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09-24-12 EDA 0 Lseo TF MINNESOTA MEMORANDUM TO: EDA Commissioners FROM: Lori Johnson, City Administrator DATE: September 21, 2012 SUBJECT: September 24, 2012, EDA Meeting Agenda item 2: The EDA met last on April 9, 2012, to discuss economic development incentives, policies, and goals. The EDA directed me to draft policies for review to further the City's economic development efforts. The expansion of economic development involvement and the development of policies to encourage development meets the City's strategic goal to increase industrial and commercial development. Attached are several proposed policies for EDA discussion and future adoption: By -Laws; Business Subsidy Policy; Tax Increment Policy; Tax Abatement Policy; Request for Financial Assistance Form; and, Fundability Guidelines Form. The one remaining policy that is needed, but has not yet been drafted, is an Economic Development Loan Fund Policy. At Monday's meeting I will go through the draft policies to solicit your input. The policies will be revised with your desired changes and will be brought back to the EDA for approval later this year. Prior to adoption, they will be thoroughly reviewed by the City Attorney. Some of the points of discussion include: • The number of jobs required for each $20,000 (or whatever amount the EDA chooses) of City assistance • The amount of owner equity required • The types of projects allowed • The minimum square feet of new construction to be considered for TIF assistance • The application fee • Establishment of advisory committees such as a finance committee Agenda item 3: At the meeting I will provide an update of recent development meetings and activities. We have certainly experienced an increase in activity in the north east corner of the City with the sale of several of the buildings and increased interested in filling previously empty spaces. As you know, housing construction is at a much higher pace than last year which is encouraging to retailers Finally, attached is information from MNCAR about the upcoming MNCAR Expo. The City is currently not a member of MNCAR; however, the exposure the City can gain by being a member is substantial. 2 ITEM 1. 7 EDA MEETING APRIL 9, 2012 *7:00 PM 1. President Stockamp calls the EDA Meeting to order. President Stockamp called the EDA meeting to order at 7:24 PM. Roll Cali: President Jessica Stockamp; members: Vern Heidner, Dan Scharber, Doug Schroeder and Tom Darkenwald. Staff: Lori Johnson, City Administrator; Daniel Licht, City Planner; Tami Loff, City Clerk and Stephen Wensman, Economic Development Intern. 2. Consider approval of the following minutes. 2.1 January 9, 2012 EDA minutes. Member Darkenwald motioned to approve as written. Seconded by Member Scharber. All in favor. Motion carried. 3. Discussion of Economic Development incentives policies, and goals. Economic Development Intern Wensman presented a summary of his findings and data he gathered which included Economic Development Authority, Business Retention and Expansion initiative and his recommendations. There was discussion on the Business Retention and Expansion meetings held in March. Some items of topic included signage, identity and image. City Administrator Johnson said that City staff will work with MnDot on signage on Highway 101. City Administrator Johnson discussed the EDA powers and policies, goals, tools available and target audience. The EDA agreed on items presented and directed the City Administrator to draft policies for the incentives discussed for EDA approval at a future meeting City Administrator Johnson presented some possible EDA bylaw revisions and said if the EDA approves of the proposed revisions, she will make the changes and call another meeting to adopt them. The EDA agreed. The EDA also reviewed a draft Business Subsidy Policy. 4. Any other business. No other items. 5. Adjourn. Member Scharber motioned to adjourn. Seconded by member Schroeder. All in favor. Motion carried. EDA meeting adjourned at 9:25 PM. President Jessica Stockamp Attest: Tami Loff, Assistant Secretary MISSION, GOALS AND OBJECTIVES OF THE OTSEGO ECONOMIC DEVELOPMENT AUTHORITY A. Mission Statement: Operating under the authority of the City Council, the EDA shall be the chief economic development agency for the City. B. Goal: The EDA shall work to improve the economic environment of the City of Otsego through initiatives that increase employment, broaden the tax base, attract new enterprises and resources to the community and strengthen the city's appeal as a place to do business in accordance with the City's Comprehensive Plan. C. General Objectives: a. Business Retention and Expansion: The EDA shall partner with businesses to develop programs that help existing businesses to remain in the City of Otsego and to grow, and to achieve goals that are consistent with the city's Comprehensive Plan. b. Outreach: The EDA shall develop programs and incentive to attract new business initiatives, resources and employment opportunities and shall pursue projects that enhance the city's competitiveness and appeal as a place to live and do business. c. Development Coordination: The EDA shall work with the City to ensure the Comprehensive Plan and other planning decisions create and preserve property for business expansion and development in the City. BY -LAWS OF THE OTSEGO ECONOMIC DEVELOPMENT AUTHORITY 1. The Authority Section 1.1. Name of Authority. The name of the Authority shall be the Otsego Economic Development Authority (hereinafter, the "EDA "), and its governing body shall be called the Authority Commission (hereinafter, the "Authority "). Section 1.2. Seal. As required by Minnesota Statutes, Section 469.096, Subd. 1, the Authority shall have an official seal. 2. Organization Section 2.1. Authority. The Authority shall consist of five (5) members of which one (1) shall be the Mayor and at least one (1) a City Councilmember. The Mayor shall present candidates for the Economic Development Authority to the City Council for consideration of approval. As required by Minnesota State Statute, Section 469.095, Subd. 2, those initially appointed to the Board shall be appointed for terms of two, three, four, five, and six years respectively. Thereafter all commissioners shall be appointed for six -year terms. Candidates for the Economic Development Authority shall have an interest in advancing the business and economic climate of the City but need not be residents of the City. Section 2.2 Officers. The officers of the EDA shall consist of an elected Chairperson (Chair) and and Vice - Chair. The offices of Secretary, Treasurer and an Assistant Treasurer will be appointed by the EDA Board. The Chair and Vice -Chair shall be members of the Board and shall be elected at the annual meeting of the Board. No Commissioner may serve as Chair and Vice -Chair at the same time. The offices of Treasurer, Secretary and Assistant Treasurer need not be held by a Commissioner. Section 2.3. Chairperson. The Chairperson (Chair) shall preside at all meetings of the Board. Section 2.4. Vice - Chair. The Vice -Chair shall preside at any meeting of the Board in the absence of the Chair and may exercise all powers and perform all responsibilities of the Chair if the Chair cannot exercise or perform the same due to absence or other inability. Section 2.5. Treasurer. The Treasurer shall receive and be responsible for EDA money, shall disburse EDA money by check only, keep an account of all EDA receipts and disbursements and the nature and purpose relating thereto, shall file the EDA's financial statement with its Secretary at least once a year as set by the EDA, and be responsible for the acts of the Assistant Treasurer. Section 2.6. Assistant Treasurer. The Finance Director for the City shall serve as the Assistant Treasurer to the EDA and shall have all powers and duties of the Treasurer if the Treasurer is absent or disabled. Section 2.7. Secretary. Shall keep the minutes of all meetings of the Board and shall maintain or cause to be maintained all records of the EDA. The Secretary shall also have such additional duties and responsibilities as the Board may from time to time and by resolution prescribe. Section 2.8. Executive Director. The City Administrator or designee shall serve as the Executive Director of the EDA, shall be chief appointed executive officer of the EDA, and shall have such additional responsibilities and authority as the Board may from time to time by resolution prescribe. The City Administrator may designate an assistant. Section 2.9. EDA Liaisons. The Board may appoint liaisons to partner organizations, city advisory boards and commissions and other local groups to facilitate a two way flow of information between those groups and the EDA. Liaisons shall have a communication function only and are neither decision makers nor voting members of the organizations to which they are assigned. Section 2.10. Subcommittees and Working Groups: The Board may, by majority vote, appoint advisory subcommittees consisting of no more than two (2) Board members, and working groups of community members, to work on projects relating to EDA goals. Working groups shall meet for the duration of their assigned project and may be disbanded by a majority vote of the Board. Subcommittees and working groups may not meet with participation of staff unless authorized by the Board. Subcommittees and working groups may vote to decide questions for the group, but their votes are not binding on the EDA. Meetings of subcommittees and working groups shall be called only by the EDA Liaison or the Executive Director. Section 2.11. Additional Duties. The officers of the EDA shall perform such other duties and functions as may from time to time be required by the Board or the bylaws or rules and regulations of the EDA. Section 2.12. Vacancies. Board members are appointed by the Mayor and approved by the City Council. Vacancies on the EDA will be filled at the discretion of the Mayer and City Council. Section 2.13. Increase in Authority Members. The Authority may be increased from five to seven members by a resolution adopted by the city council following the procedure provided for modifying the enabling resolution in Minnesota State Statute, Section 469.093. Section 2.14. 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. 3. Procedures of Authority Commissioners Section 3.1. Annual Meeting. The Board shall hold an annual meeting for the purpose of organization, the election of officers and the transaction of such other business as may properly come before the meeting. Section 3.2. Regular Meetings. The board may hold regular meetings according to a meeting schedule, if any, adopted or revised from time to time by the Board. Section 3.3. Special Meetings. Special meetings of the EDA may be called by the Chair, Executive Director, or two (2) members of the Board for the purpose of transacting any business designated in the call. The call for a special meeting may be delivered at any time prior to the time of the proposed meeting to each Commissioner or may be mailed to the business or home address of each Commissioner at least two (2) days prior to the date of such special meeting. At least three days prior to a special meeting, written notice of its date, time, place and purpose shall be (a) mailed or delivered to anyone who has specifically requested notice of special meetings or, as an alternative (b) posted as required by law. At such special meeting, no business shall be considered other than as designated in the call, but if all of the members of the EDA are present at a special meeting; any and all business may be transacted at such special meeting. Section 3.4. Quorum. A quorum of the five member Board shall consist of three Commissioners. In the absence of a quorum, no official action may be taken by, on behalf of, or in the name of the Board or EDA. Section 3.5. Adoption of Resolutions. Resolutions of the Board shall be deemed adopted if approved by not less than simple majority of all Commissioners present and constituting a quorum. Section 3.6. Removal. 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. Section 3.7. Rules of Order. The meetings of the Board shall be governed by the most recent edition of Robert's Rules of Order. 4. Duties and Powers Section 4.1. Duties and powers. The Officers shall have the duties and powers of their offices and other powers and duties as may be delegated by the EDA, the Bylaws, and Minnesota State Statutes (the Act). No action of the EDA may be in conflict with the City's current Comprehensive Plan or controls instituted to effectuate the Plan. All modifications of the Enabling EDA Resolution must be presented as a recommendation to the City Council. Section 4.1.1. City Administrator. The City Administrator shall attend all meetings of the EDA, shall serve as a consultant and advisor to the EDA. Section 4.1.2. Conflicts of Interest. Except as authorized by Minnesota Statute 471.88, a Member, Officer or employee of the EDA may not have a substantial conflict of interest in projects undertaken by the EDA. Section 4.2. Development Districts. The EDA may create and define the boundaries of economic development districts and use the powers as allowed by city ordinance granted to carry out economic development in these districts. Section 4.3. Acquire property. The EDA may acquire, by lease, purchase, devise or through condemnation proceedings, title in property to create economic development in the Development Districts. Property acquired, leased, owned, controlled, used or occupied by the EDA for any of the purposes of Section 469.101, Subd. 2 of Minnesota Statutes is for public purposes and is exempt from taxation by the state or its political subdivisions. The exemption from property taxes only applies while the EDA holds the property for its own purpose(s). Section 4.3.1. Options. The EDA may negotiate and acquire options to purchase, sell or lease property for the purpose of economic development. Section 4.4. Contracts. The EDA may make contracts for the purpose of economic development. Section 4.5. Limited partnerships. The EDA may become a limited partner in a partnership. Section 4.6. Rights and easements. The EDA may acquire rights or easements for a term of years or perpetually. Section 4.7. Receive public property. The EDA may accept land, money or other assistance, whether by gift, grant, loan or otherwise in any form from federal, state, local government, any agency of either or a local division of state government. Section 4.8. Public facilities. The EDA may operate or maintain a public parking facility, or other public facilities to promote economic development in the area. Section 4.9. Other powers. The EDA shall have such other powers as authorized as described in the Act. 5. Limit of Powers Section 5.1. General obligation and revenue bonds. The EDA may issue general obligation bonds or revenue bonds after receiving the approval and authorization through a majority vote of City Council and in accordance with the Act. Section 5.2. Comprehensive Plan. The official actions of the EDA must be consistent with the adopted Comprehensive Plan of the City, and any official controls implementing the Comprehensive Plan. 6. Budget Section 6.1. Fiscal Year. The fiscal year of the EDA shall be the same as the City's fiscal year. Section 6.2. Fiscal budget. The EDA, if requesting funding, shall prepare an annual budget to coincide with the City's budget process. The City shall establish a special fund designated as the "Economic Development Authority Fund." The EDA shall, if requesting funding, recommend a budget and submit it to the City Council for final approval. The City Council shall appropriate to the fund money it deems necessary for the EDA's purposes. All payments drawn on the account of the EDA shall be by written statement signed by two officers of the EDA, directing the Executive Director to prepare and deliver payment. All expenditures shall be consistent with the operation of the EDA pursuant to the Act. Section 6.3. Levy. Levy authority shall be consistent with Minnesota Statute 469.033, Subd. 6. and rest with the City Council. Section 6.4. Audit. All financial records of the EDA shall be prepared, audited, and filed with the City, said records being coordinated by the City Finance Department at the direction of the City Administrator. Section 6.5. Treasurer's Bonds. The Treasurer shall give bond to the state conditioned for the faithful discharge of official duties. The bond must be approved as to form and surety by the EDA and filed with the Secretary and must be for twice the amount of money likely to be on hand at any one time as determined at least annually by the EDA, provided, however, that said bond must not exceed $300,000. Section 6.6. Checks. An EDA check must be signed by the Chair and Executive Director. The check must state the name of the payee and the nature for which the check was issued. Section 6.7. Financial Statements. The EDA shall examine the financial statement together with the Treasurer's vouchers, which financial statement shall disclose all receipts and disbursements, their nature, money on hand and the purposes to which it shall be applied, the EDA's credits and assets and its outstanding liabilities. If the EDA finds the financial statement and Treasurer's vouchers to be correct, it shall approve them by resolution. Section 6.8. Report to City. The EDA, if it has received or expended funds, shall annually, at a time designated by the City, make a report to the City Council giving a detailed account of its activities and of its receipts and expenditures for the preceding calendar year. Section 6.9. Budget to City. The EDA shall if requesting funding, at a time designated by the City, send its budget to the City Council which budget includes a written estimate of the amount of money needed by the EDA from the City in order for the EDA to conduct business during the upcoming fiscal year. 7. Miscellaneous Section 7.1. Employees. The EDA shall utilize City staff and facilities as it may require as assigned by the Executive Director. Section 7.2. Execution of Contracts. All contracts, notes, and other written agreements or instruments to which the EDA is a party or signatory or by which the EDA may be bound shall be executed by the Chair and /or the Executive Director, or by such other Commissioners or Officers of the EDA as the Board may by resolution prescribe. Section 7.3. Amendment of By -Laws. These By -Laws may be amended by the Board by majority vote of Commissioners, provided that any such proposed amendment shall first have been delivered to each Commissioner at least five days prior to the meeting at which such amendment is considered. The foregoing By -Laws were duly adopted by the Board of Commissioners of the Otsego Economic Development Authority on the _ day of , 2012. BUSINESS SUBSIDY POLICY I. PURPOSE This policy provides the criteria that every business subsidy shall be evaluated against. The business subsidy criteria included in this policy applies to all potential business subsidy recipients. In addition to this policy, every business subsidy will be subject to the requirements of Minnesota (MN) Statutes. II. POLICY A. This policy is adopted for the purposes of the business subsidies act (the Act), as outlined in Minnesota Statutes Section 1163.993 through Section 1163.995. Terms used in this policy are intended to have the same meaning as used in the Act. This policy shall be applied as outlined in Section 1163.993, Subdivision 3, of the Minnesota Statues. B. A business subsidy must meet a public purpose, which may include, but not be limited to, increasing the tax base. The City of Otsego (City) and Otsego Economic Development Authority (Authority) shall consider various public purposes including but not limited to creation or retention of jobs, transportation and utility improvements, elimination of blight, and other development and redevelopment goals established by the City, and the Comprehensive Plan. C. Except as described in D and E, a business subsidy must result in wage increase or the creation or retention of jobs, which will pay at least 150 - percent of the State minimum hourly wage, exclusive of benefits, with the wage goals specifically set forth in the business subsidy agreement. D. Wage increase or job creation or retention is not required for businesses subsidies as long as the grantor identifies an alternate public purpose in addition to tax base increase. If after a public hearing, the increase in wages or creation or retention of jobs is determined not to be a goal, the wage and job goals may be set at zero. E. In lieu of job creation or retention, other measurable, specific, and tangible goals shall be established. Examples of tangible goals may include redevelopment, transportation, utility improvements, or redevelopment. F. If wage increase or job creation or retention is identified as the public purpose, goals must be established for wage increase or the number of jobs created; in cases where job loss is specific and demonstrable, goals must be established for number of jobs retained. As set forth in the business subsidy agreement, wage increase or job creation or retention (based on wage floor set forth in the agreement) shall be attained within two years of the benefit date. G. The Authority, as authorized by the City, shall hold a public hearing after notice is published in the local newspaper, for all requests for business subsidies of $150,000 or more. The Authority must hold a public hearing for any subsidies under $150,000 that do not include job and wage goals. Page 1 of 25 September 24, 2012 H. The business subsidy agreement must stipulate that the recipient will continue operations at the site where the subsidy is used for at least five years after the benefit date. Any development agreement or contract for public assistance as defined in Minnesota Statutes shall contain, at a minimum, the following provisions: 1. Description of the subsidy including the amount and type of subsidy 2. Identification of the specific tax increment financing district, if tax increment financing assistance is to be provided 3. Statement of public purposes for the subsidy in addition to tax base increase 4. Identification of measurable, specific, and tangible goals for the subsidy 5. Description of the financial obligation of the recipient if the goals are not met 6. Statement of why the subsidy is needed 7. Statement of commitment to continue operations for at least five years in the jurisdiction where the subsidy is used - the five year commitment may be waived if the grantor, after a public hearing, approves the recipient's request to move 8. Identification of the name and address of the parent corporation of the recipient 9. Identification of all financial assistance by all grantors for the project; and reporting requirements 10. Identification of specific wage floor for the wages to be paid, if job creation or retention is a goal, of at least the minimum set forth in Item C of this policy, and for at least two years after the benefit date or until the goals are met, whichever is later J. When granting a business subsidy, the City or the Authority may deviate from the criteria in this Policy by documenting in writing the reason for the deviation and filing that explanation with the Department of Employment and Economic Development along with the grantor's next annual report on business subsidies. The City or the Authority will not approve a deviation from these criteria unless the applicant provides a written request describing why the deviation is needed to permit the proposed project to proceed, and the grantor determines in its sole discretion that such deviation is reasonable and necessary. K. Each business subsidy agreement will require a recipient failing to meet the specified goals by the specified date to pay back the assistance plus interest, or at the request of the City or the Authority, to the account created under Minnesota Statutes, Section 1163.551. Any repayment shall be prorated to reflect partial fulfillment of goals. The interest rate shall be set at no less than the implicit deflator as defined by Minnesota Statutes, Section 1163.994, Subdivision 6. The City or the Authority may, after a public hearing, extend the period for meeting job and wage goals for up to one year. The City or the Authority may extend the period for meeting any other goals for any period specified by the City or the Authority, by documenting in writing the reason for the extension and filing that explanation with the Department of Employment and Economic Development along with the grantor's next annual report on business subsidies. L. The City and the Authority reserve the right to modify this Policy, from time to time in accordance with Minnesota Statutes. M. The following supplemental policies are attached hereto and made part of the Business Subsidy Policy: Attachment 1: Tax Increment Financing Policy Attachment 2: Tax Abatement Policy Page 2 of 25 September 24, 2012 III. PROCEDURE To the extent that a business subsidy requires tax increment financing, it must meet this Business Subsidy Policy and the Tax Increment Financing Policy. To the extent that a business subsidy requires tax abatement assistance, it must meet this Business Subsidy Policy and the Tax Abatement Policy. Any other business subsidy must meet this Business Subsidy Policy. IV. RESPONSIBILITY AND AUTHORITY The responsibility and authority for the City and the Authority to adopt a Business Subsidy Policy is established by Minnesota Statutes 1163.993 -995, which sets requirements for subsidies allocated to businesses by state or local government agencies. Administrative implementation of this policy shall be the responsibility of the City Administrator. Page 3 of 25 September 24, 2012 ATTACHMENT 1 TAX INCREMENT FINANCE POLICY I. PURPOSE This policy is to serve as a guideline for the use of tax increment financing (TIF) above and beyond the requirements and limitations set forth by State Law. This policy shall be used as a guide in the processing and review of applications requesting tax increment assistance. The fundamental purpose of tax increment financing in the City of Otsego is to encourage desirable development that would not otherwise occur but for the assistance provided through TIF consistent with the Business Subsidy Policy. The City of Otsego is granted the power to utilize TIF by the Minnesota Tax Increment Financing Act, as amended. It is the intent of the City to provide the minimum amount of TIF at the shortest term required for the project to proceed. The City reserves the right to approve or reject projects on a case by case basis, taking into consideration established policies, project criteria, and demand on city services in relation to the potential benefits from the project. Meeting policy criteria does not guarantee the award of business assistance to the project. Approval or denial of one project is not intended to set precedent for approval or denial of another project. The City Council can deviate from this policy for projects that supersede the objectives identified herein. II. OBJECTIVES OF TAX INCREMENT FINANCING Tax Increment Financing (TIF) uses the increased property taxes generated by new real estate development within a tax increment district to pay for certain eligible costs associated with the development. As a matter of adopted policy, the City will consider using TIF to assist private development projects that will achieve one or more of the following objectives: • To retain local jobs and /or increase the number and diversity of jobs that offer stable employment and /or attractive wages and benefits. Preference will be given to higher paying jobs that also provide benefits such as health care coverage. • Projects that provide value in the forms of needed transportation and other utility infrastructure improvement that would be completed in conjunction with the project. • To encourage additional unsubsidized private development in the area, either directly or indirectly through "spin off" development. • To facilitate the development process and to achieve development on sites which would not otherwise be developed but /for the use of TIF. Page 4 of 25 September 24, 2012 • Projects that improve the quality of life in the City by providing a desirable good or service and address an unmet demand in the community. • To contribute to the implementation of other public policies, as adopted by the city from time to time, such as the promotion of quality urban or architectural design, energy conservation, and decreasing capital and /or operating costs of local government III. POLICY The City of Otsego (City) and Otsego Economic Development Authority (Authority) recognize that local government plays a critical role in enhancing the vitality of our community. All reasonable means shall be utilized to leverage private business development and redevelopment in the city consistent with this and other policies. Tax increment financing is an important and useful tool in attracting and retaining businesses. The fundamental principle that makes tax increment financing viable is that it is designed to encourage development that would not otherwise occur. The Authority, as authorized by the City, shall be responsible to determine that (1) a project would not occur "but for" the assistance provided through tax increment financing; and (2) no other development would occur on the relevant site without tax increment assistance, that could create a larger market value increase than the increase expected from the proposed development (after adjusting for the value of the tax increment). The Authority shall consider tax increment financing in cases that serve to accomplish targeted city goals for development as they may change over time. These goals include, but are not limited to projects that will (1) retain local jobs and /or increase the number and diversity of jobs that offer stable employment and /or attractive wages and benefits;(2) encourage additional unsubsidized private development in the area, either directly or indirectly through "spin off" development; (3) facilitate the development process and to achieve development on sites which would not otherwise be developed but /for the use of TIF; or (3) projects that will assist with the retention and expansion of businesses, and projects that will expand the city's tax base. Creation of Tax Increment Financing (TIF) Districts The Authority shall consider the creation of any of the general types of TIF Districts allowed by Minnesota Statutes when doing so is consistent with the development goals of the City. TIF Districts are the specific parcels within a Project Area from which tax increment is captured. Minnesota Statutes currently defines five general types of TIF Districts, which the Authority may consider: 1) Redevelopment District 2) Renewal and Renovation District 3) Soils Condition District 4) Housing District 5) Economic Development District 6) Compact Development District; Page 5 of 25 September 24, 2012 In addition to these five general types of TIF Districts, defined by Minnesota Statutes, the Authority may also consider the creation of TIF Districts as authorized by applicable special tax increment financing legislation. Tax increment financing is a business subsidy under Minnesota Statutes and is governed by strict legal requirements. Therefore, the City and the Authority shall maintain current Business Subsidy Policies, as required by Minnesota Statutes. As granted by the City Council, the Authority shall have control and authority over the creation and operation of TIF Districts for the City. The Authority shall consider the creation of a TIF District based on qualifications and term restrictions, as defined in Minnesota Statutes. The Authority shall consider a range of criteria including but not limited to the following: • A maximum of ten percent (10 %) of any tax increment received from the district shall be retained by the City to reimburse administrative costs. • Only for a project which significantly supersedes the objectives identified herein, will the term of the TIF assistance exceed 15 years. • Any developer receiving TIF assistance shall provide a minimum of twenty percent (20 %) cash equity investment in the project. The assistance shall not be used to supplant cash equity. • TIF shall not be used in circumstances where land and /or property price is in excess of fair market value. An appraisal by a third party, agreed upon by the City and Developer, will determine the fair market value of the land /property. • The developer must) adequately demonstrate a market demand for a proposed project. Such determination shall be at the City Council's discretion. TIF shall not be used to support purely speculative projects. • TIF shall not be utilized in cases where it would create an unfair and significant competitive financial advantage over other projects in the City. • TIF shall not be provided for projects that would place extraordinary demands on city services or for projects that would generate significant environmental impacts. • The developer must provide adequate financial guarantees to ensure completion of the project, including, but not limited to: assessment agreements, letters of credit, personal guaranties, etc. • The developer shall adequately demonstrate, to the City's sole satisfaction, an ability to complete the proposed project based on past development experience, general reputation, and credit history, among other factors, including the size and scope of the proposed project. • For the purposes of underwriting the proposal, the developer shall provide any requested market, financial, environmental, or other data requested by the City or its consultants. • Projects consistent with development goals of the city. • Projects will maximized use of other financial resources • Projects that provide funding for appropriate public improvements that may benefit numerous development projects Page 6 of 25 September 24, 2012 • Analysis of detailed business pro forma with reasonable timeline for completion and occupancy • Project has potential to enhance spin -off development • Maximizes increased tax base and contributes to higher market values • Number of jobs and pay level of positions will be a consideration but not a requirement if other appropriate public purpose(s) is met Project Qualifications All TIF projects considered by the City of Otsego must meet all of the following requirements: a. To be eligible for TIF, a project shall result in: 1. For Economic Development TIF Districts, new construction of a minimum of 15,000 square feet; 2. For Economic Development TIF Districts, the minimum creation of one new or retained full time job per $20,000 of TIF provided; b. The project shall meet at least one of the objectives set forth in Section II. c. The developer shall demonstrate that the project is not financially feasible but -for the use of TIF. d. The project must be consistent with the City's Comprehensive Plan, Land Use Plan, and Zoning Ordinances. e. The project shall serve at least two of the following public purposes: • Creation of jobs with livable wages and benefits, per City's Business Subsidy Policy. • Increase of tax base. • Enhancement or diversification of the city's economic base. • Industrial development that will spur additional private investment in the area. • The project contributes to the fulfillment of the City's development objectives. Available Funding for Private Development within a Current TIF District Applications for tax increment financing for a project within a current TIF Districts shall be considered for approval provided the current TIF District is generating sufficient tax increment revenue to retire bonds supported by tax increment revenue within the TIF District. Costs Eligible for Tax Increment Financing Assistance Project costs qualifying for tax increment financing assistance, as defined under the TIF Act, include: utilities design, landscape design, architectural and engineering fees directly attributable to site work, site related permits, earthwork/excavation, soils corrections, landscaping, utility construction (sanitary sewer, storm sewer and water), streets and roads, street/parking lot ay tr ing lot lights, curb and gutter, sidewalks, land acquisition, building demolition, ovation of occular, special assessments, Page 7 of 25 September 24, 2012 legal (acquisition, financing and closing fees), soils tests and environmental studies, surveys, title insurance and TIF application deposit. Determination of Amount of Assistance The amount of tax increment financing provided to an applicant shall be based on a review of the following: • Request for Financial Assistance Form (Attachment A) • Review of Applicant's Pro Forma • Amount of Increment Generated by the Project • Fundability Guidelines for Financial Assistance Form (Attachment C) Depending on the public purpose to be met the Fundability Guidelines for Financial Assistance Form may weigh more or Tess in the review of the application. The level of assistance shall be evaluated on a case -by -case basis and may reflect an increase or decrease in requested financial assistance. When considering a request for tax increment financing for a project, there shall be consideration of the level of financial assistance provided for other previously approved projects in the TIF District or Project Area. Forms of Assistance Tax increment financing shall be provided on a "pay -as- you -go" basis wherein the Authority compensates the applicant for a predetermined amount for a stated number of years. In all cases, semi - annual TIF payments shall be based on available increment generated from the project. TIF payments shall be made after collection of property taxes. IV. PROCEDURES The Authority will require a deposit in the amount of $5,000 from the applicant to investigate the feasibility of providing assistance to the applicant. If the Authority incurs additional expense beyond the $5,000 prior to execution of the Developer's Agreement, the Authority shall notify the applicant in writing and the applicant must deposit additional funds for work on the application to continue. If the project is approved and the applicant proceeds with the project, the applicant's deposit may be reimbursed as an eligible project cost to the extent permissible under MN Statutes. In addition to the $5,000 deposit fee, the applicant must submit the following forms and documentation at time of application for the application to be complete and review of the application to begin: 1. Request for Tax Increment Financing Form (Attachment A) 2. Project Pro Forma Documentation (Developed by Applicant) 3. Fundability Guidelines for Financial Assistance Form (Attachment B) As required by Minnesota Statutes, the City Council must be the governing body to hold the public hearing and make the findings of fact for creation of a TIF District. Page 8 of 25 September 24, 2012 The procedures for making application are: a. Applicant meets with staff, discusses the project, and receives an application. b. Applicant submits the completed application forms, deposit and plans and specifications to the City Administrator. c. The City Administrator will decide if the City /EDA's tax increment consultants need to review the project to determine the project's feasibility for tax increment financing. d. Upon completion of a draft of the tax increment financing plan, district plan and development agreement terms that are agreeable to the applicant, the EDA will hold a special meeting to discuss these drafts. e. If approved, the EDA will make a recommendation to the City Council to proceed with allowing this project to move forward. f. The City staff, applicant and consultants will make a presentation to the City Council and request public hearings and other statutory items be scheduled and other board reviews scheduled, if appropriate. g. The public hearings will be conducted and after hearing the public input and receiving other board recommendations, the City Council may: 1) accept the plans and recommendations and direct staff to complete these plans, 2) reject the plans and project or 3) modify the plans accordingly and reenter negotiations. h. If /once approved and both parties sign the documents, construction may commence. V. SUBSIDY AGREEMENT AND REPORTNG REQUIRMENTS All developers /businesses receiving tax increment financing assistance from the City of Otsego shall be subject to the provisions and requirements set forth by state statute 1163.993 and summarized below. All developers /businesses receiving TIF assistance shall enter into a subsidy agreement with the City of Otsego that identifies: the reason for the subsidy, the public purpose served by the subsidy, and the goals for the subsidy, as well as other criteria set forth by statute 1163.993. The developer /business shall file a report annually for two years after the date the benefit is received or until all goals set forth in the application and performance agreement have been meet, whichever is later. Reports shall be completed using the format drafted by the State of Minnesota and shall be filed with the City of Otsego no later than March 1 of each year for the previous calendar year. Businesses fulfilling job creation requirements must file a report to that effect with the city within 30 days of meeting the requirements. The developer /business owner shall maintain and operate its facility at the site where TIF assistance is used for a period of five years after the benefit is received. The developer /business will be required to attain or exceed the jobs and wages goals set forth in the Subsidy Agreement. Developers / Businesses failing to comply with the above provisions will be subject to fines, repayment requirements, and be deemed ineligible by the State of Minnesota to receive any loans or grants from public entities for a period of five years. VI. ATTACHMENTS: FORMS Page 9 of 25 September 24, 2012 The following forms are referenced in this policy and are included as attachments to this policy. A. Request for Tax Increment Financing Form B. Fundability Guidelines for Financial Assistance Form VII. RESPONSIBILITY AND AUTHORITY Minnesota Statutes, Section 469.174 through 469.179 (Tax Increment Finance Act), as amended authorizes local governments to utilize Tax Increment Financing to assist development and redevelopment of certain parcels within its boundaries. Page 10 of 25 September 24, 2012 ATTACHMENT 2 TAX ABATEMENT POLICY I. PURPOSE AND NEED FOR POLICY The purpose of this policy is to establish the City of Otsego's position relating to the use of Tax Abatement for private development above and beyond the requirements and limitations set forth by State Law. This policy shall be used as a guide in the processing and review of applications requesting tax abatement assistance. It is the intent of the City to minimize the risk and amount of business assistance to a project and to leverage its public dollars to maximize private sector funding. The City of Otsego is granted the power to utilize tax abatement by Minnesota Statutes chapters 469.1812 through 468.1815, as amended. The fundamental purpose of tax abatement is to encourage desirable development or redevelopment that would not otherwise occur but for the assistance provided through the assistance. The City reserves the right to approve or reject projects on a case by case basis, taking into consideration established policies, project criteria, and demand on city services in relation to the potential benefits from the project. Meeting policy criteria does not guarantee the award of business assistance to the project. Approval or denial of one project is not intended to set precedent for approval or denial of another project. The City Council can deviate from this policy for projects that supersede the objectives identified herein. B. OBJECTIVES OF TAX ABATEMENT As a matter of adopted policy, the City will consider using the use of tax abatement to assist private development projects that will achieve one or more of the following objectives: • To retain local jobs and /or increase the number and diversity of jobs that offer stable employment and /or attractive wages and benefits. • To encourage additional unsubsidized private development in the area, either directly or indirectly through "spin off" development. • To facilitate the development process and to achieve development on sites which would not otherwise be developed but /for the use of Tax Abatement. • Increase or preserve the tax base • Help provide access to services for residents of the City Page 11 of 25 September 24, 2012 • To contribute to the implementation of other public policies, as adopted by the city from time to time, such as the promotion of quality urban or architectural design, energy conservation, and decreasing capital and /or operating costs of local government. II. POLICY a. When possible, Tax Abatement shall be used to finance public improvements associated with the project. The priority for the use of Tax Abatement funds is: 1. Public improvements, public infrastructure, legal, administrative, and engineering costs. 2. Site preparation, site improvement, land purchase, demolition. 3. Rehabilitation of existing underutilized or substandard buildings. 4. Capitalized interest, bonding costs. b. Tax abatement assistance shall be provided to the developer upon receipt of the increment by the City, otherwise referred to as the pay - you - method. c. Any developer receiving assistance shall provide a minimum of twenty percent (20 %) cash equity investment in the project. The assistance shall not be used to supplant cash equity. d. Tax abatement assistance will be considered for up to a maximum of 10 years using an agreed -upon formula. Full abatements, or partial, may be phased in over 10 years based on need and each situation. e. Assistance shall not be provided for reimbursement of land and /or property price that is in excess of fair market value. An appraisal by a third party, agreed upon by the City and Developer, will determine the fair market value of the land. f. Developer shall be able to demonstrate a market demand for a proposed project. Assistance shall not be granted to support purely speculative projects. g. Business assistance shall not be utilized in cases where it would create an unfair and significant competitive financial advantage over other projects in the area. h. Business assistance shall not be provided for projects that would place extraordinary demands on city services or for projects that would generate significant environmental impacts. i. The developer must provide adequate financial guarantees to ensure completion of the project, including, but not limited to: assessment agreements, letters of credit, personal guaranties, etc. Page 12 of 25 September 24, 2012 j. The developer shall adequately demonstrate, to the City's sole satisfaction, an ability to complete the proposed project based on past development experience, general reputation, and credit history, among other factors, including the size and scope of the proposed project. k. For the purposes of underwriting the proposal, the developer shall provide any requested market, financial, environmental, or other data requested by the City or its consultants. Requests for tax abatement must serve to accomplish the city's goals for development including, but not limited to projects that will result in the creation or retention of a significant number of jobs that pay wages adequate to support households, projects that will assist with the retention and expansion of businesses, bring technology (fiber to the premise) as part of and projects that will expand the city's tax base. Projects must meet the requirements established by the Business Subsidy Policy of the City and the Authority, to the extent it is applicable, in order to receive abatement. Project Qualifications Projects eligible for consideration of property tax abatement include but are not limited to the following: • Mixed use projects including new and redevelopment projects • Commercial and industrial redevelopment projects • Commercial and industrial new developments • Residential business properties (with some restrictions as defined in this policy) All projects considered by the City of Otsego must meet all of the following requirements: a. The project shall meet at least one of the objectives set forth in Section II and satisfy all the provisions set forth in Section III of this document. b. The developer shall demonstrate that the project is not financially feasible but - for the use of tax abatement. c, The project must be consistent with the City's Comprehensive Plan, Land Use Plan, and Zoning Ordinances. d. The project shall serve at least two of the following public purposes: • Creation of jobs with livable wages and benefits, per City's Business Subsidy Policy. • Increase of tax base. • Enhancement or diversification of the city's economic base. • Industrial development that will spur additional private investment in the area. • The project contributes to the fulfillment of the City's development objectives. Page 13 of 25 September 24, 2012 e. That the project will comply with all provisions set forth in Minnesota Statute chapters 116j.993 through 116j.995, as amendment (Business Subsidies) and Minnesota Statutes chapters 469.1812 through 469.1815, as amended. Determination of Amount of Assistance Tax abatement assistance available shall generally be limited to the incremental taxes generated on the improvements to the property. The City and the Authority may consider a greater level of financial assistance, up to the maximum allowed under Minnesota Statutes, in limited circumstances. The level of assistance will be evaluated on a case -by- case basis and may reflect an increase or decrease in requested financial assistance from the applicant. The amount of tax abatement assistance provided to an applicant shall be based on a review of the following: • Request for Financial Assistance Form (Attachment A) • Review of Applicant's Pro Forma • Amount of additional City tax generated by the Project • Fundability Guidelines for Financial Assistance Form (Attachment C) In any year, the total amount of property taxes abated (citywide) may not exceed (1) ten percent of the current levy, or (2) $200,000, whichever is greater. The limit does not apply to an uncollected abatement from a prior year that is added to the abatement levy. The developer /landowner must adequately demonstrate, to the City's sole satisfaction, an ability to complete the proposed project based on past development experience, general reputation, and credit history, among other factors, including the size and scope of the proposed project. The developer /landowner must provide adequate financial guarantees to ensure completion of the project, including, but not limited to: assessment agreements and letters of credit. Duration and Restrictions a. The City may grant an abatement for a period no longer than 15 years, except as provided under (B). The City may specify in the abatement resolution a shorter duration. b. The City, when proposing to abate taxes for a parcel, may make a written request to Wright County or a school district in which a parcel is located to grant an abatement of county or school taxes for the property. If one of the other political subdivisions declines, in writing, to grant an abatement or if 90 days pass after receipt of the request to grant an abatement without a written response from one of the political subdivisions, the duration limit for an abatement for the parcel may be increased to 20 years. Page 14 of 25 September 24, 2012 c. The City may not enter into a property tax abatement agreement that provides for abatement of taxes on a parcel, if the abatement will occur while the parcel is located in a tax increment financing district. III. PROCEDURE The City shall require a deposit in the amount of $5,000 from the applicant to investigate the feasibility of providing assistance to the applicant. If the City incurs additional expense beyond the $5,000 prior to execution of the Developer's Agreement, the City shall notify the applicant in writing and the applicant must deposit additional funds for work on the application to continue. If the project is approved and the applicant proceeds with the project, the applicant's deposit may be reimbursed to the extent permissible under MN Statutes. In addition to the $5,000 deposit fee, the applicant must submit the following forms and documentation at time of application for the application to be complete and review of the application to begin: 1. Request for Financial Assistance Form (Attachment A) 2. Fundability Guidelines for Financial Assistance Form (Attachment B) 3. Project Pro Forma Documentation (Developed by Applicant) For the purposes of underwriting the proposal, the developer must provide any requested market, financial, environmental, or other data requested by the City or its consultants. The City Council must hold a public hearing on the tax abatement, after notice is published in the local newspaper. A resolution shall be adopted that will specify the terms of the abatement. As required by MN Statutes, the City Council must be the governing body to hold the public hearing and make the findings of fact for creation of a tax abatement agreement. The procedures for making application are: a. Applicant meets with staff, discusses the project, and receives an application. b. Applicant submits the completed application forms, deposit and plans and specifications to the City Administrator. c. The City Administrator will decide if the City /EDA's tax abatement consultants need to review the project to determine the project's feasibility for tax increment financing. d. Upon completion of a draft of the tax abatement financing plan, district plan and development agreement terms that are agreeable to the applicant, the EDA will hold a special meeting to discuss these drafts. e. If approved, the EDA will make a recommendation to the City Council to proceed with allowing this project to move forward. f. The City staff, applicant and consultants will make a presentation to the City Council and request public hearings and other statutory items be scheduled and other board reviews scheduled, if appropriate. g. The public hearings will be conducted and after hearing the public input and receiving other board recommendations, the City Council may: 1) accept the plans and recommendations and direct staff to complete these plans, 2) reject the plans and project or 3) modify the plans accordingly and reenter negotiations. h. If /once approved and both parties sign the documents, construction may commence. Page 15 of 25 September 24, 2012 IV. SUBSIDY AGREEMENT & REPORTING REQUIRMENTS All developers /businesses receiving tax abatement assistance from the City of Otsego shall be subject to the provisions and requirements set forth by state statute 1163.993 and summarized below. All developers /businesses receiving tax abatement assistance shall enter into a subsidy agreement with the City of Otsego that identifies: the reason for the subsidy, the public purpose served by the subsidy, and the goals for the subsidy, as well as other criteria set forth by statute 1163.993. The developer /business shall file a report annually for two years after the date the benefit is received or until all goals set forth in the application and performance agreement have been meet, whichever is later. Underperforming projects shall result in reduced assistance on a pro rata basis. Reports shall be completed using the format drafted by the State of Minnesota and shall be filed with the City of Otsego no later than March 1 of each year for the previous calendar year. Businesses fulfilling job creation requirements must file a report to that effect with the city within 30 days of meeting the requirements. The developer /business owner shall maintain and operate its facility at the site where tax abatement assistance is used for a period of five years after the benefit is received. In addition to attaining or exceeding the jobs and wages goals set forth in the Subsidy Agreement, the applicant shall meet the qualifications set forth in Section IV of this document. Developers / Businesses failing to comply with the above provisions will be subject to fines, repayment requirements, and be deemed ineligible by the State of Minnesota to receive any loans or grants from public entities for a period of five years. IV. ATTACHMENTS: FORMS The following forms are referenced in this policy and are included as attachments to this policy. A. Request for Financial Assistance Form B. Fundability Guidelines for Financial Assistance Form V. RESPONSIBILITY AND AUTHORITY Minnesota Statutes, Sections 469.1812 through 469.1815, authorizes a political subdivision to utilize property tax abatement on certain parcels of land within its boundaries. Administrative implementation of this policy shall be the responsibility of the City Administrator. Page 16 of 25 September 24, 2012 ATTACHMENT A: FORM REQUEST FOR FINANCIAL ASSISTANCE FORM CITY OF OTSEGO AND OTSEGO ECONOMIC DEVELOPMENT AUTHORITY REQUEST FOR FINANCIAL ASSISTANCE TAX INCREMENT FINANCING (TIF) OR TAX ABATEMENT FORM FOR NAME OF APPLICANT Page 17 of 25 September 24, 2012 CITY OF OTSEGO REQUEST FOR FINANCIAL ASSISTANCE FORM REQUIRED INFORMATION 1. Provide a brief project description 2. Provide business information Business Name: Address: Telephone: Contact Name: 3. Provide brief description of the business 4. Provide information on the present ownership of the site Name: Address: Phone Number: Contact Name: 5. Provide information on the proposed project Building square footage: Size of property: Description of building: Materials and other additional relevant building information: 6. Provide total estimated project costs Land Acquisition $ Site Development $ Building Cost $ Equipment $ Architectural & Engineering Fees $ Legal Fees $_ Financing Costs $ Broker Costs $ Contingencies $ Other (please specify) $ Total $ 7. Describe amount and purpose for which financing (either tax increment financing or tax abatement financing) is required 8. State specific reasons why the use of tax increment financing or tax abatement assistance is necessary for the project (the "but for" test) Page 18 of 25 September 24, 2012 9. List project costs that may be eligible for assistance. Costs that may be eligible for assistance include: - Utilities Design - Site Related Permits - Architectural And Engineering Fees - Soils Correction Directly Attributable To Site Work - Earthwork /Excavation - Utilities (Sanitary Sewer, Storm Sewer and Water, fiber to the premise) - Landscaping - Parking Lot Paving and Parking Lot Lights - Streets And Roads - Sidewalks - Curb And Gutter - Special Assessments - Land Acquisition - Legal Costs Associated With Financing /Closing Attributable To Site - Legal Costs Associated With - Surveys Acquisition - Soil Tests And Environmental - City SAC and WAC Charges Studies - Title Insurance - Application Deposit - Landscape Design 10. Provide market value information Current market value (from Wright County Assessor): $ Proposed market value at completion: $ 11. Provide real estate property tax information Existing real estate taxes of property: $ Estimated real estate taxes of property upon completion: $ 12. Provide source of financing information Equity $ Bank Loan $ Tax increment assistance (TIF or Abatement) $ Revenue Bonds $ Other $ Total $ 13. Provide name and address of architect, engineer, and general contractor for the project 14. Provide project construction schedule Estimated construction start date: Estimated construction completion date: If phased project: Year % Complete Year % Complete Page 19 of 25 September 24, 2012 15. Describe how the project will meet one or more of the following City of Otsego or Otsego Economic Development Authority goals (in addition to increasing tax base). Please provide measurable, specific, and tangible goals. Goals may include the following: increased wages; creation of jobs that pay wages adequate to support households; and /or job retention where job loss is specific and demonstrable; and /or development or redevelopment projects that are consistent with the City of Otsego's goals and objectives. 16. Provide a reference from another municipality (if applicable) 17. Provides names of any other municipalities wherein the applicant, or other corporations the applicant has been involved with, has completed developments within the last five years 18. Provide the following required supplemental information: - Project Pro Formas (one showing with assistance and one without assistance) - Legal description of the property - Application fee of $5,000 payable to the City of Otsego - Site plan and building rendering SUBJECTIVE ANALYSIS In addition to the required information from above (items 1 -19), the following information is requested and will be considered as part of the application approval process: 19. Provide number of years in business 20. Provide number of years located in the City of Otsego (if applicable) 21. Describe potential for business growth or future development 22. Explain whether the building will be owner- occupied (Yes /No) 23. If rental space, provide the targeted retail rates 24. If building is non -owner occupied, explain whether the lessee will be required to capitalize this lease 25. Provide and costs per acre or square foot 26. Describe the location of proposed facility within Otsego 27. Describe the general quality of the development 28. Provide the size of parcel being developed 29. Provide the projected building cost per square foot 30. Additional comments Page 20 of 25 September 24, 2012 ATTACHMENT B: FORM FUNDABILITY GUIDELINES FORM CITY OF OTSEGO AND OTSEGO ECONOMIC DEVELOPMENT AUTHORITY REQUESTS FOR TAX INCREMENT FINANCING (TIF) OR TAX ABATEMENT ASSISTANCE FUNDABILITY GUIDELINES FORM FOR NAME OF APPLICANT Page 21 of 25 September 24, 2012 1. Ratio of Public versus Private Investment $ Private Investment $ Authority /Public Investment $ Total Investment Ratio of public versus private investment Point Value Private Public +1 Less than $3 To $1 +2 Over $3 To $1 +3 Over $4 To $1 +4 Over $6 To $1 +5 Over $8 To $1 2. Number of Current and Estimated New Employees Point Value Number +1 1 - 15 +2 > 16 - 30 +3 > 31 -45 +4 > 46 - 75 +5 > 75 Plus *Current Number of Employees *Estimated New Employees (within next 2 - years) Total Number of Current and Estimated New Employees *Employees should be computed as full -time equivalent positions 3. Public Investment Per Current Employees Point Value Investment 0 $7,500+ +1 $6,000 - $7,500 +2 $4,500 - $6,000 +3 $3,000 - $4,500 +4 $1,500 - $3,000 +5 $ 0 - $1,500 Public Investment (Tax Abatement /Tax Increment) $ *Current Number of Employees $ Investment Per Employee = $ *Employees should be computed as full -time equivalent positions Page 22 of 25 September 24, 2012 4. Pay Level of Jobs Created Point Pay Dollar Total Weighted Value Range Weighting Employees Dollar Amount 0 $0 - 14,999 $10,000 $ +1 $15,000 - 24,999 $20,000 $ +2 $25,000 - 29,999 $27,500 $ +3 $30,000 - 44,999 $37,500 $ +4 $45,000 - 59,999 $52,000 $ +5 $60,000 and Over $60,000 $ *TOTAL $ WEIGHTED AVERAGE = $ *Employees should be computed as full -time equivalent positions. New Employees over and above the number required to be added shall be exempt from this section. 5. Real Estate /Property Taxes Generated Point Value *Projected Tax Revenues + 1 Below $25,000 +2 $ 25,000 - $49,999 +3 $ 50,000 - $99,999 +4 $100,000 - $249,999 +5 $250,000 and Over Projected Tax Revenues $ *Projected Tax Revenues should be based on the existing property tax system and rates plus legislative future changes if subject to estimation. 6. Service Impact Point Value Type of Development +1 Retail +2 Office Warehouse +3 Office +4 Mixed Use +5 Hi- Tech /Manufacturing Type of Use 7. Redevelopment Age Multiplier Point Value Age of Building 1.0 New Development 1.0 0 - 5 Years Redevelopment* 1.1 6 - 10 Years Redevelopment* 1.2 11 - 15 Years Redevelopment* 1.3 16 - 20 Years Redevelopment* 1.4 21 - 25 Years Redevelopment* 1.5 26+ Years Redevelopment* * Redevelopment is defined as the development of a property again to a better condition. Page 23 of 25 September 24, 2012 8. Significant Impact Multiplier Point Value Type of Use 3.0 Mixed Use New Development or Redevelopment 2.5 Commercial /Industrial Redevelopment 2.0 Industrial New Development 1.5 Commercial New Development WORKSHEET SUMMARY Worksheet Breakdown Total Points 1. Ratio of Public versus Private Investment (1 to 5) 2. Number of Current and Estimated New Employees (1 to 5) 3. Public Investment per Current Employee (0 to 5) 4. Pay Level of Positions (0 to 5) 5. Real Estate /Property Taxes Generated (1 to 5) 6. Service Impact (0 to 5) SUBTOTAL Multiplier's 7. Redevelopment Age Multiplier (1.0 to 1.5) 8. Significant Impact Multiplier (1.5 to 3.0) TOTAL SCORE * To determine the total score multiply the Subtotal x Redevelopment Age Multiplier x Service Impact Multiplier. The information provided herein is true and accurate to the best of my knowledge: (Signature) (Date) Page 24 of 25 September 24, 2012 Fundability Rating for Tax Abatement The total score on the project analysis sheet on previous page determines the general term of assistance. The City of Otsego or Otsego Economic Development Authority will make any final decision on term. Point Value Term of Assistance* 0 - 25 O Years 26 - 35 3 Years 36 - 45 5 Years 46 - 59 7 Years * *60 and over 10 Years * Assistance amount will be the incremental taxes only. ** The City or the Authority may consider between 15 - 20 years for projects that score 60 and over. Page 25 of 25 September 24, 2012 M N CA R 6th Annual EXPO Exhibitor Invite COMMERCIAL REAL ESTATE Thursday, November 8, 2012 EXPO 3:OOpm - 7:OOpm T he Depot, Downtown Minneapolis The Premier By Exclusive Invite Only... Commercial Real Join us as an exhibitor! Estate Event In Here's your chance to be in front of an audience of Minnesota! 500+ DEAL MAKERS in the commercial real estate industry. There won't be a better time for you to announce YOUR NEWS and upcoming happenings such as new developments and properties, changes in ownership, etc., to such a large and important audience than this night! Plus, we have an incredible program to kick off our event this year. Two days after the presidential election, we have Tom Emmer and Kelly Doran, With Tom Hauser moderating! to lead a lively discussion on how the recent election results will affect business and the commercial real estate industry. Complete the attached Exhibitor Form on the back and return to Terri Jackson at MNCAR today! VAN A 1 . November 8, 2012 3:00 - 7:00 PM Jf � A R THE DEPOT DOWNTOWN MINNEAPOLIS For a $1,000 investment, as an exhibitor you receive: COMMERCIAL REAL ESTATE • 8' x 10' display booth at event, with an anticipated attendance of 500+ commercial real estate professionals from across MN. • Recognition in all event print and e -mail promotional materials, including media advertising, distributed to 9,000+ commercial real estate industry professionals. • Company name recognition on MNCAR website, September - November 2012. Website receives 3,000+ unique visitors monthly. • Recognition at the event and expo program. • Two complimentary event tickets. Exhibitors are by invitation only. Yes, I would like to be an expo exhibitor! Today's Date: Company Name: (Please write name exactly how you want it to appear on all marketing pieces) Address: City : State: Contact Person: Phone: Email: Fax: ❑ Enclosed is my payment of $1,000. ❑ I'll contact the MNCAR at 952- 908 -1780 with my credit card information. ❑ I've included my credit card information below. MNCAR does not keep credit card info on file; however I acknowledge there is some risk in entering credit card information on this form. VISA or Master Card #: Exp. Date: Name on card: Signature: Please contact Terri at 952- 908 -1784 or terri @mncar.org with any questions. Please return this agreement to: MNCAR, Attn: Terri Jackson, 6800 France Ave, Suite #760, Edina, MN 55435 Fax: 952 - 908 -1799 Thank you for your support!