HomeMy WebLinkAbout7A - Business Subsidy Policy
16200 Eagle Creek Avenue S.E.
Prior Lake, MN 5537~-tn1QOUNCIL AGENDA REPORT
MEETING DATE: October 18, 2004
AGENDA #: 7 A
PREPARED BY: John Sullivan, Community Development Director
AGENDA ITEM: PUBLIC HEARING TO CONSIDER ADOPTION OF BUSINESS SUBSIDY POLICY
DISCUSSION: Historv: The 2020 Vision and Strategic Plan emphasizes community development as
one of the vision elements. Accordingly, in 2004 the City Council added to the city's
community development resources by hiring a Community Development Director
whose primary mission is to work with businesses to promote retention and new
development.
Over the last six months, in addition to working on almost two dozen business deals, I
have been evaluating the city's community development policies. My findings are that
the Tax Increment Financing Policy needs to be updated. A separate agenda item
addresses the Tax Increment Financing Policy. The city does not presently have a
Business Subsidy Policy. The adoption of such a policy is important and is the
purpose of this agenda report.
In 1999, the State Legislature adopted the "Business Subsidy Act." A summary of the
law is attached hereto and entitled The Business Subsidy Act. This summary is
provided to the council so that it may familiarize itself with the law and may also
ultimately be provided to the public to clear up any ambiguities regarding statutory
authority or requirements under the law.
Under the law, the city is providing a business subsidy when it: contributes personal
property, real property, infrastructure, a loan at rates below those commercially
available, a reduction or deferral of any tax or fee, any guarantee to pay all or a portion
of any loan, lease or other obligation or preferential use of any government facility.
The Law provides for certain exceptions enumerated in the statute, most notable of
which is the exemption from regulation of any subsidy that is less than $25,000.00 in
value. However, as a matter of policy, I recommend that the council require all
subsidies, regardless of their size, to comply with the requirements of the Business
Subsidy Act. It does not make sense that a subsidy of $24,999.00 or under should not
be subject to the same reporting and agreement requirements that apply to a subsidy
of $25,001.00. As a matter of clarity, fairness and continuity, all subsidies should meet
the criterion outlined in the Business Subsidy Policy.
Current Circumstances: I believe that to improve our economic development efforts we
will need to offer business subsidies as defined, authorized and allowed by the law.
Accordingly, it will be necessary for the Prior Lake Economic Development Authority
www.cityofpriorlake.com
Phone 952.447.4230 / Fax 952.447.4245
ISSUES:
(EDA) and the City Council to adopt a Business Subsidy Policy. The Business Subsidy
Policy that I recommend for adoption is attached hereto and entitled City of Prior Lake,
Minnesota, Business Subsidies Policy.
The key provisions of the Business Subsidy Policy are:
1. The purpose of the policy is to: establish guidelines and criteria for providing a
business subsidy; to define the types of business subsidy which the City Council
may consider; to clarify that subsidies must be the minimum necessary assistance
to allow the prospect to proceed; and to provide that the City Council will review
each application on a case by case basis.
2. Business subsidies are defined in accordance with the law.
3. Business subsidies must achieve one or more of the "public purposes."
4. A section defines general policies for use of business subsidies. For example, "pay
as you go" tax increment is preferred. Petitioners are expected to demonstrate a
significant cash equity position in subsidized projects. Petitioners must be able to:
demonstrate the marketability of the proposed project; that it will not create an
unfair advantage over similar existing projects; and that the project will not
negatively affect city infrastructure, etc.
5. Specific guidelines are provided for commercial/industrial projects including such
things as: a demonstrated increase in tax base; reduction of blight; increase in
employment; retention of jobs; and the like.
6. The last two sections of the policy outline the Business Subsidy Agreement,
reporting requirements and process and procedures for considering such
applications. A copy of the Business Subsidy Agreement is attached.
Conclusion: The. City Council should conduct a public hearing on the proposed
Business Subsidies Policy and refine the policy as appropriate.
The proposed policy has been written to facilitate city compliance with the Business
Subsidies Act and statutes applicable to types of funding or support that the city may
offer.
The policy is written to allow the City Council to consider subsidies on a case-by-case
basis. The policy is written to prohibit certain kinds of impacts. For example, if a
subsidy request places a significant demand upon infrastructure, it is prohibited from
consideration from this policy. For instance, a recent commentary published by State
Auditor Pat Anderson stated:
Indirect costs resulting from development should also be considered. If
increased demands for public safety and other public services outweigh the
value of a higher tax base and greater employment opportunities, it may be
counterproductive to assist the project. A business policy should require
applicants to meet with officials representing the school district and town or city
in which the project will take place as well as representatives of public safety,
transportation, and other affected departments. The county board should be
ALTERNATIVES:
provided with reasonable estimates of the impact of the proposal on these
functions.
As written, the policy allows the Council flexibility to consider whether or not a subsidy
creates an undue burden on a case-by-case basis.
The policy requires a party requesting a subsidy to reguide or rezone property where
necessary, before submitting a subsidy request. This provision will encourage projects
in conformance with the comprehensive plan and zoning ordinance but will discourage
those that require changes. Is the Council comfortable with this approach?
1. Adopt the policy as proposed.
2. Adopt the policy with modifications.
3. Close the public hearing and refer the policy back to the Prior Lake EDA for
additional discussion and input.
4. Take no action.
RECOMMENDED
MOTION: Alternative 1.
REVIEWED BY: ~
THE BUSINESS SUBSIDY ACT
Leaislatiye Authoritv
In the 1999 legislative session, the Minnesota State Legislature enacted the
Business Subsidy Act (Minnesota Statutes, Section 116K.993-995). The act
authorizes any statutory or home rule charter city to offer a business subsidy to a
business so long as that subsidy serves a public purpose. This public purpose may
be increasing the tax base, but other public purposes generally related to economic
development are also valid. It's important to note that although job creation is
specifically mentioned as a valid public purpose, job retention can only be used as a
public purpose in cases where job loss is specific and demonstrable.
What is business subsidy under the Act?
A business subsidy is a local government agency grant of personal property, real
property, infrastructure, the principal amount of a loan at rates below those
commercially available to the recipient, any reduction or deferral of any tax or any
fee, any guarantee of any payment under any loan, lease, or other obligation or any
preferential use of government facilities that are given to a business.
There are 18 specific exceptions to the general business subsidy rule listed in the
Statute. Those that may apply to the Prior Lake EDA/City of Prior Lake ("Prior Lake
EDA") could include: 1) a business subsidy of less than $25,000; 2) assistance for
housing; 3) assistance for energy conservation; and 4) tax increment financing for a
soil conservation district. Although a business subsidy of less than $25,000.00 is
exempt from the act, the City of Prior Lake requires all business subsidies,
regardless of size, to comply with all of the requirements of the Act to be eligible for
funds.
Who arants a business subsidy?
With respect to the City of Prior Lake, the Prior Lake EDA has control over the
provision of business subsidies. Only by appealing to the Prior Lake EDA pursuant
to the Policies and Procedures Relating to the Use of Business Subsidies can a
business successfully obtain a business subsidy.
What are the criterion that the Economic DeveloDment Authority and the City
of Prior Lake use to determine whether or not to arant business subsidies?
Any business subsidy must meet one or more of the adopted business subsidies
criteria of the Prior Lake EDA. The Business Subsidy Criteria were adopted by the
City of Prior Lake in August of 1999, following a public hearing.
Basically, the likelihood that a business subsidy will be granted increases if its
proponent can demonstrate that the public purpose will be achieved if, and only if,
the business subsidy is granted. Any business that is seeking to obtain a business
subsidy should carefully articulate the public purpose to be achieved and then
demonstrate how the project in question would achieve that public purpose.
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Each of the five general types of tax increment financing districts may have its own
qualifications, duration, and purpose as they are outlined in the Business Subsidies
Criteria. This is because each of the districts must consider which pUblic purpose
that district needs to address.
What are the reauirements for a Business Subsidy Aareement?
1. A recipient and the Prior Lake EDA must enter into a subsidy agreement that
includes:
i. A description of the subsidy, including the amount and type of subsidy
and the type of district if the subsidy is tax increment financing:
a. This may include a description of whether the subsi~y was in the
form of cash, or some other tangible good obtained fort less than its
reasonable commercial value.
b. The amount of the subsidy will be estimated in good faith by the
Prior Lake EDA if it comes in any form other than cash.
c. The description of the type of district in the case of a tax increment
financing is important because each TIF district may have different
criterion for what constitutes a public benefit.
ii. A statement of the public purposes for the subsidy:
a. The statement of the public purposes of the subsidy should include
a description of the public purpose to be served through the
project.
b. The statement of the public purposes of the subsidy should also
include specific wage and job goals. These goals must include a
description of how many jobs should be created (separate part-
time and full-time) over what time frame and any incr~ased wage
goals that should be realized by the project.
iii. Goals for the subsidy:
a. The goals for the subsidy should include an economic analysis of
the return on the investment from the perspective of thb Prior Lake
EDA.
b. The Prior Lake EDA will approach its analysis from the standpoint
that the greater the economic benefit to be derived per subsidy
dollar, the more likely the subsidy agreement will be approved.
iv. A description of the financial obligation of the recipient if the goals are
not met:
a. This description must include a specific discussion of the financial
penalties paid by the recipient of a subsidy if the recipient fails to
meet its goals.
2
b. At a minimum the agreement must require the recipient to repay
the assistance with interest if goals are not met. This repayment
may be prorated to reflect the fact that some goals were partially
achieved.
v. A statement of why the subsidy is needed:
a. This should include a description of the precise economic condition
in the affected area that will be addressed by the subsidy.
b. This should also include a description of why the business cannot
proceed without the subsidy.
vi. A commitment to continue operations at the site where the subsidy is
used for at least five years after the benefit date.
any.
vii. The name and address of the parent corporation of the recipient, if
viii. A list of all financial assistance by all grantors, for the project.
2. The subsidy agreement must be approved by the Prior Lake EDA.
3. The Prior Lake EDA must provide public notice and hold a public hearing on
any subsidy in excess of $100,000. At the hearing the business will be
expected to support the case in favor of the subsidy before the citizens of
Prior Lake and that hearing will be considered part of the application.
4. Before entering into a Business Subsidy Agreement, the Prior Lake EDA
must check with the compliance and summary report requirements to
determine if the recipient is eligible to receive a business subsidy.
ReDorts by ReciDients
Any recipient of a business subsidy must file certain reports with the Prior Lake
EDA. The Business Subsidy Agreement will provide for periodic reports to the Prior
Lake EDA for at least two years, or until the goals outlined in the agreement have
been achieved, whichever is later. These reports will include the following:
1.
A restatement of the type of subsidy, the public purpose served by it, and the
amount of subsidies by type and districts;
2.
The hourly wage or salary for each job that has been created by the subsidy,
with separate bands for full-time and part-time positions;
3.
The sum of the hourly wages and the cost of health insurance provided by the
employer with separate bands for full and part-time positions;
The date when the recipient expects to reach any job and wage goals;
4.
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5. A restatement of the goals identified in the Business Subsidy Agreement and
an update on whether or not those goals are being achieved;
6. The location of the recipient prior to receiving the subsidy;
7. If the recipient was previously receiving a subsidy in Minnesota and failed to
finish that project, a discussion of why that project was not completed in the
previous location;
8. The name and address of the parent corporation, if any;
9. A list of all financial assistance granted by all grantors; and
10. Any other information requested by the commissioner.
When is the Act in effect?
The Business Subsidy Act has been effective for all business subsidies entered into
on or after August 1, 1999.
4
City of Prior Lake, Minnesota
DRAFT #1
Business Subsidies Policy
Adooted:
Economic Development Authority
Prior Lake City Council
Amended:
City of Prior Lake
16200 Eagle Creek Avenue, S.E.
Prior Lake, MN 55372
(952) 447-9805
DN: 230703
5
DATE:
CITY OF PRIOR LAKE
POLICY AND PROCEDURES RELATING TO
THE USE OF BUSINESS SUBSIDIES
I. PURPOSE
For the purposes of this document, the term tlCity" includes the Prior Lake City
Council and Economic Development Authority.
This policy establishes guidelines and criteria regarding the use of business
subsidies, such as tax increment financing ("TIF"), tax abatement and other
business subsidies for private development projects within the City of Prior Lake.
These guidelines and criteria are in addition to the requirements and limitations set
forth by provisions of Minnesota Statute 116J.993 ("MN Business Subsidy Law"),
and policies and guidelines with respect to any particular form of subsidy.
The fundamental purpose of business subsidies in the City is to encourage
desirable development or redevelopment that would not otherwise occur "but for"
the assistance. Business subsidies do not exist to enhance the return on
investment for projects that would otherwise occur, but to facilitate development that
would not otherwise occur.
Any developer that applies for business subsidy assistance may look to these
guidelines for guidance regarding the criterion the City will use in evaluating an
application. However, whether a particular project meets the criterion and serves
the City's present needs shall be the City's decision. The guidelines are instructive
only and do not have the force of law. If the City finds that its present needs require
one project to be given priority over another, then the City's judgment will ultimately
prevail.
The City will provide subsidies and incentives in the most limited fashion possible to
assure that the project will proceed. The City reserves the right to approve or reject
projects on a case-by-case basis, taking into account established policies, specific
project criteria, and demand on city services in relation to the potential benefits to
be achieved from a proposed project. This process is inherently subjective, and
whether a project receives a business subsidy may be as much a function of the
City's budget as the merit of the project.
The City will work to maximize the subsidies to those projects that, in the City's
judgment, will address the most pressing public purpose. The ability to
demonstrate that the project will most likely achieve its stated goals and therefore
address the most pressing public purpose will be the primary factor in determining
whether a project receives a business subsidy. Meeting these policy guidelines
does not guarantee that a business subsidy will be awarded. Furthermore, the
approval or denial of one project should not be construed as setting a precedent
that another similar project should be approved or denied. The City cannot possibly
approve a business subsidy for every worthy project. Whenever possible, it is the
City's intent to coordinate the use of business subsidies with other applicable taxing
jurisdictions.
DN: 230703
6
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ON: 230703
II. DEFINITION OF "BUSINESS SUBSIDY"
The following types of assistance in excess of $25,000.00 are defined as a
"business subsidy" within the MN Business Subsidy Law:
· State and local government agency grants;
· Contributions of personal property, real property, or infrastructure;
· Any loan that has a principal amount in excess of $75,000 for which
interest accrues at a rate below those commercially available for loans
of that risk profile;
· Reductions or deferrals of taxes or fees;
· Guarantees of any payment under any loan, lease, or other obligation;
· Preferential use of government facilities.
In any case where the value of the business subsidy is indeterminate, the City will
make a good faith determination of the value of the subsidy.
Although only assistance in excess of $25,000.00 is subject to the law, the City of
Prior Lake has a policy requiring all developers that request business subsidies to
comply with the requirements imposed by the MN Business Subsidy Law,
regardless of the size of the grant or loan. Therefore, although they are not strictly
subject to the act, developers requesting subsidies under $25,000.00 must agree to
comply with all the requirements of the Act to be eligible.
III. PUBLIC PURPOSE OBJECTIVES OF BUSINESS SUBSIDIES
In accordance with the MN Business Subsidy Law, the City will consider using
business subsidies to assist private development projects in an attempt to achieve
one or more of the following public purpose objectives:
.
To retain local jobs and/or increase the number and diversity of jobs
that offer stable employment and/or attractive wages and benefits.
Because it is required by the Business Subsidy Law, if the stated
public purpose is to retain jobs, there must be a showing that job loss
in the affected area is specific and demonstrable.
To enhance and diversify the City of Prior Lake's tax base.
To encourage additional unsubsidized private development in the
area, either directly or indirectly, through "spin off' development. In
this case, a business subsidy may be given to an "anchor" property in
the hopes that one business locating in the area will create a domino
affect and other unsubsidized businesses will locate to the area.
To achieve development on sites that would not be developed without
business subsidies assistance.
To remove blight and/or encourage development of commercial and
industrial areas in the city that result in higher quality development or
redevelopment and private investment.
To offset increased costs of development of specific properties when
the unique physical characteristics of the site may otherwise preclude
private investment.
.
.
.
.
.
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ON: 230703
IV. GENERAL POLICIES FOR THE USE OF BUSINESS SUBSIDIES
I.
J.
A.
Business subsidy assistance will be provided from the City, by a "pay-
as-you-go" note method, to the developer if the business subsidy is tax
increment financing or tax abatement. Requests for up front financing
will be considered on a case-by-case basis. However, the MN
Business Subsidies Law requires that any up front grant financing be
given in the form of forgivable loans. This means that any grants will
be documented as loans that will be forgiven if the specific goals of the
subsidy are met.
B.
A developer requesting business subsidy assistance must
demonstrate, to the satisfaction of the City, sufficient cash equity
investment in the project as required within the City's policy for the
particular form of subsidy. The City will assure that the business will
be adequately capitalized to guarantee it will continue as a going
concern for many years.
C.
Business subsidies will not be provided in circumstances where land
and/or property price is demonstrated by the County Assessor to be in
excess of fair market value. This would normally be where the
acquisition price is more than 10% in excess of market value as
determined by an independent appraiser.
D.
A developer must be able to demonstrate to the City, or, if applicable,
to the underwriting authority, market demand for a proposed project.
E.
Business subsidies will not be given if the subsidy would create an
unfair and significant competitive financial advantage over other
similar projects in the area.
F.
Business subsidies will not be given to projects that would place
extraordinary demands on city infrastructure and services.
G.
If the City requests it, the developer will provide adequate financial
guarantees to ensure completion of the project, including, but not
limited to: assessment agreements, letters of credit, cash escrows,
personal guaranties, mortgages, and other securities.
H.
Each developer must be able to demonstrate to the City's satisfaction
an ability to construct, operate, and maintain the proposed project
based on past experience, general reputation, and credit history.
If requested by the City, or its consultants, the developer shall provide
sufficient market, financial, environmental, or other data relative to the
successful operation of the project.
Projects receiving business subsidy approval from other affected
taxing jurisdictions will be more favorably received by the City.
8
V. GUIDELINES FOR COMMERCIAL/INDUSTRIAL BUSINESS SUBSIDIES
A. Business subsidies will not be used for on-site retail or service
business unless it is a redevelopment project that demonstrates that it
will result in a substantial increase in tax base and a significant
improvement in quality employment.
B. The project must be consistent with the City's Comprehensive Plan,
Land Use Plan, and Zoning Ordinances.
C. The project must result in the retention of existing jobs that would be
lost "but for" the proposed development, or result in an increase and
diversification in local jobs that would not otherwise occur, "but for" the
proposed development.
D. The City will determine the specific wage and job goals giving
consideration to the particular form of the subsidy, nature of the
development, the purpose of the subsidy, local economic conditions
and similar factors. The recipient will have up to two years to meet the
job and wage goals established by the City. The minimum wage for a
job to be considered a new or retained job shall be $13.00 per hour,
exclusive of benefits. Deviations less than the wage floor will be
considered on a case-by-case basis and in accordance with the
requirements of the MN Business Subsidy Law.
E. Business subsidies will not be given to commercial/industrial projects
or developers that have a history of inconsistent compliance with
applicable environmental rules and regulations, or failure to comply
with State and Federal Regulations regarding Equal Opportunity and
Occupational Safety Standards.
VI. BUSINESS SUBSIDY AGREEMENT
Each developer receiving a business subsidy, regardless of the size of that subsidy,
shall be subject to the subsidy agreement set forth by the MN Business Subsidy
Law and summarized below:
A. A Statement of the Public Purpose. The recipient must state the
public purpose the subsidy will address.
B. Goals of the SubsidY. The recipient will state the specific and tangible
wage goals that will be achieved by the subsidy. Specifically, the
. agreement will outline the number of jobs created and the wage goals
for each of those jobs. Although it is possible that the job and wage
goals may be set at zero, there must then be a public hearing that
addresses what the public purpose for the subsidy will be.
C. Need. The recipient will state in the Business Subsidy Agreement why
the subsidy is necessary and describe why the economic development
would not occur without the subsidy.
DN: 230703 9
D. Maintain Facilitv. The recipient agrees to maintain and operate its
facility at the site where the subsidy is used for a period of five years
after the date the subsidy is provided.
E. Failure to Comolv Business. Failing to comply with the subsidy
agreement will be subject to fines, repayment requirements, and be
deemed ineligible by the state to receive any loans or grants from
public entities for a period of five years.
VII. REPORTING REQUIREMENTS
Each developer receiving a business subsidy, regardless of the size of that subsidy,
shall be subject to the subsidy reporting requirements set forth by the MN Business
Subsidy Law and summarized below:
A. Resoonsibilitv to Reoort. Any developer receiving a business subsidy will
provide information regarding the goals and results for two years after the
subsidy is granted, or until the goals are met, whichever is later. If the goals
go unmet beyond two years, then the developer will provide reports until the
subsidy is fully repaid.
B. Public Puroose. The developer will restate in each report the public purpose
of the subsidy.
C. Waaes. The developer will report on the hourly wage of each job created by
the subsidy.
D. Benefits. The developer will report on the sum of hourly wages and any health
insurance provided by the developer.
E. Goal Date. Each year the developer will reassess the date it expects to meet
its specific job and wage goals and report what that date is.
F. Uodate. Each year the developer will provide an informal update on the
likelihood that the goals will be achieved and indicate the progress made
during the year toward achieving the stated goals.
G. Recioient Information. Each year the recipient developer will report its name,
address of itself and any parent corporation. Furthermore, the report will
include a summary of all financial assistance received from the Authority or
any other organization and any other information the Commissioner of
Employment and Economic Development may request.
VIII. SUBSIDY APPLICATION PROCESS AND PROCEDURE
A.
Application for business subsidies shall be made on forms for the
particular form of assistance provided by the City of Prior Lake
Community Development Director, or designee. A fee as identified in
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DN: 230703
the City's official fee schedule shall accompany any Tax Increment
Finance, Tax Abatement, or grant request application to cover the
City's initial legal, administrative, and planning costs.
B.
Following a review by appropriate City Staff the application shall be
referred to either the Economic Development Authority or City Council
for further action.
C.
The application for business subsidies shall request information
required within the City's policies on the particular form of subsidy,
including, but not limited to: a detailed description of the project; a
preliminary site plan; the amount of business subsidy requested; the
public purpose of the project; the number and types of jobs to be
created; the wages and benefits to be paid new employees; and
verifiable funding sources and uses.
11
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CITY OF PRIOR LAKE
ECONOMIC DEVELOPMENT AUTHORITY
TAX INCREMENT FINANCING POLICY
ADOPTED BY THE CITY COUNCIL APRIL 16, 2001
PURPOSE
This policy is established to outline the City's position on the use of tax increment
financing ("TIF") policy for private development. This policy will be used as a guide
in processing and reviewing applications for tax increment financing assistance. In
accordance with the TIF policy, TIF requests must comply with applicable state
statutes. The City of Prior Lake is governed by the limitations established in
Minnesota Statutes Chapter 469.174, the Minnesota Tax Increment Financing Act,
for all districts created after August 1, 1979.
PROGRAM GOALS
This program exists to achieve the following goals:
1. To promote commercial, industrial and residential development under special
circumstances that would otherwise not occur.
2. To increase and diversify the long-term tax base of the City in order to ensure
the ability of the City to provide adequate services for its residents while
lessening reliance on the residential property tax.
3. To improve the City's economic vitality through the creation and expansion of
employment opportunities.
4. To remove blight and encourage redevelopment in the commercial and
industrial areas of the City in order to encourage high levels of property
maintenance and private reinvestment in those areas.
5. To assure that projects are constructed and maintained at a level of quality
consistent with the goals of the City of Prior Lake.
6. To retain local jobs, increase the local job base and provide economic
diversity in that job base. The Program will only be used to retain jobs in
those situations when job loss has been documented and specific and
demonstrable.
7 . To assist in achieving other goals contained in adopted public policies as may
be adopted by the City Council from time-to-time, including, without limitation,
quality design and construction, energy conservation and reductions in the
capital and operating costs of government.
8. To provide high density housing in the Downtown (C-3) zoning district and to
assist in the development of other housing in the community that is consistent
with City goals and policies and is generally not being provided by the private
sector.
ON: 230703 1
PROGRAM ELIGIBILITY CRITERIA
Qualified projects should meet or exceed the following criteria to be eligible for TI F
assistance. These criteria are being adopted to meet the requirements of Minnesota
Statutes Annotated 9 116J.994 Subdivision 2. Meeting the threshold of eligibility
does not guarantee approval of the project by the City. Final approval of any project
will be made by the City Council.
1. The project must be consistent with the City's Comprehensive Plan, zoning
ordinance and other applicable City ordinances as well as applicable state
statutes.
2. The project shall meet at least one of the Program Goals listed above.
3. The applicant must be willing to enter into a development or redevelopment
agreement satisfactory to the City.
4. It must be demonstrated that the project would not be financially feasible but
for the public assistance to be provided. The level of TIF financing shall be
reduced to the lowest possible level.
5. The project must comply with all applicable environmental regulations.
6. The applicant must submit all of the materials required in the application.
7. The applicant must agree to provide surety to the City to cover all costs paid
by the increment, unless the project is a "pay-as-you-go" agreement. These
may include assessment agreements, letters of credit, personal deficiency
guarantees, guaranteed maximum cost contracts and minimum payment
agreements.
8. The applicant/developer must provide a minimum of 100/0 equity in the
project.
9 The City Council will favor owner-occupied projects over projects that will be
leased.
10. For projects in an Economic Development District, a maximum of $10,000 of
public money will be invested for each full-time equivalent position created or
retained.
11. For projects in Redevelopment Districts, those that remove or prevent blight
will be favored.
12. For projects in Redevelopment Districts, a ratio of taxes paid before and after
redevelopment of 1 :2 is desired.
13. TIF will not be used in projects that would give: a significant competitive
financial advantage over similar projects in the area. Developers will provide
information to demonstrate that this criterion is met.
14. The developer should be able to provide market data, letters of intent or
financial statements that illustrate the market potential or demand for the
project.
The applicant for assistance must complete an Application for TIF Assistance
pursuant to the procedures outlined in the Application.
PROJECT COSTS ELIGIBLE FOR TIF ASSISTANCE
Project costs that qualify for TIF assistance include the following:
. Property acquisition
· Land clearance
· Relocation and demolition of structures
· Site preparation
ON: 230703
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ON: 230703
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Soils correction
Removal of hazardous wastes or remediation of site contamination
Installation of Utilities
Construction of public or private improvements
Administrative costs directly related to the identified parcels
Design fees
Surveys
Environmental studies
Relocation of building occupants
Rehabilitation of structures
Special assessments
Other costs allowed by Minnesota Statutes
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3
BUSINESS SUBSIDY AGREEMENT
This Business Subsidy Agreement is entered into this _ day of ,
2004, by and between the Prior Lake Economic Development Authority, MN., a public body
corporate and politic (the "EDA") and (company name) a
(type of company) and its heirs and assigns.
Recitals
Description of the Business Subsidy (company), situated at
(address) and legally described as the
(legal description) City of Prior Lake, Scott County, Minnesota.
The subsidy is intended to assist the property owner in (state
activity, type of subsidy).
A. Statement of Need for Business Subsidy. The applicant recognizes the
need for a business subsidy to (state reason for need).
Furthermore, the applicant states that without the subsidy the project could not move
forward.
B. Public Purpose Statement. The EDA also recognizes that area and/or
neighborhood revitalization; creation of job opportunities with benefits; retention and
expansion of existing Prior Lake businesses; insert other goals and stuff from the
business subsidy policy here is the cornerstone of job creation
efforts in the City of Prior Lake.
In consideration of the above premises and the covenants herein, the parties hereto
agree as follows:
1. Waoe and Job Goals at the Proiect. As a condition to
(the Project), and the use of (the type of subsidy, such as
Available Tax Increment) in connection with (the Project), on the
terms and conditions set forth in the Development Agreement, Company will meet the
Wage and Job Goals of the Project as they are outlined in Exhibit A, which is attached
hereto and incorporated by reference herein.
2. Repayment of Business Subsidy.
(a) As security for the (company) compliance with the
Wage and Job Goals in Exhibit A, above, (company) agrees that
in the event it cannot achieve the Wage and Job Goals outlined in Exhibit A it will repay the
Business Subsidy pursuant to the terms and conditions outlined in Exhibit B, which is
attached hereto and incorporated by reference herein.
3. ReDortina Reauirement.
(a) Annually, on March 1, commencing on the March 1 immediately following the
Benefit Date and continuing until the applicable report evidences satisfaction of the Wage
ON: 231222
and Job Goals, or two years, whichever is later, the company will furnish to the EDA
Minnesota Business Assistance Form in substantially the form attached hereto as Exhibit C
(as such form may be modified to comply with reporting requirements imposed by law
including Minn. Stat. Section 116J.994, Subdivision 7), covering the preceding 12 months,
certified to be accurate by the Chief Operating Officer or Director of Human Resources of
the (company).
(b) If (company) does not file a report by the due date
set forth in subparagraph (a), above, the EDA will mail a warning to
(company) within one week 0 the filing date. If
(company) does not file the report within 14 days after the
postmarked date of the warning, (company) must pay the EDA a
penalty of $100 for each subsequent day until the report is filed. The maximum penalty
shall not exceed $1,000.
4. Five Year Commitment to City.
(a) (company) acknowledges that it has received a
Business Subsidy in connection with the Project and, in consideration thereof, hereby
agrees to conduct the operations anticipated by the Development Agreement at the Project
site, for at least five years after the Benefit Date, unless the consent of the EDA to a move
from the Project site is first obtained, which, subject to the provisions of subparagraph (b),
below, shall not be unreasonably withheld or delayed.
(b) If, during the five year period referred to in subparagraph (a), above,
(company) decides to move the operations which it was
conducting at the Project site to a location other than the Project site,
(company) must first notify the EDA of such decision, including in
its notification the specific business reasons for such decision. Following receipt of such
notice, the EDA will promptly schedule and conduct the public hearing required by law.
5. Name and Address of Parent CorDoration (if aDDlicable). The
(company's) parent corporation is
(name and address).
6. Other Business Subsidies Receive for this Proiect.
Nothing herein shall preclude (company) from receiving
additional financial assistance for the Project. (company) has also
received a total of $ in financial assistance from other grantors for the
Project. A complete list of all grantors and the amounts of financial assistance is attached
to this Agreement as Attachment 2.
7. Indemnity.
(company) hereby agrees to pay, indemnify and hold the
EDA harmless from any and all costs, expenses and fees, including reasonable attorney's
fees that may be incurred by the EDA in enforcing this Agreement, provided the EDA is the
prevailing party.
ON: 231222
2
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8. Successors and Assians.
This Agreement and all terms, conditions and obligations contained herein, shall run
with the Land and shall be binding upon and inure to the benefit of the EDA and
(the company), and their respective successors and permitted
assigns.
9. Breach. Notice. and Remedies.
(a) Breach. If for any reason the Company is unable to meet the requirements of this
Agreement, including, but not limited to, the requirement to meet specific Wage and
Job Goals, the Reporting Requirements and the Five Year Commitment, then the
Company will be deemed to be in breach of this Agreement.
(b) Notice. Once a breach has occurred, the Company shall provide written notice (the
"Notice") of the breach. The Notice shall include a description of the nature of the
breach, a description of the actions or accomplishments which must occur to cure
the breach, and a reasonable time to cure the breach which will be at least 15 days.
(c) Remedies. If a breach occurs and is not cured within a reasonable time, the EDA
may pursue any of its remedies at law or in equity including, but not limited to the
following:
I. Repavment of the SubsidY. The EDA may, at it's discretion, invoke
requirement to repay the Business Subsidy as outlined in Section 2 of this
Agreement in the event of a breach of the Agreement.
II. Specific Performance. The parties hereto agree that, in the event of a default
by (the company) in the performance of the
obligations set forth in this Agreement, money damages shall not provide an
adequate remedy. As a result, the parties understand and agree that, in the
event of a default by (company) in the performance of
its obligations under this Agreement, the EDA shall be entitled to seek specific
performance by the (company) of such agreement.
10. Term.
The term of this Agreement shall be from the day and year first above written until
the date on which all of the requirements of this Agreement have been satisfied. This
Agreement shall specifically survive the termination of the Development Agreement.
11. Attachments.
The following documents attached to this Agreement are hereby incorporated by
reference and made a part hereof:
Attachment 1: Minnesota Business Assistance Form
Attachment 2: Other Grantors and Financial Assistance to the Project
DN: 231222
3
IN WITNESS WHEREOF this Agreement has been duly executed and delivered by
the parties hereto as of the date above written.
Approved as to Form
ECONOMIC DEVELOPMENT
AUTHORITY OF THE CITY
OF PRIOR LAKE, MINNESOTA
City Attorney
By:
Its Chair/Commissioner
By:
Its Executive Director
By:
ON: 231222
4
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STATE OF MINNESOTA )
) ss.
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this _ day of
, 2000_, by , the Chair/Commissioner of the
Economic Development Authority of the City of Prior Lake, Minnesota, a Minnesota public
body corporate and politic, on behalf of said public body.
Notary Public
STATE OF MINNESOTA )
) ss.
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this _ day of
,2000_, by , the Executive Director of the Economic
Development Authority of the City of Prior Lake, Minnesota, a Minnesota public body
corporate and politic, on behalf of said public body.
Notary Public
DN: 231222
5
COMPANY NAME
By
Its
STATE OF MINNESOTA )
) ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this _ day of
, 200_, by (name), the
(title) of (company), on behalf of said
company.
Notary Public
THIS INSTRUMENT WAS DRAFTED BY
AND WHEN RECORDED RETURN TO:
City attorney's name and address here
DN: 231222
6
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ATTACHMENT 1
MINNESOTA BUSINESS ASSISTANCE FORM
[to be attached]
ON: 231222
Attachment 1 - 1
ATTACHMENT 2
OTHER GRANTORS AND FINANCIAL ASSISTANCE
Grantor Amount of Financial Assistance
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
DN: 231222
Attachment 2 - 1
EXHIBIT A
ON: 231222
9
EXHIBIT B
DN: 231222
10