HomeMy WebLinkAbout06-22-2000ECONOMIC DEVELOPMENT COMMISSION AGENDA
June 22"d 2000
7:30 A.M.
MOUNDS VIEW CITY HALL - CITY COUNCIL CHAMBERS
1. CALL TO ORDER
2. ROLL CALL (Present = P, Absent = A)
Belting
Carlson
Field
Goff
Johnson
3. APPROVE EDC MINUTES
May 25th, 2000
Action: Motion
Second
Vote
4. SPECIAL BUSINESS
Ma
Walther
Coughlin (EDA Liaison)
Jo
(Staff)
(Staff)
5. REPORT OF COMMISSIONERS, STAFF AND EDA LIAISON
A. Report of Commissioners —
B. Chamber of Commerce Up(
C. 2901 Highway 10 —No Mat
D. Tax Increment Finance Poli
E. Walgreens — No Materials f
F. Mermaid Hotel and Banque
G. Council Manager Form of C
H. Charter Commission Resoli
6. EDC BUSINESS
A. Tax Abatement Finance Policy
7. ADJOURN
Materials Attached
— No Materials Attached
mt - No Materials Attached
A.M.
Next Regularly Scheduled Meeting: July 27th, 2000 at 7:30 A.M
N:\DATA\GROUPS\ECONDEV\EDC\Agendas\AgendaOO\June.doe
Not Approved
Minutes of the Economic Development Commission
City of Mounds View
Ramsey County, Minnesota
Regular Meeting
May 25t', 2000
City of Mounds View, Council Chambers
2401 Highway 10, Mounds View, MN 55112
CALL TO ORDER:
The meeting was called to order at 7:35 a.m. by Chairperson Tom Field.
2. ROLL CALL:
Members Present: Dr. Greg Belting, Cindy Carlson, Tom Field, Torri Johnson, Rosemary
Goff, Sean Walther, and EDA Liaison Dan Coughlin.
Members Absent: Wendy Marty
Staff Present: Economic Development Coordinator Aaron Parrish
3. APPROVAL OF MINUTES:
Motion/Second: Carlson/Goff moved to approve the minutes from April 27th, 2000.
Motion Carried: 6 Ayes 0 Nays
4. SPECIAL BUSINESS
A. Welcome New Commission Member Torri Johnson / Oath of Office
Torri Johnson was welcomed to the Economic Development Commission as its newest
Business Representative. Subsequently, Commissioner Johnson was given the Oath of
Office by Chairperson Tom Field.
5. REPORT OF COMMISSIONERS, STAFF AND EDA LIAISON
A. Commissioner and EDA Liaison Reports
Commissioner Tom Field updated the Commission on a recent Highway 10 Steering
Committee meeting. He indicated that previous Highway 10 studies were discussed, along
with various obstacles the community has faced. Additionally, he pointed out that the focus
for the current planning process was to move toward implementation.
NB—MV Chamber of Commerce Update
Commissioner Greg Belting, Chair of the Board of Directors for the NB—MV Area Chamber
of Commerce provided the Commission with information on the Chamber's recent activities.
Commissioner Belting indicated that the Chamber's recent golf event was a success with
over 80 golfers, and that the 2000 Business of the Year awards will be held next week.
6. EDC BUSINESS
N:\DATA\GROUPS\ECONDEV\EDC\Minutes\MinOO\05-25-OO.doe
Not pf) oved
A. Tax Increment Finance Policy Revisions
After discussing revisions to the TIF policy from the previous meeting, a motion
recommending the Economic Development Authority adopt the revisions to the tax increment
finance policy was presented.
Motion/Second: Carlson/Walther
Motion Carried 6 ayes 0 nays
B. Mermaid Hotel and Banquet Center TIF Application
Economic Development Coordinator Parrish outlined the proposed project and the nature of
the nature of the TIF request. After discussing the proposed request, a motion
recommending the Economic Development Authority give preliminary approval of the
Mermaid's application for tax increment finance assistance was introduced:
Motion/Second: Field/Carlson
Motion Carried 6 ayes 0 nays
C. Business Retention Visits
After discussing the various facets of conducting business retention visits, the Commission
decided to conduct visits after regularly scheduled meetings. To the extent possible, it was
determined that the visits should be prioritized based current city issues and concerns
expressed by businesses.
8. Adjournment
There being no further business before the Commission, this meeting of the Economic
Development Commission adjourned at 8:30 a.m.
Respectfully Submitted,
Aaron Parrish
Economic Development Coordinator
N:\DATA\GROUPS\ECONDEV\EDC\Minutcs\MinOO\05-25-OO.doe
City of Mounds View Staff
To:
From:
Item Title/Subject:
Date of Report:
Background:
Item No. 5H
Meeting Date: June 22nd 2000
Type of Business: IN
EB: EDC Business
IN: Informational Item
Economic Development Commission
Aaron Parrish, Economic Development Coordinator
Charter Commission Resolution 2000-09
June 15, 2000
The City of Mounds View is governed under a charter form of government. Accordingly, the Charter has
provisions relating to form of government, council procedure, elections; initiative, referendum, and recall;
city administration; taxation and finance; public improvements and special assessments; and a variety of
other provisions.
On May 31", 2000 the Charter Commission passed Resolution No. 2000-09 which adds section 7.13 to
Chapter 7: Taxation and Finances of the Mounds View Charter. The resolution has been included for
your information.
Charter Commission Resolution No. 2000-09 essentially places limits the city's ability to utilize tax
increment financing, and attempts to limit other business incentives. However, the emphasis is on tax
increment finance. In essence, the city would not be able use TIF if the captured tax capacity for
Mounds View's TIF districts (the amount of TIF dollars generated) was more than 10% of the city's
total tax capacity.
For taxes payable in 1998, 1999, and 2000, the percentage is 22 percent. The following table is
illustrative:
PAY YEAR
TOTAL TAX CAPACITY
TIF TAX CAPACITY
PERCENTAGE OF TIF TO TOTAL
TAX CAPACITY
1998
$7,065,449
$1,533,128
22%
1999
$6,933,389
$1,502,950
22%
2000
$7,403,151
$1,645,539
22%
From a procedural perspective, the Council will review and then subsequently consider the amendment. If
the Council votes unanimously to approve the amendment, it will be adopted and incorporated into the
Charter. If it is not approved unanimously, it will then be placed before the residents of Mounds View for
consideration during a general or special election.
Necessary Actions:
None. This has been provided for informational purposes.
Aaron Parrish, Economic Development Coordinator
(763) 717-4029
RESOLUTION NO. 2000-09
MOUNDS VIEW
CHARTER COMMISSION
RESOLUTION RECOMMENDING CITY COUNCIL APPROVAL BY
ORDINANCE; AN ORDINANCE AMENDING Chapter 7
OF THE MOUNDS VIEW CITY CHARTER.
The Mounds View Charter Commission acting under Minnesota Statutes 410.12
Subdivision 7, hereby recommends amending the Charter of the City of Mounds View
under Chapter 7 Section 7.13 Subdivisions 1,2, & 3 and is amended by the addition of the
bold and underlined language to read as follows;
Section 7.13 Tax Increment Financing, Economic Subsidies & Tax Abatement
Subdivision 2. The City Council of the City of Mounds View, its Economic
any new tax abatements,if such approval would cause the aggregate amount of captured
net tax capacity for all Tax Increment Financing Districts located in the City of Mounds
View to exceed 10 percent of the total tax capacity of the city.
BE IT RESOLVED that the Charter Commission directs the commission's chairperson to
forward this resolution to the Clerk -Administrator for presentation to the City Council
under Minnesota Statutes 410.12 Subdivision 7. If the City Council does not adopt this
resolution by an unanimous vote of all its members the Charter Commission hereby
requests that the above amendment be placed on the ballot at the next general election in
November 2000, under Minnesota Statues 410.12 Subdivision 1,
Adopted this 31st day of May, 2000
rission Chair
mmission Officer
Attest:
Item No. 613
Meeting Date: June 22nd, 2000
Type of Business: EB
EB: EDC Business
IN: Informational Item
Citv of Mounds View Staff Re
To: Economic Development Commission
From: Aaron Parrish, Economic Development Coordinator
Item Title/Subject: Tax Abatement Finance Policy
Date of Report: June 14, 2000
Background:
At the March 13th meeting of the Economic Development Authority, the Authority gave direction to the
EDC to examine the potential use of tax abatement in Mounds View, and to develop a tax abatement
policy. The proceeding paragraphs provide a detailed overview of what is commonly referred to as tax
abatement.
Realizing the need for a viable alternative to tax increment finance, the 1997 Minnesota Legislature
and Governor adopted tax abatement legislation into law. "The laws goal was to give each taxing
jurisdiction a voice in economic and redevelopment efforts, limit the state's financial liability through the
school finance system, and enable new business retention efforts" (Bubul et al 3). While tax
abatements have not been widely adopted at this point, it is anticipated the use of this development
finance tool will increase in the future as TIF becomes more restrictive.
Operational Considerations
It must be noted that "Abatement, in the context of Minnesota's abatement law, is not an abatement in
the literal sense of the word. In reality, what Minnesota law contemplates is a tax rebate rather than an
exemption from paving taxes. When a jurisdiction enters into an abatement agreement, the taxpayer
pays taxes on the abated property to the county in the same manner it would if the taxes were not
being abated. The county then pays the abatement to the general fund of the political subdivision"
(Bubul et al 3). Accordingly, the term tax abatement is somewhat misleading.
Tax increment finance allows municipalities and local economic development authorities to capture the
tax base from the three primary taxing jurisdictions. As previously indicated, tax abatements are
granted by particular political subdivisions. A political subdivision may grant an abatement if:
" (a) it expects the benefits to the political subdivision of the proposed abatement agreement to at least
equal the costs to the political subdivision of the proposed agreement; and
(b) it finds that doing so is in the public interest because it will:
(1) increase or preserve tax base;
(2) provide employment opportunities in the political subdivision;
(3) provide or help acquire or construct public facilities;
(4) help redevelop or renew blighted areas;
(5) help provide access to services for residents of the political subdivision; or
City of Mounds View Staff Report
June 14, 2000
Page 2
(6) finance or provide public infrastructure" (Minnesota Statutes §469.1813).
The public purposes highlighted above are primarily oriented toward economic development objectives
such redeveloping blighted areas, preserving the tax base, and providing employment opportunities.
However, abatement can also be used for public infrastructure and facilities. Therefore, abatement
may be one of the finance options for the anticipated improvements to Highway 10, or other public
infrastructure projects.
While the term of the TIF assistance varies with the type of district, abatements have a duration limit of
10 years if combined with another taxing jurisdiction, or 15 years if just one jurisdiction is involved "
(Minnesota Statutes §469.1813 subd. 6). Finally, "In any year, the total amount of property taxes
abated by a political subdivision under this section may not exceed (1) five percent of the current levy,
or (2) $100,000, whichever is greater'" (Minnesota Statutes §469.1813 subd. 9)
Tax Abatement and Tax Increment Finance: A Comparison
There are both and advantages and disadvantages associated with the use of tax abatement and tax
increment finance. There are several reasons a development authority would consider granting a tax
abatement as opposed to TIF assistance. First, granting an abatement is less time and resource
intensive. Second, there are less restrictions on how and when a development authority can use
abatement proceeds. Third, there are no specific reporting requirements associated with abatement.
Conversely, a considerable amount of time is spent responding to information requests from the Office
of the State Auditor and completing "TIF Authority" and "TIF Municipality" reports for each TIF district.
Fourth, abatements are less costly to establish compared to tax increment (Bubul et al 13).
Finally, tax abatements are not geographically restricted to districts like its TIF counterpart. In most
instances, an abatement can be granted anywhere within the political subdivision's jurisdiction. In
sum, abatement's flexibility allows taxing jurisdictions to better address smaller development and
particularly redevelopment concerns that TIF may not be considered for.
When contrasted with abatement, there are also some obvious advantages to the use of tax increment
finance. While abatement is left to the respective taxing jurisdictions, TIF allows a development
authority to capture the tax base of each political subdivision. As a result, in most instances TIF will
result in greater funding potential than abatement. However, it is possible to obtain greater funding
with abatement if all taxing jurisdictions participate. Unfortunately, there are some structural
disincentives for a school district to not grant tax abatements.
Financial Considerations
There are several financial issues that must be considered when using tax abatement. Like TIF,
abatement revenue can be paid to a developer or business owner in either a pay-as-you-go
arrangement or with up -front financing. Pay-as-you-go financing is paid to the recipient on a semi-
annual basis usually three months after taxes have been collected. In most arrangements, the political
subdivision will pay the recipient a percentage of the captured abatement minus an agreed upon
percentage for administration. For example, a typical agreement would be structured in the following
manner: 95% of property taxes paid would be disbursed to the recipient while 5% would be retained by
the taxing jurisdiction for administrative purposes. The above represents the maximum abatement
that a developer/business might hope to receive. In reality, the development authority or other taxing
N:\DATA\GROUPS\ECONDEV\EDC\Staff Reports\Staff00\06-6A.doc
City of Mounds View Staff Report
June 14, 2000
Page 3
jurisdiction has the option of specifying the percentage of taxes that could be pledged for a particular
project. The political subdivision also has discretion in the number of years that a project could be
funded (Bubul et al 11).
Pay-as-you-go financing is the preferred method of finance due to the limited liability incurred by the
grantor. However, there are some projects that will not be viable without an up front injection of equity.
In this instance, it may be necessary to issue bonds on behalf of the project. (Bubul et al 11)
Economic development is a function that is commonly associated with local government. However,
the property taxes collected at the municipal level are typically the smallest of the three primary taxing
jurisdictions. Thus, the ability to generate revenue based simply on a municipal abatement is rather
limited. For example, the overall tax rate for property located in the City of Mounds View is 124.556
percent. Of that 124.556%, 25.551 % can be attributed to the city, or approximately 20.5% of the total
property tax liability for a Mounds View taxpayer. Comparatively speaking, Ramsey County and the
Mounds View Public School District account for approximately 79.5% of the total. Needless to say,
this places a significant constraint on a city's ability to generate abatement revenue individually. The
following calculations are illustrative:
2000 Abatement Calculation:
City of Mounds View Only
Total Tax Capacity ($1,000,000 Commercial Project): $40,481
City Tax Rate: 25.551%
Percent Abated: 95%
2000 Abatement Payment: $9,826.14
5 Year Revenue Projection: $49,130.70
2000 Abatement Calculation:
City of Mounds View & Ramsey County
Total Tax Capacity ($1,000,000 Commercial Project):
$40,481
City Tax Rate:
25.551%
County Tax Rate
44.839%
Percent Abated:
95%
2000 Abatement Payment:
$27,069.85
5 Year Revenue Projection:
$135,349.25
N:\DATA\GROUPS\ECONDEV\EDC\Staff Repoits\Staff00\06-6A.doc
City of Mounds View Staff Report
June 14, 2000
Page 4
2000 Abatement Calculation:
City of Mounds View/Ramsey County/ISD #621
Total Tax Capacity ($1,000,000 Commercial Project):
$40,481
City Tax Rate:
25.551%
County Tax Rate
44.839%
ISD #621 Tax Rate
46.421%
Percent Abated:
95%
2000 Abatement Payment:
$44,921.95
5 Year Revenue Projection:
$224,609.75
As one can see, intergovernmental cooperation will be a necessary component for the effective use of
tax abatement. At this point, a preliminary letter has been sent to the school district and county
requesting their perspective on the use of abatement. However, we have not received a response at
this point. Beyond the general parameters outlined in the legislation, the attached "Tax Abatement
Finance Policy & Application" further refines the potential use of abatement in Mounds View.
1. Bubul, Steve, Mike LaFave, Mark Ruff, and Joel Sutter. "'How to Succeed at Business Without
Really Trying' aka Abatement.„ TIF on Stage: Comedy Tragedy Mystery' Tax Increment Financing
2000. Ehlers and Associates, 2000.
Necessary Actions:
Evaluate and make recommendations regarding the attached Tax Abatement Finance Policy
Aaron Parrish, Economic Development Coordinator
(763) 717-4029
N:\DATA\GROUPS\ECONDEV\EDC\Staff Reports\StaffDO\06-6A.doc
City of Mounds View, Minnesota
Tax Abatement Finance Policy & Application
Adopted: ,2000
Table of Contents
I. Policy Purpose 3
II. Difference Between Tax Abatement & TIF 3
III.
Objectives of Tax Abatement Financing
3
IV.
Policies for the Use of Tax Abatement
4
V.
Project Qualifications
5
VI.
Subsidy Agreement & Reporting Requirements
6
VII.
Application Process for Tax Abatement Financing
7
VIII.
Attachment A: Application
8
DX.
Attachment B: Deposit Agreement
12
X. Attachment C: Application Review Worksheet 15
XI. Attachment D: Sample But For Analysis 17
2
I. POLICY PURPOSE
The purpose of this policy is to establish the Mounds View Economic
Development Authority's, hereafter referred to as the EDA, position relating to
the use of tax abatement financing for private development above and beyond
the requirements and limitations set forth by State Law. This policy shall be
used as a guide in the processing and review of applications requesting tax
abatement. The fundamental purpose of tax abatement in Mounds View is to
encourage desirable development or redevelopment that would not otherwise
occur but for the assistance provided.
The Mounds View EDA is granted the power to utilize tax abatement financing
by the Minnesota Tax Abatement Act, as amended. It is the intent of the EDA to
provide the minimum tax abatement, as well as other incentives, at the shortest
term required for the project to proceed. The EDA reserves the right to approve
or reject projects on a case by case basis, taking into consideration established
policies, project criteria, and demand on city services in relation to the potential
benefits from the project. Meeting policy criteria does not guarantee the award
of tax abatement to the project. Approval or denial of one project is not intended
to set precedent for approval or denial of another project.
II. DIFFERENCE BETWEEN TAX ABATEMENT & TIF
The primary difference between Tax Abatement Financing and Tax Increment
Financing (TIF) is the way in which the dollars are awarded to the project.
When TIF is awarded to a project by the EDA, the other political subdivisions
(the school district and the county) are required to contribute their portion of the
increased taxes to the project. Conversely, when tax abatement financing is
requested, each political subdivision has the option of granting its portion of the
increased taxes to the project. Depending on the position of the respective taxing
J urisdictions, the dollars generated by tax abatement have the potential to be
less than the dollars generated with TIF.
III. OBJECTIVES OF TAX ABATEMENT FINANCING
As a matter of adopted policy, the EDA will consider using tax abatement
financing to assist private development projects to achieve one or more of the
following objectives:
• To enhance and diversify the City of Mounds View's economic base.
`< 3
• To encourage the revitalization and redevelopment of the Highway 10
Corridor.
• To encourage additional unsubsidized private development in the area,
either directly or indirectly through "spin off' development.
• To facilitate the development process and to achieve development on sites
which would not be developed without assistance.
• To remove blight and/or encourage redevelopment of commercial and
industrial areas in the city that result in high quality redevelopment and
private reinvestment.
• To encourage the removal of blight or the rehabilitation of a high profile
or priority site.
• To offset increased costs of redevelopment (i.e. contaminated site clean
up, demolition expenses etc...) over and above the costs normally
incurred in development.
• To increase the tax base.
• To create housing opportunities.
• To retain local jobs and/or increase the number and diversity of jobs that
offer stable employment and/or attractive wages and benefits.
• To contribute to the implementation of other public policies, as adopted
by the EDA from time to time, such as the promotion of quality
architectural design, enhanced recreational opportunities, and decreasing
capital and/or operating costs of local government.
IV. POLICIES FOR THE USE OF TAX ABATEMENT
a. Tax abatement assistance will be provided to the developer upon
receipt of taxes by the EDA, otherwise referred to as the pay-as-you-go
method. Requests for up front financing will be considered on a case
by case basis.
b. Any developer receiving a tax abatement shall provide a minimum of
twenty percent (20%) cash equity investment in the project.
4
c. Tax abatement will not be used in circumstances where land and/or
property price is in excess of fair market value.
d. A market demand shall be demonstrated for the proposed project.
e. Tax abatement will not be utilized in cases where it would create an
unfair and significant competitive financial advantage over other
projects in the area.
f. Tax abatement shall not be used for projects that would place
extraordinary demands on city services or for projects that would
generate significant environmental impacts.
g. The developer must provide adequate financial guarantees to ensure
completion of the project, including, but not limited to: assessment
agreements, letters of credit, personal guaranties, and additional
documentation as necessary.
h. The developer shall adequately demonstrate, to the EDAs sole
satisfaction, an ability to complete the proposed project based on past
development experience, general reputation, and credit history, among
other factors, including the size and scope of the proposed project.
i. For the purposes of underwriting the proposal, the developer shall
provide any requested market, financial, environmental, or other data
requested by the EDA or its consultants.
V. PROJECT QUALIFICATIONS
All tax abatement projects considered by the Mounds View EDA must meet
each of the following requirements:
a. The project shall meet at least one of the objectives set forth in section
III of this document.
b. The use of tax abatement will be limited to:
• Industrial development, expansion, redevelopment, or
rehabilitation; or
• Commercial redevelopment or rehabilitation; or
• Office or research facilities;
• Housing and infrastructure.
c. The developer shall demonstrate that the project is not financially
feasible but -for the tax abatement financing provided.
d. The project shall comply with all provisions set forth in Minnesota's
Tax Abatement Law, statues 469.1812 to 469.1815, as amended.
e. The project must be consistent with the City's Comprehensive Plan
and Zoning Ordinances.
VI. SUBSIDY AGREEMENT & REPORTING REQUIRMENTS
All developers/businesses receiving a tax abatement, or other assistance in
excess of $100,0000 from the Mounds View EDA shall be subject to the
provisions and requirements set forth by state statute 116J.993 and
summarized below.
All developers/businesses receiving tax abatement assistance shall enter into
a subsidy agreement with the Mounds View EDA that identifies: the reason
for the subsidy, the public purpose served by the subsidy, and the goals for
the subsidy, as well as other criteria set forth by statute 116J.993.
The developer/business shall file a report annually for two years after the
date the benefit is received or until all goals set forth in the application and
business subsidy agreement have been meet, whichever is later. Reports
shall be completed using the format drafted by the State of Minnesota and
shall be filed with the Mounds View EDA no later than March 1 of each year
for the previous calendar year. Businesses fulfilling job creation
requirements must file a report to that effect with the city within 30 days of
meeting the requirements.
The developertbusiness owner shall maintain and operate its facility at the
site where the tax abatement and/or other assistance is used for a period of
five years after the benefit is received.
In addition to attaining or exceeding the jobs and wages goals set forth in
the Subsidy Agreement, the borrower shall achieve at least one of the
objectives set forth in Section III of this document.
Developers / Businesses failing to comply with the above provisions will be
subject to fines, repayment requirements, and be deemed ineligible by the
State to receive any loans or grants from public entities for a period of five
years. See the City's Business Subsidy Policy for additional information.
6
VII. APPLICATION PROCESS FOR TAX ABATEMENT FINANCING
A. MOUNDS VIEW EDA
1. Applicant submits the completed application along with all application
fees.
2. City staff reviews the application and completes the Application Review
Worksheet.
3. Results of the Worksheet are submitted to the appropriate governing
authorities for preliminary approval of the proposal.
4. If preliminary approval is granted, all necessary notices, resolutions and
certificates are prepared by City staff and/or consultants.
5. If necessary, public hearing(s) on the proposed project are held.
6. The EDA grants final approval or denial of the proposal.
B. APPLICATIONS TO OTHER POLITICAL SUBDIVISIONS
It is recommended that applicants intending to seek tax abatement
financing from Ramsey County and/or School District 621 make their
applications to those bodies concurrent with their application to the Mounds
View EDA. For more information on applying for a tax abatement financing
from Ramsey County and/or School District 621, contact:
Judy Karon
Director, Community and Economic Development
Ramsey County
651-266-8006
Dr. Jan Witthuhn
Superintendent
Mounds View School District #621
651-639-6001
7
1
VIII. ATTACHMENT A: APPLICATION FOR TAX ABATEMENT FINANCING
A. APPLICANT INFORMATION
Name of Corporation/Partnership
Address
Primary Contact
Address
Phone Fax
Email
On a separate sheet, please provide the following:
• Brief description of the corporation/partnership's business, including
history, principal product or service, etc... Attach as Exhibit A.
• Brief description of the proposed project. Attach as Exhibit B.
• List names of officers and shareholders/partners with more than five
percent (5%) interest in the corporation/partnership. Attach as Exhibit C.
• A but -for analysis and narrative. Attach as Exhibit D.
Attorney Name
Address
Phone Fax Email
Accountant Name
Address
Phone Fax Email
Contractor Name
Address
Phone Fax Email
Engineer Name
Architect Name
8
Email
Email
B. PROJECT INFORMATION
1. The project will be:
Vacant Land Development
_Commercial Redevelopment:
_Industrial Redevelopment:
_Housing
_New Construction
—Expansion
_New Construction
—Expansion
_New Construction
_ Rehabilitation
New Construction
Rehabilitation
2. In addition to the Mounds View EDA, applicant is requesting abatement
funds from: Ramsey County School District 621
3. The project will be: _Owner Occupied _Leased Space
If leased space, please attach a list names and addresses of future lessees and indicate
the status of commitments or lease agreements. Attach as Exhibit E.
4. Project Address
• Include Legal Description and PID Number. Attach as Exhibit F
5. Site Plan Attached:
Yes _ No
6. Total Abatement Requested: $ over years.
City Abatement Annual $ Total $
County Abatement: Annual $ Total $
ISD 621 Abatement: Annual $ Total $
7. Current Real Estate Taxes on Project Site: $
Estimated Real Estate Taxes upon Completion: $
8. Construction Start Date:
Construction Completion Date:
If Phased Project: Year % Completed
Year % Completed
C. PUBLIC PURPOSE
It is the policy of the Mounds View EDA that the use of tax abatement
financing should result in a benefit to the public. Please indicate how this
project will serve a public purpose.
_Industrial development resulting in additional private investment
_Enhancement and/or diversification of the city's economic base.
_Removal of blight.
61
_Provide housing opportunities
_Expand the tax base
_Rehabilitation of a high profile or priority site.
Creation/Retention:
Number of existing jobs
_Job
Number of jobs created by project
Average hourly wage of jobs created
Other:
D. SOURCES & USES
SOURCES NAME
AMOUNT
Bank Loan
$
Other Private Funds
$
Equity
$
Fed Grant/Loan
$
State Grant/Loan
$
Tax Abatement
$
ID Bonds
$
Other
$
TOTAL
$
r USES
AMOUNT
Land Acquisition
$
Site Development
$
Construction
$
Machinery & Equipment
$
Architectural & Engineering Fees
$
Legal Fees
$
Interest During Construction
$
Debt Service Reserve
$
Contingencies
$
Other
$
TOTAL
$
' 10
E. ADDITIONAL DOCUMENTATION AND CHECKLIST
Applicants will also be required to provide the following documentation.
A) Written business plan, including a description of the business,
ownership/management, date established, products and services, and
future plans
B) Financial Statements for Past Three Years
Profit & Loss Statement
Balance Sheet
C) Current Financial Statements
Profit & Loss Statement to Date
Balance Sheet to Date
D) Two Year Projections
E) Personal Financial Statements of all Major Shareholders if "Up Front"
Financing is Requested
Profit & Loss
Current Tax Return
F) Letter of Commitment from Applicant Pledging to Complete During
the Proposed Project Duration
G) Application fee of $1000 (To be returned upon project completion)
H) Additional information that will be helpful in evaluating your
application
Note: All Major shareholders will be required to sign personal guarantees if up front
financing of the project is required.
The undersigned certifies that all information provided in this application is true and
correct to the best of the undersigned's knowledge. The undersigned authorizes the
Mounds View Economic Development Authority to check credit references and verify
financial and other information. The undersigned also agrees to provide any additional
information as may be requested by the Authority after the filing of this application.
Applicant
IX. Attachment B: Deposit Agreement
Deposit Agreement for Evaluation of Tax Abatement Finance
Assistance
By and Between the Mounds View Economic Development
Authority and (The Applicant)
This agreement made as of the _ day of 2000 by and between
the MOUNDS VIEW ECONOMIC DEVELOPMENT AUTHORITY, a body
corporate and politic, organized and existing under the laws of the State of
Minnesota (the "EDA") and (The Applicant).
WITNESSETH:
WHEREAS, the EDA has the powers provided in Minnesota Statutes,
Sections 469.1812 to 469.1815, as amended (collectively, the "Act"); and
WHEREAS, pursuant to and in furtherance of the objectives of the Act, the
EDA has undertaken a program to promote development and redevelopment of
certain land within the City of Mounds View
NOW THEREFORE, in consideration of a mutual covenants made herein and
for other good and valuable consideration set forth in the Agreement, the parties
agree as follows:
Section 1. (The Applicant) agrees to provide the EDA with a deposit of
$1,000 for the EDA's consultants to investigate the feasibility of providing Tax
Abatement Financing assistance to (The Applicant) for the redevelopment of the
(the "Property"). If the EDA incurs additional expenses directly related to the
feasibility of providing Tax Abatement Assistance to (The Applicant) beyond the
$1,000, prior to the execution of the Developer's Agreement, the EDA shall notify
(The Applicant) in writing and (The Applicant) will be required to deposit additional
funds as a condition of the EDA entering into any such Development Agreement.
Section 2. If the project is approved and (The Applicant) proceeds with the
project, the EDA shall reimburse (The Applicant's) deposit to the extent permissible
under applicable statute including statues 469.1812 to 469.1815, as amended. If
(The Applicant) does not proceed with the redevelopment of the Property due to the
decision of either the EDA or (The Applicant), the EDA shall reimburse the
applicant for the unused portion of the deposit.
F 12
Section 3. Nothing contained in this agreement shall in any way obligate
either party.to proceed with the redevelopment of the Property or otherwise enter
into a Development Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
MOUNDS VIEW ECONOMIC
DEVELOPMENT AUTHORITY
Im
:
STATE OF MINNESOTA)
) SS
COUNTY OF )
Dan Coughlin
ITS PRESIDENT
Michael Ulrich
ITS EXECUTIVE DIRECTOR
The foregoing instrument was acknowledged before me on this _ day of
2000, by Dan Coughlin and Michael Ulrich, the President and
Executive Director respectively of the Mounds View Economic Development
Authority named in the foregoing instrument.
Notary Public
13
STATE OF MINNESOTA)
) SS
COUNTY OF )
day of
(The Applicant)
C
ITS:
The foregoing instrument was acknowledged before me on this
, 2000, by
the
of
(The Applicant) named in the foregoing instrument.
Notary Public
14
X. ATTACHMENT C: APPLICATION REVIEW WORKSHEET
TO BE COMPLETED BY CITY STAFF
1. The project meets the criteria set forth in Section V of the Tax
Abatement Financing policy.
a) Meets at least one of the objectives in Section III.
b) Demonstrates need for TAF with the but -for analysis.
c) Consistent with all city plans and ordinances.
d) Conforms with the criteria defined in Section V.
2. Ratio of Private to Public Investment in Project: Points:
$ Private investment 5:1
5
$ Public Investment 4:1
4
Ratio Private: Public Financing 3:1
3
2:1
2
Less than 2:1
1
3. Job Creation in the City of Mounds View: Points:
Number of net new jobs as a result of the project. 25+
5
Number of existing/retained jobs divided by 10. 20+
4
Total 15+
3
10+
2
Less than 10
1
4. Ratio of TAF to new jobs created: Points:_
$ TAF request $8,000 or less
5
Number of new jobs created $10,000 or less
4
$ of TAF per new job created $12,000 or less
3
$15,000 or less
2
Over $15,000
1
5. Wage Level of jobs created: Points:_
Average hourly wage Over $21/ hour 5
of jobs created: $18-21/hour 4
$14-17 / hour 3
$10-13 / hour 2
Under $10 / hour 1
6. Project size: Points:
The project will result in the construction 30,000+ 5
of net square feet 20,000+ 4
10,000+ 3
5,000+ 2
5,000 or less 1
15
7. Type of Project:
100% Owner Occupied
Mix Owner Occupied & Investment
Investment Property
8. Use:
Industrial
Office
Warehouse/Distribution
Commercial
Housing
9. The project will pay annual
property taxes in the first fully
assessed year of $
Points: -
5
4
3
Points•_
5
5
4
3
3
Points•_
25,000+
5
15,000+
4
10,000+
3
5,000+
2
Under $5,000
1
10. Likelihood that the project will result in Points:_
unsubsidized, spin-off development. High 5
Moderate 3
Low 1
Sub - Total Points: of a possible 45 points.
9. Bonus Points
Bonus Points:
The project will be 100% pay-as-you-go TAF. 3 points
The project contributes to Highway 10 Redevelopment 3 points
Total Points:
Overall project analysis: High 45-38 points
Moderate 37-29 points
Low 28-20 points
Not Eligible 19-0 points
E[:
XI. SAMPLE BUT -FOR ANALYSIS
N:\DATA\GROUPS\ECONDEV\Tax Abatement\Abatement Policy.DOC
17
WITH NO
WITH
TAX ABATEMENT FINANCING
TAX ABATEMENT FINANCING
SOURCES AND USES
SOURCES AND USES
SOURCES
SOURCES
Mortgage
9,600,000
8,667,000
Equity
2,400,000
2,400,00
Tax Abatement Financing
0
933,000
12,000,000
12,000,000
TOTAL SOURCES
USES
USES
Land
1,500,000
1,500,000
Site Work
300,000
300,000
Soil Correction
468,000
468,000
Demolition
100,000
100,000
Relocation
65,000
65,000
Subtotal Land Costs
2,433,000
2,433,000
Construction
6,750,000
6,750,000
Finish Manufacturing
250,000
250,000
Subtotal Construction Costs
7,000,000
7,000,000
Soft Costs
350,000
350,000
Taxes
35,000
35,000
Finance Fees
850,000
850,000
Project Manager
542,000
542,000
Developer Fee
540,000
540,000
Contingency
250,000
250,000
Subtotal Soft Costs
2,567,000
2,567,000
TOTAL USES
12,000,000
12,000,000
Income Statement
Income Statement
Sq. Ft. Per Sq. Ft.
Sq. Ft. Per Sq. Ft.
Rent -Space 1
100,000 $8.00
800,000
100,000 $8.00
800,000
Rent -Space 2
25,000 $8.50
212,500
25,000 $8.50
212,500
Rent -Space 3
25,000 $9.00
225,000
25,000 $9.00
225,000
Other
0 $0.00
0
0 $0.00
0
1,237, 500
1,237,500
Mortgage
20 Term
1,051,646
20 Term
949,439
9.00% Interest
9.00% Interest
9,600,000 Principal
8,667,000 Principal
Net Income
185,854
288,061
7.74°/
12.00%
Total Return on Equity
N:\DATA\GROUPS\ECONDEV\Tax Abatement\Abatement Policy.DOC
17