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HomeMy WebLinkAbout05 20 2013 EDA 8B Financing Tools O � YR10 !� � v 4646 Dakota Street SE Prior Lake. MN 55372 '�rMxsao'��' ECONOMIC DEVELOPMENT AUTHORITY AGENDA REPORT MEETING DATE: May 20, 2013 AGENDA #: 8B PREPARED BY: Casey McCabe, Community Development Specialist AGENDA ITEM: ECONOMIC DEVELOPMENT FINANCING TOOLS DISCUSSION: I ntrod uction The purpose of this agenda item is to confirm whether the tools identified on the attachment have the EDA's support as a menu of potential tools for use in encouraging economic development and redevelopment in our community and whether this list can be shared with business leaders during Business Retention & Expansion interviews and with the general public in the future. Hi StON 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 & Welcome Industrial Parks, EDA Business Plan, a Sewer and Water Fee Deferral Program, and an update of the Economic Development Revolving Loan Fund Guidelines. City staff has also provided the EDA with information on the importance of financing tools, viewing the city as a partner with busi- nesses to achieve economic development goals (jobs, businesses and tax base). Current Circumstances City staff has developed a list of available incentives offered by the City of Prior Lake. Economic development incentives are intentled to fill gaps in private development project financing that would otherwise make the project improbable without public support. Incentives are available for use by the City of Prior Lake for certain economic development projects. Not all ineentives are available for each project and projects may be able to combine more than one incentive. Some projects may need no incentive. The type and number of incentives offered for a project is at the sole discretion of the Prior Lake Economic Development Authority and the Prior Lake City Council. At the same time, Chaska demonstrates an approach whereby data centers are informed by city policy that they are eligible for tax abatement assistance equal to three years of city taxes. This approach gives that type of business assurance early on that the city strongly supports public as- sistance at a specified level. Conclusion The attached handout identifies financing tools and programs that may be available for use in Prior Lake. The EDA should solidify these uses as potentially available, but then also consider the establishment of specific policies that further explain the city's criteria for their use. For exam- ple, the city has a TIF policy, but none for Tax Abatement. ISSUES: EDA members should review the list of available financing tools and programs and determine whether or not these incentives should be recommended to the city council. Since the city council is the final authority regartling the use of these tools, the council must be comfortable with them as well. Once the EDA is comfortable with a specific arsenal of tools, they should arrange a joint meeting with the city council to assess the extent to which agreement exists. Once there is a consensus of the tools which are to be available and the circumstances in which they are to be used, then the EDA can consider whether they should be included in a new docu- ment identifying Economic Development Policy Guidelines, addetl to the Business Subsidy Policy (Agenda Item 8C), or provided to property owners and developers in its current form as a handout. FINANCIAL The financing tools are intended to provide the city with leverage to retain and to encourage the IMPACT: development and redevelopment of businesses which will bring needed services, products, em- ployment, tax base and revenues to our community. ALTERNATIVES: 1. Approve the economic development and redevelopment tools as proposed, or as amended, and direct the staff to schedule a joint city council/EDA Meeting to reach a consensus on the tools which should be available. 2. Continue discussion at a future meeting. RECOMMENDED Alternative #1. MOTION: ATTACHMENTS: 1. Economic Development Financing Tools & Incentives L 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 t�es 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 I 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 andlor 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 dro n�ssna.cit�fpriorlake.com