5.0. 6.0. 7.0. EDSR 07-13-1998 • ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY
MEMORANDUM
TO: Economic Development Authority
FROM: Paul T. Steinman, Director of Economic
Development
DATE: July 1, 1998
SUBJECT:Agenda Memo for July 13, 1998,
Meeting
5. Presentation by AMCON/Associated Builders Regarding East
Business Park
Issue
AMCON and Associated Builders have requested an appearance
• before the EDA to present information regarding the business park
component of the Earl Hohlen mixed use development project. The
purpose of this agenda item is to hear such presentation and to have a
discussion with the developers regarding their proposed business park
concept.
Attachment
• Letter from Brookstone
Financial Issues
The EDA may recall that the Associated Builders initial tax
increment application did not include a request for tax increment
assistance related to the business park portion of this project. It is
foreseen that a tax increment request will be coming forward as this
mixed use project proceeds which relates directly to the business park
project. This tax increment request may include a write down of the
costs of land and public improvements to the business park. At this
time these costs are unknown, but it appears from initial investigation
that the values which AMCON is projecting at full development of the
business park, will provide enough tax increment to fund such
• request. Further discussion of this issue will ensue as we proceed
with the developer on negotiation of the overall tax increment request.
13065 Orono Parkway • P. O. Box 490 • Elk River.; MN 55330-1743 • {612) 441-7420 •Fax (612) 441-7425
Equal Opportunity Housing and Equal Opportunity Employment
EDA Agenda Memo
July 1, 1998
Paget
6. Consider Resolution 98- Approving TIF Plan for TIF District
No. 19
Issue
The issue before the EDA at this time is to consider a resolution
supporting the establishment of Tax Increment Financing District No.
19 (Hohlen project). At its meeting following this EDA meeting, the
City Council is scheduled to hold a public hearing on the proposed
district as the final step prior to considering a resolution making
findings of fact and approving TIF District No. 19.
Overview
TIF District No. 19 includes approximately 108 acres of privately
ownedra ertY
identified for commercial and business park mixed
p p
use development. The purpose of certification of TIF District No. 19 is
p P �
to make available a potential financial tool in order to stimulate
private development on this site. It is important to note that the
creation of TIF District No. 19 does not,in and of itself, provide any
• level of tax increment assistance to the developer. Should the Council
proceed with certification of TIF District No. 19, the EDA will proceed
to negotiate a package with Associated Builders for the mixed use
development project. The EDA has continually expressed its interest
in stimulating this private development in order to accomplish the
goal of having a 40 acre business park constructed at the south end of
this project area. Associated Builders has partnered with AMCON, a
local developer, to develop this business park.
Attachments
• Resolution 98-
• TIF Modification and Plan for TIF District No. 19
Recommendation
Staff recommends approval of Resolution 98- Modifying
Development District No. 1 and Adopting the Development Program
Therefor; and Establishing Within Development District No. 1, Tax
Increment Financing District No. 19, and Adopting the Related Tax
Increment Financing Plan Therefor.
110
EDA Agenda Memo
July 1, 1998
Page 3
•
7. Consider Resolution 98- Asking that the City Council Call
Public Hearing for TIF District No. 20
Issue
This is the first action which is necessary in the case of establishing a
tax increment district to begin the schedule and process of completing
a tax increment plan.
Overview
In July 1997, the EDA purchased the last remaining lot in the Elk
River Industrial Park for approximately $65,000. The EDA now has a
request before it to provide this lot at a zero land cost to the developer
for the development of an industrial project. Supermats, Inc. has
submitted a tax increment financing application along with payment
of$5,000 to process such request. Supermats, Inc. is proposing the
construction of an approximately 35,000-40,000 square foot building
on this 2.39 acre lot. Supermats is the manufacturer and distributor
of rubber mat products made from recycled tires. Staff began working
• with Supermats over a 18 months ago to find them a location to lease
space here in Elk River. At that time it was made known that the
company would eventually want to construct and own its own facility.
Supermats is currently located in a 5,000 square foot leased space in
the building located behind E & 0 Tool. They also have
approximately 13,000 square feet of space in Brooklyn Center.
Supermats proposal is to combine its manufacturing, warehousing,
and distribution in one location in the Elk River Industrial Park.
In this situation, the ability of the EDA to provide this lot to the
developer at zero land cost is a significant incentive. The developer is
able to use the equity in the land to minimize its up front dollars into
the project. This scenario as it is being proposed in concept to the
developer has helped solidify Supermats commitment to complete this
project in Elk River. This "instant equity"concept is also no different
than what is being offered to companies like Supermats by other
communities.
The EDA's ability to purchase this lot last year will prove to be a
positive strategic investment should the Supermats project proceed.
It is an investment in which, should a TIF proposal proceed, the EDA
• should be able to recoup its dollars within an approximate two to
three year time period.
EDA Agenda Memo
July 1, 1998
Page 4
Staff is also workingon a concept which may include the relocation of
P Y
a Business Incubator company as a tenant in part of the Supermats
project. Staff is working with Supermats on the concept of providing
lease space for this special circumstance of relocating a Business
Incubator company. Dollars would have to be provided to the
Supermats project in other ways if the EDA is to expect the owner to
provide a below market lease rate to our Business Incubator company.
Staff will continue to work on this concept as we proceed with this
project.
Attachments
• Resolution 98- Asking Council to Call Public Hearing for TIF
No. 20
• Schedule of Activities for TIF No. 20
• Supermats TIF Application
Recommendation
Staff recommends the EDA approve Resolution 98- asking the
City Council to call a public hearing for TIF District No. 20 on August
•
24, 1998, at approximately 6 p.m., in the City Council Chambers at
City Hall.
07/06/97 15:07 NO.746 1302
BROOKSTONE,INC.
• r
4. /
7400 Metro Blvd.,Suite 212
Edina,Minnesota 55439
July 6, 1998 612.837.9167 phone
612.837.8010 fax
Paul T. Steinman City of Elk River /`c,�o t k1 8/14.8 .
13065 Orono Parkway
P.O.Box 490
Elk River,MN 55330
Dear Paul:
We are excited about the opportunity of working together with you in the creation of a high quality
business park in Elk River. We understand that Matt Fischer is moving towards a closing of the
overall property this summer and on that basis we are currently finalizing our arrangement with him
to secure control of the approximate thirty acres of useable industrial property as the south end of
the site. We are writing to you to begin the approval process and outline our preliminary project
concept. In this regard,we are attaching
• 1. A preliminary overall master concept plan.
2. An outline of initial infrastructure needs and anticipated assessed values of the project.
The specifics of the concept plan and proposed first phase is outlined below:
1. Overall Master Plan—the plan attached shows approximately 325,000 square feet which is
about a 27% site coverage on the twenty-eight useable acres. We feel that we can probably
increase the overall square footage to above 350,000 with some plan refinement.
2. Uses —we anticipate and propose a mix of multi-tenant and single user industrial
office/warehouse buildings with finishes ranging from 10-40%and probably averaging in
the 20-25%range.
3. Property Taxes —based upon the current commercial property tax rates we anticipate that
when fully assessed these buildings on average will generate annual property taxes in the
$2.00 per square foot range. On this basis, the total property taxes payable on this project
upon completion will be approximately$750,000 at today's value and tax rates. The first
phase, as outlined below,will generate taxes when fully assessed, of approximately$100,000.
4. Phasing—we anticipate starting with a phase I multi-tenant speculative office/warehouse
building of 50,000 square feet as shown on the attached plans no later than April 1, 1999.
• We feel that it is necessary to proceed on a speculative basis in order to create some near
term momentum for this project and generate additional interest. We expect that the total
industrial park will be phased-in over a four to six year period.
REAL ESTATE ADVISORY SERVICES.INVESTMENT AND DEVELOPMENT
07/06/97 15:07 NO.746 P03
• 5. City ofElk River Public Improvement Costs —our preliminaryestimate is $1,200,000 for the
P
road serving the industrial land, complete with related grading, curb and gutter,base and
finish work together with utility extensions along the road and stubbed to each lot. Any cost
for the wetland irrigation is not included here. This still needs to be refined and resolved.
Additionally, per you request,we have not,at this time, included any specific tax increment requests
for the Phase I building. We can move ahead on that as soon as we know that we have your support
for the master plan and related items addressed in this letter.
Thank you for your interest in working together and we look forward to moving ahead on this
project.
Yours very truly,
Br tone, Inc. AMCON
s 90'11.1d4/46,616‘,...
Richard V. Martens Jim Winkels
President
•
RVM/bb
Attachments
110
07/06/9? 15:0? NO.746 PO4
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I Schedule of Assessed Values and Site Development Costs
a) Site Development Costs
Including Streets, Utilities
Curb and Gutter, Grading $ 1,200,000
b) Schedule of Assessed Values
Phase Ctp date SQ. Ft. Tax Values Fir= TAX Yr
1 12/31/99 50000 $ 2,250,000 2001
4111 2 9/1/00 50000 $ 2,250,000 2002
3 5/31/01 100000 $ 4,500,000 2003
4 6/30/02 70000 $ 3,150,000 2004
5 9/30/03 80000 5 3.600,00C 2005
350000 $ 15,750,000
* Based upon current Caste
•
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RESOLUTION 98 - 2
• ECONOMIC DEVELOPMENT AUTHORITY
CITY OF ELK RIVER
COUNTY OF SHERBURNE
STATE OF MINNESOTA
RESOLUTION MODIFYING DEVELOPMENT DISTRICT NO. 1 AND
ADOPTING THE DEVELOPMENT PROGRAM THEREFOR; AND
ESTABLISHING WITHIN DEVELOPMENT DISTRICT NO. 1, TAX
INCREMENT FINANCING DISTRICT NO. 19, AND ADOPTING THE
RELATED TAX INCREMENT FINANCING PLAN THEREFOR
BE IT RESOLVED by the Board of Commissioners (the "Board") of the City
of Elk River Economic Development Authority ("EDA") of the City of Elk
River, Minnesota ("City") as follows:
Section 1. - Recitals.
1.01. It has been proposed that the EDA modify Development District No. 1
and adopt the Development Program therefor and establish within Development
District No. 1, Tax Increment Financing District No. 19 ("District No. 19"), and
• adopt the related Tax Increment Financing Plan therefor (collectively, the
"Program" and"Plan"); all pursuant to and in conformity with existing law,
including Minnesota Statutes, Sections 469.090 through 469.1081 and 469.174
through 469.179, inclusive, as amended, all as reflected in the Program and Plan
and presented for the Board's consideration.
1.02. The Board has investigated the facts relating to the Program and
Plan and has caused the Program and Plan to be prepared.
1.03. The EDA has performed all actions required by law to be performed
prior to the adoption of the Program and Plan by the City, including, but not limited
to, notification of Sherburne County and School District No. 728 having taxing
jurisdiction over the property included in District No. 19, a request for review of and
written comment on the Program and Plan by the City Planning Commission, and a
request that the Council schedule a public hearing on the Program and Plan upon
published notice as required by law.
Section 2. - Findings for the Adoption and Approval of the Program and Plan.
2.01. The Board hereby finds that District No. 19 is in the public interest
and is a "Redevelopment District" under Minnesota Statutes, Section 469.174, subd.
10, and finds that the adoption of the proposed Program and Plan will advance the
EDA's and City's objectives of encouraging development within Development
• District No. 1.
2.02. The EDA further finds that the proposed development, in the opinion
of the EDA, would not occur solely through private investment within the
• reasonably foreseeable future and that the increased market value on the site that
could reasonably be expected to occur without the use of tax increment financing
would be less than the increase in the market value estimated to result from the
proposed development after subtracting the present value of the projected tax
increment for the maximum duration of District No. 19 permitted by the Tax
Increment Financing Plan, that the Program and Plan was reviewed by the City
Planning Commission on June 23, 1998, and by resolution was found to be in
conformance to the general plan for the development or redevelopment of the City
as a whole; and that the Program and Plan will afford maximum opportunity
consistent with the sound needs of the City as a whole, for the development of
District No. 19 by private enterprise.
2.03. The EDA further finds that the Program and Plan, are intended and,
in the judgment of the EDA, the effect of such actions will be, to provide an impetus
for development in the public purpose and accomplish certain objectives as specified
in the Program and Plan, which are hereby incorporated herein.
Section 3. - Approval and Adoption of the Program and Plan.
3.01. Conditioned upon the approval thereof by the City Council following
its public hearing thereon, the Program and Plan as presented to the EDA on this
date, are hereby approved, established, and adopted.
3.02. The staff, the EDA's advisors and legal counsel are authorized and
directed to proceed with the implementation of the Program and Plan and for this
purpose to negotiate, draft, prepare, and present to this Board for its consideration
all further Plans, Resolutions, Documents, and Contracts necessary for this
purpose. Approval of the Program and Plan does not constitute approval of any
project or a Development Agreement with any developer.
3.03. Upon approval of the Program and Plan by the City Council, the
Executive Director of the EDA is authorized to forward a copy of the Program and
Plan to the Sherburne County Auditor and the Minnesota Department of Revenue
pursuant to Minnesota Statutes, Section 469.175, subd. 2.
Approved by the Board of Commissioners of the Elk River Economic
Development Authority this 13th day of July, 1998.
Zr.;:a./Le"..----
enry Duitsman, President
ATT,`
ittit
P.ul T. teinman, Executive Director
•
MODIFICATIONS
To the
Development Program
For
Development District No. 1
and the
TAX INCREMENT FINANCING PLAN
for
• Tax Increment Financing District No. 19
(A Redevelopment District)
Economic Development Authority in and for the City of Elk River
Sherburne County
City of Elk River, Minnesota
Prepared: July 1, 1998
Revised: July 1, 1998
Adopted: July 13, 1998
Prepared by:
Springsted Incorporated
85 E. Seventh Place, Suite 100
St. Paul, Minnesota 55101-2887
(612)223-3000
•
•
City of Elk River, Minnesota
Modification to the Development Program
for
Development District No. 1
Dated: July 1, 1998
•
Prepared by:
SPRINGSTED INCORPORATED
85 E. Seventh Place, Suite 100
St. Paul, MN 55101-2887
(612) 223-3000
MODIFICATION TO THE DEVELOPMENT PROGRAM
FOR DEVELOPMENT DISTRICT NO. 1
•
Add to Section I:
•
As of the date of this modification, anticipated development within Tax Increment Financing
District No. 19 consists of several mixed-use projects. Commercial development on
approximately 70 acres of the TIF District will encompass approximately 1.5 million square feet
of retail space and approximately 300,000 square feet of restaurant and convenience store
space. Construction is tentatively scheduled for 1998 and 1999.
Approximately 40 acres of the TIF District is currently zoned for an industrial business park. At
this time no specific development has been scheduled for this site, although it is anticipated that
300,000+ square feet of industrial space will be constructed over the next 2-5 years. The
estimated public costs associated with the anticipated development and redevelopment projects
within the TIF District are shown in Section K of the TIF Plan.
• •
•
City of Elk River, Minnesota
Tax Increment Financing Plan
for
Tax Increment Financing (Redevelopment)
District No. 19
(U.S. Highway 169 and County Highway 12 Project)
•
Dated: July 1, 1998
Prepared by:
SPRINGSTED INCORPORATED
85 E. Seventh Place, Suite 100
St. Paul, MN 55101-2887
(612) 223-3000
TABLE OF CONTENTS
Section Page(s)
A. Definitions 1
B. Statutory Authorization 1
C. Statement of Need and Public Purpose 1
D. Statement of Objectives 1
E. Designation of Tax Increment Financing District as a Redevelopment District 1-2
F. Duration of the TIF District and the Three Year Rule 3
G. Property to be Included in the TIF District 3-4
H. Property to be Acquired in the TIF District 4
I. Specific Development Expected to Occur Within the TIF District 4
J. Findings and Need for Tax Increment Financing 5
K. Estimated Public Costs 6
L. Estimated Sources of Revenue 6
M. Estimated Amount of Bonded Indebtedness 6
N. Original Net Tax Capacity 6-7
O. Original Tax Capacity Rate 7
P. Projected Retained Captured Net Tax Capacity and Projected Tax Increment 7-8
• Q. Use of Tax Increment 8
R. Excess Tax Increment • 9
S. Tax Increment Pooling and the Five Year Rule 9
T. Limitation on Administrative Expenses 10
U. Limitation on Property Not Subject to Improvements - Four Year Rule 10
V. Estimated Impact on Other Taxing Jurisdictions 10
W. Local Government Aid Penalty 11
X. Prior Planned Improvements 11
Y. Development Agreements 11
Z. Assessment Agreements 11-12
AA. Modifications of the Tax Increment Financing Plan 12
AB. Administration of the Tax Increment Financing Plan 12-13
AC. Financial Reporting and Disclosure Requirements 13-15
Map of the Tax Increment Financing District EXHIBIT I
Assumptions Report EXHIBIT II
Projected Tax Increment Report EXHIBIT III
Estimated Impact on Other Taxing Jurisdictions Report EXHIBIT IV
Market Value Analysis Report EXHIBIT V
City of Elk River, Minnesota
Section A Definitions
• The terms defined in this section have the meanings given herein, unless the context in which
they are used indicates a different meaning:
"City" means the City of Elk River, Minnesota; also referred to as a "Municipality".
"City Council" means the City Council of the City; also referred to as the "Governing Body".
"County" means Sherburne County, Minnesota.
"Development District" means Municipal Development District No. 1 in the City, which is
described in the corresponding Development Program.
"Development Program" means the Development Program for the Development District.
"Project Area" means the geographic area of the Development District.
"School District" means Independent School District No. 728, Minnesota.
"State" means the State of Minnesota.
"TIF Act" means Minnesota Statutes, Sections 469.174 through 469.1791, both inclusive.
"TIF District" means Tax Increment Financing (Redevelopment) District No. 19.
• "TIF Plan" means the tax increment financing plan for the TIF District (this document).
Section B Statutory Authorization
See Section A of the Development Program for the Development District.
Section C Statement of Need and Public Purpose
See Section B of the Development Program for the Development District.
Section D Statement of Objectives
See Section E of the Development Program for the Development District.
Section E Designation of Tax Increment Financing District as a
Redevelopment District
Redevelopment districts are a type of tax increment financing district in which one of the
following conditions exists and is reasonably distributed throughout the district:
(1) parcels comprising at least 70% of the area of the district are occupied by buildings,
streets, utilities, or other improvements, and more than 50% of the buildings (not
including outbuildings) are structurally substandard requiring substantial renovation or
clearance. A parcel is deemed "occupied" if at least 15% of the area of the parcel
contains some type of improvement; or
SPRINGSTED Page 1
City of Elk River, Minnesota
(2) the property consists of vacant, unused, underused, inappropriately used, or
• infrequently used railyards, rail storage facilities, or excessive or vacated railroad right-
of-ways.
For districts consisting of two more noncontiguous areas, each area must individually qualify
under the provisions listed above, as well as the entire area must also qualify as a whole.
The TIF District qualifies as a redevelopment district in that it meets all of the criteria listed in (1)
above. The supporting facts and documentation for this determination will be retained by the
City for the life of the TIF District and are available to the public upon request.
"Structurally substandard" is defined as buildings containing defects or deficiencies in structural
elements, essential utilities and facilities, light and ventilation, fire protection (including egress),
layout and condition of interior partitions, or similar factors. A building is not structurally
substandard if it is in compliance with the building code applicable to a new building, or could be
modified to satisfy the existing code at a cost of less than 15% of the cost of constructing a new
structure of the same size and type.
A city may not find that a building is structurally substandard without an interior inspection,
unless it can not gain access to the property and there exists evidence which supports the
structurally substandard finding. Such evidence includes recent fire or police inspections, on-
site property tax appraisals or housing inspections, exterior evidence of deterioration, or other
similar reliable evidence. A parcel is deemed to be occupied by a structurally substandard
building if the following conditions are met:
(1) the parcel was occupied by a substandard building within a three-year period prior to the
parcels inclusion in the district; and
(2) if the substandard building was demolished or removed within the three year period,
such demolition or removal was performed or financed by the City, or was performed by
a developer under a development agreement with the City. In addition, the City must
have found by resolution before such demolition or removal occurred that the building
was structurally substandard and that the City intended to include the parcel in the TIF
District.
In the case of (2) above, the County Auditor shall certify the original net tax capacity of the
parcel to be the greater of (a) the current tax capacity of the parcel, or (b) a computed tax
capacity of the parcel using the estimated market value of the parcel for the year in which the
demolition or removal occurred, and the appropriate classification rate(s) for the current year.
At least 90 percent of the tax increment from a redevelopment district must be used to finance
the cost of correcting conditions that allow designation as a redevelopment district. These
costs include, but are not limited to, acquiring properties containing structurally substandard
buildings or improvements or hazardous substances, acquiring adjacent parcels necessary to
provide a site of sufficient size to permit development, demolition and rehabilitation of
structures, clearing of land, removal of hazardous substances, and installation of utilities, roads,
sidewalks, and parking facilities for the site. The allocated administrative expenses of the
authority may be included in the qualifying costs.
•
SPRINGSTED Page 2
City of Elk River, Minnesota
Section F Duration of the TIF District and the Three Year Rule
• Redevelopment districts may remain in existence 25 years from the date of receipt of the first
tax increment. This term shall be reduced to 20 years if the City elects to delay receipt of the
first tax increment until a minimum market value for the TIF District is reached or exceeded, or
four years have elapsed from the date of certification, whichever is earlier. Modifications of this
plan (see Section AA) shall not extend these limitations.
The City does not elect to delay receipt of the first tax increment. The City reserves the right to
allow the TIF District to remain in existence the maximum duration allowed by law (proiected to
be through the year 2024). All tax increments from taxes payable in the year the TIF District is
decertified shall be paid to the City.
In addition, no tax increments shall be paid to the City from the TIF District after three years
from the date of certification unless within that time period:
(1) bonds have been issued in aid of the Project Area (except revenue bonds issued
pursuant to M.S. Sections 469.152 to 469.165);
(2) the City has acquired property within the TIF District; or
(3) the City has constructed public improvements within the TIF District.
Section G Property to be Included in the TIF District
The TIF District is a 156.37 acre area of land located within the Project Area. A map showing
the location of the TIF District is shown in Exhibit I. The boundaries and area encompassed by
• the TIF District are described below:
PID #'s:
75-002-2200
75-002-2300
75-135-3420
75-135-3315
75-135-3310
In addition, the following property is to be included in the TIF District:
That part of the West half of the Northwest Quarter of Section 2 and that part of the East half of
the Northeast Quarter of Section 3, both in Township 32, Range 26, and that part of the East
half of the Southeast Quarter of Section 34 and that part of the West half of the Southwest
Quarter of Section 35, both in Township 33, said Range 26, all in Sherburne County,
Minnesota, described as follows:
Beginning at the Northeast corner of said West half of the Northwest Quarter of Section 2;
thence South, along the East line of said West half of the Northwest Quarter of Section 2, to the
Southeast corner of said West half of Northwest Quarter of Section 2; thence West, along the
South line of said West half of the Northwest Quarter of Section 2, to the Southwest corner of
said West half of the Northwest Quarter of Section 2; thence West, along the South line of said
East half of the Northeast Quarter of Section 3, to the intersection with the Northeasterly
right-of-way line of the Burlington Northern Railroad; thence Northwesterly, along said
Northeasterly right-of-way line of the Burlington Northern Railway, to the intersection with the
Westerly right-of-way line of U.S. Highway No. 169, thence Northerly, Easterly, and Northerly
along the Westerly, Northerly and Westerly right-of-way line of said U.S. Highway No. 169 to
the intersection with a line, to be hereinafter described as follows:
SPRINGSTED Page 3
City of Elk River, Minnesota
Commencing at the Northwest corner of Johnson Plat, according to said plat on
• file and of record in the office of the County Recorder, Sherburne County,
Minnesota; thence South 17 degrees 04 minutes 00 seconds East, an assumed
bearing along the West line of said Johnson Plat, a distance of 520.00 feet;
thence South 72 degrees 56 minutes 00 seconds West, a distance of 327.60 feet
to the intersection with the Easterly right-of-way line of said U.S. Highway
No. 169; thence South 17 degrees 04 minutes 00 seconds East, along said
Easterly right-of-way line, a distance of 260.00 feet, to the actual point of
beginning of said line to be hereinafter described; thence South 72 degrees
56 minutes 00 seconds West, to the intersection with the Westerly right-of-way
line of U.S. Highway No. 169 and there terminating.
thence North 72 degrees 56 minutes 00 seconds East, along the last described line, to the
intersection with said Easterly right-of-way line of U.S. Highway No. 169; thence Southerly and
Southeasterly, along said Easterly and Northeasterly right-of-way line of said U.S. Highway
No. 169, to the intersection with the Northerly right-of-way line of County Road No. 12; thence
Easterly and Northeasterly, along the Northerly and Northwesterly right-of-way line of said
County Road No. 12, to the intersection with the Northwesterly and Westerly right-of-way line of
County Road No. 13; thence Northerly along said Westerly right-of-way line of County Road
No. 13, to the intersection with the Easterly extension of the North line of Outlot A, said
Johnson Plat; thence Easterly, along said Easterly extension of the North line of Outlot A, to the
intersection with the Easterly right-of-way line of said County Road No. 13; thence Southerly,
along said Easterly right-of-way of County Road No. 13 to the intersection with said Northerly
right-of-way line of County Road No. 12; thence Easterly and Southeasterly, along said
Northerly and the Northeasterly right-of-way line of County Road No. 12, to the intersection with
the East line of said West half of the Southwest Quarter of Section 35; thence South, along said
• East line of the West half of the Southwest Quarter of Section 35, to the point of beginning.
Section H Property to be Acquired in the TIF District
The City may acquire and sell any or all of the property located within the TIF District; however,
the City does not anticipate acquiring any such property at this time.
Section I Specific Development Expected to Occur Within the TIF District
As of the date of this TIF Plan, anticipated development within the TIF District consists of
several mixed-use projects. Commercial development on approximately 70 acres of the TIF
District will encompass approximately 1.5 million square feet of retail space and approximately
300,000 square feet of restaurant and convenience store space. Construction is tentatively
scheduled for 1998 and 1999.
Approximately 40 acres of the TIF District is currently zoned for an industrial business park. At
this time no specific development has been scheduled for this site, although it is anticipated that
300,000+ square feet of industrial space will be constructed over the next 2-5 years.
At the time this document was prepared, there were no signed development agreements or
construction contracts with regard to any of the anticipated development described above. As
such development occurs and contracts are signed, the City will periodically update this
document to reflect such information.
•
SPRINGSTED Page 4
City of Elk River, Minnesota
Section J Findings and Need for Tax Increment Financing
• In establishing the TIF District, the City makes the following findings:
(1) The TIF District qualifies as a redevelopment district;
See Section E of this document for the reasons and facts supporting this
finding.
(2) The proposed development, in the opinion of the City, would not reasonably be
expected to occur solely through private investment within the reasonably
foreseeable future, and the increased market value of the site that could
reasonably be expected to occur without the use of tax increment would be less
than the increase in market value estimated to result from the proposed
development after subtracting the present value of the projected tax increments
for the maximum duration of the TIF District permitted by the TIF Plan;
The reasons and facts supporting this finding are that the developer has
represented to the City that it would not undertake the proposed
development without the assistance of tax increment financing. Private
investment will not finance these development activities because of
prohibitive costs. It is necessary to finance these development activities
through the use of tax increment financing so that other development by
private enterprise will occur within the Project Area.
A comparative analysis of estimated market values both with and without
establishment of the TIF District and the use of tax increments has been
• performed as described above and is shown in Exhibit V. This analysis
indicates that the increase in estimated market value of the proposed
development (less the indicated subtractions) exceeds the estimated
market value of the site absent the establishment of the TIF District and
the use of tax increments.
(3) The TIF Plan conforms to the general plan for development or redevelopment of
the City as a whole; and
The reasons and facts supporting this finding are that the TIF District is
properly zoned, and the TIF Plan has been approved by the City Planning
Commission and will generally compliment and serve to implement
policies adopted in the City's comprehensive plan.
(4) The TIF Plan will afford maximum opportunity, consistent with the sound needs
of the City as a whole, for the development of the Project Area by private
enterprise.
The reasons and facts supporting this finding are that the development
activities are necessary so that development and redevelopment by
private enterprise can occur within the Project Area.
•
SPRINGSTED Page 5
City of Elk River, Minnesota
Section K Estimated Public Costs
The estimated public costs of the TIF District are listed below. Such costs are eligible for
reimbursement from tax increments of the TIF District.
Land Acquisition, Demolition, $12,595,000
Site Improvements,
Public Improvements, etc.
Subtotal $12,595,000
Interest on Pay-As-You-Go 20,185,000
Obligations or Bonds
Administration 1,640,000
Total $34,420,000
The City reserves the right to administratively adjust the amount of any of the items listed above
or to incorporate additional eligible items, so long as the total estimated public cost is not
increased.
Section L Estimated Sources of Revenue
The City currently anticipates providing financial assistance to the proposed developments
through the use of a pay-as-you-go technique. As tax increments are collected from the TIF
District in future years, a portion of these taxes will be distributed to the developer/owner as
• reimbursement for public costs incurred (see Section K).
The City reserves the right to finance any or all public costs of the TIF District using pay-as-you-
go assistance, internal funding, general obligation or revenue debt, or any other financing
mechanism authorized by law. The City also reserves the right to use other sources of revenue
legally applicable to the Project Area to pay for such costs including, but not limited to, special
assessments, utility revenues, federal or state funds, and investment income.
Section M Estimated Amount of Bonded Indebtedness
The City does not anticipate issuing tax increment bonds to finance the estimated public costs
of the TIF District, but reserves the right to issue such bonds in an amount not to exceed
$12,595,000.
Section N Original Net Tax Capacity
9 p Y
The County Auditor shall certify the original net tax capacity of the TIF District. This value will
be equal to the total net tax capacity of all property in the TIF District as certified by the State
Commissioner of Revenue. For districts certified between January 1 and June 30, inclusive,
this value is based on the previous assessment year. For districts certified between July 1 and
December 31, inclusive, this value is based on the current assessment year.
The Estimated Market Value of all property within the TIF District as of January 2, 1998, for
• taxes payable in 1999, is $2,229,200. Upon establishment of the TIF District, and subsequent
reclassification of property, it is estimated that the original net tax capacity of the TIF District will
be approximately $76,447.
SPRINGSTED Page 6
City of Elk River, Minnesota
Each year the County Auditor shall certify the amount that the original net tax capacity has
• increased or decreased as a result of:
(1) changes in the tax-exempt status of property;
(2) reductions or enlargements of the geographic area of the TIF District;
(3) changes due to stipulation agreements or abatements; or
(4) changes in property classification rates.
Section 0 Original Tax Capacity Rate
The County Auditor shall also certify the original tax capacity rate of the TIF District. This rate
shall be the sum of all local tax rates that apply to property in the TIF District. This rate shall be
for the same taxes payable year as the original net tax capacity.
In future years, the amount of tax increment generated by the TIF District will be calculated
using the lesser of (a) the sum of the current local tax rates at that time or (b) the original tax
capacity rate of the TIF District.
At the time this document was prepared, the sum of all local tax rates that apply to property in
the TIF District, for taxes levied in 1998 and payable in 1999, was not yet available. When this
total becomes available, the County Auditor shall certify this amount as the original tax capacity
rate of the TIF District. For purposes of estimating the tax increment generated by the TIF
• District, the sum of the local tax rates for taxes levied in 1997 and payable in 1998, is 111.504%
as shown below.
1997/1998
Taxing Jurisdiction Local Tax Rate
City of Elk River 26.255%
Sherbume County 27.235%
ISD #728 56.539%
Elk River HRA .633%
Elk River EDA - .842%
Total 111.504%
Section P Projected Retained Captured Net Tax Capacity and
Projected Tax Increment
Each year the County Auditor shall determine the current net tax capacity of all property in the
TIF District. To the extent that this total exceeds the original net tax capacity, the difference
shall be known as the captured net tax capacity of the TIF District.
The County Auditor shall certify to the City the amount of captured net tax capacity each year.
The City may choose to retain any or all of this amount. It is the City's intention to retain 100%
of the captured net tax capacity of the TIF District. Such amount shall be known as the retained
• captured net tax capacity of the TIF District.
SPRINGSTED Page 7
City of Elk River, Minnesota
Exhibit II gives a listing of the various information and assumptions used in preparing a number
• of the exhibits contained in this TIF Plan, including Exhibit III which shows the projected tax
increment generated over the anticipated life of the TIF District.
Section Q Use of Tax Increment
Each year the County Treasurer shall deduct 0.25% of the annual tax increment generated by
the TIF District and pay such amount to the State's General Fund. Such amounts will be
appropriated to the State Auditor for the cost of financial reporting and auditing of tax increment
financing information throughout the state. Exhibit III shows the projected deduction for this
purpose over the anticipated life of the TIF District.
The City has determined that it will use 100% of the remaining tax increment generated by the
TIF District for any of the following purposes:
(1) Pay for the estimated public costs of the TIF District (see Section K) and County
administrative costs associated with the TIF District (see Section T);
(2) pay principal and interest on tax increment bonds or other bonds issued to
finance the estimated public costs of the TIF District;
(3) accumulate a reserve securing the payment of tax increment bonds or other
bonds issued to finance the estimated public costs of the TIF District;
(4) pay all or a portion of the county road costs as may be required by the County
Board under M.S. Section 469.175, Subdivision 1a; or
• (5) return excess tax increments to the County Auditor for redistribution to the City,
County and School District.
Tax increments from property located in one county must be expended for the direct and
primary benefit of a project located within that county, unless both county boards involved waive
this requirement. Tax increments shall not be used to circumvent levy limitations applicable to
the City.
Tax increment shall not be used to finance the acquisition, construction, renovation, operation,
or maintenance of a building to be used primarily and regularly for conducting the business of a
municipality, county, school district, or any other local unit of government or the State or federal
government. This prohibition does not apply to the construction or renovation of a parking
structure, a common area used as a public park, or a facility used for social, recreational, or
conference purposes and not primarily for conducting the business of the community.
If there exists any type of agreement or arrangement providing for the developer, or other
beneficiary of assistance, to repay all or a portion of the assistance that was paid or financed
with tax increments, such payments shall be subject to all of the restrictions imposed on the use
of tax increments. Assistance includes sale of property at less than the cost of acquisition or
fair market value, grants, ground or other leases at less then fair market rent, interest rate
subsidies, utility service connections, roads, or other similar assistance that would otherwise be
paid for by the developer or beneficiary.
SPRINGSTED Page 8
City of Elk River, Minnesota
Section R Excess Tax Increment
• In any year in which the tax increments from the TIF District exceed the amount necessary to
pay the estimated public costs authorized by the TIF Plan, the City shall use the excess tax
increments to:
(1) prepay any outstanding tax increment bonds;
(2) discharge the pledge of tax increments thereof;
(3) pay amounts into an escrow account dedicated to the payment of the tax
increment bonds; or
(4) return excess tax increments to the County Auditor for redistribution to the City,
County and School District. The County Auditor must report to the
Commissioner of Education the amount of any excess tax increment
redistributed to the School District within 30 days of such redistribution.
Section S Tax Increment Pooling and the Five Year Rule
At least 75% of the tax increments from the TIF District must be expended on activities within
the district or to pay for bonds used to finance the estimated public costs of the TIF District (see
Section E for additional restrictions). No more than 25% of the tax increments may be spent on
costs outside of the TIF District but within the boundaries of the Project Area, except to pay
debt service on credit enhanced bonds. All administrative expenses are considered to have
• been spent outside of the TIF District. Tax increments are considered to have been spent
within the TIF District if such amounts are:
(1) actually paid to a third party for activities performed within the TIF District within
five years after certification of the district;
(2) used to pay bonds that were issued and sold to a third party, the proceeds of
which are reasonably expected on the date of issuance to be spent within the
later of the five-year period or a reasonable temporary period or are deposited in
a reasonably required reserve or replacement fund.
(3) used to make payments or reimbursements to a third party under binding
contracts for activities performed within the TIF District, which were entered into
within five years after certification of the district; or
(4) used to reimburse a party for payment of eligible costs (including interest)
incurred within five years from certification of the district.
Beginning with the sixth year following certification of the TIF District, at least 75% of the tax
increments must be used to pay outstanding bonds or make contractual payments obligated
within the first five years. When outstanding bonds have been defeased and sufficient money
has been set aside to pay for such contractual obligations, the TIF District must be decertified.
The City does not anticipate that tax increments will be spent outside of the TIF District (except
for allowable administrative expenses); however, the City does reserve the right to allow for tax
increment pooling from the TIF District in the future.
•
SPRINGSTED Page 9
City of Elk River, Minnesota
Section T Limitation on Administrative Expenses
• Administrative expenses are defined as all costs of the City other than:
(1) amounts paid for the purchase of land;
(2) amounts paid for materials and services, including architectural and engineering
services directly connected with the proposed development within the TIF
District;
(3) relocation benefits paid to, or services provided for, persons or businesses
residing or located within the TIF District; or
(4) amounts used to pay interest on, fund a reserve for, or sell at a discount, tax
increment bonds.
Administrative expenses include amounts paid for services provided by bond counsel, fiscal
consultants, planning or economic development consultants, and actual costs incurred by the
County in administering the TIF District. Tax increments may be used to pay administrative
expenses of the TIF District up to the lesser of (a) 10% of the total estimated public costs
authorized by the TIF Plan or (b) 10% of the total tax increment expenditures for the project.
Section U Limitation on Property Not Subject to Improvements - Four Year Rule
If after four years from certification of the TIF District no demolition, rehabilitation, renovation,
or qualified improvement of an adjacent street has commenced on a parcel located within the
•
TIF District, then that parcel shall be excluded from the TIF District and the original net tax
capacity shall be adjusted accordingly. Qualified improvements of a street are limited to
construction or opening of a new street, relocation of a street, or substantial reconstruction or
rebuilding of an existing street. The City must submit to the County Auditor, by February 1 of
the fifth year, evidence that the required activity has taken place for each parcel in the TIF
District.
If a parcel is excluded from the TIF District and the City or owner of the parcel subsequently
commences any of the above activities, the City shall certify to the County Auditor that such
activity has commenced and the parcel shall once again be included in the TIF District. The
County Auditor shall certify the net tax capacity of the parcel, as most recently certified by the
Commissioner of Revenue, and add such amount to the original net tax capacity of the TIF
District.
Section V Estimated Impact on Other Taxing Jurisdictions
Exhibit IV shows the estimated impact on other taxing jurisdictions if the maximum projected
retained captured net tax capacity of the TIF District was hypothetically available to the other
taxing jurisdictions. The City believes that there will be no adverse impact on other taxing
jurisdictions during the life of the TIF District, since the proposed development would not have
occurred without the establishment of the TIF District and the provision of public assistance. A
positive impact on other taxing jurisdictions will occur when the TIF District is decertified and the
development therein becomes part of the general tax base.
•
SPRINGSTED Page 10
City of Elk River, Minnesota
Section W Local Government Aid Penalty
• Tax increment financing districts established or expanded after April 30, 1990 may cause a
reduction in the local government aid (LGA/HACA) received by the City from the State. For tax
increment financing plans approved on of after July 1, 1995, the City may elect at the time of
such approval to make qualifying local contributions to the project, and thereby be exempt from
any loss of local government aid.
For redevelopment districts these contributions must equal 5.0% of the annual increment
generated by the district. If the City elects to make the local contribution but fails to do so in
any year, a reduction in local government aid will occur. The loss of aid will equal the greater of
1) the required local contribution or 2) the loss of aid which would have been incurred had the
local contribution election not been made.
Local contributions must be made out of unrestricted money and may not be made, directly or
indirectly, with tax increments or developer payments. The contributions must be used to pay
project costs and cannot be used for general government purposes or for costs which would
have been incurred absent the project. The City may request contributions from other local
governmental entities that will benefit from the establishment of the district.
The City elects to make the qualifying local contributions to the project.
Section X Prior Planned Improvements
The City shall accompany its request for certification to the County Auditor (or notice of district
enlargement), with a listing of all properties within the TIF District for which building permits
• have been issued during the 18 months immediately preceding approval of the TIF Plan. The
County Auditor shall increase the original net tax capacity of the TIF District by the net tax
capacity of each improvement for which a building permit was issued.
There have been no building permits issued in the last 18 months in conjunction with any of the
properties within the TIF District.
Section Y Development Agreements
If within a project containing a redevelopment district, more than 25% of the acreage of the
property to be acquired by the City is purchased with tax increment bonds proceeds (to which
tax increment from the property is pledged), then prior to such acquisition, the City must enter
into an agreement for the development of the property. Such agreement must provide
recourse for the City should the development not be completed. The City anticipates entering
into an agreement for development.
Section Z Assessment Agreements
The City may, upon entering into a development agreement, also enter into an assessment
agreement with the developer, which establishes a minimum market value of the land and
improvements for each year during the life of the TIF District.
The assessment agreement shall be presented to the County or City Assessor who shall review
• the plans and specifications for the improvements to be constructed, review the market value
previously assigned to the land, and so long as the minimum market value contained in the
assessment agreement appears to be an accurate estimate, shall certify the assessment
SPRINGSTED Page 11
City of Elk River, Minnesota
agreement as reasonable. The assessment agreement shall be filed for record in the office of
• the County Recorder of each county where the property is located. Any modification or
premature termination of this agreement must first be approved by the City, County and School
District.
At the time this document was prepared, it was not determined whether the City would enter
into any assessment agreements.
Section AA Modifications of the Tax Increment Financing Plan
Any reduction or enlargement in the geographic area of the Project Area or the TIF District;
increase in the amount of bonded indebtedness to be incurred; increase in the amount of
capitalized interest; increase in that portion of the captured net tax capacity to be retained by
the City; increase in the total estimated public costs; or designation of additional property to be
acquired by the City shall be approved only after satisfying all the necessary requirements for
approval of the original TIF Plan. This paragraph does not apply if:
(1) the only modification is elimination of parcels from the TIF District; and
(2) the current net tax capacity of the parcels eliminated equals or exceeds the net
tax capacity of those parcels in the TIF District's original net tax capacity, or the
City agrees that the TIF District's original net tax capacity will be reduced by no
more than the current net tax capacity of the parcels eliminated.
The City must notify the County Auditor of any modification that reduces or enlarges the
geographic area of the TIF District. The geographic area of the TIF District may be reduced but
not enlarged after five years following the date of certification.
• •
Section AB Administration of the Tax Increment Financing Plan
Upon adoption of the TIF Plan, the City shall submit a copy of such plan to the Minnesota
Department of Revenue. The City shall also request that the County Auditor certify the original
net tax capacity and net tax capacity rate of the TIF District. To assist the County Auditor in this
process, the City shall submit copies of the TIF Plan, the resolution establishing the TIF District
and adopting the TIF Plan, and a listing of any prior planned improvements. The City shall also
send the County Assessor any assessment agreement establishing the minimum market value
of land and improvements in the TIF District, and shall request that the County Assessor review
and certify this assessment agreement as reasonable.
The County shall distribute to the City the amount of tax increment as it becomes available.
The amount of tax increment in any year represents the applicable property taxes generated by
the retained captured net tax capacity of the TIF District. The amount of tax increment may
change due to development anticipated by the TIF Plan, other development, inflation of
property values, or changes in property classification rates or formulas. In administering and
implementing the TIF Plan, the following actions should occur on an annual basis:
(1) prior to July 1, the City shall notify the County Assessor of any new development
that has occurred in the TIF District during the past year to insure that the new
value will be recorded in a timely manner.
(2) if the County Auditor receives the request for certification of a new TIF District, or
for modification of an existing TIF District, before July 1, the request shall be
• recognized in determining local tax rates for the current and subsequent levy
years. Requests received on or after July 1 shall be used to determine local tax
rates in subsequent years.
SPRINGSTED Page 12
City of Elk River, Minnesota
(3) each year the County Auditor shall certify the amount of the original net tax
capacity of the TIF District. The amount certified shall reflect any changes that
occur as a result of the following:
(a). the value of property that changes from tax-exempt to taxable shall be
added to the original net tax capacity of the TIF District. The reverse
shall also apply;
(b) the original net tax capacity may be modified by any approved
enlargement or reduction of the TIF District;
(c) if the TIF District is classified as an economic development district, then
the original net tax capacity shall be increased by the amount of the
annual adjustment factor; and
(d) if laws governing the classification of real property cause changes to the
percentage of estimated market value to be applied for property tax
purposes, then the resulting increase or decrease in net tax capacity shall
be applied proportionately to the original net tax capacity and the retained
captured net tax capacity of the TIF District.
The County Auditor shall notify the City of all changes made to the original net tax capacity of
the TIF District.
Section AC Financial Reporting and Disclosure Requirements
• The State Auditor shall enforce the provisions of the TIF Act and shall have full responsibility for
financial and compliance auditing of the City's use of tax increment financing. On or before
August 1 of each year, the City must annually submit to the State Auditor, City Council, County
Board and County Auditor, and the School District Board a report which shall:
(1) provide full disclosure of the sources and uses of public funds in the TIF District;
(2) permit comparison and reconciliation of the accounts and financial reports;
(3) permit auditing of the funds expended on behalf of the TIF District; and
(4) be consistent with generally accepted accounting principles.
The report shall include, among other items, the following information:
(1) the original net tax capacity of the TIF District;
(2) the captured net tax capacity of the TIF District, including the amount of any
captured net tax capacity shared with other taxing jurisdictions;
(3) for the reporting period and for the duration of the TIF District, the amount
budgeted under the TIF Plan, and the actual amount expended for, at least, the
following categories:
(a) acquisition of land and buildings through condemnation or purchase;
S (b) site improvements or preparation costs;
SPRINGSTED Page 13
City of Elk River, Minnesota
(c) installation of public utilities, parking facilities, streets, roads, sidewalks,
or other similar public improvements;
(d) administrative costs, including the allocated cost of the City; and
(e) public park facilities, facilities for social, recreational, or conference
purposes, or other similar public improvements.
(4) for properties sold to developers, the total cost of the property to the City and the
price paid by the developer; and
(5) the amount of increments rebated or paid to developers or property owners for
privately financed improvements or other qualifying costs.
Additional information which must be annually reported to the State Auditor, by August 1 of
each year, includes:
(1) for the entire City:
(a) the total principal amount of nondefeased tax increment bonds
outstanding at the end of the previous calendar year; and
(b) the total amount of principal and interest payments that are due for the
current calendar year on tax increment bonds.
(2) for each tax increment financing district in the City:
• (a) the type of district;
(b) the date the TIF District is required to be decertified;
(c) the amount of any payments and the value of in-kind benefits, such as
physical improvements and the use of building space, that are financed
with revenues from increments and are provided to another governmental
unit during the preceding calendar year;
(d) the tax increment revenues for taxes payable in the current calendar
year;
(e) whether the TIF Plan permits tax increment revenues to be expended for
activities located outside of the TIF District, and
(f) any additional information that the State Auditor may require.
The City must also annually publish in a newspaper of general circulation in the City an annual
statement for each tax increment financing district showing the tax increment received in that
year, the original and captured net tax capacity, the amount of outstanding bonded
indebtedness, the amount of increments paid to other governmental bodies, the amount paid
for administrative costs, the sum of increment paid, directly or indirectly, for activities and
improvements located outside of the district, the increase in property taxes if a fiscal disparity
contribution is being made from outside of the district, and any additional information the City
deems necessary. The City must publish the annual statement by August 1 of the next year
• and must provide a copy to the State Auditor by the time it submits the annual statement for
publication.
SPRINGSTED Page 14
City of Elk River, Minnesota
The reporting and disclosure requirements outlined in this section shall begin with the year the
411 district was certified, and shall end in the year in which both the district has been decertified and
all tax increments have been spent or returned to the county for redistribution. Failure to meet
these requirements, as determined by the State Auditors Office, may result in suspension of
distribution of tax increment.
•
•
SPRINGSTED Page 15
EXHIBIT I
• JOHNSON I The Boundaries of Municipal Development District No. 1
\ I I Are Coterminous With the City Limits
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EXHIBIT II
Assumptions Report I
• City of Elk River, Minnesota
Tax Increment Financing (Redevelopment) District No. 19
(U.S. Highway 169 and County Highway 12 Project)
Type of Tax Increment Financing District Redevelopment
Maximum Duration of TIF District 25 years from 1st increment
Certification Request Date 08/01/98
Decertification Date 12/01/24 (25 Years of Increment)
1998/1999
Base Estimated Market Value $2,229,200 (5 PID Ws)
Times: First $150,000 2.45% 3,675
Excess 3.50% 72,772
Original Net Tax Capacity $76447
Assessment/Collection Year
1999/2000 2000/2001 2001/2002 2002/2003
Base Estimated Market Value $2,229,200 $2,229,200 $2,229,200 $2,229,200
Increase in Estimated Market Value(a) 8,000,000 16,000,000 26,000,000 36,000,000
Total Estimated Market Value $10,229,200 $18,229,200 $28,229,200 $38,229,200
• Times: First $150,000 2.45% 3,675 3,675 3,675 3,675
Excess 3.50% 352,772 632,772 982,772 1,332,772
Total Net Tax Capacity $356,447 $636,447 $986,447 $1,336,447
Base Inflation Factor NA
Local Tax Capacity Rate °
111.504/oPa
( y 98)
Fiscal Disparities Contribution From TIF District 0.0000%
Administrative Retainage Percent(maximum= 10%) 5.00%
Pooling Percent 0.00%
City Tax Rate(Only if Local-Effort TIF) NA
Bondg Note(Pay-As-You-Got
Bonds Dated 09/01/98 Note Dated 09/01/98
First Interest Date 02/01/99 Note Rate 7.50% (Blended)
Underwriters Discount 1.50%
LGA/HACA Loss:
Will Annual Local Contribution Be Made(Yes or No)? Yes (Annually)
I.S.D#728 Equalized Tax Capacity Rate NA
I.S.D#728 Sales Ratio NA
City Sales Ratio&Taxable Net Tax Capacity NA NA
Present Value Date&Rate 08/01/98 7.50% (Blended)
• (a) Assumes new commercial development of$8,000,000 in 1998(50%complete),
and an additional$8,000,000 in 1999(total new commercial EMV=$16,000,000).
Also assumes new industrial development of$10,000,000 in each of the years 2000 and 2001.
(total new industrial EMV=$20,000,000=400,000 sq. ft. @$50/sq.ft.).
Prepared by: Springsted Incorporated(printed on 6/30/98 at 3:00 PM) Tifinca
EXHIBIT III
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EXHIBIT V
Market Value Analysis Report
IIICity of Elk River, Minnesota
Tax Increment Financing(Redevelopment)District No. 19
• (U.S. Highway 169 and County Highway 12 Project)
Assumptions
Present Value Date 08/01/98
P.V. Rate-Gross T.I. 7.50%
Increase in EMV With TIF District $36,000,000
Less: P.V of Gross Tax Increment 12,549,987
Subtotal $23,450,013
Less: Increase in EMV Without TIF 0
Difference $23,450,013
Annual Present
Gross Tax Value @
Year Increment 7.50%
1 2000 312,211 266,929
II 2 2001 624,422 496,613
3 2002 1,014,686' 750,694
4 2003 1,404,950 966,905
5 2004 1,404,950 899,447
6 2005 1,404,950 836,694
7 2006 1,404,950 778,320
8 2007 1,404,950 724,019
9 2008 1,404,950 673,506
10 2009 1,404,950 626,517
11 2010 1,404,950 582,807
12 2011 1,404,950 542,146
13 2012 1,404,950 504,322
14 2013 1,404,950 469,136
15 2014 1,404,950 436,406
16 2015 1,404,950 405,959
17 2016 1,404,950 377,636
18 2017 1,404,950 351,290
19 2018 1,404,950 326,781
20 2019 1,404,950 303,982
21 2020 1,404,950 282,774
22 2021 1,404,950 263,046
23 2022 1,404,950 244,694
24 2023 1,404,950 227,622
• 25 2024 1,404,950 211,742
$32,860,219 $12,549,987
Prepared by: Springsted Incorporated(6/11/98)
•
RESOLUTION 98 - 3
ECONOMIC DEVELOPMENT AUTHORITY
CITY OF ELK RIVER
COUNTY OF SHERBURNE
STATE OF MINNESOTA
A RESOLUTION REQUESTING THE CITY COUNCIL OF THE CITY OF ELK
RIVER TO CALL FOR A PUBLIC HEARING ON THE MODIFICATION OF
DEVELOPMENT DISTRICT NO. 1 AND THE ESTABLISHMENT OF TAX
INCREMENT FINANCING DISTRICT NO. 20
BE IT RESOLVED by the Board of Commissioners (the "Board") of the Economic
Development Authority of the City of Elk River, Minnesota (the "EDA"), as follows:
WHEREAS, the City Council ("the Council") of the City of Elk River, Minnesota
(the "City") established Municipal Development District No. 1
pursuant to Minnesota Statutes, Sections 469.090 through 469.1081,
inclusive, as amended, in an effort to encourage the development and
redevelopment of certain designated areas within the City; and,
. WHEREAS, the EDA is proposing the modification of the Development Program
for Municipal Development District No. 1 and the establishment of
Tax Increment Financing District No. 20, pursuant to and in
accordance with Minnesota Statutes, Sections 469.090 through
469.1081 and Sections 469.174 through 469.179, inclusive, as
amended.
NOW, THEREFORE, BE IT RESOLVED by the Board as follows:
1. The EDA hereby requests that the Council call for a public hearing on
August 24, 1998, to consider the proposed adoption of the Modification to the
Development Program for Municipal Development District No. 1 and the
proposed adoption of the Tax Increment Financing Plan for Tax Increment
Financing District No. 20 (collectively, the "Program and Plan") and cause
notice of said public hearing to be given as required by law.
2. The EDA directs the Executive Director to transmit copies of the Program
and Plan to the Planning Commission of the City and requests the Planning
Commission's written opinion indicating whether the proposed Program and
Plan are in accordance with the Comprehensive Plan of the City, prior to the
date of the public hearing.
3. The Executive Director of the EDA is hereby directed to submit a copy of the
• Program and Plan to the Council for its approval.
• 4. The EDA directs the Executive Director to transmit the Program and Plan to
the Sherburne County and Independent School District No. 728 in which Tax
Increment Financing District No. 20 is located not later than July 24, 1998.
Passed and adopted by the Board this 13th day of July, 1998.
11‘.
=enry . Duitsman, Mayor
ATTEST:
Sandra A. Peine, City lerk
••
•
• THE ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY AND
THE ELK RIVER CITY COUNCIL
FOR THE
ESTABLISHMENT OF TAX INCREMENT DISTRICT NO. 20
(SUPERMATS,INC.)
(an economic development district)
Schedule
July 13, 1998 EDA requests City Council to call for a public hearing to be
held on August 24, 1998 to establish Tax Increment
Financing District No. 20.
July 13, 1998 City Council calls for a public hearing to be held on August
24, 1998 to establish Tax Increment Financing District No.
20.
July 23, 1998 Complete Plan.
July 24, 1998 Plan forwarded to School District and County Board (at
least 30 days prior to public hearing)
• July 28, 1998 Planning Commission reviews Plan for compliance with
the comprehensive plan.
August 5, 1998 Send public hearing notice and map to local paper
August 10, 1998 EDA approves Plan.
August 12, 1998 Date of publication of hearing notice and map (at least 10
days but not more than 30 days prior to public hearing)
August 24, 1998 City Council holds public hearing on the establishment of
Tax Increment Financing District No. 20 and passes
resolution approving Plan.
August 25, 1998 Send Plan to County/State for certification
TI2Osch
06, 12.98 13:52 e4417425 CITY.'ELK RIVER 006 '0n9
APPLICATION FOR TAX INCREMENT FINANCING
CITY OF ELK RIVER, MINNESOTA
•
APPLICANT
Business Name: Si1pPr7Kjs , Inc_
Address: 1810 Freeway Boulevard
Brooklyn Center, MN 55430
Telephone: 612-585-90006 -
Officers: Bryan L. Jones
Contact Person: Bryan L. Jones
Title: President , CEO
Business Form (Corporation, Partnership, Etc.): C Corporation
Years In Operation: 11
• Sales/Revenues: 2 •e Mi 11 i on
Brief Description of Business, Principal Products, etc:
Manufacture, Sales and D.iat,.r,jhnfiQn of jna1-G Ant
'loorina orod,cts
Has applicant ever filed for bankruptcy? Yes No X
If yes, provide details on separate page(s).
Has applicant ever defaulted on any bond or mortgage
commitment? Yes No X
If yes, provide details on separate page(s).
Does applicant have commitments for conventional financing for
the project? Yes No
Please list three financing references:
(Name/Address/Contact/Phone)
Norwest Bank, 8041 Brooklyn Blvd , Brooklyn Park,MN
Richard Seaton, Vice President , 612-424-7518
Toyota Uotor C'rPr3i t Cnrp. , P 0 Rnx--'958, TrIrr-a r-e,CA
Brett Beals, Commercial Finance Supervisor 310-787-1310
Name and Address of applicant's legal counsel and accountant:
Donald C. Willeke, ESQ. Mike Kissel_" (Comprehensive Acct )
201 Ridgewood Avenue 7100 Northland Circle #308
Minneapolis , MN 55403 Minneapolis , MN 55428
013, 12 98 13:32 $4417425 CITY%ELK RIVER ZUO7 '009
P,ROPOSED PROJECT
• Describe Project: New construction of a 35,000 to
40,000 sq. ft . facility to house all of SuperMats ,
Inc. ' s operations : manufacturing, sales , administration
and distribution .
Location: Industrial Park
Elk River, MN
Site Plan Attached: Yes _ _ No X
Type of Project:
Commercial Industrial X Residential
New Construction Expansion Rehab
JOB CREATION
Current Number of Employees: 8
Current Payroll: (Year-End 1997) $549,425 .00
Number of Jobs Created: 12
• Number of Jobs Retained: 20
Revised Payroll: (Year-End 1999) $760,000 - estimated
PROJECT COSTS
Laud Acquisition: 7 S, 00
Site Development:
Construction: $ I.
Machinery & Equipment:
Architectural and
Engineering Fees
Legal Fees
Interest During Const.
Debt Service Reserve S
Contingencies
TOTAL 3 , 5 6-a-0
SOU , OF FINANCING
Conventional Loan $ /�
Equity
SBA Loan $__ 1, 3 Z o, a-zrn
Revenue Bond $
Tax Increment Financing 7.5(
Grant(s) $_
Other
. $_
TOTAL $ I , 3 ?X;
06, 12%98 13:52 $4417425 CITY ELK RIVER Qi008%009
CONSTRUCTION AND DESIGN
• Name and address of architect, engineer and contractor for project:
Target Dates:
Start of Construction: September 1
Construction Completed: December 1
Finished Market Value of Project: $ 1 . 1 Million
S'T'ATEMENT OF PUBLIC PURPOSE
Describe why the proposed development or redevelopment would not
reasonably be expected to occur solely through private investment
within the foreseeable future and therefore the use of Tax Increment
Financing is deemed necessary:
Many communities offer incentives to bring business
to their cities . SuperMats currently has its
manufacturing plant in Elk River ander distribution,
sales and administration operations in Brooklyn Center.
SuperMats , Inc. while in sound financial condition
• and with good growth potential , need help to get the
size building it needs to house all o.erations
together under one roof . in Elk River.
The undersigned, (a) (the) President , CEO
of applicant, hereby represents and warrants to the City that (he) (she) has
carefully reviewed this application, and that the statements and information
contained herein and submitted herewith are accurate and complete to the
best of the undersigned's knowledge and belief.
Dated: June 26, 1998 SuperMats , Inc.
A. ant
By Bryan L. Jones
is President, CEO
The City reserves the right to require additional information and supporting
data from the applicant'after the Ming of this Application.
•
SUPERMATS,INC.
013180
111 52034 0 . 00 0 .00 5000 .00
06/26/98
00013180
$ 5000. 00
4
Suu erMats" NORWEST BANK MINNESOTA N.A.
Crystal Office 17-1910 516 013180
7000 Bass Lake Road
1810 FREEWAY BLVD. PH.612-585-9006 Crystal,Minnesota 55428 CHECK NO.
BROOKLYN CENTER,MN 55430 0001 31 80
• ** FIVE THOUSAND DOLLARS AND 00 CENTS **
DATE AMOUNT
06/26/98 ****5 ,000 .00
PAY CITY OF ELK RIVER
TO THE
ORDER
OF411.
'::<<c, THE REVERSE SIDE OF THIS DOCUMENT INCLUDES AN ARTIFICIAL WATERMARK HOLD':i'AN ANGLE'TO-t;CW-
1160 L3 L80111 1:09 L0000 L9': 31, 60098a ? LII'
•