ITEM 3.6 Financial Planning AgreementO tSCIT
4/ F O
MINNESOTA V
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT
REQUESTOR:
MEETING DATE:
Administration
Finance Director Flaherty
April 24, 2017
PRESENTER(s)
REVIEWED BY:
ITEM #:
Consent Item
City Attorney MacArthur
3.6
AGENDA ITEM DETAILS
RECOMMENDATION:
City staff is recommending that the City Council approve the financial planning agreement with Northland
Securities for services in connection with the consideration of tax increment financing on the Kadler
Avenue street construction and industrial development project.
City staff is recommending that the City Council approve a resolution calling for a public hearing on June
12, 2017 for consideration of tax increment financing on the Kadler Avenue street construction and
industrial development project.
ARE YOU SEEKING APPROVAL OF A CONTRACT?
IS A PUBLIC HEARING REQUIRED?
Yes
Yes
BACKGROUND/JUSTIFICATION:
At a special meeting on April 10, 2017, the City Council concurred to move forward with the consideration
of tax increment financing on the Kadler Avenue street construction and industrial development project. In
order to continue, the City Council will need to approve the two following items:
1] Financial Planning Agreement with Northland Securities
This document outlines the financial planning services that will be provided by Northland Securities related
to the establishment of a new tax increment financing district. The costs for the services included within
the agreement are not to exceed $4,000. It should be noted that the City may incur additional costs during
the establishment of the district for services beyond the scope of Northland's expertise (i.e. legal review).
The costs incurred by the City during the establishment of the district are considered eligible expenditures
and can be reimbursed with future tax increment generated by the development. The City Attorney has
reviewed the agreement with no comment.
2] Resolution 2017-34
In accordance with Minnesota Statutes, the City will hold a public hearing on June 12, 2017 for the
modification of the City's development district no. 1 as well as the establishment of tax increment financing
district no. 2. The City is required to provide notice to Wright County, School District No. 728, as well as
within the designated City newspaper. All noticing requirements for the public hearing will be handled by
Northland Securities, Inc. as part of the services outlined in the financial planning agreement, which is also
under consideration at this meeting.
SUPPORTING DOCUMENTS ATTACHED:
• Financial Planning Agreement with Northland Securities, Inc.
• Resolution 2017-34
Fff*-n 09Is] I
PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES:
Motion to approve the financial planning agreement with Northland Securities for services in connection
with the consideration of tax increment financing on the Kadler Avenue street construction and industrial
development project.
Motion to approve Resolution 2017-34 calling for a public hearing on June 12, 2017 for consideration of tax
increment financing on the Kadler Avenue street construction and industrial development project.
R11DGFT INFORMATION
FUNDING:
BUDGETED:
101-41600-390
No
When/if the tax increment district is established, the
expenditures will be reclassified to the respective fund
and will be reimbursed with the future collections of
tax increment.
FINANCIAL PLANNING AGREEMENT
BY AND BETWEEN
THE CITY OF OTSEGO
AND
NORTHLAND SECURITIES, INC.
TAX INCREMENT FINANCING DISTRICT (ECONOMIC DEVELOPMENT)
This Agreement made and entered into by
(hereinafter "City") and Northland Securities,
"NSI"
and between the City of Otsego, Minnesota
Inc., of Minneapolis, Minnesota (hereinafter
WITNESSETH
WHEREAS, the City desires to use the services of NSI for financial planning assistance related
the establishment of a new tax increment financing (TIF) district related to the proposed
expansion of commercial (manufacturing) business located within the City (The "Project").
WHEREAS, the Project is intended solely for financial planning and NSI is not providing advice
on the timing, terms, structure or similar matters related to a specific bond issue.
WHEREAS, NSI desires to furnish services to the City as hereinafter described.
NOW, THEREFORE, it is agreed by and between the parties as follows:
SERVICES TO BE PROVIDED BY NSI
The scope of work will undertake the process to establish the proposed tax increment financing
district. Legal services to review the TIF plan and the approving resolution are not provided by
NSI and are not subject to this agreement. NSI will provide the following services:
1. Collect data for the TIF District, including:
• Parcel identification numbers for all parcels in the Development District and TIF District.
• Estimated market value and tax capacity value for all parcels in the TIF District.
• Current property tax rates for all jurisdictions.
• City map showing project location and parcel boundaries.
2. Evaluate and advise City on type of TIF district.
3. Provide guidance on statutory findings.
4. Collect data about the Project, including:
• Type, size, value and timing of proposed development.
• Activities and estimated costs (project budget) to be paid by TIF.
5. Review basis for findings for establishing TIF District, including:
• Statutory criteria for proposed district.
• Project justification ("but for") for the use of TIF
• Review of Project pro forma.
Agreement (Economic Development TIF District} Page 1
6. Determine basic understanding of key criteria for the process including:
• Boundaries of Development District.
• Specific development objectives to address in the planning documents beyond the
proposed project.
• Official newspaper and publication schedule.
• Attorney that will review the plan and final resolution.
7. Obtain any additional data not collected in #1, including:
• Building permits issued for parcels in the TIF District over the past 18 months.
• Current comprehensive plan.
8. Set and distribute calendar of meetings and key dates.
9. Prepare notice of hearing and comply with statutory requirements for mailing and
publication.
11. Prepare planning documents including program for the Development District, if necessary,
and plan for the TIF District.
12. Distribute draft planning documents with letter of explanation and other supporting
information to county and school district.
13. Prepare city council and authority resolutions authorizing the District and approving the
plan and authorizing an interfund loan, if so applicable.
14. Prepare and distribute resolution for planning commission findings, if necessary (scope
does not include NSI attendance at planning commission meeting).
15. Prepare and distribute packet for public hearing(s) including TIF plan and approving
resolution.
16. Attend and facilitate discussion at public hearing(s).
17. Prepare TIF record book (electronic transcript).
18. Submit district for certification by the county.
19. File district with the State.
COMPENSATION
The budget for undertaking the tasks in this agreement is an amount not to exceed $4,000. The
amount is based on the estimated number of hours required to complete these tasks at an
hourly billing rate of $200 per hour plus reimbursable expenses for travel, printing, and
mailing. NSI will bill on a monthly basis for actual services performed and reimbursable
expenses.
The City may at its discretion authorize NSI to undertake additional tasks, including meeting
attendance, beyond the tasks listed above. Additional planning services will be billed monthly
at a rate of $200 per hour.
Agreement (Economic Development TIF District) Page 2
Invoices will detail the work performed, requested compensation for the period and show
amounts previously billed.
ASSIGNED NORTHLAND EMPLOYEE
The NSI employee responsible for providing services pursuant to this agreement and for the
services performed is Jessica Green.
SUCCESSORS OR ASSIGNS
The terms and provisions of this Agreement are binding upon and inure to the benefit of the
City and NSI and their successors or assigns.
DISCLAIMER
In performing service under this agreement, NSI is relying on the accuracy of information
related to the Project as provided the City and the services provided by Northland are based on
current State Law. The parties agree that the Minnesota property tax system and other laws
may change and may affect the accuracy and validity of services provided by NSI. NSI will
perform its work using the best available information. The City recognizes and accepts that
future property values, tax levies and tax rates may vary from the assumptions used by NSI and
such changes may affect the work product produced and provided by NSI.
TERM OF THIS AGREEMENT
This Agreement may be terminated by thirty (30) days written notice by either the City or NSI.
In the event of early termination by the City, NSI shall provide the City with an itemized hourly
statement of services already provided. All billable hours by NSI shall be billed at the stated
hourly rates should early termination occur.
Dated this _ day of April 2017.
Northland Securities, Inc.
Tom Bartzen
Head of Public Finance, Chief Credit Officer
City of Otsego, MN
In
Title
Agreement (Economic Development TIF District) Page 3
EXTRACT OF MINUTES OF A MEETING OF THE
CITY COUNCIL OF THE CITY OF
OTSEGO, MINNESOTA
HELD: April 24, 2017
Pursuant to due call and notice thereof, a regular meeting of the City Council of the City
of Otsego, Wright County, Minnesota, was duly held at the Otsego Prairie Center on Monday,
the 24th day of April, 2017 at 7:00 p.m. for the purpose of calling a public hearing on the
proposed modification of Municipal Development District No. 1 and the proposed establishment
of Tax Increment Financing District No. 2 within the Development District, the proposed
adoption of the Development Program and the Tax Increment Financing Plan relating to thereto.
The following Council members were present:
and the following were absent:
Councilmember introduced the following resolution and
moved its adoption:
RESSOLUTION 2017-34
RESOLUTION CALLING PUBLIC HEARING ON THE PROPOSED
MODIFICATION OF MUNICIPAL DEVELOPMENT DISTRICT NO. 1 AND
THE PROPOSED ESTABLISHMENT OF TAX INCREMENT FINANCING
DISTRICT NO. 2 WITHIN THE DEVELOPMENT DISTRICT AND THE
PROPOSED ADOPTION OF DEVELOPMENT PROGRAM AND TAX
INCREMENT FINANCING PLAN RELATING TO THERETO
BE IT RESOLVED by the City Council (the "Council") of the City of Otsego, Minnesota
(the "City"), as follows:
1. Public Hearin. This Council shall meet on Monday, June 12, 2017, at
approximately 7:00 p.m., to hold a public hearing on the following matters: (a) the proposed
modification of Municipal Development District No. 1; (b) the proposed establishment of Tax
Increment Financing District No. 2 within the Development District; (c) the proposed adoption
of the Development Program for the Development District; and (d) the proposed adoption of a
Tax Increment Financing Plan relating to Tax Increment Financing District No. 2, all pursuant to
and in accordance with Minnesota Statutes, Sections 469.124 through 469.133, and, Minnesota
Statutes, Sections 469.174 through 469.1794, both inclusive, as amended (collectively, the
"Act"); and
2. Notice of Hearing_ Filing of Program and Plan. The City Cleric is hereby
authorized to cause a notice of the hearing, substantially in the form attached hereto as Exhibit A,
to be published as required by the Act, and to place a copy of the proposed Development
Program, the proposed Tax Increment Financing Plan on file in the City Clerk's Office at City
Hall and to make such copies available for inspection by the public.
3. Consultation with Other Taxing Jurisdictions. The City Clerk is hereby directed
to mail a notice of the public hearing and a copy of the proposed modification to the
Development Program and the proposed establishment of Tax Increment Financing Plan to
Wright County and Independent School District No. 728 informing those taxing jurisdictions of
the estimated fiscal and economic impact of the establishment of the proposed Tax Increment
Financing District No. 2.
Adopted by the City Council of the City of Otsego, Minnesota, this _ day of
.2017.
ATTEST:
City Clerk
Mayor
2
The motion for the adoption of the foregoing resolution was duly seconded by
Councilmember and upon vote being taken thereon, the following
voted in favor:
and the following voted against the same:
Whereupon said resolution was declared duly passed and adopted.
STATE OF MINNESOTA )
ss.
COUNTY OF WRIGHT )
I, the undersigned, being the duly qualified and acting City Clerk of the City of Otsego,
Minnesota, DO HEREBY CERTIFY that the attached resolution is a true and correct copy of an
extract of minutes of a meeting of the City Council of the City of Otsego, Minnesota duly called
and held, as such minutes relate to the calling of a public hearing on the proposed modification
of Municipal Development District No. 1, the establishment of Tax Increment Financing District
No. 2, and the adoption of the Development Program and Tax Increment Financing Plan relating
to thereto.
WITNESS my hand as such City Clerk of the City of Otsego this day of
, 2017.
City Clerk
11
EXHIBIT A
CITY OF OTSEGO, COUNTY OF WRIGHT
STATE OF MINNESOTA
NOTICE OF PUBLIC HEARING
NOTICE IS HEREBY GIVEN that the City Council (the "Council") of the City of Otsego, Wright County,
Minnesota, will hold a public hearing on Monday, June 12, 2017, at approximately 7:00 p.m., at the Otsego
Prairie Center, in the City of Otsego, Minnesota, relating to the modification of Municipal Development District
No. 1 and the establishment of Tax Increment Financing District No. 2, and the adoption of the Development
Program and Tax increment Financing Plan relating to thereto, all pursuant to and in accordance with
Minnesota Statutes, Sections 469.124 through 469.133, and Minnesota Statutes, Sections 469.174 through
469.1794, both inclusive, as amended. Copies of the Development Program and Tax Increment Financing Plan
as proposed to be adopted, will be on file and available for public inspection at the office of the City Clerk at
City Hall.
The property proposed to be included in Municipal Development District No. 1 is described in the Development
Program on file in the office of the City Clerk. The property proposed to be included in Tax Increment
Financing District No. 2 is described in the Tax Increment Financing Plan on file in the office of the City Clerk.
The boundaries of Municipal Development District No. 1 and Tax Increment Financing District No. 2 are
shown in the adjacent map.
[insert map with boundaries of Development District and TIF District]
All interested persons may appear at the hearing and present their views orally or in writing prior to the hearing.
Dated: , 2017.
[Publish , 2017]
BY ORDER OF THE CITY COUNCIL
City Clerk
5