RES 20-67City of Elk River
City Council
Resolution 20- U
A Resolution of the City Council of the City of Elk River approving a
modification to the development program for development district no. I,
establishing an economic development tax increment financing district,
approving a tax increment financing plan therefor (Shoot Steel, Inc. Project),
and authorizing execution of a tax increment development agreement
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Elk
River, Minnesota, as follows:
Section 1. Recitals.
1.01 The Council of the City of has heretofore established Development
District No. 1 and adopted a Development Program therefor. It has been proposed that
the City adopt a Modification to the Development Program (the "Development Program
Modification") for Development District No. 1 (the "Development District") and
establish Tax Increment Financing (Economic Development) District No. 26 (Shoot
Steel, Inc. Project) (the "TIF District") therein and adopt a Tax Increment Financing Plan
(the "TIF Plan") therefor (the Development Program Modification and the TIF Plan are
referred to collectively herein as the "Program and Plan"); all pursuant to and in
conformity with applicable law, including Minnesota Statutes, Sections 469.124 to
469.133 and Sections 469.174 to 469.1794, all inclusive, as amended, (the "Act") all as
reflected in the Program and Plan, and presented for the Council's consideration.
1.02 The City has performed all actions required by law to be performed prior
to the adoption and approval of the Development Program Modification and the TIF Plan,
including, but not limited to, delivery of the Development Program Modification and the
TIF Plan to the Board of Sherburne County (the "County") and the Board of Independent
School District No. 728 (the "School District") and the holding of a public hearing
thereon following notice thereof published in the City's official newspaper at least 10 but
not more than 30 days prior to the public hearing.
1.03 Certain written reports and other documentation (collectively, the
"Reports") relating to the TIF Plan including the tax increment application made and
other information supplied by Moyer Properties, LLC, a Minnesota limited liability
company (or an affiliate thereof, the "Developer") and Shoot Steel, Inc., a Minnesota
corporation (the "Operator"), as to the activities contemplated therein, have heretofore
been assembled or prepared by staff or others and submitted to the Council and/or made a
part of the City files and proceedings on the TIF Plan. The Reports include data,
information and/or substantiation constituting or relating to (1) why the TIF District
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meets the requirements to be an economic development tax increment financing district
and why the assistance satisfies the so-called "but for" test and (2) the bases for the other
findings and determinations made in this resolution. The Council hereby confirms,
ratifies and adopts the Reports, which are hereby incorporated into and made as fully a
part of this resolution to the same extent as if set forth in full herein.
1.04 The Developer has proposed to acquire, construct and equip an
approximately 20,000 square foot warehouse facility to be leased to the Operator
(collectively, the "Development') and has requested that the City provide tax increment
assistance to pay a portion of the public development costs of the Development.
1.05. There has been presented before the Council, a Tax Increment
Development Agreement between the City and the Developer (the "Agreement'), setting
for the terms and conditions of the Development and provides certain tax increment
assistance (the "TIF Assistance") to the Developer repayable from tax increment
generated from the TIF District. The TIF Assistance constitutes a business subsidy
within the meaning of Minnesota Statutes, Section 116J.993 to 116J.995, as amended (the
"Business Subsidy Act'), and the Agreement includes a "business subsidy agreement" as
required under the Business Subsidy Act.
1.06. The Council has on this date conducted a duly noticed public hearing
regarding the granting of a business subsidy being provided to the Developer in
accordance with the Business Subsidy Act, at which all interested persons were given an
opportunity to be heard.
Section 2. Findings for the Creation of the TIF District and Adoption of a TIF
Plan Therefor.
2.01 The Council hereby finds that the land within the Development District is
proper and desirable to establish and develop within the City, its effect will be to carry
out the objectives of the Development District by creating an impetus for the
development of warehouse and related structures in the City, and otherwise promote
certain public purposes and accomplish certain objectives as specified in the Plans. The
Development District has been previously established by the City and is not being
expanded in connection with the establishment of the TIF District. The only modification
to the Development Program relates to the incorporation of the proposed TIF District and
the terms of the TIF Plan therefor.
2.02 The Council hereby finds that the TIF District is in the public interest and
is an "economic development district' within the meaning of Minnesota Statutes,
Section 469.174, Subdivision 12, because it will result in increased employment in the
state, including construction jobs, and it will result in capital investment in the City and
therefore preservation and enhancement of the tax base in the state.
2.03 The Council hereby makes the following additional findings in connection
with the TIF District and hereby incorporates the findings set forth in the TIF Plan herein by
reference as part of this resolution.
NATURE
(a) The City further finds that the proposed development, in the opinion of the
City Council, would not occur solely through private investment within the reasonably
foreseeable future and, therefore, the use of tax increment financing is deemed necessary.
The specific basis for such finding being:
2.04 The Developer and the Operator have represented that they could
not proceed with the proposed construction of the Development in the TIF District
without tax increment assistance due to the high cost of the construction of the
facility. The property requires additional expenditures related to development of
the site, including acquisition, site improvements, and storm water ponding which
currently do not allow development on the property.
(b) The Council further finds that the TIF Plan conforms to the general plan
for the development or redevelopment of the City as a whole. The specific basis for such
finding being:
The TIF Plan will generally complement and serve to implement policies adopted
in the City's comprehensive plan. The City Council has concluded that the
Development contemplated on the property is in accordance with the existing
zoning for the property and is consistent with the City's comprehensive plan.
(c) The Council further finds that the TIF Plan will afford maximum
opportunity consistent with the sound needs of the City as a whole for the development of
the TIF District by private enterprise. The specific basis for such finding being.
The proposed Development will be used by the Operator, a private enterprise, for
warehousing and related activities and will afford maximum opportunity for the
development of the applicable parcels consistent with the needs of the City. The
Development will maximize the potential of an underutilized site and will increase
the taxable market valuation of the City and warehouse facilities in the City. The
land located within the TIF District requires site improvements including site
preparation, grading, and landscaping, as well as storm water ponding. Given the
nature of the property, there is no reasonable expectation of any development
occurring that would generate as much market value increase as is estimated to be
generated by the proposed Development. Therefore, the City has concluded that
substantial development at this particular site --and hence any significant increase in
market value --is not reasonably expected to occur unless the City provides tax
increment assistance as described in the TIF Plan.
(d) For purposes of compliance with Minnesota Statutes, Section 469.175,
Subdivision 3(b)(2)(ii), the Council hereby finds that the increased market value of the
property to be developed within the TIF District that could reasonably be expected to
occur without the use of tax increment financing is probably $0 (other than amounts due
to inflation), which is less than the increased market value estimated to result from the
proposed development (i.e., approximately $1,330,900) after subtracting the present
value of the projected tax increments for the maximum duration of the TIF District (i.e.,
approximately $214,321) which is approximately $1,116,579. Thus, the use of tax
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increment financing will be a positive net gain to the City, the School District, and the
County, and the tax increment assistance does not exceed the benefit which will be
derived therefrom.
2.05 The provisions of this Section 2 are hereby incorporated by reference into
and made a part of the TIF Plan.
2.06 The Council further finds that the Development Program Modification and
the TIF Plan are intended and, in the judgment of this Council, their effect will be, to
promote the public purposes and accomplish the objectives specified therein.
Section 3. Creation of the TIF District and Approval and Adoption of the
Plans; Interfund Loans.
3.01 The Development Program Modification, the creation of the TIF District
and the adoption of the TIF Plan, as presented to the Council on this date, including
without limitation the findings and statements of objectives contained therein, are hereby
approved, ratified, established, and adopted. The City Administrator, or his or her
designee, is hereby directed to request, in writing, the Sherburne County Auditor to
certify the new TIF District and to file the TIF Plan with the Commissioner of Revenue
and the Office of the State Auditor.
3.02 The Council hereby approves a policy on interfund loans or advances
("Loans") for the TIF District, as follows:
(a) The authorized tax increment eligible costs (including without
limitation out-of-pocket administrative expenses in an amount up to $26,809 and
land acquisition other public improvement costs in an amount up to $241,274)
payable from the TIF District, as its TIF Plan is originally adopted or may be
amended, may need to be financed on a short-term and/or long-term basis via one
or more Loans, as may be determined by the City Finance Director from time to
time.
(b) The Loans may be advanced if and as needed from available
monies in the City's general fund or other City fund designated by the City
Finance Director. Loans may be structured as draw -down or "line of credit"
obligations of the lending fund(s).
(d) Neither the maximum principal amount of any one Loan nor the
aggregate principal amount of all Loans may exceed $268,083 outstanding at any
time.
(e) All Loans mature not later than February 1, 2031 or such earlier
date as the City Finance Director may specify in writing. All Loans may be
prepaid, in whole or in part, whether from tax increment revenue, TIF bond
proceeds or other eligible sources.
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NATUREI
(f) The outstanding and unpaid principal amount of each Loan shall
bear interest at the rate prescribed by the statute (Minnesota Statutes, Section
469.178, Subdivision 7), which is the greater of the rates specified under
Minnesota Statutes, Sections 270C.40 or 549.09 at the time a Loan, or any part of
it, is first made, subject to the right of the City Finance Director to specify a lower
rate (but not less than the City's then -current average investment return for similar
amount and term).
(g) Such Loans within the above guidelines are pre -approved. The
Loans need not take any particular form and may be undocumented, except that
the City Finance Director shall specify the principal amount and interest rate and
maintain all necessary or applicable data on the Loans.
Section 4. Approval of Agreement.
4.01. The Developer has presented the City with a proposal for the construction
of the Development and there has been prepared the Agreement between the City and the
Developer, stating the terms and conditions of the Developer's responsibilities with respect
to the Development and the City's the assistance therefor, which has been presented to the
Council for its consideration.
4.02. The Council hereby approves the Agreement substantially in the form
presented to the Council, including the provisions granting a business subsidy to the
Developer, together with any related documents necessary in connection therewith,
including but not limited to the TIF Note and any documents or certifications referred to in
the Agreement or attached thereto (collectively, the "Development Documents"), and
hereby authorizes the Mayor and City Clerk, in their discretion and at such time, if any, as
they may deem appropriate, to execute the same on behalf of the City, and to carry out, on
behalf of the City, the City's obligations thereunder.
4.03. The approval hereby given to the Development Documents includes
approval of such additional details therein as may be necessary and appropriate and such
modifications thereof, deletions therefrom and additions thereto as may be necessary and
appropriate and approved by legal counsel to the City and by the officers authorized herein
to execute said documents prior to their execution; and said officers are hereby authorized to
approve said changes on behalf of the City. The execution of any instrument by the
appropriate officers of the City herein authorized shall be conclusive evidence of the
approval of such document in accordance with the terms hereof. In the event of absence or
disability of the officers, any of the documents authorized by this Resolution to be executed
may be executed without further act or authorization of the Council by any duly designated
acting official, or by such other officer or officers of the Council as, in the opinion of the
City Attorney, may act in their behalf.
4.04. Upon execution and delivery of the Development Documents, the officers
and employees of the City are hereby authorized and directed to take or cause to be taken
such actions as may be necessary on behalf of the City to implement the Development
Documents, including without limitation the issuance of the Tax Increment Revenue Note
thereunder.
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NATURE
4.05. The Council hereby determines that the execution and performance of the
Development Documents will help realize the public purposes of the Act.
Passed and adopted this 5th day of october2020.
J n J. bietz, s ayor
ATTEST:
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Tina Allard, City Clerk
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