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HomeMy WebLinkAbout08-15-22 CITY OF Meeting Location: FARMINGTONFarmington City Hall 430 Third Street Farmington, MN 55024 ECONOMIC DEVELOPMENT AUTHORITY REGULAR MEETING AGENDA August 15, 2022 6:00 PM 1. CALL TO ORDER 2. ROLL CALL 3. APPROVE AGENDA 4. CONSENTAGENDA (a) Meeting Minutes (July 18, 2022 Regular Meeting) (b) Monthly Financial Statements (c) Appoint An Executive Director of the EDA (d) Execute a Certificate of Completion & Release of Contract—5147 208th Street W S. DISCUSSION ITEMS (a) Review of An Amended Business Subsidy Policy 6. DIRECTOR'S REPORT (a) Director's/Staff Report 7. ADJOURN CITY OF O 43o Third St., Farmington, MN 55024 FARMINGTON © 651-28o-6800 Farmington M N,gov TO: Economic Development Authority FROM: Kalley Swift, Community Development Specialist SUBJECT: Meeting Minutes (July 18, 2022 Regular Meeting) DATE: August 15, 2022 INTRODUCTION/DISCUSSION Attached are the draft meeting minutes from the July 18, 2022 Regular EDA Meeting. ACTION REQUESTED Approve the July 18, 2022 Regular EDA Meeting minutes. ATTACHMENTS: Type Description © Exhibit Meeting Minutes (July 18, 2022 Regular Meeting) CITY OF FARMINGTON ECONOMIC DEVELOPMENT AUTHORITY MINUTES REGULAR MEETING July 18, 2022 1. CALL TO ORDER The meeting was called to order by EDA Chair Wilson at 6:01 p.m. 2. ROLL CALL Members Present: Bernhjelm,Hoyt,Porter,Lien,Wilson Members Absent: None Staff Present: Lynn Gorski, City Administrator; Samantha DiMaggio,Community Development Director; Kalley Swift,Community Development Specialist 3. APPROVEAGENDA MOTION by Bernhjelm,second by Hoyt to approve the Agenda.APIF,MOTION CARRIED. 4. CONSENT AGENDA a) Meeting Minutes(June 20,2022,Regular Meeting) b) Monthly Financial Statement MOTION by Bernhjelm,second by Porter to approve the consent agenda.APIF,MOTION CARRIED. 5. DISCUSSION ITEMS a)Business Subsidy Policy-2022 Policy Update The EDA has allocated funding for the Redevelopment and Property Reinvestment Program for 2022 with the intent of helping spur investment on commercial and industrial properties to foster property improvements,redevelopment growth and increase the productive use of existing infrastructure within the city. Eligible projects focus on property, building,and code improvements which are permanent and anchored to the site.Projects utilizing this grant money must go towards a project which helps redevelop,maintain and/or expand the variety of business use on site. For 2022,the EDA has allocated up to$30,000 of its annual operating budget to fund the Redevelopment and Property Reinvestment Program.Within the program guidelines,it states that the EDA will contribute up to a maximum of 50% of eligible project costs and that grants typically will not exceed$10,000. A completed Redevelopment and Property Reinvestment Program application has been received for the following properties in the following amounts.The totality of the four applications exceeds the available 2022 funding amount,so the EDA should use the scoring system created for this program to make their decisions of approval and denial. • 306-312 Oak Street:$10,000 requested • 216 Oak Street: $10,000 requested • 705 Eighth Street:$7,500 requested • 345 Third Street:$9,240 requested Economic Development Authority Minutes Page 1 of 2 Regular Meeting July 18,2022 MOTION by Hoyt,second by Bernhjelm to approve a Redevelopment and Property Reinvestment Program Grant to 306-312 Oak Street: $10,000, 216 Oak Street: $10,000, and 705 Eighth Street: $10,000.APIF,MOTION CARRIED. MOTION by Bernhjelm,second by Porter to deny 34S Third Street but to have staff bring this application back to the EDA should one of the other grants not be awarded. 6. DIRECTOR'S REPORT Staff has seen an increase in large industrial development RFP's and a decrease in interest from local entrepreneurs. 7. ADJOURN MOTION by Porter,second by Hoyt to adjourn at 6:47 p.m. APIF,MOTION CARRIED. Respectfully submitted, Samantha DiMaggio Community Development Director Economic Development Authority Minutes Page 2 of 2 Regular Meeting July 18,2022 - CITY OF O 430 Third St., Farmington, MN 55024 FARMINGTON © 651-28o-6800 FFarmingtonMN.gov TO: Economic Development Authority FROM: Kalley Swift, Community Development Specialist SUBJECT: Monthly Financial Statements DATE: August 15, 2022 INTRODUCTION/DISCUSSION Attached is the monthly statement of the EDA. ACTION REQUESTED Acknowledge the monthly financial statement for the EDA and ask any questions you may have. ATTACHMENTS: Type Description ❑ Exhibit Monthly Financial Statement More Robust Financial Report Business Object Account Cumulative 12 Cumulative 12 Cumulative 12 Cumulative 12 Cumulative 12 Cumulative 12 Cumulative 12 Cumulative 12 Unit Account Description Actual Budget Actual Budget Actual Budget Actual Budget 2019 2019 2020 2020 2021 2021 2022 2022 2000-HRA/ECONOMIC DEVELOPME 1010 CASH _ 197,086.27 203,702.91 165,522.75 219,474.87 2000-HRA/ECONOMIC DEVELOPME 1010 CASH-LGAASSMNT RELIEF 35,000.00 35,000.00 35,000.00 35,000.00 2000-HRA/ECONOMIC DEVELOPME 1011 PREMIUM/DISCOUNT ON INVESTMENT -38.19 -142.41 -535.95 0.00 2000-HRA/ECONOMIC DEVELOPME 1095 ACCRUED INTEREST INVESTMENTS 565.86 523.28 515.28 0.00 2000-HRA/ECONOMIC DEVELOPME 1305 ACCOUNTS RECEIVABLE 0.00 54,202.17 0.00 0.00 2000-HRA/ECONOMIC DEVELOPME 1305 ACCOUNTS RECEIVABLE MANUAL 0.00. -54,202.17 0.00 0.00 2000-HRA/ECONOMIC DEVELOPME 1353 DUE FROM COUNTY 65,397.70 54,202.17 0.00 0.00 2000-HRA/ECONOMIC DEVELOPM E 1505 PREPAID EXPENSES 300.00 0.00 1,365.00 0.00 2000-HRA/ECONOMICDEVELOPME 2010 ACCOUNTS PAYABLE MANUAL -6,237.92 -62.14 -20.16 0.00 2000-HRA/ECONOMIC DEVELOPME 3510 UNRESERVED FUND BALANCE -299,361.64 -292,073.72 -293,223.81 -201,846.92 2000-HRA/ECONOMIC DEVELOPME 4955 INTEREST ON INVESTMENTS -6,661.47 -2,300.00 -4,390.92 -2,700.00 -3,135.90 -2,100.00 -1,348.62 -2,400.00 2000-HRA/ECONOMIC DEVELOPME 4960 GAIN/LOSS INVEST MKT VALUE -3,772.51 -2,305.52 2,885.48 0.00 2000-HRA/ECONOMIC DEVELOPME 5010 SALES OF ASSETS 0.00 0.00 0.00 0.00 -34,000.00 0.00 0.00 0.00 2000-HRA/ECONOMIC DEVELOPME 5205 OPERATING TRANSFERS -50,000.00 -50,000.00 -40,000.00 -40,000.00 -40,000.00 -40,000.00 -29,166.69 -50,000.00 2000-HRA/ECONOMIC DEVELOPME 5360 REFUNDS&REIMBRSMNT-DBB -65,397.70 -169,469.33 -162,911.00 -122,312.85 -180,474.00 0.00 -183,465.00 2000-HRA/ECONOMIC DEVELOPME 6110 FULL TIME SALARIES 50,128.63- 128,629.60 122,761.00 90,881.27 129,430.00 0.00 134,160.00 2000-HRA/ECONOMICDEVELOPME 6152 FICA/MEDICARE 3,643.60 9,362.38 9,392.00 6,679.37 10,030.00 0.00 10,579.00 2000-HRA/ECONOMIC DEVELOPME 6154 PERA 3,759.73 9,647.15 9,206.00 6,816.11. 9,707.00 0.00 10,638.00 2000-HRA/ECONOMIC DEVELOPME 6158 EMPLOYEE BENEFITS 7,865.74 20,154.17 21,550.00 14,846.30 9,046.00 0.00 21,465.00 2000-HRA/ECONOMIC DEVELOPME 6159 WORKERS COMP 182.17 263.43 790.00 0.00 833.00 2000-HRA/ECONOMIC DEVELOPME 6220 EQUP SUPPLIES&PARTS-DBB 58.08 0.00 2000-HRA/ECONOMIC DEVELOPME 6280 BOOKS&SUBSCRIPTIONS 85.00 80.00 0.00 2000-HRA/ECONOMIC DEVELOPME 6280 BOOKS&SUBSCRIPTIONS-DBB 496.36 0.00 0.00 2000-HRA/ECONOMIC DEVELOPME 6401 PROFESSIONAL SERVICES 9,512.50 11,680.00 2,635.00 12,000.00 26,575.00. 11,650.00 0.00 11,650.00 2000-HRA/ECONOMIC DEVELOPME 6401 PROFESSIONAL SERVICES-DEB 29.04 0.00 0.00 2000-HRA/ECONOMIC DEVELOPME 6403 LEGAL 853.00 4,000.00 83.50 2,500.00 2,287.46 2,000.00 0.00 2,000.00 2000-HRA/ECONOMIC DEVELOPME 6404 IT SERVICES 8,317.00 8,317.00 8,767.00 8,767.00 9,472.00 9,472.00 6,601.00 11,316.00 2000-HRA/ECONOMIC DEVELOPME 6404 IT SERVICES-DBB 1,800.00 2000-HRA/ECONOMIC DEVELOPME 6412 CELLULAR SERVICES-DBB 507.13 348.23 540.00 0.00 540.00 2000-HRA/ECONOMIC DEVELOPME 6422 ELECTRIC 207.93 300.00 246.10 300.00 13.86 300.00 0.00 0.00 2000-HRA/ECONOMIC DEVELOPME 6426 INSURANCE 142.70 130.00 121.21 130.00 542.38 130.00 283.43 550.00 2000-HRA/ECONOMIC DEVELOPME 6450 .OUTSIDE PRINTING 0.00 500.00 0.00 500.00 4,572.00. 500.00 0.00 500.00 2000-HRA/ECONOMIC DEVELOPME 6455 LEGAL NOTICES 0.00 0.00 91.50 0.00 2000-HRA/ECONOMIC DEVELOPME 6460 MEMBER DUES&LICENSURE 1,820.00 2,500.00 795.00 2,000.00 1,250.00 2,000.00 1,790.00 2,000.00 2000-HRA/ECONOMIC DEVELOPME 6460 MEMBER DUES&LICENSURE 1,526.00 0.00 2000-HRA/ECONOMIC DEVELOPME 6470 TRAINING&SUBSISTANCE 2,898.45 3,000.00 1,678.71 4,000.00 1,637.95 3,500.00 2,320.88 3,000.00 2000-HRA/ECONOMIC DEVELOPME 6470 TRAINING&SUBSISTANCE-DBB 175.80 1,529.71 5,000.00 0.00 5,000.00 2000-HRA/ECONOMIC DEVELOPME 6480 MEETING EXPENSE 10.93 167.36 2000-HRA/ECONOMIC DEVELOPME 6485 MILEAGE REIMBURSEMENT 391.32 1,000.00 21.28 800.00 410.48 400.00 1,056.47 400.00 2000-HRA/ECONOMIC DEVELOPME 6492 ADVERTISING 0.00 3,000.00 0.00 0.00 0.00 2,500.00 0.00 2,500.00: 2000-HRA/ECONOMIC DEVELOPME 6505 EQUIPMENT REPAIR/MAINTENANCE 0.00 0.00 12.98 0.00 1,296.00 0.00 0.00 0.00 2000-HRA/ECONOMIC DEVELOPME 6505 EQUIPMENTREPAIR/MAINT-DBB 272.55 247.64 195.00 0.00 250.00 2000-HRA/ECONOMIC DEVELOPME 6550 DEVELOPER PAYMENTS 9,500.00 20,000.00 37,922.98 4,885.00 2000-HRA/ECONOMIC DEVELOPME 6570 PROGRAMMING EXPENSE 31,229.00 17,000.00 11,113.55 7,733.00 5,240.20 8,000.00 5,150.00 8,000.00 2000-HRA/ECONOMIC DEVELOPME 6950 MACHINERY,EQUIPMENT&TOOLS 27,744.00 0.00 2000-HRA/ECONOMIC DEVELOPME 7140 LEGAL&FISCAL FEES 1,230.50 0.00 2000-HRA/ECONOMIC DEVELOPME 7310 OPERATING TRANSFERS 2,850.00 2,850.00 0.00 0.00 44,366.78 0.00 -44,366.78 0.00 Total 2000-HRA/ECONOMIC DEVELOPM 0.00 1,977.00 0.00 -3,970.00 0.00 -17,384.00 0.00 -8,684.00' 0.00 1,977.00 0.00 -3,970.00 0.00 -17,384.00 0.00 -8,684.00 0.00 1,977.00 0.00 3,970.00 0.00. -17,384.00 0.00 -8,684.00 8/8/2022 3:27:28 PM Page 1 of 1 CITY OF 0 43o Third St., Farmington, MN 55024 FARMINGTON 651-280-6800 Farmington MN.gov TO: Economic Development Authority FROM: Kalley Swift, Community Development Specialist SUBJECT: Appoint An Executive Director of the EDA DATE: August 15, 2022 INTRODUCTION/DISCUSSION The Economic Development Authority By-Laws allows the EDA to appoint an Executive Director. The Executive Director position has been left vacant since August 12,2022 with the resignation of Community Development Director,Samantha DiMaggio.The EDA needs to appoint an interim Executive Director of the EDA until a new Community Development Director is hired. Last year,previous City Administrator David McKnight was appointed as interim Executive Director in the absence of a Community Development Director.The EDA should appoint Lynn Gorski,City Administrator,as the official interim Executive Director effective immediately. This will allow her signature on all EDA forms and official EDA spending to occur smoothly while we are in transition. ACTION REQUESTED Approve the appointment of Lynn Gorski, City Administrator, as interim Executive Director of the EDA effective immediately. CITY OF O 430 Third St., Farmington, MN 55024 FARMINGTON © 651-28o-6800 �IWIi ' FarmingtonMN.gov TO: Economic Development Authority FROM: Kalley Swift, Community Development Specialist SUBJECT: Execute a Certificate of Completion & Release of Contract—5147 208th Street W DATE: August 15, 2022 INTRODUCTION/DISCUSSION Lot 1, Block 1 in the plat Farmington Industrial Park 208th Street,also known as 5147 208th Street W,is currently owned by one of the investors of Aerospace Fabrication—LSI Holdings I LLC. Aerospace Fabrication is the business currently located on the property. I n the process of selling the property to a different owner, LSI Holdings I LLC discovered that there is still an Agreement& Estoppel Regarding Contract For Private Development still recorded against the property from 2005. The document is between the H RA(now the E DA) and Associated Bank, National Association which was the lender for the development. The lender required the agreement as a condition to making the loan to LSI Holdings I LLC.This purpose of this document recorded against the property was for the H RA to acknowledge that the loan the bank was giving to finance the development of the property also encompassed the cost of the special assessment for the Pilot Knob Road improvement project owed to the city by this property. The Agreement& Estoppel outlined that the Assessment Agreement and the H RA's rights shall not be affected by a potential foreclosure or deed in lieu thereof. City staff performed a special assessment search on the property and confirmed with our Finance Department that all of the assessments outlined within the 2005 documents have been paid for. In order for the document to no longer be recorded against the property,the HRA must approve and execute a Certificate of Completion & Release of Contract. This will be authorized by the E DA's Chair and Executive Director to confirm that the lender,Associated Bank, National Association,has complied with all terms and conditions set forth and all sums due and owing under the Agreement for special assessment have been satisfied. City staff has reached out to Aerospace Fabrication and they are not leaving Farmington. This sale is simply a transaction of changing property owners of the site. ACTION REQUESTED Approve and execute a Certificate of Completion & Release of Contract for 5147 208th Street W regarding the Agreement& Estoppel Regarding Contract For Private Development from 2005. ATTACHMENTS: Type Description D Exhibit Special Assessment Agreement April 20, 2005 D Exhibit Agreement& Estoppel October 18, 2005 D Exhibit Certificate of Completion & Release of Contract 2324106 W zwoz i ae o �zd CD 0 vy ¢z O m O {y j .. cc (!j Q Z Z U .... �. 'i7' W iL? z LL = z N s q C) a- 0 U p r 3U) v x v W _ � LU _ Cp = C0w N FE v }' ch u. Q ¢ ,z w o C* QW� � m O 3UJ z U LL� F U 0r6 0 G U ' W U U W SPECIAL ASSESSMENT AGREEMENT 015- AGREEMENT made this U day of I 1 , 2005, by and between the CITY OF FARMINGTON, a Minnesota municipal corporation ("City") and LSI HOLDINGS I, LLC, a Minnesota limited liability company(the"Property Owner"). RECITALS A. Property Owner is the fee owner of the property described on the attached Exhibit "A" (the "subject property"). B. There is a deferred assessment for the Pilot Knob Road improvement project against the subject property. C. Property Owner has requested that the City assess the deferred assessment in the amount of $12,216.79 for the Pilot Knob Road improvement project against the subject property. NOW, THEREFORE, IN CONSIDERATION OF THEIR MUTUAL COVENANTS THE PARTIES AGREE AS FOLLOWS: 1. Special Assessments. The Subject Property is hereby assessed by the City for the Assessments in the amount of$12,216.79. The foregoing assessment will be spread over ten (10) years, with interest accruing at the rate of 6.5%per year on the unpaid balance until the assessments are paid in full. The Assessments shall be deemed adopted on the date this Agreement is signed by the City. 2. Waiver. The Property Owner waives any and all procedural and substantive objections to the Assessments, including but not limited to hearing requirements and any claims that the Assessments exceed the benefit to the subject property. The Property Owner waives any appeal rights otherwise available pursuant to Minn. Stat. § 429.0$1. NCS.\ 5O •MPLS(NE, i 3. Development Approval. Nothing contained in this Agreement shall be construed to give the Property Owner pre-approval of any development of the Subject Property. 4. Bindiny, Effect; Recording. This Agreement shall be binding upon the Property Owner and the Property Owner's successors and assigns. This Agreement may be recorded against the title to the subject property. CITY OF INGTON By: evan de er ,Mayor A David M.U ia, i y tra LSI HOLDINGS I,LLC By: Its: I I STATE OF MINNESOTA ) )ss. COUNTY OF DAKOTA ) The foregoing instrument was acknowledged before me this f 0 day of r ir , 2005,by Kevan Soderberg and David M.Urbia, respectively the Mayor and City Adininistrator of the City of Farmington, a Minnesota municipal corporation,on behalf of the corporation and pursuant to the authority granted by its City Council. er1� j� Not�" Public ;- JENNIFER L.MORICAL NOTARY PUBLIC-MINNESOTA s; Yp ewadni n E*m Jen.31,2008 r 117754 2 14 3. Development Approval. Nothing contained in this Agreement shall be construed to give the Property Owner pre-approval of any development of the Subject Property. 4. Binding Effect, Recording. This Agreement shall be binding upon the Property Owner and the Property Owner's successors and assigns. This Agreement may be recorded against the title to the subject property. CITY OF FARMINGTON By:_ Kevan Soderberg,Mayor And:_ David M. Urbia, City Administrator LSI;J. GS I,LLC By: Its; W4�s,qw- T STATE OF MINNESOTA ) ) ss. COUNTY OF DAKOTA ) The foregoing instrument was acknowledged before me this day of , 2005,by Kevan Soderberg and David M. Urbia, respectively the Mayor and City Administrator of the City of Farmington, a Minnesota municipal corporation,on behalf of the corporation and pursuant to the authority granted by its City Council. Notary Public 117754 2 M. STATE OF MINNESOTA ) )ss. COUNTY OF 4f 09 P j ) The foregoing instrument was acknowledged before me this A+—day ofQpp.; I 2005,by PA,�*j K C. A,.,a�rdv^ ,the Mg,.4 to,- of LSI HOLDINGS I, LLC, a Minnesota limited liability company, on behalf of said eefle�. ox. ......:� lh , 12a2: Notary Public THIS INSTRUMENT WAS DRAFTED BY: CAMPBELL KNUTSON Professional Association a 1380 Corporate Center Curve,Suite#317 r IN Eagan,Minnesota 55121 LORRAINEM.P91NDLE Telephone: (651)452-5000 NOTARYPUBUC=111NNESOTA AMP/cjh 14 CIO I t11 Eq—ion 31,2010 AAAAAROMA MRr l 117754 3 I EXHIBIT "A" Legal description of the Subject Property: Lot 1, Block 1, Farmington Industrial Park 208th Street Addition, Dakota County,Minnesota, according to the plat recorded therein. 1 i i I -• 117754 4 • . ,l� 2413003 m � 'V -nIn rn i • v o N G � = o �'-' n�i p v, -a m r O tvir o v p � x 3 -i ai A 33- tv rno n =a4 Ln ❑ m �� _ a CM This instrument was drafted by 00 > And when recorded return to: V) v LEONARD,STREET AND DEINARD r, ❑ X -i PROFESSIONAL ASSOCIATION(!DP) o 150 South Fifth Street, Suite 2300 Minneapolis,MN 554M COPY DEL D (Space Above this Line Reserved for Recording Infommtion) AGREEMENT AND ESTOPPEL REGARDING CONTRACT FOR PRIVATE DEVELOPMENT THIS AGREEMENT AND ESTOPPEL REGARDING CONTRACT FOR PRIVATE DEVELOPMENT (this "Agreement") is made as of October /Y , 2005 between the Housing and Redevelopment Authority of the City of Farmington, Minnesota, a public body corporate and politic organized and existing under the laws of the State of Minnesota(the"HRA'),and Associated Bank,National Association,a national banking association(the"Lender"). RECITALS A. The HRA has entered into that certain Contract for Private Development,dated as of April 1, 2005, (the "Development Agreement"), between the HRA and LSI Holdings I, LLC, a Minnesota limited liability company(the`Borrower")as assignee of Patrick C.Anderson,pertaining to the development of the real estate described on Exhibit A hereto(the"Property"). B. Pursuant to the Development Agreement, the HRA and the Borrower have executed and delivered to one another Special Assessment Agreements dated April 20,2005,imposing special assessments which shall apply to the Property for the purpose of the payment of real estate taxes, which Special Assessment Agreements were recorded on May 20, 2005 as Document No. 2324106 and Document No. 2324107,respectively,in the office,of the County Recorder of Dakota County, Minnesota(the"Assessment Agreements'). C. The Lender has agreed to loan to the Borrower a sum not to exceed$1,520,000(the"Loan") on the terms and conditions set forth in that certain Construction and Term Loan Agreement, dated as of October J j$, 2005, between the Borrower and the Lender (the "Loan Agreement"). The Loan is also evidenced by a Promissory Note, dated as of October 1$, 2005, from the Borrower to the Lender(the "Note'). D. The Loan Agreement and the Note are secured by a Combination Mortgage,Assignment of Rents, Security Agreement and Fixture Financing Statement covering the Property, dated as of October j2L{Z,2005(the"Lender Mortgage"),which was recorded in the office of the County Recorder of Dakota County onA/O✓�2005 as Document Number a-ZU7a .(The Loan Agreement,the Note,the Lender Mortgage, and any other document or agreements evidencing or securing the Loan are referred to herein collectively as the"Lender Documents.") E. The Lender has required that this Agreement be executed as a condition to making the Loan. 2676770.1 • i NOW,THEREFORE,in consideration of the foregoing,their mutual promises contained herein,and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Affirmation of Assessment Agreement. The Assessment Agreements and the HRH's rights thereunder shall not be affected by a foreclosure or deed in lieu thereof. 2. Consent to Collateral Assignment of Development Agreement. The HRA hereby consents to the collateral assignment by the Borrower to the Lender of the Borrower's rights and obligations under the Development Agreement. At any time after the occurrence and during the continuation of an Event of Default under the Loan Agreement(as defined therein),the Lender may at its option notify the HRA and the Borrower in writing that it has elected to assume the obligations of the Borrower under the Development Agreement. Upon receipt of such notice,the HRA shall recognize the Lender as successor to the Borrowers rights under the Development Agreement and shall continue to perform the HRA's obligations under the Development Agreement for the benefit of the Lender. 3. Subordination of Development Agreement. Except as provided in Section 1 of this Agreement,regardless of the priority of any rights or interests otherwise available or belonging to the HRA, each and every right and interest of the NRA in and to the Property of any kind whatsoever, including without limitation its rights and interests under the Development Agreement, is hereby subjected and subordinated and shall remain in all respects and for all purposes,subject,subordinate and junior to the rights of the Lender under the Lender Documents and to the liens thereof. The subordination effected hereby shall extend to any and all advances heretofore or hereafter made pursuant to the terms of the Lender Documents. It shall also extend to any amendment,modification,extension,replacement or renewal of any of the Lender Documents,including any amendment which increases the principal amount secured by the Lender Mortgage or the Lender Financing Statements. Notwithstanding the foregoing provisions of this Section 3, the Assessment Agreements and the HRH's rights thereunder shall at all times be prior to the Lender Documents and the Lender's rights thereunder,as set forth in Section 1 of this Agreement and nothing in this Section 3 shall impair the rights or remedies of the HRA against the Borrower pursuant to the Development Agreement. 4. Lender's Riglig Undgr Lender Documents. The Lender shall have no obligation to the HRA of any kind whatsoever with respect to the Lender Documents, and the Lender may exercise its rights and administer its duties under such documents in any manner it sees fit. Without limiting the generality of the foregoing, the Lender may amend the Lender Documents or release any collateral for the Loan in its discretion, and the Lender shall have no duty to the HRA to preserve, protect, maintain, insure, take possession of, foreclose, dispose of or otherwise realize upon the Property or any other collateral for the Loan. 5. HRA's Representations. Warranties and Covenants. The HRA represents and warrants to and covenants with the Lender as follows: (a) The execution, delivery and performance of this Agreement have been duly authorized by all necessary action, and this Agreement is the valid and binding obligation of the HRA,enforceable in accordance with its terms. (b) Until all amounts advanced and to be advanced under the Lender Documents have been repaid,no amendment to the Development Agreement or the Assessment Agreements which in any way affects the Properly shall be binding on the Lender unless the Lender consents to the amendment in writing. 2676770.1 2 (c) The Development Agreement is in full force and effect and has not been amended, and to the best knowledge of the HRA, neither the HRA nor the Bom3wer is in default under the Development Agreement. (d) The HRA shall provide the Lender a copy of any notice of any default under the Development Agreement sent to Borrower at the same time such notice is sent to Borrower. If within forty-five(45)days after receipt of said notice,the Lender commences the actions necessary to cure any default and thereafter diligently proceeds to cure the same, then the HRA shall not terminate the Development Agreement based upon such a default, or exercise any other remedy available to the HRA, including without limitation enforcement of any right of reverter contained in the Warranty Deed dated April 20,2005 recorded May 20,2005 as Document No.2324108,and the HRA hereby waives any right to reclaim fee title to the Property while the Lender is attempting to cure such default in accordance with the terms hereof. (e) If the Lender provides the HRA with notice pursuant to Section 2, above,and then completes the Minimum Improvements as required by the Development Agreement, the HRA will issue a Certificate of Completion to the Lender in the form attached as Exhibit D to the Development Agreement. (f) A transfer of the Property to the Lender pursuant to a foreclosure of the Mortgage or a deed4n-lieu of foreclosure shall not cause a default under the Development Agreement. 6. Notices. All notices delivered pursuant to this Agreement shall be delivered by United States Mail or hand-delivered to: If to the HRA: Housing and Redevelopment Authority in and for the City of Farmington 325 Oak Street Farmington,MN 55024 If to the Lender.Associated Bank,National Association 401 E.Kilbounn Ave.,Suite 350 Milwaukee,WI 53202 Attn: Commercial Real Estate Division 7. Miscellaneous. This Agreement may be amended only by an agreement in writing signed by all of the parties hereto. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. [Signatures appear on the following pages.] i 2676770.1 3 SIGNATURE PAGE OF HOUSING AND REDEVELOPMENT AUTHORITY TO AGREEMENT AND ESTOPPEL REGARDING CONTRACT FOR PRIVATE DEVELOPMENT IN WITNESS WHEREOF,the parties have executed this Agreement as of the date first above written. HRA: HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FARMINGTON,MSOTA /" By- Its --6(4'7r vG !7� And By- its _ &C 5 �y r STATE OF MINNESOTA } )ss. COUNTY OF DAKOTA ) The foregoing instrument was aclmowled ed before me this 14 day of October,2005,by —✓I t-47Lt?-0(ti- and —'70 On /y�= ,the 6L&'EA 'r, vi'—:'- 01 �G"7�✓L and r et,�='S t gz5W T respectively of the Housing and Redevelopment Authority of the City of Farmington,Minnesota,a public body corporate and politic organized under the laws of the State of Minnesota,on behalf of such public body. JENNIFER L.MOAICAL No Public y�I NOTARY PUBUC•MNNE$OTA NyCo MWWEWM Jim.$1,to AMiwvs NOTARY SIGNATURE DIFFERS FROM STAMP 4 r � 2676770.1 4 SIGNATURE PAGE OF ASSOCIATED BANK,NATIONAL ASSOCIATION TO AGREEMENT AND ESTOPPEL REGARDING CONTRACT FOR PRIVATE DEVIELOPMENT IN WITNESS WHEREOF,the parties have executed this Agreement as of the date first above written. LENDER: ASSOCIATEDBANK, NATIONAL ASSOCIATION its tl.-, STATE OF WISCONSIN )ss. COUNTY OF MILWAUKEE The foregoing instrument was acknow edged bqfore me this JL day of October, 2005\',,W,,,,,, 6iA 6�� 2 V61;'fi 10A'.o� of Associate the sewit Is co �. ......... V& Natiohal Association,a natiSAal banking association,on behalf of such national banking associati . '0 AMELIA J. I (ILL' . = STRICKLER ., Notary Public .. !,,-: .......... Py P%3 2676770.1 5 SIGNATURE PAGE OF BORROWER TO AGREEMENT AND ESTOPPEL REGARDING CONTRACT FOR PRIVATE DEVELOPMENT f CONSENT QE BORROWER i The Borrower hereby consents to all of the terms of the foregoing Agreement. LSI HOLDINGS 1,LLC By: - Patrick C.Anderson,its Chief Manager W.'scar s".0- STATE OF hiPP"94A ) vh-. )ss. COUNTY OF 1WiNINEPW ) The foregoing instrument was acknowledged before me this day of October,2005,by Patrick C.Anderson,the Chief Manager of LSI Holdings I,LLC,a Minnesota limited liability company,on behalf of the limited liability company. V"�xOFttWiISC Notary Public, `_��`y •, Z ' AMELIA J. *= 0& 9 1STRICKLER . . .......... Y,P,:�`��� 2576770A 6 EXHIBIT A LEGAL DESCRIPTION The Real Property described in the referenced instrument is located in Dakota County,Minnesota and is legally described as follows: Lot 1,Block 1,Farmington Industrial Park 208th Street Addition Abstract Property z676770.1 A- 1 (Reserved for recording data) CERTIFICATE OF COMPLETION AND RELEASE OF AGREEMENT AND ESTOPPEL REGARDING CONTRACT FOR PRIVATE DEVELOPMENT Date: 52022 WHEREAS, the HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF FARMINGTON,MINNESOTA,now known as the FARMINGTON ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and politic organized and existing under the laws of the State of Minnesota("EDA") and ASSOCIATED BANK,a national banking association ("Lender") entered in an Agreement and Estoppel Regarding Contract for Private Development dated October 18, 2005 and recorded March 17, 2006 as Dakota County Document No. 2413003 ("Agreement") for the property legally described on Exhibit "A" attached hereto ("Subject Property"); and WHEREAS, Associated Bank has complied with all terms and conditions of the Agreement and that all sums due and owing under the Agreement have been satisfied. NOW,THEREFORE,pursuant to Paragraph 5(e)of the Agreement,the undersigned, on behalf of the EDA, certifies that the terms and conditions of the Agreement have been complied with and satisfied,that the Agreement is no longer in effect, and is hereby Released. THIS CERTIFICATE SHALL BE CONCLUSIVE DETERMINATION OF THE SATISFACTION AND TERMINATION OF THE AGREEMENT AND ESTOPPEL REGARDING CONTRACT FOR PRIVATE DEVELOPMENT. 222915v1 FARMINGTON ECONOMIC DEVELOPMENT AUTHORITY,formerly known as the Housing and Redevelopment Authority of the City of Farmington,Minnesota, By Its Chair And Its Executive Director STATE OF MINNESOTA ) )ss. COUNTY OF DAKOTA ) The foregoing instrument was acknowledged before me this day of , 2022, by and by , respectively the Executive Director and Chair of the Farmington Economic Development Authority,a public body corporate and politic organized and existing under the laws of the State of Minnesota, on behalf of the entity. Notary Public This Instrument was Drafted by: CAMPBELL KNUTSON, Professional Association Grand Oak Office Center I 860 Blue Gentian Road,Suite 290 Eagan,Minnesota 55121 (651)452-5000 [iii] 2229150 EXHIBIT "A" Lot 1, Block 1, Farmington Industrial Park 208'Street Addition, Dakota County, Minnesota. Abstract property. 222915v1 CITY OF O 43o Third St., Farmington, MN 55024 FARMINGTON © 651-280-6800 s t Farmington MN.gov TO: Economic Development Authority FROM: Kalley Swift, Community Development Specialist SUBJECT: Review of An Amended Business Subsidy Policy DATE: August 15, 2022 INTRODUCTION/DISCUSSION The Farmington City Council has established priorities,one of which is Business Growth,to help provide more amenities to residents and increase and diversify our tax base. one of the primary tools that could help accomplish this goal is a business subsidy. The purpose of a Business Subsidy Policy is to establish criteria and provide guidelines for granting businesses subsidies,including assistance such as Tax Increment Financing(TI F) and Tax Abatement. I n addition to our local Business Subsidy Policy,the requirements and limitations established through Minnesota State Statute Sections 116J.993 through 116.1.995,as amended,shall be followed.The Business Subsidy Policy will be used as a guide when reviewing an application submitted to the city for a business subsidy. I n addition to the Business Subsidy Policy,all other city policies will be used when reviewing a business subsidy application.The City has the right to deviate from their Business Subsidy Policy. A business subsidy is defined as: A local government agency grant,contribution of personal property, real property,infrastructure, the principal amount of a loan at rates below those commercially available to the recipient,any reduction or deferral of any tax or any fee,any guarantee of any payment under any loan,lease,or other obligation,or any preferential use of government facilities given to a business,and as defined by the Business Subsidy statute M.S. §1161.993- 116J.995. MN Statute 116J.994,Sub. 2 requires that prior to awarding a financial subsidy to a business,a set of criteria needs to be developed by the grantor. Subd. 2. Developing a set of criteria. A business subsidy may not be granted until the grantor has adopted criteria after a public hearing for awarding business subsidies that comply with this section. The criteria may not be adopted on a case-by-case basis. The criteria must set specific minimum requirements that recipients must meet in order to be eligible to receive business subsidies. The criteria must include a specific wage floor for the wages to be paid for the jobs created. The wage floor may be stated as a specific dollar amount or may be stated as a formula that will generate a specific dollar amount.A grantor may deviate from its criteria by documenting in writing the reason for the deviation and attaching a copy of the document to its next annual report to the department. The City of Farmington's proposed amended Business Subsidy Policy establishes MN State Statute business subsidy definition and develops a set of criteria as required.The current Business Subsidy Policy was last amended on April 20,2015. City staff believes that based on the changes in our community and the economic environment that the policy should be updated to better attract businesses into our community and help retain a more diverse business economy. The amended Business Subsidy Policy will absorb the current Business Subsidy Policy(2015),Tax Abatement Policy(2016),and TI F Policy(2016)and dissolve it into one single policy for ease of use and understanding for business prospects,the community and city staff. It will also align better with M N State Statute and provide clear guidelines and requirements for those looking to qualify for a business subsidy. The Economic Development Authority(EDA)began an initial conversation about an amended Business Subsidy Policy on February 22,2022 at their Regular meeting and had a follow-up discussion on May 16,2022 at their Regular meeting. City staff utilized the direction given from the EDA to finalize the amended Business Subsidy Policy brought forward tonight for review and adoption by the City Council. The City Attorney has also reviewed the amended Business Subsidy Policy document and his recommended changes were incorporated as well. The EDA should review the proposed amended Business Subsidy Policy and ask any final questions prior to the official public hearing by the City Council to formally consider adoption of this amended Business Subsidy Policy. ACTION REQUESTED Review the proposed amended Business Subsidy Policy before the public hearing by the City Council on August 15,2022 at 7 p.m. ATTACHMENTS: Type Description ❑ Exhibit Current Business Subsidy Policy(2015) ❑ Exhibit Current Tax Abatement Policy (2016) ❑ Exhibit Current Tax Increment Financing Policy(2016) ❑ Exhibit Proposed Amended Business Subsidy Policy (2022) FARMINGTON BUSINESS SUBSIDY POLICY 1.0 PURPOSE 1.01 This Policy is adopted for purposes of the Business Subsidies Act (the "Act"),Minnesota Statues, Sections 116J.993 through 116J.995. Terms used in this Policy are intended to have the same meanings as if used in the Act, and this Policy shall apply only with respect to "subsidies" as defined by the Act if and to the extend required thereby. 2.00 POLICY 2.01 The City of Farmington and the Farmington Economic Development Authority maintain several policy documents which speak to the general goals and objectives for the provision of public assistance for private development or redevelopment activities. These documents include, but are not limited to the current Strategic Plan for Economic Development and the Comprehensive Land Use Plan. 2.02 The City of Farmington has determined that in order for any project to be considered for financial assistance, a finding is needed that determines that, "but for"the City's assistance, this project will not occur or will not occur within a reasonable amount of time. The City will also need to demonstrate a return on its investment based on one or more of the public benefit categories listed in this Policy. 2.03 Because projects vary greatly in structure and public benefit derived, each project will be considered on its own merits. Consideration will be given to projects providing public benefits in one or more of the following categories: a. The creation of new jobs/increase in total payroll. In the case of new job creation, new jobs must pay an average wage equal to the minimum wage level for business assistance programs administered by the Minnesota Department of Employment and Economic Development for cities located in the seven county metropolitan area in place at the time of an application by any business seeking a subsidy. Preference will be given to higher paying jobs that also provide benefits such as health care coverage. b. Projects that provide value in the forms of needed transportation and other utility infrastructure improvements including regional infrastructure in the community that would be completed in conjunction with the project. C. Redevelopment projects that result in the stabilization of business districts or neighborhoods by elimination of blighting conditions. d. Projects that enhance or increase the economic diversity of the community by attracting businesses or industries not currently located in the City. New job wage requirements will apply to any new jobs created. Farmington Business Subsidy Policy rev.4.20.15 e. Projects that result in the development of affordable senior or workforce housing. f. Quality of Life based on business/projects. Those business/entities that provide a desirable good or service and address an unmet demand in the community will be considered. New job wage requirements will apply to any new jobs created. g. Retention of existing jobs. To be considered under this category, it must be demonstrated—to the satisfaction of the City-that the loss of jobs is specific and can be demonstrated. 2.04 If a particular project does not involve the creation of jobs, but is nonetheless found to meet another public purpose of the City it may be considered without any specific job wage goals, as permitted by Minnesota Statutes. This public purpose has to be something other than an increase to the City's tax base. Other measurable, specific and tangible goals must be established. Examples of tangible goals may include redevelopment or clean-up of a contaminated site or increased tourism. 2.05 Each project shall not only be evaluated against the Business Subsidy Policy but also against other applicable City of Farmington or Economic Development Authority policies, including the Comprehensive Land Use Plan, current Strategic Plan for Economic Development. The level of assistance to be provided for any project is at the discretion of City of Farmington. 2.06 Because it is not possible to anticipate every type of project which may in its context and time present desirable community building or preservation goals and objectives, the governing body must retain the right in its discretion to approve projects and subsidies which may vary from the principles and criteria of this Policy. The burden will be on the applicant to demonstrate,to the satisfaction of the City of Farmington,that the public benefit justifies the requested subsidy. 2.07 In all cases of business subsidy, where the subsidy is equal to or greater than the threshold prescribed in Minnesota Statutes, a subsidy agreement will be entered into between the City and the recipient. This agreement will delineate the subsidy structure and amount, as well as the expected public benefit. The agreement will include provisions for repayment and other resolution options if the expected public benefit is not achieved. Upon completion of the project, the actual costs of the elements of the project eligible for the business subsidy will be verified. All business subsidies will be subject to the criteria outlined in Minnesota Statutes, Section 116J.933 through Section 116J.955 except those subsidies as exempted by same. Farmington Business Subsidy Policy rev.4.20.15 FARMINGTON TAX ABATEMENT POLICY November 2016 1.0 PURPOSE 1.01 For the purposes of this document,the term "City" shall include the Farmington City Council and Farmington Economic Development Authority(EDA). 1.02 The purpose of this policy is to establish the city of Farmington's position relating to the use of Tax Abatement for private development above and beyond the requirements and limitations set forth by State Law. This policy shall be used as a guide in the processing and review of applications requesting Tax Abatement assistance. 1.03 The City is granted the power to utilize Tax Abatement by the Minnesota Statutes 469.1812 through 469.1815, as amended. The fundamental purpose of Tax Abatement in the city of Farmington is to encourage desirable development or redevelopment that would not otherwise occur but for the assistance provided through Tax Abatement. 1.04 The City reserves the right to approve or reject projects on a case by case basis,taking into consideration established policies, project criteria, and demand on City services in relation to the potential benefits from the project. Meeting policy criteria does not guarantee the award of business assistance to the project. Approval or denial of one project is not intended to set precedent for approval or denial of another project. The City can deviate from this policy for projects that supersede the objectives identified herein. 1.05 Though the EDA has expressed support for the use of Tax Abatement as needed,the EDA may reject any Tax Abatement application prior to consideration by the Farmington City Council. 2.0 OBJECTIVES OF TAX ABATEMENT 2.01 As a matter of adopted policy,the City will consider using Tax Abatement to assist private development projects that will achieve one or more of the following objectives: a. To retain local jobs and/or increase the number and diversity of jobs that offer stable employment and/or attractive wages and benefits. Preference will be given to higher paying jobs that also provide benefits such as health care coverage. b. Projects that provide value in the forms of needed transportation and other utility infrastructure improvement that would be completed in conjunction with the project. C. To encourage additional unsubsidized private development in the area, either directly or indirectly through "spin off'development. d. To facilitate the development process and to achieve development on sites which would not otherwise be developed but-for the use of Tax Abatement. e. To remove blight and/or encourage redevelopment of commercial and industrial areas in the city of Farmington that result in high quality redevelopment and private reinvestment. f. To offset increased costs of redevelopment(i.e. contaminated site clean-up) over and above the costs normally incurred in development. g. To create opportunities for affordable housing. h. Projects that improve the quality of life in the city of Farmington by providing a desirable good or service and address an unmet demand in the community. 3.0 POLICIES FOR THE USE OF TAX ABATEMENT 3.01 At all times, procedures and policies related to the proposed or actual approval of Tax Abatement usage will comply with the state laws. 3.02 The project must be in accord with the city of Farmington's Comprehensive Plan and Zoning Ordinances to secure assistance. 3.03 The use of Tax Abatement may be a"business subsidy"as defined by state law. In these cases,the use will comply with the requirements of applicable statutes and the city of Farmington's Business Assistance Policy. 3.04 When possible, Tax Abatement shall be used to pay for the costs of public improvements associated with a project, including but not limited to streets, sewers, storm water control, water,public parking lots and structures, lights, fiber optic infrastructure,transit and transportation, energy technologies, and publicly owned infrastructure. 3.05 Business assistance shall not be utilized in cases where it would create an unfair and significant competitive financial advantage over projects in the area. 3.06 The applicant is required to retain and be assisted by qualified professionals, e.g. accountants, legal counsel, etc., separate and independent from the EDA. 3.07 Tax Abatement shall not be used for projects that would place extraordinary demands on city services or for projects that would generate significant environmental impacts. 3.08 Construction of an eligible project shall not commence until the City has given final approval to the application for financing. 3.09 The City reserves the right to deny any application for financing at any time prior to final execution of a business subsidy agreement or development agreement, whichever applies. 3.10 The EDA shall be reimbursed by the applicant for all its costs related to the request for Tax Abatement. At the time of application,the applicant will deposit with the EDA an amount as determined by the EDA as necessary to cover all costs incurred by the EDA in connection with the proposed project. a. The amount of the initial deposit shall be determined by the Executive Director of the EDA. b. The fact that the applicant's deposit is accepted by the EDA is not to be construed as a guarantee that the EDA will authorize the project. C. The EDA may request and the applicant shall be responsible to pay any additional amounts as determined from time to time by the EDA, should associated costs exceed the initial deposit. 3.11 All applications and supporting materials and documents shall become the property of the EDA, and, as such, are subject to the Minnesota Data Practice Act. 3.12 The EDA reserves the right to select a third party to assist in the management of the Tax Abatement process. 3.13 All Tax Abatement proposals must take into account the direct costs to the City and county and how those costs will be addressed. The applicant shall pay all permits and fees normally charged by the City as part of the subdivision or building permit approval. 4.0 PROJECT QUALIFICATIONS 4.01 All Tax Abatement projects considered by the City must meet the following requirements: a. For new construction or expansion projects,new construction of a minimum of 5,000 square feet. b. The minimum creation of one new or retained full time job per$25,000 of assistance provided. C. The developer shall demonstrate that the project is not financially feasible but-for the use of Tax Abatement. d. The project must be consistent with the City's Comprehensive Plan, Land Use Plan, and Zoning Ordinances. 4.02 The project shall serve at least two of the following public purposes: a. Creation of jobs with livable wages and benefits,per City's Business Subsidy Policy. b. Increase of tax base. C. Enhancement or diversification of the City's economic base. d. Industrial development that will spur additional private investment in the area. e. The project contributes to the fulfillment of the City's development or redevelopment objectives. f. Removal of blight or the rehabilitation of a high profile or priority downtown site. 5.0 SUBSIDY AGREEMENT AND REPORTING REQUIREMENTS 5.01 All recipients of Tax Abatement assistance from the City shall be subject to the provisions and requirements set forth by state statute. 5.02 All recipients of Tax Abatement assistance shall enter into an assistance agreement with the City that identifies the reason for the assistance, the public purpose served by the assistance,the goals of the assistance, as well as other criteria set forth by state statute. 5.03 The Tax Abatement assistance agreement may be amended from time to time as the parties may agree. Any such amendment must be in writing and signed by both parties. The Tax Abatement assistance agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. The Tax Abatement assistance agreement shall be recorded in the office of the Dakota County Recorder or Registrar of Titles. 5.04 All recipients of Tax Abatement assistance shall file a report annually for two years after the date the benefit is received or until all goals set forth in the application and the assistance agreement have been met. Reports shall be completed using the format drafted by the State of Minnesota and shall be filed with the City no later than March 1 of each year for the previous calendar year. Businesses fulfilling job creation requirements must file a report to that effect with the City within 30 days of meeting the requirement. FARMINGTON TAX INCREMENT FINANCING POLICY June 2016 1.0 PURPOSE 1.01 For the purposes of this document,the term"City" shall include the Farmington City Council and Farmington Economic Development Authority (EDA). 1.02 The purpose of this policy is to establish the city of Farmington's position relating to the use of Tax Increment Financing (TIF) for private development above and beyond the requirements and limitations set forth by State Law. This policy shall be used as a guide in the processing and review of applications requesting tax increment assistance. 1.03 The City is granted the power to utilize TIF by the Minnesota Tax Increment Financing Act, as amended. The fundamental purpose of tax increment financing in the city of Farmington is to encourage desirable development or redevelopment that would not otherwise occur but for the assistance provided through TIF. 1.04 The City reserves the right to approve or reject projects on a case by case basis,taking into consideration established policies,project criteria, and demand on City services in relation to the potential benefits from the project. Meeting policy criteria does not guarantee the award of business assistance to the project. Approval or denial of one project is not intended to set precedent for approval or denial of another project. The City can deviate from this policy for projects that supersede the objectives identified herein. 1.05 Though the EDA has expressed support for the use of TIF as needed,the EDA may reject any TIF application prior to consideration by the Farmington City Council. 2.0 OBJECTIVES OF TAX INCREMENT FINANCING 2.01 Tax Increment Financing (TIF)uses the increased property taxes generated by new real estate development within a tax increment district to pay for certain eligible costs associated with the development. As a matter of adopted policy,the City will consider using TIF to assist private development projects that will achieve one or more of the following objectives: a. To retain local jobs and/or increase the number and diversity of jobs that offer stable employment and/or attractive wages and benefits. Preference will be given to higher paying jobs that also provide benefits such as health care coverage. b. Projects that provide value in the forms of needed transportation and other utility infrastructure improvement that would be completed in conjunction with the project. C. To encourage additional unsubsidized private development in the area, either directly or indirectly through"spin off'development. d. To facilitate the development process and to achieve development on sites which would not otherwise be developed but-for the use of TIF. e. To remove blight and/or encourage redevelopment of commercial and industrial areas in the city of Farmington that result in high quality redevelopment and private reinvestment. f. To offset increased costs of redevelopment(i.e. contaminated site clean-up) over and above the costs normally incurred in development. g. To create opportunities for affordable housing. h. Projects that improve the quality of life in the city of Farmington by providing a desirable good or service and address an unmet demand in the community. 3.0 POLICIES FOR THE USE OF TIF 3.01 At all times,procedures and policies related to the proposed or actual approval of TIF usage will comply with the state laws. 3.02 The project must be in accord with the city of Farmington's Comprehensive Plan and Zoning Ordinances to secure assistance. 3.03 The use of TIF may be a"business subsidy" as defined by state law. In these cases,the use will comply with the requirements of applicable statutes and the city of Farmington's Business Assistance Policy. 3.04 The following general types of TIF districts may be established: a. Redevelopment District b. Renewal and Renovation District C. Economic Development District d. Housing District e. Other types of TIF districts, along with specific criteria,may be considered on a case by case basis. In addition to these districts,the City may also consider the creation of TIF Districts as authorized by applicable legislation. 3.05 When possible, TIF shall be used to pay for the costs of public improvements associated with a project, including but not limited to streets, sewers, storm water control, water, public parking lots and structures, lights, fiber optic infrastructure,transit and transportation, energy technologies, and publicly owned infrastructure. 3.06 TIF shall generally be used to reimburse the developer for eligible costs on a"Pay as You Go"basis. The City shall have the option to issue a TIF note with or without interest. The principal amount of the TIF note will not exceed the amount of eligible project costs incurred and documented by the developer. The developer shall be required to provide written receipts that show costs eligible for reimbursement have been paid. In all cases, TIF payments shall be based on available increment generated from the project. TIF payments shall be made after collection of property taxes. 3.07 The applicant is required to retain and be assisted by qualified professionals, e.g. accountants, legal counsel, etc., separate and independent from the EDA. 3.08 TIF shall not be used for projects that would place extraordinary demands on city services or for projects that would generate significant environmental impacts. 3.09 Construction of an eligible project shall not commence until the City has given final approval to the application for financing and the TIF district has been established, if required. 3.10 The City reserves the right to deny any application for financing at any time prior to final execution of a business subsidy agreement or development agreement,whichever applies. 3.11 The EDA shall be reimbursed by the applicant for all its costs related to the request for TIF. At the time of application,the applicant will deposit with the EDA an amount as determined by the EDA as necessary to cover all costs incurred by the EDA in connection with the proposed project. a. The amount of the initial deposit shall be determined by the Executive Director of the EDA. b. The fact that the applicant's deposit is accepted by the EDA is not to be construed as a guarantee that the EDA will authorize the project. C. The EDA may request and the applicant shall be responsible to pay any additional amounts as determined from time to time by the EDA, should associated costs exceed the initial deposit. 3.12 All applications and supporting materials and documents shall become the property of the EDA, and, as such, are subject to the Minnesota Data Practice Act. 3.13 The EDA reserves the right to select a third party to assist in the management of the TIF process. 3.14 All TIF proposals must take into account the direct costs to the City and county and how those costs will be addressed. The applicant shall pay all permits and fees normally charged by the City as part of the subdivision or building permit approval. 3.15 The EDA will reserve up to 10% of all TIF funds to pay the EDA's administrative costs. 4.0 PROJECT QUALIFICATIONS 4.01 All TIF projects considered by the City must meet the following requirements: a. For Economic Development TIF Districts,new construction of a minimum of 5,000 square feet. b. For Economic Development TIF Districts,the minimum creation of one new or retained full time job per$25,000 of TIF provided. C. The developer shall demonstrate that the project is not financially feasible but-for the use of TIF. d. The project must be consistent with the City's Comprehensive Plan, Land Use Plan, and Zoning Ordinances. 4.02 The project shall serve at least two of the following public purposes: a. Creation of jobs with livable wages and benefits,per City's Business Subsidy Policy. b. Increase of tax base. C. Enhancement or diversification of the City's economic base. d. Industrial development that will spur additional private investment in the area. e. The project contributes to the fulfillment of the City's development or redevelopment objectives. f. Removal of blight or the rehabilitation of a high profile or priority downtown site. 5.0 SUBSIDY AGREEMENT AND REPORTING REQUIREMENTS 5.01 All recipients of TIF assistance from the City shall be subject to the provisions and requirements set forth by state statute. 5.02 All recipients of TIF assistance shall enter into an assistance agreement with the City that identifies the reason for the assistance, the public purpose served by the assistance, the goals of the assistance, as well as other criteria set forth by state statute. 5.03 The TIF assistance agreement may be amended from time to time as the parties may agree. Any such amendment must be in writing and signed by both parties. The TIF assistance agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. The TIF assistance agreement shall be recorded in the office of the Dakota County Recorder or Registrar of Titles. 5.04 All recipients of TIF assistance shall file a report annually for two years after the date the benefit is received or until all goals set forth in the application and the assistance agreement have been met. Reports shall be completed using the format drafted by the State of Minnesota and shall be filed with the City no later than March 1 of each year for the previous calendar year. Businesses fulfilling job creation requirements must file a report to that effect with the City within 30 days of meeting the requirement. CITY OF Exhibit A FARMINGTON Amended: August 15, 2022 Last Amended: April 20, 2015 Business Subsidy Policy For the purposes of this document, the term "city"includes the Farmington City Council,the Farmington Economic Development Authority(EDA),city staff,financial consultant, and legal counsel. I. PURPOSE The purpose of the Farmington Business Subsidy Policy is to establish criteria for the granting of business subsidies,including financial assistance,through Tax Increment Financing(TIF),Tax Abatement,or other programs that may become available through the city or the Minnesota Department of Employment&Economic Development(DEED). This policy will be used as criteria for providing subsidies,in addition to the requirements and limitations set forth by provision of Minnesota Statutes Section 116J.993 through 116J.99S,as amended,the Business Subsidy Act(the act).Any applicant who is not in good standing with the city regarding licenses,fees,code violations, or other city issues will not be considered for a business subsidy. The criteria set forth in this Business Subsidy Policy shall be used as a guide in processing and reviewing the application and will be used in conjunction with other relevant policies of the city.The city reserves the right to approve or reject projects on a case-by-case basis,taking into consideration current polices,project criteria,and demand on city services or infrastructure in relation to the potential benefits from the project.Meeting this policy criteria does not guarantee the award of business assistance for the project.Approval or denial of one project is not intended to set precedent for approval or denial of another project. The City may amend this policy at any time.Amendments are subject to public hearing requirements contained in the act.The city also has the right to deviate from this policy at any time. II.TYPES OF BUSINESS SUBSIDY A Business Subsidy,as further defined herein and in the Act shall include,but not be limited to one of the following types of subsidies provided by the City and/or DEED: 1. Loan 2. Grant City of Farmington,MN Page 1 of 7 Business Subsidy Policy 3. Tax Abatement 4. Tax Increment Financing(TIF) or other tax reduction or deferral 5. Guarantee of payment 6. Contribution of property or infrastructure 7. Preferential use of governmental facilities 8. Land contribution,or 9. Another specified subsidy III. BUSINESS SUBSIDY CRITERIA The following criteria will be utilized in evaluating a request for a business subsidy. 1. Public Purpose.A business subsidy must be used to meet a public purpose.The public purpose may include,but may not be limited to,increasing the tax base.job retention may only be used as a public purpose in cases where job loss is specific and demonstrable. 2. Increase Tax Base. The act provides that an increase in tax base cannot be the sole basis for generating a business subsidy. However, the city considers an increase in tax base to be a critical factor in granting a business subsidy. 3. Wage&Job Creation. The project provided a business subsidy must create a minimum of ten full-time equivalent job paying at least 200% of the State minimum wage in effect at the time the subsidy is granted. If, after a public hearing, the city determines that the creation or retention of jobs not a goal of the project, the job creation goal may be set at zero (0). The maximum assistance provided per job created or maintained will be$25,000/job. 4. "But-For"Test.When there is a substantial likelihood that the project would not go forward or would not go forward in the same capacity without the business subsidy. This criterion may be met based solely on representation of the recipient of the business subsidy. 5. Other Economic or Redevelopment Goals. If creation of jobs is determined not to be a goal of a project(and by extension wages)the proposed business subsidy must achieve specific, tangible,and measurable goals related to one or more of the following: a) To encourage additional unsubsidized private development in the area,either directly or indirectly through"spin off'development. b) To remove blight and/or encourage development of commercial and industrial areas in the city that result in higher quality development and private investment. c) To support a project that will improve the quality of life in the city by providing a desirable good or service and addressing an unmet demand in the community. d) To promote revitalization and redevelopment within the city but especially in the Downtown and HWY 3 Corridor. e) Focus on the creation of wealth through"high value investment"rather than on the City of Farmington,MN Page 2 of 7 Business Subsidy Policy number of jobs created. In granting a business subsidy,the city may deviate from the criteria outlined above if: a) The reason for the deviation is documented in writing,and b) Reported to the DEED pursuant to the act. IV. APPLICATION PROCESS The applicant will complete and submit the city's Business Subsidy Application,the required application fee (refer to the current year's adopted fee schedule),and any additional information requested by the city pertaining to the project.The application fee covers the cost of the city's outside financial analysis and the development of a business subsidy agreement by legal counsel.The applicant will be liable for any additional costs beyond the initial application fee.All materials submitted to the city in connection with a business subsidy application shall become the property of the city and is subject to data privacy law.The review process shall involve at least the following: 1. The city shall review the application materials to ensure: a. The completeness of the application,and b. Whether the application meets the goals and criteria of this policy. 2. If the city determines the application is complete,a public hearing will be set. 3. At the time of the scheduled public hearing,staff will make a final recommendation to the city regarding the approval or denial of the business subsidy application.This recommendation will be based on: a. Applicable credit analysis. b. Financial structure of the proposed project/application. c. Legal compliance of the project/application. 4. The city will conduct the public hearing,during which they will take citizen comment on the issuance of the business subsidy.After the public hearing is closed,the city will either approve or deny the business subsidy request.If the subsidy is approved,the business and the city will enter into a Business Subsidy Agreement. V. BUSINESS SUBSIDY AGREEMENT The following terms are specified under MN Statute 116J.994,Subd.3 Subsidy Agreement: 1. A recipient must enter into a subsidy agreement with the grantor of the subsidy that includes: a. A description of the subsidy,including the amount and type of subsidy,and type of district if the subsidy is tax increment financing. b. A statement of the public purposes for the subsidy. City of Farmington,MN Page 3 of 7 Business Subsidy Policy c. Measurable,specific,and tangible goals for the subsidy. d. A description of the financial obligation of the recipient if the goals are not met. e. A statement of why the subsidy is needed. f. A commitment to continue operations in the jurisdiction where the subsidy is used for at least five years after the benefit date. g. The name and address of the parent corporation of the recipient,if any. h. A list of all financial assistance by all grantors for the project. 2. A business subsidy in the form of grants must be structured as a forgivable loan.For other types of business subsidies,the agreement must state the fair market value of the subsidy to the recipient,including the value of conveying property at less than a fair market price,or other in-kind benefits to the recipient. 3. If a business subsidy benefits more than one recipient,the grantor must assign a proportion of the business subsidy to each recipient that signs a subsidy agreement.The proportion assessed to each recipient must reflect a reasonable estimate of the recipient's share of the total benefits of the project. 4. The city and the recipient must both sign the subsidy agreement,and the agreement must be approved by the local elected governing body. S. Notwithstanding the provision in V.1.clause f.of this agreement which states: A commitment to continue operations in the jurisdiction where the subsidy is used for at least five years after the benefit date A recipient may be authorized to move from the jurisdiction where the subsidy is used within the five-year period after the benefit date if,after a public hearing,the grantor approves the recipient's request to move. VI. COMPLIANCE AND REPORTING 1. Any assistance that does not meet the definition of a"business subsidy"will be excluded from the requirement of holding a public hearing prior to granting a business subsidy.All assistance that meets the definition shall be subject to the requirement of a public hearing. 2. Every recipient of a business subsidy must enter into a business subsidy agreement with the city.This agreement must fulfill the requirements of the act. 3. Both the recipient and the city must comply with the business subsidy reporting and monitoring requirements of the act. 4. If a recipient fails within two (2)years of the benefit date as defined in the act to meet the job and wage goals set forth in the business subsidy agreement,the recipient or its successors and assigns shall be liable to repay to the city the assistance plus interest.The city may prorate City of Farmington,MN Page 4 of 7 Business Subsidy Policy repayment to reflect partial fulfillment of the goals set forth in the business subsidy agreement.The rate of interest charged must be set at no less than the implicit price deflator for government consumption expenditures and gross investment for local governments prepared by the Bureau of Economic Analysis of the United States Department of Commerce. S. The city may,after holding a public hearing,extend the time for compliance with the business subsidy agreement job and wage goals by up to one (1)year. VII. DEFINITIONS "Benefit date"means the date that the recipient receives the business subsidy.If the business subsidy involves the purchase,lease,or donation of physical equipment,then the benefit date begins when the recipient puts the equipment into service.If the business subsidy is for improvements to property,then the benefit date refers to the earliest date of either: a) When the improvements are finished for the entire project; or b) When a business occupies the property.If a business occupies the property and the subsidy grantor expects that other businesses will also occupy the same property, the grantor may assign a separate benefit date for each business when it first occupies the property. "Business Subsidy"or"Subsidy"means a state or local government agency grant,contribution of personal property,real property,infrastructure,the principal amount of a loan at rates below those commercially available to the recipient,any reduction or deferral of any tax or any fee,any guarantee of any payment under any loan,lease,or other obligation,or any preferential use of government facilities given to a business. "The Act"means the Business Subsidy Act,Minnesota Statutes Section 116J.993 through 116J.995, as amended. "Business Subsidy Report" means the annual reports submitted each year for each business receiving a business subsidy in the community.The report is submitted by the local governmentunit in order to comply with M.S.§116J.994 Subd.7. (b). "Criteria" means the equitably applied, uniform standards by which the City bases its decision to award any business subsidy to a private business or development project establishing a business and creating jobs in the City of Farmington. "DEED"means Minnesota Department of Employment and Economic Development. "Full-Time Equivalent Job" The number does not reflect headcount, but rather all annual hours recorded by the employer divided by 40 hours per week. "Grantor"means the city department, city attorney,local or regional economic development agency or other authorized entity that is empowered to solicit, negotiate, and form business subsidy agreements on behalf of the City of Farmington. City of Farmington,MN Page 5 of 7 Business Subsidy Policy "High Value Investment"will create jobs for highly skilled workers to operate the facility and often includes expensive equipment that is very difficult and costly to move and often requires customized buildings and building designs. "Local Government Agency": Includes a statutory or home rule charter city, housing and redevelopment authority,town,county,port authority, economic development authority,community development agency, nonprofit entity created by a local government agency, or any other entity created by or authorized by a local government with authority to provide business subsidies "Public Purpose"A business subsidy must meet a public purpose which may include,but may not be limited to,increasing the tax base.Job retention may only be used as a public purpose incases where job loss is specific and demonstrable. "Recipient" means any for-profit or nonprofit business entity that receives a business subsidy. Only nonprofit entities with at least 100 full-time equivalent positions and with a ratio of highest to lowest paid employee, that exceeds ten to one, determined on the basis of full-time equivalent positions, are included in this definition. VIII. FINANCIAL ASSISTANCE NOT CONSIDERED A BUSINESS SUBSIDY The following forms of financial assistance are not considered business subsidy under MN Statute 116J.993,Subd.3 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 116J.552,subdivision 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 percent 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 sub-district as defined under M.S.§469.174,subdivision 23; 9. Assistance for energy conservation. 10. Tax reductions resulting from conformity with federal tax law. 11. Workers'compensation and unemployment insurance. 12. Benefits derived from regulation. City of Farmington,MN Page 6 of 7 Business Subsidy Policy 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 section 469.174,subdivision 19. 17. Redevelopment when the recipient's investment in the purchase of the site and in site preparation is 70 percent or more of the assessor's current years 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. 23. Property tax abatements granted under M.S.§469.1813 to property that is subject to valuation under Minnesota Rules,chapter 8100 City of Farmington,MN Page 7 of 7 Business Subsidy Policy CITY OF O 43o Third St., Farmington, MN 55024 FARMINGTON 651-280-6800 II Farmington MN.gov TO: Economic Development Authority FROM: Kalley Swift, Community Development Specialist SUBJECT: Director's/Staff Report DATE: August 15, 2022 INTRODUCTION/DISCUSSION Favor Farmington City staff has created a Favor Farmington bingo event for the month of August for food/beverage businesses in Farmington. This is to encourage foot traffic to these businesses. The Farmington community is invited to participate in the event and earn a FAVOR (bingo). Completed bingo cards need to be submitted by September 9 and a winner will be drawn on September 12.The winner will receive a $50 gift card to the Farmington food/beverage business of their choice as well as a spotlight in the next Farmington Currents and on social media. Encourage your neighbors and friends to participate! A link to the bingo card,map and information about the event can be found at www.FarmingtonMN.gov/Bingo RFls City staff continues to see an increase in large industrial development RFPs and a decrease in interest from small commercial and industrial developments and local entrepreneurs. City staff is working with our partners on a confidential company considering Minnesota for an advanced manufacturing facility which has the the opportunity to create up to 1,000 jobs in its initial phases. Farmington is in the running as a final site opportunity for Minnesota. RFP The RFP for a 2040 Comprehensive Plan Update: 2022 Amendment is currently open and accepting submittals from qualified firms to look at our transportation and land use chapters. City staff has had multiple meetings with prospective firms to answer questions and provide clarification on the amendment project.The deadline for submission is August 24,2022 at 4 p.m. Ribbon Cuttings A ribbon cutting will be held for Great Oaks Academy on Tuesday,September 6 at 10 a.m. located at 115 Elm Street. All are welcome to attend! The Dakota County Regional Chamber of Commerce and Lakeville Chamber of Commerce will be hosting a ribbon cutting celebration and open house for Evolution Accounting and Consulting's newest location in Farmington's industrial park at 5437 212th Street W on Thursday,August 25 from 2 p.m.—5 p.m. The cutting of the ribbon will occur at 2:15 p.m. All are welcome to attend and welcome Evolution Accounting&Consulting's expansion into Farmington! ACTION REQUESTED This is an informational update. No action is requested.