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HomeMy WebLinkAboutEDA Levy EDA Levy EDA Levy Background: Minn. Stat. 469.107 authorizes city, at the request of the EDA, to levy a tax for the benefit of the EDA. The tax must be not more than 0.01813 percent of estimated market value. The amount levied must be paid by the city treasurer to the treasurer of the authority, to be spent by the authority. statute does not expressly limit the proceeds to any particular use, but the implication is that they may be used for any activity an EDA is authorized to carry out under the EDA Act. Those uses include: • Housing and redevelopment activities under the HRA Act • Broader economic development activities. 469.107 CITY MAY LEVY TAXES FOR ECONOMIC DEVELOPMENT AUTHORITY. Subdivision 1.City tax levy. A city may, at the request of the authority, levy a tax in any year for the benefit of the authority. The tax must be not more than 0.01813 percent of estimated market value. The amount levied must be paid by the city treasurer to the treasurer of the authority,to be spent by the authority. Subd. 2.Reverse referendum. A city may increase its levy for economic development authority purposes under subdivision 1 in the following way. Its city council must first pass a resolution stating the proposed amount of levy increase. The city must then publish the resolution together with a notice of public hearing on the resolution for two successive weeks in its official newspaper or if none exists in a newspaper of general circulation in the city. The hearing must be held two to four weeks after the first publication. After the hearing, the city council may decide to take no action or may adopt a resolution authorizing the proposed increase or a lesser increase. A resolution authorizing an increase must be published in the city's official newspaper or if none exists in a newspaper of general circulation in the city. The resolution is not effective if a petition requesting a referendum on the resolution is filed with the city clerk within 30 days of publication of the resolution. The petition must be signed by voters equaling five percent of the votes cast in the city in the last general election. The election must be held at a general or special election. Notice of the election must be given in the manner required by law. The notice must state the purpose and amount of the levy. If an EDA levy is imposed under the authority granted in Minnesota Statutes, section 469.033, subdivision 6, it is a levy for housing and/or redevelopment purposes under the EDA's authority to exercise the powers of an HRA. 469.033 PUBLIC REDEVELOPMENT COST; PROCEEDS; FINANCING. Subdivision 1.Financing plans authorized. The entire cost of a project as defined in section 469.002, subdivision 12, including administrative expense of the authority allocable to the project and debt charges and all other costs authorized to be incurred by the authority in sections 469.001 to 469.047, shall be known as the public redevelopment cost. The proceeds from the sale or lease of property in a project shall be known as the capital proceeds. The capital proceeds from land sold may pay back only a portion of the public redevelopment cost. An authority may finance the projects in any one or by any combination of the following methods. Subd. 2.Federal grants. The authority may accept grants or other financial assistance from the federal government as provided in sections 469.001 to 469.047. Before it uses other financial methods authorized by this section,the authority shall use all federal funds for which the project qualifies. Subd. 3.113ond issue. An authority may issue its bonds or other obligations as provided in sections 469.001 to 469.047. Subd. 4.Revenue pool; use. The authority may provide that all revenues received from its redevelopment areas be placed in a pool for the payment of interest and principal on all bonds issued for any redevelopment project, and the revenue from all such areas shall be paid into the pool until all outstanding bonds have been fully paid. Subd. 5.Special benefit tax fund. If the authority issues bonds to finance a redevelopment project, it may, with the consent of the governing body obtained at the time of the approval of the redevelopment plan as required in section 469.028, notify the county treasurer to set aside in a special fund, for the retirement of the bonds and interest on them, all or part of the real estate tax revenues derived from the real property in the redevelopment area which is in excess of the tax revenue derived therefrom in the tax year immediately preceding the acquisition of the property by the authority. The county treasurer shall do so. This setting aside of funds shall continue until the bonds have been retired. This subdivision applies only to property that the governing body has by resolution designated for inclusion in a project prior to August 1, 1979. Subd. 6.Operation area as taxing district,special tax. All of the territory included within the area of operation of any authority shall constitute a taxing district for the purpose of levying and collecting special benefit taxes as provided in this subdivision. All of the taxable property, both real and personal, within that taxing district shall be deemed to be benefited by projects to the extent of the special taxes levied under this subdivision. Subject to the consent by resolution of the governing body of the city in and for which it was created, an authority may levy a tax upon all taxable property within that taxing district. The tax shall be extended, spread, and included with and as a part of the general taxes for state, county, and municipal purposes by the county auditor, to be collected and enforced therewith, together with the penalty, interest, and costs. As the tax, including any penalties, interest, and costs, is collected by the county treasurer it shall be accumulated and kept in a separate fund to be known as the "housing and redevelopment project fund." The money in the fund shall be turned over to the authority at the same time and in the same manner that the tax collections for the city are turned over to the city, and shall be expended only for the purposes of sections 469.001 to 469.047. It shall be paid out upon vouchers signed by the chair of the authority or an authorized representative. The amount of the levy shall be an amount approved by the governing body of the city, but shall not exceed 0.0185 percent of estimated market value. The authority shall each year formulate and file a budget in accordance with the budget procedure of the city in the same manner as required of executive departments of the city or, if no budgets are required to be filed, by August 1. The amount of the tax levy for the following year shall be based on that budget. Subd. 7.Inactive authorities;transfer of funds; dissolution. The authority may transfer to the city in and for which it was created all property, assets, cash or other funds held or used by the authority. Upon any such transfer, an authority shall not thereafter levy the tax or exercise the redevelopment powers of sections 469.001 to 469.047. All cash or other funds transferred to the city shall be used exclusively for permanent improvements in the city or the retirement of debts or bonds incurred for permanent improvements in the city. An authority which transfers its property, assets, cash, or other funds shall be dissolved as provided in this subdivision. After a public hearing after ten days' published notice thereof in a newspaper of general circulation in the city, the governing body of a city in and for which an authority has been created may dissolve the authority if the authority has not entered into any contract with the federal government or any agency or instrumentality thereof for a loan or a grant with respect to any urban redevelopment or low-rent public housing project that remains in effect. The resolution or ordinance dissolving the authority shall be published in the same manner in which ordinances are published in the city and the authority shall be dissolved when the resolution or ordinance becomes finally effective. The clerk of the governing body of the municipality shall furnish to the commissioner of employment and economic development a certified copy of the resolution or ordinance of the governing body dissolving the authority. All property, records, assets, cash, or other funds held or used by an authority shall be transferred to and become the property of the municipality and cash or other funds shall be used as herein provided. Upon dissolution of an authority, all rights of an authority against any person, firm, or corporation shall accrue to and be enforced by the municipality. If an EDA levy is for bonds issued by the EDA under Minnesota Statutes, section 469.102, subdivision 5, the levy is also a special taxing district levy. Subd. 5.Tax levy. An authority that issues bonds under this section, shall, before issuing them, levy a tax for each year on the taxable property in the authority's city. The tax must be for at least five percent more than the amount required to pay the principal and interest on the bonds as the principal and interest mature. The tax must be levied annually until the principal and interest are paid in full. After the bonds have been delivered to the purchasers, the tax must not be repealed until the debt is paid. After the bonds are issued,the authority need not take any more action to authorize extending, assessing, and collecting the tax. On or before September 15, the authority's secretary shall send a certified copy of the levy to the county auditor, together with full information on the bonds for which the tax is levied. The county auditor shall extend and assess the levied tax annually until the principal and interest are paid in full. The authority shall transfer the surplus from the excess levy in this section to a sinking fund after the principal and interest for which the tax was levied and collected is paid. The authority may direct its secretary to send a certificate to the county auditor before September 15 in a year. The certificate must state how much available income, including the amount in the sinking fund, the authority will use to pay principal or interest or both on each specified issue of the authority's bonds. The auditor shall then reduce the bond levy for that year by that amount. The authority shall then set aside the certified amount and may not use it for any purpose except to pay the principal and interest on the bonds. The taxes in this section shall be collected and sent to the authority by the county treasurer as provided in chapter 276. The taxes must be used only to pay the bonds when due. What represents the type of activities the EDA is authorized to carry out requires legal analysis so it is beneficial to consult the opinion of the city attorney. Summary of Mounds View Program Goals: To provide a funding mechanism needed to fund economic development activities and programs. Specifically, this program will provide the resources necessary to purchase land, demo buildings and package parcels as redevelopment projects that when completed, will add to the tax valuation and ultimately the tax base. Some projects may assist in creating additional jobs as well as the attraction, retention, rehabilitation and preservation of commercial, industrial, retail, residential, recreational, and public service centers. Other goals of the EDA levy is the support of senior/mature adult and /or other housing development partnerships or other multi-use housing projects and facilities, other public utilities (including telecommunications), business incubator loan and other business programs, and 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. Due to lack of funding,the city has been restricted or hasn't been able to support the following: Marketing: There is currently no funds budgeted in marketing. Normally, marketing funds are used for new signage, branding, marketing redevelopment sites, and promoting the city in the attraction of new businesses. Many cities pay their staff to travel with DEED to trade shows, complete the Shovel Ready Certification Program, market the city in several publications through articles and sponsorships, and participate in recruiting events. With limited or no funding, marketing efforts have been limited. Advertising: Currently, there are no funds budgeted for advertising. Advertising is accomplished by placing ads in business publications that reach key personnel in targeted corporations. Articles are used to promote the city's redevelopment sites, its business friendly atmosphere, as well as community events like the Festival in the Park, through Mounds View Matters, and other venues. Advertising has been limited. Small scale incentives: Cities across Minnesota are offering many variations of small business loans set up to be revolving loans. This means that when one business pays back their loan another business can benefit with the continuous replenishing of funds. Each program has its own policy and has different purposes. For example, some loan programs target job creation; others target property valuation, while others qualify the project by the community benefit in relation to its social value. Still others focus on the aesthetics like improving the fagade of small businesses. All these programs make it easier for business to get over the hump so that they are sustainable and create long-term value to the community. The City of Mounds View has a Business Improvement Loan Program and we have had businesses that have asked for this loan. However, the program has been unfunded for several years and therefore, the City has not been able to use the business loan program to help our local businesses. Property acquisitions: The city keeps an inventory of vacant and distressed properties with the idea of purchasing these properties then packaging them together for redevelopment. Several opportunities have come up that the city has been forced to pass on because there hasn't been a funding mechanism to purchase the properties without issuing bonds to cover the debt. If Mounds View wishes to continue its growth, it must concentrate on purchasing and redeveloping properties with the cooperation of private developers. Surveys: When redeveloping property it is sometimes necessary to conduct surveys of the parcels. With limited funding, completing surveys is an added cost that puts a strain on the city's budget. Appraisals: When purchasing property, appraisals are sometimes required in order to negotiate a fair price. Appraisals are normally only good for 6 months and are an added tool in the negotiation process. Professional Fees: When redeveloping property to increase the long-term benefit to the community, attorneys must review the legal documents and be involved in the transactions. Financial consultants also review economic development projects and conduct their financial analysis to determine the feasibility of each project and if subsidies are appropriate and legal for each proposed development. An EDA levy could help cover these types of costs. Training & professional development: In order to stay current on state statues and economic development programs cities must continuously send their staff to training and professional development. Current training helps in preventing missteps and violations and ultimately law suits which can be costly to cities. Adequate training also helps staff stay abreast of the new economic development programs available and any changes to the policies of each program. A knowledgeable staff is good for business. Organizations across Minnesota that have an EDA/HRA Levy: http://www.revenue.state.mn.us/proPertvtax/Pages/ptlevies 15c.aspx EDA's Port Authorities, & Development Commissions Certified Special Taxing District Levy Changes for CY 2015 February 27, 2015 HOME Pay 2014 Pay 2015 $Change %Change COUNTY Final Certified Levy Levy SPECIAL TAXING DISTRICT NAME ID ID Levy Levy TOTALS 90,348,467 91,678,374 1,329,907 1.5% VICTORIA EDA 017 10 0 188,000 188,000 #DIV/0! COLUMBUS EDA/HRA 059 02 75,267 81,375 6,108 8.1% EAST BETHEL EDA 063 02 123,022 123,022 0 0.0% ST CLOUD ECONOMIC DEV AUTH 065 73 333,000 353,000 20,000 6.0% RENVILLE COUNTY HRA-EDA 099 65 276,000 270,000 (6,000) -2.2% DAKOTA COUNTY CDA 113 19 6,643,476 6,829,714 186,238 2.8% SCOTT COUNTY HRA/CDA 164 70 2,445,823 2,517,278 71,455 2.9% WATERTOWN EDA 185 10 41,386 42,237 851 2.1% CARVER CO CDA (FKA HRA) 190 10 1,850,205 1,954,904 104,699 5.7% DAYTON EDA 216 27 10,867 10,867 0 0.0% NORTH BRANCH EDA/HRA 230 13 242,005 241,802 (203) -0.1% ARROWHEAD REG DEV COMM 301 69 550,133 566,637 16,504 3.0% REGION 5 REG DEV COMM 303 77 283,595 292,103 8,508 3.0% HEADWATERS REG DEV COMM 305 04 280,435 288,848 8,413 3.0% ST CHARLES ECON DEV AUTH 306 85 33,497 34,086 589 1.8% REGION 9 REG DEV COMM 307 07 519,682 535,272 15,590 3.0% REGION 1 REG DEV COMM 309 57 249,503 256,988 7,485 3.0% REGION 6E REG DEV COMM 311 34 307,195 307,195 0 0.0% LAC QUI PARLE COUNTY EDA 314 37 165,000 147,500 (17,500) -10.6% REGION 8 REG DEV COMM 315 51 330,732 340,654 9,922 3.0% UPPER MINN VALLEY RDC 317 76 280,435 288,848 8,413 3.0% EAST CENTRAL REG DEV COMM 319 33 275,016 283,266 8,250 3.0% METRO LIVABLE COMM FUND 502 62 11,194,036 11,342,458 148,422 1.3% BECKER ECON DEV DIST 506 71 110,300 113,280 2,980 2.7% BIG LAKE ECON DEV DIST 508 71 70,000 20,000 (50,000) -71.4% ELK RIVER ECON DEV DIST 512 71 561,154 616,467 55,313 9.9% ST PAUL PORT AUTHORITY 513 62 2,835,000 2,795,400 (39,600) -1.4% WINONA PORT AUTHORITY 515 85 548,290 538,200 (10,090) -1.8% RURAL DEV FINANCE AUTH 523 49 75,000 75,000 0 0.0% ECONOMIC DEVELOPMENT AUTH 526 16 210,000 223,550 13,550 6.5% NORTHFIELD EDA 531 66 203,591 214,180 10,589 5.2% NEW ULM EDA 534 08 117,000 117,000 0 0.0% CHAMPLIN EDA 535 27 310,439 306,000 (4,439) -1.4% NEW HOPE EDA 537 27 0 150,000 150,000 #DIV/0! MONTEVIDEO EDA 539 12 26,200 29,568 3,368 12.9% BROOKLYN PARK EDA 541 27 918,460 916,487 (1,973) -0.2% FARIBAULT EDA 544 66 193,354 218,551 25,197 13.0% BECKER COUNTY EDA 545 03 160,748 160,748 0 0.0% ST MICHAEL EDA 546 86 90,000 90,000 0 0.0% PRIOR LAKE EDA 548 70 150,000 159,000 9,000 6.0% ROBBINSDALE EDA 551 27 155,778 0 (155,778) -100.0% HANOVER EDA 552 86 44,927 49,000 4,073 9.1% BURNSVILLE EDA 562 19 542,500 567,500 25,000 4.6% DULUTH SEAWAY PORT AUTH 566 69 898,555 919,718 21,163 2.4% DULUTH TRANSIT AUTHORITY 567 69 1,391,900 1,391,900 0 0.0% RED WING PORT AUTHORITY 569 25 307,409 334,177 26,768 8.7% WASECA CITY EDA 581 81 78,918 78,159 (759) -1.0% KANDIYOHI/WILLMAR EDC 582 34 455,000 455,000 0 0.0% JORDAN EDA 591 70 60,072 67,200 7,128 11.9% LAKES AREA ECON DEV AUTH 593 21 194,000 213,000 19,000 9.8% WADENA PORT 595 80 25,739 26,495 756 2.9% HUTCHINSON EDA 596 43 150,450 152,442 1,992 1.3% NORWOOD YOUNG AMERICA EDA 598 10 34,995 39,300 4,305 12.3% What are these city's accomplishing with their EDA/HRA levies?An Idea of the Types of Programs and Activities an EDA levy is being used for currently from a list of Minnesota cities. City of Columbus: Advertise/Branding, Marketing, Attracting New Development & Businesses-Retaining Current Businesses, Shovel Ready Program, website. City of Dayton: small incentives; a business summit that we hope will be an annual event; and other city marketing improvements to encourage new businesses. City of Hutchinson: Our EDA levy supports the operations area of our budget. We typically don't use any of those dollars to support program activities (those are operated through separate funds). Consequently, levy dollars pay for staffing primarily, along with our marketing. Salaries, Office Supplies, Operating Supplies, Professional Development, Travel, Software & Licensing, Advertising, Dues & Subscriptions, Business Retention & Expansion, Downtown Improvement, Industrial Park Recruitment, Skilled Workforce Development, Fund local loan programs, update policies, etc. City of North Branch: In 2009 we issued bonds for land purchases that the City made for a multi-use development(housing, commercial and industrial). Our HRA/EDA levy is solely used to pay the bonds for the industrial land purchases. Our operational budget for EDA activities is through our general fund levy. City Brooklyn Park: The City of Brooklyn Park created its EDA in 1989 and set EDA/HRA levies in the early 1990s. The EDA oversees both levies as we do not operate an HRA. The EDA/HRA levies are two funding sources that contribute to the funding of a number of programs. Marketing, Video Promotion, print advertising campaign, launching merchandise sales in City Hall. Vision of Light Rail Transit Station: artistic renderings for planning purposes, DEED Site Selector Program, Open to Business Program, funding of the SAC/WAC Deferral Program, Business Forward Forum, Annual Banker Breakfast, Redesign Newsletter, City of Prior Lake: The largest piece of the budget pays for % salary/benefits for two staff persons (myself and the Community Development Specialist). Another piece relates to the operation of a small business incubator program. Created a Targeted Commercial Assistance Program to support retention of existing gateway center businesses, Salaries, Training & Professional Development, legal fees, dues, SAC Deferred Loan Program, etc. City of Watertown: The EDA currently supports a building fagade and RLF program in addition to downtown free downtown WIFI. One of our most recent items is the acquisition of a former county public works site that we are working to redevelop. The EDA also provides some staff support and marketing. We have primarily used the EDA levy to fund property acquisition and redevelopment activities like demolition, environmental, etc. We are exploring a housing stock rehabilitation program as well. City of Becker: Overall, the EDA levy goes towards staffing, training/professional development, dues/subscriptions and promotional activities. Becker is proactive with professional development and is very supportive of staff furthering their education. Specific expenditures examples: ■ I will be attending my first NDC course next month and will be working towards EDFP certification. ■ Becker has also been able to participate in the Site Selectors Guild the last few years and were able to connect to site selectors working worldwide. This is part of our "promotion" budget,which is the largest category after staffing. We will also be looking at rebranding the City, but a specific budget has not been prepared. ■ Becker pays dues to two different regional development organizations, along with EDAM and APA. We try to stay as involved as possible, so following promotion, this is the next largest budget category. ■ We currently budget$65,000 for EDA staff, but our full staffing budget is in conjunction with our planning department. In the past the EDA and City went through DEED's shovel ready process and was able to certify approximately 70 acres in our industrial park. Also prior to my time, the EDA and City bought a couple old homes in our commercial area and paid to have the houses demolished. From what I heard, it was a huge improvement for the area. We are looking to implement/kick off a revolving loan fund or smaller incentives, but the policies are not currently in place and have not been budgeted for. Updating our city website, cooperating with the Chamber of Commerce, BR&E's, Broadband Initiative, Community Videos, Update marketing brochures, hire a broker to market Becker, Site Selector events, Trade shows, MNCAR Expo, Metro area Tour, DEED events, update maps & newsletter, Marketing Plan,Twin Cities business articles, MN Real Estaet Journal, demographic studies, income,traffic counts, retail oriented packets distribution, update policies, etc. EDA Program Goals Creation of a strong and diverse tax base ■ Higher quality commercial/industrial development with a higher tax base density per acre ■ A mix of wage rates which meet or exceed the livable wage as per the City's municipal subsidies policy, depending upon the types of businesses that locate here ■ Development and Redevelopment Professional, Medical and Technology oriented business/office ■ Heavy and Light Manufacturing/office warehouse/rail users ■ Business/office park with higher development standards ■ Commercial/retail centers ■ Appropriately zoning industrial land when annexed into the City City of Robbinsdale EDA: The HRA/EDA levy goes into the Robbinsdale EDA General Fund - $165,000 for 2016. The amount of the levy is similar to the amount that the City invoices the REDA for City Staff time working on REDA projects — including finance, community development and the City Manager's time in role of Executive Director for REDA—as well as REDA Attorney. REDA has a long standing scattered site residential program — we acquire severely blighted homes, demolish them, and sell the lot for new construction. New construction is not for a starter home —the homes are typically 3-4 bedroom, with lots of kitchen upgrades. The difference between acquisition + demolition and sale of the home averages around $50,000; depends on asbestos removal. REDA has a downtown loan program (attached)—these are rarely repaid. REDA has also been involved in larger scale downtown redevelopment involving admin of funds from other agencies—County/TBRA/... or TIF. City of Hanover: ■ Only has EDA authority. The HRA powers are something I think you should consider up front versus having to go through the entire enabling process again down the road. ■ 7 member board. 5 members are people with a business connection to Hanover or are a community person who brings a benefit to the board. 2 members are council members who have full voting authority on the EDA. I like how ours is setup with majority members being business sense people separate from the Council. I think it gives the ability for a different thought process. I think this holds especially beneficial because the budget is considered, yet they always focus first on what they can offer the most and if they think the business is a good fit for the area. ■ Only holds EDA authorities versus both EDA and HRA. EDA does not have 100% separate powers so the EDA's levy and any financial decisions are final approved by our Council. I think this is good in order to help prevent a rogue operation from a board who could issue debt without any other approval, in the end increasing tax impacts. I know this is probably unlikely, but you never know. ■ i.e. If an incentive program is approved by our EDA,the Council gives final approval. ■ Our levy covers a consultant fee, member salaries, and website costs on an annual basis. I also provide staff assistance to the EDA, but my salary is paid from the city budget. ■ In the past they have also funded studies to determine growth of the city and specific needs for businesses,traffic studies, etc. ■ They also donate to the annual town celebration ■ Levy also helps fund the assistance fund ■ We offer three local incentive programs (low interest loan, rent reimbursement, and a matching grant/0% interest loan program) ■ Our EDA did issue bonds for a lease to buy on the City's Fire Hall. City of Staples: The state sets our tax levy and we use the funds as match for staff time on several planning & program delivery such as; municipal comp planning, transportation, broadband, managing our EDA revolving loan funds, (we have 4 lending programs at Region Five) business TA, energy, local foods and much much more! The Regional Development Commissions across the state do not have levy authority beyond what the state offers. Per state statute the only property RDC's can own is the property of which our office's reside. Our tax levy contribution is less than 1/3 of our annual budget. The levy share of MN RDC budgets vary among the 9 MN RDCs. City of Northfield: The 2016 general operating budget for the Northfield EDA is copied below. The EDA also purchases property and assists with TIF and Tax Abatement Districts and manages a Revolving Loan Fund. One of the differences between Northfield and other EDA's are the two final items under other charges. The Micro-Grant program is an annual budget appropriation of$25,000 for up to $5,000 grants that are available to local entrepreneurial businesses for expansion projects. A business must be in operation for at least 1-year, have a qualified project, and be awarded funding from this program one time per business. The Northfield Enterprise Center (NEC) is a local entrepreneurial support program funded primarily by the Northfield EDA. The NEC has been in business for 15 years and has assisted with over 100 local business start-ups in Northfield. City of Champlin: The EDA levy pays for operating costs including salary, benefits, insurance, marketing, consulting expenses for our development activities. Salaries & Benefits, operating supplies, minor equipment, Consultants, Auditing & Accounting Services, Engineering fees, Legal Services, Contract Services, Travel Expenses, Marketing, Advertising & Publishing, Insurance & Bonds, Electric Utilities, Sewer Utilities, Subscription & memberships,taxes & Licenses, Special Events.