8.2. SR 05-06-2019
Request for Action
To Item Number
Mayor and City Council 8.2
Agenda Section Meeting Date Prepared by
General Business May 6, 2019 Amanda Othoudt, EDD
Item Description Reviewed by
Energy Incentive Program Cal Portner, City Administrator
Reviewed by
Action Requested
Approve, by motion, the Energy Incentive Program and Policy.
Background/Discussion
At their April 15, 2019, meeting the EDA recommended approval of the new Energy Incentive Program
utilizing Elk River Municipal Utilities (ERMU) Payment in Lieu of Taxes (PILOT) to the city.
This incentive would waive PILOT as a development tool for new businesses meeting very specific criteria
and redirect it as a credit distributed through the applicant’s electric service bill for up to two years. The
amount of the incentive shall be determined by ERMU in its sole discretion in consultation with the city.
To be eligible, the business must be located within the ERMU electric service territory in which the electric
sales are included in the calculation for the city PILOT and the project must meet all other applicable
provisions of the policy.
If approved, the policy will be implemented immediately.
Financial Impact
N/A
Attachments
Energy Incentive Program Policy and Application
ERMU PILOT Policy
Map
The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional
service, and community engagement that encourages and inspires prosperity
Economic Development
Energy Incentive Program
Policy Manual
13065 Orono Parkway
Elk River, MN 55330
763.635.1000
ElkRiverMN.gov
Elk River Economic Development
Energy Incentive Program
Guidelines, Policy & Application
1. Policy Purpose
The City of Elk River Economic Development Authority (EDA) and the City of Elk
River (City) maintain a goal to stimulate private sector investment for new job
creation and tax base growth. The Energy Incentive Program offers a savings to
qualified applicants on their Elk River Municipal Utilities (ERMU) electric bills for
up to two years.
2. Compliance with the ERMU Payment in Lieu of Taxes (PILOT) and
Other Donations to the City of Elk River Policy
Elk River Municipal Utilities was purchased by the City in 1945 and separate
governance was created in 1947. It is typical for a municipal utility to provide a
PILOT regardless of the separation of governance. The PILOT is calculated based
on eligible electric sales within the City.
As an economic development incentive option, the City agrees to waive the
applicable PILOT for an approved applicant and redirect that amount as a credit
distributed through the applicant’s monthly ERMU electric service bill for up to two
years. The amount of the incentive shall be determined by ERMU in its sole
discretion in consultation with the City. The total amount of the incentive provided
to the applicant shall not exceed $149,999.
For the applicant to be eligible for this incentive, the business must be located within
an area of the ERMU electric service territory in which the electric sales are included
in the calculation for the PILOT to the City. And for the applicant to be eligible, the
project must meet all other applicable provision of the ERMU PILOT policy; the
City must be eligible to receive PILOT for the location to be able to waive PILOT
for the project.
3. Eligible Businesses
Projects proposed may be eligible as further defined herein:
Data Centers, Manufacturing, Distribution, and Warehouse Facilities are only
eligible to apply.
Unless otherwise stated, must be a for-profit corporation, partnership,
limited liability company, or sole proprietorship.
Must be new construction, expansion or addition projects only.
Located within eligible ERMU area within the City of Elk River. Religious,
political, and pornographic enterprises are not eligible.
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Data Center Projects must meet the following requirements:
Peak electric demand greater than 500kW per month
Minimum New Job Creation of 15 FTE Employees within 2 years
Wages greater than $18 per hour
Minimum Project Size: 25,000 square feet
Minimum Economic Output: $5 million through Implan software
(information provided by Sherburne County)
Total Annual Property Taxes of at least $80,000
Manufacturing, Distribution and Warehouse Facilities must follow the following
requirements:
Peak electric demand greater than 50kW per month
Minimum New Job Creation of 30 FT Employees within 2 years
Wage Level of greater than $18 per hour
Minimum Project Size: 25,000 square feet
Minimum Calculated Economic Output: $5 million through Implan software
(information provided by Sherburne County)
Total Annual Property Taxes of at least $60,000
4. Regulation for New Construction
All buildings which public funds will be used for construction shall conform to City
codes and ordinances and the state building code.
5. Timing of Project Expenses
No project shall commence without final City Council approval of the application.
No building construction shall commence until all required permits are secured.
6. Procedural Guidelines for Application and Approval
1. The applicant shall obtain information about the Energy Incentive Program and
application from the City.
2. The applicant shall complete and submit an application, and must provide a letter
of commitment for constructing the project.
3. The EDA and the City are governmental entities and must provide access to
public data in accordance with Minnesota Statutes, Chapter 13 - Minnesota
Government Data Practices Act (MGDPA).
The information provided in an application will be used to assess eligibility for
financial assistance. The MGDPA governs whether the information provided is
public or private. If financial assistance is provided for the project, the
information submitted in connection with your application will become public,
except for those items protected under Minnesota Statutes, Section 13.59,
Subdivision 3(b) or Section 13.591, Subdivision 2. Data deemed by the applicant
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to be nonpublic data under state law should be so designated or marked by the
applicant. See Minn. Stat. Sections 13.59, Subd. 1, respectively.
4. The application will be reviewed to determine conformity to all City policies and
ordinances and to consider the following:
a. The availability and applicability of other governmental grants and/or
microloan programs.
b. Whether it is desirous and in the best interests of the public to provide
incentives and/or funding for the project.
5. The EDA will review each application for compliance with the City’s
Comprehensive Plan, Economic Development Strategic Plan and the goals,
requirements and intent of this policy.
The EDA will evaluate the project application in terms of the following:
a. Project Design - Evaluation to include review of proposed activities, time
lines and a capacity to implement the project.
b. Letter of Commitment from applicant pledging to complete the project
during proposed project duration, if the application is approved.
c. Project compliance with all City codes, ordinances and policies.
d. Quality job and wage creation requirements.
e. Peak electric demand.
f. Located within the eligible ERMU area.
g. Calculated economic output through Implan software (information
provided by Sherburne County).
h. Total annual tax generation.
i. The project contributes to the fulfillment of the City’s approved and
adopted economic development and/or redevelopment plans.
j. All other information as required in the application and/or additional
information as may be requested by the economic development staff, in
its sole discretion.
k. Compliance with this Economic Development Energy Incentive
Program policy
6. The EDA will recommend approval, denial, or request a resubmission. A
recommendation from the EDA will be forwarded for approval or denial to the
City Council for final action.
7. Policy Review
The above criteria will be reviewed on an annual basis to ensure the policies reflected
in this document are consistent with the economic development goals set forth by
the City.
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8. Right of Refusal
The EDA shall deny any application found inconsistent with the goals of the City’s
Comprehensive Plan, Economic Development Strategic Plan and the intent,
requirement and goals of this policy. The City Council shall have final authority to
review the application and will make the final determination as to whether the
assistance shall be granted. The EDA and the City reserve the right to approve or
reject projects on a case-by-case basis, taking into consideration established policies.
Meeting policy criteria does not guarantee the award of assistance to the project.
Approval or denial of one project is not intended to set precedent for approval or
denial of another project.
9. Compliance with the Minnesota Business Subsidy Law
All developers/businesses receiving financial assistance from the EDA and the City
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, including entering into a
business subsidy agreement if necessary. Any business subsidy agreement will be
drafted by the EDA. If the applicant requests any changes to the agreement, the
applicant will pay the EDA’s legal costs associated with review of the requested
changes and incorporation of any accepted changes by the EDA’s attorney.
10. Form of Assistance; Repayment
The incentive will be provided over a period of two (2) years starting after the City
issues a Certificate of Occupancy (CO) for the project. If the business owner fails to
create the number of jobs as set forth in its application within two (2) years of the
issuance of a CO, the business may be required to repay the amount of assistance
provided as required by applicable law.
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Elk River Economic Development
Energy Incentive Program 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 Request
Please give a brief summary of your business and its products or service:
Please give a brief summary of the project and a construction timeline for the project:
Please describe how this program will impact your project:
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3. Proposed Peak Electric Demand and Energy Usage
4. Job & Wage Goals
Jobs 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
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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
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6. Attachment Checklist
Please attach the following:
______ A) Application
______ B) Projected Electric Usage as calculated by ERMU
______ C) Economic Impact Analysis (from Sherburne County)
______ D) Proposed Increase in Property Taxes
______ E) Certificate of Good Standing and Applicant’s Organizational
Documents (for example, articles of incorporation and bylaws)
______ F) Resume of Owner/Management
______ G) Letter of Commitment from Applicant Pledging to Complete
During the Proposed Project Duration
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7. 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 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 EDA.
APPLICANT SIGNATURE
BY
DATE
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Economic Development Energy Incentive Program
Policy History
Adopted by: On (date) Item #
EDA April 15, 2019 7.1
City Council May 6, 2019
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A.17 Payment in Lieu of Taxes (PILOT) and Other Donations to the City of Elk River
1.0 Purpose and Summary
The success of ERMU is linked with the success of our community. And the success of our
community is linked with the operation of our city government and ERMU. ERMU was
purchased by the City of Elk River in 1945 and separate governance was created per State
Statute in 1947. Although governed separately, ERMU is still an important component of our
local government and our city services.
It is typical for a municipal utility to provide a Payment in Lieu of Taxes (PILOT) and other
donations to their city, regardless of a separation of governance. Although typical, this
contribution should never inhibit ability to make repayment on debt, cause ERMU to
become non-competitive, or inhibit needed investment in personnel or infrastructure which may
hurt ability to meet the needs of their customers. For these reasons the PILOT and
other donations should be reviewed at least once every five (5) years by the ERMU Commission.
2.0 Payment in Lieu of Taxes (PILOT)
The PILOT transfer from Elk River Municipal Utilities to the City of Elk River shall be four
percent (4%) of the revenues generated by customers within the corporate
boundaries of the City of Elk River which are not subject to a loss of revenue payment resulting
from the March 20, 2015, electric service territory transfer agreement with Connexus Energy.
3.0 Donated Electricity
Elk River Municipal Utilities shall donate all electricity to the City of Elk River for street lights
and signal lights.
4.0 Donated Water
Elk River Municipal Utilities shall donate water for use by the Elk River Fire Department
(ERFD) for the purpose of extinguishing fires within the City of Elk River and other cities under
contract with the ERFD.
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For the purpose of creating ice rinks for public/ non-enterprise use, ERMU shall donate water for
use by the Elk River Parks Department.
Elk River Municipal Utilities shall donate water for the use by the Elk River Streets Department
for the use of street sweeping.
5.0 Donated Labor
Because of specialized skills and equipment, ERMU may be able to provide a better value to our
community by donating labor to the City of Elk River. For example, ERMU has trained
employees and the equipment to hang banners where the City does not. In this example, ERMU
is able to provide this donated service to the City for less cost than a third party, creating greater
value to our community. For such situations, ERMU shall donate labor to the City of Elk River,
as appropriate, where a greater value is created for our community and where ERMU is not
subjected to undue burden.
In addition to hanging banners, other examples include: maintenance of street lighting, relamping
signal lights, locating underground fiber optics and/or other facilities, administration costs
associated with the billing of city franchise fees, installation of temporary lighting, relamping of
city ball field lighting, installation and/or maintenance of city warning sirens, meter reading for
wastewater,
Adopted December 6, 1994
Revised June 6, 2008
Revised July 2, 2013
Revised October 13, 2015
Revised January 1, 2016
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2031
2031
2030
2031
2019
2029
Not Eligible
(Big Lake Township)
Not Eligible
(Otsego)
2027
2028
The City of Elk River Economic Development
Energy Incentive Program
Eligibility Timeline Map
Not Eligible
(Dayton)
$