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Home My WebLink About03 18 2013 EDA 8A Financing Tools Oi PRIOR 4646 Dakota Street SE Prior Lake. MN 55372 1N]vESO`t ECONOMIC DEVELOPMENT AUTHORITY AGENDA REPORT MEETING DATE: March 18, 2013 AGENDA #: 8A PREPARED BY: Casey McCabe, Community Development Specialist AGENDA ITEM: ECONOMIC DEVELOPMENT FINANCING TOOLS DISCUSSION: Introduction During the January 2013 EDAC meeting, members discussed the value of having a list of availa- ble economic development financing tools and incentives to share with business leaders during Business Retention & Expansion interviews. The purpose of this agenda item is to receive clarifi- cation from the EDA regarding its support for the use of the tools for EDA projects. History Over the past year, Community & Economic Development staff has been working to update and develop guidelines and policies related to financing or incentive programs; including the Technol- ogy Village Business Plan, an Economic Development Plan for Deerfield Business and Welcome Industrial Parks, EDA Business Plan, establishment of a Sewer and Water Fee Deferral Program and an update of the Economic Development Revolving Loan Fund Guidelines. Current Circumstances City staff has developed a list of available incentives offered by the City of Prior Lake. Economic development incentives are intended to fill gaps in private development project financing that would otherwise make the project improbable without public support to fill those financing gaps. Incentives are available for use by the City of Prior Lake for certain economic development pro- jects. Not all incentives are available for each project and projects may be able to combine more than one incentive. The type and number of incentives offered for a project is at the sole discretion of the Prior Lake Economic Development Authority (EDA) and /or the Prior Lake City Council. Conclusion A handout identifying available City of Prior Lake financing tools and programs has been provided for EDA discussion during the March 18th meeting. ISSUES: EDA members should review the list of available financing tools and programs and determine whether or not these incentives should be included in a new document identifying Economic De- velopment Policy Guidelines, added to the Business Subsidy Policy (Agenda Item 8B), or provid- ed to property owners and developers in its current form as a handout. The EDA should discuss the degree of comfort or discomfort in the use of various tools for various purposes. Apllicants for these tools are often called upon to deposit with the city as much as $12,000 to cover preparation and analysis costs associated with the desired tool (TIF in this case). We have received feedback from applicants that this fee is significant and onerous as it does not guarrentee that they receive the requested incentive. This can have a dampening effect upon the use of the tool. FINANCIAL These incentives, if judiciously used, will cost the city initially but will also result in added property IMPACT: valuation and jobs if properly employed.. ALTERNATIVES: 1. Provide direction to staff related to how information about the City of Prior Lake's available financing tools and incentives should be provided to the public. 2. Continue discussion at a future meeting. RECOMMENDED Altemative #1. MOTION: ATTACHMENTS: 1. Economic Development Financing Tools & Incentives. 2 Economic Development Financing Tools & Incentives City of Prior Lake, Minnesota Financing incentives offered by the City of Prior Lake are intended to fill gaps in private development project financing that would otherwise make the project improbable without public support. Incentives are approved based on development projects meeting specified criteria tied to each program. The type and number of incentives available for a project is at the sole discretion of the Prior Lake Economic Development Authority (EDA) and/or the Prior Lake City Council. Potential incentives are as follows: Tax Increment Financing — A development tool whereby the taxes generated by a development or redevelopment project are used to pay the costs of the project. Four types of Tax Increments Districts are used for different projects: Economic Development District — for new commercial or industrial expansion and job creation purposes. Increments are limited to 10 years (8 years of increment production). Redevelopment District — to redevelop or reuse previously developed land and/or buildings. Usually used for building code issues, base value purchase, demolition and/or infrastructure purposes. Soils Condition District — used to make land with unstable soils usable for development. Also used to address situations involving pollution. Housing District — used to develop affordable housing by acquiring land, buildings and /or funding infrastructure. Sewer and Water Fee Deferral Program — Eligible businesses or properties can apply for the deferral of a portion of one or more sewer /water fees, including: Metropolitan Council Sewer Availability Charge (SAC); Prior Lake Sewer Connection Charge; Prior Lake Water Connection Charge; and Prior Lake Water Tower Charge. Conduit Bonds — City issued bonds on behalf of a private developer. The City is not a guarantor of conduit bonds and the liability of the bonds is solely that of the developer. Conduit feature is used to obtain rates in the tax - exempt market. Land Sale Write Downs — Land owned by the City, acquired either through purchase or through property tax default, is occasionally sold at less than what an appraisal determines to be is estimated market value. This can be done either because of unique conditions on a site, such as soils, rock, pollution, wetland, or it can be done purely as an incentive. Special Assessment — The levying of a charge for public costs against property that has received a benefit from a particular project or activity undertaken by the city. The special assessment becomes a part of the funding mechanism to defray the cost of the project. Building Leases — City owned commercial properties are available for lease to private business enterprise. Below market lease rates will be considered by the EDA and/or City Council. Business Accelerator Lease Space Write Downs — Below market lease rates available to qualifying companies or tenants in city owned incubator space. Economic Development Revolving Loan Fund — Provides gap financing through low interest loans to low to small and medium size businesses for a variety of economic development activities requiring public assistance but that also provide added value. Industrial Revenue Bonds — A bond issue sponsored by the City with the proceeds directed to a private business enterprise. Payments made by the business enterprise to City government are used to service the bonds. Tax Abatement — Abatement redirects all or a portion of property taxes to be used for a wide range of public benefit projects and purposes, including; general economic development, such as increasing tax base or employment; construction of public facilities or infrastructure; and redevelopment of blighted areas. DEED Loans /Grants — Numerous grant and loan programs are available from the Minnesota Department of Employment and Economic Development (DEED) for the purpose development, redevelopment and/or job creation. The city must serve as the applicant in partnership with a company or developer. Metropolitan Council Loans /Grants — The Metropolitan Council has several programs that provide funding and fee waivers to local communities to assist with planning, development, housing, and environmental initiatives. With any questions about the Economic Development financing tools or incentives, please contact: Dan Rogness Community & Economic Development Director City of Prior Lake 4646 Dakota Street SE Prior Lake, MN 55372 (952) 447 -9813 drogness @cityofpriorlake.com