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Home My WebLink About10B - Tax Increment Financing Policy AGENDA ITEM: DISCUSSION: FISCAL IMPACT: ALTERNATIVES: RECOMMENDED MOTION: REVIEWED BY: CITY COUNCIL AGENDA REPORT APRIL 20, 1998 lOB DONALD RYE, PLANNING DIRECTOR CONSIDER APPROV AL OF TAX INCREMENT FINANCING POLICY Current Circumstances- At present, the City does not have a formal TIF policy. The EDA has developed a recommended policy for Council consideration. The Issues- The primary issue is whether to have a policy or not. Without a stated policy, the likelihood of approving projects which do not achieve City goals increases. With a policy in place, it is possible' to review proposals and have a specific reason to approve or deny the request. Without a policy, there is no objective basis for consideration of requests for TIF assistance. Conclusion- The attached TIF policy was developed by the Economic Development Authority and recommended for adoption. The City Council has reviewed this policy at a work session on April 6 and the draft before Council for consideration reflects the modifications which were discussed at that meeting. Budget Impact- Adoption of the policy will have no budget impact by itself. Potential budget impacts will occur as a result of specific projects approved as a result of applying the policy and will be one of the factors considered when reviewing a project for approval. 1. Adopt the policy as recommended 2. Adopt the policy with specified changes 3. Deny adoption of the policy Motion to adopt the Tax Increment Financing policy as recommended by the Economic D elopment Authority. cu Frank Boy' 1620.0.~~~'AQM,,~q~lOO(€, Minnesota $5372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER CITY OF PRIOR LAKE ECONOMIC DEVELOPMENT AUTHORITY TAX INCREMENT FINANCING POLICY ADOPTED BY THE EDA DECEMBER 15, 1997 AMENDED APRIL 6, 1998 PURPOSE This policy is established to outline the City's position on the use of tax increment financing (TIP) 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 TIP policy, TIP 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 I, 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. 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. PROGRAM ELIGIBILITY CRITERIA Qualified projects should meet or exceed the following criteria to be eligible for TIF assistance. Meeting the threshold of eligibility does not guarantee approval of the project by the City. Conversely, failure to meet the criteria will not automatically exclude a I:\econdev\eda\tifpolcy.doc Page 1 16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER proposal from further consideration. Final approval of any project will be made by the City Council and Economic Development Authority. 1. The project must be consistent with the City's Comprehensive Plan, zoning ordinance and other applicable City ordinances. 2. The applicant must be willing to enter into a development or redevelopment agreement satisfactory to the City. 3. The project must comply with all applicable environmental regulations. 4. The applicant must submit all of the materials required in the application. 5. 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. 6. The applicant/developer must provide a minimum of 10% equity in the project. 7. The EDA will favor owner-occupied projects over projects which will be leased. 8. 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. 9. For projects in Redevelopment Districts, those which remove or prevent blight will be favored. 10. For projects in Redevelopment Districts, a ratio of taxes paid before and after redevelopment of 1 :2 is desired. 11. 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. 12. The developer should be able to provide market data, letters of intent or financial statements which 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 below. APPLICATION PROCEDURE, 1) EDA establishes goals and objectives (EDA) 2) Advance Resources for Development acts as agent for EDA (Staff) 3) The applicant submits a sketch plan and information on sources and uses of funds for consideration and meets with appropriate staff and consultants to discuss the scope of the project, the amount of public assistance being requested, the time schedule and other appropriate information. (Applicant, Staff and Consultants) 4) The applicant completes an Application for Tax Increment Financing and submits this to the Planning Department. (Applicant) l:\econdev\eda\tifpolcy.doc Page 2 -1 I 5) The application will be reviewed by staff and their consultant for feasibility and compliance with the criteria and a report to the EDA will prepared. (Staff and Consultant) 6) Advance Resources proposes projects to EDA (Staff) 7) EDA approvaVdenial of project in concept.. If the EDA's preliminary review is positive, the applicant can make final application for assistance. This shall be accompanied by a non-refundable application fee of $2,000 and a completed "But- For" worksheet. If approved, the applicant shall be responsible for any additional costs incurred by the City or EDA. (EDA and Applicant) 8) Concept goes to City Development Review Committee (DRC) for concept plan review and comment (Staff) 9) Advance Resources negotiates with Developer (Staff) 10) Advance Resources prepares preliminary documents, which include comments from DRC on concept plan review (Staff) 11) EDA approves documents to assure consistency with concept plan approval (EDA) 12) City Attorney reviews documents (Staff) 13) EDA recommends approval or approves applicable agreements for City Council consideration, subject to site review approval including, but not limited to, variances, CUP's, PUD's. Comprehensive Plan amendments, rezonings and subdivision approvals (EDA) 14) Developer submits site plan, including necessary zoning applications, for official action (Developer) 15) Staff reviews plans according to applicable Zoning and Subdivision Ordinance requirements and refers to Planning Commission and/or City Council as necessary (Staff) 16) Documents granting necessary approvals are incorporated into agreement in Paragraph 7. Following final analysis of the submission, the EDA and City Council will receive a report with staff recommendations for final action. If approved, staff will prepare a Development or Redevelopment Agreement between the City and developer. (Staff) 17) Obtain any required City Council approvals (Council) l:\econdev\eda\tifpolcy.doc Page 3 I 18) EDA and Developer execute agreement. Any zoning or land use approvals required shall be completed prior to execution ofthe developers agreement. (EDA, Staff, and Developer) PROJECT COSTS ELIGIBLE FOR TIF ASSISTANCE Project costs which qualify for TIF assistance include the following: . Property acquisition . Land clearance . Relocation and demolition of structures . Site preparation . 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 l:\econdev\eda\tifpolcy.doc Page 4