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Item 5.7 rITEM 1 5.7. \74 . ity of Ilk River MEMORANDUM TO: Elk River Planning Commission FROM: Marc Nevinski, Assistant Director of Economic Development DATE: July 25, 2000 SUBJECT: Softpac Industries/ Opus Proposal for West Business Park Development Issue Opus Northwest has submitted a proposal, in conjunction with Softpac Industries (formally referred to as ANC/Pouch Pac) to develop 13.97 acres in the West Business Park. Because tax increment financing (TIF) will be used in the project, state law requires that the Planning Commission review the attached TIF plan to ensure that the project is in compliance with the city's comprehensive plan. • Background Softpac intends to build a state of the art plant in Elk River that will produce, package, and distribute beverage products in stand-up flexible pouches. The facility will be built by Opus Northwest and will consist of a premium concrete structure of approximately 75,000 square feet in Phase I and may approach 200,000 square feet in subsequent expansions. Nine thirty-seven foot storage tanks will be included in the design of the building and will require a conditional use permit. ANC plans to employ approximately 50 people with the initial phase and up to 200 with subsequent expansions. Many of the jobs will be technically oriented and will command higher wages. Action Requested Staff requests that the Planning Commission review the plans for TIF District No. 21 and consider the attached resolution declaring that the project conforms to the Comprehensive Plan. Attachments • Tax Increment Financing Plan for TIF District No. 21 • Resolution declaring the project's conformity to the • Comprehensive Plan 13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • TDD & Phone: (612) 441-7420 • Fax: (612) 441-7425 III MODIFICATIONS to the Development Program for DEVELOPMENT DISTRICT NO. 1 and the establishment of the tax increment financing plan for TAX INCREMENT FINANCING DISTRICT NO. 21 (An Economic Development District) City of Elk River City Council and Economic Development Authority 0Sherburne County City of Elk River, Minnesota Prepared: July 19, 2000 Adopted: August_, 2000 Prepared by: City of Elk River 13065 Orono Parkway Elk River Minnesota 55330 (612)441-7420 With final review by: Briggs &Morgan 2200 First National Bank Building 332 Minnesota Street St.Paul,Minnesota 55101 Phone 651.223.6600 • Fax 651.223.6450 • TABLE OF CONTENTS TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 21 SECTION I. MODIFIED DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT I-1 SECTION H. TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 21 Section A. Statutory Authority 11-1 Section B. Statement of Objectives II-1 Section C. Development Program Overview II-2 Section D. Description of Property in District No. 21 II-2 Section E. Classification of the Tax Increment Financing District II-3 Section F. Property To Be Acquired II-3 Section G. Estimate of Costs -Use of Funds 11-4 Section H. Estimated Amount of Loan/Bonded Indebtedness II-4 Section I. Sources of Revenue II-5 Section J. Original Tax Capacity and Tax Rate II-5 Section K. Amount of Captured Tax Capacity and Tax Rate II-5 Section L. Duration of the District II-6 Section M. Estimated Impact on Other Taxing Jurisdictions II-6 • Section N. Modifications of the Tax Increment Financing District II-7 Section O. Administrative Expenses 11-7 Section P. Duration of Tax Increment Financing Districts II-8 Section Q. Limitation on Qualification of Property in Tax Increment District Not Subject to Improvement II-8 Section R. Limitation on the Use of Tax Increment II-8 Section S. Notification of Prior Planned Improvements II-9 Section T. Excess Tax Increments II-9 Section U. Requirement for Agreements with the Developer II-9 Section V. Assessment Agreements II-10 Section W. Administration of District and Maintenance of the Tax Increment Account II-10 Section X. Financial Reporting Requirements 11-10 Section Y. Municipal Approval 11-12 Section Z. County Road Costs 11-13 Section AA. Other Limitations on the Use of Tax Increment II-13 Section AB. Reduction in State Tax Increment Financing Aid 11-14 Section AC. Economic Development and Job Creation 11-15 Section AD. Summary II-16 EXHIBIT A Boundary Map of Tax Increment Financing District No. 21 A-1 EXHIBIT B Cashflow Analysis and Base Value Analysis B-1 IIIEXHIBIT C Minnesota Business Assistance Form C-1 • SECTION I. MODIFIED DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO. 1 MODIFICATION TO SECTION I: Current plans for this development project are to build a 73,000 square foot industrial facility (TIF District No. 21). The project is proposed to include a maximum of $700,000 of Tax Increment Financing, as summarized in Section G of the TIF Plan for the District. III • Development Program for Development District No 1 .. ............Page I-I • SECTION II. TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 21 A. STATUTORY AUTHORITY Within the City of Elk River (the "City") there exist areas where public involvement is necessary to cause development or redevelopment to occur. To this end, the City Council established the Elk River Economic Development Authority (the "Authority"). The City faces various existing land use problems that require corrective action by the City or Authority before development by private enterprise becomes financially feasible or desirable. The Authority and City are authorized to establish a tax increment district pursuant to Minnesota Statutes, Section 469.174 to 469.179, inclusive, as amended, to assist in financing public costs related to this project. Tax increments are derived only from the increased amount of taxes that are paid on a parcel of property after the construction of a new structure on the parcel. Tax increment districts encompass the parcels from which tax increments are paid for a period of time. 110 Below is the Tax Increment Financing Plan (the "Plan") for Tax Increment Financing District No. 21 ("District No. 21"). Other relevant information is contained in the Development Program for Development District No. 1, originally adopted on April 1, 1985 and subsequently modified. A modification of the Development Program is contemplated in the Tax Increment Plan. Development District No. 1 includes the area proposed for District No. 21. The Authority or the City reserves the right to approve all or a portion of the property proposed to be included in District No. 21 on the date of the first public hearing, August 21, 2000. B. STATEMENT OF OBJECTIVES District No. 21 consists of 1 parcel of land and adjacent and internal rights-of-way. The current plans for the new development on the site include a 73,000 square foot industrial facility. District No. 21 is expected to achieve many of the objectives set forth in the Development Program for Development District No. 1 in regard to land use. These objectives include: 1. Provide impetus for industrial development by constructing the public facilities necessary to make such development possible; 2. Increase employment opportunities in the City by encouraging additional industrial • development. Tax Increment Financing District No.21 Page 11-1 • 3. Provide adequately serviced industrial areas of the City to accommodate desirable users; 4. Preserve and enhance the tax base of the City; 5. Preserve and enhance the quality of life of the City; and, 6. Provide maximum opportunity, consistent with the needs of the City for development by private enterprise. C. DEVELOPMENT PROGRAM OVERVIEW 1. Property to be Acquired - Property located within District No. 21 will be acquired by the Developer, Opus Northwest, LLC, and is further described in this Plan. 2. Relocation - complete relocation services are available pursuant to Minnesota Statutes, Chapter 117 and other relevant state and federal laws. 3. Upon approval of the developer's plan relating to the project and completion of the necessary legal requirements, Country Ridge, Inc. may sell to the developer selected properties it may acquire within District No. 21. 4. The City or the Authority may perform or provide for some or all necessary • relocation, removal of substandard structures, site preparation, grading, demolition, construction of required utilities and public parking/streets work within District No. 21. 5. District No. 21 contains property zoned BP — Business Park. All development in the area will conform to applicable state and local codes and ordinances. D. LEGAL DESCRIPTION OF PROPERTY IN DISTRICT NO. 21 District No. 21 encompasses parcel (PIN 75 —616 — 0020) identified below in addition to all adjacent and interior right-of-ways: Country Crossing business Center Second Addition, Outlot A, according to the plat thereof on file and of record in the office of the County Recorder in and for Sherburne County, Minnesota. The property is anticipated to be platted and recorded as: Country Crossing Business Center Third Addition, Block 1, Lots 1 & 2, according to the plat thereof on file and of record in the office of the County Recorder in and for Sherburne County, Minnesota. (PIN & ) The City or the Authority reserves a right to approve all or a portion of the area of the parcels listed IIas being designated for District No. 21. Tax Increment Financing District No.21 Page 11-2 See the map in Exhibit A for further information on the location of District No. 21. • E. CLASSIFICATION OF THE TAX INCREMENT FINANCING DISTRICT The City and the Authority, in determining the need to create a tax increment financing district in accordance with Minnesota Statutes, Section 469.174 to 469.179, as amended, inclusive, find that District No. 21 to be established is an economic development district pursuant to Minnesota Statutes, Section 469.174, Subdivision 12 and 469.176 Subdivision 4c as defined below: Subd. 12. "Economic Development district" means a type of tax increment financing district which consists of any project, or portions of a project, not meeting the requirements found in the definition of redevelopment district, renewal and renovation district, soils condition district, mined underground space development district, or housing district, but which the authority finds to be in the public interest because: (1) it will discourage commerce, industry, or manufacturing from moving their operations to another state or municipality;or (2) it will result in increased employment in the state;or (3) it will result in preservation and enhancement of the tax base of the state. Subd. 4c. Economic development districts. (a) Revenue derived from tax increment from an economic development district may not be used to provide improvements, loans, subsidies, grants, interest rate subsidies, or assistance in any form to developments consisting of buildings and ancillary facilities, if more than 15 percent of the buildings and facilities (determined on the basis of square footage)are used for a purpose other than: Ill (1) the manufacturing or production of tangible personal property, including processing resulting in the change in condition of the property; (2) warehousing, storage, and distribution of tangible personal property, excluding retail sales; (3) research and development related to the activities listed in clause(1)or(2); (4) telemarketing if that activity is the exclusive use of the property; (5) tourism facilities;or (6) space necessary for and related to the activities listed in clause(1) to(5). The parcel has been investigated by City and Authority staff and consultants and District No. 21 has been found to meet all requirements of an economic development district. Data on file regarding the qualifications of the economic development tax increment financing district. 1. District No. 21 consists of 1 parcels. 2. District No. 21 does not meet the requirements of any other Tax Increment Financing District. 3. District No. 21 will discourage commerce, industry, or manufacturing from moving their operations to another state or municipality. 4. District No. 21 will result in increased employment in the state. 5. District No. 21 will result in preservation and enhancement of the tax base of the state. 6. The facility will qualify specifically under Subd. 4c. (1), (2), (3), and (6), as indicated in Section E of this Plan. F. PROPERTY TO BE ACQUIRED IIIThe Developer will acquire all parcels within District No. 21. Tax Increment Financing District No.21 Page 11-3 • G. ESTIMATE OF PUBLIC COSTS- USE OF FUNDS The estimated use of funds associated with District No. 21 are outlined in the following line item budget: USE OF FUNDS TOTAL Qualified Costs: Land Acquisition $ 764,000 Site Improvements $ 154,000 Public Improvements $ 0 Other Development Costs $ 0 Interest $ 0 Administration (up to 10%) $ 10,000 TOTAL: $ 928,000 The City or Authority reserve the right to modify actual line item dollar amounts at any time throughout the duration of the District, as long as it does not change the Total as indicated above. Capitalized interest and other interest payments on tax increment bonds and obligations are also • considered to be public costs in addition to the above referenced estimate of public costs. Interest payments and capitalized interest will be determined at the time of issuance of the bonds and obligations and are dependent on interest rates in effect at such time. In addition to above mentioned costs, administration costs to cover City staff and overhead and various consulting fees in an amount not to exceed 10% of total tax increment will be funded with tax increments from District No. 21. This provision does not obligate the City or Authority to incur debt. The City or Authority will issue bonds only upon determination that such action is in the best interest of the City. The City or Authority may also finance the activities to be undertaken pursuant to the Tax Increment Financing Plan through loans from funds of the City or Authority or to reimburse the developer on a "pay-as- you-go" basis for eligible activities paid for by the developer. Any funds to be expended outside the boundaries of District No. 21, but within the boundaries of Development District No. 1, will be less than 20 percent of total tax increment generated by District No. 21, including administrative costs. Subject to that limitation, and the limitations as described in Section R., the tax increment from District No. 21 may be used to pay for public costs outlined in the Development Program for Development District No. 1 (subject to the limitations as described in this Plan). H. ESTIMATED AMOUNT OF LOAN/BONDED INDEBTEDNESS The City or Authority have the ability to issue a revenue bond, general obligation bond, or other III type of obligation in one or more series for a maximum amount of$500,000 to finance any or all of Tax Increment Financing District No.21 Page II-4 the Total Estimated Public Costs authorized to be paid under Section G of this Plan. III I. SOURCES OF REVENUE The anticipated source of revenue to be used to finance public costs associated with the public development projects and objectives as stated in Development District No. 1 is tax increment generated as a result of the taxation of the land and improvements in District No. 21. Tax increment financing refers to a funding technique that utilizes increases in valuation and the property taxes attributable to new development to finance, or assist in the financing of, public development costs. Additional sources of revenue may include, but are not limited to, investment income and land sales proceeds. This does not preclude the City, the Authority, or the developer from using other funds, at its discretion, to pay such costs. SOURCES OF FUNDS TOTAL Tax Increment $ 844,000 Interest Local Contribution 84,000 Other Revenue Sources TOTAL $ 928,000 J. ORIGINAL TAX CAPACITY AND TAX RATE Pursuant to Minnesota Statutes Section 469.174 Subdivision 7 and Section 469.177, Subdivision 1, • the original Net Tax Capacity for District 21 is based on the value placed on the property by the assessor in 1999 for taxes payable 2000. The original local tax rate for the purpose of the projecting cashflow for District No. 21 will be the tax rate for taxes payable in 2000 of 119.448. The certified original local tax rate for District No. 21 will be the tax rate for taxes payable in 2000. K. AMOUNT OF CAPTURED TAX CAPACITY AND TAX RATE Pursuant to Minnesota Statutes, Section 469.174 Subdivision 4 and Minnesota Statutes, Section 469.177, Subdivision 1f and Subdivision 2, the estimated Captured Net Tax Capacity (CTC) of District No. 21, upon completion of Phase I of the project, will annually approximate tax increment revenues as shown in the table below. The City and Authority requests 100 percent of the available increase in tax capacity for repayment of debt and current expenditures, beginning in the tax year payable 2002. The original tax capacity and project tax capacity are estimated at current market values and class rates to be the total amount when all development is in place and uses of the property have changed. Original Estimated Project Tax Capacity (upon completion of project) $130,046 less: Original Tax Capacity 24,442 Estimated Captured Tax Capacity 105,604 • Estimated Annual Tax Increment (CTC x Tax Rate) $31,943 Tax Increment Financing District No.21 Page 11-5 • L. DURATION OF THE DISTRICT Pursuant to Minnesota Statutes, Section 469.175, Subdivision 1 b, the duration of District No. 21 must be indicated within the Plan. The duration of District No. 21 will be no more than nine years from payment of the first tax increment expected in 2002. Thus it is estimated that District No. 21, including any modifications of the Plan for subsequent phases or other changes, would terminate at the end of the year 2010. The City and the Authority reserve the right to decertify District No. 21 prior to the legally required date. M. ESTIMATED IMPACT ON OTHER TAXING JURISDICTIONS The estimated impact on other taxing jurisdictions assumes construction would have occurred without the creation of District No. 21. After careful consideration and analysis, the Authority has determined that construction would not occur without the creation of District No. 21. If the construction is a result of tax increment financing, the impact is $0 to other entities. Notwithstanding the fact that the fiscal impact on the other taxing jurisdictions is $0 due to the fact that the construction would not have occurred without the assistance of the City and Authority, the following estimated impact of District No. 21 would be as follows if the "but for" test was not met: IMPACT ON TAX BASE ENTITY'S ESTIMATED % OF CAPTURED IP ENTITY TOTAL NET CAPTURED TAX CAPACITY TAX CAPACITY TAX CAPACITY TO ENTITY TOTAL Sherburne County 59,143,714 105,604 .0018% City of Elk River 13,208,236 105,604 .0080% School District No. 728 17,985,332 105,604 .0059% IMPACT ON TAX RATES CURRENT PERCENT CAPTU RED POTE NTIAL ENTITY TAX RATE OF TOTAL TAX CAPACITY TAXES Sherburne County .31468 .26 105,604 33,231 City of Elk River .30248 .25 105,604 31,943 School District No. 728 .56027 .47 105,604 59,185 Other .01709 .01 105,604 1,805 TOTAL 1.19448 1.00 126,146 The estimates listed above display captured tax capacity when all construction is completed. The tax rates and tax capacities are the payable 2000 figures for all jurisdictions. District No. 21 will be certified under rates for tax year payable 2001 which were unavailable at the time of preparation of • this Plan. Tax Increment Financing District No.21 Page II-6 N. MODIFICATIONS OF THE TAX INCREMENT FINANCING DISTRICT IIIIn accordance with Minnesota Statutes, Section 469.175, Subdivision 4, any reduction or enlargement of the geographic area of the project or tax increment financing district, increase in amount of bonded indebtedness to be incurred, including a determination to capitalize interest on debt if that determination was not a part of the original plan, or to increase or decrease the amount of interest on the debt to be capitalized, increase in the portion of the captured tax capacity to be retained by the City or Authority, increase in total estimated tax increment expenditures or designation of additional property to be acquired by the City or Authority shall be approved upon the notice and after the discussion, public hearing and findings required for approval of the original plan. The geographic area of a tax increment financing district may be reduced, but shall not be enlarged after five years following the date of certification of the original tax capacity by the county auditor or by approximately August 2004. If an economic development district is enlarged, the reasons and supporting facts for the determination that the addition to the district meets the criteria of Sections 469.174, subdivision 12, must be documented. The requirements of this paragraph do not apply if(1) the only modification is elimination of parcel(s) from the project or district and (2)(A) the current tax capacity of the parcel(s) eliminated from the district equals or exceeds the tax capacity of those parcel(s) in the district's original tax capacity or (B) the authority agrees that, notwithstanding Sections 469.177, subdivision 1, the original tax capacity will be reduced by no more than the current tax capacity of the parcel(s) eliminated from District No. 21. The City or EDA must notify the County Auditor of any modification that reduces or enlarges the geographic area of District No. 21 or Development District No. 1. Modifications to the District No. 21, in the form of a budget modification or an expansion of the II boundaries, will be recorded in this Plan. O. LIMITATION ON ADMINISTRATIVE EXPENSES In accordance with Minnesota Statutes, Section 469.174, Subdivision 14 and Minnesota Statutes, Section 469.176, Subdivision 3, administrative expenses means all expenditures of an authority other than amounts paid for the purchase of land or amounts paid to contractors or others providing materials and services, including architectural and engineering services, directly connected with the physical development of the real property in the district, relocation benefits paid to or services provided for persons residing or businesses located in the district or amounts used to pay interest on, fund a reserve for, or sell at a discount bonds issued pursuant to Section 469.178. Administrative expenses include amounts paid for services provided by bond counsel, fiscal consultants, and planning or economic development consultants. No tax increment shall be used to pay any administrative expenses for a project which exceed ten percent of the total tax increment expenditures authorized by the tax increment financing plan or the total tax increment expenditures for the project, whichever is less. Pursuant to Minnesota Statutes, Section 469.176, Subdivision 4h, tax increments may be used to pay for the county's actual administrative expenses incurred in connection with District No. 21. The county may require payment of those expenses by February 15 of the year following the year the expenses were incurred. Pursuant to Minnesota Statutes, Section 469.177, Subd. 11, the County Treasurer shall deduct an • amount equal to .25 percent of any increment distributed to the City or Authority and the County Treasurer shall pay the amount deducted to the State Treasurer for deposit in the state general fund. Tax increment Financing District No.21 Page 11-7 • P. DURATION OF TAX INCREMENT FINANCING DISTRICTS Pursuant to Minnesota Statutes, Section 469.176, Subdivision 1(d), no tax increment shall be paid to the City or Authority three years from the date of certification of the ONTC by the County Auditor unless within the three-year period (1) bonds have been issued pursuant to Section 469.178, or in aid of a project pursuant to any other law, except revenue bonds issued pursuant to Chapter 469.152 to 469.165, prior to the effective date of the Act; or (2) the authority has acquired property within the district; or (3) the authority has constructed or caused to be constructed public improvements within the district. The City or Authority must therefore issue bonds, or acquire property, or construct or cause public improvements to be constructed in District No. 21 by approximately August 2000. Q. LIMITATION ON QUALIFICATION OF PROPERTY IN TAX INCREMENT DISTRICT NOT SUBJECT TO IMPROVEMENT Pursuant to Minnesota Statutes, Section 469.176, Subdivision 6, If, after four years from the date of certification of the original tax capacity of the tax increment financing district pursuant to Minnesota Statutes, Section 469.177, no demolition, rehabilitation or renovation of property or other site preparation, including qualified improvement of a street adjacent to a parcel but not installation of utility service including sewer or water systems, has been commenced on a parcel located within a tax increment financing district by the authority or by the owner of the parcel in accordance with the tax increment financing plan, no additional tax increment may be taken from that parcel and the original tax capacity of that parcel shall be III excluded from the original tax capacity of the tax increment financing district. If the authority or the owner of the parcel subsequently commences demolition, rehabilitation or renovation or other site preparation on that parcel including improvement of a street adjacent to that parcel, in accordance with the tax increment financing plan, the authority shall certify to the county auditor in the annual disclosure report that the activity has commenced. The county auditor shall certify the tax capacity thereof as most recently certified by the commissioner of revenue and add it to the original tax capacity of the tax increment financing district. The county auditor must enforce the provisions of this subdivision... For purposes of this subdivision, qualified improvements are limited to(1)construction or opening of a new street, (2)relocation of a street, and(3)substantial reconstruction or rebuilding of an existing street. R. LIMITATION ON THE USE OF TAX INCREMENT Pursuant to Minnesota Statutes, 469.1763, Subd. 2, at least 80 percent of the revenues derived from tax increments from an economic development district must be expended on activities in the district. These costs include demolition of structures, grading, site preparation, clearing of the land and installation of utilities, roads, sidewalks, and parking facilities for the site. The revenues shall be used to finance or otherwise pay public redevelopment and economic development costs allowed by law. These revenues shall not be used to circumvent any levy limit law. No revenues derived from tax increment shall be used for the construction or renovation of a municipally owned building used primarily and regularly for conducting the business of the municipality; this provision shall not prohibit the use of revenues derived from tax increments for the construction or renovation of a parking structure, a commons area used as a public park or a • facility used for social, recreational or conference purposes and not primarily for conducting the business of the municipality. Tax Increment Financing District No.21 Page 11-8 • Tax increments generated in Tax Increment Financing District No. 21 will be paid by Sherburne County to the City of Elk River for the Tax Increment Fund of said District No. 21. The City or Authority will pay to the developer annually an amount not to exceed an amount as specified in a developer's agreement to reimburse the costs of land acquisition, public improvements, demolition and relocation, site preparation, and administration. Remaining increment funds will be used for City or Authority administration (up to 10 percent) and the costs of public improvement activities outside District No. 21 (subject to the limitations as described in this Plan). S. NOTIFICATION OF PRIOR PLANNED IMPROVEMENTS Pursuant to Minnesota Statutes, Section 469.177, Subdivision 4, the City and the Authority have reviewed the area to be included in District No. 21 and found no properties for which building permits have been issued during the 18 months immediately preceding approval of the Plan by the City. If a building permit had been issued within the 18 month period preceding approval of the plan by the City, the county auditors shall increase the original tax capacity of the district by the valuation of the improvements for which the building permit was issued. T. EXCESS TAX INCREMENTS Pursuant to Minnesota Statutes, Section 469.176, Subdivision 2, in any year in which the tax increment exceeds the amount necessary to pay the costs authorized by the tax increment plan, including the amount necessary to cancel any tax levy as provided in Minnesota Statutes, Section 475.61, Subdivision 3, the City or Authority shall use the excess amount to do any of the following: • 1. prepay the outstanding bonds; 2. discharge the pledge of tax increment therefore; 3. pay into an escrow account dedicated to the payment of such bond; or 4. return the excess to the County Auditor for redistribution to the respective taxing jurisdictions in proportion to their tax capacity rate as provided in Minnesota Statutes, Sections 469.176, Subdivision 2. The Authority may also modify this Plan to authorize additional costs within 5 years of date of certification. U. REQUIREMENT FOR AGREEMENTS WITH THE DEVELOPER The City or Authority will review any Developer's proposal to determine its conformance with the Development Program and with applicable municipal ordinances and codes. To facilitate this effort, the following documents may be requested for review and approval: site plan, construction, mechanical, and electrical system drawings, landscaping plan, grading and storm drainage plan, signage system plan, and any other drawings or narrative deemed necessary by the City or Authority to demonstrate the conformance of the development with City plans and ordinances. The City or Authority may use the Agreement to address other issues related to the development. The requirements to be imposed upon the Developer and the City's or Authority's exact participation in the project will be negotiated as part of the development Agreement between the • City or the Authority and the Developer. Tax Increment Financing District No.21 Page 11-9 V. ASSESSMENT AGREEMENTS IIIPursuant to Minnesota Statutes, Section 469.177, Subdivision 8, the City or Authority may enter into an agreement in recordable form with the owner of property within the tax increment financing district which establishes a minimum market value of the land and improvements for the duration of District No. 21. The assessment agreement shall be presented to the county assessor who shall review the plans and specifications for the improvements constructed, review the market value assigned to the land upon which the improvements have been or will be constructed and, so long as the minimum market value contained in the assessment agreement appear, in the judgment of the assessor, to be a reasonable estimate, the assessor may certify the minimum market value agreement. W. ADMINISTRATION OF DISTRICT AND MAINTENANCE OF THE TAX INCREMENT ACCOUNT Administration of District No. 21 will be handled by the Executive Director of the Authority. The tax increment received as a result of increases in the tax capacity of District No. 21 will be maintained in a special fund separate from all other municipal funds and expended only upon sanctioned municipal activities identified in the tax increment financing plan. X. FINANCIAL REPORTING REQUIREMENTS Pursuant to Minnesota Statutes, Section 469.175, Subdivisions 5, 6, and 6(a); the City or Authority must file an annual disclosure report for all tax increment financing districts with the State Auditor, IIIthe county board, county auditor, and school board. Pursuant to Section 469.175, Subd. 5, of the Tax Increment Financing Act, the City or Authority must file an annual disclosure report for the Tax Increment Financing District. The report shall be filed with the State Auditor, the county board, county auditor, and school board on or before July 1 of each year. The report to be filed by the City or Authority shall include the following information: 1. the amount and source of revenue in the tax increment account; 2. the amount and purpose of expenditures from the account; 3. the amount of any pledge of revenues, including principal and interest, on any outstanding bond indebtedness; 4. the original net tax capacity of the Tax Increment Financing District; 5. the captured net tax capacity retained by the City; 6. the captured net tax capacity shared with other taxing districts; 7. the tax increment received; 8. any additional information necessary to demonstrate compliance with the tax increment financing plan. Section 469.175, Subd. 5, of the Tax Increment Financing Act also provides that an annual statement showing the tax increment received and expended in that year, the original net tax capacity, captured net tax capacity, amount of outstanding bonded indebtedness, the amount of the district's increments paid to other governmental bodies, the amount paid for administrative costs, IIIthe sum of increments paid, directly or indirectly, for activities and improvements located outside Tax Increment Financing District No.21 Page 11-10 of the district, and any additional information the City or Authority deems necessary shall be IIIpublished in a newspaper of general circulation in the City. Pursuant to Minnesota Statutes, Section 469.175, Subd. 6, of the Tax Increment Financing Act, the City or Authority must annually submit to the State Auditor, on or before August 1, a financial report which shall: 1. provide for full disclosure of the sources and uses of the public funds in the district; 2. permit comparison and reconciliation with the City's accounts and financial reports; 3. permit auditing of the funds expended on behalf of the tax increment district, including a single district that is part of a multi district project or that is funded in part or whole through the use of a development account funded with tax increments from other districts or with other public money; and 4. be consistent with generally accepted accounting principles. The financial report must also include the following: 1. the original net tax capacity of District No. 21; 2. the captured net tax capacity of the District No. 21, including the amount of any captured net tax capacity shared with other taxing districts; 3. for the reporting period and for the duration of District No. 21, the amount budgeted under the tax increment financing plan, and the actual amount expended for, at least, the following categories: a. acquisition of land and buildings through condemnation or purchase; III b. site improvements or preparation costs; c. installation of public utilities, parking facilities, streets, roads, sidewalks, or other similar public improvements; d. administrative costs, including the allocated cost of the authority; e. public park facilities, facilities for social, recreational, or conference purposes, or other similar public improvements; and 4. the total cost of the property to the authority and the price paid by developers (for properties sold to developers); 5. the amount of increments rebated or paid to developers or property owners for privately financed improvements or other qualifying costs, other than those reported under clause (3), that were issued on behalf of private entities for facilities located in District No. 21. Pursuant to Minnesota Statutes, Section 469.175, subdivision 6a, the City or Authority must also annually report to the State Auditor before or on July 1 of each year the following amounts for the entire City or EDA: 1. the total principal amount of nondefeased tax increment financing bonds that are outstanding at the end of the previous calendar year; and 2. the total annual amount of principal and interest payments that are due for the current calendar year on (i) general obligation tax increment financing bonds and (ii) other tax increment financing bonds. III Tax Increment Financing District No.21 Page II-11 and for each tax increment financing district within the City: • 1. the type of tax increment financing district; 2. the date on which the district is required to be decertified; 3. the amount of any payments and the value of in-kind benefits, such as physical improvements and the use of building space, that are financed with revenues derived from increments and are provided to another governmental unit (other than the municipality) during the preceding calendar year; 4. the tax increment revenues for taxes payable in the current calendar year; 5. whether the tax increment financing plan or other governing document permits increment revenues to be expended outside of District No. 21; 6. any additional information that the State Auditor may require. Copies of this report must also be provided to the county and school district boards. Y. MUNICIPAL APPROVAL Pursuant to Minnesota Statutes, Section 469.175, Subdivision 3, before or at the time of approval of the tax increment financing plan for District No. 21, the municipality shall make the following findings and shall set forth in writing the reasons and supporting facts for each determination. 1. Finding that the Tax Increment Financing District No. 21 is an economic development district as defined in Minnesota Statutes, Section 469.174, Subd. 12. . District No. 21 consists of 2 parcels of property. The District is in the public interest because it will result in increased employment in the State, and it will result in preservation and enhancement of the tax base of the State. 2. Finding that the proposed development, in the opinion of the City Council and the Authority, would not occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonable be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of District No. 21 permitted by the Tax Increment Financing Plan. Due to the high cost of development on the parcel, and the cost of financing the proposed improvements, this project is feasible only through assistance, in part, from tax increment financing. A comparative analysis of estimated market values both with and without establishment of Tax Increment Financing District No. 21 and the use of tax increments has been performed as described above. Such analysis is included in the Tax Increment Financing Plan and shows that the estimated market value of the proposed development (less the indicated subtractions) after discounting by the present value of the tax increment is significantly greater that the increase in the market value estimated to result from other development that could be expected to occur without the use of tax increment after the present value of the III Tax Increment Financing District No.21 Page 11-12 projected tax increment for the maximum duration of District No. 21 permitted by the Tax • Increment Financing Plan (see cashflows in Appendix C). 3. Finding that the Tax Increment Financing Plan for District No. 21 conforms to the general plan for the development or redevelopment of the municipality as a whole. The site is appropriately zoned. The Tax Increment Financing Plan will be reviewed by the Planning Commission on July 25, 2000, for conformance with the general development plan of the City. 4. Finding that the Tax Increment Financing Plan for Tax Increment Financing District No. 21 will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development of Development District No. 1 by private enterprise. The establishment of Tax Increment Financing District No. 21 will result in increased employment for the City and State of Minnesota, increased tax base of the State, and add a high quality development to the City. Additional findings may be set forth in the Authorizing Resolution of the City. Z. COUNTY ROAD COSTS Pursuant to Minnesota Statutes, Section 469.175, Subdivision la, the county board may require the authority to pay for all or part of the cost of county road improvements if the proposed III development to be assisted by tax increment will, in the judgment of the county, substantially increase the use of county roads requiring construction of road improvements or other road costs and if the road improvements are not scheduled within the next five years under a capital improvement plan or other county plan. The improvements outlined in the Plan serve as notice to the county that the development of the commercial facility will be assisted with tax increment. In the opinion of the City, the Authority, and consultants, the proposed development will have little or no impact upon county roads. If the county elects to use increments to improve county roads, it must notify the City within thirty days of receipt of this plan. AA. OTHER LIMITATIONS ON THE USE OF TAX INCREMENT 1. General Limitations. All revenue derived from tax increment shall be used in accordance with the tax increment financing plan. The revenues shall be used to finance or otherwise pay public capital and administration costs pursuant to Minnesota Statutes, Section 469.124 through 469.134. These revenues shall not be used to circumvent existing levy limit law. No revenues derived from tax increment shall be used for the construction, renovation, operation or maintenance of a building to be used primarily and regularly for conducting the business of a municipality, county, school district, or any other local unit of government or the state or federal government; this provision shall not prohibit the use of revenues derived from tax increments for the construction or renovation of a parking structure, a commons area used as a public park or a facility used for social, recreational or conference III Tax Increment Financing District No.21 Page 11-13 purposes and not primarily for conducting the business of the municipality. III2. Pooling Limitations. At least 80 percent of tax increments from District No. 21 must be expended on activities in District No. 21 or to pay bonds, to the extent that the proceeds of the bonds were used to finance activities within said district or to pay, or secure payment of, debt service on credit enhanced bonds. Not more than 20 percent of said tax increments may be expended, through a development fund or otherwise, on activities outside of District No. 21 except to pay, or secure payment of, debt service on credit enhanced bonds. For purposes of applying this restriction, all administrative expenses must be treated as if they were solely for activities outside of District No. 21. 3. Five Year Limitation on Commitment of Tax Increments. Tax Increments derived from District No. 21 shall be deemed to have satisfied the 80 percent test set forth in paragraph (2) above only if the five year rule set forth in Minnesota Statues, Sections 469.1763, subdivision 3, has been satisfied; and beginning with the sixth year following certification of District No. 21, 80 percent of said tax increments that remain after expenditures permitted under said five year rule must be used only to pay previously commitment expenditures or credit enhanced bonds as more fully set forth in Minnesota Statues, Sections 469.1763, subdivision 4. AB. REDUCTION IN STATE TAX INCREMENT FINANCING AID Pursuant to Minnesota Statues, Section 273.1399, for tax increment financing districts for which certification was requested after April 30, 1990, a municipality incurs a reduction in state tax . increment financing aid (RISTIFA) applied to the municipality's Local Government Aids (LGA) first and, Homestead and Agricultural Credit Aids (HACA) second, in an amount equal to a formula based upon the equalized qualifying captured tax capacity (QCTC) of the tax increment financing district. Pursuant to Minnesota Statutes, Section 273.1399, Subdivision 6, for tax increment financing districts certified after June 30, 1994, the City may choose an option to the LGA-HACA penalty. A tax increment financing district is exempt if the City elects at the time of approving the tax increment financing plan to make a qualifying local contribution. To qualify for the exemption in each year, the City must make a qualifying local contribution to the project of a certain percentage. The local contribution for an economic development district is 10 percent. The maximum local contribution for all districts in the City is limited to two percent of the City's net tax capacity. The amount of the local contribution must be made out of unrestricted money of the City or Authority, such as the general fund, a property tax levy, or a federal or a state grand-in-aid which may be spent for general government purposes. The local contribution may not be made, directly or indirectly, with tax increments or developer payments. The local contribution must be used to pay project costs and cannot be used for general government purposes. The Authority elects to make the annual local contribution to the project to exempt itself from the LGA-HACA penalty. The City or Authority will pay for costs of the project described in this Plan, in an amount equal to 10 percent of annual tax increment for District No. 21, subject to the limitations described above, in any year in which such amount does not exceed 2 percent of the IllTax Increment Financing District No.21 Page II-14 City's net tax capacity. Such contribution may be in the form of either lump sum or annual IIIpayments (in addition to tax increment payments) toward costs identified in this plan or other costs related to that development or redevelopment. The contribution may also be made in the form of public improvements financed by the City or Authority or other unit of government with unrestricted funds. AC. ECONOMIC DEVELOPMENT AND JOB CREATION To the extent applicable, the City agrees to comply with Minnesota Statutes, Section 116J.991, which states that a business receiving state or local government assistance for economic development or job growth purposes, including tax increment financing, must create a net increase in jobs and meet wage level goals in Minnesota within two years of receiving assistance (See Appendix C). III • Tax Increment Financing District No.21 Page II-15 • AD. SUMMARY The City of Elk River is establishing Tax Increment Financing District No. 21 to preserve and enhance the tax base, to develop underutilized areas, and increase employment of the City. The Tax Increment Financing Plan for Tax Increment Financing District No. 21 was prepared by the City of Elk River, 13065 Orono Parkway, Elk River, Minnesota 55330, telephone (612) 441-7420. 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Box 490 Elk River. MN 55330 • EXHIBIT B Cashflow Analysis and Base Value Analysis • • Tax Increment Financing District No.21 Page B-1 • CITY OF ELK RIVER,MINNESOTA-•ISTRICT NO.21(ANC) • BASIC ASSUMPTIONS District: New Economic Development District Inflation Rate per Year 3.0000% Pay As You Go Rate 8.00% Fiscal Disp.Contnbution Ratio EST 0.000% Current Tax Extension Rate-Pay 2000 1.194480 Frozen Tax Extension Rate -Pay 2001 1.194480 I BASE TAX CAPACITY Market Tax Rate Tax Year PID Value Capacity Payable 75-616-0020 Emmerich site 763,000 2.4%-3.4% 24,442 2001 TOTALS 763,000 24,442 PROJECT VALUE INFORMATION Market Value Taxes Tax Capacity Total Tax Development Phase Sq.Ft. Sq.Ft Per Total Minus Capacity Tax Market Type Units Units Sq.Ft./Unit Taxes Fis.Dis. Rate Value Payable Industrial 1 $53.00 73,000 $2.13 155,337 130,046 130,046 2.4%/3.4% 3,869,000 2002 TOTALS 155,337 130,046 130,046 3,869,000 TOTAL PROJECT TAX INCREMENT CASH FLOW Payment Date Beginning Period Annual Project Captured Semi-Annual State Aud. Semi-Annual City P.A.Y.G. Semi-Annual Local Ending Period Base Tax Tax Tax Gross Tax Payment Tax Administration Note Net Tax Match Yrs. Mth. Yr. Capacity Capacity Capacity Increment 0.25% Increment 10.00% 90.00% Increment 10.00% Yrs. Mth. Yr. 0.0 02-01 2000 24,442 24,442 0 0 0 0 0 0 0 0 0.0 08-01 2000 0.0 08-01 2000 24,442 24,442 0 0 0 0 0 0 0 0 0.0 02-01 2001 0.5 02-01 2001 24,442 97,160 72,718 43,430 (182) 43,248 (3,584) (39,664) 0 4,325 0.0 08-01 2001 1.0 08-01 2001 24,442 97,160 72,718 43,430 (182) 43,248 (3,584) (39,664) 0 4,325 0.0 02-01 2002 1.5 02-01 2002 24,442 130,046 105,604 63,071 (264) 62,807 (5,540) (57,267) 0 6,281 2.0 08-01 2002 2.0 08-01 2002 24,442 130,046 105,604 63,071 (264) 62,807 (5,540) (57,267) 0 6,281 2.5 02-01 2003 2.5 02-01 2003 24,442 133,947 109,505 65,401 (274) 65,127 (5,772) (59,356) 0 6,513 3.0 08-01 2003 3.0 08-01 2003 24,442 133,947 109,505 65,401 (274) 65,127 (5,772) (59,356) 0 6,513 3.5 02-01 2004 3.5 02-01 2004 24,442 137,966 113,524 67,801 (284) 67,517 (6,011) (61,506) 0 6,752 4.0 08-01 2004 4.0 08-01 2004 24,442 137,966 113,524 67,801 (284) 67,517 (6,011) (61,506) 0 6,752 4.5 02-01 2005 4.5 02-01 2005 24,442 142,105 117,663 70,273 (294) 69,979 (6,257) (63,722) 0 6,998 5.0 08-01 2005 50 08-01 2005 24,442 142,105 117,663 70,273 (294) 69,979 (6,257) (63,722) 0 6,998 5.5 02-01 2006 5.5 02-01 2006 24,442 146,368 121,926 72,819 (305) 72,514 (6,510) (66,004) 0 7,251 6.0 08-01 2006 6.0 08-01 2006 24,442 146,368 121,926 72,819 (305) 72,514 (6,510) (66,004) 0 7,251 6.5 02-01 2007 6.5 02-01 2007 24,442 150,759 126,317 75,442 (316) 75,126 (6,772) (68,354) 0 7,513 7.0 08-01 2007 7.0 08-01 2007 24,442 150,759 126,317 75,442 (316) 75,126 (6,772) (68,354) 0 7,513 7.5 02-01 2008 7.5 02-01 2008 24,442 155,282 130,840 78,143 (327) 77,816 (7,782) (70,034) 0 7,782 8.0 08-01 2008 8.0 08-01 2008 24,442 155,282 130,840 78,143 (327) 77,816 (7,782) (70,034) 0 7,782 8.5 02-01 2009 8.5 02-01 2009 24,442 159,940 135,498 80,925 (339) 80,586 (8,059) (72,528) 0 8,059 9.0 08-01 2009 9.0 08-01 2009 24,442 159,940 135,498 80,925 (339) 80,586 (8,059) (72,528) 0 8,059 9.5 02-01 2010 TOTALS 1,234,608 (5,168) 1,229,440 (112,570) (1,116,870) 0 122,944 PRESENT VALUE 843,511 (3,531) 839,980 (76,171) (763,809) 0 83,998 Prepared by City of Elk River 7/20/2000 Page 1 CITY OF ELK RIVER,MINNESOTA-TIF DISTRICT NO.21 (ANC) • BUT/FOR ANALYSIS Current Market Value-Est. 763,000 New Market Value-Est. 3,869,000 Difference 3,106,000 Present Value of Increment a 8.00% 843,511 Difference 2,262,489 Value Likely to Occur Without TIF is Less Than: 2,262,489 IMPACT ANALYSIS TAX CAPACITIES SHERBURNE COUNTY 59,143,714 105,604 0.179% CITY OF ELK RIVER 13,208,236 105,604 0.800% DISTRICT 728 17,985,332 105,604 0.587% TAX RATES SHERBURNE COUNTY 0.314680 105,604 33,231 CITY OF ELK RIVER 0.302480 105,604 31,943 DISTRICT 728 0.560270 105,604 59,167 OTHER 0.017090 105,604 1,805 TOTALS 1.194480 126,146 • 11111 Prepared by City of Elk River 7/20/2000 Page 1 EXHIBIT C • Minnesota Business Assistance Form (Minnesota Department Of Trade And Economic Development) III • Tax Increment Financing District No.21 Page C-1 +NtiNESO,. 1999 Minnesota Business Assistance Form • (Please return by April 1,1999) Trade&- Economic Please complete lines 1 through 16 for all agreements. Development 1.Funding government agency name 2.Contact name 3.Agency street address 4.City 5.Zip code 6.Phone number(area code) 8.Type of government agency 7.Fax number(area code) -City _County Regional State -Other(Please indicate) 9.Name of business receiving assistance 10.Industry of recipient(SIC code) 11.Type of assistance(e.g.loan,TIF,grant,infrastructure,etc.) 12.Name of TIF district(if applicable) 13.Date of business 14.Date assistance first 15.Date project(building/ 16.Dollar value of business assistance agreement provided machinery/etc.)was assistance placed in service For assistance agreements signed between July 1,1995 and December 31,1997,complete lines 17 through 20.For agreements signed during 1998 and future years,please complete lines 21 through 24. • 17.Job creation goals for business receiving assistance 18.Average hourly wage level goals for business receiving assistance 19.Actual jobs created since business received assistance 20.Actual average hourly wage paid to employees hired since business received assistance Goals of business receiving assistance:(Please indicate Actual performance since project placed in service:(Please number of employees at each wage level and indicate the indicate number of employees at each wage level and indicate corresponding benefit level.) the corresponding benefit level.) 21.Job Creation Hourly Wage 22.Hourly Value 23.Job Creation Hourly Wage 24.Hourly Value Level of Voluntary Level of Voluntary Full-tine Part-time (excL benefits) Benefits($) Full-time Part-time (excl.benefits) Benefits($) less than$7.00 less than$7.00 $7.00 to$7.99 $7.00 to$7.99 $8.00 to$9.99 $8.00 to$9.99 $10.00 to$11.99 $10.00 to$11.99 $12.00 and higher $12.00 and higher If necessary,please attach additional documentation. If necessary,please attach additional documentation. Please complete lines 25 through 27 for all agreements. 25.Last date actual wage and job creation levels documented 26.Date this Minnesota Business Assistance Form completed 27.Have all wage and job goals been achieved? U Yes-do not submit future forms for this project. ❑No-please submit the 200011Tnnesota Business Assistance Form. • This form replaces all previous forms.Please complete one form for each business assistance agreement your agency signed between July 1,1995 and December 31,1998 which provided$25,000 or more in public funds or used tax increment financing.A form should be submitted annually for each assistance agreement until a submitted form indicates that all wage and job creation goals have been achieved Do not submit this form if your agency has not agreed to provide assistance to a business since July 1,1995. (over) +‘ EtiN S plq • Trade & Economic Development Please send completed form annually by April 1, 1999 to: Minnesota Business Assistance Form—AEO Minnesota Department of Trade and Economic Development Analysis and Evaluation Office 500 Metro Square 121 East 7th Place St.Paul,Minnesota 55101 or fax report to: (651)215-3841 For information,call: (651)297-2335 or 1-800-657-3858 • Minnesota Statutes 116J.991: A business that receives state or local government assistance for economic development or job growth purposes must create a net increase in jobs in Minnesota within two years of receiving the assistance. The government agency providing the assistance must establish wage level and job creation goals to be met by the business receiving the assistance. A business that fails to meet the goals must repay the assistance to the government agency. Each government agency must report the wage and job goals and the results for each project in achieving those goals to the department of trade and economic development. The department shall compile and publish the results of the reports for the previous calendar year by June 1 of each year. The reports of the agencies to the department and the compilation report of the department shall be made available to the public. For the purposes of this section, "assistance" means a grant or loan in excess of$25,000, or tax increment financing. • PLANNING COMMISSION • CITY OF ELK RIVER,MINNESOTA RESOLUTION RESOLUTION OF THE ELK RIVER PLANNING COMMISSION FINDING THAT THE MODIFICATION TO THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO. 1 AND THE TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 21 (AN ECONOMIC DEVELOPMENT DISTRICT) THEREIN CONFORM TO THE GENERAL PLANS FOR THE DEVELOPMENT AND REDEVELOPMENT OF THE CITY. WHEREAS, the City Council for the City of Elk River, Minnesota, (the "City") has proposed to adopt the modifications to the development program for Development District No. 1 and the Tax Increment Financing plan for Tax Increment Financing District No. 21 (an economic development district) therein and has submitted the Modifications to the Elk River Planning Commission (the "Commission")pursuant to Minnesota Statutes, Section 469.175, Subdivision 3, and WHEREAS, the Commission has reviewed the modifications to the development program for • Development District No. 1 and the Tax Increment Financing plan for Tax Increment Financing District No. 21 to determine their conformity with the general plans for the development and redevelopment of the City as described in the comprehensive plan for the City. NOW, THEREFORE, BE IT RESOLVED by the Commission that the Modifications conform with the general plans for the development and redevelopment of the City as a whole. Adopted this 25 day of July, 2000. Chair ATTEST: Secretary INF s:\eda\tif\tif21\pc-res.doc