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4.1. EDSR 06-28-2016 El .�.� Request for Action Ricer To Item Number Economic Development uthority Finance Committee 4.1 Agenda Section Meeting Date Prepared by General Business June 28,2016 Amanda Othoudt,EDD Item Description Reviewed by EDA Financial Policy Annual Review Cal Portner, City Administrator Reviewed by Action Requested Consider the changes made to the EDA Microloan Fund Program Policy,EDA Forgivable Loan Program Policy,Tax Abatement Policy,and TIF Policy and the creation of a separate microloan policy utilizing the former state MIF proceeds. Background/Discussion Staff,in conjunction with our attorney and financial advisor,reviewed and revised the EDA loan programs and policies based on discussions from the April 26 meeting. Changes to the EDA Forgivable Loan Program Policy include the following: 1. Federal Poverty Level Wage Updates 2. LMI Income Requirements Changes to the Property Tax Abatement Policy include the following: 1. Subsidy and Reporting Requirements 2. Removed the requirement of a minimum assessment agreement per attorney 3. Application fee increased to $10,000 4. Added Reimbursement of Costs of Review Changes to the Tax Increment Policy include the following: 1. Incorporated the housing policy into the general TIF policy for consistency 2. Added Public Purpose Objectives for Housing TIF districts 3. Identified Statutory TIF district categories and term 4. Revised Application 5. Added Confidentiality Agreement Changes to the Microloan Policy include the following: 1. Rename policy for consistency: Elk River Economic Development Business Microloan Fund, Guidelines,Policy&Application 2. Re-Organization and Re-numeration of policy for clarity 3. Application fee increased to $7,000 from$2,000. 4. Rate is consistent throughout at 2% 5. Added Meeting Schedule 6. Added Confidentiality Agreement 7. Added Scoresheet Creation of a new policy utilizing former State MIF proceeds i 0WEAED 6Y 4A R 1. The policy was separated from the general microloan program to address specific state guidelines, eligible expenditures, activities,projects,wage goals and outlines prevailing wage requirements. Financial Impact None Attachments ■ Economic Development Microloan Fund Program Policy ■ Economic Development Forgivable Loan Program Policy ■ Tax Abatement Policy ■ TIF Policy ■ Job Incentive Microloan Seeded by State MIF Funds N:\Departments\Community Development\Economic Development\EDA\Administrative\Agenda\EDA Finance Committee Agenda Packets\2016\6-28-16\4.1 sr EDA Financial Policy Annual Review.docx -0 C ty of E ILk T Economic Development Forgivable Loan Policy Guidelines & Application Citi of Elk River Economic Development Division 13065 Orono Parkway Elk River,AIN 55330 763.635.1040 www.elkrivermn.gov P o w E e E D s Y AU ` ELK RIVER ECONOMIC DEVELOPMENT FORGIVABLE LOAN POLICY GUIDELINES & APPLICATION I. OVERVIEW The Economic Development Authority(EDA) for the City of Elk River recognizes the need to stimulate private sector investment to help spur new construction,create and retain employment opportunities,and promote the sale of city-owned property. The focus is on industrial,manufacturing,and technology-related industries to increase the local and state tax base and improve economic vitality. The program can be used toward the purchase of land (preference given to city-owned property)or to assist in purchasing new machinery,equipment,furniture or fixtures. II. TO APPLY Applications will initially be accepted freffi FebFd ..._4 c 20 2 to r ft fe. 45,-n4 a n f+e-r Alftfe4 4 cam, on an ongoing basis and reviewed monthly. Projects will be scored based on the attached Application Review Worksheet The applicant shall complete and submit the attached application to the city,along with a processing fee of 1%of the loan request to cover processing expenses (any unused portions of the application fee is to be refunded if the project is denied. f,-.p-W]he Formatted:Font:Bold refttttded if Tpfiefttiott is ). Once application is deemed complete,it will be reviewed by the EDA Finance Committee and EDA(process may take up to six weeks . III. PURPOSE Forgivable loan funds are to be used for business start-ups,expansions,and relocations where jobs are created and tax base is generated. This can be accomplished by the following means: 1. Creation of permanent,private-sector jobs in order to create above average economic growth; 2. Stimulation or leverage of private investment to ensure economic renewal and competitiveness; 3. Increase oflocal tax base; 4. Improvement of employment and economic opportunity for citizens in the region to create a reasonable standard of living;and 5. Stimulation of productivity growth through improved manufacturing or new technologies. IV. PROJECT ELIGIBILITY AND REQUIREMENTS The forgivable loan must be based on the following criteria: 1. Creation of new jobs which meet the Federal low to moderate income(LMI)guidelines and wage goals(currently wages and benefits must equal at least$42-4112.82/hr.-requirements adjust annually in March)which can be found here: (.2ttps://www.federalregister.gov/articles/2015/01/22/2015-01120/annual-update-of-the-hhs- Formatted:Font:Garamond,Font color:Auto poverty-gguidehnes#t-1) 4-2. At least 51%of the jobs created must be made available or held by LMI person as outlined on page 18 of this application. -2-3.Increase in tax base 44.The project demonstrates that investment of public dollars induces private funds; 45.The project provides higher wage levels to the community or will add value to current workforce skills; —5- The project results in the sale and development of city owned property; Forgivable Loan Policy and Application FP O N t R 1 U R INAWREE] Page 1 of 20 4-7.Whether assistance is necessary to retain existing business;and -7-8.Whether assistance is necessary to attract out-of-state business. A forgivable loan cannot be made solely on a finding that the conditions in clause 6.)or 7.)exist. A finding must be made that a condition in clause 1.),2.),3.),4.),or 5.)also exists. Forgivable loans are awarded to businesses that meet all project and job requirements as outlined within. Projects are awarded based upon meeting program criteria. V. ELIGIBLE ACTIVITIES Forgivable Loan may be used for the following activities: 1. Land acquisition(city-owned property given preference) 2. Purchase of furniture,fixtures,and equipment(FF&E)along with new construction* *if equipment installation is greater than$2,000,Davis Bacon Rates apply VI. BUSINESSES ELIGIBILITY Any project meeting the above criteria,and located or proposed to be located within the city limits of Elk River as defined by this program,may be eligible for an Economic Development Forgivable Loan as further defined herein: 1. Business must be a for-profit corporation,partnership,or sole proprietorship. 2. Business must be a small business as defined by the Small Business Administration(SBA. 3. Business must have a positive net worth. 4. Business must be an industrial,manufacturing or technology-based industry 5. Religious,political,casino,sports facilities and pornographic enterprises are not eligible to use the Economic Development Forgivable Loan Program. VII. FORGIVABLE LOAN TERMS&CONDITIONS Loan Amount There is a maximum of$200,000 per forgivable loan.Federal guidelines require a minimum of one job to be created for every$35,000 requested. To receive maximum loan amount of$200,000,applicant would need to create six new FTE positions of which 51%meet LMI requirements. Wage and benefits must be Formatted:Highlight equal or greater than$1912 82 hr The Federal poverty level changes annually Applicants will have a Formatted Highlight minimum of two years to hire these jobs,and the jobs created by the forgivable loan program must be retained for a minimum of one year. Job creation and retention periods will be established by the Economic Development Authority(EDA)and the EDA Finance Committee.Program guidelines may be changed on a case-by-case basis at the FDA's discretion. Loan Structure All Economic Development Forgivable Loans shall be structured as direct loans. Interest will be fixed at 3%or 2 points below the lowest prime rate published in the Wall Street Journal, whichever is greater. The applicant must provide at least 50%of project cost through other means.Equity down payment requirements may vary depending on project and primary lending institution. Forgivable loan funds may be used as equity upon approval of primary lending institution. Forgivable Loan Policy and Application P O N [ R 1 U R 1 Page 2of20 INAWREI The EDA may require additional agreements to be signed by the borrower(i.e.security agreement, personal guarantees,business subsidy agreement). Other EDA Incentives Projects can combine the forgivable loan with all other incentives(i.e.:Micro Loan Program,Tax Abatement,TIF,etc. Call of Loan Forgivable Loan terms are set by the EDA.Projects which don't meet the terms may be required to repay all or a portion of the loan as determined in the loan agreement. If the 51%of LMI job creation is not met,the funds will need to be repaid. A job creation extension may be granted upon review of the Economic Development Authority on a case by case basis. Repayment terms will vary depending on the use of funds and collateral securing the loan. Specific repayment terms will be defined in the loan agreement in the event repayment of part or the entire forgivable loan is required. A loan shall become due and payable in full if a business relocates outside of the City of Elk River prior to the maturity date of the loan. The loan will be forgiven upon completion of all of the goals set forth by the EDA,and the jobs created as a result of the forgivable loan program are retained for a minimum of one year. VIII. LOAN SECURITY AND GUARANTEES Applicant must secure the loan by providing the EDA with a minimum of a subordinate mortgage upon the building and/or assets or other approved collateral. Personal guarantees will be made part of all loan agreements. Key person life insurance may be required as determined by the EDA Finance Committee based on loan amount and company ownership partners. IX. TIMING OF PROJECT EXPENSES/PROJECT TIMELINE No project can commence until the Elk River Economic Development Authority has approved the loan application. Any costs incurred prior to the approval of the loan application are not eligible expenditures. Applicant must submit project timeline with application;timeline will assist in determining job creation goal deadlines. The applicant will be responsible for all legal,recording,and other fees required for protection of a security interest in the loan,payable by a non-refundable 1%processing fee,which is paid at the time of application. In addition to the non-refundable 1%processing fee,all legal and filing fees shall be paid by the borrower at loan closing. X. PROCEDURAL GUIDELINES FOR APPLICATION AND APPROVAL 1. All applicants shall first contact a primary lending institution to determine if additional equity is needed,and if so,how much. 2. The applicant and the primary lender(if applicable)shall then meet with City Staff to obtain information about the Economic Development Forgivable Loan program,discuss the project,and obtain application forms. 3. The applicant shall complete and submit an application form to the City,along with a processing fee Forgivable Loan Policy and Application P 0 N [ R 1 0 R INAWREE] Page 3of20 of 1%of the loan request. (The fee is used to cover processing expenses and ani unused portions of the apphcation fee is to be refunded if the project is denied. ftrpheftfiatt is The applicant must provide evidence of their ability to meet the equity requirements or provide a letter of commitment for conventional financing from the primary lending institution if applicable. 4. The EDA is a governmental entity and as such must provide public access to public data it receives. Data deemed by Applicant to be nonpublic data under State law should be so designated or marked by Applicant. See Minn.Statute Sections 13.59,Subd.1,respectively. 5. City staff will review the application to determine if it conforms to all City policies and ordinances and to consider the following: a. The availability and applicability of other governmental grants and/or loan programs. b. Whether the proposed project conforms with building and zoning codes. c. Whether the proposed project is desirous and in the best interests of the public to provide funding for the project. 6. The application will be submitted by City Staff to the cities designated financial advisor as advisory consult for staff and EDA Finance Committee. 7. The EDA Finance Committee and EDA Commissioners will review each application in terms of its consistency with the goals of the City's Comprehensive Plan and Economic Development Strategic Plan.Consideration will also be given to the project's overall impact on the community's economy. The EDA Finance Committee will evaluate the project application in terms of the following: a. Project Design-Evaluation of project design includes review of proposed activities,time lines and a capacity to implement. b. Financial Feasibility-Availability of funds,private involvement,financial packaging and cost effectiveness. • Appropriate ratio of private funds to Forgivable Loan funds. • Sufficient cash flow to cover proposed debt service as demonstrated by financial statements and projections. • Ability to demonstrate a positive net worth. • Letter of Commitment from applicant pledging to complete the project during proposed project duration,if the loan application is approved. • Letter of Commitment from other financing sources stating terms and conditions of their participation in the project if applicable. • Sufficient collateral. • Certificate of Good Standing from the Minnesota Secretary of State or other satisfactory evidence of good standing. c. All other information as required in the application and/or additional information as may be requested by the Economic Development Authority. d. Job retention requirements will be determined at the time of approval. e. Project compliance with all city codes and policies. Forgivable Loan Policy and Application P O N [ R 1 U R INMUREEI Page 4 of 20 f Program Objectives-In addition to quality job and wage creation/retention requirements,the applicant must meet all Forgivable Loan Program criteria and demonstrate how the proposed activities will meet at least one of the objectives listed on page two of this application. 8. The EDA Finance Committee will recommend the approval,denial,or request a resubmission. A recommendation from the Finance Committee will be forwarded to the EDA for final action. 9. Loan proceeds will be disbursed upon proof of expenditures. A closing to execute the forgivable loan documents will only occur upon the following: a. Evidence that Applicant's portion of project funds have been disbursed or escrowed;or b. Written confirmation from the primary lender that Applicant has met equity requirements for the project and primary Lender has funded their portion of the project; c. Lender has fully funded the project and is seeking take out financing by EDA for FDA's portion of the project;or d. Lender is requesting simultaneous closing for the funding of the project. XI. LOAN POLICY REVIEW The above criteria will be reviewed on an annual basis to ensure that the policies reflected in this document are consistent with the economic development goals set forth by the City. XII. RIGHT OF REFUSAL The Elk River Economic Development Authority may deny any project which it deems inappropriate according to the guidelines established in this document. XIII. COMPLIANCE WITH MN BUSINESS SUBSIDY LAW Each company receiving assistance in the principal amount of$75,000 or more from the EDA Forgivable Loan Program shall be subject to the provisions and requirements set forth by Minnesota Business Subsidy Law Statute 116J.993 and the City of Elk River Business Subsidy Policy. All applicants will be required to submit annual progress reports to the Economic Development Authority until job creation requirements are met. Additionally,all new hires will be required to complete a salary survey to prove LMI requirements are met and forgivable loan policy requirements are met. XIV. OTHER FEDERAL REQUIREMENTS 1. FAIR HOUSING AND EQUAL ACCESS a. Title VI of the Civil Rights Act of 1964,as Amended(42 U.S.C.2000d et seq.) (24 CFR Part 1) i. No person may be excluded from participation in,denied the benefits of,or subjected to discrimination under any program or activity receiving Federal financial assistance on the basis of race,color or national origin. b. The Fair Housing Act(42 U.S.C.3601-3620) ((24 CFR Part 100-115) i. Prohibits discrimination in the sale or rental of housing,the financing of housing or the provision of brokerage services against any person on the basis of race,color,religion,sex, national origin,handicap or familial status. Furthermore,section 104(b) (2)of the Act requires that each grantee certify to the secretary of HUD that it is affirmatively furthering fair housing. The certification specifically requires grantees to conduct a fair housing Forgivable Loan Policy and Application P O M [ R 1 U R INAWREE] Page 5 of 20 analysis,develop a fair housing plan,take appropriate actions to overcome the effects of any impediments identified and maintain records on the analysis,plan and actions in this regard. c. Equal Opportunity in Housing(Executive Order 11063,as amended by Executive Order 12259) (24 CFR Part 107) i. Prohibits discrimination against individuals on the basis of race,color,religion,sex or national origin in the sale,rental,leasing or other disposition of residential property,or in the use or occupancy of housing assisted with Federal funds. d. Age Discrimination Act of 1975,As Amended(42 U.S.C.6101) (24 CFR Part 146) i. Prohibits age discrimination in programs receiving Federal financial assistance. e. Section 109 of Title I of the Housing and Community Development Act of 1974 i. Requires that no person shall be excluded from participation in,be denied the benefits of, or be subjected to discrimination under any program or activity funded with Community Development Block Grant(CDBG)funds on the basis of race,color,religion,national origin or sex. f. Americans with Disabilities Act(ADA) (42 U.S.C.12131;47 U.S.C.155,201,218,and 225) i. Provided comprehensive civil rights to individuals with disabilities in the areas of employment,public accommodations,state and local government services and telecommunications. The Act also states that discrimination includes the failure to design and construct facilities that are accessible to and usable by persons with disabilities and requites the removal of architectural and communication barriers that are structural in nature in existing facilities. g. Section 504 of the Rehabilitation Act of 1973 i. Prohibits discrimination in Federally assisted programs on the basis of handicap. It imposes requirements to ensure that"qualified individuals with handicaps"have access to programs and activities that receive Federal funds. h. Architectural Barriers Act of 1968(942 U.S.C.4151-4157) ii. Requires certain Federally funded buildings an other facilities to be designed,constructed or altered in accordance with standards that ensure accessibility to,and use by,physically handicapped people. 2. EQUAL OPPORTUNITY a. Equal Employment Opportunity,Executive Order 11246,as amended..(41 CFR part 60) i. Prohibits discrimination against any employee or applicant for employment because of race,color,religion,sex or national origin. Provisions to effectuate this prohibition must be included in all construction contracts exceeding$10,000. b. Section 3 of the Housing and Urban Development Act of 1968 i. Requires that,to the greatest extent feasible,opportunities for training and employment arising from CDBG will be provided to low-income persons residing in the program service area. Also,to the greatest extent feasible,contracts for work(all types)to be performed in connection with CDBG will be awarded to business concerns that are located in or owned by persons residing in the program service area. c. Minority/Women's Business Enterprise(Executive Orders 11625,12432,12138) (24 CFR 8536(e)). Forgivable Loan Policy and Application P O V [ R 1 U R INAWREE] Page 6of20 i. City will prescribe procedures for a minority outreach program to ensure the inclusion,to the maximum extent possible,of minorities and women,and entities owned by minorities and women,in all public infrastructure contracts. 3. LABOR REQUIREMENTS All contracts for construction and installation of equipment must comply with the following: a. Davis-Bacon and Related Acts(40 USC 276(A)-7) i. Ensures that mechanics and laborers employed in construction work under Federally assisted contracts are paid wages and fringe benefits equal to those that prevail in the locality where the work is performed. b. Contract Work Hours and Safety Standards Act,as amended(40 USC 327-333) i. Provides that mechanics and laborers employed on Federally assisted construction jobs are paid time and one-half for work in excess of 40 hours per week,and provides for the payment of liquidated damages where violations occur. It also addresses safe and healthy working conditions. c. Copeland(Anti-Kickback)Act(40 USC 276c) i. Governs the deductions from paychecks that are allowable. Makes it a criminal offense to induce anyone employed on a Federally assisted project to relinquish any compensation to which he/she is entitled,and requires all contractors to submit weekly payrolls and statements of compliance. d. Fair Housing Standards Act of 1938,As Amended(29 USC 201,et.seq) i. Establishes the basic minimum wage for all work and requires the payment of overtime at the rate of at least time and one-half. It also requires the payment of wages for the entire time that an employee is required or permitted to work,and establishes child labor standards. e. In accordance with 24 CFR Part 5,CDBG funds may not be used to directly or indirectly employ,award contracts to or otherwise engage the services of any contractor or subrecipient during any period of debarment,suspension or placement of ineligibility status. Grantees should check all contractors,subcontractors,lower tier contractors and subrecipients against the Federal publication that lists debarred,suspended and ineligible contractors. See internet site at http://www.amet.gov/epls/. 4. PROCUREMENT The procurement standards of 24 CFR 85.36 apply. 5. CONFLICT-OF-INTEREST For the procurement of property and services,the conflict-of-interest provisions at 24 CFR 85.36 and 24 CFR 84.42 apply. This requires the city to maintain written standards governing the performance of their employees engaged in awarding and administering contracts. At a minimum, these standards must: a. Require that no employee,officer,agent of the city or its subrecipient shall participate in the selection,award or administration of a contract supported by CDBG if a conflict-of-interest, either real or apparent,would be involved; Forgivable Loan Policy and Application P O M [ R 1 U R INAWREE] Page 7of20 b. Require that grantee or subrecipient employees,officers and agents not accept gratuities,favors or anything of monetary value from contractors potential contractors or parties to subagreements; and c. Stipulate provisions for penalties,sanctions or other disciplinary actions for violations of standards. A conflict would arise when any of the following has a financial or other interest in a firm selected for award: a. An employee,agent or officer of the grantee or subrecipient; b. Any member of an employee's,agent's or officer's immediate family; c. An employee's,agent's or officer's partner;or d. An organization that employs or is about to employ an employee,agent or officer of the grantee or subrecipient. In cases not covered by the above,the CDBG regulations at 24 CFR 570.611 governing conflict-of- interest apply. These provisions cover employees,agents,consultants,officers and elected or appointed officials of the city or subrecipient The regulations state that no person covered who exercises or has exercised any functions or responsibilities with respect to CDBG activities or who is in a position to participate in decisions or gain inside information: a. May obtain a financial interest or benefit from a CDBG activity; b. Have an interest in any contract,subcontract or agreement for themselves or for persons with business or family ties. This requirement applies to covered persons during their tenure and for one year after leaving the city or subrecipient entity. Upon written request,exceptions to these provisions may be granted by HUD on a case-by-case basis only after the city has: a. Disclosed the full nature of the conflict and submitted proof that the disclosure has been made public,and b. Provided a legal opinion from the city stating that there would be no violation of state or local law if the exception were granted. 6. ENVIRONMENTAL REVIEW The city is responsible for undertaking environmental reviews in accordance with the Environmental Handbook. The Environmental Review must be completed before funds are committed. 7. FLOOD INSURANCE Section 202 of the Flood Disaster Protection Act of 1973(42 USC 4106)requires that CDBG funds shall not be provided to an area that has been identified by the Federal Emergency Management Agency(FEMA)as having special flood hazards unless: a. The community is participating in the National Flood Insurance Program,or it has been less than a year since the community was designated as having special flood hazards;and b. Flood insurance is obtained. 8. DISPLACEMENT,RELOCATION,ACQUISITION AND REPLACEMENT OF HOUSING Projects involving acquisition,rehabilitation or demolition may be subject to the provisions of the Uniform Relocation Act. Forgivable Loan Policy and Application P O M [ R 1 U of INAWREE] Page 8 of 20 9. ANTI-PIRATING RULE Funds may not be used to assist for-profit businesses,including expansions,as well as infrastructure improvement projects or business incubator projects designed to facilitate business relocation IF a. The funding will be used to assist directly in the relocation of a plant,facility or operation;and b. The relocation is likely to result in a significant loss of jobs in the labor market area from which the relocation occurs The following are definitions to assist in determining if a business location falls under these provisions: • Labor Market Area(LMA):An LMA is an economically integrated geographic area where individuals can live and work within a reasonable distance or can readily change employment without changing their place of residence. • Operation:A business operation includes,but is not limited to,any equipment,production capacity or product line of the business. • Significant Loss of Jobs • A loss of jobs is significant if: ■ The number of jobs to be lost in the LMA in which the affected business is currently located is equal to or greater than one-tenth of on percent of the total number of persons in the labor force of that LMA; OR in all cases ■ A job is considered to be lost due to the provision of CDBG assistance if the job is relocated within three years of the provision of assistance to the business. ■ Notwithstanding the above definition,a loss of 25 jobs or fewer does not sonstitute a significant loss of jobs. Before directly assisting a business with CDBG funds,the state and UGLG shall include appropriate language in the written agreement with the assisted business to ensure that no pirating has occurred. In addition to other programmatic clauses,the written agreement shall include: • A statement from the assisted business as to whether the assisted activity will result in the relocation of any industrial or commercial plant,facility,or operation from one LMA to another, and,if so,the number of jobs that will be relocated from each LMA. • If the assistance will not result in a relocation covered by this section,a written certification from the assisted business that neither it,nor any of its subsidiaries,have plans to relocate jobs at the time the agreement is signed that would result in a significant job loss as defined in this rule;and • The agreement shall provide for reimbursement of any assistance provided to,or expanded on behalf of,the business in the event that assistance results in a relocation prohibited under this section. XV. STATE REQUIREMENTS 1. MINNESOTA INVESTMENT FUND(MS.116J.8731) Wage Goals-Businesses receiving assistance must pay each employee total compensation, including benefits not mandated by law,that on an annualized basis is equal to at least 110%of the federal poverty level for a family of four,which as of March 1,2012 is$ 9-12.82 er hour. The Formatted:Not Highl ght federal poverty level changes annually. Retail Businesses are not prohibited from receiving federal ED assistance. Forgivable Loan Policy and Application P O N [ R 1 U R INAWREE] Page 9of20 2. MUNICIPAL RIGHTS,POWERS,DUTIES(MS 471.87-471.88) An officer of the city may not have a personal financial interest or personally benefit financially from the business to be assisted. 3. BUSINESS SUBSIDY LAW(MS 116J.993-116J.995). Any state or local government agency or public entity that provides financial assistance to a business must comply with this statute. 4. FIRST SOURCE AGREEMENT(MS 116L.66) A business that receives grants or loans in an amount greater than$200,000 must agree to list any vacant or new positions with the MN Department of Employment and Economic Development. 5. SURETY DEPOSITS REQUIRED FOR CONSTRUCTION CONTRACTS(MS 290.9705) When a public infrastructure contract exceeds$100,000 and a non-Minnesota construction contractor has been hired to perform the work,the city must do one of the following: a. Deposit with the Department of Revenue,8%of every payment made to the contractor;or b. Have in its possession a Waiver of Withholding from the Department of Revenue. 6. GOVERNMENT DATA PRACTICES(MS 13) Information contained in the application for assistance will become a matter of public record with the exception of those items protected under the Minnesota Government Data Practices Act. Forgivable Loan Policy and Application FP O N [ R 1 U R INAWREE] Page 10 of 20 ELK RIVER ECONOMIC DEVELOPMENT FORGIVABLE LOAN APPLICATION I. CONTACT INFORMATION Legal Name of Business: Project Site Address: City/State/Zip Contact Person(s) Business Phone Fax Home Phone Email Check One: Proprietor Corporation Partnership Federal ID# State ID# *Social Seetrrti-eSecurity Number maybe requested. II. NATURE OF LOAN REQUEST Does your project involve purchasing city-owned property? Yes No Amount Requested:$ Total Project Cost:$ Type of project: New construction for a startup business. New construction for an existing business. On site expansion Equipment purchase Other Project timeline: Forgivable Loan Policy and Application P O N [ R 1 U R INAWREE] Page 10 of 20 Please give a brief summary of your business and its products or service: Please give a brief summary of the project: Please describe how this loan will impact your project: III. FINANCING Project Costs Land $ Site improvements $ Buildings(attach plans&costs) $ Equipment/Machinery/Fixtures (attach list and estimated costs) $ Remodeling $ Industrial Inventory/Working Capital $ Other(attach description) $ Total Costs $ Comments: Forgivable Loan Policy and Application P 0 N [ R 1 0 0 1 Page 11 of 20 INMUREI Proposed Sources of Financing SOURCE NAME TERMS AMOUNT Bank Loan $ Bank Loan $ Other Private Funds $ Applicant Contribution $ Other $ Fed Grant/Loan $ State Grant/Loan $ EDA Micro Loan $ EDA Forgivable Loan $ Tax Increment Financing $ Tax Abatement $ Total Financing $ Collateral Assignments Lien Description of Collateral Position To Bank 1 To Bank 2 To Private Sources To Other Sources To Federal Govt To State To EDA Micro Loan EDA Forgivable Loan Forgivable Loan Policy and Application P O N [ R 1 U R INAWREEI Page 12 of 20 Value of Collateral Book Value Cost Existing Liens Land $ $ $ Buildings $ $ $ Machinery&Equip. $ $ $ Other $ $ $ Other $ $ $ IV. JOB & WAGE GOALS How many employees do you currently have? Guidelines require a minimum of one job created for every$35,000 requested. Of total jobs created,at least 51% must be taken to a low to moderate income person. Jobs To Be Created* Please provide the followin information on jobs ou expect to create Within 2-years. Average Are the Jobs Expected Number Hourly Annual Permanent or Hiring job Title of jobs Wage Salary Tem ora ? Date Program Objectives (Check all that apply) The project contributes to the fulfillment of the city's approved and adopted economic development and/or redevelopment plans. The project prevents or eliminates slums and blight. The project increases the local tax base. The project brings a structure into compliance with an existing building code violation. Forgivable Loan Policy and Application P O N [ R 1 U R INAWREE] Page 13 of 20 V. PROJECT CONTACTS Attorney Name Address Phone Accountant Name Address Phone Financing Sources(lenders,partners,etc... Name Address Phone Name Address Phone Parent Company_ Name Address Phone Others Name Address Phone Name Address Phone Forgivable Loan Policy and Application P O N [ R 1 U R INAWREEI Page 14 of 20 VI. ATTACHMENTS CHECKLIST Please attach the following: A� Written Business Plan: 1. Description of Business 2. Ownership 3. Management 4. Date Established 5. Products/Services 6. Future Plans B� Financial Statements for Past Two Years C) Financial Projections for Two Years D) Resume of Owner/Management E) Personal Financial Statements of Proprietor,Partners, Guarantors F) Letter of Commitment from Applicant Pledging to Complete During the Proposed Project Duration G) Letter of Commitment from the Other Sources of Financing, Stating Terms and Conditions of their Participation in Project Fee of 1%of amount of loan request I) Certificate of Good Standing VII. AGREEMENT I/We certify that all information provided in this application is true and correct to the best of my/our knowledge. I/We authorize the City of Elk River and the Finance Committee to check credit references and verify financial and other information. I/We agree to provide any additional information as may be requested by the City and the Finance Committee. APPLICANT SIGNATURE BY DATE Forgivable Loan Policy and Application P O N [ R 1 U R INAWREE] Page 15 of 20 APPLICATION REVIEW WORKSHEET TO BE COMPLETED BY CITY STAFF 1. The project meets the criteria set forth in Section IV of the Forgivable Loan Policy. Check those which apply. Must meet first four to score 20 points. 0 points if any of the first four boxes an unchecked Ll Creates new jobs which meet the federal low to moderate income guidelines Ll Increases tax base Ll The project can demonstrate that investment of public dollars induces private funds Ll The project provides higher wage levels to the community or will add value to current workforce skills. Ll The project results in the sale and development of city owned property(additional 100pointsgiven) Ll Applicant has sufficient collateral(if box isn't checked loan won't be considered) Sub total Section I(mammum 120points) 2. Consideration of Capacity. Check those which apply. Must meet all four to score 20 points. 0 points if any boxes an unchecked Ll Applicant included a realistic implementation/project schedule Ll Applicant has the ability to administer and monitor project Ll Applicant has the ability to conform to city,state and federal requirements Ll Applicant has agreed to annual progress reports and submission of salary surveys for all new hires Subtotal Section 2(maxum um 20points) 3. Impact: Points Number of new jobs as a result of the project: *Award five points perjob created up to 150 points Ratio of loan funds to jobs created/retained $15,000 or less/job 80 points $15,001-$24,999/job 60 points $25,000-$34,999/job 40 points $35,000 and over/job 20 points Increase in the local real estate tax base >$500,000 20 points $250,000 to$500,000 15 points <$250,000 10 points Immediacy of Impact *20 points awarded if pmject will begin witbin 6 months Subtotal Section 3(maxim um 270 points *minimum ofWpoints must come from this section in orderforproject to be considered Forgivable Loan Policy and Application P 0 N [ R 1 0 R 1 Page 16 of 20 INAWREI 4. Wage Level of new jobs created: Points Minimum hourly wage of jobs created/retained: Over$21/hour 5 points $18-21 /hour 4 points $14-17/hour 3 points $ 312.82-13/hour 2 points Below$12.8244/hour application disqualified 5. Project size: The project will result in the construction of square feet. 80,000+ 50 points 65,000+ 40 points 50,000+ 30 points 35,000+ 20 points 25,000+ 10 point Subtotal Sections 4-S (maximum 35points) Sub-Total Points: of a possible 465 points. Forgivable Loan Policy and Application P O N E R E U R R Page 17 of 20 INAfUREI LMI Income Limits I. OVERVIEW Below is the Low and moderate income limits for Sherburne County. In order to qualify for the Forgivable Loan program as outlined above,51%of the full-time jobs created by the project need to be filled by employees falling into the category in the table below. To calculate the income of the individual or household: 1. The Family's entire income must be counted. 2. A family is all persons living in the same household who are related by blood,marriage,or adoption. 3. Adult children who continue to live at home should be included in the entire family's income. 4. A dependent child who is living outside of the home but continues to be claimed by the parent(s)as a dependent on their taxes should include their parents'income along with theirs to make up the family's income. FY 20154 FY 20135 Income Median Income 1 person 2 person 3 Person 4 Person 5 Person 6 Person 7 Person 8 Person Limit Income Limit Area Category Low Sherburne $92-,3008 (80%) $599,0992 $654,840 $Fi971140 $8173,360 $5 93986 Coup 6 600 Income $ 100 $524 Cr550 50 0 0 $764 350 0900 Limits Forgivable Loan Policy and Application P O N E R E U 9 1 Page 18 of 20 INAWRE City of er Powered b7Xature Economic Development Business Microloan Fund An-dGuidelines, Policy & Application Amended: May 2011 November 18, 2013 July 2014 November 17, 2014 June,2016 Cite-of Elk Rivef Economic Development Division 13065 Orono Parkway Elk River,MN 55330 763.635.1040 ELK RIVER ECONOMIC DEVELOPMENT BUSINESS MICROLOAN FUND PQ' ICY G-1-11 DEI—I GUIDELINES, POLICY &APPLICATION I. PURPOSE The Economic Development Authority for the city of Elk River(EDA)recognizes the need to stimulate private sector investment into manufacturing and certain commercial facilities and equipment in order to create new jobs,boost productivity and retain existing jobs for local residents.Additionally,the need exists to encourage investment in the expansion and/or rehabilitation of commercial and retail buildings in order to maintain the economic viability of the City and in the Downtown District. Subsequently,the purpose of this program is to provide low interest,long- term(i.e.greater than one year)loans as incentives for new industrial and commercial development within the city of Elk River and to encourage commercial and retail business owners in the Downtown District to rehabilitate their existing buildings. 2. LOAN PROGRAMS In order to meet the economic and community development objectives of the EDA, four distinct loan programs exist within the Business Microloan Fund_ 3. ELIGIBLE BUSINESSES Anyproject meeting the above criteria,and located or proposed to be located within the city limits of Elk River as defined by this program,may be eligible for an Microloan as further defined herein: • Unless otherwise stated,business must be a for-profit corporation, partnership,or sole proprietorship. • Business must be a small business as defined by the Small Business Administration (SBA). • Business must have a positive net worth. • Religious,political,and pornographic enterprises are not eligible to use the Economic Development Microloan Fund. 4. MICROLOAN FUND TERMS &CONDITIONS Loan Structure All Economic Development iNficroloans shall be structured as direct loans unless otherwise approved by the EDA Finance Committee.If a participation loan is requested,an agreement will be signed by the borrower,primary lender and the EDA. PawEREa Rr Page 2 of 29 NATURE The EDA ma require additional agreements to be signed by the borrower (Le. securiLT agreement,Personal guarantees,business subsidg agreement. Simultaneous Microloans The simultaneous use of different EDA Microloan Fund Programs by ani borrower or for an,r�project is Prohibited. Loan Repayment Jobs Incentive funds,including12rincipal and interest received may not be used to support restaurant,retail,casinos,or sports facilities. Call of Loan A loan shall become due and payable in full if a business relocates outside of the city of Elk River prior to the maturity date of the loan. Late Payment Charge A late payment charge of 8%of the installment amount will be enforced following a grace period of ten calendar days. S. REGULATION FOR NEW CONSTRUCTION AND IMPROVEMENTS All buildings which public funds will be used for construction or renovation are to be brought into conformance with city ordinances and state building codes. Repairs may include the following systems and portions of real property: a. Mechanical heating,12lumbing,and electrical b. Structural;including the facade of the structure and energy related improvements. c. Hook-up to cit:services (i.e.water,sewer) d. ADA(Americans with Disabilities Actimprovements 6. LOAN SECURITY AND GUARANTEES Applicant must be able to secure the loan b3:12roviding the EDA with a minimum of a subordinate mortgage upon the building and/or assets or other approved collateral equal to the amount of the loan. Applicant must demonstrate the financial means to repay the loans,as determined by the Economic Development Authority. Whenever possible,personal,corporate,and/or entit r�guarantees will be made part of any loan agreement. Ke:12erson life insurance may be required as determined by the EDA Finance Committee based on loan amount and company ownersW 12artners. r. TIMING OF PROJECT EXPENSES No Project should commence until the Elk River Economic Development Authority has 212�roved the loan ag�lication. Any costs incurred prior to the approval of the PO110fa B Page 3 of 29 NATURE loan application axe not eligible expenditures. No building construction should commence until the required cityl2ermits are secured. The applicant will be responsible for all legal,recording,and other fees required for protection of a security interest in the loan,payable by-a$7.000 processing fee,which is paid at the time of a12�lication. In addition to the processing fee,all legal and filing fees shall be paid by the borrower at loan closing. Closing of the Microloan should be simultaneous with the borrower's primary funding.The EDA should be given two weeks'notice before closing_ 8. PROCEDURAL GUIDELINES FOR APPLICATION AND APPROVAL 1. All applicants shall first contact a primary lending institution to determine if additional equity is needed,and if so,how much. 2. The applicant shall then meet with city staff to obtain information about the Microloan program,discuss the project,and obtain a,12�lication forms. 3. The applicant shall complete and submit an application form to the ci ,along with a$5,000 processing fee. (The fee is used to cover processing expenses and any remaining funds will be returned only if application is denied.) The applicant must provide evidence of their ability to meet the 10%equity requirements or provide a letter of commitment for conventional financing from the primary lending institution. 4. The EDA is a governmental entity and as such must provide public access to public data it receives. Data deemed by A1212licant to be nonpublic data under State law should be so designated or marked by Applicant. See Minn.Sat. Sections 13.59,Subd. 1.respectively_ 5. The application will be reviewed by the city staff to determine if it conforms to all city policies and ordinances and to consider the following; a. The availabili, and applicability of other governmental grants and/or loan programs. b. Whether the proposed project will result in conformance with building and zoning codes. c. Whether it is desirous and in the best interests of the public to provide funding for the project. The a,12�lication will be submitted by city Staff to the designated financial advisor acting as a third-party consult for staff and EDA Finance Committee. 6. The EDA Finance Committee and EDA Commissioners will review each application in terms of its consistency with the goals of the city's Comprehensive Plan and Economic Development Strategic Plan and in relation to the project's overall impact on the community's economy. Downtown Revitalization PO110fa B Page 4 of 29 NATURE Program applications will also be reviewed by a Housing&Redevelopment Authority Commissioner in conjunction with the EDA Finance Committee. Energy Efficiency Improvement Program applications will also be reviewed by an Energy City Commissioner in conjunction with the EDA Finance Committee. The EDA Finance Committee will evaluate the project application in terms of the following: a. Project Design-Evaluation of project design will include review of proposed activities,time lines and a capaci to implement. b. Financial Feasibility-Availability of funds,private involvement,financial packagimV and cost effectiveness. • Appropriate ratio of private funds to Microloan funds. • Sufficient cash flow to cover proposed debt service as demonstrated by financial statements and projections. • Ability to demonstrate a positive net worth. • Letter of Commitment from applicant pledginV to complete the project during12roposed project duration,if the loan application is approved. • Letter of Commitment from other financing sources stating terms and conditions of their participation in the project if applicable. • Sufficient collateral. c. All other information as required in the application and/or additional information as may be requested by the Economic Development staff. d. Project compliance with all city codes and policies. e. Program Objectives-In addition to qualityjob and wage creation/retention requirements,the applicant must meet all Microloan Fund criteria and demonstrate how the proposed activities will meet at least one of the following objectives: • The project contributes to the fulfillment of the cit,V s 24212roved and adopted economic development and/or redevelopment plans. • The project prevents or eliminates slums and blight. • The project increases the local tax base. • The project brings a structure into compliance with an existing building code violation. 8. A written request for an extension shall be accompanied b3:-A copy of current fmancial statements and a$500 upfront processing fee. The processing fee is used to cover processing expenses and will be returned if request is denied. The application for an extension beyond the original term should include a letter of PO110fa B Page 5 of 29 NATURE denial from a conventional lender. 9. The EDA Finance Committee will recommend the approval,denial,or request a resubmission. A recommendation from the Finance Committee will be forwarded to the EDA for recommendation of approval,denial to the City Council for final action. 9. MICROLOAN POLICY REVIEW The above criteria will be reviewed on an annual basis to ensure that the policies reflected in this document are consistent with the economic development goals set forth by the city. 10. RIGHT OF REFUSAL The Elk River Economic Development Authorit,V may depy any 12roject which it deems inappropriate according to the guidelines established in this document. 11. COMPLIANCE WITH MN BUSINESS SUBSIDY LAW All developers/businesses receiving financial assistance from the City of Elk River shall be subject to the provisions and requirements set forth by the City's Business Subsidy as amended and Minnesota Statutes Sections 1161.993 to 1161.995 (the"Minnesota Business Subsidy Law")if applicable. 12. AGREEMENT TO PAY COSTS OF REVIEW Formatted:All caps It is the policy of the City of Elk River to require applicants to pay costs incurred by the City in reviewing and acting upon applications,so that these costs are not borne by the taxpayers of the City. These costs include all of the City's out-of-pocket costs for expenses,including the Citds costs for review of the application by the City's Financial Consultant and City Attorney,or other consultants,recording fees,and necessary 12ublication costs. The application processing fees cover anticipated costs:costs incurred above the application fee will be invoiced as they are incurred,and payment will be due within thirt�:(30)days_Application fees are not refundable,though any unused portion is returned at the request of the applicant IfIf payment is not received as required by this agreement,the City may suspend the application review process and ma,r�y the application for failure to comply with the requirements for processing the application. Payment for costs will be required whether the application is granted or denied. Formatted:Font:Gill Sans MT,12 pt Formatted:Heading 1,Indent:Left: 0",First 13. MICROLOAN PROGRAMS line: 0",Line spacing: 1.5 lines Formatted:Heading 1,Indent:Left: 0",Line spacing: 1.5 lines Industrial Incentive R*eeFaFgLoan \\ Formatted:Font: 12 pt,All caps Purpose: The purpose of the Industrial Incentive PYe Loan is to �\ Formatted:Font:Gill Sans MT,12 pt,All caps encourage industrial and high technology business development that Formatted:Font:Gill Sans MT,12 pt supports the tax base and brings quality jobs to the city. tted:Indent:Left: 0" "X@e Page 6 of 29 Amount: Up to$100,000 of secondary financing not to exceed 20%of the total project cost. £Remaining Principal: Must have private-sector commitments for 50%of the project cost. Borrower must provide 10%or more of project financing. Rate: Fixed at 2%, ° Comment[OAl]:Talk to a bank about this? Formatted:Indent:Left: 0",First line: 0.5" Term: .Loans must mature within 5 years,but must be amortized over a longer period of 44ietime.The balloon payment must not be longer than the balloon payment of the participating bank if applicable. Loans may be amortized up to the following limits: 20 years on real estate uses; 10 years on equipment uses. Extension. T_.k_ .q1g 4 i.P u is _411 H. Rte. :_ In the event that the Borrower is unable to payoff the loan or Formatted:Indent:First line: o" refinance the Microloan at the end of five years,the loan may be extended up to two additional years at 2 points below the lowest prime rate published in the Wall Street journal the day the loan is closed,or 3%.whichever is greater.of interest. Criteria: Borrower must be an industrial or high technology€tffi7business and create or retain one new full-time job for each$20,000 loaned within 2 years.Said jobs must pay a minimum wage of$4$A915.00 per hour excluding benefits required by law. Loans of$75,000 or more shall meet the city of Elk River Business Subsidy Policy for the creation of new jobs at a minimum wage of$15.00 per hour excluding benefits required by law,as well as a 5-year location requirement. In the case where multiple sources of public financing are requested (e.g.Microloan and Tax Increment Financing)job creation goals shall not be double-counted. Borrower must comply with the provisions of the city's Industrial and Business Park zoning ordinances as applicable. Permitted Fund Uses: Formatted:Indent:First line: 0" P 0 1 1 0 f a B Y Page 7 of 29 INATUREJ a. Building construction Formatted:Numbered+Level: 1+ b. Building Purchase Numbering Style:a,b,c,...+Start at: 1+ Alignment:Left+Aligned at: 1"+Indent at: b. Land acquisition 1.25' c. Machinery d. Furniture,fixtures,and equipment(FF&W e. Renovation and modernization of buildings g. Public infrastructure needed for economic development expansions h. Investment real estate with a minimum of 50%of the space pre-leased Ineligible Fund Uses: a. Expenditures for the construction and/or renovation of residential units Formatted:Numbered+Level: 1+ b. Inventory Numbering Style:a,b,c,...+Start at: 1+ Alignment:Left+Aligned at: 1"+Indent at: c. Refinancing of existing debt 1.25' b. Working capital Formatted:Indent:Left: 0.5" Downtown Revitalization Financing RregraFnLoan Purpose: The Downtown Revitalization Financing Loan is available to business and property owners in the Downtown Area primarily for the rehabilitation and restoration of older buildings,as well as new business development.Non-profit organizations may be considered. The Downtown Area shall be described as that area in the attached Exhibit A. Amount: Up to$74,999 of secondary financing not to exceed 40%of the total project cost. E Remaining Principle: Must have private-sector commitments for 50%of the project cost. Borrower must provide 10%or more of project€fttfteingcQst. Rate: Fixed at 2%. Term: Financing with a balloon payment in up to 5-years.Loans may be amortized up to the following limits: 20 years on real estate uses; 10 years on equipment uses. Extension: In the event that the Borrower is unable to_payoff the loan or refinance the Microloan at the end of five years,the loan may be extended up to two additional years at*-2 points below the lowest prime rate published in the Wall Street journal the day the loan is closed,or 3%,whichever is reater. f interest. Comment[OA2]:DEFINE Formatted:Highlight P 0 1 1 0 a B Y Page 8 of 29 NATUOREi Criteria: At a minimum,20%of Microloan dollars must be used for the improvement of the building facades,with exceptions to be considered when it appears the facade improvements are not necessary.Financing of leasehold improvements will be considered at a limit of$25,000. _;_q-mifts nni-i 4- sttrre)rf ed 437 51-1_f4_ei-ef,t_F 9114-rft4,w4ielft ffi"iftelftde rerse)ftft4 ftsse�s ftftd Formatted:Indent:Left: 0" gttftrftttfees. Permitted Fund Uses: Formatted:Indent:First line: 0" Building construction Formatted:Indent:Left: 1.5",First line: 0" MachlnerV Formatted:Indent:Left: 1.5" Furniture,fixtures,and equipment(FF&E) Renovation and modernization of buildings Exterior renovation of retail,commercial and industrial bulldinVs Public infrastructure needed for economic development expansions Financing of leasehold improvements including facade improvements will be considered at a limit of$25.000 Expenditures for the construction and/or renovation of residential units Ineligible Fund Uses: Formatted:Strikethrough a.Inventory b.Refinancing of existing debt c.Working capital Formatted:Indent:Left: 0" Energy Efficiency Improvement PwegraFgLoan Purpose: The Energy Efficiency Improvements hregtarrrLoan is available to property owners of commercial or industrial buildings in Elk River to provide eaFlow interest loans to businesses to invest in energy efficiency and improve their profitability through reduced energy costs, . In addition, the program helps the city of Elk River use energy conservation as an economic development tool.Non-profit organizations may be considered. Amount: Applicants may apply for the cost of improvements up to$74,999 P 0 1 1 0 f a B Y Page 9 of 29 INATUREJ b Equity: Must have a minimum of 10%equity provided by the borrower. Rate: Fixed at 2%; IN" S�ree�re.__...,.t �t e a,.t �i e left_ is elesea e..24,w144..._�...,. Term: The maximum maturity date will be determined by the useful life of the improvement and the energy payback achieved as determined by ERMU.For projects that have a shorter length of payback(2-5)years as calculated according to energy savings,the loans will have an initial maturity of up to 5 years from the date of closing. Longer life improvements (6-15 years)may apply for a longer maturity of up to 10 years. Criteria: At ie s. 5004 of M-tticroloan funds shetild shall be spent on energy efficiency improvements outlined below or related building improvement costs- Applicant must agree to energy audits conducted under the utility company's Conservation Improvement Program(CIP). If warranted, engineering studies then are performed on facilities with conservation opportunities under the utility company's CIP Program. Energy efficiency is defined as improvements that are rebatable by the Elk River Municipal Utilities (ERMU)or the utility provider for the property if not ERMU.Proposed energy efficiency improvements that do not qualify for the utility's prescriptive rebate program will be reviewed and approved by the utility company servicing the upgrade measures (e.g.Elk River Municipal Utilities,Connexus,CenterPoint) along with a letter indicating eligible utility rebates. Utility rebates as applicable will be assigned to the Elk River EDA and applied toward principal repayment of the loan. An Elk River Energy City Commission member will be asked to participate in the EDA Finance Committee review and recommendation of the application. P 0 1 1 0 f a B Y Page 10 of 29 NATURE The loans will be secured by personal and corporate guarantees,and if applicable a lien on equipment financed and subordinate mortgage on the property. r astis ft_e tr-ftisfer-r-ftble. Installation must be certified through a licensed contractor and electrician.New construction is eligible when participating with a utility company rebate program. Eligible costs shall include only incremental costs over industry design standards. Eligible Uses: a.Energy efficiency measures installed in or on a building include: Formatted:Indent:Left: o",First line: o.s" a. Facility systems optimization(commissioning/re-commissioning b. Facility systems control improvements c. Process efficienc3r improvements (CenterPoint Energyl d. Lighting efficiency improvements e. Heating,ventilation and air conditioning system modifications f. Exterior envelope improvements V. Motor and pump efficienc,r� improvements h. Ground-source heat pump systems used to heat or cool a facility i. Installation of equipment or devices that use renewable energy sources to generate electricity or heat or cool a building including solar electriciL�:Whoto�voltaic).wind turbine or solar thermal. Ineligible Fund Uses: Formatted: No bullets or numbering a. Invento Formatted:Font:Century Schoolbook,Bold b. Refinancing of existing debt Formatted:Font:Century Schoolbook c. Working capital d. Expenditures for the construction and/or renovation of residential units Formatted:Indent:Left: 1.5", No bullets or numbering Formatted:Indent:Left: 0" lobs Incentive P*egramLoan Purpose: To assist existing businesses with expansion and attract new businesses to the City whose local operations will help expand the City's economy through job retention and creation and maintain/grow the City's tax base.The purpose of the Jobs Incentive Program is to encourage the creation of high paying and quality jobs to the city. Amount: Up to$200,000 of secondary financing not to exceed 20%of the total project cost. Equity: Must have private-sector commitments for 50%of the project cost. Borrower must provide 10%or more of project financing. Rate: Fixed at 2%. POwEREa R1' Page 11 of 29 NATURE Term: Financing with a balloon payment in up to 5-years.Loans may be amortized up to the following limits: 20 years on real estate uses; 5-10 years on equipment uses. Extension: The loan term of 5 years may be extended by up to two additional years with approval from the EDA and City Council. Criteria: Borrower must create or relocate one new full-time job to the City of Elk River for each$20,000 loaned,retain one new full-time job for each$10,000 loaned,or combination of retainage and creation to meet the requirements.All new jobs must be created within 2 years and retained for the period of the loan. Said jobs must pay greater of $15.00 per hour or 150%of state or federal minimum wage,whichever is greater,exclusive of benefits required by law.Any loans shall meet the city of Elk River Business Subsidy Policy for the creation of new jobs,as well as a 5-year location requirement. In the case where multiple sources of public financing are requested (e.g.Microloan and Tax Increment Financing) job creation goals shall not be double-counted. Eligible Costs: Funds may be used by the borrower for costs related to job creation and retention as a result of the project as defined in the City's Business Microloan Fund Policy.Eligible costs may include relocation costs that equal the lesser of$25,000 or 20%of total loan amount. Costs may also include actual incurred City fees associated with construction and/or development costs of the project and outstanding or pending assessments on properties where a business is to be located. In no circumstance may Jobs Incentive funds be used for restaurants,retail businesses,casinos,or sports facilities. Permitted Fund Uses: Formatted:Font:Not Bold a. Building construction Formatted:Indent:First line: 0" b. Land acquisition c. Machinery d. Furniture,fixtures,and equipment(FF&E) e. Renovation and modernization of buildings f. Exterior renovation of retail,commercial and industrial buildings g. Public infrastructure needed for economic development expansions h. Investment real estate with a minimum of 50%of the space pre-leased Ineligible Fund Uses: Formatted:Font:Not Bold a. Expenditures for the construction and/or renovation of residential units b. Working capital c. Refinancing of existing debt Inventory P 0 1 1 0 f a B Y Page 12 of 29 NATURE b. Refinancing of existing debt c. Working capital 4. R l 1 S I N ELaESJztYViv?lIT� b rftrfnersl-AV or sole rrorriete—l-lir. R._,.:..............' • _„4-1.,e ,. .,.77 L.,...:..,...,.As .l PL:._�,7 R._,.:...e,.,. S. MICRO' OAA Clr�-rvi1DTPRMC R.CONDITIONS Loan Streettire Formatted:Font:Garamond,Not Italic b > b G of Loan bate Pftyment Charge 0 A. REG IQI1-A TI ON CnR hi EW GO W STR1ICTION AAI-D IM PROVEM ENTS P BB E R E B 8 r Page 13 of 29 INATUREl g ,a. �. , ..1.:_el.,l:_b 4ie f-e-s-dof 44.. 9{�a bFf 7 1 GAN REV MTV ARID GI IARA WEER b TIMING OF PRGjEGT- EXPENSES b b ' 44 b g ftnd b O PRO c I IRAI P^11IDELINESCA�Pcr ATIAAI AAII'1 APPRAVAI b 44 41iFH-R�. b 0 PIRERER 8E Page 14 of 29 INATUREl ffltid-9,R-49-ing eedes. , Formatted:Indent:First line: 0" b —As R- be ed Hettsing&Rede-eelepffien b design Comment IOA31:Should we keep this in or ' take this out? dttritib PIMEREI s Page 15 of 29 INATURE] 0 _.__.__:�.___._4-f__.__ _tel___f:n,..__L_b._,._._.___I 4_�:._,� b A. 4_ __ -__tete A Mier left- b b .7.....:,,1 F..�..... ...,,1 1.....,7.... i25i•T oira9sf6'"' ,1 ...,7,.«�... F�..... 4L.-P L':...,....fP FR...__,....l P,l 4-H 41_P:PP,1C`R..F:._,,1 ,. F__.fl_ 1__ fl_,. . RIGHT OF R€flam' �� Comment[OA4]:? 12. COMPLIANCE WITH MN BUSINESS SUBSIDY AIN PBIEREB 8Y Page 16 of 29 INATURE ra010FaBy Page 17 of 29 INATUREI ELK RIVER ECONOMIC DEVELOPMENT MICROLOAN FUND APPLICATION I. CONTACT INFORMATION Legal Name of Business: Project Site Address: City/State/Zip Contact Person(s) Business Phone Fax Home Phone Email Check One: Proprietor Corporation Partnership Federal ID# State ID # 2. NATURE OF LOAN REQUEST Which Micro-Loan Program are you applying for? Industrial Incentive Program Downtown Revitalization Financing Program Energy Efficiency Improvement Program Jobs Incentive Program Amount Requested:$ Total Project Cost:$ Type of project: New construction for a start-up business New construction for an existing business On site expansion Equipment purchase Remodeling: (circle one Commercial/Retail/Industrial Other Please give a brief summary of your business and its products or service: Page 18 of 29 P 0 N E R € o a INATUREI Please give a brief summary of the project: Please describe how this loan will impact your project: 3. FINANCING Project Costs Land $ Site improvements $ Buildings (attach plans&costs) $ Equipment/Machinery/Fixture s (attach list and estimated costs) $ Remodeling $ Industrial Inventory/Working Capital $ Other(attach description) $ Total Costs $ Comments: Page 19 of 29 P 0 N E R € o a r NATURE Proposed Sources of Financing SOURCE NAME TERMS AMOUNT Bank Loan $ Bank Loan $ Other Private Funds $ Applicant Contribution $ Other $ Fed Grant/Loan $ State Grant/Loan $ EDA Microloan $ Tax Increment Financing $ Tax Abatement $ Total Financing $ Collateral Assignments Lien Description of Collateral Position To Bank 1 To Bank 2 To Private Sources To Other Sources To Federal Govt To State To EDA Microloan Formatted:Indent:First line: 0" Page 20 of 29 P 0 N E R E o a r NATURE Value of Collateral Book Value Cost Existing Liens Land $ $ $ Buildings $ $ $ Machinery&Equip. $ $ $ Other $ $ $ Other S $ $ 4. JOB & WAGE GOALS Present#of Employees Total Payroll ]obs To Be Created* Please provide the following information on jobs you expect to create within 2-years. Average Are the Jobs Expected Number Hourly Annual Permanent or Hiring Job Title of Jobs Wage Salary Temporary? Date *If loan is for job retention only,please explain in Business Plan. Program Objectives (Check all that apply) The project contributes to the fulfillment of the city's approved and adopted economic development and/or redevelopment plans. The project prevents or eliminates slums and blight. The project increases the local tax base. The project brings a structure into compliance with an existing building code violation. Page 21 of 29 P 0 N E R € o a r NATURE S. PROJECT CONTACTS Attorney Name Address Phone Accountant Name Address Phone Financing Sources (lenders,partners,etc... Name Address Phone Name Address Phone Parent Company Name Address Phone Others Name Address Phone Name Address Phone Page 22 of 29 P d ANE R f 0 R Y �" TU©E 6. ATTACHMENTS CHECK LIST Please attach the following: A) Written Business Plan: 1_Descrlption of Business Formatted:Numbered+Level: 1+ 2. Ownership Numbering Style: 1,2,3,...+Start at: 1+ Alignment:Left+Aligned at: 1.25"+Indent 3. Management at: 1.5" 4. Date Established 5_Products/Services 6. Future Plans B) Financial Statements for Past Two Years and Year To Date 1. Profit&Loss Statement Formatted:Indent:Hanging: 0.25", 2. Balance Sheet Numbered+Level:3+Numbering Style: 1,2, 3,...+Start at: 1+Alignment:Left+Aligned at: 1.38"+Indent at: 1.5" C) Financial Projections forFive Years Formatted:Indent:First line: 0.5" D, A Project Proforma to include: Formatted:Indent:First line: 0.5",Tab 1. Projected revenues, stops: 1.31",Left 2. Operating expenses, 3. Net operating income,and 4. Annual debt service and loan Pavements. Formatted:Indent:Left: 1.75", No bullets or numbering D) Resume of Owner/Management E) Personal Financial Statements of Proprietor,Partners, Guarantors F) Letter of Commitment from Applicant Pledging to Complete During the Proposed Project Duration G) Letter of Commitment from the Other Sources of Financing, Stating Terms and Conditions of their Participation in Project H) Fee of ° Application Fee of$7,000 Page 23 of 29 P 0 N E R E o a r NATURE 7. MEETING SCHEDULE 2016 Economic Development Authority & City Council Meeting Schedule For Review of Business Subsid A lications Formatted:Centered,Don't allow hanging punctuation,Don't adjust space between Latin and Asian text'Don't Don't adjust space between APPLICATION EDA Finance EDA CITY Asian text and DEADLINE Committee Lrtl Anda COUNCIL Formatted:Font:Garamond,Not Bold,No underline LS MI (Last Tuesday) L-M Dec 7 LZL15 Dec 29 2015 Jan 19 Jan 19 Jan 4 Jan 26 Feb 16 Feb 16 Feb 1 Feb 23 Mar 21 Mar 21 Mar 7 Mar 29 Apr 18 Apr 18 Apr 4 Apr 26 May 16 May 16 May 2 May 31 Jun 20 Jun 20 Jun 6 Jun 28 Jul 18 Jul 18 Jul 5 Jul 26 Aug 15 Auq 15 Aug 1 Au q 30 Sep 19 Sep 19 Sep 5 Sep 27 Oct 17 Oct 17 Oct 3 Oct 25 Nov 21 Nov 21 Nov 7 Nov 29 Dec 19 Dec 19 Dec 5 Dec 27 Jan 17 2017 Jan 17 2017 ALL REQUIRED APPLICATION MATERIALS MUST BE SUBMITTED BY THE DEADLINE OR YOUR APPLICATION WILL BE POSTPONED TO THE NEXT MONTH 87, AGREEMENT I/We certify that all information provided in this application is true and correct to the best of my/our knowledge. I/We authorize the city of Elk River and the Finance Committee to check credit references and verify financial and other information. I/We agree to provide any additional information as may be requested by the city and the Finance Committee. The undersigned has received the Cit f ss policy regarding the payment of costs of review, Formatted:Indent:Left: o" understands that reimbursement to the City of costs incurred in reviewing the application will be required,agrees to reimburse the Ci as required in the policy and make payment when billed by the CiL3:,and agrees that the aPPlication may be denied for failure to reimburse the City for costs as Provided in the Polic3r. APPLICANT SIGNATURE BY DATE Page 24 of 29 P 0 N E R E o a r ATA Exhibit A:Downtown Area I ,1n. � I F P. h4rl� 1�Yac. 9 � / _� ` '4MN;IYA�_ n90lE StY1946 Ii9ffCNXOI A lOkOlk s[km Ll1 i lm I wiwt r - r It ,r Y 1� _ 8R�5i •X} 1 �'rYI—,yikfl II f�I �V I CI nt1 IT � iua X• kl�vlkakE RIZ a jj- Zi 17, 1`.. r i. Iy I II �e n� Y f F, f ;) Downtown Area River November 19,2013 Page 2-5 of 29 R 0 N E 0 € 0 0 Y ATURE CONFIDENTIALITY AGREEMENT (Sample Agreement) Formatted:Line spacing: 1.5 lines This agreement is made this day of 20 ,by and between a company,hereinafter "Developer,"and Springsted Incorporated,a Minnesota corporation,hereinafter "Springsted." WHEREAS,Developer is (description of project),hereinafter the"Project,"pursuant to a (form of agreement)with (public entity),hereinafter the"City,"dated and WHEREAS, Springsted has been hired by the City to investigate certain financial aspects of the Developer and the Project;and WHEREAS,in conjunction with such investigation, Springsted desires to examine the financial information of Developer relative to Developer and the Project;and WHEREAS,Developer is willing to disclose such information only on the condition that such information be kept confidential. NOW,THEREFORE,in consideration of the terms and mutual covenants contained herein,the parties agree as follows: 1. Developer agrees to make its financial information,development pro forma and projection,budget information,and such other financial information concerning the Project as Springsted may reasonably request,hereinafter the "Information,"available for inspection by Springsted,but solely for the purpose set forth above. 2. Springsted shall accept the Information in strict confidence solely for that purpose and shall make no other use of the information,or disclose it to any other person or party, including the City, without the express written consent of Developer. Notwithstanding the foregoing, Springsted may use the Information in summary form only to report its findings to the City provided that Springsted first presents its proposed report to Developer and obtains Developer's written consent to ensure that no inadvertent disclosures of confidential information or other inaccurate information are contained in such report. 3. Inspection of the Information shall take place in such manner and at such place and time as the parties may agree. The Information shall not be copied, duplicated, Page 26 of 29 P I V E R € o a r NATURE abstracted, summarized or recorded, directly or indirectly, by any means whatsoever, without the prior consent of Developer. 4. The Information shall remain the property of Developer, and any Information provided in tangible form shall be returned to Developer upon completion of such inspection. Any copies, duplications, abstracts, summaries or other recordings of the Information made with Developer's consent shall be returned to Developer upon demand. 5. Springsted agrees that any breach of the obligation of confidentiality imposed hereby shall constitute irreparable harm to Developer and shall entitle Developer to equitable relief enjoining any further breaches of this Agreement, together and in conjunction with any and all such other remedies as may be available to Developer at law or in equity. IN WITNESS WHEREOF,the parties have hereunto set their hands the daand year first above written. Developer ... By Its SPRINGSTED INC. By Its Page 27 of 29 P 0 N E R € 0 a r NATURE 9. MICROLOAN APPLICATION SCORING WORKSHEET Formatted:Font:Gill Sans MT,Bold TO BE COMPLETED BY CITY STAFF 1.The project meets the criteria set forth in the appropriate the Microloan policy. a) Meets at least one of the program objectives in Section 9:6(e). c) Consistent with all ciLy 121ans and ordinances. d) Meets the wage requirements as defined in the city's business subsidpolic 2.Ratio of Private to All Public Investment in Project: Points: $ Private Investment 5:1 5 $ Public Investment 4:1 4 Ratio Private: Public Financing 3:1 3 2:1 2 Less than 2:1 1 3.job Creation in the City of Elk River: Points: Number of new jobs as a result of the project 25+ 5 Number of existing/retained jobs 20+ 4 Total 15+ 3 10+ 2 Less than 10 1 4. Ratio of Public Investment to Job Creation: Points: $ Public Investment $8.000 or less 5 Number of new jobs created/retained $10,000 or less 4 $ of Public Investment per new job $12,000 or less 3 $15,000 or less 2 Over$15,000 1 5.Wage Level of I cwjobs created/retained Points: Comment[OAS]:Define Minimum hourly wage Over$21/hour 5 of jobs created/retained: $18-21 /hour 4 $15 / hour 3 6.Project size: Points: The project will result in the construction 40,000+ 5 of square feet 30,000+ 4 20,000+ 3 10,000+ 2 10,000 or less 1 Page 28 of 29 P 0 N E R € 0 8 Y NATURE 7.Market Value/Tax Base Generation: Points: The Project will result in a Per square foot Industrial Commercial estimated market value aand and building) $80/sf+ $110/sf+ 5 of $70/sf+ $100/sf+ 4 $60/sf+ $90/sf+ 3 $50/sf+ $80/sf+ 2 $40/sf+ $70/sf+ 1 8.Type of Project: Points: 100%Owner Occupied 5 Mix Owner Occupied&Investment 4 Investment Property 3 9.Use: Points: Industrial or Business Park Project 5 Commercial/Retail KZehabilita6on/Redevelopment 4 Comment[OA6]:Is this allowed? 10.Likelihood that the project will result in Points: unsubsidized, spin-off development. High 5 Moderate 3 Low 1 Sub-Total Points: of a Possible 45 Points. 11.Bonus Points Bonus Points: The Project contributes to the goals of Energy City. 5 Points • Product gtomotes sensible use of energy. OR • Project utilizes significant energy efficient design Wor materials in construction. Total Points: Overall project desirability: High 45-3850-35 points Moderate 34-7-29 points Formatted:Indent:Left: 2.5" Low 28-20 points Not Eligible 19-0 points Formatted:Indent:First line: 0.5" Page 29 of 29 P 0 N E R E o a r NATURE City of er Tax Increment Financing Policy & Application Amended: February 2014 Amended: May 2006 Amended: March 2000 Adopted: August 1991 City of Elk Rivef Economic Development Division 13065 Orono Packwav Elk River,MN 55330 763.635.1040 Table of Contents Policy Purpose 3 1, Formatted:Numbered+Level: 1+ Numbering Style:I,II,III,...+Start at: 1+ W. -Objectives of Tax Increment Financing 3 Alignment:Right+Aligned at: 0.38"+Tab after: 0.5"+Indent at: 0.5",Tab stops: 0.19",List tab+Not at 0.5" II_ Formatted:Numbered+Level: 1+ M-City of Elk River Policies for the Use of TIF 4 Numbering Style:I,II,III,...+Start at: 1+ 4 Alignment:Right+Aligned at: 0.38"+Tab after: 0.5"+Indent at: 0.5" III. Formatted:Numbered+Level: 1+ 4V-.--Project Qualifications 6 Numbering Style:I,II,III,...+Start at: 1+ Alignment:Right+Aligned at: 0.38"+Tab after: 0.5"+Indent at: 0.5" IV, Formatted:Numbered+Level: 1+ Numbering Style:I,II,III,...+Start at: 1+ V. Subsidy Agreement & Reporting Requirements 7 Alignment:Right+Aligned at: 0.38"+Tab 4 after: 0.5"+Indent at: 0.5" VI. Application Process for TIF 8 VII. Application for Housing TIF Projects 9 Formatted:Heading 3,Numbered+Level: 1 +Numbering Style:I,II,III,...+Start at: 1+ Alignment:Right+Aligned at: 0.38"+Tab VIII. Application for Non-Housing TIF Projects 12 after: 0.5"+Indent at: 0.5" Formatted:Heading 3,Numbered+Level: 1 +Numbering Style:I,II,III,...+Start at: 1+ IX. Sources and Uses of Funds Is . Alignment:Right+Aligned at: 0.38"+Tab after: 0.5"+Indent at: 0.5" \' Formatted:Heading 3,Numbered+Level: 1 X. Additional Documentation & Checklist 16 +Numbering Style:I,II,III,...+Start at: 1+ Alignment:Right+Aligned at: 0.38"+Tab after: 0.5"+Indent at: 0.5" X1. Confidentiality Agreement 18 Formatted:Heading 3,Indent:Left: 0.5" VII. 7 Formatted:Heading 3,Numbered+Level: 1 +Numbering Style:I,II,III,...+Start at: 1+ Alignment:Right+Aligned at: 0.38"+Tab after: 0.5"+Indent at: 0.5" Formatted:Heading 3,Indent:Left: 0.5" SAarEeS-8c v5e9 ¢ Cl�ippld;sf 4-A 4d4; yiAl 148_w .: _ 40 Formatted:Heading 3,Numbered+Level: 1 +Numbering Style:I,II,III,...+Start at: 1+ Alignment:Right+Aligned at: 0.38"+Tab after: 0.5"+Indent at: 0.5" .X11. Sample But-For Analysis Formatted:Indent:Left: 0.25",Hanging: 19- 0.5", No bullets or numbering X111. Application Review Worksheet: 20 Formatted:Heading 3,Indent:Left: 0.25", Non Hanging: 0.5" inumbering tted:Indent:Left: 0.5", No bullets or City of Elk River Tax Increment Financing Policy&Application R N A' E Ei E QAmended February 2014 /f; r ' Page 2of15 A y ia'Housing Projects XIV. Application Review Worksheet: 22 Housing Projects Formatted:Indent:Left: 0.5", No bullets or numbering .XV. 2016 Meeting Schedule 25 IA Formatted:Indent:Left: 0",First line: 0" Formatted:Indent:Left: 0.25",Hanging: 0.5" Formatted:Indent:Hanging: 0.5" City of Elk River Tax Increment Financing Policy&Application p 1 M E B E 1 IE Amended February 2014 //H�� Page 3of15 I. POLICY PURPOSE For the jiu?poses of this document,the term `City"shall include the Elk River City Council,Economic Development Authority,and Housing and Redevelopment Authority. The purpose of this policy is to establish the City of Elk River's position relating to the use of Tax Increment Financing(TIF) for private development above and beyond the requirements and limitations set forth by State Law.This policy shall be used as a guide in the processing and review of applications requesting tax increment assistance.The fundamental purpose of tax increment financing in Elk River is to encourage desirable development or redevelopment that would not otherwise occur but for the assistance provided through TIF. The City of Elk River is granted the power to utilize TIF by the Minnesota Tax Increment Financing Act,as amended. It is the intent of the City to provide the minimum amount of TIF,as well as other incentives,at the shortest term required for the project to proceed. The City reserves the right to approve or reject projects on a case by case basis,taking into consideration established policies,project criteria,and demand on city services in relation to the potential benefits from the project.Meeting policy criteria does not guarantee the award of TIF to the project.Approval or denial of one project is not intended to set precedent for approval or denial of another project. II. OBJECTIVES OF TAX INCREMENT FINANCING As a matter of adopted policy,the City will consider using TIF to assist private development projects to achieve one or more of the following objectives: • To retain local jobs and/or increase the number and diversity of jobs that offer stable employment and/or attractive wages and benefits as defined in the City's Business Subsidy Policy. • To encourage additional unsubsidized private development in the area,either directly or indirectly through"spin off'development. • To facilitate the development process and to achieve development on sites which would not be developed without TIF assistance. • To remove blight and/or encourage redevelopment of commercial and industrial areas in the city that result in high quality redevelopment and private reinvestment. • To offset increased costs of redevelopment(i.e.contaminated site clean up) over and above the costs normally incurred in development. • To create opportunities for affordable housing. • To contribute to the implementation of other public policies,as adopted by the city from time to time,such as the promotion of quality urban or architectural design,energy conservation,and decreasing capital and/or operating costs of City of Elk Rives Tax Increment Financing Policy&Application p A I E A E I $ T Amended Febfuafy 2014 � � Page 4of15 local government. • To enhance and diversify the City of Elk River's economic base. • To significantly increase the City of Elk River's tax base. III. CITY OF ELK RIVER POLICIES FOR THE USE OF TIF a. When possible,TIF shall be used to finance public improvements associated with the project. The priority for the use of TIF funds is: 1. Public improvements,legal,administrative,and engineering costs. 2. Site preparation,site improvement,land purchase,and demolition. 3. Capitalized interest,bonding costs. 3. a ._ :_ .�—l— b TT,._ 1__ _ _:a_.__a _ ft efts_ 1__ efts_L__:_ b. All projects must meet one of the following statutory TIF district categories. Redevelopment District Alinn. State Statutes 469.974,Subd. 90; Formatted:Indent:Left: 1.17" 469.976,Subd.4i1 Formatted:Indent:Left: 0.5",First line: ■ Buildings,streets,other improvements occupv 70%of the area,and, 0.42" more than 50%of the main buildings are substandard(substantial Formatted:Bulleted+Level: 1+Aligned at: 1.17"+Indent at: 1.42" renovation or clearance justified;cost of attaining State building code exceeds 15%of the cost of a new structure). ■ At least 90%of the tax increment revenues must be used to correct the conditions that allow redevelopment district designation. Such costs include:land acquisition, demolition,land clearance,utility installation,roads, sidewalks,and parking facilities. ■ Maximum term 25 years after receipt of the first increment. Renewal&Renovation District/Minn. State Statutes 469.974,Subd. Formatted:Indent:Left: 1.17" 90a;469.976,Subd. 4�7 • Buildings,street,other improvements occupv 70%of area; Formatted:Bulleted+Level: 1+Aligned at: and at least 20%of the buildings are substandard �as defined 1.25"+Indent at: 1.5" under Redeve&mentDistr4;and,30%of the other buildings require substantial renovation or clearance to remove City of Elk River Tax Increment Financing Policy&Application p 1 W E B E 0 B1 Amended February 2014 Page 5of15 conditions such as inadequate street layout,incompatible uses,overcrowding,obsolete buildings,or other identified hazards to community health,safe r,and general welfare. These conditions must be reasonably distributed throughout the geographic area of the district. ■ At least 90%of the tax increment revenues must be used to finance the cost of correcting the conditions (i.e.land acquisition,demolition,land clearance,utility installation,roads, sidewalks,and parking facilities). ■ Maximum term 15 years after receipt of the first increment. Economic Development District[Minn. State Statutes 469.174, Formatted:Indent:Left: 1.25" Subd. 12,469.176,Subd.4c1 • A project found to be in the public interest because: Formatted:Font:Bold • It will discourage a business from moving operations Formatted:Font:Bold,Not Expanded by/ to another state or municipality;or. Condensed by • It will result in increased local employment or, Formatted:Font:Bold ■ It willreserve and enhance the tax base.p �� Formatted:Level 2,Right: 0.07",Bulleted+ • At least 85%of the facilities must be used for: \ Level: 1+Aligned at: 1.25"+Indent at: 1.5" • Manufacturing or production operations:or, \ Formatted:Indent:Left: 1.75",Bulleted+ ■ Warehousing,storage,and distribution,excluding \ Level:3+Aligned at: 1.25"+Indent at: 1.5" retail sales:or, Formatted,Font:Bold • Research&development related to activities listed \ Formatted:Level 2,Right: 0.07",Bulleted+ above in items (1)or(2);or, Level: 1+Aligned at: 1.25"+Indent at: 1.5" • Telemarketing if it is the exclusive use of the properly; Formatted:Font:Bold,Not Expanded by/ Condensed by or, • Space necessary for and related to activities listed in Formatted:Font:Bold items (1)through(4). Formatted:Indent:Left: 1.75",Bulleted+ Level:3+Aligned at: 1.25"+Indent at: 1.5" • Maximum term 8 years after receipt of the first increment. : 1.25"+Indent �\ Formatted:Right: 0.07",Bulleted+Level: 1+Aligned at: Housing District Minn. State Statutes 469.174,Subd. 11,469.176, FormattedFont:Bold Subd.4d, 469.17611 �� Formatted:Indent:Left: 0.5" ■ A project for low&moderatesin income houg occupancy.A project does not qualify if more than Formatted:Indent:Left: 1.25" 20%of the square footage of improvements axe for Formatted:Bulleted+Level: I+Aligned at: 1.8"+Tab after: 2.05"+Indent at: 2.05" commercial,retail or other non-housing uses. ■ Tax increment revenue must solely finance housing12roject costs,which may include public infrastructure. ■ For owner-occupied housing,95%of the units must be initially purchased and occupied by individuals gualif inng as low and moderate income under current Federal schedules.For rental housing,50%of the units must be occupied by persons whose income is 80%or less of area median gross income. ■ Maximum term 25 years after receipt of the first increment. Formatted:Indent:Left: 0" Soils Condition District rMinn. State Statutes 469.174,Subd 19, Formatted:Indent:Left: 1.31",Tab stops: 469.176,Subd 4b7 1.31",Left City of Elk River Tax Increment Financing Policy&Application R 0 N E B E 0 BY Amended February 2014 W/f; r ' Page 6 of 15 /� y • A project where presence of hazardous substances, pollution, Formatted.Bulleted+Level: 1+Aligned at: or contaminants requires removal or remedial action for use; 1.25"+Indent at: 1.5" and, the estimated cost of remediation exceeds the land's fair market value,or,exceeds$2 per square foot. ■ Tax increment may be used only to: O Acquire parcels on which the improvements will Formatted:Bulleted+Level:2+Aligned at: occur; 1.75"+Indent at: 2" o Pap for the cost of removal or remedial action;and o Pay for the administrative expenses of the TIF Authority allocable to the district. ■ Maximum term is 20 years after receipt of the firstFormatted.Bulleted+Level: 1+Aligned at: increment. 1.25"+Indent at: 1.5" c. TIF assistance will be provided to the developer upon receipt of the increment by the City,otherwise referred to as the pay-asyou go method. Requests for up front financing will be considered on a case-by-case basis. d. A maximum of ten percent(10%)of any tax increment received from the district may be retained by the City to reimburse administrative costs. e. Any developer receiving TIF assistance shall provide a minimum of ten percent(10%)owner cash equity investment in the project. f. TIF will not be used in circumstances where land and/or property price is in excess of fair market value. g. Developer shall be able to demonstrate a market demand for a proposed project. TIF shall not be used to support purely speculative projects. h. TIF will not be utilized in cases where it would create an unfair and significant competitive financial advantage over other projects in the area. i. TIF shall not be used for projects that would place extraordinary demands on city services or for projects that would generate significant environmental impacts. j. The developer must provide adequate financial guarantees to ensure completion of the project,including,but not limited to:minimum assessment agreements,letters of credit,personal guaranties,etc. k. The developer shall adequately demonstrate,to the City's sole satisfaction,an ability to complete the proposed project based on past development experience,general reputation,and credit history,among other factors, including the size and scope of the proposed project. 1. For the purposes of underwriting the proposal,the developer shall provide any requested market,financial,environmental,or other data requested by the City or its consultants. m. All TIF proposals shall optimize the private development potential of a site. City of Elk Rives Tax Increment Financing Policy&Application P p w E Ei E 0 E Amended Febfuafy 2014 INATURIE Page 7 of 15 IV. PROJECT QUALIFICATIONS All TIF projects considered by the City of Elk River must meet each of the following requirements: a. To be eligible for TIF,a project shall result in: i. Except with a housing TIF district,Tthe new construction of a minimum of 25,000 square feet; ii. A minimum increase of$37,500 per year in property taxes,excluding the state portion;and iii. Have a market value of at least$1,250,000 upon completion. b. The project shall meet at least one of the objectives set forth in Section II and satisfy all the provisions set forth in Section III of this document. c. The developer shall demonstrate that the project is not financially feasible but for the use of TIF. d. The project shall comply with all provisions set forth in the Tax Increment Financing Act,Minnesota Statutes 469.124 to 469.134,inclusive,as amended, and Statutes 469.174 to 469.1794,inclusive,as amended. e. The project must be consistent with the City's Comprehensive Plan,Land Use Plan,and Zoning Ordinances. f. T'k-A non-housing project shall serve at least two of the following public purposes: • Creation of jobs with livable wages and benefits. • Significantly increase the City's tax base. • Enhancement or diversification of the city's economic base. • Industrial development that will spur additional private investment in the area. • Fulfillment of defined city objectives such as those identified in the City's Comprehensive Plan and the City's Economic Development Strategic Plan,among others. • Removal of blight or the rehabilitation of a high profile or priority site. g. A housing12roject shall serve at least two of the following12ublic purposes: • Enhancement or diversification of the city's housing stock. • Development that will spur additional private investment in the area. • Fulfillment of defined city objectives such as those identified in the City's Comprehensive Plan and the City's Housing and Redevelopment Strategic Plan,among others. • Removal of blight or the rehabilitation of a highprofile or priority Formatted:Indent:Left: 1.19",Hanging: site. 0.31" Formatted:Level 2,Indent:Left: 1.8", Hanging: 0.25",Right: 0.48",Font Alignment: Auto,Tab stops: 0.33",Left+ 2.05",List tab +Not at 1.5" City of Elk Rives Tax Increment Financing Policy&Application R N N E Ei E Q 8 Y Amended Febfuafy 2014 /f; r '�, Page 8 of 15 /� y V. SUBSIDY AGREEMENT & REPORTING REQUIRMENTS All developers/businesses receiving Tax Increment assistance from the City of Elk River shall be subject to the provisions and requirements set forth by the City's Business Subsidy Policy as amended and Minnesota Statutes Sections 116J.993 to 116J.995 (the"Minnesota Business Subsidy Law"),if applicable. VI. APPLICATION PROCESS FOR TIF 1. Applicant submits the completed application along with a$10,000 application deposit,to be refunded for any portions not utilized if the tax increment project does not proceed. The application deposit will be used toward the cost of services provided in the evaluation of financial feasibility,establishment or modification of the TIF district,and preparation of legal documents and agreements. An additional deposit of$10,000 will be required for projects that require meeting statutory eminent domain and/or redevelopment substandard tests. Projects that demand professional services in excess of the initial deposit shall be required to reimburse the City for the additional expenses. 2. City staff reviews the application and completes the Commercial-Industrial and/or Housing Worksheets. The Application and Commercial-Industrial and/or Housing Worksheets are primarily designed to score the desirability of the proposed project. Industrial,Redevelopment and Housing projects will be evaluated on a case-by-case basis and as the projects meet the city's desired objectives. 3. Results of the Commercial-Industrial and/or Housing Worksheets are submitted to the appropriate governing authorities (EDA or HRA) for recommendation to the City Council of approval or denial of the request. 4. If preliminary approval is granted,the Tax Increment Financing Plan,along with all necessary notices,resolutions are prepared by City staff and/or consultants. 5. Notices are published and sent to the county and school board. 6. Public hearing(s) on the proposed request are held. 7. The City Council grants final approval or denial of the request. City of Elk Rives Tax Increment Financing Policy&Application R N W E R E 0 9 Amended Febfuafy 2014 INATURIE Page 9 of 15 2015 Financial Incentive City of Housing Application Ik River Tax Increment Finand!2Z Public Information Notice Generally_correspondence to and from Staff is considered Public information. Specific data related to a financial assistance request is deemed not public: Financial Information_Financial Statements Net worth Calculations,Business Plans,Income and Expense Projections,Balance Sheets,Customer Lists_Income Tax returns. When public financial assistance is received_only the following remains not public: Business Plans_Income and Expense projections_Customer lists.Income tax returns design,market,and feasibility studies not Paid for with Public funds. The city does allow an applicant to submit sensitive financial information directly to the City s financial consultant,for additional security. I. APPLICANT INFORMATION Name of Corporation/Partnership Address Primary Contact Address Phone Fax Email Brief description of the corporation/partnership's business,including historyprincipal product or service: Brief description of the proposed project Attorney Name Address Phone Fax Email Accountant Name Address Phone Fax Email City of Elk Rives Tax Increment Financing Policy&Application R OWERED 9 Amended Febfuafy 2014 INATURIE Page 10 of 15 Contractor Name Address Phone Fax Email Engineer Name Address Phone Fax Email Architect Name Address Phone Fax Email II. PROJECT INFORMATION Formatted:Numbered+Level: 1+ Numbering Style:I,II,III,...+Start at: 1+ Property Information (4lease_t)rint Alignment:Right+Aligned at: 0.25'+Tab after: 0.5"+Indent at: 0.5" Address: Parcel Number: 75- The Project will be: Redevelopment Renewal&Rennovation Economic Development Housing Soils Condition Formatted Font Bold No underline The project will be: Owner Occupied Leased Space If Leased Space Percent Occupied 6 months after Certificate of Occupancy Total Amount of Tax Increment Requested:$ over years. City Portion: Annual S Total$ County Portion: Annual S Total$ ISD 728 Portion: Annual$ Total$ Current Real Estate Taxes on Project Site: $ Estimated Real Estate Taxes upon Completion:Phase I$ Phase II$ Construction Start Date Construction Completion Date Percent of project complete on December 31,current year. III. PUBLIC PURPOSE Formatted:Numbered+Level: 1+ Numbering Style:I,II,III,...+Start at: 1+ It is the policy of the City of Elk River that the use of Tax Increment Financing should Alignment:Right+Aligned at: 0.25'+Tab result in a benefit to the public. Please indicate how this project will serve a public purpose: after: 0.5+Indent at: 0.5 job Creation/Retention(Complete table in Section 4. New industrial development which will result in additional private investment in the area. Enhancement and/or diversification of the City of Elk River's economic base. City of Elk River Tax Increment Financing Policy&Application P ONERED E Amended February 2014 INATURIE Page 11 of 15 The Project contributes to the fulfillment of the City's Economic Development Strategic Plan. Removal of blight. Rehabilitation of a high profile or priority site. Significantly increase the City's tax base. IV. SIGNATURE Formatted:Numbered+Level: 1+ Numbering Style:I,II,III,...+Start at: 1+ I certify that is defined as a Small Business.For-Profit and is not a religious Alignment:Right+Aligned at: 0.25"+Tab (Business—Q after: 0.5"+Indent at: 0.5" Political,Casino,Sports Facility.or PornographicEnterprise.I further certify that all information provided in this a.12�lication is true and correct to the best of my knowledge. I authorize the city of Elk River and the Finance Committee to check credit references and verify financial and other information.I further agree,if approved,to the loan security andguarantees required by the Subsidy policy. I agree to Provide any additional information as may be requested by the city. Agreement to Pay Costs of Review It is the policy of the City of Elk River to require applicants to pay costs incurred by the City in reviewing and actingupon applications,so that these costs are not borne by the taxpayers of the City. These costs include all of the City's out-of-pocket costs for expenses,including the City's costs for review of the application by the City's Financial Consultant and City Attorney,or other consultants, recording fees,and necessarypublication costs. The application processing fees cover anticipated costs:costs incurred above the al2jlication fee will be invoiced as they are incurred,and Payment will be due within thirty(30.)days. Application fees are not refundable_though any unused portion is returned at the request of the applicant. If payment is not received as required by this agreement.the City may suspend the application review Process and may deny the ap�lication for failure to com"ly with the requirements for processing the application. Payment for costs will be required whether the application is granted or denied. The undersigned has received the City's policy regarding the payment of costs of review_understands that reimbursement to the City of costs incurred in reviewing the application will be required,agrees to reimburse the City as required in the Policy and make Payment when billed by the City,and agrees that the application may be denied for failure to reimburse the City for costs as provided in the Policy. Note:All Major shareholders will be required to sign personal guarantees and a minimum assessment agreement if up front financing of the project is required. APPLICANT SIGNATURE: TITLE: DATE: Formatted:Level 3,Indent:Left: 0.25", Keep with next,Don't allow hanging punctuation,Don't adjust space between Latin and Asian text,Don't adjust space between Asian text and numbers,Font Alignment: Baseline,Tab stops:Not at 3" City of Elk Rives Tax Increment Financing Policy&Application P N N E Ei E 0 E Amended Febfuafy 2014 INATURIE Page 12 of 15 City of Elk Rives Tax Increment Financing Policy&Application R N N E R E 0 9 Amended Febfuafy 2014 INATURIE Page 13 of 15 VIII. V ill. APPLICATION FOR TAX INCREMENT FINANCING. r`AMMCDr`IAI /I AIrl11CTD1A1 NON-HOUSING Formatted:Indent:First line: 0.5" PROJECTS Public Information Notice Generally,correspondence to and from Staff is considered public information. Specific data related to a financial assistance request is deemed not public: Financial Information,Financial Statements, Net worth Calculations,Business Plans,Income and Expense projections,Balance Sheets,Customer Lists,Income Tax returns. When public financial assistance is received,only the following remains not public: Business Plans.Income and Expense projections.Customer lists_Income tax returns design,market,and feasibility studies not paid for with public funds. The city does allow an applicant to submit sensitive financial information directly to the City's financial consultant,for additional security. Formatted:Numbered+Level: 1+ Numbering Style:I,II,III,...+Start at: 1+ Alignment:Left+Aligned at: 0.25"+Indent W.I. -APPLICANT INFORMATION at: 0.25" \\�FirmatteE:Normal Name of Corporation/Partnership Formatted:Numbered+Level: 1+ Numbering Style:I,II,III,...+Start at: 1+ Alignment:Left+Aligned at: 0.25"+Indent Address at: 0.75" Primary Contact Address Phone Fax Email Brief description of the corporation/partnership's business,including history,principal product or service: Brief description of the proposed project: Attorney Name Address Phone Fax Email Accountant Name Address Phone Fax Email City of Elk River Tax Increment Financing Policy&Application R 1 W E Ei E 0 E Amended February 2014 INATURIE Page 14 of 15 Contractor Name Address Phone Fax Email Engineer Name Address Phone Fax Email Architect Name Address Phone Fax Email Formatted:Heading 1,Indent:Left: 0",First line: 0" Formatted:Heading 1,Indent:Left: 0",First ". P line: 0" Formatted:Heading 1,Numbered+Level: 1 +Numbering Style:I,II,III,...+start at: 1+ Alignment:Left+Aligned at: 0.25"+Indent at: 0.75" City of Elk River Tax Increment Financing Policy&Application R N N E Ei E 0 E Amended February 2014 INATURIE Page 15 of 15 B. PROJECT INFORMATION Formatted:Normal,Indent:Left: 0.25",First 1. The project will be: line: 0" Industrial Greenfield: New Construction Expansion Commercial Redevelopment: New Construction Rehabilitation Industrial Redevelopment: New Construction Rehabilitation Other 2. The project will be: _Owner Occupied Leased Space 3. Project Address Legal Description&Parcel Identification Number(s) 4. Site Plan and Preliminary Construction Plans Attached: Yes No 5. Amount of Tax Increment Requested for: Land Purchase$ Public Improvement$ Site Improvement$ 6. Current Real Estate Taxes on Project Site: $ Estimated Real Estate Taxes upon Completion: Phase I $ Phase II$ 7. Construction Start Date: Construction Completion Date: If Phased Project: Year %Completed Year %Completed 111. PUBLIC PURPOSE Formatted:Numbered+Level: 1+ Numbering Style:I,II,III,...+Start at: 1+ It is the policy of the City of Elk River that the use of Tax Increment Financing should Alignment:Left+Aligned at: 0.25"+Indent result in a benefit to the public. Please indicate how this project will serve a public at: 0.75" purpose. Job Creation/Retention: Number of existing jobs Number of jobs created by project Average hourly wage of jobs created/retained _New industrial development,which will result in additional private investment in the area. _Enhancement or diversification of the city's economic base. _The project contributes to the fulfillment of the City's Economic Development Strategic Plan. _Removal of blight or the rehabilitation of a high profile or priority site. _Significantly increase the City's tax base. Other: i Formatted:Numbered+Level: 1+ IV. SIGNATURE Numbering Style:I,II,III,...+Start at: 1+ Alignment:Left+Aligned at: 0.25"+Indent at: 0.75" City of Elk River Tax Increment Financing Policy&Application R N W E Ei E Q R Y Amended February 2014 INATUR Page 16 of 15 I cerfify that is defined as a Small Business.For-Profit and is not a religious isus name) Political,Casino,Sports Facility,or PornographicEnterPrise.I further certify that all information provided in this application is true and correct to the best of my knowledge. I authorize the city of Elk River and the Finance Committee to check credit references and verify financial and other information.I further agree,if approved,to the loan security and guarantees required by the Subsidy policy. I agree to provide any additional information as may be requested by the city. Agreement to Pay Costs of Review It is the policy of the City of Elk River to require applicants to pay costs incurred by the City in reviewing and actingupon applications_so that these costs are not borne by the taxpayers of the City. These costs include all of the City's out-of-pocket costs for expenses,including the City's costs for review of the application by the City's Financial Consultant and City Attorney,or other consultants, recording fees,and necessarypublication costs. The application processing fees cover anticipated costs:costs incurred above the application fee will be invoiced as they are incurred_and payment will be due within ffi ru(30)days. Application fees are not refundable,though any unused portion is returned at the request of the applicant. If payment is not received as required by this agreement,the City may suspend the application review process and may deny the application for failure to comply with the requirements for processing the application. Payment for costs will be required whether the application is granted or denied. The undersigned has received the City's policy regarding the payment of costs of review_understands that reimbursement to the City of costs incurred in reviewing the application will be required,agrees to reimburse the City as required in the policy and make payment when billed by the City_and agrees that the application may be denied for failure to reimburse the City for costs as provided in the policy. Note:All Major shareholders will be required to sign personal guarantees and a minimum assessment agreement if up front financing of the project is required. APPLICANT SIGNATURE: TITLE: DATE: City of Elk Rives Tax Increment Financing Policy&Application R N N E R E 0 9 Amended Febfuafy 2014 INATURIE Page 17 of 15 IX. 01-.—SOURCES & USES Formatted:Numbered+Level: 1+ Numbering Style:I,II,III,...+Start at:9+ Alignment:Left+Aligned at: 0.25'+Indent SOURCES NAME AMOUNT at: 0.75' Bank Loan $ Other Private Funds $ Owner Cash Equity $ Fed Grant/Loan $ State Grant/Loan $ EDA Micro Loan $ Tax Increment $ ID Bonds $ TOTAL $ USES AMOUNT Land Acquisition $ Site Development $ Construction $ Machinery&Equipment $ Architectural&Engineering Fees $ Legal Fees $ Interest During Construction $ Debt Service Reserve $ Contingencies $ TOTAL $ Formatted:Numbered+Level: 1+ Numbering Style:I,II,III,...+Start at:9+ Alignment:Left+Aligned at: 0.25'+Indent at: 0.75' City of Elk River Tax Increment Financing Policy&Application R N W E Ei E 0 E Amended February 2014 INATURIE Page 18 of 15 X.&ADDITIONAL DOCUMENTATION AND CHECKLIST Applicants will also be required to provide the following documentation. A) -A� Application dedeposit of$10,000,with any unused portion to be = refunded if project does not proceed. Formatted:Indent:Left: 1",First line: 0.5" Bl Written Narrative: Please give a brief summate of your business.its Formatted:Indent:First line: 0.5" products or service_the project and how this subsidy will impact your Formatted:Indent:Left: 1",First line: 0.5" project.The narrative should include a statement demonstrating how the Formatted:Normal,Indent:Left: 1.5" project meets the public purpose. Formatted:Font: 11 pt Bl Written business plan,including the followlnV: 1. Description of Business Formatted:Indent:Left: 1.5" 2. Ownership 3. Management 4. Date Established 5. Products/Services 6. Future Plans 7. Market for Business Financial Statements for Past Two Years Profit&Loss Statement Balance Sheet D6) Current Financial Statements Profit&Loss Statement to Date Balance Sheet to Date E13) Project Proforma Formatted:Don't allow hanging punctuation, 1. Sources and uses of funds to finance the project,and Don't adjust space between Latin and Asian text,Don't adjust space between Asian text 2. Operating cash flow assumptions that include: and numbers,Font Alignment:Baseline a. Projected revenues, b. Operating expenses c. Net operating income,and d. Annual debt service and loan pavements. 3.Financial Projections for Term of abatement up to 10 Years Formatted:Indent:Left: 1",First line: 0.5", Allow hanging punctuation,Adjust space between Latin and Asian text,Adjust space Fes) Personal Financial Statements of all Major Shareholders between Asian text and numbers,Font Profit&Loss Alignment:Auto Current Tax Return Formatted:Font: 11 pt GF� Letter of Commitment from Applicant Pledging to Complete During the Proposed Project Duration GH) Letter of Commitment from the Other Sources of Financing, Stating Terms and Conditions of their Participation in Project City of Elk River Tax Increment Financing Policy&Application R 0 W E 0 E 0 0I Amended February 2014 INATUR Page 19 of 15 Formatted:Indent:Left: 0",First line: 0" Site and Construction Plans and Itemized Formatted:Numbered+Level: 1+ Project Construction Numbering Style:I,II,III,...+Start at: 1+ Alignment:Left+Aligned at: 1"+Indent at: Statement 1.5" Formatted:Indent:Left: 1.5" J) Attach the following documentation as Exhibits Exhibit A—Corporation/Partnership Description Exhibit B—Description of Project Exhibit C—List of Shareholders/Partners Exhibit D—But-For Analysis Exhibit E—List of Prospective Lessees Exhibit F—Legal Description and PID Number(s) Note:All Major shareholders will be required to sign personal guarantees if up front financing of the project is required. The undersigned certifies that all information provided in this application is true and correct to the best of the undersigned's knowledge. The undersigned authorizes the City of Elk River to check credit references and verify financial and other information. The undersigned also agrees to provide any additional information as maybe requested by the City after the filing of this application. Applicant Name Date Formatted:Heading 1 Formatted:Heading 1,Numbered+Level: 1 +Numbering Style:I,II,III,...+start at:9+ Alignment:Left+Aligned at: 0.25"+Indent at: 0.75" City of Elk River Tax Increment Financing Policy&Application R N W E Ei E 0 E Amended February 2014 INATURIE Page 20 of 15 XI. CONFIDENTIALITY AGREEMENT Formatted:Font:Gill Sans MT,14 pt (Sample Agreement) Formatted Font 11 pt This agreement is made this day of 20 ,by and between a companny,hereinafter"Developer,"and Springsted Incorporated,a Minnesota corporation,hereinafter"Springsted." WHEREAS,Developer is (description of project),hereinafter the"Project" pursuant to a (form of agreement)with (public entity),hereinafter the"City,"dated and WHEREAS,Springsted has been hired by the City to investigate certain financial aspects of the Developer and the Proiect and WHEREAS,in conjunction with such investigation,Springsted desires to examine the fmancial information of Developer relative to Developer and the Project,and WHEREAS,Developer is willing to disclose such information only on the condition that such information be kept confidential. NOW,THEREFORE,in consideration of the terms and mutual covenants contained herein,the parties agree as follows: 1. Developer agrees to make its fmancial information,development pro forma and projection,budget information,and such other fmancial information concerning the Project as Springsted may reasonably request,hereinafter the"Information,"available for inspection by Springsted,but solely for the purpose set forth above. 2. Springsted shall accept the Information in strict confidence solely for that purpose and shall make no other use of the information, or disclose it to any other person or party, including the City, without the express written consent of Developer. Notwithstanding the foregoing,Springsted may use the Information in summary form only to report its findings to the City provided that Springsted first presents its proposed report to Developer and obtains Developer's written consent to ensure that no inadvertent disclosures of confidential information or other inaccurate information are contained in such report. 3. Inspection of the Information shall take place in such manner and at such place and time as the parties may agree. The Information shall not be copied, duplicated, abstracted, summarized or recorded, directly or indirectly, by any means whatsoever, without the prior consent of Developer. 4. The Information shall remain the property of Developer, and any Information provided in tangible form shall be returned to Developer upon completion of such inspection. Any copies, duplications, abstracts, summaries or other recordings of the Information made with Developer's consent shall be returned to Developer upon demand. 5. Springsted agrees that any breach of the obligation of confidentiality imposed hereby shall constitute irreparable harm to Developer and shall entitle Developer to equitable relief enjoining any further breaches of this Agreement,together and in conjunction with any and all such other remedies as may be available to Developer at law or in equity. IN WITNESS WHEREOF,the parties have hereunto set their hands the day and year first above written. DEVELOPER By Its SPRINGSTED INC. By Its Formatted:Heading 1 City of Elk Rives Tax Increment Financing Policy&Application R 0 N E 0 E 0 0 Amended Febfuafy 2014 INATURIE Page 21 of 15 VWXI1.=SAMPLE BUT-FOR ANALYSIS ;;- Formatted:Font:Not Italic WITH NO WITH TAXINCREMENT TAXINCREMENT SOURCES AND USES SOURCES AND USES SOURCES SOURCES Mortgage 9,600,000 8,667,000 Equity 2,400,000 2,400,00 Tax Increment Financing 0 933,000 TOTAL SOURCES 12,000,000 12,000,000 USES USES Land 1,500,000 1,500,000 Site Work 300,000 300,000 Soil Correction 468,000 468,000 Demolition 100,000 100,000 Relocation 65,000 65,000 Subtotal Land Costs 2,433,000 2,433,000 Construction 6,750,000 6,750,000 Finish Manufacturing 250,000 250,000 Subtotal Construction Costs 7,000,000 71000,000 Soft Costs 350,000 350,000 Taxes 35,000 35,000 Finance Fees 850,000 850,000 Project Manager 542,000 542,000 Developer Fee 540,000 540,000 Contingency 250,000 250,000 Subtotal Soft Costs 2,567,000 2,567,000 TOTAL USES 12,000,000 12,000,000 Income Statement Income Statement Sq.Ft. Per Sq.Ft. Sq.Ft. Per Sq.Ft. Rent-Space 1 100,000 $8.00 800,000 100,000 $8.00 800,000 Rent-Space 2 25,000 $8.50 212,500 25,000 $8.50 212,500 Rent-Space 3 25,000 $9.00 225,000 25,000 $9.00 225,000 Other 0 $0.00 0 0 $0.00 0 1,237,500 1,237,500 Mortgage 20 Term 1,051,646 20 Term 949,439 9.00%Interest 9.00%Interest 9,600,000 Principal 8,667,000 Principal Net Income 185,854 288,061 Total Return on Equity 7.74% 12.00% City of Elk Rives Tax Increment Financing Policy&Application R N N E Ei E 0 9 Amended February 2014 INATURIE Page 22 of 15 XIII4X. TAX INCREMENT FINANCING APPLICATION REVIEW WORKSHEET- NON. HOUSING PROJECTS TO BE COMPLETED BY CITY STAFF 1. The project meets the criteria set forth in Section IV of the City's Tax Increment Financing policy. a) Meets minimum thresholds for size,value,and tax revenue. b) Meets at least one of the objectives in Section II and satisfies all of the provisions set forth in Section III. c) Demonstrates need for TIF with the but for analysis. d) Consistent with all city plans and ordinances. e) Serves at least two public purposes as defined in Section IV(f). 2. Ratio of Private to All Public Investment in Project: Points: $ Private investment 5:1 5 $ Public Investment 4:1 4 Ratio Private:Public Financing 3:1 3 2:1 2 Less than 2:1 1 3. job Creation in the City of Elk River: Points: Number of new jobs as a result of the project. 40+ 5 Number of existing/retained jobs divided by 2. 30+ 4 Total 20+ 3 10+ 2 Less than 10 1 4. Ratio of Public Investment to Job Creation: Points: $ Public Investment $15,000 or less 5 Number of new jobs created/retained $20,000 or less 4 $ Public Investment per nemjob $22,000 or less 3 $25,000 or less 2 Over$25,000 1 5. Wage Level of new jobs created/retained: Points: Minimum hourly wage Over$21/hour 5 of jobs created/retained: $18-21 /hour 4 $14-17/hour 3 $10-13/hour 2 Under$10/hour 1 6. Project size: Points: The project will result in the construction 80,000+ 5 of square feet 65,000+ 4 50,000+ 3 35,000+ 2 25,000+ 1 City of Elk Rives Tax Increment Financing Policy&Application R N N E R E 0 9 Amended Febfuafy 2014 INATURIE Page 23 of 15 7. Market Value/Tax Base Generation: Points: The project will result in a per square foot Industrial Commercial estimated market value (land and building) $80/sf+ $110/sf+ 5 of $70/sf+ $100/sf+ 4 $60/sf+ $90/sf+ 3 $50/sf+ $80/sf+ 2 $40/sf+ $70/sf+ 1 8. Type of Project: Points: 100%Owner Occupied 5 Mix Owner Occupied&Investment 4 Investment Property 3 9. Use: Points: Manufacturing 5 Research&Development 4 Commercial Redevelopment 3 Warehouse/Distribution 2 Housing 1 10. Likelihood that the project will result in Points: unsubsidized,spin-off development. High 5 Moderate 3 Low 1 Sub-Total Points: of a possible 45 points. 11. Bonus Points Bonus Points: The project will be 100%Pay-asyougo TIF. 3 points The project contributes to the goals of Energy City. 2 points • Product promotes sensible use of energy,OR • Project utilizes significant energy efficient design&/or materials in construction. Total Points: Overall project analysis: High 45-38 points Moderate 37-29 points Low 28-20 points Not Eligible 19-0 points City of Elk River Tax Increment Financing Policy&Application R OWERED 9 Amended February 2014 INATURIE Page 24 of 15 X ` `. TAX INCREMENT FINANCING APPLICATION REVIEW WORKSHEET- HOUSING PROJECTS TO BE COMPLETED BY CITY STAFF The project must meet the criteria set forth in Section IV of the City's Tax Increment Financing policy to continue. a) Meets minimum thresholds for size,value,and tax revenue. b) Meets at least one of the objectives in Section II and satisfies all of the provisions set forth in Section III. c) Demonstrates need for TIF with the but for analysis. d) Consistent with all city plans and ordinances. e) Serves at least two public purposes as defined in Section IV(I). 1. Ratio of Private to All Public Investment in Project: Points: Greater than 7:1 10 $ Private investment 6:1 8 $ Public Investment 5:1 6 Ratio Private:Public Financing 4:1 4 3:1 2 Less than 3:1 1 2.Project provides housing that is restricted Points: to persons 55 years and older: 10 3. Market Value/Tax Base Generation: Points: Project will result in an estimated market value per unit $135,000/Unit 5 (land and building) of $125,000/Unit 4 $115,000/Unit 3 $105,000/Unit 2 $ 95,000/Unit 1 4.Project proposes rehabilitation of existing housing,housing stock,and maximizes utilization of existing infrastructure: Points: 10 5.Project proposes a location near existing jobs,transportation,recreation,retail services, social services,and schools: Points: 3 City of Elk Rives Tax Increment Financing Policy&Application R N N E R E 0 9 Amended Febfuafy 2014 INATURIE Page 25 of 15 6. Project includes community/neighborhood: Points: facility(pool,community center,etc. Points based on scale of improvement(1-5) Yes 5 7. Type of Housing Project: Points: 100%Owner Occupied 2 Investment Property 1 8. Likelihood that the project will result in Points: unsubsidized,spin-off development. High 5 Moderate 3 Low 1 Sub-Total Points: of a possible 50 points. 9. Bonus Points Bonus Points: The project will not be 100%Pay-as-you-go TIF. -5 points The project does not require modification to land use plan. 2 points The project contributes to the goals of Energy City. 2 points • Product promotes sensible use of energy,OR • Project utilizes significant energy efficient design&/or materials in construction. Total Points: Overall project analysis: Rank Points Max eligible High 45-50 points 100% Moderate 37-44 points 85% Low 30-36 points 65% Not Eligible 0-29 points City of Elk River Tax Increment Financing Policy&Application R 0 W E 0 E 0 0 Amended February 2014 INATURIE Page 26 of 15 MEETING SCHEDULE 2016 Economic Development Authority& City Council Meeting Schedule For Review of Business Subsidy Applications APPLICATION EDA Finance EDA w CITY DEADLINE Committee ardMonda COUNCIL 1st Monda Last Tuesday) 3=d Monda Dec 7 2015 Dec 29 2015 an 19 an 19 La-4 an 26 Feb 16 Feb 16 Feb 1 Feb 23 Mar 21 Mar 21 Mar 7 Mar 29 AVL-1 8 A r 18 —Apr 4 Apr 26 Mla-16 Mav16 Ajay-2 Ma 31 un 20 un 20 un 6 _un 28 11118 11118 1115Tu126 Au 15 Au 15 Aug1 A11 30 Se19 Se 19 Sen 5 Sep 2 Oct 17 Oct 17 Oct 3 Oct 25 Nov 21 Nov 21 Nov 7 Nov 29 Dec 19 Dec 19 Dec 5 Dec 27 an 17 2017 an 17 2017 ALL REQUIRED APPLICATION MATERIALS MUST BE SUBMITTED BY THE DEADLINE OR YOUR APPLICATION WILL BE POSTPONED TO THE NEXT MONTH City of Elk River Tax Increment Financing Policy&Application R OWERED 9 Amended February 2014 INATURIE Page 27 of 15 City of er Tax Abatement Policy & Application Amended:June 2016- Amended: February 2014 Amended: May 2006 Amended:August 2002 Adopted: April 10,2000 Cita of Elk River Economic Development Division 13065 Orono Packwav Elk River,MN 55330 763.635.1040 Table of Contents I. Policy Purpose 3 II. Difference Between Tax Abatement & Tax Increment Financing 3 III. Objectives of Tax Abatement 3 IV. Policies for the Use of Tax Abatement 4 V. Project Qualifications 5 VI. Subsidy Agreement & Reporting Requirements 6 VII. Application Process for Tax Abatement 7 Citv of Elk River Application to Other Jurisdictions VIII. Application for Tax Abatement 8 Applicant Information $ Project Information 4 Public Purpose 4 Sources&Uses 4-8 Additional Documentation and Checklist 44 IX. Sample But-For Analysis 13-2 Application Review Worksheet 14-3 X. City of Elk River Business Subsidy Policy is Formatted:Normal, No bullets or numbering, XI. 2016 Meeting Schedule 16 Tab stops:Not at 0.53° Rage 2of16 P 0 M E A E 0 , IN ATURE I. POLICY PURPOSE For the pwposes of this document,the term Gity"shall include the Elk Diver City Council Economic Development Authority,and Housing and Redevelopment Authority. The purpose of this policy is to establish the City of Elk River's position relating to the use of Tax Abatement for private development above and beyond the requirements and limitations set forth by State Law.This policy shall be used as a guide in the processing and review of applications requesting Tax Abatement assistance.The fundamental purpose of providing Tax Abatement in Elk River is to encourage desirable development or redevelopment that would not otherwise occur but-for the assistance provided through the Tax Abatement. The City of Elk River is granted the power to utilize Tax Abatement by Minnesota Statutes,Sections 469.1812 to 469.1815 (the"Minnesota Tax Abatement Act",as amended. It is the intent of the City to provide the minimum amount of Tax Abatement,as well as other incentives,at the shortest term required for the project to proceed. Preference is given to projects in which the total amount of Tax Abatement request includes participation from the county. The City reserves the right to approve or reject projects on a case by case basis,taking into consideration established policies, project criteria,and demand on city services in relation to the potential benefits from the project.Meeting policy criteria does not guarantee the award of Tax Abatement to the project.Approval or denial of one project is not intended to set precedent for approval or denial of another project. II. DIFFERENCE BETWEEN TAX ABATEMENT AND TAX INCREMENT FINANCING The primary difference between Tax Abatement and Tax Increment Financing(TIF)is the way in which the dollars are awarded to the project. When TIF is awarded to a project by the city,the other taxing jurisdictions(the school district and the county)are required to contribute their portion of the increased taxes to the project.Conversely, when Tax Abatement is requested,each political subdivision has the option of granting its portion of the increased taxes to the project.Subsequently,the dollars generated for the project with Tax Abatement are generally less than the dollars generated with TIF. III. OBJECTIVES OF TAX ABATEMENT As a matter of adopted policy,the City will consider using Tax Abatement to assist private development projects to achieve one or more of the following objectives: • To retain local jobs and/or increase the number and diversity of jobs that offer stable employment and/or attractive wages and benefits as defined in the City's Business Subsidy Policy. • To enhance and diversify the City of Elk River's economic base. • To encourage additional unsubsidized private development in the area,either directly or indirectly through"spin off'development. Page 3of16 F0NEREO 91 ATU • To facilitate the development process and to achieve development on sites which would not be developed without Tax Abatement assistance. • To remove blight and/or encourage redevelopment of commercial and industrial areas in the city that result in high quality redevelopment and private reinvestment. • To offset increased costs of redevelopment(i.e.contaminated site clean up) over and above the costs normally incurred in development. • To create opportunities for affordable housing. • To contribute to the implementation of other public policies,as adopted by the city from time to time,such as the promotion of quality urban or architectural design,energy conservation,and decreasing capital and/or operating costs of local government. • To significantly increase the City of Elk River's tax base. IV. POLICIES FOR THE USE OF TAX ABATEMENT a. Tax Abatement assistance will be provided to the developer upon receipt of taxes by the City,otherwise referred to as the pay-asyougo method. Requests for up front financing will be considered on a case-by-case basis. b. Any developer receiving Tax Abatement assistance shall provide a minimum of ten percent(10%)owner cash equity investment in the project. c. Tax Abatement will not be used in circumstances where land and/or property price is in excess of fair market value. d. Developer shall be able to demonstrate a market demand for a proposed project. e. Tax Abatement will not be utilized in cases where it would create an unfair and significant competitive financial advantage over other projects in the area. f. Tax Abatement shall not be used for projects that would place extraordinary demands on city services or for projects that would generate significant environmental impacts. g. The developer must provide adequate financial guarantees to ensure completion of the project,including,but not limited to:minimum assessment agreements,letters of credit,personal guaranties,and etcetera. h. The developer shall adequately demonstrate,to the City's sole satisfaction,an ability to complete the proposed project based on past development Page 4of16 pOIFREa 8f ATU experience,general reputation,and credit history,among other factors, including the size and scope of the proposed project. i. For the purposes of underwriting the proposal,the developer shall provide any requested market,financial,environmental,construction plans or other data requested by the City or its consultants. j. Tax Abatement proposals shall not be used to support speculative office projects. Speculative projects are defined as those projects which have pre- leasing agreements or letters of intent for less than 50%of the available space. In addition,leasable office projects must meet the following guidelines: 1. Evidence of the 50%occupancy must be reported to the Director of Economic Development six months following an issued Certificate of Occupancy. 2. Of the occupants certified at the six month period,50%of the jobs must be considered"new"jobs to the City of Elk River,meaning jobs not located in the City at any time prior to occupying space in the project. 3. Business retention jobs will be considered on a one-fox-one match to job creation only in cases where job loss is specific and demonstrable in accordance with the Minnesota Business Subsidy Law. Evidence may include documentation that the company will have to close involuntarily, or the company has received an attractive offer to move to another state or community. k. All Tax Abatement proposals shall optimize the private development potential of a site. V. PROJECT QUALIFICATIONS All Tax Abatement projects considered by the City of Elk River must meet each of the following requirements: a. The project shall meet at least one of the objectives set forth in Section III of this document. b. The use of Tax Abatement will be limited to: • Industrial development,expansion,redevelopment,or rehabilitation;or • Commercial redevelopment or rehabilitation;or • Research and development facilities that satisfy Business Park zoning requirements;or _Office facilities with a minimum new construction of 25,000 square feet;or Formatted:Normal c. The developer shall demonstrate that the project is not financially feasible but-for the use of Tax Abatement. Evaluation of the project's financial Page 5of16 F 0 W € R E O 9 V ATU feasibility without Tax Abatement shall be provided by the City's financial advisor on all requests of over$25,000 total public investment. d. The City will consider the use of Tax Abatement assistance for projects that may not meet the but for and job creation criteria,but rather would be considered as a"location incentive". These projects may result in other public benefits such as a significant tax base increase,the creation of higher paying jobs (at least twice the minimum hourly rate stated in the City's Business Subsidy Policy),and is likely to assist in the marketing and attraction of additional desired developments. e. The project shall comply with all provisions set forth in the Minnesota Tax Abatement Law,Minnesota Statutes 469.1812 to 469.1815,as amended. f. The project must be consistent with the City's Comprehensive Plan,Land Use Plan,and Zoning Ordinances. g. The project shall serve at least two of the following public purposes: • Job creation or job retention. • Significantly increase the tax base. • Enhancement or diversification of the city's economic base. • Development or redevelopment that will spur additional private investment in the area. • Fulfillment of defined city objectives,such as those identified in the Economic Development Strategic Plan or the City's Comprehensive Plan,among others. • Removal of blight or the rehabilitation of a high profile or priority site. VI. SUBSIDY AGREEMENT & REPORTING REQUIRMENTS All developers/businesses receiving Tax Abatement assistance from the City of Elk River shall be subject to the provisions and requirements set forth by the City's Business Subsidy Policy as amended and Minnesota Statutes Sections 116J.993 to 116J.995 (the"Minnesota Business Subsidy Law" ,If applicable- Page 6of16 N 0 M E 0 E 0 8 f ATURE VII. APPLICATION PROCESS FOR TAX ABATEMENT A. CITY OF ELK RIVER 1. Applicant submits the completed application along with a$§10 000 application deposit,to be refunded for any portions not utilized if the tax increment project does not proceed. The application deposit will be used toward the cost of services provided in the evaluation of financial feasibility and preparation of legal documents and agreements. Projects that demand professional services in excess of the initial deposit shall be required to reimburse the City for the additional expenses. 2. City staff reviews the application and completes the Application Review Worksheet. 3. Results of the Worksheet are submitted to the appropriate governing authorities (EDA or HRA) for recommendation to the City Council of approval or denial of the request. 4. If preliminary approval is granted,all necessary notices,resolutions and agreements are prepared by City staff and/or consultants. 5. Public hearing(s) on the proposed request are held. 6. The City Council grants final approval or denial of the request. B. APPLICATIONS TO OTHER JURISDICTIONS It is recommended that applicants intending to seek Tax Abatement from Sherburne County and/or School District 728 make their applications to those bodies concurrent with their application to the City of Elk River. For more information on applying for Tax Abatement through Sherburne County and/or School District 728,contact: Sherburne County Administrator 763-241-2701 School District 728 Superintendent 763-241-3400 Page 7of16 N0WE0Ea 91 ATURE VIII. APPLICATION FOR TAX ABATEMENT A. APPLICANT INFORMATION Name of Corporation/Partnership Address Primary Contact Address Phone Fax Email Brief description of the corporation/partnership's business,including history,principal product or service: Brief description of the proposed project: Attorney Name Address Phone Fax Email Accountant Name Address Phone Fax Email Contractor Name Address Phone Fax Email Engineer Name Address Phone Fax Email Architect Name Address Phone Fax Email Page 8of16 N 0 M E 0 E 0 8 f ATURE B. PROJECT INFORMATION 1. The project will be: Industrial: New Construction Expansion Redevelopment/Rehab. _Office/research facility that conforms to Business Park zoning standards Commercial Redevelopment/Rehabilitation Other 2. In addition to the City of Elk River,applicant is requesting Tax Abatement from: Sherburne County School District 728 3. The project will be:_Owner Occupied Leased Space 4. Project Address Parcel Identification Number(s) 5. Site Plan and Construction Plans Attached: Yes No 6. Total Amount of Tax Abatement Requested: $ over_years. City Portion: Annual$ Total$ County Portion: Annual$ Total$ ISD 728 Portion: Annual$ Total$ 7. Current Real Estate Taxes on Project Site: $ Estimated Real Estate Taxes upon Completion:Phase I $ Phase II$ 8. Construction Start Date: Construction Completion Date: If Phased Project: Year %Completed Year %Completed C. PUBLIC PURPOSE It is the policy of the City of Elk River that the use of Tax Abatement should result in a benefit to the public. Please indicate how this project will serve a public purpose. Job Creation/Retention Number of existing jobs Number of jobs created by project Average hourly wage of jobs created/retained _New industrial development which will result in additional private investment in the area. _Enhancement and/or diversification of the City of Elk River's economic base. _The project contributes to the fulfillment of the City's Economic Development Strategic Plan. _Removal of blight. _Rehabilitation of a high profile or priority site. _Significantly increase the City's tax base. Page 9of16 N0ME0Ea 8f ATURE D. SOURCES & USES SOURCES NAME AMOUNT Bank Loan $ Other Private Funds $ Owner Cash Equity $ Fed Grant/Loan $ State Grant/Loan $ EDA Micro Loan $ Tax Abatement $ ID Bonds $ TOTAL $ USES AMOUNT Land Acquisition $ Site Development $ Construction $ Machinery&Equipment $ Architectural&Engineering Fees $ Legal Fees $ Interest During Construction $ Debt Service Reserve $ Contingencies $ TOTAL $ Page 10of16 P 0 M E A E O 9 ATURE E. ADDITIONAL DOCUMENTATION AND CHECKLIST Applicants will also be required to provide the following documentation: A) Written business plan,including a description of the business, ownership/management,date established,products and services,and future plans B) Financial Statements for Past Two Years Profit&Loss Statement Balance Sheet C) Current Financial Statements Profit&Loss Statement to Date Balance Sheet to Date D) Two Year Financial Projections E) Personal Financial Statements of all Major Shareholders Profit&Loss Current Tax Return F) Letter of Commitment from Applicant Pledging to Complete During the Proposed Project Duration G) Letter of Commitment from the Other Sources of Financing, Stating Terms and Conditions of their Participation in the Project H) Application deposit of$§10 000,with any unused portion to be refunded if project does not proceed I) Construction Plans and Itemized Project Construction Statement J) Attach the following documentation as Exhibits Exhibit A—Corporation/Partnership Description Exhibit B—Description of Project Exhibit C—List of Shareholders/Partners Exhibit D—But-For Analysis Exhibit E—List of Prospective Lessees Exhibit F—Legal Description and PID Number(s) Note:All Major shareholders will be required to sign personal guarantees_R_a -A ftssessiftettf if up front financing of the project is required. The undersigned certifies that all information provided in this application is true and correct to the best of the undersigned's knowledge. The undersigned authorizes the City of Elk River to check credit references,verify financial and other information,and share this information with other political subdivisions as needed. The undersigned also agrees to provide any additional information as may be requested by the City after the filing of this application. Formatted:Normal Page 11of16 fro NEAEa ATURE The undersigned has received the Citj:'s policy regarding the payment of costs of review, understands that reimbursement to the City of costs incurred in reviewing the application will be required,agrees to reimburse the Ci,r as required in the policy and make payment when billed by the Ci ,and agrees that the application may be denied for failure to reimburse the City for costs as provided in the policL Formatted:Normal Applicant Name Date Page 12of16 P 0 M E A E O 9 ATU IX. SAMPLE BUT-FOR ANALYSIS WITH NO WITH TAX ABATEMENT TAX ABATEMENT SOURCES AND USES SOURCES AND USES SOURCES SOURCES Mortgage 9,600,000 8,667,000 Equity 2,400,000 2,400,00 Tax Abatement 0 933,000 TOTAL SOURCES 12,000,000 12,000,000 USES USES Land 1,500,000 1,500,000 Site Work 300,000 300,000 Soil Correction 468,000 468,000 Demolition 100,000 100,000 Relocation 65,000 65,000 Subtotal Land Costs 2,433,000 2,433,000 Construction 6,750,000 6,750,000 Finish Manufacturing 250,000 250,000 Subtotal Construction Costs 7,000,000 7,000,000 Soft Costs 350,000 350,000 Taxes 35,000 35,000 Finance Fees 850,000 850,000 Project Manager 542,000 542,000 Developer Fee 540,000 540,000 Contingency 250,000 250,000 Subtotal Soft Costs 2,567,000 2,567,000 TOTAL USES 12,000,000 12,000,000 Income Statement Income Statement Sq.Ft. Per Sq.Ft. Sq.Ft. Per Sq.Ft. Rent-Space 1 100,000 $8.00 800,000 100,000 $8.00 800,000 Rent-Space 2 25,000 $8.50 212,500 25,000 $8.50 212,500 Rent-Space 3 25,000 $9.00 225,000 25,000 $9.00 225,000 Other 0 $0.00 0 0 $0.00 0 1,237,500 1,237,500 Mortgage 20 Term 1,051,646 20 Term 949,439 9.00%Interest 9.00%Interest 9,600,000 Principal 8,667,000 Principal Net Income 185,854 288,061 Total Return on Equity 7.74% 12.00% Page 13of16 P 0 M E A E a 9 IN ATURE X. TAX ABATEMENT APPLICATION REVIEW WORKSHEET TO BE COMPLETED BY CITY STAFF 1.The project meets the criteria set forth in Section V of the Tax Abatement policy. a) Meets at least one of the objectives in Section III. b) Demonstrates need for Tax Abatement with the but for analysis. c) Consistent with all city plans and ordinances. d) Serves at least two public purposes as defined in Section V(g). 2.Ratio of Private to All Public Investment in Project: Points: $ Private Investment 5:1 5 $ Public Investment 4:1 4 Ratio Private:Public Financing 3:1 3 2:1 2 Less than 2:1 1 3.job Creation in the City of Elk River: Points: Number of new jobs as a result of the project. 25+ 5 Number of existing/retained jobs 20+ 4 Total 15+ 3 10+ 2 Less than 10 1 4.Ratio of Public Investment to Job Creation: Points: $ Public Investment $8,000 or less 5 Number of new jobs created/retained $10,000 or less 4 $ of Public Investment per new-job $12,000 or less 3 $15,000 or less 2 Over$15,000 1 5.Wage Level of new jobs created/retained Points: Minimum hourly wage Over$21/hour 5 of jobs created/retained: $18-21 /hour 4 $14-17/hour 3 $10-13/hour 2 Under$10/hour 1 6.Project size: Points: The project will result in the construction 40,000+ 5 of square feet 30,000+ 4 20,000+ 3 10,000+ 2 10,000 or less 1 7.Market Value/Tax Base Generation: Points: Page 14 of 16 p0 * E0Ea 91 ATURE The project will result in a per square foot Industrial Commercial estimated market value(land and building) $80/sf+ $110/sf+ 5 of $70/sf+ $100/sf+ 4 $60/sf+ $90/sf+ 3 $50/sf+ $80/sf+ 2 $40/sf+ $70/sf+ 1 8.Type of Project: Points: 100%Owner Occupied 5 Mix Owner Occupied&Investment 4 Investment Property 3 9.Use: Points: Industrial or Business Park Project 5 Commercial Rehabilitation/Redevelopment 4 10.Likelihood that the project will result in Points: unsubsidized,spin-off development. High 5 Moderate 3 Low 1 Sub-Total Points: of a possible 45 points. 11. Bonus Points Bonus Points: The project will be 100%Pay-asyougo Tax Abatement 3 points The project contributes to the goals of Energy City. 2 points • Product promotes sensible use of energy, OR • Project utilizes significant energy efficient design&/of materials in construction. Total Points: Overall project desirability: High 45-38 points Moderate 37-29 points Low 28-20 points Not Eligible 19-0 points Page 15of16 P O M E A E a 9 V ATU MEETING SCHEDULE 2016 Economic Development Authority& City Council Meeting Schedule For Review of Business Subsidy A�lications APPLICATION EDA Finance EDA w CITY DEADLINE Committee ardMonda COUNCIL 1st Monda Last Tuesday) 3=d Monda Dec 7 2015 Dec 29 2015 an 19 an 19 La-4 an 26 Feb 16 Feb 16 Feb 1 Feb 23 Mar 21 Mar 21 Mar 7 Mar 29 A T 18 Apr 18 —Apr 4 Apr 26 Mla-16 l-lav 16 Alay-2 Ma 31 un 20 un 20 un 6 _un 28 11118 11118 1115Tu126 Au 15 Au 15 Aug1 A11 30 Se19 Se 19 Sen 5 Sep 2 Oct 17 Oct 17 Oct 3 Oct 25 Nov 21 Nov 21 Nov 7 Nov 29 Dec 19 Dec 19 Dec 5 Dec 27 an 17 2017 an 17 2017 ALL REQUIRED APPLICATION MATERIALS MUST BE SUBMITTED BY THE DEADLINE OR YOUR APPLICATION WILL BE POSTPONED TO THE NEXT MONTH Page 16of16 P-0 M E A E O 9 ATURE City of er Powered by Na tune Economic Development State Seeded Job Incentive Microloan Guidelines, Policy & Application (Seeded by State MN Investment Fund Awards) June, 2016 City of Elk River Economic Development Division 13065 Orono Parkwav Elk River,TAIN 55330 763.635.1040 ELK RIVER ECONOMIC DEVELOPMENT STATE SEEDED JOB INCENTIVE MICROLOAN GUIDELINES, POLICY & APPLICATION GENERAL PURPOSE AND GUIDELINES The purpose of the RLF is to provide financial and technical assistance for the creation and retention of new employment.These objectives may be accomplished through the followingmeans: 1. Create/retain permanent private sector jobs to fuel above-average economic growth consistent with environmental protection; 2. Investment in technology and equipment that increase productivity and provide for higherwages; 3. Leverage of private investment to ensure economic renewal and competitiveness; 4. Increase the local tax base to guarantee a diversified industry mix; 5. Improve the quality of existing jobs,based on increases in wages or improvements in the job duties, training,or education associated with those jobs; 6. Improve employment and economic opportunities and create a reasonable standard of living,and 7. Enhance productivity growth through improved manufacturing or new technologies. One way to meet these objectives is to assist businesses that have location options outside Minnesota.These firms bring income into the state and raise the overall standard of living. ELIGIBLE EXPENDITURES The MIF-seeded funds may be used in a variety of ways include example noted below.More information is available in Minn. Stat. 116J.8731 and through conversations with your loanofficer. 1. Provide loans,loan guarantees,interest buy-downs,and other forms of participation,ensuring that RLF funds are matched by private financing. 2. Fund strategic investments in renewable energy market development. Any expenditure for external marketing for renewable energy market development is not subject to the matching requirements listed above. 3. Provide entrepreneurs with training, other technical assistance, and financial assistance as defined by federal guidelines. ELIGIBLE PROJECTS Assistance must be evaluated on the existence of the following conditions as noted in Minn.Stat. 116J.8731: 1. Creation or retention of jobs,or the improvement of jobs as measured by wages,skills orknowledge; 2. Increase in the tax base; 3. Attraction of private funds to the project; 4. Incapacity of local communities and finance partners to finance project; 5. Results in higher wage levels or workforce skills; 6. Supports development of microenterprises,as defined by federal guidelines,through technical assistance or financial assistance. 7. Need for assistance to retain existing business; 8. Importance of assistance to attract out-of-state business;and 9. The project promotes or advances the green economy. The assistance cannot meet solely 7.or 8.;other conditions must also be present. ELIGIBLE ACTIVITIES RLF's may be used to fund a variety of business activities including: 1. Acquisition of land 2. Construction or rehabilitation of facilities 3. Site improvements 4. Utilities or infrastructure 5. Machinery and Equipment 6. Training 7. Working capital Advance approval from DEED is necessary if the local government would like to provide financing for activities not listed above.Approval is more likely to occur in projects that relate to business development and involve other local government funds. INELIGIBLE ACTIVITIES In contrast to federal MIF funds,there are industry limitations on how state MIF RLFs may be used. State MIF RLFs may not be used for the operation,construction or expansion of a casino,a sport facility that that has a professional sports team as a principal tenant or any firm engaged in retailing merchandise.All assistance should follow the approved RLF guidelines.Please call your loan officer to discuss any prospective financing. WAGE GOALS Businesses receiving RLF-State MIF assistance must pay each employee total compensation,including benefits not mandated by law,that on an annualized basis is equal to at least 110%of the federal poverty level for a family of four,which as of February 1,2014 is $12.61 per hour.Each year's compensation level changes and can be found on DEED's Business Finance MIF website. The minimum wage for a job to be considered a new or retained job shall be the greater of$15.00 per hour or 150%of state or federal minimum wage,whichever is greater, exclusive of benefits required by law. OTHER ELIGIBLE USES OF THE FUNDS Minn. Stat. 116J.8731 allows local governments to loan or grant RLF funds to a regional development commission,other regional entities,or a certain statewide community capital funds to provide the local match required for capitalization of a regional or statewide RLF.Unlike federal MIF funds,state MIF funds held by local governments never lose their state identify and must follow all applicable laws and regulations. The locslgovemfuentfnustrequestpe=fission from the DEED before it-can cofamit toprovrding funds to any,ofthese organizations. The local government does not have the authority to turn over to another entity,such as Port Authority,Economic Development Authority,Housing Authority,etc.revolving loan funds for any purpose;these entities may administer MIF transactions provided the MIF grantee still maintains control over the RLF. CONFLICT OF INTEREST Minn. Stat.471.87 and 471.88 provide guidance on conflict of interest in a MIF transaction.An actual conflict of interest shall be deemed to exist when a decision on a MIF transaction would compromise a duty to another party or if special advantage is deemed to occur.Potential conflict of interests should also be considered. BUSINESS SUBSIDY LAW Minn. Stat. 116J.993 and 116J.994 must be followed in the administration of RLF-State MIF.These sections pertain to the definition of a business subsidy,public purpose of the subsidy,criteria,subsidy agreements,wage and job goals,timing of the project,public notice and hearing requirements,failure to meet goals,and reporting of information regarding the outcomes of the subsidy. JOB LISTING REQUIREMENTS Per Minn. Stat. 116L.66,a business that receives grants or loans in an amount greater than $200,000 must agree to list any vacant or new positions related to the financial assistance on the MinnesotaWorks.net job bankwebsite. PREVAILING WAGE Per Minn. Stat. 116J.871,laborers and mechanics at the project site during construction,installation,remodeling, and repairs must be paid the state prevailing wage if the financial assistance is greater than $500,000 for a loan.All contracts for publicly owned infrastructure using the RLF must comply with the prevailing wage provisions. DATA PRIVACY The provision of any information related to any applications for assistance is guided by Minn. Stat. 13.591, particularly Subd. 1 and 2. Other applicable state and federal laws and rules must also be followed. MICROLOAN FUND TERMS & CONDITIONS Purpose: To assist existing businesses with expansion and attract new businesses to the City whose local operations will help expand the City's economy through job retention and creation and maintain/grow the City's tax base. The purpose of the Jobs Incentive Program is to encourage the creation of high paying and quality jobs to the city. Amount: Up to $200,000 of secondary financing not to exceed 20% of the total project cost. Equity: Must have private-sector commitments for 50% of the project cost. Borrower must provide 10% or more of project financing. Rate: Fixed at 2%. Term: Financing with a balloon payment in up to 5-years. Loans may be amortized up to the following limits: 20 years on real estate uses; 10 years on equipment uses. Loan Structure All Economic Development Microloans shall be structured as direct loans unless otherwise approved by the EDA Finance Committee. If a participation loan is requested, an agreement will be signed by the borrower,primary lender and the EDA. The EDA may require additional agreements to be signed by the borrower (i.e. security agreement,personal guarantees,business subsidy agreement). Simultaneous Microloans The simultaneous use of different EDA Microloan Fund Programs by any one borrower or for any one project is prohibited. Loan Repayment Jobs Incentive funds,including principal and interest received may not be used to support restaurant, retail, casinos, or sports facilities. Call of Loan A loan shall become due and payable in full if a business relocates outside of the city of Elk River prior to the maturity date of the loan. Late Payment Charge A late payment charge of 8% of the installment amount will be enforced following a grace period of ten calendar days. REGULATION FOR NEW CONSTRUCTION AND IMPROVEMENTS All buildings which public funds will be used for construction or renovation are to be brought into conformance with city ordinances and state building codes. Repairs may include the following systems and portions of real property: 1. Mechanical heating,plumbing, and electrical 2. Structural;including the facade of the structure and energy related improvements. 3. Hook-up to city services (i.e.water, sewer) 4. ADA (Americans with Disabilities Act) improvements LOAN SECURITY AND GUARANTEES Applicant must be able to secure the loan by providing the EDA with a minimum of a subordinate mortgage upon the building and/or assets or other approved collateral equal to the amount of the loan. Applicant must demonstrate the financial means to repay the loans, as determined by the Economic Development Authority. Whenever possible,personal, corporate, and/or entity guarantees will be made part of any loan agreement. Key person life insurance may be required as determined by the EDA Finance Committee based on loan amount and company ownership partners. TIMING OF PROJECT EXPENSES No project should commence until the Elk River Economic Development Authority has approved the loan application. Any costs incurred prior to the approval of the loan application are not eligible expenditures. No building construction should commence until the required city permits are secured. The applicant will be responsible for all legal,recording, and other fees required for protection of a security interest in the loan,payable by a $7,000 processing fee,which is paid at the time of application. In addition to the processing fee, all legal and filing fees shall be paid by the borrower at loan closing. PROCEDURAL GUIDELINES FOR APPLICATION AND APPROVAL All applicants shall first contact a primary lending institution to determine if additional equity is needed, and if so,how much. 1. The applicant shall then meet with city staff to obtain information about the Microloan program, discuss the project, and obtain application forms. 2. The applicant shall complete and submit an application form to the city,along with a $7,000 processing fee. (The fee is used to cover processing expenses and any remaining funds will be returned only if application is denied.) The applicant must provide evidence of their ability to meet the 10% equity requirements or provide a letter of commitment for conventional financing from the primary lending institution. 3. The EDA is a governmental entity and as such must provide public access to public data it receives. Data deemed by Applicant to be nonpublic data under State law should be so designated or marked by Applicant. See Minn. Sat. Sections 13.59, Subd. 1, respectively. 4. The application will be reviewed by the city staff to determine if it conforms to all city policies and ordinances and to consider the following: a. The availability and applicability of other governmental grants and/or loan programs. b. Whether the proposed project will result in conformance with building and zoning codes. c. Whether it is desirous and in the best interests of the public to provide funding for the project. 5. The application will be submitted by city Staff to the designated financial advisor acting as a third-party consult for staff and EDA Finance Committee. 6. The EDA Finance Committee and EDA Commissioners will review each application in terms of its consistency with the goals of the city's Comprehensive Plan and Economic Development Strategic Plan and in relation to the project's overall impact on the community's economy. Downtown Revitalization Program applications will also be reviewed by a Housing& Redevelopment Authority Commissioner in conjunction with the EDA Finance Committee. Energy Efficiency Improvement Program applications will also be reviewed by an Energy City Commissioner in conjunction with the EDA Finance Committee. 7. The EDA Finance Committee will evaluate the project application in terms of the following: a. Project Design- Evaluation of project design will include review of proposed activities, time lines and a capacity to implement. b. Financial Feasibility-Availability of funds,private involvement, financial packaging and cost effectiveness. c. Appropriate ratio of private funds to Microloan funds. d. Sufficient cash flow to cover proposed debt service as demonstrated by financial statements and projections. e. Ability to demonstrate a positive net worth. f. Letter of Commitment from applicant pledging to complete the project during proposed project duration,if the loan application is approved. g. Letter of Commitment from other financing sources stating terms and conditions of their participation in the project if applicable. h. Sufficient collateral. i. Project compliance with all city codes and policies. All other information as required in the application and/or additional information as may be requested by the Economic Development staff. Program Objectives - In addition to quality job and wage creation/retention requirements, the applicant must meet all Microloan Fund criteria and demonstrate how the proposed activities will meet at least one of the following objectives: 1. The project contributes to the fulfillment of the city's approved and adopted economic development and/or redevelopment plans. 2. The project prevents or eliminates slums and blight. 3. The project increases the local tax base. 4. The project brings a structure into compliance with an existing building code violation. LOAN EXTENSION A written request for an extension shall be accompanied by a copy of current financial statements and a $500 upfront processing fee. The processing fee is used to cover processing expenses and will be returned if request is denied. The application for an extension beyond the original term should include a letter of denial from a conventional lender. The EDA Finance Committee will recommend the approval, denial, or request a resubmission. A recommendation from the Finance Committee will be forwarded to the EDA for recommendation of approval,denial to the City Council for final action.. MICROLOAN POLICY REVIEW The above criteria will be reviewed on an annual basis to ensure that the policies reflected in this document are consistent with the economic development goals set forth by the city. RIGHT OF REFUSAL The Elk River Economic Development Authority may deny any project which it deems inappropriate according to the guidelines established in this document. AGREEMENT TO PAY COSTS OF REVIEW It is the policy of the City of Elk River to require applicants to pay costs incurred by the City in reviewing and acting upon applications, so that these costs are not borne by the taxpayers of the City. These costs include all of the City's out-of-pocket costs for expenses,including the City's costs for review of the application by the City's Financial Consultant and City Attorney, or other consultants, recording fees,and necessary publication costs. The application processing fees cover anticipated costs; costs incurred above the application fee will be invoiced as they are incurred, and payment will be due within thirty (30) days. Application fees are not refundable, though any unused portion is returned at the request of the applicant. If payment is not received as required by this agreement,the City may suspend the application review process and may deny the application for failure to comply with the requirements for processing the application. Payment for costs will be required whether the application is granted or denied. ELK RIVER ECONOMIC DEVELOPMENT STATE SEEDED JOB INCENTIVE MICROLOAN FUND APPLICATION 1. CONTACT INFORMATION Legal Name of Business: Project Site Address: City / State / Zip Contact Person(s) Business Phone Fax Home Phone Email Check One: Proprietor Corporation Partnership Federal ID # State ID # 2. NATURE OF LOAN REQUEST Amount Requested: $ Total Project Cost: $ Type of project: New construction for a start-up business New construction for an existing business On site expansion Equipment purchase Remodeling: (circle one Commercial / Retail / Industrial Other Please give a brief summary of your business and its products or service: Please give a brief summary of the project: Please describe how this loan will impact your project: 3. FINANCING Project Costs Land $ Site improvements $ Buildings (attach plans & costs) $ Equipment/MachineryT/Fixtures (attach list and estimated costs) $ Remodeling $ Industrial Inventoryr/Working Capital $ Other (attach description) $ Total Costs $ Comments: Proposed Sources of Financing SOURCE NAME TERMS AMOUNT Bank Loan $ Bank Loan $ Other Private Funds $ Applicant Contribution $ Other $ Fed Grant/Loan $ State Grant/Loan $ EDA Microloan $ Tax Increment Financing $ Tax Abatement $ Total Financing $ Collateral Assignments Lien Description of Collateral Position To Bank 1 To Bank 2 To Private Sources To Other Sources To Federal Govt To State To EDA Microloan Value of Collateral Book Value Cost Existing Liens Land $ $ $ Buildings $ $ $ Machinery&Equip. $ $ $ Other $ $ $ Other $ $ $ 4. JOB & WAGE GOALS Present# of Employees Total Payroll Jobs To Be Created* Please provide the followin information on jobs you expect to create within 2-years. Average Are the Jobs Expected Number Hourly Annual Permanent or Hiring job Title of jobs Wage Salary Temporary? Date *If loan is for job retention only,please explain in Business Plan. Program Objectives (Check all that apply) The project contributes to the fulfillment of the city's approved and adopted economic development and/or redevelopment plans. The project prevents or eliminates slums and blight. The project increases the local tax base. The project brings a structure into compliance with an existing building code violation. 5. PROJECT CONTACTS Attorney Name Address Phone Accountant Name Address Phone Financing Sources (lenders, partners, etc... Name Address Phone Name Address Phone Parent Company Name Address Phone Others Name Address Phone Name Address Phone 6. ATTACHMENTS CHECKLIST Please attach the following: A) Written Business Plan: 1. Description of Business 2. Ownership 3. Management 4. Date Established 5. Products/Services 6. Future Plans B) Financial Statements for Past Two Years and Year To Date 1. Profit&Loss Statement 2. Balance Sheet C) Financial Projections for up to Five Years D) A Project Proforma to include: 1. Projected revenues, 2. Operating expenses, 3. Net operating income,and 4. Annual debt service and loan payments. 5. D) Resume of Owner/Management E) Personal Financial Statements of Proprietor, Partners, Guarantors F) Letter of Commitment from Applicant Pledging to Complete During the Proposed Project Duration G) Letter of Commitment from the Other Sources of Financing, Stating Terms and Conditions of their Participation in Project Application Fee $7,000 7. MEETING SCHEDULE 2016 Economic Development Authority & City Council Meeting Schedule For Review of Business Subsidy Applications APPLICATION EDA Finance ir EDA 1F CITY DEADLINE Committee (3rd Monday) COUNCIL 1St Monday) (Last Tuesday) (3rdMonday) Dec 7 (2015) Dec 29 (2015) Jan 19 Jan 19 Jan 4 Jan 26 Feb 16 Feb 16 Feb 1 Feb 23 Mar 21 Mar 21 Mar 7 liar 29 Apr 18 Apr 18 Apr 4 Apr 26 May 16 Mav 16 May 2 May 31 Jun 20 Jun 20 Jun 6 Jun 28 Jul 18 jul 18 Jul 5 Jul26 Aug15 Aug15 Aug1 Aug30 Sep 19 Sep 19 Sep 5 Sep 27 Oct 17 Oct 17 Oct 3 Oct 25 Nov 21 Nov 21 Nov 7 Nov 29 Dec 19 Dec 19 Dec 5 Dec 27 Jan 17 (2017) Jan 17 (2017) ALL REQUIRED APPLICATION MATERIALS MUST BE SUBMITTED BY THE DEADLINE OR YOUR APPLICATION WILL BE POSTPONED TO THE NEXT MONTH 8. AGREEMENT I / We certify that all information provided in this application is true and correct to the best of my/our knowledge. I /We authorize the city of Elk River and the Finance Committee to check credit references and verify financial and other information. I / We agree to provide any additional information as may be requested by the city and the Finance Committee. The undersigned has received the City's policy regarding the payment of costs of review, understands that reimbursement to the City of costs incurred in reviewing the application will be required,agrees to reimburse the City as required in the policy and make payment when billed by the City, and agrees that the application may be denied for failure to reimburse the City for costs as provided in the policy. APPLICANT SIGNATURE BY DATE CONFIDENTIALITY AGREEMENT (Sample Agreement) This agreement is made this day of .20—, by and between , a company,hereinafter"Developer," and Springsted Incorporated, a Minnesota corporation,hereinafter"Springsted." WHEREAS,Developer is (description of project),hereinafter the "Project,"pursuant to a (form of agreement) with (public entity),hereinafter the "City," dated ; and WHEREAS, Springsted has been hired by the City to investigate certain financial aspects of the Developer and the Project;and WHEREAS,in conjunction with such investigation, Springsted desires to examine the financial information of Developer relative to Developer and the Project; and WHEREAS,Developer is willing to disclose such information only on the condition that such information be kept confidential. NOW,THEREFORE,in consideration of the terms and mutual covenants contained herein,the parties agree as follows: 1. Developer agrees to make its financial information,development pro forma and projection,budget information,and such other financial information concerning the Project as Springsted may reasonably request,hereinafter the "Information," available for inspection by Springsted, but solely for the purpose set forth above. 2. Springsted shall accept the Information in strict confidence solely for that purpose and shall make no other use of the information, or disclose it to any other person or party, including the City, without the express written consent of Developer. Notwithstanding the foregoing, Springsted may use the Information in summary form only to report its findings to the City provided that Springsted first presents its proposed report to Developer and obtains Developer's written consent to ensure that no inadvertent disclosures of confidential information or other inaccurate information are contained in such report. 3. Inspection of the Information shall take place in such manner and at such place and time as the parties may agree. The Information shall not be copied, duplicated, abstracted, summarized or recorded, directly or indirectly, by any means whatsoever,without the prior consent of Developer. 4. The Information shall remain the property of Developer, and any Information provided in tangible form shall be returned to Developer upon completion of such inspection. Any copies, duplications, abstracts, summaries or other recordings of the Information made with Developer's consent shall be returned to Developer upon demand. 5. Springsted agrees that any breach of the obligation of confidentiality imposed hereby shall constitute irreparable harm to Developer and shall entitle Developer to equitable relief enjoining any further breaches of this Agreement, together and in conjunction with any and all such other remedies as may be available to Developer at law or in equity. IN WITNESS WHEREOF,the parties have hereunto set their hands the day and year first above written. Developer ... By Its SPRINGSTED INC. By Its