2006 HRA Resolutions 06-03
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Resolution 06-03
April 11 , 2006
Commissioner Freiberg introduced the following and moved its adoption:
RESOLUTION REVISING THE 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 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 oftax 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 revises 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 to provide for reasonable analysis of the project and proposed public
subsidy, such application to be similar in format to the application attached as Exhibit B.
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Paula Pentel, Chair
A~.
T1lomas D. BU#,
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: Loomis; whereupon said
resolution was declared duly passed and adopted, signed by the Chair and her signature
attested by the Director.
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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 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 setforth 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
ass.istance 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 attracti'Je 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.
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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.
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 ~reen 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 affair 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.
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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.
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 developerslbusinesses 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 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.
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APPLICATION FOR TAX INCREMENT FINANCING
A. APPLICANT INFORMATION
Name of Corporation/Partnership
Address
Primary Contact
Address
Phone Fax
Email
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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 11$
Construction Start Date:
Construction Completion Date:
If Phased Project:
Year % Completed
Year
% Completed
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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 indicat6~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
ID Bonds
Tax Increment (present value of "pay as you go")
Other
TOTAL
USES
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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AMOUNT
$
$
$
$
$
$
$
$
$
$
AMOUNT
$
$
$
$
$
$
$
$
$
$
$
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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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. 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
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Printed name
Signature
Its
Printed name
Signature
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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 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%
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