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EDA Agenda 10-14-2015EDA MEETING Wednesday, October 14th, 2015 6:00 p.m. Mississippi Room - 505 Walnut Street, Monticello, MN Commissioners: President Bill Demeules, Vice President Bill Tapper, Treasurer Tracy Hinz, James Davidson, Steve Johnson and Council members Tom Perrault and Lloyd Hilgart Staff. Executive Director Jeff O'Neill, Angela Schumann, Wayne Oberg Guest: John Uphoff — WSB & Assoc. 1. Call to Order. 2. Roll Call. 3. Approve Meeting Minutes: a. Regular Meeting — April 8th, 2015 (included) b. Regular Meeting — July 8th, 2015 (not yet available) c. Special Meeting — July 22nd, 2015 (not yet available) d. Regular Meeting — August 12th, 2015 (not yet available) e. Special Meeting — August 12th, 2015 (not yet available) f. Special Meeting — August 24th, 2015 (included) g. Regular Meeting — September 9th, 2015 (included) 4. Consideration of additional agenda items. 5. Consideration of approving payment of bills. 6. Consideration of Market Matching report. 7. Consideration to adopt Resolution EDA- 2015 -010 for modification of Tax Increment Financing District No. 1 -22 as related to tax increment pooling for housing. 8. Consideration to approve an invoice for Initiative Foundation membership, 2016 9. Consideration to review and action as related to TIF 1 -35. 10. Consideration to set dates for 2016 goal- setting workshop(s) of the EDA. 11. Consideration of Director's Report. 12. Adjourn. MINUTES REGULAR MEETING — ECONOMIC DEVELOPMENT AUTHORITY (EDA) Wednesday, April 8, 2015, Mississippi Room, Monticello Community Center Present: Bill Demeules, Bill Tapper, Tracy Hinz, James Davidson, Steve Johnson, Tom Perrault, Lloyd Hilgart Absent: None Others: Jeff O'Neill, Angela Schumann, Wayne Oberg 1. Call to Order Bill Tapper called the meeting to order at 6:00 p.m. 2. Roll Call All commissioners were present at the meeting. 3. Approve Meeting Minutes BILL TAPPER MOVED TO APPROVE THE MINUTES OF THE SPECIAL EDA MEETING ON FEBRUARY 11, 2015. MOTION WAS SECONDED BY TOM PERRAULT. MOTION CARRIED 7 -0. TRACY HINZ MOVED TO APPROVE THE MINUTES OF THE SPECIAL EDA MEETING ON MARCH 11, 2015 AS CORRECTED. MOTION WAS SECONDED BY TOM PERRAULT. MOTION CARRIED 7 -0. BILL TAPPER MOVED TO APPROVE THE MINUTES OF THE REGULAR EDA MEETING ON MARCH 11, 2015 AS CORRECTED. MOTION WAS SECONDED BY TOM PERRAULT. MOTION CARRIED 7 -0. 4. Consideration of additional agenda items • Market Matching - WSB's John Uphoff provided a Market Matching update and responded to commissioner questions. He referenced the report included in the agenda packet. He briefly summarized contact and follow -up activities within the industrial /commercial sectors, attendance at meetings at which he represented City interests, and market data provided in response to prospect inquiries. 5. Consideration of approving payment of bills LLOYD HILGART MOVED TO APPROVE PAYMENT OF BILLS THROUGH MARCH 2015. MOTION WAS SECONDED BY BILL TAPPER. MOTION CARRIED 7 -0. EDA Minutes: 4/08/15 6. Consideration to elect officers • Bill Tapper nominated Bill Demeules as EDA President. Steve Johnson seconded the nomination. • Steve Johnson nominated Bill Tapper as EDA Vice - President. Lloyd Hilgart seconded the nomination. • Bill Demeules nominated Tracy Hinz as EDA Treasurer. Bill Tapper seconded the nomination. • Bill Tapper nominated Steve Johnson as EDA Vice - Treasurer. Tracy Hinz seconded the nomination. • Bill Demeules nominated Staff as EDA Secretary. Bill Tapper seconded the nomination. BILL TAPPER MOVED TO APPOINT 2015 EDA OFFICER POSITIONS AS NOMINATED; INCLUDING BILL DEMEULES AS EDA PRESIDENT, BILL TAPPER AS EDA VICE - PRESIDENT, TRACY HINZ AS EDA TREASURER, STEVE JOHNSON AS EDA VICE - TREASURER, AND STAFF AS EDA SECRETARY. MOTION WAS SECONDED BY TRACY HINZ. MOTION CARRIED 7 -0. 7. Consideration to review EDA Bylaws and Enabling Resolution Angela Schumann noted that the EDA's attorney had reviewed both the bylaws and the enabling resolution and recommended striking references to the ordinance in the bylaws. She also pointed out that a resolution had been added to this agenda item to formalize the EDA approval of amendments to its bylaws. TRACY HINZ MOVED TO ADOPT RESOLUTION EDA- 2015 -005 APPROVING THE EDA BYLAWS AS PRESENTED ON APRIL 8, 2015. MOTION WAS SECONDED BY BILL TAPPER. MOTION CARRIED 7 -0. 8. Consideration to review EDA fund balances Finance Director Wayne Oberg reviewed the Fund Balance report that he distributed at the meeting. He noted the status of each Tan Increment Financing (TIF) District, the Greater Monticello Enterprise Fund (GMEF) and the EDA General Fund account and responded to commissioner questions. Steve Johnson asked why excess increment generated within expired TIF Districts are not directed to the EDA General Fund after reapportionment and redistribution by Wright County. Oberg stated that the use of unrestricted funds is a policy issue EDA Minutes: 4/08/15 determined by Council. Angela Schumann added that the redistributed funds are directed to the City's capital account rather than its General Fund. Johnson also pointed to a deficit related to the Union Square development noted on the Fund Balance spreadsheet and asked if a minimum valuation had been established and who is liable for the shortfall. Staff agreed to look into the matter. TRACY HINZ MOVED TO APPROVE THE 2015 EDA FUND BALANCE REPORT AS PRESENTED BY THE CITY FINANCE DIRECTOR. MOTION WAS SECONDED BY BILL TAPPER. MOTION CARRIED 7 -0. 9. Consideration to adopt Resolution for Decertification of Tax Increment Financing District No. 1 -37 Angela Schumann explained that the EDA is required to decertify TIF 1 -37 (Karlsburger Foods) now that the obligations of both the district and the budget have been met. She noted that staff had revised the resolution in the agenda packet so that the language pertained to the EDA's recommendation to the City Council. BILL TAPPER MOVED TO ADOPT RESOLUTION NO. EDA- 2015 -004 DECERTIFYING TAX INCREMENT FINANCING DISTRICT NO. 1 -37. MOTION WAS SECONDED BY LLOYD HILGART. MOTION CARRIED 7 -0. 10. Consideration of approving a 2015 Farm Lease Agreement for Outlot F, Otter Creek Crossing Angela Schumann noted several minor corrections in the 2015 Farm Lease Agreement. She indicated that, with the exception of the dates and the payment amount, the terms of the agreement were substantially the same as in 2014. She explained that the tenants had renegotiated the rental fee and agreed to pay $1,300 for the six month lease. There was some discussion about the rationale for leasing the land for farming. Wayne Oberg indicated that tax and property maintenance costs make it reasonable to do so. BILL TAPPER MOVED TO AUTHORIZE THE EDA EXECUTIVE DIRECTOR AND PRESIDENT TO EXECUTE THE 2015 FARM LEASE AGREEMENT FOR OUTLOT F. OTTER CREEK CROSSING AS PRESENTED. MOTION WAS SECONDED BY STEVE JOHNSON. TOM PERRAULT MOVED TO AMEND THE PRIOR MOTION TO INCLUDE AMENDING THE LEASE AGREEMENT TO PROVIDE THE TENANT FLEXIBILITY IN ACCESSING THE PROPERTY. MOTION WAS SECONDED BY TRACY HINZ. MOTION CARRIED 7 -0. EDA Minutes: 4/08/15 11. Consideration of an update regarding the Administrative Lot Combination and Simple Subdivision of EDA -owned property Angela Schumann explained that the Planning Commission had recently recommended approval of the administrative lot combination and simple subdivision of property owned by the EDA (Lots 14 and 15, Block 34, Original Plat of Monticello). She indicated that this item would be considered by the City Council at its April 13th meeting. Schumann pointed out that the EDA attorney would prepared a deed for conveyance of the property to MnDOT for EDA consideration at its May meeting. 12. Consideration of Director's Report • Business Subsidy Policies - Bill Demeules asked about evaluating the subsidy programs to verify compliance. Angela Schumann pointed to the need to clarify guidelines related to the MN Investment Fund (Small Cities Fund). She noted that the EDA attorney had not found problems related to TIF guidelines. • CSAH 75 /TH 25 Improvements - Schumann pointed out that staff had sent a letter to notify property owners about planned demolition activity on Block 34. • City Industrial Park - Schumann stated that she has been reviewing Finance Department records to determine ownership of the industrial park. She indicated that she would summarize and report findings to the EDA upon clarification. • Xcel Energy Substation - Schumann reported that the Planning Commission had approved the land use application related to the development of the Xcel Energy substation and briefly summarized project status. • Joint EDA/CC Workshop - Schumann noted that staff would schedule a joint EDA /CC workshop to discuss abatement and levy issues at the end of May. • Newsletter - Schumann volunteered to post a correction on the City's Facebook page in response to an error in the Snapshot of a Growing Community newsletter. 13. Adiourn BILL TAPPER MOVED TO ADJOURN THE MEETING AT 7:10 P.M. MOTION WAS SECONDED BY STEVE JOHNSON. MOTION CARRIED 7 -0. Recorded: Beth Green Revised: Kerry Burri Date Approved: Attest: Angela Schumann, Community Development Director MINUTES SPECIAL MEETING - ECONOMIC DEVELOPMENT AUTHORITY Monday, August 24, 2015 — 5:45 p.m., Monticello Community Center Commissioners: Bill Demeules, Bill Tapper, Tracy Hinz, James Davidson, Steve Johnson, Tom Perrault, Lloyd Hilgart City Council: Brian Stumpf, Charlotte Gabler, Lloyd Hilgart, Tom Perrault, Glen Posusta Staff: Jeff O'Neill, Angela Schumann, Wayne Oberg, Tammy Omdahl (Northland Securities) 1. Call to Order Bill Demeules called the meeting to order at 5:45 p.m. 2. Purpose Angela Schumann stated that the purpose of the special meeting is to invite City Council feedback related to levy options and budget considerations and to provide an opportunity for the EDA to further discuss issues or take action. Schumann summarized that the EDA had reviewed its financial resources through a series of workshops and determined that it is limited in its capacity to address the broad economic development initiatives identified in its annual workplan. She specified that the three primary sources of revenue available to the EDA include pooled increment in TIF 1 -22, excess increment in TIF 1 -6 and the annual budget request allotment from the City's General Fund. Schumann noted that the EDA had included researching the concept of a levy as a workplan goal in response to the need to identify an alternative recurring revenue source to fund ongoing operational needs and accomplish strategic objectives related to redevelopment, revitalization and housing. Schumann pointed out that establishing a levy at the maximum allowable amount under statute could provide an additional $155,000 year to year. Schumann explained that an EDA levy is established by the City for the benefit of the EDA and within the City's overall levy and an HRA levy is a separate special benefit levy that would exist outside of the City's levy limits. She said each type of levy has a maximum amount per statute, each is listed as a separate line item on tax statements and each requires annual EDA and Council approval. Tammy Omberg, of Northland Securities, noted that it is a policy decision to establish a Special EDA Minutes: 8/24/15 levy and recommended that the Council focus on whether or not it supports creating additional tax revenue for economic development. She confirmed that the level of City Council control would be the same for either type of levy. Schumann pointed out that the Council would have oversight over the EDA's workplan, levy and budget. In addition, Schumann suggested that the EDA could formalize its current practice of inviting Council input as it considers the purchase or sale of property and provide an annual year end economic development report. Schumann noted that staff recommend that the EDA approve an HRA levy and budget. She clarified that an HRA levy, adopted at the full allowable statutory limit, would generate approximately $280,000. This would fund the day -to -day operations of the EDA, estimated at $150,000, and the balance would be available to fund housing and redevelopment activities. The proposed 2016 EDA budget would total $305,000 with this addition through the levy. Wayne Oberg pointed out that the current EDA allocation 1.1% of the City's general levy. An HRA levy would equate to an additional 2.2% commitment. He indicated, however, that the impact to taxpayers could be significantly less than 3.3 %. There was considerable discussion about the cost of development, the value of leveling the playing field on some properties to initiative development, the need to establish a mechanism for replenishing the EDA General Fund, the emphasis on hiring an economic director, and the importance of making a commitment to investing in the community through economic development. BILL TAPPER MOVED TO ADOPT EDA RESOLUTION EDA- 2015 -008 AUTHORIZING THE LEVY OF A SPECIAL BENEFIT LEVY PURSUANT TO MINNESOTA STATUTES, SECTION 469.033, SUBDIVISION 6 AND APPROVAL OF A BUDGET FOR FISCAL YEAR 2016. TRACY HINZ SECONDED THE MOTION. MOTION CARRIED 6 -1 WITH TOM PERRAULT VOTING IN DISSENT. Schumann pointed out that this item would be presented for Council consideration on September 14th. The levy must be filed with Wright County by September 151h 4. Adiournment BILL TAPPER MOVED TO ADJOURN THE SPECIAL MEETING AT 6:19 PM. TOM PERRAULT SECONDED THE MOTION. MOTION CARRIED 7 -0. Recorder: Kerry Burri Approved: Attest: Angela Schumann, Community Development Director 2 MINUTES REGULAR MEETING - ECONOMIC DEVELOPMENT AUTHORITY (EDA) Wednesday, September 9, 2015, Mississippi Room, Monticello Community Center Present: Bill Demeules, Bill Tapper, Tracy Hinz, Jim Davidson, Steve Johnson, Tom Perrault Absent: Lloyd Hilgart Others: Angela Schumann, Jeff O'Neill, Wayne Ober; 1. Call to Order Bill Demeules called the meeting to order at 6:00 p.m 2. Roll Call 3. Approval of Minutes 4. The minutes for the following a. Regular Meeting — April 8' b. Regular Meeting — July 8th c. Special Meeti 22" d. Regular M g — August e. Special — August £ Special ee Augifft 24". 2015 Consideration of adding items lote agenda "IN >NS 5. Consideration of approving payment of bills None :onsideration. 'ER MOVED TOIKPPROVE THE PAYMENT OF BILLS THROUGH AUG 015. STEVE JOHNSON SECONDED THE MOTION. MOTION CARRIED 6 -0. if Angela Schum responded to questions related to the following invoices: Block 34: St has been tracking the invoices submitted against the amount the EDA approved for environmental studies related to Block 34. ECM. Nine ECM payments reflect the cost of publishing TIF District disclosures. Wright County: The $12,227.35 reflects the excess TIF 1 -37 increment returned. 6. Consideration to review the 2015 Hospitality Study Update Steven Sherf summarized the updated Hospitality Study and responded to questions. He EDA Minutes: 9/09/15 indicated that the study utilizes lodging data from 2014 and early 2015. He pointed out that the original study was based on 2013 data which had included crew business from Xcel Energy outage. Sherf explained that one of the issues facing the Monticello lodging industry is that it is subject to cycles which involve reserving most rooms at 25% off rack rates to guarantee accommodations for crews that come to town. He noted that there had been a lot more crew business along the I -94 corridor in recent years. would want to participate in crew business because it Sherf indicated that he had used the san penetration rates in this study. He said 1 demand was a bit lower than anticipate projections really didn't change much s that a new hotel tv income. ire and id the base is that Sherf explained that the original report h ed on a midscale to upper *iscale limited service hotel with an indoor pool and a 11 meeting room becaus the data indicated that a full service hotel was not likely t be feasible. Based on budgets used to develop such hotel types, Sherf mated that a 60 rolk otel would cost $104,000 per room. He estimated a project cost 40,000 using equity contribution. Sherf stated that he came up with sufficient debt coverage t ay the mortgage and that the return on equity was estimated to be in the 10 -15% range. He said that the subject type of hotel ila es ti run 54 -63% ' occupancy, which is in the low to midscale range from a s ibility oint. He p ted out that the minimum return acceptable to an investor would be 10% that most w Id like to see 15% or more. Sherf said that he thinks the EDA should p sue locating a hotel in the City. He said that the mmunity has a lot of positives including interstate location, good employers, a s e econo proximi to the Twin Cities. said that the report will act a lot of attention, but pointed out that incentives may be d. He said that some ommunities have provided assistance with costs by acquir e land and selling (or leasing) it for a nominal fee. Others have absorbed the cost ofd ition or infrastructure, or helped with bonding and tax abatement. He noted that the land cost was assumed to be $6,000 per room or $360,000 for the project. Sherf said that he doesn't know what specific kind of assistance would be necessary in Monticello to push the return on investment to 15% if that is the developer's target. Sherf stated that a 60 unit hotel would require a minimum of an acre and a half of land and shared parking. He suggested that a hotel of the type similar to a Holiday Inn Express, Hampton Inn or Hilton would cost another $10,000 per room but may be able to get higher rates. He noted that the estimated costs in this study's subject review, which reflect the low end of the upper midscale, are realistic for this market. He pointed out that this estimated budget is based on costs associated with an undeveloped site with utilities 7. EDA Minutes: 9/09/15 in place. Demolition of existing buildings would add to the project cost. Sherf specified that departmental expenses that reflect the cost of operating a room (reservation system, payroll for the front desk, supplies and cleaning) are allocated to the rooms. Undistributed expenses reflect costs associated with business management, utilities and maintenance. Fixed costs include property tax and insurance. Sherf said that lenders like to see 24% of gross sales allocated as replacement reserve for parking lots and roofs so he added it as a restriction on cash flow before debt service. Sherf pointed out that it would take a strong national franc , or a well- recognized regional franchise, to attract business from the interstatgjPT8Wd that a new hotel would be competing with the Best Western and hotels in AlbCillelWe Grove and Buffalo. Sherf also pointed out that convenient access decision to locate a hotel. He said that it wou club were within walking distance, but thaR anywhere on this side of the interstate. Sherf indicated that lenders w He pointed out, however, that Sherf said that it takes about a year would be to contact hotel franchise that the City v recommended positive reactions by a sit -down in the nt or supper to have a restawtit option that was more than a year old. would do their own study. s�gested that the next step Ib suggested that mentioning would get some attention. Sherf ng an RFP to hotel developers. WSB Market Matching consultant John Uphoff reported on the following: N HospitAlity Report - Uphoff will use the updated Hospitality Report immediately to directly market to hotel franchise representatives. GreaterMSP RFI - Uphoff will continue to follow up on information submitted elated to two sites in response to a GreaterMSP RFI seeking 10 -20 acres for an iotech firAWith 120 employees. Week ley Homes - Uphoff will host a site visit for David Weekley Homes in O r s follow up to a recent meeting with the President of the organization. MND Familiarization Tour - Uphoff will meet with the regional site selectofduring the upcoming tour. Meetings - Uphoff represented Monticello's interests at the Sensible Land Use Coalition and Wright County Economic Development Partnership's Small Business Program meetings. He also met to share market ideas with Wayne Elam. 25175 Intersection - Uphoff noted the importance of moving forward to determining the environmental status of the 25/75 intersection project. and suggested that removing additional buildings would attract developers to the site. EDA Minutes: 9/09/15 8. Consideration to review current 2015 Fund Balance Report Wayne Oberg presented an updated EDA fund balance report. He noted that all of the TIF districts are fairly healthy with the exception of TIF 1 -34. He indicated that he would reverse the Interfund Loan transfer to eliminate the $234,053 deficit in TIF 1 -34 and that funds collected in the future would be directed to the Debt Service Fund. He summarized that the EDA General Fund balance is about a million dollars. Steve Johnson asked for information related to a request for a r ed tax valuation within TIF 1 -34. Jeff O'Neill acknowledged that the Union Crossin developer had requested a reduction in valuation some time ago. Johnson suggested that a reduced valuation would have an effect on the shortfall of the gitrict and pointed out that such agreements can be revalued after three years. O'Neill i icated th taff would follow up to determine the amount of the reduction in vayon and date of eement. 9. Consideration to adopt Resolution ED 015 -009 re uestin a pub!' on the modification of Tax Increment Fin ncina District No. 1 -22 4 Angela Schuman stated that the EDA's attorney ha rmined that only a minor modification related to available d housing in re in TIF 1 -22 is required and that the EDA has sufficient budge authority to make ification. She recommended that the EDA take no tion gested th taff would prepare related documents for consideration at its Oc ber TOM PERRAULT MOVIP TO TAKE O ACTIO RELATED TO THE MODIFICATION OF TAX CREMEN INANCING DISTRICT NO. 1 -22. BILL TAPPER SECOND D THE MOTION. M N CARRIED 6 -0. 10. Consideration to re ew for approval o 015 -2016 Greater MSP Salesforce partnership commitme AAngela Schumann asked that the EDA renew its license agreement (through August 2016) with GreaterMSP related to participation in its Salesforce CRM program. Schumann confirmed with GreaterMSP that the City would continue to have access to the program should an economic development staff person be hired. BILL TAPYGTERMSP D TO APPROVE A $400 ANNUAL LICENSE FOR 2015 -2016 FOR THE SALESFORCE CRM PROGRAM. STEVE JOHNSON SECONDED THE MOTION. MOTION CARRIED 6 -0. 11. Consideration of a request to the City Council regarding redistributed funds from TIF 1 -22 excess increment Angela Schumann summarized that there had been some informal discussion related to a request to redistribute funds from TIF 1 -22 excess increment to the EDA at several meetings. She asked that the EDA provide staff direction related to this issue. 4 EDA Minutes: 9/09/15 Bill Demeules pointed out that statutes indicate a use it or lose it proposition. Schumann suggested that the EDA may wish to recommend in future that City Council consider designating redistributed funds for specific capital projects which have been identified as city priorities within the annual EDA workplan. Wayne Oberg responded to commissioner questions and comments and explained the rationale related to the policy in place. He pointed out that thtplon of funds redistributed varies each year and will not always exist as a r revenue source. He indicated that these funds are directed into the City's Capi Fund and are used for one -time expenses that directly benefit the commun' d he supports the proposed HRA levy provided that the City retains co 1 of ss TIF funds and the annual allocation from the City's General Fund to�AA is elied BILL DEMEULES MOVED TO TAKE NO ACTION LATED T OC TION OF FUNDS RESULTING FROM THE REDIS RIBU N OF TIF DI T 1 -22 EXCESS INCREMENT TO THE EDA. TO ECONDED E MOTION. MOTION CARRIED 4 -2 WITH BIL ER AND STEVE JOHNSON VOTING IN OPPOSITION. 12. Economic Development Report HRA /EDA Levy - The City Council conside enefit levy (HRA levy) and EDA budget for 2016 at its September 1 meeting. UMCIWorkforce Education Event C hosted an event to explore developing workforce a ceship rams throu ut the state based on Wright Technical Center's model h partners with area scl districts and local industries. TH25 /CSAH 75 Project - Council rejected the bids associated with the TH 25 /CSAH 75 inte ection prof ct. The project will be re -bid in time for spring construction. Ichange - The Council will consider the Planning Commission's recommendation rove forward with a study to further define land use concepts related to tial i change(s) at its September 28th meeting. 13. BILL TAPPI PERRAULT Recorder: Kerry Burri Approved: Attest: TO ADJOURN THE MEETING AT 7:18 PM. TOM THE MOTION. MOTION CARRIED 6 -0. Angela Schumann, Community & Economic Development Director EDA Agenda: 10/14/15 5. Consideration of approving payment of bills (WO) A. REFERENCE AND BACKGROUND: Accounts Payable summary statements listing bills submitted during the previous month are included for review. B. ALTERNATIVE ACTIONS: 1. Motion to approve payment of bills through September 2015. 2. Motion to approve payment of bills through September 2015 with changes as directed by the EDA. C. STAFF RECOMMENDATION: Staff recommends Alternative 91. D. SUPPORTING DATA: Accounts Payable Summary Statements Accounts Payable CITY OF Transactions by Account �� • User: eflo Printed: 09/09/2015 - 1:41PM Batch: 00203.09.2015 Account Number Vendor Description GL Date Check No Amount PO No 213 - 00000 - 155020 LEAGUE OF MN CITIES INS TRU Ins Premium 7/15/15 - 7/15/16 09/15/2015 114639 869.00 Vendor Subtotal for Dept:00000 869.00 213-46301-431990 NORTHLAND SECURITIES INC 2014 TIE Reporting - District 22 09/15/2015 114653 990.00 Vendor Subtotal for Dept:46301 990.00 213-46301-431990 HARRY LANTTO EDA Meeting Recording 8/12/15 09/15/2015 0 60.00 Vendor Subtotal for Dept:46301 60.00 213 - 46301 - 434600 HOSPITALITY CONSULTING GR( Fees for updating hotel market study 09/15/2015 114631 4,000.00 Vendor Subtotal for Dept:46301 4,000.00 213 - 46301 - 436100 LEAGUE OF MN CITIES INS TRU Ins Premium 7/15/15 - 7/15/16 09/15/2015 114639 621.00 Vendor Subtotal for Dept:46301 621.00 213-46522-431990 VEIT AND COMPANY MG Farm Demo - Final 10% 09/15/2015 114678 2,625.30 Vendor Subtotal for Dept:46522 2,625.30 AP- Transactions by Account (09/09/2015 - 1:41 PM) Page 1 Account Number Vendor The following list of bills payable was reviewed and approved for payment. Date: 10 -14 -2015 Approved by Description Tracy Hinz - Treasurer GL Date Check No Subtotal for Fund: 213 Report Total: Amount PO No 9,165.30 9,165.30 AP- Transactions by Account (09/09/2015 - 1:41 PM) Page 2 Accounts Payable C1ii OF Transactions by Account � User: Debbie.Davidson eRo Printed: 09/23/2015 - 3:04PM MO en- Batch: 00204.09.2015 Account Number Vendor Description GL Date Check No Amount PO No 213 - 46301 - 430400 KENNEDY AND GRAVEN CHAR] Downtown Hotel Dev- (60) Ins 6/2/20 09/29/2015 114724 111.00 Vendor Subtotal for Dept:46301 111.00 213-46301-431990 WSB & ASSOCIATES INC Economic Development & Market Ma 09/29/2015 0 4,000.00 Vendor Subtotal for Dept:46301 4,000.00 213-46301-431990 NORTHLAND SECURITIES INC EDA 0 Special Tax Levy Authority - A 09/29/2015 114735 330.00 Vendor Subtotal for Dept:46301 330.00 213 - 46301 - 437100 WRIGHT CO AUDITOR -TREAS R155- 171 - 000060 2nd Half Payment 09/29/2015 114753 678.00 Vendor Subtotal for Dept:46301 678.00 213 - 46301 - 443990 GREATER MSP Annual Fee 2015 Greater MSP Salesfc 09/29/2015 114720 400.00 Vendor Subtotal for Dept:46301 400.00 213 - 46535 - 430400 KENNEDY AND GRAVEN CHAR] TIE 35 -General EDA Matters througl 09/29/2015 114724 592.00 Vendor Subtotal for Dept:46535 592.00 AP- Transactions by Account (09/23/2015 - 3:04 PM) Page 1 Account Number Vendor Description The preceding list of bills payable have been reviewed and approved for payment. Date: 10/14/2015 Approved by Tracy Hinz - Treasurer GL Date Check No Subtotal for Fund: 213 Report Total: Amount PO No 6,111.00 6,111.00 AP- Transactions by Account (09/23/2015 - 3:04 PM) Page 2 Accounts Payable C1ii OF Transactions by Account � User: Debbie.Davidson eRo Printed: 09/15/2015 - 12:15PM MO en- Batch: 00201.09.2015 Account Number Vendor Description GL Date Check No Amount PO No 213 - 00000 - 362970 US BANK CORPORATE PMT SYS US Bank Rebate Q2 2015 09/15/2015 0 -1.95 Vendor Subtotal for Dept: 00000 -1.95 213-46301-431990 US BANK CORPORATE PMT SYS MN Pollution Control Agency - Gen L 09/15/2015 0 187.50 Vendor Subtotal for Dept:46301 187.50 213 - 46301 - 432200 US BANK CORPORATE PMT SYS USPS - Certified Letter (1) 09/15/2015 0 6.74 Vendor Subtotal for Dept:46301 6.74 213 - 46500 - 443990 US BANK CORPORATE PMT SYS Domino's Pizza - Meal for meeting 09/15/2015 0 53.80 213 - 46500 - 443990 US BANK CORPORATE PMT SYS USPS - Certified Mail - 1 letter 09/15/2015 0 6.74 Vendor Subtotal for Dept:46500 60.54 The preceding list of bills payable have been reviewed and approved for payment. Subtotal for Fund: 213 252.83 Report Total: 252.83 Date: 10/14/2015 Approved by Tracy Hinz - Treasurer AP- Transactions by Account (09/15/2015 - 12:15 PM) Page 1 Accounts Payable Transactions by Account User: Debbie.Davidson Printed: 10/01/2015 - 10:57AM Batch: 00215.09.2015 Account Number Vendor Description Monticello GL Date Check No Amount PO No 213 - 46522 - 438100 XCEL ENERGY ZCULPS - EXPENS - 51- 0623082 -2 09/30/2015 0 16.89 Vendor Subtotal for Dept:46522 16.89 The preceding list of bills payable have been reviewed and approved for payment. Date: 10/14/2015 Approved by Tracy Hinz - Treasurer Subtotal for Fund: 213 16.89 Report Total: 16.89 AP- Transactions by Account (10/01/2015 - 10:57 AM) Page 1 EDA Agenda: 10/14/15 6. Consideration of Market Matching report. A. REFERENCE AND BACKGROUND: A verbal report will be provided by WSB Market Matching consultant John Uphoff. EDA Agenda: 10/14/15 7. Consideration to adopt Resolution EDA- 2015 -010 for the modification of Tax Increment Financing District No. 1 -22 as related to tax increment pooling for housing. (AS) A. REFERENCE AND BACKGROUND The EDA is asked to consider adoption of a resolution for modification of TIF District 1 -22. The purpose of the modification is related to the capture of available pooled housing increment in Monticello Tax Increment Financing District 1 -22. The EDA has the ability to pool an additional 10% of captured tax increment within TIF District 1 -22 for housing purposes. A modification of the district is required to allow for pooling of the 10 %. This type of modification does not meet the requirements which trigger a public hearing and other notification processes. At present, the EDA is not capturing the 10% allowable housing pooling. The amount of pooled increment generated over the remaining life of TIF 1 -22 is estimated to be approximately $345,000 (collected over 10 years, between years 2016 and 2024). The EDA would also have the authority to capitalize this annual revenue through an interfund TIF loan. It is estimated that the EDA returns approximately $35,000 annually to Wright County as excess increment which could be captured and used to assist affordable housing projects. In approving this modification, the EDA would have the ability to provide assistance utilizing the pooled housing increment to a housing project anywhere with the city limits. The 10% of pooled funds available for housing can only be used for "qualifying" housing projects within the city. Projects do not necessarily need to occur within TIF 1 -22 or the redevelopment project area itself. This requires that the housing project meet standards for low to moderate income for either/both rental or owner - occupied units. More information on the required standards can be found in the supporting data on housing districts. The EDA would not necessarily need to create a new TIF housing district to utilize the pooled funds, but would need to use the guidelines established for TIF housing districts in order to apply the available pooled housing resource to a given project. For example, if there were an identified housing project not located within the boundaries of an existing (or new) TIF district, to which the EDA desired to provide financial assistance, the EDA would have the authority to provide tax increment assistance from TIF 1 -22 revenue. The owner would be required to satisfy the same income qualification for residents as required for a property located within a housing TIF district. Similar to the 25% of pooling allowed within TIF 1 -22, the additional 10% pooling must be committed to a qualifying project before decertification of the district at the end of 2024. As the City Council establishes TIF districts for the City, the EDA's attorney has recommended that the City Council also consider a companion resolution for approval of the modification. Al. Budget Impact: As noted above, the estimated amount of available pooled housing increment is $345,000 over the balance of the life of the district. The cost to complete the modification process is approximately $4,000. 1 EDA Agenda: 10/14/15 A2. Staff Impact: As previously noted, staff has been working with Northland Securities and Kennedy & Graven on the modification process. Staff time on this process is estimated at approximately 12 hours. B. ALTERNATIVE ACTIONS 1. Motion to adopt Resolution EDA- 2015 -010 approving modification of tax increment financing plan for Tax Increment Financing District No. 1 -22. 2. Motion to deny adoption of Resolution EDA- 2015 -010 approving modification of tax increment financing plan for Tax Increment Financing District No. 1 -22. C. STAFF RECOMMENDATION Staff recommends alternative 1 consistent with the EDA's previous discussion and action. D. SUPPORTING DATA A. Resolution EDA- 2015 -010 B. TIF 1 -22 Modification Plan C. House of Representatives House Research Department Information — Housing TIF Districts D. Northland Securities Memo, TIF Pooling 2 CITY OF MONTICELLO WRIGHT COUNTY, MINNESOTA ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. EDA- 2015 -010 APPROVING MODIFICATION OF TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 1 -22 WHEREAS, the City of Monticello (the "City ") and the Housing and Redevelopment Authority in and for the City of Monticello (the "HRA ") previously established Central Monticello Redevelopment Project Area No. 1 (the "Redevelopment Project ") pursuant to Minnesota Statutes, Sections 469.001 through 469.047, as amended (the "HRA Act "); and WHEREAS, on March 10, 1997, the City and the HRA approved a Tax Increment Financing Plan (the "TIF Plan ") for Tax Increment Financing District No. 1 -22 (the "TIF District ") located within the Redevelopment Project, pursuant to the HRA Act and Minnesota Statutes, Sections 469.174 to 469.1794, as amended (collectively, the "TIF Act "); and WHEREAS, administration of the TIF District was subsequently transferred to the City of Monticello Economic Development Authority (the "Authority "); and WHEREAS, the City and Authority have determined a need to modify the TIF Plan in order to amend the budget contained therein and such amendment is consistent with the redevelopment program for the Redevelopment Project; and WHEREAS, pursuant to Section 469.175, subd. 4(b) of the TIF Act, a tax increment financing plan may be modified without public hearing or the findings required to be made for the original tax increment financing plan if the modification does not include (i) any reduction or enlargement of the geographic area of the project or tan increment financing district; (ii) an increase in the amount of bonded indebtedness; (iii) a determination to capitalize interest on debt if that determination was not a part of the original plan; (iv) an increase in the portion of the captured net tax capacity to be retained by the City; (v) an increase in the estimated cost of the project, including administrative expenses, to be paid or financed with tax increment from the district; or (vi) the designation of additional property to be acquired by the authority; and WHEREAS, the proposed modifications to the TIF Plan include revised line items of expenditures to finance additional affordable housing in the City, but do not increase the total estimated cost of the project or the total amount of bonded indebtedness. 469140v1 MNIMN190 -150 CITY OF MONTICELLO WRIGHT COUNTY, MINNESOTA ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. EDA- 2015 -010 NOW THEREFORE, BE IT RESOLVED by the Board of Commissioners of the City of Monticello Economic Development Authority as follows: 1. The administrative modification to the TIF Plan is hereby approved in substantially the form on file in City Hall. 2. Upon approval of the modification to the TIF Plan by the City Council of the City, the Community Development Director is authorized to forward a copy of the modified TIF Plan to the Department of Revenue and the State Auditor pursuant to Minnesota Statutes 469.175, subd.4a. 3. The City Clerk is authorized and directed to forward a copy of the TIF Plan to Wright County for information purposes. DATED: October 14, 2015 President ATTEST: Secretary 2 469140v1 MNIMN190 -150 City of Monticello Economic Development Authority Modification No. 2 to Tax Increment Financing Plan for Tax Increment Financing District No. 1 -22 Administrative Amendment Dated: October 26, 2015 (DRAFT) Prepared by: Kennedy & Graven, Chartered 470 US Bank Plaza 200 South 6th Street Minneapolis, MN 55402 (612) 337 -9300 www.kennedy-graven.com INTRODUCTION On March 10, 1997, the Housing and Redevelopment Authority in and for the City of Monticello (the "HRA ") established Tax Increment Financing District No. 1 -22 (the "District ") within Central Monticello Redevelopment Project No. 1 (the "Project Area "), and adopted a Tax Increment Financing Plan (the "Plan") in connection with the District. The City of Monticello Economic Development Authority (the "Authority "), as successor in interest to the HRA, now administers the District. By EDA Resolution 2015 -001, the Authority approved one previous administrative amendment to the Plan on January 12, 2015, removing certain parcels from the District. The Authority now intends to administratively amend the Plan for the District (this amendment) to provide for the financing of certain eligible housing project costs within the City of Monticello. The boundaries of the District are not being modified under this amendment. The purpose of the administrative amendment to the Plan is to adjust the existing authorized tax increment revenues and public costs to authorize for `pooling' of increment to pay for eligible housing project costs related to new anticipated development in the City. This amendment does not make any of the changes specified in Minnesota Statutes, Section 469.175, subd. 4, clauses (1) to (6), and therefore may be approved without the hearings and notices required for approval of the initial Plan. The sections of the Plan for the District specifically being modified include Subsection 23 -10: Use of Funds; Subsection 23 -11: Sources of Revenue /Bonded Indebtedness; Subsection 23 -13: Estimated Impact on Other Taxing Jurisdictions; and Subsection 23 -14: Modifications to Tax Increment Financing District No. 1 -22. The text of the original Plan is in plain font; new or modified text resulting from this modification is underlined. TABLE OF CONTENTS Tax Increment Financing Plan for Tax Increment Financing District No. 1 -22 Subsection 23 -10. Uses of Funds ........................................................................................ ............................... 1 23 -11. Sources of Revenue/Bonded Indebtedness ............................................ ............................... 1 23 -13. Estimated Impact on Other Taxing Jurisdictions ................................... ............................... 2 23 -14. Modifications to Tax Increment Financing District No. 1 -22 ............... ............................... 2 ii Subsection 23 -10. Use of Funds Currently under consideration for the District is a proposal to facilitate Monticello's downtown revitalization plan. The City and HRA have determined that it will be necessary to provide assistance to the project for certain costs. The HRA has conducted a feasibility study for the development or redevelopment of property in and around the District. To facilitate the establishment and development or redevelopment of the District, this Plan authorizes the use of tax increment financing to pay for the cost of certain eligible expenses. The estimate of public costs and uses of funds associated with the District is outlined in the table below. Under the amendment, the Authority is authorizing �penditure of tax increments within or outside the District to finance additional affordable housing projects, which expenditures are deemed to be activities within the District under Section 469.1763, subd. 2 of the TIF Act. Under this Plan as amended, the Authority estimates additional costs in the amount of $350,000 (see chart above) to finance construction of affordable housing which meets the requirements of Minnesota Statutes, Section 469.1761. Such additional costs represent amounts qualifying under Minnesota Statutes, Section 469.1763, subdivision 2(b) and 4. The Authority reserves the right to administratively adjust the amount of any of the items listed above or to incorporate additional eligible items, so long as the total estimated public cost is not increased. Subsection 23 -11. Sources of Revenue /Bonded Indebtedness Public improvement costs, acquisition, relocation, and site preparation costs and other costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax increments. The City or Authority reserves the right to use other sources of revenue legally applicable to the Modified Redevelopment Plan and the Tax Increment Financing Plan, including, but not limited to, special assessments, general property taxes, state aid for road maintenance and construction, proceeds from the sale of land, other contributions from the developer and investment income, to pay for estimated public costs. The City may finance additional affordable housing project costs through any obligations permitted under law, provided that any additional bonds or notes will be sized in an amount such that the total estimated bonded indebtedness from the TIF District does not exceed the original authorized bonded indebtedness of $39,000,000. Original Approved Budget March 10, 1997 Modification No. 2 October 26, 2015 Land/building acquisition 4,275,000 4,275,000 Site improvements/preparation costs 4,275,000 4,275,000 Utilities 4,275,000 3,925,000 Other public improvements 4,275,000 4,275,000 Construction of affordable housing 0 350,000 Small city authorized costs 0 0 Administrative costs 1,900,000 1,900,000 Estimated Financing costs - interest 20,000,000 20,000,000 Total 39,000,000 39,000,000 The Authority reserves the right to administratively adjust the amount of any of the items listed above or to incorporate additional eligible items, so long as the total estimated public cost is not increased. Subsection 23 -11. Sources of Revenue /Bonded Indebtedness Public improvement costs, acquisition, relocation, and site preparation costs and other costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax increments. The City or Authority reserves the right to use other sources of revenue legally applicable to the Modified Redevelopment Plan and the Tax Increment Financing Plan, including, but not limited to, special assessments, general property taxes, state aid for road maintenance and construction, proceeds from the sale of land, other contributions from the developer and investment income, to pay for estimated public costs. The City may finance additional affordable housing project costs through any obligations permitted under law, provided that any additional bonds or notes will be sized in an amount such that the total estimated bonded indebtedness from the TIF District does not exceed the original authorized bonded indebtedness of $39,000,000. The estimated sources of funds for the District are contained in the table below. Subsection 23 -13. Estimated Impact on Other Taxing Jurisdictions The Citv does not anticipate that modification of the Plan will chance the fiscal impacts of the District on other taxing_ jurisdictions, other than to retain the District for its maximum duration. The City has determined to continue to collect tax increment in order to stimulate development of additional affordable housing. Any such additional housing located within the District will not create fiscal impacts beyond those originally indicated. New affordable housing not located within the District will also not create additional fiscal impacts (other than positive impacts in the form of additional tax base not captured as tax increment). Subsection 23 -14. Modification of Tax Increment Financing District No. 1 -22 In accordance with Minnesota Statutes, Section 469.175, Subdivision 4, any reduction or enlargement of the geographic area of the District; increase in amount of bonded indebtedness to be incurred, including a determination to capitalize interest on the debt if that determination was not a part of the original Plan, or to increase or decrease the amount of interest on the debt to be capitalized; increase in the portion of the captured tax capacity to be retained by the City or HRA; increase in total estimated tax increment expenditures; or designation of additional property to be acquired by the City or HRA shall be approved upon the notice and after the discussion, public hearing and findings required for approval of the original Plan. The Authoritv is proposine an administrative amendment to the Plan_ under which there will not be an of the activities listed above that would require notice and public hearing. As provided in Subsection 23.10 above, the Authority intends to adjust specific project costs of the original Plan budget to authorize the expenditure of available tax increments on elieible affordable housine `poolina' activities of the Project Area and within the City as a whole. 2 Original Approved Budget March 10, 1997 Modification No. 2 October , 2015 Tax increment revenue 39,000,000 37,553,000 Interest and investment earnings 0 720,000 Loan /advance repayments 0 57,000 Lease Proceeds 0 650,000 Market value homestead credit 0 20,000 Total 39,000,000 39,000,000 Subsection 23 -13. Estimated Impact on Other Taxing Jurisdictions The Citv does not anticipate that modification of the Plan will chance the fiscal impacts of the District on other taxing_ jurisdictions, other than to retain the District for its maximum duration. The City has determined to continue to collect tax increment in order to stimulate development of additional affordable housing. Any such additional housing located within the District will not create fiscal impacts beyond those originally indicated. New affordable housing not located within the District will also not create additional fiscal impacts (other than positive impacts in the form of additional tax base not captured as tax increment). Subsection 23 -14. Modification of Tax Increment Financing District No. 1 -22 In accordance with Minnesota Statutes, Section 469.175, Subdivision 4, any reduction or enlargement of the geographic area of the District; increase in amount of bonded indebtedness to be incurred, including a determination to capitalize interest on the debt if that determination was not a part of the original Plan, or to increase or decrease the amount of interest on the debt to be capitalized; increase in the portion of the captured tax capacity to be retained by the City or HRA; increase in total estimated tax increment expenditures; or designation of additional property to be acquired by the City or HRA shall be approved upon the notice and after the discussion, public hearing and findings required for approval of the original Plan. The Authoritv is proposine an administrative amendment to the Plan_ under which there will not be an of the activities listed above that would require notice and public hearing. As provided in Subsection 23.10 above, the Authority intends to adjust specific project costs of the original Plan budget to authorize the expenditure of available tax increments on elieible affordable housine `poolina' activities of the Project Area and within the City as a whole. 2 Tax Increment Financing - House Research Minnesota douse of representatives House research Department Housing TIF Districts Duration Limit How long can increments be collected from a housing district? Page 1 of 3 The law permits increments from a housing district to be collected for 25 years after the receipt of the first increment. fin z , 45S,� l6, subd. lb (5). The authority may, in the TIF plan, elect to waive up to the first four years of increment. Minn. Stat. � 4.0.175, subd. lb. This allows the authority to avoid using the duration limit for a year in which only a small amount of increment is received. What is the duration limit for interest reduction programs? A special duration limit applies to interest reduction programs. These programs are most commonly, if not exclusively, funded with housing district tax increments. Increments may be collected for an interest reduction program for 15 years after the first interest reduction payment is made. Minn. Stat. 5 469.176, subd. 4f. This limit does not, however, limit the duration of the actual housing TIF district. The district may collect increments for the full 25 -year duration, if the increments are used for other qualifying purposes (i.e., noninterest costs of the project or another project). Geographic Areas that Qualify Do geographic restrictions apply to housing TIF districts? In general, no geographic restrictions apply to housing districts. A housing district may be created anywhere, but its increments must be used for qualifying purposes. However, the law does contain one geographic -based provision: the income limits on qualifying housing do not apply in targeted areas. Do pooling rules limit where housing district increments may be spent? Unlike other types of TIF districts, housing districts are largely exempt from the pooling rules. The pool no rules limit the portion of increments that may be spent outside of the TIF district (but within the project area). For a housing district, though, these rules consider amounts spent on housing projects to be within the district, regardless of where the developments are physically located. inn Stat. § 469.1763, subd. 2(b). Permitted Uses of Increments What are the permitted uses of housing district increments? Increments from a housing district may only be used to finance a "housing project" or public improvements that are directly related to the project, as well as the authority's administrative expenses. Minn scat, r S. ice, subd. 4d. The cost of a project includes items such as acquisition, construction, or rehabilitation of the housing, planning, engineering, and architectural services, and related financing costs. Public improvement or infrastructure costs must be directly related to the project. For example, sewer and water connections for or a public access road to the housing could be financed. However, an adjacent road that serves the general public likely could not be. What is a "housing project" that qualifies for funding? A housing project is a development that is intended for occupancy, in part, by low- and moderate- income individuals, as defined under a federal, state, or municipal law. May an incidental amount of commercial development be assisted as part of a housing project? Yes, the law allows up to 20 percent of the total square footage of improvements to be used for purposes other than low- and moderate - income housing. Minn. Stat §_469.1-/4, subd. 11. This 20 percent share could be used for commercial developments, such as office or retail space. (It also could be used for housing for occupancy by individuals who do not meet the definition of low- and moderate - income housing under the federal, state, or municipal law.) In applying the 20 percent test, only developments that received assistance count. What income limits apply to projects financed with housing district increments? http: / /www. house. mn /hrd /issinfo /tif/hsgdist.aspx 8/3/2015 Tax Increment Financing - House Research Two separate sets of income limits apply: Page 2 of 3 1. The income limits under the federal, state, or municipal law that the authority uses as the legal authority for the housing project 2. The specific income limits under the TIF law that apply regardless of the housing law used Both of these income limits must be satisfied. The first income limit will vary depending upon the federal, state, or municipal law selected by the authority. The law requires that 80 percent of the fair market value of the project meet the first of these income limits. This will mean that units to be occupied by individuals meeting the income test under the selected law must comprise 80 percent or more of the market value of the property constructed in the district. What income limit does the TIF act specify? Separate income limits are established for rental and owner - occupied developments. Rental developments must meet one of two tests: 1. 20 -50 test: 20 percent of the units are occupied by individuals whose incomes are 50 percent or less of the area median income. 2. 40 -60 test: 40 percent of the units are occupied by individuals whose incomes are 60 percent or less of the area median income. These tests are taken from federal law. Owner - occupied developments have considerably higher income limits than the rental developments. The general limit is 115 percent of the greater of (1) the area median income or (2) the statewide median income. Are the income limits adjusted for family size? Yes, the income limits are adjusted based on family size. Higher limits apply for units designed to serve larger families and lower limits for units for smaller families. What are the dollar amounts of the income limits for the Twin Cities metropolitan area and rural counties? The income limits vary by family size and county or metropolitan area. The limits displayed in the table below apply to a family of four in the seven - county metropolitan area (and in Chisago, Isanti, Sherburne, and Wright counties) and in 42 rural counties. These are the highest and lowest area limits in the state. TIF Housing District Income Limits How long do the income limits apply? The rental limits apply for the duration of the TIF district, while the owner - occupied limits apply only to the first purchaser of the housing. Do exceptions apply to the TIF income limits? Yes, the income limits do not apply in "targeted areas." Minn. Stat. § 469.1761, subd. 1. Targeted areas are defined as census tracts in which 70 percent or more of families have incomes that are 80 percent or less of the statewide median family Income. Minn. 5tat. § 462C.101:2, subd. 9(e). The following table shows that 59 census tracts (about 4 percent of all of the census tracts in the state) qualified under this rule. These tracts are located in eight counties; more than half of them are In Hennepin County. (Under the 2000 census, 50 tracts qualified in 8 counties.) Most of these tracts (52 out of http: / /www. house. mn /hrd/issinfo /tif/hsgdist.aspx 8/3/2015 Twin Cities 42 Rural Counties Rental Housing Developments 50% of area median (20% required) $41,150 $30,850 60% of area median (400/6 required) 49,380 37,020 Owner - Occupied Housing 115% of the > of area or statewide median 96,485 84,985 Notes For family of four, calendar year 203.3 How long do the income limits apply? The rental limits apply for the duration of the TIF district, while the owner - occupied limits apply only to the first purchaser of the housing. Do exceptions apply to the TIF income limits? Yes, the income limits do not apply in "targeted areas." Minn. Stat. § 469.1761, subd. 1. Targeted areas are defined as census tracts in which 70 percent or more of families have incomes that are 80 percent or less of the statewide median family Income. Minn. 5tat. § 462C.101:2, subd. 9(e). The following table shows that 59 census tracts (about 4 percent of all of the census tracts in the state) qualified under this rule. These tracts are located in eight counties; more than half of them are In Hennepin County. (Under the 2000 census, 50 tracts qualified in 8 counties.) Most of these tracts (52 out of http: / /www. house. mn /hrd/issinfo /tif/hsgdist.aspx 8/3/2015 Tax Increment Financing - House Research Page 3 of 3 59) are in first -class cities. All of the Ramsey County tracts are in the city of St. Paul and all but four of the tracts in Hennepin and St. Louis counties are in the cities of Minneapolis and Duluth. Targeted Areas County Number of Qualifying Tracts Percentage of i Percentage of Total Tracts Qualifying Qualifying Tracts Beltrami 1 10 %€ 1.7% Crow Wing 1 6.25% i 1.7% j Fen nepin 32 10.7% 54.2% Minneapolis 29 49.2% N ower i 9% 1.7% Ramsey total 14 10.4% 23.7% St. Pa u 1 14 23.7/0 ' St. Louis total 10 15.2% 17% I Duluth 9 15.3% Total 59 4.4% 100%,j What special rules apply to housing districts? Housing districts are exempt from three requirements or rules that apply to other types of TIF districts: 1. The municipality is not required to make the increase in market value finding under the but -for test before approving a housing district. Minn Stat. § 459.175, subd. 3(b)(2)(ii). The legislature provided this exemption because low- income housing will rarely generate the largest increase in market value for a site and often may generate a lower market value than the use of the site that would be provided solely by the private market. The public benefit of housing districts is thought to be the expansion of the supply housing for low- income families, not the expansion of the property tax base, which lies at the heart of the market value component of the but -for test. 2. Housing districts may be created on parcels, whose property tax values were limited under the Green Acres, Minnesota Open Space Property Law, or the Metropolitan Agricultural Preserves Act. Minn. Stat � 469.176, subd. 7. In general, parcels in these programs may not be included in TIF districts. The rationale for this prohibition is that these programs are intended to encourage continued use of the property in less intensive uses (e.g., as farms or golf courses) by providing reduced taxes. Given this, the legislature considered it inappropriate to allow public subsidies to encourage development of these properties, shortly after they had received subsidies in return for not doing so. The exemption for housing districts was provided, apparently because the public benefits of expanding the supply of low- income housing was thought to outweigh these concerns. Data on Use of Housing Districts How many housing districts are active? According to the January 2014 Report of the State Auditor; there were 546 active housing districts at the end of calendar year 2012. This is an increase of 179 districts over calendar year 2000 or a 49 percent increase. What share do housing districts comprise of all TIF districts? Housing districts comprise about 30 percent of all TIF districts, according the State Auditor's data for calendar year 2011. January 2614 http: / /www. house. mn /hrd/issinfo /tif/hsgdist.aspx 8/3/2015 U It goes without saying that the rules governing the use of tax increment financing (TIT) are complicated. We often create basic principles to ensure that TIF is used correctly. While usually a safe strategy, this approach may result in overlooking important and useful TIF powers. A good example is the "five year rule ". A basic approach to this rule is that TIF district revenues can only be spent on obligations incurred within five years of certification and on administra- tive expense. However, a closer look at the statutes governing the use of TIF finds substantial funding capacity after the initial five -year period. • TIF district revenues that are NOT "tax increments paid by the properties" are not subject to five -year or pooling restrictions. • The amount of "pooling" expenditures increases for certain housing projects. As with all aspects of TIF, the devil is in the details. This profile highlights the key elements of this statutory authority. Northland can help you more thoroughly evaluate potential applica- tions and devise a plan of action. TAX INCREMENT NOT DERIVED FROM PROPERTY All tax increment is not the "same ". Revenues that are derived from tax increments paid by the properties in the TIF district are not the same as other revenues within the TIF district. The authority has discretion as to timing of the use of these other dollars and geographically where these dollars are spent. Revenues not derived from property include investment earnings/ interest income on or from tax increment derived from properties, proceeds from the sale or lease of property purchased with tax increments, principal and interest received on loans or advances made with tax increments, repayments to an authority, and market value credit paid to the authority. The use of these other revenues must be for tax increment eligible purposes but can be spent without regard to the five -year rule or pooling restrictions. HOUSING TIF DISTRICTS For housingTIF districts, tax increments can be spent on other projects that meet the criteria for establishing a housing district (% of units occupied by persons with qualifying incomes). The practical application of this authority includes: • This use of tax increment is not limited by pooling restrictions or the five -year rule. • The tax increment can be spent on activities outside of the TIF district, but within the proj- ect area /development district. • This authority does not extend the maximum statutory duration of a TIF district. • As with a housing TIF district, a portion of the assistance may go to persons with incomes above the qualifying limits. Using this authority to provide such assistance requires careful definition of the "housing project ". (Continued on Page 2) i• v Northland Securities is committed to keeping local governments in- formed of the latest tools, issues and trends in public finance. Northland's Public Finance Group specializes in the public finance needs of municipalities and govern- mental agencies across the Upper Midwest. Our public finance profes- sionals have the depth of experience in the municipal bond industry that serves our clients well, as they navi- gate through the complexities of the financial markets. As a diversified financial services firm, we provide financial advisory services and are also a significant underwriter of municipal debt. This provides a distinct advantage to our clients. Not only can they draw upon our experience to develop a sound finance plan, but also our expertise in the credit markets, to get first- hand market information useful in the structuring and timing of their financing. Our mission is to "provide direction and produce results." Northland Public Finance is committed to devel- oping long -term client relationships by providing sound advice, creative solutions, and the desired results. Northland Securities, Inc. 45 South 7th Street, Suite 2000 Minneapolis, MN 55402 Toll Free 1- 800 - 851 -2920 Main 612- 851 -5900 www.northlandsecurities.com Member FINRA and SIPC NORTHLAND STRATEGIES IFSpeCigl Projects Group The tax increment must be used solely to finance the cost of the "housing project" as defined by the statute and no more than 20% of the sq. footage of buildings that receive assis- tance may consist of commercial, retail, or other nonresiden- tial uses. Potential applications of this authority include: • Avoid the need to create a new TIF district for an individual housing project. • Supplement the revenues of another housing TIF district. • Provide assistance for renovation of existing housing. • Provide assistance for foreclosed housing. • Acquire land for housing. • Provide assistance to make public improvements more affordable. NON - HOUSING TIF DISTRICTS For all other types of TIF district, the amount of expenditure is limited to an additional 10% in the regular pooling limitations. The qualified uses are different from housing districts. To qualify for the 10% pooling increase, the expenditure must: 1. Be used exclusively to assist housing that meets the require- ment for a qualified low- income building, as that term is de- fined in Internal Revenue Code (IRC). 2. Not exceed the qualified basis of the housing, as defined un- der IRC, less the amount of any credit allowed under IRC. 3. Be used to acquire and prepare the site of the housing, ac- quire, construct, or rehabilitate the housing, or make public improvements directly related to the housing. 4. Be used to develop housing if the market value of the hous- ing does not exceed the lesser of: 150% of the average mar- ket value of single - family homes in that municipality, or $200,000 for municipalities located in the metropolitan area, as defined in the TIF Act, or $125,000 for all other municipali- ties; and if the expenditures are used to pay the cost of site acquisition, relocation, demolition of existing structures, site preparation, and pollution abatement on one or more par- cels, if the parcel contains a residence containing 1 to 4 family dwelling units that has been vacant for 6 or more months and is in foreclosure as defined Statutes, but without regard to whether the residence is the owner's principal residence, and only after the redemption period stated in the notice pro- vided under Statute has expired. Not only may the expenditures be made for activities outside of the TIF district, they may also occur outside of the project area/ development district. Since this authority is an expansion of ex- isting pooling authority, the determination of the funding capac- ity requires analysis of the other expenditures subject to pooling limitations. A critical limitation is the requirement to use the tax increments solely for expenditures related to qualifying housing for low /moderate income persons. FORECLOSED HOUSING The 2011 Amendments to the TIF Act expanded authority related to foreclosed housing. The expanded poling authority may be used to develop housing under the following criteria: 1. The parcel contains a residence containing 1 to 4 family dwelling units that has been vacant for 6 or more months and is in foreclosure (as defined in MN Statues, Section 325N.10, Subdivision 7), but without regard to whether the residence is the owner's principal residence, and only after the redemp- tion period stated in the notice provided under MN Statues, Section 580.06 has expired. 2. The market value of the housing does not exceed the lesser of: 150 % of the average market value of single - family homes in that municipality or $200,000 for municipalities located in the metropolitan area (as defined in MN Statues, Section 473.121) or $125,000 for all other municipalities. 3. The tax increments are used to pay the cost of site acquisi- tion, relocation, demolition of existing structures, site prepa- ration, and pollution abatement on one or more parcels. This authority expires on December 31, 2016. Increments may continue to be expended under this authority after that date, if they are used to pay bonds or qualifying binding contracts. For more information about the services available from Northland Strategies, please contact: Tammy Omdal Manager of Northland Strategies (612) 851 -4964 tomdal @northlandsecurities.com www.northlandsecurities.com /public finance /service s_ strategies The information in this summary is based on sources believed to be reliable, but does not purport to be complete and is not warranted by Northland Securities, Inc. (ASL 12 -308) EDA Agenda - 10/14/15 8. Consideration of authorizing a 2016 contribution to the Initiative Foundation. (AS) A. REFERENCE AND BACKGROUND The Initiative Foundation is requesting the Monticello EDA contribute a $2,300 partnership commitment to the organization for 2016. The requested amount represents a $50 increase over 2015's commitment. The EDA authorized a $2,250 contribution for 2015. The Initiative Foundation is a Central Minnesota community foundation providing financial assistance to the region's communities, businesses and non - profits. The EDA has been a contributing partner in this organization for a number of years, dating back to at least 2009. Included with the supporting data to this report is a statement regarding local economic impact resulting from Initiative efforts. Investments made by local communities in the Initiative Foundation have resulted in an economic impact of $9.15 for every dollar of investment in Wright County alone — an increase over 2015. $5.5 million has been returned to Wright County since the Foundation's inception. As the EDA will recall, ReSTOREing Downtown has received a grant from the Initiative Foundation to assist in their initial launch and promotion projects. Per State Statute, cities are able to contribute not more than $50,000 annually for promoting, advertising, improving, or developing the economic and agricultural resources of the city or town Al. Budget Impact: The investment of $2,300 for the proposed contribution would come from the 2016 EDA general fund, Dues and Memberships line item. As currently proposed at $10,000, the EDA will have sufficient funds in this line item to cover the estimated costs. A2. Staff Workload Impact: None. B. STAFF RECOMMENDATION City staff recommends approval of the contribution to the Initiative Foundation. The Foundation is a well known and established organization that provides economic growth support to Wright County. The City /EDA's continued support of their activity should be coupled with renewed efforts to utilize IF services. It is noted that given current staffing resources, there are opportunities through IF which have not been capitalized on over the past few years. Over the coming years, the ability to partner with the Foundation on downtown activities is an opportunity that should be explored and utilized to further the Embracing Downtown goals. C. ALTERNATIVE ACTIONS 1. Motion to approve contributing $2,300 of the 2016 EDA general fund to the Initiative Foundation. 2. Motion to deny contributing money to the Initiative Foundation. 3. Motion to table action for further research and discussion. A SUPPORTING DATA A. Initiative Foundation Letter of Request and Information (320)632 -9255 405 First Street SE Little Falls, MN 56345 June 19, 2015 City of Monticello 505 Walnut St Ste 1 Monticello, MN 55362 -8822 Dear Mayor Stumpf, Council Members and Mr O'Neill, Your partnership and support is beyond important to us. It's essential. As you know, the Initiative Foundation directs all of its resources to stimulate business growth, quality jobs, and a climate for economic success in Central Minnesota. We see many positive signs in the regional economy, and we believe that with your investment, 2016 will be a prime year for business start-up, expansion and hiring. The Initiative Foundation remains focused on strong local economies and vibrant communities. Our business financing programs have helped secure 1,032 quality jobs in Wright County. Our grants and leadership programs are providing a safety net for important nonprofit organizations, supporting at -risk businesses, and indirectly assisting displaced workers. Our Initiators' Fellowship Program, Emerging Leaders, and community leadership programs are preparing Central Minnesota's future workforce. Since 1986, donors in the Monticello community have received a 914% return on their Initiative Foundation investments, in the form of grants and economic development loans (see enclosed information). In light of our twenty -nine year performance history and demonstrated impact, we ask that you consider supporting the Initiative Foundation. We respectfully request that you consider a contribution by allocating $2,300 to the Initiative Foundation in your 2016 Budget. After your budget is finalized, could you please return the 2016 Endowment Confirmation Document in the enclosed envelope? Please contact us with questions or to request a staff presentation at an upcoming council meeting. Thank you your consideration. All the best, Kathy wY aal� President Enclosures l� r Eric Stommes Vice President for External Relations ifound.org 13 Powering Possible Equal opportunity lender provider and employer. Our Mission: Unlock the power of Central Minnesota people to build and sustain thriving communities. 405 First Street SE Little Falls, MN 5634 (877) 632 -9255 ifound.org 10 Powering Possible Initiative Foundation at work in WRIGHT COUNTY $601,9409 in local donations to the Initiative Foundation. $5*5 MILLION returned to Wright County in grants and loans. Return on Investment For every local dollar contributed, the Initiative Foundation has invested $9.15 back into Wright County. Economic Impact [1986 to present] - Awarded 250 grants totaling $1.3 million - 64 loans totaling $4.1 million - Secured 1,040 quality jobs - Leveraged $26 million in private business financing Equal opportunity lender. provider and employer. WRIGHT C highlight For a full fisting of Initiatiue Foundation investments in Wright County, Contact us at (877) 632 -9255. Grants Thriving Economy, Thriving Communities Annandale Area Community Team Big Brothers Big Sisters of Central MN, St. Cloud City of Clearwater City of Cokato City of Howard Lake City of Montrose City of Rockford City of Waverly Delano School District Friendship Ventures, Annandale Friendship Ventures, Annandale HIS Healing Heart, St. Michael Rivers of Hope, Monticello RiverWorks Community Development Organization, Rockford Wright County Economic Development Partnership, Rockford Community Field Day event College Bound Developing Leaders for Life Youth engagement Regional marketing for business retention and attraction Economic development project Small businesses consulting services Local businesses consulting support; business plan for Crow River Food Cooperative Downtown revitalization Auditorium restoration project (DCF) Operating support Camps of Courage & Friendship for Elk River Area (TRCF) Equine therapy for victims of abuse (TRCF) Empowerment and legal advocacy (TRCF) Strategic and business planning Business outreach Business Financing Local Ownership, Quality Jobs BK Properties dba IKER Manufacturing, LLC., St. Michael Bollin Properties, LLC. dba Cowgirl Tuff Company, Cokato Cinch Systems, Inc., St. Michael Maple Lake Veterinary Properties, LLC Plug Technologies, Hanover The Asphalt Company, Inc., Monticello Trilite Stone Compnay, Howard Lake Charitable Funds Activating Generosity CNC machining Western clothes wholesaler Hardware /software company Veterinary Clinic Manufacturer of rubber inflatable pipe plugs Asphalt coating and sealing Manufacturer & distributor of manmade stone exterior products Delano Area Community Foundation I Delano Emergency Family Fund i Manufacturing Fund of Central Minnesota I Minnesota Pioneer Park Endowment Fund I Wright County Historical Society Fund Technical Assistance Investing in Talent Eden Medical, Howard Lake Pellco Machine, St. Michael Patent application and support International sales and marketing analysis Community Action The Power of Partnership Cokato -based Cowgirl Tuff has anew 30,000- square -foot office and warehouse thanks in part to an Initiative Foundation construction loan. Cowgirl Tuff designs and distributes fashionable western apparel with an emphasis on comfort. The company distributes its products through a network of more than 1,700 stores nationwide. The city of Howard Lake is utilizing a $10,000 grant supported by a gift from the Xcel Energy Foundation and the Initiative Foundation to organize a new Chamber of Commerce, carry out downtown beautification, market its industrial park, enhance the lakeside Lions Park and complete a detailed retail area analysis. The Wright County Economic Development Partnership (WCEDP) is moving forward with plans for a Creating Entrepreneurial Opportunities (CEO) program for area youth. With help from an Initiative Foundation grant, the WCEDP will invite business and civic Leaders into the mentorship program that will offer students hands -on business experience and a chance to build their own start-up over the course of the year. updated 8.18.15 Projects Funded in Wright County (through 3/31/15) RECENT GRANTS AWARDED ... ORGANIZATION NAME CY 2015 City of Maple Lake City of Montrose City of Rockford Crow River Organization of Water Joint Powers, Buffalo Wright County Health & Human Services, Buffalo CY 2014 Annandale Area Community Team Central MN Jobs & Training, Monticello City of Cokato City of Montrose City of Rockford Cornerstone Women's Center, St. Michael* Friendship Venture, Annandale* HIS Healing Heart, St. Michael* Love Inc - Heartland, Delano MN Pioneer Park, Annandale* Rivers of Hope, Monticello* Rogers High School Band Booster Club* St. Cloud State University Wright County Economic Development Partnership, Rockford Wright County Economic Development Partnership, Rockford CY 2013 Annandale Area Community Team Big Brothers Big Sisters of Central MN, St. Cloud City of Clearwater City of Howard Lake City of Rockford City of Waverly Delano School District* Friendship Ventures, Annandale* Friendship Ventures, Annandale HIS Healing Heart, St. Michael* Rivers of Hope, Monticello RiverWorks Community Development Organization, Rockford Wright County Economic Development Partnership, Rockford CY 2012 Buffalo Housing Redevelopment Authority, Buffalo City of Clearwater City of Cokato City of Cokato City of Howard Lake City of Montrose City of Rockford Howard Lake Watershed Alliance Howard Lake - Waverly - Winsted School District MN Pioneer Park, Annandale* Wright County Economic Development Partnership, Rockford CY 2011 Central MN Jobs & Training, Monticello City of Howard Lake City of Montrose Family Education Center of Wright County, Buffalo Minnesota Pioneer Park, Annandale* Wright County Historical Society, Buffalo* PROJECT TITLE initiative F O U N D A T 1 0 N Industrial Park Feasibility Study Mixed Use Development Project Business Expansion & Development Engaging Generations X, Y & Z to Prevent AIS Early Childhood Dental Outreach Community Center Feasibility Study Workforce Devi, Education & Business Summit 2014 Regional Marketing for Business Retention & Attraction Small Businesses Consulting Services Local Businesses Consulting Support Wright County Pregnancy Resources (TRCF) Elk River Area Financial Assistance (TRCF) Equine Therapy for Elk River Area Families (TRCF) TOP Financial Resiliency through Social Enterprise Annandale Area Historical Park Operating Suppt (MPPEF) Adult Advocacy Program (TRCF) Student Scholarships & Instrument Upgrades (TRCF) Student Internship for Export Research Development of Marketing Materials Youth Entrepreneurial Training Opportunity Community Field Day Event College Bound Developing Leaders for Life Youth Engagement Economic Development Project Business Plan for Crow River Food Cooperative Downtown Revitalization Auditorium Restoration Project (DCF) Camps of Courage & Friendship for Elk River Area (TRCF) Operating Support Equine Therapy for Victims of Abuse (TRCF) Empowerment & Legal Advocacy (TRCF) Strategic & Business Planning Business Outreach Cooperative Food Market Feasibility Study Housing Feasibility Study Cokato Design Team Visit Six Cities United Thriving Communities Initiative Business Retension & Expansion Project Crow River Food Cooperative Market Study Riparian Restoration Buckets of Books -Early Childhood Literacy Operating Support (MPPEF) Project Building Capacity Camps to Careers for Monticello Area Youth Thriving Communities Partnership Montrose Business Development & Hwy 12 Revelopment Wright County Inside -Out Connections Coalition Operating Support (MPPEF) Support of the Wright County Historical Society (WCHS) AMOUNT $4,000 2,500 2,500 57,468 1,000 2,500 1,695 3,000 5,000 5,000 1,500 2,500 2,500 10,000 800 4,500 1,500 5,000 3,000 3,000 2,500 5,000 5,000 10,000 3,000 10,000 3,000 2,500 250 2,100 3,500 3,500 3,000 3,750 4,000 3,500 3,500 20,000 10,000 3,000 5,000 2,000 800 500 2,500 5,000 10,000 5,000 860 1,600 CY 2010 Beebe Lake Improvement Association, St. Michael Lakewide Curlyleaf Pondweed Mgmt 5,000 City of Annandale Business Retention & Expansion 2,500 City of Montrose Business Recruitment & Hwy 12 Redevelopment Impl 10,000 City of Rockford Promoting Business Stability 2,500 Delano Public Schools Youth as Resources 5,000 Family Education Center of Wright County, Buffalo Wright Cty Inside Out Connections Coalition 5,000 Love Inc. - Heartland HOP GrowStrong 14,000 Minnesota Pioneer Park, Annandale* Operating Support (MPPEF) 1,000 Minnesota Pioneer Park, Annandale* Operating Support (MPPEF) 1,000 Rivers of Hope, Monticello HOP StayStrong 7,500 RiverWorks Community Development Organization, Rockford HOP GrowStrong 14,000 The Salvation Army, Buffalo Wright County Emergency Services 1,000 FCY 2009 Annandale School District Youth as Resources 10,000 City of Delano Healthy Communities Partnership Training 10,000 City of Monticello Business Retention and Expansion Program 5,000 City of Montrose Highway 12 Redevelopment Implementation 10,000 City of Rockford Rockford Chamber of Commerce 2,000 Clearwater River Watershed District, Annandale Curlyleaf Pondweed Water Treatment 5,000 Delano Public Schools Youth as Resources 10,000 Delano Public Schools Youth as Resources 7,500 Faith in Action of Wright County, Buffalo 2009 Marketing & Volunteer Recruitment Campaign 2,200 Family Education Center of Wright County, Buffalo Wright County Inside -Out Connections Coalition 2,500 St. Michael /Albertville School District Mixed Roots 1,000 Sustainable Farming Assn., of Minnesota, Starbuck Garlic Festival at Howard Lake 1,000 Wright County Economic Development Partnership, Rockford Wright County Commuter Transit Study 5,000 Wright County Economic Development Partnership, Rockford Wright County CEDS Application 3,000 Wright Soil & Water Conservation District, Buffalo Healthy Lakes & Rivers Partnership Training 20,000 Wright Soil & Water Conservation District, Buffalo Camp Lake Phosphorus Filtration Project 5,000 FY 2008 Annandale Area Community Team HCP Implementation and Revisioning 10,000 City of Annandale Industrial Land Analysis 3,000 City of Hanover Implementation of Conservation Design 5,000 City of Montrose Healthy Communities Partnership Training 15,000 Minnesota Pioneer Park, Annandale* Operating Costs and Facilities Improvements (MPPEF) 4,400 PATH Minnesota, Monticello Wright County Crisis Nursery Caregiver Recruitment 2,500 The Salvation Army, Roseville Wright County Family Emergency Services 1,500 Wright County Community Action, Inc., Maple Lake Healthy Organizations Partnership Training (Mufti -Year) 6,500 FY 2007 Annandale Community Education Youth As Resources 15,000 Central MN Jobs & Training, Monticello Fundamental Manufacturing Skills Development Prog. 5,000 Central Minnesota Workforce Center, Monticello Central Minnesota Business Resource Directory 5,000 Economic Development Partnership of Wright Cty., Rockford Economic Dev. Finance Professional Certification 1,000 Minnesota Pioneer Park, Annandale * Facilities Improvements (MPPEF) 4,000 Rivers of Hope, Monticello Youth Advocacy Violence Intervention and Prevention 3,850 Rivers of Hope, Monticello Technology Enhancement Project 2,000 Sustainable Farming Association of MN, Howard Lake 2nd Annual Minnesota Garlic Festival 1,000 Wright County, Buffalo Medical Minds and Meth Conference & MEADA Efforts 10,000 Wright County Soil & Water Conservation District, Buffalo Healthy Lakes & Rivers Partnership Training 20,000 Wright County Soil & Water Conservation District, Buffalo Granite Lake Stormwater Management Project 5,000 Zion Lutheran Church, Buffalo FY 2006 Faith In Action of Wright County Expansion 5,000 Annandale Health & Community Services Faith In Action of Wright County 7,500 City of Annandale Community Initiatives Support 16,653 Delano Public Schools Youth As Resources 15,000 Maple Lake Public Schools Intergenerational Connections 5,000 Sugar Lake Association, Annandale Lake Vegetation Management Plan 5,000 Sustainable Farming Association of MN, Starbuck 2006 Minnesota Garlic Festival 1,000 FY 2006 - PRESENT (99): $595,926 PRIOR YEARS (151): $742,881 TOTAL GRANTS (250): $1,338,807 * Denotes awards made from a Turn Key fund of the Initiative Foundation, in parenthesis. (See Key) RECENT BUSINESS FINANCING INVESTMENTS: BUSINESS NAME CY 2015 Wolf Auto, LLC (Citizens State Bank) CY 2014 BK Properties LLC, St. Michael (The Bank of Elk River) Maple Lake Veterinary Properties LLC (Wells Fargo) The Asphalt Company, Inc., Monticello (Falcon Nat'l Bank) CY 2013 Bollin Properties, LLC, Cokato (First MN Bank) Plug Technologies, Hanover FCY 2009 Cinch Systems, Inc., St. Michael (Great Northern Bank, St. Michael) Cinch Systems, Inc., St. Michael (Great Northern Bank, St. Michael) Cinch Systems, Inc., St. Michael (Great Northern Bank, St. Michael) Tapper's Inc., Monticello; (Stearns Bank) FY 2008 Trilite Stone Compnay, Howard Lake (Bremer Bank, Minneapolis) FY 2007 Adjust to Wellness, PLLC, Waverly (Citizens State Bank of Waverly) Snap Fitness, Howard Lake (Citizens State Bank of Waverly) Trillite Stone Company, Howard Lake FY 2006 John's Collision, Howard Lake (First Community Bank, Lester Prairie) Tapper's Inc., Monticello; (Stearns Bank) TriLite Stone Company, Inc. (Bremer Bank, St. Louis Park) Women's Fitness Express, Albertville (Citizens State Bank of Waverly) BUSINESS TYPE LOAN TYPE Auto Repair Shop Existing CNC Machining Mfg Start-up Veterinary Clinic Existing Asphalt Coating & Sealing Existing Western Clothes Wholesaler Existing Working Capital Start-up Hardware /Software Company Start-up Hardware /Software Company Existing Hardware /Software Company Existing Manufacturer of Custom Cabinetry Existing Manufacturer & Distributor of Manmade Stone Exterior Existing Products Chiropractic Office Start-up Fitness Center Start-up Stone Exterior Manufacturer & Distributor Existing Autobody /Collision Repair Shop Start-up Cabinet Manufacturing & Parts Distribution Existing Manufacturing of Stone Products Existing Women's Fitness Center Existing FY 2006 -PRESENT (18): $1,766,400 PRIOR YEARS (46): $2,307,012 TOTAL LOANS (64): $4,073,412 Total Business Investment Leveraged: $25,997,835 Total Jobs Created or Retained: 1,040 GRAND TOTAL OF GRANTS & LOANS IN WRIGHT COUNTY $5,412,219 For business start -up and expansion projects, Initiative Foundation Business Financing Investments meet the "gap" between the financing a local lender is able to provide and the equity the owner is able to contribute. By offering gap financing to supplement owner equity and taking a position as a subordinate lender, Initiative Foundation business financing programs are a tool to help lending institutions better serve local businesses. Economy. Community. Philanthropy. The Initiative Foundation: Empowering People to Build, Sustain Healthy Communities Formed in 1986 by a partnership of regional leaders and The McKnight Foundation, the Initiative Foundation is one of six unique, nonprofit Minnesota Initiative Foundations serving the regions of Greater Minnesota. We believe local people - not outside organizations - have the necessary enthusiasm, knowledge and relationships to achieve a brighter future. Good Works Supported By Sound Strategy The Foundation's strategic framework is based on the philosophy that economy, com- munity and philanthropy are intertwined. This three - pillared approach helps us to collaborate in truly meaningful ways to unlock the power of each community and all of Central Minnesota. Our charitable work is supported by a spectrum of public and individual donors. Earn- ings from investments in the Foundation's operations and permanent endowment are returned to Central Minnesota communities through grants, programs and business financing. We are proud to serve the 14 counties of Central Minnesota that include 160 hometowns and two tribal nations, each with its own unique character and local assets. Economy Woven into our fabric is the firm belief that a qualityjob is the most essential element of a stable family and a strong community. We offer business loans to secure qualityjobs, and we invest grants in workforce training to fill these job opportunities. Our goal is to support local business growth and attract new revenue to the region. BUSINESS FINANCING, CONSULTING I MAN UFACTU RING, TECHNOLOGY AND EXPORTING J ECONOMIC, WORKFORCE DEVELOPMENT GRANTS Community 1 Central Minnesota is defined by its quality of life — the special people, places and or- ganizations of each hometown. We gather business, nonprofit and government leaders a a to identify and enhance these unique assets. Working together, we inspire community service and plan for a brighter future. COMMUNITY VISIONING AND PLANNING I NONPROFIT TRAINING AND CONSULTING I GRANTS TO SUPPORT QUALITY OF LIFE ^I�il ;Tttitr , >� We help donors give back to Central Minnesota and leave a permanent legacy. Every donated dollar is matched by The McKnight Foundation and returns more an average of $4.52 in grants, loans and scholarships to the region. We also work with families, busi- nesses and nonprofits to create named funds that support their favorite charities. DONOR SERVICES I TURN KEY CHARITABLE FUNDS PROFESSIONAL INVESTMENT OVERSIGHT TAX- ADVANTAGED GIFTS For more information, contact: Initiative Foundation Initiative (877) 632 -9255 info @ifound.org FOUNDATION ifound.org (877) 632 -9255 405 First Street SE Little Falls, MN 56345 4 n oNP , I y1-n ,, 1—der znd Cn,p over Partnership Ideas Six ways that the Foundation can serue local gouernments... Apply for a Grant ` The Foundation awards quarterly grants ($5,000 average) to projects that: • Help communities address barriers to business growth and employment • Advance economic self - sufficiency for vulnerable children and families • Support training programs for future, displaced or underemployed workers • Help businesses survive and grow through access to consulting services and education • Help communities improve efficiencies through shared services Refer Businesses for Financing The Foundation partners with other lenders to make business Loans that create quality jobs. We can help coordinate financing packiages, subsidize management training for borrowers, and serve as a key piece of the puzzle that enables a local business to start up or expand. 3 Engage Citizens & Train Leaders The Foundation hosts programs, workshops and Leadership discussions related to community planning, economic development, nonprofit management, early childhood and environmental preservation. Our newest effort is the Thriving Communities Initiative that connects the public and private sectors to address economic growth and recovery. 4 Recover from Disasters If your community experiences a tornado, flood or other disaster, please call the Foundation immediately. We can host and promote a charitable relief fund, accept online donations, and make distributions at no charge. Timing is critical to take advantage of news media reports. We can also provide grants and staff assistance for community recovery and rebuilding. 5 Start a Community Foundation From 2011 to 2030, nearly $48 billion may be passed from one generation to the next in central Minnesota. Does your community have a local foundation to accept gifts, bequests or even real estate? We host these funds and often provide matching gifts incentives. Community foundations are wonderful resources that provide local dollars and promote generosity. 6. Find Solutions If you are facing a unique challenge, we are usually able to refer you to professional ex- pertise, possible funding sources, or other organizations that have had similar experiences. Just give us a call! Initiative F 0 U N D A T 1 0 N ►found.org 1 (877) 632 -9255 1 405 First Street SE I Little Falls, MN 56345 Eq.M Opp-oNly Lender. P, de, and Employer mm Economic Development `� Fr Business Financing Since its inception in 1986, the Initiative Foundation has been involved in economic and community development initiatives to support healthy, sustainable community living that includes access to quality jobs. • We partner with community development efforts through training and capacity- building programs as well as grants in support of community planning and projects. • We support economic development through business financing activities designed to create living -wage jobs, diversify local economies and leverage private sector investment. The Initiative Foundation's Business Financing programs meet the "gap" between the financing a local lender is able to provide and the equity the owner is able to contribute. By offering gap financing to supplement owner equity and taking a position as a subordinate lender, Initiative Foundation business financing programs are a tool to help lending institutions better serve local businesses. The Foundation focuses resources on financially sound businesses with clear impacts: • Creation and retention of quality living -wage jobs with benefits • Business contributes to a strong and diversified local economy • Project supports local community's economic development objectives Business Loan Fund Our Business Loan Fund fills the gap in financing packages up to $250,000 for new or expanding companies that show potential for qualityjob creation or retention. Targeted industries include manufacturing, technology -based business sectors and value -added agriculture. (Eligible uses: real estate, equipment and working capital) Green Business Loan Fund The Green Business Loan Fund supports entrepreneurial ventures up to $250,000 by financing new or expanding businesses that deliver a product /service that protects or preserves the environment, reduces or recycles an existing waste stream or reduces energy demands /costs. (Eligible uses: real estate, equipment, and working capital) Lender Match Loan Program The Initiative Foundation provides up to $50,000 of subordinated financing to match the senior financing provided by a financial institution issued under its standard loan policy guidelines. The combined financing of both loans may not exceed 100 percent of the total financing package or value of assets. (Eligible uses: to provide crucial capital to eligible businesses, to purchase equipment, real estate, and working capital. Nonprofit Loan Program The Initiative Foundation provides financing up to $50,000 to eligible nonprofit organizations for the creation or expansion of mission - related earned - income /social enterprise activities. Loan proceeds may be used for working capital, equipment acquisition and /or facility improvements for earned - income /social enterprise activities, which are clearly defined in a written business plan. (Eligible uses: include, but not limited to community development, human services, health care, housing, education, environmental, arts and humanities. Technology Capital Fund The Technology Capital Fund supports emerging technology ventures up to $500,000 and helps established businesses integrate proven productivity applications into operations. (Eligible uses: Fixed assets, working capital, commercialization of new product launch and productivity- enhancing software systems) For more information, contact: Dan Bullert Business Finance Manager Initiative (320) 631 -2013 1 dbullert@ifound.org FOUNDATION ifound.org 1 (877) 632 -9255 1 405 First Street SE I Little Falls, MN 56345 if,_, Opportu niy Lender, Provider, and Employer Thriving Organizations Partnership Prouiding Programs, Training To Help Central Minnesota Nonprofits Thrive Designed to help nonprofit organizations navigate the new economy, the Foundation's Thriving Organizations Partnership strives to improve the fiscal health of nonprofit organizations that improve the quantity and quality of nonprofit services, particularly those that reduce barriers to employment, while strengthening board members' abilities to govern the organizations they serve. PROGRAMS Financial Resiliency & Social Enterprise: A financial leadership and social enterprise training program designed for weLL- established nonprofits. Participating organizations receive a combination of training, technical assistance, professional consultation and first -year planning grants. Leaders Circles: Professionally facilitated small groups of nonprofit peers coming together to build leadership and support. Available to all 501(c)(3) nonprofit organizations serving the 14- counties of Central Minnesota. Open Office Hours: Access to professional services in the areas of board development, strategic planning, financial management, business planning, evaluation, nonprofit Law and technology. Available to all 501(c)(3) nonprofit organizations serving the 14- counties of Central Minnesota. VISTA: VISTA members help nonprofit agencies develop, expand and coordinate services and programs designed to help Low - income people become more self - sufficient and address poverty - related issues within communities. ifoundtraining.org: Experience affordable, easy -to- access online training courses for everything from starting a new nonprofit organization to creating a solid Leadership succession plan at ifoundtraining.org. ifound.org 1 (877) 632 -9255 1 405 First Street SE I Little Falls, MN 56345 OUR COMMITMENT Thriving nonprofit organizations are critical to strong economies and strong communities. They work to remove barriers to employment, create livable wage jobs, provide job - skills training, build financial Literacy, enhance local economic development, provide safety net services and assist in the placement of thousands of unemployed and underemployed rural residents. For more information, contact: (320)632 -9255 Initiative F 0 U N D AT 1 0 N Equal Opportunity Lender, Povid,,,,,d Employer 8.18.15 %ifThriuing Communities Initiatiue (TCZ): Fast Track The Initiative Foundation's Thriving Communities Initiative (TCI) partners with central Minnesota communities to engage local leaders and citizens in planning for the future. The Foundation believe that courageous leadership, positive community dialog and growing civic engagement are the keys to a thriving community. Throughout this program, each group is challenged to examine how to integrate community develop- ment to ensure all segments are appropriately represented (graphic below). Based on the premise that everyone who is affected by a decision should have an opportunity to be involved in the deci- sion- making process; inclusive community dialog is critical to the visioning and planning processes across generations and ethnicities. This 90 day, comprehensive program helps communities identify their unique assets, challenges and goals in five steps; Step 1: Core Team Training (4 hours, plus coursework) Step 2: Community Input Meeting (3 hours) Step 3: Review and Discuss Community Priorities (2 hours) Step 4: Organize Three Task Forces and Begin Training (4 hours, plus research) Step 5: Ongoing Technical Assistance and Grants for Implementation (ongoing) PROGRAM The Initiative Foundation provides each community with training, technical assistance and resource referral. Because participants of TCI communities work in concert to achieve goals, identified at the grassroots level, the Initiative Foundation will help identify matching funds to move community projects forward. PROCESS TCI begins by providing innovative training to diverse Leadership teams dedicated to involving citizens in building a brighter future for their community. Each team is responsible for leading their community through a place based process that results in the development and implementation of a locally shared vision and action plans. PARTICIPATE Participation in this program is a TCI is offered annually through a competitive selection process. Eligible communities must be located within the Foundation's 14- county region. For more information, contact: Dan Frank Sr Program Manager for Community & Economic Development (877) 632 -9255 1 dfrankoifound.org ifound.org 1 (877) 632 -9255 1 405 First Street SE I Little Falls, MN 56345 Initiative i e FOUNDATION Equal Opportunity Lender, Provider, and E,np toyer EDA Agenda - 10/14/15 9. Consideration of review and action as related to TIF 1 -35. (AS) A. REFERENCE AND BACKGROUND The EDA is asked to provide staff and the developer with direction as related to Tax Increment Financing District 1 -35. TIF 1 -35 was certified in 2006, and was created to fund $170,000 in development costs associated with the development of an 11,000 square foot retail commercial project known as "Landmark Square II ". The project includes a single parcel located at the northwest corner of Yd and Locust Streets. The tax increment generated in the district was intended to reimburse the developer for land acquisition through "pay -as- you -go" assistance. The original contract for private redevelopment required a date for commencement of development of October 1, 2005 and completion of minimum improvements, including the 11,000 retail center and associated parking, by December 31, 2006. In 2006, due to "unavoidable delays ", the contract was amended to reference a later required commencement date and a minimum improvements completion date of December 31, 2008. Then, in 2007, the contract was again amended, to delay the commencement date and provide for a completion date for minimum improvements by December 31, 2009. Accordingly, the contract amendments also included language amending the commencement of TIF installment payments to later dates. The contract has not been amended since 2007. To -date, the developer has not met the obligations of the contract, as last amended. The City sent a letter in August of 2015 to the developer requesting information on development goals for the district. The developer has responded requesting a discussion with the EDA on possible options. Staff has consulted with the EDA's attorney at a preliminary level on the matter. At this time, there are two primary options related to development of the district as originally intended and per the adopted TIF Plan. The developer may formally request a third amendment to the development contract to again delay the commencement and completion dates, or the EDA can declare the developer in default and proceed with the remedies as described in the contract. While other possible scenarios exist, these options are dependent on the developer's plans for the site, if different from that in the TIF Plan. If the developer seeks to develop a project other than the 11,000 square foot retail project, the related options likely require more involved conversations between the EDA, the developer, and the EDA attorney. Therefore, depending on developer input as to the nature of intended development on the site, a third option is to table action and direct staff to work with the developer and EDA attorney on alternatives related to those development plans. The developer will be present to answer questions of the EDA regarding the proposed project. It should be noted that language as written in the TIF 1 -35 Plan states that increment will be collected for 26 years from the date of first collection. The Finance Director has confirmed that no increment has been generated for the parcels since the date of certification. As such, the language as written seems to suggest that the district retains all 26 years of increment capture ability at present. TIF District 1 -35 has met the four year knock -down requirement, as the three residential homes originally located on the parcel were either demolished or relocated. An obligation for the district has also been created, given the contract for development. As such, the five -year rule has also been met. Finally, the EDA will note that no increment has been paid to the developer, given that no increment has been generated in the district. Al. Budget Impact: None at this time. The district allows for up to 10% of increment collected to be used to cover administrative expenses. As such, consulting time spent to explore other options could be recovered through future increment. A2. Staff Workload Impact: An estimated 4 -6 hours of staff time has been spent to -date in research and communication on this district. B. STAFF RECOMMENDATION Staff does not recommend declaring a default at this time. Additional information from the developer will be necessary in order to proceed with an amendment to the contract for private redevelopment or other alternative. C. ALTERNATIVE ACTIONS 1. Motion to direct staff to work the developer and attorney as related to a third amendment to the Contract for Private Redevelopment. 2. Motion to send a formal notice of default to the developer and to proceed with the remedies as described in the Contract for Private Redevelopment. 3. Motion to table this item and to direct staff to research additional options with the developer and the EDA attorney. D. SUPPORTING DATA A. Letter to Developer, August 5t', 2015 B. Developer Response, September 28th, 2015 C. Contract for Private Redevelopment D. Amendment to Contract for Private Redevelopment E. Second Amendment to Contract for Private Redevelopment F. TIF Plan 1 -35, excerpt G. TIF Management Plan, excerpt for TIF 1 -35 2 CITY OF f 1 Mont e August 5, 2015 Master's Fifth Avenue, Inc. 204 Locust Street, Suite 209 Monticello, MN 55362 Attn: Barry D. Fluth, President BY REGISTERED MAIL Re: Contract for Private Redevelopment, TIF 1 -35 Dear Mr. Fluth: PHONE: 763 -295 -2711 FAx:763- 295 -4404 505 Walnut Street Suite' Monticello, MN 55362 It has recently come to our attention that construction of the Minimum Improvements, pursuant to the Contract for Private Development between you (the "Developer ") and the Housing and Redevelopment Authority in and for the City of Monticello (as subsequently assigned to the EDA) dated as of September 7, 2005, as amended by a First Amendment dated as of June 7, 2006 and a Second Amendment dated as of December 18, 2007 (as so amended, the "Contract "), has not been completed as of the required completion date of December 31, 2009. Failure to complete the minimum improvements represents a default under the terms and conditions of the Contract. Section 4.3 of the Contract, as amended, provides that the Developer must commence construction of the Minimum Improvements by May 31, 2009 and substantially complete construction of the Minimum Improvements by December 31, 2009. Section 9.1 of the Contract defines Events of Default to include "failure by any party to observe or perform any covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement." This letter is not a formal notice of default. The EDA respectfully requests that you provide written correspondence relating to the intended timeline to remedy this default and/or other requested action relating to the contract. This information is requested no later than September 30'`, 2015. If a response is not received by that date, the EDA may consider additional action, including a letter of formal notice of default! Please contact me if you have any questions regarding this letter. Very truly yours, go Jeff O'Neill Executive Director City of Monticello Economic Development Authority Encl cc. Martha Ingram, Special Counsel to the EDA www.ci.monticellamn.us MASTER'S FIFTH AVENUE, INC. 19577 180TH AVE NW BIG LAKE, MN 55309 September 28, 2015 City of Monticello 505 Walnut Street, Suite I Monticello, MN 55362 Attention: Jeff O'Neill Re: Contract for Private Redevelopment, TIF 1 -35 Dear Mr. O'Neill Thank you for your letter of August 17th. Although the initial plans for the redevelopment of this property did not proceed as anticipated, we are still pursuing various options to bring alternate plans to fruition. I propose that the EDA and our company meet to agree on various options that will accomplish both of our goals for this district and the betterment of Monticello. This may include extending or altering the dates and timelines originally agreed upon or any other positive ideas that may come as a result of our meetings. Please let us know how soon we can meet to discuss these important issues. Thank you foryour cooperation in this matter. Master's Fifth Avenue, Inc. .r �4� EXECUTION COPY CONTRACT FOR PRIVATE DEVELOPMENT By and Among MASTERS FIFTH AVENUE, INC. and HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MONTICELLO and Dated as 2005 This document was drafted by: KENNEDY & GRAVEN, Chartered (MTN) 470 US Bank Plaza 200 South Sixth Street Minneapolis, Minnesota 55402 Telephone: (612) 337 -9300 MTN- 267260v 10 MN 190 -115 TABLE OF CONTENTS ARTICLE I DEFINITIONS ----------------------.----------....2 ARTICLE II REPRESENTATIONS AND WARRANTIES ..---...—.-----.---.--5 Section 2.l. Representations by the --.---__--.-----...--------5 ARTICLE III �� ' � ^.~`"__-_--~-` PROPERTY; Status nfthe Development Property .............................................................. 7 Section 3.2. Soil Conditions ............................................................................................... 7 Section 3.3. Payment of Administrative Costs .................................................................. 7 Section 3.4. Financing of Land Acquisition Costs ............................................................ 7 Section 3.5. Additional Public Assistance ......................................................................... 8 Section 3.6. Business --...--------,.,---..----...9 ARTICLE IV OF MINIMUM IMPROVEMENTS .............................. Il Section 4.l. Construction of Improvements _—.....,....-~.—..--_........_.----...11 Section 4.2. Construction Plans ..................................... ................................................... }T Section 4`3. Commencement and Completion of ......................................... 12 ARTICLE V INSURANCE AND CONDEMNATION —.---.'—.---.-----'---..}4 ARTICLE VI TAX INCREMENT; TAXES ..................................................... ...................... l6 Section 6.l. Right to Collect Delinquent Taxes ................................................................. }6 ARTICLE V11 FINANCING -----.—..—..----_--..---..---..----_------l7 Section 7. Mortgage Financing --.—..—.--.....-------..—..—.--..~.----..}7 A RIH -%CLE2 1 1,7111 AGAINSIF AND INDEMNIFICATION ....................................................................................... l8 Section 8'}. Representation as to -----------.----------..18 Section @.2. Prohibition Against Developer's Transfer 9f Property and Assignment 0fAgreement ................................................................................................. l8 NoN-27260v|V MN 190-115 ARTICLE IX EVENTS OF DEFAULT ...................................................... .............................21 Section 9.1. Events of Default Defined ................................................ .............................21 Section 9.2. Remedies on Default ......................................................... .............................21 Section 9.3. No Remedy Exclusive ....................................................... .............................21 Section 9.4. No Additional Waiver Implied by One Waiver ................ .............................22 ARTICLE X ADDITIONAL PROVISIONS ............................................. .............................23 Section 10.1. Conflict of Interests; Authority Representatives Not Individually Liable ..... 23 Section 10.2. Equal Employment Opportunity ....................................... .............................23 Section 10.3. Restrictions on Use ........................................................... .............................23 Section 10.4. Provisions Not Merged With Deed ................................... .............................23 Section 10.5. Titles of Articles and Sections .......................................... .............................23 Section 10.6. Notices and Demands ....................................................... .............................23 Section 10.7. Counterparts ...................................................................... .............................24 Section10.8. Recording .......................................................................... .............................24 Section 10.9 Choice of Law and Venue ................................................. .............................24 Section 10.10 Attorney Fees .................................................................... .............................24 Section 10.11 Entire Agreement .............................................................. .............................24 SIGNATURES TESTIMONIALS EXHIBIT A Legal Descriptions EXHIBIT B Certificate of Completion MTN- 267260v I 0 11 MN 190-115 CONTRACT FOR PRIVATE DEVELOPMENT THIS CONTRACT FOR PRIVATE DEVELOPMENT is made this 1) Y" day of 2005, by and between. 1HE HUOSING AND REDEVELOPMENT AUTHORITY IN AND FOR CITY OF MONTICELLO, MINNESOTA, a public body corporate and politic under the laws of Minnesota (the "Authority "), and MASTERS FIFTH AVENUE, INC., a Minnesota corporation (the "Developer "). WITNESSETH: WHEREAS, the Authority has undertaken a program to promote economic development and job opportunities and to promote the development of land which is underutilized within the City of Monticello, Minnesota (the "City "), and in this connection created Redevelopment Project No. 1 (the "Project ") in an area (the "Project Area ") located in the City and Tax Increment Financing District No. 1 -35 (the "TIF District") within the Project Area, all pursuant to Minnesota Statutes: Sections 469.001 to 469.047 (the "Act ") and Minnesota Statutes, Sections 469.174 to 469.179; and WHEREAS, pursuant to the Act, the Authority is authorized to undertake certain activities to prepare such real property for development by private enterprise; and WHEREAS, in order to achieve the objectives of the Redevelopment Plan for the Project the Authority is prepared to pay certain Land Acquisition Costs in order to bring about development in accordance with the Redevelopment Plan and this Agreement; and WHEREAS, the Developer proposes to construct an approximately 11,000 square foot retail center with associated parking known as "Landmark II" in Tax Increment Financing District No. 1 -3 5 in the Project Area; and WHEREAS, the Authority believes that the development of the Project Area pursuant to this Agreement, and fulfillment generally of this Agreement, are in the vital and best interests of the City and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of the applicable State and local laws and requirements under which the Project has been undertaken and is being assisted. NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: hTTN- 267260v 10 MN190 -115 ARTICLE I Definitions Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the context: "Act" means Minnesota Statutes, Sections 469.001 to 469.047, as amended. "Adjacent Property" means the real property located in TIF District No. 1 -22 upon which Developer will construct parking to serve Landmark Square I and II. "Agreement" means this Contract for Private Development, as the same may be from time to time modified, amended, or supplemented. "Authority" means the Housing and Redevelopment Authority in and for the City of Monticello, Minnesota. "Business Subsidy Act" means Minnesota Statutes, Section 1161993 through 116J.995, as amended. "City" means the City of Monticello, Minnesota. "Certificate of Completion" means the certification provided to the Developer, or the purchaser of any part, parcel, or unit of the Development Property, pursuant to Section 4.4 of this Agreement. "Construction Plans" means the plans, specifications, drawings and related documents on the construction work to be performed by the Developer on the Development Property which (a) shall be as detailed as the plans, specifications, drawings and related documents which are submitted to the appropriate building officials of the Authority, and (b) shall include at least the following: (1) site plan; (2) foundation plan; (3) basement plans; (4) floor plan for each floor; (5) cross sections of each (length and width); (6) elevations (all sides); (7) landscape plan; and (8) such other plans or supplements to the foregoing plans as the Authority may reasonably request to allow it to ascertain the nature and quality of the proposed construction work. "County" means the County of Wright, Minnesota. "Developer" means Masters Fifth Avenue, Inc., a Minnesota corporation, or its permitted successors and assigns. "Development Property" means the property legally described at Exhibit A. After the construction of the Minimum Improvements, the term shall mean the Development Property as improved. MTN- 267260v ] 0 2 MN190 -11 "Event of Default" means an action by the Developer listed in Article IX of this Agreement. "Holder" means the owner of a Mortgage. "HRA Act" means Minnesota Statutes, Sections 469.001 to 469.047, as amended. "Material" means any effect or change which significantly alters the intended use of the Development Property, or increases or decreases the costs of any individual item of the Minimum Improvements by more than $100,000. "Minimum Improvements" means the construction on the Development Property of an approximately 11,000 square foot retail center, with associated parking, known as Landmark Square II, and associated parking on an adjacent parcel ( "Adjacent Property "). "Mortgage" means any mortgage made by the Developer which is secured, in whole or in part, with the Development Property and which is a permitted encumbrance pursuant to the provisions of Article VIII of this Agreement. "Project" means Redevelopment Project No. 1. "Project Area" means the real property located within the boundaries of the Project. "Redevelopment Plan" means the Authority's Redevelopment Plan for Redevelopment Project No. 1, as it may be modified. "State" means the State of Minnesota. "Tax Increment" means that portion of the real property taxes which is paid with respect to the Development Property and which is remitted to the Authority as tax increment pursuant to the Tax Increment Act. "Tax Increment Act" or "TIF Act" means the Tax Increment Financing Act, Minnesota Statutes, Sections 469.174 to 469.179, as amended. "Tax Increment District" or "TIF District" means Tax Increment Financing District No. i -35. "Tax Increment Plan" or "TIF Plan" means the tax increment financing plan for Tax Increment Financing District No. 1 -35, as approved September 12, 2005, and as it may be amended. "Tax Official" means any County assessor; County auditor; County or State board of equalization, the commissioner of revenue of the State, or any State or federal district court, the tax court of the State, or the State Supreme Court. "Termination Date" means the earliest of. (i) February 1, 2033; (ii) the date on which the Developer has been fully reimbursed for the Land Acquisition Costs (as defined in Section 3.4 of MTN- 267260v C 0 3 MN 190-115 this Agreement); or (iii) the date this Agreement has otherwise been terminated in accordance with its terms. "Unavoidable Delays" means delays beyond the reasonable control of the party seeking to be excused as a result thereof which are the direct result of strikes, other labor troubles, prolonged adverse weather or acts of God, fire or other casualty to the Minimum Improvements, litigation commenced by third parties which, by injunction or other similar judicial action, directly results in delays, or acts of any federal, state, or local governmental unit (other than the Authority in exercising its rights under this Agreement) which directly result in delays. Unavoidable Delays shall not include delays in the Developer's obtaining of permits or governmental approvals necessary to enable construction of the Minimum Improvements by the dates such construction is required under Section 4.3 of this Agreement. MTN- 267260v I 0 4 MN 190 -11 ARTICLE II Representations and Warranties Section 2.1. Representations by the Authority. The Authority makes the following representations as the basis for the undertaking on its part herein contained. (a) The Authority is a housing and redevelopment authority created under Minnesota Statutes sections 469.001 — 469.047 ( "HRA Act ") and has the power to enter into this Agreement and carry out its obligations hereunder. (b) The activities of the Authority are undertaken for the purpose of promoting economic development and job creation and fostering the development of certain real property within its project areas which for a variety of reasons is presently under - utilized and under- developed_ Section 2.2. Representations and Warranties by the Developer. The Developer represents and warrants that: (a) The Developer is a corporation duly organized and in good standing under the laws of the State, is not in violation of any provisions of its corporate documents or the laws of the State, is duly authorized to transact business within the State, has power to enter into this Agreement, and has duly authorized the execution, delivery and performance of this Agreement. (b) The Developer will construct, operate, and maintain the Minimum Improvements in accordance with the terms of this Agreement, the Redevelopment Plan, and all local, state, and federal laws and regulations (including, but not limited to, environmental, zoning, building codes, and public health laws and regulations). (c) The Developer has received no notice or communication from any local, state, or federal official that the activities of the Developer or the Authority in the Project Area may be or will be in violation of any environmental law or regulation_ The Developer is aware of no facts the existence of which would cause it to be in violation of or give any person a valid claim under any local, state, or federal environmental law, regulation or review procedure. (d) The Developer will construct the Minimum Improvements in accordance with all local, state, and federal energy - conservation laws and regulations. (e) The Developer will obtain, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner, all requirements of all applicable local, state and federal laws and regulations which must be obtained or met before the Minimum Improvements may be lawfully constructed. (f) Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fiilfillment of or compliance with the terms and MTN- 267260v 10 5 MN 190-115 conditions of this Agreement is prevented, limited by or conflicts with or results in a breach of, the terms, conditions or provisions of any partnership restriction or any evidences of indebtedness, agreement or instrument of whatever nature to which the Developer is now a party or by which it is bound, or constitutes a default under any of the foregoing. (g) The proposed development by the Developer hereunder would not occur but for the tax increment financing assistance being provided hereunder. (h) The Developer shall promptly advise the Authority in writing of all litigation or claims affecting any part of the Minimum improvements and all written complaints and charges made by any governmental authority materially affecting the Minimum Improvements or materially affecting Developer or its business which may delay or require changes in construction of the Minimum Improvements. (i) The Developer did not obtain a building permit for any improvements to the Development Property prior to the date of approval of the TIF Plan. 0) The Developer is not currently in default under any "business subsidy agreement" with any "grantor ", as such terms are defined in the Business Subsidy Act. MTN- 267260v 1 a 6 MN 19© -11 ARTICLE III Acquisition of Property; Financial Assistance Section 3.1. Status of the Development Pro e�rty. As of the date of this Agreement, the Developer has already purchased the Development Property pursuant to that certain Preliminary Development Agreement among the Developer and the Authority dated September 14, 2004, in anticipation of this Agreement. The Authority- shall have no obligation to purchase the Development Property or any portion thereof Section 3.2. Soil Conditions. The Developer acknowledges that the Authority makes no representations or warranties as to the condition of the soils on the Development Property or its fitness for construction of the Minimum Improvements or any other purpose for which the Developer may make use of such property. The Developer further agrees that it will indemnify, defend, and hold harmless the Authority, the City, and their governing body members, officers, agents, servants, and employees, from any claims or actions arising out of the presence, if any, of hazardous wastes or pollutants on the Development Property. The Developer's obligations under this Section 3.2 shall survive termination of this Agreement. Section 3.3. Payment of Administrative Costs. The Developer agrees that it will pay upon demand by the Authority, Administrative Costs (as hereafter defined). For the purposes of this Agreement, the term "Administrative Costs" means out -of- pocket costs incurred by the Authority and attributable to or incurred in connection with the negotiation and preparation of this Agreement and other documents and agreements in connection with the development contemplated hereunder. Out -of- pocket Administrative Costs shall be evidenced by invoices, statements, or other reasonable written evidence of the costs incurred by the Authority. As of the date of this Agreement, the Developer has deposited $7,500 with the Authority to be applied toward Administrative Costs. The amount by which this deposit exceeds the Authority's actual Administrative Costs, if any, shall, upon demand by the Developer, be returned to the Developer, but no earlier than the date on which the Developer receives a Certificate of Completion pursuant to Section 4.4 of this Agreement. Section 3.4. Financing of Land Acquisition Costs. In order to make development of the Minimum Improvements economically feasible, the Authority will reimburse the Developer for the Land Acquisition Costs (hereby defined as the Developer's cost of acquiring the Development Property, not to exceed $170,000 net present value) from Available Tax Increment (as defined below) from Tax Increment District No 1 -35 in accordance with the following terms and conditions: (a) Subject to the terms and conditions of this Agreement, the Land Acquisition Costs will be reimbursed to the Developer with simple interest thereon at 6.50% per annum, interest commencing to accrue on the date that the Developer complies with the cost certification requirement described in paragraph (fl of this Section. The Land Acquisition Costs will he reimbursed by the Authority to the Developer in semi - annual installments payable on each February 1 and August 1 ( "Payment Dates ") commencing August 1, 2008 and concluding no later than the Termination Date. These payments will be made from Available Tax Increment as defined in this Section 14 and from no other source. MTN- 267260 l0 7 NIN 190 -115 (b) The term "Available Tax Increment" means 90% of the Tax Increment with respect to the Development Property as calculated by the County and paid to the Authority during the six months preceding any Payment Date, (c) If on any Payment Date there is available to the Authority insufficient Available Tax Increment to pay the amounts due on such date, the amount of such deficiency shall be deferred and shall be paid, without interest thereon, on the next Payment Date on which the Authority has available to it Available Tax Increment in excess of the amount necessary to pay the amount due on such Payment Date. (d) The Authority shall have no obligation to pay any portion of the Land Acquisition Costs that remains unpaid after the Termination Date. The Authority may prepay all or a portion of the Land Acquisition Costs at any time. (e) The Authority shall not be obligated to make any payment under this Section if: (i) there is an Event of Default on the Developer's part under this Agreement that has not been cured; or (ii) the Developer has failed to comply with the payment procedures described herein. (f) At least 30 days before becoming entitled to receive any payment hereunder, the Developer must submit to the Authority a payment request certificate signed by its duly authorized representative stating: (i) that the Developer has paid Land Acquisition Costs in at least the amount of $170,000, verified by copies of executed purchase agreements; (ii) that no Event of Default has occurred and is continuing under this Agreement; and (iii) that the Developer has received a Certificate of Completion pursuant to Section 4.4 of this Agreement. The payment request certificate must be accompanied by evidence satisfactory to the Authority that the Land Acquisition Costs have been incurred and paid by the Developer, and without limitation of the foregoing, must include a copy of the purchase agreement, a certificate of real estate value evidencing the purchase price paid by the Developer for the Development Property, and evidence reasonably satisfactory to the Authority that the purchase price did not exceed the fair market value of the Development Property at the time of the Developer's acquisition of it. (g) The Authority makes no warranties or representations that Available Tax increment will be sufficient to pay the eligible Land Acquisition Costs. The Developer agrees and understands that Available Tax Increment is subject to calculation by the County and change in State law, and that a significant portion of Land Acquisition Costs may remain unpaid after the Termination Date. The Developer further agrees and understands that estimates of Available Tax Increment provided by the Authority and its agents, officers, or employees are estimates only and not intended for the Developer's reliance. (h) As a condition of the Authority approving the provision of Available Tax Increment to the Developer to assist in defraying the Land Acquisition Costs, the three residential properties located on the Development Property shall not be relocated to any site within the City. Section 3.5. Additional Public Assistance. (a) The Authority shall provide Developer a MTN- 267264v I O MN 190 -115 $20,000 grant from available tax increment fiends of the Authority, including at the Authority's option, tax increment funds from TIF District No. 1 -22, for the purpose of site improvements ( "Parking Improvements ") on property adjacent to the Development Property (PID No. 155 -010- 036100) and located in TIF District 1 -22 ( "Adjacent Property "). The Parking Improvements shall be for the purpose of improving traffic circulation and parking for Landmark Square I located within TIF District No. 1 -22, and the Minimum Improvements to be constructed on the Development Property and described as Landmark Square 11. Subject to the terms and conditions of this Agreement, the $20,000 grant (the "Parking Improvement Costs ") will be paid, without interest thereon, within thirty (30) days after the date that the Developer provides evidence satisfactory to the Authority of the following: (i) proof of payment of the acquisition and garage removal costs; (ii) completion of the Parking Improvements on the Adjacent Property to the satisfaction of the Authority; (iii) submission of lien waiver(s) from any contractor(s) employed by the Developer for the activities undertaken on the Adjacent Property. (b) The term "tax increment funds" in this section 3.5 means tax increment paid by the County to the Authority prior to the date of this Agreement with respect to TIF District No. 1 -22, but only to the extent that such tax increment: (i) may lawfully be used for the purpose of paying the Parking Improvement Costs; and (ii) has not, prior to the date of this Agreement, been paid or pledged to the payment of any person other than the Developer. The Authority warranties that it has sufficient tax increment funds from TIF District No. 1 -22 on hand to pay the Parking Improvement Costs, and that payment of such costs is an allowable expenditure of such funds under the TIF Plans for TIF District No. 1 -22. Section 3.6. Business Subsidy Agreement. The Developer warrants and represents that the Redeveloper's investment in the purchase of the Development Property together with Developer's investment in site preparation on such property (net of any portion of such costs reimbursed through payment of TIF) will equal at least 70% of the County assessor's estimated market value of the Development Property for the 2005 assessment year, calculated as follows: Aggregate Purchase price of Development Property ............. ............................... $455,000 Date of purchase of each Parcel: Aggregate Purchase Price of PID No. 155 - 010- 036100 ........ ............................... $ 20,000 Plus Estimated cost of Development Property site preparation ............................ $ 30,000 Equals land cost and site preparation ..................................... ............................... $505,000 Less Land Acquisition Costs reimbursed by TIF (No. 1-35) ................. 170,000 (No. 1 -22) ................... 20.000 ....................................,............... ............................... .............,..........1%)000 Equals net land cost and site preparation ......................... ...... $315,000 MTN- 267260v 10 9 MN 190 -115 2005 Assessor's estimated market value of Redevelopment Property .................. $354,000 $315,000 (net acquisition and site preparation cost) is 89% of $354,000 (assessor's current estimated fair market value of the Redevelopment Property) Accordingly, the parties agree and understand that the financial assistance described in this Agreement does not constitute a business subsidy within the meaning of the Business Subsidy Act. The Developer releases and waives any claim against the Authority and its governing body members, officers, agents, servants and employees thereof arising from application of the Business Subsidy Act to this Agreement, including without limitation any claim that the Authority failed to comply with the Business Subsidy Act with respect to this Agreement. Section 3.7. Use of Tax Increment. Except as set forth herein, the Authority shall have no obligation to the Developer with regard to its use of Tax Increment and may use Tax Increment for any lawful purposes, whether set forth herein or otherwise. WN- 26726000 10 MN 190-115 ARTICLE IV Construction. of Minimum Improvements Section 4.1. Construction of Improvements. The Developer agrees that it will construct the Minimum Improvements on the Development Property in accordance with the approved Construction Plans and at all times during the term of this Agreement, will operate and maintain, preserve and keep the Minimum Improvements or cause such improvements to be maintained, preserved and kept with the appurtenances and every part and parcel thereof, in good repair and condition. The Authority shall not have any obligation to operate or maintain the Minimum Improvements. Section 4.2. Construction Plans. (a) Before commencement of construction of the Minimum Improvements, the Developer shall submit to the Authority Construction Plans. The Construction Plans shall provide for the construction of the Minimum Improvements and shall be in conformity with the Redevelopment Plan, this Agreement, and all applicable State and local laws and regulations. The Authority will approve the Construction Plans in writing if: (i) the Construction Plans conform to the terms and conditions of this Agreement; (ii) the Construction Plans conform to the goals and objectives of the Redevelopment Plan; (iii) the Construction Plans conform to all applicable federal, state and local laws, ordinances, rules and regulations; (iv) the Construction Plans are adequate to provide for construction of the Minimum Improvements; (v) the Construction Plans do not provide for expenditures in excess of the funds available to the Developer from all sources for construction of the Minimum Improvements; and (vi) no Event of Default has occurred. Approval may be based upon a review by the City's Building Official of the Construction Plans. No approval by the Authority shall relieve the Developer of the obligation to comply with the terms of this Agreement or of the Redevelopment Plan, applicable federal, state and local laws, ordinances, rules and regulations, or to construct the Minimum Improvements in accordance therewith. No approval by the Authority shall constitute a waiver of an Event of Default. If approval of the Construction Plans is requested by the Developer in writing at the time of submission, such Construction Plans shall be deemed approved unless rejected in writing by the Authority, in whole or in part. Such rejections shall set forth in detail the reasons therefore, and shall be made within 10 days after the date of their receipt by the Authority. If the Authority rejects any Construction Plans in whole or in part, the Developer shall submit new or corrected Construction Plans within 10 days after written notification to the Developer of the rejection. The provisions of this Section relating to approval, rejection and resubmission of corrected Construction Plans shall continue to apply until the Construction Plans have been approved by the Authority. The Authority's approval shall not be unreasonably withheld. Said approval shall constitute a conclusive determination that the Construction Plans (and the Minimum Improvements constructed in accordance with said plans) comply to the Authority's satisfaction with the provisions of this Agreement relating thereto. (b) If the Developer desires to make any Material change in the Construction Plans after their approval by the Authority, the Developer shall submit the proposed change to the Authority for its approval. If the Construction Plans, as modified by the proposed change, conform to the requirements of this Section 4.2 of this Agreement with respect to such previously approved WN- 26726000 11 NIN 190 -115 Construction Plans, the Authority shall approve the proposed change and notify the Developer in writing of its approval. Such change in the Construction Plans shall, in any event, be deemed approved by the Authority unless rejected, in whole or in part, by written notice by the Authority to the Developer, setting forth in detail the reasons therefor. Such rejection shall be made within ten (10) days after receipt of the notice of such change. The Authority's approval of any such change in the Construction Plans will not be unreasonably withheld. Section 4.3. Commencement and Completion of Construction. Subject to Unavoidable Delays, the Developer shall commence construction of the Minimum Improvements by October 1, 2005. Subject to Unavoidable Delays, the Developer shall complete the construction of the Minimum Improvements by December 31, 2006. All work with respect to the Minimum Improvements to be constructed or provided by the Developer on the Development Property shall be in conformity with the Construction Plans as submitted by the Developer and approved by the Authority. The Developer agrees for itself, its successors and assigns, and every successor in interest to the Development Property, or any part thereof, that the Developer, and such successors and assigns, shall promptly begin and diligently prosecute to completion the development of the Development Property through the construction of the Minimum Improvements thereon, and that such construction shall in any event be commenced and completed within the period specified in this Section 4.3 of this Agreement. The obligation to construct the Minimum Improvements in accordance with this Section touches and concerns the land, and shall run with the property and be binding upon all successors and assigns to the Development Property. After the date of this Agreement and until construction of the Minimum Improvements has been completed, the Developer shall make reports, in such detail and at such times as may reasonably be requested by the Authority, as to the actual progress of the Developer with respect to such construction. Section 4.4. Certificate of Completion. (a) Promptly after completion of the Minimum Improvements in accordance with those provisions of the Agreement relating solely to the obligations of the Developer to construct the Minimum Improvements (including the dates for beginning and completion thereof), the Authority will furnish the Developer with a Certificate shown as Exhibit B. Such certification and such determination shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any Holder of a Mortgage, or any insurer of a Mortgage, securing money loaned to finance the Nlinimum improvements, or any part thereof. (b) If the Authority shall refuse or fail to provide any certification in accordance with the provisions of this Section 4.4 of this Agreement, the Authority shall, within thirty (30) days after written request by the Developer, provide the Developer with a written statement, indicating in adequate detail in what respects the Developer has failed to complete the Minimum Improvements in accordance with the provisions of the Agreement, or is otherwise in default, and what measures or acts it will be necessary, in the opinion of the Authority, for the Developer to take or perform in order to obtain such certification. MTN- 267260v ] 0 12 MN 190-115 (c) The construction of the Minimum Improvements shall be deemed to be complete upon issuance of a certificate of occupancy by the City for, and the opening for business of, the Minimum Improvements. MTN- 267260v 10 13 MN 190-115 ARTICLE V Insurance and Condemnation Section 5.1. Insurance. (a) The Developer will provide and maintain at all times during the process of constructing the Minimum Improvements an All Risk Broad Form Basis Insurance Policy and, from time to time during that period, at the request of the Authority, furnish the Authority with proof of payment of premiums on policies covering the following: (i) Builder's risk insurance, written on the so- called "Builder's Risk -- Completed Value Basis," in an amount equal to one hundred percent (100 %) of the insurable value of the Minimum Improvements at the date of completion, and with coverage available in nonreporting form on the so- called "all risk" form of policy. The interest of the Authority shall be protected in accordance with a clause in form and content satisfactory to the Authority; (ii) Comprehensive general liability insurance (including operations, contingent liability, operations of subcontractors, completed operations and contractual liability insurance) together with an Owner's Contractor's Policy with limits against bodily injury and property damage of not less than $1,000,000 for each occurrence (to accomplish the above - required limits, an umbrella excess liability policy may be used); and (iii) Workers' compensation insurance, with statutory coverage. (b) Upon completion of construction of the Minimum Improvements and prior to the Termination Date, the Developer shall maintain, or cause to be maintained, at its cost and expense, and from time to time at the request of the Authority shall furnish proof of the payment of premiums on, insurance as follows: (i) Insurance against loss and/or damage to the Minimum Improvements under a policy or policies covering such risks as are ordinarily insured against by similar businesses; (ii) Comprehensive general public liability insurance, including personal injury liability (with employee exclusion deleted), against liability for injuries to persons and/or property, in the minimum amount for each occurrence and for each year of $1,000,000, and shall be endorsed to show the Authority as additional insured; and (iii) Such other insurance, including workers' compensation insurance respecting all employees of the Developer, in such amount as is customarily carried by like cr�rn »�z�tin »C a »no ar'i! in l� e activities Cf vmm� Y h1P C��e and l,wh tlt[7 A n Cil_C; nm iirjed ga...z_LL.. ^_..., ..gaged a t J .t a s iiit Xpo , i that the Developer may, if permitted by law, be self - insured with respect to all or any part of its liability for workers' compensation. MTN- 267260v 10 14 MN 190 -115 (c) All insurance required in Article V of this Agreement shall be taken out and maintained in responsible insurance companies selected by the Developer which are authorized under the laws of the State to assume the risks covered thereby. Upon request, the Developer will deposit annually with the Authority policies evidencing all such insurance, or a certificate or certificates or binders of the respective insurers stating that such insurance is in force and effect. Unless otherwise provided in this Article V of this Agreement, each policy shall contain a provision that the insurer shall not cancel nor modify it in such a way as to reduce the coverage provided below the amounts required herein without giving written notice to the Developer and the Authority at least thirty (30) days before the cancellation or modification becomes effective. In lieu of separate policies, the Developer may maintain a single policy, blanket or umbrella policies, or a combination thereof, having the coverage required herein, in which event the Developer shall deposit with the Authority a certificate or certificates of the respective insurers as to the amount of coverage in force upon the Minimum Improvements. (d) The Developer agrees to notify the Authority immediately in the case of damage exceeding $100,000 in amount to, or destruction of, the Minimum Improvements or any portion thereof resulting from fire or other casualty. In such event the Developer either will forthwith repair, reconstruct, and restore the Minimum Improvements to substantially the same or an improved condition or value as it existed prior to the event causing such damage and, to the extent necessary to accomplish such repair, reconstruction, and restoration, the Developer will apply the Net Proceeds of any insurance relating to such damage received by the Developer to the payment or reimbursement of the costs thereof. The Developer shall complete the repair, reconstruction, and restoration of the Minimum Improvements, whether or not the Net Proceeds of insurance received by the Developer for such purposes are sufficient to pay for the same. Any Net Proceeds remaining after completion of such repairs, construction and restoration shall be the property of the Developer. (e) The Developer and the Authority agree that all of the insurance provisions set forth in this Article V shall terminate upon the Termination Date. MTN- 267260v 10 15 MN190 -115 ARTICLE N71 Tax Increment; Taxes Section 6.1. Riglll to Collect Delinquent Taxes. The Developer acknowledges that the Authority is providing substantial aid and assistance in furtherance of the development. The Developer understands that the tax increment intended to pay expenses of the Authority and the Developer are derived from real estate taxes on the Development Property, which taxes must be promptly and timely paid. To that end, the Developer agrees for itself, its successors and assigns, in addition to the obligation pursuant to statute to pay real estate taxes that it is also obligated by reason of this Agreement to pay before delinquency all real estate taxes assessed against the Development Property and the Minimum Improvements. The Developer acknowledges that this obligation creates a contractual right on behalf of the Authority to sue the Developer or its successors and assigns to collect delinquent real estate taxes and any penalty or interest thereon and to pay over the same as a tax payment to the county auditor. In any such suit, the Authority shall also be entitled to recover its costs, expenses, and attorney fees. MTN- 267260v 10 16 MN 190 -115 ARTICLE VIII Prohibitions Against Assignment and Transfer; Indemnification Section 8.1. Representation as to Development. The Developer represents and agrees that its purchase of the Development Property, and its other undertakings pursuant to the Agreement, are, and will be used, for the purpose of development of the Development Property and not for speculation in land holding. Section 8.2. Prohibition Against Developer's Transfer of Property and Assignment of Agreement. The Developer represents and agrees that prior to issuance of the Certificate of Completion for the Minimum Improvements: (a) Except only by way of security for, and only for, the purpose of obtaining financing necessary to enable the Developer or any successor in interest to the Development Property, or any part thereof, to perform its obligations with respect to making the Minimum Improvements under this Agreement, and any other purpose authorized by this Agreement, the Developer has not made or created and will not make or create or suffer to be made or created any total or partial sale, assignment, conveyance, or lease (except a lease of the Minimum Improvements to Masters Fifth Avenue, Inc., which is hereby consented to by the City and the Authority), or any trust or power, or transfer in any other mode or form of or with respect to the Agreement or the Development Property or any part thereof or any interest therein, or any contract or agreement to do any of the same, without the prior written approval of the Authority unless the Developer remains liable and bound by this Development Agreement in which event the Authority's approval is not required. (b) In the event the Developer, upon transfer or assignment of the Development Property or any portion thereof, seeks to be released from its obligations tinder this Agreement as to the portions of the Development Property that is transferred or assigned, the Authority shall be entitled to require, except as otherwise provided in the Agreement, as conditions to any such release that: (i) Any proposed transferee shall have the qualitications and financial responsibility, in the reasonable judgment of the Authority, necessary and adequate to fulfill the obligations undertaken in this Agreement by the Developer as to the portion of the Development Property to be transferred. (ii) Any proposed transferee, by instrument in writing satisfactory to the Authority and in form recordable among the land records, shall, for itself and its successors and assigns, and expressly for the benefit of the Authority, have expressly assumed all of the obligations of the Developer under this Agreement as to the portion of the Development Property to be transferred and agreed to be subject to all the conditions and restrictions to which the Developer is subject as to such portion; provided, however, that the fact that any transferee of, or any other successor in interest whatsoever to, the Development Property, or any part thereof, shall not, for whatever reason, have assurned such obligations or so agreed, and shall not (unless and only to the extent otherwise specifically provided in this MTN- 26726Ov J O 18 MN 190-115 Agreement or agreed to in writing by the Authority) deprive the Authority of any rights or remedies or controls with respect to the Development Property or any part thereof or the construction of the Minimum Improvements; it being the intent of the parties as expressed in this Agreement that (to the fullest extent permitted at law and in equity and excepting only in the manner and to the extent specifically provided otherwise in this Agreement) no transfer of, or change with respect to, ownership in the Development Property or any part thereof, or any interest therein, however consummated or occurring, and whether voluntary or involuntary, shall operate, legally or practically, to deprive or limit the Authority of or with respect to any rights or remedies on controls provided in or resulting from this Agreement with respect to the Minimum Improvements that the Authority would have had, had there been no such transfer or change. In the absence of specific written agreement by the Authority to the contrary, no such transfer or approval by the Authority thereof shall be deemed to relieve the Developer, or any other party bound in any way by this Agreement or otherwise with respect to the construction of the Minimum Improvements, from any of Its obligations with respect thereto. (iii) Any and all instruments and other legal documents involved in effecting the transfer of any interest in this Agreement or the Development Property governed by this Article VIII, shall be in a form reasonably satisfactory to the Authority. In the event the foregoing conditions are satisfied then the Developer shall be released from its obligation under this Agreement, as to the portion of the Development Property that is transferred, assigned or otherwise conveyed. After issuance of the Certificate of Completion for the Minimum Improvements, the Developer may transfer or assign any portion of the Development Property or the Developer's interest in this Agreement without the prior written consent of the Authority, provided that the transferee or assignee is bound by all the Developer's obligations hereunder. The Developer shall submit to the Authority written evidence of any such transfer or assignment, including the transferee or assignee's express assumption of the Developer's obligations under this Agreement. If the Developer fails to provide such evidence of transfer and assumption, the Developer shall remain bound by all its obligations under this Agreement. Without limitation of the foregoing, if the Developer does not provide the Authority with written evidence that Masters Fifth Avenue, Inc. has assumed the Developer's obligations under this Agreement in conjunction with a lease of the Development Property from the Developer to Masters Fifth Avenue, Inc., the Developer shall remain bound by all its obligations under this Agreement. Section 8.3. Release and Indemnification Covenants. (a) The Developer releases from and covenants and agrees that neither the Authority, the City, nor their governing body members, officers, agents, servants, or employees shall be liable for and agrees to indemnify and hold harmless the Authority, the City, and their governing body members, officers, agents, servants, and employees against any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Minimum Improvements. (b) Except for any willful misrepresentation or any willful or wanton misconduct of the following named parties, the Developer agrees to protect and defend the Authority, the City, and WN- 26726000 19 N4N 190 -115 their governing body members, officers, agents, servants, and employees now or forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from this Agreement, or the transactions contemplated hereby or the acquisition, construction, installation, ownership, maintenance, and operation of the Minimum Improvements. (c) The Authority, the City, and their governing body members, officers, agents, servants, and employees shall not be liable for any damage or injury to the persons or property of the Developer or its officers, agents, servants, or employees, or any other person who may be about the Development Property or Minimum Improvements, due to any act of negligence of any person. (d) All covenants, stipulations, promises, agreements, and obligations of the Authority contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the Authority or the City, respectively, and not of any governing body member, officer, agent, servant, or employee of the Authority or the City in the individual capacity thereof. (e) Nothing in this Agreement shall be construed to constitute a waiver of any statutory or common law immunity from or limitation on liability to which the Authority or the City are entitled under law, including but not limited to those set forth in Minnesota Statutes, Chapter 466. MTN- 267260v 10 20 MN190 -115 URYU01twu Events of Default Section 9.1. Events of Default Defined. The following shall be "Events of Default" under this Agreement and the term "Event of Default' shall mean, whenever it is used in this Agreement (unless the context otherwise provides), any failure by any party to observe or perform any other covenant, condition, obligation or agreement on its part to be observed or performed under this Agreement. Section 9.2. Remedies on Default. Whenever any Event of Default referred to in Section 9.1 of this Agreement occurs, the non - defaulting party may exercise its rights under this Section 9.2 after providing thirty days written notice to the defaulting party of the Event of Default, but only if the Event of Default has not been cured within said thirty days or, if the Event of Default is by its nature incurable within thirty days, the defaulting party does not provide assurances reasonably satisfactory to the non - defaulting party that the Event of Default will be cured and will be cured as soon as reasonably possible: (a) Suspend its performance under the Agreement until it receives assurances that the defaulting party will cure its default and continue its performance under the Agreement. (b) Cancel and rescind or terminate the Agreement. (c) Upon a default by the Developer, the Authority may terminate its obligation to make any payment to the Developer, and the Developer shall, within 10 days of written demand therefor, pay to the City the Fees forgiven pursuant to Section 3.7 of this Agreement. (d) Take whatever action, including legal, equitable, or administrative action, which may appear necessary or desirable to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant under this Agreement. In addition, upon an Event of Default by the Developer, the Authority may withhold issuance of the Certificate of Completion. Section 9.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority or the Developer is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the .Authority to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be required in this Article IX. WN- 267260 30 21 NIN190 -115 Section 9.4. No Additional Waiver Implied by One Waiver. in the event any agreement contained in this Agreement should be breached by any party and thereafter 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 hereunder. MTN- 267260v 10 22 MN 190-115 ARTICLE X Additional Provisions Section 10.1. Conflict of Interests; Authority Representatives Not Individually Liable. The Authority and the Developer, to the best of their respective knowledge, represent and agree that no member, official, or employee of the Authority shall have any personal interest, direct or indirect, in the Agreement, nor shall any such member, official, or employee participate in any decision relating to the Agreement which affects his or her personal interests or the interests of any corporation, partnership, or association in which he or she is directly or indirectly interested. No member, official, or employee of the Authority shall be personally liable to the Developer, or any successor in interest, in the event of any default or breach by the Authority or the County or for any amount which may become due to the Developer or successor or on any obligations under the terms of the Agreement. Section 10.2. Equal Employment Opportunity. The Developer, for itself and its successors and assigns, agrees that during the construction and operation of the Minimum Improvements provided for in the Agreement it will comply with all applicable federal, state, and local equal employment and non - discrimination laws and regulations. Section 10.3. Restrictions on Use. The Developer agrees that, during the term of this Agreement, the Developer, and its successors and assigns, shall not unlawfully discriminate upon the basis of race, color, creed, sex, national origin, or any other prohibited basis in the sale, lease, or rental or in the use or occupancy of the Development Property or any improvements erected or to be erected thereon, or any part thereof, and shall devote the Development Property to the operation of the Minimum Improvements. Section 10.4. Provisions Not Merged With Deed. None of the provisions of this Agreement are intended to or shall be merged by reason of any deed transferring any interest in the Development Property and any such deed shall not be deemed to affect or impair the provisions and covenants of this Agreement. Section 10.5. Titles of .Articles and Sections. Any titles of the several parts, Articles, and Sections of the Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 10.6. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand, or other communication under the Agreement by either party to the other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally; and (a) in the case of the Developer, is addressed to or delivered personally to the Developer at Masters Fifth Avenue, Inc., 204 Locust Street, Suite 209, Monticello, MN 55362, Attn: Mr. Barry D. Fluth, President, MTN- 267260v 10 23 NIN190 -115 (b) in the case of the Authority, is addressed to or delivered personally to the Authority at City Hall, 505 Walnut Avenue, Suite 1, Monticello, Minnesota 55362, Attn: Executive Director; or at such other address with respect to either such party as that party may, from time to time, designate in writing and forward to the other as provided in this Section. Section 10.7. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 10.8. Recording, The Authority may record this Agreement and any amendments thereto with the Wright County recorder. The Developer shall pay all costs for recording. Section 10.9. Choice of Law and Venue. 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 of these courts, whether based on convenience or otherwise. Section 10.10 Attorney Fees. Whenever any Event of Default occurs and if the Authority shall employ attorneys or incur other expenses for the collection of payments due or to become due, or for the enforcement of performance or observance of any obligation or agreement on the part of the Developer under this Agreement, the Developer agrees that it shall, within ten days of written demand therefor, pay to the Authority the fees of such attorneys and such other expenses so incurred by the Authority. Section 10.11. Entire Agreement. This Agreement constitutes the entire agreement among the parties pertaining to its subject matter and it supersedes all prior contemporaneous agreements, representations, and understandings of the parties pertaining to the subject matter of this Agreement. This Agreement may be modified, amended, terminated, or waived, in whole or in part, only by a writing signed by each of the parties. MTN-267260v 10 24 MN190-115 HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MONTICELLO,f INNESOTA By rz Its dhair By CA (3 Its Executive Director STATE OF MINNESOTA ) ss. COUNTY OF WRIGHT ) The foregoing instrument was acknowledged before me this day of oc't ., 2005, by ti � „r. �. Ln),e- and , the Chair and Executive Director of the Housing and Redevelopment Authority in and for the City of Monticello, Minnesota, on behalf of the Authority. DEBRA A. WARD NOTARY PUBLIC - MINNESOTA My Commission Expires Jan. 31, 2010 MTN- 267260v 1 D MN 190 -115 S -1 r 1 Not lic MASTERS FIFTH AVENUE, INC. By � B D. Fluth Its President STATE OF MINNESOTA ) ss. COUNTY OF WRIGHT ) The foregoing instrument was acknowledged before me this Ljn_ day of 2005, by Barry D. Fluth, the President of Masters Fifth Avenue, Inc., a Minnesota corporation, on behalf of the corporation. Notary P`4blic DEBRA A. WARD NOTARY PUBLIC - MINNESOTA ray Commission Expires Jan. 31,2010 WN- 26726000 S_2 MN 190-115 EXHIBIT A LEGAL DESCRIPTIONS Development Property: That property located within the city of Monticello, Wright County, Minnesota and legally described as follows: The Northeasterly one -half of Lots 1 and 2, as measured at right angles to and parallel with the Northeasterly line of said lots, Block 36, Townsite of Monticello, Wright County, Minnesota; ,. Lots 1 and 2, Block 36, Townsite of Monticello, except therefrom: The Northeasterly one -half of said Lots 1 and 2, as measured at right angles to and parallel with the Northeasterly line of said lots, Block 36, Townsite of Monticello, Wright County, Minnesota; ON Lot 3, Block 36, Townsite of Monticello, Wright County, Minnesota. MTN- 267260v 10 A -1 MN 190-115 1 CERTIFICATE OF COMPLETION The undersigned hereby certifies that Masters Fifth Avenue, Inc. (the "Developer ") has fully complied with its obligations under Articles III and IV of that document titled "Contract for Private Development," dated , 2005 between the Housing and Redevelopment Authority in and for the City of Monticello, Minnesota and the Developer, with respect to construction of the Minimum Improvements on the property described in Exhibit A thereto in accordance with the Construction Plans, and that the Developer is released and forever discharged from its obligations to construct of the Minimum Improvements under Articles III and IV of said Contract. Dated: 200_. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MONTICELLO, MINNESOTA By Its Chair By Its Executive Director STATE OF MINNESOTA ) } ss. COUNTY OF WRIGHT ) The foregoing instrument was acknowledged before me this day of , 200`, by and , the Chair and Executive Director of the Housing and Redevelopment Authority in and for the City of Monticello, Minnesota, on behalf of the Authority. Notary Public THIS DOCUMENT 17RAFTF,D BY- Kennedy & Graven, Chartered (MTN) 470 US Bank Plaza 200 South Sixth Street Minneapolis, Minnesota 55402 (612) 337 -9300 MTty- 2672604.1 o B -1 MN190 -115 AMENDMENT TO CONTRACT FOR PRIVATE DEVELOPMENT This agreement is made as of June J. , 2006, by and between the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MONTICELLO, a public body politic and corporate (the "Authority') and MAS'T'ERS FIFTH AVENUE, INC., a Minnesota corporation (the "Developer"). WHEREAS, the Authority and Developer entered into that certain Contract for Private Development dated September 7, 2005 (the "Contract ") providing, among other things, for the construction of certain improvements (the "Minimum Improvements ") on the property legally described within the Contract (the "Development Property'); and WHEREAS, the parties have determined to extend the dates of commencement and completion of construction of the Minimum Improvements; and WHEREAS, the parties have further determined to modify the date of first receipt of tax increment as a result of extending the dates of commencement and completion of construction of the Minimum Improvements. NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: Section 4.3 of the Contract is amended as follows: (c) Commencement and Completion of Construction. Subject to Unavoidable Delays, the Developer shall commence construction of the Minimum Improvements by May 31, 2007. Subject to Unavoidable Delays, the Developer shall complete the construction of the Minimum Improvements by December 31, 2007. All work with respect to the Minimum Improvements to be constructed or provided by the Developer on the Development Property shall be in conformity with the Construction Plans as submitted by the Developer and approved by the Authority. 2. Section 3.4(a) of the Contract is amended as follows: (a) Subject to the terms and conditions of this agreement, the Land Acquisition Costs will be reimbursed to the Developer with simple interest thereon at 6.50% per annum, interest commencing to accrue on the date that the Developer complies with the cost certification requirement described in paragraph (f) of this Section. The Land Acquisition Costs will be reimbursed by the Authority to the Developer in semi - annual installments payable on each February 1 and August 1 ( "Payment Dates ") commencing August 1, 2009 and concluding no later than the Termination Date. These payments will be made from Available Tax Increment as defined in this Section 3.4 and from no other source. 3. All other terms of the Contract remain the same. (Remainder of this page intentionally left blank.) 292753v1 MMMN190 -115 Dated this day of June, 2006. Masters Fifth Avenue, Inc. Housing and Redevelopment Authority in and for the City of Monticello By: By: _ I Its President By: Its Executive Director THIS DOCUMENT DRAFTED BY: Kennedy & Graven, Chartered 470 Pillsbury Center 200 South Sixth Street Minneapolis, Mn 55402 (612) 337 -9300 292753v1 MNI MN190 -115 SECOND AMENDMENT TO CONTRACT FOR PRIVATE DEVELOPMENT This agreement is made as of December , 2007, by and between the CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY, a public body politic and corporate (the "EDA ") and MASTERS FIFTH AVENUE, INC., a Minnesota corporation (the "Developer" }. WHEREAS, the Housing and Redevelopment Authority in and for the City of Monticello ("HRA") and Developer entered into that certain Contract for Private Development dated September 7, 2005, as amended by that Amendment to Contract for Private Development dated as of June 7, 2006 (the "Contract ") providing, among other things, for the construction of certain improvements (the "Minimum Improvements ") on the property legally described within the Contract (the "Development Property) within the City of Monticello (the "City"); and WHEREAS, the City Council of the City has taken the necessary steps to all all powers and projects of the HRA to the EDA, and the HRA, by its Resolution No�'0°�r ted November 7, 2007, has transferred and assigned to the EDA all outstanding contracts to which the HRA is a party, including the Contract; and WHEREAS, the Developer has requested and the EDA has determined to extend the dates of commencement and completion of construction of the Minimum Improvements described in the Contract. NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: Section 4.3 of the Contract is amended as follows: (c) Commencement and Completion of Construction. Subject to Unavoidable Delays, the Developer shall commence construction of the Minimum Improvements by May 31, 2009. Subject to Unavoidable Delays, the Developer shall complete the construction of the Minimum Improvements by December 31, 2009. All work with respect to the Minimum Improvements to be constructed or provided by the Developer on the Development Property shall be in conformity with the Construction Plans as submitted by the Developer and approved by the Authority. 2. Section 3.4(a) of the Contract is amended as follows: (a) Subject to the terms and conditions of this agreement, the Land Acquisition Costs will be reimbursed to the Developer with simple interest thereon 6.50% per annum, interest commencing to accrue on the date that the Developer complies with the cost certification requirement described in paragraph (f) of this Section. The Land Acquisition Costs will be reimbursed by the Authority to the Developer in semi - annual installments payable on each February 1 and August 1 ( "Payment Dates ") commencing August 1, 2011 and concluding no later than the Termination Date. These payments will be made from Available Tax Increment as defined in this Section 3.4 and from no other source. 3. All other terms of the Contract remain the same. 292753YI NCYI MN190 -1 is Dated this 18th day of December, 2007. Masters Fifth Avenue, Inc. City of Monticello Economic Development Authority By By: Its Its President Q By: kID ca Its Executive Executive Director Kennedy & Graven, Chartered 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, Mn 55402 (612) 337 -9300 292753v1 NINIMN140 -115 Ehlers & Associates, Inc. Talc Increment Financing District Overview City of Monticello Tax Increment Financing District No, 1 -35 The following summary contains an overview of the basic elements of the Tax increment Financing PIan for TIF District No. 1 -35. More detailed information on each of these topics can be found in the complete TIF Plan. Proposed action: Establishment of Tax Increment Financing District No. 1 -35 (District) and the adoption of a Tax Increment Financing Plan (TIF Plan). Adoption of a Redevelopment Plan Modification for the Central Monticello Redevelopment Project No. 1. (The Modification is to include the project activities anticipated in the District.) Type of TIF District: A redevelopment district Parcel Numbers *: 155- 010 - 036011 ** 155- 010 -036010 ** 155 -010- 036030 ** *These parcels will be combined via an administrative lot combination by the City of Monticello **These parcels are "Knocked Down" parcels that are being removed from Tax Increment Financing District No. 1 -22 to be included in Tax Increment Financing District No. 1 -35. Proposed Development: The District is being created to facilitate construction of 11,000 s.£ of commercial space consisting of a restaurant, office and other uses in the City of Monticello. This project is being proposed by a local developer. The value of the new development is estimated to be $70 per s.f. plus land costs of approximately $230,000 for an esimated value of $1,000,000. The building will be completed in 2006 and the assistance of land acquisition, public improvements, site preparation, streets and sidewalks and utility costs will be funded on a pay- as -you- go basis at a rate of 6.5% TIF District Overview Maximum duration: The duration of the District will be 25 years from the date of receipt of the first increment (26 years of increment). The date of receipt of the first tax increment will be approximately 2008. Thus, it is estimated that the District, including any modifications of the TIF Plan for subsequent phases or other changes, would terminate after 2033, or when the TIF Plan is satisfied. Estimated annual tax Up to $17,014 increment: Proposed uses: The TIF Plan contains a budget that authorizes the maximum amount that may be expended: Land/Building Acquisition ............................................... $ 100,000 Site Improvements /Preparation ................... $35,000 ....................... Public Utilities .................................... ............................... $35,000 Parking Facilities ........... :................................................... $35,000 Streets and Sidewalks ......................... ............................... $10,000 Interest.............................................. ............................... $190,000 Administrative Costs (up to 10 %) .............. ........................ $45,000 TOTAL PROJECT COSTS ............... .............................45 See Subsection 2 -10, page 2 -6 of the TIF Plan for the full budget authorization. Additional uses of funds are authorized which include inter -fund loans and transfers and bonded indebtedness. Form of financing: Financing will be primarily by a pay -as- you -go (PAYG) note. Administrative fee: Up to 10% of annual increment, if costs are justified. Interfund Loan Requirement: If the City wants to pay for administrative expenditures from a tax increment fund, it is recommended that a resolution authorizing a loan from another fund must be passed PRIOR to the issuance of the check. 4 Year Activity Rule After four years from the date of certification of the District one of the (§ 469.176 Subd b) following activities must have been commenced on each parcel in the District: • Demolition Rehabilitation • Renovation • Other site preparation (not including utility services such as sewer and water) • If the activity has not been started by the approximately September, 2009, no additional tax increment may be taken from that parcel until the commencement of a qualifying activity. Page 2 TIF District Overview 5 Year Rule Within 5 years of certification revenues derived from tax increments ff 469.1763 Sub 3) must be expended or obligated to be expended. Tax increments are considered to have been expended on an activity within the District if one of the following occurs: • The revenues are actually paid to a third party with respect to the activity • Bonds, the proceeds of which must be used to finance the activity, are issued and sold to a third party, the revenues are spent to repay the bonds, and the proceeds of the bonds either are reasonably expected to be spent before the end of the later of (i) the five year period, or (ii) a reasonable temporary period within the meaning of the use of that term under §. 148(c)(1) of the Internal Revenue Code, or are deposited in a reasonably required reserve or replacement fund • Binding contracts with a third party are entered into for performance of the activity and the revenues are spent under the contractual obligation • Costs with respect to the activity are paid and the revenues are spent to reimburse for payment of the costs, including interest on unreimbursed costs. Any obligations in the Tax Increment District made after approximately September, 2010, will not be eligible for repayment from tax increments. The reasons and facts supporting the findings for the adoption of the TIF Plan for the District, as required pursuant to M.S., Section 469.175, Subd 3, are included in Exhibit A of the City Council Adopting Resolution. Page 3 TiF District Overview MAPS OF CENTRAL MONTICELLO REDEVELOPMENT PROJECT NO. I AND TAX INCREMENT FINANCING DISTRICT NO. 1-35 Page 4 Proposed Tax Incren...c Financing District No Central Monticello Redevelopment Project N City of Monticello Wright County, Minnesota Proposed Tax Increment Financing District No. 1 -35 District 1 -35 is a redevelopment TIF district. The Dis- trict was established to assist with the construction of 11,000 square foot commercial building. The District was created from parcels removed from District 1 -22. This approach established new time limits that con- strain use of increments in District 1 -22. The tax incre- ment from District 1 -35 is obligated to repay a $170,000 developer note at an interest rate of 6 %. The note will end at a date no later than 2/1/2023. Ninety percent (90 %) of annual tax increment is used to make pay- ment on the note. The District will be decertified no later than December 31, 2033. The development planned for District 1 -35 has not happened. Actions Taken Since 2009 Funds have been transferred into TIF District 1 -35 from TIF District 1 -22 to cover administrative expenses incurred for TIF 1 -35. Administrative Steps There are no outstanding administrative items Management Strategy The strategy for District 1 -35 focuses on using the ex- isting district to undertake redevelopment on this par- cel. The factors that allow the creation of a new re- development district have been removed. A new TIF district is not an option. Clearance of the site satisfied the criteria of the 4 -year knock down requirements. Management of this District benefits from 2009 amend- ments to the TTF Act. The limitations of the five -year rule are extended to ten years for the District. Obli- gations for the use of tax increments must now be in CityNumber .......... ............................... ............................ ...........................1 -35 CountyNumber ............................................... ............... ........................... 635 Name........................... ............................... .......................Landmark Square 11 Type.......................................................... ............................... Redevelopment Established...................................... ............................... ........................9 /12/05 Certification Requested .................................... .............................12 /29/05 Certified..................................................................... ............................... 8/1/06 Year of First Increment ................... ............................... ...........................2008 4 -Year Knockdown 8/1/12 5-Year Rule ....................................... ............................... .........................8 /1/16 Decertification .......................... ............................... ..........................12 /31 /33 Original Tax Rate ........................ ............................... .......................110.297% Original Tax Capacity Value .......... ............................... ..........................3,409 Current Base Tax Capacity Value ............................... ..........................6,068 Current (Pay 2012) Tax Capacity . ............................... ..........................2,962 Parcels.................................................................................... ............................... l 155- 010 - 036030 place by August 1, 2016. The financial implications and options for this District cannot be fully analyzed until development occurs. District Summary District 1 -35 (Landmark Square II) Redevelopment 43 EDA Agenda - 10/14/15 10. Consideration to set dates for 2016 goal - setting workshop(s) of the EDA. (AS) A. REFERENCE AND BACKGROUND The EDA is asked to consider setting a date for its first goal- setting workshop for 2016. Unlike previous years, staff is moving goal setting up in the calendar in order to have action or goal statements in place for 2016. Al. Budget Impact: None at this time. A2. Staff Workload Impact: Staff will coordinate the necessary meeting postings and agenda materials for the workshop. B. STAFF RECOMMENDATION Not applicable. C. ALTERNATIVE ACTIONS 1. Motion to set a special meeting date of Wednesday, November 11th at 4:30 PM for a 2016 EDA goal- setting workshop. 2. Motion of other. D. SUPPORTING DATA EDA Action Statement, Current EDA ANNUAL WORK PLAN EDA Purpose: The EDA is charged with coordinating and administering the City of Monticello's economic development and redevelopment plans and programs. The EDA is also responsible for housing and housing redevelopment. EDA Work Plan Mission Statement: The EDA's 2015 work plan is adopted in support of achieving the goals of the Monticello Comprehensive Plan. The EDA will be proactive by developing and undertaking actions for achievement of the Comprehensive Plan's Economic Development goals and will be reactive in responding to economic development opportunities as they arise in the most timely and effective manner possible. The EDA shall utilize the economic development strategies of the Comprehensive Plan as a guide for action. Comprehensive Plan Goals: Attracting & Retaining Jobs Expanding Tax Base Enhancing Downtown Facilitating Redevelopment Housing Choice for Life -Cycle 2015 Action Statements: 1. Research for implementation the adoption of a 2016 EDA (and /or HRA) levy. 2. Research for implementation the use of tax abatement by the City of Monticello, including specific use criteria. 3. Clearly understand allowable uses of available pooled housing increment as a financial resource. 4. Continue to support redevelopment efforts for publicly -owned properties on Block 34. 5. Engage as a partner in other redevelopment opportunities as they arise, actively encouraging redevelopment within the TH25 /CSAH 75 area. 6. Market industrial development at the Monticello Business Center (Otter Creek Business Park), targeting businesses which will be a supplier, customer or collaborative partner to existing businesses within the community. 7. Encourage more proactive lead development and response in all market segments to support a diversified tax base. 8. Develop and re- establish a dedicated economic development staff position to facilitate and support the accomplishment of Comprehensive Plan goals. 9. Market EDA incentive programs in a more proactive manner, both within the community and beyond, beginning with the education on these resources at the EDA level. 10. Actively market for sale for development the EDA -owned properties at Cedar Street, 349 West Broadway and 413 W. 4t' Street. 11. Examine housing stock for aging or blighted properties and research development of programs for redevelopment and /or revitalization. 12. Support the development of the Destination for Innovation brand and implement in economic development activities. Appendix: Monticello Comprehensive Plan, Chapter 5 - Economic Development 2 EDA Agenda: 10/15/15 11. Economic Development Report (JO /AS) Industry of the Year Update The IEDC has named Bondhus Corporation as the 2015 Industry of the Year. The award will be presented to Bondhus Corporation at this year's Industry of the Year event. Invitations for the October 21St, 2015 event have been sent. Again. EDA members are encouraged to attend this event, so please mark your calendars. HRA Levy Commissioner Tapper indicated that there have been some concerns expressed to him by community/business members regarding the HRA levy. Mr. Tapper indicated that there seem to be some misconceptions about the mechanics and purpose of the levy. As such, staff is preparing an article for the upcoming City newsletter on the item. Interchange Study The City Council authorized the interchange land use planning study, which better define land use concepts as related to potential interchange(s). NAC is preparing a timeline for the project at this time. Property for Sale — Update The EDA has received 7 inquiries to date on the Fred's Auto building at 349 East Broadway, each of these related to storage or auto repair uses, which are not allowable uses in that district. The EDA has received 3 inquiries on the 4th Street residential property, none of which have led to a formal offer. No inquiries have been received for the garden center site on Broadway. A renewed discussion on marketing strategy will be a 2016 goal- setting item.