The URL can be used to link to this page

04-08-14 HRA Agenda Packet AGENDA Regular Meeting of the Housing and Redevelopment Authority Golden Valley City Hall 7800 Golden Valley Road Council Chamber April 8, 2014 6:30 pm Pa9es 1. Roll Call 2. Approval of Agenda 3. Approval of Minutes - January 14, 2014 2-3 4. Approval of Bills: Reimbursement of City Expenditures 4 City of Golden Valley �32,591.48 TOTAL $32,591.48 Bill Summary: General Fund $1,736.05 North Wirth Capital Project Fund 583.17 Golden Hills Capital Project Fund 30,272.26 TOTAL $32 591.48 5. Receipt of March 2014 Financial Reports 5-8 6. Decertification of Golden Hills Tax Increment District 9 7. Tax Increment Financing Policy and Application Form 10-32 A. Rescinding Resolution 06-03, Resolution Revising the Tax Increment Financing Policy 14-3 B. Adopting a Tax Increment Financing Policy and Application Form 14-4 8. Adjournment REGULAR MEETING OF THE HOUSING AND REDEVELOPMENT AUTHORITY January 14, 2014 Pursuant to due call and notice thereof, a regular meeting of the Housing and Redevelopment Authority of the City of Golden Valley, Hennepin County, Minnesota, was held at 7800 Golden Valley Road in said City on January 14, 2014 at 6:30 pm. The following members were present: Commissioners Joanie Clausen, Larry Fonnest, Shep Harris, Steve Schmidgall and Andy Snope. Also present were HRA Director Thomas Burt, Finance Director Sue Virnig and Administrative Assistant Lisa Wittman. Election of Officers The HRA Bylaws provide for the annual election of the HRA Chairperson and Vice Chairperson to serve a one year term. Commissioner Harris opened the nominations. MOVED by Clausen and seconded by Snope to nominate Schmidgall for the office of Chair. MOVED by Fonnest and seconded by Harris to nominate Snope for the office of Vice Chair. Schmidgall and Snope accepted the nominations and the Commissioners voted unanimously to appoint Schmidgall as Chair and Snope as Vice Chair. Approval of Aqenda MOVED by Harris, seconded by Clausen and motion carried unanimously to approve the agenda as submitted. Approval of Minutes - Reqular Meetinq — October 8, 2013 and Special Meetinq — November 8, 2013 MOVED by Fonnest, seconded by Harris and motion carried unanimously to approve the Regular Housing and Redevelopment Authority minutes of October 8, 2013 and the Special Housing and Redevelopment Authority minutes of November 8, 2013 as submitted. Approval of Bills MOVED by Harris, seconded by Fonnest and motion carried unanimously to approve the bills as submitted. Receipt of December 2013 Financial Reports Sue Virnig, Finance Director, reviewed the Financial Reports and answered questions from the Commissioners. Housing and Redevelopment Authority January 14, 2014 Page 2 MOVED by Clausen, seconded by Fonnest and motion carried unanimously to receive and file the December 2013 Financial Reports. Adoption of 2014 General Fund Budqet Commissioner Fonnest introduced the following resolution and moved its adoption: RESOLUTION 14-1 RESOLUTION OF THE HOUSING AND REDEVELOPMENT AUTHORITY (HRA) ADOPTING THE 2014 GENERAL FUND BUDGET The motion for the adoption of the foregoing resolution was seconded by Commissioner Clausen and upon a vote being taken thereon, the following voted in favor thereof: Clausen, Fonnest, Harris, Schmidgall and Snope and the following voted against the same: none, whereupon said resolution was declared duly passed and adopted, signed by the Chair and his signature attested by the Director. Desiqnation of Depositories Commissioner Harris introduced the following resolution and moved its adoption: RESOLUTION 14-2 RESOLUTION DESIGNATING DEPOSITORIES FOR HRA FUNDS The motion for the adoption of the foregoing resolution was seconded by Commissioner Clausen and upon a vote being taken thereon, the following voted in favor thereof: Clausen, Fonnest, Harris, Schmidgall and Snope and the following voted against the same: none, whereupon said resolution was declared duly passed and adopted, signed by the Chair and his signature attested by the Director. Adjournment MOVED by Snope, seconded by Clausen and motion carried unanimously to adjourn the meeting at 6:45 pm. Steve Schmidgall, Chair ATTEST: Lisa Wittman, Administrative Assistant � C��1 C?� Housing and Redevelopment Authority 763 593 8002!763 593 8109(fax) Executive Summary For Action Golden Valley Housing and Redevelopment Authority Meeting April 8, 2014 Agenda Item 5. Reimbursement of City Expenditures Prepared By Sue Virnig, Finance Director Summary As of March 31, 2014 the following expenditures were paid by the City on various check registers and need to be reimbursed by the HRA: City Expenditures: Amount 1000 Best & Flanagan (December legal) (2013) $3,777.80 1000 Best & Flanagan (January legal) 10,855.00 1000 Best & Flanagan (February legal) 8,842.05 1000 Wilson Development (Globus relocation) 7.50 1000 Hennepin County (TIF administration) (2013) 9,109.13 $32,591.48 HRA Expenditures: 9000 General Fund $1,736.05 9250 North Wirth #3* 583.17 9280 Golden Hills Capital Projects* 30,272.26 $32,591.48 Recommended Action Motion to approve reimbursing the City of Golden Valley for expenditures of$32,591.48 (check #4060). C;t�� C�� '� Housing and Redevelopment Authority 763 593 80021763 S93 8109(fax} Executive Summary For Action Golden Valley Housing and Redevelopment Authority Meeting April 8, 2014 Agenda Item 6. Receipt of March 2014 Financial Reports Prepared By Sue Virnig, Finance Director Summary Attached is the March 2014 Financial Reports for Housing and Redevelopment Authority (HRA) review. Staff will address questions from the HRA before or at the meeting. Attachments • HRA General Fund Budget Report (1 page) • HRA Tax Increment District Projections for Golden Hills Tax Increment Funds (1 page) • HRA Capital Project Funds Report (1 page) Recommended Action Motion to receive and file the March 2014 HRA Financial Reports. HRA of Golden Valley General Fund March 2014 Budget Report(unaudited) Percentage Of Year Completed 25% Over % Of 2014 Jan-Mar YTD (Under) Budget Revenue Budget Actual Actual Budget Received Transfer from TIF Funds: Golden Hills 159,000 0.00 0.00 (159,000.00) 0.00% Interest Earnings (3) 0 0.00 0.00 0.00 Fund Balance 0 0.00 0.00 0.00 Totals $159,000 0.00 0.00 (159,000.00) 0.00% Over % Of 2014 Jan-Mar YTD (Under) Budget Expenditures Budget Actual Actual Budget Expended Legal Services (1) $6,000 1,076.05 1,076.05 (4,923.95) 17.93% Audit 12,000 0.00 0.00 (12,OOQ.00) 0.00% City Overhead (2) 140,000 0.00 0.00 (140,000.00) 0.00% Miscellaneous 1,000 0.00 0.00 (1,000.00) 0.00% Totals $159,000 1,076.05 1,076.05 (157,923.95) 0.68% Notes: (1) Includes February to date billings from Best & Flanagan. (2) Transfers will be made in July 2014. (3) Interest will be allocated at year end. 00 O ��MO 00 O M d' �' CO t0 f� bg �- (D M N N 00 � M 00 � � I� � CU ti � OM M N N � �M � I� � � � � �3 O NCfl00 O NM� O 0� 00 � OONO O � MN � M N � GO r- O O �- � M � �- CU r- 1� O OO d� � M 00 tfl M N � M ti � N � OCfl � OO I�- � O � �- N �- 00 � � O Cfl O N N � tn � �- �N tf') N u� � � � � �3 69 Efl � M � N N � C � O N N � � �� (6 � � .O U � U N �6 V C � C C� ' O � L .--. .-. N o �o +��+ Q ^ � �N V r � U (O o r- G� M � �O � �O N "' a � E � � �� a� c a�i o�0 � m � � � � o � � c m c � � � 00 � rn� `� � �;, � � � � -� ,� :� � � � = c m � a� ca� O _ � li �- }, p � � � � y � , L � ��1 � ° � C � C C1 d t� � v � � � C •�+ _ � • N � X N X = �T � (a U `� � tQ � (B N � � U 00 � N I— � I— N �iS � � rn � Q � � � � � y � x c a� y � �- � N � ca � 'c � a� 2 � � � � � �. o C� � `- _ � � xxx � �� _ � .� � -a w > � ° '� ca c6 ca Q c a� o a � � c � n � � �' c°n' mQaw a` � � a� a� � � � d � �. � �n cfl � -a � 'p > :� a� .�.r � � o 0 0 .�., � U C� �. � � W � F-- W F— ONNNI— m HRA Of Golden Valley Capital Project Funds 2014 Financial Report 9280 9250 Golden North Hills Wirth #3 Cash Balance @ 01/01/14 $286,767.41 ($578.95) Add: Receipts: I nterest Lease revenue _._..._..._. _._.. _ Increment on Deposit 0.00 Less: Expenditures: City of Golden Valley (1) TIF Payment-Bank Mutual 0.00 (2) Cash Balance @ 03/31/14 $286,767.41 ($578.95) (1) Breakdown on City Expenditures Memo (2) Hennepin County billed fees after the TIF was sent to Bank Mutual. The August payment will be lowered to make up the difference. C��1 t?� Hausing and Redevelopment Authority 763-593-8002/763-593-8109(fax) Executive Summary For Action Golden Valley Housing and Redevelopment Authority Meeting April 8, 2014 Agenda Item 7. Decertification of Golden Hills Tax Increment District Prepared By Sue Virnig, Finance Director Summary Golden Hills Tax Increment Financing (TIF) District was set to close in 2011. With the property tax class changes and the 2001 elimination of the state determined general education property tax levy resulted in reductions in the tax increment revenues generated by the Golden Hills TIF District. In 2003, special legislation was enacted to extend the duration of the district to December 31, 2014. Hennepin County needs a resolution passed to discontinue collection of tax increment from these parcels by June 30, 2014. Those parcels will be removed from collecting tax increment and future taxes collected will be allocated by the current taxing jurisdictions tax rates. All these changes will be made for the 2014 tax levy for the 2015 Budget. In 2015, the Housing and Redevelopment will approve a payment to Hennepin County for any remainder funds collected by the district. Those funds will be distributed to Hennepin County, Hopkins School District#270 and City of Golden Valley based on the current tax rate percentage. This hopefully can be done shortly after the debt service payment in February. Hennepin County would disburse the funds probably with the July tax settlement. Recommended Action Motion to request the City Council to consider a resolution to discontinue collection of tax increment from the parcels located in the Golden Hills Tax Increment Financing District. CZ��I C?� , Housing and Redevelopment Authority 763-593 8002/763 593 8109(fax} Executive Summary For Action Housing and Redevelopment Authority Meeting April 8, 2014 Agenda Item 8. Adoption of Tax Increment Financing Policy and Application Form Prepared By Jason Zimmerman, City Planner Summary In 2003 the Housing and Redevelopment Authority (HRA) adopted a policy and procedure related to Tax Increment Financing. At the time of its adoption, the HRA requested an annual review of the policy to see if it should be continued or revised. Attached is the current version of the policy, which was last changed in 2006. In keeping with the HRA request for annual review, the current policy is presented for consideration by the HRA. Staff recommends slight changes to the application form. Staff believes the resolution under which the policy was adopted is no longer current and recommends it be rescinded. The Tax Increment Financing Policy and Application Form should be approved under a new resolution and continue to be reviewed annually. Attachments • Resolution 06-03, adopted April 1, 2014, Resolution Revising the Tax Increment Financing Policy (11 pages) • Resolution Rescinding Resolution 06-03, Resolution Revising the Tax Increment Financing Policy (1 page) • Resolution Adopting a Tax Increment Financing Policy and Application Form (10 pages) Recommended Actions Motion to adopt Resolution Rescinding Resolution 06-03, Resolution Revising the Tax Increment Financing Policy. Motion to adopt Resolution Adopting a Tax Increment Financing Policy and Application Form. Resolution 06-03 April 11, 2006 Commissioner Freiberg introduced the following and moved its adoption: RESOLUTION REVISING THE TAX INCREMENT FINANCING POUCY WHEREAS, the Housing and Redevelopment Authority in and for the City of Golden Valley (hereinafter"HRA") and the City Council for the City of Golden Valley may elect to participate in Tax Increment Financing as authorized under Minnesota Statutes for specific projects in the City of Golden Valley; and WHEREAS, the consideration of projects seeking public participation through the use of:tax increment financing involves detailed financial analysis and evaluation of public policy issues; WHEREAS, it is the desire of the HRA to inform potential applicants for such funding of its objectives and policies related to tax increment financing and establish a process for consideration of proposed projects; and WHEREAS, on March 11, 2003, the HRA adopted Resolution 03-03 which adopted a tax increment financing policy, which it now wishes to amend; and WHEREAS, the attached policy r�vises Objective II A and adds a new Objective II H. NOW, THEREFORE, BE iT RESOLVED, as follows 1. The Tax Increment Financing Policy attached as Exhibit A, is hereby adopted. 2. At the beginning of each year after the adoption of the attached Tax Increment Financing Policy, the HRA shall review the policy with the purpose of making any desired changes in it or rescinding it if it is no longer necessary. 3. A non-refundable fee of$5000 will be charged for any project submitted for consideration by the HRA, and that an additional charge of$2000 shall be charged at such time as fees previously submitted have been expended, if needed for continued analysis of the project. 4. The HRA staff use an application to collect information regarding the project and requested funding ta provide for reasonable analysis of the project and prpposed public subsidy, such application to be similar in format to the application attached as Exhibit B. �I/l�t.� ��./� Paula Pentel, Chair ATTEST: � omas D. Burt, r r Motion for the adoption of the foregoing resolution was seconded by Commissioner Shaffer; and upon a vote taken thereon, the following voted in favor thereof: Freiberg, Pentel, Scanlon and Shaffer; and the following voted against the same: Laomis; whereupon said resolution was declared duly passed and adopted, signed by the Chair and her signature attested by the Director. GOLDEN VALLEY HOUSING AND REDEVELOPMENT AUTHORITY GOLDEN VALLEY, MINNESOTA TAX INCREMENT FINANCING POLICY REVISED: April 11, 2006 I. POLICY PURPOSE For the purposes of this document, the term "HRA"shall include the Go/den Valley Housing and Redeve/opment Authority. The purpose of this policy is to establish the position of the Golden Valley HRA relating to the use of Tax Increment Financing (TIF) for private development above and beyond the requirements and limitations set forth by State Law. This policy shall be used as a guide in the processing and review of applications requesting tax increment assistance. The fundamental purpose of tax increment financing in Golden Valley is to encourage desirable development or redevelopment that would not otherwise occur but forthe assistance provided through TIF. Regardless of authorized expenditures under the law, it is the intent of the HRA to provide the minimum amount of TIF at the shortest term required for the project to proceed. The HRA reserves the right to approve or reject projects on a case by case basis, taking into consideration established policies, project criteria, and demand on city services in relation to the potential benefits from the project. Meeting policy criteria does not guarantee the award of TIF to the project. Approval or denial of one project is not intended to set precedent for approval or denial of another project. II. OBJECTIVES OF TAX INCREMENT FINANCING As a matter of adopted policy, the HRA will consider using TIF to assist private development projects to achieve one or more of the following objectives: A. To retain local jobs and/or increase the number and diversity of jobs that offer stable employment and/or livable wages and benefits. B. To encourage additional unsubsidized private development in the area, either directly or indirectly through "spin off" development. C. To facilitate the development process and to achieve development on sites which would not be developed without TIF assistance. D. To remove blight and/or encourage redevelopment of commercial and industrial areas in the city that result in high quality redevelopment and private reinvestment. E. To offset increased costs of redevelopment (i.e. contaminated site clean-up) over and above the costs normally incurred in development. F. To create opportunities for affordable housing. 1 G. 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. H. Foster sustainable development and work to establish a balance befinreen urban and natural systems. Encourage the application of green building and infrastructure techniques. Examples include low-impact development that maintains the natural functions of the land, reduces storm water runoff and fosters resource conservation and the use of renewable systems in new construction. III. POLICIES FOR THE USE OF TAX INCREMENT FINANCING A. The priority for the use of TIF funds is: 1. Public improvements, legal, administrative, and engineering costs. 2. Site preparation, site improvement, land purchase, soil correction, environmental remediation and demolition. 3. Capitalized interest, bonding costs. B. TIF assistance will 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. C. A maximum of ten percent (10%) of any tax increment received from the district shall be retained by the City to reimburse administrative costs. D. Any developer receiving TIF assistance shall provide an equity investment in the project. E. TIF will be used to purchase land and/or property only at fair market value. F. TIF 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: assessment agreements, letters of credit, personal guaranties, escrow deposits, etc. H. 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. I. 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. 2 IV. SUBSIDY AGREEMENT & REPORTING REQUIREMENTS All developers/businesses receiving tax increment financing assistance from the Golden Valley HRA shall be subject to the provisions and requirements set forth by state statute 116J.993 and summarized below. A. All developers/businesses receiving TIF assistance shall enter into a subsidy agreement with the Golden Valley HRA 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. B. 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 Golden Valley HRA 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. C. The developer/business owner shall maintain and operate its facility at the site where TIF assistance is used until the end of the TIF District. D. 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. 3 APPLICATION FOR TAX INCREMENT FINANCING A. APPLICANT INFORMATIQN Name of Corporation/Partnership Address Primary Contact Address Phone Fax Email Attorney Name Address Phone Fax : Email Accountant Name Address Phone . Fax Email Contractor Name - : _ Addcess Phone Fax Email Engineer Name Address � Phane Fax Email _ Architect Name : Address Phone Fax Emaif -1- B. PROJECT FNFORMATION The project will be: Industrial Greenfie(d: New Construction Expansion Commercial Redevelopment: New Construction Rehabilitation Industrial Redevelopment: New Construction Rehabilitation Other The project will be: Owner Occupied Leased Space Project Address Legal Description ' Attach Site Plan AmoWnt of Tax Increment Requested for: Land Purchase $ Public Improvement $ Site lmprovement $ Currenf Real Estate Ta�ces on Project Site: $ Estimated Real Estate Taxes upon Completion: Phase I $ • (If Any) Phase 11 $ . Construction Start Date: Construction Completion Date: - ' If Phased Project: . Year % Completed Year % Completed _ -2- , C. PUBLIC PURPOSE � It is the policy of the Golden Valley HRA 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: Number of existing jobs - � Number of jobs created by project Average hourly wage of jobs created New industrial development which will result in additional private investment in the area. Enhancement or div�rsi#ication of the city's economic base. Removal of blight or the rehabilitation of a high profils or priority site. Other: -3- I D, SQURCES & USES OF FUNDS _ SOURCES - NAME - AMOUNT Bank Loan $ Other Private Funds $ Equity $ Fed GrantlLoan $ State Grant/Loan $ EDA Micro Loan $ ID Bonds $ Tax Incrernen# (present value of"pay as you go") $ Other $ .TOTAL $ _ I : USES AMOUNT Land Acquisition $ Site Development $ _ Construction � Machinery &� Equipment $ Architectural & Engineering Fees $ Legal Fees $ Interest During Gonstruction $ Debt Service Reserve $ Contingencies . $ Qther $ TOTAL $ -4- E. ADDITIONAL DOCUMENTATION . Applicants will also be required to provide the following documentation. 1, Current financial statements and those far the past finro years: Profit & Loss Staterr�ent Balance Sheet ' 2. Brief description'of the carporationlpartnership's business, including history, principal product or service, etc... Attaah as Exhibit l. 3. Names o#officers and shareholders/partners with more than five percent (5°fo) interest in the corporation/partnership. Attach as Exhibit lk 4. A but-for analysis (proforma). Attach as Exhibit 111. (See example on page � 5. Application fee of$5000(non-refundable) -5- 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 Golden Valley HRA 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 applieation and to submit a supplemental application fee of$2,000 if the balance of application fees previously submitted is expended. I have received, and read, a copy of the Golden Valley Tax Increment financing Policy. Applicant Name Date By _ Printed name Signature Its Printed name Signature -6- . EXAMPLE BUT-FOR ANALYSIS WITH NO WITH TAX iNCREMENT TAX INCREMENT SOURCES AND USES SOURCES AND USES SOURCES SOURCES Mortgage 9,600,000 8,667,000 Equity 2,400,000 2,400,00 Tax Increment Financing 0 933,000 TOTAL SOU:RCES 12,000,000 12,000,000 USES USES Land 1,500,000 1,500,000 Site Work 300,OOQ 300,000 Soil CoRec�ion � 468,000 458,000 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,OOp,000 Soft Costs 35U,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,OOQ,000 12,00O,OOQ ` Income Statement Incorne Statement 5q: Ft. Per Sq. Ft. Sq. Ft. Per Sq. Ft. Rent-Space 1 100,Q00 $8.Q0 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 9�49,439 9:00% fhterest 9.00% Interest 9,600;OOO.Principal � 8,667,000 Principal Net lncome 185,854 288,061 . Total Return on Equity 7.74% 12.00%0 -7- G:IHRAMISC1TIFlTI Frevised-01-17-06.doc Resolution 14-3 April 8, 2014 Commissioner introduced the following and moved its adoption: RESOLUTION RESCINDING RESOLUTION 06-03 RESOLUTION REVISING THE TAX INCREMENT FINANCING POLICY WHEREAS, the Housing and Redevelopment Authority (hereinafter "HRA") passed Resolution 06-03 on April 11, 2006; and WHEREAS, the policy language in Resolution 06-03 is no longer current and a new Resolution is needed containing an updated Tax Increment Policy and Application Form. NOW, THEREFORE, BE IT RESOLVED that Resolution 06-03 is hereby rescinded. Steven T Schmidgall, Chair ATTEST: Thomas D. Burt, Executive Director The motion for the adoption of the foregoing resolution was seconded by Commissioner and upon a vote being taken thereon, the following voted in favor thereof: and the following voted against the same: whereupon said resolution was declared duly passed and adopted, signed by the Chair and his signature attested by the Director. Resolution 14-4 April 8, 2014 Commissioner introduced the following and moved its adoption: RESOLUTION ADOPTING A TAX INCREMENT FINANCING POLICY AND APPLICATION FORM WHEREAS, the Housing and Redevelopment Authority in and for the City of Golden Valley (hereinafter "HRA") and the City Council for the City of Golden Valley may elect to participate in Tax Increment Financing as authorized under Minnesota Statutes for specific projects in the City of Golden Valley; and WHEREAS, the consideration of projects seeking public participation through the use of tax increment financing involves detailed financial analysis and evaluation of public policy issues; and WHEREAS, it is the desire of the HRA to inform potential applicants for such funding of its objectives and policies related to tax increment financing and establish a process for consideration of proposed projects. NOW, THEREFORE, BE IT RESOLVED, as follows: 1. The Tax Increment Financing Policy and Application Form attached as Exhibit A, is hereby adopted. 2. At the beginning of each year after the adoption of the attached Tax Increment Financing Policy and Application Form, the HRA shall review the policy with the purpose of making any desired changes in it or rescinding it if it is no longer necessary. 3. A non-refundable fee of$10,000 will be charged for any project submitted for consideration by the HRA, and that an additional charge of$5,000 shall be charged at such time as fees previously submitted have been expended, if needed for continued analysis of the project. 4. The HRA staff use the application to collect information regarding the project and request funding to provide for reasonable analysis of the project and proposed public subsidy. Steven T Schmidgall, Chair ATTEST: Thomas D. Burt, Executive Director The motion for the adoption of the foregoing resolution was seconded by Commissioner and upon a vote being taken thereon, the following voted in favor thereof: and the following voted against the same: whereupon said resolution was declared duly passed and adopted, signed by the Chair and his signature attested by the Director. Resolution 14-4 - Continued April 8, 2014 EXHIBIT A GOLDEN VALLEY HOUSING AND REDEVELOPMENT AUTHORITY GOLDEN VALLEY, MINNESOTA TAX INCREMENT FINANCING POLICY I. POLICY PURPOSE For the purposes of this document, the term "HRA"shall include the Golden Valley Housing and Redevelopment Authority. The purpose of this policy is to establish the position of the Golden Valley HRA relating to the use of Tax Increment Financing (TIF) for private development above and beyond the requirements and limitations set forth by State Law. This policy shall be used as a guide in the processing and review of applications requesting tax increment assistance. The fundamental purpose of tax increment financing in Golden Valley is to encourage desirable development or redevelopment that would not otherwise occur but forthe assistance provided through TIF. Regardless of authorized expenditures under the law, it is the intent of the HRA to provide the minimum amount of TIF at the shortest term required for the project to proceed. The HRA reserves the right to approve or reject projects on a case by case basis, taking into consideration established policies, project criteria, and demand on city services in relation to the potential benefits from the project. Meeting policy criteria does not guarantee the award of TIF to the project. Approval or denial of one project is not intended to set precedent for approval or denial of another project. II. OBJECTIVES OF TAX INCREMENT FINANCING As a matter of adopted policy, the HRA will consider using TIF to assist private development projects to achieve one or more of the following objectives: A. To retain local jobs and/or increase the number and diversity of jobs that offer stable employment and/or livable wages and benefits. B. To encourage additional unsubsidized private development in the area, either directly or indirectly through "spin off' development. C. To facilitate the development process and to achieve development on sites which would not be developed without TIF assistance. D. To remove blight and/or encourage redevelopment of commercial and industrial areas in the city that result in high quality redevelopment and private reinvestment. E. To offset increased costs of redevelopment (i.e. contaminated site clean-up) over and above the costs normally incurred in development. Resolution 14-4 - Continued April 8, 2014 F. To create opportunities for affordable housing. G. 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. H. Foster sustainable development and work to establish a balance between urban and natural systems. Encourage the application of green building and infrastructure techniques. Examples include low-impact development that maintains the natural functions of the land, reduces storm water runoff and fosters resource conservation and the use of renewable systems in new construction. III. POLICIES FOR THE USE OF TAX INCREMENT FINANCING A. The priority for the use of TIF funds is: 1. Public improvements, legal, administrative, and engineering costs. 2. Site preparation, site improvement, land purchase, soil correction, environmental remediation and demolition. 3. Capitalized interest, bonding costs. B. TIF assistance will 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. C. A maximum of ten percent (10%) of any tax increment received from the district shall be retained by the City to reimburse administrative costs. D. Any developer receiving TIF assistance shall provide an equity investment in the project. E. TIF will be used to purchase land and/or property only at fair market value. F. TIF 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: assessment agreements, letters of credit, personal guaranties, escrow deposits, etc. H. 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. Resolution 14-4 - Continued April 8, 2014 I. 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. IV. SUBSIDY AGREEMENT & REPORTING REQUIREMENTS All developers/businesses receiving tax increment financing assistance from the Golden Valley HRA shall be subject to the provisions and requirements set forth by state statute 116J.993 and summarized below. A. All developers/businesses receiving TIF assistance shall enter into a subsidy agreement with the Golden Valley HRA 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. B. 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 Golden Valley HRA 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. C. The developer/business owner shall maintain and operate its facility at the site where TIF assistance is used until the end of the TIF District. D. 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. Resolution 14-4 - Continued April 8, 2014 APPLICATION FOR TAX INCREMENT FINANCING FORM REVISED: April 8, 2014 A. APPLICANT INFORMATION Name of Corporation/Partnership Address Primary Contact Address Phone Fax Email 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 Resolution 14-4 - Continued April 8, 2014 B. PROJECT INFORMATION The project will be: ❑ Industrial: (� New Construction ❑ Redevelopment/Rehab ❑ Expansion) ❑ Commercial: (❑ New Construction ❑ Redevelopment/Rehab ❑ Expansion) O Office/Institutional: (❑ New Construction ❑ Redevelopment/Rehab � Expansion) ❑ Housing: (❑ New Construction ❑ Redevelopment/Rehab ❑ Expansion) ❑ Other The project will be: O Owner Occupied ❑ Leased Space Project Address Legal Description PID number(s) Amount of Tax Increment Requested for: Land Purchase $ Public Improvement $ Site Improvement $ Current Real Estate Taxes on Project Site $ Estimated Real Estate Taxes upon Completion: Phase I $ (If Any) Phase II $ Construction Start Date Construction Completion Date If Phased Project: Year % Completed Year % Completed Resolution 14-4 - Continued April 8, 2014 PUBLIC PURPOSE It is the policy of the Golden Valley HRA 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. Check all that apply. ❑ Retain jobs and/or increase the number and diversity of jobs that offer stable employment and/or livable wages and benefits. Number of existing jobs: Number of jobs created by project: Average hourly wage of jobs created: ❑ Encourage additional unsubsidized private development and investment in the area. ❑ Remove blight and/or encourage redevelopment of commercial and industrial areas in the city. O Enhance or diversify the city's economic base. ❑ Create opportunities for affordable housing or increase the diversity of housing opportunities in the City. ❑ Contribute to the implementation of other public policies such as the promotion of quality urban or architectural design, energy conservation, and decreasing capital and/or operating costs of Iocal government. ❑ Other: Resolution 14-4 - Continued April 8, 2014 C. SOURCES & USES OF FUNDS SOURCES NAME AMOUNT Bank Loan $ Other Private Funds $ Equity $ Fed GranULoan $ State Grant/Loan $ EDA Micro Loan $ ID Bonds $ Tax Increment (present value of"pay as you go") $ Other $ TOTAL $ USES AMOUNT Land Acquisition $ Site Development $ Construction $ Machinery & Equipment $ Architectural & Engineering Fees $ Legal Fees $ Interest During Construction $ Debt Service Reserve $ Contingencies $ Other $ TOTAL $ Resolution 14-4 - Continued April 8, 2014 D. ADDITIONAL DOCUMENTATION Applicants will also be required to provide the following documentation. 1. Current financial statements and those for the past two years: ❑ Profit & Loss Statement ❑ Balance Sheet 2. Brief description of the corporation/partnership's business, including history, principal product or service, etc... Attach as Exhibit I. 3. Names of officers and shareholders/partners with more than five percent (5%) interest in the corporation/partnership. Attach as Exhibit II. 4. A but for analysis (pro-forma). Attach as Exhibit III. (See example on page 9) 5. Attach site plan as Exhibit IV. 6. Application fee of$10,000 (non-refundable). 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 Golden Valley HRA 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 and to submit a supplemental application fee of$5,000 if the balance of application fees previously submitted is expended. I have received, and read, a copy of the Golden Valley Tax Increment Financing Palicy. Applicant Name: Date: By Printed Name Signature Its Printed Name Signature Resolution 14-4 - Continued April 8, 2014 EXAMPLE BUT-FOR ANALYSIS WITH NO WITH TAXINCREMENT TAXINCREMENT SOURCES AND USES SOURCES AND USES SOURCES SOURCES Mortgage 9,600,000 8,667,000 Equity 2,400,000 2,400,000 Tax Increment Financing 0 933,000 TOTAL SOURCES 12,000,000 12,000,00.0 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 E uit 7.74% 12.00%