Loading...
HomeMy WebLinkAbout07-21-1994 CITY OF MOUNDS VIEW ECONOMIC DEVELOPMENT COMMISSION JULY 21, 1994 6:30 P.M. AGENDA SESSION 1. Introduction of EDC members 2. Economic Development Commission Articles 3. EDC Requirements: o Designation of Regular Meeting Date and Time • o Selection of Chairperson, Vice Chairperson and Secretary • El Establishment of EDC Mission, Bylaws and 1994 Work Plan 4. Other E Tax Increment Financing Basics • ORDINANCE NO. 546 • CITY OF MOUNDS VIEW COUNTY OF RAMSEY STATE OF MINNESOTA AN ORDINANCE AMENDING THE MOUNDS VIEW MUNICIPAL CODE, CHAPTER 408, ENTITLED "ECONOMIC DEVELOPMENT COMMISSION" The City Council of the City of Mounds View does hereby ordain: SECTION I. City of Mounds View Municipal Code. Chapter 408, Section 408.03, subdivision 1 is amended as follows: The Commission shall be composed of seven (7) equal voting members, including three business representatives and four residents. appointed by the Authority. President with the approval of the Authority Board of Commissioners. Members shall have diverse qualifications with practical experience consisting of, not limited to, but including one of the following areas - economics, finance, accounting, real estate, social services and marketing. For the purpose of initiating the "Commission'. the terms of all members shall expire December 31 . 1994. Beginning January 1995. three members shall serve a one year term. two members shall serve two year terms and two members shall serve three year terms. Thereafter, members shall serve three year staggered terms, with terms expiring December 31 of each year. At least two of these terms, but not more than three terms shall • expire each year. The appointees shall be duly sworn and take office at the first regular meeting of the Commission in the month of January each year. Both original and . successive appointees shall hold their offices until their successors are appointed and qualified(1988 Code, 32.03). SECTION II. This ordinance shall take effect thirty day after the date of its publication. Read Oy the City Council of the City of Mcunds View this 11th day of July, 1994. Read and passed by the City Council of the City of Mounds View this day of ATTEST: Mayor (SEAL) City Administrator 41) APPROVED AS TO FORM: City Attorney 408.01 408.05 • CHAPTER 408 ECONOMIC DEVELOPMENT COMMISSION 408.01 Establishment.The Economic Development Commission is hereby established. The Economic Development Commission is referred to herein as the "Commission". 408.02 Purpose. The Commission shall serve as an Advisory Commission to the Economic Development Authority, hereinafter the "Authority", on matters relating to fostering a positive economic climate, encouraging economic development, and enhancing the tax base of the City. The Commission shall also make recommendations to the Authority regarding retention and expansion of existing businesses, attraction of desirable new businesses, redevelopment and rehabilitation opportunities, and other appropriate economic development strategies. 408.03 Composition. Subdivision 1. Appointed Members, Qualification of Members. Terms of Office. The Commission shall be composed of seven(7) equal voting members, including three • e business representatives and four residents, appointed by the Authority President with thapproval of the Authority Board of Commissioners. Members shall have diverse qualifications with practical experience consisting of, not limited to, but including one of the following areas - economics, finance, accounting, real estate, social services and marketing. Members shall serve three year staggered terms, with terms expiring December 31 of each year. At least two of these terms, but not more than three terms shall expire each year. The appointees shall be duly sworn and take office at the first regular meeting of the Commission in the month of January each year. Both original and successive appointees shall hold their offices until their successors are appointed and qualified. (1988 Code, 32.03) Subdivision 2 Designated-Members. In-addition-to-appointed-membership—one non-voting member shall be designated by the Authority to serve as liaison to the Commission.' The term of the appointment shall ordinarily be for one year, except that they will terminate with the office from which the non-voting appointment is derived. 408.04 Conflict of Interest No person shall be appointed with private or - personal interest likely to conflict with the general public interest. If any person appointed shall find that his/her private or personal interests are involved in any matter coming before the Commission, he/she shall disqualify him/herself from taking part in action on the matter; alternatively, he/she may be disqualified by a two-thirds majority vote of the Commissioners in attendance. III408.05 Compensation. Members of the Commission shall serve without compensation. City of Mounds View 408.06 408.07 408.06 Vacancies, Subdivision 1. Termination of Appointment.Any Commission member desiring to terminate his/her appointment to the Commissioner before the expiration of his/her term shall give written notification to the Commission Chairperson of his/her intentions. It should be the duty of the Chairperson of the Commission to notify the Authority promptly of any vacancies. The Authority President, with approval of a majority of the Authority Board of Commissioners, shall appoint a new member from applications received for the unfulfilled portion of the term. Subdivision 2. Removal from Office.Any member of the Commission may be removed from office for just cause and on written charges by at least four-fifths of the entire Authority. Such member may be entitled to a public hearing before such a vote is taken. An appointed member may also be removed by the Authority for non-attendance at Commission meetings if a Commissioner is absent from five regularly scheduled meetings per year or from three consecutive meetings, without the consent of the Commission. 408.07 Organization. Meetings. Subdivision 1. Organization. At the first regular meeting of the year, the Commission shall appoint a chairperson from among its voting members. This appointment shall be subject to Authority approval and shall consist of a one year term. The position of Chair shall rotate among members, with no Commissioner serving in that capacity for more than two consecutive terms. The Commission shall also elect a vice-chair from among its appointed • members for a term of one year. The Commission may create and fill such other offices from its members as it may determine to transact Commission business. Subdivision 2. Regular Meetings. The Commission shall hold at least one regular meeting each month at a time which the Commission shall fix by resolution. Subdivision 3. Special Meetings. Special meetings may be called by the Chairperson or by any two members of the Commission by a written notice filed with the Clerk- Administrator who then shall notify all members of the Commission of the time and date of the special meeting, at least three days before the meeting date. Subdivision 4. Quorum. A majority of the appointed voting Commission members shall constitute a quorum. Subdivision 5. Voting Privileges, Each of the appointed members shall have equal voting privileges. Subdivision 6. Bylaws. The Commission shall adopt bylaws for its governance and for the transaction of its business. The bylaws will be reviewed on an annual basis at the first regular meeting in February. • City of Mounds View 408.07 408.09 Subdivision 7. Records. A recording secretary shall keep a record of • attendance at Commission meetings, a record of resolutions, and votes and abstentions on each question requiring a vote. The record of the Commission shall be a public record. Subdivision 8. Report. The Authority may request an annual report from the Commission without having received consent of its content by a majority of the Commission members at a regular or special meeting of the Commission. 408.08 Expenditures. The Commission may request from the Authority such funds as may be necessary and proper for the conduct of its duties. 408.09 Duties of the Commission. In order to carry on its purpose, the Commission shall: (1) Confer with and advise the Authority on all matters concerning the industrial and commercial development and redevelopment of the City. (2) Publicize, with the consent of the Authority, the industrial and commercial advantages and opportunities of the City. (3) Collect data and information as to the type of industries and commerce best suited to the City. • (4) Survey the overall condition of the City from the standpoint of determining whether the City has a community climate for industry and to determine the general receptiveness of the City of particular types of industry. (5) Publicize information as to the general advantages of industrial and commercial development and redevelopment in a community. (6) Cooperate with all industries and businesses in the City and in the solution of any community problems which they may have, and to encourage the expansion, development and management of such industries and business so as to promote the general welfare of the City. (7) Coordinate the Economic Development activities of the various groups active in the City. (8) Recommend zoning changes and development of areas suitable for industrial and commercial development and redevelopment to the Planning Commission. • City of Mounds View 408.09 408.09 (9) Develop, compile, coordinate and publicize information such as, but not limited to the following: • a. Existing industrial and commercial concerns within the City, their addresses, types of business, number of employees and whether each serves local, regional or national markets. b. Available industrial and commercial sites including number of acres and square footage, approximate price, existing zoning and proximity to highways. c. Available buildings for industrial and commercial operations, including type of buildings, number of square feet, existing zoning and proximity to highways. d. Transportation facilities, including railroads, motor carriers, water transportation, air transportation and highway facilities that serve the area. e. Electric power available. f. Fuels available for industrial and commercial use. g. Sewage disposal facilities. h. Water supply facilities. i. Community facilities such as fire, police and educational. j. Recreational facilities. k. Going wage rate in the City for the trades, skilled and semi-skilled and white collar workers. 1. Availability of labor. m. General community attitude toward industrial and commercial expansion, development, redevelopment and attraction. n. Experience and programs of surrounding communities in regards to industrial and commercial expansion, development, redevelopment and attraction. o. Financial and technical resources available to new and existing businesses at the local, county, state and national levels for economic expansion and vitality. City of Mounds View 408.09 408.09 (10) Recommend Authority and Planning Commission policies and particular actions • in regards to industrial and commercial expansion development, redevelopment and attraction. (11) Cooperate with and use the services of the Minnesota Department of Trade and Economic Development, Minnesota Housing Finance Authority and any other organizations at the national, state, county and local levels that are deemed conducive to the overall vitality of the City. (12) The Commission shall have the power to appoint task forcesof a size and nature it may deem necessary and may enlist the aid of persons and/or organizations who are not members of the Commission. (13) The Commission shall have no power to make contracts, levy taxes, borrow money or condemn property, but shall have the full power and responsibility to investigate the necessity and recommend the taking of these and any other actions related to the industrial and commercial development and redevelopment by the Authority and all other officers of the City responsible to formulate the terms of and the procedure for taking such action. (14) Review the City's existing housing stock analysis and make recommendations to the Authority regarding mechanisms for the rehabilitation of said housing stock • City of Mounds View MOUNDS VIEW PLANNING tiNING COMMISSION • BYLAWS WS I• AL:HORI Y. These Bylaws are established in accordance with City Ordinance 32.05, Subdivision 6 D, "The Commission shall adopt bylaws for its governance and for the transaction of its business. ' There shall be no conflict between the Bylaws of this Commission and the provi- sions of the City Charter and the Municipal Code. Il• MEETINGS. The regular meetings of the Commission shall be held on the first and third Wednesday of each month as. established by resolution of the Planning Commission. Regular or agenda meetings may be added or cancelled by the chairperson or vice-chairperson. Special meetings may be added by the chairperson or vice-chairperson. A. The first Wednesday of the month shall be a regular business meeting for the purpose of making recommendations to the City Council. conducting public hearings. convening the Board of Adjust- ments and Appeals, and other official business. • Rev. -)/9":', B. The third Wednesday of the month shall be a reguiar agenda meeting for the purpose of informational review of applications for • planning consideration, drafting of reports, and for other discussion not requiring action (i.e.., vote) by the Commission. C. Meetings shall be conducted in accordance with State Open Meet- ing Laws. III. INFORMATIONAL PACKETS. Each commissioner shall receive an informational planning report for the items to be placed on the follow- ing month's regular business meeting agenda no later than the Friday preceding the agenda meeting. Each commissioner is responsible for reviewing the material within the packet prior to the regular agenda meeting. • IV. A i"1 LN`DA_NCE. Commission members shall advise the designated Staff member or chairperson of an anticipated absence from any regularly scheduled Planning Commission meeting. Any member attending less than 20 meetings per year without consent of the commission shall be deemed to have vacated the office, and such vacancy shall be filled by the City Council pursuant to Chapter 32.09 of the Municipal Code. A leave of absence may be granted by the consent of the commission. Rev. '79"; V. PROFESSIONAL CONSULTANTS. Advice from. consultation with. and/or requests for review by the Citi' Attorney. City Engineer, City Planning Agency, or other paid consultants shall be in accordance with the Municipal Code. VI. ADJOURNMENT. Meetings shall adjourn on or before 11:00 p.m. unless a two-thirds majority of the members present agree to extend the#time of adjournment. VII. MINUTES. Approved minutes shall be the official record of the Planning Commission. A. 1 The minutes shall state: 410 1. The kind of meeting, whether regular business or special and the date, time, and place. ?. Roll call of members present and whether absent mem- bers are excused or unexcused. 3. Corrections to and approval of the previous minutes and the vote taken. 4. Description of each item being discussed, case number. and name and address of the applicant. a) Summary of the request. b) Summary of any previous action. 1111 Rev. 2/93 3 c) Summary of staff review. d) Summary of statements made by the applicant. particularly concessions or agreements by the applicant. :Motion;Second a) The motion shall be quoted as accurately as possi- ble. b) The motion shall be prefaced with supportive statement; i.e., "whereas". 6. The vote on each motion (ayes, nays, and abstentions), a statement of reasons for nay votes or abstentions. and whether motion carries or fails. 7. Specific concerns addressed to the chairperson for inclu- • sion in the minutes. 8. Reports by members. 9. Date, time, place. and attendance at the preceding regu- lar agenda meetings. 10. Motion for adjournment, second, vote, and time. 11. Signature of the Staff designated member. B. All minutes shall be clearly marked to indicate either "APPROVED" or "UNAPPROVED". Each commissioner shall receive a copy of the previous regular business meeting minutes Rev. 2/93 "UNAPPROVED". Approved copies may be obtained upon request. A copy of the approved minutes shall be filed with the Clerk-Administrator. VIII. LIAISON TO COUNCIL. In the event of the absence of the Council ex- officio member, a commission member may be appointed by the chairperson to represent the Planning Commission at the next regular City Council meeting. IX. CONFLICI OF INTEREST. When a conflict of interest may exist for a commission member or members, the member(s) shall ask to be excused and step down from the commission prior to discussion on that item. X. SUPPLEMENTARY PUBLICATIONS. .x.11 commission members shall receive a copy of the Municipal Code. Chapter 40. and other chapters applicable to the work of the commission and a copy of the Municipal Comprehensive Plan as well as other materials as provided by the City Council or City Staff. These materials shall be retained by each commission member and returned to the chairperson upon the member's resignation or termination of appointment. Rev. 1/93 • 1 LA W N )-- /'1 W N k-+ /1 .A (J.). IN.)NN /'1 Q; � nC � b © . 4ac .1:: .71 dGU�Q C- 4r,rri © o CD O CD o 0 0 0 �.. = CD o 0 0 ►_. 0 ,,,, = ,.., _ ;17. ',c 0 ~a O Z c ,c C° 4 O m ▪ s'g o r. Cil n Cr o _ W �. 'd �: CrD o N 'b C7 5' �, a� ::j C� ~ -. O C7 I r. '-t CD td k 0 n CD r-. Q' C •� fra CD CmJ co N A'•-•• ` CO co O a) p nA,Na .t O ...• — 4'. fa, "' CD eD nG CL "9 `• Cl) u) ......i CCn CA Cv . CD O dn▪ Ca- ° . CD C ° • CA or° tri 'CI t••r� R. CCD CDPO Cl)�, c • m F.o ,"S �' c ,� I-I c4 n �, C �c `�° © a CCDM = 0 o Uj CD 1:11 OQ fl, C corn c CD °' ro oo- o.,cco o � �, no ° `oc = Co Cl,c . D .W CD `� r. It 't CSp0!y = CD 0 OZi O co D ,• = CC n (7O ^J SE, n = On . 0cpQ moO o....6 ~ VZOCD ~ CD 1.4�' 'CD _ � C7`O cd O Ot v'O o ti o O O Oo C r e••i-et) cnr. ' �'. c cra = o c - E• �D �D C n7 c , � x = C CD o 0 to 0 • FT; a d 0 C Cl)n0 ep Cn c' (D "� p • CA ;1 SID Sit CA CD SW o CA CD '0 0 POCI) PW. WI , p S : C C " O CD• = A, O C17 B-+' R° I� O0 Cl. P6) CD QPO ti _� n G. n O C = 0 O G co v cn r� �� v, �. � eD • .+ C cC 1.. CCDD C CD , I , UQ rprp O d5 5 Cl) OCD Cr rD .r C O '7 N ,�� V7 !D �• �' i�7 �' C O �' v, rD �' fig C• n _ vv_ • OCG N ,C `7 Q " An O ►t "+ = O `C em C CD C ►.+. CD a 74 r-r, a) 0 co A) O CD 0 On �. n CD N 0• 4 OM D CIO 7 G UQ O N C 0 .1 A� C 11) • CD 5 d• C/)• c C • ° ,-.< = ICA c0 wMCD.� 00 .o~• o C• A0 oa. • O' Co 0 C CD P 00 J C\ LA A w N r-- /1 N C1 " -P W N r-, N C CD C 7Q .-. cCn C. • C ~ C CM ~ < C n CCD C. O< -CG C n - (Tt4 A3 PO ^ N C CD C C �, 0 CD C cn Cl.. ,� CD C (�D O C CC. c��D �' C O C CD C C r. • `wCo n cr , Q LD nc• p (IQ p C ,-,• (D '�, cCpn b C ' � CDC •-t ,r-• . p CDo c- 0 cn� C CD 0,1?-." ,_,FD Q' a' `Ca0 _ JD C. CD -„ ^�- n �C D C < C— = O $y Cfc C A -s . `< CD _ t - . C. C C- - r. C (D C - -» S '--, ,. . p CD C -oC = n C = A' C 7o c 0., 00. C `< C0 ,1. ,-QOppvC C � c4CN ', CY• apIB. ~ ci CD " ca' C ''S„ CD a r CA CD OOcnCpC = p �C • C ~' oC i o CD C y ” CIQ CD , : ►.. (P c 1 COD a� UQ � C CD nci p O nCC F. a = CD O C cQ 6.4 • aPo ,!-<- � pC . = - o C- ja. oCp.) . , n . CN Co C = N � CD o ,.-..• C 'Z CA - h 02 c'' ,-,-(1' ? cn O - aC CC :n O a -•'= sOCCDfiSy C cn CM CIQ _ •, ,.., O _ o Q, C o 0 n p, (n c o --n m t= 't r) �O cn' cD ••• w C CSD p. �' —. _, •- `C •C 7C (YQ -O C r -• CCD CCD C.CD C v' x - n C < C CD p C C CSD cn C .0 C C ►r. O C C. CD cn < x CD " ,-,- VI _ O C' O :+' v Or - C/CQ ut F(M b C co --h C. 'C•s n C- • C CD ` <' 0 a, i (oD p' CIO a. o -o c o ''= -'t' o O CD C G„ C P7' cn ro C C i'S CL CD C cD �' C �C CD CC oC C C n- SC O C7 t . pO ,., n ,� C nn < CD - - C. C � r- C= - r.+ - dpC 0 -j CD C7 �. Ci CCD O ~ ^ 6' C CICQ cn C: O - 0-A CD `C (D o C. m n u C `< a' o ,-' ,,..-.7- F-+ M CD -'h CD CD CD c (D pD rJ. o.. N 9 ,-t CD m 'a't C. un C 'Y t/D (ID nO" � o � n C, o - CCD CD rCD O . Cr ' C C CC.- --hOC C(JQ O c 's 0 CD O -= r' C/o• n a CCCC. cn CaryC - CD CD o -• R C . rD C O o CN C CC• CD ., 7r r-. C C, <rO ' C.• ry cCn T C+ O C� "'�'' O H O� • c C CS' V ~ C '^'-r ' d �� O C r--' "9`i. �. d r C. CD C H `�' coCD CD -t AO > r- o o �oCi c C. c rCD� CCD o aD Cro CIO C -� v, r-. , o C cz- C� 0 C. '» C. a 9 o ''-s (PP o -I C• c4 - Cr= , ° Q. . = G G r' C G o C CIQ < N C CSD CIO < n CD C C C CM? CD �. cn �, �'•h �. CCD co C '6. 5. C C, �, n C cD <CD C cNn n O O O �D CD r'• • N N /.� O 'O rrr cn o CD cn CD . CM C v' a -. (Ci E C CIQ C O cn (71 (may+, p `< a) C rD CC OC O C t< CI~Q c op „ o C. pi CD C o N - y C7 CtQ -• < sy C C ?D• '--+ ,-. C7 . C CCD op CD o v C-., CD C CD C' _b C `- C = -'v C- C� O OI w CD < co -O co -O < s CD o C -t Cj n0 O CD r-. ,_� d (Jo C v, C co 'C cA cin C _� -ps X < a) CD CD C x C "D ?�' C CD C �n O C C C i' n SD a ,_,• O' ,.t up ro cm 7G- C C C.' CCD C '•"• CD ,•-. '••i C TAX INCREMENT FINANCING BASICS 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. 1-IRA: 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 1-IRA powers. 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 District are the specific parcels within a Project area from which tax increment will be captured. There are five general types: 11111 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. (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. Term, restrictions: May collect increment for 25 years after the date of receipt of the first increment. 1993 Change: 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. SJB64549 FIRM-2 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 20% 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) Unusual terrain, presence of hazardous substances, pollution or contaminants, or soil deficiencies for 80% of the area in the district require substantial filling, grading, removal or remedial action or other physical preparation. 1993 Change: formerly required that 70% of the area be vacant, and ha7nrdous wastes were not expressly named as a criteria; the change allows designation of a developed parcel as a soils district based on hazardous wastes. (b) the estimated costs of physical preparation (excluding costs directly related to roads) exceeds the fair market value of the land before the preparation. 1993 Change: can either meet this requirement for each parcel, or show that hazardous waste removal or remediation costs exceed $2 per square foot for the parcel. (c) an area does not qualify if it contains a wetland unless a development agreement prohibits draining, filling or alteration, or other "binding legal assurances" for preservation of the wetland are provided. (d) the proposed development must be consistent with the comprehensive municipal plan. 1993 Change: Formerly, a development agreement covering at least 50% of the area was required before the district was created. Term, Restrictions: May collect increment for 12 years after the date of approval of the TIF Plan; increment may be spent only to: acquire parcels on which improvements will occur; pay the cost of correcting the soil deficiencies (including public improvements "directly caused by the deficiencies"); and pay allocated administrative expenses. An acquired parcel may be sold for a price "no less than the cost of acquisition." 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. 5,1E64549 RM-Z -2- • 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 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. 1993 Change: 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; (4) telemarketing if that activity is the exclusive use of the property; or (5) "tourism facilities;" or space necessary for and related to the above. Exception: Cities with population 5,000 or less may finance up to 5,000 square feet of commercial or retail facilities. The 5,000 square feet is cumulative for the city as a whole. 1993 Change: 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 SSB64549 ., .:RM-2 �_ facility or nonhomestead dwelling unit that, in each case, is intended to serve primarily • individuals from outside the county. C. 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. 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 or Board 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 for" finding). 1993 Change: 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. 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 acquisition may be approved simply by resolution. Note: modifications will not trigger application of current statutes unless the boundary of the TIF District is expanded. 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. Such purposes include, generally: land acquisition; site improvements; public and on-site utilities, demolition; relocation; and administration. If the authority owns a Project, increment may be-used to finance essentially any aspect of the Project. 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 SJa64549 FIRM-2 -4- • 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.' 1993 Change: 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. 4. 1993 Change: Guaranty Fund: An authority may establish a guaranty fund to indemnify 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 April 30, 1990, no more than 25% of the increment may be • spent outside the boundaries of the TIF District (except in the case of housing districts, from which increment 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 older districts 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 reconstruction 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 re-instated 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. 1111 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 5264549 FIRM-2 -5- 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 (with certain limited exceptions); (3) binding contracts are entered with a third 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 TIF 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 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. M. 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 alternative 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. 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). • S.;B64549 .:RN-2 -6- 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°A 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 District and Economic Development Districts: the maximum penalty begins in the first year in which increment is collected. 4. "Qualified Manufacturing Districts;" these are economic development districts that: are requested for certification after June 30, 1991; provide assistance to manufacturing, research and development, or telemarketing (but not tourism facilities or warehousing); and are located in a city with a maximum population of 10,000. The aid loss is phased in with 20%percent of the maximum applied in year two, followed by an addition 20% • each year until the full penalty applies in year six. 1993 Change: the former requirement that the city be located outside a metropolitan statistical area has been eliminated. Thus, metro area cities under 10,000 population are now eligible for the phased in penalty. 5. 1993 Change — Qualified Housing District: this is a housing district for a residential rental project in which the only properties receiving 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 are generally more stringent than the income requirements otherwise applicable to a housing TIF District. There is no LGA/HACA penalty for a qualified housing district. 6. 1993 Change — Qualified Hazardous Substance Subdistrict: this is a hazardous substance subdistrict for which the municipality elects to pay at least 18% of the cost of developing and implementing the development action response plan. The 18% share must be paid by any sources of funds available other than tax increments. The election must be made at the time of certification of the district, and is irrevocable. There is no LGA/HACA penalty for a qualified hazardous substance subdistrict. 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. 1993 Change: 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 SJ364549 FIRM-2 -7- 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 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. • • 5n64549 F?RM-2 -8-