ITEM 3.1ITEM 3_1
TPC3601 Thurston Avenue N, Suite 100
Anoka, MN 55303
Phone: 763.231.5840
Facsimile: 763.427.0520
TPC(c_i) Plan ningCo.com
PLANNING REPORT
TO: Otsego Planning Commission
FROM: Daniel Licht, AICP
DATE: 26 January 2016
RE: Otsego — P&F Machining Inc.; TIF District No. 1
=4911111 = Eli WIN
BACKGROUND
The City of Otsego acquired 13.9 acres of land within the Great River Centre from Wright
County through tax forfeiture. The City subsequently platted the property and has entered
into a purchase agreement with P&F Properties, Inc to acquire Lot 1, Block 1 Great River Centre
of Otsego Fourth Addition. The developer has also submitted application for Tax Increment
Financing (TIF) to assist with the eligible costs associated with the development. The City
Council will hold a public hearing to consider the TIF application at their meeting on 22
February 2016. One of the Statutory requirements of the TIF process is that the Planning
Commission consider the proposed TIF Plan and adopt a resolution that the application is
consistent with the Comprehensive Plan.
Exhibits:
A. Development Program/Establishment of Development District No. 1
B. Tax Increment Financing Plan/Tax Increment Financing District No. 1
C. Resolution 2016-01
ANALYSIS
P&F Properties, Inc. has submitted plans for development of a 54,400 square foot
manufacturing use on Lot 1, Block 1, Great River Centre 4th Addition. The proposed building will
be occupied by P&F Machining, Inc., which is a precision manufacturer of high-quality custom
machining for the aerospace, medical, agricultural, heavy equipment and medical trial
industries. Construction is expected to being in early 2016 and be completed for occupancy in
fall 2016, when P&F will relocate its 40 full time employees (or full time equivalent employees)
to the facility. The City Council on 25 January 2016 approved a PUD Development Stage Plan
and conditional use permit for the proposed development based on a finding that the proposed
land use is consistent with the 2012 Otsego Comprehensive Plan and development regulations.
The City has prepared a Development Program for establishment of a Development District and
a Tax Increment Financing Plan for the project, which are attached. The Development District is
being established to include the entire area of the City. The Tax Increment Financing Plan for
Establishment of Tax Increment Financing District No. 1— Great River Centre within
Development District No. 1 related to the proposed development of Lot 1, Block 1, Great River
Centre of Otsego Fourth Addition by P&F Properties, Inc. The Tax Increment Financing Plan
establishes an eight year duration for TIF District No. 1 to provide $610,000 for site
improvements and preparation. The 2012 Otsego Comprehensive Plan includes the goal of
"attracting, retaining, and expanding businesses and industry as a priority for diversifying
Otsego's tax base". The proposed TIF Development Program for establishment of a
Development District and the Tax Increment Financing Plan for Establishment of Tax Increment
Financing District No. 1— Great River Centre within Development District No. 1 related to the
proposed development is consistent with achievement of this goal.
RECOMMENDATION
City staff recommends adoption of Resolution 2016-01 finding that the proposed TIF
Development Program and TIF Plan.
POSSIBLE MOTIONS
A. Motion to adopt Resolution 2016-01 finding that the proposed Development Program
for Development District No. 1 and TIF Plan for establishment of TIF District No. 1—
Great River Centre within Development District No. 1 is consistent with the 2012 Otsego
Comprehensive Plan.
B. Motion to deny the application based on a finding that the application is not consistent
with the 2012 Otsego Comprehensive Plan.
C. Lori Johnson, City Administrator
Tami Loff, City Clerk
Adam Flaherty, Finance Director
Andy MacArthur, City Attorney
2
As of danuary 25, 2016
Draft for Planning Commission
Development Program
for the establishment of
Development District No. 1
City of Otsego
Wright County
State of Minnesota
Public Hearing: February 22, 2016
Adopted:
0 FREERS
Prepared by: EHLERS & ASSOCIATES, INC.
3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105
(651) 697-8500 fax: (651) 697-8555 www.ehlers-inc.com
Table of Contents
(for reference purposes only)
Municipal Action Taken ........................................................ i
Section 1 - Development Program
for Development District No. 1 .............................................
1-1
Subsection 1-1.
Definitions ..............................................
1-1
Subsection 1-2.
Statutory Authority ........................................
1-2
Subsection 1-3.
Statement of and Finding of Public Purpose ....................
1-2
Subsection 1-4.
Statement of Objectives ...................................
1-3
Subsection 1-5.
Statement of Public Facilities and Costs to Be Financed ..........
1-4
Subsection 1-6.
Funding of Developments and Redevelopments ................
1-4
Subsection 1-7.
Environmental Controls ....................................
1-4
Subsection 1-8.
Proposed Reuse of Property ................................
1-4
Subsection 1-9.
Open Space to Be Created .................................
1-5
Subsection 1-10.
Administration and Maintenance of Development District No. 1 .....
1-5
Subsection 1-11.
Rehabilitation ...........................................
1-5
Subsection 1-12.
Relocation ..............................................
1-5
Subsection 1-13.
Property Acquisition ......................................
1-5
Subsection 1-14.
Modification of the Development Program and/or Development District
No.
1
1-5
Subsection 1-15.
Description of Boundaries of Development District No. 1 ..........
1-6
Appendix A
Boundary Map of Development District No. 1 ................................. A-1
Municipal Action Taken
(This Municipal Action is only for convenience of reference.)
Based upon the statutory authority described in the Development Program attached hereto, the public purpose
findings by the City Council and for the purpose of fulfilling the City's development objectives as set forth
in the Development Program, the City Council has created, established and designated Development District
No. 1 pursuant to and in accordance with the requirements of the Municipal Development District Act and
the TIF Act as defined in the definitions of this document.
Tax Increment Financing District No. 1 - Great River Centre, an economic development tax increment
financing district, was established at the same time that the Development District No. 1 was established.
The following municipal action was taken in connection therewith:
Development District No. 1:
February 22, 2016: The Development Program for Development District No. 1 was adopted by the City in
and for the City of Otsego.
Tax Increment Financing District No. I - Great River Centre:
February 22, 2016: The Tax Increment Financing Plan for Tax Increment Financing District No. 1 - Great
River Centre was adopted by the City in and for the City of Otsego.
Section 1 - Development Program
for Development District No. 1
Subsection 1-1. Definitions
The terms defined below shall, for purposes of this Development Program, have the meanings herein
specified, unless the context otherwise specifically requires.
"City" means the City of Otsego.
"City Council" means the City Council of the City of Otsego.
"Comprehensive Plan" means the documents which contain the objectives, policies, standards and
programs to guide public and private land use, development, redevelopment and preservation for all lands
and water within the City.
"County" means the County of Wright County, Minnesota.
"Development District" means the real property within the City constituting the Development District
No. 1, as described in the Development Program.
"Development Program" means this Development Program for Development District No. 1, as initially
proposed, and as it shall be modified.
"BDA Act" means Minnesota Statutes, Section 469.090 through 469.1082.
"HRA Act" means Minnesota Statutes, Section 469.001 through 469.047.
"Land Use Regulations" means all federal, state and local laws, rules, regulations, ordinances, and plans
relating to or governing the use of development of land in the City, including but not limited to
environmental, zoning and building code laws and regulations.
"Municipal Development District Act" means Minnesota Statutes, 469.124 to 469.133, inclusive, as
amended.
"Public Costs" means the costs set forth in the Tax Increment Financing Plan, and any other costs eligible
to be financed by Tax Increments under the TIF Act, EDA Act, HRA Act or the Municipal Development
District Act.
"Public Improvements" means the public improvements described in the Development Program and Tax
Increment Financing Plan.
"State" means the State of Minnesota.
"Tax Increment Bonds" means any tax increment bonds or notes issued by the City to finance the Public
Costs as stated in the Development Program for Development District No. I and in the Tax Increment
Financing Plans, and any obligations issued to refund such bonds.
"TIF Act" means Minnesota Statutes, Sections 479.174 through 479.1794, inclusive, as amended.
City of Otsego Development Program for Development District No. 1 1-1
"Tax Increment Financing District" means any tax increment financing district presently established or
to be established in the future in Development District No. 1.
"Tax Increment Financing Plan" or "Plan" means the Plans adopted by the City for any Tax Increment
Financing District.
Subsection 1-2. Statutory Authority
The City established Development District No. 1 pursuant to the Municipal Development District Act. It is
authorized that the City will administer the Development District No. 1 and any tax increment financing
districts.
Within the Development District No. 1, the City plans to create one or more tax increment financing districts
established pursuant to the Tax Increment Act to finance the public improvements proposed for the
DevelopmentDistrict. The public improvements may be initially financed from other City sources, including,
but not limited to the use of improvement bonds issued pursuant to Minnesota Statutes, Chapter 429, which
sources the City may reimburse from tax increment proceeds derived from tax increment districts to be
created with the Development District No. 1.
The tax increment district or districts will be created at such time as will enable the City to capture the
increase in taxable value of private improvements to be constructed within the Development District No. 1.
Subsection 1-3. Statement of and Finding of Public Purpose
In recent months, the City has been reviewing the future development of the community. This review has
defined several important roles for the City of Otsego.
• Facilitating development activities that are compatible with overall community development objectives
of the City.
• Removing the physical and economic barriers to development.
• Providing the infrastructure needed to support development.
• Providing sites for future development.
The City intends to use the powers allowed under the Municipal Development District Act to fill these roles,
to promote development and redevelopment throughout the City, and to pool resources in order to reduce
financial barriers to providing decent housing and development and redevelopment opportunities.
The City has found that there is a need for development and redevelopment within the Development District
based upon the following conditions:
1. The Development District contains numerous parcels containing buildings or improvements
which, by reason ofdilapidation, obsolescence, overcrowding, faulty arrangement or design, lack
of ventilation, light and sanitary facilities, excessive land coverage, deleterious land use or
obsolete layout, and a combination of these and other factors is detrimental to the safety, health,
morals or welfare of the community.
City of Otsego Development Program for Development District No. 1 1-2
The Development District suffers from alack ofnecessary streets, utilities and site improvements
essential to preparing and making sites available for meaningful development.
The Development District requires active promotion, attraction, encouragement and development
of economically sound commerce through government action for the purpose of preventing
emergence and continuation of blight and the occurrence of conditions requiring redevelopment
The Development District contains vacant, unused, underused and inappropriately used land.
Therefore, the City has determined to exercise its authority to develop a program for improving the
Development District to provide impetus for private development and redevelopment, to provide decent
housing to residents, to maintain and increase employment, to provide infrastructure to serve citizens and
employees of the City, to utilize existing land for potential redevelopment and to provide other facilities as
are outlined in the Development Program.
The City has also determined that proposed developments to be assisted by the City would not occur solely
through private investment in the foreseeable future. The City finds that the welfare of the City , as well as
the State of Minnesota, requires active promotion, attraction, encouragement and development of
economically sound industry and commerce to carry out its stated public purpose objectives.
The City has also determined that any tax increment financing plans to be proposed herein will be consistent
with the Development Program, and that the tax increment financing plans will afford maximum opportunity,
consistent with the sound needs of the City as a whole, for the development or redevelopment of the
Development District by private enterprise.
Subsection 1-4. Statement of Objectives
The City determines that it is necessary, desirable and in the public interest to establish, designate, develop
and administer the Development District. The City determines that the establishment of Development District
No. 1 will provide the City with the ability to achieve certain public purpose objectives not otherwise
obtainable in the foreseeable future without City intervention in the normal development process. The City
seeks to achieve the following program objectives:
1. Promoting and securing the prompt development of property in the Development District in a
manner consistent with the City's planning and with a minimal adverse impact on the
environment, which property is less productive because of the lack of proper utilization and lack
of investment, and thereby promoting and securing the development of other land in the City;
2. Promoting and securing additional employment opportunities within the Development District
and the City for residents of the City and the surrounding area, thereby improving living
standards and preventing unemployment and the loss of skilled and unskilled labor and other
human resources in the City;
3. Securing the increase in value of property subject to taxation by the City, Independent School
District No. 728 and Wright County, and any other taxing jurisdictions in order to better enable
such entities to pay for public improvements and governmental services and programs required
to be provided by them;
4. Securing the construction and providing of moneys for the payment of the cost of public
City of Otsego Development Program for Development District No. 1 1-3
improvements in the Development District, which are necessary for the orderly and beneficial
development of the Development District; and
Providing and securing the development of increased opportunities for families to reside in
quality owner -occupied housing, for senior citizens to choose from housing options which offer
a wide array of services without regard to income, and for residents looking for a wide range of
multi -family units.
Subsection 1-5. Statement of Public Facilities and Costs to Be Financed
The preceding objectives will be promoted by providing improvements and opportunities within the
Development District which may include various types of site improvements, land acquisition,
redevelopment, demolition, parking, street, sewer, water and other public improvements. A description ofthe
items of expenditure and the estimated costs can be found in the Tax Increment Financing Plans for the Tax
Increment Financing Districts created within this Development District.
Subsection 1-6. Funding of Developments and Redevelopments
To implement the established objectives, the City plans to utilize a number of public and private financing
tools. Funding of the necessary activities and improvements in the Development District is expected to be
accomplished through, and is not limited to, tax increment financing, special assessments, state aid for road
construction, proceeds from the sale of property, and federal and state grants.
Any public facilities within the Development District will be financially feasible and compatible with longer
range development plans. Any acquisition of property for the public improvements will be done to provide
the impetus for private development within the Development District.
Subsection 1-7. Environmental Controls
All municipal actions, public improvements and private development shall be carried out in a manner
consistent with existing environmental controls and all applicable Land Use regulations.
Subsection 1-8. Proposed Reuse of Property
The Development Program contemplates that the City may acquire property and reconvey the same to another
entity. Prior to formal consideration of the acquisition of any property, the City will require the execution
of a binding development agreement with respect thereto and evidence that Tax Increments or other funds
will be available to repay the Public Costs associated with the proposed acquisition. It is the intent ofthe City
to negotiate the acquisition of property whenever possible. Appropriate restrictions regarding the reuse and
redevelopment ofproperty shall be incorporated into any development agreementto which the City is aparty.
Subsection 1-9. Open Space to Be Created
Any open space within the Development District will be created in accordance with the zoning and
ordinances of the City.
Subsection 1-10. Administration and Maintenance of Development District No. 1
Maintenance and operation of the Development District will be the responsibility of the City Administrator.
City of Otsego Development Program for Development District No. 1 1-4
Each year, the administrator ofthe Development District will submit to the City Council the maintenance and
operation budget for the following year.
The administrator of the Development District will administer the Development District pursuant to the
provision of the Enabling Act; provided, however, that such powers may only be exercised at the direction
of the City. No action taken by the administrator of the Development District pursuant to the above-
mentioned powers shall be effective without authorization by the City.
Subsection 1-11. Rehabilitation
Owners of properties within the Development District may be encouraged to rehabilitate their properties to
conform with the applicable state and local codes and ordinances, as well as any design standards. Persons
who purchase property within the Development District from the City may be required to rehabilitate their
properties as a condition of sale of land. The City may provide such rehabilitation assistance as may be
available from federal, state or local sources.
Subsection 1-12. Relocation
Any person or business that is displaced as a result of the Development Program will be relocated in
accordance with Minnesota Statutes, Section 117.50 to 117.56. The City accepts its responsibility for
providing for relocation assistance pursuant to the Enabling Act.
Subsection 1-13. Property Acquisition
The City intends to acquire such property, or appropriate interest therein, within the Development District
as the Authority may deem to be necessary or desirable to assist in the implementation of the Development
Program.
Subsection 1-14. Modification of the Development Program and/or Development District
No. 1
The City reserves the right to alter and amend the Development Program and the Tax Increment Financing
Plans, subject to the provisions of state law regulating such action. The City specifically reserves the right
to enlarge or reduce the size of the Development District and the Tax Increment Financing District, the
Development Program, the Public Costs and the amount of Tax Increment Bonds to be issued to finance such
cost by following the procedures specified in Minnesota Statutes, Section 469.175, subdivision 4.
Subsection 1-15. Description of Boundaries of Development District No. 1
The boundaries of the Development District shall be coterminous with the corporate boundaries of the City
of Otsego.
City of Otsego Development Program for Development District No. 1 1-5
Appendix A
Boundary Map of Development District No. 1
City of Otsego Development Program for Development District No. 1 A-1
As of danarar y 25, 2016
Draft for Planning Commission
Tax Increment Financing Plan
for the establishment of
Tax Increment Financing District No. 1 - Great River Centre
(an economic development district)
within
Development District No. 1
City of Otsego
Wright County
State of Minnesota
Public Hearing: February 22, 2016
Adopted:
Prepared by: EHLERS ASSOCIATES, INC.
3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105EHLERS 651-697-8500
i
fax: 651-697-8555 www.ehiers-inc.com
Table of Contents
(for reference purposes only)
Section 2 - Tax Increment Financing Plan
for Tax Increment
Financing District No. 1 - Great River Centre ...................
2-1
Subsection 2-1.
Foreword ...............................................
2-1
Subsection 2-2.
Statutory Authority ........................................
2-1
Subsection 2-3.
Statement of Objectives ...................................
2-1
Subsection 2-4.
Development Program Overview ............................
2-1
Subsection 2-5.
Description of Property in the District and Property To Be Acquired .
2-2
Subsection 2-6.
Classification of the District .................................
2-2
Subsection 2-7.
Duration and First Year of Tax Increment of the District ...........
2-3
Subsection 2-8.
Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity
Value/Increment and Notification of Prior Planned Improvements ................
2-3
Subsection 2-9.
Sources of Revenue/Bonds to be Issued ......................
2-4
Subsection 2-10.
Uses of Funds ...........................................
2-6
Subsection 2-11.
Business Subsidies .......................................
2-7
Subsection 2-12.
County Road Costs .......................................
2-8
Subsection 2-13.
Estimated Impact on Other Taxing Jurisdictions .................
2-8
Subsection 2-14.
Supporting Documentation ................................
2-10
Subsection 2-15.
Definition of Tax Increment Revenues .......................
2-10
Subsection 2-16.
Modifications to the District ................................
2-10
Subsection 2-17.
Administrative Expenses ..................................
2-11
Subsection 2-18.
Limitation of Increment ...................................
2-12
Subsection 2-19.
Use of Tax Increment ....................................
2-12
Subsection 2-20.
Excess Increments ......................................
2-13
Subsection 2-21.
Requirements for Agreements with the Developer ..............
2-13
Subsection 2-22.
Assessment Agreements .................................
2-14
Subsection 2-23.
Administration of the District ...............................
2-14
Subsection 2-24.
Annual Disclosure Requirements ...........................
2-14
Subsection 2-25.
Reasonable Expectations .................................
2-14
Subsection 2-26.
Other Limitations on the Use of Tax Increment .................
2-15
Subsection 2-27.
Summary ..............................................
2-15
Appendix A
Project Description...................................................... A-1
Appendix B
Map of Development District No. 1 and the District ............................. B-1
Appendix C
Description of Property to be Included in the District ............................ C-1
Appendix D
Estimated Cash Flow for the District ........................................ D-1
Appendix E
Minnesota Business Assistance Form ....................................... E-1
Appendix F
Findings Including But/For Qualifications ..................................... F-1
Section 2 - Tax Increment Financing Plan
for Tax Increment Financing District No. 1 - Great River Centre
Subsection 2-1. Foreword
The City of Otsego (the "City"), staff and consultants have prepared the following information to expedite
the establishment of Tax Increment Financing District No. 1 - Great River Centre (the "District"), an
economic development tax increment financing district, located in Development District No. 1.
Subsection 2-2. Statutory Authority
Within the City, there exist areas where public involvement is necessary to cause development or
redevelopment to occur. To this end, the City has certain statutory powers pursuant to Minnesota Statutes
("M.S.'), Sections 469.124 to 469.133, inclusive, as amended, and M.S., Sections 469.174 to 469.1794,
inclusive, as amended (the "Tax Increment Financing Act" or "TIF Act"), to assist in financing public costs
related to this project.
This section contains the Tax Increment Financing Plan (the "TIF Plan") for the District. Other relevant
information is contained in the Development Program for Development District No. 1.
Subsection 2-3. Statement of Objectives
The District currently consists of one parcel of land and adjacent and internal rights-of-way. The District is
being created to facilitate construction of a 54,400 square foot manufacturing facility. Please see Appendix
A for further District information. The City has designated P & F Properties, Inc. as the developer and
development is likely to begin in 2016. This TIF Plan is expected to achieve many of the objectives outlined
in the Development Program for Development District No. 1.
The activities contemplated in the Development Program and the TIF Plan do not preclude the undertaking
of other qualified development or redevelopment activities. These activities are anticipated to occur over the
life of Development District No. 1 and the District.
Subsection 2-4. Development Program Overview
1. Property to be Acquired - Portions ofthe property located within the District may be retained
by the City or may be acquired by the City in the future.
2. Relocation - Relocation services, to the extent required by law, are available pursuant to
M.S., Chapter 117 and other relevant state and federal laws.
3. Upon approval of a developer's plan relating to the project and completion of the necessary
legal requirements, the City may sell to a developer selected properties that it may acquire
within the District or may lease land or facilities to a developer.
4. The City may perform or provide for some or all necessary acquisition, construction,
relocation, demolition, and required utilities and public street work within the District.
5. The City proposes both public and private infrastructure within the District. The proposed
reuse of private property within the District will be for a manufacturing facility, and there
will be continued operation of Development District No. 1 after the capital improvements
City of Otsego
Tax Increment Financing Plan for Tax Increment Financing District No. 1 - Great River Centre 2-1
within Development District No. 1 have been completed.
Subsection 2-5. Description of Property in the District and Property To Be Acquired
The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the
parcels listed in Appendix C of this TIF Plan. Please also see the map in Appendix B for further information
on the location of the District.
The City currently owns the property to be included in the District.
Subsection 2-6. Classification of the District
The City, in determining the need to create a tax increment financing district in accordance with M.S.,
Sections 469.174 to 469.1794, as amended, inclusive, finds that the District, to be established, is an economic
development district pursuant to M.S.., Section 469.174, Subd. 12 as defined below:
"Economic development district" means a type of tax increment financing district which consists of any
project, or portions of a project, which the authority finds to be in the public interest because:
(1) it will discourage commerce, industry, or manufacturingfrom moving their operations
to another state or municipality; or
(2) it will result in increased employment in the state; or
(3) it will result in preservation and enhancement of the tax base of the state.
The District is in the public interest because it will meet the statutory requirement from clause 1, 2, and 3.
Pursuant to M.S., Section 469.176, Subd. 4c, revenue derived from tax increment from an economic
development district may not be used to provide improvements, loans, subsidies, grants, interest rate
subsidies, or assistance in any form to developments consisting of buildings and ancillary facilities, if more
than 15 percent of the buildings and facilities (determined on the basis of square footage) are used for a
purpose other than:
(1) The manufacturing or production of tangible personal property, including processing resulting
in the change in condition of the property;
(2) Warehousing, storage, and distribution of tangible personal property, excluding retail sales;
(3) Research and development related to the activities listed in items (1) or (2);
(4) Telemarketing if that activity is the exclusive use of the property; or
(5) Tourism facilities;
(6) Space necessary for and related to the activities listed in items (1) to (5)
In meeting the statutory criteria the City relies on the following facts and findings:
The facilities in the District meet the conditions of Purposes 1, 2, and 6.
The District is being created to assist in the construction of a manufacturing facility for P & F Machining,
Inc. The proposed facility will be used for manufacturing precision parts and related activities.
Pursuant to M.S., Section 469.176, Subd. 7, the District does not contain any parcel or part of a parcel that
qualified under the provisions of M.S., Sections 273.111, 273.112, or 273.114 or Chapter 473H for taxes
payable in any of the five calendar years before the filing of the request for certification of the District.
City of Otsego
Tax Increment Financing Plan for Tax Increment Financing District No. 1 - Great River Centre 2-2
Subsection 2-7. Duration and First Year of Tax Increment of the District
Pursuant to MS., Section 469.175, Subd. 1, andMS., Section 469.176, Subd. 1, the duration of the District
must be indicated within the TIF Plan. Pursuant to M.S., Section 469.176, Subd. 1b., the duration of the
District will be 8 years after receipt of the first increment by the City. The date of receipt by the City of the
first tax increment is expected to be 2018. Thus, it is estimated that the District, including any modifications
of the TIF Plan for subsequent phases or other changes, would terminate after 2026, or when the TIF Plan
is satisfied. If increment is received in 2019, the term of the District will be 2027. The City reserves the right
to decertify the District prior to the legally required date.
Subsection 2-8. Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity
Valuelincrement and Notification of Prior Planned Improvements
Pursuant to M.S., Section 469.174, Subd. 7 and M.S., Section 469.177, Subd. ],the Original Net Tax Capacity
(ONTC) as certified for the District will be based on the market values placed on the property by the assessor
in 2016 for taxes payable 2017.
Pursuant to M.S., Section 469.177, Subds. 1 and 2, the County Auditor shall certify in each year (beginning
in the payment year 2018) the amount by which the original value has increased or decreased as a result of:
1. Change in tax exempt status of property;
2. Reduction or enlargement of the geographic boundaries of the district;
3. Change due to adjustments, negotiated or court-ordered abatements;
4. Change in the use of the property and classification;
5. Change in state law governing class rates; or
6. Change in previously issued building permits.
In any year in which the current Net Tax Capacity (NTC) value of the District declines below the ONTC, no
value will be captured and no tax increment will be payable to the City.
The original local tax rate for the District will be the local tax rate for taxes payable 2017, assuming the
request for certification is made before June 30, 2017. The ONTC and the Original Local Tax Rate for the
District assuming Pay 2016 figures appear in the table below.
Pursuant to M.S., Section 469.174 Subd. 4 and M.S., Section 469.177, Subd. 1, 2, and 4, the estimated
Captured Net Tax Capacity (CTC) of the District, within Development District No. 1, upon completion of
the projects within the District, will annually approximate tax increment revenues as shown in the table
below. The City requests 100 percent ofthe available increase in tax capacity for repayment of its obligations
and current expenditures, beginning in the tax year payable 2018. The Project Tax Capacity (PTC) listed is
an estimate of values when the projects within the District are completed.
Project Estimated Tax Capacity upon Completion (PTC) $84,510
Original Estimated Net Tax Capacity (ONTC) $2,588
Estimated Captured Tax Capacity (CTC) $81,922
Original Local Tax Rate 1.17068 Pay 2016
Estimated Annual Tax Increment (CTC x Local Tax Rate) $95,904
Percent Retained by the City 100%
City of Otsego
Tax Increment Financing Plan for Tax Increment Financing District No. 1 - Great River Centre 2-3
Pursuant to M.S., Section 469.177, Subd. 4, the City shall, after a due and diligent search, accompany its
request for certification to the County Auditor or its notice of the District enlargement pursuant to M.S.,
Section 469.175, Subd. 4, with a listing of all properties within the District or area of enlargement for which
building permits have been issued during the eighteen (18) months immediately preceding approval of the
TIF Plan by the municipality pursuant to M.S., Section 469.175, Subd. 3. The County Auditor shall increase
the original net tax capacity of the District by the net tax capacity of improvements for which a building
permit was issued.
The City has reviewed the area to be included in the District and found no parcels for which building
permits have been issued during the 18 months immediately preceding approval of the TIF Plan by the
City.
Subsection 2-9. Sources of Revenue/Bonds to be Issued
The costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax
increments. The City reserves the right to incur bonds or other indebtedness as a result of the TIF Plan. As
presently proposed, the projects within the District will be financed by a pay-as-you-go note. Any refunding
amounts will be deemed a budgeted cost without a formal TIF Plan Modification. This provision does not
obligate the City to incur debt. The City will issue bonds or incur other debt only upon the determination that
such action is in the best interest of the City.
The total estimated tax increment revenues for the District are shown in the table below:
SOURCES OF FUNDS TOTAL
Tax Increment $610,000
Interest $61.000
TOTAL $671,000
The City may issue bonds (as defined in the TIF Act) secured in whole or in part with tax increments from
the District in a maximum principal amount of $524,000. Such bonds may be in the form of pay-as-you-go
notes, revenue bonds or notes, general obligation bonds, or interfund loans. This estimate of total bonded
indebtedness is a cumulative statement of authority under this TIF Plan as of the date of approval.
Subsection 2-10. Uses of Funds
Currently under consideration for the District is a proposal to facilitate construction of a 54,400 square foot
manufacturing facility. The City has determined that it will be necessary to provide assistance to the
project(s) for certain District costs, as described. The City has studied the feasibility of the development or
redevelopment of property in and around the District. To facilitate the establishment and development or
redevelopment of the District, this TIF Plan authorizes the use of tax increment financing to pay for the cost
of certain eligible expenses. The estimate of public costs and uses of funds associated with the District is
outlined in the following table:
City of Otsego
Tax Increment Financing Plan for Tax Increment Financing District No. 1 - Great River Centre 2-4
USES OF TAX INCREMENT FUNDS TOTAL
Site Improvements/Preparation $463,000
Administrative Costs (up to 10%) $61,000
PROJECT COST TOTAL $524,000
Interest 147 000
PROJECT AND INTEREST COSTS TOTAL $671,000
The total project cost, including financing costs (interest) listed in the table above does not exceed the total
projected tax increments for the District as shown in Subsection 2-9.
Estimated capital and administrative costs listed above are subject to change among categories by
modification of the TIF Plan without hearings and notices as required for approval of the initial TIF Plan, so
long as the total capital and administrative costs combined do not exceed the total listed above. Further, the
City may spend up to 20 percent of the tax increments from the District for activities (described in the table
above) located outside the boundaries of the District but within the boundaries of the Project (including
administrative costs, which are considered to be spend outside the District), subject to all other terms and
conditions of this TIF Plan.
Subsection 2-11. Business Subsidies
Pursuant to M.S., Section 116J.993, Subd. 3, the following forms of financial assistance are not considered
a business subsidy:
(1) A business subsidy of less than $150,000;
(2) Assistance that is generally available to all businesses or to a general class of similar businesses,
such as a line of business, size, location, or similar general criteria;
(3) Public improvements to buildings or lands owned by the state or local government that serve a
public purpose and do not principally benefit a single business or defined group of businesses at
the time the improvements are made;
(4) Redevelopment property polluted by contaminants as defined in M.S., Section 116J 552, Subd. 3;
(5) Assistance provided for the sole purpose of renovating old or decaying building stock or bringing
it up to code and assistance provided for designated historic preservation districts, provided that
the assistance is equal to or less than 50% of the total cost;
(6) Assistance to provide job readiness and training services if the sole purpose of the assistance is to
provide those services;
(7) Assistance for housing;
(8) Assistance for pollution control or abatement, including assistance for a tax increment financing
hazardous substance subdistrict as defined under M.S., Section 469.174, Subd. 23;
(9) Assistance for energy conservation;
(10) Tax reductions resulting from conformity with federal tax law;
(11) Workers' compensation and unemployment compensation;
(12) Benefits derived from regulation;
(13) Indirect benefits derived from assistance to educational institutions;
(14) Funds from bonds allocated under chapter 474A, bonds issued to refund outstanding bonds, and
bonds issued for the benefit of an organization described in section 501 (c) (3) of the Internal
City of Otsego
Tax Increment Financing Plan for Tax Increment Financing District No. 1 - Great River Centre 2-5
Revenue Code of 1986, as amended through December 31, 1999;
(15) Assistance for a collaboration between a Minnesota higher education institution and a business;
(16) Assistance for a tax increment financing soils condition district as defined under M.S., Section
469.174, Subd. 19;
(17) Redevelopment when the recipient's investment in the purchase of the site and in site preparation
is 70 percent or more of the assessor's current year's estimated market value;
(18) General changes in tax increment financing law and other general tax law changes of a principally
technical nature;
(19) Federal assistance until the assistance has been repaid to, and reinvested by, the state or local
government agency;
(20) Funds from dock and wharf bonds issued by a seaway port authority;
(21) Business loans and loan guarantees of $150,000 or less;
(22) Federal loan funds provided through the United States Department of Commerce, Economic
Development Administration; and
(23) Property tax abatements granted under M.S., Section 469.1813 to property that is subject to
valuation under Minnesota Rules, chapter 8100.
The City will comply with M.S., Sections 116J.993 to 116J.995 to the extent the tax increment assistance
under this TIF Plan does not fall under any of the above exemptions.
Subsection 2-12. County Road Costs
Pursuant to M.S., Section 469.175, Subd. ]a, the county board may require the City to pay for all or part of
the cost of county road improvements if the proposed development to be assisted by tax increment will, in
the judgment of the county, substantially increase the use of county roads requiring construction of road
improvements or other road costs and if the road improvements are not scheduled within the next five years
under a capital improvement plan or within five years under another county plan.
If the county elects to use increments to improve county roads, it must notify the City within forty-five days
of receipt of this TIF Plan. In the opinion of the City and consultants, the proposed development outlined
in this TIF Plan will have little or no impact upon county roads, therefore the TIF Plan was not forwarded to
the county 45 days prior to the public hearing. The City is aware that the county could claim that tax
increment should be used for county roads, even after the public hearing.
Subsection 2-13. Estimated Impact on Other Taxing Jurisdictions
The estimated impact on other taxing jurisdictions assumes that the redevelopment contemplated by the TIF
Plan would occur without the creation of the District. However, the City has determined that such
development or redevelopment would not occur "but for" tax increment financing and that, therefore, the
fiscal impact on other taxing jurisdictions is $0. The estimated fiscal impact of the District would be as
follows if the "but for" test was not met:
City of Otsego
Tax Increment Financing Plan for Tax Increment Financing District No. 1 - Great River Centre 2-6
The estimates listed above display the captured tax capacity when all construction is completed. The tax rate
used for calculations is the estimated Pay 2016 rate. The total net capacity for the entities listed above are
based on estimated Pay 2016 figures. The District will be certified under the actual Pay 2017 rates, which
were unavailable at the time this TIF Plan was prepared.
Pursuant to M.S. Section 469.175 Subd. 2(b):
(1) Estimate of total tax increment. It is estimated that the total amount of tax increment that will be
generated over the life of the District is $610,000;
(2) Probable impact of the District on city_provided services and ability to issue debt. An impact of the
District on police protection is not expected. The City currently contracts with the Wright County
Sheriff's Office for police services. The Wright County Sheriff s Office does track all calls for service
including property -type calls and crimes. The City does not expect that the proposed development,
in and of itself, will necessitate new capital investment or require that the City expand its contract
with Wright County.
The probable impact ofthe District on fire protection is not expected to be significant. Typically new
buildings generate few calls, if any, and are of superior construction.
The impact of the District on public infrastructure is expected to be minimal. The development is
not expected to significantly impact any traffic movements in the area. The City will be extending
the water and sewer line, constructing a new road, and incurring additional storm sewer costs. Fifty
percent of the improvement costs will be funded by a Department of Employment and Economic
Development Grant, with the remainder being assessed to the property owners. Based on the
development plans, there are no additional costs associated with street maintenance, sweeping,
City of Otsego
Tax Increment Financing Plan for Tax Increment Financing District No. 1 - Great River Centre 2-7
IMPACT ON TAX BASE
Estimated
Estimated Captured
2015/Pay 2016
Tax Capacity (CTC) Percent of CTC
Total Net
Upon Completion to Entity Total
Tax Capacity
Wright County
130,336,497
81,922
0.0629%
City of Otsego
11,358,615
81,922
0.7212%
ISD No. 728
45,124,595
81,922
0.1815%
IMPACT ON TAX RATES
Estimated Pay 2016
Percent
Potential
Extension Rates
of Total CTC
Taxes
Wright County
0.399450
34.12% 81,922
32,724
City of Otsego
0.378900
32.37% 81,922
31,040
ISD No. 728
0.392330
33.51% 81,922
32,140
Other
0.000000
0.00% 81,922
0
Total
1.170680
100.00%
95,904
The estimates listed above display the captured tax capacity when all construction is completed. The tax rate
used for calculations is the estimated Pay 2016 rate. The total net capacity for the entities listed above are
based on estimated Pay 2016 figures. The District will be certified under the actual Pay 2017 rates, which
were unavailable at the time this TIF Plan was prepared.
Pursuant to M.S. Section 469.175 Subd. 2(b):
(1) Estimate of total tax increment. It is estimated that the total amount of tax increment that will be
generated over the life of the District is $610,000;
(2) Probable impact of the District on city_provided services and ability to issue debt. An impact of the
District on police protection is not expected. The City currently contracts with the Wright County
Sheriff's Office for police services. The Wright County Sheriff s Office does track all calls for service
including property -type calls and crimes. The City does not expect that the proposed development,
in and of itself, will necessitate new capital investment or require that the City expand its contract
with Wright County.
The probable impact ofthe District on fire protection is not expected to be significant. Typically new
buildings generate few calls, if any, and are of superior construction.
The impact of the District on public infrastructure is expected to be minimal. The development is
not expected to significantly impact any traffic movements in the area. The City will be extending
the water and sewer line, constructing a new road, and incurring additional storm sewer costs. Fifty
percent of the improvement costs will be funded by a Department of Employment and Economic
Development Grant, with the remainder being assessed to the property owners. Based on the
development plans, there are no additional costs associated with street maintenance, sweeping,
City of Otsego
Tax Increment Financing Plan for Tax Increment Financing District No. 1 - Great River Centre 2-7
plowing, lighting and sidewalks. However, lighting operating costs are yet to be determined. The
development in the District is expected to contribute an estimated $83,054 in availability charges.
The City also expects to collect additional connection fees for the development at the time of
permitting.
It is not anticipated that there will be any general obligation debt issued in relation to this project,
therefore there will be no impact on the City's ability to issue future debt or on the City's debt limit.
(3) Estimated amount of tax increment attributable to school district levies. It is estimated that the
amount of tax increments over the life of the District that would be attributable to school district
levies, assuming the school district's share of the total local tax rate for all taxing jurisdictions
remained the same, is $204,429;
(4) Estimated amount of tax increment attributable to county levies. It is estimated that the amount of
tax increments over the life of the District that would be attributable to county levies, assuming the
county's share of the total local tax rate for all taxing jurisdictions remained the same, is $208,139;
(5) Additional information requested by the county or school district. The City is not aware of any
standard questions in a county or school district written policy regarding tax increment districts and
impact on county or school district services. The county or school district must request additional
information pursuant to M.S. Section 469.175 Subd. 2(b) within 15 days after receipt of the tax
increment financing plan.
No requests for additional information from the county or school district regarding the proposed
development for the District have been received.
Subsection 2-14. Supporting Documentation
Pursuant to M.S. Section 469.175, Subd. 1 (a), clause 7 the TIF Plan must contain identification and
description of studies and analyses used to make the determination set forth in M.S. Section 469.175, Subd.
3, clause (b) (2) and the findings are required in the resolution approving the District. Following is a list of
reports and studies on file at the City that support the City's findings:
Wright County Resolution #15-43 and supporting minutes: City of Otsego acquisition of tax forfeit
property.
P&F Machining Request for Development Assistance Form
DEED Infrastructure Grant Application.
Subsection 2-15. Definition of Tax Increment Revenues
Pursuant to M.S., Section 469.174, Subd. 25, tax increment revenues derived from a tax increment financing
district include all of the following potential revenue sources:
1. Taxes paid by the captured net tax capacity, but excluding any excess taxes, as computed under M.S.,
Section 469.177;
2. The proceeds from the sale or lease of property, tangible or intangible, to the extent the property was
purchased by the authority with tax increments;
3. Principal and interest received on loans or other advances made by the authority with tax increments;
4. Interest or other investment earnings on or from tax increments;
5. Repayments or return of tax increments made to the Authority under agreements for districts for
City of Otsego
Tax Increment Financing Plan for Tax Increment Financing District No. 1 - Great River Centre 2-8
which the request for certification was made after August 1, 1993; and
6. The market value homestead credit paid to the Authority under M.S., Section 273.1384.
Subsection 2-16. Modifications to the District
In accordance with M.S., Section 469.175, Subd. 4, any:
1. Reduction or enlargement of the geographic area of the District, if the reduction does not meet the
requirements of M.S., Section 469.175, Subd. 4(e);
2. Increase in amount of bonded indebtedness to be incurred;
3. A determination to capitalize interest on debt if that determination was not a part of the original TIF
Plan;
4. Increase in the portion of the captured net tax capacity to be retained by the City;
5. Increase in the estimate ofthe cost ofthe District, including administrative expenses, that will be paid
or financed with tax increment from the District; or
6. Designation of additional property to be acquired by the City,
shall be approved upon the notice and after the discussion, public hearing and findings required for approval
of the original TIF Plan.
Pursuant to M.S., Section 469.175 Subd. 40, the geographic area of the District may be reduced, but shall
not be enlarged after five years following the date of certification of the original net tax capacity by the
county auditor. If an economic development district is enlarged, the reasons and supporting facts for the
determination that the addition to the district meets the criteria of M.S., Section 469.174, Subd. 12 must be
documented in writing and retained. The requirements of this paragraph do not apply if (1) the only
modification is elimination of parcel(s) from the District and (2) (A) the current net tax capacity of the
parcel(s) eliminated from the District equals or exceeds the net tax capacity ofthose parcel(s) in the District's
original net tax capacity or (B) the City agrees that, notwithstanding M.S., Section 469.177, Subd. 1, the
original net tax capacity will be reduced by no more than the current net tax capacity of the parcel(s)
eliminated from the District.
The City must notify the County Auditor of any modification to the District. Modifications to the District
in the form of a budget modification or an expansion of the boundaries will be recorded in the TIF Plan.
Subsection 2-17. Administrative Expenses
In accordance with All. S., Section 469.174, Subd. 14, administrative expenses means all expenditures of the
City, other than:
1. Amounts paid for the purchase of land;
2. Amounts paid to contractors or others providing materials and services, including architectural and
engineering services, directly connected with the physical development of the real property in the
District;
3. Relocation benefits paid to or services provided for persons residing or businesses located in the
District;
4. Amounts used to pay principal or interest on, fund a reserve for, or sell at a discount bonds issued
pursuant to MS., Section 469.178; or
5. Amounts used to pay other financial obligations to the extent those obligations were used to finance
costs described in clauses (1) to (3).
City of Otsego
Tax Increment Financing Plan for Tax Increment Financing District No. 1 - Great River Centre 2-9
For districts for which the request for certification were made before August 1, 1979, or after June 30, 1982,
and before August 1, 2001, administrative expenses also include amounts paid for services provided by bond
counsel, fiscal consultants, and planning or economic development consultants. Pursuant to MS., Section
469.176, Subd. 3, tax increment may be used to pay any authorized and documented administrative
expenses for the District up to but not to exceed 10 percent of the total estimated tax increment expenditures
authorized by the TIF Plan or the total tax increments, as defined by M.S., Section 469.174, Subd. 25, clause
(1), from the District, whichever is less.
For districts for which certification was requested after July 31, 2001, no tax increment may be used to pay
any administrative expenses for District costs which exceed ten percent of total estimated tax increment
expenditures authorized by the TIF Plan or the total tax increments, as defined inM. S., Section 469.174, Subd.
25, clause (1), from the District, whichever is less.
Pursuant to M.S., Section 469.176, Subd. 4h, tax increments may be used to pay for the County's actual
administrative expenses incurred in connection with the District and are not subject to the percentage limits
ofMS., Section 469.176, Subd. 3. The county may require payment of those expenses by February 15 of the
year following the year the expenses were incurred.
Pursuant to M.S., Section 469. 177, Subd. 11, the County Treasurer shall deduct an amount (currently .36
percent) of any increment distributed to the City and the County Treasurer shall pay the amount deducted to
the State Commissioner of Management and Budget for deposit in the state general fund to be appropriated
to the State Auditor for the cost of financial reporting of tax increment financing information and the cost of
examining and auditing authorities' use of tax increment financing. This amount may be adjusted annually
by the Commissioner of Revenue.
Subsection 2-18. Limitation of Increment
The tax increment pledged to the payment of bonds and interest thereon may be discharged and the District
may be terminated if sufficient funds have been irrevocably deposited in the debt service fund or other escrow
account held in trust for all outstanding bonds to provide for the payment of the bonds at maturity or
redemption date.
Pursuant to M.S., Section 469.176, Subd. 6:
if, after four years from the date of certification of the original net tax capacity of the tar
incrementfinancing districtpursuant to M.S., Section469.177, nodemolition, rehabilitation
or renovation of property or other site preparation, including qualified improvement of a
street adjacent to a parcel but not installation of utility service including sewer or water
systems, has been commenced on a parcel located within a tax increment financing district
by the authority or by the owner oftheparcel in accordance with the tax incrementfinancing
plan, no additional tax increment may be taken from that parcel, and the original net tax
capacity of that parcel shall be excluded from the original net tax capacity of the tax
increment financing district. If the authority or the owner of the parcel subsequently
commences demolition, rehabilitation or renovation or other site preparation on thatparcel
including qualified improvement of a street adjacent to that parcel, in accordance with the
tax incrementfinancingplan, the authority shall certify to the county auditor that the activity
has commenced and the county auditor shall certify the net tax capacity thereof as most
recently certified by the commissioner of revenue and add it to the original net tax capacity
ofthe tax incrementfrnancingdistrict. The county auditor must enforce theprovisions ofthis
subdivision. The authority must submit to the county auditor evidence that the required
City of Otsego
Tax Increment Financing Plan for Tax Increment Financing District No. 1 - Great River Centre 2-10
activity has taken place for each parcel in the district. The evidence for a parcel must be
submitted by February I of the fifth year following the year in which the parcel was certified
as included in the district. For purposes of this subdivision, qualified improvements of a
street are limited to (1) construction or opening of a new street, (2) relocation of a street,
and (3) substantial reconstruction or rebuilding of an existing street.
The City or a property owner must improve parcels within the District by approximately February 2020 and
report such actions to the County Auditor.
Subsection 2-19. Use of Tax Increment
The City hereby determines that it will use 100 percent of the captured net tax capacity of taxable property
located in the District for the following purposes:
1. To pay the principal of and interest on bonds issued to finance a project;
2. To finance, or otherwise pay the capital and administration costs of Development District No. 1
pursuant to M.S., Sections 469.124 to 469.133;
3. To pay for project costs as identified in the budget set forth in the TIF Plan;
4. To finance, or otherwise pay for other purposes as provided in M.S., Section 469.176, Subd. 4;
5. To pay principal and interest on any loans, advances or other payments made to or on behalf of the
City or for the benefit of Development District No. 1 by a developer;
b. To finance or otherwise pay premiums and other costs for insurance or other security guaranteeing
the payment when due of principal of and interest on bonds pursuant to the TIF Plan or pursuant to
M.S., Chapter 462C. M.S., Sections 469.152 through 469.165, and/or M.S., Sections 469.178; and
7. To accumulate or maintain a reserve securing the payment when due of the principal and interest on
the tax increment bonds or bonds issued pursuant to M.S., Chapter 4620 M.S., Sections 469.152
through 469.165, and/or M.S., Sections 469.178.
These revenues shall not be used to circumvent any levy limitations applicable to the City nor for other
purposes prohibited by MS., Section 469.176, Subd. 4.
Tax increments generated in the District will be paid by Wright County to the City for the Tax Increment
Fund of said District. The City will pay to the developer(s) annually an amount not to exceed an amount as
specified in a developer's agreement to reimburse the costs of site improvements. Remaining increment funds
will be used for City administration (up to 10 percent) and for the costs of public improvement activities
outside the District.
Subsection 2-20. Excess Increments
Excess increments, as defined in M.S., Section 469.176, Subd. 2, shall be used only to do one or more of the
following:
1. Prepay any outstanding bonds;
2. Discharge the pledge of tax increment for any outstanding bonds;
3. Pay into an escrow account dedicated to the payment of any outstanding bonds; or
4. Return the excess to the County Auditor for redistribution to the respective taxing jurisdictions in
proportion to their local tax rates.
The City must spend or return the excess increments under paragraph (c) within nine months after the end
of the year. In addition, the City may, subject to the limitations set forth herein, choose to modify the TIF
City of Otsego
Tax Increment Financing Plan for Tax Increment Financing District No. 1 - Great River Centre 2-11
Plan in order to finance additional public costs in Development District No. 1 or the District.
Subsection 2-21. Requirements for Agreements with the Developer
The City will review any proposal for private development to determine its conformance with the
Development Program and with applicable municipal ordinances and codes. To facilitate this. effort, the
following documents may be requested for review and approval: site plan, construction, mechanical, and
electrical system drawings, landscaping plan, grading and storm drainage plan, signage system plan, and any
other drawings or narrative deemed necessary by the City to demonstrate the conformance ofthe development
with City plans and ordinances. The City may also use the Agreements to address other issues related to the
development.
Pursuant to M.S., Section 469.176, Subd. 5, no more than 10 percent, by acreage, of the property to be
acquired in the District as set forth in the TIF Plan shall at any time be owned by the City as a result of
acquisition with the proceeds of bonds issued pursuant to M.S., Section 469.178 to which tax increments from
property acquired is pledged, unless prior to acquisition in excess of 10 percent of the acreage, the City
concluded an agreement for the development of the property acquired and which provides recourse for the
City should the development not be completed.
Subsection 2-22. Assessment Agreements
Pursuant to M.S., Section 469.177, Subd. 8, the City may enter into a written assessment agreement in
recordable form with the developer ofproperty within the District which establishes a minimum market value
of the land and completed improvements for the duration of the District. The assessment agreement shall be
presented to the County Assessor who shall review the plans and specifications for the improvements to be
constructed, review the market value previously assigned to the land upon which the improvements are to be
constructed and, so long as the minimum market value contained in the assessment agreement appears, in the
judgment of the assessor, to be a reasonable estimate, the County Assessor shall also certify the minimum
market value agreement. The City does expect to enter into an assessment agreement in connection with the
District.
Subsection 2-23. Administration of the District
Administration of the District will be handled by the City Administrator.
Subsection 2-24. Annual Disclosure Requirements
Pursuant to M.S., Section 469.175, Subds. 5, 6, and 6b the City must undertake financial reporting for all tax
increment financing districts to the Office of the State Auditor, County Board and County Auditor on or
before August 1 of each year. M.S., Section 469.175, Subd. 5 also provides that an annual statement shall be
published in a newspaper of general circulation in the City on or before August 15.
If the City fails to make a disclosure or submit a report containing the information required by M.S., Section
469.175 Subd.. 5 and Subd. 6, the Office of the State Auditor will direct the County Auditor to withhold the
distribution of tax increment from the District.
Subsection 2-25. Reasonable Expectations
As required by the TIF Act, in establishing the District, the determination has been made that the anticipated
development would not reasonably be expected to occur solely through private investment within the
City of Otsego
Tax Increment Financing Plan for Tax Increment Financing District No. 1 - Great River Centre 2-12
reasonably foreseeable future and that the increased market value of the site that could reasonably be expected
to occur without the use of tax increment financing would be less than the increase in the market value
estimated to result from the proposed development after subtracting the present value of the projected tax
increments for the maximum duration ofthe District permitted by the TIF Plan. In making said determination,
reliance has been placed upon written representation made by the developer to such effects and upon City
staff awareness of the feasibility of developing the project site(s) within the District. A comparative analysis
of estimated market values both with and without establishment of the District and the use of tax increments
has been performed as described above. Such analysis is included with the cashflow in Appendix D and
within Appendix F, and indicates that the increase in estimated market value of the proposed development
(less the indicated subtractions) exceeds the estimated market value of the site absent the establishment of
the District and the use of tax increments.
Subsection 2-26. Other Limitations on the Use of Tax Increment
1. General Limitations. All revenue derived from tax increment shall be used in accordance with the TIF
Plan. The revenues shall be used to finance, or otherwise pay the capital and administration costs of
Development District No. 1 pursuant to M.S., Sections 469.124 to 469.134. Tax increments may not be
used to circumvent existing levy limit law. No tax increment may be used for the acquisition,
construction, renovation, operation, or maintenance of a building to be used primarily and regularly for
conducting the business of a municipality, county, school district, or any other local unit of government
or the state or federal government. This provision does not prohibit the use of revenues derived from tax
increments for the construction or renovation of a parking structure.
Pooling Limitations. At least 80 percent of tax increments from the District must be expended on
activities in the District or to pay bonds, to the extent that the proceeds of the bonds were used to finance
activities within said district or to pay, or secure payment of, debt service on credit enhanced bonds. Not
more than 20 percent of said tax increments may be expended, through a development fund or otherwise,
on activities outside of the District except to pay, or secure payment of, debt service on credit enhanced
bonds. For purposes of applying this restriction, all administrative expenses must be treated as if they
were solely for activities outside of the District.
Five Year Limitation on Commitment of Tax Increments. Tax increments derived from the District shall
be deemed to have satisfied the 80 percent test set forth in paragraph (2) above only if the five year rule
set forth in M.S., Section 469.1763, Subd. 3, has been satisfied; and beginning with the sixth year
following certification of the District, 80 percent of said tax increments that remain after expenditures
permitted under said five year rule must be used only to pay previously committed expenditures or credit
enhanced bonds as more fully set forth in MS., Section 469.1763, Subd. S.
Subsection 2-27. Summary
The City of Otsego is establishing the District to preserve and enhance the tax base, and provide employment
opportunities in the City. The TIF Plan for the District was prepared by Ehlers & Associates, Inc., 3060
Centre Pointe Drive, Roseville, Minnesota 55113-1105, telephone (651) 697-8500.
City of Otsego
Tax Increment Financing Plan for Tax Increment Financing District No. 1 - Great River Centre 2-13
Appendix A
Project Description
The City of Otsego acquired the parcels to be included in the TIF District in partnership with Wright County
in 2015 in order to facilitate development of a manufacturing business to increase the City and County's tax
base and bring jobs to the community. The 13.9 acre former tax forfeit site within the Great River Centre
development has remained vacant since it was platted eight years ago with little prospect for development
due to extraordinary site development costs to include: substantial grading to create buildable area and the
need to extend water, sewer, storm sewer, and street improvements through the site to provide access for
future industrial development.
P & F Machining, Inc. is proposing to construct and occupy a 54,400 square foot manufacturing facility on
the site with an estimated construction cost of $6.8 million. P & F Machining, Inc. is a precision
manufacturer who offers high-quality custom machining for the aerospace, medical, agricultural, heavy
equipment and medical trial industries. It will relocate its 40 full time equivalent employees to the facility
with plans for additional employment and expansion onsite. Construction is expected to begin in early 2016
with planned occupancy in the Fall of 2016. Tax increment from this TIF district will be utilized to reimburse
the developer for eligible site development costs incurred to bring the lot up to a buildable condition.
Appendix A-1
Appendix B
Map of Development District No. 1 and the District
Appendix B_q
Tax Increment Financing District No. 1 -
Great River Centre
Development District No. 1
City of Otsego
Wright County, Minnesota
U cera Otsego
Albertville
TIF District Inset
Tax Increment Financing
District No. 1 -
Great River Centre
1-J
The boundaries of Development District No. I
are coterminous with the corporate
boundaries of the City of Otsego.
AIN
Appendix C
Description of Property to be Included in the District
The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the
parcel listed below.
I Parcel Numbers I Address I Owner
118-266-000010*I Outlot A, great River Centre of I City of Otsego
Otsego 3
The property is being replatted to: Lot 1, Block 1 and Outlot A Great River Centre Fourth Addition. Lot 1
will be transferred to P & F Properties, Inc. Legal descriptions will be provided prior to the request for
certification of the District.
Appendix C-1
Appendix D
Estimated Cash Flow for the District
Appendix D-1
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Appendix E
Minnesota Business Assistance Form
(Minnesota Department of Employment and Economic Development)
A Minnesota Business Assistance Form (MBAF) should be used to report and/or update each calendar year's
activity by April 1 of the following year.
Please see the Minnesota Department of Employment and Economic Development (DEED) website at
http://www.deed.state.mn.us/Cominunity/subsidies/MBAFFonn.htm for information and forms.
Appendix E-1
Appendix F
Findings Including But/For Qualifications
To be added prior to the public hearing
But -For Analysis
Current Market Value
166,900
New Market Value - Estimate
4,263,000
Difference
4,096,100
Present Value of Tax Increment
662,739
Difference
3,433,361
Value Likely to Occur Without TIF is Less Than: 3,433,361
Appendix F-1
PLANNING COMMISSION
CITY OF OTSEGO
WRIGHT COUNTY, MINNESOTA
RESOLUTION NO. 2016-01
RESOLUTION OF TEE CITY OF OTSEGO PLANNING COMMISSION
FINDING THAT A DEVELOPMENT PROGRAM FOR DEVELOPMENT
DISTRICT NO. 1 AND A TAX INCREMENT FINANCING PLAN FOR TAX
INCREMENT FINANCING DISTRICT NO. 1 - GREAT RIVER CENTRE
CONFORM TO THE GENERAL PLANS FOR THE DEVELOPMENT AND
REDEVELOPMENT OF THE CITY.
WHEREAS, the City of Otsego (the "City") has proposed to adopt a Development Program for
Development District No. 1 (the "Development Program") and a Tax Increment Financing Plan for Tax
Increment Financing District No. 1 - Great River Centre (the "TIF Plan") therefor (the Development
Program and the TIF Plan are referred to collectively herein as the "Program and Plan") and has
submitted the Program and Plan to the City Planning Commission (the "Commission") pursuant to
Minnesota Statutes, Section 469.175, Subd. 3, and
WHEREAS, the Commission has reviewed the Program and Plan to determine their conformity with
the general plans for the development and redevelopment of the City as described in the comprehensive
plan for the City.
NOW, THEREFORE, BE IT RESOLVED by the Commission that the Program and Plan conform to
the general plans for the development and redevelopment of the City as a whole.
Dated: February 1, 2016
Chair
ATTEST:
Secretary