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EDA Agenda 04-09-2008 (Workshop Meeting)Cb~ WORKSHOP CITY OF MON'TICELLO ECONOMIC DEVELOPMENT AUTHORITY Wednesday, Apri19, 2008 - 4:U0 p.m. Academy Rooitn - S05 Walnut Street, Monticello, MN Commissioners: President Bill Demeules, Vice President Dan krie, Treasurer Bill Tapper, Bill Fair, Bob Viering, and Council members Clint Herbst and Wayne Mayer. Staff EDA Executive Director Ollie Koropcliak, Secretary Angela Schumann, and Assistant Treasurer Tom Kelly. 1. Call to Order. 2. Roll Call. 3. New Business: A. Consideration to review and complete revisions to the City of Monticello EDA Business Subsidy Criteria. B. Consideration to review and authorize Kennedy & Graven to review proposed amendments to the Preliminary Development Agreements. C. Consideration to establish EDA objectives, strategies, and tasks (Action Plan) supporting the Economic Development Chapter of the Comp Plan. D. Other. 4. Adjournment. EDA Workshop - 04/09/08 3. New Business• A. Consideration to review and cvm fete revisions to the Ci of Monticello EDA Business Subsidy Criteria. A. Reference and background: Within the Business Subsidy Criteria, it states any amendments to the criteria are subject to public hearing requirements pursuant to the Minnesota Statutes. In the Greater Monticello Enterprise Fund (GMEF) Guidelines, it states the GIVIEF Guidelines shall be reviewed annually and no changes to the Guidelines shall be instituted without prior approval of the City Council. Initially and prior to consolidation, both the HRA and EDA had independent Business Subsidy Criteria. EXHIBIT A. is the revisions proposed by the commissioners at the March meeting. The proposed revisions are highlighted in red. Please continue review of the document starting on page 8. At the regular EDA meeting the carnmissioners will be asked to call for the public hearing to amendment the Criteria and request the Council consider the proposed changes at the April 14 Council meeting. B. Su ortin Data• Exhibit A. Revised document as of March 12. EDA Business Subsidy Criteria h10~"flCl! LLO CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY Business Subsidy Criteria Public Hearing and Adoption the day of PURPOSE 1:01 The purpose of this document is to establish the City of Monticello Economic Development Authority's (hereinafter referred to as EDA) criteria for granting ofbusiness subsidies, as defined in Minnesota Statutes 116J.993, Subdivision 3, for private development. This criteria shall be used as a guide in processing and reviewing applications requesting business subsidies. 1:02 The criteria set Earth in this document are guidelines only. The EDA reserves the right in its discretion to approve business subsidies that vary from the criteria stated herein if the EDA determines that the subsidy nevertheless serves a public purpose. The EDA will file evidence of any deviation from these criteria with the Department of Trade and Economic Development in accordance with Minnesota Statutes, section 116J.994, Subd. Z. 1:03 The EDA may amend tl~e business subsidy criteria at any time. Amendments to these criteria are subject to public hearing requirements pursuant to Minnesota Statutes, Sections 116J.993 through I I6J.994. 2. STATUTORY LIMITATIONS 2:01 In accordance with. the Business Subsidy Criteria, Business Subsidy requests must comply with applicable State Statutes. The EDA's ability to grant business subsidies is governed by the limitations established in Minnesota Statutes 116J.993 through 116J.994. 3. PUBLIC POLICY REQUIREMENT 3:01 All business subsidies must meet a public purpose in addition to increasing the tax base. Job retention may only be used as a public purpose in cases where job loss is specific, imminent and demonstrable. EDA Business Subsidy Criteria 4. BUSINESS SUBSIDY APPROVAL CRITERIA 4:01 All new projects approved by the EDA should meet the following minimum approval criteria. However, it should not be presumed that a project meeting these criteria will automatically be approved. Meeting these criteria creates no contractual right on the part of any potential developer or the EDA. 4:02 The project must be in accord with the Comprehensive Plan and Zoning Ordinance, or required changes to the plan and ordinances must be under active consideration by the City at the time of approval. 4:03 Business subsidies will not be provided to projects that have the financial feasibility to proceed without the benefit of the subsidy. In effect, business subsidies will not be provided solely to broaden a developer's profit margins on a project. 4:04 Prior to approval of a business subsidies financing plan and when deemed appropriate by the EDA, the developer shall provide any required market and financial feasibility studies, appraisals, soil baring information provided to private lenders far the project, and other information ar data as requested. 4:05 A recipient of a business subsidy must make a commitment to continue operations at the site where the subsidy is used for at least five years after the benefit date. 4:06 (Recipients of any business subsidy will be required to meet wage and job goals determined by the Economic Development Authority an a case-by-case basis, giving consideration to the nature of the development, the purpose of the subsidy, local economic conditions, and situational circumstances). 4:07 The EDA may determine after a public hearing that job creation or retention is not a goal of the subsidy. In those cases, the recipient must instead tmeet at least one of the following minimum requirements (in addition to all other criteria in this document other than those relating to jobs and minimum wages): A. The proposed subsidy must accomplish removal, rehabilitation ar redevelopment of "blighted areas" as defined in Minnesota Statutes, Section 469.002, Subd.1 1, or must constitute a cost of correction conditions that allow designation of redevelopment districts under Minnesota Statutes, Sections 469.174 to 469.179; or B. The proposed subsidy must result in improvements to public infrastructure or public facilities, including without limitations, sewers, storm sewers, streets, parks, recreational facilities, and other City facilities; or C. The proposed s~,ibsidy must remove physical impediments to development of land, including without limitations poor soils, bedrock conditions, steep slopes, or similar geotechnical problems. 4:08 For any business subsidy that does not meet the requirements of section 4:07, the recipient must create or retain jabs as determited by the Economic Development Authority, and must meet the minimum wage thresholds, described in Section 5:03 C or D Tax Increment Froject EDA Business Subsidy Criteria Evaluation Criteria, and Section 6:03 Greater Monticello Enterprise Fund Guidelines, l .(b) (whether or not the source of the subsidy is tax increment financing). 5. TAX INCREMENT PROJECT EVALUATION CRITERIA 5:01 The EDA will utilize Tax Increment financing to support the community's long-term economic, redevelopment, and housing goals. 5:02 Each Tax Increment Financing Application will be analyzed and evaluated by the EDA. Each project shall be measured against the general criteria in Sections 1 through 6 and the specific guidelines in this Section S applicable to tax increment financing business subsidies. 5:03 The EDA shall use the following guidelines when evaluating a tax increment financing request. A. All business subsidy requests shall meet the "but for" test. The "but for" test means that the project would not develop solely on private investment in the reasonable future. The developer shall provide findings for the "hut for" test. B. Business subsidy request should create the highest feasible number of jobs on site from date of occupancy where deemed appropriate. C. For manufacturing and warehousing business subsidy requests, at least 90% of the jabs created must pay a wage of the higher of $9.00 per hour, or at least 160% of the federal minimum wage requirements for individuals over the age of 20. FEDERAL MINIMUM WAGES: July 24, 2007 - $5.85 x 16D% _ $9.36 July 24, 2008 - $6.55 x 160% - $10.48 July 24, 2009 - $7.25 x 160% = $11.60 In the case of a recipient with existing jobs, the EDA may determine that the wage goal is satisfied if wages are increased to at least the minimum specified in this paragraph. Annual written reports are required until termination date. Failure to meet tl~e job and wage level goals require partial ar full repayment of the assistance with interest. D. For other business subsidy requests, jobs created must meet as a minimum the federal minimum wage requirement. In the case of a recipient with existing jobs, the EDA may determine that the wage goal is satisfied if wages are increased by a specified amount over the federal minimum wage. Annual written reports are required until termination date. Failure to meet the job and wage level goals require partial or full. repayment of the assistance with interest. E. BLisiness subsidy requests should create the highest possible ratio of property taxes paid before and after redevelopment. 3 EDA Business Subsidy Criteria F. Business subsidy requests should facilitate redevelopment or elimination of "substandard" or "blighted" areas where deemed appropriate. G. Business subsidy requests should facilitate the "clean-up" of environrnentallyuosound property where deemed appropriate. H. Business subsidy requests shauld increase moderate priced housing options for area residents where deemed appropriate. Business subsidy requests should be deemed to promote additional desired "spin-off' development. Business subsidy requests should demonstrate "community involvement" including demonstrated degrees of the various factors: 1) Local residency of the company's owners and employees, or 2) Local residency of the contractors involved in the project, or 3) Membership in local business organizations, or 4) Other similar factors. 6. PROCEDURES • Meet with appropriate Staff to discuss the scope of the project, define public assistance requested, identify public participation eligibility, and other information as may be necessary. • The request shall be reviewed by Staff on a preliminary basis as to the feasibility of the project. • The project concept shall be placed on the EDA agenda for concept review. The applicant will make a presentation of the project. Staff will present its findings. • If Economic Development Authority's concept review is positive, Staff will provide the City Council with an informational concept review. • The applicant will e~,~cute_.and bmit the Preliminary Development Agreement accompanied by;'a non-refundab ?fee per approved fee schedule. • Building and site plans submitted to the Community Development Coordinator. • if Planning and Zoning Commission action is required, it will be necessary for tlae applicant, at this time, to make application to the Commission. • Staff will authorize the following steps: - Preparation For establishment of tl~e Tax Increment Finance District and the Tax Increment Financing Plan if required. - Preparation of the Private Redevelopment Contract (Subsidy Agreement) based upon agreed terms. 4 EDA Business Subsidy Criteria When action is required for the Tax Increment Finance Flan, Private Redevelopment Contract, or Zoning/Ordinance; the EDA, Planning Commission and City Council shall take appropriate action such as public hearings and consideration of approvals. + Building permit issued after the Tax Increment Finance District and Plan is approved by the City Council., the Private Redevelopment Contract is executed by the developer and EDA, and the Building Permit Fees are paid. Eligible Tax Increment Finance expenditures: Land acquisition, site improvements, public imprvvements, and demolition and relocation casts. Tax Increment Finance time: Generally six tv eight weeh-s from time of authorization to begin drafting plan and contract. Zoning/Ordinance time: Varies per project. 7. GREATER MONTICELLO ENTERPRISE FUND PROJECT EVALUATION CRITERIA 7:01 The EDA will utilize the Greater Monticello Enterprise Fund to support the community's long-term economic goals. 7:02 Each Greater Monticello Enterprise Fund Application will be analyzed and evaluated. by the EDA. Each project shall be measured against the general criteria in Sections 1 through 4 and the specific guidelines in Section 5 applicable to the Greater Monticello Enterprise Fund subsidies. 7:03 Following are the evaluation guidelines that will be used by the Economic Development Authority. 5 EDA Business Subsidy Criteria GREATER MONTICELLO ENTERPRISE FUND GUIDELINES CITY OF MONTICELLO SOS WALNUT STREET, SUITE #1 MONTICELLO, MINNESOTA 55362 (763)271-3208 INTRODUCTION The purpose of the Greater Monticello Enterprise Fund (GMEF) is to encourage economic development by supplementing conventional financing sources available to existing and new businesses. Through this program administered by the Economic Development Authority and participating lending institution(s), loans are made to businesses to help them meet a portion of their financing needs. All loans must serve a public purpose by complying with four or more of the criteria noted in the next section: In all cases, it is mandatory that criteria #1 be satisfied; which requires the creation of new jobs. It is the responsibility of the EDA to assure that loans meet the public purpose standard and comply with all other GMEF policies as defined in this document. Along with establishing the definition of public purpose, this document is designed to outline the process involved in obtaining GMEF financing. DEFINITION OF PUBLIC PURPOSE To provide loans for credit worthy businesses that create new jobs. (a) One job is equivalent to a total of 37.5 hours per week. (b) At lest 90% of the jobs created must pay a wage of the higher of $9.00 per hour, or at least 160% of the federal minimum wage, exclusive of benefits, for individuals over the age of 20 during the teen of assistance. FEDERAL MINIMUM WAGES: July 24, 2007 - $5.85 x 160% = $9.36 July 24, 200$ - $b.55 x 160% -= $10.4$ July 24, 2009 - $7.25 x 160% - $11.60 Annual written reports are required until ten~nination date. Failure to meet the job and wage level goals require partial or full repayment of the assistance with interest. 2. To provide loans for credit worthy businesses that would increase the community tax base. To assist new or existing industrial or commercial businesses to improve or expand their operations. Considerations for loans shall take into account factors including, but not limited to, the nature and extent of the business, the product or service involved, the present availability of the product or service within the City of Monticello, the compatibility of the proposed business as it slates to the comprehensive plan and existing zoning policies, and the potential far adverse environmental effects of the business, if any. 6 EDA Business Subsidy Criteria 4. To provide loans to be used as a secondary source of financing that is intended to supplement conventional financing (bank financing). 5. To provide loans in situations in which a funding gap exists. 6. Ta provide funds for economic development that could be used to assist in obtaining other funds such as Small Business Administration loans, federal and state grants, etc. THE GREATER MONTICELLO ENTERPRTSES REVOLVING LOAN FUND POLICIES I. BUSINESS ELIGIBILITY * Industrial businesses. * Non-competitive commercial businesses which enhance the community. * Businesses located within. the City of Monticello. * Credit worth existing businesses. * Non-credit worthy start-up businesses with worthy feasibility studies (Deny all historical non-credit worthy businesses). * $l 0,000 loan per each job created, or $5,000 per every $20,000 increase in property market valuation, or $5,000 per every $20,000 increase in personal property used for business purposes, whichever is higher. II. FINANCING METHOD * COMPANION DIRECT LOAN W Example: Equity 20%, RLF 30% and bank SO%. (All such loans maybe subordinated to the primary lender(s) if requested by the primary lender(s). The RLF loan is leveraged and the lower interest rate of the RLF lowers the effective interest rate on the entire project.) * PARTICIPATION LOAN - RLF buys a partian of the lawn (the RLF is not in a subordinate position, no collateral is required by the RLF and the loan provides a lower interest rate). * GUARANTEE LOANS - RLF guarantees a portion of the bank loan. (Personal and real estate guarantees handled separately.) III. USE OF PROCEEDS * Real property acquisition and development * Real property rehabilitation (expansion or improvements) * Machinery and equipment IV. TERMS AND CONDITIONS * LOAN SIZE - Minimum of 52,000 and maximum not to exceed SO% 7 EDA Business Subsidy Criteria of the Remaining revolving loan fund balance; for example, if the remaining revolving loan cash fund balance is $50,000, the maximum loan issuance is $25,000. * LEVERAGING - Minimum 60% private/public non-GMEF Maximum 30% public (GMEF) Minimum 10% equity EDA loan * LOAN TERM - Personal property term not to exceed life of equipment (generally 5-7 years). Real estate property maximum. of S-year maturity amortized up to 30 years. Balloon payment at 5 years. * INTEREST RATE - Fixed rate not less than 2% below prime rate as published in the Wall Street Journal on date of EDA loan approval. * LOAN FEE - Loan fee not to exceed 1.5% of the total loan project or a minimum fee of $200. * Fees are to be documented and. no duplication of fees between the lending institution and the RLF. Loan fee maybe incorporated into project cost. EDA retains the right to reduce or waive loan fee ar portion of loan fee. *Fee to be paid by applicant to the EDA within 5 working days after City Council approval of GMEF loan. Non-refundable. * PREPAYMENT POLICY - No penalty far prepayment. * DEFERRAL OF PAYMENTS - 1. Approval of the EDA membership by majority vote. 2. Extend the balloon if unable to refinance, verification letter from two lending institutions subject to Board approval.. * LA"I"E PAYMENT POLICY - Failure to pay principal or interest when due may result. in the loan being immediately called. In addition to any other amounts due on any loan, and without waiving any right of the Economic Development Authority under any applicable 8 EDA Business Subsidy Criteria documents, a late fee of $250 will be imposed on any borrower for any payment no received in full by the Authority within 30 calendar days of the date on which it is due. Furthermore, interest will continue to accrue an any amount due until the date on which it is paid to the Authority, and all such interest will be due and payable at the same time as the amount on which it has accrued. * INTEREST LIMITATION ON GUARANTEED LOANS - Subject to security and/or reviewal by EDA. * ASSUMABILITY OF LOAN - None. * BUSINESS EQUITY REQUIREMENTS - Subject to type of loan; Board of Directors will determine case by case, analysis under normal lending guidelines. * COLLATERAL - * Liens on real property in project (mortgage deed). * Liens on real property in business (mortgage deed). * Liens on real property held personally (subject to Board of Directors -homestead exempt). * Machinery and equipment liens (except equipment exempt from bankxuptcy). * Personal and/or corporate guarantees (requires unlimited personal guarantees). * NON-PERFORMANCE - An approved GMEF loan shall be null and void if funds are not drawn upon or disbursed within 180 days from date of EDA approval. * NON-PERFORMANCE EXTENSION - The 180-day non-performance date can be extended up To an additional 120 days. A written request is received 30 days prior to expiration of the 180-day non-performance date. 2. Approval of the EDA membership by majority vote. * LEGAL FEE - Responsibility of the GMEF applicant. 9 EDA Business Subsidy Criteria The Greater Monticello Enterprise Fund is operated as an equal opportunity program. All applicants shall have equal access to GMEF funds regardless of race, sex, age, marital status, or other personal characteristics V. ADDITIONAL CRITERIA FOR LOANS ORIGINATING THROUGH SMALL CITIES ECONOMIC DEVELOPMENT SET-ASIDE GRANT FUNDS Campliance with federal labor standards laws, including: The Davis-Bacon Act, which requires that workers receive no less than the prevailing wages being paid for similar work in the locality when the contract, financed in whole or part with federal fixnds, exceeds $2,000; The Contract Work Hours and Safety Standards Act, which requires that workers receive overtime compensation at a rate of 1-1/2 times their regular wage after they have worked 40 hours in one week; The Copeland "Anti-Kickback" Act, which requires that workers be paid at least once a week without any deductions ar rebates except permissible deductions which include taxes, deductions the worker authorizes and those required by court processes. Compliance with federal fair housing and civil/human rights laws and with the Minnesota Human Rights law, which forbids discrimination in credit, employment, housing, public accommodations, public service and education an the basis of race, color, creed, religion, national origin, sex marital status, disability, sexual orientation, public assistance or familial status. Compliance with the Low and Moderate Income (LMI) Benefit National Objective, which, in the economic development context, has as its goal the creation and retention of jobs, of which a minimum of Sl % must be held by LMT persons, defined as a member of a family having an income less than or equal to the Section Slow-income limit established by the U.S. Department of Housing and Urban Development (HUD). Campliance with requirements of the National Environmental Policy Act (NEPA) of 1969, as amended, and preparation of an Environmental Review Record. Compliance with. Section 104(4) of the federal Housing and Community Development Act of 1974, as amended, which requires that any reduction in LMI dwelling units in the community must be offset by the creation of similar affordable units and relocation assistance to displaced LMI families; and with the Uniform Relocation Assistance and. Real Property Acquisition Folicies Act of 1970, as amended, which mandates procedures to ensure fair and equitable treatment for persons displaced by projects designed for the public good. Terms and conditions for federal money: Interest Rate: 0% with balloon payment in three years or fixed rate not less than 3% below Minneapolis prime rate with balloon payment in five years. 10 EDA Business Subsidy Criteria All other terms and conditions are as outlined in The Grater Monticello Enterprises Revolving Loan Fund Folicies, Section IV, above. ORGANIZATION The Greater Monticello Enterprise Fund is administered by the City of Monticello Economic Development Authority (EDA), which is aseven-member board consisting of two Council members and five appointed members. EDA members are appointed by the Mayor and confirmed by the City Council. Formal meetings are held on a quarterly basis. Please see the by-laws of the EDA for more information on the structure of the organization that administers the Greater Monticello Enterprise Fund. PARTICIPATING LENDING INSTITUTION 1. Participating lending institution(s) shall be determined by the GMEF applicant. 2. Participating lending institution(s) shall cooperate with the EDA and assist in carrying out the policies of the GMEF as approved by the City Council. 3. Participating lending institution(s) shall analyze the formal application and indicate to the EDA the level at which the lending institution will participate in the finance package. AN APPLICATION/ADMINISTRATIVE PROCEDURES The EDA desires to make the GMEF loan application process as simple as possible. However, certain procedures must be followed prior to EDA consideration of a loan request. Information regarding the program and procedures for obtaining a loan are as follows: City Staff Duties: The Economic Development Director, working in conjunction with the Assistant City Administrator, shall carry out GMEF operating procedures as approved by the EDA and Council. Staff is responsible for assisting businesses in the loan application process and will work closely with applicants in developing the necessary information. Application. Process: Applicant shall complete a preliminary loan application. Staff will review application for consistency with the policies set forth in the Greater Monticello Fund Guidelines. Staff consideration of the preliminary loan application should take approximately one week. Staff will ask applicant to contact a lending institution regarding financing needs and indicate to applicant that further action by the EDA on the potential loan will require indication of support from a lending institution. 2. If applicant gains initial support from lending institution and if the preliminary loan application is approved, applicant is then asked to complete a formal application. If the preliminary loan application is not approved by staff, the applicant may request that the EDA 11 EDA Business Subsidy Criteria consider approval of the preliminary application at the next regularly scheduled meeting of the EDA. 3. If the preliminary loan application is approved, applicant shall complete a formal application. Farrnal application shall include a business plan which will include its management structure, market analysis, and financial statement. Like documentation necessary for obtaining the bank loan associated with the proposal is acceptable. Attached with each formal application is a written release of information executed by the loan applicant 4. City staff will meet with applicant and other participating lender(s) to refine the plan for financing the proposed enterprise. S. City staff shall analyze the formal application and financial statements contained therein to determine if the proposed business and finance plan is viable. Staff may, at its discretion, accept the findings of a bank institution regarding applicant credit and financial viability of act the project. After analysis is complete, City staff shall submit a written recommendation to the EDA. A decision regarding the application shall be made by the EDA within 60 days of the submittal of a completed formal application. 6. The EDA shall have authority to approve or deny loans; however, within 21 days of EDA approval, the City Council may reverse a decision by the EDA to approve a loan if it is determined by Council that such loan was issued in violation of GMEF guidelines. 7. Prior to issuance of an approved loan, the City Attorney shall review and/or prepare all contracts, legal documents, and intercreditor agreements. After such review is complete, the City shall issue said loan. ORIGINAL REVOLVING LOAN FUNDING "LETTER OF CREDIT" FROM MONTICELLO CITY COUNCIL - $200,000 SOURCE -City Liquor Store Fund City shall transfer needed loan amount from. existing accounts at such time that individual loans are approved.. Revenue created through this program shall be under the control of the EDA and shall not be transferred to City funds unless the City Council determines that reserves generated are not necessary for the successful operation of the Authority. If such is the case, such funds must be transferred to the debt service funds of the City to be used solely to reduce tax. levies for bonded indebtedness of the City (see Section S B afthe ordinance establishing the Monticello EDA). R FP(7RTTNCT 1. Staff shall submit quarterly summaries and/or annual report detailing the status of the Monticello Enterprise Fund. FUND GUIDELINES MODIFICA At a minimum, the EDA shall review the Fund Guidelines on an annual basis. No changes to the GMEF guidelines shall be instituted without prior approval of the City Council 12 EDA Business Subsidy Criteria LOAN ADMINISTRATION 1. City staff shall service City loan, shall monitor City position with regard to the loan, and shall assure City compliance with intercreditor agreement. 2. All loan documents shall include an intercreditor agreement which must include the following: A. Definition of loan default, agreements regarding notification of default. B. Agreements between lending institution and City regarding reproduction of pertinent information. regarding the loan. All loan documentation shall include agreements between borrower and lenders regarding release of privacy regarding the status of the loan. 13 EDA Business Subsidy Criteria Under the GMEF Guidelines use of proceeds fvr real property acquisition and development, real property rehabilitation (expansion or irnpravements) and machinery and equipment. The following commentary is intended to assist developer with those costs typically considered eligible: Real Property Acauisition and Improvement Costs Land Acquisition Engineer/Design Inspection Fees Building Permit Fees Architect Fees Building Materials Sail Borings Construction Labor Appraisal Fees Landscaping Legal Fees Grading Environmental Fees Curbing/Parking Lot Recording Fees Title Insurance Machinery and Equipment Costs Personal property used as au integral part of the manufacturing or commercial business, with a useful life of at least three years. Acquisition costs would include freight and sales taxes paid. As a general rule, off ce equipment would not qualify. 14 EDA Workshop - 04/09/08 3. New Business• B. Consideration to review and authorize Kennedy & Graven to review proposed amendments to the Preliminary Development Agreements. A. Reference and back round: The Preliminary Development Agreement (EXHIBIT A.) is used for proposed TIF projects associated with redevelopment, housing, economic developments other than the Monticello Business Center (Otter Creek Crossing). This Preliminary Agreement is executed after the developer and EDA commissioners have agreed to the cancept of the project, the developer has demonstrated the need for TIF, the project is eligible for TIF, and preliminary tax increment revenue projects make the project doable. The deposit is required along with the executed Agreement. The purpose of the deposit is to cover administrative costs incurred by the EDA for creation of the TIF District and preparation of the Contract. It is at that time, Ehlers and Kennedy & Graven are authorized to begin preparatian of documents. The depasit ensures the EDA recovery or partial recovery of its cost incurred should the developer decide not to move forward. The executed Contract supersedes the Preliminary Agreement. The previous agenda item identified the fees associated with creation of TIF Districts and preparation of Contracts. Please review the document for any recommendations of changes in addition to the need to replace HRA with EDA. You will note the administrative deposit amount is left blank due to the unknown of the type of TIF District. The second Preliminary Development Agreement (EXHIBIT B) is used for projects within the Monticello Business Center (Otter Creek Crossing). In this case, the Agreement is executed after the seller atad buyer have agreed to a site (parcel), proposed land price offer consistent with the Preferred Package Criteria, compliance of the Recorded Covenants, and the project is eligible for TIF. The deposit of $10,000 is greater because in addition to Ehlers and K&G preparations, there are added costs associated witla land platting and purchase. Again, the Contract supersedes the Agreement. Sections which vary from the first Agreement are Sections 3(g), 4 (d) and (e), 6, 7, and 9. Again, please review the document for any recommendations of changes in addition to the need to replace HRA with EDA. In either document, it is important for the commissioners to define the "administrative costs" as those currently identified in the Preliminary Agreement and Contract are not being charged to the developer. EDA Workshop - 04/09/08 B. Alternative Action: Motion to authorize Kennedy & Graven to review proposed amendments to the Preliminary Development Agn'eements. 2. Motion to approve amendments to the Preliminary Development Agreements. 3. Motion to table any action. C. Reeommendation: Assuming the commissioners complete their review and propose changes to the A~~reements, the recommendation is Alternative No. 1. It is recommended the EDA approve the proposed amendments at the May meeting. D. Supporting Data: Existing Preliminary Development Agreements. 2 ~x~ ~ Form October 7, 2005 - NT AUT IN AND FOR THE CITY OF MONTICELLO, NllNNESOTA PRELIMINARY DEVELOPMENT AGREEMENT THIS AGREEMENT, dated this _ day of _ , 20~ by and between the Housing and Redevelopment Authority in and far the City of Monticello, Minnesota, a public body corporate and politic under the laws of Minnesota ("Authority") and ("Developer"): WITNESSETH:. WHEREAS, the Authority desires to promote development of certain property within the City of Monticello, which property is legally described in Exhibit A attached hereto ("Property"); and WHEREAS, the Developer has submitted a preliminary proposal (the "Proposal") for development of the Property (the "Development"), which proposal is attached hereto as Exhibit B; and WHEREAS, the Developer has requested the Authority to explore the use of certain public assistance to assist with the Development; and WHEREAS, the Authority has determined that it is in the Authority's best interest that the Developer be designated sole developer of the Property during the term of this Agreement; and WHEREAS, the Authority and the Developer are willing and desirous to undertake the Development if (i) a satisfactory agreement can be reached regarding the Authority's commitment for public costs necessary far the Development; (ii) satisfactory mortgage and equity financing, or adequate cash resources for the Development can be secured by the Developer; and (iii) the economic feasibility and soundness of the Development and other necessary preconditions have been determined to the satisfaction of the parties; and WHEREAS, the Authority is willing to evaluate the Development and work toward all necessary agreements with the Developer if the Developer agrees to reimburse the Authority for its costs if the Development is abandoned ar necessary agreements are not reached under the terms of this Agreement. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and obligations set forth herein, the parties agree as follows: 1. Negotiations between the parties shall proceed in an attempt to formulate a definitive development contract ("Contract")based on the following: SJB-269358v1 MN190-101 (b) Proceed to seek all necessary information with regard to the anticipated public casts associated with the Development. (c) Estimate the Authority's level and method of financial participation, if any, in the Development and develop a financial plan for the Authority's participation. 5. It is expressly understood that execution and implementation of the Contract shall be subject ta: (a) A determination by the Authority in its sole discretion that its undertakings are feasible based on (i) the projected tax increment revenues and any other revenues designated by the Authority; (ii) the purposes and objectives of any tax increment, development, or other plan created or proposed for the purpose of providing financial assistance for the Development; (iii) a determination by the Authority that tax increment financing or other public financial assistance is reasonably necessary in order to make the Development feasible; and (iv) the best interests of the Authority. (b) A determination by the Developer that the Development is feasible and in the best interests afthe Developer. 6. This Agreement is effective from the date hereof through , 200 .After such date, neither party shall have any obligation hereunder except as expressly set forth to the contrary herein. 7. The Developer shall be solely responsible for all costs incw'red by the Developer. In addition, the Developer shall reimburse the Authority for Administrative Costs, as hereafter defined. For the purposes of this Agreement, the term "Administrative Costs" means out of pocket costs incurred by the Authority together with staff costs of the Authority, all attributable to or incurred in connection with the negotiation and preparation of this Agreement, the Contract, and other documents and agreements in connection with the Development, including without limitation the cost of financial advisors, attorneys, tax increment building inspection consultants, and planning and environmental consultants. In order to secure payment of the Administrative Costs, the Developer shall deliver to the Authority cash or a certified check in the amount of $~ ,such delivery to occur upon execution of this Agreement. If at any one or more times during the term of this Agreement, the Authority determines that Administrative Costs will exceed $ and that additional security is required, the Authority shall notify the Developer of the amount of such additional security. Within ten calendar days of receipt of this notice, the Developer shall deliver to the Authority the required additional security. The Authority will utilize the funds delivered by the Developer to pay or reimburse itself for Administrative Casts. Upon termination of this Agreement, the Authority will return to the Developer the funds paid by the Developer to the Authority pursuant to this Section 7, less an amount equal to the Administrative Costs. This Section 7 shall survive termination of this Agreement and shall be binding on the Developer regardless of'the enforceability of any other provision of this Agreement. 51B-2693S8v1 MN190-101 14. This Agreement maybe executed simultaneously in any number of counterparts, all of which shall constitute one and the same instrument. 15. This Agreement shall be governed by and construed in accordance with the laws of the state of Minnesota. Any disputes, controversies, or claims arising out of this Agreement shall be heard in the state or federal courts of Minnesota, and all parties to this Agreement waive any objection to the jurisdiction ofthese courts, whether based on convenience or otherwise. 16. The Developer hereby agrees to protect, defend and bald the Authority and its officers, elected and appointed officials, employees, administrators, commissioners, agents, and representatives harmless from and indemnified against any and all loss, cast, fines, charges, damage and expenses, including, without limitation, reasonable attorneys fees, consultant and expert witness fees, and travel associated therewith, due to claims or demands of any kind whatsoever arising out of (i) the development, marketing, sale or leasing of all or any part of the Property, including, without limitation, any claims far any lien imposed by law for services, labor or materials furnished to or far the benefit of the Property, or (ii) any claim by the state of Minnesota or the Minnesota Pollution Control Agency or any other person pertaining to the violation of any permits, orders, decrees ar demands made by said persons or with regard to the presence of any pollutant, contaminant ar hazardous waste on the Property; and (iii) ar by reason of the execution of this Agreement ar the performance of this Agreement. The Developer, and the Developer's successors or assigns, agree to protect, defend and save the Authority, and its officers, agents, and employees, harmless from all such claims, demands, damages, and causes of action and the casts, disbursements, and expenses of defending the same, including but not limited to, attorneys fees, consulting engineering services, and other technical, administrative or professional assistance. This indemnity shall be continuing and shall survive the performance, termination or cancellation of this Agreement. Nothing in this Agreement shall be construed as a limitation of or waiver by the Authority of any immunities, defenses, or other limitations an liability to which the Authority is entitled by law, including but not limited to the maximum monetary limits an liability established by Minnesota Statutes, Chapter 466. 17. The Developer, far itself, its attorneys, agents, employees, farmer employees, insurers, heirs, administrators, representatives, successors, and assigns, hereby releases and forever discharges the Authority, and its attorneys, agents, representatives, employees, farmer employees, insurers, heirs, executors and assigns of and from any and all past, present or future claims, demands, obligations, actions ar causes of action, at law or in equity, whether arising by statute, common law or otherwise, and far all claims for damages, of whatever kind ar nature, and far all claims for attorneys' fees, and costs and expenses, including but not limited to all claims of any kind arising out of the negotiation, execution, or performance of this Agreement between the parties. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] s1s-~b9~sa~1 MN190-101 HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MONTICELLO, MINNESOTA By Its Chair By Its Executive Director 5JB-269358v1 MN190-lOl C) 0 P, a Form November 3, 2005 HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MONTICELLO, MINNESOTA PRELIMINARY D ~ GREEMENT onticello Business Center) THIS AGREEMENT, dated this _ day of , 20~ by and between the Housing and Redevelopment Authority in and for the City of Monticello, Minnesota, a public body corporate and politic under the laws of Minnesota ("Authority") and ("Developer"): WITNESSETH: WHEREAS, the Authority ar the City of Monticello ("City") awns certain property within the City of Monticello, which property is legally described in Exhibit A attached hereto ("Property"); and WHEREAS, the Developer has submitted a preliminary proposal (the "Proposal") far the acquisition and development of the Property (the "Development"), which proposal is attached hereto as Exhibit B; and WHEREAS, the Developer has requested the Authority to explore the use of certain public assistance to assist with the Development; and WHEREAS, the Authority has determined that it is in the Authority's best interest that the Developer be designated sole developer of the Property during the term of this Agreement; and WHEREAS, the Authority and the Developer are willing and desirous to undertake the Development if (i) a satisfactory agreement can be reached regarding the Authority's commitment for public costs necessary for the Development; (ii) satisfactory mortgage and equity financing, or adequate cash resources for the Development can be secured. by the Developer; and (iii) the econaxnic feasibility and soundness of the Development and other necessary preconditions have been determined to the satisfaction of the parties; and WHEREAS, the Authority is willing to evaluate the Development and work toward all necessary agreements with the Developer if the Developer agrees to make the nonrefundable deposit described herein, which is intended, in part, to reimburse the Authority for its casts if the Development is abandoned by Developer ar necessary agreements are not reached under the terms of this Agreement. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and obligations set forth herein, the parties agree as follows: 1. Negotiations between the parties shall proceed in an attempt to formulate a definitive purchase and development contract ("Contract") based on the following: 4. During the term of this Agreement, the Authority agrees to: (a} Commence the process necessary to undertake such public assistance as is necessary pursuant to the terms of the Proposal, including without limitation commencement of actions necessary to create a tax increment financing district that includes the Property. (b) Proceed to seek all necessary information with regard to the anticipated public costs associated with the Development. (c) Estimate the Authority's level and method of financial participation, if any, in the Develapment and develop a financial plan far the Authority's participation. (d) Either acquire the Property and grant to the Developer, or cause the City to grant to the Developer, a right of access to the Property far purposes of enviranrnental and soil testing. Developer agrees to indemnify, save harmless, and defend the Authority and City ,their officers, and employees, from and against any and all claims, actions, damages, liability and expense in connection with personal injury and/or damage to the Praperty arising from ar out of any occurrence in, upan or at the Property caused by the act ar omission of the Developer in cannection with Developer's entry on the Property. Further, Developer shall not permit any mechanics', materialmens' or other liens to stand against the Property or any part thereof for work or materials furnished to Developer in connection.. with-. the._ right _.of. entry granted .pursuant _to ._this .Agreement and Developer agrees to indemnify, defend and hold harmless the Authority and City from and against the same. (e) Commence replatting of the Property, or cause the City to commence such replatting, in order to create the parcel described on Exhibit A. 5. It is expressly understaad that execution of the Contract shall be subject to: (a) A determination by the Authority in its sole discretion that its undertakings are feasible based on (i) the projected tax increment revenues and any other revenues designated by the Authority (ta the extent requested by Developex); (ii) the purposes and objectives of any tax increment, development, or other plan created or proposed for the purpose of providing financial assistance for the Development, if any, including the determination that such assistance is reasonably necessary in order to make the Development passible; (iii) the best interests of the Authority. (b) A determination by the Developer that the Development is feasible and in the best interests of the Developer. 6. This Agreement is effective from the date hereof through , 20 ,unless extended with approval of the Authority's board of commissioners. After expiration of the term of this Agreement, neither party shall have any obligation hereunder except as expressly set forth to the contrary herein. s1s-zoos9s~z 3 MN 190-41 10. In the event that the Developer, its heirs, successors or assigns, fail to comply with. any of the provisions of this Agreement, the Authority may proceed to enforce this Agreement by appropriate legal or equitable proceedings, or other similar proceedings, and the Developer, its heirs, successors ar assigns, agree to pay all casts of such enforcement, including reasonable attorneys' fees. 11. If any portion of this Agreement is held invalid by a court of competent jurisdiction, such decision shall not affect the validity of any remaining portion of the Agreement. 1Z. In the event any covenant contained in this Agreement should be breached by one party and subsequently waived by another party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach. 13. Notice ar demand or other communication between or among the parties shall be sufficiently given if sent by mail, postage prepaid, return receipt requested or delivered personally: (a) As to the Authority: Housing and Redevelopment Authority in and far the City of Monticello 505 Walnut Street, Suite 1 Monticello, MN 55362-8822 Attn: Executive Director (b) As to the Developer: 14. This Agreement maybe executed simultaneously in any number of counterparts, all of which shall constitute one and the same instrument. 15. This Agreement shall be governed by and construed in accordance with the laws of the state of Minnesota. Any disputes, controversies, ar claims arising out of this Agreement shall be heard in the state or federal courts of Minnesota, and all parties to this Agreement waive any abjection to the jurisdiction of these courts, whether based on convenience or otherwise. 16. The Developer hereby agrees to protect, defend and hold the Authority, the City and their off cers, elected and appointed officials, employees, administrators, commissioners, agents, and representatives harmless from and indemnified against any and all loss, cost, fines, charges, damage and expenses, including, without limitation, reasonable attorneys fees, consultant and expert witness fees, and travel associated therewith, due to claims ar demands of any kind whatsoever caused by Developer or arising out of actions of Developer (and excluding those caused by or arising out of the Authority's ar City's awn acts or conduct) with regard to (i) the development, marketing, sale or leasing of all or any part of the Property, including, without limitation, any claims for any lien imposed by law for services, labor or materials furnished to or for the benefit of the Property, or (ii) any claim by the state of Minnesota ox the Minnesota SJB-200895v2 5 MN 190-41 HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MONTICELLO, MINNESOTA By Its Chair By Its Executive Director 578-200895v2 MN 190-41 C) 0 P, a EDA Workshop - 04/09/08 3. New Business• C. Consideration to establish EDA objectives, strategies and tasks1Action Play supporting the Economic Development Chapter of the Comp Plan. This is a carry-over item from the regular March meeting of the EllA. In lieu of vacation and EDA agenda preparation time, I will begin to prepare a draft of an Actioan Plan for distribution at the April workshop. First, the EDA members are asked to review the mission statement, purpose, and goals of the previous HRA which are attached. Secondly and for your information, on March 4, the Planning Cornmissian is expected to call far a public hearing date of April 18, 2008, For recamrnendation to adapt the Comp Plan. Utilizing the Economic Development Chapter of the proposed Comp Plan, I summarized the Land Use -Places to Work into the two objectives: Attracting Jobs and Expanding the Tax Base and listed the benefits of each. The last part of the summary is the Development Strategies identified for Places to Work. Based on the Development Strategies for Places to Work, the EDA needs to discuss development and a process for establishment of a Work Plan. One of the things brought up by the reconstituted EDA was the concern to clarify the roles of the IDC and EDA in order to prevent overlapping. The Economic Development Chapter also identifies Enhancing Downtown and redevelopment which is clearly a role of the EDA; however, not yet summarized. In the past, the LDC and HRA which provided the funding tools, worked together on the marketing goal (to provide support for recruitment efforts of additional industrial businesses to locate in Monticello) and the industrial land goal (to provide a continuous stream of available industrial land with infrastructure potential). Of the eight strategies, Strategies I through IV support the objective: Expanding the Tax Base which perhaps is more suited to be the role of the EDA. While Strategies V through VIII supports the objective: Attracting Jobs which historically have been initiated and the role of the IDC. The purpose of this exercise is to clarify roles although interrelated.. Far purpose of discussion, here is suggestion. for a process far the IDC and EDA. l . Clarify role of IDC and EDA by objective and strategies. IDC and EDA agree. 2. Each commission then develop a Work Plan which supports each. objective and strategy by identifying tasks, prioritizing the tasks, establishing a time frame (annual, five-year, 10-year or short and long term), assignment (whom to carry out), and budget. Ask members to volunteer on a subcommittee of their expertise or interest for development and accountability of the work EDA Workshop - 04/09/08 plan. Some of the Development Strategies are currently being carried out through tasks of the Marketing, Fiber Optics, and Higher Education Subcommittees. Si7PPORT~NG DATA. Previous HRA Goals. Summary of the Economic Development Chapter -Land Use -Places to Work. 2 2008 MONTICELLO COMPREHENSIVE PLAN is a tool for guiding the growth, redevelopment and improvement of the City into 2030. ECONOMIC DEVELOPMENT CHAPTER LAND USE -PLACES TO WORK. OBJECTIVE OF PLACES TO WORK: T. Attracting Jobs. II. Expanding the Tax Base. ATTRACTING JOBS. I. Benefits of Attractin Jabs: A. Jobs attract residents to the community. Jobs will play a critical role in creating the type of "move up" housing sought by the City. B. .lobs provide the income needed to support Iocal business and govemrent services. C. Retention of businesses promote community stability by keeping jobs and growing jobs and residents in Monticello. TI. Types of Jobs: A. Jobs created by attracting new business development. 1. Bioscience, technology, research and. development, corporate headquarters, business office, wholesale showrooms, and related uses. 2. Other general industrial development in the areas of manufacturing, processing, warehousing, distribution, and related businesses. 3. Nan-industrial businesses that provide necessary support to the underlying development objectives of this land use. Examples of supporting land uses include lodging, office supplies and repair services. B. Jobs created by the retention and growth of existing business development. III. Wage Levels;, A. Emphasis on jobs at higher wage levels that allow more people to Live and work in Monticello. B. Framote wage levels that provide incomes needed to purchase decent housing, support local businesses and support local government services. EXPANDING THE TAX BASE. I. Benefits of Ex andin the Tax Base: A. Property taxes are the largest source of city revenue. B. While Xcel Energy creates almost 40% of the city's tax base which is a unique asset, it is essential that the tax base become mare diversified. C. Promotion of a business campus setting that provides a high level of amenities, including architectural controls, landscaping, preservation of natural features, storage enclosed within buildings, and other features. DEVELOPMENT STRATEGIES: I. Use Comprehensive Plan to provide adequate locations for future job producing development. (Preserve sufficient land for Places to Work over the next twenty-five years.) ~~ II. Adhere to the Comprehensive Plan to encourage stable business setting and promote investment and expansion of facilities. III. Coordinate utility planning and manage other development to ensure that expansion areas are capable of supporting new development in a timely manner. ~IV. Evaluate the need and feasibility of additional city-owned business parks as a means attracting the desired businesses. V. Establish a plan to evaluate the feasibility of implementing the recommendation a~the SCSU study and if feasible to take necessary action. to attract bioscience businesses to Monticello. VI. Continue to work with existing businesses to maintain an excellent business environment, retax jabs, and facilitate expansions. VTI. Work with the Monticello-Big Lake Hospital to ensure the retention and to promote the expansion of health care services in Monticello. VIII. Use the Comprehensive Plan to maintain and enhance the quality of life in Monticello as a tool ' for attracting businesses and jobs. 2 'n r\ HOUSING AND REDEVELOPMENT AUTHOIUTY ~ , ! IN AND FOR THE CITY OF MONTICELLO Mission Statement To i~zcrease the tax base, to create jobs at a sustainable wage-level, and to maintain a spectrum of housing mix within the City of Monticello, Minnesota. Purpose Ta coordinate, facilitate, and implement proposals and commitments to undertake development and redevelopment consistent with the objectives set forth in the Central Monticello Redevelopment Project Na. I Plan and the Comprehensive Plan of the City of Monticello. Goals To pravide a service to developers that is user-friendly and professional. 2. To maximize the opportunity for development and redevelopment by private enterprise. Ta provide increased employment opportunities through permanent businesses located in the area. 4. To acquire and remove buildings that are structurally substandard and/or buildings that are economically or fiu~.ctionally obsolete and infeasible of being rehabilitated. 5. To strive to accomplish the optimum quality of development far the project through site planning and landscape architecture, the treatment of open space, building design, the use of materials, scale, appropriateness, and functional utility. 6. To accomplish convenient and adequate parking to serve the needs of the area. 7. To establish and to promote development incentives to facilitate new industrial construction on vacant land. 8. To develop high density housing in immediate proximity to public and commercial facilities. Ta pravide adequate streets, utilities, and other public improvements and facilities to enhance the area for both existing and new development. 1 p. To establish and to promote renovation/redevelopment incentives to foster a vibrant core city.