3.0. - 4.0. EDSR 06-17-1996 rk,/ ITEMS 3 & 4
ity of ,/
MEMORANDUM
lk •
River TO: Economic Development Authority
FROM: Lori Johnson,Asst. City Administrator
DATE: June 17, 1996
SUBJECT: Public Hearing on Tax Increment
Financing District No. 15
As you know, the public hearing for this item was rescheduled for June 17.
All of the information was previously distributed to the EDA with the June
10 packet with the exception of the Contract for Private Development which
is attached for your review.
Briefly, this tax increment financing district involves $35,000 in TIF
assistance to McChesney Cabinets on a pay-as-you-go basis. It is expected
that increment will be collected for four years starting in 1998.
• Action Requested
The EDA is asked to hold a public hearing on Tax Increment Financing
District No. 15, consider the attached resolution relating to the establishment
of Tax Increment Financing District No. 15 and the adoption and approval of
the Tax Increment Financing Plan relating thereto located within
Development District 1. Additionally, the EDA is asked to approve the
Contract for Private Development.
s:\eda\meetings\tiff 51j.doc
•
13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441-7420 • Fax: (612) 441-7425
EDA RESOLUTION 96 -
• A RESOLUTION FOR THE ECONOMIC DEVELOPMENT AUTHORITY
FOR THE CITY OF ELK RIVER, MINNESOTA, RELATING TO THE
ESTABLISHMENT OF TAX INCREMENT FINANCING DISTRICT NO. 15
AND THE ADOPTION AND APPROVAL OF THE TAX INCREMENT
FINANCING PLAN RELATING THERETO, LOCATED WITHIN
DEVELOPMENT DISTRICT NO. 1
BE IT RESOLVED by the Economic Development Authority for the City of
Elk River, Minnesota (EDA), as follows:
Section 1. - Recitals.
1.01. It has been proposed that the EDA establish Tax Increment
Financing District No. 15 within Development District No. 1.
1.02 The EDA has caused to be prepared a proposed Tax Increment
Financing Plan (the Plan) for Tax Increment Financing District No. 15.
1.03 The EDA has performed all actions by Minnesota Statutes to be
performed prior to the establishment of Tax Increment Financing District No.
• 15 and the adoption of the Plan relating thereto.
1.04 The EDA hereby determines that it is necessary and in the best
interest of the City at this time to establish Tax Increment Financing District
No. 15 and to approve the Plan relating thereto.
Section 2. - Findings for the Establishment of Tax Increment
Financing District No. 15.
2.01 The EDA hereby finds, determines, and declares that the
establishment of Tax Increment Financing District No. 15 within
Development District No. 1 is intended and, in the judgment of this EDA, its
effects will be, to provide an impetus for commercial and industrial
development, increase employment and otherwise promote certain public
purposes and accomplish certain objectives as specified in the Plan for Tax
Increment Financing District No. 15.
2.02 The EDA further finds, determines, and declares that Tax
Increment Financing District No. 15 qualifies as an Economic Development
District pursuant to Minnesota Statutes, Section 469.174, Subdivision 12.
• 2.03 The EDA further finds, determines, and declares that the
proposed development, in the opinion of the EDA, would not occur solely
through private investment within the reasonably foreseeable future and,
• therefore, the use of Tax Increment Financing is deemed necessary.
2.04 The EDA further finds, determines, and declares that the
proposed Plan for Tax Increment Financing District No. 15 conforms to the
Comprehensive Plan of the City.
2.05 The EDA further finds, determines, and declares that the
proposed Plan for Tax Increment Financing District No. 15 will afford
maximum opportunity, consistent with the sound needs of the City as a
whole, for the development or redevelopment of Development District No. 1
by private enterprise.
2.06 The EDA determines and declares that Tax Increment
Financing District No. 15 located within Development District No. 1 is
hereby established.
Section 3. - Adoption of the Plan.
3.01 The Plan for Tax Increment Financing District No. 15 presented
to the EDA on this date, is hereby approved and adopted and shall be placed
on file in the office of the City Clerk.
• Section 4. - Implementation of the Plan.
4.01 The Executive Director of the EDA, the City Administrator, and
the Assistant City Administrator are authorized and directed to proceed with
implementation of the Plan, and for this purpose, to negotiate, draft, and
prepare and present to the EDA for its consideration all future plans,
resolutions, documents, and contracts necessary for this purpose.
Adopted this 17th day of June, 1996.
Jeffrey A. Gongoll, President
Elk River EDA
ATTEST:
Patrick D. Klaers, Executive Director
Elk River EDA
•
CONTRACT FOR PRIVATE DEVELOPMENT BY AND
BETWEEN THE CITY OF ELK RIVER, THE ECONOMIC
• DEVELOPMENT AUTHORITY FOR THE CITY OF
ELK RIVER, AND GERALD AND JOANNE MCCHESNEY
THIS AGREEMENT entered into this day of , 1996, between and
among the City of Elk River ("City") and the Economic Development Authority for the City of
Elk River ("EDA"), and Gerald Eugene McChesney and JoAnne McChesney (together, the
"Developer").
WHEREAS, Minnesota Statutes, Section 469.090, et seq., authorizes cities and counties
to establish Economic Development Authorities for the purpose of furthering the economic
development objectives of the respective city or county; and
WHEREAS, the City of Elk River, Minnesota, established the Economic Development
Authority for the City of Elk River ("EDA") in 1987; and
WHEREAS, Minnesota Statutes, Section 469.174, et sea., (the "Tax Increment Financing
Act") enables an Economic Development Authority to undertake certain housing projects,
redevelopment projects, and economic development projects with the use of Tax Increment
Financing; and
• WHEREAS, Developer applied to the EDA for Tax Increment Financing Assistance
("TIF") for development of the property located at Lot 9, Block 1, McChesney Industrial Park,
Elk River, Sherburne County, Minnesota (the "Development Site") into an office and
manufacturing facility of approximately 10,000 square feet to be constructed and owned by
Developer, to be occupied by McChesney Cabinets and Winn Electric (the "Project"); and
WHEREAS, the TIF assistance was requested to provide Developer with partial
reimbursement for site acquisition costs (the "Land Write Down"); and
WHEREAS, City staff prepared a Tax Increment Financing Plan ("TIF Plan") for the
Project which proposed maximum reimbursement for Land Write Down to Developer in the
amount of Thirty-Five Thousand and No/100 Dollars ($35,000.00); and
WHEREAS, the EDA held a public hearing on the TIF Plan on , 1996,
and approved the TIF Plan on that date; and
WHEREAS, the City Council held a public hearing on the TIF Plan on
1996, and approved the TIF Plan on that date; and
WHEREAS, an Economic Development Tax Increment Financing District ("TIF
District") was established on the Development Site, legally described as follows:
• Lot 9, Block 1, McChesney Industrial Park
; and
WHEREAS, the Tax Increment Financing Plan for the TIF District provides for the
Developer to be reimbursed, in an amount up to a maximum total assistance sum of Thirty-Five
• Thousand and No/100 Dollars ($35,000.00), upon evidencing payment of annual real estate
taxes; and
WHEREAS, the 1998 real estate tax year is the first year Developer is eligible for a
reimbursement payment, based on the January 2, 1997, value of the Project;
NOW, THEREFORE, BE IT RESOLVED that the City, the EDA and the Developer
agree on the following terms and conditions for reimbursement of the Land Write Down:
1. The EDA hereby pledges the Tax Increment it receives from the TIF District to
the City of Elk River to enable the City to reimburse Developer for the Land
Write Down identified in the TIF Plan.
2. Payments shall be made by the City to Developer, in a total amount not to exceed
the Land Write Down, pursuant to the terms of the Note attached as Exhibit A
to this Agreement (the "Note").
3. The sole source of funds for payment of the City's obligations under the Note
shall be the tax increment generated by the TIF District. If taxes are not paid,
or taxes paid are not sufficient to generate tax increment, no payment on the Note
shall be due from the City.
• 4. If Developer fails to make real estate tax payments prior to the date when said
taxes are due to Sherburne County, an Event of Default under this Agreement
shall exist. No payments shall be made to Developer under the terms of the Note
if an Event of Default occurs, and payments shall not be resumed until the
Default is remedied. The Default shall be deemed remedied upon evidence of
receipt of payment in full for real estate taxes from Sherburne County.
5. After reimbursing Developer for the principal sum of the Land Write Down, no
further payments shall be due under this Agreement and the City shall request that
Sherburne County decertify the TIF District.
6. Developer shall complete construction and shall occupy all or a substantial portion
of the Project by December 31, 1996. Failure to complete construction and
achieve occupancy of the Project by this date shall be an Event of Default under
this Agreement and City and EDA shall have the right to terminate this
Agreement and their obligations hereunder.
7. Developer shall, prior to January 2, 1997, provide City with evidence acceptable
to City of Developer's expenditures for Development Site acquisition costs.
• PXB 123191 2
8. Pursuant to Minnesota Statutes, Section 116J.991, City and EDA have
• established, and Developer has agreed, to the following Job Creation and Wage
Level Goals:
Job Creation: Two new jobs
Wage Level: to dollars per hour
9. Developer agrees to meet the Job Creation and Wage Level Goals on or before
, 19 . Failure to meet the Goals by this date shall be a
Default under the terms of this Agreement. In addition to such other remedies
as City and EDA may have, if Developer defaults by not meeting the Job
Creation and Wage Level Goals, Developer shall immediately repay to City all
amounts paid to Developer pursuant to this Agreement.
10. Developer shall report to EDA no later than 1st of each year
that this Agreement is in effect:
• Actual jobs created since first payment received under this
Agreement.
• Actual average hourly wage paid to employees hired since first
payment received under this Agreement.
• IN WITNESS WHEREOF, the City of Elk River, the Economic Development Authority
for the City of Elk River and Developer have caused this Development Agreement to be
executed as of the date and year first above written.
CITY OF ELK RIVER
By:
Henry Duitsman, Mayor
By:
Patrick D. Klaers
City Administrator
• PXB 123191 3
ECONOMIC DEVELOPMENT AUTHORITY
FOR THE CITY OF ELK RIVER
•
By:
Jeffrey Gongoll, President
Elk River EDA
By:
Patrick D. Klaers, Acting Executive
Director, Elk River EDA
DEVELOPER:
Gerald Eugene McChesney
JoAnne McChesney
•
• PXB 123191 4
EXHIBIT A
• TAX INCREMENT REVENUE NOTE
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF SHERBURNE
CITY OF ELK RIVER, MINNESOTA
TAX INCREMENT REVENUE NOTE
The City of Elk River, Minnesota(the "City"), hereby acknowledges itself to be indebted
and, for value received, hereby promises to pay to Gerald Eugene McChesney and JoAnne
McChesney or its assigns (the "Owner"), an amount equal to Thirty-Five Thousand and No/100
Dollars ($35,000.00) as more fully described in the Contract for Private Development by and
between the City of Elk River, the Economic Development Authority for the City of Elk River,
and Gerald Eugene McChesney and JoAnne McChesney (the "Development Agreement"), in the
manner, at the times, from the sources of revenue, and to the extent hereinafter provided.
The unpaid principal on this Note shall be payable on July 15, 1998 and on each
December 15 and July 15 thereafter, or within ten (10) days of receipt by City of the tax
settlement from Sherburne County, whichever comes later, to and including December 15, 2003
(the "Payment Dates"). On each Payment Date the City shall pay by check or draft mailed to
the Owner of this Note an amount equal to the lesser of(1) the principal then due on this Note;
• or (2) the Tax Increment received and retained by the City pursuant to the City of Elk River Tax
Increment Financing Plan for Tax Increment Financing District No. 15.
The amounts due hereon shall be payable solely from Tax Increments paid to the City
and which the City is entitled to retain pursuant to the provisions of Minnesota Statutes, Sections
469.174 through 469.179, as the same may be amended or supplemented from time to time.
This Note shall terminate and be of no further force and effect following the last Payment Date
defined above, on any date upon which the City shall have terminated the Development
Agreement, or on the date that the principal payable hereunder shall have been paid in full,
whichever occurs earliest.
The City makes no representations or covenants, express or implied, that the Tax
Increment received by the City will be sufficient to pay, in whole or in part, the amount due and
payable hereunder.
The City's payment obligations hereunder shall be further conditioned on the fact that
there shall not have occurred and be continuing on the Payment Date a Default under the terms
of the Development Agreement, but such unpaid amounts shall become payable if said Event of
Default shall have been cured. If, pursuant to the occurrence of a Default under the
Development Agreement, the City elects to terminate the Development Agreement, the City shall
have no further debt or obligation under this Note whatsoever.
•
This Note is a special, revenue obligation of the City and not a general obligation of the
• City and is payable by the City only from the sources and subject to the qualifications stated or
referenced herein. Neither the full faith and credit nor the taxing powers of the City are pledged
to the payment of this Note, and no property or other asset of the City, save and except the
above-referenced Tax Increment, is or shall be a source of payment of the City's obligation
hereunder.
Except as hereinafter qualified, this Note may be assigned but upon such assignment the
assignor shall promptly notify the City in care of the office of the City Administrator by
registered mail, and the assignee shall surrender the same to the City either in exchange for a
new note or for transfer of this Note on the records for the Note maintained by the City. Each
permitted assignee shall take this Note subject to the foregoing conditions and subject to all
provisions stated or referenced herein.
IN WITNESS WHEREOF, The City of Elk River, Minnesota, by its City Council, has
caused this Note to be executed by the manual signatures of its Mayor and its City Administrator
and has caused this Note to be issued on and dated , 1996.
CITY OF ELK RIVER
By:
• Henry Duitsman, Mayor
By:
Patrick D. Klaers
City Administrator
• PXB 123191 2