04-09-12 EDA ot CITY o
MINNESOTA
TO: Economic Development Authority Commissioners
FROM: Lori Johnson, City Administrator
DATE: April 5, 2012
RE: Discussion of EDA Powers and Policies
One of the four goals that the City Council identified in the recent strategic planning
session was to increase commercial and industrial development in the City; in other words,
increase economic development efforts to bring development to the City. State Statutes
give more authority and tools to EDA's in economic development than to cities to achieve
that goal. Therefore, an active and involved EDA is a critical part of successfully attracting
commercial and industrial development.
The City's EDA was formed in the early 1990's, but it has been relatively inactive other
than for the purpose of financing public facilities and approving a couple of development
incentives. In December 1993 the EDA approved an EDA Policy Outline. The document
was well thought -out identifying the development objectives, funding sources, and a Tax
Increment Financing (TIF) policy. You will note as you read the document that most of
the content still applies today. With some revision to add additional financing sources now
available such as tax abatement and minor updating, the EDA will have a workable
framework to evaluate development proposals.
Since it has been some time since the EDA reviewed the powers and policies of the EDA, I
have attached background information for your review:
• The first document is from the League of Minnesota Cities' (LMC) Handbook for
Minnesota Cities, Chapter 15: Community Development and Redevelopment. This
provides specific information on EDA powers, TIF, tax abatement and many other
areas of economic development and redevelopment.
• The next set of documents includes the Otsego EDA enabling resolution, EDA Policy
Outline discussed above, and a memo from the attorney dated September 28, 1998
outlining the purpose, powers and operation of an EDA.
• Finally, the last attachment is a summary of the recent Otsego Business meetings
held in partnership with the City and the I -94 West Chamber of Commerce.
Goals
It would be unwieldy to summarize each of the documents in this memo; however, there
are several items I would like to highlight. The first is what do we want to accomplish?
What are the City's economic development goals?
Goals of Economic Development:
• Help existing business grow and expand
• Attract new businesses (commercial, retail, industrial, medical, technical)
• Increase tax base
• Add jobs
• Redevelop blighted property and stop degradation of property values
Tools Available
The second is the types of economic development tools available. You will find reference
to these as you read the LMC document.
Types of economic development incentives available:
• Tax Abatement
• Tax Increment Financing (TIF)
• Loans
• Industrial Development Bonds
• Tax Levy
• State and Regional Grants (DEED, Initiative Foundation)
• Deferral of development fees
Target Audience
Lastly, but a very important element is what type of development can the City attract? We
need to capitalize on the attributes of the City and go after development that fits with
those attributes. For instance, don't spend energy on trying to attract development that
needs a rail spur because you will never land that development.
Identify the City's niche and go after it. Use what you have to your advantage:
• Land
• Location
• Low taxes
• Development flexibility
• Transportation network
At the workshop, we will further discuss the powers of the EDA and the role the EDA
wants to play in the City's increased economic development initiative.
2
Finally, in addition to the general EDA discussion, Steve Wensman will be at the EDA
meeting to present a summary of his findings and project while he served as intern these
past few months. He was instrumental in gathering and compiling vast amounts of data
to prepare the City to quickly and accurately respond to economic development inquires
and with numerous other economic development activities.
3
CHAP! k K 15
Part IV
REGULATORY AND DEVELOPMENT FUNCTIONS OF CITIES
CHAPTER 15: COMMUNITY DEVELOPMENT AND
REDEVELOPMENT
Business subsidies or financial assistance 2
A. Business subsidies 2
B. Financial assistance 3
II. City development tools 3
A. General city development powers 3
B. Housing and redevelopment authorities 4
C. Economic development authorities 8
D. Port authorities 10
E. Municipal or area redevelopment agencies 11
F. City development districts 11
G. City industrial development 12
111. Other development strategies 12
A. Housing bonds 12
B. Industrial parks 13
C. Industrial revenue bonds 13
D. Commercial rehabilitation 14
E. Tax increment financing (TIF) 14
F. Property tax abatement 17
IV. State-sponsored development tools 17
A. Minnesota Housing Finance Agency 17
B. Department of Employment and Economic Development (DEED) 18
C. Enterprise Minnesota 19
D. E-commerce ready cities 19
E. Corporations 20
V. Federal development tools 20
A. Community development block grants 20
B. Rural development grants 20
VI. How this chapter applies to home rule charter cities 20
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Chapter 15
Community development and
redevelopment
This chapter describes the requirements for a city to establish criteria for
awarding business subsidies, addresses the various development agencies
cities may create, and provides a brief overview of state and federally
sponsored programs for encouraging development and redevelopment. Most
economic development tools can be applied to any size city. These tools are
interrelated, and a city may use several for one project.
I. Business subsidies or financial
assistance
A. Business subsidies
Minn. Stat. §§ 1161993 to State law defines "business subsidy" or "subsidy" as a state or local
1167.995; government agency grant, contribution of personal property, real property,
Minn. Stat. § 1161993, subd. 3. 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 given to a
business in an amount greater than $150,000.
Minn. Stat. § 1167.994, subds. 5, Prior to awarding a business subsidy of more than $150,000 (and as defined
11; by law) to any business, a city and any Housing and Redevelopment
Minnesota Department of Authority (HRA), Economic Development Authority (EDA), port authority,
Employment and Economic and nonprofit created by a local government must hold a public hearing and
Development (DEED).
adopt criteria for awarding business subsidies. The public hearing notice
must include a statement that either a resident or a city property owner may
file a written complaint with the city if the city does not follow the business
subsidy law. Written complaints must be filed within specified timelines.
The criteria must include a policy regarding the wages to be paid for any
jobs created. Copies of the criteria adopted by cities are found on the
Minnesota Department of Employment and Economic Development
(DEED) web site.
Minn. Stat. § 1161994, subd. 3. Once the criteria are established, the grantor and the recipient must enter
into subsidy agreements that meet the statutory requirements. The agreement
must include an obligation to repay part or the entire subsidy if the recipient
does not meet its obligations.
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Minn. Stat. § 116J.993, subd. 3; Types of assistance meeting the definition of a business subsidy include:
Minn. Stat. § 469.185. grants; contributions of real or personal property or 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 given to a business.
Minn. Stat. § 1161994, subd. 11. The law imposes a 180 -day statute of limitations on actions to challenge a
city after approval of a business subsidy agreement. Citizens or owners of
taxable property in a city may bring a civil action against the city for failure
to comply with the business subsidy laws. Cities should therefore consult
closely with the city attorney before awarding a business subsidy.
Minn. Stat. § 1161993, subd. 3. There are several exceptions to this definition, including a subsidy of less
than $150,000; subsidies for redevelopment, pollution control and land clean
up, housing, industrial revenue bonds, utility property tax abatements and
other similar programs.
Minn. Stat. § 116J.994, subds. 4, Recipients must provide grantors with information on their progress toward
7' $" the goals outlined in the agreement. The goals for increasing jobs or
retaining jobs must result in local job creation and job retention. Grantors
must submit the annual Minnesota Business Assistance Form (MBAF) to the
Department of Employment and Economic Development (DEED) by April 1
each year for each business subsidy agreement. Local government agencies
in cities with a population of 2,500 or more must submit an MBAF,
regardless of whether they have awarded business subsidies. Local
government agencies in cities with a population of 2,500 or less are exempt
from filing the MBAF if they have not awarded a subsidy in the past five
years.
B. Financial assistance
Minn. Stat. § 116J.994, subd. 2; Cities may offer "financial assistance" in the form of a business loan of
Minn. Stat. § 1161.994, subd. 8. more than $25,000 or a guarantee of $75,000 or more, but less than
$150,000 required to constitute a business subsidy. If a city offers such
financial assistance it must develop criteria and set minimum wage floor
levels as prescribed in business subsidy law. Cities granting such financial
assistance must submit business assistance reports to the Department of
Employment and Economic Development (DEED) within one year of
granting the assistance.
11. City development tools
A. General city development powers
Minn. Stat. § 469.041. Cities have authority to aid and cooperate in the planning, construction, or
operation of economic development, and housing and redevelopment
projects. The following is a partial list of actions cities may take, with or
without compensation:
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• Dedicate, sell, convey, or lease any of its interests in any property or
grant easements, licenses, or any other rights or privileges to an HRA.
• Furnish parks, playgrounds, recreational, community education, water,
sewer, and drainage facilities or other works adjacent to or in connection
with housing and redevelopment projects.
Minn. Stat. § 469.043, subd. 2. • Grant a partial tax exemption of up to 50 percent of all local taxes for
housing projects in a redevelopment district.
Minn. Stat. § 469.192. A statutory city, home rule charter city, economic development authority,
housing and redevelopment authority, or port authority may make a loan to a
business, a for - profit or nonprofit organization, or an individual for any
purpose the entity is otherwise authorized to carry out under any of the laws
cited.
Judd Supply Co. v. Merchants & Private development projects that receive public financial or other assistance
(Min Ct. Co., App. . 1989). 9 895 w ill not necessarily become public projects that trigger competitive bidding
Ct. App. 1989). Y P P J � P g
or other state laws applicable to public works.
B. Housing and redevelopment authorities
The predominant method of delivering and administering housing and
redevelopment programs in Minnesota is through a legal public agency,
accountable to city government. A city may establish this public agency,
which is often the HRA. There are more than 230 HRAs in Minnesota.
1. Elements of an HRA
Minn. Stat. §§ 469.001 to An HRA is a public corporation with power to undertake certain types of
469.047; housing and redevelopment or renewal activities. While state legislation
Minn. Stat. § 469.003. conveys authority for housing and redevelopment in each city, it is up to the
city council to formally establish an HRA before it can do business and use
its powers. Once a council legally establishes an HRA, it may undertake
certain types of planning and community development activities on its own
with council approval.
Minn. Stat. § 469.003, subd. 1. To create a housing and redevelopment authority, the city council must, by
resolution, make the following findings required by law:
• Substandard, slum or blighted areas that cannot be redeveloped without
governmental assistance; or,
• A shortage of affordable, decent, safe, and sanitary dwelling
accommodations available to low- income individuals and families.
Minn. Stat. § 469.003, subds. 2, The council must pass this resolution after a public hearing. A copy of this
4. resolution must go to the commissioner of DEED.
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2. Area of operation for an HRA
Minn. Stat. § 469.004, subds. 1, The area of operation of a city HRA is the corporate limits of the city.
2.
County and multi - county HRAs operate in areas that include all the political
subdivisions within the county or counties, except they may not undertake
any project within the boundaries of a city that has not adopted a resolution
authorizing the county or multi - county HRA to exercise powers within that
city.
Minn. Stat. § 469.004, subd. 5. Establishment of a county or multi - county HRA precludes the formation of
city HRAs, unless the county or multi - county HRA and the commissioner of
DEED agree to let the city form one.
3. HRA membership
Minn. Stat. § 469.003, subd. 6. An HRA consists of five commissioners who are residents of the city. The
mayor appoints and the council approves the members who serve five -year,
staggered terms. City councilmembers often serve on the HRA. The entire
membership of an HRA may consist of councilmembers.
24 C.F.R. 964.415. Federal regulations require that at least one eligible resident be a member of
a public housing agency board, which may be the HRA, an EDA or other
public housing authority (PHA). This rule applies to any public housing
agency that holds a public housing annual contributions contract with HUD
or that administers Section 8 tenant -based rental assistance. The rule does
not apply to state - financed public housing projects or Section 8 project -
based assistance. A "small PHA exception" also exists.
Minn. Stat. § 469.003, subd. 7. The city clerk must file a certificate of appointment for each commissioner
of a city HRA and send a certified copy to the commissioner of DEED.
Minn. Stat. § 469.011, subd. 2; State law allows the HRA to adopt bylaws. Commissioners may accept
Minn. Stat. § 469.011, subd. 4. compensation of up to $75 for each meeting they attend. Commissioners
who are elected officials may receive daily payment for a particular day only
if they do not receive any other daily payment for public service on that day.
Commissioners who are public employees may not receive daily payment,
but may not suffer loss in compensation or benefits as a result of their
service.
4. HRA powers
Minn. Stat. § 469.012, subd. 1. An HRA is primarily responsible for the planning and implementation of
redevelopment and/or low -rent housing assistance programs within its area
of operation. An HRA has all the powers necessary to carry out the state
HRA Act, including but not limited to the following powers:
• To sue and be sued.
• To employ staff and an executive director.
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• To undertake projects within its area of operation and to provide for the
construction, reconstruction, improvement, extension, alteration, or
repair of any project or part of a project.
• To sell, buy, own, and lease property by any means necessary, including
the power of eminent domain.
• To cooperate with and use state and federal financial assistance
programs.
• To develop rehabilitation and code enforcement techniques.
• To issue bonds for any of its corporate purposes backed by the pledge of
revenues, grants or other contributions.
• To implement renewal or redevelopment programs using tax increment
financing.
• To own, hold, improve, lease, sell or dispose of real or personal
property.
• To designate substandard, slum or deteriorating areas needing
redevelopment, and unsafe, unsanitary, and overcrowded housing.
• To make necessary expenditures to carry out the purposes of the HRA
law.
• To develop and administer an interest reduction program to assist the
financing of the construction, rehabilitation, or purchase of low- or
moderate - income housing.
5. HRA special assessment and levy authority
HRA power to levy and collect taxes or special assessments is limited to the
Minn. Stat. § 469.001 — 469.047; power provided in state law. Subject to a resolution of consent from the city
Minn. Stat. § 469.033, subd. 6; council an HRA may levy a tax upon all taxable property within the city.
(The council may give a consent that covers a series of years if they so
Minn. Stat. § 275.70 to 275.74; choose or council may pass a resolution authorizing an HRA levy for a set
amount of time, for example, the entire term of the bonds secured in part by
Minn. Stat. § 275.066. an HRA levy and in part by a city levy.) State law recognizes the distinct
nature of HRAs and designates them as "special taxing districts." The
maximum general allowable operational levy of 1-RAs is 0.0185 percent of
the previous year's taxable market value of all property in the city. The
city's total taxable market value is available from the county assessor. An
HRA raises its own levy because it is a separate political subdivision and not
a "local governmental unit." Therefore, an HRA levy is not subject to levy
limits but is subject to the 0.0185 percent market value limit. Levies
collected by an HRA must be used only for purposes listed in the HRA Act.
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There is crossover between HRA and EDA levies that can be confusing.
Typically, EDAs are not authorized to levy taxes under state law. However,
Minn. Stat. § 469.107; many city EDA- enabling resolutions adopt all the powers of an HRA, and
Minn. Stat. § 275.066. then the EDA functions as a special taxing district under state law. If the
enabling resolution so allows, the EDA levies a separate tax or "HRA levy"
not subject to levy limits or city debt limits —but again subject to the 0.0185
percent of total city market value limit in state law. The city attorney may
verify the structure and levy authority of each city's HRA and/or EDA.
Minn. Stat. § 469.012, subd. 4; While HRAs have the legal authority to "do whatever is necessary and
Minn. Stat. § 469.028. convenient" to implement redevelopment, they are subject to the ordinances
and laws of the city. The city council must approve HRA plans before the
housing and redevelopment authority may begin implementation.
6. HRA contracting
Minn. Stat. § 469.015; All HRA construction work and purchases of equipment, supplies or
Minn. Stat. § 469.015 subd. 1 a. materials that involve expenditure of more than $100,000 must be
competitively bid. An HRA (and a city) may also use the "best value
alternative." There are limited exceptions to these requirements for
emergencies and certain projects, such as parking ramps and certain public
transit facilities.
7. HRA financing
Minn. Stat. §§ 469.033; and Operating funds, capital improvements, and debt retirement expenses for
Minn. stet. § 469.034. HRA projects may be financed by any one, or combination of, the following
methods:
• Federal grants.
• Revenue bonds the HRA or local governing body sells.
• General obligation bonds the local governing body sells.
• Tax increments from redevelopment projects.
• A limited mill levy for redevelopment projects and planning activities.
• A limited mill levy for informational and relocation services.
Minn. Stat. § 469.034, subd. 1. When an HRA issues bonds, the revenue generated must be used for the
projects financed, or bond costs must be paid from income generated by
designated projects. The law states that the principal and interest on bonds
are payable exclusively from the income and revenues of the project
financed with the proceeds of the bonds, or exclusively from the income and
revenues of certain designated projects, whether or not they are financed in
whole or in part with the proceeds of the bonds.
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8. HRA certifications to state
The following documents relating to the establishment and activities of local
HRAs must go to the DEED commissioner:
Minn. Stat. § 469.003, subds. 4, • Resolution of need.
6.
Minn. Stat. § 469.003, subd. 7. • Certificates of appointment or reappointment of HRA commissioners.
• Project reports.
• Applications for federal assistance.
• Contracts with federal agencies.
• Redevelopment plans.
• Low rent public housing project and management plans.
Minn. Stat. § 469.013. In addition, annual financial reports must go to the state auditor.
9. HRA federal certification
In order for a local HRA to use federal Department of Housing and Urban
Development (HUD) assistance programs, it must submit a transcript of
organizational documents to the HUD area office.
C. Economic development authorities
Minn. Stat. §§ 469.090 to All cities and townships have authority from the state Legislature to create
469.1082; economic development authorities. The city may consolidate the economic
Minn. Stat. § 469.1082, Saba. s; development authority (EDA) with an existing HRA or the city may grant
Minnesota Department of the authority HRA powers. The city council may create an EDA by passing
Employment and Economic
Development: The Economic an enabling resolution. Before adopting the enabling resolution, the city
Development Authorities must first conduct a public hearing. The enabling resolution establishes a
Handbook. board of commissioners for the EDA. The city council can choose to serve
as the EDA board of commissioners or create a board composed of
community members. The mayor, with approval of the council, appoints the
commissioners. The board may consist of three, five or seven members who
serve six -year terms. The board is subject to the open meeting law.
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1. EDA levies
Minn. Stat. § 275.70; The typical EDA levy is different than the HRA levy discussed above. It is
not a levy raised by the EDA —it is a levy set by a city at the request of the
EDA. Basically, the city simply appropriates part of the money the city
collects in the general city levy to the EDA. Because the EDA levy is part of
Minn. Stat. § 275.066. the city levy, it is not a "special levy" under state law and thus the EDA levy
is subject to the city's overall levy limit. However, as noted above, many
EDA - enabling resolutions adopt all the powers of an HRA. If so, the EDA
may levy a separate tax or "HRA levy," and then the EDA functions as a
special taxing district as if it were an HRA and that levy is not subject to
levy limits or to city debt limits. An EDA using the levy powers of an HRA
is still limited to a levy no more than 0.0185 percent of the total taxable
market value in the city.
2. EDA loans
Minn. Stat. § 469.192; An EDA is authorized to make a loan to a business, a for - profit or nonprofit
Minn. Stat. §§ 469.090 to organization, or an individual. Before taking an action or making a decision
469.1082; which could substantially affect an EDA commissioner's or an employee's
Minn. Stat. § 469.098. financial interests or those of an organization with which the commissioner
or an employee is associated, a commissioner or employee of an authority
must comply with specific requirements to disclose the conflict and obtain
prior approval. Failure to do so may result in criminal charges.
Loans must be for a purpose the EDA is authorized to carry out under the
law. An authorized purpose must deal with or contribute to economic or
industrial development. EDAs have the ability to use pooled bond reserving.
In most development programs, each bond issue is independent of any other
bond issue with a separate service or sinking fund account. EDAs, however,
may create a single common bond reserve fund. Under this arrangement,
each project's revenues go into a common fund, which in turn pays the
bondholders on all projects.
Through this pooling mechanism, the security of each project's bond
increases and borrowing costs decrease as long as the pool has the necessary
volume and diversity of cash flow.
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3. Other EDA powers
Minn. Stat. § 469.101, subds 1, EDAs can acquire property and facilities but cannot issue debt without an
2; election. The city must authorize the issuance of debt in the resolution
Minn. Stat. § 469.101, subd. 1; creating the EDA. Also, EDAs can create economic development districts
"Bill Summary H.F. 3729" House but the districts must be contiguous. Current law eliminates the requirements
Research Department (May 16, that economic development districts established by EDAs meet the "blight
2010);
Minn. Stat. § 469.102. test" under tax increment financing law for redevelopment districts. EDAs
may exercise powers under the housing and redevelopment authority (HRA)
law (if a particular EDA enabling resolution includes HRA power) to create
a redevelopment project, housing development, or housing project under
which a restrictive blight test does not apply. These projects can be used for
similar purposes to those of an economic development district under the
EDA law.
D. Port authorities
Minn. Stat. §§ 469.048- 469.068; The state Legislature authorizes city creation of port authorities. A port
Minn. Stat. § 469.053. authority is a separate political entity with the right to sue and be sued in its
own name and is generally organized to increase commerce in a city. Unlike
EDAs and HRAs, a port authority may issue general obligation bonds
without holding an election.
Minn. Stat. § 469.050; Minn. Cities establish a port authority by passing an enabling resolution. It may
Stat. § 469.051. have from three to seven commissioners (two of whom must be on the city
council) appointed by the mayor and approved by the city council, unless a
different number or procedure is set out in the enabling law. State law
governs commissioner pay, vacancies, duties, and port authority by -laws.
Minn. Stat. § 469.051, subd. 2. A port authority shall annually elect a president or chair, vice - president or
vice - chair, treasurer, secretary, and assistant treasurer. A commissioner may
not serve as president or chair and vice - president or vice -chair at the same
time. The other offices may be held by one commissioner. The offices of
secretary and assistant treasurer need not be held by a commissioner.
The treasurer of a port authority must be bonded to faithfully perform these
duties:
• Receive and be responsible for port authority money.
• Be responsible for the acts of the assistant treasurer, if appointed.
• Disburse port authority money by check or electronic procedures.
• Keep an account of the source of all receipts, and the nature, purpose,
and authority of all disbursements.
• File the authority's detailed financial statement with its secretary at least
once a year at times set by the authority.
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Minn. Stat. § 469.051, subd. 9. The port authority's annual detailed financial statement must show all
receipts and disbursements, their nature, the money on hand, the purposes to
which the money on hand is to be applied, the authority's credits and assets,
and its outstanding liabilities. The authority must examine the statement
together with the treasurer's vouchers. If the authority finds the statement
and vouchers correct, it shall approve them by resolution and record the
resolution.
Minn. Stat. §§ 469.048-469.068. State law governs many other aspects of port authorities, including but not
limited to use of city property by a port authority, employees, contracts, and
audits. The city attorney also acts as the port authority's attorney.
E. Municipal or area redevelopment
agencies
Minn. Stat. §§ 469.109 to Any rural municipality or group of municipalities may establish a public
469.123. body, known as a municipal or area redevelopment agency, in and for the
area the municipality covers. This law defines municipalities as home rule
charter or statutory cities, counties, towns or school districts.
Minn. Stat. § 469.110, subd. 11; The law includes only rural areas, which generally means all areas that are
Minn. Stat. § 469.111. not within the boundary of any city having a population of 50,000 or more,
and not immediately adjacent to urbanized and urbanizing areas with a
population density of more than 100 persons per square mile—or areas with
an unemployment rate of 6 percent or more. The restrictions limit
applicability of the law to rural areas and to the Iron Range.
Minn. Stat. § 469.111. The establishment of the municipal or area redevelopment agency is similar
Minn. Stat. § 469.115. to the establishment of an HRA. A municipal or area redevelopment agency
has similar powers to an HRA.
F. City development districts
Minn. Stat. §§ 469.124 to Any home rule charter or statutory city may designate development districts
469.134. within the boundaries of the city. Within these districts, cities may:
• Adopt a development program to acquire, construct, reconstruct,
improve, alter, extend, operate, maintain or promote developments
aimed at improving the physical facilities, quality of life, and quality of
transportation.
• Promote pedestrian skyway systems.
• Install special lighting systems, street signs and street furniture,
• landscaping of streets and public property, and snow removal systems.
Minn. Stat. § 469.127. The law encourages pedestrian skyway systems, underground pedestrian
concourses, people -mover systems, and publicly -owned parking structures.
It exempts these structures from taxation even when they are attached to
privately -owned buildings.
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G. City industrial development
Minn. Stat. §§ 469.152 to For the purpose of attracting industrial and commercial development and
469.1651; encouraging local governments to prevent economic deterioration, any home
Minn. Stat. § 469.152. rule charter or statutory city or its redevelopment agency has the power to
promote industrial development by:
• Acquiring, constructing, and holding lands, buildings, easements,
improvements to lands and buildings, capital equipment, and inventory
for industrial projects.
• Issuing revenue bonds and entering into revenue agreements to finance
these activities to promote industrial projects.
Minn. Stat. § 469.155, subd. 4. • Refinancing health care and other facilities.
Under the legislation, cities assist industries in starting operations and use
generated revenues to repay the costs. This law is the basis for issuing most
industrial revenue bonds.
Minn. Stat. § 469.153, subd. 2; Industrial projects eligible for assistance include any revenue - producing
enterprises engaged in assembling, fabricating, manufacturing, mixing,
processing, storing, warehousing, or distributing any products of agriculture,
forestry, mining, or manufacturing; or in research and development activity
Minn. Stat. § 469.1655. in these fields; or in the manufacturing, creation, or production of intangible
property, including any patent, copyright, formula, process, design, know
how, format, or other similar item. "Project" also includes any properties
designated as a qualified green building and sustainable design project under
state law. Eligible projects may include costs related to dewatering
activities.
Minn. Stat. § 469.155, subd. 14. The law prohibits a city from operating any of these projects as a business or
in any other manner.
III. Other development strategies
A. Housing bonds
Minn. Stat. ch. 462C. Cities may use revenue bonds for financing single- and multi - family
housing, primarily for the benefit of low- and moderate - income families.
The law contains single- and multi - family housing criteria and the specific
actions cities must take to comply with the law. Federal law limits the
issuance of housing revenue bonds. Bonding authority is allocated by a state
formula.
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15
B. Industrial parks
An industrial park is a tract of land suitable for industrial use because of
location, topography, proper zoning, availability to utilities, and accessibility
to transportation. A single body has administrative control of the tract. In
some cities, an industrial park may be little more than a tract of unimproved
land, while in other cities it may be totally served by city services and have
restrictive building requirements. An industrial park's purpose is to attract
industrial development.
Property a city holds for later sale for economic development purposes
remains tax exempt for a period of eight years, or until buildings or other
improvements that are constructed after acquisition reach one -half
occupancy.
Currently, private enterprise creates most new industrial park development
by establishing a for - profit community development corporation. A city can
cooperate with that corporation through its land -use controls and methods of
financing public improvements. Many cities have also established industrial
parks complete with streets, water, and sewer, in spite of the possible tax
ramifications. The city then sells or leases a portion of the park to a business
needing a location for its building.
Minn. Stat. § 469.185; The law authorizes any city owning lands that are not restricted by deed to
Minn. Stat. § 465.035; convey the lands for nominal consideration, to encourage and promote
A.G. Op. 476 -B -2 (Mar. 2, industry, and to provide employment for citizens. In finding that a
1961); Cary ofPipesrone v. conveyance of land for an indoor arena was not within the statute, the
Madsen, 287 Minn 357,178
N.W.2d 594 (1970). attorney general concluded the conveyance must encourage and promote
industry and provide employment for citizens. A more direct promotion of
industry is necessary, beyond the fact that more potential customers might
be in town as a result of athletic contests. However, the courts have upheld
the municipal industrial development revenue bond law, discussed
subsequently, against the same objection. The city's attorney can best advise
the city concerning the legality of a purchase of land for resale.
C. Industrial revenue bonds
Minn. Stat. §§ 469.152 to The municipal industrial development laws help cities attract new
469.1651. commercial and industrial development, and keep existing businesses in the
city. The law authorizes the council to issue revenue bonds, and use the
proceeds to acquire and construct industrial sites and facilities. The city then
leases these facilities to private industry and uses the rental fee proceeds to
retire the bonds.
A city may issue industrial revenue bonds, also known as municipal revenue
bonds, without public referendum. It cannot pledge the full faith and credit
of a community as security for these bonds. Thus, the city may not tax
property owners to pay principal and interest on the bonds.
HANDBOOK FOR MINNESOTA CITIES 15:13
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CHAPTER 15
For more information, contact If a city decides to investigate the use of industrial bond financing, it should
DEED 651.259.7114, 8 8 or 888. c ontact the Department of Employment and Economic Development. The
800.657.3858 or 888.438.5627. P P
Main Office: 1st National Bank department provides the city with information, advice, and technical
Building 332 Minnesota Street, assistance. This assistance is important, due to the adoption of federal and
Suite E200 Saint Paul, MN
55101 -1351. state laws allocating issuance authority among the states and their political
subdivisions. The commissioner of Securities must approve the project.
D. Commercial rehabilitation
Minn. Stat. § 469.184. Cities have authority to carry out programs for the rehabilitation of small -
and medium -sized commercial buildings. The city must adopt a program
ordinance that provides for the adoption of program regulations, including a
definition of small- and medium -sized commercial buildings. Loans under
the program may be for amounts up to $200,000. The city may finance the
program through the sale of revenue bonds.
E. Tax increment financing (TIF)
Minn. Stat. §§ 469.174 to Tax increment financing authority is available to most cities. Cities with
469.1799. housing and redevelopment authorities, economic development authorities,
port authorities, redevelopment agencies, those cities administering
development districts or development projects, or cities exercising port
authority powers under a general or special law may use tax increment
financing. Amendments to the law, however, may make the use of this
development tool more complicated.
Tax increment financing is a funding technique that takes advantage of the
increases in tax capacity and property taxes from development or
redevelopment to pay upfront public development or redevelopment costs.
The difference in the tax capacity and the tax revenues the property
generates after new construction has occurred, compared with the tax
capacity and tax revenues it generated before the construction, is the
captured value. The taxes paid on the captured value are called
"increments." Unlike property taxes, increments are not used to pay for the
general costs of cities, counties, and schools. Instead, increments go to the
development authority and are used to repay public indebtedness or current
costs the city incurred in acquiring the property, removing existing
structures or installing public services.
Thus, the property owner in a TIF district continues to pay the full amount
of property taxes. TIF involves only the increased property taxes generated
within the district. It does not change the amount of property taxes currently
derived from the redevelopment area, nor does it directly affect the amount
or rate of general ad valorem taxes the city levies. The result of a TIF project
is an increased tax base that will benefit all local taxing jurisdictions.
Additionally, TIF districts usually spur economic development and
redevelopment through creating job, removing blight, and providing more
affordable housing.
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CHAPTER 15
State. v. Wicklund, 589 N.W.2d TIF is used to encourage four general types of private development:
793 (Minn. 1999). redevelopment, renovation and renewal, growth in low- to moderate - income
housing, and economic development. Public financing using TIF funding for
a privately owned facility does not make public space in the facility a public
forum for free speech purposes.
A TIF district may involve compact development. Two major conditions
Minn. Stat. § 469.174; Minn. must be satisfied:
Stat. § 469.175 subd. 2a; Minn.
Stat. § 469.176, subd. lb; Minn. • Parcels consisting of 70 percent of the area of the district are occupied
Stat. § 469.176subd. 1 i; Minn. by buildings or similar structures that are classified as class 3a property
Stat. § 469.176, subd. 4c;
Minn. Stat § 273.13, subd. 24. under state law. and
• The planned redevelopment or development of the district, when
completed, will increase the total square footage of buildings, classified
as class 3a under state law, occupying the district by three times or more
relative to the square footage of similar buildings occupying the district
when the resolution is approved.
The authority to establish or approve a compact development district expires
on June 30, 2012.
Minn. Stat. § 469.176, subd. 4c; TIF economic development districts must:
• Request certification of the district no later than June 30, 2012.
• Must begin construction before Jan. 1, 2012, for development of
housing.
Minn. Stat. § 469.1761, subd. 2 These districts may not be used to assist housing that is developed to qualify
or 3. for owner- occupied or rental housing, or similar requirements of other law,
if construction of the project begins later than July 1, 2011.
Minn. Stat. § 469.176, subd. 4m; Cities have temporary authority to spend TIF funds to stimulate construction
using economic development districts for any type of project if three
conditions are met:
• The municipality funds projects that will create new jobs in the state,
including construction jobs, and the project otherwise would not have
begun before July 1, 2012, without assistance.
• Construction of the project begins no later than July 1, 2012.
• The request for certification is made by June 30, 2012.
Minn. Stat. § 469.176, subd. For a development consisting of housing, the authority to spend tax
am(d ). increments expires Dec. 31, 2011, and construction must commence before
July 1, 2011, except the authority to spend tax increments on market rate
housing developments expires July 31, 2012, and construction must
commence before Jan. 1, 2012. This temporary authority to spend the tax
increment expires Dec. 31, 2012.
Minn. Stat. § 469.175, subd. 5. The city using TIF must report annually to the county board, the county
auditor, the school board, and the state auditor as to the status of the TIF
district or districts and publish the report. The state auditor has established a
uniform system of accounting and financial reporting for TIF districts. The
city must annually submit to the state auditor a financial report in
compliance with these standards.
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CHAPTER 15
Minn. Stat. § 469.1771, subds. 1, The state auditor may audit TIF districts. If the state auditor notifies a TIF
2b. authority of an alleged violation, a copy of the notice is also forwarded to
the county attorney. If no corrective action is brought within one year, the
county attorney must notify the state auditor, who then notifies the attorney
general. If the attorney general finds a substantial violation, the attorney
general will petition the state tax court to suspend the authority's power to
use TIF for a period of up to five years.
Minn. Stat. § 469.177, subd. 8; The TIF agreement with the developer is a complex document. Assistance
Lake Superior Paper Indus. v.
State, 624 24 N.W.2d 254 (Minn.
from a financial advisor and the city attorney is necessary in order to
2001); Brookfield Trade Center, anticipate the many potential problems. An agreement can establish a
Inc. v. County of Ramsey, 609 minimum market value for tax increment assessment purposes, as well as
N.W.2d 868 (Minn. 1998). provide that the developer pay a certain level of taxes regardless of any
classification rate changes or levy decreases The agreement should be
entered into before the assembly and acquisition of the land on which the
completed improvements are to be located.
See Minn. Stat. §§ 469.177, The 2001 tax reform legislation, which reduced class rates and provided for
subds. lb, 11; 469.1771, subd. 1; th state takeover of the general education levy, resulted in several changes
Stat. §469.1791; Minn. g y� es g
Stat. § 469.1793; Minn. Stat. § to various statutes to accommodate the changes. These changes considerably
469.1799; and Minn. Stat § reduce the continued viability of TIF in the future.
469.1814.
Minn. Stat. § 469.174. The law imposes a 180 -day statute of limitations on actions to challenge the
creation or modification of a TIF district. The law is complex including a
"but -for" finding before a city approves a TIF plan and the creation of a TIF
district. Cities must follow statutory requirements including but not limited
to administrative expenses, plan modifications, reporting requirements, use
of increment in pre -1979 districts, excess increments, pooling,
decertification, and use of funds outside the district.
Minn. Stat. § 469.175. Before a district can be created, the law requires a detailed estimate of the
impact of a proposed district on city- provided services, such as police and
fire protection, public infrastructure, and borrowing costs attributable to the
district, in addition to other complex estimations must be prepared.
Walser Auto Sales, Inc. v. City of Cities should use extreme care in establishing a TIF district and should
Richfield, 635 N.W.2d 391
follow ollo all procedural requirements; otherwise a court may find the district
(Minn. Ct. App. 2001); P q �'
N.W.2d 425 (Minn. 2002). was not properly established. In one case, a TIF district was not properly
established where minimal effort was made to ensure the thorough
inspection of the properties, inaccurate methodology was used to establish
the condition of the buildings, and the buildings found structurally
substandard were not reasonably distributed throughout the district.
Chenoweth v. City of New In another case, a cause of action for inverse condemnation does not arise
Brighton, 655 N.W.2d 821 where a city's involvement with an adjacent property owner's development
(Minn. Ct. App. 2003).
consists of establishing a TIF district, entering into a contract with a private
developer specifying the size and value of structures to be built, and
providing for substantial city assistance to facilitate development.
Given the complexity of the laws governing the use of TIF, cities or IRAs
should not undertake this method of financing community development
projects without the advice of an attorney and professional consultants.
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CHAPTER 15
F. Property tax abatement
Minn. Stat. §§ 469.1812 to A city may use this development tool to segregate some or all of the taxes
469.1815. (or the increase in taxes) it imposes on a parcel of property if the city
expects the benefits of the proposed abatement agreement to at least equal
the costs of the proposed development. The term "abatement" is somewhat
misleading, as in most cases the tax is not forgiven; it is paid normally, but
the amount of property tax levied by the city is used to pay for the bonds.
The city must determine that the agreement is in the public interest because
it will increase or preserve tax base, provide employment opportunities,
provide or help acquire or construct public facilities, help redevelop or
renew blighted areas, or help provide access to services for residents of the
city. Property taxes in a TIF district cannot be abated unless the period of the
abatement will not occur until after the district is decertified.
A resolution must be adopted after notice and public hearing, specifying the
terms of the abatement. A city may issue bonds or other obligations to
provide an amount equal to the sum of the abatements granted for a specific
property. The maximum principal amount of these bonds may not exceed
the estimated sum of the abatements for the property for the years
authorized. The bonds may be general obligations of the city if the city
council chooses to pledge the full faith and credit of the city in the resolution
issuing the bonds. The law limits property tax abatements to 15 years.
School districts and counties have similar abatement powers. A city, county,
and school district can agree to abate their taxes on the same property.
IV. State - sponsored development
tools
A. Minnesota Housing Finance Agency
Minn. Stat. ch. 462A; For more The goals of the Minnesota Housing Finance Agency (MHFA) are to
information about MHFA provide decent, affordable housing to low- and moderate - income people;
eo
programs, contact MHFA at 400 P > ffdbl hi g P P
Sibley Street Suite 300, St. Paul, preserve the existing housing stock in Minnesota; preserve existing
MN 55101 -1998 (651)296 -7608 neighborhoods and prevent them from deteriorating; and prevent mortgage
or(800)657 -3769.
foreclosures while promoting energy conservation in residential housing.
The Minnesota Legislature created the MHFA in response to a shortage of
affordable housing for low- and moderate- income people. Private enterprise
and private investment were unable, without public assistance, to provide an
adequate supply of safe, sanitary, and decent housing at affordable prices
and rents.
HANDBOOK FOR MINNESOTA CITIES 15 :17
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CHAPTER 15
Minn. Stat. § 462A.O73 er seq; The sale of state tax- exempt bonds is the primary financing for MFHA
MHFA: Minnesota City programs. Through the Minnesota City Participation Program, Minnesota
Participation Program. Housing sells mortgage revenue bonds on behalf of cities to meet locally
identified housing needs. The proceeds of these bonds provide below - market
interest rate home mortgage loans for low- and moderate - income, first -time
homebuyers, or for the construction or rehabilitation of single- and multi-
family housing. Appropriations from the Legislature provide additional
funding for programs, including the promotion of energy conservation; an
increase in home ownership opportunities for first time homebuyers; home
improvement grants to very low- income homeowners; and programs to
improve the housing available to Native Americans, large families, and
people with disabilities.
B. Department of Employment and
Economic Development (DEED)
Minn. Stat. ch. 116J; The Minnesota Department of Employment and Economic Development is
Minnesota Department of the primary development agency for Minnesota. DEED staff is responsible
Employment and Economic for a wide range of grant and loan programs, as well as for providing
Development.
technical assistance to businesses and communities.
Minn. Stat. H 1161411 to DEED also provides grants for contamination cleanup and redevelopment;
116J.424; administers the rural development program; makes challenge grants to
The USDA Development.. regional organizations to encourage private investment in rural areas; and
administers a revolving loan fund to provide loans to new and expanding
business in rural Minnesota. Local government units, including cities, may
receive these loans if the community has established a local revolving loan
fund and can provide at least an equal match to the loan received.
Minn. Stat. § 116J.431; Cities outside the seven - county metropolitan area may receive grants from
Greater Minnesota Business DEED for up to 50 percent of the capital costs of public infrastructure
Development Infrastructure Grant necessary for certain specified economic development projects, excluding
Program.
retail and office space. For this program, "public infrastructure" means
publicly owned physical infrastructure necessary to support economic
development projects, including but not limited to sewers, water supply
systems, utility extensions, streets, wastewater treatment systems,
stormwater management systems, and facilities for pretreatment of
wastewater to remove phosphorus.
Minn. Stat. § 116J.431, subd. 2. Under this law, an "economic development project" for which a county or
city may be eligible to receive a grant under this section includes
manufacturing; technology; warehousing and distribution; research and
development; agricultural processing or industrial park development that
would be used by any one of these businesses.
Minn. Stat. § 1 16J.435. DEED runs the Innovative Business Development Public Infrastructure
(BDPI) program that provides grants to local governmental units on a
competitive basis statewide for up to 50 percent of the capital cost of the
public infrastructure necessary to expand or retain jobs.
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CHAPTER 15
Innovative Business "Innovative business" means a business that is engaged in, or is committed
Development Program: to engage in, innovation in Minnesota in the following:
Department of Employment and g n one o owg'
Economic Development; • Using proprietary technology to add value to a product, process, or
service in a high technology field;
Minn. Stat. § 1161435.
• Researching or developing a proprietary product, process, or service in a
high technology field;
• Researching, developing, or producing a new proprietary technology for
use in the fields of tourism, forestry, mining, transportation, or green
manufacturing.
"Proprietary technology" means the technical innovations that are unique
and legally owned or licensed by a business and includes, without limitation,
those innovations that are patented, patent pending, a subject of trade
secrets, or copyrighted. "Eligible project" means a bioscience an innovative
business development capital improvement project in this state, including:
• Manufacturing; technology; warehousing and distribution; research and
development;
• Bioscience innovative business incubator;
• Agricultural bio- processing processing; or industrial, office, or
• Research park development that would be used by a bioscience -based an
innovative business.
Minn. Stat. § 272.02, subd. 64. DEED administers "tax -free" job opportunity building zones (JOBZ). In
each of these zones, businesses will be eligible for a broad range of tax
incentives for a period of 12 years. Under the program, local units of
government, including cities, must submit applications to DEED and follow
all statutory requirements related to JOBZ.
C. Enterprise Minnesota
Minn. Stat. ch. 1160. Enterprise Minnesota is a nonprofit business consulting organization, set up
by the Legislature that helps small and medium -sized manufacturing
companies, education services, and government entities in Minnesota.
Enterprise Minnesota operates as a fee - for - services 501(c) (3) nonprofit.
Enterprise Minnesota 612-373- Enterprise Minnesota focuses on applied research and technology transfer
2900 or 800- 325 -3073; and early stage funding. It may provide financial assistance, including loan
Minn. Stat. § 1160.061. guarantees, direct loans, interest subsidies, or equity investments, to sole
proprietorships, corporations, other entities, nonprofit organizations, or joint
ventures. Financial assistance includes but is not limited to assisting a
qualified company or organization with business services and products that
will enhance the operations of the entity.
D. E- commerce ready cities
Minn. Stat. § 1161037; As a tangential aid to encouraging development, the Department of
DEED (651) 297 -1291 or (800) Employment and Economic Development may designate cities that meet
657 -3858. certain criteria as e- commerce ready.
HANDBOOK FOR MINNESOTA CITIES 15:19
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ClIAPII It 15
E. Corporations
Minn. Stat. § 465.717; Minn. Cities must not create nonprofit corporations unless authorized to do so by
Stat. § 471.59; special legislation. The law allows incorporation of a joint powers entity, but
LMCIT risk information memo, these must comply with all applicable public sector laws (open meeting, gift
Liability Coverage for Joint
Powers Agreements. law, conflicts of interest, competitive bidding, etc.) and must be separately
insured.
V. Federal development tools
A. Community development block grants
More information is available on The Community Development Block Grant (CDBG) program, under the
the HUD web site. U.S. Department of Housing and Urban Development (HUD), provides
cities with federal funding to initiate and continue a diverse array of housing
and community development projects.
B. Rural development grants
For more information, contact A variety of grants and loans to encourage economic development are
Rural Development State Office
410 F Credit Service Building a vailable to cities from the U. S. Department of Agriculture, rural
arm
375 Jackson Street St. Paul, MN development program. Sewer, water, rural enterprise, housing, and other
55101 -1853, (651) 602 -7800; See types of grants and loans are available.
also, Handbook, Chapter 25.
VI. How this chapter applies to
home rule charter cities
All of the tools this chapter lists are available to charter cities. The general
discussions also apply to all cities.
15:20 LEAGUE OF MINNESOTA CITIES
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•
CITY OF OTSEGO
EDA POLICY OUTLINE
A. Introduction
B. Development Objectives
C. Public Participation Objectives
D. Public Participation Policy Guidelines
E. Development Policy Guidelines
F. Public Funding Sources Objectives
G. TIF Policies
H. TIF Project Approval Criteria
I. TIF Procedures
REVISION #2
Document Drafted By:
Economic Development Authority
Advisory Committee
December 1993
CITY OF OTSEGO
ECONOMIC DEVELOPMENT POLICY STATEMENT
MISSION STATEMENT: THE CITY OF OTSEGO SHALL ENCOURAGE, ASSIST AND
FACILITATE THROUGH EDA, EDAAC, ETC. FINANCIAL GUIDANCE AND
INCENTIVES APPROPRIATE TO THE QUALIFIED INTERESTED PARTIES ENGAGED
IN ECONOMIC DEVELOPMENT. OTSEGO SHALL AVOID OR MINIMIZE FINANCIAL
RISK TO THE CITY.
A. INTRODUCTION
It is the goal and policy of the City of Otsego to develop,
maintain and enhance its commercial, industrial and residential
areas. The City views itself as having a direct responsibility to
participate as may be needed with private developers to accomplish
these ends.
In order to insure that there is a clear understanding of the
City's participating priorities and procedures, the following
material outlines the objectives and policies affecting development
within the community.
B. DEVELOPMENT OBJECTIVES
Assistance may be provided by the City of Otsego to facilitate
economic development in a public effort to meet the following
objectives:
1. To afford all businesses the opportunity to upgrade, expand or
relocate their business within the City.
2. To increase the City's tax base.
3. Elimination of hazardous, substandard, and obsolete buildings
within the City.
4. To provide adequate streets and utilities within Otsego to
enhance the City for new development.
5. To enhance the overall economy of the City and surrounding
areas by retaining and providing additional employment
opportunities for the residents of the City and surrounding
communities.
6. To stimulate development and investment within the City by
private interests through providing public facilities and land
of suitable size and configuration to permit its economic and
appropriate utilization.
C. PUBLIC PARTICIPATION OBJECTIVES
Any public or private development efforts in the City and
surrounding areas that have a direct impact upon the lives and
livelihood of those individuals who reside, work and /or own
property within the boundaries of the area shall require public
participation. The community in total is, however, also concerned
as such projects involve expenditure of public funds and affect the
tax base of the City. Additionally, from the perspective of
creating and maintaining a sense of community, the general
citizenry needs to be informed of efforts and improvements
undertaken for the benefit of the City as a whole. Such
considerations dictate public participation throughout all aspects
of any development project.
1. Active and direct participation and involvement of those
residents, business persons and property owners within the
City.
2. Maintenance of general citizen awareness of the purpose, plans
and accomplishments of all development projects.
D. PUBLIC PARTICIPATION POLICY GUIDELINES
1. Establish a structure and program for the direct involvement
and input of area residents, business persons and owners in
the planning and implementation of any development projects in
the City.
2. Utilize existing business and civic organizations as a means
of communicating and informing land owners and tenants, and
the general citizenry of area plans and accomplishments.
3. Prior to public hearings, hold informal meetings with area
residents, business persons and property owners on a
neighborhood or sub -unit basis to inform them of plans and
recommendations.
4. Hold formal public hearings as required by Statute on area
plans and projects with adequate prior notice to all citizens
of the community.
5. Utilize the area newspapers and other public media on a
continuing basis to keep the general citizenry informed and
updated on plans and accomplishments within the area.
6. Enlist specialized expertise which can contribute to the area
plans from the individuals of the community at large.
2
E. DEVELOPMENT POLICY GUIDELINES
1. The City will establish target areas where assistance will be
provided to achieve specific land use and economic objectives.
2. The City Council shall have the option of amending or waiving
sections of this policy when determined necessary or
appropriate to carry out the development objectives.
3. The developer /applicant shall present adequate financial
information to show the capability, intent and history of the
developer or business to make all property tax payments
required by law and the development agreement.
4. The following priorities will be utilized when considering if
public assistance will be offered to a proposed development:
a. The first priority for the use of public funds is for the
assistance to achieve a balanced and sustained growth and
development of residential, commercial, service and
industrial sectors of the City. The assistance will
serve to help expand the tax base, economy, housing
opportunities and employment opportunities in the City.
b. The City will set as a second priority for the use of
public assistance the development of areas containing
blighted substandard buildings, lots or uses,
incompatible land uses or hazards to the public health,
safety or general welfare of the community residents.
The public contributions will provide for public
improvements to serve the area in accordance with adopted
City plans.
5. The developer /applicant shall be required to enter into a
contractual agreement with the City guaranteeing construction.
The City will require financial security to guarantee the
payment of all property taxes and assessments associated with
the project to assure that the City will have the funds
necessary to retire its bond payments, if any.
6. The tax capacity value of all parcels of property in all tax
increment districts within the City of Otsego shall not exceed
15 percent of the tax capacity value of all private property
in the City, as established by the City Assessor.
3
F. PUBLIC FUNDING SOURCES OBJECTIVES
•
The City will seek a variety of funding sources to implement its
development objectives. Private sector investment will be a
primary source of funds for private activities or where private
property benefits.
Public development costs will be covered by special assessments,
other public agency grants and loans, capital improvement projects
and tax increment financing.
Tax increment financing (TIF) is a funding source for public -
private development projects.
TIF assistance is only available when value has been added to real
property and there is a subsequent increase in real estate taxes.
The increased real estate taxes are "captured" or received by the
City for a specified period of time. Hence, the City receives the
tax increment dollars over time.
The City can provide the TIF assistance either as the funds are
received from the County over time (pay as you go method) or the
financial assistance can be provided at the "front end" or at the
beginning of the project while the project is being constructed.
When assistance is provided at the front end, the City has to sell
bonds to finance the assistance (bonded method).
Pay As You Go Method:
It should be assumed that all private development projects will be
pay as you go method, unless the applicant has demonstrated why
this would not be feasible.
Bonded Projects:
The City reserves the right to finance public improvements with
bonded debt. Assistance to private developers may be funded with
bonded debt in situations where the public benefit outweighs the
public risks. The project size must justify the additional cost of
issuance.
G. TAX INCREMENT FINANCING POLICIES
The following steps must be followed in arriving at what level of
assistance the City will consider committing to any specific
project. The City assumes the right to decline any assistance to
a private development project if it is determined that the project
does not sufficiently impact or enhance the development area plan
objectives.
4
The City also reserves the right to increase the level of public
assistance in the case of unique, private development projects, on
an individual basis, where the public benefit is significant and
justified.
The following policy statements are in addition to tax increment
financing rules and regulations as stated in Minnesota Statues
469.174 - 469.179 (TIF Act).
Administrative Fees:
The City may retain for public use the maximum level of
administrative fees permitted by TIF statutes.
Developer Fees:
All private developers will be charged a TIF developer's fee to
cover the City's professional, legal and staff related expenses for
structuring the TIF project, and the TIF district's formation. A
standard application fee of $2,500.00 will be due and payable after
the EDA has given its preliminary concept approval. In addition,
the developer may also be required to file a deposit or escrow with
the EDA to be applied to these professional service expenses.
As a matter of adopted policy, the City of Otsego will consider
using tax increment financing to assist private developments only
in those circumstances in which the proposed private projects meet
one or more of the following uses:
1. To maintain and improve the business area as the focal point
of community activity through the expansion and concentration
of uses which will provide goods, personal and professional
services, entertainment, and recreational use to residents of
Otsego and its surrounding area.
2. Provide for the improvement of existing streets and public
rights -of -way and to provide a more attractive and pleasant
pedestrian environment.
3. Provide expanded utilities and public services as a means of
encouraging new commercial and industrial growth.
4. Make the area more attractive, convenient and efficient for
both people and commercial activities.
5. Provide sites to accommodate new or expanding businesses in
the City.
6. To create new and expanded employment opportunities.
7. To improve the tax base of the community.
5
8. To promote and secure the prompt development of certain
property in the City, which property is not now in productive
use or in its highest and best use, in a manner consistent
with the City's Comprehensive Plan and with a minimum adverse
impact on the environment, and thereby promote and secure the
development of other land in the City.
9. Promote and secure additional employment opportunities within
the development district and the City for residents of the
City and the surrounding area, thereby improving living
standards.
10. Secure the increase of housing, commercial, and industrial
property subject to taxation by the City, School District,
Wright County, and other taxing jurisdictions in order to
better enable such entities to pay for governmental services
and programs required to be provided by them.
11. Provide for the financing and construction of public
improvements necessary for the orderly and beneficial
development of the business district and adjacent areas of the
City.
12. Promote the concentration of commercial, office, and other
appropriate development in accordance with the Comprehensive
Plan so as to maintain the area in a manner compatible with
its accessibility and prominence in the City.
13. Encourage local business expansion, improvements, and
development whenever possible.
14. Encourage and provide maximum opportunity for private
development of existing areas and structures which are
compatible with the development program.
15. To provide for the orderly use of vacated streets within the
City.
16. To promote the development of the City's water and sewage
system, thereby preventing any adverse impact on the
environment and the general health and well -being of residents
within the City.
17. To encourage an expansion of commercial activities in a manner
which will promote the image of Otsego and expand its drawing
power.
18. To promote the development of new commercial activities which
will support existing commercial uses and which contribute to
the well -being of the downtown area.
6
H. TAX INCREMENT FINANCING PROJECT APPROVAL CRITERIA
All new projects approved by the City of Otsego should meet the
following mandatory minimum approval criteria. However, it should
not be presumed that a project meeting these criteria will
automatically be approved. Meeting these criteria creates no
contractual rights on the part of any potential developer.
1. The TIF assistance shall be provided within applicable state
legislative restrictions, debt limit guidelines, and other
appropriate financial requirements and policies.
2. The project should meet one or more of the above adopted tax
increment financial policies of the City.
3. The project must be in accord with the Comprehensive Plan and
Zoning Ordinance, or required changes to the plan and
ordinance must be under active consideration by the City at
the time of approval.
4. Prior to approval of a TIF financing plan, the applicant shall
provide any required market -and financial feasibility studies,
appraisals, soil borings, information provided to private
lenders for the project, and other information or data that
the City or its financial consultants may require in order to
proceed with an independent underwriting.
5. Prior to consideration of a TIF financing assistance request,
the City may undertake an independent underwriting of the
project to help ensure that the request for assistance is
valid.
6. The applicant should provide adequate financial guarantees to
ensure the repayment of the TIF subsidy. These may include,
but are not limited to, assessment agreements, letters of
credit, etc.
7. The applicant should retain ownership of the project at least
long enough to complete it, to stabilize its occupancy, to
establish the project management, and to initiate repayment of
the TIF.
8. The level of TIF funding should be reduced to the lowest
possible level by maximizing the use of private debt and
equity financing first, and then using other funding sources
or income producing vehicles that can be structured into the
project financing, prior to using additional TIF funding.
7
I. TAX INCREMENT FINANCING PROCEDURES
A typical TIF project will go through the following steps. The
applicant should anticipate this will require a minimum of 90 days.
Complicated projects will require additional negotiating time. The
TIF process is concurrent with the normal plan review and permit
process required by City ordinances (see Exhibit A).
1. The private applicant introduces the project to the City
staff, financial advisors, auditor, planner, engineer and
attorney.
2. Eligibility is determined and preliminary financial
feasibility test is completed by the planning consultant and
financial advisor.
3. Preliminary feasibility test site concept plan development
application is reviewed by the Otsego EDA Advisory Committee,
EDA Committee, and Planning Commission for comment and
approval.
4. Applicant completes TIF application and pays for project
review and plan preparation fee.
5. Preliminary "but for" financial feasibility test is prepared
by applicant and reviewed by the EDA Advisory Committee, staff
and City Council.
6. The City determines project type (pay as you go versus
bonding) and issues preliminary intent to participate.
7. Public costs are determined.
8. Private applicant finalizes plans and costs.
9. Applicant provides final "but for" test.
10. Assessor establishes minimum market value.
11. Development contract is prepared by City Attorney and City
Planner and negotiated (subject to EDA /City Council approval).
12. Tax Increment Financing Plan is prepared.
13. EDA Advisory Committee reviews and recommends action on the
TIF Plan and contract.
14. EDA Committee reviews and approves TIF Plan and contract.
15. City Council calls public hearing.
8
16. Notice is given to School District and County thirty days
prior to public hearing.
17. Planning Commission reviews TIF Plan for consistency with
Comprehensive Plan.
18. City Council holds public hearing.
19. City Council adopts TIF Plan.
20. Development contract is signed by the City and applicant.
21. TIF District is certified to County.
22. Building permit can be issued.
23. Bond sale is authorized when necessary.
24. Bond proceeds are received four to six weeks after bond sale
is authorized.
9
OTSEGO, MINNESOTA
TYPICAL DEVELOPMENT
- FLOW CHART
ACTIVITY WEEK # 0 5 10 15 20
1 tit • 4441 1111 lifit
1. Introduction
2. Preliminary Feasibility
3. Advisory Committee
Concept Approval
4. City Council Approval
5. Development Feasibility
Preliminary Final
6. Public Feasibility
7. Preliminary Development
Agreement
8. Development Agreement
9. TIF Plan
10. Advisory Committee
TIF Approval
11. Call Public Hearing
12. Planning Commission
13. Hold Public Hearing
14. EDA Approval
15. City Council Approval
16. Execute Development
Agreement
17. Sell Bonds
18. Certify TIF District
19. File with Department
of Revenue
20. Acquire Property
Purchase Agreemelt Title
21. Relocate Displacees
90 - 123 Days
22. Demolish Property
9ids & Assessor Determination
23. Install Public
Improvements
24. Private Development
Begins
WEEK ' # 0 5 10 15 20
NOTE: Not all projects will include public bond sales,
acquisition, relocation, demolition, or public - ft:hwe.M
improvements. EXHIBIT A Assoctated
Consultants, inc.
Memo To: Otsego City Council ��
From: Marcus Miller, Attorney, Couri and MacArthur Law Office
Date: September 28, 1998
Re: Economic Development Authority (EDA)
Introduction
The following is a brief explanation regarding the purpose, powers and operation of an
Economic Development Authority (EDA). This is not intended to be a comprehensive
explanation. Rather, it is intended to provide a brief overview of the subject.
EDA Purpose, Creation and Membership
Purpose and Creation
The purpose of and EDA is to encourage and promote economic development within the
City. Economic development includes that activities that help create, maintain and grow
local economies.
" A City may create an EDA by adopting an enabling resolution after holding a public
hearing upon two weeks published notice. (See attached City of Otsego Enabling
Resolution for your information) The enabling resolution's purpose, in part, is to
establish the EDA's powers or limitations on powers. The enabling resolution may later
be amended or modified by the City upon that same procedure as it was adopted. Once
an EDA is established, it is a body corporate and politic and a political subdivision of the
State of Minnesota. It may sue and be sued in its own name.
Membership
An EDA is governed directly by its Board of Commissioners. Commissioners are
appointed by the Mayor, with approval of the City Council. The EDA board may range
in size from three (3), five (5) or seven (7) members. The following chart shows the
initial terms and the number of Council Members required to be on the Board for each
size makeup.
Board Size # of Council Members Initial Term of Office
3 at least 1 2, 4, 6 years
5 at least 2 2, 3, 4, 5, 6 years
7 at least 2 1,2,3,4,5 and
2 for 6 years
1
After the initial terms, all Board members are appointed for six year terms, except that
Council Members may be appointed to terms which coincide with their Council terms.
Vacancies, Removal
Vacancies are filled by Council appointment for the remainder of the unexpired term. A
commissioner may be removed by the City Council for inefficiency, neglect of duty, or
misconduct in office. To accomplish removal, the removal procedures set forth in
Minn.Stat. §469.095 must be followed.
EDA Powers
An EDA may exercise the following powers:
1. Acquire by lease, purchase, gift, devise, or condemnation proceedings, the
needed right, title and interest in property to create economic development
districts.
2. Sign options to purchase, sell or lease property.
3. Use eminent domain (condemnation) to acquire property for certain economic
development purposes.
4. Enter contracts for certain economic development purposes. The Authority
may contract to purchase or sell real or personal property provided, however,
existing funds, together with reasonable expected revenue, are sufficient to
either discharge the obligation or pay expenses when due.
5. The EDA may become a limited partner in a partnership, as long as the
partnership's purpose is consistent with the EDA's purpose.
6. Acquire property rights or an easement for a development district.
7. Sell land held by it in a development district for economic development
purposes.
8. Operate and maintain a public parking facility to promote development in a
development district.
9. Accept conveyances of land from other public agencies or governmental units,
if the land can be used to carry out a proper EDA purpose.
10. Fill, grade and protect property it owns, including taking necessary steps to
make the property suitable for economic development.
11. Use Tax Increment Financing as provided law.
12. Exercise Housing and Redevelopment Authority (HRA) powers.
13. Issue G.O and/ or Revenue Bonds under certain circumstances.
14. Create committees for itself.
15. Hire employees.
2
Limitations on Powers
The City, through the enabling resolution, may impose the following limitations on the
EDA Boards actions and powers:
1. No HRA, EDA or City Development powers may be exercised by the
Authority without the prior approval of the City Council.
2. The Council may, by resolution, require the EDA to transfer any portion of
reserve funds generated by EDA activities, unless previously pledged by the
EDA, to the debt service fund of the City, to be used solely to reduce tax levies
for bonded indebtedness of the City.
3. The EDA must get prior Council Approval before issuing any and all bonds or
obligations.
4. That the EDA must follow the budget process for City departments.
5. That all actions of the Authority be consistent with the comprehensive plan.
6. That the Authority submit all planned activities for influencing other
governmental units to the City Council for prior approval.
7. That the EDA submit its structure and management practices to the City
Council for approval.
8. Any other limitation or control as determined by the City Council and adopted
in the enabling resolution.
Administration and Budget
Compensation
Minnesota law requires that commissioners be paid for attending regular and special
meetings of the EDA. The City Council sets the rate of compensation. The law does not
require that any minimum amount be paid. Compensation could be set, for example, at a
dollar ($1.00) per meeting.
Bylaws, Rules and Seal
The EDA may adopt bylaw and rules of procedure and shall adopt an official seal.
Officers
The EDA must elect a president, vice president, treasurer, secretary and assistant
treasurer. The president, treasurer and secretary are elected annually. The secretary and
assistant treasurer do not need to be commissioners. A single commissioner may not be
both president and vice president. All other offices may be held by the same
commissioner. Official duties of the officers are set by statute.
3
•
Treasurer's Bond
The EDA treasurer must post a bond to the state for faithful discharge of official duties.
The amount of the bond shall be equal to twice the money likely to be on hand at any
given time, but in no circumstances shall the bond amount exceed $300,000.00.
Financial Statement
The Authority must approve its financial statement by resolution. Financial statements
must be prepared, audited, filed, published or posted in the same manner as the City
financial statements. The financial report must be filed with the State Auditor by June
30 each year.
Budget
The EDA must submit its proposed budget to the City annually. The budget must include
a detailed written description of what it needs to conduct business, minus any revenues
• from other activities. The EDA and City operate on the same fiscal year. The City
Council is not obligated to budget any money for the EDA.
Depositories
Every two years the EDA must name a national or state bank(s) as its depository. The
bank must post a bond as to amount, form and surety.
Conflict of Interest
A Board member, Officer, employee, representative or agent of an EDA must not acquire
any financial interest, whether direct or indirect, in any property included or planned to
be included in any project sponsored by the EDA. EDA Board members, Officers,
employees, representatives or agents may not have any financial interest, whether direct
or indirect, in any contract or proposed contract for materials or services to be furnished
or used in connection with any project.
A list of conflict of interest exceptions is attached.
An individual Council member should refrain from voting on a motion or resolution to
appoint when that council member is under consideration for the appointment.
4
CITY OF OTSEGO
COUNTY OF WRIGHT
STATE OF MINNESOTA
RESOLUTION NO. 92 -33
RESOLUTION ESTABLISHING AN ECONOMIC DEVELOPMENT AUTHORITY
FOR THE CITY OF OTSEGO
THE 14TH DAY OF Sertoarber ' 1992
WHEREAS, the City Council of the City of Otsego recognizes the need
for economic development within the City; and
WHEREAS, the City Council of Otsego desires to encourage, attract,
promote and develop economically sound industry and commerce within
the City; and
WHEREAS, such economic development will enhance the community and
the economic welfare of the citizens of the City of Otsego; and
WHEREAS, the above said economic development requires the
encouragement of the City and assistance in making suitable land
available for development; and
WHEREAS, the above said economic development requires control by
the City to prevent conflicts with the City of Otsego Comprehensive
Plan and the desired orderly development of the City; and
WHEREAS, the establishment of an economic development authority
will promote and enhance the above said economic development; and
WHEREAS, a notice of public hearing to consider the need for an
economic development authority was duly published in the
Elk River Star News once a week for two weeks on
September 9, 1992 andSentembPr 16 'ql; and
WHEREAS, a public hearing was held on sont_14 Lg42 and all
concerned members of the public were heard; and
WHEREAS, the City Council has considered the comments made at the
hearing and the facts presented there;
1
1
NOW, THEREFORE, BE IT RESOLVED that the Otsego City Council hereby
establishes an Economic Development Authority to be known as the
Otsego Economic Development Authority. The Otsego Economic
Development Authority shall be established in the form and shall
and operate with the powers established in the attached document
titled "Governing Resolution, City of Otsego Economic Development
Authority" and that said document is incorporated herein and made
part of this resolution.
By order of the City Council of the City of Otsego.
CITY OF OTSEGO
a
Norman Teske, Mayor
ATT ST:
' C 7/(4, (r
one Perrault, City Clerk
f .
GOVERNING RESOLUTION, CITY OF OTSEGO ECONOMIC DEVELOPMENT
AUTHORITY
1. Authority to Establish, Governing Law:
a. The City of Otsego Economic Development Authority
(hereinafter the "Authority ") is established under the
authority of Minnesota Statutes 469.090 through 469.1081,
as amended, and the organization, powers and activities
of the Authority shall be governed by those said statutes
and this resolution.
2. Commission Size, Appointment, Compensation and Removal of
Commissioners:
a. Size: The Authority Commission shall consist of the
members of the serving City Council.
b. Terms and Appointment of Commissioners: The members of
the Commission shall serve as Commissioners during their
regularly elected term of office as a member of the
Otsego City Council.
c. Increase in Commission Members: The Authority Commission
may be increased in number from five to seven members by
a resolution adopted by the City Council following the
same procedure used to pass this resolution or that
prescribed by Minnesota Statute 469.095, Subdivision 3,
as amended.
d. Compensation and Reimbursement: Commissioners, including
the President, shall be paid for attending each regular
or special meeting of the Authority in an amount to be
set by resolution of the City Council. In addition to
the said payment for attending regular and special
meeting Commissioners shall be reimbursed for actual
expenses incurred in doing official business of the
Authority. All money paid for compensation or
reimbursement shall be drawn form the Authority's budget.
e. Removal for Cause: A Commissioner may be removed by the
City Council for inefficiency, neglect of duty or
misconduct in office. Such removal shall be preceded by
a hearing wherein the Commissioner charged shall be given
an opportunity to be heard in person or by counsel. The
Commissioner charged shall be provided a written copy of
the charges at least ten days before any hearing. If
written charges are submitted against a Commissioner the
City Council may temporarily suspend the said
Commissioner. When any Commissioner is removed for cause
a record of the proceedings of the hearing shall be filed
in the office of the City Clerk together with the charges
and findings of fact.
r
3. Authority Officers, Duties and Organizational Matters:
a. The Authority shall adopt bylaws, rules of procedure and
an official seal.
b. Officers Required: The Authority shall elect a
president, vice president, secretary, treasurer and an
assistant treasurer. The president, treasurer and
secretary shall be elected on an annual basis. The
office of president and vice - president shall not be held
by the same Commissioner, the other offices may be held
by the same Commissioner. The offices of secretary and
assistant treasurer need not be held by a Commissioner.
c. Duties and Powers of Officers:
i. The officers shall have the usual duties and powers
of their offices. They may be granted other duties
and powers by resolution of the Authority.
ii. Treasurers Duties: The treasurer:
(1) shall receive, and is responsible for, all
Authority monies;
(2) is responsible for the acts of the assistant
treasurer;
(3) shall disburse money by check only;
(4) shall keep an account of the source of all
receipts, and the nature, purpose and
authority of all disbursements; and
(5) shall file the Authorities detailed financial
statement with its secretary at least once a
year at times to be set by the Authority.
iii. Assistant Secretary: The assistant treasurer has
the powers and duties of the treasurer if the
treasurer is absent or disabled.
iv. Treasurers Bond: The treasurer shall give bond to
the state conditioned for the faithful discharge of
official duties. The said bond shall be approved
as to form and surety by resolution of the
Authority and shall be for twice the amount of
money likely to be on hand at any one time as
determined annually by the Authority. In no case
shall the bond exceed $300,000.
v. Public Money: Authority money is public money.
vi. Checks: All Authority checks must be signed by the
treasurer and one other officer named by resolution
of the Authority. The check must state the name of
the payee and the nature of the claim for which
the check is issued.
d. Financial Statement:
i. Contents: The Authority's financial statement must
{
show all receipts and disbursement, their nature,
the money on hand, the purposes to which the money
on hand is to be applied, the authorities credits
and assets and its outstanding liabilities in the
form required for the financial statements of the
City of Otsego.
ii. Examination and Approval: The Authority shall
examine the financial statement along with the
treasurers vouchers. If the Authority finds the
financial statement and vouchers are correct the
Authority shall approve them by resolution and
enter the said resolution in its records.
4. Employees, Services and Supplies:
a. Employees: The Authority may employ an executive
director, a chief engineer, other technical experts and
agents and other employees as it may require and
determine their duties, qualifications and compensation.
b. Contracts for Services: The Authority .may contract for
the services of consultants, agents, public accountants
and other persons needed to perform its duties and
exercise its powers.
c. Legal Services: The Authority shall use the services of
the City Attorney and said City Attorney shall serve as
its chief legal advisor.
d. Supplies: The Authority may purchase the supplies and
materials it needs to carry out its duties and exercise
its authority as prescribed by this resolution and
Minnesota Statue 469.090 to 469.108, as amended.
e. City Purchasing: The Authority may use the facilities of
the City of Otsego in connection with construction work
and to purchase equipment, supplies or materials.
f. City Facilities and Services: The City of Otsego may
furnish any offices, structures and space, and
stenographic, clerical, engineering or other assistance
to the Authority required in the performance of its
duties or the exercise of its powers.
5. Conflict of Interest: Except as authorized in Minnesota
Statute 471.88 a Commissioner, officer or employee of the
Authority shall not acquire any financial interest, direct or
indirect, in any project or any property included or planned
to be included in any project, nor shall the said party have
an financial interest, direct or indirect, in any contract or
proposed contract for materials or service to be furnished or
used in connection with any project.
6. Depositories, Default and Collateral:
r
C -
.
a. Depositories: Every two years the Authority shall name
a national or state chartered bank located within the
State of Minnesota as a depository. Before acting as a
depository the named bank shall give the Authority a bond
approved as to form and surety by the Authority. The
said bond shall be conditioned for the safekeeping and
prompt repayment of all deposits and shall be at least
equal in amount to the maximum sums expected to be
deposited at any one time. The Authority may deposit all
funds from any source in one account.
b. Liability for Deposits: When Authority funds are
deposited in a bonded depository, the treasurer and the
surety of the treasurer official bond are exempt from
liability for the los of those said deposits because of
the failure, bankruptcy or other act or default of the
depository. The Authority may accept assignments of
collateral from its depository to secure deposits just as
assignments of collateral are permitted by law to secure
deposits of the City of Otsego.
7. Obligations:
a. Taxes and Assessments Prohibited: The Authority must not
levy a tax or special assessment, except as otherwise
provided in Minnesota Statutes 469.090 to 469.108, pledge
the credit of the State of Minnesota or the City of
Otsego or incur an obligation enforceable on any property
not owned by the Authority.
b. Budget to the City: Annually, at a time to be fixed by
resolution or ordinance of the City of Otsego, the
Authority shall send its budget to the Otsego City
Council. The budget must include a detailed written
estimate of the amount of money that the Authority
expects to need from the City of Otsego to do Authority
business during the next fiscal year. The needed amount
shall be that amount in excess of any expected receipts
from other sources.
c. Fiscal Year: The fiscal year of the Authority shall be
the same as the fiscal year of the City of Otsego.
d. Annual Report: Annually, at a time and in the form fixed
by the Otsego City Council, the Authority shall make a
written report to the Otsego City Council giving a
detailed account of the Authorities receipts and
expenditures during the preceding calendar year together
with additional matters and recommendations the Authority
deems advisable for the economic development of the City
of Otsego.
e. Audits: The financial statements of the Authority shall
be prepared, audited, filed and published or posted in
the manner required for the financial statements of the
City of Otsego. The Authorities financial statements
shall be such form to permit comparison and
reconciliation with the City of Otsego accounts and
financial reports. The above said financial report shall
be filed with the state auditor by June 30 of each year.
The auditor shall review the Authorities financial report
and may accept it or, in the public interest, audit the
books of the Authority.
f. Compliance Examinations: At the request of the City of
Otsego, or on the state auditor's initiative, the state
auditor may make a legal compliance examination of the
Authority for the City of Otsego in accordance with
Minnesota Statute 469.100, Subdivision 6, as amended.
8. Powers of the Authority, General obligation Bonds, Revenue
Bonds:
a. Powers: The Authority shall have all of the powers
listed and granted in Minnesota Statute 469.101, as
amended.
b. General Obligation Bonds: The Authority shall have the
authority to issue such bonds in the amounts and by the
process established by Minnesota Statute 469.102, as
amended.
c. Revenue Bonds: The Authority shall have the authority to
issue such bonds in the amounts and by the process
established by Minnesota Statute 469.103, as amended.
9. City Tax Levy:
a. The City of Otsego may levy a tax in any year for the
benefit of the authority. The said tax must not be more
that 0.01813 percent of the taxable market value. The
amount levied must be paid by the City of Otsego
treasurer to the treasurer of the Authority to be spent
by the Authority.
b. The Authority shall request the levy of the above said
tax in a manner set by the City Council.
c. The City of Otsego may increase its levy for the
Authority's purposes in accordance with Minnesota Statute
469.107, Subdivision 2, as amended.
EDA4A
X
The following is a Iist of exceptions when en an EDA may contract for goods or services with a board
member or officer of the EDA who has a financial interest in a project. Approval of this action must
be passed by a unanimous vote of the EDA Board with the affected board member abstaining from
the vote on the resolution.
•
1. When an officer or a board member is employed by a bank or savings
the EDA's depository or as a source of borrowing, and that board member o has l an interest either
direct or indirect, no restrictions apply. However, if a board member or officer does have a direct
or indirect interest as a director or an employee of the bank or savings association, he or she must
make that disclosure and enter it into the minutes of the EDA. This disclosure serves as notice
of the board member's interest and does not need to be made on future transactions with that
designated financial institution.
2. When a board member of the EDA is employed by a bank that is engaged in making loans or
performing trust services involving real or personal property affected by any plan of the EDA,
there is no restriction that applies to the loans made or trust services performed by the board
members bank if he or she discloses the nature of the Ioans or trust services that the board member
has personal knowledge of. This disclosure must be entered in the minutes of the EDA.
3. If the EDA has designated an official newspaper, or publication where it publishes its public
notices and minutes, and a board member has an interest in the paper.
4. If the EDA enters into a contract with a cooperative association where a board member is a
shareholder or stockholder, but not an officer or manager.
5. A contract for which competitive bids are not required by Iaw and where the amount does not
exceed $5,000.
6. Contracts for goods or services when consideration does not exceed $5,000 in any year and the
contracting governmental unit has a population of less than 5,000.
7. When an EDA board member is engaged in or employed by a firm that is in the business of
importing or exporting or general trade, the EDA may enter into business transactions with the
Board member or the Board member's employer provided that the board member abstains from
voting on any resolution that sets rates affecting shippers or users of an EDA -owned facility."
• Mnnesota Statute 471.88
Minnesota Statute 471.88
20
•
MN- STAT -AN - MSA S 469.095, Commissioners; appointment, terms, vacancies, pay, removal
Excerpt from page 69292 follows
469.095. Commissioners; appointment, terms, vacancies, pay, removal
Subdivision 1. Commissioners. Except as provided in subdivision 2, paragraph (d), an
economic development authority shall consist of either three, five, or seven commissioners who
shall be appointed after the enabling resolution provided for in section 469.093 becomes
effective. The resolution must indicate the number of commissioners constituting the authority.
Subd. 2. Appointment, terms; vacancies. (a) Three - member authority: the commissioners
constituting a three - member authority, one of whom must be a member of the city council, shall
be appointed by the mayor with the approval of the city council. Those initially appointed
shall be appointed for terms of two, four, and six years, respectively. Thereafter all
commissioners shall be appointed for six -year terms.
(b) Five - member authority: the commissioners constituting a five - member authority, two of
whom must be members of the city council, shall be appointed by the mayor with the approval of
the city council. Those initially appointed shall be appointed for terms of two, three, four,
five, and six years respectively. Thereafter all commissioners shall be appointed for six -year
terms.
(c) Seven - member authority: the commissioners constituting a seven - member authority, two of
whdm must be members of the city council, shall be appointed by the mayor with the approval of
the city council. Those initially appointed shall be appointed for terms of one, two, three,
four, and five years respectively and two members for six years. Thereafter all commissioners
shall be appointed for six -year terms.
(d) The enabling resolution may provide that the members of the city council shall serve as
the commissioners.
(e) The enabling resolution may provide for the appointment of members of the city council
in excess of the number required in paragraphs (a), (b), and (c).
(f) A vacancy is created in the membership of an authority when a city council member of the
authority ends council membership. A vacancy for this or another reason must be filled for the
balance of the unexpired term, in the manner in which the original appointment was made. The
city council may set the term of the commissioners who are members of the city council to
coincide with their term of office as members of the city council.
Excerpt from page 69293 follows
Subd. 3. Increase in commission members. An authority may be increased from three to five
or seven members, or from five to seven members by a resolution adopted by the city council
following the procedure provided for modifying the enabling resolution in section 469.093.
Subd. 4. Compensation and reimbursement. A commissioner, including the president, shall be
paid for attending each regular or special meeting of the authority in an amount to be
determined by the city council. In addition to receiving pay for meetings, the commissioners
may be reimbursed for actual expenses incurred in doing official business of the authority. All
money paid for compensation or reimbursement must be paid out of the authority's budget.
Subd. 5. Removal for cause. A commissioner may be removed by the city council for
inefficiency, neglect of duty, or misconduct in office. A commissioner shall be removed only
after a hearing. A copy of the charges must be given to the commissioner at least ten days
before the hearing. The commissioner must be given an opportunity to be heard in person or by
counsel at the hearing. When written charges have been submitted against a commissioner, the
city council may temporarily suspend the commissioner. If the city council finds that those
charges have not been substantiated, the commissioner shall be immediately reinstated. If a
commissioner is removed, a record of the proceedings, together with the charges and findings,
shall be filed in the office of the city clerk.
Copyright (c) West Group 1998 No claim to original U.S. Govt. works
W ark IYu ' To .ezhes -, Grawi Together
B usi nE- & Coinwuknity
BRE Meeting Notes
Kick -off meetings at Rockwoods Grill and Klein Bank
March 27 and 29, 2012
Persons /businesses in attendance /comments:
(March 27 Meeting)
• Lyle Talbot, Special Timer Corporation — Company makes pollution control devices in
Otego since 1963. He believes the city is in need of and ripe for a business incubator.
• Todd Shatusky, American Family Insurance — open for 3 years.
• Linda Running, Otsego Dental.
• Tom Darkenwald, City Council Member, Chairman of the Board —1 -94 West Chamber,
and business owner.
• Doug Schroeder, City Council Member.
• Ron Touchette, Rock Solid — works with troubled assets. Waterfront Commons fully
leased. Business activity in Otsego is good. Identity is an issue, but there are
opportunities. The City lacks the infrastructure issues of neighboring cities — Otsego's
infrastructure is well planned.
• Joyce Chen, Volcano Buffet — restaurant is busy for now. They recently added a hibachi
grill.
• Cary Bush, Holiday Station Store.
• Tasha Mills, Holiday Station Store.
• Doug Andrews, Napa Valley Liquors — Store in business for 3 years. Foot traffic and
referrals are important to business. Interested in city efforts to attract another big box
to the area.
• Rob Vold, Napa Valley Liquors.
• Jen Esselman, Healing Hands Family Chiropractic.
(March 29 Meeting)
• Ken and Julie Nathe, 101 Market- floral and gift market
• Wendy Fong, President of Brett Admixtures — they sell concrete admixtures throughout
the Midwest region. They've been in business in Otsego for ten years and moved from
Eden Prairie for the ease of transport. Business is good and their employees would enjoy
more restaurants in the area.
• David Bury, Asset Manager at Target.com — Target has seen double digit growth with
250 employees from the area. Employees want more restaurants. Partnerships
City of Otsego BRE Meeting Notes — March 27 and 29, 2012 1
important for business. Strong communities make a difference in lower crime incidents.
Target is focused on volunteering for community events. Bury clarified that they do not
own the land around Target and that they have no restrictions on the types of
businesses that can locate there.
• Amy Nelson, Accurate Home Health Care, serves disabled clients in MN, Illinois, and
Iowa. Corporate headquarters moving to Otsego (around 40 corporate employees)
• Diana Weller, Klein Bank -In business for 3 years with growing commercial and
residential lending. Klein Bank clarified that the franchises in Elk River and surrounding
communities have restricted competition by prohibiting one from opening in Otsego.
• Susan Middleton, Great Clips — In business 3 years.
• Lezlie Johanson, Dogue Spot
• Wendy Beck, Dogue Spot, a dog training and boarding company. Businesses they would
like to see include Subway, Papa Murphy and Redbox.
• Mike Day, Direct Digital Controls.
Lori Johnson, City Administrator discussed city efforts:
• City Council strategic planning identified economic development as a city goal.
• City has updated city logo and website.
• City is updating the comprehensive plan.
• City has hired a recreation director.
• City to improve 70 Street in 2012 to make an east -west connection; completion
scheduled for 2014.
• City recognizes the needs for community identity, to create community activities,
promote Mississippi River Trail, and the need for city promotion /marketing.
• City to work with MnDot to get additional MnDot approved business signage along Hwy
101
Rhonda Baack, 1 -94 West Chamber of Commerce discussed:
• 11 largest Chamber of Commerce in the state.
• 1 -94 West Corridor Coalition.
• Grow MN — Business expansion and retention initiative with many resources for
businesses.
o Conducts face -to -face visits to businesses with a survey.
• Chamber activities:
o Chamber 101— education about benefits of chamber.
o Legislative - chamber can leverage influence for the region.
City of Otsego BRE Meeting Notes — March 27 and 29, 2012 2
o Candidate forums.
o Ambassador program.
o Special events such as golf tournament on July 24 and networking events.
Ted LaFrance, Wright County Economic Development Partnership
Services include:
• Analyze financials
• Financial and technical assistance
• Community assistance
• Marketing
• Small Business Development Center
Revolving loan fund
Business Discussion Topics:
• Regional Influence opportunities:
o Chamber can leverage influence for the region.
o New Senate district with Otsego in the center is an opportunity. Republican
candidate David Fitzsimons is engaged and interested in communicating with
businesses.
• Business Needs:
o Bring another big box to the area to increase foot traffic.
o Increase number and variety of businesses and visitors to city.
o More family oriented community activities, many families with small children
living here.
o Business incubator — there is a need for incubator space in Otsego.
o Need to get traffic off of Highway 101 to town.
• Billboard or other signage.
• City has a policy to balance wants and needs of businesses and residents
alike and has limited visual clutter on the highway.
• Consider creative options such as using MNDOT information signs to
identify local businesses, business district, and Mississippi River Trail.
o Business signage- city ordinance needs to be modified. Direct Digital wants an
electronic sign and feels it is essential to keeping business in Otsego. The 101
Market has a similar signage issue and feels more signage is necessary because
of the 101 Bridge /Interchange
City of Otsego BRE Meeting Notes — March 27 and 29, 2012 3
o Street Lighting fee — business feels it is excessive and should be more fairly
distributed to all residence.
• Community /City Identity —
o Create a farmers market or other recreation and community events and
activities in Highway 101 commercial area.
o Rebranding - Otsego stickers in business windows to create an area identity and
sense of community, consider street pole banners downtown, with a tag line
such as "Friendly gathering place," which is the meaning of Otsego in a Native
American language.
o Jam Fest can be leveraged to raise community identity and serve as an anchor
event.
o Influence Holiday Inn to change their sign to Holiday Inn of Otsego.
• Otsego opportunities:
o Otsego is well situated as the first stop after the 101 flyway in Rogers.
o City has been growing during the downturn unlike so many other communities.
• Opportunities created by partnership among City, Chamber, and Businesses.
o Businesses encouraged to use City and Chamber as resources.
o Businesses need to partner together.
o All want businesses to grow and succeed.
o City wants ideas and comments from businesses — call or email.
o Need rooftops and jobs in City to support retail.
• Future Meetings — April 23rd at 4 P.M. at the Riverwood Conference Center and April
25 at 8 A.M., location to be determined.
o Want ideas for future topics from businesses.
o Meetings need to be valuable to businesses.
City of Otsego BRE Meeting Notes — March 27 and 29, 2012 4