03-03 HRA Resolution
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Resolution 03-03
March 11, 2003
Commissioner Loomis introduced the following and moved its adoption:
RESOLUTION ADOPTING A TAX INCREMENT FINANCING POLICY
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'lncrement 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, the HRA should review its policies related to tax increment financing each
year.
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. Anon-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 to provide for reasonable analysis of the project and proposed public subsidy,
such application to be similar in format to the application attached as E ibit B.
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Motion for the adoption of the foregoing resolution was seconded by Commissioner Grayson;
and upon a vote taken thereon, the following voted in favor thereof: Grayson, LeSuer, Loomis
and Tremere; the following was absent: Johnson; 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.
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Resolution 03-03
EXHIBIT A
March 11, 2003
GOLDEN VALLEY HOUSING AND REDEVELOPMENT AUTHORITY
GOLDEN VALLEY, MINNESOTA
TAX INCREMENT FINANCING POLICY
ADOPTED: March 11, 2003
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 for the 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 localjobs and/or increase the number and diversity of jobs that
offer stable employment and/or attractive 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.
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Resolution 03-03
EXHIBIT A
March 11, 2003
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 (Le. contaminated site clean
up) over and above the costs normally incurred in development.
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
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 ofcredit, personal guaranties, escrow deposits, etc.
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Resolution 03-03
EXHIBIT A
March 11, 2003
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,.andcredit 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.
IV. SUBSIDY AGREEMENT & REPORTING REQUIRMENTS
All developers/businesses receiving tax increment financing assistance from the
Golden Valley HRA shall be subject to the provisions and requirements setforth
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 meet, 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
requ irements.
C. The developer/business owner shall maintain and operate its facility atthe
site where TIF assistance is used until the end of the TIF District.
D. Developers / Businesses failing to complywith 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 e.ntities
for a period of five years.
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t.AH 1151 I l)
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APPLICATION FOR TAX INCREMENT FINANCING
A. APPLICANT INFORMATION
Name of Corporation/Partnership
Address
Primary Contact
Add ress
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
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Kesolution 03-03 (Con't.)
EXHIBIT B
March 11, 2003
B. PROJECT INFORMATION
. The project will be:
_Industrial Greenfield: _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
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
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Year
% Completed
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KeSOIUtlon UJ-UJ (Con't.)
EXHIBIT B
March 11 ,2003
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 diversification of the city's economic base.
- Removal of blight or the rehabilitation of a high profile or priority
site.
Other:
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D. SOURCES & USES OF FUNDS
SOURCES NAME
Bank Loan
Other Private Funds
Equity
Fed Grant/Loan
State Grant/Loan
EDA Micro Loan
I D Bonds
Tax I ncrement (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 $
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KeSOIU~lon us-us ~lon.t.)
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EXHIBIT B
t4arch 11, 2003
AMOUNT
$
$
$
$
$
$
$
$
$
$
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Resolution 03-03 (Cont.)
EXHIBIT B
Ma rch 11. 2003
E. 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 (proforma). Attach as Exhibit III. (See example on page
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5. Application fee of $5000 (non-refundable)
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Kesolutton U3-03 (Cant.)
EXHIBIT B
March 11, 2003
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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 $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
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KeSUIU~lon UJ-UJ ,Lon't.)
EXHIBIT B
~.1arch 11, 2003
EXHIBIT III
EXAMPLE BUT-FOR ANALYSIS
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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 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%
G:IHRAMISCITIFITIFpolicy-03-11-03.doc
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