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Home My WebLink About08-22-1996 ECONOMIC DEVELOPMENT COMMISSION DRAFT AGENDA AUGUST 22, 1996 6:00 P.M. MOUNDS VIEW CITY HALL COUNCIL CHAMBERS 1. CALL TO ORDER 62,', (0 11 P.M. 2. ROLL CALL (Present = P, Absent = A) / Carlson r.. - Schmidt 4 Goff .�,�, c., Welsch ✓ Nelson , .,►�, : Terhark Sjoberg a Hankner (EDA Liaison) Bennett (Staff) 3. APPROVE EDC MINUTES May 30, 1996 Action: Motion Second 63 _ Vote Lk � 4. SPECIAL BUSINESS Report on Loan Committee Meeting 5. EDC BUSINESS A. Discussion of the EDC's Advisory Responsibilities and Procedures for Communication Between the EDC and EDA Action: Motion Second Vote Comments: B. Update on Housing Program and Discuss Ways to Market the Program 10 Action: Motion Second Vote Comments: C. Review EDA's Priorities for Highway 10 and Identify Strategies for Redevelopment in these Priority Areas. Action: Motion Second Vote Comments: D. Discuss and Review Revised Tax Increment Policy Action: Motion Second Vote Comments: E. Discussion of Everest Proposal for TIF Assistance Action: Motion Second Vote Comments: 6. Report of Commissioners, Staff and EDA Liaison 7. ADJOURN P.M. �� Next Meeting September 26, 1996 �? r 4 L - �I EJt -Q•�. Vim' ' 1 tU • QS-- c).),.0(AL 0 a- D _ Quo, Ltibtj Co umAcd enc- a Qel <5-17 �- C �(o -ci - 5�- • --( U-(z-\-/ 'Nurvaktrt. : cLeL asA 9of • `t €0c-.. \D-u1/4,(- c zt ^' 60A,A7Z\ C9 riDec-9-. ik93 - -'h1 -e-ciakk cc. - CCPV < i.L 41)44-48 c c(siJ tUo LocutioLt, usua_ p L91)1 dLi6Cia- -c • {-1-0,s24 - 3 11 (CoO LLL- ck. N igit,1011 e g:71211 ECONOMIC DEVELOPMENT COMMISSION DRAFT AGENDA AUGUST 22, 1996 6:00 P.M. MOUNDS VIEW CITY HALL COUNCIL CHAMBERS 1. CALL TO ORDER P.M. 2. ROLL CALL (Present = P, Absent = A) Carlson Schmidt Goff Welsch Nelson Terhark Sjoberg Hankner (EDA Liaison) Bennett (Staff) 3. APPROVE EDC MINUTES May 30, 1996 Action: Motion Second Vote 4. SPECIAL BUSINESS Report on Loan Committee Meeting 5. EDC BUSINESS A. Discussion of the EDC's Advisory Responsibilities and Procedures for Communication Between the EDC and EDA Action: Motion Second Vote Comments: r B. Update on Housing Program and Discuss Ways to Market the Program IP Action: Motion Second Vote Comments: C. Review EDA's Priorities for Highway 10 and Identify Strategies for Redevelopment in these Priority Areas. Action: Motion Second Vote Comments: D. Discuss and Review Revised Tax Increment Policy • Action: Motion Second Vote Comments: E. Discussion of Everest Proposal for TIF Assistance Action: Motion Second Vote Comments: 6. Report of Commissioners, Staff and EDA Liaison • 7. ADJOURN P.M. Next Meeting September 26, 1996 Minutes of the Economic Development Commission City of Mounds View • Ramsey County, Minnesota Regular Meeting May 30, 1996 City of Mounds View, Council Chambers 2401 Highway 10, Mounds View, MN 55112 1. Call to Order: The meeting was called to order at 6:10 p.m. by Chairperson, Dan Nelson. 2. Roll Call: Members present were as follows: Cindy Carlson, Rosemary Goff, Dan Nelson, Brian Sjoberg, Ron Schmidt, Delane Welsch and Bev Terhark. In addition, Economic Development Coordinator Cathy Bennett was present. EDA Liaison Sue Hankner and Alternate Liaison Gary Quick were absent. 3. Approval Of Minutes: Motion/Second: Carlson/Goff moved approval of Minutes of April 25, 1996 Meeting. • Motion Carried 7 ayes 0 nays 4. Special Business Chairman Dan Nelson brought forward the discussion of the purchase of the Bel-Rae and the EDC's request to have the EDA come to a meeting to discuss procedure with the purchase and the future roles and responsibilities of the EDC. Chairman Nelson expressed disappointment that EDC's advice regarding the purchase and use of the Bel-Rae site was not taken into consideration or recorded in any minutes of the EDA in discussions regarding the Bel-Rae. Commissioner Carlson felt the decision to purchase the Bel-Rae was based on emotion rather than financial circumstances and that the EDC's expertise could have provided a balance. Chairman Nelson suggested that he address the EDA at the next regular meeting. 5. A. Discussion of Tax Increment Policies for new/expanded development in Mounds View Coordinator Bennett presented a draft TIF policy per the discussions at the March meeting. The information for review included a Policy,Application for Tax Increment Financing, Analysis Form and Deposit Agreement. 111 1 Several revisions were made to ensure that all commissioners ideas were incorporated into the policy. Additions to the Analysis Form were made to clarify some of the subjective nature of development such as Elimination of Blight, Target Industries and generation of tax base verses public improvements. Staff was directed to contact the City of Burnsville regarding the intent of the point value under service impact. B. Update on Housing Program and Discuss Ways to Market the Program Under the Guidelines of the Program. Motion/Second: Schmidt/Sjoberg moved to table Update on Housing Program until there has been direction from the EDA regarding EDC roles and responsibilities. Motion Carried 7 ayes 0 nays C. Review EDA's Priorities for Highway 10 and Identify Strategies for Redevelopment in these Priority Areas Motion/Second: Schmidt/Sjoberg moved to table Review of EDA Priorities for Highway 10 until there has been direction from the EDA regarding EDC roles and responsibilities. Motion Carried 7 ayes 0 nays Reports From Chair, Commissioners and Staff: • Commissioner Ron Schmidt requested a leave of absence or resignation from the EDC due to personal views as a resident and business owner regarding some City policies and decisions over the past few years. Mr. Schmidt felt that he would not be doing the EDC justice until he is able to work through some of the differing views regarding the City of Mounds View. Chairman Nelson suggested a leave of absence rather than resignation. Commissioner Schmidt agreed to a leave of absence until he can take a more positive view of the City of Mounds View. 7. Adjournment There being no further business before the Commission, this meeting of the Economic Development Commission adjourned at 7:40 p.m. Respectfully Submitted, , . Economic Development Coordinator 1111k 2 • Staff Memo To: Economic Development Commission Members From: Cathy Bennett, Economic Development Coordinator Date: July 18, 1996 Subject: Discussion of the EDC's Advisory Responsibilities (5.A.) and Procedures for Communication Between the EDC and EDA Several EDC members were in attendance at the July 8, 1996 Council work session regarding EDC's request for guidance from the EDA on what items and recommendations they should be reviewing. It's clear that there is some difficulty in gauging what should and should not be discussed by the EDC and how recommendations should be formally considered by the EDA. The EDA suggested the EDC review how other Cities EDA and EDC's communicate. I contacted 15 Cities that have EDA's. Six of those have an advisory commission. Delane Welsch, Cindy Carlson, Brian Sjoberg and I were able to attend other commission meetings this month to evaluate what topics are discussed and how much responsibility is provided to the advisory commissions. Please be prepared to give a report on the meetings attended so the group can discuss how we may better communication with the EDA. • Staff Memo To: Economic Development Commission Members From: Cathy Bennett, Economic Development Coordinator Date: August 16, 1996 Agenda Item: Update on Housing Program and Discuss Way to Market (5.B.) the Program Under the Guidelines of the Program The housing inspector has researched several housing prorams over the past several months. With the information from several metro Cities and reviewing the needs in Mounds View a housing replacement program was developed to allow the use of TiF funds to upgrade a portion of Mounds View's housing stock. The homes targeted for these programs are beyond repair or homes where the cost of repair would exceed the houses total value. The program allows the EDA to purchase a substandard home, clear the site, and sell the raw land to a buyer/developer team. The EDA could only purchase the home on a voluntary basis. This allows for the construction of a • new, larger valued home thereby increasing the amount of taxes generated and eliminating the blighting influence of substandard housing. The program was approved by the EDA on May 13, 1996. Please review the program and begin to think of ways the City can market this program and generate positive attitudes in the community for the benefits of this program. Currently, the City has purchased one house with this program - 8265 Spring Lake Road. This home was in violation of many of the Mounds View building and nuisance codes and was considered a hazard. The City had the first right of purchase from HUD and was able to negotiate a 10% discount off the appraised value of the home. Closing is scheduled for August 26, 1996. • CITY OF MOUNDS VIEW'S PROPOSED HOUSING REPLACEMENT PROGRAM Statement of Purpose To reduce the social costs of blight, making better use of existing public infrastructure and redistributing tax base to communities with higher levels of fiscal needs. Program Objectives • Replace small lower value housing on scattered sites throughout the City with larger, new, higher value housing designed for families. • Eliminate the blighting influence of substandard housing, thus improving residential neighborhoods. • Increase the availability for quality housing for families. Definitions Data Privacy All files and information which identifies property and persons is private and connot be released, All information secured through the program is subject to the Data Privacy Act. Acquisition Procedures (Sale to EDA) Seller Solicitation Procedures 1. EDA staff, or their appointee(s), will solicit for sellers by direct mail, advertisement, or other method. The number of properties purchased will be determined by the availability of resources and properties. 2. Sale to the EDA must be on a voluntary basis. Interested sellers are required to respond to the EDA solicitation in writing, with an offer indicating: a. An interest in selling their property to the EDA. b. A willingness to waive relocation benefits. 41Ikc. Statement of tenant interest in the property at the time of offer. 1 d. Consent to the release of relevant information to potential developers and • end buyers. 3. Owners who have expressed an interest in selling must be contacted to inform them of the estimated project time line and solicit the required written response. Property Selection Criteria EDA staff, or their appointee(s), will prepare property fact sheets for properties which owners have expressed an interest in selling, and make a drive by inspection. Properties will be evaluated based on the following criteria. To be eligible for acquisition, properties must meet criteria#la, b, c or d; and #2 through#5. 1. The property is: a. Substandard as to condition, size or usage. b. Obsolete and of a faulty design for block and area in which it is located. c. A deteriorating factor which has caused blight to other adjoining properties. d. Detrimental to the safety or health of abutting properties in the block. 2. An effort will be made to provide a geographic mix of properties. • 3. The site can be developed with a single family home within city code requirements, including zoning and conformance with the Comprehensive Plan. 4. The property must be owner-occupied or vacant before the owner should consider offering it to the EDA. Tenant occupied properties will not be considered for purchase. 5. Prior to acquisition by the EDA, properties over 50 years old must be evaluated for historical significance. This will be accomplished by forwarding general property information and a property photo to the Minnesota Historical Society for review. This should be confirmed prior to signing a purchase agreement. The EDA will not purchase property which qualifies for the National Registry of Historical Structures. Property Evaluation Procedures 1. Based on the above information, EDA staff, or their appointee(s), will identify the best candidates for acquisition. The following will be considered in that evaluation: 2 • a. Properties must be available to meet the EDA development time frame. b. Properties with one or more of the following characteristics should be considered first: • lowest values • poorest visible conditions • located in average to better neighborhoods c. Properties purchased should be equally distributed by location and value through the districts when possible, and provide a viable financial mix of properties to support program financial requirements. Given the above considerations, each site will be evaluated on a case by case basis. 2. Once an offering letter is received, EDA staff, or their appointee(s), will contact the owners of the properties and arrange an inspection of the interior for blight qualification. The following information will also be obtained during the inspection: a. Demolition information for estimating demolition credit to builder. 11, b. A determination as to the existence of any hazardous materials on the property. This includes: • a visual inspection • a statement from the seller regarding any knowledge of the properties use for production, storage, deposit, or disposal of any toxic or hazardous wastes or substances or asbestos products whatsoever, during the time seller owned the property and prior to the date of seller purchased property. Properties with environmental problems or hazards may be considered if the purchase price is reduced sufficiently to cover increased site clearance and preparation costs. 3. If a property meets the blight test, acquisition procedures can continue. If the blight test cannot be met, the property cannot be considered for acquisition. 4. If a variance is required to redevelop the property, the EDA may, at its sole discretion, choose not to acquire the property. This determination will be made based on the project time lines, available resources, and availability of more desirable properties which do not require a variance. 3 S. If the EDA chooses to continue with the acquisition, a fee appraisal will be ordered • to determine the purchase price of the property (to present to the seller), the reuse value as a vacant lot, and a finished price range for new single family construction (to present to the developer). The independent fee appraiser will be carefully instructed to document in specific terms the conditions of the property; details regarding structural condition and floor plan. The acceptance of these conditions in the market place should be discussed in the report. The appraisers value judgement should reflect these conditions. 6. If the seller agrees to the purchase price and signs a purchase agreement, the property will be included in the EDA marketing program. The purchase agreement will be contingent on the completion of an environmental evaluation suggesting no evidence of hazardous waste on the property. 7. Sellers will be asked to provide the Abstract or RPA(as applicable) to the EDA, to facilitate the rendering of a title opinion. The cost of updating the Abstract or RPA will be the seller's if a sale occurs. 8. Legal Counsel will be responsible for having the Abstract or RPA updated and will contact staff as quickly as possible with an oral opinion of title. A written opinion 41, or title insurance policy will follow shortly thereafter. 9. If the title opinion indicates the property has marketable title, purchase procedures will continue. If the title opinion does not indicate a marketable title, the EDA, at its sole discretion, may choose not to acquire the property. The EDA may determine remedies and evaluate their resolution, including the additional time and expense to provide marketable title. The EDA may proceed to correct title deficiencies once a Purchase Agreement is executed by the seller. 10. Simultaneously with the title opinion, an environmental Phase I audit may be obtained from an independent environmental engineering firm or other firm performing such service. If environmental hazards are found on the site, the EDA may choose not to acquire the property. Acquisition Process When a purchase price has been determined, the seller will be informed of: a. The purchase price b. How the purchase price was determined. c. If negotiations fail, and the offer is not accepted, the EDA will not acquire 4 • the property. 2. Once a negotiated price has been reached, a contract for purchase, with the attached form of purchase agreement and"waiver of relocation payment" form must be executed by the seller for the acquisition process to continue. The relocation benefits which the seller agreed to waive, must be clearly explained at this time, if not explained previously. 3. The acquisition and disposition of the property is in conformance with the Mounds View Comprehensive Plan. 4. Following EDA authorization of these agreements seller will be requested to assemble or supply all required documentation prior to closing. 5. The seller must be prepared to vacate the property on the day of closing. Special considerations during the acquisition process: a. Non-homestead vacant property will be considered for acquisition. b. Tenant occupied property cannot be acquired. c. Property expenses related to maintenance, taxes, and insurance should be minimized since the EDA does not intend to retail title to the property. d. Review appraisal services may be part of the negotiating process to determine purchase price. e. Negotiated prices considerably below the assessor's market value, may be accepted without appraisal on a case by case basis if the seller concurs. f. Number of acquisitions is determined by available resources (funding and staff). 5 Staff Memo # To: Economic Development Commission Members From: Cathy Bennett, Economic Development Coordinator Date: August 16, 1996 Agenda Item: Review EDA's Priorities for Highway 10 and Identify (5.C.) Strategies for Redevelopment in these Areas. This item has been carried over from the May 30th EDC Meeting. The EDA had a Prioritization work session on April 29, 1996. This session allowed the EDA to purely focus on the redevelopment of Highway 10. Each development area, as proposed in the draft Highway 10 Redevelopment Plan, was reviewed and the EDA chose three areas to focus on in 1996 through a silent vote. I have attached an overview of the top three priority areas and the strategy notes 1110 from this session for your review. The EDA would like the EDC to provide additional strategies for the redevelopment of the three priority areas especially with regards to Section 9 which includes the "Late Blue House" and the Jones/Winn Property. Highway 10 Redevelopment Priorities Section 4 - Regional Business Center Approximate Acres - 94 Current Character - Mounds View Business Park consisting of various limited manufacturing \warehouse and distribution facilities. Proposed Vision - Preserve the current quality of the business park with completed parcel development to maximize the acreage. Benefits • Increase the commercial tax base ■ Increase job opportunities • A completed business park ■ Excellent Access to freeways • Very marketable to quality companies Challenges: 1. • Request for pay-as-you-go TIF package to complete the last remaining building in the business park. Section 8a. - City Center: City Hall and Community Center Approximate Acres - 31 Current Character- Location for City Hall with ball fields, soccer fields, volleyball and playground. In addition this area includes 9 acres of underutilized wetland and the Bel-Rae Ballroom. Proposed Vision - Cluster all the uses for a large recreational/activity/community meeting place -- a place for residents to come and share the spirit of community. Benefits ■ Increase the spirit of community • Possible location to increase tax base and jobs ■ Improve aesthetics of wetland area Challenges: 1111 • Package redevelopment of the Bel-Rae with private sports venture. ■ Identifying City Community needs to incorporate into redevelopment opportunity i Section 9 - Mixed-Use Development Approximate Acres - 33 Current Character- Mix of scattered commercial development, multi-family housing and underutilized and underdeveloped parcels. Proposed Vision - Coordinated mixed-use development with commercial complex to the south and a mixed multi-family\commercial use to the north. Benefits • Remove\improve dilapidated structures and improve aesthetics. ■ Increase tax base and jobs. • Reduce public safety issues ■ Provide services for the general community and multi-family community living close to the area. Challenges: ■ Property owners not working together to market as a whole. • Some property owners have unrealistic price expectations for property ■ Properties to the North directly abut single family neighborhood. ■ Limited access off of Highway 10 ■ Wetland Considerations. STRATEGIES FOR PRIORITY REDEVELOPMENT Formulated by EDA on Apri129, 1996 SECTION 8.a. (City Center: City Hall & Community Center) + Determine likely tenants ♦ Consider positives\negatives of purchase verses lease arrangements ♦ Implement procedures in architects report • ♦ Minimize risk verses capitalizing on opportunities in terms of financing cost and community programs. + Move forward on acquisition of Midland-Videen Property and direct staff to formulate additional funding options. SECTION 4 (Regional Business Center) note: this section was expanded to include the area to expand the business park in section 5 i • Staff to begin negotiation on BuildingN in Mounds View g g Business Park S ♦ Complete all projects before TIP District end date ♦ Assess potential of developing "Building K" SECTION 9 (Mixed-Use Development) ♦ Investigate acquisition of Pleasant Wood Apts and lots 7800, 7851 • ♦ Proceed with demolition of "Blue House" ♦ Investigate opportunities for acquiring/developing Win/Jones Properties i Staff Memo To: Economic Development Commission Members From: Cathy Bennett, Economic Development Coordinator Date: August 16, 1996 Subject: Review and Discussion of Revised Draft Tax Increment (5.D.) Policy Please refer to your materials from the scheduled July meeting. We will review recommendations from the City's Tax Increment Consultant Briggs & Morgan and Casserly Molzahn and Associates with regards to the policy. I have attached their comments for your review. In addition, I have redrafted the policy to address some of the concerns but we still may want to reevaluate the purpose of the policy and what our goals and objectives are in reviewing the use of tax increment funds. Also for those that were unable to be at the last meeting I have attached handouts that give a summary of tax increment financing. • 411 Tax Increment Policy Mounds View Economic Development Authority Mounds View, Minnesota GENERAL POLICY: The Mounds View Economic Development Authority has the powers under the Minnesota Statute Sections 469.124 through 469.137 and Sections 469.001 through 469.047 to govern and monitor the use of tax increment financing for three tax increment districts and the Mounds View development district which encompasses the entire boundaries of the City of Mounds View. It is the responsibility of the Mounds View Economic Development Authority to use tax increment financing as a tool to accomplish the City's economic development and redevelopment goals and objectives. The Mounds View Economic Development Authority understands and abides by the fundamental principal which makes tax increment financing viable to encourage development and redevelopment which would not otherwise occur. The Mounds View Economic Development Authority shall consider tax increment financing in cases that serve to accomplish the City's development goals and activities as hereby defined in projects eligible for tax increment financing. -- - • . -; •-. ;--•--- -- -- - t. 411 PROJECT ELIGIBLE FOR TAX INCREMENT FINANCING: Projects eligible for consideration of Tax Increment Financing assistance per the Mounds View Economic Development Project Plan dated May 9, 1994 include, but are not limited to (1) the attraction, retention, rehabilitation and preservation of commercial, industrial, retail, residential, recreational and public service facilities; (2) new and rehabilitated public infrastructure; (3) community and other public service centers; (4) senior/mature adult and/or other housing development partnerships or other multi-use housing projects and facilities; (5) other public utilities (including telecommunications); (6) business incubator loan and other business programs; and (7) transportation systems. More emphasis will be placed on those items which increase the tax base, eliminate blight and meet the City's economic and redevelopment goals. COSTS ELIGIBLE FOR TAX INCREMENT FINANCING: Project costs qualifying for Tax Increment Financing assistance, as defined under the TIF Act, include utilities design, landscape design, architectural and engineering fees directly attributable to site work, site related permits, earthwork/excavation, soils correction, landscaping, utilities (sanitary sewer, storm sewer, and water), streets and roads, street/parking lot paving, street/parking lot lights, curb and gutter, sidewalks, land acquisition, special assessment, legal (relating to acquisition, financing, and closing fees), soils tests and environmental studies, surveys, park dedication fee, SAC, WAC charges, titles insurance and TIF application !posit. 1 DETERMINATION OF AMOUNT OF ASSISTANCE TO APPLICANT: Within TIF Districts No. 1. 2, and 3 The amount of Tax Increment Financing provided to an applicant will be based, in part, on the analysis of information provided on the application for Tax Increment Financing assistance (Attachment"A"), amount of increment generated by the project as evaluated by the City's Financial and Bond Counsel and the City's economic and redevelopment goals. The standard guideline for assistance is % of the project's annual increment for a term determined by . •': i.:'-- ..• •- ': __ • ._: -- - -- : -- • - - - - - r The level of assistance provided will be evaluated on a case by case basis and may reflect an increase or decrease in assistance dependant upon the level of increase in the tax base, amount of elimination of blight and/or a number of variables that may substantiate the need for assistance. • ; .; ': - : -•fr -- . ofeYf--t-Ite-Eettientie--9evelopment Authority. An adjustment in the amount of assistance that can be provided is at the sole discretion of the Board of the Economic Development Authority as long as the requested uses are legal under the Minnesota State Statues for use of tax increment financing. Within the Development District (herein referred to as the "City" limits) but outside of TIF Districts 41110 The amen evaluation of Tax Increment Financing assistance that could be provided to an applicant will be based on (A) the analysis of information provided on the application for Tax Increment Financing assistance (Attachment "A"), (B) square footage cost of the project, (C) balance available in the Economic Development Authority excess tax increment fund and (D) proof of need for assistance under the "but for" test for use of tax increment financing. TYPES OF ASSISTANCE Within TIF Districts No. 1, 2, and 3 Tax Increment Financing can be provided in either"pay as you go" or"up front"payments. "Pay as you go" is wherein the Mounds View Economic Development Authority compensates the applicant for a predetermined amount for a predetermined number of years. The applicant pays for(re)development up front and then annual payments are issued to the applicant based on the need for assistance and increment generated from the project. "Up front' payments is wherein the Mounds View Economic Development Authority must issue revenue or general obligation bonds to pay for the (re)development prior to completion of the project. The increment generated from the project is then used for repayment of the bonds. The Mounds View Economic Development Authority gives preference to the use of"pay as you go" assistance to finance private development projects due to the reduced risk to the community. The EDA will consider"up front" payment projects that would benefit the entire community. • 2 Within the City but outside of TIF Districts Financing in the form of Cxec3s from the dedicated tax increment fund can will be provided in annual installments to the applicant based on the positive cash flow balance in the Economic Development Authority's cxccss dedicated tax increment fund and need for assistance based on analysis of the "but for" test for the project. The dedicated tax increment fund includes a value based on the use and is adjusted along with the budget process and goal and objectives for economic and redevelopment on an annual basis. APPLICATION FOR TAX INCREMENT FINANCING ASSISTANCE: The Mounds View Economic Development Authority shall require a deposit in the amount of$1,000 from the applicant for the EDA's consultants to investigate the feasibility and need for providing Tax Increment Financing assistance to the applicant and per the terms of the deposit agreement(Attachment"B"). SUBMITTAL OF APPLICATION FORMS: Applicants requesting Tax Increment Financing assistance within an existing district or in the creation of a new district, shall be required to complete and submit the following: 1. Application for Tax Increment Financing Assistance Deposit for Review of Tax Increment Financing Assistance 3 ATTACHMENT "A" • APPLICATION FOR TAX INCREMENT FINANCING PROJECT: 1. Business Name: Address: Telephone #: Contact: 2. Brief Description of the Business. (Please provide# of years in business under current ownership and # of years in Mounds View) -1111/ 3. Present Ownership of the Site: 4. Present Project: Building square footage, location of project, size of property, description of buildings - materials, etc. Attach site plan, if available • 5. If Property is to be Subdivided, Show Division Planned. • attachment "A" Cont.) • 6. Estimated Project Costs: (please enclose construction performa, if available.) a. Land Acquisition $ b. Site Development $ c. Building Cost $ d. Equipment $ e. Architectural & Engineering Fees $ f. Legal Fees $ g. Financing Costs $ h. Broker Costs $ I. Contingencies $ j. Other(please specify) $ Total $ 7. Total Estimate Market Value at Completion $ 8. Submit an Itemized List of Eligible Costs Qualifying for Assistance (see page 1 of Tax Increment ilk Policy). 9. Sources of Financing a. Equity $ b. Bank Loan $ c. Tax Increment Assistance $ d. Industrial Revenue Bonds $ e. Other (please specify source) $ 10. Form of Tax Increment Financing Assistance Requested. Pay As You Go Bond Issuance Excess Increment 11. Name & Address of Architect, Engineer, and General Contractor. (Attachment"A" Cont.) 12. Estimated Real Estate Taxes on Project Site upon Completion of Project. (please show calculations.) 13. Project Construction Schedule: a. Construction start date b. Construction completion date c. If phased project: Year % Complete Year % Complete 14. Estimated Number of Jobs: Created (within 2 yrs) Retained 15. Average Annual Wage Level of Jobs 1110 Created (within 2 yrs) Retained 16. Is Job Training Assistance Needed? TAX INCREMENT FINANCING REQUEST: 1. Describe amount and purpose for which tax increment financing is required and how the project fits into the Citv's economic development and redevelopment goals and objectives. 2. Statement of necessity for use of tax increment financing for project. • 3. Describe the Potential for Growth. 4. What is your Desired the Return on Equity Invested that you need to make the project feasible. 5. If Rental Space, What is the Range of Targeted Rental Rates: CITY OF MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY COMMISSION GUIDELINE IN THE ANALYSIS OF APPLICATION FOR TAX INCREMENT FINANCING ASSISTANCE FOR 11111 NAME OF APPLICANT Note: The EDC acts as an advistory to the Economic Development Authgrity who is the governing body, legal and political, for all Date Reviewed disbusements and approvals of tax increment funds. This document serves as a guideline to asstist the EDC in making judgements for the Total Score use of tax increment funds. There may be projects that do not financially score high but meet or exceed the economic development Result of Analysis and redevelopment goals and objectives for the City of Mounds View. There may also be projects that financially score high but do not meet or are not compatable with the goals and objectives. S 410 PUBLIC VERSUS PRIVATE INVESTMENT Private Investment TIF/Public Investment Total Investment Ratio of public vs. private investment Point Private Public Value + 1 Less than$3 to $1 + 2 Over$3 to $1 + 3 Over$4 to $1 + 4 Over$6 to $1 + 5 Over $8 to $1 NUMBER OF EMPLOYEES • 11.1 (Computed as full time equivalent positions) Point Number Value + 1 > 1 - 15 + 2 > 16 - 30 + 3 > 31 - 45 • + 4 > 46 - 75 + 5 > 75 - plus Current Number of Employees Estimated Number of New Employees (within the next 2 years)*T Total Number of Current and Estimated New Employees 3. PUBLIC INVESTMENT PER CURRENT EMPLOYEE • Point Value INVESTMENT 0 $12,500 + + 1 $10,000 - $12,500 +2 $7,500 - $10,000 + 3 $5,000 - $7,500 +4 $2,500 - $5,000 + 5 $ 0 - $2,500 TIF/Public Investment $ Current Number of Employees Investment per Employee = $ 4. ANNUAL PAY LEVEL OF POSITIONS • Point Annual Dollar Total # of Weighted Value Salary Weighting • Employees Dollar Amt. 0 $ 0 - 14,999 $10,000 + 1 $15,0'00 - 24,999 $20,000 +2 $25,000 - 29,999 $27,500 + 3 $30,000 - 44,999 $37,500 +4 $45,000- 59,999 $52,000 + 5 $60,000 and Over $60,000 Total Full Time Equivalent Weighted Average REAL ESTATE /PROPERTY TAXES GENERATED (projected tax revenues should be bases on the existing property tax system and rates plus legislative future changes if subject to estimation.) Point Total Projected Value Annual Taxes + 1 Below$25,000 + 2 $25,000 - $49,000 + 3 $50,000 - $99,999 + 4 $100,000 - $249,999 + 5 $250,000 and Over 6. SIGNIFICANT IMPACT MULTIPLIER Point * Provide Comments regarding Value Type of Development subjective public benefits of project. • + 0 Retail + 2 Office + 3 Office / Service (50/50) + 3 Value Added (retail with significant service component) + 4 Industrial -2 Activity Not Contributing to Tax Base +1 Company/Corporate Headquarters - location of upper management where decisions are made (add 1 pt to above) +1 Target Business +1 - +3 Elimination of Blight(add points to • above value) Total Point Value * 7. SERVICE IMPACT Point Value Type of Development - 4.0 Retail - 3.5 Office/Warehouse Service - 3.0 Hi Tech - 2.0 Office 8. FORM OF ASSISTANCE REQUESTED (within TIF District 1, 2, and 3) Point Value - 2 Up-Front + 5 Pay-As-You-Go 9. FORM OF ASSISTANCE REQUESTED (within City but outside of TIF Districts) Point Value - 2 One-Time Payment + 1 3 Annual Payments + 2 4 Annual Payments + 3 5 Annual Payments S 0. WORKSHEET SUMMARY POINT VALUE Public versus Private Staff Pt.Value Number of Employees EDC Pt. Value Public Investment per Employee Pay Level of Positions Comments: Real Estate/Property Taxes Generated Significant Impact Multiplier Service Impact Form of TIF Assistance Required Total Points is. RATING FOR PROJECTS LOCATED WITHIN TIF DISTRICTS 1, 2, AND 3 Point Value Term of Assistance 0-10 0 Years 11 - 13 3 Years - or - Remaining life of TIr District, whichever is less 14 - 16 5 Years - or - Remaining life of TIF District, whichever is less 17 - 20 7 Years - or- Remaining life of TIF District, whichever is less 21 and Over 10 Years - or- Remaining life of TIF District, whichever is less 12. RATING FOR PROJECTS IN DEVELOPMENT DISTRICT (OUTSIDE OF TIF DISTRICT) • (1) Building Size: Square Foot Cost of Project: (Land & Building) Project (2 ) Per S.F. Cost Per S.F. Allowance $20.00 - $30.00 $3.00 $30.01 - $40.00 $4.00 $40.01 - $50.00 $5.00 OVER $50.01 $6.00 Points (3) Percent of Accumulated Assistance • 11 - 13 30% 14 - 16 50% 17 - 20 70% 21 & OVER 100% S.F. of Bldg: (1) $ X S.F. Allowance (2) $ X % of Assistance: (3) Equals Amount of Assistance: $ L.'►•r OFFICES BRIGGS .A.vD MORGAN 1.noru_ssIONAL AS.S`OcIA:1-101+' 3300 YZR NAF ONAL ItANZ _BUILD/NG SAINT FA UL,.MINNESOTA 65101 • TELEPH ONE fe131 32 i-edoO FACSI.mCtLE (9121 223.5440 &ITFBS DIRLCT DLaa. ,T }328 July 23, 1996 ,aLvvEwroLXS O' cz 0400 ID.. c7arma (612) 223-6420 uLis.a11rrNEsoz.8asoa TZLZWEI ONE 1304VID4•61400F.&cm(ILE!duo G4 -8es0 VIA TELECOPY AND REGULAR MAIL, Cathy Bennett Economic Development Coordinator City of Mounds View Mounds View City Hall 2401 Highway 10 Mounds View, Minnesota 55112-1499 S Dear Cathy: I am writing in response to your letter to me of July 16. You draft of the Tax Increment Poli u asked for any comments I might have on the letter. Policy which accompanied your My general view of policies, whether for tax increment or concern, is that while it is a good idea to attempt to formulate them it is also difficult to came up with policies that will anticipate any other area of public difficult tot co P and sift out the projects which extremely ort and exclude the ones which it doesn't. I think the reason for this is simply that there are so many intangibles and relevant factors, 1 hich the City ect to project- It's also difficult to anticipate which facto which can vy decisive ' factors will turn outto beesignificant or in a particular circumstance. The Policy, through its point system, seems to emphasize such things levels, tax base, and certain n as jobs, wage analysis of a proposed tax increment S Of course, those are all very valid criteria in any project. At the same time, it has been benericand needful of assistance my experience that the same project maybe very context can make a large difference. For example,one city site but not nearly so in another. The times one is not nearly as concerned about what the end useversusrue Chep case the pr redevelopment epredominantgoal is 327144,1 S. • Casserly Molzahn & Associates, Inc. fitSuite 1100 Southpoint Office Center • 1650 West 82nd Street • Minneapolis, Minnesota 55431 Office (612) 885-1298 • Fax (612) 885-1299 MEMORANDUM TO: City of Mounds View Attn: Cathy Bennett, Economic Development Coordinator FROM: James R. Casserly RE : Tax Increment Policy DATE : July 18, 1996 I received a copy of your draft tax increment policy which you recently sent me . Enclosed you will find some basic information we have prepared to help explain tax increment financing, the different types of tax increment financing districts and some 411 issues that occur with the creation of tax increment financing districts . Please use this information if you find it helpful . I have made a quick review of your tax increment policy (the "TI Policy" ) and have the following general observations : 1 . The TI Policy appears to be concerned mainly with providing incentives and seems to have little concern with addressing need. 2 . There is very little concern with the problems of redevelopment . As is true with item 1 above, almost all of the criteria seem to address issues of economic development . 3 . There are references to assistance outside the tax increment district (but within the project area) which will be funded by the use of "Excess Increment" . From a legal point of view there is no such thing as the EDA retaining excess tax increment . 4 . While community and public service centers can be funded by tax increment, that use has been much criticized and the 1997 Legislature will most likely probibit it . 5 . Some of the rating criteria may be directly opposed to your redevelopment goals . It is very difficult in a redevelopment project to provide assistance on a pay- as-you-go approach, for example . To apply a negative point value for upfront assistance in a redevelopment project creates a disincentive for redevelopment . The same observation could be made about the public investment versus private investment or the public investment per current employee . In a redevelopment situation the public investment is going to be substantially greater. 6 . The criteria involving the generation of new real estate taxes discriminates against smaller projects and, again, those projects involving redevelopment . Generally, it is not the gross amount of taxes that should be the determination. For economic development, it should be taxes per square foot, or tax increment per square foot, or increased taxes per square foot . Assuming the same completed market value, a piece of vacant land will always generate more increased taxes than parcels that require redevelopment efforts and may already have a significant tax base . The 1997 Legislature is determined to review tax increment with the goal of curtailing the use of spending tax increment outside of the tax increment districts in which they were generated (commonly referred to as "pooling" ) . Most of the TI Policy seems to be responding to the expenditure of pooled tax increment . It Ilk may be prudent to de-emphasize the incentive approach for the economic development uses of tax increment and concentrate more on redevelopment, pollution abatement and housing uses for tax increment . If I can provide any further information, please do not hesitate to call . I look forward to visiting with you and the Economic Development Commission on July 25 . JRC/kh Enol WHAT IS TAX INCREMENT FINANCING ? 11/ Tax increment financing ( "TIF" ) is a planning and financing tool which has been used by local units of government since 1973 . TIF was originally designed by the Minnesota Legislature to replace the federal urban renewal programs of the 1960 ' s which were gradually cut back and eventually eliminated. Simply described, TIF uses the increase in property taxes resulting from new development to finance qualified public improvements costs related to that development . It is this increase or difference between the current property tax on a parcel of land and the estimated property tax after development, that is known as the tax increment . • 411 CASSERLY MOLZAHN & ASSOCIATES, INC. 6/10/96 WHAT IS THE "BUT FOR" TEST ? 11/ The basic premise behind TIF states that without municipal assistance a proposed project would not have occurred or would not have occurred within the foreseeable future . This premise is also known as the "but for" test, and all projects must satisfy it . The "but for" test consists of two separate analyses . The first analysis involves two statements . The first statement assumes "that the estimated captured net tax capacity would be available to the taxing jurisdictions without creation of the district" , and the second assumes "that none of the estimated captured net tax capacity would be available to the taxing jurisdictions without creation of the district" . 111 The second analysis, adopted by the 1995 Legislature, requires the authority to determine "that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the district permitted by the plan" . 410 CASSERLY MOLZAHN & ASSOCIATES, INC. 6/10/96 WHAT IS THE LGA/HACA ELECTION ? 410 In 1990, the Legislature initiated the LGA/HACA reduction which penalized authorities for providing TIF Assistance . In 1995, the Legislature provided an alternative to this penalty. An Authority may now elect to make a qualifying contribution to a project . The contribution may not include tax increments or developer payments and must be used to pay project costs and not for general government purposes or for costs a city would have incurred without the project . A city may receive assistance for its local contribution from other affected units of government . For example, if the state contributes to a project, the local contribution may be reduced by one-half of the dollar amount of the state contribution. A limitation in the use of this exemption is that the maximum city contribution for all TIF Districts cannot exceed 20 of the city' s net tax capacity. CASSERLY MOLZAHN & ASSOCIATES, INC. 6/10/96 WHAT IS A REDEVELOPMENT DISTRICT ? A. Qualifying parcels consisting of 70% of the area of the TIF District are occupied by buildings, streets, utilities, or other improvements, and more than 50% of the buildings (excluding outbuildings) are structurally substandard to a degree requiring substantial renovation or clearance; OR parcels consisting of vacant, unused, underused, inappropriately used, or infrequently used rail yards, rail storage facilities o; excessive or vacated railroad rights- of-way. ights- of-way. To be considered" improved" , at least 15% of a parcel' s area must contain improvements . A building is "structurally substandard" if there are defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors . A building is not substandard if it complies with the building code or could be brought up to code at a cost of 4110 less than 15% of the cost of a comparable new building on that site. B . TIF Expenditures - land acquisition - demolition - clearing land - installation of utilities, roads, sidewalks, and parking facilities - administrative costs C. Duration 25 years from receipt of the first tax increment D. Pooling - 25% E . LGA/HACA Election - 5 . 0% 411 CASSERLY MOLZAHN & ASSOCIATES, INC. 6/10/96 WHAT IS A RENOVATION AND RENEWAL DISTRICT ? 411 A. Qualifying parcels consisting of 70% of the area of the TIF District are occupied by buildings, streets, utilities, or other improvements; 20% of the buildings (excluding outbuildings) ; and 30% of the other buildings require substantial renovation or clearance to remove existing conditions such as inadequate street layout, incompatible uses or land use relationships, overcrowding of buildings on the land, excessive dwelling unit density, obsolete buildings not suitable for improvement or conversion, or other identified hazards to the health, safety and general well-being of the community. B . TIF Expenditures - land acquisition - demolition - clearing land - installation of utilities, roads, sidewalks, and 411 parking facilities - administrative costs C. Duration 15 years from receipt of the first tax increment D. Pooling - 20% E. LGA/HACA Election - 10 . 0% • CASSERLY MOLZAHN & ASSOCIATES, INC. 6/10/96 WHAT IS A SOILS CONDITION DISTRICT ? 411 A. Qualifying parcels containing hazardous substances, pollution or contaminants which require removal or remedial action for use; AND the estimated cost of the removal and remedial action exceeds the fair market value of the land before completion of the preparation; OR the estimated costs of the removal/remedial action exceeds $2 per square foot B . TIF Expenditures - land acquisition - cost of removal or remedial action - administrative expenses, including preparation of the development action response plan 110 C. Duration 12 years from approval of the TIF plan D. Pooling - 2096- E. 00E. LGA/HACA Election - 5 . 0% CASSERLY MOLZAHN & ASSOCIATES, INC. 6/10/96 WHAT IS A HOUSING DISTRICT ? A. Qualifying Facility is intended for occupancy in part by persons or families of low and moderate income as defined in chapter 462A, Title II of the National Housing Act of 1934 , the National Housing Act of 1959, the United States Housing Act of 1937, Title V of the Housing Act of 1949 or other similar acts . Up to 200 of the fair market value may be for uses other than low and moderate income housing. B. TIF Expenditures - qualifying public improvements - administrative expenses C. Duration 25 years from receipt of the first tax increment D. Pooling - 200 E. LGA/HACA Election - 10 . 0%; 0 . 0% if qualified 111 CASSERLY MOLZAHN & ASSOCIATES, INC. 6/10/96 WHAT IS AN ECONOMIC DEVELOPMENT DISTRICT ? 411 A. Qualifying Parcels that do not qualify for any other type of TIF District, and the authority finds that (i) business is discouraged from moving to another state or municipality; (ii) employment is increased in the state; or (iii) the tax base of the state is preserved and enhanced. 85% of the building square footage in the TIF District shall be used for manufacturing, warehousing, storage, distribution, research and development, telemarketing, or tourism: B . TIF Expenditures - qualified public improvements - administrative costs loans - subsidies grants interest rate subsidies - additional site preparation and public improvement costs if - bedrock soil conditions are present in 80% of the acreage - estimated cost of site preparation exceeds the fair market value of the land before completion of the preparation C. Duration 9 years from date of receipt of the first tax increment or 11 years from approval of the TIF plan, whichever is less D. Pooling - 20% E. LGA/HACA Election - 10 . 0% CASSERLY MOLZAHN & ASSOCIATES, INC. 6/10/96 WHAT IS A MINED UNDERGROUND SPACE DEVELOPMENT DISTRICT? 411 A. Qualifying parcels to be developed or redeveloped for mined underground space B . TIF Expenditures - costs of excavating and supporting the space - providing public access to mined underground space including roadways, - installing utilities including fire sprinkler systems C. Duration 25 years from receipt of the first tax increment D. Pooling - 20% E. LGA/HACA Election - 5 . 0% 411 CASSERLY MOLZAHN & ASSOCIATES, INC. 6/10/96 WHAT IS A HAZARDOUS SUBSTANCE SUBDISTRICT ? 410 A. Qualifying parcels for which there is a state-approved development action response plan and the for which an agreement has been entered into for removal actions or remedial actions . B. TIF Expenditures - removal or remedial actions due to hazardous substances, pollutants, contaminants or petroleum releases - pollution testing - demolition - soil compaction correction - administrative and legal costs - PCA review and approval of the development response action plan C. Duration 25 years from commencement of the extended period or the time necessary to recover the costs of removal/remedial actions D. Pooling - 20% E. LGA/HACA Election - 5 . 0%; 0 . 0% if qualified 410 CASSERLY MOLZAHN & ASSOCIATES, INC. 6/10/96 WHAT ARE QUALIFYING PUBLIC IMPROVEMENTS ? 111 Land Acquisition Site work demolition/site clearance grading/backfilling/compaction of fill erosion control paving - cost of base construction up to laying of asphalt Utility Hook Up Traffic Control - Lights/Signs Relocation Expense Public Right-of-Way costs lighting signage curbs and driveway aprons sidewalks boulevards berms landscaping Interest Cost During Construction Period of Eligible Expenses Administrative Costs supervision contractors fee inspection fees overhead Environmental Costs assessment work program abatement/clean up Consultants' Fees architectural/design engineering financial consulting legal/bond counsel City Assessments sanitary sewer storm sewer streets other assessible public improvement costs Contingency 411 CASSERLY MOLZAHN & ASSOCIATES, INC. 6/10/96 WHAT ARE REDEVELOPMENT AGREEMENTS? 411 A Development Agreement is a contract between an authority and a developer. It spells out the rights and responsibilities of each party with respect to the proposed development and the public financing connected with that development . 110 0 CASSERLY MOLZAHN & ASSOCIATES, INC. 6/10/96 CITY OF , MINNESOTA ASSUMPTIONS Original Market Value 200,000 Original Tax Capacity 4.600% 9,200 Estimated Market Value 40,000 sf @ 50.00 /sf 2,000,000 Estimated Tax Capacity 4.600% 92,000 Estimated Taxes 40,000 sf @ 2.88 /sf 115,000 1996 Construction 1997 Valuation 1998 Taxes Payable Tax Rate 1.25000 Inflation 0.000% Admin/Program Fees 25.000% P. V. Rate 06/01/96 7.500% • • FORMS:CASH PREPARED BY CASSERLY MOLZAHN &ASSOCIATES, INC. 10—Jun-9 CITY OF , MINNESOTA CASH FLOW AND PRESENT VALUE ANALYSIS Original Estimated Captured Estimated Admin/ Available 7.500% P. V. ilk Tax Tax Tax Tax Program Tax Semi Annual Cumulative Date Capacity Capacity Capacity Increment Fees Increment Balance Balance 06/01/96 9,200 9,200 0 0 0 0 0 0 12/01/96 0 0 0 0 0 0 06/01/97 9,200 92,000 0 0 0 0 0 0 12/01/97 0 0 0 0 0 0 06/01/98 9,200 92,000 82,800 51,750 12„938 38,813 33,498 33,498 12/01/98 51,750 12,938 38,813 32,287 65,785 06/01/99 9,200 92,000 82,800 - 51,750 12,938 38,813 31,120 96,906 12/01/99 51,750 12,938 38,813 29,995 126,901 06/01/2000 9,200 92,000 82,800 51,750 12,938 38,813 28,911 155,812 12/01/2000 51,750 12,938 38,813 27,866 183,678 06/01/2001 9,200 92,000 82,800 51,750 12,938 -38,813 26,859 210,537 12/01/2001 51,750 12,938 38,813 25,888 236,426 06/01/2002 9,200 92,000 82,800 51,750 12,938 38,813 24,953 261,378 12/01/2002 51,750 12,938 38,813 24,051 285,429 06/01/2003 9,200 92,000 82,800 51,750 12,938 38,813 23,181 308,610 12/01/2003 51,750 • 12,938 38,813 22,343 330,954 06/01/2004 9,200 92,000 82,800 51,750 12,938 38,813 21,536 352,489 12/01/2004 51,750 12,938 38,813 20,757 373,247 06/01/2005 9,200 92,000 82,800 51,750 12,938 38,813 20,007 393,254 12/01/2005 51,750 12,938 38,813 19,284 412,538 06/01/2006 9,200 92,000 82,800 51,750 12,938 38,813 18,587 431 5 12/01/2006 51,750 12,938 38,813 17,915 44 06/01/2007 9,200 92,000 82,800 51,750 12,938 38,813 17,268 466,e 8 12/01/2007 51,750 12,938 38,813 16,644 482,951 06/01/2008 9,200 92,000 82,800 51,750 12,938 38,813 16,042 498,993 12/01/2008 51,750 12,938 38,813 15,462 514,456 06/01/2009 9,200 92,000 82,800 51,750 12,938 38,813 14,903 529,359 12/01/2009 51,750 12,938 38,813 14,365 543,723 06/01/2010 9,200 92,000 82,800 51,750 12,938 38,813 13,845 557,569 12/01/2010 51,750 12,938 38,813 13,345 570,914 06/01/2011 9,200 92,000 82,800 51,750 12,938 38,813 12,863 583,776 12/01/2011 51,750 12,938 38,813 12,398 596,174 06/01/2012 9,200 92,000 82,800 51,750 12,938 • 38,813 11,950 608,124 12/01/2012 51,750 12,938 • 38,813 . 11,518 619,641 • 1,552,500 388,125 1,164,375 619,641 619,641 10 FORMS:CASH PREPARED BY CASSERLY MOLZAHN &ASSOCIATES, INC. 10-Jun-- CITY OF , MINNESOTA . REVENUE NOTE Beginning Accrued Principal Interest Interest Total Ending Date Balance Interest Payment Rate Payment Payment Balance 06/01/96 619,641 0 0 7.500% 0 0 619,641 12/01/96 619,641 23,237 0 7.500% 0 0 642,878 06/01/97 642,878 24,108 0 7.500% 0 0 666,986 12/01/97 666,986 25,012 0 7.500% 0 0 691,998 06/01/98 691,998 12,863 7.500% 25,950 38,813 679,135 12/01/98 679,135 13,345 7.500% 25,468 38,813 665,790 06/01/99 665,790 13,845 7.500% 24,967 38,813 651,945 12/01/99 651,945 14,365 7.500% 24,448 38,813 637,580 06/01/2000 637,580 14,903 7.500% 23,909 38,813 622,677 12/01/2000 622,677 15,462 7.500% 23,350 38,813 607,215 06/01/2001 607,215 16,042 7.500% 22,771 38,813 591,173 12/01/2001 591,173 16,644 7.500% 22,169 38,813 574,529 06/01/2002 574,529 17,268 7.500% 21,545 38,813 557,262 12/01/2002 557,262 17,915 7.500% 20,897 38,813 539,346 06/01/2003 539,346 18,587 7.500% 20,225 38,813 520,759 12/01/2003 520,759 19,284 7.500% 19,528 38,813 501,475 06/01/2004 501,475 20,007 7.500% 18,805 38,813 481,468 12/01/2004 481,468 20,757 7.500% 18,055 38,813 460,711 06/01/2005 460,711 21,536 7.500% 17,277 38,813 439,175 12/01/2005 439,175 22,343 7.500% 16,469 38,813 416,831 06/01/2006 416,831 23,181 7.500% 15,631 38,813 393,650 12/01/2006 393,650 24,051 7.500% 14,762 38,813 369,600 0 06/01/2007 369,600 24,953 7.500% 13,860 38,813 344,647 12/01/2007 344,647 25,888 7.500% 12,924 38,813 318,759 06/01/2008 318,759 26,859 7.500% 11,953 38,813 291,900 12/01/2008 291,900 27,866 7.500% 10,946 38,813 264,034 06/01/2009 264,034 28,911 7.500% 9,901 38,813 235,122 12/01/2009 235,122 29,995 7.500% 8,817 38,813 205,127 06/01/2010 205,127 31,120 7.500% 7,692 38,813 174,007 12/01/2010 174,007 32,287 7.500% 6,525 38,813 141,719 06/01/2011 141,719 33,498 7.500% 5,314 38,813 108,221 12/01/2011 108,221 34,754 7.500% 4,058 38,813 73,467 06/01/2012 73,467 36,057 7.500% 2,755 38,813 37,410 12/01/2012 37,410 37,410 7.500% 1,403 38,813 (0) • 72,356 691,998 472,377 1,164,375 • ORMS:CASH PREPARED BY CASSERLY MOLZAHN &ASSOCIATES, INC. 10-Jun-9t CITY OF , MINNESOTA CITY CONTRIBUTION VS LGA/HACA REDUCTION0 Estimated [ City Contribution ) Captured [ Aid Reduction ) Tax Semi Annual Cuulative Tax Semi Annual Cuulative Date Increment Balance Balance Capacity Balance Balance 06/01/96 0 0 0 0 0 0 12/01/96 0 0 0 0 0 0 06/01/97 0 0 0 0 0 0 12/01/97 0 0 0 0 0 0 06/01/98 51,750 2,588 2,588 82,800 0 0 12/01/98 51,750 2,588 5,175 0 0 _ 0 06/01/99 51,750 2,588 7,763 82,800 0 0 12/01/99 51,750 2,588 10,350 0 0 0 06/01/2000 51,750 2,588 12,938 82,800 0 0 12/01/2000 51,750 2,588 15,525 0 0 0 06/01/2001 51,750 2,588 18,113 82,800 1,128 1,128 12/01/2001 51,750 2,588 20,700 0 1,128 2,256 06/01/2002 51,750 2,588 23,288 82,800 2,256 4,512 12/01/2002 51,750 2,588 25,875 0 2,256 6,768 - 06/01/2003 51,750 2,588 28,463 82,800 3,384 10,152 12/01/2003 51,750 2,588 31,050 0 3,384 13,537 06/01/2004 51,750 2,588 33,638 82,800 , 4,512 18,049 12/01/2004 51,750 2,588 36,225 0 * 4,512 22,561 06/01/2005 51,750 2,588 38,813 - 82,800 5,640 28,201 12/01/2005 51,750 2,588 41,400 0 5,640 33,841 06/01/2006 51,750 2,588 43,988 82,800 6,768 40,610 12/01/2006 51,750 2,588 46,575 0 6� 47 06/01/2007 51,750 2,588 49,163 82,800 7, 5 12/01/2007 51,750 2,588 51,750 0 7,896 6 06/01/2008 51,750 2,588 54,338 82,800 9,024 72,195 12/01/2008 51,750 2,588 56,925 0 9,024 81,219 06/01/2009 51,750 2,588 59,513 82,800 10,152 91,372 12/01/2009 51,750 2,588 62,100 0 10,152 101,524 06/01/2010 51,750 2,588 64,688 82,800 11,280 112,805 12/01/2010 51,750• 2,588 67,275 0 11,280 124,085 06/01/2011 51,750 2,588 69,863 82,800 12,409 136,494 12/01/2011 51,750 2,588 72,450 0 12,409 148,902 06/01/2012 51,750 2,588 75,038 82,800 13,537 162,439 12/01/2012 51,750 2,588 77,625 0 13,537 175,975 1,552,500 77,625 77,625 175,975 175,975 • City Contribution 5.000% I.S.D. Sales Ratio 90.10 I.S.D. Rax Rate 39.28 • =ORMS:CASH PREPARED BY CASSERLY MOLZAHN &ASSOCIATES, INC. 10-Jun-9E CITY OF , MINNESOTA • "BUT FOR" QUANTITATIVE ANALYSIS WITHOUT TIF ASSISTANCE 30,000 sf @ 30.00 /sf Estimated Market Value 900,000 Original Market Value 200,000 Increased Market Value 700,000 WITH TIF ASSISTANCE 40,000 sf 50.00 /sf Estimated Market Value 2,000,000 Original Market Value 200,000 Increased Market Value 1,800,000 Less: Tax Increment Present Value 826,188 Net Increased Market Value 973,812 1111 • • • ORMS:CASH PREPARED BY CASSERLY MOLZAHN &ASSOCIATES, INC. 10—Jun-9E "BUT FOR" QUANTITATIVE ANALYSIS WITHOUT TIF ASSISTANCE 30,000 sf @ 30.00 /sf Estimated Market Value 900,000 Original Market Value 200,000 Increased Market Value 700,000 WITH TIF ASSISTANCE 40,000 sf 50.00 /sf Estimated Market Value 2,000,000 Original Market Value 200,000 Increased Market Value 1,800,000 Less: Tax Increment Present Value 826,188 Net Increased Market Value 973,812 • • FORMS:CASH PREPARED BY CASSERLY MOLZAHN &ASSOCIATES, INC. 23—Jan—s • TAX INCREMENT FINANCING IN MINNESOTA By Stephen J. Bubul Kennedy & Graven, Chartered • April, 1996 • SJB100909 FIRM-2 • TABLE OF CONTENTS Page Projects and Districts 1 A. Projects 1 B. TIF Districts 1 1. Redevelopment District 1 2. Renovation and Renewal District 2 3. Soils Condition District 2 4. Housing District 3 5. Economic Development District 3 6. Hazardous Substance Subdistricts 4 7. Hazardous Waste Extension 5 8. Pre-1979 Districts 5 II. How Increment May Be Used 5 A. TIF Plan 5 B. General Restrictions 6 C. Geographic Restrictions 7 11110 D. Time Restrictions (other than duration) 7 E. Parcels Excluded from TIF Districts 8 III. Type of Financing 8 A. Bonds 8 B. Pay As You Go 8 IV. Local Government Aid Penalty 9 A. Generally 9 B. Amount 9 C. Penalty Recapture 9 D. LGA/HACA Exemptions 10 s SJB100909 FIRM-2 • TAX INCREMENT FINANCING IN MINNESOTA I. PROJECTS AND DISTRICTS A. Projects. Tax increment financing is used in conjunction with underlying development and redevelopment powers. Tax increments must be spent within particular geographic areas created under the development statutes. The basic planning area is referred to as a "Project," which also has other names: City: Development District, created under Sections 469.124 to 469.134. HRA: Redevelopment Project, created under Section 469.001 to 469.147. EDA: Economic Development District, created under Section 469.090 to 469.1081, or Development District or Redevelopment Project created using City or HRA powers. PORT AUTH.: Industrial Development Districts, created under Section 469.040 to 469.068, or special legislation. 1111, All Projects require a general development or redevelopment plan, approved after a public hearing. The boundaries tend to be large areas within which the authority intends to promote development or redevelopment. B. TIF Districts. TIF Districts are the specific parcels within a Project area from which tax increment will be captured. There are five general types: 1. Redevelopment District, Section 469.174, Subd. 10. Qualifications: (a) Parcels that make up 70% of the district are improved, and more than 50% of the buildings (excluding outbuildings) are structurally substandard to a degree requiring substantial renovation or clearance. To be considered "improved," at least 15% of the parcel's area must contain improvements. A building is not substandard if it complies with building codes or could be brought up to code at a cost of less than 15% of the cost of a comparable new building on that parcel; or (b) the district consists of vacant, unused, underused, inappropriately used, or • infrequently used rail yards, rail storage facilities or excessive or vacated railroad rights-of-way. SJA100909 1 FIRM Term, restrictions: May collect increment for 25 years after the date of receipt • of the first increment. May designate commencement in the year when the market value reaches an agreed-upon minimum (no more than four years after date of certification), in which case the district duration is 20 years after such commencement year. At least 90% of the increment must be used to finance the cost of correcting conditions that allow designation of redevelopment districts. 2. Renovation and Renewal District, Section 469.174, subd. 10a. Qualifications: The same parcel and area requirements apply as for a redevelopment district, but only 20% of the buildings need be structurally substandard; another 30% of the buildings must require renovation or clearance to remove conditions such as inadequate street layout, incompatible land uses, or obsolete buildings not suitable for improvement or conversion to other uses (that is, a lesser standard of blight). Term, Restrictions: May collect increment for 15 years after the date of receipt of the first increment. At least 90% of the increment must be used to finance the cost of correcting conditions that allow designation of renovation and renewal districts. . 3. Soils Condition District, Section 469.174, Subd. 19. Qualifications: (a) The presence of hazardous substances, pollution or contaminants requires removal or remedial action; and _ (b) the estimated costs of removal and remedial action exceeds the fair market value of the land before the preparation; and (c) the proposed removal or remedial action must be specified in a development response action plan approved by the Minnesota Pollution Control Agency. The requirements of clause (b) need not be satisfied if each parcel either satisfied the requirements of that clause, or the estimated costs of the proposed removal or remedial action exceeds $2.00 per square foot for the area of the parcel. Term, Restrictions: May collect increment for 12 years after the date of approval of the TIF Plan. The increment may be spent only to: acquire parcels on which removal or remediation will occur; pay the cost of the removal or • remediation; and pay allocated administrative expenses, including the cost of preparation of the development response action plan. SJB100909 2 FIRM-2 • Note: Soils districts could be created before June 30, 1995 based on unusual terrain and soils conditions. The 1995 amendments essentially changed a soils condition district to a hazardous waste district. • 4. Housing District, Section 469.174, subd. 11. Qualifications: Must be a facility intended for occupancy in part by persons or families of low and moderate income. Up to 20% of the fair market value of the improvements may be for uses other than low and moderate income housing. Term, Restrictions: May collect increment for 25 years after the date of receipt of the first increment, subject to the same exception as for redevelopment districts. To maintain qualification as a housing district, residents' income must be limited: for owner-occupied housing, 95% of the units must be initially purchased by persons with income that is less than or equal to the income requirements for qualified mortgage revenue bonds under federal law; for rental projects, must satisfy the income requirements for qualified residential rental projects under Section 142(d) of the Internal Revenue Code, or 50% of the units must be occupied by individuals with income 80% or less of the area median income. The rental income requirements apply for the life of the district. If the income requirements are violated, the district duration is reduced to that of an economic • development district. Note: additional restrictions apply for a "qualified housing district" that is exempt from state aid penalties. See Section IV. 5. Economic Development District, Section 469.174, subd. 12. Qualifications: The district does not meet the qualifications for any other type of district, and the municipality must find that the district will (1) discourage business from moving to another state or municipality; (2) increase employment in the state; or (3) preserve and enhance the tax base of the state. Term, Restrictions: May collect increment for nine years after the date of receipt of the first increment, or eleven years after the date of plan approval, whichever date is first. Note: for districts filed for certification before June 1, 1993, these periods were eight years and ten years, respectively. Increment may not be used to assist developments if more than 15% of the buildings and facilities (on a square footage basis) are used for a purpose other than: (1) manufacturing; (2) warehousing, storage and distribution of tangible personal property • (excluding retail sales); (3) research and development related to the aforementioned activities; SJB100909 2 FIRM-2 3 (4) telemarketing if that activity is the exclusive use of the property; . (5) "tourism facilities;" or (6) or space necessary for and related to the above. Note - Tourism Facilities: The term "tourism facility" was substantially restricted for districts created after May 31, 1993. Now, such a facility means property that: (1) is in a county where the median income is no more than 85% of the state median income; (2) in a county in which tourism-related earnings make up at least 15% of the total earnings in the county (excluding first class cities); (3) is located outside the Twin Cities metropolitan area; (4) is located in a city with a maximum population of 20,000; and (5) is a meeting facility, amusement park, recreation facility, cultural facility, marina, park, hotel, motel, lodging facility or nonhomestead dwelling unit that, in each case, is intended to serve primarily individuals from outside the county. Note - Bedrock Soil Exception: The 1995 legislature added language that allows revenue derived from tax increment from an economic development district be used for site preparation and public improvements for any type of development if bedrock soils are present in 80 percent or more of the acreage of the district, the estimated costs of physical preparation of the site exceeds the fair market value of the land before completion of the preparation, and revenue derived from • tax increments are expended only for the additional costs of preparing the site and installing public improvements required by unstable soils and the bedrock soils condition. The 1995 legislature also removed a previous exception that allowed use of tax increment to finance up to 5,000 square feet of commercial or retail facilities in cities of 5,000 people or less. 6. Hazardous Substance Subdistricts. Qualifications: Consists of parcels within a TIF District of any kind that are "designated hazardous substance sites" or are contiguous parcels that the authority expects to be developed together with the hazardous substance site. "Designated hazardous substance sites" are parcels for which there is a state-approved "development action response plan," and the authority has entered into an agreement providing for removal actions or otherwise certified that it will finance such removal. Term, restrictions: May collect increment from the subdistrict for up to 25 years after the date of receipt of the first subdistrict increment (which is, generally, the tax attributable to the "base value" of the parcel). This period overrides any shorter duration for the underlying TIF District, except that during the extended period, the increment may be used only to pay the cost of hazardous waste • removal and related administrative costs, and the "base value" increment is no longer collected. S3BI00909 4 FIRM-2 • 7. Hazardous Waste Extension. The 1995 legislature added an alternative to hazardous substance subdistricts. An authority, with approval of the municipality, may extend the duration of any TIF district if: a. contamination is discovered after the district was established; b. the authority elects not to create a hazardous substance subdistrict; and c. the municipality pays for the cost of removal or remediation out of general revenues and not from tax increments. If those tests are met, the district may be extended for the lesser of (1) 10 years after the district would otherwise have terminated; or (2) the number of additional years necessary to collect increment equal to the cleanup costs paid by the municipality from non-tax increment funds. Cleanup costs are restricted to actual costs of removal and remediation, including testing and engineering but excluding financing or interest costs. Cleanup costs are also reduced by any reimbursements or amounts recovered from private parties or other responsible parties. This provision is available for any TIF District filed for certification after December 31, 1988. 8. Pre-1979 Districts. TIF Districts created prior to August 1, 1979 are not generally subject to the TIF Act, except when the proposed development extends beyond the "scope of activity" in the project plan after May 1, 1988. After April 1, 2001, increment from a pre-1979 increment may be used only to pay bonds that were outstanding as of April-1, 1990, but in no event may increment be collected after August 1, 2009. II. HOW INCREMENT MAY BE USED A. TIF Plan. The use of increment must be spelled out in a TIF Plan approved by the city council (or county board for a county HRA) after public hearing, with 30-day notice to the county and school district, 10 days' published notice, and review by the planning commission. TIF Plans describe the estimated tax increment projections,financing budget and maximum debt to be issued. When approving the TIF Plan, the council must find (among other things) that the proposed development would not reasonably be expected to occur solely through private investment in the reasonably foreseeable future (the "but 111 for" finding). TIF Plans may be modified using the same process as for approval of the initial plan. Generally, modifications that do not increase expenditures or debt or call for new land :EJB 100909 5 FIRM-' acquisition may be approved simply by resolution. Modifications will not trigger • application of current statutes unless the boundary of the TIF District is expanded. Note - County Commissioner notice: For housing and redevelopment districts, must notify the county commissioner who represents the area of the TIF District at least 30 days before the date of publication of the public hearing notice. Note - New "But for" test: Under a 1995 legislative change, the municipality must find that the increased market value of the site that could reasonably be expected to occur without the use of TIF (a hypothetical figure) would be less than the increase in market value estimated to result from the proposed development, after subtracting the present value of the projected tax increments for the maximum duration of the district permitted by the TIF Plan. This finding is not required for qualified housing districts (see Section IV). An example: if the development is estimated to add $500,000 in value, and the present value of the maximum stream of increment at an assumed discount rate is $300,000, the municipality must find that no other development would add more than $200,000 in market value at this site. • B. General Restrictions. • 1. In addition to the specific limitations for each type of TIF District, tax increment may be spent only for specified purposes permitted in the underlying development statutes. Because the development statutes are often ambiguous, whether a particular activity is TIF-eligible may depend on the facts in each case. 2. Administrative expenditures are limited to 10% of the expenditures authorized in the TIF Plan, or 10% of actual increment expenditures, whichever is less. They are defined to mean all expenditures of the authority other than land acquisition and relocation costs and costs "directly connected with the physical development of the real property in the district." Note: the County auditor may assess each TIF District for the county's cost of administering the district, and the fee may be paid from tax increment. 3. Increment may not be used to finance buildings that are used "primarily and regularly for conducting the business" of any unit of government, except for parking structures, a commons area used as a public park, or a facility used for social, recreational-or conference purposes. If a TIF-financed social, recreational or conference facility is operated by an entity other than the authority, the authority's governing body must approve operating • policies for the facility. This would apply, for example, when an HRA finances a city community center. w B100909 6 FIPM-2 4. An Authority may establish a guaranty fund to indemnity a person for liability for remediation costs under state or federal environmental law. The maximum term of the indemnity is 25 years, and the maximum amount is one-half of the remediation costs. The authority may deposit tax increments in the fund, and the municipality may also appropriate money for deposit in the fund. C. Geographic Restrictions. 1. For districts created after June 30, 1995, no more than 20% of the increment (25%, in the case of a redevelopment district) may be spent outside the boundaries of the TIF District. However, increment from housing TIF districts may be spent to finance "housing projects" located anywhere in the broader Project area. Administrative costs are considered spent outside the district. 2. Increment from districts created before May 1. 1990 may be spent anywhere within the Project boundaries, which permits "pooling" of increment from more than one district. D. Time Restrictions (other than duration). 1. 3-year rule: within three years after the date of certification, one of three things must happen for the district to remain alive: bonds•are issued to aid the Project • • (excluding industrial development revenue bonds); the authority acquires property within the TIF District; or the authority causes public improvements to be constructed within the TIF District. 2. 4-year knock down rule: increment will not be collected from a particular parcel unless, within four years after the date of certification, demolition, rehabilitation or renovation of property or other site improvements has taken place by either the authority or the owner in accordance with the TIF Plan. Construction or major construction of an adjacent street qualifies as an improvement to a parcel, but utility improvements do not. if the parcel is "knocked-down" and later improved, it is reinstated in the TIF District but at the market value at the time of the reinstatement. 3. 5-year rule: for increment to be considered a spent expenditure within the TIF District, one of the following must occur within five years after certification of the district: (1) increment is paid to a "third party" for a TIF-eligible "activity"; (2) bonds, the proceeds of which are used to finance an activity, are sold to a third party and proceeds are reasonably expected to be spent within the five-year period limited ); (3) contracts are entered with a third (with certain e,'tcept,o;ts�, tom, binding party for performance of an activity, and increment is spent under the contract; or (4) costs are incurred by a "party" and revenues are spent to reimburse a party. • The term "third party" excludes the party receiving T1F assistance and the "municipality or the development authority or other person substantially under the control of the municipality." Therefore, clause (4) permits the typical "pay as you SJB100909 7 FIRM-3 S go" reimbursement where the initial costs are incurred by the developer within the 5-year period. See Section III.B. Note: the 5-year rule applies only to districts requested for certification after April 30, 1990. E. Parcels Excluded From TIF Districts (the "Green Acres Exclusion"). For districts filed for certification after June 30, 1995, parcels in the 7-county metropolitan area may not be included in a TIF district if they qualified for special tax treatment under green acres, open space, or agricultural preserves provisions in any of the five calendar years before the request for certification. Outside the metropolitan area, such parcels may be included in a TIF District if at least 85 percent of the planned facilities (on a square footage basis) are used for manufacturing. Legislation in 1996 changes this rule and makes it uniform statewide for districts filed for certification on or after August 1, 1996. Now, any parcel receiving special tax treatment mentioned above in the five years before the request for certification may be included in a TIF district anywhere if: (1) At least 85 percent of the planned facilities (on a square footage basis) are for manufacturing; or • (2) The district is a "qualified housing district" (described in Section IV.D.). III. TYPE OF FINANCING A. Bonds. Bonds secured by tax increments are issued when there is a need for initial capital to finance public or private improvements. Typically, the bonds are general obligation bonds backed by the full faith and credit of the municipality. As long as at least 20% of the debt service on the bonds is reasonably expected to be paid with tax increments, the bonds may be issued without election. If bonds are issued, the authority will typically require that the developer sign an "assessment agreement," which establishes a minimum market value of the improvements upon completion. Other types of security may also be required, such as a guaranty of debt service in the event of a tax increment deficiency, a letter of credit during the construction period, or other forms. B. Pay As You Go. An alterative to bond financing is a "pay as you go" arrangement with the developer. The developer pays for various TIF-eligible costs initially, and the authority promises to reimburse the developer from tax increment over time as it is generated. The developer (rather than an unrelated bondholder) bears the risk that the increments will be insufficient to repay the costs incurred. S7B100909 FIRM-2 8 1 This arrangement may be structured as a revenue note or bond issued to the developer, with an interest component to compensate the developer' for costs of financing the improvements up front. IV. LOCAL GOVERNMENT AID PENALTY A. Generally. The penalty, set out in Minnesota Statutes, Section 273.1399, applies only to districts requested for certification after April 30, 1990. The penalty is tied to the state school aid formula. When an authority creates a TIF District, the state calculates how much less the school aids would have been had the captured property value been available to the school district. That amount is then deducted from the municipality's local government aid (LGA) and if necessary from the homestead and agricultural credit aid (HACA). B. Amount. The LGA/HACA loss varies, but is usually about 30% of the tax increment collected annually when the maximum penalty applies. Note that the penalty does not change the amount of increment collected; it changes the amount of state aid the municipality receives. The amount of aid loss depends on the type of TIF District: • 1. Redevelopment and Housing Districts and Hazardous Substance Subdistricts: the aid loss is phased in over time. For the first six years after the original assessment year of the district, there is no aid loss. Beginning in year seven, the loss is only 6.25% of the maximum possible loss. Each year thereafter, the loss increases in 6.25% increments, until the full penalty applies in year 21. 2. Renewal and Renovation District: the same 6-year grace period applies, but in year seven the loss is 12.5 percent of the maximum loss, followed by an additional 12.5% annually until the full penalty applies in year 12. 3. Soils Condition and Economic Development Districts: the maximum penalty begins in the first year in which increment is collected. C. Penalty Recapture. 1. For districts created between May 1, 1990 and July 31, 1993, the municipality may obtain reimbursement from the developer for lost aid. However, tax increment may not be directly expended to reimburse the general fund for such aid loss. 2. For districts requested for certification after July 31, 1993, new restrictions apply. • If any agreement or "arrangement" provides for the developer to repay any part of the tax increment assistance provided, such developer payments are subject to restrictions imposed by law on tax increment itself. Thus, a municipality may not deposit such payments in the general fund, but rather must maintain them in the s.313100 909 g FIRM-2 TIF District account for use only on TIF-eligible activities. As a practical matter, • this severely limits the ability to fill the aid-loss hole in the municipality's general fund. D. LGA/HACA Exemptions. 1. Qualified housing districts are exempt from the LGA/HACA penalty. These are housing districts for residential rental .projects in which the only properties receiving the TIF assistance meet all the requirements for a low-income housing credit under federal law, regardless of whether the project actually receives a housing credit. The tax credit requirements: at least 20 percent of the units are occupied by persons with no more than 50 percent of areawide median income, or at least 40 percent of the units have occupants with no more than 60 percent of median income; and rent in the income-restricted units does not exceed 30 percent of an imputed maximum income (which depends on the size of the unit). 2. Local match option: A TIF District is exempt from the LGA/HACA penalty if the municipality elects at the time of approval of the tax increment plan to make a "qualifying local contribution" each year, equal to the following percentages of increment from the district: • 10 percent, for an economic development, housing, or renewal and • renovation district; • 5 percent, for a redevelopment, mined underground space, hazardous substance subdistrict, or soils condition district. If the municipality elects the local match option but fails to make a contribution in any year, there will be a state aid reduction equal to the greater of (1) the required local contribution, or (2) the LGA/HACA reduction that otherwise applies under the statute. If, in any year, the combined local contributions for that year from districts in the municipality reaches two percent of the city net tax capacity (excluding the captured tax capacity in any TIF district), then only a minimum additional contribution is required in that year. In addition to the overall two percent of tax capacity (which may be allocated among the municipality's TIF districts at its discretion), the municipality must contribute .25 percent of the city net capacity or three percent of the tax increment revenues from the district in question, whichever is less. If those contributions are made, no LGA/HACA penalty will apply that year for any TIF districts subject to the local match option. The local contribution must be made from unrestricted money of the authority or municipality (including any unrestricted grant), and cannot include tax increments • or developer payments. The contribution must be used to pay project costs and not improvements that the authority or city planned to incur absent the project. Cities, counties, towns and schools are authorized to contribute towards this local SJB100909 FIRM-2 10 • match. If the project receives a direct state grant or similar state incentive, the required local contribution is reduced by one-half of the dollar amount of the grant or incentive. The contribution may be made in the first year or so, and that amount will be carried forward to offset the contribution required in later years. However, no interest will be imputed on such an up-front contribution. To be eligible for the exemption each year, cities must submit a report on local contributions to the Minnesota Department of Revenue by March 15. 3. Other exemptions: certain ethanol production facilities and agricultural processing facilities outside the seven-county metro area are exempt from the LGA/HACA penalty. • • 3B 100909 11 FIRM • II Staff Memo To: Economic Development Commission Members From: Cathy Bennett, Economic Development Coordinator Date: August 16, 1996 Subject: Discussion of Everest Request for TIF Assistance (5.E.) Since there was not a quorum at the.July meeting, Everest requested the Council consider their request for tax increment assistance. The council reviewed their information at the August work session and directed staff to continue negotiating equitable terms with Everest. Staff is working on new strategies to offer proposals for the development of which I will discuss at the meeting.. Again, please review the documents that were in the July packet. If 11, you have any questions regarding the information provide please feel free to contact me prior to Thursday's meeting. i MOUNDS VIEW BUSINESS PARK DEVELOPMENT SUMMARY • 95 ACRES • 1 ,020,000 SQ. FT. OF • OFFICE/MANUFACTURING/WAREHOUSE AND 2 RESTAURANTS • 1 ,600-2,000 + JOBS • TAX BASE $30,000,000 • $1 .9 MILLION ANNUAL TAXES icn-clatiter • tgcto "KA - Q ccleku. ►s � • MOUNDS VIEW BUSINESS PARK PHASE I • BUILT 1988 TO 1990 • SEVEN (7) BUILDINGS • 656,000 SQ. FT. • • TENANTS: ONAN, BAKERS SQUARE, MULTI-TECH, LIBERTY CHECK, PHARMACIA DELTEC, OWENS & MINOR, FIRSTAR • 1 ,200 JOBS • UP FRONT BONDED TIF FOR LAND ACQUISITION, SITE AND PUBLIC • IMPROVEMENTS 1\9 • EVEREST GUARANTEED $19.5 MILLION TAX VALUE MOUNDS VIEW BUSINESS PARK PHASE II (MOUNDS VIEW BUSINESS PARK SOUTH) • BUILT 1990 TO 1992 /6/. • THREE (3) BUILDINGS / ,50' • 264,000 SQ. FT. • • EVEREST GUARANTEED $7,400,000 TAX BASE • TENANTS: MEDTRONIC, FIRST TEAM SPORTS, U.S. GEOLOGICAL SURVEY, MOUNDS VIEW SCHOOL DISTRICT, GARMENT GRAPHICS, LIBERTY CHECK • 500 + JOBS \„:\t-2 • UP FRONT BONDED TIF FOR LAND ACQUISITION, SITE AND PUBLIC IMPROVEMENTS l�� ,� ' • MOUNDS VIEW BUSINESS PARK PHASE III (C.C. HILL AND MULTI-TECH EXPANSION) • BUILT 1994 • TWO (2) BUILDINGS TOTALING 92,000 SQ. FT. • TENANTS/OWNER 1: MULTI-TECH SYSTEMS AND C.G. HILL & SONS • NEW TAX BASE OF $3,000,000 • ADDITIONAL TAXES OF $200,000/YEAR • PAY-AS-YOU-GO TI F M � OUNDS •VIEW BUSINESS PARK FINAL PHASE • TWO (2) BUILDINGS ("K" AND "N") • 168,000 SQ. 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''''' ,'"' Pit Wlgt;,'.. = ...4.." • Mr- ."-,-,'-' - - . .1.L.,....,,„.!;.., C...). yr -, .• ,, ,,,. •, . , _ Minutes of the Economic Development Commission City of Mounds View Ramsey County, Minnesota Regular Meeting August 22, 1996 City of Mounds View, Council Chambers 2401 Highway 10, Mounds View, MN 55112 1. Call to Order: The meeting was called to order at 6:09 p.m. by Chairperson, Dan Nelson. 2. Roll Call: Members present were as follows: Cindy Carlson, Rosemary Goff, Dan Nelson, Brian Sjoberg. Ron Schmidt is on leave of absence. Members Delane Welsch and Bev Terhark and EDA Liaison Sue Hankner and Alternate Liaison Gary Quick were absent. Economic Development Coordinator Cathy Bennett was present. 3. Approval Of Minutes: Motion/Second: Goff/Sjoberg moved approval of Minutes of May 30, 1996 Meeting. Motion Carried 4 ayes 0 nays 4. Special Business Coordinator Bennett noted that the EDC loan committee, comprised of at least 4 members (Dan Nelson, Cindy Carlson, Bev Tarhark and Rosemary Goff), met to discuss a loan request from Mounds View Fina located on County Road I. Member Carlson explained that the committee reviewed the application and financial information to make sure the request fit into the goals of the program. The loan will be used to enhance the gas station operation. The loan committee recommended the approval of the loan which was formally approved by the EDA on August 12, 1996. 5. A. Discussion of EDC's Advisory Responsibilities and Procedures for Communication Between the EDC and EDA Coordinator Bennett explained that EDC members were able to attend other EDC meetings over the past month to evaluate how communication and discussion flowed between the advisory group and EDA/Council's. Coordinator Bennett explained that she attended the Coon Rapids EDC where discussion focused on the distribution of CDBG funds that are allocated to the City. The EDC makes recommendations to the EDA where they are formally approved. Other I 1 topics they discussed included recommending participation in civic and membership groups. Member Carlson attended the New Brighton EDC meeting which has been in existence for about 10 years. There are two Council members which are members of the EDC which shows a strong linkage and communication tie between the two entities. Most all development projects go through the EDC first for evaluation. They are involved in the strategic planning sessions with the Council on economic development. Member Sjoberg attended the Arden Hills EDC which has been meeting for approximately 3 years. The group is very project specific. They view their role more as staff to the EDA/Council. A project is given to them and they bring back a recommendation on how to approve it rather than bringing options for the EDA/Council to choose. There is strong Council representation and a report is given on major Council activities to improve communication. Member Welsch attended the Crystal EDC meeting. He was unable to attend this meeting therefore forwarded his comments in writing (see attached). After discussion, the EDC directed staff to incorporate the following items into recommendations for communication between the EDC\EDA for review at the next meeting. Strong EDA interaction is a must. A report by the EDA liaison should be given at every EDC meeting on the key activities at the EDA level. Develop a sequence of review for (re)development projects. Develop a system of communication between other commissions. Hold a joint meeting, accompanied by a tour of the City, every year with the EDA. Possibly eliminating the work session at the EDA\Council level will allow the Council members more time and commitment to attend commission meetings where • background discussion on items can take place. B. Update on Housing Program and Discuss Ways to Market the Program Under the Guidelines of the Program. Coordinator Bennett noted this was an item that was tabled in May. Bennett explained the basic parameters of the housing program and reported that the EDA has already purchased its first house as part of the program. Since there is a variety of expertise on the EDC, coordinator Bennett asked for ideas regarding marketing the program to the community without actually calling up a homeowner who's house could be a candidate. EDC members came up with the following ideas: Educate representatives of HUD; Invite local Realtors to a meeting to discuss the program;Advertise in the local paper; Send direct mail to residents and break it up into sections of the City that should be focused on first. Coordinator Bennett will pass these ideas along to the Mounds View Housing Coordinator to incorporate into her marketing plans for the housing program. C. Review EDA's Priorities for Highway 10 and Identify Strategies for Redevelopment in these Priority Areas Coordinator Bennett gave an overview of the three redevelopment priority areas along Highway 10. Several requests for development of 2625 Highway 10 have been presented to City staff. In 11, 2 addition, the owner of property next to the Silver Lake Pointe Apts. is interested in marketing his site for development These properties are in Priority Area No. 3,which is from County • Road I to Silver Lake Road. Coordinator Bennett explained that there are many issues that need to be taken into consideration such as access to the sites, market demand for uses,wetland and drainage issues, compatibility with residential uses, zoning restrictions etc. prior to evaluating what type of assistance or role the City would play in planning the development for this area. Coordinator Carlson suggested that the EDC develop a request for proposal for the area. The RFP should include studying the area to address the issues mentioned and draft plans be put together for what types of development would be most beneficial to the City in terms of tax base, jobs and aesthetics. Motion/Second: Carlson/Sjoberg moved to request approval from the EDA to develop a RFP and interview candidates to study Priority Area No. 3 (Section 9) of the Proposed Draft Highway 10 Redevelopment Plan Motion Carried 4 ayes 0 nays D. Discuss and Review Revised Tax Increment Policy Coordinator Bennett discussed changes to the draft tax increment policy taking into consideration the recommendations from tax increment consultants from Briggs &Morgan, Casserly Molzan and Associates and Kennedy&Gravin. It was suggested that the point system be used only as a tool for the EDC but should not be considered a procedure to determine the amount of tax increment. In addition, it was recommended that the point system be reevaluated to address redevelopment vs. new development. Chair Nelson suggested that staff bring back an example of a redevelopment project that could be plugged into the point system. • E. Discussion of Everest Proposal for TIF Assistance Coordinator Bennett noted that since there was not a quorum at the July meeting that Everest requested that they present their proposal to the EDA for consideration. Staff is still evaluating the proposal and has requested additional information from Everest before further negotiations take place. Motion/Second: Goff/Carlson moved to table this item until further information is received by staff. Motion Carried 4 ayes 0 nays Reports From Chair, Commissioners and Staff: Chairman Nelson suggested that the next EDC meeting be held at 7:30 a.m. instead of in the evening. This may be a more convenient time for the members to attend meetings since many times he gets stuck at work in the evening but usually can arrange to be a little late. Motion/Second: Nelson/Sjoberg moved to hold the September 26, 1996 meeting at 7:30 am instead of 6:00 pm if this time is more convenient for the majority of the Commission Motion Carried 4 ayes 0 nays I 3 7. Adjournment • There being no further business before the Commission, this meeting of the Economic Development Commission adjourned at 8:20 p.m. Respectfully Submitted, .... Economic Dev- . 'ment Coordinator • 111 4