Loading...
7.1. EDSR 06-15-2020 �� Request for Action Elk - River To Item Number Economic Development Authori 7.1 Agenda Section Meeting Date Prepared by General Business June 15, 2020 Amanda Othoudt,Economic Development Director Item Description Reviewed by Chamber of Commerce Business Survey: Concern Cal Portner, City Administrator #11, #15 Reviewed by Action Requested • Receive information,provide feedback. • Agree,by consensus,the action sufficiently meets or exceeds expectations to address concerns/recommendations from the Chamber of Commerce Business Survey: Concern#11 and #15. Background/Discussion Citing concerns regarding the business atmosphere experienced by developers with the city,the EDA commissioned a survey through the Elk River Area Chamber of Commerce to identify specific concerns. Two follow up meetings were held with participants of the survey with Commissioners Westgaard, Wagner and Blesener. The information gathered was shared with the city administrator who developed a workplan to address the concerns. Staff will review all the concerns outlined in the workplan organized by department prior to the EDA regular meetings scheduled in May,June,July,with a wrap up in August. At their May 18, 2020, meeting,the EDA reviewed concerns #2 and#9 and directed staff to continue the discussion for concern #11 and #15 at a future EDA meeting. Concern #11: EDA/HRA Loan processes are cumbersome. Can they be simplified and expedited.? The Joint Finance Committee and the EDA completed the review of all loan programs and policies in April of 2017. The application process was simplified for applicants. Since 2017, the EDA approved the new Energy Incentive Program,updated the Jobs Incentive Program, and created a new COVID-19 Emergency Small Business Microloan program. The Elk River Vision A Y�elcoming community nvith revolutionary and spirited resourcefulness, exceptional p D W E H E D D Y service, and community engagement that encourages and inspires prosperity ,g /` UR The Authority should review the attached policies and provide direction to staff on policy changes within each of the financial applications to ensure a smooth and efficient application process. One item to keep in mind is that the use of public financing tools requires public purpose and data transparency by state law. The differences between a private application process through a bank or credit union and local government are purposeful requirements to protect the taxpayer and limit their risk. To assist the Authority in reviewing the applications, staff has attached similar policies from various municipalities. It should be noted that each municipality has tailored their policies to fit the needs and objectives of their own communities. Essentially,what works for one community,may not work for an adjacent community. Some municipalities may not have Revolving Loan Funds, support Tax Abatement or TIF projects. ■ City of Big Lake does not have a Revolving Loan Fund program however, they offer Tax Abatement and TIF as financing options. ■ City of Anoka offers a tax abatement but does not offer a Revolving Loan Fund program. ■ City of Fairmont offers TIF,Abatement and has a Revolving Loan Fund program. ■ Lake City offers TIF,Abatement and has a Revolving Loan Fund program. ■ City of St. Cloud offers TIF,Abatement and has a Revolving Loan Fund program. ■ City of St. Louis Park offers TIF and a Revolving Loan Fund program. ■ City of Hutchinson offers a TIF and Abatement program in addition to a microloan program. ■ City of Hastings offers TIF and Tax Abatement and a Revolving Loan Fund program. ■ City of Shakopee offers TIF and Abatement, and a Facade Improvement program,but not a general Revolving Loan Fund program. ■ City of Burnsville offers TIF and Abatement,but not a general Revolving Loan Fund program. Concern #15: Some perceived that the personal agenda ofa staffinember can influence the way Cityprocess is interpreted. The CoVrebensive Plan and EDA Strategic Plan updates will provide clarification of EDA/Council and direction for interpretation. City administrative processes are public information and subject to Council and Authority review and amendment. Concern #15: Shouldn't it be a collective effort, or common goal, for staff and entrepreneurs to build and grow the business community in Elk River together? Staff developed an online tool in 2019 to assist new businesses that are opening or expanding in Elk River. The guide provides a step-by-step guide that best fit the potential business looking to open. The page also features a link to the Economic Development's Business Toolbox,and guides for commonly opened businesses. htWs://www.elkrivermn.gov/1602/01)ening-a-Business Realtor Day—Staff held Realtor Day on February 26, 2020. Nearly 50 realtors,brokers and developers attended this event. This was an opportunity for realtors,brokers, and developers to hear about new projects, development opportunities, and initiatives of the city. This has become an annual event in partnership with the St. Paul Area Association of Realtors. Developer Forums—Staff scheduled a developer forum on March 26, 2020, to educate local developers on the Main/Gates redevelopment project. The forum was postponed due to the COVID-19 pandemic. Similar types of developer forums have been held in the past educating the public on new development opportunities. Business Retention and Expansion (BR&E) visits conducted by staff from economic development, planning, environmental and engineering,ISD #728, EDA Commissioners, Council Members,and County Commissioners. It is at these meetings that we learn if a business is seeking to expand,which gives us an opportunity to educate owners on the process. Staff provides developers with an option to conduct a concept review with the City Council. This gives developers an opportunity to present their project to the Council and request feedback and direction on their project. Staff shares trend information,peer city policies,programs and ideas with the authorities and council from which the elected and appointed bodies develop their own goals,policies, and programs. In working with developers and businesses, staff administers the policies and programs to meet the elected and appointed official's goals. Staff does not have nor use their own set of goals to grow business. Most recently,the EDA established the #TogetherElkRiver campaign,which is a partnership with the EDA and the Elk River Area Chamber of Commerce. This marketing campaign was derived to assist small businesses during the COVID-19 pandemic. Financial Impact N/A Attachments ■ Chamber of Commerce Business Matrix Workplan ■ City of Elk River EDA Financial Policies ■ Sample policies from various municipalities Action Plan Elk River Area Chamber of Commerce Focus Group Discussions July 30 & 31, 2019 Concerns/Recommendations Type of Task/Actio L Staff Point of Expected Completion Date am 6, Concern Contact (Date to CC or Commission) If the city really wants to be known for supporting renewable energy, they Policy Review Comprehensive Plan Update Comp Plan update throughout the year. should reconsider their incentive programs to support projects that are in line -Explore programs to support goals Zack Work session discussion July 20. 1 with the stated objectives in the Comprehensive plan: to be more energy -Explore ordinances that provide flexibility to meet efficient, preserve resources, even if it means ordinance or design flexibility. goals Current rebate programs are insufficient to achieve the objectives of the stated Policy Review ERMU, EDA and HRA Commission Reviews May 18 2 goals. -Discuss programs to achieve Comp Plan Goals Amanda/Troy -Determine what is sufficient Clearly outline what is being inspected for the entire project and limit the Communication Citizenserve Software Implementation Suzanne June 15 (Postponed) inspection to that list. New items should not pop up with every inspection Formal letters of explanation Suzanne/Bob R. June 15 (Postponed) 3 Preconstruction meetings Suzanne/Bob R. June 15 (Postponed) Develop inspection policy for each permit with Suzanne/Bob R. June 15 (Postponed) explanation sheet for each permit to include relevant code citation Clear written instruction including citing relevant code for each infraction. The Communication Citizenserve Software Implementation Suzanne June 15 (Postponed) 5 remedy should be clearly defined so there is less re-work that needs to be done Can there be an ombudsman or advisor type position to negotiate the maze of Budget/Position Council Budget discussion Suzanne/Zack/Amanda May 18 - First budget meeting discussing city rules on the business owner's behalf? This person could develop Addition new positions requests. relationships proactively with business owners and encourage a partnership mentality between owners and city staff. Use the velvet glove approach when delivering requirements for compliance. Customer Service -Customer Service Training Suzanne June 15 (Postponed) Think of the business owners as customers. -Professional Standards Training • The business customer often does not feel their risk is appreciated or understood. Empathy does not mean bending the rules. • It is generally understood that rules are rules;it's the attitude and approach of 7 those tasked with compliance/enforcement that makes the difference. FAQ guides Suzanne/Zack/Bob June 15 (Postponed) • Can Compliance and Customer Service both be accomplished or balanced? • Find a way to say"yes" and not always "no". Find a way to be more welcoming in the process, even when the answer might be "no". Can staff help to find a way Authority/Council review/craft of ordinance and Zack/Amanda July 20 to say"yes"with suggested changes in design? policy purpose statements There is a need for balance between desire for beautification and business use of Policy Council Review/Action on city ordinances Zack July 20 8 property (storage, signage etc.) • Can there be a proactive approach to business development such as educating Education -Incorporate Pre-application meetings Suzanne/Zack June 15 - Process has started. No need to builders, contractors, owners before a project is submitted? Planning and ED -Encourage Work Session Reviews discuss,provide as information in future • Communications regarding process requirements for Building permits, Codes, update. 9 Loan programs and Ordinances needs to be timely,consistent, clear, transparent Review and update project checklists Zack July 20. and communicated up front,before excessive money is spent. Meet with Minneapolis planners regarding their Amanda May 18 Business Navigator Office Citizenserve Software? Suzanne June 15 (Postponed) Website Update—Opening a business in ER Amanda/Zack May 18 • Communicating in person vs. sneaking around taking pictures or sending Communication -Public Information for CUP compliance process Zack July 20 threatening letters would be appreciated more. -Council/Authority work session discussion 10 • Several references to the `enforcement'verbiage on the city truck were used as an regarding legal compliance / notice requirements example of a philosophy being tilted away from personable customer service. Re-brand nuisance code division Zack July 20 Community Enhancement division unveiled. 11 EDA/HRA Loan processes are cumbersome. Can they be simplified and expedited? Policy EDA/HRA policy review Amanda May 18 &June 15 There is no substitution for product knowledge, some examples of staff not fully Training Remedial staff training Amanda/Zack Cal seek additional direction from Matt 12 knowledgeable of the code, ordinance,process or loan. Additional training can help. and Jennifer on specific topics to provide direction on training needs. How can the Planning and Zoning process be streamlined and given more authority to Policy Council policy discussion regarding: Zack July 20 reduce timelines? - Policy delegation 13 - Ordinance standards - Uses and approval process - Eliminate one of two public hearing requirements. - Eliminate some permitting requirements A review of the city fee schedule is needed both by comparison cities and philosophy. Policy Council Work Session Discussion on Fees Cal June 15 -July 20 if planning fees too 14 (i.e. bldg. permit, sac/wac,utility deposits) Fee Comparison Study Suzanne June 15 -July 20 if planning fees too • Some perceived that the personal agenda of a staff member can influence the way Communication Public education on city process/rules Cal May 18 &June 15 City process is interpreted. Education 15 Perception Council/Authority work session on processes Amanda/Cal/Zack Ma 18 & une 15 • Shouldn't it be a collective effort, or common goal, for staff and entrepreneurs to P / ty pY J build and grow the business community in Elk River together? Follow-up on August 17 with an overview of the feedback received, actions taken, and next steps. Tax Abatement Policy Revision Dates September 28, 2005 February 25, 2015 March 8, 2017 February 28, 2018 I. General Purpose The purpose of this policy is to establish the City of Big Lake’s (“the City”) position as it relates to the use of Property Tax Abatements (“Abatements”) for private development. This type of abatement is allowed pursuant to Minnesota Statutes, Sections 469.1812 through 469.1815, as amended (the “Abatement Law”). It is the City’s intent to coordinate the use of Tax Abatement with other local jurisdictions to the extent that it is possible to do so. Tax Abatement shall be defined as the City’s share of the property taxes derived from the increase in market value over the current year market value of property within the project area resulting from development. For purposes of this definition, current year is the year in which an application for request for assistance is received. The City of Big Lake recognizes the importance of this development tool which may be used by the City to satisfy its economic development goals and objectives. These general goals include the following: A. Broaden and diversify the tax base; B. Create and or retain an employment base; C. Strengthen and enhance the commercial-industrial areas of the community; D. Promote a high quality of construction or site design. This policy shall be used as a guide in the processing and review of applications requesting tax abatement assistance. The fundamental purpose of Tax Abatement in the City of Big Lake is to encourage desirable development or redevelopment that would not otherwise occur but for the assistance provided through Tax Abatement. II. Types of Projects and Uses Eligible for Assistance In order to meet the stated goals and objectives of the City, Abatements will be used to assist private developments in those instances where the proposed project demonstrates one or more of the following objectives or conditions: Big Lake Tax Abatement Policy Last Amended ‒ 2/28/2018 Page 2 of 5 Public Financing is needed to… 1. Retain local jobs and/or increase the number and diversity of jobs that offer stable employment and/or attractive wages and benefits. 2. Enhance and diversify the City’s economic base. 3. Encourage additional unsubsidized private development in the area, either directly or indirectly through “spin-off’ development. 4. Offset increased costs of redevelopment (i.e. contaminated site clean-up) over and above costs normally incurred in development. 5. 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. 6. Promote a high quality of construction and/or site design. 7. Aid in the development or implementation of an environmentally sound practice, production or product. 8. Improve the condition of existing commercial or industrial buildings, including but not limited to, accessibility requirements, exterior façade improvements and energy upgrades. 9. Complete specific enhancements, including but not limited to signage, landscaping and lighting (within private property or adjacent to public property). 10. Fill a defined financing gap that is associated with a pedestrian public improvement project in commercial areas, including but not limited to, access control, pedestrian systems and parking improvements. 11. Facilitate the development process and achieve development of sites that would not be developed without Tax Abatement assistance (general “but for” test). 12. Finance or provide public infrastructure pursuant to the Abatement Law. III. Eligible Expenditures Abatements may be used to pay for expenditures related to eligible project costs. Eligible expenditures may include land acquisition and conveyance, building Big Lake Tax Abatement Policy Last Amended ‒ 2/28/2018 Page 3 of 5 improvements, site improvements and public streets/utilities. Ineligible expenditures are non-fixed assets including equipment and working capital. IV. Financing Structure The City will structure Abatements as a direct annual or semi-annual payment (corresponding to the City’s portion of the property taxes only) to the property owner based on the terms and conditions stated in an agreement between the City and the property owner. The property owner is subject to changes in the taxes that may result in payments lower than the original estimated amount. V. Specific Policies for the Use of Tax Abatement 1. Tax Abatement will be provided to the developer upon receipt of taxes as a pay-as- you-go method. All taxes on the subject parcel need to be paid to date before a rebate payment will be made. Requests for up-front financing (bonds) will be considered on a case-by-case basis. 2. Developer shall be able to demonstrate a need for a proposed project. 3. Tax Abatement shall not be used for projects or businesses that would place extraordinary demands on city services considering the benefit to the City. 4. The developer must enter into an abatement agreement to ensure compliance with the City policies and requirements. 5. The developer shall demonstrate his or her ability (via past experience, credit history and corporate or personal financial statements) to complete the project in an adequate and timely manner, and also at the option of the City, shall provide financial guarantees to ensure completion of the project that include but are not limited to: assessment agreements, letters of credit and personal guarantees. 6. The developer/business shall provide information necessary for the City to make a determination on the project. 7. The City will view projects having a county/school district tax abatement commitment more favorably. 8. The project supports and furthers the City’s Comprehensive Plan and/or other public policies, as adopted by the City. 9. Tax Abatement may be used to phase in a property tax increase on a parcel that will increase in estimated market value of 50 percent or greater when the increase is not attributable to an abatement project. Big Lake Tax Abatement Policy Last Amended ‒ 2/28/2018 Page 4 of 5 10. The business subsidy funding for any project shall be the lowest amount feasible for the shortest period of time. Business/developers shall exhaust all possible forms of non-business subsidy funding, i.e. private debt and equity financing prior to using business subsidy finding. 11. Any receipt of Tax Abatement assistance will be required to provide an equity investment in the project. 12. Tax Abatement will not be used in circumstances where land and or property price is in excess of fair market value. 13. Tax Abatement will not be utilized in cases where it would create an unfair competitive financial advantage over other projects or businesses in the area. 14. No abatement of taxes will be granted on property in a TIF District. 15. The project shall comply with all provisions set forth in the state Abatement Law. 16. Abatement can only be granted, if it benefits the City to a level equal to or greater than the abatement cost to the City. 17. In any year, the total amount of property taxes abated by the City may not exceed ten percent (10%) of the net tax capacity of the City or $200,000, whichever is greater. This is consistent with the Abatement Law. 18. No tax abatement period shall exceed 15 years from the date of approval by the City Council unless the county or school district has declined to participate in the abatement. In this event, the City may approve an abatement period that is up to 20 years in length. 19. The City Council may change and modify the application of these specific policies as it deems necessary and appropriate. VI. Decision Guidelines or Project Requirements The following guidelines will be used by the City in order to determine whether a financing proposal is warranted which will become the basis for findings in the resolution of Abatement approval. A. The proposed project does not fit well within the City’s and the Economic Development Authority’s Tax Abatement Policy or is subject to other state statute restrictions. B. The proposed project addresses an identified need within the community, including but not limited to, improved maintenance or expansion of public utilities, reuse of underutilized property, or development of property with site constraints, installation Big Lake Tax Abatement Policy Last Amended ‒ 2/28/2018 Page 5 of 5 of design enhancements, compliance with safety or accessibility codes, and financing within a targeted improvement area. C. The proposed project cannot be completed without public financing due to identified costs that are greater than normal or due to an identifiable financing gap. D. The proposed project can be assisted with a private-to-public leverage, which results in minimal impact to the statutory limit for the City’s use of Abatements. In addition, the amount of Abatement should not exceed the level of private equity from the project owner(s). E. The project is consistent with the City’s Comprehensive Plan, Land Use Plan and Zoning Ordinances. F. The project meets one or more of the following public purposes: • Creation of new jobs • Increase in the tax base • Enhancement or diversification of the City’s economic base • Development or redevelopment that will spur additional private sector investment in the area • Fulfillment of defined City objectives such as those identified in the City’s Comprehensive Plan • Removal of slum and blight or the redevelopment of a high profile site. VII. Procedure for Application: A. A completed application with the application fee in accordance with the current City of Big Lake Fee Schedule shall be submitted to the City. The application will be reviewed by the City staff and the Economic Development Authority. B. After review and recommendation for approval by the Economic Development Authority (the review body for the City), the City Council shall publish a notice and hold a public hearing on the proposed Abatement. C. The City Council holds a public hearing concerning the Abatement. It must approve the Abatement by resolution. D. If the City approves the Abatement by resolution, its staff and/or consultants will draft a development contract. A. APPLICANT INFORMATION Name of Corporation/ Partnership Address Primary Contact Address Phone Fax Email On a separate sheet of paper, please provide the following: 1 2 Brief description of the proposed project (Attach as Exhibit B) 3 4 Attorney Name Address Phone Fax Email Accountant Name Address Phone Fax Email Contractor Name Address Phone Fax Email APPLICATION FOR TAX ABATEMENT Approved by BLEDA - July 8, 2013 Brief description of the corporation/partnership's business, including history, principal product or service, etc.. (Attach as Exhibit A) List names of officers and shareholders/partners with more than five percent (5%) interest in the corporation/ partnership (Attach as Exhibit C) An analysis and narrative that explain why this project would not locate/expand in Sherburne County "but for" the use of tax abatement financing (Attach as Exhibit D) Abatement Application Page 1 of 5 Engineer Name Address Phone Fax Email Architect Name Address Phone Fax Email B. PROJECT INFORMATION 1 The project will be: ___Industrial ___New construction ____ Expansion ___Redevelopment/ Rehab ___ Commercial Redevelopment/ Rehabilitation ___ Commercial Redevelopment/ Rehabilitation 2 In addition to the City of Big Lake, applicant is requesting Tax Abatement from: ____ Sherburne County ___ School District 727 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 727 Portion Annual $Total $ 7 Current Real Estate Taxes on Project Site:$ Estimated Real Estate Taxes up Completion:Phase I $ Phase II $ 8 Construction Date: Construction Completion Date: If Phased Project:Year % Completed Year % Completed Abatement Application Page 2 of 5 C. 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 area Enhancement and/or diversification of the City of Big Lake's economic base Removal of blight Rehabilitation of a high profile or priority site Significantly increase the City's tax base D. SOURCES AND 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 Land Acquisition AMOUNT Site Development $ Construction $ Machinery & Equipment $ Architectural & Engineering Fees $ Legal Fees $ Interest During Construction $ Debt Service Reserve $ Contingencies $ TOTAL $ It is the policy of the City of Big Lake that the use of Tax Abatement should result in a benefit to the public. Please indicate how this project will serve a public purpose. Abatement Application Page 3 of 5 E. ADDITIONAL DOCUMENTATION AND CHECKLIST _____ A. _____ B.Financial Statements for Past Two Years Profit & Loss Statement to Date Balance Sheet to Date _____ 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 Statement to Date Balance Sheet to Date _____ 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 fee of $500 _____ I.Escrow deposit of $5,000 for Abatement related administrative expenses _____ J.Construction Plans and Itemized Project Construction Statement _____ K.Attach the following documentations 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) Written business plan, including a description of the business, ownership/management, date established, products and services, and future plans Abatement Application Page 4 of 5 Applicant Name Date 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. 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 Big Lake to check credit references, verify financial and other information, and share this information with other political subdivisions are needed. The undersigned also agrees to provide any additional information as may be requested by the City after the filing of this application. Abatement Application Page 5 of 5 Application for Tax Increment Financing (TIF) Assistance 2 APPLICATION FOR TAX INCREMENT FINANCING (TIF) ASSISTANCE PROJECT 1. Business Information Business Name: ________________________________________ Address: ________________________________________ Contact Person: ________________________________________ Telephone Number: ________________________________________ Email Address: ________________________________________ 2. Brief description of the business: 3. Proposed project: − Business type(s) and/or use(s): ______________________________ ________________________________________________________ − Prospective tenants: _______________________________________ ________________________________________________________ − Building(s) square footage: _________________________________ ________________________________________________________ − Building height and materials: _______________________________ ________________________________________________________ 4. Location of project: _______________________________________ 3 5. Size of project area: _______________________________________ 6. Present ownership of the site: ________________________________ ________________________________ 7. Current control of the site: ________________________________ ________________________________ 8. Total Estimated Market Value of project upon completion: $__________________________ 9. Estimated real estate taxes of project upon completion: $__________________________ (Please show calculations) 10. Project construction schedule: a. Estimated construction start date: _____________________ b. Estimated construction completion date: _____________________ c. If phased project: _____ year ______ % completed _____ year ______ % completed d. Will all the development costs to be reimbursed with TIF assistance be expended within 5 years of the project’s commencement? _____ Yes _____ No (If no, please explain) 11. Expected general traffic impacts (on and off street parking, projected auto/truck counts, traffic flow, peak traffic periods, etc.): 4 12. Name & address of: − Architect: ________________________________________ ________________________________________ − Engineer: ________________________________________ ________________________________________ − General Contractor: ________________________________________ ________________________________________ 13. Total Estimated Project Costs: a. Land Acquisition $_______________ b. Soil Correction/Remediation $_______________ c. Demolition $_______________ d. Site Grading and Excavation $_______________ e. Utilities $_______________ f. Road Improvements $_______________ g. Curb, gutter, parking lot, sidewalks $_______________ h. Building Construction $_______________ i. Parking Ramp (if applicable) $_______________ j. Landscaping $_______________ k. Equipment $_______________ l. Architectural & Engineering Fees $_______________ m. Legal Fees $_______________ n. Financing Costs $_______________ o. Broker Costs $_______________ p. Developer Fee $_______________ q. Contingencies $_______________ r. Other (please specify) $_______________ TOTAL $_______________ 5 14. Sources of Financing: a. Equity $_______________ b. Loan Source(s) $_______________ c. TIF Assistance $_______________ d. Other Sources (explain) $_______________ 15. Describe amount and purpose for which TIF assistance is required: 16. Please submit an itemized list of project costs for which TIF assistance is being requested (see attached list of TIF eligible costs): 17. Please submit project proformas indicating need for TIF assistance (i.e., with TIF assistance and without): 18. Specific reasons why, “but for” the use of TIF assistance, this project would not be possible: 19. What other alternative financing sources have been sought and why are they not feasible? 6 20. What is the existing Comprehensive Guide Plan Land Use designation and zoning of the property? (Include a statement as to how the proposed development will conform to the current land use designation and how the property will be zoned or rationale as to why changes may be necessary.): 21. Please indicate how the project would meet one or more of the following City of Big Lake Development Goals: − Retention and/or creation of jobs that pay wages adequate to support households: __________________________________________________________ __________________________________________________________ __________________________________________________________ − Tax base expansion: __________________________________________________________ __________________________________________________________ __________________________________________________________ − Blight elimination: __________________________________________________________ __________________________________________________________ __________________________________________________________ − Remediation of contaminated property: __________________________________________________________ __________________________________________________________ __________________________________________________________ − Other economic benefits: __________________________________________________________ __________________________________________________________ __________________________________________________________ 7 22. Background on the developer’s company, principals, and history (Please list previous related projects and locations as well as experience of this particular development team working together.): 23. Has developer, developer’s company, partner, or related affiliate ever filed bankruptcy? _____ No _____ Yes (If yes, please explain) 24. Municipal Reference. (Please name any other municipalities wherein the applicant, or other corporations with which the applicant has been involved, has completed similar developments within the last five years.) _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ _____________________________________________________________ 8 DEVELOPMENT COSTS ELIGIBLE FOR TIF ASSISTANCE  Application Deposit  Architectural and Engineering fees (directly attributable to site work)  Curb and Gutter  Earthwork/Excavation  Environmental Studies and Permits  Land Acquisition  Landscaping  Landscape Design  Legal Costs associated with Acquisition  Legal Costs associated with Financing/Closing Attributable to Site  Parking Lot Paving and Parking Lot Lights  Sidewalks  Site Related Permits  Soil Correction  Soil Tests  Special Assessments  Streets and Roads  Surveys  Utilities Design  Utilities – Sanitary Sewer, Storm Sewer and Water I. POLICY PURPOSE For the purposes of this document the term "City” shall include the Anoka City Council, Economic Development Commission, and Housing and Redevelopment Authority. The purpose of this policy is to establish the City of Anoka's position relating to the use of Tax Rebate Financing (T'RF), otherwise referred to as 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 rebate assistance. The fundamental purpose of tax rebate financing in Anoka is to encourage desirable development or redevelopment that would not otherwise occur but for the assistance provided through TRF. The City of Anoka is granted the power to utilize TRF by the Minnesota Tax Abatement Act, as amended. It is the intent of the City to provide the minimum amount of TRF, 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 TRF 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 TRF & TIF The primary difference between Tax Rebate Financing JR) 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 political subdivisions (the school district and the county) are required to contribute their portion of the increased taxes to the project. Conversely, when TRF 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 TRF are generally less than the dollars generated with TIF. Tax Rebate Financing cannot be applied to parcels in an active tax increment district. III. OBJECTIVES OF TAX REBATE FINANCING As a matter of adopted policy, the city will consider using TRF 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.  To enhance and diversify the city of Anoka's economic base. Policy Number 2003-01 Adopted January 6, 2003 TAX REBATE FINANCING POLICY Policy 2003-01 Tax Rebate Policy Page 2 of 10  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 that would not be developed without TRF assistance.  To promote historic preservation conservation and rehabilitation of commercial, residential, and public properties.  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, housing rehabilitation and home ownership.  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. IV. POLICIES FOR THE USE OF TRF a. TRF assistance will be provided to the developer upon receipt of taxes by the City, otherwise referred to as the pay-as-you-go method. Requests for up front financing will be considered on a case-by-case basis. b. Any developer receiving TRF assistance shall provide a minimum of twenty percent (20%) cash equity investment in the project. Projects utilizing the SBA504 program will be required to provide a minimum of ten percent (10%) cash equity investment. c. Developer shall be able to demonstrate a market demand for a proposed project. d. TRF shall not be used for projects that would place extraordinary demands on city services or for projects that would generate significant environmental impacts. e. The developer must provide adequate financial guarantees to ensure completion of the project, including, but not limited to: assessment agreements, letters of credit, personal guaranties, and etcetera. Policy 2003-01 Tax Rebate Policy Page 3 of 10 f. 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. g. 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. h. TRF proposals shall not be used to support speculative office projects. Speculative projects are defined as those projects that 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 Community Development Director six months following an issued certificate of occupancy. 2. 50% of the jobs within the leasable office building space must be considered "new" jobs to the City of Anoka, 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-for-one match to job creation only in cases where job loss is specific and demonstrable in accordance with the MN 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. i. All TRF proposals shall optimize the private development potential of a site. V. PROJECT QUALIFICATIONS All TRF projects considered by the City of Anoka 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 TRF will be limited to: • Industrial development, expansion, redevelopment, or rehabilitation; or • Commercial redevelopment or rehabilitation; or Policy 2003-01 Tax Rebate Policy Page 4 of 10 • Research and development facilities that satisfy Anoka Enterprise Park zoning requirements; or • Office facilities with a minimum new construction of 25, 000 square feet and minimum market value of $1,000,000 upon project completion; or • Residential development, redevelopment, or rehabilitation upon recommendation of the HRA. • Historic properties preservation, conservation, or rehabilitation. c. The developer shall demonstrate that the project is not financially feasible but for the use of TRF. Evaluation of the project's financial feasibility without TRF shall be provided by the City's financial advisor on requests of over $25,000 total. d. The project shall comply with all provisions set forth in the state's Tax Abatement Law, statues 469.1812 to 469.1815, as amended. e. The project must be consistent with the City's Comprehensive Plan, Land Use Plan, and Zoning Ordinances. f. The project shall serve at least two of the following public purposes: • Job creation or job retention. • Increase of 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 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 Rebate Financing assistance from the City of Anoka shall be subject to the provisions and requirements set forth by the City's Business Subsidy Criteria as adopted, and State Statute 116J.993 as summarized below. All developers/businesses receiving TRF assistance shall enter into a Subsidy Agreement with the City of Anoka that identifies: the reason for the subsidy, the public purpose served by the subsidy, and the goals for the subsidy, as well as other subsidy agreement criteria set forth by Statute 116J.993. Policy 2003-01 Tax Rebate Policy Page 5 of 10 The developer/business shall file a report annually for two years after the date the benefit is received or until all goals set forth in the application and Subsidy Agreement have been met, whichever is later. Reports shall be completed using the format drafted by the State of Minnesota and shall be filed with the City of Anoka no later than March 1 of each year for the previous calendar year. Businesses fulfilling job creation requirements must file a report to that effect with the city within 30 days of meeting the requirements. The developer/business owner shall maintain and operate its facility at the site where TRF assistance is used for a period of five years after the benefit is received. In addition to attaining or exceeding the jobs and wages goals set forth in the Subsidy Agreement, the borrower shall achieve at least one of the objectives set forth in Section III of this document. Developers / Businesses failing to comply with the above provisions will be subject to fines, repayment requirements, termination of the assistance, and be deemed ineligible by the State to receive any loans or grants from public entities for a period of five years. VII. APPLICATION PROCESS FOR TRF a. City of Anoka. 1. Applicant submits the completed application along with a $5,000 application fee. The application fee will be used toward the cost of services provided in the evaluation of financial feasibility and preparation of legal documents. The balance of the application fee will be returned to the applicant. 2. City staff reviews the application and completes the Application Review Worksheet. 3. Results of the Worksheet are submitted to the appropriate governing authorities for preliminary approval of the proposal. 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 project are held. 6. The EDC or HRA recommends approval or denial of the proposal to the City Council. 7. The City Council grants final approval or denial of the proposal. Policy 2003-01 Tax Rebate Policy Page 6 of 10 b. Applications to other political subdivision. It is recommended that applicants intending to seek TRF from Anoka County and/or School District 11 make their applications to those bodies concurrent with their application to the City of Anoka. For more information on applying for TRF through Anoka County and/or School District 11, contact: Mr. Jay McLinden, County Administrator Anoka County Government Center 2100 Third Avenue Anoka, MN 55303 Phone: 763-323-5693 Dr. Roger Giroux, Superintendent Anoka-Hennepin School District No. 11 Educational Service Center 11299 Hanson Blvd. Coon Rapids, MN 55433 763-506-1000 Policy 2003-01 Tax Rebate Policy Page 7 of 10 VIII. APPLICATION FOR TAX REBATE FINANCING A. APPLICANT INFORMATION Name of Corporation/Partnership________________________________________________ Address____________________________________________________________________ Primary Contact______________________________________________________________ Address_____________________________________________________________________ Phone______________ Fax _________________ E-mail__________________________________ On a separate sheet, please provide the following:  Brief description of the corporation/partnership's business, including history, principal product or service, etc...Attach as Exhibit A .  Brief description of the proposed project. Attach as Exhibit B. List names of officers and shareholders/partners with more than five percent (5%) interest in the corporation/partnership. Attach as Exhibit C. • A butfor analysis and narrative. Attach as Exhibit D. 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______________________________ Policy 2003-01 Tax Rebate Policy Page 8 of 10 B. PROJECT INFORMATION 1. The project will be: ____Industrial:____New Construction ____Expansion ____ Redevelopment / Rehab. ____Office/research facility that conforms to business park standards ____Commercial Redevelopment/Rehabilitation Other______________________________________________ 2. In addition to the City of Anoka, applicant is requesting TRF funds from: ____Anoka County ____School District 11 3. The project will be: ____Owner Occupied ____Leased Space • If leased space, please attach a list names and addresses of future lessees and indicate the status of commitments or lease agreements. Attach as Exhibit E. 4. Project Address_________________________________________________________ • Include Legal Description and PID Number. Attach as Exhibit F 5. Site Plan Attached: _____Yes _____No 6. Total Amount of TRF Requested: $_________over________ years. City Portion of TRF: Annual $__________ Total $_________ County Portion of TRF: Annual $__________ Total $_________ ISD 11 Portion of TRF: 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 Anoka that the use of Tax Rebate Financing 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's economic base. ________The project contributes to the fulfillment of the City's Economic Development Plan. ________Removal of blight. ________Rehabilitation of a high profile or priority site. Other:_________________________________________________________ Policy 2003-01 Tax Rebate Policy Page 9 of 10 D. SOURCES & USES NAME AMOUNT SOURCES $____________ Bank Loan $____________ Other Private Funds $____________ Equity $____________ Fed Grant/Loan State Grant/Loan $____________ Other Loan $____________ Tax Rebate Financing $____________ ID Bonds $____________ TOTAL AMOUNT USES Land Acquisition $____________ Site Development $____________ Construction $____________ Machinery & Equipment $____________ Architectural & Engineering Fees $____________ Legal Fees $____________ Interest During Construction $____________ Debt Service Reserve $____________ Contingencies TOTAL 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 fee of $5000 I) 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 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 Anoka 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. Applicant Name Date ____________________________________________ ________________________ Burnsville Development Tools Criteria and Public Financing Policy Page 1 City of Burnsville and Burnsville Economic Development Authority Developmental Tools Policy December 2019 INTRODUCTION: This Policy is adopted for purposes of the business subsidies act, pursuant to Minnesota Statutes, Sections 116J.993 through 116J.995, as amended (the “Statutes”). Terms used in this Policy are intended to have the same meanings as those used in the Statutes. Subdivision 3 of the Statutes specifies forms of financial assistance that are not considered a business subsidy. This list contains exceptions for several activities, including redevelopment, pollution clean-up, and housing, among others. By providing a business subsidy, the city commits to holding a public hearing, as applicable, and annually reporting to the Department of Employment and Economic Development (“DEED”) on job and wage goal progress if and when required by the Statutes. 1.PURPOSE AND AUTHORITY: A. The purpose of this document is to establish criteria for the City of Burnsville (“City”) and the Burnsville Economic Development Authority (“EDA”) for the granting of business assistance and public financial assistance for private development within the City. As used in this Policy, the term “City” shall be understood to include the EDA. The criteria outlined in this Policy shall be used as a guide in processing and reviewing applications requesting business assistance and/or City public financial assistance. As used in this Policy, the term business assistance includes, but is not limited, assistance constituting a “business subsidy” under the Statutes. B. The City's ability to grant business assistance is governed by the limitations established in the Statutes and other provisions of Minnesota law. The City may choose to apply the criteria contained herein to other development activities not covered under the Statutes. City public financial assistance may or may not be considered a business subsidy as defined by the Statutes. C. Business assistance include grants by state or local government agencies, contributions of personal property, real property, infrastructure, the principal amount of a loan at rates below those commercially available to the recipient of the assistance, any reduction or deferral of any tax or any fee, tax increment financing (TIF), abatement of property taxes, loans made from City funds, any guarantee of any payment under any loan, lease, or other obligation, or any preferential use of government facilities given to a business. Certain types of business assistance may not be considered business subsidies under the Statutes. Burnsville Development Tools Criteria and Public Financing Policy Page 2 D. The criteria contained herein shall be used in conjunction with other relevant policies of the City. Compliance with the Development Tools Policy shall not automatically mean compliance with such separate policies. E. The City, at its sole discretion, may deviate from the job and wage goals criteria outlined in Section 5 D, E, and F below by documenting in writing the reason(s) for the deviation. The documentation shall be submitted to DEED with the next annual report. F. The City may amend this document at any time. Amendments to this Policy are subject to public hearing requirements contained in the Statutes. 2.CITY’S OBJECTIVE FOR THE USE OF PUBLIC FINANCING: A.As a matter of adopted policy, the City may consider using public financial assistance which may include tax increment financing (TIF), tax abatement, and other forms of public financing as appropriate, to assist private development projects. Such assistance must comply with all applicable statutory requirements and accomplish one or more of the following objectives: 1.Remove blight and/or encourage redevelopment in designated redevelopment/development area(s) per the goals and visions established by the City. 2.Expand and diversify the local economy and tax base. 3.Enhance the City’s position as a regional destination 4.Encourage additional unsubsidized private development in the area, either directly or through secondary “spin-off” development. 5.Offset increased costs for redevelopment over and above the costs that a developer would incur in normal urban and suburban development (determined as part of the But-For analysis). 6.Facilitate the development process and promote development on sites that could not be developed without this assistance. 7.Retain local jobs and/or increase the number and diversity of quality jobs 8.Provide opportunities for small businesses and/or entrepreneurs and promote resident economic stability. 9.Meet other uses of public policy, as adopted by the City from time to time, including but not limited to promotion of quality urban design, quality architectural design, energy conservation, sustainable building practices, and decreasing the capital and operating costs of local government. Burnsville Development Tools Criteria and Public Financing Policy Page 3 3.PUBLIC FINANCING PRINCIPLES: A.The guidelines and principles set forth in this document pertain to all applications for City public financial assistance regardless of whether they are considered a Business Subsidy as defined by the Statutes. The following general assumptions of development/redevelopment shall serve as a guide for City public financial assistance: 1.All viable requests for City public financial assistance shall be reviewed by staff, and, if so designated, a third-party financial advisor who will inform the City of its findings and recommendations. This process, known as the “But For” analysis is intended to determine if the project would not be feasible but for the City assistance. 2.City staff and a third-party financial advisor will prepare a memorandum for the City Council and EDA documenting the “But For” Test has been met. 3.The City shall establish mechanisms within the development agreement to ensure that adequate checks and balances are incorporated in the distribution of financial assistance where feasible and appropriate, including but not limited to: a.Establishment of “look back provisions” b.Establishment of minimum assessment agreements c.Documentation of all costs 4.TIF and abatement will be provided on a pay-as-you-go-basis. Any request for upfront assistance will be evaluated on its own merits and may require security to cover any risks assumed by the City. 5.The City may set up TIF districts in accordance with the maximum number of statutory years allowable; however, this does not mean that the applicant will be granted assistance for the full term of the district. 6.The City shall elect to have the fiscal disparities contribution come from inside applicable TIF district(s) to eliminate any impact to the existing tax payers of the community. 7.Public financing will not be used in projects that would give a significant competitive financial advantage over similar projects in the area due to the use of public subsidies. Applicants should be able to provide information to support that City public financial assistance will not create such a competitive advantage. Priority consideration will be given to projects that fill an unmet market need. 8.Public financial assistance will not be used in a project that involves a land and/or property acquisition where the price is in excess of the fair market value. Burnsville Development Tools Criteria and Public Financing Policy Page 4 9.The applicant shall pay all applicable application fees and pay for the City’s fiscal and legal advisor time as stated in the Public Assistance Application. 10.The City may consider waiving fees. The City may consider using SAC credits, to the extent they are available, to off -set a project’s SAC expenses. 11.The applicant shall proactively attempt to minimize the amount of public assistance needed through the pursuit of grants, innovative solutions in structuring the deal, and other funding mechanisms. 12.All developments are subject to execution and recording of a Minimum Assessment Agreement. 4.PROJECTS WHICH MAY QUALIFY FOR PUBLIC FINANCING ASSISTANCE: A. All new applications for public financial assistance that are considered by the City must meet each of the following minimum qualifications. However, it should not be presumed that a project meeting these qualifications will automatically be approved for assistance. Meeting the qualifications does not imply or create contractual rights on the part of any potential applicant to have its project approved for assistance. 4.1 MINIMUM QUALIFICATIONS/REQUIREMENTS: A. In addition to meeting the applicable requirements of State law, t he project shall meet one or more of the public financing objectives outlined in Sec. 2. B. The applicant must demonstrate to the satisfaction of the City that the project is not financially feasible “but for” the use of public financial assistance. C. The project is, or will be through the City approval processes, consistent with the Comprehensive Plan, Zoning Ordinances, Design Guidelines or any other applicable land use documents of the City. D. The project will meet the City’s “Better” or “Best” architectural standards E. Prior to approval of a financing plan, the applicant shall provide any requested market and financial feasibility studies, appraisals, soil boring s, private lender commitment, and/or other information the City or its financial advisors may require in order to proceed with an independent evaluation of the proposal. F. The applicant must provide adequate financial guarantees to ensure the repayment of any public financing and completion of the project. These may include, but are not limited to, assessment agreements, letters of credit, personal deficiency guarantees, guaranteed maximum cost contract, etc. Burnsville Development Tools Criteria and Public Financing Policy Page 5 G. Any applicant requesting public financial assistance must be able to demonstrate a previous capability for successful development, as well as specific capability regarding the type and size of the development proposed, unless for a use specified in 4.2C (7-8). Public financing shall not be used when the applicant’s credentials, in the sole judgment of the City, are inadequate due to previous history relating to completion of projects, general reputation, and/or bankruptcy, or other problems or issues considered relevant to the City. H. The applicant, or its contractual assigns, shall retain ownership of any portion of the project long enough to complete it, stabilize its occupancy, establish project management and/or needed mechanisms to ensure successful operation. 4.2 DESIRED QUALIFICATIONS: A. Projects providing a high ratio of private investment compared to City public investment shall receive priority consideration. Private investment includes developer cash, government and bank loans, conduit bonds, tax credit equity, and land if already owned by the applicant. B. Proposals that significantly increase the amount of property taxes paid after redevelopment will receive priority consideration. C. Proposals that encourage the following will receive priority consideration: 1.Implements the City’s vision and values for a City-identified redevelopment area, including but not limited to Heart of the City, Burnsville Shopping Center, and the County Road 42 corridor. 2.Provides significant improvement to surrounding land uses, neighborhoods, and/or the City 3.Attracts or retains an employer within the City 4.Provides increased quality and higher paying jobs 5.Promotes housing investment that meets the following City goals: i.Increase housing choice within the community; diversify existing housing stock; and provide options that do not currently exist ii.Attract young professionals and young families to the community iii.Provide clean, safe, and affordable housing units iv.Include housing as part of City special purpose projects, such as Heart of the City, or other priority City redevelopment areas. v.Multi-family housing with high-amenities considered luxury and/or market rate Burnsville Development Tools Criteria and Public Financing Policy Page 6 6.Provides opportunity for the attraction of destination-oriented uses such as outdoor recreation, entertainment and shopping 7.Provides opportunities for small businesses and/or entrepreneurs 8.Projects that promote resident economic stability 9.Redevelops a blighted, contaminated and/or challenged area 10.Preserves and/or stabilizes a major commercial or industrial node 11.Adds needed public infrastructure such as roads or structured parking 5.BUSINESS SUBSIDY PUBLIC PURPOSE, JOBS AND WAGE REQUIREMENT: A. All business assistance must meet a public purpose with measurable benefit to the City as a whole. B. Job retention may only be used as a public purpose in cases where job loss is specific and demonstrable. The City shall document the information used to determine the nature of the job loss. C. The creation of tax base shall not be the sole public purpose of a subsidy. D. Unless the creation of jobs is removed from a particular project pursuant to the requirements of the Statutes, the creation of jobs is a public purpose for granting assistance. Creation of at least 2 Full Time, or Full Time Equivalent (FTE) jobs is a minimum requirement for consideration of assistance. For purposes of this Policy, FTE jobs must be permanent positions with set hours, and be eligible for benefits. E. Part-Time Equivalent jobs may receive a partial credit and be counted toward the job goals. F. The wage floor for wages to be paid for the jobs created shall be not less than 200% of the State of MN Minimum Wage. The City will seek to create jobs with higher wages as appropriate for the overall public purpose of the assistance. Wage goals may also be set to enhance existing jobs through increased wages, which increase must result in wages higher than the minimum under this Section. G. After a public hearing, if the creation or retention of jobs is determined not to be a goal, the wage and job goals may be set at zero. Burnsville Development Tools Criteria and Public Financing Policy Page 7 6.SUBSIDY AGREEMENT: A.In granting a business assistance, if required by the Statutes, the City shall enter into a subsidy agreement with the recipient that provides the following information: 1.Wage and job goals (if applicable) 2.Commitment to provide necessary information for reporting purposes 3.Five-year operation commitment after the benefit date 4.Recourse for failure to meet goals required by the Statutes B. The subsidy agreement may be incorporated into a broader development agreement for a project. C. The assistance agreement will commit the recipient to provide the reporting information required by the Statutes, if any. D. For assistance that does not constitute a business subsidy under the Statutes, the grantee and the City or the EDA will enter into an agreement setting forth the terms of the assistance. 7.PUBLIC FINANCING PROJECT EVALUATION PROCESS: A. The following methods of analysis for all public financing proposals will be used: 1.Project is deemed consistent with City’s Goals and Objectives 2.Consideration of project meeting minimum qualifications 3.Consideration of project meeting desired qualifications 4.Project meets “but-for” analysis and/or statutory qualifications Please note that the evaluation methodology is intended to provide a balanced review. Each area will be evaluated individually and collectively and in no case should one area outweigh another in terms of importance to determining the level of assistance. 100 Civic Center Parkway • Burnsville, MN 55377 • Phone (952) 8954400 APPLICATION FOR PUBLIC FINANCING Applicant Information 1. Applicant Name: (Name should be the officially registered name of the business entity.) Address: Telephone: Email Address: 2. Individual Completing the Application: Address: Telephone: Email Address: 3. Names and Addresses of Attorney Architect, Engineer, and Contractor for this Project: Attorney Name: Address: Telephone: Email Address: Architect Name: Address: Telephone: Email Address: Engineer Name: Address: Telephone: Email Address: Contractor Name: Address: Telephone: Email Address: 4. If the applicant is a corporation, please name officers, directors, or stockholders holding more that 5% of the stock of the corporation. If the corporation is not formed, provide as much information as possible concerning potential officers, directors, or stockholders . 4a. If the applicant is a general partnership, name of the general partners and if a limited partnership, state the general partners and limited partners with more than 5% interest in the limited partnership. If the partnership is not formed, provide as much information as possible concerning potential officers, directors or stockholders. 4b. Has the applicant ever been in bankruptcy? If yes, please describe the circumstances. ☐ Yes ☐ No 4c. Has the applicant ever been convicted of a felony? If yes, please describe the circumstances. ☐ Yes ☐ No 4d. Has the applicant ever defaulted on any bond or mortgage commitment? ☐ Yes ☐ No Project Information 1. PID#’s, Addresses, Size of Project Site, and Legal Description: PID#’s: Address: Size of Project (Acres): Please attach legal description to this application. 2. Current Ownership of the Site: 3. Do you have current control of the site? ☐ Yes ☐ No 4. Project Description. 5. If property is to be subdivided or re-platted, please describe. 6. Please attach a detailed project budget, operating pro forma, and financing details, including all items listed in Appendix A. 7. Project Construction Schedule: Construction Start Date: Construction Completion Date: If the Project is phased, please provide the following: January 2, % Completed January 2, % Completed 8.Total Estimated Market Value of Project upon completion: 10.Will any public official of the City, either directly or indirectly, benefit from the issuance of public assistance within the meaning of Minnesota Statutes, Section 412.311 or 471.87? If yes, please explain the circumstances. ☐ Yes ☐ No Public Assistance Request 1.Amount of Assistance and Term: Amount: Term (years): 2.Describe the purpose for which Public Assistance (TIF or Tax Abatement) is required. 3.Please submit an itemized list of project costs for which TIF assistance is being requested. 4.State specific reasons why, “but for” the use of public assistance, this project would not be possible. 5.Identify the ways in which the project meets both the “Minimum” and the “Desired ” qualifications as detailed in the City and EDA’s Business Subsidy and Public Financing Policy (Sections 4.1 and 4.2). ☐ Per M.S. 471.462, an applicant may request that the City provide a written, nonbinding estimate of the anticipated consulting fees to be charged to the applicant based on information available at the time of application. By checking this box, I request that the City provide that estimate, and I acknowledge that by making this request, the application shall not be deemed complete until the city has: 1. provided an estimate to the applicant; 2. received the required application fees as specified by the city; 3. received a signed acceptance of the fee estimate from the applicant; and 4. received a signed statement that the applicant has not relied on the estimate of fees in its decision to proceed with the final application from the applicant __________________________________ Signature of Applicant ___________________________________ Date ESTIMATE OF ANTICIPATED CONSULTANT FEES Pursuant to M.S. 471.462, the Applicant has requested the City provide a written, nonbinding estimate of the consultant fees to be charged to the applicant based on information available at the time of the request. At this time, the City estimates the following consulting fees will be incurred and charged to the applicant: Financial Consultant _________________ Legal _________________ I acknowledge receipt and acceptance of the fee estimate provided and attest that I have not relied on the estimate of fees in my decision to proceed with the final application to the City. __________________________________ Signature of Applicant ___________________________________ Date Appraisal Fees ______________________ Application Process 1.Submit completed application and attach additional items listed in Appendix A. Significant additional information may be requested at any time by the City/EDA and may be in addition to the materials outlined in this application. The Applicant shall be required to submit any and all information as requested by the City/EDA. 2.Applicant acknowledges and agrees to pay the Public Assistance Application Fee and is non- refundable. 3.At the time of acceptance by staff of the Public Financing Application, the applicant shall deposit the current published fee with the City/EDA to cover attorney and consultant costs incurred as part of establishing a TIF district or abatement, drafting and negotiating a development agreement, and conducting any fiscal analysis that may be required to meet the requirements of utilizing any public financing. If additional expenses are incurred beyond the fee, prior to the execution of a development agreement, the City/EDA shall notify the applicant in writing and the applicant will be required to deposit additional funds upon notice. 4.The Applicant shall hold the City/EDA, its officers, consultants, attorneys, and agents harmless from any and all claims arising from or in connection with the Project or Public Assistance Application, including but not limited to, any legal or actual violations of any State or Federal securities laws. 5.The Applicant recognizes and agrees that the City/EDA reserves the right to deny any application for Public Assistance at any stage of the proceedings prior to adopting the resolution approving the public assistance, that the Applicant is not entitled to rely on any preliminary actions by the City /EDA prior to the final resolution, and that all expenditures, obligations, costs, fees, or liabilities incurred by the Applicant in connection with the Project are incurred by the Applicant at its sole risk and expense and not in reliance on any actions of the City/EDA. The undersigned, a duly authorized representative of the Applicant, hereby certifies that the foregoing information is true, correct, and complete as of the date hereof and agrees that the Applicant shall be bound by the terms and provisions herein. APPLICANT’ S NAME DATE CITY ACCEPTANCE OF APPLICATION DATE FEE AMOUNT REMITTED DATE Appendix A Required Financial Information Required With Application • Detailed Sources and Uses of funds o Identify and isolate any extraordinary redevelopment and/or clean-up expenditures o For mixed-use projects: separate commercial and residential costs • Revenue/Income Projections o Residential: Include monthly unit rent, unit count, and square footage for each unit type. Also include any other income (Parking, Storage, Pet Fees, etc.). For low income housing tax credit projects, include the full housing workbook submitted to the state housing finance agency. For senior care facilities, breakout the services as separate income. o Commercial: Include square footage of each leasable space and the per square foot lease rate for each space. Indicate the terms of leases (duration, N, NNN, etc.) Also, include the expense on Commercial Space (Property Taxes and CAM). o Hotel: Include average daily rate, occupancy percentages, REVPAR and TREVPAR. Include any additional revenue from restaurant, bar and/or banquet operations, and any misc. revenue (vending, etc.). o All: Include vacancy rate projections • Detailed Operating Costs o Include the major categories, such as administrative, payroll, utilities, insurance, maintenance, management fees, property taxes, etc. • Financing Assumptions o Rate o Amortization o Term o Underwriting requirements (DCR, LTV, etc.) • 15-Year Operating Proforma • Site Plan and location map • Building Elevations • For residential projects: o Detailed list of amenities o Types of parking (Underground, structured, and/or surface) o Interior unit finish materials o Exterior finish materials • Market and/or Feasibility Study Significant additional information may be requested at any time by the Ci ty/EDA and may be in addition to the materials outlined in this application. The Applicant shall be required to submit any and all information as requested by the City/EDA. Tax Abatement Policy & Application Amended: April 2000 August 2002 May 2006 February 2014 September 2016 April 2017 City of Elk River Economic Development Division 13065 Orono Parkway Elk River, MN 55330 763.635.1040 Page 2 of 15 EDA & City Council Approved April 17, 2017 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 city of Elk River Application to Other Jurisdictions VIII. Application for Tax Abatement 8 Applicant Information Project Information Public Purpose Sources & Uses Additional Documentation and Checklist IX. Sample But-For Analysis 13 X. Application Review Worksheet 14 Page 3 of 15 EDA & City Council Approved April 17, 2017 I. POLICY PURPOSE For the purposes 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 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 4 of 15 EDA & City Council Approved April 17, 2017 • 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 generally be provided to the developer upon receipt of taxes by the city, otherwise referred to as the pay-as-you-go 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: agreements, letters of credit, personal guaranties, etc. h. The developer shall adequately demonstrate, to the city’s sole satisfaction, an Page 5 of 15 EDA & City Council Approved April 17, 2017 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. i. For the purpose 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-for-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 c. The developer shall demonstrate that the project is not financially feasible Page 6 of 15 EDA & City Council Approved April 17, 2017 but-for the use of Tax Abatement. Evaluation of the project’s financial 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 7 of 15 EDA & City Council Approved April 17, 2017 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 8 of 15 EDA & City Council Approved April 17, 2017 Financial Incentive Application Tax Abatement Financing VIII. APPLICATION FOR TAX ABATEMENT 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. A. APPLICANT INFORMATION Name of Business Entity’s ___ Address ___________________________________________________________ Primary Contact _____________________________________________________ Address____________________________________________________________ Phone______________ Fax________________ Email______________________ Brief description of the business entity, including history, principal product or service: Brief description of the proposed project: Attorney Name ________________________________________________________ Address______________________________________________________________ Phone _________________ Fax________________ Email_____________________ Page 9 of 15 EDA & City Council Approved April 17, 2017 Accountant Name ______ Address Phone Fax Email ______ Contractor Name ______ Address Phone Fax Email _______ Engineer Name _______ Address Phone Fax Email ______ Architect Name ______ Address Phone Fax Email ______ 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 Page 10 of 15 EDA & City Council Approved April 17, 2017 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. 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 11 of 15 EDA & City Council Approved April 17, 2017 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 & Current Tax Return of all Major Shareholders 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) I. Note: All owners with ownership interests greater than 20% will be required to sign personal guarantees if up front financing of the project is required. Page 12 of 15 EDA & City Council Approved April 17, 2017 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. 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 Name Date Page 13 of 15 EDA & City Council Approved April 17, 2017 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 14 of 15 EDA & City Council Approved April 17, 2017 X. TAX ABATEMENT APPLICATION REVIEW WORKSHEET 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 TO BE COMPLETED BY CITY STAFF Page 15 of 15 EDA & City Council Approved April 17, 2017 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: _____ 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 11. Bonus Adjustments Bonus Adjustments: The project will be 100% Pay-as-you-go 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 &/or materials in construction. Sub - Total Points: of a possible 45 points. Total Points: Rating Points Max Eligibility Overall project desirability: High 45-38 points 100% Moderate 37-29 points 75% Low 28-20 points 50% Not Eligible 19-0 points 0% City of Hk River ver (City CouncH Resolution l 9. 06 A Resolution of the City Council of the City of Elk River Approving an Amended Business Subsidy Policy WHEREAS, the City Council (the "Council") of the City of Elk River, Minnesota (the City") acknowledges the need to provide financial assistance to businesses to further the economic development objectives of the City; and WHEREAS, Minnesota Statutes. Sections 116J.993 through 116J.995, as amended (the Business Subsidy Act") requires any state or local government agency with the authority to grant a business subsidy to establish business subsidy criteria before any new business subsidy can be provided; and WHEREAS, the Council previously approved business subsidy criteria and has now determined to amend the criteria in accordance with the Business Subsidy Act; and WHEREAS, the Council has performed all actions required by law to be performed prior to the adoption of an amended version of the City of Elk River, Minnesota Business Subsidy Criteria (the "Policy"), including the holding of a public hearing on behalf of itself, the Economic Development Authority of the City of Elk River and the Housing and Redevelopment Authority in and for the City of Elk River, Minnesota, upon published notice as required by law. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk River, Minnesota, as follows: 1. The Council hereby adopts the amended Policy, a copy of which is on file at the City Hall. 2. City staff is authorized to transmit a copy of the Policy to the Minnesota Department of Employment and Economic Development in accordance with the Business Subsidy Act. Passed and adopted this 19"' day of February 2019. J n J. ietz, yox ATTEST: Tina Allard, City Clerk 13065 Orono Parkway Elk River, MN 55330 763.635.1000 ElkRiverMN.gov COVID-19 Small Business Emergency Microloan Program 2 | Page COVID-19 Small Business Emergency Microloan Program Purpose The City of Elk River Economic Development Authority (EDA) has developed the small business emergency assistance microloan program to provide financial assistance to locally owned and operated businesses adversely impacted by the COVID-19 pandemic. Eligibility The COVID-19 Small Business Emergency Microloan Program is available to locally owned and operated small businesses located within the City of Elk River. 1. Eligible business types include locally owned and operated businesses noted in Executive Orders 20-04 and 20-08, including but not limited to: a. Restaurants, cafes, coffeehouses, and other places of public accommodation offering food or beverage for on-premises consumption b. Taverns, brew pubs, microbreweries, distilleries, wineries, tasting rooms and other places of public accommodation offering alcoholic beverages for on- premises consumption c. Gymnasiums, fitness centers, indoor sports facilities, indoor exercise facilities, exercise studios, businesses offering massage therapy or similar body work, spas, salons, nail salons, cosmetology salons and barber shops. This includes, but is not limited to, all salons and shops licensed by the Minnesota Board of Cosmetologist Examiners and the Minnesota Board of Barber Examiners. d. Art and music studios e. Bowling alleys, skating rinks and other similar recreational or entertainment facilities f. Other businesses deemed nonessential under executive orders adopted by the Governor of the State of Minnesota g. Other businesses as approved by the EDA 2. The business must have been in operation prior to the Governor’s Executive Order 3. Be a legal entity registered with the Office of the Minnesota Secretary of State and be in good standing 4. Be a conforming or legally nonconforming use under the current city zoning regulations of the city 5. Not be in violation of the city’s zoning code 6. Be in compliance with city ordinances, codes, licensing, and must not have any delinquent taxes, bills, or other charges due to the city Amount: Up to $20,000 Loan Up to $5,000 in Property Tax Relief Application Fee: Waived Equity: None Rate: Fixed at 0% Term: Loans will be payable over 5 years and will be amortized over a period of 10 years. 3 | Page Payment: Loan is deferred for 6 months upon approval of the loan agreement. Forgivable: Up to $5,000 is eligible for forgiveness for property tax relief for taxes payable in 2020. Lease or ownership documentation is required. Forgiveness for property tax relief will be granted if the Borrower has met the reporting requirements listed below. Extension: In the event the Borrower is unable to obtain conventional financing to replace the Microloan at the end of five years, the loan may be extended up to two additional years at a market rate of interest. Collateral: Loans must be supported by sufficient collateral, which will include personal guarantees and/or corporate guarantees. Supporting Documentation: 1. Proof of ownership or signed lease. 2. Proof of submittal, acceptance, approval and/or denial of SBA and DEED loan applications (not absolutely required) 3. Copy of page from business’s most recent federal tax return indicating gross receipts or sales 4. A W-9 form (with signature) 5. Other supporting documentation you wish to provide to the EDA to assist in understanding the applicant’s situation. 6. Narrative descriptions and estimated calculations of the negative impacts on the business due to COVID-19 7. Description of costs to be paid with the proceeds of the loan 8. Narrative description of the plans for resuming operations following the COVID-19 crisis Permitted Fund Uses: Awarded funds may be used exclusively for current payroll obligations (may not include employees who have been laid off), lease or mortgage payments, utilities, accounts payable, property taxes and other critical business expenses that can’t be paid as a direct result of the COVID-19 pandemic. Awarded funds may not be used for business owner’s/manager’s personal uses or expenses. Ineligible Fund Uses: Assistance cannot be provided to businesses or nonprofits that: 1. Do not have a physical business address within the City of Elk River 2. Are home-based businesses 3. Derive income from passive investments without operational ties to operating businesses 4. Primarily generate income from gambling activities 5. Generate any part of its income from adult-oriented or tobacco/vaping-related activities 6. Have no current or historical financial statements 7. Previously received emergency funds from the EDA Fund Availability: 4 | Page Funds are granted on a first come, first serve basis and will be provided until the funds are exhausted or the city-declared state of emergency declaration is lifted, whichever comes first. Reporting: As a condition for receiving funding, all recipients are required to submit a brief report to the EDA within sixty (60 days of receiving funds, specifying how the funds were used and providing evidence in the form of paid invoices, statements or similar documentation. 5 | Page COVID-19 Small Business Emergency Microloan Program Application Applicant Information DBA - Legal Name of the Business: _______________________________________________  Sole Proprietorship  Partnership  Corporation  LLC Length of Time in Business Years Months Fed Tax Id# MN State License Mailing Address City Zip Location Address City Zip Business Phone ( ) Business Fax ( ) E-Mail Address Web Address Contact Name Title Is your business currently registered with the Minnesota Secretary of State? Is your business currently in good standing with the Minnesota Secretary of State? Amount of Funding Requested $______ - Loan $_______ - Forgivable Loan (Property Tax Relief) Total number of employees: _______ The number of your employees who have been impacted by the Governor’s Executive Orders? _______ Was your business subject to the Governor’s Executive Orders 20-04 and 20-08? How has the Governor’s Executive Orders financially affected your business? 6 | Page For what purpose will these funds be used? Please include proposed expenses up to the total funding request. (For example: lease expenses for June ($2,000), payroll for employees, utilities, etc). Describe plans for resuming operations following the COVID-19 crisis. Principal #1 Name DOB SS# Address City ZIP Percentage of Ownership ______% Principal #2 Name DOB SS# Address City ZIP Percentage of Ownership ______% Primary Lender Name Phone Ref# Address Fax Contact Title 7 | Page Eligible Applicants  All eligible business categories must be referenced in Governor Walz’s Executive Orders (EO 20-04 and EO 20-08).  Must have a physical, commercial location, whether owned or leased, that is located in city limits of Elk River, MN.  Must be registered with the Minnesota Secretary of State.  Must be current with Sherburne County property taxes. Application Requirements  The "COVID-19 Small Business Emergency Microloan Program" application must be completed in its entirety by the applicant and submitted to:** City of Elk River 13065 Orono Parkway Elk River, MN 55330 Electronic submissions are also accepted to aothoudt@elkrivermn.gov  All loans will be subject to the EDA’s COVID-19 Small Business Emergency Microloan Program.**  Applications will be considered on by the Joint Finance Committee and acted on by the EDA.**  The most recent federal tax return filed by the business indicating gross receipts of sales.  Income statements and balance sheets for the past year or current within 90 days, if the business has been in business less than one year.  Proof of ownership or signed lease.**  Proof of submittal, acceptance, approval and/or denial of SBA and DEED loan applications (not absolutely required).  A W-9 form (with signature).**  Other supporting information requested from staff to review eligibility.**  If funds are awarded, a brief report to the EDA within two months after receiving funds, specifying how the funds were used and providing evidence in the form of paid invoices, statements or similar documentation.** **Only needed for property tax relief Applicant Acknowledgement:  The applicant shall hold the EDA, its officers, consultants, attorneys, and agents harmless from any and all claims arising from or in connection with the COVID-19 Small Business Emergency Microloan Program or its application, including but not limited to, any legal or actual violations of any state or federal laws.  The applicant recognizes and agrees that the EDA retains absolute authority and discretion to decide whether or not to accept or deny any particular application, and that all expenditures, obligations, costs, fees, or liabilities incurred by the Applicant in connection with the application are incurred by the applicant at its sole risk and expense. 8 | Page  The applicant acknowledges that they have read the COVID-19 Small Business Emergency Microloan Program guidelines and understands that if the application is approved for funding, loan funds awarded must only be used to pay eligible expenses. Data Privacy Notice: The city and the EDA are subject to Minnesota Statutes Chapter 13 (the “Minnesota Government Data Practices Act”). The application shall become the property of the city and/or EDA and is subject to the Minnesota Government Data Practices Act. LOAN PROGRAM POLICY AUTHORIZATION FOR RELEASE OF INFORMATION I declare that the information provided in this application and on the accompanying exhibits is true and complete to the best of my knowledge. I agree to be bound by all terms and conditions of the COVID-19 Small Business Emergency Microloan Program. The City of Elk River Economic Development Authority has the right to verify any information contained in this application, including credit reports on the individuals and the business, and may contact any individuals and institutions involved with the proposed project. The lenders named herein have the right to share information with the EDA, its Finance Committee and boards as is necessary to approve the application for its loan funds. Signature/Title of Applicant: ___________________________________Date: ___________ Signature/Title of Applicant: _______________________ ____________Date: ___________ Applicants are encouraged to review the Governor’s Executive Orders 20-04 and 20-08 for further definition and clarification of businesses that are or are not eligible for this COVID- 19 Small Business Emergency Microloan. The EDA retains final authority to determine if a business is eligible or not, and whether to approve a loan or not. For questions, call 763.635.1042 or cell at 763.218.2766 or email aothoudt@elkrivermn.gov. COVID-19 Small Business Emergency Microloan Program Policy History Adopted by: On (date) Item # EDA 5/18/2020 7.2 Powered by Nature Economic Development Business Microloan Fund Guidelines, Policy & Application Amended: May 2011 November 2013 July 2014 November 2014 December 2016 April 2017 August 2017 May 2020 City of Elk River Economic Development Division 13065 Orono Parkway Elk River, MN 55330 763.635.1040 Page 2 of 22 EDA & City Council Approved August 21, 2017 ELK RIVER ECONOMIC DEVELOPMENT BUSINESS MICROLOAN FUND GUIDELINES, POLICY & APPLICATION 1. POLICY 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 microloan 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. ELIGIBLE BUSINESSES Any project located or proposed to be located within the city limits of Elk River as defined by this microloan program, may be eligible for a 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). • Religious, political, and pornographic enterprises are not eligible. 3. MICROLOAN FUND TERMS & CONDITIONS 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 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. Page 3 of 22 EDA & City Council Approved August 21, 2017 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 10 calendar days. 4. 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. 5. 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 EDA. 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. 6. TIMING OF PROJECT EXPENSES No project should commence until the EDA 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 $2,000 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. Closing of the Microloan should be simultaneous with the borrower’s primary funding. The EDA should be given two weeks’ notice before closing. 7. PROCEDURAL GUIDELINES FOR APPLICATION AND APPROVAL Page 4 of 22 EDA & City Council Approved August 21, 2017 1. All applicants shall first contact a primary lending institution to determine if additional equity is needed, and if so, how much (if applicable). 2. The applicant shall then meet with city staff to obtain information about the microloan program, discuss the project, and obtain application forms. 3. The applicant shall complete and submit an application form to the city, along with a $2,000 processing fee. The fee is used to cover processing expenses and any remaining funds will be returned to the applicant. 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 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. 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 availability and applicability of other governmental grants and/or microloan 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. 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 Loan applications will also be reviewed by a Housing & Redevelopment Authority Commissioner in conjunction with the EDA Finance Committee. Energy Efficiency Improvement Loan 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 capacity to implement the project. b. Financial Feasibility - Availability of funds, private involvement, financial packaging and cost effectiveness. • Appropriate ratio of private funds to Microloan funds. • Sufficient cash flow to cover proposed debt service as demonstrated Page 5 of 22 EDA & City Council Approved August 21, 2017 by financial statements and projections. • 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. 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. Microloan 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: • 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. 7. 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. The application for an extension beyond the original term should include a letter of denial from a conventional lender. 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 recommendation of approval, denial to the City Council for final action. 8. 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. 9. RIGHT OF REFUSAL The EDA may deny any application if it is found not consistent 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. Page 6 of 22 EDA & City Council Approved August 21, 2017 10. 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 Policy as amended and Minnesota Statutes Sections 116J.993 to 116J.995 (the “Minnesota Business Subsidy Law”) if applicable. 11. 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. Any unused portion of the application fee will be returned to 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. 12. Microloan Programs In order to meet the economic and community development objectives of the EDA, five distinct microloan programs exist within the Business Microloan Fund. Industrial Incentive Loan Purpose: The purpose of the Industrial Incentive Loan is to encourage industrial and high technology business development that supports the tax base and brings quality jobs to the city. Amount: Up to $200,000 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 3% Term: Loans must mature within 5 years, but must be amortized over a longer period of time. 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; Page 7 of 22 EDA & City Council Approved August 21, 2017 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 3% interest. Criteria: Borrower must be an industrial or high technology business 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 $15.00 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: a. Building construction b. Land acquisition c. Machinery d. Furniture, fixtures, and equipment (FF&E) e. Renovation and modernization of buildings f. Public infrastructure needed for economic development expansions g. 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 b. Inventory c. Refinancing of existing debt d. Working capital Downtown Revitalization Financing Loan 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 in Exhibit A. Amount: Up to $74,999 of secondary financing not to exceed 20% of the total Page 8 of 22 EDA & City Council Approved August 21, 2017 project cost. Remaining Principle: Must have private-sector commitments for 50% of the project cost. Borrower must provide 10% or more of project cost. Rate: Fixed at 3%. 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 3% interest. Criteria: At a minimum, 20% of Microloan dollars must be used for the improvement of the building façade, with exceptions to be considered when it appears the façade improvements are not necessary. Financing of leasehold improvements will be considered at a limit of $25,000. Permitted Fund Uses: a. Building construction b. Renovation and modernization of buildings c. Furniture, fixtures, and equipment (FF&E) d. Exterior renovation of retail or commercial buildings e. Financing of leasehold improvements including façade improvements will be considered at a limit of $25,000 f. Expenditures for the construction and/or renovation of residential units Ineligible Fund Uses: a. Inventory b. Refinancing of existing debt c. Working capital Energy Efficiency Improvement Loan Purpose: The Energy Efficiency Improvements Loan is available to property owners of commercial or industrial buildings in Elk River to provide low interest loans to businesses to invest in energy efficiency and improve their profitability through reduced energy costs. In addition, the microloan 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 Page 9 of 22 EDA & City Council Approved August 21, 2017 Equity: Must have a minimum of 10% equity provided by the borrower. Rate: Fixed at 3% Term: The maximum maturity date of the loan 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: Microloan funds 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. The loans will be secured by personal and corporate guarantees, and if applicable a lien on equipment financed and subordinate mortgage on the property. 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. Permitted Fund Uses: Page 10 of 22 EDA & City Council Approved August 21, 2017 a. Energy efficiency measures installed in or on a building include: b. Facility systems optimization (commissioning/re-commissioning) c. Facility systems control improvements d. Process efficiency improvements (CenterPoint Energy) e. Lighting efficiency improvements f. Heating, ventilation and air conditioning system modifications g. Exterior envelope improvements h. Motor and pump efficiency improvements i. Ground-source heat pump systems used to heat or cool a facility j. Installation of equipment or devices that use renewable energy sources to generate electricity or heat or cool a building including solar electricity (photovoltaic), wind turbine or solar thermal. Ineligible Fund Uses: a. Inventory b. Refinancing of existing debt c. Working capital d. Expenditures for the construction and/or renovation of residential units Micro-Brewery Loan Purpose: The Micro-Brewery microloan is available to business and property owners located within the city of Elk River. Amount: Up to $74,999 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 3%. Term: Financing with a balloon payment in up to 5-years. Loans may be amortized up to the following limits: 10 years on equipment uses Extension: In the event that the Borrower is unable to obtain conventional financing to replace the Microloan at the end of five years, the loan may be extended up to two additional years at a market rate of interest. Criteria: At a minimum, 50% of Microloan dollars must be used for the purchase of equipment. Loans must be supported by sufficient collateral, which will include personal guarantees. Page 11 of 22 EDA & City Council Approved August 21, 2017 Permitted Fund Uses: e. Renovation and modernization of buildings f. Furniture, fixtures, and equipment (FF&E) g. Exterior renovation of retail or commercial buildings h. Financing of leasehold improvements including façade improvements will be considered at a limit of $25,000 Ineligible Fund Uses: a. Inventory b. Refinancing of existing debt c. Working capital Page 12 of 22 ELK RIVER ECONOMIC DEVELOPMENT 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 Which Microloan Program are you applying for? Industrial Incentive Loan Downtown Revitalization Financing Loan Energy Efficiency Improvement Loan Micro-Brewery Loan ______ COVID-19 Small Business Loan 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 Page 13 of 22 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/Machinery/Fixtures (attach list and estimated costs) $ Remodeling $ Industrial Inventory/Working Capital $ Other (attach description) $ Total Costs $ Comments: Page 14 of 22 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 Page 15 of 22 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 following information on jobs you expect to create within 2-years. Job Title Number of Jobs Average Hourly Wage Annual Salary Are the Jobs Permanent or Temporary? Expected Hiring Date *If loan is for job retention only, please explain in Business Plan. Microloan 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 16 of 22 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 Page 17 of 22 6. ATTACHMENTS CHECK LIST 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 Three Years and Year to Date 1. Profit & Loss Statements 2. Balance Sheets _______C) Financial Projections for up to Three 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. _______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) Processing Fee of $2,000 (Waived for COVI-19 Small Business Loan) Page 18 of 22 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 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 Page 19 of 22 Exhibit A: Downtown Area Page 20 of 22 MICROLOAN APPLICATION SCORING WORKSHEET 1. The project meets the criteria set forth in the appropriate the Microloan policy. a) Meets at least one of the microloan objectives in Section 7; 6(e). c) Consistent with all city plans and ordinances. d) Meets the wage requirements as defined in the city’s business subsidy policy. 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 jobs created/retained or relocated Points: _____ 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 TO BE COMPLETED BY CITY STAFF Page 21 of 22 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: _____ Industrial or Business Park Project 5 Commercial/Retail Rehabilitation/Redevelopment 4 ______ Downtown Revitalization or Microbrew 3 10. Likelihood that the project will result in Points: _____ unsubsidized, spin-off development. High 5 Moderate 3 Low 1 11. Point Adjustments Point Adjustments: The project contributes to the goals of Energy City. 5 points • Product promotes sensible use of energy, OR • Project utilizes significant energy efficient design &/or materials in construction. Sub - Total Points: of a possible 45 points. Total Points: Overall project desirability: High 50-35 points Moderate 34-29 points Low 28-20 points Not Eligible 19-0 points Page 22 of 22 1 Economic Development Energy Incentive Program Policy 2 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. Eligible Businesses Projects located or proposed to be located within the city limits of the City may be eligible for the program as further defined herein:  Unless otherwise stated, business must be a for-profit corporation, partnership, limited liability company, or sole proprietorship.  Business must be a small business as defined by the Small Business Administration.  Only new construction projects qualify.  Peak electric demand greater than 50kW per month.  Located within eligible ERMU area.  .  The creation of at least 50 new jobs at ≥ $18.00 per hour  Calculated Economic Output of $10 million through Implan software (information provided by Sherburne County)  Project must generate a least $80,000 in total annual property taxes.  Religious, political, and pornographic enterprises are not eligible. 3. Regulation for New Construction and Improvements All buildings which public funds will be used for construction are to conform to city code and ordinances and state building codes. 4. Timing of Project Expenses No project shall commence without city council approval of the application. Any costs incurred prior to the approval of the application are not eligible expenditures. No building construction should commence until the required permits are secured. The applicant will be responsible for all legal, recording, and other fees payable by a $2,000 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 applicant. 3 5. 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 along with a $2,000 processing fee. The fee covers processing expenses. Any remaining funds will be returned to the applicant. The applicant must provide a letter of commitment for constructing the project. 3. The EDA and the City are a governmental entities and must provide access to public data received in accordance with the Minnesota Government Data Practices Act, (Minnesota Statutes, Chapter 13) (the “Minnesota Data Practices Act”). The information provided in an application to the EDA and the City will be used to assess eligibility for financial assistance. The EDA and the City will not be able to process an application without this information. The Minnesota Government Data Practices Act governs whether the information that you are providing to the EDA 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 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 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 incentives and/or funding for the project. 5. The Joint Finance Committee of the EDA and EDA Commissioners 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 Finance Committee will also 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 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 of at least 50 new jobs at a minimum hourly wage of $18.00. e. Peak electric demand greater than 50kW per month. 4 f. Located within eligible ERMU area. g. Calculated economic output of $10 million through Implan software (information provided by Sherburne County) h. Project generates a minimum of $80,000 in total annual property taxes 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. 6. 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. 6. 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. 7. Right of Refusal The EDA shall deny any application found inconsistent with the goals of the city’s Comprehensive Plan and Economic Development Strategic Plan and 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. 8. Compliance with the Minnesota Business Subsidy Law All developers/businesses receiving financial assistance from 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. 5 9. 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. 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 prevision 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. 10. Form of Assistance; Repayment The incentive will be provided over a period of 2 years starting after the City issues a certificate of occupancy for the project. If the business owner fails to create the number of jobs as set forth in its application within 2 years of the issuance of a certificate of occupancy, the business may be required to repay the amount of assistance provided if required by applicable law. 11. Agreement to Pay Costs of Review City and EDA policy requires applicants to pay all costs incurred by the city to review and act upon applications so that these costs are not borne by the taxpayers. These costs include all of the city’s out-of-pocket costs for expenses, including the City’s and the EDA’s costs for review of the application by the City’s and EDA’s financial advisor, attorney, 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. Any unused portion of the application fee will be returned to 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. 6 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: Please describe how this program will impact your project: 7 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. Job Title Number of Jobs Average Hourly Wage Annual Salary Are the Jobs Permanent or Temporary? Expected Hiring Date 8 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 9 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) Certificate of Good Standing and Applicant’s Organizational Documents (for example, articles of incorporation and bylaws) ______ E) Resume of Owner/Management ______ F) Letter of Commitment from Applicant Pledging to Complete During the Proposed Project Duration ______ G) Processing Fee of $2,000 10 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 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 11 APPLICATION SCORING WORKSHEET 1. The project meets the criteria set forth in the Energy Incentive policy. a) Meets the objectives of the program c) Consistent with all city plans and ordinances. d) Meets the wage requirements as defined in the city’s business subsidy policy. 2. Job Creation in the City of Elk River: Points: _____ Number of new jobs as a result of the project. 50+ 5 Total Less than 50 0 3. Wage Level of jobs created/retained or relocated Points: _____ Minimum hourly wage Over $21/ hour 5 of jobs created/retained: $19-20 / hour 4 $18 / hour 3 4. Project size: Points: _____ The project will result in the construction 50,000+ 5 of square feet 40,000+ 4 30,000+ 3 5. Tax Base Generation: Points: _____ The project will result in the annual estimated Tax Base Generation $100,000+ 5 of $90,000+ 4 $80,000+ 3 Sub - Total Points: _____________of a possible 20 points. TO BE COMPLETED BY CITY STAFF 12 6. Bonus Points Point Adjustments: The project contributes to the goals of Energy City. 3 points • Product promotes sensible use of energy, OR • Project utilizes significant energy efficient design &/or materials in construction. Total Points: Overall project desirability: High 20-23 points Moderate 18-19 points Low 12-17 points Not Eligible 0-11 points 13 Economic Development Energy Incentive Program Policy History Adopted by: On (date) Item # EDA January 22, 2019 7.7 1 Tax Increment Financing Policy 2 Tax Increment Financing Policy Purpose The purpose of this policy is to ensure development receiving Tax Increment Financing (TIF) is consistent with the long-term city Comprehensive Plan, Strategic Plan, Mississippi Connections Plan and/or most recent Housing Study. This is a guide for processing and review of TIF applications. The City of Elk River shall utilize TIF to encourage desirable development or redevelopment that would not otherwise occur but for TIF. The city is empowered to utilize TIF by the Minnesota Tax Increment Financing Act, as amended in Minnesota Statutes 469-174 through 469-1794. The city provides the minimum amount of TIF at the shortest term required for a 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. Projects meeting policy criteria are not guaranteed the award of TIF. Approval or denial of a certain project is not a precedent for approval or denial of another project. The City Council and Economic Development Authority and the Housing and Redevelopment Authority can deviate from this policy for projects that supersede the objectives identified herein. Authority Minnesota Statutes 469-174 through 469-1794 govern the use of TIF and exceed any issues that conflict with this policy. Public Purpose The City of Elk River will consider TIF for projects that achieve one or more of the following: 1. Demonstrate long-term benefits to the community. 2. Retain local jobs and/or increase the number and diversity of jobs that offer stable employment and/or attractive wages and benefits through:  Diversification of the local economy  Significant addition of permanent, high-wage, full-time jobs  Addition of jobs attractive to those unemployed or underemployed 3. Significantly increases the city’s commercial and industrial tax base. 3 4. Demonstrates the ability to encourage unsubsidized private development through “spin off” development. 5. Facilitates the development process and achieves development on sites that would not develop “but for” the use of TIF. 6. Removes blight and/or encourages redevelopment of commercial and industrial areas resulting in high quality redevelopment and private reinvestment. 7. Offsets redevelopment costs (i.e. contaminated site cleanup) over and above the costs normally incurred in development. 8. Aids the implementation of the Mississippi Connections Plan. Policy Statements 1. The primary intent of TIF is direct funding for public improvements and secondarily for developer assistance. 2. The use of TIF shall be in accordance with state law. The more restrictive language will apply when a conflict exists between this policy and state law. 3. Projects must be consistent with the Comprehensive Plan and/or the Mississippi Connections Plan. 4. Projects must be consistent with the Strategic Plan for Economic Development and/or the most recent Housing Study. 5. Preferred projects promote the completion of major public improvement projects within the city such as the installation of trunk sewer and water lines and major transportation projects. 6. The level of assistance provided will be determined on a case-by-case basis as referenced in Public Purpose. Based on the extent to which the project achieves the policy statements (1-6 above), the city will consider TIF for projects in the following categories:  Manufacturing  Major office warehouse/production facilities  Research and development  Commercial projects encouraging substantial redevelopment of substandard properties  Housing needs identified in the most recent city housing study 4 1. Assistance for TIF is required to meet the uses identified by statute including, but not limited to the following:  Public improvements  Land acquisition and land write down  Loans  Site preparation and improvement  Demolition  Legal, administration, and engineering 2. The preferred method of TIF is pay-as-you-go for eligible costs as reimbursement, upfront financing maybe considered on a case-by-case basis. 3. A maximum of ten percent (10%) of any tax increment received from the district shall be retained by the city to reimburse administrative costs. 4. All TIF assistance must be accompanied by a signed development agreement including a minimum assessment value. The developer must provide additional financing guarantees to ensure completion of the project, including, but not limited to: letters of credit, personal guarantees, corporate guarantees, etc. 5. TIF District’s shall be limited to the minimum term necessary to meet the project needs. Only projects exceeding the objectives identified in this policy will be considered to exceed the following general thresholds:  Redevelopment District 15 Years (Max is 26)  Housing District 15 Years (Max is 26)  Soils Condition District 15 Years (Max is 21)  Renewal and Renovation District 10 Years (Max is 16)  Economic Development District 8 Years (Max is 9) 6. Policy Considerations  Each project is required to meet the “but-for” test to determine the need for and level of assistance. This test and the amount of tax increment generated determines the district’s term. It is difficult to facilitate a redevelopment, housing or soils condition district for less than the maximum term as the extraordinary costs involved are usually significant.  The term of the district could coincide with the amount of tax increment the city has to spend on its priorities within a project area.  Of all the TIF districts, the Economic Development District is most often the one limited to a lesser term. Economic Development Districts are really “incentive” districts where it is not so much the extraordinary costs as it is an “incentive” to get a business to locate in a community. In the other districts, the costs are easily identifiable and usually significant such as demolition, relocation, environmental remediation, and the cost differential between market rate and income/rent restricted housing. 5 7. Developers receiving TIF assistance shall provide a minimum of ten percent (10%) cash equity investment in the project. TIF will not be used to supplant cash equity. 8. TIF will not be used in circumstances where land and/or property price is in excess of fair market value. A third-party appraiser agreed upon by the city and developer will determine the fair market value of the land. 9. The developer shall demonstrate a market demand for a proposed project. TIF shall not be used to support purely speculative projects. 10. 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. 11. 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. 12. The city of Elk River shall only use TIF to encourage economic growth and development within the city limits. Application Process 1. Applicant submits a complete application and a $10,000 application deposit by the first Monday of the month. The application deposit will be used toward the cost of services provided in the evaluation of financial feasibility, establishment or modification of the district, and preparation of legal documents and agreements. An additional deposit of $10,000 shall be required for projects requiring statutory redevelopment substandard tests. The applicant shall reimburse the city for professional services in excess of the initial deposit. Deposit portions not utilized shall be refunded. 2. City staff reviews the application for completeness and submits the application to the city’s financial consultant for review and preparation of a financial analysis. 3. The Joint Finance Committee shall review the proposal’s financial strength and make a recommendation to the appropriate commission with findings of fact. 4. The appropriate authority reviews the proposal and the recommendation to determine conformance with this policy. The authority makes a recommendation to the City Council. 5. After meeting the statutory requirements for establishing the Tax Increment District, the City Council holds a Public Hearing and takes action on the proposal (Approximately 45-60 days). 6 APPLICATION FOR TAX INCREMENT FINANCING A. APPLICANT INFORMATION Name of Entity Address Primary Contact Address Phone Fax Email Brief description of the entity 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 7 B. PROJECT INFORMATION 1. The project will be: _____ Redevelopment District _____ Housing District _____ Soils Condition District _____ Renewal and Renovation District _____ Economic Development District 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 8 C. PUBLIC PURPOSE It is the policy of the City of Elk River that the use of Tax Increment Financing 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 or diversification of the city’s economic base. _____ The project contributes to the fulfillment of the City’s Plan. _____ Removal of blight or the rehabilitation of a high profile or priority site. _____ Significantly increase the City’s tax base. _____ Other: 9 D. SOURCES & USES SOURCES NAME AMOUNT 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 $ 10 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 Current Tax Return _____F) Letter of Commitment from Applicant Pledging to Complete During the Proposed Project Timeline _____G) Letter of Commitment from the Other Sources of Financing, Stating Terms and Conditions of their Participation in Project _____H) Application deposit of $10,000, with any unused portion to be refunded. _____ I) Construction Plans and Itemized Project Construction Statement _____J) Attach the following documentation as Exhibits Exhibit A – Entity Documents 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. 11 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 may be requested by the City after the filing of this application. Applicant Name Date 12 Tax Increment Financing Policy History Adopted by: On (date) Item # City Council 12/4/2017 EDA 11/20/2017 HRA 11/6/2017 Revolving Loan Fund City of Hastings Economic Development PROGRAM INFORMATION, GUIDELINES AND APPLICATION INSTRUCTIONS City of Hastings 101 4th Street East, Hastings, MN 55033-1955 T: 651-480-2350 F: 651-437-7082 www.hastingsmn.gov CITY OF HASTINGS: ED RLF//UPDATED 06.11.2018 1 CITY OF HASTINGS ECONOMIC DEVELOPMENT REVOLVING LOAN FUND PROGRAM INFORMATION, GUIDELINES AND APPLICATION INSTRUCTIONS SECTION 1: GENERAL PROVISIONS A. Purpose The Hastings Economic Development and Redevelopment Authority recognizes the need to stimulate private sector investment in order to create and retain jobs, increase the overall tax base, and encourage investment, expansion, and rehabilitation of commercial and retail buildings. The purpose of the Economic Development Revolving Loan Fund is to provide financial assistance to companies in the City of Hastings that do not have the ability to receive adequate funding for business growth through traditional or private means. The ED RLF is meant to serve as a bridge between the amount the borrower can obtain on the private market or through equity and the amount needed to start or grow a business. B. Funding Amount The maximum amount of a loan from this program is $150,000. Working Capital loans are capped at $25,000. Any fund requests that exceed program guidelines must receive special approval by HEDRA. SECTION 2: ELIGIBILITY CONSIDERATIONS A. Area The area served by the RLF program shall be within the limits of the City of Hastings, whose boundaries may change as growth and annexations of new properties take place naturally over time. Applications from companies located outside the city limits that have facilities within the city may be allowed to apply, as long as the funds will be used AND the jobs created only at the Hastings facility. B. Eligible Activities a. Working capital b. Acquisition of land and buildings c. New construction d. Facade and building renovation e. Purchase and installation of machinery and equipment f. Clearance, demolition, or removal of structures g. Infrastructure improvements necessary to support new or expanding businesses C. Ineligible Activities a. Refinancing or consolidating existing debt b. Reimbursement for expenditures prior to loan approval c. Specialized equipment that is not essential to the business operation d. Residential building construction or reconstruction (unless such construction is intended to convert building to a business or industrial operation) e. Routine maintenance f. Professional services g. Line of Credit h. HEDRA reserves the right to limit the ED RLF to businesses operating in accordance to the goals and objectives of the city. CITY OF HASTINGS: ED RLF//UPDATED 06.11.2018 2 D. Timing of Project Expenses No project should commence until HEDRA has approved the loan application. Any costs incurred prior to the approval of the loan application are generally not eligible expenditures. E. Priorities a. Priority will be given to projects which include one or more of the following: i. Job Creation, specifically jobs paying a livable wage ii. Job Retention iii. A beneficial impact on the Vermillion Street Corridor iv. A beneficial impact on the Industrial Park v. A beneficial impact to Downtown Hastings vi. Increase in property valuation b. The RLF program is an Equal Opportunity Lender and will not discriminate based on gender, race, religion, sexual preference, age, etc. in its loan decisions. SECTION 3: TERMS AND CONDITIONS A. Financing Methods Upon proof of owner’s 10% equity share, RLF dollars shall not exceed 50% of total project cost. B. Financing Policy Up to 100% of the RLF dollars may be used for fixed asset financing, however no more than 30% of RLF dollars may be used for working capital loans. C. Terms a. The loan is payment and interest free for the first year. An interest rate of 0.25% above the prime rate will be assessed on the loan balance at the beginning of loan term. The interest rate will be adjusted to reflect any changes in the prime rate at the beginning of year three, and every two years after until the loan is paid in full. b. The term of the loans may vary according to the type of the project, use of funds, cash flow needs, etc. However, the maximum loan terms shall be the following: i. Real Estate: 15 years ii. Machinery & Equipment: 10 years iii. Working Capital: 3 years c. In order to allow for flexibility, changes in loan terms and conditions may be determined based on project need and/or the beneficial impacts of the project, as approved by HEDRA. D. Fees A 1% origination fee for the loan will be required. The applicant will be responsible for all legal, title insurance, recording, and other fees required for the protection of a securing interest in the loan. All legal and filing fees shall be paid by the borrower at loan closing. E. Collateral a. The City of Hastings shall have first position lien on real property and/or machinery and equipment financed by the RLF, unless the need to subordinate to another lender is demonstrated. b. Whenever possible, personal guarantees will be made part of any loan agreement. c. Other conditions, including title insurance, or performance standards or penalties may be required depending on the circumstances of the proposed project. CITY OF HASTINGS: ED RLF//UPDATED 06.11.2018 3 SECTION 4: APPLICATION PROCEDURES A. Preliminary Meeting Prior to submission of an application, the potential applicant shall meet with ED staff to discuss the proposed project and program requirements. B. Application Format Applicants shall submit a loan application package consisting of the following: a. Completed RLF Application form, including requested attachments b. A Business Plan c. Documentation and/or Statement of Need for RLF involvement in the project d. Commitment Letters (equity, private funding, etc.) C. Application Submittal The completed application and all required attachments shall be submitted to: John Hinzman, Community Development Director 101 4th Street East Hastings, MN 55033 jhinzman@hastingsmn.gov Please note, acceptance of applications is subject to the availability of RLF dollars. SECTION 5: REVIEW PROCESS A. Staff Review The ED staff shall the review the application for completeness and verification that the proposed project meets the standards and eligibility requirements of the program. Once a complete application is analyzed, ED staff will prepare a recommendation to HEDRA. B. City Compliance All projects must be in compliance with all city codes and/or necessary permits before any funds are disbursed. C. Credit Check The ED staff will perform a credit check on both the company’s principals and the business. D. Negotiation of Terms Upon completion of the application review with a favorable recommendation, the ED staff will meet with the applicant to negotiate terms, including loan amount, interest rate, term of loan, collateral pledged, title requirements, and repayment schedule. The agreed upon terms will be part of the loan package recommendation presented to HEDRA. E. Formal Review HEDRA will meet to formally review the application and staff recommendations. Applicants are encouraged to attend the meeting to provide additional information and/or answer any questions by committee members. F. Notice of Award/Denial of Application If the application is approved and negotiation of terms are agreed upon, the applicant will be sent a notice of award letter. The notice letter will have a timeline of when loan documents should be completed and a CITY OF HASTINGS: ED RLF//UPDATED 06.11.2018 4 suggested loan closure date. If the application is not approved, the applicant will be sent a letter of denial stating the reason for denial. SECTION 6: DISTRIBUTION OF FUNDS TO APPROVED APPLICANTS A. Loan Agreement Prior to the city’s distribution of RLF funds, all appropriate documentation, including loan agreement, promissory note, repayment schedule, security instruments, personal guaranty, and any others deemed appropriate, shall be prepared and executed. B. Evidence of Expenditures The business must provide documentation related to RLF fund expenditures prior to the release of RLF funds. Documentation may include invoices, receipts, final bills of sale, cancelled checks, or other documentation as deemed appropriate by ED staff. SECTION 7: ADDITIONAL REPORTING REQUIREMENTS A. Job Creation & Retention The loan recipient will be required to complete documentation, on an annual basis, that details the number of jobs created and/or retained. B. Property Valuation Property valuation will be completed at time of project completion. C. Leverage Commitments The loan recipient will be required to provide documentation detailing the use of funds committed for leveraging. Documentation may include invoices, receipts, final bills of sale, cancelled checks, or other documentation as deemed appropriate by ED staff. SECTION 8: REPAYMENTS AND DEFAULT A. Repayments All payments are due within 30 days of the billing date. B. Prepayment of Loan There is no prepayment penalty. C. Late Payments Any payments not paid within ten (10) days of the due date will pay a late fee equal to 5% of the amount of the installment due. Loan recipient will be contacted by HEDRA staff requesting the account is brought current. After sixty (60) days, HEDRA staff will send a letter requesting full remittance of late payments. D. Default Failure by the business to make any payment of principal or interest within ninety (90) days after payment is due and payable or as otherwise required in the loan documents shall be considered a default. In the event of a default, all sums due and owing to the city shall, at the city’s option, become immediately due and payable. The business will receive a written notice specifying the following: a. The default. b. The action required to cure the default. CITY OF HASTINGS: ED RLF//UPDATED 06.11.2018 5 c. The date, not less than sixty (60) days from the date of the notice, by which the default must be fully satisfied to avoid foreclosure or other collective action. E. Call of Loan A loan may become due and payable in full if a business relocates outside of the city of Hastings prior to the maturity date of the loan. SECTION 9: PROJECT & LOAN CLOSURE REQUIREMENTS A. Project Closeout Upon completion of the project funded by the RLF, the business shall notify the city that the project has been completed. Loan recipients may document closure with photographs of completed work, as well as other statements related to the project. B. Loan Closeout Thirty (30) days before closing out the loan, the business should contact the city for the final payment amount. Once final payment is submitted, the business will be sent a copy of originating loan documents, as well as a letter confirming loan is closed and “paid in full”. CITY OF HASTINGS: ED RLF//UPDATED 06.11.2018 6 CITY OF HASTINGS ECONOMIC DEVELOPMENT REVOLVING LOAN FUND APPLICATION SECTION 1: CONTACT INFORMATION Legal Name of Business:_______________________________________________________________________ Project Site Address:__________________________________________________________________________ City / State / Zip:_____________________________________________________________________________ Primary Business Contact Person(s):______________________________________________________________ Phone:______________________________________________________________________________________ Email:______________________________________________________________________________________ Check One:_____ Proprietor _____Corporation_____Partnership FEIN #_____________________________________________________________________________________ SECTION 2: PROJECT OVERVIEW Amount Requested: $__________________________________________________________________________ Total Project Cost: $___________________________________________________________________________ Please provide a brief summary of your company and its products and/or services. ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ Please provide a brief summary of the proposed project. ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ Please describe how these funds will impact your project. ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ CITY OF HASTINGS: ED RLF//UPDATED 06.11.2018 7 SECTION 3: ESTIMATED PROJECT COSTS Land: $_____________________________________________________________________________________ Site improvements: $__________________________________________________________________________ New Building: $______________________________________________________________________________ Equipment/Machinery: $_______________________________________________________________________ Remodeling/Renovation: $______________________________________________________________________ Demolition: $________________________________________________________________________________ Working Capital: $____________________________________________________________________________ Permits/Fees: $_______________________________________________________________________________ Other (attach description) $_____________________________________________________________________ Total Costs $________________________________________________________________________________ SECTION 4: SOURCES OF FINANCING Bank Loan: $________________________________________________________________________________ Bank Name: _________________________________________________________________________________ Loan Officer Name & Contact Info:______________________________________________________________ Additional Bank Loan (if applicable): $___________________________________________________________ Bank Name: _________________________________________________________________________________ Loan Officer Name & Contact Info:______________________________________________________________ Additional Private Funds (amount & source): $_____________________________________________________ Owner/Business Equity: $______________________________________________________________________ State Funding (amount & program): $_____________________________________________________________ Federal Funding (amount & program): $___________________________________________________________ Other Sources of Funding (amount and description): $________________________________________________ Total Financing: $___________________________________________________________________________ CITY OF HASTINGS: ED RLF//UPDATED 06.11.2018 8 SECTION 5: JOB CREATION (if applicable) Current number of Employees (working at Hastings location): _________________________________________ Total number of jobs to be created (in Hastings) over the next two years: ________________________________ Job Title Number of Positions Hourly Wage w/ Benefits Expected Hiring Date SECTION 6: REQUIRED ATTACHMENTS CHECKLIST Please attach the following with completed application: _________1. Written Business Plan, including the following: a. Business overview and company history and ownership b. Date Established c. Products/Services d. Future Plans _________2. Two Years of Historical Financials and Financial Projections _________3. Personal Financial Statements of Proprietor, Partners, Guarantors _________4. Letter of Commitment from Financing Sources SECTION 7: AGREEMENT I/We certify that all information provided in this application (and its attachments) is true and correct to the best of my/our knowledge. I/We authorize the City of Hastings to check credit references and verify financial and other information. I/We agree to provide any addition information as may be requested by the City of Hastings and HEDRA. APPLICATION SIGNATURE:________________________________________________________ PRINTED NAME & TITLE:__________________________________________________________ DATE:_________________________________________________________________________ Page 1 of 2 City of Hastings Hastings Economic Development and Redevelopment Authority (HEDRA) Tax Increment Financing (TIF) Assistance Application Name of Project Name of Applicant Corporation/Partnership Address Street City State Zip Name of Primary Contact Email Phone Prior to the initiation of the process to establish a TIF district, the Applicant will deposit funds into an escrow account to pay for the professional services needed by HEDRA to prepare the TIF Plan and the development agreement. The amount of the escrow deposit will be determined based on the review of this Application, but will not be greater than $15,000. Money remaining in the escrow after HEDRA costs have been paid will be returned to the Applicant. Certification of Application 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 Hastings/HEDRA to check credit references and verify financial and other information. The undersigned also agrees to provide any additional information as may be requested by the City/HEDRA after the filing of this application. Name (print) Title Signature Date Supporting Information The application must include the following information attached as exhibits. The applicant can structure the exhibits in the manner that best explains the project as long as the required information is provided. 1. Project Description (Attach as Exhibit A) Briefly describe the proposed project. At a minimum, the description shall include:  Project address  Parcel identification numbers  Type of development  Amount of development (building square footage or number of dwelling units)  Dates for start and completion of construction  Assumed Estimated Market Value of project upon completion  Site concept plan (if available) Page 2 of 2 2. Applicant Information (Attach as Exhibit B)  Brief description of firm’s business  Names of officers and shareholders/partners with 5% or more ownership interest  Location and address of comparable projects completed by the firm  Name and contact information attorney, engineer, architect, or other member of applicant project team that may be involved with this application Note – The City may require the applicant to submit other financial information needed to evaluate the project and the requested assistance. This information may include, but is not limited to, financial statements and project financing commitments . 3. Description of Requested Assistance (Attach as Exhibit C)  Description of requested assistance, including amount and use of assistance.  Explanation of why the proposed project is not feasible without this assistance.  Description of benefits to the City from the proposed project.  Table containing detailed description of sources and use of funds for the project.  Project proforma with and without requested TIF assistance over the life of the requested assistance.  Unless otherwise agreed to by the City tax increment assistance is provided on a pay-as-you-go basis through a TIF Note. Indicate your intentions for holding the Note or selling it to a third party. 4. Land Use Controls Please indicate if any of the following are needed: Yes No Don’t Know Comprehensive Plan Amendment Rezoning Variance Conditional Use Permit Replatting Please send the completed application and direct questions about the application to: Rusty Fifield, Economic Development Coordinator City of Hastings 101 4th Street East Hastings, MN 55033 651.480.2379 rfifield@hastingsmn.gov ECONOMIC DEVELOPMENT LOAN FUND APPLICATION Return Application To: Hutchinson Economic Development Authority 111 Hassan Street SE Hutchinson MN 55350 Email: edadirector@ci.hutchinson.mn.us Adopted: 23 February 2011 Overview The Economic Development Revolving Loan Fund of the Hutchinson Economic Development Authority (EDA) provides assistance for businesses either located in, or relocating to, the City of Hutchinson. Eligible uses of funds include land & building purchase, building construction, building renovation / expansion, machinery & equipment, working capital and inventory. The loan criteria provided on the following page of this application detail the eligible projects and general terms of the Economic Development Revolving Loan Fund. The purpose of the fund is to provide “gap” financing to supplement conventional bank loans for new and existing business expansion, to retain and / or create jobs, expand the local tax base and encourage new business investment in the community. Application Procedure The Hutchinson Economic Development Director serves as the loan officer for the Economic Development Revolving Loan Fund. The EDA Director will gather all necessary in formation on the project from the interested business or individual and verify that the proposed project is eligible for consideration of a loan from the Economic Development Revolving Loan Fund. Once all the required information has been obtained, the ED A Director will make a report and presentation to the Finance Team of the Economic Development Authority (EDA) at their regularly scheduled monthly meeting. The applicant may be requested to attend this meeting to provide additional information on the project and answer any questions the Finance Team might have. The Finance team will then review all information provided and make a recommendation to the EDA Board to either approve or reject the loan application. At its regularly scheduled monthly meeting, the EDA Board will then review all information provided along with the recommendation of the Finance Team prior to considering final approval of the loan. No loan shall be made prior to authorization of the EDA Board. Approval Considerations The EDA Finance Team will evaluate all submitted information, specifically looking at the strengths & weaknesses of the business, its potential for success, its overall credit worthiness and how well the project supports the economic development goals of the community. Generally, the following criteria will be used in reviewing loan applications: > Job creation / retention > Collateral coverage > Credit worthiness of applicant > Economic impact > Equity or cash commitment > Leveraging of other funds Application Requirements The following items must be provided before the Finance Team can proceed with their review: 1. Completed Economic Development Loan Application 2. Copies of the applicants’ most recent business plan along with all applicable attachments. (Please contact the EDA Director to verify which particular exhibits are required) Incomplete applications will not be reviewed; however if the applicant can provide a written explanation of the circumstances that prevent a complete application from being submitted, that may be considered. Loan Approval Upon final approval by the EDA, and the City Council when required, a promissory note, personal guarantees, and / or mortgage will be prepared for loan closing. All fees related to document preparation, along with any legal and recording fees are the responsibility of the borrower. Eligible Businesses  Businesses must be located, or willing to relocate, within the corporate boundaries of the City of Hutchinson.  Manufacturing, assembly, warehousing, research & development facilities, call centers & administrative processing centers are eligible. Ineligible Businesses  Retail & service businesses are not eligible under this program. Eligible Uses of Funds  Land & building purchase  Building construction  Building renovation / expansion  Machinery & equipment  Working capital  Inventory Ineligible Uses of Funds  Purchase of equity positions in business enterprises  Refinancing of existing debt Loan Amounts  $20,000 to $150,000 is available  The EDA reserves the right to approve loan amounts less than the amount requested. Loan Terms Available  Up to 10-year terms are available  Each loan term will be determined on a case-by- case basis.  Equipment loans will generally not exceed 5-7 years and will not go beyond the depreciated life of the asset being financed. Interest Rates  Anywhere from a rate of 2% to Prime Interest Rate + 3%  Interest rates will be fixed.  Interest rates are determined on a case-by-case basis as recommended by the EDA Finance Team & EDA Board. Job Creation & Wage Requirements  At least 1 full-time or FTE job must be created for each $25,000 lent.  Jobs created must pay minimum wages as stated in the City of Hutchinson’s Business Subsidy Policy. Bank Requirement  Because the EDA loan fund provides “gap” financing only, a bank or other financial institution must be involved in the project as the primary lender. Fees  Approved borrowers are responsible for all legal fees, document preparation costs, recording & filing fees.  No origination or application fees apply. Equity Requirements  The borrower must provide a minimum of 10% of total project costs as equity. Personal Guarantees  Personal guarantees are required of all persons having 20% or more ownership of the business. Collateral Requirements  The EDA Finance Team and EDA Board will review and take into consideration loan collateral coverage.  The EDA may take a subordinate collateral position to other lenders. Management Experience  It is required that the project have capable, skilled management through experience or expertise in the applicant’s industry, either through previous successful business ownership or through appropriate managerial support services. Repayment Ability  Applicants must demonstrate adequate historical and / or pro-forma cash flow for the proposed new debt. Late Penalties  The EDA may include late penalties for loan payments made after their due date. Loan Disbursement Policy  The EDA will place restrictions on the disbursement of loan funds. Considerations in setting Interest Rates  Size of loan  Length of loan  Use of loan  Inflationary expectations  Interest rate expectations  Perceived risk of project  Amount of owner equity  Presence / absence of other funding sources  Financial strength of ownership  General economic conditions & expectations  Type & size of building  Number of jobs created  Wages paid Considering all these factors, loan interest rates are set at the sole discretion of the Hutchinson EDA. LOAN CRITERIA APPLICANT INFORMATION Business Name & Address Phone Number ___________________________________ _____________________ ___________________________________ Fax Number ___________________________________ _____________________ ___________________________________ Email Address____________________________________________________ Business Internet Address__________________________________________ Federal Tax ID #___________________________________________________ Name & Address of Business Owner(s) 1. _________________________________ Title__________________________ ___________________________________ % of Ownership________________ ___________________________________ SSN__________________________ ___________________________________ 2. _________________________________ Title__________________________ ___________________________________ % of Ownership________________ ___________________________________ SSN__________________________ ___________________________________ 3. _________________________________ Title__________________________ ___________________________________ % of Ownership________________ ___________________________________ SSN__________________________ ___________________________________ Please attach a separate page if there are more than three owners. Name & Address of Bank ___________________________________ Contact_______________________ ___________________________________ Phone________________________ ___________________________________ Name & Address of Accountant ___________________________________ Contact_______________________ ___________________________________ Phone________________________ ___________________________________ STRUCTURE OF BUSINESS ____Sole Proprietorship ____Partnership ____S-Corporation ____C-Corporation PROJECT SUMMARY Requested Loan Amount Type of Project __________ Construction / New Business __________ Expansion of Existing Business Project Start Date________________ Completion Date______________ Briefly Describe Project:__________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ $ PROJECT COST DETAIL Use of EDA Funds Land & Site Improvements (For improvements include a cost $_______________ $______________ breakdown on the back page) Buildings (Attach plan & cost estimates) $_______________ $______________ Machinery & Equipment (Describe in detail on back page) $_______________ $______________ Working Capital $_______________ $______________ Other Project Costs (Provide detail on back page) $_______________ $______________ Total Project Cost Total EDA Funds FINANCING DETAIL Equity Bank EDA Other Other Funding Source $ $ $ $ $ % of Total % % % % % Term of Loan N/A yrs. yrs. yrs. yrs. Interest Rate % % % % % Monthly Pmt. $ $ $ $ $ Lien Position (i.e. 1st, 2nd, 3rd) Approved? $ $ COLLATERAL DETAIL Collateral Provided (Describe) Position of EDA (i.e. 1st, 2nd, 3rd) Dollar Amount $ $ $ $ $ Total Collateral: $_______________ (Must agree with EDA Financing) EXISTING BUSINESS FINANCING OBLIGATIONS Creditor Name & Contact Information Original Amount Current Balance Monthly Payment Maturity Date $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ JOB CREATION DETAIL Applicant agrees to create the following jobs as a direct result of this loan: Position Total Jobs Annual Hours / Job Salary / Wage Rate $ $ $ $ $ $ Total number of full-time & full-time equivalent (2,080 hours / year) positions:_____________ Will this project retain any jobs?__________ If so, how many?_______________ NOTES ATTACHMENTS The following items should be enclosed with this loan application: 1) Business Plan – This should be as recent as possible and include: A) History & Description of the Business Briefly describe the past operation of the business and / or events leading up to its creation. Include information on the product lines or services, industry, management and key employees as well as the operation’s growth and affiliates. B) Project Summary Briefly describe the project you are proposing. Indicate the part of the project the loan would be used for. Include information on any existing financial or legal situations of the applicant that might affect the credit worthiness of this application. C) Marketing Plan Detail the marketing strategy and describe how it will support the planned business expansion or start-up. Include information on the following:  Current customers and target markets (provide copies of any contracts, purchase orders, etc. that relate to the loan request).  Manufacturing process and materials.  Major suppliers.  Competition and comparison of products.  Pricing, distribution & promotion. D) Business Financial Statements Please include independently prepared financial statements, prepared according to Generally Accepted Accounting Principles (GAAP) – unless exempted from this requirement by the EDA Finance Team. Provide balance sheets, income statements and statements of cash flow for the past three fiscal years. E) Projections Provide pro-forma balance sheets, income statements and statements of cash flow (in both a monthly & annual basis) for the next three years. Define the assumptions used to derive the projections. F) Personal Resumes & Financial Statements Provide resumes of all principals as well as current, signed and dated personal financial statements on all principals with a financial interest in the business. Include notes indicating the basis of value on the assets (market value or acquisition cost) and explanations of other entries (notes payable, receivables, stocks, etc.). Financial statements should be dated within 90 days of filing this application. Personal financial statements will be returned to the applicant(s) once the loan application has been reviewed and acted upon by the EDA Finance Team and the full EDA Board. 2) Interim Statements Provide balance sheets, income statements and statements of cash flow that are less then 90 days old, if the business plan does not contain information this current. 3) Commitment Letters Include firm commitments from banks and other participating lenders stating the te rms and conditions of their financing. Continued 4) Other Required Attachments  A letter from the County Auditor or Treasurer verifying that there are no outstanding judgments or tax liens against the business, property or owners of the business.  Evidence of payment of last quarter’s payroll and sales taxes.  Evidence of Worker’s Compensation coverage. SUPPLEMENTAL ATTACHMENTS The following attachments may be required, if applicable: Appraisals / Proposed Lease / Purchase Options or Agreements An independent appraisal paid for by the applicant may be required for any real estate which is a subject of the proposed financing, or which is offered as a major source of collateral to secure the loan. Also, include copies of existing or proposed lease(s), purchase options or agreements, or other financial arrangements. Affiliates Provide a description of any affiliates or subsidiaries of business or principles requesting assistance, as well as balance sheets, income statements, and statements of cash flow for t he past three years for those entities. APPLICANT AGREES TO THE FOLLOWING: 1. All jobs must be created within the time frame specified in the development agreement. 2. Immediate repayment of the “per job cost” (plus interest) will be made for each job described above that is not created within the agreed upon time frame. 3. Immediate repayment of the entire outstanding balance of the loan will be made if the business relocates outside the corporate limits of the City of Hutchinson. 4. Documentation must be provided to the Hutchinson Economic Development Authority showing the number and types of jobs created by each anniversary of the effective date of the loan until such time as the loan is paid off. 5. Company financial documents will be available for inspection by the Hutchinson Economic Development Authority upon request. I certify that the firm known as: ____________________________________________________________________ agrees to abide by all the requirements of this application and that all information provided to the Hutchinson Economic Development Authority for this project is true and correct. ___________________________________________________ ____________ Authorized Signature / Title Date Tax Abatement Policy Adopted: June 28, 2017 I. Purpose The purpose of this policy is to establish the terms and conditions under which City of Hutchinson would consider the use of Tax Abatement to facilitate economic development. The fundamental purpose of providing Tax Abatement in Hutchinson is to encourage desirable development or redevelopment that is in the public interest. The City of Hutchinson is granted the power to utilize Tax Abatement by Minnesota Statutes, Sections 469.1812 to 469.1815 (the "Minnesota Tax Abatement Act"), as amended. The City reserves the right to approve or reject the use of Tax Abatement on a case by case basis, taking into consideration established policies, the relative merits of each project, and demand on city services in relation to the potential benefits from the 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 collected for a project. When TIF is awarded to a project by the City, the gain in property taxes that would ordinarily go to other taxing jurisdictions (the school district and county) is “captured” for use in the project. The other taxing jurisdictions have no choice in the matter. With Tax Abatement, each taxing jurisdiction makes its own decision regarding participation. As a result, the dollars generated for the project with Tax Abatement are generally less than the dollars generated with TIF. III. Objectives for Use of Tax Abatement The City will consider using Tax Abatement to assist private development projects to achieve one or more of the following objectives which are found to be in the public interest:  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’s economic and/or employment base.  To facilitate the development process and to achieve development on sites that otherwise would not be developed without economic development assistance.  To remove blight and/or encourage redevelopment of commercial and industrial areas in the city that result in high quality redevelopment and private investment.  To offset increased costs of redevelopment (i.e. contaminated site cleanup) over and above the costs normally incurred in development.  To significantly increase the City’s tax base. IV. Policies for Use of Tax Abatement a. Tax Abatement will only be used in those circumstances where other economic development tools (e.g. Tax Increment Financing) are unavailable and/or impractical to use. b. The City will not abate existing property taxes. Only the gain in property taxes resulting from the increased estimated market value of the property brought about by the project can be abated. c. Tax Abatement assistance will be provided to the business only on a “pay-as-you- go” basis. The City will never bond for Tax Abatement projects. d. The Hutchinson Economic Development Authority (EDA) and the City will limit the amount of Tax Abatement provided to a specific dollar amount and/or a specific length of time. e. The maximum term for any Tax Abatement will be 15 years. f. The City shall withhold an amount from the first Tax Abatement payment equal to the costs incurred by the City in the establishing the Tax Abatement. V. Business Subsidy Requirements Any Tax Abatement authorized will be in accordance with and subject to the provisions of the City of Hutchinson Business Subsidy Policy and Minnesota State Statute 116J.993 (the "Minnesota Business Subsidy Law"). Application for Tax Increment Financing Tax Increment Financing (TIF) is an economic development tool that refunds a portion of the property taxes paid on a property to the developer / owner in order to reimburse certain qualifying project costs. TIF Districts must be approved by the Hutchinson Economic Development Authority and the Hutchinson City Council following a public hearing. Approval of a TIF District is at the sole discretion of the Hutchinson City Council. The EDA and/or City Council may limit the amount of Tax Increment provided. Due to legal notification requirements, meeting schedules, waiting periods, etc. it generally takes 6-8 weeks to move through the approval process. Construction cannot begin until the TIF District is approved. Once the TIF District is approved and the project completed, TIF payments may begin. After property taxes are paid, TIF reimbursement checks typically are sent out by the City in July and December of each year for the duration of the TIF District. Reimbursements will be made only up to the amount of actual Tax Increment available. If desired, up front project financing can potentially be arranged through the applicants’ primary project lender. TIF payments can be made directly to the lender if needed. TIF dollars can only be used to reimburse qualified project costs, documentation for which will have to be provided to the City once the project is completed. Application fee $15,000 Payable to “City of Hutchinson” The TIF application fee covers the city’s financial consulting and legal costs in establishing the TIF District and is reimbursable via future TIF payments. All expenses incurred by the City will be documented and any unused amount will be returned to the applicant. SECTION 1 APPLICANT INFORMATION Applicant _________________________________________________________________ Company Name _________________________________________________________________ Address _________________________________________________________________ Contact Person _________________________________________________________________ Telephone (work) ________________________(mobile) ____________________________ Email _________________________________________________________________ SECTION 2 PROJECT INFORMATION Project Site Address _________________________________________________________________ Tax Parcel ID No. _______________________________________ Size of proposed structure or expansion ___________________ square feet Type of Construction (i.e. wood-frame, steel, tip-up concrete, etc.)_______________________________ _____________________________________________________________________________________ Project Description – please be as detailed as possible. Generally speaking, items potentially eligible for TIF reimbursement include:  TIF application fee  Demolition  Land acquisition  Parking lots  Soil corrections  Sidewalks  Contamination remediation  Items that cause sub-standard buildings to be defined as ‘blight’  Site work IMPORTANT: Contact EDA staff to discuss your project and what specific items will be eligible for TIF reimbursement, as these vary by the type of TIF District utilized. Estimated Project Budget SOURCES USES Equity $_______________ TIF Application fee $_______________ Bank $_______________ Land acquisition $_______________ Other _____________ $_______________ Site development / Clean-up $_______________ Other ____________ $_______________ Building(s) $_______________ Other ____________ $_______________ Equipment $_______________ TIF (the GAP) $_______________ Architectural & Engineering $_______________ Legal fees / soft costs $_______________ Other $_______________ TOTAL $_____________ TOTAL $_______________ SECTION 3 STATEMENT OF NEED Why is public financial assistance needed for this project? Are there unusual costs or special conditions that make the use of TIF necessary? (these could be such things as blight, soil contamination, needed soil corrections, needed infrastructure, unusual or difficult site to develop or there is a need to make the Hutchinson location economically competitive with other potential project locations.) SECTION 4 JOB CREATION Current Company Employment Full-time_____________ Part-time_____________ New jobs to be created within two Full-time_____________ Part-time_____________ years of project completion SECTION 5 FINANCIAL INSTITUTION INFORMATION Bank _________________________________________________________________ Address _________________________________________________________________ Contact Person _________________________________________________________________ Telephone (work) ________________________(mobile) ____________________________ Email _________________________________________________________________ SECTION 6 – CERTIFICATION I hereby certify that all the information provided on this application is true and correct to the best of my knowledge and belief. Furthermore, I certify that the development would not happen solely through private investment in the reasonably foreseeable future; i.e. the project would not be economically feasible and/or competitive to do at this site (or in Minnesota) but for the use of Tax Increment Financing. TIF is needed to make this project work financially. Signed _________________________________________________________________ Date ____________________________ Return application to: City of Hutchinson Miles R. Seppelt Economic Development Director (320) 234-4223 mseppelt@ci.hutchinson.mn.us • • • • •       • • • • •          • • • • • • • • • •       • • • • •                   • • • • • • • • • • 2014 Page 1 City of Shakopee, Minnesota TAX ABATEMENT POLICY 1) POLICY PURPOSE For the purposes of this document the term “City” includes the Shakopee City Council, Staff, Advisory Boards and Commission, Financial consultants, and legal counsel. The purpose of this policy is to establish the City of Shakopee’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. It is the intent of the City to minimize the risk and amount of business assistance to a project and to leverage its public dollars to maximize private sector funding. The City of Shakopee (City) is granted the power to utilize Tax Abatement by Minnesota Statutes 469.1812 through 469.1816, as amended. The fundamental purpose of Tax Abatement in Shakopee is to encourage desirable development or redevelopment that would not otherwise occur but-for the assistance provided through the tax abatement. 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 business assistance to the project. Approval or denial of one project is not intended to set precedent for approval or denial of another project. The City Council can deviate from this policy for projects that supersede the objectives identified herein. 2) OBJECTIVES OF TAX ABATEMENT As a matter of adopted policy, the City will consider using the use of Tax Abatement to assist private development projects that must, at a minimum, achieve one 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.  Projects that provide value in the forms of needed transportation and other utility infrastructure improvement that would be completed in conjunction with the project.  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 otherwise be developed but-for the use of Tax Abatement.  To remove blight and/or encourage redevelopment of commercial and industrial areas in the City that result in high quality redevelopment and private reinvestment. 2014 Page 2  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.  Projects that improve the quality of life in the City by providing a desirable good or service and address an unmet demand in the community. 3) TAX ABATEMENT PROJECT REQUIREMENTS 1. Tax Abatement assistance shall be provided to the developer upon receipt of the increment by the City otherwise referred to as the pay-as-you-go method. Requests for up front financing will be considered on a case by case basis. 2. Any developer receiving assistance shall provide a 20% cash equity investment in the project. The local government assistance shall not be used to supplant cash equity. 3. Minimum investment for new businesses is $10,000,000 and for expansions $5,000,000, unless an exception is granted by the City. 4. The length or term of any Tax Abatement assistance will be based on need for each project as determined by the City. 5. Assistance shall not be provided for reimbursement of land and/or property price that is in excess of fair market value. An appraisal by a third party, agreed upon by the City and Developer, will determine the fair market value of the land. 6. The Developer shall be able to demonstrate a market demand for a proposed project. Assistance shall not be granted to support purely speculative projects. 7. Business assistance shall not be utilized in cases where it would create an unfair and significant competitive financial advantage over other projects in the area. 8. Business assistance shall not be provided for projects that would place extraordinary demands on City services or for projects that would generate significant environmental impacts. 9. The developer must provide adequate financial guarantees to ensure completion of the project, including, but not limited to: assessment agreements, letters of credit, personal guarantees, etc. unless an exception is granted by the City. 10. 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. 11. For the purposes of analyzing the proposal, the developer shall provide any requested market, financial, environmental, or other data requested by the City or its consultants. 12. At least one full time job must be created or retained per $15,000 of abatement provided. 4) SUBSIDY AGREEMENT & REPORTING REQUIREMENTS  All developers/businesses receiving tax abatement assistance from the City of Shakopee shall be subject to the provisions and requirements set forth by State Statute 116J.993 and summarized below. Developers/businesses must also comply with the City’s Business Subsidy Policy. 2014 Page 3  The developer/business shall file a report annually for two years after the date the benefit is received or until all goals set forth in the application and performance agreement have been met, whichever is later. Underperforming projects shall result in reduced assistance on a pro rata basis or potentially repayment of some or all of the assistance.  Reports shall be completed using the format drafted by the State of Minnesota and shall be filed with the City of Shakopee no later than April 1 of each year for the previous calendar year. Businesses fulfilling job creation requirements must file a report to that effect with the City within 30 days of meeting the requirements.  The developer/business will be required to attain or exceed the jobs and wages goals set forth in the Subsidy Agreement.  In addition to attaining or exceeding the jobs and wages goals set forth in the Subsidy Agreement, the applicant shall meet the qualifications set forth in Section 3, Project Requirements, of this document.  Developers/businesses failing to comply with the above provisions will be subject to fines, repayment requirements, and be deemed ineligible by the State of Minnesota to receive any loans or grants from public entities for a period of five years.  APPLICATION PROCESS 1) Applicant submits the completed application 2) City staff reviews the application and completes a project score sheet. 3) Results of the score sheet are submitted to the appropriate governing authorities for preliminary approval of the proposal. 4) If preliminary approval is granted, the applicant submits the application fee of $12,000. The process for creating a Tax Abatement project area, including all necessary notices, resolutions and certificates prepared by City staff and/or consultants is begun. The application funds will be placed in a non-interest bearing account and any unused portion of the fee will be returned to the applicant. 5) Public hearing notices are published. 6) Public hearing(s) on the proposed project are held. 7) The City Council grants final approval or denial of the proposal. *This policy shall be reviewed on a biannual basis with the next review being set for April, 2016. 2014 Page 1 City of Shakopee, Minnesota TAX INCREMENT FINANCING (TIF) POLICY 1) POLICY PURPOSE For the purposes of this document the term “City” includes the Shakopee City Council, Staff, the Economic Development Authority, Advisory Boards and Commission, Financial consultants, and legal counsel. The purpose of this policy is to establish the City of Shakopee’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 City of Shakopee (City) is granted the power to utilize TIF by the Minnesota Tax Increment Financing Act, Minnesota Statutes 469.174 through 469.1794, as amended. The fundamental purpose of tax increment financing in the City of Shakopee is to encourage desirable development or redevelopment that would not otherwise occur but for the assistance provided through TIF. 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 business assistance to the project. Approval or denial of one project is not intended to set precedent for approval or denial of another project. The City Council (and EDA Board) can deviate from this policy for projects that supersede the objectives identified herein. 2) OBJECTIVES OF TAX INCREMENT FINANCING Tax Increment Financing (TIF) uses the increased property taxes generated by new real estate development within a tax increment district to pay for certain eligible costs associated with the development. As a matter of adopted policy, the City will consider using TIF to assist private development projects that will 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. Preference will be given to higher paying jobs that also provide benefits such as health care coverage.  Projects that provide value in the forms of needed transportation and other utility infrastructure improvement that would be completed in conjunction with the project.  To encourage additional unsubsidized private development in the area, either directly or indirectly through “spin off” development. 2014 Page 2  To facilitate the development process and to achieve development on sites which would not otherwise be developed but-for the use of TIF.  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.  Projects that improve the quality of life in the City by providing a desirable good or service and address an unmet demand in the community.  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. 3) USE OF TAX INCREMENT FINANCING 1. When possible, TIF shall be used to finance public improvements associated with the project. The priority for the use of TIF funds is: a. Public improvements, legal, administrative, and engineering costs. b. Site preparation, site improvement, land purchase, demolition, and environmental remediation. c. Capitalized interest, bonding costs. 2. The following types of TIF districts may be established: a. Economic Development Districts (maximum term 9 years) b. Redevelopment Districts (maximum term 26 years) c. Housing Districts (maximum term 26 years) d. Renewal and Renovation Districts (maximum term 16 years) e. Other types of TIF districts, along with specific criteria, may be considered on a case by case basis. 3. TIF assistance shall not be provided for reimbursement of land and/or property price that is in excess of fair market value. An appraisal by a third party, agreed upon by the City and Developer, will determine the fair market value of the land. 4. The City shall retain a fee to reimburse administrative costs up to but not to exceed ten percent (10%) of any tax increment received. 5. Any developer receiving TIF assistance shall provide a minimum of twenty percent (20%) cash equity investment in the project. The TIF assistance shall not be used to supplant cash equity. The City may consider exceptions for “pay-as-you-go” TIF projects. 6. Developer shall be able to demonstrate a market demand for a proposed project. TIF shall not be used to support purely speculative projects. 7. TIF shall not be utilized in cases where it would create an unfair and significant competitive financial advantage over other projects in the City. 8. TIF shall not be provided for projects that would place extraordinary demands on city services or for projects that would generate significant environmental impacts. 2014 Page 3 9. The developer must provide adequate financial guarantees to ensure completion of the project, including, but not limited to: assessment agreements, letters of credit, personal guarantees, etc. 10. 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. 11. For the purposes of analyzing the proposal, the developer shall provide any requested market, financial, environmental, or other data requested by the City or its consultants. 4) PROJECT QUALIFICATIONS All TIF projects considered by the City of Shakopee must meet all of the following requirements: 1) To be eligible for TIF, a project shall result in one of the following: a. For Economic Development TIF Districts, new construction of a minimum of 50,000 square foot building. b. For Economic Development TIF Districts, the minimum creation of one new or retained full time job per $15,000 of TIF provided. c. For Redevelopment TIF Districts, a minimum value increase of 2 times the current year assessed value, whichever is greater. 2) The project shall meet at least one of the objectives set forth in Section 2 and satisfy all the provisions set forth in Section 3 of this document. 3) The developer shall demonstrate that the project is not financially feasible but-for the use of TIF. 4) The project must be consistent with the City’s Comprehensive Plan, Land Use Plan, and Zoning Ordinances. 5) The project shall serve at least two of the following public purposes: a. Creation of jobs with livable wages and benefits, per City’s Business Subsidy Policy. b. Increase of tax base. c. Enhancement or diversification of the City’s economic base. d. Industrial development that will spur additional private investment in the area. e. The project contributes to the fulfillment of the City’s development or redevelopment objectives. f. Removal of blight or the rehabilitation of a high profile or priority downtown site. 5) SUBSIDY AGREEMENT & REPORTING REQUIREMENTS  All developers/businesses receiving tax increment financing assistance from the City of Shakopee shall be subject to the provisions and requirements set forth by State Statute 116J.993 and summarized below. Developers/businesses must also comply with the City’s Business Subsidy Policy.  All developers/businesses receiving TIF assistance shall enter into a Subsidy Agreement with the City of Shakopee that identifies: the reason for the subsidy, the public purpose served by the subsidy, and the goals for the subsidy, as well as other criteria set forth by State Statute 116J.993. 2014 Page 4  The developer/business shall file a report annually for two years after the date the benefit is received or until all goals set forth in the application and performance agreement have been met, whichever is later. Reports shall be completed using the format drafted by the State of Minnesota and shall be filed with the City of Shakopee no later than March 1 of each year for the previous calendar year. Businesses fulfilling job creation requirements must file a report to that effect with the City within 30 days of meeting the requirements.  The developer/business owner shall maintain and operate its facility at the site where TIF assistance is used for a period of five years after the benefit is received.  The developer/business will be required to attain or exceed the jobs and wages goals set forth in the Subsidy Agreement.  Developer/Businesses failing to comply with the above provisions will be subject to fines, repayment requirements, and be deemed ineligible by the State of Minnesota to receive any loans or grants from public entities for a period of five years. 6) APPLICATION PROCESS 1) Applicant submits the completed application 2) City staff reviews the application and completes a project score sheet. 3) Results of the score sheet are submitted to the appropriate governing authorities for preliminary approval of the proposal. 4) If preliminary approval is granted, the applicant submits the application fee of $12,000 and the Tax Increment Financing Plan, along with all necessary notices, resolutions and certificates are prepared by City staff and/or consultants. The application funds will be placed in a non-interest bearing account and any unused portion of the fee will be returned to the applicant. 5) Notices are published and sent to the county and school board. 6) Public hearing(s) on the proposed project are held. 7) The City Council grants final approval or denial of the proposal. *This policy shall be reviewed on a biannual basis with the next review being set for April, 2016. FAIRMEconomic Development AuthorityRevolving Loan Fund GuidelinesThe Fairmont Economic Development Authority's Revolving Loan Fund is available within the City Limitsof Fairmont, Minnesota. The program works in partnership with local lending institutions to help 'fill afinancing gap' between available and necessary financial tools.Investment AmountUp to $75,000Eligibility Criteria• Financial participation by a lender isrequired• Demonstrated management skills,industry experience and financialaptitude• Sound business plan with financialprojections• Adequate cash flow to service debt• Ability to secure loan with collateral• Creation or retention of living-wagejobs• Contribution to the region's economiccompetitivenessUse of Funds• Building acquisition• Expansion• Machinery and Equipment• Inventory• Real Property AcquisitionLoan Terms• Loans will be considered up to $75,000;cannot exceed 33% of the total project• Interest rate is determined case by case• Loans can be amortized for 20 years,balloon in 10; or amortized over 10years, balloon in 7• It is desirable for loans to be fullysecured; may be subordinate to theprimary lender• Personal guarantees equal to theamount of the loan are required• Loan recipients will be charged a 1.5%origination feeRequired Application Attachments• Receipt of Completed Loan Application• Current Business Plan - Startups only• Two years of business financialstatements for existing businesses• Two years of business income taxreturns for existing businesses• Cash flow projections• Personal Financial Statements of allstakeholders of more than 20%• Two years personal income tax returnsfor all stakeholders of more than 20%Once a completed loan application is received, a meeting will be held with the applicant, City staff and theprimary lender. The application will then be reviewed by a Loan Committee and their recommendationwill be made at a subsequent Fairmont Economic Development Authority meeting. It is typical to take 4-6weeks from the time we receive a complete application to the time a decision is made. Your applicationmay be approved as is, approved with changes, or denied. Loan processing takes an additional 1-2 weeksafter FEDA makes a decision. FAiRi^asnrEconomic Development AuthorityRevolving Loan Fund Application (Revised 6-16)Name and Address of BusinessPhone NumberFax NumberEmail AddressBusiness Organization: CorporationPartnershipBusiness Owners Names and Addresses1.2.Type of BusinessNew BusinessExistingDescribe the company's business:EIN NumberSole ProprietorshipOtherTitlePercent of OwnershipSocial Security NumberTitlePercent of OwnershipSocial Security NumberNumber of Years Existing FAIRMEconomic Development AuthorityRevolving Loan Fund Application (Revised 6-16)Describe the Proposed Project:Source of Funds:Sources of Funds:Bank (Conventional financing)Equity (funds the business will be applying)FEDA (funds requested)Fixed Assets:Acquisition of LandAcquisition of BuildingBuilding RehabilitationMachinery and EquipmentFixed Asset Total:Working CapitalInventoryOperating CapitalWorking Capital Total:TOTAL PROJECT COSTSAmount Needed$$_$_$$_$,$_$Amount Committed FAIRMEconomic Development AuthorityRevolving Loan Fund Application (Revised 6-16)Describe the Details of the Loan you are Requesting:Loan Amount $TermSpecial Payment Terms or Conditions RequestedConventional Business Lender Name and Contact Person:Job Impact:Full Time PositionsPart Time PositionsAverage Full Time WagesAverage Part Time WagesCurrent$ /hr$ /hrAdditional Createdwithin 2 years$ /hr$ /hrApplication Attachments Required (if applicable as determined by the EDA)3 FAIRMEconomic Development AuthorityRevolving Loan Fund Application (Revised 6-16)All Businesses:> Articles of Incorporation (if applicable)> Certificate of Good Standing (Secretary of State)> Personal Financials on individuals owning 20% or more of the company> Written commitment letters from all other sources of funding> Purchase Agreement (if applicable)> Building Cost Estimates/Plans and Specifications> AppraisalNew Business Start-Ups Only:> Business Plan> Pro-forma balance sheet and projected operating statement for two years> Monthly forecasted cash flow analysis for 3 yearsExisting Businesses:> The last two fiscal year end and current financial statements> Balance Sheet and Profit and Loss Statement for the previous 3 years> Current balance sheet and current operating statement, no older than 90 dayso Aging accounts payable/receivableo List current obligations FAIRM®NTEconomic Development AuthorityRevolving Loan Fund Application (Revised 6-16)Information Release AuthorizationI authorize the Fairmont Economic Development Authority to obtain background information needed inconnection with my loan application such as:> Credit report.> Employment histoiy, dates of employment, title, income, hours worked, stability, etc.> Banking and savings accounts, deposits and balance verifications.> All loan ratings, opening date, high credit, payment amount, loan balances, payment records, andpay off information.> Any other information requested in connection with a determination of credit worthiness.This information is for the use of this lender in connection with my/our loan application and the conductof "Post Closing" Quality Control Audits as required by various government and quasi-govemmentagencies.A photocopy of this authorization, bearing the photocopied signatires of the undersigned, may be deemedto be the equivalent of the original and may be treated and used as a duplicate original.Applicant Name and AddressSocial Security Number:Date of Birth:Co-Applicant Name and AddressSocial Security Number:Date of Birth:Applicant SignatureCo-Applicant Signature FAIRMEconomic Development AuthorityRevolving Loan Fund Application (Revised 6-16)Tennessen Warning: Data Privacy StatementThe information provided in the application materials or to be obtained separately as a part of theapplication process will be used by the lender to determine whether you qualify as a prospective borrowerfor the Fairmont Economic Development Authority (EDA) Revolving Loan Fund. The informationprovided in the application and information authorized above for assistance will become a matter ofpublic record with the exception of those items protected under Minnesota Statutes Chapter 13Government Data Practices.The private data whom this information may be shared include:1. The EDA Loan Review Committee and EDA Board; and2. Staff who are involved in program administration; and3. Auditors who perform required audits of the program; and4. Authorized personnel from other County, State, Federal or Regional Agencies providing fundingassistance to you; and5. Those other persons who you authorize to see the information; and6. Law enforcement personnel in the case of suspected fraud.Unless otherwise authorized by MN Statutes or Federal Law, other government agencies using the privatedata must also handle the data as private. You may wish to exercise your rights as contained in theMinnesota Government Data Practices Act. Those rights include:1. The right to see and obtain copies of the data maintained on you; and2. Be told the contents and meaning of the data; and3. Challenge the accuracy and completeness of the data.Applicant Signature Applicant SignatureApplicant Full Name Applicant Full Name Multifamily Housing Tax Abatement Program Intent: In an effort to spur development of more housing options for our workforce, the City of Fairmont, Martin County and School District all agreed to abate property taxes for new construction of multifamily residential housing in Fairmont. Approved applicants for new housing between January 1, 2020 and December 31, 2024 will have the taxes abated over ten years. This effort is being made to provide incentives for construction of duplexes and other multifamily complexes within the City of Fairmont. There is a shortage of housing options available for our current residents and those who are interested in relocating to Fairmont. Eligibility Eligibility includes any person or business who builds duplexes or multifamily complexes and who files application materials and seeks formal approval from appropriate local jurisdiction may be eligible to receive 100% tax abatement of the City, County and School District’s share of increased real estate taxes as a result of building newly constructed housing, or a period of ten (10) years provided all of the following criteria are met: 1. The property is located within City of Fairmont and is zoned properly for the proposed development project. 2. The project is built to any and all applicable zoning and building codes adopted at the time the building/zoning permit is obtained. 3. Property taxes are current and paid on time and in full. Failure to keep property taxes current shall result in cancelation of the tax increment payments. 4. Program approvals must be obtained prior to the start of construction of the duplexes or multifamily complex. The real estate taxes to be abated shall be for up to the full amount of the real estate collected due to the added tax base of the newly constructed multifamily housing annually. The value of the property is not eligible for the abatement, so it will not be abated as part of this program. Any eligible abatement years are calculated on the tax increase due to the construction of the housing facility. Partially constructed housing may result in an abatement in the first abatement year that may be significantly less than the following years based on the taxable value of the property. This will be considered one of the ten years of the eligible abatement. If the owner refuses access to County Assessor staff to perform an appraisal for tax assessment purposes, the tax abatement shall expire for the remaining term of the abatement period. The abatement period will begin in the tax year the property realized a value increase due to construction of the housing project. This abatement will transfer with the sale of the property one time during the ten-year abatement period. This abatement does not apply to, or include, existing and/or new special assessments to property. The City shall provide the awarded abatement payment following the payment of due real estate taxes annually. One single payment shall be made to the owner of record at the time of the payment, by December 30 for that calendar year. Application: Statute requires that City approve each abatement application. The granting of tax abatement will be contingent upon Council approval of the abatement. A complete application for abatement shall consist of the following: • A letter requesting abatement for eligible projected addressed to the Economic Development Coordinator, County Coordinator, and School Superintendent. • Legal description of the subject property, including address and property identification number. • A set of construction plans for the proposed project, including site plan • Submission of a copy of the building/zoning permit once received • Applicant shall sign a statement to the effect that no construction has started. For the purposes of this provision, construction shall be determined by the issuance of a building permit before approval of the City Council. Upon submittal of a completed application, the City Council shall schedule a public hearing on the granting of the tax abatement. The date shall not exceed 60 days from the date of submitted application. After consideration, the Council will adopt a resolution outlining the details of the abatement program if approved by the taxing authority. Each taxing entity retains its individual authority on property tax abatements. The City is solely responsible for its share of property tax abatements and this policy does not allow the City to abate County, or School District property taxes. Property Owner(s)/Applicant(s): _____________________________________________________________ Current Address: __________________________________________________________________________ Telephone: _____________________ Email: ____________________________________________________ Has applicant ever defaulted on property taxes? ☐ Yes ☐ No If Yes, provide details on separate page(s). Are property taxes current? ☐ Yes ☐ No Proposed Project: ☐ New Construction ☐ Replacement of housing unit Project Address: ___________________________________________________________________________ Project Description: Parcel Number: ______________________ Estimated Project Valuation: $ ___________________________ I/We as applicant(s) for the Housing Tax Abatement certify that no construction has begun or will begin prior to the taxing authority’s decision on my/our application. For the purposes of this provision, construction shall include the installation of footings, slab, foundation, posts, walls or other portions of a building. Site preparation, land clearing or the installation of utilities shall not constitute construction. Attach building plans, site map, and parcel information. (Include letter of consent from property owner if subject to purchase agreement.) Signature of Applicant: _________________________________________ Date: ____________________ Signature of Applicant: _________________________________________ Date: ____________________ FOR OFFICE USE ONLY: ELIGIBLE/APPLICABLE APPROVALS ______________________________________ Date: ____________________ ______________________________________ Date: ____________________ Martin County City of Fairmont School District ______________________________________ Date: ____________________ Disclaimer: Each taxing entity makes its own decision on approval or denial of application for tax abatement. Applications must comply with all requirements of the program as outlined in program guidelines and build within allotted time frame or tax abatement offer will be automatically terminated. Building cannot start until such time as all taxing entities have approved and written authorization is provided. Please submit completed applications to: For questions or additional information call: Housing Tax Abatement Application (Application Period through 12/31/2024) City of Fairmont Economic Development 100 Downtown Plaza Fairmont, MN 56031 Email: lpreuss@fairmont.org 507-238-3925 LAKE CITY REVOLVING LOAN FUND PROGRAM GUIDELINES INTRODUCTION Thank you for your interest in the Lake City Revolving Loan Fund (RLF). The RLF is a public source of money from which loans are made for business development projects. The RLF is a low- interest, deferred payment loan program that can be used to leverage additional private sources of funding. When interest and principal payments are made to the RLF from outstanding loans, the money “revolves” and can be made available to other borrowers. The Lake City Revolving Loan Fund may not be used as the primary source of financing for a project. The RLF is typically used to fill a “financing gap” in a business development project if a business owner lacks the funds to meet the equity requirements of traditional bank financing. By combining public and private financing, the risk for the primary lender is reduced which yields an overall lower cost of money for the borrower. ELIGIBILITY REQUIREMENTS Businesses must be located, or willing to relocate within the corporate boundaries of the City of Lake City to be considered for a loan. ELIGIBLE USES OF RLF INELIGIBLE USES OF RLF • Land & Building Acquisition • Debt Refinancing • Land Improvements • Working Capital • New Building Construction • Equipment Relocation • Building Renovation • Machinery, Furniture, Fixtures, Equipment • Routine maintenance that does not extend the life of the structure TERMS AND CONDITIONS 1. The term is determined by the RLF Committee and fixed at 5-years or less. 2. Minimum loan fixed interest rate shall equal 5%. 3. Minimum loan amount is $5,000. 4. Maximum loan amount shall not exceed $25,000. 5. RLF Loan shall not exceed 50% of the total project costs. 6. Applicant will pay for legal, recording and other fees directly attributable to the processing and closing of the loan. 7. Immediate repayment of the entire outstanding balance of the loan will be made if the business relocates outside the corporate limits of the City of Lake City. 8. All construction and renovation must comply with City Codes and policies. 9. Security requirements will be determined by the RLF Committee and will be consistent with financial industry standards. 10. Life insurance, key man policy, and business interruption policies may be required. 11. Applicant must be willing to sign a personal guaranty. 12. A project may commence after the City Council of Lake City has approved the loan. 13. No building construction may commence until the required City permits have been secured. 14. A loan recipient may apply for an extension of the RLF Loan at a higher interest rate. Extensions must include repayment of principal and interest and be reviewed by the RLF Committee and approved by the City Council. PROCEDURE Applicant should allow approximately 30 days once the completed application and all required documentation is submitted. The EDA Executive Director is available to assist with all stages of the application process. The RLF Committee will review the loan request utilizing financial industry standards including but not limited to: 1. Applicant is credit worthy 2. Applicant can show lender commitments 3. Applicant is willing to sign a personal guaranty 4. Applicant can pledge adequate collateral 5. Applicant can inject adequate equity REVOLVING LOAN COMMITTEE MEMBERSHIP 1. City Council Members (May include Mayor) 2 2. Economic Development Authority Members 2 3. City of Lake City Finance Director (Advisory) 1 4. EDA Executive Director (Advisory) 1 5. Community Representative 1 Total RLF Committee Members 7 (5 Voting Members + 2 Advisory) LOAN MONITORING The City Finance Director/Treasurer will prepare a monthly management report which describes loans as either current, past due or in default and any actions taken to date. This information will be made available to the EDA Executive Director who will report this information in writing to the City Council on a quarterly basis. Company financial documents will be available for inspection upon request of the Lake City Revolving Loan Committee during the active term of the loan. Applicant meets with EDA Director to discuss project Applicant submits completed application & ALL required attachments RLF Committee reviews application & makes recommendation to City Council EDA Executive Director presents recommendation at the next regularly scheduled City Council meeting If approved EDA Director prepares the Development Agreement Legal review Upon completion, The loan is closed & Documents recorded Loan recipient commences with monthly payments according to repayment schedule DELINQUENCY AND DEFAULT Past Due Balances: A loan payment is considered past due fifteen (15) days after the payment due date. The loan will be considered in default thirty (30) days after failure to make a scheduled payment. Process: After fifteen (15) days - The borrower will receive written notification that their loan payment is past due, that a late payment fee has been assessed and the amount due to return the loan to a current status. After thirty (30) days – The borrower will receive 2nd notice of default including: late fees that have been assessed, the amount due to return the loan to a current status and notification that collection procedures will commence in thirty (30) days if no action is taken to resolve this matter. After sixty (60) days – The borrower will receive a final notice of default stating that all other attempts to collect on this debt have been unsuccessful, therefore, if the borrower does not contact the City within ten (10) business days to resolve this matter collections procedures will commence. Remedies in the event of default: If a borrower knows that they will be late making a scheduled loan payment, or have fallen behind on regular monthly payments they are encouraged to contact the City Finance Director/Treasurer at 651-345-5383 to schedule a payment plan. Fees and Penalties: • Late payment fee – $10.00 for payments received more than fifteen (15) days past due. • Returned check fee - $30.00 will be charged for each returned check. Collections: Collections are the last source of repayment and will begin seventy (70) days after the payment due date if no actions are taken by the borrower to resolve the default. The City will make every reasonable effort to resolve this issue with the borrower prior to commencing with collections actions. If, after seventy (70) days, the City is unable to negotiate an alternative with the borrower, collections will be pursued in accordance with approved policy guidelines and applicable laws. All costs associated with collection proceedings will be the responsibility of the borrower. • The Economic Development Director will work with the proper legal authority to recover collateral from the borrower that was used to secure the loan and arrange for its sale. • Judgments are filed against the borrower for any remaining balance on the loan owed after the sale of collateral. • The borrower will be ineligible for future revolving loans with the City. LAKE CITY REVOLVING LOAN FUND PROGRAM APPLICATION PLEASE ALLOW UP TO 30 DAYS TO COMPLETE THIS PROCESS 1. General information: Business Name: ________________________________________________________________ Address: ______________________________________________________________________ Telephone #: _________________________ Fax #: ________________________ Contact Person: ________________________________ Email: __________________________ Business Form: _____ Corporation _____ Partnership _____ Sole Proprietorship State of Incorporation or Organization: ___________________ Date: ___________________ SIC Code: _____________ Federal ID: _____________ State ID: _____________ 2. Ownership Information (a separate sheet of paper may be attached if more than 2) Name: ______________________________ Name: _________________________________ Percentage Owned: __________% Percentage Owned: __________% Home Address: _______________________ Home Address: ___________________________ City: ___________ State: ____ Zip: _______ City: _____________ State: ____ Zip: ________ Phone: ______________________________ Phone: _________________________________ Social Security #: ______________________ Social Security #: _________________________ 3. Brief description of the business: ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 4. Briefly describe the proposed project: ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ LAKE CITY REVOLVING LOAN FUND PROGRAM 5. Estimated Project Costs: a. Land Acquisition $ ____________________ b. Building Acquisition ____________________ c. Building Construction/Renovation ____________________ d. Equipment/Machinery ____________________ e. Architectural/Engineering Fees ____________________ f. Site Improvement Costs ____________________ g. Inventory ____________________ h. Working Capital ____________________ i. Other (please specify) ____________________ j. Other (please specify) ____________________ Total $ ____________________ 6. Sources of Financing: *Written letters of commitment are required for all sources of financing other than the Revolving Loan a. Equity $ ____________________ b. Bank Loan ____________________ c. RLF ____________________ d. Other (please specify) ____________________ Total $ ____________________ 7. Professional services of applicant: Architectural Firm/Contact: _______________________________________________________ Address: ______________________________________________________________________ Telephone #: __________________________ Fax #: ______________________________ Engineering Firm/Contact: ________________________________________________________ Address: ______________________________________________________________________ Telephone #: __________________________ Fax #: ______________________________ General Contractor/Contact: ______________________________________________________ Address: ______________________________________________________________________ Telephone #: __________________________ Fax #: ______________________________ Attorney Firm/Contact: __________________________________________________________ Address: ______________________________________________________________________ Telephone #: ___________________________ Fax #: ______________________________ Accounting Firm/Contact: ________________________________________________________ Address: ______________________________________________________________________ Telephone #: ___________________________ Fax #: ______________________________ LAKE CITY REVOLVING LOAN FUND PROGRAM 8. Proposed project schedule: Start Date: _____________________ Completion Date: _____________________ 9. Current and projected employment: Type Existing Jobs After Completion Wage Professional/Managerial _____ FT _____ PT _____ FT _____ PT $ ________/______ Technical/Skilled _____ FT _____ PT _____ FT _____ PT $ ________/______ Unskilled/Semi-skilled _____ FT _____ PT _____ FT _____ PT $ ________/______ 10. Reason for seeking RLF financing assistance for this project: ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ 11. Certification I hereby certify that all the above responses and the attachments hereto are true and correct to the best of my knowledge. I hereby authorize the City of Lake City, or its designees to contact any or all individuals or corporations named herein for confirmation of the information provided in the application. I understand that any false statement contained in the application or the attachments hereto may result in the rejection of the application. I further state that I am aware that the Lake City Revolving Loan Fund Committee is subject to the open meeting laws of the State of Minnesota and that the application information and all required attachments will become public data once a funding decision has been reached. I am aware that until such time as a funding decision has been reached that the application materials will be considered nonpublic data other than company name, address and other identifying information. Printed Name: ____________________________________ Title: ________________________ Signature: ________________________________________ Date: _______________________ LAKE CITY REVOLVING LOAN FUND PROGRAM Required Attachments Checklist _____ Business plan and/or market feasibility information which addresses the business' products or services and identifies existing and potential major customers and competitors. _____ Three years historical financial statements (balance sheet, profit and loss statement and a reconciliation of net worth) or Prior three years of tax statements for businesses with no formal financial statements. _____ Personal Financial Statement (attached) and résumé for each principal in the business. _____ Projected earnings report. _____ Documentation confirming applicants interest in the subject property (copy of lease, title deed, contract for deed, etc). _____ A list of major equipment or classes of equipment to be acquired with reliable vendor cost estimates for new machinery and equipment purchases, and an appraisal for used machinery and equipment acquisitions. _____ Written letters of commitment for all sources of leveraging other than the Revolving Loan. Loans from financial institutions used as leverage shall indicate approval as well as the loan amount, the specified term and rate, collateral, and conditions attendant to the loan. Equity contributions shall be documented through signed letters from the benefiting business. _____ Documentation of the legal status of the borrower and authorization to enter into the loan, including: ______ Secretary of State’s Certificate of Good Standing ______ Letter from the County Auditor/Treasurer verifying there are no past due real estate taxes or special assessments owed by the applicant _____ Signed Information Release Authorization form(s) The Borrower may be asked to provide additional information as appropriate or necessary to facilitate the processing of the loan. Additional information including but not limited to: articles of incorporation and bylaws, a resolution or agreement to borrow funds, an environmental analysis for real estate loans, if justified may be requested at the discretion of the RLF Committee or the Common Council of the City of Lake City. LAKE CITY REVOLVING LOAN FUND PROGRAM Information Release Authorization You are hereby authorized to release to the Lake City Revolving Loan Fund Committee, its successors and assigns and information you may possess regarding the following: • Employment history, dates of employment, title, income, stability, etc. • Banking and savings accounts, deposits and balance verifications. • All loan ratings, opening date, high credit, payment amount, loan balances, payment records and payoff information. • Any other information requested in connection with a determination of credit worthiness. This information is for the use of the Lake City Revolving Loan Fund Committee and its investors, successors and assigns in connection with my/our application and the conduct of “Post Closing” Quality Control Audits as required by various government and quasi-government agencies. A photocopy of this authorization for the business and individuals, bearing the photocopied signatures of the undersigned, may be deemed to be the equivalent of the original and may be treated and used as a duplicate original. ____________________________________ ____________________________________ Business Name Federal Tax Identification Number ____________________________________ ____________________________________ Address State Tax Identification Number ____________________________________ ____________________________________ City, State, Zip Telephone Number ____________________________________ ____________________________________ Full Name and Title (please print) Social Security Number and Date of Birth ____________________________________ ____________________________________ Signature Date ____________________________________ ____________________________________ Full Name and Title (please print) Social Security Number and Date of Birth ____________________________________ ____________________________________ Signature Date LAKE CITY REVOLVING LOAN FUND PROGRAM Business Plan Outline 1. Description of Business 5. Facilities Name and Location Location Legal Structure Size and zoning Principal Owners Age and condition Nature of the business Expansion opportunities History of the business Franchise: Franchise agreement 6. Management and Personnel Management expertise 2. Product or Service Key personnel (position, qualifications) Describe product or type of service Professional services Describe materials & supply sources Present & future requirements Methods of production Personnel – (skill level, hours, wage, etc.) Quality & cost of production/service 7. Benefits to the Community 3. Market Information Jobs created/retained Market area and trends Building rehabilitation Customers & potential new customers Meeting community needs Competition, names, locations & size Increase community tax base Advantage of your product/service 8. Summary of Future Plans 4. Advertising Short range and long range Methods of advertising and promotion Expansion Sales methods Relocation Pricing policy 3 years of projections (year 1 by month) Customer service ** The business plan is an important component to your loan package. It will show how well your proposal has been thought out. One paragraph for each number item is sufficient. An overall length of 2-5 pages is adequate. LAKE CITY REVOLVING LOAN FUND PROGRAM Personal Financial Statement All owners holding 20% or more of the share equity in the Company are required to submit the following: Name: _______________________ Date: _______________ Assets Amount in Dollars Liabilities Amount in Dollars Cash - checking accounts $ - Current Debt (Credit cards, Accounts) $ - Cash - savings accounts - Notes payable (describe below) - Certificates of deposit - Taxes payable - Securities - stocks / bonds / mutual funds - Real estate mortgages (describe) - Notes & contracts receivable - Other liabilities (specify) - Life insurance (cash surrender value) - Other liabilities (specify) - Personal property (autos, jewelry, etc.) - Total Liabilities $ - Retirement Funds (eg. IRAs, 401k) - - Real estate (market value) - - Other assets (specify) - - Other assets (specify) - - Total Assets $ - Net Worth $ - Dependents (Name, Age, Relationship) Bank 1. ______________________________________________ Address_________________________________________ 2. ______________________________________________ Checking Acct. # _________________________________ 3. ______________________________________________ Savings Acct. # __________________________________ Real Estate Address: _________________________________ Estimated Value Remaining Balance Monthly Payments $ ________________________ $ ________________ $ ________________ Mortgage payable to. . . . . . . . . . . . . . . . . . . . . . . . . __________________________________________ Address: _________________________________ Monthly Payments $ ________________________ $ ________________ $ ________________ Mortgage payable to. . . . . . . . . . . . . . . . . . . . . . . . . __________________________________________ Notes Payable To whom payable Collateral Monthly payment Unpaid balance 1. ______________________ __________________ $ __________________ $ ____________________ 2. ______________________ __________________ $ __________________ $ ____________________ 3. ______________________ __________________ $ __________________ $ ____________________ 4. ______________________ __________________ $ __________________ $ ____________________ 5. ______________________ __________________ $ __________________ $ ____________________ Signature: _________________________________ Date: _________________________ 1 10/14/2009 CITY OF LAKE CITY & LAKE CITY ECONOMIC DEVELOPMENT AUTHORITY TAX ABATEMENT FINANCING POLICY Cities are authorized pursuant to Minnesota Statutes 469.1812 through 469.1815 to provide tax abatements for economic development purposes. In determining whether or not the City of Lake City/EDA should utilize tax abatements for economic development purposes, the following factors will be considered: • The benefits to the City must be at least equal to the costs of the abatement. • Whether the public interest will be served in one of the following respects: ♦ Increase or preserve the tax base ♦ Provide employment opportunities in the City ♦ Provide or help acquire or construct public facilities ♦ Help or develop or renew blighted areas ♦ Help provide access to services for residents of the City • Total tax abatements in the City cannot exceed ten percent (10%) of the current net levy or $200,000 whichever is greater. • The extent to which the proposal adds to the City’s net commercial, industrial or general tax base • Whether or not the proposal provides services not already provided in the City or which are needed. • The extent to which the proposal results in an increase in new employment opportunities that provide good wages and benefits for employees, or the retention of good jobs. Proposals that provide quality employment, which is paid above the minimum wage, and provides prospects for advancement, are preferred. • Establishments which will be engaged in the retail sales of merchandise or services to the public will not be considered for economic development tax abatements unless they provide substantial opportunities for quality employment and economic development, substantial tax base or are part of the redevelopment of a substantially underutilized property. • The City/EDA does not support tax abatements for proposals that are not economically feasible. Any developer requesting business assistance should be able to demonstrate past successful general development capability as well as specific capability in the type and size of development proposed. 2 10/14/2009 • The fundamental purpose of Tax Abatement Financing is to encourage desirable projects that would not otherwise occur “but for” the assistance provided through Tax Abatement Financing. • The project should maximize the amount of private development investment in a site. • The extent to which the project represents “new” dollars into the City. The City/EDA will not consider a tax abatement application that abates existing tax dollars unless the proposed project leads to significant job creation or retention. In either case a minimum of 25 jobs must be created or retained. • Each project will be reviewed on a case-by-case basis. • In the case of job retention, to demonstrate the need for public subsidy in order to retain jobs, the applicant will submit a pro forma showing cash flows and resulting profit margins with and without the subsidy being requested. The application must indicate: ♦ That target profit margins are not being met without the subsidy and will result in the elimination or relocation of jobs within the community. ♦ The jobs being retained as a result of the subsidy and will submit reports each year verifying the continued existence of said jobs within the community. ♦ Failure to retain those jobs for a period of time (agreed upon and specified within the Development Agreement) will require the repayment of a prorated share of any subsidy provided plus interest. • The extent to which the project requires improvements in all aspects of City infrastructure. • Whether or not the project will generate significant environmental problems or alleviate such problems. • Tax abatements cannot be considered in conjunction with an existing Tax Increment Financing District. The term of anabatement on a parcel of property may be granted for up to 15 years for each taxing entity (8 year maximum if no initial duration is specified) or 20 years if one taxing jurisdiction does not participate. If an abatement has been granted to a parcel of property and the period of the abatement has expired, the political subdivision that granted the abatement may not grant another abatement for eight years after the expiration of the first abatement. • The City may grant an abatement for a period of up to 20 years, if the abatement is for a qualified business. Qualified businesses have at least 50 percent of the payroll of the operations of the business that qualify for the abatement are engaged in one of the following lines of business or any combination of them: ♦ Manufacturing ♦ Agricultural processing ♦ Mining ♦ Research and development ♦ Warehousing ♦ Qualified high technology 3 10/14/2009 Alternatively, a qualified business also includes a taxpayer whose real and personal property is subject to valuation under MN Rules, chapter 8100. • The City/EDA may limit the amount of the abatement to the following: ♦ A specific dollar amount per year or in total, ♦ The increase in property taxes resulting from the project, ♦ The increases in property taxes resulting from increases in market value or tax capacity of the property, ♦ The tax attributable to the value of land may not be abated, ♦ Any other criterion the City/EDA determines is appropriate. • Each project will be reviewed on a case-by-case basis. Tax abatement assistance can be provided in one of two different forms. The preferred form is “pay as you go” wherein the City compensates the applicant for a predetermined amount for a predetermined number of years. Annual payments are reissued to the applicant with tax dollars after payment of property taxes by the applicant. The City/EDA will give special consideration to applicants applying for “pay as you go” assistance. Another form of assistance is “up front” payment to the applicant wherein the City must issue revenue or general obligation bonds, or use cash reserves. The increment generated from the applicant’s project is then used for repayment of the bonds. The City/EDA because of the additional risk incurred in case of default does not look upon this form of assistance favorably, and will only consider this form of assistance if the applicant is able to demonstrate, to the City’s sole satisfaction, the need for “up front” payment. The City/EDA shall require a deposit in the amount of $5,000 from the applicant for the City/EDA's consultants to investigate the feasibility of providing tax abatement financing assistance to the applicant's project whether it is by the creation of a new tax increment financing district or the modification of a current district. If the costs reach the deposited amount, the City/EDA shall notify the applicant in writing and the applicant will be required to deposit additional funds prior to any additional work on the project being completed. The additional deposit required would include an aggregate total from the consultants to finish their work and other costs that are expected to be incurred. If the project is approved and the applicant proceeds with the project, the City/EDA shall reimburse any remaining applicant's deposit or bill the applicant for any additional fees incurred above the initial deposit. If the applicant does not proceed with the project, the City/EDA shall reimburse the applicant for the unused portion of the deposit. The procedure to receive tax abatement is: • Applicant meets with the EDA Director, discusses the project and receives an application. • Applicant submits the completed application, deposit, plans and specifications, financial information including past information and pro forma future projections for the project and company information to the EDA Director. 4 10/14/2009 • EDA Director meets with the City Administrator to discuss the project including conformity with the City policies and plans. • EDA Director discusses project with the City/EDA's tax abatement consultants and receives a not to exceed quote for completing the work should the EDA Board accept the project as feasible for tax abatement financing. • Project is placed on the EDA Agenda for the next regularly scheduled meeting. • The EDA Director and applicant present the project to the EDA Board. • Within 10 days, the EDA will determine to accept or reject the application and deposit. If rejected, nothing further happens and deposit is returned. • If the EDA Board accepts the application and deposit, staff will be directed to work with the consultants and City Staff to put together a tax abatement financing plan and enter into negotiations with the applicant to secure agreeable terms for the development agreement. The development agreement will not be drafted until after City Council approval. • Upon completion of a draft of the tax abatement financing plan, district plan and development agreement terms that are agreeable to the applicant, the EDA Board will hold a special meeting to discuss these drafts. • If approved, the EDA Board will make a recommendation to the City Council to proceed with allowing this project to move forward. • The EDA Director, applicant and consultants will make a presentation to the City Council and request public hearings and other statutory items be scheduled and other board reviewal scheduled, if appropriate. • The public hearings will be conducted and after hearing the public input and receiving other board recommendations, the City Council may: 1) accept the plans and recommendations and direct staff to complete these plans, 2) reject the plans and project or 3) modify the plans accordingly and re-enter negotiations. If/once approved and both parties sign the documents, construction may commence. Criteria for Economic Development Abatements In considering whether or not the City/EDA should approve Tax Abatements for a specific project, the following will be considered, in addition to the statutory and City/EDA restrictions listed above. These points will be specifically defined in an Economic Development Agreement between the City of Lake City and the Developer: • Equal consideration will be given to both existing business expansion and new businesses locating in the county. • The extent that the use of Tax Abatements would create an unfair and significant competitive financial advantage over existing projects in the area. • The extent that the developer is able to demonstrate a market demand for a proposed project. • Tax Abatements will not be used in circumstances where land and/or property price is in excess of fair market value. • The extent to which the project increases costs for road construction, traffic control, law enforcement, human services and other budgetary items. • The extent to which other public assistance is provided to the project. 5 10/14/2009 • The nature and type of the new development. • Redevelops area that has experienced blight or contamination and/or brownfields remediation and environmental cleanup. For this purpose, the term “brownfields” is defined as abandoned, idled or under-used industrial or commercial facilities where expansion or redevelopment is complicated by real or perceived environmental contamination. • If the Tax Abatements will be used to facilitate the relocation of commercial or industrial enterprises within the City, the effects of the relocation on the former neighborhood will be considered and analyzed. • The proposal must include property identification numbers or legal descriptions and must be an existing parcel of record. • The extent, to which the project adds to, diversifies or preserves the city’s net commercial, industrial or general tax base. • The project must be consistent with the City’s Comprehensive Plan, Land Use Plan, Zoning Ordinance, and Transportation Plan. • The extent that Tax Abatements will result in development on sites which would not otherwise be developed. • The developer shall demonstrate that the project is not financially feasible but-for the use of tax abatements. This requirement must include tax abatements and all other sources of funds from other government jurisdictions, private sector and non-profit organizations. The City/EDA requires that an Economic Development Agreement be completed for each Tax Abatement project. Recommendations of the City/EDA will be the basis of the Agreement. The Agreement will contain specific language regarding the following items: • A base application fee of $5,000 will be charged at the time the application is formally submitted. After an initial analysis of the project, the City/EDA may propose a fee for administrative and investigative work on the project. The City/EDA may deduct administrative fees from the abatement during the life of the project, if so outlined at the beginning of the project. • A cash equity investment by the developer will be determined through analysis of the project by an EDA recommendation. • The developer must provide adequate financial guarantees to ensure completion of the projects, such as: assessment agreements, letters of credit, personal guaranties, financing commitments, etc. • The Developer shall adequately demonstrate, to the City/EDA’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. • For the purposes of underwriting the proposal, the developer shall provide any requested market, financial, environmental, or other data requested by the City/EDA or its consultants, at a cost to be paid by the Developer. • The Tax Abatement will not be transferable to another party without City/EDA approval. • Rescission of Tax Abatement Benefits 6 10/14/2009 • Rescission of benefits is at the sole discretion of the taxing authority and is considered on a case-by-case basis, and will be stated in each Economic Development Agreement. Reasons for rescission of the abatement benefits, interest, and penalties include: ♦ Sale or closure of the facility and departure of the company from the jurisdiction. ♦ Significant change in the use of the facility and/or the business activities of the company. ♦ Employment reductions not reflective of the company’s normal business cycle and/or local and national economic conditions. ♦ Failure to comply with annual reporting requirements. ♦ Significant departure from the goals of the project. SUBSIDY AGREEMENT & REPORTING REQUIRMENTS Business Subsidy Tax abatement is a business subsidy, as defined in MS 116J.993 to 116J.995, and is subject to the reporting requirements under that law as summarized below. All developers/businesses receiving Tax Abatement assistance shall enter into a Subsidy Agreement with City of Lake City that identifies: the reason for the subsidy, the public purpose served by the subsidy, and the goals for the subsidy, as well as other criteria set forth by statute 116J.993. The developer/business shall file a report annually for two years after the date the benefit is received or until all goals set forth in the application and performance agreement have been meet, whichever is later. Reports shall be completed using the format drafted by the State of Minnesota and shall be filed with City/EDA no later than March 1 of each year for the previous calendar year. Applicants fulfilling job creation requirements must file a report to that effect with the City/EDA within 30 days of meeting the requirements. The developer/business owner shall maintain and operate its facility at the site where Tax Abatement assistance is used for a period of five years after the benefit is received. In addition to attaining or exceeding the jobs and wages goals set forth in the Subsidy Agreement, the borrower shall achieve at least one of the criteria set forth in each of Sections 3.1 A and 3.1 B of this document. Developers/Businesses failing to comply with the above provisions will be subject to fines, repayment requirements, and be deemed ineligible by the State to receive any loans or grants from public entities for a period of five years. Costs will be assessed against the property. * Subsidies greater than $150,000 require their own public hearing* 7 10/14/2009 PLEASE ALLOW UP TO 90 DAYS TO COMPLETE THIS PROCESS! TAX ABATEMENT FINANCING APPLICATION 1. General information: Business Name: __________________________________________________________ Address: ____________________________________________________ Telephone #: _____________________ Fax #: _________________ Email: __________ Contact Person: ______________________________________________ Business Form: ___ Corporation ___ Partnership ___ Sole Proprietorship State of Incorporation or Organization: _________________ Years in Business: _________ Years a Lake City Business: ___________ 2. Brief description of the business: ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ 3. Proposed project site: Location: ___________________ Present Ownership: ________________ Zoning: ____________________ Rezoning Required: ________________ Will property be subdivided? ___ If so, please attach a layout of planned subdivision. Will variances of the Zoning Ordinance be requested? ___ If so, please list. 4. Estimated Project Costs: a. Land Acquisition $ ____________________ b. Site Development ____________________ c. Building Cost ____________________ d. Equipment ____________________ e. Architectural/Engineering Fees ____________________ f. Legal Fees ____________________ g. Financing Costs ____________________ h. Broker Costs ____________________ i. Contingencies ____________________ j. Other (please specify) ____________________ Total $ ____________________ 8 10/14/2009 5. Total Estimated Market Value at completion: $________________ 6. Description of proposed project: Building square footage, size of property, description of buildings, materials, etc. ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ 7. Sources of Financing: a. Equity $ ____________________ b. Bank Loan ____________________ c. Tax Abatement Assistance ____________________ d. Other (please specify) ____________________ Total $ ____________________ 8. Form of tax abatement financing assistance requested: Pay As You Go ________ Bond Issuance ________ 9. Requested tax amount to be abated: $ ____________ per year 10. Requested duration of abatement: ____ years 11. Has a tax abatement application been submitted to the County or School District? ______ If so, please provide details of the requested abatement. 12. Description of expected financial benefit to the City: __________________________________________________________________ __________________________________________________________________ 13. Professional services of applicant: Architectural Firm/Contact: _________________________________________ Address: ___________________________________________________ Telephone #: ___________________ Fax #: _____________________ Engineering Firm/Contact: __________________________________________ Address: ___________________________________________________ Telephone #: ___________________ Fax #: _____________________ 9 10/14/2009 General Contractor/Contact: _________________________________________ Address: ___________________________________________________ Telephone #: ___________________ Fax #: _____________________ Attorney Firm/Contact: ____________________________________________ Address: ___________________________________________________ Telephone #: ___________________ Fax #: _____________________ Accounting Firm/Contact: __________________________________________ Address: ___________________________________________________ Telephone #: ___________________ Fax #: _____________________ 14. Project construction schedule: a. Construction Start Date: _____________________ b. Construction Completion Date: _____________________ If construction will not be completed at year end, what % of construction will be completed by year end? ___% 15. Current and projected employment: Type Existing Jobs First Year Second Year Wage Professional/Managerial ____ FT __ PT __ FT __ PT __ FT __ PT $ ____/___ Technical/Skilled __ FT __ PT __ FT __ PT __ FT __ PT $ ____/___ Unskilled/Semi-skilled __ FT __ PT __ FT __ PT __ FT __ PT $ ____/___ 16. Statement of necessity for the use of tax abatement financing assistance for the project: ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ 17. Signatures: I declare that any statement in this application or information provided herein is true and complete in substance and in fact. Also, I authorize this information to be released to the appropriate agencies that may be able to assist in this request. Name of Business: ________________________________________________________ By: _____________________________Title: ________________ Date: __________ 10 10/14/2009 1 CITY OF LAKE CITY & LAKE CITY ECONOMIC DEVELOPMENT AUTHORITY TAX INCREMENT FINANCING POLICY I. PURPOSE: The purpose of this policy is to establish the City/EDA’s position as it relates to the use of tax increment financing for private development. This policy shall be used as a guideline in processing and reviewing applications requesting tax increment assistance. II. GENERAL POLICY: While tax increment financing is an important and useful tool in attracting and retaining businesses, it is essential that it is used appropriately to accomplish the City/EDA's economic development goals and objectives. The fundamental principle which makes tax increment financing viable is that it is designed to encourage development which would not otherwise occur. The City/EDA is responsible to assure that the project would not occur "but for" the assistance provided through tax increment financing. The City/EDA shall consider tax increment financing in cases that serve to accomplish the City/EDA's targeted goals for economic development as they may change over time. These goals include projects that would result in the creation of jobs that pay wages to support households, increase the tax base, remove blight, retain the viability of the central business district and the retention and expansion of businesses. III. DESCRIPTION OF TAX INCREMENT FINANCING: With tax increment financing, the increase in assessed valuation and tax revenues attributed to the new development pay for eligible new development costs. The tax increment is the difference in assessed valuation and tax revenues generated by the property in the district after construction compared with the assessed valuation and tax revenues generated by the property before construction at the time of "certification". This difference in assessed valuation and tax revenues is used to pay the current eligible development costs. Any project utilizing tax increment financing requires the usage of at least two Minnesota State Statutes. These statutes are: A) the statute creating the project area and specifying its public purpose and B) the statute establishing the means to finance the project by creating a tax increment financing district. IV. STATUTORY LIMITATIONS: In accordance with the tax increment policy, tax increment financing requests must comply with applicable state statutes. The City/EDA is governed by the limitations established in the Minnesota Tax Increment Financing Act (M.S. 469.174-469.1791, as amended.) for all districts created after August 1, 1979. V. ELIGIBLE USES FOR TAX INCREMENT FINANCING As a matter of adopted policy, the City/EDA will consider using tax increment financing to assist private developments only in those circumstances in which the proposed private projects meet one or more of the following uses: A. To redevelop blighted or under-utilized areas of the community 2 B. To meet the following housing-related uses: 1. To provide a diversity of housing adjacent to the downtown area; 2. To provide a variety of housing ownership alternatives and housing choices; 3. To promote affordable housing for low- or moderate-income individuals; or 4. To promote neighborhood stabilization and revitalization by the removal of blight and the upgrading of existing housing stock in residential areas. C. To remove blight and encourage redevelopment in the commercial and industrial areas of the community in order to encourage high levels of property maintenance and private reinvestment in those areas; D. To increase the tax base of the City in order to ensure the city’s long-term ability to provide adequate services for its residents while lessening the reliance on residential property tax; E. To retain local jobs, increase the local job base, and provide diversity in that job base; F. To increase the local business and industrial market potential of the City. G. To provide adequate short-term business and shopper parking, and resident parking; H. To encourage additional unsubsidized private development in the area, either directly or through secondary “spin-off” development; I. To offset increased costs of redevelopment, over and above those costs that a developer would incur in normal urban and suburban development; J. To accelerate the development process and to achieve development on sites which would not be developed without this assistance; or K. To meet other uses of public policy, as adopted by the City/EDA from time to time, including promotion of quality urban design, quality architectural design, energy conservation, decreasing the capital and operating costs of local government, etc. VI. TAX INCREMENT PROJECT APPROVAL CRITERIA: All new projects approved by the City/EDA should meet the following mandatory minimum approval criteria. However, it should not be presumed that a project meeting these criteria will automatically be approved. Meeting these criteria creates no contractual rights on the part of any potential developer. A. The tax increment financing assistance shall be provided within applicable state legislative restrictions, debt limit guidelines, and other appropriate financial requirements and policies. B. The project should meet one or more of the above adopted tax increment financing goals of the City/EDA. C. The project must be in accord with the Comprehensive Plan and Zoning Ordinances, or required changes to the plan and ordinances must be under active consideration by the City at the time of approval. D. Tax increment financing assistance will not be provided solely to broaden a developer’s profit margins on a project. Prior to consideration of a tax increment financing assistance request, the City/EDA may undertake an independent underwriting of the project to help ensure that the request for assistance is valid. E. The City/EDA will need to make a finding that the proposed development would not be reasonably expected to occur solely through private investment within the reasonably foreseeable future and therefore the use of tax increment financing is deemed necessary. F. The City/EDA will need to make a finding that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the district permitted by the plan. G. Prior to approval of a tax increment financing plan, the developer shall provide any required market and financial feasibility studies, appraisals, soil boring information provided to private lenders for the project, and other information or data that the City/EDA or its’ financial consultants may require in order to proceed with an independent underwriting. H. To ensure cash flows are adequate, projects receiving tax increment financing assistance “up front” will be analyzed on a debt service coverage ratio. 3 I. The developer should provide adequate financial guarantees to ensure repayment of the “up front” tax increment financing assistance. These may include, but are not limited to, assessment agreements, letters of credit, etc. J. Any developer requesting tax increment financing assistance should be able to demonstrate past successful general development capability as well as specific capability in the type and size of development proposed. K. The developer should retain ownership of the project at least long enough to complete it, to stabilize its’ occupancy, to establish the project management, and to initiate repayment of the tax increment financing, if any is required. L. The level of tax increment financing funding should be reduced to the lowest possible level by maximizing the use of private debt and equity financing first, and then using other funding sources or income-producing vehicles that can be structured into the project financing, prior to using additional tax increment financing funding. VII. TAX INCREMENT PROJECT EVALUATION CRITERIA: All projects will be evaluated on the following criteria for comparison with other proposed tax increment financing projects reviewed by the City/EDA and for comparison with other subsidy standards (where appropriate). Changes in local markets, costs of construction, and interest rates may cause changes in the amounts of tax increment subsidies that a given project may require at any given time. Some criteria, by their very nature, must remain subjective. However, wherever possible, “benchmark” criteria have been established for review purposes. The fact that a given proposal meets one or more “benchmark” criteria does not mean that it is entitled to funding under this policy, but rather that the City/EDA is in a position to proceed with evaluations of (and comparisons between) various tax increment financing proposals, using uniform standards whenever possible. Following are the evaluation criteria that will be used by the City/EDA: A. All tax increment financing proposals should optimize the private development potential of a site. B. All tax increment financing proposals should obtain the highest possible private to public financial investment ratio. C. All tax increment financing proposals should create the highest number of new jobs on the site. There shall be an analysis of newly created or retained full-time equivalent jobs as compared to the amount of financing assistance provided for industrial projects. Housing and retail/commercial projects shall be reviewed on an individual project basis. VIII. COSTS ELIGIBLE FOR TAX INCREMENT FINANCING ASSISTANCE: Project costs qualifying for tax increment financing assistance, as defined under the TIF Act, include: utilities design, landscape design, architectural and engineering fees directly attributable to site work, site related permits, earthwork/excavation, soils corrections, landscaping, utility construction (sanitary sewer, storm sewer and water), streets and roads, street/parking lot paving, street/parking lot lights, curb and gutter, sidewalks, land acquisition, building demolition, relocation of occupants, special assessments, legal (acquisition, financing and closing fees), soils tests and environmental studies, surveys, title insurance and TIF application deposit. IX. TYPES OF ASSISTANCE: Tax increment financing can by provided in two different forms. One form is "pay as you go" wherein the City compensates the applicant for a predetermined amount for a predetermined number of years. Annual payments are based on increment generated from the project and issued to the applicant after payment of property taxes by the applicant. The City/EDA will give special consideration to applicants applying for "pay as you go" assistance. Another form of assistance is "up front" payment to the applicant wherein the City must issue revenue or general obligation bonds. The increment generated from the applicant's project is then used for repayment of bonds. This form of assistance is not looked upon favorably by the City/EDA because of the additional risk incurred in case of default. 4 X. DEPOSIT REQUIRED WITH TAX INCREMENT FINANCING APPLICATION: The City/EDA shall require a deposit in the amount of $7,500 from the applicant for the City/EDA's consultants to investigate the feasibility of providing tax increment financing assistance to the applicant's project whether it be by the creation of a new tax increment financing district or the modification of a current district. If the City/EDA incurs additional expense beyond $5,000, prior to the execution of the Developer's Agreement, the City/EDA shall notify the applicant in writing and the applicant will be required to deposit additional funds. If the project is approved and the applicant proceeds with the project, the City/EDA shall reimburse the applicant's deposit to the extent permissible under the TIF Act utilizing available tax increment dollars. If the applicant does not proceed with the project, the City/EDA shall reimburse the applicant for the unused portion of the deposit. XI. OTHER POLICY ISSUES: Loss of Government Aid: changes to Minnesota Statutes mandate a reduction in the LGA/HACA payments from the State to the City when new tax increment financing districts are formed. In the event a new tax increment financing district is formed or a new project in an existing district created after 1991 is approved, the City will suffer an LGA/HACA reduction from the State and/or may have other considerations mandated by current State Statute. This will be a major consideration in determining the feasibility of the creation of a new or modification of an existing tax increment financing district. XII. SUBMITTAL OF FORMS: Applicants requesting tax increment financing assistance within an existing district or in the creation of a new district shall be required to complete and submit the following: A. Request for tax increment financing application B. Deposit of $7,500.00 (check made payable to the EDA) C. Three copies of plans and specifications XIII. PROCEDURE: A. Applicant meets with the EDA Director, discusses the project and receives an application. B. Applicant submits the completed application, deposit and plans and specifications to the EDA Director. C. EDA Director meets with the City Administrator to discuss the project including conformity with the City policies and plans. D. EDA Director discusses project with the City/EDA's tax increment consultants and receives a not to exceed quote for completing the work should the EDA Board accept the project as feasible for tax increment financing. E. Project is placed on the EDA Agenda for the next regularly scheduled meeting. F. The EDA Director and applicant present the project to the EDA Board. G. Within 10 days, the EDA will determine to accept or reject the application and deposit. If rejected, nothing further happens and deposit is returned. H. If the EDA Board accepts the application and deposit, staff will be directed to work with the consultants and City Staff to put together a tax increment financing plan and district plan and enter into negotiations with the applicant to secure agreeable terms for the development agreement. The development agreement will not be drafted until after City Council approval. I. Upon completion of a draft of the tax increment financing plan, district plan and development agreement terms that are agreeable to the applicant, the EDA Board will hold a special meeting to discuss these drafts. J. If approved, the EDA Board will make a recommendation to the City Council to proceed with allowing this project to move forward. K. The EDA Director, applicant and consultants will make a presentation to the City Council and request public hearings and other statutory items be scheduled and other board reviewal scheduled, if appropriate. 5 L. The public hearings will be conducted and after hearing the public input and receiving other board recommendations, the City Council may: 1) accept the plans and recommendations and direct staff to complete these plans, 2) reject the plans and project or 3) modify the plans accordingly and reenter negotiations. M. If/once approved and both parties sign the documents, construction may commence. PLEASE ALLOW UP TO 90 DAYS TO COMPLETE THIS PROCESS! Type Existing Jobs First Year Second Year Wage Professional/Managerial __ FT __ PT __ FT __ PT __ FT __ PT $ ____/___ Technical/Skilled __ FT __ PT __ FT __ PT __ FT __ PT $ ____/___ Unskilled/Semi-skilled __ FT __ PT __ FT __ PT __ FT __ PT $ ____/___            Business Financial Assistance Application Policy Purpose of Policy The City of St. Cloud’s public financial assistance programs for business development proposals will be administered by the Economic Development Authority (EDA) and in accordance with the application policies and procedures adopted by the EDA and City Council. Requests for the following forms of financial assistance are subject to this policy:  Tax Increment Financing (TIF)  Tax Abatement  Revolving Loan Fund (RLF)  MN Investment Fund (MIF)  MN Job Opportunity Building Zone Tax Exemptions (JOBZ) The EDA incurs costs in the review, analysis and evaluation of development proposals and other requests for public financing assistance. The EDA seeks to recover its legal and financial consultant fees associated with the preparation of any development contract for public financing assistance. Developer Deposit for Business Financial Assistance Applications At the time a formal application is submitted to the Economic Development Director, the developer shall pay a deposit for reimbursement of the EDA’s costs expected to be incurred. The standard initial deposit amount is $5,000. The developer shall be responsible for all costs incurred by the EDA over and above the initial deposit amount. In some cases, the developer will be required to deposit additional funds when the initial deposit has been fully drawn. Depending on the complexity of the development proposal, fees associated with a typical development project can range from $10,000 to $20,000. Any funds deposited by the developer and not expended by the EDA for its legal and financial consultant fees on or before the date of execution of the development contract will be returned to the developer. EDA Adopted: August 1, 2012                              Economic Development Revolving Loan Fund Program HRA Original Adopted Policy March 2000 HRA Revised Policy June 2004 EDA Revised Policy October 2017 Each application submitted for assistance will be evaluated by the City on a case-by-case basis to analyze the viability of a proposed project. Depending on the exact nature and complexity of a project, the estimated timeframe from application to approval is approximately two months. Revolving Loan Fund Policy Page | 2 City of St. Cloud EDA CITY OF ST. CLOUD ECONOMIC DEVELOPMENT REVOLVING LOAN FUND PROGRAM HRA Original Adopted Policy March 2000 HRA Revised Policy June 2004 EDA Revised Policy October 2017 I. BACKGROUND The City of St. Cloud Economic Development Revolving Loan Fund (RLF) program was originated by the state-funded Minnesota Investment Fund (MIF) program awarded through the Department of Employment & Economic Development (DEED) to the City of St. Cloud. The RLF is administered by the Economic Development Authority of the City of St. Cloud (EDA), and its predecessor St. Cloud Housing & Redevelopment Authority under authorization provided by City Resolution 2004-6-165. Reuse of the RLF funds is guided by this local policy, and state policies in Minn. Stat. 116J.8731 and the Minnesota Business Subsidy Law (Minn. Stat. 116J.993 and 116J.994). II. POLICY STATEMENT The City of St. Cloud recognizes the need to stimulate private sector investment in order to provide employment, diversify the economy and enhance the property tax base. The Economic Development Authority (EDA) of the City of St. Cloud makes as part of its mission the increasing of job opportunities and tax base through leveraged investments, including providing affordable loans for new or expanding businesses locating within the city. The RLF will be administered by the EDA. The Finance Director of the City of St. Cloud will provide general program oversight on behalf of the City. III. PURPOSE AND GOALS It is the purpose of the City of St. Cloud Economic Development Revolving Loan Fund (RLF) to deploy and sustain a local pool of money to support private economic development and redevelopment projects for the benefit of the City of St. Cloud. These objectives may be accomplished through the following means: A. Create/retain permanent private sector jobs to fuel above-average economic growth; B. Investment in technology and equipment that increase productivity and provide higher wages; C. Leverage of private investment to ensure economic renewal and competitiveness; Revolving Loan Fund Policy Page | 3 City of St. Cloud EDA D. Increase the local tax base to guarantee a diversified industry mix; E. Improve the quality of existing jobs, based on increases in wages or improvements in the job duties, training, or education associated with those jobs; F. Improve employment and economic opportunities and create a reasonable standard of living; and G. Enhance productivity growth through improved manufacturing or new technologies. IV. GENERAL CRITERIA Revolving Loan Funds may be used to provide assistance for loans, loan guarantees, interest buy-downs, and other forms of participation with private sources of financing. Assistance must be evaluated on the existence of the following conditions as noted in Minn. Stat. 116J.8731: A. Eligible Projects Business must be a for-profit corporation, partnership, or sole proprietorship. Eligible projects must meet one or more of the following criteria: 1. Creation or retention of jobs, or the improvement of jobs as measured by wages, skills or knowledge; 2. Increase in the tax base; 3. Attraction of private funds to the project; 4. Incapacity of local community 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; and 8. Importance of assistance to attract out-of-state business. The assistance cannot meet solely 7. or 8.; other conditions must also be present. Revolving Loan Fund Policy Page | 4 City of St. Cloud EDA B. Eligible Activities RLF may be used to fund a variety of business activities including: 1. Acquisition of land 2. Construction, demolition or rehabilitation of facilities 3. Site improvements 4. Utilities or infrastructure 5. Machinery and equipment 6. Working capital C. Ineligible Activities RLFs may not be used for the operation, construction or expansion of the following uses: a casino, a sport facility that has a professional sports team as a principal tenant, or any firm engaged in retailing merchandise, or sexually-oriented businesses. D. 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, 2017 is $13.53 per hour. This compensation level is adjusted annually. V. FINANCING POLICIES A. RLF assistance can be for no more than one-half of the cost of the project. B. A minimum loan size of $25,000 and a maximum loan size of $100,000. Exceptions must be approved by the EDA Board. C. Loan terms for fixed assets are anticipated to range between 10 to 20 years for land and building, and 5 to 10 years for machinery and equipment. D. Interest rates are fixed and provided at 2 points below the U.S. prime rate published in the Wall Street Journal the business day prior to the loan closing date, or 3%, whichever is greater. Exceptions must be approved by the EDA Board and based on significant economic benefits. Revolving Loan Fund Policy Page | 5 City of St. Cloud EDA E. Deferments on principal repayments and subordination of loans may be provided to meet the credit needs of borrowers. F. The minimum equity requirement for participation on an RLF loan is equal to 10% of eligible project costs. It is the intention of the EDA to secure each loan with a first or second mortgage on real estate or a UCC filing on equipment, inventory and/or receivables, and may include personal assets and guarantees. G. No project shall commence until the EDA has provided loan approval. Any costs incurred prior to the loan approval are not eligible for financing. In addition, no building construction should commence until the required City permits are secured. H. RLF loans will only be restructured if the restructuring improves the borrower repayment ability, and normally only where additional security is obtained. Refinancing will not be allowed solely for the purpose of reducing the interest rate due to lower market interest rates. I. While the EDA is prepared to consider long-term loans, attempts will be made to structure debt in such a manner as to encourage prepayment or early recapture of the proceeds. One method that may accomplish this is to provide a 5 year term with a 20 year amortization period and work with the borrower to find private sources of capital to replace the RLF loan at the end of the initial term. In the event that the borrower is unable to obtain conventional financing to replace the RLF at the end of 5 years, the loan may be extended up to 2 additional years at a market rate of interest. Extension requests shall be accompanied by a copy of the current financial statements, a letter of denial from a conventional lender, and a $500 non-refundable processing fee. J. Interest earnings or other profits earned from the sale of the loan will be returned to the RLF fund for re-lending or for administrative costs. K. The applicant will be responsible for all legal, recording and other fees required for protection of a security interest in the loan. In addition to the non-refundable fee in Section VI, all legal and filing fees shall be paid by the borrower at loan closing. L. The EDA shall require that proposed borrowers provide bank commitment letters or other evidence of their ability to meet the equity requirements. M. The EDA may deny any project which it deems inappropriate according to the guidelines established in this document. Revolving Loan Fund Policy Page | 6 City of St. Cloud EDA VI. LOAN APPLICATION AND SERVICING The application evaluation and servicing process will be as follows: A. Pre-application 1. A brief pre-application in narrative form will be required of all potential applicants in order to determine the proposed structure and eligibility of the project. 2. Pre-applications will be screened for eligibility and written invitations for full applications will be provided. B. Full Application Package 1. A full application package will include the necessary documentation to make a final loan decision. 2. When a full application is invited, a site visit and discussion about full application details will take place. 3. A non-refundable processing fee of $1,000 will be required when a full application is submitted. 4. When completed applications are received, the EDA Staff will conduct a thorough review including: a. Eligibility with RLF plan b. Economic benefits of the proposed project c. Balance sheet/ratio analysis (if necessary) d. Repayment ability e. Management skill f. Collateral and lien position g. Credit risk of applicant h. Need for special requirements, i.e. insurance, personal guarantee i. Environmental review 5. Upon recommendation by the EDA Executive Director, the EDA Board has the authority to approve the loan. Applicants will receive notification of decision in writing. 6. 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, particularly Minn. Stat. 13.591, subd. 1 and 2. Revolving Loan Fund Policy Page | 7 City of St. Cloud EDA C. Loan Servicing 1. Loans may be closed by the EDA Executive Director. 2. Loan accounting will be a part of the City Finance Department. Reports may be requested for individual loans including principal, interest, fee payments, etc. 3. Delinquency will be handled in a firm, yet flexible way, with provision for modifying or restructuring consistent with program objectives and responsible money management. Any modifications of loan terms and conditions must be requested in writing by the applicant and approved by the EDA Executive Director and, if applicable, the EDA. 4. Defaults will be handled on a case-by-case basis. Specific action will depend on the nature and circumstances, amount and availability of collateral, and costs versus benefit of liquidating assets or other collateral. 5. Any total or partial sale, assignment, conveyance, lease or transfer with respect to the loan and security interest is not allowed without prior review and written approval by the EDA Board, which approval shall not be unreasonably withheld. D. Compliance with MN Business Subsidy Law Each company receiving assistance in the principal amount over $75,000 from the RLF shall be subject to the provisions and requirements set forth by Minnesota Business Subsidy Law Statute 116J.993 and the City of St. Cloud Business Subsidy Policy. All RLFs will be required to submit annual progress reports to the EDA until job creation requirements are met.                              Tax Increment Financing and Tax Abatement Policy EDA Adopted: October 2013 City Council Adopted: November 2013 Each application submitted for assistance will be evaluated by the City on a case-by-case basis to analyze the viability of a proposed project. Depending on the exact nature and complexity of a project, the estimated timeframe from application to designation of a TIF District or Tax Abatement is at least three (3) months. Tax Increment Financing and Tax Abatement Policy Page | 1 City of St. Cloud CITY OF ST. CLOUD ECONOMIC DEVELOPMENT AUTHORITY TAX INCREMENT AND TAX ABATEMENT POLICY A. PURPOSE The term “City” as used in this policy shall include both the City of St. Cloud and the Economic Development Authority for the City of St. Cloud (EDA), which administers various economic development programs and activities within the City of St. Cloud. The purpose of this policy is to establish the City’s position relating to the use of Tax Increment Financing (TIF) or Tax Abatement (Abatement) for private development. This policy shall be used as a guide in the processing and review of applications requesting TIF or Abatement assistance. The City, in adopting this policy, retains the sole and absolute discretion to grant or deny any request for any reason. The City shall have the option of amending or waiving sections of this policy when determined necessary or appropriate when the EDA has determined that the total economic benefit exceeds this policy’s intent. Administration of this policy shall be the responsibility of the EDA. In the case of Tax Abatement the EDA serves as a recommending body for the City Council’s approval. In the case of Tax Increment Financing the EDA must first obtain approval of its proposed TIF Plans from the City Council, in addition to the sale of all bonds and other obligations issued by the EDA. B. STATUTORY LIMITATIONS The City is granted the power to utilize TIF and Tax Abatement by Minnesota statutes. Requests must comply with Minnesota Statutes 469.174-469.1791, the Minnesota Tax Increment Financing Act. Tax Abatement requests must comply with Minnesota Statutes 469.1812-469.1815. All requests shall comply with Minnesota Statutes 116J.993 and 116J.994, the Business Subsidies Act. The statutes authorizing TIF and Tax Abatement are frequently amended. This policy is subject to change to conform to amendments to such statutes. C. DIFFERENCE BETWEEN TAX INCREMENT FINANCING AND TAX ABATEMENT The primary difference between Tax Increment Financing and Tax Abatement is the way in which the dollars are awarded to the project. When the City awards TIF to a project, the other political subdivisions (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. Tax Increment Financing and Tax Abatement Policy Page | 2 City of St. Cloud D. TIF DISTRICT REQUIREMENTS The following may be eligible for consideration for the use of TIF as authorized by statutes, as amended: Redevelopment District [Minn. State Statutes 469.174, Subd. 10; 469.176, Subd. 4j]  Buildings, streets, other improvements occupy 70% of the area, and, more than 50% of the main buildings are substandard (substantial 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 469.174, Subd. 10a; 469.176, Subd. 4j]  Buildings, street, other improvements occupy 70% of area; and at least 20% of the buildings are substandard (as defined under Redevelopment District); and, 30% of the other buildings require substantial renovation or clearance to remove conditions such as inadequate street layout, incompatible uses, overcrowding, obsolete buildings, or other identified hazards to community health, safety, 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, Subd. 12, 469.176, Subd. 4c]  A project found to be in the public interest because: (1) It will discourage a business from moving operations to another state or municipality; or, (2) It will result in increased local employment; or, (3) It will preserve and enhance the tax base.  At least 85% of the facilities must be used for: (1) Manufacturing or production operations; or, (2) Warehousing, storage, and distribution, excluding retail sales; or, (3) Research & development related to activities listed above in items (1) or (2); or, (4) Telemarketing if it is the exclusive use of the property; or, (5) Space necessary for and related to activities listed in items (1) through (4).  Maximum term 8 years after receipt of the first increment. Housing District [Minn. State Statutes 469.174, Subd. 11, 469.176, Subd. 4d, 469.1761]  A project for low & moderate income housing occupancy. A project does not qualify if more than 20% of the square footage of improvements are for commercial, retail or other non-housing uses.  Tax increment revenue must solely finance housing project costs, which may include public infrastructure.  For owner-occupied housing, 95% of the units must be initially purchased and occupied by individuals qualifying 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. Soils Condition District [Minn. State Statutes 469.174, Subd. 19, 469.176, Subd. 4b]  A project where presence of hazardous substances, pollution, or contaminants requires removal or remedial action for use; 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: (1) Acquire parcels on which the improvements will occur; (2) Pay for the cost of removal or remedial action; and (3) Pay for the administrative expenses of the TIF Authority allocable to the district.  Maximum term is 20 years after receipt of the first increment. Tax Increment Financing and Tax Abatement Policy Page | 3 City of St. Cloud E. TAX ABATEMENT GENERAL REQUIREMENTS Pursuant to MN Statutes 469.1812 to 469.1815 the City is authorized to grant abatement of all or a portion of the City property tax amount on specified parcels. The City may abate taxes only after holding a public hearing and adopting an abatement resolution that stipulates the specific terms of the abatement agreement and the nature and extent of the public benefit that the City expects to result from the abatement. The City must find that the expected benefits to the City of the proposed abatement agreement at least equal the cost to the City of the proposed agreement. The City Council must also find that the abatement is in the public interest because it will facilitate one or more of the following objectives: 1. Increase or preserve tax base; 2. Provide employment opportunities in the City of St. Cloud; 3. Provide or help acquire or construct public facilities; 4. Help redevelop or renew blighted areas; 5. Help provide access to services for residents of the City of St. Cloud; or 6. Finance or improve public infrastructure. The abatement of taxes shall typically be limited to the new taxes generated from the project. 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. The maximum duration of an abatement is 15 years (with a maximum of 20 years in limited situations). Preference is given to projects in which other local government jurisdictions support the project, including but not limited to participation in the abatement agreement. Each project shall be reviewed on an individual basis. Prior approval of a similar project for Abatement shall not establish a precedent for future approval. F. DEVELOPMENT OBJECTIVES As a matter of adopted policy, the City of St. Cloud will consider using TIF or Abatement to assist private developments only in those circumstances in which the proposed private projects meet one or more of the following objectives: 1. To increase and diversify the long-term tax base of the City in order to ensure the long-term ability of the City to provide adequate services for its residents while lessening reliance on the residential property tax. Tax Increment Financing and Tax Abatement Policy Page | 4 City of St. Cloud 2. To improve the City’s economic vitality through the creation and expansion of quality employment opportunities. 3. To retain local jobs, increase the local job base, and provide economic diversity in that job base. 4. To encourage additional unsubsidized private development in the area, either directly or through secondary “spin-off” development. 5. To remove blight and encourage redevelopment in the commercial and industrial areas of the City, including high profile or high priority sites, in order to encourage high levels of property maintenance and private reinvestment in those areas. 6. To offset increased costs of redevelopment over and above those costs that a developer would incur in normal urban and suburban development. 7. To finance or provide public infrastructure as part of a development/redevelopment project including public parking facilities. 8. To accelerate the development process and achieve development on sites which would not be developed without this assistance. 9. To assist in achieving other goals contained in adopted public policies as may be adopted by the City from time to time, including without limitation, quality design and construction, energy conservation, and reductions in capital and operating costs of government. G. PROJECT APPROVAL CRITERIA In addition to complying with all statutory requirements, projects requesting TIF or Abatement assistance should meet the following minimum approval criteria. However, it should not be presumed that a project meeting these criteria will automatically be approved. 1. TIF or Abatement assistance shall be provided within applicable state legislative restrictions, debt limit guidelines, and other appropriate financial requirements and policies. 2. The project shall meet one or more of the above Development Objectives. 3. The project must be consistent with the Comprehensive Plan and Zoning Ordinances, or required changes to the Plan and Ordinances must be under active consideration by the City at the time of approval. 4. TIF or Abatement assistance will not be provided to projects that have the financial feasibility to proceed without the public financial assistance. In effect, assistance will not be provided solely to broaden a developer’s profit margins on a project. Prior to consideration of a TIF or Abatement assistance request, the City may undertake an independent financial evaluation or feasibility study of the project to help ensure that the request for assistance is valid. Tax Increment Financing and Tax Abatement Policy Page | 5 City of St. Cloud 5. All TIF projects will need to meet the “but for” test. TIF will not be used unless the need for the City’s economic participation is such that without that assistance the project would not be financially feasible. 6. Prior to approval of a TIF or Abatement application, the developer may be asked to provide market and financial feasibility studies, appraisals, soil boring, information in the developer’s possession or provided to private lenders for the project, and other information or data that the City or its financial consultants may require in order to proceed with an independent evaluation. 7. The developer must provide a minimum of 10% equity in the project. 8. TIF and Abatement assistance shall typically be in the form of pay-as-you-go. Requests for upfront financing will be considered for priority projects on a case- by-case basis. The developer should provide adequate financial guarantees to ensure the repayment of TIF or Abatement subsidy. These may include, but are not limited to: assessment agreements, letters of credit, etc. 9. Any developer requesting TIF or Abatement assistance shall be able to demonstrate past successful general development capability as well as specific capability in the type and size of development proposal. 10. The developer shall retain ownership of the project at least long enough to complete it, to stabilize its occupancy, to establish the project management, and to initiate repayment of TIF or Abatement. 11. The level of TIF funding shall be reduced to the lowest possible level by maximizing the use of private debt and equity financing first, and then using other funding sources or income producing vehicles that can be structured into the project financing, prior to using additional TIF or Abatement assistance funding. 12. The developer shall be responsible to pay any legal, consultant fees and related costs incurred by the City in reviewing applications for TIF or Abatement and preparation of plans and agreements. 13. Developers receiving TIF or Abatement assistance shall meet the requirements of the City’s approved Business Subsidy Criteria. 13. Proposals shall optimize the private development potential of a site. 14. Proposals shall create the highest possible ratio of property taxes paid before and after redevelopment. Given the different assessment circumstances in the City, this ratio will vary widely. However, under normal circumstances the expectation shall be at least 1:2 ratio of taxes paid before and after redevelopment. 15. TIF or Abatement assistance should normally not be used to support speculative industrial, commercial, and office projects. In general, speculative projects are defined as those projects which have letters of intent or pre-leasing for less than 50 percent of the space available for lease. Tax Increment Financing and Tax Abatement Policy Page | 6 City of St. Cloud 16. Proposals will normally not be used in a project that involves an excessive land and/or property price. This will normally be where the acquisition price is more than 10 percent in excess of fair market value as demonstrated by the City Assessor. 17. TIF or Abatement will not be used when the developer’s qualifications, in the judgment of the City, are unacceptable due to past or present performance and qualifications relating to: completion of projects, general financial responsibility and experience and/or bankruptcy, or other problems or issues considered relevant by the City. 18. To the extent the proposed project places extraordinary demands on City services, an evaluation may be conducted to consider the extent of total public costs required to support the project, including off-site facilities costs that may be required. 19. TIF or Abatement will not normally be used for projects that would generate significant environmental problems in the opinion of the local, state, or federal governments. 20. TIF or Abatement funding should not be provided to projects that fail to meet good public policy criteria as determined by the City, including: poor project quality; projects that are not in accord with the Comprehensive Plan, zoning, redevelopment plans, and City policies; projects that provide no significant improvement to surrounding land uses, the neighborhood, and/or the City; projects that do not provide a significant increase in tax base; projects that do not have significant new, or retained, employment; projects that do not meet financial feasibility criteria; and projects that do not provide the highest and best desired use for the property. 21. TIF or Abatement will not be used in projects that would give a significant competitive financial advantage over similar projects in the City due to the use of assistance. Priority consideration will be given to projects that fill an unmet market need. H. EVALUATION CRITERA The following items will be taken into consideration in the evaluation of any development proposal requesting TIF or Tax Abatement assistance. 1. Need For Public Assistance – In all cases, it is required that the need for public assistance be demonstrated and documented by the developer to the satisfaction of the City. All such documentation, including development budgets, cash flow projections, market studies and other financial and market information, must be submitted by the developer along with an application for public financial assistance. If the request is based on financial gap considerations, the developer will demonstrate the profitability and feasibility of the project both with and without public assistance. 2. Amount of Public Assistance versus Private Investment – All development proposals should seek to maximize the amount of private investment per dollar of public assistance. Public assistance as a percentage of total development costs Tax Increment Financing and Tax Abatement Policy Page | 7 City of St. Cloud will be determined for each project and compared to other development projects of similar scope and magnitude whenever possible. 3. Term of Public Assistance – The term of the assistance shall be kept to a minimum. The proposed term of any assistance shall be fully documented and explained. 4. Development Benefits and Costs – The direct and indirect benefits of the development proposal shall be determined and quantified to the degree possible. Benefits shall include, but are not limited to, employment benefits (number of jobs retained or created, wage and salary information, etc.), tax base benefits (estimated market value of new development, new property taxes generated, etc.), housing benefits (number of new rental or ownership units, etc.), and other benefits relating to transportation, parking, blight remediation, environmental cleanup and historic preservation. I. APPLICATION PROCESS 1. Meet with appropriate EDA and City Staff to discuss the scope of the project, public participation being requested, and other information as may be necessary. 2. Completion of Preliminary Application form and initial deposit of $5,000.00 submitted to the Economic Development Director. The initial deposit will be used toward the cost of services provided in the evaluation of financial feasibility and preparation of legal documents and agreements. 3. The request shall be reviewed by EDA staff on a preliminary basis as to the feasibility of the project. The staff shall prepare a preliminary recommendation to the EDA and City Council regarding 1) the completeness of the application, 2) whether the application meets the goals of this policy, and 3) whether the application complies with the criteria established in this policy. 4. The preliminary recommendation shall be placed on the EDA agenda for concept review. The applicant may make a formal presentation of the project. The staff will present its findings. 5. If the EDA’s Preliminary Concept Review is positive, the applicant may file a formal application accompanied by a fee deposit of $15,000. The fee will be used toward the cost of services provided in the preparation of legal documents and agreements. Projects that demand services in excess of the fee shall be required to reimburse the City for the additional expenses. 6. If Planning Commission action is required, it will be necessary for the applicant, at this time, to make application to the Commission for Concept Review. 7. A public hearing may be set, if required by statutes, at which the EDA or City will consider a final recommendation related to the formal application. Following the necessary financial analysis and preparation of detailed plans, the EDA and/or City Council shall take action on the project as required under Tax Abatement or Tax Increment Financing statutes. If approved, EDA staff will be directed to undertake the following steps: Tax Increment Financing and Tax Abatement Policy Page | 8 City of St. Cloud  Prepare a development agreement based upon the terms approved.  Prepare an economic development plan or redevelopment plan and tax increment financing plan if required. 8. If a redevelopment plan or zoning action is required, the Planning Commission and City Council shall take the appropriate action at the same time the redevelopment agreement is considered for approval. The following information is needed to begin financial analysis and drafting of a Term Sheet related to financial assistance from the City of St. Cloud in the form of Tax Increment Financing or Tax Abatement. 1. A description of the project to be undertaken. This would include the size of the buildings, estimated cost of the buildings, the estimated values for real estate tax purposes (which must be a value agreeable to the City Assessor). 2. Description of the real estate to be included in the project: a. Provide the name, address of the owners of each parcel. b. Provide the name and address of each occupant of the property, if different than the owner. c. Provide copies of the real estate tax statements for each parcel. 3. List the streets and utility easements needing to be vacated/relocated, if any. 4. Does the project site need to be rezoned? If so, what is the schedule? 5. List sources and describe the proposed financing plan for construction of the project. 6. List estimated costs expected to be paid with tax increment or tax abatement. Examples could be: a. property acquisition $__________________________________ b. demolition $__________________________________ c. relocation $__________________________________ d. utility relocation $__________________________________ e. site improvements e.g. parking facility $__________________________________ f. other (describe) $__________________________________ 7. Provide job creation information with the number of jobs to be retained and created and wage scale for each class of jobs. The jobs should be created within two (2) years of the benefit date, which is generally upon completion of construction of the Project. 8. Provide the name and organizational documents for the organization to be the developer and owner of the project. If the entity is newly created, who will “guarantee” satisfactory completion of the work under the Contract for Private Development? 9. Provide a schedule for commencement and completion of each phase of the project. ECONOMIC DEVELOPMENT APPLICATION FOR TAX INCREMENT FINANCING OR TAX ABATEMENT ASSISTANCE 10. Provide area map and detailed map of the project area. 11. Provide a statement or analysis as to why you believe this project would not proceed without the benefit of tax increment. 12. Provide the following supporting information: a. Detailed sources for the proposed project (i.e. bank debt, equity, other funds, TIF request, etc. b. Detailed uses of the funds for the construction and financing c. NNN Lease rate to be charged (copy of lease if available) d. Bank financing term and rate e. 15-year Operating proforma f. Expected return (cash-on-cost or cash-on-cash) St. Louis Park Economic Development Authority Revolving Loan Fund Guidelines Adopted March 21, 2016 St. Louis Park Economic Development Authority 5005 Minnetonka Blvd St. Louis Park, MN 55416 Table of Contents Revolving Loan Fund Guidelines I Introduction Page 1 II Authorization and Funding Sources Page 1 III Purpose Page 1 IV Program Objective Page 2 V Eligible Activities Page 2 VI Ineligible Activities Page 3 VII Loan Terms and Conditions Page 4 VIII Guidelines for Application, Approval and Servicing Page 6 IX Delinquency Page 10 X Default Page 10 XI Recaptured Funds Page 10 XII Fund Acknowledgement Page 11 1 Revolving Loan Fund Guidelines I. Introduction The purpose of this document is to provide written guidelines for the award and processing of loans by the St. Louis Park Economic Development Authority (EDA). These guidelines are intended to be used as the procedure for the EDA to follow in the granting and administration of revolving loan funds. Conformance with these Guidelines does not entitle any applicant to financial assistance under this program. The Guidelines state the current minimum and maximum loan amounts as well as desired qualifications necessary to approve an application. The EDA retains the right to accept or deny applications on the basis of evaluating additional criteria it deems prudent and necessary. All applications are subject to approval by the EDA or its designee(s). The EDA encourages all eligible St. Louis Park businesses, especially women, minority and veteran-owned businesses, to apply for revolving loan funds. This program may be amended or discontinued at any time without prior notice. II. Authorization and Funding Sources Minnesota Statutes, Sections 469.090 to 469.1082, as amended, authorizes the EDA to provide loans to private businesses. The Revolving Loan Fund shall be capitalized through the City’s Development Fund. III. Purpose The purpose of the Revolving Loan Fund is to make funds available to enable local and area businesses to grow and expand their enterprises thereby creating employment opportunities and increasing the city’s tax base resulting in enhanced economic vitality. Loans are to be provided when the economics of a project cannot be overcome exclusively with conventional financing and where there is public interest in seeing the business investment occur at the proposed location. The Revolving Loan Fund is not to be utilized in lieu of commercial lending but in participation with such lending sources. The mission of the revolving loan fund is to promote local business development and expansion and attract new business to the community so as to increase the city’s market value, create and retain permanent private sector jobs thereby improving economic opportunity and living standards for the citizens of St. Louis Park. 2 IV. Program Objective The objective of the Revolving Loan Fund is to fill the financing gap between project costs, private debt financing and private equity by making direct loans so as to facilitate the growth and expansion of certain business enterprises within the St. Louis Park city limits. The EDA will consider providing a revolving loan to facilitate private sector projects to achieve one or more of the following purposes: • Support development growth and expansion of St. Louis Park small businesses. • Conform to the city's Comprehensive Plan and Zoning Ordinance. Any required changes to the Plan and Ordinance must be under active consideration by the city at the time a Development Contract providing the assistance is scheduled for approval. • Revitalize identified key areas of the City of St. Louis Park through the replacement of blight, nonconforming uses and replacement of other negative influences with high quality, private development. • Serve as a catalyst to encourage further private "spin-off” development within tired, deteriorated, or functionally obsolete areas so as to lead to their economic stabilization and revitalization. • Increase the city’s market value. • Retain local jobs and/or increase the number and quality of jobs (e.g. stable employment with attractive wages and benefits). • Encourage projects that exhibit efficient urban design; quality architecture and materials; sustainable "green" design; energy efficiency; enhanced stormwater management; improved public safety; and decrease the capital and operating costs of local government. • Promote principles related to Livable Communities and Transit Oriented Development so as to create compact, efficient mixed-use developments that include: attractive design, quality amenities (e.g. public art) as well as pedestrian and transit friendly environments. • Fulfill the strategic directions outlined in Vision St. Louis Park. V. Eligible Activities; Costs The following activities and costs are eligible for financing under the Revolving Loan Fund. A. Eligible costs: Eligible costs may include the following: 1. Site improvements. Improvements to the land which are a portion of the project cost including but not limited to: building demolition, environmental cleanup, site preparations, shoring, grading, new streets or street improvements, parking lots, utilities, and landscaping. 3 2. Purchase and renovation of building. Purchase and renovation of an existing commercial or industrial facility (including façade improvements) is permitted. 3. Purchase machinery and equipment. Purchase of major items of machinery and equipment independent of land and buildings. These items must be defined to have a useful life of at least 10 years. 4. Building construction. Construction of a new building and/or a major addition to an existing building. 5. Leasehold improvements. Revolving loan funds may be used for certain leasehold improvements provided the lease is equal to, or greater than, the term of the loan and the city secures a lien on the land or building, and improvements or other collateral deemed to be sufficient to support the loan. VI. Ineligible Applicants, Activities and Costs The following applicants, projects, activities, and costs are ineligible for financing through the Revolving Loan Fund. A. Ineligible applicants: Applications from the following entities will not be considered for financing: sexually oriented businesses, pawn shops, tattoo parlors, off sale liquor stores, tobacco shops, gun shops, check cashing businesses, non-profit institutions, gambling organizations, warehouses, lending or investment organizations, or land speculators. B. Ineligible activities: Applications to finance the following activities will not be considered for financing: • Activities that place extraordinary demands on city services. • Activities that are inconsistent with Vision St. Louis Park including those considered to create environmental problems in the opinion of the local, state, or federal governments due to the type of operation or processes involved in the business operation. • Activities that continue and/or expand nonconforming uses. • Any activity deemed illegal by federal, state, or local law or ordinance. C. Ineligible costs: Ineligible costs include but are not limited to: developer fees, management fees, financing costs, franchise fees, debt repayment or consolidation, moving costs, refinancing, operating costs, working capital or work completed prior to loan approval. 4 VII. Loan Terms and Conditions Loans provided under the Revolving Loan Fund shall be subject to the following terms and conditions. A. Maximum and minimum loan amounts for eligible projects: 1. Maximum loan amount. The maximum loan available from the revolving loan fund for each eligible project is limited to $200,000 or 40% of total project cost, whichever is less. 2. Minimum loan amount. The minimum loan amount available from the revolving loan fund for each eligible project is $50,000. B. Interest rate: The interest rate shall be fixed and will be determined at the time of loan application and funding. C. Term: The term of the loan will be tied to the useful life of the assets being financed. The following general terms apply: 1. Machinery/equipment. The term of the loan for machinery/equipment shall not exceed 10 years 2. Land/building acquisition. The term of the loan for land/building shall not exceed 20 years. 3. New construction/renovation. The term of the loan for new construction/renovation shall not exceed 20 years. 4. Balance due upon Sale. All balances will be due and payable if and when the loan recipient sells or otherwise transfers any or part or his/her interest in the property or fails to meet any of the guidelines established within this document before the maturity date of the loan or relocates any part or all of the business outside the City of St. Louis Park. D. Wage and job goals: Wage and Job goals shall be established for all loans in excess of $75,000. The wage and job goals will be identified in the Loan Agreement between the St. Louis Park EDA and the borrower. The loan agreement, must include: (1) the number of jobs created, which may include separate goals for the number of part-time or full-time jobs, or, in cases where job loss is specific and demonstrable, goals for the number of jobs retained; (2) wage goals for any jobs created or retained; and (3) wage goals for any jobs to be enhanced through increased wages. 5 E. Green Building Policy: Building expansions 15,000 square feet or greater and renovations 50,000 square feet or greater receiving $200,000 in financial assistance are required to comply with the City of St. Louis Park’s Green Building Policy. F. Equity participation: There shall be a minimum 10% owner equity investment of total project costs required of all applicants. G. Collateral requirements: All loan agreements will be secured by one or more of the following; 1. a promissory note, 2. mortgage, 3. or security agreement as required by the EDA. The revolving fund may take a subordinate position to the primary lender on the assets financed; and surety deposits shall be required for certain construction contracts as set forth in Minnesota Statutes 290.9705. H. Letters of Commitment: Letters of commitment from all funding sources must be submitted for the application to be deemed complete. I. Personal guaranty: Personal guaranties of persons with an ownership interest of 20% or greater are required. Personal guaranties of persons with ownership interest between 5% to 19% may be required by the EDA but are discretionary. J. Loan repayments: Loan payments must begin within one month of funding of the Revolving Loan. The EDA may make exceptions to this rule on a case-by-case basis. K. Loan prepayment: Prepayments are permitted where the borrower makes the EDA whole for any losses or costs associated with the prepayment. L. Notice of award or denial: Applicants will be notified by the EDA in writing not more than fourteen (14) business days after final action has been taken on their revolving loan fund application. M. Loan closing documents: The EDA will close the loan within sixty (60) days of final EDA approval of the loan application. At that time, the EDA will deliver to the borrower all closing documents and a final debt service schedule. In exchange, the borrower will deliver to the EDA its Promissory note to evidence the loan. N. Post closing amendments and modifications: Requests for amendments and 6 modifications following award, closing or disbursement of funds to the underwriting of the original request require EDA approval and shall be presented at the next scheduled meeting of the EDA. O. Loan denial: The EDA will not make a loan if it determines the loan amount would place an undue burden on the financial resources of the borrower or the borrower cannot demonstrate adequate financial capacity to repay the loan or the EDA determines that making the loan is not in the best interest of the City or EDA. P. Appeal: There will be a complaint and appeal procedure for aggrieved applicants: 1. Written notice. Applicants will receive written notice of denial of the loan and the reasons(s) for the determination within fourteen (14) days of the determination. 2. Petition. The aggrieved applicant may petition the EDA in writing for reconsideration within fourteen (14) days from date of the written notice of denial. Any request to appear before the EDA must be in writing and must be submitted at least seven (7) days prior to the EDA’s scheduled meeting. Upon receipt of the written petition for reconsideration, the EDA shall consider the petition at its next scheduled meeting and advise the petitioner in writing of its decision within fourteen (14) days of that meeting. The EDA’s decision will be final. 3. Re-application. Applicants aggrieved by the EDA’s final decision may re- apply for revolving loan funds after ninety (90) days if the concerns in the preceding application are adequately and appropriately addressed. VIII. Guidelines for Application Approval and Servicing A. All applicants shall first contact a primary lending institution to determine if additional financing from the EDA is needed to accomplish the project, and if so, how much. B. The applicant and the primary lender shall then meet with EDA and Central Minnesota Development Company (CMDC) staff to obtain information about the RLF program, discuss the project, and obtain application forms. C. The applicant shall complete and submit an application form to the EDA and CMDC staff, along with a processing fee of 1.5 percent of the loan request or $1,500 whichever is greater. (The fee is used to cover processing expenses and will be returned less expenses only if application is denied.) The applicant must provide evidence of its ability to meet the equity requirements or provide a letter of 7 commitment for conventional financing from the primary lending institution. D. The EDA will assign application review to CMDC which will serve as underwriter for the RLF. The application will be reviewed by the CMDC and EDA staff to determine if it conforms to all City and EDA policies and ordinances and to consider the following: 1. The availability and applicability of other governmental grants and/or loan programs. 2. Whether the proposed project will result in conformance with building and zoning codes. 3. Whether it is desirous and in the best interests of the public to provide funding for the project. E. With written permission granted by the applicant, the application will be submitted by the EDA staff to the CMDC as the EDA’s advisor. F. CMDC will review each application in terms of its consistency with the goals of the RLF Program as enumerated above. G. In the event there is ambiguity of an application’s conformance with the program’s Guidelines, the proposed application could be brought to the EDA for further discussion. CMDC and EDA staff will evaluate the project application in terms of the following: a. Project Design - Evaluation of project design will include review of proposed activities, timelines and a capacity to implement. b. Financial Feasibility - Availability of funds, private involvement, financial packaging and cost effectiveness. • Appropriate ratio of private funds to RLF 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. • Project compliance with all city codes and policies. 8 • All other information as required in the application and/or additional information as may be requested by the EDA and CMDC. c. CMDC will recommend the approval, denial, or request a resubmission to EDA staff. A recommendation from CMDC will be forwarded to the EDA for final action. Right of Refusal The EDA may deny any project which, in its opinion, conflicts with or does not conform to the guidelines established in this document. Approval. If approved, the applicant will be sent a written commitment letter that will outline the terms and conditions of the loan approval. A copy of the commitment letter will be signed by the borrowers and guarantors signifying acceptance of the terms and conditions of the loan proposal and the conditions for funding. Upon the return of the executed commitment letter, EDA staff will begin the loan closing process with the EDA’s attorney. Closing. The EDA’s legal counsel and/or CMDC’s legal counsel will prepare documentation and coordinate the closing with the borrower or the borrower’s counsel. Loan Servicing: The EDA will contract with CMDC for all loan servicing. When servicing EDA loans, CMDC will comply with Loan Program Requirements and in accordance with prudent and commercially reasonable lending standards. CMDC is responsible for routine servicing including receipt and review of the borrower's or Operating Company's financial statements on an annual or more frequent basis and monitoring the status of the borrower and RLF loan collateral. CMDC will respond to borrower requests for loan modifications following approval of the EDA. For any RLF loan that is more than three months past due, CMDC will promptly notify the EDA that the loan should be placed in liquidation unless the RLF loan has an EDA- approved deferment or is in compliance with an EDA-approved plan to allow the borrower to catch up on delinquent loan payments. CMDC will work with the EDA and borrower to cure defaults and initiate workouts. 1. Monitoring. CMDC staff will monitor loans for compliance with the accepted terms and conditions including job creation statistics and wage and benefit levels. 9 CMDC is responsible for monitoring that the borrower makes all required insurance premium payments and has paid all taxes when due. CMDC is responsible for filing renewals and extensions of security interests on collateral for the RLF loan, as required. 2. Reports. CMDC will provide quarterly portfolio reports to the EDA. 3. Records. Computer files and conventional paper files will be maintained for the purpose of documenting, tracking, and monitoring program and loan activities and will be maintained by the EDA and CMDC staff a. Program records. The following program information will be maintained in the project file, including but not limited to: i. Environmental report; ii. Eligibility determination records; iii. Property inspection report; iv. Progress reports; v. Credit Memo; vi. Correspondence; vii. Loan documents; and viii. Executed loan agreement. b. Financial records. The following financial information will be maintained in each Loan file, including but not limited to: i. Copy of the executed loan agreement; ii. Disbursement data; iii. Progress reports; iv. Repayment data; and v. Amortization tables. 4. Record retention. All program and financial records, supporting documents, statistical records, environmental review records and other records pertinent to the revolving loan program shall be maintained for a period of at least three (3) years from the final project report and project closeout date. IX. Delinquency The following is the notification procedure for delinquent loans: 10 A. The City Finance Department is responsible for the timely posting of all loan repayments. B. Thirty (30) day notice. Upon thirty (30) days delinquency, CMDC will notify the City Controller of the delinquency and shall send the borrower a delinquency notice requesting payment within fifteen (15) days. A copy of the letter shall be forwarded to the EDA Executive Director. C. Forty-five (45) day notice. If payment has not been received by the 45th day a second delinquency notice will be sent to the borrower by CMDC requesting payment within fifteen (15) days. A copy of the letter shall be forwarded to the City Controller and EDA Executive Director. D. Sixty (60) day notice. If payment has not been received by the 60th day, CMDC will attempt to contact the borrower by telephone to address the delinquency. CMDC shall also send a notice of default to borrower via certified mail requesting immediate payment and advising the borrower the delinquency will be placed on the EDA agenda for discussion at an upcoming meeting. E. Ninety (90) day notice. If no repayment plan is submitted by the borrower, or if there is no attempt by the borrower to negotiate the amount due, the CMDC will contact the EDA Executive Director and the EDA attorney to sending a 90 day letter calling due the loan in full. F. Negotiation. Throughout this process, every attempt will be made to preserve the company, the jobs, and the loan funds. X. Default If the EDA determines a loan to be in default it may adopt a resolution declaring the borrower in default and convey the matter to the EDA legal counsel for disposition. XI. Recaptured funds Loan repayments shall be deposited into the ity’s Development Fund. These recaptured funds are available to other applicants for utilization as gap financing for certain approved economic development projects. The Revolving Loan Fund shall be administered by a financial management system in compliance with all state and federal requirements. XII. Funding acknowledgement 11 For projects financially supported by revolving loan funds the Borrower shall: A. Acknowledge revolving loan fund support in certain written materials including company brochures, reports, newsletters, and press releases; and B. On the building or expansion construction site post a sign acknowledging financial support from the St. Louis Park EDA. St. Louis Park Community Development Department • 5005 Minnetonka Blvd., St. Louis Park, MN 55416 www.stlouispark.org • Phone: 952.924.2575 • Fax: 952.928.2662 • TTY: 952.924.2518 Revolving loan fund application Contact information Legal name of business: _________________________________________________________________ Project site address: ____________________________________________________________________ City: _____________________________________ State: _________________ ZIP code: _____________ Contact persons: _______________________________________________________________________ Business phone: ________________________________ Fax: ___________________________________ Home phone: __________________________________ Email: _________________________________ Check one: ☐ Proprietor ☐ Corporation ☐ Partnership Social Security Number: _________________________________________________________________ Federal ID number: ____________________________ State ID number: __________________________ Type of business: ☐ Sole proprietor ☐ Partnership ☐ Corporation ☐ Other: _______________ Nature of business: ___________________________________ Date established: ___________________ Nature of loan request ☐ Land and building acquisition ☐ Building construction ☐ Machinery and/or equipment purchase ☐ Renovation and modernization of commercial buildings ☐ Site improvements ☐ Investment real estate with a minimum of 50 percent of the space pre-leased Total project cost: __________________________ Amount requested: ___________________________ Notes: Revolving loan fund application | Page 2 Give a brief summary of your business and its products or service: General description of proposed project, building and site (Attach site and building plans and project description, including size of property to be purchased, proposed size of building renovation or expansion, and/or any machinery or equipment to be purchased.) Building size: _______________________________ Building materials: ___________________________ Address of the property to be acquired where the project will occur _____________________________________________________________________________________ Estimated market value upon completion (land and building): $_________________________________ Appraised value of land and building before construction: $_____________________________________ Expected start date: _______________________ Expected completion date: ______________________ Other potential use(s) of proposed facility: __________________________________________________ Describe how this loan will benefit your business. Revolving loan fund application | Page 3 Will additional jobs be created through this project? If yes, explain current and projected employment: Projected employment Type of employment Existing jobs First year Second year Professional/managerial technical Wage rate: ___________ ______ FT ______ PT ______ FT ______ PT ______ FT ______ PT Skilled Wage rate: ___________ ______ FT ______ PT ______ FT ______ PT ______ FT ______ PT Semi-skilled/unskilled Wage rate: ___________ ______ FT ______ PT ______ FT ______ PT ______ FT ______ PT Totals ______ FT ______ PT ______ FT ______ PT ______ FT ______ PT Public benefit Describe how the project will benefit the City of St. Louis Park. Attach additional sheet if needed. Revolving loan fund application | Page 4 Financing Project costs: $ ___________________________ Land: $ ___________________________ Site improvements: $ ___________________________ Buildings (attach plans and costs): $ ___________________________ Equipment/machinery/fixtures: $ ___________________________ (attach list of estimated costs) Remodeling: $ ___________________________ Other (attach description): $ ___________________________ TOTAL COSTS: $ ___________________________ Source Name Terms Amount Bank loan Bank loan Other private funds Application contributions Federal grant/loan State grant/loan EDA (SLP) loan Other public funds Total financing Revolving loan fund application | Page 5 Collateral assignments Description of collateral Lien position To bank 1 To bank 2 To private source To other sources To federal government To state Value of collateral Book value Cost Existing liens Land Buildings Machinery and equipment Other Declaration A separate sheet may be attached and used for explanations. A. Have there ever been judgments or injunctions against the business, principals, owners, officers, applicants or shareholders? If yes, please explain. ☐ Yes ☐ No B. Is there any pending, anticipated or final regulatory or legal (civil or criminal) litigation involving the business, principals, owners, officers, applicants or shareholders? If yes, please explain. ☐ Yes ☐ No C. Has the business, principals, owners, officers, applicants or shareholders ever filed bankruptcy? If yes, please explain and state the date in which the bankruptcy occurred. ☐ Yes ☐ No D. Has the business, principals, owners, officers, applicants or shareholders ever been or currently are delinquent on state or federal taxes? If yes, please explain. ☐ Yes ☐ No E. Has the business, principals, owners, officers, applicants or shareholders ever defaulted on any loan commitment, development or redevelopment agreement, or other business subsidy? If yes, please explain. ☐ Yes ☐ No Revolving loan fund application | Page 6 F. The undersigned specifically acknowledge(s) and agree(s) that 1. All statements made in the application are made for the purpose of obtaining the loan indicated herein. 2. Verification or re-verification of any information contained in the application may be made at any time by the grantor/lender, its agents, successors and assigns, either directly or through a credit reporting agency, from any source named in this application, and the original copy of this application will be retained by the grantor/lender, even if the loan is not approved; 3. The grantor/lender, its agents, successors and assigns will rely on the information contained in the application and I/we have continuing obligation to amend and/or supplement the information provided in this application if any of the material fact which I/we have represented herein should change prior to closing; 4. In the event my/our payments or obligations for the loan indicated in this application become delinquent or otherwise in default, the grantor/lender, its agents, successors and assigns, may, in addition to all their other rights and remedies, report my/our name(s) and account information to a credit reporting agency; 5. Ownership of the loan may be transferred to successors or assigns of the grantor/lender without notice to me/us and/or the administration of the loan account may be transferred to an agent, successor or assign of the lender without notice to me/us. Certification I/we certify that the information provided in this application is true and correct as of the date set forth opposite my/our signature(s) on this application and acknowledge my/our understanding that any intentional or negligent misrepresentation(s) of the information contained in this application may result in civil liability and/or criminal penalties including, but not limited to, fine or imprisonment or both and liability for monetary damages to the grantor/lender, its agents, successors and assigns, insurers and any other person who may suffer any loss due to reliance upon any misrepresentation which I/we have made on this application. Name of business: _____________________________________________________________________ Loan recipient: _______________________________ Title:______________________ Date: _________ Print name: __________________________________ Title: _____________________ Date: _________ Co-recipient: _________________________________ Title:______________________ Date: _________ Print name: __________________________________ Title: _____________________ Date: _________ Co-recipient: _________________________________ Title:______________________ Date: _________ Print name: __________________________________ Title: _____________________ Date: _________ List other co-recipients on a separate sheet of paper. Revolving loan fund application | Page 7 Attachments checklist ☐ Written business plan or description (see attached outline) ☐ Description of business ☐ Ownership ☐ Management ☐ Date established ☐ Products/services ☐ Future plans ☐ 2-year financial statements (for businesses less than two years old) ☐ Financial projections for 2 years ☐ Resumes of owner/management ☐ Personal financial statements of proprietor, partners and guarantors ☐ Letter of commitment from applicant pledging to complete the project during the proposed project duration ☐ Letter of commitment from the other sources of financing, stating terms and conditions of their participation in project ☐ Deposit of 1 percent of loan amount or $1,500, whichever is greater Revolving loan fund application | Page 8 Debt schedule Name of operating company: ______________________________________ Date: ______________ Please list existing debts Creditor name Original amount Original date Present balance Interest rate Maturity date Monthly payments Security Current or delinquent Total present balance Total monthly payment *Total must agree with balance shown on current financial statements. Revolving loan fund application | Page 9 Project contacts Attorney Name: _______________________________________________________________________________ Street address: ________________________________________________________________________ City: _____________________________________ State: _________________ ZIP code: _____________ Phone: ___________________________________ Email: ______________________________________ Accountant Name: _______________________________________________________________________________ Street address: ________________________________________________________________________ City: _____________________________________ State: _________________ ZIP code: _____________ Phone: ___________________________________ Email: ______________________________________ Financing sources (lenders, partners, etc.) Name: _______________________________________________________________________________ Street address: ________________________________________________________________________ City: _____________________________________ State: _________________ ZIP code: _____________ Phone: ___________________________________ Email: ______________________________________ Name: _______________________________________________________________________________ Street address: ________________________________________________________________________ City: _____________________________________ State: _________________ ZIP code: _____________ Phone: ___________________________________ Email: ______________________________________ Parent company Name: _______________________________________________________________________________ Street address: ________________________________________________________________________ City: _____________________________________ State: _________________ ZIP code: _____________ Phone: ___________________________________ Email: ______________________________________ Insurance Name: _______________________________________________________________________________ Street address: ________________________________________________________________________ City: _____________________________________ State: _________________ ZIP code: _____________ Phone: ___________________________________ Email: ______________________________________ Revolving loan fund application | Page 10 Business plan outline 1. Executive summary a. Name and location of business b. Brief discussion of product, market and competition c. Expertise of management team d. Summary of financial projections e. Amount of financial assistance requested and proposed purpose f. Business goals and reasons for undertaking the project 2. Description of the company a. Date and state of incorporation or formation b. History of the company c. Background of the principals and their roles 3. Market analysis a. Description of current industry and industry trends b. Description of the total market and its participants c. Discussion of the target market and the competition 4. Description of the product or service a. List of patents, copyrights, licenses or proprietary interests b. Discussion of technical and legal considerations c. Comparisons to competitors' products or services d. Description of current and future research and development. 5. Marketing strategy a. Overall strategy b. Pricing policy and sale terms c. Method of selling, distributing and servicing d. Current and estimated sales and market share e. Advertising, public relations and promotion 6. Management plan a. Form of business organization b. Composition of board of directors c. Officers organization chart and responsibilities d. Resumes of key personnel and listing of key advisors 7. Operating plan a. Schedule of upcoming work and key completion dates for next 2 years b. Planned facilities or capital improvements for next 3 years c. Staffing plan 8. Financial data a. Funding request indicating the desired financing, capitalization, use of funds and future financing b. Past 3 years, year-end financial statements (balance sheet, income and cash flow statements) c. Current interim financial statements d. Pro forma cash flow projections, including the proposed financing, for 2 years e. Projected balance sheets, income statement and statement of changes in financial position, including the proposed financing, for 2 years f. Description of all assumptions behind the financial projection Tax Increment Financing (TIF) Policy Adopted August 18, 1997 1 CITY OF ST. LOUIS PARK Tax Increment Financing Policy For the purpose of this policy, the "City" shall also mean the St. Louis Park Economic Development Authority (EDA), which serves in conducting various economic development, housing and redevelopment programs and activities within the City of St. Louis Park I. GENERAL POLICY The purpose of this policy is to establish the City's position relating to the use of Tax Increment Financing for private development. This policy shall be used as a guide in processing and reviewing applications requesting Tax Increment assistance. The fundamental purpose of tax increment financing in St. Louis Park is to encourage desirable development and/or redevelopment that would not otherwise occur “but for” the assistance provided through TIF. The City of St. Louis Park shall consider Tax Increment Financing for projects that serve to accomplish the City’s goals for housing and economic development as they may change over time. The goals include facilitating projects that would result in the creation of quality jobs (e.g. stable employment and/or attractive wages and benefits) and the attraction, retention, and expansion of business and housing options in the City. II. CITY'S OBJECTIVE FOR THE USE OF TIF: As a matter of adopted policy, the City of St. Louis Park will consider using Tax Increment Financing (TIF) to assist private development projects to achieve one or more of the following purposes: • Remove blight and/or encourage redevelopment in the commercial and industrial areas of the City in order to encourage high quality development or redevelopment and private reinvestment in those areas. • To achieve any of the following housing-related goals: • to ensure all housing is safe and well maintained • to provide a balanced and sustainable housing stock to meet diverse needs both today and in the future • to promote neighborhood stabilization and revitalization by the removal of blight and the upgrading of existing housing stock. • To retain local jobs and/or increase the number and diversity of quality jobs (e.g. stable employment and/or living wages and benefits). 2 • To encourage additional unsubsidized private development in the area, either directly, or through secondary "spin-off" development. • To offset increased costs of redevelopment (e.g. contaminated site clean-up), over and above those costs that a developer would incur in normal urban and suburban development. • To facilitate the development process and to achieve development on sites which would not be developed without this assistance. • To meet other uses of public policy, as adopted by the Council from time to time, including promotion of quality urban design, quality architectural design, energy conservation, decreasing the capital and operating costs of local government, etc. • To encourage the application of Livable Communities principles to a development project so as to create compact, efficient mixed-use development, quality amenities (e.g. public art), and attractive, pedestrian and transit friendly development. III. COSTS WHICH QUALIFY FOR TAX INCREMENT FINANCING ASSISTANCE: • Project Design fees including: utilities, landscape, architectural and engineering design. • Site related work, including: permits for site work, earthwork/excavation, soil correction, landscaping, utilities, streets and roads, street/parking lot paving, street/parking lot lighting, curb and gutter, sidewalks • Land acquisition • Special assessments • Legal fees (acquisition, finance, closing) • Soil tests • Environmental studies • Surveys • Park and open space dedication fees • Interest rate write downs • Relocation assistance • Replacement or clean-up of contaminated soils which would otherwise preclude redevelopment • Rehabilitation • Any other costs allowable by Statute 3 IV. PROJECTS WHICH MAY QUALIFY FOR TAX INCREMENT FINANCING ASSISTANCE All new TIF projects considered by the City of St. Louis Park must meet each of the following minimum qualifications and will also be evaluated based on their ability to meet the desired qualifications for assistance. However, it should not be presumed that a project meeting any of the qualifications will automatically be approved. Meeting the qualifications creates no contractual rights on the part of any potential developer to have its project approved. MINIMUM QUALIFICATIONS A. The project should meet one or more of the Tax Increment Financing Objectives outlined in Section 2. But at a minimum shall: • Remove blight and/or encourage redevelopment in the commercial and industrial areas of the City in order to encourage high quality development or redevelopment and private reinvestment in those areas. • To facilitate the development process and to achieve development on sites which would not be developed without this assistance. A. The developer must demonstrate that the project is not financially feasible "but-for" the use of tax increment financing. B. The project must be consistent with the City's Comprehensive Plan and Zoning Ordinances, or required changes to the plan and ordinances must be under active consideration by the City at the time of final TIF application submittal. C. Prior to approval of a TIF financing plan, the developer shall provide any requested market and financial feasibility studies, appraisals, soil boring, private lender commitment, and/or other information the City or its financial consultants may require in order to proceed with an independent underwriting of the proposal. D. The developer must provide adequate financial guarantees to ensure the repayment of the TIF loan and completion of the project. These may include, but are not limited to: assessment agreements, letters of credit, personal deficiency guarantees, guaranteed maximum cost contract, etc. E. Any developer requesting TIF assistance should be able to demonstrate past successful general development capability as well as specific capability in the type and size of development proposed. TIF will not be used when the developer's credentials, in the sole judgment of the City, are inadequate due to past track record relating to: completion of projects, general reputation and/or bankruptcy, or other problems or issues considered relevant by the City. 4 F. The developer should retain ownership of the project at least long enough to complete it, to stabilize its occupancy, to establish the project management, and to initiate repayment of the TIF loan. DESIRED QUALIFICATIONS A. TIF proposals creating a higher ratio of property taxes paid before and after redevelopment will receive priority consideration. Given the different assessment circumstances in the City, this ratio will vary widely. A 1:2 ratio of taxes paid before and after redevelopment is desired. B. TIF proposals should normally not be used to support speculative industrial, commercial, office or housing projects. In general the developer should be able to provide market data, tenant letters of commitment or finance statements which support the market potential/demand for the proposed project. C. TIF will normally not be used in a project that involves an excessive land and/or property price. This will normally be where the acquisition price is more than 20% in excess of market value as determined by an independent appraisal of the property. D. TIF will not be used in projects that would give a significant competitive financial advantage over similar projects in the area due to the use of tax increment subsidies. Developers should provide information to support that TIF assistance will not create such a competitive advantage. Priority consideration will be given to projects that fill an unmet market need. E. TIF will be provided on a pay-as-you -go-basis. Any request for upfront assistance will be evaluated on its own merit in accordance with the City's general financing policies. Projects requesting pay-as-you-go financing will receive priority consideration. F. TIF will not be used to support projects that place extraordinary demands on City services. Preference will be given to projects that do not place extraordinary demands on City services. G. TIF will not normally be used for projects that would generate significant environmental problems in the opinion of the local, state, or federal governments. Priority will be given to projects that aim to clean-up existing contaminated sites and would facilitate the location of an industry or business, that has an environmentally sound track record, or meet a housing need in the City. H. Preference will be given to projects that meet good public policy criteria as determined by the City Council, including: 5 • High project quality (e.g. sound architectural design, quality construction and materials) • Projects that are in accord with the Comprehensive Plan, Zoning Ordinance, Strategic Plan, and other redevelopment plans of the City • Projects that provide significant improvement to surrounding land uses, the neighborhood, and/or the City • Projects that provide a significant increase in tax base • Projects that provide significant new, or retained, employment • Projects that meet financial feasibility criteria established by the City; and • Projects that provide the highest and best desired use for the property • Project is consistent with Livable Communities principles V. TAX INCREMENT PROJECT EVALUATION PROCESS The following five methods of analysis for all TIF proposals will be used: 1. Consideration of project meeting minimum qualifications. 2. Consideration of project meeting desired qualifications. 3. Project meets "but-for" analysis and statutory qualifications (Exhibit A). 4. Project Report Card (Exhibit B) 5. Project is deemed consistent with Vision St. Louis Park and City Strategic Plan Please note that the evaluation methodology is intended to provide a balanced review. Each area will be evaluated individually and collectively and in no case shall one area outweigh another in terms of importance to determining the level of TIF assistance. VI. APPLICATION FOR TIF ASSISTANCE FOR ALL TIF DISTRICTS AND PROJECT AREAS The City's tax increment financing program will be administered by the St. Louis Park EDA. The St. Louis Park EDA will require a non-refundable application fee in the amount of $3,000 for its processing of the application. The application fee shall be paid to the EDA at the time a final TIF application is submitted. At the time a final TIF application is submitted, the applicant shall also deposit $20,000 with the EDA to cover its attorney’s and consultants costs incurred as part of amending or establishing a TIF district, drafting and negotiating a development agreement, and conducting any fiscal analysis that may be required to meet the requirements of utilizing TIF. If additional expenses are incurred beyond the $20,000, prior to the execution of a development agreement, the EDA shall notify the applicant in writing and the applicant will be required to deposit additional funds upon notice. 6 If the project is approved and the applicant proceeds with the project, the EDA shall reimburse the applicant any unused portion of the deposit as of the date of execution of the development agreement. If the applicant does not proceed with the project, the EDA shall reimburse the applicant for the unused portion of the deposit as of the date that the EDA is notified in writing that the applicant desires to withdraw its application. VII. APPLICATION PROCESS: The application process is a two-step process and must be completed in accordance with the TIF application procedures (Exhibit C). The purpose of this approach is to give an applicant the opportunity to present a development proposal without expending a great deal of money and time in pursuing a development that may conflict with the City's goals and objectives. VIII. OTHER POLICY ISSUES Fiscal Disparities It is the City’s general policy to have tax increment financing districts contribute to fiscal disparities in accordance with applicable State law. In the event a project cannot be completed as a result of this election, the City may re-evaluate the impact of this policy on the project within the framework of State statute. Loss of Government Aid At any time, if the formation of a new TIF district or the use of an existing district to finance a project will subject the City to an LGA/HACA penalty or local contribution to a project, the transaction shall be structured so as to have the ultimate cost to the City minimized to the greatest extent permitted by law, so as to have the project bear the cost of the penalty or contribution. 7 Public Use of Tax Increment The City shall follow applicable state laws in terms of potential public improvement financing with TIF. It shall be the general policy of the City to identify public improvements at the time of adoption or amendment of the TIF Plan. PASSED AND DULY ADOPTED this 18th day of August, 1997 by the City of St. Louis Park/St. Louis Park EDA _____________________________ Mayor _____________________________ EDA President ATTEST: _________________________________ City Manager/EDA Executive Director ADDENDUM The above Policy has been modified to include the following: Green Building Policy adopted 2-16-10 Inclusionary Housing Policy adopted 6-1-15 and amended May 15, 2017 St. Louis Park Community Development Department • 5005 Minnetonka Blvd., St. Louis Park, MN 55416 www.stlouispark.org • Phone: 952.924.2575 • Fax: 952.928.2662 • TTY: 952.924.2518 Tax increment financing (TIF) assistance application Applicant information Applicant (developer/business) name: _____________________________________________________ Street address: ________________________________________________________________________ City: __________________________________ State: __________________ ZIP code: ______________ Contact person: _________________________________ Title: _________________________________ Phone number: ____________________________ Email: _______________________________ Brief description of applicant’s business: Contact information for person directly involved in preparing public finance application Contact name: _________________________________________________________________ Business name: _________________________________________________________________ Phone number: ____________________________ Email: _______________________________ Proposed project 1. Proposed project description Business type(s) and/or use(s); building(s) square footage; number of stories; number of housing units, if applicable, including number and percentage of market rate and affordable units; building height and materials; and prospective commercial tenants, if applicable. Provide a map showing the exact location and boundaries of the proposed development, proposed project site plan, preliminary building elevations and floor plans showing arrangement and floor areas of proposed uses. TIF assistance application | Page 2 2. Location of project Please attach a map depicting where project will be located within the city. 3. Size of project area Acres/square feet: __________________________ 4. Describe anticipated sustainable elements as related to the city’s Green Building Policy. 5. Is any of the proposed project area blighted, contaminated or environmentally challenged? ☐ Yes ☐ No If yes, please describe the challenges and their estimated extent. 6. Current ownership of the site Does applicant have a fully executed option or purchase agreement with property owner(s)? ☐ Yes ☐ No Please explain. 7. Does developer control all the parcels required for the proposed development? ☐ Yes ☐ No Please explain. TIF assistance application | Page 3 8. Submit proposed project’s financial statements, including: 1. Sources and uses statement (delineating hard and soft costs) indicating total estimated project costs (such as those listed below). Sources of financing Estimated amount Percentage Developer equity $ % Developer financing A $ % Developer financing B $ % Grants $ % Other sources (explain) $ % TIF assistance $ % Total sources $ 100% Uses of funds Estimated amount Percentage Hard costs Acquisition costs Land acquisition $ % Closing costs – broker commission $ % Demolition $ % Construction costs Soil correction/remediation $ % Site grading and excavation $ % Building construction $ % Tenant improvements (TI) $ % Furniture, fixtures and equipment (FF&E) $ % Structured parking (if applicable) $ % Utilities $ % Road improvements $ % Curb, gutter, parking lot, sidewalk $ % Landscaping $ % Contractor fees $ % Contingencies $ % Permits $ % SAC/WAC $ % Park dedication and art fees $ % Contingency $ % Soft costs Professional services Architectural and engineering fees $ % Environmental consulting fees $ % Legal fees $ % Financing costs $ % Developer fee $ % Other (please specify) $ % Total uses $ 100 % TIF assistance application | Page 4 2.Monthly/annual income and expense budget. 3.15-year operating Proforma along with assumptions and estimated return on investment with and without TIF assistance. 9.For what specific reasons is TIF assistance needed for this project? 10.What extraordinary costs prohibit this project from achieving financial viability? Submit an itemized list of project costs for which TIF assistance is being requested. See attached list of TIF eligible costs. Description of expense Estimated amount TIF request $ $ $ $ $ $ $ $ $ $ $ $ $ $ Total $ $ 11.Total estimated amount of TIF assistance required to make proposed project financially feasible. Specific dollar amount: $_______________ TIF assistance application | Page 5 12. Specific reasons why, “but for” the provision of the requested TIF assistance, this project would not proceed. 13. What other alternative financing sources have been sought and why are they not adequate or feasible? 14. Summarize the anticipated change in the property tax base after completion of the proposed project. Current assessed value: $__________________ Current annual property taxes paid: $__________________ Anticipated assessed value after completion: $__________________ Anticipated annual property taxes paid after completion: $__________________ Estimated growth in assessed value after completion (c minus a): $__________________ Estimated annual incremental taxes paid after completion (d minus b): $__________________ 15. Estimated project construction schedule: Estimated construction start date: ______________ Estimated construction completion date: ______________ If phased project: ______________ year ______________ % completed ______________ year ______________ % completed Will all development costs to be reimbursed with TIF assistance be expended within five years of the project’s commencement? ☐ Yes ☐ No 16. Architect, engineer, and general contractor company names, contact persons and addresses. TIF assistance application | Page 6 17. What is the existing comprehensive guide plan land use designation and zoning of the property? Include a statement as to how the proposed development will conform to the current land use designation and how the property will be zoned or rationale as to why changes may be necessary. 18. Is the proposed project part of a mixed use development? ☐ Yes ☐ No If yes, please describe various components. 19. Does the proposed project incorporate principals of livable communities and/or transit- oriented development? ☐ Yes ☐ No If yes, please describe. 20. Will the project incorporate LEED (Leadership in Energy and Environmental Design) or other sustainable building design principals? ☐ Yes ☐ No Will certification likely be pursued? ☐ Yes ☐ No 21. If applicable, how many FTE (full-time equivalent) jobs are expected to be retained in the city as a direct result of this project? TIF assistance application | Page 7 22. What is the expected pay range of these retained positions (without benefits)? Pay range Number of FTE employees Total wages $0 — $14,999 $ $15,000 — $24,999 $ $25,000 — $29,999 $ $30,000 — $44,999 $ $45,000 — $59,999 $ $60,000 and above $ Total $ 23. How many FTE (full-time equivalent) jobs are expected to be created in the city as a direct result of this project? 24. What is the expected pay range of these new positions (without benefits)? Pay range Number of FTE employees Total wages $0 — $14,999 $ $15,000 — $24,999 $ $25,000 — $29,999 $ $30,000 — $44,999 $ $45,000 — $59,999 $ $60,000 and above $ Total $ 25. Please describe any other economic/social impacts this project is likely to have on the community. TIF assistance application | Page 8 Applicant (developer) background 26. Provide a brief description of the project developer (or client business) Include a summary of development experience, financial capacity, construction, operational and management experience and proposed project staff. Attach additional pages if necessary. 27. Describe at least two recent projects similar in scope that the applicant has successfully completed, as well as experience of this particular development team working together. 28. Has the applicant or any project-related entity filed for bankruptcy or defaulted on a development or construction related agreement in the last seven years? ☐ Yes ☐ No If so, please describe the situation and how it was resolved. 29. Municipal reference. Provide the names of municipalities where the applicant has completed similar developments with local public funding assistance in the past five years. TIF assistance application | Page 9 Development costs eligible for TIF assistance The EDA will consider the following development costs eligible for reimbursement through tax increment financing: • Phase II environmental site assessments • Additional necessary soil testing • Environmental consulting, studies and permits • Remediation action plans • Asbestos abatement • Building demolition and removal • Soil correction • Earthwork/excavation/shoring • Additional necessary structural support such as pilings • Architectural and engineering fees (directly attributable to site work) • Utilities design and construction – sanitary sewer, storm sewer and water • New or expanded streets • Parking structures