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Home My WebLink About1998 [05] May 04 --1 J DY . . ~ CITY OF ST. JOSEPH 21 First Avenue NW P.O. Box 668, St. Joseph, MN 56374 (320) 363-7201 EDA Board Meeting - Special Meeting Fax: 363-0342 Ilk May 4, 1998 City Hall- 8:00am MAYOR Kenneth J. Hiemenz 1) Call to Order CLERK! ADMINISTRATOR 2) St. Joseph Finance Policy Proposal- EDA Director Rachel Stapleton 3) St. Joseph Business Park Covenants Proposal- EDA Director COUNCILORS 4) Business Park Update/ May 11th Meeting - EDA Director Bob Loso Cory Ehlert Ken Twit 5) Adjourn .Niedenfuer . :4 . ~þ.- \-2'" ,- . City of St. Joseph Policy and Procedures for Tax Increment Financing Project For the purpose of this policy, the "City" shall also mean the St. Joseph Economic Development Authority (EDA), which serves in conducting various economic development, housing and redevelopment programs and activities within the City of St. Joseph. I. GENERAL POLICY The purpose of this policy is to establish the position of the City of 8t. Joseph and the Economic Development Authority with respect to the use of Tax Increment Financing for private development within the City. This policy shall be used as a guide in the application for, review and consideration of any requests for Tax Increment assistance. The fundamental purpose of tax increment financing in 8t. Joseph is to encourage desirable development and/or redevelopment that would not otherwise occur "but for" the assistance provided through TIF. The City shall consider Tax Increment Financing for projects that serve to accomplish the City's goals for housing and economic development as they may change over time. The goals include facilitating projects that would result in the creation of quality jobs(Le. stable employment and/or attractive wages and benefits) and the attraction, retention, and expansion of business and housing options in the City. . II. CITY'S OBJECTIVE FOR THE USE OF TIF As a matter of adopted policy, the City of 8t. Joseph will consider using tax Increment Financing (TIF) to assist private development projects to achieve one or more of the following purposes: · Remove blight and/or encourage redevelopment in the commercial and industrial areas of the City in order to encourage high quality development or redevelopment and private reinvestment in those areas. · To provide for a balanced and sustainable housing stock to meet diverse needs both today and in the future. · To retain local jobs and/or increase the number and diversity of quality jobs (Le. stable employment and/or attractive wages and benefits. · To encourage additional unsubsidized private development in the area, either directly, or through secondary "spin-off' development. · To offset increased costs of redevelopment (Le. contaminated site clean-up), over and above those costs that a developer would incur in normal urban and suburban development. · To facilitate the development process and to achieve development on sites which would not be developed without this assistance. . · To meet other uses of public policy, as adopted by the Council from time to time, including promotion of quality urban design, quality architectural design, energy conservation, decreasing the capital and operating costs of local government, etc. St. Joseph TlF Policy I ~ , . 3. COSTS WHICH QUALIFY FOR TIF ASSISTANCE · Project design fees including: utilities, landscape, architectural and engineering design. · Site related work including: permits for site work, earthwork/excavation, soil correction, landscaping, utilities, streets and roads, street/parking lot paving, street/parking lot lighting, curb and gutter, sidewalks · Land acquisition · Special assessments · Legal fees (acquisition, finance, closing) · Soil tests · Environmental studies · Surveys · Park and open space dedication fees · I nterest rate write downs · Relocation assistance · Replacement or clean-up of contaminated soils which would otherwise preclude redevelopment · Rehabilitation · Any other costs allowable by Statute IV. PROJECTS WHICH MAY QUALIFY FOR TIF ASSISTANCE . All new TIF projects considered by the City of St. Joseph must meet each of the following minimum qualifications and will also be evaluated based on their ability to meet the desired qualifications for assistance. However, it should not be presumed that a project meeting any of the qualifications will automatically be approved. Meeting the qualifications creates no contractual rights on the part of any potential developer to have its project approved. MINIMUM QUALFICIA TIONS 1. The project should meet one or more of the Tax Increment Financing Objectives outlined in Section \I of this policy, but at a minimum shall: . Remove blight and/or encourage redevelopment in the commercial and industrial areas ofthe City in order to encourage high quality development and redevelopment and private investment in those areas. . To facilitate the development process and to achieve development on sites which would not be developed without this assistance. 2. The developer must demonstrate that the project is not financially feasible "but for" the use of TIF assistance. 3. The project must be consistent with the City's Comprehensive Plan and Zoning Ordinances, or require changes to the plan and ordinances must be under active consideration by the City at the time of final TIF application submittal. . 4. Prior to approval of a TIF financing plan, the developer shall provide any requested market and financial feasibility studies, appraisals, soil borings, private lender commitment, and/or other information the City or its financial consultants may require in order to proceed with an independent underwriting of the proposal. St. Joseph TIF Policy 2 . . 5. The developer must provide adequate financial guarantees to ensure the completion of the project. These may include, but not limited to: assessment agreements, letter of credit, personal deficiency guarantees, maximum cost contract, etc. 6. Any developer requesting TIF assistance should be able to demonstrate past successful general development capability as well as specific capability in the type and size of development proposed. TIF will not be used when the developer's credentials, in the sole judgement of the City, are inadequate due to past track record relating to: completion of the projects, general reputation and/or bankruptcy, or other problems or issues considered relevant by the City. 7. The developer shall retain ownership of the project at least long enough to complete it, to stabilize its occupancy, and to establish the project management and initiate repayment via the TIF assistance. DESIRED QUALIFICATIONS 1. TIF proposals creating a higher ratio of property taxes paid before and after redevelopment will receive priority consideration. Given the different assessment circumstances in the City, this ratio will vary widely. A 1:2 ratio of taxes paid before and after redevelopment is desired. . 2. TIF proposals should normally not be used to support speculative industrial, commercial, office or housing projects. In general, the developer should be able to provide market data, tenant letter of commitment or finance statements which support the market potential/demand for the proposed project. 3. TIF will normally not be used in a project that involves an excessive land and/or property price. This will normally be where the acquisition price is more than 20% in excess of the market value as determined by an independent appraisal of the property. 4. TIF will not be used in projects that would give a significant competitive financial advantage ! over similar projects in the area due to the use of tax increment subsidies. Developers .' _ V should provide information to support that the TIF assistance will not create such a //J competitive advantage. Priority consideration will be given to projects that fill an {nm~t market need. -' '-. 5. TIF will be provided on a pay-as-you-go basis. Any request for up front assistance will be evaluated on its own merit in accordance with this policy. Projects requesting pay-as-you-go financing will receive priority consideration. 6. TIF will not be used to support projects that place extraordinary demands on City services. Preference will be given to project that do not place extraordinary demands on City services. 7. TIF will not normally be used for projects that would generate significant environmental j' problems in the opinion of the local, state, or federal gove~ents. Priority will be given to , . project that aim to clean-up existing contaminated sites a ould facilitate the location of an industry or business that has an environmentally sound track record, or meet a housing need . in the City. St. Joseph TIF Policy 3 . 8. Preference will be given to projects that meet good public policy criteria as determined by the City Council, including: · High project quality (e,g. sound architectural design, quality construction and materials), · Projects that are in accord with the Comprehensive Plan, Strategic Plan. Zoning Ordinances and other redevelopment plans of the City, · Projects that provide significant improvement to surrounding land uses, the neighborhood, and/or the City, · Projects that provide a significant increase in tax base, · Projects that provide significant new. or retained employment. · Projects that meet financial feasibility criteria established by the City, and · Projects that provide the highest and best desired use for the property. V. TAX INCREMENT PROJECT EVALUATION PROCESS The following five methods of analysis for all TIF proposals will be used: 1. Consideration of project meeting minimum qualifications. 2. Consideration of project meeting desired qualifications. 3. Project meets "but for" analysis and statutory qualifications (Exhibit A). 4. Project Report Card (Exhibit B). 5. Project is deemed consistent with the EDA Strategic Plan and the City's Comprehensive . Plan. Please note that the evaluation methodology is intended to provide a balanced review. Each area will be evaluated individually and collectively and in no case shall one area outweigh another in terms of importance to determining the level of TIF assistance. VI. APPLICATION FOR TIF ASSISTANCE FOR ALL TIF DISTRICTS AND PROJECT AREAS The City's tax increment financing program will be administered by the St. Joseph Economic Development Authority (EDA). The St. Joseph EDA will require a non-refundable application fee in the amount of $ 'A,ODÙ for its processing of the application. The application fee shall be paid to the EDA at the time of final TIF application is submitted. At the time a final TIF application is submitted, the applicant shall also deposit $ 10.1100 with the EDA to cover its attorney's and consultant's costs incurred as part of amending or establishing a TIF District, drafting and negotiating a development agreement, and conducting and fiscal analysis that may be require to meet the requirements of utilizing TIF. If additional costs are incurred beyond the $ , prior to the execution of a development agreement, the EDA shall notify the applicant in writing and the applicant will be required to deposit additional funds upon notice. If the project is approved and the applicant proceeds with the project, the EDA shall reimburse the applicant any unused portion of the deposit as of the date of execution of the development agreement. If the applicant does not proceed with the project, the EDA shall reimburse the applicant for the unused portion of the deposit as of the date that the EDA is notified in writing . that the applicant desires to withdraw its application. St. Joseph TIF Policy 4 . . VII. APPLICATION PROCESS The application process is a two-step process and must be completed in accordance with the TIF application procedures (Exhibit C). The purpose of this approach is to give an applicant the opportunity to present a development proposal without expending a great deal of money and time in pursuing a development that may conflict with the City's goals and objectives. VIII. OTHER POLICY ISSUES FISCAL DISPARITIES Does not impact the City of S1. Joseph according to State Statute. Loss of Government Aid At any time, if the formation of a new TIF district or the use of an existing district to finance a project will subject the City to an LGAlHACA penalty or local contribution to a project, the transaction shall be structured so as to have the ultimate cost the City minimized to the greatest extent permitted by law, so as to have the project bear the cost of the penalty or contribution. Public Use of Tax Increment The City shall follow applicable state laws in terms of potential public improvement financing with TIF. It shall be the general policy of the City to identify public improvements at the time of adoption or amendment of the TIF Plan. . PASSED AND DULY ADOPTED this _day of ,1998 by the City of St. Joseph. PASSED AND DULY ADOPTED this _ day of .1998 by the St. Joseph EDA. Mayor EDA Chair ATTEST: City Administrator EDA Director . Attachment A "But For" Worksheet Attachment B In-house Grading and Report Card Attachment C Application Procedures 81. Joseph TIP Policy 5 . Attachment A - " But For" Analysis . Sources and Uses Sources and Uses SOURCES SOURCES Bank 1 Bank 2 Bank 3 Equity Tax Increment TOTAL SOURCES I $ - I I $ - I USES USES Land Sitework Soil correction Demolition Relocation Subtotal Land Costs $ - $ - Construction Finish Manufacturing Subtotal Const Costs $ - $ - . Soft costs Taxes Finance Fees Project Manager Developer Fee Contingency Subtotal Soft Costs $ - $ - TOTAL USES ~ $ - I I $ - t Income Statement Income Statement All Revenues from Project Lease Income Net Income . TIF "But For" Test . . Attachment B TAX INCREMENT FINANCING PROPOSAL Gradin2 and Report cardO 1. Ratio of Private to Public Investment in the Project: Grade: - Private Funds/TIF $ Private Investment $5:1 A $ TIF/Public Investment 4:1 B $ Ratio of Private/Public Financing 3:1 C 2:1 D Below 2:1 F 2. New job creation in the City: Grade: - _ New employees in St. Joseph as a 50+ A result of the project 25+ B 15+ C . <15+ D None F 3. Ratio of City Financing to new jobs created: Grade: - $ TIF assistance requested $8,000 or less per job A New jobs created $10,000 or less per job B $ TIF/Job $12,000 or less per job C $15,000 or less per job D More than $15,000 F 4. Pay Level of Jobs: Grade: - Pay Range # of Employees in Range Total Wages Grade $45,000/yr or more A $35,000/yr or more B $30,000/yr or more C $20,OOO/yr or more D Less than $20,000 F Total Wages $ / # of employees (FTE) = Average wage $ . 5. Increase in Real Estate Value: Grade:_ . . 5. Increase in Real Estate Value: Grade: - Value of site after development Before/ After Development 1:5 A Value of site before development 1:4 B 1 :3 C Ratio of value before/after development 1:2 D 1:1 F Bonus Points (5 points total) · The project adds value to the neighborhood and/or business community 2 points and adheres to the Comprehensive Plan. · The developer agrees to the Pay-as-you-go financing. 1 point · The proposed project will redevelop a previously contaminated or 2 points environmentally challenged site. · Mixed use project bonus 2 points Total Bonus Points Available 7 points . . . . . PROJECT REPORT CARD BUSINESS and COMMERCIAL PROJECTS Ouestion Grade Points 1. A Excellent =5 - - B Very Good =4 2. C Average =3 - - D Below Average =2 3. F Fail =1 - - 4. - - 5. - - Bonus Požnts - TOTAL POINTS /5 = GPA - . . . . Attachment C . City of St. Joseph TIF Application Procedures · Applicant shall meet with the Economic Development Director to discuss the scope of the project, public assistance being requested, time schedule, and other information as may be necessary . · Following the initial meeting, the applicant shall provide information required by the Preliminary TIF Application Form. The application shall be submitted to the Economic Development Office as soon as possible. · The preliminary application will be reviewed by the Economic Development Director conceming the feasibility of the project on a preliminary basis. A report will be prepared by the EDA and present to the EDA Board for review and recommendation to the City Council. · The applicant shall be placed on the City Council agenda for concept review. The applicant may make a presentation of the project at that time, which is strongly suggested. The EDA Director will present the report and any other findings. · If the Council's concept review is positive, the applicant may file a Formal Application for Tax Increment Financing assistance. The following items must accompany the final application in order to be complete: 1. $2,000 final application fee . 2. $10,000 application deposit 3. Completed "But For" worksheet · All industrial uses within the City of St. Joseph require a Special Use Permit and action from / the Planning Commission is required. It will be necessary for applicant, at this time, to file a (' / V formal application with the Commission for review. · Following the necessary analysis of the final application by the EDA, a report shall be prepared and presented to the City Council and EDA for formal action. If the application is approved, the EDA Director will be instructed to undertake the following steps: 1. Prepare a development/redevelopment agreement between EDA and Developer; and 2. Prepare or modify the redevelopment plan and TIF plan if necessary. í · Prior to the completion and acceptance of the development/redevelopment agreement, the Vi Planning Commission and City Council must take 8ctioA-GA-tAe Special Use Permit. þ,tU;..( ('$~ít"c( ~ If you have any questions concerning the Tax Increment Financing application process, please contact: City of St. Joseph Economic Development Authority P.O. Box 668 St. Joseph, MN 56374 (320) 363-8573 . 81. Joseph TIF Policy Attachment C " City of St. Joseph . TIF Assistance Program Preliminary Application (Please print or type) General Information: Legal name of applicant: Address: Telephone Number: Fax Number: Name of contact person: The following information should be presented in to the S1. Joseph EDA Office as soon as possible after the initial meeting with the EDA Director. The information will be evaluated to determine if the proposed project conforms with the community's goals and objectives. :=} A map showing the exact boundaries of the proposed development. :=} Give a general description of the project including the following: . · Size and location of building(s) · rbµsiness type and use · tr~ffic information, including parking · ti~ing of project · e,stimated market value following completion J :=} The existing Comprehensive Plan land use designation and Zoning of the property. V Make a general statement)tfs how the project will conform to the land use designation. . :=} A statement identffying how the increment will be used and why it is needed to complete the project. :=} A statement identffying the public benefits of the proposal including estimated increase in property evaluation, new jobs, to be created and other community assets. :=} A written perspective of the developers company(i.e. corporation, principals, history, past project, etc.) Signature Applicants signature: Date: . 81. Joseph TIF Policy Attachment C-l . ~ City of 51. Joseph . TIF Assistance Program Formal Application (Please print or type) General Information: Business name: Date: Address: Type (partnership, etc.): Authorized Representative: Phone: Description of Business: Legal Counsel: Address: Phone: . Financial Information: => Have you ever filed for bankruptcy? (If yes, explain) => Have you ever defaulted on any loan commitment? => Have you applied for conventional financing for the project? (if so, where?) => List three financial references: a. b. c. => Have you ever use the TIF Assistance Program before? (if yes, where and when) . St. Joseph TIF Policy 1 · - Proiect Information: => Location of proposed project(lnclude map): · => Present Zoning of the site and proposed use of the facility: => Amount of Tax Increment Assistance requested: => Explain the need for TIF assistance: => Present ownership of site: => Number of permanent jobs created as a result of the project? => Property market value: Present: $ Future: $ => Any public benefits as a result of the project: => Name and address of architect/engineer: · => Anticipated start date: Completion date: Financial Information: Uses of Funds: · Land acquisition $ · Site development $ · Building cost $ · Equipment $ · Arch/engineering fees $ · Legal fees $ · Off-site development cost $ Sources of Funds: · Private financing inst. $ · Tax Increment funds $ · Other public funds (Local, State and Federal) $ · Developer equity $ . (Note: please list all sources separately, use additional sheets if necessary) 81. Joseph TIF Policy 2 '/Þ .. Please attach the following items to this application: 1.A letter of financial commitment from the participating lenders (if applicable) . 2. Plans and drawings of the project 3. Background material about the company 4. Pro Forma analysis 5. Financial statements (income and balance sheets for the past two years) 6. Statement of property ownership or control Signature: The information provided in this applicàtion is true and correct to the best of my knowledge. If the information is deemed to be misleading or untruthful, I will withdraw this application and/or allow the recipient to disregard the application in its entirety. I understand that the acceptance of this application does not ensure the assistance of Tax Increment Financing from the City of S1. Joseph for the completion of the project. Applicant's Signature: Date: . . 81. Joseph TIF Policy 3