3.0. EDSR 06-02-1997 TAX INCREMENT FINANCING POLICY
CITY OF ELK RIVER, MINNESOTA
• WHEREAS, Minnesota Statutes authorizes the use of Tax Increment
Financing to assist communities with its development or
redevelopment efforts; and,
WHEREAS, Tax Increment Financing is a financing tool that enables
communities to use the increase in property taxes from a
completed development or redevelopment project to pay for certain
qualifying improvements; and,
WHEREAS, qualifying improvements may include site acquisition costs, land
write down, demolition, site preparation, soil correction,
relocation costs, interest reduction costs, housing to low and
moderate income persons and families, housing for the
elderly, or the construction of public infrastructure; and,
WHEREAS, there is a decline of Federal and State programs available to
cities for urban renewal and economic development.
NOW, THEREFORE, the City of Elk River, its Economic Development
Authority and its Housing and Redevelopment
Authority do hereby resolve:
1. That Tax Increment Financing is a necessary tool to
IP encourage private sector investment to stimulate
economic growth and redevelopment initiatives in the
community.
2. That there exists a need to develop a general Policy
Statement to review requests for Tax Increment
Financing.
3. That the attached Policy Statement will serve as a
guideline for reviewing requests for Tax Increment
Financing.
Adopted in 1991 By:
CITY OF ELK RIVER
BY: /s/James A. Tralle
Its Mayor
ELK RIVER EDA
BY: /s/Jeffrey A. Gongoll
Its President
ELK RIVER HRA
BY: /s/Richard Hinkle
Its Chairman
TAX INCREMENT FINANCING POLICY
ELK RIVER, MINNESOTA
SECTION I- COMPREHENSIVE PLAN
• All requests for Tax Increment Financing shall be consistent with the
City's Comprehensive Land Use Plan and its components. Only those
requests that are comprehensive in nature will be accepted. Fragmented
projects that exclude adjacent parcels will not be encouraged.
SECTION II - DEMONSTRATED NEED
The request for Tax Increment Financing assistance must demonstrate
that the proposed development or redevelopment would not reasonably be
expected to occur solely through private investment within the reasonably
foreseeable future and, therefore, the use of Tax Increment Financing is
deemed necessary.
SECTION III - QUALIFYING IMPROVEMENTS
A request for Tax Increment Financing shall specify in detail the
proposed uses of the Tax Increment Financing subsidy. Qualifying
improvements may include but are not limited to site acquisition, land write
down costs, site preparation, soil correction, demolition, relocation costs,
interest reduction costs, or the construction of public infrastructure.
• SECTION IV-EXTRAORDINARY DEVELOPMENT STANDARDS
Preference shall only be given to those projects requesting Tax
Increment Financing assistance which meet or exceed the City's development
standards. These standards include building design, type of construction,
and extraordinary landscaping.
SECTION V-MAXIMUM SUBSIDY
All requests for Tax Increment Financing shall be subject to a subsidy
cap. The subsidy shall be based on a percentage of the project's finished
market value (for tax purposes) as determined by the County Assessor.
Except for redevelopment projects which may require more assistance than
other projects, the average Tax Increment subsidy shall not exceed 15% of the
project's finished value. The following projects shall be eligible for Tax
Increment Financing:
Redevelopment
Industrial/Manufacturing
Service Companies/High Technology
Commercial
• Housing
Under extraordinary circumstances, the City Council reserves the
right to adjust the average subsidy level.
SECTION VI - LEGISLATIVE RESTRICTIONS
• 1990 amendments to the Tax Increment Financing Act provide for a
reduction in state aid for cities that establish new Tax Increment Financing
Districts after April 30, 1990. The state aid reduction will not directly affect
the amount of Tax Increment revenues. Rather, it will be a reduction in the
amount of Local Government Aid (LGA) or Homestead and Agricultural
Credit Aid (HACA). Because this penalty will affect municipal budgets
through reductions in LGA and HACA, the City of Elk River will evaluate, in
greater detail, how new projects and the penalty will adversely affect the
community.
The applicant will be advised by the City of Elk River as to how the
request for Tax Increment Financing will affect the City's loss in LGA.
Thereafter, a decision to pursue a Tax Increment Financing request will be
made by the applicant.
SECTION VII - FINANCING THE QUALIFYING IMPROVEMENTS
Qualifying improvements may be financed in a variety of ways. Tax
Increment bonds issued to finance a qualified project may be either general
obligation bonds or revenue bonds. General obligation bonds are backed by
the full faith and credit of the municipality and remain an obligation and a
financial liability of the municipality as long as the bonds remain
outstanding. To that end, the preferred option to finance the qualifying
improvements is through a technique known as "pay-as-you-go." Under this
financing method, the applicant is reimbursed for the costs incurred with the
qualifying improvements over a series of years. The applicant recovers the
costs over a series of years by providing evidence that real estate taxes have
been paid in a timely fashion. Through this reimbursement method, the need
to issue general obligation bonds is avoided. "Pay-as-you-go" financing
requires no bonding and relies on an income stream generated by real estate
taxes to reimburse the applicant for the qualified costs.
SECTION VIII -APPLICATION FEE
All persons and companies requesting Tax Increment Financing shall
be required to pay a non-refundable application fee equal to ten percent
(10%) of the tax increment requested up to a maximum fee of$5,000.00. This
fee is intended to cover the City's legal, financial and administrative analysis
of the request.
•
SECTION IX- REVIEW OF APPLICATION
Upon receipt of a completed Tax Increment Financing application, and
• upon payment of the application fee, the request for assistance shall be
reviewed by a committee consisting of the City Administrator, Finance
Director, Economic Development Coordinator, City Attorney and the
Economic Development Consultant. A recommendation from the committee
shall be made to the Economic Development Authority or the Housing and
Redevelopment Authority and this recommendation shall be forwarded to the
City Council. Following a public hearing as required by Minnesota Statutes,
the City Council shall approve or deny the Tax Increment Financing Request.
The City Council reserves the right to approve or reject each request.
•
•
APPLICATION FOR TAX INCREMENT FINANCING
CITY OF ELK RIVER, MINNESOTA
• APPLICANT
Business Name:
Address:
Telephone:
Officers:
Contact Person:
Title:
Business Form (Corporation, Partnership, Etc.):
Years In Operation:
• Sales/Revenues: $
Brief Description of Business, Principal Products, etc:
Has applicant ever filed for bankruptcy? Yes No
If yes, provide details on separate page(s).
Has applicant ever defaulted on any bond or mortgage
commitment? Yes No
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)
• Name and Address of applicant's legal counsel and accountant:
PROPOSED PROJECT
Describe Project:
•
Location:
Site Plan Attached: Yes No
Type of Project:
Commercial Industrial Residential
New Construction Expansion Rehab
JOB CREATION
Current Number of Employees:
Current Payroll:
Number of Jobs Created:
Number of Jobs Retained:
Revised Payroll:
PROJECT COSTS
•
Land Acquisition: $
Site Development: $
Construction: $
Machinery & Equipment: $
Architectural and
Engineering Fees $
Legal Fees $
Interest During Const. $
Debt Service Reserve $
Contingencies $
TOTAL $
SOURCE OF FINANCING
Conventional Loan $
Equity $
SBA Loan $
Revenue Bond $
Tax Increment Financing $
• Grant(s) $
Other $
TOTAL $
CONSTRUCTION AND DESIGN
Name and address of architect, engineer and contractor for project:
•
Target Dates:
Start of Construction:
Construction Completed:
Finished Market Value of Project: $
STATEMENT 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:
• •
The undersigned, (a) (the)
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:
Applicant
By
Its
The City reserves the right to require additional information and supporting
data from the applicant'after the filing of this Application.
•
PLEASE ATTACH:
1. Site Plan Consistent with Submittal Requirements of the Building and Zoning
Department.
• 2. Audited Financial Statements or Tax Returns from the Past Two
Years.
3. Current Financial Statement
4. 3-Year Pro Forma Analysis
5. Other Information Related to the Project
6. Application Fee
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