Occupied 5 Mix Owner Occupied&Investment 4 Investment Property 3 8.Use: Points: Industrial or Business Park Project 5 Commercial Rehabilitation/Redevelopment 4 9.The project will pay annual Points: property taxes in the first fully 35,000+ 5 assessed year of$ 25,000+ 4 15,000+ 3 10,000+ 2 Under$10,000 1 10. Likelihood that the project will result in Points: unsubsidized,spin-off development. High 5 Moderate 3 Low 1 • Sub-Total Points: of a possible 45 points. 9. Bonus Points Bonus Points: The project will be 100%Pay-asyougo TRF. 3 points The project contributes to the goals of Energy City. 2 points • Product promotes sensible use of energy, OR • Project utilizes significant energy efficient design&/or materials in construction. Total Points: Overall project analysis: High 45-38 points Moderate 37-29 points Low 28-20 points Not Eligible 19-0 points • City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 13 - • • 7.Type of Project: Points: 100% Owner Occupied 5 Mix Owner Occupied&Investment 4 Investment Property 3 8. Use: Points: Industrial or Business Park Project 5 Commercial Rehabilitation/Redevelopment 4 9. The project will pay annual Points: property taxes in the first fully 35,000+ 5 assessed year of$ 25,000+ 4 15,000+ 3 10,000+ 2 Under$10,000 1 10. Likelihood that the project will result in Points: unsubsidized, spin-off development. High 5 Moderate 3 Low 1 • Sub-Total Points: of a possible 45 points. 9. Bonus Points Bonus Points: The project will be 100%Pay-asyougo TRF. 3 points The project contributes to the goals of Energy CO. 2 points • Product promotes sensible use of energy, OR • Project urili7es significant energy efficient design&/or materials in construction. Total Points: Overall project analysis: High 45-38 points Moderate 37-29 points Low 28-20 points Not Eligible 19-0 points 411 City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 13 - • • EXHIBIT A Description of the corporation or partnership EXHIBIT B Description of the proposed project EXHIBIT C Names of officers and shareholders/partners with more than five percent (5%)interest in the corporation/partnership. EXHIBIT D But for analysis EXHIBIT E Prospective Lessees • EXHIBIT F Legal Description and PID Number • City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 14 - • • EXHIBIT A Description of the corporation or partnership EXHIBIT B Description of the proposed project EXHIBIT C Names of officers and shareholders/partners with more than five percent (5%)interest in • the corporation/partnership. EXHIBIT D But for analysis EXHIBIT E Prospective Lessees • EXHIBIT F Legal Description and PID Number • City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 14 - r XI. SAMPLE BUT-FOR ANALYSIS WITH NO WITH TAX REBATE FINANCING TAX REBA 1'E FINANCING SOURCES AND USES SOURCES AND USES SOURCES SOURCES Mortgage 9,600,000 8,667,000 Equity 2,400,000 2,400,00 Tax Rebate 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. Per Sq. 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% City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 15 - s • XI. SAMPLE BUT-FOR ANALYSIS WITH NO WITH III TAX REBATE FINANCING TAX REBATE FINANCING SOURCES AND USES SOURCES AND USES SOURCES SOURCES Mortgage 9,600,000 8,667,000 Equity 2,400,000 2,400,00 Tax Rebate 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. Per Sq. 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% City of Elk River Tax Rebate Financing Policy,Amended August 2002 - 15 - Business Beat Jake's Sports Café—More Parking Added Since the Mounds View City Council's approval of the Development Agreement for Jake's Sports Café on September 23rd, the parking lot expansion project has been significantly completed. Contractors for both Jake's Sports Café and for the County Rd. H2 Reconstruction Project closely coordinated their site preparation, grading, curbing, and paving activities. Striping of the parking lot has been completed and lights installed. Installation of a perimeter fence and the planting of vegetation/trees remain to be completed. The new parking lot, located to the west of Jake's, nearly doubles the parking available for customers (adding 58 spaces) and enhances safe access to and from the business. Congratulations Jake's! New Business Notes Redevelopment of the Old Perkins Site Begun Residents driving along County Highway 10 may have noticed a new look north of the • Mermaid in the last three weeks. Redevelopment activities have begun at the former Perkins property. The restaurant building was demolished on November 19th to make way for a new commercial development—Hwy 10 Business Center. Rob Carlson Builders of Blaine, the developer, has obtained a building permit to construct a 22,000 sq. ft. building on the 1.72 acre site. The developer anticipates that footings will be laid in mid-December and that the building will be enclosed by March 2003. Carlson's goal is to have the project completed by June 1, 2003 when Abbey Carpet of New Brighton, the largest tenant, is scheduled to relocate to Mounds View. Colonial Craft Has Arrived Colonial Craft, one of the nation's largest producers of wooden door and window grills, has relocated its administrative and production facilities from Roseville to Building I in the Mounds View Business Park. During October and November leasehold improvements were largely completed. Northco Real Estate Services of Minneapolis renovated the manufacturing/office space to meet Colonial Craft's needs. Company staff is pleased with the larger, more efficient space (120,000+ sq. ft) at the 2270 Woodale Drive facility south of County Highway 10. On December 2nd Colonial Craft began operations at the new facility and it forecasts employing 200 people early next year. Welcome Colonial Craft employees! s gi U aO + p N O %�°✓ ° zs�a 3w Nm ❑ OCw O �.r . 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E- wcao V V Z 34, M Backman, Aaron From: Atkinson, Jim Itent: Tuesday, October 29, 2002 1:49 PM o: Backman, Aaron Subject: FW: Split-level/Entry Website Original Message From: Stacie Kvilvang [mailto:skvilvang@ehlers-inc.com] Sent: Tuesday, October 29, 2002 9:35 AM To: Marjoriem@ci.brooklyn-park.mn.us; Jenni.tovar@ci.burnsville.mn.us; cpeterson@ci.circle-pines.mn.us; Bennett@ci.coon-rapids.mn.us; mgrimes@ci.golden-valley.mn.us; melinda.coleman@ci.maplewood.mn.us; jim.atkinson@ci.mounds-view.mn.us; kdoresky@ci.new-hope.mn.us; kmcdonald@ci.new-hope.mn.us; bsenness@ci.plymouth.mn.us; jbarnes@ci.plymouth.mn.us; cathy.bennett@ci.roseville.mn.us; knordine@ci.shoreview.mn.us; steve.cramer@co.hennepin.mn.us; drogness@dakotacda.state.mn.us; bdacy@wchra.com; khroberts@yahoo.com Subject: Split-level/Entry Website Hello everyone. Wanted to let you know that the Website for the planbook is up and running as of today (October 29, 2002) . Robert Gerloff is having the post cards and press release regarding this site printed, so you should be receiving the information soon via the mail. The website was designed to be somewhat simplistic in nature, so we could ascertain answers to specific questions about these types of houses. Robert will use the that is received for compiling design solutions to problems or upgrades .nformation omeowners would like to see. The website will be updated and reformated after the book is complete, to showcase the book and some of the solutions. Please check out the site, and if possible, have a link from you website to this one installed. www.split-level.com Stacie 0 1 Coy "°' County Schcui District +1161 In the 1997 legislative session,Representative Ron Abrams from Minnetonka authored legislation to allow individual political subdivisions(county,city,town, or school district)to return their proportional share of all or a portion of a building's CDproperty taxes(see H.F.2163,Laws of Minnesota,Article 2, Sections 45-48,or Minnesota Statutes,Section 469.1812 to 469.1815). Abatements were designed to give each jurisdiction a voice in economic and redevelopment efforts, limit the state's financial liability through the school finance system, and enable new business retention efforts. Complications arose in the mechanics of abatements and, more importantly, from the reintroduction of levy '4.'J limits for taxes payable in 1998 and 1999. The 1998 Legislature passed legislation to exempt these abatements from the levy limits and also allow bonds to be issued as a means to finance the development. The 1999 through 2001 Legislatures, in an effort to make abatement a more viable economic development tool, has further expanded the scope of abatement authority. The nuts and bolts of the abatement program are as follows: ❑ The abatement is a tax rebate rather than an exemption from paying taxes. ❑ The taxpayer pays taxes on the abated property in the same manner it would if the taxes were not being abated. The county pays the abatement to the general fund of the political subdivision without identifying the amount of the abatement. ❑ The 1999 Legislature expanded the meaning of the term abatement to encompass agreements to defer property taxes without interest or penalties. The city,town,county or school district can levy taxes as usual,defer payments for up to ten years,impose a set repayment schedule,and abate the penalties and interest. ❑ Towns may take action on tax abatement at any meeting, not only at their annual meeting. The 1999 Legislature gave the town board the power to approve the abatement resolution at other times, but unfortunately, the new legislation did not change the definition of "governing body". The 2001 Legislature corrects the defmition of governing body to authorize town boards(rather than the annual meeting)to approve abatement, and is retroactive to the date of the 1999 change(May 26, 1999). ❑ As of May 26, 1999,a school district may abate its entire tax capacity based levy(previously could only abate 60%to 75%). A school district may not abate market value based levies. School boards,also as of May 26, 1999, may now grant abatements for the entire term of the abatement(previously they could only approve the abatement one year at a time). School districts may levy an additional property tax to pay for their abatements. The school district will not lose net revenue by using the program. ❑ The maximum term of the abatement is ten years if the city(or town),county,and school all participate. If one or more entities decline, the maximum term is 15 for all participating entities, not just the requesting unit of government, under legislation passed in 2001. ❑ The maximum that an entity can abate is the greater of$100,000 per year or 5%of the entity's levy. ❑ Taxes payable from the market value of a new or existing building,and,as of May 26, 1999, the value of land and any fiscal disparities contributions(for metro and taconite credit areas only)may be abated. -4% The maximum annual abatement equals the political subdivision's local tax rate multiplied by the net tax capacity of the parcel. • • EHLERS&ASSOCIATES, INC. 3060 Centre Pointe Drive, Roseville, Minnesota 55113 651.697.8500 O Abatements are authorized to finance public infrastructure,whether or not the benefitted infrastructure is on or adjacent to the parcel for which the tax is abated. The owner of a parcel for which taxes are abated need not consent. Thus,a political subdivision may approve an abatement for certain parcels and use the retained taxes to finance public improvement projects. O -The notification requirements include a public hearing with a 10 to 30 day publication notice. O The findings required by a council or board include general statements of tax base,preservation,employment,public facilities, blight, or access to services. O G.O.Abatement Bonds can be issued without affecting net debt and can be issued without a referendum under certain conditions. Authorities may increase their abatement levies to make up for shortfalls resulting from class rate compression. Effective for bonds issued or sold after July 1,2001,abatement bonds used for buildings primarily used to conduct the business of a unit of government must require approval by the voters in a referendum,under legislation passed in 2001. O Abatement does not require a property owners consent. O Abatements cannot be used in concert with tax increment financing,but can be utilized after a TIF district is decertified. iii Effective for abatement levies payable beginning in 2002, the 2001 Legislature authorizes political subdivisions to increase their abatement levies to make up for shortfalls from class rate compression. Another issue which complicates the abatement program is the specific authority of a governmental body to pledge its abatements to the debt of another governmental entity, if the debt is not a G.O. Abatement Bond. Many attorneys differ on the interpretations of the pledges allowed and what exactly constitutes a G.O. Abatement Bond. We recommend that abatement always be utilized in conjunction with a development agreement that clearly spells out the developer's responsibilities with respect to improvements and job and wage goals. Abatement is a"business subsidy" and as such is subject to Minnesota Statutes § 116J.993 —§ 116J.995. • Ehlers&Associates-Abatement • ECONOMIC DEVELOPMENT COMMISSION AGENDA December 20, 2002 7:30 A.M. MOUNDS VIEW CITY HALL - CITY COUNCIL CHAMBERS 1. CALL TO ORDER A.M. 2. ROLL CALL (Present = P, Absent = A) Belting Fox Field Helgemoe McDonald Backman (Staff) Ericson (Staff) 3. APPROVE EDC MINUTES November 20, 2002 Motion: Second: Vote: 4. SPECIAL BUSINESS No Special Business Scheduled 5. REPORT OF COMMISSIONERS, STAFF AND EDA LIAISON A. Report of Commissioners -No Materials Attached B. Report of EDA Liaison -No Materials Attached C. Chamber of Commerce Update -No Materials Attached D. Report of Staff 1. Activity Report (Business Beat) 2. I-35W Corridor Coalition Insert in Twin Cities Business Monthly 3. Rob Carlson Builders Activities—Hwy 10 Business Center 4. Developer Activities—Amoco Site Prospect C:\Documents and Settings\AaronB\Local Settings\Temporary Internet Files\OLK8B\12-20-02.doc J • 6. EDC BUSINESS A. Discussion of Tax Abatement Policy & Usage B. Consideration of Resolution 02-EDC-35 setting the 2003 Meeting Schedule C. Other 7. ADJOURN at A.M. Next Regularly Scheduled Meeting: January 17, 2003 (?) III III C:\Documents and Settings\AaronB\Local Settings\Temporary Internet Files\OLK8B\12-20-02.doc Tax Abatement Finance Policy & Application City of Mounds View, Minnesota Adopted: October 10, 2000 • S Table of Contents • I. Policy Purpose 3 II. Difference Between Tax Abatement & TIF 3 III. Objectives 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 Abatement Financing 6 VIII. Attachment A: Application 8 IX. Attachment B: Deposit Agreement 12 X. Attachment C: Application Review Worksheet 15 XI. Attachment D: Sample But-For Analysis 17 • 2 I. POLICY PURPOSE • The purpose of this policy is to establish the Mounds View Economic 6' 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 or 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 or 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. Meeting policy criteria does not guarantee the award of tax abatement to the project. Approval or denial of one project is not intended to set precedent for approval or 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 or 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 or indirectly through "spin off' development. 3 • 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 or 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. II d. A market demand shall be demonstrated for the proposed project. e. Tax abatement will not be utilized in cases where it would create an unfair and significant competitive financial advantage over other 4 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. i. 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 469.1812 to 469.1815, as amended. e. The project must be consistent with the City's Comprehensive Plan and Zoning Ordinances. • 5 MI VI. SUBSIDY AGREEMENT & REPORTING REQUIRMENTS All developers/businesses receiving a tax abatement, or 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.993 as summarized below. All developers/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 goals for the subsidy, as well as other criteria set forth by statute 116J.993. The developer/business shall file a report annually for two years after the date the benefit is received or 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 View EDA no later than March 1 of each year for the previous calendar year. Businesses fulfilling job creation requirements 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 years after the benefit is received. In addition to attaining or exceeding the jobs and wages goals set forth in the Subsidy Agreement, the borrower shall achieve 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 fines, repayment requirements, and be deemed ineligible by the State to receive any loans or grants from public entities for a period of five years. 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 reviews the application and completes the Application Review Worksheet. • 3. Results of the Worksheet are submitted to the appropriate governing authorities for preliminary approval of the proposal. 4. If preliminary approval is granted, all necessary notices, resolutions and certificates are prepared by City staff and/or consultants. . 5. If necessary, public hearing(s) on the proposed project are held. 6. The EDA grants final approval or denial of the proposal. B. 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, Community and Economic Development Ramsey County 651-266-8006 Dr. Jan Witthuhn Superintendent Mounds View School District#621 651-639-6001 C. PUBLIC FACILITY AND INFRASTRUCTURE PROJECTS When abatement is being utilized to finance public facility and infrastructure projects, as opposed to those oriented toward private business and development objectives, the following process will be adhered to: 1. The EDA will recommend the preliminary use of tax abatement financing for a particular facility/infrastructure project. A formal application, deposit agreement, 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 hearing(s) on the proposed project are held. 4. The EDA grants final approval or denial of the proposal. VIII. ATTACHMENT A: APPLICATION FOR TAX ABATEMENT FINANCING • A. APPLICANT INFORMATION Name of Corporation/Partnership Address Primary Contact Address Phone Fax Email On a separate sheet, please provide the following: • Brief description of the corporation/partnership's business, including history, principal product or 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 Address Phone Fax Email Accountant Name Address Phone Fax Email Contractor Name Address Phone Fax Email Engineer Name Address Phone Fax Email Architect Name Address Phone Fax Email • 8 B. PROJECT INFORMATION • 1. The project will be: Vacant Land Development New Construction Expansion Commercial Redevelopment: New Construction Expansion Industrial Redevelopment: New Construction Rehabilitation Housing New Construction Rehabilitation Other 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 space, please attach a list names and addresses of future lessees and indicate the status of commitments or lease agreements.Attach as Exhibit E. 4. Project Address • Include Legal Description and PID Number. Attach as Exhibit F 5. Site Plan Attached: Yes No 6. Total Abatement Requested: $ over years. City Abatement : Annual $ Total $ County Abatement: Annual $ Total $ • ISD 621 Abatement: Annual $ Total $ 7. Current Real Estate Taxes on Project Site: $ Estimated Real Estate Taxes upon Completion: $ 8. Construction Start Date: Construction Completion Date: If Phased Project: Year % Completed Year % 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. 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: Number of existing jobs Number of jobs created by project Average hourly wage of jobs created Other: 9 D. SOURCES & USES SOURCES NAME AMOUNT • Bank Loan Other Private Funds Equity Fed Grant/Loan State Grant/Loan Tax Abatement ID Bonds Other TOTAL USES AMOUNT Land Acquisition Site Development Construction Machinery & Equipment Architectural & Engineering Fees Legal Fees Interest During Construction Debt Service Reserve Contingencies Other • TOTAL • 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 Years 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 will be helpful in evaluating your application Note: All Major shareholders will be required to sign personal guarantees if up front financing of the project is required. The undersigned certifies that all information provided in this application is true and correct 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 of this application. Applicant Name Date By Its • 11 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 VIEW ECONOMIC DEVELOPMENT AUTHORITY, a body corporate and politic, organized and existing under the laws of the State of Minnesota (the "EDA") and (The Applicant). WITNESSETH: 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 Applicant) 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 411 into a Development Agreement. 12 IM\ . • S. • IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. STATE OF MINNESOTA) COUNTY OF day ) SS ) BY: BY: MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY Dan Coughlin ITS PRESIDENT Kathleen Miller ITS EXECUTIVE DIRECTOR of The foregoing instrument was acknowledged before me on this , 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 1 . (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 • 14 X. ATTACHMENT C: APPLICATION REVIEW WORKSHEET TO BE COMPLETED BY CITY STAFF 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: Points: Private investment 5:1 5 Public Investment 4:1 4 Ratio Private : Public Financing 3:1 3 2:1 2 Less than 2:1 1 3. Job Creation in the City of Mounds View: Points: Number of net new jobs as a result of the project. 25+ 5 Number of existing/retained jobs divided by 10. 20+ 4 Total 15+ 3 10+ 2 Less than 10 1 • 4. Ratio of TAF to new jobs created: Points: TAF request $8,000 or less 5 Number of new jobs created $10,000 or less 4 of TAF per new job created $12,000 or less 3 $15,000 or less 2 Over $15,000 1 5. Wage Level of jobs created: Points: Average hourly wage Over $21/ hour 5 of jobs created: $18-21 / hour 4 $14-17 / hour 3 $10-13 / hour 2 Under $10 / hour 1 6. Project size: Points: The project will result in the construction 30,000+ 5 of net square feet 20,000+ 4 10,000+ 3 5,000+ 2 5,000 or less 1 • 15 7. Type of Project: Points: 100% Owner Occupied 5 • Mix Owner Occupied & Investment 4 Investment Property 3 8. Use: Points: Industrial 5 Office 5 Warehouse/Distribution 4 Commercial 3 Housing 3 9. The project will pay annual Points: property taxes in the first fully 25,000+ 5 assessed year of$ 15,000+ 4 10,000+ 3 5,000+ 2 Under $5,000 1 10. Likelihood that the project will result in Points: unsubsidized, spin-off development. High 5 Moderate 3 Low 1 • Sub-Total Points: of a possible 45 points. 9. Bonus Points Bonus Points: The project will be 100%pay-as-you-go TAF. 3 points The project contributes to Highway 10 Redevelopment 3 points The project results in substantial interior or exterior renovation 3 points The project will enhance the aesthetics of the surrounding area through high quality architectural and/or urban design 3 points Total Points: Overall project analysis: High 45-38 points Moderate 37-29 points Low 28-20 points Not Eligible 19-0 points 0 16 XI. SAMPLE BUT-FOR ANALYSIS • 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 4111, 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. Per Sq. 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% • N:\DATA\GROUPS\ECONDEV\Tax Abatement\Abatement Policy.DOC 17