HomeMy WebLinkAbout09.24.12 EDA Packet (Pif vac'
AGENDA
REGULAR ECONOMIC DEVELOPMENT AUTHORITY MEETING
SEPTEMBER 24, 2012
6:30 P.M.
CITY COUNCIL CHAMBERS
Todd Larson, Chair; Julie May, Vice-Chair
Jason Bartholomay, Terry Donnelly, Christy Fogarty
Doug Bonar, Geraldine Jolley
Action Taken
1. Call Meeting to Order
2. Pledge of Allegiance
3. Roll Call
4. Approve Agenda
5. Citizen Comments/Presentations
6. Consent Agenda
a) Meeting Minutes (8/27/12 Regular) Approved
b) Bills: 8/27/12—9/23/12 -None Approved
c) August 2012 Budget Information Received
d) Adopt Resolution—TIF Modification District 2 R12-01
7. Public Hearings
8. Continued Business
a) MCCD Update Approved$5,000
b) Review Strategic Plan—Tracking Sheet
i. October Business Visit Schedule
ii. Grow Farmington Update and Shop Local Information Received
9. New Business
a) Funding of EDA Budgets and Programs Information Received
b) Region Wide Economic Development Initiative Information Received
10. City Staff Reports/Open Forum/Discussion
11. Adjourn
C;Q
MINUTES
ECONOMIC DEVELOPMENT AUTHORITY
Regular Meeting
August 27, 2012
1. CALL TO ORDER
The meeting was called to order by Chair Larson at 6:46 p.m.
Members Present: Larson, Bartholomay, Fogarty, Bonar, Jolley
Members Absent: Donnelly, May
Also Present: Lee Smick, City Planner; Tony Wippler, Assistant City Planner;
Cynthia Muller, Executive Assistant
2. PLEDGE OF ALLEGIANCE
3. ROLL CALL
4. APPROVE AGENDA
Chair Larson moved items 9a and 9b to the beginning of the meeting
MOTION by Fogarty, second by Bartholomay to approve the Agenda. APIF,
MOTION CARRIED.
9. NEW BUSINESS
a) Metropolitan Consortium of Community Developers (MCCD) Presentation
The Open to Business Program is administered by the Metropolitan Consortium
of Community Developers (MCCD). Mr. Lee Hall and Mr. Rob Smolen of
MCCD explained their program. MCCD is a non-profit organization and is a
partnership program between their organization and municipalities to offer
support for business entrepreneurs and small businesses. The idea is to create a
program that cities can offer as their own program. They provide hands-on, one-
on-one consulting with the business to identify points of weakness or issues. That
is married with an access to capital program. This is to encourage private lending
with the client. These services have been provided in Minneapolis and Hennepin
County. They are in 16 cities. The CDA invited them to Dakota County. The
entrepreneur is not charged for these services. They serve as an advisor to the
business and inform people of what it takes to run a business. One third of
businesses are looking for assistance of$25,000 or less. Two thirds are
participation lending where they are providing money to a deal to encourage
private investment. This has ranged from $50,000 - $350,000.
Member Bonar noted they are considering hiring a full time staff member once a
minimum amount of contract is secured. Mr. Hall confirmed they would hire a
full time person for Dakota County. They have attended meetings in nine cities
and the response has been positive. Member Bonar asked how much of the
market will be outside Minneapolis in 2013. Mr. Lee stated they have a$1
million budget, with 60%being on the business development side. Half of that is
from traditional sources that have supported their work in Minneapolis. The other
30%will support their work outside Minneapolis. They have long term
EDA Minutes(Regular)
August 27,2012
Page 2
partnerships with the City of Minneapolis and with banks in Minneapolis. They
are finding more work in the suburbs than in Minneapolis. Member Bonar asked
if they provide mentorship to EDA staff over the short term so they are removing
themselves from the business in 3-5 years. Mr. Hall stated they work with
EDA's,but do not mentor them. There is value in separation. It is awkward for a
City employee when there is more than one business of the same type and they
have to provide aid to one and not the other. Their program is confidential as far
as their clients. Member Bonar noted 21%of the population works in
Farmington. Mr. Hall was surprised it was only 21%,but was not familiar with
what Farmington has for business or industry. Most cities do not know how many
home based businesses they have. The more people that live and work in the
community is a benefit to the community. They are big on developing from the
grass roots, not to build a strip mall.
Member Fogarty asked if they work with Greater MSP. Mr. Hall stated the Open
to Business program belongs to MCCD. If the county contracts with MCCD they
would contract specifically with them and they will provide the staff. MCCD is
an association of non-profit developers in the Twin Cities. They have 49 other
non-profit developers that are members of their organization. They do a lot of
cross-referral with other organizations for small business support. Mr. Smolen
stated Greater MSP is regional and attracts bigger businesses. MCCD works with
smaller businesses one-on-one. The community has access to their capital funds
to provide gap financing.
Member Jolley stated they provide financing so the relationship with the small
business is a loan relationship. Mr. Hall stated it can be. Member Jolley asked if
it can be a relationship not involving a loan and then do you charge a fee. Mr.
Hall stated 10% of their clients get a loan from them. There is never a fee for
consulting. Mr. Smolen stated the first step is to determine what they need in
capital. They try to get them into traditional bank financing. MCCD is the lender
of last resort. Member Jolley stated if an existing business is struggling and
wanted your expertise they could come to you. She asked if they are regulated
like a bank. Mr. Hall stated because they are a certified development financial
institution through the U.S. Treasury,they are able to access funds from them.
MCCD does annual reporting to them. Because of the size of their organization,
they are also subject to annual audit. As a lending organization,their only
reporting is through the CDFI, so they are more flexible. Member Jolley asked
who sets the rules, interest rates, collection procedures, etc. Mr. Hall replied they
are set internally. They have a board of directors and a committee of volunteers
made up of bankers that review and manage the loan portfolio. They also have a
volunteer finance committee made up of financial experts who provide guidance
on the overall management. Their capital costs are 2%. In their history they have
had an 8% loss rate. For a non-profit lender that is on the low end; for a for-profit
lender we would be out of jobs. The maximum rate they charge is 10%. They
pay 2% for the money,they lose 8% of the money, and they charge 10% so they
are breaking even. They make sure they maintain their capital base. Member
Jolley asked how long they stay with the businesses. Mr. Hall stated there are two
kinds of relationships; being available as a resource for ideas or for lending. They
have had some clients for ten years. They recently approved a third loan for the
EDA Minutes(Regular)
August 27,2012
Page 3
same business. Member Jolley asked about the cost to the City. Mr. Hall stated
they do not charge the client and the lending pays for itself. To cover salaries,
their building, miscellaneous expenses they charge a countywide fee of
$130,000/year. Farmington's fee would be $10,000 with the CDA providing
$5,000. Member Jolley asked what other involvement is expected from the City.
Mr. Hall stated they would expect the City to promote it. They are not
guaranteeing a set number of hours and they are not capping the amount of hours.
The more the City promotes it,they will be there to support the customers.
Success requires the City buying into the program.
Chair Larson asked how the City or businesses could use MCCD. Mr. Hall stated
through the amount of one-on-one time, if there is a business for sale, or space for
sale, MCCD could spend 80 hours with a client. Some people already have a
license and business, but have a problem. Mr. Smolen stated the people have to
write their own business plan and they build on that and what the next step is.
They do not run a business for them.
Member Bonar asked if any cities are deciding on joining this year. Ms. Andrea
Brennan, Dakota County CDA, stated there are eleven cities with a population
over 10,000 in Dakota County and those are the cities being considered to partner
with this program. One city has decided not to participate; other cities are
considering it or have included it in their budgets for 2013. MCCD has given a
presentation to the CDA, and the board has not taken action, but has included the
matching contribution in their budget. Formal approval will be brought to their
September meeting. In October the CDA should be able to determine if the
program will be finalized.
Member Jolley stated the market they work most with, under$25,000, she agreed
it is a difficult market because of the risk. She appreciated the fact they work
with the business plan. She asked what is the worst case; they lend money to a
business and they do not survive. Does MCCD take the loss? Mr. Hall stated
yes, generally speaking. They have a number of sources with layered funding.
They work with clients for eight to ten months before they provide funding. Not
everyone is approved.
Chair Larson liked the idea and the fact it is hands-on and working with the
smaller entrepreneur. The county's decision will play a big role in our decision.
Member Jolley stated the investment is minimal. If you spend the time on it, it
produces results. It is about teaching people who want to run a business,how to
actually do it. Member Fogarty was intrigued. Member Bartholomay wanted to
see what the county decides. The amount of investment is very low and felt
Farmington would get a lot out of it. Member Bonar would support it as a pilot
program for two to three years.
b) Andrea Brennan, Community Development Agency
Ms. Andrea Brennan, CDA Director of Community and Economic Development,
stated the CDA has completed two programs in Farmington;the senior housing in
Vermillion River Crossing and the Twin Ponds townhomes. Twin Ponds has 51
units and all but six units are leased, but have appointments scheduled.
EDA Minutes(Regular)
August 27,2012
Page 4
Vermillion River Crossing contains 66 units and all but eight are leased,but
appointments have been scheduled. Dedication ceremonies will be held this fall.
The CDA has been convening a group of economic development professionals in
Dakota County who meet on a bi-monthly basis including Farmington Planning
staff. The CDA is interested in supporting economic development efforts of the
cities. They are interested in investing in greater MSP on behalf of the county.
The Open to Business Program came to the CDA from the Burnsville City staff.
Greater MSP promotes the greater metro area and the county. They are working
on increasing the visibility of suburban areas. They are targeted to recruitment
and retention of large businesses. Open to Business is another tool for smaller
businesses. The CDA board has not yet approved this program. Member Fogarty
noted the city has to decide which program is better for Farmington. Open to
Business may be more useful to us. The cost to join Greater MSP is $5,000.
Member Bonar asked if the CDA works on refurbishing existing structures. Ms.
Brennan stated they do have several housing finance programs and have partnered
with private developers. There is a requirement that 20% -40%have to be
affordable. The CDA has partnered with Habitat for Humanity over the last ten
years to rehabilitate housing. Member Bonar asked what the CDA sees in the
future for partnering with Farmington. Ms. Brennan stated they have wanted to
do Twin Ponds phase three for single family housing. They are waiting for more
demand. County-wide there is not a lot going on for multi-family housing. The
CDA works with staff on spending CDBG funds. Member Bonar asked if the
CDA will be looking at commercial/industrial growth in the county. Ms. Brennan
stated it is not on their agenda right now, but staff can bring it to the monthly
meetings.
Member Bartholomay asked when another senior housing project will be done.
Ms. Brennan stated they move those projects around the county. They have four
remaining buildings in their capital improvement plan. They do not have another
CIP developed yet. They have seen a sharp decline in the amount of resources
they have. Their requests for senior housing in 2013 are lower than 2006. Sites
have not been identified for the four buildings. They wait to see how quickly a
waiting list for current housing grows.
Ms. Brennan stated there will be an Economic Development Event on October 28,
2012, at the Rosemount Community Center. The focus of the event is
highlighting smaller businesses and how they have benefited from services in the
county. DCTC will be moderating and there will be a panel of business
representatives.
5. CITIZEN COMMENTS/PRESENTATIONS
6. CONSENT AGENDA
MOTION by Fogarty, second by Bartholomay to approve the Consent Agenda as
follows:
a) Approved Meeting Minutes (6/25/12 Regular)
b) Approved Bills 6/16/12—8/26/12
EDA Minutes(Regular)
August 27,2012
Page 5
c) Received June and July 2012 Budget
APIF,MOTION CARRIED.
7. PUBLIC HEARINGS
8. CONTINUED BUSINESS
a) Review Strategic Plan
i. Business Visits
Staff and EDA members have completed 28 business visits since June. The
businesses enjoy the visits. Last week they went to Kwik Trip, Smiles for Life
Dentistry,Akin Hills Pet Clinic, and Pilot Knob Pizzeria. City Planner Smick
asked if twice a month was too often as more participation is needed. Member
Bartholomay felt the visits are very important. Member Fogarty is available
Wednesday morning. Staff and two EDA members would be appropriate.
Member Jolley has been on 12 visits and really enjoys them. Businesses like to
show what they do and talk about their business. Members Bonar and
Bartholomay would be available on Fridays. The EDA agreed to continue with
two visits a month.
ii. Shop Local Campaign—Tracking Sheet
Cities with a shop local program have a revenue growth of 5.6%, and those
without a program have 2.1%growth. Public awareness of the program is key.
Staff would have to talk with the Farmington Business Association, so City
Planner Smick proposed to reconvene the Grow Farmington group to discuss
what brand they want such as Farmington First, or Go Local, etc. The
Farmington Independent will provide marketing ideas. Staff wanted to talk with
the City Council about offering start-up cash of$5,000. Staff would help with
advertising and whatever is needed. Chair Larson asked staff to prepare a
schedule with a timeline ending in when the program will launch. The money
would come from the$50,000 available in the general fund to the EDA each year.
9. NEW BUSINESS
c) EDA Budget
The budget includes a transfer of$50,000 from the general fund which was
started in 2012 for EDA operations. The EDA needed to determine if they
wanted to continue this for 2013. In the EDA budget there is a-$33,500 inter-
fund loan to be repaid to the storm sewer trunk fund which will continue for the
next six years. Right now there is $12,080 in the EDA fund. The $33,500 comes
out of the $50,000. In 2008 or 2009,there was an inter-fund loan having to do
with the library. This was also brought to the EDA in March 2011 and stemmed
from separating out TIF funds from the HRA. Member Fogarty thought we used
fiscal disparities money to eliminate the EDA debt and thought that took care of
all debt. Staff suggested this may be separate from that. EDA members wanted
more information on the inter-fund loan. Members agreed to continue providing
the EDA with$50,000 each year from the general fund. Member Bonar
suggested increasing that number as we have spent a lot of time putting a plan
together and hoped they would attach a person to this plan. The third part is
having some funding available to pave the path to progress. If we underfund it, it
will hamper our ability to start some of the efforts we are considering. Member
EDA Minutes(Regular)
August 27,2012
Page 6
Bonar was trying to obtain some historical information on when economic
development was a department and how much it took to run that. Member
Fogarty mentioned the HRA primarily worked on the industrial park. It has been
discussed to build the initial infrastructure to entice industry to come. Member
Bartholomay suggested contacting cities of similar size to see how they fund their
EDA.
Mr. Clyde Rath stated if you hire these people to work with home-based
businesses, which he was struggling with why we need to work with home-based
businesses to develop,there is no where to put anyone especially in the
downtown. You have building owners that should not own buildings or they are
falling apart. If you want to bring a business in to downtown, it is hard to find a
space for them. He suggested the EDA buy a couple buildings downtown to get
the rent in line and provide a place for businesses to come. To encourage people
to come to open a business when we have no place to put them; you are throwing
money away. Member Fogarty mentioned we do have the Riste lot. Mr. Rath has
been talking with a business similar to Vintage Marketplace that wants to come
in. It is difficult to find a space large enough. Member Fogarty stated that is
within a four block radius. In Vermillion River Crossing we have lots of land.
Mr. Rath stated for the small business,they will not have the funds to build. You
need to have affordable rent to make them work. Chair Larson stated we also
have spaces on First Street for incubator businesses. Member Fogarty stated there
are plenty of spaces in what she would consider downtown,but within the four
block radius it is tough. Chair Larson stated we have the hwy 3 strip mall,
Tamarack, and former Pellicci's. Mr. Rath felt it should be on an agenda to figure
out what to do about rent in the downtown.
Member Fogarty wanted to see where we are for fiscal disparities. City Planner
Smick did not want another year of the City missing opportunities by not having
funding. Member Fogarty stated it is a big difference if we have $50,000 or
$12,000. Mayor Larson asked about the missed opportunities. City Planner
Smick explained she received a call regarding redeveloping the old BP station on
hwy 3 and they asked if we had any incentives and we didn't. She also received a
call regarding the former Angel to Diva location who is very interested in being in
Farmington. She also asked about funding. Mayor Larson asked what they want
for funding. City Planner Smick suggested $5,000 which could be used for rent
assistance. The BP developer was looking for$10,000. There would have to be
criteria put together. Member Fogarty liked the former Business Assistance
Program we did have with low interest loans. She would like to see that come
back. Member Bartholomay met with some people interested in a restaurant in
Tamarack. Even if the EDA helps with a small amount, such as $5,000, it shows
the City has some investment in them. Member Fogarty recalled Anna's
Banana's received a$15,000 grant from us and it helped her get financing.
Member Jolley stated banks will never fund 100%, so if you have something to
bring to the table, it looks better. City Planner Smick was concerned that Installed
Building Solutions is looking for a new site, perhaps in Bloomington. Mayor
Larson and staff will be contacting them to help them stay in Farmington.
Member Fogarty would like the $50,000 to be our operating budget for the year.
If we could come up with a program like we had she would have that as another
EDA Minutes(Regular)
August 27,2012
Page 7
funding line and not mix them together. The $50,000 could be used for programs,
or budget decisions the EDA would make. Member Bonar agreed with targeted
dollars set aside for a purpose and general dollars to cover operations. Member
Jolley would like to see part of the money reserved for business opportunities.
EDA members were confused on the storm sewer trunk fund loan and wanted
more information. Staff will move forward on the shop local campaign and
prepare a schedule for it. The EDA did not want to approve the EDA budget until
they learn more about the inter-fund loan,but did support the $50,000 for
operating costs for the EDA.
10. CITY STAFF REPORTS
Member Bartholomay asked about funding for Greater MSP. Member Fogarty stated that
program is very focused on the Minneapolis/St. Paul area and does not see anything
trickling down to other cities from that program. She was more comfortable with
partnering with Dakota County CDA. Member Bartholomay thanked Executive
Assistant Muller for her work on the Farmers' Market. He learned that this year 3/4 of his
neighborhood patronizes the market and last year there were only a couple people. Staff
has learned there are numerous people from the north end that attend the market.
11. ADJOURN
MOTION by Fogarty, second by Bartholomay to adjourn at 8:34 p.m. APIF,MOTION
CARRIED.
Respectfully submitted,
Cynthia Muller
Executive Assistant
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TO: EDA Members
FROM: David J. McKnight, City Administrator
SUBJECT: Modification of HRA Redevelopment District No. 2 with the Downtown
Redevelopment Project
DATE: September 24, 2012
INTRODUCTION
Attached for your review is a resolution adopting the modification to the redevelopment plan for
the downtown redevelopment project; and adopting the modification to the tax increment
financing plan for HRA redevelopment district number two within the downtown redevelopment
project. This plan/resolution has already been approved by the Planning Commission along with
the City Council after a public hearing was held on September 17,2012.
DISCUSSION
After the annual audit of our tax increment finance districts in 2012, Ehlers and Associates
proposed the modifications to the HRA redevelopment district number two within the downtown
redevelopment district. The changes are being proposed to reflect actual increment received to
date and expected through the term of the district and bring the plan into conformance with the
current Office of the State Auditor requirements.
BUDGET IMPACT
All expenditures of the modification are included in the tax increment finance district.
ACTION REQUESTED
Approve the attached resolution adopting the modification to the redevelopment plan for the
downtown redevelopment project; and adopting the modification to the tax increment financing
plan for HRA redevelopment district no. 2 within the downtown redevelopment project.
Respectfully submitted,
David J. McKnight
City Administrator
CITY OF FARMINGTON
DAKOTA COUNTY
STATE OF MINNESOTA
RESOLUTION NO. 12-01
RESOLUTION ADOPTING A MODIFICATION TO THE REDEVELOPMENT
PLAN FOR THE DOWNTOWN REDEVELOPMENT PROJECT AND A
MODIFICATION TO THE TAX INCREMENT FINANCING PLAN FOR HRA
REDEVELOPMENT DISTRICT NO. 2 WITHIN THE DOWNTOWN
REDEVELOPMENT PROJECT.
Whereas, the Board of Commissioners of the Farmington Housing and Redevelopment Authority (the
"HRA") has heretofore established the Downtown Redevelopment Project (the "Project Area") and
adopted a Redevelopment Plan therefore.
WHEREAS, on August 22, 2005, the City Council enabled the creation of an Economic Development
Authority (the "EDA") in the City of Farmington (the "City"), Minnesota and as of January 1, 2006, the
EDA accepted the control authority, and operation of all projects,programs, and activities of the HRA.
WHEREAS, it has been proposed by the Board of Commissioners(the"Board")of the EDA and the City
that the EDA adopt the Modification to the Redevelopment Plan for the Downtown Redevelopment
Project (the "Project Modification") and the modification to the Tax Increment Financing Plan (the "TIF
Plan") for HRA Redevelopment District No. 2 (the "District") (collectively, the Project Modification and
TIF Plan are referred to as the "Modifications"), all pursuant to and in conformity with applicable law,
including Minnesota Statutes, Sections 469.090 to 469.1082 and Sections 469.174 to 469.1799, all
inclusive, as amended, (the "Act") all as reflected in the Project Modification and TIF Plan and presented
for the Board's consideration; and
WHEREAS, the EDA has investigated the facts relating to the Modifications and has caused the
Modifications to be prepared; and
WHEREAS,the EDA has performed all actions required by law to be performed prior to the adoption and
approval of the proposed Modifications. The EDA has also requested the City Planning Commission to
provide for review of and written comment on the Modifications; and,
WHEREAS,the Council held a public hearing on and approve dthe Modifications,upon published notice
as required by law,on September 17,2012.
NOW,THEREFORE,BE IT RESOLVED by the Board as follows:
1. The EDA hereby reaffirms that the District as modified herein is in the public interest and is a
"redevelopment district" under Minnesota Statutes, Section 469.174, subd. 10(a)(1), and finds
that the Modifications conform in all respects to the requirements of the Act and will help fulfill a
need to develop an area of the State of Minnesota which is already built up and that the adoption
of the proposed Modifications will help provide employment opportunities in the State and in the
preservation and enhancement of the tax base of the City and the State because it will discourage
commerce and industry from moving their operations to another state or municipality and thereby
serves a public purpose.
2. The EDA further finds that the Modifications will afford maximum opportunity, consistent with
the sound needs for the City as a whole, for the development or redevelopment of the project area
by private enterprise in that the intent is to provide only that public assistance necessary to make
the private developments financially feasible.
3. Following the approval of the Modifications by the City Council on September 17, 2012, the
Modifications, as presented to the EDA on this date, are hereby approved, established and
adopted and shall be placed on file in the office of the City Administrator.
4. The staff, the EDA's advisors and legal counsel are authorized and directed to proceed with the
implementation of the Modifications and for this purpose to negotiate, draft, prepare and present
to this Board for its consideration all further plans, resolutions, documents and contracts
necessary for this purpose. Approval of the Modifications does not constitute approval of any
project or a Development Agreement with any developer.
5. The City Administrator is authorized and directed to forward a copy of the Modifications to the
Minnesota Department of Revenue and Office of the State Auditor pursuant to Minnesota
Statutes 469.175, Subd.4a.
Approved by the Board of Commissioners of the Farmington Economic Development Authority
this 24th day of September 2012.
Chair
Attest: catAA:
Executive Dir c
SCHEDULE OF EVENTS
FARMINGTON ECONOMIC DEVELOPMENT AUTHORITY
AND THE CITY OF FARMINGTON
DAKOTA COUNTY,MINNESOTA
FOR THE MODIFICATION TO THE REDEVELOPMENT PLAN
FOR THE DOWNTOWN REDEVELOPMENT PROJECT
AND THE MODIFICATION TO THE TAX INCREMENT FINANCING PLAN FOR
HRA REDEVELOPMENT DISTRICT NO.2
(a redevelopment district)
August 1,2012 Project information (redevelopment plan and maps) for drafting necessary
documentation sent to Ehlers.
August 6,2012 City Council calls for a public hearing on the modification to the Redevelopment Plan
for Redevelopment District No 2 and the Tax Increment Financing Plan for
Redevelopment District No 2.
August 7,2012 Letter received by County Commissioner giving notice of potential redevelopment tax
increment fmancing district modification(at least 30 days prior to publication of public
hearing notice.) [Ehlers will fax and mail on or before August 7, 2012.]
August 17,2012 Fiscal/economic implications received by School Board Clerk and County Auditor (at
least 30 days prior to public hearing). [Ehlers will fax& mail on or before August 17,
2012]
August 20,2012 Ehlers&Associates conducts internal review of the Modifications.
September 6,2012 Date of publication of hearing notice and map (at least 10 days but not more than 30
days prior to hearing). [Ehlers will e-mail notice & map to the Farmington
Independent by August 31, 2012 to legalsl @farmingtonindependent.com]
September 11,2012 Planning Commission reviews Modifications to determine if they are in compliance
with City's comprehensive plan and adopts a resolution approving the Modifications.
September 17,2012 City Council holds public hearing at 7:00 p.m. on the modification to the
Redevelopment Plan for the Downtown Redevelopment Project and the modification
of HRA Redevelopment District No 2 and passes resolution approving the
Modifications. [Ehlers will email council packet information on or before September
10, 2012]
September 24,2012 EDA adopts a resolution approving the Modifications.
,2012 Ehlers files Modifications with the MN Department of Revenue, OSA and Hennepin
County.
An action under subdivision 1,paragraph(a),contesting the validity of a determination by an authority under section 469.175,
subdivision 3,must be commenced within the later of:
(1) 180 days after the municipality's approval under section 469.175,subdivision 3;or
(2)90 days after the request for certification of the district is filed with the county auditor under section 469.177,subdivisionl.
As of September 24, 2012
Draft for EDA
Modification to the
Tax Increment Financing Plan
for
the HRA Redevelopment District No. 2
(a redevelopment district)
within
the Downtown Redevelopment Project
Farmington Economic Development Authority
City of Farmington
Dakota County
State of Minnesota
Adopted: June 17, 1991
Public Hearing on Modification No. 1: September 17,2012
Modification No. 1 Adopted:
0 E H L E RS Prepared by: EHLERS&ASSOCIATES,INC.
3060 Centre Pointe Drive, Roseville,Minnesota 55113-1105
651-697-8500 fax: 651-697-8555 www.ehlers-inc.com
Table of Contents
A.STATUTORY AUTHORITY 1
B.STATEMENT OF OBJECTIVES 1
C. STATEMENT OF DEVELOPMENT PROGRAM 2
D.LEGAL DESCRIPTION OF PROJECT PROPERTY 2
E. STATEMENT OF REDEVELOPMENT ACTIVITIES FOR WHICH CONTRACTS HAVE BEEN
ENTERED INTO 2
F.IDENTIFICATION OR DESCRIPTION OF TYPE OF OTHER SPECIFIC DEVELOPMENT
REASONABLY EXPECTED TO TAKE PLACE WITHIN THE PROJECT AND EXPECTED DATE
OR DATES THEREOF 3
G.STATEMENT OF TOTAL DEVEIDPMENT ACTIVITIES TO TAKE PLACE WITH PROPOSED
DATE OF COMPLETION 3
H.PROJECT COSTS ESTIMATES INCLUDING ADMINISTRATIVE EXPENSES 3
I.PROPOSED BONDING INDEBTEDNESS TO BE INCURRED 4
J.SOURCE OF REVENUE TO FINANCE OR OTHERWISE PAY PUBLIC COSTS 4
K.MOST RECENT NET TAX CAPACITY OF TAXABLE REAL PROPERTY WITHIN TAX
INCREMENT FINANCING DISTRICT 5
L.ESTIMATED CAPTURED NET TAX CAPACITY OF TAX INCREMENT FINANCING DISTRICT
UPON REDEVELOPMENT COMPLETION 5
M.DURATION OF TAX INCREMENT FINANCING DISTRICT 5
N.STATEMENT OF AUTHORITIES'ESTIMATE OF IMPACT OF TAX INCREMENT FINANCING
DISTRICT ON ASSESSED VALUES OF ALL TAXING JURISDICTION AFFECTED THEREBY 6
O.STUDIES AND ANALYSIS 8
P.BUSINESS SUBSIDIES 8
Q.DEFINITION OF TAX INCREMENT REVENUES 9
R.MODIFICATIONS TO THE DISTRICT 9
S.ADMINISTRATIVE EXPENSES 10
T.USE OF TAX INCREMENT 11
U.EXCESS INCREMENTS 11
V.ASSESSMENT AGREEMENTS 11
W.ADMINISTRATION OF THE DISTRICT 12
X.ANNUAL DISCLOSURE REQUIREMENTS 12
Y.REASONABLE EXPECTATIONS 12
Z.OTHER LIMITATIONS ON THE USE OF TAX INCREMENT 12
AA. SUMMARY 13
AB.FISCAL DISPARITIES ELECTION 13
Exhibits
"A"—Description of Property to be Included in the District
"B"—Project Cost Estimates
"C"—Projected Tax Increments to be Received
"D"-Map
A.STATUTORY AUTHORITY
The Housing and Redevelopment Authority of the City of Farmington, Minnesota(hereinafter HRA), undertakes
this project pursuant to Minnesota Statutes 469.001 to 469.047 as HRA Development District #2. Further,
pursuant to M.S.A.469.174 to 469.190 the HRA intends financing for HRA Development District#2 through the
use of tax increment financing.
(AS MODIFIED SEPTEMBER 17,2012)
On August 22, 2005, the City Council enabled the creation of an Economic Development Authority
("EDA") in the City of Farmington, Minnesota. As of January 1, 2006, the EDA accepted the control,
authority,and operation of all projects,programs,or activities of the HRA.
B. STA'T'EMENT OF OBJECTIVES
1. Provide new infrastructure facilities to provide impetus for industrial development to be located on the
Redevelopment Property;
2. Improve and provide opportunities for growth in the financial base of the City;
3. Provide employment opportunities through the creation of new jobs;
4. Provide opportunities for development of and expansion of existing businesses;
4. Acquire land or space and poorly configured parcels which are vacant, unused,underused, or inappropriately
used a part of which consists of abandoned railroad right-of-way;
5. Acquire property for public use and/or reuse by private enterprise;
6. Eliminate blight and blighting influences which impede potential development by employment opportunities
and upgrading of developed property within the city;
7. Coordinate elements of the City's Comprehensive Plan with project objectives;and
8. Provide maximum opportunity,consistent with the needs of the City,for development by private enterprise.
9. Raze dilapidated residential buildings,join together irregular parcels to create an economically viable parcel
on which development can occur and redevelop area to appropriate land use.
10. Eliminate soil and water contaminated area thereby becoming a developable area by private enterprise.
11. Remove possible hazardous waste substances and the sources of that contamination.
(AS MODIFIED SEPTEMBER 17,2012)
The TIF Plan for TIF District No. 2 is being modified to reflect actual increment received to date and
expected through the term of the District and bring the plan into conformance with current OSA
requirements.
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C. STATEMENT OF DEVELOPMENT PROGRAM
The tax increment fmancing district is being created for the purpose of continuing improvement and
revitalization activities in and adjacent to the existing downtown area of the City of Farmington in accordance
with the City's Comprehensive Plan and the objectives of HRA.The proposed redevelopment consists of razing
obsolete and blighted housing; purchase numerous parcels of poorly configured lots; purchase former railroad
right-of-way property; and petition City to vacate former streets within the area. The HRA shall combine the
parcels to form a single economically viable parcel consistent with HRA project plans and objectives and the
City's overall development plan. The HRA proposes to assist the developer in acquiring the unified parcel of
land or portion thereof as hereinafter legally described, together with streets to be vacated, for the construction
of commercial and residential facilities. In addition, the developer will be assisted in a portion of the costs of
site development, public utilities installation and other public improvement costs associated therewith. Funding
for public redevelopment costs will be born by the HRA partly through the issuance of Bonds with repayment
thereof by the tax increment generated as a result of this development and partly through repayment to HRA for
acquisition costs born by HRA. Currently the HRA has negotiated the development contract relating to the
construction of a retail shopping facility to be located thereon. Further, this project is part of a larger
redevelopment plan one of the objectives of which is to relocate existing manufacturing from blighted areas in
the commercial area to a more appropriate location to provide efficient allocation of land, and separate
incompatible land uses.The HRA is negotiating to relocate Austin Products will allow the manufacturing site to
be cleared and the property redeveloped to eliminate blight in the area of the original commercial downtown
and reconfigure the original parcels to conform to the Downtown Redevelopment Plan.
D. LEGAL DESCRIPTION OF PROJECT PROPERTY
See Exhibit"A"attached.
E. STATEMENT OF REDEVELOPMENT ACTIVITIES FOR WHICH CONTRACTS HAVE BEEN ENTERED
INTO
The HRA has entered into a Development Agreement with Elm Park Limited, Inc., for the construction of a
37,200 square foot commercial facility to be located on the site. The commercial facility is to have an assessed
valuation of$1,860,000.00 pursuant to the terms of an Assessment Agreement. The Development Agreement is
contingent upon HRA being able to acquire all necessary properties at a cost which will be recoverable through
payment of tax increment to be received in respect to the project. The contract is further contingent upon
Developers obtaining financing acceptable to HRA and the titles to the several properties being marketable or
acceptable to Developer.The expected completion date of construction is spring of 1992.
(AS MODIFIED SEPTEMBER 17,2012)
As of the date of this modification,the Authority has entered into contracts with the following developers
for the following development activities:
1. The Elm Park Limited Incorporated,dated September 20,1993.Activity is the construction of an
approximately 37,200 square foot commercial facility,which has been completed.
2
F. IDENTIFICATION OR DESCRIPTION OF TYPE OF OTHER SPECIFIC DEVELOPMENT REASONABLY
EXPECTED TO TAKE PLACE WITHIN THE PROJECT AND EXPECTED DATE OR DATES THEREOF
Without HRA acquisition of parcels, clearing of blighted buildings, and purchase of prior railroad right-of-
way to form a unit viable for development, no other development is reasonably expected in the foreseeable
future within the project area.Further this development is the relocation of an existing manufacturing business
within the blighted area to a more appropriate location.
G. STATEMENT OF TOTAL DEVEIDPMENT ACTIVITIES TO TAKE PLACE WITH PROPOSED DATE OF
COMPLETION
Purchase and Transfer of Project Property ... Fall of 1990
--free of encumbrances thereon-
Site Preparation for Construction Fall of 1990
Installation of Utilities .. Fall of 1990
Paving Spring of 1991
Curbs and Walkways Installed Spring of 1991
Landscaping Spring of 1991
H. PROJECT COSTS ESTIMATES INCLUDING ADMINISTRATIVE EXPENSES
See Exhibit"B"attached.
(AS MODIFIED SEPTEMBER 17,2012)
The total uses of funds has been revised to reflect the actual increment received to date and expected to be
received through the term of the District. In addition, the City and EDA have determined that it will be
necessary to provide assistance to the project(s)for certain District and Downtown Redevelopment Project
costs. The revised cumulative uses of tax increment funds is summarized in the table below:
USES OF TAX INCREMENT FUNDS TOTAL
Land/Building Acquisition $350,000
Site Improvements/Preparation $250,000
Other Qualifying Improvements $1,350,000
Administrative Costs(up to 10%) $300,000
PROJECT COST TOTAL $2,250,000
Interest $900,000
PROJECT AND INTEREST COSTS TOTAL $3,150,000
The total project cost,including financing costs(interest)listed in the table above does not exceed the total
projected tax increments for the District as shown in Section J.
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Estimated capital and administrative costs listed above are subject to change among categories by
modification of the TIF Plan without hearings and notices as required for approval of the initial TIF Plan,
so long as the total capital and administrative costs combined do not exceed the total listed above.Further,
the EDA may spend up to 25 percent of the tax increments from the District for activities(described in the
table above) located outside the boundaries of the District but within the boundaries of the Project
(including administrative costs,which are considered to be spent outside the District), subject to all other
terms and conditions of this TIF Plan.
I. PROPOSED BONDING INDEBTEDNESS TO BE INCURRED
Bonding up to the amount of $1,250,000.00 will be issued in phases in respect to the project. Further, the
remaining public development costs are to be financed by HRA indebtedness in respect to land acquisition;
repayment to be made from TIF funds. Said financing to be in accordance with paragraph H above.
(AS MODIFIED SEPTEMBER 17,2012)
The EDA or City may issue bonds (as defined in the TIF Act) secured in whole or in part with tax
increments from the District in a maximum principal amount of$1,250,000. Such bonds may be in the
form of pay-as-you go notes, revenue bonds or notes, general obligation bonds, or interfund loans. This
estimate of total bonded indebtedness is a cumulative statement of authority under this TIF Plan as of the
date of this modification.
J. SOURCE OF REVENUE TO FINANCE OR OTHERWISE PAY PUBLIC COSTS
Public costs will be repaid by tax increment received pursuant to the schedule of projected payments shown on
Exhibit"C"attached hereto.
(AS MODIFIED SEPTEMBER 17,2012)
The costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax
increments. The EDA or City reserves the right to incur bonds or other indebtedness as a result of the TIF
Plan. This provision does not obligate the EDA or City to incur debt. The EDA or City will issue bonds or
incur other debt only upon the determination that such action is in the best interest of the City.
The total estimated tax increment revenues for the District are shown in the table below:
SOURCES OF FUNDS TOTAL
Tax Increment $3,100,000
Interest $50,000
TOTAL $3,150,000
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K. MOST RECENT NET TAX CAPACITY OF TAXABLE REAL PROPERTY WITHIN TAX INCREMENT
FINANCING DISTRICT
Parcel #14-77000-030-18/Tax Capacity $ -0-
Parcel #14-77000-040-18/Tax Capacity $ -0-
Parcel #14-77000-050-18/Tax Capacity $ 13.78
Parcel #14-77000-060-18/Tax Capacity $ 2,065.30
Parcel #14-77000-061-18/Tax Capacity $ 387.48
Parcel #14-77000-070-18/Tax Capacity $ 1,463.46
Parcel #14-77000-080-18/Tax Capacity $ 590.10
Parcel #14-77000-090-18/Tax Capacity $ 604.84
Parcel #14-77000-100-18/Tax Capacity $ -0-
Parcel #14-77000-060-25/Tax Capacity $ -0-
Parcel #14-03100-012-01 /Tax Capacity $ 953.18
Parcel #14-03100-011-37/Tax Capacity $ 1,822.78
(AS MODIFIED SEPTEMBER 17,2012)
The actual original local tax rate for the TIF District is 132.731,which is the rate for taxes payable in 1994.
The estimated rate for taxes payable in 2012 is higher,as shown in the chart below. The lower rate is used
for purposes of tax increment projections in the Modification
Project Estimated Tax Capacity upon Completion(PTC) $110,440
Original Estimated Net Tax Capacity(ONTC) 8,395
Estimated Captured Tax Capacity(CTC) $102,045
Original Local Tax Rate 1.32731 Pay 1994
Estimated Annual Tax Increment(CTC x Local Tax Rate) $135,445
Percent Retained by the EDA 100%
L. ESTIMATED CAPTURED NET TAX CAPACITY OF TAX INCREMENT FINANCING DISTRICT UPON
REDEVELOPMENT COMPLETION
See Exhibit"C"attached hereto.
M. DURATION OF TAX INCREMENT FINANCING DISTRICT
The tax increment financing district is a redevelopment district.The district shall exist for twenty-five(25)years
from the date of the receipt of the first tax increment payment. If the public costs are repaid within a shorter
period,the district shall be dissolved as of the date of repayment of such costs. See Exhibit"C"attached hereto.
5
(AS MODIFIED SEPTEMBER 17,2012)
Pursuant to M.S., Section 469.175, Subd. 1,and Section 469.176, Subd. 1,the duration of the District must
be indicated within the TIF Plan. Pursuant to M.S., Section 469.176, Subd. ib,the duration of the District
will be 25 years after receipt of the first increment by the City(a total of 26 years of tax increment). The
date of receipt by the City of the first tax increment was July, 1996. Thus,it is estimated that the District,
including any modifications of the TIF Plan for subsequent phases or other changes,would terminate after
December 31,2021,or when the TIF Plan is satisfied. The City reserves the right to decertify the District
prior to the legally required date.
N. STATEMENT OF AUTHORITIES'ESTIMATE OF IMPACT OF TAX INCREMENT FINANCING DISTRICT
ON ASSESSED VALUES OF ALL TAXING JURISDICTION AFFECTED THEREBY
The property in question is taxed as:
Parcel #14-77000-030-18
Parcel #14-77000-040-18
Parcel #14-77000-050-18
Parcel #14-77000-060-18
Parcel #14-77000-061-18
Parcel #14-77000-070-18
Parcel #14-77000-080-18
Parcel #14-77000-090-18
Parcel #14-77000-100-18
Parcel #14-77000-060-25
Parcel #14-03100-012-01
Parcel #14-03100-011-37
with total market value of $400,400.00 and assessed value of $400,400.00. The gross tax on the parcels is
$7,900.92;the same being broken down as follows,to-wit:
City of Farmington $1,858.93
School District#192 $4,407.29
Dakota County $1,520.61
Other $114.56
Assuming the property was developed as proposed without the aid of tax increment financing the impact on the
taxing jurisdictions would be as follows:
The appraised value of the property as improved is estimated to be approximately$4,260,000.00
Real Estate Tax to be generated, in excess of the present base tax, is in the estimated amount of
$178,406.00 with the same being allocated as follows:
Percentage Amount
City of Farmington 23.528 $41,975.00
Independent School District 55.782 $99,518.00
Dakota County 19.246 $34,336.00
Others 1.445 $2,577.00
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However,the development as proposed would not be viable within the foreseeable future without the assistance of
tax increment financing. Therefore there is no negative impact on the respective taxing jurisdictions excepting
therefrom loss to the City of Farmington of LGA Funds of$342,507 as determined by present law.
(AS MODIFIED SEPTEMBER 17,2012)
The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the
parcels listed below.
Parcel Numbers Address Owner
14-25831-00-010 OUTLOT A Farmington City Center LLC
14-25831-01-010 113 Elm St. City Center Development LLC
14-25831-01-020 109 Elm St. Farmington City Center LLC
14-25831-01-031 115 Elm St. Farmington City Center LLC
The charts below include the captured tax capacity for the original and modified District.
IMPACT ON TAX BASE
2011/Pay 2012 Estimated Captured
Total Net Tax Capacity(CTC) Percent of CTC
Tax Capacity Upon Completion to Entity Total
Dakota County 356,397,445 102,045 0.0003%
City of Farmington 13,576,819 102,045 0.0075%
ISD 192 22,964,744 102,045 0.0044%
IMPACT ON TAX RATES
Pay 2012 Percent Potential
Extension Rates of Total CTC Taxes
Dakota County 0.314170 20.40% 102,045 32,059
City of Farmington 0.63093 40.97% 102,045 64,383
ISD 192 0.55292 35.91% 102,045 56,423
Other 0.04187 2.72% 102,045 4,273,
Total 1.53989 100.00% 126,120
The estimates listed above display the captured tax capacity as of taxes payable in 2012. The tax rate used
for calculations is the actual Pay 2012 rate. The total net capacity for the entities listed above are based on
actual Pay 2012 figures.
7
O. STUDIES AND ANALYSIS
In 1984, Barton-Aschman Associates, Inc. prepared a study of Retail Market Analysis and Revitalization study.
Subsequently, and in conjunction with the above named study Milo Thompson prepared a further study in 1987,
taking into account the physical locations of revitalization activities to accomplish HRA objectives. In the
intervening years the City of Farmington and the HRA have repeatedly attempted to accomplish the objectives
and parts thereof by private investment and development without government assistance. Those efforts
experienced miimal success because interested private efforts experienced minimal success because interested
private developers found that development, without substantial government aid, was not practicable. Therefore,
since no private development was found to be feasible for this property and since the City of Farmington and the
HRA must move forward to accomplish the objectives of redevelopment and eliminate blight,the project is being
undertaken by the HRA.Although the HRA has repeatedly attempted to induce private investment,the fact is that
both in the past and in the reasonably foreseeable future, it appears that private investment and redevelopment of
the subject property is not viable without government assistance.
(AS MODIFIED SEPTEMBER 17,2012)
P.BUSINESS SUBSIDIES
Pursuant to M.S.,Section 116J.993,Subd 3,the following forms of financial assistance are not considered a
business subsidy:
(1) A business subsidy of less than$150,000;
(2) Assistance that is generally available to all businesses or to a general class of similar businesses,such
as a line of business,size,location,or similar general criteria;
(3) Public improvements to buildings or lands owned by the state or local government that serve a public
purpose and do not principally benefit a single business or defined group of businesses at the time the
improvements are made;
(4) Redevelopment property polluted by contaminants as defined in M.S.,Section 116J.552,Subd 3;
(5) Assistance provided for the sole purpose of renovating old or decaying building stock or bringing it
up to code and assistance provided for designated historic preservation districts, provided that the
assistance is equal to or less than 50%of the total cost;
(6) Assistance to provide job readiness and training services if the sole purpose of the assistance is to
provide those services;
(7) Assistance for housing;
(8) Assistance for pollution control or abatement, including assistance for a tax increment financing
hazardous substance subdistrict as defined under M.S.,Section 469.174,Subd 23;
(9) Assistance for energy conservation;
(10) Tax reductions resulting from conformity with federal tax law;
(11) Workers' compensation and unemployment compensation;
(12) Benefits derived from regulation;
(13) Indirect benefits derived from assistance to educational institutions;
(14) Funds from bonds allocated under chapter 474A, bonds issued to refund outstanding bonds, and
bonds issued for the benefit of an organization described in section 501(c)(3)of the Internal Revenue
Code of 1986,as amended through December 31, 1999;
(15) Assistance for a collaboration between a Minnesota higher education institution and a business;
(16) Assistance for a tax increment financing soils condition district as defined under M.S., Section
469.174,Subd 19;
8
(17) Redevelopment when the recipient's investment in the purchase of the site and in site preparation is
70 percent or more of the assessor's current year's estimated market value;
(18) General changes in tax increment financing law and other general tax law changes of a principally
technical nature;
(19) Federal assistance until the assistance has been repaid to, and reinvested by, the state or local
government agency;
(20) Funds from dock and wharf bonds issued by a seaway port authority;
(21) Business loans and loan guarantees of$150,000 or less;
(22) Federal loan funds provided through the United States Department of Commerce, Economic
Development Administration; and
Property tax abatements granted under M.S., Section 469.1813 to property that is subject to valuation
under Minnesota Rules,chapter 8100.
The will comply with M.S.,Sections 1161.993 to 1161.995 to the extent the tax increment assistance under
this TIF Plan does not fall under any of the above exemptions.
Q. DEFINITION OF TAX INCREMENT REVENUES
Pursuant to M.S., Section 469.174, Subd 25, tax increment revenues derived from a tax increment
financing district include all of the following potential revenue sources:
1. Taxes paid by the captured net tax capacity, but excluding any excess taxes, as computed under M.S.,
Section 469.177;
2. The proceeds from the sale or lease of property,tangible or intangible, to the extent the property was
purchased by the Authority with tax increments;
3. Principal and interest received on loans or other advances made by the Authority with tax increments;
4. Interest or other investment earnings on or from tax increments;
5. Repayments or return of tax increments made to the Authority under agreements for districts for
which the request for certification was made after August 1, 1993;and
6. The market value homestead credit paid to the Authority under M.S.,Section 273.1384.
R. MODIFICATIONS TO THE DISTRICT
In accordance with M.S.,Section 469.175,Subd 4,any:
1. Reduction or enlargement of the geographic area of the District,if the reduction does not meet the
requirements of M.S.,Section 469.175,Subd 4(e);
2. Increase in amount of bonded indebtedness to be incurred;
3. A determination to capitalize interest on debt if that determination was not a part of the original TIF
Plan;
4. Increase in the portion of the captured net tax capacity to be retained by the EDA or City;
5. Increase in the estimate of the cost of the District,including administrative expenses,that will be paid
or financed with tax increment from the District; or
6. Designation of additional property to be acquired by the EDA or City,
shall be approved upon the notice and after the discussion, public hearing and findings required for
approval of the original TIF Plan.
9
Pursuant to M.S. Section 469.175 Subd 4(),the geographic area of the District may be reduced, but shall
not be enlarged after five years following the date of certification of the original net tax capacity by the
county auditor. If a redevelopment district is enlarged, the reasons and supporting facts for the
determination that the addition to the district meets the criteria of M.S.,Section 469.174,Subd 10,must be
documented in writing and retained. The requirements of this paragraph do not apply if(1) the only
modification is elimination of parcel(s) from the District and (2)(A) the current net tax capacity of the
parcel(s) eliminated from the District equals or exceeds the net tax capacity of those parcel(s) in the
District's original net tax capacity or(B)the EDA agrees that,notwithstanding M.S.,Section 469.177,Subd
1,the original net tax capacity will be reduced by no more than the current net tax capacity of the parcel(s)
eliminated from the District.
The EDA or City must notify the County Auditor of any modification to the District. Modifications to the
District in the form of a budget modification or an expansion of the boundaries will be recorded in the TIF
Plan.
S. ADMINISTRATIVE EXPENSES
In accordance with M.S.,Section 469.174,Subd 14, administrative expenses means all expenditures of the
EDA or City,other than:
1. Amounts paid for the purchase of land;
2. Amounts paid to contractors or others providing materials and services, including architectural and
engineering services, directly connected with the physical development of the real property in the
project;
3. Relocation benefits paid to or services provided for persons residing or businesses located in the
project; or
4. Amounts used to pay principal or interest on, fund a reserve for, or sell at a discount bonds issued
pursuant to M.S.,Section 469.178; or
5. Amounts used to pay other financial obligations to the extent those obligations were used to finance
costs described in clauses(1)to(3).
For districts for which the request for certification were made before August 1, 1979, or after June 30,
1982, administrative expenses also include amounts paid for services provided by bond counsel, fiscal
consultants, and planning or economic development consultants. Pursuant to M.S., Section 469.176,Subd
3, tax increment may be used to pay any authorized and documented administrative expenses for the
District up to but not to exceed 10 percent of the total estimated tax increment expenditures authorized by
the TIF Plan or the total tax increments,as defined by M.S.,Section 469.174,Subd 25, clause(1),from the
District,whichever is less.
Pursuant to M.S., Section 469.176, Subd 4h, tax increments may be used to pay for the County's actual
administrative expenses incurred in connection with the District. The county may require payment of
those expenses by February 15 of the year following the year the expenses were incurred.
Pursuant to M.S., Section 469. 177,Subd 11, the County Treasurer shall deduct an amount(currently.36
percent) of any increment distributed to the EDA or City and the County Treasurer shall pay the amount
deducted to the State Treasurer for deposit in the state general fund to be appropriated to the State
Auditor for the cost of financial reporting of tax increment financing information and the cost of examining
and auditing authorities' use of tax increment financing. This amount may be adjusted annually by the
Commissioner of Revenue.
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T. USE OF TAX INCREMENT
The EDA or City hereby determines that it will use 100 percent of the captured net tax capacity of taxable
property located in the District for the following purposes:
1. To pay the principal of and interest on bonds issued to finance a project;
2. To finance, or otherwise pay the cost of redevelopment of the Downtown Redevelopment
Project pursuant to M.S.,Sections 469.090 to 469.1082;
3. To pay for project costs as identified in the budget set forth in the TIF Plan;
4. To finance,or otherwise pay for other purposes as provided in M.S.,Section 469.176,Subd 4;
5. To pay principal and interest on any loans,advances or other payments made to or on behalf of
the EDA or City or for the benefit of the Downtown Redevelopment Project by a developer;
6. To finance or otherwise pay premiums and other costs for insurance or other security
guaranteeing the payment when due of principal of and interest on bonds pursuant to the TIF
Plan or pursuant to M.S., Chapter 462C. M.S., Sections 469.152 through 469.165, and/or M.S.,
Sections 469.178; and
7. To accumulate or maintain a reserve securing the payment when due of the principal and
interest on the tax increment bonds or bonds issued pursuant to M.S., Chapter 462C, M.S.,
Sections 469.152 through 469.165,and/or M.S.,Sections 469.178.
These revenues shall not be used to circumvent any levy limitations applicable to the City nor for other
purposes prohibited by M.S.,Section 469.176,Subd 4.
Tax increments generated in the District will be paid by Dakota County to the EDA for the Tax Increment
Fund of said District. The EDA or City will pay to the developer(s) annually an amount not to exceed an
amount as specified in a developer's agreement to reimburse the costs of land acquisition, public
improvements, demolition and relocation, site preparation, and administration. Remaining increment
funds will be used for EDA or City administration (up to 10 percent) and for the costs of public
improvement activities outside the District.
U. EXCESS INCREMENTS
Excess increments,as defined in M.S.,Section 469.176,Subd 2,shall be used only to do one or more of the
following:
1. Prepay any outstanding bonds;
2. Discharge the pledge of tax increment for any outstanding bonds;
3. Pay into an escrow account dedicated to the payment of any outstanding bonds; or
4. Return the excess to the County Auditor for redistribution to the respective taxing jurisdictions
in proportion to their local tax rates.
The EDA or City must spend or return the excess increments under paragraph(c)within nine months after
the end of the year. In addition,the EDA or City may,subject to the limitations set forth herein,choose to
modify the TIF Plan in order to finance additional public costs in the Downtown Redevelopment Project or
the District.
V. ASSESSMENT AGREEMENTS
Pursuant to M.S.,Section 469.177,Subd 8,the EDA or City may enter into a written assessment agreement
11
in recordable form with the developer of property within the District which establishes a minimum market
value of the land and completed improvements for the duration of the District. The assessment agreement
shall be presented to the County Assessor who shall review the plans and specifications for the
improvements to be constructed, review the market value previously assigned to the land upon which the
improvements are to be constructed and,so long as the minimum market value contained in the assessment
agreement appears,in the judgment of the assessor,to be a reasonable estimate,the County Assessor shall
also certify the minimum market value agreement.
W. ADMINISTRATION OF THE DISTRICT
Administration of the District will be handled by the City Administrator.
X. ANNUAL DISCLOSURE REQUIREMENTS
Pursuant to M.S.,Section 469.175,Subds. 5,6,and 6b the EDA or City must undertake financial reporting
for all tax increment financing districts to the Office of the State Auditor,County Board and County
Auditor on or before August 1 of each year. M.S.,Section 469.175,Subd 5 also provides that an annual
statement shall be published in a newspaper of general circulation in the City on or before August 15.
If the City fails to make a disclosure or submit a report containing the information required by M.S.,
Section 469.175 Subd 5 and Subd 6, the OSA will direct the County Auditor to withhold the distribution of
tax increment from the District.
Y. REASONABLE EXPECTATIONS
As required by the TIF Act, in establishing the District, the determination has been made that the
anticipated development would not reasonably be expected to occur solely through private investment
within the reasonably foreseeable future and that the increased market value of the site that could
reasonably be expected to occur without the use of tax increment financing would be less than the increase
in the market value estimated to result from the proposed development after subtracting the present value
of the projected tax increments for the maximum duration of the District permitted by the TIF Plan. In
making said determination,reliance has been placed upon written representation made by the developer to
such effects and upon EDA and City staff awareness of the feasibility of developing the project site(s)
within the District. A comparative analysis of estimated market values both with and without
establishment of the District and the use of tax increments has been performed as described above. Such
analysis is included with the cashflow in Appendix D, and indicates that the increase in estimated market
value of the proposed development(less the indicated subtractions) exceeds the estimated market value of
the site absent the establishment of the District and the use of tax increments.
Z. OTHER LIMITATIONS ON THE USE OF TAX INCREMENT
1. General Limitations. All revenue derived from tax increment shall be used in accordance with the TIF
Plan. The revenues shall be used to finance, or otherwise pay the cost of redevelopment of the
Downtown Redevelopment Project pursuant to M.S., Sections 469.090 to 469.1082; Tax increments
may not be used to circumvent existing levy limit law. No tax increment may be used for the
acquisition,construction,renovation,operation,or maintenance of a building to be used primarily and
regularly for conducting the business of a municipality, county, school district, or any other local unit
of government or the state or federal government. This provision does not prohibit the use of revenues
derived from tax increments for the construction or renovation of a parking structure.
12
2. Pooling Limitations. At least 75 percent of tax increments from the District must be expended on
activities in the District or to pay bonds, to the extent that the proceeds of the bonds were used to
finance activities within said district or to pay, or secure payment of, debt service on credit enhanced
bonds. Not more than 25 percent of said tax increments may be expended,through a development fund
or otherwise, on activities outside of the District except to pay, or secure payment of, debt service on
credit enhanced bonds. For purposes of applying this restriction, all administrative expenses must be
treated as if they were solely for activities outside of the District.
3. Five Year Limitation on Commitment of Tax increments. Tax increments derived from the District
shall be deemed to have satisfied the 75 percent test set forth in paragraph (2) above only if the five
year rule set forth in M.S., Section 469.1763, Subd 3, has been satisfied; and beginning with the sixth
year following certification of the District, 75 percent of said tax increments that remain after
expenditures permitted under said five year rule must be used only to pay previously committed
expenditures or credit enhanced bonds as more fully set forth in M.S.,Section 469.1763,Subd S.
4. Redevelopment District. At least 90 percent of the revenues derived from tax increment from a
redevelopment district must be used to finance the cost of correcting conditions that allow designation
of redevelopment and renewal and renovation districts under M.S., Section 469.176 Subd 4j. These
costs include,but are not limited to,acquiring properties containing structurally substandard buildings
or improvements or hazardous substances, pollution, or contaminants, acquiring adjacent parcels
necessary to provide a site of sufficient size to permit development, demolition and rehabilitation of
structures, clearing of the land, the removal of hazardous substances or remediation necessary for
development of the land,and installation of utilities,roads,sidewalks,and parking facilities for the site.
The allocated administrative expenses of the EDA or City, including the cost of preparation of the
development action response plan,may be included in the qualifying costs.
AA.SUMMARY
The City of Farmington established and is modifying the District to preserve and enhance the tax base,
redevelop substandard areas, and provide employment opportunities in the City. The TIF Plan for the
District was prepared by Ehlers & Associates, Inc.,3060 Centre Pointe Drive,Roseville,Minnesota 55113,
telephone(651)697-8500.
AB.FISCAL DISPARITIES ELECTION
Pursuant to M.S.,Section 469.177,Subd 3,the EDA or City may elect one of two methods to calculate fiscal
disparities. If the calculations pursuant to M.S.,Section 469.177,Subd 3,clause a,(outside the District)are
followed,the following method of computation shall apply:
(1) The original net tax capacity and the current net tax capacity shall be determined before the
application of the fiscal disparity provisions of Chapter 276A or 473F. Where the original net tax
capacity is equal to or greater than the current net tax capacity, there is no captured net tax capacity
and no tax increment determination. Where the original net tax capacity is less than the current net
tax capacity,the difference between the original net tax capacity and the current net tax capacity is the
captured net tax capacity. This amount less any portion thereof which the authority has designated, in
its tax increment financing plan,to share with the local taxing districts is the retained captured net tax
capacity of the authority.
13
(2) The county auditor shall exclude the retained captured net tax capacity of the authority from the net
tax capacity of the local taxing districts in determining local taxing district tax rates. The local tax
rates so determined are to be extended against the retained captured net tax capacity of the authority as
well as the net tax capacity of the local taxing districts. The tax generated by the extension of the lesser
of(A)the local taxing district tax rates or(B)the original local tax rate to the retained captured net tax
capacity of the authority is the tax increment of the authority.
The City will choose to calculate fiscal disparities by clause a.
According to M.S.,Section 469.177,Subd 3:
(c) The method of computation of tax increment applied to a district pursuant to paragraph (a) or(b) shall
remain the same for the duration of the district,except that the governing body may elect to change its election
from the method of computation in paragraph(a)to the method in paragraph(b).
14
EXHIBIT"A"
DESCRIPTION OF PROPERTY TO BE INCLUDED IN THE DISTRICT
Parcel #14-77000-030-18
Parcel #14-77000-040-18
Parcel #14-77000-050-18
Parcel #14-77000-060-18
Parcel #14-77000-061-18
Parcel #14-77000-070-18
Parcel #14-77000-080-18
Parcel #14-77000-090-18
Parcel #14-77000-100-18
Parcel #14-77000-060-25
Parcel #14-03100-012-01
Parcel #14-03100-011-37
(AS MODIFIED SEPTEMBER 17,2012)
The District encompasses all property and adjacent rights-of-way and abutting roadways identified by the
parcels listed below.
Parcel Numbers Address Owner
14-25831-00-010 OUTLOT A Farmington City Center LLC
14-25831-01-010 113 Elm St. City Center Development LLC
14-25831-01-020 109 Elm St. Farmington City Center LLC
14-25831-01-031 115 Elm St. Farmington City Center LLC
15
EXHIBIT`B"
FARMINGTON HOUSING AND REDEVELOPMENT AUTHORITY
REDEVELOPMENT DISTRICT NO.2
PROJECT COSTS ESTIMATES
MAY 15, 1991
Activity Cost
Acquisition $ 1,479,565
Relocation 45,000
Demolition 55,000
TOTAL $ 1,579,565
On-Site Improvements
Streets/Utilities(Estimate) $ 350,000
Parking Lot 125,000
Landscaping 50,000
Bond Interest 1,575,500
Issuance 195,000
Administration 510,525
Soil Contamination 300,000
New Tax Base 645,125
TOTAL ESTIMATED COSTS $ 5,330,715
16
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D
CITY OF FARMINGTON
DAKOTA COUNTY,MINNESOTA
DOWNTOWN REDEVELOPMENT PROJECT
ITRA REDEVELOPMENT DISTRICT NO.2
18
0149 City of Farmington
'�, 430 Third Street
`,. Farmington,Minnesota
to;
651.280.6800•Fax 651.280.6899
" 0f wwwci.farmingtoin.mn.us
TO: EDA Members
FROM: Tony Wippler,Assistant City Planner
SUBJECT: MCCD"Open to Business"program update
DATE: September 24,2012
INTRODUCTION/DISCUSSION
At the August 27th EDA meeting Lee Hall and Rob Smolund from the Metropolitan Consortium of Community
Developers [MCCD] gave a presentation on the Open to Business program. The Open to Business program is designed to
provide intensive one-on-one technical assistance to small business owners and entrepreneurs who intend on establishing,
purchasing, or improving a business in a participating City. The current proposal submitted by MCCD, has Farmington's
share in the cost of establishing the program in Dakota County at $10,000. The actual cost for Farmington to join the
program, under the proposal, would be $5,000 as the CDA had indicated a willingness to cover half of the costs for the
participating Cities. However, at the time of the August EDA meeting the CDA Board had not taken formal action on the
CDA's participation in the program. The EDA was interested in potentially participating in the Open to Business program
but wanted to hold off on making a decision until the CDA Board had reviewed and taken action on the financial
assistance for the program.
The CDA Board considered the proposal at its meeting on September 18, 2012 and approved the CDA's participation in
the Open to Business program in Dakota County for 2013. This approval is subject to the participation of Dakota County
Cities sufficient to produce a minimum of$50,000 investment in the Open to Business program.
BUDGET IMPACT
$5,000 would have to be budgeted for in 2013 if the EDA is receptive to participating in the Open to Business program as
outlined in the attached proposal.
ACTION REQUESTED
Authorize staff to make the necessary arrangements for the participation in the Dakota County Open to Business program.
Respectfully submitted,
L115:04
Z
Tony Wippler,Assistant City Planner
iii
O
PEI
MCCD is TO BUSINESS in your community
Who is MCCD?
The Metropolitan Consortium of Community Developers(MCCD)is a 49 member association committed
to increasing opportunities for development of quality,community-based projects through collaborative
action on public policy issues, loan fund development,public education efforts,and long-term strategic
planning. Through these efforts,we have been able to demonstrate the effectiveness and efficiencies
gained by a shared vision and cooperation.
Our mission is to: "work collectively to build strong, stable communities by leveraging resources for the
development of people and places." Our goals are to: 1)increase popular,political,business,and
financial support for community-based housing and small business development organizations;2)create
access to loan capital and technical assistance for emerging entrepreneurs; and 3)increase the
effectiveness of community-based development through coordination,collaboration,and capacity
building activities.
MCCD's work is centered on three distinct program areas:Emerging Small Business Program,Member
Convening,and Public Policy.
Emerging Small BusinessProgram: Provides capital access and technical assistance for existing
businesses and aspiring entrepreneurs who are unable to fully access the commercial banking system.
The organization funds or participates in an average of 50 loans per year,with loan amounts of up to
$100,000. Along with capital,MCCD staff provides more than 2,000 hours of direct technical assistance
to entreprenuers. Technical assistance services include business plan development,loan packaging,
feasibility studies,cash flow and financing projections,marketing plans,assistance with licensing and
filing requirements,and development of sound financial management and tracking systems. Historically,
more than 80%of MCCD's loans have been to minority borrowers. For many of our borrowers the loans
provide self-employment,and unique opportunities for advancement and personal enrichment as business
owners that may not be available to them as employees. Open to Business is a part of the Emerging
Small Business Program.
Convening:MCCD acts as a convener for our members. This is accomplished through monthly meetings
of our Housing Committee,Economic Development Committee,and St.Paul Task Force. Agendas for
each reflect the focus of the participating members. Meetings typically involve guest presenters on topics
of relevance, strategy sessions related to common concerns, or general updating and sharing among the
attendees. On at least an annual basis, staff from the City of Minneapolis' Community Planning and
Economic Development(CPED),City of St.Paul's Planning and Economic Development(PED),the
Minnesota Housing Finance Agency(MHFA),the Family Housing Fund,and Hennepin County among
others,would be invited.
Public Policy: With the combined expertise of the leading community development organizations,
MCCD has become a recognized and respected voice on housing,small business development,and inner-
city commercial development. Through the work of our standing committees,MCCD shapes an annual
policy platform and legislative agenda that is formally adopted by the board of directors. These
documents provide direction to staff as to items MCCD takes the lead on,those that we support others,
and those that we monitor. Aside from the adopted positions,MCCD responds frequently to new
program proposals,changes in policy or procedures,and funding changes at the local, state and federal
levels.
OPEN .
MCCD is TO BUSINESS in your community
What is Open to Business?
MCCD's Open to Business program brings on-site business services specialists who can expand
your community development staff's expertise in such areas as start-up financing and business
plan development. We can respond to requests for business assistance when those requests are
beyond the range of the services normally provided by your municipal agencies.
Open to Business Technical Assistance Services in Dakota County:
MCCD will provide intensive one-on-one technical assistance to small City/County business
owners and aspiring entrepreneurs intending to establish,purchase, or improve a business in the
City/County. Technical assistance includes,but is not limited to the following:
> Business plan development
> Feasibility analysis
> Marketing
➢ Cash flow and other financial projection development
> Operational analysis
> City and State licensing and regulatory assistance
> Loan packaging, and other assistance in obtaining financing
➢ Help in obtaining competent legal advice
MCCD intends to hire a full time staff person once the minimum amount of contract is secured
in Dakota County. This staff member will be based in Dakota and Carver County full time. The
business advisor will be available to meet clients at the various city halls of municipalities that
are OTB cities or at their place of business. This staff person will be based out of donated office
space either at the Dakota CDA or another facility in the area. Currently in OTB cities in
Hennepin County we hold two-hour"Test Drive Your Business Idea" sessions once a month.
We plan to offer this service to Dakota County municipalities.
MCCD has offered technical assistance services since 2003,primarily through our staff
facilitator, Rob Smolund. Rob came to MCCD from the City of Richfield Enterprise Facilitation
project—a Hennepin County supported initiative. In the years since, our program has added
specialists in the areas of business accounting, finance,real-estate development, and regulatory
compliance. We now offer a team of professionals and former business owners who can provide
real world advice to clients, and tailor that support to meet each client's specific needs.
Depending on the needs of the client,that assistance can include business plan development,
feasibility studies, cash flow and fmancing projections,marketing plans, licensing and filing
requirements, and development and implementation of sound financial management and tracking
systems. Even if the client can obtain all their financing from a bank, staff will assist them in
preparing their loan request and will advocate for the client with the bank. In essence, MCCD
staff members become an advisor, an advocate, and a partner for that entrepreneur to lean on. In
addition, each entrepreneur can draw on the diversity of backgrounds and expertise of our team
OPEN
MCCD is to eus t ss in your community
of experts, gaining the kind of support more established businesses benefit from with hired
professionals and/or Boards of Directors.
Open to Business Access to Capital
Access to capital will be provided to qualifying businesses through MCCD's Emerging Small
Business Loan Program(see Exhibit B Small Business Loan Program Guidelines below).
MCCD also provides its financing in partnership with other community lenders,banks or
municipalities interested in making capital available to residents and/or businesses in their
community.
EXHIBIT B
Small Business Loan Program Guidelines
Loan Amounts:
• Up to $25,000 for start-up businesses
• Larger financing packages for established businesses
• Designed to leverage other financing programs as well as private fmancing provided by
the commercial banking community.
Eligible Projects:
• Borrowers must be a"for-profit"business.
• Business must be complimentary to existing business community.
• Borrowers must have equity injection as determined by fund management.
Allowable Use of Proceeds:
• Loan proceeds can be used for working capital, inventory, building and equipment and
general business operations.
Interest Rates:
• Loan interest rate is dependent on use, term and other factors,not to exceed 10%.
Loan Term Length:
• Loan repayment terms will generally range from three to five years,but may be
substantially longer for major asset financing such as commercial property.
Fees and Charges:
• Borrowers are responsible for paying all customary legal and other loan closing costs.
OPEN
MCCD is TO BUSINESS in your community
Open to Business Loan Products
MCCD manages a multi-million dollar loan pool consisting of a mix of State,Federal, Bank and
private capital sources. We are able to structure financing packages for a variety of business
purposes that are flexible and designed to either enhance a business's opportunities to leverage
private financing, or act as a bridge to future fmancing be traditional capital markets. Below are
some examples of the financing packages available to Open to Business clients:
• Loan Packaging/Facilitation
MCCD staff can assist potential borrowers with the preparation of business plans, cash
flow and other financial projections and loan application materials. Our staff can assist
entrepreneurs in identifying borrowing needs and accessing community lending programs
that provide favorable terms and conditions for small business borrowers. We work with
our clients to help them find the fmancing that best meets their unique needs.
• Micro Loans
Direct loans from MCCD for a variety of business purposes, including inventory,
working capital, asset and equipment purchases, and start-up costs. Typical loan terms of
3-5 years, loan sizes up to $25,000 for retail/service businesses, or$50,000 for
manufacturing businesses. This program is targeted to start-up and early stage businesses
that cannot secure financing from traditional commercial lenders.
• Four Percent Loan Program
MCCD loans in partnership with private lenders for physical improvements and hard
asset/equipment purchases. MCCD can provide financing of up to $40,000 at an interest
rate of 4%provided that its funds are matched by an equal or greater amount of bank
funds. The 4%rate is available for bank partnership loans provided that the term on the
MCCD loan does not exceed five years.
• Real Estate Participation Loans
MCCD loans in partnership with private lenders to provide gap financing for real estate
acquisition projects—including projects financed through the SBA 504 program. MCCD
matches the bank's rate. MCCD also matches the bank's term provided that the term
does not exceed 10 years.
• Real Estate Acquisition Financing
MCCD, in partnership with private lenders,provides permanent term financing for
commercial real estate acquisition—up to 90%of the property's appraised value. MCCD
r
OPEC
MCCD is TO BUSINESS in your community
will provide up to 40%of the appraised value, with the bank providing 50% and holding
first secured position. MCCD will match the bank's rate with terms up to 10 years
(though amortizations may be longer).
• Transactional Financing
MCCD provides short term loans for businesses whose cash flow cycle inhibits them
from making regular monthly loan payments. Transactional loans are often used by
construction contractors who have received or about to receive a construction contract
with a community agency. MCCD can provide up front fmancing to cover the cost of
labor and material associated with the contract. When the work on the contract is
completed,the contracting agency issues a two-party check to cover the completed work,
payable to MCCD and to the contractor. Larger loans are also available for businesses
with performance bonds and escrow payment arrangements.
Loan Origination and Servicing
MCCD seeks to integrate its financing products with other available resources in its service
areas. To facilitate that integration, MCCD may be able to originate,package, underwrite and
potentially service loan funds or programs offered by the County, individual Cities, or other
Development authorities.
Partnerships in other Open to Business communities include management of community
facade/fix-up grants,packaging of City-controlled loan products, and full underwriting and
servicing of Commercial loans with City funds "purchasing"a portion of the total fmancing.
Where appropriate,MCCD and the municipal lending authority shall enact a separate agreement
to govern the rights and duties of each party to such a partnership.
OPEN.
MCCD is TO BUSINESS in your community
Dakota County Fees:
Based on MCCD's current work load and resources,we would have to have a minimum of$100,000 in
annual fees to begin work in Dakota County.The individual city pricing is listed below. To avoid
confusion on what city is an Open to Business city,we would recommend covering all of Dakota County
for$150,000 annually.
Whole
population employment county OTB
(2010) (2011) Annual Fee
Dakota County 400,000 170,582 $150,000.00
Sort by population;largest to smallest
Open To
population employment Business
(2010) (2011) Annual Fee
Eagan 64,206 49,032 $ 15,000.00
Burnsville 60,306 31,656 $ 15,000.00
Lakeville 55,954 14,522 $ 15,000.00
Apple Valley 49,084 14,350 $ 15,000.00
IGH 33,880 9,647 $ 12,500.00
Hastings 22,172 8,303 $ 10,000.00
Rosemount 21,874 6,980 $ 10,000.00
Farmington 21,086 4,461 $ 10,000.00
SSP 20,160 8,112 $ 10,000.00
WSP 19,540 7,683 $ 10,000.00
MH 11,071 11,528 $ 7,500.00
City Total 379,333 166,274 $130,000.00
Marketing Open to Business:
• Inform all city staff of OTB program, especially staff that has contact with prospective
entrepreneurs and existing businesses. Have 0113 staff make short presentation at city
staff meetings
• Feature OTB on website, especially advertise monthly walk in counseling sessions
• Include article in city newsletter
• Notices in utility bills
• Promote program through local chamber of commerce
• Coordinate meetings with key community bankers and OTB staff
• Press releases to community newspapers on businesses helped by OTB
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�o�E i�, City of Farmington
L S 430 Third Street
g Farmington,Minnesota
X10 651.280.6800•Fax 651.280.6899
•A moos wwwcilarmington.nums
TO: EDA Members
FROM: Lee Smick,AICP, CNU-A
City Planner
SUBJECT: Business Visits
DATE: September 24,2012
INTRODUCTION/DISCUSSION
The EDA and staff performed four business visits so far this month with another seven visits on
September 20th. We'll be in the vicinity of TH 3 & TH 50. A group of businesses would like to
meet together including Farmington Billiards, Razberry Beret, Tan Ambitions, and Synergy
Dance. They are looking to discuss Farmington Mall issues and would like to be included in the
FBA's annual commercial block parties. After Thursday,we will have visited 43 businesses.
THURS Sept 20th
3:00 PM Impact Automotive
3:20 PM Town's Edge Barber
3:40 PM Amcon
4:00 PM Synergy Dance, Razberry Beret,
Farmington Billiards,Tan Ambitions
(meeting at Farmington Billiards)
Next month's visits will be on October 10th and 18th. We will be visiting the Industrial Park
again in the morning on October 10th including Ruff Manufacturing, Vinge Tile, EDCO
Products, Albert J. Lauer, Inc., and Marshall Lines. We still have the southwest portion of the
Industrial Park left, but after that,we will have visited the entire park.
On October 18th at 3:00 PM, we will visit the Stegmaier House on Pilot Knob Road which
includes Light of the World Church, ESQ Office, Integrity Chiropractic, David Story Insurance
Agency.
ACTION REQUIRED
Please let me know if you are available for the month of October visits. We will also discuss the
recent visits.
Respectfully submitt :
Lee Smick, City Planner
AICP, CNU-A
o
htitoyc City of Farmington
430 Third Street
Farmington,Minnesota
651.280.6800•Fax 651.280.6899
•., 0
www.ci.farmington.mn.us
TO: EDA Members
FROM: Lee Smick,AICP, CNU-A
City Planner
SUBJECT: GROW Farmington Update & Shop Local Campaign
DATE: September 24, 2012
INTRODUCTION/DISCUSSION
The GROW Farmington group met on September 12th to begin discussions on a shop local
campaign. At first, the discussion dealt with benefits and added revenue that comes from a shop
local campaign. The group agreed that the most important idea is to educate the community on
shop local and what it can do for Farmington. That would entail that the City Council agrees to
the campaign and the need for GROW to teach locals to change their shopping habits.
Various ideas were discussed about the campaign including providing shop local businesses on
loyalty and new customer gift cards, discounts at the local business of the week, Parks &
Recreation partnering with Community Ed to promote the shop local campaign, provision of
GROW Farmington Visa Card with percentage off for using it, Tiger football card discounts to
local businesses, or I-pad or I-phone giveaway for most used shop local card or most spent on
receipt.
The group also discussed the slogan and logo for the campaign. Ideas included"Buy Farmington
First" with additions to Farmington First campaign of the past, "Farmington - Think. Shop.
Buy.", or "Shop Friendly Farmington — Help us GROW". The logo included the use of the
sunflower.
The next GROW Farmington meeting is on September 19`h. Further discussions at the next
meeting will be about the slogan and logo. Staff will inform the EDA of the progress made for
the shop local campaign at the September 24th meeting.
ACTION REQUIRED
Information only.
Respectfull submitte
m4 City City Planner
AICP, CNU-A
!cc.
VitA11111,, iy� City of Farmington
430 Third Street
' Farmington,Minnesota
�� ''10 651.280.6800•Fax 651.280.6899
°*•A► � wWw.cifatm1Dg}ongton.mn.us
TO: EDA Members
FROM: Lee Smick,AICP, CNU-A
City Planner
SUBJECT: Funding of EDA Budgets and Programs
DATE: September 24, 2012
INTRODUCTION/DISCUSSION
At its August 27th meeting, the EDA requested that staff perform a survey to find out how other
communities fund their EDA. The communities below deal with DEED and GREATER MSP
loans and grants. The parentheses show the community's population. The list of communities
surveyed is as follows:
Faribault Economic Development Authority (23,352) — They have a tax levy of $215,000
based on their market value. Redevelopment programs: tax increment financing, industrial loan
programs, commercial rehabilitation programs and an assortment of public improvement
projects. Funding support is governed in large part by the EDA's Tax Increment Financing and
Business Subsidy policies. They offer revolving loans, cost allocations from the general fund,
and they have excess TIF funds to utilize. They also are in the JOBZ area.
Lakeville Economic Development Commission (55,954)—The Commission offers suggestions
to the Council on economic initiatives. They have no authority. They also do not provide
business incentives. In the past, they only offered the City's land at a reduced cost (Lifetime
Fitness). They also have TIF and Tax Abatement options. (FYI—single family building permits
in 2012— 169 with an additional 170 lots that have recently been platted).
Rosemount Port Authority (21,874) — Their economic development incentives come from the
general fund. In 2012, they received $58,000. They act as the development authority on behalf
of the City's interest to increase the tax base, promote new job development and enhance the
health, safety and welfare of its residents. They offer a Downtown Development Improvement
Program that comes from CDBG money which is the same as we offer. They also have TIF and
Tax Abatement options.
Burnsville Economic Development Commission (60,306) — The Commission is an advisory
committee only. They have a tax levy of$415,000 in 2012, which pays for EDA activities and
the Economic Development Director's salary.
Apple Valley Economic Development Authority (49,084) — The EDA looks for job
development in their medical, corporate, and financial office service development. They also
provide business addition retention, expansion in its older commercial areas and centrally located
downtown. They do not have a tax levy. They have old TIF districts from the 1970's that
provide their budget of $800,000 for EDA activities. They provide TIF and Tax Abatement
opportunities. They are opening up one of each industrial and housing district for TIF this year.
They direct businesses to the Small Business Administration Loans Program, however,they have
not been used (Farmington staff has reviewed this program and most of the programs are out of
date). A number of banks in the city work with the SBA loans. They are providing $10,000 for
the MCCD—Open to Business program. They currently do not provide business loans, but they
are researching them.
Prior Lake Economic Development Authority (22,796) - The EDA has prepared a tax
increment policy, facade improvement policy, downtown redevelopment proposal and a
substantially completed development of Waterfront Passage Business Park. The Economic
Development Advisory Committee (EDAC) offers recommendations to the City Council and to
the Economic Development Authority on economic development issues, strategy development
and implementation. This includes commenting on business retention and expansion, targeting
business recruitment, new business and entrepreneurial development and finding funding
sources. Prior Lake budgets a reserve fund that is transferred to the EDA for economic activities
such as those stated above. In 2012, this budget is $185,000. A portion of the money was spent
earlier this year on an $80,000 fiber network study. It also pays for half the salary of the EDA
Director and other EDA needs. There are no dedicated funds to the EDA, however, the City is
proposing a tax levy of$50,000 for the 2013 budget for EDA funds.
ACTION REQUIRED
Information only.
Respect„" sub l,:
fri
e mic , Tanner
AICP, CNU-A
17,Z
o�EARMi City of Farmington
430 Third Street
` z Farmington,Minnesota
goo��10 651.280.6800•Fax 651.280.6899
www.cilarmington.mn.us
TO: EDA Members
FROM: Lee Smick,AICP, CNU-A
City Planner
SUBJECT: Region Wide Economic Development Initiative
DATE: September 24, 2012
INTRODUCTION/DISCUSSION
At the August 27th meeting, the EDA was curious about what the difference was between the
Minnesota Department of Employment and Economic Development (DEED), GREATER
Minneapolis Saint Paul (MSP) Partnership, and the Metropolitan Consortium of Community
Developers (MCCD). Actually, the difference is with whom they serve. DEED represents the
entire state of Minnesota and is the state's principal economic development agency. GREATER
MSP represents the 13-County Minneapolis Saint Paul region (11 Minnesota counties and two
adjoining Wisconsin counties). And, MCCD provides funding and services directly to business
owners or entrepreneurs. All three have business financing opportunities.
DEED provides loans and grants to local governments to disburse funding to local businesses.
They also provide job programs and business startup information.
GREATER MSP staff works with businesses considering a location or expansion in the 13-
county region, drawing on a range of private and public fmancing options. GREATER MSP has
the relationships and expertise to connect businesses with venture capital resources, private
sources of capital and financing, and federal, state and local government financing and incentive
programs. GREATER MSP deals with financing on the local level and they work with DEED's
grants and loans as well.
MCCD deals one-on-one with business owners and entrepreneurs providing technical assistance
to those who intend to establish, purchase, or improve a business in a participating City. They
help new and promising entrepreneurs find financing that meets their business needs. Often, a
loan from MCCD is an option for a small business owner. They provide loans for a variety of
business purposes, including equipment, inventory, working capital, and start-up costs. Their
loans generally do not exceed$25,000,with terms of up to five years.
• DEED — Positively Minnesota - The Minnesota Department of Employment and
Economic Development (DEED) or Positively Minnesota is the state's principal
economic development agency. DEED programs promote business recruitment,
expansion, and retention; international trade; workforce development; and community
development.
http://www.positivelyminnesota.com/
• GREATER MSP Partnership - The GREATER MSP Partnership is a primary point of
contact for domestic and international businesses looking to locate or expand in the 13-
county Minneapolis Saint Paul region.
http://www.greatermsp.org/
• MCCD - The Metropolitan Consortium of Community Developers deals one-on-one with
business owners and entrepreneurs providing technical assistance to those who intend to
establish, purchase, or improve a business in a participating City. It is a 49 member
association committed to increasing opportunities for development of quality,
community-based projects through collaborative action on public policy issues, loan fund
development, public education efforts, and long-term strategic planning. The loan and
assistance opportunities began in Minneapolis in the 1980's and moved to first ring
suburbs later. Just recently the consortium expanded into Hennepin County, with further
expansion into Dakota County upon approval of the County Commissioners.
MCCD will work with city staff to develop materials that brand the "Open to Business"
program in the city and will assist with outreach ideas to the business community.
MCCD staff can meet clients at City Hall or at the MCCD office. In addition, they can
schedule on-site hours at City Hall or other public venues for walk-in consultations. This
fee-for-service arrangement can provide cities with a cost-effective alternative to an "in-
house"business development program staffed and funded by the city.
• The "Open to Business" program is designed to provide intensive one-on-one technical
assistance to small City business owners and entrepreneurs who are intending to
establish, purchase, or improve a business in a participating City. Some of the technical
assistance that would be provided includes:
• Business Plan development
• Feasibility analysis
• Marketing
• Cash flow and other financial projection development
• Operational analysis
• City and State licensing and regulatory assistance
http://www.mccdmn.org/
ACTION REQUIRED
Information only.
ii.
Respe r y s , tted,
C%'
Lee Smick, City Planner
AICP, CNU-A