6.2. EDSR 05-08-2006ITEM # 6.2.
t~ver
MEMORANDUM
TO: Economic Development Authority
FROM: Catherine Mehelich, Director of Economic Development~~
DATE: May 8, 2006
SUBJECT: Consider Adoption of Amended Tax Abatement Policy
Attachments
• Tax Abatement Policy and Application, Amended May 2006
Background
The City of Elk River adopted its original Tax Rebate Financing Policy in Apxi12000, shortly
after the state legislature authorized the use of tax abatement as an economic development
financing tool. The policy was amended in August of 2002 to include clarifications on the
use of tax abatement Fox speculative office developments.
Recommendation
The attached policy includes the amendments discussed at the March 13, 2006 EDA
meeting. Staff recommends that the EDA consider adoption of the amended Tax
Abatement Policy. Following the EDA's adoption, the City Council will be asked to adopt
the amended policy.
Cry of
Elk -~.-
River
Tax Abatement
Policy & Application
Amended: May 2006
Amended: August 2002
Adopted: April 10, 2000
City of Elk River
Economic Development Division
13065 Orono Parkway
Elk River, b~IN 55330
763.635.1040
Table of Contents
I. Policy Purpose 3
II. Difference Between Tax Abatement &
Tax Increment Financing 3
III. Objectives of Tax Abatement
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 7
Ciry of Elk River 7
Application to Other Jurisdictions 7
VI11. Application for Tax Abatement 8
Applicant Information 8
Project Information 9
Public Purpose 9
Sources & Uses 10
Additional Documentation and Checklist 11
IX. Sample But-For Analysis
12
X. Application Review Worksheet 13
XI. City of Elk River Business Subsidy Policy 15
City of Elk River
Tax Abatement Policy
Amended May 2006
2-
I. POLICY PURPOSE
Far the puopae'er o, f tbir document, the term `City"'ball include the Elk I~zver City Counezl, Economic
DeveloJ~ment Authority, and Hounng and Redeveloj~ment Authority.
The purpose of this policy is to establish the City of Elk River's position relating to the
use of Tax Abatement fox 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 assistance. The fundamental
purpose of providing Tax Abatement in Elk River is to encourage desirable development
ox redevelopment that would not otherwise occur but for the assistance provided through
the Tax Abatement.
The City of Elk River is granted the power to utilize "Tax Abatement by Minnesota
Statutes, Sections 469.1812 to 469.1815 (the "Minnesota Tax Abatement Act"), as
amended. It is the intent of the City to provide the tninitnum amount of Tax
Abatement, as well as other incentives, at the shortest term required for the project to
proceed. Preference is given to projects in which the total amount of Tax Abatement
request includes participation from the county. The City reserves the right to approve or
reject projects on a case by case basis, taking into consideration established policies,
project criteria, and demand on city services in relation to the potential benefits from the
project. Meeting policy criteria does not guarantee the award of Tax Abatement to the
project. Approval ox denial of one project is not intended to set precedent fox approval
ox denial of another project.
II. DIFFERENCE BETWEEN TAX ABATEMENT AND
TAX INCREMENT FINANCING
The primary difference between Tax Abatement and Tax Increment Financing (I'IF) is
the way in which the dollars are awarded to the project. When TIF is awarded to a
project by the city, the other taxing jurisdictions (the school district and the county) are
required to contribute their portion of the increased taxes to the project. Conversely,
when Tax Abatement is requested, each political subdivision has the option of granting
its portion of the increased taxes to the project. Subsequently, the dollars generated for
the project with Tax Abatement axe generally less than the dollars generated with TIF.
III. OBJECTIVES OF TAX ABATEMENT
As a matter of adopted policy, the City will consider using Tax Abatement to assist
private development projects to achieve one ox more of the following objectives:
• To retain local jobs and/ox increase the number and diversity of jobs that offer
stable employment and/ox attractive wages and benefits as defined in the City's
Business Subsidy Policy.
• To enhance and diversify the City of Elk River's economic base.
• To encourage additional unsubsidized private development in the area, either
directly or indirectly through "spin ofP' development.
City of Elk Rivet
Tax Abatement Policy
Amended May 2006
3-
• To facilitate the development process and to achieve development on sites
which would not be developed without Tax Abatement assistance.
• To remove blight and/ox encourage redevelopment of commercial and
industrial areas in the city that result in high quality redevelopment and private
reinvestment.
• To offset increased costs of redevelopment (i.e. contaminated site clean up)
over and above the costs normally incurred in development.
• To create opportunities for affordable housing.
• To contribute to the implementation of other public policies, as adopted by the
city from time to time, such as the promotion of quality urban ox architectural
design, energy conservation, and decreasing capital and/ox operating costs of
local government.
• To significantly increase the City of Elk River's tax base.
IV. POLICIES FOR THE USE OF TAX ABATEMENT
a. Tax Abatement assistance will be provided to the developer upon receipt of
taxes by the City, otherwise referred to as the pay-a~ yougo method. Requeste
fox up front financing will be considered on a case-by-case basis.
b. Any developer receiving Tax Abatement assistance shall provide a minimum
of ten percent (10%) owner cash equity investment in the project.
c. Tax Abatement will not be used in circumstances where land and/or
property price is in excess of fair market value.
d. Developer shall be able to demonstrate a market demand fox a 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 ox 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: minimum assessment
agreements, letters of credit, personal guaranties, and etcetera.
h. The developer shall adequately demonstrate, to the City's sole satisfaction, an
ability to complete the proposed project based on past development
City of Elk River
Tax Abatement Policy
Amended May 2006 _ ¢_
experience, general reputation, and credit history, among other factors,
including the size and scope of the proposed project.
Fox the purposes of underwriting the proposal, the developer shall provide
any requested market, financial, envuonxnental, construction plans or other
data requested by the City ox its consultants.
j. Tax Abatement proposals shall not be used to support speculative office
projects. Speculative projects axe defined as those projects which have pxe-
leasing agreements ox letters of intent fox less than 50% of the available
space.
In addition, leasable office projects must meet the following guidelines:
1. Evidence of the 50% occupancy must be reported to the Director of
Economic Development six months following an issued Certificate of
Occupancy.
2. Of the occupants certified at the six month period, 50% of the jobs
must be considered "new" jobs to the City of Elk River, meaning jobs
not located in the City at any time prior to occupying space in the
project.
3. Business retention jobs will be considered on aone-fox-one match to
job creation only in cases where job loss is specific and demonstrable in
accordance with the MN Business Subsidy Law. Evidence may include
documentation that the company will have to close involuntarily, ox the
company has received an attractive offer to move to another state ox
community.
k. All Tax Abatement proposals shall optimize the private development
potential of a site.
V. PROJECT QUALIFICATIONS
All Tax Abatement projects considered by the City of Elk River must meet each of the
following xequixements~
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; ox
• Commercial redevelopment ox rehabilitation; ox
• Research and development facilities that satisfy Business Paxk
zoning requirements; ox
• Office facilities with a mixumum new construction of 25,000
square feet; or
City of Elk River
Tax Abatement Policy
Amended May 2006
- 5-
• Residential development and redevelopment may be eligible fox
Tax Abatement under a separate set of policies and only with the
recommendation of the HRA.
c. The developer shall demonstrate that the project is not financially feasible
but for the use of Tax Abatement. Evaluation of the project's financial
feasibility without Tax Abatement shall be provided by the City's financial
advisor on all requests of over $25,000 total public investment.
d. The City will consider the use of Tax Abatement assistance for projects that
may not meet the but far and job creation criteria, but rather would be
considered as a "location incentive". These projects may result in other
public benefits such as a significant tax base increase, the creation of higher
paying jobs (at least twice the minimum hourly rate stated in the Ciry's
Business Subsidy Policy), and is likely to assist in the marketing and attraction
of additional desired developments.
e. The project shall comply with all provisions set forth in the Minnesota Tax
Abatement Law, State Statues 469.1812 to 469.1815, as amended.
f The project must be consistent with the City's Comprehensive Plan, Land
Use Plan, and Zoning Ordinances.
g. The project shall serve at least two of the following public purposes:
• Job creation or job retention.
• Significantly increase the tax base.
• Enhancement ox diversification of the city's economic base.
• Development or redevelopment that will spur additional private
investment in the area.
• Fulfillment of defined city objectives, such as those identified in the
Economic Development Strategic Plan or the City's Comprehensive
Plan, among others.
• Removal of blight ox the rehabilitation of a high profile ox priority site.
VI. SUBSIDY AGREEMENT & REPORTING REQUIRMENTS
All developers/businesses receiving Tax Abatement assistance from the City of Elk
River shall be subject to the provisions and requirements set forth by the City's
Business Subsidy Policy as amended and attached as Section XI of this document,
and Minnesota State Statute 116J.993 (the "Minnesota Business Subsidy Law").
City of Elk River
Tax Abatement Policy
Amended May 2006
- 6-
VII. APPLICATION PROCESS FOR TAX ABATEMENT
A. CITY OF ELK RIVER
Applicant submits the completed application along with a non-
refundable $5,000 application deposit. The application deposit will
be used toward the cost of services provided in the evaluation of
financial feasibility and preparation of legal documents and
agreements. Projects that demand professional services in excess of
the initial deposit shall be required to reimburse the City fox the
additional expenses.
2. City staff reviews the application and completes the Application
Review Worksheet.
3. Results of the Worksheet axe submitted to the appropriate governing
authorities (EDA ox HRA) for recommendation to the City Council
of approval ox denial of the request.
4. If preliminary approval is granted, all necessary notices, resolutions
and agreements axe prepared by City staff and/ox consultants.
5. Public hearing(s) on the proposed request axe held.
6. The City Council grants fmal approval ox denial of the request.
B. APPLICATIONS TO OTHER JURISDICTIONS
It is recommended that applicants intending to seek Tax Abatement from
Sherburne County and/or School District 728 make their applications to
those bodies concurrent with their application to the City of Elk River. Fox
more information on applying fox Tax Abatement through Sherburne
County and/or School District 728, contact:
Sherburne County Administrator
763-241-2701
School District 728 Superintendent
763-241-3400
City of Elk River
Tax Abatement Policy
Amended :stay 2006
7-
V111. APPLICATION FOR TAX ABATEMENT
A. APPLICANT INFORMATION
Name of Corporation/Partnership
Address
Primary Contact
Email
Brief description of the corporation/partnership's business, including history, principal
product ox service:
Brief description of the proposed project:
Attorney Name
Address
Phone Fax Email
Accountant
Phone Fax Email
Contractor Name
Fax Email
Engineer Name
Fax
Architect Name
City of Elk River
Tax Abatement Policy
Amended May 2006
8-
B. PROJECT INFORMATION
1. The project will be:
_Industrial~ -New Construction Expansion -Redevelopment /Rehab.
-Office/research facility that conforms to Business Paxk zoning standards
Commercial Redevelopment/Rehabilitation
2. In addition to the City of Elk River, applicant is requesting Tax Abatement from:
Sherburne County School District 728
3. The project will be:
4. Project Address
Parcel Identification
Owner Occupied Leased Space
5. Site Plan and Construction Plans Attached Yes No
6. Total Amount of Tax Abatement Requested $ over- years.
City Portion: Annual $ Total $
County Portion: Annual $ Total $
ISD 728 Portion: Annual $ Total $
Current Real Estate Taxes on Project Site: $
Estimated Real Estate Taxes upon Completion: Phase I $
Phase II $
8. Construction Start Date:
Construction Completion Date:
If Phased Pxoject~ Year % Completed
Year % Completed
C. PUBLIC PURPOSE
It is the policy of the City of Elk River that the use of Tax Abatement should result
in a benefit to the public. Please indicate how this project will serve a public
purpose.
Job Creation/Retention Number of existing jobs
Number of jobs created by project
Average hourly wage of jobs created/retained
-New industrial development which will result in additional private
investment in the area.
-Enhancement and/ox diversification of the City of Elk River's economic base.
-The project contributes to the fulfillment of the City's Economic Development
Strategic Plan.
-Removal of blight.
-Rehabilitation of a high profile ox priority site.
-Significantly increase the City's tax base.
City of Elk Rivez
Tax Abatement Policy
Amended May 2006
-9
D. SOURCES & USES
SOURCES
Bank Loan
Other Private Funds
Owner Cash Equity
Fed Grant/Loan
State Grant/Loan
EDA Micro Loan
Tax Abatement
ID Bonds
TOTAL
NAME
USES
Land Acquisition
Site Development
Construction
Machinery & Equipment
Architectural & Engineering Fees
Legal Fees
Interest During Construction
Debt Service Reserve
Contingencies
TOTAL
City of Elk River
Tax Abatement Policy
Amended May 2006
AMOUNT
AMOUNT
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 fox Past Two Years
Profit & Loss Statement
Balance Sheet
C) Current Financial Statements
Profit & Loss Statement to Date
Balance Sheet to Date
D) Two Year Financial Projections
E) Personal Financial Statements of all Major Shaxeholdexs
Profit & Loss
Current Tax Return
F) Letter of Commitment from Applicant Pledging to Complete
During the Proposed Project Duration
G) Letter of Commitment from the Other Sources of Financing,
Stating Terms and Conditions of their Participation in the Project
H) Non-refundable application deposit of $5,000
I) Construction Plans and Itemized Project Construction Statement
J) Attach the following do
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
cementation as Exhibits
- Coxporadon/Parmexship Description
-Description of Project
- List of Shaxeholdexs/Farmers
- But-For Analysis
- List of Prospective Lessees
-Legal Description and PID Number(s)
Note: All Major shareholders will be required to sign personal guarantees and a minimum
assessment agreement if up front fmancing of the project is required.
The undersigned certifies that all information provided in this application is true and correct
to the best of the undersigned's knowledge. The undersigned authorizes the City of Elk
River to check credit references, verify financial and other information, and share this
information with other political subdivisions as needed. The undersigned also agrees to
provide any additional information as may be requested by the City after the filing of this
application.
Applicant Name Date
City oEElk River
Tax Abatement Policy
Amended May 2006
_ 11_
IX. SAMPLE BUT FOR ANALYSIS
WITH NO WITH
TAX ABATEMENT TAX ABATEMENT
SOURCES AND USES SOURCES AND USES
SOURCES SOURCES
Mortgage 9,600,000 8,667,000
Equity 2,400,000 2,400,00
Tax Abatement 0 933,000
TOTAL SOURCES 12,000,000 12,000,000
USES USES
Land 1,500,000 1,500,000
Site Woxk 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. Pex 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 Texm 1,051,646 20 Term 949,439
9.00% Interest 9.00% Interest
9,600,000 Principal 8,667,000 Principal
Net Income 185,854 288,061
Total Return on Equity 7.74% 12.00%
City of Elk River
Tax Abatement Policy
Amended May 2006
- 12-
X. TAX ABATEMENT APPLICATION REVIEW WORKSHEET
TO BE COMPLETED BY CITY STAFF
1. The project meets the criteria set forth in Section V of the Tax Abatement policy.
a) Meets at least one of the objectives in Section III.
b) Demonstrates need fox Tax Abatement with the but for analysis.
c) Consistent with all city plans and ordinances.
d) Serves at least two public purposes as defined in Section V(~.
2. Ratio of Private to All Public Investment in Project:
$ Private Investment
$ Public Investment
Ratio Private: Public Financing
Less than
3. Job Creation in the City of Elk River:
Number of new jobs as a result of the project.
Number of existing/retained jobs
Total
Less than
Points:
5:1 5
4:1 4
3:1 3
2:1 2
2:1 1
Points:
25+ 5
20+ 4
15+ 3
10+ 2
10 1
4. Ratio of Public Investment to Job Creation: Points:
$ Public Investment $8,000 ox less 5
Number of new jobs created/retained $10,000 or less 4
$ of Public Investment per new job $12,000 ox less 3
$15,000 ox less 2
Over $15,000 1
5. Wage Level of new jobs created/retained Points:
Minimum hourly wage Over $21 /hour 5
of jobs created/retained: $18-21 /hour 4
$14-17 /hour 3
$10-13 /hour 2
Under $10 /hoax 1
6. Project size: Points:
The project will result in the construction 40,000+ 5
of square feet 30,000+ 4
20,000+ 3
10,000+ 2
10,000 ox less 1
City of Elk River
Tax Abatement Policy
Amended May 2006
13-
7. Market Value/Tax Base Generation:
The project will result ui a per square foot
estimated market value (land and building)
8. Type of Project:
100% Owner Occupied
Mix Owner Occupied & Investment
Investment Property
9. Use:
Industrial ox Business Paxk Project
Commercial Rehabilitation/Redevelopment
Points:
Industrial Comxnexcial
$80/sf+ $110/sf+
$70/sf+ $100/sf+
$60/sf+ $90/sf+
$50/sf+ $80/sf+
$40/sf+ $70/sf+
5
4
3
2
1
Points:
5
4
3
Points•
5
4
10. Likelihood that the project will result in
unsubsidized, spin-off development.
Points•
High 5
Moderate 3
Low 1
Sub -Total Points: of a possible 45 points.
11. Bonus Points
Bonus Points:
The project will be 100% Pay-aa'yougo Tax Abatement 3 points
The project contributes to the goals of Fnergy City. 2 points
• Product promotes sensible use of energy, OA
• Project utilizes significant energy efficient design &/or
materials in construction.
Total Points
Overall project desirability: High 45-38 points
Moderate 37-29 points
Low 28-20 points
Not Eligible 19-0 points
City of Ells River
Tax Abatement Policy
Amended May 2006
- 14-
Business Subsidy Policy
Amended & Adopted: May 2006
Original Adopted:
Housing & Redevelopment Authority November 25, 2002
City Council November 25, 2002
Economic Development Authority December 9, 2002
City of Elk River
Economic Development Division
13065 Orono Parkway
Ells Rivex, MN 55330
763.635.1040
CITY OF ELK RIVER
POLICY AND PROCEDURES RELATING TO
THE USE OF BUSINESS SUBSIDIES
I. PURPOSE
Far thepurporer of thin document, the term `City"shall include the Elk River City Council, Economic Development
Authority, and Housing and Redevelopment Authority.
The purpose of this policy is to establish guidelines and cxitexia regarding the use of business
subsidies, such as tax increment financing (TIF~, tax abatement, and other business subsidies
fox private development projects within the City of Elk River. This policy shall be used as
criteria fox providing subsidies, in addition to the requirements and limitations set forth by
provisions of Minnesota State Statute 116J.993 (MN Business Subsidy Law), and the Ciry's
policy and guidelines of the particular form of subsidy.
These guidelines shall be used in processing and reviewing applications requesting business
subsidy assistance. The fundamental purpose of business subsidies in the City is to
encourage desirable development or redevelopment that would not otherwise occur "but
for" the assistance provided through business subsidies.
It is the intent of the City to provide business subsidies, as well as other incentives that the
City may deem appropriate, at the shortest term requited for the project to proceed. The
City reserves the right to approve or reject projects on a case-by-case basis, taking into
account established policies, specific project criteria, and demand on city services in relation
to the potential benefits to be received from a proposed project. Meeting policy guidelines
or other cxitexia does not guarantee the award of a business subsidy. Furthermore, the
approval ox denial of one project is not intended to set precedent fox approval ox denial of
another project.
Whenever possible it is the City's intent to coordinate the use of business subsidies with
other applicable taxing jurisdictions.
II. DEFINITION OF "BUSINESS SUBSIDY"
The following types of assistance having a value in excess of $25,000 axe defined as a
"business subsidy" within the MN Business Subsidy Law:
• State and local government agency giants;
• Contributions of personal pxopexry, real pxopexry, or infrastructure;
• The principal amount of a loan that exceeds $75,000 at rates below those
commercially available;
• Reductions ox deferrals of taxes or fees;
• Guarantees of any payment under any loan, lease, or other obligation; and,
• Preferential use of government facilities.
Ciry of Elk River Business Subsidy Policy
Amended bfay 2006
III. PUBLIC PURPOSE OBJECTIVES OF BUSINESS SUBSIDIES
In accordance with the MN Business Subsidy Law, the City will consider using business
subsidies to assist private development projects to achieve one ox more of the following
public purpose objectives:
• To retain local jobs and/or increase the number and diversity of jobs that offer
stable employment and/or attractive wages and benefits.
• To enhance and diversify the City of Elk River's tax base.
• To encourage additional unsubsidized private development in the area, either
directly ox indirectly through "spin off 'development.
• To achieve development on sites which would not be developed without
business subsidies assistance.
• To remove blight and/ox encourage development of commercial and industrial
areas in the city that result in higher quality development ox redevelopment and
private investment.
• To offset increased costs of development of specific properties when the unique
physical characteristics of the site may otherwise preclude private investment.
• To create opportunities for the construction, operation and maintenance of
affordable housing.
IV. GENERAL POLICIES FOR THE USE OF BUSINESS SUBSIDIES
A. Business subsidy assistance will be provided from the City, on a "pay-as-you-go"
note method, to the developer if the business subsidy is tax increment fmancing or
tax abatement. Requests for up front financing will be considered on a case-by-case
basis.
B. A developer requesting business subsidy assistance must demonstrate, to the
satisfaction of the City, sufficient cash equity investment in the project as required
within the City's policy for the particular form of subsidy.
C. Business subsidy assistance will not be provided in circumstances where land and/ox
property price is demonstrated by the County Assessor to be in excess of fair market
value. This would normally be where the acquisition price is more than 10% in
excess of market value.
D. A developer must be able to demonstrate to the City, ox, if applicable, to the
underwriting authority, amarket-demand for a proposed project.
E. Business subsidy assistance will not be used in cases where the subsidy would create
an unfair and significant competitive financial advantage over other similar projects
in the area.
F. Business subsidy assistance will not be used for projects that would place
extraordinary demands on city infrastructure and services.
City of Elk River Business Subsidy Policy
Amended May 2006
G. If requested by the City the developer shall provide adequate financial guarantees to
ensure completion of the project, including, but not limited to: minimum assessment
agreements, letters of credit, cash escrows, and personal guaranties.
H. Each developer must be able to demonstrate to the City's satisfaction, an ability to
construct, operate, and maintain the proposed project based on past experience,
general reputation, and credit history.
L If requested by the City, or its consultants, the developer shall provide sufficient
market, financial, environmental, ox other data relative to the successful operation of
the project.
I. Projects receiving business subsidy approval from other affected taxing jurisdictions
will be more favorably received by the City.
V. GUIDELINES FOR COMMERCIAL/INDUSTRIAL BUSINESS
SUBSIDIES
A. Business subsidies will not be used fox retail ox service businesses unless it is a
redevelopment project that demonstrates that it will result in a substantial increase in
tax base and a significant improvement in quality employment.
B. The project must be consistent with the City's Comprehensive Plan, Land Use Plan,
and Zoning Ordinances.
C. The project must result in the retention of existing jobs that would be lost "but for"
the proposed development ox result an increase and diversification in local jobs.
Business retention jobs will be considered on aone-fox-one match to job creation
only in cases where job loss is specific and demonstrable in accordance with the MN
Business Subsidy Law.
D. Specific wage and job goals will be determined by the City giving consideration to
the particular form of the subsidy, nature of the development, the purpose of the
subsidy, local economic conditions and similar factors. The recipient will have up to
two years from the benefit date, which is the date that the recipient receives the
subsidy, to meet the job and wage goals established by the City.
E. The minimum wage for a job to be considered a new or retained job shall be $15.00
per hour, exclusive of benefits required by law. Deviations from the job and wage
goal may be considered for projects that will result in a significant increase in tax
base. Deviations less than the wage floor will be considered on a case-by-case basis
and in accordance with the requirements of the MN Business Subsidy Law.
F. Business subsidies will not be used fox commercial/industrial projects that have a
history of inconsistent compliance with applicable environmental rules and
regulations.
City of Elk River Business Subsidy Policy
Amended bfay 2006
VI. GUIDELINES FOR REDEVELOPMENT AND RENOVATION
BUSINESS SUBSIDIES
In accordance with the MN Business Subsidy Law, the following forms of financial
assistance related to redevelopment and renovation axe not a "business subsidy":
A. Assistance provided for the sole purpose of renovating old or decaying building
stock ox bringing it up to code, provided that the assistance is equal to ox less
than 50 percent of the total cost;
B. Assistance fox pollution control or abatement;
C. Redevelopment when the recipient's investment in the purchase of the site and
in site preparation is 70 percent or more of the assessor's current year's estimated
market value.
VII. SUBSIDY APPLICATION PROCESS AND PROCEDURE
A. Application for business subsidies shall be made on the City's forms fox the
particular type of assistance. The application fox business subsidies shall request
information required within the City's policies on the particular form of subsidy
including but not limited to; a detailed description of the project; a preliminary site
plan; the amount of business subsidy requested; the public purpose of the project;
the number and types of jobs to be created; the wages and benefits to be paid new
employees; and verifiable funding sources and uses.
B. Following a review by appropriate City Staff the application shall be referred to the
either the Economic Development Authority, ox Housing and Redevelopment
Authority, fox recommendation to the City Council fox denial of approval.
C. Before granting a business subsidy that exceeds $100,000, the City shall provide
public notice and hold a hearing on the subsidy unless a hearing and notice on the
subsidy is otherwise required by law.
VIII. SUBSIDY AGREEMENT AND REPORTING REQUIREMENTS
Each company receiving a business subsidy shall be subject to the subsidy agreement and
reporting provisions and requirements set forth by the MN Business Subsidy Law and
summarized below:
A. Progress Reports
The recipient shall file a report annually fox two years after the receiving the
subsidy or until all goals set forth in the subsidy agreement have been met, which
ever is later. Reports shall be completed using the format drafted by the State of
Minnesota and shall be filed with the City's Economic Development Division no
later than March 1 of each year fox the progress made the previous year.
City of Elk River Business Subsidy Policy
Amended May 2006
B. Maintain Facility
The recipient agrees to maintain and operate its facility at the site where the
subsidy is used fox a period of five yeazs after the date the subsidy is provided.
C. Failure to Comnlv
Businesses failing to comply with the subsidy agreement will be subject to fines,
repayment requirements at the rate established within the MN Business Subsidy
Law, and be deemed ineligible by the State to receive any loans or giants from
public entities for a period of five years.
City of Elk River Business Subsidy Policy
Amended May 2006