EDA Agenda 08-24-2015 (Joint Meeting)EDA SPECIAL MEETING – JOINT MEETING WITH CITY COUNCIL
Monday, August 24th, 2015
5:45 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
City Council: Mayor Brian Stumpf, Charlotte Gabler, Lloyd Hilgart, Tom Perrault, Glen
Posusta
Staff: Executive Director Jeff O’Neill, Angela Schumann, Wayne Oberg, Tammy Omdahl
(Northland Securities)
1.Call to Order.
2.Roll Call.
3.EDA/HRA Levy and Budget – Consideration to adopt EDA Resolution EDA-2015-008
authorizing the levy of a special benefit levypursuant to Minnesota Statutes, Section
469.033, Subdivision 6 and approval of a budget for fiscal year 2016.
4.Adjourn.
EDA/City Council Workshop – 08/24/15
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3.Consideration 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. (AS/JO/WO)
A.REFERENCE & BACKGROUND
The EDA has requested a joint meeting with the City Council to further the
understanding of the HRA or EDA levy option and to gain Council feedback
regarding the adoption of a resolution authorizing a levy and budget for 2016.
This requested action comes as a result of the EDA’s research on adopting an EDA or
HRA levy. Research regarding a potential EDA or HRA levy is an adopted goal
within the EDA’s annual work plan. At this time, the EDA is seeking Council
feedback to assist them in their decision-making regarding a potential EDA or HRA
levy. Ultimately, the EDA recognizes that the City Council must approve or deny the
adoption of either an EDA or HRA levy.
In its research of the levy option, the EDA analyzed its available funding sources,
operating expenses, and its goals and objectives as set out by the adopted
Comprehensive Plan and EDA work plan.
The EDA has recognized that its existing financial resources to achieve these goals
have limitations. These financial resources include pooled increment in TIF District
1-22, the available balance in the EDA general fund, and the available increment in
decertified TIF District 1-6. Furthermore, as these three resources are used to tackle
projects such as those on Block 34, funds dwindle to support other economic
development initiatives. In addition, the EDA will need to continue funding of day-
to-day operations of the EDA for marketing, TIF district administration, loan
management, etc.
As an outcome of this analysis, it appears that without a recurring funding source, the
EDA’s current available funds will be depleted quickly for day to day economic
development operations, leaving few resources to accomplish more strategic
initiatives, including the facilitation and support of the Embracing Downtown Plan.
Adoption of a levy will create the financial opportunity to continue working towards
the accomplishment of these goals and objectives.
Importantly, the levy option can be used as an alternative to the current process of the
EDA’s request for an allocation from the City’s general levy each year. The levy
would provide a separate funding source for the EDA as an alternative to this fund
transfer each year. More information on each levy type can be found in the attached
memo (previously provided to the EDA and City Council on May 26th, 2015).
In Wright County, staff’s understanding is that both would be clearly identified on the
taxing statement as a separate levy.
EDA/City Council Workshop – 08/24/15
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The Council will also have a number of points of oversight for any EDA or HRA levy
and/or use of levy funds. These include:
1.Filing of annual budget (required)
2.Joint meetings for purchase or sale of property
3.End of year Economic Development Activities report
4.Work Plan ratification (required)
5.Annual consideration for adoption of levy (required)
As identified above and as part of the decision to adopt a levy, the EDA must also
adopt a budget which identifies the use of the levy funds. The budget must also be
filed with the City Council. Staff had prepared a 2016 proposed EDA budget,
previously presented to the City Council during a budget workshop. That budget was
estimated at $141,000, and included the hiring of a dedicated economic development
staff position, but did not include additional funding through a levy for
redevelopment and housing activities.
If an HRA levy (also known as a “special benefit levy”) were to be adopted at the full
allowable statutory limit, it would generate approximately $280,000. For the
purposes of Council/EDA workshop discussion, the proposed EDA budget has been
revised to include the addition of redevelopment and housing activities funding
through use of the maximum allowable HRA levy. Approximately $155,000 is
proposed to be allocated to a line item of “redevelopment and housing activities” for
accomplishment of strategic objectives. The EDA budget would total $305,000 with
this addition through the levy. The balance of the EDA’s funding (outside of an HRA
levy) would come from interest earnings and other revenues.
If an EDA or HRA levy were to be denied by the Council, the proposed EDA budget
would be revised back to $150,000, which includes an adjusted amount for health
care for a dedicated economic development staff person. As noted in the City Council
budget presentation, this amount represents an increase in the requested allocation
from the City Council over recent years due to the inclusion of the staff position.
The EDA has held a number of workshops for the evaluation of levy information,
including a joint workshop with the City Council on May 26th, 2015. During that
workshop, information was presented to the City Council regarding both the EDA
and HRA types of levies, amount of revenue generated, impact to the City’s overall
levy, and potential impact to a general taxpayer.
On May 26th, the City Council authorized formal notification to Wright County of its
intent to adopt the levy (or levies) for 2016. An EDA or HRA levy must be adopted
by the City Council and provided to Wright County by September 15th, 2015.
Based on the discussions at the various EDA workshops, staff has prepared a
resolution for review by the EDA and Council for adoption of an HRA levy and
EDA/City Council Workshop – 08/24/15
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budget. At this time, the EDA and Council are asked to provide input in order to
move this item forward to the City Council for consideration.
A1. Budget Impact:Northland Securities and Kennedy & Graven were used to
assist staff in the research and development of information for the EDA and
Council on this issue. The impact for this assistance has been to the EDA’s
general fund budget for Miscellaneous Professional Services and totals
approximately $3,000.
A2. Staff Workload Impact:Staff time on the part of the City Administrator,
Finance Director and Community Development Director has been expended
in support of the research and presentation of this information.
B.ALTERNATIVE ACTIONS
Pending the discussion at the workshop, the EDA may choose to take action to
approve or deny the resolution, or may wish to table action on this item to their
regular September meeting, with modifications to the proposed budget and resolution.
1.Motion to adopt EDA Resolution EDA-2015-008 authorizing the levy of a special
benefit levypursuant to Minnesota Statutes, Section 469.033, Subdivision 6 and
approval of a budget for fiscal year 2016.
2.Motion to denyadoption of adopt EDA Resolution EDA-2015-008 authorizing the
levy of a special benefit levypursuant to Minnesota Statutes, Section 469.033,
Subdivision 6 and approval of a budget for fiscal year 2016.
3.Motion to table action on the adoption of EDA Resolution EDA-2015-008
authorizing the levy of a special benefit levypursuant to Minnesota Statutes,
Section 469.033, Subdivision 6 and approval of a budget for fiscal year 2016 to the
September 8th, 2015 meeting of the EDA and request modifications to both
documents as directed by the EDA and Council.
C. STAFF RECOMMENDATION
Staff recognizes this is a policy decision for the EDA and Council. For discussion
and decision purposes, staff has provided a resolution for adoption of an HRA levy at
the full allowable statutory limit. This is based on feedback and discussion received
during the EDA workshops regarding the levy options.
D. SUPPORTING DATA
A. Resolution EDA-2015-008
B. Memorandum – Kennedy & Graven, dated March 23rd, 2015
C.Sample EDA Budget 2016, with HRA Levy
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CITY OF MONTICELLO
ECONOMIC DEVELOPMENT AUTHORITY
RESOLUTION NO. 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
WHEREAS, pursuant to Minnesota Statutes, Sections 469.090 through 469.1082, as
amended, the City Council of the City of Monticello, Minnesota (the “City”) previously created the
City of Monticello Economic Development Authority (the “Authority”); and
WHEREAS, the Authority is authorized to exercise all powers and duties of a housing and
redevelopment authority under the provisions of Minnesota Statutes, Sections 469.001 to 469.047
(the “HRA Act”); and
WHEREAS, Section 469.033, subd. 6, of the HRA Act permits the Authority to levy and
collect a special benefit tax of up to .0185 percent of taxable market value in the City, levied upon
all taxable real property within the City, to finance the Authority’s economic development and
redevelopment activities; and
WHEREAS, the special benefit tax levy authorized by Section 469.033, subd. 6 of the HRA
Act is separate and distinct from the City’s levy and is not subject to levy limits; and
WHEREAS, the Authority desires to levy a special benefit tax in the amount of .0185
percent of taxable market value in the City; and
WHEREAS, at a joint work session of the City Council and Authority Board held on the
date hereof, the City Council and Authority Board discussed levying the special benefit tax; and
WHEREAS, the Authority has determined to adopt a budget for fiscal year 2016 that
provides for the levy of the special benefit tax in the amount of .0185 percent of taxable market
value of property in the City, to be used for the Authority’s economic development and
redevelopment activities.
NOW, THEREFORE, Be It Resolved by the Board of Commissioners (“Board”) of the
Monticello Economic Development Authority as follows:
1. The Board hereby approves a budget of $305,000 (excluding TIF district and loan
activity) for fiscal year 2016, including the levy of a special benefit tax in an amount
not to exceed $280,000, subject to approval of such budget by the City Council prior
to September 15, 2015.
2. Staff of the Authority is hereby authorized and directed to file the budget with the
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City in accordance with Minnesota Statutes, Section 469.033, Subdivision 6 and
request that the City Council consider approval of the special benefits tax levy.
3. There is hereby levied a special benefit tax pursuant to Minnesota Statutes, Section
469.033, Subdivision 6, in an amount not to exceed $280,000 with respect to taxes
payable in calendar year 2016, contingent upon the approval of the City Council.
4. Staff of the Authority is hereby authorized and directed to take such other actions as
are necessary to levy and certify such levy upon approval by the City Council.
466721v1 MNI MN190-101 3
Approved by the Board of Commissioners of the Economic Development Authority of
Monticello, Minnesota this 24th day of August, 2015.
President
Attest:
Executive Director
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Kennedy Offices in
Minneapolis
Saint Paul
St. Cloud
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis MN 55402
(612) 337-9300 telephone
(612) 337-9310 fax
www.kennedy-graven.com
Affirmative Action Equal Opportunity Employer
Graven
CHARTERED
MEMORANDUM
TO: Board of Commissioners, Monticello Economic Development Authority
FROM: Martha Ingram, Kennedy & Graven, Chartered
CC: Tammy Omdal, Northland Securities, Inc.
DATE: March 23, 2015
RE: HRA/EDA Tax Levies
You have requested an explanation of the authority for the two types of levies available to the
City of Monticello Economic Development Authority (“EDA”), and some historical background
on those levies. The two levies are sometimes referred to as the “HRA levy” and the “EDA
levy,” described as follows.
1. HRA levy
Under Minnesota Statutes, Sections 469.091 an economic development authority has all the
powers of a housing and redevelopment authority under Sections 469.001 to 469.047 (the “HRA
Act”), unless those powers are limited by the City’s enabling resolution that established the
authority. The enabling resolution that established the Monticello EDA contained no such
limitations, and in fact, in about 2008, the City acted to consolidate the functions of the EDA and
HRA and to bring all such functions under the purview of the EDA. Therefore, the EDA may
essentially act as a housing and redevelopment authority and exercise all powers under the HRA
Act, as well as exercising its economic development powers under Minnesota Statutes, Sections
469.090 to 469.1081 (the “EDA Act”).
Under Section 469.033 of the HRA Act, an HRA may levy a tax on its area of operation for the
purposes authorized under the HRA Act, subject to consent by the city council. The levy may not
exceed .0185 percent of the taxable market value in the City. The “area of operation” of the
authority is the boundaries of the City.
Since the EDA has all the powers of a housing and redevelopment authority, the EDA may levy
the tax authorized under Section 469.033, subject to the same limitations and procedures that
would apply if it were levied by a housing and redevelopment authority.
The HRA levy has two important features. First, the proceeds must be used only “for the
purposes of [the HRA Act].” Minnesota Statutes, Section 469.033, subd. 6. Those purposes,
broadly, include redevelopment to correct or prevent blight, and development of or assistance to
housing for low or moderate income persons.
&
457807v1 MNI MN190-101
Second, the HRA levy is technically raised by the EDA (using its HRA Act powers), albeit
approved by the City Council. The levy amount is above and beyond any levy limits that apply
to the City; the only limit is the .0185% of market value described above. As such, the HRA
levy is a reliable source of revenue independent of City revenues. As shown in Exhibit A,
attached, the maximum HRA levy authorized for 2015 in Monticello is $280,011.
2. EDA levy
Section 469.107 of the EDA Act provides separate authority for a tax levy to benefit the EDA.
Under this provision, the City levies the tax at the request of the EDA. The amount levied is limited
to .01813 percent of the taxable market value in the City (a higher levy is permissible but subject to
reverse referendum). For Monticello in 2015, the maximum authorized EDA levy is $274,410.
This levy is different from the HRA levy in two respects. First, it is made by the City for the benefit
of the EDA, at the EDA’s request. The amount is within the City’s overall levy limits. As such, it
is essentially the same as an appropriation to the EDA from the City’s general funds. In any year in
which levy limits apply, the EDA levy would compete with general City needs. As such, the EDA
levy is not as stable, and consequently is not frequently used (at least among the cities I work with).
Second, the statute does not expressly limit the proceeds to any particular use, but the implication is
that they may be used for any activity an EDA is authorized to carry out under the EDA Act. Those
uses include housing and redevelopment activities under the HRA Act, but also broader economic
development activities. That is, the EDA levy has a slightly higher limit, and fewer restrictions on
use; however, these benefits tend to be overshadowed by the City levy limit problem described
above.
The existence of these two separate levies can be explained by the history of the EDA Act. That
statute was enacted in 1986, and was intended (by its proponents) as mechanism to consolidate
development and redevelopment powers in a single agency. However, that concept became
somewhat controversial, and the powers of economic development authorities were scaled back
during the course of the legislative session. The final result was a statute that provides some new
powers for economic development authorities, coupled with the cross-referenced powers of
housing and redevelopment authorities and cities. In practice, the cross -referenced powers have
been more beneficial.
The City could, if it chose, use both the EDA levy and the HRA levy, as long as the EDA levy is
used for purposes other than housing and redevelopment. Again, this strategy would be no
different than simply appropriating City funds to the EDA, in addition to allowing the EDA to
raise its own levy (using the HRA levy power).
3. Process
If the EDA wishes to levy an HRA levy, the steps required are fairly straightforward. First, the
EDA must prepare and file an annual budget (for its housing and redevelopment activities) in
accordance with the budget procedures of the City. The EDA must request that the City Council
approve a levy based on this budget. The City Council must review the budget and consent to
457807v1 MNI MN190-101
the HRA levy by resolution. No public hearing is required for this process. Once adopted, the
HRA levy is included in the City’s preliminary levy certification and is collected by the County
in the same manner as general City taxes, but is kept in a separate fund and turned over to the
EDA directly.
The process is basically the same if the EDA wishes to institute an EDA levy. As previously
stated, though, the EDA levy should be considered to be part of the City’s general levy, rather
than a special levy independent of City revenues.
Once the EDA levy is in place, it may be increased above the statutory limit, but only if the
following requirements are met. First, the City Council must adopt a resolution stating the
proposed amount of the increase. The resolution and a notice of public hearing must then be
published for two successive weeks in the official newspaper of the City, with the first
publication taking place at least two weeks before the public hearing. After the hearing, the City
Council may (but is not required to) adopt a resolution authorizing the proposed increase or a
lesser increase. This resolution must also be published once. If a petition requesting a
referendum on the increase, signed by voters equaling at least 5 percent of the votes cast in the
most recent general election, is filed with the City Clerk within 30 days of publication, the
resolution will not become effective and an election on the increase will be required.
4. Calculation of City Taxes Attributable to Decertified TIF Districts
You also requested information on the amount of taxes that will be available to the City upon
decertification of various tax increment financing (“TIF”) districts that are nearing the end of
their statutory terms. As shown in Exhibit A, there are three TIF districts that will be decertified
in the near future: TIF District No. 36 (decertified by end of 2015), TIF District No. 37
(decertified by end of 2015), and TIF District No. 38 (decertified by end of 2017). Upon
decertification of these TIF districts, property taxes currently paid over to the City as tax
increment from parcels within the TIF districts will instead be distributed by Wright County to
the normal taxing jurisdictions, resulting in an increase in tax revenues available for general City
purposes. The estimated additional city taxes that will become available as a result of
decertifying TIF District No. 36 and TIF District No. 37 at the end of 2015 is $32,028. The
additional amount available at the end of 2017 will be approximately $4,887. In total, the annual
amount of property tax going to the City’s general fund after the end of 2017 is approximately
$37,000.
If you have further questions on these points, please let me know.
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EXHIBIT A
2016 Budget Draft 1 - EXPENDITURES
EDA FUND 2011 2012 2013 2014 2015 2015 2016 %
EDA General EDA/HRA ACTUAL ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE
213-46301-410100 SALARIES, FULL TIME - REG 18,214$9,883$2,209$4,255$8,727$8,727$65,898$655.10%
213-46301-410200 SALARIES, FULL TIME - OT ---66 ------
213-46301-410400 SALARIES, TEMPORARY - REG ----------
213-46301-410900 SALARIES, OTHER ----------
213-46301-411100 SEVERANCE PAY ----------
213-46301-412100 PERA CONTRIBUTIONS 1,320 716 160 314 655 655 4,942 654.50%
213-46301-412200 FICA CONTRIBUTIONS 1,091 590 124 242 541 541 4,086 655.27%
213-46301-412300 MEDICARE CONTRIBUTIONS 255 138 29 56 127 127 956 652.76%
213-46301-413100 HEALTH/DENTAL/LIFE INSURAN 4,984 2,579 594 999 2,754 2,754 17,745 544.34%
213-46301-413500 FLEX BENEFITS ----------
213-46301-421990 GENL OPERATING SUPPLIES -1,170 -36 ------
213-46301-422990 MISC REPAIR & MTC SUPPLIES ----------
213-46301-424100 SMALL TOOLS & EQUIPMENT ----------
213-46301-430260 PROF SRV - CONSTRUCTION CO ----------
213-46301-430300 PROF SRV - ENGINEERING FEE 4,533 4,461 -5,379 1,000 1,000 1,000 0.00%
213-46301-430400 PROF SRV - LEGAL FEES 10,931 10,487 6,306 17,724 10,000 10,000 10,000 0.00%
213-46301-430910 PROF SRV - Market Matching --24,000 48,000 48,000 48,000 12,000 -75.00%
213-46301-431990 MISC PROFESSIONAL SERVICES 6,003 32,936 997 30,874 10,000 10,000 10,000 0.00%
213-46301-432150 IT Services 691 1,400 1,416 1,416 1,416
213-46301-432400 DELIVERY MAIL SERVICE (UPS 1,331 109 46 24 ------
213-46301-433100 TRAVEL EXPENSE -290 3 ---500 ---
213-46301-433200 CONFERENCE & SCHOOLS 154 148 95 76 --1,000 ---
213-46301-434600 MARKETING 17,338 13,047 723 1,144 17,000 17,000 5,000 -70.59%
213-46301-435100 LEGAL NOTICE PUBLICATION 1,114 274 260 77 500 500 500 0.00%
213-46301-435200 GENERAL PUBLIC INFORMATION 4,998 399 --------
213-46301-436100 Insurance - Liability/Property/Vehicle 2,073 8,026 486 486 486
213-46301-437100 PROPERTY TAXES 374 -1,628 1,512 1,700 1,700 1,600 -5.88%
213-46301-438200 WATER & SEWER ----------
213-46301-438300 GAS ----------
213-46301-443300 DUES, MEMBERSHIP & SUBSCRI 10,769 4,309 2,373 3,041 10,000 10,000 10,000 0.00%
213-46301-443500 BOOKS & PAMPHLETS ----------
213-46301-443800 Redevelopment (account placeholder)-260 ----155,000 ---
213-46301-443990 MISC OTHER EXPENSE 2,823 658 2,323 2,901 3,244 3,244 2,871 -11.50%
213-46301-451010 LAND (or value adjusted)--55,800 71,000 ------
213-46301-453010 IMPROVEMENTS ----------
213-46301-458010 Other Equipment ----------
213-46301-460300 Interfund Loan - Principal ----------
213-46301-461300 Interfund Loan - Interest ----------
213-46301-461500 SA INT PYBL-LAND FOR RESAL ----------
213-46301-472030 TRANSFER TO GENERAL FUND ----------
213-46301-472030 TRANSFER TO DEBT SERVICE F ----------
213-46301-472030 TRANSFER OUT - TRUNK FEES ----------
TOTAL EXPENDITURES 86,232$82,454$100,434$197,146$116,150$116,150$305,000$162.59%