HRA - 14-04 - 04-08 - adopting a tax increment financing policy and application form Resolution 14-4 April 8, 2014
Commissioner Harris introduced the following and moved its adoption:
RESOLUTION ADQPTING 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.
�,, � � �;6 �l
teven T Schmidgall, Chair
ATTEST:
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Thomas D. Burt, Executive Director
Resolution 14-4 - Continued April 8, 2014
The motion for the adoption of the foregoing resolution was seconded by Commissioner
Snope 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 Executive Director.
Resolution 14-4 - Continued April 8, 2014
EXHIBIT A
GOLDEN VALLEY HOUSING AND REDEVELOPMENT AUTHORITY
GOLDEN VALLEY, MINNESOTA
TAX INCREMENT FINANCING POUCY
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. QBJECTIVES 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
nat 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 oppartunities 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 Corporatian/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: (O New Construction ❑ Redevelopment/Rehab ❑ Expansion)
❑ Office/Institutional: (❑ New Construction ❑ Redevelopment/Rehab ❑ Expansion)
❑ Housing: (O New Construction � Redevelopment/Rehab ❑ Expansion)
❑ Other
The project will be: ❑ Owner Occupied ❑ Leased Space
Project Address
Legai 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.
❑ Enhance or diversify the city's economic base.
❑ Create opportunities for affordable housing or increase the diversity of housing opportunities
in the City.
O 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 local government.
❑ Other:
Resalution 14-4 - Continued April 8, 2014
C. SOURCES & USES OF FUNDS
SOURCES NAME AMOUNT
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 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 Aprii 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 Policy.
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 12,000,000
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,OOQ 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 1,237,50�
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%